Inside The Booming World of Initial Coin Offerings

SPEAKER_1 (0:00)

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Joe Weisenthal (0:25)

Let's Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal, and I'm sad to say that this week, my co-host Tracy Alloway is out. She's currently traveling, so it's just going to be me this week.

So this is where normally she would interject something, and then we'd have like some banter, but I'm not really good at solo banter, so I'm not even gonna try to say anything funny or coy. I'm just gonna jump right to the topic.

Unless you've been living under a rock, you've probably heard about the incredible frenzy that we've seen of late in crypto assets, crypto currencies, whether we were talking about Bitcoin or Ethereum or ICOs or all these things, just nonstop incredible moves these days.

So it really is sort of, it's time that we talked about them here. And so today on the podcast, we have a guest who's very well positioned to talk about just what the heck is going on in this area. His name is Chris Bernisky. He's the blockchain products lead at ARK Invest, which is a asset management company that has ETFs, and they actually are one of the few firms that actually has exposure to Bitcoin. So he is going to help us sort out just what's going on right now, where we are. Is this a bubble? What's going on? What's going on? Why are people so excited about this area? Chris, thank you very much for joining us.

Chris Burniske (1:57)

Thanks for having me.

Joe Weisenthal (1:59)

So first of all, before we get into this, what is ARK Invest?

Chris Burniske (2:03)

ARK Invest is an investment manager. We were started in January of 2014, actually the same month that Ethereum was announced by Vitalik.

Right now, we're approaching about a billion in assets, but the key to ARK is taking the open source software development paradigm and applying it to Wall Street investment management and research. So whereas most investment managers keep their trades and their research close to their chest, we actually share all of that because it allows our theses to evolve more quickly and it imbues trust within us.

Joe Weisenthal (2:37)

Tell us about your products. You have ETFs.

What are they?

Chris Burniske (2:40)

We primarily have ETFs, and they focus solely on disruptive innovation. And as a thematic investment manager, they focus on different themes. So, for example, we have our next generation Internet ETF, which has themes like machine learning, cloud computing, Internet of Things, and crypto assets. And so, for example, in that ETF, Bitcoin is actually a number one position.

And then we've got other ETFs like genomics or industrial innovation, so on and so forth. We do have a fintech mutual fund in Japan, and we do some separately managed accounts. So we're a broad purpose investment manager.

Joe Weisenthal (3:18)

Now, what's your background? Sorry, I keep forgetting the name of your title, but that's probably because it's unusual, you know. It's not most people. Blockchain products lead?

Chris Burniske (3:26)

You can think of me as the only buy side analyst to focus on crypto assets with a flavor of business development in there.

Joe Weisenthal (3:34)

So how did you become the blockchain products lead? What's your background? How did you become the person who would analyze these assets?

Chris Burniske (3:44)

Well, as with much of life, it was chance.

But in college, in 2011, 2012, Bitcoin crossed the radar. I was a student at Stanford at the time, pretty tech-focused environment, and started exploring this brave new world. And that took me down a bit of a rabbit hole. I remember looking with friends at mining equipment on Craigslist and these racks of servers. And we briefly flirted with the idea of having a mining operation. But at the time, I didn't dig deeply enough to dissociate Bitcoin from what was the major application at the time, which was the Silk Road. And so I interpreted much of what was going on as illegal and didn't necessarily have the courage at the time to leap in.

Forgot about Bitcoin for a few years. Joined ARK in 2014 And at that time, our director of research had invested in Bitcoin early on. It was something that we knew was going to be important. And so picked up the ball and ran with it. And that eventually led me here.

Joe Weisenthal (4:57)

You characterize yourself as a buy side analyst. And that raises an interesting question, which is that when you hear people talk about any of these crypto assets, they're like, yeah, but how do you value them? What is the fundamental value?