Nic Carter on CoreWeave's origin story, the crypto strategic reserve, and why stablecoins are eating finance

joins me and then uh me and me and them and 30 AI agents uh you know allocating Capital if that sounds appealing uh reach out well we have our next guest on the line right now thanks Jeremy Jeremy thank you for coming on we'll talk to you soon we love you guys talk soon this is fantastic Nick welcome to the show welc to the show hey guys I didn't mean to kick off the last guy and good what's that up I was three minutes early you're all good how you doing doing great man how how did investment Community go uh break down introduce yourself what is what do you do and then what does investment committee mean on a Monday like what who's in the meeting what are you talking about no in a little asteris first Nick just started lent and he's not uh he's giving up nicotine so he said he's a little bit grumpy today but we're gonna we're going to turn it around because we're going to eventually talk about cor weave which is uh maybe a 2,000 bagger or something in that I was trying to run the numbers on it but uh how how did investment committee go it was good yeah we're actually having I am having a poly crisis with all the the companies that I'm on the board of M uh so that part's not good so never become a venture capitalist you know I don't advise it to any Young Folks listening don't do it okay go become an artist or become an artist become an artist what kind of art should should the fans do these days what's that what kind of art is not going to be immediately commoditized by AI I don't know like sculpure you know I think you just have to learn to work with the AI you know you know look at Grimes model there the Grimes AI but people still like her you know so that's true that's good uh how often do you take a board seat when you make an investment is that uh you you sound like future Investments you may just write the check and say you know good luck good luck no don't say that I can't have I can't have potential investees hearing that no no no uh I'm on five boards okay uh I've yeah I got capacity you know I got I got some space still so um if I'm leading and it's my deal then and we try and Lead most around so I will I do we do end up on a lot of boards for sure would you want to be on a public company board at any point like you know how andreon has visibility into Facebook and that's just like Alpha for the entire portfolio right yeah and I think they pay you as well so that that part's nice so I don't get paid to be on well maybe maybe cor weave will bring you up will bring you back you know I'm silently hoping that they're gonna me to be on the board explain the business to us and if they like how you explain the business then you're on the board boom we'll send him this clip yeah we'll tell him the technology Brothers uh collectively requested that Nick be added to the board prior to the IPO yeah and get a little uh yeah maybe maybe let's just break I'm a very small shareholder right right for now could start building that position up there when did you invest in core weave what were they doing at the time and what are they doing now it's obviously been in the news but I would love to hear it from you what a fun story man I was my first Angel uh investment ever what uh yeah it was it was a good way to start becoming an angel investor uh so I have like over 50 now but that was my first and I was not accredited at the time I mean you know Dirty Dog Dirty Dog no one checks okay that's the trick no one Chucks yes he doesn't Chuck I don't think I had the money to make the investment at the time I think I borrowed it from my dad amazing uh and I had met these guys because we were mutual haters of ethereum um so we we hated ethereum proof of stake specifically and I think I found them on Reddit and um Brian Brian venturo he was posting on Reddit about how proof of sake was stupid and bad because they were eth miners right they were mining e they're against the transition proof of stake and I was as well because I just love proof work and hate proof of steak so we we we you know we were kind of strange bed fellows and then uh you know they were just mining eth that's what they were doing uh they had a different take on it than other eth miners they used more high-end inv videas which became very important later versus other e miners used amds more commodity commodity amds and then uh they we became friends I became friends with Brandon and Brian and mo mostly centered on our our Mutual shared disdain for ethereum ethereum culture uh they had like a very like weird relationship with ethereum it was all their revenue but also they just like had a very antagonistic relationship and then they pitched me the idea of of to repurposing their GPU Hardware just like idling by Mining eth and other proof OFW crypto assets and then uh also you know on a more bursty basis doing like rendering like CGI yeah yeah c yeah like blender so that the AI wasn't even in the conversation wasn't even in the discussion this is 2018 though yeah no one except for gor knew yeah was this related to the the render Network like the octane renderer R anddr was that a thing or is this just like general purpose rendering for do you know what they pitched me was like they were going to like go to the blender conferences and be like the industrial uh HPC farm for blender yeah and uh and movie studios and whatever and that sort of happened actually but then um so I I did the the first round in which they rais capital I I think it was um was the only like VC to be on the cap table I did it personally actually brought it to the fund and we didn't do it because it was seen as outside of scope which was a catastrophic mistake obviously worst mistake of my career by far like I just r the math that I did the numbers on it and yeah it would have been big it was our first fun fun one would have been a 50x fund on that alone wow if if we' done that check so uh that was that was a Miss um and then uh what was the scope back then like like why was it not in scope cuz we had done some crypto mining stuff and then we got got really turned off by it okay and you know we invest in like more like asset light cryp we was totally out and the whole pitch was we're going to stop doing crypto and we're pivot into this other stuff yeah makes sense so then in 2019 they almost went out of business because eth moved to proof of stake so all the proof of work market for gpus ceased to exist and but right around the same time uh all of these early applications for LS uh like transform based LS came out like GPT 2 was actually really big for them uh because um there were all these apps that were built on it like AI dungeon if you guys remember that I think was you guys remember that that was my first uh they were like yeah this thing's going crazy like the usage just hockey scking and I played it I'm like oh my God like wow this is actually like amazing technology like yeah uh that's when I realized LM or like you know the Transformer model was was going to you know change the world and so then that just hockey sticked and they obviously did an incredible job of being creative about financing and uh you know magnetar was obviously a great um you know Capital Partner to them in many different ways over the years and technically they've delivered um it's not it's not an undifferentiated product it really is um you know they built with the idea of HPC big performant synchronous HBC clusters in mind when absolutely no one was doing that none of the hyperscalers were doing that um and then now of course everybody's realized AI specific data centers make sense but coru was really the first to do it and so you know they' they've been able to lock in you know long duration contract so so they've done very well y very cool uh changing subjects a little bit uh I want to go back to it feels like a year ago it wasn't that long ago what was the vibe at the crypto ball which you were at uh once everybody started realizing that the the incoming president had launched a token no one knew at the ball that the Trump coin had launched or maybe others knew but I certainly didn't know I think it launched around 900 p.

m.

and I didn't get out of there till like 11:30 and uh really so there wasn't too late there wasn't people were at the ball just hanging out having fun and people weren't realizing what had happened yet nobody that I knew at the ball knew I certainly know no one was talking about it so I felt that we were rug pulled actually by Dr Trump yeah cuz cuz most most conferences there's quite a lot of people just looking down at their phone the whole time because it's just not that and obviously this wasn't a conference it was a party um but uh the timing was hilarious and then and then the lesson from this last Sunday was if there's ever anything White House related you know any type of crypto event expect some uh expect some big news I thought you had some of the best takes on the Strategic uh crypto Reserve now that a few days have passed have any of your thoughts changed you know you're generally um not super excited about it you had written a post before that you were sort of broadly against it uh what's your thinking uh on today March 5th uh and and where does this all go yeah I mean we're going to find out on Friday what they're really proposing or thinking I think there's so many unanswered questions like like how are they going to pay for it is Congress going to have to authorize are they just going to hold the seized Bitcoin are they going to sell the seized Bitcoin to buy cardano is that really going to happen I mean can you imagine hey portfolio rebalancing you know it's strategically important for the United States to uh you know diversify yeah I mean really like if if they can't find some ot's way to finance this thing without asking Congress because they can't ask Congress let's be real Congress is not going to pass this yeah so okay are they just going to use the Bitcoins they hold 200,000 Bitcoins okay we want to do a basket of Bitcoin cardano eth salana Ripple so you're selling Bitcoin to buy Ripple and card that's crazy come on uh so we're going to find out what David sxs has up his sleeve I mean I like the guy I think he's smart I don't know how this policy came to be uh I don't support it uh continue to not support it whether or not it's just Bitcoin or Bitcoin in a basket of other crypto assets it doesn't make sense at all there's no strategic purpose to uh owning crypto at the government level other strategic assets that we hold are Commodities that are like hard to acquire in a pinch if we have liabilities toomin in those Commodities right we it makes sense to have a petroleum Reserve makes sense to have a Tungsten reserve a uranium Reserve even medical equipment agricultural Commodities whatever where is the industrial need to to own Bitcoin or Ripple or cardano there is none so I just don't understand the whole thing seems totally incoherent to me what uh I think we share the same point of view on sax uh do you think that he is having real influence on the sort of messaging coming out of the White House related to crypto or is he finding out live like the rest of us I think if it was just up to scks we wouldn't be talking about the reserve there wouldn't be a trump meme World Liberty F wouldn't be as big as it is uh what other crazy stuff did Trump do with crypto I don't know I mean I've just been hoping that Trump would just fire Gensler put in Atkins and then never say the word Krypto ever again we' be so much better instead he's like hugging us to death you know and I don't know where it's coming from I don't know is it Baron is it Eric is it Dawn who's doing it who's who's the Puppeteer whoever it is they need to stop hopefully saak can put an end to all this nonsense I just not for Trump to care it does feel like a distraction from the other side of Sax's responsibilities which is the uh AI stuff we heard we heard a good take uh on the on the Strategic crypto Reserve yesterday that I want to get your feedback on uh Trump is known for coming out of the gate hot with a very aggressive proposal Canada is going to be the 51st state and then when All Things Are set are done it's like a 5% tariff or something like that and and so the the idea here was hey maybe the cardano thing is is this opening Salvo of craziness that winds up just being pure Bitcoin Reserve do you think that's strategically 4D chess possible I know you're still against it even if it lands there but is it possible that that's what's Happening Here Yeah certainly I mean the thing is I kind of like disagree with the premise of the question though like everybody says this is an amazing negotiation tactic but like I make deals for living right this is what I do if a Founder came to me they're like yeah you know we're raising a preed it's $100 million pre money yeah and then they expect to get negotiated down to like 50 million or something I'm like this person is clearly insane and not like trustworthy and I don't want especially if they like a track record of doing just that and it's like very public I mean yeah look Trump he wrote he wrote the order deal he's great dealmaker whatever I still don't like the strategy what about just like being a fair and honest broker you know like what about that yeah yeah that's totally fine yeah uh does Trump launch another crypto project while in office W are you uh are you or you think he's he's had enough so he's launched what four five in CL six if you count October Milani oh yeah four since October right so there's World Liberty 5 there's Trump coin there's Milani coin there's the reserve which kind of is a project is there's probably something else that I'm forgetting sure nfts he has Trump nfts two editions actually not just one edition to be clear cuz I know a lot of the holders the first edition of the Trump nft they're very upset at the second edition okay yeah so delution and the Trump nft every says mutable you know no no inflated Supply no inflation but when you issue a whole new batch of course you're going to dilute the problem with Melania too I mean look if we extrapolate this it'll be four 5,000 Trump crypto projects by the end of his they're gr exponentially supply of Trump trump crypto projects is growing exponentially he loves it uh more broadly where does crypto go from here it it's sort of it feels like a very interesting moment because it's never had more attention it's never had more users it's never had more adoption right even you know with stable coins things like that yet the uh the Vibes are are bad right like uh it there's a and and the price action is not what you would expect out of the government saying you know we're going to start buying these these assets where does it go from here how are you thinking about it as a as an investor I think markets are calling Trump's Bluff I actually don't think we're going to see a reserve we might see a stockpile I don't think we're going to see a reserve where this we're using government taxpayer funds regardless of how they're accounting for whatever accounting tricks they use we're not going to see taxpayer funds used to buy crypto assets that's crazy okay that's not going to happen markets calling is Bluff also you know risk markets are going crazy every war everyone's worried about the tariffs and inflation and uh you know recessionary signals whatever that probably explains a lot of the selloff too uh Vibes are really bad in crypto because the big uh L1 launches of this year have not done well uh meme coins are dead as a category um even though we have sort of like emerging regulatory Clarity around it like the retail bid's just not there I think retail got hosed one too many times yeah so they're just not willing to do that they don't want to buy the you know 30 billion fdv hot new L1 that Andre put $400 million into right nobody wants to do that okay there's no ultimate buyer there just VC's buying from other VCS now with a lot of these launches so in terms of liquid tokens like everyone's down bad the cycle didn't happen Bitcoin did well nothing else happened there was no alt season right so the framework people have this mental framework that's wrong that Cycles have to happen in a certain way and they happen every four years and it plays out like this it didn't happen like that um in terms of like actual usage of blockchains like it couldn't be better stable coins are taking over all of ftech all of global Finance all banking remittances B2B uh you you know International Trade settlement like my corner of the world little stable coin Corner we couldn't be happier but most people in crypto don't care about that uh the coins matter and uh the coins might be dead for a generation here so yeah how are you thinking about net new stable coin Investments where are the opportunities obviously uh anywhere that money you know Fiat moves today is an opportunity for Stables uh but there's now been a bunch of teams sort of tackling you know these various areas for a while are you making a lot of net new kind of pure stable coin bets or are you kind of letting your bets uh ride yeah I have wires going out for two new stable coin related deals this week um so we're at 19 now in our portfolio I believe uh I if you if you look at the stable coin stack I don't know how exciting this is but uh you know there's the issuers then there's like the infrastructure like the intermediaries like the B2B stable coin startups then you have like consumer uh which are like fex built on Stables um the issue game is like immensely competitive and it's the domain of Banks and consorti now so like and also basically no one's ever created a new stable coin issuer from scratch done well except for probably Athena I mean tether and circle dominate so that one's very hard the B stable coin payments like the PSP stable coin based PSP thing immensely commoditized there's like 100 new Bridges right everybody wants to be the next Bridge uh very very competitive very hard going to be thin margin um I'm looking at um you know weird stuff like um you know the banking layer itself like uh you know how do you incorporate uh stable coins into the core banking infrastructure um we're still looking at Regional fex that have a stable coin angle like that's very interesting to me but so you're looking for modes like that would be more of like maybe a regulatory driven mode or or local network effect something like that um but yeah I think just like tossing checks into the next bridge that that's probably going to be a losing strategy is is trafi even trying to move to stable coins in a meaningful way like in AI you know we see yeah chat GPT is dominant but there's Gemini and and copilot from Microsoft and every hyperscaler has their products baked in is Western Union thinking about working on this or is it just you know just completely the train just passing them by because it's more complex from the regulatory perspective I would say the major fintex non-bank fintex are very usted they're looking at making Acquisitions sure the remitters are either being disrupted by stable coin remitters or building their own so for sure that's happening there the big credit cards like visa and M MasterCard are pretty active like the big Global Payments networks uh are I would say all looking at it the last Bastion those Banks the domestic Banks foreign banks are actually doing a lot of stable coin stuff depending like look at so genen or um Standard Chartered uh tons and tons of stable coin stuff the domestic banks have PTSD from what happened over the last two years with choke point they are very afraid um I think many of them would like to me in the business of issuing a stable coin or being a service provider for stable coin being the first mile um that's going to take a lot longer they're they're still afraid that the FED is going to destroy them if they someone just think about stable coins is it shifting from like regulatory Arbitrage to more just like I don't know like yeah yeah whatever the inverse of fear like boldness courage Arbitrage like if you're if you're courageous There's an opportunity right now I think so I think so that's good that feels good still a regar actually I mean yeah that's why people say rarb to mean crime like I don't see it that way you know um a lot of like fintech thought leaders on Twitter will say that like oh you're just doing rarb like you're just a criminal yeah I mean stable coin there will be questions asked of how stable coins work from a kyc and surveillance perspective that's actually not settled that's a big Grace Swan hang of the industry people don't really talk about much grace Swan never heard that term before I like that it's like a Black Swan but some of us know about it it's a known it's a Known Unknown not an not an unknown unnown got it yeah cool like that uh what other grce swans are out there yeah gray Swan give me your top five grce Swans in crypto or just in general yeah in general uh I only know about crypto so I'm G to limit my okay that's fine tether is the top gry swan in Krypto uh some kind of can you explain that we we have some crypto investors and entrepreneurs in the audience but I would say it's not the the average so why is tether so sketchy I know the answer but I'll let you kind of explain ah yes uh I mean you know they made they did some like let's say light accounting fraud in in the past uh you know they were hacked for $850 million and then they uh or bitfinex was or was it bitfinex or tether anyway they co-mingled their balance sheets there's like a weird ersat promisory note alone type thing um I mean look they're just an offshore dollar that serves people that want dollars on the blockchain in a kind of lightly surveilled way outside of the Contours of the US banking system so of course they're going to be used by a lot of insalubrious people that's that was always going to happen and uh you know so the Wall Street journals is always going to be dig digging up examples of kind of nasty criminal use and there's only so much activity they can flag and freeze so that's just that's really it uh obviously the reserves have been questionable in the past I think they're fine now but uh you fine because even if they got hacked for 850 million they just make so much money that presumably they would be able to cover the hole in the balance sheet is that the idea well that they could do today yeah I mean the reason the hack was they were forced into it because no US Bank would really serve them so they had to use these sketchy Banks and one of them scammed them basically so like the sketchiness it like the fact that they've been sketchy is also kind of a function of the fact that the doj is like chasing them around yeah yeah because they're like forced to use some of the worst intermediaries on the planet if that makes sense yeah now they've been able to legitimate themselves now they have caner Fitzgerald they hold all the treasuries like that's probably fine but in the past that's that's like the thing that people don't understand about tether the reason that they looked sketchy sketchy and they like wouldn't disclose what banks are using whatever they were untransparent was kind of because they were playing this cat and mouse game with the US government that makes sense any other Grace wans well if coinbase's custody setup gets hacked or anything happens they custody hundreds of billions they were really the main custodian for all the ETFs that would be like absolutely catastrophic for the industry I don't expect it to happen but that's that'd be bad yeah is there I'm curious if you're looking at businesses uh there seems like some of the biggest opportunities in crypto outside of stable coins are just solving uh like the security problem right and the and the the lack of you know once funds are onchain they can move around instantly right you know we saw that uh with um what's the firm that L that got hacked for 1.

4 billion two weeks ago by bit we saw that by bit right there's not a lot of recourse there um is there opportunities around security and the sort of broader sort of like fat finger issue we talked about this you know yesterday in the context of City Bank you know accidentally uh sending you know they're constantly uh sending money around sort of not actually sending dollars but like these dollars are sort of appearing in in client accounts uh are are you looking at opportunities uh where software and can kind of like solve for that or is that just going to be kind of a everpresent sort of risk in the industry yeah so first of all yes cyber is actually one of our biggest investment themes on a go forward basis so we we think that we've really underinvested in like Security in the crypto space second of all what I think we should do is take crypto away from being a real-time gross settlement Network or like a bearer asset a digital Bearer asset and then make it more like the way that traditional Finance works and I know like people like Matt LaVine are going to like make fun of me for saying that like oh you're just rebuilding ntional Finance from scratch y my answer to that is yes that's exactly what we're doing okay but instead of working with like fax machines or whatever and like weird file transfer protocols that predate the internet we're going to do it on a better substrate and we're going to introduce this amazing thing called deferred settlement where you don't settle the payment instantly and in so doing you obtain scalability and you obtain recourse and so if we're able to create like pull payments as supposed to push uh you know all crypto payments are push that's solves a lot of this problem if we create a messaging layer alongside the settlement layer uh you know like that's what Swift is to wires right it's the messaging layer to the settlement layer yep you know all of these structures that are to like make traditional payments work and be safe and have recourse uh they just don't exist in crypto it's it's so weird like if you were to examine the crypto Market from first principles you be like this is garbage nonsense I don't know how anybody uses it I don't know how anybody cross Set uh so yeah it's just a matter of making it more like traditional payments and finance so that's the next chapter here yeah I mean I I don't think it takes away from uh you know we built an alternative to traditional Financial rails and we did it in you know I say the the collective Wei we did it in 15 years and it's moving hundreds of billions of dollars around the world and uh it's showing a lot of potential and I think it's totally I think your point of view uh and and share this view is it's okay if we're just sort of uh making a better version of of the sort of the Legacy systems that are more internet native so I love that point of view um uh do you have anything else John this great to have you we'd love to have you as our resident uh uh uh [Music] cryptographer I don't actually know any cryptography but well it sounds Coy and that's what this show is about cryptographer sounds like we're going to have him on the show to like people's passwords which would be a fun segment yeah just don't ask me to explain a CK proof I can't do that I'm sorry it's impossible no one can actually did any of that did that dark Forest game go anywhere people were pretty hyped on that for a while uh was that like a paradigm thing I I don't know I I it was like a couple years ago uh it was ZK proof powered uh like multiplayer online game and the and the map like the fog of war is cryptographically sealed so I can we can both run open source installations we know we're not hacking it was kind of a cool idea in general crypto rule thumb if you ask me did that crypto game go somewhere the answer is no and that's true 100% of the time it's never not been true yeah so there there's the answer yeah what's interesting is that uh I mean did uh what was the thing you were talking about with gpt2 AI dungeon yeah yeah I I haven't seen like we have GPT 4.

5 now and I'm still not seeing like dungeon games AI generated games taking off I see a lot of demos of people building games with Claude code for example or cursor but I don't see a lot of people uh saying like this game is completely AI generated and it's a mobile game and we're printing millions of dollars and it's working it's like a business um it seems Seems like somebody should have run with that or maybe they have and I just I'm not aware of it I don't know if you've seen anything like that I think AI dungeon was popular because people could people could just like jailbreak the game and then just use it as a conventional while I'm pre- chat gbt but now you can just use that's why was so magical interesting yeah um yeah maybe this is the new Benchmark like can you make a good game with AI Soup To Nuts like that's what uh levels did right have you guys played his have you played it yeah yeah I've i' I've spent like a weird amount of time playing you play a lot that's great so there's a there's a pmf or die blimp ad in there uh oh you guys sponsoring it pmf or die has a has like a blimp in the game I think they did some corrupt bargain or something and they did I think Patty Patty uh one of the players was so excited that he just said I'm paying for this out of pocket oh W that's great very cool well I think this answers your question you can make a game with AI yeah it's just a it's a horrible like flash game from 2000s but it's hey you're playing it it's got your attention yeah you're I know they got me it's a Skinner box you can make a Skinner box that's he's a whale on on the uh on the Peter on the Peter game on the levels iio flying flight simulator that's great terrible game but it's fun you guys should get on there I will we'll see you in we'll see you in the air next time we're on we'll all be playing at the same time see see you in the Met Earth yeah see you later thank you for coming on Nick it's great take care guys bye bye talk soon it's a lot of fun apparently levels is up to 58k Mr in about 14 days ripping this thing according to hes in the chat that's pretty good it's it's funny because he has enough of an audience now that he can almost release anything and hit metrics like that great it is sort of potentially warping uh the the actual pmf um who knows though uh do we got a PO couple of posts we can run through before well I mean we're inviting a seoa investor on and you know Sequoia is an investor in ramp so let's do a ramp ad there we go time is money save both easy to use corporate cards bill payments account and a whole lot more all in one place go to ramp.

com to get started uh and uh what oh oh uh there was news about cor weave they're buying weights and biases for 1.

7 billion did you see this deal I saw that have you SE weights and biases before I've uh I used to watch these videos called two-minute papers and they had this very interesting like Professor who would have all these like funny turns of phrases and he would uh he would always say hold on to your papers whenever he saw some like AI breakthrough and he was like and he had a bunch of other like funny funny like little phrases that everyone would like he had a great community of like uh just uh giving you updates on like what the latest AI papers are uh and and weights and biases was like his main sponsor and so that's where I know about them uh so weights and biases they paid tools start for $50 per month for professionals have attracted data scientists from various Industries including Pharmaceuticals and Medical Imaging firms it's more than 900,000 users hail from companies including open Ai seens and sales and so uh Cory is expected to IPO at a public market valuation north of 20 billion um but it's concentrated customer base has prompted investors to debate how long the company's growth will continue weights and biases competes with major Cloud providers and other AI focused firms such as data bricks hugging face which sells similar tools to developers weights and biases are common terms in the AI field uh the revenue the information couldn't figure out the revenue but they raised at a billion doll valuation in 21 and then uh 1.

25 billion slight up round in 2023 company started in 2018 and previously raised 250 million in funding from investors including kotto management Insight partners and felices I can never pronounce that Ficus is that