Welcome to The Inquisitive VC Podcast Ep 2 with Kinjal Shah from Blockchain Capital.
Kinjal is an early-stage investor at Blockchain Capital, working with founders building the future of crypto. She is also a founding member of Komorebi Collective, a DAO making investments exclusively in female and nonbinary crypto founders. Previously, she spent time at Fidelity Investments and Tufts University.
We talk about Komorebi Collective, crypto consumer products, DAOs, access to information for new users and more!
NA: I thought it would be great to start off with your background, how you got into the world of crypto and venture capital.
KS: Yeah. So, I joined Blockchain Capital about three years ago, and prior to this, I had a very traditional financial services background. So, I worked at a bank or not a bank, but an asset manager, Fidelity Investments in Boston. They are known for being pretty progressive in the crypto space and have done a lot of work on blockchain and more broadly.
So I got introduced to the space when I was actually working at Fidelity on a project and just fell in love and felt like this is the future of finance and even more broadly the future of just a lot of different industries around the entire world.
And so I wanted to do this full-time. I actually came across Blockchain Capital when I was on vacation in San Francisco, visiting some friends, I got connected. And yeah, ever since then, I've been on the investing side, which has been really a really rewarding experience.
NA: Fantastic. And how has the experience been with Blockchain Capital compared to life at Fidelity? How has the difference between the two worlds been?
KS: Yeah, I mean, it's very different. So I think at Fidelity, I was more focused on strategy and as it relates to different product launches so as much more of like a consulting model, whereas in investing, it's just a completely different model, but I think like the biggest change was just how you know, independent the work is in terms of, you can kind of decide what you're interested in.
You can pick areas to kind of dig deeper into. Basically design your days to learn and meet with some amazing people and, and research what's happening in the crypto ecosystem, which really, felt like a complete change coming from Fidelity. And then I just say like the other piece is just, I'm working a lot closer with smaller companies and with protocols themselves, and so that's definitely an experience that I think is unique
NA: For sure. I'm quite interested to know about your story behind the Komorebi Fund and how that came to be?
KS: Yeah. So, I've been investing now for three years. I always want to see more women when I'm in conversations with founders. I really just felt like it's not just a crypto problem, I think it's a broader tech and VC conversation around getting more funding for female founders, you know, and non-binary founders. So, I started hosting female office hours and just having people come drop in and schedule time with me just to chat.
Eventually, this turned into what can I do to like, take this even further? And I linked up with Syndicate Protocol, which is a new project, that's basically DAO infrastructure, and we started working on the idea of Komorebi with She256 and Women in Blockchain. So those are two organizations that are trying to further education and sort of awareness specifically for females and non-binary, either founders or engineers or operators or wherever or whoever it may be.
We decided to launch a DAO. I think launching a fund comes with a lot of paperwork, it's expensive, it's somewhat inaccessible. Raising with LPs is certainly its own endeavour and what we really wanted to do was could we just come up with a really passionate group of people who want to support this mission and start putting some dollars behind it and spin it up relatively quickly.
Within a matter of weeks, Komorebi was founded. And now we have about 30-35 members who are contributing to the DAO and we're kind of making investment decisions.
NA: That's quite exciting. And have there been investments made already?
KS: Yeah. So we actually are in the process of making our first investment right now. I can't disclose it yet just because we haven't closed on it yet, but yeah, we're targeting you know, four or five investments, I think over the course of this year.
NA: For sure. I've been thinking a lot about how projects that form as DAOs how they will scale without having, you know, a clear leader compared to a lot of these traditional tech companies, which are led by founders.
I don't know if you saw, but Kain, the founder of Synthetix, had stepped back into a passive role once there was a governing council set out. And then he recently published his intention to run for the council now in return as one of the leaders of the project. So, I'd love to hear your thoughts on, you know, what you think about how DAO leadership should function and how it would help scale.
KS: Yeah, it's really a question I think around like how humans self-organize and like what we can do when we break down hierarchical structures versus when we have like a little more hierarchy in place. So my mental model for it, the way that it is right now is we're unbundling the organization. We're saying, we're going to develop these like DAOs that are more grassroots, where you can opt-in or opt-out depending on your skillset and you can kind of build something from there.
So that's like, step one and then I think step two is going to involve some degree of hierarchy or some degree of rebundling. But I think the manner in which it re-bundles is going to be different. And I think it's going to be based on proof of work, like literally proof of work, right? I think it'll potentially be more of a meritocracy in terms of folks who are contributing to a DAO can prove themselves into more of a leadership role.
I also think that there's going to be voter delegation. Where there will be some decisions that the entire DAO might be voting on, but once those decisions are made, then they're kind of signing off and delegating. But the decisions under that particular you know, whatever that broader decision is, they're saying, okay, anything related to this is going to be in the hands of XYZ, which is what we're starting to see with committees being formed.
Whether it's like the grants committee or some of the other committees that are being formed. So, I think we're naturally going to see some more rebundling, but it really is just a question of how you rebundle, what checks and balances are put in place, how reputation is measured. And I think from that, we'll start to see more scalable DAOs.
Then the last piece here, I know I just said a lot, but the last piece here that I would think about is; the concept of DAOs scaling can mean many different things. On one hand, scaling can mean that there's a lot of people contributing, right? We can think of a massive organization.
The second way of scaling is just thinking about the revenue generated by the DAO and the product that they're actually working on. So, I would argue something like Uniswap is a DAO at scale when you think about the amount of trading volume that they process on a day-to-day basis. But I imagine, you know, they have a hundred employees or something like that. It's a fairly small organization when we think of the DAO, of folks who are working on it full time.
That being said, Uniswap token holders, that make up the entire network and that might be thousands and thousands of people. But my point being is that the scale might be measured in terms of the reach of the actual product itself or something else, you know, whatever, whatever other measures might come along.
But I just think those metrics of what a DAO scaling looks like might change and might not just mean you know, it's the number of people involved.
NA: Yeah, that's quite insightful, definitely something that's very interesting to see how it's going to play out. And as a VC investing in this space, what are you looking for in terms of DAO infrastructure that you think is quite necessary at this point that you haven't seen?
KS: Yeah. In terms of things that I haven't seen yet, I think we're starting to see a lot of the major gaps that I had personally highlighted start to get filled. Some of those I'll just name off a couple; first is like treasury management. I think that we're starting to see a lot of teams build better products and tools for treasury management.
I think what you'll start to see is within treasury management, there's like a bottom-up and there's like a top-down version. And the bottom-up version of treasury management is how do we pay our contributors? Like, how do we basically do payroll?
Then the top-down is, maybe top-down is not the right phrasing, but the top-down version is okay, how do we take this massive treasury that we have and ensure it meets our objectives as a protocol or as a DAO more broadly? That might mean, stabilizing into some sort of stable coin or that might mean increasing yield opportunities or incentivizing participation through token rewards or whatever that might look like. I think those are kind of the two ends of the spectrum there.
So that's kind of more on the financial side. And then the second side is all about coordination and what coordination will look like within DAOs. I think we're starting to see tools like Collabland. That's done really well.
Even protocols like Orca or Colony Protocol or Colony’s interface for DAOs, which is, you know, all about coordination and how DAOs will organize over time and communicate with one another. And how users will communicate with one another. So I'd say those are the two biggest areas that I see right now and then moving forward I think there's going to be this gap of, okay, now we have all these DAOs, but how do we maintain new users, like make sure the funnel of new users coming into DAOs is strong.
That people understand how to contribute to a DAOs, that DAOs can sort of last for whatever extent of period of time that they want to last for. Then also just like scaling infrastructure, so things that we're already starting to see with, like Polygon but also just how do we kind of let these things scale?
From a tech perspective. So those are some of the areas that I'm thinking about right now. And I think what we're, we're kind of in this moment where I think everyone is building based on pain points, which is great. I think that's really a great way to start building a new product in the governance space is what's your pain point? And then how can I solve it?
Then over time, we're going to start to see the evolution of the stack either horizontally or vertically as a lot of these integrations kind of, kind of join forces.
NA: Yeah, it's definitely an exciting time. What about protocols and platforms like Syndicate, essentially building those interesting protocols that allow those specific use cases for DAOs. Are you seeing a lot of that kind of specificity?
KS: I would say on the investment side, definitely we're seeing multiple, but I don't think we've quite seen it in other regards. I think the reason being is, right now, at least, you know, the biggest DAO categories to start off with had been in the protocol world with the rise of all of these DeFi DAOs. And from there, we've kind of gone into now the more social DAOs, investment DAOs, NFT related DAOs, but I would say that's like very much happened in the last 12 months or 16 months.
I think we'll start to see more specialized infrastructure, but it's still pretty early, I would say right now.
NA: Yeah. And I saw earlier today, you tweeted:
“I worry a lot about crypto feeling like an insider game a few years ago, it felt like anyone and everyone could become a part of the community. Nowadays. There are so many ways to go astray.”
Could you elaborate on that and what you mean by it?
KS: Yeah, for sure. So when I joined the broader crypto ecosystem, you know, it's been basically three and a half years, and really it felt very consumable, all the content that was being created.
There were very few folks who I think had these massive media empires built around crypto. There was a lot of openness like people were really willing to chat. It just felt much smaller. I mean, I think this is just like the growing pains of any industry. It just felt a lot smaller.
What I'm starting to see today and what I struggle with is there are so many new folks that are trying to come on board and there are so many different ways that they can get their information, that the quality of the information diet is not as high as I think it used to be.
By that, I'm not thinking of anyone particular channel, but we're starting to hear it more and more of people investing in things that they don't fully understand, or people joining particular projects that they haven't like come up to speed entirely on and it just feels hard.
Like if I were to put myself in somebody else's shoes today, who's like, I want to get involved in crypto, it just feels really painful and kind of intimidating. You know, it was intimidating to me back then, so I can't even imagine what it must feel like today. And I think like sitting on the insider side of things and I don't mean insider in the lens of like, I wasn't pointing to any one particular group and obviously, you know, I'm an investor, you can say that I'm an insider. It's more just the idea that sometimes you're so deep, you can't really like to put yourself in the shoes of a completely new person in crypto, right?
Yeah, I think it's challenging, and I've been having a lot of conversations lately with women who are wanting to get involved and asking for resources and asking for ways to do so and I just don't want to lose that ability to bring new people in.
NA: Yeah, I'm definitely seeing that as well. A lot of the conversations I've been having with new people entering crypto is where is the best place to access the good and easy to understand information.
KS: Part of the challenge there is, you know, I can send you a list of articles. I could probably send you like 50 hours of reading. But I think sitting in a room and reading for 50 hours is really tough. For saying like, oh, you want to get involved? Here's like a month's worth of homework.
I think there needs to be a better way to get people, to start using products, to test them out, to actually play with them and have it not feel like we're getting you know, like an overwhelming amount of homework to do.
So yeah, I think that's like a little bit of the conversation I'm having as well. It's like, oh, I can find all these lists, but that doesn't necessarily mean that it all makes sense to me.
NA: So, what do you suggest apart from just reading?
KS: Yeah, so I think a couple of things, I mean, I think you definitely have to take a learning mindset for sure.
I do think crypto takes work to get involved and I think that's okay, but I would say, if you can think about having your own little education fund, maybe you can put like $50 into it or $100 into it and start playing around with either like the NFT space or DeFis or whatever it is that interests you, but actually start like trading and using some of the products.
That's what I would say is number one, and then number two; DAOs are actually a really cool way to make friends in the space. I think they're relatively accessible and welcoming and warm. So, if you can get involved with a DAO or do some reading on DAOs and start one yourself with a group of friends, but basically find people who you can talk to crypto with.
I think those are like the top two things I would do, in addition to reading. But, you know, I think without having the second piece of socialization or trying out products, it's hard to sort of internalize what you're learning.
NA: For sure, definitely agree on that. In the 2021 Crypto Crystal Ball Halftime Edition, one of your predictions was:
“The industry will see its first true social consumer application take off with the non-crypto audience”
I'd love to hear more about that, what part of crypto do you think will bring this to reality?
KS: Yeah, so, okay. I guess there's a couple of things that we can talk about in my prediction there, one, like, what is the consumer application, two what is mainstream, three, I would argue like NBA Top Shot did it to a certain degree.
You know, I was having conversations with friends who do not know anything about crypto, who are pursuing their NBA Top Shots, and were really excited about the product. So, that was like a retail-oriented product that was fun to use that got a lot of my friends to purchase their first NFT.
So, I would say like maybe NBA Top Shots might've been like that consumer hit that we've seen, but really what I'm starting to see more and more of is I think where we have the infrastructure in place or we have infrastructure that is going to be in place soon that will allow for social interactions within crypto to scale a little bit more.
That can mean like social trading, that could be like DAOs and just how people join DAOs and talk to one another, it could be just, you know, NFT platforms. It could be using NFTs in a gaming environment or using NFTs in some sort of metaverse environment. I think there's so many different flavours, but we've had a lot of discussions in the past six months in crypto about all the things that I'm talking about right now.
It feels this is the time to build a consumer-focused application in crypto. And it just wasn't as feasible the past few years, it was much more financial services heavy.
NA: Yeah. Agreed. I think the past year has been so interesting in terms of the growth of NFTs and gaming as well in crypto. That's what I'd like to pick up with Axie Infinity. I'm sure you must've heard of it. I guess it would probably fall in with one of those potential consumer applications in crypto taking off.
KS: Absolutely. I love what Axie is doing. I mean, I think as of yesterday, maybe they became like the top, or maybe not yesterday as of like this past month, they became the top-grossing dapp on Ethereum and especially like the work that they're doing with play, to earn and in making it feasible for somebody to earn their income, which is so cool. If we extrapolate what happened with Axie and zoom out, I imagine in 10 years, there's going to be a cohort of people who can make their entire income online.
We've talked about this a lot like you wake up and you go to work in the metaverse and what that might look like, but I really do think that we're going to start to see like right now, it's all what we call knowledge work, where you have to be like an engineer or a designer, or you know, like whatever, an investor, somebody who's going online to work every single day is typically regarded as being a knowledge worker fast forward 10 years.
And hopefully, it's accessible to anyone around the world who can participate in online economies, whether it's through games, through DAOs, through crypto more broadly. I just think that this is going to change the way that labour works around the world and I think Axie is a great example of what that could look like.
I would say between, yeah, you're right, between Axie and NBA Top Shot, those are like true consumer use cases. I think that we've seen one is more playful with the collectibles and Axie is a great game, but it's also like changing the trajectory of lives of people, working in the Philippines.
NA: Yeah, I find that so interesting and fascinating. I think over the past, I guess a few years, crypto's really grown in terms of applications and use cases as we've discussed, how do you personally stay across everything, you know, as a crypto VC. My understanding is Blockchain Capital is a generalist crypto VC. So how do you stay across the entire spectrum of stuff that's happening?
KS: Yeah, so we are definitely a generalist. And I would say it's increasingly more difficult to be a generalist in this space. You know, it used to be that I felt I could wake up every day and read all the news that's happening in crypto and now I can't keep up.
So, it's definitely like a tougher conversation and the way that at least at Blockchain Capital, we started to sort of divide up the industry into areas of focus. I, myself, spend a lot of time thinking about these consumer applications, looking at NFTs and DAOs. Thinking about gaming and some of the infrastructure associated with all of these.
That's really where I spend the majority of my time. I'm still like keeping up with everything happening in DeFi and I'm still like wanting to, understand, but I kind of know what my primary focus is going to be versus my secondary focus and then vice versa other team members are more focused on DeFi, or other team members are more focused on governance or whatever that might look like.
So yeah, that's kind of the reality is that, you know, you kind of need a team of people now to keep up with crypto and then make sure that you're sharing learnings across the table. So it doesn't feel like you have to go do all the reading yourself.
NA: For sure. And if you had to pick one sector to actually go after, we mentioned a few DeFi, NFTs DAOs or consumer-focused applications, what would you pick?
KS: Yeah, it's a great question. I think right now I would pick consumer. What I mean by consumer is anything that helps onboard the next, you know, 10 million users of crypto. So whether that's some flavour of doing something in the DAO space or in the NFT space, like that's still up for debate. But I'm really excited about helping scale crypto to more global markets, more global user bases making it open and accessible.
All of the things that we've been talking about for quite some time, but then actually turning it into a reality, I think is probably what I would want to spend most of my time.
NA: For sure. That is definitely exciting. I think applications like Lolli really help that as well.
KS: Yeah, absolutely. I think the question, or maybe not the question, the framework is products that require a change in user behaviour versus products that require that don't require it. They can kind of be put into the flow of what you're doing. So, I love Lolli as an example, where if I'm shopping, like it doesn't require too much of a shift in my behaviour to have a Chrome extension plugged in that just gives me a Bitcoin every time I do an online purchase versus like requiring someone to open up an entirely new product to like shop online.
NA: Yeah, exactly. So just wrapping up here with a couple more questions. A secret obsession of yours and not many people know about what, what would that be?
KS: I really love painting. I love painting all sorts of things. Recently. It's been painting sneakers, so I've been slowly going around my family and making everybody custom Nike's so that's what I do in my spare time.
NA: That's really cool. Have you been making them into NFTs as well?
KS: I haven't. No, but I would love to release an NFT collection in the future. Definitely on my wish list of things.
NA: Yeah, that's pretty cool. And what's the latest investment you've made and why did you make it?
KS: Yeah, it's a great question. I'm not sure about the latest in terms of what I can like actively disclosed, but I will talk about an investment that we announced earlier this year in a protocol called Upshot.
I'm really excited about Upshot there, basically doing NFT appraisals and NFT price discovery. It's a major problem. I think two of the biggest problems in the NFT space right now are price discovery and liquidity, right? Like being able to actually deliver some sort of reasonable pricing mechanism.
The second is around IP and digital rights management. So yeah, the CEO, Nick has come up with a really interesting protocol design to be able to basically crowdsource price estimates based on a fun, hot or not app where you're rating NFTs based on the subjectivity, but within a large enough sample within like the entire group, you can kind of come down to what would be a relative value for an NFT compared to something else.
So yeah, really cool product interesting, design space and Nick is awesome. So, I'm really excited. Yeah.
NA: Yeah, that I saw that as well. That is definitely interesting. I've seen a handful of other projects trying to go down that space in terms of appraisals and valuing NFTS.
So, I think that's going to be super interesting to see how that actually ends up. Thank you so much for joining me.
KS: Yeah, same here. Thanks so much for having me.
Kinjal Shah - Blockchain Capital