Feb. 14, 2024

Collecting & Connecting the Dots

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Catching Up

We’re back after a few weeks off the newsletter due to the tsunami of calls, data gathering and deep thinking it takes to decide on investing in 12 early-stage blockchain startups in one fell swoop. We’re just about there with finalizing the Techstars Web3 Class of 2024, and watch out for the big reveal on the podcast in mid-March on the identity of the 12 companies/projects!

This Week’s Podcast

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Collecting & Connecting the Dots

In the book Setting the Table by restauranteur Danny Meyer, he talks about the ABCD’s of hospitality, or ‘Always Be Connecting the Dots’.

The longer form of the ABCDs, which is one of Danny’s many mnemonic devices, is ‘always be collecting the dots so that you can always be connecting the dots’.

Danny describes ‘dots’ as data, experiences, thoughts, feelings and memories. Just having that lights-always-on awareness of the connectivity between everything going on around you helps you to draw more meaningful inferences and build stronger relationships with people. Take note of chance coincidences, pull on those threads of curiosity, and you’ll be surprised at what you find.

This more or less sums up my modus operandi, and is the reason why podcasting helps me to build trust and build relationships fast. I forget who said it, but I truly believe that the world moves at the speed of trust.

Constant content creation for an audience requires a lot of things to go your way in terms of building the new connections that you need to enable publishing weekly. I take note of every suggested introduction or chance coincidence that happens as it might just point to a compelling narrative to unwind with an interesting person in a conversation recorded for the masses.

Coincidentally, this context also enables my role as a venture investor, where your network and relationships make all of the difference in finding incredible founders on a mission to change the world. You’ve got to collect tons of dots before you can connect the dots that point to a good investment, and after you invest, the dot-collecting and connecting goes into overdrive.

Back in September 2014, I started collecting the dots in crypto, which were mostly personal proof points that something incredibly interesting was going on that piqued my curiosity. Seven years later, I started doing the same thing with the intersection of blockchain and AI after a chance intro to Lou Kerner, as he brought me into a community of folks looking deeply at blockchain-AI crossover.

Although Lou and I didn’t get into this topic in episode 237, Mai Santamaria and I stumbled into the blockchain-AI intersection in episode 241 as Mai had been reading Scary Smart by Mo Gawdat at the same time that I put Vitalik Buterin’s ‘d/acc’ techno-optimism treatise in front of her.

Thankfully, MoneyNeverSleeps superfan Niall Dennehy from AID:Tech was listening to Mai and me that week. After Niall finished the episode, a thought sparked for him and he offered me an email intro to Evan Miyazono from the Atlas Computing Initiative. Evan has a past in blockchain and a present and future in AI, so he and I ended up recording episode 246 last month.

Coming full circle, I still had that itch to scratch on digital identity and blockchain that was left over from episode 241 with Mai, and I wanted to return the favor to Niall for the intro to Evan Miyazono. Niall has blockchain and digital identity at the core of what he does, and I thought that a deeper dive into this intersection might be enjoyable for him.

So, I reached out to Mai last week with my thesis, and the result is this week’s episode!

Digital Identity, Trust, Risk & Blockchain

Mai Santamaria joins me once again as guest co-host this week as we riff on the intersection of digital identity, digital wallets, blockchain, CBDCs, and how the political regime under which an individual lives influences your sense of trust and risk.

We also blow to bits my expectation that the new EU digital identity wallet will have anything to do with blockchain, contrary to what we’re seeing with digital identity frameworks in Latin America.

Mai is one of the most helpful people I know and always has a uniquely incisive insight or two on what’s going on at the crossover of finance and emerging tech. Mai originally featured on episode 5 of MoneyNeverSleeps back in 2018, she made a cameo on our 200th episode last year, she’s a Techstars mentor, and she recently helped me make sense of the crossover of blockchain and AI in episode 241.

In this episode, Mai and I riff on the topic of digital identity through the lens of the new European Union digital identity wallet brought forth by the eIDAS2 legislation, and look at digital identity regimes in Latin America through the latest news on Nubank’s expansion.

With the investments I’m making right now, topics like decentralization, over-centralization, and the elements of trust and risk when it comes to how individuals feel about who has access to their data are also a focal point of this chat.

Some History…

Before Mai and I recorded episode 241 back in December, we caught up over coffee at a local place outside of the Dublin city centre that just happened to be full of parents and toddlers at mid-day on a Tuesday, hence its nickname, “Nappy Valley”.

I don’t remember exactly what it was that Mai said that got me thinking about digital identity and blockchain, but I started waving my hands around, animating my opinion that digital identity is the missing link in web3 wallets.

I then shared my view about how maybe CBDCs aren’t as wickedly evil as I thought, and this takes a bit of care to help connect the dots:

When I referred to ‘digital identity’ and ‘CBDCs’ in short order, something clicked for Mai, and she started telling me about the new eIDAS2 legislation enabling digital identity wallets in EU countries.
I thought that if digital identity in the EU works as expected, you should be able to prove your identity to another party, either online or in person through some kind of digital authentication, without providing the other party with any of your personal information.
In blockchain, this type of authentication is enabled by a technology called zero-knowledge (ZK) proofs. If ZK proofs are part of a blockchain-based technology solution enabling the EU digital identity wallet, then an individual’s data in that wallet will not be revealed to other parties seeking to authenticate that you are who you say you are.
Following the logic, if that same digital wallet is used when the digital euro is eventually available as a CBDC, does that protect an individual from having their financial activity tracked by an overseer, because ZK proofs are enabling the whole construct?

We didn’t have an answer that day in Nappy Valley, and we didn’t even talk about it on episode 241 in December, but now we do have an answer:

The new EU digital identity wallet, my friends, will have nothing to do with ZK proofs, and certainly nothing to do with blockchain. Sad but true.

I figured this out while preparing to record episode 246 with Mai, which has since been referred to as one of the Top 5 all-time episodes of MoneyNeverSleeps by superfan and digital identity guru Niall Dennehy.

Smartly, Mai parked the technology element of this conversation within the first 5 minutes of the episode after my rehash of the ZK-proof-blockchain-spiel, and we instead focused on the human element of being able to authenticate yourself many different ways, and how that impacts your trust in others and your sense of risk.

Make sure you listen to episode 247 with Mai to hear the whole conversation!

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X-Post (Tweet!) of the Week

An oldie but a goodie, for Valentine’s Day!

Sharing Dealflow

As most readers are aware, I lead the Techstars Web3 accelerator program, investing at the pre-seed level up to $120,000 into each of 12 web3 companies/projects each year, and then leading them through a 13-week program to get them moving faster. Here’s an overview from the Techstars blog post where I announced the 2024 program back in September.

As I mentioned above, we’re nearly there with building the class of 2024, and all will be revealed in mid-March. If you’re an angel investor, VC, or just a blockchain-crypto-web3 enthusiast and want to see what kind of companies we’re investing in this time around, watch this space!