EB85 – Adam Draper: Accelerating 100 Bitcoin Startups With Boost VC

Transcript

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Bitcoin, the show which talks about the technologies, projects, and startups driving decentralization and the global cryptocurrency revolution. My name is Sebastian Cuchio and my name is Brian Fabian Crane. We're here today with Adam Draper. Adam is the founder of Boost VC. Probably many of you have heard of Boost VC. It's been it was the first accelerator just focused on Bitcoin startup and it has sort of taken on an important role in the Bitcoin ecosystem. So, thanks very much for joining us today, Adam. Thanks for having me. I'm really excited to be here. This is a really really great thing you guys are doing. Yeah, thanks. I mean, we've actually had some people before on who were um in the accelerator, although maybe Flavian is the only

one, but um I'm sure there's going to be some more in the future. Anytime you want an intro, let me know. We have 47 others who could be a part of it. Um actually, no, that before we get into topics, we had we did the one the lightning episode, right? So, there's the mirror guys. Oh, great. they were part of there too. Yeah. So, um, Adam, well, tell us a bit. How did you get into Bitcoin originally and how did you end up deciding to start an accelerator? Yeah. So, uh, f first I'll I'll just say hi, I'm Adam Draper, uh, founder and managing director of Boost VC. Uh, and our our first Boost VC, it's

an accelerator. It's a three-month program where we provide housing, office space, and we invest in startups that are focused around uh the Bitcoin industry. Um, and we've we've had that focus for about two and a half years. We've recently added an additional focus of virtual reality this session. Um, and we bring everyone to Silicon Valley. Uh, and we really just build a network and a community of investors and entrepreneurs around them over the course of three months. Program builds towards a demo day. on demo day they get to present in front of a large amount of investors 150 200 investors um to ideally attain funding so my story about Bitcoin is uh it's unique in a couple ways one is um

first time I ever heard about Bitcoin was actually from the CEO of Coinbase three years ago um almost to the day probably it's it's like so it would have been early August uh three years ago and I met with him at a coffee shop because I I had read this summary of what his company did and it said digital currency marketplace and uh that was like how he was defining his company. Um and and so I met up with him and he pitched this great story about uh how this digital currency concept uh which is called Bitcoin uh is going to help revolutionize the world. And what I really pulled from that was the idea that there would be this uh meta

currency or a currency that lies on top of all other currencies so that you never have to transact uh you never need to cash out of a currency while you like travel the world or um and more than that what was really I liked I liked that concept like a global currency but I also loved the idea that uh well loved it was a strong word but I I really uh it I thought it was really cool. Cool is not the right word either. Interesting that in 2011, Bitcoin had gone from uh $30 per Bitcoin to $0 per Bitcoin because of that crash.

I found because at that at the time I was speaking with Brian Armstrong at at Coinbase, the price of Bitcoin was already about $15 per Bitcoin again. Um, and that to me made me feel that there was a passionate community of people who really wanted this to exist. Um, and that that's a really great indicator of some form of technological uh evolution or revolution, one or the other. Um, and so my so my early days of uh Bitcoin, so I ended up investing in Brian um more than anything more I wasn't even I wasn't a crazy expert on Bitcoin. I had just learned about Bitcoin from Brian. I

ended up uh investing because Brian was is this three years ago he had just left Airbnb. Uh he was one of the first hundred employees at Airbnb and which was known to be a rocket ship company. And he was leaving this company that was probably valued at about a billion dollars to join a market that in total uh was $200 million the entire marketplace. So he was trying to jump into a market and it's impossible to own an entire market. And so I was thinking either this guy is absolutely insane or uh he knows something I don't. And so I uh ended up really uh being enthusiastic about Brian and that was my first foray

into Bitcoin. What ended up happening 6 months later was uh well about 2 weeks later after I invested in him, I founded Boost. We were not focused on Bitcoin at that time. Uh we did an entire session just to making sure that the wheels stayed on the ship uh while it was moving at 1,000 mph. And then uh you know our first session went really well. Six of the seven companies raised additional money. It went great. Uh in between the first and the second session, we were trying to figure out what technology we really really wanted to throw our weight behind. And um Bitcoin kept coming up and we realized that there were only five Bitcoin companies 2 and a half years ago that anyone could list on their hand. So this was January, February

2013ish, something like that. Is that right? I think so. Yeah, that's that's about right. Yeah. Um, so it was 2012 before 2013 that Yes. I think at the time maybe Coinbase and like one or two others had gotten used. Well, it was it was Mount Gaus. Everyone knew Mount Gaus if you were in the space. Everyone knew uh Bit Pay, Coinbase, uh Bit 4 uh was one and then um blockchain. Blockchain. And those were like the main five. There was really probably six or seven that anyone could masters could list. But we were thinking, okay, well, let's write down all the ideas that could exist from this new technology. And we wrote down 10 ideas immediately that we were like,

well, we might as well double the population of Bitcoin companies because I think that these are all going to be different companies using this new technology. And there was a resounding response immediately. But then also uh I no you might remember 6 weeks after February so about uh late March early April there was a huge runup from $20 per Bitcoin to $250 per Bitcoin. And so all of a sudden because we had proclaimed that Bitcoin was going to be a sector we look like experts because like there was an immediate reaction in the marketplace. And so so like we got called by you know 150 different enthusiasts, investors and entrepreneurs

in the space and we uh and so we met I met with every single person I could. I probably became an expert over that time just because I had finally met with as many people as I could. Um and so that's really like the background of how we ended up getting into Bitcoin. We we have now invested in about 47 Bitcoin companies. So we've maintained the focus uh throughout the last five tribes, four tribes. So we've done five tribes at Boost, but four tribes with Bitcoin focus. Um our last session had about uh 22 Bitcoin startups. Um and yeah, and we've just really enjoyed being such a uh big part of the Bitcoin space. We've had a lot of fun helping out the Bitcoin

companies get off the ground and get funded. So when you when you have Bitcoin startups applying in Boost that so you mentioned uh Brian Armstrong and you know him being either crazy or he was on to something. Is that something that you still look for when uh when filtering applicants? Definitely. Uh so we uh so I mean I would say on the sort of our our um what we look at when we're reviewing an application uh we do normal stuff like market team idea. Uh so a lot of that's what most investors will do. They'll go through is the market big enough and we we're making

the assumption that the Bitcoin market is going to explode over the next um x number of years. Uh is can the team do what they're saying they're going to do? Is this the right team? Is this the team that's actually going to pull it off? Um idea, is this the right time for the idea? Is is it possible that people will want this idea? Is it useful to the world? Um and then we have a fourth category that we go through which is called scrappiness. Um, and so we we uh basically the filter for scrubbing units is if this person uh were, you know, out of money living in their parents' basement, would they still be building this product? Because uh one of the things that I think entrepreneurs

don't understand sometimes when they're starting a business because it's sort of cool to start a business right now. Um is it's really really hard. Uh and so if you're not in it for the reasons to be, if you're not passionate about the idea, if you're not going to be doing it for no money, uh when the times get tough, you will not continue to do it probably. And so we uh we really want the founders who are going to be uh fearless and really uh go after big ideas and be very passionate about them. actually a passion. I find it very difficult to say no to a founder who is both very passionate uh and very knowledgeable about their space because when they're knowledgeable about the space and they speak very passionately about it, it's like they understand everything about this space and you're just sort of like

here take my money. Um so is there something different about Bitcoin entrepreneurs from people starting business in other areas? That is a uh it's an interesting question because so I'd say there had been an evolution over the last three years for Bitcoin entrepreneurs. Uh there was I'd say it started out as like philosophical idealists were the entrepreneurs that were in the space and they've gradually evolved into opportunistic builders. Uh and I I think that that's one thing that there has been a steady evolution towards like uh you uh the just the the entrepreneurs have

just evolved and changed over the last three years. Um in the Bitcoin space already you have to be a little crazy to be in the Bitcoin space because it's the market's still not huge. Uh the uh ideas still aren't flushed out. Uh the you know it's becoming more useful. So I would say entrepreneurs in general if you're entering the Bitcoin space, it's you are passionate about the technology still like there's no reason for you to be as insane as jumping into like the Bitcoin space if you're not passionate. So it's almost a filter for us that they're already f like fascinated and passionate about this space. Um, and then I I'd say uh some

Bitcoin entrepreneurs, this is something that we've run into a little bit is uh some Bitcoin entrepreneurs just love really the technology layer. Uh this happens with other entrepreneurs too where they're they just they like want to really change the way that the technology works but then you really need to be solving a problem otherwise like the business side of it doesn't work. And so that's we want to find where those two things clash like where those two things like mix because that's where great companies come from. Um it's sort of like uh I mean the best analogy is probably like you know Wnjak couldn't have done Apple without Jobs and Jobs probably couldn't have done it without Wnjak. Um and you you sort of need like

those two pieces to make a really great uh foundation for a company. Um, otherwise you just have someone who loves fiddling with the technology and then someone who uh likes to uh just t talk about things. It's time for a word from our sponsors, Ledger, makers of the Ledger Nano hardware wallet. Now, you may have heard of Cold Storage before. Ledger makes your cold storage even colder. That's right. Don't be the guy on Reddit that's complaining because he lost his money in some heist or someone stole his laptop or his mobile phone or something like that. No, you want to have a safe and secure solutions for storing your Bitcoin that doesn't that isn't expensive, that is affordable, and that doesn't require you installing Armory on

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2015. And when you sleep soundly at night knowing your bitcoins are cold and secure, you'll thank us. Ledger Nano Smart Card Security for your bitcoins. Give it a try. We would like to thank Ledger for their support of Bitcoin. You mentioned before you guys are making the assumption that Bitcoin is going to explode, right? So otherwise this wouldn't make much sense. Are there other aspects to your investment thesis or other assumptions you guys are making? Yeah. So uh so I I would well yeah I mean the fact that we're in the Bitcoin space at all uh you know we're probably the largest investors as far as sheer

number of companies in the Bitcoin space. Um it means that we're definitely making a couple large assumptions. One is that the Bitcoin space is going to go through a huge uh transformation and become this huge huge technology that everyone uses. My assumption is that all payments will be running on Bitcoin in the next 10 years. And so if you assume that it makes sense to back basically every Bitcoin company you can get your hands on. Um and my how I justify that to myself is really uh there are a couple ways but one is mostly it's voiceover IP. So originally everyone has been making telephone calls for the last you know 70 years or

whatever uh whenever uh Edison created the telephone. Was he the one who created the telephone or was he the light bulb? No, I think it was Alexander Graanbell. Alexander Graanbell whenever he made the uh when he made the telephone. Um but it but uh recently in the last 10 years Skype uh Zenstrom and uh the team at Skype they uh with Skype you you were still making calls. It was still call to call because you're you could hear the other person over this mechanism. Um, but the entire backend had changed out and suddenly they were like decoding bits and then sending those bits across the wire and then you re-encoding the bits so that you could hear it like

we're using on Google Hangouts right now. And so voiceover IP was an entire uh shift for the entire telephone industry that I'd say the end consumer didn't see as much because they were still just making calls. Uh, and I think that that's that's very similar to Bitcoin with payments where it's still going to be called a payment, but the entire backend is about to shift out and become an international payments network. And so I'm really excited about that and there's a lot of opportunity in that that we're excited about. So that's what I think. But having said that, a a lot of the companies in Boost VC haven't necessarily been doing payments. I mean, some have. I mean, there's been Snapcard

and and and some others, I believe. Yeah, but can you talk about you know what's the sort of thesis behind the other companies that you funded like Zapchain or uh so others that are not necessarily in a transfer of value or in the payment sector? So, I would say when you're looking at Bitcoin and the blockchain, they're first I we'll break like I'll break down sort of Bitcoin. Um, and I I group them all together and I think that they're all in the same sector. So, I I don't really deviate too much, but the so the what we did is we broke down what Bitcoin does better than cash because that's where really usefulness comes in and that's where opportunity is for businesses. Um, and

the there there are three things that Bitcoin does better than cash. It's store of value for emerging markets uh that really don't have a great currency. Greece would should probably adopt Bitcoin. That's I'm going to probably write a blog post about how Greece should adopt Bitcoin. Um the uh transfer of crossber for money um using Bitcoin as the rails and then microtransactions. uh something that is actually was probably not possible before Bitcoin existed. And so I'd say almost all of our investments, all 47 Bitcoin companies we've invested in are encompass the Bitcoin ones are encompassed in those three categories.

Um and so we we're trying to find you know all each of those though even break down further where you know I there there are a lot of really great companies doing microtransactions. Zapchain, I believe, is one of the best implementations of microtransactions in their tipping. Um, and so that was one of the reasons that we were really excited about what they were building. They just started out as sort of a social network for Bitcoin people and now they've built out this great uh tipping system and people are actually like making money off of this tipping system. Um, which is incredibly powerful uh long term. But when you when we deviate to the blockchain, I'd say the blockchain, everyone's very excited

about blockchain 2.0 or Bitcoin 2.0 or whatever everyone's calling the next generation of Bitcoin stuff. Um, but really what it comes down to is it's digitizing assets, transferring assets, um, and then a, uh, the smart contracts inside of those. And those aren't even like categories. They all sort of group together in a lot of ways because if I'm going to transfer like real estate, I'm going to need it to be a digital asset and I'm going to transfer that asset. Um, so they're all sort of one thing and you need a smart contract to be able to enable those two things to happen. Um, I'd say it's still super early in the blockchain development. I everyone is still

creating what that those three things look like. Uh, and I I I'm really excited, you know, uh, we we mentioned, uh, Flavian earlier, uh, who works who's founded Coin Prism. Um, and he really was the one of the core, uh, reasons that open assets is as fully flushed out as it is. Um, and the and which is probably the primary thing that most companies are looking at in order to digitize assets. uh they're looking at that over Ethereum over uh other technologies who are trying to do that.

So I think that that's sort of our investment thesis is going down those two category verticals and then seeing who's really solving big problems and then we try to invest in help where we can. Has that evolved since you started Boost VC? So, uh, when we when we started Boost, everyone was excited about the speculative nature of Bitcoin. And the reason that it went up so high was because traders were like, "Hey, I could triple my money in a day. That's awesome. They're huge margins is where like speculators and traders love to play." Um, and so a lot of people were looking at it as like Bitcoin as the

currency. And I'd say the evolution has been a way for has been a uh like and we were on board with that too. You know, we backed payment processors. We backed and I I still think some payment processor will probably end up working especially if Greece adopts Bitcoin. Um we we backed brokers. We've backed about 10 brokers in different countries. um just like Argentina, um Mexico, Brazil, uh South America, South Africa, uh just tons of really great um Europe, lots of them. the and the reason for that was uh I believe that my my initial belief was crossber transfer and

I was thinking hey the fastest way to get like a huge remittance network set up is to have these brokers in every country uh so that you could send Bitcoin and as long as the broker handled the cash in cash out um you'd have an entire remittance network so right now technically you could send money from Argentina to Brazil to uh Australia to uh Europe all on uh some like a Bitcoin company's a boost Bitcoin company's rails uh which is really really cool and you can save a lot of money because that's what Bitcoin does crossber um but I'd say the steady evolution has been really about not sending Bitcoin specifically but sending uh

money uh cross borders or and I'm I mean I'm I'm also really excited so I told you my two verticals, but I'm also really excited about things I wasn't expecting to hear about. So, like we had a company in the last tribe that was called Bit Mesh. Uh, and they they allow you to resell your Wi-Fi. And the reason that they're able to do that, you couldn't do that before Bitcoin. Uh, the reason you're able to do that is because of Bitcoin, but also because of micro payment channels. uh because you only have to you can pay for what you use rather than like a monthly subscription or a hourly subscription. It's like literally what you use you pay for which

is never been done before and it was theoretical and now Bit Mesh has done it so it's awesome and they're going to be trying it in a couple places. Um but like I love the crazy things also that are like even no one was expecting that this would influence. Um, I think what Zapchain is the beginning of is really replacing ads on the internet. Like there now there's a new way in which people can uh get paid or be paid for content on the internet which is really really exciting. Uh because before everyone's been sort of handcuffed to ads like they they've completely you've needed to be using ads.

Um, yeah. So, I uh the EV, you asked about the evolution. I'm went back to your last question. Sorry. The evolution has really been about uh it's really been about Bitcoin transitioning to uh everyone's saying the blockchain, but really I'd say uh right now we're in the state where it's Bitcoin as the rails for sending money, which is using the blockchain, I guess, technically. Um, and then the next stage is going to be blockchain related and it's going to be a transfer of assets. You know, NASDAQ's doing tests with it. I get reached out to by institutions. I I actually think the next evolution in these stages.

Um, so startups have done a lot from the bottom up, building the technology, getting users, getting people excited about it. But the marketing cost that it would cost to get everyone on the earth to adopt this would be very very capital inensive. Um so I actually think that the next step is going to be institutional adoption from the top down where institutions are starting to find that the technology is useful to them and they're trying to figure out how they either save money or make money using this new technology. And that's a very exciting evolution that I'm not sure everyone's seeing yet. Um, but it's going to be a really big deal over the next 18 months. I think you're going to

see huge institutions adopt aspects of Bitcoin or the blockchain for actual products. And I think people will and consumers will be using Bitcoin and the blockchain without them knowing they're using Bitcoin and the blockchain in the next 18 months. I think it's 18 months. And do you think those institutions will primarily use the Bitcoin blockchain maybe through some projects like side chains or or open assets or things like that or do you think that uh they will use other types of blockchains maybe private blockchains or things like that? So it's going to depend on what problem they're trying to solve for themselves. Uh I so I think a lot of big

institutions have problems with crossber payments and so I think that's actually going to be a big piece of it is going to be I think a lot of people are going to try to start figuring out a way to do crossber payments more efficiently using the blockchain. Um but then also you know loyal great loyalty programs can be created using the blockchain. uh I mean NASDAQ is openly saying that they're doing they're running tests with open assets to uh do transfer of uh stocks securities um and though I I think on a per institution basis there is a different way to use Bitcoin or the blockchain and I think that it depends what they're trying to solve for themselves. So this is actually a

question that we wanted to bring up with you is you know there there's there appears to be this sort of shift uh we we've I mean I don't have any really concrete examples but it seems like companies are starting to shift towards uh more financial institution type services. I mean one example is chain now. If you go to chain.com's website there's like not one place on the website that mentions bitcoin. Um I think even bit mentioned something like that. Yeah. I mean, I I think that the what's probably happening what's probably likely to be happening is all this adoption that Bitcoin startups were expecting a year ago when the price gone up to uh you know $1,000 or whatever uh didn't happen and now they're running

out of money or perhaps or you know their investors are saying like what's going on and now they're sort of shifting to where there might be some money which is institutions and trying to sell them on the technology and which which is fine, right? I mean, if if it gets people using Bitcoin one way or another, whether that's uh through, you know, banks using Bitcoin to, like you said, u in the back end or financial uh institutions now offering payments uh for consumers to use, but having Bitcoin in the in the back end u that you know, that's fine.

If it brings more adoption, then why not, right? Yeah. And so I I actually think that that's what that's sort of the way you're explaining it is sort of how it's I'd say it's sort of how it's happening. A big piece of it is you know as a business you want to figure out how to make the business work. And so uh and where you can solve big problems and if an institution is the way that you get to solve a big problem, startups will start working with the big institutions and institutions are a little unsure of how they can use it. And so they need the startups guidance a lot on this stuff. So it's it's it's sort of a it's a it's a great thing that they that the institutions might start working with all these different companies. Ryan, I'm

curious what what you think about this apparent shift. I I I think of it like this, right? So, if you you made this bet that Bitcoin was going to be used widely and I think many of us like I certainly believe that and especially was going to be used widely like as a currency by like normal people adopted on a mass scale soon to pay like for their coffee for remittances and whatever. So I think that was sort of a common assumption uh we had in you know 2013 when the price was going up and and you know adoption was also increasing rapidly then and so I think a lot of startups they built their business models you

know using that assumption right they say oh we're you know going to execute great and then all these users will be there and maybe that's going to happen but it hasn't happened so far and uh I think I'm actually really curious what your point of view is there Adam but you know one problem is you raise money and then you you burn through the money you spend it and you need to raise more money and then if if you don't if you aren't able to show like big traction then you it's hard to raise more money and if the Bitcoin user base doesn't grow it's really hard to show traction and grow the user base I mean because the Bitcoin user base is so limited maybe to some extent you can do it uh

just with that. But then you soon you hit the ceiling. I mean, Coinbase is going to have a really hard time growing more users unless they can convert, you know, new people to using Bitcoin. Well, unless they sort of become a and I I I have no idea what their plans are, but if they become a international um repository for the unbanked, like technically that would be a use case that would be really valuable to the world. Um or the unbanked anyway. Um I I think the what one of the reasons that Bitcoin itself captivated me early on was how global the world has become like if one country gets you know hit by economic crisis the entire world gets

hit by economic crisis in some way and the everything's connected so closely mostly because of the internet um because of how you can communicate frictionlessly uh through the internet um and I think that uh when you think globally, every country still has different financial issues and problems and those are all different ways in which Bitcoin can help and improve that situation. And so, you know, like one of our companies, Zapco, they're in South Africa. Turns out it's they have 2% credit card adoption. Uh, and no one buys anything online uh just because that's how it works. And like in

America, I don't know how I would live without being able to buy anything online. And so I uh it's just everyone's in a different situation. And so I think Bitcoin is the thing that will bring us all to one level where we effectively have the same payment structure and rails. Um and so but everyone needs to solve their own problems inside of their own countries. And so it's important that internationally Bitcoin companies are building. Yeah. Yeah. No, I mean I agree. I think that that vision I I totally share with you. I think it's it's such an exciting thing and something that makes so much sense. The idea that you have a global currency that's like free from nation states, free from that. I think that's just an idea that kind of makes sense and it's obviously super powerful idea. Yeah.

Um so what what's your impression? are is the rate at which new Bitcoin startups are being created now at the sort of you know maybe preede level but people trying to build something trying to raise money how has that developed has that been going down with the decrease in price uh so I could probably say that after our applications have come in and I could see like what the enthusiasm based off of number of applications we get um in general I would say it's becoming a more legitimate currency and there's less speculation in it. So it's it's more about business.

It's more about like what business you can build rather than like what technology you can build which is sort of an interesting transition as a technology. Um, it's sort of like when TCP IP was just this weird thing for a while for communication and then you know people tried out web pages and then they were like oh this is sort of like marketing and then they found a use case which was marketing for the web pages and then things were built on top of that communication a IM like all these different ways of uh communicating. I I think that we're we're in the stages of like if you are starting a Bitcoin company, you do need to find a use case that's different than what other people are building right now. And that

is it's you have to be creative. I mean you have to find the um you know create something where robots are paying each other for something or uh get the uh you know found a new country that's founded you know currency first like it's almost like everyone needs to start thinking a little bigger um about about the uh about their ideas because you know I promised 100 Bitcoin companies to the Bitcoin ecosystem. We're at 47 and I plan on following through on my promise, which I'm definitely going to be doing.

Um, and probably continue to back more after that because I think the eventually it's just going to be like I'm backing fintech companies because everyone's using Bitcoin. I think that's how it's going to work. Um, but the like people need a they need to be actually solving a problem and b it needs to be different from the market. Like I think a lot of people saw a lot of money flowing into brokerages like uh Coinbase or you know or payment processors, Bit Pay, uh blockchain, got some wallets, that sort of thing. Um but like there were so many uh like competitors that were created just because that money flew to in that direction that now it's sort of like we

need to see the next generation of like Bitcoin and the blockchain. We need to see what really it's entrepreneurs job to really push the limits rather than play it safe and follow the money. And I want to see the next level of of stuff. And you know, we've backed 10 brokerages. I I we'll for good entrepreneurs, I'll probably continue to back brokerages, but the um it's just the competitive level and landscape in every country has be gotten pretty high that you find a new opportunity. Um, that's basically my suggestion in the uh as far as building companies. I but I do continue to see stuff and I continue to see crazy weird stuff and so I would say the in the speculative enthusiasm

has definitely died down a little bit, but like people are still so curious and I'd say on a institutional level they're curious now. And so there's going to be a lot more money pouring into the companies over the next 18 months, but it really needs to solve problems. Big problems. Yeah. Know, I think one of the funny things was that when there's this website, Bud with Bitcoins. Do you know it? What's it called? Bud with Bitcoins. No. So, it's sort of a joke, but it says like a Bitcoin business generator. So, you can click like a button and it comes up with something and then but with bitcoins, right? And I felt like that it was a little bit like that you know

during the bubble during that bubble where just everybody was like I'm starting like some Bitcoin company and you I'm just doing that but but with bitcoins. That's funny. We used to have a sort of inside joke at Boost where it was like anytime we needed a a solution that we didn't really have to a question we would say cuz Bitcoin like so yeah like I I'd say it's a little less that way now and it's more finding an actual business.

Today's magic word is tribe. T R I B E. Head over to let's talk bitcoin.com to sign in, enter the magic word, and claim your part of the listener reward. So moving on from startups to uh a recent event in in the US at least well which affects US companies and specifically those in New York but also might affect uh companies and startups worldwide is bid license. Uh I believe today this day of recording is the day that it actually comes into effect. I might be wrong on that but Oh really? Um, and I think I saw it on Reddit this morning. Anyway, but so, uh,

can you, uh, tell us what do you think about bit license? Hey, everything you read on Reddit is true. So, so, so what are your thoughts about bit license? Okay, so my I actually released a response about I I don't think they made the changes that I sort of wanted to be changed. So, I I submitted a response. It was like a day or two after the responses were allowed to be due, but it was because the first time it was like very loud and like bit license came out and everyone like, you know, crushed the spirits of the thing and then they like silently released their second draft and I didn't even know it was out there for until basically the end of the u

response period. But uh the things I didn't there were only like two major I actually think it's the closest thing to what we'll get. Uh, and and it's very it's pretty well thought through. Like I will say the first one was like, "Hey, let's throw as many rules at the board as possible and do you want a rule? Like let that guy create like five rules." Um, and it was their attempt at they aimed at the sun hoping to hit the moon sort of thing. Um, and I think that's exactly what they got. And I think testament to Ben Loski for actually releasing it on Reddit to accept comments and hear responses. I think that's a really big move as far as the

government's concerned. Um the things I don't like I I don't like that New York state uh regulators are duplicating the um uh AML KYC rules that so federally you have to do a certain level of AML KYC and what New York is saying is that there's a like oh that's not enough like federal federal isn't doing enough like we need a duplicate of that also and doing it it just ups the cost for every startup. I'd say bit license is something that's going to affect my business almost more than anyone else's

business because we give uh you know smaller checks to these companies and they uh and so and you know our our check won't be able to get them through the bit license at this level um for becoming a brokerage or becoming uh whatever they want to do as far as being a money transmitter. And so I I would say I'm I understand the regulation necessities. I just wish that there were they allowed a little more like low-level experimentation on like a 100 users so that you could test out ideas and that was something that I requested.

I think a you know sandbox environment for uh fintech would be a really great idea for the government to have because if I knew I was being experimented on uh I think I would probably it I would be fine with it like as long as I knew that I I was like the guinea pig. Um so those are I mean those are like the main things there. It's just become now it's going to be really really the barrier to entry to becoming a Bitcoin company. And I feel what we were talking about last time was what's been the transition of Bitcoin companies. I would say the transition from tribe 4 to tribe 5 was tribe 5 felt more most of the conversations we were

having were very regulationoriented. Um where before it was very much more gray area, now everyone is very formalizing on processes and um really they're a little like worried and scared and fear the government uh even if the rules aren't completely hashed out uh officially and I uh I mean I completely understand why I and we we really try to guide them towards you know doing appropriate AML KYC and doing uh the appropriate regulatory steps. It's just it does become expensive and burdensome and like two people who decided to start a company in their garage and wanted to

change the way banking works ends up now needing something like $2 million just to get off the ground. Um and so that that process is sort of tough. So So what does that mean for you? How do you go about that now that it's it's too expensive or to start a company especially if you have to go through bit license uh with with the funds you guys are able to provide. Does that mean you're going to specifically try to fund companies that don't require a bit license? Uh so not excl you know we won't exclusively do that. What we're really good for is sort of hooking a early stage company into a network and that network includes investors who might be able to get them to that

through that stage. Um, and so that's really one of the benefits of joining an accelerator like ours is that we can click them into, you know, the biggest Bitcoin network there is. Um I so we will continue to look at because I I I don't want to be afraid of the regulatory bodies that be I I want to be able to um like help fintech be innovated on and not be stopped in innovation. It's just I do feel the general feel really in the environment is like when you're starting a Bitcoin company you need to be regulated otherwise you go to jail. like that is what they feel and it's like that that's

like not a great spa that's not a great feeling to have where like they fear like jail. It's that's a tough it's a tough spot to be. So, um, we we're going to continue backing everything, uh, like because I think innovation comes from the craziest of ideas and you know, sometimes people will have to innovate on themselves and figure out a way in which maybe they're not transferring uh, money or maybe they're not transferring assets if they aren't uh, if it's not possible to raise the money at that time. But um, yeah, I I'm not going to stop doing that. what we're but we are looking more towards the future and I would say that we will be it will be difficult more difficult for

us to be backing more and more brokerages probably because it's just there are so many of them now so one question I'm really curious about so you are based in California and I presume most of the startups that join BoostBC are not from New York now I know the interpretation of who these New York rules apply to or pretty broad. But does that mean if for example one of your startups just blocks New York IP addresses or something like that, is that enough to avoid bit license?

Because I I've heard from people say that that's not enough and some people have said that is enough. So I'm I'm really unsure. So I I think that's something that's still being debated and there is no clear answer on. I think that that would be enough for you're ju you're you're making a statement that you're not dealing with New York and you're not breaking New York's rules. However, the problem is that I believe a lot of states will adopt whatever gets passed in the Bit License. So, because they would rather like, oh, well, these people got all the way to the finish line. I think that we can probably either actually it turns out like I think South Dakota has very friendly uh Bitcoin rules uh something like that like there are a couple and

then California is just awful like they're trying to approve something bit license at least had good like it's a good name and marketing California like they call it AB126 or something it's not it's a number and letters it's a horrible concept and it has just a bunch of like overregulation I think And yeah, I don't know what they're expecting out of it. I think they they should probably go talk to at least what's the status on that? Has that been passed? And so it's they have created it and it's I think it's out for uh responses right now is where I believe a I don't think it's AB126 because I just typed that in and that

wasn't what popped up, but it's AB something numbers. Um, and the fact that I can't remember it and I can remember bit license is not probably problematic for a lot of people. Um, and so I I yeah, it's a it's there's still definitely gray area out there, but it's becoming more formalized, which is actually a good thing for the industry as a whole. the when the government recognizes something as real and has spent enough time on it, the masses then uh think, oh well, it's not just for like criminals and drugs and like it changes the dialogue of what Bitcoin will be how Bitcoin will be

represented. The problem is more from the startup side where you do need to go through appropriate protocols and processes before you really uh break the mold and be a a Bitcoin company if you're transferring money. if you're not transferring money. And I'd say that's a general reason that a lot more people are moving towards the blockchain is because it makes more sense uh from a cost standpoint. Like it's just cheaper to start a blockchain company than a Bitcoin related company. So um let's move on to another topic. Recently you announced that you'd have 50% of the the companies coming into Boost VCB in the VR space. What gets you so excited about this technology? Okay. So, uh actually the

reason that we picked VR was because there are a lot of analogous things to VR and Bitcoin uh at the same so just uh VR virtual reality for people who are surprised by this turn. Yeah. the uh so we're doing VR AR and Bitcoin and the uh the switch is we feel there's a lot of anal for the state that the VR AR space is in it's very similar to what Bitcoin was in 3 years ago where um the infrastructure layer of the technology had really been laid so mining equipment was sort of the infrastructure layer um which means and

so for VR it's the the goggles so it's ocul Ulus, it's uh you know, Magic Leaps building them, but um Samsung, all these other companies who are really laying the groundwork for the development of the next generation, which is where we're very good, which is sort of infra infrastructure software and infrastructure and uh apps built for the first generation. And that's where we were really good for Bitcoin and the blockchain. And I believe that that will be where we're really great for virtual reality and augmented reality. Um it's it's more and what we do really well and what we found with Bitcoin and like we have a lot of thanks to the community of Bitcoin for this is that we're very good at building early technology communities

uh around an early stage technology sector which is inclusive of investors, entrepreneurs, uh enthusiasts and press and like lots of things in that space where we are able to build up and package this um this thing and and sort of help our companies plug into it. And so that's what we're that's our value ad. And I think that we it doesn't only need to relate to Bitcoin. It can also relate to VR. Obviously, we're going to continue uh supporting the Bitcoin ecosystem. Um that's the plan indefinitely. But the uh I I think that uh we if you've tried VR also also one of the things it's like VR is really cool.

I don't know if you've tried it. It's pretty awesome. Yeah, I've tried it. I've tried it quickly at some conference, but it I mean I I mean I thought it was I thought it was interesting. Uh it's definitely one of those things where like oh I want to try this thing. At least that's the way I felt like I want to try this thing. I've seen it on TV or on the internet or whatever. But um wasn't like totally blown away by it. But then again, you know, it's early stages like we're still using, you know, it's early one technology. It's sort of the perfect time for us to help supporting the ecosystem and help build uh our network to help sort of our the companies we back become thought leaders in the space. Um and that's that's what we did

with Bitcoin and we're going to continue doing that with Bitcoin. I will agree with this though. There there are there does seem to be like a lot of people really really really excited about VR just as though just as in Bitcoin there's like a lot of really enthusiastic people. there seems to be like this whole other uh planet of people that are just all all into VR and that's yeah it's it's a there's very little overlap in the communities that's one thing that we definitely recognized uh and the um but yeah one of the reasons that we also chose it was because small passionate communities like when they start with small passionate technological communities it's gen it mean it generally means it's

probably happening. Um, yeah. Yeah. So, one question, do you see any intersection or synergies between VR and cryptocurrencies being used together? I've heard some people mention that. U I haven't, you know, I think it's going to be a big deal. I actually think uh so, you know, people joke and say that Bitcoin's going to be the uh currency of the metaverse. Metaverse is like the, you know, virtual reality space. Um, but I I actually think the blockchain is going to be really really important to the metaverse or the virtual reality world because what if you only want to sell like 100 virtual reality chairs?

Um, like being able to put a cap on the number of real virtual goods is only possible through something like the blockchain. And so I I actually think that there's going to be a lot of overlap with these two technologies given I think that those overlaps will happen in x number of years. I don't think they're happening in the you know next 18 months at all like there's going to be that's interesting. Are you are you aware of ascribe? What is it? Ascribe the company ascribe. I've heard of ascribe. Yeah. So, so they they use the blockchain exactly for that to track digital property and they have like addition and limited edition and loaning things. So, that seems like it

would be a perfect fit and they do focus on the the digital art market, but at at the moment, but it seems like that would be sort of natural way to develop into. I think that there's been a huge uh I mean I like I think a lot of the you know a lot of art and uh photos and stuff will still be free. Like a lot of them you'll still be able to search through Google images and grab Google images and stuff but some artists will just be like hey I only want there to be a hundred of these out there. And it's like okay that's that's now possible.

That was not possible when the internet was created. The internet was just this open portal to like share everything. And so business models were created as such. And now there's another way where you can restrict the number of goods and create a a certain amount of demand for that good, which is awesome. So just before we wrap up here, so you're uh you're from a a lineage of venture capitalists. Your dad's of course Tim Draper uh the who invested in some of the early internet companies like Hotmail, Skype, and others. Um, and I I read your grandfather's book at one point like years ago. The Oh, the uh Startup Game. Well done. Yeah, that that one. Yes. Yeah, it's a great book. I actually really recommend it. It's a

his you can hear him when he when it's being when you're reading it like that is his tone. That is his voice. It's very So my my question was u you know what uh what has your dad been able to to to pass on to you or teach you regarding investing in such disruptive technologies as he did back in the '90s. Um he was actually one of the ones who helped us uh make the decision to focus on Bitcoin.

Um because we were I was sort of deciding I was going to focus on something and I was talking to him and I said you know, I think that there are a lot of different ideas in the Bitcoin space. And his analogy to me was, you know, one of the best decisions we ever made at DFJ was we uh everyone thought we were crazy, but we said we're only going to be backing internet startups. Um, which sounds like bogus because there's so many internet internet startups now, but like he got the pick of the litter at the beginning for internet startups, which got him, you know, Hotmail and like a bunch of other ones like in that space. And so, uh, he said that ended up being a really great thing. And so I was like, well, that's, you know, it's a

no-brainer that we should pick a industry now. Um, we as a team ended up evolving into the Bitcoin space. But I love I I really uh that was one major thing that he like helped us focus on. Um general stuff it's re it's difficult to say like I'm really close to my dad and like I would say his advice has been invaluable. What's really really great is the uh you know I'm running a fund uh that invests in companies and my dad's done it for 30 years, my grandpa's done it for 40 years and so like I if I run into a situation where I don't know what the answer is, they've probably gone through

this situation and so I like that has been an incredible uh information base for me. Um, other than that, you know, he's definitely helped me figure out what type of founders we like to back. Uh, he's definitely helped. Um, it's it's really difficult to define everything because it's like, you know, crazy ideas often are the ones that work. Uh, like there's like little, you know, idioms that he says that have sort of stuck with my whole thesis throughout the, uh, time I've been an investor. And, uh, he's super smart. He's way smarter than me. So, also that's cool.

Um, yeah. So, I I don't know. It's those are all broad things, but it's it's just been it's sort of fun having someone who I can uh bother and just be like, "Hey, I'm going through this thing right now. What is your answer to it?" And then I take his answer and I change it. But I do like it's great to have his his like feedback on like, hey, this is how it work for me. And then he sort of recommends what he would do and then I'm like, well, you know, I need to position it a little better. But that's a really good thesis. He's creative. Be creative is probably the other thing like think differently than everyone else because that is generally the way that the world's going.

Yeah, absolutely. Well, I think we're at the end of our show. So, you mentioned in the beginning, I don't know that the Boost VC application is due uh on that's is that Wednesday? So next Wednesday boost VC application is due. Uh so that is Wednesday July 1st. Yeah. So yeah and two days. Yeah. And then then the program starts August 3rd. That's all I was going to say. Okay. Perfect. Yeah. So we'll put a link in the show notes. So anyone who's listening to that, you have about 48 hours or perhaps less to finish your applications. So, you may have to do some caffeine infused allnighters, but uh but do so and hopefully hopefully some of you will end

up at at Boost VC. We hope to see you all in Silicon Valley at some point. So, uh yeah, please apply to Boost. We're really excited about the next chapter and it's going to be really really fun. Tribe 6. Talk to you guys later. Yeah. Well, thanks so much for joining. So, and uh thanks to our listeners for listening. So, we put out new episodes of Append Bitcoin every Monday. You can subscribe to the show on iTunes, SoundCloud, or your podcast app. You can also get the video on on YouTube. We're at YouTube.com/epersonbtc. And if you like the show, uh please do us a favor and leave us an iTunes review. That helps new people find the show. We haven't mentioned that in a while, but uh let's

let's mention it again because and share it. And share. Yes, shareh because few people do. So yeah, thanks so much. And of course, you can always send us a tip in the address. So, thanks and until next time. [Music]