The Pomp Podcast - Niv Dror: Building Engaged Crypto Communities

Episode Date: September 5, 2018

Niv Dror is the Founder of Shrug Capital, a venture fund focused on early stage consumer products. He previously worked at AngelList and Product Hunt.  In this conversation, Anthony and Niv cover consumer technology, how to build engaged communities, and what crypto projects can learn from successful Silicon Valley startups.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Niamh Dror is the founder of Shrug Capital, a venture fund based in San Francisco focused on early stage consumer products. He previously worked at AngelList and Product Hunt doing a variety of different roles. Niamh is one of my favorite investors in all of Silicon Valley. In this conversation, we covered consumer technology, how to build engaged communities and what crypto projects can learn from successful Silicon Valley startups. I really enjoyed this one and I hope you do too. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions

expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by pomp as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his opinion this podcast is for informational purposes only all right guys i'm super excited about this neve is one of my favorite investors in silicon valley i will caveat this entire conversation saying that in a previous fund we are an lp in one of neve's funds so we've done our diligence and came out with a thumbs up so i'll get that out of the way but thank you for coming on and thank you for kick-starting my

investing career we can get into that later but let's talk about where are you from and how do you get to silicon valley i moved to silicon valley when i was 10 from israel so i grew up in the bay area i went to steve jobs's high school they used pcs i grew up like you know a mile away from apple and all that stuff and then went to school at uc santa barbara and um and then i was studying accounting and um and got a cpa when i was like 20 and then like went to like audit hedge funds because like santa barbara is not really like a theater school for hedge funds so like auditing them was a close like a day it was great and then and then um it's super easy to like audit hedge funds because it's like cash and marketable securities yep so then the next

year i got into i was exposed to the vcs and the first vc fund that i worked on was lowercase which is like the highest returning fund of all time and then and then chris saka's story like really inspired me and his investments in twitter and instagram and they were and it was it was a very interesting portfolio so then and he was a lawyer so it was kind of a somewhat related absolutely he's got an incredible story yeah right he uh for those don't know chris saka um long story short was like day trading in college went into debt uh went out ended up working at google um and uh did not claim bankruptcy was like in the whole like four million dollars by himself yep and then and then after google in public he like made it to zero

which is that he's like never felt richer after making it back to zero absolutely um okay so uh you went to steve jobs high school um did they promote that while you were in high school no i didn't even know it when i really yeah and then i went to community college first to dianza which is like where the where the steve jobs movie was and like where they launched initial ipod and the initial mac and and i was like i graduated when i was 16 so i was really young so it was like two i never took the sats or anything i just um barely graduated high school but in college i like really like started studying and like all of them that's awesome what what is uh what's the one thing that you took from your time growing up in israel that like i stuck with you in

it makes you appreciate how other especially like thinking back over that environment it it took very it's tel aviv is like a bubble i did not grow up tel aviv it was like in hadera which is like a small like not rural but it's just like it's it's like a shithole compared to other cities so uh it makes you kind of appreciate where people come come from and and gives you context different perspective yeah uh very cool okay so uh you're auditing all these funds uh you're um you know working with lowercase etc uh hear chris's story what do you do after you kind of get inspired and you're like oh this tech thing might be real yeah so i wanted to join a startup in my and i liked soccer a lot so and my friend from high

school and college had a sports technology company in huntington beach so that was if i was if i was any less naive i would not have joined it it was like a really like no offense to it but they're like in school like they weren't even doing it full-time so it was a really nice like vacation for three months in Huntington Beach this is so I moved from San Francisco to Huntington Beach and then left after after three months and then just started kind of reading a bunch of like about crowdfunding and the Naval story of like I saw that he was making the private the I saw that the private market was becoming more efficient so like with AngelList and those things and he was the first person I called emailed like asking to work at AngelList and he said he's only hiring

designers and engineers but the fact that i responded was really inspiring because it showed that i can actually connect to these people and then i ended up working at data fox which was kind of like a bloomberg for private markets yep um so it was great and then so you go data fox and then where you go after that and then i left and i was briefly kind of helping my friend at nasa ames because like it was i love the space industry but quickly realized i don't have a physics background and it was kind of and he was like it was a tiny satellite company so i ended and then meerkat just happened out of nowhere so he joins i want to do that but then i reached out to to ben the founder and wrote this post to get his attention because it's like meerkat was it's

like a weekend so everyone's like blowing up so so pause for a second uh meerkat is a video streaming um app that at the time just literally exploded in a couple of days yeah ripped through silicon valley across the country you'd open your your home screen like you just open your phone like the entire home lock screen would be uh this person followed you this person that went live it It was really, like, I've never seen something like that. It was, like, really remarkable. It was, like, a new type of experience. Truly viral product.

Yeah, yeah. Because they were, like, hacking, not hacking, but, like, their original tagline was tweet live video. Yep. And then you couldn't even not tweet it. If you went live, it tweeted it. The old growth hacking days. Yeah, and, like, Periscope wouldn't even do that, and they were acquired by Twitter. So it was really aggressive.

and like my first day I had to write the first day in that morning Twitter cut off our API access so we couldn't well so you

so back up for a second so you reach out to the CEO you write a post reach out to the CEO and eventually get hired right to go work at Miracle I just said I'll do it

I'll just I'll work for free like they just decided they weren't planning on going to South by but they just decided they were going to go so then I was like

okay I'll do like I'll do the Twitter I'll do like a social media yep and then and that turned out to be a key thing because that's when I really kind of blew up with Salphi.

Every year there's like an app that kind of wins Salphi. That was unanimously, like Mashable threw out a Meerkat parade. It was insane. That's awesome. Okay, so you're there, and then you go where after Meerkat? And then after Meerkat, I joined Product Hunt. Yep. And for those that don't know what Product Hunt is?

Product Hunt is where people discover new apps. People go to launch their apps. whether you're a developer in India making a Chrome extension or Uber's like Uber Eats team making it or Facebook Messenger. Anyone is launching anything, an update, a new app, anything. You're putting on a product and it's kind of from makers. It's a great way to get feedback

and then it has become kind of an essential part of your launch strategy. So you go to TechCrunch, you go to Product Hunter. And then primarily kind of tech audience, early adopters. Absolutely. And it's a way to drive kind of those early adopters to use your product, give you feedback, and then obviously for the early adopters, it's a way for them to discover these new products they're going to build. And then we expanded on it. Like when I was there, we launched this thing called Ship, which is a tool that helps people launch their new products.

So if you have a test flight, especially like a pre-launch product, it's a way to build a community ahead of the launch. And then when you do launch, you have all these people that actually care about what you're doing. They know your story, and they can try your beta product. Absolutely. Absolutely. So for those of the people that don't know, Neve does very little to almost nothing in the crypto space. But one of the things that you did at Product Hunt and that Product Hunt did very well was build community and build this rabid community that was ended up being highly defensible. Right. Let's talk about that because a lot of parallels to the crypto community in terms of the crypto industry and building community. What are the things that you guys did that worked and maybe even a couple of things that didn't work as you build out that community?

uh i'll start briefly what didn't work okay so we product is is it's for tech people and then when i when i joined we expanded into books and podcasts and and all these separate and gaming and all these sort of verticals and that just didn't resonate with people and it was we end up just diverging back and just okay let's double down on tech because it's big enough that's what's working yeah and then in terms of how you build community it's it's essentially it's like it's giving people early access and and and for things or that's just that's a tactic but the goal is to make them feel like part of the team so for example like a big part of the way in proctant and meerkat less hands-on in proctant but it was more of a strategy it's like sending people swag

so i think there's like a community swag and there's like marketing swag marketing swag is not effective it's like you go to a college and you you throw like 100 t-shirts and people like sleep in them maybe yep and then there's community swag which is more people already like you then you send them a shirt and like with a letter or something and then they like love you for life and so do you think that people uh when you do this like highly like this high touch you know um interaction is it because they love the swag that you're sending do they love the it could be anything you don't even have to send the shirt just send the letter the swag is just it stays with them because the letter you end up throwing away the sweat like the shirt you end up

like wearing it becomes like your favorite shirt because you really like the people and it makes them feel like part of the team same thing with like when you like same when you have a new hire you should give them, like, a swag pack, like a notebook and a computer and a shirt to make people, like, feel at home and feel like they're part of your tribe. Yep. You indoctrinate them. Yeah. And then I don't think you can spend enough money on –

you can't spend too much money on this kind of stuff because you're just, like, making people, like, fans for life. Absolutely. Okay, so that makes sense to me. So the swag and the personalized outreach was a huge driver of the community. What else did you guys do? So we had early, like, making them feel like they're, I mean, not just feel like, but actually, like, giving them, showing them early stuff. So we had a thing called, like, building in public.

So we just, like, tweet out or email them or share, like, screenshots of, like, InVision stuff of what we're building and getting their feedback. And you don't have to implement the feedback. It's more making them feel like their voice is heard. Yep. And this is Product Hunt was taking features and new products, et cetera, that they were working on, exposing them or showing the community them before they were actually launched, soliciting feedback, and then Product Hunt may or may not take the feedback, but at least people felt like they were a part of the process. yep exactly um any app could do this by this is like i end up working very closely with founders directly so when i have feedback or suggestion i just have i can give it and then by extension maybe my friends are using it could also go through me and say it but then it's scaled that

doesn't work so maybe like having like i'm i'm really not a fan of chatbots but then i know like some people are building like chatbots into their apps just to get feedback or to like share earlier like just to communicate with your audience better because email is not really effective Email is great if you could, I mean, it's very high touch and personal. So, for example, like even like with Adams, for example, there's like 11,000 people are waiting to order the shoes. And you can just email everyone and be like, hey, you can order the shoes now. Yep.

I think that's going to convert like 20%. That's actually going to be really high. Or you could like email 11,000 people individually and be like, hey, what's your address? I mean, sure, you can make things more scalable. and but making feel like it's think like if you're going to hollywood premiere and like you just see like a billboard like you're invited or like someone from the event like tells you hey like we have an extra ticket do you want to come like even if you don't care about the movie you'll

probably come because it's like it feels like you're getting a personal invite so um like scaling down scalable and in those ways and especially like at the early stages i think it's really key absolutely and then uh how much of the product on audience was uh u.s based versus international did you guys do anything different 50 50 50 did you do anything different for the international audience um no no but but it was that's actually it's a great it's a key point from when it started because when it started it was like very much like silicon valley based and then those same people which i mean it's based on sf like and these are like our friends basically so the um they would feel like the whole process has changed but it's like no not really like

i mean you're still on it but you're just a tiny minority compared to like the all audience absolutely tiny compared to the entire world or even just the united states um and then but it should still apply that's another thing by the way it's like there's a danger of not scaling enough like not making decisions that only apply to your early audience but then that could in the long term hurt you because you really have to like think what's best for the broader community and ideally without losing that early audience but what's best like a broader absolutely so okay so you've got the personalized touch right um you've got the swag you're kind of building this about what else did you guys do that slack groups or that was

we had like a 7 000 person slack group that eventually it died down but it was still like super effective at some point and even just the newsletter so i wrote the newsletter every day in the morning and it's you're talking directly to your community every time it's having that channel that's we almost like took it for granted because it was in terms of like announcing stuff because it was such a we just did that every day yep and we usually announced everyone else's product but when we launched our own look we had already a channel to do that and how much of that is uh the slack group etc is just digital community right what we see a lot of people doing on social media today okay i think so when procton throws an event like there would be like

a line it's like known to have a line like all the way across so okay so hold on we gotta go deeper here because uh you used to put the events right product on events on facebook and people could rsvp didn't mean that you were going to get in right it just meant that hey i want to go to this it's on my calendar and facebook will send me a notification you know what's coming up i remember that you guys held one at um what's the uh open air bar in uh sf um there's like an i know what you mean yeah it was packed i forget what it is and there were i remember this is a couple years ago there was probably 3 000 people maybe more on the rsvp on facebook and uh i wasn't in san francisco the day that it happened but i remember people sending me photos being like

dude there's literally like a hundred maybe more people standing outside in line trying to get in this thing and it's closed right because it was just full inside um i think like something to take away from that is like people weren't there just like yes they maybe they're here like to see like ryan or or the team members but like they're there just be part of the community yep so like apply that's like a big like pretty much like what what do people want like and i think people tend to like people as a company when they're announcing something or anything or a product they end up like thinking what do i want and then here is now you can have it and then you really should think what do you want and then and then like extension maybe it's related to me so even

like like we're going to dinner later today right so it's like how do you get higher profile people to come you don't you don't say hey high profile person do you want to come and then you go get everyone else you say here's everyone else hey high profile profile person do you want to meet all these cool people yep so it's like and that's where they would come because they get to meet absolutely well well because i think that a lot of those people who are in that position they don't want to feel like they are the attraction right they want to feel like they're actually getting exposed to a different audience but they're all they're just they have interests too like they want to meet interesting people so it's like hey come meet interesting people and then you know all

the people that benefit from that person yep it's not like let's let's get some hype it just it's usually comes down to like reversing how people think about things it's i always end up doing that like people start from like the end and they should like take a step back and just flip it absolutely so uh in summary product honey it sounds like one the initial contact right so there's some kind of indoctrination of hey you are one of us welcome to our community two is there's a personalization to that uh initial contact right and then three is doing things to um would it be fair to say continue to cause collisions of members of the community whether it's digitally or in person so slack groups in-person meetups etc um and as you kind

of just continue to do that it feeds on itself and then would it be fair to say that at first that's the team right doing it and then there's like ambassadors almost right they kind of take over those roles as it grows? Most of the events at first at Product Hunt, people just asked if they could throw them.

I wasn't even there at the time when I was there later but it was people just like all over the world that started wanting to host these meetups and then they would ask,

hey, can you send us stickers? I'm like, yeah, of course. You're doing all this work, yeah, we can send it. And they would go crazy for that because it's super easy

in our part. Because then they get to say I'm hosting a Product Hunt meetup. Yeah, yeah. So allowing your brand to be an extension. It takes some trust because, like, you're basically letting other people control your brand,

and then if something bad happens, then you're kind of like it's on you. So it's not without giving anything up. Absolutely. Empowering the community is key. And that makes it more scalable, right? Okay, so you go through Product Hunt. You guys build this ridiculously amazing community. How do you go from Product Hunt to Investor?

so product was acquired by AngelList which is fantastic for me because I've always wanted to work at AngelList hey Naval he came back and then I slowly kind of transitioned into AngelList Nivi who's Naval's co-founder really like took me under his wing and and he was doing marketing and then I was kind of but he let me for everything I do like starts with doing the twitter and then kind of I earned his trust doing that and then I extended blog posts and kind of running a team of one the marketing there because

no one else was doing it and then the fund started but before you get into the fund but the twitter thing you're a little bit dismissive of it but it's maybe one of the most important things right because it is the public voice to some degree of this organization yeah so and it was yeah so people usually i've seen this like firsthand where people see that the company's twitter account is like they'll let the intern do it but really that's like your especially for especially for crypto companies or in tech companies in general that is your voice so with meerkat that was like super important because like we it was all eyes were on meerkat all the time and the product is actually differently because we we promote everyone else's products every day and once in a while we

have our own announcement but it's silly like you're crafting the brand voice from that that's what i'm doing like a lot very carefully now with this shrug capital account where i'm kind of treating it like it's a parody account like in in because it's like funny like i literally walk founders through the twitter feed and they're cracking up and then like they like me better but like what it does is like it demonstrates what i can do like i'm using my own skills like marketing community building a brand voice in my own company now yep and then by extension i can help you do that and i'm not like right now i'm explicitly saying it but that just it's implicit like when i'm talking to founders about it absolutely okay so so let's get into that in

a second but uh you're at angel list and you say okay i want to go invest right walk me through what was your thought process to why you wanted to go invest and then like how you formed your thesis of what you were going to invest in yeah so i've always wanted to be an investor like my first ever vine when vine was coming was coming out it was like me riding my motorcycle around sandhill like taking like vines of all the vc logos i just really liked it and then after we were acquired by angels i started doing some angel investing using syndicates you backed i think the first two the only two that i did um and then but i never thought i would raise my own fund my dream job would be to like intern or be an associate or i was not not at a partner level you know like

at andreessen or a founder's fund or something like that but why would how would i raise my own fund like i'm not a founder i'm not an experienced angel i'm not i'm not like a vp somewhere so um but then a friend suggested why don't you like raise 500k um you could do like 25k checks i'm like yeah i could do a lot of 25k checks from 500k so that was like within the realms of possibility like i could see myself being able to raise that much i wasn't sure who would come from but i could probably pull together that amount because i knew enough people in the industry yep um and then that turned into three million the way that happened was um again much like the events like the kind of briefly talked about it's how do you make it something that

that someone would appeal to them so it wasn't at first it was like focused on me it's like

hey I'm doing I'm raising this fund it's focused on consumer I have a sense for consumer always want always want to work with you would love would love for you to be involved

for like any amount like any amount is like key like people would say like 10k I'm like great fantastic it's like any amount

that you're comfortable with 10k more than you had before you sent the email yeah but especially with like the early ones that means I could use their name it's like Balaji

from uh who's now the cto of uh coinbase he was the first like it was the day one before i even officially started fundraising i went to owen brainard who um who is like a wealth manager for phoenix and he said he'd be in and then i went to cyanide founders fund and she said she would be in um and then balaji and he said he would be in and now i was ready to start fundraising because now i can go like over email the people and be like hey i'm doing this thing cyan and owen baldry investing um i'm going to focus on consumer i just like i have uh i think i have a good sense for this i think founders i didn't say this but the pitch was basically founders want to work with me i have deal flow and i have access it was but it's like more

hypothetical because it wasn't really proven out yet yep and then um the ask was like would love for you to be involved by any amount and then the first those first emails went to chris saka chris dixon mark and chris dixon invest with mark andreason um and and a few and adam draper um and then and you and then everyone basically said yes so okay so but hold on this is super important right because i think that uh i'm gonna brag on you for a second because i'm uh very impressed with your ability to one have the confidence right to directly reach out to people cold two is you're not really scared of them saying no well i didn't think they would say yes well of course chris sack i wouldn't even get on a phone with like i still never talked to him on

the phone like he i was trying to get on a call with him just to discuss like an angel investing because i see how naval is investing and he has a different strategy i was like hey now i'm like if i'm following your path let's get on a call and then like he was too busy so i'm like okay but two days later i had to like ask him for money so i didn't think he would say yes and and then this is not risk like it when once there's expectations like then it becomes more of a thing but i didn't think you had no expectations so if they said no there was not going to be that much and the amount was like the amount was like 500k to a million like you know it was it's very achievable so it's like it yeah there's zero expectations and then but once

everyone said yes then now i kind of changed the pitch because like hey i'm doing this thing and i had allocations in some high profile companies at that point so it's um hey i'm doing this thing i have a location in like xyz companies like you've heard of um so and so and so and so and like all these people that you know are investing. And then I would still say, like, we'd love to be involved for any amount, but it was really, like, framed as, hey, you should, like, want to be part of this LP group.

Yep. So then, like, and by that point, that's what took it from, like, a million and a half to three. Yep. And, like, because I just started reaching out to, like, anyone I could possibly want to work with. And you built social capital, right? You built enough validity for what you were doing

by going to people who were closest to you first, getting them to say yes, didn't even matter the amount, then what you could use them as again i passed their threshold i passed their criteria they know who i am right i'm good enough for them then that almost emboldened you to reach out to more and more people all the way to kind of the edge of your network where you're reaching out to people that you had never talked to didn't know like i was done fundraising i was like it was like a continuous case of being oversubscribed but i was fine taking more because i didn't change the strategy the strategy was to do 50k to 100k checks um and then and then at three million i knew i

could still do that maybe i need to like incur more in the higher amount but um because i shouldn't work with like too many companies but it didn't change the strategy i was fine taking more up to up to three million um and then and what the the key thing that i did that was really important was i was not an investor before so i wasn't like an angel where people would go to me for deals like but now i was so even if people said no like i reached out to people that no business saying yes and some and some said no by that point but they one they all agreed to say like do you want to on the investor updates and like um they're like yeah i love it cool so now i get to like email them these like i don't want to name names but it's like of course they're really i feel like

i have like the most influential like smallest mailing list right now basically or and then but after like doing a few investor updates now like i've gotten to know them better and and maybe if i raise like more money then maybe they will say yes it was just an opportunity to email people um every month yeah i mean look but but this is again the parallel to crypto companies founders is very real right because one of the things that I've never understood you're now sitting in an investor seat is a company comes in they pitch on an idea maybe you know the founder beforehand maybe you don't right and yeah I really want to work with you that you know they give you the whole pitch and

if for whatever reason you pass whether it's them it's the market it's you timing all the different reasons they go away you don't hear from them again until they're fundraising again and so yeah you always you shouldn't do that well i tell them all the time i say listen the number one thing that you can do whether it's with us or any other investor is just send a weekly monthly or quarterly update and you don't even have to address it to them personally just make sure that they're staying up to date with your progress because when you walk in the door the next time and you're fundraising or you need help you don't want the last time that they talk to you to be when you're asking for money yeah but

even even then so i take that a step further and basically is that is still so self self-serving beneficial for you like i want you to know what i'm up to then here's the stuff the way i i think of it is like okay you've you've allowed me to email you um how can i make like i kind of pretty much i'm trying to make the investor update super interesting so it's it's less so about updates on my portfolio it's more here's what i'm noticing and i think that'll be interesting to you so that's what i'm like what i'm going to communicate and then by the way here's like some updates on the portfolio but um this like and then it's hard to like make that really it's easier to do when you're emailing one person because you know what would what they want what they want but when you're

trying to make it like broadly applicable to over 100 people then then it's different but it's it's always coming over the mindset of um what does this person care about what are they what's going to resonate with them and then and then like you never i never asked for it's like never asking it's always like coming like bearing gifts which and then the gift could be it's uh an opportunity to invest or or or info about your space or or about but whatever resonates with them that's what you should do and and then they should want to be involved involved with what you're doing at facebook uh we had this saying and i'm paraphrasing because i forget how we say it but basically provide more value than you take right and if you it sounds like you're doing that

i can definitely uh vouch for you that you have the most interesting updates because i've never seen so many gifs emojis ar vr you know video clips uh it is just entertaining right and so when you look through it it's not only do you are you saying hey you know i invested in x company and this is what they do when you wrote in text you're literally showing the products yeah right you're showing how this stuff works and it's just super i can't a lot longer to do it takes like you know a month to like work on them like as soon as i finish the first one i start working on the second one yep um and then iterating over time but it's it's the it's the most effective got it okay um so again you're not super deep in the crypto world right but i think that there's

parallels in terms of you're building a company right building this fund um but you're investing in consumer products right and um walk us through why consumer and what does that entail you know from your investment strategy and then we can um kind of walk through some of the similarities between that and the crypto companies so the funds thesis is again not traditional it's things i'm excited enough to talk about for an hour to a non-tech audience and and i think that's important for a consumer because you can be you can get kind of like sucked into the mindset of like this is like a especially within the product audience like don't just build something for early adopters or for the sf tech scene or or whatever your community is doing it's good to start that way

but for a specifically for a consumer product needs to be broadly applicable to anyone like mainstream so like what am i excited about like tell my brother about or my mom about or and that doesn't apply to everything um but needs to be like broadly applicable applicable i don't end up having an hour to talk about each product usually so the way i kind of test my interest is things i'm excited enough to pitch on on the behalf of the founders meaning to get co-investors in it doesn't really matter what they if they are in or not or what they say it's more am i excited enough to actually pitch it on their behalf. And during the pitch, I often,

one, I give them feedback on pitching, especially if they're kind of beginning their fundraise. And then two, I kind of pitch it back to them to see if I know how to explain it properly. It's all a word of mouth. Like, how do you explain something in a very simple way? Because people aren't going to take away, especially the first time meeting you,

everything you're saying. How do you make sure they know how to explain what you're doing in one sentence and then maybe in a paragraph? and it's all like building up to i guess let's talk briefly about pitching so it's like building i don't think you can like i don't think it it's effective to just say any statement without substance behind it so like anything anytime you in separately you can't tell people what to think so if i want you to like if you say this is the best you that doesn't no one's gonna like care

about that you should you have to validate the statement yeah don't even don't even say it like you've earned the right to say it after you've like said five factors of like uh like after you have shown why it's the best and then maybe you can like narrate what you just said therefore we're the best but um and it's like very generalized obviously but it's you can't tell people to think and then you can't like you shouldn't say any statement that people can disagree with you about so if you could like say the sky is blue well okay you can't disagree with that but that also doesn't advance what you're yes obviously it's blue so it's just saying like step by step like like little by little moving the needle of saying stuff that people can't

disagree with to the end and by the end of the bed they're like saying 20 of those things like maybe you're at the end of your pitch and then they can't disagree with it therefore they like your pitch absolutely but but so let's talk about this uh for example um your mission statement or what you're focused on is something that you're excited about to talk to a non-tech audience for an hour right uh in crypto specifically this is probably actually the most egregious example of the opposite where there's a bunch of early adopters technologists who have run into an industry and they're highly talented very experienced they've got a lot of capital behind them and they're tinkers they're hackers right and so they're building all this technology that

can do x y or z thing um it remains to be seen is that actually going to solve problems for users and be products that users want to use now it depends what state i think right now like we're infrastructure phase of crypto, so you're probably not going to. I mean, there's obviously very big exceptions, but mostly you're just building infrastructure that maybe in a few years is going to enable these

consumer apps. But somebody still has to use the infrastructure. Right, so maybe your audience is developers or people that are doing other things. I'm not sure. Yeah, of course. But I think that the parallel here is the technology is important because it has to work,

right but also what is important is getting the user experience correct solving the problem right and i always tell people that if you have two mobile apps right that do the exact same functionality they're the same quality one is decentralized and one is not the likelihood that somebody who's using the centralized version is going to switch to the decentralized version is very very low there's some people who will do it but the majority of people are not going to switch if you have a product that is centralized and is a better product than the decentralized version almost no one's going to leave is it fair to like compare it like the tesla example where like there's some people that buy a tesla because it's electric and they want to be clean

and environmentally friendly but then tesla i mean i think tesla's winning but like majority of the people are buying it because they think it's a better car yeah right yeah they're not buying it for the environmental impact although it happens to be decentralized or happens to be electric because it's absolutely not leading to that. Absolutely. And I think that that's part of the challenge for people building stuff in the crypto and blockchain world is you are not competing against other decentralized applications.

You are competing against all applications, right? All infrastructure. And so your mission or your goal is actually much tougher than people building decentralized services and products because you not only have to build it in a decentralized way, but then you've got to build it better than the centralized version. where do you think it uniquely makes sense for something to be decentralized yeah i mean look there's all kinds of stuff right i think that the number one you know criteria that we really look

at is uh or really there's two things so one is if there is somebody who uh profits or is incentivized to wedge their way in between two parties right in the transaction so that applies across finance tech you know all kinds of different industries but uh when you are actually incentivized to wedge yourself in between the two we think that technology can rip that person out right um the second thing is uh trust right so really what is happening here is technologists are attacking all of these centralized entities and doing all this stuff that you know is pretty sexy and shiny and all that stuff all they're doing is they're using technology to have a more robust trust system and so when that occurs think of all of the product services interactions

transactions etc that you you know interface with on a daily basis that you only use because you trust them right or or you at least trust them so therefore you use it do you think that what's happening with facebook and and the lack of trust with these bigger entities is is an essential moment for crypto or so super controversial uh opinion probably uh i don't think that the number of people who don't trust facebook is very large if you look at the global audience over two billion they're very there is a they're a very loud minority over two billion you know monthly users across the globe i don't even think that there's 10 million people who actually don't trust Facebook right now to your point they're incredibly loud they're right in

our face in terms of you know us-based media social media etc but but a lot of people in the world Facebook is a very very you know net good and so I don't even think that they're aware of the issues let alone you know kind of got their pitchforks out and complaining about them yeah right okay so another component of these consumer applications right not only is building for the users but walk me through um how you talk with founders about building virality and and building these like growth mechanisms um and maybe we can use an example like let's talk about atoms for example right so uh maybe talk about what atoms is and then we can talk through some of the things that

they're doing because i think there's a lot of things that apply to the crypto world yeah so adams is uh it's it's the well say it it's the best everyday shoe um i'll start from the end it's these two founders from pakistan that came from nothing and just were shoemakers for years and went through white comedy or like a separate shoe company like the dress shoes and then and then they realized that people don't really wear dress shoes in the united states and then they wanted to make a shoe that people wear every day so they like started like interviewing kind of designers at facebook and instagram and then like everyone like they call them like the new creative so people that are creative like what do you want in a shoe like they would like go to nike and like

see people wear adidas they go to adidas stores people wear nikes there's no like lock-in but you see people wearing in suits like wearing uh sneakers and some just want to be like working stuff like or the orange but really just people uncomfortable shoes and then that has been underserved from from like an everyday shoe perspective because if you're wearing sneakers that's maybe like a more like a running shoe or a gym shoe and you're kind of compromising on the look and um and then and also like a big underserved part of the market is people like have different feet like different size feet uh it's more so it's important right each individual has two feet for the most part yep and most people yes yeah and and one of those feet may be bigger or smaller

than the other like i think a quarter so don't quote me on it but i think like a quarter size difference in feet is like maybe like 60 percent and then maybe like 30 percent have a half size difference and then under 10 percent have like more than that so it it's it become you probably know people just don't never talk about it but it's some your one foot will will like fit a little bit differently so anyway they do quarter sizing so one if it's better they do quarter sizing by foot so i'm like in size nine and 9.25 for example and then people usually assume it's a gimmick but and like just try your actual size and it makes a huge difference but they just rethought like what a shoe should be like i when i met to what cost for the first time i told them i have like a hard

hard stop in like 45 minutes we end up talking for an hour and a half because i've never heard someone like speak thoughtfully about shoes and just everything that goes from the design to the to the sole to the outer sole to the laces like no the laces need reinventing but people are treating about how the laces are like people people uh people want laces but they no one wants to tie lace so it's all these little things that at the end of the day people end up wearing them every day and and kind of singing their praises um and then and oh there's no logos too so that's an interesting part like people don't want logos they don't want to feel like um their billboards the way logos came about like these all these big nike logos and adidas logos because

in the 60s when the tvs were tiny and they're like sponsoring athletes the only way to like really know what who's wearing what's to put a logo on the thing so it shows up on tv um but They have no logos, and that's what they found people want from research. Absolutely. And so what they've done, though, is they've built a product that, one, people want, and then, two, is they've done a lot of the things that we talked about from Product Hunt, right? They've implemented in terms of building a community around these shoes, what these shoes stand for, wearing these shoes every day,

and almost made it a lifestyle, right? Yeah, so they're not selling one of their own shoes. they're just like keeping people updated um through newsletter updates of what they're doing we got we got our factory in order we're making progress just keeping people like they have an amazing story and they're telling the story and then and then by the way like they end up making like the best shoes and then people and then they they see that you have tried them are very happy with them yep and then people want to be a part of that and it's like there's a way to to to make that a gimmick basically like but it's yeah you have to make the best product and then and then

everything else amplifies it and i think like the most important thing is word of mouth growth uh that's like the not necessarily like think like you know the way facebook is like all these like you know invites and like having all your contacts up and that's like you'll get maybe like high numbers but the retention probably won't be there versus like getting a friend like no you have to like actually get this make sure you get in the they tell their I think I don't know what the numbers are but again I don't think anyone knows what the numbers are at this point but if you have a pair of Adams you're probably telling like at least five people about them and getting and then people also ask like because there's no logos

people don't know what they are so like they would see the shoes and be like what what are they and then or especially if they see like a second one like then it's like they put two together okay what are these that you are wearing and then it may it kind of turns your customer into to pitch your product on your behalf same with morph and the gif thing that i keep tweeting uh i've regularly said i've referred over 100 people 100 people to their test flight because everyone keeps asking what these are and then they added a watermark to it and then that stopped and then people get a support because they're disappointed because they would like to see what it is and they'd go to the app store and they can't find it and then but even if they could like it neutralized the

conversation and then when they took it away it's like you see like the product stands on its own like both atoms of shoes people know what they are because of what they are not because it says the name same with morphin like the gifts it has like a very distinctive look and then that just gets your your early users to become almost like salesperson on our behalf because it invites their audience to ask about them well and morphin is interesting because it's a technology product right where they basically take it's not even a gift as much as a very short video right it can be you know five ten seconds and they take your face right um and they impose it on to uh into that video and so it literally puts you in the video and then you can send that and so there's

ones where you know you're superman you're all these different characters and so when you post it online what you end up seeing is you know my friend in a video how the heck did they create that yeah right i know my friend's not going in you know i movie and doing it they've got to have no people assume because like i would respond like i would respond to and i always like to like turn like celebrities on like that into a gif like really quickly and then i respond to them and all their friends they see the replies like did you really just spend like hours doing no it takes like 20 seconds yeah but um but that even that is like it's there's one a lot of technology behind it to be able to get it just off a selfie and not off a video it's they're

the best of that and then two there's a whole art component to it where um there's a lot of subtleties that make them so likable where i'm seeing like 100 people's reaction like it's just universally this is awesome um and there's a very fine line between uh creepy and awesome absolutely and they're like they've nailed that basically because they used to they came at it from a way of like wanting to put you in video games two years ago so it's more like an art you like it you definitely recognize the person but it doesn't look the real you don't look mistake of actually being realistic got it um okay so what's your view as somebody who's an early stage investor consumer products based in silicon valley of the crypto industry right

where are you sure you want to ask i'm asking and i and i truly want the good and the bad right of how sitting in your seat you see the industry i fully believe in it in the long term and then a lot of things are exciting in the short term but there aren't too many like use cases it's first i feel like and especially with the icos it's like it's it's definitely an innovation on the fundraising side but then what happens when you have a like you're essentially funding like a seed company with 100 million dollars like that if you gave like a seed startup 30 million dollars that will um promote kind of bad behaviors like you know like too fancy of an office or just all these extravagant extravagant things that we've seen in certain startups so like i know

like there's probably like mild milestone based things are happening but the innovation the fundraising is clearly there but it needs to be refined more to actually align the incentives and the behaviors and better yeah what this is i wrote this morning um underfunding can kill a startup overfunding can kill a startup as well right um and when i first started investing somebody told me uh they were like look no matter how much money a company raises they spend in 18 months if there is a million bucks they spend in 18 months if there is 100 million dollars they spend in 18 months right and there will be out fundraising again right and so to your point the difference between a million 30 million and 100 million where does that delta go it's not

usually in headcount it's in how how nice the office is whether they serve lunch or not no even even then it's like so you could like even with with headcount like well then you can afford to pay whatever i've seen i've had friends who've gotten like ridiculous offers uh for salary like double yeah we'll double your salary sure which is like insane because if you if you're like one they're gonna raise okay can i get like ten percent so it's people like i mean not and then not in turn like um who like the type of people that attract probably aren't the best because they're probably motivated by by what you're building or and then nobody should be like that motivated by salary I think I my entire career I've like really like work for free or away kind

of under just because that was like a side thing probably to a fault where they shouldn't have accepted a few things but it's just it's following kind of what you want to work on um because your time is your most valuable thing and then if you're just doing something for a salary then maybe you don't do your best work but that that only that's only a motivator to some extent um I think is it fair to say with the crypto that's kind of an issue like how much people getting paid and yeah so i don't know how uh there's definitely the teams that have raised you know in my opinion too much money um there's definitely uh you know excess spending going on that's everything for offices to i know some projects that are flying around in private jets

to you know all that kind of stuff um also paying people too much right i think that the part that is most interesting to me about the icos that obviously as an early stage investor where you sit um you don't deal with as much right so uh if you think about a traditional deal that you do you're doing either price rounds or you're doing convertible debt right and the convertible debt is usually in some standardized form around a safe or something similar right in the ico world you know what initially turned me off almost you know over two years ago and just i couldn't get over was the idea that as an investor and a fiduciary of other people's money when i would invest there was very very little investor protections yeah right and so not in a egregious

hey i want to own your whole company but in uh if i give you money and you give me this token it's not equity it's not debt it's not a claim on cash flow what do i own right if everything goes sideways and the company's about to go out of business what's our repercussions what you know what recourse do we have um and so i think that the innovation right that you're talking about is much more on the issuer side, right? There's almost like a power law to some degree, right? So the power was in the hands of the venture capitalists for the last two, three decades, right?

They had the money. They really dictated terms and market comps and things like that. What we just saw over the last two, three years was a massive swing to the other side where founders all of a sudden were raising tens of millions of dollars in non-dilutive capital, right? And sometimes even could do it,

and a lot of times without the VCs, they're completely boxing out of deals yeah i think that there's probably equilibrium to be found between those two extremes right i mean naval talks about this a lot down bundling of capital and advice and and there's nothing but it's being unbundled and and too much of an extreme is not good because you're actually like having like when you're raising a series a and someone joins your board that is the most like you're essentially hiring someone that the that's unhirable and that is a key from a mentorship part in governance and in advice that's actually very key and maybe you cannot get an advisor to do that but but do they feel as like there's a

whole balance that needs to be worked out i think that's a really essential part of the early stage well and it sounds like really what you're talking about so if i kind of extrapolate this out right so one is you gotta have the right founding team right you gotta have the right community right that part of the team and you gotta have the right investors advisors around the company and around the community and when those three things align you got a shot right you still gotta go to the tech you still gotta go you know you don't you probably get away with with some there's always exceptions but these sound what you mentioned those three things sound like the right balance for something to happen and then it could still not happen for so many reasons um absolutely you

want to have the right you want to give yourself the best chance of let's say like even just from a like if you have like too many co-founders maybe that's like a red that could be a red flag there's like things like you should give yourself like the best shot from like that you have direct control over because you have there's so much that you don't have direct control over absolutely uh how much do you think the things that are valuable in building a startup that is proven to be important how much over and over do you think there is in the crypto world and are we not seeing enough of it potentially or yeah this is a really good question um so there's two there's a level one level two level one's kind of high level you need a team

you go after the you know big market you got to have a product that solves a problem kind of all those types of things identical right level two is more of well who are the types of members that you need on a team um you know how do you deal with growth you know is it through invites like on facebook or is it through this incentive token how do you fundraise right um the kind of more nuanced or detailed um components are uh correlated they look similar but they are different when you get you know really really in the in the details um i do not think that a lot of the projects right so remember in crypto we call them projects which is like you know a bunch of friends always say like what do we like talking about seventh grade science projects right um that's what i called

earlier when i was talking about the first job i have it was like a very advanced school project well and i think that what ends up happening is people look at them like they're building a project and so they throw out all of the things we've learned over decades of building companies and building sustainable organizations so you get but like side projects are important like i'm sorry but then it changes when you're raising 100 million dollars for your side project well is that a side project anymore right and should investors allow it to be your side project right because i think that part of this is um what is the expectation setting between a founder or a leader of a organization an individual is putting capital forward right and so if there's

misalignment there as we all know it might not play out day one day 365 or year four at some point though you're going to hit a snag and that misalignment is going to become very very obvious and actually going to become a usually insurmountable obstacle, right? And so I think that what we're seeing in the crypto space is a lot of people who are trying to build companies or projects, but they are not leveraging all of the things that we know that work. So, you know, a couple of examples for you. They raise too much money, right?

They spend very, very little time solving the problem, and they either focus all on building community or building technology, but if you build technology you build a community and you solve the community's problem with the technology that's kind of the holy grail to some degree um so there's a little bit of that uh and then the teams right um i see teams that what they're optimizing for is what i call like the sticker shock right so what's the sticker so they want advisors investors and team members that have the logos right so hey i worked at x company i you know spent i went to y school whatever they're not optimizing for experience for expertise for skills now in the traditional

tech world there's still a lot of that goes on right you still see teams that hey we've got all the people went to the right schools who you know what works the right companies etc but I think that venture investors who do it professionally for a living are much much better at teasing out i got it that you went to x school but they can reference and they can kind of get around say are you are you real right do you have the skills to actually do this in crypto remember most of the capital that was raised over the last 18 months the individuals contributing the capital never talked to the team right huge problem right and so not because you can't make good investments without talking to the team but at an early stage startup the team is probably going to be the most

consistent thing that exists through the life cycle of the company and so how do you you know imagine if you couldn't talk to any of the teams before you invest in them yeah it's a it's a key thing what i what i have seen is i kind of usually say i'm either like the first check or the last check so if i'm like technically as an angel investor if you're the last check that's how you're supposed to do it yep because the price stays the same and then and and everything's like you already know who's investing you know everything all the information you could know is there and then you can make a decision to me those are the investments that one i'm lucky to be involved in like thank you to my lps and it worked for getting into them but those those

are ones i'm less active in because i just haven't worked that much with the team or compared to basically when i'm the first check because i can never ask who else is investing until after i commit but then and and obviously i mean you do know kind of someone's like you know towards the end of the beginning but actually if i'm one of the first commitments then um by extent if i'm excited enough to invest and i'm excited enough to get other people to invest too and then that means i'm pretty much like putting together your round or at least helping there and then by extension i end up like working very closely with the founder either on the product but at least that point on the on the fundraising side and then i either like set introductions like everyone and

then maybe like they close nothing and that's like that's like frustrating because i mean how are you gonna hire how you know it's it's telling and then maybe you close everyone and then like you kind of amplify you you're taking something and you're like really like you it also it shows that okay maybe i want to put more money in it it just it gives me more knowledge of what it's like to work with someone and that's what that's what happened with uh with morphin where i wasn't like i thought it was like that's too silly like to invest but okay it was like very on pieces i'll do like i thought like maybe i'll do 25k but then okay i'll do 50k and then i work with them more and I got more of a conviction on it,

I was like, I need like 100K. And then I was like, I can like syndicate out like another 200K. So it gave me a lot. So you went from 25 to 300? No,

it's my biggest investment. So very, and that's because when I've worked with them, you just kept impressing me. So that's the other thing. The more you know someone, like unrelated to the fundraising side of it,

they could show you what it's like to work with them and then that could either make you less excited about them or they could use that and keep exciting even more where like they are like i'm already excited i'm already investing but then they just keep impressing me even more so that yeah it's just more information about it it is one of the only

places in the world where um past performance is a great indicator of future performance right if somebody has proven that they can execute on the company itself not necessarily previous companies yes which may or may not be telling like a lot of founders especially like when they're in the wrong environment so i could say a founder like used to work at twitter and i didn't fit in yep Well, that's much different than a startup. Well, it's hard to tell what impact they actually have at Twitter, right? But I think what you're saying here is

if I start a company today and I approve for the next six months that I have executed, six months when I come and ask you for money, it's a very good signal to you that I will likely continue to execute. Which is why it's good to talk to someone. It's fine if they say no.

You should never really get someone to say no. You should pretty much know what they would say. you're not trying it's not like a rant when i guess i when i asked people for money initially i didn't i thought they would say no so it's fine but it was more like like why not try but they didn't say no it's like okay that's a reference point and then you come back a year later and and involve them but if you're actually asking them for to make a decision you should pretty much know they'll say yes because and because you should have already done all the work up front to get to that point where you know it's going to resonate with them

um and then maybe things don't work out that's fine but but even if they don't then you know maybe maybe they'll do your next round and that's different with crypto but it's it's it's an essential kind of reference point and as opposed to like meeting someone for the first time and and seeing just one snapshot where you're at at this point as opposed to like look at how much you could say like you've you've sold a hundred thousand one hundred thousand worth of revenue and then come back in a year and say you've sold 110 000 okay that's like not impressive or you could say we okay we we saw you like 30 days ago and we're at zero 30 days later we're a hundred thousand now that a hundred thousand looks great so absolutely what um so uh i'm gonna

ask you one last question then you can ask me one question um what is your best piece of advice to somebody who wants to uh let's talk about an international individual who would like to break into silicon valley or become connected to silicon valley what what do they do it always comes down into teaching people at something. So right now, for example, if you're based in Germany, for example, then a lot of Silicon Valley investors, I'm generalizing, but it's an active thing,

is a lot of Silicon Valley investors want to invest more outside Silicon Valley because the area is so expensive and it kind of prices a lot of people out and there's a lot of great opportunities in the United States, but also internationally. And I have two companies in London, two in France, one in Berlin.

made and i know a lot of investors are maybe not maybe they're more investing in outside like more around the united states but definitely there's more in europe so if you're in that local let's say in berlin then well you could find those investors that are looking forward to invest in europe and then like show them like here's what's cool in berlin be like their first like pretend like you're already working there and pretend like and this is like if you want to get into vc or going to get a startup or whatever is like reach out to the person that's that's most relevant but and it needs to be record it's not anyone it's a person that is actually in europe but they're not in europe they're in silicon valley so teach them about berlin teach them about about the

european startup system like and then like and don't ask for anything just like give value like you're not and then after you've like sent a few emails or tweets or which relevant information then you probably run the night to um hey can you can you actually introduce me to someone and then and by that point that person will will want to do that because they feel like they know you and then and that now you're kind of asking them to pitch you to someone else and then that reaffirms for them that they actually um like for example like chris saka made introduction like for me recently and i'm like i was blown away i didn't even know he knew that much about me so it was very telling but that was over like years of years of years like building kind of

still be kind of a relationship so yeah just give give value without like give more than you take yeah absolutely but it's not just more than you take it's like only take like a little down the line after giving so much or like of course they would like want to help you absolutely um all right what uh what one question do you have for me what consumer crypto products are you most excited about that are more like in the next 12 months are more uh ready for true consumer yeah that happen to be crypto? There's pure consumer products that happen to be crypto.

So I don't think that any of the pure consumer crypto projects in the next 12 months are interesting. But I will caveat that and say there are a number of products that are actually outside of crypto that are starting to incorporate crypto. So they're not pure play crypto.

So Robinhood's a great example. Square's a great example with their cash app, et cetera. I think that those are super interesting because what you're doing, you're taking highly kind of experienced, very, very data driven teams that have over time iterated on that user experience and they understand the growth models and levers of control, et cetera. and now they're incorporating crypto into that ecosystem or that system and when you do that what you get is crypto now becomes this great user experience this great consumer product etc i think that most of the core crypto products other than say maybe you could say like a coin base a circle etc they are the exception to this rule but the rule really is technologists are

building technology i don't really see that many products that i'm like wow i want to use that super easy and i could walk up to anybody on the street show it to them and they're going to intuitively understand how to use this right some of that's driven by the underlying technology right so if you know metamask is my my favorite example here super difficult to use a lot of people don't know how to use it a lot of people have actually never used it before and so if your product requires that as a criteria to you know be used on a daily basis there's a lot of friction right and so some teams are just gonna have to wait for the infrastructure to get better and then they can build these consumer products uh but some teams can be more thoughtful about how

to build a consumer experience and and um you know a lot of that stuff and and if they do that i think that you know my answer could change but right now it's uh you know go infrastructure because the consumer side is uh is not looking great yeah all right so um awesome man thank you so much for coming i uh i really appreciate this you've got a a unique view in the world and uh hopefully we can we can do this again thank you for having me hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill

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