E85: Hashed Founding Partner: Why The World Needs To Study The Korean Crypto Market

0:002017, crypto bull market just came. We gathered a lot of high profile people. So many founders came to Korean market and we even sent a lot of people to come. And that's how we initiate the Korean crypto community. But this is something I didn't anticipate. Ryan Kim is the founding partner at Hash. A global early stage venture fund focused on backing founders. Who are pioneering the future of blockchain and cryptocurrency. What is Hash and why did you start it seven years ago? I truly believe the decentralized network. I'm bypassing VC round. You can raise from the people directly. So we give out the tool to the founders.

0:39Kind of alternative VC system. How do you define who is a winner and who is not? Practically, how many users they onboarded is very important. Rather than just FDV or valuation, two or three metrics are very important to define the success or not. Can you tell me what you guys are doing exactly with anime and K-pop? Anime, now it's like all-time high. We want to onboard ZAPA's IP to the blockchain space. K-pop has a global audience. Fans, when they onboard, they can buy NFTs and it can be a game changer. You're the second person on this podcast who is extremely bullish on... What do you like so much about the team?

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2:00And Astar Network, a scalable network connecting people to Web3 through entertainment, blockchain development and community events. Ryan, welcome to the podcast. Let's start with maybe some of your background. Who are you? Yeah. My name is Ryan and co-founder and partner at Hashed. So I started, no, we started from 2016. At the time we were just individual investors. Me and other co-founders just, you know, every weekend we met together, just drank a coffee and studied Ethereum, Bitcoin. And this week Vitalik said this one, why he said this. and at the time like EOS was rising. So like Dan Rarimo says this, why he discussed with his friends and in the community.

3:00And the kind of like topics we always discussed. And 2017, like crypto bull market just came. So we gathered a lot of high profile people such as developers, founders, conglomerates, and venture capitalists. And we evangelize them like blockchain is the future. You should invest to crypto or you should invest to blockchain company. And founder, you should come and build a project on top of here. And because our background is like engineer and entrepreneur, me, I found my own company. I sold that out to the big data company. And I worked there for three years as a data scientist. and I realized like a blockchain will be a heaven for data scientists.

3:49So we even select a lot of people to come and that's how we initiate the Korean crypto community. Actually, you know, if you think about Korean market, always Korean market has been a strategic market for everyone. So 2017, so many founders came to Korean market and we introduced them to our network, our community, and they engaged with them to onboard their project. And we became like all of a sudden like private sale investors, kind of crypto fun. Exactly. So the idea initially was we have a passion, but a passion is much more fun when it's shared, right? So let's build a community and share this thing that we think is going to change the world with as many people as possible.

4:43And then what? It's because the community became sizable that you got access to these deals. Yeah, there's kind of, out of a sudden it became a tactic for us. But at the beginning, we just gathered and shared this idea to them because this is fun. and you know more people more fun so as you know we get that like every week 100 people and sharing our idea and our our founder's idea and like what's your thought what's your thought like no we discuss a lot and like uh maybe we can do something because no we our background is like i said uh entrepreneur so we want to make a value in this community and in the industry so uh we We, of course, no, we, at the time we were just investors, but we nurture a lot of resources to our like founders.

5:42So that's how just spontaneously we started like investment. Was this a side hobby, like a side hustle or did you have a main job at that time? At the time, yeah. At the time I was a data scientist. So I developed a personalization algorithm for small e-commerces. So actually I built data. So I felt like, ah, data scientist was quite hard at the time, 2016, 15. But actually all business opportunity belongs to big tech science, not data scientist. data scientists just know they're making good algorithm for big companies so basically they can make their own company but in blockchain space all data is open so data scientists can utilize any type of data on blockchain so I believe data scientists with economy knowledge they can make a lot of business in here so okay I'll jump in.

6:55That was 2017. Okay. So you said you built and sold a company before, right? Yes. Why did you decide to move on to the investing side of entrepreneurship instead of being a builder, right? Because it's two very different things that require different skills and that some are better at one and some are better at the other yeah yeah i i think no maybe i feel like the meeting like a lot of people and learn the new idea was i think i i enjoyed a lot and actually i can just stick to just one project i can build for a few years though also I can do but um like blockchain space at the time blockchain space was very nascent and we don't know what is a final form of the blockchain or final form of like like like business I mean industry so maybe this phase maybe next couple of years I want to invest like top tier founder and learn why he think this technology is usable in this industry.

8:19And then now it's like we can pass like over 200 companies and still I'm learning. So it starts as a community that you grow out of passion. And then how does it work? Like some people who come to this community, they're actually founders and they say, hey, do you want to invest in my project? Or how do the first allocation come? along? At the beginning, usually we approached the best project out of the world and who want to come to Korean market. And we connect them to our community. And the community itself was very purely content-centric, not sales. So just new idea, new consensus algorithm or new new token design the kind of stuff they introduced and purely academic but a lot of founder was very satisfied from the community activities so they gave us like a location like oh okay I want to enroll you guys I want you guys to monitor the Korean market maybe making more partnership here or engage with a lot of high profile people, please help us.

9:46And we got the location from them. And yeah, that's how we started. So you have the right, you become kind of like a coherent partner for businesses that want to go global, right? And so the interesting point maybe out of that is how do you survive during that time? because it's cool to get an allocation, but you're actually not being paid, right? And if you think about how crypto works, the crypto economy is a lot like that. Who gets the best allocations? And then there might be a payout or a handsome payout, right? There might not be, but meanwhile, you need to kind of survive. So what was, did you just feel like, I mean, you had your main job, right?

10:37Oh man, it's fun. I'm going to do that on the side. Plus I have some upside if the thing works or now let's go full time. But we need a way to make a living out of that because we're not sure that how long it's going to take for this product to go out, you know, out there on the markets. How did you manage this? It's a very unique aspect to crypto, right? Yes. Even today when you talk to content creators or even employees of projects, there's a lot of, hey, you get an allocation to this token. If it goes well, you're going to do well. In the normal startup world, yes, you get shares, but you also get a salary.

11:24In crypto, there is almost this thing where you get an allocation. Even, let's say now, the crypto market is starting to do really well. The founders are kind of the kings, right? hey you are allowed an allocation in my project and in in exchange you're going to do all this stuff for me so basically you need to work and invest yeah right it's very yeah it's very it's an aspect that i don't think we see in many other or or any other industry yeah so how did you deal with that in the beginning? Yeah. So at the beginning, before becoming a full-time job as an investor, so until 2017, November, I was locked to the previous company.

12:10But so 2017 was kind of, you know, a little bit overlapped. You know, main job was a daytime. I worked in the previous company, but after after after no after 6 p.m i turned out to be an investor and i think most uh like usable way to uh to help a founder is obviously network so if i have to walk like you know writing a lot of contents or a marketing job or bd or developer definitely you know a lot of time is needed but at the time like no because our previous like no track record uh already we are very well connected to all the web to vc or founder and developer so just connecting them to uh the right partnership was very very valuable for them so at the beginning we maximize our network to help them out.

13:14You're from Korea. You understand deeply the culture there and the market landscape. Why is crypto retail market so huge? Why was it already so hot in 2017? And why is it one of the biggest retail market in the world today? So Korean market is like very unique. That means like a lot of people, if someone makes so much money, from investment everybody is just copy and follow very easily let's say I'm a new crypto investor in Singapore or in Europe or in the US and I totally dismiss the Korean market what am I missing in the big picture let's say as an investor and also as a founder I would say like you know Korea is the most important market of course like one of the most important markets in the world because if you think about like KW crypto pair and up it and be some like you know this like local exchanges no market share is like one of the no I think top two of course like the other one should be a USD can you give some numbers so people can represent like hey look there is 50 million people 50 million people in korea but look the numbers compared to the u.s or to you know other big uh countries in crypto these are the numbers despite you know having much fewer korean people yeah who are in crypto like to understand how much like what it represents so now it's like no market show was of course like uh like except the crypto crypto exchanges crypto crypto is like of course binance okx by bed they're better but no up it has up it and bism has just uh krw and crypto pair of course btc pair exists but almost like zero but crypto character repair wise every day like three to four billion USD the trading volume is traded in those market and if you think about a coinbase like maybe one to two billion trading volume so USD wise Korean the fiat crypto pair is higher than coinbase and also like the percentage wise 20 % is like active traders in Korea out of total population I guess US is like 5-10 % So it's 2017 you find yourself in this crazy Korea retail market it's very hot there you feel and you have a passion for you know crypto you build this community yeah what makes you take the leap why why did you launch what is hashed and why did you start it seven years ago yeah good question because it could be just something for fun right hey I get some allocations here I'm not gonna go all in I'm very truly believed the decentralized network because I know if you think about narrative Bitcoin just started just after 2008 financial crisis we all knows like the Wall Street the financial system is very vulnerable and always a US government is printing money and this is like always all the people in this industry has same spirit, something wrong happened.

17:24And Bitcoin is fixing something and making balance. But you come more from the Ethereum side initially. Yes. Yeah. Yeah. Because Bitcoin was like just kind of, I feel Bitcoin was a little bit commodity. There's not many, I mean, software can be deployed on top of Bitcoin, right? But Ethereum and Sys was like, they wanted to be a global computing system. Not only just a financial system, but the vision embraced all kinds of computing, all kinds of financial system will be deployed on top of Ethereum. We resonate that. And as I saw, you know, previously I was, you know, founder in the software industry, also data scientist.

18:18So I feel like more opportunities can come into the market through Ethereum technology. And eventually, I think first invention was ICO. Even though like 99.9 % of ICO was kind of shit. but yeah it was no it was quite innovative because you know people can raise money without bypassing VC round they can raise from the people directly so either give out the tool to the the founders kind of alternative VC system so it was wow like and actually we invested a lot to the ICO how did this turn out for you? Um, almost zero. Most of them. Almost? I mean, yeah, many of them I lost it, lost it. But a few of them, like at the time, Omiseko, Kaiba Network, still alive.

19:23EOS was also one of the prominent projects at the time. And many L1 projects as well. So, like, I think our hit ratio was 20 to 30%. But it made like 100x, 200x. So that was, oh, okay. Maybe we can start our own crypto fund with this, like the treasury. When did you launch the crypto fund? Like officially go from, hey, we're a bunch of people who have a passion and are early investors because we have a location to, hey, we'll build a structure around that.

20:05When was that? uh 2018 so after the the crash yeah 2017 was um kind of you know we built uh all the communities and actually peak was uh January 2018 so after that still no market was quite active nobody thinks this is like you know the beginning of yeah this is a peak more no the other peak is coming but you know 2018 november just dropped to uh 3k bitcoin 3k yeah 3.5k 3 to 3.5k and like oh shit we we uh rent out all the office we hire like 20 30 people and like every day every month we spend a lot of money and now like oh maybe uh we need to we need to uh minimize our cost spending everything and we need to secure our investment budget as well.

21:07Most of the investment first 2018 they cannot list so exchange means that we don't have a liquid at all. So we get all people all like members and discuss how we can we survive the next two years. Because you had this belief that crypto would come back? Yeah. What, around the halving? Or what was your thesis? Or you're just thinking, oh man, like, we have so much passion because that's what keeps you in crypto, right? First you go for the gains and then you stay for the passion because it makes so much sense. Yeah. I think the fun thing of crypto is like everybody is very fanatic. Everybody has a religion of Bitcoin or blockchain.

21:58So that means like, It's not opportunistic. We truly believe the decentralization thesis and the narrative. So even though market went down, we truly believed like this will come within one to two years. But it can be three years. So that's why I know at the time we were a little bit worried, but we didn't worry that the blockchain will die. Hmm. Yeah. What is Ash today? Today? I'll say like, um, over seven years, last seven years, we improve ourselves every year. At the beginning, we were a little bit just kind of community driven funds. That means like a little bit, Hmm. Depending on the person.

22:58I mean, depending on one person or the process was a little bit incomplete. But over time, we built a system process and now we are getting more institutionalized. We have a lot of system inside all like staffs. know they know what they do and know they know how to how to work better and we always guide them and i feel now has this more like institution rather than just syndicate like investing together started as an angel syndicate yeah around the community which if you think about it is how a lot of these funds start right and some people stay at that at that stage hey let's just stay a bunch of angels together team up and uh and do this because the returns can be so amazing that you don't have to go through the the compliance and all that stuff right that comes with an actual real fund yes yes we're always thinking like, no, before this interview, you said like, oh, I'm not doing this for money.

24:22You're doing this for karma. We also, we always care ecosystem. So, we're talking with a lot of players, of course, like for, for the better return. But at the same time, we're talking with politician, governor, regulator, how we can make better ecosystem together, how we can make crypto-friendly policies. And we are researching all the cases outside, like US, Europe, Singapore, Hong Kong, Bahrain, Abu Dhabi. And we consolidate all the policies and we educate our regulator. Now Korea is in the middle of a competition. You should go forward. and then a lot of the founders will be attracted to the regulation.

25:17Then it's all good. I mean, good for country, good for ecosystem, good for community, good for founders, good for like companies here. So I think why we are doing this is more like making better world, better ecosystem more making a sustainable ecosystem that's why we're contributing our our capital and resources to the to the ecosystem what's the best what's the best decision you've made in the last seven years last seven years oh that's a good question um basically we are quite long term holder for everything like because no our we're a little bit uh we're not good at uh i would say uh we are always resonating the founder's vision and we if the founder is really uh a good executor of course but good visionary leader then we want to support them uh like forever.

26:37We want to see that dream comes true. So, for example, 2019 in the middle of crypto winter, just after Bitcoin dropped to 3 ,500, we, of course, we believed blockchain and maybe 2017, 2018, there were so many ICOs, but where's the use case? Still, you know, a lot of people share now where's the use case what is the most successful like application et cetera 2019 trust on that trust on that what do you answer to people today in 2024 to people who ask this question you mean learn from where's the use case where's the use case obviously I think finance sector like a payment or like lending and borrowing DEX exchange was very obvious use cases but on top of it like you know gaming or social and a lot of like mass adaptive services we can see some of the small successful cases and forecaster just you know smashing the market but I feel more use cases will come.

28:07So nothing that really has reached mass population yet except maybe let's say stable coins payment. Yeah. Stable coins as a store of value for kind of developing countries. Bitcoin as a store of value but not much that has reached mass adoption yet. Yeah. I think stable coins is like most successful use case in the world so far. So 2019? So 2019, we believe like the gaming sector will come first because if you look back the internet era, 2000, 1999, first internet come. Always like mass adoption will come last. At the beginning, truly believer, early adopter, use the service first and then more broader mass broader mass the targeted service come out like music service or some of the maybe e-commerces then like you know becoming like messenger and social network so there's a stage but always the first stage is like gamble or you know like sexual size yeah very very niche but very addictive services and then a little bit more entertaining service that's game still addictive but entertaining yeah but not not illegal I think gaming should be we believe gaming should be a first service should come in the market 2019 so we decided to we opened up the temporary structure named Hash Labs, which is like kind of incubation team.

30:12At the time, we invested like eight gaming companies. So out of eight, Axie Infinity and Sandbox, we were first check investors. Mythical Games. Very first check investors. Yeah, very first. In Axie and Sandbox. Yeah, yeah. and uh mythical games and um node games which is korean company those are all like uh became uh became an unicorn so uh it was quite high heat ratio like out of eight four became a unicorn so with that uh we still we believe uh gaming will be a huge at the same time 2019 mccordow just came out and like becoming like guru of i mean like michelle of the ethereum and revive the ecosystem so your thesis was let's invest in these games right the eight games and as you said before you want to help founders accomplish their visions which would mean that you hold do you hold all your tokens still in these companies what's your way to play that yeah um of course not everything we are still holding like uh quite quite significant amount and um like sandbox still no we you can see the the product but current product is not final form of the product so still we are supporting them.

31:49XC, they, like, XC Infinity itself is doing really well. But at the same time, the SkyMap's team launched a new L1 loan-in. Yep. So we are helping out the loan-in success as well. Hey, when shift happens, family. Time to toast our partner, Devin. They're taking luxury wine to the blockchain with their super fun concept called Uncorked to Earn. Buy your favorite wines, enjoy unique experiences, and get an airdrop each time you open a bottle with your friends. Cheers to Divin for bringing transparency, authenticity and exclusivity to the fine one's industry.

32:29What's the worst decision you made in the last seven years?

32:36A lot. So many. I think I'll say 2022.

32:472021.

32:51Still at the time, we invested a lot of projects in the inter-medial bull market. I'll say like our system was not settled down yet. So a little bit the management of the token, for example, like following up with the founder, and checking in, like, these founders going right way or wrong way. And somehow at the time, like, our capacity is a little bit saturated. So we couldn't follow up all the founders. So too many investments in too many companies? Too many companies, too many investors, too many projects. And we couldn't manage that well at the time. a little bit over capacity. Does it mean also you said, if I'm not mistaken, you said we invested too much during the bull run.

33:57Does that mean that you have also a thesis that says we should invest more in bear market? Yeah. Like basically timing these markets one way or another. We have like different, so I had Arthur Reyes on this podcast and he very openly says we invested in 2023 and now we don't invest anymore. Even if we find a good project, it's too late because with the vesting and the cliff and all that stuff, right? Even if it's a good project, I'll be in the bear market wrecked. Yes. We also had Jordi Alexander from Cellini. He says, oh, look, I mean, obviously he's kind of like sensitive to these bull markets, but like he says, if we find a good project today, we're still going to invest.

34:41How do you guys think about that? Yeah. always we believe um um constantly constantly investing to founder and projects is the best way even it's a bull market or bear market but more strategically i think no uh investing more aggressively in in bear market and maybe a little bit investing less in bull market is better obviously because no the valuation is totally different different level is there a moment you say you'll stop for example maybe as it relates to your bitcoin having plus 12 or 18 months is there a moment where you say oh man we would love to invest in this one but now is really not the right time because we feel it's late in the cycle um you know investment is like not just like no no we are not looking only a vision right of course we see a condition valuation or like a timing as well everything should be considered um sometimes yes like no even though we like the founder but sometimes the valuation is like super high then maybe it's not our fit but at least we try to put a little bit because to engage with the team eventually we're not only just maximizing our profit but we're expanding our network if he's a really good founder eventually he is we think he is a winner then um we put a bit of capital to them and resonate with the founder's vision and introducing them to the the right partner or right ecosystem how do you define who is a winner and who is not

36:54I think more like practically the user activity and user user how many how many users they onboarded is very important rather than just FDV or valuation so for instance like this technology or SaaS business or infratech you know they always lay it like now it's like 3 billion 4 billion 5 billion but eventually they have to prove themselves like with the user metric and now so maybe tvl also good metric to measure like how successful they are uh yeah maybe just two or three metrics are very important to define the success or not do you believe in fundamentals in crypto or do you think that fundamentals are a meme?

37:50If we look at, the reason I'm asking that is, and I had this conversation with many people on this podcast, one of them is Alex Van Evick, who was actually saying fundamentals are bearish in crypto. And we see that with, you know, Ethereum, Lidl, kind of Uniswap maker, how they performed, right? Because the fundamentals would essentially put a ceiling on the valuation. was a project without fundamentals that we could call bubble assets, memes, meme coins, AI, gaming, don't really have kind of benchmarks, at least yet, and therefore are much more prone to go crazy, which you did really well in 2019, right?

38:37Investing in gaming. So like how much do you balance between fundamentals and kind of like these bubble assets and potential narratives that you think will make the best returns because there is no fundamentals and benchmark yet. So eventually, you know, we try to expose every type of assets to learn, but sometimes there's nothing to learn. But I believe the fundamental is there. That means like now, so in the real life, real world, like the wide property or stock market or like, you know, the valuation is like several hundred billion dollars. So they're making so much money, of course, like USD or local currency.

39:27And we basically believe the government system. Maybe you believe in US. That's why, you know, USD is still have a fundamental. the fundamental USD is like like trust of US government right so fundamental like crypto is like trust to Bitcoin or it's trust of Ethereum and all people around this industry they believe Bitcoin so how strong you believe is I think fundamental and eventually I think um next bull market, huge bull market, I think this is just mini bull market. The huge bull market is like integrating between a crypto economy and real world economy. I think at that point, all the capital will concentrate this area.

40:28When do you think this is happening and how? Already, I think a BTC ETF is the first case. BTC obviously listed on all the crypto exchanges, DEX or like BTC, L2, whatever. And now it's like institutional monies are flowing into BTC through BTC ETF. And this is a very simple asset, but eventually they will open up more and more and more than more assets will be selected by an institution. I think it happened already in previous I mean internet era for example MP3 MP3 was freely traded all over the world through torrent or like eMonkey or like other a lot of like pirate sites was there right they freely trade I mean send and receive the data or file mp3 or video but out of a sudden like you know governments regulate everything and the guideline guideline came out and in korea also there was uh solinara which is a freely traded mp3 free mp3 free market but out of a sudden like a apple music spotify and korea local company like Bucks and like a lot of like local mp3 player came out with better user experience and better ui and with compliance so eventually i think there will be a compromise there will be a compromise between regulation and like crypto natives and the market a lot of capital will be flowing and then like the company who take care of this stream will win over the competition Does it mean that it's risky as an investor to play the cycles?

42:43That we might miss out this like huge super cycle or do you think that it's a more kind of progressive thing it's still going to take a lot of time everything takes time and there's still going to be these big bubbles, busts, bubbles, busts, and cycles?