As an investor, I’m the gatekeeper of the future.
Getting a meeting with Alex wasn’t easy, to say the least. Even when our good friend Rokas gave us an introduction, we were still far from having a coffee with him. Look, he’s a busy guy and revolutionizing cryptos takes some serious effort and brainpower. Nonetheless, we followed our mantra of never giving up, and 3 months later, we finally got the chance to get together.
Alex is the founding partner of Inflection VC, an early-stage venture firm investing in the open economy. Before that, he worked at Earlybird and led crypto investments at Index Ventures. Alex also holds a diploma in law and an economics degree from the University of Osnabrück.
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This interview has been edited and condensed for clarity.
What did you dream of when you were a kid?
I grew up in the western part of Germany. My mom worked at a local newspaper while my dad was one of the early adopters of the internet. He was obsessed with it. Remember, this is in the 90ies, there weren’t many people with an interest in such technology.
That futuristic world excited me, it made me realize all the possibilities the future would hold, but not from a work perspective. I never thought I would make a career out of it, I simply liked to connect regularly with a bunch of geeks.
Later on, the relationship with my dad became quite challenging and subconsciously, I probably moved away from tech for that reason.
And then, university?
Yes, I decided to study law and economics and graduated with honors from the University of Osnabrück. I had a predefined path with a Ph.D. in line of sight and multiple engagements with globally leading law firms in antitrust and commercial law.
However, something inside me felt odd about this future that was already mapped out. I didn’t want to pursue that academic career and could barely find someone working in law who was deeply passionate about her profession. I looked around and actually joined Google in 2012.
It felt amazing to be reconnected to the technology world.
From there, I’ve only followed my curiosities. I worked three years in operations as an entrepreneur in residence. The tipping point of that experience was the Snowden Saga from 2013. The whole Internet community was shaken up, and everybody started freaking out about the downsides of real-time micro-targeting, mass surveillance, and the overwhelming (and unconstitutional) powers of secret services.
In turn, I became an activist trying to defend online privacy. I strongly believe that, without privacy, freedom is not achievable. I wanted to contribute to the cause and dove into cryptography and privacy-preserving technologies.
I connected with the hacker scene of Berlin and was introduced to Bitcoin. I didn’t care about currencies or finance that much in the early days, but the democratising effects and decentralisation of power through cryptography fascinated me.
How did you get into Venture Capital?
My initial role at Google was all about reconnecting with the tech ecosystem. I got a lot of responsibility, managed two M&A transactions and worked on both product and finance. In parallel, I had this side role as Data Protection Commissioner, which was more related to cyber security.
I saw from the inside how marketing departments were leveraging behavior manipulation algorithms. They were able to read and listen to what people were doing as well as modify those behaviors with a/b testing.
When I realized that tech giants could control the masses and influence political opinions, I had to step out.
After my Google years, I worked for a Fintech startup for a while, and after the company was acquired, I went on a backpacking trip to Southeast Asia. During that trip, a colleague from Google reached out, saying he was starting a fund and he needed someone on the venture side. The fund ended up merging with Earlybird.
When did you hear of cryptos for the first time?
There were multiple touchpoints with these technologies.
At first, I needed some sort of informal education, as you could not get a certificate about cryptos (laughs). I joined the so-called crypto parties. It was a bunch of volunteers showing how to use PGP, Tor, and stay safe online. They would run alternative operating systems and would ensure their communication could not be monitored. I found it fascinating.
I felt empowered by the feeling of freedom, not being monitored or controlled by anyone.
Mid-2015, I got hooked on the idea of native assets floating around, like information through the Internet. This drastically changed my view on monetary systems, and I felt it was going to change the world.
Another interesting project was The Dao, which was the first venture fund run on Ethereum. It was ready to deploy its resources into startups, as a venture capital fund living on the Internet, not controlled by anybody but the people who had invested in this fund (this was one of the largest crowdfunding campaigns in history, raising the equivalent of $120M).
I remember vividly thinking ‘holy f***, this is so insane. I want to be part of that.’
How was it to be that early in the game?
There are a few people who have been into this since 2011, and actually built companies out of it, so I wasn’t that early. I see cryptos as a multi-decade technology. A trend. We’re only in the first 10 years, and it’ll take decades before it fully unfolds.
At Earlybird, we were working with phenomenal founders in the space such as Trent McConaghy, Bruce Pon or Erik Voorhees but our investment mandate limited us to Central Europe and equity positions, hence we couldn’t touch some of the exciting things in the ecosystem.
About 3 years later I had the opportunity to lead crypto at Index Ventures, without any of such limitations. I learned a ton about markets, investing and the more US-centric approach of running a venture capital fund. The partners gave me a lot of freedom to follow my curiosity and spent some time in London and the US to explore the ecosystem globally. However, investing into very early stage businesses leveraging frontier technologies in the middle of a bear market turned out to be more challenging than expected.
I then decided to found Inflection, my way of venturing into the unknown.
In the beginning, it was difficult. I wasn’t even able to pay myself a salary for about two years and nobody - particularly in Europe - seemed interested in the industry at large. But, I stuck to my gut, and I’m now in a much more favorable position than before.
It’s relieving to be able to call the shots. When I have conviction and want to invest, I can do it - principled, thoughtful but fast-moving. I don’t need to ask for permission. This flexibility is liberating.
If you could change one thing in your journey, what would it be?
This is a difficult question. Overall, I should have taken more risks early in my career. Instead of joining a fintech company as an early employee, it’d have been the same risk profile to start something on my own but with a much higher upside - both financially and from a personal development angle.
I guess the reason for having been more risk-averse has been a more conservative family and overall social background - entrepreneurship wasn’t part of my family’s DNA but now it is (laughs).
Secondly, I should have listened to my intuition and followed my curiosities earlier and with more conviction. I studied law for 5 years despite knowing after year 3 that I wouldn’t pursue this path for the rest of my life.. I should have experimented with other interests and skills earlier. But again, this is related to risk-taking, if everybody tells you that you’re on a great path and your grades are strong, it doesn’t feel like there is any other option.
When was the time you felt the most vulnerable?
It was probably in the first few months of the pandemic.
I was already in a difficult place without the pandemic, having to raise a fund in a very exotic industry that everybody hated because the few people who put up money into it lost most of it and barely anyone understood what was going on fundamentally.
That, combined with the pandemic, made things hard. I felt like my back was against the wall. No more resources. Without my partner Robert and the extended Inflection team - who also took some very significant reputation and financial risks - I wouldn’t have gotten anywhere. I was close to giving up more than once.
This taught me to have grit and be patient. It’s character-forming.
What would you do if you only had 30 days to live?
Love that question (laughs)!
I wouldn’t do much different. I would probably accelerate some of the deals, potentially push on the ones with the most impact for future generations.
Oh, I would also meditate even more and spend most of my time with family and my inner circle.
Do you have an inspiring figure?
Multiple actually, like friends and entrepreneurs who’ve also been through difficult times. My wife obviously, the most supportive force I could imagine. And then, my partner, who really taught me how to be an entrepreneur.
The sovereign individual by James Dale Davidson.
This is not financial advice.
If you have a ten-year time horizon and high-risk tolerance - hold some BTC, hold some ETH (Ethereum’s native asset) in a 70/30 or 60/40 split. Ignore the shiny stuff if you don’t have the time or resources to deeply follow the markets. Those with more risk appetite could look into Defi or Metaverse centric index funds to complement those positions as a tiny fraction of the defi portfolio.
If you were to start a company today, what would be your one-billion-dollar idea?
One very powerful idea might be a neutral open source ecosystem for venture financing, specifically for retro-active public good financing.
Building a set of technologies that empowers public goods financing and maintenance in a sustainable fashion is one of the few ways to deal with some of the largest challenges humanity will have to deal with over the course of the 21st century (e.g. climate crisis or the rise of authoritarianism around the globe).
Inspiring story Alex, thank you very much.
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