Latest / CRYPTO 101 / Ep. 730 Crypto VC Explains Why Crypto’s Biggest Opportunities Are Still Ahead

Transcript

Ep. 730 Crypto VC Explains Why Crypto’s Biggest Opportunities Are Still Ahead · CRYPTO 101

0:08
[SPEAKER_00]: All right, ladies and gentlemen, welcome back to another action packed high caliber episode here of the crypto 101 podcast.
0:17
[SPEAKER_00]: I'm your co-host Bryce today, joined by my good buddy across the country, Mr. Brendan Veman.
0:22
[SPEAKER_00]: How are you doing Brendan?
0:24
[SPEAKER_00]: I'm doing good, Bryce.
0:25
[SPEAKER_00]: I'm doing good.
0:26
[SPEAKER_01]: I'm feeling good.
0:27
[SPEAKER_01]: I don't know what it is.
0:28
[SPEAKER_01]: There's something in the air, a little bit of extra energy, a little bit of extra um, but uh, man, I'm excited.
0:34
[SPEAKER_00]: It's a good day.
0:36
[SPEAKER_00]: Maybe it's starting to become hurricane season over there in Florida and you're just feeling something clean, uh, electrons in the air.
0:45
[SPEAKER_00]: One too many lightning strikes.
0:46
[SPEAKER_00]: Yeah, not too many lightning strikes in your body.
0:49
[SPEAKER_00]: I don't know if anybody remembers if we were on a livestream one time and Brennan's house did get struck by lightning one time and it just completely blacked him out.
0:58
[SPEAKER_00]: And I was left hanging.
0:59
[SPEAKER_00]: So we're not going to have
1:00
[SPEAKER_00]: that today, but we've got a great guest a really, really exciting one for me personally.
1:05
[SPEAKER_00]: You know, a serial ventures has been pioneering, you know, venture investments in crypto for almost as long as I've been in the crypto industry.
1:14
[SPEAKER_00]: And we're joined by their co-founder, Min Tio Hello, Min, how are you doing?
1:19
[SPEAKER_00]: Welcome to the show.
1:21
[SPEAKER_02]: Hi guys, thanks so much for having me on excited for our chat.
1:25
[SPEAKER_00]: Yeah, we would love to hear the founding story of ethereal ventures.
1:29
[SPEAKER_00]: You guys are pretty OG, original gangsters here in the venture capital space as it relates to crypto.
1:37
[SPEAKER_00]: Tell us a little bit about how you guys started up the firm.
1:41
[SPEAKER_02]: Yeah, absolutely.
1:42
[SPEAKER_02]: So interestingly enough, most of us have been working together since 2018 and doing exactly what we're doing today, incubating, accelerating, investing, co-building, crypto startups.
1:56
[SPEAKER_02]: That was back in the day where it wasn't even clear that MetaMAS would have a hundred thousand users.
2:02
[SPEAKER_02]: And now they're obviously way, way, way, way to pass that.
2:05
[SPEAKER_02]: So there's been some really great success stories from the consensus ecosystem.
2:10
[SPEAKER_02]: So I've had the pleasure working with my co-founder of many of the ethereal teams in 2018.
2:16
[SPEAKER_02]: And this was before, you know, crypto VC was really as prevalent as it was today.
2:20
[SPEAKER_02]: So there weren't as many funders of startups.
2:23
[SPEAKER_02]: And it wasn't really clear like,
2:25
[SPEAKER_02]: the, you know, what the technology could do.
2:27
[SPEAKER_02]: There was so much promise, but there wasn't logged infrastructure.
2:31
[SPEAKER_02]: So, consensus was one of the pioneers in terms of building out a logged infrastructure with MetaMAS, with Infura, funding a lot of Ethereum research, also backing a lot of application developers to just test the technology.
2:44
[SPEAKER_02]: Many of them didn't survive.
2:46
[SPEAKER_02]: But that really wasn't the point of it, the point was that we tried and also we could see the limits of the technology and back saw what kind of tooling that we need was sort of real is that we need what the people need in order to build really fully functioning applications.
3:02
[SPEAKER_02]: So it's through that work that, you know, consensus sort of grew a lot became a lot more institutional with the rise of metamask and as that became
3:13
[SPEAKER_02]: you know, more obvious every time I spoke to a team, they thought that I was going to get it in a good deal, they were going to get an integration of MetaMAS, which was slightly problematic for the MetaMAS team.
3:22
[SPEAKER_02]: So it was very clear that, you know, consensus needed more of a corporate, you know, sort of investment team, the corporate development team, and we want to continue doing venture.
3:31
[SPEAKER_02]: So, you know, Joe and I had a chat in 2020 when this was just around COVID time,
3:37
[SPEAKER_02]: And maybe this part of the reason because we're all like, you know, just nonstop about on our computers during defy summer, but, you know, we just realize we are really exciting opportunity in front of us that we could actually spend this out into a venture firm, a lot of our founders that we have worked with encouraged us to do so they liked our style of investment and they like our partnership model.
3:57
[SPEAKER_02]: And it was a great opportunity to actually build something with people that we liked working with doing something that we all love doing.
4:07
[SPEAKER_02]: You know, I think a venture fund is ultimately at least a tenure commitment, so it's very long term, we're backing founders at the earliest stages, you know, it could take them.
4:15
[SPEAKER_02]: you know, five years, 10 years, sometimes longer to build out their companies.
4:19
[SPEAKER_02]: And so the team needs to stay together and what better way to know that the zero team would stay together and work well together than having the benefit of working for three years together doing just this.
4:31
[SPEAKER_02]: So, you know, we spun out a theory on 2021 and it would have been doing the same thing working with founders and still loving all jobs ever since.
4:40
[SPEAKER_00]: I love it.
4:41
[SPEAKER_00]: And you come from a kind of a private equity, private credit background before you came into the wild west of crypto.
4:50
[SPEAKER_00]: So much more volatile, much more maybe exciting.
4:53
[SPEAKER_00]: But kind of like philosophically or from like an ethos standpoint, what made you jump ship from traditional finance?
5:00
[SPEAKER_00]: and say crypto is actually going to be the thing I want to bet my career on because at the time there was a lot of career risk but there was also a lot of other things to invest and I was the early days of AI, early days of quantum, all these other exciting technologies so you could have kind of had your pick at the letter, why'd you land on crypto?
5:17
[SPEAKER_02]: Yeah, so, you know, I've kind of, in terms of my career art, I've kind of gone full circle, I've gone from traditional investing to then tech.
5:24
[SPEAKER_02]: I helped to build a FinTech startup in the UK, and then ultimately in crypto.
5:29
[SPEAKER_02]: And it's worth noting, you know, I started my career in 2008.
5:32
[SPEAKER_02]: So that was a very exciting, the interesting time to be starting is finance, like, you know, just really seeing things fall apart and seeing a lot of the failures with the existing financial system frankly.
5:45
[SPEAKER_02]: and trying to make sense of everything, trying to pick up the pieces, I really want to try and avoid catching a falling knife.
5:51
[SPEAKER_02]: So I think I started my career pretty skeptical of financial services to begin with, not necessarily a boobiever, and it really like honed in me this,
6:02
[SPEAKER_02]: this mindset that, hey, like, when we're investing in something, it's not just investing in the status quo, investing in things that should be better, that should drive the industry for it.
6:12
[SPEAKER_02]: And, you know, I love what I was doing, you know, working in private, equity, and credit taught me a lot.
6:17
[SPEAKER_02]: It taught me kind of right cash flows, assess businesses, be creative, restructuring.
6:22
[SPEAKER_02]: And, ultimately, I want it to be more operational build a company.
6:27
[SPEAKER_02]: I had, you know, a lot of, I covered financial services and TMT really fascinated by payments.
6:33
[SPEAKER_02]: At the time, like that was when the rise of, you know, mobile payments was happening in the UK.
6:40
[SPEAKER_02]: I helped to build a mobile payments and automated loyalty startup in the UK.
6:44
[SPEAKER_02]: And how I came to crypto was less about, you know, when I bought Bitcoin because to me, didn't really get it, traded it like too early, you know,
6:55
[SPEAKER_02]: And it was called Yoyo Wallet working the engineering team to tremble around cost payment that I realized it wasn't possible.
7:02
[SPEAKER_02]: And it was crazy to me that you know, we were payments started.
7:05
[SPEAKER_02]: We weren't making gross margin on any payment.
7:07
[SPEAKER_02]: And neither were any of us any of our competitors.
7:09
[SPEAKER_02]: And that's just because of how antiquated the back end was that we couldn't really do anything in the context of like, you know, the existing.
7:18
[SPEAKER_02]: traditional financial rails.
7:20
[SPEAKER_02]: And after reading the Bitcoin and Ethereum white papers, I just had this aha moment that payments belong on crypto rails.
7:26
[SPEAKER_02]: That's what the modern day consumer needs.
7:29
[SPEAKER_02]: 247, instance settlement, global by design.
7:32
[SPEAKER_02]: And it just felt that we wouldn't really be able to live a real value to users unless we could offer that.
7:40
[SPEAKER_02]: And when you add a software layer that was permissionless,
7:44
[SPEAKER_02]: and allow for a global coordination on top of financial services, innovation which just become unstoppable.
7:52
[SPEAKER_02]: So that's what drove me towards crypto.
7:55
[SPEAKER_02]: And I had the great opportunity to work with Joe at consensus.
7:58
[SPEAKER_02]: And really, the front row seat to a lot of that innovation.
8:00
[SPEAKER_02]: And I think it all kind of makes sense, right?
8:04
[SPEAKER_02]: Like, in a lot of ways, I came from a
8:07
[SPEAKER_02]: part of finance that was very opaque and gated.
8:10
[SPEAKER_02]: It was almost like, oh, you need it to be very smart to understand all of this.
8:14
[SPEAKER_02]: And being in it, you're like, well, actually, this is just not that complicated, actually.
8:19
[SPEAKER_02]: A lot of it doesn't really make sense.
8:20
[SPEAKER_02]: It just doesn't work.
8:22
[SPEAKER_02]: Like, crypto was the opposite.
8:24
[SPEAKER_02]: I think it's, you know, everything is public.
8:25
[SPEAKER_02]: Everything is transparent.
8:27
[SPEAKER_02]: Everyone sort of has a say it.
8:29
[SPEAKER_02]: Anyone can build anything.
8:31
[SPEAKER_02]: And that's really the ethos that drew me to crypto.
8:34
[SPEAKER_00]: Yeah, not a question, but just a comment.
8:36
[SPEAKER_00]: It seems like all these high finance folks are up in their ivory towers, nose in the air, and crypto is really for the people.
8:46
[SPEAKER_00]: And so I love that you kind of picked up on that and that was attractive to you.
8:49
[SPEAKER_00]: But what do you think, Brendan?
8:52
[SPEAKER_01]: Yeah, no, it is and it's it's always interesting hearing people come from the traditional sense.
8:58
[SPEAKER_01]: I was just thinking myself, it is a little bit funny.
9:00
[SPEAKER_01]: You came in 2008, Bryce is like, what made you jump ship and you're like, well, it's started my career in 2008.
9:04
[SPEAKER_01]: It's like, oh, that'll do it.
9:06
[SPEAKER_01]: If you're in 2008, you're dealing in track by it's probably got to put a bad taste in your mouth.
9:12
[SPEAKER_01]: But I think what it really does is,
9:15
[SPEAKER_01]: For everyone, like that was an eye-opening moment that said, hey, prior to that, people thought it was invincible, it was invulnerable, it was just infinitely scaling full proof machine.
9:28
[SPEAKER_01]: And what that did is it created a very humbling and eye-opening moment for I think everyone.
9:34
[SPEAKER_01]: You'd never have to be an expert on Wall Street to see it.
9:36
[SPEAKER_01]: You could be a normal kind of mom and pop shop.
9:39
[SPEAKER_01]: individual and everyone around the world saw the flaws in our system and their flaws that they that there was just no solution to.
9:47
[SPEAKER_01]: And I so I think here we are now, you know, right 15 plus years later, pushing, you know, we're getting closer 20 years later.
9:55
[SPEAKER_01]: And we have something that can help us against that, right?
10:00
[SPEAKER_01]: And it's continually growing and it's scaling.
10:03
[SPEAKER_01]: And I think that that's the allure of crypto and overall, you know, beyond just crypto blockchain tech, is that it's, it's been tremendously fast at creating new technology and adopting it and that makes the space volatile.
10:16
[SPEAKER_01]: But I think that that's a real reason why people like it in the first place.
10:20
[SPEAKER_01]: because it moves at a million miles an hour, people acknowledge the fact that the fact that some things are gonna break, some things aren't gonna work out, but the parts that do will become transformational.
10:29
[SPEAKER_01]: And I think you've seen that with a lot of these modern blockchains and Bitcoin, Ethereum, Solana, HyperLick with here recently.
10:38
[SPEAKER_01]: And the stuff that sticks it sticks and people really, really like it and use it.
10:41
[SPEAKER_01]: And so, you know, from something like that, opportunity is born, you know, enter a ethereal ventures and that's kind of what you all are about is saying, okay, well, we know that there's going to be some big things that come out of it.
10:55
[SPEAKER_01]: So I guess for the listeners out there, can you just walk us through how you approach venture capital and what makes ethereal ventures different from other venture firms?
11:07
[SPEAKER_02]: Yeah, absolutely.
11:07
[SPEAKER_02]: And you know, our team are an interesting mix.
11:10
[SPEAKER_02]: So if, you know, we come from across the globe, a lot of us have backgrounds in financial services and sort of are in the space for a reason, because we do think we do believe that things can be built better.
11:31
[SPEAKER_02]: You know, I had this type of investor when I was building my business and we have many sort of, you know, computer programmers and researchers on our team as well.
11:41
[SPEAKER_02]: And I think everyone has, you know, somewhat beliefs in the original cipherpunk vision, which I think is clearly identified as law of overhang from like distrust of government.
11:50
[SPEAKER_02]: We, we, we see like, you know, the rise of Z cash today, and I think it's, you know, that sentiment is very live and law, right?
12:01
[SPEAKER_02]: when people ask like, you know, why build a venture fund to just invest crypto?
12:05
[SPEAKER_02]: Is it just, isn't it just a flash in the pan?
12:07
[SPEAKER_02]: Like, you know, I think we're just getting started.
12:10
[SPEAKER_02]: Like, there's going to be so much more that we can do to actually accelerate financial innovation.
12:17
[SPEAKER_02]: And I think our central thesis as a fund is just that blockchains are the trust settlement there for money movement globally.
12:24
[SPEAKER_02]: And now we're seeing it play out in earnest across institutions around a world with retail, many different types of market participants.
12:33
[SPEAKER_02]: And in terms of a different situation, firstly, where do you want capital?
12:38
[SPEAKER_02]: We like to go as early as possible.
12:39
[SPEAKER_02]: We're back.
12:40
[SPEAKER_02]: people.
12:40
[SPEAKER_02]: So we want to be a partner some day one.
12:43
[SPEAKER_02]: We have a global approach.
12:45
[SPEAKER_02]: So we meet founders where we are.
12:47
[SPEAKER_02]: We don't really care where you're from.
12:49
[SPEAKER_02]: We don't really care where your team is based.
12:51
[SPEAKER_02]: We all we care about is that you have global ambitions to build software that really transcends borders.
12:57
[SPEAKER_02]: And lastly, we are operationally hands-on, like, you know, we can't help but get involved.
13:03
[SPEAKER_02]: Ultimately, we see ourselves as cool builders rather than passive investors.
13:08
[SPEAKER_02]: So we're, you know, we want to be right beside the founder, helping them move over to whatever they need, getting their first customers, getting their first products, making their first hires.
13:16
[SPEAKER_02]: Like, these are all things that we work actively with our portfolio companies on.
13:20
[SPEAKER_02]: You know, we invest in both
13:22
[SPEAKER_02]: equity companies and token networks.
13:23
[SPEAKER_02]: We see the value at both.
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[SPEAKER_02]: And ultimately, we really focus on a concentration over spray and pay prey.
13:32
[SPEAKER_02]: We look to back a small number of foundational companies.
13:35
[SPEAKER_02]: We stay with them rather than chasing different things that we cycle.
13:38
[SPEAKER_02]: And, you know, we hope to be right about a few of them, you know, as opposed to just shallowly involved in a very wide venture companies that we don't really have a new relationships with.
13:49
[SPEAKER_02]: So that's, you know, a thorough venture isn't a nutshell.
13:53
[SPEAKER_00]: You know, I've heard with venture capital, it's, you know, you make a hundred bets and maybe 10 of them pan out, but those 10% or 5% maybe kind of pay for the rest of the losers have you.
14:07
[SPEAKER_00]: As I've been in your experience the same because I see a lot of folks on your portfolio list, you know, I again, you know, billion dollar firm now or.
14:16
[SPEAKER_00]: protocol as tech drift, blue sky, and dozens of others, tell us a little bit about that dichotomy in your business.
14:27
[SPEAKER_02]: Yeah, the power law is very, very strong and critical portfolios.
14:32
[SPEAKER_02]: I do think like, you know, if you look at sort of 2018 to maybe 2019 advantages, a lot of things, like, you know, just pop because there were not as many tokens as they were today.
14:44
[SPEAKER_02]: Now there's like
14:44
[SPEAKER_02]: thousands of tokens being minted every day, back then they're only a handful of tokens.
14:49
[SPEAKER_02]: So, you know, people, if you were right about timing, everything could be a hit in your portfolio, maybe, if you select the correctly, but it's certainly very different today.
15:00
[SPEAKER_02]: You know, these are ultimately...
15:02
[SPEAKER_02]: companies with an early-stage companies, the number one challenge is people problems, just founders deciding that they don't want to do it anymore, they're tired, they have found their fallout, like change in my priorities.
15:16
[SPEAKER_02]: So it's really a game of odds, and Mark and Jason has a quote that
15:23
[SPEAKER_02]: Our, you know, the failure of a VC is not failure of a mission, a commission, it's failure of a mission.
15:29
[SPEAKER_02]: So we're not really too hung up about the companies that don't make it.
15:32
[SPEAKER_02]: We know that like it's a very challenging thing and like, you know, ultimately people just have to try their best.
15:38
[SPEAKER_02]: But we get hung up on the the winners that we actually missed.
15:42
[SPEAKER_02]: And I have a lot that, you know, we can probably spend another podcast on only fitness, I wish I invested that company and this company, you know, you can't get it all, but this is why I think you really have to build independent conviction.
15:54
[SPEAKER_02]: And when you do so, you have to, you know, really double down.
15:58
[SPEAKER_02]: I mean, you mentioned Igen that was, we co-led the seed, and that's actually our biggest investment out of our first fund.
16:06
[SPEAKER_02]: And, you know, it took a while for it to pan out, but we really worked our career around to help build a narrative, around shared security and be staking.
16:14
[SPEAKER_02]: And I think that's why conviction really matters.
16:17
[SPEAKER_02]: You know, when you're building a portfolio, if you just sort of follow the crowd,
16:24
[SPEAKER_02]: Neither we hear nor there, and maybe you could have a couple of like, um, outcomes there are, say, maybe you're a two X or three X, but you really need to hit that sort of, like, no, 20 X, 50 X, who make money as a venture investor.
16:40
[SPEAKER_01]: You know, when it comes to what you look at, you've set a couple of things.
16:43
[SPEAKER_01]: I noticed that you said that you're investing in people.
16:47
[SPEAKER_01]: what are some of the key things that you look for because like you said I mean the crypto space has changed a lot people who traded prior market cycles even in the larger side of market caps right not early stage not micro caps none of that.
17:02
[SPEAKER_01]: I think they've experienced a change.
17:05
[SPEAKER_01]: To your point, there have been millions, and now tens of millions of new projects made.
17:11
[SPEAKER_01]: I think that's changed the landscape a little bit.
17:13
[SPEAKER_01]: You know, what's hot is also changed over the years.
17:17
[SPEAKER_01]: You've also just seen the technology itself maybe get a little bit more competitive, right?
17:21
[SPEAKER_01]: Creating a layer one, creating a layer two, creating a simple D5 platform or decentralized exchange is no longer flashy and new because anyone can do it and there's been a lot of them made.
17:31
[SPEAKER_01]: So it's a fairly competitive environment.
17:34
[SPEAKER_01]: What are you looking at when you're making an early investment beyond maybe the team and how do you kind of prioritize what's important?
17:44
[SPEAKER_02]: Yeah, I think it's more mentioning because the we are really a founders first sort of investment from at the stage for investing and it's all about the founder like you know because they they have hopes and a dreams on like you know a PDF and you have to bet that they can execute on it and bring it into reality and when we talk about like strong founders I think that's also changing in the age of AI right we used to especially for crypto crypto is consider deep tech.
18:15
[SPEAKER_02]: You do need technical excellence and really good engineers.
18:20
[SPEAKER_02]: However, I do think AI is a great equalizer in many ways.
18:23
[SPEAKER_02]: So like technical, maybe is becoming less important than having really, really strong business development sense and commercial.
18:33
[SPEAKER_02]: ability to make something a reality, so that's what we look for because ultimately founders need to be the biggest evangelist, the biggest storytellers for what they're building.
18:45
[SPEAKER_02]: Not a track to talk to your talent, to onboard clients, to raise capital so they can keep going to build the brand of the company.
18:53
[SPEAKER_02]: So we're really looking for people who can tell that story and tell it in a very compelling way.
18:59
[SPEAKER_02]: When we say we're looking for top founders,
19:03
[SPEAKER_02]: And in terms of specific qualities around the idea, we want infrastructure that becomes a dependency, things that other applications are forced to use, they're not optional.
19:17
[SPEAKER_02]: We also want real wedges into large and growing map markets.
19:22
[SPEAKER_02]: And you know, with a good understanding of whether remote actually is, obviously we prefer blue ocean categories to red oceans, but we're also not afraid of investing in competitive spaces, as long as they have, you know, large and growing markets and the founder can convince us that they have a compelling strategy to gain share.
19:41
[SPEAKER_02]: But again, you know, we're investing so early.
19:44
[SPEAKER_02]: So we try not to get to a hung up on ideas.
19:46
[SPEAKER_02]: Like founders will pivot or pirouette into new categories.
19:51
[SPEAKER_02]: You know, we have to trust the founders to be the best arbiters of their time.
19:55
[SPEAKER_02]: It's their opportunity costs at the end of the day.
19:57
[SPEAKER_02]: And the best founders only dedicate themselves to products that the bake-out come and where they're solving real problems.
20:03
[SPEAKER_02]: You know, you mentioned a USDA AI like they
20:06
[SPEAKER_02]: actually pivoted many times before the land on the current product they sort of started in the NFT space doing NFT financing and you know I think right now their current product of providing on-chain credit for GPU financing is a product of their learning through their various iterations.
20:24
[SPEAKER_02]: I don't know they got in there if they didn't have like you know all the prior learning from their prior products and now the timing is right and it's really cool to see them compete
20:35
[SPEAKER_02]: for GPU financing and to bring the market at the first AID links stable coin.
20:39
[SPEAKER_02]: So I think that's some about example.
20:41
[SPEAKER_02]: I've like, it doesn't example of a long-term sort of partnership model.
20:45
[SPEAKER_02]: We understand sometimes it takes like, you know, a couple of iterations land on the right idea and ultimately we're backing great people.
20:53
[SPEAKER_01]: Well, you know, one of the big standouts speaking of great people is your fellow co-founder Joe Lubin, for the listeners out there who don't know.
21:01
[SPEAKER_01]: You know, Joe is also a co-founder of Ethereum.
21:05
[SPEAKER_01]: And because of that, you know, obviously you all have had a lot of investments inside the Ethereum ecosystem.
21:11
[SPEAKER_01]: That's been a big part of Ethereum Ventures history.
21:14
[SPEAKER_01]: But you've also backed some other really big projects outside of the Ethereum.
21:18
[SPEAKER_01]: You know, you all are,
21:20
[SPEAKER_01]: Investing all over the crypto space now and you're not just limited to that, where do you think the, maybe the Ethereum dominance kind of ends, you know, where do you start looking at other change, you know, is that again, is it founder specific, is it purpose specific, is it sector specific,
21:41
[SPEAKER_01]: You know, at what point do you start looking at some of these other ones?
21:43
[SPEAKER_01]: Because I know you've had investments over in the Solana ecosystem, the avalanche ecosystem, you've done stuff with Osmosis and Yala and Utexo and there's a handful of others outside of Ethereum, but we'd love to get your thoughts.
21:57
[SPEAKER_02]: Yeah absolutely so you know working with Joe is awesome.
22:00
[SPEAKER_02]: Like we learned from him every day and he's a great resource for a love out founders and it's great having him and I see's every week and he does a 10 every week too and you know we always joke that Joe's allowed to have a favorite child.
22:14
[SPEAKER_02]: but he does believe that there will be many children.
22:17
[SPEAKER_02]: And those part of reason why we started they're able to, you know, it enabled us to invest in multi-chain opportunities more easily.
22:25
[SPEAKER_02]: I think for us as a firm we're pretty chain-it-nostic, you know, we're not L1 MacCs, we're not L2 MacCs, like we're more interested at that.
22:34
[SPEAKER_02]: application there in many ways, like, you know, and I think different chains enable different applications.
22:40
[SPEAKER_02]: For example, you mentioned Solana, I think the really index heavily on performance and usability and that done a great job on it.
22:49
[SPEAKER_02]: So, you know, with invested in drift and others Solana projects where
22:53
[SPEAKER_02]: And we do believe that performance aspect is really important.
22:57
[SPEAKER_02]: And Solano brings that out, you know, that performance best for their application.
23:02
[SPEAKER_02]: Um, I think they're a ton of all one teams that have done a fantastic job.
23:06
[SPEAKER_02]: Like, and we've looked at investing in many of them, you know, hyper liquid is an ecosystem that would actively invest it in basically too.
23:13
[SPEAKER_02]: Um, and ultimately, I do think, you know, valuable crew to.
23:17
[SPEAKER_02]: the biggest applications that often have multi-chain and cross-chain developments at deployment, so it's, in a lot of ways, it kind of doesn't really matter, and if you're a really big application, maybe you decide you want your own chain.
23:33
[SPEAKER_02]: at the end of the day.
23:34
[SPEAKER_02]: Why would you pay rent at, you know, why don't you, this way you can sort of manage your own onboarding, you can manage your own infrastructure.
23:43
[SPEAKER_02]: I do think the calculus has really shifted.
23:45
[SPEAKER_02]: As you mentioned earlier, like building a new L1 is not that it's like more challenging per se, but it's a lot more competitive.
23:55
[SPEAKER_02]: And I do think it's amazing that, you know, builders today just have so many options to and the ease of getting started, you can just deploy to see if your idea actually works.
24:08
[SPEAKER_02]: And if you want to build a new wild one, that's not to say that they won't exist right at all.
24:11
[SPEAKER_02]: maybe someone will build something in like Quantum Belated that will really resonate with the market or maybe we'll have more space chains or something.
24:21
[SPEAKER_02]: I think it's still very early to say, but ultimately we're here for it.
24:24
[SPEAKER_02]: We're here to see all of it.
24:26
[SPEAKER_00]: I love it.
24:27
[SPEAKER_00]: Yeah, maybe there's going to be a completely AI generated protocol one of these days.
24:33
[SPEAKER_00]: I know there's a lot of scuttle about Opus 4.8 that apparently white hack hacked.
24:42
[SPEAKER_00]: Z-cash and found some bugs.
24:44
[SPEAKER_00]: I don't know if that was just a meme.
24:45
[SPEAKER_00]: It was actually opus or something else, but these AI things are getting really, really impressive.
24:52
[SPEAKER_00]: But I want to kind of backtrack here on Ethereum just from a sentiment standpoint.
24:56
[SPEAKER_00]: I mean, you're very close with all these teams.
24:59
[SPEAKER_00]: A lot of these teams raised treasuries in Ethereum.
25:02
[SPEAKER_00]: is the sentiment down because prices down and this is just cyclical or a sentiment down because there's just so many competitors out there now, whereas back in 2020, 2021, there were no, there was Solana maybe and that's it.
25:20
[SPEAKER_00]: Now we've got, you know, a litany of them.
25:22
[SPEAKER_00]: How do you kind of square the circle in your mind?
25:26
[SPEAKER_02]: Yeah, I do think that Ethereum set of point where, you know, the fundamentals and price narrative have temporarily decoupled and in large part it's about sentiment and some a lot of the negative sentiment comes from concerns whether Ethereum will continue to maintain its lead.
25:47
[SPEAKER_02]: And there is definitely some merit to some of those concerns.
25:52
[SPEAKER_02]: There's a lot that we don't know, meaning, you know, fees and activity have migrated to L2s.
25:58
[SPEAKER_02]: Like so, in a lot of ways, Ethereum L1 looks kind of quiet, right?
26:04
[SPEAKER_02]: You have competing L1s with very flashy user numbers.
26:09
[SPEAKER_02]: And then you have a lot of value of your crow questions, which is like,
26:16
[SPEAKER_02]: in order for ease the asset to really capture L2 growth.
26:21
[SPEAKER_02]: And there's still quite a bit of the beta around that.
26:25
[SPEAKER_02]: I do think some of it is cyclical, you know, Bitcoin is also down.
26:28
[SPEAKER_02]: It's not like Bitcoin has stopped being a great store of value asset.
26:33
[SPEAKER_02]: But some of it is certainly structural.
26:36
[SPEAKER_02]: about the long-term future of Ethereum.
26:39
[SPEAKER_02]: I don't have a crystal ball on this.
26:41
[SPEAKER_02]: I think that EF will be making some important announcement soon that I think are very positive for the long-term advantage of Ethereum.
26:49
[SPEAKER_02]: And it's also hard for me to imagine that Ethereum won't be a major
26:56
[SPEAKER_02]: doing a period where I think blockchain utilization will be growing pretty rapidly.
27:00
[SPEAKER_02]: They're still, you know, the major, like, it's still where most of the volume of stable coin lives, most of the RWA lives, a lot of treating activity as well.
27:12
[SPEAKER_02]: Well, Ethereum be the leader, I don't know, but I think those definitely be, you know, one of the leaders.
27:20
[SPEAKER_00]: Yeah.
27:20
[SPEAKER_00]: No, I agree with that.
27:21
[SPEAKER_00]: Yeah.
27:22
[SPEAKER_00]: No crystal ball here.
27:23
[SPEAKER_00]: Anybody who's telling you they do have a crystal ball, you know, it's not true.
27:30
[SPEAKER_00]: But I do have a quick question just in terms of, you know, kind of where you are focused on your investments going forward.
27:46
[SPEAKER_00]: is there like a pocket of the the universe that you're you're really focused on right now or you are you guys making new investments like where are you guys at in your journey?
27:55
[SPEAKER_02]: Yes, we're still actively investing.
27:58
[SPEAKER_02]: We are meeting great teams.
28:00
[SPEAKER_02]: I think, as I mentioned before, our money movement is crypto's killer use case.
28:05
[SPEAKER_02]: And I think the regulatory landscape is really coalescing around it.
28:09
[SPEAKER_02]: Hopefully we get clarity past soon.
28:11
[SPEAKER_02]: And we're only going to see volumes grow.
28:13
[SPEAKER_02]: So we're really focusing out time as payments for users and companies, asset tokenization for institutions.
28:23
[SPEAKER_02]: And there are some agentic use cases of crypto that include, you know, transactions, such as payments, verification, privacy, and also new on chain markets say, you know, computer exchanges, for example.
28:45
[SPEAKER_02]: It's growing really rapidly.
28:46
[SPEAKER_02]: I think private credit has, you know, quietly become like the number one subcategory within our WAs overtaking treacheries.
28:55
[SPEAKER_02]: Now that the infrastructure is hardened and institutions can use block chains for settlement.
29:00
[SPEAKER_02]: I think this is one area that we're seeing a lot of growth and lots of smart entrepreneurs built within it.
29:10
[SPEAKER_02]: That is bringing sort of traditional consumer loans, such as so-fi loans, to your favorite part, crypto wallets, such as Metamas or Phantom.
29:20
[SPEAKER_02]: And I think it's going to be really cool.
29:23
[SPEAKER_02]: Like, ultimately, it's another gateway.
29:25
[SPEAKER_02]: And I think the crypto user is a very valuable user for many meal banks around the world.
29:31
[SPEAKER_02]: And I think that people ask me, like, well, I can just get a loan on so-fi.
29:37
[SPEAKER_02]: Why would I?
29:38
[SPEAKER_02]: do that.
29:39
[SPEAKER_02]: And it's the same reason why, hey, you can go buy spaceships, why do people buy spaceships on trade.
29:44
[SPEAKER_02]: It's like that, right?
29:45
[SPEAKER_02]: And those volumes are growing a lot.
29:47
[SPEAKER_02]: So I do think the medium really matters and people really have shown a preference for crypto mediums in any ways.
29:56
[SPEAKER_02]: But yeah, you know, if for us as early stage investors, we do have to invest where we think the puck is growing and we have to be early to market.
30:03
[SPEAKER_02]: Oftentimes that means we're investing before we
30:07
[SPEAKER_02]: full market valid validations.
30:09
[SPEAKER_02]: So we don't really pivot from sector to sector where waiting for a phase shift opportunity where a technical and walk has happened, where there's latent observable market demand, where the dependency has been identified.
30:22
[SPEAKER_02]: So I think a lot of founders are the best sources of phase shifts, which is why we always lean towards taking the call from founders,
30:31
[SPEAKER_02]: It's actually a really like interesting way for us to just learn as to what people are excited about, so why wouldn't we take the call?
30:38
[SPEAKER_02]: But yeah, I do think, you know, investing in sort of phase shifts is how we sort of see the world and these are phase shifts we see that we see happening at the moment.
30:47
[SPEAKER_02]: And why this is important is, you know, just to give you an example, I think one of the reasons that I put liquid became so large and successful was because
30:56
[SPEAKER_02]: FTX proved there was market demand, but FTX, you know, went fast.
31:00
[SPEAKER_02]: And the volume went to other sexes, but I think it was really looking for an on-chain alternative because people had lost stress in the sexes.
31:07
[SPEAKER_02]: And, you know, hyper-liquid immerse as a place where liquidity could aggregate and be saw that opportunity.
31:13
[SPEAKER_02]: So, it's usually doing these like market dislocations or regulatory changes or
31:19
[SPEAKER_02]: where they're like, you know, like, the big AI shift, like, it's hard for me to believe even though it's still a very early that that won't yield opportunities eventually.
31:28
[SPEAKER_01]: Do you think that any of those sectors are maybe overhyped or overextended at the moment, because you do hear a lot of like hype and attention, especially towards some of these like AI is probably like the best example, right?
31:43
[SPEAKER_01]: AI is everywhere right now.
31:45
[SPEAKER_01]: Companies are sticking it in front of their name.
31:48
[SPEAKER_01]: They're sticking it in their descriptions.
31:50
[SPEAKER_01]: They're talking about how they're using AI here and there.
31:53
[SPEAKER_01]: You also kind of see that a little bit in the crypto space
31:59
[SPEAKER_01]: And those projects that relate to it do do very well.
32:02
[SPEAKER_01]: But you also mentioned that there's tokenization and payment rails and stable coins.
32:08
[SPEAKER_01]: Do you think that any of those sectors, or maybe one that I didn't even mention are overextended or are overhyped, or is the best yet to come for some of those?
32:20
[SPEAKER_02]: Yeah, so, you know, maybe before I like immediately address those specific categories, like I think we can talk about like things being sort of over height.
32:30
[SPEAKER_02]: Then as investor, I think sometimes there's too much emphasis on being contrarian, you know, if you focus on trying to get
32:39
[SPEAKER_02]: end up drinking your own cool it in ignoring what the market is telling you.
32:42
[SPEAKER_02]: So it's a good point.
32:43
[SPEAKER_02]: As a firm, we do all in research.
32:45
[SPEAKER_02]: We come up with our own hypotheses, which generally agnostic of what appears in market narratives or saying.
32:50
[SPEAKER_02]: But, you know, for example, we mostly missed the NFT high.
32:54
[SPEAKER_02]: We missed the play to earn high.
32:55
[SPEAKER_02]: We missed the gaming hype.
32:56
[SPEAKER_02]: Because we looked into it.
32:58
[SPEAKER_02]: We just couldn't really build conviction around the long-term sustainability of it.
33:02
[SPEAKER_02]: And we're in it for the long run.
33:04
[SPEAKER_02]: But that said, I have immense respect for out peers and I think narrative that exists for reasons.
33:09
[SPEAKER_02]: So ignoring them could completely seem quite foolish and if something seems like, like, there's often a reason and there's an opportunity and it's worth making sense of it.
33:18
[SPEAKER_02]: So I do, but at the same time, like,
33:21
[SPEAKER_02]: Especially in something emerging like our space, like the narrative is always ahead of them for structure.
33:26
[SPEAKER_02]: So that gap is where you either lose money or make money, so timing is everything.
33:31
[SPEAKER_02]: And, you know, I think if I, I think you mentioned stable coins, still devisation and AI, right?
33:35
[SPEAKER_02]: Like, so I believe stable coins are under height.
33:39
[SPEAKER_02]: You know, they're the clearest product market fit in all of crypto, the reals are still very early.
33:45
[SPEAKER_02]: If you look at say merchant payments or set the tip of the iceberg right now is mostly be to be cross border Treasury use cases and know while those are very very large they're equally large like adjacent subcategories that stable coins can push into that I don't think we've seen much traction yet tokenization I think the idea is 100% on point
34:08
[SPEAKER_02]: But oftentimes, it's quite premature.
34:11
[SPEAKER_02]: Like, we see a lot of tokenized this, tokenized that.
34:14
[SPEAKER_02]: Like, you know, I think we'll see a lot of tokenized real estate, for example.
34:18
[SPEAKER_02]: But it may be lacks real buyers or liquidity.
34:22
[SPEAKER_02]: There's a lot like reliance on institutional participation and, you know, Franklin Templeton and Blackware are not going to work with every single pre-seat startup.
34:30
[SPEAKER_02]: Um, but I do think the winners will be very large in this category.
34:33
[SPEAKER_02]: Picking is the right bets in this category is everything.
34:37
[SPEAKER_02]: Um, A.I.
34:38
[SPEAKER_02]: and crypto, I think, yeah, this has certainly, you know, um, as you mentioned, the most hype.
34:44
[SPEAKER_02]: And it's the least.
34:46
[SPEAKER_02]: settled or validated.
34:48
[SPEAKER_02]: There's been a lot of AI crypto chains and applications that haven't really seen a lot of traction and a lot that the early ones were also sort of rappers around the technology as opposed to really delivering anything meaningful in terms of verification or privacy.
35:06
[SPEAKER_02]: I think the long-term thesis that agents need permissionless money and identity
35:13
[SPEAKER_02]: And, you know, I think with, for example, with the recent band of anthropic, that really shows us like how we do need open systems.
35:23
[SPEAKER_02]: We do need, like, you know, autonomous ownership of a lot of these models, because a lot of the censorship is only going to continue.
35:32
[SPEAKER_02]: This is not a fashion, the pen.
35:36
[SPEAKER_02]: So I think the long-term thesis really makes sense.
35:39
[SPEAKER_02]: But a lot of today's projects will not survive until there's sort of demand from the AI site.
35:47
[SPEAKER_02]: So we're proceeding very carefully with this category, even though we have a lot of excitement for it in the long run.
35:54
[SPEAKER_02]: I think the founders need to make sense.
35:56
[SPEAKER_02]: I think the
35:57
[SPEAKER_02]: the sort of closeness to the AI industry and identifying real opportunity that is really important.
36:04
[SPEAKER_02]: And I think the ability to sort of raise money to whether a sort of long-term uptake is also very important here.
36:12
[SPEAKER_01]: Yeah, what it sounds like is that you think that, you know, hey, this stuff.
36:16
[SPEAKER_01]: has a really valid argument for the long term.
36:19
[SPEAKER_01]: And it sounds like you believe that the TAM, right?
36:22
[SPEAKER_01]: The total addressable market is there.
36:25
[SPEAKER_01]: And maybe there's pullbacks and stuff.
36:27
[SPEAKER_01]: But the bet really is on the long term when it comes to this.
36:31
[SPEAKER_01]: And I get, I think that really goes back to kind of the core of ethereal ventures.
36:34
[SPEAKER_01]: You all say, listen, there's going to be speed bumps.
36:36
[SPEAKER_01]: There's going to be volatility.
36:38
[SPEAKER_01]: But for the listeners out there, I think the total addressable market here is real.
36:42
[SPEAKER_01]: And when you look at a lot of these different sectors,
36:45
[SPEAKER_01]: You know, you're you're looking in the trillions.
36:47
[SPEAKER_01]: I think personally here.
36:49
[SPEAKER_01]: I think you're looking in the trillions for tokenization.
36:51
[SPEAKER_01]: I think you're looking in the trillions for stable coins and kind of that kind of infrastructure.
36:56
[SPEAKER_01]: I think obviously AI has proven itself that it's, you know, trillions maybe more in terms of how much it can kind of disrupt in effect.
37:03
[SPEAKER_01]: But there's a lot of potential here and I think that what we're doing is we are just scratching the surface of it.
37:08
[SPEAKER_01]: And the way that I like to look at this and again, you're the expert when it comes to early investments and viewing all this.
37:15
[SPEAKER_01]: But the way that I always like to phrase it is that to me personally, the risk of missing this, missing this train is so much greater than the risk of maybe losing and throughout this process, right?
37:30
[SPEAKER_01]: I can live with myself saying, hey, I tried it.
37:33
[SPEAKER_01]: I failed some.
37:34
[SPEAKER_01]: I won some, but you know, I took a part in this.
37:37
[SPEAKER_01]: this risk train.
37:39
[SPEAKER_01]: As opposed to if I look back in 20 years, 30 years and I go man, I was too scared and I put anything in it, it succeeded, it blew up.
37:47
[SPEAKER_01]: I think that this is what we like to call somewhat of asymmetric upside, which is that there is this huge potential impact.
37:54
[SPEAKER_01]: There's this huge potential market that's sitting out there and if this succeeds, well that's where the asymmetric
38:03
[SPEAKER_01]: Again, risk management is important here, but I think that the space there is certainly open for the space is open and it's ready to be filled and I guess that's what we're betting on is who's going to fill it.
38:16
[SPEAKER_02]: 100% I think from the retail site, you really see a lot of demand.
38:21
[SPEAKER_02]: That people want to see more AI related crypto.
38:26
[SPEAKER_02]: I think ultimately, like real products need to exist and there are many teams building real products.
38:30
[SPEAKER_02]: We know world coin has done really well recently.
38:33
[SPEAKER_02]: Venice AI has done super well.
38:36
[SPEAKER_02]: I can let cloud which is one of our investments.
38:38
[SPEAKER_02]: They have a supercrack team long runway and they're building products that should rival.
38:44
[SPEAKER_02]: you know, products coming from the big AI labs themselves.
38:46
[SPEAKER_02]: So I do think there's we're going to see a lot of activity over the next two years and it's going to become more and more real.
38:56
[SPEAKER_02]: There are certainly like, you know, categories that people are excited about like a genetic payment.
39:01
[SPEAKER_02]: So we are looking at it like very carefully.
39:05
[SPEAKER_02]: I have no idea what their requirements for agent agent payments are.
39:10
[SPEAKER_02]: I feel like it may be that the agents will build their own payment system, what stopping them from doing that.
39:16
[SPEAKER_02]: So they're parts of that way.
39:17
[SPEAKER_02]: I think we do want to wait for more market data, but ultimately find a really great team where, you know, we think like, hey, the vision of future that you're presenting is really compelling, and you're a waste harder than us.
39:29
[SPEAKER_02]: You know, why not take the lead?
39:32
[SPEAKER_00]: I love it.
39:33
[SPEAKER_00]: Man, this has been an awesome conversation, men, and I hope that we get you back at some point in the future, whether for a podcast or one of our live virtual summits, but just as you leave our listeners with kind of one last word of wisdom or word of not financial advice or anything like that.
39:52
[SPEAKER_00]: But we're just curious, like, you know, for somebody who is, you know, maybe just starting
40:00
[SPEAKER_00]: or maybe well on their way, you know, from an expert who's way down the line, what are some words of wisdom you could leave us with?
40:09
[SPEAKER_02]: I, you know, so from a context of someone who is, you know, just starting to trade crypto for example, my,
40:19
[SPEAKER_02]: my sort of two senses a developer system and focus on quality.
40:24
[SPEAKER_02]: Right now, I think we've learned the lot as an industry at BlockWorks has released a token transparency framework, which I think is fantastic for understanding a lot of fundamentals of these token networks.
40:37
[SPEAKER_02]: You know, if you're holding, you want to hold category leaders at the end of the day.
40:41
[SPEAKER_02]: And so people are looking not just for revenues, also for cash flows.
40:45
[SPEAKER_02]: And we're regards to developing a system.
40:47
[SPEAKER_02]: I think if you need to, like, clawed and, you know, can really help you out here, like, you know, learn from the best.
40:54
[SPEAKER_02]: It's like, so easy now to ask claw to just ingest, like, systems of, like, the best traders out there and implement it on your own.
41:00
[SPEAKER_02]: And you can, like, technical analysis.
41:02
[SPEAKER_02]: You can, like, you know, buy and hold, you can, like, DCA, whatever it is.
41:06
[SPEAKER_02]: have a system and always know when to sell and take profit.
41:10
[SPEAKER_00]: I love it.
41:11
[SPEAKER_00]: Awesome.
41:12
[SPEAKER_00]: Yeah, use the the bots to kind of obfuscate away the emotion that gets in the way of making good decisions.
41:19
[SPEAKER_00]: I think that's a great tip.
41:22
[SPEAKER_00]: Everybody should check it out.
41:23
[SPEAKER_00]: Whether it's claw.
41:24
[SPEAKER_00]: I think Grock now has Grock.
41:25
[SPEAKER_00]: build you've got chat GPT with their codex so there's a lot of different tools out there and I think it's great right now because they're all subsidized essentially by venture capitalists and by the companies and all of these other investments so it says cheap as it's going to be uh that's kind of my my
41:42
[SPEAKER_00]: prognostication is that right now these AI tools are just only going to get more expensive as we kind of adjust price to the supply and demand of everything.
41:51
[SPEAKER_00]: But a good note, I love that one.
41:53
[SPEAKER_00]: Min, thank you so much.
41:55
[SPEAKER_00]: Weir can people follow you personally or follow ethereal ventures, whether there's like a blog or a LinkedIn or an ex-profile you'd like to shout out and whatever it is, we'll post all that in the show notes.
42:08
[SPEAKER_02]: Absolutely, so our website is www.theroventures.com.
42:11
[SPEAKER_02]: You have all our socials.
42:13
[SPEAKER_02]: You have a blog link there on the background of the team.
42:16
[SPEAKER_02]: And please check them out.
42:17
[SPEAKER_02]: Like the team is absolutely awesome.
42:20
[SPEAKER_02]: I'm just one humble member of the team.
42:23
[SPEAKER_02]: And my Twitter is at underscore mintio.
42:28
[SPEAKER_02]: I mostly post about portfolio company stuff, but I also respond to DM.
42:33
[SPEAKER_02]: So I'm reachable there.
42:35
[SPEAKER_00]: awesome.
42:35
[SPEAKER_00]: Well, thank you so much for all of your time this afternoon.
42:39
[SPEAKER_00]: We hope chat with you again and for everybody who took the time out of their busy data listen to us.
42:43
[SPEAKER_00]: We greatly appreciate all of your support.
42:45
[SPEAKER_00]: Come back same time.
42:46
[SPEAKER_00]: Same place next week.
42:47
[SPEAKER_00]: We'll have some more great guests for you.
42:49
[SPEAKER_00]: Take care.