Elvin Zhang on 6 Figure Exits, Pitching to VCs, & Blockchain Technology [S01E04]

(22:25) So, these 3 things are the only things that an early-stage startup have and one pivot, if you actually, pivot wrongly, you will actually screw it up. So what happened was that we actually went from business to consumer, from B2C startup, which is doing a payments lending to overseas Filipino workers and also Filipinos in Manila in the Philippines to actually serving Filipino lending through an enterprise lender.

(22:49) So, the enterprise lender actually had like 5,000 initial pilots up to 50,000 full customer base wanting to use our services. So, we try to go for a large, large contract like a baseball swing, kind of a movement. But I guess, a baseball swing movement really isn’t a startup play.

(23:06) A baseball swing is a play of Google, Amazon, Apple who has like a [inaudible]. They have a shit ton of resources, right? A lot of time, a lot of money, and a lot of people who are very, very stable. But you do not have that kind of resource. So, you do not take baseball swings as a startup. That was my key takeaway.

(23:24) So, don’t pivot into a baseball swing kind of model. Before your pivot always think through it and understand fully. The other thing was that because it wasn’t lending space… so, lending and payments are fin-tech space. It’s extremely regulated space. Very, very hard to navigate.

​(23:39) It doesn’t really matter how good your product is. It doesn’t even matter if you have soft oil demands side issues. You can have like, people lining up for your product and service but if you cannot deploy it in a legal manner, there’s no way that you can get to the next milestone.

(23:54) So I think, I underestimated that drastically. I thought that demand… “Let’s, just do this.” Uber had demand. Uber, in San Francisco on it’s Right Hailing Law and does a rent through, right? Yeah. So, every startup is very different and I think, there in the Philippines, which is a developing country, it’s very, very different. It’s not really… the power and the regulations is a very different thing from San Francisco. So, geographical regions and all these cost variables come into play.

(24:20) So I guess, I can go on and on and on about other different mere learnings, but I guess, the main thing that I learned was that, do not change your path just to make baseball swings or promised baseball swings. If you want to make a baseball swing, sure. Right? Like, a home run kind of swing, make sure that person pays your first, get cash in the bank. Survive as a startup.

Irfan: (24:42) Yeah. These are some really good points and makes total sense to me. So for instance, sometimes I would come across a friend who would try to make that home run or a huge baseball swing. And what happens is that they would depend on just that one big shot, a big deal or something. And then what happens is that they would get discouraged and it won’t work out.

(25:02) Or even at times, if it works out, what happens is that they would get so much dependent on that large project or something, then they would forget to do the usual day to day stuff, in a sense. And this for example, sometimes some of them would come to me and they will be like, “Okay, you’re doing very slow,” or “You’re not expanding,” or something.

(25:21) But I have realized that maybe sometimes I get too complacent as well. Obviously, it’s a kind of balance that you have to work on every day. Right? It’s not like I would decide today that, “Okay, I will continue my business at such and such speed and then I will continue.” It’s a day to day struggle. Right? But overall, when I see and compare myself with them, I can see that… it’s that example of slow and steady wins the race. Right?​

​Elvin: (25:44) Right.

Irfan: (25:45) Yeah. And with regards to regulations, like you mentioned how not all startups can be the same and I really love the example that you mentioned that with Uber or some of the startups from the West, for example. Them bypassing some laws or something like that, some sort of regulations. But definitely, they’re in a very different market.

(26:03) And even in that market in the US market, San Francisco, the speed of innovation and that mindset that the investors, and the regulators, and the government, and all the organizations might have would be very different than a developing country like [the] Philippines or any others. So, that’s a very good important point as well.

(26:21) So, would you say that, for a startup based in Asia, in Southeast Asia, in Singapore or in South Asia, they have to… we should listen to the advice given to us by, say, Peter Teal, I know he’s your favorite, his book is your favorite. I saw it. Do you think that we should listen to it but then customize it according to our own situations and challenges and all that?​

Elvin: (26:43) Yeah, definitely. I think, his concept of 0 to 1 applies to a lot of situations. In fact, our situations, but 0 to 1, what the definition of 1 in Southeast Asia is very different from what the definition is of 1 in San Francisco, in Beijing, in Israel, in Europe. Right? So, it’s very, very different. Or in Africa. Yeah. So, when the concept is the same, I guess, the context is different.

Irfan: (27:07) Definitely. That makes total sense. So, you did mention a little bit about Token Pay. Can you go in a little bit more detail? Like, what was it originally conceived as and what were some of the changes that you guys made into the platform, into the app?​

Elvin: (27:22) Right. Token Pay was originally, the most basic version, was actually selling prepaid load on credit to overseas Filipino maids in Singapore. So, that was like version 0.1

Irfan: (27:35) Right. So, like a virtual credit card?​

Elvin: (27:37) Yeah, it’s kind of like a virtual credit card. But the only thing that the virtual credit card supported was, literally, airtime and eLoad, prepay load.

Irfan: (27:45) So you’re saying, these are the things that Token Pay supported initially, or are you saying, other virtual credit cards supported these things, initially?​

Elvin: (27:53) Sorry, I didn’t get that.

Irfan: (27:53) So, are you saying that Token Pay when it was launched, it was supporting airtime and the other feature you mentioned, or are you saying that the competitors were offering just these services, and you guys were bringing much more than that?​

Elvin: (28:04) No. Actually, for Singapore where we launched, I think, we were the only one providing credit top-up to airtime. As far as we know. So, everybody else, that model… it was like, you can do electronic top-up but you have to top up your wallet first.

(28:17) So for our case, it doesn’t make sense because in Singapore if you want to top up wallet for maids who do not have access to bank accounts, like overseas Filipino workers who do have bank accounts, they literally have to pass cash to over the counter, which essentially they step out of the house.​

(28:30) If they step out of the house, that defeats the whole point of electronic top-up, which means that you have top-up at the comfort of your own home without leaving your house. So, we had to enable the credit card-ish kind of function in order for them to reduce the time wastage to step out of house or sometimes the employers don’t allow them to go out.

Irfan: (28:47) Like for instance, if I am living in Singapore and I don’t have banking facilities and all that and I’m not very may be educated and all that. I don’t have a bank account. So, if I was using Token Pay at that time, in that version of Token Pay, what happens after one month after I use it. I still have to go to a shop to pay up the amount. So, is it like I pay all the amount at the same time? Is that what it is?​

​Elvin: (29:09) You can actually roll your credit. So, that becomes the pure credit card model. So you can, there’s the full sum, you can adjust a minimum payment. So, you just pay whatever you want. As long as you meet the minimum payment, then your account is fine. If you don’t make any payment, then, of course, your account is locked and there’s this call collection process, just like a credit card company.

Irfan: (29:28) Right. And if you can share if it’s possible, any sort of numbers with regards to how many consumers were using it at its peak or anything like that.

Elvin: (29:37) Right. We had about a thousand plus customers, like when we decided to actually move towards the enterprise model. Yeah, the B2B model, B2B2C model actually. So, we had about a thousand plus overseas Filipino workers, as well as Filipinos in the Philippines using our service using this app to do credit top-up.

Irfan: (29:56) Right. So, Filipinos living in the Philippines, we’re using it inside [the] Philippines to pay for online purchases and stuff. Was it doing the same thing for Filipinos living there as it was doing for Filipinos living in Singapore but just in [the] Philippines? Does that make sense?​

Elvin: (30:12) Yeah. It’s that same model. So, basically we just sought the telcos, to Filipino telcos and for Singapore site, it’s Singapore telcos. And for [the] Philippines, I think, there are 1 or 2 more additional merchants. So, we enabled this manual purchasing kind of process where you basically tell us what you want to get by our chatbot and we will allow you to get from Shopee or Lazada.

(30:35) And they will have a whitelister account with Shopee or Lazada to actually help you purchase using our accounts and charge it to your bill. Does it make sense? Yeah. It’s kind of a manual simulation, not really that user-friendly but it serves as an MVP enough to still solve, to still get people coming and referring people.​

​(30:55) So even until today, there’s like, people… if you go to Token’s Facebook page, even though the service is no longer… [The] Token is undergoing acquisition right now. So yeah, there’s still people tell you, “Hey, I got a friend who told me about this like one year ago, can I avail?” So, this is not like, okay… I think that’s the hardest moment for our founder, it’s like, “Oh, I’m sorry you’re not serving anymore. You have to wait for our restructuring to be finished.”

Irfan: (31:17) Right. So you are saying that, correct me if I’m wrong, you guys are in discussions with regards to acquisition of Token Pay as well?

Elvin: (31:25) Yes, we are. We have currently 3 different buyers. Who’s… yeah.

Irfan: (31:30) Right. Sounds good. Well, wish you good luck with that. And I hope, once you have done that acquisition, we can hopefully have you on the show again to tell us some of the non-confidential stuff about it.​

Elvin: (31:42) So, fingers crossed.

Irfan: (31:44) And so, you have already answered my next question, which was basically about some of the challenges in Asian, Southeast Asian markets and you already mentioned some of the stuff that may be regulations and culture maybe are different.​

​(31:57) So, as you guys have already made one exit and you mentioned that it was a 6 figure USD amount, US dollar amount. And you guys are in talks and have 3 bids, as you said, for your most recent startup Token Pay as well. So, do you have any advice for other startups on what they should be doing while pitching to a VC? And what are some of the mistakes that they can avoid, which you might have made or you might have seen other startups made?

Elvin: (32:24) Right. So I guess, I’ll talk about this from a more founder’s perspective because I mean we have a VC firm right now, but like, a senior partner with more experience will probably give you a much better understanding from the VC side of things. Right?

(32:37) So, from the founder’s perspective, I think, it’s… okay, it’s really hard to just say it from the founder’s perspective now that I know from the VC perspective a little bit. Anyway, I think, one of the main thing that comes to my mind is that, don’t try to smoke things. Don’t try to fluff things because [of] VCs, especially the more legit ones, which are the ones that you want to be part of a business, unless there’s something wrong, right?

(32:59) You want a good VC to be a partner, especially at an early stage because it’s like a marriage. So, you wouldn’t want to hide things because good VCs will always know and always have known the questions to ask to call you a bluff.​

(33:12) So, I guess from a founder’s perspective, don’t think that VCs are clueless. Most of the VCs, we’ve seen like, thousands of projects in the same vertical over the past years and it’s our job. So, we see a lot of different kind of people. So, I guess that’s one thing that I want to point out, which is, just don’t try to sell too much, just present whatever information you have and it is okay to be rejected by VCs.

(33:35) It’s okay to do what? Sorry.​

(33:37) To be rejected by VCs. It’s entirely okay. And it doesn’t mean that you do not have a chance to that VC again. Right? As long as you are transparent, you have integrity. You’re just sharing your business as it is, instead of trying to fluff up and get caught on your bluff.

(33:52) As long as the integrity component isn’t compromised, a VC will always talk to the entrepreneur. Always a good VC. I mean, right, case in point, when I was in Toucan, I had a privilege to basically, the incubator kind of like… Being [a] resident startup at Vertex Ventures, which is actually the VC arm of Temasek, which is the firm I’m with right now.​

Irfan: (34:13) Is it the same incubator called DBS, the one which is, I think, the incubation arm of a bank?

Elvin: (34:18) Yeah. That was a structure accelerator program for about 6 months. So, before and after 6 months, Vertex Ventures has been very, very kind to take us in for the resident startup program. So, I got to spend time with the managing partner and a partner may be bi-monthly or every 2, 3 months we’d catch up.​

​(34:36) And be… I just shared all the challenges, the troubles, the problems and they try as much as possible to help us. So, I think that’s really invaluable in building trust because you don’t hide your shortcomings as you pitch to a VC. A VC is meant to partner you, you drive the startup, we provide resources to partner you. So I guess, that was what Vertex Ventures did for me and that really shaped my view to what a good VC should be like.

Irfan: (35:02) Right. And you have mentioned, I can see that you are very good at approaching VCs and maybe angel investors and getting their attention, building relation. So, any tips on that? Like, how do you do it? Are there any sort of established formal channels of communication, or do you just walk in their office? How does it work? Any tips that you have in terms of your building relations, pitching ideas, getting their attention, anything like that.

Elvin: (35:26) Right. So I think, there are few parts to answering that question. One is that VCs run a very tight network, tenure investors, the more experienced ones, they share information a lot. So, just be really, really genuine. People who have made it. VCs, Angel Investors, one of the main thing that you want to do, apart from making a 1000 times return is to really help the next promising founder to solve a real good problem.

(35:51) And we share information, we genuinely want to help. So, genuine founders really have an advantage over founders who just try to sell too much. So, that’s one. Of course, the definition of selling, in this case, where you talk to angel investors and VCs, I think, you should know your business as much as possible, as clear as possible so that you’d save their time. Right.​

(36:15) So generally, respect for people, be genuine, and just be yourself. If you’re not there yet, just admit it. Just acknowledge it. Thank you very much. Take the advice, go back, work hard. And then after that, go back to the person again.

(36:30) All this count for basic… I guess it’s just basic like, you just like to work with [a] person like these. It doesn’t really matter whatever the person is pitching or just like catching up. Someone like this… because let me… angel Investors… investors are just human, right? You just like to hang out with humans like this and genuinely want to help people like this.​

Irfan: (36:46) Right. Makes Sense. So, let me ask a followup question to sort of come up to [a] more basic level. I’m sure it’s a more basic level for you, but I’m sure some of the listeners may have this question or this sort of confusion. So, if I come to Singapore, And I don’t have any startup ideas to pitch, but I’m just asking for the sake of listeners.

(37:04) So if I come over to Singapore, if I have an idea, just let’s say, you might have an idea to pitch. And I have some customers, I have a platform ready, an MVP and all that and I want to pitch it to a VC. So, how do I go about it? Do I contact them via Linkedin, give them a brief piece of information about my idea and ask them to meet me on a cup of coffee, or do you advise something different?​

Elvin: (37:27) So, I would say, VCs are a little bit later. By VCs, I think, the definition for my VC is an institutional investor. The angel investors, there’s this network that is run by our very good friend and mentor of mine called Shawnee. She runs Angel Central, which is a network of angel investors. You can approach her. So, there are some key influencers at different stages of the business. So, I wouldn’t recommend just going right to a VC unless you have a pretty solid idea of what you’re doing or what you’re going to launch.

Irfan: (37:56) So, let’s say, some sort of an early, some sort of a fund or angel investment network, which is meant for, say, very early-stage startups.​

​Elvin: (38:04) Right. I think that, just google Angel Investors Singapore Association, there’s BANSI, there’s all kinds of association with regular schedules to uncover hidden gems. We’ve got ideas. Singapore is still pretty much a hot bid for startups and stuff.

Irfan: (38:18) Do you think that Singapore is like the Silicon Valley of Asia? Would you call it that?

Elvin: (38:24) I think, nowhere else can call themselves a silicon valley because it’s really hard to duplicate Silicon Valley’s culture in my opinion. It’s a lot of different variables. Singapore is its own unique startup culture. But I guess, within Southeast Asian nations, just Southeast Asia as a region, Singapore is definitely the place to be for startups. Yeah.​

Irfan: (38:42) Right. And what about entire Asia?

Elvin: (38:45) Entire Asia, actually that is Beijing, next Shenzhen. So, depends on what you want to do. Right? So, Singapore recently there’s this whole buzz about cryptocurrency and blockchain. So I guess, Singapore is like the go-to place, it’s not just in Asia but globally as well because of China’s ban.​

(39:00) And so Hong Kong, you don’t have to go there, but Singapore it’s kind of like, the right stepping stone between the Eastern Market and the Western markets because you have both English and Chinese speaking guys. So yeah. So [it] depends on what vertical you’re in. I wouldn’t say like… really depends on what we did create. Yeah.

(39:15) If you are in manufacturing, go to Shenzhen. Right? If you are in banking and finance for, say, corporate, personal finance, you can go to Hong Kong. Hong Kong for corporate and you can come to Singapore for Personal Fintech. So, it really depends on where you want to… what kind of business you want to do.​

Irfan: (39:29) What do you mean by Personal Fintech, as in Consumer Fintech?

Elvin: (39:33) Consumer Fintech, right. Enterprise Fintech and Consumer Fintech. Yep.​

Irfan: (39:36) Right. So, you already started to speak about blockchain and cryptocurrencies. I know you’re very excited about it. I have been dabbling a little bit and learning more and more about it since, a year now. So, tell me why blockchain? Warren Buffett, he’s recently mentioned… I probably shouldn’t mention what he said or that might lead Bitcoin’s price to go back to $9,000 or $8,000 again.

Elvin: (40:04) It’s fine. It’s fine.​

Irfan: (40:04) No, I’m just joking. So, there are these 2 camps, the way I see it. And I know some of the stuff, but definitely you know more about it and some of the listeners will definitely learn from. So, why do we need blockchain? Why do we need decentralized networks?

Elvin: (40:19) Right. So, disclaimer, I’m not an expert, I think. I don’t think, anyone can call themselves experts in blockchain, in this space. If they call themselves an expert, they are not experts. That’s my personal opinion because it’s turning so fast, right? Every single day there’s so many different things.​

(40:32) For me. The question of whether you need decentralization or no decentralization is, I’m actually a guy that’s researching on blockchain and crypto thesis in Vertex Ventures and also a few sharing to a few other Temasek lead funds.

Irfan: (40:46) What’s Temasek?

Elvin: (40:46) Temasek is the sovereign wealth fund of Singapore.​

Irfan: (40:48) Right. And Vertex Ventures is a sort of a sister company of Temasek..

Elvin: (40:53) So, Temasek is one of our anchor LPs. Vertex Ventures is a network fund that manages 1.4 billion UM around the world. Temasek is the anchor’s 50% of our current fund. On the holdings level, we are 100% subsidiary of the holdings level of Temasek.​

Irfan: (41:07) All right. So, you said that you are the guy for Vertex Ventures, Temasek and some other organizations and you are doing… you are the research guy for them when it comes to blockchain, is that correct?

Elvin: (41:19) Yeah, I spend more time doing research, trying to exchange notes with the other people in other… Temasek is a massive [inaudible]. So, there are hundred people researching our blockchains. For Vertex Ventures, I’m the guy spending the most time right now, researching on possible crypto thesis and blockchain, looking at startup, what kind of products can we invest in?​

(41:36) So, going back to your question, which is why do people need decentralization? The answer actually is, most people do not need decentralization right now. So, it also depends, right? No extra application in the world right now that can be entirely decentralized.

(41:50) So, if you look at CryptoKitties, right? You’re a blockchain, there’s no tokens whatsoever. So, no ICO stuff, but they’re not decentralized, right? Because it’s [a] decentralized record of data, of a unique virtual kitty, but it’s still powered by centralized providers who provide the internet, the basic internet.

(42:09) So, if you shut off [the] internet, you can shut off CryptoKitties. So I guess, one of the most common misconceptions of people who stand firmly just for centralization or decentralization is that there is no absolute decentralization or centralization.

(42:24) It’s just like depending on the circumstance of the particular network of people, decentralization helps a mature network to eliminate [the] central point of failure because it’s decentralized, right? Even when one will hack one thing, you get a compromise, maybe 1, 10% of the network, but you can still… like, with 90% of the networks still being uncompromised, you can still continue performing whatever service or function that a network is supposed to perform. So, yes, there’s some merit to decentralization.​

(42:51) So, there’s actually 3 questions that I can share, in a more generic manner to actually… this is my personal thesis for evaluating potential blockchain/ICO projects. So, more fundamental… so, speculative… this is not speculation, it’s more fundamental analysis.

(43:07) First question is, whether you’ll need a blockchain, in the first place or not, depends on the amount of mistrust in the current way of doing things, and the amount, the level of need that our network needs to reduce single point of failure.

(43:21) So, the more mistrust you have in your current way of doing things, the more blockchain can actually be applicable to your network. The more you need to reduce single point of failure, the more you can actually use a decentralized way of storing your data in as security and immutable fashion.

(43:38) The second question is, after you determine whether you need a blockchain, right? You need [a] certain level of decentralization. Then the question is about, what type and how much of this to decentralized. How much and what type is confused to be the same thing. Right?

(43:52) The type is basically like who can access it? Is it anyone? Is it a public network, like the Etherium or Bitcoin? Is it a hybrid one which is kind of like, your permission level. Some people have more permission than the others or is it like, a private or purely permission one like a consortium of banks whereby privacy is really important.

(44:11) So, all 3 forms, self-different use cases. That is a type of decentralization that you need. Then how much decentralization do you need is depending on… it’s like, how many people do I need to make decisions to reach [an] agreement for me to agree or what kind of data is confirmed in this decentralized database? That answers [the] question of how many notes you need. Which effectively means, a participant that writes, that contributes to the data.

(44:38) And then the final question, which is..​

Irfan: (44:40) So basically these notes would be the parties or the stakeholders who can approve or disapprove any type of transaction. Would that be it?

Elvin: (44:49) Yes. So, I wouldn’t say approve or disapprove because the whole network approves or disapproves. So, the whole network reaches an agreement or no agreement. It’s like, it has [a] voting system similar to that. The note, basically, suggests a vote. So it can contribute to what’s writing onto the blockchain. Say that, “Hey, there are no contributes to validating data that is being written onto the blockchain.”​

(45:11) So, the third question is actually the most important question of all and most ICOs fail this, even if they answer question 1 and question 2. The third question is, do you really need a token in your network? Or can you, like CryptoKitties, that answers question 1 and 2 two, CryptoKitties doesn’t have a token but is it decentralized? Yes, it is. The data of every single unit kitty is securely start and you can never go back in time. You cannot say that this kitty is yours just because your money finds certain ledger data, in the Etherium blockchain.

(45:43) Right? But it works. And I mean, it used to be crazy and it used to be one of the best applications that proved the, “Hey, blockchain has a real use case, to trace virtual objects on value or less perceived value. Right? Or scarcity. So do you really need to invent? To really not use Etherium, but a new type of token in your network?

(46:04) I think, the answer really depends on, they can only design. So, that here is a whole rabbit hole that you can go down. So, yeah. I think, those are the 3 fundamental questions. Do you need a blockchain? What is the nature of decentralization? And do really need a token in your network?​

Irfan: (46:20) Right. If you still have some time, I would like to ask a couple of questions on this.

Elvin: (46:26) Yeah, sure.​

Irfan: (46:27) Right. So, you mentioned how, with respect to [the] type of blockchains, you mentioned that there are 3 types of blockchains, right? One would be, something totally public like Bitcoin or Etherium. I believe, the third type that you mentioned, like a private consortium of banks. Would you say that Ripple would be an example of this? Like a total private consortium? If not, would Ripple fall under the second type that you said? Like, not very public but not very private either.

Elvin: (46:53) Right. So I think, Ripple is a very special case. Ripple has actually two products. The Ripple organization has the Ripple Coin, which is a public token. It can be traded at exchanges and Ripple has the RippleNet, which is essentially a newer decentralized version of [inaudible] banking system.​

(47:12) So, the private permission one, whereby only banks can participate. And most of the partnerships that’s being formed by Ripple is actually under RippleNet. There we can see how this whole mania happened, right? Where partnership announced for Ripple under RippleNet is being taken as… these banks actually want Ripple tokens. But actually there is a segregated difference. There might be some cross over here and there, but there is a segregate difference between these two product lines of Ripple.

Irfan: (47:40) Right. So, basically XRP that we see, right? That’s the public coin and that’s not the coin that RippleNet banks would be using. At least it’s not a requirement for them at this point. Is that correct?

Elvin: (47:52) Yeah. You don’t have to have Ripple coins to be part of RippleNet.​

​Irfan: (47:56) Right. And RippleNet, would you say that that’s like an example of totally private type of blockchain?

Elvin: (48:02) Yeah, it’s a good example. Yeah.

Irfan: (48:04) Right. And do you have an example of the second type of blockchain? So, you mentioned very private, very public, and then something which is a hybrid. So, I would love to have, if you know of any examples of a hybrid type of blockchain network or cryptocurrency, do you know of any?

Elvin: (48:19) Right. So, I think a hybrid just means that you actually use a mixture of public participation as well as publisher participation. Let me go to private first, right? Because it’s much easier to give an example over there. R3 Corda, Corda by R3 is actually a publisher blockchain. IBM Hyperledger is a…​

(48:35) Sorry, what’s the first one?

(48:36) R3 Corda. R3 has an underlying blockchain. R3 is a consortium, so R3 has an underlying technology called Corda. It’s a private permission blockchain, also there’s a Quorum, which was developed by JP Morgan. There’s IBM Hyperledger, and also Etherium has an enterprise version of it, which is a Permission Etherium Implementation.​

Irfan: (48:57) Right. There is a Linux one as well. Where Linux is a partner as well. Is that Hyperledger, or Is that something different? The private blockchain consortium or something?

Elvin: (49:03) Yeah, I heard of the Linux one, but I’m not quite sure of the Linux implementation, but Hyperledger is actually a blockchain that’s native to… it’s developed by IBM. I can’t remember the exact history. I think, it was some other company developed or some other association developed Hyperledger and then IBM took it into its cloud computing stack. What’s the IBM one. I can’t remember their name. It’s IBM Blue Mix.​

Irfan: (49:28) Right. Any examples of the hybrid type that come into mind? It’s not necessary, I’m just curious.

Elvin: (49:35) Oh, that’s a tough one. A good example of a hybrid.​

Irfan: (49:39) I think, we can leave that question, but wouldn’t you say that, some of the reports that mentioned that, even with regards to Bitcoin, I mean, there is, I think, like a group of 5 or so developers who get to decide what code gets written into the updated version of the Bitcoin client. Right? So, some critics say that they still have that power over what can or can’t happen in terms of the features. Would you agree or is it something that I’ve maybe misunderstood, or something?

Elvin: (50:08) Wait, so this one is regarding Bitcoin or Bitcoin Cash.​

Irfan: (50:11) No, Bitcoin. So, with Bitcoin, the BTC. I read an article, it’s been a while since I read it that there are like 5 developers, right? Who get to decide what features will be written into the next version of the bitcoin client software. So, I mean, would you say that that makes it kind of a little less public, a little more private?

Elvin: (50:32) It’s called the developer community. Actually, that’s a question, not really on the type of blockchain, but that is the governor’s model of the blockchain network. That’s nothing to do with like… the nature of the note is decentralization. Yes, these will do decentralization based on a governor’s model.​

(50:49) So, the number of note decentralization in terms of how many notes and what is the type of notes, is just the participants and the participants in network might or might not, depending on a protocol, depending on the rules that used to run this network, can be part of the governing body or not.

(51:07) So, a good parallel is kind of a country, right? You have your participants, which can be a huge note. This note can be, let’s say, Singapore Airlines. Let’s say, let’s just use Singapore as an example. This is Singapore, it’s like… we have a Singapore blockchain, right?​

(51:19) We have all this is databases, which is all the entities in Singapore and every single entity is like a note. At least the large entities are the note, right? So, there’s a note called Syntel but who decides on the policies of how the network of Singapore behaves? So, that is decided by the governing bodies, which is the government. So there’s a fundamental difference between the participant in the network and whether the participant is actually part of the governing body.

Irfan: (51:44) Right. So, you mentioned that while judging the viability of an ICO or if for instance, I am thinking of an idea, or if I am pitched an idea about a blockchain startup or something, there are 3 parameters and I will just repeat it just so that our listeners can better understand it. Number 1, is the type of blockchain, whether it’s private or public or hybrid. The number 2 was, whether there is a lack of trust in the current centralized system. Is that correct?​

Elvin: (52:14) Yeah. I think the number 1 question is to determine whether there is a huge lack of trust in the current system of doing things.

Irfan: (52:21) Right. And number 2 is the type of blockchain and the amount of decentralization. Is that what it is? The second one?​

Elvin: (52:28) Yes. How many in those do you need to form [a] consensus, and what kind of people do we need to form consensus? Is it like, do we let the public come in or do we just let private publisher people to come in, or is it a mixture?

Irfan: (52:40) Right. And the third, I believe you mentioned whether there is a need for a token, right?​

​Elvin: (52:45) Yes. Whether there’s a need for a token, needs to have users using, let’s say, you guys raise using Bitcoin or you raise using Etherium, is there a need for you to create another token?

Irfan: (52:53) Right. So, if better you need to have something, a different token rather than the ERC 20 of Etherium or Bitcoin, right?

​Elvin: (53:00) The ERC 20 is like, if you would say, I do quite say, Alvin coin, right?. Alvin coin, [the] token is Alvin coin, but ERC 20 its kind of like a standard. It is basically [a] mixed Alvin coin for few certain checklists on the Etherium, like a type. So that it’s kind of, it can be inter-operable if another exchange or other people would choose to exchange with it.

Irfan: (53:21) Right. So, for example, if there is a totally new platform which wants to be a competitor of Etherium and it wants to, say, have interoperability with the Etherium as well, then it should have ERC 20 compatibility. Is that what you’re saying?

​Elvin: (53:36) A competitor of Etherium wants to, what?

Irfan: (53:38) So, if I want to come up with a platform which becomes a competitor of Etherium, for example, and I want interoperability with Etherium. So, what I will want to have is to have my tokens be ERC 20 compatible. Does it make sense?

Elvin: (53:53) Yeah. If you want to exchange with other ERC 20 tokens programmatically via smart contracts. But it depends on whether your counterparty enables that function. So, just because I have Alvin coin, which is ERC 20 compatible, basically just like ERC token, doesn’t mean that you automatically get on Binance.

Irfan: (54:11) Yeah. I mean, definitely if you want to get your coin on any exchange, you do have to get their approval, right? I mean, it’s not the case that you just mentioned, right? I mean it goes either way.​

​Elvin: (54:21) There’s still [an] integration process in order for Binance to literally integrate you to the ERC token.

Irfan: (54:25) Right. And you also mentioned something very interesting, which I wanted to ask you about. You mentioned how… when I came across the CryptoKitty News, I was like, “Okay, this is just pure speculation and how people are maybe not wise enough to understand that this is not something which is going to be very beneficial.

​(54:43) That was sort of my gut feeling and I didn’t really read into it. But if I understand correctly, you are looking at it from a different perspective and it’s very interesting. I would love to have you explain why you think CryptoKitty’s example is significant.

Elvin: (54:56) Right. So I guess, CryptoKitties itself, it’s… so, there’s definitely a hype around CryptoKitties. But then again, aren’t most art pieces hype?

Irfan: (55:06) Sorry, come again.

Elvin: (55:08) Aren’t most art pieces hype?Irfan: (55:10) Aren’t most…

Elvin: (55:11) Like, “art pieces.”

​Irfan: (55:13) Yeah. Exactly. So, if, like that example, right? Like, when I started studying blockchain I, obviously, one of the authors was, we had a very interesting guest, I think it was Andreas Antonopoulos. I think, he wrote the Internet Of Money, and I think, Mastering Bitcoin, as well. I’m not sure if I’m remembering the right names, but I will add these in the show notes.

(55:31) So I think, what he mentioned was about [the] value of money. Like, we believe in the significance and value of a currency note just because it is something we can see and we can touch and we think that it’s presumably backed by, or most definitely backed by our government.

(55:45) Even if we have examples like Venezuela or Greece or other countries where the countries may have defaulted and all that. And so, the thesis of the writer was that whatever the society or the majority feel has value… say, if they feel something has value, then it has value. It can be seashells, it can be currency notes, it can be a goat or something. That totally makes sense what you said.

Elvin: (56:10) So I guess, that’s the underlying explanation for everything that humans may believe has value. As long as many people believe in it​

Irfan: (56:17) Yeah. But I think, I mean, the reason I asked this question was not basically to have a critique on this from my end, but I think, I felt like you were talking about how the CryptoKitty’s example maybe have inspiration for, say, games which would like to have their own, for example, currency. For example, if I am playing a video game and I get credits and I can sell them, I can buy more credits, something like that. Did I catch that correctly?

Elvin: (56:44) Right, correct. So, another part of me that… I used to be a competitive gamer for DOTA, Defense Of The Ancient, that is the game. So, I used to play well as well. So, there’s all these unique items, but there’s kind of like no way for you to… especially, let’s say, if you get unique items out of the in-game environment and trade it on the open market, there’s no way they can prevent anti-forgery or duplicates. You have no way of verifying whether this is a unique thing that actually past hand, actually transferred from this ownership to another ownership.​

(57:13) So, blockchain, without a token a blockchain can basically do that because each phase has providence. As long as it’s a digital product, once it enters the blockchain, it’s traceable and it’s kind of like unhackable by [inaudible]. I mean, can be compromised on the incentive level but on the pure security hash level, it’s kind of pretty safe.

Irfan: (57:33) Yeah. Right. So, why the interest in blockchain? Are you thinking of doing something within that space apart from your work as a very new VC like you had mentioned previously, or you’re just studying it as part of your job as a VC?​

Elvin: (57:48) Well, it’s funny you should ask because it was part of my job initially, right, joined Vertex because I was already looking to cryptocurrencies and ICOs and then after that, what happened to us is that, initially, I was like, “Oh my God, it’s so much…” because it’s a parallel universe. This is really counter-intuitive to understand and to absorb. It’s not like… because it tenders the fundamentals of business, which is really weird. Right?

(58:11) So I guess over time, taking both sides because I have to do a bulk balanced view from an institutional investor point of view, I realized that blockchain has the ability to really shape the world. So, I’m a big subscriber to Andreessen Horowitz’s Chris Dixon’s Podcast series. I think he is…​

Irfan: (58:28) Which podcast is that?

Elvin: (58:30) Chris Dixon’s Podcast for the Cryptocannons by Andreessen Horowitz. So, Andreessen Horowitz and Fred Wilson from Uniscribe Ventures, they really helped shape my initial mental model for blockchain and what is its role in the economy moving forward in the next 10, 20, or 30 years.​

​(58:47) So I guess, the past 5,000 years [of] human civilization, in fact, we’ve all been focused entirely on scarcity. And blockchain is a technology improvement. It’s a way of using technology in a way that… for the first time it changes how value is distributed on a very fundamental vehicle, which is the shareholding structure. Because shareholding structure by default was invented to go through sub-party and governments.

(59:15) In which [the] government is essentially a bunch of people who are [the] third party to verify trade and settlement of value between two willing parties. Right? And the blockchain actually passed this power back to the people. Of course, there are a lot of challenges, but I believe that the ultimate end, it will be such a case.

(59:32) This is my personal opinion. I don’t represent Vertex in this, right? This is what I propose to Vertex as my personal opinion as well. So I think, AI, artificial intelligence, will actually drive value creation so much. General-purpose AI, especially, if it comes, when it comes, it will relieve both of us of jobs, which can be a scary thing, but when it comes, it’s probably going to be a very natural thing.​

(59:57) Most of us are not enjoying jobs and is something that can save us so much time, it’s going to take over our jobs. Right? It can actually free up time for us to actually pursue what really makes us happy. So AI, as a super scaling value creator, IoT as a super scaling value capturer, who’s convert offline value into digital value that can actually be traced, digital format. So, analog value into digital value. And then with blockchain as an equitable value distributor.

(01:00:30) It’s probably the fundamental building blocks of, all us technologists, we term as the ultimate singularity. So of course, this is a crystal ball gazing. It’s not going to come soon. I don’t know when it’ll come, right? It’s a question of how fast or how slow.​

(01:00:49) But look at all the creations, look at all the progress in AI, IoT, as well as blockchain. It just seems to be that way. And there are other books like Energy As Civilization, you can check it out on Guest Notes. As well as, we call it, The Enlightenment Now, which is a follow up to the Better Angels Of Our Nature, by Steven Pinker, Professor Steven. They all speak about this potential singularity thing in all different kinds of lenses.

(01:01:14) And I guess, technology has come to the point whereby, we no longer actually worry about scarcity, about resource allocation. Which actually brought us the topic of economics and shareholdings and company structure.

(01:01:26) So, we’ve moved beyond that, and we’re at a part of time in history, and I’m hopeful because I don’t want to be depressed. That’s a… I can’t let it be personal, yeah, I don’t want to really be depressed. I want to be hopeful. Looking forward to the future, to the next day, by thinking that we are on the cusp of an exponential singularity growth in these 3 areas.​

(01:01:44) AI, IoT as a value creator and capturer, a blockchain as the equitable value distributor where it can free people from the bottom-most layer, every single human being in this earth, part of the bottom-most layer of scarcity needs of the most bottom lowest layer of hierarchy and move upwards. So, I believe in that.

(01:02:04) I believe in these 3 interplayings and I believe that technology is, as well as family officers, large family officers are part of Nexus Global, which is [the] second or third generation of Impact Investment Association. So, Matt Rockefeller is one of the guys who actually anchors the fund along with [inaudible] Foundation.​

​(01:02:19) So, a lot of people around the globe who’s waking up to this moment, and I want to be part of it. I’d love to lead it. There’s no need to lead it because it’s decentralization, right? And we can all be part of this and just bring happiness to the world instead of dwelling in scarcity.

Irfan: (01:02:36) Right. So, you touched upon quite a few interesting concepts in these last few minutes. What do you think happens when a lot of the people lose their jobs due to AI, and IoT? What happens next and how can they be ready for that shift?

​Elvin: (01:02:55) Right. So I think, it’s more of an education game than an actual implementation-execution game. So, [inaudible] itself, actually, to me personally, I feel, it’s the foundation to the buzzword called Universal Basic Income, the UBI. That’s made famous by Mr. Mark Zuckerberg, right?(

01:03:13) So I think, UBI requires a blockchain to actually implement so that it’s devoid of human ego and selfishness, and it literally takes whatever value in this case, what value of value, in my opinion, is equivalent to time spent. If you look at… this is a little bit going beyond tech and a little bit more of a philosophical level because you have addressed an interest in that.

​(01:03:37) So, even at what fuel value, right? The fundamental fear of all human beings is the fear of death. Every other fear, it’s an extension or a derivative of the fear of death. If you read most of the religious scriptures, spiritual teachings, it all says about this thing.

(01:03:54) Philosophical arguments, it reaches this point. The underlying fear of humans is actually the fear of death. And what is actually the fear of death, right? The fear of death is actually the fear of running out of time because we do not know what’s after death. Well, most of us do not know, right? Most of us don’t know what’s after death.

​(01:04:15) So, it’s the fear of the unknown. And we are actually afraid of running out of time. So, basically what money is actually a measure of value, is whatever you value the most, which is time. There’s this famous saying in business, right? “You either save people time, or you save people money.” Because if you save people money, people can use that money to buy other people’s time so that they have more time to enjoy stuff to be happy. Right?

(01:04:42) And I think, it’s a fundamental thing to remember that as we disrupt, there’s AI, IoT and blockchain comes as this trio forces of disruption, we are disrupting the time wastage and we’re not really disrupting jobs. Like, jobs are just a derivative as well. [The] job was invented as a means to centralize production for efficiency. And efficiency is an economic concept of scarcity allocation

​(01:05:10) And if we have more than enough, enabled by our technological progress, to increase output of everything that we need to leave and to survive, basic necessities, why are we still allowing money, which is an instrument for allocating scarce resource to dictate our jobs, our perception of what it means to have a job, what it means to live day . This is no longer the case. Right?

(01:05:37) You are using something that’s developed a few hundred years ago to run the current state of the world. Does that make sense? So, losing jobs, actually, it’s not… I don’t think it’s something to be feared. If losing jobs is, actually in this case, [it] is analogous to having Universal Basic Income, a.k.a. “Financial Freedom.”

​Irfan: (01:05:59) Yeah. But I mean, both these things might not come at the same time. Right? So that’s the issue that a lot of people who have… who are not entrepreneurs and who have jobs and they might be concerned about. And I do know that you are also… one of your recent peer Facebook posts, as I can see, it talks about finding meaningful work, rather than, quote-unquote, jobs. So, how do we make that switch from having no jobs to having Universal Basic Income and have a passion that we can pursue? Does it make sense?

Elvin: (01:06:28) Right. So, I’m trying to figure out the exact executional thing as well, which is kind of why I’m involved. So, to answer your question, back to the first question, because we can’t take risk, is why I chose to be involved spending more time in blockchain? Because it’s something that needs to be figured out.

​(01:06:44) And I think, being part of, contributing to its formulation of something that can be understood and can be distributed to the masses, to educate people is something that brings meaning to what I spend my time working on.

(01:06:59) So, I’m trying to figure it out. If I figured it out… I welcome anyone to try to figure it out together with me. I’m looking for comrades, like companionship along this journey. There are a lot of people who are already working on this and we are actively trying to debate, argue and just try to figure something out, executional thing.

​(01:07:15) We know where you’ll end but we have no idea how… we have to figure our way out. That’s how [a] human being is all this time, right? So I guess, that’s the interesting part and that’s why I’m in this space as well.

Irfan: (01:07:27) Yeah, definitely. I mean, that’s a very interesting process to brainstorm and try to figure out a solution to a problem which can change the way millions or even billions of people live their lives. So Elvin, I know, it has been a very lengthy discussion, but I have really enjoyed our chat, and thank you so much.

​Elvin: (01:07:45) Thank you so much too.

Irfan: (01:07:45) If you have any parting words, any final words, where people can find you? Please do let us know.

​Elvin: (01:07:49) Sure. I think partly was, I still get a lot of work, so just feel free to reach me on Facebook, Linkedin, and I’ll definitely get back to people who want to, who’s interested, especially folks who actually want to work together to try to figure out a formula or size the shit out of how to make IoT, AI, and blockchain work together to drive towards that vision that we just spoke about.

​Irfan: (01:08:09) Wonderful. Sounds good. We will definitely include your social media profile links, including Facebook and LinkedIn. Thank you so much, Elvin. It was really nice to have you, and I wish you good luck with your future endeavors.

Elvin: (01:08:21) Thank you so much for having me.Irfan: (01:08:22) Welcome. Thank you.

Elvin: (01:08:23) Thank you so much.

OUTRO: (01:08:26) Thank you for listening. For show notes and other resources, please refer to the description of the show.