Speaker 1: So the big question is this, how do investors like
Speaker 1: us get access to the ideas, information, and most importantly,
Speaker 1: the right people that give us the tools and information
Speaker 1: we need to make conformed and educated decisions to have success.
Speaker 1: That is the question, and this podcast will give us
Speaker 1: the answers. This is Mark Moss, your host. Let's get
Speaker 1: this started, all right, Welcome to another episode of the
Speaker 1: Market Disruptors podcast. I am joined today by Kate Mitzlmacher,
Speaker 1: and she is the founder and CEO of block Accelerate,
Speaker 1: which is a fund that's in the blockchain space and
Speaker 1: and really getting into a lot of these projects we're
Speaker 1: going to talk about, but let's just get into it. So, Kate,
Speaker 1: welcome to the show. Thank you so much for having me.
Speaker 1: All right, thanks for coming so um just for those
Speaker 1: that don't know more than that, just little intro, tell
Speaker 1: us who you are and kind of your background and
Speaker 1: how you got to where you are and what you're
Speaker 1: doing right now. Sure. So, I am the CEO founder
Speaker 1: of a fund specifically dedicated to deploying capital into this
Speaker 1: emerging space called Blockchain um Are fund. Of sort of
Speaker 1: hypothesis driven in our thesis is that blockchain is going
Speaker 1: to generate trillions of dollars worth of wealth over the
Speaker 1: next five to ten years. We see it as the
Speaker 1: next inflection points similar to the Internet, similar to microchips,
Speaker 1: similar to Industrial Revolution, when enormous amount of wealth came
Speaker 1: out of the innovation and those who managed to create
Speaker 1: companies around it capitalize on that innovation within the same
Speaker 1: sort of wave is going to happen with blockchain. And
Speaker 1: we see this fund as a dedicated vehicle not just
Speaker 1: to invest in companies, but help them scale, build the
Speaker 1: infrastructure to help them succeed. Um. And that's sort of
Speaker 1: what we were focused on today. Great, all right, UM,
Speaker 1: there's definitely a need for that, right any you're kind
Speaker 1: of at the front helping these companies get up off
Speaker 1: the ground, really helping push the industry forward. I like that. Um,
Speaker 1: do you want to tell us, like, uh, I mean,
Speaker 1: were you involved in tech or finance or economics before
Speaker 1: you got to this position? Yeah? Sure so. I guess
Speaker 1: the way that I got involved with blockchain is I
Speaker 1: was fortunate to be in the right place at their time,
Speaker 1: like a lot of people, and um, and I was
Speaker 1: involved with technology since two thousand and eight. I was
Speaker 1: working for a global research firm called Gartner, where we
Speaker 1: got a chance to track trends or cloud computing to
Speaker 1: big data, to cybersecurity, and blockchain came about in about sixteen,
Speaker 1: and that's when we formed a division to track more
Speaker 1: than a hundred different proof of concepts, and that's when
Speaker 1: I sort of started seeing this wave of interest coming
Speaker 1: from enterprises. It was enormous amount of inquiries to Gardner
Speaker 1: from c i os of fortunate companies who wanted to
Speaker 1: learn about this technology. And I sort of saw this
Speaker 1: parag so not enough startups coming to us and trying
Speaker 1: to pitch to those enterprises. So to me, it seems
Speaker 1: sort of been a symmetric um market dynamic that I
Speaker 1: thought was interesting and in two seen when I left,
Speaker 1: I thought it's a perfect time to come in and
Speaker 1: start building out the infrastructure because it's going to take
Speaker 1: a few years to close the gap between where the
Speaker 1: expectations were with blockchain when everybody got excited about it,
Speaker 1: about all the different use cases, but the technology wasn't
Speaker 1: quite ready yet, so the timing was good. But just
Speaker 1: a quick story about myself, I think that might be
Speaker 1: interesting for listeners to hear, is that while my fund
Speaker 1: is focused on making returns UM and UH financial returns
Speaker 1: to all peace. Personally, I'm driven by this mission to
Speaker 1: make blockchain ubiquitous. And the reason for that is because
Speaker 1: of where I come from. UM. I was born and
Speaker 1: raised in the Soviet Union, UM, and the environment that
Speaker 1: I was raised in was extremely centralized. There was nothing
Speaker 1: anything but open financial infrastructure that we're trying to imagine.
Speaker 1: And today said, to give you an example. In my mother,
Speaker 1: UM was out of job. She was an aerospace engineer
Speaker 1: and militarization happened. She had to go start a business.
Speaker 1: So she went to a bank and we only had
Speaker 1: one bank in my hometown of seventy thousand people, and
Speaker 1: she had to borrow money and a hundred percent interest rate,
Speaker 1: and that's literally the only option she had to gain
Speaker 1: access to capital. So she borrowed money. Between n two
Speaker 1: we had a three thousand percent inflation because Russian rouble
Speaker 1: was collapsing, the country was unstable, and obviously she had
Speaker 1: to go bankrupt. She did it multiple times, and finally
Speaker 1: she had built a business, started generating cash flow. We
Speaker 1: started building a house on a beautiful bank over river,
Speaker 1: and that was the year of financial crisis, and that's
Speaker 1: when rubal devalued thirty x within twelve months and then
Speaker 1: sixty x within forty eight months. So it was sort
Speaker 1: of this living through this continuous wave of fluctuation where
Speaker 1: you don't know what you're going to do next day,
Speaker 1: like let alone next year, gave me a thing appreciation
Speaker 1: for hedge against your local currency. It was rubal um.
Speaker 1: And in many other cases in countries such as Venezuela
Speaker 1: or Brazil, or many countries in Africa like Zimbabwe, where
Speaker 1: you know, the inflation was in trillions of percentage points.
Speaker 1: I think that's sort of a an interesting use case
Speaker 1: that we here in the United States still necessarily see
Speaker 1: as a little hanging growth. Yeah, definitely. And you know
Speaker 1: a lot of people the United States do kind of
Speaker 1: get that tunnel vision where they look at the US
Speaker 1: doesn't see that they don't have that problem. But this
Speaker 1: is global. This is a global thing. Um. Now in
Speaker 1: is that when the Soviet Union fell, was that the
Speaker 1: USSR fel still in and then between we try to
Speaker 1: sort of bring this democratic capitalistic system in place and failed.
Speaker 1: I thought, I remember somewhere like in the mid nineties
Speaker 1: watching the TV like as like it was coming down. Maybe,
Speaker 1: but I don't know, maybe not. I think August of
Speaker 1: nineteen one, I still remember watching TV and taking strolling
Speaker 1: into Kremlin. Yeah so then so then through that period,
Speaker 1: I mean, we had you had seen the currencies crashing
Speaker 1: through inflation. I'm guessing at that point the governments for
Speaker 1: printing more money. It was devaluing the currency. Your money
Speaker 1: was losing value, um, and you're paying exorbit rates to
Speaker 1: borrow and your money was invo at the same time, right, Well,
Speaker 1: essentially the central banks collapsed on its payments all together.
Speaker 1: I recently heard a story actually just last week. I'm
Speaker 1: curious to get your take. So it was a there's
Speaker 1: a book written about y MR Germany crashing after World
Speaker 1: War Two, and it was kind of like a autobiography
Speaker 1: of people that lived through that and they said that, um,
Speaker 1: as it was happening, they didn't really feel like their
Speaker 1: money was losing value. They thought everything else was just
Speaker 1: getting more expensive. Do you think that's how it was
Speaker 1: or did you not look at it that way? That's
Speaker 1: a good way to look at it. But a lot
Speaker 1: of expenses we had were actually in US dollars. That
Speaker 1: was at the time a professional form dancer. That's a
Speaker 1: funny story about it, and all of my lessons were
Speaker 1: in the US dollars. Um So for us, I remember
Speaker 1: getting going to a kiosk in exchanging money and at
Speaker 1: one point it was six to one and the next
Speaker 1: day was sixty to one. So in a way, everything
Speaker 1: is becoming more expensive. If um, so you did see
Speaker 1: things getting more expensive at that time, you didn't really
Speaker 1: look at it as your money was losing value. I
Speaker 1: think those are the same things. Well. I think like
Speaker 1: a lot of times, even in the United States, right, like,
Speaker 1: people see prices getting more expensive, but they don't realize
Speaker 1: that their money is actually losing value. And I think
Speaker 1: that's a big different, different way to look at It's
Speaker 1: the same thing. It's the same thing, like you said, um,
Speaker 1: but someone who's seen the extreme side of it, you
Speaker 1: obviously have a different opinion. So well, having lived in
Speaker 1: Russia and now having lived in the United States for
Speaker 1: the last thirteen years, I don't think US dollars losing
Speaker 1: value at any rate close to what we've seen in
Speaker 1: any other countries. Yeah, And I think in that way
Speaker 1: we have been pretty lucky here was somewhat of a
Speaker 1: stable currency that we can somewhat rely on, even though
Speaker 1: we have ninety trillion plus debt as a country and
Speaker 1: certainly have a lot of problems, but we're lucky in
Speaker 1: that way. Yeah. Sure. So then, um, were you first
Speaker 1: drawn to bitcoin as like a new money that gave
Speaker 1: you this hedge like you said you were looking for
Speaker 1: this hedge or did you more see like the technology
Speaker 1: and kind of dove in that way? So first I
Speaker 1: saw a bitcoin, and that's when I made my investment, um,
Speaker 1: thinking it's probably going to go to zero, but nonetheless
Speaker 1: it was it was a sort of a bath or
Speaker 1: a hedge. Um. And then in parallel to that, I
Speaker 1: was doing my masters at Harvard in international relations and
Speaker 1: foreign policy, and that's when I started getting exposure to
Speaker 1: some of the social impact of blockchain, specifically as was
Speaker 1: studying the case study at Hondora's um and the issue
Speaker 1: they had with land titles, when essentially you own your land,
Speaker 1: but you have no way to prove it other than
Speaker 1: a piece of paper that government had issued and then
Speaker 1: kept the centralized database the record off and then some
Speaker 1: his brother in law would go to the government, change
Speaker 1: the record, and your property has gone forever. So to
Speaker 1: me that sort of opened my eyes to the blockchain
Speaker 1: and the impact that I can have. And then, obviously
Speaker 1: of being a gartner, started looking at enterprise use cases
Speaker 1: and sort of the conclusion that I came to UM
Speaker 1: is that the last ten years of blockchain were very
Speaker 1: different from what we're going to see in the next
Speaker 1: ten years of blockchain. UM. The last ten years of blockchain,
Speaker 1: we're all about cryptic currencies, digital goal, digital cash, other
Speaker 1: forms of coins, privacy coins. And not to say that
Speaker 1: this category is going away, it's actually going up exponentially
Speaker 1: as well. But what we're going to see over the
Speaker 1: next ten years is going to be more and more
Speaker 1: adoption of the actual blockchain technology by enterprises and governments
Speaker 1: around the world, and revenue generating companies coming to fruition.
Speaker 1: And that's sort of the angle that our fund is
Speaker 1: looking to capitalize on. We already have a few investments
Speaker 1: UM identified that we're deploying capital into that are making revenues,
Speaker 1: selling to fortune part hunter companies, creating real business outcomes,
Speaker 1: and that's what's interesting. So blockchain technology can be used
Speaker 1: for many different things, one being a new monetary system
Speaker 1: or as a money or payment system, but then there's
Speaker 1: other use cases UM, and that's kind of where you're focusing,
Speaker 1: so other types of applications where the technology could work,
Speaker 1: and I can walk you through our thesis more granularly. Yeah,
Speaker 1: I'd love it. I'd be great. Why don't we hear that? Sure? So,
Speaker 1: um think about it as a stack, if you will.
Speaker 1: That's how we view it. And at the bottom of
Speaker 1: the stack we have the protocols. And you probably are
Speaker 1: familiar with a theory called the fat particle theory, which
Speaker 1: we agree to a certain extent, so the fat protocol
Speaker 1: theory for those who don't know sense release states unlike
Speaker 1: the aren N when t c P i P was invented, uh,
Speaker 1: Tim burners Ley did not monetize it. The protocol layers,
Speaker 1: the company's the facebooks, the Googles of the world came
Speaker 1: on talk to c P i P. They a crude
Speaker 1: majority of the value. They say blockchain is going to
Speaker 1: be reversed. So the protocols, the likes of Ethereum, eos Um, Cardonna,
Speaker 1: you know, they hash grown. They're the ones monetizing and
Speaker 1: everything else sort of a sin a layer of the stack.
Speaker 1: Our hypothesis is that it's only going to be true
Speaker 1: for the next few years until protocols become commoditized. At
Speaker 1: some point in time, the technology will become good enough.
Speaker 1: There might be four or five six protocols dominating the market,
Speaker 1: maybe silver, gold, Platinum, then a flavor for financial services,
Speaker 1: the flavor for supply chain and everything else will sort
Speaker 1: of become consolidated and the technology will be good enough,
Speaker 1: and that's when the value will move up the step
Speaker 1: to the application layer. So what this means for us
Speaker 1: is that at the moment we are investing in protocols,
Speaker 1: but we think majority of our investments, because our fun
Speaker 1: term is five to ten years, the majority of our
Speaker 1: investments will fall into the middleware layer and into the
Speaker 1: application layer. And I can talk a little bit more detail,
Speaker 1: and so um for everyone that's listening that doesn't quite
Speaker 1: follow along. So um, in the Internet, we have protocols
Speaker 1: that are standardized things that everybody builds too. And she
Speaker 1: mentioned t c P I P, which is kind of
Speaker 1: how the information is found and transmitted. But there's also
Speaker 1: other protocols. So we have a protocol for email, right SMTP.
Speaker 1: We have a protocol for security. So there's different types
Speaker 1: of protocols for different types of things. And um, I
Speaker 1: guess just talking on this protocol layer. Right now, you're
Speaker 1: saying that we're seeing just a ton of protocols. Seen
Speaker 1: was the protocol war or whatever. But you think it's
Speaker 1: going to settle down to just a couple of protocols, Well, UM,
Speaker 1: don't quote me on numbers. It's UM, it's really hard
Speaker 1: to tell how many protocols will will dominate. But the
Speaker 1: bottom line, there will be a finite number of protocols.
Speaker 1: We're not gonna need a hundred plus protocols. UM. There
Speaker 1: will be interoperability among those protocols. They will become scalable
Speaker 1: at the moment they're not UM, GDP are compliant, UM
Speaker 1: and so forth. And when that happens, that's sort of
Speaker 1: when the protocol later will become commodities. I think the
Speaker 1: ultimate value is about building real products and services for
Speaker 1: consumers and for enterprises. Regardless what blockchain protocol it's on,
Speaker 1: it should be invisible, it should be working, UM, it
Speaker 1: should be good enough. UM. Nobody needs to know that
Speaker 1: it's built on ethereum on it's building hyper LEGA just
Speaker 1: needs to how the properties of immutability, transparency, auditability, ability.
Speaker 1: I'm curious on that. So you just said immutability, So
Speaker 1: for me. I'm like, if you don't need censorship resistance
Speaker 1: and immutability, what you need a blockchain for? Just go
Speaker 1: have a database. I'm curious, especially with your background UM
Speaker 1: from Russia and then even referencing like Honduras, it seems
Speaker 1: like the censorship resistance portion is a big piece of that.
Speaker 1: And it seems to me that that starts at the
Speaker 1: protocol layer. So applications could be built that are less immutable, right,
Speaker 1: so they have you know, claud acts or whatever, but
Speaker 1: it has to start at the base layer. Do you
Speaker 1: agree with that or not? Really? Well, I think there's
Speaker 1: two different questions there. The first one I used to
Speaker 1: agree with you, then I changed my mind a little
Speaker 1: bit on that. Okay, So I think there's a set
Speaker 1: of use cases that would not survive without a blockchain,
Speaker 1: meaning there's no other way for you to do completely
Speaker 1: fair are resistant, government resistant, land title system on a
Speaker 1: private blockchain. It has to be done on a public
Speaker 1: chain because true public chain is truly immutable. That's sort
Speaker 1: of the core value proposition of it. Voting, for example,
Speaker 1: that could be another example of where mutability truly matters.
Speaker 1: But there's a lot of use cases where UM immutability
Speaker 1: is important, but it's not a deal breaker like a
Speaker 1: video game, right, yeah, for a video game, or let's
Speaker 1: even just say, um, you know, provenance of of seeds
Speaker 1: in a supply chain is as long as you can
Speaker 1: sort of track back the time stamped order of when
Speaker 1: and where they came from, and you have regulators in
Speaker 1: the network who confirmed that this was indeed, you know,
Speaker 1: stamped at the right time. You know, if you go
Speaker 1: back and change it and you can see that somebody
Speaker 1: change that, it's sort of not not the end of
Speaker 1: the world. So I think eventually I see it as
Speaker 1: three three reasons to do things on the blockchain. Number
Speaker 1: one is a mutability. Number two is whenever you're working
Speaker 1: with multiple parties who don't know and don't trust each other,
Speaker 1: and they need to sort of have a single version
Speaker 1: of truth that is somewhat immutable and without having a
Speaker 1: centralized intermediary controlling that version of truth, that's when blockchain
Speaker 1: makes a lot of sense. And number three is programmability,
Speaker 1: meaning when this happens, then this is the outcome. If
Speaker 1: you if your flight is delayed, you should get your
Speaker 1: flight insurance, or if your flight is canceled, you should
Speaker 1: get your money back. So whenever there's if this and that,
Speaker 1: then smart contract could ability makes a lot of sense.
Speaker 1: And that's sort of immutability or no immutability, it's still
Speaker 1: a really good use case for latching. Yeah. Great, Okay,
Speaker 1: So if we're moving up the stack, you had talked
Speaker 1: about like the industrial revolution, and I've studied all these
Speaker 1: industrial revolutions, or actually say technological revolutions. There's been five
Speaker 1: in the last two or fifty years. It looks like
Speaker 1: even though they're different technologies, they all kind of evolved
Speaker 1: the same way, it seems to me. And uh, you
Speaker 1: talked about, you know, going from protocols to applications, but
Speaker 1: really if you look at the Internet as the as
Speaker 1: the last revolution, well anyway, I don't think that's part
Speaker 1: of the revolution, but anyway, Uh, you kind of have protocols,
Speaker 1: which would be the t C P I P s,
Speaker 1: but then it didn't go straight to applications, right, so
Speaker 1: then we have like platforms in between. So like for example,
Speaker 1: Instagram or Instagram's a app, but it's on iOS and
Speaker 1: iOS runs on tc pH And I think you reference
Speaker 1: that with like your middleware, right, is that kind of
Speaker 1: what you're talking about? So what I'm talking about when
Speaker 1: I think about middleware, in my view of the stack
Speaker 1: is three things. One is protocol enabling layer, application enabling layer,
Speaker 1: and then identity enabling layer. So there's sort of platfora
Speaker 1: of companies that are solving problems on the protocol, the
Speaker 1: issues around operability or interoperability, security, privacy, those are sort
Speaker 1: of platform enabling layers UM application enabling layer in a way,
Speaker 1: is what you're talking about is how can you get
Speaker 1: access to the platfor of applications out there, while in
Speaker 1: univerrows er UM, you know you need some form of
Speaker 1: an operating system, you need UM the wallet even to
Speaker 1: or some form of identity which leads into the upper layer,
Speaker 1: which is the identity and if so, I sort of
Speaker 1: see those three as the middleware UM. And then it's
Speaker 1: interesting because one comp anywhere investing in right now, they
Speaker 1: are a fork or ethereum. So they created a fork
Speaker 1: m ethereum, but they are essentially configured that fork to
Speaker 1: appeal to what enterprises would want to see, such as
Speaker 1: high throughput permission GDP, are compliance security, and they sort
Speaker 1: of enabling those enterprises to build applications on top of
Speaker 1: those bottom protocols even though it's a fork. So I
Speaker 1: sort of see that even as a middlewhere because it's
Speaker 1: also not industry specific, it's across um in industry agnostic,
Speaker 1: across multiple companies, multiple industries. Do you think that's kind
Speaker 1: of like what we saw though in the Internet days,
Speaker 1: where um, you know, in the early nineties, all these
Speaker 1: companies said, oh, we can't be on this public Internet,
Speaker 1: We're gonna build an intranetum. But eventually everybody came around
Speaker 1: and everybody's on the open Internet. Do you think we're
Speaker 1: seeing the same thing with that. I do, even though
Speaker 1: we are invest seeing those types of companies, I don't
Speaker 1: think it's a deal breaker because they can always ce
Speaker 1: mibrate to the public chain. And I sort of see
Speaker 1: the matter of time, at some point in time, the
Speaker 1: public chain will become good enough to handle throw quote
Speaker 1: it to become permissioned when it's necessary or um uh
Speaker 1: private privacy of data and when there's different there's different
Speaker 1: investing thesis and time frames too, so like this might
Speaker 1: be a really good investment for the next five years,
Speaker 1: but then eventually it changes or something that's right. So
Speaker 1: it's an evolution, and I think we're in very early days.
Speaker 1: It's sort of we just invented electricity and we're trying
Speaker 1: to Teleration said, that's totally what's happening. So that's a
Speaker 1: that's a great that's a great point, and I wanted
Speaker 1: to ask you about that. Right. So, um, they say
Speaker 1: that being early is the same as being wrong. Right,
Speaker 1: You're not going to create a television when you just
Speaker 1: create electricity. We saw in the internet days again, you
Speaker 1: know the famous pets dot com explosion. That was a
Speaker 1: great idea and people buy all their pet stuff online,
Speaker 1: but there was nobody buying an thing online at the time.
Speaker 1: So I believe there's like the sequencing, right, And do
Speaker 1: you agree with that? And if so, like do you think,
Speaker 1: like Depps, is not the time for depths, like right
Speaker 1: now we're still kind of in the protocol, maybe into
Speaker 1: the protocol, maybe into that middlewhere layer right now and
Speaker 1: then depths come later or how do you look at that? No,
Speaker 1: I don't think so. I think there will not be
Speaker 1: any successful protocols and there's not going to be any
Speaker 1: successful depths. So one is sort of driving another. I
Speaker 1: think we just got a notification that run out of time.
Speaker 1: We got it. Um, but I think that applications is
Speaker 1: what's ultimately going to drive this industry to be successful.
Speaker 1: And I think if we try to time it too carefully,
Speaker 1: we're going to miss out. Nobody knows whether we're in
Speaker 1: the or whether in two thousand four isn't. Many people
Speaker 1: are trying to guess. They're probably mostly wrong. So the
Speaker 1: best it to look at it is one by one
Speaker 1: basis is looking at companies the problems they're trying to solve.
Speaker 1: Are they solving problems with blockchain where the blockchain is
Speaker 1: actually needed? Um, and are they getting traction? You know
Speaker 1: they're getting traction, they're probably getting revenue. So that's sort
Speaker 1: of that's a better way to look at it. And
Speaker 1: try to say, oh, we're only investing in protocols and
Speaker 1: we're only investing in middle where we're only investing in
Speaker 1: you know, site chains. That's nonsense. So you've identified the
Speaker 1: different layers, but you're investing into the best projects that
Speaker 1: you find in each one right now, Yes, because we
Speaker 1: don't know where the timing is. Yeah, I agree. Just
Speaker 1: because it happened you know that way, it may not
Speaker 1: directly apply this time. So that's that I would say
Speaker 1: in the application layer. There are some projects that I
Speaker 1: think more of long term bets than short term vets,
Speaker 1: and I'm not investing in them at the moment because
Speaker 1: I don't think it's gonna happen in the next five
Speaker 1: or so. To give you an example, Um replacing marketplaces
Speaker 1: is like replacing Uber alltogether. In theory, you can run
Speaker 1: a smart contract connect buyers and sellers, drivers and writers
Speaker 1: and just put them on an app that's not following
Speaker 1: by Uber and everybody gets a piece of the pie.
Speaker 1: So it sounds like a utopian vision, but technology is
Speaker 1: not there yet. Unit scalability in order to do that.
Speaker 1: Trust is not there yet. There's no identity laier that
Speaker 1: self sovereign and trusted so that you get in the
Speaker 1: car with an Uber driver you can trust that he
Speaker 1: didn't murder or more a thousand people before, and at
Speaker 1: the moment you trust the central party such as uber. Um.
Speaker 1: In the blockchain world, you would trust the system, but
Speaker 1: it hasn't been developed. The identity system has not been
Speaker 1: developed yet. So those sort of projects I think more
Speaker 1: long term focused, and we wouldn't necessarily invest right now.
Speaker 1: That that's a that's a good breakdown. I appreciate that
Speaker 1: so um, then is your fun then really geared more
Speaker 1: like as a venture fund? So you talked earlier about
Speaker 1: kind of having that long time horizon, So are you
Speaker 1: do you consider yourself more of a venture fund you're
Speaker 1: investing into early stage or do you actually have your
Speaker 1: fund broken up into like different sectors. Now it's a
Speaker 1: it's a long term focus eight year plus two ten
Speaker 1: year horizon fund. UM. We invest of our assets into
Speaker 1: tokens and majorities, so into equity of mostly revenue generating companies.
Speaker 1: Majority of them will be selling to some form of
Speaker 1: an enterprise or B two B play. Are these companies
Speaker 1: that are part of it? Is also because we have
Speaker 1: expertise in that. So it's not to say there's not
Speaker 1: opportunities in the consumer. We as a fund have expertise
Speaker 1: in the enterprise, so that's wherever we want to play.
Speaker 1: And you say revenue generating, So um, you're looking to
Speaker 1: invest in the companies who are already generating revenue or
Speaker 1: you're trying to get them to generate revenue as quickly
Speaker 1: as possible, both for pally preferably former. Yeah, of course, right,
Speaker 1: So as a venture fund or long term focus fund, UM,
Speaker 1: how do you look at risk in this space, and
Speaker 1: how do you manage that risk like through diversification. I
Speaker 1: guess do you stage in your investments like good question.
Speaker 1: So yes, Obviously every venture fund is in the business
Speaker 1: of risk risk management essentially UM, and every venture fund diversifies.
Speaker 1: But I think there's limited diversification where you're just placing
Speaker 1: the bets because you're fraid to miss out on something
Speaker 1: that's not diversification. That's just that strategy. UM in terms
Speaker 1: of our strategy is the way we knew it as
Speaker 1: a funnel. So we know that we don't know everything.
Speaker 1: We know we're probably going to be wrong in a
Speaker 1: lot of times, so we want to make enough bets
Speaker 1: UM in the forefront with smaller check sizes, where we
Speaker 1: sort of use it as cost of information, if you will.
Speaker 1: We understand the company a little bit better, we work
Speaker 1: with them, we get to know the team, and then
Speaker 1: the majority of our capital specifically seventy percent of our
Speaker 1: capital is reserved for the follow on and that's when
Speaker 1: we already have conviction about the company's strategy, about their execution,
Speaker 1: about their team, and we double down on the winners.
Speaker 1: So this sort of the funnel approach is how we
Speaker 1: view risk management if you will. Okay, Yeah, So for
Speaker 1: you know, someone who's listening to this that's kind of
Speaker 1: maybe just looking at putting their own money into the space.
Speaker 1: I mean, they could follow a similar approach where it's
Speaker 1: like a venture fund. They're diversifying through I don't know,
Speaker 1: twenty different positions, but not putting all the money in.
Speaker 1: You're saying like, as the project is proving itself, you're
Speaker 1: averaging in milestone based personal based, so as as milestones
Speaker 1: are hit, they're building trust. If you continue to like
Speaker 1: what you're seeing, you continue to invest in. And this
Speaker 1: was the problem with the space and when projects are
Speaker 1: raising fifty plus million dollars with no milestones and oftentimes
Speaker 1: no truck record and sometimes not even the product, let
Speaker 1: alone product market fifth. So I think we're sort of
Speaker 1: moving back to more traditional, you know, disciplined venture style financing,
Speaker 1: which is which is healthy. But for somebody who is
Speaker 1: an individual, I would say it takes a lot of
Speaker 1: time and a lot of effort to source and I
Speaker 1: mean we have a team of ten and we do
Speaker 1: it full time. Yeah, and we feel like we are
Speaker 1: we don't know everything, you know, So yeah, it's definitely
Speaker 1: it's definitely risky with I mean anybody's money. You're managing
Speaker 1: other people's money, which is a heavier burden as well. Um,
Speaker 1: but we're running out of time, so let's let's I
Speaker 1: appreciate that talk. But I'm just curious if we future,
Speaker 1: if we kind of forecast the future a little bit,
Speaker 1: which is always just kind of a little fun topic. Um.
Speaker 1: Right now, Bitcoin has just been crushing all coins. Um,
Speaker 1: you know historically in the short history we have, that's
Speaker 1: kind of the way it goes and all coins come back.
Speaker 1: Does that Does that concern you at all? I mean,
Speaker 1: you're obviously invested in the space, so I'm guessing not.
Speaker 1: But what do you think about that relationship? So it
Speaker 1: doesn't concern me as a fun manager because the majority
Speaker 1: of our investments are in equity, so we sort of
Speaker 1: see it as a hedge against the fluctuations of the space.
Speaker 1: With that said, with the tent and we do invest
Speaker 1: into it's I sort of see it's similar to you
Speaker 1: that bitcoin is the gold standard, is sort of the
Speaker 1: they move the wave behind this sort of um capital
Speaker 1: influx into the rest of the coins, and then once
Speaker 1: it reaches a certain point, and by the way, it
Speaker 1: would not be surprised if it does go to a
Speaker 1: hundred thousand, and don't quote me on that, but once
Speaker 1: it happens, then you sort of have enough investors feeling
Speaker 1: like they can diversify, and that's sort of naturally trickles
Speaker 1: into alt coin. UM. But I think the regulation has
Speaker 1: become a lot stricter since TV, so that's a good
Speaker 1: thing because the quality of the old coins is actually
Speaker 1: going up as well. UM. And I wouldn't be surprised
Speaker 1: if we're going to see another wave similar to what
Speaker 1: we saw in the past happening again. Right. I think
Speaker 1: we will, right, I mean we we we see cycles
Speaker 1: and human psychology is always the same, and so I
Speaker 1: think we'll see a repeat of that. Um. Speaking of regulations, today,
Speaker 1: I was watching uh, Facebook get grilled by by Congress
Speaker 1: about regulations and stuff like that. Um. We've seen Donald Trump,
Speaker 1: the President United States, and and the Fed chair tweeting
Speaker 1: about bitcoin. UM. A lot of the heat is just hilarious.
Speaker 1: Like I think it's a it's the first time the
Speaker 1: bitcoin gets mentioned by the president. Everybody should be happy
Speaker 1: about it. Whatever he said, it's sort of irrelevant. It's
Speaker 1: sort of gotten high enough in the raider for people
Speaker 1: who start paying attention, and to me that sounds like
Speaker 1: free advertising. Yeah. I think most of at least Twitter
Speaker 1: crypto Twitter was very happy about it and thought that
Speaker 1: was bullish, um to even be mentioned by by two
Speaker 1: you know, high ranking people. I watched some of that
Speaker 1: live testimony today and and they're grilling Facebook Libra. A
Speaker 1: lot of it has to do with their um, you know,
Speaker 1: their problems have had in the past with securing privacy
Speaker 1: and things like that. I know they're not happy about that.
Speaker 1: I'm just curious. It seems like the government, uh, and
Speaker 1: not just the US government, but lots of governments are
Speaker 1: maybe gonna start coming at Bitcoin, libra and other cryptocurrencies. Um.
Speaker 1: Do you see that having a big effect in the
Speaker 1: market or is that, as you said, like marketing and
Speaker 1: maybe proves the use case more. I think every single
Speaker 1: country has already tried to crush bitcoin in one shape
Speaker 1: or form, and the more they try to crush it,
Speaker 1: the more successful it becomes. Um. This is separate argument
Speaker 1: from liberal because liberal is own by centralized entity like Facebook,
Speaker 1: which ultimately has the selfish motives of collecting people's data
Speaker 1: and monetizing on the data. Bitcoin doesn't have that. So
Speaker 1: I think that, yes, the US government can crush Libra,
Speaker 1: but it cannot crush bitcoin. We know it can't stop it,
Speaker 1: but it could make it illegal or whatever. And I
Speaker 1: guess what I'm starting to see. And we saw it
Speaker 1: in Donald Trump's tweet where he said the US dollar
Speaker 1: is the strongest it's ever been. Well, we know that's
Speaker 1: a lie. And he's saying that too. Short it up
Speaker 1: because just last week he's saying we need to devalue
Speaker 1: it even more. Right, Um, So, what I see is
Speaker 1: like internet technology allowed us to transfer information of share information,
Speaker 1: um and now information is decentralized, everyone creates it and
Speaker 1: shares it. And blockchain technology allows us to everyone to
Speaker 1: create value and us to share and create value, and
Speaker 1: that takes away from the dollar. So I see a
Speaker 1: lot of the hate against Libra and bitcoin is about
Speaker 1: trying to shore up their own currency and keep people
Speaker 1: from leaving the US dollar or whatever currency they're in.
Speaker 1: And it seems like other cryptocurrencies would also help that along.
Speaker 1: Um So that seems to me like maybe what they're
Speaker 1: trying to do capital controls. You don't you don't see
Speaker 1: that at all. I don't see you as dollar going
Speaker 1: away anytime soon. What I do see is defend creating
Speaker 1: their own stable point that's based on some form of cryptocurrency. UM,
Speaker 1: I think we're I'm not falling into the camp of
Speaker 1: people who thinks that the government is evil and it
Speaker 1: needs to go away. I think there's really good reason
Speaker 1: to have the regulation to an extent and to have
Speaker 1: the controls that we have. But UM, I think I
Speaker 1: see blockchain as an enabler to their goal of having
Speaker 1: a transparent and UM, I guess currency that is remitted
Speaker 1: without um, you know, high frequency or high friction on
Speaker 1: that today? Yeah? Good stuff. All right, Well we're we're
Speaker 1: pretty much out of time, but that was some good stuff.
Speaker 1: I really appreciated you sharing your your funds, thesis and
Speaker 1: kind of how you're looking at the market. UM. Do
Speaker 1: you guys have any information that people should keep up
Speaker 1: on Where could people learn more about that? Sure? Well,
Speaker 1: first of all, UM, I welcome anybody to reach out
Speaker 1: to me. I'm with Kate at block Celerate. It's bloc
Speaker 1: c E L E r A T dot BC. I
Speaker 1: feel free to share my information as well, and anybody
Speaker 1: can go on the website UM block clerate WC to
Speaker 1: check us, and we do a lot of publications were
Speaker 1: very research drivents, so we always put out reports. We
Speaker 1: did one on stable coins that's sort of relevant to
Speaker 1: our conversation right now. I did a prediction note where
Speaker 1: I talked about governments adopting stable coins and identity, you know,
Speaker 1: kinds of trends. Um and then we did one on
Speaker 1: government adoption and you data three point oh webs three
Speaker 1: point no era. Great. I'll definitely link to that in
Speaker 1: the show notes for anybody listening that wants to go
Speaker 1: check that out. But um, that's it for today again, Kate,
Speaker 1: thank you so much. It was It was a great conversation. Yeah,
Speaker 1: thank you so much. Market Hey, if you like this
Speaker 1: episode of the Market Disruptors Podcast, please help us take
Speaker 1: this to the top of the podcast charts. Just please
Speaker 1: do me a favor and rate review and subscribe. Taking
Speaker 1: fifteen seconds to just leave a quick review goes a
Speaker 1: long way and helping us reach more people and disrupt
Speaker 1: more markets. I really appreciate you listening and I'll see
Speaker 1: you next time on The Market Distructors Podcast.