From Seed to Unicorn: The Crypto VC Playbook | EBC11

Transcript

All right, good morning. Good to see you all. Uh my name is Neil Kunigomes. I've been investing professionally in everything from structured credit to private equity, uh venture capital, crypto for 15 plus years. Uh pleasure to be your moderator here today. We're here to talk about C to Unicorn. We have a panel of excellent experts in crypto venture capital who uh both scale small early stage projects to very large unicorns and beyond and help their portfolio companies quite a bit. Very excited to actually let them introduce themselves. I don't know if Christopher you want to kick off.

>> Hello. Uh yeah, my name is Christopher Hyman. Um I'm one of the founding partners at 1KX. Um we started 1KX in 2018. Uh before 1KX we were founders ourselves and um while we were founders we've also raised money from external capital and um the VCs that we raised money from were actually like quite decent but we always had the feeling you know like that they could have had you know like a much bigger impact on our success than they've actually had and so we said okay like you know if we get the opportunity to launch our own VC fund in crypto then let's really try and focus on really trying to maximize the impact that we can have like on for success and yeah I think like so far we've done like a pretty good job at that. Um we are mainly investing or like we mainly lead

seed stage tickets. Um but we also um invest into preede and series A. Um our ticket sizes usually range between like 1 to 5 million, but you know we also invest outside of those and yeah we invest like across the whole stack. Um from application platforms to middleware to um consumer applications to financial applications um yeah basically everything that's crypto. >> Hey guys. Um so my name is John Butalu. I'm the founder of uh St Capital Group.

We've been investing in more than 200 different companies in the space. I also uh participated in some of the DeFi uh projects early days. For example, Curve Finance. I'm also the guy behind uh Rect News and uh so alongside of investment we also been building different companies, different DeFi projects. We also actively participate in uh DeFi governance. For example, we are the biggest voter on Moro. Uh we also take uh some uh quantitative strategies, build uh uh yield strategies in the market. Uh yeah, that's it.

>> Awesome. So, we have a lot to get through today. Let's start with the big picture. Uh compared with previous crypto cycles, what's different in early stage investing this time around? >> Um I mean, I think it's completely different. Um I think everything really has changed. Um I mean like if you're looking at you know like the 2017 or like before cycles um there were maybe five VCs out there in total that focus on crypto and there were maybe I don't know um 50 investable companies per year and so you know like the natural selection etc you know like was a lot lot easier and simpler. Um, and now you have like hundreds of VCs. Um, you have tens of thousands of like companies. Um,

and um, yeah, like the game has gotten like a lot lot more comp competitive. Um, and that is kind of, you know, like really like one of the main differences that I'm seeing. >> How about you? >> Well, the the market is way more mature. So, what matters today is the execution velocity. Uh, it's not necessarily about the product. this video about this distribution channel about the design of the product um and yeah matters of how you can execute the product on on different niches because everyone has this kind of the same ideas right now and the same way of building a product.

So what really differentiate yourself is the team experience on the market past execution successes u that what that really what can differentiate yourself and as investment when we look at projects we're really looking at the team 98% is the team and then we look at what type of product they are building which is very different from before it was like you could have a average team like a B+ C++ team and then a innovative product and you will actually bet in the team. But right now this those things has changed completely. Now you bet on the team and you look at what the type of product they are building. So we chasing team first and then they're looking at what type of product you're building rather

than actually looking at product and what type of team that can actually execute the product. >> That's really interesting. So I mean if you think about you know what matters in terms of early stage signals you mentioned team a lot Julian. Um what do you think about community in this cycle? I think community was a very big part of previous cycles. Um I mean everyone wants to look at community when talks about talking about listing and eventually launching a token and so on. What what are your thoughts on community this time around? >> Yeah, community is extremely difficult. You might have um AAA team that has a perfect product but will still fail on the community side. We've seen most of the TGE and most of the token release that they have failed over the past few

years. And because the community when you when you get your product live especially with the token it's like instant IPO instant public listing and then you the expertise and the skills that you have to acquire by dealing with the community is way different from actually driving a business a traditional business or product. So we're seeing today for example what Binance is facing those type of comm community is extremely strong. So even if you have a good team a good product you might actually surf on the community and then your product might die. So I think the play of having your token being released immediately after after having your product well executed it can

be dangerous. So what we've seen for example in the past I will give the example of moro is having a very good product fit a very good executions but still wait two years before releasing the the token live. So they build a steady uh community growth and they find a really perfect product fit before making their public listing live. And this worked pretty well for them. But usually what will happen with products they try to rush on the TGE tries to rush on the token because it's kind of like the snake eating is is on tail. You need the community and product community and attention to get your product above other products but at the same time this can actually destroy your product.

>> Absolutely. And you talked about product a little bit and Christopher I know you're actually very technical. How do you think about evaluating technology this cycle? I mean the technologies come in we I mean I feel like we do the same thing in crypto. We just rename certain topics. Tokenization was called something else was called something else. But when you're evaluating the technology itself, the product, how how do you go about that? Is there anything that you've done or you're doing differently this cycle versus previous cycles? >> Um I think I'm going to like answer something similar to what Julian said. Um it's technology etc. You know like all of these things you know like they matter a lot less um you know you need to you need to really like find like a very strong product you need like to have product market fit right you need

to kind of like have very strong distribution channels um you know those are the things that matter these days. You can have the best technology in the world and we're seeing this like over and over, right? You know, like that teams are like so proud of their technology, but you know, they're getting smoked 100% of the time by teams that are focusing on distribution. And that is kind of like the thing, you know, where you know, just like being blind and like focusing on like technology is not going to help you very much. You will end up with like very cool tech. Yes. Um, and we've seen this like a lot, right? super cool tech, but then the customers, you know, like they have like slightly different needs, you know, like and you know, like the reality is, you know, like you probably like built your technology, you know,

like relatively isolated, you know, you didn't really take out taken like many feedback loops, you know, like from talking to customers, etc. And um yeah, all of your competitors, you know, they went out of out into the market and, you know, just worked on distribution from day one and they just made it in the end. Yeah. >> Yeah. If I can add actually it's even more um u important in this in the era of AI the the technology is be becoming uh commoditized. So everyone can have actually have access to the best PhD in the world using Chad GPT5. They can actually find any type of answers to any

almost any type of problems. So what really matters is not necessarily building the best technology ever is as being mentioned it's actually having the best distribution channel. So today the investment phase is way different from two years ago thanks to AI and also because the market is becoming way more mature. So now we looking at new type of innovative ideas and new type of executions that we never seen before. That's actually a nice segue in terms of what is the goal these days, right? So I guess an initial milestone for web 2VC and and web 3VC of course was become a unicorn. Get that FTV valuation to

billion. Is that still a relevant milestone for crypto crypto startups? People think about TGE, people teams change after TGE. We've seen that a lot in the last couple cycles. What what's the milestone? What's the goal that you're driving towards now? Um yeah so I mean like that's kind of like a it's a it's a tricky question right because you know in in public markets right you know um in equity markets right you know like your goal is to like eventually like IPO right you know like and you know like put the company on you know like much much broader shoulders but in crypto you know like you are like launching a token essentially like you're going public so much earlier um and most of the times like the companies

are not nearly like ready to to do that, right? And so what we are always kind of like telling projects is, you know, like number one, make sure that you have like PMF, right? I mean, like without PMF, you know, like don't even think about launching a token unless it's like a memecoin or something like that, right? Um then second thing is you need to make sure that you have enough capacity in your team because, you know, just kind of like maintaining like a live token is just going to really change the day-to-day priorities a lot. you know, will kind of you have like very different, you know, like priorities and if you don't kind of like pay attention to them, then, you know, your token will bleed to zero, right? So, you need really need to have like enough capacity um to kind of like really maintain um

all of like the capital markets function, the capital formation functions, um investor relations um on like a on like a day-to-day basis with your team. And you know like once you have all of those ingredients you know then you wait for the right narrative you know then you wait for the right moment and then you launch a token. That is kind of like for me like the best ingredient um for success in token launches. But yeah like the the unfortunate reality is you know like that um a lot of projects you know like they are just struggling with like finding any funding or like follow on funding and so they are opting you know to just launch a token um via platforms like pumpf fun etc and you know like get their their runway from these kind of

like platforms and I guess I guess that can work I just haven't really seen it um for for product >> that's fair Julian just any thoughts on what the goal the milestone should be for early stage founders? >> Well, uh the the goal in traditional finance is the IPO, right? So, as you as you said, uh and what we've seen in the crypto space is people uh before having the right product product feed, they they get IPO. Um so if you look at the graph uh the chart uh usually the the market goes down pretty rapidly. uh is because they I think what we will see more and more uh structures

in crypto that are actually almost exactly the same that you find in equity ventures like in startup ventures like you have a mix between equity and and uh SAF tokens for example of course but you trigger those tokens on milestones so then you incentivize founders to stay for the long the the long shot rather than actually incentivizing them to exit early. Um so if you look at the camera bear, if you look at the the how the tokens are being distributed to the founders and the team and the employees and also the the community, it's extremely important that you you find a pattern of incentivization that actually go for the long-term success of the

product. It makes sense that founders they will leave at some point because founders of phase one is never the same as founder of phase two. It's impossible. Someone that build a startup in the early days is way different from operating a startup. That's it makes sense. But you cannot have the founder having most of the shares by leaving the company at the exit of TGE. It doesn't work out. So normally in traditional finance they he will not be able to exercise his shares u and then leave and then give it to someone that take over. We've seen it in all the big companies like Yuber uh Air RNB all the biggest one. And this is what needs to happen in the crypto world if we want to have steady growth, steady executions and very well uh class of founders because

what we've seen today is like people creating a product releasing the TGE and then they call it a day because they they can trade and exit. This will change. I think we've seen a couple of different new patterns. For example, there was a a new idea from Andre Kronj. has been doing a lot of different things, but I felt I thought that it was kind of like really good idea like being able to lock the investment of VCs for the long-term success of the projects and only use the yield generated from the those investment to create value in the project and people can exit at any point of time. I think this is kind of like a new idea.

>> That's actually really interesting. I mean what I'd like to do now is move into early stage investing the crypto VC playbook itself and that's a nice segue there. I guess one thing actually you mentioned earlier many TGES I think most TGES over the last year and a half have actually failed right they're down 80% plus I haven't checked in the last few weeks do you still recommend that your projects launch a token the crypto token versus equity debate comes up quite often but what are you telling your portfolio companies these days is it still worth launching a token >> they're like um yeah I I mean I 100% right? You know, like eventually I do think, you know, like a token is still, you know, like a

super nice um incentive um liquidity, etc. like mechanism. It's just right, you know, you need to kind of like hit the right time, you know, like and most founders, you know, like they're just um I don't know that they're not kind of like waiting for like the right signals, you know, like and they kind of like want to rush things. They're completely underestimating and this is like really true for almost all of them. they're completely underestimating you know like how much this will change like a company in terms of like culture and you know like the actual you know like day-to-day work. Um, and you know that is like something you know where we're like really like urging the founders like hey you know unless you really have all of those boxes ticked and you're like 100% sure you know like don't even think

about you know like launching a token and then you know like once you do all of those things you know like it's like a 6 to9 month process you know to kind of like like get everything done right you know like with regards to like token distribution token economics work um exchange negotiation market maker negotiations etc road shows Um it's it's definitely like a very very demanding time. >> I think we like it or not but everything is becoming uh tokenized. So I think the the best way of value to give a value to a company or a project is by looking at a token in the future. So I think it's not a matter of saying oh we should we should stop having tokens because most of the TG in the past two years failed.

It's more about how can we make those TG not fail moving forward and like for example I I give the example again tomorrow but I think the execution was really well made because they delayed the TGA so people were able to kind of like farm or be compensated by tokens by providing liquidity to the the landing market but they couldn't actually make those tokens transferable. So they couldn't be traded for almost two years. So when they they they had the perfect market fit or product fit, then they decided to make it transferable. I think it's really a

matter of how do you what's the purpose of your token or how when do you want to launch the token considering that you are building the product? I don't think like releasing the product immediately after releasing the token immediately after the to the product is actually a good you should actually the more you will delay your token I feel like the better is the product and this mine >> no no absolutely and actually both what both what you said makes a lot of sense if you think about some of the deals in your portfolio right now of course tokconomics are very often set at the beginning right then there's maybe a couple of rounds of raises and so the framework is set fixed supply in most cases are there any terms any general general terms in how you structure these

deals in the safes, token warrants, whatever else that would you that you would change today to better align incentives versus what was set on day one. >> Well, as I mentioned before, I think uh the ability to have onchain milestones is extremely important. So I think we'll come to the the concept of okay if TVL stays uh above 100 million for 6 months then milestone number two is triggered and this is actually made by an oracle somewhere. So then founders get compensated for achieving milestones the same by the with the community. Um, of course, we've seen like normal patterns, vesting, cleave, linear vesting, linear

cleave, all the different things, but if they are not correctly executed, it doesn't work out. You might have a six months cliff and uh and still not a product fit and it will still fail because people will farm and then dump. Uh, so what you want is people to have online incentive with the product execution and fit. So they stay um in u well in the in they stay in the couch for a long time the long-term basis. Um so yeah I think for me what matters is really the milestone concept. I think we can really align people building because the problem in what happened in in Dows decentralized autonomous organizations is usually PE holders of the token are anti-correlated to whatever the builders

is building or the vision of the product because as a token holder you have short-term um the you're shortterm you want to if you're making 2x or 3x or whatever by holding the token you will sell it but the founder is building the company for the long-term basis normally So you need to incentivize builders of the the company that had there for the long term and and holders that there for the short term and you need to find a way to have a threshold between long-term basis and short-term activities on your projects. It's extremely difficult.

>> Absolutely. And actually this let's move on and explore path to investor liquidity. And I think one of the key things here is actually the importance of investor relations. you know, keeping the community prize of what's going on and and of course managing expectations appropriately. So, in today's token market, what does it take to win and sustain investor attention? I know Christopher, do you want to go? >> Um, what does it take to sustain investors attention? Um, yeah. Yeah, I mean that's what I've kind of like a little bit alluded to like in the beginning, right?

Where I said, you know, it's a it's a full-time job uh at least, you know, like for one person, you know, like to basically like be constantly like in touch with um investors, um with market makers, with exchanges, um with like liquid funds, um if you know like with all kinds of, you know, like or like whales, right? like all kinds of like capital deployers to just kind of like see okay you know like what are they looking for you know like what are we missing what can we do better um and you know so that is kind of like you know one thing that I'm kind of that I'm thinking is super important um we're seeing like far too many projects you know just think okay you know we just need to hit the narrative right we not just need to pivot to AI and that's it

or we just need to um I don't know hit like 100,000 users on our community No, it has like no no impact at all, right? And so you just kind of like need to really like think about this, you know, like you need to just kind of like engineer all of this like a lot more. Um, and yeah, that's that gets like more tricky, right? And that is, you know, like where now, you know, we're seeing investment banks, you know, like coming into the space, you know, like structuring DATs, etc., right? Um, and all of that. And, you know, this is we're seeing like more and more projects, right? you know, like really like going for them, you know, not just, you know, like the very big ones, but also, you know, like the longer tail um of assets um going for like these these

types of things as well. And I mean, like the number of like um hiring um or job openings I've seen over like the past couple of months for like a head of capital markets um across crypto companies is also like I've I've never seen something like that before. It's absolutely crazy. >> Actually, that's a really good question. So who whose job is it within a company, an early stage company to manage investor expectations? So you're seeing a lot of these job postings to sort of externalize it and hire another person to be specialized and focus on capital markets, public market investors once you have a token or otherwise. Should the founder be involved in that or should be something that you hire a specific IR person or team into? At what point in the journey should they be doing that?

Well, I think yeah, I think as a founder, if you're building a technological product, you shouldn't be the one responsible for dealing with the community and dealing with the TG, dealing with the token lanch. I think you you can oversee and manage, but you really need to have a a team that is dedicated to answering community being extremely transparent with what's happening. Um because if you believe that having a couple of VC on your cap table is is tough but wait when you have the TG and uh a thousand of 10,000 of holders and it's an army of VCs army of people asking you question what's going on in the product. So I feel like today acquiring liquidity I

mean TVL is not necessarily tough but maintaining and and having this liquidity for the long term is extremely tough and we've seen really good projects that managed to get two three billion TVL for a couple months because people were farming the future airdrop and within 24 hours then they go down to 100 100 million so 20x 30x less the opportunity cost is extremely high. So if you the ability to release a product, the ability to copycat projects and technological innovation is extremely easy. I mean extremely easy. It's way easier than before. So now is how you differentiate yourself compared to

people that they have the same ability as you as building product. So as we mentioned before distribution channel um new type of partnerships the ability to plug and play uh into D5 projects. So how you connect across like interability how do you connect between projects how project actually leverage your tool in order to sustain and and uh survive. >> Oh wow. >> Hi J. >> Welcome Richard. But I don't know if you want to say two minutes about yourself and we'll dive right back into uh investor education.

>> Um I like to do things very very efficiently. So why why allow 2 and 1/2 hours to get to the uh panel when you can allow 30 minutes? Um um no I had a a flight cancellation this morning. Um so apologies for that because all of your valuable time. Um uh I run Fabric Ventures. Uh we and you can tell maybe from my shortness of breath I literally have run here from the airport. Um and we have about a dozen people uh predominantly kind of exoperators. We've backed about 150 plus projects in the last 12 years. Uh we started more kind of generalist investors across seed in Europe when that was a very significant gap uh back sort of 2009 2014.

um but got in sort of pretty early um to backing some projects initially alongside Panta um in 2013. So uh Abra, Bitstamp, Circle um some of them have gone well, some of them have clearly gone exceptionally well. Um and we our kind of philosophy we come at the space uh as folks who saw there was a new computing stack arising uh that for us is this combination of truly distributed decentralized computing self- sovereignty for the individual and your assets and your data and then importantly AI which for us is the killer application for all of this uh and even payments will just become a

sideshow within that you know future AI driven driven uh realm of commerce and and so forth. And anyway, we're super excited to be here and and on the hunt for um you know, relentless, reckless, uh charismatic, technically competent uh founders. >> Welcome. Glad to have with us. >> Um so, we were just talking about the importance of, you know, path to investor liquidity. And I think one of the things Julian's talking about is, you know, preparing um the a you know, the audience, the token holders for it.

And so maybe the next topic to really touch on here is education. What do you guys think about education assets that are must-ave assets ahead of you know in while preparing and ahead of launching a token? So these are you know if I think 5 10 years ago people really cared about white papers that was really what was talked about on crypto Twitter and now it's much more around a few higher level topics less deep less in the meat and weed of things. But what what do you guys think about dashboards research getting narratives out there around one's new project? And maybe I'll give Richard a few minutes to breathe. I don't know, Christopher, if you want to go first.

>> Okay. Um, I mean, I'm I'm personally not 100% convinced that any of that is needed to be honest. Um, I've seen like lots of projects, you know, like that just have nothing of that, you know, and they're just kind of like posting a screenshot of like an Excel sheet and saying, "Yeah, this is our revenue." And, you know, they're getting away with it. And um, you know, like the pumping goes through the roof. The token goes through the roof. Um so I mean obviously right I would recommend you know like everybody to do these kind of things right you know like just always you know like strive for like doing things the right way. Um it's just I'm skeptical you know like that they really have you know like meaningful impact um on like you know on what you want to achieve with your like token. Um

and so from that perspective, yeah, um you know, work on those things, but you know, like don't expect miracles just from, you know, having dashboards or like a great documentation or anything like that. >> Well, it's always the same if you're not in a top chair, uh you need to do more in order to show that you're willing to you're there to actually you're hustler, you know, you're there to make it. But if you're in the top tier of projects, then you don't need to actually demonstrate and show that you have good revenue and people will build it for you. They will get to do analytics. They will build a dashboard. So all those things they come together natively if you're really kind of like succeeding.

But if you are someone that go after the tier one project then of course I believe you should actually create those things yourself. Uh do analytics dashboard uh connect to defy llama. I mean the game today is the attentions right distribution channel attentions and what type of team do you have so if you're not on the top 10 or top 20 of D5 lama uh people won't even talk to you so this is something you need to work on and how you work on is you by building analytics building things that people can actually utilize API SDK plug and play those different type of things that's how you make it >> yeah I'm just going to echo that Um, I guess as kind of investors who should

know about the fundamentals, I think focusing on actually having uh token economics and a utility to it that makes sense and being able to articulate that, wrapping a narrative about it makes sense. And of course, doing all of this blocking and tackling and having a dashboard so people can see what's going on um is key. Uh it's all of those that that substrate plus do it with flare. Um because at the end of the day and I mean you know uh Julianne used the word attention. You want attention. You've got to have a narrative that stands out from the crowd. Um and then it becomes ultimately very reflexive. And so that reflexivity means either you you swim or you sink. Um you know there's a big

dividing line between the big winners and the kind of also brands. And even if you're Revolute, who obviously have done a lot of things right, you still take time to put your logo on the top of a building, which ultimately is not really a fundamental thing. It's a kind of just a way of getting more reflexivity in your in your favor. Uh so you've got to, you know, you got to do the fundamentals and you got to do it with flare and then hopefully you win. >> So thank you. So we we thought we talked big picture about you know this cycle versus previous cycles what investing and what founders need to see in the in this cycle. We talked a little bit about you know deal mechanics what you know whether tokens still relevant anymore uh you know what it takes to really do that and then want to

switch gears a little bit and talk about how you guys help your portfolio companies. So maybe we just start with a very simple, you know, where are you most hands-on technically, distribution wise, otherwise what what's your preference in terms of where you add value to your portfolio companies for the founders perspective founders out there? I'm sure they'd love to hear. >> Yeah. So I think on our side we a bit different from the VC traditional VC I would say because we come I mean I'm a founder investor. So I was a uh and still building companies. So uh I end up investing because I was talking to founders as I was building my companies. So what really different in state capital is we

don't invest in projects if we don't or cannot leverage the project. It's really I think it's of course you can invest for the upside and and making a return of investment but we will always prefer investing in product that we can utilize leverage or connect to our portfolio company. So for example uh Moro we are the biggest governance voter there. Zama fullyovic encryption we utilize we plug it into rectuse uh into vault structure for anonymity confidentiality. So every project that we actually try to work with I mean invest and we talk about 200 projects. So we do approximately five or six different uh calls with all the

portfolio company on a weekly basis and uh it's like an hour an hour and a half and we just basically ask them okay how can we help you? How can we plug and play? How can we do an MVP? How can we build something that will uh help you that will help us? This basically how we have the portfolio company and hopefully they can give you some feedback. I think we've been pretty good at doing this. Of course, we probably also failed a couple times, but we really care about helping people, helping the portfolio company because they actually helping us back. That's what important. >> Um um yeah, I mean similar similar answer like in in that regard, right? So, I mean like we're focusing um on on a lot of like verticals, right? with regards

to the token economics work uh we're helping you know like with investor introductions you know like follow follow on funding um we are helping you know like with product PMF related work um and you know like lots of kind of you know like these types of you know like platform activities but what I'm convinced actually like makes the biggest difference for founders is you know like providing a sounding board to founders there's like far too many um you know like founders you know like who just who don't have really like a strong you know network of people, you know, like who they can share like their their worries, their doubts or, you know, like their visions or like strategies with and, you know, like that also like understand these types of things or like really care about them. And so I think you as a VC you know like you're like in

this unique position you know like where you really like understand deeply like what the founder is like you know doing and you know providing kind of like this sounding board for the founder is something you know like that um I've just kind of like noticed you know like was so far like really really appreciated and it sounds simple sounds super simple but you would be absolutely surprised how many of the absolute top tier VCs in the space are not doing that you know like they invest a big check and then they're handing you off to like the platform home department and you have like very little interactions with like the actual investment team after that and so um yeah it's just like you know just being there is already kind of like a very big part of the job I think so I'm not going to I'm going to try not

to bore you by repeating all of the the very good things that have just been said by Julian and and Christopher that uh is all absolutely right and to different degrees we attempt to do similar things I think both um stake and 1KX are excellent firms firms who in their particular areas, you know, there's a particular emphasis they do really in a world-class way. Uh to Chris's point, much better than a lot of the bigger firms. Um and uh arguably much better than even some of the Silicon Valley firms who uh can comfortably sort of lean on the existing network that exists within the valley.

It's very easy, for example, for people to network peer-to-peer over there because you bump into somebody in the Starbucks queue who's building the, you know, the drivers you need for your for your next product or whatever or something random like that happens. Um uh so I'll just pick one other area which I think is key is is key um that I found myself doing maybe because I'm now in my kind of fourth decade of of kind of building or helping build build businesses um which is thinking about organizational design and thinking about the people that slot into the that organization and thinking about uh the the the topic that shouldn't be boring but is actually essential which is kind of governance but not I mean governance can be in the community sense as well.

It's tied into onchain governance. Uh but also, you know, off-chain traditional, you know, the board governance, but hopefully not in the sense of like let's check that you're not being criminal and siphoning off money or you're not haven't got conflicts or uh that you're making a fair process, but rather how do you have a governance process that is actually driving forward the strategy in a in a in a good way and and in a way that is um inspiring to the rest of the organization that is data driven. uh because you know uh you know leadership kind of starts at the top or the bottom whichever you want to think of the organization and if you if you haven't got a board and an executive team that is leading by example um you know you can spend decades sort of limping along

with an organization that just doesn't perform so well. Um so I think that's another area that you can spend a lot of time on and then helping with those key hires. How you really have a fantastic recruitment process? How do you do scoring? How do you assess people psychologically? How do you look at cultural fit? All of this stuff. Um, you know, and and the earlier you can start doing that, you know, in each process and in the company, uh, you know, obviously there's a that's a massive leverage on the overall outcome you're going to have. Actually, you touched on a really interesting point, Richard, which is governance in web two businesses that I've invested in. Of course, boards are much more regular and expected. Web 3, a newer, younger concept, makes a lot of sense. A lot of

what web 3 transitioned into and transitions into was potentially to be dows you know where where foundations treasury sort of take over and community can manage on a go forward basis. I think the dowo governance model has largely flopped in in many cases. I think a might be one of the few positive stories there as to how that continues to work. Are you guys active in DAO governance by any mean by any chance? Is that something you encourage? >> I think everybody is to greater or lesser degree but I think it's been a great challenge. I agree. But you do you guys want to comment? >> I mean I think Julian probably like has the most to say here. Um you know we we've looked a little bit um into this as well. Um however like the problem right with like DAO governance is like

every single person uh you know like has like an equal voice and you know that just makes it like you know very very easy for you know like people um you know who just kind of like scream the loudest um you know to just kind of like get the most attention and those people are not necessarily like the ones you know like who actually like having like the best things to say or like the best thing for the product uh project in mind and it's it's you know and then you know like a lot like the other people, you know, like who actually like, you know, have very good things to kind of like bring forward, you know, they're like easily demotivated by, you know, like all of these people um screaming and like yelling and like, you know, demanding like that their approach kind of like

goes forward and so I'm a little bit, you know, like disillusioned, but um I'm still hopeful, but I think Julian has a lot more experience there. Well, we we participate in a governance in Mofo governance and uh I think about 15 different uh big D5 project governance and I call them uh most of them I mean they have failed um but decentralized autonomous chaos rather than uh decentralized autonomous organizations and uh yeah as Chris mentioned people uh have different incentive than the core team of the projects and it's extremely difficult to align in incentive interest and and particularly

with X and people going public whatever type of decision you make even if they are extremely important for the protocol you will just get backfired like you get uh criticized you get uh so I think governance on chain is extremely difficult only two big protocol have have succeeded is bitcoin and ethereum uh otherwise as projects the more centralized uh control you have of your project the better execution you have. So it's it's basically against a decentralized organization a decentralized governance.

>> Exactly. And I get just to comment on that um I've definitely been in projects both actually trying to effectively on the board for or um you know backing them where as you say uh the most effective path to success would be to continue to be centralized command and control military style. Get the hell on with it. uh everybody thinks either for some philosophical reason they need to be decentralized or they're acting out a decentralization theater for the SEC and CFTC as it was um you know for years um uh thinking that that might protect them. Turned out of course it didn't necessarily make as much difference as they thought it might at the end of the day. Um and but that I think has created

significantly suboptimal outcomes for those different uh projects and for the industry as a whole. So far I although the heat has come out of the digital asset treasury um should we say fashion and list listing in the in the US um I think that having I think that having a publicly listed node that is very commercial and outlook and that can operate on a kind of that kind of commander control centralized sort of basis is a good thing for these ecosystems even if some aspects of you know the the core open source is protected through a foundation and that means it can't be entirely co-opted. It get I think it will deliver a better balance. Um there's a separate question you know people were piling into DAT

because they thought it was a good short-term trade for like 30 to 60 days. That's a different thing. Uh but I think generally having listed entities is a useful uh part of these web 3 ecosystems >> makes a lot of sense. I mean if you look at web two look at IPOs look at public shares. I mean you can have one share of this company and that one share of another but you're actually giving a proxy to very few people anyway to sort of govern professionally uh to some extent possible. So in in the minute that remains let's just do a quick lighting round. Uh actually I didn't share this at the beginning but I'm actually now a founder of a very small crypto startup and just closed my seed.

So I'm very keen to understand this from you guys. >> You didn't you didn't call me. >> Very stealth. Nobody knows what we're doing. Um, what's one misconception you'd advise founders to drop in 2026? >> Can you say again? >> What's one misconception that you would advise founders to drop in 2026? >> Um, I mean, I've seen a I'm seeing a lot less of those, but I would I hope I'm not going to see like, okay, we're building unis swap on this new chain. Um, and so, you know, like basically like building X on Y. I don't know like if this has ever worked. you know, like really sustainably well. Um, those kind of things I would prefer not to see

anymore. >> All right, Julian. >> Well, I think um, stop believing that having a good-looking product will make you successful and also having a a TGE will also make you successful. I mean, I would I usually say tokens fade, execution compound. So, if you have a strong execution, a strong understanding of the market, you will succeed. but not by releasing a token and releasing a good-looking product because AI is is there now.

>> Uh I'm going to try and marry up uh two different points and it's connected a little bit of what Julia's saying. You don't want a good-looking product. Um you don't want to just go and list a token. You want to actually solve obviously a problem. And it's it is so trit and I feel like I've sat on stage saying it a million times in different contexts. But whether it's a twoperson organization or literally a 222 person organization, I have seen such bad product management as in you got to go out and actually speak to the market, the customers and listen to them or don't listen to them where that is the right thing to do. It's really really hard. You got to do that relentlessly and try and build a product that people

the world actually needs and that takes a huge amount of organizational effort. drop your kind of um love for some particular technology uh even even drop your love for web 3 or blockchain now absolutely it shouldn't be about that it should be about you know solving a problem and then you go the direction you need to go and for but I I'll connect it with something that often pops up in that context which is privacy privacy people might think privacy is in a sense a kind of a benefit that users want it's not really it's really kind of a technical feature and it's extremely hard to sort sell it other than to people who are kind of have a zealous desire for it. Uh but I do think it's an important part of the kit bag and I I

hope uh that we get to the point where we can start um marketing privacy as a feature that solves real problems for people rather than in for privacy in itself. >> Wonderful. Great advice. Thank you guys very much. It's been a lot of fun. Thank you all for listening. Give it up to our great panelists. >> Thank you. Thank you.