Speaker 1: Hello, and welcome to another episode of The Mark Moss Show,
Speaker 1: where we always talk about the decentralized revolution, talking about
Speaker 1: the way the world is changing, and of course we
Speaker 1: always look at it through the lens of politics, finance,
Speaker 1: and technology technologies. The technology always the piece that changes
Speaker 1: the world as we know, and so we like to
Speaker 1: dig into that and I try to bring to you
Speaker 1: some thought provoking pieces to help you think about the
Speaker 1: world differently, some latest breaking news headlines, and some interesting
Speaker 1: guests that you don't have to just listen to me
Speaker 1: all the time. And that's what we have for you today.
Speaker 1: I'm sitting down with Christopher Calcott. He is the co
Speaker 1: founder and managing director at Trammel Venture Partners TVP, based
Speaker 1: out of Austin, Texas, and he is an investor.
Speaker 2: Of a fund. We're going to dig into that.
Speaker 1: So we're going to talk about what's going on with
Speaker 1: the overall macro investing space, the environment for investing and
Speaker 1: not just public equities, but into private equity, mergers, acquisitions,
Speaker 1: venture capital, things like that.
Speaker 2: We're going to talk about the state.
Speaker 1: Of bitcoin and crypto, bitcoin investor, venture capital, investing, some deals,
Speaker 1: some things that are looking at some of the most
Speaker 1: interesting things and then we'll start to maybe have fun.
Speaker 2: Speculate about where this future goes.
Speaker 1: So stick around for this whole conversation. Christopher, thanks so
Speaker 1: much for joining me today.
Speaker 3: Thanks for having me. Mark's good to see you again.
Speaker 2: Yeah, great scene.
Speaker 1: It is always a pleasure talking to you. You know,
Speaker 1: this is a topic that I'm super interested in always.
Speaker 1: I'm always paying attention to this as as someone who
Speaker 1: invests through the bitcoin ecosystem buying bitcoin, yes, but through
Speaker 1: the ecosystem as well. And it's also something that's been
Speaker 1: kind of top of mind as I'm working through this presentation.
Speaker 1: I'm about to go give it a bit block boom.
Speaker 1: But let's talk about this from a from a top
Speaker 1: down approach, and so, how do you see the macro
Speaker 1: picture overall affecting you know, the public markets, but then
Speaker 1: the relationship to more institutional investor investing.
Speaker 3: It's a great question and a really interesting moment in history,
Speaker 3: I would say, given how things have been folded back
Speaker 3: to twenty nineteen and certainly twenty twenty moving forward through COVID. Obviously,
Speaker 3: in public markets there was a big boom cycle last year,
Speaker 3: though we've seen really large retracements bottom is probably put in.
Speaker 3: It looks like inequities markets this year a bit of
Speaker 3: a rebound. But what's happened in the interim is that
Speaker 3: whenever there's some fear in the market, typically the M
Speaker 3: and A activity drives up, and large institutional allocators, which
Speaker 3: we can talk about. I think it's interesting with Bitcoin native,
Speaker 3: where we're focused day to day, adventure capital have not,
Speaker 3: for the most part, really gotten off zero, and what
Speaker 3: we're thinking about now is when this actually picks back up.
Speaker 3: We had the great fortune in our first fund back
Speaker 3: in Q four, we had a company that was an
Speaker 3: apply to I company outside of the bitcoin native space
Speaker 3: that actually completed an acquisition. I was super excited and
Speaker 3: happy for the founders and their families. It was their
Speaker 3: first company that they founded. But interestingly, they actually got
Speaker 3: that transaction closed in Q four. Q four of twenty
Speaker 3: twenty two and Q one this year were about a
Speaker 3: fifteen year EBB in the M and A activity full stop,
Speaker 3: and so it felt like a bit of a small
Speaker 3: miracle they got that done, but they did. And what
Speaker 3: that means though for institutional limited partners is with the
Speaker 3: down market in public equities, you know, their entire book
Speaker 3: is suddenly out of balance. They have target investment thresholds
Speaker 3: of course for asset classes like venture capital, and suddenly
Speaker 3: they found themselves overweight relative to equities. And furthermore, with
Speaker 3: the liquidity events slowing down dramatically at this fifteen year EBB,
Speaker 3: they suddenly were liquidity starved. And so the short way
Speaker 3: to say it is that new allocators to managers in
Speaker 3: venture capital and private equity more broadly slowed down pretty dramatically,
Speaker 3: and so they had relationships and commitments existing, so they
Speaker 3: had to re up with some of those. So those
Speaker 3: are some of the direct impacts for private markets and
Speaker 3: alternative assets and specifically private equity menor capital that we're
Speaker 3: seeing so.
Speaker 1: In private markets versus public markets. Broadly, public markets are
Speaker 1: marked to market on a daily basis. Everybody knows what
Speaker 1: the price of Tesla or Google or Facebook is today.
Speaker 1: Private markets aren't, right, And so I'm curious when you
Speaker 1: said that they found themselves overweight compared to public equities
Speaker 1: because the value of the public equities drew down, but
Speaker 1: then their private equities didn't. So they didn't mark those
Speaker 1: to market, they didn't draw, they didn't write those down.
Speaker 1: So do you think that's why they were so off sides,
Speaker 1: because anyway, do you think that's why they're soft sides.
Speaker 3: Great question, that's exactly right. We invest in early stage
Speaker 3: venture capital, and in particular early stage versus growth or
Speaker 3: late stage venture across the board. You can use you know,
Speaker 3: black suals, option pricing models and things like that, but
Speaker 3: for the most part, most venture investors, they simply carry
Speaker 3: the asset on the books at the last priced venture round.
Speaker 3: And so what that means is if no new rounds
Speaker 3: are happening, and they're not happening on a down round
Speaker 3: in a lower valuation, they're just sitting there and they're
Speaker 3: carrying it at this higher evaluation, even though the world
Speaker 3: might have changed. There's no way to really price those
Speaker 3: unless there's a lot, you know, a high volume of
Speaker 3: secondaries on a late stage venture deal. And so you're
Speaker 3: exactly right. The public we can mark to market with
Speaker 3: public equities, and all the private stuff kind of sits
Speaker 3: there because there's unknown it's an unknown as far as
Speaker 3: what the valuations and what the asset should be carried out.
Speaker 2: I've heard some speculation.
Speaker 1: I think there's been some talks and public talk of
Speaker 1: potentially having some of these private markets VCPE, metrocap or
Speaker 1: private equity maybe remark their books, mark them down, and
Speaker 1: some speculation of what that might look like in this
Speaker 1: type of environment. Do you have any kind of speculation
Speaker 1: or any kind of data of what you think might
Speaker 1: actually happen if some of these private equity venture capital
Speaker 1: companies were actually doing some of that and marking those
Speaker 1: things down.
Speaker 3: Well, the question is always a tricky one. It's it's
Speaker 3: what price do you put on the companies. If there's
Speaker 3: a markdown, that kind of implies that you've gotten a
Speaker 3: reasonably sized data set of maybe secondary transactions from early
Speaker 3: employees that traded, and you can back into what some
Speaker 3: of the options are worth. The very big household brand
Speaker 3: name VC firms tend to have a bit more of
Speaker 3: a sophisticated approach to valuation, But it's still tricky because
Speaker 3: what private market investors are willing to pay for some
Speaker 3: thing is just fundamentally a different question than something that's
Speaker 3: highly liquid and available to a global capital base. Right now,
Speaker 3: things are just really slowed in particular, you know, late
Speaker 3: last year, the second half of last year, in the
Speaker 3: first half of this year. Right now, in general, most
Speaker 3: founders are working to grow revenues and grow into what
Speaker 3: maybe the previous valuations were in some of their venture rounds,
Speaker 3: so that they can prove that they're ready for a
Speaker 3: new investment round whenever the larger investors are ready to
Speaker 3: do some new venture investing.
Speaker 1: Yeah, it's sort of like if there's no activity, if
Speaker 1: there's no deals being made, then there's no way to
Speaker 1: understand what their value is. And the truth is, even
Speaker 1: with public equities would be the same thing, because public equity,
Speaker 1: sure they have some of them, a lot of them
Speaker 1: actually have revenue and they have profits, and so then
Speaker 1: you can kind of work out like some sort of
Speaker 1: like a pe ratio, but what's that multiplier, and that
Speaker 1: multiplier changes based off of the price of the stock,
Speaker 1: and so we don't know that is until somebody buys it.
Speaker 1: And so it's almost sort of like what we see
Speaker 1: happened in the housing market today, where most people think
Speaker 1: their housing markets should be crashing, but it's holding on
Speaker 1: pretty strong even in the face of almost eight percent
Speaker 1: mortgage rates because there's just no activity. The people that
Speaker 1: are stuck in those two and three percent orgags, they
Speaker 1: ain't sell it, and so we're not seeing it and.
Speaker 2: Sort of something like that you'd said.
Speaker 1: You had said that the M and A activity mergers
Speaker 1: and acquisitions in that private space had ebbed to a
Speaker 1: new low. I think you said is that in twenty
Speaker 1: twenty two.
Speaker 3: So Q four and Q one Q four, twenty twenty
Speaker 3: two Q one. This year it was about a fifteen
Speaker 3: year ebb in the overall, you know, just transaction counts
Speaker 3: in mergers and acquisitions, and since most you know, certainly
Speaker 3: in venture sometimes companies get public, either via IPO or
Speaker 3: direct listing, but most of the time they're acquired at
Speaker 3: some point along through their growth trajectory. And these large
Speaker 3: institutional investors that might put a few billion dollars into
Speaker 3: a fund of funds that then allocates to managers. Since
Speaker 3: the M and A has slowed, the managers don't get
Speaker 3: the liquidity in their funds that doesn't roll up to
Speaker 3: the funds of funds and subsequently to the pension funds,
Speaker 3: et cetera. Their liquidity has slowed down a lot.
Speaker 1: That makes sense seeing as twenty twenty two was the
Speaker 1: worst year for financial markets, both stocks and bonds in
Speaker 1: fifty years, So of course you start to see that
Speaker 1: slow down. Now if you're just tuning in you're listening
Speaker 1: to the Mark Moss Show. We're talking about the decentralized revolution.
Speaker 1: I'm sitting down with Christopher callicut the co founder managing
Speaker 1: director of Trammel Venture Partners.
Speaker 2: I'm gonna take a very quick break. We'd be right back.
Speaker 2: Don't go away, all right, Welcome back.
Speaker 1: If youre just tune in, you're listening to the Mark
Speaker 1: Moss Show. I'm sitting down with Christopher Callicutt. He is
Speaker 1: the co founder managing director of Trammel Venture Partners, which
Speaker 1: is a venture capital fund specifically in the bitcoin space.
Speaker 2: And we were.
Speaker 1: Talking about, Christopher before the break about sort of like
Speaker 1: this this glow macro picture that's sort of in the
Speaker 1: driver's scene, and how has impacted private markets. I'm just curious,
Speaker 1: you know, from your standpoint as a you know, venture
Speaker 1: capital investor, in dealing with other investors who are trying
Speaker 1: to allocate capital in this space, how do you think
Speaker 1: about the overall macro picture, Because you know, when I
Speaker 1: think about the macro picture, what's the FED going to
Speaker 1: do with rates over the next six months?
Speaker 2: Will there be a crash this year?
Speaker 1: Things like that That sort of goes against what I
Speaker 1: think about in private equity or specifically venture capital, because
Speaker 1: venture capital, my money is locked up for seven years,
Speaker 1: ten years. So do I really care about the macro
Speaker 1: picture over the next six or twelve months when my
Speaker 1: money is locked up for eight to ten years.
Speaker 2: How do you think about those two things.
Speaker 3: It's a great question, and it's an interesting one. You know,
Speaker 3: in principle, the idea being that if you have this
Speaker 3: long term view, this long term commitment to venture capital
Speaker 3: as an asset class, these you know, fluctuations in you know,
Speaker 3: the one, two, three year time frame have less impact
Speaker 3: in practice, though, you know, I hear a lot of
Speaker 3: chatter with other managers that have a broader we'll say,
Speaker 3: venture capital mandate than we do. They're very much down
Speaker 3: focused on the bitcoin stack exclusively, and you know, they
Speaker 3: they have a lot of trepidation, even for large institutions
Speaker 3: that feel like, okay, just take a pause. You know,
Speaker 3: they feel become more comfortable with the pause. So even
Speaker 3: though you should have that kind of disinterested Hey, the
Speaker 3: conventional wisdom buy when there's blood in the streets, a
Speaker 3: time like this year is necessarily a great time to
Speaker 3: at least go out and see where how people are
Speaker 3: feeling about pricing and maybe actually get to have a
Speaker 3: little bit more ownership at the fun level for some
Speaker 3: of these investments. I do know that there are managers
Speaker 3: out there that have said that their LPs have just
Speaker 3: felt a little overwhelmed by trying to process everything full stop.
Speaker 3: So in practice sometimes it doesn't meet the academically agreed
Speaker 3: on standard as far as like this long term view
Speaker 3: for us, and I think one of the ways that
Speaker 3: you Mark and TVP are very strongly aligned is we
Speaker 3: see some fundamental flaws with the structure of the system,
Speaker 3: and we know that in the end things are going
Speaker 3: to be fundamentally different. We think that sound money is
Speaker 3: one of the key components, and we think that market
Speaker 3: view wise, bitcoin has already won the battle for the
Speaker 3: Internet in the Internet age the base monetary layer, and
Speaker 3: so we're preparing for that kind of long term view.
Speaker 3: And one of the ways that we were actually sort
Speaker 3: of managing against what we would see is a certain
Speaker 3: type of risk where some of our investors might have trepidation,
Speaker 3: they might be feeling the pain of public markets, and
Speaker 3: what they might be seeing at this micro level is
Speaker 3: by kind of really dialing in with family offices and
Speaker 3: individual investors that we might have very different opinions on
Speaker 3: a wide variety of subjects, but around this one unifying
Speaker 3: idea of bitcoin being the Internet age's monetary standard, we're
Speaker 3: aligned on that, and so investing in these companies that
Speaker 3: help realize this transformation to a new sound monetary order,
Speaker 3: we wanted to grow purposefully, and so we've we've attracted
Speaker 3: like a great group of investors around us that are
Speaker 3: at least aligned on that sort of principle. That's not
Speaker 3: to say that we're not subject to some of the
Speaker 3: stresses of looking at the macro micro picture though.
Speaker 1: So then I mean, it's something that you're certainly paying
Speaker 1: attention to, but it's not really something that's driving your decisions.
Speaker 3: Would you say, definitely not, you know, I think as
Speaker 3: far on the on the decision driving question, you know,
Speaker 3: I think this year has been an interesting year for
Speaker 3: you know, bear market and bear market year fallout reasons,
Speaker 3: I would say, but in a broader sense, it's important
Speaker 3: for us to just we can't be toned after what's
Speaker 3: happening in public markets and UH and the broader alternative
Speaker 3: asset landscape, because you know, as we grow as a firm,
Speaker 3: net new investors for us will come from the institutional base.
Speaker 3: So we have to be you know, keenly aware for
Speaker 3: the the challenges they're facing and what their their market
Speaker 3: impacts are, what impacts are happening to them and their
Speaker 3: portfolio overall.
Speaker 2: Yeah.
Speaker 1: Uh, some of the problems have have really come because
Speaker 1: of socio economic paradigms I think that we live in today,
Speaker 1: such as just short term thinking, and so you have
Speaker 1: this bigger institutional involvement today, but institutions are constantly being
Speaker 1: judged by their investors on a marke to market basis,
Speaker 1: and so you know, I know, other fund managers and
Speaker 1: other and other markets, public markets, and in order to
Speaker 1: make the big returns, they need time, but their investors
Speaker 1: are judging them on a month basis, and they're like,
Speaker 1: how can I make these big moves to get these
Speaker 1: big returns when you're constantly comparing my returns on a
Speaker 1: monthly basis, And so it starts to cause these types
Speaker 1: of problems. And I think about you know, Warren Buffett
Speaker 1: his partner Charlie Munger says, the big money's not made
Speaker 1: in the buying and the selling, It's made in the waiting.
Speaker 1: So one waiting for the right opportunity, but also two
Speaker 1: waiting for that opportunity to actually take time to develop.
Speaker 1: Warren Buffett has this thing he called twenty punches or whatever.
Speaker 1: If any new investor would come in knowing they had
Speaker 1: twenty moves twenty punches their whole career that outperform, and
Speaker 1: that's because they're not overtrading. And Warren Buffett said, he said,
Speaker 1: I don't buy stocks. I buy companies. They just happen
Speaker 1: to be publicly traded. And what I think he means
Speaker 1: by that, or what I take from that, is he
Speaker 1: buys a company, so I'm gonna buy. He likes a
Speaker 1: capital efficient business is like a Hershey or Coca Cola.
Speaker 1: Do you think people still buy soda in the future?
Speaker 2: Yes or no?
Speaker 1: Great, well, then coke should be a good long term investment.
Speaker 1: You know, Tesla. Do you think people will buy more
Speaker 1: ev vehicles in the future or less? Great than I
Speaker 1: should buy Tesla and set up for the long term.
Speaker 1: Or do I think for bitcoin? Do I think governments
Speaker 1: will print more money in the future or less? Will
Speaker 1: governments take more of our freedoms or give us more
Speaker 1: freedoms back in the future?
Speaker 2: Right? And so?
Speaker 1: But that's that long term view, right, And I think
Speaker 1: if people would approach it like that, everything would change,
Speaker 1: would go back to the warm buffett you know, twenty
Speaker 1: punch kind of kind of mandate. How do you think
Speaker 1: about investors and allocating towards venture capital from best practices
Speaker 1: or from what you've seen it? Should it only be
Speaker 1: done by people that are super rich? Should it only
Speaker 1: be done with a tiny minuscule piece of portfolio if
Speaker 1: you love gambling?
Speaker 2: Or how do you think about that for most people?
Speaker 3: For most people, the average person, I would say venture
Speaker 3: capitals not necessarily a fit for them.
Speaker 1: Well, when you say most people, I would imagine you
Speaker 1: probably break that down by portfolio size. So if you
Speaker 1: have a five figure portfolio, or even a six figure portfolio,
Speaker 1: maybe not, but once you get over seven maybe something
Speaker 1: you consider Or how do you say for most people?
Speaker 1: Is that based off portfolio size or just for mentality?
Speaker 3: Yeah, I mean from a regulatory perspective, you know, it's
Speaker 3: it's one of these clothes to average folks kind of things.
Speaker 3: So you got you've got to be at least a
Speaker 3: credited not a qualified purchaser to participate. That's a whole,
Speaker 3: uh wormhole. We can discuss uh at some point on
Speaker 3: on the regulatory questions there and fairness of it, but
Speaker 3: that is the regime that as it stands, and so
Speaker 3: for people that they're a potential investor they're considering it,
Speaker 3: you have to think about all sorts of questions. Are
Speaker 3: you is it a sector play, is it like you
Speaker 3: were describing, is it you know, electric vehicles for example,
Speaker 3: or or space exploration, or you you have a viewle
Speaker 3: on a thesis of bitcoin or or some you know,
Speaker 3: life sciences and explosion in life sciences. So then you've
Speaker 3: got to go from from that that thesis and then
Speaker 3: try to identify and get access to the best managers available.
Speaker 1: And so I'm gonna I'm gonna pause you on that
Speaker 1: the best managers available. We're gonna come back to that.
Speaker 1: If you're just tune in you're listening to the Mark
Speaker 1: Moss Show. I'm sitting down with Christopher Callicutt. He is
Speaker 1: the co founder and managing director of Trammel Venture Partners,
Speaker 1: which is a bitcoin venture capital fund focused on that specifically.
Speaker 1: We've got to take a very quick break, but we're
Speaker 1: going to come back and finish that thought and we're
Speaker 1: going to dive down into some specifics, so don't go away.
Speaker 2: We'll be right back.
Speaker 1: All right, Welcome back. If you're just tune in you're
Speaker 1: listening to the Mark Moss Show. I'm sitting down.
Speaker 2: With Christopher Callicutt.
Speaker 1: He is the co founder and of Trammel Venture Partners,
Speaker 1: managing director of Trambo Venture Partners, a bitcoin venture capital fund.
Speaker 1: And before the break we had to kind of cut
Speaker 1: you off, but you were talking about, you know, finding
Speaker 1: your thesis and then trying to find the best allocators
Speaker 1: in that thesis.
Speaker 2: I think is kind of what you were saying.
Speaker 3: Yeah, that's right. You know, So if you're your your
Speaker 3: thesis first and then finding the best managers you can
Speaker 3: get access to in a fund, you know, I think
Speaker 3: you want them to versification in in that thesis because
Speaker 3: in venture this, you know, individually these investments are very
Speaker 3: very high risk. Typically, you know, a couple of investments
Speaker 3: within a portfolio return the entire fund multiple times over
Speaker 3: in successful venture capital funds. And so you've got to
Speaker 3: think in terms of a whole holistic picture of your
Speaker 3: overall portfolio and what that should comprise, if it should
Speaker 3: comprise any of it within it, So you know it's
Speaker 3: it's a it's a question for for sizing and a
Speaker 3: whole lot of thought.
Speaker 1: Actually, yeah, you know, one thing that I've been starting
Speaker 1: to kind of change some of my narrative around is
Speaker 1: been you know, I've talked a lot about parallel markets
Speaker 1: and the need for these things and really like maybe
Speaker 1: putting your money where your mouth is or building the
Speaker 1: world that you want. And you look at like the
Speaker 1: founding fathers of the United States, and you know, unfortunately
Speaker 1: for the for those that you know signed the Declaration
Speaker 1: of Independence, for example, most of them ended up dead.
Speaker 1: It wasn't good for the revolutionaries, but they sacrifice their
Speaker 1: life for future generations. And today the world is also
Speaker 1: going in a scary place and we need some revolutionaries
Speaker 1: to take some action. And fortunately for us, we don't
Speaker 1: have to go risk our lives like they did. But
Speaker 1: maybe we need to make some sacrifices with our time
Speaker 1: or our capital, and maybe we should use our time
Speaker 1: or our capital to help build this new world, build
Speaker 1: this ecosystem they want. So unlike the Founding Fathers, we
Speaker 1: don't have to go risk our lives, but maybe we
Speaker 1: do need to risk some of our time or risk
Speaker 1: some of our money. And so maybe that's just a
Speaker 1: different way to kind of start to think about it.
Speaker 1: Because part as part of this talk that I'm gonna
Speaker 1: be giving next week here, it'll be on my main
Speaker 1: YouTube channel, So shout out. If you're not following me
Speaker 1: on YouTube, just search Mark Moss on there. I'll break
Speaker 1: this down. But how bitcoin isn't just a new technology,
Speaker 1: it's a technological revolution, and there's a big difference between
Speaker 1: those two. A technological revolution is a cluster of new
Speaker 1: technologies that basically change all of society as we know it.
Speaker 1: And what happens is as that is, it's not just
Speaker 1: new technology. It creates thousands or maybe even millions of
Speaker 1: investment opportunities in that ecosystem. So, for example, oil was
Speaker 1: a new technology that also came out at the same
Speaker 1: time as the automobile, and those two together were technologies
Speaker 1: on their own, but they created roads we need now
Speaker 1: because we have oil and cars, we need roads to
Speaker 1: drive them on.
Speaker 2: Well.
Speaker 1: To get roads, I might need a design a caterpillar
Speaker 1: tractor to plow the road, and I might need to
Speaker 1: come up with a new type of asphalt and like.
Speaker 1: So there's all these downstream effects, and in bitcoin we're
Speaker 1: already starting to see that, right, So, like in bitcoin mining,
Speaker 1: for example, they're pioneering all new types of energy plays
Speaker 1: and all new types of switches and managers, and they're
Speaker 1: building their own equipment and racks and cooling technologies, and
Speaker 1: like there's thousands of little downstream rabbit holes that go
Speaker 1: into that you can play into. And so I guess
Speaker 1: as someone who wants to buy bitcoin and whole bitcoin,
Speaker 1: I also want to think about developing that ecosystem and
Speaker 1: these are some play So as a venture capital fund,
Speaker 1: are these things that you kind of think about, like
Speaker 1: how what are these kind of offshoots of technology that
Speaker 1: we think could really take off, and then we want
Speaker 1: to allocate and help those build.
Speaker 3: I think that's exactly right. I like the energy the
Speaker 3: energy example, by the emergence of you know, reasonably priced
Speaker 3: automobiles and the oil industry. Bigcoin very similarly is just
Speaker 3: you know, intrinsically related to energy, and so managing some
Speaker 3: of the frictions that are inherent to the energy market,
Speaker 3: for example, is actually investable landscape for what we do
Speaker 3: in the bitcoin native ecosystem. For example, one of our
Speaker 3: companies is playing against the thesis we've had for a
Speaker 3: very long time that pricing oil or any other kind
Speaker 3: of energy in dollars is a little bit of a
Speaker 3: strange long term bedfellow in the Internet age, where we're
Speaker 3: used to being able to receive something instantaneously. In fact,
Speaker 3: energy itself, electricity specifically, it's very weird in one unique
Speaker 3: way we produce it and consume it simultaneously. Well, wouldn't
Speaker 3: it be nice if we had a way to do
Speaker 3: something that's inherent to energy market, which is to do
Speaker 3: business with another company, As if I own a large
Speaker 3: energy producing asset and someone wants to buy energy from me,
Speaker 3: I have to know a lot about their business and
Speaker 3: their ability to pay, because there's you know, at least thirty,
Speaker 3: maybe sixty or niney day settlement time, and in the
Speaker 3: meantime they could have run up a bill of millions
Speaker 3: of dollars. So energy money bitcoin in the middle of that,
Speaker 3: and being able to stream small fractions of a bitcoin
Speaker 3: nearly real time, so that there's final settlement with this
Speaker 3: money that has inherent property values built in when it's yours,
Speaker 3: it's not an ioe you to money, or it's not
Speaker 3: ach where there's a clawback of ninety day, right you
Speaker 3: have it you have possession of that money. And so
Speaker 3: this one company called Sonoda is working against this thesis
Speaker 3: that over the long term energy it makes sense, it's
Speaker 3: intuitive almost that it should be priced in a money
Speaker 3: that can be fully final and settled in real time
Speaker 3: as someone consumes that product that's produced at the same
Speaker 3: time it's consumed, which is an interesting kind of place.
Speaker 3: So I think, I think I love the energy analogy
Speaker 3: there actually, and.
Speaker 1: When you think about that, so basically what I what
Speaker 1: I'm hearing when I when you when I'm listening to
Speaker 1: that is that obviously technology has changed, and what's happened
Speaker 1: is it's changed our transaction times. So pre Internet or
Speaker 1: you know, we go back to the early gold days,
Speaker 1: I would have to travel by long distance on a
Speaker 1: horse or whatever to you to transact. I would give
Speaker 1: you the gold, you'd give me the supplies, and there
Speaker 1: would be like this handoff.
Speaker 2: Right.
Speaker 1: Well, what happened is with the Internet specifically, transaction times
Speaker 1: got instantaneous. I can go right onto Amazon as I'm
Speaker 1: talking to you, and I could just buy something and
Speaker 1: have it delivered to my office by the end of
Speaker 1: the day. But the settlement time hasn't kept up, so
Speaker 1: it's going to take Amazon five days to get that money,
Speaker 1: and then to the point you made, I could claw
Speaker 1: that back up to ninety days later. So now the
Speaker 1: transaction time has sped up, but the settlement hasn't come
Speaker 1: anywhere close to keeping up. And so now bitcoin gives
Speaker 1: us a way to sync that back up, instantaneous transaction
Speaker 1: and instantaneous settlement at the same time. To the example
Speaker 1: you gave in the energy space, that's a great example,
Speaker 1: but there's a million use cases for something like that
Speaker 1: right in every type of industry. I was talking with
Speaker 1: Gary Cardon, Grant Cardon's twin brother, and he comes from
Speaker 1: the merchant card space, and I don't want to mischaracterize
Speaker 1: exactly what he said, but roughly he helps businesses that
Speaker 1: do large scale, you know, hundreds of millions of dollars
Speaker 1: of credit card transactions and they lose, you know whatever,
Speaker 1: billions of dollars on chargebacks. And I used to sell
Speaker 1: e commerce way back, and we would sell a product,
Speaker 1: a physical product I might have a thirty percent margin on.
Speaker 1: I would deliver to someone's house and they would just
Speaker 1: charge it back on their credit card and there was
Speaker 1: no recourse for me. And I was only making a
Speaker 1: thirty percent margin, so now way behind on that. So anyway,
Speaker 1: these companies are losing billions of dollars on chargebacks and
Speaker 1: bitcoin can fix that instantaneous settlement and to your point,
Speaker 1: final settlement. So yeah, some really interesting things.
Speaker 3: Extremely low cost. It is important to you know, it's
Speaker 3: fractions of a scent to move real monetary value. And
Speaker 3: what we're talking about here, actually, if I might just
Speaker 3: to add one step further, is what we're describing here.
Speaker 3: I think was the point you were trying to make
Speaker 3: or we're about to make that this actually reflects a
Speaker 3: generalizable problem that we're actually seeing in multiple massive industries,
Speaker 3: so not only energy, but similarly in total communications. It's
Speaker 3: the exact same problem. The generalizable problem is that they're
Speaker 3: all carrying a big risk book, which is an impediment
Speaker 3: to doing new business, generating new revenues, and also to
Speaker 3: innovation because it's very very risky for some scrappy telecom
Speaker 3: startup to for a large player to open up the
Speaker 3: ability for them to run up very large bills and
Speaker 3: then you know, be out of business and that sort
Speaker 3: of thing. So this actually one of the big long
Speaker 3: term or midterm or long term unlocks is it opens
Speaker 3: up all kinds of areas for innovation, you know, kind
Speaker 3: of like linking this back to your original example. You know,
Speaker 3: we had to run you know, telephone polls to larger places.
Speaker 3: The oil industry, we had to have the roads and
Speaker 3: and suddenly there were all these second and third order
Speaker 3: effects that we hadn't even know for seen, and so
Speaker 3: we're seeing that in telecom as well.
Speaker 1: Yeah, if you just turned into listening to the Mark
Speaker 1: Moss Show, I'm sitting down with Christopher callicut. He is
Speaker 1: the co founder managing director of Trammel Venture Partners, a
Speaker 1: bitcoin venture capital fund. I got to take a quick break,
Speaker 1: but when we come back, I want to talk about
Speaker 1: specifically what types of projects we're starting to see, what
Speaker 1: he's working on and so much more. Is the last
Speaker 1: part that I'm excited to dig into. Don't go away,
Speaker 1: We'll be right back, all right, Welcome back. If you
Speaker 1: just tune in, you're listening to the Mark Moss Show.
Speaker 1: I'm sitting down with Christopher callicat. He is the co
Speaker 1: founder managing director of Trammel Venture Partners, a bitcoin focused
Speaker 1: venture capital fund.
Speaker 2: And you know, I.
Speaker 1: Want to we've kind of we started high with the
Speaker 1: macro and kind of dug down into institutional funds and allocations,
Speaker 1: and then there's some bigger stuff. Let's let's dive down
Speaker 1: into some sort of actionable not actionable, a little bit
Speaker 1: more micro type looks at some stuff, and I kind
Speaker 1: of want to know, like what type of projects you're seeing,
Speaker 1: maybe what you know, what's popping up, you know, what's
Speaker 1: the most interesting, maybe has the biggest potential, and maybe
Speaker 1: some active deals that you guys are working on. So
Speaker 1: I want to talk about that. And I know that
Speaker 1: you guys also have started putting out some research briefs
Speaker 1: that have been very good, and I know, let's talk
Speaker 1: about that for just a second. On the search brief
Speaker 1: that you put out, and you were kind of talking
Speaker 1: about maybe the malinvestment or the misallocation of money that
Speaker 1: went into gambling into the crypto ecosphere ecosperic versus potentially
Speaker 1: going into like the bitcoin sector. Do you want to
Speaker 1: talk about that for a minute.
Speaker 3: Sure. And I'll set the stage by saying that there's
Speaker 3: been this kind of sentiment that a lot of we're
Speaker 3: focused on bitcoin native if you're crypto manager, people have said,
Speaker 3: you know, kind of repeated this refrain that I just
Speaker 3: think is fundamentally false that the innovation is not happening
Speaker 3: on bitcoin. Part of that came from the view that
Speaker 3: in the startup world, the Mark Zuckerberg approach to doing
Speaker 3: things when it happens to be on the Internet's monetary
Speaker 3: layer bitcoin, you don't want to take a move fast,
Speaker 3: break things approach. And so you know, we've been taken
Speaker 3: a very methodical, purposeful approach to any kind of changes
Speaker 3: in bitcoin core, but there have been a couple of
Speaker 3: key technological innovations that have happened in the growth of
Speaker 3: bitcoin core that have enabled some new things that are
Speaker 3: starting to happen really now, and so that's kind of
Speaker 3: the backdrop for why we wanted to put out this research.
Speaker 3: TVP is in a very unique position to really instrument
Speaker 3: the universe of bitcoin companies and understand what's happening in
Speaker 3: startup investment activity, and so we put out the first
Speaker 3: of its kind research brief earlier this year. It's called
Speaker 3: the Emerging Bitcoin Native Venture Capital Landscape. And one of
Speaker 3: the interesting things that we wanted to do is challenge
Speaker 3: assumptions for what we see we know instinctively is happening.
Speaker 3: We've been observing it, but to get this research to
Speaker 3: institutional allocators, to family offices, to individual investors. You know,
Speaker 3: twenty twenty two, obviously it was a down year across
Speaker 3: the board in crypto for these assets the twenty however,
Speaker 3: many thousand of them there are They were down bad.
Speaker 3: You know, Bitcoin was down cyclically in the in that
Speaker 3: year as well. But one of the interesting things venture
Speaker 3: investment and we'll say broader, you know, crypto quote unquote
Speaker 3: was about flat. However, the bitcoin native ecosystem was actually
Speaker 3: up despite a down year. It was up about fifty
Speaker 3: two point nine percent increase in in bigcoin startup transactions
Speaker 3: across the board, which really flies in the face of
Speaker 3: some of the narratives that get built around where the
Speaker 3: quote unquote smart money's investing. And so that was one
Speaker 3: of the key reasons or the motus are putting this out.
Speaker 3: We want to challenge assumptions. We want for these institutional
Speaker 3: investors to realize, wait a minute, you mean that there's
Speaker 3: actually growth and these are very long term sustainable businesses
Speaker 3: being built on bitcoin. Do we have a bitcoin manager?
Speaker 3: Are we are? We are we allocating correctly and you
Speaker 3: know we would we would make the we assert in
Speaker 3: this research that there's just a a fundamental misallocation of capital,
Speaker 3: in particular when if you add up the market capitalization
Speaker 3: for all these scrypto stuff, include Bitcoin in that bucket,
Speaker 3: and go further and include every stable coin that exists
Speaker 3: on every smart contract platform. Bitcoin as the asset is
Speaker 3: still nevertheless market cap dominant to forty one point one percent.
Speaker 3: And the research that we put out said all of
Speaker 3: the venture dollars, despite that market cap dominance and it
Speaker 3: being the premiere, the first and we think the last
Speaker 3: asset only got about one point three to one percent
Speaker 3: of the institutional venture dollars in twenty twenty two. So
Speaker 3: we think that that's a very glaring statistic that should
Speaker 3: make people wake up and go, Okay, I've allocated to
Speaker 3: this other stuff. Why don't we have a manager that's
Speaker 3: focusing on lightening infrastructure or some of these kinds of
Speaker 3: things that are investments that we look at.
Speaker 1: Yeah, And I think the big thing is that, you know,
Speaker 1: when you understand technology cycles, you see that there's always
Speaker 1: this speculative phase, and you need this speculative phase. When
Speaker 1: automobile was introduced very quickly, there's two hund and fifty
Speaker 1: automobile manufacturers, but we didn't need them. There was no market,
Speaker 1: there was an infrastructure, and they collapsed. But a lot
Speaker 1: of that technology they pioneered kind of went into bitcoin.
Speaker 1: But the other thing that we see specifically today with
Speaker 1: these everything bubbles is you have money specifically in the
Speaker 1: crypto space, and now now it's in the AA. It
Speaker 1: was the blockchain space, now it's the AI space.
Speaker 2: They're looking for.
Speaker 1: They're trying to take AI or blockchain and go solve
Speaker 1: a problem. They're trying to what can I do with
Speaker 1: this as opposed to solving actual problems. Oh, we can
Speaker 1: take this blockchain and we could manage let us on
Speaker 1: the supply chain. Okay, but is that a problem. Do
Speaker 1: we have a problem managing let.
Speaker 2: Us on a supply chain? We don't really have that problem.
Speaker 1: So it's cool that you could use a blockchain for that.
Speaker 1: We don't need that, And the same with AI. Right,
Speaker 1: And so when I look at new deals, the very
Speaker 1: first question I asked someone, I don't want to hear
Speaker 1: anything about it, Just tell me first, what problem are
Speaker 1: you solving? And so I think when people say that
Speaker 1: to your point that there's no advancement on bitcoin all
Speaker 1: the advancements happening on crypto advance for what solving doing
Speaker 1: a whole bunch of things that nobody needs, right, And
Speaker 1: so that's kind of the way that I look at it.
Speaker 1: Bitcoin is actually solving problems like how do I send
Speaker 1: money to somebody in Afghanistan when Taliban runs the bank accounts?
Speaker 1: Or how do I save money in North Korea when
Speaker 1: they regularly search my house and don't let me have money? Right,
Speaker 1: Or when I'm a trucker for protesting in Canada, how
Speaker 1: do I keep my bank out? Right? It's actually solving
Speaker 1: problems today, so we don't need all that tech bro advancement,
Speaker 1: so to speak. That's the way I look at anyway.
Speaker 3: Definitely a million solutions in search of problems, right, And
Speaker 3: you know, right now it's a very interesting time for
Speaker 3: the bitcoin space because we have taken this methodical approach,
Speaker 3: A lot of work has been done and things are
Speaker 3: starting to accelerate in a very I think it's going
Speaker 3: to be surprising to a lot of these allocators that
Speaker 3: they thought they were being very smart by getting, you know,
Speaker 3: exposure to crypto and then they kind of missed the
Speaker 3: real revolution on a bitcoin and sound monetary standard. In
Speaker 3: the Internet age, and they're smart people though, they'll they'll
Speaker 3: catch up. And you know, to your point, I think,
Speaker 3: you know, with some of this you know, speculation and
Speaker 3: this kind of stuff that happens to be fair. Going back,
Speaker 3: you know, to the earlier days in bitcoin, we said, hey,
Speaker 3: you know, please, for the love of all things holy,
Speaker 3: do not break the Internet's monetary layer. Go and experiment,
Speaker 3: build some other whatever you want to build. And by
Speaker 3: the way, if you happen to stumble upon a massive
Speaker 3: validated market, we'll be paying attention, taking notes, and in
Speaker 3: due course, the validated markets that are sustainable and have
Speaker 3: real businesses possibilities, we'll figure out a way to appropriate
Speaker 3: that and bring it home to bigcoin. And so that
Speaker 3: inflection point, that's that's really the timing that we are
Speaker 3: in the market. It's really exciting because of some of
Speaker 3: the new technological enablements that are that are going to
Speaker 3: unlock some big things over the next twelve to twenty
Speaker 3: four sixty months.
Speaker 2: Yeah, and that's exactly what's happening.
Speaker 1: So to your point, they've been trying all these different things,
Speaker 1: too many things. But when there are little things that
Speaker 1: are working, we've already seen them coming back to Bitcoin
Speaker 1: and not changing the base layer, but changing on multiple
Speaker 1: layers on top of it. You know, if you think
Speaker 1: about innovation and as many tries as you can get
Speaker 1: what you want. Unfortunately people don't think this through. But
Speaker 1: what you really want is you want the base layer
Speaker 1: to be dumb and slow and basic, because the more
Speaker 1: basic it is, the more options I have to build
Speaker 1: on top of it. If I have a flat table,
Speaker 1: I can build almost anything on top of it. If
Speaker 1: I have a very intricate table with all different layers,
Speaker 1: what can I actually build? And so when you build
Speaker 1: this base layer so intricate, it limits what I can
Speaker 1: do on top of it.
Speaker 2: And so Bitcoin has.
Speaker 1: Kept this sort of basic base layer approach so to speak.
Speaker 1: I hate to call it basic because it's so revolutionary,
Speaker 1: but it creates all these opportunities to build on top
Speaker 1: of it. If you're just tuned in you're listening to
Speaker 1: the Mark Mass Show, of course, we're always talking about
Speaker 1: the decentralized revolution, and we're talking about the technology of bitcoin,
Speaker 1: which is the decentralized technology. I've been sitting down with
Speaker 1: Christopher Callicott. He's the co founder and managing director of
Speaker 1: Trammel Venture Partners. It's a bitcoin focused venture capital fund,
Speaker 1: not crypto bitcoin. If you want to know more, just
Speaker 1: check them out online. Trammel Venture Partners will link it
Speaker 1: in the show notes down below. But think about the
Speaker 1: bitcoin ecosystem as much more than just buying an asset.
Speaker 1: It's going to change all areas of life, and as
Speaker 1: I kind of said earlier in the show, to be
Speaker 1: a revolutionary, don't need to risk your life, but go
Speaker 1: put some money up, put your money where your mouth is.
Speaker 2: But that's what we got for today. Thanks so much
Speaker 2: for listening. Until next time,