Paradigm’s Matt Huang on the Biggest Crypto Fund Ever Raised

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

We haven't talked about it in a few weeks, but crypto, price aside, there's always volatility. It's clearly not slowing down at all.

Tracy Alloway (0:26)

I feel like we have been talking about crypto over the past few weeks, but I guess we haven't on the podcast. We've written about it on the Odd Lots site. There's still a lot going on. I mean, like every day, it seems there's a new investment in the space. People are getting more and more excited about DeFi.

These random tokens keep taking off. At the same time, everyone's talking about NFTs.

The list goes on.

Joe Weisenthal (0:52)

Right. You know what I feel like with crypto? And it's funny, like a joke, it's kind of half true. We haven't been talking about it lately.

I think I guess the issue is, I feel like if you go three weeks without having a crypto episode of the podcast, or if I sort of tune out of crypto for a few weeks, because say I'm interested in supply chains or lumber or inflation or something, then when I try to tune back in, I'm like, what the heck just happened? Because the narrative has changed so fast, and the new story or the new coin that people are into has changed so fast that I feel like I'm totally behind. So three weeks in the crypto space feels like three months or a year.

Tracy Alloway (1:30)

Yeah, it's sort of like a dog years type phenomenon, right? Like crypto just seems to be moving faster than everyone else.

Joe Weisenthal (1:37)

Yeah. So anyway, I want to just get right into it. I'm very excited. There's a long time by crypto standards, VC firm or investment firm called Paradigm. If you say the name Paradigm to people, like in crypto circles, it's like this like hushed tone, because like there's such reverence for this firm. Everyone respects this firm. And they've recently raised the biggest crypto, I think VC is the right word term, but the biggest crypto investment fund as of now. And today we're recording this November 30th.

Who knows the record's probably gonna be broken in about three days, but they've raised the biggest fund ever to invest in the space of $2.5 billion.

And we are going to talk to one of their co-founders about what they plan to do.

Tracy Alloway (2:26)

Great, can't wait.

Joe Weisenthal (2:27)

I'm very excited. I wanna bring in Matt Huang. He is the co-founder and managing partner at Paradigm. Matt, thank you so much for coming on Odd Lots.

Matt Huang (2:36)

Hi Joe, hi Tracy. Thanks for having me.

Joe Weisenthal (2:38)

Absolutely. So like I said in the intro, I feel like when I've been in crypto circles or hanging out with crypto people and like you bring up Paradigm, people are like, oh yeah, they're legit. Like there's a lot of like kind of fakers in the space. We all sort of know that. And there's a lot of people that just arrived on the scene five minutes ago. But before we talk about this new fund, why don't you talk about, where did Paradigm come from? What is its background and history? And what's its sort of basic story?

Matt Huang (3:07)

Well, we are very grateful that that's what people are saying about us.

Look, I think Paradigm started from a pretty simple place. My co-founder, whose name is Fred Ersam, who had previously co-founded Coinbase. And I were longtime acquaintances and friends. Back in 2017, when I was, I like to say, a boring venture capitalist at Sequoia, focused on all kinds of different technology investing and started to spend a lot more time in the crypto space, we would meet up often and consider new investments. And one of our observations at the time, well, actually there were two. The first was, and Fred gained this early, but a very, very deep conviction that what was enabled by crypto was likely to be one of the most impactful sort of spaces to be spending time in over the next 10 years. And we'd already seen Bitcoin as a digital monetary asset grow from effectively zero to hundreds of billions. We started to see the early days of DeFi take off on top of Ethereum.

And so it was just very clear to us that this was the future. And yet, when you looked at the traditional tech investing establishment, I think it was very underrated. In fact, most very smart and well-meaning people, often when they take a first look at crypto, especially back then, they couldn't help but come away with a sense that maybe there wasn't so much substance. Since there were dog coins and cat coins, and it was sort of, what is the point of all this? And yet, when we spent time on the front lines with some of the protocol developers and the teams building real hard technology in the space, we just had a totally different view. So it was sort of born out of that conviction in crypto. And then, somewhat separately, we looked around and I would talk to Fred. He had co-founded Coinbase in 2012 So if you were starting another crypto project today, is there another investor that you would be really excited to work with? And I think the answer for both of us at that point in time was no. And so Paradigm really came from us kind of building the investment firm that we would have wanted as entrepreneurs.