Does Venture Capital Investment Violate the Ethos of Crypto? Sequoia Says No - Ep. 367

Shaun Maguire and Michelle Bailhe, partners at Sequoia, discuss their long term view and thesis about crypto, what do they look for to invest in a crypto project, the takeaways from the blowup of Terra, the insolvency of crypto companies, and much more. Show highlights:

• what is Sequoia’s long term view and thesis about the crypto industry
• how different our lives will look in 20 years from now due to blockchain technology
• how Sequoia had to adapt to invest in this new asset class and what are the similarities and differences with investing in traditional startups
• when a product or service on the internet should be offered in a decentralized or centralized way
• how Sequoia decides whether to invest in the entity behind a project or in the tokens
• whether having venture capitalists involved at all goes against the ethos of decentralization
• why Shaun believes that Ethereum proved that decentralization can be achieved even when you start being centralized
• whether people underestimate the value that VCs can add to a project
• why Shaun believes that Solana is moving towards decentralization
• Sequoia’s thesis about privacy in crypto and the potential of zero-knowledge proofs 
• how Michelle sees the macroeconomic environment impacting crypto and whether this cycle is different from the previous ones
• the importance of product market fit in crypto projects
• what crypto projects should be focusing on and the business model they should be pursuing
• the main takeaways of the Terra collapse and how it was a major setback for algo stablecoins
• how crypto founders should always do the right thing even though there is no clear regulation
• whether SBF is the Berkshire Hathaway of crypto today
• the lessons to be learned from the potential insolvency of some crypto lenders and investment firms
• how demand for blockspace will keep increasing and whether a single blockchain could supply all that space
• the future of the metaverse and how it can be defined
• Michelle’s mental model for crypto and the phases for achieving worldwide adoption

 

Thank you to our sponsors!

 

Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021

Beefy Finance: https://beefy.finance/

Ava Labs: https://www.avax.network/

EPISODE LINKS

 

Shaun Maguire: 

• Twitter: https://www.twitter.com/shaunmmaguire
• Sequoia Profile: https://www.sequoiacap.com/people/shaun-maguire/

 

Michelle: 

• Twitter: https://twitter.com/michellebailhe
• Sequoia Profile: https://www.sequoiacap.com/people/michelle-bailhe/
• Michelle’s investment thesis: https://www.sequoiacap.com/article/ask-not-wen-moon-ask-why-moon/

Bear Market:

• Michelle’s Twitter thread: https://twitter.com/michellebailhe/status/1526373378516365312?s=20&t=c7vdmdg2mnQ34rsAGIm0lg
• Insolvency of crypto lenders:
• • Voyager: https://www.coindesk.com/business/2022/06/22/voyager-digital-requests-loan-repayment-from-3ac-considers-issuing-default-notice/
  • BlockFi: https://decrypt.co/103422/blockfi-secures-250-million-line-of-credit-from-ftx
  • Celsius: https://www.theblock.co/linked/151522/crypto-lending-firm-celsius-pauses-withdrawals-and-transfers-citing-market-conditions
  • Celsius possible bankruptcy: https://www.theblock.co/linked/154100/crypto-lender-celsius-hires-more-advisors-ahead-of-possible-bankruptcy-wsj
• Previous Unchained Coverage:
• •  Why Possible Insolvencies by Celsius and 3AC Could Spell Disaster for Crypto: https://unchainedpodcast.com/why-possible-insolvencies-by-celsius-and-3ac-could-spell-disaster-for-crypto/
  • Cobie and Chris Burniske on How to Navigate a Crypto Bear Market: https://unchainedpodcast.com/cobie-and-chris-burniske-on-how-to-navigate-a-crypto-bear-market-ep-354/

Terra

• Shaun’s take on stablecoins: 

https://twitter.com/shaunmmaguire/status/1524420727968976898?s=20&t=26DylQ2_YbW36Y4ZMwxVFw

• Previous Unchained Coverage: 
• • Kevin Zhou on the risk of UST’s death spiral: https://unchainedpodcast.com/heres-why-usdn-de-pegged-from-the-dollar-and-why-ust-might-too/ 
  • The Legal and Regulatory Fallout From Terra’s Collapse: Who Will Pay?: https://unchainedpodcast.com/the-legal-and-regulatory-fallout-from-terras-collapse-who-will-pay-ep-363/
  • The Chopping Block: Does the New Terra Have Any Chance?: https://unchainedpodcast.com/the-chopping-block-does-the-new-terra-have-any-chance/
  • Why Terra Collapsed and Whether an Algo Stablecoin Can Ever Succeed: https://unchainedpodcast.com/why-terra-collapsed-and-whether-an-algo-stablecoin-can-ever-succeed/
  • The 5 Biggest Lessons From Terra/Luna’s Collapse, According to Tascha Che:  https://unchainedpodcast.com/the-5-biggest-lessons-from-terra-lunas-collapse-according-to-tascha-che/