The Exchanges

Q Yeah, or a book like the Coinbase way. Dixon, from your vantage point, um, as an investor, you're on the board of Coinbase, but you also meet with a ton of companies as well as Very early projects in crypto. What do you think is the biggest missing piece that all these companies in the ecosystem are not doing right, or that they need to do?

A That's a question. Well, so, I mean, I think there's a couple of different things. There's, as you mentioned, it's sort of a religious cult, and there's a lot of misconceptions around crypto. As Katie was talking about earlier, people thinking it's for criminals, or only thinking it's Bitcoin, and not understanding there's a whole, like, kind of wide range of different projects. And for me, a lot of it is, how do we Get the message out and bring more people into the movement, right? And broaden that. So there's a lot of great engineers and great entrepreneurs, but like to really make this work, we need product managers, marketing folks, like just the whole, everything you have sort of throughout Silicon Valley, right? And it's still in the kind of engineer entrepreneur phase, I think. So I think a lot about how can we clear up the misconceptions because it's a very powerful technology. You know, I think it's very analogous to open source. Open source started as a political movement in the eighties, and then it morphed into a technology movement, but was in the nineties, through things like Linux, but was dismissed by almost everybody, including Microsoft and other people, until probably a decade later, because they still saw it as that wacky Richard Stallman stuff, you know, the anti, and so people still, I think the same thing's happening with crypto, where it's really a new w…

AI assessment note: “we need product managers, marketing folks, like just the whole, everything you have”

Q Let's pause on that for a minute, because that's so counterintuitive, honestly, because the whole thing we've been touting here and the whole community's been talking about for ages is how important, yes, that Bitcoin and blockchain and everything related to the cryptocurrencies, the protocol is obviously very important, but because of what it enables. So I'm very confused by this concept of investing in a protocol. Can you guys?

A The way I think of it is, is like, imagine you were back in 1993 and the internet was starting. There were two ways you could have imagined investing in that. One was to invest directly in companies like Amazon, and if you were fortunate enough to invest in Amazon, of course, that would be a phenomenal investment. A lot of people didn't have access to that or invested in companies that weren't as successful as Amazon. Another way to have sort of bet on the internet would have been to do something like buy domain names, which a lot of people did, actually. They called them domainers, and there were a bunch of people that saw the value there, and a lot of them bought, you know, whatever, pizza.com or something, and at the very beginning, you'd buy for eight dollars or whatever the Domain registration fee was. The aggregate value of, like, .com domain names today, you know, it's hard to add it up, but it's certainly in the many billions of dollars.

AI assessment note: “Another way to have sort of bet on the internet would have been to do”

Q Yeah, or a book like the Coinbase way. Dixon, from your vantage point, um, as an investor, you're on the board of Coinbase, but you also meet with a ton of companies as well as Very early projects in crypto. What do you think is the biggest missing piece that all these companies in the ecosystem are not doing right, or that they need to do?

A That's a question. Well, so, I mean, I think there's a couple of different things. There's, as you mentioned, it's sort of a religious cult, and there's a lot of misconceptions around crypto. As Katie was talking about earlier, people thinking it's for criminals, or only thinking it's Bitcoin, and not understanding there's a whole, like, kind of wide range of different projects. And for me, a lot of it is, how do we Get the message out and bring more people into the movement, right? And broaden that. So there's a lot of great engineers and great entrepreneurs, but like to really make this work, we need product managers, marketing folks, like just the whole, everything you have sort of throughout Silicon Valley, right? And it's still in the kind of engineer entrepreneur phase, I think. So I think a lot about how can we clear up the misconceptions because it's a very powerful technology. You know, I think it's very analogous to open source. Open source started as a political movement in the eighties, and then it morphed into a technology movement, but was in the nineties, through things like Linux, but was dismissed by almost everybody, including Microsoft and other people, until probably a decade later, because they still saw it as that wacky Richard Stallman stuff, you know, the anti, and so people still, I think the same thing's happening with crypto, where it's really a new w…

AI assessment note: “we need product managers, marketing folks, like just the whole, everything you have”

Q Do you guys do that when you talk through deals?

A Yeah, no, so like, I think a good investor discipline is to do something similar to that, you know, where you kind of, and, and frankly, an entrepreneur, like, I think that one of the myths around entrepreneurship is that they're, um, that they're, I mean, the risk takers, I, that said entrepreneurs do take risks, but good entrepreneurs are very good at doing premortems, ordering the risks, and then systematically trying to mitigate them, right? I mean, now that's not to say that they don't take big risks, but You certainly don't want to take unnecessary risks, right? So I think what you're a good entrepreneur is doing is constantly thinking about all the different scenarios, how they'll go wrong, you know, kind of rank ordering them, taking a bunch of risks, but saying, Hey, the big, you know, so my key risk in this is, you know, sort of like this type of business is all going to be about financing risk. And this one will all be about talent. And this one will be all about, you know, how will it go wrong? And you see enough of it. And of course it's a very, uh, rough and imperfect science, but

AI assessment note: “I think a good investor discipline is to do something similar to that”

Q Do you guys do that when you talk through deals?

A Yeah, no, so like, I think a good investor discipline is to do something similar to that, you know, where you kind of, and, and frankly, an entrepreneur, like, I think that one of the myths around entrepreneurship is that they're, um, that they're, I mean, the risk takers, I, that said entrepreneurs do take risks, but good entrepreneurs are very good at doing premortems, ordering the risks, and then systematically trying to mitigate them, right? I mean, now that's not to say that they don't take big risks, but You certainly don't want to take unnecessary risks, right? So I think what you're a good entrepreneur is doing is constantly thinking about all the different scenarios, how they'll go wrong, you know, kind of rank ordering them, taking a bunch of risks, but saying, Hey, the big, you know, so my key risk in this is, you know, sort of like this type of business is all going to be about financing risk. And this one will all be about talent. And this one will be all about, you know, how will it go wrong? And you see enough of it. And of course it's a very, uh, rough and imperfect science, but

AI assessment note: “I think a good investor discipline is to do something similar to that”

Q chicken-egg thing, though, because the network effect is that the network becomes more valuable the more users that use it. But there is this chicken-egg problem in the sense of, You can't have a lot of users when you don't have scale, but you also need to scale in order to have a lot of users, because scalability is a pretty big bottleneck here. How is the community addressing that?

A So like Ethereum is a good example where you can run any kind of arbitrary code in that crypto network, but the network can only handle, like, 10 transactions a second or something, and so it's just not at all ready to really be the world computer. You can look at it in two ways. One, it's a challenge. Two, it's an opportunity. There's a whole bunch of different interesting kind of approaches to improving that. It'll get fixed. It's all software. I mean, the good thing about all this is it's, it's all software. I've been involved with both software and hardware, and I will tell you they're very different. So you look at the internet and why it took so long It really took, you know, 20 years to reach its potential, and it's because you had to, like, literally dig ditches and lay fiber down, and then you had to get the, you know, computer, mobile phones to, like, you think how, like, where we are today, we have mobile phones, we have high-speed cellular, we have fiber, like, that's just a lot of physical, you know, digging and capex, and the nice thing here is it's all software. The internet is built. Like, everything is software. So there is a lot of work to do, and there's this sort of chicken-egg problem. At some point, right, you get some tipping point, And I think at some point, I think over the next five to 10 years, we'll have this sort of internet money, and it'll either …

AI assessment note: “There's a whole bunch of different interesting kind of approaches to improving that. It'll get fixed.”

Q chicken-egg thing, though, because the network effect is that the network becomes more valuable the more users that use it. But there is this chicken-egg problem in the sense of, You can't have a lot of users when you don't have scale, but you also need to scale in order to have a lot of users, because scalability is a pretty big bottleneck here. How is the community addressing that?

A So like Ethereum is a good example where you can run any kind of arbitrary code in that crypto network, but the network can only handle, like, 10 transactions a second or something, and so it's just not at all ready to really be the world computer. You can look at it in two ways. One, it's a challenge. Two, it's an opportunity. There's a whole bunch of different interesting kind of approaches to improving that. It'll get fixed. It's all software. I mean, the good thing about all this is it's, it's all software. I've been involved with both software and hardware, and I will tell you they're very different. So you look at the internet and why it took so long It really took, you know, 20 years to reach its potential, and it's because you had to, like, literally dig ditches and lay fiber down, and then you had to get the, you know, computer, mobile phones to, like, you think how, like, where we are today, we have mobile phones, we have high-speed cellular, we have fiber, like, that's just a lot of physical, you know, digging and capex, and the nice thing here is it's all software. The internet is built. Like, everything is software. So there is a lot of work to do, and there's this sort of chicken-egg problem. At some point, right, you get some tipping point, And I think at some point, I think over the next five to 10 years, we'll have this sort of internet money, and it'll either …

AI assessment note: “There's a whole bunch of different interesting kind of approaches to improving that.”