00:00Katie, is this what it's about? Is it about finding the startups that are likely to just drive this ecosystem
00:05forward?
00:07Good morning, Caroline. Thanks for having me. Yeah, the world's a very different place than it was four years ago
00:13when we raised our first pair of funds.
00:16And we're really excited now to have a billion dollars in fresh capital across a pair of funds to back
00:21founders in what we say are building the new economy.
00:25And the new economy is we think there's an intersection really between AI and between digital assets. We're calling it
00:33an agentic future.
00:34That's one structural shift we've seen. Another structural shift we've seen is the creation of new assets, things like stable
00:41coin.
00:43That has been an area that clearly you saw coming, you lent into and the stable coin ability.
00:48I think we just had a few tech issues with Katie. We'll get back to you in a minute. There
00:51we are.
00:51I think the stable coin area has been something that clearly you've seen work with M&A and portfolio companies
00:59being bought by really institutional adopters who are now trying to embrace, I think, of the likes of MasterCard, for
01:05example.
01:05But what's happening in terms of the AI adjacency? For those who've been hidden away from how crypto is now
01:11thinking of itself as the future of AI agents, how does that work?
01:15Well, if you think about a world where financial products and services are really being built for an end user
01:21that's not necessarily a human but might also soon be an agent or a computer, that's a really different world.
01:27I mean, if you think about agents, what are one thing we humans do? We stop. We have a finite
01:32period of time that we work during the day.
01:34So we might be OK with a bank that's closed on a weekend or that has a wire cutoff or
01:39deadline or banker's hours.
01:41But, of course, AI agents are powered 24-7. They work globally from day one and they're always on.
01:49And so I think that there's a lot of opportunity there in what we're calling the agentic finance sector.
01:54But you also mentioned, Caroline, stablecoins. And I think that's another area where we've seen the digital asset space grow
02:01and we're seeing it grow ever more.
02:03Of course, now we're at a point where stablecoins – and you mentioned BVNK, which just exited to MasterCard for
02:10$1.8 billion.
02:11By the way, that was MasterCard's third largest ever acquisition.
02:15And I think it's reflective of that you now have double-digit trillion dollars in stablecoins.
02:21And this is an innovation that didn't even exist a decade ago. And if you can tokenize a dollar, it
02:26turns out you can tokenize other things.
02:28So we see institutional players like BlackRock and fintech giants like Robinhood and Coinbase start to tokenize stocks.
02:36And it turns out you can tokenize all kinds of other products and services.
02:40For that to really be adopted is, of course, a future where the regulatory environment has been far more warm,
02:48shall we say, towards crypto and these innovations.
02:50And that's where you sit at this intersection, Katie, that's so interesting.
02:53I mean, Brian Armstrong himself, someone that you've helped oversee the company of, of Coinbase.
02:58You perform at A16Z. What was so interesting about you is also you sat on the DOJ side of things.
03:03You understand government. You can talk to both sides of the community.
03:07What is the regulatory environment like right now?
03:09Yeah, look, I've been following the flow of assets my entire career.
03:13I started my career actually at the Supreme Court as a law clerk to Justice Kennedy and then spent over
03:20a decade at the Justice Department.
03:22And what I can tell you is this is one of the most transformational periods in technology and finance that
03:27I've really ever witnessed.
03:28You mentioned regulatory, Caroline, and I think that's a part of it.
03:31But also the infrastructure is a part of it.
03:33And let's also be honest, the institutional story is a part of it.
03:36As far as regulatory environment, I think people often also overlook what the courts have been involved in the regulatory
03:43and shaping the regulatory environment.
03:45And this has been happening kind of in the background over the last several years.
03:49Now we have something coming up, which is the crypto market structure bill.
03:53And so everyone's eyes are on that. And of course, we had the Genius Act passed last year.
03:58There are still lawmakers that need convincing.
04:01Katie, I think of Elizabeth Warren, who's worried about perhaps one of your new and really, well, many would say
04:08the exciting startup that has been co-founded by Palmer Luckey.
04:12Now you're in a company that is Erebor, which is all about, I think I'm pronouncing it correctly, right?
04:17Erebor is this new sort of bank.
04:20It's just had OCC sign off that it's able to go out there and after it got an application and
04:24granted a preliminary application, at least, for approval to become a bank.
04:29But Elizabeth Warren is like, that's happened all too fast.
04:31And it seems to be that they're close to the administration.
04:33How do you get comfortable that these companies are being vetted in the way that you want to see them
04:38being vetted?
04:39Sure. Well, we always look at the founding team whenever we're looking for an opportunity to make an investment.
04:45We look at the founding team.
04:46And you've alluded to part of the founding team here.
04:48So we think this founding team of Erebor is incredibly strong.
04:52And actually, Palmer Luckey's co-founder is a founder that we had backed in our first fund.
04:58So we have a long history going back with him and have seen him over the years.
05:02And we are actually the second largest investor, I believe, at this point in Erebor.
05:06And I think the exciting thing about Erebor, so it's also the product market fit.
05:11And they've just crossed a billion dollars in deposits.
05:14And it's also the size of the opportunity.
05:16And that's where I think Erebor and companies like it really shine.
05:19I mean, it's really built for the future.
05:23And if you think about it, it opened on a Sunday, Caroline.
05:26And I think who's ever heard of a bank opening on a Sunday?
05:29Now, I think that for the digitally native generations and certainly for the AI native generations, wire cutoffs are going
05:37to be a thing of the past.
05:38It will be kind of like when you see a payphone booth on the corner and you're like, what is
05:42that for in a world where everyone's now on their cell phones?
05:46Very briefly, Katie, you've already had success with exits on the M&A side of things.
05:51You personally have invested in some of the most exciting companies we're anticipating IPOs from, SpaceX.
05:56I know they were in Android, another family lucky business.
05:59You're an open AI.
06:00Is the market feeling solid right now?
06:02You know, I think right now what we're seeing is we're seeing a period of transformation and tremendous opportunity.
06:09And I think this is something I've been alongside the unfolding of transformational technology my entire career.
06:17And there will be ups and there will be downs.
06:19And one thing I've noticed is that there are periods of irrationality on the way up and there are periods
06:23of irrationality on the way down.
06:25And our job is long term venture investors who are investing, by the way, Caroline, over a 10 year decade.
06:31Although your colleague, Natasha, reported that we had already returned capital four years in to some of our LPs around
06:37the world from our first pair of funds.
06:39We're looking at what the world looks like in 10 years, not what it looks like right now.
06:44And we think at bottom, it's a period of tremendous opportunity, generational opportunity.
Comments