Unbounded Perspectives Austin 2023: VC perspectives on investing in blockchain companies

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Bitcoin thought leader and developer Joshua Henslee recently participated in a panel discussion at Unbounded Perspectives Austin 2023. He joined Andrea Kalmans and Ted Moskovitz in a discussion moderated by Mike Hennessey from Unbounded Capital.

Introducing the panelists

The discussion begins with Kalmans telling a little about her story. When the 2008 financial crisis hit, she was working at Dell after completing an MBA. Due to the crisis, she took voluntary redundancy at Dell, giving her an opening to fulfill her ambition of getting involved in startups.

Kalmans began investing, following the trends of Austin, including enterprise software, digital health, Bitcoin/blockchain, developer tools, and so on. She says this is an amazing time in Austin, with lots of innovation and advancement taking place.

Moskovitz then shares a little about his background. He was an advisor in the U.S. Senate, became a lawyer at the SEC, and is now an investor in blockchain, psychedelics, and genetics. He’s enthusiastic about the potential of psychedelics to unlock empathy and help people connect with nature and each other.

Moskovitz notes a distinct difference between investors in Washington, D.C., and Silicon Valley and those in Austin. In the former two, there’s a lot of name-dropping, a desire to be seen as having high status, and a focus on what people do. In Austin, there’s more privacy and more focus on revenue and profits instead of growth for growth’s sake.

Henslee then introduces himself. For those who don’t know, he’s one of the leading voices in the BSV ecosystem and is now an advisor at Unbounded Capital. He tells us he used to work for a top accounting firm as a technical lead, helping to implement the Microsoft VRP. He specialized in implementing credit cards and saw the pain points such as security, compliance, etc.

During this time, Henslee became interested in Bitcoin. After reading the white paper, he went tumbling down the rabbit hole, and slowly, Bitcoin became a bigger part of his life. Eventually, he decided to go all in to build Bitcoin applications.

Questions and answers about blockchain technology

Hennessey asks Kalmans if there are any companies in her portfolio that are using the blockchain in a meaningful way today. He notes that discussions about the potential of blockchain are usually in terms of its future, but he wants to know how it’s being used today, if at all.

Kalmans replies that she’s invested in a company called Niftory. It helps people mint and create NFTs of all kinds. It currently runs on Polygon, but she notes it could run on any blockchain.

Hennessey then asks Henslee to elaborate on the intersection between blockchain, AI, and identity/security. Henslee replies that they work well together and are a natural fit for each other. He sees how blockchain and blockchain-based identity can help people prove they created specific prompts and outputs, giving them a way to prove AI-generated work is theirs using the immutable ledger that is the blockchain.

Hennessey asks where Henslee sees the enterprise clients coming from—will it be data management and storage? He replies that he doesn’t believe enterprise usage of the blockchain will come first. In his view, it will be a viral consumer-facing app that kicks things off. Kalmans backs this point up, noting that the popular messaging app Slack started with users organically before making its way into enterprises.

Moskovitz then tells us about his interests in blockchain and how he’s focused on its social impact, sharing that he’s also interested in bringing real-world assets on-chain. His team is working on a project that involves decentralized energy storage and arbitrage in Europe. This is an example of a real-world, practical use case of blockchain technology that directly impacts people’s lives.

Hennessey wants to know if Moskovitz, as a lawyer, is worried about regulatory impacts on his companies given the recent U.S. government crackdown. He replies that he’s been aware of how ICOs were securities since 2017 and has been screaming it from the rooftops. Due to the shenanigans of FTX, BlockFi, and others, there’s going to be a more brutal crackdown than was otherwise necessary. This will lead to short-term pain, but it will be good for the long-term development of the space. However, the harsh attitude of the U.S. government will cause many companies to go offshore.

Where does Kalmans see the industry 5-7 years from now? She says it’s a painful time right now, but looking back at her time in New York when the Dot Com bubble was at its height, she says the mess will go away, the regulations will come, and the credibility of the industry will be rebuilt.

Henessee then asks Henslee if he has any advice for technical founders about developing and building their companies and futures. He replies that demand is king and everything should start with the customer. He also points out that developing an app isn’t necessary since many successful games and applications exist on domains, including Ordinals.

Audience questions and answers

Q. Is there a crossover between the psychedelic medicine industry and blockchain/digital currencies?

Moskovitz says there are a lot of philosophical underpinnings that the two share in common. Both cause us to question everyday concepts most people take for granted, including ideas about what money is. We also have to throw out old ideas and embrace new ones in both industries. Also, back in the early days, some psychedelic medicine companies used Bitcoin and other digital currencies to fundraise.

Q. What’s the one thing you’re going to be focused on in the immediate future?

Moskovitz says they’re closing on buying a major league Pickleball team, so that will be his focus. Henslee wants to focus on building games, and he thinks ChatGPT and other AI tools can help him move faster. Kalmans says she just wants to be there for her portfolio companies as the world is throwing lots of curveballs right now.

Q. It’s important for value to be stable. Can you talk about the importance of a stable protocol when it comes to the determination of a digital asset as a commodity?

Henslee answers this one, saying that the value of Bitcoin is apparent in the white paper; it enables commerce on the internet by lowering payment costs. It’s difficult for people to imagine use cases for micro and nano payments when the floor on payment sizes is completely removed, but we’re now experimenting with what’s possible. In any case, a stable protocol is essential to making all of this work.

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