Marvin Liao, partner at the early stage VC fund 500 Startups that financed companies like Credit Karma, Udemy, Grab and Twilio, shared his thoughts on blockchain, ICOs, the future of crypto and a lot more.
Marvin is bullish about the long-term, but he compares today’s situation to the dotcom bubble. Just like then, he says, there is a lot of distracting noise in the short term, but when this abates, the really valuable blockchain projects will emerge.
There is a lot of hype currently with many trends, particularly ICOs. We are at the peak of the hype cycle, and there are tons of different ventures. Something will come out of it, but we don’t know what yet.
Where to Invest?
When asked how he decides what projects to invest in, Marvin said he looks first and foremost at the people involved. Of course, “does the use case make sense?” is always the first question.
However, even with a good team and excellent use case, we are lacking the core infrastructure for a lot of these companies to succeed.
“There is a lot of hype, there is a lot of money being raised and there is nothing being build.”
Founders are making mistakes by raising too much money – which can be as fatal as raising too little.
“Bitcoin Should be in everyone’s portfoli.”
Bitcoin, he explains, is more like gold, it is something to have in your portfolio, along with other assets.
Marvin gave some excellent tips for entrepreneurs, noting, the odds of success are very low so you might as well work on something that matters to you. There is a trade-off between money and time. You can lose money and get it back. You will never get the time back you lose.
What are key factors for a successful platform business? A platform is a marketplace – look at Apple, Google, Facebook, Amazon; they are all marketplaces. You have to learn how to balance supply and demand in the marketplace, make it easy for sellers and buyers to come together. At the beginning it’s not about attracting attention, it’s about solving a problem in a niche market. Look at Craigslist and Ebay. They started by serving niches and then built up from there.
Massive regulation is going to come into the ICO market and this will make things tougher. We will then see ICOs taking place at much later stages, which will raise the bar for them. The wild west will come to an end because of regulation.
“This is a great time to be looking at this space. Crypto is the future, whether people like it or not.”