Myth Of Money: What Makes A Good Founder?
Welcome to this week’s edition of Myth of Money, a weekly newsletter on the digital asset markets read by 12,000+ investors.
Disclaimer: The following is not intended as investment advice. Do your own research.
Last week Chamath Palihapitiya published his annual investor newsletter. Unlike most years, which are full of numbers, this year, Chamath brought something different to the game. He talked about the psychology of good founders.
Based on more than 10 years of accumulating these learnings, we believe being a successful technology investor is less complicated than many make it out to be: attract and partner with founders who are, above all else, hyper-focused on finding product-market fit, and then willing to scale this fit with superhuman resilience and persistence, no matter the distraction.
While that may sound glib and obvious, the past decade has taught us that these attitudinal and psychological characteristics dominate the makeup of the most successful founders. And the more time we spend with founders, we’ve become increasingly better at learning how to identify who has it and who doesn’t. Inspiringly, the founders that exhibit these traits exist in every age, color, gender, and sexual orientation imaginable.
Meanwhile, we’ve also learned (the hard way) the price of investing in companies and founders who don’t exhibit these traits. No matter how shiny they may appear from the outside, failed startups and founders uniformly reveal the same shortcoming: they are easily distracted by whatever priority is popular at the time. Sometimes this can be a technology fad, other times it's the social cause du jour. What is unambiguously clear, however, is that no amount of virtue signaling or focus on non-product issues will make a company successful.
As a result, the level of discipline and focus required for success can make a founder seem, at times, aloof, detached, or even callous to some of their employees. But through a different lens, this hyper-focus can also be invigorating for employees, partners, and customers. For the founder, this often means a tough and even lonely road, but as the saying goes, “smooth seas never made for a skilled sailor.” [Read the full letter here.]
Reading this, I couldn’t agree more. The other day, I finally shared my portfolio. I always picked founders based on gut, across industries. Sure, I have some business knowledge to judge a project in crypto and in consumer investing, but truly I pick all of my investments based on intuition. And each time I try to go against it, it’s like I feel a bad rash coming on.
I stayed away from starting my own fund, and continued to invest based off my own balance sheet and through SPVs, because frankly this type methodology is difficult to described to LPs.
I tried to put my method recently into words on my website:
Like many good things, we started small, investing in good people with great visions, and grew to where we are today.
We invest in founders first, technology second. If you meet our founders, they all have in common - integrity, tenacity, and authenticity. Their visions are an extension of who they are, and we are proud to be aligned with them.
Basically, I want to be able to put all of the founders around a dinner table and have them get along because they are that similar in this one indescribable way.
Chamath was the first investor who was actually able to put that feeling into words for me. My skill is the judgment of someone’s psychology, not of their business plan. Because plans change. And unfortunately, people have a harder time doing so.
Here are a few of the companies I’m most proud of:
CoinMARA (Crypto exchange for Africa - backed by Distributed Global, FTX, CoinBase, DIGITAL.xyz, TQ Ventures, and more)
CoinMENA (Crypto exchange for the Middle East - backed by FTX, BECO)
Clover.Finance (Cross-chain infrastructure - backed by Polychain, Alameda)
Hashflow (Multiplatform DeFi Trading - backed by Dragonfly, Galaxy Digital, Kraken, Alameda, Naval Ravikant)
Flooz.Inc (Culture-first infrastructure for Web3, backed by Felix Capital and Seedcamp)
Gameboard One (Digital table-top gaming, backed by Riot Games, TVC, SOSV)
MiniCircle (Genetic enhancement to facilitate life extension, backed by Robert Rhinehart, Sam Altman, Peter Thiel and Naval Ravikant)
Winston House (Music venue in Venice,CA backed by entertainment industry leaders)
JungleTea (Healthy hard tea, backed by Rob Rhinehart, Founder of Soylent and John Fiorentino, Founder of Gravity Blanket)
Going forward, you will see more deals from me, featured in this newsletter. I will do my best to pick the best founders for you and tell you why I picked them.
This Week By the Numbers 📈
Top Stories 🗞️
Major crypto exchange Binance has participated in Elon Musk’s $44 billion acquisition of Twitter, according to data filed with the United States Securities and Exchange Commission. On May 5, Musk filed an amended general statement of the acquisition, announcing that Twitter received an aggregate of about $7.2 billion in new financing commitments in connection with the merger agreement, subject to the conditions in co-investor equity commitment letters. According to the document, Binance is one of 18 co-investors in the acquisition alongside major crypto industry players like Sequoia Capital Fund and Fidelity Management and Research Company. Having invested $500 million, Binance is the fourth biggest contributor, following the Lawrence J. Ellison Revocable Trust, which invested $1 billion. Sequoia Capital and VyCapital donated $800 million and 700 million, respectively.
Stratis has entered a long-term partnership with the charitable foundation of King Oyo, the current monarch of the Tooro Kingdom located in southwestern Uganda, with a population of approximately one million. King Oyo — Rukirabasaija Oyo Nyimba Kabamba Iguru Rukidi IV — is the world’s youngest reigning monarch, crowned at three-and-a-half years old. He is known for his keen interest in technology. A recent partnership with the Uganda Industrial Research Institute saw the creation of the King Oyo Science, Technology, Innovation and Industrialization park. Under the partnership, Stratis will fund a new blockchain innovation center in the kingdom designed to build knowledge and blockchain development skills in the kingdom. Knowledge will be shared by developing a syllabus designed to provide relevant use case examples to spark creativity and innovative thought process around blockchain applicability.
The crypto community and Wall Street converged last week in Nassau, Bahamas, to discuss the future of digital assets during SALT’s Crypto Bahamas conference. The SkyBridge Alternatives Conference (SALT) was also co-hosted this year by FTX, Sam Bankman-Fried’s cryptocurrency exchange. Anthony Scaramucci, founder of the hedge fund SkyBridge Capital, kicked off Crypto Bahamas with a press conference explaining that the goal behind the event was to merge the traditional financial world with the crypto community.
According to Kelvin O’Leary a Canadian entrepreneur, recent crypto regulatory frameworks from United States Senator Kirsten Gillibrand and Senator Cynthia Lummis, along with the Stablecoin Transparency Act proposed on March 31, 2022, by Representative Trey Hollingsworth and Senator Bill Hagerty, are now attracting institutional interest in crypto. “They’ve come to the conclusion that this is an asset class that is here to stay,” O’Leary remarked.
The Northern Virginia county of Fairfax has already invested a part of its pension funds in crypto and blockchain startups. Now, it’s mulling over deeper involvement with decentralized finance (DeFi) yield farming. The Fairfax County Police Pension System’s chief investment officer Katherine Molnar said on Tuesday at the Milken Institute Global Conference that the system aims to fund two new crypto-focused hedge fund managers in the next three weeks. The next few days will see a decision made, which, if approved, would be the first time pension fund money was used in DeFi.
The Central Bank of Argentina (BCRA) has put the kibosh on financial institutions offering crypto trading only days after two of the country’s largest banks signaled they were opening up to digital assets. On Thursday, the BCRA said the move was to mitigate the risks crypto poses to users and “to the financial system as a whole,” citing crypto’s high volatility, use in money laundering and absence of regulatory safeguards. The news came hot on the heels of an announcement on Monday from two of the country’s largest banks, Banco Galicia and Brubank, that they would allow their customers to purchase Bitcoin (BTC), Ether (ETH), USD Coin (USDC) and Ripple (XRP).The decision to open crypto trading was decided by a poll conducted by Banco Galicia, where 60% of respondents said they wanted easier access to digital currencies.
Thank you for reading this week’s edition of the Myth of Money.🚀
Until next week,
By Tatiana Koffman
Hi there and thanks for reading. If you stumble upon my newsletter, you will notice that I write about money, economics and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital and Cryptocurrencies. I believe in empowerment through closing the financial education gap and creating equality of opportunity for the next generation. I have invested in 20+ companies and funds. Check out my portfolio here.
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