This week on the Chain Reaction podcast, we chatted with Kevin Rose, a serial entrepreneur whose projects over the years—most notably Digg—have received extensive coverage. Rose is a partner at the venture capital firm True Ventures, but his most recent endeavor is an NFT startup called Proof Collective. This company just debuted a much-touted 10,000 NFT collection of pixelated owls. In order to create a “web3 media company,” Rose and his partners are utilizing the $80 million they made from the first sale of the Moonbirds project in addition to a much more traditional $10 million fundraising round that was sponsored by Alexis Ohanian’s venture capital firm Seven Seven Six.
Rose states, “We’re in this to develop a gigantic, enormous, completely different type of media organization from the ground up. We didn’t need to solicit money from Alexis or True Ventures, but we did it anyway so that people would realize we meant business when we said we were serious about doing so. These days, those Moonbirds trade for at least 25 Eth, which corresponds to nearly $50,000 at the current Ethereum price, albeit the exchange rate has just taken a hit. We discussed a wide range of subjects with Rose throughout our chat, including the current market slump, which he summarizes as “risk presenting itself” in the middle of a protracted transition away from fiat currencies.
“If nothing fundamentally has changed in terms of the technical infrastructure behind the scenes for Bitcoin or Ethereum or whatever it may be, which I guess obviously is not the case when it comes to something like UST or Luna, then I’m just of the mindset that I don’t ever really think about going back out to fiat at any point,” Rose says. While many venture firms appeared to be suffering, this week’s rapid retreat struck businesses with significant crypto holdings particularly hard. The overall decline in crypto markets has been occurring alongside a more moderate decline in public markets over the last few of weeks. According to Rose, his company is not aiming to be reactive in an effort to profit from a potential bear market.
We can look entrepreneurs in the eye and say, “We’re not in this to flip it.” That is one amazing thing about our funds because we have never sold a token. We think it will take you a decade to establish something truly significant in this new arena, regardless of whether we are sitting on a 20x, 50x, or even a negative 50% discount to whatever the token price is. It’s not in our DNA to abandon the founder, which is the very worst thing you could ever do. Over the last several years, venture companies have discovered a large number of new supporters to participate in funds or vehicles with a focus on cryptocurrency. Rose thinks that most backers are aware of the risks involved in pursuing cryptocurrency returns, even if many of these LPs are probably going through their first significant crypto slump.
If individual LPs didn’t understand the multiples they were ideally striving for and the risks they were taking on, they probably wouldn’t be investing in a crypto fund, according to him. “If you look at everything that venture is dabbling in, cryptocurrency is the riskiest bucket of them all,” the author claims. You may listen to the complete conversation with Rose (above), in which we talk about his conflicted sentiments regarding the metaverse, the difficulties faced by entrepreneurs who use pseudonyms, and the inclusiveness issues with web3.