# Betting Big on Web3 with Li Jin

Channel: Greg Isenberg
Video: https://www.youtube.com/watch?v=h_iiWwvF4kw
Duration: 1 hr 9 min
Language: English
Words: 12769
Transcript page: https://viewrankai.com/tools/youtube-transcript/h_iiWwvF4kw

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[0:00] i grew up very online i was always on these consumer platforms these ugc platforms creating content on the internet i was vlogging throughout my pre-teen and teenage years and throughout college i had multiple tumblrs and live journals and all of that like i had been primed to think about consumer software and the future of like content creation on the internet from such a young age and i was just genuinely so passionate about it because i saw myself in it [Music] did you know that one of the top reasons startups fail is bad hiring decisions people can be unpredictable and developers can be unpredictable as well let lemon.io take care of hiring your

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[3:02] right now element is offering my listeners a free sample pack with any order that's eight single serving packets free with any element order it's a great way to try all eight flavors or share element with a salty friend get yours at drinkelement.com happens this deal is only available through my link you must go to d-r-i-n-k-l-m-n-t dot com slash happens to take advantage of this special offer try element you won't regret it we're super excited to have you on this has been a long time coming i've been like a huge fanboy from afar of all of your writings for a long time um and uh and most

[3:46] recently was was excited to read your ownership economy 2022 piece which was it feels like forever ago now i guess it was like late april i think when it came out um and the world has obviously changed a lot around a lot of these things at least prices have maybe the world hasn't which is one thing we're excited to dig into with you but um excited to have you on so thanks for taking the time amidst all your travel yeah thanks so much for having me big fan of you guys as well um greg i feel like you're one of my few irl friends in tech since so many people

[4:20] i now know only virtually um but yeah no it's so nice to be here thank you it's kind of one of the one of the nice features of um of this like new postcovid world you know there's like a lot of negatives obviously that came out of it but the the reach of our friendships i feel like has dramatically expanded over the last couple of years i mean it truly feels like you have friends all over the world and it's not weird like it's no longer weird to say oh yeah most of my close friends i met on twitter or i met in discords or whatever it is that's like a really

[4:49] normal thing that you run into in conversations with people now totally i mean i grew up that way most of my friends were online friends that i met through neopets but i realized that that was not a cool thing when i was a child we need to we need to dig into that now hang on so so wait first off what is neopets i feel like i remember that from when i was a kid like was that like like tamagotchi and stuff like that uh and neopets was that in the same category neopets was this like online game phenomenon in i want to say like late 90s early 2000s

[5:25] um where you basically had a virtual pet you would play games you would earn neo points there was this whole in in-game economy and in addition to that there was a social element which took the form of forums on the neopets site and i would spend all day on the forums talking to people and you know then like going over to aim adding friends and that's that's like my my ages 9 to 11 i have no memories aside from being on neopets that's this is usually where i spent all of my waking hours um i was very neopets popular on the help forum um i knew i recognized you

[6:09] i couldn't greg was definitely under a pseudonym and i pretended to be like 18 years old this is so cool like i just so i just pulled this up i mean this is like there's so many of these things like i feel like we've had this same conversation um greg with like alexis ohanian or even like with gabby a few weeks ago um gabby goldbergly who you probably know from the from the web 3 world of like these um the like predecessors to all of these web 3 things that we now talk about and obsess over like play to earn games and actually infinity and all this

[6:38] stuff like i'm looking at neopets and it literally looks like you know you can just trace back a lot of these things we're talking about today to neopets or to some of these other games that people were playing at a young age 100 neopets was the metaverse but on a dial-up internet connection it looks so cool i like i want to go back i have this um i guess a lot of people probably do but i have this like obsession with kind of like retro things that i did when i was a kid and going back and interacting with them and like experiencing it with the benefit

[7:08] now of new things that i've seen um i've been doing it recently with reading books that i loved as a kid i don't know if you guys have ever done that but like i just went back and read hitchhiker's guide to the galaxy which is amazing if you go and elon musk says it's the most impactful book he's ever read so i was like i'm gonna read it again because i loved it it's incredible but like i've gone back now and i'm on a kick i'm like reading a wrinkle in time i'm reading uh you know i read a hitchhiker's got the galaxy i want to go

[7:34] back and read lord of the rings again and the hobbit again um but there's something about the like nostalgia retro aspect of going back and engaging with these things from our childhood that's so fun yeah i really really agree um this is random but i've basically i've taken about a like ten year break from reading fiction and i just recently got back into

[8:01] uh well two reasons one is i was a little bit burned out of reading fiction from taking so many english literature classes in college and having to read thousands of pages like per month um it was just so it was so much and i remember like pulling multiple all-nighters to try and like finish a book that it just sacked a lot of the joy out of reading for me um and so i was i was kind of like feeling quite exhausted honestly from reading so much fiction um because basically from my entire life up to that point up to college and including college i only read

[8:38] fiction i never touched non-fiction i just thought fiction was so much better i thought it was amazing that you could basically experience the world as someone else like really get into their brains which no other media type allows you to do um but then after graduation i was like okay now i'm a working person i'm an adult i should actually use my free time in a way that is productive and like teaches me something that i can apply to my work um so i started reading exclusively non-fiction and i've been doing that for a long time uh and and then i just recently i recently picked up jane eyre again by charlotte

[9:17] bronte which is one of my favorite novels that i read when i was a teenager and the pros just it like it was like um opening a window after you've closed the room to a very musty room and the air is very stale and you open the window and it's like you know it's just after the rain and it smells amazing that's what reading the first page of jane eyre was like like i forgot writing could be like this it's a beautiful um it's a beautiful way of thinking about it it's a beautiful imagery um so i can see that you've read a lot of fiction in your life because

[9:53] the way you said that was like a very novel-esque way of a way of describing that i so it's interesting the way the way that you characterize your arc of like you read so much fiction because that was what you were studying and you got sick of it and you needed to um you know go towards like business and like you know productive type reading quote unquote um i feel like that's the opposite of most people like my experience was literally the inverse where i read so much you know economics and like non-fiction you know business biographies all of that and i was the like hustle culture guy of you know like

[10:25] listen on 2x speed so that i could get through 100 books a year and like flex on you know how many books i read to people and like that was me and then maybe two years ago like right around when covid started i started just reading fiction for pleasure and like a lot of sci-fi and i feel like it's made me much more intelligent because now all of a sudden like i engage with tons of business content from like newsletters i read your stuff you know other people's things like that's what i read all day so then at night when i read things that are like novels or sci-fi or whatever it

[10:55] is i feel like the sort of amalgamation or like the maelstrom of all these types of information actually allows your brain to expand in new and unique ways yeah you're gonna be uh if you read fiction you're just gonna be more creative period like you're not gonna come up with the idea for neopets after reading zero to one by peter thiel like you're not gonna be like oh my god i just had this amazing creativity like insight and i wanna go and create you know i'm constantly reading fiction um trying to you know interact with creative uh mediums video games comics like you name it to like

[11:37] basically connect pieces in my brain to create creative insights because like my job is to like build things like neopets for ourselves and for clients so like i i kind of need like that's my hack my hack is like how do i how do i bring the most creative mediums to me so those connections happen and one i wonder uh if you agree or disagree yeah well i mean i i i think that all sounds right i don't have the counterfactual i don't know what i would be like if i hadn't spent my entire childhood and adolescence reading nonfiction instead but i think um people often tell me like

[12:20] i write very differently from other people i think i speak very differently than other people i speak like a character in a novel um or um i mean the way you said that about the room and the window opening and the fresh air and the smell outside like the way you described that situation it was described in a way of like someone that i would imagine has read a lot of fiction in their life because you described it with a lot of imagery that in my mind i was like oh i can picture that that entire scene i can picture that versus you know i think someone

[12:49] that had read a lot of nonfiction their entire life yeah probably would have been a lot more like direct and to the point of exactly that and it wouldn't have presented that same imagery so i would guess the counter factual exists there i think yeah the first order effect is it's definitely influenced the way that i write and speak and communicate the second order effect is probably a lot of what you had described greg in terms of um like more creativity maybe more empathy for users and like just tons of different types of users because that is the exercise of reading fiction is like deeply empathizing with

[13:24] various characters um yeah it's interesting to think about yeah i also just the last point to this before we dive into actual you know business business related stuff is like i also have this perception that um the entire like nonfiction book industry um you know business books self-help books like all of that stuff the vast majority of those things are like 200 pages but could have been said in a like two-page or five-page article absolutely and so that troubles me like i don't think you could condense a beautiful novel into two or three pages because the character development and like the whole scenery and the world that's being

[14:02] built cannot be condensed but most of those books are like you read the first five pages and i get it i understand your thesis i understand like your key point of evidence that you just brought up to hook people in and now i can probably leave and so i actually think the newsletter industry and like you know people like you and people like mario at the generalist and you know he and [ __ ] write super long pieces and so i can't even read theirs because they're too long sometimes i need to like listen right there needs to be a newsletter to summarize the newsletter yeah totally

[14:31] and i think there's like a million dollar opportunity in doing that actually just summarizing all the great business newsletters um which is a topic for another day but um i do think that like the newsletter industry and the blogging industry has disrupted um fundamentally non-fiction book writing uh yes because it's just completely agree i think well i think it's a different motivation set on the part of author i think people write books for lots of different reasons not just i want exactly they want to i mean it's it's very much a like kind of life goals like bucket list kind of thing to do um but yeah i agree with you i mean that's

[15:09] why nonfiction has spawned industries that summarize books like blinkist or um like i feel like tldrs were invented for for non-fiction books yeah so i i do want to dive into a dive into some stuff outside of this book topic which i thought was a fascinating opening that i wasn't anticipating um lee can you just give really quickly and it's for my own benefit too because i'm not quite as familiar with with your background prior to variant um you know you mentioned that you had studied english literature and um you know were were very into into reading uh fiction your whole life like what did you study where where did you kind of

[15:49] end up in school how did you get started in the venture industry how did you break into that um and then i want to dive into like you kind of founded the uh the creator economy you're like you were kind of the first writer that i remember reading talking about it and i think he coined the term probably so i'd love to get there but maybe we can just set the stage with a little bit on your background for sure so starting from the very beginning i'm from beijing i grew up there for the first six years of my life then my family and i moved to pittsburgh

[16:18] pennsylvania when i was six years old why pittsburgh my dad was doing his phd in pittsburgh at carnegie mellon at pet at the university that was my dad's first job was at carnegie mellon so that's why i was asking my parents in pittsburgh for many years yeah well the back story was really that my mother was in love with america and american values and freedom and and all of that and really really wanted us to move to america and back then in the 90s really the only way to immigrate legally from china to america was through education and so the phd was like a stepping stone for us

[16:58] to come here um but anyways so then we moved here didn't speak a word in english learned it in school um really yep saw every like every layer of american society because when we moved here we were living in you know the inner city of pittsburgh i went to public school didn't know english learned it through esl and then gradually we moved out of the city into the suburbs where i went to high school and then i went to college at harvard i like to say that harvard plucked me out of obscurity from southwestern pennsylvania um and really brought me into this environment that was really life-changing and

[17:43] transformative for me and initially when i when i first got there i thought i wanted to be a writer of some sort either of books and novels or to be a journalist so i threw myself into that i spent 40 hours a week writing for the harvard crimson um i was an english literature major um and then and then gradually i was made aware that um well actually what happened was was that my mother called me one day and she was like you know it's very hard to make a living as a writer you should study something else she said this much more harshly but that was the sentiment she

[18:20] meant well this is like the immigrant mother thing my mom does the same thing like she still thinks it's ridiculous that i didn't go to medical school and become a doctor like my indian mother you know indian immigrant mother it's like it's definitely an immigrant parent thing it definitely she was like if you look at the job postings on a newspaper where do you see the listings for author there is none like there are no jobs for for you so please study please study something else where you can support yourself um like financial matters were very top of mind given their backgrounds so anyways um long story short

[18:56] i then decided to study statistics and that is what i graduated with so i pivoted 180 degrees um and then years later i found myself in silicon valley working at a startup that built mobile apps that were tailored towards retailers and brands and rewarded users for walking into physical retail stores um and then that company got acquired and then i went to go work at andreessen horowitz so that was my entree into the venture world and i really didn't know that much about venture when i joined i actually cold applied to andres and horowitz on the website as a last-ditch attempt to not have to go to business school

[19:37] which is a whole other story um i i didn't want to go to business school but i had applied and i i didn't i felt like at that age at that point of my life you know that i ought to um basically move on from from my previous job but i wasn't sure what to do and so i applied this to business school but i didn't really want to go i didn't want to take myself out of the workforce so i just think that's most people by the way i think like business school is like the um it's like the uncertainty pick where like people aren't willing to uh to

[20:10] tolerate the like uncertainty of what comes next at that first pivot point in their career and business school is like the easy uh the easy answer like there's some people obviously that really want to go to business school and there's a specific reason but it's a very like reputable thing that your parents will never get met no one will ever like dig you for going it's like a socially acceptable way to wander around in the wilderness and figure that's a good way of putting it um yeah so that's that's how i felt at the time and then and then i just i called applied to andreessen which by the way

[20:41] is like not the not how you're supposed to go about getting i didn't know you could i didn't know that there was other ways of getting jobs this was how naive and innocent i was in my early 20s i thought that people just applied to jobs and that's how they got them i didn't know about warm introductions and referrals and all of that so anyways to my surprise someone actually writes me back this is frank chen who um is is one of the people who works at a16c still and he writes me back and he's like hey you should um you should come in and like come chat with me

[21:19] so i drive over to their office which is very close to where i'm living at the time and have a conversation with him and that kicks off a seven month long process in which i basically go over to their office every week have a conversation meet with other people and finally finally after seven months i get the i get the job and i join the consumer investment team

[21:43] and this is fall of 2016. um i ended up staying for four years um much longer than i had anticipated i thought that i would stay for one or two years go back to product um well after a seven month after a seven month recruiting process you gotta stay for two you're like for at least two years is that there's gotta be something raised now i think they i think they hire anyone that just says crypto in their twitter sorry if you're listening it was a joke greg didn't you pitch andreessen once and like someone fell asleep or something do i remember that story greg or is that not andreessen

[22:20] so that's i i don't know i don't think lee i've ever told you this story maybe i have you pitched me yes i did not fall asleep no we definitely didn't fall asleep i'll tell this you gotta name drop the person okay i'll name drop the person sorry sorry but not sorry so lee we met in 2018 uh andrew chen introduced us right and [Music] you know i was doing islands which was a sort of discord for communities and colleges were were using it and uh you told me you liked what we were doing and you said hey like it's gotten to the point where you know you can pitch mark mark and

[23:04] mark andreessen and and some of the other partners which is if you're an entrepreneur this is kind of like the final stage this is the super bowl of of uh of pitching your startup right here exactly and as someone who [Music] you know i grew up reading about mark andreessen like he's he's kind of a hero in terms of the tech landscape he's created so much of the infrastructure for technology um i was like wow this is really really cool like i'm in it i'm really in it so i'm very excited i show up uh to it's on sand hill road which is like where all these vc firms are and i'm i

[23:46] show up and lee's there and andrew chen's there and mark andreessen is there and benedict evans is there and i'm going through you know i'm having this sort of pinch me moment right because like this is incredible i'm like pitching and i think we had like a 90 minute or two hour conversation i'm getting direct product feedback from mark andreessen like what a legend and in the corner of my eye i see someone sleeping in the middle so i'm like oh i must be like uh you know it's probably a sign greg yeah no it can't it can't be it can't be so i'm like i'm looking mark mark was

[24:26] sitting right across from me so i'm just like i'm gonna focus on mark and talk to mark a minute later i look in the corner of my eye and that same person is still asleep this person was not me no it was not legal this person was benedict evans benedict fell asleep oh no during my my pitch you should have that on your twitter bio greg [Laughter] [Music] yeah yeah that's an amazing story because um i don't know he kind of looks like i guess he looks like he might fall asleep in a pitch um he's an amazing writer i mean i i subscribe i think i pay and

[25:10] subscribe to his weekly newsletter which is amazing and it's like probably one of the best things that i read every week he kind of like it's a it's a for people that don't have it it's like a combination of sort of insights plus curation um once a week and it like basically if you only read one thing a week on the tech landscape it sort of gives you like everything you need um in one swoop but that's hysterical greg everything you need in one sleep to be i don't have any recollection of someone falling asleep thought that is maybe it was greg's like subconscious maybe greg was like nervous about

[25:47] someone falling asleep and so his subconscious showed him benedict evans asleep so i even i actually glanced i think at andrew chen and i think he might have seen it um because i was like we should bring we should bring benedict evans on the show greg and and ask him about this because like he actually he strikes me as a very um honest and like direct person and he might just say like yeah it was super boring bro uh he would definitely tell it like it is i i am going to just take the i'm gonna apologize on behalf of ben evans he's he's a really nice person and i'm to

[26:23] chalk it up maybe to jet lag he he was probably coming back from england and jet lagged or something like that very tired but as the entrepreneur i was kind of thinking like okay do i say something like do i like tap him on the shoulder and be like dude like you okay um like i also was worried about his health yeah i was like is this guy like should we i don't even know it's like should we should we help him like and i was like there was too much stimulation for me between mark and this whole long table between our company being like out of

[26:59] cash in three months or something like there was too much going on you know if it's probably just like to take away from this for me is like if you're a startup founder and you're pitching the partners of a firm uh and one of them's asleep it's probably not gonna work out you might wanna go ahead and walk out of there and i know greg you ended up you ended up just fine and your business got acquired uh shortly thereafter so things worked out for you uh and here we are today but man that is a great uh that is a great graveyard story from the vc

[27:31] trail that was such a quintessentially like pre-covered uh silicon valley vc kind of story um so yeah to continue the story like that was my life sand hill road every single day from 2016 through 2020 basically through until covet happened um and then and then in early 2020 i decided to leave and to start my own fund at that time to invest in the future of online work and that included the creator economy um or what i call the passion economy basically platforms that enabled consumers to monetize their passions and their individuality um so in early 2020 i left i started that fund called atelier ventures which i then

[28:18] subsequently ended up deploying a large portion of into crypto and web sorry to interrupt you was that before covet hit like did you leave and raise that in q1 of 2020 or was that post it was basically in the midst of coven so i i think i started raising in april of 2020 when the whole world was falling apart um yeah that was that was a whole journey like i learned so much that's amazing it's an amazing example of seeing into the future though right like the clearly you started to think about you know the second order effects of some of the things that were happening and i

[28:54] think it was at a time you know when a lot of people were just like oh this guy's following the world's gonna end and you were kind of looking out and seeing like oh wow this unlocks an entire new economy and a ton of people to go and monetize in a way that didn't exist prior totally everyone everyone that i spoke to i remember this clearly in april 2020 told me not to fundraise than in there they told me don't don't raise a fund right now like just chill out wait six months maybe nine months 12 months who knows how long this can last but like this is the worst time possible

[29:27] to to try to raise a new fund um like emerging managers told me this angels told me this lps told me this everyone told me this and i just did it anyway and it was it was definitely really hard i think it's one of those things like where being i mean similar to being a founder you need a degree of kind of exuberance and like irrational confidence and almost naivete to go ahead with it because in retrospect knowing how hard it was it actually does seem kind of crazy to me now that i actually did that um but going into it i was like yeah well no it's gonna be a piece of cake

[30:03] like i can raise like a fund like i'm coming from andreessen ultimately that was not the case like it was so hard and i got told no like 900 times um but anyways the fund like got raised eventually and then i deployed it into a bunch of um yeah like new consumer platforms that enabled people to pursue entirely new like internet based forms of work um so i invested in companies like patreon and sub stack a bunch of early stage companies like stir and pair pop and then i invested a lot into web3 as well so that included um projects like syndicate foundation field guild games

[30:44] um mirror and many others um really because i saw like crypto was this new way for people to earn an income online and not only could they earn an income they were actually earning ownership in the projects that they were participating in uh which i thought was so interesting and something that had never been possible before before crypto um and so i began spending more and more of my time in the web 3 world and ultimately looked up one day and felt like this was the most dynamic and interesting part of the consumer software universe and i wanted to spend a hundred percent of my time there

[31:21] so long story short i decided to join forces with my friend and former colleague jesse walden um over at variant we ended up merging raise fund two together um last fall and are now yeah a partnership of three um myself jesse and then um one other partner named spencer and we've built out this whole team and we're entirely focused on web3 investing across the full stack it's a really amazing story and you know i think it has a lot of parallels to today as well like what you said about the timing of when you went out and raised it and you know the environment at the time and you know the naysayers

[32:00] etc i think it's probably pretty similar to what web 3 founders and potential emerging managers are experiencing now um you know we have this like the pendulum swings right like you go from way like overreaching optimism and like unbounded optimism to it swings the other way and suddenly we're in this environment where personally i feel like we're at like really unbounded pessimism and everyone's like oh everything's dead nothing's gonna ever work again you know the vc's private markets are dead all of that you know pessimism and the reality is it's gonna swing back and it'll be somewhere in the middle but for founders today there's a lesson in there of like

[32:37] you know your your kind of message of you know slight irrationality like you know throwing caution to the wind a little bit as you uh you know if you if you do have that level of belief in what you're building and doing well i think uh so one thing that lee isn't saying because she's quite humble is that she what she was known as you know really the passion economy leader one of the leaders here in the space and i remember when you started fundraising lee for atelier and they checked out put a mini you know small check in and the reason why we put it in was because

[33:18] even though the world was falling apart like if anyone's going to figure it out in the space it's gonna be lee and if you believe in that space um so those are the two things and you have capital i guess those are the three things um the same was true you know i invested in variant fund one um with jesse you know i think was april 2020 or something like that um because jesse what you know he was i believe one of the best crypto managers and he wrote the first thesis on ownership economy um and published that popular blog post and i think the lesson is

[33:59] in in you know sahel you speak about this all the time but like the lesson is really like how do you become the community guy or the frameworks you know girl or the passion economy person or whatever it is and build that audience so that when you do need and ask when you need that ask like you only need a few people to say yes to your fund or a few people you know you only need andreessen to to to fund your company right you only need a couple yeses to create to create momentum yeah i'm looking i mean the way you said that greg i

[34:36] thought was perfect like you know lee um i'm on your website uh you know leadashgen.com and i'm at the bottom and i'm looking at your top posts and all i see is like i'm looking at the dates of these posts and when you were putting out this writing and you know you say that it kind of came together the reality is like you were putting out these amazing posts on this stuff on the topic of you know 100 true fans came out in february 2020 before all this you wrote about ways to measure network effects you wrote about startups on consumer platforms like tick tock etc all of that stuff it was like

[35:09] you know the the 10 years to become an overnight success with these things and so to greg's point um you know i think naval calls this like type four luck which is um you become an expert at something and you build an audience around this expertise and then luck comes to you you know luck comes to you quote unquote um in the sense that like people seek you out for that and suddenly you know you've been putting out amazing content around this you're sharing in public which is a great way to get lucky because you sort of cast these like idea magnets out into the world around all this stuff and now

[35:40] suddenly you know you are the passion economy person and you've built a reputation for that you've shared unique um you know individual ideas around it you're not just kind of like tailing on the back of other people and a lot is possible on the back of that when you do that today's episode is brought to you by element a tasty electrolyte drink mix with everything you need and nothing you don't that means lots of salt with no sugar it contains a science-backed electrolyte ratio 1000mg sodium 200 milligrams potassium and 60 milligrams of magnesium but none of the junk no sugar no coloring no artificial ingredients no gluten no fillers no bs i

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[38:43] be stronger than 90 percent of startups on the market go to lemon.io room and get 15 off for the first four weeks get there before your competitors will check out lemon.io today yeah absolutely i i completely agree and i think there's there's a step before that type of type four luck which is just genuine passion for the topic like you have to have a genuine like intellectual um curiosity and passion for whatever it is that you're studying in order to have those like novel ideas that you then translate into a blog post but you know like even starting from when my childhood like i i grew up very

[39:27] online i was always on these consumer platforms these ugc platforms creating content on the internet i was vlogging throughout my pre-teen and teenage years and throughout college i had multiple tumblrs and live journals and all of that like i had been primed to think about consumer software and the future of like content creation on the internet from such a young age and i was just genuinely so passionate about it because i saw myself in it and i really really wanted to find a way for people to monetize that passion so i think yeah just like it sounds cheesy but like i just advise people to follow their passions and to have this

[40:07] like intuitive sense of of always thinking about what gives them energy because if they're working on something that gives them energy and that they're truly in love with that they feel like is their life's work they are going to excel at that and they're going to have insights beyond what other people can have you know the way i always think about this is so the whole like you know follow your passion for all your energy i i always personally found it as like it felt abstract to me and i didn't really know what that meant and the what the thing when it clicked for me was the

[40:39] idea of um what feels easy to you like when you're doing it what just feels so easy and like you're in flow and for you that was engaging in these digital communities it was playing games like neopets it was writing it was you know all those things you were doing they felt very easy and so you did them you built a passion around them um and you did the sort of like janky early version of your later things that you were exceptional at throughout your whole life and like i i found that to be a common thread by the way among extremely successful people they like

[41:10] built the you know version 1.0 of their thing accidentally prior to doing the real one like tim urban i had on um the podcast a couple months ago he writes wait but why which is like arguably the most popular blog in the world and before he launched that he had this like weird email thing that he would send to like a hundred friends that basically said what he did during the course of the day and he did it for years like he would just say oh yeah here's what i did today and it was like a few bullets um and it just struck me that like everyone that goes and does

[41:42] something exceptional had the like kind of yucky uh skeleton type version of that just because it felt easy to them and natural um so i do think it's like a call to arms for a lot of people out there if you just if you're trying to figure out what your thing is think about what feels fluid like what just feels effortless to you when you're doing it maybe that's playing video games by the way like and and for you like neopets maybe that felt effortless and there is in this new world that we live in a path within any of those worlds for you to go and

[42:13] monetize and make money and do things yeah plus one i agree with all of that and consistency like yeah like how many threads have you written since 2020 consistently too many weeks right like two newsletters a week for two years i mean a year and a half now we have a friend uh justin welsh and he had a tweet that went viral the other day which i thought was really good and he wrote my social media strategy tweets two times per day threads one time per week linkedin post two times per day weekly newsletter one time per week then each day i spend about 45 minutes interacting with my audience do

[42:56] this for six months and watch what happens wow yeah this is like so so i think there's two sides to this by the way like i love justin i think it's amazing i think there's like the tactician um which is that like i think justin's a tactician i think he's amazing and he's like doing a great job of building a life and you know career and businesses for himself around the internet by doing this by like having that consistency and just like he basically has a blueprint and he follows it he knows it works and he'll replicate it then you have the like uh i don't

[43:24] know the the artist which is like the person like a tim urban frankly who just like writes you know he might write one blog post every three months but you know when it comes out it's going to be like it's going to change your world because he just sits around thinking and writing all the time and like his business model is very different um i don't i wouldn't say one is better or worse um but it's interesting to see like these different kind of ends of the spectrum of doing this um especially i mean it's all it all ties to the passion economy right it all ties

[43:52] to the stuff that that you've been writing and talking about but it is fascinating like the intensity model versus the consistency model and then kind of where they blend in the middle of the hybrid um yeah i'm definitely more on the tim urban side of the spectrum like yeah i'm not consistent at all um i call my newsletter and aspirationally weekly newsletter or maybe it's aspirationally monday monthly i don't even know what what cadence i said i wanted to do but it basically comes out whenever whenever i have some insight or something to share that crosses a bar that's very hard yeah i mean greg you do

[44:27] the same thing and like i think it's very hard julian shapiro our friend greg um who lee you may have read some of his stuff before um also an awesome internet writer and thinker um he's talked about this in the past like it's really hard to send an insight rich newsletter once a week um and the people that do it like ben thompson i like bowed down to the fact that that guy can every single day turn out an insight rich piece of piece of writing is insane to me like [ __ ] once a week you know mario same thing like it's pretty remarkable i think and those are

[45:01] like unicorns in my mind i think most of us um can't really do that uh it's it's just very very difficult so it's interesting to like see those different models of of what works within this within this economy and world um before we lose you because we've got about 20 minutes left um i want to talk about your piece i want to talk about web3 um because a lot has changed since that piece came out although i think the principle is in the body of it still really holds but we've had you know over really over like may and june abroad kind of reset or destruction of of um you know

[45:38] crypto asset prices i'll separate that from like the fundamentals of the crypto world which i'm curious to get your guys perspectives on um but we'd love to just like start out by kind of just getting your thoughts on what has transpired and you know like general perspective on the space and what you're seeing you know in terms of as an investor uh founders going and doing and building and just a general vibe check like vibe check you know quick vibe check lee how are you doing and [Music] and and are you feeling more bullish you know as bullish you know less you know more barriers like asking yeah like how are

[46:18] you doing you know that's very kind well i just got better from kovitz so i'm already doing better than that's great was that an nft week kovid it was yeah yeah man everyone got everyone got it before but i was basically out for like nftmc i didn't see anyone i didn't make it to our own parties um hope everyone had fun at our parties but i wasn't there because i had coven um but yeah anyway so i'm i'm doing pretty well i think to answer your question i think i'm a really strange creature in web3 uh i'm i'm kind of like an aberration in the landscape because

[46:58] i got into web3 for really ideological reasons um so when i was talking about my backstory and how i was i was investing out of this fund that was scoped to the future of online work and and consumer tech like i think one thing that i didn't mention was i had always felt this tension between um the platforms that i was investing in and like the professed vision of enabling anyone to achieve financial stability and economic freedom through their working on these platforms versus what was happening in reality which is that a lot of the value came from the equity value of these companies and that

[47:39] accrued to a very very small group of people investors founders early employees executives etc and notably who's missing from that is the participants on the platforms themselves so i was really drawn to web3 as a way to alleviate that tension and imbalance that i perceived in the platform world wherein i felt like there were huge swaths of people who were actually contributing the value to these platforms but left out of the ownership of them um and so i got into web3 from a mission perspective of how do we make that situation much more equitable how do we make the internet more fair and architect new platforms that actually

[48:18] share ownership much more broadly um and i i say that i'm kind of like an aberration in crypto because i feel like for the last year or so for maybe the last two years of the bull market i felt like that message was oftentimes drowned out by a lot of the price action that was happening or a lot of like you know projects that would launch to a huge fanfare and then like kind of displayed into nothingness there were just a lot of distractions happening over the last few years that i felt like the mission element of crypto sort of got lost in all of that noise

[48:55] and i actually find it refreshing now where we are at this moment because i think a lot of the noise is finally settling down and we can actually focus on what the long-term mission of crypto is like why we're all here in the first place like what are we actually trying to build our mission as investors is nothing short of building a more equitable internet that is why we are in crypto as variant funds like we think crypto can be the basis of a more equitable fair internet that actually enables people to own wealth building assets for the first time ever um and so we're we're still really deeply

[49:33] committed to that vision and that mission and i think finally um like we're we're finally in a market environment in which we can cut through the noise and there's less of like the wild speculation that's happening that i think detracts from that long-term mission do you um do you know like cape cod you were in the boston area for a while you know cape cod yeah um i keep thinking of this as like cape cod i've talked to our friend sean poury about this in the past as well it's like um cape cod you know in the summer it's like everyone goes to cape cod those

[50:09] places are packed it's like the hot place you know all these like uh vacationers come in and rent all the houses all the prices go through the roof everything's insane uh you know and then come labor day weekend it's crazy and like starting in september it starts getting real quiet in cape cod and like all of those people leave and they go back to wherever they live and the people that stay in cape cod and that live there are the locals um and you know they're like the true cape cod lovers and believers and the prices come down and it's like it's the place where they love to live

[50:40] and i keep thinking about that i mean with asset markets in general but like crypto um there were a lot of tourists that were in it not because they understood you know underlying fundamentals or they understood the vision of of you know a kind of a a truly equitable internet as you as you laid it out um but because you know they thought they could make a quick buck or like it was the get-rich-quick scheme of the day and a lot of those people have left um you know and i know a lot of those people and there's nothing wrong with it actually um you know it's sort of a tail

[51:08] as old as time for humans to to chase after those things um but the real builders of the space if it does end up being and fulfilling the promise of you know what a lot of people think or hope um are the ones that are more excited now than they were um because now you know i like it for you guys first off like prices are hopefully going to reset to some extent in the private markets too and you're going to be able to invest in things at a you know a more reasonable price point and generate better returns for your investors which creates a feedback loop

[51:37] of more money flowing into the space um and allows more projects to be built so actually you know in the aggregate that should be good for founders as well um but there's a lot i mean it is a lot to unpack just because of all of the speculative fever that had to get drained out in a short period of time i mean all like the unwinding of three arrows capital and you know the impact that's had on block fi and some some of these other things that you've seen that are more publicized um it really i think it had to happen and it had to happen in tech broadly like the

[52:06] whole tech bubble has sort of pulled back um to get just some of this like crazy speculation out of the markets i agree did you guys see this like i mentioned it just in passing there but did you guys see and follow like the whole block fi ftx uh a little bit yeah i just thought it was so interesting um i mean the whole like story of it is actually not super complicated because basically you know they were uh taking in money from from clients and you know they were loaning it out into what is a super attractive loaning market for crypto assets and so they were

[52:41] generating a great return on that and they were basically passing through a high return to their to their customers and most of it was like over collateralized loans meaning there was um a lot of collateral in the form of bitcoin or other crypto assets um for every dollar of a loan and that's great actually um the challenge is these are super volatile assets over collateralized is good until something drops 60 percent and all of a sudden the over collateralization is not super helpful and so you know generally speaking what happened was there was you know a couple of these hedge funds that got liquidated and collapsed like three

[53:13] arrows capital and these places like block fire like voyager has been another big one got smoked by losses and and had to you know take pretty dramatic actions to avoid you know being completely bankrupt and losing client funds um but you know the thing that i found so interesting was like so that business was valued at what like four billion dollars or something last year ftx is now you know under a definitive agreement to acquire block five for like i i don't really care how you know the ceo positioned it you know with the with the revolving line of credit that's not really enterprise value it's not like

[53:48] buying the equity but like basically for up to 240 million or something like that um it had been reported that it was for 25 million which i imagine is like the low end of what it could possibly be if everything goes to hell but it's pretty remarkable um that you can have a business you know raise money at a four billion dollar valuation and all that you know frankly like the employees who came on and got equity at that valuation and have it literally be worth you know basically nothing right like pennies on the dollar um from that deal it's just like it's a little bit

[54:19] shocking just on the surface of it yeah i i totally agree and i think um i mean there's there's just like so many lessons and implications from all of this um like one thing that i'll call out is like i think i think it all gets conflated together in the news media and in the minds of like the broader like retail investor market but i would distinguish between these like centralized companies like blockbuy um that are um built on top of crypto assets but really like kind of building a proprietary business around that where it's you know lending money to actors and institutions that aren't super transparent to the end users and

[55:04] so on and so forth and exposing themselves to a lot of risk um i would distinguish between that versus like the world of decentralized finance or defy wherein things are very much transparent it's all on chain all the smart contracts are auditable um users know that is a very important that's a very important point that you made because i think someone i saw it on twitter somewhere you guys might have seen it but like so you know block fi is like centralized finance uh voyager is the same way um there's like a single point of failure in those systems right and like the equity that you know the value that was

[55:40] lost from 4.6 billion or whatever it was to the you know the deal pennies on the dollar that's like you know tiger global and bain capital like it's not you know people um and client funds are actually going to be protected in this deal with ftx which is fantastic but the the point you made about defy like i think that the biggest protocols like compound or maker dow they actually didn't experience any of these massive issues in this rundown they actually operated and functioned quite effectively with this massive drawdown um which is an important point what for people that question d5 and the merits of it i think

[56:12] there's plenty of reasons to question it but this probably isn't one actually because it seemed to function well in what was a massive drawdown exactly exactly all of the d5 protocols are still working they've been incredibly resilient during this period of broader turmoil and i think it's really important to note that because in those instances in in the d5 world users know exactly what is happening with their funds how it's being pulled um what's going to happen once they deposit their funds into a lending pull etc versus for something like block fi when users deposited their funds i think they were just messaged the interest rate and they

[56:49] probably had no idea that it was you know ultimately being you know sent to 3ac or whomever else like there is a very clear distinction between those two worlds of centralized i think it's called cd5 like centralized d5 versus actual d5 so i would i would be very clear in drawing that distinction g5 is still working as expected and continues to like come along i think unfortunately like it does get conflated together in the minds of general consumers and i think in the short term this is going to represent a headwind to broader consumer adoption unfortunately because i think broadly speaking like most normal americans are

[57:28] gonna look at what's happening right now and just think oh my god like crypto is imploding like all of crypto under this umbrella of crypto is like not doing well and and things are um you know getting marked down significantly and people are losing money um i think that that is definitely going to be an impact of it and then i think what this also exposes is that is the need for more consumer protections and disclosure of who is um representing certain projects in a certain way when people have exposure financially to a certain project success having to disclose that just like they do in the securities

[58:11] world or just as they do for advertising purposes on social media like i think there were a lot of instances over the last year where people promoted you know not just lock by but a whole range of different projects didn't disclose that they were actually being compensated for that or that they were investors and ultimately like you know obviously have an incentive to talk about it in a certain way that's really positive and yeah retail investors um ultimately were harmed in those situations and i think that's really sad um let me ask you on that because because i think that's a really important point it's one that's not often talked about

[58:51] um you know one of the things that i've seen people criticize about the crypto industry and web 3 in general is like this idea that vcs are like dumping their bags quote unquote on retail um and that you know they're basically like buying into a token and in the pre-sale uh marking it up with a follow-on investment and then as soon as it starts being liquid and tradable they're exiting it at a huge markup to retail who you know is then kind of caught holding the bag quote unquote for you know for any drops in price my experience personally you know i haven't done a ton of like out of my

[59:25] fund or personally i haven't done a lot of like pre-sale investing but i've always seen there be like lockups investing periods for at least like the most reputable projects like the ones that i see big vcs getting into i've always seen them having like 12 to 24 month lockups basically to prevent from this happening like the same way your startup equity gets you know vests over a certain period of years is that like is that a real problem do you see people that are actually able to do that or do most of these projects have those type of lockups so usually um i i would say in the deals that i've

[1:00:00] been a part of lockups are very very common if not just universally present and furthermore those lock-ups are really long um like multi-year lock-ups and for venture firms i mean venture firms are structured as usually 10-year funds where we have a 10-year time horizon to achieve our fund returns and so people are not investing for a quick flip or to invest on a short time short time horizon i think obviously there's lots of different capital allocators out there there's not just the venture firms there's trading firms there's hedge funds investing in crypto so i'm not entirely sure if um you know all of them are stipulating

[1:00:45] that there's going to be a lock up or perhaps people are negotiating differently but i think lock-ups are really really important to create that long-term alignment yeah yeah i completely agree i gotta ask you before selfishly before we leave um what does a web 3 version of neopets look like and can you describe it um yeah that's a that's a really really good question um i haven't thought about this i think neopets was essentially a play to earn game before the term player actually existed so there was an in-game currency called neopoints that you would earn by taking various actions you could earn it through investing in their virtual stock

[1:01:31] market you can earn it by selling items in your shop or by playing games but that in-game currency was just that it was an in-game currency that had no connectivity to like us dollars there was no way to like actually take that near point and like convert it to any any fiat currency um and furthermore like neopoints were subject to whatever like you know economy they designed like it could be inflated they could create so many more neopoints etc there was no transparency into that so i think the web 3 version of neopoints there's probably lots of lessons to be learned around designing play to earn economies

[1:02:10] i i think someone's gonna crack this actually like so far um the play to earn games that we've seen take off haven't had exactly sustainable tokenomics but i think in this next cycle someone is going to crack that and design a game economy that is actually sustainable and functions and neopets was really really amazing because there were both um ample ways to earn um earned neo points but there were also a ton of different ways to spend your meal points so you could spend them on items you can spend it like upping the attractiveness of your pet painting it into different colors etc buying furniture for your virtual home

[1:02:49] like it was really this very expansive virtual world and economy and i think that holds a lot of lessons for game designers to both like create the mechanisms mechanisms for earning but also to make sure that people have ways to continue to spend and therefore demand the token on a long-term basis yeah i have two cut through the noise like i know nothing about plate iron outside of you know my like general uh reading and and what not like i've never built anything in the space but i have two like simple rules that i think need to exist for someone to build a thriving play to earn game number one um people

[1:03:25] have to get utility from playing not just from making money like there has to be people who play because they love it like you have neopets and number two i think there needs to be outside dollars coming into the system not from gamers and the way that i think that happens is like neopets oh maybe my guy can wear nike shoes in neopets and so nike is excited to like put their brand in this and there's like all of a sudden brand dollars or outside dollars and ecosystem dollars coming into this environment and i think the combination of those two creates a much more sustainable environment because now i don't just

[1:03:57] rely on you know effectively ponzi economics of like you know new dollars coming in to fund returns to old money um i have like a truly like self-replicating system that exists so um that's my like thing if i'm looking at them that's what i'm looking for so a slight edit on the second the second characteristic that you mentioned so i i do agree the first one needs to be in place which is that the game actually needs to be fun it actually needs to be played and users want to be there for like intrinsic reasons not just to earn and that ties in um well to the second characteristic

[1:04:30] that it needs to have which is that there needs to be players who are net like putting in money into the game versus extracting out from the game there needs to be people who have like net inflows versus net outflows like all the net outflows are the people who are earning um but there needs to be another contingent of players which does exist in most games it's the whales who are spending more money than they earn out and that is the only way that the economy of the game can be imbalanced without necessarily relying on the ponzinomics of new players depositing money in therefore like earlier players

[1:05:04] can cash out and so it needs to perpetually grow otherwise it collapses so it needs to get those players like that segment of whale users in the game paying um to enhance their experience and being happy to pay like on a net basis um depositing money into the game's economy for it to work lee do you think the winner of the this play to earn ecosystem is gonna look primitive like a neopets like when you went to neopets it like felt pretty primitive web-based um or do you think it's going to be from a triple a game studio like is it going to look more like fortnite or is it going

[1:05:46] to look more like neopets there's a good closing question greg i have an answer i have an answer but i'm curious lee's perspective i think you can do a lot with a really primitive game i i don't think a game needs to be so visually fancy to compel the two characteristics that we just mentioned i think you can get there with pretty simple game dynamics um like what neopets had neopets was literally playable on a dial-up modem um and so i think those are the games that are going to figure it out first in advance of the aaa games that probably will take five years to come out

[1:06:28] i like it greg i think the i'm with you lee i think the [Music] the vibe i'm hearing from a lot of game developers right now and game designers is it needs to be this aaa crazy metaverse 3d let's go take three years and raise a hundred million dollars and build this crazy ecosystem i think it's gonna look way more like neopets than it is fortnite initially all right i'll take the other side of this bet just because i don't want to have three people agree with it i think it's going to come from a triple a game developer but do you believe that yeah i do i just think that um i think

[1:07:05] that the game experience and like absolutely having an immersive insane game experience is going to be really important but we can argue it more when you say aaa game developer what do you mean do you mean like coming like from the makers of like epic or yeah i think they're gonna have to create like a um you know like a separate entity that kind of allows it to be more free ownership um and it'll come from one of those big studios not i actually don't think it'll be a new studio that raises money here's why i think you're wrong so [Music] if you look at what happened with

[1:07:38] ubisoft ubisoft created was going to do some nft [Music] dynamics in one of their games they used the most green block chain tezos which basically is super green and they had such a big backlash that it sent a ripple effect to all major game studios that if you are gonna do play to earn if you're gonna do nfts you can't really do it from your there's just so much of a backlash you can't really do it from uh the mothership uh it has to be like an independent game studio yeah it has to be like and i take that point yeah i think that's true like the there's a big uh

[1:08:26] there's a big uh hold up like around the terminology and the gaming community doesn't love it um so i i hear you i i'm happy to debate this further i think it'll be interesting to see maybe they'll set up a separate entity that's like you know a shell company exactly people are creative that's what's gonna happen thank you so much this was awesome um super super excited to release this you're amazing and um people can find you on on twitter and you're writing and they should check out variant fund as well because you guys are up to some amazing things so we look forward to having you back on in the future um

[1:08:55] thank you so much for joining us thank you so much for having me this is great thanks so much for listening to today's episode if you have any questions that you want featured in a future episode email us at hi trwih.com leave us a review at apple or spotify to help us grow the reach of this podcast until next time we will see you simple cup of soon [Music]

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