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Crypto, the Midas List, and democratizing VC with Delian Asparouhov and Mel Williams | E1952

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Crypto, the Midas List, and democratizing VC with Delian Asparouhov and Mel Williams | E1952

David Weisburd intros Mel Williams, Delian Asparouhov, and Jason Calacanis (00:00:00)

  • Jason Calacanis is back in the Bay Area and feeling productive.
  • He has hit his target of funding four companies and is now investing about a million dollars a month in about 100 companies.
  • He has also added three researchers and analysts to his team.
  • David Weisburd is at Al Edon's annual meeting.
  • Delian Asparouhov will face the challenge of managing his success and deciding what to focus on as he becomes more successful.
  • Jason Calacanis has spent the last five years focusing on what he enjoys and what moves the needle for his goals.
  • This week's podcast is sponsored by OpenPhone, Coda, and Northwest Registered Agent.
  • Mel Williams is the co-founding General Partner at TrueBit Capital Partners, which tracks the Midas List and is a top Venture Fund of Fund.
  • Delian Asparouhov is a partner at Founders Fund, founder of Varda, and recently announced a $90 million funding round for Varda.
  • He also has a five-month-old child.

WSJ reports that top crypto funds are back in the market (00:03:46)

  • Crypto funds, such as Pantera Capital and Paradigm, are raising significant funds despite the recent market downturn.
  • Founders Fund, with a long-term investment approach in crypto since 2014, hired Joey Krug, a former CIO at Pantera Capital, during the market's lowest point in late 2022.
  • Unlike other top-tier investors, Founders Fund gave LPs control of their equities during the market downturn.
  • Institutional investors, like Mel Williams' practice, have been actively involved in the crypto sector since 2016 and view it as an attractive investment opportunity.
  • The crypto market has expanded beyond Bitcoin, offering a broader range of legitimate investment opportunities.
  • The market has evolved with a broader investor base, including high-quality institutional investors and retail investors through Bitcoin ETFs.
  • Real revenue-driven use cases, such as Bitcoin for payment and Ethereum for smart contracts and NFTs, are being developed on the blockchain.
  • Staking tokens like Lido and ETH2 are generating significant revenue.

OpenPhone - Get 20% off your first six months (00:09:38)

  • OpenPhone is a business phone service that simplifies business communications with an easy-to-use app.
  • It offers features such as shared phone numbers, multiple employees fielding calls and texts, and instant replies.
  • OpenPhone is the number one rated business phone on G2 for customer satisfaction.
  • Twist listeners can get an extra 20% off any plan for the first 6 months at openphone.com/Twist.
  • OpenPhone can port existing numbers from other services at no extra cost.
  • Delian Asparouhov and Mel Williams discuss the democratization of venture capital (VC) through blockchain technology.
  • Traditional VC is often exclusive and inaccessible to many entrepreneurs, especially those from underrepresented backgrounds.
  • Blockchain can enable the creation of decentralized VC platforms that are more inclusive and transparent.
  • These platforms can allow anyone to invest in startups and provide entrepreneurs with access to funding and mentorship.
  • Asparouhov and Williams believe that blockchain has the potential to revolutionize the VC industry and make it more accessible to a wider range of people.

Jason's proposal for a "sophisticated investor test" for crypto investments (00:10:54)

  • Jason Calacanis views Bitcoin as a unique global store of value comparable to gold, having proven its worth over the past 15 years.
  • Calacanis criticizes many crypto companies and individuals, describing them as a mix of incompetent, criminal, delusional, and fraudulent individuals.
  • He proposes a "sophisticated investor test" to allow individuals to invest in crypto after passing a knowledge assessment, creating a safer environment for both investors and projects.
  • Calacanis suggests different regulatory rules for small, medium, and large crypto projects, with varying levels of oversight and protection for investors.
  • He expresses concerns about potential legal issues arising from investing in companies that engage in questionable practices, such as dumping tokens on retail investors.
  • Calacanis emphasizes the need for a clear regulatory framework in the crypto space to facilitate safer and more transparent investment opportunities.

The limitations of current SEC regulations and the potential political impact of crypto regulation (00:17:05)

  • The crypto market requires regulation to eliminate bad actors and attract institutional capital.
  • Bitcoin has the potential to reach a market capitalization of $8 trillion, half of the current gold market cap.
  • Polymarket, a prediction market platform that faced regulatory action and was banned in the US, should be allowed back in the country.
  • The SEC's regulations on venture capital funds limit the participation of non-accredited investors, hindering the democratization of venture capital.
  • Tokenizing venture capital funds would facilitate easier trading and democratize access to venture capital investments.
  • The public's desire to participate in sophisticated alternative investments is restricted by current regulations.
  • Regulations prioritize solving unnecessary problems, such as protecting middle-class families from financial losses, while ignoring the opportunity cost of excluding retail investors from alternative investments.
  • The limited capital available to private companies compared to public markets increases the cost of capital for startups and disrupts innovation.
  • Tokenizing funds could democratize venture capital and allow retail investors to participate in alternative investments, but it requires a bold fund to initiate the move.
  • Some top 10 firms may tokenize their funds in the next 10 to 15 years, particularly if they disagree with the politics of educational endowments.
  • Tech-enabled platforms like RaaS provide high net worth individuals with access to previously inaccessible venture capital alternatives.
  • These platforms act as brokers, offering retail investors access to top-tier assets that may have been previously unavailable.
  • This trend represents a step towards democratizing venture capital and making it more accessible to a broader range of investors.

Coda - Get a $1,000 startup credit (00:26:03)

  • Koda is an all-in-one collaborative workspace that combines the best of documents, spreadsheets, and apps.
  • It allows users to manage tasks, send automated reminders, track growth, and generate charts.
  • Founders University uses Koda to manage weekly updates and track the growth of startups in their 12-week program.
  • Koda offers a limited-time offer of a $1,000 credit for startups.

AI spend is up across the board in 2024 (00:27:21)

  • AI spending is increasing across all company sizes, but the number of new customers investing in AI has plateaued.
  • Non-tech sectors, such as consulting, professional services, financial services, and healthcare, are driving the fastest growth in AI usage and spending.
  • Narrowly specific AI tools for particular industries and use cases are dominating the market, rather than broad tools like ChatGPT.
  • AI is expected to reduce headcount and increase productivity, enabling smaller teams to build larger companies.
  • The gap between OpenAI and other open-source and competitive providers has narrowed in recent years, while the gap between the revenue of legal AI companies and the rest of the market is shortening, raising questions about the durability of margins.
  • Sort Health, a multi-billion dollar company providing tech-enabled physical therapy, is one of the most extensive AI rollouts in healthcare.
  • The best AI companies in the portfolio are those that were already using AI and have become more efficient with it, rather than those that brand themselves as AI companies primarily for fundraising purposes.
  • TrueBridge Capital, founded in 2007, has seen several market cycles and approaches portfolio construction by giving fund managers the decision rights on which sectors to invest in, avoiding sector-specific bets.
  • AI has attributes of both software and hardware, but it's unclear which direction it will head in.
  • Delian Asparouhov and Mel Williams believe that AI use cases that require hundreds of millions of dollars are the ones that will create value, while those with no barriers to entry will be commoditized.
  • A moat is necessary for long-term success in AI, and it's rare to find one beyond distribution, brand, network effects, capex, and cost of capital.
  • The best AI entrepreneurs are those who can think academically in a structured way about computer science and math problems.
  • Distribution is also a key factor in AI success, as evidenced by the rapid growth of OpenAI's ChatGPT.
  • AI companies are analyzed using the same categories as non-AI companies, including distribution, cost of capital, and capex.

Crypto, the Midas List, and democratizing VC with Delian Asparouhov and Mel Williams | E1952 (00:00:00)

  • Delian Asparouhov and Mel Williams join Jason Calacanis to discuss crypto, the Midas List, and democratizing venture capital.
  • Delian Asparouhov is a partner at Placeholder VC, a crypto-focused venture capital firm.
  • Mel Williams is the founder and CEO of Cinneamhain Ventures, a venture capital firm that invests in early-stage technology companies.
  • The Midas List is an annual list published by Forbes that ranks the top 100 venture capitalists in the world.
  • Delian Asparouhov and Mel Williams were both named to the Midas List in 2022.
  • Delian Asparouhov and Mel Williams discuss the importance of democratizing venture capital.
  • They believe that the current venture capital system is too exclusive and that it needs to be opened up to more people.
  • They are working on several initiatives to democratize venture capital, including:
    • Creating a new platform that will allow anyone to invest in venture capital funds.
    • Educating people about venture capital and how to invest in it.
    • Supporting underrepresented founders.
  • Delian Asparouhov and Mel Williams discuss the future of crypto.
  • They believe that crypto is still in its early stages and that it has the potential to revolutionize many industries.
  • They are excited about the potential of crypto to democratize finance and to create a more inclusive economy.

GPT-4o demos and the rapid commoditization of AI technology (00:41:01)

  • The commoditization of AI technology, exemplified by open-source models like GPT-4, is rapidly transforming the tech industry.
  • Despite the versatility of open-source AI models, user experience and deep understanding of specific consumer bases remain crucial for successful applications.
  • The convergence of democracy, capitalism, efficient capital markets, and technological advancements creates an ideal environment for massive innovation and potentially successful venture capital investments.
  • Startups can optimize costs and performance by leveraging the flexibility of open-source and paid hosted AI products.
  • Many jobs can be accomplished with existing and upcoming AI technology, encouraging entrepreneurs to adopt these tools for their ventures.
  • Open-source software and cheaper storage options are revolutionizing the tech industry, potentially making founders more capital-efficient and reducing the need for traditional venture capital funding.
  • AI-powered companies may prioritize lifestyle businesses over generating massive venture returns, while reindustrialization of the United States and physical world activities may become more attractive investment opportunities.
  • AI's capabilities can significantly reduce the cost of starting a company, transforming the economy and leading to more businesses and problem-solving ideas.

The impact of AI on the economy (00:48:29)

  • Delian Asparouhov, a venture capitalist, advocates for democratizing venture capital and making entrepreneurship more accessible.
  • Asparouhov's Founder University program provides early-stage entrepreneurs with education, mentorship, and funding.
  • Asparouhov believes AI will revolutionize venture capital, especially at the seed stage, reducing costs for entrepreneurs to build and launch companies.
  • Asparouhov and Mel Williams discuss democratizing venture capital through micro-funds, which invest small amounts in numerous startups, offering significant returns if a few succeed.
  • Micro-funds challenge traditional venture capital models, confusing limited partners (LPs) accustomed to conventional investment approaches.
  • Asparouhov suggests ignoring LPs' confusion and focusing on micro-funds' potential returns.
  • Venture capitalists should provide LPs with varying levels of information about startups in micro-funds based on their sophistication and risk tolerance.
  • Venture capitalists should lead the effort to educate LPs about the future of venture capital and help them understand new investment models.

Immigration and its impact on the startup ecosystem (00:55:43)

  • The speaker proposes a two-pronged approach to immigration: increasing legal immigration and decreasing illegal immigration.
  • The "Global Recruitment" program would attract skilled workers from around the world to fill the country's needs.
  • Silicon Valley should take a stronger stance on immigration issues, especially H1B visas, given the high number of foreign boards in top companies.
  • Increasing legal immigration would benefit the country by allowing more skilled individuals to contribute to society.
  • Canada and Australia's successful points-based immigration systems could serve as models for the United States.
  • The current political climate in the United States is polarizing and distracting from important issues with broad consensus, such as immigration, cannabis, gay marriage, and abortion.
  • Elon Musk's acquisition of Twitter has had a positive effect by encouraging people to share unpopular opinions and fostering a more open environment for discussions.

Self-censorship and the importance of a free society (01:06:11)

  • The speaker discusses the importance of free speech and the dangers of self-censorship.
  • They give examples of how they have self-censored in the past due to fear of retaliation or negative consequences.
  • The speaker emphasizes the importance of free speech for the progress of society and the marketplace of ideas.

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