1 00:00:13,900 --> 00:00:16,000 Welcome to episode of the podcast was talks about the 2 00:00:16,000 --> 00:00:19,200 Technologies projects and people driving decentralization and the 3 00:00:19,200 --> 00:00:21,400 global watching Revolution. I'm Sebastian could do. 4 00:00:21,400 --> 00:00:23,200 And I'm here with my co-host mayor Roy. 5 00:00:23,400 --> 00:00:26,900 Today, we're speaking with Ali. Yeah, he is a general partner at 6 00:00:26,900 --> 00:00:31,500 a 16z course. They are a Massive fund which 7 00:00:31,500 --> 00:00:32,900 Bears? No, I don't think that you do. 8 00:00:32,900 --> 00:00:35,400 The proper introduction, everybody knows it. 9 00:00:35,400 --> 00:00:39,200 Who a czr and the type of the Investments they've made. 10 00:00:39,700 --> 00:00:43,000 But we're going to be chatting with Ali today about a bunch of 11 00:00:43,000 --> 00:00:46,400 stuff, including a 16 sees thesis. 12 00:00:47,600 --> 00:00:50,600 Also taking a step back and looking at fundamentals of 13 00:00:50,600 --> 00:00:54,100 crypto networks. And some of the broader banking 14 00:00:54,100 --> 00:00:56,200 in political crises that have been happening around the world 15 00:00:56,200 --> 00:00:59,600 in the last few weeks and months but first. 16 00:00:59,600 --> 00:01:02,600 Yeah. Thanks for joining us and may be 17 00:01:02,600 --> 00:01:05,300 starting off by giving us a little background and how you 18 00:01:05,300 --> 00:01:09,700 became part of the team at ACC. Yeah, sure thing. 19 00:01:09,800 --> 00:01:12,000 Thank you, 7 mirror. It's great to be good to be 20 00:01:12,000 --> 00:01:14,800 here. So yeah, maybe I'll give you a 21 00:01:14,808 --> 00:01:16,800 little bit of a little bit of my history. 22 00:01:16,800 --> 00:01:21,000 I was I was originally born and Mexico City was born and raised 23 00:01:21,000 --> 00:01:25,700 in Mexico and throughout my childhood that I was fascinated 24 00:01:25,700 --> 00:01:29,900 by technology, I was very into engineering and to the things 25 00:01:29,900 --> 00:01:33,900 that humans have built I was always in awe of things like you 26 00:01:33,900 --> 00:01:38,400 know, fast cars or planes or like tall buildings all over. 27 00:01:38,600 --> 00:01:41,100 Superlatives like the kind of the great things that humans 28 00:01:41,100 --> 00:01:44,000 could build and I was particularly fascinated by 29 00:01:44,600 --> 00:01:48,200 computers and by Robotics and Prospect of AI and you can have 30 00:01:48,200 --> 00:01:52,300 a whole that whole world and very much wanted to pursue a 31 00:01:52,300 --> 00:01:56,000 career in engineering. And so I kind of saw it looked 32 00:01:56,000 --> 00:02:00,100 like toward the us as a place to study as a place to to kind of 33 00:02:00,200 --> 00:02:03,200 make a career. And in the end I ended up going 34 00:02:03,200 --> 00:02:06,900 to Stanford to study computer science focused on systems in 35 00:02:06,908 --> 00:02:08,500 particular. I really like to like, right. 36 00:02:08,699 --> 00:02:10,699 Code. And that was like that track. 37 00:02:10,699 --> 00:02:13,900 That would that would expose you the most to large, like 38 00:02:13,900 --> 00:02:15,700 programming, programming projects and programming 39 00:02:15,700 --> 00:02:18,200 experience. So focused a lot on distributed 40 00:02:18,200 --> 00:02:21,500 systems Operating Systems computer, networking computer 41 00:02:21,500 --> 00:02:24,700 security, those were all of the fields that were most 42 00:02:24,700 --> 00:02:27,900 interesting to me. And this was, by the way, I like 43 00:02:27,900 --> 00:02:31,200 my undergrad started in 2006. This is before crypto was a 44 00:02:31,200 --> 00:02:34,900 thing at the very tail. End of my undergrad degree. 45 00:02:35,400 --> 00:02:39,800 In 2010 I was doing research with David Meza areas at the at 46 00:02:39,800 --> 00:02:42,900 the computer security Lab at Stanford and that's when we all 47 00:02:42,900 --> 00:02:45,600 became aware of the of the Bitcoin white paper. 48 00:02:46,100 --> 00:02:49,100 I still have a few emails like in the lab of us being like out 49 00:02:49,100 --> 00:02:51,000 like isn't this. So cool thing we should just 50 00:02:51,000 --> 00:02:55,500 like play with it and we all we all like downloaded it played 51 00:02:55,500 --> 00:02:59,000 with it, we minded but I think most of us that specially 52 00:02:59,000 --> 00:03:02,400 certainly I did I missed the implications of how important 53 00:03:02,400 --> 00:03:04,900 that was going to be so even though I was playing with it and 54 00:03:04,900 --> 00:03:07,900 minded I didn't track anything. I did attract any of the private 55 00:03:07,900 --> 00:03:10,900 keys. That I was that I was mining 56 00:03:10,900 --> 00:03:13,900 with it so that was that ended up being later on like three 57 00:03:13,900 --> 00:03:16,700 years after the, after that until 2013, when I started to 58 00:03:16,700 --> 00:03:19,600 become more clear, what the applications really were? 59 00:03:19,700 --> 00:03:24,000 That was my first very visceral lesson in the space. 60 00:03:24,000 --> 00:03:27,200 And I kind of that kind of likes was be, became a seared in my 61 00:03:27,200 --> 00:03:29,900 memory as a, as an experience early on. 62 00:03:29,900 --> 00:03:32,600 And I feel like many people who bit in the space in a while, 63 00:03:32,600 --> 00:03:36,900 have similar stories but I was fascinated by it. 64 00:03:36,900 --> 00:03:40,300 So I kind of was Was following it closely. 65 00:03:40,800 --> 00:03:44,800 Since then at the time there was no, there were no word, really 66 00:03:44,800 --> 00:03:47,900 many ways of working on it full-time. 67 00:03:48,100 --> 00:03:51,200 And I was also, as I said, I was also interested in Ai and so I 68 00:03:51,200 --> 00:03:55,700 actually, I joined Google first. I joined Google X and I joined 69 00:03:55,700 --> 00:03:58,200 this robotics project called replicant which had been started 70 00:03:58,200 --> 00:04:01,900 by an open, which is this abomination of a bunch of 71 00:04:01,908 --> 00:04:04,500 different robotics projects and the mission was to build an 72 00:04:04,500 --> 00:04:06,500 operating system for fleets of robots. 73 00:04:07,800 --> 00:04:10,400 And that was that Nice because it kind of married my interests 74 00:04:10,400 --> 00:04:13,700 in distributed systems and then also machine learning and 75 00:04:13,700 --> 00:04:16,899 Robotics. So the very fun project to work 76 00:04:16,899 --> 00:04:23,600 on for two years that that that that ultimately it was a project 77 00:04:23,600 --> 00:04:25,500 that was that exit actually became the everyday. 78 00:04:25,500 --> 00:04:29,600 Robot project, just now a real real thing at me it's like it's 79 00:04:29,600 --> 00:04:32,600 alive is now public, you know how X is super secretive about 80 00:04:32,600 --> 00:04:34,900 about everything but but it's now a project that people can 81 00:04:34,900 --> 00:04:37,600 talk about it which is nice. But after that I moved over to 82 00:04:37,600 --> 00:04:39,900 Google brain. Where where I did a little bit 83 00:04:39,900 --> 00:04:42,700 more of the same Act, was distributed systems for machine 84 00:04:42,700 --> 00:04:44,900 learning generally and I was working closely with the 85 00:04:44,900 --> 00:04:48,200 robotics team at Google brain. It was a core contributor 86 00:04:48,200 --> 00:04:51,100 tensorflow, to make tensorflow, more capable to work in that 87 00:04:51,100 --> 00:04:54,800 kind of environment. And then finally, in 2017, like 88 00:04:54,800 --> 00:04:56,400 all throughout this time, by the way, it was still kind of 89 00:04:56,400 --> 00:05:00,300 fascinated that crypto Google of course will never touch crypto 90 00:05:00,300 --> 00:05:04,600 with a thousand foot pole. So I could only really Follow it 91 00:05:04,600 --> 00:05:08,000 and play with it in my own time. All right, in my roommate at the 92 00:05:08,000 --> 00:05:12,400 time was was one Bennett or the founder of protocol Labs. 93 00:05:12,400 --> 00:05:15,400 So we were, we were close or like teasing. 94 00:05:15,400 --> 00:05:18,600 You may be my best friend and we were kind of contemporary since 95 00:05:18,600 --> 00:05:21,600 school is we we go way back. We were living together at the 96 00:05:21,600 --> 00:05:23,100 time and talking about all of this stuff. 97 00:05:24,000 --> 00:05:25,800 So I was fascinated by the space. 98 00:05:26,000 --> 00:05:29,300 I won't point they got connected to Chris to Chris Dixon, York 99 00:05:29,300 --> 00:05:32,700 firm. And we kind of hit it off and he 100 00:05:32,700 --> 00:05:35,300 and he essentially Said like hey you should you to join. 101 00:05:35,300 --> 00:05:38,900 We should start a crypto of crypto farmed because back then 102 00:05:38,900 --> 00:05:42,400 the firm was simplest investing. We Chris was investing in 103 00:05:42,900 --> 00:05:44,800 crypto. He's been investing in crypto 104 00:05:44,800 --> 00:05:48,900 since 2013 or so but it was all entirely within the context of 105 00:05:48,900 --> 00:05:52,800 the meaning of the main farm. So the thinking was we should 106 00:05:52,800 --> 00:05:56,400 build a dedicated team for crypto and really double down 107 00:05:56,400 --> 00:05:59,200 and that was his pitch to me and to me that's all I can operators 108 00:05:59,200 --> 00:06:00,400 like that. I love the space is super 109 00:06:00,400 --> 00:06:02,700 interesting. I was frustrated that Google is 110 00:06:02,700 --> 00:06:04,600 such a big company. It's very hard, actually, get 111 00:06:04,600 --> 00:06:08,500 things done. So I dropped, I kind of do. 112 00:06:08,500 --> 00:06:12,900 I joined the firm in 2017? It was christened me at first, 113 00:06:12,900 --> 00:06:14,500 and then, we started to build out the team. 114 00:06:14,500 --> 00:06:17,100 We've recruited a few other people, and then since then, we 115 00:06:17,100 --> 00:06:18,800 both out the entire think they're equipped. 116 00:06:18,800 --> 00:06:22,700 So vertical here at the firm, and we're now, we're now up to 117 00:06:22,800 --> 00:06:25,800 80 people or so across a bunch of different functions. 118 00:06:25,800 --> 00:06:29,900 And the idea is to not only make great wrestlers, but to also 119 00:06:30,100 --> 00:06:33,300 support every portfolio company in every way we can. 120 00:06:33,600 --> 00:06:35,800 And I'm happy to talk a little bit more about the way that we 121 00:06:35,808 --> 00:06:38,400 tend to work with Founders, but that's the story. 122 00:06:38,400 --> 00:06:41,200 It's been five years now and it's been quite a ride and and 123 00:06:41,200 --> 00:06:42,800 it's been awesome and really great. 124 00:06:44,600 --> 00:06:46,600 That's a, that's fascinating story. 125 00:06:46,600 --> 00:06:50,800 I didn't realize that your roots at the crypto went so far back. 126 00:06:50,800 --> 00:06:54,100 And that's like many of us you have been burned early, right? 127 00:06:54,100 --> 00:06:57,000 Yeah. But by not realizing the 128 00:06:57,000 --> 00:06:59,400 implications of what you were getting involved in. 129 00:07:00,400 --> 00:07:04,200 What you mentioned that you you think that Google will never 130 00:07:04,200 --> 00:07:07,100 catch crypto with a ten-foot pole or perhaps even longer 131 00:07:07,100 --> 00:07:09,100 pole? Why do you think that is? 132 00:07:09,100 --> 00:07:12,800 And why do you think Google hasn't embraced? 133 00:07:13,100 --> 00:07:15,500 Do because there's such, like, a forward-thinking company on so 134 00:07:15,500 --> 00:07:19,500 many other, you were two goals and industries, but crypto seems 135 00:07:19,500 --> 00:07:23,000 to be something that they are incredibly hesitant to Tasha. 136 00:07:23,100 --> 00:07:26,500 Although, although recently, there were some announcements 137 00:07:26,500 --> 00:07:29,600 that they were implementing like, if their Cloud offerings, 138 00:07:29,600 --> 00:07:32,900 like some MPC services, and things like that, this seemed to 139 00:07:32,900 --> 00:07:36,700 indicate that they are you open to providing infrastructure 140 00:07:36,700 --> 00:07:39,400 services to crypto companies? But at least I got the payment 141 00:07:39,400 --> 00:07:42,700 side or on any of the higher level. 142 00:07:43,100 --> 00:07:45,600 Ex of the stack there, there's they're quite absent. 143 00:07:46,600 --> 00:07:50,300 Yeah, well, I could go into an hour long rant about Google, 144 00:07:50,800 --> 00:07:54,600 that would consume the entire podcast, but I think that maybe 145 00:07:55,400 --> 00:07:59,200 the core reason that that Google will will likely never do 146 00:07:59,200 --> 00:08:01,600 anything. Significant in the space is it's 147 00:08:01,600 --> 00:08:04,000 just a classic innovators dilemma. 148 00:08:04,000 --> 00:08:07,000 It's just the fact that crypto is such a disruptive technology, 149 00:08:07,600 --> 00:08:11,800 the fact that crypto works by being fully open by being open 150 00:08:11,800 --> 00:08:15,700 source and by the centralizing power as much as possible. 151 00:08:15,800 --> 00:08:18,500 Well, the fact that that is at the core of wood crypto is about 152 00:08:18,600 --> 00:08:22,900 is entirely at odds. With the entire business model 153 00:08:23,100 --> 00:08:25,400 that Google The Google leverages to survive. 154 00:08:26,300 --> 00:08:31,100 And so in order for Google to actually truly move into the 155 00:08:31,100 --> 00:08:33,299 space and actually do something meaningful, it would it would 156 00:08:33,299 --> 00:08:36,299 have to disrupt itself. It would have to disrupt the 157 00:08:36,299 --> 00:08:39,200 core business models that drive it today and because as a 158 00:08:39,200 --> 00:08:42,200 company is no longer really found or lead, you don't have 159 00:08:42,700 --> 00:08:45,700 very and Sergey there as involved as they used to be. 160 00:08:46,700 --> 00:08:48,700 And because of the fact that it's atrophied, and all these 161 00:08:48,700 --> 00:08:52,700 ways and that is become, I mean, they could, I think it's fair to 162 00:08:52,700 --> 00:08:55,600 say that we come up, more complacent company than it used 163 00:08:55,600 --> 00:08:58,600 to be. It's just very unlikely that for 164 00:08:58,600 --> 00:09:01,200 them, to for them to do anything that disrupting everything that 165 00:09:01,200 --> 00:09:05,000 they do now, it seems to be in to be much more incremental and 166 00:09:05,000 --> 00:09:08,400 seems to be in service of the core business model that has 167 00:09:09,000 --> 00:09:13,700 that has powered them this far. So, yeah, I think I have not 168 00:09:13,700 --> 00:09:16,000 holding my breath for Google to do something meaningful. 169 00:09:16,100 --> 00:09:18,500 Well, they do have all of these like little little experiments 170 00:09:18,500 --> 00:09:20,300 because Google does still have this kind of Freedom. 171 00:09:20,300 --> 00:09:23,800 Where you, as an engineer, you can use your quote-unquote, 20% 172 00:09:23,800 --> 00:09:26,500 time and play around with things. 173 00:09:26,500 --> 00:09:28,600 And there are a couple of teams that are maybe experimenting but 174 00:09:28,600 --> 00:09:33,000 it's hard to imagine that we will actually invest heavily in 175 00:09:33,000 --> 00:09:36,800 and make it up core part of what they do, for a portal of the 176 00:09:36,800 --> 00:09:39,200 above reasons. It may be that Google is like 177 00:09:39,200 --> 00:09:42,300 the is like the IBM or the HP of Our Generation. 178 00:09:43,900 --> 00:09:46,700 Oh, no, for sure. I agree with that completely. 179 00:09:46,700 --> 00:09:51,800 I'm glad that this was point and so if this size it, yeah good. 180 00:09:51,800 --> 00:09:55,200 The innovators dilemma is probably the biggest culprit 181 00:09:55,200 --> 00:09:58,500 here and that's the case for many, many companies not just 182 00:09:58,500 --> 00:09:59,900 Google. You know, we could say the same 183 00:09:59,900 --> 00:10:03,800 thing about Microsoft or or Facebook or although you know 184 00:10:03,800 --> 00:10:06,400 there have been some I think other types of Miss interesting 185 00:10:06,400 --> 00:10:09,900 experiments there that You might leverage purple at some point, 186 00:10:09,900 --> 00:10:14,000 but in a very different form than what we know, and they'll 187 00:10:14,000 --> 00:10:18,000 sort of thriving for as people have been in space for long as 188 00:10:18,000 --> 00:10:22,000 we have. So, just maybe zooming in a 189 00:10:22,008 --> 00:10:26,800 little bit on a 16 SE and, and the, the, the, the crypto team 190 00:10:27,000 --> 00:10:30,500 you may said it's 80 people. What does that, what does that 191 00:10:30,500 --> 00:10:33,900 look like? And you know what are the, you 192 00:10:33,900 --> 00:10:35,500 know, what are the key roles there? 193 00:10:35,700 --> 00:10:38,600 I'm curious because I'm also starting a Fund. 194 00:10:38,600 --> 00:10:41,000 And, you know, there's a lot of things that I think I have to 195 00:10:41,000 --> 00:10:45,400 learn from other funds and even though he's ECG is a massive 196 00:10:45,400 --> 00:10:48,600 organization and like, you know, is nowhere near the size that 197 00:10:48,600 --> 00:10:52,000 I'll ever use bar to get to the understanding sort of what the 198 00:10:52,000 --> 00:10:55,800 course, core support structures. There are and and support 199 00:10:56,200 --> 00:10:57,800 functions. Yeah. 200 00:10:57,800 --> 00:11:00,000 Give us a bit of an overview of what the team looks like. 201 00:11:01,100 --> 00:11:04,000 Yeah, of course. So the whole the vision from the 202 00:11:04,000 --> 00:11:08,000 very start was to was to build a vertical within the firm that 203 00:11:08,000 --> 00:11:12,600 mirrored. The original, a 16z form factor 204 00:11:13,300 --> 00:11:17,700 but was very tailored for crypto specifically it. 205 00:11:17,700 --> 00:11:19,700 So originally mayonnaise is easiest firm. 206 00:11:20,100 --> 00:11:23,300 The whole vision from the start was that, it's a, it's 207 00:11:23,300 --> 00:11:26,900 essentially, a platform The Firm that not only makes Investments, 208 00:11:26,900 --> 00:11:32,000 but but is truly a partner end-to-end across Many different 209 00:11:32,000 --> 00:11:34,900 functions to help the companies in our portfolio succeed. 210 00:11:35,800 --> 00:11:41,000 What that means for crypto is that because crypto has certain 211 00:11:41,700 --> 00:11:45,300 big differences from traditional traditional companies. 212 00:11:45,700 --> 00:11:48,900 There are things in ways that we can help that that are 213 00:11:48,900 --> 00:11:51,300 fundamentally different. They require building out the 214 00:11:51,308 --> 00:11:53,700 team differently. This was an example of that. 215 00:11:54,800 --> 00:11:59,700 One of the observations that we made was that because most of 216 00:11:59,700 --> 00:12:02,900 the work in crypto. A test to be open source because 217 00:12:02,900 --> 00:12:05,600 it the work that's done tests to be out. 218 00:12:05,600 --> 00:12:09,200 In the open, it's actually possible for collaboration to 219 00:12:09,200 --> 00:12:11,100 happen between organizational boundaries. 220 00:12:11,300 --> 00:12:14,300 And that means that as a as a venture firm, we actually can 221 00:12:14,300 --> 00:12:17,300 get involved in some of the core technical challenges. 222 00:12:17,600 --> 00:12:20,200 That some of our portfolio companies are facing which is 223 00:12:20,200 --> 00:12:22,800 something that would be much more difficult to do in any 224 00:12:22,800 --> 00:12:24,400 other sector of technology that you can. 225 00:12:24,400 --> 00:12:27,200 You imagine, for example, in the world of Biotech in order or in 226 00:12:27,200 --> 00:12:29,000 the world of, like, I don't know, deep like Enterprise 227 00:12:29,000 --> 00:12:31,900 software in order to get access The code base or to the 228 00:12:31,900 --> 00:12:34,600 intellectual property that the company is working on you. 229 00:12:34,600 --> 00:12:38,000 You really have to become a full-time employee, as it would 230 00:12:38,000 --> 00:12:42,000 be difficult in those worlds, to contribute technically to 231 00:12:42,000 --> 00:12:45,400 contribute to the core science and technology. 232 00:12:45,500 --> 00:12:48,900 That each of our portfolio companies are working on. 233 00:12:49,100 --> 00:12:52,100 Whereas in crypto, this much more is much more collaborative 234 00:12:52,100 --> 00:12:53,700 environment. The fact that it's all open 235 00:12:53,700 --> 00:12:56,800 source actually changes the game and makes it makes it possible 236 00:12:56,800 --> 00:13:01,500 for us to build the research team, which Is led by Tim 237 00:13:01,500 --> 00:13:03,000 roughgarden. He's a former professor at 238 00:13:03,008 --> 00:13:06,100 Stanford was actually my purposely we get took all of his 239 00:13:06,100 --> 00:13:09,100 classes and these were these were some of the most 240 00:13:09,100 --> 00:13:12,200 interesting and hardest classes that I ever took it. 241 00:13:12,200 --> 00:13:17,800 He's a Pioneer in the world of algorithmic Game Theory and he's 242 00:13:17,800 --> 00:13:20,100 also extremely deep in the space. 243 00:13:20,500 --> 00:13:23,400 So he in a sense he's a bit of a bit of a unicorn are very few 244 00:13:23,400 --> 00:13:27,800 people who have the kind of knowledge and breadth of the 245 00:13:27,800 --> 00:13:30,400 traditional literature the academic literature around 246 00:13:30,400 --> 00:13:32,100 distributed. Systems and Game Theory and 247 00:13:32,100 --> 00:13:34,800 mechanism design. But who also deeply understand 248 00:13:34,800 --> 00:13:39,000 the crypto and blockchains and bring those two together to do 249 00:13:39,000 --> 00:13:41,300 what he's been on the podcast search and this distance great 250 00:13:41,700 --> 00:13:42,700 own accord. We have course. 251 00:13:43,200 --> 00:13:46,300 And he was he was actually the person who who did the formal 252 00:13:46,300 --> 00:13:51,000 analysis of our VIP 1559 and and actually got the community or 253 00:13:51,000 --> 00:13:53,900 helped get the community more comfortable with incorporating. 254 00:13:54,000 --> 00:13:57,900 Yet be won by 1592 aetherium. So he's the head of research and 255 00:13:57,900 --> 00:14:03,300 under him we have a team of World-class researchers across 256 00:14:03,700 --> 00:14:07,900 cryptography, distributed systems, economics Game Theory 257 00:14:08,300 --> 00:14:11,300 mechanism design, and we're still going to be open to, to 258 00:14:11,300 --> 00:14:14,500 continue to expand that team. And the idea there is a is that 259 00:14:14,500 --> 00:14:17,000 they can really help our portfolio companies at the very 260 00:14:17,000 --> 00:14:19,800 least, understand what's been done before. 261 00:14:20,200 --> 00:14:23,700 And then also, we can help them, think through some of the 262 00:14:23,700 --> 00:14:28,000 open-ended problems that are actually research problems in 263 00:14:28,000 --> 00:14:30,600 that team, works very closely with our engineering. 264 00:14:31,100 --> 00:14:35,500 Just headed by a lazarum. You may also know as any labs 265 00:14:35,500 --> 00:14:39,300 are in, is our CTO and head of head of research and under him, 266 00:14:39,300 --> 00:14:44,000 we have a team of, of, I get extremely senior, very sort of, 267 00:14:44,800 --> 00:14:48,900 they like better and like, like a smart contract Engineers. 268 00:14:49,300 --> 00:14:54,000 A security Engineers people who build build things and they work 269 00:14:54,000 --> 00:14:57,400 closely with our research team, and our portfolio to, to 270 00:14:57,400 --> 00:15:00,200 actually produce a production grade code. 271 00:15:00,200 --> 00:15:02,500 And and so Much of the work that they do tests to be open source 272 00:15:02,500 --> 00:15:04,300 again. If the idea here is that we want 273 00:15:04,300 --> 00:15:07,800 to contribute, we want to help our portfolio solve open-ended 274 00:15:07,800 --> 00:15:10,200 problems, but we also want to help community at large. 275 00:15:10,200 --> 00:15:13,700 So, all of the work that we do is fully public and we publish 276 00:15:13,700 --> 00:15:17,300 all the research papers and all of the research content both in 277 00:15:17,300 --> 00:15:20,800 our website. And then also on in a reviewed 278 00:15:20,800 --> 00:15:23,400 conferences, on the research side and then we publish all of 279 00:15:23,400 --> 00:15:25,600 the code that our engineering team. 280 00:15:26,000 --> 00:15:29,800 Produces in our GitHub repo, right? 281 00:15:29,800 --> 00:15:32,800 So it's all it's all. So those two teams work closely 282 00:15:32,800 --> 00:15:35,500 with our portfolio and there's a third important team which is 283 00:15:35,500 --> 00:15:40,200 very different from from a good traditional Venture side, kind 284 00:15:40,200 --> 00:15:42,600 of the main firm and that is the Regulatory and policy team 285 00:15:43,100 --> 00:15:46,400 because as you guys know that's that's obviously, look at a huge 286 00:15:46,400 --> 00:15:48,800 open, open. Kind of question in the space. 287 00:15:49,400 --> 00:15:53,500 There are no bright lines is to what is regulatory compliant, 288 00:15:53,500 --> 00:15:56,000 and what isn't? And as a result we have to take 289 00:15:56,100 --> 00:16:00,700 we have to be very smart about about how we navigate. 290 00:16:00,800 --> 00:16:02,900 Negate, the regular regulatory landscape. 291 00:16:02,900 --> 00:16:07,500 And so, we have a team that includes that includes people 292 00:16:07,500 --> 00:16:10,200 from people who have been extremely senior, just about 293 00:16:10,200 --> 00:16:13,300 every regulatory agency, including, for example, Bill 294 00:16:13,300 --> 00:16:18,600 Kahneman, who, who was the person who actually established 295 00:16:18,600 --> 00:16:23,000 the framework for decentralisation at the SEC who 296 00:16:23,700 --> 00:16:27,000 established for example, that that ethereal should not be 297 00:16:27,008 --> 00:16:31,500 considered a security in part because or largely because It 298 00:16:31,500 --> 00:16:33,700 feels like the fourth prong of the how we just the fact that 299 00:16:33,700 --> 00:16:37,400 it's that there's no managerial and entrepreneurial efforts of 300 00:16:37,400 --> 00:16:40,900 others because it's fully decentralized is allowable frame 301 00:16:40,900 --> 00:16:44,200 working from him and so he he works closely with us and and 302 00:16:44,300 --> 00:16:47,300 and watch with a portfolio company step to think through 303 00:16:47,300 --> 00:16:49,600 some of the regulatory constraints it. 304 00:16:49,600 --> 00:16:52,000 So then it's important to have both of those three teams. 305 00:16:52,000 --> 00:16:55,700 The research engineering and Regulatory policy teams in the 306 00:16:55,700 --> 00:16:59,200 same room often with the portfolio company to be able to 307 00:16:59,200 --> 00:17:02,100 explore at the same time. All of the possibilities on the 308 00:17:02,100 --> 00:17:04,400 research and Engineering side, but then also the constraints, 309 00:17:04,400 --> 00:17:05,500 like, how do you design a protocol? 310 00:17:05,500 --> 00:17:10,900 That also is also compliant and doesn't doesn't run afoul of by 311 00:17:10,900 --> 00:17:14,800 Securities laws or a male, like a comprehensive regulatory 312 00:17:14,800 --> 00:17:17,000 constraints. So, those are the three 313 00:17:17,000 --> 00:17:20,500 important teams that are fairly unique to crypto and other. 314 00:17:20,599 --> 00:17:24,800 No other vertical. At the firm has has those those 315 00:17:24,800 --> 00:17:29,100 teams just yet and then beyond that we have like the more 316 00:17:29,100 --> 00:17:32,600 traditional the traditional team That the help of Performing 317 00:17:32,600 --> 00:17:34,100 companies and the ways that you'd expect. 318 00:17:34,500 --> 00:17:37,100 So for example, we have a big recruiting team to help our 319 00:17:37,200 --> 00:17:40,200 portfolio. Companies recruit at at every 320 00:17:40,200 --> 00:17:43,400 level recruit both individual contributors people like 321 00:17:43,400 --> 00:17:47,300 software Engineers product Managers generally product or ux 322 00:17:47,300 --> 00:17:51,600 people, as well as Executives. So higher, like, if you want to 323 00:17:51,608 --> 00:17:54,500 hire like a general counsel, for example, which is again, super 324 00:17:54,500 --> 00:17:58,100 important given the regulatory piece to the recruiting team is 325 00:17:58,100 --> 00:18:01,600 an important function with. We also have The kind of the biz 326 00:18:01,600 --> 00:18:05,400 Dev Market Dev team which helps with Partnerships and that team 327 00:18:05,400 --> 00:18:08,900 is connected to just about every team, every every entity, every 328 00:18:09,100 --> 00:18:11,800 individual important, individual, and the space, and 329 00:18:11,800 --> 00:18:13,900 also outside of the space. So we want to connect our 330 00:18:13,908 --> 00:18:18,400 portfolio companies to potential Partners to exchanges. 331 00:18:18,900 --> 00:18:21,900 Maybe also Partners from the traditional world, like, we want 332 00:18:21,900 --> 00:18:24,300 to connect them to this to a company like, like stride for 333 00:18:24,300 --> 00:18:27,700 resale companies, like that, that team is basically the 334 00:18:27,700 --> 00:18:32,500 connector of everything and beyond that we have the 335 00:18:32,500 --> 00:18:37,100 marketing team, which, which helps base helps us basically 336 00:18:37,100 --> 00:18:39,400 produce all the content we do, but it also works closely with 337 00:18:39,400 --> 00:18:43,500 the portfolio companies to to shape the narrative to pick 338 00:18:43,500 --> 00:18:48,700 maybe sickly help them tell the story of their company and we 339 00:18:48,700 --> 00:18:54,800 hope especially around born in moments like announcements or or 340 00:18:54,808 --> 00:18:58,500 for example, if there happens to be some kind of Crisis, we can 341 00:18:58,500 --> 00:19:02,800 really be helpful at managing the ER and that the cons around 342 00:19:02,800 --> 00:19:05,600 around moments of Crisis. That's a very important theme. 343 00:19:06,400 --> 00:19:10,600 And then finally, we have the network operations team which is 344 00:19:10,600 --> 00:19:14,400 the team that allows us to participate actively in all of 345 00:19:14,400 --> 00:19:16,200 the networks that we were involved with. 346 00:19:16,700 --> 00:19:20,300 And so that involves staking our tokens for example, for layer 1 347 00:19:20,300 --> 00:19:25,100 block chains and involves voting or tokens for protocols that 348 00:19:25,100 --> 00:19:28,800 have on chain governance it involves delegating or tokens to 349 00:19:28,800 --> 00:19:32,000 other players in the space. So as to increase of the 350 00:19:32,000 --> 00:19:33,600 centralization of these networks. 351 00:19:34,500 --> 00:19:37,000 So for example, we have this this delegate program that in 352 00:19:37,100 --> 00:19:43,800 that involves many University watching groups that are very 353 00:19:43,800 --> 00:19:47,100 eager to learn a lot about space and would like to participate 354 00:19:47,100 --> 00:19:49,800 and some of the governance conversations that happen for 355 00:19:49,900 --> 00:19:52,500 for protocols. Like you to swap and compound 356 00:19:52,500 --> 00:19:54,000 and protocols like that, like that. 357 00:19:55,100 --> 00:19:58,500 So we very actively have a whole process for for bedding, the 358 00:19:58,500 --> 00:20:02,300 various different delegates. That we can potentially do get 359 00:20:02,300 --> 00:20:06,200 tokens to as a way of including more voices in the conversation 360 00:20:06,200 --> 00:20:08,500 and making the space more more decentralized. 361 00:20:09,500 --> 00:20:13,200 So that was a bit of a rat. That's that's maybe the full 362 00:20:13,600 --> 00:20:16,700 rundown of the, the various different ways that we work with 363 00:20:16,708 --> 00:20:19,200 the portfolio. And that's how the team is 364 00:20:19,200 --> 00:20:22,300 structured. So only for those of us who 365 00:20:22,300 --> 00:20:25,400 don't know, a lot about the Venture Capital business you 366 00:20:25,900 --> 00:20:30,900 started off as partner in the the in the crypto arm of a sixth 367 00:20:30,900 --> 00:20:34,200 easy and then you became General partner I think a couple of 368 00:20:34,200 --> 00:20:36,200 years back. That's right. 369 00:20:36,800 --> 00:20:40,600 What does a partner do and what is a general partner do in this 370 00:20:40,600 --> 00:20:45,800 in this organization structure? General partners are responsible 371 00:20:45,800 --> 00:20:49,100 for ultimately making investment decisions and in the whole 372 00:20:49,100 --> 00:20:51,900 investment team works together at at finding the best. 373 00:20:51,900 --> 00:20:56,600 Founders being connected to everyone in the space thinking 374 00:20:56,600 --> 00:21:02,100 through what our thesis for this place is it's always an active 375 00:21:02,100 --> 00:21:05,000 conversation and we have many meetings internally to discuss 376 00:21:05,000 --> 00:21:08,000 what we believe to be true. And what we think might be 377 00:21:08,000 --> 00:21:10,800 interesting to invest in. So it's a fairly flat 378 00:21:10,800 --> 00:21:15,700 organization and that Dee has a very active role in making any 379 00:21:15,700 --> 00:21:17,600 one particular investment. And then the, the one 380 00:21:17,600 --> 00:21:20,600 distinction is that ultimately, a general partner, is the one 381 00:21:20,600 --> 00:21:23,800 who makes the final, the final decision of whether or not to 382 00:21:23,800 --> 00:21:26,100 invest. And also is the primary point of 383 00:21:26,100 --> 00:21:29,600 contact with, with the portfolio company thereafter, do the whole 384 00:21:29,600 --> 00:21:31,200 team again? I got it should basically, went 385 00:21:31,200 --> 00:21:34,400 through the whole team that ultimately, the portfolio 386 00:21:34,400 --> 00:21:36,800 company will work with and the general partner ends up being 387 00:21:36,800 --> 00:21:39,500 more of a router or like a psycho, you need help. 388 00:21:39,500 --> 00:21:42,000 The majority will let me let me connect you to create the go. 389 00:21:43,600 --> 00:21:46,500 You start to dim or there's an engineering problem to talk to 390 00:21:46,500 --> 00:21:49,500 edit. So it's really a team effort. 391 00:21:49,500 --> 00:21:52,400 Like we all we all work very closely together and we're 392 00:21:52,400 --> 00:21:57,800 different from many other Venture firms in that we really 393 00:21:57,800 --> 00:22:03,300 do work as a team and is not as if every investor has its own 394 00:22:03,300 --> 00:22:09,100 his or her own mandate. And it is is like a little bits 395 00:22:09,100 --> 00:22:11,400 like survival of the fittest that which tends to be the case 396 00:22:11,400 --> 00:22:14,000 in other places where there's just less teamwork and each 397 00:22:14,000 --> 00:22:18,000 person is more of a solo actor. Here we do have a ballistic 398 00:22:18,000 --> 00:22:20,700 General thesis for the space. We all believe it will be ball. 399 00:22:20,700 --> 00:22:24,400 Kind of crafted it together. We debated constantly and we 400 00:22:24,400 --> 00:22:27,000 work closely together to make sure that all of our companies 401 00:22:27,000 --> 00:22:31,900 are supported Let's let's maybe talk about the thesis a little 402 00:22:31,900 --> 00:22:36,900 bit or, you know, to the extent to whatever extent we want it. 403 00:22:36,900 --> 00:22:38,800 We could we could probably talk about the thesis for a long 404 00:22:38,800 --> 00:22:41,100 time. So what is the, what is a 60s? 405 00:22:41,100 --> 00:22:46,800 These pieces when it comes to crypto, Yeah, well the the heart 406 00:22:46,800 --> 00:22:50,000 of it starts with the, with the Insight, which I think by now 407 00:22:50,000 --> 00:22:54,900 is, is now better understood that a blockchain is a computer. 408 00:22:55,300 --> 00:22:58,700 It's a the best way to think of it as a is a computer and it's 409 00:22:58,700 --> 00:23:02,300 not it's not some sort of database or Ledger or whatever 410 00:23:02,300 --> 00:23:03,400 you not. There are many. 411 00:23:03,500 --> 00:23:06,400 Many other terms of people like to use to describe blockchains 412 00:23:07,000 --> 00:23:08,600 another right model to think about. 413 00:23:08,600 --> 00:23:11,600 This is a new paradigm for computation. 414 00:23:11,800 --> 00:23:14,800 It is a computer that has special Properties. 415 00:23:15,200 --> 00:23:18,100 If you if you look back at the history of computing, every 416 00:23:18,200 --> 00:23:22,600 every Paradigm along the way as introduced something that's 417 00:23:22,600 --> 00:23:25,600 qualitatively different and that's what that's what kind of 418 00:23:25,600 --> 00:23:28,300 demarcates the different, the different phases of competition. 419 00:23:28,400 --> 00:23:30,700 And that's also what allows for the kinds of applications that 420 00:23:30,700 --> 00:23:34,600 we can build to expand and to enter kind of bleed into more 421 00:23:34,600 --> 00:23:37,400 aspects of Our Lives. As we started with things like 422 00:23:37,900 --> 00:23:40,700 minicomputers and mainframes and then we moved on to personal 423 00:23:40,700 --> 00:23:43,800 computers and then we had cloud and mobile. 424 00:23:44,500 --> 00:23:46,400 Men, the whole kind of Internet chapter. 425 00:23:47,700 --> 00:23:52,400 And now we contend how we have. We have blocked it and if you 426 00:23:52,400 --> 00:23:57,600 look at previous waves of computation, new kind of 427 00:23:57,600 --> 00:23:58,300 computing. Paradigm. 428 00:23:58,300 --> 00:24:02,500 Is that, for example, take mobile Tend to actually be worse 429 00:24:02,500 --> 00:24:05,300 than previous paradigms, in many ways, maybe in most ways. 430 00:24:05,300 --> 00:24:07,600 Like, for example, a mobile phone is a slower computer, then 431 00:24:07,600 --> 00:24:09,800 a personal computer and it doesn't have a keyboard and it 432 00:24:09,800 --> 00:24:12,400 has limited battery life and it has a small screen right in and 433 00:24:12,400 --> 00:24:15,200 it's it's kind of maybe clunky to use it first. 434 00:24:15,900 --> 00:24:19,800 But it has one key feature that personal computers don't have. 435 00:24:19,800 --> 00:24:23,200 And that that it fits in your pocket and that it has a GPS and 436 00:24:23,200 --> 00:24:26,500 that it has like this all of these and mobile features that 437 00:24:26,800 --> 00:24:29,300 that actually unlock new kinds of applications. 438 00:24:29,300 --> 00:24:32,300 Did you couldn't possibly built? It on a personal computer which 439 00:24:32,300 --> 00:24:34,600 include things like uber, for example, right? 440 00:24:34,600 --> 00:24:38,100 Or include all of the, you know, the things that we love about 441 00:24:38,100 --> 00:24:40,000 about like the mobile Revolution, the kinds of things 442 00:24:40,500 --> 00:24:43,100 that people have built over the past couple of decades. 443 00:24:44,500 --> 00:24:46,800 So our contention is that blockchains yes. 444 00:24:46,800 --> 00:24:50,200 Like there are criticisms of them that are true. 445 00:24:50,400 --> 00:24:53,300 Like, for example that they are very slow conduction is a 446 00:24:53,300 --> 00:24:55,300 computer. It's a very slow computer. 447 00:24:55,700 --> 00:25:01,500 It's an expensive computer run but There are features that 448 00:25:01,500 --> 00:25:04,100 block his have the traditional computers don't have. 449 00:25:04,600 --> 00:25:07,700 And in particular block, chains are a kind of computer that 450 00:25:07,700 --> 00:25:11,700 allow developers to write programs that have a life of 451 00:25:11,700 --> 00:25:14,000 their own. In a sense, these are programs 452 00:25:14,000 --> 00:25:17,900 that can make strong commitments about their own behavior in the 453 00:25:17,900 --> 00:25:20,200 future. These are programs that run 454 00:25:20,500 --> 00:25:25,100 without interference from anyone from including the people, who 455 00:25:25,100 --> 00:25:29,100 originally wrote them, including the people who run the actual 456 00:25:29,100 --> 00:25:31,900 physical. Machines that execute the logic 457 00:25:31,900 --> 00:25:35,000 of those programs and including the people who interact with 458 00:25:35,000 --> 00:25:38,500 those programs. As they run these programs can 459 00:25:38,500 --> 00:25:40,400 run free of interference from all of those. 460 00:25:40,600 --> 00:25:44,300 All of those players. And that's a very powerful thing 461 00:25:45,100 --> 00:25:47,500 in particular, is powerful, because it can create a kind of 462 00:25:47,500 --> 00:25:51,600 trust that a normal program that runs in a computer that someone 463 00:25:51,600 --> 00:25:55,200 else controls cannot engender. One way of putting. 464 00:25:55,200 --> 00:25:59,700 This is our credit to Chris is that blockchains invert the 465 00:25:59,900 --> 00:26:01,600 Relationship between software and Hardware. 466 00:26:02,300 --> 00:26:06,400 We're traditionally Hardware has power over software because 467 00:26:06,400 --> 00:26:09,900 whomever controls the hardware can turn the the software off or 468 00:26:09,900 --> 00:26:11,600 can change it into whatever they want. 469 00:26:12,000 --> 00:26:15,300 Whereas in crypto on a blockchain is the reverse. 470 00:26:15,400 --> 00:26:17,300 The software actually has power over the hardware. 471 00:26:17,800 --> 00:26:22,100 The hardware is actually just provided as a commodity by 472 00:26:22,100 --> 00:26:24,000 various different. Participants who have an 473 00:26:24,000 --> 00:26:25,700 economic incentive to participate. 474 00:26:25,700 --> 00:26:29,200 But, we do not have any kind of control or what the software 475 00:26:29,400 --> 00:26:30,100 does. Does. 476 00:26:30,400 --> 00:26:33,200 And that's a very powerful shift that has never that has never 477 00:26:33,200 --> 00:26:35,700 happened in history of computer, computer science, having a 478 00:26:35,708 --> 00:26:38,500 network, and the software have power over the hardware. 479 00:26:38,700 --> 00:26:40,600 That's what's unique. That's what's different about 480 00:26:40,600 --> 00:26:42,800 blockchains. And as I mentioned before, the 481 00:26:42,800 --> 00:26:47,200 powerful thing about this is that it can create applications 482 00:26:47,200 --> 00:26:49,300 that have a different level of trust. 483 00:26:49,500 --> 00:26:53,000 The first application of that was Bitcoin, where the fact that 484 00:26:53,000 --> 00:26:57,700 you can trust that Bitcoin will only have will only ever have 21 485 00:26:57,700 --> 00:27:01,000 million Bitcoins and that As we processed in a way. 486 00:27:01,000 --> 00:27:05,400 That's that is, well, defined in that is valid, and that no one 487 00:27:05,408 --> 00:27:07,600 can really subvert the logic of how Bitcoin works. 488 00:27:07,600 --> 00:27:10,200 And that's the first example, what is the very simple example 489 00:27:10,208 --> 00:27:13,100 and we contend there's so many different different things that 490 00:27:13,100 --> 00:27:15,100 you can do. Like, now that you have this 491 00:27:15,100 --> 00:27:17,000 primitive, you have this kind of program that can make 492 00:27:17,000 --> 00:27:18,900 commitments. What can you build with that? 493 00:27:18,900 --> 00:27:21,400 Some of the applications that you could build might be 494 00:27:21,400 --> 00:27:24,200 Financial in nature of Finance lends itself. 495 00:27:24,200 --> 00:27:27,200 Well to this space because of the fact that it requires trust 496 00:27:27,200 --> 00:27:31,200 so you can build maybe more Enid Financial Primitives like that, 497 00:27:31,200 --> 00:27:34,600 that maybe the whole like defy world, you can build exchanges. 498 00:27:34,600 --> 00:27:37,800 That are decentralized that have assembled property of trust, 499 00:27:37,800 --> 00:27:39,900 ready? Or you can build a landing 500 00:27:39,900 --> 00:27:41,100 platform. You can build stable coins. 501 00:27:41,100 --> 00:27:43,000 You can build some of the interesting divide Primitives of 502 00:27:43,000 --> 00:27:46,800 people have experimented with, but you can also build these. 503 00:27:46,800 --> 00:27:49,200 I have nothing to do with finance and I think one of my 504 00:27:49,200 --> 00:27:54,200 favorite examples, which is fairly topical these days is the 505 00:27:54,200 --> 00:27:57,300 whole, the whole world of of social media. 506 00:27:58,100 --> 00:28:00,700 Because you can conceivably build something like a 507 00:28:00,700 --> 00:28:03,800 decentralized social network that is truly decentralized. 508 00:28:04,100 --> 00:28:09,300 And doesn't have a monopolistic 44, billion-dollar Tech Giant in 509 00:28:09,300 --> 00:28:12,300 the middle that can control who you get the follow. 510 00:28:12,400 --> 00:28:16,200 That can control who gets to follow you. 511 00:28:16,400 --> 00:28:19,300 That controls what you see, and has like, the one given 512 00:28:19,300 --> 00:28:23,900 algorithm one given duration, mechanism that controls would 513 00:28:23,900 --> 00:28:26,900 you feed contains. And instead, you can build 514 00:28:26,900 --> 00:28:29,200 something that is decentralized. As were you as a user control 515 00:28:29,200 --> 00:28:32,400 your own identity, you as a user control, you get to follow and 516 00:28:32,400 --> 00:28:34,700 get to follow you. You maybe even control the 517 00:28:34,700 --> 00:28:38,100 algorithm that's used to curate content and you have control 518 00:28:38,100 --> 00:28:40,900 over your feet and it could be a whole Marketplace for different 519 00:28:40,900 --> 00:28:44,300 kinds of recommendation, algorithms, that is competitive, 520 00:28:44,300 --> 00:28:47,700 and people and people participate in it. 521 00:28:48,900 --> 00:28:50,600 And then you can do that with crypto in the same way that you 522 00:28:50,608 --> 00:28:54,300 can build Bitcoin and it has the same property that you can trust 523 00:28:54,300 --> 00:28:58,200 that the network will maintain and will commit to certain 524 00:28:58,200 --> 00:29:01,800 rules, that, that will be up out throughout time that cannot be 525 00:29:01,800 --> 00:29:03,700 changed by some kind of central operator. 526 00:29:05,200 --> 00:29:07,500 So, that's basically the heart of the pieces, and there's that 527 00:29:07,500 --> 00:29:10,100 there are many applications that but that's where it where it 528 00:29:10,100 --> 00:29:13,600 starts. Yeah, that's interesting. 529 00:29:14,000 --> 00:29:19,000 Way to you know I think if you still if you ask a lot of people 530 00:29:19,000 --> 00:29:22,500 today what is a blockchain? I think like 90% of people will 531 00:29:22,500 --> 00:29:25,000 say it's a decentralized database or it's like a 532 00:29:25,300 --> 00:29:27,600 decentralized ledger or yeah. This. 533 00:29:27,600 --> 00:29:30,800 This idea of a decentralized letters Ledger still permeates 534 00:29:30,800 --> 00:29:36,600 and and I think there is a shift You know, in there it is in the 535 00:29:36,600 --> 00:29:38,800 industry. That is that is leaning more 536 00:29:38,800 --> 00:29:42,700 towards this idea that it is a computer and, you know, like it 537 00:29:42,700 --> 00:29:45,000 sort of started that way with etherium as the world computer. 538 00:29:45,000 --> 00:29:48,100 And then it went to decentralize Ledger's like in the whole like 539 00:29:48,100 --> 00:29:52,300 mid 2000s with or 2010s with like Enterprise trying to build 540 00:29:52,300 --> 00:29:56,100 whatever their private probably attend that whole thing. 541 00:29:56,100 --> 00:29:58,000 Yeah, old and blockchain not Bitcoin. 542 00:29:58,000 --> 00:29:59,500 Exactly. Yeah. 543 00:29:59,500 --> 00:30:04,600 It's so I think a lot of that narrative came from that and now 544 00:30:04,900 --> 00:30:07,900 Oh, it's it from from what I'm seeing, like, teams that were 545 00:30:07,900 --> 00:30:10,200 looking at. And the narratives that we see, 546 00:30:10,200 --> 00:30:14,100 at least, like, I'm pretty, I'm fairly well connected like, in 547 00:30:14,100 --> 00:30:17,200 the inner chain, ecosystem, those, those narratives are 548 00:30:17,200 --> 00:30:19,400 starting to come back again and I think it's quite positive 549 00:30:19,400 --> 00:30:22,500 because it really does. I think a line, well, like I 550 00:30:22,508 --> 00:30:26,400 said with the with the evolution of computing and, you know, it 551 00:30:26,400 --> 00:30:30,800 might very well be that if you go back to the example of 552 00:30:30,800 --> 00:30:35,200 mobile. Mobile enabled, new types of 553 00:30:35,200 --> 00:30:41,100 applications that are are well-suited like for people who 554 00:30:41,100 --> 00:30:44,400 are not who are not stationary, right? 555 00:30:44,400 --> 00:30:47,700 It's like their applications that are well suited for for 556 00:30:47,700 --> 00:30:50,000 Mobility through their mobile. Right? 557 00:30:51,100 --> 00:30:54,600 We're here, you know, the types of applications I think we will 558 00:30:54,600 --> 00:30:57,500 discover is types of applications and sort of like 559 00:30:57,500 --> 00:30:58,900 self-serving the what I'm about to say. 560 00:30:58,900 --> 00:31:03,300 But the types of applications that that require Typically that 561 00:31:03,300 --> 00:31:08,000 will require trust in a person or an entity and what will 562 00:31:08,000 --> 00:31:13,100 realize you know, as as crypto and decentralized applications 563 00:31:13,100 --> 00:31:16,000 become more mainstream is that, that that this will be the 564 00:31:16,000 --> 00:31:18,100 defining factor. And yeah. 565 00:31:18,800 --> 00:31:26,100 So let me you've started off in my Stead these blockchains at 566 00:31:26,100 --> 00:31:29,800 distributed computers and the key property is that programs 567 00:31:29,800 --> 00:31:34,000 running on these computers are able to credibly commit 568 00:31:35,400 --> 00:31:39,600 Something about their future Behavior to participants and 569 00:31:39,600 --> 00:31:44,000 because then able to credibly commit about simcha behaviors in 570 00:31:44,000 --> 00:31:48,200 action and end up getting applied to finance because those 571 00:31:48,200 --> 00:31:51,600 sorts of commitments are important in finance. 572 00:31:52,300 --> 00:31:56,700 Yes. From this Viewpoint as it the 573 00:31:56,700 --> 00:32:02,900 you see particular verticals in the crypto area but you can 574 00:32:02,900 --> 00:32:06,500 subscribe to that are you know, especially Code or especially 575 00:32:06,500 --> 00:32:09,800 bullish about. So, what I mean is you can scan 576 00:32:09,800 --> 00:32:13,200 across crypto, you have the crypto gaming area, then you 577 00:32:13,200 --> 00:32:18,300 have the Storage storage area, on a Computing Services area. 578 00:32:18,300 --> 00:32:22,100 Then you have defiled, you have these exchanges, you have this 579 00:32:22,100 --> 00:32:26,600 data sharing area data dolls, Etc, right, are there any 580 00:32:26,600 --> 00:32:29,700 particular areas that you are especially when the shop out and 581 00:32:29,700 --> 00:32:32,000 believe that in twenty twenty years? 582 00:32:32,800 --> 00:32:36,600 That those one or two areas are going to be a massive success 583 00:32:36,600 --> 00:32:41,000 has the power law successes. Yes, absolutely. 584 00:32:41,400 --> 00:32:47,000 So I think we want to be other ways in which trust really plays 585 00:32:47,000 --> 00:32:51,500 an important role in the world of software is, is this notion 586 00:32:51,500 --> 00:32:56,800 of platform risk, which is directly in the web to world has 587 00:32:56,800 --> 00:33:00,900 been a huge source of risk for any startup that is potentially 588 00:33:00,900 --> 00:33:05,600 building on top of some other companies, apis. 589 00:33:06,000 --> 00:33:08,100 And I think you mean you really are, we're all kind of seen 590 00:33:08,100 --> 00:33:09,500 this. There would have been many Art 591 00:33:09,500 --> 00:33:12,900 ups, for example, that built on top of Twitter, apis, a long 592 00:33:12,900 --> 00:33:14,700 time ago. Remember, like Tweety and 593 00:33:14,700 --> 00:33:17,500 there's a whole kind of set of companies that we're doing 594 00:33:17,500 --> 00:33:20,100 interesting things, and composing different, kinds of 595 00:33:20,100 --> 00:33:23,500 web to apis, but that ultimately because those apis are 596 00:33:23,500 --> 00:33:25,400 controlled by a centralized company. 597 00:33:26,500 --> 00:33:29,600 The company, the central company can change the rules and can 598 00:33:29,600 --> 00:33:31,400 decide to move against the startup. 599 00:33:31,400 --> 00:33:35,000 That is starting to get big. And instead charge more or 600 00:33:35,000 --> 00:33:38,100 instead, like change. Something about how the apis 601 00:33:38,100 --> 00:33:41,600 work, such that the central company, captures more value, 602 00:33:41,600 --> 00:33:44,200 and then maybe the startup ends up dying in. 603 00:33:44,208 --> 00:33:46,500 This happen has happened time and time again, where there's 604 00:33:46,500 --> 00:33:49,000 certainly kind of like the Tweety Twitter, or example. 605 00:33:49,000 --> 00:33:52,000 There's Zynga Facebook. And it's also, by the way, they 606 00:33:52,000 --> 00:33:54,900 it's back to to kind of the world, the world of operating 607 00:33:54,900 --> 00:33:57,700 systems where we You have operating systems like, 608 00:33:57,700 --> 00:33:59,900 Microsoft Windows. Also, subverting, the 609 00:33:59,900 --> 00:34:01,900 functionality of some of the applications that are built on 610 00:34:01,900 --> 00:34:03,800 top. So platform, wrist has been at 611 00:34:03,800 --> 00:34:07,400 the game and technology is and software for a very long time. 612 00:34:08,800 --> 00:34:11,199 And I think it gives you some insight as to how crypto can be 613 00:34:11,199 --> 00:34:14,900 used for things that are no longer Financial in nature. 614 00:34:15,600 --> 00:34:22,800 So when you can build a program that has a kind of API that is 615 00:34:22,800 --> 00:34:25,699 committed to that that the program committee. 616 00:34:25,800 --> 00:34:29,500 To not change it. Then you neutralize platform 617 00:34:29,500 --> 00:34:34,500 risk and it has a result allows startup companies to build on 618 00:34:34,500 --> 00:34:36,699 top of that program in a way that, that it is no longer 619 00:34:36,699 --> 00:34:40,300 possible in the world of web to these days. 620 00:34:40,300 --> 00:34:43,400 If there's a company that comes pitch outs, for example, you 621 00:34:43,500 --> 00:34:46,400 could they come to pitch our main main father consumer phone 622 00:34:47,400 --> 00:34:51,300 with an idea to build a product that depends entirely on the 623 00:34:51,300 --> 00:34:55,100 apis of Instagram for the apis of Google or whatever? 624 00:34:55,800 --> 00:34:58,500 That's a non-starter because it is now very well known that, 625 00:34:58,500 --> 00:35:01,300 that, that that won't work. You cannot build a massive 626 00:35:01,300 --> 00:35:04,900 company on top of the apis of a company like that because at 627 00:35:04,900 --> 00:35:08,400 some point sooner, or later, right, whoever runs that 628 00:35:08,400 --> 00:35:12,000 centralized company will change the roles and they will want to 629 00:35:12,000 --> 00:35:13,700 capture more of the value which is doesn't work. 630 00:35:14,300 --> 00:35:16,900 So now, I think this is, this is, by the way that enables 631 00:35:16,900 --> 00:35:19,200 composability in the world of cricket, in fact that you can 632 00:35:19,200 --> 00:35:23,000 neutralize platform risk, the fact that you can actually build 633 00:35:23,000 --> 00:35:26,000 on top of the theory. Mmm, And not worry that if you 634 00:35:26,000 --> 00:35:28,700 remove change the rules on you and we'll try to take a bigger 635 00:35:28,700 --> 00:35:33,900 cut of the, of the money that you're prod product makes that's 636 00:35:33,900 --> 00:35:36,200 huge. And in fact, that that continues 637 00:35:36,200 --> 00:35:39,400 even above that, right? The fact that you can build a 638 00:35:39,400 --> 00:35:43,000 product or a start up on top of the unit swap where you can 639 00:35:43,000 --> 00:35:48,400 build a startup on top of some of the, some of the applications 640 00:35:48,400 --> 00:35:50,600 that are already running on top of the theory on because those 641 00:35:50,600 --> 00:35:52,300 applications also make commitments. 642 00:35:52,500 --> 00:35:56,600 Then you can actually you can actually trust So, I give you 643 00:35:56,600 --> 00:36:00,800 one example of a vertical or above sort of an area that's 644 00:36:00,800 --> 00:36:04,500 super interesting, which is that of social media like 645 00:36:04,500 --> 00:36:08,000 decentralized social media. The fact that you can build a 646 00:36:08,008 --> 00:36:12,600 decentralized social network that has rules and has apis that 647 00:36:12,800 --> 00:36:16,700 that can be trusted in perpetuity is very interesting. 648 00:36:16,700 --> 00:36:22,800 Because now, now you can have a social network where the social 649 00:36:22,800 --> 00:36:26,800 graph is I kind of like a public good, right? 650 00:36:26,800 --> 00:36:30,100 That exists on chain that is owned, collectively by all of 651 00:36:30,107 --> 00:36:32,000 the users. You own your node in the graph 652 00:36:32,000 --> 00:36:33,900 and other users on their own notes. 653 00:36:34,600 --> 00:36:37,400 And then all sorts of startups can build on top of that, same 654 00:36:37,400 --> 00:36:40,700 social graph, you can imagine a start of building, one 655 00:36:40,700 --> 00:36:44,700 particular client, that gives you one of you into the social 656 00:36:44,700 --> 00:36:47,700 graph and that may be the size to curate content in one 657 00:36:47,700 --> 00:36:50,100 particular way. But someone else can build a 658 00:36:50,107 --> 00:36:53,400 client to that's different. That has a different interface 659 00:36:53,400 --> 00:36:56,400 that maybe maybe Like highlights different kinds of content. 660 00:36:56,700 --> 00:36:58,800 Maybe one of them is kind of like Instagram and another one 661 00:36:58,800 --> 00:37:02,700 is more like medium. I don't know, but it's the same 662 00:37:02,700 --> 00:37:04,000 social graph. And this is what enables the 663 00:37:04,008 --> 00:37:07,000 composability and none of those startups that are building on 664 00:37:07,000 --> 00:37:09,800 top of the social graph, have to worry that the rules will be 665 00:37:09,800 --> 00:37:14,400 changed from underneath them and that and that as a result, there 666 00:37:14,500 --> 00:37:17,800 they'll go out of business. So that's one very interesting 667 00:37:18,100 --> 00:37:21,200 vertical where where there's notion of platform risk plays a 668 00:37:21,200 --> 00:37:24,400 role where crypto I think in crypto in the trust feature. 669 00:37:24,500 --> 00:37:27,800 Is that crypto provides really make a difference but there are 670 00:37:27,808 --> 00:37:29,200 many others. I think another one, as you 671 00:37:29,200 --> 00:37:34,300 mentioned gaming, is another interesting area where you can 672 00:37:34,300 --> 00:37:37,600 look at the history of gaming, you can look at examples like 673 00:37:37,600 --> 00:37:40,500 Fortnight, right? The fact that people pay a lot 674 00:37:40,500 --> 00:37:45,000 of money for for in-game items that are purely cosmetic. 675 00:37:45,000 --> 00:37:47,300 Right the fact that these in-game items don't actually 676 00:37:47,300 --> 00:37:51,000 change Gameplay at all, they only change the way you look in 677 00:37:51,000 --> 00:37:55,200 the game or that the kinds of little emotes that your Can make 678 00:37:56,300 --> 00:37:58,700 and it's a is like a multibillion-dollar Runway 679 00:37:58,700 --> 00:38:02,600 business that's fascinating because the company at the 680 00:38:02,600 --> 00:38:05,200 center of it has full control over that economy. 681 00:38:05,600 --> 00:38:10,600 Imagine if you could actually build a crypto economy into a 682 00:38:10,607 --> 00:38:15,300 game, such that the Indian items that you buy are actually yours, 683 00:38:15,700 --> 00:38:17,100 right? Such that you can actually take 684 00:38:17,100 --> 00:38:19,900 them out of the game and maybe even take them into another 685 00:38:19,900 --> 00:38:22,200 game. If it's a standard, for example, 686 00:38:22,200 --> 00:38:25,600 that multiple games begin to support Then maybe maybe your 687 00:38:25,600 --> 00:38:28,300 character does, it actually isn't just specific to one game. 688 00:38:28,300 --> 00:38:30,900 You can actually take it from one game and into another game 689 00:38:31,200 --> 00:38:34,800 and this becomes a much larger economy that spans multiple 690 00:38:34,800 --> 00:38:36,300 different kind of digital universes. 691 00:38:36,300 --> 00:38:38,700 And this is what people like to call the metal version of 692 00:38:38,700 --> 00:38:42,800 become, a word has been co-opted and it's a very overloaded, but 693 00:38:42,800 --> 00:38:46,100 but it's an interesting idea and it's born bottom-up. 694 00:38:46,400 --> 00:38:48,200 And again, the trustee does really matter here, right? 695 00:38:48,200 --> 00:38:51,600 Because it's important that you do, you trust that you actually 696 00:38:51,600 --> 00:38:55,800 own the things that you own. That's what allows us ecosystem 697 00:38:55,800 --> 00:38:59,000 to emerge. So that's another interesting 698 00:38:59,000 --> 00:39:01,500 area, maybe a third one and then I'll stop. 699 00:39:01,700 --> 00:39:07,800 I'll stop ranting is is the area of media generally and maybe 700 00:39:07,800 --> 00:39:11,200 I'll lead with an example. So we were, we were investors in 701 00:39:11,200 --> 00:39:15,800 a company called sound XYZ, which is a decentralized music 702 00:39:15,800 --> 00:39:19,300 streaming platform, which I think is a super interesting 703 00:39:19,300 --> 00:39:23,100 application of of crypto. If you look at the music 704 00:39:23,100 --> 00:39:27,300 industry, historically, The record labels have an inordinate 705 00:39:27,300 --> 00:39:29,800 amount of power. And the reason for that is that 706 00:39:29,800 --> 00:39:33,500 they control the catalog instead of some sort of company like 707 00:39:33,500 --> 00:39:36,200 Spotify. For example, cannot really 708 00:39:37,000 --> 00:39:40,000 negotiate against the record labels because any one of these 709 00:39:40,000 --> 00:39:43,900 record, labels controls so much of the historical catalog that. 710 00:39:44,300 --> 00:39:49,100 If they pull out Spotify becomes almost unusable because now it's 711 00:39:49,100 --> 00:39:50,700 missing. I kept third of the music and 712 00:39:50,700 --> 00:39:53,500 the total value proposition of being able to provide you with 713 00:39:53,500 --> 00:39:56,700 every song on you You might want to listen to is no longer hold 714 00:39:56,700 --> 00:39:58,200 up. So the record labels have 715 00:39:58,200 --> 00:40:01,300 enormous, leverage, they take a huge cut in a Spotify has to 716 00:40:01,300 --> 00:40:05,000 take a cut and so therefore there's only a sliver that's 717 00:40:05,000 --> 00:40:07,500 left that that it actually goes to the artist. 718 00:40:07,600 --> 00:40:11,000 So the artist is royally screwed and if you actually look at the 719 00:40:11,000 --> 00:40:14,800 numbers, there are something like 8 million artists on 720 00:40:14,800 --> 00:40:18,000 Spotify and only like 14 thousand of them. 721 00:40:18,400 --> 00:40:22,500 So 14,000 out of eight million make more than 50 k per year. 722 00:40:23,300 --> 00:40:27,600 Which is hardly a living, which is a say basically no one makes 723 00:40:27,600 --> 00:40:29,700 any money on Spotify. The only people who make money 724 00:40:29,900 --> 00:40:32,000 are like, be the very head of a distribution. 725 00:40:32,200 --> 00:40:35,400 The kind of a Taylor Swift's early, some sort of a daisies of 726 00:40:35,400 --> 00:40:40,500 the world and then everybody else makes 50k or or less likely 727 00:40:40,500 --> 00:40:44,000 much less in order to actually make any kind of money on 728 00:40:44,000 --> 00:40:46,900 Spotify. You have to have millions if not 729 00:40:46,900 --> 00:40:48,800 tens of millions or hundreds of millions of tramps. 730 00:40:49,100 --> 00:40:51,600 It's insane. How much, how much traction you 731 00:40:51,600 --> 00:40:54,300 have to have as an artist. To make any money on Spotify. 732 00:40:54,900 --> 00:40:57,000 So sound sound is a little different. 733 00:40:57,000 --> 00:41:01,200 So you guys remember SoundCloud from before SoundCloud was As 734 00:41:01,200 --> 00:41:03,800 Nice Guy, music service, you as an artist can upload music. 735 00:41:04,200 --> 00:41:07,100 And it had this cool feature which was that you can as a 736 00:41:07,107 --> 00:41:12,100 user, you can comment on the track as it plays on the 737 00:41:12,100 --> 00:41:14,900 website. Such that other users can then 738 00:41:14,900 --> 00:41:17,900 see your comments, right? So as as the music plays and it 739 00:41:17,900 --> 00:41:20,300 rolls over the time at which you left your comment, they can see 740 00:41:20,300 --> 00:41:22,900 what it was, which like was like a cute idea. 741 00:41:23,100 --> 00:41:25,300 This kind of social Dynamic around a piece of music. 742 00:41:25,700 --> 00:41:27,900 So sound too bad idea. And if their initial their 743 00:41:27,900 --> 00:41:31,800 initial product idea is that you can actually make that comment 744 00:41:31,800 --> 00:41:35,600 an entity. Meaning that say as an artist 745 00:41:35,600 --> 00:41:38,500 you upload a piece of music and there's 100 and of teas for that 746 00:41:38,500 --> 00:41:42,400 piece of music. Whoever buys those entities, if 747 00:41:42,400 --> 00:41:45,800 you have one of those entities, you now have the right to add a 748 00:41:45,808 --> 00:41:49,300 comment to the track and if you sell you an empty, then the 749 00:41:49,300 --> 00:41:51,800 comment is a few years and then whoever pulls the empty. 750 00:41:51,800 --> 00:41:54,200 Now the new The new folder of the end of T. 751 00:41:54,300 --> 00:41:57,200 Can now add a comment as well. So this creates a bit of a 752 00:41:57,207 --> 00:41:59,700 little seven, guys can look a little market right for these 753 00:41:59,700 --> 00:42:02,800 energies. The beauty of it, is that 100% 754 00:42:02,800 --> 00:42:07,400 of the money that is recouped from the sale of these entities 755 00:42:07,400 --> 00:42:11,100 goes to the artist or maybe like 95% of vitamin A small 756 00:42:11,400 --> 00:42:16,600 percentage of it goes to sound the protocol, so that's great. 757 00:42:16,600 --> 00:42:20,000 But the more important piece of this is that as an artist, you 758 00:42:20,000 --> 00:42:22,500 now have a direct relationship with your super fans. 759 00:42:23,100 --> 00:42:26,300 These are the people who are willing to buy an entity to add 760 00:42:26,300 --> 00:42:29,100 a comment to your track. These are the people who truly 761 00:42:29,300 --> 00:42:31,700 believe in your music. I would truly truly like your 762 00:42:31,700 --> 00:42:34,900 music and it's not only a relationship. 763 00:42:34,900 --> 00:42:37,400 It's an economic relationship, you know, they're quick the 764 00:42:37,400 --> 00:42:39,600 wallets and that's a community you can. 765 00:42:39,600 --> 00:42:43,300 Now start doing interesting things, you can, for example, I 766 00:42:43,308 --> 00:42:46,400 don't know do like backstage passes for the people who hold 767 00:42:46,400 --> 00:42:50,100 any one of these entities or you can have like a Discord group 768 00:42:50,100 --> 00:42:53,500 that is token gated and only people have any of tea. he's of 769 00:42:53,500 --> 00:42:56,900 this kind can can access it or any other kinds of benefits 770 00:42:57,100 --> 00:43:00,000 where you as an artist now have like a more direct relationship 771 00:43:00,000 --> 00:43:04,400 with your with your fans and it's connected to this idea 772 00:43:04,400 --> 00:43:08,700 there's this great blog post by David Kelly called 1,000 true 773 00:43:08,700 --> 00:43:13,300 fans which which argues that all you need as an artist or as a 774 00:43:13,300 --> 00:43:18,600 Creator to make a living online is 1,000 true fans and his logic 775 00:43:18,600 --> 00:43:21,400 is if you define a true fan as someone who pays you, ten 776 00:43:21,400 --> 00:43:25,000 dollars a month, You do the maths right 1,000? 777 00:43:25,000 --> 00:43:27,700 True fans, each paying you $10 a month. 778 00:43:28,100 --> 00:43:30,100 That's a hundred and twenty thousand dollars a year. 779 00:43:31,100 --> 00:43:32,500 All you need is a thousand two events. 780 00:43:33,800 --> 00:43:35,800 Clearly on Spotify, that doesn't work, but you need them. 781 00:43:35,800 --> 00:43:37,700 You need millions of fans to actually make any kind of 782 00:43:37,700 --> 00:43:39,600 living. But if you had a more direct 783 00:43:39,600 --> 00:43:42,400 economic relationship with your fans, you can actually make a 784 00:43:42,400 --> 00:43:45,100 living and so sound. This is basically exploring how 785 00:43:45,100 --> 00:43:46,700 you can use crypto to do that right. 786 00:43:46,700 --> 00:43:50,500 As an artist, you can, you can build a community of two fans 787 00:43:50,500 --> 00:43:52,000 and have an economic relationship with them. 788 00:43:52,200 --> 00:43:53,700 They pay you at Least ten dollars. 789 00:43:53,700 --> 00:43:55,800 That's that's more than you could make on Spotify. 790 00:43:56,400 --> 00:43:57,600 All right. So far, by the way, they played 791 00:43:57,600 --> 00:44:01,300 out like five million dollars, it's not as a content creator 792 00:44:01,300 --> 00:44:05,100 getting to 1,000 true fans. Even for just five bucks a month 793 00:44:05,200 --> 00:44:07,800 is not easy. Ask it's not, it's not easy to 794 00:44:07,800 --> 00:44:09,200 get there but making it you're right. 795 00:44:09,200 --> 00:44:11,500 You're right for that to happen in your things. 796 00:44:11,500 --> 00:44:14,800 Like, patreon have definitely shown how this model works, 797 00:44:14,800 --> 00:44:16,300 right? Like I think patreon has a 798 00:44:16,300 --> 00:44:19,500 similar type of model and and one that is very different from 799 00:44:19,500 --> 00:44:25,600 say like a Spotify model. You know, I think like those 800 00:44:25,600 --> 00:44:29,800 there there were probably you know just as many musicians 50 801 00:44:29,800 --> 00:44:33,200 years ago that were making zero dollars. 802 00:44:34,200 --> 00:44:36,800 They just weren't streaming but I mean of course like that. 803 00:44:36,800 --> 00:44:41,700 But the the platform allowing this, you know, does a lot does 804 00:44:41,700 --> 00:44:44,500 like allow opportunities for people to achieve those goals. 805 00:44:44,700 --> 00:44:46,900 You know, there was that something you were missing 806 00:44:46,900 --> 00:44:51,900 earlier about you know the the platform risk and recently in 807 00:44:51,900 --> 00:44:54,500 the last year or so you I used to have this idea that like 808 00:44:54,500 --> 00:44:57,300 blockchains are immutable rules that are embedded in the Block 809 00:44:57,300 --> 00:45:00,000 Chain and the smart contracts are immutable and like that's 810 00:45:00,000 --> 00:45:01,300 it. And, you know, you could you can 811 00:45:01,300 --> 00:45:05,900 sort of like, deploy there and be assured that like your, your 812 00:45:05,900 --> 00:45:07,700 code will be run in perpetuity forever. 813 00:45:08,000 --> 00:45:12,000 And then, and then there was the whole Juno whale thing. 814 00:45:12,100 --> 00:45:15,600 And I don't know if you followed this, this particular part of 815 00:45:15,600 --> 00:45:18,600 Cosmos drama. But essentially a governance 816 00:45:18,600 --> 00:45:21,900 boat on Juno which is a smart contract chain in the cosmos 817 00:45:21,900 --> 00:45:25,800 ecosystem that The runs cause the walls and smart contracts, a 818 00:45:25,800 --> 00:45:30,400 governance boat decided that funds that were held 819 00:45:30,400 --> 00:45:35,700 essentially, by an individual who had received airdrops for 820 00:45:35,700 --> 00:45:39,800 for reasons that I'm not going to get into here, were were to 821 00:45:39,800 --> 00:45:45,700 be clawed back, essentially, and because because, you know, the 822 00:45:45,700 --> 00:45:50,300 rules of the airdrop had not specified certain Provisions 823 00:45:50,300 --> 00:45:52,900 about people holding other people's funds or whatever it 824 00:45:52,900 --> 00:45:53,900 is. So there's a whole blog post 825 00:45:53,900 --> 00:45:59,600 about it and and if that's not enough the people who were meant 826 00:45:59,600 --> 00:46:03,300 to take those funds as sort of transfer them into a treasury so 827 00:46:03,300 --> 00:46:06,200 that they could be effectively managed or whatever made a 828 00:46:06,200 --> 00:46:09,600 mistake when transferring the funds and lost like tens of 829 00:46:09,600 --> 00:46:13,100 millions of dollars or maybe even hundreds. 830 00:46:13,100 --> 00:46:16,700 I mean it was a massive catastrophe but it just showed 831 00:46:16,700 --> 00:46:20,300 me that I just that I realized that you know what like 832 00:46:20,500 --> 00:46:24,700 blockchains do have this immutability Aspect is sort of 833 00:46:24,700 --> 00:46:28,000 like this. This like, this is this platform 834 00:46:28,100 --> 00:46:31,300 risk Assurance, when they arrive at a such a state that 835 00:46:31,300 --> 00:46:37,900 governance is solid enough that the governance and incentives 836 00:46:37,900 --> 00:46:41,000 are aligned, such that validators are not going to 837 00:46:41,000 --> 00:46:45,500 screw, you know, the user base or you account holders. 838 00:46:45,800 --> 00:46:50,000 And I think there's a delicate balance between validators users 839 00:46:50,000 --> 00:46:52,800 and application developers that really mirrors. 840 00:46:52,900 --> 00:46:57,800 Is kind of governance that that we know and soda from from, 841 00:46:57,800 --> 00:47:00,900 from, from our, everyday lives, and democracy and sort of like 842 00:47:00,900 --> 00:47:02,500 human governance. But when it comes down to it, 843 00:47:02,500 --> 00:47:08,300 like, blockchains are our mechanism for, for executing 844 00:47:08,600 --> 00:47:13,100 human decisions, and the power, balances that exist in the real 845 00:47:13,100 --> 00:47:16,300 world can also exist in blockchains, you know, how do 846 00:47:16,300 --> 00:47:20,900 you reason about that when when thinking about You know, this 847 00:47:20,900 --> 00:47:24,700 whole idea of platform risk and eliminating platform risk. 848 00:47:26,000 --> 00:47:29,300 Yeah, it's a really good. It's a really good point. 849 00:47:30,200 --> 00:47:35,800 I think that the way to think about this is that a blockchain 850 00:47:35,800 --> 00:47:40,200 gives you an enormous design space on top of which, you can 851 00:47:40,200 --> 00:47:42,500 build, all sorts of different things, including different 852 00:47:42,500 --> 00:47:45,800 kinds of governance systems, which I think is an exciting. 853 00:47:45,800 --> 00:47:51,400 Some really exciting thing because now it is possible for a 854 00:47:51,400 --> 00:47:54,100 thousand different companies who are building different, 855 00:47:54,100 --> 00:47:57,400 ecosystems to Run a thousand different experiments about how 856 00:47:57,400 --> 00:48:00,700 to run a governance system for their Community which actually 857 00:48:00,700 --> 00:48:02,300 gives us insight about governance. 858 00:48:02,300 --> 00:48:05,400 Generally and it gives us inside the maybe can translate to be on 859 00:48:05,400 --> 00:48:09,600 crypto and it's in a way that was impossible before where like 860 00:48:09,600 --> 00:48:12,000 I think before crypto if you wanted to test a new kind of 861 00:48:12,100 --> 00:48:15,500 sort of political governance system you had to spin up at a 862 00:48:15,500 --> 00:48:19,300 whole civilization Institute, your new experimental governance 863 00:48:19,300 --> 00:48:22,300 system, wait 10,000 years and check to see if everyone has 864 00:48:22,300 --> 00:48:26,000 died or if it has somehow Baird. Well or not. 865 00:48:26,800 --> 00:48:29,300 Whereas now it seems like you can run much more isolated 866 00:48:29,300 --> 00:48:33,700 experience experiments with with a network that maybe does one 867 00:48:33,700 --> 00:48:36,100 simple thing and has a community that governs. 868 00:48:36,100 --> 00:48:39,500 It you can come up with a new governance system that hopefully 869 00:48:39,500 --> 00:48:41,700 does better than other governance systems and some will 870 00:48:41,700 --> 00:48:43,600 do well in others in others won't did. 871 00:48:43,600 --> 00:48:47,600 I think over time we will figure out what the best practices are. 872 00:48:47,800 --> 00:48:49,600 Maybe we conclude that one token. 873 00:48:49,600 --> 00:48:52,800 One boat is not the right model because it leads to a kind of 874 00:48:52,800 --> 00:48:55,000 total credit outcome. Maybe we can. 875 00:48:55,100 --> 00:48:58,500 Glued that the governance system has to be restricted in some way 876 00:48:58,500 --> 00:49:00,300 so that you can't call back tokens. 877 00:49:00,300 --> 00:49:02,300 Maybe that's not something that's within the purview of the 878 00:49:02,300 --> 00:49:04,600 governing system. Maybe we concluded. 879 00:49:04,600 --> 00:49:05,900 We need different kinds of stakeholders. 880 00:49:05,900 --> 00:49:09,700 Like like maybe you have token holders is that as one camera 881 00:49:10,000 --> 00:49:15,000 and the governance chamber and then there is also like actual 882 00:49:16,100 --> 00:49:19,300 applications or drivers of volume or drivers of activity in 883 00:49:19,300 --> 00:49:24,000 the network that also have some say and have some ability to 884 00:49:24,300 --> 00:49:28,600 participate in the Governance process is a very big design 885 00:49:28,600 --> 00:49:31,400 space and I don't think we found all of the answers and I think 886 00:49:31,400 --> 00:49:33,400 that some of the, some of the initial experiments are 887 00:49:33,400 --> 00:49:36,300 interesting. I think, for example maker is 888 00:49:36,300 --> 00:49:38,300 pioneering what pioneered? I think. 889 00:49:38,300 --> 00:49:41,500 One of the one of the initial models for governance with the 890 00:49:41,500 --> 00:49:44,800 mkr token and the way that that govern is works for level 891 00:49:44,800 --> 00:49:47,300 system, which is very complex. But but it was interesting that 892 00:49:47,300 --> 00:49:50,500 we learned a lot from it. Then also compound was also 893 00:49:50,900 --> 00:49:54,800 initially at one of the One of the Pioneers until can base 894 00:49:54,800 --> 00:49:58,900 Governor governance with their governance module to get that. 895 00:49:59,000 --> 00:50:02,200 As I forget actually technical the code file governance, a file 896 00:50:02,800 --> 00:50:05,800 or something. And I think, since then we've 897 00:50:05,800 --> 00:50:08,200 seen, we've seen many other experiments and it's exciting to 898 00:50:08,200 --> 00:50:09,700 see. I think what when you think 899 00:50:09,700 --> 00:50:13,200 people may try in it and along the way there will be failures 900 00:50:13,200 --> 00:50:15,800 like the one that you described. But I just think that that's 901 00:50:15,800 --> 00:50:19,500 part of the learning process In my cup. 902 00:50:19,500 --> 00:50:21,700 No Journey. One of the things that I found 903 00:50:21,800 --> 00:50:27,200 very hard is making sense of it could provoke an valuations by 904 00:50:27,200 --> 00:50:30,100 that. I mean is, you know, pick pick 905 00:50:30,100 --> 00:50:35,400 any random coin and you often have this sense that okay, if 906 00:50:35,400 --> 00:50:40,200 this coin is trading at 100 million, that's awesome. 907 00:50:40,300 --> 00:50:43,200 And if it's trading at 10 billion, I'm not going to buy 908 00:50:43,200 --> 00:50:47,200 that coin, right? You often have this kind of kind 909 00:50:47,200 --> 00:50:50,600 of gut gut instinct. Where what? 910 00:50:50,600 --> 00:50:55,600 You invest in depends on the market cap of the think. 911 00:50:55,600 --> 00:51:01,300 When you're looking at yet, there is no good way to Quantify 912 00:51:01,300 --> 00:51:08,200 or think about it logically. So I'm actually curious how a 913 00:51:08,200 --> 00:51:12,500 16z as a as as professionals that make these decisions day in 914 00:51:12,500 --> 00:51:15,500 day out. How do you How do you think 915 00:51:15,500 --> 00:51:18,300 about valuation and what makes sense? 916 00:51:18,300 --> 00:51:24,000 And what doesn't Yes, it's a great question. 917 00:51:24,600 --> 00:51:29,000 Well, and I think this, this often is, is a conversation that 918 00:51:29,000 --> 00:51:30,900 we tend to have on a case-by-case basis. 919 00:51:31,200 --> 00:51:34,100 It's a very much depends on the kind of network. 920 00:51:34,100 --> 00:51:37,500 The kind of protocol, the kind of product that we are looking 921 00:51:37,500 --> 00:51:40,500 at their different models, for different kinds of things, 922 00:51:40,500 --> 00:51:44,500 especially when it comes to different layers of the stack. 923 00:51:44,900 --> 00:51:47,600 So it's for example, we can, we can work through this tag, 924 00:51:48,000 --> 00:51:51,100 something that exists at the at the user interface, like client 925 00:51:51,100 --> 00:51:54,000 level. An application that's may be 926 00:51:54,000 --> 00:51:58,100 communicating with protocols that run on chain but that it in 927 00:51:58,100 --> 00:52:01,000 and of itself isn't on chain and that maybe has a more 928 00:52:01,000 --> 00:52:04,500 traditional business model by something like a wallet where 929 00:52:04,500 --> 00:52:07,300 wallets business model is to potentially just take decrease 930 00:52:07,300 --> 00:52:10,600 on all transactions or something like this that's 931 00:52:10,600 --> 00:52:12,200 straightforward. We don't have to spend too much 932 00:52:12,200 --> 00:52:15,300 time on that. We use traditional methods of 933 00:52:15,500 --> 00:52:19,300 reasoning evaluation in decades. If we move one level down that 934 00:52:19,300 --> 00:52:21,700 there may be applications that run on. 935 00:52:21,800 --> 00:52:25,600 And there are protocols, that provide that for example, like, 936 00:52:25,600 --> 00:52:28,800 one on top of the theorem and this could include some of the 937 00:52:29,000 --> 00:52:32,800 some of the D5 protocols like you in a swap or, or compound 938 00:52:32,800 --> 00:52:35,600 or, or like applications. Like I mentioned like sound that 939 00:52:35,600 --> 00:52:38,900 XYZ as like a non chain. Component is a protocol that 940 00:52:38,900 --> 00:52:44,900 runs on etherium oftentimes in those cases there's this is by 941 00:52:44,900 --> 00:52:48,000 the way, I think apparently like a misconception about space 942 00:52:48,000 --> 00:52:49,700 people take good. People think that all 943 00:52:49,700 --> 00:52:54,400 cryptocurrencies are just like fully - in most cases there is 944 00:52:54,400 --> 00:52:59,500 still some notion or something that resembles Revenue side 945 00:52:59,500 --> 00:53:02,400 where there's like a fee that's being taken by the protocol on 946 00:53:02,400 --> 00:53:05,100 chain. The see a crewman accrues to 947 00:53:05,100 --> 00:53:09,300 some Unchained Treasury and the token has some claim on the 948 00:53:09,300 --> 00:53:12,500 treasury or Pez a potential claim down the line based on 949 00:53:12,500 --> 00:53:15,100 governance, potentially. And in the same way that that 950 00:53:15,100 --> 00:53:20,600 may be the shareholders of the company have a claim to the 951 00:53:20,600 --> 00:53:23,500 assets on the balance sheet. And to Future cash flows, 952 00:53:23,900 --> 00:53:27,400 talking holders. Similarly, have that kind of 953 00:53:27,400 --> 00:53:32,200 claim over a protocols treasury course, is fully decentralized, 954 00:53:32,200 --> 00:53:34,300 right? So there is no, there's no 955 00:53:34,400 --> 00:53:37,000 company how when we're talking about the protocol. 956 00:53:37,000 --> 00:53:40,500 There's no company that controls the treasury and it's just a 957 00:53:40,500 --> 00:53:43,400 broad ecosystem, which is by the way, it's why the token is not a 958 00:53:43,400 --> 00:53:47,900 security fact that it's a fully decentralized ecosystem, where 959 00:53:47,900 --> 00:53:49,900 there aren't any asymmetry of information. 960 00:53:50,100 --> 00:53:51,600 It's just all one chain and it's all open source. 961 00:53:51,700 --> 00:53:57,200 And so, for those, for those networks, are those protocols, 962 00:53:57,500 --> 00:53:59,400 it's also reasonable to think of it. 963 00:53:59,900 --> 00:54:03,000 In terms of the traditional methods of allowing a company, 964 00:54:03,200 --> 00:54:06,000 like, what is the current, the current Revenue, the current 965 00:54:06,000 --> 00:54:08,700 cash flow and do, what is our thesis for? 966 00:54:08,700 --> 00:54:12,700 What that, what? That might look like in a in the 967 00:54:12,700 --> 00:54:15,100 long-term future? And we believe that this 968 00:54:15,100 --> 00:54:19,200 protocol will somehow become like a fundamental piece of the 969 00:54:19,200 --> 00:54:22,900 crypto world, and if crypto is going to it, Going to ultimately 970 00:54:23,000 --> 00:54:25,800 reach billions of people, then you can make some argument for 971 00:54:25,800 --> 00:54:29,200 why it will be much bigger than it is today, but the methods are 972 00:54:29,200 --> 00:54:32,700 still fairly fairly traditional in those cases. 973 00:54:33,200 --> 00:54:36,600 And then there's the question of how you would value a layer one 974 00:54:36,600 --> 00:54:39,300 block chain. So, something like, like 975 00:54:39,300 --> 00:54:42,800 etherium. For example, the good news, is 976 00:54:42,800 --> 00:54:45,800 that even a blockchain like a theorem, which is a later one 977 00:54:45,800 --> 00:54:49,300 block chain and the token serves many different kinds of 978 00:54:49,300 --> 00:54:54,200 purposes. Also has a notion of Revenue and 979 00:54:54,200 --> 00:54:57,500 that comes in the form of eith getting burned with every 980 00:54:57,500 --> 00:55:02,400 transaction. Thanks to VIP 159 that that is a 981 00:55:02,400 --> 00:55:06,000 form of Revenue because it it is taking it out of circulation and 982 00:55:06,000 --> 00:55:09,800 that's mathematically equivalent to essentially doing a 983 00:55:09,808 --> 00:55:14,500 distribution of that amount of money to all eat holders so you 984 00:55:14,500 --> 00:55:17,700 can use that at least to reason about the value of f. 985 00:55:17,900 --> 00:55:21,400 But there are many other drivers of Value for the ID token. 986 00:55:21,400 --> 00:55:27,300 For the sort of the fact that if is used for staking, makes it a 987 00:55:27,308 --> 00:55:31,000 kind of productive asset such that you can actually earn money 988 00:55:31,000 --> 00:55:35,500 by holding it and owning it in the way that validators in the 989 00:55:35,500 --> 00:55:37,600 Network's do. And that provide that, that 990 00:55:37,600 --> 00:55:40,400 drives some value to the Token because because it's a 991 00:55:40,408 --> 00:55:41,800 productive asset, think of it as capital. 992 00:55:41,800 --> 00:55:47,300 It also is the courtesy with which everything gets paid for 993 00:55:47,300 --> 00:55:51,500 in the network, you need Eve's to pay for From, in the network 994 00:55:51,500 --> 00:55:54,600 which means that people have to buy it to be able to use it. 995 00:55:54,600 --> 00:55:57,100 Here, I am to be able to participate, which is another 996 00:55:57,100 --> 00:56:00,000 driver, which gives the token. The kind of monetary premium 997 00:56:00,000 --> 00:56:02,600 people begin to think of it, as kind of money. 998 00:56:02,900 --> 00:56:05,800 That is also may be a good store of value. 999 00:56:05,800 --> 00:56:08,600 And as a result, we took a probably just hold some amount 1000 00:56:08,600 --> 00:56:13,400 of weeks longer term, which, which drives which provides 1001 00:56:13,400 --> 00:56:16,600 value to the Token. So that there are a number of 1002 00:56:16,600 --> 00:56:17,700 different in there are, there are more. 1003 00:56:17,700 --> 00:56:21,400 Maybe we can keep talking about the drivers of value for a token 1004 00:56:21,400 --> 00:56:25,300 likies but we tend to think of all those things and try to at 1005 00:56:25,300 --> 00:56:28,700 the very least, get some quantitative sense for for how 1006 00:56:28,700 --> 00:56:31,000 all of these interplay, but it's very hard. 1007 00:56:31,000 --> 00:56:36,700 It's very hard to make it a very quantitative analysis for what a 1008 00:56:36,700 --> 00:56:39,500 layer 1 Block Chain, should be worth and people had tried. 1009 00:56:39,600 --> 00:56:43,200 I'm sure you guys have heard of them of the, basically, the 1010 00:56:43,200 --> 00:56:46,800 application of the equation of exchange to to layer 1 block 1011 00:56:46,800 --> 00:56:50,200 chains, which is that equation, a equals to P Q, which is used 1012 00:56:50,200 --> 00:56:54,100 to Value for x foreign exchange currencies. 1013 00:56:54,100 --> 00:56:55,700 Like, one currency with respect to another. 1014 00:56:56,200 --> 00:56:59,000 You can think of it here, IAM as a kind of like a like a 1015 00:56:59,008 --> 00:57:01,700 sovereign nation state that has its own currency in a material, 1016 00:57:01,700 --> 00:57:03,600 and it has one export. And that's the central as 1017 00:57:03,600 --> 00:57:06,400 computation, then you can apply the equation of exchange to try 1018 00:57:06,400 --> 00:57:09,500 to Value V in that way. And there's a term there, which 1019 00:57:09,500 --> 00:57:11,800 is the velocity of money. Like, the more it gets 1020 00:57:11,800 --> 00:57:15,100 transacted, then the less valuable it is because it's not 1021 00:57:15,100 --> 00:57:18,100 being held. So that's the intuition. 1022 00:57:18,300 --> 00:57:20,800 But if you actually use that model to try to, Predict the 1023 00:57:20,800 --> 00:57:23,500 price of view, you're going to be completely completely out. 1024 00:57:24,900 --> 00:57:28,800 So we we take all of those factors as input and then we 1025 00:57:28,800 --> 00:57:31,900 think about what the future might look like if we believe 1026 00:57:31,900 --> 00:57:34,900 that there's a whole thesis that we have about, how there will 1027 00:57:34,900 --> 00:57:37,700 likely be a handful of winning smart contract, architectures. 1028 00:57:38,900 --> 00:57:41,400 The won't be 1000 and there won't be one will probably be a 1029 00:57:41,408 --> 00:57:43,800 handful in the same way that there's a handful of winning 1030 00:57:43,800 --> 00:57:47,900 processor architectures and the winning ones will likely be if I 1031 00:57:47,900 --> 00:57:50,300 get if we're right about grip doing crypto, will we? 1032 00:57:50,500 --> 00:57:53,700 Millions of users and will become this major phenomenon in 1033 00:57:53,700 --> 00:57:56,000 a whole world. It's akin to web to will be 1034 00:57:56,000 --> 00:57:59,900 built on top of web, 30, then we strongly believe that each one 1035 00:57:59,900 --> 00:58:02,300 of these winning smart contract, architectures will be worth 1036 00:58:02,300 --> 00:58:06,800 many, many trillions of dollars. So that's kind of how we think 1037 00:58:06,800 --> 00:58:09,100 about it and we just try to imagine what the future looks 1038 00:58:09,100 --> 00:58:11,800 like. And then back back, back track 1039 00:58:11,800 --> 00:58:16,100 from there to try to like then make an argument about what the 1040 00:58:16,200 --> 00:58:19,600 what the token should be worth today and then make investment 1041 00:58:19,600 --> 00:58:21,400 decisions. In that way. 1042 00:58:22,800 --> 00:58:26,400 So one curiosity is so it makes a lot of sense, right? 1043 00:58:26,400 --> 00:58:29,600 But if you have Walnut Valley because a traditional business, 1044 00:58:29,700 --> 00:58:31,800 okay? Present value of future, 1045 00:58:32,000 --> 00:58:36,100 discount, present value of future cash flows, easy. 1046 00:58:37,100 --> 00:58:40,200 When it's a protocol. Well, if it's a protocol like 1047 00:58:40,200 --> 00:58:44,100 you this job, you can still still view it. 1048 00:58:44,700 --> 00:58:47,700 That way any, you need token, maybe maybe we will that way. 1049 00:58:47,800 --> 00:58:55,300 And can you can have some kind of rational Model for it, but it 1050 00:58:55,300 --> 00:58:59,600 comes into each area. You can have a rational 1051 00:59:00,500 --> 00:59:03,700 evaluation for it, but then the some kind of Premium that needs 1052 00:59:03,700 --> 00:59:07,500 to be added because the market is attaching some kind of 1053 00:59:07,500 --> 00:59:10,700 monetary premium. And if you ignore it, it's going 1054 00:59:10,700 --> 00:59:14,200 to be hard to justify the values at which each is practically 1055 00:59:14,200 --> 00:59:19,100 trading in the market. And then to get the Bitcoin, 1056 00:59:19,100 --> 00:59:23,000 man. You really can't see any Court 1057 00:59:23,000 --> 00:59:28,000 Revenue stream at all and then it is entirely some kind of 1058 00:59:28,000 --> 00:59:32,200 monetary premium which really hard to approximate do I get 1059 00:59:32,200 --> 00:59:35,500 that right? And then so my question would 1060 00:59:35,500 --> 00:59:42,700 be, do you think other in ones L1 tokens with also have 1061 00:59:42,700 --> 00:59:49,800 monetary premium in the future or is the market kind of Already 1062 00:59:49,800 --> 00:59:56,300 won by Bitcoin in in any sir, it's a good signal question. 1063 00:59:56,600 --> 01:00:01,800 We think that the touching on this and other pieces for for 1064 01:00:01,800 --> 01:00:05,800 why there will likely be a handful of winning 1065 01:00:05,800 --> 01:00:10,400 architectures. Did the thinking is that no one 1066 01:00:10,400 --> 01:00:13,500 watching can fully cover the trade-off space? 1067 01:00:13,800 --> 01:00:15,800 There are there are many different things that you can be 1068 01:00:15,800 --> 01:00:17,600 optimizing for. You guys, may be familiar with 1069 01:00:17,600 --> 01:00:18,800 the scalability. Trilemma. 1070 01:00:19,400 --> 01:00:22,100 There are number of different optimizations that you can try 1071 01:00:22,100 --> 01:00:24,200 to make and it's very hard for a single architecture. 1072 01:00:24,200 --> 01:00:28,100 To just be the god blockchain that basically takes the whole 1073 01:00:28,100 --> 01:00:31,100 thing. And this is similar, by the way, 1074 01:00:31,100 --> 01:00:35,000 to, to just traditional Computing where you have CPU 1075 01:00:35,000 --> 01:00:38,000 architectures, that are intended for general-purpose computation, 1076 01:00:38,000 --> 01:00:41,000 like x64 and arm and things like that. 1077 01:00:41,100 --> 01:00:44,000 Which by the way themselves have big differences between them. 1078 01:00:44,600 --> 01:00:46,700 But you also have different kinds of architectures that are 1079 01:00:46,700 --> 01:00:48,700 optimized for completely different things like gpus. 1080 01:00:49,100 --> 01:00:51,900 That are optimized for parallel compute and optimized for 1081 01:00:51,908 --> 01:00:55,200 gaming, and now, they could turn out to actually work quite well 1082 01:00:55,200 --> 01:00:58,200 for machine learning and AI, is there? 1083 01:00:58,200 --> 01:01:02,500 Similarly, we believed that there will be a handful of 1084 01:01:02,500 --> 01:01:07,100 different kinds of architectures for smart contract, platforms. 1085 01:01:07,500 --> 01:01:09,700 That collectively, cover the entire Trail space. 1086 01:01:09,700 --> 01:01:14,500 But no one in architecture Will Will just win win everything. 1087 01:01:15,700 --> 01:01:18,200 And I think that that's maybe the reason for why they won't be 1088 01:01:18,200 --> 01:01:21,100 one. We also have to argue have to 1089 01:01:21,100 --> 01:01:23,500 make the argument for why there won't be a thousand of them. 1090 01:01:24,200 --> 01:01:27,600 And and the reason there is that there are very strong Network 1091 01:01:27,600 --> 01:01:32,200 effects as if you do have to block chains that are fairly 1092 01:01:32,200 --> 01:01:34,500 similar and are differentiated with respect to one another. 1093 01:01:34,700 --> 01:01:37,500 I think that the equilibrium state is for is for one of them 1094 01:01:37,500 --> 01:01:40,100 to ultimately win and that's that's because of the 1095 01:01:40,100 --> 01:01:42,300 self-reinforcing feedback loops involved. 1096 01:01:42,500 --> 01:01:45,600 The fact that there are network effects at every level, there 1097 01:01:45,600 --> 01:01:49,300 are no visible security level because as a validator, you To 1098 01:01:49,300 --> 01:01:51,200 validate on the blockchain, that's more secure and the 1099 01:01:51,200 --> 01:01:53,800 voucher that will give you the biggest reward, which is the bug 1100 01:01:53,800 --> 01:01:56,300 chain that has, highest token value, and so. 1101 01:01:56,400 --> 01:01:59,500 So with that, that results in a self-reinforcing feedback loop 1102 01:01:59,500 --> 01:02:03,500 that causes one way back when causes one box into when there's 1103 01:02:03,500 --> 01:02:06,900 also Network effects at the application Level where because 1104 01:02:06,900 --> 01:02:09,600 of composability you want to build your application on the 1105 01:02:09,600 --> 01:02:11,900 blockchain that has all of the other applications because you 1106 01:02:11,900 --> 01:02:14,600 can use those other applications as building blocks, this is the 1107 01:02:14,600 --> 01:02:17,400 whole notion of, like, Lego building blocks in crypto. 1108 01:02:17,400 --> 01:02:20,600 The fact that there is no platform Allows you to leverage 1109 01:02:21,000 --> 01:02:24,500 other smart contracts that are also running on the same Block 1110 01:02:24,500 --> 01:02:27,300 Chain as inputs to your own application and you don't have 1111 01:02:27,300 --> 01:02:31,200 to necessarily reinvent the wheel, which is another reason. 1112 01:02:31,700 --> 01:02:34,700 You you're more likely to build on top of each theorem and you 1113 01:02:34,700 --> 01:02:39,200 are on top of a random new Block Chain that has nothing on it and 1114 01:02:39,200 --> 01:02:41,500 at the same applies at the Integrations level they give for 1115 01:02:41,500 --> 01:02:44,900 watching is already integrated into all of the exchanges in all 1116 01:02:44,900 --> 01:02:48,000 of the wallets and all of the interfaces and clients a new 1117 01:02:48,000 --> 01:02:52,300 Block Chain has a hard time I'm displacing all of that, I'm 1118 01:02:52,300 --> 01:02:54,000 competing against, I guess, all of that. 1119 01:02:54,000 --> 01:02:58,300 So the network effects of think reduce the possibility that 1120 01:02:58,300 --> 01:03:01,000 there may be many different block chains that are all 1121 01:03:01,000 --> 01:03:04,800 identical to one another. So that I think precludes the 1122 01:03:04,800 --> 01:03:07,900 possibility that there will be a thousand blockchains. 1123 01:03:08,300 --> 01:03:11,100 This was a result. Like I think my strong belief is 1124 01:03:11,200 --> 01:03:13,300 is will probably end up with something like five. 1125 01:03:13,300 --> 01:03:15,500 I don't know. Like some handful of different 1126 01:03:15,500 --> 01:03:17,700 kinds of architectures, all of which will likely be. 1127 01:03:17,700 --> 01:03:20,800 Very big is that. So small number that support, 1128 01:03:21,300 --> 01:03:24,500 all of the decentralised competition in the world and I 1129 01:03:24,500 --> 01:03:27,500 think as a result, it's likely that token for each. 1130 01:03:27,500 --> 01:03:30,500 One of them will will have all of the same factors that drive 1131 01:03:30,500 --> 01:03:32,900 value grief, right? Including the stake, including 1132 01:03:32,900 --> 01:03:35,200 the fact that there is a monetary premium because people 1133 01:03:35,200 --> 01:03:38,300 use it to pay for things in those ecosystems, but take all 1134 01:03:38,300 --> 01:03:40,000 this with a grain of salt, you know, Phil. 1135 01:03:40,000 --> 01:03:42,300 See it says it is very hard to predict future. 1136 01:03:42,600 --> 01:03:45,700 This is just, this is just one way to look at it. 1137 01:03:47,600 --> 01:03:52,200 In your experience, investing in, in some of these protocols 1138 01:03:52,800 --> 01:03:58,500 I'm sure like a 16z comes across the case, where then is the 1139 01:03:58,500 --> 01:04:04,100 split of Revenue. May not be may not be clear at 1140 01:04:04,100 --> 01:04:06,200 the time of admission. What I meant when I might mean 1141 01:04:06,200 --> 01:04:09,700 is like maybe I can only take a practical example like the Yuna 1142 01:04:09,700 --> 01:04:13,100 swap case. So where you have Unis, more 1143 01:04:13,100 --> 01:04:18,600 open apps will build the protocol and for a long while 1144 01:04:18,600 --> 01:04:23,700 did not actually want to launch a token and then out of the 1145 01:04:23,700 --> 01:04:31,300 competitive Dynamics, with sushi swap, they were forced to almost 1146 01:04:31,300 --> 01:04:33,700 their hand. Was almost forced to go into the 1147 01:04:33,700 --> 01:04:39,900 direction of launching a token. And when I personally, look at 1148 01:04:39,900 --> 01:04:44,700 you Eunice walk like a rational evaluation of the uni token is 1149 01:04:44,700 --> 01:04:50,600 made for me hard by the fact that how does the revenue gets 1150 01:04:50,600 --> 01:04:54,800 split between these two. These two entities, there are 1151 01:04:54,800 --> 01:04:59,000 many of these protocols in which that is like fashion. 1152 01:04:59,000 --> 01:05:01,600 Evaluation is hot made hard by the fact that there is a 1153 01:05:01,607 --> 01:05:05,500 foundation and there's a there's a community Treasury and the 1154 01:05:05,500 --> 01:05:07,400 Dynamics of that may not pick to you. 1155 01:05:07,600 --> 01:05:12,900 Up time now for me as an external as an external the 1156 01:05:13,300 --> 01:05:16,000 market participants. The only thing that is available 1157 01:05:16,000 --> 01:05:21,800 is the but for a 16z in such cases, you you, you would have 1158 01:05:21,800 --> 01:05:28,300 the option to invest it either. Republic token or the regular of 1159 01:05:28,500 --> 01:05:34,700 the founding team. Do you have any kind of General 1160 01:05:34,700 --> 01:05:37,400 guidelines for when to prefer one? 1161 01:05:37,500 --> 01:05:40,800 Over the other or how to think about the state of space. 1162 01:05:42,600 --> 01:05:47,100 Well, we primarily invest very early stage and and at that 1163 01:05:47,100 --> 01:05:52,100 stage, it's often too hard to know whether the value will 1164 01:05:52,100 --> 01:05:54,400 ultimately be captured by some token of the team decides to 1165 01:05:54,400 --> 01:05:57,800 build or whether it will be captured by a company. 1166 01:05:57,800 --> 01:06:00,300 A traditional company that company builds the the team 1167 01:06:00,300 --> 01:06:03,800 Builds on top of, on top of some protocol that maybe it's just 1168 01:06:03,800 --> 01:06:08,200 open source as so as a result, the structure that we've landed 1169 01:06:08,200 --> 01:06:11,900 on is one where everyone involved. 1170 01:06:12,500 --> 01:06:16,300 That includes the team and it also includes investors like us 1171 01:06:16,700 --> 01:06:21,200 should get both things. They should get both an equity 1172 01:06:21,200 --> 01:06:24,300 stake in the company. In the case that the tuck that 1173 01:06:24,300 --> 01:06:26,800 depth, the team decides that that's that's the path that they 1174 01:06:26,800 --> 01:06:28,200 will take. Maybe they decide not to even 1175 01:06:28,200 --> 01:06:30,200 launch a token. Maybe they took us about the 1176 01:06:30,200 --> 01:06:31,900 wrong thing. May just want to build a 1177 01:06:31,900 --> 01:06:34,800 traditional business and it's too hard to know that a priori. 1178 01:06:35,900 --> 01:06:38,400 So in the case that that happens, you want everyone to 1179 01:06:38,400 --> 01:06:42,600 have Equity or and then also, I think if it in the end, It is 1180 01:06:42,600 --> 01:06:45,400 actually a token and token is what captures the most value. 1181 01:06:45,400 --> 01:06:48,900 You also want everyone to have the token and the reason this is 1182 01:06:48,900 --> 01:06:52,300 important is just for alignment reasons, it is what everyone to 1183 01:06:52,300 --> 01:06:55,300 be on the same boat. No matter what happens. 1184 01:06:55,300 --> 01:06:57,800 If the company succeeds, everybody succeeds no. 1185 01:06:57,800 --> 01:07:00,400 And and then did this also by the way, maximize flexibility. 1186 01:07:00,400 --> 01:07:04,600 It doesn't constrain the founder 22 absolutely necessarily launch 1187 01:07:04,600 --> 01:07:08,300 token because the investors expect that or to just build a 1188 01:07:08,300 --> 01:07:11,800 revenue earning business again because you can investors expect 1189 01:07:11,800 --> 01:07:17,900 that as investors, we are on board, we're on your team, no 1190 01:07:17,900 --> 01:07:20,000 matter what and everyone's aligned. 1191 01:07:20,200 --> 01:07:22,500 And we found it, that that is actually the best structure. 1192 01:07:23,500 --> 01:07:26,700 And we don't try to predict a priori, you know, where the 1193 01:07:26,700 --> 01:07:29,600 value is going to be captured because that can impose 1194 01:07:29,900 --> 01:07:33,100 constraints on the founding team that you don't want to impose 1195 01:07:33,400 --> 01:07:36,900 that early. Yeah, that's that's really 1196 01:07:36,900 --> 01:07:40,900 interesting. And, you know, I think for us as 1197 01:07:40,900 --> 01:07:43,200 we think about how we want to construct a portfolio is also 1198 01:07:43,200 --> 01:07:48,600 this altar alliance with what we look for when investing and and 1199 01:07:48,600 --> 01:07:51,700 certainly, you know, they're there has become I think a sort 1200 01:07:51,700 --> 01:07:55,700 of standard that most teams raising in crypto will you know 1201 01:07:55,700 --> 01:08:02,400 will raise on on a silly future Equity agreement and and then 1202 01:08:02,400 --> 01:08:04,400 and then a token warrant or something like that. 1203 01:08:04,400 --> 01:08:07,000 So it is quite commonplace. To have that sort of agreement 1204 01:08:07,500 --> 01:08:10,900 with teams that are raising. Yeah, maybe just before we wrap 1205 01:08:10,900 --> 01:08:13,200 up here. One final thing, I wanted to 1206 01:08:13,400 --> 01:08:17,200 touch on taking a step back and looking at the events of the 1207 01:08:17,200 --> 01:08:26,200 last couple of weeks is, you know, how has the firm you 1208 01:08:26,200 --> 01:08:29,200 change? Or say, how does the firm advise 1209 01:08:29,200 --> 01:08:32,800 companies and teams in your portfolio to protect themselves 1210 01:08:32,800 --> 01:08:39,200 against, you know, up? Federal Banking crisis or the 1211 01:08:39,200 --> 01:08:42,700 shutdown of, you know, perhaps like the bag that they're 1212 01:08:42,700 --> 01:08:48,899 working with or or more broadly, you know, economic crisis that 1213 01:08:49,600 --> 01:08:54,899 that might, you know, have them have their treasury be wiped out 1214 01:08:56,000 --> 01:08:58,200 or, to some extent you even regulatory risks. 1215 01:08:58,200 --> 01:09:02,600 Like, how do you approach these sort of, you know, risks that 1216 01:09:02,600 --> 01:09:06,300 are inherently tied to the system in which crypto Operates 1217 01:09:07,399 --> 01:09:10,399 in order for teams to be better prepared against these types of 1218 01:09:10,399 --> 01:09:13,800 events. Yeah, it's it's a really good 1219 01:09:13,800 --> 01:09:16,899 question and it's a hard one. I don't think that there's a 1220 01:09:17,500 --> 01:09:20,800 truly great answer and by the way I think that everything has 1221 01:09:20,800 --> 01:09:25,399 been going on with a banking crisis is is actually just a 1222 01:09:25,399 --> 01:09:28,800 reflection of the failures of centralized Finance. 1223 01:09:28,800 --> 01:09:31,100 So in a way like it kind of highlights the way the reasons 1224 01:09:31,100 --> 01:09:34,200 that you actually actually decrypt out and being able to 1225 01:09:34,600 --> 01:09:36,899 have the transparency such that you can tell, you could, you 1226 01:09:36,899 --> 01:09:42,100 know, whether an organization or a protocol is solvent or not. 1227 01:09:42,500 --> 01:09:46,700 Um, is some of the essential is a part of the central, ethos of 1228 01:09:46,899 --> 01:09:51,000 the space, but given that we are still embedded in the 1229 01:09:51,000 --> 01:09:53,300 traditional Financial system and our company still need bank 1230 01:09:53,300 --> 01:09:55,700 accounts in order to advise really just comes down to 1231 01:09:55,700 --> 01:09:59,700 diversification. You you want to not be entirely 1232 01:09:59,700 --> 01:10:04,200 concentrated with anyone back. You want to maybe split up the 1233 01:10:04,200 --> 01:10:08,500 company's assets across three bags or so maybe maybe you can 1234 01:10:08,500 --> 01:10:11,800 hold some amount of capital on chain in the front of you, as 1235 01:10:11,800 --> 01:10:15,000 you see As well it's another it's another way of diversifying 1236 01:10:16,400 --> 01:10:19,400 but that's really ultimately the only answer like borrowing like 1237 01:10:19,400 --> 01:10:23,200 most companies in the space at the moment cannot get bank 1238 01:10:23,200 --> 01:10:27,500 accounts with the big G sub organizations, like the banks 1239 01:10:27,500 --> 01:10:29,400 that are so big that they're too big to fail. 1240 01:10:29,500 --> 01:10:32,700 They fail because those Banks don't want to bank crypto 1241 01:10:32,700 --> 01:10:35,700 companies. And so then as a result, the 1242 01:10:35,700 --> 01:10:39,100 only other option is to is to maybe get three bank accounts 1243 01:10:39,100 --> 01:10:42,300 with other more Regional banks that are more friendly towards 1244 01:10:42,400 --> 01:10:46,900 Do as a way of of minimizing the risk that any one of them might 1245 01:10:46,900 --> 01:10:50,200 fail. Yeah, I think that's sound 1246 01:10:50,200 --> 01:10:55,100 advice and certainly, it's what I would have encountered so far 1247 01:10:55,100 --> 01:10:58,800 in the last last two weeks, as the dust has settled and people 1248 01:10:58,800 --> 01:11:02,200 are starting to reason about how they want to reduce that risk. 1249 01:11:02,200 --> 01:11:06,900 And certainly for us, you know, we were, we were about to start 1250 01:11:06,900 --> 01:11:09,200 working with one of the banks that was shut down. 1251 01:11:09,200 --> 01:11:12,300 And, and now are thinking, okay, well mean, we probably need to 1252 01:11:12,300 --> 01:11:15,800 engage with several Banks exactly as we set up our our 1253 01:11:15,800 --> 01:11:17,400 structure so that it makes a lot of sense. 1254 01:11:18,000 --> 01:11:20,300 Yeah, this has been really fascinating really do this 1255 01:11:20,300 --> 01:11:22,300 conversation. And yeah, all the insights, you 1256 01:11:22,300 --> 01:11:27,300 provided here and so would like to leave our listeners with one 1257 01:11:27,300 --> 01:11:28,900 final thing, where can people find you? 1258 01:11:28,900 --> 01:11:32,300 Or you know, some of the things that you mentioned the the work 1259 01:11:32,300 --> 01:11:34,400 they succeed, Zeus doing the research, Etc. 1260 01:11:36,000 --> 01:11:39,100 Yeah, absolutely. So we are a 16z crypto.com. 1261 01:11:39,800 --> 01:11:43,800 Probably, as you can see, crypto specific content and that's 1262 01:11:43,800 --> 01:11:45,800 where we all are in this where you can find us, and then 1263 01:11:45,800 --> 01:11:49,200 personally, I'm on Twitter at alive underscore eat. 1264 01:11:50,300 --> 01:11:51,400 Great, thanks. Lyle you. 1265 01:11:51,400 --> 01:11:52,600 Thanks for coming on the podcast. 1266 01:11:53,400 --> 01:11:55,000 Thank you so much, guys. This was so fun. 1267 01:11:55,100 --> 01:11:59,100 Really appreciate it. Thank you for joining us on this 1268 01:11:59,100 --> 01:12:01,500 week's episode. We release new episodes every 1269 01:12:01,500 --> 01:12:03,500 week. You can find And subscribe to 1270 01:12:03,500 --> 01:12:07,300 the show on iTunes Spotify, YouTube SoundCloud or wherever 1271 01:12:07,300 --> 01:12:09,700 you listen to podcast. And if you have a Google home or 1272 01:12:09,700 --> 01:12:12,400 Alexa device, you can tell it to listen to the latest episode of 1273 01:12:12,407 --> 01:12:16,200 the epicenter podcast, go to epicenter dot TV /, subscribe 1274 01:12:16,300 --> 01:12:19,000 for a full list of places where you can watch and listen, while 1275 01:12:19,000 --> 01:12:21,300 you're there, be sure to sign up for the newsletter so you get 1276 01:12:21,300 --> 01:12:24,600 new episodes in your inbox as they're released if you want to 1277 01:12:24,608 --> 01:12:27,400 interact with us guests. Or other podcast listeners you 1278 01:12:27,400 --> 01:12:29,900 can follow us on Twitter and please leave us a review on 1279 01:12:29,900 --> 01:12:31,600 iTunes. It helps people find the show 1280 01:12:31,800 --> 01:12:35,000 and we're always happy to read them but thanks so much and we 1281 01:12:35,000 --> 01:12:36,400 look forward to being back next week. 1282 01:12:26,100 --> 01:12:28,900 Or other podcast listeners you can follow us on Twitter and 1283 01:12:28,900 --> 01:12:30,200 please leave us a review on iTunes. 1284 01:12:30,400 --> 01:12:32,700 It helps people find the show and we're always happy to read 1285 01:12:32,700 --> 01:12:36,000 them but thanks so much and we look forward to being back next 1286 01:12:36,000 --> 01:12:36,400 week.