thank you to the foundation and
especially Althea for having me and
taking a risk on this talk it's the
first time I believe that VC is being
talked about at any Def Con this was
very exciting my name is Johan Chu and
this topic comes out of conversation
that I've been having with some of the
largest institutional holders of
aetherium who are also diehard etherion
bulls and we felt frustrated a little
bit not so much by the current state of
aetherium because we're all relatively
patient long-term investors with you
know longtime horizons to invest but
there's a disconnect a powerlessness and
a disconnect on how we as institutional
investors can help make a difference in
the layer1 aetherium ecosystem not just
the startups that are building on top so
something doesn't fit between
traditional VC and decentralisation it
used to be that VC was really
straightforward you would find a bunch
of interesting early-stage companies you
make sure that the founders are good you
write a check you help them grow and
then you wait for an exit opportunity
and that's how it was for decades but
this model is not only obsolete as seen
by recent failures of uber and we were
to really kind of perform in the public
markets but it also obviously doesn't
really fit a decentralized project like
aetherium so we can kind of agree that
the old model of venture capital needs
an update to fit the decentralized age
so add that to the rise of you know
obviously crowd funded applications of
aetherium and it becomes even harder as
an investor to process all this so as an
investor how do I invest in a company
that has no CEO that doesn't report
revenue much less have revenues and how
do i price the risk of an asset that you
know swings 15% on the back of a tweet
how do I help the project grow when I'm
not even sure who they are is it the
foundation is it
the Debs is it the DAPs
is it the ever-present but kind of fluid
community and how should i as an
investor feel about a community who
isn't really sure how they feel about me
and my role as an investor and seems to
keep a healthy distance from the
investors at best and maybe is you know
a little suspicious and skeptical of our
agendas at worse so there's a disconnect
between what you know there's disconnect
and I think that the etherium community
as a whole is really missing an
opportunity as a result and I want to be
clear about what the opportunity is for
connecting the VCS to the community
better it's that it's the fulfillment of
the promise of aetherium of the
potential aetherium and obviously this
can't be done by the EC's alone but i
believe that the more open dialogue
between the traditional a theorem
community and the investor community we
can all really help grow the ecosystem
together in ways that are not really
being currently addressed so Who am I to
say all these things I first and
foremost I'm the founder of the etherium
meetup in Hong Kong so we started in
March of 2014 was our first meetup we
had five people in a smokey bar and we
had Stefan Toole who was skyping in to
tell us about aetherium since then I've
done over 80 meetups and I've hosted
Vitalik seven or eight times in Hong
Kong and I'm also the founder of kinetic
which is a VC we've invested in over 50
aetherium based projects along the way
and I personally invested in the crowd
so myself I co-hosted the first
aetherium super meetup in Hong Kong with
Sean gia from digits and each Singapore
which drew well over a thousand 500
people and I did the first NFT
conference in 2018 with Ahri from
decentraland called nifty so I'm an
early investor and one last thing I'll
mention is that I have a small
foundation which is dedicated to
blockchain for social impact called
social alpha and as a Kauffman fellow I
think a lot about VC and venture capital
and how we can better serve the founders
so I think the backdrop of some of where
this comes from is this idea and this
feeling that aetherium is somehow under
fire it's become the whipping boy of
blockchain in some ways with people
focusing too much on what aetherium
can't do rather than all the things that
it can do there's continuous complaints
about the scalability issue even though
we know that there are solutions that do
exist in our making traction there's
frustration around the long wait time
for you to and then on the external side
you have companies and projects that
have you know multibillion-dollar
bankrolls who are challenging for the
protocol space and waging a really
increasing war to attract and retain
developer Talent and that's putting
pressure on aetherium
in addition one of the founders of one
of the largest
etherium owning projects that I know he
described a fatigue in aetherium that's
happening right now and I can think we
can we can almost even witness it here
there's not as many people hair as there
used to be there's not as much buzz
around it but this is not a permanent
condition for us we know as people in
the etherion community that this is a
natural growing pain we're growing and
it's painful but its growth and more
importantly we know that these problems
are more of a issue of perception rather
than reality the issue is not just that
the you know people are believing the
wrong things it's that there's a gap in
mainstream communication and messaging
so people who are outside of the
ecosystem don't really know who to
listen to they don't know what to
believe because they're not in it every
day like the way that we are and can't
separate fact from your fact from from
fiction I guess to somewhat up there is
a feeling that there's a gap between
there's a gap in the number of
influential mainstream voices who are
consistently and vocally articulating
the strength of aetherium
if you think about it who are the
biggest Bulls in the etherium ecosystem
sorry in a mainstream
so aside from italic and the foundation
all the great work that they're doing
obviously Joe Lubin is out there is
doing great work as well who are the
other key external people that you can
think of off the top of your head in the
mainstream who are really talking about
aetherium
consistently who are really educating
the public and educating other
influencers because it's in their direct
interest to do so how many can you
really name
I have trouble thinking about too many
of them now part of this is that this is
a feature not a bug this is how the
foundation in my mind wants to be
positioned which is fine because it's a
decentralized governance system it's a
decentralization and they don't want to
be too influential in certain ways but
there is a cost and consequence to this
and it's the void of kind of messaging
and support by mainstream influencers
that is filled by FUD and complaint and
doubt and there are many ways that VCS I
think can help and that's what we do in
our daily life but in my mind this is
one of the most immediate and
influential roles that VC's can turn on
immediately to help grow etherium so
that leads us to why why do we want to
help as VCS and it leads to the
incentives and alignments of VCS who
have significant investments in ether
and the ecosystem projects how can the
community understand and evaluate our
incentives for choosing and boosting
aetherium signal well first the talaq
was talking about economic incentives
let's just address those obviously we as
VCS who are invested long term in
aetherium have a financial a direct
financial interest in the price of eath
and many funds that I know have put 10%
of their fund in aetherium now I don't
know how much you know about VC math but
a lot of these funds are depending on
their investment in aetherium to go up
many many multiples in order to return
the fund itself that's just VC math it
means that they're really depending on
if to grow long term but most large
crypto VCS who hold the theorem are not
really speculating on the price only
their investors with long term
investment horizons and they're
investing in the technology and the
ecosystem like traditional VCS and they
have five to ten-year investment
horizons and I really want you to
understand that because there's a sense
perhaps that I've heard where people
think that these are just flipping coins
some of them are that's fair but many
are not and the earliest ones are not
yes there are trading funds but they're
different than VCS and second I think
that many of us who have invested
significant portions of our portfolios
in the equity of companies are based in
aetherium and again these are five to
ten year investment horizons that were
trying to grow companies equity on
aetherium if aetherium doesn't work if
it doesn't scale if it doesn't grow its
user base a large portion of our
portfolios will starve to death and then
we as VCS will starve to death 2/3 I
think that etherium is in many ways a
proxy for the health of decentralized
technology generally aetherium is almost
synonymous for blockchain technology and
whenever someone says that aetherium
doesn't scale it's an indictment of the
entire industry because etherium is the
largest and most holistically developed
public blockchain it's really bad for
business for people to be you know
continuing this flood so I think we've
established with the financial alignment
of VCS and why we want to help grow the
ecosystem not just the companies on top
is clear we need aetherium price and
especially utility and the companies on
top to grow so that we can make money
and drive returns for our investors
that's the financial side now if your
dev or our founder maybe you're thinking
okay well that's basically what I
thought
VC just want to make money cool well yes
and no yes we want to make money but no
that's not all we want it's actually
this fourth reason that I think is the
most important and why most of us are in
it in reality the financial side of VC
is not why most of us got into investing
in reality the much more powerful
incentive and alignment is that we
really loved and believed in aetherium
our passion and belief in aetherium is
the most reliable indicator of our
long-term investment in the space many
of us who are the long-term holders were
there at the beginning I did a short
survey of some of my friends who are
long-term holders and 75% of them were
invested within the first year of
aetherium between 2014 and 2015 now we
believe in the idea of decentralisation
we admire the developers in the etherium
community building the platform and most
importantly we respect the tone and
tenor of the community it is the most
single differentiating factor of a
theorem in my mind and we remember how
far we've come from the start just like
you when you know the financial
opportunity was non-existent really kind
of uncertain the path is uncertain and
the risk of failure far greater and this
is why we get that it's different than
99% of the other protocols and better
than 99% of the other protocols it's the
community that's been built for many of
us aetherium is the purest form of
expression of blockchain and the ideas
of community and decentralization that
attracted us to the space in the first
place we chose to invest in this
industry it didn't choose us and that's
what I really want you to understand
about some of us VCS who are long and
large and in etherium if you're adi
hydra central is hard to centralist
maybe you're thinking well VCS are part
of the problem because we concentrate
capital because we're exclusive and
because we wield outsized influence
which bulldoze is the field of
decentralization and you're not wrong we
do concentrate capital we are exclusive
and we do wield influence but the point
of this talk is to suggest that maybe
that's not the end of this story maybe
there's more that unites us than divides
us our common ground is the belief in
the product and the mission and maybe
it's time we can harness our influence
for the common good I think if the aim
has come a long way the foundation the
devs consensus the EEA have done an
incredible amount to carry the load this
far but I think the question for now is
what can be seized do for our part to
ensure that if you can really go the
distance and to really help if you
really succeed so I think in considering
VCS we can suggest that we're just
another node in the network I think it's
best to think of VCS not as a class
outside of the etherium ecosystem but
more like just another node in the
network just like there are minor nodes
there are business nodes there are
developer nodes there are other types of
community nodes who focus on different
areas of developing aetherium VCS are a
particular community and we have
particularly and particular skill sets
and contributions VC is in particular
don't like to sit back and let other
people
do the work we like to add value to our
investments it's how we are evaluated
for our work how much we make and how
much value we add so we can't just sit
back and let someone else handle we have
to mingle we have to meddle we have to
get in there and and try to help make
things better we can't help ourselves
it's like a sickness it's like the
venture capital itis we don't know any
better than to try to help we're not
always helpful but we want to be helpful
we we try to be so how does an
old-school traditional VC typically help
a project obviously if you're funding
helping to raise other funding we
introduced founders to business
development develop strategy we do board
of directors financial roadmaps and
recruiting and Resource Planning risk
management crisis management and
obviously we're the main investor for
many of the companies that are building
on top and I think addition to things
that are specifically relevant to
etherium because of its decentralized
nature are helping to engage and attract
enterprise customers and growth and to
influencing I think Enterprise has great
support from EEA but it can't have can't
hurt to help and have more firepower I
want to touch on this point of
influencing because it's really key for
VCS I know it sounds a bit fluffy but
influencing influencers is an important
leverage that VCS have as investors for
example back in 2015 I was doing
one-on-one meetings with italic and CEOs
in the Hongkong community CEOs of banks
to educate and normalize the narrative
of blockchain 4 that was the first time
they'd heard a blockchain and continue
to today hypothetically if there was a
gathering in China of some of the
biggest multi billionaire internet
founders who are just starting to look
at blockchain and our enamored of
certain Chinese dominated DPOs block
chains or worse think that they can
better roll their own solution and I can
ask fatale ik or other people in the
foundation to come and make a pitch and
form a contact bond so that when they
build their blockchain solutions for
their billions of users that 3m is at
least in the conversation then isn't
that worth it isn't that worth the
effort and as VCS we may not be able to
build applications
but we're pretty good at building
stories and building relationships
so if feces can do all this then why
aren't we doing it well it's because we
work in a certain way and when we back a
start up we're typically backing a
founder leading a company building
things and driving revenue that can
typically be sold so aetherium is really
hard to help because there is no one
founder to talk to her help but this is
by design again this is a feature not a
bug the foundation doesn't want to be in
the position as I understand a blessing
specific investment agendas or efforts
much less telling us what to do or not
to as I understand it they're here to
Shepherd and various self-guided efforts
if they deem it aligned with the aims of
the foundation so the question here is
is there a way for VCS to make use of
their resources without compromising the
spirit of decentralized governance
that's core to its birth one idea which
is a really simple one would be to self
organize and to start doing calls or
meetings to discuss how we can help and
how we can prioritize things that we
think the ecosystem needs and it's
important to note that many other
top-level protocols which are great in
their own rights are also already have
vc-backed who they came after aetherium
so they didn't have to deal with the
same type of issue of not having formal
backing now I don't have the perfect
answer here but the point I'm trying to
make is that perhaps there's a middle
ground if we talk openly about what we
both want and can contribute then I
believe VCS and investors can harness a
great deal of the pent-up energy and
experience for the common good we just
need to work together on the solution so
going further how can we improve venture
capital the age of decentralisation well
there's no question that the traditional
model of venture capital is tried and
has been honed to address some of the
most fundamental issues and growing a
company and it's been effective in
growing the companies that we know and
love but it's worth asking the question
has decentralization changed the game
perhaps we're not only helping to grow
companies anymore instead we're helping
to grow the communities that grow the
platforms that grow the companies and if
that's a case maybe we need a new
approach the new VC is not just a
financier were a node
we can't just invest we need to
participate if I had to sum it up in a
simple idea it would be don't just
allocate participate specifically
participation in this new time the VC
realm can mean a host of things and it's
really important to note that many great
funds are already doing these things
farms like Pantera and fund Gucci and
poly chain and hash multi coin and
Andrea sin liberties and even a set at
kinetic we're already doing some of
these things we need to run nodes adding
nodes to the network is a very basic
function and a fundamental role that we
can play staking of course we can add
value to the network and add security to
the network community calls actually
participating in the conversation around
where the function goes and where the
platform goes is important obviously
participating in governance we can't
just talk about it
we have to be about it we need to
continue educating and evangelizing and
help to create and enforce a narrative
around aetherium that goes beyond just
the foundation just the technology
storytelling is really important in our
space and it's important I think
particularly important for aetherium
and I think we can do that on behalf and
then finally Enterprise growth I think
is quite important and I think that we
can add a bit of firepower to that and
rahl user growth maybe what we should be
asking at the end of each quarter is not
why isn't the foundation doing more to
increase user growth and instead asked
how many companies did I introduce to
aetherium and how many users do they
bring on and in the spirit of the
community and to address the exclusivity
issue maybe we as venture capitalist
shouldn't do this from the perch of
being an investor maybe we should be
doing it you know not as an exclusive
access to an exclusive club investing in
an exclusive round but really from the
ground level at the same level as the
community and if we go into that area
maybe we can think of ourselves you know
maybe we don't need to be just venture
capitalists maybe we can be nodes maybe
we can be venture nodes and step by step
we can slowly but steadily facilitate a
more
open and distributed investment
framework for this new age of
decentralisation and I think if we kind
of travel along this path and think
about it more maybe we can become a
better version of ourselves and who
knows maybe we can just fix the broken
model of venture capital along the way
wouldn't that be nice so what's next
what do we want from the community or
the foundation to be honest we don't
really want anything other than for them
to know that there are people out there
like us who are thinking this way and if
they think that this is helpful if you
think this is helpful engage us we need
to grow this through dialogue from the
etherion community again we don't
necessarily want anything specific
either other than an openness to meet us
halfway and engage in the dialogue and
get suggestions and support and feedback
there's always been a distance between
the etherium and VCS and maybe we can
bridge that gap a little bit and breathe
some life into this idea to be honest I
think this is much more a call to action
for the investor community to
self-organize and perhaps give some
shape to the things that we think about
and kind of put into action and so if
you're an investor and want to
participate hit me up thank you very
much
[Applause]
you