Bloomberg Studio 1.0 - Haun Ventures Founder & CEO Katie Haun

Bloomberg Studio 1.0 - Haun Ventures Founder & CEO Katie Haun

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Good. How are you. It's so great to see you. Thank you so much for doing this. What do you think about all the celebs getting into crypto law. I think that I think was more last year. I think it's kind of a way of the past.

No I don't think so. But I think it's like any time that frankly it's when a lot of other people get into debt. Right. Other audiences to watch what's in the news a lot. When does that happen.

A lot of times when prices are going up. She was a federal prosecutor going after gangs and the mob before being handed for next assignment taking down bitcoins. Katie Horne soon realized this new technology was much more than a tool used by criminals. She doped and became a crypto convert swapping her prosecutor hat for a board seat at Coinbase and became the first female general partner at venture firm Andreessen Horowitz.

On now a prolific crypto investor recently launched her own fund with one and a half billion dollars to deploy. It's the largest fund ever raised by a single investor. Joining me on this edition of Bloomberg Studio 1.0 CEO and founder of Hahn Ventures Katie Hahn. Katie it's so great to have you. Great to be back here in the studio with you Emily. I want to start with a vibe check.

OK what state of the crypto cycle are we in right now. It was hot. Yeah. And then it got pretty cold. Well look Emily zooming back because I've been in crypto for a decade if you can believe it. We've seen crypto be really hot and then all of a sudden not. And so we've seen this before. However I think one of the things that's

a little bit different now is with each new crypto cycle more and more people come into it. And so it's more and more pronounced each cycle. And I I would push back on it's not I think it depends on what area of the ecosystem you're looking at.

We think developers think crypto and what three is still really hot. I am seeing a lot less of those. We're all gonna make it hash hashtags. I'm seeing a lot less of them too although I am spending less time on Twitter. So maybe that's why. But with you Tikal there are there are new acronyms.

What hasn't happened is a crypto winter in the midst of kind of really serious global macro conditions. So we have inflation kind of at record highs for our generation and in our lifetime. And then we have also a war that's broken out in the Ukraine. And we have a number of other factors going on here.

So that's very different. There was some serious carnage out there. ISIS Luna 3 hours. What's been your takeaways from. I don't want to sit here and tell you that algorithmic stable coins are bad because I actually think they're really interesting. However I think what happened is you had in this case you mentioned Luna and Tara you know that was an algorithmic stable coin that was getting pretty widespread adoption relative to what the tech could do. I didn't realize you spent your teenage years living in Egypt and learning Arabic.

Yes. Tell me about your upbringing. I was always uprooted. My dad worked for a large company and we were always moving. Just when I would get comfortable in one space. And I think actually that's pretty important. If you fast forward and look at my

career I'm comfortable being in uncomfortable situations. You know I was didn't know a lot about venture when I got into it initially and I didn't know a lot about crypto when I got into it initially and I was okay asking questions. I was OK not knowing the local acronyms or the nominee cloture of a particular field. And I'm you know I'm taken right back to my teenage years in Cairo moving from Houston Texas one day to downtown Maddie in Cairo the next day. You studied law. I did.

You clerked for Supreme Court Justice Anthony Kennedy. That's right. You became a federal prosecutor. You were taking on prison gangs and the mafia.

That must have taken a really thick skin. I was doing it at age 25. And now I if I kind of take a step back and you I think that happens at different points in your career like whoa if I would have analyzed that a little more at the time. And I'm kind of in some ways glad I didn't.

I just don't write in because I find it fascinating. There was a human aspect to it and people's stories. And I felt like those stories mattered. So I was drawn to criminal law and became a federal prosecutor. And I did cases involving violent crime but then really missed trying cases being back in the courtroom being before the grand jury like the prosecutor you would see on TV go to try those murder cases doing those two hour closing argument.

That's right. And so moved out here to California. They died at the largest prison gang in the world at the time outlaw motorcycle gangs hostage taking bank robberies armed bank robberies. There was really not a kind of criminal case by that point in my career.

I hadn't done. And it was right around that time 2012 one of my bosses came in and said let's have that same energy that you brought to those gang cases to those murder cases. And let's go ahead and have you investigate this new criminal technology that we really need to look into and possibly shut this down. So you created the first crypto currency task. How did you describe it. Fortunately several of us in the

government realized at the time it's not possible also not desirable because bitcoin is not an entity. It's not a person. Right. It's a protocol. And it would be like saying let's go shut down cash let's go shut down the Internet. It's not possible. Probably wouldn't be a good idea either. I was using crypto and technologies like the Bitcoin block chain because that's all that existed then. This is 2012 2013 to actually uncover criminal activity.

So I didn't think that that technology was bad. Frankly it was a tool that helped me uncover nefarious activity. And by the way it was a step level function improvement better than compliance by banks. I'll just go ahead and say it. That's a little bit controversial. But I had spent a decade subpoenaing

large financial institutions and five times out of 10 didn't get back what I needed. One case I worked on and people always say oh you shut down the Silk Road. What actually happened. I was looking into something completely not having to do with anything at all of the Silk Road and came across them what looked to be some kind of odd activity. And it turns out that a couple of federal agents on the Silk Road Task Force out of Washington D.C. were approached. And that is the case that I ended up indicting and I ended up prosecuting those agents and they both went to prison. So that's the aspect of the Silk Road case that I worked on.

I would never never have been able to uncover that criminal activity by those agents because they were federal agents. They knew how to cover their tracks. Had they not used bitcoin block chain. All right. So that technology right there if they had just use wires or cash or bank wires we would never have uncovered that. Just how hard is it to launch a crypto fund from scratch.

So you became kind of a crypto convert. After this you joined the board of Coinbase. That's right. Very early on. How did you and Coinbase and Brian Armstrong come together. I hosted an event here in San Francisco at the Federal Reserve Bank and I believe it was there that it wasn't just Brian. It was a lot of what I call legitimate

actors in crypto who wanted to usher in this new wave this new ecosystem. And then we brought together the heads of all kinds of agencies really in an effort to kind of talk about building bridges you know the government and the crypto industry. We're never going to see eye to eye on a lot of things. But we did think there were some commonalities. Coinbase is a company that has suffered. They've been losing share. The valuation of public markets has

plummeted. Why do you think that is. And how do you think it can be fixed. Yeah well I think again a few things. It's tied to one a large aspect of coin says business.

Now of course is trading revenue and that's down when prices are down. And you know the company's been very transparent about that long before going public. I mean also if you look at its S-1 it specifically identifies that and just how volatile crypto cycles are. So I think that's part of it. It's judged by public markets as a technology stock or but as a financial services company.

By the way I think it's both. I think it's not just a financial services company. I think it's so much more. I think it's really a portal to this whole new ecosystem. You are also on the board of Open Sea. Until recently there's an insider

trading situation or accusation going on there. Coinbase has also had employees accused of insider trading. How much is this happening within the companies and within the industry and how big a problem is. Yeah I think crypto is under the microscope. So where you have a case of two cases three cases in crypto ecosystem which now is a trillion dollar industry.

I think multi billion approaching trillion dollar industry you're always going to be able to find examples like that. So I don't want to make too much out of a handful of cases. That said the company Coinbase open see take these things incredibly seriously along with your position at Coinbase. You became a partner at one of the most storied venture capital firms Silicon Valley and ISE Andreessen Horowitz.

What was your experience. You had a 16 ze like there. I met Chris Dixon and I met Ben Horowitz and I met Marc Andreessen and I had worked with them for just about a year maybe a little bit over when they asked me to come and co run their crypto funds at Andreessen Horowitz again. I jumped at that chance. And I think really that speaks to the fact that as I've said before things are hell yes or there are no.

And it was a hell yes for me. So interested Horowitz is the kind of place where if you make partner you don't leave yet. How did Marc and Ben respond when you said yeah I want to leave to start a crypto fund of my own. As you might know Emily they're an anchor. They're an anchor. Check into my fund. And I'm very grateful for that. You know Marc and Chris and folks like them are also personal level.

PS So I felt very supported when I shared that decision. And I will say that it was not running away from Anderson hearts. It was running to another opportunity. And you know crypto is not. What do they say. It's not a spectator sport. It's like you're in it. It skews very young.

It's 24/7. It's global and it's hustle. And at this. And that's a tradeoff. It's a life tradeoff. And at this point in my career and in my life if I was going to continue to make that tradeoff I just wanted to do it and do it in a way that was really true to me. So you struck out on your own. Yes.

To launch on ventures. What gave you the courage to do that. What was the spark. That was the fire that got you to say I need to do this and do this now. Sure. What I set out to do was to continue to invest in this ecosystem that I think is so broad. That decision was very purposeful and the timing was very purposeful. We have an early stage fund that does

seed stage series A even series B and then we have what we call an acceleration fund which is it's not a growth fund it's a crypto growth fund. And I think those are different things. But later stage it might be crypto publics certain kinds of public tokens we're setup to to hold tokens to participate in the token ecosystem or later stage companies. I mean you know there are now several crypto many crypto unicorns.

Space has become really competitive even though you say you know crypto has had its kind of ups and downs. The thing is a lot of people in some of those last cycles have seen the kind of venture style returns that can be had in crypto. And so you've had a lot of new funds enter the space. And that's driven up competition. So what differentiates on ventures that in all of these other crypto funds or even more traditional venture capitalists like Andreessen Horowitz are Sequoia. They also have crypto for sure now. Well I think a lot of traditional venture capital funds now have crypto funds. It used to just be like a regulatory

designation. I was like are you an RIAA which is registered investment adviser I would say for crypto founders today. It's not enough to just be an RIAA right. Frankly I don't even know if a lot of them care. That's a regulatory designation. What crypto founders today want to know is do you live and breathe crypto. Do you inhale the discourse.

Are you part of the community. Do you participate in governance. Are you going to be staking these kind of crypto verbs out there. And if you're not really in this space full time I think it's very hard to run a successful crypto fund. We don't have a hedge fund component so we're not sitting here buying and trading and selling.

That's a hedge fund structure. And there are crypto hedge funds. We're not one. We're making 7 to 10 year bets. Just how hard is it to launch a crypto fund from scratch. You know it's hard but it's not impossible. And we don't have a crystal ball. I don't know. I can't predict cycles. But I knew that we were in a cycle where

you saw so much fervor and excitement around the space. And I already talked about what makes us different. But I think one thing also is we are a nimble Strikeforce. We don't fish in the same pond. We have the crypto natives. We have efficient execution. We have operators seasoned operators who

really know how to stick the landing. And I think that's reflected in our culture. I would say the only thing that's changed in our strategy as a result of the market correction is really more of a focus on early stage. But we still have our late stage fund. And when we see valuations which I think we'll still see correct spoiler I think we'll continue to see some corrections. And so we might deploy our later stage fund a little bit more slowly.

It might not be on an even 50 50 cadence and that's OK long term. Our strategy hasn't changed long term. We're committed to this space. How much do you think valuations are going to correct. You know it's just I can't give you a one size fits all answer because crypto is not a monolith. You have some crypto companies that really follow more of an enterprise SAS business model.

You have others that are layer 1 protocols. You have still others that are consumer facing applications. And I think one of the things we're seeing right now is the infrastructure layer. And that's where we're spending a lot of

our time by the way. We think more and more use cases will come about when the infrastructure layers in place. So my own view is we are not rushing to deploy. We're certainly not getting caught up and do get a flow and not to away that.

You know look I think it's very easy to get into that mindset right. It's because it's a competitive sport. It's a competitive space. And I think I'd be lying if I said that. That doesn't influence anyone. I try to what I do and I think I do differently is I try to take stock of that. Oh that's the faux mo mentality kicking

in. That's bad. Again you don't want to overcorrect though. What we look for is we look for amazing founders. It doesn't matter if I think valuations or corrective there are amazing founders. There's a huge TAM. We also look for what's your regulatory plan.

If you're launching a token what's your plan to comply with the law. What's your plan for security by the way. We've seen a lot of hacks in the space. We want to really dive in there and make sure that the founders have been thoughtful about especially if they're clustered in customer funds. Keeping those funds secure if it's across Chain Bridge. What are the exploits. Have you changed your strategy at all given the downturn.

Have you backed out of any deals or decided not to do certain dimples because the conditions have changed. She raised the phone. We have decided not to do certain deals. We've never backed out of a deal. We have decided not to do a few deals because because we think that pricing was ahead of progress candidly. And we might have been wrong about that Emily. We might have been wrong about that. But I think if we were wrong not to do a couple of deals better that we might have been right. Because if we were wrong about that I

think we can find a way to still invest in those projects later. Well one thing I'm hearing is that a lot of dry powder has just stepped up because yet all these funds raised a lot of money raised. Why was it the biggest fund ever for a single person not just a woman.

Yeah. Anyone. Yeah. Are you confident you can have a place to put all that. I am but if I don't have a place to put

it I'm not just going to go willy nilly deploy it. One of the things that we told our employees even during that period when we raised our fund which was when crypto was undeniably still in a bull run we said that we are going to be pretty steadfast sticking to a two year deployment cycle. And you know I think one thing that's changed is that might have lengthened. It certainly hasn't shortened. But we will again we have we feel very good that we have the capital to back pre teens when we see them. So you think we're going to fall behind

the United States. We already are falling behind. Fall behind. We're falling behind. What about NAFTA is easy for you to learn about the declining demand.

We are going to increasingly live in a digital world. And I happen to think that if you live in a digital world you're going to want to own digital goods in that world. You're not just going to be satisfied to rent them which is what we do now. We buy our content from walled gardens without digital scarcity which is what NFTE unlock.

You don't really own anything. You're subject to the whims of a platform. And I think NAFTA is and digitally scarce goods fundamentally change that. I think you'll see NAFTA back again. But we are spending a lot of time in the infrastructure layer. Like I tell you zero knowledge technologies scalability. We think of that as like the plumbing. If you think of the fiber optic cables

remember you could have had YouTube and Netflix with dial up. You couldn't have streamed content. The same is true of crypto use cases. We think that there will be a lot of new use cases unlocked when the infrastructure is there when it's more efficient when it's more user friendly. And so we're spending a lot of our time there.

President Biden issued this crypto executive order. There are a number of ports that are coming due. We want to see from the administration when it comes to regulation. And are you optimistic that we will get there. Yeah. We were so delighted to see that

executive order. It's not something you should normally be delighted about. But why we were is because it was to us a real recognition that this is a U.S. government thing. This field isn't going anywhere. This field is growing. It's growing so much that we are going to direct every single agency in the federal government to come up with a plan here.

I think you know we take a step forward but then you see you know we are a big government we're a big system. We have states we have local entities. So we take a step forward with the EO and then we take some steps back sometimes too. And I think what I see is crypto founders are confused by that. They're starting to think well I could go to this jurisdiction where there's a single regulator and you don't have 50 states with different rules. It's the U.S.

government that needs to start taking stock of the fact that right now Emily and China there's a quarter of a billion CNY wallets a quarter of a billion. We're still talking about whether there should be government central bank digital currency. We're still studying that. So you think we're gonna fall behind the United States. We already are falling behind fall behind. We're falling behind. What are the dangers of falling behind China and the rest of the world. This is years ahead.

So I don't want people to take a headline and say oh I think the U.S. dollar will be you know no longer the global currency reserve global currency. I'm not saying that now but fast forward decades.

And if you no longer need to use the dollar because you have no alternative. I think that's a real problem. What would we use instead. Well I think that there are going to be stable coins out there that people who have access to a smartphone will use. There is a demand for it. We see our two hundred eighty five percent year over year growth is stable coins. So people are clearly liking the idea of this. Now again there have been some

spectacular failures too but not all stable coins are created the same. But I think the important thing is that we really do need to not just quash innovation. What do you think of how Gary Gensler the chair of the S.E.C. and how he's approaching it. One of the things that I hear from founders is that they're very confused because they get told come in register just come in and talk to us. But you have the one company who's done the ultimate act of going in and registering Coinbase filed in this one. And still you know there's a lot of

saber rattling still going on I think. And again I don't want to single out the S.E.C. you know and I don't want to suggest that anything they're doing is bad. I do think though that right now there's a lot of confusion. And one of the pieces of confusion stems from the fact that you know it started with the ICAO mania back in what 20 sixteen twenty seventeen. I can't remember which year now where

the S.E.C. was very loud about securities. A lot of them were securities but the spaces changed. And so to still view it through the ICAO lens when so much has happened over the last five years in the space I think is a mistake. What do you have to say to the skeptics out there who just don't believe in the future of theory and don't see where this is going. Yeah I would say don't judge the current state of innovation by the end state of innovation. I hear from a lot of these skeptics. And by the way I'm friends with a lot of these skeptics too.

I don't only want to live in a crypto bubble. They want to see the use cases especially if they're not technical. Well when am I going to use it. What will I use it for.

And I think one of the things that's not appreciated is how quickly the infrastructure here is catching up. And once you have kind of a once you have really scalable block chains that can handle a lot of throughput and are very efficient I think that unlocks a whole lot of use cases. People are spending more time on screens. That curve is up and to the right whether we like it or not. That is the future. I mean.

Those who have kids know that kids spend more time online. They want digital things too. And I think to dismiss it it is a bit generational. I do fine.

Not always but it is a bit generational. Do you talk to kids about being able to have money online. They instantly get that concept. They're comfortable not having to hold something in their hand to think it has value. Take us to the end state to Google and Amazon or Facebook. Apple still exists.

I believe they will still exist. I mean it depends what you talk about when you talk about the end state. I mean I think that you know I think for decades those companies will still be around. But the important thing is I think this new ecosystem is going to represent a challenge to them. I do think that those entities

decentralized forces are coming and we'll cut into those entities profits and revenues. So we have a little Rapidfire section. If you could belong to any outgoing tribes. Would it be. Gosh.

There is no way I'm answering that because I will get trolls on Twitter by every other alt coin tribe. I'm a crypto maximalist. I'm a crypto max. All right. Well I'm not taking one book or podcast or bingeing now. OK I'm I. Yes I am. Gosh I'm bingeing on wheat crashed. Something that brings you simple joy. You know one of the things that I love and I've missed being away from this summer is swimming. I just love I find like some of my best

thoughts come to me while I'm moving career philosophy. I'm gonna do a job where you know 50 percent of the job and we're going to learn 50 percent of the job. Again that goes back to no growth in the comfort zone no comfort in the growth.

2022-10-02 09:17

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