My Next Startup is a Multi-Strategy Crypto Asset Fund — And Here’s Why
First Medium post…Ever! So here goes…
I recently left DocuSign, who just announced that they were going to go public, after a little over 2 years as the VP of Growth for the company. I love the DocuSign product offering and enjoyed the “work hard and deliver culture” that exists there; however, I needed to go out and start something new — for the 5th time. There is something about being in charge of your own destiny and the captain of your own ship that just really speaks to me. It always has, and it is pretty much all I know.
A bit of background…
After college at The University of Wisconsin — Madison I went to Chicago-Kent Law School in my hometown of Chicago. I went to law school partly because both of my parents are attorneys, and also because I just wasn’t sure what I wanted to do with my life. Law school taught me how to think, how to read contracts, and how to critically examine differing situations. I appreciate the tool set I gained by attending law school and taking the bar exam, but I knew inside that starting a company was what I really wanted to do.
My first foray into starting a “real” company was InStadium. InStadium was started in 1999, when I partnered up with my high school buddy Mark Beckwith and Josh Kritzler to put advertising in professional and collegiate sports stadiums across the country. Yep…I went to Law School to put up 11” x 17” steel frames above the urinals and next to the vanity mirrors in bathrooms! If you have been to AT&T Park, Yankee Stadium, US Cellular Field, Fenway Park, and more you have seen InStadium ads in action.
When I started InStadium, I knew basically nothing about raising money, or how to run a business. But what I did have was passion, and I wanted to build something. I raised the first $350,000 for the company at a whopping $1M valuation. This was my first lesson that investors are sharks — Period Full Stop. Over the years I have met hundreds of venture capitalists, and some have become good friends. The fact remains that most of them will do anything it takes to get a deal or make more money. That’s just the game they are playing. We wound up raising over $40M while I was at InStadium, and I left after about 5 years to pursue new opportunities.
Fast forward 19 years and InStadium is still in business! What an amazing thing to be able to look back and point at company you created 19 years ago at the young age of 21 which is still operating.
After InStadium I wasn’t sure what I wanted to do next, so I took a little bit of time off to make sure that I didn’t rush into something which I would not be able to follow through on. One of the biggest lessons that I learned in over my almost 20 years of being an entrepreneur, and one that I still subscribe to, is that in order to succeed you must become a student of the industry you are in. You need to fully immerse yourself in the ecosystem, study your partners and competitors, and live it. For me that is the only way to be successful; you can’t have one leg in and one leg out.
I had worked on the floor of the Chicago Mercantile Exchange for two summers as a runner and then as a clerk in the Live Cattle pit. This was my first in your face introduction to the trading world. In 2005, my next company Riverbank Trading would build on this prior experience as I started an equity options trading firm. All our trading was done on the screen, and we built some lightweight software tools for our traders to use to quickly spot inefficiencies in the market.
I loved the action of trading, and appreciated the skill set it took to be successful. Being a successful trader takes a skill set that is much different than what it takes to successfully run a business. I believe this stems from the fact that when you are running a business and make a mistake you can usually figure out a way to fix it. When you are trading and you make a mistake you lose money. There is no going back, and there is no do over. Your decisions and actions have immediate and irreversible financial outcomes associated to them.
We built Riverbank into a 100+ person trading firm with offices in Chicago, New York, and Philadelphia. It was a legitimate company, but I didn’t feel as if I was creating anything of lasting value. I wanted to do more, and that led me to start my next company BringIt.
Ok, I played a lot of video games in college — Didn’t we all? I had the privilege of playing on the University of Wisconsin’s Division I Hockey Team in college, and as a result we didn’t get much time off. When other students left for winter break we were stuck in Madison with freezing temps and not much else to do after daily practices. All the boys would head back to someone’s apt. or dorm room, and we would play Madden, Fifa, Golden Eye, and of course NHL against each other. These friendly games eventually evolved into playing for a $5-$10, a pizza, or a beer.
After college when I was getting disenchanted with continuing to run my trading firm Riverbank, I thought about the gaming competitions we used to have. I wondered why I couldn’t play my buddies in other cities for money in Xbox, PlayStation, and Wii games. Well it turns out you could. I launched BringIt which relied on the skill-based gaming carve out to allow people to compete against each other for money. Turns out when people are competing for money, they will do anything to win including glitching, pulling the plug, or hiring expert players to play for them. Because we didn’t control the game itself from end to end the experience was wrought with fraud.
In later 2009, we wound up pivoting to games on Facebook, and that brought me from Chicago to San Francisco. By this time in my career I knew that I wanted to be around technology and innovation and San Francisco was the epicenter. It was so hard to leave my family and life in Chicago, but I wanted to come out West to compete and collaborate with the best and the brightest tech minds in the world. Leaving Chicago allowed me to grow as person in a far greater way than I would have been able to in Chicago. After raising a Series A from Blumberg Capital, I was able to architect a successful sale of Bringit to the largest US based public gaming company, International Game Technology, which was led by their current CTO Chris Satchel.
After just over two and a half years at IGT, I decided that it was time to move on and start something new again. This time my entrepreneurial journey would take me down another new path as my partner Joe Moss and I built a cloud based storage solution with permissioned sharing. Think about Estate Assist as a digital safe deposit box which holds the login information to your important accounts, as well as your important life documents. We would keep track of your Chase, Fidelity, E*TRADE, crypto accounts, as well as hold copies of your Will, Power of Attorney, and more. If something happened to you this information would be shared with people you designated — your family or attorney.
Estate Assist offered as financial and digital asset protection. We set out to partner with life insurance companies, estate attorneys, and wealth management firms to drive distribution. In 8 months, we had built a great looking and functional product which was starting to gain traction. We met with LifeLock, an identity theft protection company, and the synergies were obvious to both companies. We received an offer from LifeLock to purchase Estate Assist when the company was under a year old. At the same time, we were in partnership discussions with DocuSign to enable their customers to better organize, store, and share the documents they signed. This would help to make the DocuSign product stickier for hundreds of millions of signers.
In September of 2015 right before my wedding, the team and I joined DocuSign after they acquired Estate Assist. I could not have felt better about joining a rocket ship company with an unbelievable leadership team. I was brought on at the VP/Head of Growth and worked on customer acquisition, DocuSign Payments, and other strategic business development initiatives. I was fortunate to have then CEO Keith Krach invite me to join the Extended Leadership Team, and I was able to contribute and learn alongside the top minds at the company. I still have many friends at DocuSign, use the product almost every day, and am super exited to see our shares listed on the Nasdaq later this month.
My trip down the crypto rabbit hole…
Although I loved DocuSign, I was being pulled away by what was a rapidly developing crypto ecosystem. I first found Bitcoin back in 2012 when I had my video game company, BringIt. Someone mentioned to me that I should let people wager Bitcoin against each other. I had no idea what a Bitcoin was, or where to get one, but I was intrigued. It was explained to me as this permission less digital currency that was “gonna take over the world”. I was curious so I opened up a Mt.Gox account, funded it through Dwolla, and bought my first Bitcoins in February 2012 at just $5.13. I also distinctly remember selling those Bitcoin about 6 months later when the price had gone up to $15. I still stand behind the fact that it was a good trade! I almost tripled my money, and who knew what this magical Internet money really was anyways…
Over the next few years, I became more and more interested in Bitcoin and the opportunity it presented. How much freedom can a fully digital, decentralized, non-government backed currency/store of value allow people to enjoy? We have always been taught that the money we make, after taxes, is ours. But is it really? Do you actually have 100% full control over the use, storage, and spending of those funds? Like most people I thought I did, but once I started to understand Bitcoin I realized I was wrong. The light switch had been turned on, and I got it. I saw the opportunity and the need for empowering individuals to decide what had value and what did not. I saw the value in taking away the power of a centralized authority and giving the power back to the people who were using the network. It just made sense.
In the earlier days, I was a Bitcoin maximalist. I had blinders on and thought that anything besides Bitcoin was a scam. Well a lot of it was; however, a lot of these coins represented great investment opportunities that returned 1,000X or even much more. Once I began to understand, with the help of my business partner Phil, that each one of these crypto assets had a discrete use case, I saw why there couldn’t be just Bitcoin. We don’t need 1,500 coins that represent a store of value, but I do understand why there is a place for coins providing identity management, provenance, file storage, distributed computing, and even the trading of digital video game assets.
These tokens represented the opportunity for me to invest in early seed stage companies, and the tokens gave me the ability to add to or exit my position through trading. Crypto assets represented the ability to invest in startups without the binary sale or no sale outcome that took 3–5–7 years to develop. I have been trading my own portfolio with Phil for about two years and been through crypto bull and bear markets before.
I started to think about building another company and what I wanted to do was sitting right in front of me. I wanted to start a multi strategy crypto asset fund. Both Phil and I have deep industry access and experience, real equities, futures, and options trading backgrounds. In addition, we had experience investing in, building, and successfully scaling startup companies. We not only understand how to trade the unique crypto markets, but we also can pull from our over experience investing in over 35 teams and private companies. The ability to see patterns across these separate industries and assimilate the data points into cogent investment decisions is what sets us apart and drives our competitive advantage.
After assessing the feasibility of the opportunity, we decided that the risks were sizable, and so was the opportunity. A crypto asset fund presented me with the opportunity to be involved with the bleeding edge of technology, get back to my trading roots, as well as continue to make early stage venture type investments. Even though I am running a fund it is in every way my new startup, and the all the things that I have learned you need to do in order to be successful founder still hold true. On top of that, I get to challenge myself to learn new constructs and paradigms that don’t exist when you are building a traditional startup.
We launched 3.0 Capital (www.Three0.com) on February 1st with $20M under management and will continue to grow the fund both organically and through investor contributions. Our target for this first fund is $100M of investor contributions. We have multiple strategies we would like to deploy over time, and the company’s growth will come. Right now, the most important thing to do is keep focused and work to be the best at one thing. In this case that means beating our benchmark, choosing the right investment opportunities, and putting up returns for our limited partners.
The crypto asset ecosystem and Bitcoin are in the very early stages of their life. There will be many bumps and even pitfalls along the way, but I believe that these technologies will work to dramatically change the current landscape across multiple facets of our lives including payments, trading, content delivery, gaming, real property, and government. It’s because of this belief, and the challenge of starting something new, that I couldn’t be more excited to begin this journey.