E86: Alliance Founding Partner - The Secret to Winning in Crypto (from a Top Investor)

28:30There's nothing interesting about these.

28:36naval calls judgment the most decisive skill he says in an age of infinite leverage judgment is the most important skill what is judgment what is judgment i'm not sure exactly what he means by that so he's saying like judgment is knowing it's kind of like wisdom knowing the long-term consequence of your actions

29:03and so that's that's what separates great investors from others right it's kind of what we talked about before when I asked you some examples that enabled you to be bullish at the bottom in Solana right based on your experience you're basically building and developing your judgment and saying oh look this is like I recognize my pattern something that you could not have done maybe earlier in your career right

29:32how do you develop judgment

29:39by taking actions by actually doing things and as a trader by getting fucked by the market you gotta lose money before you can develop good judgment if you just if you never take action which in the case of traders and investors is never putting any skin in the game you'll never learn the best way to learn is there's two there's a there's a great thing there's two types of investors those who are humble and those who will be humbled yeah 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 Devin for bringing transparency authenticity authenticity and exclusivity to the fine one's industry i can definitely feel even what happened two years ago i was a i had dokund on the podcast i was very i had like seven million dollars in luna that turned into five dollars in two days i mean he's not not the only fuck up i had but he was a pretty good one so yeah and i'm not the only one right so that's a good one actually yeah i think i like to think i became more humble but let's find out this cycle right let's find out you posted a great meme on trading and investing right because that's what we're talking about now you posted a great meme one of that turkish pistol shooter at the olympics who just wears his normal glasses and gets the job done and ends up i think second right yeah uh silver medal and then on the other side there's the asian dude with the super advanced glasses.

31:22It's a girl? Yeah. Okay. With the super advanced glasses probably did not end up on the podium. Yeah. The meme says that the Asian girl - She actually won the gold medal. She won? Ah, okay. Then it's, I mean, still kind of, so the meme says that the Asian girl with the super advanced lens is the technical analysis trader, right? Yeah. And the Turkish dude is the, with the normal glasses, is the investor who buys and forgets. You want to explain? There's nothing, it's just a meme. There's no insight behind it. But do you believe, what do you believe in the most? Investing or trading? For the majority of the people who take part in the crypto markets?

32:06Because I think there is some kind of myth to debunk, especially for the new joiners in the industry. Where do you think I can just trade and kind of leave my nine to five, right? Yeah. so i'm not uh um you know tribalistic about either i think either could work um there's people who can make a lot of money by holding long term and there's people who are very good at short-term trading you just got to figure out what you're good at um in the very early stage of my career i did extreme extreme short-term trading like microsecond level trading like in and out in microseconds. And now I'm doing the total opposite of that, which is holding, like making venture bets and hold them for like years.

32:51Either it can work depending on what you're good at. Like whenever I hear people say, hey, you want to be a long-term investor, you know, expand your time horizon. It's just being very tribalistic. You can't like, if you're really good at short-term trading, you can probably make more money than long-term investors when your capital is small. So short-term trading is really good when you don't have a lot of capital because you can turn over the same capital over and over again. You can compound the trades. You can compound it much more quickly. But if you're a Warren Buffett and you have like$100 billion, you simply cannot do short-term trading.

33:30You are forced to do long-term investments. Maybe to help people knowing what kind of bracket they are, what are the key skills? because you've been both, right? Yeah. That are required to be successful in short-term trading and in long-term investing. Again, like, you have to question the consensus. I already mentioned that. But also, trading fundamentally is studying history. That's what it fundamentally is. You look at the patterns from the past and you try to analyze the patterns. you try to figure out a pattern that works over and over really really well statistically over time and this is true for both short-term training and long-term but the difference is when you do short-term trading you can get feedback from the market really really quickly right like if you if you trade like 10 times a day then probably within a month you have 300 trades and you can you have enough uh you have big enough of a sample data sample to say whether or not your strategy works the ultimate one me being having zero money left probably not working yeah whereas for long-term investing it's much harder to get feedback from the market because a hundred investments would take like years yeah so what do you do what do you do to study how do you study history um when you're a long-term investor while you study history by studying what has worked in the past for some of the greatest investors in the world.

35:05I love reading Warren Buffett's, his strategies, his philosophy, the mistakes he's made. You can learn a lot. You can study history by reading what some of the greatest investors have done in the past. How much do you think the kind of old or boomer way of investing applies into crypto? Because there is all these, I mean, it's not only talks, but like if you look at, okay, maybe last cycle, I had Arthur Cheung on the podcast, was amazing at getting early into some really great protocol with strong kind of fundamentals, right? Which was working last cycle. This cycle, we talk about MemeCoin later, but like this cycle is very different, right?

35:46Much harder game. What do you still think about kind of value investing in crypto?

35:56So people think of Warren Buffett and Charlie Munger as value investors. But my understanding is they actually evolved their strategy over the last 90 years. They played for 90 years. Their strategy actually evolved. In the early days, before Warren Buffett met Charlie Munger, he was a pure value investor. He would be looking at PE ratios and PB ratios. Basically, compare the price to the revenue that the company generates and the lower that ratio is the more undervalued the company is and the more you want to invest but when uh warren buffett met charlie munger the latter really changed the former's uh philosophy of investing so charlie munger said uh it's much much it's far better to invest in companies to great companies at fair value than to invest in fair companies at a low value interesting and if you really think about that that is not that is more like growth investing than value investing because what really what constitutes a great company is a company that has great cash flow and hopefully grows over time consistently that is to me more like growth investing than value investing so if you apply that same idea to crypto I think you know I think Charlie Munger's idea kind of works kind of works in crypto you want to look at protocols or tokens that grow over time and growth could mean on-chain transactions it could mean TVL it could even mean you know narrative attention attention right absolutely yeah so it's not look this one is making that much money but no one cares about it it's going to catch up it's ah this one maybe doesn't make much money there is already good attention and there might be even more attention in the future therefore this is the bet right yep i think warren buffett got really lucky by meeting charlie munger because his original strategy is called they call it the cigar butt strategy like advancing in companies that are are fair not great fair companies at extremely low price they call the cigar bet a cigar butt strategy that strategy worked really well until the 1980s and then between 1980s or maybe um yeah until 1980s and then 1990s 2000s growth strategy started to work really well with the advent of the internet because internet is all about growth yeah so the original value investing strategy stopped working and then it became growth that's when Charlie Munger's strategy started to shine and it makes a lot of sense because if you think about it there is a finite i mean you can argue there is a lot of money printing but there's a finite amount of capital to be allocated to more and more company being built or more and more token being created right and it's where is this money going to be going and it's probably where there's the most attention and not necessarily the most rational way of saying, oh, this is a good business.

39:22I mean, I talked about with Alex Van Evic and many people were talking about Lido, for example, right? Yeah. And many protocols were thinking like this should do so well, but it's not, right? Yeah. And so it makes a tough sense. It's a very kind of like a very basic way of thinking, which is people bet their money where their attention is going and where their kind of excitement is going about the future and not necessarily about the present on how well things are doing, right? Yep. Like even if you think about the stock market in the last two years, the best performing stock in the S &P 500, NVIDIA.

39:58And in hindsight, it's such an obvious bet. And there was no way you could put your money into NVIDIA back in 2022, you know, shortly after ChatGPT, based on fundamentals based on price earnings ratio or based on price book or whatever those you know old school fundamentals investment strategies yeah you could just make a lot of money by reasoning about ai like you can you could just say ai is going to be the future and then it's kind of again thinking about patterns i mean i was kind of too young but like it's kind of like the ipod moment or the iphone moment right i don't know what the kind of like fundamentals of Appleware back then, but if you use the product and you're like, this is so good, you might think, oh, now I'm going to bet for the next five or 10 years on that because it's so good.

40:50And I think everybody's going to want to love that. Or maybe Tesla, you drive a Tesla, you know, and you say, this is so different. The experience is so good. I remember a couple of years ago saying, which made me invest in Tesla is because I hear Chamath saying on the TV, when everybody was saying Tesla is shit, et cetera, he was saying something like, you can't deny the fact that once you kind of put your butt in a tesla and drive it your expectation of what's driving a car is changed forever in the future right and when i hear that i was like everybody hates elon everybody hates tesla and chamath who is like so smart he's actually talking about user experience and in there right probably a good bet if he says that yeah so it's kind of similar right by the way it's just curious when you say everybody hates you on is it a i feel like every European I've seen.

41:42A couple of years ago, I was just looking at the, actually it was American TV, right? And they were all against him. Obviously it's because of the, I didn't understand back then yet, right? I didn't understand the whole mass media. Now it's becoming more clear, right? But it was kind of like a signal of like, everybody, mass media doesn't like Elon. I mean, now I understand why, right? The whole thing is becoming clearer by the day. It's political. Yeah, completely. but the years and years it was 2019 yeah i didn't i didn't understand anything yeah i'm not saying i understand everything today but i start to smell right what's happening here going back to the tesla example and the was the iphone example the other reason that gave me the conviction in solana back back at the bottom was i just tried the products yeah the salon products and i started using the Solana products in 2021 for about like for over a year before the collapse of FTX.

42:41I mean, the products were pretty janky back in the day, but you knew that oh, I can now execute transactions in about 100 milliseconds. Like it feels really smooth and then the fees are really low. You could just feel that it's going somewhere. It's going to go like you can feel that the Solana based products are no longer limited by the blockchain. And it sounds so simple, but most of the great investments are that, right? You start like, we often say, right, why do you own an iPhone but don't own Apple stocks, right? So if you love to use something, you're probably not the only one, right? Because we're probably all more average than we want to admit.

43:32right so it's probably a good sign but we always think oh what's the futuristic product what's the futuristic thing and investing is the same what do i love like think it's right in front of you right absolutely same thing happened with defy summer i i really love defy because you you can try the product and feel the magic and same thing i mean there were many reasons that got me into bitcoin but just sending a transaction with bitcoin the first time you sent the transaction was magical. I think in crypto, in all of crypto there has been two fundamentally magical moments. Truly magical moments.

44:07The first time was Bitcoin, sending your first Bitcoin transaction. The second time was DeFi Summer when it can do more interesting transactions than just sending a payment with DeFi. Because you can trade. Transactions become two-way rather than just one-way. You can lend and do other things with DeFi. That was the second most magical moment. Yeah, I think we called it, I can run a hedge fund from my room, right? Like I can be a nobody. I mean, I remember, I mean, I got wrecked on that afterwards, but I remember doing some Biluna Luna arbitrage, right? And I was printing like crazy amount of money and I was like, oh, it's because my Luna capital is big, but I'm making 1.5 % every 21 days, right?

44:50Is this too much? I don't know. Hedge funds are able to do that, right? And you start to think the amount of possibilities that are possible for normal people. I mean the whole thing went to shit but like at least it's completely new right? Yeah. Something that you could not do before. And by the way like this is one of the biggest alphas for anyone in crypto whether you are entrepreneur or trader or an investor most people are just too lazy to try the products. They just it's much easier to scroll crypto Twitter and see what people say like what people are buying than to actually use the product because the crypto products are pretty janky.

45:27But if you can get over that hurdle and just getting to the weeds of trying products you're gonna you're gonna outperform a lot of people it's so simple right so underrated yeah absolutely we talked about uh kind of the buy and forget strategy yeah not talking about uh what you guys at alliance but your personal portfolio is it what you do what you personally do with your crypto portfolio how do you play the cycle um i mean the vast majority is in the bitcoin ethereum salon and coinbase and then occasionally you know i do some uh short term like when i say short term i mean a duration of a few months kind of like narrative trading rather than medium to long hold so i got into with pretty early most most people probably know yeah and um yeah that's the kind of short-term training that i do but yeah long term like there's only i looked at like the top 300 tokens and i looked at the supply to market cap overhang like the supply overhang basically what percentage of the tokens have been unlocked that's a that's a very important factor to look at.

46:45And I looked at whether or not those projects have real, you know, traction or users that love them. And ultimately, I think the set of tokens that satisfy these two criteria, Bitcoin, Ethereum, Solana, Coinbase. How do you split between the four? I am overweight Bitcoin and Solana. Why?

47:16Relative to Ethereum, I think Ethereum is overvalued compared to Solana. I'm not saying I'm bearish Ethereum. I'm just saying Solana is, by objective metrics, it's undervalued. And also by metrics that only I have access to, meaning the founders, the entrepreneurs, more and more entrepreneurs are going to Solana than on Ethereum. And in fact, a lot of entrepreneurs are going from, that are building on top of Ethereum today, are going to Solana than the other way around. So I can see where the puck is going in terms of developer activity. So I'm overweight Solana versus Ethereum. Bitcoin is just pure product market fit.

48:00It's just the best store of value. Uncensorable store of value. And no one will be able to challenge that anytime soon. Do you play markets, market cycles? or do you just say this is my core position the four of them are so big and I understand that I can't outperform a buy and hold strategy therefore these four I'm going to keep for the next forever I try to play cycles a little bit but it's really really hard so I think I actually tweeted about this but my first cycle I like held held my positions Bitcoin all the way down. Down like 80%. Second cycle, I sold too early because of my PTSD from the first cycle.

48:53I sold like maybe at 40 % to 50 % of the peak. That was the 2017 cycle. And the third cycle was the 2021 cycle. I remember the tweets. I sold maybe 30 % below the peak. so every cycle i got a little bit better than the last one but you're you're just never able to sell the pickle pickle top but last cycle i bought the pickle bottom about within eight hours of the pickle bottom so you get you i mean i i got better over time but it's been like fucking 15 years very very long feedback loop but so but the key thing is even if i play the cycles i don't try to sell everything and i don't try to yolo into everything at the bottom i sell maybe like 20 to 30 percent uh because that the downside of getting wrong on the on the top is you're gonna miss a lot more right of the upside so i try to sell maybe 20 to 30 at the top and then try to buy double my position at the bottom if that makes sense

50:05what's the typical journey of a crypto investor through his or her first second and third cycle typical journey yeah like i said you just hold everything all the way down to zero in my case uh 80 down but i got lucky because i was only in bitcoin i wanted to ask you right so you did still the right choice which is you don't yolo in shit coins yeah you're able to say oh man like i'll huddle to to the moon or to the grave but the main coin right yeah i mean the first cycle i didn't even understand the other coins like there was like a light coin and uh pure coin and all that kind of stuff which i didn't understand there there's a coin about uh dn decentralized dns can't remember the name starts with an m uh and then there's pure coin which is the original proof of stake.

50:55Anyway, back in the day, 10 years ago, I didn't understand any of these coins. So the only thing I held was Bitcoin. Second cycle, I started to buy some shitcoins. But even the second cycle, I sort of knew that the only coins that were real were Bitcoin and Ethereum. So in fact, when I tried to sell the top, I sold the shitcoins, the long tail of shitcoins. Into? Into fiat. Into fiat. Yeah.

51:27That's a very interesting one. You know what's real, right? Maybe life cycle was Bitcoin and ETH. Maybe this cycle, you can say what's real is Bitcoin, ETH, SOL, right? Yep. Another myth to debunk is how complicated it is to outperform the real coins with shit coins. Even if there is smaller and it's smaller, lower liquidity, it's actually extremely hard to outperform especially for example it's like solana this this cycle right extremely hard to outperform i had raupon on the podcast he's saying i'm just if someone comes with a shit coin to me i'm just charting against sol right i'm trying to look at the trend with bonk a few like is the trend kind of going up through time yeah and maybe he's going up but you are at the top right and at the top right so like i think it's different every cycle last cycle, it was extremely easy to outperform the real coins.

52:23But last cycle was the greatest asset bubble of all time. In all markets, not just crypto, all markets, the Federal Reserve balance sheet went to, I don't know, it just went absurd. So it was easy. Anything you bought last cycle would have outperformed Bitcoin. This cycle is very different. It's fundamentally different. and in fact I think it's almost impossible to outperform from this point on a mix of Bitcoin, Solana, Coinbase stock unless we get the same kind of mass fiscal or monetary policy printing that we did last time last cycle so like people always say we're going to get an alt season alt seasons are guaranteed it's just a matter of when not if I don't know if that's going to be the case because if you really think about what alt season is fundamentally how do alt seasons work or happen?

53:24How do they happen? They happen with two conditions. Condition one is you don't have a ton of alt tokens. Condition two is there's a ton of money because when there's more money than the number of tokens then all the tokens can go up. but what's happening in this cycle is neither condition are met there is too many tokens 10 000 tokens are created daily on pump.fund there's too many tokens too many vc funded tokens as well and there's not enough money that's injected into the system so and and condition one the number of tokens there's no way back it's it's irreversible the damage is irreversibly done so they will always have a ton of tokens but condition two that might change if tomorrow the you know Jerome Powell decides to print a lot of money yeah I literally had this morning a friend from Bali with a surfer it's his main job trying to call me he's like Kevin, Kevin look I bought this this coin on Solana it's definitely a Pumfund coin created right market cap 500k I made 10x already etc.

54:39I'm like, yeah, absolutely. It's a good reality check, right? Times have changed, things are different. We might have fiscal stimulus, maybe money printing, etc. But the amount of coins is extremely important to understand, which is a massive factor here. But despite that, we still had, I mean, now there's even more coins, right? But we still had some subclasses of crypto that worked out really well. I talked about with before. So one of the kind of sort of contrarian bets in the beginning of this cycle was, that's more accepted now, is meme coins. What makes a meme coin a great meme coin?

55:28At what stage? Going from$0 to 100 million market cap or later? I think later. Because I think the first stage is extremely, it's too hard. Like what makes a meme coin something that could last? A risk adjusted bet in meme coin. Define lasting. What does it mean for a meme coin to last? I would say at least a cycle. Meaning the market cap needs to be above a certain number over a cycle. I mean, I have some, for example, let's talk about WIF, right? Yeah. You were early in WIF. You can take the whole journey of WIF, right? So from kind of zero to a hundred mil and then now in the billions and then maybe even thinking what happens next, right?

56:10Maybe you can go through the kind of like different part of the With journey. I mean, in the early stage of With or any meme coin, the cycle is there is a cult leader. In the case of With, it's Ensemble. Yeah. And the meme itself needs to be actually pretty good. So the genius of With is it has a hat. and the thing with the hat is you can vampire attack any meme any PFP with that hat. So tomorrow you can add a hat to your Twitter PFP and everyone can do that. So the hat actually makes the meme go viral a lot better than without it. So the actual innovation with Whiff is the hat. So the meme needs to be good.

57:05There needs to be a call leader. And I think these are the key critical conditions in the early stage. And then for the meme to sustain even longer, ideally you get listed on Binance. And that happened with around a billion dollar FDV. But that condition is harder and harder to meet over time because exchanges are not going to list every single meme coin on the planet. In fact, they're getting more and more strict with listing new tokens. Not just meme points, any new tokens, they're getting more strict.

57:47I think these are the conditions. If you think about what happened with Dogecoin,

57:54I don't know if Doge had a call leader in the early days, but the meme was certainly very good, very organic, it was one of the most popular internet memes and then later on they had listings from a bunch of centralized exchanges

58:13do you think the meme narrative is over?

58:17because we went through this kind of meme coin craze right? now the whole market has kind of like cooled down a lot we had like crazy liquidation a couple of weeks ago I mean crazy liquidation that happened I'd say like once or twice a year at least in crypto in general. So it's not uncommon.

58:39What's outperforming when market pick up again? If they do pick up? It's really hard to say. I don't think the, I don't think meme coins is a one cycle thing. I think it's just, I think it's always going to be here to stay. To still own with. No. Why?

59:07At this FDV,

59:13on a pure risk-adjusted point of view, I don't know if it'll outperform Solana. I think about everything in relationship to Solana, basically. That's so interesting. And that's so counterintuitive for someone who is new into crypto, right? Because a lot of people might think, hey, like, Whiff is the main meme coin of Solana. One of the main is kind of like a beta for Solana. Like, Pepe would be a beta for ETH, right? Yep. But it might not happen. it might not outperform. I mean, if the market cap of all crypto keeps going up, I could see with go up with Solana or probably outperform it, but there's always a risk of things going to complete shit.

1:00:02Yeah. And then if things go complete shit, then those meme coins are actually going to zero. You'd rather have. Solana is here to stay. So I'm just taking it as a suggested bet. Absolutely.

1:00:15so Alliance DAO which we talked about we will talk about in a minute incubated PumpFun what did you see that most others didn't when you pulled the trigger on one of today's most successful protocol in terms of revenue and mindshare so when the team joined our accelerator they were not building PumpFun they were building some other products that didn't work out and in fact they pivoted at least twice before the pump.fund idea. So I mean, investing at the earliest stage, especially in end-user-facing products, it's almost always a bet on the founders rather than a bet on the idea. The ideas will almost always pivot.

1:01:03So I saw a high degree of autism in the founders. And I think it's not a coincidence. I think to be a great consumer-facing product founder, you need a high degree of autism. I think there's causality. It's not correlation. There's causal effect. I think the autistic people are able to think independently and in a contrarian way. And they're not distracted by the consensus, by what people say on the internet. they're able to sit down and observe

1:01:47do you think it's a trait that you personally share a bit I think I have some degree I do think I have some degree of autism I can tell you most of the podcast guests I had some like where I'm not going to give names and I'm like this person has probably Asperger it's like next level autism I'm like wow but at the same time they're crazy successful right in this field like so definitely so like as an investor I pattern match a lot and like for consumer facing products I mean autism is almost a requirement for me the traits that I look for in a founder in a consumer facing founder autism is important ideally some kind of childhood trauma is but they never obviously they never tell you about their childhood trauma in the first two meetings you need to send them on this podcast i can go and dig yeah i can go and dig i will use your podcast as my interview process that's part of my interview process so childhood trauma plus autism that's the alpha yeah for the best investors because it makes a lot of sense actually it takes two things to really succeed succeed as a founder uh thinking and action thinking is autism action is childhood trauma you want to prove something you have something to prove and that That is trauma.

1:03:08Autism is how you think. How do you find that? How do you sense that? It's just like, you're an autistic person, I can feel directly. It's gut feeling. The more you do it, the better you get at it.

1:03:25What is AllianceDAO? We invest in autistic and child. Continue, continue. We invest in autistic. The investing founders who show high degree of autism and childhood trauma. That's going to be a good clip. I'm being tongue-in-cheek but ultimately that's sort of what we do. Amazing. Why did you build Alliance? So when I left Masari, so I had been with Masari for three years, it was founding how to product. I really enjoyed the zero to one game. but i hate the scaling game i hate to scale a business from one to like 10

1:04:12because there is something fundamentally different from zero to one and one to 10 zero to one a lot of it is figuring out an insight going back to something i said earlier figuring out an insight about users that no one else understands and try a lot of things to get there i really enjoy this game which often start with a problem that you have i mean you wrote down yes and i built three companies in my life is the same it's just i have this problem there's no solution or there's some solution but it's not really i'll just build something to solve my own problem right 100 % that's it i always tell i always tell our founders we're in the middle of a pivot just think of a problem that you yourself have that is the best way to find a good idea because and here's the fundamental reason why if you try to develop an idea by talking to other people most of the time they will lie to you of course the users always like there's no upside yeah for the users to say okay you asked him the question if i build this would you use it there's no upside for the users to tell you no because they want to be nice of course so the survey marketing study surveys is mostly useless yeah but you will never lie to yourself so you ask yourself what is a product that needs to exist today.

1:05:24But anyway, back to the question.

1:05:29I enjoyed the 0-to-1 and I asked myself, how do I do this 50 times a year? How do I build a white combinator of crypto, essentially? Well, no, it's not really that. It's like, how do I experience the 0-to-1 game in a variety of topics 50 times a year? well the best way to do that is to build an accelerator how many times a year do you experience that now 50 times 50 times what's the next goal i mean if we can scale a grade if we can scale from 50 to like 500 great but there aren't that many great founders there aren't that many founders showing high degrees of autism and childhood trauma. And there aren't that many great product ideas.

1:06:20So ultimately the number is driven by the market. One of the things you guys organize to find more founders with a high degree of autism is a hackathon, right? You choose Lucanets as a judge for the next Alliance MVP hackathon. Why?

1:06:43We're just like any founder who has built something great in crypto. We'd love to have them as a judge.

1:06:54As an investor in more than 200 projects with Alliance, what do you think of what Lucanets is building with Pudgy Penguins? And now Abstract. Pudgy Penguins and NFT communities in general is very counterintuitive. It's not a traditional business. You start off by building a community, you launch a jpeg that is you know that a lot of people can that appeals to a lot of people and then you start and then in the case of pudgy penguins you start developing products so like those toys at walmart uh for example and then they're developing a game those toys those toys beautiful toys and then they developed the game uh it's called pudgy world right and then um what else do they do?

1:07:40But basically, they start off by building a community which then evolves into a product. And that is very counterintuitive. That's very uncommon. But you see more and more of that today. Like for example, one thing I can think of is Brian Johnson and even biology. Biology is like the network state, whereas Brian Johnson is the Dong Dai community. They both start off as a community, especially in the case of Brian Johnson. He starts off as a community. A lot of people watch his videos and his content and then now he's selling products, supplements. That's kind of the new way to build businesses.

1:08:21They call it like the next billion dollar kind of community, right? Which today with AI and it's kind of becoming the barrier to entry to build anything is much lower. So the way to go is build a community and then it's going to be valuable forever. and then you can build product around it, right? Yep. And it's the exact approach of what an NFT project should do. It's not what most of them do, right? But what they should do. Yeah. I actually can't think of many other NFT communities that did what Pudgies are doing. Like, which NFT communities are actually developing products? I don't know. I don't know.

1:09:02Do you own a Pudgie Penguin NFT?

1:09:08can i say i used to but i don't have it i don't anymore why because the price was going down so i paper handed really so you you kind of more had like your trader cap there were you thinking i can buy lower or you're just thinking i'm just thinking whether or not it'll outperform solana love it and unfortunately and this is not a pudgy penguin problem i don't understand If I, down to my head, if I had to own a JPEG today, NFT collection, you would be Pudgy Penguins and probably Milady's. By the way, Milady's is very high on autism. And I fucking love that community. But the problem with NFTs in general as an investment asset class is because of the very nature of non-fungibility and therefore a very high floor price, it's very hard to attract new capital.

1:10:03and therefore it's very hard to outperform Solana. And you need these conditions which is more liquidity, right? And more money in the system. But there's already so many tokens, so many meme coins, and then there's so many NFTs and people need to choose that, right? Absolutely. But if your goal is to outperform Solana, then why do you hold ETH?

1:10:28There's a little bit of, it's not really for financial reasons. I'm just, I'm almost like emotionally married to ETH a little bit. Because I've been with ETH since the beginning, 2014. It just feels really bad to dump everything. Did you buy the ICO? Yeah. Okay. Got really lucky there, by the way. So, I mean, I understand that you don't want to say that. I've been selling for Solana, ETH for Solana. And I'm almost done selling. but i just it just feels really bad to get rid of something you've been part of since the beginning like for me eth is like nft community now yeah understand let's dive a bit deeper into what it takes to be a great founder right we talked about before insight right you don't have a if you don't have a contrarian take you don't have a startup there's another one perseverance you wrote it's plausible that perseverance matters even more in crypto than in other industries name any other industry that goes through a complete boom and bust cycle every four years or another industry that the SEC chairman makes it a personal mission to annihilate or another industry where all the main characters end up in jail in less than one year I chuckle every time I see tweets like I aged three years in the last 24 hours or I survived the great bear market of 2022, 20th of November.

1:12:06This is not an industry for the faint of heart. How do you maximize the chances of survival in the bear market as a crypto founder?

1:12:18The easiest way is you have no skill sets in any other industry. You cannot pivot into any other industry. That is actually the truth for many crypto founders. They just don't have, they don't understand any other industry. In fact, in the last bear market, there's a lot of founders that did pivot away from crypto to AI, for example. And these are some of the smartest people. They can pivot into any industry they wanted to. They can become an expert in a new industry within a very short period of time. But as an investor, I'm looking for someone who can pivot quickly from one industry to another or for someone who is sticking into that industry?

1:12:58It depends. Like those founders that pivot, some of them had a good reason to pivot. Others don't. Like if they want to talk about their new pivot with me, I always question them, what is the one insight that you have that no one else has? Maybe it's from a personal experience, like solving your own problem. Maybe it's something else. but it's case by case. There's no one size fit all. But yeah, I was being tongue in cheek. Having no skills that is... I was being tongue in cheek but it's also the truth.

1:13:37How do you survive in the bear market is... You just really have to love crypto. You have to love pain. You have to love pain but also... you have to love crypto that's the ultimate test right who is there when everything is going to shit and everybody is shitting on crypto who is still there building who is still there around ultimate test yeah absolutely another one you mentioned is having a co-founder

1:14:10how do you find a great co-founder because whether in crypto or in startups in general probably one of the biggest reasons why businesses fail is co-founder issues right do you have a co-founder now i had to you had to but that didn't work even for my previous businesses it never really worked and were they your friends that's the problem i choose friends and not based on i mean again some people they choose their friend and it worked really well i choose like are you a great person so you're gonna do great but i was not looking for to fit to feel a certain skill that I don't have that is complementary, right?

1:14:45But they were your friends. Yeah. So we're still in good terms, but it didn't work out. Any of them were your past co-workers? Never. The ideal, statistically, the ideal co-founder configuration is two people who have worked closely in the past on any project, whether it's co-workers or side projects. the second best configuration is two friends who have never worked with each other in the past but they trust each other they know each other's strengths and weaknesses the worst configuration is someone you just met at Hackathon or some online co-founder matching platform these are the worst so in terms of like if I were to rank the things you should look for in co-founders the most important thing is probably trust and trust comes from past experience working or just being friends.

1:15:50That's the most important thing. Oftentimes you find a co-founder that you don't know or just met. You have a good feeling about that person but there's always this honeymoon period between co-founders and that's typically six to twelve months I would say and usually co-founders break up after that 6-12 month initial hurdle. As soon as you realize that things are not as easy or beautiful than you thought they would be, right? When you're not growing, when your business is stalling, that's when the co-founder relationship thing really matters. So trust is the most important thing. But second most important thing is, I would say some kind of complementary skill sets, which was the problem in your case yeah you didn't find a co-founder who's i guess i mean i think like the main thing that i learned is you have to understand what the fuck i'm building which is hard because you don't know what you're building right because you you don't exactly know so what's the actual game in podcasting or data analytics or whatever and then once you understand the actual game which will take time because you have to go in there and try then you can define a few skill sets that are very different.

1:17:03Ah, I actually need to feel this and that and that. So, that's probably my biggest kind of mistake, right? But also at the same time, if I kind of like try to be kind to myself is, how could I know exactly what game I'm playing if I was never in this industry before and I'm just like figuring out on the fly? I don't know. Right.

1:17:28That's how you learn. That's how you learn. That's it. through pain. I remember my first business, the Data Analytics one, which I still have today, firing my co-founder after like two or three months. And I was crying and I was like, how? He was your friend? Not really. Okay. He was kind of, he was very autistic. Very autistic, but had no feelings and he was just trying to do everything on his own and then asking for more shares in the business, saying, I brought more clients, et cetera, when it was not even true. And then you just like end up in a situation, you know, like you're building a business, you're rowing against the current and then it's really hard, right?

1:18:03But then you're rowing in different direction in the team. You're like, what the fuck? How is that possible? No one told me. But obviously you're 22 years old. They're like, obviously like, you thought, morning moon, right? We are going to solve this grand idea together. And then you realize, no, that's not the case. That's not the case. And I was just crying and crying and crying, telling him like, we can't continue. Crying because I couldn't believe that this would happen so early, right? but it's a good learning one of the things you talk about is integrity right and uh actually buffett and naval ravican they say uh in terms of picking people to work with pick ones that have high intelligence high energy and high integrity why is integrity the absolute most important quality to that a world-class founder must have yeah like integrity is basically it's a multiplier and that multiplier is either plus one or minus one so the formula is very simple it's uh intelligence times uh work ethics times integrity intelligence and work ethics are absolute numbers they're positive numbers the higher the better but at the end when you have integrity if you're integrity if you're having integrity it's a positive one multiplier.

1:19:24If you're low integrity, you're minus one integrity. You're minus one multiplier. So if you're really smart and really hardworking and you have no integrity, then that's actually the worst possible. You get a huge negative number. That's the worst possible configuration because you're going to kill yourself. You're going to kill your customers. You're going to kill your investors. You're going to kill your users, your co-founders, your employees, and the industry, which was the case of SBF, for example. SPF, extremely high intelligence, work ethics, negative one on the integrity part. Where do you think the negative one integrity part comes from?

1:20:04In his case or in general? I would say in general. Is it something that you could start with good intentions, but then things become too big and you lose control and you're kind of like in denial? Which is very common for founders, being in denial, right? Especially in crypto, it's… I don't necessarily believe that. I believe that people do change. And money changes people. And when you get too rich too quick, it can change you. So you don't believe in the money doesn't change you, it amplifies you. You think money can change you. Money can... I mean, I'm not saying this in an absolute sense, but from what I've observed, there's a lot of founders and traders who start off, I might be very controversial here, but Do Kwan, I met Do Kwan in the early days.

1:20:56I didn't see him as a bad person per se, but I think he just got too rich too quick and he started to make decisions that are bad for himself and the users. I think that the overnight success and the overnight money does change at least the way people, how people make decisions. it changes their utility function. Maybe SBF is the same kind of person, but I definitely saw that overnight success changed Do Kwon, for example. I think you wrote, right? Warren Buffett said it best. I look for three qualities, integrity, intelligence, and energy. If you don't have the first, the other two will kill you.

1:21:41100%. It will kill you and everyone around you. how do you find out as quickly as possible if someone has a low integrity it's so hard it's so hard I still I try to come up with a question for our accelerator application form to get a sense of to find out but it's so easy to lie everybody has good intentions right everybody is a good person inside yeah

1:22:14you wrote many people would argue that money and fame are not good reasons to build a startup actually back to your question that the previous question how do you find if someone has is high or low on integrity uh i learned that uh because our accelerators terms are fairly low. Like the valuation is low. We invest at the earliest stage, our valuation is low. That's understandable. But because of that fact, we self-select into founders who are less opportunistic or less of the unethical kind. Because the unethical kind, they will go out and raise a shit ton of money from at a very high valuation.

1:23:03Like that's the kind of game they play. But we self-select into the other kind who's not driven by that, at least not yet, and really focus on building a product. On that, who are not driven by that yet, right? Many people would argue that money and fame are not good reasons to build a startup. I'm actually not sure if that's true. Yeah. Can you develop? I just felt so many good founders that just straight up, like they never tell you, like when you first meet them, never tell you, hey, I'm here for the money. But after a while, like they start to tell you like the truth. I just love it when they tell me, I just want to build.

1:23:45I want to make money. Yeah. Yeah. At least be honest, right? Be honest. Yeah. I love it when a founder tells me, I want to build a billion dollar business. Yeah. And I was talking with Johan, the founder of Wintermute. And he was also saying like, even for different projects, he was like, you know, as long if you say that you're here for the short term because they have a VC arm, right? But at least you are honest about it.

1:24:09It doesn't mean it's great, but at least like we can kind of bet on you because we know that you're not lying and you're playing a certain game, right? And we know maybe we have like different kind of quotas on what kind of money we allocate where. And so the most important is kind of like being honest and transparent, which is not necessarily easy.

1:24:27link to this last question you tweeted the other day high historical correlation between how long btc is stuck in the range and the level of burnout of crypto builders and investors yeah what does this say about the majority of the people who build and invest in crypto say that again what was what does that say about the majority of the people who build and invest in crypto what does that say does it mean they're here for the right reason i mean there's the meme for the tech right or in for the money yeah but if you really love crypto as we said before you're going to be here when it's bad or and it's not that bad it's just a range right yeah chill like so actually when i when i tweeted that what i was implying was uh actually either either the price going up or down people feel less even if the price goes down people people feel alive People feel alive when the price goes down.

1:25:22But when the price just stagnates for months, people just burn out. And I can feel it. I can feel it when I talk to people. Like at the beginning of the year, the price was going up, people felt great. People felt alive. And now I talk to the same person, they're tired, they're jaded, tired. Why crypto hasn't shipped anything good for humanity? Blah, blah, blah. I want to quit. Blah, blah, blah. You can just feel it. You can feel the burnout. What do you tell these people? I tell them that we're going up in December. After the election. Do you believe in that? I think the election will cause some volatility for sure.

1:26:04I mean, Trump is going to be significantly better for Harris in the short term and probably in the long term as well. In the short term, there's going to be a 5 % price movement the night of the election. depending on who gets elected. So there will be some correlation. I mean… What happens if Trump doesn't get elected? We go down. But either way, like, if we go down, people will feel alive. Fair enough.

1:26:38You wrote something that's not crypto-related. It's easy to be great nowadays because most people are weak. Yeah. Can you elaborate? Well, I just think most people… most people are by weak I mean both psychologically and physically psychologically most people are just they can't think independently they're always looking for the tribe, their own tribe they're looking for approval rather than the truth I think that's just being psychologically weak but that's what most humans are right? I think that's what most humans are without being mean yeah that's human nature that's human nature Most people are followers.

1:27:20Yeah. And, you know, there's also some human behaviors that really emerged in the last like 10 years or so with the advent of smartphones and social media. There's very strong evidence that smartphones and social media are killing people slowly. There's much higher degree of ADHD, suicide, depression, anxiety since 2012. just just the ADHD part I would be lying if I don't say that it impacted me a lot and I was talking at the beginning of this podcast a year ago I was talking to the founder of blockchain.com Nicola Carrey and he was saying a year ago he was saying I'm building this company I think it's worth like I don't know 14 billion I can't read a text I can't read an article anymore without like I can't yeah right it's a superpower to be able to focus on something for hours yeah it used to be not the like everyone used to be able to focus for at least 45 minutes but nowadays it's most people can't anymore how do you do that how do i try to stay focused yeah i actively limit my time on tiktok uh and the other only social media i use is twitter i don't use you know instagram facebook Snapchat blah blah blah but TikTok is just so fun but even Twitter is extremely addictive and it is like day altering you might argue oh yeah but I get some good news on there and I know what's happening but it's a bit of cope too right because if you're actually building

1:29:05probably can spend way less time than we all do so for me personally it's a little bit easier to not get addicted to Twitter because every time I tweet something, there's a lot of toxicity. So I... There's a lot. I don't want to get criticized more. Yeah, exactly. So I only spent maybe like five minutes tweeting per day and then five minutes reading just because I have natural aversion to Twitter. But otherwise, I think Twitter is a great product. TikTok is really addictive. And I have a time limit on my iPhone. What do you watch on TikTok? I watch soccer. A lot of Ronaldo and Messi. Okay. The Ronaldo and Messi tribes are really interesting.

1:29:52They're shitting on each other. Yeah. TikTok is extremely smart. As soon as you have one or two videos, it's like, they understand exactly on another level what you want to watch next. And it's just, it's crazy. It's really good. TikTok is really good. It's crazy. I think TikTok is the best product in like social entertainment. And addiction. And addiction. So I have a daily limit for myself. And I turn every app off at 7 p.m. because I go to bed between 9 and 10. So I need two hours away from any screen time. And you manage to not click on the button where you just like skip this. Or is there an additional lock or something?

1:30:36Exactly that. There's an additional one? Yeah. Okay, I probably need that because I have like from, I think 10 p.m. or 11 p.m. until 9 a.m. but I just click on the thing, right? Every time on WhatsApp call, ah, I'm logged out, ah, just click on the thing. Okay, it's back on the WhatsApp call. No effect. Doesn't work, right? Doesn't work. Doesn't work.

1:31:03We have a crypto alpha part. I mean, we talked about a lot of alpha today already, but we're asked to guess what their favorite crypto teams are and why. what are your two top teams favorite teams and why

1:31:24that's gonna

1:31:28I mean we invest in like 200 teams and if I mention two that's gonna make the other 198 teams really but

1:31:38my favorite teams are actually the ones I interact the most with and by the way there is a high correlation between my level of interaction and their success there's some causality there and there's some correlation but I really love the Tensor team why? I think they're both very high on autism and and probably some childhood trauma you can feel it I don't know their trauma exactly but you can feel it you can feel the trauma because they just have something to prove just have something to prove to prove and they think about products very uniquely um so my my so there there's um i i give a lot of advice to our like product advice like product feedback to to all our founders who want my feedback and um they're the founders who don't take my feedback there's a lot of founders who don't take my feedback but the founders who don't take my feedback are either really really really good or really really bad and and the tensor team has rejected my feedback many times and they made some really counterintuitive product decisions that in hindsight turn out to be the correct one um

1:33:04i love that team

1:33:08your dad how did having kids change your perspective on life

1:33:17um

1:33:25i think kids are just most magical thing it's magic like my daughter is uh my son is a five months old he's mad he's like he's not at the age he doesn't understand anything yet but my daughter is three and a half and she's like the most funny and interesting human being i often wonder like if like how much um damage that just growing up and the society has on your sense of humor and your creativity like i haven't seen many people who are funnier than my daughter she just says things that are just really out of nowhere really unique and funny and humorous

1:34:17one of the most common messages that i hear from super successful people who come on this podcast is you should have kids as early as possible and they kind of regret not having kids earlier. Do you feel the same? No. I think I had kids at the right time.

1:34:39I'm actually glad that I focused on money and career in my 20s. That's my view too, actually. focusing first on that and then feeling safe is also is actually very selfish right you want to stress out less later yep and you want to be able to provide a better life to everyone right and also probably be a bit more present and uh yeah there was a study recently that uh just changed uh everyone's understanding of money and happiness so there used to be a study back in like 10 years ago that um your level happiness uh increases monotonically with your money but at some point it flattens out and that point is like i don't know 100k or some 150k per annual uh sell uh you know per year of salary and that this new study showed that uh happiness and money are actually correlated and there's no upper bound of course the the scale is is like logarithmic so like if you double the money you don't necessarily double your your happiness uh i actually like the you know the reason why these two studies uh show different results i think it's probably a matter of methodology and maybe sample and maybe they're the author's own bias but if i had to pick one that i believe is the correct one i think it's the latter i think my level happiness has increased monotonically with with money and there's a very simple reason for that is money does remove a lot of stress out of your life.

1:36:11And I'm really glad that I was focused on money and not kids because now I get to enjoy the beautiful parts of having kids and not the stressful parts. Yeah. Makes a lot of sense. I've been thinking like that since I'm 23, actually. I was thinking like that. I mean, it's very rational, right? As a man, right? Where you're thinking, okay, like maybe we're not, we're not I mean as a man you still have this responsibility even if like yes woman work etc as a man you have this thing in your mind where I need to be able to provide and protect and to be the man especially when she's pregnant and maybe if she wants to just take care of the kids afterwards and therefore like I'd rather be there afterwards sorry before having kids maybe even before meeting my partner right than after because otherwise is going to be so much stress, right?

1:37:05A lot of stress. Money can remove a lot of stress from your life. Yeah.

1:37:14You tweeted, positive impacts of crypto on society so far. Bitcoin, stablecoin, making early adopters rich so they'll go on and figure out health and longevity. Yeah, that was being tongue-in-cheek, but there's obviously a lot of crypto people who are into longevity. Absolutely. It's a common pattern. I think out of the fields outside of crypto that crypto people are into, I think longevity is the one that has the highest overlap with crypto people. You don't see a lot of crypto people who are into like nuclear energy or climate or space or I mean there's a lot of people into AI these days, but the OGs are universally interested in longevity.

1:37:53Let's be a bit critical here. Because I've been talking to a few of these big crypto people and I've been asking them like off the record oh this person begin longevity and then like for example they say yeah but they don't even go to gym right like it's cool to be longevity right yeah i have money and i want to live better not literally longer but better right as well as that because that's the definition of longevity it's not like let's certainly live until 200 years old but it's lifespan versus health span right but but that's not a coincidence if you had a match if you had a magical pill that you can and just swallow and then live forever, instead of going to the gym, of course you pick that.

1:38:33But today, so far today, I mean, these people are probably very lazy and don't want to go to the gym, but the science is unequivocal that today the best drug that we have as humans is going to the gym. That's exactly right, right? So you're thinking that these people who are kind of lazy, they're kind of hoping for that magic pill? because my definition of longevity is that is okay i sleep enough i eat clean that's my number for me in order of importance number one sleep number two going to the gym and then work and then no and then eat and eat clean where does well where does work fit into that for for longevity purpose for life in general all i mean work is important i mean there's some trade-off between work and longevity because the stress does remove absolutely some years of life but there's some positive impacts as well because you get to meet interesting people because like the social interactions is one of the key factors of longevity as well so there's a balance but again i get to say this because in my 20s i didn't get to say this in my 20s it's all work work work i don't regret that How healthy were you in your 20s?

1:39:51I was extremely unhealthy. How bad did it get?

1:39:58I don't know if you know, ferritin. Ferritin is one of the markers of inflammation. My ferritin is in the 1400s. The average male is like 200. And even the average is not considered optimal. The optimal is like 70, 80, 100. The people who get their ferritin to like 1400 are those who get cancer or some other really bad inflammation. And my entire body was inflamed. Like that was, I thought I had cancer. That's how bad it got in my late 20s. My cardio today is, I've never been, my cardio today is just much better than I've ever had in my 20s. Are you doing something to help advance the health and longevity space?

1:40:51I'm making some angel investments here and there, but not that much.

1:40:58What's something you believe in that most people would not agree with?

1:41:07I do have something in mind that I think most people will not agree with in the public, but they will agree with me in the private. I think the whole political situation is getting absurd. And I think the modern liberals, not the classic liberals, the modern liberals in the last five years are then negative to society. Elaborate. This whole, I mean, Kamala Harris is basically a Marxist, period. By definition, she announced her very first on concrete policy was, press controls yeah there's that I mean there's like that's just absurd financial illiteracy I think most people will at least agree with me in private in public I don't know because Kamala Harris is a woman and she's a minority so

1:42:10most people publicly will be on her side that's part of the something that I think is net negative to society a lot of the ideology that the modern left again by modern left I mean really the last like 3 to 5 years

1:42:32is a religion it's a religion it's crazy, it's absurd how is it possible that the best person that the Democrats can come up with is financially illiterate and that she might become president. What's kind of wrong about the system that makes it that there's no kind of better options? Yeah, that's a good question. I don't have an answer. I wish I had an answer. If I had the answer, I would have... You would be the president. I would at least help the society to build that system. But it's crazy that we end up with the two choices we have is a Marxist and a clown. I'm voting for the clown because I think the clown will do less damage than the Marxist.

1:43:27But I wish we had better candidates. I mean, like on both, candidates from both parties in the last couple of decades were better than what we have today. Like I like Obama. I liked even Bush. I like Clinton. Yeah. Like all these are decent candidates. I've been hearing a lot of, yeah, I'm going to vote for Trump because he's less bad. But you're not like there's better. It's like less bad. And it's, I mean, when you think that president of the USA is probably one of the most important roles on the planet and people vote by less bad, it shows that there is a kind of underlying issue. Yeah. What's your biggest prediction for next 12 months?

1:44:11On anything? Anything. Bitcoin will be higher. How much higher? 100k. What's the top of this cycle for Bitcoin? I don't know. The range is huge. What's your range? Somewhere between 100k to 420, 69. Because we live in a simulation. I mean, last cycle we ended at 69, 420. I mean it would be perfect if the next one is 42069 amazing thank you so much for doing that that was an amazing conversation appreciate it thanks for having me