GRTiQ Podcast: 51 Tushar

The following podcast is for informational purposes only. The contents of this podcast do not constitute tax, legal, or investment advice. Take responsibility for your own decisions, consult with the proper professionals, and do your own research.

Tushar Jain (00:21):

You’re not necessarily going to stay synced to the tip of every chain. Off your home computer? Probably not. Off your mobile? Definitely not. So you need to find a way to query the databases in a scalable, trust-randomized, and secure way in order to be able to use web3. Otherwise, it’s not useful if you can only write to it.

Nick (01:11):

Welcome to the GRTiQ Podcast. Today, I’m speaking with Tushar, co-founder and managing partner at Multicoin Capital, an industry-leading investments firm that focuses exclusively in the crypto ecosystem. As you’re about to hear, Tushar has an incredibly insightful mind and possesses a deep understanding of both the crypto and web3 landscapes.

(01:34):

During our discussion, Tushar talks about his evolution from tech entrepreneur in the healthcare industry to co-founder at Multicoin Capital, one of the most widely recognized and respected investment firms in all of crypto. In addition to a great conversation about crypto and the future of web3, Tushar shares some of his thoughts on The Graph, including what he and his partners first recognized as the core value propositions offered by the protocol. As always, I started our discussion by asking Tushar about his educational background.

Tushar Jain (02:09):

So it’s great to be on. Thank you for having me. I think education is a lifelong thing. I grew up in New York, went to school there, but I really think a lot of my education started with my parents who were small business owners. They owned a store like a lot of immigrant parents do. And I helped out there. I got a sense of what business was like as a child just by being around family all the time in the family business. So I think that’s where my education really started.

(02:33):

I went to NYU. I studied finance. After that, I decided not to go the traditional financial industry investment banking route. Instead, I moved from New York to Austin and I started a healthcare IT company here called ePatientFinder. ePatientFinder used patient’s medical record data to help them find clinical trials or other advanced treatment options that their physician may not have been aware of. And this was fairly successful. We had a good number of patients on the platform. We had a number of big pharma clients.

(03:05):

But in 2013, I heard about this thing called Bitcoin. And it was interesting. I had just started this company, I find out about this thing called Bitcoin, and I started digging into it to learn a little bit more. I bought a couple of Bitcoin, two honestly. I wish I had bought more back then. I think everyone does. But I bought two and I just thought of it as tuition. I wanted to have some skin in the game so I would actually spend the time to learn about the thing.

(03:28):

And I spent a bunch of time learning about Bitcoin and I was like, “This tech is amazing, but I can’t really do anything with it. I’m not an economist. I’m not thinking about hard money. That’s not what I care about. I care about technology.” So I was like, “I’ll put this on the shelf.” And I held onto those two Bitcoin, but I’ll come back when you can actually build stuff using this tech.

(03:51):

And so in 2016, my friend Kyle came to me. We had known each other for a long time. We’d been roommates in college, long relationship already, and he came to me and he said, “Hey, check out this white paper.” And it was for Ethereum. And that’s when I started to get a lot more excited about crypto because what I saw in Bitcoin was peer-to-peer cash. What I saw in Ethereum was a new way to build human economic coordination structures. I had also just recently read this book by Yuval Noah Harari called Sapiens, which was just coincidentally very, very well-timed with me rewriting the story of how human economic coordination could work in my brain.

(04:34):

And I would say most of my education in crypto came from there, came from spending basically every week since then deeply immersed in trying to figure out how will this technology evolve and debating with people on the internet all the time. I think a lot of our education has come from writing actually, because the best way to make sure you truly understand something is to write it out and try and explain it to others. It forces you to be a lot more clear in your thought processes and also it opens you up for criticism and feedback, which we also value and we learn a lot from. When we’re wrong, we are happy to be wrong if someone corrects us because what we care about is finding the truth.

(05:14):

And so I think most of the education that we have in crypto has come from writing, from engaging with the community, and co-exploring this. It’s not like higher education teaches you how to do stuff in blockchain or crypto. I’m like, “This is too new. It hasn’t been codified yet. The people who are going to be professors of this stuff are still in the field.”

Nick (05:31):

You mentioned you’re joining me from Austin, Texas, and for listeners that don’t know, Austin, Texas has become a hub in the United States for entrepreneurship and technology. Do you have a sense for what the attitudes and opinions of the people living in Austin are towards crypto?

Tushar Jain (05:47):

That’s an interesting question. I think Austin is probably more crypto-friendly than most parts of the country. Austin has kind of the Texas culture of freedom and liberty as being high, high priorities or top priorities. I would say Austin is very purple. It’s not red or blue. It is very much in between, which I like. And I think that it means that there’s a lot of open-minded people here. And open-minded people I think are more welcoming to crypto and more welcoming to change. And so I think Austin is pretty friendly to crypto.

(06:26):

I would also add Austin is a very young city. There’s a lot of young people who have moved here, also a lot of young technologists, and that’s just a demographic that is more crypto-friendly.

Nick (06:35):

Tushar, one of the reasons we’re speaking today is Multicoin, a company that you helped found, was an early investor in The Graph. And of course, these type of scenarios where you’re being interviewed require disclosure. So give you an opportunity now to say or provide any of those disclosure statements for listeners.

Tushar Jain (06:51):

Yeah, I have to put out a disclaimer that Multicoin holds Graph tokens and we benefit when the price of Graph goes up. We have been investors in Graph for a long time, since 2018. And we are very supportive of the project, but we do have to disclose that we have a position here. We also have to say nothing that we talk about today is financial advice, please do your own research, and this is for educational purposes only.

Nick (07:17):

Thanks for that. So let’s turn our attention to Multicoin Capital. What can you share with us about who and what Multicoin Capital is?

Tushar Jain (07:24):

Multicoin Capital is an investment firm that’s focused on investing in the crypto space. We really focus on investing in things that were not possible before blockchain technology, so things that really need to be permissionless or trust-minimized or credibly neutral or censorship resistant in order to actually work. So we’re looking to help invest in and work with the entrepreneurs who are building the future of human economic coordination in an internet-native way.

Nick (07:56):

So you’re an entrepreneur starting off as a technologist working in the healthcare industry and eventually make your way to Multicoin Capital. What can you tell us about that experience and your role at Multicoin Capital?

Tushar Jain (08:07):

So I’m one of the founders of MultiCoin. I got obsessed with crypto in 2016. 2017, I sat down with Kyle and we were both just spending all day, every day thinking about this stuff. And we were both looking for our next project to work on and we thought, what does this space need? And in early 2017, everyone was raising money in a bunch of ICOs. And a lot of times we thought this didn’t make a lot of sense. You’re not going to have a separate coin to pay for your coffee or a separate coin to pay for X or pay for Y. These payment currencies just did not make sense.

(08:44):

What we realized was there were not many investors in the market who were teaching people heuristics and frameworks of how to reason about value capture in this new paradigm where everything is open source, where everything is permissionless, there is no IP. What we realized is there was just a huge need in the market for investors who were willing to think in open and think publicly and share their thoughts, and we thought that that is the way that we can best help move the industry forward.

(09:16):

That was our skillset that we really had that we thought could help advance the industry is communicate these narratives, help traditional investors better understand what’s going on because especially in 2017, everyone was just like, “This is nuts. What is happening?” Especially any serious traditional investors, it made no sense to them. And so we spent the past several years really trying to speak to a wide variety of audiences to better explain how this stuff works, how it might work in the future, and put money behind what we think.

Nick (09:47):

Well, I’d like to spend a moment here and talk about a concept you bring up there, which is this idea of value capture. Obviously, in conventional business, value capture’s at the center of everything. It’s extractive. But this whole new paradigm of web3, crypto, everything seems to have changed. How do you, with your perspective at Multicoin, reason through this concept of value capture in the web3 space?

Tushar Jain (10:11):

Oh, so much is different. I would say value capture in web3 is going to be very hard for a lot of projects that are just expecting to do the same things that worked in web2. A lot of web2 business models are very simple. They are, I have this product, I own it and I operate it, and in order to access this product, you must go through a gate and I charge you to go through the gate. Or they’re advertising-based, in which case the users are the product and they’re selling to advertisers and they’re saying, “Advertisers, if you want to get to the users, you have to go through this gate.” Those are two business models of web2. They don’t really work that well in web3 because you don’t have IP and so therefore you can’t put up a gate. Anyone can offer the product, anyone can access it permissionlessly.

(10:55):

And so given that those are core tenants of what web3 means, to be permissionlessly accessible and censorship resistant, how do you monetize? Because these things need business models. You can’t really expect this whole industry to spring off without a business model. It doesn’t make sense. Developers are people, they need to make money. People who are participating in web3 need to be economically rewarded for building this.

(11:22):

And so I think there are a few business models that do work. One is to have the token be a necessary part of the security guarantees of the system. That’s part of what The Graph token does, but a lot of other tokens do this as well. The Ethereum token secures the Ethereum network. The more valuable the Ethereum token is, the more secure the Ethereum network is.

(11:48):

And so I think that is a very straightforward way to capture value. But not every project can take advantage of that. Some things just don’t need to be providing additional security guarantees above the platform which they’re on. Ethereum needs to provide security guarantees that the database is not going to be changed and it’s protected against 51% attack. The Graph needs to provide security guarantees that your query is honest and correct and that you’re not getting erroneous information when you query The Graph.

(12:23):

But not all projects need to provide security guarantees. So I think there are other business models as well. We recently published a blog post called DAOs Don’t Collect Fees, DAOs Manage Risk. I think that is another business model for web3 projects is to not just say, “Oh, every time you use my exchange, you have to pay me five BIPs.” I think that doesn’t work really well because permissionless access means people will either fork that liquidity, or sorry, not fork that liquidity, but be able to use that liquidity to bootstrap their own exchange with lower fees. And market makers will trade inside the spread that you offer. But if the exchange is managing some risk by having an insurance fund and therefore paying people out on insurance claims, if they’re winning droves position, gets Auto-D leverage, that’s interesting and that’s a reason why that token can capture value.

(13:20):

If you want to understand that a little bit more in detail, I’d recommend reading the post, a lot more eloquent in writing than verbally. But I think there are a variety of ways that tokens can capture value, but it’s going to be a lot harder than web2 where it’s yeah, you just throw up a gate.

Nick (15:03):

The concept of value capture really needs to be discussed in the context of competition. In conventional business, businesses build moats to prevent competitors from blocking their ability to extract value from the market. How do you think about, in the context of web3, these dynamics of value capture and competition?

Tushar Jain (15:22):

So there’s definitely competition. I think competition in web3 is harder because once again, you don’t have IP, so they can just take your code and build on top of it. And a lot of people frown on that. They say, “Oh, you shouldn’t copy other people’s code.” I think you should. It’s open source for a reason. If I’m thinking about this at the grandest scale of how do we move everything forward faster technologically, the way to do that is for everyone to always be building on the latest and greatest and for humanity to be able to not spend time reinventing the wheel over and over again. That’s just a bunch of wasted effort where you have scarce resources, talent, engineers. Rebuilding the same thing that someone has already built is wasted at a system level in my opinion.

(16:12):

So I think competition is harder because everyone can copy your code. That’s why I think either you need to have a very good reason why your token captures value and it’s a Shelling point for value, whether that’s you manage a lot of risk or you’re providing security guarantees which are Shelling points for value, or you’re not going to have any margins, which is okay, as long as you’re covering your costs. I think there’s a lot of people who are motivated to write code that does a specific thing without necessarily needing to go hit it out of the park on a financial outcome, and that’s great.

(16:50):

But I think that there’s very few things that are in between in web3 because of competition being so fierce. If you can’t capture a massive amount of value by being a Shelling point for risk or security, then I don’t think you can throw up a gate and get a middling outcome. You end up coming out with a lower outcome where you don’t have margins if you’re running some sort of service that’s just non-differentiated and you just get to charge enough to run the servers.

Nick (17:22):

With your perspective at Multicoin, having partnerships and invested in a lot of players helping to build the web3 space, how do you define web3 and what do you make of all this recent online chatter on the topic of web3?

Tushar Jain (17:37):

The recent online chatter has been interesting because there’s been a lot of pushback from web2 leadership on web3, people like Jack Dorsey and Aaron Levie from Box. And then I really liked Moxie’s post that he wrote recently, which felt like the most honest and actually thoughtful critique because he went to use the products and he is like, “Hey, it turns out you’re trying to build all this decentralized infrastructure and all these decentralized apps, but you have these centralized choke points that sit in the middle, and so how are you actually going to end up with a different power structure than web2 if you have these centralized choke points sitting in the middle?” And he identified Infura and Alchemy in particular as centralized choke points that could mean that web3 looks a lot like web2 if those things continue to dominate and continue to have large amounts of market share because as soon as you put decision-making power in the hands of one centralized body, you’re giving a lot of power.

(18:33):

And I forget which famous philosopher said this, but I remember this quote, “Power corrupts and absolute power corrupts absolutely.” And then a lot of these cases where you have absolute power over what’s going to be shown in the stack, that’s too much power. I think that’s anti-web3. And so I thought Moxie’s criticism was very well-formed. I think the industry should take that criticism and try to decentralize those different layers of the stack. I think The Graph clearly plays a big role in that.

(19:02):

And I think that a lot of the web2 criticisms of web3 can be addressed by actually decentralizing the entire stack. I think a lot of the criticism is like, “Hey, you guys are playing a decentralization theater. You are saying it’s decentralized, but really what you’re doing is you’re selling tokens and you’re selling tokens to people with this promise, but really you’re not able to offer the same trust guarantees or credible neutrality guarantees that people think they’re getting out of web3.” And I think the challenge to the web3 community and the web3 builders is let’s go build it. Let’s prove them wrong and let’s show them that we can decentralize every single layer of the stack.

Nick (19:37):

It seems to me a lot of the chatter about web3 usually falls into different focal points. So someone might be arguing in favor of ownership or participation, or maybe it’s decentralization. How do you reason through these different focal points and how they relate to defining web3?

Tushar Jain (19:54):

So I think decentralization is most definitely not the goal. I think it’s a means to an end. It is the way to get to the goal. I don’t think anyone cares how decentralized something is, but we care what decentralization enables. And the thing that we care about is credible neutrality, I think is the most important thing. There’s no one person or organization that has control over the system. And I think credible neutrality is going to be the biggest difference between web3 and web2.

(20:21):

The problem that web2 has is if you are Zynga and you are building on Facebook, Facebook can change the rules on you and now your business model is vastly less effective. They did that. This happened. If you are Yelp and you are building on top of Google and optimizing your website for SEO in order to get on the front page of Google and then Google changes their algorithm to put their own results in front of yours, then your business model is severely impacted because Google was not credibly neutral. They did that. That happened, all right.

(20:51):

There’s time and time again I can tell you many stories of web2 platforms using their power against the people who built on top of their platform to extract more value. And I think the most important thing about web3 is credible neutrality. And that says that devs can build on top of this and know that the rules can’t be changed out from underneath them arbitrarily. That doesn’t mean the rules can’t ever change. Obviously, we need the systems to be able to evolve and the world changes. But what you don’t want is whoever controls the layer below yours decides I want your business model and then comes and takes it and then you’re just powerless to prevent that.

(21:28):

So I think credible neutrality is by far the most important part of web3. And I think the second most important part is permissionless access and censorship resistance, which kind of fits under credible neutrality. If you’re credibly neutral, that means you would let everyone use a system. But I think that that’s another major point that’s worth calling out separately even though it’s a subset because a lot of access to web2 systems is permissioned and gated. You cannot access it without signing up for an account. And then when you sign up for an account, you have to agree to their terms and conditions and you are now a part of their ecosystem and otherwise you cannot access a thing, or you may be in a different country and you cannot access a thing. And I think web3 is about anyone can access it on your terms.

Nick (22:10):

In addition to these different focal points, there’s also this binary framing of the issue, which is web3 wins, web2 loses or vice versa, web2 wins and web3 loses. How do you think through that dichotomy?

Tushar Jain (22:22):

I think web3 is growing the market by enabling new things that were previously not possible. I think some of those new things that were previously not possible will eat old things and they’ll eat some of the old things like payments. I think web3 payments is going to eat web2 payments. web2 payments are objectively worse.

(22:42):

So yes, there is an element of web3 will win on some use cases and web2 will lose. But I think the most interesting things in web3 are things that just weren’t even possible in web2, things like NFTs, digital scarcity was just not even possible. You could not create tradable items that could be traded between games. That didn’t exist. You couldn’t own your profile picture that you use on your various social media accounts, and that’s your avatar and you truly own it and it is yours. So I think those are places where it’s not web3 wins and web2 loses. Those are web3 creates and expands the pie.

Nick (23:20):

Since you’ve founded Multicoin Capital, what’s been your opinion or perspective of how the crypto space has evolved and changed since those early days?

Tushar Jain (23:30):

The crypto space has evolved quite a bit, but I think there are certain things that have carried through. I think those ideals that I mentioned of credible neutrality and what we’re all building towards have carried through. I think some of the things that have changed are the technology of how those things will be implemented. All right. We’ve seen different types of scaling plans. I think even the best-laid scaling plans today are just not enough. I think I’m more bullish on the demand for blockchain transactions than anyone would expect. I think that it’s going to grow literally 10,000 decks over the next few years, which is an incredible multiple to imagine.

(24:06):

So I think the way that we’re provisioning web3 and providing that to users is changing, but I think the thing that’s really important is what has stayed the same? The thing that has stayed the same is the why we’re doing it. The how we’re doing it is evolving. The technology is improving. We have more and more really talented people building it. But why we’re doing it is staying the same.

Nick (24:28):

Tushar, one of the questions I like to ask guests of the podcast, and this is really for listeners who come here for education trying to better understand web3 or The Graph ecosystem, it’s this question of how web3 impacts the lives of everyday people, people not working in technology, people not having the debate about web2 and web3, just users, but how is their lives impacted by web3?

Tushar Jain (24:52):

How far out are we thinking? How many years?

Nick (24:55):

Well, that’s a great follow-up. So let’s just go fully evolved. So years and years down the road, if web3 realizes its full potential, how are the lives of everyday people impacted?

Tushar Jain (25:07):

It’s very difficult to give a clear answer, but what I can do is give you an analogy of how big the change could be. Think back about your life 12 years ago. It’s probably before you got a smartphone. Most people started getting smartphones in 2009, 2010 onwards. So think back to your life 12, 13 years ago before you got a smartphone and how different the world was before mobile, right? Mobile has filled up so much of our lives. It has really transformed how society works.

(25:37):

Think about how different the world was before social media. Social media has literally played a key role in electing presidents and other key world leaders. It has literally changed the fabric of society. And so I think web3 has the potential to be that big of a change because if we can decentralize social media and we can make it so that everyone can interact with social media with a different front end and a different filter that they want while everything is still going into the same backend, web3 neutral system, that has profound political implications potentially, that has profound implications in how you interact with your family and your friends who live in different cities. I know I use social media to interact with a lot of those people in my life and I expect that a lot of other people do too.

(26:24):

And so the products that web3 enables. It just by going and changing how social media works or going and changing how payments work I think has profound impacts. And you really have to think about second and third-order consequences on people’s lives.

Nick (26:41):

If you project out and try to forecast which industries or sectors will be the adopters of blockchain technology into the future, which ones stick out most to you or come to mind?

Tushar Jain (26:52):

Gaming for sure. I mean, that’s become very, very clear that games are a part of this thing that everyone is calling the metaverse. I don’t think anyone actually knows what the metaverse is, but it’s just a word that we use to describe the sense of this thing that people are building towards. And games and game developers are a big part of that because they’ve been doing all of the VR work and a lot of AR work that is helping to drive that vision to fruition.

(27:19):

And I think that blockchain plays a really big part in the metaverse because if you’re going to own things in the metaverse, you need digital scarcity. The whole point of the metaverse is that it’s digital, and I think there’s going to be a lot of interesting intersections of digital abundance in the metaverse and digital scarcity in the metaverse. Because the whole point of having the metaverse is that there is abundance. Right now, there’s scarcity in how many people can go to a concert. Even if you pick a really big venue, Madison Square Garden or something, there’s a limit to the number of tickets that can go there, but you can have 10 million people at a concert in the metaverse, right? That’s not scarce. But maybe you want the tickets to be scarce or maybe you want the merch to be scarce or something else in there to be scarce. So I think you need blockchains for that.

(28:09):

I also think blockchains are going to be profoundly reshaping the financial services industry all around the world. The way that financial services today is provided is just all based on all these middlemen who all extract fees. And there’s a bunch of neobanks that have been trying to make financial services better. A bunch of fintech companies that have been trying to make financial services better. But really that approach reminds me of just being in 1996 and trying to just put the newspaper on the internet. It’s very skeuomorphic. You’re just looking backwards and you’re saying, “What if I take the old thing and did it in the new way?” And I don’t think that’s the long-term answer. I think the long-term answer is to do the new thing that is now uniquely enabled.

(28:48):

The skeuomorphic answer is let’s put the newspaper on the internet at 6:00 a.m. every day and people can refresh and read the newspaper today. And the internet-native way to deliver news is social media and it’s blogs, it’s Substack, right? It’s podcasts. That’s how we deliver news. It’s not by putting the New York Times online at 6:00 a.m. in the morning. And so I think financial services will be entirely reshaped. I think a lot of what we’re seeing right now is fintech is putting the New York Times online at 6:00 a.m. every day.

Nick (29:17):

How about healthcare. With your experience, do you think healthcare is impacted by blockchain?

Tushar Jain (29:21):

That’s hard. The thing with healthcare is it is extraordinarily regulated. There is a culture of let other industries go and figure out this technology first and then we will adopt it because we have the most mission-critical systems. And I think I agree with that mindset, though I think it sometimes goes too far.

(29:45):

But healthcare is amongst the slowest to adopt new tech. They were just adopting electronic medical records in the past decade and it took a massive government program. I remember this because I was working in the healthcare IT industry and I was just shocked by how much people are just using free text notes in 2012, 2013, ’14, ’15, and they’re like, “Yeah, I’m on paper charts.” And that concept was just amazing to me. But healthcare is very slow to evolve. I would imagine that there are implications for healthcare, but they will take a long time.

Nick (30:16):

Going back a little bit on this question of web3, again, these different focal points, whether it be decentralization, maybe it’s data, maybe people make the argument that web2 has completely misused or mistreated personal data. There’s also this idea of deplatforming, this concern that in web2 people can be deplatformed. What do you say to people that make the converse argument of things like, “Well, maybe someone ought to be platformed,” and on the basis of that they’re nervous or hesitant about a web3 world?

Tushar Jain (30:47):

Oh, that’s a really interesting question. I just want to, before I answer that question, just say it’s credible neutrality, not decentralization that enables that, right? And I think the reframing here is very important. This is not just semantics. It’s not that decentralization enables extreme views or enables this type of speech that people don’t like. It’s credible neutrality enables that.

(31:13):

And I think that that reframing is important because it makes it much more clear what the platform is doing in this case. The web3 platform is allowing people to be free. It is enabling liberty, enabling people to act in the way that they freely choose to act rather than taking sides. And that’s why I think the phrase credible neutrality is important over the phrase decentralization. Decentralization is just a means to get to credible neutrality. And I think that platforms being neutral is a good thing. I think that the answer to bad speech is more speech. I think that as a fundamental first principle, we should seek to maximize the amount of freedoms that humans have.

(31:59):

I think that having freedom is a fundamental right, and I would remind people who ask that question of the Ben Franklin quote of, “Those who sacrifice essential liberty for temporary security end up with neither.” And so be careful who you’re giving power to. If you’re saying you don’t want your platforms to be credibly neutral, then who do you want making decisions? Do you want it to be whoever’s in the White House that term? I mean, I think a lot of people wouldn’t want that. It seems like half the country hates the President every time. Do you want it to be congressional? How is that going to work? That doesn’t make sense. Do you want it to be the United Nations? That doesn’t make sense at all. China has a veto on the UNSC. So does Russia. That’s not going to work.

(32:44):

Do you want it to be Mark Zuckerberg personally? Do you want it to be some third-party board that’s appointed by the executive leadership at Facebook or Twitter or TikTok? Who are you trying to give this power to and how are they going to be held accountable to a wide diversity of people? I think the answer to that is there is no answer. You cannot do that in a way that’s going to be legitimate to the majority of people. And so from first principles, I believe in liberty and I believe in freedom. And I think that credible neutrality enables liberty and freedom.

Nick (33:45):

With your macro-level view of the web3 or crypto space, what are some other projects or ideas, different things that you’re interested in keeping an eye on?

Tushar Jain (33:56):

There’s a lot of things that I’m really interested in right now that are happening in crypto. One that I want to call out is just the creation of decentralized infrastructure by using tokens to coordinate human economic activity. An example that I’ve been working a lot on recently is the Helium Network, which is a decentralized telecom network that regular people create and own and operate. And so the way the Helium Network works is you buy this effectively a router or radio, you position it and you are creating wireless coverage for your neighborhood, or wherever you put it, your work neighborhood, et cetera, and people are able to then use that wireless network.

(34:36):

The reason why this is really powerful is it’s just way, way cheaper to do it this way than the centralized telecoms. The centralized telecoms have to hire a bunch of people. They have to pay a bunch of rent on top of towers and tall buildings. They then have to pay those people to install the very expensive enterprise-grade radios up there. They’re going to have a massive advertising force and massive support teams in order to provide these very capital-intensive services. And something like Helium flips that cost model on its head. It just says there are no employees. It’s just people who are sharing their connectivity with each other. And there is no rent because you already live there or you already work there. And so by eliminating that cost structure makes it way cheaper.

(35:22):

Another example that I’m really excited about is called Hivemapper, which is a crowdsource map. And so the way that that works is you can put a dash cam on your car and upload the video in order to create a decentralized Google Street View that’s up-to-date because Google doesn’t send those cars around very often. Businesses change, there’s construction, there’s development. Especially if you’re in the developing world, a lot of those cities aren’t even covered by Google Street View.

(35:48):

But if you think that those three billion people who are not online are going to come online and are going to want to participate in E-commerce and participate in just the internet world, maps are a core critical part of that. And so something like Hivemapper that’s creating Google Street View and also creating actual maps through things like OpenStreetMaps with incentives to annotate and enhance the data, I think building that type of infrastructure in a more cost-efficient way, making it more globally accessible and doing it in a neutral way, rewarding the participants who are actually creating the value in the network is really, really fascinating and just was not possible before blockchains.

Nick (36:26):

I’d like to turn our discussion now to The Graph. Are you able to take us back in time and tell us when you first became aware of The Graph and what some of your initial impressions were?

Tushar Jain (36:36):

Yes. So we had just published a blog post, this was January 2018, called New Models for Utility Tokens, where we talked about new business models for utility tokens. The reason that we had published that is everyone at that time was just saying, “Oh, this is a payment currency.” And there was real economic problems with that token design.

(36:57):

So we put out this proposal of just, these are other ways to think about designing a token. And Yaniv Tal, the founder of The Graph, saw it and he reached out to us and he’s like, “I’m building this utility and I’ve been thinking about how do I design the token and this is helpful.” So he reached out to us. I think he talked to my partner Kyle first, though we had a three-person team back then, so everyone worked on everything. And after thinking about it, we immediately loved it and we were like, “This makes a lot of sense.” Everyone has been focusing on scaling the right layer of blockchains, how do I write faster? And we’re like, “Well, people are going to need to think about how to read out of the blockchains if these blockchains are going to be useful for stuff.” And that’s just a really interesting idea space to go and explore.

(37:47):

We later on further refined that thesis to being able to scale the ability to read and being able to do that in a secure and trust-minimized way, which I think are the core value propositions of The Graph. But at the time we were just thinking, everyone’s thinking about ways to write to the blockchain and if this stuff is going to be useful, you have to be able to read the database.

Nick (38:11):

So one thing I want to share with listeners is the wealth of knowledge and information that Multicoin publishes through their blog. It’s really an incredible resource. And in preparation for this interview, I read through a bunch of the articles. In July of 2021, for example, you wrote a blog post called Scaling Reads and Writes, and a lot of the observations made in that blog post relate to The Graph and web3. And so I want to ask you, how important do you think a solution like The Graph is for web3? Whether The Graph provides that solution or something else does, is a solution like this a necessary component of the web3 stack?

Tushar Jain (38:48):

Oh, absolutely. I mean, look, blockchains are a database. There are a very specific kind of database. And they’re not useful for many things. They’re going to be slower than a traditional database, will be more expensive, but they provide some very valuable properties in the trust minimization and credible neutrality of that database. And like all databases, you have to be able to read out of the database to make use of it.

(39:15):

The problem that exists today for a lot of dapps is that blockchains are not optimized for your ability to read out of them. If you look at an Ethereum block, it is just a blob. If you are trying to query what is the price of this asset on Unisswap today, you can’t just query the latest block of Ethereum. You need to look at all of the blocks and maintain the state of that liquidity pool to the current moment. And very importantly, you need to be synced to the very tip of the chain, which in a proof-of-work Ethereum is easier to do because it’s 15 seconds. But in a proof-of-stake Ethereum with many different shards or roll-ups, or in higher throughput, faster systems like Solana, it’s hard to stay synced to the tip of the chain. You’re not necessarily going to stay synced to the tip of every chain. Off your home computer? Probably not. Off your mobile? Definitely not.

(40:11):

So you need to find a way to query the databases in a scalable, trust-randomized, and secure way in order to be able to use web3. Otherwise, it’s not useful if you can only write to it.

Nick (40:24):

So what then, in your opinion, positions The Graph to fill that spot, to be that solution for web3?

Tushar Jain (40:31):

I mean, The Graph is doing this today and has a lot of traction and community love already, right? Developers love using this product. I’ve seen many unsolicited excited comments from developers about how they like using The Graph and how many problems it solved for them. Because if you think about the developers who are building these apps, they’re not trying to build the query system. They’re trying to build whatever their end product is that they want to deliver to consumers. So they want to outsource that to someone else.

(41:02):

Now, the question is really do they outsource it to a decentralized network like Graph or do they go to a centralized service like Alchemy or Infura? And I think more and more people are going to go to decentralized solutions because of the criticisms that Moxie put forth in his post. I mean, Moxie knows what he is talking about. He’s right that having those centralized choke points in the stack produces control points that then could harm the security guarantees and the credible neutrality guarantees of web3. And I don’t think you can say that your dapp is decentralized unless the infrastructure that it runs on is also decentralized.

Nick (41:44):

So given that you got involved with The Graph early on, you caught the vision early and now you’ve had the opportunity to watch The Graph scale, to watch more people get involved in the ecosystem and surround the project, what’s been your opinions and observations about that growth?

Tushar Jain (42:00):

Something that I’ve noticed and seen that I’ve been very impressed by is The Graph Foundation making large grants to bring on many dev teams to continue to contribute to The Graph protocol and grow it in many different directions and optimize all these different pieces of it. I think that having multiple core dev teams further enhances the credible neutrality of The Graph platform itself and it also helps the platform evolve faster. And I wish that more crypto foundation treasuries were as aggressive in giving out grants to new dev teams to continue to enhance and build out the protocol in many different directions. So that’s definitely been the thing I’ve been most impressed by.

Nick (42:42):

One of those core dev teams that joined The Graph is StreamingFast, an incredibly talented team with some incredible technology. Had the opportunity to interview a couple members of StreamingFast here on the podcast. What was the experience for you seeing different partners that Multicoin had come together and start working together in The Graph ecosystem?

Tushar Jain (43:02):

Yeah, I mean, the way that we look at this is we want the web3 stack to work. That is our guiding principle is that we want the stack to work. We’re thinking about what are all the different layers of the stack and how do we help advance the whole ecosystem?

(43:17):

What we saw were there are a variety of different approaches, technical approaches on how to solve this layer of the stack that The Graph is focusing on, on the query layer of the stack. And we wanted to see those approaches explored. And we are very excited that StreamingFast has joined The Graph as one of the core dev teams because that helps further advance the mission of building the web3 stack. And having those different technologies go and complement each other in the same system, I think produces something where the whole is worth more than the sum of its parts individually.

(43:58):

So we’re very excited that the StreamingFast team and Marc and those guys have all joined The Graph community, and we think that the pie has grown for the whole community because of it.

Nick (44:08):

What most excites you about the future of The Graph and are there any important milestones you’re keeping an eye out for?

Tushar Jain (44:15):

The thing that excites me the most is I mentioned earlier I’m really bullish on the demand for writing to block space. I think that people will really want to write to trust-minimized, incredibly neutral databases. And I think that even more than they want to write to those databases, they’re going to want to read to those databases. You have to realize reads scale super linearly to writes. An example I’ll give you is let’s say you have a thousand followers on Instagram. You go post one picture and 10% of your followers see the picture. Your one write has produced 100 reads. That’s for having a thousand followers. That’s a normal number of followers for a regular person to have.

(45:00):

Now, what if you are an influencer with a million followers and you post a picture. Your one write has produced 100,000 reads, a million reads. And so if you expect that people are going to write a lot of new things to blockchains, then I think you should expect that people are going to read blockchains even more and demand for reads will scale super linearly. And so that’s what I’m most excited for is watching that ratio of the reads that The Graph facilitates compared to the writes on the systems that The Graph supports.

Nick (45:34):

When you talk about the web3 stack, another thing that comes up online and in different discussions is how far along we are in the development or the deployment of web3. So what’s your opinion on that? Sometimes you hear it said, “Oh, it’s within 12 months.” “It’s in a couple years, a couple decades.” Where do you think we are in the evolution of web3?

Tushar Jain (45:55):

I think that we just had the iPhone moment for web3. I personally think that iPhone moment was just with the proliferation of really scalable Layer-1 blockchains and proof-of-stake Layer-1 blockchains. There’s been a variety of approaches have been tried. I’m most partial to the approach that Solana has taken. But there’s a variety of things that have been tried. And I think that that was the most important unlock for the web3 stack.

(46:23):

You need scalable blockchains that enable fast and inexpensive transactions. You need to be able to support many millions, tens of millions, hundreds of millions of users. You need to not have hundred-dollar fees. And that is just now happening. So I think we just had the iPhone moment. I think that we need to give the ecosystem some time to develop. People forget the iPhone launched and the app store wasn’t on it, right? It takes some time and mobile took a few years after the iPhone to really build out the consumer-facing parts of that ecosystem.

(47:02):

And so I am incredibly excited about the next three to five years in crypto. I think it’s going to be one of the most transformative years in the history of technology because I think that now that a lot of the infrastructure is there, you can have scalable blockchains, you know how to read from blockchains in a scalable and decentralized way with The Graph, you know how to store data using things like Arweave, you can render your metaverse or your fruity game or whatever using something like Render Network. All these things work now. You can combine all these things.

(47:33):

And I remember four years ago, we were dreaming about this stuff and nothing actually worked. And today all the pieces work. Smart people are putting them together in creative ways. The user experience is not great, but it’s getting better. We know how to make user experience better as an industry once the core tech is there. The first apps on the iPhone, also the user experience wasn’t great because they were designed for people who were thinking with a desktop mindset or thinking with a Blackberry mindset. They just weren’t mobile native yet. And so we’re bringing that design along and I think it’s going to take a few years, but I think that we’ve had the pivotal moment.

Nick (48:13):

So a question I’d really like to ask someone like you is how do you stay current and up to date on everything that’s happening in crypto and in web3? I mean, this space doesn’t sleep, it’s constantly moving with new news, new information. How do you do it?

Tushar Jain (48:28):

It’s exceptionally difficult. I can’t say that any one person can stay up to speed on everything that’s happening. I rely a lot on our team at Multicoin. Nothing that we do would be possible without the whole team and everything that they’re able to bring to the table. We’re really passionate. We eat, breathe, live this stuff every day, and I rely on them as a lot of the information source. Otherwise, I like to listen to podcasts. I especially like reading really well-thought-out theses. I think that writing is the best form of communication for complex ideas because it really forces clarity.

Nick (49:07):

What do you say to people or listeners of this podcast who have a vision for web3, they’re energized and see the benefits, but they’re reluctant to make the move? Either they have a job in web2 or something’s blocking them from participating and getting more active in the web3 space. What’s your advice to them?

Tushar Jain (49:26):

I would say to the listeners who have a job in traditional financial services or in the web2 world, do you want to sell boring financial products for the rest of your life? Do you want to sell ads for the rest of your life? Or do you want to come with us and change the world?

(49:40):

There are a lot of financial incentives in web3. It’s not like we’re saying go quit your job and go work for a not-for-profit. There are profit motives and there’s a lot of funding available, a lot of venture capital that’s available for building web3. And so I would tell the people who are thinking about it that they should go look at working on changing the world.

(50:03):

The way I operate and the way I think about my life is regret minimization. And just thinking back, imagine you’re 40 years older than you are today and think back, what do you wish that you did? And I think that the people who are on the fence are going to wish that they jumped to web3 sooner. You don’t want to miss the building of something so cool. We’re building history here.

Nick (50:28):

So here’s my final question, Tushar. And the question is what’s your advice to listeners that want to better understand how you’ve done it, how the son of immigrants who have seen his parents struggle and work hard has gone on to finding success in the healthcare industry as an entrepreneur, now finding success in the crypto and web3 space with Multicoin Capital? What’s the secret? What have you learned in that life experience that you can share with listeners?

Tushar Jain (50:54):

Oh, that’s a really good question. I’ll give you an answer. It’s going to sound really simple, but I promise this is really core. Try harder. I say this as actually one of our investment theses is we talk about this when we meet entrepreneurs and then we chat in investment committee. We’re like, “How hard are they trying? Are they jumping in with every fiber of their being? Is this the first thing they think about when they wake up and the last thing they think about before they go to sleep?” If so, that person has a really high chance of success. When people go all in and they’re motivated and they just tell themselves I have no other choice but to succeed, then they have a very, very high chance of success.

(51:40):

I’m not saying it’s guaranteed. There’s a lot of an entropy in the world. The world is a big place. There’s a lot of randomness. I can’t say anything in absolutes. But something I really look for is people who are trying really hard. They throw every fiber of their being into it. And that really means being a missionary rather than a mercenary. You have to really believe in it.

(52:00):

I saw this with my parents. My parents tried really, really hard. Their mission was clearly build a life for themselves and their family and their kids. If you come over here as an immigrant with no money, that really is your mission. But they worked seven days a week for 52 days a year my entire life. I saw that and they tried really hard.

(52:19):

We try really hard at Multicoin. We really want to build the future of web3. We really want to help enable it. And we think that having investors, we’re helping think about this stuff and helping entrepreneurs build this stuff is a big value-add. And that’s the most important thing that we look for in entrepreneurs is how mission-oriented are you? How hard are willing to try? And that would be my biggest piece of advice to listeners as well. If you have a goal, you really have to want it. And if you really want it and you really try hard, I think that gives you the highest chance of success.

Nick (52:51):

Thank you so much for sharing that and I really appreciate how generous you’ve been with your time today and all the great insights you’ve shared about web3, about crypto, and your own background and history. Again, I want to encourage listeners that want to learn more about Multicoin Capital to go read the blog. It’s a great resource and I really applaud you and the team for publishing some really great education. For listeners that want to stay in touch with you and follow more of the work you’re doing at Multicoin, what’s the best way for them to stay in touch?

Tushar Jain (53:19):

The best way to stay in touch is go to our website, Multicoin.capital and sign up our blog. We have a newsletter that goes out with every new blog post, and that’s the best thing to read to kind of get a sense of what we’re thinking. You can also follow us on Twitter. My handle is at @TusharJain_ at the end. Someone else grabbed without the underscore. Or you can also follow my partner, Kyle Samani at @KyleSamani on Twitter. So those would be the best ways to keep up with us.