Meet the Blockchain VC, Pt. 3

Transcript

everyone [Music] hello everyone to our event from crypto valley association in two switzerland we are very happy to have now already the third theory or the third event meet the blockchain we see today with all american guests from california and from chicago with rumi morales from outlier ventures and she has also led previously the venturer of cme group and was uh executive director at goldman

sachs very happy to have you here i think you have a very interesting claim also on your website visionary leader in advanced technology grounded in patterns of history i think this is very in the very very in an interesting claim and i would like to also discuss regarding this with you because we live in quite on present unprecedented times now but still i think it's important to look back in history and to find similarities so rumi i would like at the later stage maybe if you give us some explanation how you see our times now here where where do you see any similarities in in

history then we have miko matsumara from gumi kryptos in san francisco i think very happy to have you um here um you are having this blockchain venture fund with as i have seen on your website various investments and very interesting thoughts and then third last but not least we have christian camera by the way he also introduced me to mikko and rumi thank you very much for this you are from systemy capital also blockchain

investor you are also an author at the forbes you have i have seen you are a guest lecturer at various university including harvard university and um you have very interesting thoughts on on on blockchain and so i would start maybe i think i start with roomie and then we do in the order we have before you you give us some some some some responses to my questions so first why do you invest in blockchain technology yeah so i will try to justify this by weaving in your point earlier about

my claim to be a visionary leader granted in patterns of history i am not a technologist i would never study technology growing up um but there was something when i first encountered bitcoin and blockchain that made me realize uh i felt in my gut that we're instinctively looking at something that humankind needs if you look at the evolution of of let's take exchanges you mentioned the cme where i used to work you know the first regulated exchange was in osaka japan it was rice futures in 1698 and for hundreds of years people were trading using openoutcry using hand gestures but by the late 90s with the advent of

electronic trading those 300 400 years of history just went away in 20 years as electronic trading happen but guess what what took just 20 years is being traded changed out already in digital trading in blockchain and bitcoin so it was the it was a rapid pace of this where i thought well this is really fascinating as someone who's always wanted to know what's next i thought that this was next but it is based on something that we've been doing for hundreds of years and i think it's very important to understand people will always want to be able to accumulate capital and provide for their families and manage their risk and what we're seeing in blockchain and bitcoin is just another way to do this more efficiently and with technology but it's harking to a basic human need that

i think everyone understands and that's why we're seeing so many people involved in this space feeling optimistic for the future so that's my way of saying this is why i'm into this stuff uh because i believe it's just an evolution of what we all want as human beings thank you nico yeah so i really appreciate uh rumi's commentary i think it's amazing to see the roots and the history of this phenomena going back to uh japan i'm a of japanese ancestry and you know i think that's a really fascinating uh thing to understand uh for me i've been in open source software for uh probably about 30

years harkening back to the first uh boom of the internet so going back to 1994 when i joined sun microsystems uh the java team so we actually popularized the java programming language and of course under that the jvm or the java virtual machine which really popularized network based bytecoded virtual machines you know successors of which include things like the evm or the ethereum virtual machine so you know in terms of my history with open source software i actually believe that open source software and this is maybe going to sound extreme but is in some ways humanity's last best hope

so you know i think it sounds very crazy for me to say but you know for me i believe that the competition for consent and uh if effectively the um sort of striving towards developing the uh effectively immortal software platform under which all society is being built you know is is really the goal of open source software and i believe that blockchain technology is internet infrastructure that will power uh quantum leap in the power of the internet to connect uh people and to serve people so i think that that's really my

mood but that i think that this next wave is ten times more significant than even the wave of the internet that we saw in 1994 uh you know which is really has to do with ownership and it has to do with people uh basically being included in this global emergent decentralized financial system so i think a lot of what i'm going to say is going to sound a lot like nico miguel and i share a lot of history grew up kind of at the same time so we were trying to build a unified messaging system very early on in the 90s on the aerial backbone in europe where i'm originally from

and so we kind of took very similar pathways we were lucky enough to sell our early internet service provider at the height of the dot com so i moved into vc 20 some years ago but so where i'm coming from i saw my last startup in in 2008 and kind of i came to the realization that we actually never built the worldwide web but what you're looking at is a commercial web and so finally there's a lot of awareness around that and i've been waiting for this literally for a decade now or more than a decade and so the larger point here being is that all the algorithms that you see implemented on any of those websites are typically driven by capital formation but as a subset of capital formation in the legacy form as in the objective here being increasing

shareholder value and that creates a lot of externalities and now there's a lot of regulators actually honing in on these externalities i.e google facebook and so forth what they're really selling is social engineering as a service right so we're still at this level where people think they're selling data but they haven't been selling data for a long time this is what they really do and um to the larger point here though is what what mikko said i would say that that actually the the worldwide web and internet act is actually an ideal tool specifically based on open source technologies to coordinate cooperation so it's not about cooperation that's really about a core operation to achieve economic activity

and what we have been missing for a long time is kind of these value transfer layers where we still needed to have intermediaries that would store that information in data silos that we call databases so the the largest overview that i kind of see if you look at this in broad strokes in history is we came from an era where we supplemented our human wetware technology with something like paper and we would write down what economic activity we were trying to facilitate and contracts and paper and then eventually moved on to databases and when we made a rather huge mistake connecting these databases to networks and so in a way the way i look at this is decentralized software solution blockchains being the the most

prominent one is going to fix that particular mistake hopefully interesting very interesting now just to get to know you or your institution is a bit bad but also for uh for our listeners and viewers um where where is where is the focus on your investments do you invest more in new protocols in in blockchain infrastructure projects or more in in application lots of great interest for you i'm happy to begin first uh but noting that also i think certainly mikko and i share a board together in other investment funds right uh but in terms of

my primary kind of my primary activities around a fund or a group i should say called outlier ventures so outlier is an early stage investor in let's just call it web3 but we're definitely at the the bleeding edge of the crypto universe already so a lot of our attention right now is on nfts on d5 and what we'll call the metaverse but what outlier focuses on primarily is running an early stage accelerator program so this is for pre-seed opportunities and that's called base camp and then we have a later stage acceleration program called ascent and this is for companies that are looking now to launch a token out into the wild so maybe they already have some traction building up

their technology or their protocol their company but wanted to be able to then have a live token as part of their network so outliers really focused primarily on this type of stuff we are all around the world our headquarters is in london you mentioned at the outset though that i'm in chicago and we have partners everywhere um but the other fun that you know mikko and i are on board it's called silica capital silica's focus on the silica blockchain network and that ecosystem primarily targeting asean and india i'm also part of an advisor of a fund called a100x and this is blockchain infrastructure but also with a purpose towards improving

the investor base in crypto with a greater focus on having minorities and women being able to invest in the space i'm sure that mikko and chris also likewise like me have a number of opportunities basically everyone who's uh watching this uh the three points of connections here amongst the speakers will probably lead you to every potential blockchain opportunity in the world if we're not investing in it we probably know somebody who is um but i'll stop there mikko go ahead i i'm happy to jump in so you know i rumi that's absolutely true and you know i feel like uh you know obviously she and i uh you know we're we're

on the board of silica capital but of course my primary affiliation is with gumi kryptos capital or gcc so gcc has made about 30 investments to date ranging the stack so we go all the way down to layer one including uh so we have a novel space time consensus portfolio company called space mesh and uh that's extremely exciting it'll be a space time so it's effectively a novel consensus that doesn't use uh you know quite as much electricity as bitcoin but it provides incredible security so space mesh is fascinating but you know we have actually done lead investments all the way up and down the stack

we have smart contracts like agoric and we have plasm we have a whole bunch of fairly low level uh investments in the infrastructure stack which is my specialization so i'm going into open source developer platform so that's really an infrastructure orientation however my partner ray is a financial services expert and so we do go into d5 and c5 so in the d5 realm we invested in one inch which i think one inch network is a very powerful dex aggregator we have idle finance we have stakewise we have a number of defy investments we also have c5 which i think our flagship in c5 is the celsius

network um currently i think about 18 billion dollars of assets being managed there and of course we have a number of other c5 investments and then of course the other flagship for us is actually my partner's brainchild which is uh nft but mostly from the gaming perspective because the name gumi comes from a mobile gaming company in japan that he founded and took public he founded it in 2007 which was the introduction year for the iphone and he took it public in japan at a unicorn valuation in 2014 so he's a long hand in the gaming sector but

particularly mobile and uh so we uh our flagship on the gaming nft side is open c so we led the early round ahead of the most recent round led by andreessen horowitz so openc has been a great kind of nft uh from our side we think of it nft as related to gaming but i think of course roomie mentioned this kind of emergent metaverse economy and of course in that segment we have um ygg or yield guild which is an up and comer which i think you'll all be hearing more about in the near future so we're very excited to kind of range the full stack and from the application side focus on financial

services and gaming but i think in the future we're going to be focused like across the boards we think that this transforms everything it's just that the gaming and financial service applications are the first i have to start talking before mikko so we don't repeat each other we're like cousins i mean in a way like uh chris chris yeah i appreciate that yeah so we have been investing in multi-massive online player games and voiceover p solutions for 20 years and those two topics share a lot in common with what we invest in now and like rumi and miko said we invest into the entire stack so we started investing in nft solutions um

three years ago and uh we're an investor in mint base which actually kind of uh you can build an open c using mint base right so it's actually the the original building blocks but then also i think most importantly it's important to understand that we in building the entire stack so blockchains is kind of on the base layer below that you got all the web 1.0 technologies like your smtps tcp v and so forth and then above that you also see new development specifically it as it relates to naming and addressing so you got decentralized naming protocol so we think fio has a lot of value handshake unstoppable domains and so forth because now and that has been very prominent as of late

it's very easy to de-platform someone because all these systems are centralized so the the last resort is always to just go to the isp go to the person who is providing the naming service and then simply cut that off so but yeah then on top of that like mikko's wearing his keyless shirt is important to then onboard quote unquote identity in a new way so right now and that's kind of a very high level description that probably requires a lot of explanations we're really changing the topology of the web so the current web topology is such that you as an individual being treated kind of like an oracle function something that spews out data

the network collects it uh stores it distributes it across those individuals that want to influence your behavior and then monetizes that so the the reverse of that is where you are the agent within the system and so you you a lot of times you see these new regulations coming out that require something like the right to be forgotten or something like that right so that's rather naive so something that's digitally observed you cannot forget it's already copied a million times at the second it enters the system so the only way of invalidating those legacy systems is give you back agency over your own let's call it data for this discussion it's more than that but the larger purpose here being everything works kind of backwards to that

end so what i mean by that is so you see a lot of systems today steep still being built on these old paradigm the old paradigm i would call kind of this username password paradigm so the the the account based systems and so that includes banks but that also includes everything else and that's our starting point where we start to look at just like how do you as the actual user of the system regain agency over that information and right now a lot of these systems are still limited to digitally native solutions so that's why we have the entire default space is all based on digitally native solutions so the largest value at the end of the day and that's what we're getting to is on the decentralized application

layer right but for for that specifically we need to start onboarding identity and assets to those networks i'm gonna stop here because i i tend to go too long about these topics because i'm super excited to finally see this in the world i think i mean this is something very important if you see now big tech companies of course where they make their money from i mean it's a handful of companies and basically they they earn on the identity also of their client and of course it would be very important to regain ownership of your own data and to uh to to invent or to establish tools which connect the individual with its data in um

in in in in the web and i think this is something for sure already now very much and often discussed and something very interesting also maybe for a next for a next uh event to discuss um in [Music] we'll discuss it now i have another question chris now i think we start with you because it's unfair if you're always the last even so we have always very interesting uh speed words to say about so i want to know now if you invest is it only in equity in company or

investing or are you also investing in tokens and now with tokens are you also investing in very early token projects where they are not yet listed not publicly tradable or or or what's your your yeah so so historically we've done a lot of um token investments in our first fund the second fund will be more equity heavy at least that's the plan but at the same point in time we have to be opportunistic we have to see where's the value being created is the value being accrued to um an entity or the value being accrued to the network right you need to be able to discern that and then more importantly and i think that's still very little understood you

gotta actually understand what is that that particular token for i mean we have a lot of tokens now we have like more than 9 500 tokens being listed on coin market cap and we have this very unsophisticated frameworks for these and you you see regulators come up with new ideas how to classify these but a most of these aren't really static and then b um it's kind of the old mike tyson quote any any time goes out of the window any plan goes out of the moon when i want to get in the face and it's kind of the same thing with releasing your token in the wild you might have one intention but the community has a different idea how to use that i mean the most prominent example is obviously bitcoin it can never be appeared to be a cache because

of its monetary policy and other things but the larger point here being is that we really have to kind of take a step back and let the technology develop at the end of the day we're technology investors so we we take a very nuanced look at every individual token at the end of the day it's like every token is really just appear to be a bearer instrument of a public blockchain that's your starting point and then you need to see what other facilities uh you attach to that so there's a lot of uh talk about what is a stable coin was what a various variation of the stable coins or what are security tokens i i think these are rather vacuous you just want to observe at the end of the day using the scientific method just take a snapshot what are people using it for

what's the actual use case right so in the prominent use cases if you look at something like tether what what's teva's use case teller has the largest market cap for any quote-unquote stable coin and what are people using it for right they're using it to stay in crypto they're using it to not incur a penalty to move back into fiat so that's its use case no one i mean there's very few people that that use it for payment or there's people that use it for lending too but the larger point here is you need to kind of work backwards from what's the utility what's the use case if you look at these as technologies not as a speculative element but what is the long-term viability of these solutions from technology perspective so as

we see we take a 5-10 year horizon when we allocate to something and you can already see right now just taking a snapshot what solutions are being used for what so regardless of why what what the white paper sounds right i'm going to stop here because i don't i want to give the other people also a chance to talk happy to jump in if that's all right yeah so uh you know i i think that uh really uh what mike tyson was summarizing is really the work of uh helmuth von modka who's a basically a german uh war strategist you know and he he basically said that no battle plan survives contact with the enemy

right and of course uh you know i'm not i'm not sure mr tyson was intending to summarize him so nicely but you know he basically said uh everybody got a plan until they get punched in the mouth that was that i think that's the that's the tyson quote and you know i think that that's a beautiful synopsis you know so in kind of rooting that back all the way to you know our philosophy you know our fund actually out of 30 uh investments to date have done 15 placements principal equity and 15 placements principally token so you know i think that really summarizes our stance right which is that um the thing to me uh you know obviously

what what chris mentioned that i think is incredibly astute is really the dynamics of value capture so you know value capture is essentially the gatek principle gating factor but i you know if i were to add anything of note or interest it would really be about things like governance right so from the governance perspective the thing that we focus on as investors is we really focus on alignment and long-term alignment with founders right so in essence if there is uncertainty in the early stages as there always is we generally want to align to the founders we want to we'll we'll accept lockups like founders you know we'll accept you know but in a sense if we're sitting in tokens and the founders are sitting

in equity uh we won't we won't move ahead with the structure like that we just think that's a recipe for disaster like we we really want to ensure that all the stakeholders have alignment you know because we only want to be paid when the founders are paid so you know we we're not we're long-term investors you know and we're we're just focused on alignment and proper governance right that's really key to stress something that i should i should also clarify is that outlier ventures is not a vc firm fund we don't have external lps rather that we are a group of partners kind of the way goldman sachs back in the day was a partnership or morgan stanley was a partnership so the partners would be contributing their

capital into the into the company and to the deals that they would invest in so outlier we are really committed completely with the founders in the program um we can also be very patient uh because we're not expected to generate returns to some external person who perhaps is less interested and less invested in the vision of the crypto industry and why we're doing this at all um and very similar to what mika was saying around you know getting punched in the mouth like i think every blockchain or any vc in general should be very very flexible we are realists here obviously we are optimistic realists but realists fundamentally and want to be able to strike the best

possible deal so even with the base camp accelerator program that we have at outlier ventures you know we are pr we are providing immediately fifty thousand dollars in funding for six percent equity and tokens uh we like tokenized investing but we also recognize what what's in the best interest for any startup ceo or their team in terms of wanting to uh take equity instead you're not you don't want to push someone into a token if it doesn't make sense for the business model or for for the vision of actually how to best execute a company um i will also say i mentioned earlier that between miko chris and me we probably have so many other touch points into the blockchain investing universe you know as you mentioned martin in your

introduction of me i ran the venture arm of the cme group which is a corporation and increasingly you're starting to see corporate vcs or corporations start to invest in the space as well so for any startups that are interested please know that it's not just us your standard financial vcs that you might want to turn to for an investment but certainly corporations can often be very valuable strategic investors in in what you're building but also be mindful that there's there's a reverse side to every coin and on you know it could be that corporation might handcuff you too in into restrictive commercial agreements or that you will be seen as just being part of one company's subsidiary as opposed to being a startup

in and of yourself um so you have to be very mindful of being too associated with a corporation if you choose to get them as an investor but i think there's also a very growing source of cattle now in the blockchain and crypto space because corporations know that they cannot avoid this longer and that they really need to get as involved as other startups and other businesses in funding the opportunities in the space yeah i think this is very interesting first of all i saw on the on the way on the web page of mikko's uh firm of gumi crypto very clearly already the question in your questionnaire what problem do you want to solve and i think there the the the the corporate venture for arms they're very well placed because

they know the problem they have in their established business of course a venture arm of an established car company knows exactly of logistics company knows what they want what problems they have and what they want to resolve and i thought it was always very interesting also to see just as a as a remark also i know quite well guys from a plug-and-play they always co-invested when a car when a big corporate invest because then it was kind of sure that there is really a problem to solve and so i think this was a very interesting point and uh so now for the next question i think room

you have already um responded to it but for me to increase the question who are typically your investors rumi i think you are just the partners who are investing maybe you could elaborate why don't you open up for investors this would also be of interest well it's funny when i first joined outlier it was with the initial thought of us having a fund so there's a partnership and that we would have a fund that be able to invest in later stage opportunities but honestly i think that we we realized quickly that we were much more effective as a as a team of partners in terms of being able to make uh rapid decisions on the deals that we wanted to go into

not having to deal with a lot of hand-holding the rather experienced people that knew what they were what they wanted to see in the space and were willing to make it happen but also just our business model is different i mean we're not simply investors we are also helping to develop the companies you can call it incubation right but there is a service element to outlier ventures as well so i think in order for us to achieve the vision that we wanted it wasn't to manage other people's money and produce a return for them it was to build to build the companies that we wanted to see in the world and we just thought it would be more effective to do that in a partnership and we continue to accept new partners into the partnership so if anyone's interested you know or hopefully you know how to

reach me you can just dm me at roomie morales on twitter any number of the 100 ways you can find me um so it's not closed right it is open to people that uh have the have the vision um that outlier sees in terms of where we're going in this space yeah i think we we have a very similar history yet again so my partner carl formed the ethereum meetups here in orange county six years ago that's how we met and we kind of started to see that we have the same outlook on investing and how we we think about technologies which is we think about them as scientists and use the scientific method so from for the first couple of years we really started to write theses on how we thought the technology is going to

change economic activity at scale and then we use these theses to run them against startups in the space because every startup in essence is an experiment on these ideas and so now for the first fund uh specifically because we're still doing this research we didn't actually allow limited partners into the fund and so after having um this peer review done six seven hundred times now if you're really confident that these theses and plus the investments are proving it as well have uh really sound footing so now for the next fund that we just opened up we actually will let outside capital in yes absolutely so uh i think very

similar to uh chris actually gummy kryptos capital is uh actually currently in a mode of fundraising so you know i think we will uh after uh successfully deploying uh a great part of fund one you know we are looking at a fund too and uh you know based on our uh successes so you know obviously if anyone's interested in participating in the gummy fun too you know feel free to contact us you can easily find me at miko.com miko.com or you could just look at gumi kryptos capital uh you can find us easily excellent thank you very much now what uh maybe another question if you invest in in

in in companies what are we talking about size wise is this open big small tickets what how how do you see that and maybe just also the other question which is related to it do you act else as lead investor or don't you like to play this i'm happy to start so out of the 30 placements we've made out of fund one uh we've been a lead investor in nine so you know we're a conviction gated fund uh we absolutely are happy to lead average check sizes are uh pretty much exactly uh 500k or thereabouts you know so that's kind of where we sit

uh we definitely have gone north of a million into deals uh we do reserve some follow-on capital although with a kind of nano micro uh scale that we're in you know at a 30 million dollar fund size you know we we don't follow on all all that often but you know we we do uh preserve and defend pro rata often and you know we really are interested in uh backing the best entrepreneurs so you know i think uh the next fund will likely be larger for that reason yeah in the uh outlier model it's a little bit different as i mentioned in the early stage base cap accelerator model the immediate funding is fifty thousand dollars

and that'd be for some combination of equity and tokens um we also provide an optional repayable advance to help cover initial legal costs for entity setup and fundraising um also be but also provide startup resources legal back office support and up to uh two hundred thousand dollars actually uh total funding available per team on the ascent program which is again the program that's almost acts like a digital capital markets um function where we help companies launch their token uh that would just be a percentage of the total token uh amount raised so our success is tied in with

the success of the company and we only get paid by how well we do for you and the amount of a fundraising that you're seeking in the crypto markets so that's i mean general how we like at outlier to function is that our financial success is tied in with yours and that the terms are such that it enables you to grow successfully without also feeling with also being supported by the overall uh services that outlier provides everything from legal back office support marketing uh communication so on and so forth yeah i mean it's similar to tamika and rumi

our early investments have been spread out between on the low and 50 000 on the high end three million and we we only like to take the lead if we see that we can provide additional value so in a company where we think um we actually have synergies with one of our other investments and or we have a strong thesis that we can help them execute on like you guys probably know provenance and the application on top of that figure so we took a colleague role there and so we actually made their particular implementation a capstone keys for the harvard fintech program because of such an innovative approach to um lending in in a new way right where the

cost for lending are reduced by by a lot and this part is kind of coming from the other way it's kind of starting out with a more c5 solution and then moving um towards the d5 solution you're muted man art and you're still a mute yeah now it's i think famous zoom words they muted me they know why the administrators uh my question is um how do startups find you do you do you wait to get approached

or are you actively prospecting yourself uh happy to kick it off uh you know we are absolutely uh on the go uh i think you know from a gummy perspective you know we are beginning to be signal producing in the nft space so you know we are actually sought out by entrepreneurs coming from that region and also things related to the gaming area so we do see tremendous inbound deal flow but in general you know we really do kind of continue to seek out partnership you know and we continue to seek out referrals so you know we're constantly uh you know really on the go

uh to try to find the most interesting uh opportunities yeah i'll go um so we have been part of the ecosystem from the very early days i mentioned we founded the ethereum startups uh the theorem communities down here in orange county in southern california but then typically i'm on developer calls a couple of times a week and we there's a lot of working groups um around these spaces because as mikko mentioned this is mostly about open source communities and you really have to be part of the discussion because you want to be able to identify um the development teams that actually have the chops to build these new technologies before they're ever seeking money right

and that's really the state that we see a lot a lot of deals coming from and that's it's kind of the reverse of um in our space that that old saying ask for money get advice um and ask from for advice and you get money and so from our perspective we have been offering a lot of guidance and environment have done the work for the past six years and so we're kind of being i have been paying it forward a lot and so to that extent we we write a lot and provide actually development guidance so we also have our own development team in india where we test these solutions we also have our own data science team that aggregates data and

runs nodes and so forth so we're deeply deeply integrated into the actual ecosystem it's really hard um to actually judge these solutions if you don't do all these elements it's it's it's almost like you can't just be a vc you need to be part of the ecosystem actually participate which is kind of the eso ethos of the space right so um i don't code much myself and whenever i do i i break things but most of our guys here engineers yeah i think it's interesting as the models of uh getting capital are changing for startups so are the models of being a vc and what it means to be tied into the startup community and

seeing deal flow yeah you can go about it the old-fashioned way with the pitch deck and sitting down but there's so many other ways to interact i think with vcs and it's great when you have a team as well it's not just you uh to be able to put its tentacles into different pockets of the crypto universe so for example at outlier as well we have more of a core tech group and they'll engage in more technical discussions online or they'll have different webinars that they that they put out um jamie burke who runs outlier adventures has his own podcast um called founders of web3 now i will be launching a linkedin web series because my i guess my

my fan base is perhaps more linked in while some others said an outlier might be more or the telegram or the twitter crowd you know but i think there's so many different channels now uh to find access into a vc and it's just as important for us to be out there networking with startups as it is for startups to try to be networking with us there is a great competition for dfos at the same time people are are saying are becoming rapidly subject matter experts in smaller and smaller niches um and as a result it's harder for those niche species to find startups they're looking for um and so it requires us to be much more methodical and strategic about how we market ourselves

and the value that we bring to startups that are out there perfect thank you um interesting and i wanted to know also from you i mean i as i said in the introduction we are here i'm we're organizing this event from from from crypto valley into switzerland or in switzerland and i wanted to know from you if you invest into a company are do you have a original focus or an exclusivity or do you invest all over the world i think i can summarize that for everybody i think everybody's investing all over

the world so we have investments in your neck of the woods we have investments in in italy and portugal in the middle east in the united states but overall what you'll also see is that a lot of these teams are actually distributed right so you might have an entity that's the delaware inc but then you have teams that are situated all around the world so we're absolutely agnostic and we look at these technologies as addressing global economic systems right not nothing that's really country specific i i don't think anything that's co well mo not anything but most things that are country specific probably won't scale all that far because

there's this tendency that we've seen actually a lot where people try to build technologies to adhere to local regulation that doesn't work well because at the end of the day regulation is actually addressing people right so regulation is not addressing technology so this is typical fallacy of saying well we're going to have like a blockchain regulation or a crypto regulation what these laws actually do is they regulate the behavior of people within their jurisdiction so from a technology investor's perspective if that's your objective if you're developing something that adheres with that so that has somewhat limited utility i'm not saying it has

none but it's very limiting in terms of the capital you have to expand to then actually engage with regulators and check all your t's and um cross uh dot all your eyes the larger point you're being though is that the technology itself really lends itself to actually provide the objective that these regulations are seeking i'll make one particular example and then i'll hand it off to roomie maybe so right now the the big problem quote unquote in our space is this whole pasty idea of know your customer we talked in the pre-roll about this like banks to this dragnet approach to even when you're just opening an account remember you didn't even send funds the bank wants to know everything about you

you have to provide the government issued credential and they put this into their database so the point here being is once you realize that you can do this with this new technology tools with those new primitives in a different way well what you're actually doing you're invalidating that legacy model meaning all of a sudden you don't have to deputize a bank for government functions but you can actually plug in these functions in the original code right so that's why regulation is not the solution to blockchains blockchains are the solution to regulation at the end of the day so i see a lot of money and time being wasted engaging with those and there's value to be had but at the end of the day technology

will always move one order of magnitude if not two orders of magnitude faster than regulation ever will i'm gonna hand it over to definitely we are all i think global uh in investing in global opportunities i will say however that i want to see more from different areas of the globe uh india is a market in particular i think where the long term opportunity here is potentially huge it's kind of a sleeping giant as it is as relates to crypto and i know but you look at how much talent there is uh engineering and development there i'm just expecting a lot more from india so that's some place where i'm very curious to see what comes out of there and then

obviously as well i'm always happy to invest in women and women finding companies in general it's just we're in a sorry state right now and i say this is a woman who's been in this space as a venture investor for over 20 years you know last year actually in the pandemic year was a record shattering year in terms of venture capital dollars that went into startups although women received 1 billion less than they did the prior year and amongst all gross stage companies um women only received one percent of all funding a mixed team got eight percent but that still means 91 of all vc funding and gross stage companies went to mail-only teams so women uh would love to see more

more of them in this space not to say that that doesn't mean you you just get a pass on your gender obviously everything else still applies right you have to have a great problem that you're solving for proof that you are have the ability to solve it or the vision to solve it you know a strong team and a good market um but that's also what's on my on my list thank you rumi i think this is very very important and by the way also we from crypto valley association we we have a very strong intention and we try to do whatever we can also in our working groups in our board it said

to integrate um [Music] the female and also of course um other groups from all places so i think this is the this variety this diversity it's very important also to um to to to obtain great results and i think we're on the right path but still far from being there where we want uh um to be and uh maybe we can just there is just the right question after that what qualities you look in a company's team what is what this

what is the focus you have and maybe also i think we can combine it what's the focus on the company's product you want to invest i'm i'm very happy to kind of jump into it from the team perspective and also segway right which is that gumi kryptos capital actually sees this inequity as being an externality and you know something that of course is a is a very bad social problem but also a tremendous opportunity right so for for example you know in portfolio we have first-time underrepresented founder ceos like uh amy wan uh suruchi gupta you know so we've backed a number of uh you know first time uh underrepresented

female founder ceos and the thing that we found is that uniformly they're outperforming their peers uh you know so that this is uh you know very gratifying obviously our extremely rigorous methodology for screening matters so you know it isn't just that you can randomly pick someone who happens to be female and automatically get a good adventure result you know so i think that segways me towards your question but just to kind of spotlight a few of these founder entrepreneurs you know uh one of the things that happened during the cove at pandemic is actually that in the united states the statistics on job loss were actually uh completely brutal towards uh the female female gender

right which is that when you look at unemployment unemployment rose dramatically for women and actually less for men and in fact the majority of increases in unemployment uh really were attributed by women and that the model for thinking about this actually related to the kind of uh factor of having uh kids at home right so there's a sort of a gender discrimination about who's responsible for taking care of that kind of situation and of course this really hugely impacted women in the workforce so this is a really bad kind of uh you know series of events now one of the fascinating things to note you know and i this may be a little bit too much information but you know our

our founder ceo amy wan was actually had a newborn and was also starting uh a company at the time called sagewise and uh you know this is a really you know complex situation to juggle but of course she she's a tremendous entrepreneur and you know is now the ceo of a profitable uh you know and she's recently uh raised a significant strategic funding round that hasn't has yet to be announced so i won't give away that either but you know a profitable uh company with four and a half million registered users so she's she's really you know doing doing beautifully well and so i guess to me when we think about what we look for all three of the principles in gomi crypto

capitals have founded companies and exited companies so you know in a sense what we look for is what we call the gummy corn founder so we really look for these really very starry-eyed individuals who have tremendous kind of fortitude and guts and execution power you know so so for us like that's a baseline but if other vcs are going to avoid investing in underrepresented founders you know they're going to lose out big time because it's there's just so much talent that people are passing up for reasons of bias and you know it's it's really uh it's super unfortunate for for those investors to be honest i mean they're they're gonna they're gonna miss out

i i'd also i love everything that you said mikko thank you for your sharing your thoughts on on diversity and founders i'll also add it's an interesting thing many times when people say well we want to invest in a uh you have to know the industry you know we want to invest in someone who knows the industry i found it i found that there's a huge difference between being entrepreneurial and being an entrepreneur you can tr it's just you there's a different constitution that's in your stomach if you're an entrepreneur and many times we have people coming out of financial services firms said well you know there was a problem that i really want to solve i really want to start my own company you know i know this market but they maybe have never been

an entrepreneur before maybe they've never get you know just decided to take a year and backpack across africa or try to be a pro golfer or something but they just went straight into working in some bank and stayed there now that they said they want to start their own business that to me is a really risky person to back it is so hard to run a startup there is a massive difference between feeling like you've got a great idea and you want to go try it out and then actually having the sense of just failure that's been hammered into your head into your soul because you've had that failure before so definitely look at people who have the intestinal fortitude to have done this that have failed a lot before in their lives

that are entrepreneurs first um and it's kind of hard to say because many times you you learn by doing right but just don't assume because you have an entrepreneurial spirit in you that that's going to make you a great startup ceo and that's kind of on the vc's just fuss out and then work with you on yeah do summarize very well as you want to invest in missionaries not immersion in mercenaries right so but just to inject i mean i know i'm out of turn here but i just want to shout out to a crypto valley native which is mona elisa who is running enzyme protocol uh you know she in some ways is pattern breaking against what rumi said in some ways which is that

she uh spent i think seven or eight years at goldman sachs and you know it had this kind of incredible success track record so success after success after success now uh she did try to launch i mean this is all covered in my interview with her on the my show the mikko bits show but like in a sense like she's very pattern breaking because she's shown tremendous fortitude you know with the melon protocol and now enzyme so you know it's a very very interesting thing and obviously she did try to launch a small you know hedge fund you know which was just a struggle and that i think catalyzed her entrepreneurial journey so i i do think that it's not a completely unbroken line of success but like a really really exciting

and interesting person to to study so so uh anyhow i want to pass it to chris but i just wanted to shout i just wanted to shout out a crypto valley native so someone who's really making waves yeah i'm definitely obviously well well aligned yet again with rumi and mikko and maybe the one thing to add that i find a very important kind of power laws the law of requisite variety so it's it's the idea that the most flexible within a given system will eventually rule the system the law out of evolution and you can see that in the development at open source technologies and you can see that in people so if you're very much in love with your own ideas and i've been an entrepreneur myself and was very much in love with that particular idea

and try to make that real but at the same point in time you want to be able to check in and be self-reflective meaning you need to have emotional intelligence and you need to be flexible to change your approach just kind of the old adage if the the facts change i change my mind and in our particular space that we all invest and things change a lot and the the other kind of common but yet uncommon threat is the fact that if you look at a lot of these founders they didn't necessarily have a traditional um education in whatever they are developing if you look at d5 specifically right so a lot of these um developers in that space they didn't have a background in finance they they just decided this is an

inefficiency that i can address in code so i start addressing that in code and you see people rapidly rapidly iterating on top of these themes so um needless to say once you you discovered like passion and and and this kind of flexibility emotional intelligence you still need to do your due diligence if that team actually has the chops so you go down the rabbit hole of github and seeing how much work do they actually do and have they built something before instead of repeatable and so forth but that's the the nitty-gritty detail i think that everybody of us does on a daily basis right but i think the larger point here also is then to finish that thought is investing is about timing right this is the old saying of you

don't want to invest in the first social media startup you want to invest into the last and so what we already see right now since we started accumulating um people in that space um six years ago we see a lot of these people reappear in your projects and so they reappear in your projects because they realize well the one that they were aligned with in the beginning was interesting at the time but it's not gonna go anywhere and so either they start their own that's what we see quite a lot and or that they join a new team that actually has the right approach to whatever topic um they are developing right so and what we do there specifically we creep a long list and keep in touch

and not only with the projects but with the team itself so there's a couple of people that are really thought leaders in the space that um don't necessarily show up on on your typical podcasts and forums they're just heads down and that's actually more typical what we see their heads down developing right so they they don't have time to tweet and so forth right so but i'll see them like subscribing to my little github depository so i see that they actually develop a certain topic and i've never heard of them and maybe i don't even know their name and i just know that they get handled at that point in time but the larger point is i can actually see the quality and i think that's also an overall trend for

the future so you don't necessarily look to a particular person you look to their body of work what have you done and i would love and i and there i would love to see actual solutions being built around that theme because there's only so much i can glean from your linkedin profile as one example link them just provides you with a presentation that you want other people to say would be way more useful if i could harvest whatever you actually engaged with and i want this for myself right i want to see how much my skills are actually increasing in one particular area to identify the ones that i'm not good at so that's really hard to assess yeah elon musk has a really great

interview question that i think is really uh sailing it here which is uh question is uh what is the hardest problem that you've ever solved and how did you solve it right so you know if you if you ask someone that question uh you're gonna really be able to tell if the person's a real thing right yeah i think that's the right thing to ask i would know what to answer but i don't do that now and i have we have i mean it's it was great i think we went quite into the deep with that and and and and and really get lots of information from you now i have some

question also from our viewers so i have one remark from drew and he wanted to say that theatre's use case it's also important for blockchain application like ntfs and that these stable coins allow ntf market freedom from price fluctuation like ether maybe mikko you have mentioned the ntf space i think it's in everyone's mouth now it's something very interesting maybe also give us um a few ideas on how you see the developments of the ntf space

uh nft space in the next few months and and and and and yeah i think i think i think this is a misunderstood space uh i think a lot of people are focused on this idea of the nft as kind of the asset right and i think people are confused because they're like oh i own this nft right and obviously ownership is is the foundational element right because obviously ownership is a right right so to me when i think about and reason about non-fungible assets what we're really talking about is a unique kind of uh thing to which you can have rights right that's the thing that i think matters right so think about

nnft as a key and the question that i think we need to ask ourselves is what is that the key for what does it unlock right so it can unlock an experience it can unlock a car it can unlock a house it can unlock you know and when we talk about rights like the thing that's super important is like the right of ownership is a right right but the thing that i think is interesting is is that there are almost an infinite number of rights that can be conferred through the uh through an nft as a signifier right so i think that to me when i think about this space broadly you know i think that we're really as part of an internet infrastructure you know nft will represent the rights to all intellectual properties right and

then the thing that i think will happen next is that it'll actually become the rights to all real properties so you know i think that that's so if you think about the how nft is an internet infrastructure it becomes what i call an object-first infrastructure first with digital objects and then of course eventually with real objects and i think the the beautiful thing about the interaction between the standards of erc and you know these types of data format standards uh coupled with things like smart contracts will then create effectively an internet or not just intellectual property for all property you know conferring and financializing the rights afforded with license and afforded

with uh you know the management of all of those rights so i think that's really where this goes and i think people are you know right now are just focused on the right of ownership and in a way i think they're really interested in things like digital collectibles but you know that's certainly just the raw beginning yeah we wrote a long thesis about that if you um want to go on hacker noon and just look for nfts for the real world we wrote a thesis about this about two years ago so my expectation is similar to what mikko just was saying there's going to be a digital clone for any real world item and the the use cases are so obvious once you start to look around right so there should actually

be a digital clone before you even create the real world item so you can start to attach metadata to that and so in our local meetups here we made an example three years ago i think that resonated really well and by the way if you were at the meetup and you got one of the nfts that we minted please look it up because it's worth a couple hundred million dollars a couple hundred dollars now um but the the point there is so if you can think of things like a vineyard which produces let's say a hundred thousand wine bottles every year um you could in theory produce these as nfts first and then start creating a futures market for specific items where every nft represents a particular bottle and

so once you track it along the supply chain using other supply chain iot supply chain solutions attaching additional metadata to this ie how was this item treated along the supply chain was it exposed to higher temperatures and makes it unuseful for consumption and you want to reject delivery at that point in time and then you as a consumer might in the near future be able to just receive the digital clone with the real world item so you actually have the provenance of that item can also see that it's been treated in a particular way and or make it immediately again available to a secondary market right and all of that is not possible right now but you can clearly see the blueprints for these so we made one particular example for the automotive industry for

uh one particular company here in california and um just the damages today that you cannot do this think of something like car recalls that's billions of dollars in years and in in in damages and the point there being is because you cannot identify just particular badges of particular items that went into this product that make it hazardous to have to recall all of them right and so you can see this across many many implementations so we have a whole circle that um is ticket solutions i think that was something that miku pointed towards a lot a lot of supply chain solutions but any right or any asset

the point that being right now everything is very much limited to digitally native assets right and that's a very small sliver of the universe considering that there's so many more real-world items but the the chasm that we need to um to bridge here is that the current standard is very simple right so what you're really getting is a as a private key to some entry on a blockchain that you can actually manipulate so you you don't you get possession right um the ownership part specifically if it comes down to uh to physical items require enforcement in the real world there's a lot of work to be done for that that's the point that i'm trying to get over to all of our projects that are developing there

there's immediate utility to be had if when where you employ these solutions in a way that you can enforce these rights in the real world because right now i don't think um your lawyer will have um much chance using your blockchain entry in terms of enforcing your crypto kitty delivery um or your real world um kd delivery if you show up with your private key there right and so there's still this kind of whole nation state uh real world regulatory framework that you need to be able to facilitate for the time being until if when we actually have things like deeds that are digitally native or car titles that are digitally native and the

most important and then i be quiet about but this is like things that pertain to your individual are digital natives the most prescient example is a voting and then things um like digital bearer instrument that certify or test or speak to any facility of you so if you got vaccinated chances are you got this paper card i mean that is a ridiculous technology given the state of technology right that we have paper cards that are peop people are carrying around with them to show that they have been vaccinated to enter a country border plane or whatever it is and so the point here being the real digiberry instrument

that that we need to create are the one that speak to the human a digital passport right so that that speaks to your identification within a certain circumstance i'm going to shut up here because that's a topic i can speak to for the next two hours i think you're muted again while you're i'm reading i'll just i'll just throw in a bone in this general space outlier also we published a paper on what we'll call the open metaverse os so you can think about as an operating system of sorts for building upon decentralized decentralized protocols uh but in particular define nfts um and

emerging within like the fuller web3 stack of crypto assets so everyone can check out that paper on the open metaverse published by outlier thanks wonderful thank you this is wonderful i think we had a very interesting discussion and i think he could go could go on forever and i hope that we will reconnect very soon i think it's just so exciting what happens in the space it's so exciting that we are here now i think rumi and i we discussed this a lot also when we got to know each other at our first meeting in preparation of this

we are very privileged i think to live in this time where you know we go in the new age out of the analog i think i mean i'm now i turn 50 years now we talked about planning i have to confess 10 years ago i wouldn't have imagined what i'm now seeing also professionally that's also and for sure i wouldn't have planned it and i think it's really great to be in this space and i think it can really resolve many problems which which have been here for many years and where we didn't have the technical means [Music] to resolve it of course i think a

blockchain won't resolve every problem on the planet um i think we had in our discussion forum uh one question regarding you know sustainability projects in the space i think this is something very very interesting to follow especially also measurement combined with tokenization and so on so i think we can give value to and also with the nft you know we can start to attribute value to things which seem not to have any value today

like trees or like clean water and i think this creates new markets new opportunities it will make the world hopefully a better place maybe i would like to open our round for a last word and then we say bye bye and hope that and make sure that we will meet those very soon again room you want to start yeah sure i'll start and it's just been a pleasure speaking with all of you as you can see we're so like-minded that chris miko and i are wearing the same outfits for this call today so that's not to say that we're conformists whatsoever but um it's it's my way of saying it i'm it's been my pleasure being on this

panel so thank you thank you nico yeah so you know i'm i'm very happy uh you know from my perspective uh it's great to be speaking with the crypto valley uh obviously it's a very deep taproot and hotbed of activity in the blockchain you know and i just wanted to encourage every listener and everyone checking this out that you know we really are at the beginnings and we're in the early days so i think there's a lot of people in crypto right now behaving as if this is their last chance to get rich quick uh you know i think this uh what's what bitcoin has shown is that the

long time preference and the investor not the speculator is the winner you know and don't don't participate in these pump and dumps like a dogecoin you know in a hurry to get rich it's a great way to get wrecked you know i think that it's really about kind of patience and about this long-term and really about the future that is absolutely well-founded it's grounded it's real it's coming and it's really a new in for infrastructure for the for the internet which will be the largest single market in world history so you know i think we have very strong rails this infrastructure is being developed and i think it will be brought to us all by smart contracts and blockchain assets including nft so so

thank you yeah to quantify what miko said we are in adoption about two percent there right so we're about at two percent of of users that use crypto in any shape or form and if you then break it down to actually blockchain users so people who didn't just buy krypton the centralized exchanges it's it's much much less and so the opportunities here are at least one order of magnitude but probably more like two orders of magnitude greater than the first web because we're not only rebuilding the entire infrastructure of the web but we're also reshaping capital formation at its root so anybody that is not looking at the space is missing

out because there's virtually no spaces it's not going to be affected by this particular paradigm and um you should get into it now right there's no better time than today thank you all i mean i'm very happy that as i told before that i found such high caliber speakers for our event that we have the opportunity here in switzerland with crypto valley association um to be um at the center of so many interesting uh projects if we think about caldano foundation here ether foundation founded here it's incredibly what happened even though and

and i'm very happy you know that we are now also from our small country here that we have speakers from all over and that we you know we always live from very open uh economies uh as chris told before i think our market is so small it's basically naturally negligent so we were always used to a tackle uh basically a bigger market than ourselves and it's great now i mean we you mentioned this before chris that regulation there is always an answer on security but still that this basically very conservative country was able now in high speed to

implement the legal framework which really secures also you know token transfer and it creates a lot of clarity also which is now the the foundation to build a new infrastructure and um we are very happy and we're still willing and working on you know building a network of friends very diverse very international with good intentions to make this place a better place thank you very much and i hope to see you very soon again all the best have a good day you too much talk to you soon yes thank you man

thank you bye-bye