The Inquisitive VC
The Inquisitive VC
John Henderson - AirTree
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John Henderson - AirTree

We talk about his journey to VC, investment biases, Olympus Finance, NFTs and more!

John Henderson is a Partner at AirTree Ventures, an Australia and NZ focused venture firm. Prior to AirTree, John was the Founding Principal of White Star Capital.

We talk about his journey to VC, investment biases, Olympus Finance, NFTs and more! See some of John’s NFTs below and be sure to subscribe.

The podcast is also available on your favourite podcast sources like Spotify, Apple and Youtube!


Nawaz Ahmed: I'd love to start with your journey to venture capital. I know you did startups. I know you worked in a startup, so it would be great to hear that story.

John Henderson: Yeah, sure. I actually I mean, I started out in management consulting where I learnt to make slides and pretty excel files. But I think the beginning of my startup journey was working for a 16-year-old called Nick D’Aloisio with a machine learning company called Summly we had some NLP technology that could take, long articles and reduce them down into very short paragraphs back when that was an unsolved problem in 2012 and 2013.

And the vision of Summly was really to take the news in long-form and bring it down to an iPhone screen. This is when it was really an open question about how content would be consumed on phones. It was before the responsive web necessarily. And you know, our vision for that was you would just summarize everything and we started out with the news. That was a pretty incredible journey, we ended up getting acquired by Yahoo in 2013 for $30 million, which sounds like nothing today. But back in 2013 was a decent acquisition.

And I got into venture capital straight after that, actually with my old boss at, at Facebook. I'd been at Facebook prior to Summly and Christian, who was my boss there and the Head of Europe for Facebook had left after the IPO and was going into venture along with frankly a lot of his ex-Facebook colleagues doing similar things for different funds. So, I hooked up with him and I guess I was a Founding principal at a firm called White Star Capital, which has now raised three funds.

The last of which was $350 million and they seem to be doing pretty well. So yeah, I got my start at White Star and spent whatever it was four years doing seed and Series A investing in London and New York.

NA: That's amazing. And then how was the journey to Australia and joining AirTree?

JH: It was kind of natural for me. I was in London at the time, but kind of knew that I wanted to raise my kids in Sydney and come back here at some point. And venture is one of those businesses where it's still in large part and network business. And so I guess the longer I spent offshore the longer I was growing and perpetuating my networks there, but arguably making it more difficult for myself to come back into a senior role.

So, when the AirTree team was raising their second fund and were recruiting partners to come and join Daniel and Craig, it felt like far too good an opportunity to give up. So, I moved back with my family and haven't looked back since. I've been at AirTree since 2016 and I work with, gosh, it must be a dozen of our companies from Employment Hero to Linktree all the way down to some of our smaller, but promising ones like Inquisitive and Joyous. So, it's been a great journey.

NA: Yeah, no, that's great to hear. You worked four years in VC and UK, and then I think just over four years now in Australia, how different are the founders that you've met and the startups compared to the UK?

JH: Yeah, it's an interesting question. So I was, in between the UK and New York. And I think the comparison between British founders and New York and East Coast American and therefore West Coast American founders kind of holds true for Australian founders as well. I would say Australian and Kiwi founders bear a lot of similarities with their British counterparts, which is that they tend to be understated for what they have done.

They tend to be much more matter of fact, far less capable of selling a colossal vision. And maybe on balance a little bit less charismatic. I know that sounds brutal, but, I think if I'm to massively generalize, Americans are just better at selling the dream. And I think the other side of that knife is that they're slightly more prone to exaggeration on what they've actually achieved so far.

So, I would say for a like for like business, an Australian or a Kiwi or a British pitch for that matter is materially worse than a US pitch. And I think that's partly reflected or partly reflective of the amount of capital that US founders can raise.

NA: Right. Do you think that like changing, so in your four years in Australia, have you seen that change?

JH: I think founders from this region now have credible examples of globally relevant and globally iconic companies that they can look up to and model themselves on. So, when I moved back Atlassian was the watershed moment. It's now I think in the top five biggest Australian companies of all time, it's more than a hundred billion in market cap.

Similarly, in our portfolio, we led the Series A of Canva. That's now a $40 billion US private company. I think it's in the top handful of private companies globally. And so, I think the existence of companies like that has made Australian and Kiwi founders realize that building iconic companies from this part of the world, is realistic rather than just a pipe dream.

I think they've got, again, I'm generalizing, but if I look at someone like Alex pitching Linktree it's a much more audacious pitch than perhaps I would have heard from an equivalent SaaS company in 2016. But that being said, I still think on balance we have a ways to go. I still, I mean, obviously in this role, I still speak to a lot of Americans and we have US companies in our portfolio.

And again, pitching the identical business, Americans are a lot more convincing, and I guess salesmen like in their pitch. And there's something to that because pitching to an investor, you know, I think a lot of people turn their noses up at this notion of pitching to an investor. And certainly, in 2021 it's often the other way around, but I do think we look for the ability to sell a vision, not necessarily because we need it to invest in your company, but certainly, I think your customers need it to buy your product and your employees definitely needed to kind of come on an improbable journey with you.

Most of the companies I work with are trying to recruit people from places like Google or Atlassian or any of these software companies and if you're gonna leave a high paying, safe software engineering job at a company like that you really need to believe in the future that a founder is painting in front of you. And so the ability to evangelize a mission, I think is as important as it ever was.

NA: Yeah, no doubt. I find that super interesting. The differences between the two types of founders. You probably been looking at pitch decks for a while now. How has your ability to analyze these pitch decks over time changed, If any, and what tips would you be able to give to like a new VC or angel?

JH: I don't know if I have any great tips, if I'm honest with you Nawaz. One thing that we focus a lot on an AirTree is the removal of cognitive bias. And I think the longer you've been an investor, the more bias you bring to the investment table and to your analysis of pitch decks.

And so we talk at AirTree we've got, we've now got five investing partners at Air tree, and they sort of span three generations. Craig, who was one of the two co-founders of the firm worked with a venture firm prior to AirTree and has worked through a couple of economic cycles.

James and I both returned from offshore to join AirTree in 2016. And then Jackie and Elicia may partner with us in 2021. And we deliberately, when we hear a founder pitch, as a group, our when we look at a deck together, we deliberately have systems and processes in place. For example, we write down our reactions to the pitch before discussing it, and we score it before discussing it to try and remove some of the historical biases that we'll bring because we've looked at sectors and they haven't worked in the past for example and therefore we don't think they'll work today. That has been a really effective tool in frankly removing some of the sorts of pattern matching that people talk about and think is a good thing. I actually think is a terrible thing. Most ideas in software will work. It's just a question of timing.

And so, you know, the perspective that Jackie and Elicia bring with a different age bracket and a different set of experiences often leads us to make better investment decisions. So, circling back to your question, do I have any advice for kind of aspiring VCs, not really other than to try and be aware of your biases and keep an open and curious mind. And I think the longer you've been in venture, the less likely you are to do that.

NA: Okay. No, I think that's a great point. I'd like to circle to crypto. I know you've been around and known of crypto for a while. How did you first get into it and then where are you now in that phase of exploring crypto?

JH: Yeah, I got into crypto in early 2013. I was in the angel investment round of CoinDesk, which was, I guess the OG crypto news site. One of my mentors in London actually founded that, a guy called Shakil Khan and I became an advisor to the CEO of that company for a few years in its early days.

Which was a really interesting first exposure, obviously, you know, I got into Bitcoin at the same time, but by being really close to CoinDesk, I was there for really close to most of the OG Bitcoin entrepreneurs who were looking for coverage. So, it was an interesting insertion point and I spent a lot of time at my previous venture fund in and around the Bitcoin ecosystem, looking at building smart contracts on Bitcoin, looking at colored coins on Bitcoin, all kinds of ideas that now seem very passe, but in sort of 2013, 14, 15 were kind of cutting edge. Through that community, I met Vitalik Buterin and in 2014 and was lucky enough to be involved in the first days of Ethereum and the presale and all that kind of stuff.

And so, I've been on the smart contract journey, for quite a while. In 2017 and 18, I kind of stepped away a little bit from the crypto ecosystem. That was obviously as you know, during the phase where there was a whole bunch of ICO's and not much else. And if you'd been in the sector for four years, which I had at that point, it really felt like we were still in the installation phase for blockchain.

There was no use case that was working other than maybe digital gold many of the sort of apps and concepts in DeFi and things around provenance were tried back then and failed. So, I became kind of jaded and moved on to web two, to be honest, and went and did a bunch of SaaS investments and other things that AirTree is done.

And it was only in sort of early to mid-2020 that I really got back into crypto in a meaningful way. When one of my friends pinged me on telegram and told me to look at DeFi Pulse and all of a sudden, some of these early protocols like Maker and others were starting to attract material TVL.

And that was interesting to me, A, because finally, we were getting some use cases beyond digital gold, but B it seemed to me that those DeFi use cases, were onboarding a whole bunch of actual users into crypto. So, I started paying attention to that AirTree started making investments in crypto in late 2020.

Because I guess my view was that we were finally through the installation phase and at the beginning of the deployment phase. And that's sort of how we think about new technologies. We try and figure out when a technology is going to hit an inflection point within the sort of 18 months to three-year runway that we fund them for.

So we started investing in late 2020, obviously, JPEG summer kind of only served to reinforce my conviction, that we were getting real consumer usage and something was different in crypto this time. And so we've been investing fairly aggressively against the picks and shovels of both DeFi and NFTs.

NA: And what areas of crypto are you most excited about now?

JH: We've taken a fairly broad view, to be honest. I mean, some of our investments are unannounced, but I'll give you some examples of ones we have put out publicly. Immutable is a good example. As you would know, that's a layer two scaling solution for Ethereum based NFTs.

So that felt like picks and shovels to us. It had a gaming component and I think I'm a big believer in play to earn gaming and crypto. Plus, it was a scalability tool for other gaming platforms to come into crypto. So, there was a lot of macro trends in its favour. I was a big fan of James and Robbie and they're actually based in Sydney.

So, there was a whole bunch of reasons that made sense for us. That's an equity investment into a company. So that's kind of on one end of the spectrum right through to we've invested in Zeta Markets, which is a decentralized options exchange built on Solana, and that's a token investment. So, you know, that's an investment in a new primitive on a different blockchain.

And, you know, I guess my view is that the performance of Solana, I mean, that is the best suited to an order book which is sort of a prerequisite for options trading at speed. So, we've done all kinds of things in between most of them in DeFi but that probably gives you a sense of our range from a token investment in, you know, a Solana app right through to an Ethereum scaling solution for games.

NA: To hear. I understand that both of us are ohmies. How did you wrap your head around what Olympus Finance is doing?

JH: Well, so there's to be clear, this is a PA investment rather than an AirTree investment. I think it was this concept of protocol owned liquidity that got me excited about Olympus. I invested in OHM on a PA basis in June, I suppose. So I wasn't quite early enough to be in the IDO, but one of my friends was, and he started telling me about this kind of concept of bonding rather than just buying on the open market and staking.

And I thought the idea of protocol and liquidity was really interesting because clearly liquidity incentives are, you know, they're an interesting bootstrapping mechanism for DeFi, but long-term, you've got to question their sustainability, and I'm not sure how many apes are really thinking about that.

And I think you're seeing that today in the outperformance of DeFi by ETH in, in the early days of DeFi summer by some, everybody got excited about the incentives and, and started farming them. But the performance of the underlying tokens would suggest that that's not a sustainable model. And so I think I kind of knew that I was trying to figure out what the answer was.

As with everybody when I saw Olympus, you know, the APYs were enough for me to have another look I have a second look. And then when I sort of read up, read about the bonding mechanism and this notion of protocol owned liquidity, I got the conviction to invest and I think the release of Olympus Pro and the extension of this to other DeFi protocols is very, very powerful.

And, you know, I think it makes Olympus kind of a black hole, for DeFi liquidity, which if you want a currency that is DeFi native is not pegged to stable coins, it feels like a pretty good way to set one up.

NA: Yeah, no doubt. And what about the forks like Klima do you have any thoughts on those?

JH: Yeah. Well, so I'm very, very bullish on Klima actually. So, for your audience, Klima and takes the same token mechanism as Olympus, but instead of backing the tokens one for one with DAI it backs them with BCTs based carbon tonnes which are essentially a carbon credit. And I think the idea is that if you can suck as many carbon credits into the protocol as possible, then you raise the price of carbon and therefore you do your bit to contributing to mitigating climate change.

I just think the mechanism itself Olympus is showing is working really well. And if you're looking for an underlying asset with which to back your tokens, then I think carbon credits being naturally inflationary are a really interesting asset. So I'm maybe even more bullish on climate than I am on Ohm, to be honest.

NA: That’s pretty interesting to hear. I think it's a great idea, the fact that you create like an on-chain sink for carbon credits, it's a great idea. But it will be interesting to see how it actually plays out.

JH: What about you, Nawaz? Is what about you looking at, or investing in any of the other forks?

NA: No, only Klima and for me. I looked at Time for a bit but didn't really get into that one. Did you?

JH: I'm interested in Time mainly because I think it's hard to bet against Daniele Sesta. He's doing incredible things in DeFi. The thing that I'm waiting to see with Time, he keeps making references to some kind of a gaming use case for the token, but I don't exactly know what that means.

So I'm waiting for that to be laid out, but I'm certainly interested in.

NA: I guess circling back to how you perfectly described JPEG summer you have a smiley Punk and a few nice art blog pieces. How do you go about finding and deciding what NFTs to purchase?

JH: Well, yeah, I was very lucky to get into punks reasonably early.

My first JPEG purchase was a Punk in, I think February of this year. And then I cycled through a few to get to the one I wanted. So, I've actually gone down in rarity in punks, but I've got one that I feel like it hits my vibe. And fortunately, I was in early enough that the profits from the previous ones paid for that one.

CryptoPunk #5956
John’s CryptoPunk #5956

So I've been very lucky there. More broadly look, I think, and it was actually Snowfro that got me into Punks, to be honest. So that's sort of why I got into art blocks as well because I think he's one of the luminaries of our time. And then the JPEG that I own the largest number of are his squiggles, because I'm a huge fan of Snowfro what he's done, both in the punk community and Artblocks.

Beyond that, I think, what do I look for? I look for something with a story or some kind of technological novelty in it. And so if I could afford one, I buy an Autoglyph in a heartbeat because I think the first generative project, fully on-chain on Ethereum is. Incredible. And you know, that would be the grail NFT one day.

I bought Punks for the same reason because, you know, they were the original and the community around them was astounding. And layer onto the fact that by having one, you get access to not just the punks discord, but a whole bunch of other communities where you instantly have firstly access, but then secondly, social credibility, which is weird, just because you own a picture. That access into that group has been amazing for me. I've made a whole bunch of crypto investments, both NFT and DeFi through connections in the punk community. So, I think I looked for some kind of technological novelty, some kind of community that's interesting for some reason.

And then something that I'm sort of proud to put in my socials or associate myself with, and for me, that's led me down the path of a few artists. It's led me down the punks path and Artblocks and it will keep, will keep taking me different places, I imagine.

NA: Would you say your dream and NFT that you don't have yet, is that and Autoglyph?

JH: Oh, a hundred per cent. Yeah, I would trade the whole collection for an Autoglyph.

Autoglyph #148
Autoglyph #148 from the collection of NFT Collector DC Investor

NA: Fair enough. What would you say is your favourite one from your collection now?

JH: So, the squiggles are my favourites because they mean a lot more to me than the art itself. I see them as one of Snowfro’s signatures and they've kind of got hidden surprises within them. I don't know how many people know that squiggles, they're actually a gif, if you click on them the colours move around, which I didn't realize when I bought them and then I kind of discovered later. So I like them a lot.

John’s Squiggle #3284

I've also got a Singularity by Hideki, a Japanese surname that I'm going to blank on basically cause I think they're beautiful. So those are probably my favourites from the Artblocks collections.

John’s Singularity #228

NA: Did you get his latest drop? The Fusion?

JH: I got a Cipher, which is the one before his latest drop and then I missed his latest one.

NA: Circling back to venture a bit, finally, what is the latest, publicly announced investment you made and why'd you make it?

JH: I think the latest one I announced was probably Immutable, which we've just talked about. The one before that was also in FinTech but in web two FinTech a business called Frankie One. And they are doing an aggregator for AML and KYC checks and processes. If you're Westpac or a large financial institution, you have to do hundreds of thousands of KYC checks a year.

And you probably have some service agreement with someone like Experian or Equifax. The problem with that is Equifax doesn't actually do the best checks for everybody in the population. There's a whole bunch of their competitors that, you know, some of them will do immigrants better, and some of them will do old people better, and some of them will do teenagers better just because their data sets come from different places and they specialize in different things. So, what Frankie does is it essentially aggregates all of those service providers and provides a single API into Westpac, which basically gives you the best coverage of all the possible AML KYC checks.

And the interesting thing for Westpac is they only have to deal with one service provider and their pass rates on the test becomes higher. And so, in Westpac's business, they spend a whole bunch of advertising and marketing dollars, acquiring people into their funnel and losing them through KYC is a disaster for them.

So, if they can increase their conversion rates, it's a big impact from the bottom-line perspective. So Frankie One is solving that problem across the world.

NA: Really interesting. It's great how you're able to move between web two and web three. That's all the questions I had, John. Thanks so much for your time. Really appreciate hearing your thoughts across the spectrum.

JH: My pleasure, Nawaz. Thanks for having me.

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Disclaimer: The Inquisitive VC is provided for informational and educational purposes only and is not intended to provide commercial, financial or legal advice. Nothing in this article constitutes an offer of securities or regulated financial products or financial services to any persons or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast.

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