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Learnings From A Chat With BITKRAFT Ventures

In an interview today with Carlos Pereira of BITKRAFT Ventures…

…we discussed some epic topics, including investing, games, crypto, and fewture.

A bit more on Carlos:

Trying to distill all of the learnings from this episode into one concise nugget is damn near impossible, so I’m going to give you the whole shebang as I remember it.

After going through his story, from horse riding to venture capitalism, I asked Carlos what his superpower was.

Making that large of an industry jump, and ending up at a top tier financial firm at a relatively young age is impressive, so I wanted to understand what allowed him to make the jump.

His answer?

Curiosity.

Thank you Olivander.

Upon hearing about a fellow curious cat…

…couldn’t help myself the memes call to me…

…I inquired about his process of learning.

Unstructured & Structured.

Once Carlos identifies an area of interest, he exposes himself to various rabbit holes of podcasts, youtube videos, twitter, etc. to get a broad sense of the various sub-areas.

This unstructured learning gives him breadth.

Locking on to one or two key ideas during this initial sweep, he then begins his structured process of choosing a more specific book or resource to go deep and conquer what he has deemed most important.

We can learn from this ourselves, and take away a few nuggets.

First, we don’t need to master every aspect of our field.

Crypto is enormous, and trying to become an expert in every aspect will not give you what Carlos termed an “edge” that can set you apart from the rest of the market.

Second, we can survey the playing field and find the one or two key ideas after assessing the greater landscape. In other words, we don’t have to drill down instantly.

We can let our creativity and curiosity guide us to what we actually care enough about to dig more into.

By letting ourselves explore organically, we’ll be much more engaged.

Third, we can create our own learning style, and don’t have to follow Carlos exactly. But we can take bits and pieces from his methodology that works for us.

Understanding how this titan of the crypto gaming investment industry makes allocation decisions could be the most undervalued part of this episode.

Luckily, Carlos brought us through the process:

Team

First and foremost, BITKRAFT looks at the people behind the project. The litmus test here is experience and passion.

If they have build successful projects in the past AND are still chomping at the bit to execute on this project, slam dunk.

For newer founders who may not have the track record yet, what have you built? Anything that has gathered data (transactions, downloads, users, etc.) is a reasonable substitute.

A lot of innovation comes from the young and hungry who may not have a significant track record, which is hard to underwrite.

This is a challenge for allocators, so if you’re raising, try your very best to show them SOMETHING, even if it is something creative you built as a side hustle.

Game

Next comes the actual game.

Another interesting dichotomy here: the grander the vision of the game, the less likely there is a true existing representation to show investors.

The greatest AAA games take years to develop, and everybody is aware of this. Founders must be able to show inklings of what is to come in the early stages to get checks written.

Luckily for Carlos, the BITKRAFT team are gamers first (“table stakes”), so if you founders have something of value then look for firms like this who understand this dilemma.

Prove to the investors you’re at least THINKING about some of these tough questions even if you don’t have the answer, and perhaps map out the skeleton of gameplay loops, lore, monetization models, etc.

Tokenomics

Once you get past the first two steps, “token is everything.”

One of the great challenges for crypto gaming projects is to nail their economic models, including the role of NFTs, governance tokens, and in-game tokens.

Carlos brought up a great point, which is the any fundraising through NFT or coin sale is essentially debt to your community that must be paid in the future.

For an investor, understanding how the outlay of capital will return to you through the various models of debt issuance and tokenomic structure is critical.

We discussed a sobering fact on this point — we haven’t had enough history to even establish a winner of long-term gamefi models.

So we can’t even model “success” because we don’t know what that looks like yet.

There are plenty of dumpster fire examples — hopefully we will avoid those — but nothing concretely correct quite yet.

Moving on to the latter stages of the interview, I asked Carlos about inflation in regards to the US dollar and how he thinks about the currency he’s taking home the bacon in.

Unfortunately, he and I both agreed most people aren’t making decisions based on macro trends.

This will lead to a lot of people getting rekt…

…but perhaps is an opportunity for those who pay attention.

Right now, 99% of people (at least in the US) still need dollars to live, even if you get paid in crypto and want to escape fiat completely.

For those who can’t go full crypto at the moment, it would be wise to make sure you have a nest egg and consider only using discretionary income for crypto.

Carlos had a great mental model — think of crypto as a college savings fund where you are preparing for a world where you’ll need it but don’t necessarily have to ape in 100% all at once right now.

New technology in the short term almost always takes longer to hit mass market than we think, so don’t eliminate yourself from the game by going full degen into crypto if losing that cash would put you on your ass.

We concluded the interview with a bit of positivity, which we can always use on days of red.

Essentially, Carlos left us with this sentiment:

Games are getting better, and will continue to do so over time. To actually enjoy them for an extended period of time, we need to make sure we take care of the environment. Plant trees so we can live longer to play more games.

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