In this episode of UpOnly, Cobie & Ledger are back and chat about the future of crypto with Matt Huang and Fred Ehrsam, founders of leading investment firm Paradigm.
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Show Notes
How’d You Meet?
– Coinbase pitched Sequoia
– Fred pitched the basis of the metaverse on the blockchain when Matt was at Sequoia
– Then Matt and Fred emailed back and forth, then the rest is history
– This was 2017
Metaverse
– Fred: “People don’t yet realize that crypto is the metaverse”
– It’s not just some VR world
– Cobie: “How do you think this plays out over the next 15 to 20 years?”
– Matt: “To state the obvious people are spending more time in these digital worlds. As people spend more time there they are also spending money”
– Blockchain can enable property rights in the metaverse
Next Levels of Crypto
– Crypto will not be fully decentralized at every level that is the wrong way to think about it
– Think gaming companies might be able to make the jump to crypto
– Social media probably not
– Matt: “all monarchies are dictatorships” (quoting someone else)
– Network effects based businesses have a chicken and an egg problem
– Overcoming is hard
– Crypto presents the first real solve to potentially getting new network effects
Play-to-earn
– Play to earn has been around for a very long time
– It’s just been under the table
– Play to earn games present it in a transparent way with an open economy
– People see work as purpose – this could fall into line with play to earn games
– Cobie was skeptical, but what made it click for him was thinking about old Halo gameplay when he spent ages trying to earn a special helmet
– Cobie bullish on interoperable assets for p2e gaming
– Fred: “I played WoW for thousands of hours and all i cared about was how my character looked”
– To the parents who always say you’re wasting your time playing video games – the founder of Paradigm did the same thing!
– You can have multiple identities in the metaverse
Paradigm Now
– In 2017 all the big internet companies had already be built
– Crypto felt like the next frontier
– Tried to make Paradigm a place where brilliant, curious people would want to spend their time
– Didn’t care about roles just wanted the best talent
– Talented young people are the people that actually create the future – 20yrs ago it was Goldman etc., 10 years ago it was Google etc., today it is crypto
– FOLLOW THE TALENTED YOUNG PEOPLE
– The quality of crypto investors has gone up
– Crypto will be a powerful movement that takes over the world
How to Keep Talent?
– Help the most ambitious people keep building
– Getting to work on multiple projects at once is very attractive
– How many anons on Paradigm?
– At least Samczsun and Hasu, another joining soon
DeFi
– Matt: “I think we’re super early. If we’re building a financial system from the ground up there is still so much left to build”
– Cobie: “What takes us from 100Bs to multi-trillions?”
– Matt: “I think it just takes time”
– This is the progression of new tech
– Institutions will like a middle man at first to help use
– Ledger: “It reminds me of when elevators came out and there was an attendant just cause it made people feel safer”
– Laughing thinking about Ledger being 190 years old and around when elevators came out
Smartest Person Bearish Crypto?
– Struggle to think of an example of someone who is very well informed and still bearish
– Only people who are worried about regulation
– Ledger: “What about Charlie Munger?”
– Matt: “I mean he also missed the internet”
– DUNK!
New Paradigm $2.5B Fund
– “We are looking at the growth over the next 10 years”
– Trying to orient vision out there instead of shorter term
– Cobie: “It makes it easier if you think in 10 years – if you’re thinking 10 years from now you might be seed investing in the main L1 today lol”
– Fred: “We’re finally getting to a place where people can build and create mainstream applications with crypto”
– Matt: “We are wired as humans to underestimate what exponential growth looks like”
Future of Web3
– Top level framing – there’s an iPhone bundling moment that’s happening with crypto
– Fred: “The same way the iPhone put all mp3s, email, a telephone, etc into one thing, crypto is bundling all of your internet identity into your wallet”
– Ledger: “Can we do this and maintain any type of financial or personal privacy?”
– Fred: “Zero-Knowledge Proofs.”
– Privacy will be really important
Quickfire Qs
Punks – overvalued vs. undervalued?
– Fred: “So we don’t give out investment advice”
Biggest mistake/ worst investment?
– Prediction markets
How to work for Paradigm?
– Always interested in thoughtful/ energetic people
– “Send us something cool you made on the internet”
FINAL ALPHA
– Matt: “It’s easy in life to sweat the small stuff. Zoom out and find the 1 or 2 things that really matter (for life, investing, etc). If you get those right everything else works out”
– Fred: “All the people that do things that really matter think through things for themselves. They think from first principles and think what makes sense for them”
Notes by Kevin
Music by GiovanniPickle