This is 20 VC with me, Harry stabbings and stay. I'm placing a bat. I think this is the best episode that we have ever done. Hit me up on Twitter at Harry stabbings with your thoughts. And if you agree. And so, to Our Guest today, and we dive into the world of crypto downs and web 3 and who better for this than average shall gorg co-founder and managing partner at Electric Capital last month. Electric announced that they had raise 1 billion dollars for their new fund. Making them one of the largest independent and crypto native VC firms in the world as for a virtual prior to Electric. He was an investor in crypto projects such as
Anchorage, bitwise lightning labs and open sea and unicorns, such as are table. Cruz deal figman ocean and many more incredible companies. And on the operating side of the table, have a child successfully sold his last company to Facebook where he became director of product management for the local product group, a team of four hundred Engineers responsible for billions of dollars in Revenue. Today's episode was also special because I knew very little and a Burchell really. That's just a walk me through the learning curve on crypto and on Dao's and on web.
Three, incredibly patient. And I want to say a huge thanks to eat like Gil, and I have a child's partner. Curtis some amazing questions sessions today. Really did make it so special. But before we dive into the show, today, if you are a venture capitalist or corporate strategist, I want to tell you about Tiga Stiga. This is the only company in the world that Aggregates qualitative information on private companies from seed stage to pre-ipo with Teague has you can access other, VCS, and Founders expert. Cool. Transcripts from previous rounds to help Source, fast-growing companies create.
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You have now arrived at your destination. Have a child. This is such a joy to do. We did one many years ago. I've had many more wonderful things from Ray from a lad from many more. So, thank you so much for joining me
today. Yeah, Pleasures here. Thanks for having me. I want
to start with a little bit on you and some contacts here. We see a lot treated. A new billion dollar fund. But where did the current Venture starred in? How did you make your way in
initially? Yeah, good question. So my back hurts most is an entrepreneur. So my co-founder and I, we started sold to companies. We saw the second one to Facebook.
With her for a few years and had a great time learned a bunch. And while we were at Facebook, we had some liquidity and so started doing some Angel Investing. So Circa twenty fifteen, we started Angel Investing and kind of our passion area was crypto. We dabbled in some Bitcoin mining and you fear in mining and play with an arrow. And so, in 2016, we were spending a lot of our personal time there and I love Facebook at the end of 2016 and Curtis my co-founder of Ed electric and co-founder, my last our table. We were dabbling all the way through 2017 and we started getting inbounds from the traditional VC is here in Silicon Valley. People who had invested in our companies or
Co invested alongside us over the years and they all were just asking for advice on crypto and by the end of 2017, most of the VC firms said, you know what? That's really not in our wheelhouse like we don't really understand it. We don't know how to do tokens. We don't know how to do custody like this is different world and frankly like the core Venture business model for 56 years ago. 2016 2017 was it was a fantastic business model where why would you give up doing SAS and fintech and marketplaces and so on? But this new thing. So few people Hearst us and said, hey you guys are really good at this. Your in all of the good stuff. Can we just give you money? Can you just deploy? Our
Up alongside yours instead of just doing Angel checks. And so that's how electric happened in 2018. So we formalize what we were doing earlier in the 2018 raised. Our first fund. It was a small fund, 16 million and then raised our sort of first proper institutional funding 2020 at 110, and then just closed a billion. So we scaled up pretty fast or less or three and a half
years. I mean, it's scaled. I'm incredibly crucial sign. We nervous about making the move to institutional. It's different. Investing your own money. We never stop making the move institutionally.
I think we weren't nervous. It's sort of like the classic entrepreneur naivete you can.
I don't know what you're getting into and so you're naive enough to like not really understand where the journey that you're about to embark on which is why I kind of works because if you really understood all of the challenges that you're going to face, you probably wouldn't go through with it. But I think there was certainly a little bit of naivete there in terms of understanding, what needs to
happen when you live by now. What do you think that? You didn't know that you now know that would have changed your perspective quite a
lot. That's a great question. I think the biggest is that in order to really run this kind of a business when you're an angel investor, you really thinking about deploying capital and working with the founders. And like, that's really what pulls you in when you're running a.
Your business so much of it in the early days until you build out the staff and infrastructure is like fun formation, accounting, legal docs taxes. And so I feel like I've gotten a master. I got a CPA and a master's in like international law and like tax accounting and there's so many nuances there to get right in terms of running the business. I think it's very similar to when a Founder starts a business in new, your sort of a product Centric CEO. And then the thing starts working and all of a sudden you realize that you really get a customer support and Ops and you have to be the CFO until you have a CFO and you have to understand like the business lovers and you understand all this.
Other things that really make the business work and painful. And so I feel like over the last three years. We've actually become accounting and tax and law experts as much as we are sort of investors, especially with crypto. Right? I mean I think work do is sort of sits at the Nexus of pushing the boundaries on a lot of these things. And so a lot of it is even, nobody knows the answer and everybody's trying to derive what the answer is to. Some of these questions
might be 0 and totally especially when it comes to as you said the film formation elements, a lot of softball Diamond to stay. But yeah, I 100% mm man. I sucked it in the early
days
and I do want to start then we can start line top down and
Move more and more granular, but what we learned top down and discuss the landscape. Stay kind of the crypto Venture landscape, really? No. Say three to four key, big funds, and driessen Paradigm. Now, let's Erick and then a bunch of the smaller 20, 30 40, 50 million dollar funds. So Landscapes bifurcating. Do you agree with this summary in terms of that current state of play? And is there anything that you would add or
change? I think that's generally true. I mean, I think General Venture, if there's sort of this bar, bellowing effect, and there are people that have
All teams and you're sort of constrained, in the amount of capital, you can deploy and kind of what your model is and how you work with Founders. And then there are these platforms that emerge that can take in a lot of scaled capital. And from the lp side, those relationships. And then the ability to deploy scale capital is really valuable. And from the founder side, being able to have all these services that the firm's can offer differentiated services, are extremely value-add and that lends itself to scale. So I think a similar thing is happening in crypto Andreessen and Paradigm and electric and I think Katie's pawns Newfound is going to be sort of in this bill and O+ kind of tear. So but the number of people in that tier
Anything is relatively small and I think you'll continue to see that. Now, what's nice though is the Dynamics, in terms of how we cooperate in this industry, a little bit different, you know, people always say it but it is actually legitimately true that I think because the crypto side of things is growing so quickly and as an offshoot, I think of the fact that these are distributed systems at their core, when you're investing in a crypto Network, the Dynamics around construction into being very, very different where you actually, you can't have too much ownership. And so, actually, we end up collaborating with with the big funds, a lot more than traditional
VC. Well, towards me about that, actually, because I'm going off schedule completely.
But like, you know, vanishes last collaborative than ever. I think now actually. So why and what is it about crypto? That allows it to be much more collaborative from that ownership standpoint. I don't get it.
Sorry. Yeah, so if you look at what is crypto and what scripture investing often, what you're doing is You're Building crypto networks that are talking powered and token incentivized and they're effectively markets that are trying to replace corporations, right? He's trying to take the corporation and replace it with some sort of marketplace in that sort of a distributed system. You can't have concentration of ownership. So like in a traditional business, you want to buy at least
Percent of it, maybe 20% and double down over subsequent rounds. And by the time, the thing IPOs, hopefully you own 20 or 25 or more of it. Right? And the traditional VC is a really productive is in a distributed system in a distributed network. If you own 20% of the network, you're a liability to the resilience of the network, the entire value proposition is that distributed ownership makes the network resilient. And so if you actually like in our case we try to not own more than 5% and often we're talking about likes low single digit percentages of ownership in these networks because that's actually the right way to have a resiliency in these systems and to incentivize the community.
Come in and actually adopt them. And so if you have too much of EC ownership, the community will just reject you, right? It's sort of like organ rejection or it's an immune response. And so what that means is the project might need to sell 10 or 15% of their project, but you really don't want any individual investor to own more than three, four, five percent. And so then as an Investor's MK, if I can buy three or five percent of this network, who also, I want at the table, like what is the other 15% going to go towards and who do I want to table and given the option between people who are just sort of dead weight on the token cap table versus people were really experts at this stuff. Like would I rather have Chris and all
Ian, Katie and Nomads, right? Absolutely. Right. Like, I much rather have those people at the table than others, and so the crisis or a collaborative Dynamic where everybody wants to own a couple of percent of the things that really broke out. I got
you. But that my question is, how do you deliver a venture sized outcomes? With much more constrained percentages on ownership?
Yeah. So there's a couple things are. So one today, at least the size of opportunities in the growth rate in these things is so phenomenal. That the multiples that you're talking about over compressed period of time are still excellent. If you just think about token networks, for example, the infrastructure
That you need to participate in anything. Let's say Beyond Bitcoin, every theorem which you could buy on coinbase. How do you do diligence on that thing? How do you actually go and buy it if it's not on a u.s. Exchange, how do you custody that asset? If it's not supported the custodians? How do you take that asset and generate yield on it? If you wanna be able to do that. So like the infrastructure required to do these things basically means that the landscape of people who can participate either from the institutional LP side or the sort of VC side is very very limited which actually means that given the growth rates are talking about the return profiles or very very dramatic in a way that I think Venture used to be 20.
Years ago, when you talk about the birth of the internet, the multiples, and those early funds through the 90s were just so phenomenal. And I think that's kind of where we are right now. And so you have the ability to generate returns. That I think we're the Venture returns of 25 30 years ago, just because the industry itself is so nice. And I were at the bottom of that S curve and we're just starting to go up the S curve and we're not even close to being the top. Yet.
You mentioned that the structures that prohibit, maybe in traditional Venture funds. What is it about traditional structures? That prohibit, the token buying and the token omits to be a large part of the portfolio
construction. Oh, they're couple things. So I think there are some regulatory.
Constraints. So, for example, in a traditional VC fund, at least in the United States, most of these funds are, you can't go above a certain percentage of liquid assets. You have a venture exemption at the SEC that allows you to sort of deploy Capital without having to register as an investment adviser. We're an riaa with the SEC as our major crypto funds and so that really constrains how much Capital you can deploy into the sector. Secondarily. It's less about the structure and it's more about the organization. So if you look at a traditional VC firm, the way that the firm is setup is really optimized for certain kind of workflow. Are you deploying Equity Investments? You have a
Is a you do partner meeting on Mondays, you go to happy hour to go Source deal through your Associates. Like there was a pattern that right of how the organization works. Now, what's happening with crypto? Is that a hundred thousand foot view its software, eating money, right to borrow an interesting phrase because it's software is eating everything in crypto software, eating money. And if you believe that crypto is software eating money than crypto is also going to eat Capital markets, right? Which is the deployment of money in the deployment of capital, and of crypto is going to eat Capital markets. It's going to eat Venture Capital Venture is just one form of capital deployment, right? And every time software
An industry. You notice that like the corollary. My opinion to software is eating the world. Is that software Engineers will run the world, because every business when it becomes a software business, your critical lever is, can you build good software? That's actually, what allows you to have a scalable and defensible business. And so the way we operate is we hire a software engineer, so half the team software engineer. So other 20 people we have about 10 Engineers. We have two designers. Everybody on the investment team has an undergraduate and graduate degree in computer science and engineering, the sort of DNA. The firm is very different in the operations. Like I showed you or chart, Engineers designers and 1bd.
One answer is, I want to finance person and I said, look, what is this organization? You wouldn't say VC firm. You probably say, oh, that looks like a fin tech company, or that looks like a Marketplace or SAS business, and it's very much my design. So, therefore, we end up doing things very, very differently. Our processes are different, right? Everything from diligence to will, how do you find the thing and what's not happening at the ferry building? It's happening in Discord. So, what you really want to hire or six Engineers that are sitting in Discord all day. We don't have Associates in principles. We hire engineers and we count them as investment professionals. We don't count them as like back office. And then when you do Indulgence, how do you do that? Like, you got to get the code and compile it and run the node, you know, actually
Thinking about what you might have to go into a decks and you might have to write little bit of code to like a crew. The thing it will now you have potentially tens of millions of dollars or something. How do you actually custody that if the custodians don't support, you might actually have to write some code and do that. If you have those assets whole point is, these are distributed system. So you have to use them productively on chain because that's the whole value. There's no board where you have to do governance. You have to generate blocks and blockchain, you might have to put your money into an automated Market maker to help loosen up the liquidity. And so you need infrastructure to do that. Like you can do that with your own money and met a mask. But doing that with a billion dollars of other people's money requires software and
the structure and most of that does not exist from third parties. Once you do that, how do you pay your taxes? Like in your accounting? Team actually track where your money is at the end of the year. Can you do an audit? Can you show to your Auditors where the assets are sitting? And if you're investing through kinds of assets or certain kinds of protocols were expressly is designed to be more private. How do you do that? So, literally, through the entire life cycle software is baked into doing a good job. So you have to build your firm differently. And so, for the traditional bcz, there is a structural challenge of like, how do you run your processes and get to register with the SEC derail, peace, sign up for being a part of this thing, but there's just
Like day-to-day, like literally what you do to run your business? Effectively is different and I liken it to the difference between Amazon and Walmart. Like Walmart still has a great business Amazon had to build its business fundamentally differently from the start. And I think that's kind of what's happening with crypto VC versus traditional PC is like, I think the group table uses are just building their businesses differently from the
start. So what I think about when I hate discuss, this is I bunny. It is so paradoxically different. Instructional Venture structures. I speak to many G pieces and like, Harry. Help me find a crypto partner. Crypto par. Everyone wants a fucking
Encrypt or a web three partner. My question to you is I don't see that working. I don't see this crypto partner being able to bring all that you do into an existing structure. There's not outdated. It's just very different but into a very different structure and be able to provide the same. And so for me, I'm like, actually the firms trying to integrate and mesh into existing ones, won't work. And it has to be a defined isolated structure in its own, right. Do you think that's fair and
right. Yeah. I think you're absolutely right. And I think there will be
Set of opportunities. I think when you try to do as a part of a generalized Venture firm, you can certainly do. I think equity-based opportunities in like series B&B on door. There's a real business and there's cash flow. You can evaluate as a business and you can create a lot of value for those things. But in my opinion, most of the really interesting stuff is not that. So I think if you're going to make that transition, I think Sequoia, now has a separate Standalone fund injuries, and obviously Chris K. And Mark, sort of pioneered this by breaking off. I think, is exactly the right way to do it because I think you have to build your organization differently. I think you have to incentivize people differently. They all peas that are opting.
Into this have to sort of approach it differently. That is really the only way to do it and I think it's a very hard thing to do. Right? It's actually the other sort of challenge here to think about is like, I think that's the right organizational structure. But then, how do you think about this over the next five to ten years as these web three Primitives, get baked into everything as tokens. Get baked into marketplaces as nft has become a part of the creative economy as distributed systems become a part of developer tools. Like it's sort of like backs into what most PCS consider their core business. So it's sort of classic, innovators dilemma in my opinion, which is like there's this small and nascent thing that's
Really quickly, which is actually requires a very different skill, set, an organization to your core business and how do you sort of disrupt yourself? And how do you change your organization and historically speaking? It's been extremely challenging and a relatively small number of organizations are able to do that from the incumbent side. Now, some absolutely can and I think some will like, I think injuries in and Sequoia will likely make that transition. But it's going to be extremely
challenging. Come on. Let's so much. I want to unpack. You very kindly said about my preparation pre-show please in fucking need to do it, because I'm his mate, but my questions you ask, you said for coming casually that software,
Seating, Capital markets. I mean that's a big statement just so we don't like gloss over it. Can you unpack that for me? How you see that playing out and just expand a little bit on your
thinking that? Yeah, it's really. So here's our reason through it. If you sort of believe this this premise for a second that ones and zeros are now, some sort of value capture value exchange rate. You look at something Bitcoins, a potential store value and I think it's a store value today, but it is potentially has all the characteristics of a fantastic store value. You sort of are faced with a really interesting set of questions that you can ask yourself. So the first is well, this is a supposedly money that I owe.
Like, how do I open it? What does that actually mean? How do I own ones and zeros? I wasn't the whole premise of the internet that I can copy paste, ones and zeros and send them to somebody else. And the way you own them, is through this private key and through his wallet and there's a sort of API. And this protocol that says only, you know, if you sign the transaction, you've officially moved the money move, the ones and zeros, and now somebody else has that money on this chain. And so there's actually a social consensus layer that needs to emerge there, which I think 100 million people who bought into Bitcoin and crypto is a social breakthrough, as much as it is a technical set of Breakers. Then you say, okay. What does it mean? Only ones and zeros?
Okay, I have this private key. What is that? Well, that's itself set of ones and zeros. And so he said, okay. Well, we're that set of ones and zeros come from, that allows me to own the other ones and zeros, but I came from some piece of code. And then you say okay. Well, what if the code didn't give me the one that zeros, what if it didn't spit it out to the screen and say this is your wallet address and this is your private key. What if it just wrote it out to disk and encrypted it and it knew the password and I didn't, what does that mean? Well, that means is you could send money to this more contract. You can spend money to that wallet and you don't own the money anymore. Now, piece of code owns the money and that I think is a very
Appreciate it breakthrough because that piece of code is an entirely new entity. Right? It's not a person. It's not a Delaware c-corporation. It does not exist inside of jurisdiction to not in Delaware. It's not in India. It's not in China. It's not in Europe and the EU. It just lives in the cloud. So now you have a nonhuman non business entity. That doesn't have a Social Security number, or itin it like doesn't exist. As far as the government is concerned, and it doesn't live in a jurisdiction and it can custody billions of dollars and you'll get that in. Like, wow, that's kind of crazy. What are the implications of that? And I think the implications of that are, what can you do now that you have code that
Owens money, will you can program it right? You can write code around. That thing. The ability to write code is really powerful because you can control access to a thing. You can control what happens to that money over some period of time and some predetermine ways. And you look at the entire world, you look at all of the capital markets in the world and fundamentally. What are they? Here's the problem money. Here's a bunch of rules around who has access to that money. Here is what I need you to do with that money, over the next 10, 20, 30 years. It's like Wills trusts, escrow reads mortgages. He locks derivatives credit markets security. Is this like a hundred trillion if you count the notion of a leader?
It's like a quadrillion dollars of stuff and instead of it being 1970s infrastructure and PDFs and Excel and email that is sort of moving all the stuff around. Because I mean you've done Venture for a long time. Like how does Ventures happen? It's like it's email when it's Excel sheets. There's a cap table coming through and you sign some PDF, it gets, put up on time. Like, I can't believe you're doing this. It should all just be code. And I think about the amount of money that's been wasted doing nda's and like, every Law, Firm recreating, the NDA. And then like people marking it up, right? Millions and millions of dollars, wasted really should just be sitting in GitHub and you can Fork it. And everybody understands her is essentially like taking
inversions of an NDA that we all agree to and this is what software. So powerful, right? This is composability of it. This is what made the internet work. And so I think all of that is going to happen here to crypto and all of the capital markets in terms of just like moving money around. All of a sudden you have the perfect infrastructure and I think we saw this in 2017, right? The Ico. Boom, people looked at as a speculative thing, which is near there's a lot of speculation there. But to me the magical thing was we created a 24/7 Global Capital Market that anybody in the world can participate in and that's why I think things like dowser really interesting and I think that's why all is on chain activity. I think ultimately
Is going to be extremely disruptive to venture and to our business. And so I don't think it's so crazy that 10 or 15 years from now, a lot of electrics activity, actually, just happens on chain. Like, do I really want to have a bank account? And I have to, like, deal with the overhead of like not being able to send money on a weekend. Like we probably do about a fourth of our investments in USD, see cuz it's just faster. I can just send it on a weekend and it shows up. And so like I think at every part of our business, I think it's going to sort of disrupt us and I think it's just going to disrupt the entire way Venture of works. I mean, I used look at things like a theory. I'm look at where the valley capture has been in FTS. Look at
The value capture. That's happened in Bitcoin. It wasn't the VCS that captured the value, right? It was actually globally. People could participate in a way that just hasn't been possible before. So to me, it's one of the most sort of amazing but also sitting in plain sight kinds of things at this stuff is just totally going to disrupt all the capital markets of the world over the next 20 years. I think one of
the reasons the show has been successful is because I'm not afraid to ask the dumb questions when I don't know the answers. Which mean that I'm going to be out of a job in 10 years like for me as a traditional Venture manager, what does this mean for me? Great
question. I
Figure out of a job. I think it's equivalent to Microsoft still had a fantastic business, despite Google breaking through and Google still has a fantastic business, despite Facebook breaking through. So I think we just invented a new thing. And I think a lot of these traditional businesses that coexist alongside and then they slowly Decay and some of them can evolve and the depends a lot on, which part of the markets you're talking about. I think in Venture, there are real, human Network effects. I think there are at the top people who create real differentiated value and those people not be replaced. So I think you'll be okay. Sequoia. We'll be okay and reasonably. Okay, the people I think should be
Worried are if you're like VC firm 15 through, 1,000, right? Like I think you get disrupted because capitalize it becomes a commodity. If your Venture firm 25 and you're like not breaking the top decile in terms of returns and I'm in all p and there's somebody who's on chain and is generating better returns than you. I think the capital like markets tend to be pretty rational about this. The money will find its way to those people. And so your competition said, just went through the roof, right? It's I think it's the equivalent of what's happening in a lot of markets, which is there used to be essentially local and Regional monopolies like newspapers. You
Like this way Venture used to work this way, like people had to come to Silicon Valley, to get the money and all of a sudden it's going global and it's going global in a way where they don't have to come to you. You're now competing against every other human on earth, that as actually pretty reasonable Venture investor. And there are guaranteed people sitting in India and China and Nigeria and Italy and Greece and Brazil and turkey that are better Venture investors than like the 50th best Venture firm, but not only, you have to worry, but I think like you venture firms, like 25 and Beyond should be really worried. Really? What a relief.
You fuck. I need help
Mom, and these things, I mean, I fully appreciate to that the sounds kind of crazy. But I think it would have sounded crazy to say that about the media industry, 1995, or I think that sounded crazy to say this about all the information, businesses are e-commerce or whatever, right? But like I think that's the power of software like destroys these, local and Regional monopolies and turns them into Global markets. And once you're competing at a global scale tends to have this sort of concentration effect, it creates a power law and it creates concentration in the head and it unlocks all really long tail in the middle kind of disappears. That's why we were talking about this on the ventral side, right? I think you get this natural.
Billing and is long tail effect that happens. And I think a similar thing probably happens to venture.
So then she think the three, four dominant players, that could be your paradigms and Reese's your electrics Casey, with her new fund. Do you think they consolidate power concentration happens? And it's that barbell, is that how you see it
happening? I suspect. So if the internet is any guide in terms of information businesses, I suspect you will get some interesting scale effects and network effects here, especially thank for the businesses that don't think of themselves necessarily A scaling, through humans, but think of themselves is where
I can solve for give you leverage and are able to do that. I think you're going to be able to apply leverage to the Venture business in a way that you haven't been able to historically. And every time you do that through software, you tend to get this sort of like power law Dynamic, that
happens to Krypton networks in crypto opportunities. Do they need the services layer that Venture provides for you. Die. Do you think about building a massive Services arm over time and the crypto networks? Really need that all because of the decentralization. Do they not need that? It's a fundamentally different Services model
required. Not a dumb question. All that's an excellent question. So I think crypto.
Two calls and businesses need an entirely different kind of services layer. And so you don't need a board member that helps you figure out how to interview a VP of sales. You need people sitting in your Discord, helping you do distributed governance. You don't need somebody doing intros to other companies in their portfolio to set up Partnerships. You need somebody to go run a validator in some data center to help decentralizing that work and produce blocks, or you need somebody to bring liquidity into your Marketplace and help bootstrap be the first couple million dollars of aetherium or so on or whatever into your Marketplace. So I think
there is absolutely a place for people who are value-add and I think that's always the case. Like if you create real value for people, you will be able to accrue value back to yourself in some way. But I think the forms of value that are necessary are very, very different. And so the way that you end up then building your firm. It is very different. And to your question around kind of like, what does that mean in terms of an army of people least the way we think about it is twofold one that army of people is unlikely to be accountants and finance people and recruiters because much of this stuff just gets standardized and operates in a very transparent way on chain and at scale more likely the
Need for example, Engineers to build software that allows them to interface with these systems at scale. And so is it possible that we end up with 30 40 50 100 engineers in time? I don't think that's crazy. But also what it means is that these systems operate in a much more open and transparent way. And so, what we're constantly thinking about is where is it that we need to build out a team internally and where is it that we plug into the ecosystem and the market to solve these problems for us? So, you know the observation here is always dowels that are on chain are starting to deploy capital and I think the best
Venture firms are likely going to build communities around them. So like all the communities are becoming investors and all the investors are trying to build communities. And so maybe what you actually do have is an army of people but they're not your employees, right? They're not people that work in your firm full-time there. This sort of community people around you, that really trust your judgment and themselves can somehow make money because these markets are transparent and open. And so the ability to participate, the markets and transparent open way means there's a very collaborative sort of market-based way to have 1000 people engaging around your community to create value for all the things that you invest in, but that doesn't look like thousand employees sitting
in an office.
You mentioned that kind of feasibly seeing maybe 30, 40 50 Engineers from a financing perspective. On the team side of the structure is the same as van tran times. The business model. Is it the two-and-twenty by? Is it the mock-up periods? How does that look? Given a specialist in the liquidity that you have
available? Yeah. Also an excellent question. Yeah, we actually look pretty vanilla on that stuff. And the reason is, I think, from a product perspective. It's much easier to tap into institutional Capital at scale, if you're not trying to invent something new there, and actually, I think
Pick the lock up periods tenure lockups. Despite the liquidity, I think is actually better for LPS because it is a venture asset class. The returns are extremely asymmetric and you can generate many multiples on your phone. And if you're patient, the liquidity is a double-edged sword, right? In a couple of few different ways. So one a lot of it is actually not real liquidity. Like, can you actually get hundreds of millions of dollars out of some these protocols unclear? You might shoot yourself in the foot on the way out. So it's a little bit of a misnomer to. I think the ability to sell early is as much a curse as it is a gift, right? Because
Too often. I think the mistake that people make is they sell too early rather than too late. This is why Sequoia is doing this new fund structure is actually if you just hold on to these things, you would have got another five to ten X and it's because there's a fundamental human cognitive bias, which is we don't really understand large numbers. We don't really understand exponential growth because we're just primates, primates can understand, five primates cannot understand a Jar full of jelly beans. Like, we don't know if that's 200 or 5,000. Great is just like our brains aren't wired to do that. When we don't understand exponential growth because as we weren't in the jungle and all of a sudden, just trees,
Shrug up next to you overnight. Like at microbiological scale. You don't have an intuition for exponential growth. And these businesses are billions of users with exponential growth baked in. And so, our intuitions about the suffer really wrong. So, I think the real risk with liquidity is useful to quickly. And so, actually, I think it's advantageous to sort of force people to not be able to sell for a long time, because I think that's actually how you're going to generate the best
returns. Is it tough for you either? I have a company. That's fucking ripping. Amazing. I can't talk to you any way. I mean, yeah, secondary market and we both know that's different. Yeah. Is it tough early investor psychology perspective?
Actively. Absolutely. Yeah, how do
you do it really hard? It's hard. It's just a muscle. You have to build in the same way that you have to get comfortable. With 80% drawdowns, your portfolio literally might be worth 80 percent less one day and that's okay. Thank you. Just have to get used to it. And so, you just get emotionally and psychologically, sort of, sort of dealt to
it. You mentioned tokens, are there. I really need your help on this one. Sure. I am an amazing company. I'm at the other day and they were like, you have to do 141 Equity to tokens and I was like, okay, what does that mean? And like
Should I be more excited about one than the other? How would you actually advise me on this? And how do you think through
that? Yeah. It depends a lot on the company. We see a lot of companies where there shouldn't be a token. Actually just doesn't make sense for there to be a token. We see some really interesting opportunities where you could potentially have a token. And so, as an investor you sort of have to structure the investment such that you might be able to participate in a token network. If one emerges and make sense and we see cases were actually yes. Today there's a company but the real value clearly will be in the token and actually want the company to dissolve and not exist. So effectively you're going to
In some Equity over time, you'll get some tokens. We spend, you'll have to sort of you mark on your books. And then you sort of look right off the equity, the equity investment, essentially, the company shuts down. And so it depends a lot on what the protocol is and what you're trying to build. And what the needs are of that particular user set. One of the reasons that investing in space is challenging. It's part of the reason we have a business is there's a lot of tribal knowledge here around. What is the instrument the investigate and where will the valley capture be? And what are your intuitions? Remember that will be and how do you structure that in the right way to do the right thing for the company and do the right thing for the users? Ultimately,
as I said, I was like, okay.
Well,
you're not gonna go wrong with the option value of like, well, I get to invest in both equity and tokens. That's
great. Yeah, this is totally true. I do want to ask because when we chatted for on the token side, you said in terms of scale of cash investing in tokens at the institutional scale, especially say that you have is hard. Why is it how she hard doing that token? Buying at scale? And what makes it so hard?
Yeah, absolutely. The entire lifecycle of from identifying an opportunity to doing the diligence to accruing into the asset to holding the asset to generating yield on it.
Paying your taxes on it and working your books to doing your audit to divesting. There is not a lot of third-party infrastructure for that. You actually have to be able to figure out how to actually build some of that infrastructure. So that involves potentially writing code, that potentially involves. Let's say if you're going to acquire it and maybe it's only available overseas. So then you have to have processes to get kyc it on. A bunch of overseas OTC desks. You might need to have some like legal infrastructure. You might need to have some subsidiaries overseas that you create to wield execute on these things, or maybe it's only on a decentralized exchange. So then you have to like run your own custody. You might have to write your own software to view tab.
Taxes, like every step of what is traditionally, a venture process and end. You have to do something slightly different. And so the infrastructure that you need both legally and operationally and organizationally. And from a software perspective. There aren't third-party tools that you can just turn to. And often you're sort of having to build these things and figure them out from first principles and even something, as simple as like your audit, at the end of the year. As a VC. We spent a lot of time with our Auditors and they spent a lot of time with us and other firms figuring out. How do we apply tax law? Like, what is the tax code say about something that just got invented this year, right? How do you think that's taking where the
And how we recognize that income. You know, how do we pass that through on the K ones? Like actually just none of this stuff and that the infrastructure doesn't existence. You have to create the infrastructure as you go. But I
listened to this is this not an invaluable asset class in itself may be for me and in traditional science based model just like the infrastructure to powers and that Shadows that prepare deployment. I as yeah, absolutely acts to reconciliations
everything. Yeah. Absolutely. Yeah, they're fantastic businesses here, be built, and we invest in some of those as
well. I think crypto businesses. Are they more traditional SAS businesses? Their traditional size
businesses from a business perspective, but you look at a business like, and
Courage or we look at a business like bitwise or you look at a business like Kraken or coinbase, they are traditional businesses, but understanding the product strategy or understanding what you need to build and how you need to build it. As I cooked investor were very close to it because we have had to solve these problems ourselves. And so our ability to sort of understand what the business needs. Is there. Sort of one foot in both worlds. And so you still have to be relatively deep, on the crypto stuff at least in the early stages. I think of this, by the time you're in a series, see your series D. They look like a, you can evaluate them as traditional businesses, but in the early days, like getting your products or as you write your go-to-market, right, so
Or is it some pretty significant understanding what's happening in the crypto
markets? So I just want to make sure that I've actually got this on the token versus the equity. When does it make sense to have a token versus not have one? You said a lot of the time. It doesn't actually make sense. When does it make sense? When does it not make sense?
Yeah, generally speaking. If you think that the company could go away and just shut down, every will use and the value creation to the end-users will persist. There might be some opportunity for tokens. If you think the company is going to be around and needs to be around in.
Her for the thing to work. I get a little bit more skeptical. That's not to say you can't exist. But I get a little bit more skeptical. And in those cases often, the fundamental question, you're really asking is are the tokens in pursuit of supporting the equity and the cash flow that gets captured by the company, or is the company exists in pursuit of making the token Network valuable. And if you sort of like an answer that question, then, you can figure out where the valley capture will be and why. And a lot of the times we you see especially in this part of the market cycle, you see, companies that are either cake and have it too. They have a core business and they think that by adding a token Network.
Old basically get non-dilutive financing or they'll get a new business line that will be added to the core business. But a lot of times what you're really doing is not building a sustainable token Network. It's often going to be the case that it's sort of a customer acquisition Channel and it behaves a little more like loyalty points than it. Does at your distributed system where like the value capture in the tokens is larger than the company generally limits were using is like, does the company just go away and if you shut down the company, would you still have a significant value capture and creation that happens on the token side? And if the answer to that is, yes, then really the companies in pursuit of making a token Networks.
Accessible rather than vice versa
is the most obvious opportunity. Not a y, combinator token.
Well, there is orange doubt. I think something like that. Will just, I mean, actually, if you look at even what's happening, there are businesses on or they're sort of these dowels on chain, you'll get things like seed club, or Flamingo data or E girl, Capital, like people are really playing with this idea of, what does it mean to have a token Network? And when you as a Founder receive investment, you receive tokens in this new community and everybody's incentives are aligned, like people talk about this for years, right? Why can you not do Equity swaps, as, and
Each router, like dearest your business a little bit. Or like, if I really create value inside a community, really, I've created a ton of value for not me personally, but somebody's create a lot of value for the Y combinator Community. Like how do they get compensated for that revive? A receive reward for that Beyond sort of the social capital and I think some of these talking networks are still playing with that idea of are there are actually ways to align Social Capital with like Financial Capital.
You mentioned Downs that I was actually just on
holiday with my girlfriend in Italy. If he's
into lab three. Wonderful, it's where I kind of drift off, but I said to her late Dows, this idea that you have this.
It's restricted group of people that have governance for a certain limited number of time and everyone gets incredibly excited about this revolutionary. New leadership structure. The school government's? We've had it for many. It's nothing Innovative here at all. Am I wrong she
right? Yes. Or no. I think what to me is interesting about a lot of these things is I absolutely think we will recreate a lot of the known governance structures in society. We will recreate representative government. For example, where there are experts in you sort of delegate your votes to them and then they go off and make decisions that need to be made.
To me, what's really interesting about really a lot of these L ones are these doubts do these blockchains is that you can now run economic and governance experiments in parallel at a scale that was not previously possible because there's real money involved, right? So rather than some Economist and writing a paper, or some political scientist writing a paper about theoretically, how much some form of governance in some country or something economy work. Or if you pull the lever in this way and Central Bank, here's what would happen or you change the economy in this way, wouldn't it be great if we can actually empirically run these studies now, right? So to me, the interesting thing here is at the market level, all of these jobs will be created, will have
Millions and millions of dollars created, many of them will fail. Many of them will look very similar to what we would expect. Just reasoning through it and some small percent ten percent of them will wildly break our expectations about what's possible and that to me is a really interesting set of stuff because there's a lot of learning in there, right there is of these sort of new metastable states of what kind of governance is possible or what kind of economic models are possible. And now we can just run these millions of experiments and see what emerges. And to me, that is like the fascinating thing at the market level.
This is a great idea. Letting someone go through the trouble of some questions.
Just some dowels fail and some succeed. I don't understand.
That's a great question. I don't think anybody really knows the answers to that. I think will only be able to know that in retrospect. I think it's still so early that we don't even know what the successful dowels are. Exactly. I mean, we have some inkling that some of these defy dowels, for example, are trending towards more success in our healthier than others, but we're only like two years into this. And I think for us to really know which of these experiments from governance or economic Game, Theory perspective or durable. I think it's going to take seven to 10 years. So, we're in
a very early Innings of even figuring out, which of these things are
successful. What does this successful dou look like like impact? But like in what
way? Yeah. It depends on the use case. If you're talking about an investment doubt might be something that has broad Global participation and is actually in covering new Founders in new markets that are creating very disruptive Technologies or new forms of innovation that otherwise would not have been funded by VCS or actually able to compete with the VCS to earn a space on the cap table, in the case of N ftes and artist Dows. It might be that you can actually, you know, have effectively new
The ends like you have a new form of public good, where a bunch of people can buy this art and put it up on display and it doesn't need to sit inside a museum in London or New York. And so only the people who live in those cities can go to them. You can have Global digital museums of the world's best art and music and writing, and so on. And there publicly available, on chain case of their service dowels, which I think are really interesting. So, people are saying, you know what, let's get all of the designers then understand crypto and to one place and we'll share best practices and learn from each other and that becomes sort of a hiring Marketplace and the success of that Dow is, can you find all of the world's best designers?
Owners and bring them into one place and identify this talent and open up economic opportunities to them. Like the internet was here back to the 90s. One of the things people always talked about, was the amazing thing with the Internet is we're going to find all these brilliant people all over the world. We're going to find the designers and the engineers and the writers and mathematicians. And then we'll let them sort of bubble to the top globally and give them opportunities that they wouldn't have otherwise had access to and the critical thing that was really missing. There was like the money couldn't flow very easily. And now what we actually have is the power of the internet to identify these people, but the ability to actually have the money flow to them. So, you know, in the servicenow case, like there's a ramanujan
Sitting out there is run the numbers, right? Just look at, like, IQ is not perfect by any means, but you run the numbers. And I'm like, okay, roughly speaking about 2% of the world is considered highly gifted, right? You're like 2 plus standard deviations out on the intelligence curve. That's like 160 million people globally. Speaking. I suspect we've tapped no more than 10% of those people and 90% of the highly gifted people in the world. We have just not been able to find yet. And so from like a service dial perspective is like, can we find the other 90%? So I think it depends on like the use case of the doubt, but I think, now we can run all these experiments in parallel. I think you just gonna get this explosion of people.
Doing these
Explorations. So I love talking to you because it's like, it's part of you. It's authentic. You spoke clearly your passion. I tweeted, Sometimes some less positive things on web through in crypto, because I get so fucked off. Sorry. I'm very honest.
My interviews change
a picture of like a dinner table and they do, hey, we're doing a web three crypto dinner, who does like a direct consumer dinner. Is this awful? The
That people are latching onto this. Yeah, what would you like to change? If mine is like the attachment to it is some sexy accessory for people. What would you
like to change? It's a good question. I don't love that stuff either. There's a lot of sort of tourists. There's a like, a lot of conferences that happen in the market, goes up in a bunch of people start coming out of the woodwork that are not long-term minded. They're not Builder oriented. They're not fundamental value creators, they're sort of extractors. And I personally, I recall a little bit, I sort of cringe a little bit. A lot of those things too, but the reality is,
I think it's just a natural property of markets and Innovation. You can't have exponential growth and experimentation and exploration without a bunch of this sort of speculative cringey kind of activity. And so I think you just sort of have to swallow it as part of the process of figuring out what's really valuable. And so you kind of have to take the good with the bad. It's kind of like in order for us to find that 10% of stuff. That's truly revolutionary breakthrough. We kind of have to deal with a bunch of stuff that's just kind of cringy and like short-term and speculative and all that stuff. And so I don't know. I don't love it either.
But I think you kind of have to accept that sort of a natural property of high growth
markets. Does it make your job harder, like, terrorists invention? Make my job harder paying stupid prices. That shouldn't be the way. Does it make your job harder having to
Earth? Yeah. Absolutely. It does because you have a bunch of people that are in some sense a rational actors, like if a VC firm, that feels like they missed out on the last wave of crypto. For the last four years comes in and is starting to buy logos, then they're going to overpay because their motivations are not just that they want to do the investment at a fair price and make a good return, but the
Ation, maybe we need to make sure we have the right logos. So that the next to the deal flow that comes in comes to us. We're not left out of this. We're not boxed out of this new and growing market. So yeah, I think it does create some kind of market distortions and then you sort of have to just be patient right as an investor. I think you have to be willing to say, you have to be disciplined. You have to be patient. And you have to sort of bet that the market is getting grow in such a way that there will be an abundance of opportunities. And the people who are really long-term minded, the founders were really long-term minded and the projects that are really want reminded will want to take capital from the people who are actually creating a lot of value. And
In the most value. I not just going to the highest bidder and Ceaser have to bank on that a little
bit. What are the pricing dynamics that like on crypto assets? Like for us there's like benchmarks. And then as outcome scenario planning, you know, traditional Venture. How do you price actually encrypt our assets and tokens even more? So like what's fair and
right. Yeah. It's actually very similar to traditional Venture. You're not trying to do some sort of like discounted cash flow in PVE. Like what is the thing worth today? Right? So take something like strike if stripe comes to at the series a and has some Revenue curve and some customer Kurt. You're not looking at it saying,
Hey, this thing is only worth 25 million on paper or 35 million 40 million. The way it really works in practice. As you know, is the founder says, I want to raise ten million. I want to take this percentage dilution. Therefore my company is worth X and the math that you're doing as a VC is okay. Well if I owned this percentage of this company, is there a path route to have a multiple such that at the end of the day it's worth five billion or 10 billion or 20 billion or whatever returning to underwrite and it's actually it's nice because then you don't have to figure out the company's worth and some sense. You have to figure out what the company could be worth. And what do you believe such that? If those things were to be true, then the company could be
With that amount of money or that protocol, could be worth that much money. So the process is actually very similar for us. Right? We're trying to underwrite is, what is our belief? Like what do we have to believe needs to be true? Such that this thing could have the multiples in order to be end up being worth whatever it's worth and the shape of the path along the way, the shape of the value might be up and down along the way as long as it's sort of like ends up roughly where you need it to be, to generate the returns that you need Venture is not about what is the thing worth today? Right? It's really about what could it be worth? And what do I have to believe her to be worth that? And can I underwrite that there? Any
investing less is you have
From your traditional Angel Investments that you've applied with you to crypto and Lasting stay with
electric. Yeah, probably, the biggest one is that I think our intuitions about how big markets will be is wrong. I think it's probably my number one lesson from the last 10 years is I worked at Google and Facebook and just to me the fact that Google is a two trillion dollar company. It's unbelievable. Right? And I think our intuitions when we start getting into that many zeros or just wrong. And so, when somebody says something, like, Bitcoin could be worth a million dollars. Obviously not investment. Advice go do your own research, but you look at that, and it sounds like
Silly statement. But actually, if you said, similar things about Google or you said, similar things about the revenue, these companies, or how many Android phones are, would be or how Big Apple would be like these sounded like stupid statements, 10 or 20 years ago, but I think the lesson from the markets is that our intuitions about what happens when there are 3 billion people involved in 3 billion mobile devices involved and trillions of dollars involved, like our intuitions are actually quite wrong. And so one of the things we always think about is, how do we have reasonable estimates that we can justify and so we never oversell to the LPS or very sort of deliberate and being concerned.
Serve about what we think is possible but in the back of my head, I'm what I'm always thinking is like I'm I actually being too conservative. Right? If the number one lesson is that these markets are actually going to be 10 x bigger than anybody thought. And I think it's entirely possible. It's just, there's a great article, a couple months ago. I think from Packy McCormick, I think it was him. So I apologize if it wasn't whoever wrote it. But the Crux of the article was basically in technology and markets their exponential, and when you're sitting at a moment in time and you look behind you, it's very clear that it was exponential, right? PCS internet mobile cloud. Like it's just clearly
Technology has been exponential forever, right? For the last 100 years. At least, let's say, 200 years and Industrial Revolution. And Beyond when you look back is clearly obvious, that that was the case and when you look forward, if you extrapolate exponentially and you continue to extrapolate exponentially, you feel silly because you get to these sort of seemingly, ridiculous, conclusions, 5 10 20 years out and so our instinct is to extrapolate linearly rather than extrapolate exponentially because the conclusions that you reach to seem ludicrous in the moment, but it's turned out that every moment in time on that curve, whether you're in 1980 or
1985 or 1990, or 1995, or 2005, 2010 to 2013. The correct thing to have done at every moment in time was to extrapolate exponentially. And so, that's always in the back of my head. It's like, actually our instinct is to extrapolate linearly when really, we should be struggling
exponentially. I mean, my fucking stop. Now, on asking stupid questions. What does it mean to extrapolate exponentially? It really in reality.
I think what that means is like you can end up in really crazy places. So for example, could Bitcoin actually be a
A reserve currency That central banks are purchasing. That could be bigger than the Yuan or the euro in central bank's. I don't think that's crazy. Actually, you know, you look at the growth curve of these things. Is it possible that aetherium is not just some sort of commodity, like, silver. That's worth a trillion dollars one day. It's actually a third digital government. Right? Like you have the the u.s. Sphere of influence the supply chains, and the money system and the US dollar and all those things that will happen. And as we're seeing kind of with the Russia situation in Ukraine, right now, there's going to be a Chinese fear of influence, right? There's going to be a you on denominator.
System that will have Russia and China and some of those countries aligned and you say, okay. Well, what does that mean for a place, like Brazil or India or turkey? Right? They don't want to be allied with the Chinese system and be beholden to that. So they're more likely to be allied with the u.s. System, but they also don't want to be 100% beholden to that system which creates this opportunity for third system, right? And Incredibly neutral third system, which might be aetherium which effectively starts to behave like a digital economy and a digital settlement layer for all the transactions that need to exist in a third place. That is not the us and not the Chinese and through its credible neutrality. You start to look at as a digital country. That has a
A dollar GDP and is actually a credibly neutral, third place to settle all these transactions and you can get there very quickly if you extrapolate these things exponentially, but that sounds like a ludicrous statement to make that. There's going to be a thing that is on par with like the Chinese government or the US government that is a third thing that doesn't exist inside of either of those jurisdictions. Any of these things. I think you can very quickly extrapolate in such a way that you get to these kinds of conclusions. Despite how ludicrous they might seem in a
moment design. Don't just mean you invested everything. I could extrapolate out to be the nice Amazon. And do you remember where does the barriers or
Miss
inker. Well, it's a great question because actually the answer might be, yes, the lesson from the last 10 years of investing, you look at it. And you say, well who played that right? Who really got that, right? And maybe it was actually tiger and a driessen, right? And in the moment 10 years ago. It was like what is tiger doing? And it turns out they were totally right, right. And so, yeah, that might actually be the right conclusion, that really should be doing is putting money into everything credible, because our intuitions, about how big the things that are really going to work are off by an order.
Magnitude. I actually think that is probably one of the lessons from the last 15 years. 20 years of venture investing. Now, there's a whole backdrop there, we've existed in like a very unique bull market with specifics or monetary policies and we exist in this amazing window, post WWII, post-cold War, where you have certain properties. I don't think it's an unreasonable conclusion to say, actually like you should be investing a lot more money and you being a GP or an LP or an individual human. You should be investing a lot more in technology as a percentage of your total assets because your intuitions about how big these markets are going to be, you're totally
off. This is
What I tell all of my Alp he's
so ten years
before the Quake fiery managing our piece that I got a ton of our peace doing reference cools on new Krypton managers. Everyone wants to allocate to crypto today. A new crypto funds. What advice do you give traditional help? He's looking to allocate to new crypto
managers. Yeah, I think just getting up to speed and getting your head around it and actually understanding it before you start to deploy. There are a variety of strategies or variety of approaches. There's a lot of nuance here.
I think we're still very early. So I wouldn't follow in, I wouldn't worry about missing it. I would be very deliberate about sort of cost averaging in over a couple of Cycles. I don't think people need to freak out about it because we're just so much runway in this. And so I think the more important thing is actually to start getting deep on it, actually understanding it. And there's a lot of work there to actually get deep on an understanding. So, I think it's more about like, doing the work to understand what's happening more so than, like, rushing to deploy capital.
I totally got you and just to deploy to existing great Sox managers in the meantime, right over here. Better percent.
And I have to say, I love your brain. This is wonderful. So we're going to move into my favorite, which is a quick fire round. So I see a short statement. You give me your immediate thoughts. So let's start with a favorite book and
why I'll give you two. I'll give you a nice turn one in Western Line. I think it's the Bible and the Gita from the Eastern side, like technology, humans, people who do math and science and physics and people that invest capital. I think underweight the value of stories. And these are probably the two most important stories in like eastern and western
culture. I know how to tell a story, no idea what your token shit is, but I know honey.
It's a very powerful skill, right? It's if you understand, storytelling is a very powerful
skill is actually, it's also lost in such a world of proliferation of capital as so Superfluous that people don't need to tell stories because people will still give you
money, correct. And those are the two most important stories in human history, in my
opinion. So, let's love it. What are you recently? Changed your mind on
anything. I recently changed my mind on the uniqueness of the period of time that we lived in from roughly 1992 2020. Like I thought we were trending towards. That was basically the state of the world where we would have.
The sort of like globally, stable travel is open to everybody everywhere, like free market society. And I think I've come to the conclusion that that was actually probably a unique moment in time. And we're going to revert to the mean, at least for a little bit. And the next 20 to 30 years, look a lot more like the 50s to the
80s. So providing to the mean means, constricted travel, less Freedom, less movement,
correct less physical movement. Vulcanize Supply chains, like two spheres of influence that are competing against each other. You cannot mclee politically culturally less of a sort of broad open free market.
Global economy. I think that sort of moment in time is likely not going to be here for another 20 to 30 years until we sort of get a resolution to what happens with the Chinese economy. And so hard to get data about what's happening in China. Like, is it durable and sustainable in the growth, is going to be here for a long time or you to take more of a Peters, a hen, if you know, him, Geo political strategist. Approach of actually demographic bust coming from China and that is going to cause an economic cratering, but that will take 20 to 30 years to play
out. I think we have slightly different reading Styles. I'm more familiar smell anyway, as you know, we go way back. Tell me what is it?
My life balance mean to you. I heard that it was a weakness of
yours. Yeah. Well, I don't really have a look like balance and I don't really believe in it. In some sense. I just think I'm fortunate in that way. In that my day job is the thing that I just love to do and I'm obsessed with and so I just I turned my hobby into my day job and just get to do it.
24/7. What, you know, now that you wish you'd known when you started a
lateral. Yeah. It's what we talked about before, how much of it is really about the accounting in the finance and the tax and the legal and like all those other things that go into actually building a venture firm and I could to prepare myself a little bit better for those I think and so we've learned a lot of hard lessons along the way and I think
We're in a great spot now, but the first two years and getting your head around, that is, it was came out, the grow, pretty fast. Had
to who's your closest man, to on what you learn from them?
Oh, that's easy. One, Fortune. I have a lot of really good mentors, especially in this space, a lot of General Partners at a lot of big firms have helped us along the way folks like Chris Dixon, and Marc Andreessen and Josh Kushner and hey, mate over General Catalyst, Andrei. It caffeinated. The person I sort of give thanks to most a zealot Gil, we wouldn't exist. If it weren't for the odd and him helping us nearly as get off the ground and mine. Frankly. Just learning from him about how his brain.
Works, respectfully, that's a big statement. What did he
do? He was the Catalyst. He was the person who came to us and said, you guys are really good at this. And there's a real Market opportunity here for a thing. That's not a traditional VC firm, and it's not a hedge fund, that's built differently. And you guys have the right DNA for it, and I think you should go do this, and I'll give you the first million dollars to go do it. In fact, not only will I do that, but like I will make all the intros that you need in the early days to like get your first 10 million in the door and then he pounded the pavement for us and with us, like, literally it like came to our first probably five.
Churches in like sat in the room and took notes and help this close those LPS and then gave me a bunch of feedback on what to do.
Better. What a great guy. That's amazing. Tell me penultimate one. What's your biggest insecurity is investors
say, I don't know if I have an insecurity necessarily and obviously fears may be the right word. The thing I'm always worried about that is both fortunate and unfortunate is, I'm worried that the opportunity that we have in front of us is going to be very short-lived and ephemeral and maybe the last one that we get. And so there's sort of this constant. Is this the last opportunity sort of
feeling deep inside me, which I know is not true. I think that the world is very fast growing market and so on and so on. But that sort of like fear that it might end and might go away. Sort of like a big driver that I sort of work through that. I worry that the whole thing might not be here in six months or 12 months, or 24 months. And so there's sort of a sense of urgency that comes from it. On the one hand, on the other hand. I think it's not a particularly healthy way to live. It's part of the reason we've been able to scale as quickly as we have. But it's something I'm learning to sort of
manage. What's the most recent publicly announced investment? And why did you get so excited? I think the last one
Announcer is a company called Magic Eden. It's an FTE Marketplace. They're the number one, nft Marketplace on Solana. And the reason we got excited was the founding team. It's just very rare. There's there's four of them and the founders are just really exceptional. We knew one of them from he was the CEO at protocol called dydx and was an early investor there and sort of met him there. But it's one of these meetings where I'm sure you've had this and other investors about this 10 minutes into the conversation. You have burned through the questions that normally take an hour because the person and the team just has such intellectual through.
Who put that you've gotten through and then all of a sudden and all of the answers are deeply, insightful and thoughtful. And then you spend the next 50 minutes like going so much farther and so much deeper than you do in any typical conversation that by about 10 or 15 minutes you in your. Like I just need to give this person all my money. We just have that conversation. We like I just can't believe this team is so stacked and so deeply insightful about all of these things and we're only 10 minutes into this conversation. And literally, I remember, I was having a conversation with them. Maria Shen, one of my partner's iMessage Maria and I said, we need to give these guys so much money, literally 10 minutes in
Relation and she said OMG.
Yes. It was so. So clear mom, you know, what's funny for me? I think this is probably the best interview I've ever done and I think it's one where I've asked the most stupid questions.
They were two questions at all. I mean you and I both basically ask stupid questions for a living. Right? But I mean those like first principle questions. Those are the important ones. I don't think they're stupid questions at all. These are like the foundational questions on why electric and even
exist.
I really believe that was one of the best shows we've ever done. If you couldn't hear from our tone. I just love doing it as well. I mean, it was just hilarious to do. I can't believe some of the dumb questions. Every child was amazing. Thank you so much for listening. If you'd like to see more from us behind the scenes, of course, you can on the 20-minute VC.com or 20V c.com. But before we leave you today, if you are a venture capitalist or corporate strategist, I want to tell you about Tiga Stiga. This is the only company in the world that aggregate score last of information on private companies from seed.
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Wednesday from next 20 product.
