 From New York, it's theCUBE, covering Blockchain Week. Now, here's John Furrier. Hello and welcome to exclusive CUBE coverage here in New York City for Blockchain Week, NY Blockchain Week, New York City. CUBE's coverage continues with cryptocurrency, decentralized internet, decentralized applications and Blockchain. Our next guest is Richard Rofi, who's the co-found partner of Cardia Crypto Ventures. Welcome to theCUBE conversation. So we're in the neck of the woods, New York City, obviously Wall Street, they traded across the wall in the old days and then it became now the Wall Street is changing. We're seeing crypto and token economics really driving the entrepreneurial energy, both on startups as well as in the capital markets and you guys on the front end of that with awesome investments, advisory. What's the craze all about? I mean, you have a more practical view, your firm conservative, but also aggressive. What's your take? Well, first of all, I'm a little older than most of the guys in the space, so I have a different perspective. I did come from Wall Street prior to this, I ran a hedge fund for 12 years and before that I was basically an entrepreneur in my whole life, software and other things. So I look at this a little differently than probably some of the younger guys do. I've kind of seen this before, I think I saw it with the internet and I think it's a world changing shift and we're a early part of it. We've been in it for a while, actually in this space forever, because the space isn't that old. So six years out of 10, we've been in it from the beginning. Us old guys look at the waves, these waves of innovation, we're like hanging 10 on the old big surfboards and the young kids are, ninjaing up on the small board. What is the younger generation looking at? Because there's certainly, I wish I was 20 something, this is the best wave I've seen in tech revolution coming, all the ingredients are there, the capital markets are changing radically, the technology product markets changing radically, the global landscapes changing radically, the regulatory landscape and everything else, it's the perfect storm for innovation. Rapid change, I got involved early around 2012, just to give you a, since we're at a conference this week and see how crowded and incredibly busy it is, takes up an entire giant hotel and bursting into the street. When I, in 2012, when I went to the very first conference that I attended anyway, you could fill a small room with every single person at the conference. So the growth has been insane. It is driven by younger people, but the beauty of this, it's driven by people all over the world. This is not just an American thing, this is a worldwide thing, this is a shift, a technology shift that I don't think we've seen since the basically admin to the internet itself. You know, there's an old expression both sides of the table, you've been an entrepreneur, you've been an investor, hedge fund, there's almost the third side of the table, it's like 3D chess almost, you now are playing in the crypto world, being an entrepreneur, you've been there, done that, hedge fund, you had to run money and make great investments. Now with this new crypto phase, how are you looking at it? Because you have the experience, you can see the growth in the younger generation, new disruptive, literally people just fly in blind, just going crazy with some good stuff. How are you managing that? How do you look at the marketplace? How do you make your bets? It's good question, it's difficult. First of all, the barrier entry is low at this time. Anyone who understands technology is really getting involved and for good reason, but therefore you have hundreds and hundreds of deals that come your way on a weekly basis. So you have to really pick and choose through the ones that are interesting. And you apply the same techniques that you applied as an entrepreneur and an investor prior to that. You look at the underlying business, the area that the blockchain will disrupt, change, shift, how it will do it, how long it will last and how many people will be interested in it. And if you find the ones that are attractive and interesting and then you find the team that's attractive and interesting, that's how the big point is that you really wanna have a very good team. You care so much about their background, their technology background and well as their business background. And if you can put those things together, you have a winning investment and then you try to do it. You and I were talking before we came on camera about crowd sales and Kickstarter, GoFundMe, as great ways to get capital. But now there was really no liquidity there. Talk about the dynamics because I think traditional investors will look at this market and say, hmm, and there's so much more coming that's gonna create more stability, obviously. We see some of that. I'll get to that in a second. But I wanna get your take on from an investor standpoint, the notion of liquidity and also from an entrepreneur's standpoint, access to capital. Talk about the dynamics between access to capital and liquidity for the investors and for the entrepreneurs. Also great points. I mean, right now we have something that is giving both things, right? Access to capital, worldwide access to capital from the smallest investor to the biggest investor, everybody has an opportunity where before it was really limited and then you have liquidity in that. If you have a token or a coin that's tradable, whether it's on an exchange or a private trade, you can actually liquidify your investment where if you're in a private company in the past and I've done many of those, you're locked in. You're kind of at the mercy of the organizers of the company, whoever they are, the people that run the business and you're kind of stuck there, good or bad. In this case, you have the ability to trade in and out just as you would with a public stock. So you can get some liquidity in the front end while private still. So it's kind of like a little liquidity market. So I want you to address a question that's come up and observations we've made in theCUBE with the Bahamas at Polycon 18, Puerto Rico, not in the US, it's New York, so we're in New York City, the capital of money. Yes, where money never sleeps, as so to speak, Gordon Gecko would say in the old Wall Street quote. But this is a global phenomenon. We're outside the United States, there's a lot of actions. Talk about the role of global money. Well, that's part of the excitement of the whole thing. It's not just the United States. It's all over the world. So it's really democratized investing. It's democratized finance. It's changing the landscape completely. And I think that it's unstoppable. I do think that regulation, and I know we talked about that earlier too, is a good thing. I think that regulation is necessary because you can't just have a rogue environment completely. But on the other hand, too much regulation kills things. So there has to be a happy medium and hopefully they'll find that. I love the invisible hand strategy and certainly lead capital to take what you want to have some signaling. SEC has been doing that. I just don't think it's stoppable in my opinion. But I want to go shift to where entrepreneurs are looking at the capital markets. Today, the choices are bootstrap, friends and family, small, lifestyle, old business, cash flow business, if you will, or go venture capital or private equity if you have the kind of multiples that would warrant that, assuming that the sector is not in vogue at the moment, which, you know, always a coin flip. Here, with token economics, there's a huge access to capital. Bubble we're seeing certainly is reflected in that. What are you looking for when you see that kind of behavior? How do you manage the risk? How are entrepreneurs navigating that world? Well, first of all, managing the risk, it's tough, obviously, especially as I mentioned earlier, there's so many deals coming at you at all times. So you have to choose wisely. That's the first way to manage risk. Always was the way to manage risk. People used to ask me in the hedge fund business, you know, how do you manage your risk? Well, I only try to invest in the things that I think have the best upside and the smallest downside is pretty simple. It's the same here. It comes at the end of the day, what businesses are you choosing? The other thing is that, you know, first of all, there's inherent risk. You can never get around that fact. But if you really believe in the long-term future and you're willing to go through some ups and downs, and there are gonna be, and there have been, as we know over the past 10 years, there will be more in the future. You have to be able to ride those waves. And if you can do that, then I think your risk will just mitigate over time. And as long as you're a smart, wide investor, and of course, spreading it around, you don't wanna be in all your eggs in one basket, then you take a giant risk. Yeah, it's one of those things where you don't wanna zig when you should have zagged when all this going on. As certainly as a turbulent landscape, I've heard phrases like it's like wet cement, you don't know when it's gonna form, all these kinds of phrases. So the question I wanna ask you is, what do you look for? What are you looking at? What signals are you trying to synthesize? What's the tea leaves that you're reading? What are you looking at? What's concerning you? What are the some tell signs that are gonna help you navigate the investment side and advisory side? With regard to the entire space, we're looking very much at regulation. We wanna know what the regulators want. I'm not sure they know what they want. We speak to them. We keep them abreast of the situation from our end and we hear back from them what they're thinking. We'd like to see some regulation over time, but it's complicated because they don't even know what they're looking at yet. That's a big part of it. They're not sure how to regulate something that they don't understand. And there are very few people in the space now, this is one of the biggest risks. There are very few people that even do understand it that are in the space. I was talking to an entrepreneur just here today and then last weekend in the Bay Area in California, they're more progressive than their suppliers, their law firm and some of their accounting help. They're more progressive on the front end. They're actually advising the law firm on deals. That has happened, that's happened with us. In fact, we recently put a structure together where we taught the law firm how to do it. The law firm was impressed with it. They had to go study it. They spent a few weeks and they came back and said, hey, this is a great idea. We're gonna do this with everybody else now going forward. And that basically came from us backwards. Did they bill you for those hours? Or did you charge them? That's a great question. I really hope not. I'm gonna ask my partner if we got billed for anything. Rich, I wanna ask you about Blockchain Week. Obviously, Consensus 2018 is happening here in New York, big event. It's part of Coin Desktop and they're doing a great job. Content program's been solid. It's been super crowded. They need a bigger venue, obviously. The demand was high and sold out. And then there's a lot of side events going on. A lot of entrepreneur activity. What is your takeaway? What do you look at this as saying, is it like, wow, what's your take on the impact of the momentum? Well, first of all, as I mentioned before, I saw this thing with my own eyes, right? From a little tiny room in Las Vegas was the entire conference to what we saw today with people in the streets who can't even get in, thousands and thousands of people in one hotel which is probably not even cut out for that thing. I think it's incredible. Momentum says a lot, by the way. Talk about mitigating risk. There's not just so many people, so many smart people that are figuring this out one by one and getting involved early. And that really gives me a lot of confidence in terms of the long-term strategy. If this thing grew by two or three times, four or five times what I saw in 2012, I would not be nearly as excited. What I'm seeing here are this mass load of people who are fighting to get into an event, right? To end the venue. And the intelligence and the kind of people they are and how educated they are, it really gives me hope. And it reminds me of early days in the internet where we saw the super smartest people kind of broke away from the crowd, did their own thing. You saw guys leaving traditional firms, going and starting companies, the Amazons to Google the Facebooks and things of that nature, which became the giant, you know, the largest companies in the world. There were problems there too. You had backdating stock options. You had all these deals where revenue is revenue and then accounting issues. But again, that's just a symptom of a growth market. Final question for you. Obviously, when you look at what you guys are doing and how you're investing, how you're getting involved in companies, you're also on an advisor to Block who's having an event here in New York City. You know, how are you navigating the hiring, the partnership, the community aspect? Because in the financial community, like the entrepreneur community, there's a tight-knit bond. How is it evolving? How are you guys shaping that? What are some of the things you can share around the financial community? Well, we do, first of all, we do advisory work. So we work with a lot of different clients that want to get into the space. We work with some very traditional clients that are not really technologists. And those are the most interesting ones. They're difficult because they don't understand a lot of it. And I don't blame them, I come from that world too. So we have to really hold their hand and we deal with a lot of very smart tech people who come from a whole other, but don't know the business side so well. So we kind of work with both. In terms of our own hiring and who we bring on to our company, we really look for a very unique person, which is a, usually in this case, a younger because of the space itself. We don't really, we look for everybody, but we don't find that many people, my age and older, that even want to spend time, let alone understand it. Some smart kid, I don't want to work at Goldman Sachs. They're old. Listen, and again, we saw this in the internet. You could not get a smart kid out of college to get a regular job back in the 90s. They were all going to web startups. Kind of same thing here. So we have a great pool to choose from. We try to pick people that are on the cutting edge, but that also want to work hard because again, it's a startup industry, right? So think about the hours. You're really going to put in a lot more than you would in a nine to five job. You're a weekend, nights, you know, the phone you're connected to 24 seven. But the hiring's been, we have a staff that's six people and I think they're great, but we do handpick them and it takes a while. Take a minute to explain what you guys do. How many investments you've made? You've been there early, what year? 2012 you mentioned, how early on? I started in 2012 in terms of just in the space itself due to my friend Matt Rosak at Block who was really early, a year ahead of me there and he got me involved, but I didn't really start making serious investments. My first investment was in 2014. We invested in a settlement and clearing house company that's now one of the fastest growing banks in the country. And then we got into some of the coins and some of the platforms. That's where we invest the most. And a few deals here and there. And then we started to do advisory work because let's face it, we knew what we were doing, we were ahead of the curve, we certainly understood it. And so many people want to get into something that they don't know, they're going to need some of the hold the hand all the way through. So our advisory business is our main stable business and then we invest in certain deals that we think are interesting. A lot of them are platforms. Yeah and token economics is driving all that. You're a great tale. Richard, thanks for coming on, I appreciate taking the time to come on the queue. I'm John Furrier, we're here in New York City for Blockchain Week New York and this is the Cube exclusive and continuing coverage of the cryptocurrency craze, token economics, obviously blockchains, the enabling technology underneath it and the whole new internet infrastructure is transforming with cloud, everything behind it. It's really exciting. Thanks for watching.