Crypto VC Playbook: Solana, Ethereum, DAOs & Startups

[00:00:00] Ethereum is prioritizing decentralization. Solana is prioritizing breakthrough apps. Solana is primarily focused to be NASDAQ on the blockchain.

Ron, thank you for being here. Super excited to jump into all this stuff. I've got a lot of ground to cover. Let's hit it. Let's get into it. So tell us your personal story. You're from Austin, then you went to NYU. Why don't you pick it up from there? Yeah, so I was born and raised here in Austin. My parents still live about 30 40 minutes away.

My dad's a computer engineer, runs a software company, so I've been around computers my whole life. Started building computers and programming when I was roughly 11 or so. Was never an amazing programmer, but I was very intrigued. When it came time to go to college went to NYU because I was excited about going to New York, being in the big city learning about business.

Also I thought that programmers were losers and that finance people Except you were programming and building computers on the side. I realized, I was like no that's for losers. I'm gonna go to NYU and become a business guy. Ah, [00:01:00] manage the engineers, the Steve Jobs model. No, I was too cool for that.

I was ready to just go work on Wall Street. I thought Wall Street was cool. Oh, I see, oh, I see. Fascinating. Okay. Over the course of a few years in college, came to realize that I had no interest in working in finance and that my passion was in fact technology and that I should pursue my passion. I also met Tushar at NYU, we were classmates at NYU, and we both became very close, bonding over our shared interests, at the intersection of finance and technology within college 2008 to 2012 and this was the rise of the App Store, the rise of the iPhone.

Tushar and I were both absolutely mega Apple bulls I continued to be, I'd say, a lightweight Apple fanboy to this day, but we were just outrageously bullish to the iPhone and I remember every for probably three years or so, every earnings call, Apple earnings call, they blew it out of the water.

And I remember it was so obvious to us. I was like, this is the greatest trade in history. And then I thought all of investing would be that easy, and it turns out it's actually not that easy. And Apple outperformed Bitcoin, actually. I will stick back to Apple, too. I've also been an Apple bull, [00:02:00] but so anyways, I did NYU.

After college, I decided not to go down the Wall Street career track. Came back to Austin started working for my dad. My dad builds software for hospitals electronic medical record systems. Which firm or company is that? The firm, company's called VersaSuite. Okay. They cater primarily to rural hospitals.

The ones in big cities typically are run by Epic and Cerner, are the two big players there. Absolutely, exactly, yep. VersaSuite caters to smaller hospitals. So I learned a lot about healthcare operations, how to design enterprise software systems, databases obviously enterprise sales cycles, all that complexity and then grew, wanted to do my own thing.

I have what I like to call shiny new object syndrome, and It's called ADHD. Adderall is in shortage apparently nationally. Yeah, a lot of people have a similar syndrome. And Google announced Google Glass in 2013. And I got very excited about the shiny new object. And it was fairly obvious that there would be uses in healthcare.

It was actually not particularly obvious with the consumer use cases. For surgery use cases? Paramedics, [00:03:00] surgeons, nurses. Any job where your hands are tied up is fairly intuitive. Yep. And so I was like, I know healthcare, I know operational hospital workflows. Like Google Glass, like it was super obvious for me.

Started my first company in May of 2013 called Pristine. Pristine built software. We started off focused on surgeons. We later did it dealt with some other kind of functions as well in healthcare workflows raised some venture money, got to about 25 ish people, maybe 22 a few million in revenue.

And then Google. How much in revenue? A few million. Oh that's your product market fit. Yeah. Yeah. Traction. Traction. Traction. Certainly. We had some hospitals using it. And then after, I think, 18 months or thereabouts, Google killed Google Glass. Correction, they killed the consumer program.

And they actually were like no, there's an enterprise program still. But the perception was that it was dead. So Apple rug pulled you. Google. Sorry, Google. Google rugged me. Google Glass, yes. Yes Google rugged me. And after that I pivoted the company. We tried some other stuff in insurance, some other places.

None of it really worked. Ultimately the business was acquired for IP and for [00:04:00] talent and no one really made any money. I, wanted to figure out what I was going to do next. I spent 18, 18 month period between Pristine and Multicoin. Which was a very long period of time.

After six months, my parents started to be like, Hey, what are you doing with yourself? I told everyone three months and once you get to six, people start asking questions. And I was trying to find what I wanted to do. One thing I knew about myself and I actually have come to appreciate this fact even more as a venture guy, is I am very bad at coming up with ideas that I'm very good at looking at an idea in front of me, and tweaking it, and iterating on it, and having some sort of Socratic dialogue about, about a system.

And so knowing that about myself, and looking for startup ideas I went to AngelList, and I don't think they have this anymore, but at the time, if you went to, this is early 2016 they'd have at the top, little tabs, and it would be fintech, and cyber security, and blockchain, and biotech, and whatever like the obvious kind of major categories of start ups were.

And so what I made a [00:05:00] rule for myself, which was every day I'd pick one of those tabs, and I'd scroll through 100 start ups per day. And look at them, and some of them I'd spend 8 seconds on, because I was just like, Quick reject. No knowledge, no interest, whatever. And some of them I'd spend 2 hours on, just like digging around and make some notes.

And so the goal of doing that was, to spend a few weeks just to accumulate, okay, here's my like, whatever, 10 or 15 or 20 more defined interest areas, and then continue the iterative process of, You triaged and identified where to focus. Correct. And went through that process, I believe it was the third day of doing that I picked blockchain as a category, it was one of the tabs on the list.

Yeah, as one of the tabs there and started going through the startups and of the hundred that were there, most of them were like bit pay and like bitcoin payments kind of things. And I would say probably of the 100 I went through that day, I'm going to guess like Seven to ten of them were doing something on top of Ethereum.

I did not know what Ethereum was. But after the third or fourth time I saw Ethereum, I was like, okay make a note [00:06:00] go look at this thing. Started looking at Ethereum by the end of the day and started to become pretty intrigued. I was pretty fortunate that I had spent just enough time playing with Stripe's APIs, again, this is February, March 2016, that I was actually pretty underwhelmed.

Stripe, even back then, was a fairly hyped up company. And I didn't fully appreciate why, and I went to the website and I was like, okay. It's like a simple used API for a credit card, which did not strike me as particularly revolutionary embedded finance. I guess in 2009 that was revolutionary to be fair to the Stripe guys.

But as of 2016, I was like, okay, whatever. . And and then I started filling around with Ethereum and although Ethereum was a hundred times harder to use for Stripe to just do basic payment acceptance it was infinitely more flexible. And the immediate thing I understood at the time was basically from what is now what I would call permissionless innovation or permissionless finance.

I didn't have that terminology certainly in my mind at that moment, and I don't think I appreciated the extent of that term, but [00:07:00] the, this, the light bulb turned on. So composability Kyle was born in this moment. I don't think, I think this was as well before composability Kyle. I don't think I could have foreseen different kinds of contracts and having a token standard that can connect all of them.

I think that's still several years away. And from there started to, made a note of Ethereum, started to, again I went through another whatever 10 or 15 days of picking more startups, more companies, and making my little list and I ended up coming back to Ethereum at the end of that process, digging more into it ended up not loving anything else of the other whatever 15 or 20 names I narrowed in on and started to dig more into Ethereum, we're now coming in to call it April or May of 2015, 2016, excuse me and I started to really the lightbulb, I was like getting the crypto pill at this time.

Um, started getting more and more into it. Started investing a little bit in Ethereum. The DAO hard fork happened. I thought Ethereum was dead for sure. It became pretty apparent within a couple of weeks that it was going to survive. And once it survived that moment I was like, alright this is it, I'm all in.

Zcash ends [00:08:00] up launching a month or two later. Augur launches actually I think even before this time and I could see a bunch of startups were now building on Ethereum and I was like at that point all in. Over the back half of 16 and first part of 17, I was playing with other startup ideas.

I had no particular interest in building a startup on Ethereum or had nothing to had gone through that experience and it's a slog and it's hard and painful. I wanted to, I thought I wanted to do something that I didn't fully appreciate. I didn't have anything I wanted to, loved to do, but the investing part was very fun and was enjoying it.

And by spring of 2017, I had 100 percent of my net worth was invested in crypto. And I was spending 40, 50 hours a week reading about crypto online. And I remember the day it was the Gnosis ICO. This is roughly, I think, May 12th, 2017. And they raised 12. 5 million at a 300 million valuation in two or three blocks on Ethereum.

So it was like 20 or 30 seconds. And I remember I called Tushar and I was like, and I've been, we've been falling down the crypto rabbit hole [00:09:00] together. He had a job, I did not, so I was able to spend more time on it at the time. And I was like, hey man I think we need to go do something.

Like this, I was like, this is crazy. We got to do something. And he was like, yeah, we got to do it. So we made the decision more or less that day to start creating LLCs and then hired some lawyers to create LPs because we, which we didn't know much about how to create an LP. Started raising money from friends and family over the summer.

We launched our, what is now our hedge fund. On October 1st of 2017 and we have since added a few venture funds and SPVs as well and we're really scrappy, had no idea what we were doing, but I think the fund launched with, I want to say, two and a half million dollars, thereabouts. That was a liquid fund.

That was our liquid fund, was our first vehicle, and that vehicle runs today, that vehicle will turn six years old here in a couple weeks. So a couple observations. One is son of an engineer, building at a young age. So you had motherboards, graphics cards, you were buying components, putting that together.

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