First you’re crazy to join them, then you’re crazy not to.
I’ve had a front row seat to Blockchain adoption over the past 6 years. Looking at the jagged growth curve, a lot has happened, but the power of blockchain technology is still in it’s early stages.
At Lattice Ventures we believe blockchain has huge potential to empower the edges and change everything we do on the web. We’ve been fortunate to have access to experts in the space and want to continue to build that community. We’re setting up discussions on the topics we feel aren’t getting enough hype: regulation, security, legal, governance, community building, and infrastructure. If you are interested in participating in the discussions, please sign up here to join us.
Now, before making investments in Blockchain companies at Lattice Ventures, I started by looking back. (And for fun, attached the bitcoin prices at those pivotal points in time). Here’s a look at the winding path to where we are today:
Public debut by way of Silk Road
I first learned about Bitcoin and the Blockchain in 2011. Back then Bitcoin was strongly associated with Silk Road. People were just starting to get excited after Adrian Chen’s Gawker article: Underground Website Lets You Buy Any Drug Imaginable. At the time I was building gtrot, a social travel that relied on a community to crowdsource travel advice and activities. The consideration then was whether to consider buying Bitcoin, not how the underlying blockchain technology could be built into tech infrastructure like ours.
Being in the travel mentality,I thought the idea of a global currency was a good thing, especially as people moved freely across borders for work or trips.
Bitcoin price- June 2011: $9.21
Compete with incumbents? Financial tools first
We spent a lot of time at USV talking about the things that would undo the incumbents. In 2013, Google, Facebook, and Apple were the clear winners leveraging network effects to become so defensible it was hard to see where new innovation could compete. Blockchain technology presented an opportunity to empower the edges and create a decentralized organization that could do things the incumbents would never be able to, which would create competition and spur more innovation.
We spent a lot of time hypothesizing about the first use cases on the blockchain but came to realize more infrastructure was needed to support more innovation. It wasn’t until a trip to SF where we spent two days with every blockchain related company we could find, that we finally made our first investment in the space: Coinbase. It was started by two ex-Wall Streeters, and frankly seemed like the only backable team at the time. We saw other crypto wallet companies but many did not take the security and infrastructure risks seriously. The space was risky enough, the team needed to start with compliance to survive. Beyond that, I joke that in bitcoin at the time, the line between enterprising and anarchist entrepreneurs was hard to distinguish.
Bitcoin price- May 2013: $114.33
Protocols and applications on the blockchain
The future is going to be decentralized, it was just hard to find that future in the current companies we saw at USV. It wasn’t until 2014 that we started seeing more protocols and applications being built on the decentralized technology. First we invested in Blockstack, and over the next two years we invested in OB1 (Open Bazaar), Media Chain, and IPFS: Protocol Labs. (Today USV has added Polychain and Numerai to their blockchain investments).
Most investors weren’t investing in blockchain companies at the time so in lieu of doing our standard Series A checks, we funded a cluster of seed investments because no one else was looking at the space. We had a head start talking to all of the entrepreneurs in the space and were smack in the middle of legislation and regulation discussions. Outside of talking to entrepreneurs our team was talking to regulators, financial companies, lawyers, cryptography experts, and futurists about the space. Those fundamentals were key components of Blockchain infrastructure then, and are even more so today.
Bitcoin price- June 2014: $598 — June 2016: $640
Inspiring blockchain adoption to a wider audience
At the USV CEO Summit in 2015 we had our Blockchain company CEOs provide a crash course on the technology. Blockchain technology will eventually impact every company in the portfolio. There were 50 CEOs in the room and the reaction was mixed. Some dove in, others saw it as a technology but not a near term priority. Two companies did take it seriously: Dwolla and Kik.
In the years that followed, Dwolla is a payments platform and they added Bitcoin to their accepted payments and Kik made headlines earlier this year with their Kin token ICO. Building an early community within our portfolio helped everyone move forward faster. Even companies that had complimentary services worked to help derisk the blockchain companies, like using CloudFlare for DDOS attacks and SiftScience to reduce fraud — issues still prevalent today.
Bitcoin price — May 2015: $234.31
Investing early in infrastructure
In 2016, I left USV to start Lattice Ventures. Our focus is on funding companies at the earliest stages. Throughout my career I’ve seen the power of network effects to create defensibility and so I’ve continued to seek and support those companies. My business partner Vanessa and I have a belief in empowering the edges with technology. If you see a meaningful problem you want to solve, the lack of an existing investor network should not limit you.
Decentralized systems are the best representations of empowering the edges. We’re excited to see more innovation in how problem solving solutions can come to market, everything from ICOs to the ability to contribute to a network with no centralized approval.
We’ve started to make investments in this space and are looking to do more. This summer has created a lock of hype around blockchain, but that type of attention is inspiring great ideas (along with the frivolous). We’re bullish on the technology and will continue to work with entrepreneurs who are thoughtful about the risks and opportunities.
Bitcoin Price — August 2017: $4,723
Creating community to move things forward
I’m most excited about the infrastructure that will help support more decentralized organizations over time. The companies with the best chance of success will have a fundamental understanding of security, legal, financial instruments, regulation, community building, and technology.
We’re excited to support the ecosystem and continue to empower the edges with new tools as they come available.
Join the Discussion
If you are interested in discussing the regulatory, financial, legal, and technology fundamentals around blockchain — please sign up here for Blockchain Conversations with updates on events.
Want to talk blockchain or get feedback on your idea? Find us at Lattice Ventures or say hello @br_ttany.
What was the price when you first learned about bitcoin? here’s a great tool: https://99bitcoins.com/price-chart-history/
Image: Coinbase.com/charts