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Deep Dive with Garry Tan, Managing Partner, Initialized Capital.

Earliest seed investor in @coinbase @instacart and 100+ great startups. Live 12th April at 1pm PST.

with or if you'd like to join the discussion.
Ben Tossell
How do you get access to become early investors in crypto companies? (Coinbase, Cointracker etc)
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Garry Blockchan
@bentossell Alexis and I had been alumni at Y Combinator for years, and Brian Armstrong was head of Antifraud for Airbnb in 2011/2012 - so we actually found out about him leaving to do a Bitcoin startup because of another YC company we had funded called Sift Science. Jason Tan, the CEO there told us that he might lose Airbnb as a customer, but that Brian was awesome and we needed to meet him. We're really glad he did.

YC continues to be the biggest and most dominant founder network, and so whatever smart engineers, we'll end up hearing about it before it becomes a thing. That was true for on-demand (Instacart) and crypto (Coinbase) and drones (Airware) and even shipping (Flexport). Smart people kind of figure out what the future will be and then tell you.
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#SeekingFundingNOW
@bentossell Most of my insights come from coders who like talking to me about their work & that I enjoy listening to.
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soona
What do you and Alexis Ohanian see eye-to-eye on re: the crypto-sphere?

And what do you disagree about?
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Garry Blockchan
@soonaorlater Alexis and I are pretty much in agreement on how to invest: Lets keep applying the same principles we have for normal non-crypto startups. Is it better/faster/cheaper than some alternative? Does it solve a real problem? If so, lets dig in.

We actually have a whole crypto team within the partnership at Initialized— in particular, it's me, Alexis, Brett Gibson (my former cofounder at my first startup Posterous), Vince Chu (VP of Eng at Posterous), and Kim-Mai Cutler (your and my favorite tech writer and housing policy expert) — we work together as a team to look at every crypto deal we see. The biggest debate these days is probably around Pfeffer's essay about utility tokens vs. our strong sense that BUIDL is the right thing and Ethereum will be dominant.
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Garry Blockchan
@soonaorlater @t_leibo I got my first tech job during the first boom. It’s always good to question whether a principle still applies in a new time. But this one seems to be rooted in mutual self interest and behavioral economics, so I suspect it will still apply, no matter which New Economy we are in.
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CryptoChat
@soonaorlater @garrytan

re: investment thesis — seems misguided to apply principles from traditional VC to crypto assets/networks.

if you solely focused on comparative speed/cost then presumably you would have yet to made an investment.

clear tradeoff in current systems between speed/cost and decentralization. see VB at deconomy: https://www.youtube.com/watch?v=7WL9hr445uo
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soona
The one thing you think people commonly get wrong when they talk about blockchain and/or crypto:
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Garry Blockchan
@soonaorlater There's too much knee-jerk reflexivity in crypto, particularly in ICOs and investments. People rely on signifiers of success, e.g. advisors who advised X billion dollar token, instead of asking the basic questions about who wants it, how does it work, and have they built anything?

We see lots of teams shout crypto crypto, or blockchain blockchain... and increasingly signifiers from their past, e.g. Stanford, Google, etc. That's probably the main thing that is wrong because that results in things getting funded that are purely "emperor has no clothes." That happens in normal tech too, and we're used to trying to see through that on the traditional side as well.
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Ben Tossell
What would you like to see built in crypto that is not yet out there?

On that question... what would you like to see from Token Daily?
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#SeekingFundingNOW
@bentossell A decent cycle of educational products that unifies a great job's board and an Alexa Skill / Flash Briefing. And, thank you so much for Token Daily. ~Beauty
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Richard Burton
What is your favourite dapp? What dapp do you want? When you day dream about the world + crypto in 10 years, what does it look like? Can we go for a walk and talk when I am in San Francisco? 😂
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Garry Blockchan
@ricburton I am a big believer that decentralized marketplaces will arise that become better cheaper and faster and as a result more liquid than centralized marketplaces. It’s the fever dream I can’t get out of my head.

Let’s definitely hang when you are in town.
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Steven Zheng
Does your decision to actively trade cryptocurrencies affect your investments in crypto startup companies in any way?
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Garry Blockchan
@Dogetoshi I have been trading less actively. It was really helpful for me to spend time looking at a number of them from a community building perspective though. It really cemented to me how powerful new online communities can be eg on Telegram and Reddit. When zealots are truly right pretty impressive movements are born.
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Sam Elliott
How have you formed your thesis on blockchain technology and how has it changed over time?
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Garry Blockchan
@Sam-Elliott I learned about bitcoin first on Hacker News in 2011 and bought some on Mt Gox. Luckily I met Brian Armstrong and he convinced me to move my bitcoin over. I wish I believed in the store of value argument more. I was mostly a medium of exchange believer early and that was what made me invest in Coinbase that early. It was clear to me that finance extracts a lot of rent in the form of transaction fee. It’s kind of funny how the fees just kept going up for Bitcoin, and that was fine because store of value was a more powerful argument that turned out to be right.
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Timothy Black
What's one trend you see emerging that others are missing?

What has been the most effective ways someone has gotten in touch? The funniest?

What books are on your counter/kindle right now?

What communication tool is underrated and for what reason?
1
Garry Blockchan
@percussivetouch I am somewhat obsessed at the moment about security tokens and think that there is a lot of value to them. Don’t think of them as tokens. Think of them as the natural standardization and securitization of the world’s private assets into things that can easily be valued, transfered, and borrowed against. On the sell side people who are seeking capital get much more liquidity and access to new crypto wealth, the same way public listings bring that lower cost of capital to public stocks.

The founder of Instacart sent me a six pack of beer to get my attention when they were applying to YC and I was the partner who pounded the table to get them in. We also were first money into the seed round too. He didn’t accept no for an answer and had an app and service that was already working.

I’m currently reading a lot of Edward Bernays. He is the modern father of public relations and pioneered a pretty powerful field that affects us every day today.
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Todd Goldberg
Beyond being an investor, I know you're a designer with great product sense.

What Dapps do you think have great UX today?
What do you think is needed to move Dapps (and more generally, crypto) usability forward?
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Garry Blockchan
@Todd-Goldberg it’s 1994 in crypto so if it works today then it has good UX. We have so much basic infrastructure still being built. There is no mobile wallet browser yet that lets you easily buy crypto and start using any dApp in 5 min or less for instance. Dapps use Etherscan as a receipt for transactions, which is basically hostile to noob users. Using dapps is like getting Linux set up as your primary desktop. There is so much to figure out but UX is certainly the key to future adoption. It is the eye of the needle that all decentralized apps must pass through.
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Jon Grinnell
What's your take on David Sack's comment about capital formation being the "killer app" of blockchain? Also curious on your thoughts on Harbor and the idea of implanting compliance directly on the token level (R-Token).
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Garry Blockchan
@Jon_Grinnell personally obsessed with this. There are so many assets hidden away by custom legal agreements and one off custody and reporting that employ so many lawyers and accountants. Standardization will bring a lot more capital to a lot more places which will be net good for the world.
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Sam
If bitcoin fails for some reason, Will the rest of the projects survive?
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Garry Blockchan
@samkurtis Yes. I am very pro ethereum myself so most of my personal account is holding that still.
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Michael Weiksner
How are we going to get to 100M+ crypto users? When?
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Garry Blockchan
@weiks Great browsers and meaningful apps. We only barely have our own versions of NCSA Mosaic.
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Michael Weiksner
What are your favorite sources for cryptocurrency and blockchain news? Favorite sub-reddits? Twitter accounts?
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Garry Blockchan
@weiks On reddit I read r/ethtrader and r/ethinsider and check out individual communities quite a lot too when’s I am considering a buy.

So many smart folks on Twitter. Too many to name! Ryan Selkis and Eric Meltzer in particular.
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kartic rakhra ⛓️
From an investment (seed stage) point of view, what would you prefer and why - large community (eg, big telegram/discord group) or a strong MVP with one or two early users
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Garry Blockchan
@karticrakhra at seed stage always the latter. And in crypto at seed you don’t often even get that- maybe a demo and a whitepaper.
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Sam
Any crypto projects you were very excited about and now not so much?
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Erik Torenberg
Garry, Thanks for joining us here!

What's something you've changed your mind about in the past 6 months in the crypto space?
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Erik Torenberg
You undoubtedly agree on a lot, but what's something you have a *slight* difference of opinion on with the following folks?

- Alexis Ohanian
- Naval Ravikant
- Sam Altman
- Fred Ehrsam or Brian Armstrong
- Kim Mai Cutler
- Joe Lonsdale
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Erik Torenberg
What's something you think people aren't paying enough attention to in crypto but should?
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Brian (Jun Cheol) Kim
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CryptoChat
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12 Capital 点阵资本
why do you like Nano? do you think nano will go mass adoption as big as bitcoin?
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