VCs Dive Headfirst into the Metaverse & Web3 - Panel featuring Zunaira Arshad, Paul Hsu and more...

[Applause] can you hear me okay awesome well it's so wonderful to see all of your lovely faces um thank you for that wonderful introduction as mentioned i am a partner at drive capital where i focus on sort of the web 3 market but we're very much a thematic vc all of our partners have different markets that they focus on so i'm privileged to be joined by this wonderful host of of awesome talented investors in the space who mostly spend their time focused on investing in the metaverse web 3 and and kind of blockchain based technologies so i'll let them each introduce themselves and then we'll jump into the questions welcome builders it's uh great to see the whole crowd great to see all the sponsors thank you for having me tonight my name is paul sue i'm uh ceo and founder of decasonic we are a crypto native venture fund uh building blockchain innovation i've been in crypto since 2013 rolled over so my zynga ipo proceeds into bitcoin prior to that i was a web one silicon valley vc a web 2 operator and now a web 3 early stage vc also just recently we signed a partnership with kadena proof of work later one to run their ecosystem fund and so now we'll have a lot more funds to back all of you so excited to share our thoughts today thank you awesome thanks for having me i'm a chen um based out of amsterdam um i'm the founder of trdc early stage venture fund um discovered bitcoin on obviously a forum related to the dark web late 13. i'm here in denver my second uh eat denver looking for the crazy ones guys and girls builders solving their hardest problems where our thesis mostly focus on infrastructure middleware actually even more from a sas perspective as in this industry is growing and growing we're not fully convinced yet that we're in the application consumer phase yet so we like to look at it from a more fundamental uh aspect hello so thank you thank you for the stay here i am not a typical busy investor because i really a computer engineer i recreate a company i saw my company 20 years ago and in that i become to invest first in web after in in fintech and right now we in in crypto and i think that's it's not going to be so they i think we are going to be more vcs builders that become vcs i have seen a lot of people who is investing and returning some of the the the the success that they have invest in our projects and it's going to be more so we'll we have crypto platas an accelerator i was even some time time sometimes i try to to develop and i was hacking three years ago yeah really wanting to to invest in projects that i love it and and i love develop so that's my background that's awesome well thank you everyone for introducing yourselves paul i know you felt some type of way but um edtan's comments are talking about his thesis so i'm going to let you guys um um talk a little bit i know i know you just had something to comment on so i'm gonna let you kind of go right in uh you know by background i'm a layer 7 guy i believe in use cases i believe use cases drive blockchain adoption there's no better time to be investing in applications in interface layers that's why we're talking about the metaverse and vcs like ourselves love that mainstream mainstream adoption kadena loves it you know ethereum loves it polygon loves it you know bring on those applications you just contradicted yourself you just said you bet kadena which is a fundamental layer of project right so thank you for that um the thing is we get on calls and we usually see copies of copies of copies and i usually would ask the founder what are you building on and i'm like i buy that right i'll support that um and what we do is uh next to investing we like to get involved in the infrastructure of the project like providing nodes validators actually grow that ecosystem that's our bread and butter that's what we feel at home and we're going to stick to that i guess we can step back a little bit and talk because because clearly as vcs all know we all develop different theses and we have different processes to developing those theses so maybe we can get into what our process is like as i mentioned a lot of my work is kind of market map-based so it's finding the whole market talking to everyone out there and once i get you know 10 reps rep repetitive calls about the same type of project that's when my insights start to kick in and when i get to 100 that's when i can really tell if there's a project out there that i'm like most excited about because i'll be able to parse kind of a little bit more of the signal from from what sometimes feels like a lot of noise or or what where i can't develop a very distinct feces um all of you guys have your own process it might look like that or otherwise so i'd love to hear about that and some of your insights that came out of that um one of the things that i think is different from the traditional vcs is that you can invest in a lot of projects that are in some way competition competing for the same thing so that's why i think when i develop a testis we can do what we can do we can invest in a lot of projects in the past we can only invest in one because it's like not too too good to invest in the company in the competitors so right now we we develop taxes i think finance is very important we have to put finance like the last word like gamify so i think the incentives are really important i think the metaverse of the web3 i see like new kind of stasis that for me it's about price discovery it's about a lot of things that you can do with these social networks that are new business models so i understand that we have to change the model i like in in weathery i like the project lens like that is like the base of uh constructing uh like the usage data user that all all web supremacy can use so i think we have to think about different things because if we think like what to point and to put a token it's not so i i like new things and to try to invest in all the possibilities of the who is building on that as far as process we like to call it we invest in bear market proof founders so we start from the human side of the equation for instance just met a 45 year old founder four kids at home it's like why in the world would you start a web 3 project so you want to understand the ambition of why someone wants to do it because you want to understand obviously how we fit in and to your point how does that fit in the overall portfolio because it's hard it needs to be at least like a three-year five-year focus horizon into what they're going and then you have to be slightly crazy to want to do this right and we want to be aware of that and provide that support where needed our process has three steps and it's based on the fundamental view that blockchain today is internet 2000 we're this early so when you're building frontier markets you need to calibrate your criteria for this so the first criteria is outlier founders winter mindset do or die hustle conviction or on a vision second criteria is dominating a verb so create that category just like facebook dominated connect just like google dominated search the web3 verbs are out there go build a verb third criteria hundred xers you won't believe how many white spaces there are today the hundred xers out there don't aim low aim tremendously high and so we we look for founders with those three criteria and it's been working extremely well for us awesome um that's really helpful to set the stage a little bit uh these days people will come up to me and talk about how they feel like they've missed kind of the boat and and i look at them and i'm like this is so early that there's so much that hasn't been built yet um so i'd love to just hear a little bit about kind of the use cases that you're most excited about or the areas that you're diving into i know you mentioned infrastructure but would love to hear a little bit uh more about like the specifics around that what do you think needs to exist in this space and then and then um would love to hear about kind of the use cases that that most inspire both of you it's funny you mentioned that when i decided finally to go all in like jump out of a plane without a parachute moment early 16. people actually told me you're late to the party right imagine that right and to answer your question about infrastructure uh a simple problem uh like to by show of hands who owns nfts oh my goodness your other you're all suddenly art collectors huh and um so the question is do you own the nft or do you own an account on openc so you don't think about it like where's that storage happening what if openc goes down how do you access your materials your art excuse me um so those from a stories perspective you look at projects like our weave alef um even falcoin how is that storage happening um how do you prove indeed that authenticity you're the owner is the only copy and that's what we look at from it's a hard problem it's a big ass problem and we want to support that and to your point i feel like that's not even 100x potential project it's a thousand x potential right uh most folks are not even aware of it yes i think one right now and we are looking a lot about gaming i think uh the entertainment industry is i think is growing a lot we probably spend a lot of money in the football and other things and we think we are building a new kind of entertainment i think we are beginning probably we will pay a lot cristiano ronaldo we will pay a lot some specific but i think we are building some kind of entertainment that is like social entertainment that we are going to pay a lot of people playing sometimes some out of roles in an ecosystem and metabolism so i think that's going to generate out of uh economies out of activity and i think it's going to be like a massive thing that people can really work for the entertainment industry so i think axe infinity has some one of the things that we can do we are investing in starters last we are going we are investing in people who are gonna organize in yields to participate in any kind of gaming but i think it's in the timing industry so that we think is huge and it's going to be like a new activity the new economic activity you know i i think of web3 use cases as web 3 verbs and we have a running list of a hundred hundred x web three verbs we're actively looking for those so you know one might be offset offset carbon offsets in the metaverse it might be transport it might be meaningfully connect online and offline uh you know there are so many verbs out there as all you builders in the audience i would encourage you to you know consider this framework as you're building out your product and product design paul um i know you were at zynga and before that you were an investor in kind of like the web 2 era as well so i'd love to just hear your thoughts on how you know the most compelling founders are building in the metaverse or what you'd like to see um when you when you talk to a project that looks like they have a there there but you're like this is kind of the next step this is what's going to take you to widespread adoption you know as a zynga former zinger early employee i always like to beat mark zuckerberg so if he says we're going to try and build meaningful connections in the metaverse let's go build meaningful connections in the metaverse let's go beat them that is the biggest use case right now how you traverse online offline connections how do you connect your digital identity to your irl identity how your interests poured over to all your different identities that's secured by cryptography and the blockchain nfts it's such an easy way to think about the metaverse as this unifying interface layer for blockchain and web 3. um i i want to talk a little bit also about the global kind of aspect so this is shifting gears a little bit but something that i've heard at this conference and this might be really contentious is that folks are not as bullish on remote work necessarily and now our teams kind of exist all over the place but for early teams kind of seed stage companies what are how do you view like the hurdles of of building across multiple time zones do you think there's value in teams coming together and being in the same location to ship product i know it's a contentious question but i'd love to hear straight from investors because we all have our own thesis some people are really for this remote first world other people kind of see products ship faster sometimes when the the team is incubating and sitting next to them um in the same office yeah well i think we have a space in madrid that is an accelerator i even i think with this event uh you can notice how important is to stay together but i think uh when you start to build talent is the most important thing uh so i i see teams all over the world organizing it doesn't matter where you are right now because of the technology and i think even to be very diverse it's also really really important and i think we are right now probably in a moment that the vcs are investing all over the world and that i think creates a a inclusion of developers and inclusion of things that i think is exploding so i think it's difficult that a project didn't have one people in it in of the continents because probably it will be the more diverse and the talent will march we prefer teams to get together earlier in the early stage fly them over like you said same building get that bonding going um because the funny thing you start off with a project your cto is in new zealand which is literally a different planet you literally have one hour on a day to get on a call like a window so if you like get together um as far as you can escape the country with whatever coffee laws uh restrictions um so we prefer bring them together at first team is up 20 people and then afterwards of course uh as you start scaling up um you're focusing on different geographical regions uh of course you want to have representation in america's europe or asia crypto never sleeps it's 24 so speed wins teams that accelerate speed will crush it have hybrid work one hour overlaps on the sun never sets meet irl at conferences to accelerate high-level strategies that that's the best practice we're seeing right now something um that i know we're covering a lot of topics but i just want to make sure to get through a breath of different things something that that i saw happen in front of me yesterday was there was a line to get in to this space and there was a son-in-law and father-in-law duo and the father-in-law was asking his son-in-law he's like what wallet should i get and the son-in-law goes get metamask and and he fully on-boarded himself onto a metamask wallet right there in front of me i saw him writing out a seed phrase he put it into his pocket and um i i couldn't help myself i said sir you really need to put that in your wallet or somewhere else like it's gonna fall out um and and he he was like listen um no one is you know really there to hold our hand or guide us through this but like we also want to get on board on this space um for folks who are sort of maybe in that i feel like there's a generational gap here we see not that there necessarily is but but we do see a larger representation of folks in their kind of 20s and 30s at these conferences um and uh i just i would love to talk a little bit about that and and how kind of security and and privacy play into onboarding like whole other sort of groups of folks that that we really need to onboard to get this to take off this large endeavor of ours you know i'll jump in because i'm the interface guy it is crazy how many clicks you have to go through to set up and get down to crypto that is our collective challenge right now in web one what took off commerce was one-click shopping on amazon let's build towards one-click wallet set up so or don't even have a wallet right it's just insane to think that we're here today this big with so many clicks so that there's so much about what i'm partnering with dana on on one code api access one click setups and onboarding for a lot of the user experiences we're seeing today literally that's the reason why i don't think we're in the uh application layer yet because if my mother needs to copy paste our pc endpoints in our metamask to connect to a chain not happening right so indeed that user experience please if you're on a team um your first hires man bring someone that is uh super super super fanatical about it test it out all day especially on people indeed like they want to put their seed phrase in their pocket right uh i'm scared about that uh and the second thing is uh security uh one topic i've been getting more and more interested in is what you would kind of call anti-virus for crypto because think about it if you could like have rule based search for potential exploits and smart contracts that's a topic we've been digging more and more into we hear about a hack almost weekly like wormhole we shrug and be like hey get my next latte it's literally a newsreel topic we're not impressed by right under paris hilton bought a new car or something and we just and i'm like i'm amazed by it right how we became almost that numb to security uh and those type of topics last note on privacy uh it changes from country to country in europe certain countries if you file your taxes and they they want to like literally with you they will check if you for instance had uh transactions through services like um tornado cache that your assets went through for instance a mixer and you're flagged instantly right so it's another like you would say a collective challenge that we need to address which i don't think we can just solve uh in one eat denver i think it's gonna take a lot of uh big brains come together and uh work on it i think i don't know if you remember was was to send an email at the beginning you have to you have a black screen you have to put them in http really really difficult it was amazing oh i can sense someone can read what i send in but that was like a miracle you have to to to use unix i was amazing i think we have probably in the same way we are right now in a in a developer environment i think this year we have to to achieve to to onboard all the people and we are with crypto cryptographic things that we really but i think it's not a problem i think we are going to solve this like if we solve the the email problem and i think that that's what is citing more already even with this difficulty people is always trying to do effort and i think we are also learning a lot of very good things about security that probably we we don't understand in the web uh two points so we'll we forgot but we have to take care about our security our data our so i think it's yeah we're going to solve that i think it's not for me a problem well that's awesome um another aspect that's really core to investing obviously is talking to the team getting to know the team and and the founders and really understanding sort of whether you know we believe that that we can be good partners in helping them build and and ship the product that they say they are or pivot and and be adaptable when they need to be i someone actually asked me to ask this question ahead of the panel he wants to know what are you looking for in kind of like the most inspiring teams and founders or who has inspired you the most and in terms of teams and founders you know i i like to be passionate of what they do and to be a little bit crazy but i think they have to be ambitious to to to things that it's like to be to concur the world in some way so i think that's and to be yeah i i think that would be very deep in technical things uh so they would be very expert on but i think probably what excites me more about is is that they develop something that is really to change the things and they have a team that is very well diversified they have a different kind of skills but anyway i think this are not so important in that moment uh in the past was very very important right now sometimes we think we have to to think for the vcs this is going to go to go to you you are have a very good project and i think the visas have to help so you have to find disease that can help you in this kind of designs uh yes because right now we are going to look for for this project so it's more uh important even it's more important for us to identify that that you think but so you have to to have pieces that can help you in the project that's really really important because this is see a lot of things a lot of projects and they can give you a lot of knowledge out of inside and they can work with you i i look for humble confidence we're sitting on the biggest opportunity of our lifetimes right now it's so early there are a lot of well-intentioned builders in our space right now building amazing innovation for better it is crazy to think that in 20 years this is going to have transformative impact across all of our society so it's a great time to be building it's a great time to be collaborating and building for positive impact we're all going to make this we're all going to do it together and build together have that humble confidence to to work with others to be open-minded and and collaborate um i'd like to like to think you talk to a founder or team and that big old word comes to mind right it's going to drop in the first five minutes we're oversubscribed and uh literally money is toilet paper right so you find yourself sometimes even you're pitching the team right like take my money take my money and uh right but indeed to your point so the money is the last aspect if you will it's only like you want to raise 1 million there's 25 at the door right and just knocking on to come in so i think feces if you don't understand why you're investing in it why you should be holding it where you fit in how you're gonna support them um it's better not the play you're looking for right um i don't think you should get involved i think it's the wrong relationship um and if you're like because like i said it's you're not investing for the current cycle you're you're looking for 2027 and plus forward um and you don't want to be my friend who sold this chain link for 15 cents uh you don't want to be that guy or sold your bitcoin in 12 right you want to have that longer horizon that kind of leads into my last and and final question timing is really really important and and we feel that all the time because there's some things use cases concepts that we've talked about and we're like dang i for me it's electronic medical records i'd love to figure out a way that we own our own medical and health data i tried to do this in 2017 way too early the the health kind of industry as a whole wasn't ready but i was like dang i'd need to work on this that lesson caught me a humble lesson you know years later which is i need to pay attention to timing so i would love to hear a little bit about um kind of how you what are some areas where you think you want to keep a pulse on it but you're not really ready to necessarily invest i know i know atm thinks it it's it's the application or consumer app types um but but i would love to get your perspective um jesus and paul and atn if have anything to add well literally um last night i was at this event and i'm hearing these kids talk about whatever nftv this bought i'm like please we'll schedule a three hour zoom call or whatever i'll fly to whatever city you're at and uh walk me through nfd's for dummies why are you as bullish as you are what's the use case what's the direction i'd like to step back and look at it what's happening here and i'm like let it correct and i'll probably take a position there uh you know history rhymes i believe today in blockchain it's internet 2000 in 1999 all the infrastructure companies crashed like cisco and jdsu what accelerates over the next five years you could map to blockchain commerce community social media music so it's a glorious time to be in applications i back test it with internet history and that's a disciplined way to understand market timing on our end i i am very brief about uh thinking about incentives i think we are we have like the best financial infrastructure that we have in our history i think we can really do incentives for a lot of people and out of projects so i think we have to find how to apply this amazing tool that we have about finance in all the sectors so i'm very bullish in that because we have on board out of people's in this kind of project incentives with markets how we discover the price of things i think nfts in some way permits you to discover how much value to be in a back stage of a concert a lot of things that probably we don't have a price but we can have a price to put an nft to put in a market and to see oh what is the price of that so that kind of thing is what i think we can really put in industry and finance incentives and price discovery using in in several things what i think is my buddies well thank you all so much for these wonderful kind of how you what you index on and you're in letting us take a peek into your process i think we're ready for the next panel um let's hear a massive round of applause for these supremely bright minds again it is a great time to be a builder