0:00you were one of the key people inside Andre Horowitz pushing we need to do a crypto fund.
0:06I went out and talked to 60 investors and basically gave them kind of two pitches why I thought this would be a good thing to invest in and then gave them an anti- pitch as to all the things that could go wrong and why they might not want to invest. Ultimately, all of these things are talent businesses. I've always believed that's a good thing to bet on. The first year I was at the firm, I made a drone investment, 3D printing investment, a few crypto investments, a Bitcoin mining company, Coinbase was another one I did that year, Oculus that year. Today, the challenge is how do you make a product
0:35that's better than Claude Chat GPT because these generalized models are just so powerful and can do so many different things.
0:41You've worked with Mark Andre and Ben Horwitz for the better part of 15 years right now. What's the biggest lesson you've [music] learned from working with the two of them? Um I think you know Chris Dixon, thanks for coming on to talk to us today.
1:10Thanks for having me, Brian. Yeah, you and I have spoken many many times and I feel like we have gotten some of your beginning before, but uh let me go back to the very very beginning and ask you about um becoming a programmer like what what was what were your first encounters with computers and how did you know in terms of programming and computers that this is what I want to do?
1:35Yeah, I mean I was I think this is a fairly common thing in tech, but I just as a kid like got a computer. Um this is back in the 1980s and like uh just you know wanted to make video games and enjoyed programming and it was you know it was kind of a cultish I don't know niche activity back then. Um, and uh, and just, you know, really enjoyed it.
1:57Like I I think kind of, you know, we'd say today got into a flow state and just sort of designing stuff and sort of figuring it all out. Um, and uh, yeah, and it just really and I so I, you know, I was doing uh, C programming and assembly language programming and making graphics stuff and video games. Um, and was really into it. And then I um I was in a in college in the early 90s and um at the time I kind of felt like
2:24computing had gotten to corporate and like it was sort of before the internet had really taken off and for those who remember it the the computer industry kind of moved from like a hobbyist phase to more of like Microsoft's office Excel I don't know I just sort of so I actually studied philosophy in school um and got into like kind of you know cognitive like a little bit the intersection maybe a little bit what we call today AI. I did a little bit of AI but more it was sort of free AAI but more philosophy of mind, cognitive
2:53science, logic and just I don't know I didn't really know what I was doing and I thought it was fun and didn't have a very sharp career idea. Um but then and I was in New York and in New York um the you know if you know how to program and you're in New York and it's expensive you end up I ended up doing various programming jobs um which eventually led me into for two years post school finance at a hedge fund doing programming just kind of to pay my my student loans and things and um but then then the internet really started taking
3:23off and I discovered that um and got into that and um fast forward you know I was I was in New York and in Boston for a while and um uh ended up in the early 2000s starting a internet security company.
3:38All right. You're you've jumped way ahead for [laughter] me. So, uh I I I'm happy to go into more detail.
3:47Yeah. Yeah. Yeah. So, people I I researched uh you for this and I learned things that I didn't know about you. And so let me come back to the you were essentially when you're saying after school you were a programmer uh you were like a quant you were you were programming for quantitative finance and like trading systems and stuff like that. Yeah, it was a company called Arbitrate and it did uh options marketmaking. I I had no particular like
4:16I mean I I wasn't like um looking to work in finance I guess but I was just sort of in New York like I mentioned programming and in New York program and I was just trying to honestly just pay bills and pay down debt. Um and it and it was the best paying thing you could do at least that I found. Um yeah so it was a it was a company that like today we we'd call like quant trading you know high-speed trading. Um, I did I wrote programs. I wasn't really quant per se, but I wrote programs that were kind of financeoriented.
4:46Um, so for those who know this stuff, like Monte Carlo simulations, like these sort of big simulations you run, and I would do basically kind of high performance algorithms for those. Um, so try to make them really optimized so they would execute quickly. Um, so we had a I think we were about 20 people in our office. The company was bigger.
5:03there was a couple hundred but in the R&D group it was about 20 and I was kind of the lead of I eventually became the lead of sort of one part of that group which was sort of the finance group. So I kind of knew and I would say just generally about myself is I kind of like know a little bit about a bunch of things as opposed to a lot about one thing. So I knew kind of enough finance to get by and enough and I and I was actually a pretty good program decent programmer. Um and so I just kind of knew a bunch of stuff. Yeah. And it was interesting. I mean you know I never had a real job. I mean, I had part-time
5:33computer jobs before that. And so, one, it was just sort of interesting. I got a glimpse into Wall Street, how that world worked, how markets worked. Um, and it was a it was a fun job. It was intellectually challenging, but I also realized Wall Street wasn't for me because it was just kind of I don't know, like [sighs] I think it was too isolated. you're sort of sitting in an R&D group in front of a screen and I don't know just all you're trying to do is predict numbers and I don't know it just didn't seem it didn't seem like the once I saw the other world the sort of entrepreneurship world which seemed kind of to me more exciting and
6:01dynamic and more people oriented um that just seemed much more appealing to me. I I think uh obviously we're going to come to crypto later on um in this conversation, but do you think that maybe that time there being Wall Street adjacent, being a programmer sort of was one of the things that helped you uh sort of be um primed for um when crypto comes around?
6:27Yeah, maybe. Yeah, to some extent.
6:28Although it's funny because like if I wrote a book about crypto called Read, write Own. And if you read the book, I actually I probably have one of the least financeoriented takes of sort of blockchains and crypto. I'm I'm sort of look at them as a new way to architect internet services generally. Um so in some ways I'm I'm not saying I'm not like there's no financial aspect to it, but it's certainly like not my main focus. Um but but I do think thinking about kind of finance and money and networks
6:58um and just all the kind of intersection of the sort of how the information economy works which has kind of been my theme throughout my career and you know later on working on the internet certainly all had there were sort of common threads through all of that. Um, and in some ways some of the things going on in finance pre- internet or early internet I think did kind of predict some of the things that the internet you know some of the kind of key themes of the internet later on.
7:23Uh, number two that I didn't know about you. Um, you you were at Bessemer Venture Partners before um you started to to be a founder. So you were in VC before being a founder a little bit.
7:36Uh, yeah. I was there for about I think about a year and a half and um I was uh they they were I was very lucky to get that job. The industry was very different back then. This was 2003 and four. Um for those I mean we think of I think today people think of VC as a you know pretty sizable industry. You go to your average person they maybe they've heard of it. Back then I don't think anyone had heard of venture capital. I had certainly never heard of it. And there were really probably only like 10
8:03to 10 to 20 maybe kind of operating firms in that era. Um and so I you know I was yeah I was very lucky to get that and it was in the New York office. I wanted to be in New York. Um and um was lucky enough to work on some really interesting things including the um we did the series A of Skype when I was there and I I was able to kind of co-work on that with some other folks.
8:24Um and so we were it was the beginning of kind of the internet revival after the internet crash. Um, so it was an exciting time and I got, you know, venture capital for someone like me who had no significant business experience outside of this quant job. Um, it was like kind of a panoramic view of business. You get to kind of meet all these interesting entrepreneurs. So, it was it was a great lesson. Um, I realized partway through that I didn't have a great kind of promotion path there. Um, and so and and really had been thinking about starting a company
8:54and they were nice enough to kind of let me transition. I would say for the last six months I was there um to being what people in venture call an EIR an entrepreneur resident. So sort of like working on the startup idea and they actually ended up along with another firm uh funding us. So it was a great experience and and a real you know I I today today we hire kind of junior people to to work in a similar role at entric horizits and I always tell them like it's a great you know two to three year gig you you get this panoramic view
9:22of things and really get sort of a deep educ or a quick education in kind of startups and business um and you know even if you end up going off and doing something else um it's a great it's a great learning experience and that that was true for me as you say um you wanted to start a and you're doing it um incubating it at Bessmer. Um so tell us what tell us the inception of site advisor and also you know 20 years on uh what site advisor was and and did.
9:51Yeah. Um but it's actually if you if you go it's it's still surprisingly still around and quite it's actually apparently a big business unit um for McAfee who were eventually parted by and in fact in like there there's sort of a category now which is kind of nice to see there's like competitors and things um but um but it's not security is not front and center for most people so you may not know that but but uh yeah so at the time uh this was 2003 I was sort of working on it um for those who who were around back then um there was
10:21it was really kind I would I think of one of the worst times on the internet for security and specifically uh two big issues spyware and fishing. So fishing with a P, you know, fishing has just had just really started around I'd say early 2000s. That's like kind of really people started getting hit with these things, you know, fake email pretending to be from someone else. Um and uh and then spyware was which is really mostly gone now was people would be sort of download a screen saver app or other kinds of things and have all these popup kind of come up. Um and what was interesting
10:50about these um both of these categories and kind of the insight we had was that in the past security security kind of uh issues had been things that were kind of hacking into people's computers through technical vulnerabilities. So like a worm or a virus takes advantage of some you know bug in the operating system or something like this. Whereas in the case of spyware and fishing all the technology was working as design. The problem was it was social engineering.
11:15It was the humans being tricked. And so the insight was that all the products out there at the time were were kind of defending against technical hacks when the when the threat vector as we say in security had changed to social engineering and the the insight was that the products weren't weren't built for that. And so the idea was very simple.
11:33It was a kind of a toolbar uh or you know or just sort of downloaded software that would just simply warn you put up a big red box that said this is a fishing email. This is a fishing website. this is a spyware website and be kind of your we described as like your trusted you know friend who some people would have sort of a smart friend they'd ask should I click on this should I download this and this software would do that for you um and so that was the idea and um the to build that though was was was kind of tricky we had I had two co-founders who
12:02were much more technical than I was they were MIT computer science folks and they recruited a team of people um and we built essentially like a what today you know we it's like a web crawler where you kind of crawl the web and then and then instead of indexing the websites the way search engines do, we would download the software and run all various kinds of tests and analyze the websites and do tests and then create this classification system that would say this is a good site, this is a bad site and then feed that back into the product. So we spent um probably a year building that database. It was it was an
12:32interesting technical problem. Um and then um released the product um in uh 2004 maybe early five I can't remember now no sorry 2005 2005 and then and then again different world I mean that very few kind of new consumer internet products back then venturebacked that were like we were there just simply weren't that many being funded and so unlike today when you maybe launch a product an internet
13:02product you know it's drowned out by all the noise back then. It was like, "Oh, wow. A new internet product." Like people paid attention because there just weren't that many. Um, and we and we very quickly got interest from uh the big security companies, McAfee and Semantic at the time were the big ones.
13:17And um they came and visited us and then and then eventually offered us to acquire us. And the way that business works is it was it's a very hard to break through because they at the time all the security products were sold through partnerships with PC makers like Dell. Like you would buy a Dell computer and then they would bundle the security product or you'd get a Comcast subscription and they would bundle the security product. And it was very hard for us to kind of penetrate those channels. And so it became clear that the only way to really make this work
13:45was to to eventually be part of one of these companies. and then through some process and there was another thing which is back then uh it was very uh common it it was much it was frankly just much harder to raise money there just weren't as many VCs and I saw you know that I knew that was going to be a challenge to raise more money um there was a different ethos in the startup world in the VC world where you would often replace the founders like me with like professional CEOs so I was also kind of you know not that I had great
14:14VCs and not that they were saying this but I just had you know my mind was like am I going to even make it and will the company make it and then we had these sort of nice offers. Um and so we eventually decided to sell that company in 2006 to McAography.
14:28any lessons that you learned there in terms of like for for founders listening like um you're describing it was it seemed obvious to you to sell but about like negotiation to do an M&A takeout or integration after you're acquired uh that you learned there that might be useful. I mean, I was naive on the sale. I I I was naive. I didn't really know what I was doing, but I had the benefit of having to acquire two offers. And so, I played a kind of
14:56simple game theoretic thing where I would take sort of I had an offer and I would go back to the other party and say, "Here's my offer." And and I and actually funny, I thought I I started, let's call it X, some number of offer, and then eventually got it to almost double, I think, by the end of it. Um, and I thought I'd done a great job. And then I had um uh dinner with the McAfee CEO like after the closing and he told me he sort of pre-authorized with the board twice what we sold for. So that was sort of the the you know the I had
15:26not even done a remotely good job apparently on on optimizing that. But um but it was fine. It was a good outcome.
15:32And uh and then at at McAfee I mean look so one challenge I think the CEO that acquired us I think he left a month after we were acquired and I think by the end of the 18 month I say 18 months I think by the end where they had I think we were on the third CEO and the management team had turned and this is just not an uncommon thing at some of these big companies. So first of all like all of our expectations were kind of thrown in disarray. Um I think you know we went in with a really kind of overly optimistic attitude that we were
15:59going to like I don't know make you know make everything work as through integrations and transform the culture of McAfee and all these other things and you know kind of went up to the kind of encountered corporate inertia um and realized that was going to be very challenging. I finally um you know kind of realized that the key thing was to kind of keep the product alive to integrate it successfully and just hope that it would sort of you know that we could deliver
16:28value to them and they would be happy with it and look back you know I kind of I cared about them looking back on it as a good acquisition. That's why I'm I'm happy to see it still around and like you know they they do I think they did feel like that. Um uh but in the end it was clear that you know the kind of stuff that we wanted to do me and my co-founders and just the kind of uh you know kind of being innovative and staying on the cutting edge just wasn't going to be something we could probably do there long term. So we stayed for our
16:57kind of vesting period our agreement of 18 months but then left and um and and started it immediately kind of working on a new startup which uh is Hunch. So take me to hunch and um how how that came around.
17:11Yeah. So we were uh interested and this is I did I sort of joke now that I was doing AI little too early way too early. Um it was an AI company, machine learning company. Uh it started in 2008.
17:24Um and uh um I I had been to so I was involved like in this advisory group to DARPA um the defense is this academic um uh group that would get non-classified academic group that would get together and talk about futuristic computer science ideas and I'd been to a few of them and everyone was talking about machine learning and I and I started getting seeing these really cool demos and getting really excited. Um, and so me and one of my co-founders from Site
17:51Adviser, uh, Tom Pinkney, who's an MIT grad and more technical than me, we said, "Hey, let's go do something with let's figure out something cool to do with machine learning." And we started so we we just sort of and we just honestly were just eager to go kind of do something after McAfee. So, we like rented an office and and recruited two of our smartest engineers and uh um and just started playing around with it. Um and then eventually you know and in retrospect kind of to be honest I think with the first company we started with a problem to solve and then figured out
18:20the technology and then with the second company I think kind of a mistake we made um was to start um more with a solution and try to find the problem um which probably is not a great way to do things um and and I think also in retrospect the technology just wasn't uh mature enough um that you know at the time uh machine learning you know today what we call you know neural networks AI is a form of machine learning um but there are different methods back then to do machine learning and the reality is neural networks which which we tried
18:50just didn't work that well they didn't work that well because you didn't have the GPU power and things um and so they were just simply like really out of favor um uh because just then you know you just run the test and it just didn't work as well so we use other methods um and and just generally like it was cool and it worked but it wasn't magical the way it is today and so we we iterated with a bunch of products we ended up with kind recommendation product technology that's sort of similar to what you see on Amazon like if you like this then you like this and eventually 2011 were acquired by
19:18eBay to do exactly that to build that product for them. Um but and if you asked me at the time I would have said um we never you know we never really figured out the right product. In retrospect that's not the case. I think we were just too early. Like I think it's just that we we were playing around with AI, you know, for those who follow the history of it, like it was 2013, so two years later when you had the Google cat video demo and sort of deep learning became um kind of burst onto the scene and then you started to see the imageet results and it you know, it was a sort
19:47of the steady march over a decade until the you know, the big bang of Chad GPT.
19:52So you know in retrospect it was 15 years too early or 10 you know 13 or whatever it is and and and specifically I think what happened during that time right obviously as GPU kind of computing power got so much better um and so um you know it was a great experience we had a good outcome you know uh uh I think you know we I think we built some cool stuff but it didn't kind of um get to the scale we wanted and I think that's my diagnosis now is just a little ahead of its
20:21Yeah, I I was going to say and maybe this is a free startup idea for somebody out there, although probably five people are doing this, but with modern ML, uh do do you think that uh what what your original vision was would be possible or what would it look like today if you were doing it with modern, you know, it's hard it's interesting. I mean um I mean for sure like I mean you can use jet GBT this way or any of these you know generalized foundation models and they're pretty incredible. like you can go and you know like a lot of what we're doing is like you paste in your you know
20:5110 favorite movies and it tells you what books to buy and what movies to buy and all that kind of stuff and I think these models today do a pretty phenomenal job at it. Um and I guess you know one of the challenges actually I I think I I don't do sort of pure AI investing today. Um but I imagine one of the challenges is it's kind of hard to build a product like this because the generalized foundation models are just so good in some ways. They sort of subsume all of the specific applications, right? Um so I I think very much it's it's possible but today I
21:20think the challenge is how do you make a product that's better than claude chat GPT Gemini and so forth because these generalized models are just so powerful and can do so many different things but um uh third thing I didn't know about you that you in parallel to all this are helping to start founder collective um tell me that story because again I you're You're still not officially a VC yet. I think you're starting to angel invest around this time, but how did you
21:50uh do Founder Collective?
21:52Yeah. So, I um I'll just maybe I'll go back a little bit. So, uh I was one of my angel investors, Ron Conway, who's a legendary Silicon Valley VC and amazing person, um a good friend. Um and he was incredibly helpful to me. And then when I sold my first company, I I thought it was what he was doing was interesting, not as a full-time job, but as like kind of a side thing, as a way to kind of I was just really excited about startups and really excited about and wanted to work with my friends and they were starting companies. And so I started angel investing. So writing a personal
22:20check into friends company. I literally I think wrote my first one like a week after I sold because I didn't have any money before that, but then I sold Side Advisor. I did. And so I started doing angel investing. Um, and I had uh um basically was doing that for a couple of years and had this um had had for a long time wanted to really kind of more aggressively well okay a couple things like one it was obvious to entrepreneurs at the time that kind of there was a mismatch between what entrepreneurs were doing in
22:48the 2000s which is building a lot of my friends at least and I were building consumer internet startups building on top of cloud services like AWS and and being able to kind of get started and going at like 500k or a million dollars like to build a product as opposed to the venture market like when I was raising money everyone was saying we just write $10 million checks right so you had this venture world that was sort of built for like a different model like the '9s was much more capex intensive on the internet and then enterprise
23:17companies typically need more money but you had this rise of consumer startups built on you know outsourced cloud hosting and they just need a lot less money and so the insight was shouldn't there be firms kind of set up for that and I had two friends uh Eric Paley and Dave Frankle who um had uh been both been entrepreneurs and both sold their companies and we were angel investing together and then they like at one point Eric was getting like job offers to work at a VC firm and we were all sitting around saying hey why why are you going to work at a VC firm we've been doing
23:46this together why don't we start something to to do it together and so then we so we started this the three of us started co-founder collective which is a you know it's a it's a great firm it's still going I I left after the first fund but you I'm still good friends with all the folks and they've done a great job. Um but uh so we started that and then I you know and then and then we were like well do we want to all do it full-time and I was like look I really want to do a second startup so I'll do it part-time um work my starter full-time and kind of help out um and but Dave and Eric went and
24:15did it full-time. So we started that uh we raised money in 2008 I want to say um I think and I think we did the launch announcement in 2009 um and invested that first fund from 2009 to 12 roughly I think um and in retrospect that was a um really good time to do that and that's because you had the confluence of two things you had the financial crisis meant that a lot of VC firms kind of stopped investing and very few funds
24:44were formed um and so you just had not many people doing this. So sort of a lack of supply of kind of that type of venture capital. And then on the tech side, you had the iPhone and the rise of mobile phones, right? So the iPhone was I think 2007, the app store 2008 and kind of the golden age if you look at like Uber, Snapchat, a bunch of those apps were like 2009 through 11 or something. And so it turned out that was just a really good time to be doing what we were doing. Um I think we did a pretty good job, but I think a lot of it
25:13honestly like in retrospect was just timing. Um, and so we, you know, in that first fund, we had a whole bunch of like kind of really Uber, Venmo, Buzzfeed, Overflow. Yeah. Buzzfeed, Trade Desk, my partner Eric did that, which is now a big public company. So, it was just a great, you know, fund. It was a great experience. But, yeah, and then I fast forward ended up joining Andre Horowitz and doing kind of bigger scale VC and they they kept uh, you know, growing growing Founded.
25:38Hey everybody, this is Brian cutting in here real quick. If you like the deep dives into tech history that I do on this show, you should know about my day jobs. First of all, I'm the host of the Tech Brew Ride Home podcast, part of the Morning Brew family. Every day in 15 minutes on that show, I tell you what happened that day in the world of tech for almost a decade. It's like I'm telling you the tech history that is happening in real time. I'd love you to check it out because that show allows me
26:05to do this show. Search Tech Brew Ride Home and your podcast app of choice. But also, I have a rolling fund, the Ride Home Fund. We invest in early stage startups, have made dozens and dozens of investments over the years. So, if you're an accredited investor, you can invest alongside me in the companies making the tech history of the future. You can find out more and sign up to invest alongside me at ridehomefund.com.
26:35But before we get to Andre um let me ask you something I've never asked people before but you you just in incepted this question um because now like preede and seed is like a whole category that of funds and things like that. So angel investing [snorts] from former operators you know people that have made their money from a a former startup or something like that. Um, do you feel like that there are waves where it is a good time to invest in your friends or
27:05is it always like like the tide coming in? It's always going to come in because you're always on the you've just had success and you're you kind of have sort of the the idea of what the next wave is going to be. What I'm asking is if for for operators out there, people that have had success, is it always a good idea to angel invest with that first success or not?
27:31Uh, you know, financially, I don't know if I want to advise anyone to angel invest because it's very very risky and like I'm not sure. I think you have to do it because I mean for me like a lot of it was honestly just because I enjoyed it and it was sort of a way like if you're a sports fan or I'm not a sports fan but if you're like a it's like a way as a startup fan so it's like a way to kind of be a fan and like support or it's a social thing. It's your friends.
27:53It's a social thing. Yeah. Social um you know you may or may not be successful. It's honestly I think it's it's a very risky thing. You should certainly consider it like your risk capital bucket not your life savings. So I don't want to advise it but um for me a lot of it and I by the way I still do that like I if a friend's doing something I want to support them in some way and it's you know whether it's a startup or a fund or something else right it's the same mentality and I and I do think that the kind of the the the one consistent thread in all of this is ultimately all of these things are talent businesses and so if you know
28:22somebody well and have faith in them you know I've always believed that's a good thing to bet on um and you know so that as opposed to like having putting your finger in the wind and trying to predict you know exactly what's going to happen tech-wise. Um my my philosophy and this is I learned like I mentioned Ron Conway I learned a lot of it from him. He's just very very people focused. Um, in fact, in fact, when I started Site Advisor, I remember he liked me, I think, and then, but then he introduced me to a bunch of security experts, and I believe they all gave negative feedback
28:52and yet he still invested. And I remember asking him, and he's like, "Well, I just had faith in you." And I just didn't, you know, he just doesn't think about the trends that much, which is kind of, you know, it's there's some really there's wisdom in that because the tech the trends shift so much in tech. It's very hard to know like um the the people are much more consistent. Um so so I would say with respect to the angel investing I mean it's become a much more like back then there were maybe there were some other funds started around founder collective there was like lowercase and baseline
29:19and the first round had been around a couple years I think um beta works um you know who uh obviously uh involved involved in in the in the history of New York uh kind of anniversary thing. Um so there were others but it was relatively small. I mean, it was we all knew each other. In fact, we were all often co-investors in each other's funds. Um, and it was just a very small group and yeah, like you said, it was kind of a social club. It was like an investing
29:48club or something. Um, and we'd often like work together and collaborate and it's just a different thing. Now, it's much there's many, many more. It's much more institutionalized. That said, also the tech world is much more successful and there's many more successful companies. So, maybe maybe it all balances out. I don't All right, let's let's take it to Andre and Horowitz. Um, first of all, they recruited you.
30:09Uh, yeah. I mean, I mean, I they I think someone at the firm reached out and I knew them. I had, in fact, I without ever really having met them, I had actually blogged about them as like an exciting new or I had mentioned them in in a blog post about sort of exciting new Let me interrupt.
30:25Why do you think they wanted to recruit you?
30:29Uh, you know, good question. Um, I think initially it was, you know, probably a scouting mission and then I went out and spent a lot of time with like Mark and Ben. Um, you know, I think it was more of a probe or something. Hey, you want to have a conversation? And then I I went out to I was in New York. I went out to California and spent a bunch of time. Um, and um, you know, I think they were so they started the firm in 2009 and uh, at the time I joined there were only a couple of investing partners and there's only one fund. Now we have sort
30:59of this complex of funds. Um and um you know I think they were I think they were probably looking and I was a you know reasonably prominent sort of angel investor blogger. Um they were probably you know looking at people that had some had been doing it for some period of time. I mean I don't know exactly why.
31:16Um but uh I think in the end we just sort of hit it off and um specifically I think in my mind I was like okay angel messing is fun. Like I s I sold my second company. I was like look I don't know if I can do another startup. um it's just so taxing personally stressful and you know in in this business it's sort of a player coach thing. You're either a player like an entrepreneur or you move on to coaching. I was like it's time to move on to coaching and then I was sort of okay I could do kind of smaller time investing but you know at the time you're in New York you always feel like you're a little bit in the minor leagues. California is the big
31:44leagues and then just the size of the checks like I was like okay I think something that kind of bothered me I was like look maybe I can make money doing this but um but am I really having impact? like am I really does it really matter that I'm doing this or am I just sort of tagging along? And so what was appealing to me was the idea that that you could go and like actually have impact. So, one of the conversations I had with them was I was like, "Look, if I do this, I want to like do a bunch of like really kind of more out there futuristic things and like and potentially really risky things like you
32:14know big checks into kind of big new things which we can jump forward to." But like in my first year though, 2013, I think I did did that in some cases well in some cases not. Um but um um that was sort of the appeal to me was the idea of kind of doing trying that out in California at kind of the cutting edge and particularly kind of leaning into the more uh futuristic things.
32:37Yes, that that was going to be my next question. So, you know, you're famous and I quote you in my book as for for the quote that the next big thing um often starts out looking like a toy. So, like you're famous for like being into investing in things that seem like sci-fi uh out there. So, like what's your framework for evaluating weird ideas that you're like, well, this isn't going
33:05to look so weird if it's right a decade on.
33:09Yeah. So, I um I mean like first of all, this is like not a framework, but I actually just like the things and I use them. So, [laughter] like this is what I do. Like I like these things and I use them and I buy even today I don't do hardware investing. I buy every new hardware device. I'm always using them. I'm playing with them as an example. Like um you know I I like all the AI stuff and I use it and I I still like program a little bit and use the tools and mess with them and I just think it's neat. I I don't know. I've always liked technology. Um so part of it is that that I I think I actually do like it and
33:39use it. But um but part of it is a I I I I guess I sort of have developed over the years kind of a framework which I think of as sort of as you said the next big thing starts as a toy but also this idea that sort of a lot of interesting things start with kind of cults and niche movements of smart people that are excited by things. And so I I used to spend a lot of time on, you know, various like technology subreddits and like, you know, I was into like biohacking and 3D printing and VR and,
34:07you know, I would like fund all these little Kickstarter things and buy them and like see what's going on and, you know, I don't know. So I was into this stuff, right? Um, and so the first year I was at the firm, I did a whole bunch of I made a drone investment, um, 3D printing investment, uh, a few crypto investments, a Bitcoin mining company, Coinbase was another one I did that year, a VR, Oculus that year, um, uh, what else? Um, a couple of AI things
34:36over the years. Um, you know, so a whole kind of range of and and each of those I think was like the kind of hypo the thesis was like crypto early on was relatively niche movement but they were like all these really smart people I knew were really into it and they had all these interesting theories and I would spend it was sort of these rabbit holes you go down and that the more you learn I always find it's interesting like certain rabbit holes I find the more you go you know flat earth people I'm just making it up and picking on the easy target but like you go down the flat earth rabbit hole I did that once
35:05it's not that interesting like do they actually believe the earth is flat like it's kind of silly, right? Um you go down the Bitcoin rabbit hole in 2013, it's pretty interesting. There's all these smart people. The techn is interesting. You know, there's a lot of like interesting computer scientists and economists and you know and and I got sort of really kind of sucked into that and all the and you think about all the possibility where could this go and how could it evolve? Um and could it be more than a kind of niche kind of cryptocurrency? Could it be a payment system? Could it be this that could you abstract parts of it and build other
35:36um VR, you know, early VR was, you know, a lot of this stuff too, you kind of project it out like early VR, like the, you know, the graphics weren't very good and the ergonomics were bad and this and that, but you know, you could imagine sort of Mo's law taking hold and the all those things getting better and application developers coming on and where would it go, right? Um, and I and I particularly think that's sort of one of the interesting things in computing, right, is you have this interplay between the technology and the creative side of what you do with the technology like the applications and the
36:03infrastructure and the two like with the internet that was one of the fun things to watch it evolve. The internet would get better and faster and more performant, you know, better bandwidth and mobile phones and so forth, but then you had all these creative people building new applications like social media and YouTube and just like and so it was just really kind of fun and creative and you just like, you know, I would just sit around for hours as an angel investor, as a VC, talking to friends, talking about the possibilities, getting excited about it, and then and then trying to find kind of the the way I would invest back then was sort of find the best in each of these
36:33rabbit holes, like who are the smartest teams with the best products in those rabbit holes and try to make an investment. So, that was the appeal to me of joining the firm, being able to do that. I did I was able to do that. It was great. Um um and uh and and uh yeah and then just got involved with a bunch of exciting kind of projects and and uh you know like all venture capital the majority of them did not work and that from the outside venture capital might seem like oh you make some investments do this. The reality is you're spending a lot of time dealing with the things
37:02that don't work um and the you know the drama around that and the financial challenges and human challenges.
37:09Um so while on the one hand it was exciting to do that on the other hand you know that's just the reality of that job this job is that you do a lot of that um and then uh yeah and so did that until I eventually in 2015 or so decided to kind of really focus on one of those rabbit holes the kind of crypto rabbit hole.
37:27Before we get to 816Z crypto, indulge me by uh telling two stories of companies you just mentioned. Um tell me how you got conviction on um Oculus.
37:40Yeah. So I had met uh like Palmer and Brendan. Brendan's the CEO um in I think early 2013. Oh, I I well I had first seen them on Kickstarter. Um, and uh, and then there was this sort of viral John Carmarmac video that went around the internet. John Carmarmac, the legendary programmer, um, was talking about how like VR might happen. And of course, if you're into technology and sci-fi, like VR has been around as an idea and as always going to happen.
38:07Yes. Products. It was like always around the corner, but never did. But then you saw this Carmarmac video and you tried it out like maybe now's the time like maybe this stuff has got, you know, and the kind of the insight partly was that mobile phones made it possible because you now had these screens that were cheap and high quality and processors and a lot of ways in fact some of the early products were literally phones you put on your face, right? Um and so um so sorry to get to know them but but I think it was you know over the course of the year you know there's a whole kind of dance you play in venture capital of
38:36like you may like want to invest in somebody but you don't get the opportunity to eventually did by the end of the year um in in November I think um but uh um you know one of the big insights was I just you know if you're do I was out meeting with people doing VR and everyone was every meeting you have they're talking about how they're building something for Oculus, Oculus, Oculus. And you just sort of, you know, this is one of the things I've learned in this business is you just need to go and go talk to a lot of smart people.
39:04And when you do that, you start to hear common patterns and you start to hear about the companies they respect and like everyone, this was clearly the center of gravity in this little growing universe. Um, whether that universe would be real or not was another question, but it was clearly like the, you know, they had kind of harnessed that energy. Um, and so it felt like a, you know, an exciting place to be. Now that said, I mean, it's one thing to have a theory. It's another thing to like make as a hardware company and they have to like manage supply chain and
39:32inventory and all these other things. And it was a, the round we led was a $75 million round, which today you see that, you know, three times a day on Twitter rounds like that. But back then it was actually like a big unusually big venture capital round. So, um, so that was that. What was the other one you asked? Sorry, the uh, the second one would be Coinbase.
39:51Quius was similar in that um uh I had met them early. They were in Y Cominator and what often happens back then at least was Y Cominator. You know, we'd sort of go and meet all the interesting companies there. I think in the early part of the year I met Fred and Brian. Um and I spent a lot of that year um meeting like a lot of crypto companies.
40:09The big challenge then like Bitcoin in 2013, Bitcoin itself was just sort of a bad word in the sense of like people thought it was only used for you know like crime or something. Um and so In fact, it was one of the things we wanted to do with the firm was to buy Bitcoin, but all the lawyers like fought against it really hard and things. We eventually figured it out, but like um that was like a big thing in Silicon Valley is even the people that wanted to buy Bitcoin, it was like really hard to do. Um uh and then a lot of the teams we
40:37met um were kind of came out of this kind of libertarian ethos of the early crypto world that were like we don't need to be regulated. We don't need to follow rules. Um that's not how we felt.
40:47We felt like look this is interesting but it needs to be you know needs to be regulated there need to be guard rails around it. Um and so with Fred and Brian they were the first team we met who were really kind of Silicon Valley true technologists wanted to build great products and wanted to take the regulation side seriously. Like when we invested there were eight employees I think and one of the like the eighth employee they hired was I think a senior compliance person from PayPal. That was a very important signal to us. So anyway, so that was all and then it took
41:16a long I used to go over there. They had this they were working out of an apartment. I used to go over there for dinner and we'd sit around and talk about crypto stuff and um I think they liked the fact that I had then invested in this friend Bology Sherbos he had a Bitcoin mining company which we led a $25 million investment in and they were like wow this is like I think that was maybe the first Silicon Valley VC investment in a crypto thing and they were like you're actually you know taking it seriously you seem to really believe in it. Um, so I think hopefully that that kind of helped convince them that that we were good people to work
41:45with and then eventually I think um also in November we uh around the same time as Oculus figured out a way to make an investment.
41:53Uh I want to thank you because uh I first bought Bitcoin when I learned that A6Z had had [laughter] invested in Coinbase. So I appreciate that. Um, but okay, I also have heard over the years that you were one of the key people inside Andre Horowitz that was pushing we need to do a crypto fund.
42:15So if that is true, can you tell me the story of how hard that was either internally or with the lawyers as you're saying to say we need to do a fund to do this?
42:27Yeah. No, I was I mean I was for sure. I mean I was the one who started the crypto fund. So, um, I started doing full-time crypto, I think in 2015, but at the time we didn't have a crypto fund. So, I did it out of one of what we call the main fund. Um, and so I started just making kind of crypto investments.
42:42The big difference with crypto, right, is that you're not um, generally what you want to eventually own are these digital assets, these tokens. Um, and that's very different for a whole bunch of reasons. You have to custody them.
42:54You you may have you have to buy and potentially sell them. You have to uh have a different kind of compliance regime. There's a whole like regulatory regime in DoddFrank, the kind of the the the the kind of the major governing regulatory framework of the financial services industry that exempts venture capital firms from some of the regulations. Um, when you own crypto assets, you're you're no longer classified as a venture capital firm. You have to you have to register what's called an RAIA instead, which is a much heavier compliance
43:23burden. um the that you know in addition to the legal things the LPs meaning our investors are you know at the time were not familiar with these assets and they would get these financial statements and they'd say what is this Bitcoin and other things on there um and they would have questions uh whole bunch of like so like a whole bunch of reasons why it was kind of complicated to do and so the idea was let's start a new fund from scratch um
43:51that uh has a you know opt-in set of LPs, investors, we go to the investors and we say, "Here's what we're doing. Do you want to opt into it?" So, like, you understand what you're getting into. Um, and then also where we started from day one to have all of these kinds of capabilities to custody and trade and have compliance and all these other kinds of things you need to do. Um, and be an RAIA, which at the time the firm was not, the firm is today, but an RA.
44:16And you have to be audited and do all these other things by the SEC and you're overseen. Um and so um and you have to have like a trading internal policies and just all these kind of complicated things. Um so that was a question and then in finally in so 2017 decided to do it I think we announced it in 2018 um and actually were like a whole separate set of entities and yeah so I was the one who spun that out and um have been running that that that you know that we're now in our fourth fund but have been running that since then.
44:46Um, so yeah, and like a big part is part of the legal, but also like I mentioned like the LPs, the employees, like it's just I just find if something's different, it's good to get everybody who's involved to opt in and not to feel like they're kind of being, you know, coralled [clears throat] into it, right?
45:00So like specifically like with the LPs, this is like our investors, right? Our universities, endowments. Um, I went out with a partner of mine and uh uh talked to I think 60 investors and these were like, you know, two-hour meetings. It was a real thing for like four weeks.
45:17Um, and basically gave them kind of two pitches. I gave them a pitch as to why I thought this would be a good thing to invest in and then gave them an anti- pitch as to all the things that could go wrong and why they might not want to invest. Um, and just was trying to be kind of fully transparent and say, you know, we want we hope to get some subset of our investors to opt in. Um, and but we want the ones who opt in to like know what they're getting into and you know know that it's going to be could be much more volatile um and risky than even venture capital which itself is already
45:45volatile and risky. Um, and so we did that and and like kind of I hoped and expected, we got a subset of the LPS to opt in and um, you know, that was a good thing because they've since then been sort of happy with that and feel like they got what they expected and then and then went and recruited a whole new team of people that were also employees who were true believers. And that was important because that kind of creates the culture of the of the firm. um because we're really kind of creating a new and this was also at the beginning
46:13at the the firm as a whole has since kind of what we call verticalized. So there's a crypto fund, a bio fund, a growth fund, a infrastructure AI infrastructure, AI apps and American Dynamism the different groups and each one kind of runs as a somewhat autonomous set but this at the time we were the first one to do that.
46:32Um and so we were kind of building in some sense within the broader firm a new kind of entity within it. Um, and so that was a whole set of interesting kind of challenges. I think in the end has has worked out well, but you know, it's it's a process to get there.
46:47Uh, we're running out of time. I got to get you out of here in a second. So, I'm going to skip ahead to we last spoke when your book came out. Read right on.
46:55Um, that was last year, so before the current regulatory regime. Um, so this is my only question for contemporary stuff. um what how are you feeling about the the environment for your thesis on web 3 and crypto um in the current environment?
47:17Yeah. I mean so like for those interested I I you know as you mentioned I wrote a book read Own and my long-term I think it's a long-term thesis. My long-term thesis is that um what ultimately block the value of blockchains is that it's they allow you to build new networks that have new um implic that have different implications in terms of um the benefits to users and and network participants. Specifically, the argument I make in the book is that they have kind of the what I would call the societal benefits of the early
47:45internet networks, what I call protocol networks like the web and email, but a lot of the kind of modern afford affordances and competitive advantages of of what I call corporate networks, which are things like, you know, Facebook and YouTube. And so, it's fundamentally about a new way to build networks. Um we uh I think had a lot of I mean clearly had a lot of challenges the last couple of years particularly around regulation and and and I think as a result of that um uh my view generally
48:14is that that uh unclear ambiguous regulation which is what we have it both makes it harder for good actors good entrepreneurs to know what to do but also emboldens bad actors and so we have a lot of scammers you know most prominently FTX X and a lot of other damage to the industry. Um I've what I've worked very hard on for the last four years is working in DC to kind of get this fixed and cleared up. Um and very importantly we got a bill passed
48:44recently that's uh called Genius that's relates to stable coins which now provides a regul federal regulatory framework for stable coins. And as a result and for those who follow it will know there's been a wave of innovation in that space and we've also cleaned up a lot of the I think all of the bad behavior essentially. Um, and we're now in the process of trying to get a second piece of legislation passed called market structure, which will do that for the rest of the industry. So, overall, I think it's we we we were slowed down a lot by this. Um, but I think things are
49:13kind of back on track and I'm I'm long-term optimistic. Um, and we're seeing like we just put out a state of crypto report last week, which is our annual report on kind of the whole industry and love it.
49:23We're Yeah, we're seeing a lot of really good trends of like real use cases, particularly around stable coins. stable coins are now, you know, they've now um the volume surpassed Visa as a network and this and and it's very importantly uncorrelated with trading volume. Like it's not just people using kind of crypto for trading. It's real use cases.
49:40It's the actual infrastructure of money sort of the original concept. Yes, it is the it's kind of come all around full circle and it's particularly in like developing countries. You see a lot of people using this as a payment system as a way to access dollars. Um, you see big companies like Stripe and Visa. Just today, Western Union made a big announcement. You know, you pay 10% on remittances right now a lot of times sending money to another country and this gets it down to basically zero. So, there's a whole bunch of interesting benefits. Um, and so it's I think it's been we've had setbacks and it's been
50:09slower than I'd like, but I do feel like it's now getting back on track to the original vision. Um, and we're hopefully cleaning up a lot of the kind of scammy behavior, which is what I, you know, which has really held things back and harmed consumers. um and try and now kind of refocusing a lot of the energy on on kind of constructive use cases. So um you know it's been I I mean look I was talking earlier about AI like I think that you know the original neural network paper I think was 1943 Alan
50:38Turing's famous test 1950 um I started my company in 2008 uh it really didn't hit until I think what was it 2021 or 2022 when CHPT came out.
50:48So sometime my experience with these things they do can take longer. Um, but that I, you know, I'm I believe that that eventually will get there in crypto the way that we have in AI. Um, and I and I'm just, you know, I I like working on things that I feel like I actually matter in it. Like I think if I were if you're working on AI today, it's very hard outside of maybe a few people to be it's such a big industry and so many people working on it. Whereas this is an industry where I feel like if there weren't you know a handful of people who
51:18have stayed the course and worked hard on policy issues and things that the whole industry could have kind of gone off course and so I feel like you know it's a role it's something where I can actually contribute and uh and try to kind of keep it on course. So um I I'm you know I'm enjoying doing that and I think uh I think I think we're making good progress.
51:36Final two questions. Uh first one is you've worked with Mark Andre [snorts] and Ben Horwitz for the better part of 15 years right now. Uh what's the biggest lesson you've learned from working with the two of them?
51:51Yeah, I've learned a lot from them. I mean I learned I mean I've you know for years sat in meetings with them and got their advice on startups and entrepreneurship and markets and I don't know life. Um so I've just learned a ton from them on all of those things. uh you know they have had a front row seat Mark you know especially obviously since the beginning um your book talks a lot about that great book by the way um I recommend it to all of our employees um and Ben also along with him and so you know they just have seen seen so many interesting things and so just a lot of
52:20it's in the details um uh you know I think I look a lot of it too I just I think they do and our firm tries to do is just set the example for what really you know like high integrity pretty first class business, you know, hard work, um, kind of excellence. Like I I just I a lot of I think, you know, I I find a lot of the great thing about working with great people is just being able to see, you know, kind of what that looks like and
52:48setting the bar high and um I don't know, I've just been feel like it's a privilege to work with all to work at this firm and with all these people that are that are so good and people on our team. So, uh, it's hard to sum. I mean, it's it's really a game. It's a business of of specifics, of a million nuances. It's uh it's hard to maybe summarize.
53:07What else? Um [clears throat] I don't know. It's hard. Yeah, I don't know of a single lesson.
53:13No worries. All right. This one maybe is easier. Um final one. You've straddled originally you were in New York City.
53:21You've straddled the coast. What makes New York City different as a tech hub, as a startup ecosystem than uh any other place, including um the valley?
53:36Yeah, I've always loved New York. I grew up in Ohio and then moved to New York for college and have spent most of my adult life in New York. Um I still have a place here. I'm in New York right now and I come here a lot. Um I love New York. I don't think there's any city in the certainly in the country that's like New York in the sense that you have just you know such a dynamic city, so many different industries, so many intersecting uh cultures. Um I found it I've always found it to be such an exciting dynamic city. Um it's a um you
54:04know you've got the financial industry, you've now got the significant tech industry, you've got the creative industry, you know the creative world. Um crypto and AI are very big.
54:14AI it's international. I I you know like it's a you know I just you know today walk downtown walk to walk to the office and back and like just all the interesting things you see the dynamism the excitement you know it's a magnet for talent. Um San Francisco is great too like San Francisco to you know is the heart of AI right now and sort of the deep tech side of things and it it's very hard to match in that way. Um San Francisco you know it's very much though an industry town right you go there and it's very hard to kind of escape that. I do think that the that the kind of
54:43confluence of all these different industries and cultures makes makes for a real strength in New York. Um and and just the you know the kind of creativity and dynamism I guess I would say. Um and I think it's natural that New York would be the kind of the other hub. I think if you're closer to an industry like if you're doing something an application in AI for finance for creative industry there's a lot of reasons to be in New York. Maybe if you're doing kind of hardcore foundation models, you might want to be in San
55:12Francisco. I don't know. But I think there's a there's a there's an obvious argument for New York being the application town. Um, you know, it's where the customers are. It's where the users are. It's much closer to kind of, you know, you get a much broader cross-section of behaviors. Um, people love to move here. Um, it's very easy to recruit. Uh I my experience having you know two of my companies based here it's very easy to recruit you know students out of technical universities and things to come to New York. They all want to
55:41come here continues to be a magnet. I it was really depressing. I was here for part of COVID and just seeing it you know at that state and I very excited to see how it's bounced back. It feels to me having been here I don't know 25 years on and most of the time you know like more vibrant than ever maybe. Um and it's great to see the tech industry particularly um you know it when I was it was always sort of this um had this sort of insecurity complex you know kind of um was it was always trying to
56:10measure up to the Bay Area and things. It's not you know it's still I don't think it's still at the scale Bay Area but it's certainly a very real and kind of escape velocity tech community now and I think a clear in crypto it's the number one it's not even a question it's the number one in the world.
56:23Um that's that's where our crypto firm headquarters are. That's where majority of our companies are. Um, and it's great. We have a lot of political support to try to I think to try to make it the the world world headquarters of that. If we get the right regulation, I think it clearly will be. Um, and then in you know, I think in every other area of tech, it's a very serious um kind of uh you know, probably number two in some areas and number one in others. Um, you know, uh, for this project, I I
56:52just, uh, interviewed Clem from Hugging Face, and he said the key thing for him for New York City was the talent. It it it's easier to get talent to move to New York City. So, New York, I mean, it's going since, you know, forever, right? I mean, it's like it's if you're if you're an ambitious person who who want, you know, is social and wants to explore the world or something, I don't I don't think there's a better place to come. I don't I came here and all a lot of my friends came here and I've spent years recruiting people here and they always seem to want
57:21to come here. We actually had a bunch of folks when we postcoid we just said you could be in either New York or SF and I was surprised the number of like people who are lifetime Bay Area moved to New York and loved it. I mean they love walking to work. They love the culture you know just the like I said I think the fact that there's different there's so many different industries and variety of people um makes it makes it so appealing. So, uh, Chris, thanks for coming on again to talk to me about all this. I love it.
57:47Great. Thank you, Brian. Really appreciate it. [music]
