Chain Reaction Podcast Recording

Good morning everybody Happy Wednesday thank you very much Thank you very much welcome to day two Here on the Builder stage my name is Alex I'm the editor-in-chief of TechCrunch plus and here on this stage Throughout the rest of this day we are Going to hear from Founders here from Operators you will have the chance to Ask questions quite a lot of how-to Topics if you know Tech brunch plus You'll know what we do here it's a lot Of fun we have a really great day ahead Of you Um notes we do have otter.ai running I Think on all stages I always have about Taking notes we will have that for you I Think you can find a link in the Application itself and the dealflow cafe Is behind me and the TechCrunch plus Lounge is right out there to your left In case you need to know your way around And today on the Builder stage we are Going to talk a lot about the labor Market and how it relates to startups How to stretch Venture Capital dollars And of course what you need to raise a Series a today however as we do at Disrupt each and every day we are going To kick off with one of our podcasts and Today is no exception uh we are going to Hear from Chain Reaction our crypto Focus podcast which is moderated by Jacqueline melanick and today we have

Chris from Han Ventures so please give Them a welcome and I'll see you all in Half an hour bye [Applause] Hmm Good morning we love the early risers How are you guys I am Jacqueline Melanick and I am the host of Chain Reaction and we are doing this live here Today at disrupt and chain reaction is a Show that breaks down the biggest news Trends and drama and crypto that's kind Of like our slogan and for the special Live episode I'm joined by Chris lahain From Han Ventures prior to joining Conventures where he's the chief Strategy officer he was an executive at Airbnb for years he also co-founded a Strategic consultancy firm Fabian and Lehane that advises political corporate Tech entertainment and professional Sports clients a lot of different things And in the 90s he also held various Government roles like press secretary to VP Al Gore and with Special Assistant Counsel to President Bill Clinton Chris Thanks for coming thanks I had a lot More hair then yeah but I know I've Arrived I'm now on chain reactions so That's the end here at disrupt so thanks For having me it's a great resume but Let's start off by discussing your Background I mean you went from Government to Airbnb to crypto I feel

Like that's a bit of a roller coaster of A resume what led you here I think There's a couple things first of all Just genuinely generally the way I am Wired no pun intended Um I constantly try to do new chapters In life Um and one of the things I've always Strived to do this is something that Actually Katie Han at the Fun talks a Lot about which is doing your next thing Should be 50 new that's sort of a Lifelong learning growth mindset but in Particular you know specific to crypto And we were talking a little bit about This backstage I'll try to do the short Version of this but you mentioned I was An executive at Airbnb and I was Involved with the process to take the Company public Showed up at conference like this which Was awesome people talking about you Know going public and everything that Goes into that but at Airbnb you know The folks who really drove the source of The wealth where the Airbnb hosts the People who make their homes available And when we decided we were going to Take the company public we spent a good Year plus Negotiating with the SEC to see if we Could provide those hosts equity Um we are told by the SEC that there is This rule of 500 once you give out more

Than 500 shares you're considered a Public company and so we couldn't do That company goes public wildly Successful 100 billion dollar company uh The day that goes out Founders Incredibly values driven created an Endowment for those hosts but at the end Of the day right folks like myself did Well the banks which really only put Their balance sheet to work on this Ended up doing extraordinarily well but Those hosts didn't get to participate in The upside of that wealth and it really Just reminded me and struck with me that You know when you have new things like An Airbnb you need new rules for a new Thing if you want everyone in society to Be able to really fully participate and Benefit from it and so for me I took a Look at what Airbnb was to me a little Bit of maybe web 2.5 and then looked at Crypto which by its very the very Underlying technology of the blockchain And I come from the left is inherently Progressive it's Democratic it's Distributed inclusive it's open and Really saw that as an opportunity to be Able to drive the type of economic Results for society that you know I Think benefit us but it was really Coming from that experience and you know Seeing how folks were thinking about These old rules and not being flexible In terms of reimagining what the world

Could look like right and in terms of The IPO World earlier this week we saw Instacart went public we have a few Crypto companies that have gone public What do you think of that in terms of Whether crypto companies should go for The IPO route or is it kind of like Depends on who's involved I think it Very much depends on the underlying Model like what about the startups you Work of the particular yeah so um right So obviously when you think about the Startups that that we invest in right There's both you know startups that are Sort of structure around that token Model They're startups that may be more Traditional in terms of whether they Would go ultimately through the IPO Route I think the way we think about it Is ultimately we're investing in that Talent one of the things that we spend a Lot of time thinking about is hey does This can I explain this business model To a normal person with a normal person Be able to understand how this Technology is potentially going to Impact them and make their lives better And so for us to be able to answer that Question then ultimately translates into This is going to be a successful Business regardless in which direction And which route it chooses to follow and Before we move on another question I

Always like to ask us on the podcast When we start but I went into your Background first because it was just an Interesting background I like to ask can You tell me about someone you've met in The past 12 months in the crypto Industry that you were inspired by and What did you learn from them okay so This I could spend the end you only get To pick one I could spend the next 24 Minutes and 53 seconds talking about it One of the awesome things about my job And my roles I get them these incredible Founders ever every day and you know These are folks that are thinking about Where the world is going in many ways They're living in the future uh they're Incredibly optimistic they're Builders They're creators Um and I'm not ducking your specific Question it is just there are so many so I'm gonna I'm gonna give you a story How's that I'll give you a story Okay yeah yeah but it does involve Sometimes people do um we met with a a Founder this is maybe three or four Months ago it may have been longer um as You get older you start to lose track of Time right um and um you know this Person was um from Asia I think there Were the late teens third company that They had started and successfully Launched Um you know had gone to UC Berkeley

Computer science graduated in a couple Years Um really thinking about uh how you Could actually use blockchain technology In a really interesting way in an Interesting space I'm not going to get Into too many details but we're doing The meeting you know it's gone a couple Hours Um and you know this person gets up and Said well you know I have to go Um uh and we're like oh why and he's Like you know my dad's in the parking Lot he had he he was waiting for me and It was just one of those moments that Was just so awesome to have someone of That and if you were in this Conversation like incredibly Sophisticated on the engineering Incredibly sophisticated on the business Model Um and yet someone you know who's a who Is a genzir Um and still a gen Zer and just seeing That all play out um like I'm you know I'm the dad of two teenagers yeah uh and Seeing what that generation is thinking And and how they're approaching the World Um you know in the political environment Today there's just a lot of negativity And pessimism when you come to Conferences like this people in this Room like folks are thinking about

Optimistically about where the world is Going the problems but not just the Problems how they can be solutions to The problems and that particular meeting Just has stayed with me because you had You know half kid half incredible Technologist who's going to be wildly Successful really thinking about Problems of the world and how he can Actually help contribute to solving them Yeah I know when I go to crypto Conferences and I meet people who are Younger than me and they're like Anywhere from like 18 or 23 or whatever 25 and they've already closed a company Or they're doing another and I'm like Wow I gotta do a bit more with my life I mean you did my bio I don't feel like My bio compare these kids are in 18 19 Have already Surpassed that that's definitely Impressive yeah yeah so your Chief Strategy officer and I think it's a very Timely moment in the crypto world to Have a role like that we see a lot of VCS pivoting whether it's a generalist Firm that is now like leaving crypto or Crypto firms that are changing their Strategies I'd love to know how Han Ventures is kind of navigating the scene Right now amid all the U.S regulatory Situations I could call it yeah so Um you know as a fund uh you know we Raise just as there was the significant

Macro economic a correction Um and so we you know have the Proverbial dry powder in a really Interesting time you know just from a Pure fun perspective to be investing but You know adjacent to the earlier point Or points I was I was making like the Stuff that we see is really incredible And I'll maybe try to do an analogy here Because I think I'm old enough to do This you mentioned I was in the Clinton Administration in the 90s I came out Here in 2001 right and the.com became The dot bomb you know headlines and New York Times and other outlets not TechCrunch Um you know the internet is dead the Internet is starting yeah you're just Starting then uh you know the internet Is over basically Um and anyone who was out here knew There was just an incredible amount of Activity taking place you know it would Broadly what you could broadly call the The infrastructure level Um you know look some of the companies That blew up in 2001 had no business of Being around some of them were just Ahead of their time like before mobile Had really developed the technological Platforms and structure to be able to Exist some became wildly successful and I think we're sort of in a similar or Analogous time period and you know Tech

Does go in those types of cycles and so We do see this enormous enormous amount Of work taking place at the Infrastructure level I said earlier part Of our test is will someone be able to Understand how this is going to work and So you know in crypto you have level one Which is for the currency level Level three is think about that as apps And then you have level two which is Sort of the in between Infrastructure and you know amongst the Challenges in crypto is crypto all came At the same time compared to maybe web One where it happened sequentially right Right like you couldn't get network Computing until you had HTTP and so that Is sort of some of the stuff that has Taken place you know within the crypto Space right now I think we sort of see Three interesting areas Um you know asset class I mean there's 400 plus million people in the world use Crypto 52 million here in the US to put That in perspective I think that's 5x More than the number of people who have Electric vehicles in this country just To put that in perspective right um I Think 3x I'm doing this at the top of my Head more than the number of folks who Hold a union card more than the number Of people I think by a factor of two who Holds it who directly holds stock that's A lot of people but where I'm where I'm

Going with that is like just take a step Back there has never been one time in Human history The global currencies were created Without a sovereign entity backing them Um it's a really big deal to have Multiple Global currencies that have Been created that are people to people So asset class is is out there I think Um secondly as a storage of value I Actually think that's going to intersect As we go forward a little bit with AI in Interesting ways but as a way to store Value and right now you have a writer Strike an actor strike in Hollywood Imagine if you could actually you know Put your IP on the blockchain and Actually be able to have long-term Lifetime value in that and then I think The third area that we were really Interested in is how blockchain because Of its underlying Tech can uniquely Solve a long-term issue that has long Plagued society which is how do you Actually reconcile the conflict between Identity and privacy usually in almost Every case you have to pick one at the Expense of the other massive centralized Platforms today obviously build their Models off of and algorithmic leverage Model Um blockchain can actually uniquely Solve so that's no longer a conflict Um I won't go into all the details I

Won't talk about Merkle trees or Multi-party computations Or you know ZK knowledge proofs but Those are the underlying technology that Helps make that possible and so those Are sort of the areas that I think we Think are really interesting and there's Others out there as well I guess given Where we are today though a lot of People are saying that the U.S Securities and Exchange Commission SCC Is doing a regulation by enforcement and That's not a favorable aspect for many They just get hit with a lawsuit maybe They heard Whispers beforehand who knows But I would love to know your thoughts Given that you've worked in the Government now you're in crypto do you Feel like chair Gary Gensler and the Team are going about it the right way or Is there a better way to enforce and Create regulatory Clarity yeah so I Don't think the SEC has been pursuing This in a way that is really Consistent with the American tradition Which is you know government seeking to Work in Partnership right with Innovators Builders entrepreneurs job Creators to the benefit of the whole Country now that flows both ways by the Way Um but for a reference point 1996 Clinton White House what was then known As the World Wide Web is emerging a lot

Of conversations uh initially about Regulating it through the FCC as if it Was just the next thing a radio Basically the same regulatory framework You'd have for for radio and TV In the Clinton White House working in a Bipartisan way with Republicans and Democrats on the hill made a really Strategic decision they established a North star we wanted to make sure that The World Wide Web would be based in the U.S it was going to be a next stage After the Industrial Age right but we Then passed the 1996 Telco act wildly Successful if the definition of success Was to meet the goal of making sure that The internet economy was based here I Mean you Flash Forward all the way to You know right before the pandemic you Know the five largest companies in the World by market cap were existed between Here and Seattle I think four of the Five today internet companies they're Just coming right right right but but so Right that the internet has become Become the economy but where I'm Ultimately going with this is that the Government had a strategy yes um right Now when you feel like they have a Strategy now and so right now you have You know the SEC whether it's looking at Crypto whether it's looking at a whole Range of other things even AI it's not To talk about uh where they're

Effectively using an enforcement-only Approach To basically establish The policy for the entire United States And in crypto it is very very Inconsistent with where the rest of the World is going so coinbase just released A study last week showing I think 84 of The G20 countries are actually moving Forward with crypto Frameworks and Crypto legislation there's reports out There showing that developers are Migrating offshore Electric Capital has A great report on this Um and so I think you're going to end up In the U.S uh at least in the short term Is you're going to start to get A framework through the legal process The SEC has lost a number of cases that Almost never happens which tells you a Little bit how over the ski over their Ski their skis they are Um and um but that then runs the big Risk of we're actually not approaching This strategically like going back to The very beginning of this conversation I think crypto has an enormous potential To be able to do an awful lot of good Things in terms of how it attributes Economics how it makes our economy more Fair how it makes it more democratic I Mean the underlying technology is all Designed to be decentralized distributed Transparent inclusive but to optimize

For that you really would need a Government wanting to think about this In a strategic way why not create Aligned incentives so that companies who Are looking to get approval looking to Get licenses amongst the things they Need to demonstrate are how they're Actually using this technology to Advance Society like that's a strategic Way of thinking about it and and that is Not just happening now for our space Like ultimately we're getting the Guidance through the legal system these Businesses are going to be adapted Really resilient the technology is Inherently resilient they will work Their way through all of that but we as A society potentially lose the Opportunity to really fully leverage the Potential here yeah I also do feel like There is a cultural aspect to the crypto World a lot of people make jokes about It obviously warranted because monkey Pictures were once selling for over a Million dollars they're not worth that Money anymore and then there's you know People who just only care about token Prices money go up number go up whatever You want to call it uh but then of Course there's you know extreme value in The industry as you mentioned as someone Who covers this day in and day out I see The founders and startups who are Building really amazing things and so on

That note I agree with you but how do You advise your portfolio companies and Founders during this like regulatory Period of uncertainty yes so you know When we raised the fund you know we had A little bit of a rubric that we shared In terms of how we would make investment Decisions Um and you know at the top of that list Was the fact that we would really look For those Founders they didn't Necessarily need to be experts in policy But they did need to recognize that Policy was a subject matter that they Were going to have to think about as They navigated forward and so you know An awful lot of the work that we do a Lot of work that I do Katie Han you know Who comes out government herself was a Significant figure in the Justice Department helped navigate coinbase as It went through its process and Ultimately became a public company a lot Of the stuff that we do is to advise our Companies about how they think about Their business models how they structure Themselves how they sort of navigate you Know helping to provide a little bit of That road map for folks I mean there's a Lot of stuff I did at Airbnb for seven Years like when I started Airbnb we had To legitimize the business across a Hundred thousand cities and you know 220 Countries and regions around the world

And a lot of that was advising the Company and putting in place strategies So that would become legitimized and we Do versions of that you hear with our Portfolio companies Um and you know we're blessed that we Have an incredible group of Founders who As I said the beginning like these are Value driven folks like they're in this Space because they actually want it's Not a good time right but but they Really care they totally fair enough They care enough um and you know it's Interesting you say that like if you Look at the underlying data You know I'm doing this off without my Head so slightly I think this is Directly but definitely directionally Accurate maybe slightly off on the Percentages but I think roughly 60 Percent of the folks who own crypto in The US Um are gen Z or Millennials under the Age of 35 right nine out of 10 of them Believe the financial system needs to be Changed over 60 percent believe that Crypto blockchain are going to be really Important in making sure that the Economy works better for them right These 75 percent make less than 100K uh I think 40 are non-white Um and so it's you know these are folks Who in particular feel like the status Quo is not working for them the builders

Developers that we see sort of reflect That right they're coming at the space Because they have genuine values that Drive their interest in it Um but there's a large number of people And this represents the Next Generation That's going to keep moving through and So if you're looking for signals out There Brian Armstrong the CEO of Coinbase another really fascinating There's so many names that were going Through my head when you're asking that Question Um but you know he's talked about this Idea of you know well they're you know a Billion people you know on on the Blockchain using crypto you know as we Go forward and if you look at that Generational data it gets a pretty Powerful signal of where the world is Going right they're driven by the fact That they're dissatisfied with the Current situation particularly Economically uh they're driven by the Fact that they themselves grew up as Gamers going through the 2008-2009 Financial credit like they've just come Up totally different way right there is And enormous sort of you know wins at Their back that are driving this desire For a change and so if you come back to The SEC right and the government and I Do think this is really a question of Whose side are you on do you want to go

Forward do you want to go backwards are You for change are you were the same and Like I come at a politics historically And change Always Wins it always wins Yeah that's a good that's a good quote Change Always Wins yeah I like that yes All right we're going to move on to okay The rapid fire segment where I just Asked you some questions and you give me Quick responses okay it'll be fun would You rather make more bad Investments With a few good ones or make a bunch of Okay Investments with no good ones I Will say we want to make a bunch of good Investments all right so the first one Do you believe that most VCS keep their Investment thesis the same throughout The firm's lifespan yes or no I think You keep your fundamentals but you're Always learning Who would you who did you like working For more Al Gore or Bill Clinton They both had incredible qualities and I Was so blessed to work for both of them And that was a very political answer to A question about two politicians I was Extraordinarily lucky to work for Do you think we'll see legitimate Regulatory Clarity in the U.S during the Next 12 months I think we will get clarity Through the court process and then Here's my prediction for you here is There political I'm going to give you

Yes well you're asking a political guy Question can I give a prediction on this Because sure not to steal your questions Yes Um I think that I think if the following Happens which is 52 million Americans on Crypto if a small portion of those Relatively speaking become engaged in Politics you know there's a recent Announcement of a goal to you know Organize a million crypto holders into Crypto voters with a particular focus on Some of the key electoral States If that happens right elected officials Begin to understand that they win or Lose races based on how they approach And think about crypto and these voters Are particularly important for them Young folks of color under 100K and so If our sector is able to effectively Organize those folks it's even just a Small subset into voters you will see The political system react and respond To that very quickly right people move Very quickly in politics yeah when they Know it may end up that's awesome Whether they win or lose right politic Good politics drives good policy yes Okay that was a bit longer that was a Bit long sorry we're you know that's all Right you'll probably give me a short One for this one well Han Ventures Launch another fund within the next 12 Months there's a Time For All Seasons

What would it look like would it be Bigger or smaller again it's hard to Predict what that season will look like But there is a Time For All Seasons okay Okay look at I think response the more Serious responses um Katie is a huge Huge believer in this space Um I haven't seen someone who's more Passionate about what this can represent Again embedded in values and a vision uh She's in this for the Long Haul uh we're Obviously very much focused and Incredibly grateful for the folks who Invested in us right now and obviously Are prioritizing that we're making sure That we do everything we can to deliver But this is a great space that's going To be bigger tomorrow than it is today And next year than it is this year uh And we're in it for the long haul yeah We also have Katie Han speaking tomorrow Just a side plug yeah everyone should go She'll be awesome it will be equally as Good as this one So Han Ventures has a 500 million dollar Early stage fund and a one billion Dollar acceleration fund Where do you see so I guess we talked About the biggest investment Opportunities earlier you talked about The strategy what are you kind of tired Of what do you think has been like over Saturating the crypto space you're tired Of getting pitch decks on it or maybe

You just think people aren't doing it Correctly I you know I think for us we have a Pretty significant screen like we're Only looking and people know what we are Generally Looking for I think Look we You know I think made good decisions and Did not end up having positions in some Of the higher profile entities that Faced some issues Um I I right and and I think that that In a lot of ways speaks to the Judgment That Katie brings to this Um we do have a really specific rubric That we do follow and we do it really Disciplined when when we raise we're Really clear that we actually thought we Were heading into a winter uh that we Were going to invest with Pace Um when was that that was literally February March of 2020 just as right Before the terrible just as everything Yeah and all of that and you know didn't End up you know in any of those had Didn't have any positions in any of Those and I do think speaks to Katie's Judgment the Judgment of the overall Investment team the rubric that we have The values that we bring to it and that Is by in no means to say anything about Anyone else who may have been involved In those I mean there are a lot of folks

Who are incredibly smart bright with Great values that where I just think That um it's amongst Katie's superpowers And one of the reasons why we get a lot Of really interesting deals that come Our way and as we are kind of you know Still in a bear Market evaluation are Down less checks are being written I Talked about this yesterday as well but It looks like crypto funding in the Total ecosystem for crypto and Blockchain Deals is going to drop Potentially for a six consecutive Quarter uh it's five consecutive Quarters unless there's some crazy deals Being announced maybe you know about uh It's it looks like it's going to fall Again but what do you say are we allowed To announce those on chain reactions Yeah Next time next time unless you have Something today uh but what do you say In response to all of that like how do You keep the positivity alive or are you Also just realistic that hey we're in a Bear Market things kind of suck for a Lack of better words and that's just What we're gonna work through I mean if You take a big step right we had a Massive macro correction Tech was hit The hardest there's other things Tech Was the macro correction at the far end Of that like crypto is probably the one Gets that gets the most Whiplash in it

Um we certainly as an industry have to Own some of the challenges and problems Uh that have occurred you've mentioned Some of them the ftx's of the world like Um and there's been a number of things That have come into play But again like I have one of the Greatest jobs in the world which is I Could every day spend time with these Folks who are really thinking about what This technology can do and where it's Going to go Um and you know I we talked about this Earlier but yeah there are 400 plus Million people who are out there using It and you know they're using it because There are these enormous socioeconomic Forces that are driving their interest At in it at the same time the technology Is being developed so it will become a Lot easier for as people in crypto would Say a norm a normal person to use Um and that is happening again this is The pattern recognition you get uh from Having lived through some of these in The past that feels so much to me like The time between 2001 and you know 2004 Five six that then gave birth to web 2 And the mobile platforms and all sorts Of fascinating interesting companies Including the one that I came out of Airbnb right um and we're in that period Now you know but not just in crypto I Mean we're in this enormous moment just

In the next sort of stage of the Architecture of the internet Um AI Distributed computing Transportation issues driverless cars Right biotech where people are making New kinds of you know able to do things With genes that you could never have Thought of like all this stuff is Happening you know as we speak and you Know this this event is where you can Pick up a lot of it so it's awesome to Have the disrupt conference it's awesome For you guys to be covering it so yeah I'm really excited and optimistic okay I Love that we love some opium we need That yes remember change wins change Wins and my last question for you Chris Is we obviously have founder startups And a bunch of different people in that World at disrupt if you could leave us With a piece of advice for them what Would it be Well I think that we've talked a little Bit about it not to be repetitive but Change does win and you absolutely have To and I think this this does describe 99.9 of those Founders like you're going To have so many people telling you why You can't Right what you have to listen to is why You can like that's really what Differentiates Um I think a really successful founder

Is like incredible confidence in what They're doing Um and then the ability for themselves To be able to scale that idea right do You have an idea can you communicate it Can you execute on it Um and at the core of that as a Fundamental belief in what you're doing And why it's important for the world Yeah think of the kid with his dad in The car That could give me and I call him a kid He's no I know he's like he's young I Mean he runs he runs circles around me In terms of his knowledge of tech and His engineering background and frankly Even his business savvy but it says a Lot but it was just I mean you've left Just like feeling good about the world And where the world was going like like I think the sooner we get those folks You know building out there doing this Stuff like the better it is and uh you See so many of them at the conference Like this it's it is inspiring yeah Definitely Chris thank you for taking The time to talk today The UNC Hoops uh UNC is the best school That's where I went to college but thank You everyone else for listening in thank You I appreciate it yes of course thanks For having me thank you everyone we'll Talk about UNC another