We Come In Peace by Jehan Chu (Devcon5)

thank you to the foundation and especially Althea for having me and taking a risk on this talk it's the first time I believe that VC is being talked about at any Def Con this was very exciting my name is Johan Chu and this topic comes out of conversation that I've been having with some of the largest institutional holders of aetherium who are also diehard etherion bulls and we felt frustrated a little bit not so much by the current state of aetherium because we're all relatively patient long-term investors with you know longtime horizons to invest but there's a disconnect a powerlessness and a disconnect on how we as institutional investors can help make a difference in the layer1 aetherium ecosystem not just the startups that are building on top so something doesn't fit between traditional VC and decentralisation it used to be that VC was really straightforward you would find a bunch of interesting early-stage companies you make sure that the founders are good you write a check you help them grow and then you wait for an exit opportunity and that's how it was for decades but this model is not only obsolete as seen by recent failures of uber and we were to really kind of perform in the public markets but it also obviously doesn't really fit a decentralized project like aetherium so we can kind of agree that the old model of venture capital needs an update to fit the decentralized age so add that to the rise of you know obviously crowd funded applications of aetherium and it becomes even harder as an investor to process all this so as an investor how do I invest in a company that has no CEO that doesn't report revenue much less have revenues and how do i price the risk of an asset that you know swings 15% on the back of a tweet how do I help the project grow when I'm not even sure who they are is it the foundation is it the Debs is it the DAPs is it the ever-present but kind of fluid community and how should i as an investor feel about a community who isn't really sure how they feel about me and my role as an investor and seems to keep a healthy distance from the investors at best and maybe is you know a little suspicious and skeptical of our agendas at worse so there's a disconnect between what you know there's disconnect and I think that the etherium community as a whole is really missing an opportunity as a result and I want to be clear about what the opportunity is for connecting the VCS to the community better it's that it's the fulfillment of the promise of aetherium of the potential aetherium and obviously this can't be done by the EC's alone but i believe that the more open dialogue between the traditional a theorem community and the investor community we can all really help grow the ecosystem together in ways that are not really being currently addressed so Who am I to say all these things I first and foremost I'm the founder of the etherium meetup in Hong Kong so we started in March of 2014 was our first meetup we had five people in a smokey bar and we had Stefan Toole who was skyping in to tell us about aetherium since then I've done over 80 meetups and I've hosted Vitalik seven or eight times in Hong Kong and I'm also the founder of kinetic which is a VC we've invested in over 50 aetherium based projects along the way and I personally invested in the crowd so myself I co-hosted the first aetherium super meetup in Hong Kong with Sean gia from digits and each Singapore which drew well over a thousand 500 people and I did the first NFT conference in 2018 with Ahri from decentraland called nifty so I'm an early investor and one last thing I'll mention is that I have a small foundation which is dedicated to blockchain for social impact called social alpha and as a Kauffman fellow I think a lot about VC and venture capital and how we can better serve the founders so I think the backdrop of some of where this comes from is this idea and this feeling that aetherium is somehow under fire it's become the whipping boy of blockchain in some ways with people focusing too much on what aetherium can't do rather than all the things that it can do there's continuous complaints about the scalability issue even though we know that there are solutions that do exist in our making traction there's frustration around the long wait time for you to and then on the external side you have companies and projects that have you know multibillion-dollar bankrolls who are challenging for the protocol space and waging a really increasing war to attract and retain developer Talent and that's putting pressure on aetherium in addition one of the founders of one of the largest etherium owning projects that I know he described a fatigue in aetherium that's happening right now and I can think we can we can almost even witness it here there's not as many people hair as there used to be there's not as much buzz around it but this is not a permanent condition for us we know as people in the etherion community that this is a natural growing pain we're growing and it's painful but its growth and more importantly we know that these problems are more of a issue of perception rather than reality the issue is not just that the you know people are believing the wrong things it's that there's a gap in mainstream communication and messaging so people who are outside of the ecosystem don't really know who to listen to they don't know what to believe because they're not in it every day like the way that we are and can't separate fact from your fact from from fiction I guess to somewhat up there is a feeling that there's a gap between there's a gap in the number of influential mainstream voices who are consistently and vocally articulating the strength of aetherium if you think about it who are the biggest Bulls in the etherium ecosystem sorry in a mainstream so aside from italic and the foundation all the great work that they're doing obviously Joe Lubin is out there is doing great work as well who are the other key external people that you can think of off the top of your head in the mainstream who are really talking about aetherium consistently who are really educating the public and educating other influencers because it's in their direct interest to do so how many can you really name I have trouble thinking about too many of them now part of this is that this is a feature not a bug this is how the foundation in my mind wants to be positioned which is fine because it's a decentralized governance system it's a decentralization and they don't want to be too influential in certain ways but there is a cost and consequence to this and it's the void of kind of messaging and support by mainstream influencers that is filled by FUD and complaint and doubt and there are many ways that VCS I think can help and that's what we do in our daily life but in my mind this is one of the most immediate and influential roles that VC's can turn on immediately to help grow etherium so that leads us to why why do we want to help as VCS and it leads to the incentives and alignments of VCS who have significant investments in ether and the ecosystem projects how can the community understand and evaluate our incentives for choosing and boosting aetherium signal well first the talaq was talking about economic incentives let's just address those obviously we as VCS who are invested long term in aetherium have a financial a direct financial interest in the price of eath and many funds that I know have put 10% of their fund in aetherium now I don't know how much you know about VC math but a lot of these funds are depending on their investment in aetherium to go up many many multiples in order to return the fund itself that's just VC math it means that they're really depending on if to grow long term but most large crypto VCS who hold the theorem are not really speculating on the price only their investors with long term investment horizons and they're investing in the technology and the ecosystem like traditional VCS and they have five to ten-year investment horizons and I really want you to understand that because there's a sense perhaps that I've heard where people think that these are just flipping coins some of them are that's fair but many are not and the earliest ones are not yes there are trading funds but they're different than VCS and second I think that many of us who have invested significant portions of our portfolios in the equity of companies are based in aetherium and again these are five to ten year investment horizons that were trying to grow companies equity on aetherium if aetherium doesn't work if it doesn't scale if it doesn't grow its user base a large portion of our portfolios will starve to death and then we as VCS will starve to death 2/3 I think that etherium is in many ways a proxy for the health of decentralized technology generally aetherium is almost synonymous for blockchain technology and whenever someone says that aetherium doesn't scale it's an indictment of the entire industry because etherium is the largest and most holistically developed public blockchain it's really bad for business for people to be you know continuing this flood so I think we've established with the financial alignment of VCS and why we want to help grow the ecosystem not just the companies on top is clear we need aetherium price and especially utility and the companies on top to grow so that we can make money and drive returns for our investors that's the financial side now if your dev or our founder maybe you're thinking okay well that's basically what I thought VC just want to make money cool well yes and no yes we want to make money but no that's not all we want it's actually this fourth reason that I think is the most important and why most of us are in it in reality the financial side of VC is not why most of us got into investing in reality the much more powerful incentive and alignment is that we really loved and believed in aetherium our passion and belief in aetherium is the most reliable indicator of our long-term investment in the space many of us who are the long-term holders were there at the beginning I did a short survey of some of my friends who are long-term holders and 75% of them were invested within the first year of aetherium between 2014 and 2015 now we believe in the idea of decentralisation we admire the developers in the etherium community building the platform and most importantly we respect the tone and tenor of the community it is the most single differentiating factor of a theorem in my mind and we remember how far we've come from the start just like you when you know the financial opportunity was non-existent really kind of uncertain the path is uncertain and the risk of failure far greater and this is why we get that it's different than 99% of the other protocols and better than 99% of the other protocols it's the community that's been built for many of us aetherium is the purest form of expression of blockchain and the ideas of community and decentralization that attracted us to the space in the first place we chose to invest in this industry it didn't choose us and that's what I really want you to understand about some of us VCS who are long and large and in etherium if you're adi hydra central is hard to centralist maybe you're thinking well VCS are part of the problem because we concentrate capital because we're exclusive and because we wield outsized influence which bulldoze is the field of decentralization and you're not wrong we do concentrate capital we are exclusive and we do wield influence but the point of this talk is to suggest that maybe that's not the end of this story maybe there's more that unites us than divides us our common ground is the belief in the product and the mission and maybe it's time we can harness our influence for the common good I think if the aim has come a long way the foundation the devs consensus the EEA have done an incredible amount to carry the load this far but I think the question for now is what can be seized do for our part to ensure that if you can really go the distance and to really help if you really succeed so I think in considering VCS we can suggest that we're just another node in the network I think it's best to think of VCS not as a class outside of the etherium ecosystem but more like just another node in the network just like there are minor nodes there are business nodes there are developer nodes there are other types of community nodes who focus on different areas of developing aetherium VCS are a particular community and we have particularly and particular skill sets and contributions VC is in particular don't like to sit back and let other people do the work we like to add value to our investments it's how we are evaluated for our work how much we make and how much value we add so we can't just sit back and let someone else handle we have to mingle we have to meddle we have to get in there and and try to help make things better we can't help ourselves it's like a sickness it's like the venture capital itis we don't know any better than to try to help we're not always helpful but we want to be helpful we we try to be so how does an old-school traditional VC typically help a project obviously if you're funding helping to raise other funding we introduced founders to business development develop strategy we do board of directors financial roadmaps and recruiting and Resource Planning risk management crisis management and obviously we're the main investor for many of the companies that are building on top and I think addition to things that are specifically relevant to etherium because of its decentralized nature are helping to engage and attract enterprise customers and growth and to influencing I think Enterprise has great support from EEA but it can't have can't hurt to help and have more firepower I want to touch on this point of influencing because it's really key for VCS I know it sounds a bit fluffy but influencing influencers is an important leverage that VCS have as investors for example back in 2015 I was doing one-on-one meetings with italic and CEOs in the Hongkong community CEOs of banks to educate and normalize the narrative of blockchain 4 that was the first time they'd heard a blockchain and continue to today hypothetically if there was a gathering in China of some of the biggest multi billionaire internet founders who are just starting to look at blockchain and our enamored of certain Chinese dominated DPOs block chains or worse think that they can better roll their own solution and I can ask fatale ik or other people in the foundation to come and make a pitch and form a contact bond so that when they build their blockchain solutions for their billions of users that 3m is at least in the conversation then isn't that worth it isn't that worth the effort and as VCS we may not be able to build applications but we're pretty good at building stories and building relationships so if feces can do all this then why aren't we doing it well it's because we work in a certain way and when we back a start up we're typically backing a founder leading a company building things and driving revenue that can typically be sold so aetherium is really hard to help because there is no one founder to talk to her help but this is by design again this is a feature not a bug the foundation doesn't want to be in the position as I understand a blessing specific investment agendas or efforts much less telling us what to do or not to as I understand it they're here to Shepherd and various self-guided efforts if they deem it aligned with the aims of the foundation so the question here is is there a way for VCS to make use of their resources without compromising the spirit of decentralized governance that's core to its birth one idea which is a really simple one would be to self organize and to start doing calls or meetings to discuss how we can help and how we can prioritize things that we think the ecosystem needs and it's important to note that many other top-level protocols which are great in their own rights are also already have vc-backed who they came after aetherium so they didn't have to deal with the same type of issue of not having formal backing now I don't have the perfect answer here but the point I'm trying to make is that perhaps there's a middle ground if we talk openly about what we both want and can contribute then I believe VCS and investors can harness a great deal of the pent-up energy and experience for the common good we just need to work together on the solution so going further how can we improve venture capital the age of decentralisation well there's no question that the traditional model of venture capital is tried and has been honed to address some of the most fundamental issues and growing a company and it's been effective in growing the companies that we know and love but it's worth asking the question has decentralization changed the game perhaps we're not only helping to grow companies anymore instead we're helping to grow the communities that grow the platforms that grow the companies and if that's a case maybe we need a new approach the new VC is not just a financier were a node we can't just invest we need to participate if I had to sum it up in a simple idea it would be don't just allocate participate specifically participation in this new time the VC realm can mean a host of things and it's really important to note that many great funds are already doing these things farms like Pantera and fund Gucci and poly chain and hash multi coin and Andrea sin liberties and even a set at kinetic we're already doing some of these things we need to run nodes adding nodes to the network is a very basic function and a fundamental role that we can play staking of course we can add value to the network and add security to the network community calls actually participating in the conversation around where the function goes and where the platform goes is important obviously participating in governance we can't just talk about it we have to be about it we need to continue educating and evangelizing and help to create and enforce a narrative around aetherium that goes beyond just the foundation just the technology storytelling is really important in our space and it's important I think particularly important for aetherium and I think we can do that on behalf and then finally Enterprise growth I think is quite important and I think that we can add a bit of firepower to that and rahl user growth maybe what we should be asking at the end of each quarter is not why isn't the foundation doing more to increase user growth and instead asked how many companies did I introduce to aetherium and how many users do they bring on and in the spirit of the community and to address the exclusivity issue maybe we as venture capitalist shouldn't do this from the perch of being an investor maybe we should be doing it you know not as an exclusive access to an exclusive club investing in an exclusive round but really from the ground level at the same level as the community and if we go into that area maybe we can think of ourselves you know maybe we don't need to be just venture capitalists maybe we can be nodes maybe we can be venture nodes and step by step we can slowly but steadily facilitate a more open and distributed investment framework for this new age of decentralisation and I think if we kind of travel along this path and think about it more maybe we can become a better version of ourselves and who knows maybe we can just fix the broken model of venture capital along the way wouldn't that be nice so what's next what do we want from the community or the foundation to be honest we don't really want anything other than for them to know that there are people out there like us who are thinking this way and if they think that this is helpful if you think this is helpful engage us we need to grow this through dialogue from the etherion community again we don't necessarily want anything specific either other than an openness to meet us halfway and engage in the dialogue and get suggestions and support and feedback there's always been a distance between the etherium and VCS and maybe we can bridge that gap a little bit and breathe some life into this idea to be honest I think this is much more a call to action for the investor community to self-organize and perhaps give some shape to the things that we think about and kind of put into action and so if you're an investor and want to participate hit me up thank you very much [Applause] you