Today we are talking to the co-founder of ConsenSys Capital, and managing partner at DARMA Capital, Andrew Keys.
- DARMA Capital is an investment firm which is exclusively focused on digital assets, and provides investors professionally risk managed exposure to a specific set of blockchain assets that meet high standards for return potential, liquidity, regulatory compliance and numerous other qualification requirements.
We’d like to kick things off by asking you a couple of questions regarding your formative years.
1) Firstly, can you tell us the things which interested you the most throughout your childhood and teenage years, and what brought you the most happiness?
What brought me the most happiness was probably girls, rock and roll and playing sports (I know that's a little bit brash), but in terms of my early formative years, I always had a penchant for looking at technology, and I've always had somewhat of an admiration for people who built businesses. I saw this was very difficult, and because I lived just outside of New York City and regularly saw people that were successful, I realised that they were either extremely intelligent professionals (so lawyers, doctors etc), or they had taken some type of calculated risk, mastered their niche and built a business. So I felt that I would probably have a better chance of being the latter as I just didn't think I had brain surgeon in me, and I kind of understood that this was a way to succeed in life; at least on the business side of the house.
2) Who were your biggest influences growing up, and why did they have such a profound effect on you?
So I would definitely say Bill Gates had a big impact on me. I remember when I was 14 years old my first computer was a Windows 95, and my first instant messenger was AOL, and from afar, seeing the notion of an operating system always blew my mind. So I had a real reverence for the art of that operating system. I would say that was kind of the macro. Closer to home, I would say my mother and father.
My father emigrated from England with three hundred dollars to his name, and was a vascular and emergency surgeon in New Jersey, so people would get helivaced to him and he would save their lives, literally. My mother on the other hand was a hardworking emergency room nurse, so there was no glory in either of those professions, and it is grueling work. I saw them both work 60, 80 hours a week whilst being present for me as their son, and I saw the sacrifices that they made for their occupation and for their family.
So I guess I kinda had both near heroes and far heroes.
3) Teenage years are often a turbulent time for many, so on this note, can you name a time which was tough for you, and how you managed to overcome it?
I'm sure there were many turbulent times during my teenage years, but I guess one turbulent time was when I had to move from one part of America to another when I was just a teenager, and I remember not knowing people, not necessarily fitting right in and not knowing my flow. This was an example of having to deal with a transition where certain variables changed, and this is something that is common when a young person goes from middle school to high school, or moves from location A to location B, and as we get older we get more comfortable with these variables of change. But when I was younger I definitely didn't have those skills yet, and I was very lucky to have a good support system in my family, and also fortunate that the school I went to was good and I made friends there, but I think this is something that is often very hard for many teenagers. So I really empathize with youngsters who have to deal with changing variables in their lives.
In terms of how I overcame this, it probably wasn't completely authentic, but I probably went out of my way to be over gregarious and overly outgoing when I was probably shy and scared, so I think I kinda just leaned into the situation. Sometimes that works, sometimes it doesn't, but that being said, one thing I do look back on is whenever I've been uncomfortable and really acknowledged the discomfort and tried to go through it, it always seemed to work out. It's really amazing how we as humans get so worked up about various things when they usually end up working out. Life simply goes on, and it may not be as best as we once hoped, but it's definitely never the worst. So if people can get into a mental habit of thinking about the absolute worst case scenario, and then saying ok, I'll still be alive and will still have my friends and my family, they’ll be able to move on.
4) If there was some advice you could give young aspiring individuals, advice which you would really have liked to have heard yourself as a young person, what would it be?
It would be to focus on STEM, so science, technology, engineering and math.
I had a liberal arts education where I studied economics and some computer science, but it was more part of a holistic course load. So when it comes to things like arts, fiction writing etc, I’m of the opinion that a lot of these things can be learned in a person’s leisure time when they are in their 30s, 40s, 50s, 60s etc. But when it comes to learning things like algebraic geometry or computer science, it is much harder to learn once you're 30, 40, 50, and to exemplify this, I recently had to retake a financial exam (Series 3) which was basically for trading derivatives that are commodities, and my twenty two year old brain would have passed it immediately, but it took a little bit longer for my 38 year old brain. So I think that while we have young good brains attacking math, computer science, engineering and technology, there is no limit to what we can achieve. My advice therefore is to do the hard work early in life as this is when you have the time and energy (it's hard to make this up later in life), and there's always going to be somebody else doing it as well.
If we're just talking about the emotional side of the house, my advice is to be kind to people because you don't know the variables that they're dealing with. We always take an interaction as a sole interaction between two people, but you or I could have had 10 other interactions with 10 other people, and these interactions could have changed how you are reacting to me now. So always err on the side of kindness. I think this is important.
I also think it's important to respect your body and let food and exercise be thy medicine, and to not party too much. I think the stresses and competition we have in life now are quite tough, and we often try to mitigate this by going out to the pub on a Friday night which usually doesn't make for a good Saturday morning. So I think that moderation is important as well.
We are now going to ask you some questions which will hopefully give our readers something to go on regarding you as a person.
5) Firstly, what are the particular strengths that you feel have made you successful in your field (don’t hold back)?
More than anything, I’d say perseverance.
When I left ConsenSys to found DARMA, I wrote a little blurb about the twelve years after university that I spent (and I quote unquote) “treading water at the intersection of finance and technology.” I graduated school right before the capital markets imploded which was probably one of the worst times for someone to graduate school, and I worked like a slave in investment banking and in various financial firms. When I look back at it, I was basically the tail end of the third industrial revolution, and following hundreds of years of hierarchy, I was literally on the bottom of that barrel. However right now we are beginning to experience the fourth industrial revolution, so younger people are really going to see the world in a radically new way that I think will be radically different from the hierarchical last 200 years. But me personally, thankfully I was able to hang in there and learn.
This actually reminds me of a quote, something to the effect of ‘many people die in their 30s and live like zombies for the next 50 years’. Basically it’s trying to say that people get very content in a job they don't necessarily like, or are stuck in some type of habit that they need to let go of in order to persevere and move forward in their life, but they just don't, and these things weighs on them. It weighs on their mind, and it weighs on their body and their spirit. So I think I was able to persevere through times like that and was still able to learn and keep a certain amount of inquisitiveness about the world (even though the world really was not going the direction that I thought it should, nor is it still), and I attribute this to some traits that I feel everyone really needs in this day and age. For one I was open minded, and always had a willingness to learn. I think sometimes we hear from our parents and our grandparents and they're typically very cynical, and they often don't want to learn from their kids and grandkids, but both generations really should learn from each other as both have so much to offer. Thankfully I took this all in.
I was also fortunate to be blessed with a good education, and I worked very hard and took my studies seriously. So I learned mathematics, economics and computer science, and also learned how to speak properly. These have served me well in being able to communicate to the masses, and this is something which I feel is criminally undervalued in this day and age.
6) What would you say is your most controversial opinion as regards to blockchain or the crypto space?
Well mine is that Ethereum will be exponentially larger than Bitcoin in five years, and it may be sooner.
I think that Bitcoin was a great opening act/gateway drug which showed the art of the possible with blockchain, but very simply put, Bitcoin has a very limited functionality - Alice can send Bob value peer-to-peer. This is a non-trivial task that it achieved first, and without Bitcoin none of this technology would be here, but there is so much more that we can do with a decentralized worldwide web than just a decentralized storage of value. We're now starting to see the opening act of the issuance of bonds, the opening act of the issuance of provenance-based supply chains, and the opening act of self sovereign digital identity. So what I believe this phenomenon is, is not about speculating whether Bitcoin is going to go to 5000 and 10000, but understanding the difference between centralization and decentralization, and going from what I would call is subjective institutional trust (so where we have to trust some institution to provide trust between two parties on a Facebook, Airbnb or Amazon) to objective programmable trust. I think once we can trust software and everyone can see the code and it can be audited so we have assurances that the code does what it says it's going to do, things are going to be revolutionized for the better. The fact that we are currently paying extreme sums to technology, banking and insurance intermediaries for providing thin layers of this subjective institutional trust, is a complete waste to me. If we took all of that spend and were then able to move that around the world more fairly, I think that it would do a great benefit to our global economy.
7) In the course of your day you can become under the most ridiculous pressures and stresses, what is your particular way of dealing with this?
So typically I wake up somewhere between 6:00 and 7:00, and I try to get to the gym by 7:00. I try to do an hour of cardio first from 7:00 to 8:00, and then I have a trainer from 8:00 to 9:00 for lifting. Then I come home, shower, and I try to do about 20 minutes of meditation where I sit in a room and try not to think, and simply breathe and slow down. And typically what happens is my things to do list starts creeping into my mind, my issues of my past, my issues with the future, and it's literally a 20 minute silent breathing battle with myself to shut the f**k up and breathe. After that we start grinding.
So basically somewhere between 9:30 and 19:00, I’m typically on Zoom conference calls from Puerto Rico to New York, Dubai, China etc, and then I try to cook a protein and vegetable based meal, maybe have a glass of wine or a glass of milk, and then do it all over again. This of course is when I'm not traveling. So I'd say 60 percent of the time I have stationery days, and 40 percent of the time I'm traveling around the world for one thing or another. There is no routine during the traveling days, and that's the hard part as I've found that a routine is good for the body and good for the mind, so if you're traveling here, there and everywhere, it really doesn't help the regularity that I think the body and the mind needs.
8) Outside of crypto/blockchain, what is your favorite thing to do?
My favorite thing to do is travel. It's a gift and a curse, but I love to see the world as it makes me feel smaller and smaller, and more appreciative of the vast world out there. I also like to exercise and spend time with my wife who has had to deal with me being absent for the last couple of years while blockchain has exploded.
We are now going to ask you some creative and humorous questions, and we are sure people will love to see you what you can come up with.
9) What is the most humorous thing you have seen or experienced during your time in the crypto/blockchain space?
I don't want to sound flippant, rude or dismissive, but I feel like there's almost two layers of the blockchain.
On one hand there are some of the most intelligent people on earth working on building solutions with blockchain technology right now, and I've been so honored to learn from them and also work with them. But then there's also this nasty underbelly of greed and fear, and where all of the bad parts of human nature kind of comes out, resulting in outrageous scams or pathetic actions which can at times be seen as humorous. So I guess it's not funny, but it’s interesting to see how the things that have happened in the early days of crypto are quite similar to what people experienced on the fringes of the Internet when things like gaming, gambling and pornography first started out.
10) If you somehow managed to meet Satoshi Nakamoto (that is he is a male person in this scenario) on his deathbed, but only had time to ask him one question, what would it be? Bear in mind that you don’t have much time at all, so make it a good one.
Have we done the right thing since you created probably the best experiment in monetary policy, economics and computer science? Also, have we as the stewards of your technology, made you proud, or has the infighting, the forking, the derailment and religious factions of blockchain really moved us away from your vision?
11) Can you give three policies you'd enact if you became the president of a country tomorrow?
We all bash our political leaders, so this is a great way to put it all on us.
I am what you would say socially liberal and fiscally conservative. So the one thing which I feel is a sign of a successful country is whether it can find an efficient way to allocate the wealth generated to its citizens that cannot self-sustain for reasons that they can't help. So by this I mean the handicapped, people that are born into poverty, those that don’t have an education, and the elderly. So one thing I would try to do is enact some type of policy where excessive wealth can filtrate to those citizens who can't take care of themselves, and I would have tight controls on those processes because sometimes you see scenarios where big government may have a budget for salaries for 20 people that are helping 10, when it would just be better if you had 10 people helping 20, and the salaries of the extra 10 people instead going to the people that needed help. So I would have to watch the bloat. That would be the first thing.
Second would be figuring out how we can use our natural resources most efficiently. So I'm big into things like the desalinization of water and solar energy, things of that nature. So enacting policy(s) which allows us as a society to stop burning coal and continuing to destroy the Earth would be something I’d definitely look to implement.
And then lastly, I would think about education and really drive the abundance of education, specifically STEM education, because that's where I feel like all the jobs are going towards. So being able to educate our youth so they can help themselves. You give a person a fish, they eat for a day, but if you teach them how to fish, they can fish for a lifetime.
Communities are often an important backbone for many crypto/blockchain projects, so we’d now like to get some personal thoughts on the community side of things.
12) Personal project aside, what are some ‘communities’ in the space that you admire and why (this is not an endorsement)?
I really admire the ZCash community’s values of privacy because I think the average user of a Facebook, Amazon, Netflix, or Google product doesn't really know how much they're being tracked, or how much of the product they are themselves; neither do they understand what can or cannot be used against them. So like the early days of Apple where people didn't know that they needed a cell phone, I think today is similar insofar as people don't know that they need privacy, and that a decentralized peer-to-peer world wide web would be much better than what they’ve got right now. So I think that community around privacy is very interesting.
I also appreciate the communities that are not focusing on the value of the assets, but are really trying to solve deep distributed systems problems. I would contrast the Ethereum Foundation which is a nonprofit filled with PHD researchers, versus something like Blockstream which is VC funded and capitalistic in a sense, and I think that sometimes when you have those types of stakeholders making the decisions, it impacts doing what's best for the protocol versus what's best for your for-profit VC investors.
13) What social-media platform do you like most and why, and are there any improvements which you feel can be made to these platforms for an even better community user-experience?
I unfortunately still use them all, and there is a point where I should probably start practicing what I preach, but I just don't think the technology is there yet. I honestly haven’t seen something that is as good, if not better that what is currently out there, which is really what we need to see happen before the masses start using social media platforms that are decentralized and peer-to-peer.
At the moment, I think my favorite is Twitter because I think it has succinct opinions and you can aggregate some vehicle of news, but there are two material improvements that I feel can be made. One is the concept of reputation. If I do a tweet and the tweet is a lie, a shill or is meant to defraud or misrepresent something in my benefit and at the expense of everybody else, I should get a reputational attribute that I am a fraud. And conversely, if I produce really good content and help people learn and provide clarity on a topic, I should get a thumbs up, and that should count towards the social media engine of what gets listened to and what doesn't get listened to. So that's the first piece.
The second piece is the ‘attention economy’. So Facebook, instead of us using it, quote unquote, for free, we should create a peer-to-peer version of Facebook where if we as the users devote our attention to a topic or an advertisement, we should maybe get paid a dollar a day instead of that money going to Mark Zuckerberg. This can be created with game theoretical incentives and tokenization using a blockchain. That's what I think will be really interesting.
14) With the endgame being mainstream adoption, do you think crypto/blockchain communities will still have an important role to play in a post-adoption environment?
So what you're seeing are economies being formed, and they're like macro-economies like the Bitcoin and Ethereum communities, and micro-economies like the Maker Dao community on top of Ethereum, the Aragon governance community, or prediction markets like GNOSIS or Augur communities. So I think that there will be, absolutely. If done right, these will be architected through gamification where you're not necessarily getting paid to be an intermediary, but instead can have a tangible role in one of these peer-to-peer networks, like Augur for example, where the rep tokens are earned if you attest that a prediction goes right or wrong. So there's going to be micro-roles that one has to do in order to earn in these economies.
In our penultimate section we are going to ask you a question regarding DARMA Capital.
15) What do you feel sets DARMA Capital apart from your competitors (that is if you have any)?
So just a quick background, DARMA was started by the former head of capital markets at ConsenSys, a gentleman by the name of James Slazas and myself, and it was us who built the capital markets team, so we have a very good understanding of blockchain technology and its intersection to finance. ConsenSys is an amazing software company, and we originally wanted to set up a registered fund, but it just did not make sense to set up a registered fund inside of a software company. So basically we left, but still work closely with ConsenSys (basically with those within the capital markets blockchain team).
In terms of what we do well, we have a very good understanding of blockchain and a very good understanding of the capital markets. What we're doing is setting up registered investment advisors that create quantitative and systematic Alpha of Web3 protocols. So what that means is if you have 100 Ether that you want to invest, and you want that Ether to earn money aside from just totalling it, what we do is we trade it with the goal of creating one new Ether a month for the investor (so 12 percent Alpha per year). So we have a very good understanding of financial engineering, a very good understanding of blockchain technology, and we also have a very good understanding of tax regimes to make it very efficient for an accredited investor to gain blockchain exposure. We also understand the nature of the markets and its nuances, so for example, with regards to our Ether fund, we track the active wallets, the hash rate and the developer usage. So we really understand the metrics by which to judge the sentiment of the market.
Well that just about does it, but before we end this interview we’d like to ask you for something which we believe will say a lot about your belief in the industry, and which may inspire those who are reading.
16) Can you come up with a short argument for our readers on why you feel cryptocurrency and blockchain (or just one) has a bright future?
Crypto and blockchain is the substrate to the next generation of the World Wide Web. You have 80 human beings on Earth that have the same amount of wealth as the bottom 3.5 billion, and that is income and wealth disparity. So when you go through those 80 human beings, the majority of them come from intermediaries that provide a thin layer of command, control, trust and reputation, as well as a payment rail. So crypto and blockchain is taking that functionality and abstracting that - it’s creating an open source layer where all of that functionality can be free. When it is free or drastically reduced in price, I believe that A) income should be dispersed through the bottom 3.5 billion and B) we will essentially see the digitization of all assets. By digitizing or tokenizing all assets, we will see fluidity in trading and velocity in liquidity, and this will literally create the largest economic growth cycle Earth has ever seen. Governments can't change that, and while they can obviously impose sanctions, they can't change the underlying technology as the genie will have already left the bottle so to speak.
On the technology side, the Internet was built really to exchange research papers, and has since grown up on a shaky infrastructure. So on a daily basis we're seeing an insane amount of hacking, and it's only getting exacerbated by the amount of IOT devices that are coming online daily, and the amount of file storage that's needed daily. So the architecture that's typical right now (which is not peer-to-peer and not immutable) has to change. This is the apparent and obvious evolution of the database.
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