Bitcoin Hitting $10M Is Less Crazy Than You Think - Avichal Garg, ElectricalCapital CoFounder | E158

Avichal Garg, the co-founder and general partner at Electric Capital, former Google and Facebook leader, and an early investor in 25 unicorns including Figma, Solana, Kraken, and Notion.

He's one of the sponsors, yeah.

I was the first investor back in '16 or '17. Hunter, who's the CEO founder, used to report to me at Facebook. He's a really good friend of mine. He and Hong would come over to my house and we brainstorm ideas. And so they went through 12 or 18 months of iteration before they even arrived at the Bitwise idea. Eight years later and it's just a monster business. It's definitely going to be a multi-billion dollar company.

Um, it's a good question.

Well, you know, there's this whole... it's a weird tangent, but there's this whole... you can put this in the excerpts if you want, but I'm like pretty convinced it's changed plastic surgery. Like I think what people are doing is getting plastic surgery so they look good in photos even if they don't look good in real life. Does that make sense? Like the way the distortions would work with like an iPhone, you would want your face to look really good in like Instagram photos even if you don't look as good in real life. And so I think that's like the direction that a lot of plastic surgery has gone.

Correct.

Correct. And then that creates a flow in a particular direction of proportions and what you emphasize and what you don't emphasize because the camera distortion with like an iPhone will make your face look a little bit different. And so I think a lot of plastic surgery optimizes for looking good on the internet because from like a CPM perspective, if you think of your face as a business, most of your impressions are happening on the internet not in real life.

Yeah. Yeah. And so I think then it creates style drift basically. So you get all these celebrities that look a certain way because actually that set of proportions is what's going to look best on camera. That's my conspiracy theory.

Well, it's just market forces. If you believe in market forces, that's what would happen, right? So, for example, Kylie Jenner or Kim Kardashian will say, 'Listen, I kind of...' I mean, the truth is I don't know what they look like in real life. I know what they look like online. Absolutely.

Yeah. Yeah. Exactly.

Yeah, I've heard of them. Not deeply familiar. I mean when you understand stablecoins, I live my life on stablecoins. I understood the... I moved to London to build my first company in 2015. Yeah. And it was the Monzo, Revolut beginnings, right? 2015, 2016. And I mean the first time you just press three buttons and it works. It just works, right? You're like, 'Holy shit.' So I never used the bank ever again in my life. Yeah, I had maybe two bank accounts but like with 200 bucks and the rest was Monzo, Revolut.

Until Revolut banned me in 2019 because I was sending too much money to Coinbase to buy Bitcoin. Too much money was £7,000 by the way. Right. Was not too much. But I was like I might be doing something right if Revolut bans me because I'm buying Bitcoin. Right. And then so basically you understand, oh no banks. Wow. And then the next level is stablecoin banks, right? And you're like, 'Holy shit, like I can just get paid in stablecoins. I never offramp and I just spend.' It's so good. It's very addictive actually.

It's a problem.

For sure. For sure.

Good, man. It's good to see you. Thanks for having me.

Oh yeah.

Yeah. I'm just... I'm very photosensitive. I get migraines. And so like if I'm in the sun too much or like with these podcast bright lights, if I sit under this for an hour, I'll just have a crazy migraine and so I have to... I mostly I live in the shade.

I don't know. It's just from a young age that was a thing. So, you'll usually see me like if I'm on stage because the lights are usually really bright and so there's something about the lights going into my eyes that it's just like after an hour I'll just have like a killer migraine and it just kills half a day.

Oh, this is just Electric branded so it's... most my clothes are free actually if you like... free like I get them right. This is like Electric gear. This a friend of mine sent me this.

Like 12. A lot.

Just two. Blue and white. Yeah. Actually, no. I have some black ones, too.

That's what we do here.

That's what we do.

Uh, he's one of the sponsors.

Yeah, I like those guys.

Um, well, you know, I was the first investor back in '16 or '17. Hunter, who's the CEO, founder, used to report to me at Facebook. He's a really good friend of mine.

Oh, did you?

Yeah. Well, I had the unfair advantage of, you know, at Facebook at the time, we used to do company level calibration. So, you like stack rank everybody. You know, like who's good, who's not, who's doing a good job. And so, I used to do it for the product management organization with some of the other senior product people. And, so I knew Hunter's performance scores. And so, I had the good fortune of knowing how good he was before everybody else figured it out. So, when he was leaving, he was literally top of his class. And so when he was leaving, I just said, 'Here's money. Like, do whatever you want.' And then we would hang out. He and Hong would come over to my house and we would brainstorm ideas. And so they went through, you know, maybe a year, something like a year or 12 or 18 months of iteration before they even arrived at the Bitwise idea. They were playing with like some SaaS stuff, some esports kind of related ideas, like some AI related ideas before they finally evolved to Bitwise like a year later. I have a lot of fond memories of just like jamming, they're like hanging out on my couch and we're just like jamming on ideas trying to figure out what to do. And then you know here we are eight years later and it's just a monster business. Like it's a...

More like, you know, I don't... I probably shouldn't give away any of the stats but it's a pretty monster business. Like it's definitely going to be a multi-billion dollar company.

Well, that's not how really things happen in general in entrepreneurship. Yeah, it's half true. Yeah. It's like I think you have to be a particular kind of orientation and agency to say I'm just going to go do the thing. And I think that part is absolutely true. But you know, as much as I love and respect Hunter and Hong and so many other founders, I think there is a big realization that people have after they've seen a bunch of successful founders, like they're not that different from a lot of other people, you know.

Yeah.

Yeah. Yeah. It's... I mean and there's like two ways to interpret that. One is that you could be... it's not trying to pull down founders or anything like that. It's actually suggesting that everybody is capable of doing great things. And actually a lot of the times the real bottleneck for people to go do these amazing things is internalizing that they can do them. It's like the belief system that you're actually capable of doing things is almost always actually the bottleneck. It's not... there's plenty of talented people in the world. There's plenty of smart people in the world. There's plenty of hardworking people in the world. But like this belief system is actually really really important and it's self-reinforcing and it's mimetic. And I think it's one of the really really difficult things to replace about Silicon Valley because the belief system and the mimetic belief system of like you just look around and you're like, 'Oh, I was hanging 12 months ago at this hackathon thing with this person and now they have a billion dollar company, right?' And so like the timeline from being a nobody to being somebody, seeing those people when they were, you know, 22 or 25 or 30 or however old and just getting started and realizing that they're actually no different than you. This little sort of switch goes off in your brain and you say, 'Wait a second, I can do great things, too.' And then all of a sudden the belief system gets unlocked. And that self-referential mimetic belief system I think is one of the really hard things to replace about Silicon Valley. It's like every time somebody says, 'Oh, we'll create a culture, a startup hub somewhere else.' That belief system is a really really important unlock which is really hard to replicate.

Um, it's a good question. In some sense, I think this gets at this related question of like can you make entrepreneurs or can you create more entrepreneurs or is it an inborn thing? And I think it's some combination of both. I think some people are predisposed through genetics or through early upbringing to be wired in certain ways and so I don't think you could create a system per se that would create another Elon, you know, that's just sort of like random lottery. But I suspect that there are at least 50 to 100 more Elons out there. And so then the question to ask is okay well we may not be able to create a system that out of seven or eight billion people produces a million Elons. But if there are 50 to 100 out there, how do we find them and what are the bottlenecks? So, identifying them or cultivating them. And I suspect a lot of that actually between access to good education, access to basic nutrition, access to capital, we're actually working through most of them. Like, if you think about it, right, like if Brian Johnson has his way, we'll all live forever. Crypto lets you get capital to anybody in the world. The internet got information to everybody in the world and got everybody online and now you can learn to code. AI is going to give everybody a doctor and a teacher and you can write code. So we're like if you think about all of the bottlenecks to potentially identifying the next 100 Elons, most of them I think kind of tip pretty fast like in the next 10 to 20 years like it's pretty likely that we address most of them. And so then the question is well what are the remaining bottlenecks? And it very well might be that just like those 50 people believing that they can do the thing and being inspired and having the agency to do it and finding themselves surrounded with a bunch of other people who say, 'Yeah, you can do it.' That might actually be the bottleneck because that's the thing that science can't solve, right? We can't... how do you change culture? Like culture is a bunch of humans and our inner relations and the way we communicate and all these other things, right? So that part actually might be the slow part.

A little of both. Yeah, I think there is something to be said for in the modern world when you do have access to the internet and you can just sort of put your thoughts out there that you can be some random person in some part of the world and kind of bubble up. At the same time, I think it would be irrational just like looking at the reality of life that, you know, let's just take the numbers, right? By the numbers, there's a billion Chinese people, there's a billion Indian people, there's a billion people on the African continent. Let's say you had somebody that was truly as gifted as Elon is. You know, what's the probability? It's like 50% probability that that person is born into a household that has less than $100 a month or what... you know, you could do the math and say like what is the household income for that person? And so could they in theory? Sure. Could they get lucky and go to like a great university and get a scholarship and come out? Yeah, absolutely. Would I expect all 100 of them to be able to pull it off just by the rules of random chance? Probably not. And so I think it's a fair question to ask, you know, what are the sort of either barriers to identifying those people or how do we identify those people and sort of get them out of those situations? And I think this is actually one of the things that crypto is really good at, right? I mean, if you look at... let's take Malaysia or Southeast Asia as a context here. Like the number of good DeFi teams that have come out of those ecosystems in like Singapore and Malaysia is pretty remarkable. And that's not a market that Silicon Valley was paying attention to. And you get CoinGecko and Jupiter, you know, you have Camino and there's like a bunch of great teams actually in that ecosystem. Etherscan, right? These are all sort of like legitimate, you know, seven, eight, nine figure revenue kinds of businesses that would have been otherwise ignored, right? So, there's clearly talent sitting there and all of a sudden the crypto capital could find them. They could use that to springboard to international sorts of scale. And so, yeah, I suspect that there's more talent out there that is unidentified and untapped. And it's not just the case that they'll kind of bubble up on their own. We could argue about the numbers, you know, is it like 10 of them will find their way out or 90 will find their way out, but I think it's probably, you know, a very very large percentage of those people are sort of unidentified and untapped right now, which actually is very, if you think about it, is quite optimistic about the future of humanity, right? Like one way to interpret that statement would be to say there is a 100x potential left in humanity, right? Like we've only managed to tap 1% of our true outliers, which is like a pretty crazy thing to think about if you think about the amount of progress we've been able to make in the last 50 years at a global scale. That if you had a 100x the talent that you could tap or 50x the talent or even 10x the talent, that's pretty remarkable actually that we have that much talent left to untap.

Yeah, it's interesting. It's been... so I started my career as an entrepreneur and we built products and we got to millions of users and we built some really cool tech and so the way I got to Facebook was they acquired our company and...

Correct. And it was phenomenal and learned a lot, managed some big teams and got to meet so many great people there. Including Hunter. And so when I was there, you know, about almost it was like nine years ago now, nine or 10 years ago, I started angel investing because I finally had a little bit of money from the exit and so I could start cutting some small checks. So I started giving people that I thought were smart money and a bunch of those companies went off to do really well. So Bitwise obviously and other companies in crypto. You know, we were kind of poking around with Ethereum. But a lot of other non-crypto things too. So things like Notion or Deel, which actually has some interesting crypto roots, or Cruise or Boom which is building supersonic airplanes and so...

Yeah. I think all of those that I just mentioned maybe like 10 to 15 million cap.

It's like 10 billion. Yeah. Deel's like 17 billion. You know, Boom is going to build supersonic airplanes. Cruise at one point was like 30 or 40 billion and then GM ended up shutting it down. They got acquired by GM for about a billion. So I did the math at one point and it was...

A lot of those are like, you know, 500x to 1,000x kinds of, you know, 100 to 1,000x.

Yeah. Definitely don't think I'm a genius, but definitely some amount of luck. I mean, like 2012 to 2020 was just like a phenomenal time to be investing in Silicon Valley just like, you know, for the last three or four years if you're investing in AI stuff, you know, being in the right market or for the last, you know, if you're between 2018 and 2022, if you were doing a lot of crypto stuff, like being in the right market obviously has a huge aspect of this. Of course, I think there's some skill in picking the right market. When it comes to early stage seed stuff, I've come to believe I think there are people that are just better at it. And like when I look at my hit rate, I think of the first... it's been a while since I did the math because now you know at Electric it's a different game. But in the angel stuff, I think of like the first 30 things I did something like 10 of them ended up being worth more than $10 billion. Like is a pretty good hit rate. And so I actually, you know, to your question about like is this... the mission is to find these people. What I kind of realized I didn't... I actually didn't realize that was good. I just was like making these investments and these companies were all like doing well. I was like oh I guess maybe this is just how startups work. You know I kind of had done the startup but I was like okay these are off to a good start. But even by 2018, 2019 some of them were really working but it wasn't clear that all of these things would start working. And so, you know, I started realizing at some point around 2018, I was like, 'Wow, maybe I'm actually like way better at finding early talent than I am actually starting companies, you know, like which is a little bit as an entrepreneur like a little bit heartbreaking because you're like, 'Oh man, I want to be as good as Elon at starting companies, but maybe the thing I'm actually really good at is finding these people who are going to go start companies and sort of assessing whether they're the right person to pursue this opportunity and then giving those people money and helping them get off the ground.'

Because the hit rate was just so good.

Yeah. Even so, I think you tend not to see unless you're in some sort of macro bubble, you might argue that in AI we're in such a bubble right now, but setting that aside, in that era, it didn't look like we were in a bubble. Like these businesses were really working. Like if you went and talked to Notion's customers, if you looked at Deel's revenue numbers, if you looked at Cruise, you could like get in the car and the car... you like take a self-driving car, like it was pretty real. And so it didn't feel bubbly, at least on the ground. Whereas like AI right now kind of feels a little bubbly if you just look at like revenue multiples and so on. Yeah, I could be wrong about that obviously, but they didn't feel bubbly and so they look like they were really working like they had product market fit. I mean, I think as an entrepreneur, if you've ever tried to build a company, there's like an intangible I think you might have product market fit kind of feel and there's gradations to that and it evolves. You don't have product market fit permanently, but there's a sense that you get when you're looking at a product and a company and is the market just like pulling it out of them. And a lot of those things you could go look at and you're like, 'Oh, the market is... this is like working.' So even if it was worth a hundred or 500 or a billion, you're like, 'I think this is like...' Like I look at Bitwise right now, I'm like, 'I think this is just working.' And so what the valuation is what it is technically on paper. But you can kind of look at it and say, 'I think this is working.' So anyway, the realization I had was like, oh man, maybe I'm a way better investor than I am a founder. So I thought about it for a long time and I think the realization I had was the thing that I'm uniquely well attuned for is this: the person that should be doing this thing. And over time what probably one of the bigger things I've changed my mind on about what it even means to be an investor. I'm not talking trader or short-term. I'm talking like you help people build real value in the world and create companies that are durable. The probably one of the biggest things I've changed my mind on is I think it's as much an intrinsic exercise as it is an extrinsic exercise. So you were talking like were you just in the right place at the right time and I think there is a lot of that you want to be in the right market. But you look at a lot of these companies and it just kind of had to be that founder like the company is an extension of the person. It's sort of their values, their quirks, their personality, their flaws, all of those things sort of rolled up into an organization. And so if you sort of realize that you start to realize that these things are essentially a form of self-expression and it's... my mental model for what an entrepreneur is has evolved from these are business people to these are artists. And my job actually is... my job is very different than like a public markets person. What I'm doing is I'm actually more like a music producer, right? What I'm doing I think of my job closer to like a Rick Rubin than like a Paul Tudor Jones, right? Because what I'm trying to do is I'm trying to find these people and they're trying to say something into the world. They're trying to express some value system into the world. They have some belief system and it just happens that it's coming through code, right? But that's their art form. And what you're really trying to get the founder to do when you're working with them is they're trying to say something and you're trying to help get them to say it authentically and honestly and really cut it. You know, what is it that you're really trying to do here? And sometimes when you say something truly authentically, the world is sort of hungry for that and they're listening for that. And if you say it authentically, they can kind of tell. And because, you know, I think as humans, we're sort of wired for authenticity. You know, there's this idea as social people like if you and I are having a conversation, somewhere deep in your brain, you can tell if I'm lying to you. And some humans are good at that. But I think all humans can kind of tell if you're telling the truth. And markets are just collections of humans. And so, humans are wired to sort of sus out authenticity. And there's a dearth of that. And so when a founder can express themselves through this medium authentically, the market kind of picks up on that. And so a lot of my job then ends up being not even... you definitely have to do the are you in the right market, is your go to market strategy right, can you build a product, there's all that sort of standard stuff that you think about and then there's this extra thing that I didn't realize you had to do which was are you actually the person to do this? Like there is going to be somebody that does this thing, are you that person? Or put another way like I think if you're going to go down this path of being an entrepreneur there's something that only you can... there's something only you can put into the world. Is this that? And if it's not this, what's blocking you from saying the thing you're really trying to say? And if you can work through that, it's just you're so much more likely to find product market fit.

You have to spend time with people. It's a very personal thing. You know, I think you could transform that question into let's say you're a music producer. How do you know somebody's going to be a great musician, right? That they're going to be a great performer, that they have... you can hear them sing and they might have great talent, but there are all these other things that go into it, right? And you know, can they pick the right songwriter? Can they write the song? Do they understand where the meta is in terms of what the market really is hungry for right now? Do they have an audience, a core audience that they're going to speak to and appeal to and that audience is going to pick this thing because it resonates with them on some emotional level not just a practical level. And so all those things you're trying to sus out, right? Can they get on stage and perform, right? Will they captivate the audience? And like a lot of sort of artist types would sort of roll this into like an X factor, you know, it's like you meet somebody and you're like... there's this great Dave Chappelle story about when he met Kanye West and Kanye was like very early. And people should just go look it up because he's a way better storyteller than I am. But the way he tells the story about meeting Kanye, it's just like he knew he was like this kid's going somewhere, right? You know, like Kanye was Kanye when he was young, right? And so there's like a little bit of an X factor. You meet somebody and you're just like oh this person has it. Like there's this X factor and you can start to sus out what some of those traits are. But you build an intuition for that. If you meet enough such people, you're like, 'Oh, this person has that X factor. I can just kind of feel it.'

Yeah, I think it's this. I think they're just authentic. They have a belief system, they believe something about the world and they have the agency and the will to sort of make that happen. Now that doesn't mean that just because you have that you're going to be successful. Like a lot of the times you could believe something and the market's not ready for it or the market doesn't care. You know, some... like the meta right now I think in crypto for example is around privacy and so we've invested in a lot of privacy stuff over the years because we believe in that. It's one of the things that brought us into the space originally. And it looks like it's maybe finally starting to hit, right? Like Zcash has kind of taken off, not investment advice, probably shouldn't buy it, but you know, Signal looks like it's working. And if you look at the demographics, the people that are most interested in privacy are actually younger people and so it's almost like you can see a generational thing happening which is a lot of people sort of figured out wait a second I don't have privacy on the internet, right? Because this is the age... the Gen Zers that are growing up now sort of grew up in the shadow of wait Facebook has all my data, Google has all my data, Bitcoin's transparent on the ledger. Like they sort of grew up understanding that and they grew up understanding the consequences of that. So you put stuff on social media and then do you get canceled? You know, you put stuff on social media does the college rescind your application? You put stuff on social media does like the job offer get pulled? And so there's like a very acute understanding of the consequences of transparency systems such that you're actually seeing younger people actually be more drawn to privacy tech which is kind of interesting. That's like not what you would have expected 10 years ago I think or 15 years ago. So you know there are a lot of people who believed in privacy for a long time and have been working in those things for 10, 20, 30 years. They were just never good businesses. Now the market might be ready for it. So it's not sufficient to say look I have a worldview. I'm going to express it into the world. The market also has to be ready for it. You need both. But that sort of I have something to say. I have something that I believe I need to say this. It's almost a compulsive thing. It's like I can't not say it. I have to do this. And that's kind of what you're looking for. And a lot of these people are just compulsive about it. Like I mean if you look at somebody like Ivan at Notion, he was working on creator tools at Apple. He worked at this company called Inkling which is an education tech company. A really smart guy Matt MacInnes started that company. He's COO at Rippling now. Like phenomenally smart guy and they're building textbooks on iPads. And so if you look at Ivan's history, he's just like compulsive. It's just like he's so obsessed with creator tools. He's like I need... tools are how humans make progress. That's how we share information. He's just like obsessed with this idea. So he spent his entire career trying to build tools for other people to create content and be able to express themselves. And so once you sort of understand him a little bit, even like you can figure that out in 30 or 45 minutes in a conversation, like, oh, this guy is just... this is what he was born to do. Like, maybe it'll work, maybe it won't work, but he has a point of view. He has a very clear way he wants to express himself, and he's just compulsive about it. It's like there's nothing that's going to stop this guy from building, and he's just going to do it again and again and again until he cracks it. And that sort of is like the raw material you're looking for.

A lot.

Yeah. Or but whatever this guy's gonna figure it out or this girl is going to figure out because they just have the thing. Yeah. It depends on what stage you're talking about. If you're talking pre-seed where it's one or two people and an idea and they're just trying to figure it out. It's 80% that. Now, you still have to assess like, hey, look, do they have an intuition for what market they're going after, who the customers are, and who the users are, and how you go about pricing it. And there's a bunch of other skills that you need. And you can assess those, but it's overwhelmingly that. Once you're starting to get into like a Series A and you're going to go raise $10 million, it's a little different. You know, you need to have some of the other stuff dialed in, you still have to have the other one. But the earlier you're talking, the more it is this sort of you're betting on somebody to figure it all out. And so, you know, the kind of questions you ask are totally different. When we're doing pre-seed stuff, you know, I spend a lot of time with people asking about where were you born, what did your parents do, like where'd you go to school, like why did you study that? Like it doesn't feel like a... we'll talk about the product, we'll talk about the business, we'll talk about all this stuff, but like I think it's very hard to make a decision without deeply understanding somebody's perspective and where they come from and what makes them unique because that uniqueness is what needs to come out in the product and the business. And so you have to really understand the person behind the thing.

Yeah. Yeah. No, it's... I really agree actually, similar.

Yeah.

Oh man.

Yeah. Well, the answer to the 'I'm just some guy who happens to be good at math and good at reading people' and here we are. I'm very, very fortunate. You know, I think the backstory you're referring to is I was born in India, but I grew up mostly in Kentucky and southern Ohio at a time where there weren't a lot of Indian people around in some of these communities. And so a lot of my early childhood experiences were basically being the outsider. I would go into these situations and in Kentucky in the '90s, it was like you're either black, you're either white or you're not white, right? So there's like white people and black people. Not a lot of brown people in most of these places. And so you kind of don't fit in with the white kids. You kind of don't fit in with the black kids. And so you're kind of out on your own and so you have to build certain skills beyond the academic stuff just sort of as a survival mechanism, right? Because unfortunately it's obviously much better now, but 30 years ago in the '90s there's still a lot of like physical racism. Like you could get physically beaten up for looking a certain way or doing a certain thing. And so you have to learn to read the room pretty quick. You have to learn to be entertaining. You have to learn to be funny. You have to learn to diffuse situations. You have to figure out is somebody lying to you? Are they a threat? Some of my earliest memories and experiences are also very quickly as a six or seven-year-old figuring out that actually the teacher may not be on my side, which is like a weird realization for a six or seven-year-old to have because you're sort of taught like, hey, if you need something, you talk to the teacher, you talk to the principal or whatever. But just because somebody has structural authority doesn't mean that they're actually a morally good person.

No, I mean some of it was pretty explicit. Some of it was very explicit. And that's just reality. You don't wallow in it. I kind of think if you go through situations like that where you're an outsider and you're going to get bullied or you're going to get physically assaulted for things you can't change. It's just like I can't change my skin color. So, it just sort of is what it is. You kind of have two paths. You can either sort of wallow in it and let it really grate on you or you just deal with it. You're like, 'All right, well, this is my life. I got to do something about it. So, what do I do about it?' And so you learn to navigate it. And so, unfortunately, as a kid, I think about it now as an adult. I'm like, man, that's tough. I would not want other little kids to have to deal with that. But at the same time, I had to spend a lot of time alone, just like nobody would want to play with me. And so, that actually turned out to be great. I was like sit with books and just read and read and read. And I got really deep on a bunch of stuff and I got smart on a bunch of things. It's funny, I grew up in that sort of environment that one safe environment actually was the church, right? And so you could go to a Bible study and they didn't care what your skin color was and so you could be in an environment of people that wanted to understand who you were and were you a good person. And so I had very early experiences with churches, both white churches and black churches which are culturally very different, which were I think very formative. And going to Bible studies and stuff when I was a young kid, I'm not a religious person per se but I look back then and I'm like, oh, I have an understanding of where the sort of middle America comes from because just through a set of funny coincidences I had to go to Bible study, right? So you look back on some of these things and you're like, 'Oh, I couldn't have controlled for any of those things, but they ended up giving me a bunch of skills that downstream turned out to be superpowers.' It's just sort of like that stress is formative in other ways. Which in retrospect I'm grateful for because I think so many of those things ultimately gave me the skills that make me successful.

Sure.

But I think this actually ties, right? Because so, you know, Curtis, my co-founder, Alex and I, we had this great career. We could have, you know, I worked on large scale machine learning systems. This is what I studied in school, worked on Google search, newsfeed ranking, like we worked on these large scale systems. So, we're sitting right next to the AI stuff. And so Curtis and I had these long conversations in 2016. And we were thinking about crypto and we were thinking about AI. And the thing that we thought about a lot and talked about a lot was to us it always felt like the AI stuff was going to benefit the incumbents. Like it was so capex heavy. It was immediately people who had the data were the ones who were going to win. And the crypto stuff to us felt like the little guy had a shot. Not just from a startup perspective but if you think about cryptography at its core, when you have a super, we all have supercomputers in our pockets now, right? And we have these GPUs at scale which allow us to hire tens of thousands of people so now you can run a business and not have any employees and so it's like asymmetric power projection through AI and computers which is pretty remarkable. What really struck us about cryptography was it kind of like the opposite of that. It was that it was a massively leveling force. It was a massively egalitarian force, which is like you and I get the same cryptography that the NSA has, that the US government has, that the Chinese government has. And it serves as essentially if you think about GPUs or AI agents as sort of power projection and sort of like an offensive tool in a sense, cryptography is a defensive tool. It's an asymmetric defensive technology where we all get the same protection regardless of whether you're a billionaire or you're a little person. And structurally inside crypto, if you go back to sort of cypherpunk, if you go back to what the space started as and hopefully continues as, there is this healthy skepticism of authority, right? The whole idea is that the system has failed in very fundamental ways. This is if you go back to the white paper with Satoshi, the system failed. And we have an opportunity now with cryptography and smart contracts and technology to reimagine these systems. We can not only reimagine banks, but we could reimagine voting systems, we can reimagine capital allocation. We can reimagine money flows, we can reimagine healthcare data, we can imagine who owns the data. There's like all of these fundamental things that we can now reimagine and we don't have to trust these large scale systems that we previously had to trust because we didn't have the technology to do it in any other way. So to tie it back to what we were just talking about, I think part of the thing that drew me in was I had these very early experiences where just because you have structural authority doesn't make you good. Doesn't necessarily mean that you should trust the structural authority just because that's how it's always been done. And so I think that healthy skepticism allowed me to see this thing. And then, in '16, '17, '18 when we were making a lot of these early investments into protocols and companies, you know, like Bitwise, is a pretty contrarian thing to do. Like if you did that, you were in Silicon Valley, you were like not serious. You're like a scammer. You're like hanging out with the drug dealers and the porn stars. Like, you know, there's a stigma around it. There's still a little bit of a stigma.

Yeah, I think it's still a little bit on the fringe, which is great. I think that's good. I would prefer it that way. And not just because I'm more comfortable with that, but I think that's where real returns get generated. Like if you're in the mix too much, then you get massive return compression. So, you know, I think a lot of the Electric story and a lot of Curtis and I being successful as investors, I think, is due to us being very comfortable being outsiders. Like it doesn't bother me. I'm actually more comfortable as an outsider. And so when we go into the bull markets, for example, I get really uncomfortable, you know? I'm just like, 'Oh, no.' Like the journalists are coming in, like the press is writing about this, celebrities want to talk to us. Like it's just I get very uncomfortable. And that's a signal that we have like a qualitative signal for, oh no, we're in the bull market. And so I think that's really like for this, it turns out my personal story of seeing, having lived through some stuff gave me a particular perspective which sort of put me on this path of being able to see this thing that a lot of Silicon Valley didn't see. Which is then why we have the business that we do today.

Well, in my experience, those people also get washed out. It's like, and one way to sort of frame up what you're talking about is sort of missionaries versus mercenaries. And the mercenaries who see prices going up or want to do PVP trading or whatever, they usually get burned out. It's hard to do that for 10 years. Missionaries, you know, going back to like the privacy thing, for example, missionaries believe in a thing even though it may not be the economically viable thing to do. They're going to do it because it's the right thing to do. And missionaries tend to have staying power. And in any industry that is highly volatile but is generally up and to the right, the name of the game is surviving. Like if you're last man standing, you win. And if it is a truly up into the right sort of industry, then if you survive long enough, often the outcomes are actually quite significant. And so you really want to surround yourself with missionaries and you want to invest in missionaries because they'll go through the ups and the downs and they'll power through and they'll survive. And then a lot of times just by surviving for long enough, they'll actually be quite successful.

Turns out it's hard.

It's really hard but

Yeah.

Yeah. Well, yeah, you're probably going to do pretty well.

Died. Yeah. Yeah. Yeah. Dead people. Yeah. They just performed the best. So yeah, there's truth to that. You know, the cognitive bias thing you're talking about. We talk about this internally a lot too. I think there's actually three cognitive biases at play here. So the exponential growth is certainly one of them. Like the human brain as primates we're not wired for exponential growth. Why does it feel, because if we look at, we can just look at the charts, right? This thing is, yeah, because I think we're extensions of our biological form and as primates as macrobiological beings we don't experience that. You don't go to sleep one day and then there's just like a tree outside your window that didn't exist yesterday. On a microbiology scale it does happen with bacteria, right? And so we saw this with COVID but because that's not our lived experience as macro beings in biology with our primate DNA. We don't have an intuition for it because we don't really experience that at scale. So it's an intellectual thing. It's not a physical thing. We tend to have very good intuitions for things that our biological sensors have adapted for. You know, think about something like how complex it is when somebody throws you a ball for your eye to see it for you to stick your hand out, predict the trajectory of where the thing is going, be able to catch it, send the electrical impulses. It's like a very complex set of operations. Not only because that, but if you actually run the math on the delay in your visual processing system from where the atoms actually are to when the light hits you to how long it takes your brain to process it, you're actually anticipating moving your hand to where the ball will be even in physical space with this built-in millisecond delay, which is remarkable. We have an intuition for that, right? If you try to model that through physics, it's actually quite complex. Meanwhile, something so simple as look at a price chart and it's going up and it's like our brains aren't, we don't have an intuition for it. So even though it's very easy to model, the intuition is not biological and so I think it's not in there. But that's only one of the biases at play here. I think another bias is we don't really understand large numbers. And so because you can see this is five, right? You can see this is 10. If there's a pile of bananas here, you don't know if it's like 23 or 64. You just kind of know it's a lot, right? You can just sort of see. And it's because we never have to think in large numbers. So this is why those jelly bean games are so interesting and everybody's just totally wrong, right? You have a jar full of jelly beans and it's like how many are in there? You don't know, right? It's just your brain doesn't have an intuition for it. So, we don't have an intuition for like a million or 10 million or a billion. Our brains are not wired for those numbers intuitively. And so we can't intuitively reason about what does it mean when hundreds of millions of people or a billion people or five billion people will be using this stuff. Like there's no intuition for it, you really have to put it on a chart and graph it and say wait a second. And what's interesting about that actually if you take those two things together is if you go back at every time in technological history for the last let's say 40 or 50 years, especially with software because that's the world I know the best. If you were to stand at that moment in time and look backwards in time, you would see an exponential growth. And then if you were to turn around and you look forward in time, you should project exponentially. But if you do that, you get to really outlandish numbers. You get to numbers like Facebook's going to be worth a trillion dollars. Nvidia is going to be worth $5 trillion. There's going to be 5 billion mobile devices. Actually, there's going to be more mobile devices than there are people. You get to like very strange conclusions. And if you assert these conclusions based on exponential growth, you sound like a crazy person, right? Like in 2010, if you'd said there's going to be more mobile devices than people and Tesla's going to be a trillion dollar company and Nvidia is going to be a five trillion, you would have sounded like an insane person, right? It's like no way that doesn't, but actually turns out that's the right thing to do. So that social thing works against you. And then I think in general when you're dealing with the world of startups which I think people have a misunderstanding about crypto in general is you're really investing in early stage companies even though they're protocols or tokens or whatever these are very low probability events, right? So the likelihood of Bitcoin succeeding was actually quite small, the likelihood of Ethereum succeeding was quite small, these are tail events and we also have a really bad intuition for low probability events, right? Because we have loss aversion of these other things happening in our brain and so people are worried about dying in a plane crash and they're not worried about dying in a car and you're like wait but if you just look at the numbers this is totally wrong. And so there are emotional factors at play and so our intuition about small probability events and tail events is also wrong. So if you think about crypto or you think about early stage investing it's actually the intersection of all three of these things. It's an exponential growth with low probability events with extremely large numbers if they work. And so it's like the intersection of three terrible cognitive biases. So it makes it basically impossible to intuitively reason about.

Yeah. Or they, yeah, that's part of it. And so they don't understand most things don't work and the likelihood of success is an anti-pattern. Most things fail. Most things that people try will fail and the things that work are the anti-pattern. There's no intuition for that. And then you intersect that with well when it works it's actually 100x bigger than you think it's going to be. Right. And so that's a really hard thing for most people to intuitively reason about which is why I think being a missionary in any field beats being a mercenary because when you're a missionary you're not doing it because of the number. You're doing it because you believe in the thing which then allows you to persist for an extra 5 years and capture the back end of the exponential growth. And so the outcome ends up being much, much bigger. Not because you thought the outcome was going to be much, much bigger, but because you believed and because you believed you were willing to grind for an extra 5 years. And that extra 5 years is where all the compounding is, right? It's not years 0 through five that you have significant compounding in a business or you have significant compounding in your assets or in the investments that you made. It's really in years 5 through 10 or actually 10 through 15, right? You can look at the Nvidia price chart, right? When they went public versus when the compounding really kicked in. And a lot of these businesses, Microsoft, Facebook, Google, like the real compounding is not in the first five or 10 years. The real compounding is in the back 10 years.

Yeah. So, obviously not financial advice. Please don't ever listen to anything I say about where you should or shouldn't put your money. But here's how we explain it to people when they ask us, like our LPs in our funds and they say okay how should we think about this and what we say is look, at a 100,000 foot view you have to understand what's happening at the backdrop and the backdrop that we have right now is we have a fiscal situation in most western countries that is creating a lot of spending and it's unsustainable. We're spending more money than we're bringing in to very, very large percentages now like 7% debt loads and this is remarkable. There are only a couple ways forward if you assume that this is one of the big drivers in the world. One is you could try to cut spending, entitlement spending, not going to happen. Like nobody wants to pick winners and losers. You can't get reelected as a politician if you cut health benefits for old people or poor people or young. You just, there's no winners here. Nobody's going to do that. There's no political will to do that. Option two is to raise taxes. Nobody's going to do that. Extremely unpopular, practically speaking in most places. Very hard to pull off. People are mobile. They'll pick up and leave with their wealth. We've seen this in the UK. We've seen this in the EU. In the US, taxes are unpopular. Again, you're not getting reelected if you raise a bunch of taxes. Not going to happen. Option three, which is the path that we've been on, is currency debasement. What you're going to do is inflate your way out of it in some form, ideally hidden, so most people don't realize it. You know, and you call that money printing. And that's the path that we're on because it's politically viable. Like nobody has to make a hard call. Nobody has to say like I did that thing. It sort of secretly happens behind the scenes and you get re-elected as a politician. And option four is we grow our way out of it. If you can actually fundamentally boost GDP through productivity gains, then we can actually afford all the things that we want to give people in society because we can grow our way there. So one and two are not going to happen. And option three, you really want to be in fixed supply assets, things that the government cannot create more of. So, you want to be in California coastline. You want to be in gold. You want to be in copper. You want to be in Bitcoin. And once you start, you want to be in fine art. Like, there's no more Da Vinci, right? You just go buy a Da Vinci. So when you look at it through that lens, you realize actually that stores of value that are seizure resistant, that are resistant to government creation are extremely valuable because the backdrop of the world has changed. And most people are just starting to realize that the world has changed, that we're in this new regime. And so most of the world hasn't even figured out this is what's happening yet, right? So we're very early in this. As people figure it out, the question is where will they put their assets? And our assertion is that when you look at the properties of a good store of value, whether you want it to be fungible, easy to transfer, easy to subdivide, highly liquid market, extremely protected against seizure from especially from a government, the government should be able to create more of it, yada yada. I think the digital stores of value like a Bitcoin or an ETH are far superior to many of these other options. Again, most of the world has not realized this yet and so they will. So then you say okay well how will these things get valued? And I think the easiest way to reason about it, a DIY way to reason about it is relative to comps and say you take something like Bitcoin it's digital gold. That's a meme. People get it. Wall Street now gets that. The pension funds and the sovereign wealth are starting to get that. The central banks have not gotten it yet. And if you just do a one to one, you say, 'Look, if Bitcoin can be as big as gold, because everybody in the world that has gold wants some Bitcoin. And there's a rotation happening. You do the math. We used to do this math in like 2017, 2018, and you just do the sort of market cap of gold divide by 21 million Bitcoin and you back then you would have gotten to like 400K. These days, you get to like 1.2 million because the market cap of gold has gone up so much in part because of the currency debasement.' And so, a really, really simple back of the envelope is like Bitcoin's worth at least a million dollars if it gets to the same market cap as gold and back to this idea of exponential growth and underestimating markets and so on and so on, you know, in these markets generally when you put things on a phone, you get TAM expansion. The total addressable market goes up. So I go back to something like Uber. The criticism against Uber like the series A was well the entire taxi industry is worth $10 billion. How could you possibly be worth more than $10 billion? And here we are when Uber is worth hundred billion, right? And not only do we have Uber, we have DoorDash and we have Instacart and we have DD and we have Grab and that whole market is hundreds of billions of dollars. It ended up being 50x bigger. And so I think there's a very reasonable assertion that when you put digital gold on a phone and now all of a sudden 3 billion people can have it instead of 300 million people that have gold, you actually get massive TAM expansion. And so, you know, our house view is that it's very likely that gold is too small a comp, that actually Bitcoin is much, much bigger because it's so much easier for people. Like there are a lot of people in the world that would like to have gold. They can't get it. And now they can. And so they will. And so actually I don't think like a 5 to 10 million dollar in the fullness of time is at all crazy just because you get TAM expansion and that's the history of every piece of software for the last 30 years would tell you that once you put it on a phone, once you put it in front of a billion people, once you put it in front of five billion people the market size actually goes up by 5 to 10x. And but that's a, you sound like a crazy person when you say that, right? Like in 2017 we used to say, 'Hey, Bitcoin's going to a million' and we sound like crazy people. And now you say Bitcoin's going to like 5 or 10 million. You sound like a crazy person. But it's not that crazy once you reason through it because the denominator is also, it's not 21. It's like Satoshi's coins are locked. Like a bunch of people have lost their Bitcoin. Dollars getting denominated. You start reasoning through this and you're like, man, you can get to some pretty large numbers without sounding, if you reason through it, it's not that crazy.

That's one, right? Then if Bitcoin gets market share from gold,

And then if it becomes much bigger because it's on a phone,

Yeah, I agree. I mean, and it's what is not that crazy is I mean, you look at you pull out your phone right now and look at all the apps on your phone. How many of those applications have more than a billion users? A lot of them actually. A billion users on a mobile device is not what it used to be. I probably have 20 apps on my phone that have a billion users. Right. And so I think we're just very early in this. There's a big question here about how long it takes. I'm not saying this can happen in two years. But again, you know, when you're thinking about compounding and investing, it's often like the back 10 years. Like we're 15 years into Bitcoin, we're 10 years into ETH. A lot of times the real compounding is like not the first 10 years or the first 15 years. It's like you have something durable that continues to compound, right? It's Amazon, it's Google, it's Nvidia. It's like actually those back 10 or 15 years is where like the real compounding is.

Yeah. ETH we tend to think of also as some sort of store value. I think it's going to be interesting to see how that gets carved up. Even if you say look if you're a BTC maxi you might say look ETH is not as good as gold origin story yada yada. Okay. Is ETH better than silver? I think it is. Would I rather have like 100 kilograms of silver and try to figure out what the hell to do with it or would I rather just have some ETH on my phone that I can turn into stables and I can like, you know, get some yield and way rather have ETH. And so silver is worth something like two, two and a half trillion. That's like a 5x right there from where ETH is today. And I think a lot of people will actually say, you know what, I don't want to have 100% BTC. There's a lot of reasons to not be 100% BTC just from technical risk and fork risks and maybe I should take some percentage of this and be allocating it to ETH. I think a lot of rational investors will take that sort of an approach. They're not going to be BTC maxis. And so I think there's a natural sort of reallocation that will happen. So not only will Bitcoin eat up gold market share, but I think ETH starts to eat up gold market share. Because people say, 'Well, should I just have one digital store value? Shouldn't I just hedge a little bit?' And so they'll reallocate between the two. So I think we're still very early in sort of that. I mean to zero index it, ETH just turned 10 in July 2025, right? It started in 2015. Bitcoin turned 10 in January 2019 and all of the institutional understanding about what Bitcoin is, like if you go back to 2018, 2019 Larry Fink doesn't understand it, Wall Street doesn't understand it, it's a real outside thing. 2019 to 2023 is when Wall Street got their head around it, that's when everybody who was an institutional investor said, 'Oh, I get it now.' That's exactly where ETH is now in our opinion, right? It's just like the Wall Street folks are just starting to get their heads around it. And so is it so crazy that ETH does what Bitcoin did between 2019 and 2024 like that 5-year window is when all the institutional investors got their heads around it? Doesn't seem crazy to us that over the next 5 years. Same thing happens for ETH. We're also very bullish on SOL.

We today, I mean it could evolve. There's no reason it couldn't evolve and I think ETH evolved for example. So maybe SOL could get there one day. Today we tend to think of it more like a computational layer which still has a huge amount of upside. You know, I think what would it be worth to have an AWS, like if you look at Amazon's market cap most of it is probably AWS like they have a huge brand but like the grocery business or the retail business doesn't make that much money. It's a huge moat but it's really AWS that makes all the money. And so what is it worth to have an AWS where global retail is participating in financial transactions, right? Or we tend to think Solana as the architecture is actually really good for things like social applications like if you look at the intersection of entertainment and financial applications the Solana ecosystem is really excelling there like there are a lot of really interesting experiments that happen there in part because the way the architecture works and so it's easy for devs to get in there and write code and ship stuff. And so what is a thing that's like AWS for financial transactions for everybody who's a retail person in the world worth? It's, you know, if AWS is worth a trillion, is it so crazy that SOL could be in that same tier? That doesn't seem crazy to us. And so that's kind of how we think about it today, could evolve. But I think what Solana is like uniquely good at relative to Bitcoin or relative to ETH is actually a lot of that kind of stuff. We just like on the ground when we look at the devs and what they're doing there's like that's where we see a lot of creativity and interest for these sort of end consumer experiences I think that the developers in that ecosystem really excel.

Yes, but you know our definitions of escape velocity are a little bit different because we're such early investors, right? So we were like in the seed rounds of things like Sui and Near and we think there's an entire new generation of things coming that are going to be even 100x faster. You know, but it's always very risky to reason by analogy but it is interesting and illustrative to think about what the analogy might teach you. There's something underneath the analogy that's useful. So even if we look at the internet and you look at later in the internet's history, we got Snowflake and we got Databricks, right? You got like database companies and data management companies 20, 25 years into the history of the internet. And so I think you're going to continue to see L1s, I think you're going to continue to see blockchains that are 100x faster and things like where you take all the learnings from all these other ecosystems and you say actually I can make it 100x faster and what happens when I make it 100x faster, maybe get an entirely new class of applications that just weren't possible before. So if there's something that comes out that's 100x cheaper, then maybe it's really great for like machine to machine communication for example, right? And now like all the sensors of the world can talk to each other and build distributed networks in a new way. So, I don't think we're anywhere close to the end of like, oh, there's going to be three L1s, three blockchains or something. It's I think it's actually much more likely that we have many, many hundreds that are interesting and successful.

Yeah, it's, well, you know, I've known Evan for a long time. It's a bunch of ex-Facebook people, right? So, we knew a bunch of those folks for a long time. Really, really talented technically. Just very gifted technically. And sort of the same idea, you know, I think purpose-driven blockchain environment, programming language with Move, like a new VM and really thinking about all these things from the ground up after having tried it with Libra and said, 'Okay, well, we learned a bunch of things and we made a bunch of mistakes and so now we know how to do it right.' And that's often a good signal. I mean, we were talking about missionaries and some of these stories and I think one thing that people may not appreciate is there's often many, many, many years of pain before the thing works and it's often not just that one company, often there's a multi-company journey or a multi-entity journey and so the fact that Evan and Sam and co have been building these kinds of systems, like take something like Evan, he worked on LLVM, he's been working on compilers and programming languages for 15, 20 years, right? Like his whole career. And so this doesn't come out of nowhere. It's not like this person just shows up and then 12 months later it's like, oh, I got this great thing that's working. It's like, no, there's like 15 years of training and pain and diligence and insight that goes into this. And so when you looked at the team at the seed stage, it was like, oh, this is a killer team to go figure out how to create an entirely new programming language and a VM and a chain that can be 100x faster and so on. And so for us, it was a lot of bet on that. And then I think these things once you have something that does have some infrastructure novelty and some ecosystem novelty then you get things like Walrus that get built on top of it and you're like oh that's interesting like I wouldn't, if you asked me four years ago would I have thought that they would have sort of produced something like Walrus as a distributed file storage system and make it performant and competitive on cost and it actually works is like I don't think I could have predicted that four years ago but it makes sense given where they are now, right? And so you know our job, we're just so early. It's different. You know, I couldn't have told you all the things they're going to do today and the ecosystems that might pick up and the use cases that might pick up, but I definitely could have told you that like Evan and Sam were really special guys and they were going to figure something out.

Thank you. Good to see you.