Episode 299 - Sam Kamani with an Intro to Web 3
Max talks to investor, founder, and podcaster Sam Kamani about Web 3.0, Crypto, AI, and Podcasting.
Sam Kamani
Sam Kamani is an investor, podcaster and ex-founder who is passionate about startups, technology and innovation.He is on a mission to change the world for good. Sam is also a father, husband, son and a part-time artist.
Links
Sam Kamani - Website | Web3 Podcast | Linkedin
Transcript
Max Sklar: You're listening to the Local Maximum episode 299.
Narration: Time to expand your perspective. Welcome to the Local Maximum. Now here's your host, Max Sklar.
Max Sklar: Welcome everyone, welcome! You have reached another Local Maximum.
I don't know about you but for me, this has been a difficult week seeing the news reports and images coming out of Israel. We often avoid political and international developments on Local Maximum. Sometimes we dive right into them but this is one I'm going to address in some upcoming episodes because there's no avoiding it. There's no way around it.
Not to take away from today's guest which has been... We've recorded this several weeks ago, we're ready to get this out. So let's get a little lighter. Let's talk about future technology. Specifically, I have this great conversation with Sam Kamani about Web3, about podcasting, crypto. And I was on his show as well! So definitely check out Web3 with Sam Kamani. And of course, I probably will play that on this feed as well. But check out his podcast. That conversation that I had with him, we got very philosophical, into the philosophy of AI so it's very cool. We had some pretty great discussions.
Today's guest is a venture partner at 3X Capital and the founder, as well as the host of the podcast, Web3 with Sam Kamani. Sam Kamani, you've reached the Local Maximum. Welcome to the show.
Sam: Thank you. Thank you, Max. It's always a pleasure talking with you and how we were just talking about how our last conversation went on for like, one and a half hour, but let's keep it short today.
Max: Well, yeah, is that out yet?
Sam: No, it's not. I've got such a long queue of episodes to edit and publish. So I'll be doing that soon.
Max: I'm excited because when we had our conversation last for your show, which I hope to republish on mine, eventually, if that's okay.
Sam: Yeah, go ahead.
Max: It was like. We got into the philosophy of AI, philosophy of consciousness. So we went down. That rabbit hole went deep if I remember correctly. I'm excited to have another look at it again.
Sam: Absolutely. We went into the functioning of AI and how it doesn't really understand, or like how that if we are ever going to get to like, I don't know if you call it singularity or you call it consciousness, that if we if the path that we are on will ever lead us to that? Or do we need to rethink the whole functioning of AI from ground up?
Max: And that is a very interesting discussion near and dear to my heart.
Let's get into you for a little bit. We were just introducing you to the Local Maximum audience. So what do you do? Why did you become an entrepreneur? What interests have led you down that path that you eventually took? And let's try to be, we're gonna get into the meat of it here but I just want you to introduce yourself to the audience.
Sam: Sure. Just very quickly, last 18 years or so most of my life, I've been an entrepreneur. My first startup was in e-commerce. I've been early in lots of different fields. I was doing Google AdWords in 2003. Pretty much nearly every social media platform, I've joined really early.
I'm in the first 5% of the users, whether it's LinkedIn or Twitter or Facebook or pretty much any platform, I give it a try, I test it out. Even some niche platforms like Vine and Orchard, and Friendster, and pretty much I've tried all of them in the first 5% or before they even had reached 5% of the user base. Because I do like to see what's out there and that's why I have been playing with Blockchain, even in 2012 when it wasn't even popular.
Max: It was just Bitcoin.
Sam: Yeah, it was just Bitcoin. And I looked at the use cases and things like that.
I still run a Web3 Podcast. For the last two years, I've been involved in a few different startups that I either own stake in or advise.I work as a venture partner in a Web3 fund called 3x Capital or 3xcapital.fund, you can check it out. We invest in early stage and seed stage, pre-seed and seed stage Web3 startups that have some utility that have some traction.
Apart from that I run podcasts on books, on tech startups and stuff. But yeah, I love tech, I love exploring new tech and talking with interesting people like you.
Max: No, I appreciate it.
I'm hoping we can dive into a little bit about the Web3, which is… it's a buzzword which are real but sometimes it's not. I'm sure you get pitched a lot of companies that say they're Web3. And this is true with every buzzword that's out there, probably cloud. There's probably a lot of companies that said cloud back in the day or even now, but we know cloud is real. It's a big deal so is blockchain, so is deep learning but a lot of AI companies, are they really doing? We don't know.
A lot of my interests are definitely in the Web3 space even if I still can't define it. But what does this term mean to you? What is Web3? What is not Web3? And maybe there are some things that kind of like Web3 adjacent? I don't know. Explain to us the space. Tell us what it is. How is it different from blockchain? How is it different from, I don't know, decentralized protocols, or is it that?
Sam: Yeah, there's a lot to unpack here. But to me, Web3 is like a collection of technologies. It's like saying like mobile tech. So that does include 3g, 4g, mobile browsers. Like lots and lots of tech that's a collection of it. So same thing with Web3. Does it mean NFTs, does it mean BitCoin, does it mean Ethereum. So it's a collection of different technologies. And it is like a work in progress, just like with any tech. It is ever-evolving.
But to me, when I first started looking at, it did mean like a decentralization. So it is pretty much like you know how we talked about cloud. So cloud is a way to host your data up on a server and you can access it from anywhere, anytime. And then what comes after cloud? After cloud is the next sort of iteration, in my point of view, is a decentralized way of hosting data or keeping data around thousands of computers around the world so there is no one big boss like Amazon, or AWS, or Google Cloud or anyone like that. And that's sort of decentralization.
So there are other things that happens because of decentralization, and one of that is that it is permissionless. So you do not need the permission of AWS. You can access, use, create things on that data, create things on that. So it's permissionless and then it's also immutable because of the nature of blockchain, how it works, where it keeps.
Unlike a traditional database that writes, rewrites on top of it, it adds data to the end of the area, you can think of it like that. It creates things on chain, writes things on chain, so it's immutable and it's more transparent. Like completely opposite to what people think that you can use blockchain to hide things but in fact, blockchain is the most transparent way of doing things. You have anyone's wallet address, you can go online and see exactly all the transactions they have done because the chain remembers pretty much. You cannot go and edit your history that if you paid someone Bitcoin from your wallet to their wallet, that record, that transaction is there for everyone to see.
But of course, it is an ever-evolving technology and there is so much innovation that is being built on top of it. So that's what Web3 sort of meant. However, that is not what it is limited to. Yes, it is founded on the principles of decentralization and that's why you would see that Web3 companies are the most open companies when it comes to working remotely compared to others. Most web tech companies do not have a headquarters anywhere. They do not have physical office buildings because they live and breathe the principles of decentralization.
However, because there is a concentration of money, there is still ways that it gets centralized. Just like the top 10 addresses of Bitcoin or wallets in Bitcoin own so much more Bitcoin than the top 10 richest people,
Max: Probably. I don't know. Yeah,
Sam: To me, it's like it's most likely a team, it's not one person.
Max: Oh, right. Probably coin base or…
Sam: Yeah, there's lots. There is still centralization of, of wealth, even in a decentralized environment. That always happens. It does not matter whether we were like 1000 years ago or 100 years or 20 years, there's always some centralization of power, wealth and resources and power, that always happens.
So yeah, Web3 is more like an ethos or Web3 is more like a general idea. There is no particular category. And that's what people say. Right now, DeFi, decentralized finance is considered as part of Web 3 but eventually, all of DeFi is just going to become Fi, just like finance. There won't be the separation between C-Fi and DeFi because this is part of finances. People will have decentralized or like ETFs, and mutual funds and all sorts of products, structured products, and all sorts of things in the finance world and eventually that line will blur and merge. So it is still evolving, the term I think,
Max: That reminds me of another term, which is Fintech. I was actually talking about a Fintech company that a friend of mine started working on recently, he's very excited about it. But my sense is some Fintech companies are Web3, but not all. Is that a space that you find you collide with a lot?
Sam: Yeah, kind of? Yes, absolutely because pretty much you can call every decentralized finance company or anyone that deals in any of the token that has a financial value. You can call it a Fintech in a way. So there is a lot of cross-section with that. It's pretty much like calling any AI startup, a tech startup. It's just a subset. So a Fintech startup could have a centralized finance startup, or trad fi, traditional finance startup or DeFi startup or all of the deals are all the subsets of Fintech.
Max: Yeah, this reminds me of a question, and this going off script a little bit, but a debate we've had is how are people actually going to do casual payments on the blockchain? Is it going to be through the Lightning Network? Is it going to be through some alternative currency that has a better level zero scaling solution or level one scaling solution? I'm not sure I know the difference. But have you weighed into that debate at all?
Sam: Absolutely. Currently, the main utility that blockchain has evolved into that people do use the most around the world, it's stablecoins. That's why the market cap of stablecoins has risen from like 2 billion in 2017, 18, at the height of that ball run to now over $100 billion.
The reason why, even though right now we are supposed to be in a crypto winter or the beer market. Despite that, they have risen so much is because they provide a real utility. Say, you want to pay someone, there is no Stripe or PayPal, which a lot of them are just in 75 countries like Stripe isn't. But what happens to the other 120 countries, you hire someone on Fiverr or somewhere else? Or just somewhere on Discord or Reddit, and you need to pay them $50, how do you do that?
So one of the best and the easiest way is stablecoins because they are pegged to US dollars or euro or Singapore Dollars or any of the currencies. And then people know exactly what they're getting paid because they do not want to be paid in Dogecoin or some random thing that goes jumps like two x up or down. They don't want to work for a whole week on $500 and at the end, the coin has crashed and they get $50 in hand. That's no fun for anyone. No one likes instability. It destroys economies, instability, and currency fluctuation.
So that's why stablecoins solve that problem as well as give the instant transaction of… You have someone's wallet address. You can move the stablecoin to them in few seconds. They get the money and that's fine. I have gotten paid for my podcasts using stablecoins and I have hired people and paid them using stablecoins. But that's at a retail or consumer-to-consumer or a peer-to-peer level.
Stablecoins are also used at enterprise level, corporate level. Say you are a big business, you have branches all around the world. You want to move money, you want to move a million dollars from UK to US. How do you do it? So there are companies who facilitate that using stablecoins.
If you currently move in the current financial banking ecosystem, it will go through 12 different parties. The money will go through that, it might take a week, two weeks. It will have to go through regulation through lots of different bureaucratic processes. But there are companies who facilitate this and also legally going through AML KYC, which is anti-money laundering laws and Know Your Customer laws. What they do is they have a bank account in UK, bank account in US. The client, or the corporate, or the enterprise pays them, they convert it into stablecoins, the move to USD, again, they convert it back to fiat. The whole transaction is done within three hours, money in your bank account anywhere in the world.
Using stablecoins as the as the underlying backbone infrastructure for this sort of things. And it costs a fraction of what it would cost in a traditional financial ecosystem. So stablecoins are going to be, I mean they are already big and providing real utility for people around the world. But they are going to be bigger and also they kind of formed the underlying infrastructure. the technology gets adapted when people don't have to learn about it. So just like open AI, Chat GPT got adapted because people did not have to learn how large language models work. They just go and ask a question, they get an answer. Just like you switch on your TV,
Max: Even I who spent so much time reading and studying this stuff in grad school and learning about large language model, I didn't really bother using it until it was right in front of me there and easy to use.
Sam: Yes, absolutely. The thing is that it people use technology only when it gets invisible. Just like we use a TV remote, we switch on a TV or any remote. We don't care about infrared and all the technology and what type of chip it's using, we don't need to learn about.
Right now a lot of Web3 stuff, they need people to learn about blockchain and smart contracts and getting a smart contract audited and all that. People don't want to do that. Most people in the world are not going to do that. So it's not gonna get adopted, it's not gonna go mainstream unless it can go invisible. stablecoins are doing that.
So next time when you use PayPal, so PayPal has a stablecoin product as well. A lot of the money that you will move in the future, the banks will be using stablecoin as their underlying technology to move money in between them to move money around the world. And that's likely to happen. There are lots of banks who are introducing these type of products, or they're working on it. So the consumer won't know. You would move money to someone, you would not know that stablecoins was used underneath to move that, or transfer that money.
That's my belief that this technology has to go invisible, so that the end consumer does not need to worry about it.
Max: Yeah. So by invisible, could it be in the future that like, I'm used to using my credit card, or I'm used to using my Apple Watch to pay for something. Someone's just gonna adopt one of these technologies at some point. I mean I'm happy using like a Bitcoin or Ethereum, or even one of the minor ones I know. some people might be worried about stablecoins.
Sam: That's what I mean that you wouldn't need to use the stablecoin as well. You would still use US dollars. But how the money went between your watch and the merchant, that transaction underlying would be facilitated using a stablecoin. But you use the US dollar, they got the US dollar, but the transaction in between when it goes from the bank, your bank, or from your Apple Pay to your credit card to your bank, from your bank, to the bank of the merchant, to the merchants account. In between that, it will be a stablecoin that will be used but you wouldn't even know that your bank used the stablecoin tech.
Just like right now your bank, you don't care about whether they are using a relationship database management software, what cloud they're using, what server they're using, or are they using a blockchain or a distributed database, you don't know. That’s what I mean that when the technology goes invisible for the end consumer, that's when there will be a lot more adoption.
Most people do not think about the cloud day to day. They just send the email, they just store the file, they don't really think about where the server is. And even that is partially distributed, not completely, but partially distributed. They have EC2 or AWS and they have different servers around in different regions so that it can provide the data faster and they have a copy of it if something gets corrupted and stuff. Most people don't think about all that tech. So that's what I mean.
Cloud was possible even back in the days, you could create your own server, you can upload things there every time. It was possible before the rise of AWS and stuff and all that. I used to do that for myself back in about 18 years ago or something like that. You could use Windows NT or something like that and create a create a folder for yourself and I could still keep files there. Just like our version of cloud, but most people did not do that because it's too arduous, too time-consuming, and too complex. We'll just wait for an easy solution.
Max: Yeah, that makes sense. This might go into the next question that I have here is, which I think getting to easy solutions is going to be a big part of this. But what are some of the biggest problems that you see in Web3 right now that need to be solved?
Sam: I don't know, somehow, it has become like a very… it's like a clique or a cult? It becomes like that and everyone becomes like a Bitcoin Maxi? I don't know if you heard those terms or an Eth Maxi or something like that.
Max: Yes, yes. I spend a lot of time talking to very opinionated and ideological people. Sometimes I offer my opinions but sometimes I like to keep my mouth shut and see what people tell me. And they say some very interesting things. So yes, I'm aware of all of this.
Sam: Yes. So the thing is it becomes very, very opinionated, very heated, becomes like a debate. The only debate we should be having is how are we delivering value and we are making the life of people more convenient, more easy. And whatever is the best technology doesn't matter if the best technology comes out of any country, any new chain, or any old chain. Doesn't matter if it's Bitcoin base, Ethereum base, or any new coin base, it shouldn't matter.
But it becomes like big groups. It becomes tribal. Like this is my team red versus blue. This is your team and, and I'll defend it, I'll die on this hill whether it does provide value or not. So that's the aspect of Web3 I don't like as much, but I think that's just a human nature thing. And it's not a Web3 thing.
Max: Well, I think it's also a combination of you have a lot of engineers who are kind of at the top of the bell curve working on it. You have a lot of people who are there for maybe ideological reasons. And you have a lot of scams, you got a lot of people who've been burned by it. There's a lot of people who want to sound confident. There's all those things kind of combined, I think, and maybe there's some other reasons, but…
Sam: There’ll always be unfortunately, decentralization is a double-edged sword. There will always be scams because yeah. The good thing about decentralization is that you don't have anyone with a big stick making rules for you on what you can and cannot do. So that is good and bad. The bad thing of that is there are likely to be more scams in this space as well, because there is no big cop with a big stick.
Max: There's no big bad guy chasing off the little bad guys because they don't want competition.
Sam: It’s kind of like a slight taste of anarchy. And that's like libertarianism. But the ideal scenario is that blockchain and maths can be made intelligent enough so that it recognizes the good from the bad and that the people in a blockchain-based environment, completely decentralized based environment can be incentivized to make the right decisions, to stop the bad people and stuff and they are given the right to vote.
That's the whole creation of DAOs, decentralized autonomous organizations. They’re are people who own the token and have the voting rights so that it’s a bit more democratic way of self-governing, creating a self-governing system so that the bad people are voted out and all that. But that's theory. There's still things that happen that are outside of the theory.
Max: I always think of the infamous DAO situation back in 2017 or 2016, when Ethereum had to crack between Ethereum and Ethereum Classic. Since then there have been successful DAOs. But that one, I'm sure a lot of people got burned on that. It’s probably a very frustrating situation.
Sam: And those sorts of things are bound to happen. Because, in theory, it is creating an idealistic society where the power is completely decentralized, and that you don't need this big cop with a big stick enforcing rules on anyone. So people have the freedom to build and move faster. That's why Web3 moves incredibly, incredibly fast, because it's permissionless. But then the bad side of it is that there are unsavory characters trying to exploit the system just because they're more technically advanced.
Max: So have you seen any cool product demos recently that you could share with us that might be of interest to someone who's… What's going on in the Web3 space? What are some of the entrepreneurs thinking about these days?
Sam: so I just came back from Singapore, I went to Token 2049. So lots and lots of cool products, lots of cool projects, and so many investors. The vibe there in the Web3 world, in the blockchain crypto world is very, very different to US. Where it feels like in US, people are waiting for SEC to make more guidance and regulation, and there is a lot of waiting. Whereas in Asia, it seems like people are just building going ahead, they don't really care what happens in US and they're a lot more optimistic than things are in US in the Web3 space. So that's what it felt like.
There were a lot and lots of products in DeFi and finances also because Singapore is a financial hub. Lots of new products going to come out in the DeFi, in the real world assets, or RWA, they call them. So basically tokenizing real-world assets so they can be traded more easily. Some people like that, some people don't like that because they don't think everything should be commercialized. Because that's what this technology is doing, it's commercializing everything for everyone.
The other projects, what I saw is that there's going to be a lot of investment products that are going to come out over the next five years, ten years, and that is going to open it up for a lot more institutional investors. It has already happened overseas. It's happening at a much rapid space overseas compared to US because in US people had to wait for the SEC to give the green light.
I came across lots of projects on that side. There is a lot of innovation happening on the on-ramp, off-ramp. Using mobile phone numbers so you can send money or stablecoins or whatever or crypto-based money from person to person using your phone number. Just text the message and do that.
Some very interesting products. And of course, as we were just talking earlier, I've seen some interesting products in the AI space as well.
Max: The AI-Web3 combo. That's the dream right now. So I want to ask you about your podcast. I see you have a podcast set up. How did you get into podcasting? What’s the name of your podcast? And maybe you could tell us a little bit more about it before we head out.
Sam: Just one minute. I just need to close the door. Just give me a minute.
Max: Okay yeah.
Sam: Yep, I'm back.
Max: All right. We're good. Let’s talk about podcasting.
Sam: I absolutely love podcasting. It started because of COVID. During the first lockdown, I wanted to talk about my book. Generally, I used to go to events and speak at events about different topics or different tech startups and stuff. I was like, how am I gonna do this? I'm gonna meet people. I'm an extrovert. I like talking with people and meeting new interesting people and all that.
So I thought, ‘Okay, you know what's the second best? I'll go on other people's podcasts.’ So I started doing that. And as soon as I went on a few, people started saying that, ‘Hey, why don't you start your own podcast?’ I thought, ‘Okay, I'll do that.’I just did that pretty much within a month of COVID starting.
Since then, I've had so much fun, and I've met some really interesting people. I've interviewed some really interesting people, including people like Vitalik. I interviewed him. In a couple of weeks, I'm going to be interviewing a senator of Wyoming, they're introducing their own stablecoin. So that's going to be interesting.
Max: What country is that?
Sam: US Wyoming? Senator of Wyoming?
Max Oh, yes. Yeah. Cynthia Lummis.
Sam: No, Christ… What's his name? Let me look right now. His name is Chris Rothfuss.
Max: I know that Cynthia Lummis is one of our senators from Wyoming who has been very pro-crypto.
Sam: Wyoming is very pro crypto so that’s why I’m…
Max: Yeah, that’s a big deal.
Sam: Yeah, I'm really looking forward to it. I found him, I'll share the link. I'll be interviewing him to learn more about his stablecoin.
It's just inevitable that pretty much nearly every country, every state, they will introduce the stablecoin. Some would be early. And eventually, there'll be consolidation and some will become really, really big stablecoins.
Max: There's so many pockets in the US. When I lived up in New Hampshire, there's so many people into crypto in New Hampshire and trading it and little caverns in the woods or whatever. I'm sure that Wyoming too.
New York, it's very frustrating. Because early on in New York, 2013, 2014, I wasn't part of it but I know people were in Union Square, always trading it. Now New York is one of the worst places for crypto.
Sam: Why is that?
Max: Because the regulations. Almost every service that's out there will operate in 49 states except New York. So it's very frustrating. Maybe it's because the kind of incumbent, financial didn’t want… But that's very bad. They should adopt it. I'm sure some of those people trading in Union Square were people who were working in finance in New York. They were employees. It was a political decision from a government that state government that didn’t have crypto.
Sam: Like BlackRock and RS invest. They're all introducing their Bitcoin ETFs early next year.
Max: But like anything retail you can't really do in New York.
Sam: But I thought Blackrock was based in New York.
Max: It is.
Sam: They are introducing it. So once they do, all the other funds, they'll follow their lead. Because they are like the biggest so they will all. I’m sure Vanguard also had something similar in the plans, but they will all definitely will have something. Every big and small wealth manager will do that sooner or later.
Max: Yeah exactly. Alright, so what's the podcast called? Where can we find it?
Sam: So the podcast is called Web3 with Sam Kamani. Even if you just search Web3 with Sam, you will find it on any audio platform.
Max: Awesome. I'm on it. Vitalik is on it. I'm gonna say that I have been on the same podcast that Vitalik was on. That sounds really cool. So even though I've had some big names on this podcast, I kind of forget…
Sam: Absolutely. I really enjoy your podcast.
Max: Yeah, I really appreciate it. Any last thoughts on our discussion today? And where can people find out more about you other than the podcast? We just went into the podcast.
Sam: You can just search for me Sam Kamani, S A M K A M A N I on LinkedIn or Twitter or TikTok or pretty much most platforms. Mostly, I'm active on LinkedIn. That's sort of the main platform that I use because a lot of the founders and other VCs are there as well and in this space. Especially the ones outside USA. It seems like US VCs are very Twitter-centric, but outside of US, they are more on LinkedIn. So that's where I mostly hang out.
So come and say hi. Send me a DM if you have any questions. If you have a startup, feel free to pitch it, especially if it's in the pre-seed or seed stage.
And apart from that, the one thing I would say is that the technology will always change and adapt and there'll be new products and new tech. So instead of investing in any particular one coin or anything, invest in yourself, invest in learning, and that's what I've done. I’ve mostly invested in learning. And one of the ways I thought is by listening to podcasts and by interviewing other people, or by going to conferences, and talking to other like-minded people. So that's what I've done. That’s my main advice, the key message that I'd like to relay is that invest in yourself.
Max: That's a really great message. And even as someone who has tried to live by that, I think it's a message that we all have to be reminded, remind ourselves from time to time. Through good times, bad times, you gotta stay on track. So appreciate that.
All right, Sam, thank you so much for coming on the show.
Sam: Thank you. Thank you so much.
Max: All right, once again, I was also on Sam's podcast, Web3 with Sam Kamani. This just came out as well this week, so we're kind of hitting them with a one two punch. It's a different conversation so definitely check that one out.
I'm hoping to have Aaron on soon to discuss maybe a look back, maybe we can discuss recent developments, current events, and also for episode 300. Alright, have a great week everyone.
Narrator: That's the show. To support the Local Maximum, sign up for exclusive content and our online community at maximum.locals.com. The Local Maximum is available wherever podcasts are found. If you want to keep up, remember to subscribe on your podcast app. Also, check out the website with show notes and additional materials at localmaxradio.com. If you want to contact me, the host, send an email to localmaxradio@gmail.com. Have a great week.
