Race Capital, Crypto Investing, and FTX + Solana’s Early Days
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Chris and Edith, welcome to the Acquired LP Show. Thank you for having us. Yeah, thanks for having us, guys. This is so fun. For listeners out there, I met Chris and Edith of Race Capital, both in November in Lisbon, but at separate events. Edith, you and I did a panel together for the Venture Track at Web Summit, and then Chris, we got together ahead of Solana Breakpoint. Of course, Edith hung out with you at Breakpoint too, but just wild fun coincidence. Yeah.

I have not traveled for almost two years and definitely get traveling out of my system. So Lisbon is definitely a blast. Hot. Yeah. I was so jealous. Yeah, Breakpoint was crazy. And since the pandemic started in early 2020, I literally haven't been anywhere. So it's the first place I went outside of California, really. Yeah.

Wow. Well, for listeners who don't know about Race Capital, we're going to get into Chris and Edith's backgrounds here, but they're some of the very earliest investors in both Solana and FTX investments.

Yeah, our other partner, Alfred, he was the original seed investor for Databricks, originally when the company got started out of UC Berkeley, more on the enterprise infrastructure side. And then he was also the founder and CEO of BA Systems. They literally invented middleware for the enterprise. He was the CEO of the public company, $2 billion in revenue acquired by Oracle for $8.6 billion back in 2008. So yeah, both on the traditional enterprise and the more recent crypto and kind of fintech industries.

infrastructure stuff. We got our hands all over. Oracle's like, I think one of the few big like canonical tech companies we haven't done on Acquired yet. We need to do that. We obviously going to talk a lot about distributed systems and all that, but centralized database is still a thing.

And the world, majority of the world still run on it. So I think still a thing like 99.999% of activity is probably still, I think I'm missing a few nines there on centralized, very fast, high performance databases. And then their market cap is 280 billion. It's still interesting.

Not too shabby. Not too shabby. Not too shabby. Well, I want to do some quick personal introductions here. So Edith, let me turn it over to you and start. You grew up in Hong Kong, right? Born and raised in Hong Kong. My parents still live there. So I can't wait to go back. But now it's three weeks quarantine. So I've been in San Francisco for the last two years. But I came here when I was 16 years old as a exchange student. I stayed with an American family in the middle of nowhere of a small town called Ossian, Indiana.

And then I moved out here after graduation from Purdue. Go Big Ten. Yeah. And my first job was a developer's very old school collection system called CACS, C-A-C-S.

My focus always been in mobile, so my customers like AT&T. And then later on, I joined this company also really old school called Siebel Systems. And again, AT&T Wireless was my customer. And I spent two and a half years in Seattle. And Oracle bought Siebel. I left and then long story short, started this conference called BizTechDay. That's how I met Chris. This is many years ago now. From that, I joined a startup called Dolphin Browser.

Oh, yeah. So Dolphin was kind of awesome. We grew from zero to 150 million install worldwide, 99% Android. We raised an A from Sequoia, Matrix Partner, and Qualcomm, and then eventually sold it to a gaming company called Changyou. After that, I joined 500 Startups. Dave McClory recruited me. I have a $10 million fund there.

is via that fund, I invested in Solana. The same time with Chris, him as an angel. And the rest is history with Solana. That was January 2018. Don't want to go into too much on the 500 stuff, but very many, many different chain of events. Chris and I decided to join up and do something on our own, write bigger checks. And we can talk about FTX stuff later.

Great. And I want to hear a lot about that January 2018 time. But let's first kick it over to Chris and your background. Chris, I actually knew of you in the like 2010-2012 era because I, as one of the things I was doing on the side, I wrote, I think like a growth hacking startup digest. You had built this company where

you know, anyone could, if they were approved, sort of start this newsletter under your umbrella and sort of build a relationship with an audience on a certain topic. And I'll kick it over to you to talk about Startup Digest. But it's been cool seeing your name come up recently because I was like, I remember the Startup Digest guy.

Yeah, I guess for quick context, yeah, I grew up in Southern California, not as exciting as Hong Kong. I went to school in Central California at Cal Poly San Luis Obispo. And then when I graduated, I literally threw all my stuff into my car, drove up to Palo Alto. I had no job, no idea, no plan, no anything. But the first place I went to was this place called University Cafe. And I was sitting there for brunch and there was two guys talking about Facebook next to me. And so I was like, oh, this is really cool. And I look over and it was Mark Zuckerberg and Michael Arrington.

literally sitting next to me. That was when I decided I want to move here. I didn't really know how I was going to do it, but Palo Alto is where I wanted to be.

So I moved to Palo Alto. I ended up taking a job I really didn't like when I first moved here. And so my original impetus was I wanted to start something so I can quit the job so I can do my own thing. Me and my roommate at the time, we had a whole bunch of like these little random side projects going on. One of them, which was the most unlikeliest to turn into a company, was this little thing called Startup Digest.

It was this little newsletter where we just cataloged all the tech events that were going on in the Silicon Valley. Because as good as technology of all the people here was, there really was not like a simple way to see all the stuff that was going on here or in Silicon Valley. This was 2009. The startup ecosystem was far smaller. It was super niche. There wasn't a lot of people doing this stuff. This is right after the whole sort of real estate crisis and everything. A lot of the prices were super depressed.

But because I was doing this newsletter, I was going to a lot of the conferences. One of those was Edith's event. And when I went to her conference, there was literally this woman, Edith, who seemed like she knew everybody. She was like on stage with Tim Ferriss and like all these other tech founders and CEOs. And she was super friendly. And she seemed like she knew everybody. In my head, I was like, I need to meet Edith. And that's how we met. This was in 2009, shortly after I moved to the Bay Area.

I remember I was interviewing Tim Ferriss. I actually read his book and then I guess Matt Molenweg from WordPress introduced me to him because I was a big WordPress fan. And I remember when I was hosting him, there were literally like ladies screaming in the audience.

It's like, Tim Ferriss! I just was so shocked. I'm like, this is so weird. But the highlight, it was not Tim Ferriss, it was me and Chris. Yeah, I didn't know it at the time. But yeah, it turns out it would be a pretty pivotal moment in life, friendship, work, kind of everything. At the time, like, tech newsletters are now a thing. And so Substack and kind of everybody, you know, Paki McCormick and Not Boring and everybody knows this stuff. Back in 2009, zero people were doing tech newsletters.

This was not a cool thing. People didn't know about the stuff. It was really quirky. But I remember in the first few weeks, we got up from zero to about 10,000 subscribers. We were one of the earliest customers and users for MailChimp. MailChimp themselves, they were launching and hadn't really sort of industrialized a lot of the things they were doing. So we ended up being kind of one of the larger email publications on their platform kind of in the early days. And then we made this decision again.

Again, Startup Digest was this little side thing that we were doing. One of my friends and a reader of the newsletter, his name's Carter Cleveland, who eventually started Artsy, which you might know. No way. Carter and I and my wife Jenny all went to college together. Oh, wow. That's a small world. It's such a small world. And so he was spending the summer here in the Bay Area, but his plan was to move back to New York.

And so when he moved back to New York, he was one of the subscribers readers. And he was like, hey, I really want to do a Startup Digest edition, but in New York. And his push to me was like, I'm going to do this thing in New York. I'm either going to do it under you or I'm going to do it for myself. What do you want to do? And I was like, all right, all right, let's...

figure out some way to try to do this together. So this became colloquially what we now call like the curator model, where Startup Digest was the singular kind of overall publication. But we had many, many, many sub publications, both in different cities, and then also in different kind of verticals. And then we grew it from zero to about a million subscribers before it was acquired by Techstars. Through this experience, I got to

kind of be a part of the super early tech ecosystem before a lot of these things are really kind of developed, not just in Silicon Valley in the States, but seeing a lot of these things kind of nationwide and also worldwide to you.

I remember those days because I was a super involved startup weekend organizer. I think I did about 30 different startup weekends, again, different cities around the world, in Rio and in Kuala Lumpur and all these places. And it really felt like a global movement around tech entrepreneurship that I'm teasing this out now because I think we're going to come back to it later in Crypto and Web3. But there was this sense of like, truly, we're all in this together. And it felt incredibly collaborative. And it felt like,

It was an expanding pie, and there weren't gigantic tech companies that sort of owned everything yet. And I know the numbers may show that now is even a better time to be doing stuff than then, and that even though there are five really big tech companies, there's actually much more opportunity down the long tail than there's ever been. But somehow it felt at that moment in time, I think this is the proliferation of Web 2, like, we are all going to make it. Yeah. Yeah.

I'm not trying to harken too much in the future, but the early Web 2 startup ecosystem, not just here, but worldwide, actually reminds me and the feeling is a lot of the Web 3 ecosystem we see today. Although I guess the big difference now is it's super proliferated. In the beginning, it was a little bit proliferated and there were some companies, but still Silicon Valley was still a major center of gravity for a lot of this stuff.

versus in the Web3 ecosystem, same feeling, but now there's no central center of gravity. In fact, there's pretty big ecosystems pretty much all around the planet now. The feeling's very similar, although with a little bit of minor differences attached to it. So I was in college at the time when I went and did an internship in the Bay Area that summer. It was like going to play in the big leagues. It felt like I was making the pilgrimage to Mecca in a way that I don't think now is quite as relevant. No. Yeah.

That's Startup Digest. You were the community lead at Greylock for four years or so. Is that right? Yeah.

So after we sold Startup Digest, we ended up having a pretty large curator ecosystem and then all the reader ecosystem. So for us, we ended up having to build kind of a whole bunch of internal community tools for ourselves just to have our kind of own organization operate. We wanted to take all the tools that we built for ourselves and productize them for other people to use, almost sell it like SaaS software, but for community kind of ecosystem development.

Was this GroupTie? Yes. The company is called GroupTie. Again, we are far too early on the end of the spectrum. The best way you can kind of think about it today is it's almost like a quasi-early Discord. Like what Discord tries to do with all of its external groups and communities. We are trying to do this for...

company tooling and kind of all this stuff to build these groups and everything around you. But three things. One, the company ultimately did not work out. Two, businesses did not really know what to do with this thing. However, we did have a few pretty active early users, one of those being the Teal Follow Show.

So the Teal Fellowship, they used it for all of their fellow communication, all the mentor communication, all the pairing, matching back and forth. They kind of used it for all their community stuff. And one of the earliest, heaviest users in that group was this guy named Dan Patio, who was a partner at Greylock. And Dan all the time used to say, hey, can I use this for Greylock? And I used to tell him, no, Dan, I'm sorry, Greylock cannot use it.

If any VC fund started to use it, the first question I would get as the founder is, is Greylock investing? And if they weren't, this would be like a negative signal towards me. Oh, man. When we ultimately decided to shut the company down because it wasn't working out, I was going through the kind of shutdown process. And then so me and Dan, we started brainstorming.

If we can take this concept of community and try to apply it to a VC fund, what may this look like? And then at the end of it, Dan's like, do you want to do this?

And I'm like, what do you mean? He's like, all the stuff we just did, he said, do it here. And I said, well, I don't really have anything else I was planning on doing. So sure, why not? So that's how I ended up joining Greylock to start and run the community and kind of ecosystem program that we ended up developing. They're all internal for Greylock itself. It's very clear coming out of that history, how you would sort of get a lot of the themes going on in Web3 right now to maybe like

Take us forward a little bit in the story. How did Race Capital come to be? And who approached who? What was the initial thesis? What was the first fund? All that. So in 2017, Chris and I already know each other for a long time. I was a partner in 500 Startups. I actually just sort of took over the China arm for 500. But a way to put things in perspective, which is not the case today, but in 2017, 2018,

The center of the universe for crypto mining, particularly Bitcoin, and also crypto trading is actually China and Asia. Of course, Chris and I know each other even longer, but in 2013, I bought my first Bitcoin because I met this other random dude. His name is Gray Kid.

Greg was Jack Dorsey's old boss. He's like Angel in Twitter Square. And didn't Jack live in his apartment for a while? That's right. Jack hacked into his company's server and he's like, who the hell are you? And come and hang out with me and live in New York. And they moved out here together. But anyways, just because I bought some Bitcoin didn't really make me an expert. But in 2017...

No one was raising equity in China. Everybody was like raising some sort of token. And I'm like, what the hell are you talking about? And then I have an old friend that I used to work with. He later on joined Alibaba. And then he was like, oh, I'm starting this new token project with this guy. He started this other token project named AntShares.

which is the name before later on become NIO. And I don't even know what he was talking about. I came back to the Bay Area and hang out with Chris, and he's like, what's happening in China? And I said, oh, yeah, I met this random dude. He said that he's the founder of AntShares. And Chris got really excited.

And I'm like, why are you excited? Because everything is in Chinese. He's like, oh my God, I bought the token. I saw it on Reddit. I Google translated it and bought a token from Huobi and then did really, really well. I'm like, what? So he's like, you got to work with this guy. Yeah.

Let me add a little context here. I didn't know we're going to go into this part, but you know, again, open book, happy to talk about it. Again, similar to like Edith, like I first bought Bitcoin in like 2013, 14. Greylock actually ended up making a handful of investments, mostly in the Bitcoin ecosystem. So Coinbase, Zappo, Blockstream, a bunch of other companies, kind of all in that timeframe. And so I just started to pay attention and knew kind of a lot of the kind of core developers and people in the ecosystem. And I was like, okay, I'm going to do this.

So in early, early 2017, before the craziness, I remember I was on Bittrex. Bittrex used to be like one of the bigger US exchanges. And Bittrex, I believe at the time, only literally had 40 assets on the platform. It's kind of crazy to think about it now with all the tokens that are out there. But at the time, like the world was pretty small and there was only 40 things.

And so I just started doing research on all 40 things to figure out what was what and who was who and who are the team's billionaires and all that. And of the 40 things, there was only one of them were that the team was based in China. And so my initial thought was like, I don't know, China's pretty big. Like they should probably have one of these things. And so I originally bought some ant chairs at, I don't know if I want to say the exact price, but like

In the sense, they were initially kind of like fairly unknown. And then they switched their name from AntShares to Neo. And the Western community found out about this thing. And very quickly, it went from like a few cents to like 20 bucks. Very fast.

This also ties into a second story of Bitrix was the only exchange that this thing could be traded on. And NEO had this weird concept inside of it. It's almost like prototypical staking. And with staking, you would earn this like gas reward. So it was called gas. But Bitrix used to keep your gas.

Which in the beginning, nobody really cared about because like gas wasn't really worth that much. But when AntShares started going up in price, gas started to be worth something. And so there was a new exchange being started. And their entire premise was we're going to list AntShares and give you your gas. And the exchange is called Binance.

I was also one of the first, probably first 100, maybe first 50 users of Binance when they first released. I had no idea that was the origin of Binance. When they initially started, they were targeting all of the AntShares holders. That's kind of how they bootstrapped themselves as the exchange. And so when AntShares turned to NEO and all this trading volume went like crazy, this is like kind of what Binance captured in the beginning.

And so my second thought was, I was like, well, if I'm going to move all my answers over to Binance, I should probably participate a little bit in this ICO thing that they're doing, because I should probably have some buy into like, you know, their exchange and all that. So when Edith came and told me, hey, I met this like answers guy, I'm like, oh, my God, this is crazy. Like, I would never probably have ever personally met him myself. But that tie in was super interesting to me at the time.

I told the whole story to Chris and Chris was like, "Let's work with this guy." I'm like, "Okay." And this is when Binance launched. It was the time that China for the first time banned RMB fiat to crypto because the world was going crazy. So Binance was sort of like the first crypto to crypto exchange. They weren't the first exchange because Huobi and OK came before that, but they were the first crypto to crypto exchange.

Chris and I were so excited. We invited this guy to come to the US. And of course, you know, to them, doesn't matter even that they're big crypto whale, coming to Silicon Valley is still the mecca. And so I hosted him at 500 Startups. We hosted him at Greylock Partners. But then at the same time, both me and his fund don't really invest in token. So we just sort of like,

This is kind of a hobby. This is kind of fun. We met so many crypto projects from both literally worldwide. And it was when they weren't sure what's happening in China. So I started to see the Binance folks, the Huobi and OKEX, they all set up offices in San Francisco the same year. So we made so many friends and sort of like the best of East meets West friends.

and sort of create our own little hub and talk crypto. It's like a crypto salon almost. You're the university cafe of crypto. Yeah. Yeah.

And to, I guess, tie in the other side. Yeah. So with Greylock, we ran all this community stuff. We used to do a whole bunch of things around different emerging market areas. It's like VR, AR, esports, autonomous vehicles, robotics. Crypto was kind of like this thing where no real Silicon Valley VC funds were paying attention to at the time. I just thought it was like a new, really interesting emerging area that

Again, like the early Web 2 people in that community, there was this similar thing happening. And so I wanted to, while we had the time, to host small dinners and talks and all this other stuff. So every time Edith used to come back with this new contingency of Chinese entrepreneurs, we'd also pair them together with a lot of the people in San Francisco working on a lot of this stuff.

So a lot of the early like 0x team, the Coinbase guys, some of the Ethereum folks, I was friends with a new kind of a lot of these people as well. So to Ida's point, it very much was kind of like the East meets West of crypto kind of centered around a lot of this. Yeah, I actually found some photo from my old broken Galaxy phone of us hosting the founder of Bitmain.

At $500. And I also found an old photo of us with Tole. Tole from Solana? Yeah. Oh, you have to send that to us. We'll put it on the website. So Chris and I basically started this whole salon thing. It was really interesting because now we're really on the urge of maybe it's time we should get our fun to do it.

And at the time, 500 was sort of like, you know what, you're so crazy about all these things. And who's this Chris guy who always like hang out with us? Why don't you actually just like build a like a crypto accelerator within 500? Yeah, I'm spending so much time. Anyways, in order to do that, I actually change my LP agreement.

At 500, I have a small $10 million fund, and that was the fund called Mobile Collective. That's what the fund that invested in Solana. But in order to even do that, I have to gone through like a lot of legal headache and paperwork and approval from, I mean, I only have 10 LPs, so that was easy. But still, they're like, what are you talking about?

Right. You're not going to own equity. You're going to own tokens. What? And did your LPA explicitly bar you from buying tokens? Or was it just that like it wasn't contemplated as the type of thing you could even own? Yeah. So in the old days, OK, it's not that old. OK. Their generation of like LP agreement is usually you don't own liquid assets.

Just like a VC fund shouldn't be owning public stock, right? You're doing early equity investment. So we basically amended it so that we can actually invest in token, like digital asset, but it have to be

at least for my old one, was below 15%. So as long as you're below that threshold, it's okay. I guess to complete the kind of other side of it, if you will, I think it was like in late 2017, I officially left Greylock. I ended up being there for almost five years. And there was a little contingency of us. It was me,

and Kevin Kwok and then Sam, who's like one of the general partners there. And there was like a little sort of contingency of us and about the four or five year threshold. I was like, I got to kind of go and do something else. And so right at the time, this is when Edith was contemplating the launch of this blockchain accelerator. And then she officially asked if I wanted to be an advisor for a fund. And again, I guess similar to the joining Greylock story doing this,

I didn't really have anything else planned. And so I was like, well, might as well. This sounds kind of fun, I guess. And so I kind of jumped in to help her out when I left. This is a photo with us and Jihan. That's the founder of Bitmain. Oh my God, like when he showed up, Jesus Christ, people were lining up on Mission Street.

Trying to get in because it was even more bigger deal then because he's not in town that often and then we're like hosting him I really think that he felt like he was a rock star and he had a bodyguard Pardon my naivete. What is or what was bit main bit main at the time? And I probably I don't think they are anymore, but they were the largest Bitcoin miner in the entire world So they not only mined Bitcoin, but they actually also produced their own chipset their own a6 to do this and

Bitmain, they've fallen from glory, if you will. But I think they were one of the fastest companies in history to go from zero to value to be over $10 billion in revenue. And they took very little in financing. I think Sequoia led the last biggest round that they did.

Yeah.

Everybody on the planet wanted to talk to him. He didn't come to the US very often. I remember at her event, the 300 people all showed up. There was a lot of growth stage investors all trying to buy to get in front of Jihan. And then his bodyguard was like pushing a bunch of them away. So very much like a rock concert. It's hilarious. So Edith, did you end up starting this crypto focused accelerator or did race happen instead?

Oh, yeah, we did. So in early 2018, by then, a lot of people know Chris and I were pretty active in crypto.

I have an old friend. I knew him from my dolphin days. David was like a growth hacker. We know each other for a long time. And he is an old buddy of Anatoly. And they play underwater hockey together. Yes, that's right. We talked about this with Anatoly on our episode. And I'm like, what the hell is that? And I'll send you guys some video of them playing. But anyway, I guess...

Chris and I did a lot of talk around those times. How do you evaluate a token project? And we have like all these decks in public. So I remember meeting Tole with Chris in a very, very small room, conference room at 500. And by the way, I don't like fourth admission is where like a lot still do like human lying around.

It's not the nicest part of San Francisco. No, no. I remember meeting him for the first time. And mind that, like, this is already, we have met hundreds of kind of spammy projects. And most people are just wanting to make a quick bug. And a lot of time when we're looking at, like, token economics, pretty much is, like, once you do ICO, IDO, whatever you call it, IEO, there's, like, all these buzzwords.

Most of the founders just wanted there to make money. And a few years ago, everybody was basically layer two and improve Ethereum. 99% of those projects around that totally basically explained to us that in my head, very simple. One is my previous company, Dolphin Browser, was invested by Qualcomm. So I love people from Qualcomm. And in my head, I'm like, if you can figure it out, you know, do distribute it with your cell phone.

Your concept of proof of history sort of makes sense. Like you can make that happen. That's 10 times harder with millions and millions of phones and you can make that happen. Okay, there's nothing for us to look at other than actually he didn't even have a white paper then. He's just talking about the ideas. So we both sort of like, we like this guy. He's real.

And Chris, had you personally invested in Solana at this point already? No. So like literally this was the... This was like the first time you met Tully too. This was like the formative Solana or like it used to be called Loom, like literally was not even like a thing yet. I guess to add a little bit of context.

We did references just on Anatoly himself with some of his former colleagues, coworkers, bosses, and all that. And for all of them, when we asked, hey, you know, just checking in about Anatoly, like, what do you think about him? Their first response is either, what is he doing? Can I join? Can I invest? Like, I want to be involved in some way. And that was like hugely positive signal to us.

But to be realistic, at the time, this was a concept in his head. There was no code written. There was no product. There was no testnet. There was no devnet. There was literally nothing. And in fact, Anatoly was actually super upfront saying, I'm not sure if this will technically work.

He said, I think it will, but like, I'm not sure. And his idea was at the time, a lot of the, and still to this day, a lot of the layer one protocols are constrained by the throughput that they can enable, mostly because proof of work. It's a hugely constraining thing. And so his idea was instead of trying to do it through sort of compute, what if you could append transactions through time?

And the reason why he came about this is because he used to do a lot of this stuff because he used to work on like low level CDMA chipset stuff. He was like one of the core kernel developers for brew, like a really early kind of mobile OS type stuff. And for there, you have very constrained networks. You have very constrained kind of compute. And so you have to mess around and do things based on time. And that's kind of how you get around the transaction throughput limitations.

A lot of this is instantiated. There's a technology called Google TrueTime, which also does kind of a similar methodology for appending transactions across a kind of distributed state of servers. And is that like a Google open source project or something? Yeah, it's basically how they synchronize all their distributed servers. And yeah, it's an open source project.

kind of instantiation of a lot of these things. And so Anatoly's idea was, I want to use all these concepts that I'm super familiar with, but I want to apply this to a layer one blockchain and distributed transactions. This was kind of the idea here. Edith was starting this blockchain accelerator. We were looking for companies to put into it. We met Anatoly right at the perfect time, came through a trusted source, referenced super well. And so we basically told them like, hey, we want to help

build this with you and we will be your very first two investors when you do this. And that was kind of how this thing got started. I remember the first few times we met, the second time we met him, he brought two other co-founder, including Raj. And then the next thing we're like, okay, we're going to start, we're all sort of learning this together.

One thing we are really good at, this is how Chris and I met, was at a conference that we self-organized. So we basically did about three months of like every other week, some sort of like community event.

And I was so burned out because like the whole point is actually to introduce Loom. It's not even Solana then. We have like three or four projects. It's all about introducing our founder to these, you know, big star, right? In crypto. And one of the big star, I remember that very clearly was Joey Kruk from Pantera. And he's like a big deal, right? In crypto.

prediction market and I remember I particularly wanted to meet Joey and they talked and he just sort of like hmm okay like weren't impressed

And to add on to this, maybe two things. One is as Anatoly got a little bit further along and they started, you know, writing what would become the first white paper, they built this thing completely on a non-EVM compatible state machine. So they ended up kind of building their own based on Rust. But the fact that it was not compatible with Ethereum rubbed a lot of early crypto people the wrong way. Oh.

Oh, I bet. Because it necessarily means that it's not compatible with anything that anyone's already built. So it makes it a fracture of the community. So everyone who has learned how to develop for the EVM, like, yeah, well, good luck with that. You have to learn a completely new thing and join this other community now. And a lot of the points of crypto in a lot of this is composability. And so you want things to work with as many things as possible. And so to have this

thing that was not compatible was a very big deal breaker for a lot of people. The other thing, keeping in mind the time, so this is now early 2018, the crypto market just went from a lot to crashed, I think it's like 60, 70%. It washed a lot of people out.

Again, we were trying to introduce Anatolia in this concept to a bunch of other people. And a lot of people were like, hey, you know, even Ethereum itself is not using all the transactions they have. Why do you need to scale this even more? It doesn't doesn't make sense here. Like we're not even using the capacity to have we have today. Why would you create this whole new thing to increase it? Doesn't make sense.

It's like little did anyone see DeFi coming or NFTs coming or DAOs coming or anything that drives gas prices to the moon. Yeah, none of this stuff existed. So when Solana initially wanted to put together this small little seed pre-seedish round that we participated in, they had a lot of people initially in late 2017 that raised their hand and said, we all want in. And then when 2018 rolled around, everybody was like, I'm not going to do it anymore. Yeah.

Like when Raj was collecting all the contributions, Raj called me and he's like, hey, I just want to check. Are you are you still OK? And how much money were they raising? I don't know what they eventually ended up at. Like, I think they were trying to do five and that turned to four and it turns a three and it might even went like under that.

Because again, like a lot of the funds had such terrible performance in that first few months, like they kind of all sort of disappeared or couldn't make any new investments. So Raj called me and he's like, hey, are you good? And I said, my commitment was to you guys. So like, you know, of course, I'm going to stay true to my word and back you guys. And

And he's like, okay, because I just want to let you know, like most of the people who said they were committing are not going to anymore. And I said, again, like my commitment was to like, I'm really trying to help you guys. And he's like, okay. He's like, this is going to be rough. And it was.

Yeah, tough time. Like 2018 was not a good year. And I just remember like we go to the 500 office every day, hang out with them. And their team like grew from one to three to and then like Michael Vine like quit. And there's this guy named Eric. There's a whole bunch of quit Qualcomm and now like congregate in this very dirty office.

And we just throw these random, you know, events, community events to meet all kinds of folks in the ecosystem. It's just so interesting. Brand new topics. It's fascinating, too, when you're talking about like famous from the bigger, you know, the established Ethereum world, because Ethereum had launched 12, 18 months ago and was under development for another couple of years before that, but is also in like normal years, still also a very recent project. I mean, crypto time is 10x accelerated, but...

Yeah. Yeah. It feels like decades ago, but I guess in reality, it's really not. It's like what three, it's really like three years ago. Although, yeah, I feel like I have aged much, much more than that standpoint. But yeah, the thing that was always, at least to me, like so impressive is one again, like because you had this crazy price correction, a lot of

People either exited the system or just disappeared or weren't investing or people weren't interested in that. The price completely unfazed the Solana team. They could care less about any of this stuff. They were just completely building. And despite the fact that we hosted all these community things and everything around them,

Nobody was interested in building anything on Solana at the time. We tried to convince exchanges to like, hey, wouldn't it be cool to do like a DEX? You could do it completely on chain. I probably won't say who, but like we said it to a few very well-known established exchanges. They're like not interested. We tried to get some of the, you know, bigger Ethereum applications to be interested in this stuff. Nobody's interested. But again, team was completely unfazed.

They were completely heads down, completely shipping. They're 24 by 7, usually way into the night. Team was growing very succinctly. But again, like the rest of the world did not deter them. They were very focused on kind of what they were doing, even from day one. And to be super clear on like just the investors at this point, just we have this

It's like you and Greg Kidd stuck around. Edith, you brought them through 500 startups, right? Yeah. So my tiny $10 million fund invested in Solana Seed. And Foundation Capital? Yes. Was anyone else? I think that's the main one. David Quek, who introduced us, he also invested. And then there was one other smaller fund called Reciprocal Ventures. Yeah.

And there might be a handful of other individuals and stuff, but that's kind of it. And this is like before multi-coin, before, obviously way before the Andreessen round, but like before the other sort of crypto native funds that got excited about it came in. Yeah. Even to the crypto ecosystem, Solana was very much an oddity. Now they're much bigger and more successful and it feels like it's all part of the same fabric and ecosystem. But in the beginning, again, remember, because it was not EVM compatible, it was this, you

side fork that like nobody really knew what to do with. And so they kind of just left them to themselves. And do you remember what the sort of big break was the first application that was like, yeah, well, we'll build something on top of Solana. I used to push Anatoly all the time. I'm like, hey, you guys are, you know, building this network that's going to do 60,000 transactions or whatever per second. I'm like, literally, nobody's going to care about this unless somebody is going to fill and use all these transactions. Right.

You could build the fastest, craziest thing in the world, but if people use zero of it, does it really matter? Him and Raj always used to be like, yeah, we know, we know, we're going to try. But again, it was hard to get people interested in building on this non-EBM compatible thing. I won't name them by name, but there were two or three or four of these bigger applications

Yeah, I was going to say, was it FTX that was? Yeah. So FTX, which is probably another long story, but another seed investment of ours with Sam Bankman and his team, they wanted to build a DAX.

And they were far more aggressive than a lot of the other exchanges out there. And they wanted to build this thing completely on chain. And so their first initial approach was they themselves were going to build a layer one. But before they went in to do that, they wanted to evaluate all of the things that were out there, not just Solana, but they wanted to look at everything. So they did kind of a deep dive technical review of Ethereum, of Solana, of Polygon, of Avalanche, of every single thing that was out there.

And it just happened to coincide with Anatoly built this little kind of a demo thing around the Solana testnet. I think it was just called break where you could just type really fast on your keyboard and it would push all those as transactions. Yep. It was this little thing, this little app you spun up. And every time you tapped a spacebar or any key, it would instantiate a Solana transaction and you can see it go through the system.

On the FTX team, the CTO is like, okay, like, you know, I can click as fast as I can. And you guys handle it all. What if I give you guys an auto clicker? What if I click like 1000 times per millisecond? Can you handle that? What if I can write some script in here? Like, how much can I actually break this thing? They stress tested the whole thing and found out for themselves, like, hey, this isn't some

Because a lot of the other projects, and again, still to this day, not saying names or whatever, but a lot of things in the crypto space, they have these big, broad, bold ideas of all the stuff they can do, but it's super theoretical. Sometimes it's harder to find stuff that works in practice today.

But Solana, like literally through example, not by big idea, but like it actually worked and functioned at small testnet scale. But like it actually did what it said it was going to do. And so the FTX team decided that instead of building their own layer one, they were just going to use Solana to build Serum. When you had a company like, and again, even then, like FTX was not the

800 pound gorilla it is today like ftx was still much smaller then but to have the brand reputation of somebody like ftx Actually treating this seriously and not only that actually building something on top of this This gave the rest of the ecosystem a lot of confidence and leeway to start experimenting with it not necessarily Transitioning over yet, but like start to actually seriously take a look at the solana thing. This is 2018.

And then we were basically hanging out, and then Chris and I basically brewing this idea about

starting a fund together. It takes a long time to start a fund. Meanwhile, Tole and Raj and the team basically been camping out at the very dinky 500 office now for about six months. And the 500 folks was like, you guys don't pay any rent. So the accelerator is supposed to last for three. Now you're here for like over half a year. It's time to get out. So Chris and I was like looking at this other project named Nabulous.

We helped them to get an office on 3rd and Hawthorne. It's right across from the Go Club. And this is a street office, but they were like failing. So I was like, hey, Raj, maybe you should take a look at this office. So they took over this office and then moved over there. And if you pass by it today, that their Solana sign is still there.

Nobody else was daring enough to become a tenant after them. Yeah. So Chris and I was like learning new things and going to a lot of these, again, community events, but by somebody else. And I remember there's a project, probably Chris was speaking there, very, very dark. It's host by a compound somewhere in the mission. There's like, nobody can see anybody, but I did see this guy who was,

Can't see his face, but you see his afro. Sort of like walking by. And then I'm like asking this guy next to me. I'm like, who is this guy? And he's like, oh yeah, he's a pretty active trader. And I'm like, hey, what's your name? He's like, oh, Sam, Sam Bankman Fry. I'm like, why is your last name so complicated? And he just sort of like, what? And then he was telling me some ridiculous trading volume. I'm thinking, is that real? Yeah.

And I'm like, what's the name of your firm? Alameda Research. I'm like, are you in Alameda? It was just kind of really odd conversation. So that's like the first time that we met Sam.

Is Alameda Research named for Alameda in the East Bay? Yeah, a lot of the early trading firms or whatever, a lot of them had super crypto name like Genesis, Blocked. They had all this instantiation of it. And Sam, I give him credit, like he wanted to create an investment fund that was well known on its own right, not just tied to the crypto ecosystem. And so they wanted to pick a more general name.

And so he used to live out in Berkeley and he liked going to Alameda. And so they picked Alameda Research Group. And you guys seem to not take that lesson at first, because when the two of you got together to start a fund, I think you were calling it proof of capital. Yeah. Like walk me through that and how it became race. Proof of capital is kind of a good name for a crypto fund, right?

Proof of work, proof of stake, proof of history, proof of capital. Everybody get it. The reason why we rebranded to Raise is actually very simple. We met Alfred. Chris actually mentioned his name earlier in the show. To me, Alfred was sort of like Anatole in the 90s. He came from Sun and basically licensed the whole, what do you call those, JVM?

an exclusive license. And it was very, very similar. Like it's the all open source and then commercialization via VA systems. We learned a lot from him. And honestly, Chris and I were pitching him as an LP. Hey, we're doing this and this. And we met all these crazy people. And he's like, you guys are crazy. I don't know what you're talking about.

I guess we impressed him enough. He's like, I like what you guys are doing. And not only I'm going to invest, I want to be part of it. So we thought, okay.

He's kind of cool. No matter how many people that we met, I've never met anybody that have scaled something from nothing to... They have over a million developers that's built on web logic, particularly. That's like a big chunk of the human population. Yeah. To the point where he took the company public and eventually sold it to Oracle for $8.6 billion. We thought, you know what? Like,

There's so much hype, other than Tole and Sam, of course, but there's so much hype around crypto. But if we really want to be serious about building developer ecosystem and really take one to know one, Alfred is a very, very pure soul. And we love having him. And it's also helped the fact that he's a big, big, big, big car collector. Yeah.

The other two stories to add on to here, it's super interesting, actually, because, again, like they literally created middleware for the enterprise, a lot of the computation. So a lot of the transaction systems for all of our ATM machines, all the flight transactions, all of AWS's data centers all used to be built on WebLogic, all the core e-commerce transaction systems. It basically powers the kind of traditional Web1, Web2 transactions.

When Alfred started looking at Solana, not just the team, but like technically, like how it's made up and constructed all that, his first comment was, this is just middleware.

It's the same thing that I built. There's no difference. With the only one caveat being the biggest technical difference between the two of them is for WebLogic, everything was built centrally. So you ran the servers yourself versus in Solana's case, you don't run the transactions. They're run distributedly and not distributed just like in multiple geographic locations. But actually, the validators are not even part of Solana. Like they're a wholly separate kind of ecosystem, if you will.

Other than that, it's pretty much transactional middleware. You can't force an update as if you owned the server. Yeah. But everything else for the time being and kind of how transactions are constructed, this is all is very similar. Yeah.

And so to take the line from I forgot the exact quote, but to take the Peter Thiel line of like, what do you believe that very few other people believe in or whatever? We actually believe that right now people treat Web3 and crypto and Web2 is completely different and subset and like a completely different universe that will never touch each other.

versus we actually think they're far more interrelated than most people give it credit for. And in fact, all of the stuff that all this Web3 is doing is just another instantiation from the transition from sort of single servers that you own to Web3 distributed architecture. This is just the next instantiation, but it's all really one in the same thing. It's not the separate fourth path, but it's part of the same ecosystem.

Race Capital, like we invest in infrastructure broadly on the seed state side. Yes, like we're probably most well known for and we do Web3 and crypto infrastructure, but we also do investments across data infrastructure, transaction systems, open source, developer tools, communication infrastructure, any of this low level systems type stuff. This tends to be like our sweet spot and what we fall in love with. And again, like we hold both of those ideas in our head at the same time.

And just to throw in, I don't want to name the exact name because otherwise Sam will be really mad. There's one of a star, star, Michael Jordan of engineer at FTX. This person is like a rock star. And he went to Berkeley.

And I saw him in Lisbon. We're talking about, hey, you guys should hire more people. But anyway, he's like, what else do you invest in? They took that advice, it seems like. He's like, what else do you invest in? And we recently invested in this company called OPEX System. It's the open source project called MC Square. And what it does is encrypted data analytics. You can do analytics on data you can't see.

And started by Jan Stalker, who's the founder of Databricks and also Ruluka Ada Papa. And then this engineer goes, Ruluka is my professor from Berkeley. And I'm like, no way. But he's like, I do crypto. Shit.

she does crypto. I mean, but it's not the same kind of crypto, but essentially the skill set is the same. So in some sense, I'm like, oh, great, awesome. Like, I'm so glad that we invest in the right people. But more importantly, is this that we support all developers. I mean, if they decide to do crypto, awesome. If they decide to do other kind of crypto, cryptography, that's cool too. And we wanted to, I think like Web3 and Hype,

have a lot more things need to be built. And it's a very exciting place to be. Maybe that might be a good transition to race itself as a firm. I mean, you talked about at 500 and at Greylock, you had all these challenges of investing in tokens and crypto projects.

How is race structured? And specifically, how did you initially structure it? And have you had to change anything since starting to adapt to changes that weren't foreseen? So maybe I'll take the beginning of this and Edith, feel free to chime in. So we intentionally set up the fund from day one to invest in both of these things and really all of these things.

So we're primarily seed stage. So seed stage, private equity, safe notes, debt, and also tokens all at the same time.

And so even when we had the misstep of initially calling ourselves Proof of Capital, like in our head, we always invested broadly in all these sectors. The reason why the name wasn't so great is it was so specific. Everybody just basically assumed we were a crypto fund. And I always used to have to explain, no, like, you know, we invest broadly, you know, we do cryptography and a bunch of other stuff. And they're like, Proof of Capital, crypto fund, you guys do crypto trading, right? I'm like, no, you know, but...

Crypto trading, right? And so it was always a struggle for us to try to

explain this in the beginning. Hence why Alfred's suggestion was we should really pick a name that is broadly applicable, that is easy to pronounce, that is not taken. We did a whole name search and there's a whole bunch of others. And the name venture, like literally almost every single word is taken, except one of the few we found was race, which was not. And it has a few other interesting tie-ins. So one, we move really quickly and fast. We

We tend to make decisions fairly quickly as well. We're very intentional. When we have your back, we have your back fully. And so it kind of applies into that name. Two, our partner Alfred does have a very large car collection and loves to race kind of a lot of his cars as well. So it has that tie in.

And then fourth, we just hired a new partner named Richard, who formerly came from the Ontario Teachers Pension Fund, one of the largest LPs of the world where he ran venture there. And so with him joining RACE, R-A-C-E, Richard, Alfred, Chris, Edith.

So it happens to fit the name too. No way. So you had to find someone as an R to really complete it. Scope the search pretty tightly. We didn't tell him that was part of the interview, but it was secretly part of the interview. And just to give you guys some credit for listeners who don't know, you guys do move quickly. We've talked about this on former Sequoia episodes. Because of your prepared mind, because you're very focused on this sector and you have a zillion relationships,

It's a 10-year-old sector that you've been living in for seven of it or eight of it. So when someone approaches you with a new idea, you've thought about the idea before and you know how to evaluate it and you know how to evaluate the timing because you're also immersed in all these other things in the ecosystem. Yeah, and especially coming from a community lens, like a lot of these Web3 and crypto projects, the community instantiation actually ends up being far

far more important than even just purely the team itself. And most of the people creating these things, they usually come from somewhere, from some ecosystem or some community, or they've done something before. And so for us now to triangulate on new early stage founders,

is much, much, much easier just because we have a lot of connections within a lot of these people. It's easy for us to kind of find out where they come from, why they're doing what they're doing. Because again, when you're looking at the seed state side, in addition to just the idea and technical aspect itself, a lot of it is really kind of still core fundamentals. You're evaluating the individuals and why they're doing what they're doing.

Yeah, and I also want to add because now I feel like I don't know what you call Web 3.0 or definitely another cycle for crypto. Is it a few years ago when people all of a sudden get listed on some exchange and you start seeing all these Lambo in all these conferences and people just gone crazy? Yeah, right. It was a whole meme for a while. Yeah.

And I felt like at least the recent generation of founders that we have invested in, they're very, very young, but yet they're very conscious about... Actually, many of them are anonymous. Like, they don't want to show their face when we first met them. They're very, very...

clear about you know what like we need to be super careful especially with DeFi we don't know what's the regulatory implication yet we don't want to like go crazy and get into any sort of compliance related so they're very conscious about it

Have you ever made an investment in someone who you never knew their real name? There's someone definitely don't want to tell us their real name. But then Chris, I like to call not only Peter Thiel of crypto, but I also like to call him like we're like he's like CIA in some sense. Like even though like it's no camera and then he'll be like, so you're this person, right? And then the person will be like, how do you know? Yeah.

The crypto ecosystem of true believers who are technical in building the real systems level oriented stuff, it's a very small community. And so if you're one of those people, it's usually fairly easy to triangulate who you are, again, even if you're anonymous or whatever. Although we do...

respect like the wishes of people there. So even we might know who you are, like we're very careful on not announcing that or saying anything. Because again, people are a little bit more sensitive in that regard. Another thing which I didn't really

intend to do, but I guess just kind of happen is because a lot of people use avatars or pseudo anonymous names or profile pictures as NFTs or whatever. I've always just used like my name and profile picture. I don't know. It just always been super normal to me. One of like the NFTs I own is like this whole, the salon of monkey business, SMB things. And I'm part of the whole like monkey DAO and everybody has like their monkey picture and whatever. I'm literally the only one that has like my name and my real profile picture.

You're the dad. Yeah. So, well, I don't know how I feel about that. But most people know who I am. And like most people, because I'm fully docs, like will trust me slightly more. And so people will tell me either who...

who they are or what they're doing or a lot of people reach out to buy again people we didn't even invest in like i've always tried to say for anybody building anything in the solana ecosystem even if we don't invest like i've always tried to be as helpful as possible connect you with other partners help you think through sort of financing stuff think through like in kind of incorporation things should you do a safe token safety all that sort of stuff i've just tried to have

help kind of in a lot of these dimensions itself. I actually like using a lot of these things. I've been almost the first user for a lot of the protocols that have come out. I've been an early liquidity provider for a lot of this stuff. Like I actually want not just to

talk about these things theoretically, but actually use them and understand them on a more personal user-based level. And so I've always tried to do that to some degree too. Well, Edith, back over to you for some of the structural things. What have you had to deal with as a crypto investor that you never had to do when you were managing a $10 million equities startup fund?

There's so many things. I think structurally, as I mentioned, like with the LPA agreement, we have to change. We couldn't even do token investment to begin with until we handle all that. So certainly we don't have an issue with RACE anymore because I've gone through it once. There's a lot of really amazing venture fund out there I love. At the same time, I remember Solana launched and then maybe a year in, Tole and Raj was like, hey, do you want to run a NOC?

Do you want to do this? Do you want to do that? And I'm like thinking, wow, like if you don't care about this, like no VC fund is going to like take on doing all these things. It's very like foreign. And then also the liquidity, the reason why I think is like the best of both worlds, because a normal VC,

traditional companies take, I don't know, seven, eight, 10, 12 years to get to any sort of event from, it doesn't matter, IPO or, okay, spec lately is kind of crazy, the direct listing and whatnot. But most of the token project, when we get involved, we're

Usually, within, I would say in Solana case was about two years. But of course, token lockup for another six or how many years. Most of the project now we invested in, one recently, we volunteer, we're like, no problem, three years. Because we're in it for a long haul. Three is long. For a lockup. For a lockup. And we're willing to do that because we're there for the long haul. But to the crypto world, what?

Three years is a long time. But to a traditional, this is nothing.

I think the sort of the understanding of learning about like token economics and then more importantly, like the psychology, the way that I explained to my web two friends is the way that you working with all the various different exchanges and get listed. It's almost like you dealing with the app store and make sure that your apps is being listed and available in all these various different app store. Cause you need to work with them. You need to understand liquidity and,

There's plenty of projects out there. Sometimes we hire market makers to make sure that there's enough trading volume. This is all skill set that is brand new. I feel like I'm learning so much about the real world finance industry.

Because I'm not a trader, so it's not natural to me. And I feel exactly the same way that getting into crypto and thus needing to understand, especially in DeFi, a lot of these financial instruments and the way that these markets work.

actually have like backed me into better understanding traditional financial markets. Yeah. And it's just so fascinating. Like we have met people from all over the world coming from jump trading to tile research to Citadel, like Morgan Stanley, JP Morgan. These are all badass traders now jumping into crypto. Yeah.

and applying what they know to a wild west to them. But yet, to me at least, I felt like I'm a tech person now investing in things that is so tied to finance. So it's sort of, I'm like tech fin instead of fintech, if that makes any sense. I love that.

Edith has a whole bunch of skill sets I do not have, which again, I kind of also think is the beauty of like a partnership. I love the idea of like the solo GP or solo fund or whatever. But honestly, like I learned so much from Alfred and Richard and Edith. Edith is amazing.

so good at being friends with a whole bunch of these people. She's so good at digesting a lot of the research and data and numbers, like inside reports, positioning companies. Edith is literally on all the mainstream press all the time, like Bloomberg. I think you just did a thing with Emily Chang. I'm usually pretty terrible at the press. I'm not pretty good at the press.

The best description I can kind of think of is almost like Mary Meeker for like the Internet 1.0. Like EDA is doing a lot of this kind of fundamental foundational work, especially in a lot of the Web3 and crypto side. And again, this is a lot of skill sets like I just do not have. And a lot of people also founders in the crypto space don't have either. And so it's really the partnership aspects that comes from a lot of this too. I like to make fun of Chris's like Peter Thiel of crypto. But then I think...

what I love doing is actually to glorify the founder because many of them are actually super geeky I think totally still very much so which I love and and in some sense I would rather to have like Chris to keep building what he's building but to help really glorify and and help them to understand so that where they sit in the world what's the positioning it's super fun for me

Well, to speak to, I think it's both of your level of analysis. You were gracious enough to let Mario Gabrielli publish the investment memo that you wrote for FTX. I think that was their $8 million round, their seed round. And it's like unbelievably awesome analysis. I read it cover to cover just in preparing for our interview with Sam a few weeks ago. And it's just very clear that a lot of times you read investment memos and they're sort of like slanty.

slapdash, here's who else is investing and the founder seems compelling and I like their background and the timing seems reasonable. And yours was like a very explicit...

logical argument about why this particular, specifically the derivatives segment of the crypto exchanges were an interesting place to go after, why there weren't enough competitors, why this moment in time was unique. It was a masterclass in how to write a well-thought-through, well-reasoned investment memo, even when the company has almost no data yet because of how early stage it was.

I also love writing these things too. So, but like we had to do this one specifically for a few reasons too, is one, there were no real other VC funds or traditional investors in the round. And so we kind of had no social proof to rely upon. Outside of us, it was a few super small, sort of more on like the trading side, a bunch of individual traders. I blew that on the FTX episode then. I thought it was like 40. I thought it was like Sequoia and the whole who's who. That was the next round. No.

No. No. Yeah, we had zero of this to rely on in the seed state side, fortunately or unfortunately. The second one, too, is similar to Anatolia and all that. We actually referenced Sam and Alameda Research with a bunch of the other trading and trading firms who knew them and were counterparties to them. We actually got extremely negative references on Sam.

Not necessarily on him personally, but the biggest hiccup that most funds had is they were launching FTX, but Alameda Research was going to be the market maker for their own exchange. And this is like a cardinal sin in the eyes of other investment funds. And a market maker is someone that's the counterparty, like they're providing all the liquidity to trade with. Yeah.

Yes. So most of the other trading firms, as we said, we would never, ever, ever in our lifetimes ever trade on FTX for this reason. Long story short, they all are trading today. They're so wrong. So they're very wrong on this aspect. But we had to justify for ourselves, like, what is the fundamental core reason why they were doing this? And was this justifiable? And again, in this space, derivatives were still new. There was no real...

large scale market making firms doing a lot of stuff stuff to begin with. And again, they were coming out with new platform new venue to compete with at the time the 800 pound gorilla of bitmex that pretty much own the sub sector that was never going to work participatory with any other participants.

But the biggest weakness of BitMEX is they did un-KYC'd, unregistered accounts of users, which opened themselves up for huge on the regulatory side. And so they wanted to come out with this new slice, if you will, but they had to bootstrap this in their own way. And this was the method that they chose to do it. It was risky in a sense, but we had to

understand for ourselves fully knew we were getting into because again, we had no other friends coming in with us. We asked a lot of other VC funds that they wanted to participate and nobody did. It was kind of just us on our own. On the derivative side, the big ruler at the time was BitMEX, B-I-T-M-E-X. And they were based out of Hong Kong. They were

so big that they rent out like the equivalent of Empire State Building of Hong Kong is this place called Changjiang Building where Goldman Sachs located in central.

versus Chris is like, hey, go remember like that guy that we met in San Francisco, this guy named Sam now is in Hong Kong. So I'm like, okay, I'm going to go hunt him down. And then compared to BitMEX, right? It's a dinky little office in Causeway Bay in Lee Garden in Hong Kong. And it's very like the typical trader with like 10 monitor, like their entire team is like that.

So I felt like, yeah, like this is sort of give me the vibe that you do or you get shit done. It's not about, you know, beautiful office in Central. This is just they're doing it. And so typical style of us. I mean, at the end of the day, it's not about...

The capital is everywhere and what we're going to do, right? So I basically volunteer. He's like, I'm going to write your press release. Let me do the pitching for you. That's how we decided to invest. I wish we invest more, but...

But if it's not because of all these other traders that Chris talked to who gave like not so positive feedback, we probably would do a lot more. But in this case, it's all good. It's all good. We have no complaint. I was going to ask you off air, just as I start to do more

crypto investments institutionally from PSL Ventures. You've made some investments that have gone really well. You invested on a safe or a safety or something that converted into tokens. You've got all these tokens. Chris, I think you...

got Solana at like 4 cents, if I'm not mistaken. So you guys have these very appreciated tokens. Back over to Edith again. Are you distributing tokens? Do LPs want tokens? They not want tokens? How do you think about this? Yeah, I think I mentioned earlier, so I have a tiny little fund, $10 million, $1 million each, 10 friends. They're all friends. And

And then when we changed the LPA and they were like, what the hell are you doing? And then we end up investing in a handful of projects. Solana wasn't the only one. We have looked at others as well. Definitely not do as well. But still, we have a handful of these tokens. And when Solana get to, when the token unlock, they're like, hey, what are you doing with this? And then I'm like, no, not really. I think it would do well. I think it would do well.

And then when it gets to $14, and by then it was already 7x my fund. One of my LP, who's a really good friend, who is a trader, he goes, you know, it's time to claim your glory. That's the literal word that he used. And I'm like, no, no, no. I really think that I believe it will go up more. But one of the things that I think in life is it's not just about money. It's more as they've been supporting me for so long. And I thought, you know what?

Even I distribute token, it actually wouldn't change how I think about it. And in fact, it wouldn't change my ownership of it at all. It's more or less is that they finally will get something in their freedom to do whatever they wanted to do.

Basically, I decided to distribute token. Chris is an advisor for my previous fund. So he gave me a lot of like, we were thinking, oh, should we help them to open their own OTC desk? Like, do we do this? Do we do that? And I wrote a very, very long message to all my LPs. And this is the seven reason why you should not sell Solana. But because of your long-term support, we will do this. And this is via the 500 Startups.

Our finance team really hated us because, like, what the hell is this? Like, how do we actually even mark to market on when the distribution notice? Do we pick like the coin market cap or coin gecko price the night before? Do we do average of this? It's a rolling five day average of what is market closed? We just look at 5 p.m. or 4.30 p.m. from the previous day when the regular markets closed. Yeah.

Yeah, and there's no closing in the crypto world. How do we count all this? And then not that long, I have some LPs. They're like, what the hell were you talking about? What is a wallet? Like, what do we do this? And Chris helped me. Like, we sent over like a guide. They're like, Solano, how do you do all this? And many of them just didn't do it. They don't know what the hell is he saying.

And some really, really smart LPs, they figure a way and they trade it on FTX or whatnot. And they're like, thank you very much. Great job, 7x. And then I still have LPs today. Just open an FTX account. Just open.

They literally told me, invested in your fund was the luckiest that ever happened to me. And I'm like, you're welcome. It means they couldn't have sold it if they're just now opening up their FTX account. That's right. And it's from 14, I think today was 180. And they're sitting on these gains and they're like, Jesus Christ.

Many of my LPs are actually very technical founders themselves. So I have one LP is now running a validator. On a basis of four cents, that's a 4,500 X on that investment. Like it's crazy. It's funny that the people who procrastinated and did not think about this again to your phrase, let the compounding do the work.

is they're the ones that kind of made out in the longer term versus the one that tried to be smarter about it or you know trade in the middle of it that ended up being the wrong decision honestly even today you just leave it like please don't touch it not investment advice i don't think you're trying to give investment advice sorry not not investment advice um

Sorry, I guess not specifically for Solana, but generally on the venture side, for most investments that you invest in on an early stage, usually it's better to not touch it and don't do anything. Even when you're dealing with liquid stuff, in general, again, not investment advice or anything like that. And then the other thing Edith mentioned to her LPs too, is she's like, I am telling you, not asking, you're participating in our fund too. Yeah. You don't have a choice. Yeah.

Did anyone want you to distribute cash? Was anyone so averse to this? They were just like, can you just liquidate it and wire me some money? There's one corporate that did that. But I'm like, honestly, that's another thing which is complicated. Because opening an account, like in this case, for 500 startups, the Royal Weed, have a Coinbase account, business account, great. But it's very American-style.

So if you are like another entity somewhere, they can't even open that. So we have some friends in Singapore, they run their OTC desk. I just basically told them that you should just do it on your own, full blown your own KYC ML, just do it that way. And one other small comment on this one. I don't know if it was the first, but Edith's fund was definitely one of the earliest, if not the earliest funds to actually do distributions in this way. And again, there was no

There's no playbook or rule book to follow. So all the steps that she did, she's actually taken and kind of wrote into a little thing for herself. And many other funds who have also had to go through this process and experience, they'll reach out to her now. Again, not to have the answers per se, but just have

something to start with. Because again, this is kind of new territory for a lot of other people and folks in the space. And so again, not so much me like Edith in this case, like we're happy to share some of that stuff too, like in case it's helpful. That's awesome.

So cool you do that. All right. As we start drifting toward close, there's two topics I want to cover. One is something cool that Chris is doing that I can see in the background there on your wall that is not being a professional venture capitalist. So I'm curious about that. The other thing that I want to talk about in our last few minutes is

what's interesting to you now? I think if I reflect back on the last few years, it's been DeFi summer, NFTs, DAOs are gaining tons of momentum, but you two have the best pulse probably in the whole ecosystem of what's around the corner and what the smartest, coolest entrepreneurs are building right now. So let's start with that. Edith, do you want to start with the next feature? I'm dying to see like a...

Shopify for NFT, not like necessarily a marketplace for NFT, which we already have quite a few front runner. All the marketplace today is really very centralized in some sense.

So wouldn't that be interesting? Like if there is something where it's so easy, then I can, although there's a whole bunch of other things that you need to build to make that happen. But let's say I want to start this and put it on my site. And I'm now letting my follower, people who love my art and start buying. But of course, the minute you buy it with a certain token, they automatically, not everybody like have their phantom wallet or whatever, right?

How do we actually manage all that? And it's going to be some work, but I could see that happening. I think that's interesting. This week, we saw something which I found it very fascinating, although I'm trying to wrap my head around it, which is Chris alluded to it, where we really think that the Web 2, Web 3 world will slowly emerge.

Actually, Ben, when we met at Web Summit, I met one of the co-founders of Eventbrite. And I was so excited about meeting him. I'm like, you need to, like, you know, NFT, like, ticketing. And he was, like, telling me, like, 10,000 reasons why, like, no one will care. And then I realized a few things. One is, it's actually hard for people in the web tool world to...

I'm not saying that they couldn't build, but it's a little bit different mindset. I feel like we will start to see a lot of web to use cases that is now built on sort of our new layer. But yet it will be for tiny little different behavior rather than trying to like use a new infrastructure for existing behavior.

So what we've been spending a lot of time is maybe the intersection of a web two, but yet it's another behavior that none of us have thought of. We saw a couple of projects this week. I thought, interesting. So now I found it. We are actually learning about new behavioral change.

Another thing that we get a lot of pitch on, I have old gaming friends, they have like 100 million MAU of their own traditional game, and they're like, we're going to launch our own token. And then I send them an example, no disrespect in any way, I'm Asian for God's sake, LINE, the messaging app, launched a link token.

But it sort of didn't really take off because it has a lot to do with because it's a Web2 mindset to push tokens. A proprietary token that's excluded. Yeah. So I think it makes sense, but it's just a different way of managing, again, relationship with the exchanges and

understand liquidity. It's not just purely distribution to Web2 users. So we're very, very conscious about that. Anyway, it's a very long answer to your questions. Let me answer in a slightly different way. I don't know how well this will come across in audio, but I'll try my best.

If you think of crypto as layers, if you will, you have the layer one protocol. So Ethereum's or Solana's of the world, you have these DeFi or NFT or, you know, things that are really more primitives and protocols. And that's the sort of stuff.

sitting on top. But the two things you're kind of, or maybe the three things you're lacking is one, you're lacking the developer platforms to take all of the tools and primitives and stuff on top to make it easier to construct things with it. I think people still think of

the DeFi apps as the end user state or end user experience. But to me, I see that more as the primitive that's going to be used into something else. And you're going to see more of, again, developer tooling across all this, especially this is super important for people coming from more traditional web to trying to build web three, they shouldn't have to be going all the way down and figuring out transactions and all this sort of stuff. They need something slightly more

abstracted like developer platform to build some stuff on top of this. And then I actually think like, in addition to just the developers themselves, at some point in time, you're actually going to see more of the full FinTech or app experience on top.

So let me give you an analogy. The traditional fintech world, if you will, was really taking all of our old core banking stuff and putting nice layers on top of this to make it really easy to use.

or, you know, any like neobank or what plaid or like whatever, all the stuff on top of it that makes it so much more easy from the user standpoint. This thing on top doesn't really exist in crypto yet. You have all the low level stuff that you can do things with, but you don't have this abstract in enough in a way for both developers or users. So I think the developers comes first, but I think you're going to start to construct experiences on top of that.

And then the other one to kind of turn it on its head, fintech is still relying on all the old core banking financial infrastructure to build these things. What I'd really love to see is crypto being used to displace the old financial infrastructure and for people to actually build normal banking experiences on top of crypto rails.

So you see almost the vice versa symbiosis of this the other way around. I think people still are so segmented and they think crypto is kind of this independent thing and they don't think so much of the other side. But I think you'll see super interesting experience to try to claw back and pull all that stuff out. Because, again, if you talk to most people in the normal fintech world, building on top of a core banking system is a terrible experience to do so.

versus on top of Solana or anything else, you can do instant remediated transactions, even in simple US dollars, USDC, fairly simply and quickly. Why can't you use that to construct a neo-banking app? There's nothing that necessarily holds you back from it other than you need to kind of make the mental leap. I agree with so much that you just said. All right, Chris, last thing. What is that cool rainbow looking thing behind you?

It's called a wave, the Playground Wave. It is an NFT collection of a thousand of them that I made and launched on the Solana blockchain under Playground. So it's an NFT that uses Metaplex and Arweave that you can view and do all this cool stuff with. And you probably have the natural question of,

Why did you do this to begin with? So in addition to all the business and kind of venture stuff, I've also done a fair amount of things more on the artistic side. Again, mostly with photography. You could probably see all the, I guess if you're on video, you can see all the camera lenses. And so I've done photography for a long time, over a decade. I'd like to say I've been doing photography since before the Bitcoin Genesis block. And then in 2016, I was the National Geographic Photographer of the Year, which is a really

within the kind of nature category. That is so cool. Which is wild. So after that, I started to do a lot more gallery sales, exhibitions, commissions. Like I did a lot more traditional kind of art world stuff. And so when all this NFT stuff started happening, I was like, this is really cool from a creator perspective.

And so my initial idea was I was just going to take some of my photographs, mint them as NFTs, sell them and call it a day. That was like my big plan. And then I initially did this on Ethereum because my other initial idea was I thought that NFTs were so much more about the culture object and where it's at and the collectors and all that speed transaction throughput and all that doesn't really matter as much. It's not like a huge determinant. So I thought like Ethereum was kind of just going to be the place where this stuff lived.

And so I was a launch partner for a handful of these new NFT platforms. One of them being uniquely is this like collection type thing. I did seven photographs, minted as a collection and all that. And so to do each photograph, seven of them, it costed anywhere between three to five hundred dollars to make the NFT. And then you had to instantiate the collection, which cost like three or four thousand bucks.

And then the photographs are valued at $120,000. And so they're like, you have to put $120,000 of ETH on the other side of this to make the pool. I told my friend, I'm like, that's a lot to ask for me. Especially imagine if I'm just like a normal photographer, how would I be able to afford this? And by the way, this took like eight hours to do because you had to do each one and wait for the transaction each time. Like it was kind of a long process to do the whole thing.

And so this gave me the realization afterwards, I'm like, speed, transaction throughput costs, this stuff actually matters far more than I think people think. And so my other idea was, okay, you know, I'm already pretty biased towards the Solana ecosystem. What exists in Solana NFT world?

And at the time, there really wasn't anything. There was this project called the SolPunks. It was kind of a complete copy ripoff of the CryptoPunks. And there was this other thing called the Solarians. It was like this little robot thing, but never really resonated with me. And so...

I was waiting for something to happen in Solana NFT world. And a friend of mine messaged me about this new project coming out called the Solana Monkey Business, the SMB things. There was these cute little kind of monkey things, characters, different hats, different stuff. It was unique to Solana. They weren't copying anybody else's artwork. They were going to launch it directly on Solana itself. And they were like minting kind of next week or whatever. I was like, cool, I should buy some of these things.

I bought a few and then I went to lunch. I think there was like 5,000 of them. And like the ticker was going down and down and down. And so I figured, well, I should probably buy some more and maybe some more. And I just kept clicking the button, I guess. So I have 32 monkeys now.

Which is kind of a lot of monkeys. I don't know exactly how much they're worth, but they're kind of worth a lot at this point. After this, there was the Dijon ape launch and like the Aurorian one. And you started to see like a little bit more of a snowballing of this effect. But the thing that I didn't really see is I didn't see any artistic works being represented on Solana.

And so in addition to photography, like I've always been super appreciative of generative art, but I've never made one of these things myself. And so I took it upon myself where I wanted to make one of these things myself from the end to end process of actually designing it, building it, launching it, building the community, the whole thing. I wanted to experience it kind of for myself.

Because I guess to tie back, I know a lot of investors love to talk about this stuff broadly and all the implications and stuff. I actually love using these things. And so I wanted to be the creator of one of these projects myself. And so I ended up learning p5.js to figure out how to construct these things. The inspiration really comes from Boilinger bands and this whole moon math charts, if anybody's familiar. It's kind of more of a trading concept.

Although the realization that I had when I was doing this was I thought that the artwork was going to be the hardest thing in this equation and the rest of itself, like you can kind of figure it out. I was totally wrong. The artwork is a very large component of it, but definitely not the only component of it. Because once you make all the artwork itself, then you have to

In Solana, you have to learn how to use Metaplex. You have to instantiate everything in this candy machine thing. You have to be able to like kind of launch the contract yourself. You have to build a community of people who actually want these things. You have to build the collectors, relationships with exchanges, the NFT exchanges in this case, and kind of all this sort of stuff. And by the way, be a community leader. Like you're building a community around the mint before the mint happens. Yeah.

Yes. So I did not fully appreciate what I was getting myself into before I started this thing. It is a completely overwhelming process. But also by going through this, I am so much more empathetic towards founders in this space now. Like literally the amount of Discord messages, Twitter messages, just the amount of stuff is completely and utterly overwhelming. And by the way, this is an art project.

We're not a DeFi thing. We don't have, you know, a billion dollars in TVL. Imagine if we are holding your money. The amount of pressure that is put under these founders is extreme. And I got to experience a little taste of this.

I guess the bigger idea with Playground is given the fact that we did one of these launches, the idea was always to work with other generative artists that want to launch their first collection within the Solana ecosystem and all the stuff that we built in this community and everything, use it and apply it to other people, not just myself.

It's an interesting time you call me today because today we just launched our second collection called Epoch with our first outside artist named Echo, who's a really well-known generative artist. He's been doing this for over 10 years. He's super well-known within the Tezos ecosystem. He was a featured artist at Art Basel. And so we just went through this full end-to-end experience of launching another artist collections, not myself, and going through this whole process with him.

It's kind of crazy that that one is also a thousand items in total. We launched it on Magic Eden Launchpad this morning at 9 a.m. Pacific time. It sold out in like 30 seconds or less. I get the push messages. I went probably like two or three minutes after I saw the notification. Totally sold out. Congratulations.

Echo is a super old school, like generative artist, like artists in all sense of the word. And to see his excitement and delight to figure out that like people honestly like love his work and the stuff that he's doing. There's a whole bunch of people excited and sharing his stuff and all that sort of stuff. Like we would love to help other artists who are doing this.

And so for me, like this is not a company. It's just a purely an art project. I love doing artistic stuff anyway. And then it's really cool to both blend all this artistic stuff that I'd done before with all this venture stuff into one and do this in a format of actually trying and using and playing around with the actual underpinnings and technology of the Solana ecosystem.

Because now I can come from more perspective of, again, like, you know, we're not like a DeFi thing or whatever, but like, I have some semblance and sense of like what it really takes like to launch one of these things. And I've been through it myself. Like, I'm not just talking about it theoretically, but like I've experienced a taste of it. So cool.

Well, where can listeners go find out info on either the first or the second mint? Or I suppose at this point, they called it collection. Playground.inc is the website. And then the two collections will be on the homepage. The first one was the waves. And then the second one was epox. So cool. Any parting words? And also, where can listeners find each of you on the internet? You can follow me on Twitter. I'm Edith Young. Edith and then Y-E-U-N-G Young.

LinkedIn, but Twitter probably easier.

Great. Chris? I'm super easy to find online. If you just search Chris McCann anything, I'll probably pop up. But my Twitter handle is at Mechanitron. So it's my last name, M-C-C-A-N-N-A-T-R-O-N. Although honestly, if you just type in Chris McCann, you're probably easier to find me. And then I guess my last parting words, if I have any, I usually say this all the time is for any founders thinking about the space, Web3, Solana, Ethereum, crypto or otherwise, I

or honestly, even traditional stuff, I always, always say, make sure you pick something that you fundamentally love doing. I feel like a lot of people sometimes in the crypto space, they see all these dollars and returns and whatever, and they gravitate towards doing this, but they're not fundamentally passionate about what they're doing. And it really shows. Life is too short. These things take a lot out of you, no matter what you do. And again, if this works out, you're probably going to be doing this for the next

five, 10 years, or maybe even multi-decades of your life. So make sure you really, really, really like what you're doing. We always try to pick founders and people who are fundamentally like this. I think Anatoly and Raj would be doing Solana even if it was worth nothing. Sam is the ultimate trader. He'd be doing this no matter what he's doing. We back the Sabre guys, Dylan and Ian. They are just super hardcore about this stuff. But yeah, just make sure you...

really, really, really find enjoyment and love in what you're doing, no matter what that is. And again, the community and people and capital and all that will resonate and find you. Don't try to fit yourself into the narrative. Just make your own. I love it. Totally. Some good wisdom right there. Hot. And on that wonderful note, listeners, we'll see you next time. See you next time. Thank you guys.