Marcos Veremis – Investing at Accolade. The $6B Fund of Funds – ep 5

0:00 I think trafi can be pretty complex however there's less value ad there that you can deliver and it's overanalyzed and researched and the risks are kind of well known at this point crypto is just ex the exact opposite so it's harder this podcast is for informational and entertainment purposes only and is not investment legal or financial advice opinions are those of the host and guests and do not reflect any Affiliated entities investing involves risk and past performance is not indicative of

0:30 future results the host and guests May hold positions in discussed Securities now please enjoy the show Marcos thank you so much for joining me today super excited to chat with you all right Marcos you are a partner at Accolade Partners which is a venture capital and growth Equity Fund fund of funds you guys also participate in co- Investments and secondaries The Firm was founded in 2000 and you guys now manage over six billion AUM which is

0:54 just you know amazing you've invested over 20 web three funds and also you guys invest in traditional funds such as T Bravo a16z Excel Kleiner Etc other top amazing funds um so you know very very excited to have you on and really excited to dive deep into the kind of crypto fun to fun investing side uh but to kick it off H how did you start you know be becoming involved or interested in crypto because everyone always has

1:21 some kind of interesting unusual Journey so can you tell me about that initial uh what initially Peak your interest to to dive deeper into into the crypto world of course Andrew first of all thank you for having me it's a pleasure I mean we've known each other for years at this point like since the early days um and I'm excited to join you on this and uh cover you know everything related to what us Al allocators are doing um but

1:45 how did I start so I'm Greek as many people know I'm Greek and I didn't it wasn't in Greece physically during the crisis that happened but my mom was there you know my family was there and uh the country went through you know severe crisis that included Capital controls and um I recall you know I was living in London at the time even taking some cash out from ATMs in London and taking them the cash over to my mom in

2:14 Greece because she could only take a max amount out of cash and sorry you were physically traveling to Greece to send the money I didn't do it like uh I didn't travel just to give her the money but no of course while I was going back um I I often took money with me during that period of time to give her cash because she couldn't uh take more than a certain amount of cash out from the you

2:38 bring local Greek currency or were you bringing pounds uh uh Euros I changed I I exchanged Pounds to Euros Greece had the Euro and I remember doing that and I was like are we are we in 2015 really like I have to bring cash back to my mom from uh from England uh in any case uh so then I realized that if this could happen to a EU member State like just imagine other places in the world and at the same time I started

3:12 reading about Bitcoin and immediately the idea of Bitcoin was evident to me right it was an asset that is digital peer-to-peer you control it uh or you can control it if you if you don't custody it um in coinbase or somewhere else you can actually custard it yourself with your private Keys Etc you it's not subject to Capital controls um it's not uh subject to seizure um it was an eye-opening moment

3:44 for me and I think it was really related to that moment in time that I was living through uh which was surreal in a way so I think that's when it caught my attention and it picked my interest personally right and then I started reading about it um I read this book called uh mastering Bitcoin that a friend of mine suggested the Greek guy called Andreas antonoplos has written so it's a great book like I'm I'm not a

4:13 programmer um and the book can be quite technical but I read the text and I took my time to read it and I just found it fascinating the whole Bitcoin Network how it functioned and how it managed to solve the problem of double spending and all of that so I I was fascinated by it also from a Innovation perspective as well after I started reading about it so uh that that's how it started and then obviously like it entered my

4:43 professional life in uh early 2018 when I was at Cambridge Associates we we can go back in time and I started uh kind of officially like researching the the crypto blockchain space uh from from a professional perspective at that point and and going back to when you first were digging into Bitcoin were you researching Bitcoin because you were curious how can I send my family money more effectively or was it some other random happen stance that where where

5:13 you started digging into to what Bitcoin is it was kind of a random happen somebody mentioned it to me I started reading focusing more I mean people had mentioned it to me before but I started um kind of focusing my attention to it more and reading about it I realized it was peer-to-peer so I would say like the the circumstances led me to revisit kind of Bitcoin and actually give it a look and then I realized you know what a

5:42 incredible Innovation it was in in my in my view for the first time to have a peer-to-peer digital asset borderless Global not instantly exactly but almost instantly uh settled like I mean it's um if people don't understand that then I mean there's not much else I can tell them why this is an important or very interesting Innovation and so 2018 Cambridge Associates could you give a brief explainer of Cambridge Associates I mean you know my very basic

6:12 understanding is that they're a extremely large asset manager and they are involved in all types of activities I think you know they have fun of funds I think they do asset management uh maybe smas uh but what what is like the you know the kind of the broad overview of of Cambridge because they're they're Behemoth so I I joined Cambridge um after business school so I went to business school in New York I came to the states and went to business school

6:36 in New York and then like a business school graduate I found a job and I actually stayed in the states for my first seven years um at at Cambridge Associates I found a job there through business school and I I ended up spending 13 and a half years there across three different offices seven in Boston for in London and then back in the States in DC where I'm at right now the firm is a legendary firm in the that

7:00 it started out in the 70s and um around the time when Yale was also pioneering uh the endowment What's called the endowment model uh basically Equity heavy portfolios uh with a high dosage of Alternatives uh hedge funds private Equity Venture Capital Etc which now it seems you know evident but back then you know not many institutions were employing this uh tactic and uh and so Cambridge was one of the pioneers years of that approach and it started uh

7:32 advising endowments in the US and um on asset allocation but also selecting the actual managers in in each of these categories and by the time I joined it was the largest consulting firm investment consulting firm in the US for specifically for endowments and Foundations by the time I left it had evolved to also managing directly some of these uh endowments What's called the oci business which is outsourced uh

8:04 Chief investment officer business but o but overall like asset allocation and manager selection very very similar to what I do now which is a funo funds approach right uh but Cambridge was more of an advisory firm and so did you bring the the thesis and ideas pertaining to crypto to Cambridge or were you guys already was there already a group within the firm that was talking about excited about crypto I think there was a group I

8:30 mean uh it was uh remember 2017 Ico bubble and everybody was talking about that uh there was a group that was seriously talking about crypto at Cambridge um however we didn't have a centralized effort uh meaning we didn't have a point person to gather the data um you know research things further disseminate you know the information um find the managers all of that so it

9:02 was it was some people were doing it uh but I raised my hand to do it in a dedicated way at least part-time because I had other responsibilities and crypto wasn't big enough at the time and the reason I raised my hand to do this because I was just already fascinated personally by crypto were you known as like the you know because oftentimes I hear stories about people being kind of the the one that who's championing

9:25 crypto at their firm and people view them as kind of like oh you know it's Marcos he's he's like in the weird crypto stuff what what was the perception of crypto at Cambridge at the time was it like this is a um you know funny weird thing that we should kind of look into or is like you know oh this is the future or you know what was that what was that perception I mean it was

9:45 mixed depending on the person right and their level of knowledge but I would say like that the firm in general was um a first mover in the space so the fact that the firm was willing to explore the space as early as remember remember like January 2018 nobody was exploring the space on the allocator side the fact that the firm was willing to do that shows like a DNA of being Innovative and trying to find things early on like it

10:10 was back in the 70s when Venture Capital was a nent thing right it it's kind of the same DNA like you you try and look at things early so I think there was a substantial group of people who were intrigued by it but but I mean the majority I would say was very skeptical of it right I mean it hadn't shown yet any real use case um it people had lost a lot of money in the Ico bubble it

10:37 wasn't institutional right so I do think the vast majority were Skeptics at the time but I would say there there were also several clients institutions that were um that were interested in looking at it um you would consider them from the outside as to be conservative institutions but actually they they were interested in looking at it and that was in you know you moved over to Accolade which is where where you are today and that was hey Marcos we need someone

11:06 fulltime just to be focused on the crypto ecosystem because as you said it's growing rapidly and and it's very expensive is that is that right exactly I mean crypto took off uh in 2021 and um it took off in a way that I don't think uh anyone expected it certainly I didn't expect so what do I mean by that uh in 2020 there was some allocation happening from institutions to cry to crypto uh but it

11:36 was pretty muted right there was these first mover institutions that were open-minded about it that were doing it and it was a pretty nichy area like I could count on five fingers the the people allocating to crypto like it was myself Brooke Paul Accolade um Andrew Chan a a few others um but in 2021 the space took off and the influx

12:06 of capital was overwhelming um it it it just came in kind of second half of 2021 there were so many allocators who wanted to do that so was clear that from that moment on this would be um a space where there would be significant institutional participation and it was an inflection point I also live in DC so is in DC so it was a perfect match I knew the guys also very well from my days at Cambridge

12:34 who were sharing ideas as early as uh January 2018 about the space so that was okay early days uh 2020 2021 how were you going about sourcing these these early managers in the crypto ecosystem because you know that there there weren't now there's you know I don't even know how many of you probably know um but it seems like back then there weren't that many especially in 2020 early 2 I'm sure in 2022 there was a

13:01 significant boost but how do you go around around sourcing the these different managers at that time yeah so I went to conferences I I remember I started you know probably early 2018 to go into several conferences um and starting to meet people I started reading I remember reading you know the what the multi-coin guys were writing for example um I started you know reaching out to people connecting the dots you

13:31 know if you do that for 3 four weeks after a point in time you start connecting the dots and getting in touch with people and you move from one thing to the next eventually I had met I think most good managers of the times meaning you know met during that period met dragonfly multicoin electric met Andre and horvit obviously launched their fund then I mean there were many funds that are well known today that emerged you

13:57 know around that time but it was more about like doing a bit of uh Grassroots research right like going to conferences reaching out to people cold reading their stuff getting introductions that sort of thing very cool yeah in these early days determining who's actually good is extremely you know it's always hard to determine who's good but in the early days with so little data to go off of um how would you make that determination and this is you know 2020 2021 would it

14:28 be more so you know having conversations with them and understanding their knowledge base of certain technical aspects of crypto blockchain and their thoughts and Theses or how are you making that assessment of how how well they might perform yeah it was a very difficult thing to do as you say because I mean many of of these folks didn't have official track records or they had some Angel Investments maybe uh or small Investments and if if they had a track

14:55 record it wasn't very long uh and in traditional Finance you're used to Long track records so it's the quantitative aspect is part of your analysis here like you had take that out of the picture and you had to say hey this is a completely new area uh these guys are first movers what's their reputation like how do entrepreneurs feel about them so I spoke with many entrepreneurs at at the time to get a sense of like

15:21 who they valued who they didn't and um I think that was the primary data point if you will or the primary set of data points that guided my U my diligence at the time I mean that makes total sense and it's you know references and kind of the people that are actually getting the funding uh it's a you know they're going to tell you the truth they have no reason to to kind of lie there so that

15:43 that's a very smart idea and do you think that during this process and still today you have developed a great ability to read folks or how are you able to you know references is one thing you know you have to find the incentives to make sure the reference are incentivized to lie right um you know not that people are outwardly lying just you know you want to make sure that you get to the source of Truth as

16:06 quickly as possible um but yeah how was your personal ability to read people evolved over over the years that's that's a great question and there's no easy answer there because I can give you some high level thoughts but at at the end of the day it's uh something you you learn and and you get better at I think and you you're not you're never like perfect but you get better at it and I think it's less a theory more a practice

16:34 that's why it's it's a little bit harder to explain exactly how um you make these um determinations but I would say you know what are the most important traits right um I think number one like Integrity right that a person has Integrity um number two uh passion I think um you know if somebody has a passion they will be there and deliver the maximum and they will also be there

17:05 for the long term most likely intelligence obviously right like if you speak with somebody and you talk about specifics uh you can understand like their level of depth uh how much work they've done you Qui quickly kind of connect the dots and you know through other inter interactions you've had with people you can start kind of benchmarking things as well so I think these were some of the most important characteristics to me like for crypto there's also another one

17:34 which is resilience and uh I think it's extraordinarily important in crypto because with the viciousness of these Cycles if you're not resilient you're going to drop off I mean 100% like in a bare Market you're going to drop off it takes a strong stomach I don't need to tell you that but uh by the way like you know it very well but um I think understanding also whether that person will be there when times look bad um is

18:04 key and whether that person will be making Investments during times where where things are bad and in terms of you know managers meeting you and you getting comfortable with folks because you know a lot of crypto is remote even before um you know even before Co and whatnot but are are you seeing these managers uh at multiple conferences and you're having conversations with them is is is that continuous exposure like let's say I'm a manager I'm trying to

18:32 raise tra raise from Accolade um the best way is obviously you know have good performance of course and have the following traits that you mentioned in addition to that good performance but you know should I try to attend as many Converses as possible and talk with the right folks so they have that repeated exposure or continuous exposure to me so I'm not some stranger and they kind of you know over five six seven eight meetings they're like okay um Marcos has

18:56 a rough idea of who I am and can read my thoughts and thesis and whatnot is that kind of something that you know managers should be thinking about or is that continuous inperson exposure not not as important because we're in a kind of virtual you know environment I think um in person to me is important like you don't have to do it like eight times but I think you got to do it a few times right and and of course zoom zoom

19:22 exposure I mean there are there are hundreds of crypto Venture funds at this point like I think we've met over 500 and uh yeah believe it or not that includes some open-ended types of strategy so liquid Venture I'm not including things like um Arbitrage or you know long short like crypto strategies uh and I'm talking more about Venture Long only kind of exposures including open- end so so there's a lot going on and so you know I mean

19:55 obviously like we try to meet everyone and we try to take notes on everyone and be familiar with what is going on but sometimes you you know having more interactions on on the part of a manager helps with awareness of what they're doing and and so I would encourage it so yeah talking about the liquid versus kind of venture strategy what do you guys focus on at Accolade because you also mentioned that um you know it could

20:22 be a crypto Venture funds but you know once those tokens go live it's kind of into a hedge fund or or can be um so tell me about your you know accolades focus and and that kind of weird crossover between liquid and and VC and crypto yeah we do both um actually strategies like the The Venture side uh which is as you know closed ended structures and the open-ended side which is kind of hedge fund structures and I'd

20:45 say like in some cases the two are absolutely similar like if you look at these the two portfolios and you don't know whether it's open-ended or closed ended and you look at the positions in some cases you couldn't tell the difference right right and One Fund is open-end and the other is closed end uh I think though in general like the closed ended strategies have a little bit more early stage pre-t toen launch exposure certainly at the

21:09 beginning and then the open-end funds are have have obviously at upfront a lot of liquid exposure and then build a liquid exposure earlier stage exposure over time via Side Pockets you know if you fast forward in time um they're both a healthy mix of tokens and early stage stuff right right um now what is better or what is the appropriate structure that's a very hard question I think it depends um I think I used to like the

21:40 Venture structure back in the 1819 period a lot because um it it was a long-term type of structure right and uh you knew that managers weren't going to be forced sellers they could play the Cycles Etc since then I've seen some open Ed managers navigate things really well also terms of Cycles but I would say in our mind you know both fit like the the the Venture Capital long-term like betting on on this sector mindset

22:10 uh this spases tokens and Equity so and it will always be like that all right so if we were hypothetical Marcos you have a billion dollar family office and you could only invest in uh either liquid crypto funds or crypto Venture funds what would you choose uh I would probably choose Venture funds the reason being that um I I have like a 10-year time Horizon at least right so I don't need to take any money out um after

22:41 three years now I don't have to even if it's an open-ended fund but the thing that worries me a little more about open-ended funds and again they're not all equal just to be clear is that people can actually take money out and uh they can face some pressures during a bare Market so other things being equal The Venture funds are more protected from that and I think staying alive in the bare Market is like half the battle

23:07 if not more than that like 80% of the battle so I'd probably go for Venture structures again I don't want to be too rigid in my thinking I in fact I I would do both uh but if I had to choose probably the Venture structures what is you know maybe this is not the correct question but is there a overarch in investment philosophy with Accolade pertaining to crypto or you know is it is it because it's such a new Emerging

23:36 Market in space that there's not one kind of strict thesis it's more like hey we want to make bets in this market because we're very bullish on it and different maners are doing a huge range of strategies the the thesis is that this is a a major open- source software Innovation it is the internet of value it complements the internet of information it feel like a really natural part of the evolution of the internet uh that's thes number one thes

24:04 number two is like many people misund understand it or are too scared to tackle it so we can be the ones who who can tackle it and figure it out and diligence it and make sense of it and make good investments in it for the long term so I think it's we have a strong conviction in the space on the one hand we also think that it's a great space to actually add value from where we stand

24:31 for investors because it it just is an area that is difficult it's difficult to research difficult to understand uh difficult to manage and we want to play that role and we are playing that role for the past several years yeah so so you know it crypto is extremely complex um but uh you know trafy for me is extremely complex right and so from your perspective because you were in both worlds would you say that trafi is just

25:01 as complex as crypto or or do you think that no truly crypto has a lot of intricacies that really you just got to have a lot of experience and time in the market to really get to understand because for my opinion it just seems like oh Trad fight is just like that is know exactly the same the Trad fight can be I mean there are countless of strategies like um can be challenging to understand like all different like

25:23 trading strategies or hedge fund strategies or product du s Etc however it's been around for a very long time you kind of know its risk characteristics more or less there's so much that has been written about it like it's covered by thousands of analysts and people um honestly like there's not much value to add over there like as if from from an allocator perspective one of the reasons also that attracted me I didn't mention that before to crypto was

25:53 like okay here I can actually make a difference right like I'm not going to make a difference in hedge fund land like I mean it's been analyzed for 40 years and there had been like thousands of books and articles millions of Articles published and like I I might I might add some value but it's going to be marginal I think crypto is much harder in my opinion to navigate and it's much harder because there are much

26:24 less information around it it's not regulated at least so far it has immense volatility which people panic with um the volatility of the S&P 500 like investors really have a rough time you know when there's a lot of volatility in the S&P 500 just imagine here like it's very hard it's very hard to stay the course it's very hard to manage that the feelings around that the investment strategies are around that so to answer your question maybe um to summarize like

26:56 I I think Trad fight can be pretty complex however there's less value ad there that you can deliver and and it's overanalyzed and researched and the risks are kind of well known at this point crypto is just ex the exact opposite so it's harder so when you're thinking about uh portfolio allocation with Accolade are you guys thinking about okay you know we have um five Venture funds we should probably have five liquid funds and you know we have

27:25 most of our funds are in America so we should go to Asia and find some more funds or are you guys setting out strict guidelines as to you know kind of f filling in these these specific criteria that you're targeting or um is it more hey crypto is pretty new so we don't want to you know kind of lock ourselves into a structure that we might not like yeah I think we're very open-minded um in general we we take an approach where

27:48 is Diversified in the sense that like we do a lot of early stage investing and we love early stage investing meaning preed early seed small funds we think you really can have really outsized returns if you get it right so we love doing that but we also do funds that have more liquid token exposure as well right I think this is this is not a space where at this stage you should be taking too many kind of thematic bets I think you

28:17 pick managers that you like and you let them run with all of that said we've done some things like Specialists right in gaming web three gaming uh consumer Europe Asia we've done some of that but in general I think it's been more kind of generalist type of funds both early stage on later stage both closed end and open end so I really don't think there's um a recipe yet here of of success I mean you can find it in many places when

28:47 you're looking at and and speaking to different managers what are you and you did mention those traits earlier but what are some other qualitative traits you you look for um you know are man you know obviously managers should have really in-depth knowledge about their specific area of expertise and whatnot um but what are some other I don't know qualitative metrics that or qualitative things that you look at when when speaking to uh managers I think uh depth

29:12 passion resilience are the three most important things now you you don't want somebody who doesn't change their mind right but you want somebody who believes in the space long term somebody who from the outset tells you and knows that this space is going to go through really bad times and I cannot stress that enough I strongly believe having studied the space and other you know technological like events that the only way the most

29:44 rational way to play the space uh if if it works let let's assume it works or it doesn't work but either way the way to play it is to be investing throughout the Cycles that's the only way for success so if somebody's going to bail you know after the first piece of bad news they're not going to persist their next fundraise is tough and they're going to wrap up and leave like that's not the type of manager we're looking

30:10 for right uh I think you need people with resilience here and passion creates resilience right if you're passionate about something you're most likely to be more resilient uh when when the times are bad uh because passion is going to drive you through that so I think these are the three characteristics in my mind like the main ones yeah and and also you spoke about kind of the specialization you like to target funds that are not necessarily specialized but you you have

30:37 also done some a few funds that are specialized in certain areas but we're talking about resilience and from my experience you know the the crypto ecosystem has every kind of cycle has these certain submarkets that outperform so 2019 2020 defi 21 nft so on so forth Etc um you know I you argue like 24 and today like meem coins and AI coins maybe which are kind of similar um but these these managers and and having this

31:06 resilience have you found that the managers that can say Hey you know maybe I start off in defi but now I'm going on to gaming um and kind of be able to arve these narratives have you found have you found that to be effective or really the manager that started with eii has a really tough time entering and and kind of investing in different areas of the market no I think um our experience has been most managers have actually managed

31:32 to evolve around themes right um I mean they know the space well they they understand uh the power of blockchains in general like across verticals and we've seen managers that were originally like only D5 focused right now they're doing dpin for example as well and they're doing that effectively so I think um our experience has been that managers have successfully kind of pivoted if will or moved into different areas in the blockchain space at least the ones we work with because this space

32:03 is also like going to move like up and down and um and and also like in in different different categories are going to emerge other categories are going to go silent like this is the nature of this game yeah you said up and down I was thinking up and down left right behind you it's just like you know evolving in multi in multip multiple Dimensions there but um so okay when you're when you're looking at different

32:28 managers what have you identified to be a a kind of a source of sustainable Edge we do a lot of referencing um or or with entrepreneurs like and and we do a lot of that as part of of our process and I think managers who reference really well with entrepreneurs uh tend to do well however that's not the only thing the the other thing is also portfolio construction I think uh to give you an example like

32:57 let's take a venture funds because open end funds are a little different like let's take an early stage Venture fund it's the same with traditional Venture by the way like the big out outcomes happen when you have high ownership in something right and your fund size is um a certain size that's not too large right so this ratio of ownership on fund size can determine you know whether an outcome is going to be massive or uh

33:23 medium or small uh so I think managers who take High conviction bets like they they have uh a portfolio of like several companies of course you need to be Diversified but but are taking pretty high conviction bets and are taking substantial ownership and are keeping the fund size relatively small I I think is important so it's references of course like getting access to the best deals but also the portfolio construction is important on the liquid

33:53 side I think um managers there um I mean there are all sorts of flavors there on the liquid side but I think managers who will buy liquid assets during a bare Market including Venture managers historically they've they've done really well right and either calling Capital to buy liquid assets in a bare Market or uh if they're a kind of a open-ended type of fund maybe you know drisking a little bit in the in a bull

34:25 market take you know holding a little bit more cash um when things are overheated and maybe investing a little bit more cash into the market when things are actually you know very depressed it's it's easier said than done by the way but it makes a huge difference totally yeah no it's it is exceptionally to have the the confidence uh to call Capital during a bare market and deploy that capital and in in size into liquid tokens is extremely um to

34:57 have very very high conviction and you know be ready for that because often you know it's get gets pretty volatile during bare markets it's volatile all the time but you know it takes a lot lot of lot of confidence there um so you mentioned the fund sizes in terms of what would you consider to be two large of a uh fund size for Venture and then too large of of a fund size for a liquid or or maybe it's the same it's all very

35:21 dependent like for Venture I mean if you're trying to do preed seed like I don't think you should be more than 100 million right probably less if you want to have a bucket for Ser series large series A's and liquid tokens then you can have a much larger fund size but I would say if you really want to do preed seed it's going to be it should be 100 and and lower in my opinion we can argue whether

35:46 it's 190 110 or whatever I'm giving you like a a rough number um on the liquid side like listen if you have a strategy that buys Bitcoin and eth you can run billions of dollars but if you want to be a a token picker of small cap tokens right um and you want to buy things that have have very thin volume you need to adjust your fund size so that uh you know your Market impact when buying or

36:18 selling is minimal and you can actually exit and enter positions at a at a certain size like over over a period of of several days so um I guess the short answer is you know it depends what you shouldn't do is like have a strategy that doesn't match the asset size right like you know and we see many managers doing that actually they they grow and grow and grow and you know they used to be great at doing early stage investing

36:47 now they're doing late stage investing they used to be great at picking like small cap tokens now they're buying Soul like you just need to make sure that that your skill and your asset base are match that makes total sense so in your experience have you identified correlates of success uh between the funds that you're investing in you know and and maybe that's like maybe it's like the timing so it's like hey you know these vintages tend to

37:13 really crush it or you know if you have incredible access then the These funds that have great access always tend to outperform or um have you found these quots of success or is it pretty manager dependent still I think it's quite manager dependent but also like I think these These are certainly aspects of success right to give you an example timing right I mean anyone who invested in 2018 has a I mean the returns vary but um if you look at the those vintages

37:42 back then they've you know almost every manager of that vintage that I know of like has done so much better than the top 10% of traditional Venture right so timing it was amazing timing amazing vintage bare Market low valuations less competition all of that stuff these things matter uh in differently like in 20121 it was not a great timing like you you had high valuations tons of capital tons of

38:14 competition so timing matters a ton and I'm not sure managers actually they can try to uh they they can try to manage the timing to a certain extent but not to a full extent as you know right but they can try on the other hand you know access I think matters right uh I think you know crypto has gone up like as a category a lot but if you had picked certain deals and had gotten into

38:41 certain uh deals where entrepreneurs were high quality like you could have have have really outsized returns like I'm thinking of companies like back from 2018 like buy some Trails for example right which I know it was a bit access constrainted from what I recall but you know that if you had access ins size something like that with great entrepreneurs like you could really shine so the short answer Andrew is like a little bit of everything yeah I think

39:09 that I wonder if we're going to see it evolve in the future where it does become maybe it's always been like that even in trafi uh where the short answer is that it actually depends but maybe with crypto it kind of Coes towards timing or Cor CO leses towards you know access or whatever but um I I expect it to probably not be like that I expect it to just broaden and become more really manager dependent in their specific

39:33 skill set and and their team skill set um but so talking about you know kind of trafy versus crypto what are your views on crypto exposure versus or like token exposure versus Equity do you like to have a little bit of a mixture do you like token mostly Equity mostly what are your views there I think um the way things have evolved where you have like equity in the business plus the token warrants like is a perfect world right

39:57 you have exposure to both like wherever the value acrs and you can ACR value in both potentially right I do think though that the major Innovation here is tokens and um and I do want to see tokens right um if investing in crypto like I think it's part of the greatness of crypto is like that you can have early liquidity you can um trade um early stage projects you know early on without having to wait like 15 years to to IPO or something so

40:32 that's the positive side of course the negative side there's a ton of speculation ups and downs terrible projects get overvalued and all of that so that the game you're playing is so much different than a traditional VC but would like to have a foot in both and certainly have the token element totally you can be as big as you want here but can you give an example of a great investment that you guys have made at

40:56 eade I think um for crypto this is the case for all asset classes I believe but for crypto even more so I mean we we bought many secondary Investments meaning LP interest in the secondary markets during the bare market and I think those are going to be extraordinary Investments why because um twofold number one prices are down in the bare market like they're always tokens in some of these interests you know they're down a lot so you're buying like these

41:26 tokens at a very cheap price you're also buying these interests at a very steep discount because the investors really want to get rid of it they're either forc sellers or they lost confidence in the asset class so there's this natural Arbitrage from long-term Believers holders and short-term um holders and people who don't really believe in it and you can basically have these extraordinary pricing opportunities to buy assets kind of at the very bottom I first came up across this with

41:57 ga uh the claims you know you're you're familiar with it just to be clear this is not an accolate trade I'm referring to amount gax um that happened in 2014 and then there was a bankruptcy you know people were selling their claims of the estate that was a situation where you know you if you had bought some of these uh distressed claims early on it would have been one of the most extraordinary trades ever it's both a distressed

42:26 aspect and the crypto cyclicality like the two together are a very powerful combination yeah I I for were this claims do they get Bitcoin as well as the equity of the company yeah so the it was only basically it was claims that um the underlying estate of Mount gaau had uh cash they had Bitcoins and they had Bitcoin cash so it was such a simple trade like in the sense that you could uh buy one claim for for example right

42:58 for $100 let's say right and there was a point in time where you bought one claim for $100 and in that claim there was like $85 of cash Bitcoin and Bitcoin cash so basically Bitcoin went to zero you got 85% of your money back if Bitcoin kept appreciating you got kind of leveraged upside on bitcoin and so you were basically getting leveraged upside on bitcoin with downside prot protection I mean it's incredible trade

43:30 and the reason that that happened is that people who owned these claims needed liquidity or they weren't willing to wait or they didn't understand the bankruptcy process or countless reasons yeah you know it's it's I was listening to a podcast recently and someone had said the best trade is when you're a a a um Force holder of crypto and and they said and specifically Bitcoin and they said that Ross o is like one of the best

43:53 investors because you know he he created the Silk Road which is that Dr Marketplace he got arrested put in jail for for what was supposed to be life um and he had a lot of Bitcoin and you know he was just his sentence was just uh he was just pardoned by Trump recently and so now he's out and he has uh apparently access to some Bitcoin that has appreciated massively so everyone people are saying that yeah you know if if you

44:16 were in that position and you were free and had access to your Bitcoin you would probably sell after you know x% increase you know wow this has gone up 5,000% I'm going to sell right because it's logical but you know as a force holder like you know you know anyway so so that that reminded me oh there's there's certainly an aspect there with with this um Mount Cox trade right like um you know the person who's willing to hold for the

44:37 long term and not trying to get liquidity right now is going to reap the benefits right of the trade there there's always a risk right there the risk was that you Bitcoin would go to zero and you'd get you know a certain percentage of your money back but the um incredible thing with uh with Mount GA was that there was a ton of cash in the estate also and depending on the price you bought the claims like you also had

45:03 this natural like downside protection like you were buying like a pool of cash Bitcoin Bitcoin cash for a very cheap price you know we went down the rabbit hole of Mount go but that's one of my favorite uh like distress trades of all time love that all right so speaking of a dist you know distress trade have you have you been involved in any sort of like very difficult situations at accolate or any sort of like quote

45:26 unquote Crucible moments that um you know were very difficult and then if so uh what lessons did you take away after you you you know overcame that that obstacle yeah I mean the bare Market can be very difficult on managers it can be very difficult on entrepreneurs it can be very difficult on investors and I think a crypto be Market is like 10x like a normal bare Market in that respect um and I just think that you

45:54 need to keep a level head and um be calm and take a long-term perspective and you know try to navigate that period until you're out of it because you will likely get out of it at some point so so I don't have like specific examples around that but I would say in general the bare Market can be challenging for everyone involved in the space so the most important thing is to not panic I think be calm play for

46:23 the long term right so I'm always interested in service providers because service providers in this world of crypto are pretty unique um well their capabilities are unique oftentimes they're traditional providers that now have implemented crypto systems and whatnot but if you could wave wave a magic wand and kind of change some operational aspect of of kind of fun operations whether it be tax audit you know Fund in whatever custody um how would you you know that magic W could

46:51 improve something uh some operational aspect what what would you choose to improve yeah that's a that's a great question I think custody would have been something I would have mentioned like a few years back but I think now it's improved a ton um there's still like stuff to do there but but I think you know with all these custody offerings and the way things have evolved like it's much more professional now when I look at funds like especially on the

47:17 open-ended side um valuations like the way people value things can be a little bit inconsistent like I mean with respect to lock token things like that right so it can be a little frustrating if you if different managers use different types of methodologies to kind of compare and confast them uh and you often need to dig deeper and kind of look at the valuation policies and all that I think it would be great if there was like one

47:44 standard that the industry adopted eventually like on valuation policy um maybe maybe that so you know next question what would be that if you could design the standard you're saying hey Marcos we need to design the golden standard for valuation policies for valuing these assets especially lock tokens you know how would that look definitely have a discount uh because recently there was this ASU proposal uh in any case like certain managers use this ASU guidance to maybe considering

48:14 uh you know not um discounting any of the lock tokens and I think that would make their portfolio so much more volatile right and also like I don't think a token that has a low load on high fdv it could end up overcoming its valuation you know over time like um if it's a the next Solana or whatever but like the vast majority of these are probably going to trade substantially lower than that at the end of the day

48:41 when things unlock so I would definitely have a discount I mean one one natural One is using a black schs model like I think many managers do that um I think that makes sense so it would just be nice if all managers had the same methodology so you knew like that when without having to dig dig deeper every time you knew uh that you're comparing at contrasting two similar things totally yeah no it is tough though it's

49:09 like you know what's a fair discount is it 20% is 50% 80% in different scenarios there's you know maybe you can come up with different logic as to why you gave that specific discount but yeah no I think a standard would be would be great um okay so the fundraising environment you know uh a lot of people I mean yeah a lot of people have been saying institutions are coming since like 21 and maybe even since you know 18 where

49:33 like Enterprise blockchain was a kind of a big theme but um so are the institutions coming from from your standpoint and especially with kind of the new Administration who's more proc crypto obviously with trump our president launching a like a a memec coin which is insane um and you know now bitcoin's reached 100 well it's going back around hovering around 100K have you noticed a a appetite change in terms of institutional awareness and interest in crypto yes uh I I think there's a lag

50:00 right the the elections happened in November and now we're January we're not even in February yet so there's definitely a going to be a lag but I do feel that um the PO the environment is going to be much more positive for fundraising than it was like the past couple of years post FTX um for two reasons one is that um all these frauds happened you know in a very short period of time and FTX was an absolute shock to

50:26 to the syst system as well and it happened after several other frauds and bankruptcies had occurred so institutional investors were just like spooked at that point and left and then you also had the SEC campaign against crypto which gave it a generally um a regulatory risk component that um that many people found found you know to be too risky for for their mandates now you know the frauds all these things have kind of washed out it's been several

50:56 years at this point I don't think there's any other Sho to drop right now like I think we've seen them all at least uh from the past uh vintages like I think they're gone um so You' have that and so people have moved on from that uh and number two like it looks like with this Administration the space is going to is going to have regulatory Clarity and in any case there's been a massive regulatory D risk of the space given

51:28 this uh new Administration and so I think these two things combined uh is going to bring back institutions to the space um and I think it's going to be is it going to be like 2021 I don't know I I don't think so I think there was just uh so much interest back then um that I'm not sure we're going to see it again to that extent in such a short period of time but I do think it's going to be much

51:54 better this year awesome all right maros are you ready for the closing questions yes all righty what trend in crypto do you think is overhyped and which Trend you think is underhyped yeah um and just to be clear I I believe in everything crypto and and they will go through periods but I think you mentioned meme coins AI Etc I feel these are overhyped areas right now will they exist in the future of course they will exist but um mcoins kind of feel

52:25 like nft Mania to me like right now maybe it's going to go even higher I don't know but I I do feel they're a little bit overhype that doesn't mean that there are areas that are not going to exist in the future right um I think that's kind of more the overhype part the underhyped I think there just so many protocols out there generating income cash Etc and are sitting at pretty low multiples like and you're you wonder you

52:55 know they're not that flashy narrative and they just seem o undervalued at this point and some defi protocols for example and you can see the potential for these to re rate you know in the next SE several months to speculate a little bit would you uh could you see a future maybe this year or next four years or whatnot where these uh tokens can send the revenues back to token holders I believe so like with this new

53:21 Administration right because there's going to be some sort of regulatory Clarity and I do believe that there's going to be um also a constructive regulatory framework the way things are are developing which will allow some of these projects to return the money back to investors like I think they've been withholding that uh for fear of being targeted by the SEC but now that fear is is um is not there anymore yeah it's tough to tough to be super fearful after

53:51 the president launches a meme coin you're like all right well it seems like we can probably try this you know not saying do it I'm just saying you know it seems like it's open season um cool all right what is a lesson that you've learned recently that's that's surprised you the life lesson for example yeah that' be great so um I'll talk about my kids I have two daughters right they're young before I had kids I thought that

54:13 uh were kids and they didn't know much and they didn't um understand the world much and I've seen by speaking to my daughter sometimes that they can actually see things better than I can in certain circumstances like just by being by thinking simple and by not over complicating things and by actually seeing through the essence of things like I've seen my daughter who's like seven years old like tell me something that I'm then thinking you know how could I have not thought about

54:41 that for example she told me the other day daddy you you look too stressed you're always on your computer you know the world is beautiful out there and you can go out and have fun you know that sort of thing and it it's a very simple message but it's something that an element of wisdom around it that my seven-year-old was able to to get and I wasn't able to get that's it's so true it's absolutely you know I was smiling

55:08 because I'm like man it's my my I have a three-year-old son and he uh I forget what he said recently but he said something recently and he's three years old so he just you know learning how to speak and whatnot but um it just cut straight to the truth of of what the situation was and I was like I was so surprised by it oh my gosh like he just he just like T T me something you know

55:27 you told me something that's so truthful exactly as as your daughter said you know hey you know you're on your computer too much you know let's go outside let's go take a walk you know um so man you know that's that's totally accurate I love that all right if you could go back in time and give your give your younger self one piece of investment advice what would that advice be um you can take more risk than you

55:48 think interesting okay interesting do do you think that it with within your personal investing that you've you've been more defensive I think that before I found crypto I was a little bit conservative um and I I was more focused on Capital preservation rather than capital appreciation and I don't think I should have been I think uh if you have a long-term time Horizon you can you can take more risk now I don't want I this is not investment advice some people

56:18 might really take risk and screw it up I'm talking about my personal experience I think um I anchored a little bit to much on Capital preservation and I didn't take enough risk um and once I took enough risk I mean in the case of crypto it's Unique but um you know Capital preservation like was a happened plus you got returns right so um I just think don't be if you have a long-term time Horizon and you understand what

56:47 you're investing in don't be too conservative that's I what I would tell myself like of 15 20 years back all right what is your proudest accomplishment uh my daughter's I don't know if it's an accomplishment but the proudest moment I guess uh for me like is having my two daughters love it Marcos man thank you so much I appreciate this this was Stellar if people want to find out you know more about your sell for Accolade where

57:13 should they go accolate partners.com easy easy all right Marcos thank you appreciate it we'll talk soon thank you very much Andrew take care man