Disclaimer: The views in this podcast do not represent the guests’ organizations, and the mentioned projects are not investment advice. Sip some boba, enjoy afternoon tea, and let’s chat Web3! 🍵🌐💼 DYOR!

Elva: What's one of your favorite Boba shops in the Bay?

Miko: I really like Teaspoon. An interesting fact I discovered is that Berkeley, California has the highest density of Boba shops in the world, even exceeding Taipei.

Elva: With GCC's involvement in early-stage investments in several unicorns, what key indicators do you consider vital when assessing startups for investment opportunities?

Miko: When considering startups for investment opportunities, the core of GCC's evaluation gravitates towards the founders. Their unique characteristics, which encompass more than mere pattern recognition, are pivotal. It's noteworthy that many successful web two unicorn founders hail from international backgrounds, hold advanced technical degrees, and despite the misconceptions, aren't necessarily from pedigree universities. In fact, the quintessential unicorn founder is a serial entrepreneur, aged around 35 to 40, who has surmounted significant life challenges and has achieved commendable heights in their domain.

A nuanced understanding of a founder's personality traits is indispensable in our evaluation process. We keenly seek founders who possess a harmonious blend of openness, which suggests adaptability, and disagreeableness, indicative of robust conviction. Additionally, there's a valuable balance to be struck between a bottom-up approach, which tends to yield quick results, and a more strategic top-down methodology. Intriguingly, we've observed that a history of residing in diverse places during early childhood often translates into an enriching attribute for potential founders.

However, it's not merely about their characteristics or background; the essence lies in the founder-market fit. Delving deeper into their motivations is crucial. Entrepreneurs who genuinely resonate with their customer's challenges, those who feel the pain and strive to alleviate it, are particularly captivating for us. Such individuals, fueled by profound motivations, are typically driven to address and solve significant global issues, showcasing them as truly aspirational figures in the entrepreneurial realm.

Elva: Since OpenSea has become a significant player in the NFT space, where do you see the future of NFTs heading?

Miko: Our historical perspective on our investment in OpenSea was based on the belief that the NFT market would prefer a consolidated leader—a "winner take all or winner take most" market. The rationale is that consumers desire a one-stop-shop where they can access any NFT from any blockchain at any time, a role that OpenSea is filling.

The emergence of NFTs essentially represents the development of an internet protocol for digital permanence, a public ledger of digital assets that are permanently recorded. This innovation is compelling as it didn't exist before, and the excitement for NFTs' future lies in valuable IP and content that can be immortalized within this digital framework.

In the early stages, NFTs have been characterized by playfulness and a certain "degeneracy" in culture, with examples like CryptoPunks, Bored Apes, Meebits, and Pudgy Penguins. However, looking ahead, we anticipate the creation of native, multigenerational, four-quadrant transmedia franchises that are built on an open-source model. Unlike traditional open-source projects which don't typically have a monetization aspect, NFTs introduce a valuation model, a monetization mechanism, a method for value transfer, and create scarcity.

Another exciting aspect is the potential for derivative IP, especially with the advent of generative AI. This technology offers immense opportunities for creative output, allowing for the ownership of base IP and licensing opportunities for derivative works. With AI's help, derivative IP rights holders could monetize and create dynamic and exciting variations of the base IP.

The future seems to be moving towards a state where a database of internet-permanent, scarce digital objects will be matched with high-quality content and characters deserving of such permanence. While many initial NFT projects may be more of a transient cultural phenomenon, the goal is to establish community-owned, internet-native IP that can outlast and outshine centralized corporate IPs, potentially creating characters and stories with significant longevity.

Elva: How do you see the convergence of AI and blockchain technologies?

Miko: The initial intersection of AI and blockchain technologies was somewhat underwhelming, appearing as a mix of buzzwords designed to capitalize on funding trends. However, fundamentally, AI acts as an accelerant to the current power structures, favoring centralized entities like big tech companies that control vast amounts of data and computational resources, and inherently tends toward centralization and power concentration.

Conversely, blockchain and cryptography are about decentralizing power. AI's tendency to say "probably" or "maybe" when faced with ethical dilemmas, like using data it finds online, contrasts sharply with cryptography's definitive "no." Cryptography enforces boundaries and consent, acting as a mechanism for prohibition and enabling user consent for data usage.

The discussion around code being law is not entirely accurate; law is law, but code establishes rules—it's lawful. Code can be designed to behave chaotically or predictably, reflecting our choices. Blockchain, in particular, enables orderly interactions and consent, establishing clear ownership and transfer of assets through cryptographic custody and smart contracts. However, when things go awry, such as with criminal hackers, that's when actual law steps in to resolve issues.

The integration of AI and blockchain points to a brighter future where power is not solely centralized in the hands of a few corporations but is distributed, maintaining a balance with societal needs. These two foundational technologies, AI and blockchain, are both critical for constructing the infrastructure of the future, ensuring an unimaginable potential for growth and development within the technological and social fabric of our world.

Elva: How do you think the play to earn models like YGG are reshaping the gaming industry?

Miko: Play to earn models like YGG are challenging traditional gaming dynamics by prioritizing economic incentives within gameplay. While this concept moves away from gaming as purely a source of entertainment, it represents a shift towards recognizing gaming as a potential income source. However, the true gaming experience should not be equated to labor, suggesting that balance is necessary. As AI advancements potentially increase leisure time significantly, the demand for entertainment, including gaming, is expected to rise. This could lead to a substantial shift in how games are both played and financed. Microsoft's investment in AI and gaming powerhouses like Activision Blizzard is a strong indicator of AI's evolving role in reshaping the industry. Blockchain technology, introduced in play to earn models, addresses more industry-centric problems than those of gamers, heralding a transformation similar to that seen with the rise of free-to-play games. Despite initial resistance, as with any disruptive technology, the eventual integration of Web3 concepts is likely to bring about broad and beneficial changes to the gaming landscape.

Elva: Do you have any advice for Web2 game designers who are finding it challenging to pivot to Web3 games and become Web3 native?

Miko: It's not essential for Web2 game designers to strive to become Web3 native during this awkward, transitional phase in the industry. Web3 gamers represent a small, unique group, and the majority of gamers still operate within the Web2 space. The focus should be on integrating Web3 technologies effortlessly rather than on adopting Web3 cultural fluency. Innovative solutions like claimable social media wallets and gaming wallets are making it easier for Web2 designers to harness the power of Web3 without the complexities. Web3 infrastructure providers are now offering tools that maintain Web2's ease of use while bringing in the advantages of Web3, such as enhanced custody, privacy, and decentralization. The objective should be to leverage these technologies seamlessly, without the burden of a steep learning curve. Since the bulk of gamers and revenue remains in the Web2 realm, that's where the emphasis should lie. Therefore, for Web2 designers, it's more about utilizing the tools at their disposal to enhance their games with Web3 capabilities rather than undergoing a complete cultural shift.

Elva: What are the common challenges startups face when raising venture capital and how do you guide them through these challenges?

Miko: Raising capital is a critical entrepreneurial skill, crucial in both bear and bull markets. It's closely tied to the ability to tell a compelling story, which is a must for any effective CEO. They must be adept at conveying both the quantitative and qualitative aspects of their business.

To assist our portfolio companies in overcoming fundraising challenges, we've honed our expertise in guiding startups through successful funding rounds. We focus on crafting exceptional pitch decks and provide warm introductions to our extensive network of over 600 venture-class coin investors. Through these connections, we facilitate clear communication channels between founders and VCs, clarifying cryptic messages and intentions, which is invaluable in understanding where VCs stand in terms of funding a deal.

Our approach begins even before our initial investment, considering how a startup will appeal to later-stage investors like Andreessen Horowitz or Blockchain Capital. We assess a founder's pitch not only for our own investment decision but also for their ability to raise future rounds. Access to capital is a lifeblood for young companies, often determining their survival or failure.

We also guide startups on operational aspects that affect fundraising, such as helping them understand the market's expectations regarding financial projections, customer counts, MOUs, revenue, ARR, DAU, MAU, and other critical metrics. By working backwards from these industry benchmarks, we drive execution towards milestones that will enable founders to raise capital at higher valuations effectively. Our goal is to position these companies optimally, so they're well-prepared to seize market opportunities and outperform their competitors.

Elva: Have you been involved in incubation, or is your focus mostly on investment?

Miko: Our involvement with startups toes the line of incubation, but we haven't fully committed to that role yet. We understand that incubation is a complex process, and we're cautious about the boundaries, particularly regarding the origination of ideas. We believe there's a profound connection between founders and their ideas, which should remain inviolable.

We avoid the venture studio model, where VCs generate and incubate their own ideas, as we firmly believe in finding entrepreneurs who are deeply bonded with their own concepts. However, we're actively engaged in supporting very early-stage entrepreneurs by providing initial funding and comprehensive assistance with hiring, legal structure, service provider introductions, and even securing operational resources like Amazon credits.

While we're not a formal incubator, we do many things that an incubator would do. We write exceedingly early checks and support startups from the idea stage, assisting with everything from early hires and co-founder matchmaking to legal setup. Our managing partners have extensive operational experience, having founded, scaled, and exited companies, which allows us to offer substantial help to first-time founders in need of guidance.

As to whether we will officially announce ourselves as an incubator, that might be a consideration for the lifecycle of our next fund. Currently, we don't declare ourselves as an incubator, but the level of value we add could potentially lead to a more formalized incubation role in the future.

Elva: Where do you see the most significant potential for innovation in the blockchain space over the next years or decades?

Miko: I believe the most exciting potential for innovation lies at the intersection of on-chain and off-chain computation. My interest is piqued by the concept of not just trustless systems but those that minimize trust. Our current societal infrastructures, like Bitcoin, are based on a design of zero trust. This contrasts with much of Web2, which operates on the premise of trusting a single party. The shift from zero trust to one party trust drastically improves efficiency—as seen with Bitcoin's seven transactions per second versus potentially millions with a trusted database.

The innovative space I foresee is in systems where you trust a few parties—say, one primary party and two auditors—creating a network that's more trustworthy together than any single entity alone. This configuration offers scalable and trusted computing without the extreme stance that no one can be trusted.

The future I envision involves solving major trust issues by creating various trust solutions with different levels of trust and computing arrangements. Given that many institutions have failed to maintain public trust, leading to widespread institutional distrust, addressing these trust issues is critical. By solving trust problems with a multitude of customized, cryptographic solutions, we have the opportunity to fundamentally improve the foundational infrastructure for human societal advancement.

Cryptography's role in this is to offer mathematical and quantifiable reasons to believe in systems, as opposed to relying on personal trust in individuals or organizations. This approach to building trust can revolutionize the way we interact and transact, offering a new era of security and reliability in digital and potentially real-world applications.

Elva: If you could travel back to two years ago, what action would you prioritize or what events would you choose to avoid?

Miko: Reflecting humorously, if I could time travel back two years, a tempting action would be to make certain trades around FTX, given it was a seismic event for the industry. But, I recognize that's a somewhat disingenuous answer, as it leans towards economic gain. If we delve into the essence of time travel, beyond the financial implications, we'd likely confront the challenge of whether or not we could meaningfully alter the course of history. Fiction often depicts time travelers trying to avert major crises or wars unsuccessfully, suggesting that such attempts may be futile or even cursed.

However, in a more serious vein, with the power of hindsight, one might aspire to engage in noble endeavors—like trying to prevent conflicts that have since emerged. These actions would arguably be of greater importance than personal economic benefit. It's a deeply open-ended question that reveals a lot about a person's thought process based on how they respond.

Elva: Are there any philosophy books or thought leaders you would recommend?

Miko: I'm an advocate for "Plato's Republic," which has regained profound relevance today. It documents the historical conflict between democracy and authoritarianism. Surprisingly, Plato sides with authoritarianism, a perspective borne from witnessing democracy's failure to oligarchy in ancient Greece. "The Republic" offers an interesting dialogue on governance, introducing the concept of a 'philosopher-king' as the ideal ruler—a subject that resonates with modern debates on the effectiveness of democracy versus authoritarianism.

The book is also notable for containing the Allegory of the Cave, which explores themes of reality and perception that parallel modern discussions about simulated realities, such as those depicted in "The Matrix." I believe "The Republic" is an undervalued work of philosophy that is incredibly pertinent to our times. It's a dense read, but one that I find to be extremely insightful and, incidentally, it may serve as an effective sleep aid due to its complexity.

Elva: Why do you enjoy open-ended questions?

Miko: Open-ended questions are intriguing because they provide a wide lens into a person's mindset, which can be quite revealing and predictive of their future behavior. Although they can sometimes be confusing, these types of questions can offer deep insight. Understanding a person's mindset gives you a strong indicator of how they might act in the future.

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