#805 Finding New Web3 Investments w/ Chris Perkins

Christopher Perkins is the President of CoinFund, the diverse Investment Management firm focused on Web3 and Decentralized Technologies. In this conversation, we discuss Bitcoin, Ethereum, Web3 and Building Infrastructure. ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset’s price history and your portfolio’s performance over time. And maybe the best part, Exodus is integrated with the Trezor hardware wallet - making advanced security easy for everyone. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= The fastest way to double your Bitcoin is at MyBookie. Instead of taking an altcoin gamble, invest in your sports knowledge. Set yourself up for success by doubling your first Bitcoin deposit when using promo code POMP at MyBookie. Deposit with Bitcoin and double your initial deposit up to $1000. Crypto is the best way to play at MyBookie because there are no fees, faster payouts and bigger bonuses. Playing with crypto also gets you access to exclusive crypto contests – NFL Crypto Survivor, NCAA March Madness Crypto Bracket Contest and more! Click here to get started. MyBookie accepts; Bitcoin, Ethereum, Litecoin, Bitcoin Cash and Ripple. The deals don’t stop after your initial deposit. Take advantage of our industry leading Crypto Re-up bonus and receive a 15% cash bonus on all crypto deposits made AFTER your initial deposit!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Christopher Perkins is the president of CoinFund, a diverse investment management firm focused on Web3 and decentralized technologies. In this conversation, we talk about Bitcoin, Ethereum, smart contracts, Web3, decentralization, and much, much more. I really enjoyed this conversation with Christopher, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. Today's episode is brought to you by Exodus, the world's leading desktop, mobile, and hardware crypto wallet. They offer beautiful, user-friendly blockchain products that sync across all of your devices,

• 0:44Anthony Pompliano?

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• 2:19Speaker 01

  Anthony Pompliano runs POMP Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of POMP Investments. You should not treat any opinion expressed by POMP or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 2:43Anthony Pompliano?

  All right. Next, we have the president of Coin Fund, Chris Perkett is going to join us. Chris, I think you're there. How are you?

• 2:49Speaker 02

  I'm well. How are you doing, gentlemen? What's going on?

• 2:51Anthony Pompliano?

  I'm doing fantastic. I'm super excited to talk to you. First of all, I have from a good source, AKA the internet, that you were in the US Marines, which you get credit for being in the military. You get negative points for being a Marine rather than in the Army. But tell us about your Marine experience.

• 3:09Speaker 02

  Yeah, we're not going to say what Army stands for, so we'll put that aside. Yeah, I was a Marine for nine years. I think you served in Tajik, right?

• 3:16Anthony Pompliano?

  I did.

• 3:17Speaker 02

  Yeah, we were out west in Ramadi back in 2004 during some of the tougher fighting. I served under Mattis for a little bit, James Mattis. And then I went down to the city to do some street fighting. Did that for nine months. It was quite an experience, as I know your experience was pretty formative as well.

• 3:35Anthony Pompliano?

  Ramadi in 2004, that's no bullshit, man.

• 3:39Speaker 02

  Yeah, it's no joke. Heavy casualties. We had to fight our way through the streets every single day. But you know, it gives you great perspective as you come into an industry like this.

• 3:49Anthony Pompliano?

  Yeah, absolutely. When you were doing that, any main takeaways you had from either time deployed or the military training in general that you kind of use now in the business world?

• 4:00Speaker 02

  Yeah, I imagine you've experienced the same thing. Have you ever been in a world where there's no rule of law, right? Where the guy with the biggest gun, you know, calls the shots. And so you really have to rely on your ethics. You need to understand how to take and manage risk. And you got to stay mission focused. Like, you know, we're experiencing this volatility now. You got to get through the noise. And power through and get to your objective. And that's what we did every single day. Uh, and it gives you great, like, I see it as a source of strength. I know a lot of fellow veterans, you know, they come back and have they struggle and we're doing things to take care of them. Uh, but for me, it's a source of strength.

• 4:34Anthony Pompliano?

  Yeah, I, I completely agree. And I always joke with people that are like, oh, man, this is stressful, but nobody's shooting at you. You're, you're gonna be okay.

• 4:42Speaker 02

  They still shoot at you. It's just in a different way.

• 4:45Anthony Pompliano?

  Yeah, tweets, the mean tweets, man. We gotta, gotta care about the mean tweets, right? Um, all right, let's talk about, uh, kind of the crypto market in general. Uh, maybe we could start CoinFund. Uh, you guys have been around for quite a while. Help, uh, help everyone understand kind of what you guys do at CoinFund. I know you're very focused on kind of decentralized technologies, web three, et cetera. How do you guys think about what you're doing?

• 5:03Speaker 02

  Yeah, thank you. So we're one of the oldest crypto native investment managers, uh, I guess in the world, started in 2015 by a mathematician and computer scientist named Jake Brugman. Uh, he was joined, uh, by anybody Alex Felix, our CIO, uh, who has a private equity background. And, and really what we are today is we're highly diverse, uh, by background. Um, and, and also, you know, straight up diversity, about 46% of our, of our team is diverse, but we bring very diverse, uh, backgrounds to, uh, focus on seed, pre-seed strategies. We have venture strategies and we have liquid strategies and, uh, you know, we look across the various verticals, uh, decentralization, web three. Uh, we'll look at everything from gaming to infrastructure, NFTs. We have, we have a really strong background in NFTs.

• 5:47Speaker 02

  DeFi and, and DAOs and things of that sort. All, all verticals we're super excited about.

• 5:54Anthony Pompliano?

  Got it. And then when you start to think about, um, obviously the crypto market in general, just like in the military, obviously one of the, uh, the most important things is the talent, right? And there's famous quotes in just business building in general. Uh, you know, I think it's Keith Roy says, uh, the people you hire is the company you build. Uh, if you think of, uh, kind of the military, they spend a lot of time breaking you down. A lot of people don't realize the breaking down process may be a little bit less fun than you would imagine. Uh, but then they build you back up and they focus on leadership and, and really kind of refining that talent. Uh, it seems like the crypto market has been a big beneficiary of a lot of capital flows in terms of intellectual capital, just. As much as financial capital, talk about the people you're seeing, both that you guys are backing, folks that are working at Coinfund and then folks that you know from the legacy tech or finance roles that are moving into the crypto industry.

• 6:39Speaker 02

  Yeah, I mean, great point, and it's a great lesson that we learned in the military. Any business, anything you do starts and ends with people, and you need people that are very diverse in background and experience and very, very smart. We're seeing an absolute pouring of talent into this space, and that's one of the things that makes me incredibly bullish in the long term. I mean, I look, I did 15 years, hard years in finance, and one thing that's super interesting right now, it's just on the phone with some of my friends over there, is that the institutional adoption of crypto has slowed a little bit. And when I'm talking about institutional adoption, I'm talking about the largest 130 asset managers in the world. Why is it slowing? It's because they all want to get in.

• 7:21Speaker 02

  They realize that they have reputational risk, not for entering the market, but for not being in the market. You know, Bitcoin's the best performing asset in eight of the last 10 years. The regulation is very well known, it's a commodity. So why can't they get in? It's because of their operations, right? And so what's happening? They're forming these task forces, and you know, just like we used to have in the military, and they get the ops guy, they get the trading guy, or lady, by the way, they bring it all together, and they institutionalize, and it's showing their commitment. The problem is, is that as they bring these task forces together, light bulbs go on, and then they lose the talent that's coming into crypto. And so we're seeing, I'm super excited by what I'm seeing, and that slows the adoption, but the commitment remains. You know, my personal belief is that you'll see less than 20% of those large institutions

• 8:05Speaker 02

  in the space by the end of the year. But that's long-term tailwind, right? Because they're coming, and there's going to be institutional adoption. As you look at any investment, it always starts with the people. I've heard you say this many times, Anthony, it's all about the people, the founders, and it's, you know, you want to invest in people that are ethical, thoughtful, knowledgeable, top in their class, but also people that are not afraid to take risk and make mistakes. And that's where we come in with a really a founder's first approach, where we try to get behind and help them think through their challenges, et cetera. So, you know, a couple of other themes that we're looking at is you're seeing a lot of Web 2 folks pouring into the space, right? And if you look at Web 3 right now, I would argue one of the biggest gaps is user experience. And we could talk about the users pouring into the space,

• 8:50Speaker 02

  which I'd love to comment on, particularly in NFTs. But we're seeing a lot of Web 2 people now coming in and they're saying, well, wait a second. I get this. This is going to be big. We're introducing private property into the Internet. I kind of know how to do, how to create a good user experience with my Web 2 background. And so that's a trend that we're starting to see, which is really interesting. The talent coming in from traditional finance is second to none. I mean, my colleagues, some of the best and brightest are coming across and I don't blame them.

• 9:17Anthony Pompliano?

  So when you think about that kind of consumer demand for NFTs, obviously, there's tons of talent coming to work on this stuff, but consumers are coming, you know, almost at a more rapid pace than the talent to actually build this stuff. What are the milestones or the data points that you look at to measure or quantify the consumer demand for NFTs and like what that market looks like right now?

• 9:35Speaker 02

  I mean, we track it all the time and we like to look at, you know, we have a, we have a company called Metaverse. We just announced around there and it's our, it's our vertical that will do everything from curate to purchase iconic NFTs. The NFT space is super exciting because of it's, it's so accessible to consumers. And in a way, it's a gateway into crypto. And, you know, if you look at some of the stats, you go onto the, onto the Internet, look at like a crypto slam or something. I think port apes are up 80% this month in the last 30 days. Sales of port apes, right? People are pouring in. World of Women up like 1,300%. You look at something like Dapper Labs, which has its NBA top shots. Very accessible to, to people. That's up like 60%.

• 10:19Speaker 02

  And so like, again, it's a very big tailwind because as people come into the space, and look, macro forces are really impacting pretty much every single asset class. You know, you know, we believe that, that crypto may outperform those other asset classes because of this increased user and consumer adoption, whether it's the consumers coming in, the NFC space, or if you have like institutions, like I said earlier, they're, they're not, they're not, they're really not in yet. The biggest, largest traditional asset managers are not in the space. That will create incremental demand over the long term for long-term investors. And so it's super exciting.

• 10:57Anthony Pompliano?

  Got it. And then when you start to think about a number of other areas, are there other areas outside of NFTs that you guys are like, wow, there's just explosive growth that rivals that kind of NFT growth? Or is NFTs really the fastest growing sector in your guys' opinion?

• 11:12Speaker 02

  It's hard to talk about timing of sectors and when they're going to blow up. I mean, everything that we do in this space is really less than five years old. And people forget that, right? Because crypto moves a mile a minute. Yes, Bitcoin's been around since 2008. Ethereum's been around 2014, 2015. But everything that we really learn looking at is less than five years old. So, you know, I think that there's innovation happening across those streams that I mentioned. I'm particularly interested in DAOs. I think DAOs are going to be huge. When you think about it, they feed this innately tribal instinct that we all have. You know, we want to be part of communities. We want to be, we want to work with those communities. We want to share ideals. And now we have the ability to fund those ideals. I think,

• 11:56Speaker 02

  I think things like Constitution DAO really changed the game when it came to DAOs. So, super excited about that space. Look, there's incredible things going on across all those verticals. You know, gaming is, continues to explode. DeFi, super interesting stuff going on. There's innovation happening all the time. You know, whether they're figuring out how to do it via AML KYC. You know, the innovation I see across those streams is fantastic. And then infrastructure, right? Like I said earlier, the user experience is something that will continue to be focused on. And as that gets sorted, you'll see more and more adoption. So, like, we're very excited across the, across the various verticals.

• 12:33Anthony Pompliano?

  Got it. And you guys recently hired Chris Giancarlo as a strategic advisor. And for those that don't know, he was the former CFTC chairman, very big deal, known as Crypto Dad. He's got a brand new book coming out about crypto. I mean, he's all in, right? Talk a little bit about getting somebody like that on board and how that kind of is a signal in terms of the various kind of regulatory things or legislative, you know, topics that are being debated right now in Washington DC and why that's important for you all.

• 13:01Speaker 02

  Yeah. So, back in my old finance days, I was, I took charge of the derivatives industry after Dodd-Frank was passed. And we had to go from, take the $700 trillion derivatives industry from unregulated to unregulated, from unregulated to regulated. And I had to build that in the context of new regulation. And wouldn't you know it, a guy named Gary Gensler was my regulator. And then Chris Giancarlo was as well.

• 13:22Speaker 02

  We're very, very bullish about the long-term policy outcome around crypto here in the United States. We're seeing Democrats and Republicans coming together, and I said it, it actually does happen. They typically don't agree on too much, but we're seeing it happen more and more as we approach the midterm elections. I don't see a single politician, you know, out in the airwaves focusing on an anti-crypto stance. To the contrary, our phones ring and people are really trying to think through, hey, how can this benefit, you know, my constituents? How can I use this new technology? And what we're seeing is a pivoting from going on the defense and saying, oh, wait a second, you know, this is dangerous. It's this and that, to saying, wait a second, this is opportunity, this is opportunity for our country.

• 14:05Speaker 02

  If we get it right, it'll create jobs, it'll create innovation. You know, despite this intermediating, we're going to give power back to the people in many cases by introducing private property. Oh, my gosh. If you look what China has done, you know, they've leveraged the technology for their ideals. You know, I see a lot of this decentralization, the democratization, even downs. It's American as apple pie. And we're seeing that being embraced by the left and the right. I mean, a great example is look at the great things Mayor Suarez is doing in Miami. And then Eric Adams here in New York City, you know, other sides of the aisle coming together, you know, even competing on how to be more pro the industry. So, you know, what needs to happen, and you know, the regulators,

• 14:49Speaker 02

  they're very, very, you know, they're there to, they're serving their country. They're there to try to implement the laws. What I think we need, and I know Chris Giancarlo is on Saturday, we talk about it regularly, is we need policy, principles-based policy that empowers, you know, the industry to be able to operate. And I think that regulatory clarity is something that we're supportive of, provided it's principles-based and thoughtful. And we're encouraged that it's happening. We're seeing great things, great dialogue happening right now, and I think the midterms will be a game changer there. But Chris is coming on board.

• 15:22Speaker 02

  There's nobody better, I think, in the regulatory landscape to really advise not only coin funds, but also our portfolio companies on how to really operate, how to think through thoughtful policy. And by taking, you know, some of our ideas and our knowledge of the technologies, and then working with him and his policy outlook, then we're hopeful to thoughtfully engage various policymakers and whoever will listen to us on how we can make this thing work for the benefit of all of us.

• 15:48Anthony Pompliano?

  Joe, John, what questions you guys got? Hey, Chris, how are you? Thanks for coming on. My question would just be around kind of institutions. I know you spend a lot of your time talking to institutions on this stuff. And I'm curious just kind of how those conversations have changed and where your general feeling is on where like we are with them, right? Not only from decentralized networks, but crypto and web three and so forth.

• 16:07Speaker 02

  Yeah, so I remember 2017, I was running a couple of businesses at Citi, phone would ring off the hook, right? And it was like, hey, get me into this market, get me into this market. And I would say, are you talking for yourself? Or are you talking for your institution? And they'd say, dude, I'm talking for myself. My company would never touch this stuff. By the time I left Citi, I left earlier this summer, the last thing I did was I got Bitcoin and Ethereum futures approved on the CME. It was a massive undertaking. I had to like, we had to take it to the reputational risk committee of the board. And like 65 people tried to stop me, but we got it done. And now, with the, like I said earlier, the institutions want to come in. Every single asset manager, the most conservative asset manager in the

• 16:52Speaker 02

  world, would call us and say, I've got to figure it out. Can you help me? And honestly, most of it came down to operations. Because like, I mean, even when I was in Citi, like a lot of the technologies, like from the 90s, it's slow, it's batch driven. They just, they need to upgrade their systems to have that 24/7, you know, it's a risk management challenge for them. So I do see them invest, investing in the technologies, you know, like I said earlier, that reputational risk dynamic is changing, where they're saying, oh, I'm a fiduciary, I missed out on this market. I need to, I need to figure it out because of its operations holding me back. I do think as rate regulation further crystallizes,

• 17:34Speaker 02

  it will help them. But in many cases, the regulation is clear. Like, we know what's, we know Bitcoin is a commodity. Ethereum is a commodity. We have futures on them. Those are derivatives. Those are regulated. So there are ways to participate. And I think it really comes down to ops.

• 17:49Anthony Pompliano?

  John.

• 17:50Speaker 03

  Chris, how do you think about investing in founders? How do you look at the founder? How do you look at the project? Can you talk about your process there?

• 17:59Speaker 02

  Yeah, so we have a really, really capable team of research analysts. These men and women are just incredibly strong at being able to get into every single nook and cranny of any type of founder that we would invest in. Clearly, it starts with people. We look at TAM. We look at applicability. We also, because of our knowledge of the ecosystem, we can step back and see how whatever particular company we're looking at fits into the greater ecosystem. And we can also see how we can add value by cross-pollinating with that expertise. But it's also, it's hard to break it down into, we have got various different strategies

• 18:41Speaker 02

  from seed, pre-seed, where there may be more focus on the founders to more on the venture side, where there is product market fit and it's a bit of a different analysis. But we have experts across those verticals that will look at all the things that you would think go into valuation of a particular opportunity.

• 19:02Anthony Pompliano?

  Chris, last question I have for you is when you start to kind of look out over the next two, three years, how do you guys think about capital flows? Obviously, we've seen some large organizations like Fidelity, et cetera, kind of get in the game over the last couple of years. We've seen public companies start to allocate. Is this a thing where it becomes the standard and actually the people who don't participate are the outliers? Or do you think we've got kind of longer than a two, three-year timeframe for that stuff to happen? Maybe it's more like a decade or two.

• 19:28Speaker 02

  Yeah, I would say true institutional adoption is going to start. It's going a little bit slower than some of us anticipated. From a policy perspective, we'll get through midterms and then probably two to three years, you'll have a very clear regulatory picture as they're building out their operations. We're going to get to a point, obviously, where the technology is ubiquitous. Everybody has crypto exposure. And frankly, I believe we're going to get to a point where you don't even know what chain is on, you don't really care. You do your transaction and there's optimization for chains and costs and efficiencies.

• 20:09Speaker 02

  I think widespread adoption for institutions, I probably would say less than five years as some of the policy crystallizes.

• 20:18Anthony Pompliano?

  Yeah, I think that's probably a pretty rational view of the world. So I appreciate that. Where can we send people to find you on the internet or find out more about CoinFund and the work you guys are doing there?

• 20:27Speaker 02

  Yeah, you can hit me on Twitter, Perkins CR97. We're also launching, I don't know, Anthony would love to invite you, an initiative called VITA, Veterans in Digital Assets. We're trying to bring a community of veterans together to get them into the space. You know, I think the space would benefit from more veterans and I think veterans would benefit from operating in crypto. So more to follow on VITA as well.

• 20:50Anthony Pompliano?

  I love that idea. I'm in. I don't know what I gotta do, but I'm in.

• 20:54Speaker 02

  Don't worry, I'm gonna track you down.

• 20:59Speaker 02

  We'll start with some Army jokes.

• 21:00Anthony Pompliano?

  You see, yeah, I was gonna say, you see how the Marine, they're always chasing after the Army guys, right? They know, they know. That's okay, Army leads the way, the Marines follow. It's easy to understand. I got it.

• 21:10Speaker 02

  I haven't heard that one. If you guys heard of aren't real Marines yet?

• 21:15Anthony Pompliano?

  I haven't heard that one.

• 21:18Anthony Pompliano?

  Awesome, Chris. Listen, thank you so much for joining us. And we'll definitely have to do it again in the future as you guys kind of keep progressing.

• 21:24Speaker 02

  Thank you so much. Great to see you guys.

• 21:26Anthony Pompliano?

  All right, later, buddy.