Struck Crypto is all about transformational technologies that have the potential to revolutionize industries. Join its Founder, Adam Struck, in this episode where he shares how the venture capital firm is ushering in a new era by infusing innovation and value into every interaction. Get captivated by the genesis story of Struck Crypto, rooted in Adam's fascination with decentralized currency and his expertise in venture capital and law. He reveals their ingenious Skeuomorphism strategy, and how they identify and fund Web3 counterparts using successful Web2 companies like Liquefy and Notifi. He also talks about enhancing user experience and mass adoption, the regulatory challenges and risks in the crypto space, and how Struck Crypto ensures compliance while generating long-term value for investors. Plus, Adam shares insights on some of the blockchain projects that are out and tackling problems in the space. Don’t miss out on this cutting-edge information on Web3 that will revolutionize industries.
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Struck Crypto With Adam Struck
This is Adam Struck from Struck Crypto. We are fueling the future with transformative seed investments. I'm thrilled to join you on the Edge of NFT, your go-to show for exploring the most exciting projects in the Web3 universe. Keep reading.
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Stay tuned for this episode to learn how our guest keeps track of everything he needs to help grow some of the most promising startups in Web3 and beyond.
What Charizard flipping strategies made our guest’s first big box?
Finally, read about Nike's upcoming Airphoria NFT sneaker hunt on Fortnite.
Before we go on, don't forget that our Outer Edge LA event returned to LA from March 20th to the 23rd, 2023. You can still catch up on all the discussions, presentations, and more. Head over to Watch.OuterEdge.live, pull out your email address, and enter it. You will have access to over 60 captivating conversations and performances. Binge watchers are welcome. Netflix, watch out. We will see you inside.
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This episode features Adam Struck, the trailblazing Founder of Struck Crypto, a venture capital firm ushering a new era by infusing innovation and value into every interaction. As the dynamic Founder and Managing Partner at Struck Crypto, Adam is no stranger to the entrepreneurial world. Prior to Struck, he cofounded Long Island Brand Beverages, a CPG company later acquired and listed on NASDAQ with a legal background at Kirkland & Ellis, one of the world's leading law firms, and accolades from Forbes 30 Under 30 lists for venture capital and Business Insider’s Rising Stars in Venture Capital.
Adam has a rich tapestry of experience. Struck Crypto is the cornerstone for entrepreneurs with a vision to revolutionize the world. Focused on seed B2B investments, Struck Capital partners with audacious founders leveraging data-driven insights to craft transformative technological innovations and their commitment to providing more sweat equity per dollar invested, standing by you as the most hands-on investor on your cap table. That sounds pretty appealing. I like that. Adam, welcome to Edge of NFT.
Thank you for having me. It is great to be here.
It is one of those fun stories of co-creation in terms of how we all got here. Struck graciously participated in our closing party for Outer Edge LA. We had a great time together and have continued to build that relationship in chemistry. We did something together for LA Tech Week. We have you on the show. The full circle continues.
I’m excited to talk about that.
Your perspective, in light of the macro dynamics in our industry, is going to be helpful and grounding for our audience. Struck Crypto is all about transformational technologies that have the potential to revolutionize industries. I would love to get the genesis story of this venture and your mission, mainly for our audience. We have talked about it a little bit, but it is interesting.
I have always seen myself as an opportunistic investor. When I started to understand the world of Web3 and decentralization and what it meant, especially for me as a former immigrant in South Africa that moved to the United States because I couldn't trust my government. I couldn't trust my fiat-based currency that was experiencing hyperinflation. It spoke to me in the concept of having a decentralized currency that could be transferred from a P2P perspective and didn't rely on a central authority or potentially even corrupt banks for its legitimacy.
The founding story of Satoshi and Bitcoin spoke to me. When I started thinking about, “You have Ethereum and smart contract platforms,” I realized that this form of core technology should exist. At the time, I was already running Struck Capital, which I would call our Web2 fund, mainly focused on B2B, horizontal and vertical SaaS.
I was approached by a large fund in LA. They chose to amend their LPA. They turned themselves into a fund to fund and cut me the largest check in their history. They saw me as a young next-generation manager, and they wanted to back me to get exposure to crypto and the Web3 universe. I took that momentum. I raised a little bit more capital. That is how Struck Crypto was born. We have been operating this space institutionally since 2017. I have been through a ton of deep bear and bull cycles. I have been lucky to say that we have partnered with some of the best founders in the space and watched companies go from the genesis phase all the way to escape velocity.
One of the unique parts of being a founder who's gone through some acquisition is knowing what it takes from an original team and having the constructs to be able to bring things from start to finish. As great as it is to be an entrepreneur and go through the rollercoaster that is entrepreneurship, it is challenging to create profitable businesses that go on to have a lot of success. One of the fascinating aspects of your investment strategy involves identifying successful Web2 companies and seeking out their Web3 equivalents. You call this skeuomorphism. Can you elaborate on what this unique approach is?
The concept of skeuomorphism was born out of a product design perspective. If you are creating a new product and you understand that your users are familiar with different products, but you can take a new product and remind them of an old product, it would make it easier for them to get through that J curve and start using your product in an intuitive way.
What happened now in the crypto space is they have taken that concept to the next level. What that means is if we find companies in the Web2 space that have been successful, could we, in theory, fund their Web3 decentralized counterparts that would maybe remind users of these Web2 companies, but it would make it easier for them to solve a cold start problem and start using the product in a more intuitive manner?
For us, as an investment firm and a company that is investing in the space, we like to look at Web2 companies that have gone all the way, have a dedicated and highly engaged unit user base with stable unit economics, and we say, “Is there a Web3 counterpart that we could back that is also solving a big problem that is specific to Web3?”
A good example of that is we are investors in a company called Liquifi. Liquifi is building the Carta for Web3. We have done a lot of work with Carta. We have realized they are focused on the Web2 space. They have no blockchain developers or engineers on their team. There is a host of Web3 companies out there that are looking for not “cap table management” but also want to understand how to launch a token and engage investing schedules where they are distributing these tokens to investors to employees and to do so in a compliant manner.
They are in a situation where the odds are stacked against them. Everything is in crypto because it is all an immutable ledger. You can't call a centralized authority and be like, “I gave you many shares. Can I get it back?” It has to be done perfectly. We felt like this was a concept we understood. Carta, as a company, has hit escape velocity, a multibillion-dollar enterprise value.
We found two incredible founders, Robin and Oliver. We said, “Why don't we back you to create the Carta for Web3?” That is how skeuomorphism has played out from an investment perspective. We got a few others. We got a company called Notifi. That was started by Paul Kim, who was the Director of Products at Oracle. He was high up on the product team at Circle, the creators of USDC. What he has created is called Notifi, which is like the Twilio of Web3, operating under the assumption that you are a dApp or a protocol.
You got users all over the place. Some of them are on Telegram, WhatsApp, Signal, or WeChat, and more on the dApp. Specifically, they are engaging with your dApp through what are anonymous wallets. If you are trying to show engagement, you got an ecosystem proposal, and you want people to vote, how do you get them engaged all at the same time?
Twilio is this messaging plumbing infrastructure where a dApp, a DAO, or a protocol can generally send a message. It can hit their users everywhere, all at the same time across Web2 and Web3. You are starting to see that engagement. They have a lot of data and analytics around them, which, when you think about the lifetime value of your customer and how to cross-sell them or upsell them, it is important to understand where they are. That is what Notifi does. Another great example of huge companies that have hit escape velocity in Web2, whether Twilio or Carta, is finding their native Web3 equivalents and investing in them.
I love that use case around hitting people everywhere because I feel like these conversations about exchanging contact information have gotten complicated because people have all their own playbooks for how they want to be in touch with people depending on what country they are in and what tools they are more comfortable with. They were like, “I only use WhatsApp to talk to my best friend. I only text with my mom.” It is random these days.
It is tough because there are Discord and all these major messaging apps that want to keep their uses there, but it is like a dApp or a project. You are like, “I wouldn't be able to speak to my users on my own terms.” It is your sentiments there.
I remember the good old days of whether you are calling me or not. You call the phone, or you don't. That is all you had. Are you home? No, you are not home. Adam, you got an insightful perspective on the capitalist markets and things like that in general, going from Web2 to Web2. It would be interesting to hear some of your perspectives on the way the space is moving.
You mentioned the skeuomorphism strategy as a way to access the possibilities of Web3 through new endeavors. We also got these ideas about maybe it is time for the big brands to be getting into the Web3 space, or if we all need to be working on mass adoption. That is the thing to focus on. It is all about gaming or augmented reality. What is your general perspective of the space and the effective strategies being applied or maybe not even effective? What strategies are being applied these days? What are the trends in fads?
The concept of skeuomorphism, when you think of it more from a design perspective, is a spirit that the crypto and Web3 community needs to channel if the goal is to get to the point that we achieve “the holy grail” of mass adoption. For us, we still feel like there is a number of UI/UX issues inherent in the use of Web3 technology and self-custody that makes it difficult for your mother and grandmother to ever even touch this.
In theory, the way that crypto and Web3 are going to achieve the ability to propagate to the masses is you almost need to be in a place where if the core technology exists, it is being used in such a seamless manner that people don't even realize it. As a firm, we are focused on what are the major gating items that are preventing people from using the technology.
We are focusing a lot on wallets because there is a new ecosystem proposal that was adopted by the Ethereum community called ERC-4337. What that is doing is solving some of the UI/UX issues inherent in non-custodial wallets that make it difficult for the average user to even understand, let alone use, with a high degree of confidence things like, “If I'm cussing my wallet and I lose my private key. Have I lost everything? How does that work?”
There is a company that we invested in called Soul Wallet that has a tremendous amount of support from the Ethereum core community, including Vitalik himself. He worked on the project and messaged about them. They are using ERC-4337 to introduce what is the concept of social recovery and guardian. For the first time, in a purely non-custodial manner where you have no changes at the protocol level, and it is extremely safe, you can now nominate a mother, a brother, or a sister to be a “guardian.” If you are in a place where you lose your private key, that can be regenerated. Your wallet can be re-accessed with another private key in a way that is completely safe.
For example, Ledger is one of the leaders in non-custodial wallet hardware. They came out with a proposal where they were like, “We can find a way to store your private keys. If you are in a position where something happens, we can help you regenerate the wallet.” All the crypto maxis freaked out because they didn't want a centralized authority holding those private keys. That defeats the purpose of non-custodial ownership in the first place.
What ERC-4337 does with guardians and social recovery is it allows you to get that same user experience of regenerating or re-accessing the wallet in the case of losing private keys but not in a way that puts those private keys in the hands of a centralized authority. That piece of core technology innovation, from our perspective, is completely groundbreaking.
Another thing that ERC-4337 introduces is what is called Beyond Account Abstraction. You can now be in a place where you are paying for gas. If I'm using Ethereum, I can now pay for gas with an ERC-20 token, like USDC stablecoin versus Ethereum itself, which is groundbreaking. For the average person, if they want to use the Ethereum blockchain, why do they have to “pay for gas” in Ethereum? I should be able to pay for gas in whatever I want. That is revolutionary.
Bitcoin and the concept of Bitcoin came out of the 2008 financial crisis. There were owes to the 2008 financial crisis in the genesis block of Bitcoin. For some people, they are like, “This has been out there since 2008. This is not a new technology anymore.” From our perspective, it is still extremely new. There are still material UI/UX challenges that are preventing mass adoption. That is something that we pay attention to from an investment perspective.
The other thing I will mention is that a lot of the readers out there are aware of all the regulatory risks that are happening now. Unfortunately, regulation is always slow to catch up to core technology innovation. You have a heavy-handed approach to crypto regulation in the form of the SEC suing Coinbase and Binance. It creates a lot of fear in the ecosystem, even from an investment perspective, because you are like, “Is this a utility token? Is it security? What are the laws? How do I mitigate my risk? How do I mitigate the risk by investors?”
Unfortunately, regulation is always slow to catch up to core technology innovation. Click To Tweet
From our perspective, that is why we love investing in companies like Liquifi. That makes it easier not to be the lowest-hanging fruit. In times of a gray area, be as regulatory compliant as you possibly can be. We are a registered investment advisor. We hold ourselves to the highest standards of compliance. That is why we have been able to navigate these bull and bear markets and have been around for a long time.
We fundamentally understand what meritocracy should look and feel like. We know how to generate an outlook for our investors in a legitimate way. When something feels or looks too good to be true, we shy away from it. For a lot of the crypto adopters going forward, they are going to have that mindset. That is healthy long term.
There is a lot you packed in there that is important. I appreciate your perspective on where we are at. From there, it would be natural to talk about the future and what that next-generation ecosystem looks like. Some underlying infrastructures, like Soul Wallet, could be part of it. Maybe the next-generation ecosystem isn't quite a mass adoption but at some degree of adoption beyond what we have now. What are the key features or trends to look for? On that note, I spoke with someone doing an interesting ad tech project with a major league soccer game. Is that the type of thing we are talking about here? Does the word Web3 and NFT disappear?
When Reddit started playing around with NFTs, all of a sudden, there was a ton of action in a short period of time. They shied away from the term NFT because, for whatever reason, there is a lot of negative sentiment associated with nonfungible tokens in terms of what that term means. One of our portfolio companies is Mythical Games. They raised $150 million from entries in 2022 at over $1 billion valuation. We put $1 million into their seed round. We were their only investor in the seed round. I was their first board member.
What has been interesting for me is understanding what the gaming use case can be as that beachhead that can result in the mass adoption of Web3. When I spoke with the Mythical team, what they pointed out is you got these massive games like Fortnite that are these large virtual worlds or “metaverses.” You got people with this “in-game currency” that care a lot about their virtual status.
Because of that, they are buying what they would call skins, but they are buying these “limited edition skins.” When they are playing their virtual characters around this virtual world, they want to say, “Look at my cool limited edition shoe or the cool costume that I'm wearing and the cool weapon I'm using.” What you realize is gamers and gaming as a beachhead has a massive amount of users and traction that intuitively understand a lot of the virtual ethos inherent in crypto and Web3 generally.
From an investment perspective, but also as a user myself, we see gaming as a major opportunity to proliferate and bring Web3 to the masses. If you speak to the founding team at Mythical, what they will say is, “We want an immutable ledger. We want to correlate these skins to NFTs. We want to create these secondary marketplaces. We want to have a future of work concept where people can start generating material income from these in-game purchases and selling them to other users. We want to do it in such a way where nobody has any idea that this is power by the blockchain and no one is calling it a nonfungible token.”
That is the critical component here. In our opinion, there are massive markets that exist that their first thinking principles are already virtual to begin with, which makes a lot of sense for virtual currency, virtual goods, virtual things, or nonfungible virtual limited edition things that are on an immutable ledger. It makes a ton of sense.
The issue is, from our perspective, there has been a horrific experience. Transaction hashes and non-custodial wallets. That makes it difficult. If you ask me what I think is the next phase, it is going to be a situation where not only are ledgers completely interoperable, but you have these large audiences of virtual first thinkers that are using blockchain and cryptocurrency but doing it in such a way without knowing it. That is what is critical right now.
Having that seamless experience is going to be what brings the masses. To go back to one of your first points about the gaming piece, being a gamer myself, what has been the biggest hesitation for a lot of people coming over from the Web2 space over the Web3 is the friction that you were talking about. When they can get to a point where they are playing a Web3, they have no idea we have made it. I know that a lot of the space is headed in that direction.
What was that first moment when asking me questions about Web3 during the NFT craze of 2021? It was the first time people got their interest peaked and asked more questions. One of the things that you brought up was Mythical Games, but you also have a unique relationship with Protocol Labs. Could you delve into a little bit more of the specifics of that collaboration and what it means for both parties?
We think Protocol Labs is one of those unique projects where they are solving a major need, and they are truly unique. What we do not like doing is funding. There is this dApp that has created a lot of enterprise value on Ethereum. We are going to fund the same thing on our brand or Avalanche. That’s us. It is not interesting.
We see Protocol Labs as super unique because of what they have accomplished with Filecoin. This is the first time that you can have distributed storage all over the world. You can incentivize people through a token to share that storage. If you can put yourself in a position where you have the reliability that if I need to get that piece of data right away and I can get to the point that it is as reliable as AWS or AWS S3 API, all of a sudden, you have completely democratized access to storage. You are going to be 1,000X cheaper than what it costs from a storage perspective for AWS.
The first version of Protocol Labs and Filecoin was getting them to a place where they amassed the largest number of distributed storage providers across the globe. The amount of storage they have amassed in their ecosystem is insane. There is something specific where they could store the amount of data on Facebook for the next ten years. It is a massive amount. The next version of Protocol Labs is we got all the storage. We now need users. Why are people going to be using Filecoin? What is the purpose?
What they launched was the Filecoin Virtual Machines. It is bringing an equivalent virtual machine or smart contract platform to this distributed storage capacity. For the first time, if you have major blockchains like Ethereum, they are not going to be in a place where they are stored either through something like IPFS, where it is unreliable because you don't have the token incentive structured to make sure that the data is retrieved in a way that matches your SLAs or worse off, you get a “distributed L1s.”
The majority of their data is from AWS, which defeats its purpose in the first place because that is a centralized authority. We think Filecoins are taking the next step in their evolution and launching a virtual machine. It opens up a scenario. We have truly distributed storage and content all in one. For us, that is interesting.
One of the things that we have at Struck is our own venture studio. We have Struck Capital, our Web2 fund, Struck Crypto, our Web3 fund, and Struck Studio. In Struck Studio, we had the privilege of being backed by the equivalent of Union Square Ventures, Revolution, Chicago Ventures, Great Oaks, Liquid 2, US Venture Partners, and a bunch of tier-one venture funds.
What I have been lucky to do is team up with people a lot more accomplished than myself, and all we're doing is building. We will look at all the information asymmetries we get across our capital in Struck Crypto. If we feel like there is a major opportunity, we will use those information asymmetries to play a pivotal role in our ideation and validation sessions. All of a sudden, we are starting to build.
We have a strong relationship with the Protocol Labs team. We understood this special moment in history when they were launching their virtual machine. We went to the Protocol Labs team and said, “What do you guys need us to build? What are you looking for?” From their perspective, they have a robust ecosystem. They would love to have tier-one products and engineers that are Web3 crypto natives build various picks and shovels they need to hit escape velocity.
One of the things we have been playing around with is, “Why don't we build the equivalent of the AWS S3 API, and instead of it being AWS, it is going to be Filecoin?” All of a sudden, we can go to Web2 users as an ICP, as an Ideal Customer Profile buyer persona, and say, “With a few lines of code, we are going to switch your API out from AWS to Filecoin.” The next thing you know, it decreases the storage cost by 1,000X. We are rapidly increasing the adoption of Filecoin more generally and bringing them to a total addressable market they are not covering, which is Web2 developers.
The stuff I mean is being able to jam with Protocol Labs, understanding they are at a special place right now and their history and we have the ability through our studio to build. We have those information asymmetries because of our Web3 fund. It is a perfect combination. We have been enthusiastic about Protocol Labs. They are a super strong team. They are mission-driven. It has been a privilege jamming with them, and hopefully, we can ship some stuff together.
It seems like a lot of groundbreaking stuff is going on. Hopefully, Jeff Bezos doesn't read this and gets too competitive around stealing business from AWS. We are looking out for you. What else besides stealing business from AWS among the collaborations is going on in your future? You have had some great successes so far. What are you looking forward to already in the pipeline or things that you are planning on exploring?
It is more generally limited only to the crypto ecosystem, even though there is so much excitement there. On the studio front, we got a number of cool concepts that are in product development with the founders who have been hired. We are going to market. For me to be in a place where I'm saying, “As a former operator, I'm not in my ivory tower barking orders to founders as a VC. I'm the CEO of the studio. We are struggling for product market fit every day.” It keeps me fresh, innovative, and understanding the founder persona, especially how difficult it is to build in a post-COVID remote hybrid world.
The things you are doing with the studio for me are exciting. We got one concept called Unleased, where we are trying to sell and democratize access to the digital nomad lifestyle. We like to look at long and broad horizontal marketplaces like Airbnb and say, “What buyer personas in there with material monthly growth rates are not being serviced by this marketplace because it is too broad?” We believe that the digital nomad says, “For $2,500 a month, I want to be able to sign a master lease and live anywhere from natural to Denver to Portugal to Lisbon.” We think that type of company should exist.
With Unleased, you sign one master lease with us. We got inventory all over the world. We layer on top of that these high-margin services like a clutter integration to help you with your move. We can do your tax and get you domiciled in the most advantageous jurisdiction. It has become this incredible thing where we have people come to us, crying and saying, “I'm in this post-COVID remote world. Instead of sitting in my boxers all day at my apartment, you are helping me move to this fabulous place. I can stay there for six months and go somewhere else.”
The stuff we are doing on the studio side is exciting. It is an amalgamation of everything. The firm is accomplished both in Web2 and Web3 because we see where the puck is going. We understand where there are opportunities for innovation. We now have the ability to build it ourselves. What has also been cool is that it is such a tough macro environment, and a lot of founders, even strong ones, know how difficult it is to build on their own. We are getting founders that are rock stars who still want to build with us at the studio. It is an exciting opportunity to take advantage of what is a tough fundraising environment.
I have another question. How do you keep up with all that and all those space shifters mentally? As a multi-industry venture capital firm doing some of your own building, you have this unique opportunity where you have asymmetric alpha not too dissimilar from a media company like us, but you also have an overwhelming amount of alpha to process. How does your brain work at the top?
I have also got two daughters on top of that. There is a lot going on. Sometimes I talk to institutional LPs. They are like, “You are all over the place.” What I tell them is, “In my opinion, everything levels up to the same thing. It is all early stage. It is all getting from 0 to 1. We led the seed round, and all of a sudden, they are worth crazy amounts of money. When we invested with them, they were pre-revenue. We were with them at that ideation level, helping them find product-market fit, yet because we were a “VC” and not a founder, we only owned 10% or 15% of the company. It made a lot of sense for us to go a degree earlier and start building ourselves.
I'm lucky that I have got a strong team around me. I have got incredible people with a lot of talent that share the mission that I do that are also making sure that train stays on track. At this point, at Struck, as a firm, it is important for me to make sure everyone understands the totality of our social graph. I want to make sure that everybody is comfortable collaborating. There is a ton of cross-pollination. I'm not looking at every single function of code. What I am making sure of is if we got an incredible product person and they need to speak to a top-tier UI/UX designer, I can make that match and bring everybody together.
It has been important to make sure that the Capital and Crypto teams are benefiting from the Studio team and vice versa. That is the role that I'm playing. I love the early stage and 0 to 1. I want to be in that place where when these founders become huge, they can come back and say, “You were there in the beginning when no one else was.” That is the interpersonal and emotional aspect of what I do that I love. You are not wrong. There are sleepless nights, and there is a lot going on, but as long as I can do it with a smile on my face, I'm going to keep pushing.
I have an image of us having drinks. All of a sudden, you are in a crisis prevention meeting with one of your founders, and you are back to having drinks. That is adamant in a nutshell for the audience to understand.
You are staying busy and innovating. Outside of your own portfolio, which is extremely exciting, there are a lot of cool projects within there. What are some other projects you have been keeping tabs on in the Web3 space?
We are focused on the intersection of blockchain and AI. I know everybody says that, but we think there is a big problem in AI in terms of the black box, and where does this training data come from? You have a lot of these broad horizontal LLMs like OpenAI that maybe suffer from ChatGPT and hallucinations and have some accuracy issues. There are real opportunities to make a shift from not LLMs but to more specialized TLMs, changing from large to tiny. We have been focusing on the Web3 space or companies that can help other companies create proprietary data that is proprietary to them and store them on the chain.
The concept of solving the black box problem for vertical-specific LLMs is something that we are interested in. The crypto concept can come in where you are using a token or incentive model to incentivize individuals that can create that proprietary data to create it and store it on the chain. There is a lot that blockchain and AI can do together to solve a lot of the problems associated with the black-box nature of artificial intelligence and AGI, more generally. We think that is going to manifest in vertical-specific LLMs that we would call like TLMs. Any project that is focused on something like that to us is interesting.
We have also been paying attention to a lot of projects that are solving security issues in the blockchain. From our perspective, in order for us to achieve L1 interoperability, we don't think bridging works because it opens you up to a ton of smart contract risk. When you are taking a token, and you are depositing it in one chain, and having a wrapped version of the token on another chain, you have doubled your smart contract risk because you have to have two smart contracts that you need to rely on.
There is a lot of new bridging technology that is a manifestation of account abstraction that ERC-4337 that I spoke about that would make things a lot safer, which would make the interoperability much easier, which is critical. People are not in a place where they are like, “My token transferred to this chain, but I don't have that wallet, and I can't use it.”
That is one of those UI/UX issues that destroy the user experience. From our perspective, blockchain, AI, and immutability data modes are always something we are going to be paying attention to. Getting away from AI and some of the more fundamental issues, anything security or UI/UX focus, we are also interested in.
It will also be interesting to hear some fun facts about you as an individual in our next segment called Edge Quick Hitters. It is a fun and quick way to get to know you a little bit better. Ten questions, and we are looking for a short single or few-word response, but feel free to expand if you get the urge and you get a new car. Are you ready?
Ready as I will ever be.
Question number one, what is the first thing, Adam, you remember ever purchasing in your life?
It has got to be something candy-focused. I was in South Africa. They make the best chocolate ever. It is a piece of chocolate called Top Deck, which is milk chocolate and also white and milk chocolate altogether. It is a fun situation.
Can you pretend to have a South African accent because they do not detect anything?
I could do my South African accent now. I could turn it on with a switch. Anytime my wife is mad at me, I turn it on, and it is like a different person.
Question number two, what is the first thing you remember ever selling in your life?
I used to purchase basketball cards and Pokemon cards. The first edition of Charizard was the first time I made real money selling something.
I missed out on that racket. That was Pokemon cards. I collected the wrong things clearly, like wrestling magazines, not worth anything whatsoever. What is the most recent thing you purchased?
I purchased my nephew a pair of black and red Jordan 1s for his birthday. That was cool to see his reaction. He is a big fan. Michael Jordan keeps on going.
You saw that movie Air, I assume.
I thought it was amazing. They have done it well.
It is a great movie. Highly recommend it to folks. What is the most recent thing you sold?
As a firm, we sold some crypto.
What is your most prized possession?
My most prized possession is my two daughters. My wife wouldn't be jealous of this because our daughters are a byproduct of what we created together. It has been insane. I brought my five-year-old to New York for the first time. Seeing her experience in New York and understanding it was amazing. I'm going to put it on my two daughters.
I don't think your wife would be mad at that, but if you could buy anything in the world, we are talking digital, physical service, or experience, and that's for sale, what would it be?
I'm a car guy. I love cars. If there is going to be some limited edition classic Aston Martin that would allow me to call myself James Bond, I would probably want to buy that.
If you could pass on one of your personality traits to the next generation, what would it be?
Understanding that adversity is a big part of success. You have to not be afraid to fail, and you got to put yourself out there. Work ethic plus being okay with adversity like being punched in the mouth and understanding, “I learned a bit from that. That was a good thing. I can get back up because I'm stronger.”
It is a classic conversation, but it is an important one where the mainstream media loves to portray the plight of the entrepreneur in terms of whether everything went as planned or was terrible and a tragedy disguised as a journey. The reality is it is more everyday adversity that challenges us entrepreneurs and fires us up at the same time. I appreciate that.
I told one of my studio founders, “Early-stage startup life should feel like Whac-A-Mole. If it doesn't, there's a problem. You are dealing with fires every day. That is part of the journey.”
There are micro pivots that happen all the time in the world of startups. With AI technology adoption, global challenges accelerate the need to play the game of Whac-A-Mole and embrace it. On the flip side Adam, if you could eliminate one of your personality traits from the next generation or if your wife could, what would it be?
My wife thinks I'm a little OCD. I like things pretty clean. I spend too much time wiping water around the sink. She probably wanted to eliminate that. When I had my daughter, and she saw that my daughter had some similar tendencies, she realized it was genetic, and it was not my fault. I want to eliminate a bit of that.
The fantasy of every wife is cleaning the kitchen. I wouldn't complain about that. Last couple of questions here. These are relatively straightforward. Question number nine is, what did you do before joining us on the show?
I spoke with my CTO and partner at my studio, Mike Montero. He was the Cofounder and CTO of Resy. If you have ever made a restaurant reservation, he built that product. Before that, he sold CrowdTwist to Oracle. He is an absolute genius and an amazing person. We had one of our catchups where we talked about what was going on and how we could stay on the same page and help one another.
Question number ten, what are you going to do next after the show?
I have my trainer coming to the house next. I'm going to do a little one-hour workout. That is something I use sometimes on Tuesdays or Thursdays. It keeps me fresh in the middle of the day. I can work into dinner or even past that and feel energized. His name is Presto. He is amazing. If anyone wants his contact information, let me know. A big part of any success I have experienced is from a health and physical perspective.
Richard and I have the pleasure of having worked out together during Outer Edge. We wake up early and get our hustle in our HIIT training. What training do you do?
It is full body. We will do chest and arms one day. We will do legs together, back and shoulders. I got a good gym in my house. I built it in my garage. It is efficient. It makes me feel good mentally and physically. What I have realized is during the week, I have to plan it in an actual appointment or meeting, or else I will never do it. The content of seeing it on the calendar, knowing that someone is coming there to my house, motivates me. I'm very consistent.
It is the same thing for me. I have a recurring meeting on my calendar twice a week. I get the other workouts in on the weekends. I have not yet figured out how to work out three times during the workweek, but it is critical to have it on the calendar. Worst case scenario, you have to move it one day or another. At least you are moving the appointment up or down. You are not pretending it wasn't there.
There are always many things going on, and you get tired. If I didn't have someone pushing me ahead on the calendar, it would be easy to be like, “Not now.” I was like, “I haven't worked out in a month.”
The bonus question of the day is you have been in the VC space for a while doing various investments and you have seen your fair share of businesses. What is the business that got away?
At the time, it did get away, and I was upset, but it was still a good outcome. It has gone a little bit in the other direction, but it is a bird. Me being in LA and the scooter craze, I knew a few of the execs, and I had an opportunity to invest. I felt like, “This may be capital intensive. Uber is going to eat their lunch.” For a short period of time, they created crazy enterprise value and changed the whole landscape of the topography of Santa Monica and a place that I was every single day. That much felt for me as an LA investor to miss out on that deal. I was not happy. It went in the opposite direction. It is all about the T-value of that temporal lens. That was one that got away.
It is one of those where on the way up, you are like, “This is going to change the world.” You are like, “This is hard to scale.”
One of our mantras is we want to invest in businesses that become easier as they scale, not harder. Bird is one of those logistical nightmares. It is difficult.
We want to invest in businesses that become easier as they scale, not harder. Click To Tweet
It does have a nice ring to it that Seinfeld Newman rings to it. You see the scooter. That was fun. Thanks for participating. You were also prompt and quick with your answers, as requested. I appreciate that. That means we do have some time for Hot Topics. Let's hit the hot topics of the day. Number one, Dmitri Cherniak's 'The Goose' NFT Sells at Sotheby's Auction for $6.2M. That doesn't sound like a bear market for NFTs to me. Let's get a little bit more on that. “Generative artist Dimitri Chernyak’s ringers number 879 NFTs sold for a hammer price of this $5.4 million and a full price of $6.2 million inclusive of Sotheby's buyer premium during a live auction, blowing past estimates during a time of slower market movement.”
“Often referred to as The Goose for its likeness to the animal was the top lot during Sotheby's most recent auction of NFTs from the Grails Collection, seized from a bankrupt crypto hedge fund, Three Arrows Capital. The piece was estimated to sell for a mere $2.3 million.” Lots of great stuff rolling in here. Sotheby's participation in the NFT market has been strong. They seem to continue to be. Adam, have you ever bought anything from Sotheby's plan anytime soon?
I have not. It is something I want to do at some point. What I will say to this is, for Three Arrows Capital, I’m glad they were able to seize it, and it is sold for more than estimates. Maybe the bull market is coming back.
You never know what happened there. There is something interesting about the fact that it was sold from more than it was originally bought from. We do see in fine art a steady state of appreciation historically. If you categorize it this way, it makes sense. On the other hand, you wonder if there were affluent folks in the industry that were trying to make a statement about helping those that were impacted by Three Arrows and supporting some of the best fine art. I don't think we will ever know the answer. Only the person that bought it knows in their heart why they spent that much. It is a personal decision, but that thought crosses my mind.
Without knowing the nuances of the auction and how it went, I'm not sure, but if there is a good Samaritan like a crypto native art lover out there, I want to meet this person, and let's do some deals.
It does say the collectible was purchased by 3AC Cofounders Su Zhu and Kyle Davies in August 2021.
They originally bought it, and it was put on the auction block.
A quote from Michael Bouhanna of Sotheby's Head of Digital Art and NFTs told CoinDesk, where the article comes from. The piece is a major highlight of his portfolio and one of the most significant works in the generative art movement, and now even more significant given this sale. Let's hit the next one, Nike teases upcoming ‘Airphoria’ NFT sneaker hunt on Fortnite.
I love that headline. That is great branding. NFT Sneaker Hunt. That sounds fun. I hope there is some augmented reality involved. “This move here would potentially mark a massive opportunity for Web3 adoption by traditional gamers, given that Fortnite has had more than 242.9 million active players over the past 30 days, according to Active Players. In a brief accompanying video, Fortnite’s and Nike's Air Max logos are featured front and center among a backdrop of floating clouds in the sky.”
It has been interesting being in this NFT space from the beginning of the run-up as we launched the show back in March 2021 and noticing how all of these traditionally collectible items are entering this space, taking their places and roles, and seeing the opportunities. Some of them being a little bit slip-shot out about it, and some of them being more towards the forefront but the sneaker movement. It's hard to remember a time when sneakers were not collectibles. You said you bought those Air Jordans for your nephew, Adam.
Yes.
Is that for sporting around town? Is your nephew a sneakerhead collector?
He is a collector but getting started. He has an appreciation for the Air Force 1s and the high tops. He was stoked about it. He also broke his finger. His cast was black and red. I planned it perfectly. That was good. For me, when I think about all the Jordans I used to own and like, I would take them on the playground and had no idea they would become these incredible collectibles. Hindsight is always 2020, but I love this use case. It makes a ton of sense. I would be a huge fan of them partnering up with Niantic and doing some augmented reality. That would be cool.
The other cool piece about this is back when I was growing up, a lot of the ways, and this is still true for a lot of kids who go to school, the ways that you show your individuality is through your shoes, especially for kids that go to a private school or have some school where you have to wear a uniform. Usually, the only thing that you could show some individuality on is wearing your shoes.
In a lot of these games like Fortnite, the way you show your individuality is through buying skins or a certain dance. You are potentially able to bring that individuality again through shoes. It is a smart way for Jordan to continue to do its branding to the next generation to keep wanting to show that individuality, even if it is not in the physical world but in the digital world.
Mythical has a game called Blankos. They were doing all these drops of Burberry and all these major designers. You had enthusiasts that loved the brand and, all of a sudden, were playing the game. They are accessing a whole new total dress of market. You also had a lot of gamers that are like, “This would be fly if my character could have these Burberry branded high tops. It echoes your sentiments there.
I feel like Fortnite and Epic Games have not traditionally been friendly to the NFT concept despite the potential overlap. Do I remember that right, Josh?
There was a moment right where there was said quote by a certain leader in Epic about the NFT industry. From going to different gaming-related events over the last few months, I have come to appreciate the relationship between Web3 and gaming through a different lens, which I'm sure, Adam, you may have a perspective on as well. The gaming industry is an industrial pioneer that is creating gamifying stories.
They are using every trick in the book to engage people and make things sticky. When there is a new tool out there that could create more engagement, they want to test it out. They want to try everything that can make a game a more engaging, consistent experience, and their users have a constant thirst for more engagement and creative ways to be engaged. Epic and a lot of these gaming companies took stock of that. They are not sure where it is all going, but they don't want to be left behind.
You make a good point, Josh, about the power of gaming as an industry and consumer understanding. If you think about it, much like Facebook usage and things like that, they have the ability to apply the scientific method and statistical techniques to optimize the experience. There is incredible potential there.
With that point, Eathan, if they do that and they are taking such a scientific data-driven event to create fan enjoyment, and they are into Web3, they see the potential. That is a good signal for the industry as a whole. Were you going to say something, Adam?
I echo your sentiments. I don't know why there is such a backlash in the first place. Maybe it got a little too hypey. Some core gamers didn't want to introduce a gambling component into the game. From my perspective, for Fortnite, you have billions of dollars in revenue generated by people purchasing a virtual currency to purchase skins to differentiate themselves and show their virtual status. For companies like Nike, it is all about limited-edition shoes and collectibles. It makes so much sense inherently. It is nice to see this move. They wouldn't be doing this unless they tested the hell out of it. This is something bullish to highlight.
Let's head on out of hot topics and start to wind things down here, but before that, we always love to give a moment for a potential shout-out. Adam, have you got anybody in your world or connections admirations that would be worth a shout-out on this episode?
I mentioned him briefly, but I will highlight him one more time. I'm shouting out John Linden, Mythical Games CEO and Cofounder and former Activision Studio Head. We were their first-ever investor. We only invested in their pre-seed round. They raised at over $1 billion valuation. One of the reasons why I think John is cool is he got up and spoke at my annual summit in 2022. They had Michael Jordan invest in their most recent round. He put up a picture of Michael Jordan. Larry Bird was shooting over or guarding Michael Jordan. He put my face on Larry Bird. That was cool because he thinks I'm a great basketball player and investor. I give him a lot of props for that.
Most importantly, if we are looking for projects and leaders in the industry to allow crypto to reach mass adoption, gaming and sports are going to be an intersection that everyone needs to pay attention to. Google Games launched NFL Rivals. They are the first blockchain base game ever with the NFL. It puts you in a position where you have, like Nintendo 64 Blitz, arcade-style gameplay, but you can participate in drafts and own all of these skins and teams.
They are bringing that in-game virtual economy to the NFL. They are pioneers because nobody else has done this with a major sports league like the NFL. I'm enthusiastic, not by John and his Cofounder Jamie, but by the totality of the Mythical Team. It has been a pleasure to support them, and what they are doing is not only great for the average gamer, but it is huge for the Web3 industry. I wanted to give him a shout-out.
We had Jamie on the show. We knew they were cooking up something big with NFL Rivals. I have been a John Madden fan all my life. I'm excited to play this game and see what is going on over there. It was a nice reminder about what they were doing.
You can check it out on iOS, Android, and the App Store. They are outselling and outperforming Madden's iOS game. It has been a nice run so far, and they are getting started, especially because we are in the NFL off-season.
A great point you made about the use case there with sports, and I don't think it is necessarily competitive with this, but similar idea. One of our sponsors, we have a segment here, Swoops, and it is basketball on the blockchain. We can own our NFT players and play them. It has been fascinating to watch them explore the possibilities. I agree that it adds another element of fun to the whole system there. Let's start to wrap out here. The last obligatory enjoyable thing we should do here is to make sure we know where to find out more. We want to know more about your website and social handles. Where do you want to send us, Adam?
You can go to StruckCapital.com, where you will see everything about the three ways we partner with founders across Capital, Crypto, and Studio. You can also find us on Twitter @StruckCapital and @StruckCrypto. We are all on LinkedIn. We post frequently. Anybody that wants to hit us up, it is Info@StruckCapital.com, and we will do our best to respond. We are in LA. We are throwing events all the time. We also love private dinners around town with individuals that want to see the LA Tech ecosystem flourish. If you are a founder, investor, or enthusiast, there are going to be ways to get in touch because we pay attention to people that are passionate about what they do.
We have reached the outer limit at the Edge of NFTs for now. Thanks for exploring with us. We got space for more adventures on this starship. Invite your friends and recruit some cool strangers that will make this journey also much better. How? Go to Spotify or iTunes, rate us, and say something awesome. Go to EdgeOfNFT.com to dive further down the rabbit hole. Look us up on all major social platforms by typing EdgeOfNFT and start a fun conversation with us online. Lastly, be sure to tune in next time for more great NFT content. Thanks for sharing this time with us.
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