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C: Wait! Isn’t that contradictory? Bitcoin mining is notoriously energy consuming. Can we be passionate about both blockchain and sustainability at the same time?
L: Yup, that’s exactly what we are talking about. In this show, we will cover the most current topics on metaverse, crypto, DAO to drive deep conversation and thinking on how we can create sustainable value in the Web3 world.
C: This podcast is brought to you by SustainaDAO, a decentralized protocol that promotes social and environmental balance with blockchain technology.
SustainaDAO protocol is operated by DECIL. As a nonprofit institute, DECIL has taken initiative in leading blockchain research and technology advancement as well as organizing events in blockchain education.
C: My name is Clarice Qiu, marketing director at DECIL.
L: I am Lin Ning, vice president at DECIL and Venture Partner at Valkyrie Fund.
L: Each week, Clarice or I will interview a guest, including the savviest web3 venture investors, the visionary entrepreneurs, and educators from top universities, to decode blockchain market trends and investment opportunities, explore new business models, and the possibility of promoting social progression through web3 technologies.
C: This show is for builders who want to be exposed to sparks of possibilities in web3 utilization and investment, for social innovators who want to build meaningful, decentralized communities, for sustainability enthusiasts who are wondering how the blockchain and Web3 can help with carbon emission and wildlife, and for anyone who are simply curious about cool applications of the blockchain technologies.
L: If you like the content, subscribe and give us a follow on Twitter @ sustainaDAO. We also have premium content, including blockchain research, member-exclusive events and more, with NFT pass access. For more information, please visit our website decil.org.
See you soon.
Clarice Qiu (00:02):
Welcome to SustainaDAO Non-Fungible Talk, a show about all things DAO and Web 3. From the team of SustainaDAO, which includes me, your host, Clarice Qiu. Our expert guest is Jimmy Shi, the venture partner of BlueRun Ventures. BlueRun Ventures China, AKA BRV China is a leading early stage venture fund in China with offices in Beijing and Shanghai. Having its heritage in Silicon Valley since 1998 and entered China in 2005, BRV China has managed over $2 billion through multiple USD and [inaudible 00:00:38] funds, with over $1 billion cash distributions. The firm has invested in more than 150 portfolio companies, and has been recognized as the number one early stage investment firm in China by [inaudible 00:00:54] IPO and China Venture, and the consistent performing venture capital fund manager by [inaudible 00:00:59]. Jimmy joined BlueRun Ventures in 2019 and is currently based in Beijing. He focuses on early stage investment in enterprise software, big data, AI, deep tech, and Web 3.
Jimmy used to serve as a global R&D executive in Oracle in the US region. He led a global R&D team dedicated to project R&D in middleware, mobile databases, and the converged communications. Jimmy has over 20 years of experience in IT and multinational enterprise project management. Jimmy also founded Duomi Music, which has become a leading independent mobile music service provider with an average DAU of over 7 million.
Hi, Jimmy, it’s a pleasure to have you here. Would you please tell us more about your background and how you got into venture and blockchain investment?
Jimmy Shi (01:56):
Yeah, thanks for the invite. My name is Jimmy Shi, and I graduated from UT Austin in computer science. And in very early days, I moved to California working for [inaudible 00:02:08] and Oracle in [inaudible 00:02:10] for about 15 years. So, I had the opportunity to be exposed to engineering, programming. Later on, I moved on to senior and the executive management role. So by ’06, my interests started evolving from enterprise software to consumer tech. So, I decided to move back to China to explore in the consumer tech space, and by 2015, and I exit from my startup, and I become Android investors. And by 2019, I joined BlueRun as a venture partner. So, how I get into venture and blockchain investment, actually the whole objective for me to go into the venture space is the motivation because I have been an entrepreneur myself, and I have a lot of exposures, and the failure and the success experiences per se.
So, I really want to help more entrepreneurs to succeed, and I can pass my lessons to them so that they have a better chance to succeed. So, the reason why I also myself get interested in blockchain investment is I have many friends in the Bay Area, and with senior tech and management roles, and they start to move into Web 3 and the blockchain space late last year. So, that got me very interested.
I began to study in the space and explore the Web 3 and the blockchain technology at the beginning of this year. With programming at heart, there are many issues and attacking the space are very natural to me, as I personally, I have gone through many tech cycles, including very early stage, like minicomputers, probably very few people would know about it, and a personal computer, and Web 1, Web 2, later on in the recent years in the cloud computing and SaaS, and AI artificial intelligence. And very briefly, I made a trip, one last trip to US, attending the Consensus Austin, NFT New York, and I also get a chance to be in the Silicon Valley, my second hometown, and Seattle and Toronto, and make even more committed and in the blockchain Web 3 space. I think that’s a huge potential values and opportunities, not only for the startups and also for investments as well.
Clarice Qiu (04:24):
Thank you, Jimmy. You have been a global R&D executive in Oracle, the startup founder of Duomi Music, an entry investor and a venture investor. Would you like to share more about what motivates your transition and how your enterprise and entrepreneurship experiences influence your investment styles?
Jimmy Shi (04:43):
Yeah, that’s a great question. So, luckily myself in my career life, I have many different roles, many different exposures. With deep tech, I have a lot of know-how, and I have a great exposure in the business and management style of it. So I know US culture and the China culture very well, and have a very deep connection and resourcing in both continents, and my past success and failing, first-hand experience, I think it’s also very valuable.
So, those information and those kind of experiences, I think are very valuable to a lot startups founders. I hope I can pass my experience to them, and hopefully they can have a much smoother past when they do the startup. And the main motivation behind it, as I mentioned in the first question is, I really want to have a larger impact to the entrepreneur space, because by 2015, I could just come back to the US and retire to be a carpenter, maybe be a fisherman or something, but I really want to have a bigger impact to the entrepreneur community to help them to succeed, and help them to build a better world and a better future for our next generation.
So, this is really my dream and what my passions about for the time being. So, my past experience is really dictating, in some degree, my investment style. And being entrepreneur in heart and a programming heart, so I always look at the things from very entrepreneur angles rather than from as an investor angle. So, that way, I have a lot of sympathy with what entrepreneurs’ vision, what they have gone through, what they like to do, so I can understand them better. Not only just from the technology and the product perspective, of course. It’s my expertise as well, so I take a very optimistic approach to many things that they are taking on, because for early investors, for entrepreneurs, they have to be optimistic, otherwise there are no chance for them to succeed. But yet I, being in the big corporation in US, in Oracle, very disciplined management style, engineering management skills. So, I’m very disciplined as well, and also very factual, being a science background, being a tech background, I’m very factual per se. This is reflect the core values, core principles, or core values per se, in my investment styles.
Clarice Qiu (07:09):
Thank you for sharing with us of your passion to support the work of entrepreneurs. Would you please share with us some impressive portfolio companies that you worked with?
Jimmy Shi (07:20):
Well, being in BlueRun for two years, so many of those investments still relatively in the early stage. So I like to share a couple of them, they still are relative in early stage but I have a high hope for many of them. The first one is [inaudible 00:07:36]. They are the enterprise grade design collaboration source. They have become the number one within a year and a half in China territory, and I believe they will go to the global market very soon. And the second project I have been very luckily to work with them is Dolphin, and they are the big data operation platform, and they have over 1,000 customers in the space, and they are the leader in China, not just the leader in China, actually: in some area, they are overtaking some of the market share from Airflow, which one the leader in US market, because many Chinese enterprises used to use Airflow, they have experienced many problems with their product, and the efficiency, and iteration speed and so forth, so that they choose to use Dolphin because their product merits.
The third one is the vertical SaaS, [foreign language 00:08:33]. They are a SaaS and enterprise software in the retail chain business. So, they’re not only just providing the software to them, they’re also involved in the traditional space. So, they have been growing very fast. When we invest in them, their annual revenue, probably maybe just $30 million [inaudible 00:08:54] per year. Now, probably it’s 10 times more, at least, so they’re going extremely fast.
And the fourth one I like to introduce is [inaudible 00:09:06], which is the leader in the China market, is the fully automated industrial grade drone and the robotics. And they’re providing automation service for energy and environmental sectors. They have become the leader in the space as well. The last one, not the least one, is the [inaudible 00:09:24] entrepreneur project is [inaudible 00:09:26]. His past project is PPTV. Most people probably have been using their video services in the past, in the Web 2.0s time era. And they’re developing a distributed collaborative edge cloud services. I think they are evolving to the Web 3 space as well as we speak. So, those are the projects I like to share with you guys, and it covers enterprise, software, and the robotics, and some early stage of Web 3 exploration.
Clarice Qiu (09:52):
That’s impressive. Can you share with us more about what emerging areas does BlueRun Ventures usually invest in?
Jimmy Shi (09:59):
So BlueRun’s investing has been new energy, new efficiency, and a new interaction, or new interface, and a new sciences. So, four news. And the special areas we have been invested, where we’re heavily invested, including Web 3, and we just start to invest, and we have invested in a couple projects already. And some of our old projects in the past portfolios are so morphed into or evolved into Web 3 space as we speak. And besides Web 3, we are also heavily invest in the mobility space in the automobile and a lot of stuff. I’m not going to the details.
Also, in the enterprise software space, computing cloud, biotech, healthcare tech, new energy, new material, consumer tech, semis. So, we cover a wide range of sectors, and we are looking for new opportunities in those sectors. And all those sectors has cyclical issues to face with. So in the different cycles, we’ll adjust our investment ratio slightly to better cope the industry cycles per se, but general speaking, we have a very wide range of coverage, and we have a very big size of funds, even though we are investing early stage. So, we have a huge funds. So, we have to deploy in funds in the much broader coverage. And we are the leading, the number one, actually, as a comprehensive portfolio investment in the early stage, not just focused on particular area. Probably you have seen many of those VCs, which will be more focused on, say, semiconductors, or maybe only focus on enterprise softwares, but we have a much wider coverage, as you can see.
Clarice Qiu (11:39):
With investment experience in enterprise software, consumer tech, and Web 3, what do you think would be the emerging market trend in the next few years?
Jimmy Shi (11:49):
Yes. For one, I would say Web 3, blockchain, its value won’t be fully realized until you start to embrace everybody’s daily life and traditional enterprises, really to improve their productivity, improve their experiences, just like cloud compute and AI. So, the cloud computing and AI won’t… It’s value won’t be released until it’s in power all the enterprises as we speak. So, I will see the similar things happening in Web 3 and the blockchain. So this is where the most value will happen.
So, the emerging trend, I would say, some of the keywords, I would say regulation and compliance. This is everybody’s talking about. I think in the Web 3 world will be even more so, and in the Web 3 world, I would expect that we will expect more scalable, secure, decentralized infrastructure to support better, much larger scale, Web 3 or even Web 2 [inaudible 00:12:48] applications and with much better experiences. So, this kind of [inaudible 00:12:53] essential. And also, I would say the second emerging trend I will see is in the Web 3 and the blockchain natives. They will continue the thought leadership in that space, undeniably. But from the practical side, I will see more Web 2 users and enterprises will start to enter the space and they embrace that technology, and then leverage those two technologies together to have a better world, rather than Web 3, going replace Web 2. I don’t see… It is less likely will happen, at least not in the foreseeable future, but I will see those two things will be empower each other to create even better world, better user experience.
Clarice Qiu (13:34):
So, what would be the next focus area in blockchain investment? We heard you just went to a blockchain conference and what innovations in Web 3 impressed you the most?
Jimmy Shi (13:46):
Yeah. So, being in the background in the computer infrastructure space for quite a number of years, and also you get exposure to the consumer tech. So, I have some, my personal opinion on that: for one is, I feel like empower Web 2 and the traditional enterprise to have them to enable to embrace Web 3 and blockchain. This is the emerging areas. This is one of the focus areas we will be looking at. And this is I think the biggest theme in the Web 3 from our angle, because with limited the Web 3 users, like 30 million users, maybe even 50 million users compared to the Web 2 users, that’s over billions. That’s a very minuscule. So, how we can bring the Web 2 user and enterprise to go into that space? This is a huge opportunity, I think that’s buffering all the Web 3 innovators and participants. So, this is the one biggest theme I would see. So in terms of specifics areas we are interested in is in the Web 3 and the blockchain infrastructure levels, as I mentioned previously. The infrastructure level need to be really leveled up to really support Web 2, Web 2.5 experience applications and enterprise softwares.
The other areas we continue, think the decent tradition is very important. I think it’s just the beginning. And we feel like blockchain is just a form of decentralization, decentralization maybe should be even bigger than blockchain itself. And obviously, the security. So everybody, every day, you will see those news talking about this leak, talk about this attack. So, security for people is very concerning, because in the decentralized world, this even more challenging issues, because everything is naked, not only from the software side, it’s open source and the node, everybody collaborate, you can participate. So, at a many different levels, it’s not like in old days in the Web 2.0 world, the service provided essentially created a walled garden to protect it and to provide a better services. So, in a decentralized world, the security is facing an even bigger challenge here. I think that’s a huge opportunity as well.
So, talk about the scalability. This is another area related to the infrastructure area. Scalability is a huge issue and the performance to support a better user experience. So, in the future, you will see people talk about decentralized cloud. Today, we talk about cloud computing, it’s distributed computing in the data center, but in the future, we will see is decentralized cloud computing. It’s still cloud computing at the bottom of our heart, but it’s a decentralized. Also in the cloud computing will have PAS, P-A-S. So, we will see decentralized PAS go into that space as we speak.
And today, many people talk about gaming infrastructure. Gaming infrastructure covers decentralized cloud, and also we cover decentralized gaming pass layer services to enable people to quickly focus in on game itself, even building Meta application itself rather than building the infrastructure, which is require very different kind of skill sets. Addition to tooling side of it, which is very important, and need to continue to be innovated. So, this is on the infrastructure side. And from the application side, we will see GameFi, Metaverse DeFi. I will continue to see the innovation, but in a much more cautious way because the less regulatory risk and so forth. This area have to be a little bit careful on that, especially for our so-called [inaudible 00:17:25] going to the blockchain space. We have to be very careful. And the other area is, really, the content creation and distribution economy.
The creator economy, I think that’s a huge opportunity because today, I would say it’s not really in the blockchain space, still are not a creative economy. It’s an influencing economy. So I think in the space, I think a lot of people know what I’m talking about. So, we will see more creator economy gets created, and a creator-driven service will be offered to the end users. So, in terms of innovation impressed me the most is really the trust will verify computing. This is nothing… In the Web 2.0, we have similar paradigm, similar technology. Maybe we have similar technology, so we have technology, but we’re never exposing such an open way. So this is very impressed me very much.
And the other one is decentralized platform to enable individuals to have data and finance ownership, which we never talk about it in the Web 2.0 world. It’s all big platforms, and never try to enable individual to have such kind of data and that. And also even to enable individual and participants to share the growth. So this is also very new for Web 2 world.
So, the other really impressed me is just to look at the folks in this space, their excitement, and the trend they created, and the form of anxiety gets created in the space, but think that’s also impressed me so much because everybody don’t want to be missed out. So, that’s good or bad. And good is really, create a lot of innovation, but bad is maybe a lot hype, over-hyped in some degree, but you have to look at these things very carefully. The other one really impresses me most is also the belief of [inaudible 00:19:25] culture. So in the Web 2.0 world is like, winner takes all, I kill them all, and I kill, and you kill me. It’s a zero sum logic most of the time, but in the Web 3 world, people are more talking about [inaudible 00:19:40], collaborative ecosystem and so forth, which is quite different, very proposition, and I believe from the traditional, the past world.
Clarice Qiu (19:50):
Thank you. We know this year has been quite eventful, both in global economy and in blockchain industry, how would high inflation and economic downturn likely impact venture investment, and how would you likely adjust your investment strategy based on the new economic data?
Jimmy Shi (20:09):
Well, we are focused on early stage investment, and we believe in long term investment strategy. So, we’re investing in the future trend. So, we are less suspected by the short term inflation, short term economic cycles. All those cyclical issues… I personally have lived through not only just technologies, but also the financial economic downturn cycle many times. So, US is very resilient, it is always have been successfully bouncing back in their system. So, we’re also very hopeful the global economic also can weather through this kind of downturn, can bounce back in some form, in some timeframe.
So, we are believing long term underlying value investment. So, we’re not interested in so called pure profit purpose investment, which is, I don’t think it is called investment. It’s more called gambling. So, this is where we believe on. And also the company, we like to see in, at this downturn era or stage, we like to see great companies really take this opportunity to innovate and innovate with high barrier space. And when bull market comes, is really can level the startup up with better chance to be successful. So, we’re very interested in talking to entrepreneurs and founders who have such kind of mindsets, as well as such kind of determination and skills.
Clarice Qiu (21:44):
Would you please tell us more about how BlueRun Ventures make investment decisions? What evaluation factors do you care most about?
Jimmy Shi (21:53):
Well, we are early investors, so obviously we don’t have a lot number to crunch on. So, we had to look at the opportunities in a much longer time horizon, as I mentioned previously. Particularly, we care about, for any particular [inaudible 00:22:08] or project, we care about a lot about its total addressable market, and potentially the differentiation and its innovation behind it. Obviously, some of the total addressable market may not be calculable as we speak, because it’s too early stage, too innovative. But obviously, we have to look at it around the innovation, the future trend perspective, see whether it’s disruptive enough. And also, that’s one angle, basically the upside, obviously. And then, we cannot just dream high. We also have to look at a low, look at execution part of it, which is the founders need to have very clear penetration point at early stage, how you crack the first entry point to make the company meaningful, sustainable, and also known in a space.
And so, the clear penetration point is very important. It’s also a testimony to the founder’s skills, because founder cannot be just a dreamer. He also have to be the executor. So, the clear penetration is a demonstration of his execution skills. So obviously, front team is awesome. You have to have awesome team with complimentary [inaudible 00:23:26] teams, very competent with complimentary skill sets, and that the team are to have a global vision and a global experience. And preferably, so ideally we like to see more successful entrepreneur going to the space because they have lived through cycle before. So, they have a better way to deal with the issues, but obviously we’re also very supportive to first time founders. That’s not a problem. But we look at some of the basic, intrinsic characteristics of those founders to make those decisions.
Clarice Qiu (24:00):
Thank you. We know BlueRun Ventures was launched in Silicon Valley in 1998 and entered China in 2005, would you please share with us more about what motivates this change, and how the geographic change impacted investment decisions?
Jimmy Shi (24:18):
Well, BlueRun started in 2000s era, at the time, in the Silicon Valley. So, BlueRun was lucky enough to invest in some of the very successful companies, like PayPal, a Cooper Software, which is the supply chain software SaaS software, and then that went public as well. Also, invest in the Waze and gets acquired. So, they have been pretty successful as a boutique shop. So, the general partner in the firm around 2005, 2004 and ’05 [inaudible 00:24:49] is they see a huge opportunity is the rising tiger in China. So, luckily they make the right decision. In 2005, they come to China, and China at that time is the booming of the consumer industries. So, they have been successfully invested many projects in the consumer tech that grab what they call business model innovation and [inaudible 00:25:16] sectors. They have been successfully be the early investor, many of them is the first round investor, like a [foreign language 00:25:24] is the Chinese version of Craigslist.
And this guy got acquired by Uber, and also invested in [foreign language 00:25:33], and also invest like [foreign language 00:25:35]. So, those are publicly-traded companies. So, they really grab these opportunities in that booming. And starting 2015, people knows China is more focusing are more on the deep tech innovations, and government, and the private sector also heavily focusing on in their space as well. So, we’re lucky they invest in those very leading companies, like [inaudible 00:26:01], want the [inaudible 00:26:03], the best product, in the EV market in China, and just look at their stock price among the other EV company. They’re the highest. So, that tells you it all. So, we’re also investing the robotics, like [foreign language 00:26:15] Robotics. They are the leading CleanTech robotics providers, not just in China, actually. They have 50% coming from global market. We’re also investing in the cloud computing, like [inaudible 00:26:27] Cloud, is another publicly-traded company actually listed last year in China [inaudible 00:26:33].
Also [inaudible 00:26:34], and as I mentioned, [inaudible 00:26:36] Design. We invest in the biomap, the biotech space, using computer, using AI, big data, and also computational technology to do drug discovery, material science, and really try to improve the iteration. And also, we invest [foreign language 00:26:54]. It’s a well known insurance tech company in China. So, you can see the area is evolving. And at the beginning we invest as a purely a Silicon Valley company. We broaden up in the China space, taking opportunity in the China growth in the consumer space, as well as now in the recent seven years in the technology innovation space. So, we are very hopeful that going forward, that we can take the opportunity to really help support the Chinese talent going to the global market space, whether in the enterprise software, whether in the Web 3, whether in the biotech, whatever. So, [inaudible 00:27:36] with majority talents with Chinese background, the [inaudible 00:27:40] Chinese experts and advantage, those are the teams and companies we like to help them
Clarice Qiu (27:47):
Globally, entrepreneurs have been trying to find creative solutions for sustainability issues. What role do you believe Web 3 initiatives or blockchain technology can play in addressing sustainability issues?
Jimmy Shi (28:00):
I would say this: so firstly, I would say blockchain, Web 3’s initiative definitely address that sustainability issues, but technology-wise, we will see, because there is different angles, because still, blockchain and Web 3 technology still not quite efficient. So, this kind of inefficiency is also the facing the challenging, this sustainability issue. But from the initiative itself, from the global impact perspective, I think they’re really addressing some of the sustainability issue, because the core value behind Web 3 initiative and blockchain is what? It’s abundance.
It’s try to ensure everybody work in the ecosystem. It’s rather than have this fear, zero sum competition. The other key value behind it is sharing. Let’s share, let’s grow the ecosystem, grow together. And then, you try to create decentralized infrastructure, decentralized [inaudible 00:28:55] population to foster better innovation. Instead, because today, if you have a chance talk to allow serial entrepreneurs in the Web 2.0 world, they are also are very frustrated in the sense that the bigger gets bigger. So, this is not just happening in US. It’s happening in China, it’s happening globally. So, the bigger platform monopolize the space and consequently, they are taking advantage of the market opportunities. And also in some degree, they’re killing some of the innovations as well. So, such Web 3 initiatives and blockchain technologies, I think from that angle, they really can help who have a much better, long term sustainable growth opportunities down the road. That’s what I say.
Clarice Qiu (29:41):
With the current macroeconomic environment, we know lot of startup founders concerned about reduced funding resources, and the missed revenue target, and potential cash flow issues. As a startup advisor and tech veteran, would you like to give some suggestions to startup funders?
Jimmy Shi (30:00):
Yeah. That’s a very good questions because in the such kind of economic microeconomic downturn, not just happening US and globally. It also impact China as well. So, we’re actively talking to our portfolios and to address those issues as we speak. So, it’s really the first-hand thing experience, not just personal from my own past startup experience. It’s also experiences by talking to and working with [inaudible 00:30:26] and coaching our portfolio companies. I will share some of the insights with some of our audience. Hopefully it’s valuable and you guys can learn something. For one years, the number one issue is obviously the focus on cash flow. So, if you don’t have the money, then you die. But the issue is sometimes the CEO, the founders, need to take very tough decision, and such kind of tough decisions, you had to make because that’s what make you the CEO, make you the key founders.
And also, you need to make the decision, you need to make a decisive decision, to cutting your cost. Don’t drag it. The longer you drag it, the slower you drag it, the less chance you will survive. That’s number one. Number two is, from a product and a development side of it, don’t be too idealistic. We have taught many founders. We found out they are true dreamers. As an enterprise, as a company, you cannot just be a dreamer, right? Dreamer is not enough. So you had to be a businessman as well, you have to be business savvy, yet you are a dreamer. Then, you can live longer. You can’t be a dreamer unless you have a super fundraising skills. Very few people have such kind of skills, has such kind of influence, especially those founders as the first time startup founders.
So, this is the areas people had to be taking a pretty pragmatic and a business savvy viewpoint. You cannot just be a dreamer. The dreamer can drag you, particularly in such kind of tough economic environment. The funding is in short supply. The third one is what we call the managing the growth. So, whether you go to the… Because if you take on new market, if you want to expand in the product space, if you want to hire people, and those all we consider to be the part of the growth strategy. So, in such environment, you really need to focus on one thing, and do one thing rather than doing too much things, and grow these things too quickly, burn the money too fast. So, this is one area where I see a lot of founders miss the boat, on that and just let it go.
So, such strategy thinking, and it had to be very critical. So, you cannot just running your daily life just like it used to be. You had to take a very conscious view, and taking a decisive actions to focus, to be focused. So, the fourth thing is, in such kind of tough environment is, as I say, you need to focus and also, you need to do focus on the most difficult yet business-sensible things. So what does it mean? What do we mean business-sensible? It means from business point of view, it makes sense, people will buy it, with clear business model that justifies the ROI return. Otherwise, the ship will collapse. The building will collapse. So, those are the four points I was thinking to share with our audience, and the key message behind it is: survive for the next bull.
If you cannot survive, so forget about your dream. Your dream is just toasted. So, even I say such things, so the sad thing is this: so I talk to many founders. Some of them is, when they went through those cycles, went through those issues, they’re coming back to me, “Jimmy, all the things you taught to me, at the beginning, we say, ah, we know everything,” but when come down to the execution, they keep on making such kind of mistake. So, that’s the sad thing.
So I’m hoping that entrepreneurs and the founders really be open minded to listen to those experienced people, and take their words very serious, and working with them, and be a part of team, have such kind of partnership, and work through those tough cycles. And I know the best learning experience is learning by personal experience. You really have to expose yourself, you do it by yourself, you make a mistake and then, you learn, “Oh, this is what I mean.” That’s okay, but I’m hoping that that learned by experience, that such kind of cycle can be shorter. So, I doubt that people can read a book and people tell, “Oh, you shouldn’t do this. Shouldn’t do that,” you will suddenly tomorrow, you won’t do it. You won’t make the mistake. It’s tough. But yeah, I’m hoping that when you make such kind of mistakes, you can suddenly realize the issues behind it and immediately make the changes. That’s the secondary level things I can ask for, I’m hoping for,
Clarice Qiu (35:16):
Thank you, Jimmy. I really learned a lot from you. And is there anything else you would like to share with our audience?
Jimmy Shi (35:23):
Yes. So, this is the first time I did an influencer to use English to my global audience. And so, I hope I provide some insight to you guys. You guys can feel useful. That’s one. The second is BlueRun China is also try to be a global player in the venture investment space, and we have a huge US dollar funds, and it has been and always been, and I’m hoping that anybody share the similar core value as I described here, or you want to learn or work with us as a partner, and has such a long term view, and if you like to talk to us to share your vision with us, feel free to contact me.
Clarice Qiu (36:06):
Thank you so much for joining this episode of SustainaDAO Non-Fungible Talk. This show is brought to you by SustainaDAO, a decentralized protocol that promotes social progress, environmental balance, and economic group with blockchain technology. I’m your host, Clarice Qiu.
Ling Ning (36:24):
And I’m your host, Ling Ning. If you like the content, subscribe and give us a follow on Twitter, @SustainaDAO. We also have premium content, including blockchain research, member-exclusive events, and more with NFT pass access. For more information, please visit our website, decel.org.
Lin Ning (00:02):
Welcome to SustainaDAO Non-Fungible Talk, a podcast on everything about DAO and Web3 by the team of SustainaDAO, which include me, your host, Lin Ning. Our expert guest today is Yida Gao, the managing general partner of Shima Capital. Shima is a global investment fund supporting cutting edge blockchain startups at the earliest stages, mainly focused on seed and pre-seed. On August 17th, Shima just announced a 200 million raise as their Fund I backed by crypto heavyweights, Dragonfly and Animoca.
A big congratulations, Yida. It’s a pleasure to have you here today. Could you tell us more about yourself and what led you to the past to start Shima Capital?
Yida Gao (00:43):
Yes, for sure. Thank you for having me on. Really, really love to share the experience that we’ve had at Shima and my journey with you and the audience.
So, yes, my name is Yida Gao. I was actually born in China in a small town called Shima, Shima in Chinese. And I came to the states when I was about four and a half years old. I grew up in Atlanta, Georgia, went to MIT for undergrad and studied math, computer science, econ. After graduation, I worked on Wall Street for a couple of years, doing M&A banking at Morgan Stanley. Then I moved over to Venture, wanted to cut my teeth investing into fast-growing exciting tech companies, so I was at NEA, New Enterprise Associates for a couple of years in their Miller Park office, focused a lot of my time in FinTech, and that’s how I got into crypto in 2000 and probably ’15, ’16, ’17, where I tried to source some deals in crypto blockchain space, but couldn’t get any of the deals passed. So after a couple of years left, and end of 2017, I started the first crypto fund, which was called DDC, Divergence Digital Currency.
Fast forward to today, we are deploying capital out of Shima Capital, which is more of a closed ended VC fund focused on Web3 founders versus a DDC, which was more of a open-ended hedge fund.
Lin Ning (01:58):
Thank you, Yida. Yes, it’s actually quite interesting. So it seems like the past two years, there’s a lot of emerging new fund focus on the blockchain area, including Shima Capital. So what do you see drives the waves of this new fund during these two years? And do you see, is it the same situation in this year?
Yida Gao (02:19):
So definitely see a lot of new funds kind of getting started, and I think what drove this last cycle, I think a couple things. One is the start of what’s considered the DeFi summer where there’s massive increase and essentially liquidity through the creation of Uniswap V3, or sorry, rather V2. And from that, a simple kind of automated market maker mechanism, you had a wealth of DeFi projects that came out of that. And that what was missing before the wave was liquidity, and there was only certain ways to achieve liquidity before the advent of AMMs, which went through centralized exchanges and very slow and expensive decentralized exchanges like Ether, Dell before AMMs were created and they were not very capital efficient. And so I think that was a major driver, and then of course carried through by the mass adoption of NFTs. And so that kind of brought new users into this space that we didn’t see before. And because of a lot of this hype, you had the opportunity for investor and funds to spring up and raise capital off of that said hype.
Lin Ning (03:42):
Yeah. So what are the key areas capital invested in and why do you decide to distribute the capital in that way?
Yida Gao (03:48):
Sure. So at Shima we’re a generalist fund, meaning we invest across all of the verticals within crypto from the infrastructure layer, middleware layer on one end of the spectrum to gaming, NFTs, metaverses, social on the other spectrum, and then kind of everything between DeFi, DAOs.
The reason why we are generalist fund versus being a vertical specific fund is because of the stage we invest into, and from our perspective, crypto is early enough where there’s a lot of opportunities across this space, but it’s also small enough where you can get a grasp on all the different verticals. And so those are the reasons why we kind of are a generalist fund and because we invest in the earliest stages, we need to mitigate our risk. It’s super risky, as you can imagine, investing into crypto, so investing across different verticals helps us kind of distribute our risk and have more diversification in the portfolio. If we were a DeFi-focused fund, then we would have missed out on all of the interesting investment opportunities that came about when NFTs were very hot last year. And so those are some of the main reasons why we are a generalist fund.
Lin Ning (05:07):
Yeah. Thank you. Yeah, that make a lot of sense. So you spoke about de-risking. So as we know that blockchain companies are… A lot of them are very risky, so I’m pretty sure you have came across a lot of pitches all the time. So some people say there’s a lot of hypes in the field. So how do you find values from all the companies that you came across, and what are the core asset that you would look for when you decide to make investment?
Yida Gao (05:32):
Yeah, so how do I find value from all of the types of companies in the Web3 space? What are the core assets that we look for? I think value can come in a lot of different ways, but because of the stage that we invest in, most of the value is coming from backing the right founders. I think in crypto, things move at hyper speeds that the idea or the product, or even the market may change overnight. And so it’s really important to make sure that you find a lot of value in the founders that you’re backing at the earliest stages.
I think a lot of the projects that may have done well raising capital and maybe even done well in terms of public price of illicit token aren’t going to do well in the next 12 to 24 months because this is a time where capital is definitely a little bit tighter, the kind of hype has died down, we’re in the winter market, winter cycle right now. And so a lot of the value will definitely be coming from founders who can build sustainable business models, just like how in traditional Web2 investing and bear markets, you see a focus on profitability, on sustainability versus growth, and what’s considered terminal value of the company. Similar things are going to happen and mindsets are going to set in for crypto, which is, okay, how do you focus on sustainable business models when it comes to token design, having the right syncs in place. And you can’t just raise off of a strong narrative, I’d say, in these markets.
Lin Ning (07:10):
Thank you, Yida. So at the beginning we talked about the recent announcement of Shima’s Fund I. From the rumors heard, you were targeting only 25 million at the beginning. It was really astonishing to learn that Shima ended up with a 200 million raise, especially given the current economic environment. So what made you decide to take more capital and make a much bigger Fund I?
Yida Gao (07:32):
Yeah, sure. We had a hard cap where we’re starting to… When we first started the raise, we were targeting somewhere around 25 to 50 and we ended up raising north of 150 for the fund. And I’d just say that the strategy didn’t change, we just moved from being more of follow-on checks, writing 250 to 500K follow-on checks for these early stage rounds to leading the rounds, the same rounds. So going from 250 to 500Ks to 1 to $2 million in rounds that were one to three million in size.
So still focused on a seed, pre-seed stage and the same valuations. Typically, we can negotiate better terms as the lead as well. So sometimes even better valuations and entry prices, but overall makeup composition of the portfolio and the stage still stays the same. I think if we raise or have a fund that’s much larger than 150, then you start to come up against needing to go downstream and invest into later rounds because it’s hard to have 200 plus companies in your portfolio if you are only writing 500K to $2 million checks for a fund that’s much larger.
So that was actually the opportunity that we saw in the market when we started the fund is that you see a lot of larger funds, either newer funds or ones that have been around a lot in the crypto space, raise hundreds of millions, if not billions of dollars. And so we saw the opportunity to come in and be kind of the first institutional checks into the early stage Web3 companies and doing it consistently and building out a team to have the right differentiated value adds from talent to building community and helping out to find narratives to tech support and helping build product with our in-house tech team that really differentiates us from other early stage funds.
Lin Ning (09:37):
Thank you. So would you like to share with our listeners a few investment that you’re the most proud of?
Yida Gao (09:43):
Sure. Sure. So we’ve been fairly active in Web3 space. Even in this bear market, we’re open for business, definitely still deploying capital in this space. And, yes, let me see. Because we’re a generalist, there’s a lot of different types of companies that we can talk about. So maybe I’ll just give a couple of more recent deals that we’ve done. Let’s see here. We can start with a company that we incubated actually recently called Magna, which is building a Web3 version of Carta, the cap table management company unicorn, traditional Web2 space.
And thesis here is that just like how there is a massive opportunity for changing the way that shares were distributed, stock certificates were distributed to investors and employees in the Web2 world, there needs to be the same type of organizational platform to help Web3 companies and founders distribute invested tokens to investors and employees. So it makes a lot of sense to build something for the Web3 space, given how many token projects there are out there and no real solution besides right now most of the founders are copying your wallet address for their employee and putting into a Google sheet and basically setting a reminder to make distributions to that employee or to your investors in your private rounds.
And so there’s got to be a better solution, and so we incubated this project with a couple of founders who we knew were going through YC, Bruno, and Arun, and they liked the idea and helped do a lot of the initial product testing and feedback with a lot of our existing portfolio companies on if this was a tool that they would want to use. It got a lot of positive feedback, and so we decided to move forward and kind of build a platform with this in mind. And so that’s an interesting company that I think a lot of the Web3 founders out there that are thinking about token table management and how do you distribute the tokens on TGE, token generation event, et cetera, et cetera, would be interested, and probably could be a good client for Magna. And the website is Magna, M-A-G-N-A dot S-O for those of you that are interested in learning more.
Lin Ning (12:08):
Yeah, I would encourage our listeners to check it out.
Yida Gao (12:10):
Yeah. That’s an interesting one that we helped incubate. Another one that we’ve incubated, there’s not too much information about this one just yet, but I’ll give the listeners here [inaudible 00:12:23] to watch off for another company that is in our portfolio started by [inaudible 00:12:27] and also a serial entrepreneur [inaudible 00:12:30]. This is a company that is bringing copyright on chain through NFTs, companies called Trips, T-R-I-P-S. And what Trips platform does is it helps creators and people who are creating content and copyright to be able to monetize that in a composable way.
So the example would be if you’re a YouTube creator and you’re creating YouTube videos, there’s no easy way to monetize YouTube video besides advertising dollars, and there’s no way to bring your revenues that will generate from that one video to present day. Just like how you have companies, like invoice factoring companies are companies that allow you to essentially bring your future revenues to the present, so you can take advantage of having the capital now for working capital needs or whatever you may need the funds for. There’s no good way to do that for creators online. And so that’s kind of the start of what Trips is trying to solve for is how do you bring copyrights on chain through NFTs so that you can have more composable ways to monetize those copyrights.
And copyrights can come in a lot of different forms and there’s a lot of revenues sources for copyright, and you can break it down into a lot of different sources of income. So that’s also another piece of the puzzle is the composability of copyright that exists into this world. It’s not really taken advantage of and not really leveraging the power of technology, and more specifically, blockchain technology to make the world of copyright much more fluid.
And so with Trips, once they launch, as a YouTube creator, you’ll be able to take your content, let’s say one video, tokenize that video and the copyright of that video through the Trips platform and be able to, number one, sell those NFTs that represent copyright and represents essentially future revenue streams from the video to your subscribers, to your fans, and then ultimately you can see a world where you can bundle these NFTs that represent copyright into a basket and use it as collateral to get a loan or to sell that bundle of copyright to more institutional investors who are already kind of lending off of copyright or purchasing copyright, but doing it in a very Web2 manner.
Lin Ning (15:05):
Yeah, that’s brilliant. So basically, you don’t need to purchase the copyright NFT to enjoy the music, but if you want to invest or to sell the copyright to someone, then you get the NFT, right?
Yida Gao (15:16):
Yes. And you can fractionize that NFT and purchasers could be fans, somebody who enjoys the video or the music that the creator is producing or could be investors. This could be very high quality revenue streams on the road. And the hard part is right now being able to really package the copyright in a way that’s easily transferable and can be very granular.
Lin Ning (15:41):
Yeah, that make a lot of sense. Yeah. So we do have see like a marriage of NFT or other blockchain technology with other industry sectors, so I think you just brought up a very good example. So besides the music or the digital art industry, what other industry sectors do you think would benefit the most from leveraging the blockchain technologies?
Yida Gao (16:01):
Yeah, that’s a great question. So one thing I’ll just follow up with on what we were talking about with Trips is that the NFT market, a lot of it is right now based off of art, and profile pictures and what’s static or it’s not really functional. I think with Trips and future companies that get created that are using NFTs and all the different standards that are coming out for NFTs outside of the 721, you’ll start to see more functional use cases for NFTs where it’s not just a picture, but it actually represents streams of revenue or represents access where you’re able to use the NFT in a more functional and utility-driven way.
So that’s just one thing I wanted to mention as what we see is the future of NFTs. But other categories that can be disrupted by Web3, I mean, wow, that’s very broad. One space, which is already getting disrupted, it’s gotten a lot of media attention, especially back in May is with stablecoins. I think payments is an area that can be massively disrupted by crypto. Why is it that you need to wait until Monday mornings to send a wire or receive a wire? And this has been one of the main, I’d say one of the main use cases, low-hanging fruit use cases for blockchain technology is payments and instant settlement and being able to transfer value across the world in one second, but it really hasn’t taken off outside of the traditional large incumbents and stablecoins like Tether or USDC.
And so I think this honing in on stablecoins, I think that’s one of the best uses I think of crypto because stablecoins is kind of the lifeblood of DeFi and a lot of the different Web3 applications. And I don’t think that having centralized stablecoins will be the ultimate future, they’ll have a place, but we’re really interested in finding different types of mechanisms that can help buttress the stability of any type of stablecoin platform. And also thinking about stable points outside of the US dollar. A lot of the majority, I would say, of the market cap for stable points is in US, but there’s massive economies outside of the US dollar.
And so we’re really interested in, and actually recently invested and led around in a company called CoinFX that is looking to build kind of circle as a service or [inaudible 00:18:32] stablecoins as a service for different kind of currencies outside of the US dollar. And I think that’s really important for the industry, and they’re a great use of blockchain because it allows for local economies to flourish and really take advantage of one of the main use cases of blockchain technologies in their domestic area. And people who are in, let’s say Mexico, aren’t really transacting in dollars on a day-to day basis. So having a stablecoin, pesos-backed stablecoin is going to be very, very powerful, and this can be said for the 190 plus other currencies out there that could benefit from blockchain technology by having a stablecoin in their local currencies that can be transacted on a 24/7 basis settled in the same way.
Lin Ning (19:23):
That makes sense. Yeah. So now we are actually in the bear market, so has Shima Capital take any strategy to deal with the current economic downturn?
Yida Gao (19:33):
Yeah. So we are definitely deep in bear market now, and I think there’s still room to fall. I think we may be in this for the next 12 to 24 months here. And so one thing that we’re doing is to really focus on existing portfolio. We’ve made many investments in our fund, and one thing that we’re doing is doing a health check, financial health check across the portfolio and asking all of our founders what their runway is, how many months before you run out of cash. And doing this survey across the entire portfolio has been super important for us in that identifying the companies that have, call it less than eight months of runway and focusing on those companies and helping them raise additional capital, I think is one way that we’re making sure that our portfolio stays healthy.
This is probably the main focus, the goal for a lot of founders is to survive, [inaudible 00:20:33] to survive through the bear market. And you need to have capital obviously to do that, and so I think survival at all cost is top of mind for a lot of founders. And if not, we make sure that to remind them that this is the primary focus. And so that’s what we’ve been spending a lot of our time internally with is just making sure that our upper flow companies that have limited runway, less than 12 months, to help them with. And most people say that 12 months would [inaudible 00:21:02] and you should be worried, but I think in a bear market that we believe could be sustained for a long time, and I think founders should assume that the capital that they have now needs to be stretched, and we have to make the assumption that they’re not going to be able to make large financing routes and be completed in a short amount of time. So you need to have that additional runway. That’s one.
And then two I’d say is focusing more time on incubation. I think right now is a great time to find talent at a reasonable cost. Before it was super, super expensive to hire [inaudible 00:21:40] [inaudible 00:21:41] developers. I think that cost is coming down a bit, especially as there’s massive layoffs at companies from large publicly listed crypto companies to ones that are in series B, series C plus stages. Incubation seems to be a good thing to focus on these days because you can get the talent at a great price relative to where we were call it six months ago, and if you are able to bring together the right set of people and idea, I think it can be super powerful in this time where everybody’s focused on building.
Lin Ning (22:19):
Yeah, exactly. I think bear market is actually a good time for building. Yeah. So do you have any advice for entrepreneurs or people want to start a company during this market?
Yida Gao (22:29):
Yeah, I think this is definitely a good time to start a company. There’s less noise. As I mentioned earlier, you can find talent at reasonable prices. But on the flip side, it’s probably harder to raise capital. Before, if you had a 15-page slide deck and a good bios and good experience in a founding team, you can raise dollars. Right now, I think investors are a little bit more patient and taking more time with diligence, asking more questions and increasing the bar for the capital because cash is king right now. So it makes sense, they can weather the storm a little bit longer because there’s a long time period of investment than there is typically for a traditional VC fund. It’s a 10 year fund. You have call it five years or so to make investments, so you can wait a couple quarters.
So I think for founders, it’s a double-edged sword, but right now is a really good time to build and create the team, but it can also be challenging to raise. That is the double-edged sword. But I think it also means that if you are able to raise capital in these markets, then you’ll probably have a much more sustainable and higher probability of success than let’s say raising the same amount, or maybe double the amount six months ago, just because of how easy it was to raise capital.
Lin Ning (23:49):
Yeah, totally. Yeah. So our last question, which is one we would ask our guest speaker. So could you share us, what’s your vision on the advantage of Web3 or blockchain technology addressing sustainability issues?
Yida Gao (24:03):
Oh yes. Sustainability issues. Yeah, sure. So we’ve invested in a lot of companies that are trying to help solve the carbon emissions problems globally, and some of those investments include KlimaDAO, to C3, to Open Forest Protocol to [inaudible 00:24:20]. And I think what’s interesting about crypto is that, one, it’s supposed to be very transparent, and two, there are ways to structure governance in a very fair way. Those are the two things I think also are missing in the, let’s just call it the carbon credit space, right? Governance and transparency.
And so I think Web3 technologies could be very valuable for this entire sustainability space for accountability and transparency, and also can help disrupt some of the large incumbents that have had a grip on this space for so many years, if not decades. One example I’ll just mention is when it comes to verifying carbon credits, it’s done by two or three firms that have oligopoly over what’s considered a quality carbon credit. It’s super expensive to have your forest or for your whatever biodiversity score to be a judged by a standard that only exists for the larger kind of project owners, because there are so few of these standard setters that it’s difficult for if you have a smaller project to be verified.
And so that is the opportunity that one of our companies Open Forest Protocol, OFP, and what they’re trying to do is displace all of the middlemen that are verifying carbon credits and allowing for more of a distributed mechanism to verify carbon credits. So you have validators that can go and validate, okay, this plot of land with all of these trees are emitting X amount of carbon… Sorry, rather sucking X amount of carbon from the atmosphere, and that validation process is done in a very distributed way, will decrease, one, the cost of validation and verification of the plot of land, but it also creates this economy where you can have very, very clear and transparent kind of movement of that credit from the time that it’s created to the time that it’s kind of sold and traded, all through the entire kind of provenance of that credit.
And so OFP is a company that’s built on top of NEAR, and they’re about to launch their product soon. They have probably 10 plus projects that they have in their hopper ready to go, and it’ll be a really interesting project to follow to see if they can really disrupt this massive, massive market that’s surprisingly only kind of governed by two or three large bodies that are taking majority of the margins and not really leaving enough for the project owners for carbon projects or other individuals that can be involved or entities that can be involved in the validation process.
Lin Ning (27:16):
Yeah. That’s very exciting. Yeah. So I think that’s all the question we have planned for you, Yida. Thank you very much for your time. I think our listeners will learn a lot from today’s interview.
Yida Gao (27:28):
Yeah. Thank you for your time, Lin Ning. Pleasure to be here and thanks for having me on the show.
Claris Qiu (27:33):
Thank you so much for joining this episode of SustainaDAO Non-Fungible Talk. This show is brought to you by SustainaDAO, a decentralized protocol that promotes social progress, environmental balance, and economic growth with blockchain technology. I’m your host, Claris Qiu.
Lin Ning (27:52):
And I’m your host, Lin Ning. If you like the content, subscribe and give us a follow on Twitter at SustainaDAO. We also have premium content, including blockchain research, member exclusive events and more with NFT pass access. For more information, please visit our website, decil.org.
Clarice: Vera, a pleasure to have you here. Would you please tell us more about your background and how you get into the Web3 world, as well as the Bored Ape community?
Vera: Hi everyone. I’m Vera, and I’m actually from a Web2 AI background. I’m a software engineer at a big company. During 2016, my husband introduced me to Ethereum, and I’ve been in the Ethereum ecosystem.
Fast forward another five years, I got into the Bored Ape community (2021) with a group of crypto people that some are shared in a group about a […] posted on Twitter sharing this IP ownership of NFT. At the time, that was very new. Before that, it was only CryptoPunks, CryptoKitties, but none of them have any IP values.
When that hit, the community brought a lot of waves of attractions to the community that this IP ownership thing it’s raising. And a lot of people who have the background with the IPs see the value of the IP. At the time in the club house, we’re all gathered talking about IPs, the Bored Apes, and within the Chinese-speaking community.
Step out of that room, we see a lot of other communities, the English-speaking also talking about the Bored Apes. We realized, okay, this awareness is globalized and is not just happening with the Chinese community or single-language community. That’s when everybody got really hyped by Bored Ape. I think that’s how I entered this Web3.
I’m a very visual person. I need to see stuff even though I have a crypto or software engineer background. Because I’m very visual, that’s something that’s much easier to understand in this industry. I believe that Web3 is another language, and introducing this crypto technology to a broader audience. I started from there and I dived into this Web3, got into the Web3 rabbithole, have been learning a lot about the Web3, and engaged with the communities.
Clarice: Thank you, Vera. Can you show us what you think is the BAYC culture, and what are the major factors that attract new members to join the community?
Vera: For the Bored Ape culture, it started with the very organic community. The community does not do any advertising at the very early stage. The project is very community-driven and introduces each community member on the Twitter space instead of a marketing community to run and introduce this product to people, including a lot of celebrities that got into the Bored Apes. They weren’t the ones that the project reached to buy the Bored Apes. They actually bought it by themselves.
It kind of brings this celebrity world or the bigger IP in the Web2 into this crypto world that never had before. I would say one is a very organic community and the community’s very close with each other. Plus, I think it’s also the loudest community in the space as well. If you go to Twitter, you see the apes everywhere. That’s one part of the culture.
Also, I think for Bored Ape, it’s kind of lined with street fashion as more and more bigger IPs got into this community. They’re more engaged, so kind of grown into this street fashion brand that the merch that they have. It’s very aligned with those bigger street fashion brands. That’s another part of the culture. Deep into part of the community, I think the culture is very supportive and the community members are very smart because there are a lot of creators in the community.
A lot of people think that BAYC is a very exclusive brand, but we still see a lot of earlier OGs involved in the BAYC community. That means there are groups of smart creators, a group of investors that are still in this community even with a lot of ups and downs.
We also have a group of very smart rich Web2 people that joined later, and that aligned the resources of early adopters of Web3+ later on the very resourceable Web2 people. With that combination, I would say that Bored Ape communities are also very diversified.
Getting down to why attract new members to the community, I would say it’s still the community itself. Everyone wants to be associated with a great community, want to join and be able to make new friends with amazing people. I think that’s just human nature. As […] that people have, I think that’s part of the reason a lot of people joined the BAYC.
Also, as Bored Ape has a bigger brand, the project has been delivered very well. That’s another reason why people want to be associated with it as an investment as well. On top of that, you see a lot of […] in the BAYC community. That means there are a lot of resources and collaboration opportunities to be within the community.
Also as the biggest brand in Web3, it obviously attracted more people into the community. I see more and more old friends from crypto join, starting to get interested in joining the community, and I think that’s a very good sign that this community is still very active even during the bear market.
Clarice: The Bored Chili brand and the PinkDAO have become valuable parts of the Yuga Labs IP system in both community-building and the podcast sector. Would you tell us more about the Bored Chili brand and its community?
Vera: I have not talked about it, that I’m also a core contributor and core founder of Bored Chili and PinkDAO brands. Bored Chili brand has nearly three categories under the Bored Chili brand. One is we have a community of 360 people. Majority of the community members are ape owners.
Number two is we have Bored Chili events. We’ll be hosting a lot of events with the ecosystem and also introduce this ecosystem to other non-ape holders as well.
The third thing that we’re having is we’re also running this podcast called Bored Chili podcast, and we own a series one of the Bored Chili podcast called 100 Hot Ones. The purpose of 100 Hots Ones is to introduce and reveal the Bored Chili brand into a bigger audience, and introduce the ape holders to the world. That’s a little bit of the background of the Bored Chili brand.
PinkDAO was also created recently, a few months ago for a group of Pink Apes that are able to hold Pink Apes together. And we want to do something fun together, potentially working as a group to collaborate with other brands. We know individual resources are very limited, so we want to grow this Pink Ape DAO to leverage our IPs together.
It’s been a very fun journey of working along both. I think for the Bored Chili and PinkDAO, our communities are very, very organic. What the organic that people are coming here to build, willing to build by their willingness. That’s a little bit about the PinkDAO and Bored Chili brands.
Clarice: Would you like to share your opinions at PinkDAO and Ape token issuance?
Vera: I think when BAYC has grown, it grew into a very luxury brand as the price is going up. Having limited people in the community, roughly BAYC has about 5000 holders and with […] over 10,000 people. When […] wanted to introduce this brand to more people other than non-fungible tokens, they created the ApeCoin to introduce this to a bigger audience with lower entry. That’s when the Ape token was created.
Honestly, that was a great amount of Ape tokens. What they’re trying to build is using it as currency within the Yuga Labs ecosystem, aligning with all the IPs, with the great vision they’re willing to build, let’s say marketplace. Or they’re willing to build games. ApeCoin is pretty much like a currency, with a token that is able to involve […] existing crypto people. Also newer crypto learners or even people who aren’t in the crypto space that are able to be involved in this ecosystem.
With that, I think ApeCoin has been a great delivery in introducing this and engaging more people in the ecosystem. ApeCoin DAO is built on top of it, so pretty much you can delegate or validate Ape tokens to other people and participate in ecosystem governance.
I’m also one of the delegators in the space. Surprisingly, I’m actually one of the only women delegators in the space. What we can do is, depending on the token numbers, we’re able to participate in the building of the ecosystem.
Let’s say Magic Eden had a proposal recently regarding building a marketplace for Bored Ape. The community had to talk about it, having some engagement, making better decisions or judgment. As delegators, you can vote. Or even non-delegators can vote based on their token numbers, and be able to decide if this proposal is passed and how the community will be able to support it.
That’s like involving more people in this engagement of governance as a DAO. They’re willing to make it very decentralized, making the community decide and drive this proposal.
With that was a great execution of a great idea. However, DAO is still a very new thing. It’s a structure and experiment. Still trying to investigate how the DAO will work at ape.dao. We all know only 20% of people make the right decisions. With the voting, will that actually work? Will the vote actually make good decisions for benefitting the DAO?
That’s something we’re willing to explore as ApeCoin DAO, but this whole journey of learning, participating, and being part of the experiment is just really amazing and appreciated. They’re willing to give this part of governance into individuals.
That’s my opinion on ApeCoin DAO. I’m […] hope they’re the best, and am also very actively engaged in ApeCoin DAO.
Clarice: As one of the early Web3 investors, what Web3 sectors are you most interested in right now? How do you evaluate NFT projects?
Vera: As a Web3 investor, I think there are a lot of things that are very important to me. One is definitely the founder (the person). We always do this by check, especially because I was investing at a very earlier stage the Web3 projects and as an earlier industry that we know a lot of. A lot of scammers, definitely a lot of extremely smart people as well.
We also wanted to do this founder’s check and to see how they’re building what their vision is. That’s a very important part of this. Also, I’m looking for the projects that are introducing this Web3 technology or cryptonology into a broader audience, and be able to introduce more and more users into the space.
That’s how we got into a lot of Metaverse projects as well. A lot of game projects, but the games’ are a little bit tricky. We’re making sure that it’s earn-to-play rather than play-to-earn. A lot of people are merely focusing on the earning part and make the whole project non-sustainable. But as we grow more […] and more healthy, we want to introduce this game to a broader audience.
That’s another thing. Games are a little more interesting on our side. Other than the investor, the project is solved. Definitely, we’ll evaluate. If the project has a product and a good community, I think that’s very important. I believe a successful Web3 project will have a very organic community.
I think the community is important at one point. The community will function as a marketing company plus a business development company. The NFT part is a pitch deck. It’s showing what you can do, what you’re able to do to the investors, instead of the investors are from the venture partners or the trained investors. They’re the broader audience as individuals, like people we see in the space.
To be able to deliver that clear message of what you’re building, having a clean roadmap on what you’re building, and how to build a very organic community, that’s very important to me. Those are the three factors I’m looking into, but definitely not limited to that.
I personally don’t invest in any NFT PFP projects. Merely investing in the infra-related projects and trying to have a bigger audience. Or something very new. Bored Ape is very new because it gives the IP. Nothing happened before in the industry. With anything that potentially can create something new and bring this technology to the next level or using a different language to explain this technology to a broader audience will be something I’m very interested in.
That’s pretty much my Web3 investment thesis. Being aware of the market and how it goes is a very important part of it.
Clarice: What do you believe Web3 initiatives are […] and technology can play in addressing sustainability issues?
Vera: As I’ve said, Web3 is a language that introduces this technology to a broader audience. Also a marketing company, plus a business development company. Also, a consulting company as well.
I’ll give you an example. As a layer one crypto project or other project before, growing into 300,000 followers on Twitter is really difficult. A lot of projects have been doing it for years to grow to 300,000 followers on a project.
However, the Bored Ape Yacht Club or the Yuga Labs, created the project for one year. Within one year, they got one million followers. I think that’s a very strong sign of how technology uses a much easier language to engage people, especially the younger generation.
I want to be able to explain to my mom one day what crypto is in a much easier language. But then when Bored Ape came, I’m able to tell my mom, if you think about Rolex, it is a digital Rolex. If you think about the community membership card, it’s very expensive but very exclusive I wouldn’t say very expensive. Just like an early adopter, it wasn’t really expensive at all. I can explain to my mom that it’s a membership card that I’m able to use to befriend someone that I probably will never be able to meet.
I got to meet Guy Oseary and had a Zoom conversation with him before, but there’s no way for me to have this engagement before. That’s another social function of Web3.
Another thing, very important is the organic community growth, and being able to leverage on your NFT with IPs. We sell current NFTs on […] based, but I believe that there are going to be other kinds of NFTs existing in the future.
I think recently the Soulbound token has been really hot. If things like that, being able to introduce and use a better language to introduce, this Web3 technology and crypto technology and application on top of that, is very important to introducing the whole blockchain and is very benefitting for the blockchain ecosystem.
For sustainability, I think growing the IP, being able to work with other projects is actually providing the real life values into the Web2 or Web1 world. If there are people starting Web2.5 or some people call it Web5, like Web2 + Web3, being able to introduce it to a broader audience and collaborating with other IPs, I think that’s another very important part.
As again an organic community growing this altogether, and being able to leverage their IPs, collaborating with bigger projects in the Web2 or even Web3, is also a way of leveraging the IP and the value of the social part. As more and more valuable people join the community, it uplifts the community to a better value.
For example, the recent Chili collaboration of M&M with the King Captain, I think. It’s a collaboration of a group of apes that’s owned by Jimmy. They created this limited-edition M&M (the chocolate) and people went crazy buying that, even for people who don’t own an ape and they still pay for getting it. I think that’s a really healthy direction of where this Web3 is heading.
People always say Yuga Labs is the Web3 Disney, but I personally think that it’s more than Web3 Disney. It’s not just about the IPs of creating like in the entertainment industry. It’s also bringing it into businesses and bringing it into individuals that could be able to function all of the world. You don’t have to get approval from Yuga Labs to say, hey, can I do something with this?
This brings more and more people to engage this community. Also, I think with that, Web3 has so much that we can think about and so much that we cannot even think about the use of this. It just opens the door of another way of how blockchain can be used and the benefitting for the people for the next generation.
I’m really looking forward and I think this is once in a lifetime opportunity, especially younger generations like us, to be able to get into this earlier builder environment, and things changing so fast and we’re able to catch every single trend that possible, to be able to learn, to build, to be a part of it. That’s a very attractive thing for me to do.
Clarice: Thank you. As a community builder and an early Web3 investor, would you like to provide some suggestions for Web3 community building and project development for blockchain founders and creators?
Vera: Let’s step back to why you got it successful. One is timing. They’re doing the right thing at the right time. Another thing that’s very important is they value the community the most. They give the benefit to the community. They value the community as their investors instead of a lot of projects trying to pump-and-dump and trying to get benefits from the community.
The first thing they were thinking is what they give to the community and how the community can benefit from the project, instead of how can I benefit from the community. This is one of the very important things. If you’re a builder listening or community building, I think put the community first. Having this community mindset will be very important. I wouldn’t say it will be the only key to succeed, but it is a very important factor in Web3 as how important community is.
Other than that, for the Web3 community, building a project with intention is also very important. A lot of people are trying to build their project to solve a problem they still have. Instead, I personally prefer people to invest in a project, that they’re building something that we must have.
I’ve seen a lot of projects come here to build nice-to-have functions and not really solve the urgent problems that we’re facing in NFTs. Not just NFTs but Web3. Or bring it to a bigger audience and include (let’s say) the payment. Be able to get people to use their credit card to buy NFTs. It’s a very obvious way to introduce it, but I know there are a lot of people doing similar projects. Building something that really solves the urgent problem first, and then improve it to the nice-to-have features. That’s another very important part for the founders.
For the community builders, I think an organic community is very important. We see a lot of groups that have been engaged whenever the community benefits. And it gets a little bit dirty. I think for the communities being organic, it means less unnecessary information.
We see a lot of groups that post in Twitter spaces to share some other projects. Or the people in the community aren’t sharing or disclosing their role in a project, so make it very beneficial. Yearly, those communities go off. You can’t cover anything in Web3. Things will eventually show no matter what you do. Having a transparent, organic-growing community is very important.
Remember that the quality is more important than the quantity for a community as well. Making sure that when a community-made person is very active, that’s a very successful community. Making sure the quality of the community having this constant engagement with the community is very important.
Those are a few things that I’ve learned from my journey. Hopefully, that can benefit more and more builders, investors, or community builders as well.
Clarice: Yuga Labs has been largely successful for creating the world’s largest and most profitable NFT projects today. It seems founded in February 2021. What do you think are the major factors behind the success of Yuga Labs projects like BAYC and CryptoPunks?
Vera: The Bored Ape is actually the one that they built. They acquired CrytoPunks. CryptoPunks is funded by Larva Labs, and because they didn’t give the IPs, ownership for the holders, and later on Yuga Labs acquired CryptoPunks. As CryptoPunks is one of the OG NFT and has been around, it’s like the relationship between Bitcoin and Ethereum.
The reason why I think Yuga Labs can be successful and be able to market the great IPs, the founders really appreciate the value of the community as I mentioned. They gave the community pretty much 100% they have. Also, they’ve been very engaging with the community.
The community has been benefiting a lot from the project. When the project is trying to launch anything from the roadmap, they always over-deliver what they have.
In the past year, they delivered so many amazing products that exceeded the community’s expectation, and over time it’s building this trust with the community in the last year. They got 100% trust from the community, and got 100% support from the community as well. That’s a very fundamental thing for them to be successful.
Another thing is the idea of IP is very new. It’s actually engaging a lot more industry in this. The idea that they have was very well-needed during the time of this industry. It was pretty much a good time and a good product happened to be right. I have to say 90% of doing the right thing at the right time, plus the fundamental quality of the project and quality of the community to make it successful.
As they always say, without a community, we couldn’t be where we are today. But also, without them, the community won’t be what the community is right now. It’s a two-way relationship, but they have been delivering whatever they promised and beyond. That’s a very important factor why the community has trust on the project.
It is a two-way relationship between the community and the project. It’s been amazing and proof it’s a working model.
Clarice: Thank you. Can you tell us more about the Bored Chili event, the Chili event vibes, and the community engagement?
Vera: For Bored Chili events, we started about a year ago, and have hosted events—probably more than 10 events—all over the world. A few in NFT YC during […], and a couple in San Francisco, Denver, Monaco. We’re going to have more in Singapore, Korea, and Japan.
When I first started the Bored Chili events, there was a very simple intention of gathering the individual holders together, to be able to […] because at the point you see more and more companies are trying to buy the NFTs and build beyond it.
As individuals, it’s very easy to hand this valuable asset to the big companies. The point is we want to meet the members, we want to share that knowledge with each other, and be able to see what the potential is. This is a very experimental industry that no one knows where it’s heading to, so grouping a group of people is very important to grow this together.
That’s how Bored Chili events started. As the community grew, we realized there are maybe 90% are builder+investor bridge communities. In every single Bored Chili event, we have a very special part to have the builders come to the stage and talk about what they’re building, and introduce their product.
That’s how the Bored Chili community started growing. In the future, we’re probably going to have to work somewhere working as a group to leverage our IP, collaborating with other brands, creating limited editions for the community ape holders. Having these investors aligning the values of this community power.
We had a token proof under […] in the community and during the token proof launch. I think I was on the phone, the app part that has some issues with people being able to open and receive the ticket.
Our community was functioning as a team of quality to assure this product, help them debug. When you have a bigger audience, a bigger user that you want to test in by that, that’s another level of a test that they may not have enough resources to do. But within the community, that can provide you this experiment and this service of helping each other.
That’s how fortunately the community became. Become a group of people helping each other very organically. Having the events just brings that trust to the next level. To meet someone in person is very important to get to do the back check and everything. That’s why the Bored events continue to be able to meet, to learn what they’re building, to align the resources that we have within and without the community.
For bringing these events to the people that are interested in the Yuga ecosystem, they don’t have enough knowledge and don’t know where to go. It’s like a social club for people to learn about the apes, aligning resources of the Yuga ecosystem. To be able to give some deal flows to the investors within the BAYC ecosystem. Or not necessarily that has to be in the ecosystem.
There are people building just general layer two and other projects as well, so it is a place for everyone to chill and share, to help each other. That’s why the events became more important to meet a person in real life.
Clarice: I really appreciate you for sharing all those great updates with us. Can you tell us more about your BAYC other site Metaverse and the Metaverse social experience?
Vera: About half a year ago, the Bored Ape launched to the other side. It’s a 10,000-land for users to play and build. As the founders have a gaming background, they wanted to introduce this game kind of build and own concept into the space and expand it into the gamers.
I think that’s one of the very important parts. But now, the other side hasn’t opened for people to play yet. They had a couple of tests around for people to experience it. The game and the functions have not been tried. That’s something that we’re still looking forward to. With the other side of 100,000 lands, that engages more people in this ecosystem, especially the gamers. I think that’s one of the targeted groups of people.
Other than that, they are experimenting with this Metaverse social, including some people that are able to have face-to-face Metaverse conversations, get to do things, visit places together. The whole other side is designed to let holders own the game and own the community experience. I think that’s another very brave experiment by Yuga Labs.
That’s actually something we actually should be looking forward to. With 100,000 lands that are having some for the A-plan and others for public sale, and that will actually let people play across the land, with some land has this thing called coda. There are 10,000 coda and the coda will be taken out as individual characters that people travel across land for the game or social, and that’s some part that we’re looking forward to.
Since we haven’t seen the final product yet, I think that’s probably something we should be paying attention to the next few months or a year, and see what they’re actually taking this Metaverse and game industry to.
Clarice: Would you like to share more about your NFT and YC experiences?
Vera: I’ve actually been to NFT and YC. One was in 2021 and another in 2022. The first NFT and YC experience was very special because the NFT industry just raised. Everyone was new there, not knowing what they should expect. That was the first Ape-fest that we have ever had and that was a very fine experience of getting the people that we are engaging in Twitter, to bring them into real life and the people to see who are actually the holders.
During the first NFT and YC, we’re still having the earlier industry vibe, that having a little bit chaos, a little bit new and fresh. Pretty much no one knows what they’re doing at this point. The industry was so raw that anything could happen. You can see a lot of people that don’t know what they’re doing, and a lot of people are trying to make money and being this tourist of the industry.
That’s the first experience I’ve had on NFT and YC, and the first Ape-fest we have, the yacht party, and people had to wait like five hours to get the tickets. You can feel the infrastructure of this industry was very new and not very gated, the social experience. The ape men warehouse party was amazing that day. First time introducing a lot of musicians to play as well. That was a great experience of this Ape-fest experience but still very, very new and fun.
We’ll go to the second NFT and YC. You feel like this industry is more put together. The whole waiting in line experience is gone. Because of the token proofs created, it’s making it much easier to validate us ape holders or other NFT holders to be able to go to the event much easier without waiting in line for the ticket. That’s one part that made the difference.
Another thing is from the second NFT and YC experience, that we see more and more people traveling all over the world, and […] is apparently getting better. At the first one, most of the people are from the States. But on the second time, you see more investors traveling all over the world to participate and witness this great, amazing festival we call Ape-fest.
That’s how the second experience felt. The infras do need a lot of work as well, but I think the whole experience is getting so much better. You can see how fast this industry has gone through in the past year. Not even the past year. Maybe 6–7 months with the two Ape-fest, and NFT and YC.
I hosted one event during the NFT and YC Bored Chili Brunch. We had 400 people coming to the events. They are very interesting guests that they like having the big names before the 0x […] and Doxxed himself. He was at the party and no one knows who he is. He went to one of the […] and told him, I’m actually the 0xb1. He told his people his real name, being able to expose himself to this bigger community that he feels safe. I think that’s a very interesting experience.
The Bored Chili event was part of the experience. We’ve got people from all over the world. We see some Japanese apes, and have some investors from the big firm, including Dragonfly. We have apes from Korea, Mexico, all over the world, and that was a very interesting experience to see how diversified this industry is and how excited people are.
Clarice: Since you have met so many cool apes all around the world, do you have some ape friends who you want to highlight?
Vera: I have so many ape friends. They’re amazing, they’re building, they’re super creative. One of the ape friends is from Morocco. His name is Nisar. He’s such a smart soul, that having very uniqure opinions on this industry and has been starting from the very beginning.
I met him while we were waiting in line to get on the yacht during the first NFT and YC, and have been friends since then. He’s been running a hedge fund of NFTs and doing a lot of things in the space, and speaks at a lot of events. He’s a very interesting character and a good friend of mine. Definitely not only my apes, but we have so many ape friends I want to highlight here.
During the very beginning of the ape, we have this community called Ape Universe, and that’s a Chinese-speaking community. A lot of people are not aware of the Asia power of contributions in this NFT, but there are actually a lot of involved, low-key apes from all over the world that speak in Chinese, who have been playing a very important role in this.
Another one—not my friend—Franklin got into a lot of apes, trading and providing liquidities for the ape. Also, there is a big […] that he introduced so many apes into the Asian celebrities, including Jay Chou, one of the greatest singers in Chinese history. Also, there are a few actors that he gifted the ape to, and I think that at an earlier stage, providing a lot of value to the ape and this ecosystem.
Also, there are people building—Fonz. He’s an amazing builder, founder of tokenproof, and very humble. You see most of the apes, no matter how amazing their background is in Web2, Web3, they have a very humble personality and are very down-to-earth. Fonz is one of them who’s willing to hear the feedback from the community and be able to executive in the product. I think that’s another very important thing.
Also, I think Guy Oseary, definitely everyone knows that. He’s been supporting ape from the very beginning. Guy introduced a lot of celebrities into the ape community. I think he’s the manager of Madonna and U2. As you know how big an influence he has in the Hollywood world. He’s introducing all his resources into this Web3 and putting him 100% into this industry. Super, super humble person, very kind and nice, very passionate. I have so much respect for people like him, and someone I’m looking up to.
Of course, there are a lot more very down-to-earth and very willing to share and contribute to apes in this community. I can’t list every single one of them; there are just so many of them in the community.
Also, when I have my event, the Bored Chili Brunch, the apes are willing to help create videos, take display, create the posters. Jack Jack is one of them that created this video. Another pink ape friend, Luca, created this poster. People from there are willing to give their expertise in contributing to this event and willing to uplift each other. I think that’s very selfless.
There are so many apes, I can even name all of them. A lot of artists, […] is one of them, that have been creating a lot of art pieces on Twitter for PinkDAO. Sarah is another pink ape and my pink sister, has been drawing a lot of very cute ape group pictures.
Those contributors either have big names or new ones that are relatively less famous and willing to build in this industry are the ones I give so much respect to. Some of them are trying to bring awareness to women in the space as well.
Clarice: We know women are still the minority in the Web3 world. How do you think we can engage more women creators, builders, founders, and investors in Web3?
Vera: That’s a great question because I, myself as a woman, have been in this industry. It’s not easy and you have to accept that you’re in the minority. I think the first thing for a woman to be introduced to is that women help women, like girls helping girls. Be able to have this group for girls to join, be able to introduce the group to other girls, then kind of become a delegated group for people, for women if they have questions then they can go for that one.
Having this group delegated to answer questions and helping each other as women will be a great place to have. I know some apes are creating women-focused groups. There’s one called Not Plus One, we’re also good friends, and I went to their party and part of it.
Having a group is one thing and being able to advertise and uplift each other will be another very important thing. Having good women support, like women-friendly communities, is very important.
We’ve seen some NFT projects that are focusing on women, including the World of Women, Crypto Chicks. I think the majority of NFT holders are actually men. Even though it’s a woman-themed project, it’s still very difficult to reach the woman behind, like the ones that aren’t into crypto.
I think having a great education system will be able to introduce more women into the space, and also go to a community for the woman to learn, to help each other will be another way. It’s just in general.
Women’s voices have to be heard as well. You can be the loudest woman in the space, just to show you’re there, having the exposure into the community with just a single woman being comfortable about who you are.
You may get some attacks with people talking about the other part not focusing on what you’re building, but that’s totally fine because you can avoid that. Being strong together will be a way to introduce more women.
I’m looking for other products that’s focused on women. In the space I see so many merch, but none of the merch are created for women or designed by women. […] the BAYC has a lot of t-shirts. Some of them aren’t really designed for women. It doesn’t really have a sex or thing, but there’s nothing that a product delegated, created for women.
I see some women are creating cosmetics, some women willing to create that closing branch and related to a project that can bring more women’s attention. I think another industry that may potentially get into the future to bring more women in is the handbags or luxury goods, including the Chanels or the Irmas or other brands, not necessarily has to be […] brand. Even […] brands like […] brands out, Sara or other brands, that are able to have a broader women audience and collaborating with the IPs would be a good way to introduce the woman into the space.
That’s one of the reasons that the PinkDAO is probably one of the best men-women ratio communities. The pink color is a very cute color and a lot of females are really into the pink color as well. We’re willing to find more opportunities for women to work together, to find the value of the PinkDAO potentially. That’s one of our goals for the PinkDAO and Pink group. […] as a woman in the space and willing to collaborate more IPs with women.
Also, one of the IPs I had at the airport right now is a café ax. It’s a robot machine. If you go to San Francisco Airport terminal one and terminal three, it’s right there. You’ll be able to see my pink ape that’s actually working as ambassador, serving coffee for people, and welcoming people who travel.
That one got us some attention and probably one of the first ones that’s showing up very early. It was totally an experiment for me to try to see how people react, and later on I see people post on Twitter, non-crypto people posting it on Instagram, sharing the NFTs and the coffee as well.
I think with more and more collaboration of female brands, female IP, or individuals in the space as a female, will bring a lot of the attention and awareness to women.
That’s going to take time, but eventually more and more women will get in as more and more brands come in. A lot of consumer goods that cosmetic brands are focusing on women, like buying power on that. So I think there’s a huge market to explore. If you’re owning IP like women products, you’re welcome to connect with us and we’re willing to bring more apes and more women into your brand ecosystem.
Lin: Welcome to SustainaDAO Non-Fungible Talk, a podcast on everything about DAO and WEB3 by the team of SustainaDAO, which includes me, your host today, .
Our guest today is Charles Cheng. Charles is the co-founder of Euterpe. He’s also a Forbes China 60 Outstanding Chinese in North America, the formal partner in Amino Capital, the advising expert of Alumni Ventures Group, and a member of Stanford Angels and Entrepreneurs.
Euterpe is a company that leverages IP-powered NFTs as a service with SocialFi. So now we will welcome Charles to tell you more about himself and his company. Hey, Charles. It’s a pleasure to have you here today. Would you please tell us more about your background and how you got into the NFT world?
Charles: Hi, everyone. Thanks for having me. There’s a long story, actually. So when I was at Stanford, my professor teaching security simulation was Joe Grundfest. He was a former commissioner at SEC. He talked a lot about Bitcoin and other cryptos. It was the first time that I sought with my legal experience, I could help a trend in technology to grow. So later I joined Amino Capital as a partner and started investing in blockchain startups.
I remember that maybe in 2017 or 2018, at that period of time, there were several projects like CryptoKitties and CryptoPunks. Both of them are now quite famous, actually, NFT projects. That was my first time knowing that there was a category of crypto called NFT.
Back to 2020. My friend, Jerry Leo, was a professor at the University of San Francisco at that time. He shared a paper with me written by him on how blockchain technology can help the IP industry. So I thought that was a great idea. This paper actually turned out to be the winner of a global legal tech conference. So we thought we could turn this paper into a project. That was Euterpe. Yeah, that’s my story, actually.
Lin: Oh, thank you, Charles. Yeah, so I was actually curious about the founding story of Euterpe. I think you already led us into the story a little bit. But would you mind sharing a little bit more with our listeners? What kind of issue is Euterpe trying to address?
Charles: Yeah, so Euterpe is the first IP-based NFT as a service for the IP industry with SocialFi. We basically want to start with Musical IP and expand into other IP categories, including videos, games, books, concerts, and also, for example, patents and trademarks in the future. In our platform, basically, the IP owners will be able to auction their IP through NFT to reach the global investors.
Also, the investors can participate in auctions and also a second market to invest in copyrights products by purchasing NFTs. This is for the IP owners and mentors, and also for the fans. They can directly support their favorite artists and works through listening to the music, playing the video, and promoting the content to earn the token rewards. So basically, this is our idea.
Lin: What is the current situation with the IP in the music or other art world?
Charles: Basically, we developed the whole idea based on the pain points of the industry. I believe that there’s a lot of unfairness or problems in the IP industry. Also, I believe that the majority of those problems can be solved by blockchain technologies.
One thing is for example, for the artist, so nowadays, for every $1 that consumers pay on the content, only around 15¢ can be collected by the content creators. Around 85% of the royalties actually went to the middleman. They were used, for example, as transactional costs like financing costs and marketing costs.
Another thing is even for the 15% of the royalties, the artists have to wait for usually a quarter up to two or three years to receive it. Lastly, every year, there’s around 20–50% of the royalties were eaten by a black box. Nobody knows where they’re going, you know? The reason is the IP or the copyright structure behind a single song is quite complicated. Usually, there will be thousands or at least hundreds of the license, or the transaction behind it. It is really, really difficult for people to handle the transaction or the royalty distributions by hand.
So if we can really use blockchain technology, we can improve the efficiency of this industry. I also believe that in the Web2 ecosystem, the artist does not really benefit from the development of technology. For example, the streaming platform actually helps the artists to share their content broadly and easily with the fans. However, they didn’t get enough revenue out of these platforms.
For example, we did our calculations and research in the US. If one artist wants to earn a minimum wage level royalty based on Spotify or YouTube—at Spotify, they have to get their content played at least 3.5 million times per year. On YouTube, the number will go to around 90 million times per year. So that’s impossible for most artists. I believe that this is insane. We should do something to help the artist. So this is for an artist.
Another part is the fans. So think about it, the fans nowadays, basically, are only passive consumers. The only thing for us as a fan to participate in this industry is to make the payments, either by purchasing a CD, downloading, or just joining a subscription membership. But there’s no financial incentive for us to do anything.
We can probably support the artist and we can promote the music by sharing or we can do something. For example, vote for the artist we like in some shows. For example, I’m not sure if there’s one quite famous in China or in Japan like AKB48. Something like that. Basically, everyone is going to vote for the favorite artists in the group. But the fans cannot get anything. They can only know that, oh, my artist or the star is going to be huge.
However, as an early supporter, I can get nothing. I think that with a Web3 business model, we can provide a better ecosystem for the fans to get their revenue or get their financial return based on their contribution to the ecosystem or to the content. That’s something we can also help with.
Lastly, is the NFT world. So I believe that NFT is currently a brand new industry. So there are many mixed-quality UGC-NFTs on the market. As an investor, it is quite difficult for you to find the real valuable ones. Also, there are a lot of scams and also copyright infringement, so it is a huge risk there.
What we want to deliver to the market is we want to link the copyrights or the IP with the NFT and allow the users to purchase the copyrights by simply purchasing a piece of NFT. By holding the NFT, you can get future revenues, either by royalties or by license. So that is our mission.
Lin: Thank you, Charles. That’s very interesting. Since you mentioned the concept of copyright NFT, could you tell our listeners a little bit more? What’s the difference between copyright NFT and normal copy NFTs?
Charles: Yeah, that’s a great question. You can think about it this way, for example, music. If it is copy-based NFT, it is essentially a CD. You can say it’s probably like a limited version. But still, it is a CD. It is only a copy of the content. What you get is you can play it in a private room, not in a public place because you didn’t get that license. You can only enjoy it by yourself or somewhat with your friends. This is a copy-based NFT.
But if you get copyrights-based NFT, then you own the copyright of the music, then you can get royalties. Every time the music is played, either on Google, Spotify, YouTube, or Apple Music, you can get royalties. Also, you can have the right to utilize it in different ways of development. For example, use it in a movie, TV show, or game.
Those are multiple ways for you to receive revenues. So that’s a big difference. Also, you can think about the value in the real world. I just took a look at the price of Michael Jackson’s Dangerous at a second market like eBay. The price nowadays is around $260, around that range. But the value for the copyrights of this album is definitely more than $10 million. So that’s the difference. That’s a huge difference.
Lin: How would you evaluate the copy NFT?
Charles: Yeah, that’s also a great question. There are a lot of ways for the copyright investors or the experts to do the evaluation because this essentially can give you the future revenue. There should be some financial modeling that you can utilize to do this. For many of the copyrights content at the early stage, if there’s no royalty yet, then the experts will take a look at the quality of the content.
You should have had a sense about, oh, will this be popular or not? You never know, as a fan, but for professional musicians, content creators, or investors, they will have a basic idea. But usually, this is a very interesting game, because different people will have different views over this content’s real value.
So for example, I noticed that several of the most popular songs actually were sold at very low prices to the music labels. But essentially, they were really hot and the music labels got a lot of money. But the content creators or either the songwriter or the lyrics writers, they didn’t get enough money. So that’s the problem actually, but that’s the way the IP industry is working.
Lin: Yeah, I guess the timing when you sell it also matters too.
Lin: That’s very interesting. Now we have to learn that Euterpe works on copyright NFTs. What are the other differences Euterpe has from the other music NFT platforms such as AirNFTs, Rarible, and OpenSea?
Charles: Basically, first off, we are building a B2C marketplace like an Amazon-style marketplace for the fans and for the content creators. We’re not doing a C2C business model because we believe that currently, the fans or the NFT buyers, what they need is to provide them with a stable and qualified channel of NFTs. We want to provide them NFT supply with only qualified and authentic copyright NFTs. That’s our mission.
Also, we only sell at the first stage the copyright NFT. We want to focus on copyright NFTs that have copy-based NFTs. So we want to allow the investors or the buyers to purchase the copyrights, instead of just a copy. The third thing is we only focus on high quality content, professional content. We don’t want to put a lot of UGC-NFTs in our market.
We also actually get a lot of expertise and also resources in IP management and legal compliance who believe that this will be value added to the platform, to the content creators, and also the buyers. We can provide a better solution for them to protect their rights and interests. They don’t have to be worried about copyright infringement or scams. The last thing is we are going to issue our native token to support the SocialFi mechanism to help everyone in our community to get the rewards based on their contribution to the ecosystem and also to grow with our platform.
Lin: Thank you, Charles. So we know that Euterpe made a great use case of owning and transferring music copyright with IP NFTs. I believe that this concept can go beyond the music industry. Could you give us some examples of other industrial sectors that can benefit from connecting their IPs to NFTs?
Charles: Yeah. I think music is only one of the use cases. This model can be copied into video comedies, live streams, and also video games or books. You can think about the offline expansion opportunities, such as concerts and also merchandise NFTs and it’s us owning copyrights. But in the intellectual property world, actually, there are also two other major fields like trademarks and patents.
We can definitely use this kind of model to revolutionize the whole intellectual property world. In our opinion, actually, NFT will be infrastructure in the world of metaverse. In metaverse, we believe that the majority of the assets actually can be linked to NFTs. In this way, we can help with different kinds of properties like virtual property or real property, any kind of stuff that can be represented by NFT or linked to NFT. We can utilize this technology to improve those assets’ efficiency in the metaverse or in the real world. So I believe that the use case will be quite broad.
Lin: Let’s say with music, you can still enjoy the music without owning the music NFTs. However, when it comes to the patent, you have to license out the patent in order to use it with benefit even though you already have the patent NFT. So what is the role of the patent NFTs when it comes to the IP protection and what are the potential issues with the compliance?
Charles: Yeah. Regarding the patents, I believe that it is not a piece of paper or it’s not about protection of the content of the intellectual property to keep it secret. That’s not the way we protect patents. Actually, for patent protection, the first step is you have to publish it. You’re going to make it public, accessible to everyone. But you have the right to use it, either exclusively or you can get royalty based on the license. That’s how we protect it.
If there’s anyone who can take a look at the contents of the patents, I think that’s fine. Still, as the owner of the patents, you have the right. I think the most important thing in patent or copyright, in general, is the rights instead of the content. I think what really matters is who owns the rights. If we can use NFT representing the rights, then the real question here is who should be the owner of the NFT or who should be the owner of the patent?
Can we really make the NFT represent the patent rights? I think that’s probably something we should figure out. If we want to make this business model work, what we should do, first thing is we can utilize blockchain technology and also NFT to do the right priority. So you can make the reservation of your patents with the authorities and make them recognize that okay, you are the creator or you are the right holder of this patent.
The next step is we can utilize the system to help you do either licensing or transaction faster and more effectively. That’s the second part. Also, we should let either the legal world or businesses recognize these transactions and also the license. The next step is dispute resolution. For example, if there are disputes here, how can we integrate the blockchain system and also the NFT system with the legal system to use the NFT or the ledger on the blockchain as evidence? That’s something we can definitely help with industry.
Lin: It sounds like something that can really revolutionize the current way how IP law works. So as a legal expert, what do you see as the voice coming from the traditional legal side towards IP NFTs? How do you envision the current Web3 wave shapes the future of the traditional legal system?
Charles: Yeah, I believe that the legal experts are excited about this trend in technology because I just mentioned that if we can really utilize smart contracts or blockchain technology, we can definitely help solve many of the problems at the current stage. Probably there will be less legal force cost for the consumers or for the copyright owners. Because if the contracts are automatically enforced, there’s no need for you to get a lawyer to enforce it.
Also, I believe that it will greatly help us to cut the middleman. If any transaction or the license can be done easily, mostly on your own, you don’t really have to find another agent to do this for you. Probably, there will be brand new ways for you to get funding or brand new ways for you to protect your content. So all this stuff will be delivered by the developers and the lawyers. Because the lawyers will be the one who helped design the product or the smart contract.
It is not only the developers’ job, I think that there should be some lawyers involved in this whole process. Also as authorities, probably they will also figure out, is there any new regulations needed here. How should we make our copyright law or securities law, more friendly or more supportively to help this new ecosystem? That’s a lot of stuff for the lawyers to explore in this new world.
Lin: Yeah, that’s very exciting. So, Charles, we have already talked about a lot of benefits we can get from NFT-based patents and other assets. So what do you see as the major challenge in such assets?
Charles: I believe that the most difficult part to integrate the NFT and copyrights is how we can make it enforceable in the real world. So you have to really combine these two smoothly. For example, you should make the copyright owner rights also can be utilized by the NFT owners. You have to link the copyrights with NFT, make the smart contracts enforceable in the real world as legal contracts, and make the NFT owners enforce their rights as copyright owners, for example, to receive royalties to protect their copyrights against other people’s infringements.
There’s a lot of work for the lawyers or for the intellectual property experts to do the work, to do the bridge. Let’s think about if there’s NFT, how can we make it as certificates of the copyrights and make the authorities recognize it? Second, if there’s a transaction of NFT, reach out, make the legal authorities recognize that, okay, this is also a transaction or a license of copyrights.
If there is an infringement or dispute, then the legal authority can recognize the NFT as a certificate or as evidence to support your right, then you can get protection from the authorities. I think that’s the thing we should figure out and also provide solutions for this NFT industry.
Lin: For us at SustainaDAO, we focus on sustainability issues. What’s your thought on what kind of road do you believe our Web3 initiatives or blockchain technology can play in addressing sustainability issues?
Charles: I think there are a lot of ways for us to utilize blockchain technology and Web3 models to help us to protect environments or to promote sustainability in the business world or in the governance side. So for example, you can also utilize the SocialFi or X-to-Earn model to encourage ordinary people to participate in environmental protection stuff.
For example, you can walk more, you can bike more, and also probably you can help to clean the streets. In this way, you can earn some sort of token, this is one way. I think it’s an obviously workable way.
Also, I believe that there are many industrial participants who are now thinking about how to utilize blockchain technology to facilitate how to save the carbon transaction. That’s also a way. You can probably have a better transaction ecosystem here, or the business model for people to do the trading and to control the limits of the pollution or to help the global control of pollution. That’s probably my initial thoughts about this.
Lin: Yes. So I think our last question for you today is as a founder, what advice would you give to other entrepreneurs who are interested in entering the Web3 world, especially nowadays we’re currently entering a market crackdown?
Charles: I think it’s a good time for us to do something because the market is not crazy. Then you have time and the opportunity to explore. My suggestion is, first thing, do the right thing. You focus on how to improve the user experience. Focus on delivering value to the community or the industry to make your product perfect. This is one thing.
The second thing is to be friends with time. You do it and you stick to it. You don’t give up. If you can do this until the next wave of bull market, you will be the winner in the future. You will be the rising star in the next wave of the bull market. Those are my suggestions.
Lin: Thank you so much, Charles. Thanks for joining us today for this episode of SustainaDAO Non-Fungible Talk.
Clarice: Thank you so much for joining in this episode of SustainaDAO Non-Fungible Talk. This show is brought to you by SustainaDAO, a decentralized protocol that promotes social progress, environmental balance, and economic growth with blockchain technology. I’m your host, Clarice Qiu.
Lin: And I’m your host, Lin Ning. If you like the content, subscribe and give us a follow on Twitter at @sustainadao. We also have premium content including blockchain research, member-exclusive events, and more with NFT pass access. For more information, please visit our website decil.org.