Miko Matsumura is a founder of crypto exchange Evercoin, is a General Partner with Gumi Cryptosand a Venture Partner with BitBull Capital, a cryptocurrency fund-of-funds. He is also an advisor to Arrington XRP Capital. He is a token holder in FileCoin, Brave, CIVIC, Propy, Polymath and an investor in Lyft. As chief Evangelist for the Java Language and Platform he participated in the first wave of the Internet, and is now fully engaged in Internet of value. As a 25 year operating exec in Silicon Valley, he has raised over $50 million in venture capital for Open Source startups and over $250M in ICO capital. He currently advises cryptocurrency startups like Naga Group ($50M ICO Stock Trading), Playkey ($10.5M Streaming Gaming), Bee Token ($15M, Decentralized AirBnB), Celsius ($50M Ether Lending), Wala (African Cryptobanking), Lottery.com (Online Lottery), Millenium ESports (ESport Gaming), Refereum ($30M Gamer Affiliate Marketing), Pundi X ($35M Payments), WiFiCoin, Guardian Circle (Decentralized Global 911 Emergency Services), Blockchain Terminal ($30M Bloomberg for Crypto) and Hub (Decentralizing Professional Social Networking). He is also an LP with Focus Ventures, a firm with over $800M under management, 9 IPOs and 44 exits. He holds an Master’s degree in Neuroscience from Yale University where he worked on abstract computational neural networks. He’s leads the Crypto Underground meetup in San Francisco and is a well known speaker at many cryptocurrency and blockchain events.
Miko: I grew up in Michigan and always felt a little out of place- a little different- Asian face- and really being a kind of an oddball and in a way it was uncomfortable. I earned a graduate degree in neuroscience at Yale University and that was also extremely uncomfortable. One day I had this wonderful meeting with my professor and he just took me aside and he said, ‘why are you here?’ and I thought, that’s a funny thing for your professor to say. And he said, ‘why aren't you out, you're young, why aren't you climbing mountains or why aren't you doing something that you really enjoy?” I was wondering if he was calling me out, what's happening here? And then after processing this, I realized something. I realized that he was unhappy and then I looked around at all my professors and I realized they were all unhappy. It dawned on me that this really wasn’t a good sign. And so I kind of did a hard thing, and I came out to Silicon Valley and started a startup career over here and in a way that was a big leap and difficult. The reason why I brought in my background story is because the two things I do now are basically read a lot and I mostly read things that are a lot like scientific papers- a lot of the big things happening in cryptocurrency are white papers. I'm used to reading something that's borderline gibberish. If you read scientific papers, it just makes your head spin and your stomach turn, so you just get comfortable being uncomfortable. So that's one big part of that and then the other side of it is I spend a lot of time explaining and speaking about this phenomenon in front of audiences. What I find is that a lot of people, when they get in front of an audience feel really singled out and they feel really nervous and weird and I just feel like I've always been singled out my whole life. I'm just comfortable, so in some ways this past of discomfort turned into a strength that I'm now able to use professionally. Sun Microsystems was my first serious Silicon Valley job.
I was working at Wired, the magazine, in their Internet division and I ran across the Java programming language and I got so pumped up about it that I ended up joining Sun Microsystems and that was the moment when I switched from being a software developer- which I was actually not a good one, I was not a good developer- but I became a technical evangelist. I was following in the shoes of Guy Kawasaki who's another Japanese-American valley person, I actually ended up having a sushi lunch with him in Cupertino. I felt like I was following in his footsteps becoming an evangelist for a technology platform. For him it was the Macintosh and for me it was Java and so I became a Java evangelist. Since then I've been if effectively operationally doing marketing related things, but really pretty nerdy, like open source software and these kind of nerdy startups.
Question: Cryptocurrency is still a new word to a lot of people although it's been around for a few years but what inspired you to jump into this?
Miko: I've been working on open source software for the past thirty years ever since Java which was an open source project and when I started, my co-founder of Evercoin, and I worked together on another open source project where we sold to the largest banks in the world this ultra high-frequency trading software. So it's software infrastructure for superduper high speed transactions in memory and the thing that happened was he came back to me some years later and said let's start a cryptocurrency startup. At the time I was like, okay so I don't I didn't know much about it, but after studying it I began to realize that this was not open-source software, it was- but it was open source money and open source money if you watched what happened to open source, if over the past thirty years in Silicon Valley open source software has eaten proprietary software. If you look at all the biggest software companies in the world which by the way are the biggest company companies in the world, ninety percent of their software is open source now it's astonishing what's happened and so if you look at that history, you can't help but to conclude that ninety percent of the money will become open-source money and that's my investment thesis.
Question: How did you go about launching Evercoin.
Miko: It was an experience of pivots. We actually originally started a service called Paycent. Paycent was actually a crypto debit card you use basically like a debit card. You could use it to pay with bitcoins and it would convert to USD on the point of purchase right there, we realized that the interface between crypto and banking was actually at the time really weak. It's much stronger now but at the time it was so weak that we decided to pull the plug on that business and then we pivoted into exchange and since the previous company is called Hazelcast we called it Hazelcoin but then of course Hazelcast wasn't too happy with the name so we had to change it and then we eventually changed it to Evercoin so the point being that it's a bunch of pivots and that's often the story of early startups. They just pivot-pivot-pivot-pivot and we just found a segment and the cryptocurrency exchange segment is down to six billion USD of daily trading volume- so it's down to and it's off of the pages to me and we think it will continue to grow, the segment is definitely lively.
Question: Do you have any advice for people venturing into the cryptoworld?
Miko: Absolutely, number one is asset allocation right which is don't put in more than you can afford to lose and you have to have a rational asset allocation because this a de-correlated asset class, it's a new emerging asset class. The other one is this, and I learned this painfully the hard way, after college, I bought Apple stock because there is this guy, Mike Markkula, there who was running the company, he was a nonsense CEO, terrible, but the brand was good. So my thesis was, this going to be a winner, went in there, started going down, guess what I sold. It went down I sold- right buy high sell low dumb really dumb right. Here's what I learned. What I learned is, hold if your thesis is still sound right? And so that's what I'm doing. In the crypto space you have volatility, my thesis is, open source money is going to do what open source software did. If it does that and as long as my thesis not broken, I'm just going to hang on I don't worry about volatility.
Question: What’s an exciting technology to be and now if you're a family office saying, Miko, show me where the money's going to be six to ten years into the future.
Miko: I went to a conference that was like, IOT plus AI plus blockchain and to me it was hilarious because it was just a buzzword expo. So to me, blockchain is super deep and what I mean by it super deep is if you look at blockchain technology, it's almost like the DNA for an entirely new Internet. So to me, when you see what has happened you're talking about Internet money right and if you look at Internet money the thing that's crazy when you look at our traditional currencies just try to spend Canadian dollars in the United States, it doesn't work it's nonsense and so that's so crazy and broken and so what is going to happen right? So to me the obvious next steps are, that there will be an internet currency that will be a global currency and everyone's going to use it. People complain and they're saying, 'oh well bitcoin isn't the currency' it isn't. It's more like a Swiss bank account, but people don't understand that there's a diversity of crypto assets and what they really don't understand is that $23 billion went into a phenomenon called ICO and that right now all of that is being spent. It's being converted into salaries and engineers and products and all of that because it exiting crypto to pay rents and groceries for engineers, it's clearly causing a drag on the cryptocurrency prices, but the thing that people say is, 'oh well, cryptocurrency isn't this or it isn't that, they're talking about software features. It's not fast enough or it's not quick enough or it's not usable enough all. All of that stuff, we anticipate should be fixed, it's all fixable because it's software. And there's so much talent there's been a twenty three billion dollar talent grab and those engineers are now working on solving those problems so to me the idea that there will be an internet money and that it will be an open-source money is essentially inevitable. I don't do market timing so I can't tell you when it's going to happen but watching the inexorable climb of open-source software over 30 years, like it's unstoppable it will eat everything.
Question: I look at cryptocurrency we get to a dollar denominated society because of the commodity exchange. The commodities are stacked all in US dollars. How does crypto work into this?
Miko: Well one of the astonishing thing that I have to you have to understand is it's like squeezing a tube of toothpaste. If the cap is off, the toothpaste coming out but if the caps on you're just going to get the toothpaste somewhere else so if you look at what happened on September 15th 2008, the collapse of Lehman Brothers, huge quantitative easing, twelve trillion dollars, you're squeezing the tube, that has to go somewhere. So what you're talking about is essentially the petrodollar, but if you actually watch petrodollars what's really happened? $100 billion dollar technology venture fund of Softbank funded by the Saudis- what's happening? Petro state transformation. You're actually seeing the transformation moving out of petrol into technology sector right because what's happening is that when you look at oil reserves one of the problems is the problem of extraction and burning. If you extract and burn how do you value that at the current present-day barrel cost if you burned it all, we wouldn't actually have a biosphere anymore. The point is, that people are questioning the fundamental value of the reserves and you're seeing petrol state transformation which is that money is that the toothpaste tube is squeezing. If you actually see us petro dollar leadership it's actually being eroded right now so it's a really interesting and fragile time and you're actually seeing a significant generational trust transfer which is that trust in banks has actually gone down from 60%- I think in the 1930's down to less than 30% and if you actually go to the Millennials, is even lower than that. I think that's fascinating about what's happened is you're really seeing a bunch of macroeconomic vectors that really are culminating in a transformation towards essentially an internet form of money.
Question: Do you foresee us using crypto like credit cards?
Miko: Inevitable, it'll be like NFC on your fitness tracker, it'll be NFC on your phone all these things will be like digital currency enabled. Sweden is virtually cash free, if you go to China like Ali pay and WePay which are not crypto but they're digital paint mobile payment systems those are dominant, and so cash is really evaporating fast. It's 8% of the total money supply and it's dwindling and it's certain areas it'll be gone. Cash actually is bad because it causes people to reason about money improperly. Like people think money is data. Money is not data money as software and it's multiple packages of software, people think money is one thing, it's not one thing it's many things.
Question: If I'm a family office and I got diversification I got some cryptocurrency, what other technologies you see emerging and where do you see the future if you're investing?
Miko: I mentioned the IOT theme, I mentioned the AI theme, to me one of the problems with advanced technology investing is that it is best handled by professionals so one of the crazy things that happen is the ICO phenomenon. I typically advise against people buying individual public equities, sometimes you rarely do that, but people are now buying into ICOs individually which is even more like insanity right because you're really talking about a rarefied domain like the air is so thin, we're talking about startups now and the risk factor in a start-up ninety percent of them will probably fail maybe 99 percent of them. The point being that the venture theme is really coming back strong in that space. There was a phase where literally billions of dollars were just flying around in this amateur kind of shark tank class of investor- that that phase I think is winding down, I think now it's much more people have learned that you can easily gain and lose money and they've done so. I feel like what's happening now is that high tech stuff is being handled by professional venture investors. I invest out of a Japan based venture fund called Gumi, and we're definitely seeing a lot of LP interest from family offices and even banks.
Question: Do you see the medicine in the basically the biotech continuing to emerge?
Miko: I think that we've got a couple of big things in healthcare that need fixing. I think obviously just the basics of insuring people and providing health care to people is going to be like a huge epic problem. In India the Prime Minister Modi just announced a half billion human insurance plans. So they're ensuring a half billion new people- the lowest part of society- which is amazing so if they can do that there may be some need for innovation here in the US to cover everyone.
Edited for Concision and Clarity
Bio courtesy of Miko.com