The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy sits down with the Lau brothers – Darren, Daryl, and Zachary Lau, also known as Not3Lau Capital. They discuss the importance of finding your tribe, how to work effectively with founders, staying up to speed with the markets and much more!
- Delphi Podcast Summaries
- The Daily Ape Website
- The Daily Ape Telegram
- Daryl’s Thread on Finding Your Tribe
00:58 • Tom
Hey everyone. Welcome back to the podcast. I’m one of your hosts, Tom Shaughnessy of Delphi Digital, and one of the co-founders who helps lead our ventures division today. I’m thrilled to have on my three favorite interns: Darren, Daryl, and Zach. How’s it going guys?
01:10 • Daryl
Hey. What’s up boss?
01:12 • Tom
Guys, I’m not sure… Am I your intern or are you guys interns for us? Who’s the intern?
01:17 • Zach
We all are interns.
01:19 • Daryl
01:23 • Tom
I love it. Well, we all have the same Twitter pic so I feel we’re all kind of the same person at the end of the day.
01:29 • Zach
The psyops continues.
01:30 • Tom
It’s a good psyops. Let’s start in order. Zach, we’ll start with you because you’re top of the screen. Let’s start with your story on how you guys got started in crypto. I know it’s kind of a joint story, but let’s go with whoever wants to run with it.
01:42 • Zach
Sure. For myself, I basically got into crypto in the most degen way possible by buying the top of the 2017 bull market. From there, it was basically the best opportunity to be a part of the whole ecosystem. After buying the top, you want to explore what you did wrong and what you could improve from there. However, at that point, I was also juggling a full-time job, so I wasn’t as into crypto at that point of time. It wasn’t until the 2020 DeFi Summer where I started putting a bit more time into it, and it was this year where we started Not Lau Capital between the three of us.
02:20 • Darren
For Daryl and I, the beginning is similar. We got in the 2017 bull market, and then the market died. In 2018, we went to this event where Coingecko was speaking. We went up to them and asked if they were hiring any interns, and we started off as interns. We were basically in charge of market research. For example, when Uniswap, Curve, and other DeFi projects came out, we were the ones pushing Coingecko to integrate all that. In March of last year, we wrote a book on, ‘How to DeFi,” but then by June/July the book already started being outdated, so then I started posting more on Twitter, just to teach people how to yield farm, what Curve is, what YFI is, etc. In August, I joined the Spartan Group. I was there for nine months, but I left in May to focus on my own thing.
03:08 • Darren
Recently, Daryl left Mechanism. We’ve been doing things more together in the form Not3Lau Capital. Daryl can explain a bit more as well.
3:21 • Daryl
The main difference between both of them was that they both had their own responsibilities. Zach had his full-time job. Darren had his scholarship. I had a scholarship too but I lost it immediately one semester in, so I could 100% focused on crypto. All the time, I was deep in the degen discords, synthetics trading for example, deep in the weeds for all the crypto groups. Since 2018, I’ve been an early DeFi user helping people out as best as I could. I was really making sure that Coingecko had the fastest data possible, and the most up-to-date and detailed information. That’s what really kicked off things.
4:00 • Tom
How’d you lose the scholarship?
4:08 • Daryl
We both got into crypto around mid-2017, which was also the start of our degrees. We were studying, and I had to maintain a certain GPA, and I fell below that threshold because I was staying up until 3 AM reading about crypto and everything, seeing my net worth go up. I lost the scholarship after one semester. And, at that time, we were near the top of the market, then in 2018 everyone suffered the crash.
04:41 • Tom
Tell me a bit about Coingecko. How was the experience there? What did you guys spend a lot of your time on? Because it sounds like you guys were interns, you are interns now – forever interns! I love it.
04:50 • Daryl
We were basically the first two interns to start outside the office. As Darren mentioned, we were in charge of the market research and those kinds of things. It went on from ICOs to DeFi, so when DeFi first started, for example, we were literally standing in front of a whiteboard explaining it to some co-founders – explaining to them what is Uniswap, why would anyone use it, and why we should add it to Coingecko. Uniswap was a lot different than most exchanges that had been integrated before. Most exchanges were centralized exchanges, so they could use APIs, but Uniswap was a pure pain-in-the-ass to integrate because it was all on-chain data. So that was a bit harder to convince them.
05:31 • Daryl
I had to spend about a week explaining it to them and why we should integrate it. It kicked off from there. Every other day, I was asking them to integrate this new DeFi app. We were the first website to actually integrate any DeFi application, and that was really during a time when nobody knew what DeFi was, or before the term DeFi existed. But it all started with Darren and I using the apps and realizing, “Okay, this is something different that maybe we should be focusing on.”
06:01 • Tom
That’s fair. Coingecko’s obviously one of my favorite sites. You guys did an incredible job helping them. I’d be interested in everybody’s journey after quitting originally, because it sounds like you guys quit, joined the bull market, obviously we had a prolonged bear market… What was your guys’ process there? I went through the same thing. You lose a lot of energy when you’re buying into a bull market and stuff goes sour.
06:25 • Zach
I only recently quit my job after DeFi Summer last year. That was because the return on investment between working in a full-time job as well as in crypto…there was a very huge gap there. It was also at a time when my brothers and I started to think about what we could do in the future. So, to me, quitting wasn’t a big deal, because the three of us are very close. In fact, the three of us used to share the same room until we made it to university. From that point in time, we just enjoyed working together. We complement each other’s skills pretty well, so it’s been fun for me.
07:11 • Tom
What about you guys? What was the journey like after joining?
07:14 • Darren
After joining in 2018-2019, I was mostly focusing on my scholarship. I also used to manage a dodgeball team, just for fun, but I haven’t played in a few years, so I’m very rusty. I was focusing on TradFi as well. I did apply for some TradFi jobs but got rejected because my grades weren’t up to par. So I thought, “Okay, screw it, let’s just go to crypto instead.” I liked crypto more anyway. The degeneracy felt more at home with me.
07:49 • Tom
I totally agree. And last but not least…
07:51 • Daryl
When I lost the scholarship, I was focused on making sure that my parents didn’t have to foot the bill for my university fees. So I was focused on crypto, and it was probably the easiest industry for us to understand. We tried trading stocks, our dad tried teaching us about it, but we hated it completely because we couldn’t understand it and it was too slow. Then, after we found crypto, we saw that it moves 30% a day, even in an hour sometimes. It is a lot more familiar to us rather than PS ratios and stuff like that. So, I was mostly focused on grinding my ass off making sure my parents would never have to foot the bill for my university and that I’d be able to sustain myself. That was the whole drive.
08:43 • Tom
Crash course in and you get interested.
08:46 • Daryl
I was still doing my degree, but my parents went from, “You need to maintain your scholarship,” to, “You need to pass,” to, “Just get the paper,” so my grades just went to 0
08:58 • Tom
I totally agree. On that route, there’s a lot of topic areas I want to dive into. One of the first ones is learnings from what you guys have had and what you’ve done so far. So, Daryl, let’s start with you. Mechanism Capital is obviously a fund we work with closely.. We have a ton of respect for Andrew, Mark, and the team. What was your biggest learnings there as an individual – maybe on the investing side, or personally, that you took with you?
09:23 • Daryl
The thing I learned from Andrew is having conviction. He has a great way in crafting his own investing thesis. He always asks, “What’s our thesis here? Why should we be investing in this in the first place? Where do we see this going in the next 3 years? How does it fit together with the whole market?” For example, he was one of the first people with you on THORChain. He was one of the few people in the space who actually cared about cross-chain at the time. He’s always been focused on having a greater narrative or thesis around all the investments that he’s made. So that’s one thing I learned from Mechanism.
10:12 • Tom
Do you still do that today, being very concentrated in your portfolio?
10:15 • Daryl
Our investment thesis has somewhat changed. We like to make investments with founders that we like. At the end of the day, if you can’t get a beer and chill with the founder, why should you be investing in him?
10:36 • Tom
Yeah. Judging those vibes online is harder but necessary. Darren, switching to you. Similar question to what I asked Daryl: you spent a lot of time at Spartan Group – also ton of respect for Jason and Calvin and the team – what was your biggest learning there that you took away from it?
10:51 • Darren
Spartan Group comes from a bit more of a fundamental background, like from TradFi as well. Two things I learned from Spartan: one is understanding risk a bit more. For example, think about what’s the maximum drawdown in a position. How quickly can you liquidate a position if there’s a market-wide crash? How much slippage will there be when you’re entering a position? That’s something I never understood as a retail guy until I started doing more fund-sized positions. When you’re aping one million into a shitcoin that has $100,000 liquidity, that moves the books very quickly. When you want to exit, you have to consider that as well.
Another thing that I learned from them is thinking more deeply into my way of thinking. For example, I tend to just think of one narrative or opinion, but Calvin and Jason really taught me to question it a bit more. Think more about, “What are the cons here? Why are people thinking this way? Is there another way to think about it?”
11:53 • Tom
Having multiple opinions and understanding is huge. Zack – I’m not sure what you did prior, but we’d love to learn more about what you took away from that before moving full-time into crypto.
12:04 • Zach
My prior job was a bit more different from crypto and what my brothers were doing. I used to work on this Community Education Firm where we did a lot of development for under-served youths. From there, it inspired me to look more into what the community wants as well as to spend time with the people to figure out the things like, “What is it that will make a product better for them?” I spent a lot of time in discords talking to people as well as speaking to the average retail investor just to figure out what it is that drives them and what interests them in the current market.
12:49 • Tom
That’s really helpful. You guys all bring a ton of experience from your past roles. A couple of topic areas I want to chat about: one of the big ones is finding your tribe. I think you guys have your own tribe within yourselves, but how do you guys think about finding tribes in crypto culture and finding a good vibe with founders and stuff like that? Unsure who wants to take it but feel free.
13:12 • Daryl
I basically wrote a thread on that right after I announced that I was leaving Mechanism. For example, the past two years we spent a lot of typing talking to people online and being in front of screens, and it just feels completely different when I’m traveling and meeting people face-to-face for the first time. That sense of community feels a lot better to me, when you realize it’s more about investing than just profits and not just zero-sum, feeling more like “we can all make it together.” We can all grow the ecosystem together, more towards the ‘WAGMI’ approach.
13:57 • Daryl
That’s an ethos of a tribe that I’d be looking for, rather than just finding people that are focused on value-extracting and making profits. It’s important for the group to ask, “What are we in crypto for? What are we investing for? What can we do with what opportunities we have?”
14:28 • Tom
That’s fair. If anyone else wants to take it too feel free to jump in.
14:31 • Zach
Another point about finding tribes is that people often overlook how much value and how much faster you can learn once you find a group of people who are willing to share ideas and debate with you. When I first got started in crypto, it wasn’t about my brothers bringing me into a bunch of different groups, but I reached out to people and formed my own groups. From there, it really accelerated my whole learning process and onboarding into the space. You get to ask questions and hear different opinions, and from there you can form a thesis based on all the things people talk about.
15:07 • Daryl
I like the journey of finding your own tribe that you fit with – your own squad. Everyone says that a shortcut to joining crypto is joining a DAO, but I find that like a negative because a DAO is an already-curated group, so it’s not clear if your interests will align with those of that group. Me, Darren, and Zach could fit into any group – we could talk about NFTs, DeFi, Olympus, anything degenerate, and that’s the benefit we’ve received from being part of a bunch of different communities. But, if you join a DAO straight away, you’re always going to be segmented into that small group.
15:49 • Darren
Finding a group of friends is always great. For example, we’re in a bunch of groups together. So, one group is filled with people that only care about on-chain listings, like Uniswap shitcoins rather than CEX coins, and then another group is analysts from other funds. So the view of both groups is very different. One group focuses on things that have just recently listed, things that we can ape right away, and another is looking more at primary deals. Like, “What deals are we currently looking at this week?” So one group is primary markets, one group is secondary. We cover a lot of areas that way.
16:41 • Tom
I completely agree about finding people that you are able to debate and learn from in an authentic way. Going back and forth really accelerates how much you learn and can capture. How do you guys suss out the good and bad tribes in crypto? How do you judge whether a founder community has good vibes, that they want to build, that they’re not just profit-maximalists focused on making a ton of money? How do you handle that? Or do you not care?
17:06 • Daryl
Mainly it’s about how they talk and how they bring themselves on. I’ve had a call with a VC where they literally only asked three questions, “What’s the allocation size? What’s the minimum check size we can do? Where do I send money?” To me, that’s a pure value-extracting VC who I don’t think is in it for the tech or the product. That’s just one example of people I wouldn’t want to mix around with or that I wouldn’t want to have future deals with.
17:36 • Tom
What do you guys look for in a founder of a project? When you’re talking through a project – I know you guys mentioned now you’re focused on meeting founders in person because it’s easier to judge – but when you’re due-diligencing a project what do you look for?
17:47 • Darren
One thing I look for is the background of the guy: seeing if I have any mutual groups with him, if he has any exposure to crypto beforehand, or if he is just coming from TradFi, for example. Some of the best founders I’ve worked with have a good sense of the market, so they know their competitors and also what’s actually happening in the market. For example, usually just to break the ice I ask about things that have recently happened in the space, and I can generally get a sense of whether these guys are tuned in with what’s happening in the market. Gauging their interest in the market is important.
18:26 • Darren
If they’re in crypto to actually build something to make the space better, you can get a sense of how interested they are in the market. Just seeing how easy it is to talk to people is a good indicator. It can be a bit awkward when you talk to people for the first time, but if they’re easy to talk to then that generally gives better vibes.
18:56 • Daryl
Generally, there’s been an increase in anon’s recently so you aren’t able to ask them up front, “What have you worked on beforehand?” because they wouldn’t want to dox themselves. Actually though, seeing an anon building a project makes me more excited about that project because you know he’s only in it because he wants to build and wants his identity to be known for the project itself rather than to rest on his own previous accomplishments. So, we actually don’t mind backing anons. We’ve done a few anon projects before as well.
19:28 • Tom
That’s pretty cool. How deep do you guys go with the founders? Is it pretty casual? Like you’re trying to get a good sense of who they are? Or are you also seriously digging into the project from the get-go or does that come later? What’s your process for going from understanding the founder to the project?
19:45 • Daryl
One way to approach is, “What’s the project doing? What problem is it trying to solve? Who else can do that?” For example, there was this NFT display project. The founders had a degree in hardware and stuff like that. They’re probably one of the only people we know that are well-connected in the whole art scene, and they have their displays everywhere. Everyone we know working on NFT displays is working on getting distribution out, but these founders had already solved that issue. So then it came down to, “How hard is it for a founder to tap into this market?” Sometimes, we are talking to a founder and they tell us they’re talking to another fund as well. Then we DM that fund and hear back from them, saying they’ve never heard of this founder or project, which is of course a red flag.
21:03 • Tom
Digging into how solid the founders are and how hard their product is to replicate is definitely key. I’d love to dive into each of your ideas of a great founder. If you have a specific example that would be great, but maybe we’ll go in order, so Zach let’s start with you. What’s a founder that has blown you away with their ability to execute or connect with you or to build a project? What’s an example of someone that you’re really impressed with?
21:30 • Zach
On the top of my mind are the founders from the Trader Joe team. They are very responsive to people and also super degen as well. They speak a language that people like to listen to. They know what community wants. We have our group chat with the team, and when we’re not talking about work, oftentimes we share memes and talk about general things.
22:04 • Tom
That’s pretty cool. Darren and Daryl let’s go to you guys next.
22:06 • Darren
For me, I like the Aurory guy the most, Sam from Aurory. He reached out to me via cold DM because he was investing in this project that I was doing as well. From there we started chatting, back in March even. Since then, I’ve been helping him out and even try to help him with his raise as well. So, I connected him with a bunch of other VCs interested in gaming at the time. Back then, in March, Darren was very skeptical on gaming, and Aurory was doing this at a 50 million valuation, and we were being told 50 million was very expensive. And then, back in May, all these VCs started coming by and asking to invest in us, talking about Axies crazy bull run.
22:49 • Darren
Sam is one founder who goes through a lot of things, planning how to do this and that. From the very beginning I’ve been helping him out. He’s one of my favorite founders.
23:10 • Daryl
He’s like the most humble, down-to-earth, no bullshit kind of guy. We love him. It is always funny to see what he puts out there and to hear what he’s gone through, and where Aurory is right now is just amazing to see.
23:27 • Tom
That’s pretty cool.
23:30 • Daryl
One recent investment we did was Atomic Form. Garett, the founder, I knew we were both in New York at the same time, so I just DM’d him, “Hey, let’s get lunch together.” We knew each other because I helped him out with some stuff at Coingecko. It was a completely random lunch that ended up being 3-4 hours, just vibing, chilling, talking about anything and everything. And then he talked to me about Atomic Form, which I was looking into, but I had no idea he was actually behind it. So he walked me through the whole vision.
24:12 • Daryl
It dawned on me that there have been so many projects and founders in the space that think about squeezing out as much money as they can because they know the crypto people can afford it, and then Garrett didn’t care about that and just wanted to make it affordable and reachable and usable as possible. He wasn’t in it for the money first. Garrett was a guy who has been deep in Cosmos for the past 2-3 years, and whoever is deep in Cosmos is in it for the tech and research, right? They do not care about money. Everyone else is chasing those VC chains. Garrett was far from profit-first. He is a very comfortable founder – amazing. He is a huge guy as well, so he really likes to hug. It was fun to be with him.
25:19 • Tom
Yeah. What I’m hearing from you guys is you like founders that are ‘degen’ and speak your language and are nice people you want to hang with, right? I guess my question for you though, is when you’re that close to people and that friendly, how do you give them critical feedback on their project? How do you say, “Hey I love you man, but this is kind of rough. I would do this.” How do you go about that feedback process?
25:41 • Zach
This has a lot to do with the type of people you’re interacting with, right? Going back to your point about how you find the tribes that you’re able to share different ideas across – it is the same thing for founders as well. You want to be able to work together with founders who are very open to feedback. And, like you said, it is nice to be friendly first, “I love you to death, and here are some things you can probably improve on, and work to be better with next time.”
26:11 • Daryl
We like founders who we can go up to and have no-bullshit conversations. “Hey, whatever you’re planning to build right now is not going to work out. This probably needs to change. We need to take a step back. Here’s what we can do here and here’s what we can help with.” Sometimes that kind of conversation is hard to do, but we’ve always found it is better to be authentic and up front with people rather than having a fake alter-ego or something. I’m usually the same person whether I’m with friends or VCs. So it’s nice to have no sense of pretense.
26:54 • Tom
I agree with being completely authentic.
26:56 • Zach
It is part of the value-adding process: being able to be critical of the founders you’re working with. That’s where we truly believe in authenticity as well. Whenever we meet any of the projects we invest in, most of the time you can see us inviting the founders to drinks or just chilling and having a meal with them, because this is where, “This is our best self. This is the way we are normally. We want to be this way with you as well and work together with you in this light.”
27:26 • Tom
I agree. You won’t add any value and you will hate your life if you’re not authentic with people. I agree on being able to add value.
What’s your process been like though? When you give feedback to founders, what’s the best way that they take that feedback and use it? Is it that they critically engage with you guys back? Do they just go run with the feedback and implement it? Is it that sure, some of them get pissed and it’s not too helpful? What’s the most optimizing feedback loop there when you guys are giving critical advice to a founder?
27:58 • Zach
Ideally, you want to have a founder that keeps the discussion going once you provide feedback. You don’t want it to be just from your point of view, but you want to share different points of view. You want to curate what sort of ideas get born from there and then work toward what is the best outcome. I think Darren has a few examples he can share.
28:22 • Darren
I think Darryl can also chime in later.
So there’s this one project we invested in called xDeFi and they’re building a wallet that supports EVM as well as Terra. Back when they were first building it, first and foremost they wanted it to be a wallet that’s used. So they were collecting a lot of feedback from us as power users and others who were making noise about MetaMask. So that was a good strategy for them: collecting a bunch of feedback from everyone, seeing what is your most demanded feature to have, and then prioritizing around that. I went on a few calls with them just to give them feedback based on their product, and I would tell them that some things looked ugly or some features weren’t necessary, and so on. It was really just them having regular calls and asking, “Have you seen the new product? Can you go test it out and let me know what your thoughts are?” And then I would send a detailed list of what I thought could be improved. And then, from there, just following up with them. “Okay, it’s been one month, how has progress been regarding that project?”
28:55 • Darren
Regular calls are a pretty good feedback loop. Another one is just to try and break the product ourselves, or doing whatever degenerate things we can think of. And then we come back to them with new user-first ideas that they’ve never heard before. And they wonder what the hell we’ve been doing. “What can we change on this? What can be done differently?” It is fun when they trust you, “Here is a platform to test out.” Try it with multiple different apps and processes and see what happens.
30:32 • Daryl
We think about things quite differently. We think about things as 1. a user and 2. a degen and 3. an investor/farmer. Those are multiple different ways to think about things and multiple different paths to play off it.
30:48 • Tom
It sounds like you guys stay in touch really closely with the teams and you provide pretty critical and authentic feedback pretty quickly. You actually use the products which helps.
31:01 • Darren
If it’s a product we wouldn’t use, then we usually wouldn’t invest in that project. If I”m not going to use it, I wouldn’t be able to give you proper feedback, and I wouldn’t be the target market. We generally want to be users of the product. I can’t support you if I don’t use you.
31:15 • Daryl
We’ve been turning down quite a few metaverse deals and physical NFT stuff because we can’t add value to that and have no idea where to even begin with it.
31:38 • Tom
I’m totally with you. If it’s outside your circle of confidence and you’re not going to use it there’s no reason to pull the trigger on it. One thing I want to talk to you guys about is: every time I talk to each of you, you’re incredibly plugged into the space. You know the trends before they happen, the projects before they’re big. I have two questions for you. The first one is how the hell do you stay that up to speed? And then, the second one is, how do you say that up to speed while also providing value and helping all of the deals you’ve done? Because it’s kind of a give and take where you want to stand still and help but you want to keep running to get new deals and to invest in the new innovation cycles. How do you all do both? I’m sure it’s a different answer from each of you though.
32:28 • Darren
I’d definitely recommend following The Daily Ape as the best way to stay in touch with the market and stay on top of daily things. I don’t know who runs it but its probably a great guy. The reason I started* the Daily Ape was because I wanted to be on top of things. That’s my daily routine. Every morning I wake up and I gather what’s happening. Twitter, newsletters, podcasts. A bunch of news sources that I look through every morning for a few hours. Because I’ve gotten some following now, I usually get DMs from people about what news I should be covering. So people DM me about pieces they’ve written and ask if I’ll include it in the newsletter, so from there I get new sources for information too. I can only see so much information. I try to keep an open mind. For example, back in the early days of Solana, when the first Hackathon happened, most of the ETH maxis were shitting on Solana, and a lot of them still are, but I was actually going to talk to the teams on the first generation Hackathon projects. For example, Mango, PsyOptions. I was talking to a bunch of them to understand what is it like building on Solana vs. Ethereum, and why would someone actually build on Solana? Just keeping as open a mind as possible is one way I keep on top of things.
33:51 • Daryl
There’ve been a lot of investments that we’ve seen, and we’ve probably passed most of them. We try not to invest in competitors to each other or one’s with similar verticals. How can this product improve on its infrastructure? How can it expand its offerings? And we try and go from there. We keep an eye on most of the things happening in the market right now. We also keep an eye on our investments and what they can add to their offering in order to improve.
35:11 • Tom
It’s crazy how much the Daily Ape has grown.. What’s the Genesis for the Daily Ape?
35:17 • Darren
I started it back in November last year. So it’s been around for one year and one month now with 25,000 followers. It really started because I was doing something similar for Spartan, so every morning I’d go through what was happening and what kind of trades we could do based on events that are happening. And then I shared it with some friends and they found it very helpful. So then I thought, why not share it with everyone else? Everyone spends a lot of time on Twitter, so being this one source of a daily update is a good way to save people time. I don’t want to check my Twitter 24/7. If I can just check one place and be done for the day, that’s enough for me.
36:02 • Daryl
It’s like an open-source and free kind of thing. He doesn’t want to charge for it. We see a lot of news like this all day, but some charge $99 fee per month. People value that thing being paid more than free content.
36:30 • Tom
I’d definitely pay the 99 bucks. Going back to staying plugged in, The Daily Ape, and all that stuff – how do you find the rotations between chains and narratives and how do you form theses so quickly around that? I feel like you guys are able to move and get conviction relatively quickly, but how do you do that in such a short amount of time?
36:52 • Daryl
Zach and Daryl are probably the best two people to answer that. Back when the Avalanche rotation happened the first time, this was a few months ago…when they all started, I had COVID so I was sleeping all day, but I’d wake up to them every day sending Avalanche memes
37:10 • Darren
Back when Avalanche first announced incentives, back then we had one instance of a similar happening. For example, the only time that happened before was with Polygon, and a lot of people that I knew missed out on Polygon. The difference was that Polygon back then and now – they don’t even they don’t have a lot of projects building on Polygon that have a lot of native tokens.
37:43 • Darren
The difference was that I felt that Avalanche had a lot more projects. It just so happened, a few months before that, I was actually talking to the Joe team already. We were discussing how there’s just farmers on Avalanche. There’s not a lot of users. There’s probably less than 100 users a day. That’s something that I found, “Do I really pay attention to?” because in Avalanche, at that moment, there were less than 10 legit projects with tokens. One thing that we were thinking of is, “If this incentive program really takes off, what are the projects that these people will be targeting? What’s going to see the most traction after that?” I think you have the narrative as well. For example, if everyone’s bridging to Avalanche, where are they going to trade? There was Pangolin and there was Joe. And, we just felt the UX of Joe was much better than Pangolin, and we felt that could give off the narrative of being a ‘Sushi’ on Avalanche. That’s what the community rolled with as well, and it really took off from there.
38:49 • Zach
It is really about being up to date about what’s happening in the market and how do you capitalize on it as well. So, for Avalanche Rush, it was the whole incentives program as well as AAVE and Curve launching. We saw what happened with Polygon, and with AAVE and Curve going onto Avalanche, this could be a chance for the next rotation there as well. So, we went in pretty hard from there and never looked back. Right now, we are on a bunch of different chains that we have seen different innovations coming in. But we’re not going to shill it too hard for now.
39:29 • Daryl
In crypto, one thing is that people remember things that have happened, especially if there is price impact. So why keep up to date is so that we also remember what happened before. We remembered that Polygon had happened before, and what happens when an ecosystem incentives get started. What happened before? Then how would you approach this problem?
40:02 • Zach
On any chain, the most usual suspects are, “What would be the frontrunning DEX? The go-to lending platform?” So we tend to stay up to date as far as which one of these protocols offers the best user experience. What protocols really entice you to come on board and use it for them and to generate volume?
40:24 • Tom
That’s fair. I totally agree on Joe, by the way. We’re investors there. The UI and the UX was fantastic, but to your guys’ points, they were innovating and growing much faster than Pangolin and they actually had a real kind of thesis there, so it made sense to move on that specific rotation. One other thing to talk about is what everyone’s strong points are and how you guys work well together. I’m sure you guys all have different strong points and everyone’s good at different things, but Zach – let’s start with you. What are your strong points within the Lao Capital Group and how do you compliment your brothers?
40:59 • Zach
I’m typically a pretty quiet person. Most of the people who met me in Lisbon know this. Typically, my value comes in after we have onboarded a project in. After we onboard a project, we have our own group chat with the founders as well. Often, I am there providing feedback and seeing what other things we can do to improve the platform as well.
41:21 • Daryl
Zach also doesn’t have much history and pain points that so many of us have been through, so he has a lot of new takes to the market that people haven’t really heard of before, because others are carrying those legacy issues. Whereas, he can just call it like he sees it, vs. people who have been in crypto for the past few years get stuck in thinking a certain way. So Zach has a fresh perspective on things.
41:48 • Zach
I also look a lot in the different communities. I don’t really post much. If you notice, my Twitter is private, but rather than posting I just prefer to look and observe what people are talking about there. What are some things that communities are attracted to? When OHM first started, I was more into the weeds there, looking at what the community is talking about, and how it is changing the landscape of DeFi.
42:19 • Darren
I am the more public one on Twitter, so I do provide a wider lens on the market. For example, I look for opportunities on all kinds of chains. I don’t discriminate against any chains. I did do a bunch of projects on different chains like Solana, Avalanche, and so on. So having that wide lens and wide range of audience also gives me a wide source of information and keeps me up with what’s happening. That’s where I bring value the most.
43:11 • Daryl
My strength is that I hammer down certain principles. Like, I do not want to invest in any competitors. I do not want to invest in things we already have some exposure to. There are certain values and principles that I think define me as a person that I will not budge on, and these have also carried on to our investments as well. Like, we don’t want to do anything that’s just an “In it for the money” kind of thing. We want to do something that’s +EV for the space. For example, if I see a project that is simply changing one thing and then making a new token, that is not something we want to back. We want to back 0 to 1 innovation that will change the landscape as a whole if it works out. One thing I have been focused on is, “How do I think about things from a long-term perspective? How do I think about things from the entire ecosystem as a whole? What can and cannot work together? How should we be approaching this? How should we be as people?
44:09 • Tom
It’s pretty interesting. You guys have a good dynamic. It sounds like you, Zach, focus on the portfolio company work at the end. It sounds like Daryl and Darren you two focus on the public facing side but also crafting the values that you invest alongside. It sounds like a good trio.
44:24 • Zach
I would say Daryl is the most analytical out of all of us. He is the one that comes with the most critical questions to the both of us before we decide to invest in something. Darren, as you said, is the public face. He’s the one that gets the deal-flow in and gets the conversation started between the three of us. In fact, we have a mini-group chat where we share different decks or protocols coming up. Our rule there is basically: if Darren says something there and we read it and find it interesting, then we’ll have a conversation.
44:57 • Tom
Is there anything you guys go back and forth on that you don’t agree on? It sounds like you guys are all pretty much in lock step so you can move fast. But what do you guys not agree on?
45:03 • Daryl
I can’t really remember certain specific investments. There have been some times where I was focused on getting out of the house and as far away as possible from my laptop. I didn’t want to spend this much time in crypto, 24/7. So I regularly tell them to fuck off on the computer. Be there in person and not on your phone, which doesn’t help from an effective investment perspective, but it does help from a personal development kind of thing. I feel there’s a balance. You can be in crypto, but you can also be a proper-functioning human being at the same time.
45:45 • Tom
45:47 • Zach
We are all pretty much in sync most of the time. Whenever we disagree on something, we often have this thing where, “Alright if you disagree and I agree on it, I’m going to enjoy investing in it myself, and then, hopefully, down the line, prove you wrong as well.” Sort of like a sibling rivalry.
46:14 • Tom
The sibling rivalry is pretty solid though because you’re putting actual money on your line which means you’re going to diligence it the right way and bring some good arguments to the table, right? We’re talking about this like it’s all civilized but I’m sure you guys are, “F-you I’m investing. I’ll see you later. We’ll check this out in a couple months.”
46:33 • Zach
That’s why you see sometimes, whenever we announce investments in something, sometimes we don’t use the 3 Lau Capital name. Sometimes, we just use individual names. Oftentimes, when we use the Not 3Lau Capital name, it means more than one of us agrees to invest in this. If we use the individual name, it means there’s a bit of rivalry.
46:50 • Tom
Do you all have to agree for it to go through Lau Capital, or is it two out of three, or how does it work?
46:55 • Daryl
Most of the time, if 2 out of 3 agree, then the third will also agree. Maybe if it’s too niche or I don’t know anything about it and I don’t want to invest, I’ll be a pass. And then Darren will just say, “I think this will be fun. I like the founder. Screw you. You can buy in at the Series-A, higher than my bags.”
47:22 • Tom
You guys are selling to each other in later stages, it sounds like.
47:31 • Tom
Is the investment committee pretty chill for you guys? Is it over telegram or do you guys do calls or how exactly do you guys come to consensus on if I want to invest in this or not through Lau Capital?
47:43 • Darren
Sometimes I just send a deck and Daryl replies Ape or no Ape, and that’s it.
47:55 • Daryl
Before this, I hadn’t seen him in six months. I was in the States and they were in Malaysia. So it was always through Telegram and we would get on calls together. The most casual investment call would be us looking at a deck and saying, “I don’t like this idea at all. I think it’s a completely stupid idea.” And one of us would say, “Screw you. This is why you’re wrong.” And we’d start to scold each other.
48:16 • Zach
We live under the same roof, right? So, for the most part, most of our investment committee ideas is mostly us in our pajamas going back and forth debating different ideas. Ever since Daryl went to the States for a while, it was mostly Telegram and random calls at night or super early in the morning.
48:39 • Daryl
One instance: we had a whiteboard in the room. It was 4:00 AM. All of us are still awake for some reason. So I’m just drawing on a whiteboard. Why? What the hell is this? And why will this work? And it just made sense, so at the end of the day we invested in that.
48:53 • Tom
That’s fair. We’re hitting the 50 minute mark, so I want to go into the fun stuff. I want to hear your best and worst play. The most painful, the one that made you the happiest, I don’t know who wants to go first but I want to hear the stories.
49:08 • Darren
The worst play was probably KP3R. Daryl and I saw the listing. We were actually one of the first ten addresses to buy the token. When it first came out, there were a few hours before the use cases for it came out, and during that time it went up to a few dollars, and so we sold it then, sub ten dollars. It went up to $100, $200. Just looking at the numbers, the amount of unrealized gains, the gains that I missed out on – that’s probably the worst one. Just because I was impatient. I sold it before the information really came out. That was the worst trade there.
49:56 • Daryl
Best trade was early on, when I went 50% of my portfolio into YFI and 50% into NXM, and I actually emptied out my bank account just to ape YFI when it first listed. My bank account was less than $100 because I emptied it all. That was the best trade. I think, for NXM’s case, a lot of people didn’t understand the model behind the capital requirements of it. SO just mathing out how much inflow was needed for it to go in, or how much price change would happen if X amount of inflows happen, just mathing that out was probably one of the best trades that I did. Another one would probably be Axie Infinity. I was actually spamming Alex back before Axie was listed on Binance. I was spamming Alex like, “Where can I buy an Axie?” and so on, and he was answering me about all the questions I had. From there, realizing they were positive cash flows, even back in the beginning of being listed on Binance, that was probably one of the best bangers I had. Back then, almost no one had exposure to NFTs or metaverse or even gaming. Even though it started out as a hedge of my portfolio, eventually it came to outperform my portfolio, and that was probably one of the best trades I had.
51:23 • Tom
I love it. Axies clearly has done super well. Sad about the key replay KP3R but let’s keep this going. These stories are great.
51:31 • Zach
When Darren said he emptied his bank account, this is a true story. He actually went to the bank with our mother to do something with a credit card or something like that. When our mom saw Darren’s bank balance our mom panicked and was like, “Why do you have so little money left in your bank account?” Literally less than a hundred ringgit, which, in Malaysia, ringgit is like $25. Less than a hundred ringgit is like $25. Our mom was panicking. “What is Darren doing? Why is he broke?” That was a pretty interesting.
51:59 • Tom
How long did you have under a hundred bucks in your bank account, man? That’s insane. I love the conviction. It’s awesome. It’s great to see it. We’ve all been there. It’s awesome.
52:13 • Daryl
My worst trades are liquidations. Name one day in your life that’s changed you completely? One thing I remember is Black Thursday. I went all-in on ETH. My liquidation price was less than $100, and then it hit and I got liquidated of almost everything. I spent three years building up that stack, and then seeing it all immediately lost…it was a heartbreaking kind of thing. I was getting on a plane to go visit my girlfriend, so it was 3-4 hours of just sitting on a plane, and I had 0 connection 0 WiFi because I couldn’t even afford it anymore, so I’m just sitting there thinking to myself, “What the hell have I done? What can I do?” Just trying to realize, “Where do I go from here?” And then, visiting my girlfriend, I had to put that all aside.
Another painful liquidation was this year, on our birthday. On our birthday, Darren released this thread, “How to be a VC in crypto,” and he was quitting Spartan, and two hours later the whole market crashes. I woke up that morning thinking, “I’m not going to trade at all today.” And then shit went down 30% and I thought, “Okay, time to open some longs.” So I opened up some longs and went to sleep after that, then shit went down even more, and I got liquidated for my whole account again.
I woke up the next morning and my whole account was empty – what the hell happened? Oh, shit went down 50%. So that was really painful.
At that moment in time I was talking with Ben from Mechanism. When I woke up he was also in his day job getting liquidated, so I asked him where do I send money so you can add collateral and don’t get liquidated. Because I didn’t want him to go through that pain.
That was the wildest birthday I’ve ever had in my life.
54:41 • Tom
Being stuck on the plane was brutal. I’m not sure how the relationship ended up but yeah.
54:47 • Daryl
That relationship ended about a month after. We had some personal issues that we couldn’t work through. She’s one of the reasons why I’ve always advocated to have a life outside of crypto and not be 100% crypto. I know a lot of the founders in the space that have been working on-stop, and I always ask them to stop working.
55:13 • Tom
I couldn’t agree more. You have to have a life outside of crypto. I mean for 1. to reset and 2. to have context on where you’re at and where you’re going.
55:21 • Daryl
Best trade would be YFI. YFI’s been one of the defining trades of our lives. We were using Curve and Yearn because it was paying 10x higher interest than the bank. And being early to farming YFI, and to see the yields and the token price, we just decided to buy the token and went all-in on that. I’ve been helping Andre doing community management and stuff like that since even before the token launch. Then it naturally progressed to being one of the multi-sigs. I was also part of the early discussion around token economics. I’ve been helping with them for about a year and a half now. Even helping them launch WOOFY; I didn’t sleep for 36 hours. Just to make sure…from the idea of WOOFY just a dog meme with the denomination of the YFI token…and making that go live and run through the front end and see what works and doesn’t work. That was fun too.
56:42 • Tom
Jeez. Now there’s a hell of a group of stories. What I’m hearing from you guys is 1. it’s a lot of conviction on your parts on the plays that have changed your life. You’ve invested a good percentage of your portfolio in these plays that have done quite well. And 2. it sounds like you guys are extremely actively involved in the projects you were working with to get that edge. Is that a good summary or maybe some luck in there?
57:10 • Daryl
There is luck as well. When LOOT first came out, for example, I was following dom because of Subdrive*. I always wanted to play a proper NFT game. And then, when he released the minting contract for LOOT, I saw it and immediately ran back home, and I was calling my brothers up at 3 AM their time, and we all just started minting LOOT together. It was the funniest shit ever. We were talking about how we minted because we wanted to be like the Grand Exchange, we wanted to sell weapons, because we all grew up playing Runescape. So we knew, this is going to be stupid, but this is going to be fun. We never, in our wildest dreams, expected look to make money. It was just an extremely fun idea based on medieval times. Swords, Divine Robes, shit like that. Okay. This is fun. We’re just going to do this for fun. And then it was extremely lucky that the idea resonated with so many people.
58:11 • Tom
That’s pretty cool. These stories are great. They’re honest stories of 1. losing your shirt but then 2. earning back the factory. One last set of questions I have for you. You guys have been in the space for four years, maybe longer. I think we all got started around the same time. I’d like to know, and feel free to give multiple answers here: what advice would you give new people in this space? We’re in a bull market right now. We have a lot of people that joined that never experienced the bear market. We had people aping into projects they don’t totally understand. What is the core advice you would give people to make sure that they don’t exit crypto and lose their shirts?
58:57 • Zach
The one advice I would give is to find as many tribes as you can. Find as many people to talk to and to share ideas with as you can. Being able to talk to people with different points of views is what got me started in crypto in the first place. And, to be able to learn from them. Once you have access to so many different opinions and ideas, you’re able to form many different theses and ideas about how you can bring yourself to the next level as well.
59:29 • Darren
The advice I can give someone is to follow the Daily Ape. Joking…but I think one thing is to really try as much as possible. For example, I did a thread on airdrops recently. I tried out dYdX because they recently moved to start with, and I was going to try out their experience.
I deposited a hundred dollars and then I got an airdrop that was much more after that. And that hundred dollars got liquidated. Trying out that whole new protocol was cheap as well. It cost me less than $50 to deposit and a hundred dollars to start the deposit as well. Trying out what you can afford is always something that I recommend, because, at the end of the day, you want to be a user of the protocol. You want to know what’s so special about these protocols. Because, if this protocol is really something special that people use, chances are the token will probably do well too. That’s where you get the upside as well.
01:00:31 • Dary
1. Make friends. 2. Be active. 3. Follow the Daily Ape
One thing I tweeted back during DeFi Summer, I think it was 2 or 3 days before the top, I was tweeting out things like, “If your position or your portfolio makes you uneasy or not making sleep easy, take some off.” I’ve heard so many horror stories about liquidations, people living in states of regret. If it’s a life-changing amount of money, there’s no reason you should be aping that into more NFTs. You should be taking that off, being able to change your life. I’ve seen how much even $1,000 can change someone’s life. I don’t ever want to forget that. If you’ve made enough to take some stress off your student loan, take it. Now re-assess where you are. A new starting point. Not only do you have the money and the safety net, you have the experience you’ve gotten building that position up. You can always start again, anew.
This is like a first world problem. For example, when our friend’s made their first million, they thought, “Okay, it is time to close the position, take a week off, and re-visit.” Re-assess how much money that actually is.
01:02:07 • Darren
We’ve heard several stories of people going from a few thousand dollars to 8 figures, and now they’re back down to less than 6 figures. That rollercoaster effect…we’ve seen the damage. The amount of depression these guys have after that….so just make sure to take some off.
01:02:55 • Darren
If it can change your life, take it off. Put it in stable farms or whatever. There’s so many opportunities with stablecoins out there. Anchor gives you 20%. That’s safe. That’s safe. That’s securing your bag.
01:03:15 • Daryl
If you can’t beat the returns yield farming, you shouldn’t be trading. You should just be yield farming instead.
After you’ve made a ton of money, take time to think about giving back. We’ve been helping out friends and artists. We have a few friends we call ‘interns’ because it is just us giving them some starting capital and opportunities. Help people experience the space like you experience it. It has been really gratifying to see.
01:03:54 • Tom
I’m totally with you guys. It’s really important to take money off the table, especially when you could make sure your family is okay. Your friends are okay. Yourself is good. So, I totally agree with that. I didn’t know you guys did that. It’s really cool that you guys are helping to boot shop your friends a bit. That’s sick. And that’s really admirable.
01:04:13 • Daryl
We’re working on a structure right now to help people with that. Probably going to think more about it after we get back from travels, so stay tuned for details.
01:04:22 • Tom
I definitely will. This is a great episode, guys. We’ve all been talking for so long. I’m excited. It’s hard to do three or four person pods but I think you guys nailed it. I’m excited to have you guys on again soon because there’s so much to cover.
(00:00:00) – Introduction.
(00:00:34) – Guests’ backgrounds.
(00:03:43) – The twins’ intern experience at CoinGecko.
(00:05:08) – The journey post-jobs.
(00:08:02) – The brothers’ biggest lessons from their last jobs.
(00:11:56) – Finding your tribe in crypto.
(00:15:53) – Judging tribes in crypto.
(00:16:38) – What to look out for when doing due diligence.
(00:20:12) – What makes a great founder.
(00:24:29) – Giving critical feedback to founders.
(00:30:47) – Staying up to speed with the market.
(00:34:17) – The Daily Ape.
(00:35:35) – Finding rotations and narratives early.
(00:39:44) – How the brothers compliment each other.
(00:43:59) – What the brothers disagree on.
(00:46:34) – How the investment committee held in Not3Lau Capital.
(00:47:57) – Their best and worst plays.
(00:57:24) – Advice to people new to crypto.