20VC Lightspeed Partner Adam Goldberg on Why There Remains No Mass Market Crypto Consumer Product, The Future For The Token Economy, The Good and Bad of Telegram's ICO and Why The Rate of Founder Learning is The Most Important Element A VC Can Assess

In this episode of the 20 minutes VC, host Harry Stebbings interviews Adam Goldberg, a prodigious partner at Lightspeed Venture Partners, who enrolled at UC Berkeley at 13, worked for the Department of Defense, and contributed to Palantir and Dropbox before venturing into Lightspeed. Adam discusses his journey into venture capital at a young age, emphasizing the importance of continuous learning and adaptability for founders, and shares insights on the crypto space, including the challenges of scalability, token economics, and the significance of community trust. Adam also touches on Lightspeed's investment in Strangeworks, a quantum computing software company, highlighting the team's product-focused approach in a research-dominated field. Throughout the conversation, the significance of diversity in venture capital and the potential of blockchain technology are explored, with Adam advocating for a diverse and inclusive ecosystem.

• Harry Stebbings introduces the 20 minutes vc podcast and encourages listeners to follow on Instagram for behind-the-scenes content.
• The podcast features accomplished guests from the venture capital industry.

You are listening to the 20 minutes vc with me, Harry Stebbings, and I'd love to see you on Instagram at H debbings 90 96 with two b's where you can see all things behind the scenes from us at the 20 minutes vc.

The quote indicates the host's name and the podcast's title, as well as an invitation for listeners to engage on social media for additional content.

• Adam Goldberg is a partner at Lightspeed Venture Partners.
• He enrolled at UC Berkeley at 13 to study mathematics.
• Adam has worked as a mathematician for the Department of Defense and as a researcher.
• His past roles include engineer at Palantir and Dropbox, and early product manager at Rubric.
• Adam joined Lightspeed in 2016 and has invested in various companies.

At the age of 13, Adam enrolled as a full time student at UC Berkeley, where he studied pure and applied mathematics and conducted research in number theory and machine learning.

The quote summarizes Adam Goldberg's early academic achievements and areas of study, emphasizing his precocity and expertise in mathematics and machine learning.

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• Adam was homeschooled until 10, attended community college, and then UC Berkeley for mathematics.
• He completed his education at Stanford studying computer science.
• Adam's background in number theory, cryptography, and distributed systems intersects with blockchain technology.
• His involvement in first round's dorm room fund at Stanford provided early investment experience.
• Adam empathizes with founders and focuses on their potential rather than their past.

I was homeschooled until I was ten, and then I went to a community college for a few years because I really liked mathematics. So after that I went to UC Berkeley at 13 to keep studying math.

The quote details Adam Goldberg's educational journey, highlighting his early interest in mathematics and non-traditional academic path.

• Adam was part of a summer fellowship program at Stanford and mentored by Barry Eggers.
• His experience at Rubrik and with board member Ravi Matra influenced his decision to join Lightspeed.

When I was at Stanford, I was part of the summer fellowship program, and I was fortunate enough to be paired with a great mentor, Barry Eggers.

This quote explains how mentorship and a fellowship program played a role in Adam Goldberg's career trajectory and his eventual partnership at Lightspeed Venture Partners.

• Adam values the potential growth and learning of founders over their starting point.
• He believes that constant improvement is key for founders to master their spaces and build great products.
• The ability to learn quickly is more important than how many times one has founded a company.

There's a professor at Stanford who says that a little bit of slope makes up for a lot of Y intercept... But the point is, really, no matter how far ahead someone is, if they learn and grow less quickly than others, they'll never maintain their lead.

The quote uses a mathematical analogy to convey the importance of continuous learning and growth for maintaining a competitive edge, especially for founders.

• Adam looks for how founders respond to challenges and failures.
• He is impressed by founders who see hardships as opportunities to improve and execute better.
• Rapid product iteration and personal scaling within a company are indicators of a quick learner.

I feel like it's how someone responds to challenges or failures.

This quote emphasizes the significance of a founder's response to adversity as an indicator of their learning ability and potential for success.

• Adam has transitioned through different fields to optimize his learning.
• He believes that mathematics is a foundational discipline, but computer science allowed him to build things.
• Product management provided insight into sales, marketing, and customer engagement.

So throughout my life, I changed from math to computer science and engineering to product management to venture capital, and I did that so that I could learn as quickly as possible.

The quote reflects Adam Goldberg's personal philosophy on the importance of learning and how it has guided his career choices across various disciplines.

• Harry Stebbings discusses the appeal of venture capital due to its unmasterable nature, highlighting the constant learning from new spaces and paradigm shifts.
• Emphasizes the importance of a growth mindset in founders, who are resilient and iterative in the face of challenges.

"But I ultimately picked venture because it's a job that nobody can ever master. There will always be a new space or a paradigm shift to learn about."

This quote explains Harry Stebbings's choice for venture capital as a career, emphasizing the continuous learning and the evolving nature of the industry.

"They operate in a growth mindset. They digest anything that they can, the ones who really can take any sort of beating from customers or from their employees with difficult situations that iterate and come back and improve."

Harry Stebbings highlights the value of founders who possess a growth mindset, capable of learning from and adapting to challenges.

• Adam Goldberg discusses the excitement of engaging with experts in various fields and the joy of learning across different domains within venture capital.
• The breadth and depth of venture capital are seen as a combination that presents an opportunity rather than a challenge.

"In this job, I get to spend all my time talking to people who are smarter than me in very specific fields."

Adam Goldberg expresses his enthusiasm for learning from experts in diverse areas within his role in venture capital.

• Adam Goldberg acknowledges the respect and knowledge he has gained in the field of decentralization and cryptocurrency.
• He identifies the lack of mass market consumer decentralized products and explores the reasons, including scalability issues, user experience, and the need for stablecoins.

"I think that the first and most obvious one is that the underlying infrastructure can't support mass market dapps."

Adam Goldberg points out the scalability limitations of current blockchain infrastructure, using cryptokitties and the Ethereum blockchain as an example.

"I think another reason is the lack of emphasis on user experience."

Goldberg notes that poor user experience is a barrier to blockchain adoption, suggesting that technology is not always the limiting factor.

"Mass market consumers want to pay for DAP and for services in a unit of account that they understand."

The quote highlights the importance of stablecoins for consumer understanding and adoption of decentralized applications (DApps).

"We need to think about what secular trends are enabled by blockchain."

Goldberg calls for a focus on the unique benefits blockchain technology can offer, rather than just its features.

• Adam Goldberg and Harry Stebbings discuss the concept of scalability as a trade-off in the context of cryptocurrency.
• Goldberg argues that scalability is essential and cannot be compromised, aligning it with the importance of community ownership in the blockchain space.

"Scalability inherently isn't something you can trade off if it makes your product unusable."

Adam Goldberg asserts that scalability is a non-negotiable aspect of product usability in the context of blockchain technology.

"You need to own the community, because in this blockchain world, anyone can try to fork away from you."

Goldberg emphasizes the importance of building trust and ownership within a blockchain community to prevent fragmentation.

• Adam Goldberg discusses trade-offs in crypto investment, addressing security and scalability, and proposes a litmus test for blockchain use cases.
• He suggests that extreme trade-offs indicate the wrong technology choice and compares blockchain to AI and statistics.

"If you're building something on the blockchain, is it as interesting if you just use the word database instead of ledger or blockchain?"

Goldberg offers a litmus test for determining whether a project genuinely requires blockchain technology or if a traditional database would suffice.

• Adam Goldberg explores the challenges and innovations in token economics, particularly the convexity problem in project funding.
• He discusses the strategy of projects holding and selling tokens over time and the potential for non-fungible tokens (NFTs) to overcome funding issues.

"Many projects keep 20% to 50% of their token, which are intended to fund the project in perpetuity."

Goldberg describes the common practice of projects retaining a significant portion of their tokens to fund long-term operations.

"If your product's a success ten years down the line, you could be selling ten times as much product rather than depleting a reserve that you have."

He suggests that successful projects with NFTs could benefit from increased exposure and sales over time, contrasting with the depletion of a token reserve.

• The decision between venture funding and selling tokens depends on where value accrues, typically in equity or a token network.
• A template term sheet for fungible and non-fungible token projects is being created, focusing on equity with a modified pro rata clause for tokens.
• Founders are advised to focus on technology rather than the choice between selling tokens or equity.

"So we haven't released it yet, but we are in process of writing up a template term sheet for both fungible token and non fungible token projects at the formation stage."

This quote indicates that a standardized approach to early-stage funding for token-based projects is under development, aiming to streamline the investment process.

• Convexity needs to be addressed to ensure economic viability after network launch.
• The concept of having separate tokens, one for payment and one as a security token, is explored to ensure long-term financial sustainability.
• The separation of tokens allows for capturing cash flows and maintaining reserves over time.

"So one interesting approach that I've seen that's used by at least one of the projects I've invested in, although unfortunately it's one that hasn't announced, is to have two separate tokens."

The quote discusses a novel approach to token economics, where the separation of utility and security tokens can help manage financial resources and growth over time.

• Telegram's ICO gained attention due to its user base and lack of perceived government affiliation.
• The importance of distribution and scaling for blockchain Dapp platforms is highlighted.
• Telegram's potential to build front ends for Dapps and integrate them into their platform is a significant advantage.

"Telegram has hundreds of millions of users, but most importantly, they don't have a perceived affiliation with a government."

This quote emphasizes Telegram's unique positioning as a platform with a vast user base that is not associated with any government, which is seen as an advantage in the blockchain space.

• Telegram's aggressive timelines and ambitious technical goals warrant scrutiny.
• Confidence in execution is based on the founders' track record with VK and Telegram, as well as their engineering team's credentials.
• Validating complex technological approaches in blockchain remains challenging.

"That being said, it's really hard to fully validate a complicated technological approach to one of the most challenging problems known today."

The quote highlights the difficulty in assessing the feasibility of ambitious blockchain projects, such as Telegram's, due to the complexity of the technology.

• Founders face trade-offs between short-term benefits and long-term success.
• Decisions on fundraising documents and regulatory strategy can have significant implications.
• The composition of the team, focusing on marketing versus engineering, affects the project's longevity.
• Fairness in token value distribution is crucial for long-term participation and success.
• Launching a token before the product is ready is a complex decision, influenced by the competitive landscape.

"And like we talked about, there's sort of these two phases to a blockchain project that actually make these decisions pretty difficult."

This quote refers to the two distinct phases of a blockchain project and how they complicate strategic decisions for founders, emphasizing the need for careful consideration of trade-offs.

• The decision to launch a token before the product is ready is not straightforward.
• In contested spaces, launching early to gain attention may be justified.
• The comparison between centralized and decentralized project launch strategies highlights the lack of historical precedent in the crypto space.

"I think that if you're in a highly contested space, it's not unreasonable to try and suck the air out of the room and get some attention."

This quote suggests that in competitive markets, early token launches can be a strategic move to capture market attention, despite the product not being fully developed.

• Prediction markets with tokens have communities that trust in execution and delivery.
• Exit scamming is a negative extreme, where companies launch tokens without intending to build a product.
• There's anticipation for the evolution of these projects and learning from successes and failures.

But that approach seems to be advantageous because the communities have faith that they will execute and deliver.

This quote emphasizes the importance of community trust in prediction market projects that use tokens.

I think on the opposite polar end of that is companies that are basically exit scamming, that are launching a token with no intention of building the product and trying to run away.

This quote highlights the issue of fraudulent activities within the crypto space, where companies launch tokens without plans for a genuine product.

• White papers are a traditional, academic form of presenting crypto projects, paying homage to the origins of the space.
• The evolution from business plans to executive summaries and decks in the traditional world is mirrored in crypto.
• Decks are becoming a more efficient entry point for investors, employees, and partners.
• Future white papers may include more traditional financial models, like pro formas and profit/loss estimates.

I think that white papers pay respects to the origins of the space, which were pretty academic, to be honest.

Adam Goldberg points out the academic roots of white papers in the crypto space and their importance in presenting projects.

And I think that we will start to expect more in depth discussions of how you plan to fund your operations over time.

Adam Goldberg predicts that white papers will evolve to include more detailed financial planning, similar to traditional business models.

• Adam Goldberg's favorite book is "Flowers for Algernon" due to its blend of science fiction and the theme of ignorance being bliss.
• To get up to speed on crypto, Adam recommends reading crypto Twitter for its comprehensive community engagement.
• Adam's frequently reverted motto is that most people don't push through hard things, implying one should strive to be different.
• In the venture world, Adam would like to see more diversity and inclusivity, using a diversity and inclusion side letter with founders.
• Success, according to Adam, is the ability to work not out of necessity but out of passion.
• The biggest challenge in Adam's role at Lightspeed is overcoming his introversion to put himself out there.
• Adam's most recent investment is in Strangeworks, a quantum computing software company with an experienced, product-oriented team.

So flowers for Algernon. I think it's got it all. It's got science fiction and sort of the principle that ignorance is bliss.

This quote reveals Adam Goldberg's favorite book and the reasons why it resonates with him.

I would actually say read crypto. Twitter. It's the focal point of the community.

Adam Goldberg suggests that crypto Twitter is the best resource for anyone wanting to learn about the cryptocurrency community.

I'd say most people don't. I think you can make excuses, but keep in mind that most people don't push through the hard things in life.

Adam Goldberg shares his belief that perseverance is key to success and distinguishes individuals.

I'd like to see a more diverse and inclusive ecosystem.

Adam Goldberg expresses his desire for greater diversity and inclusivity in the venture capital ecosystem.

I actually struggle with naming a particular person, but I think it's never needing to work again. But still working because you love it so much.

Adam Goldberg defines success as having the financial freedom to work by choice rather than necessity.

Well, this one's going to be pretty funny. I think a key part of venture is to put yourself out there, and I'm actually really introverted, so I've been working on that more, and that's why I'm here.

Adam Goldberg discusses his personal challenge of being introverted in a field that requires extroversion.

Yeah, so we announced our investment in strangeworks earlier today, actually. It's a quantum computing software company.

Adam Goldberg shares details about Lightspeed's recent investment in Strangeworks, highlighting the company's experienced team and product focus.