• Today we are talking with Joey Krug who is the Co-Chief Investment Officer at Pantera Capital, and Co-founder and Core Dev at Augur.

  • Pantera Capital is one of the worlds foremost
    investment firms focused exclusively on ventures, tokens, and projects related to blockchain tech, digital currency, and crypto assets, whilst Augur is a decentralized prediction market platform built on the Ethereum blockchain which will accommodate markets for cryptocurrencies, finance, politics and so forth. 





When I was younger I loved horseback riding, so I used to do that a few times a week. I also played a lot of video games, and played a lot of Halo on Xbox and a few MMOs. I then got into computers as well, but it wasn’t until middle school that I started to get more involved on the programming side. Before that I was always playing around computers and that kind of stuff, but didn't really do anything on the software side until my dad got me an old Apple computer, and I then started writing simple programs on that; just text-based programs that did really simple things.


Those were the kind of things I spent my time on growing up.





I'd say the biggest influencers I had growing up were probably entrepreneurs who were building really cool stuff. I always thought that was fascinating. So on that side of things, I thought people like Steve Jobs were awesome; it was awesome what he did at Apple and all of the cool products he helped bring to life, so I thought he was really cool. 


I also liked reading about older historical figures. I really enjoyed reading about the likes of Teddy Roosevelt, Abraham Lincoln and Winston Churchill, people like that. I found those types of historical figures fascinating. 




Good question. 


So when I was younger my brother kind of got pretty sick twice. He basically had a really rare disease where he was hospitalized for months at a time, so it was super stressful as I was worried about whether he would get better. He's fine now, but this happened like twice where he was hospitalized for months out of a year, and it took him over a year to recover each time. 


I guess I got through this by mostly reading lots of academic medical papers about the disease that he had, and seeing if there was anything that could be done about it. Eventually he ended up getting this medicine that actually didn’t cure it, but made it so you don't have any problems as long as you keep taking the medicine.


So that was one thing. 


The other thing was when I myself was hospitalized with stomach issues, and this happened like six weeks right before I graduated from high school. So that was stressful as I was trying to finish my classes and submit final assignments and stuff, and it kinda sucked because it was right when everybody was graduating, so I missed most of that; although I did manage to get out of the hospital just in time to go to the graduation ceremony, so that was nice. 


So whenever I have some sort of problem, I'm one of those people who likes to figure out what can be done about solving it, and this applies even to problems where it seems there is no hope. That's kind of just who I am.




I think the most useful piece of advice I could give, and it is something that took me a while to learn myself, is that it doesn't really matter that much what other people think. 


So if you have a conviction about doing something, or you think that what you're doing is the right thing, it doesn't necessarily matter what others think. Like sure you can listen to what other people say and then decide whether to take it into account or not, but I say it's important to trust yourself and trust your own instincts, because in most situations that involve yourself, you probably have more information than almost anybody does for the most part. 





I would say just being very persistent. 


I'm a very persistent sort of person, and will hammer away at a problem until I come across some solution, and will often think of wacky solutions that may seem crazy or might not actually work, but if you try enough of those you'll probably end up solving the problem you’re trying to solve. I think that's my biggest strength - being very persevering and being willing to think of and test other ideas that other people might write off.





That’s a good question.

It might be that decentralization itself doesn't matter that much in the sense of what really matters, and I think what really matters is the concept of minimal trust. And so if you think about that and peel it down a bit, people in crypto often like to say is it decentralized, is it centralized, that sort of thing. But the reality is this - you can have a decentralized system that you have to trust (even though it can steal your money), and then you can have a centralized system that you don't have to trust at all. Between these two systems, I would always pick the centralized form that you don't have to trust, but ideally the best thing would be if you had a decentralized system that you didn't have to trust. 


So I think people kind of overemphasize decentralization but don't focus enough on creating systems that don't require the user to actually trust them.




Pressures and stresses could be to do with anything from oh, we ran into this tech problem that nobody knows how to solve, to one of the companies that we invested in are running into some issues with team dynamics. It can be to do with a thousand things, right. So there's kinda two levels on how to deal with those things. 


One is thinking about the problem and thinking about what can we do here? The other is I like to pace back and forth when there are very stressful situations. I find this actually enables me to clear my mind and think a bit better. Taking a walk outside is also really good for that, or putting in some earbuds in and listening to music. Going for a walk is a great way to deal with something unexpected.  





I think outside of crypto and blockchain, probably like angel investing into general startups outside of the space. I think it's interesting to see what people are working on outside of crypto since I'm very much focused on it ninety nine percent of the time. I also like meeting people and traveling, and I like driving. A lot of people don’t like driving, but I enjoy it. I think it's kind of fun.  


So those are probably the main things.





I’d say for me, once a month we'll maybe get some pitch that is like super, super wacky. Like I don't remember the exact examples, but it's on the order of, you know, something like, “We'll put dog collars on the blockchain so we can keep track dogs so that nothing happens to them, and whenever a dog barks, we’ll broadcast that as an Ethereum transaction.” And so there's times when I've gotten those emails and actually started laughing. It's just hilarious that somebody would be building something like that. So that's probably one thing.


Oh, and a couple of years ago there was someone who made a Twitter account that was called a Lil Butterin, and it was Vitalik if he was a rapper, so that was pretty funny as well. 




That's actually the best question I've been asked for any interview.


It's hard to know, but there are two questions I’d like to ask, but I'm not sure which one I would choose.  


The first one is, out of curiosity, you why did you invent Bitcoin, and what was the spark that made you do it? The other one would be (and this one will probably be controversial on Twitter), what do you think of Ethereum? 




Yeah let's see. I have one policy which is kind of like a meta-policy, and it would be to enact some sort of system that allows people to basically have their identity, passport, license, whatever, on their smartphone. I guess that would be the first thing. 


The second thing would be I'd institute a voting system where you could then use that identity to basically say what you wanted to vote for as an actual individual citizen. So it would be pretty close to direct democracy except that Congress would still write all the bills (and would still be elected and everything), but the end-users and the actual populace would vote on which bills they want to be enacted; so it would sort of be like direct democracy in that sense. I’d also have it so you could also opt-out or delegate your vote to your congressman or congresswoman if you wanted (so you don’t have to vote on things), and also so you could just decide to vote on really meaningful, important things, and everything else is delegated to your congressman or congresswoman. This is kind of a US-centric view, but you could apply this same idea to other systems and other countries as well. That's kind of the second policy.


I think the third one would probably be an energy policy. So I'm a pretty big fan of nuclear power if you do it using the newer technologies that don't have melting risks; so plants are not running super hot and there's not a bunch of radioactive waste that can come up if something goes wrong. I’d put a bunch of government resources on funding that because I think if you have cheaper energy and cheaper electricity, it kind of trickles down and makes everything else in the economy cheaper because energy is kind of the basic input to producing anything.



12) What do you feel makes the Augur community unique compared to others?


I would say the Augur community is one of the few communities that actually takes  game theory and incentives very seriously. 


So in a lot of communities in crypto, they just kind of hand-raise certain problems and sort of assume that everything will be fine. But in the Augur community, our Discord even has a game theory channel where people kind of debate whether certain things have the right incentives, and whether these incentives are compatible, those sort of things. So in the Augur community there is like this constant striving towards improving that. That doesn't really exist in most other communities, even in the Ethereum and Bitcoin communities, as while they're very rigorous about the tech, on the incentive side there's definitely things that I've seen that are kind of like hand-waved over, and that wouldn't really fly in the Augur community. So that's something which I think is pretty cool and really nice dynamic to have.






So I think clearly the Bitcoin community as they have done a great job of promoting Bitcoin and kind of making people aware of it. They're very enthusiastic. Then there is the Ethereum community which has done a pretty good job of focusing on the tech and actually getting things done on the tech side. I also find things like 0X interesting as you have this ecosystem of companies and entities that are building on top of it, and are building various UIs that allow you to interact with markets and basically trade on 0x.


Those are three off the top of my head. 




I definitely prefer Twitter over other options because if you look at like Facebook, Instagram or any other social media platform, they all tend to be focused around what I would consider to be small talk in the sense that you are posting things like, “Here is what I ate for lunch”, or if it's Instagram, “Here's me on a yacht on vacation”. This stuff is only interesting for like two minutes. But beyond that stuff I want to be debating ideas and concepts, and talking about stuff that I think is a little more deeper and philosophical than that. And so really, I think the main social network that actually has that is Twitter. There are some elements of Reddit which have the same sort of dynamic, although for Reddit now I just read it; I used to like and comment on a lot of stuff, but this just got too time consuming. 


But in terms of improvements, I don't really like how they’ve added this feature recently that allows people to censor what tweets show up in your replies to a tweet. So for me, I just tweet whatever I'm thinking about, regardless of whether it's like politically correct or not, and I don't censor any of the comments you apply to it. In fact, I frequently reply to people who say something, even if they completely disagree with me. That's what makes Twitter a great platform. But recently, they've added this feature where if someone tweets something that you disagree with, you can literally just click a button so  anybody else can't see that tweet. I think that's a bad feature, so I think Twitter should go back to how it was before and fix that. But apart from that, I think Twitter is actually pretty good. It's a pretty decently designed platform.




Yeah, absolutely. 


I think there's always more adoption to be gained. Even if you look at the Internet, the amount of people who can access the Internet is still growing, and I think it’s still only about half the world's population that has access to the Internet, and that's been the case for well over 20 years now. So I think the crypto/blockchain community will be growing for a very long time, and even once we've kind of reached saturation, the community will still be very important because it sort of sets the values, discussions and the dialogs of what people are talking about. And so these systems will always need to be improved, even if they're not getting more users, so the community will be very important for that.


In our penultimate section we are going to ask you a question regarding Augur and Pantera.

16) What do you feel sets Augur and Pantera apart from your competitors (that is if you have any)?


So if you look at Augur, what sets it apart is it's sort of the world's most accessible, no-limit betting platform. So if you look at most betting sites where you're betting on politics, sports, crypto or whatever, they tend to have limits in the sense that if you start winning, they'll cut you off; particularly with those sports markets. And so with Auger’s peer-to-peer market, there's no person who'd be able to cut you off if you started winning. So it's a really key and important piece that doesn't really exist anywhere else. 


Another thing is that Augur has lower fees than pretty much everywhere else. So if you're trading on Betfair and you start winning, you have to pay them 20 percent of your profits (that's if you're in the top 1 percent of traders), but with Augur, I think fees will be 1 percent or less, so that's a big difference 


For Pantera, I think the main thing is that we're investing across liquid crypto currencies, across new token projects and across equity in companies in the space. Most investment firms in crypto typically have a team from Wall Street backgrounds, or a team which has a bunch of traditional venture investing backgrounds, or a team which has a bunch of great technical people. What I think makes Pantera different is the three partners, Paul, Dan and myself, we each bring one of those pieces to the table. So we're not like all the same - we each bring a very different perspective to things. I think that's kind of a big thing that makes us different as a firm from other people out there.





I think the main reason why blockchain tech is interesting is it’s something that's censorship resistant, and that's really important because it enables you to do global transactions at very low fees with sort of no limit to the size of the transaction. So with Bitcoin you could send 50 million dollars just as easily as you could send 50 dollars. And so that's a very powerful thing which doesn't really exist in other payment ecosystems or in other payment mechanisms. And so if you take this idea and you extend it further, you can apply it to financial markets, you could apply it to betting, you can apply it to a lot of things. And if you look at finance, the cost of financial intermediaries (costs of the middlemen basically) has continued to increase over time. It appears to be cheaper because you have things like you know, Robinhood which offer zero transaction fee trading, but there are still fees for kind of lot of the underlying vehicles people invest in. There's still fees that basically go to the high frequency traders who are market making, there’s fees for custody, fees for settlement, fees for clearing, fees for all this stuff that really if you add it all together, it's essentially higher than it was in the past. 


So the short pitch is basically crypto allows you to do no limit, very low cost global transactions - whether that’s for sending money, whether that’s for placing a bet, or whether that's for buying a derivative asset or any sort of investing you could think of. And so long term, I think that's a really powerful concept because it enables global financial markets that traditionally have been walled off, been expensive and prohibitive, and have been hard to gain access to.


Keep up to date with Joey and Pantera/Augur on:

Twitter (Joey)

Twitter (Pantera)

Medium (Pantera)

Twitter (Augur)

Facebook (Augur)

Reddit (Augur)

GitHub (Augur)




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