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Deep Dive with Alok Vasudev

Investor in early-stage protocols and startups. Former VC at @s28vc & @Benchmark, quantum mechanic at @Stanford, and Vince Young devotee at @UTAustin

posted 2 years ago

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Linda Xie
Hi Alok! There's so much noise right now in the crypto space. How do you source good projects?
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Alok Vasudev
@ljxie My go-to sources to find new crypto investments are (1) promoted tweets in my Twitter feed and (2) Facebook ads. The beauty of those platforms is that the ads are tailored just for me, so I rarely need to look elsewhere! I’ve also subscribed to James Altucher’s newsletter. He found a line in the Bitcoin source code that predicts the price. Can’t get any easier than that!

In case it wasn’t abundantly clear, everything I wrote above is sarcasm. Please do not do any of that.

Sourcing early-stage blockchain investments isn’t all that different from sourcing other early-stage startup investments — with one major exception!

(1) Spend time where entrepreneurs do — on the internet and in meatspace — and follow your curiosity/authenticity. In this market that means Reddit/Telegram and meetups/events attended by engineers/builders.
(2) Cherish referrals and tips from trusted friends & co-investors (like you!). I’ve found investing early in cryptocurrency projects to be far more collaborative than typical early-stage venture investing.

The major exception:
(3) Once a token is trading, sourcing is just finding a reputable exchange! There’s a bias to be as early as possible. To me, this is due to (1) pattern matching to VC dynamics and (2) predictable “pops” upon exchange listing allowing instantly realized gains for pre-sale investors. I invest early sometimes but not always. I’m convinced there are VC-scale returns achievable by building a position in undervalued but already-traded tokens.
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Ben Tossell
What's your advice for people who are just starting out in crypto?
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Alok Vasudev
@bentossell

(1) Full immersion. You can’t “dabble in crypto”. There are very smart people spending 24/7 in this world who feel paranoid that they’re behind. Let the mind virus take hold.
(2) Spend time on the “old” stuff and original sources. It’s easy to get caught up in the latest white paper or surging token, but there’s a mountain of evergreen content out there.
(3) There are plenty of projects that are cash rich and talent poor. That’s a great opportunity for anyone who’d like to get involved. Most projects are in need of technical and non-technical help.
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Erik Torenberg
What's something you believe in crypto that few people agree with you on?
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Alok Vasudev
@eriktorenberg Creating a new form of money is the end-game.
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Matt Huang
You've spent a lot of time as a VC and now in crypto. Which common VC mental models are valuable in crypto? Which aren't?
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Alok Vasudev
Most VC mental models around evaluating team, technology, market apply well to early-stage crypto projects. But there are a few areas where I've had to re-wire my brain for this space.
(1) Value capture. Centralized networks have established ways of capturing value. In decentralized networks there's far more nuance around when/why a token would capture the value from a successful network (as opposed to value being created as, say, a consumer surplus)
(2) Screen for a team's skill in investor/community relations. Startups with stock tickers is something we haven't seen before but successful project leads can impart a Bezos-like force field on their constituents to get through contentious moments and orient everyone towards the long game.
(3) Portfolio construction. Unlike VC when you get one and only one bet in a given market, in crypto you're able to invest simultaneously in several projects along a secular trend you believe in (e.g. privacy coins).
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Kelly McGrath
XRP - long/short? over/undervalued? the actual tech vs the coin?
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Alok Vasudev
@kellymcgrath I’m not a trader so I don’t have a good instinct for price movements. To be honest, I’m in the midst of forming an opinion on the future of cryptocurrencies that rely on centralized components as a design trade-off to enable a new function (e.g. fast confirmations). On a pure systems architecture basis, I prefer Stellar to Ripple because their consensus model is more decentralized (though not entirely so) and I’ve heard anecdotally that Stellar’s developer experience is good.
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Ben Tossell
How did you get into Bitcoin?
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Alok Vasudev
@bentossell I grew up in Texas where a healthy distrust of the government might as well have been written into the K-12 curriculum. So the notion of an internet-native value transfer mechanism was appealing to me by default when I first leared about Bitcoin. Once entrepreneurs started building businesses around it I got deeper into it professionally, and ultimately found the most intellectually rich domain I've ever encountered.
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Erik Torenberg
What have you changed your mind about in the space in the last 3 months?
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Alok Vasudev
@eriktorenberg This may sound obvious but one important realization I’ve had over the past few months is that the world of cryptocurrencies has evolved into a bonafide market. And that there’s a humility required when reasoning about how markets behave. Once upon a time we could point to simple deterministic events to explain price movements (e.g. PersonX is pumping CoinA!) but that’s no longer the case. The market values some things and it doesn’t value other things simply because it does and doesn’t.
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Paul Fletcher-Hill
What are your thoughts on curation markets, especially content curation?
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Alok Vasudev
@pfletcherhill I’d love to see more work in curation markets and, to generalize, incorporating DAO capabilities into existing product paradigms. It’s clear to me that naively adding money into working products (e.g. replacing upvotes with Satoshis) doesn’t work. But I do believe there’s a way to augment the existing forces in consumer products (e.g. status signaling, communication, discovery) with economic forces. But I haven’t seen anything yet that fits the bill.
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Erik Torenberg
What do you think of Radar Relay, will wallet-to-wallet exchanges ever outpace a traditional currency exchange?
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Erik Torenberg
In your view, what is holding Bitcoin price down? I felt there was much more infighting at $17,000 - $20,000 (early Dec) than now. Felt more like a market bottom than a top.
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Erik Torenberg
What are your thoughts on the Telegram ICO?
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Alok Vasudev
It flagrantly violates both VC and crypto-insider orthodoxy along several dimensions. https://twitter.com/AlokVasudev/status/953029875887042560
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Erik Torenberg
What are your favorite projects out there right now?
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Erik Torenberg
What do you think of privacy coins?
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Alok Vasudev
@eriktorenberg Critical and under-invested in portion of the market.
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Jordan Cooper
top 3 protocols as measured by system design (as opposed to coin value necessarily) in your opinion?
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Alok Vasudev
@jordancooper

Not in order but off the top of my head...
(0) Bitcoin ;)
(1) AdChain's token-curated registry is a powerful construct
(2) Keep Network's use of a governance token combined with ETH payments is fascinating
(3) Urbit isn't a protocol but I'm in awe of that project's audacity
0
Tom Klein
Where are the best sources to discover evergreen opportunities?
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Alok Vasudev
Okay, I need to run! I'll answer some of the other questions over the course of the day. Thanks!
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Abi
You said in a previous question there is a lot of evergreen content that people should read, do you have any suggestions of what I (the average investor) should read?
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Erik Torenberg
What will you be doing one year from now?
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Alok Vasudev
@eriktorenberg Well, BTC will have crossed $1M/coin by then so I'll be mostly finished with my self-driving Lambo fleet that drives down the 280 in a "HODL" formation.
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Justin Darcy
What crypto projects are you advising at the moment?
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Noah Jessop
What are one or two contrarian views in this space that you think might just prove to be right?
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Paul Fletcher-Hill
We now have video game goods and digital collectibles minted/traded on ethereum. What will be the next popular non-fungible digital asset?
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Alok Vasudev
Alright! Let's give this a go.
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Erik Torenberg
How do you compare coins looking to solve problems in similar problem spaces? Do you think that one will dominate the rest, or rather see an Uber/Lyft kind of dividing of market between multiple players
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Erik Torenberg
Who are the voices in the crypto community who people might not have heard of, but that we actually should be paying close attention to?
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Erik Torenberg
Given the success of Cryptokitties and ongoing development of standards like ERC721, what do you think 2018 has in store for non-fungible assets?
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Alok Vasudev
@eriktorenberg Cryptokitties was a watershed moment IMO for two reasons: (1) though short-lived it was the first consumer app on top of a blockchain to gain meaningful use and (2) it served as a reminder that as much as we prognosticate about which global industries will be disrupted by blockchains, we should probably be focusing on the weird, emergent stuff built by and for crypto nerds at least for a while.

In 2018, I expect a few more breakouts in gaming/collectibles with digitally scarce assets, along with more attempts to build support infrastructure for non-fungible tokens. I also hope to see some exotic experiments with tokenizing real world assets (e.g. real estate).
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Erik Torenberg
Do you look at the privacy coins category as winner take all? Do you think privacy coins are a hedge against things like private transactions via Lightning, or are they going after a different market opportunity?
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Erik Torenberg
What do you think is the key differentiator/s between the numerous crypto funds that are launching?
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Erik Torenberg
What we have to learn from XRP price history?
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Talmadge O'Neill
Is there a particular StableCoin project that you think has a greater chance of success, and if so, why?
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Alok Vasudev
@TalmadgeOrion The top stable coin projects all have a chance of working but as the space becomes increasingly competitive, holding a peg won't be enough for one to "win". Exchanges hold strategic high-ground -- whichever stable coin an exchange chooses (unlikely they offer several or perhaps more than one) will be greatly advantaged.
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Erik Torenberg
What do you think of stable coins?
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Erik Torenberg
What do you think is the biggest existential threat to Bitcoin? Curious of your views on either a technical level, or a non technical level.
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Erik Torenberg
If you were running Benchmark, what would your crypto strategy be? :-)
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Romane Geraci
Hi all! How did you get started in the crypto space?
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Hassan Ahmed
Hi Alok! Do you have a thesis around interoperability coins/chains? Do they need to even exist, and do they need a native token?
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