Oct 30, 2023 · 1h 16m · news
Nick Tomaino: The Future of NFTs, What Will Happen with FTX & Who Should be Held to Account | E1076 · 20VC with Harry Stebbings
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In this episode of 20VC, host Harry Stebbings interviews Nick Tomaino, Founder of 1confirmation, exploring Tomaino's disciplined investment philosophy, his critiques of mainstream venture capital hype, and his strong conviction in the long-term potential of NFTs and mimetic desire.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 20.8% of the talking time here. How this is scored →
Harry as informed peer 4.4 Guest teaching 5.0 Guest disagreement 3.3 Harry pushing back 3.8
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 9:01 Nick firmly rejects Harry's luck narrative
When Harry attributes his venture success primarily to luck in adoption cycles, Nick firmly pushes back, asserting his success is 90% skill and grit, telling Harry that calling it luck sells himself short.
Hardest push from Harry ▶ 47:27 Harry rejects mimetic theory with chemical scienceHarry refuses Nick's René Girard framework regarding mimetic preference, presenting counter-arguments based on chemical brain reactions to sugar and musical composition.
Biggest teaching moment ▶ 46:13 Nick introduces René Girard's mimetic desireNick reframes the discussion around creator economics and user preferences by introducing René Girard's theory of mimetic desire, asking Harry if he has read Girard.
Harry holds his own ▶ 1:01:20 Harry corners Nick on OpenSea markdown valuationHarry uses his market insight to drill down into 1confirmation's portfolio performance, directly asking Nick where OpenSea is currently marked down and forcing Nick to confirm a major drop.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Origin Stories: From Sneaker Forums to Coinbase | 2 | 3 | 1 | 1 | Harry welcomes Nick and asks for his origin story in crypto. Nick explains his background in sneakerhead forums and how BitcoinTalk contrasted with the mainstream media narrative. | |
| Being Pushed Out of Coinbase & Founding 1confirmation | 2 | 4 | 2 | 2 | Nick candidly reveals he was pushed out of Coinbase due to office politics before founding 1confirmation. Harry listens sympathetically as Nick outlines the transition. | |
| Raising a $26 Million Fund & Building a Personal Brand | 5 | 5 | 3 | 5 | Harry challenges Nick directly on how someone pushed out of Coinbase manages to raise a $26 million fund without rich friends. Nick reframes the premise, explaining how he built a personal brand via Token Summit. | |
| Luck vs. Skill in Venture Success | 4 | 6 | 6 | 5 | When Harry attributes venture success mostly to luck on adoption cycles, Nick explicitly rejects the premise, asserting his success was 90% skill and grit. He then recounts losing $50k in a phishing attack. | |
| Fund Discipline: Managing Portfolio Size and Strategy | 3 | 4 | 2 | 2 | Harry asks baseline questions about fund sizing. Nick explains 1confirmation's discipline in keeping fund sizes small relative to hype-driven crypto funds. | |
| Exceptionally Low Loss Rates in Crypto Investing | 3 | 5 | 2 | 2 | Nick explains why crypto loss rates in his fund differ from traditional VC, highlighting zero total losses in Fund 1 due to strict check sizes and avoiding pure narrative hype. | |
| Chasing Narratives: Crypto Tourists vs. Strategic Builders | 3 | 4 | 2 | 2 | Harry asks about tourist founders versus hardcore crypto builders. Nick breaks down the spectrum of founder motivations during bull markets. | |
| The Criticism of Crypto VCs and Token Dumping | 5 | 5 | 4 | 4 | Harry presses on token dumping by crypto VCs and asks about SEC legality. Nick confirms predatory VC behavior exists and details how Alameda/FTX engaged in perception manipulation. | |
| Deal Flow, VC Criticism, and Collaborative Rounds | 4 | 4 | 3 | 3 | Harry quotes Avichal Garg on crypto rounds being more collaborative than traditional VC. Nick mildly pushes back, arguing it depends on the firm and fund size. | |
| The Ultimate Crypto Benchmark: Outperforming BTC and ETH | 5 | 5 | 4 | 3 | Nick argues that crypto VCs must benchmark against a simple 50/50 BTC/ETH basket and calls VC vanity metrics the fakest part of the industry. Harry asks about publishing returns. | |
| Legacy Venture Giants vs. New Era Crypto VCs | 6 | 5 | 4 | 6 | Harry bluntly labels a16z as pump and dumpers. Nick urges nuance, pointing out Chris Dixon's early success while admitting oversized fund sizes push firms into hyping tokens. | |
| The Next Three Years of Crypto Fundraising | 5 | 5 | 4 | 4 | Harry asks what the next three years look like for crypto fundraising. Nick elaborates on FTX and defines the broader 'fraud of perception' engineered by elites. | |
| VC Accountability and the Long Game of Truth | 5 | 5 | 3 | 5 | Harry questions whether VCs involved in FTX will ever be held accountable or if losses get swept under the rug. Nick maintains that truth reveals itself over time on the internet. | |
| Internet-Native Creators and the Next Generation of Stars | 7 | 7 | 7 | 7 | Harry strongly rejects Nick's claim that NFTs help creators, using his own experience as a podcast creator. Nick counters by asking if Harry knows René Girard and introduces mimetic desire, prompting a vigorous debate on human psychology. | |
| Bully Thesis on OpenSea and Long-Term NFT Market Outlook | 5 | 5 | 3 | 4 | Nick explains his long-term thesis on OpenSea as an entry portal for digital assets. Harry asks probing questions about taking money off the table during high valuations. | |
| Independence of Thought and Cultivating a Contrarian Mindset | 5 | 5 | 4 | 5 | Harry brings up Mark Cuban praising Nick's contrarian mindset, but challenges Nick's statement that he doesn't feel insecure. Harry argues insecurity is universal. | |
| Balancing Rigid Principles and Dogmatism: The Solana Example | 6 | 6 | 5 | 6 | Harry cites Mark Cuban calling Nick dogmatic. Nick acknowledges his principled stance can be a flaw, using his early skepticism of Solana as a practical example. | |
| Nick Tomaino's Biggest Investment Win and Loss in Venture Capital | 6 | 5 | 3 | 5 | Nick discusses OpenSea as both his biggest win and biggest miss due to under-allocating. Harry presses Nick on OpenSea's current markdown valuation. | |
| Quick-Fire: Unpacking LP Investment Philosophy and Pronomos | 4 | 6 | 2 | 3 | In quick-fire, Nick highlights niche funds Pronomos and 1789 Capital. He educates Harry on seasteading and charter city models. | |
| Quick-Fire: CryptoPunks as the Ultimate User-Owned Consumer Brand | 3 | 4 | 2 | 2 | Nick names CryptoPunks as his favorite consumer brand and chooses René Girard as his ideal dinner guest, prompting laughter from Harry. | |
| Quick-Fire: Why Prediction Markets Have Taken Longer to Explode | 5 | 6 | 3 | 3 | Nick reflects on prediction markets taking longer to explode than expected, citing Friedrich Hayek's 1945 paper on decentralized information markets. |
Statements from this episode (36)
Tomaino: FTX was a perception fraud enabled by politicians and investors
“The people that got sucked into this perception game that FTX was playing that, you know, the politicians, the regulators, the investors, they all now are trying to just sweep it under the rug and say, oh, I didn't know about this financial fraud. It wasn't ju…”
Tomaino: Early Bitcoin community was aligned by shared belief and incentives
“They weren't aligned by physical location, but they were aligned by shared belief system and economic incentives.”
Tomaino reveals he was effectively pushed out of Coinbase
“Well, frankly, I mean, I got pushed out of Coinbase. Like, I wasn't a, Great employee, I think is the truth. I think I did a lot for Coinbase in the early days. But I wasn't, Coinbase got to a certain point where I wasn't great at kind of office politics and f…”
Tomaino: Crypto is the most important social technology of our lifetime
“Like, I genuinely believe and still believe that, you know, crypto is the most important social technology of our lifetime.”
Tomaino emptied his bank account to buy Bitcoin while at Coinbase
“I had all my money in Bitcoin on Coinbase, right? And that's how much I believed. Like I basically you know, emptied my bank account put it all in, in Bitcoin.”
Tomaino lost his entire $50K net worth in a phishing attack
“I got an email saying that Coinbase updated terms of service. I clicked the link to try to update the service, log into Coinbase to do so, logged into Coinbase with my password, boom the hacker Got into my account and drained all my Bitcoin. So it wasn't a ton…”
Tomaino: Frequent Crypto Hacks Are an Unspoken Secret in the Industry
“It's kind of a big unknown secret. You know, unspoken secret, I should say in, in crypto, like how many people actually get hacked and no one really talks about it”
Tomaino: 1confirmation launched its initial fund in 2017 with $26M
“So our first fund which was launched in 2017 is twenty six million.”
Tomaino: 1confirmation $1B AUM is mark-to-market portfolio value
“Well, a billion in AUM includes is kind of the mark to market, right? It's the value of the total portfolio.”
1confirmation's first fund had zero complete write-offs across 22 investments
“In the first one, 22 investments, we've only we haven't had any zeros. We've had two projects that basically you know, dissolved, but they actually gave back, in one case, about 50%, and in, in another case, about 70%. So we actually haven't had any, Zeroes in…”
Tomaino: 1confirmation Fund I distributions came mostly from equity
“Yeah, it was mostly equity actually.”
Tomaino: Crypto VCs hype private tokens and dump them on retail
“A big part of the crypto VC game is doing these private token deals, and then you kind of build some prestige media narrative hype and then sell the token to retail, and then retail gets sucked in, and the VCs kind of dump tokens on retail. That's like a big G…”
Tomaino: Alameda invested in tokens that FTX listed and hyped
“Alameda was their investment arm that was basically investing in these token projects. Then FTX, the exchange, was listing these tokens, hyping up the tokens to their users.”
Tomaino: Controversial VCs still get deal flow from prestige-seeking founders
“There are certain founders that that go for the prestige. You know, maybe they get some hate from a non's on Twitter or something, but they're still, they get you know, press and they have prestige.”
Tomaino: Crypto investing rounds are no more collaborative than traditional venture
“I don't feel strongly that it's much different than a traditional venture. I think that's kind of a narrative that some people Believe, but I don't know.”
1confirmation sold 10% to 30% of stakes in major winning investments
“We basically you know, had some big winners that we, You know, sold somewhere between 10 and 30% of the position.”
Tomaino: Crypto fund managers must beat a 50/50 BTC/ETH benchmark
“I mean, as a venture manager, you get paid two and 20, maybe more, maybe a little more, maybe a little less, but those are meaningful fees. The reason that you get those fees is because you can outperform you know, an index and you know, every private equity F…”
Tomaino calls VC fund size focus the fakest part of venture
“Yeah, a hundred percent. I mean, I, to me, it's one of like the fakest parts of venture capital. It's like everyone, it feels like everyone's competing for prestige. Everyone talks about fund size or, you know, is trying to get press. These kind of vanity you …”
Tomaino: Incumbent VCs would lose prestige if judged on fund performance
“If you know, everyone viewed Fund performance as the, you know, the metric of success, these, the big, you know, incumbents wouldn't have the prestige that they have.”
Tomaino: Andreessen Horowitz's crypto fund has probably grown too big
“A-Six and Z is a great fund. In crypto. And I have a lot of respect for them. I do think they probably got too big.”
Tomaino: a16z's large fund size drives investment in hyped token projects
“But yeah, I think more recently Fundsize has probably caused them to do some of the stuff that people you know, accuse them for, which again, I don't think they're dumping. They have to be very careful about that, but I do think they are investing in some of t…”
Tomaino: Crypto VC Funds Should Downsize After Raising Too Much Capital
“A hundred percent. I mean, this is again, a generalization, but I think way too much money was raised. You know, you had people raise billion dollar funds that just had no unique insights or you know, no investing prowess really or anything like that, but they…”
Tomaino: Crypto VCs would succeed by secretly buying just BTC and ETH
“Like I think a strategy, you know, a dishonest, but probably successful strategy for one of these billion dollar fund managers would be to, you know, pitch to LPs that you're investing in, you know, bleeding edge crypto that's gonna, gonna push the space forwa…”
Tomaino: Few crypto funds will raise capital as LP scrutiny increases
“I don't think many crypto funds are getting raised. And I think LPs are going to get a little smarter and do more diligence and not just you know, deploy You know, like crazy into you know, fund managers that don't really have any unique insights or defined st…”
Stebbings discloses spending $25K on Chain Runners NFTs now worth $25
“By the way, I bought chain runners. I think I probably spent 25 K on them. So, you know, that's probably worth like 25 dollars now, which, you know, something.”
Tomaino: Taylor Swift will never create music NFTs
“Taylor Swift is never going to create music NFTs.”
Tomaino: Bitcoin and pop stars derive value from mimetic desire
“A lot of why people think she's good is because other people think she's good. And I think that can, that, that applies to cryptocurrency too. Why does everyone think Bitcoin is valuable? Because other people think it's valuable.”
Tomaino: OpenSea will be significantly more important in five years
“Do I think it's going to be a, an important product in the world in five years, much more important than it is today? Yes, because I think NFTs are important, and because I think an on-ramp to NFTs is is very valuable for people.”
Tomaino: NFT trading activity will resurge within three to five years
“I would say three to five years, you know, it's likely before that, but you know, with a high degree of conviction, I would say three to five years.”
Tomaino: Best crypto projects blend purists and tourists
“There's purists and there's tourists, and the best crypto projects were kind of at the intersection of purists and tourists.”
Tomaino: Solana was an insider VC token marketed to retail
“I have historically viewed Solana as a very tourist thing, you know, because it came in kind of right at the beginning of the last bull markets. It was, you know, aggressively marketing. There's also one of these insider VC coins that sold a lot to early insid…”
Tomaino: I missed a huge investment opportunity in Solana
“The people that invested in Solana have done incredibly well. So You know, I missed a big investment opportunity as well.”
Tomaino: 1confirmation invested $500K in OpenSea from $26M fund
“When we invested we only invested 500 K initially. And that was, again, like at that time we had a twenty six million dollar fund.”
1confirmation bought OpenSea on the way up and sold near the peak
“We actually invested on the way up a little bit and then sold on the big way up.”
Tomaino: Silicon Valley is driven by soulless greed, citing Sequoia Capital
“My sentiment in a lot of Silicon Valley is that it's very, there, there's a lot of soulless greed, and just this desire to create these kind of you know, massive funds create massive attention, and I think, again, Sequoia is the best example of this, and 1789,…”