Unlock the synergy between Warren Buffett's investment sagacity and the dynamic world of Web3 with Matthew Snider of Block3 Strategy Group. In our enlightening chat, we peel back the layers of traditional investment philosophy to reveal how it weaves seamlessly with the fabric of blockchain and cryptocurrency. Matthew's tale, spanning from management consulting to being at the forefront of blockchain innovation, coupled with my own investment club roots, paves the way for a rich discourse on the promise of Web3 for business growth and the seismic shifts introduced by NFTs in the market.
How can AI and blockchain serve as the compass and map in the terra incognita of Web3 decisions? We pore over the role of data as the lifeblood of strategy, from fueling software innovation to unveiling new dimensions of transparency and security. The volatility of the cryptocurrency landscape poses a Sisyphean challenge to traditional market analysis, yet through our exchange, we share the beacon of knowing one's circle of competence, guiding listeners to chart a prudent course through the tumultuous waters of investment choices.
This episode is not just a conversation; it's a masterclass for any intrepid investor aiming to demystify the enigmatic world of Web3. I impart timeless truths from the investment legends, tailored for the digital frontier, as we navigate through the intricacies of blockchain investments. With Matthew Snider's expertise, we bridge the chasm between established economic precepts and the burgeoning digital economy, equipping you with the acumen needed for a foray into Web3's uncharted territory.
This episode was recorded through a Podcastle call on November 29, 2023. Read the blog article and show notes here: https://webdrie.net/warren-buffett-in-a-web3-world-with-matthew-snider
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So we took somebody who has really good track record in 65 years of investing 20% compounded interest year over year, and he hates crypto and I thought this is the best person to have an investment guide about.Joeri:
Hello everyone and welcome to the Web3 CMO Stories podcast. My name is Joeri Billast and I'm your podcast host, and today, yeah, I'm excited to be joined by Matthew. Matthew, how are you?Matthew:
Good, good, how are you? Thank you so much for having me today.Joeri:
Yeah, I'm happy to have you, Matthew. What I didn't say when you were preparing is how to pronounce my name. Actually, that's Joeri or Joeri, because I'm in Belgium I think there is a six- hour time difference and you are in the US. So, guys, if you don't know who is Matthew, Matthew Snider is the president and co-founder of Block3 Strategy Group, which exists to educate businesses, brands, and entrepreneurs how to leverage blockchain technologies to generate new channels of income, and he's also a published author, actually like myself, and a published author of the Warren Buffett in a Web3 World Book, applying six years of advice to cryptocurrency, NFTs, blockchains and more. Yeah, that's an interesting subject for me because I had an investment club for many years. Fantastic, for I went into, you know, because it was just like a hobby of mine and this helped me, by the way, to enter the Web3 space. It was also one of the reasons, Matthew, that I think we can have a nice conversation. But, yeah, tell me a bit about your backstory first, your journey from, maybe, management consulting into an expert, a leading expert, into Web3, blockchain, and crypto.Matthew:
Yeah, Joeri, thank you so much. So I really got my start in about 2016, and 2017, dabbling in the investment ecosystem. I was learning a lot about stocks and bonds and I thought this is a whole new asset class very interesting and new. And I was a management consultant at the time for big four companies tech boutique firms and I kept thinking this is a great technology for you to be maybe building go-to-market strategies for figuring out how to engage clients in this kind of space. And, like many people, I was three or four or five years too early and nobody really listened or cared, so I just kept learning on the back end, kept investing and doing my thing and really enjoying the space I was in. And then, a couple of years ago, we had this big NFT boom which really got me thinking well, maybe I could start consulting about that. Consulting is a pretty general topic, why not? And people just kept. I just created a landing page and just saw, just curious about who was going to come out, and the phone would not stop ringing, People asking about different use cases, If they could get their art on the internet, if they could get things minted, how to do it, all this kind of stuff, and I thought this is fantastic. People are actually really interested in this. And that sort of morphed into bringing that company to a smaller partnership of Like a smaller partnership of people that I worked with who ended up sort of absorbing that company and creating Block3 Strategy Group, where we decided to say NFTs are a bit niche, so how about we broaden the scope a little bit and say everything from blockchain to Web3, which is how we came up with Block3 and that sort of consulting became a lot more interesting from a blockchain perspective because now companies were saying, oh, how do you do this from a marketing perspective? How do you leverage these tokens? How do you do this in a sufficient way or a way that allows people to grow wealth sustainably for the long term? And part of that also allowed me to also think outside the box and say, well, what if I became a registered investment advisor as well? I like the space a lot. I want to lend credibility to myself in this space, and so last year I got my Series 65 license, which in the United States, means that we're legally allowed to give investment advice. So in a world where people say not financial advice, or I can't give financial advice. We literally do that as a means to differentiate ourselves between any other people in the space and then, from a content perspective, much like yourself, it's important to have anchors and things that you can lean on. So I thought, well, why don't I take a really unique investor in the space, Warren Buffett, who's been a fan of and very sad news about Charlie Munger, his partner, passing away yesterday. So it kind of hit home a little bit for me but, as a hero, I took all of his shareholder letters about 1300 pages of shareholder letters and condensed it into an easy to read investment guide for people in the Web 3 space. So we took somebody who has really good track record 65 years of investing 20% compounded interest year over year. He hates crypto and I thought this is the best person to have an investment guide about. So we made it really easy for people to get started and it was an incredible project. And this last year we've been speaking a lot more at college campuses. I was at UNC Charlotte. I was at Skidmore recently. We've been really trying to engage more on the education side and getting students involved as well as businesses involved with respect to how departments might learn about blockchain technology and use them to enhance their business.Joeri:
Yeah, it's interesting that you have this solid financial background, and indeed, lots of people say no financial advice. They are showing a shard and so now I must say, when I had my investment club, I was using technical analysis most of the time to make decisions, of course, businesses or companies that I really understand what they are doing and then, based on that, seeing what is the right moment. Absolutely, and what Warren Buffett is all about, I think keep and hold, keep and hold by and hold strategies. Obviously, there is a lot of things can happen in a short time in the blockchain world. There is a lot of movements, or you also advise your clients or people you work with, using shards to time the markets.Matthew:
Our perspective has always been growing wealth sustainably for the long term, and that's kind of been the phrase that I've used to coin and sort of brand ourselves as the people who are not looking to go chase a lot of these more volatile tokens or more volatile strategies. We're actually working to raise money for a fund right now that is taking a risk, adjusted approach to blockchain investment, and that comes with taking some of the more known foundational tokens and pairing them with companies public companies in the United States or abroad who we're building in this space as well. So we stay away from those kinds of things only because it's important to stay sustainable and to stay hedged in some respect. There are ways that we can go ahead and do that, but we typically don't advise people in that sense, mostly because, from a financial literacy perspective, they might be not so savvy. So, especially from a shorting perspective, those are things that are very typically advanced, and so, while I think they're important, they're definitely not something we would throw in the mix right away.Joeri:
Yeah, maybe, okay, there is. You know, it's not like a white, of course, or people that are leaders who say shorting or really short term, but I like, for instance, if you want to invest in Bitcoin or Ethereum or maybe in a project that I would say that you understand that has value, and then see, okay, what is the best timing? Of course, man, but I agree with you, it's, but you cannot predict what will happen, so it's better to you know, at different times, be investing or stay in the market. True, yeah, we, at the end of the podcast episode, we'll talk. You know, you can give the link where people can buy the book and so on, because I think they have a lot of value in there. But also, our listeners are also entrepreneurs, marketers, and they're probably listening. Yeah, Web3 technologies, Is that something that I can use for my business, you know, to grow or to create wealth? And probably you will say yes, and maybe you can give those people some advice where to start.Matthew:
Yeah, I think the first. Well, the short answer is yes. There's absolutely ways for organizations to do this and entrepreneurs to do this, and what's key is to really understand where your use case and expertise fit and how we model that around a Web 3 strategy. One really good thing to do is do the research on big brands already using the technology today, especially from a marketing perspective. I was a consultant at Nike for three and a half years on email marketing and data analytics, and it was amazing to see them purchase artifact, which is an NFT company that basically producing what they call digital items right, so, a physical Nike shoe and the digital Nike shoe and that over the course of 18 months, generated $180 million in revenue for them. It's amazing to see the future vision of how we're going to mix together both virtual and physical experiences. So, from a marketing perspective, that was really exciting, because how do you explain that to people, right? So that's one example of companies that are building in the space. Maybe you're not a huge financial institution like HSBC or JP Morgan that's going to use it to settle payments, but there are Gucci, for example. There's a lot of both fashion and sports related, especially in the Hollywood space. When we talk about royalties and things like that. These are perpetual smart contract royalties that allow people to earn revenues without the need for a third party intermediary, so they're very powerful, especially for entrepreneurs starting out, and typically a lower cost entry. And then what we do is we engage with folks to figure out is a membership going to be the right thing? Do you want to issue a token? Do you want to issue art? What's your objective and how do we fit that in there? But the truth is there's pretty much an answer to it all the way through. One of the most important pieces, though, is are you being successful in the Web 2 sense? I think one of the most important pieces of caution that people come is they say oh, I've got this amazing art and I want to do NFTs. My first question is typically does your art sell now? Because if it doesn't sell now, it's not going to sell in Web 3 just because it's an NFTs. So I have to take a more realistic approach, especially with blockchain technology. Nfts did not just apply it because we can.Joeri:
Yeah, I love that it's also, do you have a business plan, you know? Is there a real business behind this? Because it's not just about Web 3, it's just a technology. If you sell something and you want to tokenize it or you want to add an NFT membership to that, as you say, will it work without any Web 3 adding something to the mix? Then I think it's yeah. So actually, that's also what I see in the market right now, because, as a marketer, the businesses that come to me, they have already a business and they want to do something in Web3. But those that are building in Web 3, it's not so easy for them at the moment because, yeah, you need, of course, the cash flow to come in and so on.Matthew:
I would say one other thing that's striking me right now is also the value of IP intellectual property in this space. As an example, the Board of Yacht Club issued something called Made by Apes, which is a consortium of something like four or 500 companies that have been using their IP in a way to market their property. So, for example, I own a pizza truck or a t-shirt company or a bottom vodka bottle the other day because this guy created his own vodka company. So you as a business can attach yourself to well-known IP in this space as well and own that as a branding mechanism if it's a community that resonates with you as well.Joeri:
Yeah, and of course it's very new to a lot of people. You see these changes.Matthew:
It'll be twofold. One, it'll be the decrease of the barriers to entry for people. It's going to be the blending of user experiences that are made much, much more easy for people to engage, coupled with the fact that they won't know that they're engaging with technology. I would assume neither you or I know how TCPIP or the internet works. We don't particularly care, but here we are engaging in a completely recorded video on multiple monitors and all this kind of stuff Fantastic, no idea how it works, which is beautiful, right. We don't need to know how it works. So I think you're going to see the lowering of barriers to entry easier ways and sort of like. Starbucks is a great example. They have a membership program where people are using NFTs and they're digital collectibles right, that's Reddit's doing the same thing. So the marketing of this needs to change a bit, where their user terms are more friendly and people are understanding. Okay, this is a new sort of cultural shift and how we participate in new experiences, and so, as we see into the next couple of years, I think that's going to really tick up in terms of adoption. We've had a whole couple of years of very clunky user interfaces and scams and don't click these links and all that kind of stuff, and it's still going to be there, but it'll be in a much cleaner and more secure way.Joeri:
And also, you know there are sometimes these hypes. Now we had the NFT hype, we had a bit of the metaverse hype. I'm doing that also, you know, organizing seven metaverse- like real life events. But NFTs have been really a hype. So from an investment standpoint would it be interesting for people to have a look at those projects, because there are so many that are not worth it, but are you also considering that in the broader portfolio mixMatthew:
I think if you. It always depends on the risk spectrum. I think you kind of put Bitcoin and Ethereum in the middle of the spectrum. You maybe have like the bonds and the stocks on this farther side, much more conservative, and you get to like the alt coins and some of the NFTs. It becomes a little bit more risky, especially in the NFT space I can't really stress this enough the number of tokens for a security or a project is magnitudes lower than you would see in a traditional stock or even a cryptocurrency, which means that the volume is lots lower and means it's almost impossible to sell or get out of a position. When you're trying to get out of a position, that's a really big problem because, especially a lot of these projects are generative and they're one-on-one. So people have to like your piece of art or the one that you bought with the right trait to think that that's of value. And then you have to worry about these founders who created communities out of nothing and don't really have a business plan, but sold a bunch of JPEGs that people really liked and you have to decide whether or not that's worth your investment. If you like the art, if you like the content in the community, 100%. It should be something you look at, but as something as a long-term investment. I think that the life cycle of these projects is so short at this time that it becomes a really tough thing to know enough information about there's so much inside information about this and to know what's real and to differentiate between what's real and what's not. I think you look at some of the projects and I do this from the same thing from a crypto perspective. When you invest in crypto, look at the projects that have been through a whole bunch of them like bad stuff, or they've been through a whole bunch of trials and errors and if they've survived those kinds of things they weren't looking at. Ripples, a great example, right Lawsuits getting dropped. They've been in this space for a long, long time dealing with a whole bunch of stuff and there's still the number five token, like that is a project that you have to look at and say something is going on here and people realize that. You look at something like the Pudgy penguins or the board of yacht club or some of these NFC projects that have been around through a bear market and are seeing now this rebound. Those are ones that I might consider of interest, but again, I think you have to like the art and be really concerted about the fact that the liquidity is so much lower. It's very difficult to exit a position.Joeri:
Yeah, actually I mentioned one of the books I've co-written the books the most amazing marketing book ever about Web 3, and I talk about NFTs in there and I say, yeah, look at how they communicate also and things don't go well, you know. So that you, that you know exactly what is happening. So, yeah, NFTs of sure will be, it'll be something. Yeah, if you look at it from a perspective of Getting rich quick, yeah, that's you know. But if you look at it from perspective, what is the value? What am I getting? Like you refer to also to, is there a business behind it? So, if I my NFTs, I have a membership. I know it's an access ticket to an event and Instead of, you know, throwing away the ticket, it stays valid. So I know every year I can go to to a, to a marketing event in Cleveland, and I know CX and I know, you know, I bought it when the market was down. Actually, the price for the ticket was for the NFT was like the price of a ticket for one year. So it was a no-brainer and I can. So for me that's an, that's an access that I have. So any of it, you know, keeps the value, or maybe I can do the better, but it's not like for my, my investment standpoint, that I look at that.Matthew:
Yeah, and the the marketing aspect. You know NFTs get rich quick. Okay, maybe that happened and maybe that was like a small piece of the snapshot. But I love the NFTs from a marketing perspective because now you can be the Dallas Mavericks and sell tickets and in those tickets you can give people a new experience or a t-shirt or something to make them stickier from a, from a user perspective, and it's very low cost, like once you figure out how to do it and implement it. Right now you can do these things on Solana and it costs next to nothing to just issue a bunch of NFTs. So there's this kind of art piece which is fine, but then you can boil down to like let's get rid of all that, and say like, oh, actually, can we just provide better user experiences for people? And now you, as a web to organization, have already blown past the competition because you've realized that you can use these things to To perpetuate people's attention and keep them engaged in your brand.Joeri:
Yeah, exactly because you, you build actually a relation with those people. A loyalty is a big, is a big use case. Also an interesting technology that for me fits also well into Web3 is AI can. It's everywhere. How do you see you know the role of AI in Web3 investments? Does it influence your decision-making process or your strategies?Matthew:
In Web3, so there's two ways to answer that. The first is all day, I'm looking at AI as a investable prospect. So, whether they're tokens about investing or whether they're, you know, like NVIDIA or AMD or some of the big players in the market that are traditional markets, all day, a hundred percent, we should be looking at companies like this to evaluate to. The other part of the question is how does AI fit in with blockchain? I recently attended a talk by the CEO of a prominent hedge fund here in North Carolina, where I'm based, called Morgan Creek Capital, and he had this amazing sort of four-step way that we thought of Data and AI and blockchain, and I know I'm gonna forget one of these. So that's cool. But the first is basically the data. Of course, is is like the fuel of all this. You use the chips to organize and build the software together. You have the blockchain that's there to help build transparency, security, stability about data, and then you use AI to make decisions. And that's how you're gonna use AI, because now it's now it's ingesting the data, the blockchain data, in a standardized, secure, transparent way, whereas right now it's kind of a morphos and all over the place, and so we're gonna get better at figuring out how to distill data in Into a blockchain ecosystem, and then we know that that data is the right data that we want to use to execute these decisions and that's how businesses are gonna be able to say then let's use AI to help influence the decision, not necessarily make the decision. That helped influence the decision for us.Joeri:
Yeah, actually I mentioned that had these investments. I also had a business analytics company before. So the question about data is is the fuel it helps you of, obviously, also to make the investment decisions? So both of these all about data too. You know what is. Is there a difference when it comes to data and taking decisions about investments in Web3 compared to the traditional, I would say, a stock market?Matthew:
This is going to be the point in time where you decide to end the interview early, because I sit here and say that I think technical analysis in the Web 3 space is not a viable way to look at these ecosystems. I have a hard time believing in technical analysis from the traditional market perspective only because there's kind of this efficient market hypothesis that people have different perspectives on right. I think it's very good at helping identify trends, but I think if you're a longer term player, you're less concerned about those sort of technical pieces on a day-to-day level than you are within making a bet and sticking with it. I think a lot of that goes out the window in cryptocurrency, where you have no reporting, you have no quarterly reports, you have no annual earnings. Most of these companies don't make money. Here you are trying to gauge the value of a token based on really what are only a few small inputs, which are market capitalization and number of tokens issued. It may be a schedule of when they get issued. Other than that, there's not really a price-to-earnings ratio, which is one of the most used metrics in the traditional market because they have no earnings. Much of the ways that we analyze stocks I feel like we tried to fit a peg into a round hole, like a square peg into a round hole by saying, well, the charts look the same, so we may as well apply the same techniques to them, completely not realizing that the ecosystem of traders and the ability for people like FTX and Sandbank and Freed to totally manipulate markets is just like asinine. And all the watch trading too. You have no way of knowing what's a real trade and what's not a real trade.Joeri:
Exactly. Also, something that's happening all the time now is these fake news that comes and that the markets react. Then you have the charts that look crazy because it's based on fake news, so it's not fundamental news.Matthew:
Yeah, the internet coin desk that accidentally leaked the spot ETFs and maybe a couple people knew that that was going to happen.Joeri:
Yeah, yeah, it thinks that because there is not perhaps the liquidity of you know, there are so big movements that can happen and, yeah, of course, this doesn't help. Also, in the broader perspective of Web3, people looking at what is happening with the market, because I'm as a marketer, people look at the bear market, even if the utility and everything the benefits of blockchain and so on for businesses say the same, but they look at the sentiment, of course. So, yes, indeed, that's a good point that you make the price earnings ratio. You don't use for crypto. Now, yeah, I used to end the podcast. No, we don't end the podcast so fast, Matthew. But, we have, like you know, always like 20, 30 minutes that we have a discussion, but I know you have so many wisdom also in your book. Is there something that you can give to our listeners? A teaser or some advice that comes from the book? Or maybe in general, if they are interested in Web3 and they are looking to, maybe for their business or to invest in it, what could you give to our listeners?Matthew:
I think and you are very apt to point it out know what you don't know? What is your circle of competence? What are you really really good at understanding? There's a reason that I don't trade oil futures and liquidity pool derivatives in the Web3 sense, like I just don't know what those things are and I don't have a way of talking about them so that my mom can understand and not think I'm the dumbest person that she's ever met. I think one of the most important aspects of investing is to be able to tell somebody in a simple way why you chose this and why you chose this over other options, because there's 23,000 cryptocurrencies out there and there's a whole traditional market where people make normal, regular way of testing, and I think that that's really important. To realize is like what do you know about and what don't you know about? So really getting crystallized on understanding that for yourself will help. You then say where do I have to go read more and where do I want to go learn more? Where are my gaps? And I've just been a huge fan of reading. I read both audio books and sit down and read physical books, but I try to read every day. Warren Buffett read 500 pages a day and says knowledge is like compound interest, you know, built up like that over time. And he says even if you think you read enough, you're not reading enough, which always like it's terrible to hear it, because you think you're reading a lot and you realize that even Charlie Munger tried to read a book a day. And so I think those two things are really important.Joeri:
Yeah, you know about reading. It's one of those things you should really should block it in your calendar to make it happen. And that it happens, because if it's not a habit, you don't like. You know, I see it for myself. Oh, I have all those interesting books that I have. Now, of course I go to them. I try to, you know, get some nuggets out of it. But help me is like listening to an audio book and then afterwards, you know, going through it to really get the most out of it. Yes, matthew, people perhaps curious where can they find your book, where can they buy it and where can they follow you online?Matthew:
Yeah, so the book is available on Amazon. You can just search for Warren Buffett. You can actually search Warren Buffett Web 3, which will bring it up, or Warren Buffett in a Web 3 world. And you can find me on Twitter at Block3Strategy and on our website, Block3Strategy. io. And again, I just want to thank you so much for making the time and giving me the oxygen to come, engage with your community and learn more about you know the work that you're doing in the space and understanding how we can help people better live this new ecosystem that's coming about and I just appreciate the opportunity very much.Joeri:
Yeah, thank you too. I like the you said it like explaining in clear terms, in clear words, in whether everyone can understand what it is about, and I think that you did this with a concept like infesting and crypto, and also people are a bit scared of it, you know, when you even use a term about Web3 days, and what is it that all about? So, yeah, thank you for that too, matthew. Guys, you know there will be a blog article, there will be show notes. All the links will be in there, like always. So, yeah, matthew, thank you so much.Matthew:
Thank you, really appreciate it, Guys as I said.Joeri:
So knowledge bombs in this episode, and if you think this is really useful for people around you you know that want to grasp a bit more about investing in Web 3 or maybe in general, because what Warren Buffett teaches or tells in his books, it's general truth. If you think this episode is useful for those people, be sure to share it with them. Of course. Also, if you're not yet subscribed to this podcast, this is a really good moment to do this and, of course, I will see you back next time, Take care.