Singularity University and Agile VC — Shuonan Chen — Solving world problems with blockchain, and tho

The Bitcoin, Ethereum, and Blockchain Superconference is coming to Dallas, Texas, February 16th, 17th, and 18th in 2018. If you know of a better way to get the latest insider knowledge about crypto, to hear directly from the top minds in this field, to interact personally with 800 fellow crypto lovers, hodlers, investors, miners, traders, developers, and founders, then I'd like to hear about it. If you don't, then you don't want to miss out. Register today for the Bitcoin, Ethereum, and Blockchain Go to bitcoinsuperconference.com and register today as a super early bird to get the lowest rates on tickets and hotel rooms. That's bitcoinsuperconference.com. Welcome to Almost Here, Around the Corner Future Technology Podcast with Richard Jacobs. Future technologies poised to transform our lives for better or worse are the focus of this podcast. Almost Here means these technologies are now here and starting to be used, or just around the corner. Bitcoin to artificial intelligence, 3D printing, blockchain, virtual reality, and more.

Hello everyone and welcome to the Future Tech Podcast. My name is Josh Thomas and I am here today with Shuo Chen from Singularity University. Hello, Shuo.

Hi, Josh. Thanks for having me.

Well, we're glad to have you. And what Singularity University is, to my understanding, is you are leveraging the world's cutting-edge technology to solve some of the world's biggest problems. And that's a— that is a mighty mission statement, to be sure.

Yeah, you got it. So everyone on the faculty really covers different areas. For example, I focus on entrepreneurship and really focusing on how you can leverage exponential technologies to work on projects that tackle some of the problems that we face as humanity. So whether it be environmental challenges, renewable energy, or even going into space. So fortunately, I don't have to tackle all the problems as one person.

Yeah, you got help, hopefully, because that's quite a few levels of expertise there. So, okay, so you're, you're a faculty member of a university. What exactly is your role?

So my role on the faculty is A couple. So as you know, SU has a number of different programs. And one of our biggest focus areas, well, I guess can be into 2. One is our GSP program, our Global Solutions Program, where we actually enroll entrepreneurs or aspiring entrepreneurs in a program that teaches them about exponential technologies. And our second prong is our executive program.

So tell me quickly what you do for entrepreneurs. Especially tech entrepreneurs.

Yeah, so for tech entrepreneurs, we have a number of different programs ranging from our GSP, our Global Solutions Program, that puts them through a boot camp that teaches them all about exponential technologies, all the way to our global conferences that just brings tech entrepreneurs together for a clash of minds in just a span of 2 days.

Wow. Okay. So this is definitely a big deal for sure.

Yeah.

Okay. And so it is entrepreneurs and tech startups and in all possible industries. You'd mentioned space before and medical technology. What are, what are some other examples of different, different industries that are represented?

So we actually have a couple of focus areas that we really focus on. as global problems that we want to tackle are what we call them global grand challenges. And it ranges from energy, focusing on sustainable and accessible energy, to environmental challenges, like I mentioned, to food. So this can be safe and nutritious food, or it could be really the latest technologies applied to how you grow food in areas where historically hasn't been as accessible. It could also range to shelter and responding to disasters and include, well, space I mentioned, include water, making sure that we provide ample and safe water, to governance. This is a much bigger topic, but this is a much more societal problem. So working with the right institutions to make sure that we have the right principles of justice established in places around the world, also tackling issues of health and learning and prosperity and security. And so this is really a broad range of challenges that we try to tackle together as an institution.

Okay, excellent.

It's totally fine for me to talk about my 2 other roles as well. My full-time role is as a venture capitalist. I'm an early-stage investor. My business partner and I run our own early-stage enterprise-focused fund. And outside of that, I also run a nonprofit that's a community of about 4,000 engineers and entrepreneurs. So full-time on the investing side, and then also spend time on the nonprofit side. And I teach at SU as my third role.

Okay, understood. And so, so one of the, one of the areas that is a specialty for you is blockchain technology. And tell me a little bit more about how you participate in that and, you know, what, what you see as the current landscape.

Perfect. So, as I mentioned, full-time my business partner and I run our own venture fund. And so we mainly focus on early-stage B2B solutions. And that means that it's technology agnostic. And what What's happened to happen is actually since a couple of years ago, my business partner and I started following blockchain, really interested in enterprise-level applications. And so we've been really exploring different opportunities, and a lot of the time everyone gets focused on financial applications of blockchain technologies and kind of forget the rest of the applications, or it doesn't get talked about as much, just given the sheer scale. Right. Especially in the recent year of how much folks have managed to raise through ICOs. But what I think is really interesting is how you can use blockchain technology to help large companies solve problems that they weren't able to tackle before, whether it's in the capacity of system of record or it's beyond that in terms of being able to allow them to store information much more cheaply and communicate more effectively on a massive scale level.

Okay. And so what are some of the interesting projects that you've seen come across your desk in the last, let's say, 2 months?

So there's been a couple. The first one is a company called Stream. It's actually an investment that we just did. What's really interesting about StreamCoin is that essentially they're building a platform that would do a very similar thing as YouTube, except it leverages blockchain technology for streaming. And it's able to bring in all of the stakeholders in the system to participate and essentially awards them with a utility coin.

Okay, and so I've seen a couple of iterations of other technologies on the blockchain before, and so this is a great example, Stream. What is the advantage of taking a YouTube-like platform and putting it onto the blockchain?

That's a great question. So the first question that we usually ask when we see a blockchain company is, why do you fundamentally need blockchain technology? And I think your question really gets to the core of that. So if you don't use blockchain, is there another way that's more effective? So I think in order to answer that question, we really need to look at a couple of key characteristics to blockchain that distinguish it from any other way. So for example, if you were just simply a system of record, can you use another type of database that's more effective to communicate and just avoid using blockchain altogether, especially because in terms of infrastructure, there's a lot of places where it's not yet fully mature. But when it comes to video and content platforms and streaming, I think the biggest reason as to why blockchain is a really effective way is because fundamentally Blockchain is decentralized, and as you would have with any content platform, essentially you have both content creators and content consumers, essentially. And so when you have a platform like that, having a decentralized way to be able to give everyone who's a participant in the system a buy-in to essentially together make the community more valuable is actually very effective. And 2, blockchain is actually fundamentally a really cheap way to store and communicate data with the hashing function. And this is a characteristic that a lot of people don't necessarily talk about, but I think it is quite important. And so when you have something that allows you to really transfer data more efficiently than before, I think this is a really powerful way to leverage systems.

So let me ask, using Streamcoin as an example, because you're talking about it. I actually think it's a great example because everybody in the world knows what YouTube is.

Yep.

And this is some kind of blockchain iteration of a YouTube. But YouTube is already really, really efficient at delivering highly compressed, high-quality video, and there's hardly any lag times, and they've got tons of server space out there. And it's got a brand recognition that, you know, everybody knows. What advantage would a consumer have to start using Stream versus YouTube? And what advantage would a creator have to start using Stream versus YouTube?

That's a great question. So there is a number of reasons, but I absolutely agree with you that YouTube is already very efficient. Why do we need a new platform? Well, for content really consumers, the key reason is that YouTube's fundamental business model is advertising-driven. So, as long as you are a participant on the network, actually, whether you are a content consumer or you are a creator, essentially, in order for both of them to maintain a sustainable system, for example, me as a consumer, I have to get used to the fact that whether I pay a monthly subscription fee, or I have to consistently watch advertisements. And either way, essentially my data is being collected and being monetized in a way that essentially would get directed to advertisements. And whether or not I, as a participant, like a video, comment on a video, or become a very active, I guess, node in terms of engaging in content, doesn't really matter because that activity in and of itself doesn't fundamentally create value for the content creator. So as long as they get the right number of views, it really doesn't matter whether or not I comment. However, well, actually, similarly for the creator of the content, if as the creator, really their only option is to get as many views as possible. Now, there are a number of them who have managed to find some other business models outside of YouTube. For example, they start a subscription business. Or if they sell a product outside of YouTube that they then advertise or create content around, that is obviously a way to go, but it is not something you can monetize on YouTube itself where you can start to sell that product. And what a platform outside of YouTube is able to do is to make every single participant in that system valuable, essentially. So, me as a participant, if I hold a virtual currency that is linked to that community, instead of just liking the video, I can directly tip that currency. And the more people that use that currency, the more valuable that currency is. And so, my presence as a participant on the platform, as a consumer of the content, actually becomes valuable. And similarly, for the, obviously, the creators, whenever they create content and they get tipped, that is direct revenue rather than having to rely on purely advertising.

Okay, and so the way that a content creator monetizes this is somebody likes their content or interacts with it in some way, and that consumer then gives them a tip for a good job or something?

So you can imagine an analogy where right now you would see a YouTube video and you would hit the like button. Well, I guess in terms of analogy, essentially what would happen on this platform is that instead of clicking like, or rather with clicking like, it would transfer an X number of coins that would be rewarded to the content creators.

And where do those coins come from?

And so this is created by the community as a way of rewarding content creators.

Got it. So, and that's just one of the projects that you are investing in now, and it certainly does seem interesting. It reminds me of Steemit, which is a similarly structured content generation platform. People get rewarded for writing good content, that sort of thing. Okay, so it's kind of like the Steemit for video.

So it's very similar to that. I guess the only difference as to this particular company is that the startup actually started from a pure tech perspective where they were really focused around streaming technologies. And so they actually didn't get started just as a video platform, but the team has very technical backgrounds and they've been working on video streaming for a number of years.

Okay, excellent. And so as with your position as an investor, I'm sure you've seen your share of great ideas and you've seen your share of crummy ideas. I'm not going to ask you to go through the hall of shame or anything, but of all of the deals that come across your desk, what percentage of them are actually attractive enough for you to want to move some money around?

That's a great question. So, I guess that's the only downside or the biggest downside of the job is how often we have to say no. So in terms of— well, actually, no matter how good your deal flow is, we have to account for the unsolicited pitches. So I get tons of emails just inbound. Some people figure out my personal email or my corporate email, and I get tons of messages through LinkedIn all the time. And so just on a day-to-day basis, I get at least a couple hundred unsolicited messages. just across email and LinkedIn. But in terms of the deals that we actually get come through in our pipeline, we really look to do about 1 deal per partner or 2 months or so. And that is relative to the industry a pretty normal speed. And by industry, I mean not specific to blockchain-focused funds. I mean just general funds. Some of the largest funds look to do one deal per partner per year. For us, because we invest relatively early stage, really between the two of us, we get to do, well, one of us per month, so we alternate. And the benefit of that is we get to focus on the companies that we invest in, but also at the same time really be able to dig into one industry to make sure that the company that we invest in is really who we think are going to be the winner in that sector. And so, to answer your question more specifically, from month to month, it's really hard to get the right percentage, but most likely much less than 1%.

Okay. Yeah. And that makes sense because there's a lot of stuff out there and there's a lot of guys out there that want money and there's a lot of guys that need money. But it's always good to get this in perspective. If you have an idea for a new technology or new blockchain company, your chances of actually getting funding are less than 1%, if you're in the entire pool of people. Now, obviously, there are things that you can do to increase that percentage by getting a good team and getting the right introductions, but if you're just somebody with an idea, you're You're kind of like 1 in 100, 1 in 1,000, trying to get the attention of someone like you that actually puts the money into it. And that's a good perspective to make sure you keep in mind for anyone who's creating a new business or a new idea that's seeking funding. You really do have to stand out. And let me just ask you, speaking of that—

If you don't mind me adding a very quick context your comment earlier. So I absolutely agree, there's a number of things you can do to increase the chances of that, and just being based in Silicon Valley actually already improves the chances a lot more because essentially you have the opportunity to run into investors in coffee shops. But more, I guess, in addition to that, this is also where essentially blockchain technology has become really powerful because it's enabled ICOs or token sales, well said, to be really technically correct. If you speak to lawyers, they would recommend that you call it token sales instead of ICOs because it's not necessarily a security that you're selling, whereas ICOs imply something that's very similar to IPOs, security sale. But this is the first time where we saw any other method of raising funding be many times of what the venture capital industry is giving out. So as, as revolutionary as crowdfunding was before. It never reached 10% of VC funding to all the startup companies that were in the spaces where crowdfunding was really kicking off, particularly in the hardware space. But if you look at ICOs, I'm sure you saw just how much money was being raised. And this is not just in the US, this is around the world. We see really around the world China was And then there was the ban, but you also see Singapore and Switzerland becoming new hotbeds for startups raising funding by ICOs. So I think it's a double-edged sword in that it's a really powerful tool for folks who otherwise have to go through a long and difficult process to raise through VCs and have it be a really small hit rate, but at the same time folks who actually raise the most successful ICOs are people who typically have raised through a pre-ICO and have raised from reputable VCs, and people who go through the process actually learn through the process and are scrutinized and actually make the relevant changes to make their business long-term successful. So just to add a little bit more context to your comment around funding.

Understood. And so aside from being based in Silicon Valley, What would you say, what would be your top 3 tips for a company that is seeking funding or seeking your attention? What would be your top 3 tips of, you know, these are the common things that most people just get wrong, and if you get these right, you're standing above the pack?

That's a great question. So it really depends on what industry the company is in. If they're building a software company that sells to large tech companies, and most of the tech companies are headquartered here where the decisions are made, then there's really no excuse for not being based here. However, if it is a software company that's selling into, for example, Fortune 500 companies where they can argue that where they're based, they're able to sell into a lot of headquarters That I would find convincing. So essentially, if they're not based in Silicon Valley, convince me why they're being based where it's optimal and why there's no other company getting started won't have an advantage over them. Because there's so many different startups getting started every single day, you really have to think about, well, is the decision I'm making going to help me best enhance my chances?

It's interesting that, uh, your geographical location has such an influence on this because you haven't said anything about how great their technology is or how revolutionary or any of that stuff. It's a very practical thing. Are you in the right place to be able to be successful?

Absolutely, because your geographic location actually has tremendous implications because one, it affects how much funding you can get and that can play a big role in terms of how quickly you can grow. And it also affects who you can hire. And I think as a startup, there's really 3 core things you need to do right. One is your fundamental technology and your business model. The other 2 components is how you raise your money and who you can hire, right? And so in Silicon Valley, you can hire relatively easily and perhaps even convince people who are working for Google and LinkedIn and Facebook to join you. in this mission to change the world. But if you're based elsewhere, it might be a lot harder to get the best engineer to join you. And so if you're in the energy space, on the other hand, if you're based in Texas, it makes a lot of sense because a lot of it's really booming in terms of the energy sector. If you wanted to hire people who are coming out of large companies, or if you wanted to work with folks in different parts in the whole supply chain of things, that's where you find the right people. And so, it really depends on which sector you're in. And so, to come back to your question in terms of the top 3 tips, number 1 is making sure that you're in the right place.

Important.

It's very important. And I would say number 2, in terms of reaching the right VCs is being able to articulate why you're the best team to tackle the issue at the right time. And so most likely the idea that a team is pitching to me is not the first time I've heard the idea. Just like earlier I was telling you about SteamCoin, and you know, you've heard about Steam It. And so I think what ultimately makes a difference is when a founder is able to convince me that they're the best person to do this. Because really there's very few new revolutionary ideas that investors haven't yet heard. And so they'll be convinced that you're the right team to do this for a number of different reasons. And particularly in the enterprise and software space, it's 80% about experience and 20% about technology. Because when you're building an enterprise technology, even for a company like LinkedIn or like Or like Salesforce. Obviously now they're much larger platforms and it's harder for you to just copy and replicate. But in its early days, well, really it doesn't take a patent-level or super amazing engineer to be able to replicate a similar platform to what LinkedIn has or to what the core software that Salesforce is building. So ultimately, what differentiates a team from another to successfully being able to build this is their experience. Do they have the right, whether it be operational or sales and marketing experience, to be able to build a platform this large? And so that's really the second thing that I'm looking for. And I would say the last part or tip that would really help entrepreneurs convince investors overall is really articulating this opportunity specifically as to how it differentiates from other competitors in the space right now. I think a lot of the pitches that we get tend to say we're the only company or we're the first company that does this. And as an investor who has seen a lot of pitches in the space, it tends to lose credibility a little bit when we're like, actually, we just saw another pitch similar to this. So I would say focus on one niche area and just be realistic about why your startup in particular wins. And I guess to also add a little bit more context specific to the crypto and blockchain space, just given how successful we've seen a lot of ICOs or token sales have been, we've seen a lot more entrepreneurs really rush into this space. And so it's very easy to just be an entrepreneur building something in the blockchain space, but not necessarily having the right edge or the right platform or the right set of experiences. And so I think the best tip to help entrepreneurs coming into this space is really making sure that you're coming in at the right time for the right opportunity, because a lot of great companies have already been built, and perhaps the idea that you have in mind now is better built on top of or being part of an existing project rather than a standalone project. And so really evaluate whether or not this is the right project to build separately. And if so, then absolutely make sure to highlight to investors that you're pitching to how it's different.

So to sum this up, you're— this is great, by the way. I'm glad you shared this. If I were to sum up the best 3 tips to get noticed and get funded: be in the right place, be the right person, and be clearly different.

Absolutely.

That is priceless advice that you just shared here, and I hope that anyone considering starting a new company will heed that advice because there's really nothing revolutionary about it. It's just, you know, it's not that easy to do. It's easy to be in the right place. You just, you know, find out where it is and move there. But convincing somebody that you are the right person takes a little bit of effort, and clarifying how you're different takes a little bit of effort. And as I'm sure you've seen with the sub-1% success rate, most people just don't take the time to do that, right?

Yeah. In fact, most of the messages that I get are cold emails that say, well, you know, hey, I'm working on a startup in this space. And usually it's a very generic term that says, for example, I'm building an AI startup. And really, it just asks for funding in the first email. And I know a lot of times it's because people don't necessarily know the right way to navigate through the industry or how to pitch. And I think this is where, for example, podcasts like this are really helpful resources, right? So I think really do your due diligence before you pitch to an investor is really the safest way to go. There's really no magic or secret sauce in terms of pitching. Oftentimes it's by being authentic and just doing your homework. If you're pitching to a specific investor, read the articles they've written or blogs that they've written and Listen to the interviews that they've done, and look at the companies that they've invested in to make sure that you understand their style. To be honest, which companies get funded in the end can be a very subjective process. And so if I had to distill it down to 3 tips, you summarized it perfectly. I couldn't have said it better. But if you were just listening to that, it could sound very generic. And so really down to the specifics is just making sure that you know the person who you're pitching to, and you make the pitch most relevant into their experiences and their area of focus.

Very good. Well said. Shuo Chen from Singularity University, thanks very much for coming on and joining us. Any final thoughts for our audience before we go?

Yeah. So I believe a great part of your audience is really interested and passionate about the potential of blockchain. And this is just the very last thing I wanted to mention, probably because I have a previous life where I did quite a bit of work around regulations. I think I'm extremely excited about the potential of blockchain to change a lot of things, particularly in the enterprise space where I'm focused on. But where I just want to quickly leave folks with this thought is how you set yourself up for success is really important. I was just on a panel with folks who are ex-SEC as well as folks who defended Coinbase in the most recent court case where essentially the San Francisco court had asked Coinbase to release a lot of information of folks who were trading over $20K. And I'm often involved in a lot of these conversations where the common takeaway is make sure that you set up yourself for success by having the right conversations with regulators and with lawyers as well as with tax experts in advance. Because now there's been a lot of changes all around the world. So even if you're not based in the US, a lot of regulators still look to the SEC for guidance. And oftentimes people think if I'm not doing an ICO and I'm not selling a security, I can get away with just a utility coin. Actually, yesterday the SEC had just gone after a utility coin as well. So I would just say make sure that you understand the implications of the business that you're building, especially now that folks in the industry are really increasingly scrutinizing companies in this space. And so make sure that you talk to the right folks that can help bring you along.

Thank you so much for being on here with us, Shuo. This has been extremely insightful. And for the rest of our audience, thank you for joining us.

We'll see you next time here on the Future Tech The Bitcoin, Ethereum, and Blockchain Superconference is coming to Dallas, Texas, February 16th, 17th, and 18th in 2018. If you know of a better way to get the latest insider knowledge about crypto, to hear directly from the top minds in this field, to interact personally with 800 fellow crypto lovers, hodlers, investors, miners, traders, developers, and founders, then I'd like to hear about it. If you don't, then you don't want to miss out. Register today for the Bitcoin, Ethereum, and Blockchain Superconference. Go to bitcoinsuperconference.com and register today as a super early bird to get the lowest rates on tickets and hotel rooms. That's bitcoinsuperconference.com. You have been listening to Almost Here, around the corner of future technology Thank you for listening to the Future of Everything podcast with Richard Jacobs. Subscribe to this podcast, post a review, and discover more future technologies that are poised to transform our lives for better or worse, such as Bitcoin, artificial intelligence, 3D printing, blockchain, virtual reality, and more.

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