The road to greatness has many paths, no matter what you call it.

Author: MD

Produced by: Bright Company

Original Title: Interview with Paradigm Founder Matt Huang: Details on Early Investment in Zhang Yiming, Experience at Sequoia, and Trends in Crypto Technology

Recently, renowned investment podcast host Patrick O'Shaughnessy interviewed Matt Huang, co-founder of the crypto investment firm Paradigm. Huang previously served as a partner at Sequoia Capital in the U.S. Currently, Paradigm manages over $12 billion in assets. In 2018, Huang co-founded Paradigm with Coinbase co-founder Fred Ehrsam.

During the interview, Huang also recalled his experience investing in ByteDance in 2012.

At that time, he felt that there was not much information asymmetry left in Silicon Valley; in terms of consumer applications, it had become very "predictable" for interesting work and substantial returns. He had previously sold a company to Twitter, and during a vacation, he went to Beijing with the idea of starting a tech company in China, visiting six founders. One of them was Zhang Yiming, who was working on Toutiao at the time, but from Huang's perspective, the chances of success for this path were slim (similar projects in the U.S. had all failed).

Zhang Yiming communicated with Huang through a translator, but Huang was captivated by the founder's "non-verbal cues"—his gestures, expressions, and intensity painted a picture that he could understand without words.

During their interaction, Zhang Yiming left a profound impression on Huang. In the interview, Huang said: “I remember having a very deep feeling that he was an extremely capable and focused person, balanced enough not to be self-destructive, yet aggressive with a world-conquering ambition. I think that’s a rare combination.”

As he left the apartment where ByteDance had just started (possibly Huqingjiayuan), he thought, “I need to find a way to support this person.”

Soon, Huang wrote a check to ByteDance at a valuation of $20-30 million, which was his largest personal investment at the time. With ByteDance now valued at $200-300 billion, his investment has grown approximately 10,000 times, and he still holds most of his shares. He admits, “This might be the best investment I’ve ever made.”

Huang's educational background was also influenced by his East Asian family, and he once aspired to complete a PhD at MIT. His father, Huang Qifu, is a well-known financial economist who served as the head of LTCM's Asia office; his mother is a computer science professor.

Below is the interview text translated by "Bright Company" (with edits)

Patrick=Patrick O'Shaughnessy, host of Invest Like the Best, CEO of Positive Sum

Matt=Matt Huang, co-founder of Paradigm, former partner at Sequoia Capital

Patrick： Today's guest is Matt Huang, co-founder of Paradigm, a leading crypto investment firm managing over $12 billion in assets. In 2018, Matt co-founded Paradigm with Coinbase co-founder Fred Ehrsam. Prior to this, Matt was a partner at Sequoia Capital, where he led many of the firm's crypto investments. Michael Moritz has been widely reported to have called Matt the only regrettable loss in Sequoia's history.

In our conversation, Matt shared his navigation framework in the often hard-to-understand frontier of crypto, how his early investment in ByteDance—now yielding returns 10,000 times his initial investment—shaped his method for identifying outstanding founders, and why he firmly believes in the long-term potential of crypto technology. His company Paradigm not only invests in many industry-leading companies but also builds open-source tools widely used throughout the crypto world.

Matt possesses a rare combination of high IQ and EQ, enabling him to understand technical complexities, gather unique talent, and navigate the well-known volatility of the crypto space. Whether you are interested in crypto or skeptical about it, I believe his insights are valuable.

#01 Early Life and Educational Shaping

Patrick： If you were to divide your life into early chapters, say until you became a professional, what would those chapters be? What happened in those chapters? Why do you divide it this way?

Matt： Let me think. I would say there’s a childhood chapter, where like many people, my main goal was to get into college. Looking back now, for many reasons, it feels somewhat frustrating, and I wouldn’t want my children to go through that either. But that was a very primal goal in my life. Both of my parents are PhDs and professors, so education was the North Star of our family.

Patrick： Guiding principle.

Matt： Yes. I was lucky, and if you look at the stereotype of Asian parenting, they were relatively open-minded. So they were very supportive of me in the latter part of my life when I took the risk of not following that path.

But anyway, that’s the first stage. The second stage might be a period of exploration in college, naturally figuring out what to do next. The third stage was starting a failed startup. The fourth stage was learning to become an investor. I think I’m now in the fifth stage, which is founding Paradigm and finding a way to express myself.

Patrick： At what point in the first stage did you first consciously realize this family guiding principle?

Matt： You only realize it in hindsight. At the time, it felt as natural as water. It’s an interesting thing; I remember family gatherings, where my parents would invite their friends or introduce people they knew, and almost every time, like mentioning titles, they would say where the other person graduated from. So from a very young age, the idea that this (education) defines a person's worth was deeply instilled in me. I think that’s completely wrong, but that was the initial direction that drove me forward.

Patrick： Did you enjoy your time in college?

Matt： Yes, I actually had a pretty good time.

Patrick： Why?

Matt： I went to MIT, which is a super special place. I didn’t realize it at the time, but it might be one of the densest concentrations of weird people on Earth. I think such centers are rare; I think Silicon Valley is one, and the crypto space is another, but they are relatively uncommon, and I believe many creative and interesting fringe activities emerge from these places.

I also met my wife there, which I didn’t realize at the time, but now looking at some of my friends struggling in their post-college lives, I don’t envy the environments they are in.

Patrick： Besides meeting your wife, what was the most memorable day for you at MIT?

Matt： Well, the most memorable… actually, this leads into the next chapter. Startups are very popular now, but around 2008, they were relatively new. Maybe if you went to Stanford, that would be the default choice for many people, but at MIT, most people were taking other typical routes—finance, consulting, high-frequency trading.

I remember a close friend of mine who was a year ahead of me, he told me he was dropping out to join a startup in San Francisco called Dropbox. He was probably the sixth or seventh employee there. This shattered my worldview at the time. Given my upbringing and my parents' influence, the idea was very strong—that a person not only needed to get into a good university but also graduate, and possibly even pursue a PhD, but dropping out seemed crazy.

However, this was someone I respected greatly; I thought he was very capable and not the type to fail academically or pursue something completely unrealistic (like becoming an actor). This was a real turning point because it made me start thinking about what kind of thought process would lead a capable person to make such a choice. It led me to discover Paul Graham's essays and Y Combinator, and I began to understand the entire Silicon Valley ecosystem.

Patrick： I remember reading Paul Graham's essays. These essays or these windows can open doors to possibilities for you. Can you elaborate on what you were thinking next and what you were actually doing?

Matt： Speaking of which, it was a highly leveraged action. Paul Graham wrote some words on a website that I think greatly changed the world, opening up a universe for nerds and teaching them how to start companies. In a previous world, they would have been completely constrained by CEOs with MBA degrees. So I think that’s a very interesting theme.

But for me, it had a significant impact because the meta-cognitive gains were very actionable. I was in a mindset: I’m going to MIT, my parents want me to get a PhD. I need to think about what I want to major in and where to apply. I was also unclear about what I should do in the summer to start contributing to research.

I wasn’t even sure if this was what I should be optimizing for. One liberating aspect of Paul Graham's essay was that you didn’t need to seek permission from others, as all PhD programs do. You could figure out what you wanted to do and just go do it. There’s a popular meme now that you can just go do things. I think it’s a cliché, but I believe it has profound truth.

I found this very enlightening; it reshaped my worldview about what I wanted to do. I majored in applied mathematics. I had been making websites since I was young and had dabbled in Photoshop. Many kids have done those things. But I hadn’t really learned how to program or the principles of computer science.

At that time, I immediately pivoted—many computer science courses actually counted towards my math major. So from then on, I started learning how to build things. Then my roommate and I began doing some things that ultimately led us to start a company.

#02 The Coming-of-Age of Startups

Patrick： Tell me the story of the failed startup. This is a necessary part of growth.

Matt： We applied to Y Combinator twice, and the first time we were not selected. I clearly remember flying to California for the interview, where we met with Paul Graham (PG), and he called us that night. Maybe they still do this now, but they would respond the same day. He said, “We really like you, but we are very dissatisfied with your idea. Can you come back? We’ll brainstorm and try to come up with something for you to do.”

We did that, but still didn’t come up with anything they were interested in. Then I think about a week later, he published a paper, which was roughly titled “Why Young People Have Bad Ideas.”

Patrick： You were quite inspiring (laughs).

Matt： Yes, exactly. So I think we did fall into the common trap of young entrepreneurs. You overestimate the problems you encounter in college; many young people are attracted to the problems they face in college, but college students do not represent the average consumer well.

From there, six months later, we continued to build and develop things. Eventually, in the next batch, we had a prototype with users… but even then, it was still a bad idea. If you remember that time, it was when streaming content was just coming online, like Netflix and Hulu.

Patrick： What year was that?

Matt： That was 2010. So we raised some angel and seed funding in Y Combinator and continued to build, but ultimately it didn’t develop the way we hoped. So we started looking for acquisition opportunities and eventually got acquired by Twitter. That in itself was an interesting chapter.

Patrick： What did you learn during the acquisition process?

Matt： At that time, they were acquiring not the business, but the talent. We interviewed with Airbnb and Palantir. I ultimately chose Twitter, which was probably the least well-run of the three companies.

What I want to say is that I don’t think there’s much substantial learning to be gained from failed startups, but I do think there are some lessons. Now as a parent, I definitely experience this more than before. Some things you have to experience firsthand to learn. You can read a lot, and you can think you understand them, but the real epiphany happens when you are in the situation.

I think the ambiguity of creating something from scratch and the loneliness of founders, along with the empathy of all founders, might be the main takeaways I got from that experience. I think that was the biggest help that experience gave me.

Patrick： If I could go back to that time, to the last day of that chapter, and ask you, “Matt, what is your worldview? What do you think you would say?”

Matt： Well, I knew I wanted to work in technology and build things. I was indeed uncertain if Silicon Valley was the ideal place to do that. This actually led me to briefly consider starting a business in China. Because it was 2012. At that time, everyone in Silicon Valley felt that it was somewhat saturated. Obviously, that was not the case, but the iPhone was released in 2007, and many mobile applications had already been developed.

I think 2012 was the year Instacart and Snapchat were founded. These might be the last batch of large consumer successes driven by mobile. That was the area I was interested in. Enterprise applications are very interesting to some people, but not to me.

So, China seemed like a field where this compound annual growth rate could be realized. I thought, hey, I’m Chinese-American, maybe I would have some advantages there. When I went there, I realized, no, I’m not really Chinese. It’s a completely different thing. But this ultimately led to the investment in ByteDance, which we can discuss in detail. But when I came back again, I felt there were potential compound growth opportunities for another decade, and the crypto space was one of those areas.

#03 Discussing Early Investment in ByteDance and Zhang Yiming: Extremely Focused, Aggressive, Ambitious, and Not Out of Control

Patrick： I have a picture in my mind, as if we are filming a movie about you. The opening scene is you boarding a plane to China during that trip in 2012. That would be the opening shot. Can we do that in audio? Can you recount every detail you can remember about that pivotal trip?

Matt： I will do my best. If you think back to 2012, every American venture capitalist and company was trying to get into China. China was entering Hollywood. Globalization was at the forefront. I thought maybe that was where I should go.

I took a week off from Twitter. I had some mutual friends who knew people in the venture capital or tech scene in China. So they helped me arrange some meetings. I landed in Beijing. I had been there before; during a summer at MIT, I went there to study the language. But even in that short six-year span, the entire city had undergone tremendous changes. As soon as you land, you realize this is a huge city, and it’s gray. But I still remember feeling this energy on the ground; it was a culture experiencing rapid growth. And at that time, Silicon Valley, while enthusiastic about startups, had become somewhat complacent in some ways.

It was very inspiring. So I went from one meeting to another, not intending to make any investments, just trying to learn. I met with China’s version of Dropbox and China’s X and Y.

I remember arriving at ByteDance, which was in an apartment building divided into two apartments. I brought a translator. We took the elevator up, and the floor was very rudimentary. I was pulled into a small kitchen; you can imagine an old-looking fridge that might be dirty inside. There was a simple IKEA-style kitchen table with some stools. I sat there talking with the translator and ByteDance’s founder, Zhang Yiming.

One very interesting thing was that we had a mutual friend, Graham Duncan, who talked about interviews, recommendations, and observing people. In hindsight, it was a very unique experience; I might not have fully understood what he meant when he spoke, and then the translator would translate it for me to understand. But while he was speaking, I could focus entirely on his non-verbal cues.

I remember having a very profound feeling at that time, that this was an extremely capable, very focused person, who was also balanced enough not to be self-destructive, yet aggressive with a world-conquering ambition. I think that’s a rare combination. I also didn’t like the idea that it was a personal news app (i.e., Toutiao). This was before TikTok or Douyin emerged, so their main business and the idea of building the company was a personalized news app.

I remember that this idea had not succeeded in the U.S.; many had tried. I now have some hindsight understanding of why it succeeded in China, but at the time, I didn’t like the idea. But coming out of that meeting, I felt, oh my gosh, I have to find a way to support this person.

Patrick： How did you do that? Did you pull out $20,000 and say, “Let me invest in your company?” What was the actual conversation and operation like?

Matt： After we left that trip, I talked to some other investors we were introduced to. The takeaway from that trip was that he was the person. Then that group basically pleaded with the existing venture capitalists to find a way to get us involved. They were very kind.

Patrick： What was the valuation when you invested?

Matt： There were some different types of shares, but it was around $20 million to $30 million.

Patrick： Okay, what started to coalesce that made you enter the investor mindset and investment chapter? Was there a feeling like, “Wow, this is something I want to do repeatedly?” What changed for you?

Matt： I think at that stage of my life, * he was probably the most impressive person I had ever met—you must have experienced this many times—someone I genuinely spent time with who was impressive.* I had read many stories about impressive people, which is very inspiring and somewhat addictive. Now as a venture capitalist, we basically do that all day long.

Patrick： So, looking back, you mentioned two of his traits, * he is neither out of control nor overly controlled, but bold and aggressive.* Maybe elaborate a bit more; if it weren’t for these two traits, try to describe that meeting in more detail. What did you see and feel?

Matt：* He had a very clear understanding of what he wanted to build and why.* I recently reread Elon Musk’s 2006 Tesla master plan. If you read that document, it has an extremely clear description of the business strategy. Zhang Yiming had a similar clarity regarding the idea of personalized news—actually, personalized news underestimates it.

* I think what he saw was what it would ultimately become, which is the global market for attention and media.* Just like before algorithms emerged, you might use social networks to get information. Before social networks, you used newspaper editors to do that. But this was the high-frequency trading version of the media market, and he saw that at the time.

It took me longer to fully understand this. But his clarity and radical ambition, * I think from day one, he was very focused on building an international business.* At that time, every Chinese company was a Chinese business, even Tencent and Alibaba. So for him to believe he could do that was very bold.

Patrick： I assume you have held this investment for a long time. I’m curious, do you still hold it? We can also discuss this from the perspective of cryptocurrency. Many of my mutual friends are early investors in Bitcoin. A notable phenomenon is that they were wealthy from the start, which made it easier for them to hold.

And those who achieved great success for the first time, if they got 100 times their return, they might sell because they had already made a lot of money. But then, this might cause them to miss out on greater gains because they didn’t hold for longer. So, do you still hold it? If so, what does it feel like to hold an investment like this, whose value far exceeds what you might have initially expected?

Matt： I hold most of it. It’s a strange situation because for most of the time it has been illiquid. So compared to cryptocurrencies, this is much easier. I think when a healthy secondary market emerges and there’s a possibility to sell, I don’t know, I haven’t compared it to the original cost. At that time, it always had the potential to become the largest company in China.

As an investor, this definitely leaves you feeling confused because this might be the best investment I’ve been involved in.

Patrick： What is the return on investment?

Matt： I haven’t calculated the specific numbers adjusted for dilution in my head, but the current trading price in the secondary market is around $200 billion to $300 billion. A simple calculation would be that this is a 10,000x return, assuming it’s a 5,000x return…

Patrick： Quite impressive.

Matt： If an American company had these numbers, its value would reach $1 trillion to $2 trillion. So it could potentially grow another tenfold.

Patrick： Yes. Is it strange to know that this might be the best investment you’ve ever made?

Matt： Yes, it is strange. I find myself increasingly accepting this reality, but let’s not pretend this is some great skill. I think I had some intuition that this was a good investment. But like many early investments, it was just a chance to say “yes.”

Patrick： Yes, I wonder, if I ranked my five most successful investments from 1 to 5, how many of them shared that kind of “energy characteristic” you described? Maybe list what they are?

Matt： Yes, I think all investments except for cryptocurrency investments are like this.

Patrick： Of course.

Matt： I think there’s an analogy of “energy characteristics” where there’s a community or meme.

Patrick： Yes. Give me a sense. What do you think the other four most important investments are?

Matt： So I don’t have a spreadsheet. Somehow, I haven’t tracked this.

Patrick： You can just go by feeling.

Matt： Yes, that’s right. If I had to guess, I would say ByteDance, Bitcoin, Ethereum. Are these personal or do they include funds?

Patrick： Both.

Matt： I should take responsibility for Uniswap; we can discuss that in detail later. There are also some regular tech investments, like Instacart, for example, where I participated in the seed round.

#04 Lessons Learned from the High Standards of Sequoia Capital

Patrick： Okay, let’s move into the pure investor chapter, especially Sequoia Capital. So how did you get to Sequoia Capital? This is a transition story. Then I have many questions about formative experiences there.

Matt： So at that time, I was at Twitter, and suddenly a random email appeared in my inbox from a recruiter about a job opening at Sequoia Capital. At that time, I didn’t really have the ambition or intention to become an investor or venture capitalist. So I initially thought this email was a mistaken spam. Why would they email me? They wouldn’t be looking for people who might enter the investment field, like bankers or similar people who might enter the investment space.

I didn’t really understand the diverse backgrounds that could enter this field. But I was intrigued, and eventually had a call with Pat Grady, whom I think you know. When he introduced me to Sequoia Capital, I started to develop a strong interest in it. I met more and more team members. I still think it’s one of the highest quality teams and cultures I’ve ever experienced.

To emphasize again, I was interested in investing, but I wasn’t sure if I wanted to do this, but I almost entirely decided to join based on the strength of the team.

Patrick： Looking back, how long did you stay there?

Matt： Four and a half years.

Patrick： During those four and a half years, what changed? If I talked to you on the first day and the last day, what was the “treatment effect” of Sequoia Capital on you?

Matt： It was definitely very profound. I think the biggest thing was probably being exposed to high standards. This might be the place with the highest standards I’ve experienced, including the startups I was involved in, as well as Paradigm. Their ability to maintain extremely high standards is impressive. I think having legendary histories like Apple, Google, and Cisco helps with that.

Patrick： When you walked in, that wall made a strong impression. Those logo walls are quite impressive.

Matt： Yes, those posters and S-1 documents. The 20% of companies listed on NASDAQ is shocking. So I think this helps… when your track record includes these things, even what others consider huge successes can be seen as trivial. So there were many days when hundreds of millions of dollars in investment results were seen as mediocre successes.

I remember the day after I joined was the day WhatsApp’s acquisition was announced, and there was a very awkward champagne celebration in the lobby. They called everyone out, and there were glasses everywhere, everyone raised their glasses, but no one drank. Five minutes later, everyone went back to their desks to continue working. So it’s not a culture that celebrates often.

But overall, the high standards—not just for companies or investments, but for personal taste and personal expectations of oneself. They strive to operate at such a high level, I think Tyler Cowen mentioned on his blog that one of the free lunches is raising the aspirations of those around you. I think a culture of high standards is a way of putting surplus into the world. If you expose a person to this culture, you can permanently change their standards for everything.

Patrick： Is there a personal story that made you feel this impact? Was it the team or a specific person that made you think, “Oh my gosh, I have to do better than I am now”?

Matt： This question is posed somewhat negatively, in that you’re not doing well, and you need to do better. There’s also a positive version, in that you’re outstanding, and we believe in you. I would say that Sequoia Capital—especially Doug Leone—had a significant impact on me.

I think the first investment I brought to the firm was one I worked on with him. In that process, observing how he worked with the team and then having him validate my views on the investment and what actions we should take with the company was an experience that increased my ambition and confidence.

But a lot of the high standards are implicit. They are habits and rituals embodied by everyone you can see, like a $100 million investment result. I thought everyone would celebrate. Instead, everyone was saying, “This company is a bit of a waste of time. Why did we spend six years to get this mediocre result?” This culture subtly influences you.

Patrick： When you set your sights on the next Apple instead of a billion-dollar company that we’ll soon forget, how does that change your approach as an investor?

Matt： In some ways, it’s daunting because the standards are so high, but in some ways, it’s also liberating because as an investor, the temptation to pursue “good” instead of “great” is immense at every level—whether it’s how you spend your time or the actual investments, the quality of the company or the quality of the founders. Therefore, unless you have very high standards, you might waste a lot of time chasing things that ultimately won’t make an impact.

Patrick： There are many incredible investors when you were there, and of course, many of them are still there now. They are very different from each other, and this will be an important topic for us, like the idea of this “collection of outliers.” I think you did a great job at Paradigm. What do you think is the key to creating a group of people who are very different and heterogeneous while ensuring they can work well together?

Matt： Sequoia Capital has many different personalities, but there’s also impressive coherence on some key dimensions. Another insight I gained from my previous experience at Sequoia Capital is that I first intuitively realized that there are many paths to greatness, no matter how you call it. Because at Sequoia Capital, there are many great people, and if you just look at their track records or the achievements they’ve made, it’s incredible. However, their styles are very different.

This was liberating for me; I realized I could find my own way and do it the way I wanted. This is actually a very interesting thing worth pursuing. You can see this from athletes or various performers. Sometimes you can read in their interviews that they realize they don’t need to follow an existing mentor or some orthodox doctrine, but can figure it out for themselves, and this ultimately becomes their great catalyst.

#05 The Application Curve of Bitcoin

Patrick： I want to return to two key parts of the timeline. The first part is your initial experience with Bitcoin and cryptocurrencies. The second part, relatedly, is your decision to leave Sequoia Capital and found Paradigm. Maybe starting with the first one. Similar to TikTok, how and when did you first encounter it? We just introduced the term “readability,” which will be an important topic for us to explore throughout the discussion. Let’s go back in time. Regarding Bitcoin, what is readable and what is unreadable? What was it like when you first saw it? What was it like when you first encountered it? Just like, tell us.

Matt： So I first encountered Bitcoin when it was just launched…

Patrick： In 2009?

Matt： In 2010. The white paper. At that time, I was still in college, and I internalized it as a very beautiful concept. It brought together intersections of computer science, mathematics, economics, game theory, monetary history, and more. It led me to delve into some related concepts.

Because if you look at the citations in the Bitcoin white paper, people have been thinking about this issue for a long time. It cites a lot of early work. So it was interesting. I didn’t have any funds at that time, and it didn’t seem like an investment; it felt more like a toy.

I next encountered it in 2013, I think that was the first Bitcoin bubble I participated in. I believe an important point about Bitcoin adoption is that you almost need to lose money or do something foolish at your first encounter. Then I found—this was definitely true for me—that you give up on it, possibly thinking it’s dead. Then when you see it come back again, you start to doubt because there are many bubbles and things like the tulip bubble. But tulips didn’t have multiple consecutive bubble cycles.

Patrick： They don’t recur, yes.

Matt： Beanie Babies also didn’t have second, third, or fourth cycles.

Patrick： That’s a key point.

Matt： And there’s a time delay in the adoption curve if you consider Bitcoin adoption based on the initial exposure to Bitcoin. So 2013 was the first cycle for me. I think at that time I wasn’t a professional investor. I was day trading on my Coinbase account, buying in at $200 or $300, it went up to $1,000, then dropped to $600, and then slowly started to decline from there.

In fact, it was right around that time that I joined Sequoia Capital. So this was before I joined. I remember thinking at the time that this was a topic I was very interested in. When I interviewed at Sequoia Capital, they asked me to prepare a one-page report on a company I thought we should invest in.

I chose Coinbase, which at the time had only seven employees. This was before a16z invested, so it was just Union Square and Ribbit. I was convinced this would be an interesting space, and this company might be the best in that space.

But after joining and after that crash, I kind of stopped paying attention to it. Bitcoin was just an asset, and there were some companies servicing it, but it wasn’t clear that it was a truly innovative software platform. It wasn’t until a few years later, when I saw the activity happening on Ethereum, that I re-engaged.

Patrick： So, when was it, presumably during your time at Sequoia Capital, that you first felt, I need to place a bigger bet in this ecosystem, ultimately leading to you and Fred founding Paradigm?

Matt： I had stopped paying attention to cryptocurrencies. I still owned some Bitcoin, and I still followed some accounts that would post Bitcoin prices on Twitter. I think during those years, they stopped posting prices, or maybe I just missed those updates. But when I saw the price rise again, I started noticing signs that this ecosystem was still alive.

Then I also noticed the activity happening on Ethereum. It wasn’t just a digital asset like Bitcoin; there were actually these projects. For example, Augur, which was an early prediction market. I thought, well, this isn’t just an asset; it’s now a platform for entrepreneurship. So, I started spending time there, and Sequoia Capital was very supportive of that. We made some interesting cryptocurrency-related investments on behalf of Sequoia Capital.

And to be honest, I think the greatness of Sequoia Capital lies in this multi-generational team, where there are 12 perspectives on any given technological idea, and then they seek the truth through intellectual debate. And in the cryptocurrency space, that kind of debate was missing.

So I ultimately sought thought partners outside the firm to test my ideas and learn from them. And Fred was one of those who left Coinbase; he started angel investing in early 2017. We looked at a lot of projects together, and in that process, I found that sitting down and talking with him, when he started articulating his ideas, I had a strong feeling—this is someone I want to collaborate with in some way. I don’t know; I certainly hadn’t thought about starting a company, but maybe I would invest in the next project he was going to do. That’s where the seed for Paradigm was born.

Patrick： People often mention you by saying, oh yes, Matt is the partner who left Sequoia Capital; they really didn’t want to lose him. Let’s explore that. What was it like when you told them you were leaving? Did they try to keep you? How did it all happen?

Matt： First of all, I don’t know if that’s true. I know it was difficult for me. I remember when I came to Sequoia Capital and experienced that culture, all the great personalities, the standards of excellence everyone was pursuing—I thought, wow. I could stay there for a long time. It didn’t feel like work. It felt like a place I could retire.

Then ultimately, I became fascinated with Bitcoin. That’s the simple answer. I really felt strongly that this would be one of the most important technological economic trends of the coming decades, and from the perspective of financial freedom, privacy, and individual sovereignty, developing this technology was incredibly important for humanity. For the first time, I truly felt a sense of mission to make this happen. So from there, intellectually, it was the right choice. But on a personal and relational level, it was difficult.

#06 The Vision for Building Paradigm

Patrick： So finally, we can talk about Paradigm and cryptocurrencies, and everything that’s happening in the world today. Paradigm is now an asset management company focused on cryptocurrencies, managing over $10 billion in assets. Could you give a brief overview of how you view Paradigm, what it is, and what you hope it will become?

Matt： Well, the founding insight when we created Paradigm was that Fred and I both firmly believe that cryptocurrencies will become one of the most important technological economic trends. We believe that to invest in cryptocurrencies, you need to be what we call “crypto-native.” We strive to build an environment like that.

We didn’t have a top-down plan. For us, it meant ensuring we had the right team to navigate an uncertain future. Going back to the question of readability and unreadability. I think cryptocurrencies, even today, but certainly at that time, were an extremely unreadable frontier. It was hard to understand what was valuable, what would be valuable, and how to distinguish noise from signal.

This is a deeply technical field, and we knew that hiring investors from traditional backgrounds wouldn’t work. We were fortunate that our first hires tended to push us in a more technical direction. I would say today, I think there are two main things driving Paradigm. First, we see our mission as advancing the frontier of cryptocurrencies. We certainly care about investment returns, but we’re not primarily optimizing for that. I think if we advance the frontier of cryptocurrencies and make cryptocurrencies work, we’ll expand the pie.

Patrick： Make a lot of money.

Matt： Get a bit lucky. I think we will also achieve good investment returns. But primarily, the first thing is that this is a set of technologies that really need to exist. We believe a lot of value will also be created.

The second thing is that we’re trying to build a team that embodies “builders” rather than just “investors.” Part of it is aesthetic orientation. I think Fred and I both enjoy making things, and many of the early team members do as well. We just tend to think about where the frontier should go from a technical or product perspective. But part of the reason is that we believe this is one of the best ways to invest in the space.

Maybe analogous to biotechnology, it’s such a technical field that you really need subject matter experts to understand what’s happening. That alone isn’t enough because you also have to combine it with business acumen. But we believe that not just seeing ourselves as an investment firm, but as a place that builds products and conducts research, will yield a lot of insights.

Patrick： The early chapter of Paradigm is very interesting because I think you raised hundreds of millions and effectively put them all into Bitcoin. Can you talk about that story because the outcome was quite good.

Matt： When you describe it that way, it sounds reckless. But I want to say that our founding idea was to create a very flexible tool—we didn’t even consider ourselves venture capitalists. We wanted to create a tool that could participate in the value creation we saw in cryptocurrencies and contribute to it. And at that time, it wasn’t clear what form that would take.

In the early days of Bitcoin, there was always the question of whether to invest in Bitcoin startups or to buy Bitcoin directly. I think many people got caught up in that question. The right answer is to do both. But for us, it was very important to be able to participate in the entire stack from early-stage investments, the currency itself, to tokenized protocols.

Patrick： How much did you raise? What were the initial months of operation like?

Matt： The first fund was an evergreen fund that could hold public companies, private companies, and everything in between. We raised $400 million, which was an interesting process in itself. Cryptocurrencies had been a bit hot the year before, so it was on everyone’s radar.

Patrick： This was in 2018.

Matt： This was early 2018. Yes, early 2018. It was still very controversial; almost everywhere we talked, there were many skeptics about Bitcoin. But we raised $400 million and launched at the end of 2018, and our plan was to start gradually entering our most confident positions, which at the time were Bitcoin and Ethereum.

Patrick： Yes, just to give everyone a sense, Bitcoin was priced around—$3,000 or so.

Matt： Yes, it was around $3,000 to $6,000. And Ethereum was $100. Then in the first year after launch, we raised another $300 to $400 million, totaling about $700 to $800 million. Then we raised a venture fund again in 2021. That was $2.5 billion, and we are currently investing from that fund. Then at the beginning of 2024, or I guess in 2024, we raised $850 million in commitments for our second venture fund.

Patrick： But you haven’t started investing yet.

Matt： Not yet.

Patrick： How is the team doing?

Matt： We have 65 people, most in San Francisco, some in New York, and some in Washington. The policy team is in Washington. The so-called “investment and research team,” which is the core team responsible for making investment decisions and trying to figure out the future of cryptocurrencies, is about 10 or 11 people.

Patrick： Does that scale feel right? I hear a lot of people say that when the number exceeds that, it’s no longer a team but more like a structure.

Matt： Are you talking about 10 or 11 people?

Patrick： Yes, 10 or 11 people. Can you imagine it having 20 people?

Matt： Well, we had 20 people in that team in 2021. Yes, in hindsight, I think that was a bit too large. There are many ways to build a successful investment team. I think some teams are quite large, but the larger the team, the dynamics of decision-making among a group of people will definitely change. I think with 10 or fewer people, it’s still possible to have sufficient touchpoints, mutual discussions, and seek the truth. The larger the room, the more self-conscious people become, afraid to say something foolish or challenge someone more senior than them, or similar things.

So this worked for us. It’s a diverse crowd. In fact, I don’t think there’s a single person on the team who would meet the hiring standards of other investment firms. Regardless, everyone has a unique perspective on the future of cryptocurrencies. We have engineers, researchers, and security experts.

Patrick： If I came in, sat down, and looked over the shoulders of those who are builders and researchers, not involved in investment activities, what would I see?

Matt： You would rarely see Excel models. More commonly, a few people might be discussing some mathematical problems on a whiteboard. You would see Georgios with three screens, 200 tabs open, inputting code. A lot of the work we do is actually in the details of protocols and mechanisms that we think are important for cryptocurrencies. The reason we spend time there is that we believe they are huge leverage points.

In terms of open source, the work Georgios is doing, this code can be used across the cryptocurrency space. In terms of mechanisms, Dan Robinson, Dave White, and many others on the team, these mechanisms are at the core of the protocols. For example, Uniswap, which serves thousands, millions, hundreds of millions, and trillions in trading volume, all comes from a mathematical formula.

In cryptocurrencies, getting the mechanisms right is a huge leverage point. We believe this applies not only to what we’ve already seen but that there will be a new frontier that needs to be invented. So most of the team focuses on this—these mechanisms will ultimately manifest in products.

#07 Dealing with the Volatility of the Cryptocurrency Market

Patrick： An emerging story is that you are a personality type that excels above volatility. Whether it’s the team, asset classes, or returns. You are in a unique structure, which is a long-term structure. But the daily volatility of cryptocurrencies is completely insane. Can you talk about that experience?

So, like the numbers you mentioned earlier. If you only look at two points in time, the funds raised and today’s funds. Wow, that’s amazing. 12x or 13x, or some ridiculous number.

I’m very interested in the painful aspects of the team and performance. So this is a super volatile asset class. You have a high-variance team. You seem to be a very solid, calm person standing above both. But I’m curious, what have been the painful, difficult parts for you so far in history, whether it’s the team or the assets?

Matt： Honestly, the assets are easier for me because that’s just a number. I think when you have a clear long-term belief in Bitcoin or cryptocurrencies in general, the volatility is much less. If you look at the potential volatility of our belief in Bitcoin or cryptocurrencies, there will definitely be ups and downs, but the magnitude is far smaller than the price. In contrast, this is easier.

The organizational effects and personnel effects are much more difficult. You can see this across the cryptocurrency space; when cryptocurrencies are hot and in the news, it’s the easiest time for recruiters in all roles, whether at companies or Paradigm. If you think about the selection function, it’s also those who might come in for the wrong reasons or may not truly believe in the 10-year timeframe of cryptocurrencies, but today it’s the hot thing. So during volatile periods, this creates a lot of turbulence. So we’ve always had a bit of a tendency that way, but today more than ever, we are very focused on locking in those who truly understand it and are in it for the long haul.

Patrick： What has been the largest peak-to-trough drawdown you’ve experienced?

Matt： I don’t know.

Patrick： Do you know when it was, if not in percentage terms?

Matt： When was it? It was definitely after 2022-2023.

Patrick： Talk about that time. What happened? What did you have to do? Did you feel caught off guard? Or did you think, you know, I’ve been through five of these…

Matt： In terms of public assets, our mindset is point-to-point, so we focus less on the intermediate volatility. So, most of our focus is on how this will obviously affect the entire private portfolio—the runway of these companies, their ability to raise funds, employee morale, revenue, etc. So, most of our focus is on categorizing to ensure that the other companies in these cryptocurrencies can survive.

Then we did a lot of reflection on 2021 because, broadly speaking, whether in cryptocurrencies or the tech space, that was a very unusual time. So, waking up basically in 2022-2023, many of the decisions we made in 2021 didn’t fit our expectations for the next five to ten years.

Patrick： If I were to try to find the best criticism of Paradigm, what do you think it would be? What kind of criticism, when someone says it, would make you think, “Oh, damn”—that really hits the mark.

Matt： I think the trade-off of having a deeply technical team that is very focused on building and research is that we essentially have a strong view on the technical future of Bitcoin. If you think about the idealized version of an investor, that would be more agnostic. This is a conscious trade-off we always have to weigh. But I think a reasonable criticism of Paradigm is that sometimes we rely too much on our technical perspective.

Patrick： What has been the worst thing in Paradigm’s history?

Matt： The most obvious is that we invested in FTX. I actually don’t know what the correct conclusion about SBF is. He is a unique and distinct individual, but many great founders are as well. Another issue is that we did uncover the core issue that ultimately became problematic, which is the nature of the relationship between market makers and exchanges.

We actually dug deep into this in our due diligence and ultimately got deceived. So, I think when a founder is willing to do that, venture capital is very difficult because the entire ecosystem relies on trust, and it’s hard to do due diligence on lies. We had no reason to believe he was lying.

Patrick： Was that the most stressful time for you personally in Paradigm’s history? You seem quite calm, but…

Matt： Yes, probably in the initial days when we didn’t fully know what was happening.

#08 "Unreadability" as an Investment Advantage

Patrick： Perhaps we can delve into the concept of "readability" in detail, and the relationship between your views on Bitcoin and investment opportunities. I know you’ve thought a lot about this. Let’s get to know your thoughts. Why is this topic interesting? What do you mean by "readability"? How does it relate to investment opportunities?

Matt： I think the less readable a field is, meaning the harder it is for others to understand, the more likely the potential returns are inversely related. Because it’s almost certain that the more a field is understood, the more (easily) it gets priced, in other words, everything should be taken into account.

Silicon Valley is an interesting case study because it’s always some kind of frontier. But in some ways, the ecosystem in Silicon Valley has also become increasingly readable. What used to be bespoke is now somewhat industrialized. I think the current frontier in artificial intelligence is still very unreadable, which is a very interesting space for builders and investors. Software as a Service (SaaS) is no longer unreadable. Perhaps the perfect pricing of SaaS valuations by companies like Tiger and Coatue is precisely the expected result.

I think readability has a strong gravitational pull. Or in other words, making things readable inevitably lowers accuracy. So, there’s a perspective on the relationship between maps and territories. We create readable explanations to better understand things, to better communicate and disseminate ideas, but they are always approximations of the full texture of reality.

I think in the cryptocurrency space, especially now, there’s a strong temptation to make it readable too soon. I think in some cases, there’s value in tolerating unreadability. For example, many people are asking, what are the use cases for cryptocurrencies? First, I think we can get there. But money and finance are obvious. But many people want to know, what comes after that?

I think there’s a temptation with the term “Web3,” which I think is somewhat useful because it’s an analogy that helps technologists understand what cryptocurrencies might be, but it also introduces a lot of false comparisons. So, if you’re building in the cryptocurrency space and take this readable meme too seriously, you might actually build something very wrong because you misunderstand the possible underlying complexities.

Patrick： That reminds me of… what’s the author’s name… James Scott or something like that—the book "Seeing Like a State."

Matt： Absolutely right.

Patrick： My memory of that book is that the top-down desire to make something understandable distorts things. So you plant trees in a neat row. The first generation of trees is fine, but all the complexity that happens in an organic forest disappears. The second generation of trees can’t grow. By oversimplifying things that shouldn’t be simplified, you lose complexity.

Or even the way cities are laid out. Should they grow organically from the bottom up, or should they be designed from the top down? It’s hard to design a great system through a top-down approach, which is an important point of that book. Do you think the book’s perspective holds a place in your thinking?

Matt： I completely agree. Perhaps the modern version of that book is seeing a meme. Ecosystems choose very simple memes because simple memes can gather a lot of power and energy and spread. You can basically see the current topics on Twitter every day, where people debate higher-dimensional memes, and these memes lead to misunderstandings about each other's true intentions. But without a meme, you actually can't have a discussion. Here, it’s unclear what to do, but the same thing happens in the investment space. Peter Thiel hates buzzwords. Once an ecosystem has buzzwords, it’s time to run.

Patrick： Stop. It’s too late.

Matt： Moritz once said, “Look for that interesting, complex bird, not a flock of birds.” I think they are all trying to express this point: outliers are unique. If you invest through memes, you actually lose all the underlying texture and complexity.

Patrick： Does this also reflect an appreciation for "product selectivity," where the world often interprets potential products through the lens of existing markets, rather than appreciating that a new product or platform technology has simply created something we cannot imagine, and that most of the returns come from that unimaginable part? Is this perhaps the reason why unreadable things might yield better returns?

Matt： I think some of the most fundamental platforms, those that can generate generative outlier results, are the most unreadable at the start. I think the internet is an example. Today, everyone takes the internet for granted. But if you think about it, even the idea of Google, its pitch was “this helps you search the internet, but what is the internet for?”

Well, Google is a use case of the internet. There’s a circular reference. And it turns out that over time, more and more things appeared on the internet and became very useful.

#09 Positioning of Crypto Assets, Reconstruction of Financial Systems, and Intersection with AI

Patrick： Let’s apply this topic to today. Describe your view on Bitcoin in your own words so that those who are not paying attention can understand.

Matt： So, I think Bitcoin is a change in a very fundamental way of human coordination.

Patrick： What does "fundamental" mean?

Matt： Fundamental means it’s a very basic building block. A change happening at the foundational level of architecture. Historically, we have always coordinated through centralized institutions—companies, governments, monetary systems. And Bitcoin allows us to coordinate in a decentralized way.

I think it has proven that the most valuable application of this coordination method is currency. I believe Bitcoin is going through three broad phases. First as a currency, second as a financial system, and third as an internet platform. I think it’s becoming increasingly clear in the first two aspects. As a currency, as a financial system, it is useful. I think the internet platform may be the most unreadable part right now.

But in terms of currency, I believe Bitcoin is the most valuable startup of the past 15 years. Most people don’t think of it as a startup because it competes in a very unusual market—the currency market. It doesn’t have a traditional company structure, team, or CEO. But if you step back and think about it, I think it’s quite remarkable that in a brand new industrial organization, Satoshi published a nine-page white paper, wrote some initial code, and then the entire ecosystem developed around it, now worth trillions of dollars.

It’s not just the most valuable startup. I think if we had said in 2018 at Paradigm that nations would discuss or even adopt Bitcoin as treasury reserves, we would have thought you were crazy. We thought that might happen in 10 to 15 years. So, to be honest, I’m very surprised by the growing legitimacy of Bitcoin as a monetary asset. This is true not only at the government level but also at the institutional level. I think in 2017, Larry Fink (founder of BlackRock) called Bitcoin a vehicle for money laundering, and now he talks about it being the future, that it is digital gold, every month on CNBC.

Jerome Powell (current chair of the Federal Reserve) was asked at a meeting last month whether they would adopt Bitcoin or if it posed a threat to the dollar. He said no, it poses no threat to the dollar; it’s just digital gold. Even the recognition of digital gold, I think, was very unconventional five years ago. If you consider the adoption of any new monetary asset, it’s a process of building acceptance and legitimacy, and that’s the real KPI. The price is the output of this process, but the main input is the number of people who believe this could be possible.

Patrick： Let’s spend a few more minutes talking about Bitcoin as a currency. Why is this important or interesting? Its current market cap is about…?

Matt： Just under $2 trillion.

Patrick： So, assuming it is in some way one of the largest companies in the world. But as a currency, it feels like… if you put it alongside Amazon, Google, Microsoft, and other trillion-dollar assets, it might be the most criticized. It doesn’t have a prominent supporter like Satoshi, the creator of Bitcoin, and there have been some questionable characters along the way. Why is it valuable or interesting? From your perspective, this is a fundamental question, but it seems very important, and I’d like to hear your answer.

Matt： I think the idea of a non-sovereign currency is valuable. I’m not the kind of person who thinks cryptocurrencies or Bitcoin should replace all fiat currencies. I think they can actually coexist quite well, and the rise of stablecoins is a great example.

But Bitcoin is not just a hedge. It can also help individuals and families preserve value in the most unsafe places on Earth. You see people fleeing Ukraine or Venezuela or other troubled countries, and cryptocurrencies have started to play a larger role in that. So, I think from a humanitarian perspective, it’s a very valuable tool. Gold used to solve part of the problem. But gold is physical, heavy, and inconvenient. There are many reasons why a digital version is better.

Patrick： Do you think of it as a currency or merely a store of value? Or does currency mean a medium of exchange, a unit of account, and a store of value?

Matt： I think right now it’s primarily a store of value, or more accurately, a bet on a future store of value. I think over time it may find some transactional uses, but I don’t think that’s necessary for it to become truly useful and interesting.

Patrick： Do you think institutions like Powell and Fink’s understanding of Bitcoin as digital gold is extremely readable, and therefore the potential returns of Bitcoin itself relative to other options are quite low? In a sense, it has already won.

Matt： It has won to some extent, which exceeds my expectations from a few years ago.

But I think we are still in this early stage of being truly understood, despite some commentary around it. A rough way to think about Bitcoin adoption is how many people globally, weighted by dollar amount, believe they should own Bitcoin. Then there’s another axis of how much of their portfolio is Bitcoin.

I think we are at a node where many institutions are starting to think, maybe we should start from zero. Maybe 1% to 2% to 5%. Even Fidelity is recommending baskets that include this weighting. I don’t think we will reach or should reach a point where people universally hold 100% Bitcoin. But I think it will be much higher than where we are today.

Patrick： So, let’s move into the second basket. I think the term “programmable financial system” is being used. So, Bitcoin is still young but relatively mature, and most people’s readable concept of Bitcoin is something like digital gold. So, regarding the new financial system of the second phase, where are we in this story, what’s possible today, what excites you? Then we can go to the most unreadable frontier part.

Matt： I think one notable aspect of stablecoins is that they are primarily tokens pegged to the dollar, existing on the blockchain but pegged to the dollar. I believe the growth of stablecoins over the past few years has exceeded $200 billion, and they are starting to be used for real use cases, not just in the cryptocurrency space.

They were initially conceived as a way to facilitate cryptocurrency trading. This is how you get onshore and offshore dollars on certain exchanges abroad. But now companies like SpaceX are starting to use stablecoins to transfer funds, and many other companies will use this corporate finance use case for stablecoins; they will generate revenue in a country, like in Africa or Latin America, and then they want to send those dollars back to the U.S., so they will exchange local currency for stablecoins at a local exchange, and then they can send those stablecoins through the blockchain. This ultimately is a cheaper way to do foreign exchange than traditional methods.

Patrick： Yes, stablecoins are very interesting because they are a perfect controlled experiment. They are a dollar, and their purpose is not to replace or surpass the dollar or exceed the dollar. They are just a dollar. So in some pure sense, it really is the technology part, the programmability, and so on. Now that we have abstracted away the price considerations, what are the core features of these technologies? Why are they so important? What does the industry structure of stablecoins look like?

Matt： It’s a 24/7 global and programmable payment rail. I think these are quite critical. I think we live in a 24/7 internet world, but payment systems shut down on weekends. So in a sense, this is just a way to modernize finance and payments, just like we have become accustomed to the internet.

Many fintech innovations are actually product and market innovations built on outdated back-end infrastructure. You can think of cryptocurrencies as a new financial back-end built from the ground up. I think one way to look at or frame the programmable financial system is that it is a bilateral market between assets and programs.

So, every financial activity we do through traditional institutions or through applications is a program. There’s some logic to decide who pays whom. Maybe there’s a custodian, maybe there are payment terms. Think about insurance, mortgages, or payroll. All of these are essentially payment methods programmed on top of traditional finance. All of these can be built on the new crypto rails.

But there is a guiding problem because most people do not trust these rails and do not use them. There aren't many assets there. Therefore, there is a guiding problem between assets and programs. I think the interesting thing about stablecoins is that we are already guiding crypto-native currencies like Bitcoin, Ethereum, and Solana.

With stablecoins, we now have a widely used currency asset that, as you said, lacks the volatility or complexity of cryptocurrencies. I think we are starting to see people build all these different ways to program and use them for the first time. It seems inevitable that in 10, 20, or 30 years, basically all of our financial transactions will occur in some way through such rails.

Patrick： Have you seen creative uses of stablecoins that would be impossible in traditional finance?

Matt： I think a recent and relevant example is prediction market platforms (like Polymarket), which are contracts where you deposit X dollars, and if X wins the election and you bet on that person, you get rewarded. If another person wins the election, you get nothing. This logic is embodied in smart contracts. There is a crypto-based way to resolve this event. So this is an example that was previously impossible.

Patrick： It automatically settles based on the outcome.

Matt： Yes.

Patrick： If we move into the third tier. What do you think is the most marginal part of cryptocurrencies today? Now everyone knows about Bitcoin, and many have heard of stablecoins, especially audiences like yours. So, what do you think most people may not have heard of or used, but you find interesting?

Matt： I think a very interesting and still very murky frontier area is the intersection of artificial intelligence and cryptocurrencies. If AI is intelligence, then cryptocurrencies are a way to coordinate that intelligence. And that is essentially the nature of money. It is a database of value that we transfer. That is the coordination mechanism of capitalism.

For me, it’s hard to imagine if AI agents really rise and become possible, that they primarily transact through traditional systems. Cryptocurrencies are essentially tailored for use by computer agents. I think many people are currently focused on the idea of payments between agents or payments on the network.

But I think a more interesting step is that you can view cryptocurrencies as a way to build markets, allowing participants to engage purely through programmatic means. If you want to run some kind of auction or allocate scarce resources through programmatic means, cryptocurrencies are designed for that. So I envision a world where AI agents are essentially building more complex ways to coordinate with each other, not just payments.

Patrick： When you see something like AI, you’ve built a company with a mission to push the frontier of cryptocurrencies. How do you weigh the temptation: “Wow, this is a new enabling technology, a general-purpose technology. Maybe there are only 25 such technologies in human history. Here’s a new one. Isn’t this bigger than what I’m currently doing? Don’t I want to dive into the biggest general technology?” Is this something you’ve thought about?

Matt： First of all, we have a team driven by curiosity. Part of our team is that everyone can spend time researching and exploring what interests them. We do have some people who are very interested in Bitcoin.

We actually spent some time exploring this rabbit hole and ultimately decided, well, first, we are certainly interested in the intersection of Bitcoin and AI. I think this may be one of the most interesting times in this field right now. But at the same time, I think there are extreme returns in specialization, and there’s also a sense that Bitcoin is something everyone is studying, and it will do well regardless, even without us.

I think cryptocurrencies are a very important technology that needs to coexist with Bitcoin. As you said, there aren’t many great advocates, and we believe it’s very important, and we need to work hard to make it a reality.

Patrick： Can you give your perspective from your research on Bitcoin, comparing it to other historical technological infrastructure developments you’ve studied, and the nature of this boom and bust? I’m thinking of Carlota Perez’s view, that speculative bubbles can actually be a good thing because they provide the capacity for the next generation of entrepreneurs, whether it’s fiber optics in the 90s or something else.

This seems to have generated so much interest and builders around Bitcoin for a while, much of which is driven by the public pricing of the underlying asset. Critics might say, look, this thing is just a casino, an unregulated gambling game.

If you compare the pipelines and infrastructure of Bitcoin today, I feel a bit behind. I realize I was very interested in the technical details of the last cycle, and then in this cycle, I’ve kind of lost touch. I wonder if this speculation has led to a higher level, more valuable infrastructure? Is this boom and bust a good thing in the traditional sense? Or is it different because Bitcoin is sometimes overly speculative?

Matt： Yes, I think this speculation is productive. You can debate the speculative nature of Bitcoin and the utility that arises from it, and compare it to other trends. Bitcoin is certainly more speculative than typical speculation. But part of the reason is that the assets that can be speculated on are the core things and core forms being enabled.

But in Bitcoin, I think there are two ways speculation manifests. One is that it is actually at the core of the adoption of any new monetary asset because believing that others will eventually accept some asset as money is a speculative act. Well, you can have some fundamental reasons based on the supply being fixed or it having certain technical characteristics to believe in it, but ultimately, your belief depends on your belief in others.

I think this can sometimes be uncomfortable, and I see many people who are very confident in Bitcoin, believing it cannot become money or gold. I think this comes from an inherent aversion to Bitcoin rather than a closer examination of it.

Then yes, there’s also Carlota Perez’s view of speculation as a guiding mechanism. I think we have seen this productive speculation in Bitcoin. For example, the current stablecoin activity, with $200 billion in stablecoin assets, many stablecoins are being used in areas outside of Bitcoin. Whether it’s cross-border payments or obtaining dollars in countries struggling with their local currency, corporate payments, etc., all of this is the result of infrastructure work built over the past two to three years.

If you look at Layer 2 solutions like Ethereum’s Base or Solana, we now have very cheap and fast stablecoin transactions, whereas in 2017 or 2021, the same transactions might have required $10 or $100 in mainnet transaction fees. So I think we are in a completely different position in terms of infrastructure, even though for the public, most of it is invisible, it is manifesting in real applications like stablecoin payments.

Patrick： Answers are sometimes easier to find far from the U.S., where these things have become very useful tools in economic freedom, whether it’s El Salvador putting its treasury reserves in Bitcoin, or cross-border payments or storing value in high-inflation countries.

I really want to ask you about your mission at Paradigm and your view on its support for the Bitcoin ecosystem, as well as what I call “unfinished business.” Many of you personally, as well as many on your team, are in a position now where you don’t have to do this. Of course, maybe you’ll get good returns. It’s clear to me that this is not your motivation; it’s a byproduct.

I want to learn more about your view of the mission with Bitcoin and how that mission has evolved over time. Today, at the beginning of 2025, what is your “why” compared to 2018? I think some of the things you might have said in 2018 have happened. You even mentioned some things you never anticipated, like governments putting their treasury reserves in Bitcoin. So today, starting from early 2025, why are you doing this? What’s the focus?

Matt： I don’t want to give the impression that I don’t care about investment returns or that I’m not someone who manages money well for LPs, but I do believe that driving the success of Bitcoin technology in the world is the mission that motivates us.

If we look at the internet, today we have end-to-end crypto messaging, like WhatsApp and Signal. I think it’s a coincidence that there are many possible worlds where we don’t have these. It’s not inevitable, and we may have lost it or come close to losing it multiple times.

……

Patrick： Back to you and your team, why do you personally care so much about all this? That’s a good answer. If I saw that answer without a name attached, I would say, yes, that makes sense. But I don’t think those who are truly pushing the frontier, like you are, and are working hard to do so, can just have a good rational answer. Why do you believe so deeply in everything you just said? What’s the story behind it?

Matt： Well, I’m not quite sure. I think I’ve always been somewhat skeptical of authority. So when I see authority exercising power, it makes me think, is this really how we want the world to operate?

Patrick： Where does this skepticism of authority come from? Trace it back to the source. What early authority figures made you feel this way? What authoritative experiences do you remember that might be questionable?

Matt： I’m not quite sure, but my hypothesis might be my mom or my parents. It sounds like I have some bad relationship with them. But I think I realized early on, in really small things, like in unimportant matters, the trade-off between authority and individual freedom.

Now I see this from my parents’ perspective, but anyway, every child and parent encounters situations where the child feels something is unfair. Maybe from some objective standpoint, it really is unfair, but it’s the parents’ decision, and I think that gave me an instinctive skepticism toward any system that allows one party to coerce another.

I have a very strong mindset that “a person should be able to choose their own path.”

Patrick： If I could bring your entire team here, the investment research team, do you think any of them would have a completely different answer regarding their motivations for Bitcoin and why they are committed to pushing this particular frontier?

Matt： I think everyone would have different motivations, but I do believe there is a common underlying direction. I think many of us are doing this work purely out of curiosity. It’s interesting, and I think you have to really dive into it to fully experience that.

Because from a distance, the noise of speculation is certainly louder, but it is indeed breaking down the ways of human coordination, deconstructing it into its most basic components and trying to figure out how to achieve better and more unique combinations. I think this is a very interesting frontier area.

Patrick： What are the "primary colors" of these most basic human interactions? What are the ways of human coordination?

Matt： I think a lot of Bitcoin is a new security technology that can safeguard different types of human coordination. An interesting thing is that when people think of security, they think of preventing bad things from happening. But security is also a huge driver of good things happening. Countries with strong property rights perform better than those with weak property rights.

If you think about it from a micro level, like physical retail, we have large supermarkets like Walmart today, which would not be possible without many different security innovations. For example, the idea of a cash register that tracks all payments and locks the drawer so you can trust that the cashier won't steal your money. In a family-run small store, this is actually a problem. For a long time, the only people who could operate the cash register were family members running the store because those were the people you trusted.

Or think about security cameras that can monitor a part of the store, which is much larger than what the cashier can see, or tags and security bars that can automatically detect if you are taking items out of the store without paying. These are all security technologies that prevent bad things from happening. You could say, well, you can make theft illegal, but the cost of enforcement is just too high.

So, one role of security technology is to lower the enforcement costs of those things you don’t want to happen, thereby promoting more GDP and more economic activity. I think a lot of Bitcoin reduces the cost of facilitating these transactions by removing intermediaries and creating security around contractual rules on-chain.

Patrick： If you take Walmart as an example, all these security technologies combined make Walmart a marvel in this world. So, where do you think we still lack security in the Bitcoin space that you hope we can achieve, perhaps something Bitcoin can solve, at least in the near term?

Matt： I think of use cases in emerging markets, and there has been a lot of discussion about this. Obtaining a good currency, whether it’s the dollar or another cryptocurrency, instead of your local high-inflation currency.

But I think what is underestimated is how useful stablecoins could be for American consumers. If you go to the Chase website and look at the interest rate they pay on Chase savings accounts, I think it’s in the low single digits.

Patrick： Yes, that’s crazy.

Matt： And at this time, treasury bond rates are at 4% or 5%. So, I think the motivation for retail banks to pass on this yield to savers is somehow flawed. It’s a very simple proposition that this is a stablecoin. When stablecoins are regulated, there will be stricter controls to support their asset base. It will be very secure; it’s not a fractional reserve system, and you will receive the full yield. I think this is a strong value proposition for every American who has savings, rather than letting others capture all the spread.

So, I think this is one area where I’m excited to address existing inefficiencies. What I’m perhaps most excited about is exploring what new possibilities exist. An abstract framework is that permissionless platforms can enable organic, bottom-up innovation and a kind of exploratory function that currently does not exist.

I think YouTube is a very useful analogy. There was a time when cable companies controlled content programming, and you had 50 to 100 channels, with some editors deciding what people wanted. With YouTube, we basically explored every possible permutation of human entertainment and discovered all these new verticals, whether it’s unboxing videos or watching others eat, etc. And we may not be done yet; as culture evolves, we may discover new domains in the future.

The same thing has not happened in finance. The fixed costs of financial exploration are so high; either you have to start a company to list new futures contracts, or you have to incur some startup costs around it. As Bitcoin rails mature, I think we will see this breadth-first search, exploring all these previously impossible financial use cases.

……

Patrick： This is really fascinating. Thank you for doing this with me. I know this isn’t what you expected to do, but I feel like I’ve always had an understanding of how Bitcoin works, just from a distance, and now I feel like I have a deeper understanding of Bitcoin, which makes me more excited about its prospects in the next five years. I feel like I’ll have a better grasp of the development process of Bitcoin, which is really cool.

My routine question is, for everyone, what is the kindest thing someone has done for you?

Matt： I thought of two things. One might be a bit cliché, but my mom is a computer science PhD who studied under Carver Mead at Caltech, and she got involved early in what later became the parallel computing revolution, eventually becoming a professor at Yale and Boston University. She gave all that up to raise me and my brother. For a long time, I didn’t even realize there were other options. Then for a long time, I was confused about Bitcoin because she was in a very interesting field at the time.

But now, especially as a parent, I understand much better how much my brother and I benefited from her. Then the second thing I think is that the kindest thing one person can do for another is to believe in them and elevate their future aspirations. Doug Leone did that. Many others have done so as well, but especially Doug. He didn’t have to do that, and I will always be grateful to him.

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