Surviving the Bear Market to Build the Next Bull Run with Graham Friedman

yeah uh we're here I've got an excellent panel largely uh coming from the investment side of things and um I'll let everybody go through their introductions but really want to cover you know we've been through a few Cycles um starting to see after the Calamity of 2022 that many of these patterns repeat themselves so just wanted to take a moment and hopefully pass on some advice of past experiences that we've gone through that we see projects and Builders sort of making the same mistakes that end up leading to getting taken out of these circular equations right we really want to see people succeed launch markets so with that being said let me start by introducing myself my name is Graham Friedman I'm the head of venture at Republic what we do at Republic is we work with a ton of Builders obviously I'm on the investment side but we have an entire platform dedicated to go to market advisory token development development work around tokenized assets around smart contracts cetera one of the only launch pad platforms that can actually reach the US audience as well as a variety of other assets and uh you know that being said I I came into this space really early on in 2009 after satoshi's white paper and um truth be told we're seeing many of the same things as we go through this so really want to use this time to tell some of those stories and impart some knowledge onto you fine people let me kick this off by introducing the rest of our panel we have Sierra from c-square Adventures Austin from coin fund and my colleague on the Builder side Jeff also joining us from Republic the thing I would like to ask first just to set the floor would really be the origin story Sierra could you tell us what brought you into this space and most importantly when was that I'm Sierra founder of c-square Adventures a reason I got into the space okay back in 2017 I was doing doing liquidation still for Lehman Brothers so that's how you see you know the financial markets really need Revolution and I saw the Bitcoin white paper um and it's a trustless efficient system to fix the problems that we you would see for Lehman Brothers and Randolph right so that's what drove me into crypto so I quit BCG and joined crypto in 2017 and I co-founded exchange and then joined hobby managing the global markets listings Investments operations and the institutional business and face regular regulatory pressure at the end of year of 2021 where you know China just shut down exchanges so you know I left I went to Singapore and started Cisco adventures with some of my ex colleagues and some you know new friends we raised 100 million from people like Google polygon Tower GSR and just started deploying and we just wish to help the founders and Builders with our expertise was running tokens and just grow with them in Webster and I imagine coming from The Exchange side you saw your fair share of uh successes as well as failures correct all right excellent we'll take some of those stories later Austin I'm gonna pass the mic to you if you could give us a little bit of your background as well as coin fund we'd love to know your story as well yeah absolutely so coin fund launched in 2015 as one of the first Venture funds uh purely focused on crypto in those early days and our approach has been similar throughout all of our history it's investing early and strong Founders from a thesis and fundamental driven perspective to push forward the adoption of crypto and this is across a whole number of areas including you know base layer infrastructure middleware defy applications wallet level really across the board personally I got into crypto back in 2013. tangentially related to Poker I guess uh my my brother was invited to a poker game where uh the buy-in was with Bitcoin ended up winning the game and then afterwards calls me it's like I don't know what to do with this how to receive it what it is can you help me out so we started digging in together I was working in cross-border payments uh at an early stage startup at the time and you know it was tangentially related to payment so started diving deeper and once I came across ethereum in 2015 that's what really was the the light bulb moment for me is seeing this broad surface area for application building Beyond just a new type of money and since then you know fell down the proverbial Rabbit Hole uh built to borrow lens in 2018-2019 worked at a crypto ETP issuer and I've been investing at coin fund for the last two and a half years fantastic Jeff toss it over to you cool uh so very different entry stories but uh similar I guess about I won't do too many names because there might be crossover to the poker game um but I moved to Denver in 2010 I was working on a um on a data startup actually in sports space and during that time I was intro to co-founders of a product Adventure Studio here in Denver they brought me on to kind of help develop that offering and I was lucky enough that one of those people in 2012 was also learning about Bitcoins and really wanted us to learn about Bitcoins and uh we kind of we got curious as to how that could affect product development and if you're a product developer you're always looking for the most interesting user experience dilemma to solve and on the horizon was the ethereum mainnet launch and the birth of decentralized applications and it's like this is going to be the most interesting thing to work on I'm gonna have uh opportunities to work with Founders building a very very complicated user experience for the rest of my life so we kind of flew the flag said we were going to accept Bitcoin as payment let's see who comes knocking at the door ahead of this launch and um some very important people just by happenstance did because no one was really a vendor to the space focused on product development focused on Outsourcing um developing product experiences the first product that we launched was shapeshift IO is obviously a big proponent here in Denver and then from that launch we were kind of we gained a lot of trust in the space so we were hired by a lot of firms we worked with dcg with the acquisition of coindesk and help them launch the consensus conference here in the states I worked on Exodus wallet lots of bitcoin.com products um and the rest is history we kind of we built that firm um to about 45 50 people worked on some you know 80 crypto startups um and uh yeah it's been kind of a wild ride and I really just kind of got lucky with my co-founder bringing me into the space and aligning with the things that I wanted to work on which was kind of democratized in the world a little bit more and as Graham mentioned now I'm uh head of tokenization at Republic kind of helping to do that for our portgo and our clients excellent so let's get into some of the problem areas that uh you know I believe are some of the most consistent across generally the bear markets but truth be told I would say a lot of the poor habits actually start in a bowl it's a very easy to develop some of these um some of these themes that will take you down when the money is very easy and it seems like there will always be an upside tomorrow and then suddenly everything disappears from under you it's something that everybody's probably very familiar with right now and it's great to see all your faces here in the middle of a bear market so [ __ ] yeah um first and foremost I think one of the biggest things is treasury management and I'm not sure that this is something that people get a very good grip on as you start your trip into launching a company obviously crypto is a very unique space there is a lot to learn simultaneously from regulation from operations uh from the fact that maybe taking in money can go from being very easy to very difficult or vice versa um but you know the the I think the the big fish in the room started in 2017 right the Ico era made it so amazing to crowdfund your technology out to anybody right they could sign on they could toss and eat they could get a token back run that strategy over and over again this was the state of blockchain in 2017 right really we've come a long way um one of the things that I think I would love some of your opinions on was what followed 2017 was tons of projects holding their treasury in a volatile asset right everybody had raised capital and eth had gone from what 1200 down to a hundred dollars something to that effect um and suddenly all these awesome founders with great ideas were completely wiped out um subsequently we've moved on you you will see most people raise Capital these days in stable assets but nonetheless treasury management continues to be something that is quite difficult um would love to know if anybody has a tail specifically around treasury management that you've seen with some of your portfolio companies maybe what's been done to alleviate their issues or even show that you know the mistake actually ended the company do you yeah um so remember back in 2017 like the beginning of the SEO age uh people raised in Syria right and they raised I remember okay one example um Lino um well they were they were later acquired by uh by by trong who D live was a choir and then the founders split up and they now started really successful projects uh we backed both severeign but I think one thing we've learned with them is that back when they were raising for for Lino um they raised this area memory Syrian prize was uh at 800 and bear Mara had really really quickly and without even notice the price was like 200 and then fell down 100 so it's really it was really really hard for the team to maintain a um you know very good backgrounds of engineers in the Bay Area and with the office run and everything so I think that's a hard lesson that we learned for charity management um so now I think we don't really see projects raising serum or other tokens anymore but we do see some swaps so um different projects invest in each other or ecosystem and they got their native token as a either as a grant or as a investment firm so we would really suggest that our portfolio companies to convert them into stablecoin and that's one thing right like what currencies you hold and also how do you store them like last year when we started c-square Adventures we saw some really good companies but like the FTX or some other changes and were required to put all the capital they raised into their exchange account so no matter how much we love the team we are we had to pass and that's just a a big red flag and it's a it's a very high resident internal you know some some of the products suffered a lot from this um so I I think when you look at storage of your assets you need to think of whether is there like a real custodian you look at how much the interest is offered for for the money you put in either as for exchanges or asset management or any other centralized SM platform if it's only offering 20 of insurance which is already considered very high in our industry you you have to think it as okay we are giving away 80 of the assets the second you put it into that platform so we would never suggest projects Do It um and for us um you know US dollar rate is in the bank and we don't even use a crypto Bank we use the Traditional Bank um or if it's stable coin will hold uscc and it's uh it's manageable and we don't really put it in any other you know places I I understand in Bear Market it can be really stressful when you have a short Runway so some of the projects think that if we put it in say exchanges and get a five percent interest and that's you know a good amount of money you know yield every month but you're not here to make percentage every year like that's not your goal you're here to have a very healthy Runway to build whatever you want to build and then made it in the boat Market I completely agree and I think a lot of the core tenants here are uh basically setting up your treasury to mitigate any uh Black Swan events right um which can come in the form of many things we're seeing one of the very basic Banks go down right now usually my advice would be just put it in a boring Bank um but you know while we're talking about 2017 um doesn't apply as much to people raising through equities through saps but this is still very relevant for nft projects they are taking in uh the speculative asset and this year I mentioned this and a harp on it because I have a a very amazing project they've got a music deal everything looked like you know to the Moon uh and really you know based their entire uh treasury in one of the L1 assets this L1 happened you know take a bit of a dent in the the downward spiral and I literally watched a project only a couple months ago go from being on the top of the world to thinking how do we funder ourselves you know for the next couple months and that comes back into your fundraising rounds right and I want to talk to you Austin about this um you know when people raise they seem to do it with this expected timeline in mind and I keep hearing Founders you know say we we've raised x amount of capital it'll get us through to the next raise uh but we're in a bear market right now so I'd be very curious to take it you know from from your POV maybe from coin funds um but like is there an x-rays how should you think about that yeah so so I think there's a couple of things there one it's very important for projects to be careful about raising too little money because you know when you're when you've attracted investor attention and you're people are very excited about what you're building and the Market's stronger for fundraising you have the ability to raise more money and a lot of teams try and manage dilution by raising very small amounts and then saying like well I'll have runway for the next eight months until I get to test net and then I'll raise again and then I'll get to mainnet and then I'll raise again and everything really has to line up quite perfectly and you don't have the opportunity to make mistakes you don't have the opportunity to Pivot and to iterate so I think it's really important to give yourself some breathing room and have a longer Runway because you don't know necessarily where the project will take you and what the fundraising environment will look like at that time so I think that's one thing but also you shouldn't necessarily if you're raising at the seed stage and you're imagining like well what do I need to achieve to raise my a that actually changes a lot by market regime where in stronger markets it's more it's been a certain amount of months and you've hired a certain amount of people and the product is you know more advanced by this amount whereas in tougher markets and you know I'd say now kind of fits the bill there's really an expectation of meaningful attraction to raise the series a so it's a much higher bar to raise so you never want to put yourself in a position where you're running out of capital and then you need to make those really tough decisions about like can you keep everyone on the team on board or do you have to make Cuts or or do we have to you know eliminate a product line that has a lot of potential but is not quite there and you know those are the sorts of that's the sort of breathing room you want to afford yourself yeah just a follow-up question for that um just as we're in a bear market and I know coin fund's still deploying are you even seeing any of those those growth stage so series a b or is it all seed I mean we're we're continuing to see oh not quite as much series B but a lot of series a but I I think there's a mutual understanding of what's required to get funded at the a level right now um and it's you know seed requires a very strong team a vision um strong product roadmap but not necessarily traction and series a very much requires the traction whereas in the past it almost was a seed extension of sorts in terms of what was required so we're continuing to invest in a number of series A's deals and are very excited about that stage um it's just the requirements are a little bit different because the the risk appetite is is lower across the board yeah and I would say for anyone exploring this um it is good to talk to those investors prior to needing the money like direly to understand stand what that landscape is and how you can get yeah and also one other thing to add um I I think sometimes Founders are not sure if they should reach out to investors if they're not raising at that point or if the products or the business isn't exactly at the most let's say like presentable stage where everything is perfect but in a startup nothing is ever perfect and nothing is ever in that presentable form and you'd be surprised how much investors are just happy to chat and happy to be helpful and make introductions and just learn about what you're doing and then when it comes to the time to raise they already have a lot of familiar familiarity with you as a Founder with what you're building and what your path has been from there to here and it makes raising a lot easier yeah take it away yeah I'll just add because I'm uh we are often working from the builders camp like we're in the Builder's Corner we're working with them we're helping them to develop their product which equates to a value proposition which equates to a tam and so we're working with them a lot on how they're trying to do private fundraising so to your point like your your investors always want to hear from you because they want to be strategic for you so never stop talking to them especially after you've closed around at what you see as far as a pivot could be happening to your product one thing I do see with uh when you can time the market to raise money and you can raise a lot of money you do want to find a sweet spot I don't think you want to raise money that's you can't develop a accurate use of proceeds for because otherwise you are building a team against benefits and features you have to develop because you've you've kind of expanded what you're going to be building to raise more money and then you could find yourself in a situation where you're not really focused on building one thing that's really really valuable that's going to afford you the ability to keep on going without investment if you needed to so that's just one thing that we've seen is like we've seen Tam get really really big because it's based on your ability to raise more money but you need to have an argument for it and it's really far away from your main value prop so that could be tricky yeah and I'm going to use that to really segue into one of the other major issues that that I see over and over again which is um your Staffing I think you want a really Clear Vision of what staff is necessary how you handle those positions and how you will use that Capital to pay for them throughout the range of the next round honest to God like one of the most common things we see and this can be this is probably a bull market issue to be quite Frank uh is that Founders get a ton of money right suddenly you're you're on top of the world you're feeling great um you're well padded and people begin to hire like mad I see this over and over again and I really want to toss it to you Jeff um because I know this was to me shapeshift was emblematic um of this in 2017 and it's a recurring issue that we see to this day so I would just love to get some of your take on that so I have a this is one you probably are not going to think about so you're going to build a product uh I've been on the Venture Studio side for a long time and it's like if you're building a product and we're building you've hired us to build something integral to your product for you look at my team pair program and build your product according to my team I'm telling you what your staff needs to look like for your like call it your Genesis team like what your teammates look like as soon as you leave our camp um then you you hit success building with that small team and then you ramp up and you need to throw what projects tend to do is they tend to throw people at the problem which is not what you should be doing preach yeah so you should you should not be throwing people at the problem because it's it's honestly just going to expand all of your problems and what where you're going to be needing to staff up on the back end of that is support so you can either spend a ton of time building the right product or you can spend a ton of money hiring a lot of support to answer all the questions because your product was not built right the first time so it has this kind of like Whiplash effect we've built this really great product and it's doing something however users can't use it in the way that they need you because we rush it to market now you have this big support staff uh bill that's coming on and it has this kind of like vicious again like Whiplash type of cycle absolutely and Austin I'd be curious just like in a broad percentage sense how many of your portfolio companies had to do a significant downsize I think we're very fortunate that it was actually quite a small percentage so directionally less than 10 percent um which I don't know necessarily reflects the broader market and I think a lot of teams though have been able to manage that pretty well throughout this cycle learning from prior Cycles but as a Founder it's the toughest thing that you'll ever have to do is fire people and you don't want to put yourself in that situation um and and also one thing that that people think about it in bull market cycles that puts you in a very bad place is they often conflate hiring with advancing the project and building and you know you'll I'll hear sometimes Founders go to investors it's like oh we were 10 people and now we're 30 people and that doesn't mean that you've built anything it means you just have more people uh so I think that distinction is really important let's see our similar question to you just how have you seen the the projects handling Staffing d-staffing Etc well I think of overstaffing so uh easy breakdowns two kinds of stuff right like either it's focusing on the product engineering side or is the business and marketing side of the people right so if you see projects haired too fast and expand their product engineering team and then how to lay off a lot of them a lot of the times we see it well back at the exchange this time of course um because they get distracted they're like building the like the shiny things building that something that was not originally on the roadmap um so that happened actually a lot to um exchanges because you know as a centralized it changes um that's where the liquidity is aggregated that's where the information is aggregated and I guess you know they they feel obligated to do Innovation stuff and to lead the market right but sometimes they get distracted so much I remember we had a Innovation Labs at movie and it was like 200 people or something and when you see bear Market hits and when you see companies layout people it's really like changes um and the people that they love are are usually who's working on those new type of experiments um so for portfolio company who is not like a you know money printing machine you don't necessarily have a cash cash flow yes so like just focus on building what you originally had in mind when your city Master back to you that was your mission to stay on track and build that and I think that what a lot of the overstepping on the product engineering side and then for marketing and business I think when bull market kids people are always competing for you know the first mover Advantage right they wanted to take things out go to market and guess get as much attraction as they can and then it's all right but instead of hire 100 people team you instead you can use like really good marketing agency and you know local communities workers work with Affiliates work with Community leads and work with those agencies who has tons of experience it was helping products go to market in in their region um you know in the past few years that's like so much better than you just hire like a huge marketing and be team and then have to fire them on their Market heads totally and you know um during this sort of downsizing period I'll be honest the one thing that was consistent across every single one of my portfolios that had to let people go was the CEO said you know what we are more efficient and effective as a smaller team than with all of those extra people um surrounding them so I yeah one caveat I just want to add because we've talked about some of the downsides of growing too fast and how you should manage teams but hiring is very helpful when you're growing quickly and like you want to build the team to be able to support um what you're building but one of the important things to do when you are growing your team is especially if you're a first time founder that's never managed a team of 15 or 30 or 50 lean on your investors that have helped teams help Founders scale up teams and have best practices around how do you run like a Performance Cycle how do you manage compensation of your team how do you structure subdivisions and organization how do you think about um finding the right Mentor you know one of the things that can be really helpful is finding a mentor that's a couple stages ahead of you that's within that portfolio or you you know within the industry so say you just raised your seed round find someone that's within you know maybe the portfolio of your your lead investor or someone that you've met that's raised in a raised to B already is running 100 person organization and it's further along and they can really help you get to that level I I agree I think talking to people who have been through um let's just call it the Ico process but the go to market also useful guys there's like hidden legal fees everywhere um the legal landscape is constantly changing right a business relationship market makers exchange listings uh there's so much knowledge to be gained from somebody who's done it once it's like you know my wife always says she could throw a wedding so easily now that she's done it uh same kind of Vibes but anyway guys looks like we're we're just about out of time so I'm gonna end it here if there's any questions that people have in specifics you know we'll be around happy to chat um but I certainly hope that this was helpful and useful advice to all of you thank you foreign