Dan Hannum - Investing in Blockchain Technologies

JohnPaul: [00:00:00] Hey everyone, welcome to the podcast. I’m your host JohnPaul and this is Digital Gold. Known to many as the Bitcoin Kid, I started my own cryptocurrency out of my parents’ basement back in 2013. The goal of this show is to simplify the crypto world and explore how it changes the way the world thinks about money through conversations with thought leaders [00:00:16] in this space.

[00:00:17] JohnPaul is the founder and CEO of Orm Capital Ventures. All opinions expressed by JP and podcast guests are solely their own and do not reflect the opinions of Orm Capital Ventures. This podcast is intended for informational purposes only and should not be relied upon for investment decisions.

JohnPaul: [00:00:42] Today I’m joined by Dan Hanham. Dan is the founder of Hanham Capital Management, a capital management company focused on digital and blockchain based assets exclusively in the blockchain technology sector. Dan is also the CEO of Zen Ledger and has been fascinated by the custody side of crypto since the beginning of his participation in this space. [00:00:59] Before starting Hanham Capital Management, he was a buy side analyst and portfolio manager at TD Ameritrade, an analyst with blockchain capital. Dan has been the crypto space since the early days and is truly passionate about the future of the industry and helping his clients navigate the world of Bitcoin. Dan, welcome to the podcast. How are you doing

JohnPaul: [00:01:14] to that? I’m good, man. Excited to have some crypto with you and appreciate you having me on. Of course. So my first question I want to jump into is how are you introduced to the world of finance and then how did you end up transitioning or why did you end up transitioning [00:01:26] to crypto? Yeah. I’ll try to make this as short as possible. I guess medium-sized story is I originally went to school for criminology. I was a young 17, 18-year-old kid who just wanted to go

Dan: [00:01:37] to school and didn’t really know what they wanted to do in life. I went to school reasoning for criminology and then my sister was actually up in New York and venture capital and it’s about three years ahead of me. So she was just getting out of college when I was just getting into school. I’m going to open my eyes to what the market looks like for someone [00:01:54] with a criminology degree versus what it looks like with someone with a finance degree. I was always good at math and numbers and really enjoyed investing. At the time had a couple dollars here and there and nothing major. So that really sparked my interest. Then I went up to New York and visited with my sister for about a week or so. She set

Dan: [00:02:10] up still very thankful for what she’s done for me. But she set up about a week full of interviews with traditional banks, startups, fintech startups in the New York City area and was fortunate enough to be able to get a position with Goldman Sachs in their internship program. And that’s what kind of switched up the entire college experience came back [00:02:29] to school, ended up changing my major, ended up going up to New York for the summer and working for Goldman. It was a really great experience. I got into the nitty-gritty of what it takes to be in traditional finance. One thing I didn’t realize at the time was you needed a sponsorship to go through your series seven, series 63 and series 65. So

Dan: [00:02:46] I was studying on my own thinking I could just go online and take a test. But it was really amazing to have someone that was willing to sponsor me, really amazing to be in a culture like that. And that’s how I originally got my start within the traditional finance realm. Was lucky enough and I guess fortunate enough to do pretty well in that initial role and [00:03:04] was offered a position outside of school. Came back to school, ended up finishing up my MBA at the University of South Carolina and then went back up to New York and jumped full time into finance at Goldman. And then I went from Goldman to Morgan Stanley. And then when I was at Morgan Stanley, I had a lot of people around me that were really

Dan: [00:03:19] interested and fascinated with crypto. I was really interested, but more from a passive investment perspective. It wasn’t something that I thought that I could jump into full time. And this is back in like early 2015. So completely different market than we have now. I met with a few people and some of the people that I met with, but were the Stevens [00:03:37] brothers and Brock Pierce at blockchain capital. They were looking for an analyst to come on and just do all the, the nitty gritty grunt work. And I was just looking for an opportunity to be able to pursue my passion full time and was, was willing to drop everything in New York and move out to the West coast. And that’s kind of how we’d have the transition

Dan: [00:03:53] from traditional finance and the crypto went. So I know I said I keep it short, but I guess that’s like the medium version.

JohnPaul: [00:03:58] No, thanks for sharing that. So when you were with Brock Pierce and you were working and

Dan: [00:04:03] you said you moved over to the West coast, what exactly were you working on as an analyst in the space and the crypto space getting dropped into it? Yeah, pretty much everything. They were just getting the fun off the ground. I had made of probably 15, 20 investments at that time. And this was once again, like back in like [00:04:18] late 15, early 2016. So market was completely different. We were still trying to figure out like what everything was going on. One of the original projects that I was originally working on with, with Brock and Jara Willich was master coin, which is one of the first ICOs even before Ethereum. So that was like, that sparked an interest into smart contracts

Dan: [00:04:36] into scalability. And that kind of just opened up a plethora of other options that were interesting to me. But yeah, the original role was just a low man on the totem pole. Just we need to go figure out what’s the best hardware wallet, what’s the best way to keep our clients fun, safe, what’s a great custody solution, whether it’s like a bit go or I’m [00:04:54] trying to think of some of the other ones that are around at the time, like Anchorage wasn’t around and some of the newer ones weren’t around. So yeah, it was just, I know I was very fulfilled with crypto in New York. I was spending a lot of my nights and weekends and pretty much all of my free time just really studying crypto, speaking with people on, you

Dan: [00:05:10] know, Bitcoin talk forums and Twitter and everything else. And so I was just very thankful that someone was able to give me a shot and at the time I was able to get paid in Bitcoin. So that was probably a risky move at the time, but I worked itself out. It’d be too Bitcoin here, five Bitcoin there. If it was a, you know, pretty extensive analysis or research [00:05:27] project, it’d be a little bit more than that. So I was able to stack some of some Bitcoin pretty early on. And like I said, for me, it was just really thankful that I was given the opportunity to follow my passion and get out of traditional finance. Were there any like early stage companies that you guys passed on that actually ended

Dan: [00:05:41] up taking off at the blockchain capital with block peers that you remember? I’m sure there’s a few none that really like come to mind. I guess there’s two kind of disclaimers on that. Like one, the availability of early stage companies at that time was a fraction of what is today. But you can look up today and every week, or it seems every [00:05:58] week, either a new company is raising capital or a company that’s already raised a seed round is raising it in a or they raised an A and they’re raising a B, etc. So the venture markets in crypto five, six years later are so much more robust than they were then. There really wasn’t that many people wanting to get into crypto wanting to get into crypto

Dan: [00:06:17] full time. And at the same time, the idea is that we’re coming up weren’t very sustainable from a venture perspective. I think that’s something that a lot of people really don’t understand with venture capital is that having a small to medium sized business that’s, you know, profitable sounds really good on paper. But sometimes that just doesn’t fit [00:06:33] within your model. And for us, us now speaking for hand on capital and then even at my time at blockchain capital, having those companies that would, you know, five X, 10 X, 20 X were no the ways that you’re able to keep your fund going and keep moving forward. So yeah, the market was just completely different. I’m sure there’s a couple companies that we

Dan: [00:06:48] passed on that either raise capital or an interesting thing to think of is some of those companies or some of those ideas that may have been passed on have come back around three, four, five, six years later. And now they’re, they’re companies that have a good product market fit or just the timing. And I guess a very easy example of that is like the chewy.com [00:07:06] and pets example. Or if you look, or excuse me, pets.com and chewy, where you look at like pets.com came out in the early 2000s. This was before people were using cell phones and they weren’t really comfortable ordering things online. And now you look at chewy, which is exactly like the exact same business model cell dog food and dog treats and dog

Dan: [00:07:23] toys online. But they did it in 2008 when people were used to smartphones, people were used to shopping online. And now they’re like a $10 billion business. So there’s a lot of those where it’s not necessarily that the product or service was wrong or that the team was bad. It’s just the market timing wasn’t there. Yeah, there’s probably a few that we [00:07:39] had either passed on that have come back around or a few that may have been good ideas at the time, but just the market went in a different direction. So the good thing for me is I was able to do the way I look at it is I was able to be the Indian a little bit before I became the chief. And I think having the experience of working with people who really knew what

Dan: [00:07:56] they were doing, really knew the markets really had connections was really important and really set myself up for success. I’m getting into raising my own capital and then starting my own fund and managing that. So very thankful for my time there. And a lot of those connections have held through over the last five, six years where some of our [00:08:13] earlier investments through hand capital came from connections that when I was at blockchain capital or, you know, they were employees at a company that we invested in that left and started a new company or things like that. Yeah, it was a great time learned a lot and definitely wouldn’t be in the same position I am now without going through that

Dan: [00:08:28] experience. So Dan, you mentioned when you went from the Indian to the chief, I love that analogy.

JohnPaul: [00:08:34] Can you explain or talk a little bit farther on when that realization came up that you wanted to make your own firm, your own VC company and kind of what may do it and how did you

Dan: [00:08:44] feel, you know, during that process? Yeah, great question. So I guess the answer like the first half, like the Indian the chief thing, I think we’ve seen a lot of funds and especially more liquid funds. Once again, quick disclaimer, hand capital, we’re an early stage venture fund. So we don’t invest in [00:08:59] liquid tokens. We’re not buying token ABC and trying to sell it tomorrow for more than we bought it. We’re typically investing anywhere between 250 K to 1.5 million in the seed or serious A stage. So just like a quick disclaimer on that, but we’ve seen a lot of those liquid traded funds where someone comes in, they write a decent amount of content, they get

Dan: [00:09:17] a pretty big following on Twitter or within the crypto community. They raise capital from outside investors, but they don’t really have a solid track record and they haven’t gone through the ups and downs of the market. So when you’re investing in assets, when everything is going up, it’s somewhat easier to make money. But the real, the real skill is being [00:09:34] able to navigate the waters when when it’s a little bit murkier. So unfortunately, we’ve seen some high profile funds in our space over the last two, three years that have came out of nowhere, raised a bunch of money, but the darlings of the crypto markets for a little bit and just as quickly lost other capital and went right out of business. And I think

Dan: [00:09:50] a lot of that happened from there’s a difference between managing your own capital and the risk reward element to that and then managing other people’s capital. And I think that was one of the amazing elements that I learned, not only at blockchain capital, but in traditional finances, being responsible and being fiduciary to other people’s capital is way different [00:10:11] than just investing your own capital. So I guess that’s like the way that it’ll get like the chief and Indian perspective is, I really wanted to learn the nitty gritty. I wanted to see the good and the bad. And there’s definitely whether it was at Goldman or Morgan Stanley or blockchain capital, there’s things that every company has it’s, it’s fault

Dan: [00:10:27] or communication issues or whatever. So it was really important for me to have that experience to see what a really well run company looks like, what a company that’s really successful looks like, but still has some issues. And then just timing. Brock was getting into a new phase within his life of getting more full time involved with EOS and Block 1 and [00:10:46] was getting less and less involved with the fund. And I got an opportunity to sit on a board for a token called Gear or a green energy and renewables token. We had Stan Barty, Jim Rogers, Larry King, some other high profile individuals on board. And I was the ICO advisor for that project. So that was a really fascinating look into how to raise quote unquote non-deluded

Dan: [00:11:06] capital at the time, how to manage an ICO. And through that experience, I was able to get some of these really wealthy individuals participating in this ICO. And we were able to get the minute, I don’t know, I don’t remember the exact numbers, like six tenths of the cent, like something like tiny. And then through the crypto markets of 2017, that token went on to be like 14, 15, 16 bucks in [00:11:26] two weeks. And they all put in a million bucks here, two million bucks here, five million bucks here. And maybe to the listeners, that sounds like a lot of money, but to someone like, someone like those guys, that’s a drop in the bucket. To wrap up the story a little bit, they were able to make five, 10, 20 million dollars in two weeks. And one thing that rich people like is getting richer.

Dan: [00:11:44] So they were like, how do we get involved in crypto? And that was with the turning point where I felt comfortable with the experience that I had. I felt comfortable with my connections. I felt comfortable with all the things I was able to look at that, that kind of venturing out on my own kind of made a lot of sense. And then I was lucky and fortunate enough to have four LPs I [00:12:03] really believed in what we were doing, our thesis or value prop, how we were getting into crypto. And then for me, I was able to be early enough into crypto that I was able to make a little bit of money for myself. So I put up out of the 25 million that we raised for our first one, I put up a million of that of my own money. And I think that really made people feel a little bit

Dan: [00:12:20] more comfortable knowing that for them, it’s a drop in the bucket. For me, it’s my entire net worth. So if this thing doesn’t work out, I’m not going to be in good shape. So I think that skin in the game, they’ll made them feel a little bit comfortable. The fact that I had already made them a considerable amount of capital and short amount of time, I think gave them the insight that I knew what I was doing. [00:12:37] And that’s how HANEM Capital got started. We were able to raise 25 million back in early 2017. And then I’ve been able to scale up the operations of our company and our investment since then. So with HANEM Capital and the creation of that and the day-to-day running process of the company, what’s one thing that you thought was going to be easy, but actually turned out to be either

Dan: [00:12:58] much harder than you expected or just completely different in how you ended up handling the problem or that opportunity. Yeah, I think one thing that I think some people may not realize is running a fund is way more than just putting a dollar here or a dollar there. The operational aspect of having a solid team, having great analysts, having great legal, having great accounting [00:13:20] really makes a big difference. And that was probably the biggest struggle is at the time, this is 2017, four years ago. So I was 24, 25 years old. So for someone of my age to go to some of these higher profile people at Goldman at Morgan Stanley at City Group and say, hey, I would love for you to get rid of your four or five, $600,000 salary. I’ll pay you $80,000 and come work for me. So it was

Dan: [00:13:43] a little bit of a challenge to get really great people on board. And I think that’s a challenge whether you’re running a venture capital company or for us, a lot of our portfolio companies have that same challenge, getting quality people on part of your team and not only quality people from an intelligence perspective, but just like quality individuals, people that you want to work [00:13:59] with and people that you’re excited to wake up in the morning. And that’s not just make it sound like it’s all Sun Chimes and rainbows. But there’s still there’s always some day to day arguments or some disagreements or whatever. But just really building a team was an interesting perspective because I wasn’t the one hiring anyone at at Goldman or Morgan Stanley or boxing capital or any of

Dan: [00:14:18] my other stops hiring, firing, promoting, trying to figure out the company organization, what was really new to me. And it’s been a great experience learning a lot about that. But oh yeah, to answer your question, I think that was probably the most challenging thing was to get some high profile people that had very solid careers and very solid jobs to be willing to [00:14:39] throw that away and take a chance on a younger kid. And I think one of the ways that I was able to make that happen is we gave equity in the company and carry in the fund to a lot of our early employees. Financially incentivizing them long term was more important to me than hey, we’ll give you a hundred thousand or two hundred thousand dollar salary. But at the same time with

Dan: [00:14:57] running a venture capital fund, typically that initial capital or your management fee is really how you get the fund off the ground. What we have was a two and twenty percent management fee and then twenty percent performance fee. Two percent of twenty five million sounds like a lot of money, but it’s really not. So trying to get X amount of people hired, trying to get good accountants, [00:15:15] a good lawyers, get a good office space, good everything that goes into it, most of a challenge. But we’ve been able to scale and through that challenge, we were able to find the right individuals, the people that were willing to think of this more long term and the people that were truly here for the right reasons. And it’s worked out. But I guess that’s definitely was one of the

Dan: [00:15:33] biggest challenges was just the back end and the operational side of running a fund, not necessarily

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Dan: [00:15:42] currency mining world for individual investors, financial institutions, and energy companies. By combining over seven years of mining experience, 24 seven management and directly aligned incentives, Orm’s managed mining program is the simplest way to enter the digital currency mining market. To learn more, please visit ormcapitalventors.com. No, that makes complete sense. Was there any [00:16:01] points in running the fund where it might not necessarily didn’t perform well or was just on that moment of time where it’s right, the bounce before the crazy 2017 increase, where you’re on the edge of your seat, making sure everything is going well or after you’ve deployed the capital. Did you have any of those interesting moments in life if you

Dan: [00:16:21] grasp what I’m trying to ask? Yeah, yeah. No, I think you hit the nail on the head 2017, what was a pretty crazy year for us. We we raised our capital in February. So I think February 8th of 2017 was right when we finished up the first round. So 25 million in the door, all all signed away. We had a five year lock up period, which most venture capital firms have [00:16:42] some type of lock up, whereas a liquid fund will typically have either quarterly or annual redemptions where if you’re not happy, you can take your money back out. For us, it was you’re putting your money in for five years. And if you want to back out, good luck. So that was the ability to have that lock up really allowed us to think long term. And especially with venture

Dan: [00:17:00] capital. And at that time, they’re really still even 2017. There really wasn’t that many people that want to venture capital. For some of the listeners, I know this is a crypto specific show. So I imagine most people are familiar with ICOs, but a big kind of promise quote unquote with ICO, so that you’re able to raise non dilutive capital. So you’re able to raise capital without giving [00:17:20] up equity in your business, you’re giving up board seats, you’re giving up authority or control. So that was a big thing for a lot of companies that were like, why would I go raise money from venture capital, give up 10%, 20% of my company, have some VC on my board and blah, blah, blah, blah. So that was a big challenge for us was with us, we’re focused primarily on that early stage

Dan: [00:17:38] venture side. So seeing some of these tokens that were going up 10, 20, 100 X and a day or two, we definitely added some questions from our LPs that were like, we’d be willing to amend the mandate to allow for liquid investments. But I truly believe that the value would accrue on the venture side. So yeah, that was definitely a kind of an interesting period that October, November, [00:17:57] December of 2017, where it seemed like anything that had a ticker, pretty much anything that was listed on CoinMarketCap was going up 10, 20, 30% every day. So that was definitely an interesting time. But I guess on the flip side, you know, that was an advantage for us in the sense that our LPs are limited partners or the people that invest their capital into the fund and then we

Dan: [00:18:17] deploy their capital for them, they understood the venture capital methodology, they understood that we’d be a little bit slower to deploy, they understood that we would take our time and try to find the right fits and they understood that model. So I think it would have been harder for me to say, Hey, give me 25 million, I’m going to put it into some random token and there’s no [00:18:35] team and there’s one line of code on GitHub. And but trust me, to work out, like, I probably could have, but I just, I really felt that raising the fund the way we did in the style that we did, not only set us, but our LPs up for long term success. And I think we’ve seen that over 2018, when that ICO bubble popped, we saw a lot of entrepreneurs come back in, they want a venture

Dan: [00:18:55] capital, they saw the value of having strategic investors on board, they saw the value of being able to work with portfolio companies, they saw the value of having people that have done this and invested tens, if not hundreds of millions of dollars into this industry for the last five, six, seven years. Yeah, so I guess, you know, specifically to your question, that Q4 of 2017 [00:19:12] definitely was got a few emails or a few phone calls or that board meeting was a little bit interesting to be like, why aren’t you doing this? But yeah, I think at the time, and I still believe we set us up for success, not only for us internally, but for our LPs to have to know that they were, we were managing their money in a way that was long term focused and wasn’t short term. And I

Dan: [00:19:33] think that’s something that we’ve seen a lot in crypto is like we talked about earlier, fun pops up, they invest in a few things. So those few things go up in value, that kind of goes to their head a little bit, and then they put money into the next thing, and that thing goes down just as quick, and then the funds gone. So for us, having that cushion, having that long term perspective, [00:19:52] and having that relationship with our LPs was more important. I think that’s, you’re always looking for an edge when you’re investing and having long term focused LPs that understand your mandate, understand the methodology, and are really there for you have been an amazing advantage compared to some of the liquid funds that are dealing with quarterly redemptions where you

Dan: [00:20:11] have this great setup at the last minute the investor wants their money out. And all you want to do is say, hey, give me the next 30 days of the next 90 days, let me make this investment, the money will go up and they’re like, no, I just want my money. I think both ways of setting up a fund have their own challenges. But yes, that was an interesting period when it seemed like any token that [00:20:28] was getting listed was just going up in value. So Dan, you talked a little bit about how back in 2017, those tokens, people were raising capital as through vehicles, but they weren’t giving up any equity. And it was a little bit harder for VCs to get into the space. How has tokenization affected capital raising farther induced? Obviously, we had the ICOs, then we had the STOs, and now

Dan: [00:20:52] we’re almost in this like DeFi space where these token models are putting out governance

JohnPaul: [00:20:58] tokens. And that’s the way to govern and own that asset. How do you see this evolving? And how are

Dan: [00:21:04] you guys participating in that space if you are at all? Yeah, great question. I think there’s a few different things. One thing that I think a lot of people haven’t paid attention to recently is the reg CF adjustments. So before you could only raise a small amount of capital, I think it was up to a million dollars from a limited amount of non-accredited investors. And now you can raise [00:21:24] up to five point something, a little over five million dollars from non-accredited investors. And that was always like the big thing is the accreditation in investing has limited a lot of people that have the experience, they have the knowledge, they have the wealth, but they just haven’t gotten that accreditation yet. So I think that’s been a big thing. And I think something

Dan: [00:21:41] that would disrupt the venture capital industry moving forward is if you’re a VC that doesn’t not any value, you’re not going to get placements in any of these investments. And I know that’s kind of cliche to say we’re value ahead. But I think being in this industry for six, seven years, I think there’s a lot of value that comes with that, a lot of experience, a lot of we’ve seen, [00:22:00] a lot of the good and the bad. So I guess the reg CF is definitely something for a lot of venture capitalists, whether you’re in crypto or not in cryptotically aware of. On the token side, I guess we’ve seen different elements, like you said, we went through the ICOs and we went through STOs and we went through IEOs, your initial exchange offerings. There’s always been this

Dan: [00:22:17] theory that you could raise non-deluded capital and it’d be great. And don’t get me wrong, I think the idea behind that was valid. But I think even with a lot of those ICOs, you saw pre-mines or you saw early allocations to venture capital investors at very reduced valuations. And those valuations were obviously better than they were when they hit public markets. So by the time that token went [00:22:41] live, the early investors already made 51020X and then the public gets in and if they made money, good for them, if they didn’t, but the early investors already made money. So I think we’ve still had that insider, not insider trading, but the venture capitalists, especially in this industry, have had the value and the ability to get in early on a lot of things. And you brought

Dan: [00:23:01] up Define, I think that still holds true. Like when you look at some of the most valuable tokens, compound is raised venture capital money, Unistwap is raised venture capital money. They’ve since tried to go into the decentralization route of providing a token, providing a governance token, providing pass through ability for revenues. But most of the most successful [00:23:19] DeFi protocols have raised venture capital money. So I still think there’s something to be said for that fact. But I agree with you, I think we’ll see a trend of the exit to community style where you’ll have more community engagement. And then you start seeing companies like a Sushi swap, which is a Unistwap competitor that kind of popped out of nowhere, excuse me, had a few lines of

Dan: [00:23:40] code one night and they were able to take hundreds of millions of dollars in liquidity almost overnight. That was during the craze of yield farming. I think that the market was pretty frothy at the moment. But yeah, so I guess to answer your question, we’ve definitely seen new ways to invest in these markets. But I think one thing that you’ll notice, whether it’s DeFi or IEOs or ICOs or STOs or [00:24:00] whatever acronym we come up with next, I think you’ll still see the adventure capitalistic behind a lot of these projects. And I think there’s a reason to that as well. For those venture back deals that you were talking about referring to earlier in that you’re to be a venture back company, it requires a certain set of things. Assuming that the venture back those venture back companies are meeting that

Dan: [00:24:19] set of criteria, what’s the most important piece of the the criteria from being a venture back company that you guys focus on or that matters the most to you when evaluating a potential deal? Yeah, I think there’s like a checklist. And I think we covered one earlier, just like the timing and kind of using that like chewy at pet.com example. There is a lot of companies that [00:24:41] have a great idea, have a great concept, have a great product, have a great service, but the market’s just not ready for it. And we’ve seen that in crypto a ton of time. The timing is a big one. The team is a big one. And I think that’s one of the reasons why venture capital will stay around is the entrepreneurs that are coming around for a second time or we’re seeing especially in the

Dan: [00:24:58] last two or three years, a lot of really successful entrepreneurs from other industries, whether they’re in fintech or healthcare or sports and gaming or media. They’re starting to get into crypto. So having someone who’s raised capital before, having someone who’s built the team before, having someone who’s been able to recruit top talent to their team or organization is a big thing. [00:25:18] Product market fit timing the team. The valuation is a big one. We’ve seen in especially in early 2018, we’ve passed on a lot of companies just because of the frothiness from the ICO market, where they would look up and see token ABC raised $100 million. So they come in and be pre-product, pre-revenue and be like, we’re raising a $10 million seed round at $100 million valuation. It’s like,

Dan: [00:25:40] in what world does that make sense? Like, we have no ability to raise that. And if you’re able to, I wish you the best of luck, but that doesn’t make sense to us. So valuation is a big one. And we’ve seen, we’ve passed on deals where the valuation is just too frothy for what the company can hold. And you always have that tug of war where the entrepreneur or the operator wants to get [00:26:01] the most amount of capital for the least amount of equity to give up. And the venture capitalist sometimes will be the opposite. They’re trying to get the most amount. But the best investments, the best teams and the best VCs try to find that middle ground where a venture capital investment company gets to get a good allocation in a good team, at a good valuation, and is willing to not

Dan: [00:26:22] try to take the maximum amount to either bring in another strategic investor or to just, we’ve seen times where we’ll ask company to decrease the valuation a little bit, but increase the option pool for their employees so that they can go out and attract new people. So there’s a lot of different ways to look at an investment, but I think those are some of the biggest ones. We’re just timing [00:26:41] product market fit, the team, the valuation mark, the four big buckets. And then there’s a lot of kind of other checkpoints that you look off of. Is it a single founder? Are they co-founders? Are the co-founders? Are they aligned in the mission? Is one looking for a quick exit or quick acquisition where the other one’s looking to sustainably scale a company long term? Is the company able to hit?

Dan: [00:27:02] Can we talk about this early on? Is the company able to hit venture capital like returns? And if we invest a million dollars in the company and we make 1.1 million back five years from now, like that’s not very successful loss. And that doesn’t really fit within our fund. But for an average investor, oh, I’m up 10%. But that just doesn’t really work for us. So there’s a lot of [00:27:21] kind of intricate decisions that go into making that final investment. But there’s definitely like a checklist that we go through of looking through the team, looking through the product, speaking to partners, a lot of times if even if they’re pre-products or pre-revenue, they’ll typically have a partnership that’s in place. Or we’ve had this MOA in place with company XYZ

Dan: [00:27:42] that’s going to purchase our product, your purchase our service. So meeting with employees, meeting with partners, meeting with other investors, whether they’re previous investors or co-investors or potential co-investors are really big. So there’s, as we mentioned earlier, there’s a lot that goes behind running a venture capital firm that just we have $1 and we put $1 here. But those are some [00:28:01] of the high profile things that we look at. And then there’s a lot of things in the mix between the moment that our analysts first meet to the team before I meet with the team. And then for us, we have an investment committee where we meet as a team to finalize investment before it goes out. So even though my name’s on the door and my name’s on the firm, I’m not the sole like I’m the sole

Dan: [00:28:20] GP. So I get to ultimately make the decision. But I still rely on my team heavily for their feedback, for their insight and for their experience and their knowledge. So yeah, there’s definitely a lot of different factors and a lot of variables that go into play to finding the right fit, finding the right team and really just believing in that team. And especially with where we invest [00:28:38] at the seed in Series A round, a lot of the times you’re betting very heavily on that team. It’s not, we can look at the company they’re doing 10 million in revenue and if we invest 5 million, they can get scaled to 50. There’s times you can do that with a Series B through Series F or whatever. But typically on the earlier stage, some of our companies pre-product pre-revenue,

Dan: [00:28:58] they’ve never sold anything. They still need to go hire new people. They need to do all these things. And that’s really where that value ad comes from. We can really set them up for success and really eliminate a lot of that headache, a lot of the time and take care of a lot of that back and stuff for them so they can focus primarily on the product you’re on the service. So I know [00:29:14] that’s a lot to throw out there all at once. But yeah, there’s definitely an interesting checklist to go through. And I think each firm kind of has their own perspectives on how to invest as well. So I don’t think it’s like a uniform standard at all.

JohnPaul: [00:29:29] Dan, I appreciate you touching on all those. I think there are key points for everyone who’s

Dan: [00:29:33] looking to raise capital. Do they understand what makes a VC backed business, what makes it an appetite for a VC? When it comes to the team, you mentioned a couple of times new players coming onto the space, coming into blockchain in 2020, seeing the opportunity of maybe using the token models to incentivize communities and really just innovate with the overall technology we have here. [00:29:56] My question for you is, is most of those guys, as you mentioned, have already had one successful either exit or a company and they have the experience in building the team. And as you mentioned, that’s one of the most important things. But for you, it seemed that you started at Goldman and then you went to the blockchain capital. Where did you get that hunger and that work ethic needed,

Dan: [00:30:15] but to be able to be at that level where you were able to get those early wins to then set yourself up in your career where you are today? Yeah, great question. I think even going back to Goldman, as we talked about through my educational experience, I originally went to a very small school in Pennsylvania called Indiana University of Pennsylvania, or IUP. It’s a school like a [00:30:36] very big party school I’ve heard. Maybe it’s something different. You’re definitely the right one. It’s like literally the IUP Santa, I usually party. Anyway, so I went to a really small school for the listeners that are listening not to toot my own horn or anything, but I just worked with Forbes last week to do a profile on some of the nitty gritty of my life. And

Dan: [00:31:01] I’ve had my share of ups and downs and got into a lot of trouble when I was in high school and that kind of eliminated a lot of the options that were available to me to go to school. And I think IUP was willing to take a chance on me because I was from out of state and was paying like five times more than someone from in state. So I think they’re like, all right, we’ll give this [00:31:17] up. We’ll give this enough. Go ahead a shot. And if he doesn’t work out, we just we made quick dollars. So anyway, so I guess the hunger came from the fact that I went to a really small school. Like I said, my sister was very instrumental in getting me a foot in the door at some of these institutions. There is no reason why I should have ever gotten an internship should have even gotten

Dan: [00:31:37] an interview let alone. But that was the hunger where it came from. Like during my internship, I was the only person in my internship class that wasn’t at Warren that wasn’t at you know, Goldman or excuse me, Coleman, that wasn’t at Harvard that wasn’t at Yale that wasn’t at one of these Ivy League schools. And I think that was humbling but also the same time super exciting. And this [00:31:57] is not like a knock on anyone that has successful parents or had an easier childhood. But I came from an area where I really had a hustling grind and that hustle got me into some trouble. But that hustle also set me up for a lot of success. And I knew that once I was able to get my foot in the door with a company like that, that I would outwork out hustle out grind do whatever I needed to do

Dan: [00:32:16] to show them that I was worth it. And I think that’s the unfortunate part is Wall Street is still a very much a walled garden where if your dad didn’t work on Wall Street, or if your uncle didn’t work on Wall Street, if you didn’t go to the Ivy League, or if you don’t have some type of connection, it’s a really difficult industry to get your foot in the door. And like you said, I was very [00:32:34] fortunate that my sister was able to be that conduit to me getting my foot in the door. And I knew that if I was able to get my foot in the door, that I’d be able to show the value that I could bring. And I think that hustle that grind that tenacity has carried me through everything, whether it was in traditional finance, whether that was early on in crypto, whether that was

Dan: [00:32:52] the through hand of capital, or even now my day to day role with Zemlager, that hustle, that grind, that tenacity, doing things the right way, being very careful about the relationships that I craft and really caring about those relationships, making sure that I don’t burn bridges. Just a lot of stuff that sounds very intuitive, but it’s hard to do. I really came from feeling [00:33:12] that I was lucky to be in a position that I was in. And I knew that a lot of people would do a lot to get in that position. And I wasn’t going to squander it. And I wasn’t going to let it go to waste. And you know, as I said, once I knew that I was able to get my foot in the door, I was the one that was getting into the office three hours before it opened. I was the one that

Dan: [00:33:28] was leaving at midnight, probably not the most healthiest thing for my mental health or sleep schedule. But I was just, I was hungry and I was willing and I was so thankful and grateful that someone was able to give me a chance. And also, when you have someone that vouges for you or someone that’s willing to put their name on the line to get your foot in the door, there’s a sense of [00:33:47] obligation to make sure that you don’t make them look like a fool. And I wanted to make sure that my sister and her friend who was able to put me at the top of the list for the internship internship class, that they weren’t three months later, like, you guys, who is this kid? Why? Well, you’re an idiot. He shouldn’t ever been here. So there’s a lot of factors that came into play

Dan: [00:34:06] and right around that time, not to get into anything too crazy, but I had made the decision to stop drinking alcohol. And that was a game changer for me. It really cleared my head and made me realize what was important to me in life, who was important, what I wanted to spend my time on. And as we talked about, that was why I was willing to take, I think when I was leaving Morgan’s [00:34:24] hand, I think I was making like 350 a year. I was like 23 from the outside, a pretty decent life. But I was just like miserable. I was working like 18 hour days. I wasn’t fulfilled with what I was doing. And I really sat back and I had a lot of really great mentors that were like, you’re going to make money wherever you go. You’re going to be successful wherever you go. So go do something

Dan: [00:34:41] that you actually want to do. And that’s once again, was very fortunate that someone was able to give me a position within crypto where I could make a little bit of money, have a roof over my head, have some food in the fridge. But I think it all started from that hunger, that tranacity and the ability to really take control of my life. And I knew that if I could get myself out of the way, [00:35:00] that I could make my life wherever I wanted it to go. So that’s where that like hunger or driver’s nasty came from. And I think it’s carried over, you know, well to the other positions that I’ve gone through. And I think that’s been a big blessing of me is I’ve always tried to do things in the right way. So when I left to Goldman, when I left to Morgan, when I left to blockchain capital,

Dan: [00:35:19] making sure you give notice, making sure you leave on the right terms, those relationships have come back tenfold where, you know, friend at Goldman’s like, hey, my friend’s raising capital, they’re doing XYZ. And you get you get an introduction there. No, not to keep rambling too hard. But yeah, so I think I came from just a place of gratitude and thankfulness and knowing it’s a scary thing [00:35:40] to think of. But for me, I feel more comfortable knowing when the ball is in my court than when it’s in someone else’s court. And I think a lot of people have this, I won’t say fake, but they have the sense of security when you’re an employee that every Friday or, you know, every two weeks, you get your paycheck. But that seems secure to me. And I saw so many people get fired instantly or

Dan: [00:36:01] laid off or just thrown out with a win. And it was like, my life is my life. And I think if I can not control it, but if I’m very willing to bet on myself is how I wrap that up. Didn’t know that was all great. There’s so many follow up questions I have after that. One of the things I do want to touch on you mentioned in the Forbes article that you were recently featured in [00:36:21] where you went in that deep dive. If you if you’re a listener will be linked in the show notes, it was really great read to just understand your background. And in that kind of the end of that article, you mentioned something where it says to get unstuck, you’ve got to identify where you’re at, where you want to go, and what you can do today to support where you want to go. Creating

Dan: [00:36:38] your life is about knowing exactly where you are, and then doing things for exactly where you want to go. I agree with you completely here. One of the things that I’ve been telling myself and have been working on is that fictional reality or the fictional perception of ourselves we have in the future and trying to get that almost as close as you can to where your current situation is, [00:36:55] and then building from there. And so on to that, with that topic in mind, what are compounding activities or what compound activities are you working on every day? And how long have you been working on these different problems where you’re working on these habits and really building results? As you mentioned, it takes a lot of time and you have that longer outlook,

Dan: [00:37:15] and you’ve been betting on yourself. Yeah, great question. I think something we touched on briefly was the sobriety aspect. And I think the longer you go, sober, the easier it tends to get, but it’s still somewhat like a daily battle, daily struggle. And especially when you start seeing success, it’s really easy to get back and kind of those old habits of those old ways. And I think that [00:37:38] was the story I kept telling myself was I had a good degree. I had a good MBA. I worked at a good firm firm that everyone across like pretty much anyone who has an internet connection has heard of Goldman before. And so I had all these things on paper where I was like, oh, my life is good. I’m making really good money. All these like kind of things that like went from the outside

Dan: [00:37:57] looking in, you’re like, oh, like you must live a great life. Internally, I was drinking a lot, living in New York City. Unfortunately, there’s not too many activities that you can do outside of going to this is all pre COVID. Going to bars, going to nightclubs, going to restaurants. One of my first positions was in our client success department. Literally, I think I got paid like [00:38:15] 80 grand a year just to take people golfing and take the restaurants and take them to dinner. And it was like the best job you could ever imagine coming out of school. You’re like, wait, you’re going to pay me to go do this stuff. That kind of just led me down to a spiral where it was a couple drinks at at a dinner, then a couple drinks because the football game was on, then it was a couple

Dan: [00:38:31] drinks because it was a day ending and why. And it was spouted in that sense. But I think I kept holding on to the fact that I was like, I have good friends and I went to school and I don’t have a DUI. And like, my wife’s not divorcing me or all these kind of like rock bottom things where I think people like people don’t realize that you can change your life before you hit that kind of rock bottom. [00:38:51] I guess to answer the question specifically, drinking is definitely a big one. A very fortunate enough that I’ll be five year sober of alcohol in March of 2021. So that’s something that like you said, it’s definitely now going into year four and a half year five. It’s not as day to day as it was for the first 30, 60, 90, 120 days where it was a real struggle to, you know, stay sober and

Dan: [00:39:13] not drink. So that’s a big one. And that’s opened up a lot of other doors to more of a holistic lifestyle. So whether it’s like dieting, whether it’s eating well, going to sleep on time, actually having a sleep schedule was another big thing that I didn’t care about forever. This works at the office till 1 a.m., 2 a.m., go to sleep for three hours and wake back up at 5 a.m. and go right back to the [00:39:32] office. And I was part of that like hungry tenacity work ethic. But at the same time, it’s not very sustainable. And that’s really where my focus shifted into short term thinking into long term sustainability. And that’s not only through the way that we invest, but the way that I live my life. Eating healthy, going to sleep on time, having a good sleep schedule. For me, I do yoga three

Dan: [00:39:52] times a week. I’m like, unfortunately, I live here in Los Angeles and we have great beaches and great hiking trails. So going out hiking, going out on my paddleboard, going out surfing and just being outdoors and in nature has been really impactful for me. Breath work and meditation has been a big one. Physical activity on a former athlete, more of a wash up has been than an athlete. At this [00:40:15] point, some part of my head likes to think that I still have a step here or there. Whether it’s getting out and running or just going to the gym or even now like having some dumbbells laying around the house or throwing up YouTube and watching like a yoga class or a Tai Chi class or a home workout class where you don’t even need weights. You can just do a lot of like body work and core

Dan: [00:40:33] work and push ups and pull ups and sit ups and a lot of boring stuff. But like stuff that like really makes you strong really quick. Yeah, I guess that’s the way that my mindset has shifted into what can I do today that puts me in a great position tomorrow. And I think the tail end of that quote that you brought up earlier kind of highlights that as well is I forget the exact wording I put [00:40:50] but be in patient with your actions, be patient with your results or something like that. And I think that’s really true is you can only control today and you can only control this hour. You can only control this moment. And if you can continue to do the right things day in and day out over the course of a week, probably nothing’s going to change. But if you keep trying to go to bed,

Dan: [00:41:08] my motto is I want to go to bed with a couple more dollars than I did with when I woke up with some better relationships with better a better feeling. Just knowing that I’ve improved myself every single day has been a really amazing. So like viewing myself as like a software like you have version 0.01 and then point two and point three. And that’s how I view myself is if I can continue [00:41:29] to prove each and every day when I look up six months or 12 months or 18 months or in March, it’ll be five years without drinking. And if I look at where my life was five years ago versus now, it’s night and day. But that didn’t come from just saying, oh, I’m going to do this in five years, it came from, I’m going to do this today, I’m going to choose not to drink today, I’m going

Dan: [00:41:45] to choose to go on a run, I’m going to choose to eliminate the people from my life that aren’t adding value. I’m going to choose to welcome in the people who I thought were weird because they didn’t want to drink the people that were like, yo, let’s go play chess, let’s go do some other, let’s go golf or let’s go do something other than just sit at a bar for four hours. I’m like, [00:42:03] that sounds horrible. So it’s, I guess a way to look at it is if you can make those long-term decisions, but be very short term in the way that you do that, just continue to improve each and every day, you look back over the course of a year, over the course of two years. And I think your life will be night and day, but I think that’s something that sobriety really taught

Dan: [00:42:19] me is, and I know this may be a little controversial because some parts of alcohol, anonymous or other groups are very religious-foken, but I truly believe in my heart that it’s a decision that I make every day. And I believe that if I wanted to go to the grocery store right now and buy a 12-pack of beer, I could. And if I wanted to come home and drink them all, I could. So for me, [00:42:39] I truly believe that I’m making that choice not to drink, and I’m making that choice to surround myself with people that are welcoming to that moment. And that doesn’t mean that everyone in my life doesn’t drink. It just means that like the people that would drink 18 beers because it was a Sunday and we’re watching the Redskins game or excuse me, the football team game or whatever they’re

Dan: [00:42:59] called now, it was just a different topic. I guess that’s a way I view it. I think that’s, I think a lot of people got some value out of the end of that article because I think people look up and that like Bill Gates quote, if you underestimate what you can do in whatever year and you overestimate what you can do in 10 years, it’s true. And you just need to break it down, take it day by day. And [00:43:17] that’s the key. But the last thing that I would say is just you are on this earth to live your own life. And if you’re okay with living, you know, the life that you’re living, then good for you. I just, I wasn’t okay living in kind of mediocrity. And I wasn’t okay with knowing that I could do more and knowing that I could be a better person and knowing that I could have better relationships

Dan: [00:43:37] and knowing that there was just so much more out there for me to enjoy and experience and do in life. And like I said, I knew once I could get my own self out of the way that I could be able to go experience those things and have those memories, have those relationships and have that at that time. So I guess that’s kind of like the way I look at kind of those like sustainable habits and [00:43:56] pick some that add value to your life. But stay true to them and make sure that you continue them even when you start feeling a little bit better. And I think that was always a challenge for me is you wake up on a Sunday morning after going out all night on a Saturday. And I’m sure we’re not the only ones that have probably said, I’m never drinking again. And then they Tuesday rolls

Dan: [00:44:13] round. You’ve you haven’t drank for a few days and maybe worked out once or twice, you’ve gone to work, you’ve hung out with some people and you’re like, Oh, like I feel better. And then then those decisions don’t become as prudent. Yeah, not to ramble too much. I think just making sure that you’re focusing on what’s important to you living the life that you want to live is number one. [00:44:31] But I think there’s a lot of people out there that have that inkling from more and they’re willing to not or I don’t know if a willingness to write word that they’re just they’re not as hungry to go chase whatever that is. And I think I’d rather go on my deathbed and be like, I wish I didn’t do that then I wish I would have. And that may be right. That may be wrong. But I’m very thankful for all

Dan: [00:44:52] the good and the bad of my life because it’s put me to the point where I am today. And I know a lot of people, whether they was high school or whether it’s college, especially from my area right in the Northern Virginia DC area where it’s you’re supposed to do everything the right way. You’re supposed to go to school, you become a doctor, you become a lawyer and you’re supposed to have [00:45:08] this amazing life on paper. But a lot of those people that I know are like miserable. They have a mortgage that they can’t pay for. They have five kids they can’t really spend time with. And it’s just I was willing once again, whether it’s life or business or whatever to go bet on myself.

JohnPaul: [00:45:22] And it’s worked out pretty well. Wow. Thanks, Dan. That was a lot. I appreciate it. I think one

Dan: [00:45:27] of my favorite quotes was you said you’re on this earth to live your own life. And that life, everyone has their own idea of what that taste looks like for them. It has their own goals and things they’re working on. That was amazing. One of the questions I had after you mentioned that was your accountability network. And I know it’s super important when you’re working on changing [00:45:48] challenging yourself, changing some of these maybe core ways you’re looking at your life and trying to build these compounding daily habits. How have you seen how has your accountability group changed, I guess, over the years since five years ago to where you are now? And how is that how are those people supported you or that network of people supported you over the years?

Dan: [00:46:07] Yeah, great question. I think there’s two things in there. The one thing that my mentor taught me a long time ago was when you’re looking to elevate your life, having three buckets of people around you is really important. You want one bucket where you’re a little bit farther ahead. You want one bucket where you’re pretty much neck and you want one bucket where you’re really behind. The bucket [00:46:26] where you’re a little bit ahead allows you to know that you’re doing pretty well and that you’re it’s not necessarily a comparison, but it’s you can peg where you are versus where someone else is at. Having that head-to-head person is what kind of drives you day in and day out, whether that’s a friend or relative, whether that’s in a business, you’ll typically have some competitors that are

Dan: [00:46:44] doing the same exact thing as you and knowing that you’re competing and thriving is going to benefit you both. And then having someone that’s way ahead of you and that’s where I’ve been really lucky. So I’ve been able to get really great mentors that have been there and done that and they’re willing to go lend their time back to me and say, hey, I’ve been in your shoes and I’ve [00:46:59] been there and I’ve done that. And I wish I could say that I’ve listened to every single advice, but there’s a lot of things that I’ve had to screw up on my own to figure out. But those are the three buckets that I’ve really looked at. And I think if you can find those people around you, whether they’re students or colleagues or other professionals, it’s really important just to have

Dan: [00:47:17] someone you’re a little bit ahead of, someone you’re competing with and someone that’s really ahead of you really helps you put stuff in perspective and really allows you to continue to move forward. And then on the other end, to answer more specifically the question, it’s been a whirlwind. A lot of the people that I was around five, six, seven years ago, I don’t talk to at all now. And that may sound [00:47:36] like super depressing or like super like, oh, that kind of sucks. But for me, it was such a blessing. It’s a cliche topic, but you like you are who you surround yourself with. But it kind of is. And as much as I like to think that I’ve been like a leader my whole life, I’ve definitely been a follower. I’ve definitely been peer pressured into other things or if you’re with four people

Dan: [00:47:55] and those four people, all they want to do all day is drink, smoke, pop pills, do whatever like you’re probably going to fall into that trend because those are the people you’re surrounding with. And those are the priorities that like your friend group and your tribe really care for. So it’s definitely been like a 180 like the people that are in my life now, I guess on the new side [00:48:13] are people that enjoy bettering themselves. And that’s not necessarily just physical or mental or whatever. It’s like holistically just being like a better person each day. And I think being a better person for me equals hitting those buckets. So like having a decent physical typically shows that you care about yourself and typically shows that you’re willing to

Dan: [00:48:32] work pretty hard to get to that perspective. It’s pretty hard to whatever bench xyz or keep a six pack or whatever. Like you have to make some sacrifices whether it’s your diet or your eating habits or just go into the gym. A lot of we all have time to binge watch Netflix for 10 hours. But we all are like, I don’t know if I want to go to the gym for an hour. So it’s [00:48:49] finding the right priorities. And then I’ve been fortunate enough to have a really great support system like really close to me. So like my mom, my sister, some like really close friends from growing up have been there for me along the way. And I think that’s why that Forbes article is really cool for me is I have a lot of people in my life, especially from like middle school high

Dan: [00:49:08] school that like the last time they saw me, I was in handcuffs getting sent away. And now they see me like on they log into Forbes.com and see my face on the front page. And then vice versa. There’s a lot of people over the last five years that have seen this like meticulously crafted, well organized, well put together person. And there’s no way that like you went through all that other [00:49:27] stuff. But anyway, so I’ve been fortunate enough to have a really solid group of friends and family that have stuck with me through thick and thin. Good times, bad times, and we’ll continue to do that. And I’m a very loyal person. So those people are the ones that will get anything they need for me, whether it’s my time, my money, my connections, my resources, whatever I can do,

Dan: [00:49:46] they know that they I got them and they got me. And that’s amazing. And then that outside friend group has definitely changed over the last five, six years. Like, I’m no longer willing to be in positions that I don’t want to be in. And that sounds really selfish. But once again, we talked about it, it’s your life. And if you’re not selfish with your own life, then no one else [00:50:05] is going to care about it. So being able to craft who I spend my time with, being able to craft people around me that don’t have drama. And that’s not to say that life throws curveballs at you all the time. So it’s not like everyone around me lives this perfect meticulous, nothing ever happens in their life. But there’s there’s life drama. And then there’s drama that like we create. And like

Dan: [00:50:24] that created drama is what I’ve been able to get rid of. And just have people that around me that enjoy bettering themselves. And there’s things that I enjoy doing. And there’s things that they enjoy doing. And we’ve had those trade offs where they’re doing something that’s really cool and really interesting. And I like to learn about that. And like vice versa, I’m doing something that’s [00:50:40] really cool. And they like to learn about that. Just having people that really want to continue to better themselves each day, weeds a lot of people ahead of your life. Because it’s not very common to find that. But once you find that, and you get that tribe around you, that tribe can be really instrumental into how you continue to move forward throughout your life. So Dan, with that supportive

Dan: [00:50:56] tribe that you’re mentioning, that is one of the most important things for being able to take the risks that you’ve taken so far in your life to get to where you are today through Goldman, through launching your firm, through being an analyst. I guess I want to hit on that risk question, which is in your eyes, what is the biggest risk that you’ve taken so far in your life? And how did [00:51:17] that end up paying out? Or how is that playing out currently? The one that I would put as the biggest risk was probably early on. And I think I touched on it a little bit in that Forbes article was when I was like 16 or 17 years old, I had a big tendency and habit and enjoyment for cannabis. And it started off pretty small, where me and a friend and then

Dan: [00:51:43] me and a friend of a friend and Yada Yada, so on and so forth, had another friend who had an older brother who was in college at the time. So we were able to get a lot of quantity. And then we went from eighth grade into high school. And you go to high school with, I think, our graduating class was like a couple thousand people, like very big area. So anyways, one of my biggest risk, [00:52:03] I think, was starting this like weed selling business, pretty much. I had people from all these different surrounding schools that were selling it for me. I was like the CEO of the organization, hacked like my lieutenants. And if you’ve ever seen like the show wire, it gives you like a good example of trying to make this into a sustainable business. And taking

Dan: [00:52:23] that risk really taught me a lot about business. It’s taught about marketing, supply chain management, accounting, finding the right people. We talked about team adventure, having the right people along, even if you’re selling weed is super important to have good people that aren’t stealing from people that you trust, etc. So that was a really big risk, but had a lot of really big rewards. [00:52:42] But also that risk turned into kind of like that big element in my life that my life really changed from. So I ended up getting in a lot of trouble. I had like a couple run-ins with the law. And then one night it was more of a bust. Someone down the line had gotten caught and said, you know, some stuff. And I was driving down the street one night and about four or five cop cars came

Dan: [00:53:03] out of nowhere, not like a tropical traffic stop. Like, surrounded my car, what right to the trunk. It was a very well planned organization in operation. And that was the end of my athletic career. I was playing three varsity sports at the time, got kicked out of the sports. About two months later, got kicked out of the entire school, got kicked out of our entire county school system. [00:53:23] And then I ended up spending like a little over my year of my life in a juvenile detention center in a six by six concrete slab for 20 hours a day. And that risk really sucked. But that was like one of the best things of my life is it really won. If I didn’t get in trouble then I would have kept going. And a year and a half later I would have been 18. And that would have been like the

Dan: [00:53:41] end of my life. So I’m very fortunate that it all happened when I was at juvenile, not only because of the sentencing, but also because of being a juvenile, you can go through different programs. We’ll only expand your record if you meet, you know, certain standards. And that’s once again, I got very lucky that on the day of my sentencing, there’s this program called beta, which was like [00:54:01] an 11 or 12 person program. And if you’re able to get through that, you had to come these perks and you’re able to continue to go back your life. And anyways, I was supposed to be getting sent down to Hanover, Virginia, which was a facility, a juvenile facility right across from a prison. And literally they send you there so that when you turn 18, you like you walk across the street

Dan: [00:54:21] and you continue your time in big boy prison. So that was supposed to be my life. And that was just like, all right, I’ve this one up and that’s it. And I’m done. And the day I was supposed to go to sentencing, one of the kids like fought a guard and got kicked out and they had one spot open. And I somehow got that spot was able to get my head back on my shoulders. In Fairfax County, it’s a very [00:54:42] like wealthy area. So we had really great support staff around us. Like we had drug and alcohol, as part of the program, we had a therapist we met with every week. We had like yoga and Tai Chi classes. We had all these things to try to help rehabilitate me and the people that were in our program. So long story short, I think the biggest risk reward was definitely that.

Dan: [00:55:03] The risk was doing making those decisions I made. The rewards was a lot of that lifestyle. Like I think I was like a 15 year old kid making 10, 15, 20 grand a week when the teacher who’s trying to teach me science was making like 30 grand like the whole year. So that reward was there. But then also getting into trouble really was the biggest blessing for me because it helped [00:55:22] me get on the right track. I was able to sit there for a year and just read books and study. They were they allowed me to leave the facility for a day to go take the SAT, which allowed me to get into school. But yeah, that’s like really where my life changed. I don’t I think I generally think if I didn’t get in trouble at that time, I just would have kept going. I would have kept

Dan: [00:55:39] getting more and more involved and the operation would have kept bigger and bigger. And then I would have been 18 and it would have been game over. Yeah, I think that’s like the biggest risk that I’ve taken was being the risk was making decisions that allowed other people to have control over your life. And that sucked knowing that I couldn’t go shower when I wanted to. I couldn’t go leave [00:56:00] when I wanted to. I couldn’t even stand up when I wanted to. I couldn’t eat when I wanted to what like lights out was at 9 p.m. It’s like the first few weeks I’m used to being up at 2-3 a.m. partying. I’m like sober staring at a concrete wall and like hoping I can fall asleep. Yeah, it was a it’s a very crazy experience. One that I don’t wish upon anyone. But one that really set

Dan: [00:56:20] my my trajectory in life in a different path and one that really made me very comfortable with me. And as we talked about when you’re in a six by six cell for 20 hours a day with no phone, no laptop, no nothing, you really get to know yourself pretty quick because there’s nothing else to really do. And that’s something that I am very grateful for and something that I think a lot of people [00:56:41] haven’t had the experience because sitting with yourself and sitting with those like those demons and those those things that you don’t like about yourself is not very comfortable. And a lot of people don’t have to do that because they’re not forced to and being forced to really understand who I was as a person what I wanted to do where I wanted to be who I wanted like who I wanted to be.

Dan: [00:57:02] I didn’t even know who I was. I was just like I was some kid trying to figure out his life and so yeah that was the biggest risk reward and the best kind of underhanded blessing that has ever come around and then was fortunate to be able to get into IUP. And then that led me into the University of South Carolina. I ended up transferring because the internship they’re like you need to [00:57:22] go to school that you know actually has a business program and then that led to a lot of different things. So I was probably like the biggest risk but also biggest inflection point of my life. It was that year and a half from 16 to 17 and a half. No that sounds like a huge inflection point just about how your identity was changing as you mentioned being able to ask those questions

Dan: [00:57:41] of yourself of what you want in life where you want to go. Having that year many 17-18 year-old kids they don’t get that opportunity it’s just not it’s not they don’t have to think about it. They’re in their own protected space. They go to college they’re just following the steps and they’re not actually asking themselves those hard questions of what is the life they want to live. And it sounds [00:58:00] like that up that risk that you took ended up providing an opportunity where you were able to make have those to take those questions make those have that conversation with yourself and then move forward. Dan so my last question or one of my last questions with you today is I want to

JohnPaul: [00:58:14] understand you where do you see yourself in two years and what are you most excited about when

Dan: [00:58:20] working with Zen the Zen ledger in your day-to-day job there. Yeah I don’t know where I see myself in two years is I’ve never really been good at that as we talked about earlier I’ve never been good at being like in two years in five years in ten years I’m like what can I do today and if I can continue to do the things I’m doing today then in two years I’ll be okay and that’s like the saving [00:58:42] grace for me is my day-to-day life is largely in my control which I’m very thankful for. I have my own company that’s we have eight full-time people working from on the Hennem Capital side on the Zen ledger side we’re about up to about 20 full-time people across eight states and two countries so I’m very thankful that I have two businesses two methods of income two things that

Dan: [00:59:01] not only just on that short-term income but two two companies that are doing very well that I own significant positions and one especially on the Zen ledger side has a really good opportunity to have an exit in the next few years we have about 30,000 US customers US-based paying customers which when you start looking at the landscape in crypto there’s not that many companies that can say [00:59:21] we’ve raised about five and a half million dollars in capital from some of the leading angels and investors in our space we’ve been able to scale a really great team you know we’ve gone through my trajectory my background Brian our CTO sold his last business for two point three billion dollars he’s been there he’s done that our CEO Pat has been around the block with his own businesses

Dan: [00:59:40] you Chicago Booth MBA Air Force captain as we talked about going through that checklist on an investment the same checklist I went through on joining a team and I was always looking for the right opportunity to get back on the entrepreneur side the table really was really wanted to be a part of something and building something and I think investing is great and I’ve [00:59:58] learned a ton from investing we’re still actively deploying capital but really being on the day to day has been really rewarding and also really challenging we talked about you look on the outside of a lot of companies and all these good stuff but like the day to day there’s a lot of blood, sweat, tears, anger, emotion, happiness, joy, etc that goes into running that and that’s life like

Dan: [01:00:20] the all the messy middle is like the fun stuff I don’t know if fun is the right word but the the rewarding stuff so I don’t know where I’m going to be out in two years I just know that if I can continue to make the right decisions day in and day out then that’ll take care of itself as far as Zendlager I’m really bullish as obviously I’m very biased as an investor now an operator [01:00:38] of the company but we walked through the executive and C-suite team but we’ve been able to assemble a really great staff not only on a development side on our sales side on our customer support side as I mentioned I’m definitely very biased as an investor now an operator but I truly believe we have not only the best customer service in crypto but one of the best products in crypto and

Dan: [01:00:58] one that actually is needed and you can always get into the conversation on taxes should we pay taxes should we not but that’s the decision that I don’t get to make so all I can do is taxes are a thing and if we can make them simple and easy for for users that’s a win and that’s what really led me into Zendlager at the beginning was I the first IRS notice around having to file crypto [01:01:20] taxes came out in 2014 and I know a lot of people are just now waking up to the fact that they need to pay taxes but it’s been a thing for six years that few are investing in crypto and not paying your taxes obviously we can get you squared away but but anyway so at the time I was using like handwritten notes and Excel spreadsheets and Google Docs and it was just like a mess so having

Dan: [01:01:39] software I could just throw in an API key for an exchange throw in a wallet address and be done and it just auto-populate my tax from so it’s like that’s great and those are some of the best companies is as a founder as an investor would you use this product would you use this service and not only me but pretty much everyone I knew back in like early 2016 early 2017 especially in 16 [01:02:01] when the market was starting to increase then 2017 things went crazy a lot of people were making a lot of money and had no idea how to handle any of their taxes and a lot of these people also have other things like they have a K1 from running their own company or they have a W2 they have a real estate income they have XYZ outside of crypto so making sure that you have your crypto

Dan: [01:02:18] and non-crypto accounting and taxes done it’s like a no-brainer so anyways looking through that checklist that we talked about earlier good team good product good service the beautiful part about our company is it’s not optional you have to do your taxes or I guess technically it’s optional but we would recommend you choose the option where you don’t get thrown in jail for not paying so that yeah [01:02:38] that’s been nice and then also the element about crypto is as we talked about early whether it’s an ICO an SEO an IEO DeFi NFTs they all circle back to having a taxable element to them tracking cost bases across 30 different blockchains tracking cost bases across buying NFT on OpenSea and then selling it on or like even listening on Decentraland there’s so much complexity that goes into really

Dan: [01:03:00] providing great accounting and great tax help and now we’ve been able to bring on tax professionals to our team that can help you with your crypto and non-crypto taxes so we have a lot of people that they just don’t want to have to handle it they don’t want to think about it they just want something to do with form and we can now do that for them as well incredibly bullish on our team [01:03:16] on our product on on the industry there’s a lot of things that we’ve seen like we were featured in the Wall Street Journal a few weeks ago for the IRS was moving the question of if you’ve ever invested in crypto from the schedule one which is a form that you that not everyone gets but some people do to the top of the 1040 which is a form that every single American gets so you know

Dan: [01:03:35] that is going to increase enforcement if you go on and say no and it comes to be yes like you’re probably not the best move and I think something that you know you and I probably know but some people may not know is whether you’re using DeFi whether you’re using Bitcoin pretty much even if you’re using like Zcash and Monero there’s ways to track this information and not only from [01:03:55] a chain analysis elliptic cypher trace level but from a tax and accounting perspective as well so there’s no longer the days where you cannot file not like care about it not really and get away with it the IRS has come after some bigger name people we’ve seen John McAfee who was extradited from another country from from a back taxes just this year not just from taxes but other things but

Dan: [01:04:16] the ability to get him out of other countries came from the the United States tax authority so anyways you know long story short super super bullish on what we’re doing at Zenledger we’ve been able to invest millions of dollars into our IP our technology our team over the last few years and we’re now in a position where a lot of people are looking for tax and accounting help [01:04:34] especially with DeFi I think really only us and token tax are the only two companies out of 15 that have actual DeFi integrations like we support I think 30 they support maybe 2025 we’re now the only crypto tax platform that supports NFTs so we’re oh and that’s the beauty as we talked about earlier from being in the space five six seven years is I have those

Dan: [01:04:55] relations I have those connections investing personally my own capital in a lot of these things so being ahead on DeFi we’re pretty early on DeFi we’re bringing ahead on NFTs we’re early on NFTs whatever comes after that like Dow infrastructure we can help out Dow’s and the investors behind the Dow’s on their tax and accounting so long story short super bullish [01:05:15] on Zenledger super bullish on HANEM capital the amazing thing for both is that both are completely remoted distributed I’m sure you’re familiar with with LA right now if we had a storefront we probably be shut down so the ability to have both my companies online the ability to be able to not only hire retain but now give you know that security to all of our employees that

Dan: [01:05:36] we have capital in the bank our runways three four five years it has been really rewarding and to know that roughly 30 35 people are trusting me to make the right decisions day in and day out for their own livelihood it’s been really amazing and I don’t have a wife I don’t have kids but a lot of our employees do and the fact that their families are now relying on me and Pat and Brian to make [01:05:57] smart articulate decisions on the future of our company and those decisions affect them directly is a really magical place to be in so I don’t take for granted the fact that I’ve been able to assemble two great teams two great companies and I’m really bullish on the investment style that we have at HANEM capital and then the team that we’ve assembled at Zenledger like I said

Dan: [01:06:15] it’s just very grateful very thankful with the business that I’m in and as long as I can continue to make right decisions and live life with integrity and keep moving forward then I think we’re going

JohnPaul: [01:06:26] to be in a good position whether it’s me personally or Zenledger or HANEM capital. Dan thanks for sharing all of that I appreciate it I appreciate you touching in not only on your personal life and

Dan: [01:06:37] getting vulnerable there but then also touching on Zenledger and giving some advice to these young founders that are looking to raise venture capital before we close up for the day I wanted to go through some rapid fire questions real quick and there’ll be about three or four questions then we’ll close it up and let you tell everyone where they can connect with you online the first question I [01:06:55] have is what is your favorite Arizona iced tea? I’m a ghetto or owner-pomer guy it’s uh the the nice mix between some lemonade and iced tea just hits the spot and I’m the one thing that I always get I get chit for I’m sorry I don’t know like the one thing I always get some stuff for is that I’m incredibly cheap with the things that I don’t care about I enjoy the car like I have a

Dan: [01:07:20] vehicle that I really like I have where I rest my head at night it is something that I really enjoy but drinking a 99 cent of years on iced tea like I love it it tastes good I spend a dollar it’s perfect so yeah I probably have to go with Arnold Palmer it’s he’s a great guy he’s a legend in that he definitely knows how to make a good drink and that was a great one there didn’t he just [01:07:41] have passed away this year or was that was that him that passed away I think or was that someone else do you know that was recently that thing was the last like two three years okay I just remember that happening on twitter and the whole world crying about it what is your best tip for making the world a better place god getting getting deep on me I don’t know I think we talked about it

Dan: [01:07:59] earlier I just think I think if not to get corny but like the Michael Jackson man in the mirror stuff like it starts with you and and if you can make your life a better place make the people around whose life better than like it’s that pay it forward method where you know that stuff builds and that stuff is sustainable and that stuff really makes an impact and I think starting with you [01:08:21] has been or starting with you speaking from I guess the third person it’s like the most impactful you know I’m very fortunate to be in the place I am now and as we talked about I’ve had mentors and people along the way they’ve opened up doors for me and for me to be able to now be in the position where I can give back whether that’s my time my money my you know a small intelligence

Dan: [01:08:41] I can I can you know hopefully help other people out and that’s been something that’s near in near and dear to me and also highlighted a little bit in that Forbes article is every year I spent about a week with with with an organization called Experience Camps which are camps for kids that have lost a parent a sibling or guardian they’re free one week camps where where kids can come and [01:08:57] just be a kid but also be around other kids that are going through the same thing and my father passed away when I was six years old and I think that obviously had a very big impact on my life and not really having a male figure around and especially in my area a lot of people around me had very good family structures not many people really got divorced they had a mom they had a dad

Dan: [01:09:16] they had some security at home and I just didn’t have that and I think that’s really important to me is a lot of these kids are now being exposed that they’re not the only one you like you have friends you have support now work around you have the counselors you have this really amazing family that’s going to be there for you and then the other one is the is arc which is a organization [01:09:35] here in a lake which is the anti recidivism coalition and recidivism is basically just like the percentage or the rate of people that are getting carcinrated and go back and arc is really focused on youth and as we touched on I’ve unfortunately made some bad decisions in my life when I was when I was a kid and had to suffer the consequences and if I think it’s always helpful to be someone who’s

Dan: [01:09:55] been there and done that and I think that’s always what we had growing up it’d be some random Joe below that came in it was like don’t do drugs and it’s okay I don’t care about what you’re saying but like for me to come in tell my story I’m like hey you know I was like one of you if anything I’ve gone through some deeper shit and was able to get out on the other side and let me let me try [01:10:14] to be here for you and it’s not something where I get to live their lives for them mistakes are made things are happening but to know that you have a support network whether it’s because you’ve lost a family member sibling or guardian or a lot of those kids have a lot of the kids in arc have lost of fathers in prison mothers on drugs and they don’t have a support system so the streets become

Dan: [01:10:32] their support system so anyways long story short I know this is supposed to be rapid fire I think if you start with yourself and you really do what you can to make you the best person that you can be and live by your own set of values and guidelines and morals that’s how you can really start to make an impact on the world and as you continue to make yourself a better person you can be a better [01:10:51] mentor a better leader a better advocate for people that are going through the same things that that you’re going through so Dan where can our listeners connect with you online after the podcast after this amazing conversation yeah I’m pretty active on Twitter I believe my hand was just D Hanham DHA and UM8 pretty active on Twitter I’m trying to think if anyone in the audience is

Dan: [01:11:14] on clubhouse I’m pretty active on clubhouse which has been really fun Jess loss who runs a company in the space called seed club and I do a weekly meet up every Wednesday at 9 p.m. Pacific so if you’re on clubhouse feel free to come in and tune in tomorrow just we wanted to create a safe space where you know we could come in and talk crypto and get into the weeds a little bit but also welcome [01:11:34] people that are just trying to get in just trying to get involved so pretty active on clubhouse really active on Twitter and then on email as well my email is just Dan at zenlajr.il so if you need any tax help tax accounting you have some questions more than happy to get you squared away and then on the investment side my my email is just D H at Hanham capital management.com I know it’s always

Dan: [01:11:55] a weird thing for people to give out their emails but I’m here to help in any way I can if you have a product that makes no sense you’ll probably hear a note pretty quickly but if you have a you got a good product good team good uh good traction going on we’d love to meet with you and see how we can be helpful and once again it probably sounds really cliche but there’s a lot of investments [01:12:11] where we passed on and and have been very helpful to those teams moving forward it just didn’t make sense from a pure investment and pure number perspective hopefully people can see that I’m not a perfect individual I’ve had my ups and downs my mistakes and I’m trying to just take things day by day and keep getting better and if there’s anything that I can do to help people out feel

Dan: [01:12:27] free to shoot me a DM on Twitter or shoot me an email and we’d love to see how I can help anyone out

JohnPaul: [01:12:32] thank Dan thanks again for coming on and for all that advice and for all those stories

Dan: [01:12:37] and definitely reach out to him guys if you’re looking to raise some money for your venture

JohnPaul: [01:12:41] backable business thanks again Dan I appreciate the time thanks man thanks for having me on of course

[01:12:47] I hope you enjoyed today’s episode of digital gold be sure to subscribe so you’re notified when the new episode drops don’t forget to leave us a five star review to support our journey to

Dan: [01:12:56] become the number one crypto podcast thanks so much for listening and until next time mine off you