Welcome back. Earlier this week, Anita caught up with two investors at Haun Ventures, partner Sam Rosenblum and associate Breck Stodghill, live on Twitter Spaces. All eyes are on the lean venture firm, led by former a16z crypto and U.S. Department of Justice official Katie Haun, as it deploys a whopping $1.5 billion fund in web3 startups. We recorded the casual conversation as a bonus episode so you can hear Rosenblum and Stodghill share their thoughts on where they’re seeing opportunities in crypto these days, how they approach the diligence process, and what they’re listening to and reading outside of web3. Subscribe to the Chain Reaction newsletter to dive deeper: https://techcrunch.com/newsletters
Welcome back. Earlier this week, Anita caught up with two investors at Haun Ventures, partner Sam Rosenblum and associate Breck Stodghill, live on Twitter Spaces. All eyes are on the lean venture firm, led by former a16z crypto and U.S. Department of Justice official Katie Haun, as it deploys a whopping $1.5 billion fund in web3 startups. We recorded the casual conversation as a bonus episode so you can hear Rosenblum and Stodghill share their thoughts on where they’re seeing opportunities in crypto these days, how they approach the diligence process, and what they’re listening to and reading outside of web3.
Subscribe to the Chain Reaction newsletter to dive deeper: https://techcrunch.com/newsletters
Helpful links:
https://techcrunch.com/2022/05/16/a-dive-into-haun-ventures-with-the-firms-first-deal-lead-sam-rosenblum/
Anita Ramaswamy 0:00
Hey everyone, its Anita, welcome to chain reaction where we unpack and explain the latest in crypto news, drama and trends breaking things down block by block for the crypto curious. Awesome. So yeah, I guess we can just get started here as people sort of trickle in, just to give a little background to everyone. So I'm Anita Ramaswamy. I'm a senior crypto reporter at TechCrunch. And on this conversation with me, I have Sam Rosenbloom, who's a Partner at Han ventures and Brex Dodge Hill, who's an associate at Han ventures both on the investment team Han ventures raised $1.5 billion in March to invest in web three startups, and is led by Katie Hahn, who used to work at Andreessen Horowitz on their crypto team. And before that worked at the DOJ. So there's been a ton of attention on your firm. And, you know, as one of the biggest names in crypto VC, despite the fact that you are working at a first time fund. So I'm super excited to hear about, you know, the crypto markets right now and where you're seeing some opportunities, but I guess, yeah, just just to get started, we basically have half the investment team here right now. Right?
Sam Rosenblum 1:06
That's right. That's awesome. Yeah. So
Anita Ramaswamy 1:09
if, if you don't mind, I think it'd be helpful for both of you to just give like a super brief background on what you did before you joined Hi, ventures?
Sam Rosenblum 1:15
Sure, yeah, I can kick off. So hi, everyone. My name is Sam Rosenbloom. I'm a partner and lead the deal team at Han ventures. So I've been working in crypto now full time for going on nine years. I initially I actually got into bitcoin in 2013 when I was in the Global Strategy Group at visa. And very fortunately, was one of the first couple of people in all of visa to be assigned to projects where I could somewhat justify studying Bitcoin during my day job. And a few months later, I ended up leaving visa to join Coinbase as a 30 person startup. So I joined Coinbase in 2014, and ended up staying there for five years. Over that time, I led business development, corporate development, I led our international expansion into Asia Pacific and Latin America, I made the first ever Coinbase ventures and which I guess was before we technically even had Coinbase ventures. But I got to do a whole bunch of fun stuff there. And then, in 2019, when Coinbase was about 1000 person company and moving into its own skyscraper in the financial district of San Francisco, I decided it was time to start a new chapter somewhere smaller. So I joined some other Coinbase alums over at Poly chain capital, which was one of the first crypto venture funds and helped grow that from a couple 100 million dollars under management to several billion was there for a couple of years. And then in late 2021, I actually stepped away and was in process of starting up my own venture fund. And Katie, and I ended up kind of linking back up in December. And in January, I ended up teaming up with her. So the rest, I guess, is the recent history as you would outline there and eat up but we are now in process of allocating our first early stage venture fund, which is the $500 million fund as well as our first Growth Fund. Both. That's the $1 billion fund, and that both of those are investing in all things crypto and web three. So you know, equity, tokens, warrants, etc. And, yeah, that that about covers it. So with that I'll pass the mic over to Breck to introduce himself.
Breck Stodghill 3:38
Sweet. Thanks, Sam. Hey, everyone, I'm Brack. I'm an associate on the investment team at Han ventures. And I got started in crypto in 2017. During my going into my senior year of college working on a couple of different startups and projects. When I was studying computer science. At college, I joined the crypto engineering team at Coinbase, where I got to work on some really interesting problems working with crypto networks at scale. So worked on a lot of our initial platform, work to be able to support new crypto networks, things like Aetherium, polka dot Solana Cosmos, all the new things that we're launching in the 2018 to 2020 era. Then I shifted focus a little bit during defi summer and got the chance to work on some of the early defi products. I claimed this. Ultimately, some due to regulatory concerns, they didn't actually get to ship and that was around the time when I realized it might be a good opportunity for me to take some time to go and work at a smaller place. So I joined some some friends from Coinbase at Zora as one of the first employees there. Again, working as an engineer, doing all sorts of different things worked on early versions of the protocol. worked on our SDKs, but ultimately spent most of my time reading a lot of our backend infrastructure, things like our data pipelines and API's to be able to support, not just our front end, but also an API that was open for anyone to use. And then somewhere along the way, as an engineer, I started to get interesting, get interested in investing personally, writing some angel checks, and then ultimately doing it a little bit more seriously. And as anyone who's been in the space, the best side projects end up turning into full time projects. And so when I got the chance to, to work with both Sam and Katie and Rachel and some others from Coinbase, who I looked up to, early on, on in my career as a really easy decision to make.
Anita Ramaswamy 5:47
So you both join Han ventures in May. And I just want to do a little like vibe check here, like, what is the energy? Like? How is it like, sort of being on a smaller team after working at larger startups in the crypto space, and especially during the market conditions and the downturn right now? How are you feeling?
Sam Rosenblum 6:03
Yeah, so I started working with Katie, on ventures in January. So then then around, I guess, for most of this segment of the crypto cycle that we find ourselves in a definitely, it's been I don't know, over the course of eight months, it definitely feels like there's been a couple of ups and downs in terms of the broader space, which obviously, I've, you know, impacted a lot of things, a lot of people, for us, as investors, we, you know, I think we came into this wanting to be as general as possible in our coverage and wanting to cover, you know, as we say, all layers of the tech stack, so everything from layer ones, and you know, now layer zeros, et cetera, all the way up to consumer enterprise facing applications and everything in between. So, crypto winters, generally speaking, and certainly I think where we're at in the cycle today, specifically, I think often do provide a good opportunity to zoom out and really hone in on what areas are not only interesting, but you know, really making good headway and good progress. And, you know, where are the investable opportunities? So yeah, we could certainly go into some of that. But just from a timing perspective, yeah, we're eight months in to fund one, both that early stage and growth, we have not really had any downtime, so things have stayed just as busy as ever. And yeah, Blackout. And if you want to tag in and cover some of the more specific stuff we've been looking at, since you've joined, but how would you say things, things seem to still be firing on all cylinders at all layers of the tech stock firmware I set?
Anita Ramaswamy 7:45
Just one quick question for you. Before we get a little more specific, but how many investments has the teammates so far I know only a couple are public at this point. But just wondering if there's any specifically that both of you were involved in that you want to talk a little bit more about?
Sam Rosenblum 7:56
Yeah, you know, I off the top of my head, I actually don't know which ones are public versus not. But I will say we've made a dozen or so investments. And I guess let's see, I know Zora is a public one because I remember when Zora Euler highlight, or some of the ones that I recall some of the press around, so we can we can go into those for sure. Breck anything you want to add on on the market timing stuff?
Breck Stodghill 8:23
No, the only thing I will do is maybe amplify a little bit is that generally during crypto winters, that's the time for, for engineers and builders, to not be distracted from some of the froth, both in the media, but also just on crypto Twitter and some of the speculation and be able to spend a lot of time deeply focused on, you know, working on the next problems to go from from zero to one and bring the entire space along with them. So we're generally very excited about what's to come.
Anita Ramaswamy 8:55
So I do want to get a little bit later, you know, talk about some of the specific investments you've made. But I'm curious about what what is the day in the life looking like for you these days? I mean, you're on a pretty small team. So how does your process differ from maybe other investors in terms of where you're spending your time in the past month or so?
Sam Rosenblum 9:10
Yeah, I can lead off there and then Brack want to hear want to hear what you're up to day to day too. So interestingly, you know, hon ventures, obviously, starting in January, we started in this sort of COVID hybrid remote situation. So the team today that the whole team is 12. And then I need, as you said that the investment team is four of us. So we're still small enough, and we're quite nimble, where we spend actually quite a bit of time together, whether that's in person or you know, on Zoom or calls or whatever. So, the investment team actually gets together for a daily standup first thing every morning just so we everyone sort of knows what's in the pipeline and what everyone's focused on what sort of research projects we're up to So that daily standup, I actually really enjoy the break, hopefully you did here you can, you can give your take on it. But it is a really cool way in a hybrid remote setting to just stay really connected with everyone. And then I think we do end up in person pretty regularly as well. So Brett and I were actually just in the office together a couple days ago, for a couple of meetings and just just get some time together in person. So a little bit of both there. And then me, as you might expect, we're splitting our time generally between doing research, speaking with founders, and then obviously working with each other, as we decide to go deep and diligence specific companies or projects. Brex, what's your day to day looking like these days?
Breck Stodghill 10:49
Yeah, I think one one meta comments. Any dad that I think is really nice, given that this is my first time at a fund is that a we're small, and B, we're off previously operators in this space. And so we bring a lot of that expertise and sort of process or maybe even lack of process to the way that we work together. So stand up, I think is a good example where that's generally a process that engineering teams or product teams do within what through their within tech in general. And we brought that over as a way for us to be able to iterate and be you fast and nimble to react. But also like check in on. Yeah, what we're doing in terms of research and writing and output for the fund. Yeah, I think in many ways, we look more like a startup than we do look like a venture fund, which which I've really enjoyed so far.
Anita Ramaswamy 11:40
Yeah, absolutely. I'm just curious, where are the two of you based I, Sam, I feel like I read that you are based in Idaho.
Sam Rosenblum 11:47
Yeah, that's right. I am sitting here in Sun Valley, Idaho, which for for many in the audience who probably have never heard of Sun Valley, Idaho, it's just a cool little ski town, about an hour and a half flight from the Bay Area or LA. And yeah, I am originally from California and spent, you know, most of my career working in either SF for LA. But when COVID hit my wife and I decided to find some some greener pastures in the mountains. So this is where we've been based for the past two and a half years or so. But yeah, we obviously as a team, again, there's 12 of us, we have a center of gravity in the Bay Area, I think it's seven out of the 12 members of the team are somewhere in the bay area between, you know, the South Bay, or San Francisco or East Bay. And actually even North Bay as well. But a lot of the team is spread around between La New York, DC and Idaho, of course, so we are fairly distributed, but we have a center of gravity in the Bay Area. And that's generally where we'll come together in person as a team. But then Breck and then Chris, on the other another member of the investment team, have also been doing a little bit of travel going around to, you know, etc. Or, you know, just just the the key industry conferences that we feel we want to have a presence at. So I'd say between the four of us a decent amount of travel. And we do find a way to see each other in person. But obviously, we're distributed and we're remote, a good amount of the time as well.
Anita Ramaswamy 13:34
So I actually do want to get into, you know, some of the trends that you've been seeing in the crypto markets recently, I guess, with startups, what are some of the areas that you have both been focused on specifically, like sub sectors or types of businesses?
Sam Rosenblum 13:45
Yeah. Brex. Do you want to get off this one? Sure.
Breck Stodghill 13:48
So I think one, one observation that we've we've made any debt with crypto cycles of past is that, again, these are opportunities for the really deep builders to be able to work on innovations that were not previously possible in previous cycles. And so generally, I'd say we've been spending more time at the bottom half of the stack, whether that be actual iterations or innovations of protocols or dev tooling. And I think most of the stuff that happens at the protocol level, we can drive back to some advancements in cryptographic primitives, things like specifically fraud proofs and validity proofs or, or opening up the design space for how blockchains can scale better, but then also interoperate better. And so a really good example of this is what we're seeing happen with relapse. So I'm sure as everyone saw this summer there's been sort of a battle between a lot of the teams that are building z k EDMS, but more broadly, this represents the movement of a lot of the stuff happening at the layer one blockchain level to be decomposed. So right now most blockchains do kind of a lot of stuff, they do execution, they do settlement, they do consensus, which means that there's a lot of like really clear resource constraints, that that are bottlenecks for scalability. And so with things like fraud and validity proofs, we can start to decompose and move some things like execution, or settlement or data availability to different parts of the stack. And that's something that I think is extremely interesting. And is definitely, at least for now, the consensus approach for the research community on how blockchains will scale and also represents sort of a very, very different way for blockchain apps to be built. And also probably allows for new ways for them to exist. Whereas right now, because of risk or resource constraints, you have to be really, really cognizant about like, the amount of gas that you use an Aetherium smart contract, or you have to do some like neat tricks where you pull capital together for for lending protocols. Maybe now, as we're able to experiment more with different types of execution environments, or the decoupling of execution and settlement, we can actually have applications that might in architecture look more like a web to app. And they're not making trade offs, because they're working with this like artificially constrained execution environment. And so things like that, that are happening at the protocol level, are super interesting to us, because they create this, you know, application flywheel for further iteration up the stack, to allow for things that maybe weren't previously possible, you know, in previous cycles before.
Anita Ramaswamy 16:43
Got it. Yeah, Sam, I don't know if you have anything to add there. In terms of areas you're looking at really closely right now.
Sam Rosenblum 16:48
Yeah, that I mean, that just about covers, I think, as Brett said, we are finding ourselves drawn into doing some deeper research and spending time talking to a lot of founders lower in the tech stack at the moment. But we are continuing, of course, to talk to founders and do research at all layers. So our portfolio definitely includes the full mix, like we kind of run the gamut. Now, in terms of what the sorts of projects we're, we're looking into and backing, and then ultimately supporting. And of course, all of these things, this is kind of what makes crypto so great as an ecosystem that's like all of these things, different layers of the tech stack are evolving and progressing in parallel, like in tandem with one another. It's sort of to draw the analogy with lead to it's sort of like if TCPIP, SMTP, Gmail were all being created and invented and developed at the same time. So it keeps things interesting. And we definitely get to kind of zoom in and out at different layers pretty regularly. But as Brex had tons of stuff going on with with z k broadly, and of course, a lot of this has come come to fruition or come to a head in layer two roll ups. And you know, we continue to be pretty excited about seeing a lot of these things coming to market and continuing to evolve.
Anita Ramaswamy 18:11
So given that there are so many crypto startups and web three startups out there, and you have to make a lot of, you know, sort of quick decisions, I'm sure, with a bunch of people pitching you or trying to get your attention. I'm wondering what are some of the heuristics that you look at that tell you whether you want to look deeper into something or whether you're immediately a pass?
Sam Rosenblum 18:30
Yeah, it's a really good point, we, we are in the fortunate position where we have pretty good access, and I guess, deal flow, quote, unquote. And we do have to be pretty tuned into what makes sense to go deeper on versus what is just not, not the right time and place to engage on. So that is honestly one of the harder parts of the job, because pretty much everything is interesting, right? At least to some extent, people, people in this space tend to be working on pretty interesting stuff. And and again, new mechanisms and designs are invented every day. So it's a hard part of the job and Brack I'd be curious to hear kind of like your, your approach to the front lines in terms of when you decide to really lean in and engage.
Breck Stodghill 19:20
Yeah, I think one way I think about it is there's there's definitely a trend happening where I think a lot of projects are hammers that are looking for nails. But when you when you speak to a founder or you know, you're you're doing conducting research, and you're and you're reading about something and you find things that are not new. There's a different level of excitement and engagement that comes when you're thinking of something that like was it potentially possible in web two or wasn't possible, maybe even before in crypto, and generally those are the things that I get really excited about it Uh, those things happened pretty quickly for me. Yeah, I don't know, I think I think that's generally how I go about talking to founders or, or conducting research is looking for the stuff that is truly not new.
Anita Ramaswamy 20:13
I guess on the flip side, I'm curious if there are any things or any parameters that you would look at that you would say that's immediately a hard No, like maybe like a type of founder or a sub sector or something like that?
Sam Rosenblum 20:24
That's a good call I need I think a big part of it is, I don't know, there's probably, there's probably some spectrum or two by two, we could we could draw here on a whiteboard, but it comes down to is, is the thing that they're working on in the first place? To Brex point, is it? Is it interesting, and is it potentially going to be an unlock for the space? Is it going to make something possible that wasn't possible before? Or is it going to draw in end users or institutions into the space in a way that wasn't maybe convenient? Or, you know, frictionless before? So that's, that's one big part of it. Another is, are the founders? Do we believe that the founders that we're speaking with, are they well equipped to actually execute on the thing that they're setting out to do because of course, there's, there's a lot in this space, there's a lot of experiments that are going to go on to change the world. And then, you know, for better or worse, there are even more experiments that, you know, for one reason or another, just aren't going to work out or aren't going to come to fruition in the way that we initially hoped. Or the founders initially hope. So I do think this is where and you know, Brett alluded to this earlier, but a lot of the members of our team are, you know, we are previous we have previously been operators, specifically within the crypto space. And as a result, I think we do have a pretty, pretty good intuition and pretty good radar for when people are setting out to do something new, like, do we, what's our feeling about this group's ability to execute on that? Not? That sounds of course, you know, Katie, has deep experience in this space as well. She's she's been in the space from, from a different side of things since 2012. And then came in and joined the board of Coinbase, in 2017. So between the lot of us on the deal team, I think we are pretty in tune with not only our founders equipped to set out to execute on the thing they're doing, but importantly, what sort of time horizon do we think that's going to be over. And of course, as investors, we have to be mindful of investable opportunities, but also the timeline that we expect things will come to fruition over. And generally when these these different categories that I've mentioned, when they all lined out, this is when we find ourselves just organically getting, you know, each individually and as a group really excited about about the project. And this is where we tend to really focus in and do some deep research and diligence and hopefully end up you know, backing the team and then being able to apply that energy into supporting them and helping them bring the project to fruition. There is some
Anita Ramaswamy 22:59
one specific investment of yours that I want to ask a little bit more about, which is oil or finance, the defy protocol. Obviously, there's been a lot of attention on crypto borrowing and lending and startups that do that. So I'm just curious what like how did you get comfortable and get confident around risk management processes specifically, when it came to this investments?
Sam Rosenblum 23:17
Yeah, I can lead off on this one. And then Brett definitely want your point of view on on the defy stuff broadly, as well, as far as risk management goes, but boiler is a really interesting one like this is first and foremost, actually, I need to add to your point here, like defy has been one of the best known categories within crypto, I suppose probably since like, couple summers ago, defi, summer of 2020. And it's a space that brought in certainly a lot of attention, a lot of a lot of congestion on the theory of network at the time, and just calls calls into question a couple of main things, and namely, you know, what are what are some of the ways that we think crypto and more specifically defy can really improve the world and change people's lives for the better? And then, of course, tactically, how are we seeing this put into practice. So at the high level, you know, the ability for anyone anywhere in the world, irrespective of what country they happen to be born into, or what economy they happen to be born into, or what their local legal tender happens to be the ability for anyone to be able to access really core financial instruments, or even just, you know, financial access at all. So the ability to securely Save, and then, of course, the kind of original invention of finance, which was borrowing and lending. So the ability for for folks who if they had some incremental resources would be able to put that to some productive use and, you know, create more in the world than that would have existed otherwise. We believe that defy is going to be a huge catalyst globally in doing just that. And And we think borrowing and lending is really at the core of what needs to be made available for this to work. So Euler has taken a really cool approach, specifically around risk management, where they, I suppose, I don't want to overstate what the audience already knows. But some of the issues in defy risk management previously, they're sort of in this trade off of how decentralized is the tool, really. And then, of course, like, how is the risk mitigated, and of course, in crypto winter, when there's a lot of volatility, and prices are changing pretty rapidly, the value of certain types of collateral can change rapidly, so you can get into some tricky or tough situations. For folks in the audience that have been kind of tuned into crypto over the last few months, we saw some of the the, I suppose risks of more centralized versions of risk management, where you have some small number of individuals or small number of institutions, or firms that are deciding how to manage their own risk, and then, you know, bringing other people's capital in, and sometimes that that doesn't work out all that great. So we've seen a couple of examples of this recently. Now, super important to note that all the defi protocols weathered that storm, exactly as they were programmed to do. So decentralized risk management, you know, one thing is just how is the protocol designed? And then, of course, how does it deal with that battle testing. Now bringing this back to Euler specifically, they have found a way that kind of invented a way to bridge this gap between having truly decentralized borrowing and lending, that's still is able to mitigate risk of certain types of collateral. And so the way that they do this is they actually have different tiers of collateral types. Anyone in the world, you know, anyone with an Internet connection, I should say, is able to create new new books to borrow and lend. But ultimately, the the asset being used can be assigned a tear by the Euler Dow. So this is anyone in the world who was a member of the Dow, by holding the oil token, is able to assign and reassign and reassess. The risk tiers have certain collateral types. And then you can choose as an end user, if you want to stick to maybe the safest collateral types, or if you're willing to kind of dip into riskier collateral types. So, boiler, you know that that's a very high level explanation of the risk mitigation there. But all of that to say, we were very impressed with their combination of bringing in that risk management, while actually increasing the level of decentralization in terms of not only the access, but the ability to spin up new borrowing lending pools. So with that, I'll cut myself off and Breck would love your take on on all of that.
Breck Stodghill 28:07
Yeah. And so like even one thing that I think it's important to remember, when we talk about defined risk management is that defy didn't exist three years ago, it's super new. And, you know, I think things move so quickly in crypto, that the creation of compound feels like it happened so long ago, but in the grand scheme of things that happened two and a half years ago. And it's important to remember that these things will get, you know, things like risk, things like risk management will get better with time. And things like capital efficiency will get better with time. And to Sam's point, Euler is doing some really interesting stuff with allowing for isolated pools to contribute to better risk management across the protocol, such that if a given, you know, collateral asset doesn't do well. Other users that are potentially not exposed to that asset are actually not exposed. And so more broadly, I expect as more institutional players common start using define rather than just retail users, there will be products that come along to provide better risk management. And so we're excited on that front. But that's also to say that as the, as the space continues to evolve, there'll be other surface areas for risk. One thing that's top of mind is crushin. Defy is going crashing today. And there's a lot of risks that didn't exist on defy that was isolated to a single chain that will exist in a crashing environment. And so that will continue to happen. And as long as we're able to identify and support teams like Euler that are pushing, pushing risk management practices in a better direction, then I think we'll we'll be in a good spot. Ah,
Anita Ramaswamy 30:00
cool. Thank you. Yeah. So I want to zoom out a little bit and ask you about, you know, a question that's been on my mind, which is just that I imagine a lot of crypto founders these days, or engineers or early employees in startups have some significant portion of their wealth tied up in the crypto markets. And I guess just given some of the recent volatility and the downturn that we've seen in crypto prices, what do you do to sort of help some of these founders feel financially Stable, so they can actually focus on building their companies versus stressing about the market movements?
Sam Rosenblum 30:30
Yeah, I mean, obviously, that's going to impact everyone individually in different ways. And this is where, again, several members of our team have been working in this space full time for the better part of a decade. And certainly, Katie and I are coming up a couple come up on our 10 year mark soon, soon enough here. But we've lived and worked through this ourselves, right. And I think that goes a long way. And understanding, it's actually, there's so many different levels that that the volatility can can impact someone on. And it's, again, different for everyone. But generally, there's a there's a combination of, of course, there's there's financial and economic pieces, but then there's also slight like, literally the psychology, it can be really tough to be heads down working on something, especially when you're a founder, or an early member of a team. And you've got, you know, you've got a group of folks who are sort of looking to you for leadership and inspiration. And it can be it can be tough, especially as crypto winters tend to grind on. So you know, I'd say from, from our seat as investors, of course, it does give us a little bit of insight into the founders and the teams that we're backing and working with in terms of just how they are dealing with it, how they are leading their teams through it. But, you know, people tend to say crypto winters, it just raises the bar on all sides, it raises the bar for founders who are willing to, you know, leave maybe a steady job somewhere else and try to bring something new into the world. And it raises the bar for teams that are willing to go work on that and kind of stake their career and their reputation on it. So for us as investors, I think we just given the experience we have, and we literally have have been in that seat working through it. I think it does allow us to connect on that level in a pretty good way. And of course, when we are backing these rounds, or you know, potentially leading these rounds, a big part of what we try to come up with with the founders is what is the appropriate amount of capital to raise. And in the sort of cyclic cyclicality of of crypto. Generally speaking, when you're raising around right now, you want to be able to, to plan for at least a couple of years runway, if not more. So obviously depends on the stage of the business for the company or the project. But we are working through that and you know, making sure that folks are not raising too little or too much and kind of going in appropriate way there. Breck anything you'd add for, for how we're interacting with founders on this point.
Breck Stodghill 33:16
I mean, I think a lot of it, you hit head on the head. But it really boils down to communications a lot. I think of founders really, because they've taken the leap to maybe this is their first crypto startup or it's their second or third, they understand and are willing to put their career on the line for for division that they ultimately want to see happen. And they're, they're also best positioned to understand that we're at a time where, you know, engineers entering the space is at an all time high. We're now getting mainstream eyeballs from creators and other folks that previously hadn't even been interested or blinking at the idea of crypto. And so making sure to reiterate some of these like foundational core metrics that are moving and making us feel confident and where crypto is heading. And sort of detaching maybe some of the headspace or mindshare, from, where the market is moving, but you know, understanding and trusting that as more people come into this space and are actually building up things will continue moving, moving forward.
Sam Rosenblum 34:26
This is this is tends to be a really interesting, you know, example of like maybe history doesn't exactly repeat, but it tends to rhyme. And I've now been working in this space full time, you know, again since 2014. And you see the same kind of pattern every time and bull and bear markets, where in the bull market, people tend to be obviously excited and enthusiastic but they also tend to be willing to really make that leap. And you get a really big inflow not only of capital but maybe You know, as importantly, or more importantly, huge influx of talent, right? A lot of people are willing to come work in crypto for the first time, when things are looking really good and exciting and trending up into the right. And then the bear market, you to some extent, maybe you see some of those folks, some of that talent flow out, but really not not as much as you might think. So a lot of a lot of the bear market is it's like the people that decided to take that leap, you know, some number of months, or maybe even years ago, it now gets put to the test. And I mean, I can't speak for anyone but myself, but I certainly have found looking back at my career, some of the some of the highlights, or some of like, the really standout moments tend to be in those bear markets when when things are tough, and you have to just kind of push yourself to get through it. And it is an opportunity, I think maybe to put a silver lining to it, it's an opportunity for the ratio of signal to noise to increase, and again, helps sort of focus in on what really matters and you know, making sure you're spending your energy on the right stuff.
Anita Ramaswamy 36:09
Yeah, so I wanted to ask a question about your structure. Last that I heard you, you're structured as a traditional venture fund, but I think you might have said something about token Sam earlier. And I'm just wondering if you had expanded the mandate, if you're making investments and tokens directly or anything of that nature?
Sam Rosenblum 36:25
Yeah, we absolutely do. And we are, we are structured as, you know, sort of vanilla venture fund. And we are, you know, we started up in January. So with that, I am not a lawyer. And without going into the specific different approaches one might take to structuring a fund, generally speaking for venture funds that want to invest more than a certain threshold of their capital directly into non equities, so things like crypto tokens, you do potentially want to structure yourself as what's called an RA, a registered investment advisor. So we are not set up as an RA today. However, we do invest directly into non equity instruments, like crypto tokens and digital assets. So as a result, you know, we have a great legal team that will tell us if and when it makes sense to register as an RA. But because we just started up this year, we've got a little bit of time to figure that out still.
Anita Ramaswamy 37:29
Yeah. So I'm wondering about, you know, we've been talking a lot about the downturn and how it's maybe affected founders and how they're coping with that. But I'm curious about other VC firms specifically, like, do you feel like they're some of the other firms that are maybe not crypto native, like the more web two firms that started investing in crypto in the past year? Or two? Are they pulling back? Are they you know, slowing down? More so than then you would say you are?
Sam Rosenblum 37:54
Um, yeah, I can lead off here. And then Breck want to hear your thoughts? I'd say there's, there's two different kind of axes to look at this. So so one is just the type of investment strategy that a firm has in the first place. So that generally is like are you more short term oriented? And like an active trader? Or are you like on ventures long term oriented? You know, we've our we've got a 10 year fund, so we invest on a really long term orientation. So that's one and then of course, the other to your point, Anita is, are you a crypto fund exclusively or not? And I guess another piece of history, rhyming and bull markets, typically, when you have non crypto specific funds, both on kind of the active trading access and the long term access, getting more interested and digging around a little bit and starting to do deals in the crypto space. And then generally in bear markets, you see quite a bit less of that. So I'd say, you know, there certainly are non crypto specific funds out there that I would classify as true believers, or at least true enthusiast, and they are really excited about it. But for sure, there's a lot more generalist funds that are going to just be be in the space and want to be around when it's hot and exciting and maybe less so when it's not. So we we on ventures are exclusively long term investors. We don't do any active trading of of equity or tokens. And this is the only space that we invest in. And we're, of course, generalists within the crypto and web three space, but it's the only thing that we do and we're going to be doing it in in bull markets and bear markets and everything in between.
Breck Stodghill 39:36
Yeah, and maybe to restate something that I think is fairly interesting as someone who's an outsider, or someone who is new to venture is that now, given the last speculative cycle, there's a lot of money that I perceive as being on the sidelines, that is looking to be invested into crypto, which actually I believe tips the scales more in favor of founders that are looking to raise. And it means that as a venture investor in the space, we have to really compete with our peers to show founders why we're a fund that is worth, you know, partnering with. And I think that really, in terms of crypto native founders, it really leads them probably to, to want to work more closely with the funds that are set up to support them and have experience in crypto. And so I don't want to speak on behalf of other funds. But it's an interesting dynamic that I think is starting to play out. Now that we've entered into a little bit of a newer cycle, but there's still being a lot of fun, a lot of money on the sidelines, both in traditional venture and in crypto venture that needs to be deployed with crypto.
Anita Ramaswamy 40:47
Yeah, I guess on that? No. I mean, I'm curious how your LPs are feeling about the crypto market right now? I mean, is there still like a pretty big appetite for exposure to the space? Or have you seen your investors sort of are not necessarily just your LPs, but LPS more broadly become scared or lose interest given what's going on? Yeah,
Sam Rosenblum 41:07
so we, we wrapped up our fundraise at the beginning of the year. And, you know, very fortunately, we've got a tremendous group of, of LPs. And we really had clear communications with with all of them upfront that we expected that over the course over we're obviously investing this fund over some period of time, that's called the deployment period. So over the course of the deployment period, we were expecting to see the crypto cycle kind of come full swing, and now we've started to see that. So certainly, none of our LPS were surprised. And I will say, you know, we have pretty, pretty good regular communication, certainly with some of our core LPs. And they're, they're all as excited as ever Brex. And I actually were meeting in the bay with with one of our core LPs, just last week, and they, it's great. They have a ton of really relevant and really smart questions. They want to sort of understand where the puck is going. And yeah, they're staying really engaged. So I'd say this is one area where we probably, you know, I only have insight into our LP base, and not all all the other funds out there. But I think we're we're pretty fortunate in terms of the LPS that we have really being long term oriented, really believing in what it is we're setting out to do here. So we've not run into any issues with, you know, folks being spooked by the volatility or anything like that.
Anita Ramaswamy 42:41
Yeah, Brock, I'm not sure if you had anything to add there. But um, if you do, I just would love to hear your thoughts. Otherwise, I do want to move on to another topic.
Breck Stodghill 42:49
Yeah, no, no, just plus one more than everything else.
Anita Ramaswamy 42:53
Awesome. Yeah. So I want to make sure that we get to talk about regulation. It's a pretty hot topic right now. And obviously given, you know, Han ventures and your Genesis as a firm, one that you all have a pretty good insight into. So I'm wondering for us, specifically, what are some of your biggest concerns right now, on the regulation front? I mean, one thing I was reading about was, like all the major crypto exchanges currently being under SEC investigation. I know that some news that leaked a couple of weeks ago. So just want to get your thoughts on, you know, how do you think this is all going to end?
Sam Rosenblum 43:24
Well, I see how it's all going to end is a great question that I wish I had a crystal ball for. But I would say along the way, and where we're at today, we're actually pretty optimistic with the direction of this space becoming regulated in an appropriate way. And I guess yet again, to call back to just how much we've seen the space change since 2014. And even before that, where it turns out, there's a lot of a lot of benefits of having clear regulation and clear guidance on on what is sort of okay versus not. Now, of course, crypto evolves extremely rapidly. And it is really hard for regulation to keep up in real time. But we've got a pretty tremendous group of policy folks within on ventures, that that are, I think, doing a really, really solid job in keeping those lines of communications open with the appropriate folks, you know, legislators, lawmakers, etc. And just making sure that that regulation is coming from a well informed place. Because, you know, technology changes quickly, this is a cutting edge space. And frankly, it's not, it's not super usable to the extent where, you know, just any, any old person can figure out necessarily how to navigate this space on their own. So, these are all things that we try to lend a hand on, and I think, generally speaking, so we've got to make a tiller man who's our head of policy and Chris Lehane, or Chief Strategy Officer, these guys are just tremendously impactful, I think in not only how much they understand about the space, but their ability to communicate it and articulate the things that are going on and quickly evolving. So I think, you know, within the team, we try to spend quite a bit of, of energy and bandwidth on helping ensure that regulation takes shape in a in a constructive and appropriate way. But overall, I'd say we're pretty optimistic generally, just with the engagement that we're seeing, and the fact that folks, you know, in DC and around the world, are wanting to lean in and understand this. And I think there is now be a really key difference from 2014 2015. To today, there is now a much broader understanding of what crypto and web three enables, and you go back to 2014, and 2015. So, in some of my the work that I was doing back then leading our international expansion, I literally was going around the world and speaking with the Ministry of Finance in different countries, the central banks in different countries that the financial authorities and regulators. And the first thing I'd have, you know, in every agenda, the first one of the in those meetings, the first thing out of their mouths would be about Silk Road, and dark web, and all all of these, let's say inherently, you know, not necessarily positive things. Whereas today, people are asking about the Creator economy, and the empowerment of new economies, and all of these things that actually come out quite positive. So I think the those sorts of things just demonstrate it. So it's only been, I don't know how long you'd even say this, this ecosystem has been an industry truly. So it's been less than a decade that we've been in industry here. And the level of engagement and thoughtfulness that we're seeing from lawmakers and regulators, is actually really promising. So it's something that we feel pretty good about.
Anita Ramaswamy 46:56
I'm curious to hear your thoughts as well on how you're looking at regulation, when it comes to the advocacy side of things like, are you looking at this more from a perspective of advocating in the US? Or do you feel like you have sort of an obligation on us to the web three, community and ecosystem to advocate for, you know, smarter regulation, I suppose, on a worldwide scale?
Sam Rosenblum 47:17
Oh, yeah, definitely. The latter, we certainly are really engaged here in the US. And this is where we as a firm are based. But web three and crypto are obviously a global phenomenon. Right? So I do think there in the history of the space so far, there tend to be a few countries that are maybe like, leaning a little bit further ahead and wanting to be first mover's and wanting to really set set the tone and define what regulations ought to look like. And and other countries have been happy to maybe follow a lead or maybe just take into consideration those data points. But certainly, we are engaged globally. And we will spend time, I would imagine, you know, we'll spend end up spending time every year in different regions of the world, doing kind of what I what I alluded to earlier, engaging with lawmakers and regulators, and just making sure that we're, we are doing our part to help inform and educate where we can.
Anita Ramaswamy 48:21
I do have one big Oh, sorry, Greg, if you have something to add, I would love to hear your thoughts.
Breck Stodghill 48:27
Yeah, no, the only thing I was gonna add on top of what Sam said, is one of the really fun parts about the place that we're in is we get to do this alongside our portfolio companies. And some of the feedback that we've been getting across the board from conversations with regulators and lawmakers, is there's nothing no one better to speak to than the people that are on the ground, building, the future that we're moving towards. And I think it's a really, really good bidirectional relationship that we're helping cultivate, to bring regulators up to speed but also give founders that are that are at the cutting edge to be able to have the communication channels to help, you know, make more informed policy decisions. So just wanted to add that in there.
Anita Ramaswamy 49:09
Got it? Yeah, I just have one other sort of big topic I wanted to touch on. And then I have a couple of fun, like more rapid fire questions for the end. But my last big topic that I want to tackle and ask both of you about is I noticed a blog post that Chris had had published from your firm on decentralization and sort of the concept of web 2.5 companies versus web three companies. And I'm just curious if you can share a little bit of your thoughts on how important it is for a company to be decentralized and how you view that when you're making your investments.
Sam Rosenblum 49:39
Yeah, definitely. This is actually a super important topic that I think can be oftentimes maybe misunderstood or not not completely understood, which is obviously at the core of crypto and web three is this concept of decentralization and maybe even more specifically, this all stems from The invention of decentralized consensus in the first place, which was was the big breakthrough, a Bitcoin back in the day. But yeah, the idea of everything all the time always being decentralized is, is definitely not I think the world that we're trending towards, I think the fact that you have the ability to choose either as a developer or an end user, is the key thing here. And so you can imagine a world and the world that we are certainly investing into and trying to bring bring to life here, there's going to be a mix of some things are better done, fully decentralized. And again, things around consensus. Generally, we really love the idea of decentralized consensus, and everything that that makes possible. But then on the other hand, of course, you're going to continue to see centralized businesses bringing valuable products and services to the market. And we want we want to bring into a world where both of those things exist in parallel, and I think probably, you know, help each other quite a bit. So I think one of the common, I don't know if this is still common today, but certainly last year, one of the common criticisms that that we would see or hear would be like, you know, oh, so and so company is not even decentralized or so such and such company is actually a centralized API. So you know, how is the experience, even decentralized. And I think the fact of the matter is, not everything needs to be decentralized. But what we do love and maybe to draw the analogy of, say, like social networks, or social media, what we what we love is the end user having the ability to exit a centralized platform and bring all of their information and data with them. And so this is something that, you know, you can imagine in the web to social media era, being D platformed. Or even just deciding to leave a certain platform that's centralized, you don't have an ability to take your social graph with you. But in crypto and web three, the social graph itself that's being built on top of is open and can therefore be kind of ported from one centralized platform to the next, whatever, however, the user chooses to do that. So we think decentralization is super important, but it's not needed for every step in the user experience. And then tying this back and back, maybe if you want to say something about Chris's essay, in terms of Decentralized Governance, and you know, when that's appropriate versus not.
Breck Stodghill 52:37
Yeah, totally. And I will also just jump in and say quickly, like, I think the question at hand really boils down to like, when and where does that centralized decentralization matter? Likely, no, it's not always the case. Likely decentralization is more important for properties like censorship, resistance. And things like that, when you go further down the stack, you want to have a credible neutral, credibly neutral, like base layer, but then on top, it's okay for there to be, you know, more levels of permissionless. And I actually tend to think, and trade off decentralization and scalability and UX and these sorts of things, kind of like I would trade off what technologies I might use in a conventional web to stack. You know, there might be reasons for using Google Cloud over AWS. And ultimately, it's up to whoever's building the product, to be able to make those decisions and, you know, articulate those to the users so that they're able to be informed and choose what, you know, defy app they'd like to use, or what layer one blockchain they want to, you know, build on or use. And so I think we'll find more often than not, that we're moving into as a design space for general crypto in general, where decentralization for some people is extremely important. And for others, it's not. Or maybe it's even a spectrum, and that's totally okay. And that there will be trade offs to be made. But ultimately, choice is the important factor here that maybe was more limited in a more web to environment where you actually don't have the choice. And by default, the solutions or products that you use are, are centralized walled gardens.
Anita Ramaswamy 54:25
Thanks. Thanks for those thoughts. It's definitely a big topic. And there's a lot going on there. But I just want it to end given that we have a couple of minutes left here with a few rapid fire fun questions, if that's alright, with the two of you. The first one I want to ask is, you know, there's been a lot of like, it's been fun to see the crypto community come together and meet up in you know, these events and conferences in person. So what's the most fun or like one example of a fun crypto event that you've been to recently? Yeah.
Breck Stodghill 54:54
Well, so we actually Chris and I just got back from UCC, which is One of my personal favorite conferences. I mean, it's summer in Paris, and who doesn't love Paris in the summer. But be it's a conference that is fairly saturated with engineers and developers, which I tend to be a community that I really, that really resonates with me. And so rather than, you know, there's a lot of conversations that are like really deep, technical and nerdy. And that's the kind of stuff that I like to nerd out on. And so that's, that's, that's one of my favorites is ECC, and definitely recommend anyone who wants to get a little bit closer to the builders are doing in the space, and specifically, not just within the Ethereum community, but with an adjacent communities. ECC is a really great one.
Sam Rosenblum 55:43
Yeah, definitely. I echo that I think we try to be thoughtful about which events we do go to. And obviously, in crypto, there's a pretty wide spectrum of maybe how, how technical versus how, like, yeah, maybe how technical versus how social a certain conference, maybe it's setting out to be. And both of those things are important, but of course, in balanced with with each other. So yeah, I think as of late, those have been some of the great ones and seeing the seeing the developer communities that are forming around some of these ecosystems, and some of them that span multiple ecosystems. So that's all really exciting stuff. And I guess in our closing minute of rapid fire here, we can give a quick plug that we will, will be at the Stanford blockchain conference, I think next week, so if anyone if anyone is, you know, in the space is going to be attending, feel free to hit us up.
Breck Stodghill 56:40
Yeah, our DMS are open.
Anita Ramaswamy 56:42
Awesome. Yeah. You You know where to find them on on Twitter. But um, last question for you guys. So we obviously all probably spend a lot of time on crypto Twitter and in various discord, chats and everything, but outside of crypto and web three, what is a book or movie or a TV show that you've really enjoyed recently? It can be something fun, like guilty pleasure, maybe.
Sam Rosenblum 57:02
Oh, man, I've got one. I've got a show that I was watching last night. So the show is called Hawks. And I'm on season two, I'm not all the way down. So don't spoil it for me if you guys are further ahead. But yeah, it's just a really hilarious show about like, an older comedian and a younger comedian, kind of banding banding together and having shared adventures. So that that one always makes me laugh. And then favorite movie, I guess I go go to the movie theater a little bit less often these days. But one that I did make sure to go to the theater and catch was the Top Gun sequel. Top Gun Maverick. And if you want to be laughing and happy and excited and also like tearing up a little bit, I would highly recommend catching Top Gun Maverick.
Anita Ramaswamy 57:52
Awesome. Yeah. I don't know if Brett, do you have any any favorites to add there?
Breck Stodghill 57:56
Yeah, sorry, I was unmuting. Or trying to try to unmute. Movie wise, I recently watched Coda on a plane and was doing like, simultaneously crying and laughing hysterically on the plane, which was probably super annoying for all the people in the aisle. But if you haven't seen coda, definitely recommend it. And then book wise, I historically not been much of a like, fiction reader, like usually like will be, you know, things related to crypto. But I've tried this year to read a lot more fiction stuff. And as a part of that got into the dune trilogy, actually, as a recommendation from Sam back, you're like a member? Yeah. And I freaking love it. And, you know, it's a long book, but it's really, really good and recommend if anyone really liked the movie, but wants to learn more about the world. Like definitely read the book before the second movie comes out, because it's much better. So I'll play did
Anita Ramaswamy 58:54
awesome. Yeah, I haven't read it. But it sounds like a good pick. Definitely always looking for non crypto things to read, too. But yeah, thank you so much, both for your time. This was a really fascinating conversation. I feel like there's never quite enough time to talk through everything going on in the world of crypto startups. But just wanted to say really quickly before we end here, for anyone who's listening today are only caught part of the conversation. We're also going to be posting it as part of our crypto podcast at TechCrunch chain reaction. We put out new episodes on Tuesdays and Thursdays. So be sure to check that out on your favorite podcast platform. And you can also follow us on Twitter at chain underscore reaction. So yeah, thanks again, Sam and Brack, this was a really great conversation.
Sam Rosenblum 59:33
Thanks for having us, NATO. This is awesome.
Breck Stodghill 59:36
Yeah, thanks so much.
Lucas Matney 59:39
We'll be back every week with interviews with the experts in the web three space. Catch Anita, Jackie and myself every Thursday for the latest in crypto news. You can keep up with us on Spotify, Apple Music or your favorite pod platform and subscribe to our companion newsletter also called chain reaction. Links to the newsletter and more from our guests can be found in our show notes and be sure to follow us on Twitter at chain underscore reaction
Anita Ramaswamy 1:00:01
chain reaction is hosted by myself Anita Ramaswamy along with my co host, Lucas Matney and Jackie melanic. We are produced by Yashad Kulkarni on our associate producer is Maggie Stamets with editing by Cal Keller Bryce Durbin is our Illustrator Alyssa stringer at leats audience development and Henry pika that manages TechCrunch is audio products. Thanks for listening and see you next week.