Noob School - Episode 66: Blockchain Business: Brooks Taylor of Trident Digital is Back Again!

Episode Date: May 19, 2023

Brooks Taylor is back again on this episode of Noob School, giving and giving an update on the state of Trident Digital, a crypto hedge fund based in Greenville, SC. Watch to learn more about blockchain technology, crypto, and even the exciting boom in the artificial intelligence world. I'm going to be sharing my secrets on all my social channels, but if you want them all at your fingertips, start with my book, Sales for Noobs: https://amzn.to/3tiaxsL Subscribe to our newsletter today: https://bit.ly/3Ned5kL #noobschool #salestraining #sales #training #entrepreneur #salestips #salesadvice

News School. Hey everybody, welcome back to the Noobcast. I've got a repeat customer here. Brooks Taylor is with me. Brooks came last time and talked about this new company he's launched. It's called Trident Digital and it is a crypto hedge fund right here in Greenville, which is pretty darn cool. Anyway, it's so cool that I wanted him to come back about six months.

about six months. It was about six months ago you were here and just give an update on where things are with the business and kind of what's new in the crypto world and the blockchain world and maybe educate me a little bit. So, so welcome back. Brooks, we appreciate it. Absolutely. A pleasure to be back. Yeah, man. Well, give us an update on try that. Yeah, so I guess last time six months ago, this was October and a whole lot has happened and the crypto world since that time. There was a pretty big blow up with FTX and sentiment has turned very negative on the space and a lot of funds that were, you know, come in, they haven't made it through.

Fortunately, we're still here. And even though the sentiment's negative, the technology's progressing at a very fast rate. And we're probably more excited than ever about the prospects of the industry. And we're in a pretty good spot where we're investing without nearly as much competition. And so the, you know, the first, I guess we had our first closed last July. At that point, there was so much competition for deals. We were really trying to fight for everything.

The valuations were crazy. It was tough to put money to work. And now it's the kind of the tables have turned where all the companies are really begging for money, even the really good ones. And so we're kind of have our pick and we're able to be really selective. We've raised almost the entire fund. We're going to have one more close, but we've started investing. All of our investments are on track.

We had a really good first quarter. So we invest over a five to seven year horizon, really trying to find undervalue things that we think have exponential upside if they're able to fulfill their potential. And so it's really early to tell, but it's looking like everything's on track. So we're excited. And so you've essentially. almost raised everything for your fund, and you've already put it to work in, what's it, five companies?

We've made seven investments so far. Kind of how we're doing it, I don't know if this is going too far into the weeds, but like 20% of our capital, we're investing into actually other fund managers who have a very specific niche or expertise that we don't necessarily have. And then 80% is in direct investments.

And a lot of that we're getting from these other funds that we're talking to and investing in. kind of just the high conviction part there. But seven investments so far in their own. That's great. That's great. So you're connected with some other people that have crypto funds like you that you trust around the world and you co-invest some and invests in each other a little bit? That's right. That's exactly right. And so we're, I mean, my other partner is not here right now, but we've probably talked over 150 funds at this point.

We've only invested in two. But the ones we talk to, we're trying to continue. to build those relationships as well and really trying to figure out what value we can bring to these other fund managers so that they're sharing Opportunities and we're sharing things with them. Okay, but it's a No, it's it's one of our advantages is that network that we're building. Absolutely. Yeah, so let's back up to the to the fund headline of What was that guy's name down the Bahamas? Oh, Sam Binkman for you? Yeah, did you ever meet him in passing? I've run into him. Yeah, it's a It's on you really came. I think we mentioned last. I think we mentioned last.

time that some of the things you see you can't make up. And we didn't invest in FTX and we didn't have any money on that platform or anything. But I'd seen a lot of the blowups coming that have happened in this phase. I did not. That was pretty special. I mean, one reason you might not see that one blowing up it because it was like too big to fail. Right. It was like, well, look, Brady's invested and Mr. Wonderful's invested.

And, you know, there's no way this could be a scam, right? It, yeah, and they had, I think, over a $30 billion valuation, the amount of money that had gone into that. Yeah. And it just showed, it's really, I think, our takeaway, it's not an indictment on the technology, because it was really just, he kind of saw an opportunity in the technology, and then so joined the industry. Yeah. But it really was just like a bank that was, you know, focused on this industry or an exchange end. And yeah, that's a big reason why this sentiment has turned negative, even though the technology is still developing just right on track.

And the price of Bitcoin's gone back up. It started to, that's right. Yeah, since then, right? Since then, yeah, I guess it's up about 50% since that. Yeah. Well, I would say on a positive note for the industry, the fact that they would value whatever the heck you call that thing he was doing in the Bahamas at $30 billion. dollars leads you to believe that people believe this industry is going to be a monster.

It's just hard to pick early on, right? And I think it's one of the reasons you, it's so hard for anyone who has a full-time job to then go through and cut through all the noise in this space because there is just so, there's a lot less noise now than there was. It's easier to find a signal. But even still, it really is, we think it's one of the. reasons it makes sense to have a trusted partner that can get you the allocation to the space. Right.

Cool. And can you talk about any of the investments you've made in companies that we would understand? Yeah. So one of the really exciting investments we've made so far was in, maybe I mentioned it, but Miston Labs. Okay. It's a, it was this kind of all-star group of blockchain developers that face now meta-hired back in 2016.

And they spent four or five years building out really proprietary technology at Facebook, had all sorts of resources poured into this project. And they were never able to launch out of faith, from Facebook for regulatory reasons. They just didn't want Facebook to have a blockchain because of us, you know, their social media company, they didn't need to also be a bank.

There were some issues with that. Yeah. The team got frustrated and left Facebook and launched Miston Lab. But it's basically just an infrastructure lab and they're launching a series of products that make it easier for normal people to access blockchain applications. And specifically, a lot of them are around with it being spin off from Facebook or internet applications they're running on blockchain, things like video games and social media apps that are run on blockchains. And it's a really exciting project because we got into us. This was kind of right when things were, things were still pretty exciting.

They had started to calm down, but even though the market had started to calm down, this was 7x over subscribed. Wow. And so we had to elaborate, one of our partners helped us get into this deal. And the other investors, and Doreseon Horowitz, Coinbase, light speed, some really smart people are involved and invested in the success of this thing. And so they actually launched their first thing they're releasing is just a hyper-scalable general purpose blockchain.

Don't want to get too technical, but it's a lot of the technical people in the industry are really excited about it. And that releases within the next couple of weeks. So we're excited to see kind of how that plays out. And so just to see if I can say if I can say what they're doing in a way that I can understand, it would be something like

a way to use the phone to exchange money and a contract or an agreement for how we're gonna be swapping whatever we're buying and selling each other. Like if I was on a video game, maybe I could be paying for extra credits or lives or something through the blockchain versus through Apple Pay. That's right. And it's actually even a step further for like a video.

It's entirely open source. So it's running on top of a blockchain, meaning that there's not a company like Activation Blizzard that's releasing it. It's actually owned and controlled by token holders, which is only possible on a blockchain. And it's kind of like sci-fi confusion to understand. understand. But these things are starting to launch and we think that's actually video games is an area where blockchain's going to gain some real mainstream adoption. And I think a lot of that people won't even realize that it's on top of a blockchain, but there's just certain benefits to it. Interesting. So what you're doing is helping yourself and investors invest in these

early stage blockchain crypto type companies that you're making a bet on will become the next, you know, very successful company in this space, just like people were doing with the software back in the early 80s or people doing with SaaS companies in the last 15 years. For the internet. For the internet. Mobile phone, mobile phones, gaming. This is just another thing. Artificial intelligence, obviously, is a new one.

Let's talk about that, artificial intelligence with relative to what you're investing in. Yes, that's another kind of when we were setting out to create this one. That was really the only, it was really AI and we think blogging technology are kind of the next technologies that are kind of on the scale of the Internet. And really it's incredible to see. And really a big thesis for our fund is that technologies, they've built on each other over time. And so the rate of advancement becomes faster and faster. So if you think about like if George Washington fast forward 200 years into the future, he would see cars going around, he'd see, you know, all kinds. It would be such a shock to him, the contrast that he would literally probably die in shock.

But if someone from the, you know, mid-1500s came forward to the mid-1700s, It wouldn't, there would be, you know, some big change, but not nearly that level of contrast. Right. And now someone from, you know, the 70s, if they just woke up today, just, you know, 50 years later, it's almost this, you know, there was no internet, no real cell phones. Yeah. No. And so anyway, we, it's getting faster and faster. And so, with AI, it's, it's been crazy.

So I guess chat GPT was the big application that launched a couple of months ago. And it already has over 150 million users, monthly active users. And it's really, I think over 40% of the code that's being put on GitHub right now, all open source code is written by AI. And so it's going to impact every single industry. Just how, if you ever, if you haven't, just go try out chat GPT. what it can do is incredible. And so it's going to impact pretty much every industry, including blockchain technology and what we're doing.

And so we're looking at how things like writing code on blockchains, I think AI is going to play a big role in that, where it's not going to have any human error, particularly when you have financial applications. You don't want there to be bugs in the code, and AI makes it so it can also audit contracts. There's tools like that. And so we're, it's happening, it's developing really fast, but we're, you know, trying to stay on top of it and seeing what's going to be there.

And it's really just taking a setback and learning at this point. So I imagine you have a, your network of people that are in the industry, y'all are talking every day about things. But besides that, where else are you getting your information from? I mean, I'm reading all the time. A bunch of newsletters I subscribe to. I used on social like Twitter's actually as weird as that is there's certain people you can follow they're pretty good and love podcasts. Yeah, there we go.

There we go. And then we're going to conferences about every month at least. Okay. And I think just talking to the other fund managers, talking to people building things in the space, that's really the best, always the best way. Gotcha. Gotcha. Are there any investment companies around here? Any people you've invested in around here?

We haven't made any investments around here. There are some, there is some stuff. Like there are a couple of Bitcoin miners in the area. And that's, you know, it's one small part of the industry, but it's interesting. And so we've met with them with a few different ones. and the chairman of our investment committee, he actually lives here and so he's been really helpful in identifying a few different opportunities that we've looked at.

And he's kind of overseeing all the investments that we do end up making. We have him kind of review. But it's really geographically dispersed, which is the cool thing about this technology is this decentralized. And so you're seeing activity in the U.S., you're seeing it in Asia, You're seeing it like an Israel is a big hot spot for a lot of this stuff. Yeah.

And so it's... Well, we, you want... That also is a change that's happened in the last, I don't know, 20 or 30 years. It used to be, you know, if you want to do anything, you would go to Silicon Valley and that's where everyone, you know, aggregated and talked about things and got things done. And now, because of high-speed internet and everything else, it happens all over the world. Right. You could live right here in Greenville and do it.

That's right. You know? And it's more of the companies are maybe they're headquartered in San Francisco, but the employees are all over the country now. Right. And so it's... Right. Are there still people working in San Francisco?

I thought everyone had left. Most of people I knew when I was out there have left. They have. Yeah. Yeah. So it's... We'll see. It seems like New York's coming back a little bit faster.

Yeah. I guess the finance, a lot of the finance jobs, I won't you in person. But it seems like San Francisco, the tech job. jobs, they just kind of gone remote. Yeah. Well, you know, we've had different business leaders in here on the podcast, and they kind of all agree that this has just gotten them. They really thought it through, and they say, hey, you know, just work wherever you can be

most productive because that's what they want, right? We want people to be productive, not at the office or not at the office or in a van. We don't even care where you are. So I like the fact that our shutdown, or everyone to call it, forced everyone to think that through. It's interesting. Do you see it coming back? I don't. No.

No. I mean, I think what's going to, what's happening is people will have these little, these little areas, these hubs where they have, you know, instead of maybe a company that used to have a place for a thousand people, might have a really nice place for a hundred. or 120 where they have meetings and specific small meetings, big meetings. People can come work sometimes. But for the most part, the lifestyle of working remote is just so great. I've got a young man who worked for me. He's worked for me. And he's married, no children, a young guy.

And they'll just be living in Croatia or living in. Canada or just like, what do I care? You know, as long as they show up for the calls and get the work done. So I like that. I like that. It is interesting. That's like my sister and her husband, my brother-in-law, they're in London, but they're being in Europe, they're taking advantage of the cheap flights all in that area.

Yeah. And so they're going to Italy. They were actually in Bali for the entire month of January. Yeah. And it's exciting time. Just set up, set up a workspace. and get after it. I love it. So AI is going to be really cool.

It's going to affect your business too. I want to just back up for a second for the sake of the noobcast here and talk about, you know, if we're looking at you sitting here, you're running this crypto hedge fund and, you know, I guess your age is somewhere around 30. 29. 29. Close to 30. And, you know, it'd be very easy for me if I was sitting there, you know, in college and

I want to do what Brooks is doing. I want to be a crypto hedge fund king. And it's one thing to think of that and want to do it and recognize it as an opportunity, but how, in fact, do you set yourself up to do that? And I know in your case, I'll give you what I do know is that you went to a really good school, who went to Washington and Lee up in Lexington, and what did you major in up there? I majored in business and accounting. Okay, business and accounting.

So you had a good, general framework for business. And then you've worked for a couple of different private equity companies, hedge funds? I worked for, I went into venture capital right out of school. So it was just investing in early stage tech companies. And, yeah, no, it was a long road to get, I had plenty of bumps and bruises. Was personally kind of as I was probably spending 20 hours a week outside of my regular job, investing in these markets trying to build my network. But then really in my jobs right out of school was building, I think, the skills to help me

make that. I don't think I would be able to do this without that experience. But the venture firm I joined, it was five, it was a small firm, but all the partners are really smart, capable people. And I was the only analyst, so I got to work underneath these people. And I was able to pull bits and pieces from each of them and learn different things. And that's Trent, you know, been applicable in what I'm doing now for sure. And then after, so I spent three years there.

And then I spent a year and a half at a company called Capato, his chief of staff to the CEO there. And that was another job where I was working under someone much smarter than me and learned all kinds of things, how to hustle. And really tech in San Francisco is kind of 24-7. It's kind of almost like an investment banking culture where you're not. sleeping much. You're always kind of on the clock. Yeah. And so anyway, I think the five partners and then my boss in San Francisco really gave me the skills I needed to actually have a shot of this. So two great experiences. And on the side, in addition to those very stressful jobs,

you were doing a lot of your own crypto investing, studying, working, networking, whatever, kind of setting up this this passion of yours for later on yes yes and I think you know made we rode kind of a wave up at the beginning and we saw we've seen a few different cycles and I was doing this with my current partner now and so we got good at working together and really built a trust amongst each other but we definitely made every mistake in the book along the way personally it was good we did it with our own money Yeah. And we've ended up doing pretty well over time.

Yeah. And I think we had a lot of deals that worked out well, several that didn't. I think the ones that didn't work out well, we took much more away from those. And so now we're able to not make those mistakes again. That's one thing we did get good at is not making the same mistake twice. That's good. That's good. That's good.

So let's talk about those people you work for. It's very important when people get out of school or when they start their career is if you can work for someone that you can learn from, particularly if it's in an industry that's going to help you with your career later on, that's a real win. And so you mentioned to me earlier, there was five folks you worked for, five VCs, and one of them you learned a lot about sales from. Tell us about this guy. Yes, he was the managing partner and really good guys. guy and he could sell anything. And so he was the one in charge of all the fundraising for the firm. He wasn't the most organized person ever. And so he kind of would have me just follow him into meetings, make sure that I had printed PowerPoints and everything that he needed. And I would kind of

just go in the meetings and not say anything and let him drive. But he just had an unbelievable ability to connect with anyone he was sitting in the room with. And he was, he was, he was, he He had a level of confidence about him where he would just say, he wouldn't say many words, but he just had confidence in how he looked and he would, um, um, he came across as very likable and fun. And so I think what he did a great job at was putting himself in the other person's

shoes and thinking about what do they want to hear instead of just trying to constantly sell. He would, he would be, most of the meaning would be spent with him just asking questions. Yeah. And asking the right questions and saying the person. and saying the person's name and asking what. And that's, I've seen, it bothers me now when I see people in sales calls just trying to talk, talk, talk without letting the other person talk.

So he resisted the temptation to say, before we get started, you know, and let you know one of the reasons I can help you is because I went to Harvard Business School. Right. People will say stuff like that. Right. And they think they're doing. it for the right reason, they're kind of doing it because they want to say it. They kind of want to, you know, have an ego, ego come out there. But the worst I've ever seen, I'll give you my

highlight, my career highlight for the worst I've ever seen. We had some guys come down to try to buy our company years ago from New York. And they flew down on a private plane, of course. They let us know it's a private plane, Brooks. They were like, where do we, where do we fly into our private playing, you know. So anyway, they show up and they're all dressed, you know, really, really fancy suits and, you know, gold cuff links, the whole thing. And they sit down, we're just sitting there across the table. And one of them looks at the other one. He goes, why don't we get started by, why don't you tell them something about me? That's literally how he started. He wanted him to describe, you know, what a great managing director this guy was. So anyway, it's a good lesson you got

early on is that people don't want to hear how great you are. They want to hear how great they are. That's good. So what did you learn from Caputo? Capato. Capato. And then they're, and I don't want to, the other four partners taught me a lot too. It was more on the, they're all jerks. It was more on the investing side looking at how to evaluate businesses. And they were all very valuation conscious, which was unique in venture, because venture is kind of all about growth mindset and big returns. whereas they were focused much more on downside protection and it worked well in the industry that was it was kind of counter to whatever else was doing so that I would you know apply that and what we were doing outside of work and into investing in

digital assets and really trying to find where's fundamental value where where is there things that are under price as opposed to what has the most gross you know the most upside potential and so at Capato I think just operate. So when I joined Capado, there were less than 50 employees. And so it was very much a startup at that point. And a year and a half later, we grew in over 250 employees, raised a billion dollar plus valuation. And that was just, the company was really successful, but it was absolutely mayhem. What was the business? What did y'all do? We sold DevOps software to other tech companies. And so, development,

What does that stand for? Development operations? Yes. So it's like if you think about like Netflix, they're, when they do updates to the software, it's just we would help help with that. And so like we'd make it so instead of every two weeks they're releasing a software update where they have to push it out and it may like pause the app. It may make it so it was continuous.

Okay. So like Netflix is actually doing updates like every eight seconds. Wow. So it's like very small little tweaks. And it helps it so there's not as much risk each time you push out an update because it's just smaller. And so learned a whole lot. When a company grows that fast, there's all kinds of, it's just not very natural. You're bringing on people every single week.

You don't even know everyone in the office who's coming in. And so, and there's more work than there are. employees too. And so his ability, it seemed like there were fires at all times. His ability to know what needed to be focused on at a given time, address it, solve it, move on to the next thing while also like staying sane and not going crazy. It was, it was really impressive. How did he, how did he, do you know how he prioritized, which was, which was, one was the worst one or which one was the one to work on that day? He seemed like there was always a million things we needed to do with something we would do

every morning morning, what we would meet in his office for we would sit and say, okay, what are like we would say what are the most important things right now and then you get on his on his wall and just write really big three tasks that just had were mission critical need to be done that day and then everything else would he get those done and then move on if he if he had time. But he would make sure that if, like, if nothing else, he got those three things. That's good. That's a great way.

Yeah, it was simple. But that was probably the biggest. That was one of the biggest takeaways. I still do that today. Yeah. I'm telling you, if people don't do that, then they will pick the stuff on the list that's either fun or easy. Mm-hmm.

Right. And even like a to-do list of like six or seven things like that. Too much. But if you just have three things and then. Yeah. I do that with our. our support technicians is we we make them put them in order every day and I said I said I don't care if you only get one done or two but you can't do number one and

number seven it can only be one then two then three you know we can't be jumping around right so that's a great that's a great time management thing that's wonderful yeah I think being inside a company like that too it's really helped me I'd evaluate companies kind of what's a good company what kind of has their stuff together and I know kind of what questions to ask to see kind of how how it's operating. Well, asking that question's a good one of the CEO. How do you decide what to do every day?

Right. I worked for a guy one time who's a really good leader and he tried to stay above any operational problems. And so he had meetings every day that were only intended to improve every group. So sales, how do we improve it? Marketing, how do we improve it? Finance, how to improve it. And when there was something that came up, like a real problem or a lawsuit or whatever it was,

it would drop everything. No meetings today until we solved this problem. And then tomorrow or the next day, we'd start back up with kind of our improvement thing. So it's pretty interesting. Well, that's good. You got that good lesson. And so you were thinking all along, I want to get into this business, the crypto business somehow, and you had enough experience running these kind of financial money raise investor invests kind of

situation that you knew enough about it and it was you know six years that I had wanted to jump into the industry and it was kind of a time there just wasn't after 2017 crypto is very cyclical where it grows kind of in waves with each And so after 2017, when the, I guess, bubble had burst, there wasn't much opportunity. Capital was very hard to come by. It was kind of looked like the industry does right now where there was a lot of building. Right. But there wasn't, it was tough to get a fun up and running back then. And I didn't have the experience at that point either.

And so really it was five years trying to. trying to wait for an opportunity to jump in, continue to expand our network, continue to invest, learn as much as we could. And then finally, when an opportunity to launch a fund emerged, once we had a pipeline, we did it, but it took a long time. So when you say you were waiting for the right time, that would be for the industry to be more well thought of? Yeah, and so no one wanted to invest in this space.

And so it would have been impossible to raise a fund. And so in 2020, once the markets had recovered, I think we had the background at that point where we were maybe a little bit more backable. And the industry was more credible where people were looking to invest in it. But I think if we had spent a year or two after 2017 and said, oh, there's nothing here and then switched to something else, it would have been hard. So I think it was really just being persistent. Yeah. I totally agree. I totally agree.

you're sticking to, you know, the blockchain, the crypto world that you have enjoyed since you since college, I guess, and just waiting, patiently, like, preparing yourself with the network and knowledge, and you already had a business because you were already buying and selling and trading, you know, with your partner. But preparing for that time when you would be ready and your partner would be ready and the market it would be ready, right? And that's when you lost it. At the same time, I know the last time you were here,

you'd just done real well in the market. About that time, so you kind of had some more funds available to make something happen. Yeah, and I think our timing was, I think,'s worked out really well for us because we were doing kind of structuring the fund, getting all of the infrastructure in place,

and then going out, putting our, getting our decks together, getting meetings lined up and then kind of getting money circled up. And then we didn't have our first close, actually, though, until July, once the market started coming down. But we have raised enough now where we can go out and execute. And it's a weird thing that it's kind of the best time to be investing, and this is true for most industries, but certainly for blotging. The best time to be investing in this is the hardest time to raise a fund because no one

wants to be investing in it. Right. And so we had circled up the capital. So we had circled up the capital we needed and are now launching at a time when there's not as much competition for deals When it's much easier to see this separate the signal from the noise Yeah, and you know, we think it's gonna work out well. It's gonna Trying to have a long-term I love it long-term outlook for it we're excited. I love it So I was gonna ask you about information on crypto, but you said Twitter's a good place just type in in this in the

search engine there just type in crypto and There's certain accounts. I can get you a big list of funds. I don't know if you can put it in show notes or anything like that. But there's certain funds in the space that publish really good research. There's actually in Dresen Horowitz. They're a big venture capital fund in the Bay Area, probably one of the biggest, but they have a big focus on crypto now.

And they released a really interesting report a month or two ago. So that'd be a good one to follow. That'd be a great one to follow. Yeah, Mark Andresen. Mark Andreessen. Yeah, he's the founder, Andresen Horowitz. And it just shows the, kind of through all the headlines and stuff, what developers are doing, what applications are being launched. And that, that's the stuff that we're interested in.

Well, closing up here, do you have a, do you have a favorite book? Favorite book? Well, for purposes of your listeners, I think, how to win friends and influence people. Yeah. That was one of the best books or most helpful books I've ever read. Yeah. That's a good one.

I think that's... And then how about favorite word? Favorite word. Your favorite word? That's a good question. I thought you said crypto. Well, I could say crypto. I want to come with something more creative than that.

I say I like dogs a lot. There you go. You bring your dog next time. Yeah, I'll have to bring them on. We think they'll be friends? Oh, yeah. Yeah. Well, my dog's 120 pounds, but she thinks she's that size.

Okay. All right. Well, listen, thanks for coming back, Brooks. It's a great update. Sounds like you got your money raised. It's a great time to be out there investing in this space, and you've paid your dues and you know what you're doing. And won't you come back in about six months and pull your rolls' voice up right outside

and the parking place waiting for you? I don't know about that. It's been great. Thank you for having me. All right, man. Thank you. Take care.