# Investing in Web3 and Blockchain: Opportunities and Challenges - Timur Daudpota | 2080 Ventures

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2023-10-07
- Duration: 38:44
- Watch: https://streameth.org/watch/yt-NrzCS2pDr1U
- YouTube: https://www.youtube.com/watch?v=NrzCS2pDr1U

## Transcript

[Applause] um thank you so much for being here uh I heard there was a party last night so hopefully everybody got drunk and it's ready to listen to this talk um so today I'm going to be talking about investing in web 3 and investing in general uh so give you a little bit background I started my company in my career by hacking into Snapchat I hack into Snapchat and a lot of some of the biggest Publishers in the world like GQ Magazine Contest time a lot of sports companies like NFL and NBA to upload really good content directly to our platform onto Snapchat and what happened is it allowed it got the attention of some of the biggest names in the VCS because we're growing really fast we did not wanted their money and one thing I realized is that when you want money you don't get it and when you are getting money you don't need it so within that what we wanted was to actually learn from other people and at the time we wanted to get into some of the biggest accelerators and incubators in the world we apply to mostly all of them and got into mostly all of them including 500 Tech Stars and we ended up going to 500 startups uh surprisingly uh my co-founder at the time just got engaged to his girlfriend and as soon as he put the ring on he said bye-bye I'm going to California so he took our car we went to California while I was there uh one of the partners asked me to help run the program so kind of like if you go into accelerators you see a bunch of programs and what they do if you haven't heard about 500 they are one of the largest seed stage investors with 50 plus unicorns to date and I was skeptical at first I was like I don't know if it's going to be for me but I tried and I loved it so much I loved working with Founders so the next part of my career I spent building up ecosystems all across Asia and the CIS region in Korea Kazakhstan Azerbaijan and tons like Georgia and tons of these other locations um and to date I worked with over 800 plus startups and what that did for me is allowed me to build package pedal recognition right so if you start working with a lot of companies you see what's working what's not working what do the founders needs where the drop-offs are happening and what do we need to do using that knowledge I was like let me invest in a few companies because I want to put my skin in the game and see if I can make really good bets uh to my surprise you know we were able to invest in three unicorns and three about to be a few about three unicorns uh and at that time I was deciding if I should go into edger Capital start my own firm because I've proven it out for myself and I wanted to prove it out for others Upland reached out to me so if you guys don't know Upland is one of the largest uh nft manowers so if you're looking at the central land or sandbox we have more land sold even with those two combine another interesting fact is that we have more nft holders than any other platform so even if you're looking at openc we have more people that own nfts and they're first-time nft holders than any other platform so my job was to make sure that people that are coming into the platform are getting addicted and having withdrawal symptoms so every time you're going onto your Instagram or Tinder and you keep opening up their ad is it's probably because there's someone behind the scenes a guy like me that's making that happen um so whenever we're looking into companies I have a unique privilege because I can see startups from the founders lens from the mentor's lens as well as from the lens of an investor so when I'm looking at companies I can see like every side of the cycle uh traditionally if you look at other VCS they're either coming from just traditional being a traditional EC or some people are investing it just have been really good Founders and they have exited and they have the capital to invest this year we'll be investing from 2080 into 15 plus companies from our Korea fund and with that said I'd like to pass along some knowledge I'm by no means an expert I'm learning on the go I think anybody who claims to be expert is lying right I have that philosophy is like you're building the train track as it's going so we're all learning here so one of the things I learned is whenever you're thinking about trading a startup or creating a company think in terms of platforms right what are platforms if you're looking at yeah it's like thinking about think about platform right anything that allows you to build on top is a platform and more likely has the potential to be a unicorn uh so if you look at traditional sense right when Microsoft came up out and the personal computer Revolution happened uh it allowed people to build software so you saw like companies like Adobe Salesforce and zoom come in build software and they became unicorns uh when platforms such as iOS came out it allowed people like Travis uh to build Uber it allowed WhatsApp to happen instacart to happen same thing with Android we saw like a huge rise in social media companies like Snapchat or Instagram Tick Tock doordash and there's a bunch of these happening all across the world and that's whenever you're looking at what are the things that are allowing people to build on top so when we're looking at rep companies uh you know there's a lot of uh like ethereum allows you to build a top there's tons of other other things but besides blockchain let's look at the metaverse right to give you example if you're looking at Upland Upland is considered to be a super app right it's a huge map of the world based on real world where people can buy buildings uh and once you go inside the building you can build your own experiences using the SDK right so there's like a simple example of like what people could do in terms of platform and it becomes a super app right like people can come in create their own worlds and really allow other people to create experiences on top and what happens is a lot of times when you're creating companies right uh we're doing marketing ourselves but what happens if you allow people to do the exact opposite is like help them build on your platform they will do the marketing for you right so it's kind of like influencer Marketing in that way is like if people build they will get other people to come in as well uh another company that I'm helping right now is called Arena game super young but the philosophy is the same right it's the web 3 company uh it's kind of like Netflix for uh wet three games right you can take any traditional web 2 company user SDK and build on the platform uh and there's tons of like really good features right so you can take the tokens and move into other games you can pick the points and move into other games you can move around the nfts uh same concept here right very simple like allow people to build on top of your platform and more than likely you are creating a great company um another simple thing is eat your own dog food right like not a lot of people know about this but the concept is is like if you if you don't like your own nobody will like it honestly right so whenever I'm teaching people um you know create content or create a blog the first question people always ask me is like how many words should there be how many how big the article should be it's like it doesn't matter if if you're writing Good crap people will read it regardless of numbers and counts right so make it interactive at the end of the day if you enjoy your stuff more than likely other people enjoy it too same goes for your products right if you're making videos if you're making games if you're liking it everybody else will like it um so I'll give you example right like uh I think few years back I was investing heavily in the Asian region and I had a call with one of the VCS and we got on a call and uh one thing led to another and he said have you invested in this company and I was like yes and I was like how have you invested in this company I was like I just like the product it was good so it's like how what did you look into it I was like I just like the game he's like we did a 10-point check we did all this due diligence we talked to these people blah blah blah blah I was like okay great but the result was the same we invested in both great companies we came to the same conclusion and you need to realize at early stage right it's all about the team and it's all about the people who can build if you like the product that's it that's most of my investment philosophy if people can build and they build a great product I like using it more than likely everybody else will like using it um also one of the philosophies at 2080 we realized is that we don't want to invest in companies that we cannot help grow right so like medical companies or hard tech companies that we have no knowledge about or we cannot get knowledge about we're not going to touch it because we do not know how to pull the livers right so like the philosophy is like if I do some inputs here they're going to be some outputs here right if I cannot control the inputs they're more than likely I cannot control the outputs of the company thank you um yeah uh Community is super important right so one of the things I tell a lot of people is if you're a non-tech person if you don't know how to build but you're curious about building something start by building a community and Community can come in many forms right you can start by creating a Blog create an article creating a following same thing with YouTube right it's all about consistency and doing it day in and day out and that's what you'll see right a lot of the web three companies when we're investing in them if they don't have product they're yet to launched they're led to release their tokens what we're really looking is like how fast they're growing their communities right Discord what are they doing on Instagram what are they doing on their uh Reddit channels what are they doing on their YouTube channels anything that goes to community and how fast that number is growing more than likely they will be able to monetize later if they can build the product right so who remembers this right I remember when Kylie Jenner came out and she was in the career of four magazine and she came claimed to be self-made billionaire I was shocked I was like how is this self-made but how did Kylie Jenner become a billionaire right I was literally shocked um but I remember something she has a huge following on Instagram right if you have a huge following you can literally be one of these people right you can see traditional actors really launching great companies right with Kylie with their makeup line uh you know Dwayne Johnson with her with his tequila brand Honest Company mint mobile just exited for a billion dollars and Ryan Reynolds would literally put out short videos on Tick Tock and everything else they were able to do that because they have a community right so whenever you're writing books or whenever you're doing something uh you can easily get a book writing contract from Wiley or penguin if people look at your following they know you can sell the book it's not that hard uh same thing when Upland launched their book it was literally because we had uh somebody in our team that a huge following so we're able to release that book with a wiley contract right so build that following I if you're not technical I believe everybody in this room can and has the ability to build the following how fast is that Community growing and you can monetize that later right so again these are the channels right like what are they doing to engage the community what are they doing to engage community on Reddit uh on on Discord uh Twitter uh Instagram these things are super important um in the early stages that's all you're looking at and what happens and what's the beautiful thing about having these communities is whenever you're launching beta products or testing service you can always launch Within These communities in a closed group and these people will be the first people to give you honest feedback about how the product is doing right uh these are the people who are going to make and break your products so nurture your communities really well and we can literally see the Discord channeled on how people are monitoring them and I always say uh one of the first hires you should always have in your company is that somebody if you're growing a community who can monitor the community right make sure they're engaged make sure they're not getting angry all the questions are answered you're helping the community getting engaged in everything you could do right um here let's be honest right like uh Market's down uh and that's the truth right like uh internally within the company we saw that as well uh everybody's out uh but it's a good thing for us right why is it a good thing because uh kings are made when markets are down right so if you're looking into when you're advertising nfts and pfps I became a P2 play to earn have become bad words right people do not want to do it uh anytime now that we're looking at Partnerships and we say nfts people don't want to know it they don't want to be associated with it they don't want their names on it uh if you're marketing with p2e like even trying to get ad dollars on there platforms will block you from running ads right it's become that bad uh and yeah so there are even some countries that block right so if you go to Korea and you say like I want to launch p2e games uh you cannot launch it it's not allowed uh so Now's the Time right now is the time to pick strong companies at lower valuations especially in a VC but if you can survive this and you can grow this Market out it literally means um you create a resilient company right you have come out of this as a winner right where everybody else is struggling and there's blood on the streets um here's the thing I'll tell you investor think they're Mavericks everybody thinks they're original oh I'm gonna do this I'm original I'm different than everybody but the reality is is that most investors have heard mentality of being comfortable they're very comfortable because they know they can follow on they're not leading right and anytime you go raise funding they'll say go find the lead or go this go do that then we'll invest right it's just another excuse because you're comfortable very rarely you'll get the chance where an investor writes you a first check so at 2080 we write our checks from 100K to half a million dollars if you like your product no questions asked like if you had a lead or not that's it um but again it's all about nowadays it's all about AI right why because of chat gbt everybody saw the success what chat GPT can do and then everybody starts come rushing in right uh and you can see this uh few years back there were so many companies going to VCS and saying I have an AI startup I have an AI this I have an AI that and nobody would blink an eye now all those companies are getting invested right uh before that it was web 3 companies and everybody was getting invested uh so that just shows you like how people have heard mentality and media stock went up the roof with all-time high so that's the trend right and the reason why I'm mentioning this is you need to learn how to ride the wave right kings are made by riding the wave to the top that's how he became so really really big when I started my company because the Snapchat wave was happening and everybody was trying to get on the Snapchat bandwagon right and all I had to do was send one emails like I have a platform that allows you to upload content onto Snapchat uh and I could say I'm not gonna take three thousand dollars a month I'm gonna take five thousand to six thousand dollars a month I had that power and having that power is really beautiful because it's like standing in a room with bunch of people and suddenly you became the most gorgeous man or gorgeous girl everybody wants to talk to you and it's very beautiful so that's where you want to be learn to ride the waves right so if you are looking at where kings are made and queens that's where they're made right so when the personal computer Revolution happened you could see Bill Gates and Steve Jobs drive to the top with Microsoft and Apple when the internet uh boom happened you saw people like Elon Musk with x.com and then later PayPal uh Larry and Sergey with Google and uh Steve Jobs sorry I mean Jeff Bezos with Amazon when the iOS apps opened up you saw New Kings come to the market right and those guys were Travis with Uber uh the founder of Instagram the founder of Bumble and now that AI is happening and the web 3 is happening you could see uh you know people like uh Sam and vitilic so Now's the Time right you're at the right place right time to build the company and ride the wave to the top right I think it's going to take a few years but it's going to be right here in this industry either AI or blockchain or web3 whatever that is um another thing to keep in mind is retention is super important whenever you're looking into companies we are looking at how are they retaining people are people engaged are they leaving the platform and that's what you need to actually think about you work so hard to get people into the product uh and into your platform and then they get bored and they leave right it becomes really hard and horrible because you spent all this time uh what you need to do is run experiments right run experiments in terms of what we're seeing um yeah so what we're seeing is like yeah run experiments right like launch collection launch tournaments uh just do new things and keep running that over and over uh popular meta works like so we also saw this as like we're uh if you're looking at popular metaverse games right a lot of Brands and Partnerships were happening every day was another announcement but it's not happening anymore right and what brands seem to realize is that when they were doing these Partnerships what they were just getting was eyeballs and there was no conversion or action after right you built this all this amazing land like PepsiCo and everybody comes in and that's it right it's not driving sales to the product it's not driving visitors to their website it's not doing anything right so Brands were like okay this is a great PR lead we're just gonna do it one time and that's it right and the reason why brands do it one time is because in their monthly yearly budgets they have money to put on these type of exercises right real money comes from Brands and Partnerships where they can see repeatable stuff happening again and again right you will get the first deal but you're not going to get the second one right that's why so many companies you can get the seed seed but you cannot go beyond series B right same thing with Netflix if you're a Netflix show you'll probably get to a second season but they won't renew you after the second season the same concept is here you can get people in for a little bit but they're not going to stay there for a long time if you do not show results right um again uh one of the questions we ask ourselves is when we're looking at web 3 games the life cycle of web3 games right uh is just like web 2. right how much I'm gonna play GTA one right before GTA 5 comes out casual games if you look at it it's one to five weeks on the other hand like if you are like a mid-core game um it's sometimes 12 months but that's it that's the life cycle of any web 3 game or product like that uh same thing goes here like web 2 games are no different than rep 3 games if they're not engaging you could do all this stuff and shebang but people are going to leave and we can see that with axes even though my friend invested in it all right um acquisition another thing to think about is acquisition right when are we looking at companies we're asking the question are they paid user what is their CAC right uh if they're only getting paid if you're only getting paid users it becomes super dangerous right so pay users like when you're running ads or spending money to get users uh to give you examples there's one of the companies in Silicon Valley that that got funded by really big brand names like Excel partners and so forth what they were doing is providing shoe subscription boxes right so you sign up and you'll get a box of shoes for like 30 dollars per month right you get the shoes in there in your house and you wear them and they were losing a amount of money a ton of money and they couldn't figure out why they were losing money and by the time they figured out it was too late the problem was is that they needed to sell three shoe boxes that means have people subscription for up to three months to become profitable but what people are doing is buying the subscription for only one month and canceling after right um and that could be really big issues when you're looking at companies like that uh the other thing is organic growth right are people bringing in other people right great products will always have some sort of organic growth and what are people doing to nurture that uh see where the users are coming from again think about platforms right all the traffic and all the people and all the customers you're looking for already exist somewhere and what you're doing is stealing customers from one platform to another right so like think about how can you steal people from Instagram how can you steal people from Pinterest How Can you steal people from Google right with SEO all you're doing is like what platform you're gonna steal your users from right and whenever we talk about experimentation you need to realize eighty percent of your users are going to come from Mostly one platform and 20 you're going to be experimenting with other channels right so you'll have one strong thing uh versus not um the other thing about paid is paid can easily be copied right if you're into a market anybody can come in and run the same ads you're running uh but nobody can copy organic because it takes time to build it takes effort to build if you're doing SEO it literally takes eight months to build it right if you are into B2B uh you have those connections uh and there's the relationships that are built out during the years and whenever you see acquisition happen uh there are three type of companies that are being acquired one you're being acquired for your talent which is aqua higher right we're acquiring you because you have really great Talent two you have a really good product an IP and we want to integrate that into our platform or our ecosystem and the last one is you have the users and that's where the biggest Acquisitions happen right we want those users because we cannot get them or will take us a lot of money to get them right so when everything about building a product you need to think about acquisition because why are where else are you doing this right uh what's the point I'm gonna spend eight to ten years on any business for my life yes to make sure what type of business is that I mean it's typical it comes in different business right like to give you example one of the acquisition Travis was doing Travis kalanick he started uh Cloud kitchens in Korea um and what those Cloud cushions had was like a lot of operators right so there are other competitors who had operators who were running the competition anyone had that type of talent right so it depends on uh business by business what you're creating right so if somebody is creating like really good AI company and has a really good AI model that works because you've spent a lot of money training the data great I want that data because it's going to take me a lot of time to train and those people are hard to come by right so again it's different but once you sell the company uh it's not your problem right yeah yeah so there's that's what's called right so uh I don't think you can legally bind people right yeah you can like make it like give equity on a certain stage or certain time is like okay I'm you're not going to get wasted right right uh and that's one way uh the other way is like whenever you're acquiring a company uh you say it's pretty much golden handcuffs right so the leadership is asked to stay it's like if I'm gonna invest in you the contract is you have to stay within the company for two years and make sure it gets integrated so you get stock or cash or whatever that deal is and then you have to stay for two years uh great question yeah so that's what you're really looking at right uh do they have a product uh lead in the group right uh do they have viral Loops built in are they experimenting fast enough are they data driven right everybody claims to be data driven but nobody's actually doing it on a weekly and daily basis so one of the things I look at is If people really have a television in their office or in their room that has all the numbers showing up like a clock and you're walking in and you're looking at those numbers and you're driving your team by that number right and when you're running your companies and your team you need to have a number assigned to each person and the famous question you should be asking is what did you get done this week how did you move the needle right and that's the question you should be asking yourself what did you do this week within the company that moved my net metrics forward if it didn't move my metrics forward why did it fail right and it's okay to fail but not having an answer to why something not worked is a problem right uh great let's move forward uh who is building the product right one of the things we realize is that people who Outsource their development it becomes a money pit you lose money if you cannot build it's going to be a money pit so like at 2080 and other most prominent VCS the most fundamental things we look for can the people build if it's being outsourced it's not a good sign right because people that are working there are literally looking to maximize their dollar amounts they're looking to maximize because they know it's short term once it's built they're going to be going somewhere else right so you need to look out for yourself learn how to build or get a CTO that could build right and when I say CTO a CTO that can build not manage a team right sometimes people get ctOS like I'll manage the team for you but in the early days that's not what you want you need somebody who can build right managing the team and they're like give me money I'll manage the team for you it's not the right way right so learn how that whole process works on building the product um yeah and the other thing is you cannot iterate fast enough right like I always look at is like how often are you running Sprints right every week are you launching something new are you experimenting with something new there's something sometimes companies who are experimenting twice a week right but that company is always going to lose uh compared to company that is launching once a week right and that's the reason why Facebook one over Snapchat is because they did not care about anything else it was all about running experiments and seeing what's working and if you look at like some of the greatest restaurants in the world right El bully where some of the famous chefs came from now there are out in the world and creating uh Michelin star restaurants if you watch Netflix half table half the more than half the cast came from albuli and was remarkable elbowly is that the first restaurant to experiment they had their own lab they're experimenting with food and taste and lighting and smells and that's what made it really great right so that's the philosophy you should be having internally uh is how fast can we iterate and launch great products all right um with that said I think uh I'll open it up for people uh to have who have any questions about uh what investors look for like how do you take investment philosophy uh what are the trends uh yeah so if anybody has questions and please add me on uh on LinkedIn or send me an email if you guys want to chat about anything thank you hi uh is it okay now okay so if I understood you correctly sorry if I didn't you had a service based business that relied on Snapchat and then you later moved to be an angel investor or yeah so that's a great question so uh we do not have a service based business we had a software so what we did is we hacked Snapchat and we allowed some of the biggest Publishers to just upload content so think about like traditionally uh people had to use their cell phones to upload their content right and that's a No-No for big Publishers um and with the iPhone it looks great because you are using your camera but if you are the Android because there's so many versions of Android all across the world what literally Snapchat did they were recording your screen they're not even using the camera so that's how they got that workaround for uploading content right I I remember waking up in the morning and seeing like a really good cooking channel list Snapchat had a discovery side um and I was like I want to wake up every day and watch really good content but there's only a few channels so a lot other people got desperate they wanted the same thing so uh thank you for that I have a follow-up question yeah um because you're building an existing platform right now the trend is uh having a tool that will help you enable similar thing on LinkedIn my profile on LinkedIn is stronger so I monitor it is it considering that companies are getting faster and faster is it actually risky and what are the risks of you relying on a platform like that before they just introduce a project that kills you overnight that's a good thing so that's what happened to us we got killed by Snapchat so as soon as GQ Magazine launched the Kim Kardashian's magazine cover using our platform form they block LinkedIn and they blocked our platform and they were not allowing people to build on top right it becomes dangerous but it is safe to build on platform that allows you to build on top right it's like simply like ethereum or polygon or whatever you're looking at these chains they do allow you to build on top so did you uh money so you can or was it a surprise to you that uh we we saw it happening but we choose to ignore the warnings every VC was saying you're gonna get shut down at scary and we were in our own delusion we were like no it's not going to happen and the reason why we were in this delusion is because uh if you if you guys know giphy by any chance there's little gifts on Facebook so like good friend of mine who launched giphy he Facebook wasn't allowing that to happen at first but he made it happen so snap Facebook did open it up and allowed gifts to come into the platform and same thing happened with YouTube right so there are a lot of people who are running advertisement platforms on top of YouTube YouTube is not allowing it but then YouTube opened up the platform to allow people to build in and the same thing happened with Facebook so we taught that Snapchat would open it up but they didn't so that's one of the reasons why they also failed is because people were really looking to build on top but they did not allow to people to build on top foreign due to your experience with startups in which state or stage of development for startup is best to apply for some investment to do its product design or developing ideas proof of concept MVP's prototype to have to apply some investment yeah that's a great question right so like the question is like what stage do we look into in general what people are looking at I think like have some sort of traction in this market like now that people are not looking into uh like idea based companies at least have like if you have a SAS company um uh eight thousand dollars in monthly recurring revenue or you can show growth right so one of the important things you could do to any VC is like show your growth trajectory right uh do you guys know the number you need to be growing on a weekly basis does anybody know what's the percentage you need to grow your company on on a weekly basis anyone what yeah that's right it's five to ten percent right so if you're growing your any kpi by five to ten percent and you could show that in a chart that's the number you need to be going after uh and it's just as simple right there have been VCS that just look at product so when I was fundraising people were just asking me like give me your login and if I like your I'll invest it was that simple um hey thanks for the brilliant talk on investing and my question would be are there any specifics related to web3 investing other than gaming that you touched sorry are there any specifics to investing into web 3 projects um no there's no pacifics I think it's just uh you know besides what I've covered it's pretty much that it uh yeah it's like the product is good the community is there if you're seeing traction it's that simple hopefully that answer a question thank you I think you want to do one more I guess yeah you can do yeah we can do a quick one last one uh thank you for the nice nice presentation uh I have one question you said uh you're looking for teams that iterate fast and uh make fast new features but uh for me there there is always a struggle between quantity and quality so is there like some Sweet Spot there or is it maybe to like take two weeks but make it really good or make it a little less time but go faster yeah that's a good question right I think uh you know internally we use something called experiment worksheet um and what that allows you to do is like score your company based on cost time and ease like what is the cost is going to take me to do it so for example if you're a startup and I want to go to uh event that's going to be costing me three thousand dollars to set up a boot I have to fly all the way down and print material that's really expensive but if I can post some questions on quora and do that that's pretty cheap right that's cost wise and time wise is that like it's going to take you three months of planning to event versus quora you could do it in a week I don't think there's a specific number right uh if you are just showing you can experiment and doing faster experimentation on a weekly basis uh that's all that matters I don't think anyone's gonna drill down and see like oh how many experiments you're doing but as long as you could show that yeah okay thank you for the many questions be sure to catch up with Timur he is here at the conference and uh yeah we're going to have our next talk pretty soon thank you thank you so much for being here really appreciate it thank you [Applause]