ABOUT THE EPISODE
Welcome back to season two of the Preferred Return podcast, focused on the transformative power of data and technology within private equity and venture capital firms.
In this episode, our host Jeff Williams, Chief Strategy Officer at Altvia, sits down with Matthew Le Merle, Managing Director at Blockchain Coinvestors. Founded in 2014, Blockchain Coinvestors investment thesis is that digital monies, commodities, and assets are inevitable, and all of the world’s financial infrastructure must be upgraded. As the leading blockchain venture fund of funds, they are invested in more than 400 blockchain companies and projects including over 60% of blockchain enterprise unicorns.
This vision is not dependent upon crypto and Bitcoin; instead, it has everything to do with how blockchain technology will enable eight billion people to digitally transact – much like how we currently communicate and share content in natively digital ways.
Matthew is no stranger to this world of digitalization having over thirty years of experience working and investing in the financial and technology industries, including having worked on the Big Bang at the London Stock Exchange and the creation of the iShares exchange-traded funds (ETFs) family at BlackRock as well as assisting in rolling out the Internet at Cisco, eBay, Google, Microsoft, PayPal and others too.
[00:00:00] Jeff Williams: Hello everybody. Welcome back to season two of Preferred Return. I’m Jeff Williams with you again. Of course, I love doing each and every one of these episodes, but this one is really a gem. I want to introduce my guest, Matthew le Merle, Managing Director of Blockchain Coinvestors. Blockchain Coinvestors was founded in 2015, and their vision is that digital monies, commodities and assets are inevitable, and all of the world’s financial infrastructure must be upgraded.
[00:00:33] Matthew and his wife Allison, have spent the bulk of their careers now predating Blockchain Coinvestors and going back 30 years or so on this same vision including having worked on the Big Bang at the London Stock Exchange and the creation of the iShares ETF family at BlackRock. Matthew and I taped this conversation several weeks back ahead of the collapse of FTX.
[00:00:55] So I know what you must be thinking, but hang in there with me. This has little to do with crypto and Bitcoin and instead has everything to do with how blockchain technology is the inevitable future of how 8 billion people will transact online. Much like we communicate and share content there already. Can’t wait for you to hear this from the man himself.
[00:01:13] So let’s jump in.
[00:01:15] Tell us a little bit about you. I mean, this is a fascinating place to be. Presumably there’s a lot of places you could be doing a lot of different things. You chose this one, and I think I get why, but I’d love to hear in your words, how you ended up here, what your background is a little bit.
[00:01:30] Matthew Le Merle: Great. Thanks a lot Jeff, for a asking and I’m gonna give you the longer version, so bear with me. But for Allison and I, we’ve been in Silicon Valley 35 years and we’ve been working on the digitalization of communications, content and financial services throughout that timeframe. And our first careers going way back when working with the London Stock Exchange on the Big Bang or big banks and payment companies in creating first version sort of digital offerings and then going online and online banking payments and so on.
[00:02:05] This has been our life, and we chose to transition to being internet and FinTech investors in the zeros. By that time, Allison had moved on from being the CFO of BGI BlackRock, the world’s largest asset manager, which is where she launched iShares. I’d worked on the strategy, the world’s largest financial product, and we decided to become internet and FinTech investors.
[00:02:32] I would say 2012, we started hearing seriously about Bitcoin. I’d just wrapped up some work with PayPal on their digital wallet. Allison was managing partner at Belvedere Capital and was getting pictures from teams that were talking about digital money and bitcoin. We leaned in, we took a long look, and Allison is actually the one for whom the light bulb went off because she realized if you could create one global distributed digital money, you could create as many as you want.
[00:03:06] And if you could create digital money, you could create digital assets. And that is the holy grail of Finance. The challenge with today’s finance is it’s slow, it’s costly, and it’s paper-based to a large extent. And so we decided to lean in 2013. We made a couple of investments. 2014 Allison became chairman of the advisory board over at Blockchain Capital with Barton Brad and the team there.
[00:03:35] And we, she still is, and we got very excited by what they were doing. We invested in a couple of other funds, DCG, Pantera, and then at some point we came up with our current strategy and we’re all in now. And we’ll probably talk about that later, Jeff, but I’ll stop there.
[00:03:52] Jeff Williams: What is it for somebody like Allison who, for whom the light bulb went off?
[00:03:58] I mean, what is it that made that light bulb go off? Presumably, we can’t go through and get all of her career experience and that helps tremendously. But what was that sort of single thing? You mentioned the sort of digitization, but like where did she go to have that light bulb go off?
[00:04:15] What sort of information? I mean, I think that probably the everyday listener here still, we hear so much about blockchain. Probably don’t know that much. I mean, what is it, in short, what’s the sort of light bulb moment for the rest of us?
[00:04:28] Matthew Le Merle: I hate to say it, but you bang your head against something so much that then if someone shows you a solution, sometimes it just is obviously a better approach.
[00:04:40] By the time that we’re talking about, she now is on the board of FISA, but she was on the board of First Data, which is one of the world’s largest payment processes. And she spent her whole life in payments, banking, financial services, and she knew all the problems.
[00:04:55] She really did understand that if I wanted to send money to a family member in Europe, a hundred dollars, let’s say, it’s gonna take a week and the banks are gonna take $25 or $30 in bank transfer fees and only $70 will show up with my family member, and there’ll be a whole bunch of KYC AML in the middle.
[00:05:19] And that’s a problem. If you are a worker here in America and you’ve got family members in Mexico, Guatemala, or someone like this, you will lose a large portion of your very hard won earnings to get them back to your family. By all the intermediaries. These are examples. If the average American wants to buy or sell their house, the biggest asset they have, on average, they will lose 10% of the value of the house or apartment in transaction fees.
[00:05:51] The average house sale in America’s $200,000 and the fees on that are $20,000 and it takes 45 or 90 days. This is friction. And so friction is a problem. And she had put a lot of energy in, as did everyone else at BGI, in taking friction out of mutual fund investing that became ETF investing and iShares as the world’s leader in that.
[00:06:16] So that notion of if you take out friction, you increase the return on investing. Well with monies, it’s very analogous. If you can take out the friction, we can all do things quicker, easier, and cheaper. And that is what, to a large extent digital assets, digital monies, and blockchain technologies making happen.
[00:06:39] And we were very excited by that. We worked on that for 30 years.
[00:06:45] Jeff Williams: Bigger, brighter light bulb.
[00:06:47] Matthew Le Merle: Yes. I know that we’ll talk later about Web3 and blockchain and there are other things that we can use with this technology that are also very exciting.
[00:06:58] But for us, digital money is digital commodities, digital assets, that all by itself is more than enough of an investment thesis to make this a space we want to focus on.
[00:07:10] Jeff Williams: Yeah, I’m compelled, I think that’s a lot of time with technology that’s missed like a lot of time. And I think this is the case, my personal opinion with blockchain, and let’s just go ahead and say it.
[00:07:21] I mean, Bitcoin, right? A lot of people still, and probably most of ’em aren’t listening to this podcast, but, many of them, still don’t understand that Bitcoin is, a form of blockchain technology. But I think the point is, at the end of the day, I think a lot of people just think about Bitcoin or even if they do understand, blockchain, it’s just this thing.
[00:07:41] It’s a highly speculative asset. People have made a lot of money. People have lost a lot of money, but what’s lost in it all? Is that at the end of the day it can be all of those things for anybody who’s, who experiences it that way. But really at the end of the day, what you’re saying is it’s a solution to a problem.
[00:08:00] And those are big problems worth a lot of money. And that’s really where the opportunity with these assets are, is solving huge problems that exist globally in which have existed for the better part of 25 years.
[00:08:13] Matthew Le Merle: Let me just say this. We also need to differentiate between, blockchain, the technology and crypto, one of the things that has been created by blockchain technology. And we should also differentiate between venture investing and public market trading.
[00:08:34] Crypto assets go through just, blockchain companies get founded and funded by venture capitalists. They go through multiple rounds and one day maybe they’ll go to a public or other liquidity events. In that sense, there’s a certain portion of blockchain opportunities that are no different than any other type of venture opportunity.
[00:08:57] But what’s different in blockchain and in Web3 is we also have tokenized projects, which may not need to raise equity, and they may get their support and their capital in other ways, but those tokens will also at some point go public. The main net will go live. There’ll be a token generation event.
[00:09:20] The token may get listed on exchanges and marketplaces, and at that point, it’s a public liquid token. So I frame it that way because we do both blockchain equity and token investing, but we only do it in the early stage and mid-stage. We do not do investing in liquid public traded crypto assets, and we don’t for that matter, invest in public equities very much either.
[00:09:49] So going back to your question. You need to decide what sort of investor you are before you can answer the question, what opportunities are there in this space? And for us, there are enormous opportunities for early-stage investors in blockchain equity and in early-stage token formation events.
[00:10:08] We’re not very big on investing in public liquid crypto.
[00:10:14] Jeff Williams: Sure. And again, I think key point is that maybe all of what you’re saying, myself included, I mean, I’d like to think I’m setting up some of these questions for you, but I think there’s, a lot that I don’t understand.
[00:10:25] So I appreciate you clarifying that. But at the end of the day, probably for a lot of people, the connection of these are huge problems with huge opportunities that are being solved by a lot of the things that are somehow connected, even if slightly distant from the sort of craze of what people you know are gonna perhaps inappropriately connect here, right?
[00:10:46] Which is like Bitcoin, everything. Now Ethereum’s a little bit more mainstream, but really what we’re talking about here is solving problems. With a very unique and emerging technology. So I would like to talk a little bit about that. I mean, talk to us a little bit about, I know that y’all have some tremendous content.
[00:11:04] I wish I had gotten through more of it. But Web3, Fifth Era, all of the sort of things that, that you all are very well known thought leaders on. Talk to us a little bit about that, cuz that’s where I’m super interested in all this, is not necessarily the coins and the mania and stuff, but there are massive, problems that have not been solved.
[00:11:26] In which a potential to solve them through blockchain.
[00:11:28] Matthew Le Merle: Yeah. Thank you for asking about that. As you point out, Allison and I have published a variety of books over the last decade, and they’re all available everywhere, Apple, Amazon and many other places. I won’t talk about that specifically other than to say there’s a lot more content that we’ve written down than we’re gonna cover off in a podcast.
[00:11:47] The biggest problems. We started so solving a long time ago, and that is that we’ve got 8 billion people around the world and we were disconnected and it was very hard to communicate. And so we digitalized communications with TCP/IP and this tech stack that we call the internet. And that actually allows you and I to do what we’re doing right now, which is to communicate in real-time.
[00:12:14] Even though we’re not proximate we’re not sitting next to each other and we’re not writing anything down and sending it, and it can happen very cheaply and very quickly. It does require some energy. And we do need a network to make it work. And then we started digitizing content, which was the corollary.
[00:12:32] If you have digital communications, then you’re gonna have digital content. And that was initially, emails and posting. And later on it became music. And today it’s all the world’s content. We didn’t yet digitalize all the world’s transactions. All right? And you and I and everyone else in the world, 8 billion of us, we communicate.
[00:12:52] We share content and we transact. But the transactions are still offline, paper-based. A few of them are digital, but even the digital ones are first-generation digital, so Swift or VisaNet. Are important. And they do work, but they are not current-generation technology. They are version one 1980s and 1990s technology.
[00:13:19] And that’s the curse of the financial services industry, the payments industry, is that it digitalized early. And so unfortunately it’s on legacy technology and it can’t do the things that the modern world needs. We don’t wanna just communicate blindingly fast at no cost.
[00:13:37] We wanna transact blindingly fast at no cost. And that doesn’t exist. And we also wanna do things like micropayments. Maybe I wanna do a transaction with you and pay you a cent. I can’t. Visa doesn’t allow 1-cent transactions. And in fact, You would be overwhelmed with fees if you tried to do a 1-cent transaction.
[00:13:59] So what I’m saying is that we digitalize communications and content over the last 30 and 40 years. And now the moment is here where we have to digitalize all the world’s transaction activity, including its financial transaction activity, and that requires upgrading all the technology, and that is what we invest into.
[00:14:23] So that’s where we are bullish. We believe that is gonna happen now. It’s still not gonna happen quickly. My crypto friends, Web3 friends, they’d like to see it happen this year. I’m sorry it’s gonna take 10 or 20 years. That’s what it took for people to embrace the internet and electronic commerce.
[00:14:40] It doesn’t happen fast, but it’s gonna happen. It is inevitable. There will be no paper left and we will have digital transactions. It truly is inevitable.
[00:14:50] Jeff Williams: Yeah. And I think that’s fairly easy to see for most of us. I want to get your thoughts on, again, just coming from the everyday person here I think there’s, again, perhaps the association is inappropriate, but, Bitcoin is still something a lot of people are trying to figure out, and so it’s the sort of hoster, even if not appropriate for some of these things.
[00:15:14] What do we have? What are these average everyday human beings like myself? What do we have to gain from it? I mean, I always imagine these sort of payment processing companies as. If you wanna see the mob at work, I mean that’s where you go there and presumably the sort of, pitch to all of us is over protecting all this.
[00:15:32] And yet, the credit card numbers are constantly being leaked. Talk to me a little bit about what the sort of everyday person has to gain from this. And on the flip side, what does the mob have to lose? And is it fair to assume there’s a little bit of resistance and maybe the time it’s gonna take is a little bit longer cuz we’re dealing with the mob here a little bit?
[00:15:52] Matthew Le Merle: You see, when you, Jeff, when you say everybody, I’m thinking 8 billion people. And if I’m talking about 8 billion people most people have no access to most of the world’s financial opportunities. All right. So that we should be clear that almost all of the best investments in the world are only available to accredited investors.
[00:16:14] And there are very few accredited investors in the world. So we know this, right? Over the last 30 or 40 years, the highest-performing asset category, bar none has been early stage technology in the public markets, the highest performing asset class of this time has been public technology stocks, and yes, they’ve taken a bit of a ding this year, but over the last 20 or 30 years, they are the value creation of the public markets.
[00:16:42] Very concentrated, very skewed. But most of the world doesn’t get to participate in these types of investments early on. So that’s investing. When it comes to payments? Yeah. Most of the world doesn’t have the types of fast, cheap, frictionless payments that we deserve, and we should have.
[00:17:03] We shouldn’t pay anything for payments. Payments should be free and they should happen in real-time. And that’s what we should have. And by the way, technology does exist to enable that, but most of the world’s payment companies, and most of the world’s banks don’t do that today. They require a lot of time.
[00:17:23] And friction for you to get, as I showed you earlier on when I talked about international remittances and real estate transactions. And then when we come to stores of value, most of the 8 billion people in this world don’t have reliable, secure, portable, systems to store their value in. We do because we’re in America or in the West.
[00:17:47] We feel pretty confident that we have some good stores of value, but we also don’t suddenly get displaced and have to flee our country with a bag of possessions, at which time we suddenly appreciate that gold is not as good a store of values as we thought because it’s heavy and it, and the person who ramsacks our briefcase and turns over the cushions in our car, unfortunately, finds it and takes it from us.
[00:18:15] Or they rip the rings out of our fingers. And the jewelry off our necks. Gold isn’t as good and as secure a system to protect yourself if you are on the move, if you are displaced, 10 million Ukrainians currently are. And then, unfortunately, most of the world’s citizens aren’t particularly trusting of their government created currencies.
[00:18:41] I’m not just talking about Venezuela and Barbara and Argentina. I mean, I think that could be said for probably at least 2 to 3 billion of the world’s people. And they also worry a lot that they will wake up one morning and their bank account will be frozen and their reliable store of value will be taken from them or devalued or depreciated or something else.
[00:19:04] So that is what the world has to gain. Right? The world has to gain frictionless, accessible, and if you wish, disintermediated and out of the traditional system. And these are big benefits that some people in the world value enormously. Some people in the world, they’re nice to haves because they have systems that they already feel are quite good.
[00:19:35] But the good thing about this space that you and I are sitting in and focused on is that it really is enabling superior propositions. And they are superior propositions.
[00:19:47] Jeff Williams: This is compelling. You really are making this compelling. What are your thoughts on El Salvador? I have to tell you that I actually, you can’t see it.
[00:19:59] I happen to have spent some time living in El Salvador, so much so that this is a picture of me having climbed a volcano in El Salvador. Obviously a lot in the news, and one thing I think after having lived there is I love that country to death. I did not expect El Salvador to be the one to move to Bitcoin, but there’s a lot of what you’re saying there that does hold true.
[00:20:24] I mean, there’s a lot of political corruption, a lot of access to modern goods and services that countries like El Salvador are still a little bit behind. I’m just curious personally, kind of what your thoughts are.
[00:20:36] Matthew Le Merle: Yes. That’s a long question, but I think for your listeners there has been discussion in a number of countries around the world that they would complement their own currency, and in most cases, the US dollar with something else.
[00:20:55] And that other thing, some people have said it should be Bitcoin. But you have to step back and you have to say what’s really going on here? And what’s really going on is that there are some countries in the world that know that their people want something better than their government-backed fear currency, and they’re realistic about that.
[00:21:14] They know that, if you are in, in a country that has experienced a lot of hyperinflation and uncertainty and volatility, then maybe you should have something else. And historically that’s something else that would then be the dollar or gold. And if it were the dollar, then you’ve dollarized your people and your economy and there are many people who have benefited perhaps from dollarizing their countries.
[00:21:43] But if you want to look forward into the future, you need to have a digital equivalent. I already gave you some reasons why digitalized money is a superior, they clearly are more accessible if you have digital wallets and they are quicker, and they are cheaper and they can be easier.
[00:22:07] So those countries are then saying, alright, what should we, and how would we complement our fear currency and the dollar and gold with something else? Let’s think about a digital store of value and then really Bitcoin pops to the surface. And that’s what’s happening. Now, there are other reasons why people might embrace Bitcoin in this timeframe, and I would say one of the major reasons is that innovation and digital innovation are the drivers of GDP and job growth.
[00:22:30] In most countries around the world, innovation and small businesses account for most of the job growth in America as well as in most developed countries. And so there is a war for talent and for entrepreneurialism and innovation. And so digital hubs, here in America that would be, things like Silicon Valley, Austin, Texas, New York.
[00:23:01] They’re competing to attract entrepreneurs and innovators. The crypto community is very mobile. There’s a lot of digital nomads and digital natives who want to travel, and we’ve already seen that when a country embraces the crypto community, whether that be Malto and Gibraltar or then Lisbon, today it could be El Salvador.
[00:23:22] And El Salvador says, we will put in place a regime that is very supportive of innovators and entrepreneurs focused on digital manage assets, Blockchain, Bitcoin, Web3. And in addition, we got a volcano and the volcanoes started to do a lot of mining which isn’t such a bad idea. I mean, we are beginning to look at all gas that Texas flares off into the atmosphere.
[00:23:44] Which is obviously one of the world’s major polluting forces is flared gas, and we’re saying can we harness flared gas and use it to drive mining? Which would be a very good thing though, obviously Ethereum has done something different, so it’s a long answer.
[00:24:06] But going back to El Salvador, you can see there are multiple reasons, right? It’s embraced the digital natives, demonstrates that we are not just a dollarized economy, creative positive environment that might attract a bunch of entrepreneurs and innovators to come and live in our country and enter the future world today and try and leapfrog some of the things that we haven’t yet done that others are struggling with today.
[00:24:27] That’s enough for El Salvador, to take a good look at this. But it’s not easy. Even though the announcements are easy, it’s very easy to make announcements. It’s actually very hard to get the entire population of a country and all of its businesses and all of its government activities, all on the new payment platform.
[00:24:52] That’s not that easy. So they’re right in the middle of all of that today.
[00:24:57] Jeff Williams: Yeah, A few hiccups. And it probably doesn’t make it any easier when you do that at the top of a sort of market dynamic. In any case, what’s next for all of this? I wanna take a minute here.
[00:25:11] After you’d tell us what the future looks like in blockchain, I want to talk a little bit about what’s going on at actual Blockchain Coinvestors and what your strategy is and stuff, but, where do we go from here? I mean, what sort of stuff are you guys looking at? This is the funnest part of this whole thing for me.
[00:25:28] I mean, sometimes not knowing enough. It’s real easy to blow my mind here, but what’s your day-to-day like? What’s the sort of stuff you’re thinking about and seeing?
[00:25:36] Matthew Le Merle: In terms of what happens for blockchain, it continues to innovate and it continues to solve some very large issues that the world has and the use cases begin to become not only more and more widespread, but the degree to which those use cases get effectively addressed, gets better and better. And that is the process of innovation and change. And we’ve seen that, in every area of technology.
[00:26:05] So going back to the internet analogy, you and I remember when we would dial up an ISP, and we would hear some beeping and buzzing on our modem, and we might get a little bit of text coming over the modem on our screen. And we’d try and download an image and it would always break.
[00:26:24] And you would never get the full image. You wouldn’t even know what their image was that was coming down. And then you’d have a broken or disconnected line and you might have waited 15 minutes.
[00:26:35] Jeff Williams: I was the baby of four kids. I constantly interrupted that by trying to pick up the phone. So Yeah, I exactly what you’re referring to. Yeah.
[00:26:42] Matthew Le Merle: Yeah. So today we can’t imagine that, right? We have real-time video streaming like you and I are doing right now. But that was a process of innovation and it took, actually, it took about 30 years. About 30 years to go from simple black-and-white text transfer over a connected network, to what we have today.
[00:27:05] That’s a long time. So that’s going on in blockchain. Blockchain is innovating. Blockchain is iterating. It’s like the whole world’s throwing rocks at Bitcoin and Ethereum used too much energy. And Ethereum has innovated out of that problem. They now did the merge and they don’t use much energy So now what are the naysayers gonna say next?
[00:27:28] They’ll find the next thing and they’ll say, This is no good. And then the innovators will again, and they’ll wipe that issue off the cards if they choose to. And so that is the process of continuous innovation. It’s occurring in blockchain, in digital assets, digital monies and things are getting better and better.
[00:27:47] But that doesn’t mean they’ll be quick. It still takes time. That’s what’s ahead of us. So for an investor like us, we stick to our knitting. We do early-stage investing in equities and in cryptos, we have the world’s highest-performing fund-of-fund, as you mentioned at the outset. You can look at Preqin and PitchBook and see us there if you want to check that claim.
[00:28:11] And we have two direct funds, a direct token fund and a direct mid-stage growth fund. I can’t really talk too much about our fund’s cuz I’m not allowed to solicit in a public setting. But we’re easy to find. Blockchaincoinvestors.com. You can find more of what we do and unfortunately, we can only serve accredited investors as well.
[00:28:32] But that’s not because of us, that’s because of the US investment rules and regulations. And so that’s what’s happening for us. And then, for me personally, I’m enjoying very much being a part of something that I believe is so important, and it’s a lot of fun to watch a new generation of people grappling with issues that we’ve grappled with for 40 years and they’re beginning to solve them.
[00:28:59] And I worked on the Big Bang in London in 1983 and 84 which was when we essentially introduced the digitalization of public equities. We blew up fixed commissions and we ushered in things like algorithmic trading and high-speed trading. Those really didn’t exist before the sort of early we only got round to public equities.
[00:29:22] I, I thought that today all of the world’s assets would’ve been digitalized a long time ago. It turns out half of them are still paper-based. All our real estate, most of our funds, most of our private investments are paper-based, and I’m looking forward to it all being digital and I want speed, ease, and low cost.
[00:29:43] And I think I’m gonna get all of those things in my lifetime, and I think everyone else in the world is gonna get those things as well, and that will make our investment returns higher. Because like I said before, if you go from 3% loads on mutual funds to 50 basis points on iShares you deliver an extra two and a half percentage points and the return goes up and all the iShares products outperform and the capital flows accordingly.
[00:30:13] And I think we’re gonna see that happening in every investment category. And payments will be better. Hopefully payments will be free. And hopefully lending and borrowing will be a lot better as well.
[00:30:27] Jeff Williams: Since you didn’t, I’ll say a couple things about Blockchain Coinvestors. By the way, you’re a customer of ours.
[00:30:32] We very much enjoy working with y’all, so thank you for that. Better around as Blockchain Coinvestors since 2014, lroughly 500 million AUM. Yeah. Still on fund three?
[00:30:48] Matthew Le Merle: Oh no, we’re up to fund six at this point. But Jeff, let me just say, we had kicked off our funds with a traditional fund administrator that was very good at doing things in a traditional way. But the challenge in this space is it is different and to be a fund administrator for a blockchain or a crypto fund, you’ve got to understand, what does that look like?
[00:31:13] And it may include custodian tokens on new custodian platforms. It may require, calculating, uplifts in new and different ways. Some of the fund structures, including our token fund, for example have, even though it’s broadly a hedge fund model, it has some pretty complicated nuances because of the notion of it having liquid tokens at some point as well.
[00:31:38] Anyhow we’re very happy that they really wanted to support, and to be honest, most fund administrators were not interested, or hadn’t built the capabilities. So we chose to work with you and we work with you across all of our funds.
[00:31:52] Could we all get better? Yes. But are you the best show in town? Yes. And we’re very happy to have all our funds with you.
[00:32:00] Jeff Williams: Awesome. Thank you for that. I had seen a webinar that, that you’d done, I think back in June – crypto winter. And I just in talking to you now, you’d think that somebody who was this involved in blockchain and crypto would be sweating now with what’s going on.
[00:32:17] And all I can see is confidence. I can see, like you mentioned being passionate, I can see that, these are things that you spent your career working on and now you can see a light at the end of the tunnel. But there’s a lot of people who bought Bitcoin at the top.
[00:32:31] They might be sweating it a little bit. Cryptos struggled a little bit. That’s a huge opportunity for you.
[00:32:37] Matthew Le Merle: So firstly I do need to be a bit careful because I do appreciate that it’s a very tough time for many people, and as you point out, there are people who have suffered badly from being too much in the public liquid markets and maybe being too overexcited about investments that were at their peak..
[00:32:55] We’re always taught by low sell high, but everyone gets excited when markets are high. And unfortunately, some people find themselves having bought high and hopefully they don’t need to sell low. They can wait for things to come back. We don’t do any of that, so we don’t do public liquid investing.
[00:33:16] We don’t use leverage. We don’t really invest in crypto hedge funds as a strategy. We don’t do yielding and staking. We’re an old-fashioned early stage venture investor. We do token investing as well as equity investing, but it’s all early and mid-stage, and that’s what we do. So the irony here is that early-stage venture outperforms in recessions and there are statistics about this.
[00:33:47] StateStreet’s got some very good stuff, but there’s sort of several reasons why early-stage outperforms in the two years after a recession, and it’s a good time to be an investor when there is a recession. And the main one is valuations come down significantly and so you simply get a lot more for your money.
[00:34:05] The second is that there’s less competition for the best teams and the best-funded projects, and they also have the chance to roll up and do acqui-hires and acquisitions of teams that maybe have run out of money. And then this is a bit more subtle, but as the recession begins to die away. Big enterprises that have had to skinny back in the recession suddenly want to grow again.
[00:34:31] And in order to grow, they’ll embrace innovation much more. They’ll do partnerships, they’ll do acquisitions and joint ventures and other things. So we actually think now is the best possible time to be an early-stage blockchain investor and we have a lot of dry powder and our goal is to put a lot of money to work right now through the fund partners and directly.
[00:34:53] But I do wanna say, I do also appreciate that unfortunately, a lot of traders have been hammered in public equities too. So it’s not just about public. And I’m sorry that happened to them. I don’t know how trading and price happened, so I don’t do it. We avoid it cuz it’s not our expertise.
[00:35:15] Jeff Williams: Yeah. It’s clear what your expertise is. So exciting to hear people that have sat and watched problems exist throughout their careers. And then, get excited about, kind of latter part of their career, working really hard to try to solve those problems. It’s clear that’s what y’all are doing and it’s very impressive.
[00:35:35] Must just be fascinating for most of us who don’t know, much more than enough to be dangerous here. And to lose money, investing in some of these more tradeable things that sort of suffer from the mania, but must be really fun to see it from that point of view and to get on a view into the insides of things like this that are still, perhaps 10, 20, 30 years from really becoming more mainstream. What else? What did we miss here? What else do you wanna tell us?
[00:36:03] Matthew Le Merle: On that last point that you just made, there are some best practices of technology and innovation investing. And I would say anyone listening to this should first read up on those before they take the plunge because blockchain, crypto, technology, innovation, there are a lot of risks and you should subscribe to the best practices.
[00:36:29] They’re not complicated. Try to invest with the best investors. Be highly diversified. Try and buy low and sell high. Have a long-term investment horizon. And don’t allow yourself to be either overallocated into innovation or conversely, don’t get yourself into a position where you have to sell in the down markets.
[00:36:52] You’ve got to be able to look through down markets and be patient and you should dollar cost average too. So I just rattled off six or seven things. I probably forgot a couple, but my point is, I feel like what we saw happen in the last couple of years was people just ignored those simple best practices, and in crypto specifically, we still had innovation risk and total failure risk into the public markets.
[00:37:20] And that shouldn’t be happening really. We should bake out failure risk before something goes public. I say we, I mean the marketplace, it’s not anyone’s responsibility, but in public equities, you don’t normally have public companies that could go a hundred percent to zero, in public crypto. I think we have a good number of crypto tokens that don’t have real businesses, haven’t really built and deployed software, don’t really have good use cases and aren’t really generating revenue in their own rights. They’re speculative tokens or assets, and I wouldn’t recommend anyone invest in a hundred percent speculative, tokenized crypto. I mean, that doesn’t make any sense.
[00:38:07] So anyhow, I said a lot there. What else about us? I think I’ve said too much already. You can find us at blockchaincoinvestors.com. We do want to educate. We have a lot of resources ranging from newsletters and webinars and other things that we do.
[00:38:24] So even if you’re not an investor, please do go to blockchainc investors.com if you want the benefit of all of that learning. We share it with everyone and I’ve really enjoyed being with you today, Jeff.
[00:38:36] Jeff Williams: Thank you, Matthew. Likewise. Fascinating stuff. And always keen to kind of keep an eye on this stuff.
[00:38:42] I wish it happened faster for a lot of reasons, but if only because all of the sort of distractions that will now, cause me not to be checking back on you guys regularly. But this is exciting stuff. I’m excited for you and look forward to kind of keeping tabs on what happens. Thank you so much for your time.
[00:38:58] Matthew Le Merle: Thank you. Very good to be with you.