E109: Meltem Demirors: Why Speculation Drives Crypto (And How To Win The Game)

35:33And then the facilitation of a futures market, a derivatives market for commodities, particularly oil, that took off in the 2000s with electronic trading, allowed commodities to become a more defined asset class with broader participation and then introduce these new financial instruments. and it just resulted in this amazing exponential explosion in the volume of activity, financial activity, happening in the oil trading space in particular. But that also sort of filtered back and made new technical innovation possible and then allowed for different kinds of operating leverage. So these three levers kind of all work together.

36:10I'm trying to be very simplistic here. I think for me, frameworks are really helpful and there's a lot you can learn from history, right? So like informative. It won't be exactly the same, but I think there's more commonality than not. So I basically broke down the whole thing into kind of frameworks, right? To make people, so people can understand the thing better, right? The first one is infrastructure, right? Which is a big focus for you. What is infrastructure? That's question number one. We throw around the word infrastructure a lot. It means different things to different people. uh one of the i think this is also one of the funny sort of challenges in in crypto like there are no canonical definitions and when i say canonical it's sort of like widely accepted truths like global truths versus localized truths right so i think one of the challenges is i'll say infrastructure and you'll say infrastructure and we're speaking about two very different things or I'll say deepen, you'll say deepen.

37:14And we're thinking of two very different things. So I think this is one of the challenges of working in an industry where there is no sort of formal body that sort of decides, like, here's the canonical definition. The market decides the canonical definition, which I think is also cool, right? Like whatever becomes the most financially successful, that is going to be the definition. So you operate in a framework where there is no concrete definition for infrastructure, but you find it... No, sorry, I'm just saying infrastructure is a confusing term. Okay, but you have... My definition of infrastructure, it breaks down into two categories.

37:49There's physical infrastructure and digital infrastructure. Right, and infrastructure is basically the scaffolding that people build things on. So it's protocols. It's frameworks that people use to build. It's about, to me, infrastructure is about standardization. Right, so standardization in terms of that technical innovation is standardization in terms of the models people are using to optimize how they operate these different assets, whether it's digital or physical infrastructure. And then it's also standardization of the financial primitives that we're going to use for this financial engineering, right?

38:20So a lot of these DeFi building blocks are infrastructure for capital markets. Does that make sense? It does. The only thing I would say is for, I think, many people who are not a bit strange, as you said, right, that you are, it's not very sexy, right, to think about that. But for you, it is. It's extremely sexy. How is it not sexy? Why is it sexy for you to talk about that and to focus on that for the next 10 to 20 years? Because it's foundational to everything else. Everything else that you interact with, like this, right? This beautiful pudgy penguin. This one's quite cool. It has a katana.

39:04Sick. This pudgy penguin, right? How does this Pudgy Penguin exist? Absolutely. ERC-721, which is the NFT token standard. That's foundational in making this possible. Then there's financial market infrastructure. You have the OpenSea contract, which allows you to trade these things. Then you have lending protocols that allow you to use these as collateral. So infrastructure, I think, is very sexy and is required to make things like this possible. Which is interesting and comes back to what you said before, because when you said you showed the project Penguin, you talk about infrastructure, you talk about all the digital infrastructure.

39:47And me, the first idea was the physical one that enabled you to build this actual toy, right? Yeah. I mean, I don't know how this was produced, right? That's not my expertise. I know where my limits I know where my competence begins we just know it's cute and we love the penguins this is kind of badass I want a katana I want to walk around with a katana on my back I think that would be a good look for me maybe hard to get through TSA with a katana not easy but you found a parking lot to come here so you can find solutions to anything I don't want to talk about it Yeah. So I think that's maybe my articulation of infrastructure.

40:36It's like, what are all of the underlying components that make it possible for this to exist? and then as there's sort of this recursive relationship um and i think fred wilson wrote a really great blog post on this and other people have written about it but i think fred wilson's blog post is sort of referred to as like i don't know the holy grail here but there's this ongoing conversation that happens in crypto like why are that they're not more consumer applications right where the applications where the applications it's like well first the infrastructure has to get built. And so when new infrastructure gets built, it unlocks new applications, right?

41:12Without ERC 721, we would have not had this. So new infrastructure innovations happen, and then new applications can get built. And there's sort of this recurring cycle. Infrastructure gets overcapitalized, then people build new applications, those applications get overcapitalized. And so that's sort of the cycle. Now, the way I translate this to what I'm excited about is this is not just happening in the digital realm, there is currently a massive shift underway in the deep tech and physical infrastructure space. For a very long time, if you were doing anything in the hardware or physical infrastructure space, nobody wanted to invest.

41:50Unless you were spent out of a corporate or you had some sort of unique access to capital at low cost, it's very, very difficult to capitalize a hardware startup. And I will go out on a limb and say, over the last decade, Bitcoin has done more for hardware investing than any other tech sector because Bitcoin catalyzed a$100 billion dedicated semiconductor and data center boom. I think you also said that Ethereum is one of the reasons why Nvidia was so successful in 2017. Yeah, in 2017 Nvidia sort of soared past Intel and others because of this massive demand for GPUs driven by Ethereum proof of work mining.

42:30Same thing in 2020, 2021 with Seagate, solid state drives, SSDs. They were impossible to find. Price skyrocketed. Blockbuster year for revenues for Seagate primarily, who produces SSDs, solid state drives, for people farming Chia Filecoin and other proof of space and time protocols. So what's interesting is people think of crypto as purely digital tech. but crypto has had a massive impact on the world of atoms on the world of semiconductors and data centers right and we're seeing this now Bitcoin data centers are really good at one thing because of the unique economics of Bitcoin as a digital commodity you can never make more Bitcoin per block right there is a fixed block reward what does that mean you have to get really good at optimizing your operating cost which means lowest cost of electricity possible, efficient operations.

43:25And that could mean immersion cooling. It could mean a multitude of things. But because Bitcoin data centers have gotten so good at minimizing OPEX operating expenditures and finding really low cost power, those Bitcoin data centers now in a lot of instances are really optimal for GPU deployments for AI. So I really think there's this interesting relationship where we think of crypto as happening like purely online, but crypto has had a massive impact on our physical world, on physical infrastructure. And now there is a new wave of investing that's happening in Silicon Valley and beyond, where I think investors are recognizing that it's time for a new era of hardware and physical infrastructure that is going to be needed to unleash a new category of software companies.

44:13Over the last 15 years, really, the dominant focus has been investing in software and bits and bytes. But I think we're now starting to see that we need new hardware, new chips, new energy generation, new models for robotics, like all of these interesting categories that historically have been really unattractive to investors are now becoming really compelling and really attractive because I think crypto and these early beginnings of AI are showing tremendous upside lift, right? Tremendous multiple expansion. I have two points based on what you just said. The first one is what you just said, right?

44:49In the last 15 years, we invested in bits and bytes. 2010? Yeah. Most of the biggest market cap companies were commodities, right? Yeah, oil and gas companies. Oil and gas. And now it's technology, right? So it feels like... Who is the number one company? NVIDIA. NVIDIA, yeah. It wasn't even on the chart a year ago. Yeah. Yeah. Yeah. So you're getting back to... It's crazy. That's one of my favorite charts. And this is why I'm such a weirdo. This is why I said strange. It's like, normal people don't think that's exciting. I think it's so exciting and so fascinating. Something wrong with us. I've accepted it.

45:33So you think that in 2038 or 2040, right, in another 15 years, we're getting back to... Bits and bites. Sure. One of the big questions is whether or not those cycles will compress and go faster and faster. I don't know. I actually think there is... And this is where I think history becomes really interesting. I have tremendous respect for people like Balaji Sunavasan, who just have such an amazing grasp of human history. his knowledge on this is just mine is not so profound i would not say it's my strong suit but i do think there is a rate uh like a limiting factors to how fast humans can integrate technological change so one of the frameworks that people use is the s-curve right of adoption where you kind of have like this slow build slow base build slow build and then there is a moment where things just sort of have this exponential uplift and that sort of parabolic part of the s-curve happens.

46:32One of the fun things I like to think about is has that moment happened for crypto yet? I don't think it has. And I think what will actually unlock that parabolic moment for crypto is the AI economy, AI agents, the agentic economy. Can you explain why? Because I think humans struggle to interact with public private key cryptography. Like interacting with crypto is quite hard. Why do so many people go through the UX hurdles and the friction of interacting with crypto it's because there's a bunch of early adopters kind of like weirdos out there who think it's fun and cool interesting whatever there's also a lot of people who are opportunistic you're like oh i can make money so they go through all this friction because there's just opportunity i think ai agents right they will have no problem interacting with public private key cryptography and things in the realm of crypto because it will be very easy for them right they operate off of code.

47:27And so I think that's an interesting thing. I like to have these like weird conversations with founders. Like we don't actually talk about the companies really all that much. Sometimes we end up spending a lot of time just talking about what does the world need to look like for what you're building to be incredibly successful, which I think is an interesting way for me to understand how other people view the world, which influences my thinking as well. right it's it's always really constructive and i think um i was having this conversation with a founder a couple of weeks ago we're sort of debating about it and it's has crypto even had that exponential growth moment yet have we even reached like a reasonable point of adoption because today the primary interface that people use to interact with crypto is a centralized exchange exchanges yeah exactly that's it so i don't think i don't think we've had that moment yet Which is kind of wild to think about.

48:20No, completely agree. And even when people kind of throw these numbers of we have that many users, if you're very critical, which you should be, there's so many people with so many addresses, right? Like even the number of users, the hundreds of millions of... Or you can say, okay, maybe they hold some coins, but what for? Probably kind of gambling, right? Or making money, right? Which... Which is a great use case. Which, exactly. It leads us to something I really want to talk about today, speculation, right?

48:55Which is very interesting because before you said crypto is this kind of like online thing, but that actually had a massive impact on this kind of new new direction and offline thesis, right? And the hardware, right? But crypto itself, so Bitcoin and ETH fueled hardware, right? But crypto itself is fueled by speculation, which a lot of people, when they come into crypto or they look at this thing kind of from far away, they think it's, you know, scammy or weird or doesn't make sense, etc. Right? You have a very different take on that. You say speculation is the fuel that makes the future possible.

49:34Absolutely. Why is greed so important in any nascent market to help it take it to the next level? I think a useful framework, again, here is Carlotta Perez wrote a great book called Technological Revolutions and Financial Bubbles. That is about this pattern that emerges. Anytime there's new technology, it tends to be overcapitalized because it happened with, I think the analogy she uses in her book is railroads, right? Railroads emerge. There was this crazy boom to invest in railroads through stock offerings. offerings. And so 90 % plus of these stock offerings went to zero very quickly. There were a lot of scams, a lot of Ponzi's.

50:16But then there was this fundamental shift because railroads became a dominant mode of transportation. They unlocked all sorts of new commerce. All of a sudden, you know, all of these new things were possible, created new industries, etc. Like led to this massive industrialization. So it took just a long period of time. And there was a very heated sort of financial speculation bubble that happened around that innovation. We saw it again with the internet. Everyone loves talking about the dot-com boom as sort of the prime example here, like pets.com and a lot of the internet bubble. Same thing happened, I think, with enterprise SaaS.

50:52We look at some of the valuations that people are investing in enterprise SaaS and you're like, wow, that's interesting. And same thing happened with crypto. And crypto has gone through a few waves of intense and fervent speculation. We saw it with ICOs. We saw it with DeFi. We're seeing it now, I think, with like L2s and all of this protocol innovation. There's so many, many, many protocols that are being capitalized at really lofty valuations, ambitious valuations, I should say, and they have to grow into those. And then there are going to be just like a small handful of winners that make it through that speculative bubble.

51:28And those are going to win really big and that's sort of just a recurring pattern what i don't like sometimes and i'm not going to name names before you ask me one of the things that aggravates me is you will have people in crypto who have made a lot of wealth and who have gained power and influence because of this speculation right because they've been on the right side of the trade and had a right call and they will come out and say oh well speculation is not a real use case speculation is bad we shouldn't have speculation and i'm like you are here because of speculation i don't understand the i don't know if people feel moral guilt or they feel that that somehow uh reduces the legitimacy of crypto or their legitimacy as an investor but that is just a foundational part of any industry and so i don't understand the moral grandstanding and i'm like do you just embrace embrace like it's not good it's not bad it's what it is it is and the more intellectually dishonest you are about it the scammer your crypto looks just be intellectually honest about it it's not a bad thing like it just this is it is how humans work It's how we make bets on the future, right?

52:49It's just part of human nature, but people get so, I don't know, they get very weird about it. And we're like, oh, well, the speculation's over and now we're doing real use cases. And the real use case is something like helium, which I love helium, right? I think they have done a really great job showcasing the potential of deep in. But helium's been around for seven years as a token. Prior to that, you know, it was this Series C company and there's zero shade here. But again, helium has been through seven years of intense sort of ups and downs. And a lot of the reason why it's survived for so long and had enough capital to figure out the model and get to a point where they're able to actually create real production value is because of the speculation.

53:35And that's not a criticism, right? Same thing for a lot of other protocols. but I think it's funny when people say that I'm like the reason a lot of these projects have been around so long and have had the runway they need to figure out the model and build the supply side then man side and build things that work is because of the speculative fervor and again not a criticism like zero shade here but I just find it so strange honestly so I embrace speculation If anyone wants to pitch me about speculation, I'm very happy to listen. And I think, again, the market decides what is right. Mr. Market decides.

54:16So you could have the technically most brilliant non-speculative use case, but if the market values it at zero, what do you have? And the market decided that we needed frog coins and dog coins. Because frog coins and dog coins don't have VCs. and maybe people are a little bit tired of the moralizing where vcs are like yes i got rich from speculation it worked out for me but now nobody else can have speculation i think people were just tired of some of the dynamics of the low flow high fdb paradigm and on the top of that they're fun they're fun they're fun yeah i own some dog coins i mean talking about that i have to talk about that now right there's a It was last cycle, but like that's how, I mean, I was following what you were doing, but one of the things that caught my attention was the ether rocks and dick butts, right?

55:11I was just thinking. I have a little pudgies, but my favorite NFTs are, yes, the rocks and dick butts. And my first, I mean, like everyone, you know, when you go through, for example, NFT is a good one. In the beginning, you're like, what the fuck is that, right? Yeah. And then you need to hurt your brain. Maybe if you're a bit more weird Like you need to less hurt your brain But you probably need to hurt your brain in the beginning To understand what the hell this is, right? Yeah Oh, my brain hurts often So basically I was just looking at what you were doing And talking about these ether rocks I mean, then they went crazy, right?

55:43And then the dick butt And I was like First I was like, what the fuck? And second I was like She's smart So instead of saying what the fuck I should ask, why? Why does she understand that I don't? I think and I get this question a lot and people were real people are still really mad about ether rocks and crypto dick butts they make people viscerally angry I think it's awesome but I think it's hilarious what I thought was really interesting so I learned about ether rocks I don't even recall how but I learned about ether rocks randomly and I remember texting a good friend of mind being like, should I buy a used Honda Civic or an Ether Rock?

56:22Just explain for those who don't know what an Ether Rock is. Okay, so an Ether Rock is an NFT like this beautiful fudgy penguin. But an Ether Rock is one of the very, very early NFTs. I believe the project was created in 2017. And like CryptoPunks, Ether Rocks have their own marketplace. So you manage your Ether Rock through the Rock Manager console, which is a very funny ux it's like very clunky there's a hundred ether rocks um the nft itself the artwork it is a free clip art of a rock so it's a png file that is like when you google rock png it's just a clip art it's free it's free on some website and the dev basically took it and each ether rock and there's been extensive analysis of ether rocks each one is a slightly different shade there's gray rocks blue rocks red rocks brown rocks the grays are the most common the blues are a bit more rare the reds are very rare each rock has a number so some people like to buy specific rock numbers a friend of mine after I bought my ether rock and then rock pilled him bought rock 21 another friend bought rock number 8 and 88 because 8s are good luck in in certain cultures so it's quite fun um there are some people who own multiple rocks i know a triple rocker somebody who owns three rocks which is like quite an accomplishment but i bought my ether rock and i was like this is really that was my first nft was the ether rock first nft that i had actually gone out and and bought right i'd been like airdroff some whatever but i was like i'm gonna go in on ether rocks and figure out what's going on so the first interview you bought was for 35k and it was a JPEG of a rock.

58:10Okay. And then I... No, no, but like it's so interesting. But then I saw this group of people. I was like, okay, I'm going to get other people I know who I think are really interesting and have a unique view on markets. I'm going to get them to buy Ether Rocks. It's like I went in, you know, Arthur Hayes from BitMEX is a good friend of mine. I was like, hey, Arthur, you should get an Ether Rock. I talked to Kayne Warwick from Synthetic. I was like, you really need an Ether Rock. I was just like, Ether Rock should be status symbol. There are 10 ,000 punks and punks are status symbol. I just don't vibe with punks.

58:44Personal sort of aesthetic thing. To me, the rock is much funnier because it's so absurd, right? And there's only a hundred of them. Yes. And it's like crypto data is basically, right? It's like performance art, really. And I think it takes that absurdity of crypto to a very much an extreme it's so absurd and so ridiculous and the best part about it was was we got together a group of people who owned rocks we called it stonehenge very exclusive group a lot of great people in it we threw an insane party the best story about the ether rock party we flew in jamie jones and lee burridge and had them do a back-to-back in a 700 person club with only 150 people in it and there were people outside during nft nyc like with their punks on their phone they're like do you know who i am like i own 10 punks and we were like bitch this is an ether rock party so someone at the door actually spent two million dollars on an ether rock to get into the party wow which is just so crazy to me that i think it goes back to this idea people want to be a part of something exclusive um the rocks themselves are so absurd there have been so many derivatives of ether rocks and then the media headlines like financial media was outraged and To them, Ether Rock somehow represented the excesses of crypto.

1:00:04I just thought it was very funny performance art. And I think committing to the bit is very important. Everyone's like, oh, you should be more professional. And I'm like, I'm a clown. I work in crypto. I don't think you understand. This is what we do. And at its core, what's... No, but I mean, first, it's amazing for advertisement, right? because people get so pissed off and everybody talks about it. They get so angry. And second, you talk about excess, right? And if I remember well, I don't remember the exact sentence I saw before on your telegram. The path to success comes with many excess, something like that.

1:00:42Oh, this is a... It's filled with excess. Yes, this is a William Blake quote, which we're all over the map and cultural reference. This is really wild. William Blake, 1800s poet, he said, the path to wisdom is paved with excess. To wisdom. And then the second part of the quote is because you never know what is enough until you've had too much. And I actually think Ether Rocks in many ways are emblematic of just crypto culture. And Ether Rocks happen to be, and dick butts, by the way, they're silly and they're funny. Just because, you know, something is a intellectual sort of like, oh, we have a white paper and that's why this token.

1:01:21Like people will go on these 30 thread sort of tweet storms. that's effectively like advertising for something like an ether rock but just because it has a white paper and some very light like sprinkling of intellectual pseudo-intellectualism on top of it they'll be like yes this is a two billion dollar protocol i'm like there's very little difference between an ether rock and and this and so i do think it's very important to sort of take a step back and again be just be real i think meme coins are also kind of a similar expression they're absurd and preposterous but what's the difference between you know some protocols that have very little tvl very low trading volume effectively fully subsidized um uh network infrastructure right like all the nodes are fully subsidized that's there's no fee paying demand for block space there's no activity and these things have multi-billion dollar valuations like yeah Yeah, absolutely.

1:02:23Yeah, the difference might just be meme coins have more attention. At least some of them have much more attention than the protocol. At least they're funny. That's my thing with Ether Rocksley. At least they're funny and they're fun and I don't know. It's entertainment value. And I think again, the thing I think sometimes with crypto that's frustrating is people try to be so serious. I'm like that all of this is a little bit funny. I mean, if you think about where Bitcoin started, like we were buying drugs on the internet people. true there's a great meme there's a great meme that's um everyone's seen this meme i feel like it's the guy setting up uh the dominoes and each one gets successively bigger and there's one where the first domino is buying buying drugs on the internet and the last domino is uh toppling the global financial system and that's and that's true yeah but what do you think this is always a fun question what is you meet an alien and you have to explain memes to them what meme do you show them what internet meme do you show them

1:03:36I mean, my favorite one is the, I don't know his name, but it's the guy with the cup, the old guy that is being reused. For example, in crypto, applied to crypto, but it could be applied to anything else, right? I'm 24 years old and I'm a crypto trader. And then you see the guy with this cup and he's just old and I don't remember his name. Actually, I had Ray Chan on the podcast. I love Ray. The man gag. Ray is amazing. He owns Crypto Dick Buts, by the way. Ray has a whole vibe. Yeah, he's great. And he said he talks about this dude, actually, that he met. I want to see the name. I actually don't know this one.

1:04:16Of course. The guy who is like... Can you show me? I don't know if I can... Maybe I'll show you later, because I don't know if I can find it easily. But he's just a guy with the cup. And this is the meme you're using to explain memes to aliens. Okay, meme. What would I search? Meme guy with cup old? Old, yeah. Okay. I would be doing... You know that. Oh, this one. Yeah, I just don't... Yeah. For me, like that's the ultimate meme. Wait, hold on. Because you can use it. How do I show that? Wait, can you put it in front of me? I feel like we need to share this with everyone. This guy. Yeah, this guy.

1:04:52For me, this guy is being used and reused for so many things, right? It's like one of the best memes. Yeah. I also like the house on fire one, the like dog cartoon, sipping a cup of coffee at a table while the house is on fire. And they're like, this is fun. Of course. But I do think for me, the domino meme where it's, you know, the first domino is by drugs on the internet, the last domino is like toppling the global financial system. I think it sort of goes back to in crypto, there can be profoundly unserious things that are actually quite serious and quite monumental. So yeah, I think it's good to have a healthy sense of humor.

1:05:29At least it makes the journey more fun. And it probably also, this meme that you say is probably like a really amazing way to show that we think that, you know, you were born in Switzerland. You think that everything works. Government work. You pay taxes. Everything is working, right? But actually things work way less than what we think, right? And so therefore, you should take yourself much less seriously and just realize that, hey, like everything is the word is too complex for one person to understand it. Right. I think the most profound moment is when you meet someone who you really look up to and you realize they have no idea what's going on.

1:06:14Like they are just as clueless and figuring it out in the same way that you are. I mean, one of the one of the examples for that is. the teachers when you grew up at school and then you grew up with google right later on your eyes you start to google everything and you realize oh had i had google i mean today being a teacher must be much harder in a classroom because kids have internet right they could just ask anything whereas you would just take the teachers or even your own parents as an authority and they would very easily say things sometimes that they have no clue about just to look like they know something right?

1:06:50I didn't grow up like this because my father is a scientist and I grew up when I was a child I really wanted an encyclopedia set this is pre-internet I only use my computer to play doom if you remember the doom on the floppy disk that's like where we're at with home computers I was playing doom on a floppy disk but I had an encyclopedia botanica set and I got in trouble a lot because I would stay up at night under the covers with the flashlight reading Encyclopedia Britannica. This is why I say I'm like a bit of a strange bird in this way because I wanted to know things. So I grew up in a very annoying household where we spent a lot of time learning things and knowing things.

1:07:36Yeah. I was imbued with distrust of authority from a young age. It's like, but is that actually true?

1:07:48so you're building a new firm right investing firm called crucible capital it's my third time on the roller coaster but this time i'm doing it my way so let's see how that works out are you doing that alone i'm a solo gp yes so obviously DCG was an incredible journey from 2015 to 2018. For all of his faults, I do think Barry Silber is extremely smart. And he was very convinced about Bitcoin very early on and turned many people into converts. Great experience, really fascinating. Coin shares for five and a half years, worked with some of the smartest people who likewise, a lot of conviction in Bitcoin, staked a lot of their own capital, their own reputations on Bitcoin.

1:08:43And this time around, it's like, okay. Now's the time. Let's try. Let's do this. And I had, you know, it's so interesting in 2011, sorry, in 2021, a lot of people approached me and they were like, when are you going to spin out and do your own firm? And people have always been, and I never really quite felt like I knew what the thing was going to be. And I've been talking about this energy compute crypto sort of concept for some time, but I didn't really see the picture clearly, maybe until December of last year. And then the picture started becoming clearer. And then I still didn't really know how I wanted to express what I was seeing, right?

1:09:25Because there are a lot of different ways to sort of express your beliefs, your conviction around what the world will look like a decade from now. And then I feel very lucky that I've had the opportunity over the last nine years in crypto to work with some really phenomenal people, really smart, really just intelligent, ambitious, risk-loving people. And a few of those people that I had worked with, interacted with, reached out to me um and they're like i know you're gonna start a firm you might not know it yet but i know you're going to and i want to back you and so as starting that way and in particular i have to give a huge shout out to um the laser digital team at numura they were really encouraging and i didn't even have a name or a thesis or really i didn't even have anything written down on paper and they were like yes we want to and i think that was a huge um i think that's really helpful especially when you're doing something new like it's always scary doing anything is new is scary um and people seem to think like vc is this easy job it's really scary and really hard actually i like it but it also scares the crap out of me and then um i had another really close friend i know for a number of years who had been in crypto a long time had been really successful and he was like it's go time like let's do this i'm with you so i think um that's that's really how it started.

1:10:51And then I was like, okay, it's go time. And the go time started in like late March, early April. Yeah. So. You tweeted recently, building anything is incredibly hard. The sheer amount of inertia required to give a life to something. Anything is massive. Cheers to the builders and the doers. It's fucking hard. Keep going. It's really hard. Especially in crypto. Yeah. what's something since you started that you did not expect would be as hard I think anytime you are raising money whether it's for a company a project a fund whatever it may be anytime you have to go out and ask people to bet on you and then not only to bet on you right people I think in our industry and just in venture in general people celebrate the fundraise and like the fundraise is actually the start of absolutely the hard part right you get to that point like raising capital is hard getting people bought in is hard getting them over the finish line getting everyone to wire their money and then all of a sudden you're sitting on this pile of money and there are these expectations right and all of a sudden you're like oh like now i have to go and do this thing and as you go through that process there I think just the and especially for me as a solo GP like I'm lucky in that I do feel very fortunate in that I have a lot of friends who are GPs solo GPs I have people who've built businesses I have so many founders I've worked with over the years who I still talk to all the time I'm close with and friendly with the founders I'm talking to now and backing now right we're going through similar journeys but in different ways just every moment when you feel really tired when your brain hurts when you just like you're like god this is so much and then there's more and it just keeps coming and you just you have to take a moment to be like so i become a really quite like boring person i go to bed early i got an aura ring because i'm not sleeping well so i'm like trying to get better at sleeping um it's not going well so really uh this morning all of the bars on like the little app were all red.

1:13:05It's basically like you suck at sleeping. Now I know where you relate. Got at it. I went to the gym this I woke up early this morning. I think that's a great thing. But you really have to manage your psychology. I think as I've gotten older like understanding respecting my physical health and just also understanding that investing is creative right like particularly investing in nascent industries is a creative endeavor. so finding ways to refill and recharge my battery by doing things that are completely unrelated without feeling like an imposter like hey I'm not working right now but I'm doing something that's actually beneficial for my decision making do you want to hear something crazy I want I think everybody wants my calendar is empty empty I don't like having a lot of things on my calendar like last week I had three days where my calendar was like that nightmare calendar you know like every half hour is fully booked anxiety those days give me anxiety I really find I like to have an open calendar and that doesn't mean I'm not constantly talking to people or on the phone but now so much communication also happens outside of calls I talk to a lot of people on telegram I'm like in twitter dms with people you know I had a conversation with someone And the other day I'm like Instagram DMs.

1:14:26It's just the conversation's happening so many different places. Yesterday I went out for like a quick walk and I rang someone up. I was like, hey, do you want to just do quick FaceTime and talk through this thing? I was talking to a founder about valuation. We don't have a call schedule, but I just like being free and available because I think it gives you more room for creativity and sort of that serendipity that I think is really so important in early stage investing. Absolutely. I think having busyness is kind of this curse. And I find when I'm overscheduled, I get very depleted. There's so many people reaching out to me.

1:14:59They're like, hey, we should meet up. And I'm like, for what? Like, for what? I so appreciate you thinking of me. Irrespectfully, like, I would much prefer to use that time to not have a meeting with you because I already know you. And I am not going to be a client. I'm not investing. like I'm happy to have a zoom or a phone like here's my cell phone I just give people my phone number like call me we can just have a chat and catch up but I don't think it's or like people who live in I'm like we both live in New York we're both in New York regularly like we could just meet here I would prefer to use my timing to meet people I haven't met before see people I haven't seen in some time um but also meet new people right and then I feel like outside of the conference then we can have a focused conversation probably the week after you know I'll have a week of just like lots of follow-ups and next steps but I just find it so funny people are obsessed with like meeting and I'm like I don't need to fly to you know Brussels to meet with you we could just meet at the coffee shop down the street from where we both live I also don't know how much time I really want to spend with you like I have a family I have friends like other things I would like to spend time on you know and that's not a criticism but I do think an important part of building something is giving yourself space to be expansive I think one of the things I noticed in 2021 when my whole life was crypto like I was on the circuit I was going to all the conferences doing all the going to all the events all the parties um I was so stupid I made bad decisions I made bad investing decisions.

1:16:43My state of mind was bad because I wasn't sleeping. My health was bad. I just made a lot of, in hindsight, dumb decisions because I didn't have the space and time to think rationally. And I was in this sort of space where I had blinders on because everyone around me was saying the same things, doing the same things. And it's very easy to get caught up in that. So again, I've just, it's important to sort of take a step away. I actually really like having dinner with non-crypto people. Like I have some friends who work in commodities or FX trading, clean tech. They're adjacent to what I'm focused on, but I find it really constructive to get their view of the world, to understand what they're excited about, to run ideas by them, get their input, to see if I can explain things happening in my world to them.

1:17:34And if they're like I don't know what you just said I'm like I need to do some work here I do think that's important because if we want crypto to be this phenomenon that we all believe it's going to be then at some point we have to actually start spending time with people outside of crypto absolutely oh I couldn't agree more I'm actually I had a funny I had a funny conversation with someone I was like I got my boomer po app this morning I went on LinkedIn you know it's like boomer status. Like, I like using LinkedIn. I go to non-crypto conferences now and it's really refreshing. I think the exact same.

1:18:11And one of the things I did for this interview was, I mean, this conversation was, I went on your LinkedIn profile and I saw that your bio, I like energy compute and crypto is actually more up to date than the Twitter one. And I was like, I think LinkedIn is great. Like, the algo I think is great. Like the whole thing is, so everybody in crypto eating this shit whatever i don't think here's okay i'm gonna give you alpha linkedin is a cesspool like the content on linkedin is so bad because it's content oriented towards people who like read a guide on marketing and they're like oh i'm gonna do content it's bad it's all really bad so if you have anything even remotely cogent to say about something going on in crypto um and i like making slides, which is also boomer activity.

1:19:01But I think I like visual things and just frameworks that I can look at that help me understand things. So I like just rip a quick slide and I put it on LinkedIn with some explanation and very high ROI activity. Absolutely. For me, I just post these daily clips on every platform, right? From this podcast, everywhere. It's like a content machine. On LinkedIn, I had some guys. You are a content machine. I mean, I'm trying to build a content machine because you have to, right? If you do podcasting, that's how people consume, like short clips, etc. On LinkedIn, I had multiple people contacting me for even to interview the co-founder of YouTube from LinkedIn, right?

1:19:40A guy who built the NFT project that got the co-founder of YouTube into Web3 and like a few other big people. I'm like, I'm getting noticed there because no one in crypto gives a fuck about LinkedIn, right? Or the ones who do our marketing, you know, like something insane. I honestly just think, again, is like water rises to meet its level, right? So I think a lot of times people are very skeptical and dismissive of non-crypto things. But it's actually amazing if you just give people an opportunity and you kind of meet them where they're at and you show them what it is that's going on. That's why I like giving talks.

1:20:22My talks tend to be like very slide framework research oriented because I think it's really constructive. And what I always appreciate is people will reach out to me afterwards and they'll be like, thank you, because I add that something clicked for me. And I feel like we don't spend enough time trying to figure out if what we're saying, what we're doing, what we're showing people is clicking, because I don't think it really clicks sometimes. And you have to try a lot of different permutations. right i feel like i've been giving the same talk for the last five years all permutations of the same conversation and then if i figure out okay this thing sticks these things are not really working okay i'm gonna go back and reconfigure and i have a lot of people who are very direct with me which is helpful the big thing actually be very candid that i'm now trying to figure out i feel like um there is no good playbook for content and crypto right now everyone has a podcast no offense but like there are a lot of podcasts every venture firm has a podcast i'm just like god the world does not need another vc podcast um newsletters like that's a lot of pressure and also there's so many of i don't know that people even really open them so i'm trying to figure out what is a good way to get ideas out there that's like the clips are nice because it's very low effort required on the part of the viewer it's a minute of commitment is a three seconds 30 seconds I mean, it depends, depends which platform, but I, I, absolutely.

1:21:51And that's how you get people consume the podcast first through the, I mean, the YouTube game is a different game, right? Thumbnail and title, and then you can reach audiences. I know nothing about that. I'm stupid at YouTube. But all the rest is just these clips that you just pump every day that almost, you give no choice. It's like the person who drives and see McDonald's, McDonald's, McDonald's. At some point they're going to start looking, right? I do love McDonald's. And because you've been there all the time, right? It's consistent. It is. When you're driving, you don't know what you're going to get.

1:22:23If you stop somewhere, like sometimes you have a really good experience, sometimes you have a really bad experience. McDonald's, it's never good. It's never bad. It just is. The Big Mac is very good. What's your order at McDonald's? Are you a Big Mac? Big Mac. I'm a Big Mac kind of guy, yeah. Oh, and I'm a two cheeseburger meal. Or sometimes that's too much. And then it's a quarter pounder with extra pickles. yeah but they're still all closed for me the the people i don't understand are the ones who pick up like the freaking fish or filet or like something that's kind of like rib yeah or or or the wrap or the salad i'm like why would you go to mcdonald they don't like wraps and salads anymore menu has been consolidated because labor is so expensive right supply chain is so expensive so mcdonald's menu has gotten much smaller they don't even pretend to be healthy anymore they're Like you are eating a hamburger.

1:23:09You're eating a hamburger. You have five choices. You get fried chicken. You get, and it's not even chicken. It's like fried slop. You get a burger. That's it. I mean, actually, as a consumer, that's what you want when you arrive somewhere. You're like, I don't want to have to go to an entire menu. I didn't grow up in America. You didn't grow up in America. I grew up in Nederland in the Netherlands. You grew up in Switzerland. Okay. In the Netherlands, when you go to a restaurant, okay, the menu is like this it's one page and there's like three appetizers there's two or three entrees there's like a chicken a meat and a fish choice and then there's like two desserts and that's the menu and you look at it and you're like okay boom boom easy okay in america my first dining experience in america um i was nine years old and my dad we're in chicago we took a family trip because my dad was trying to like slow roll the idea of relocating to the states okay so in chicago and my dad takes us to cheesecake factory okay the cheesecake factory they bring you a binder the menu is a binder and i'm sitting there and i'm just like i this is terrifying it's too many choices the paradox choice but it's all slop it's all like frozen cisco food that's reheated you know in the back.

1:24:32It's so funny that you say that because in 2006 was my first time in the US with my family and I discovered Cheesecake Factory. Yeah, what did you think? I thought it was amazing. Really? Because I was like, I love cheesecake. All these burgers, they were so huge first time. Everything's so huge. I'm like, I want to bring Cheesecake Factory to Europe, right? And then I checked online. I mean, first, I was probably 2006, 14 years old, so they wouldn't be like, fuck off. But second, there was already someone doing it, right? So I was like, and the other thing I discovered in the US was Abercrombie and Fish 2006.

1:24:59six and i was like i want to bring abercrombie and fish to europe abercrombie was cool because everyone was so hot it was so cool everyone was hot the store was really dark you could not see what you were buying the store was so dark it was actually you know the 2000s were an incredible time in human history the 2000 like the 90s amazing i moved to america in the the 90s amazing unparalleled era to be a child in America, 1990s. 2000s, just wild. Absolutely wild. Now everything's very sanitized. Everything's very like pre-packaged, sanitized. And then the algorithm, right, has made everything this.

1:25:40I don't know what I really dislike. And this is, again, why I don't have stuff on my calendar. I'm not really into like trendy things because I feel like the algorithm them. I used to just travel, right? And I'd go somewhere I'd never been before. And I just wander like I didn't have a plan. I didn't have a map. I didn't have a list of stuff. You just go wander and like figure stuff out. And then you'd write it down. And then your friend would be like, oh, I'm going to go here. And you're like, oh, and I went, you know, you go here and you walk down this alleyway. And there's this great little shop and they just sell gloves.

1:26:12I don't know, something random. And it was great. Or there's this little cafe here. And they have this really lovely owner and you should ask him about but but but it was an experience and adventure now because of instagram everyone has all these expectations and everyone wants to get the photo to put it on their social that they've been there and everything has just become so the same and commodified and i find it very tiring yeah it's very tough i couldn't agree more with that anyways neither here nor there cheesecake factory overwhelming you loved it i was horrified and then the food came out i remember i was so overwhelmed by the menu i don't know what anything is like in the netherlands the food is appalling right like no offense to the dutch but the dutch kitchen's not known for its deliciousness it's quite practical it's like fish here's some fish asparagus um but i was like what do i order and i was like i asked the waiter and he was like all the meatloafs are top seller i'm gonna get meatloaf i don't know what meatloaf is the meatloaf arrives it's literally the size of a book yeah that's true that's that's why i found it awesome because i was a guy who was always hungry as fuck so i was like it's so much even the burgers are like like this is burger paradise right comical how big it is i was i was i still i haven't been back to the cheesecake factory in a while but it's it's an experience I don't want to but we have to wrap up okay

1:27:45when's the last time on your show that you talked about the Cheesecake Factory never but we often talk about a lot of things that are non-crypto related that's one of the goals actually I had so many other questions on so many things but next time let's do quick one answers we can do three quick one word answers or one sentence go what do you have

1:28:11do you have kids no comment

1:28:22do you have kids i feel like asking a crypto person that nobody should answer that question your personal life is your personal life be safe good opsec i actually had the ask raul pal this question and he said no and then he explained why so that's why i never asked specific question about specific people it's more like to understand why if yes or if if not how did you change your life etc i asked annabelle huang from amber as a woman who is very successful i asked her what you're gonna say no comment no comment i have no comment i always have no comment about my family or my personal life. That's for me and not for anyone else.

1:29:03You told me the other day, I think, if I understood well, that you got your house off the grid. I'm working on taking my house off the grid, yeah. So I buried a 3 ,500 gallon propane tank in my yard. I have a generator. I'm running off of well waters. I have a well and I have two ponds, a one acre pond and a slightly smaller pond that can store water. I have like a year's supply of beans and other legumes. And then I'm now working on a solar and battery installation that are going to be on the solar installation will be on the glow network. And then the battery installation will be on daylight network, which are two decentralized energy generation protocols.

1:29:42So I'm taking my house off the grid. I recently just picked up a really beautiful Beretta 1301 tactical. I've been dreaming of that for a while. I got it in a custom bronze finish. Like I'm very into personal resilience. I think it's very important. Why? Why? Yeah, why is self sovereignty so important? Because that's what we keep talking about in crypto. And I think it's important if you talk about it, if you invest in it, you have to actually do those things. Like how am I as an investor going to sit here and tell the world, oh yeah, like, you know, daylight is an amazing protocol. It's so easy to use.

1:30:16But if I don't do any of those things myself. Yeah. More the talk. yeah you you must you must i've always done that i have lost countless bitcoin doing that but i think it is i just it doesn't make sense to me i talk to investors who like have never even used metamask and i'm like doesn't make sense yeah listen to each their own for me personally like very important i also think if we talk about self-sovereignty it's the reason i have my house in new hampshire like it's the reason i spend a lot of time there we talk about self sovereignty why don't you actually try some self-sovereignty it's fucking hard it takes planning it takes effort it takes a lot of maintenance it's important to know how to do these things and all these crypto bros like they no offense not to stereotype but i talked to these people who were like oh yeah like bitcoin's all about self-sovereignty and i'm like what have you done in your life other than gone a computer and push some buttons to express your self-sovereignty what what actions what steps have you taken and i think you can tell a lot about someone's character and their the fiber of their being like larping is one thing go and be about it and then come back to me and tell me what that's like it's very important to me i think to actually adhere to the principles that you're preaching and it's it becomes very apparent when people say one thing but then live their life a completely different way the last one for today what's your biggest prediction for the next 12 months?

1:31:44Biggest prediction? Up only. Why? No, it's you said short. Done. Up only. Beautiful. Up only. Thank you so much for doing that. That was awesome. Thanks.