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Okay, let's get into it. Avichal, thank you for joining me on the podcast today. I appreciate you taking the time and have been looking forward to this conversation. You are an angel investor, a serial entrepreneur, and currently co-founder and managing partner at Electric Capital, an early-stage venture firm focused on crypto primarily. But I'd love for those who aren't familiar with you or Electric, if you could just sort of start off by telling your story, and ideally sort of as early as you're willing to start. It's always interesting.
Awesome. Good to be here, Jake. Thanks for having me. Yeah, as you mentioned, I'm a co-founder and managing partner at Electric Capital. These days we invest in early-stage crypto. My backstory, though, is well, actually going all the way back to the beginning. I was born in India, moved to the US when I was a kid with my parents, obviously, when I was about five. So I grew up mostly in the US, kind of all over, Kentucky, Ohio, and then came to California for college, and then stuck around. And then spent most of my career as an entrepreneur and was always interested in computers when I was a little kid. I was fortunate, my parents didn't have a lot of money, but one of the things my dad did a good job of was they got me a computer. This is like the 90s, and so you know, they're pretty terrible. But I got an old computer and I kind of learned how to tinker with it, and then I got a graphing calculator and learned how to program that thing. And so I was sort of always interested in just playing with computers and programming. And then built a startup when I was in college and scaled that up later after college and sold it. And then started another company that my co-founder Curtis and I sold to Facebook back in 2012. And then was there at Facebook from 2012 to the end of 2016, so almost about five years. And then we kind of left and I started dabbling in angel investing, as you mentioned, starting in like 2013, 2014, 2015, somewhere in there. And a lot of kind of like up-the-middle, like SaaS and marketplaces and fintech kind of companies, many of which have gone on to do quite well. So things like Notion or Deel, great companies. And I was also doing a lot of frontier tech, so just things where advances in engineering or technology let you do a thing that you couldn't do before. So this was things like genomics or self-driving cars or supersonic airplanes. And crypto was one of those areas. And so we were dabbling in that for a few years, Curtis and I were. And then when we left in 2016, we kind of found ourselves spending all of our time in crypto. You know, it just sort of felt to us like the most raw part of the internet. And it reminded us a lot of when we were much younger, when we were kids, sort of like the magic of the internet where you could go into some chat room and you know, nobody knew how old you were, it was just a handle, and you could have these discussions with people all over the world. And it felt like a lot of promise. You know, it kind of felt like the internet was going to democratize access to information and education, and you know, we could all work at home and the best and brightest people in the world would have access to all these great resources, and you know, we'd untap this global economy and like all this great stuff. Some of which actually happened, you know, was accelerated by COVID, but some of it didn't happen. Like we ended up with these massive centralized entities that control so much of the internet and have so much money and power and influence. And the tools have been used for things I think that weren't originally anticipated in the early days of the internet. And so to us, it sort of felt like this combination of that same raw energy but also this desire to maybe like reclaim what the internet was supposed to be about. And we kind of just loved that ethos. And so we were just hanging out in all these chat rooms and having fun with it through 2017. And then in 2018, we decided to formalize a lot of what we were doing into a firm called Electric Capital. And the thinking was, you know, we thought we would go start another company, we thought we'd do another startup. And what we realized was that we were doing all this investing, we could help a lot of people because we built and shipped products and scaled them. And that was actually a lot of where we were just spending time with the founders, is helping them think about how to build stuff and ship products and think about product strategy and a lot of the mechanics of how you actually do the actual startup or the protocol. And we said, you know, it'd be great to be able to do this at scale. It'd be great to be able to hire a team of people to support these founders, to be able to support these protocols. You know, at the time a lot of the discussion was around layer one, and so we were like, you know, it'd be great to be able to hire some engineers and run some nodes, you know, and build a stake and help secure the networks. And to do that, it would be nice to have some sort of capital base to do it. So that's how Electric was born. And so it was a small fund in 2018, and we've since scaled it up to, you know, a couple billion in assets at this point. And so we're a little bit bigger than we were even just three years ago. But yeah, that's crypto. Crypto grows and scales quickly. So that's kind of us.
Awesome. Well, I appreciate the story to start out and looking forward to digging into a couple of pieces. There's one thing that I thought was particularly interesting. You mentioned sort of yourself and your co-founder Curtis thinking that, you know, seeing in crypto something similar to what you saw, you know, earlier on growing up in like the original internet and sort of the future and the promise of it and the ability to sort of democratize access and to things like education, all the things that you said earlier. But like you mentioned, that's not really the way that it played out, at least not in a lot of ways. And you know, you have a pretty unique perspective having worked for two of the largest centralized players that sort of won this first iteration of the internet, if you will, Google and Facebook respectively. So what's your sort of evaluation, like, you know, after the fact, like what happened to that future? And you know, how do you think crypto is poised to maybe capture some of what you envisioned in the first place?
Yeah, it's a really good question. You know, like how did we end up with these big centralized powers? I think part of it is that, you know, state, like the internet was these stateless transactions, and so the data that you needed to preserve state had to be captured in a database. And so this is, you know, like who are your friends, for example. And that database is proprietary. And so then the best business model became how do you get all the data into one place and own that data and then monetize it. And that might be through selling access to it or, you know, by building algorithms on top of it. But that in effect became the business model of the internet as a sort of side effect of what was possible technically. And so when we think about Web3, I think what's really interesting is the idea that you have sort of shared state. Like the blockchain is an open, publicly available database with a set of APIs and sort of standardized data formats, allows you to have the database get opened up and potentially behave more like a public good, such that that data doesn't serve as a moat quite in the same way anymore. Like you have transferability and transportability of that data. So imagine like if you could take your friend graph from Facebook and just take it with you and go to some other social network, and maybe that other social network has a different perspective on how to filter the news or, you know, has a different set of algorithms for the newsfeed, and all of a sudden you would get a huge amount of competition that could happen on top of that data. And people would have to compete at that layer. And generally speaking, I tend to think that when you have a lot of competition, you get better goods and products and services. And so you might actually have what happened, you know, on the internet but times 10, because all of a sudden you can enable a new kind of innovation. And so, you know, just that one technical change, I think opening up the data layer and allowing people to have access to it could potentially be a very, very big unlock in terms of and change in terms of what the business models could be around it. Because you sort of eliminate one of the business models. And you know, kind of as an investor or as an early-stage founder, when something like that happens, where you see, you know, something that was the core of a business, you know, sort of proprietary data, and you sort of flip it on its head and you say it's no longer proprietary, in fact it's now open and anybody can access it, those kinds of platform shifts where like a platform does the opposite of the previous generation of a platform tend to be very, very disruptive. And so that sort of catches your eye, like your spidey sense starts tingling a little bit as an entrepreneur who's seen a few things or as an early-stage investor, that that might be really disruptive. And I think when you couple that with the idea of tokens, which allow value and money to be exchanged, you know, 24/7 between people or computers and computers, you know, not just people and people, but you know, people to computers or computers to computers, and create incentive structures around who has access to that data and what you can do with it and how you secure that data, that is really interesting because that creates an entirely new business model. And so all of a sudden now the ability for money to flow peer-to-peer, directly tied to the data or directly tied to the movement of information, I think is a fundamental business model shift. And so now you don't have to have an ads-based business, you can actually have something where people can pay directly for some good or service that they want in a way that they can be disintermediated. And so this starts to strike at like really the core of the business models of the internet. And now what you might have is a technical architecture that allows you to build products slightly differently in a way that is potentially very disruptive to the core business model of Web2 companies, but also you have the ability to monetize that in a totally different way. And I think that is a killer combination. The fact that you have like a technical architecture that's different plus the ability to monetize it in a different way is potentially, you know, that sniffs very, very disruptive to me. And so when I play that forward, I think, you know, today it's starting with layer one and DeFi, because you sort of, you know, if these tokens are some form of value exchange and some form of money in some sense, not for a strict definition of money, but value exchange, it makes sense that people would build protocols to move that money around. But I think when you play this forward, the primitives that we're creating around decentralized computation, decentralized data storage, open access to the data, ability to pay people for access to compute or data, and to do it in very small increments in real time 24/7, all of those basic primitives to me actually sniff like over the next decade we reinvent big chunks of the internet. And we reinvent them in this different way where actually your data is not seized and captured by a third party. And because the data can't be seized and captured and is effectively portable, you might get a very different sort of topology that emerges and who has power in that ecosystem might look very, very different. And so what that could mean, for example, is you could own all your own data on a secure enclave on your phone and then choose which social networking application you want to have access to your data. And maybe they even have to pay you for it, right? Because they're going to monetize that somehow. And so there can even be new forms of, you know, monetization for the end user that are actually even more beneficial. So anyway, we're in the very early innings of this, but that's how we sort of think about it at a high level. It's like, you know, we're engineers, so we sort of approach it from that technical lens of like, oh, this is a different way to build, you know, the architecture of how to build an application. But actually that infrastructure could be very, very disruptive over the next 10 years.
Right. So we're going to spend some time, of course, talking about crypto and how it can be so potentially disruptive. But before we get there, I would like to spend a little more time on the potentially disrupted. So especially the companies that you've got experience with, Google and Facebook. Of course, you know, they could make various adjustments to their business model or, you know, change of focus, of course, like, you know, Facebook focusing on the metaverse now, changing the name of their company. But having been inside both of those organizations, I think Facebook more recently than Google, and even, you know, interacted, I understand, like directly with people like Larry and Sergey and Zuckerberg at Facebook, as well as a bunch of other people in sort of leadership positions there. How do you think they're going to react? I know it's a little bit speculative, but like, are these companies sort of dead in the water? Or is there a chance that Facebook actually sort of wins out, for example, like the metaverse that people are sort of waiting for and envisioning that hasn't seemed to arrive yet, but it seems to be gaining some steam lately. How do you see these tech titan companies, like FAANG companies, sort of surviving or otherwise in sort of this crypto rise?
Yeah, it's a really good question, and of course nobody really knows the answer. I think if you look at history, in technology history, it's rare that a company is able to make a transition through a platform like this. More often than not, companies that were really big on the prior platform tend to miss the next platform. So classic example might be something like Microsoft and mobile, or Intel and mobile compute, right? They really missed the boat relative to ARM or Qualcomm. And in part, I think it's because when you see something that is disruptive, often what's happening, and we throw that term around a lot in tech, but often what's happening is you have something that in the early days looks inferior to what you're currently doing, but actually does meet some real need. And that need starts as a niche market and then it grows tremendously and very quickly, and it grows far more quickly than anybody has anticipated to the point where it is a meaningful market. But by that point, it's a little too late because the incumbents have built up their entire businesses in sort of the prior market. And switching that to a new market can be often very, very challenging, and not just from like a technology perspective, but really from a human perspective. You know, like when a platform changes, you also have to change how your business works and how your organization works around that technology. So to use a concrete example, you know, like Walmart has known that Amazon is just on a tear for like 30 years now, right? Amazon is not a young company, it's a 30-year-old company at this point. That's kind of like when Amazon was getting started. And so where are we? We're in 2021, right? So it's like a, you know, 27-year-old company. So it's something like when Amazon was getting started, you know, there were companies that were started in like 1967. That's like the equivalent, right, to just put it in context, which is wild. And so, you know, Walmart has known that this company is on a tear for the last 30 years. And Walmart has known that it's on a tear for 30 years, and like why haven't they been able to do something about it meaningfully? And in my opinion, the reason is that changing the human organization around the technology is really, really hard. Right? At Walmart, who has all the power? It's like the people who have the retail relationships and the people who have, you know, the relationships with the Procter & Gamble and they understand how the supply chain works, like that's who has all the power. And at Amazon, who has all the power? It's the engineers. So is Walmart able to disrupt its organization internally such that the engineers have all the power? Right? That's actually really hard. And so often the human organization changing is the hard part. And that's why when technology companies experience a platform shift, like figuring out how to change your human organization ends up being very hard. Now, I think the one exception to this rule are founder-led companies, because founder-led companies tend to have moral authority. Like the founder has moral authority inside the organization, and so the founder can just say, no, we're not doing that anymore, and now the company's going to do this. And if the reason is why, the answer is because I think it's the right thing to do. And so for example, if you look at Facebook, you know, Facebook started as a desktop web company, and even by about 2012, around the time of the IPO, a very small percentage of Facebook's revenue came from mobile. And what Mark did was he basically pivoted the entire company and said, we are now a mobile-first company. And the way he enforced that was really interesting. He would do things like, this is not the only thing he did, you know, had to retool the organization and build a bunch of engineering capacity and teach designers how to be mobile-first and so on. But you know, there are subtle things that he could do that really enforced it top-down. So for example, if you went into a meeting with Mark and he showed him any mockups, if you showed him desktop mockups, the meeting was instantly over. Right? It was, that was it, meeting's done, adjourned, like everybody leave. And so all of a sudden, like you just didn't show desktop mockups anymore, right? And if you didn't show them in a meeting with Mark, like why would you show them in a meeting with the VPs? Because they're not going to go to Mark anyway, right? And so all of a sudden you could pivot the company very quickly to mobile. And so the company was able to transform itself. So I wouldn't rule out Facebook. And in fact, I think a lot of people have lost a lot of money betting against, or maybe not made as much money as they could have, you know, betting against Zuck. And so I tend to think like you probably don't, there's like a handful of people you really don't want to bet against: Elon Musk, Jeff Bezos, Mark Zuckerberg. If you bet against them, you probably lose. So I think Meta is maybe one of the few companies that might be able to pull it off just because Mark wants it badly enough, which I think is really impressive that he's as motivated as he is, you know, this many years into him having built this company. Now, does that necessarily mean that Meta's version of the metaverse will emerge? Not necessarily. Right? I think there are, you know, at least two competing worldviews for how this is going to happen. I think there's a step-function worldview, which is something like what, you know, Oculus is envisioning. You have sort of a headset that you're going to wear, there's going to be VR, it's a whole new computing platform. You know, there's presence, maybe NFTs and crypto get baked into that somehow. You might have native cryptocurrencies to enable transactions, or you have NFTs that are part of this whole ecosystem. But it's really like the compute platform shift through VR that I think, you know, Meta is really pushing. And then I think there's a slightly different worldview, which is the one that I tend to subscribe to, which is we're already in the metaverse, we just don't have something strapped to our heads yet. Like you just think about where you spend most of your day as a member of the internet these days, it's probably online. You sleep for seven or eight hours a day, and you're probably online for like 12 hours a day. So you're actually probably spending more time in the metaverse than you are awake, right, when you take out sleeping. So, you know, I think we're already in the metaverse, and then we're sort of incrementally moving our way towards that, sort of just getting enmeshed in our lives. And that the compute, you know, the window, the screen that we look at that metaverse through is going to be the less interesting part of that transformation. Right? So it doesn't matter if it's a laptop or a mobile phone or something strapped to your head, but that is the less interesting part of it. The more interesting part is all the cultural and social dynamics that are happening around things like cryptocurrencies or NFTs or communities on the internet or DAOs. All of those things are really what are going to define what the metaverse looks like, and that's happening today anyway. And in that world, certainly I think Meta could play an important role, or Google could play an important role, or Netflix could play an important role. But I think they end up playing not the defining role. Like I think the crypto-native companies end up being the defining companies, in the same way that, you know, Microsoft was an important company on the internet and they've become more important with things like Azure, but I wouldn't suggest that they're the most important company on the internet. But, you know, time will tell. Right? I think if I were to play the other side of it, what would Facebook or what would Meta or what would Mark say about it? Well, you know, Apple was able to transform itself. Apple became perhaps the most important company because they transitioned the world to mobile and they made that happen after being, you know, a very major player in the PC revolution. And they were able to do that in part because Steve Jobs was there. So again, kind of this idea of founder-led companies, because founders have moral authority, can sometimes make these transitions. It's rare, but if anybody's going to pull it off, it's going to be a founder-led company. So, you know, it's certainly possible that I think Meta pulls something off and they do, you know, what Apple did in the last platform shift.
Yeah, it's a really interesting perspective. I definitely agree with sort of the founder point, especially guys like, you know, Steve Jobs, Zuck, sort of generational type of founders, not just like any founder. And sort of it does sort of help, I think, to see that Zuck, to your point, already transitioned Facebook to a mostly mobile company. Instagram, I think, is, I don't know if it's like the majority of the volume of sort of their value or not, volume, but the majority piece of their value these days, but at the very least it's a large piece. So they've sort of reinvented themselves a couple of times. And certainly says something that this time is the first time that they've actually changed their company name about it. And like, no, you know, they're not hiding anything, they called themselves Meta, everyone's talking about the metaverse, it's like a pretty clear direction that they're setting for themselves. Be interesting to see. Speaking more on like a, you know, you talked about a couple of like really impressive people now that you've worked with in the past, Zuckerberg being one of them. I mentioned Larry and Sergey earlier from your early experience at Google. I think you worked like directly with Marissa Mayer as well, maybe with Sheryl Sandberg a little bit at Facebook. Just sort of the sheer exposure that you've had to these like extraordinary tech leaders, and generally like entrepreneurs and leaders, what was like, what did you learn from all that exposure? Like what were some similarities you saw between people like this, some differences, like outstanding features that maybe Zuck had something about him that like you didn't really see in Larry and Sergey or something like that. I'm just curious because not a lot of people have that sort of exposure over their career.
Yeah, it's been pretty wild. I'm very, very fortunate to have had access to all those people. It's just one of those like right place, right time things. It was just like Google was the first place I worked, and it turned out being at Google in the mid-2000s, mid-to-late 2000s, kind of like that 2005 to 2010 era, was an amazing time to be there because the organization was still so small. And it was, I don't know, when I joined it was like 3,000 people. And so yeah, my first manager was Marissa Mayer, who's gone on to do amazing things. And you know, you had access to Larry and Sergey and Eric, and Sundar was just, was not CEO of Google yet. Sundar was just this senior PM that you sat next to on the couch while you were waiting for Marissa. You know, it's a wild time. And same thing with Facebook, right? It's just like all these leaders there were, you know, they were not sort of who they are today. I think, you know, having had the good fortune to have seen a lot of that, I think probably my biggest takeaway actually is that most of these people that, you know, from arm's length look superhuman, are actually not. And I don't mean that in any sort of derisive way. It's, you know, I think it's remarkable what all these people have accomplished and, you know, what their skill sets are and how talented they are. So it's not intended as a slight against them in the least. But I think what I realized was I've met a lot of people in my life that are of that caliber. And one of the big unlocks for all of these people was that they had the good fortune to find something that they really believed in and have people who supported them early and get a little bit of luck flowing their way. And the combination of those things created this feedback loop where they had, you know, increasing amounts of success and they believed that they could be successful and they believed that they could accomplish great things and they had people around them who believed they could accomplish great things. And that actually is a really, really big unlock. You know, I think when you look at a lot of, there are people that, you know, like as an angel investor I've invested in, and you kind of look at who they were when they started and who they become by the time everybody learns about their billion or five billion or ten billion dollar company, and it's really impressive who they became. But they didn't start as that person. And so one of my biggest takeaways from having worked with all these amazing people is that the amount of human potential in the world, we're probably only tapping like 1% of the human potential in the world. Because most people are actually capable of a lot more than they think they're capable of. And what they need is just to believe that, and then what they need is some people around them that believe that. And then you do need access to certain resources, like, you know, a good education and capital and a little bit of luck. But it's actually really inspiring because I think you realize that it's not like the Elon Musks of the world are somehow, you know, rare breeds. It's actually that like we could have a thousand more people like that very easily. And we could have like millions of people who are, you know, doing remarkable things in the world if only we had systems that created those kinds of people, right? If only we had systems where people actually got great educations and could get access to capital, and there were enough people who believed in other people, and you had enough people who believed in themselves. And so that actually takes you to this place of realizing that actually not a huge amount of capital is necessary, and actually most of the world's potential is actually untapped right now. And then actually we could have, you know, a thousand more great leaders like that, or we could have millions of more entrepreneurs, and actually the world could support all that because actually probably the number of opportunities that are unpursued right now is in the millions. Like there are probably millions and millions of great ideas that we just haven't had the founders go pursue yet. So anyway, you know, I don't know if that's what everybody would take away from that necessarily or what you were intending, but like my biggest takeaway was actually these people are remarkable, but actually I think we've probably only created 1% of the remarkable people in the world that we should have created. Like we actually should create 100x more remarkable people. And if we could figure out how to unlock all that, we'd actually unlock a lot of human potential and we'd accomplish great things. You know, like imagine if there were a thousand SpaceX-caliber companies, or, you know, a thousand people working on scientific research, or a thousand x the people, you know, trying to solve clean energy problems, or, you know, just like the amount of amazing things that we could do, I think would, you know, we just haven't figured out how to do that yet. It's actually one of the reasons I feel like I find a great deal of satisfaction doing what I do is like in effect the way I think about my job is finding these people who have so much potential that they don't even realize how much potential they have and giving them just a little bit of money and a little bit of advice and a little bit of support along the way in hopes of unlocking all that potential. And it happens and it's remarkable to see.
When it happens, I mean, I look at somebody like Blake Scholl, who's a founder and CEO at Boom Supersonic, and they're building a supersonic airplane. Blake is an old friend of mine, and it's just remarkable to see how far he's come in the last few years. I think five or ten years from now, people are going to be talking about Blake as like the next Elon because he'll have willed supersonic flight into existence as a founder. I know Blake, and I think he's a great example of that. Blake is a very smart guy. If you look at his prior track record, he struggled with his previous company because he had this mobile e-commerce shopping app, and it just wasn't the thing that he was put on Earth to do. When he found the thing that he truly, truly believed in, he just moved mountains to make that company exist. I think it's going to change the course of human history as a result. It's a fascinating case study in how much untapped entrepreneurial energy and potential there is in the world.
Yeah, it's a super interesting takeaway. I don't know if that's to your point, like you said, if that's what most people would take away, but I think that's a very layer zero perspective that you gave on some of the commonalities between these legends that you worked alongside with before they were legends. It is extremely hopeful and optimistic, the point that you make. It's really remarkable how these people, from the outside looking in, they do just look like superhumans, especially someone like Zuck. But he still has 24 hours in the day, Elon Musk still has 24 hours in the day, and they just have to figure out how to make things work. There's presumably, like you said, a ton of belief behind it, and so some luck and some smarts, and maybe a lot of both, but either way, it sort of makes it happen. I'm going to ask you somewhat of an impossible question to answer, maybe, but I'd like to hear where you might go with it. The startup that you spent the most time working on, I believe, was education-focused with online learning, and that seemingly would have to play some sort of role in helping that 10x, 100x, thousand x, million x people realize the potential that they're capable of, but they just, for whatever reason, can't really fulfill at this point. What do you think could be an element or two of the solution to untap some of that human potential to go from maybe 1% to even just 5% or 10%?
Yeah, that's a good question. For context, the startup that I started, the idea was to use machine learning and really basic statistical techniques to personalize content delivery for education. It was actually quite effective. In V1, all we really did was assess very quickly the things that you knew already and then just not bore you by removing that content. If you already know how to add, we don't need to show you a bunch of content on how to add. Let's move you on to subtraction. If you already know addition and subtraction, let's just move you on to multiplication. Turns out just doing that makes people way more engaged because now you're not boring them with stuff that they already know. That was the high-level insight.
