Episode Summary
Executive Summary: Boris Wertz of Version One argues crypto is still early but already reshaping VC, with decentralized platforms creating new business models, broader access to capital, and operational challenges for investors. He sees native crypto projects, deep technical understanding, and continued time in the space as essential, while believing the most successful future systems will blend centralization for efficiency with decentralization for trust.
Main Topics: Crypto’s stage in the hype cycle (Priority: 5/5): Wertz places crypto between early internet-era experimentation and a later-stage financial bubble, arguing the technology remains raw but is increasingly mainstream and still has decades of growth potential. Why crypto disrupts venture capital (Priority: 5/5): He identifies three forces: token-based value accrual at the protocol level, global fundraising competition through ICOs, and new operational/legal issues around token custody and fund structures. How VCs should adapt (Priority: 5/5): Wertz says venture firms must spend meaningful time learning crypto or risk being left behind; understanding the space requires active participation, not just watching from the sidelines. Investment approach and learning curve (Priority: 4/5): He recommends white papers, Telegram communities, and small personal bets as the best way to learn, while noting that white paper literacy is necessary but not sufficient for good investing. Native crypto vs retrofitting existing platforms (Priority: 4/5): Discussing Telegram’s ICO, he suggests native crypto-first products are likely to win, though proven operators with scale can still succeed if they can adapt carefully. Specialist vs generalist funds and LP participation (Priority: 4/5): He believes brands and conviction matter more than pure specialization right now, but notes that crypto-native funds and mixed funds both have advantages; institutional LPs remain cautious but interested. Version One’s thesis and notable investments (Priority: 4/5): Version One sees crypto as an extension of its network-effects investment theme and has backed companies like Coinbase, reflecting its confidence in the sector’s long-term importance.
Key Arguments: Crypto is still in an early phase, despite 2017 hype, because the underlying technology is only beginning to mature. Compared with the internet bubble, crypto is technologically closer to 1995 but financially already beyond that stage. Bubble dynamics attract dumb money, but better regulation and market discipline can filter out scams over time. Decentralized platforms change venture economics because value can accrue at the protocol/token layer rather than through traditional equity-only models. ICOs widen fundraising access globally and create direct competition for VC capital. VCs need to invest time and attention in crypto or risk irrelevance as the space evolves. Learning crypto requires reading white papers, joining active communities, and making small real investments. A white paper is important, but successful crypto investing also depends on team quality, community-building ability, and long-term execution. Privately negotiated token rounds can be superior to immediate ICOs because they allow more time to build, refine the token model, and gain committed investors. Native crypto-first products are likely to outperform retrofitted existing platforms, though experienced operators can still succeed. The future may not be fully centralized or fully decentralized; the best systems will combine efficiency and trust. Institutional LPs are interested but still cautious, often preferring mixed funds before moving into crypto-only vehicles.
Data Points: Version One fund size: $35 million - Version One’s current early-stage fund size mentioned by Boris Wertz Crypto market capitalization: about $500 billion - Wertz’s comparison of the crypto market to the 1999 internet bubble Internet bubble market capitalization: about $4 trillion - Historical comparison used to contextualize crypto’s market stage Time since Bitcoin white paper: almost 10 years - Used to emphasize crypto’s age and how early the space still is Team size at A Books: 70 people - Wertz’s former operating role before Amazon acquired A Books Year of Amazon acquisition of A Books: 2008 - Marks the transition point before he moved into investing First fund year: 2012 - When Wertz raised Version One’s first fund Recent focus period on crypto: 18 months - How long Version One had been going deep on crypto at the time of the interview Share of recent investments in crypto: six of the last nine investments - Indicates how concentrated Version One had become in the sector Solar return offered by Wonder Capital: up to 7.5% annually - Sponsor mention during the episode Telegram ICO funding expectation: up to two billion or so - Wertz’s estimate of Telegram’s fundraising potential Fundraising pressure interval: seven months - He described a seven-month stretch in 2016 without making an investment
Pivotal Quotes: "we're still in the very early inches of this" — Boris Wertz: His view of crypto’s overall maturity and long-term upside "the truth is really in the middle" — Boris Wertz: On centralized vs decentralized systems, arguing that the best future products combine both "if you don't spend enough time in the area, you're going to be left behind" — Boris Wertz: His warning to VCs about the necessity of active crypto engagement
Implications: Listeners should see crypto as an early but meaningful shift in venture and technology infrastructure. The winners will likely be teams with deep technical understanding, strong communities, and hybrid models that balance decentralization with practical execution.