'Look for Opportunities' to Increase Diversity in Crypto - Ep.128
5 Jun 2020 · 35:36
Steven McKie, CEO and founding partner at Amentum Capital, joins Unchained to discuss how the killing of George Floyd and the response to Amy Cooper's actions connect to systemic racism in the crypto industry. Drawing on his own path from childhood poverty to running a crypto hedge fund, McKie explains why companies need to change their hiring and outreach practices to reach underrepresented communities. The conversation also covers survey data showing Black Americans express more interest in crypto than white Americans despite remaining underrepresented in the industry.
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Hi, everyone. Welcome to Unconfirmed, the podcast that reveals how the marquee names in crypto are reacting to the week's top headlines and gets the inside scoop on what they see on the horizon. I'm your host, Laura Shin. I'm doing another survey to find out what you want from the podcast and how I can make them better. Last year, we heard you loud and clear on the news front and so have begun including a weekly news recap at the end of every Unconfirmed. This year, what would you like to see from the podcasts? Please take a moment to fill out the survey to let us know what you'd like from the show. The link is in the show notes or you can just go to surveymonkey.com slash r slash unchained 2020.
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In response to the challenging times, Crypto.com is waiving the 3.5% credit card fee for all crypto purchases. Download the Crypto.com app today. Today's guest is Stephen Mackey, CEO and founding partner at Amentum Capital. Welcome, Stephen. Thanks, Laura. Thanks for having me on. It's been a heartbreaking couple weeks in this country. And I think some of that is the necessary outpouring of emotion as hundreds of years of heartbreak and suffering become shockingly visible on social media. Last week, we saw two videos showing some of the everyday racism that Black Americans face. In one, a white woman, Amy Cooper, said, is shown lying to the police
that, as she called it, an African-American man was threatening her when all he was doing was asking her to follow the rules in Central Park and she was actually breaking them. In the other, we saw the homicide of a black man named George Floyd by a white Minneapolis police officer, Derek Chauvin, who pressed his knee into Floyd's neck for nine minutes. Although this happened on Memorial Day, which is Monday, it took authorities until Friday to even arrest Chauvin. And in the meantime, peaceful protests erupted around the country and across the world. So while these events may seem tangential to crypto, I think the fact that these two incidents happened on the same day in extremely different contexts showed that they actually pervade every aspect of
our society. But before we get to these specific events, Steve, you founded a crypto hedge fund with three founders who are African-American. You yourself are mixed race, African-American and Native American. And you've told your story before about how you grew up in poverty. Tell us a little bit about your journey from growing up in a low income household to running a crypto hedge fund. Yeah, of course. And, you know, I try to always keep this sort of story succinct just because so much material and all that is out there. But, you know, the short story really is, is, you know, I came into the crypto space about seven and a half years ago now while I was still in college. I was about maybe 22. It was around like late 2012. Yeah. And I had just had a grand interest into Bitcoin and kind of
what it is everyone was seeking to solve and kind of the general ethos of the space really inspired me. So, you know, that at the time I was studying CS and then later moved into studying information systems while I was studying at Old Dominion University. And later when I graduated in 2014, I had already had some good experience working into the space, working on developing different projects, researching proof of stake, mining with personal friends of mine that were working with me at Apple at the time. And so I had a really deep interest into like kind of how the markets were evolving and keeping an eye on them and Later moved into the space full time, doing some contract writing positions, working with other individuals and community on open source related initiatives, worked at Bit Reserve, which is now Uphold, worked at Purse for a
few years and contributed to a few other projects and now also Handshake, which recently launched. So my journey in the space has been pretty evolutionary. And so through that process, you know, I tried to self-actualize myself, position myself where these technologies were going to, you know, lead and grow into and kind of like follow that path. And I wanted to put myself on that same path to success. trying to discover wealth on my own. As I saw people online in the crypto community who are very well educated, who are great programmers, who are great developers and traders and speculators. And I knew that if I followed along and kind of inserted myself into this narrative that eventually, you know, I could find success. And Having been a part of the
community for so many years, I saw the launch of many other different assets, Ethereum, Zcash, et cetera, and kind of put myself investing myself into those assets. And by one, contributing to the communities, helping to educate people, et cetera, attending these different meetups and trying to insert myself and just as an important player in the space. And with that, I accrued my own wealth and got the capability to be able to start a fund with a few other partners a few years back. Now it's to myself and Kyle Forkey, who is my other GP, and my other advisors, Alalua Asuntukun, who is a chief scientist at Lightning, Matt Pruitt, who is
a co-leader at the Radical Exchange, and Kevin Zhao, who is the CEO and founding partner of Galois Capital. And so we've been, you know, really hardened to grow into the space as crypto has matured. And now as I'm a mature individual in the space, I'm trying to do my part to add to the representation. And just to fill in a few more details about your background, you were the first in your family to go to college. And I did read a story saying that there was a period where you subsisted on Clif bars and supplements while you were using the rest of your money to buy crypto. Yeah. Well, at the time, it was
all about the dream. And so I really envisioned a future where that would help me get out. And I'm always midterm to long-term thinking. And I wasn't worried about taking care of myself in the short term. I was worried about being all right in the future. So I would finally not have to worry anymore. And as the founder of a minority-run crypto hedge fund, do you feel that race has had any impact on your business? So thankfully, you know, through historical context and some other successes in the space that I've had and just being so deeply ingrained with so many leaders and other researchers and developers into the space, I found it easier than most coming into the space. Because when we started raising for the fund, it was somewhere around the start of 2018. So we were already well into that phase. a big
bull run that happened in late 2017. And so everyone was kind of frothly looking for an opportunity. And they saw an experience, an individual that came into the space. We market ourselves as crypto natives. People had been here, had seen the space grow, and now we're looking to mature ourselves with the community so we can continue to invest from an accredited perspective and continue to do the trading and the advisory that we've done before in a more legitimate means. So, you know, having to do that and work, you know, collectively with other people in the space has been somewhat easy, but ever since, you know, the bear market that, you know, happened after that. having to outbound yourself and get out there and put yourself in front of
investors and LPs and explain to them the importance of crypto and explain to them your very complex thesis where, because crypto is not the simplest tool and some structures that are with crypto funds aren't necessarily the simplest to grok immediately because you have some attributes of regular headphones, some attributes of a generalized venture capital. So it can be difficult when there's a mixed-race individual like myself and who you don't really see as a capital allocator, as a fund manager in this space often. It's also my age as well because when I started Amentum, I was 26 about to turn 27. So and I'm 29 now, so I'm still on
the younger side, too. So as crypto is continuing to prove itself, I myself and my partners have to continue to attribute ourselves. And, you know, we want to expand and grow the fund so we can help other like, you know, minorities and other unrepresented folks continue to educate. But, you know, we cannot do that without other individuals making it easier for us to join these existing venture capital hedge fund related communities and things like that and contribute to that mind share and get the same sort of referrals and recommendations that, you know, other majority white led Ivy League, Stanford educated individuals are can so easily obtain. And it can be very difficult. And sometimes I do feel like I need to work two, three, four times harder. But, you know, unfortunately, that's just the name of the game. And that's just what you have to
hustle to get there. So in a moment, we'll discuss more how crypto itself and the industry can help. But first, a quick word from the sponsors who make this show possible. Diversify has partnered with Starkware to bring serious traders a speed and security advantage without sacrificing the cornerstones of profitable trading. They enable high speed UI or API access to deeply liquid order books, instant execution of 9000 plus trades per second, as well as rapid withdrawal certainty for when you need to move fast. If you're an arbitrage, algorithmic, or day trader, you can capitalize on the best of centralized trading while preserving complete control of your assets 24-7.
Want the edge? Head to D-E-V-E-R-S-I-F-I.com and learn more today. In response to the challenging times, Crypto.com is introducing three measures to help the community. First, the 3.5% credit card fee for all crypto purchases will be waived for the next three months. Second, you can now get up to 10% back by using the MCO Visa card on food and grocery shopping. Lastly, you could buy gift cards on the Crypto.com app from merchants like Whole Foods, Safeway, Burger King and more and get 20% back on food and 10% back on groceries. Download the Crypto.com app today. Back to my conversation with Stephen Mackey. So as you've watched these events the last couple of weeks, what do you feel the crypto community should take away from them? Yeah.
So, I mean, one of the really important things to realize is, you know, when people's voices go unheard for too long, then eventually they're going to act appropriately, how they deem subjectively appropriately, and to try and get their voices heard. And sometimes those can be acts of violence. Sometimes those can be looting from individuals of lower socioeconomic status that don't have the means absolutely in any way to take care of themselves, don't have another stimulus check coming. They don't have access to any more unemployment. Maybe they didn't have that prior, you know, and it's kind of the weight of the world is on their shoulders. And when groups go unrepresented without a voice for too long, eventually that can, you know, congeal and turn into something that can be catastrophic.
And even though the crypto space is, you know, completely, you know, separate and uncorrelated from this mess, There are important lessons to be learned in regards to representation. Crypto as itself is a myriad of different actors over time. We've had libertarian anarchist types. We've had Wall Street finance types, Silicon Valley venture types, Silicon Valley Bay Area developer types, et cetera. But all of them usually fit a certain archetype, either white and or Asian of a certain descent, of a certain higher upper middle class, upper class at a certain type of education. And in crypto, that's really prevalent as well. Though we speak to certain emerging markets and we claim that our technologies help people pull themselves up our bootstraps, many times often people are absent those boots because they don't
have the foundation in order to get the representation they need in the space to do and to become and self-actualize and learn the insides and outs of these markets, of these technologies and how they work and interface. And it can be hard. And, you know, I've been in this space for so many years and I've seen so many different opportunities for people trying to, in the best interest, like with a real heart into it, we want to have representation. We want to increase the number of women in the space. We want to increase the number of minorities in space. We want to focus on black people, et cetera. And it's all well and good. But, you know, those opportunities are kind of just passive activities. that just kind of help to eventually to a point when all these activities are going to come to a
head and you're going to actually see whether or not they're successful. So it's more than just saying we want to help minorities. It's actively making it a part of your day to day and making a change in your habit. Just like when you want to lose weight, you make a change in your diet and your activity level. When you want to make a change in representation, you don't just speak it. You actually do it. You look out for these opportunities. You look for opportunities to mentor. You look for opportunities where you see people might be struggling to be able to interact or code switch with their peers accordingly because they don't come from the same backgrounds. They don't speak in the same manner. They don't use the same slang. They don't know how to interject themselves into these communities. So it makes it even harder
for So in crypto, in our own way, we have our own struggles of representation because we have these technologies that are so complex, but that esoteria just continues to be locked up to a certain niche group of individuals. And until that changes... Core the core fundamental of financial inclusion and financial engineering and getting representation for minorities and getting crypto in the hands of black people and other minorities that can't happen if they don't understand what they have in their hands. And because those portals to education and because of those things are, you know, a lot of times socially gate gate keep by certain individuals, it's going to continue. And so we need to take the lessons learned here to better ourselves and to look at everyone else as Black Lives Matter, Black Wealth Matters, Black Entrepreneurs Matter, et cetera, and understand that it's something that
we need to work on as a collective and not something that we only need to talk about when it is beneficial to our brand. Coinbase did a survey among 5,100 people in the US and UK. And in its report, which was called Black Americans and Crypto, one of the more interesting findings was that Black Americans show more interest than any other respondents, with 70% of them being interested in crypto versus 42% of white Americans interested. And the discrepancy was even bigger among the college educated, with 75% of college educated black Americans being interested in crypto versus 39% of college educated white Americans being So from that, you would expect that there would be more people working, more blacks working in crypto, you know, than they are in the general
population, but it's the opposite. So why do you think that blacks are underrepresented in crypto and what can we do to bring more of them into the fold? So it really comes down to exactly the core issue, which is representation, right? So if you start... with, you know, an all-way, all-Asian cast of individuals. And you say, we are welcome. We're opening our arms. Come to us. We will teach you. We will. You've got a couple of barriers in your way. One, some people don't have the financial flexibility in order to invest into crypto. So some people have more of an outsized incentive than others to contribute day in and day out and to continue to learn, right? They can put $500,000, $2,000, $4,000, $5,000 into crypto and really be invested
into it. versus someone that has to first learn about it, doesn't have the discretionary income to make those investments. And then still they want to find interest. A good example of this is myself, you know, deciding to eat Clif Bars and deciding to forego certain other luxuries just so I can invest in it, right? I knew there was a sacrifice I needed to make. So first you need to find people who are willing to make that sacrifice. So that makes that tunnel really tight already, okay? And then on top of that, You need to have the people who have the education to understand the tooling and these communities and how they work. Very few software engineering communities and stuff like that exist in the U.S. You know, there's very little representation for black African-Americans in software, especially historically cryptography. Right. That's a majority white led
field of expertise, at least here in the United States. Right. So, you know, you're going to have to have someone that really wants to learn these very complex things when who doesn't who won't necessarily have a direct mentorship that provides you that that that technical guidance that you need to flatten that learning curve. So now you've got to really want you got to really, really want to learn these things, you know, and then. And then finally, it's ingraining yourself long-term in the space. So whether that's finding a job in the space that you can take, that's whether it's in Boston, San Francisco, New York, Miami, where a lot of these other crypto companies are mostly led, or finding yourself a company that you can work with remote, that you vibe with socially, you have the same ethos, right? You can engage with them because these
are completely remote-first companies. So there's a whole other slew of different complexities in how you communicate and work and interface with these different environments and global communities. So there are a lot of barriers that just when it comes to it, you got to work through those. And that can be tough for someone that already has to worry about how do I pay the bills? How do I pass this test? How do I, you know, take care of my family? But now I see these technologies being built around me and I feel like I'm being left behind. But I feel like if I don't make a certain sacrifice, then I'll be that once again left behind. Once again, just like we were in the past with, you know, early, you know, adoption of the Internet and, you know, and other technologies, we're always trying to catch
up. We're trying to always be at the forefront. But we can never be, you know, the majority in any of these new spaces because we just don't possess the same means. Yeah, from what you're saying, it sounds like it's really incumbent upon the employers or the people who are already working in crypto to make the outreach because, as you say, these groups are oppressed in so many ways, as we saw in these videos. And, you know, I just feel like there's a lot of things that that community, Blacks in America in particular, deal with that are Just impact them every day in every way that seem invisible to other people. But, you know, so you and I are saying that we recognize that obviously you live it. But I often
do see there are some segments of the curriculum. crypto community who say things like, oh, you know, diversity isn't a problem. There are no barriers to Bitcoin or crypto. Anybody can access these networks. And therefore, these underrepresented groups, you know, whether it's blacks or women or whatever, they just choose not to be involved in crypto. And they're naturally disinterested. I've seen this several times. What would you say to those groups who say that? Oh, yeah. I mean, I think, I think, you know, I think it's just one, it's a lack of self-awareness, right? So to them, logically, rationally, it makes sense. It's, we don't have anyone who's actively engaging and saying, no, we don't want any blacks in the community. No, we don't want any inter XYZ minority in the community. There is no one proactively doing that. That's true. Right. There is there is
no one that, you know, when you jump into these groups and there's no one that's saying, oh, whoa, whoa, whoa. You know, like, let's do a race check first on this random GitHub username. Right. Like that doesn't that doesn't happen. The issue comes in when you try and like get really granular with it. Right. When you try and insert yourselves into these communities, when you try and talk to these oftentimes, you know, Asperger's. laid in autistic, very intellectual, high thinking individuals from many different types of backgrounds, when you really get into the thick of it, socializing with them can be very difficult. As we've seen in yourself as a reporter in the space, you've seen a lot of the social craziness and stuff that has happened. And a lot of it is contribute to poor communication. So you have a lot of engineers and things
like that and those types that aren't necessarily the best team players and don't know how to handle the behavioral and management of small teams or global teams and distributed teams. So they don't realize that it takes a little bit of an extra effort to get that representation in place. So for them, you can't blame them. For them, they see that we don't see anyone trying to actively block. But the whole fact that there isn't anyone trying to actively pull people in and to recognize that there's additional difficulty and they might need just a little bit extra help. Not always. We're just as capable as anybody else, right? But just a little bit of an extra helping hand to get us going, right? For instance, my LPs at my fund, they
took a big risk, right? I'm a guy in this space. I got a great technical background. My partners are all smart and great. But none of us come from really wealthy families. None of our families were head-fung managers. Nobody. So it was like they had a track record of ours. history of successes in the space to go off of. And that was simply it. And they made a bet on me. And with that, we have found success with that. And I've become really close friends with the investors that have invested into the fund. And it's been a great opportunity. When they come to me and they want to have questions about representation, when they come to me and say, like, Stephen, we see this stuff happening in the crypto space.
And how do I help? What organizations can I donate to? Who is an up and coming voice? And I can assist. I can work directly alongside them and tell them and interact with these other important capital allocators and institutional investors with a direct helping hand. And it takes a lot of extra work, but it's very important. And to build something foundational, something generational that is like wealth creating, it takes just a little bit, a couple of helping hands to get you there. But once you're there, once you're there, you're You can hold so many other hands and you can automate that work. And you know, natively, organically, how those communities work and interface best. You know how to talk to them. You know where they live. You know what they
look like when they're successful and they just, they're a diamond in the rough and they just need a little bit of help. So many individuals in this space I've mentored, you know, who have come from very difficult backgrounds, you know, who are struggling and, you know, in their own families, in their own personal life, in their own financial situations. And I've helped pull them up, make introductions to people that they never would have met, you know, give them opportunities that they never would have seen. And those those people have gone on to be successful leaders in the space and have contributed to the space in very important ways historically. And and I think that just by doing that, committing yourself to doing that with one or two individuals just to change a couple of lives, you can really make a difference. All right. Well, I
really appreciate these thoughts. I think a lot of people are asking these questions now. And, you know, although the crypto space is you know, is its own area of the world. Obviously, as I mentioned earlier, I do think we've seen that these issues are everywhere. And so I was so glad to have your thoughts. Thank you so much for coming on Unconfirmed. Thank you very much for having me on, Laura. I appreciate the opportunity to speak to your audience. Don't forget to stay tuned for the weekly news recap. Stick around for This Week in Crypto after this short break.
Nexto.com. What's more, interest is paid out daily and you can add or withdraw funds at any time. Get started at nexo.io. Hi, everyone. Thanks for tuning in to this week's news recap. First headline, tug of war at Bitmain. Who's in charge?
So the drama continues. CoinDesk reports that Bitcoin mining equipment manufacturer Bitmain is in a civil war, with two co-founders, Jihan Wu and Mikri Jean Ketuan, battling over power. Jean, who was ousted by Wu last fall, addressed Bitmain employees via WeChat, saying he had returned to the company's Beijing office and called for them to join him. He also claimed he would lead the company to an IPO. A video circulating online showed Zhan leading private guards and entering the Bitmain office on Wednesday. He even offered cash bonuses of 10,000 yuan, which is about $1,500 to those who return Wednesday, and 5,000 yuan, or $700 for those that came Thursday. Meanwhile, there are now two versions of the
company's official seal, which Coindesk says in China is, quote, as important as the role of the legal representative in terms of signing a company's decision into effect. However, both Jeanne and Wu appear to have different seals with different serial numbers. Wu's side of the firm said Jeanne had no authority, while Jeanne said that the seal with Wu's side had been voided. Bitmain issued a statement on its WeChat accusing Jeanne of forgery and said it has hired lawyers to take legal action against him. Phew, sounds like there will be more where this came from. Next headline, newest version of Bitcoin Core protects against state actors. On Wednesday, Bitcoin Core released a new software update that includes software that could help prevent attacks by nation states. The feature, called Asmap, makes
it possible to limit the number of nodes connecting any specific autonomous system, such as Amazon Web Services or states. This helps prevent a so-called Erebus attack in which an autonomous system could censor large swaths of the Bitcoin network. Next headline, ETH 2.0 status update. For those of you wondering about Ethereum 2.0, Danny Ryan wrote of a monster post on what each phase entails, what the benefits of Ethereum 2.0 will be, and more. He says, quote, We shall see
just how seamless it all ends up being. Next headline. Coinbase is the biggest holder of Bitcoin. According to the block, Coinbase is the largest holder of Bitcoin with 984,000 BTC in its wallets. The second largest is Huobi at 413,000 BTC and then Binance at 318,000 BTC. The block's report on exchanges shows that exchanges still hold 17% of all bitcoins down from 19% in February. Next headline. Coinmetrics analysis shows potential for an institutional approach to Bitcoin. Coinmetrics published what it calls a preview of a forthcoming research piece with ARK Invest that analyzes various metrics that institutions might look at
when evaluating Bitcoin. The It begins with a breakdown of the various markets showing, interestingly, that the USD market is the smallest at $500 million in daily volume. Next are all fiat markets, which is at $1.2 billion. Then all fiat and stablecoin markets at $3.5 billion. Next, all fiat, stablecoin, and crypto markets at $4.1 billion. And finally, all fiat, stablecoin, crypto, and derivatives markets, which are at $18 billion. Among stablecoins, Tether completely dominates, accounting for $2.2 billion in daily volume, whereas the next highest is Binance USD, which accounts for $65 million in daily volume. However, the analysis shows that Bitcoin's volume is still minuscule compared to other major asset
classes at $4 billion a day versus $46 billion a day for U.S. equity spot markets and $2 trillion for global FX spot markets. Next headline. Most off-chain Bitcoin is on Ethereum. Coindesk reports that the most popular off-chain use for Bitcoin is to, well, take it to Ethereum. RAPS BTC and IMBTC hold 70% more Bitcoins than the Bitcoin-based Lightning or Liquid. Although, to be fair, the amount of Bitcoin held off the Bitcoin blockchain is only 8,300 BTC, which is about $80 million.
Blockstream engineer and researcher Christian Decker said the greater popularity of off-chain Bitcoin on Ethereum is, quote, a strong signal that the interest in Bitcoin itself is increasing and that other tokens are losing ground when it comes to Bitcoins. Next headline. Some users of Ethereum mixer Tornado Cash are leaving a trail. Some users of the Ethereum mixer Tornado Cash are making it possible to de-anonymize their transactions. The mixer uses zero-knowledge proofs so users can anonymously withdraw. Except, of course, that doesn't work when users do so in a traceable manner. A group of researchers were able to link 400 out of 3,000 withdrawals to specific deposits and The most common error was that the user
used the same address for both deposits and withdrawals. Many users also are leaving their deposit in the mixer for less than a day. Another error, using the same manually set gas price. Next headline, Crypto Mom Hester Peirce renominated for second term. SEC Commissioner Hester Peirce has been tapped for a second term, allowing her to serve through 2025. Without the reappointment, her term would have expired Friday. Back in February, she proposed a safe harbor for new token issuers. Finally, fun bits. Andreessen Horowitz introduces the Talent X Opportunity Fund. Although it was six months in the making, A16Z made a timely announcement of a new $2.2 million fund and program for entrepreneurs from
atypical backgrounds. It plans to fund and train a small group in the first year and then expand. Entrepreneurs will receive seed capital as well as undergo training programs. The announcement says, quote, Spread the word.
So before we head out, I just want to add one personal note about everything that's happened in the last couple of weeks. First, I want to say Black Lives Matter. It's sad we have to say it and that some people continue to quibble with that statement, but But that just means we have to say it more. Second, I hope justice is served, not just in these recent cases that have gotten attention, but also for all the other ones that are not recorded on video and are not shared on social media. And finally, I want to say that I truly believe that good things will come out of all these events, including the pandemic and these racist, unjust incidents and the protests that Everything. I don't know how long all that
will take, but I'm in it for the long haul. And I think all of you are too. Um, one other thing I wanted to say, I, you know, I know many of you know that I used to be a yoga teacher. Some of you also know I'm really into meditation and other kinds of spiritual things. And I just wanted to say, you know, I hope as we move forward that people also turn inward and reflect on our common humanity. I think people are already doing that from what we've seen at these vastly peaceful protests. Um, And I just would encourage people to always remember everybody started out as a precious little baby. Even the perpetrators of violence and injustice, they are in their own way victims of a system that has racism built into its core. And I'm not saying those people shouldn't be punished
or that justice shouldn't be served, but just that we should ask ourselves going forward as we try to do a massive reset to all of our systems, What do we want that to look like? Things need to be shaken up. Obviously, they are already being shaken up. And we should think about what kind of new systems do we want to put in their place? How do we prevent future generations from playing out these same roles? And while we ponder those questions, it would be great if we would all just remember our common humanity. Okay, everyone, that's it. Thanks for tuning in. To learn more about Steven, Amentum, and Diversity in Crypto, be sure to check out the links in the show notes of your podcast player. Don't
forget to take the Unchained Survey at surveymonkey.com slash r slash Unchained 2020. Unconfirmed is produced by me, Laura Shin, with help from Fractal Recording, Anthony Yoon, Daniel Ness, Josh Durham, and the team at CLK Transcription. Thanks for listening.