I caught up with Alex Friedberg after our first discussion in June. A lot has changed in the crypto markets and the blockchain space in that time and I wanted to get his views on those changes. Much has also changed at his firm, Block by Block Capital. Some of those mirror the market while others are mainly internal.
We discussed the impact of volatility on crypto trading and the firm’s hiring of a Chief Investment Officer. As crypto continues its march towards mainstream acceptance, the market is becoming more professional as institutions like Goldman Sachs, J.P. Morgan, etc. deepen their involvement. I joked with Alex that even he changed his profile picture on LinkedIn…
Block by Block Capital is also evolving. No longer just interested in crypto trading and arbitrage, BxB now also focuses on venture building and investing. As the space developed, they were trying to determine where they fit in the investment stack and realized they were passionate about incubating ideas…and leveraging the teams experience in building and also on the finance side.
Managing a companies finances is important for success, but building the right product is also important and those are core competencies of Block by Block. Alex wrote a very interesting article entitled ‘You Can’t Buy a Decentralized Product’, which I recommend you read.
Alex’ point here is very interesting. You can suffer in at least two ways from buying users. The first is obvious…your growth will essentially be fake and your retention numbers will be skewed. But, potentially even more important is that the product signals you will get from these users are likely to be false flags…encouraging you to build product that nobody will be around to actually like.
Our conversation ended with a discussion on what Block by Block likes to invest in and what a founding team needs to have to meet their criteria.