Obstacles to the IT Upgrade | Andy Tang & David Needle

I don't pretend to understand the complete depth of this, but you mentioned mining. Is there really a valid concern here that the actual computing power to support this big infrastructure is somehow beyond our grasp at some point, or how do we deal with that?

I think this is a dynamic equilibrium, so it'll continue to change. If you look at this again as a long baseball season, you're going to have some parts of the season where someone's batting 1,000, and it's not gonna last.

Right.

So, it's a self-healing system, I think. You know, the moment you have 50% of the mining happens in China, some other miners will start picking up, and I think in the long run, it's a pretty— I like to believe it's a pretty resilient network. It will have problems, just like the internet. All kinds of problems, regulatory challenges, technical challenges, you know, consumer confidence, all of that, but I think over time, if you look at the fundamental technology, it actually is pretty deterministic, we need a major IT upgrade across all industries.

Across all blockchain, or?

Blockchain is the IT upgrade that's going to happen to media, to Food to government to—

You're not saying blockchain needs an upgrade, you're saying this is the upgrade.

This is the upgrade. The IT upgrade is blockchain, is to take advantage of all these servers in your pocket.

Right.

Yeah.

Nice. Amazing. One of the things I remember from the dot-com era before the bust was one of the ways companies got invested Is they said, look at all these eyeballs we have, look at all these customers. And in retrospect, at least, that became kind of a cautionary tale.

Yeah.

It wasn't, because that wasn't real. Is there any analogy in what you see today where things are being hyped for kind of the wrong reasons?

Absolutely. This is such a great example. I'm glad you brought this up. I remember I was at an investment bank during the dot-com days.

Yes.

We were valuing companies first based on profit and then based on revenue and then based on future contracts and then based on number of customers, eyeballs, and then based on the number of engineers. Does that sound familiar? And then, you know, and then there was a correction. Today you see some companies being valued based on, you know, first based on, you know, I don't think there's any profit, based on maybe number of users and then the the quality of the team, and then the latest metric is the number of people on Telegram in their community or group.

Yeah.

So I think it's a phase. I think, you know, when I hear stories like that, it doesn't make me more nervous because I've seen it go through. Because at the end of the day, these internet businesses are awesome, right? You look at— there are plenty of internet businesses that went out of business, but the ones that survived, in fact, the ones, the second group of internet companies that share economy of these e-commerce companies that were built from the failed internet business, they're pretty awesome. So I do think it's a necessary and natural phase to go through, but just don't get too overly excited. You can, but not if your job is investing, you've seen this and you have a strategy, that strategy's dollar-cost averaging. So when it's really exciting, you don't want to overinvest. When this is really sort of looking very depressing, you don't want to underinvest. So you kind of just keep an even keel, same amount of investment put to work. And over time, what you'll find is that the long-term investment thesis is actually very easy to predict, right? Humans will live over 100 years, you know, because Less than 100 years ago, our average life was 40 years, right? Now it's 70. It doubles, right? So something will come along. Blockchain technology, it will upgrade entire IT infrastructure. It's just very deterministic if you take a 20-year view. But what you don't want to do is make a 5-year bet, and then you may get caught with your pants down.

So I'm kind of thinking this through. I'm thinking maybe you have an endgame here of investing, Investing in immortality should be long enough to see the blockchain come to realization.

That's right, that's right. Prioritize the immortality so we could see the end of blockchain.

And, you know, 2 quick things I wanted to mention. One is, if nothing else comes of this, look up Internet Squared and Andy on the internet, because there's some great videos of what you've done talking about it. Many of these topics. Well worth checking out on YouTube, I think.

Yeah, it's actually on our company's website, drapertv.com.

And you also have a conference yourself.

Yeah, we actually— so as part of what we do, so we started with venture investing with Tim's fund, and today we have a US dollar fund, a renminbi fund in China, and then most recently we also have a crypto fund. Really, we try to listen to our customers, and my customers are entrepreneurs and our limited partners. And then we also have a nonprofit arm that does education. And then, so that class is sold out, that's in April, so it shows you the excitement of the blockchain course, one-week course. We are still looking for partners and sponsors, and if you are interested, feel free to talk to our folks. I haven't really looked at this.

I mean, is blockchain filtered out to the university level?

It's beginning to, and in fact, that's one of the things that we try to do is we try to fill that void. We see a lot of the entrepreneurs want to get into blockchain but don't know how, so the education piece is important, so it's done through Draper University. In fact, we'll have a course on immortality, a course on colonizing space, because that seems to be the gap between venture capital and traditional higher ed, right? So, we really try to fill that gap.

And then looking ahead 3 years, how big do you think this conference will be?

You know, by the way, one thing I've noticed is it's a sort of a temperature gauge for how hot a topic is. Most of the blockchain conferences are sold out within 2 to 3 weeks. So in 3 years, it depends on where we are in the cycle, right? I think this is easily a 1,500 to 5,000 people conference. I think this is huge.

And one of the things that— and I don't know if this is more of an urban legend, but I think we touched on the gold rush earlier. The original gold rush, that the story is that the people who made the money were selling the picks and shovels, and they didn't have conferences then, but if they did, they probably would have made money. But are those areas of investments as opposed to directly in the currency itself?

It's interesting you mention that. I think we don't invest in the— we don't just invest— we never invest in just the token itself.

Yeah.

It has— we invest in technology, right? If the course of investing in technology requires us to buy into a token, we have the crypto fund that does that. But we started investing in the picks and shovels, that's how we got into Ledger, Coinbase, and that's precisely the investment thesis. We'll continue to do that, but I think to an extent there are some interesting blockchain companies like VeChain in China, in fact we were in 2 of the top 3 blockchain companies in China, VeChain, we made a seed investment there, and then we incubated Qtum, the 3rd largest in China, out of Draper University. So that was a guy and a piece of paper.

Wow. Yeah.

That must have been a heck of a pitch. Yeah, I tell you, at the early stage, you know, they're all a heck of a pitch, right? I mean, they all look good.

It's just a matter of time before they Well, we're wrapping up, but basically you're very optimistic about where things are headed.

Yeah, absolutely. If you take a 10-year view, the future becomes very clear, right? My job is really easy because I make 10-year predictions. I can do that every day, all day long, in any sector. It doesn't take much, right? But it is very difficult to actually spend your time, dedicate your time, 10 years of your time doing one thing, Even though you're going to go through some tough times, everybody thinks you may be crazy or, you know, delusional, but you got to keep going.

Buckle up. What a fantastic discussion.

Please join me in thanking Andy. Thank you. It's awesome. Thank you.