Interaction with well-known traditional venture capital referral partners: The next wave of venture capital firms will have Web 3.

A well-known marketing firm, Benchmark was known for its early investments in startups such as eBay and Uber. In recent years, Benchmark has started to look into the crypto market by investing in crypto projects such as Chainalysis and Sorare. However, Benchmark does not engage in cryptocurrency investments like other investment companies such as 16z, but it does have its own investments and competition in the crypto market.

Recently, Benchmark Interviews interviewed General Partner Sarah Tavel. In the interview, Tavel described his thoughts on venture capital investing in the cryptocurrency market and how some early investors transitioned into securities. expert venture capitalists.

It also covers topics such as the DAO concept, the amount of startups that will work on Web3, benchmarking thinking on tokens, and Twitter VC chats. Here is the full interview:

Data: There seems to be a distribution of cryptocurrency traders. Some investors not only buy tokens but also support the management team and the process, others are regular VC traders such as Sequoia and Benchmark. Do you think normal VCs will inevitably convert to electrons?

Tavel: I think it's a real separation. If you look at these crypto-based companies, few build customer relationships and build long-term customer relationships. People in this group are intelligent and seem to have a lot of energy to explain things. It's a very special place and very different from the traditional idea of ​​building a stable consumer base.

I think this is still a mainstream network device for people now known as Web3 and should continue to compete with businesses today and regularly (Web 2.0) for unsuspecting consumers of the crypto space. the same process.

So I would like to ask these web3 companies to have a technology similar to Web 2.0. However, in a unique and intelligent world dominated by contracts, we have specialized knowledge and skills such as mining operations and management. It was a very different area for me, and I admit I didn't like it.

IMPORTANT: What encryption environment do traditional VCs like Benchmark focus on? What is the limit of your abilities?

Tavel: Sorare and Chainalysis are two cryptocurrency companies we invest in and are good representatives of the types of investments we make. We also made short-term investments in game companies like Web3. This project is quite an investment in Supermap.

These companies form groups whose head office is part of a group or a construction project, but also participate in the distribution of real estate. You can see Sorare and the NFTs they sell, or in the case of Chainalysis, the key players in the space.

Of course, I have also invested in companies with tokens, which I did recently. But if you ask me as a consumer and not a representative of Benchmark, I personally don't like the new DeFi protocol. It's not my world. This is an area I'm not aware of as I don't see the start of the loan.

Likewise, the company I just invested in will have a team in the middle, at least in the short term. Part of the infrastructure is centralized. I think there will be more of these companies in the future because it's the best way to build a customer base.

Fact: How has your experience as a consumer and merchant changed since the cryptocurrency boom last year?

Tavel: I said that I was "selected" by "Red Pill" when I started working on the Benchmark. All I want to do with Benchmark is spend all my time in cryptocurrency. So read as much as you can, join free text groups, talk to some really smart people, and learn the process from the start. This was my first investment in Benchmark, Chainalysis.

Then I realized that I was a consumer focused on real resources. I generally think of consumer products. It seems too early to make this investment, and the cryptocurrency world needs to be established. So, over the next few years, I returned to marketing and the Internet to invest more.

Then in the fourth quarter of 2020, I started learning more about NFTs and heard about other improvements.

As an entrepreneur, it's a rewarding time to open my mind to new consumer experiences. This knowledge can be obtained in unprecedented ways and through new industries, even before blockchain and smart contracts, by NFTs, digital members and consumer network owners. So from there I started to catch up on the thread and we invested in Sorare and then I started investing more and more time in cryptocurrencies until that was all I could do.

So now most of the time, new businesses are devoted to finding companies that have some of the decentralized processes that they use to bring in new customers.

Fact: What do you think of venture capitalists like Andreessen Horowitz or Spark Capital investing in DAOs? Looking to invest in DAO?

Tavel: We have never made a similar investment, but we are not against it either. There are some very important things about DAOs, but many feel that it is necessary to ask a lot of questions about DAOs and their limitations and to discuss the situations in which they are most useful rather than explaining them as a "panacea". I have seen several DAOs and am excited and excited for the future of this place.

By the way: Companies such as Sequoia Capital and Lightspeed Venture Partners secured deals last year to demonstrate their commitment to investing in cryptocurrencies. What do you think about this?

Tavel: Reality is a real craze for the industry. However, our model is different. We have 5 partners and each partner invests once or twice a year.

Q: So don't you think Benchmark should raise more money or invest more?

Table: No.

Data: What do you think of the cowardly minds of creators of cryptocurrencies that operate in a decentralized way? And are you skeptical of a venture capital firm that really wants to be part of the business? What are your thoughts on growing relationships with VC developers, particularly in the cryptocurrency space? ~

Tavel: These questions seem to come back a bit to the "differences" I mentioned at the beginning. I think there will be other crypto-based, protocol-level brands, founders, etc., all with their own philosophy. We can go back to the beginnings of Bitcoin, a cryptocurrency that was created in a way that was not fundamental to kicking banks. It is designed to be compared to baseline work.

A lot has happened on Twitter lately... It's kind of true. Twitter and social networks often exaggerate the opposite. Because limiting these conversations to 280 characters always leads to misunderstandings. These pockets may be available. Companies are regular and always have autonomous and self-promoting developers. This is how they want to build their business. Of course, there are also companies like Sorare, OpenSea and Axie Infinity. The company has benefited greatly from his management team and his investments. Like everything, there is no culture.

Information: How do you think cryptocurrencies are traded?

TV: It can change. For example, a crypto company may want less money and raise less money, but may get early access to NFTs before selling (buying NFTs for blockchain-based games or existing networks after installation ) financing. .

However, there are other companies, such as game companies, that have done this for many years before releasing their games. Investment investment should be first, then the board. Because the base must be created before anything can be sold.

Data: Early crypto investments are great, but there are a few examples of good public companies. How will this situation behave?

Tvel: You can see it separately. First, it will take a long time for companies to mature enough to go public. For example, Coinbase was launched in June 2012, and some reputable companies have been established recently. Research Chainalysis, which was established in 2014 and has been in operation for 7 years. It usually takes longer to get to the market. Firewalls are elsewhere, just newly developed.

First, it is in its infancy and second, there are other financial mechanisms for crypto companies. If you are a cryptocurrency blockchain business, you may not need to go public because there is already a liquid market. But I also think that a number of companies in the crypto ecosystem will grow in the next few years.

Information: In the next few years, do you think there will still be room for consumers to get started without blockchain technology?

Tvel: I'm not sure. There are so many things that cannot be said. But I would like to believe that the next wave of iconic consumer products will have Web3. This means that their infrastructure will include some sort of distribution that will allow users to own the internet or digital devices. Because of what I focus on.

Q: Is there anything else you need more?

Tavel: I would also like to say that babies should not be thrown out with the bathwater. Is the principle perfect? Of course not. Web3 distributed standards and can provide users with network or digital resources. It is a significant change. But it's not perfect.

Startup competition should be competition for product value creation, not competition for distribution. Decentralized infrastructure must be the way to achieve this. When we think this way, we begin to realize that we need to embrace the world of Web 2.0 more than just ignore it.

Sometimes you'll see someone in the crypto community tweeting, "If you're only into crypto for 6 months, get out of there." Companies that have developed customer service at scale will learn the ins and outs of building long-term customer relationships.