I'm Max Webster, founder of Hivemind Ventures, a Lightning Network seed fund - AMA!
27.9k sats \ 48 comments \ @MaxAWebster 14 Jun 2022 bitcoin freebie
Hi, it's Max (@maxawebster), founder of Hivemind Ventures, a seed fund investing in L2 & L3 Bitcoin startups building the future of finance, communication, and energy. We're particularly focused on the Lightning Network and are fortunate to have partnered with many of the best companies in the space including: Lightning Labs, River, Galoy, Breez, Stacker News, Lightspark, Ibex Mercado, Pouch, Neutronpay, Bitnob, Lightning Network Plus, Satoshi Energy, and many more.
My Lightning thesis: https://hivemind.vc/why-lightning-why-now/
Prior to Hivemind, I invested at Version One Ventures and was on the founding team of Bright, a leading residential solar company in Mexico.
I also rap: bit.ly/2SxBo4d https://www.wavlake.com/cypher-perro https://open.spotify.com/album/7dRob11mbsIwBptfoZ8XxV?si=gC-TWLxVTQCO_mOta0tLKA
write
preview
related posts
228 sats \ 1 reply \ @andyleroy 14 Jun 2022
What do you see as the biggest risks overall in the space and also to individual portfolio companies? What have been your biggest challenges as an investor in this space?
reply
222 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
Biggest risks:
  • Arbitrary rules / regulation that makes it difficult to run nodes and use LN payments
  • That I'm investing a bit too early in the wave and that it will either be hard for current portfolio cos to sustain a long bear or that we're still investing the in webvans of LN and the instacarts will come a few years later
Biggest challenges:
  • Determining where in the adoption curve we are and how quickly it will run
  • Personal bandwidth - I love doing this and wish I had even more time to roll up my sleeves and help my portfolio cos gain global adoption
reply
224 sats \ 2 replies \ @andyleroy 14 Jun 2022
What kind of data points about the lightning network are most important to you as an investor?
reply
136 sats \ 1 reply \ @MaxAWebster OP 14 Jun 2022
Usage!!
Liquidity is amazing, but I think we're at the point where we have excess liquidity. We now need users, which is why I'm so excited about both payment apps (e.g. Pouch, Neutronpay, Ibex Mercado, Bitnob) and new LN native online apps like Stacker News and Fountain.
reply
21 sats \ 0 replies \ @andyleroy 14 Jun 2022
💯 that makes a ton of sense - thanks!
reply
110 sats \ 1 reply \ @k00b 14 Jun 2022
Generic advice for Bitcoin/Lightning companies?
reply
31 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
Stay focused and don't worry about what you can't control (broader market, what other projects are doing, etc). With the caveat that it's always a good idea to have a lean cockroach plan where you could survive with a very small team or by yourself just in case.
Live far below your means. Always.
Prioritize taking time away from the screen to figure out your priorities. Meditation might help. Also probably a good idea to spend less time on Twitter (or any distracting site). This applies doubly for me too haha
reply
264 sats \ 1 reply \ @andyleroy 14 Jun 2022
How do you envision the next five years of the lightning ecosystem evolution playing out? What is your most optimistic outlook for what the world could look like in five years with Lightning (and Bitcoin)?
reply
131 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
LN overtakes all closed payment rails (Visa, Mastercard, Swift, ACH, etc). At least 2B people can now participate in the global economy and send remittances/payments for nearly free. We'll have a huge wave of innovation as entrepreneurs develop new business models and applications based on an incredible new primitive: payments that are instant, global, and programmable. Companies like Breez are successful in creating the tools necessary for non-custodial applications to thrive so that those who wish to hold their own keys (in a very user friendly way) are able to do so. A general golden age ensues :)
reply
331 sats \ 3 replies \ @AlvaroJSol 14 Jun 2022 freebie
We are proud to have Max as one of our investors at IBEX
reply
130 sats \ 1 reply \ @AlvaroJSol 14 Jun 2022 freebie
Max, given the current VC and economic landscape, what advice can you give companies that are scaling in terms of users and TXs but will eventually have to find profitability with their offerings/clients? How do we bridge this gap while competing against the BIG legacy rails?
reply
73 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
At the (pre)seed stage, not much has changed. For companies scaling into their Series As and Bs, I would say have two plans. One for more aggressive growth assuming mission aligned, patient capital is available (which, for now at least, still seems to be the case). But also, it's smart to have a more conservative cockroach plan should we enter a new zone of short term pain. In the long run though, I may be naive, but I'm not too worried. Truly breakthrough ideas with organic, explosive growth will always find a way ;)
reply
121 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
And I'm a proud investor :) The IBEX team is amazing and working on an issue that's particularly close to my heart: LN adoption in LatAm. These guys rock!
reply
204 sats \ 1 reply \ @andyleroy 14 Jun 2022
How do you model or measure TAM or opportunity of the Lightning Network as a whole?
reply
121 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022 freebie
I like this article from @nb: https://medium.com/galoymoney/lightning-as-a-retail-payment-system-part-1-7463c46342ef
If LN can eat all closed payment networks (Visa, Mastercard, Swift, ACH, etc) then the TAM is literally all of global payments. Because fees on LN will be so much lower, however, it's possible that value capture will be much smaller for companies in this world, which is generally a very good thing for people. The key in my mind, however, is that free global micropayments are going to enable orders of magnitude more commerce. When 8B people - most of whom currently have no means of conducting commerce online - can one day participate in the global economy, then the total pie of payment volume should skyrocket. So even if you're taking a smaller slice of each payment as a company, the total pie is going to be much, much bigger.
reply
211 sats \ 2 replies \ @k00b 14 Jun 2022
What's something you believe about Bitcoin/Lightning that few Bitcoin/Lightning investors would agree with you on?
reply
142 sats \ 1 reply \ @MaxAWebster OP 14 Jun 2022
A few:
LN will eat all closed payment networks this decade. Probably much faster than anyone believes.
Investing in any other crypto project and/or traditional fintech is a waste of time and capital.
Bitcoin cos are cool, but LN companies will see by far the most explosive growth.
In the future, all energy contracts will be Bitcoin smart contracts settled in real time over the LN.
reply
11 sats \ 0 replies \ @andyleroy 14 Jun 2022
Thanks for your insight on this - really great to see all of the potential in lightning
reply
283 sats \ 1 reply \ @ThrillerX_ 14 Jun 2022
Hi Max, thanks for doing this SN/AMA.
Wanted to find out how you go about looking for talented founders of ⚡️projects? Do you find they come to you or is there some other process you use to filter.
reply
142 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
I'm open to meeting founders from anywhere. TBH, I follow the space pretty closely, so I generally have a pretty good idea of what I'd like to fund next (either team and/or idea). I love, however, being blown away by a unique inbound insight that I've never considered. I'd say it's good mix of inbound and outbound for me though.
reply
233 sats \ 3 replies \ @kr 14 Jun 2022
In 10 years, which of today's Lightning Network companies will have the largest market cap?
reply
91 sats \ 2 replies \ @MaxAWebster OP 14 Jun 2022 freebie
Probably Block.
But honestly it's very difficult to say at this point and depends on both where value is created and where it accrues. It could be the companies with the most efficient, best capitalized, best connected nodes (i.e. the new Visas). It could be the leading liquidity marketplaces (e.g. Lightning Labs, Lightning Network Plus, Amboss, etc.). It could be the breakout apps that build new user experiences with native LN payments (i.e. the new Twitters, YouTubes, Googles, etc). I'm personally investing in all of these categories.
reply
110 sats \ 1 reply \ @kr 14 Jun 2022
Bonus question: In 10 years, how many people will be making Lightning Network payments on a daily basis?
reply
105 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
Over 2 billion
reply
231 sats \ 1 reply \ @agbegin 14 Jun 2022
What one or two books, pods or articles shaped your thinking about Lightning the most? And/or who are the people you most recommend following to stay on top of what’s happening with Lightning?
reply
87 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
https://medium.com/galoymoney/lightning-as-a-retail-payment-system-part-1-7463c46342ef from @nb
Everything from @roy especially https://medium.com/breez-technology/lightning-is-a-liquidity-network-550896ca27ea
A vision for "web3" on Lightning from Ryan Gentry https://multicoin.capital/2020/05/05/lightning-2020-a-toolkit-for-heretical-web3-developers/
This talk from Dhruv Bansal:
And to shill my own stuff ;) https://hivemind.vc/why-lightning-why-now/ https://versionone.vc/dont-sleep-on-lightning/
People to follow: Roy, Nicolas, Elizabeth/Laolu/Ryan/Jacob/et al at Lightning Labs, Steve/Matt/et al at Spiral, and the teams of all my portfolio cos listed above + Zebedee, Voltage, and Amboss. Some amazing talent in this space :)
reply
207 sats \ 2 replies \ @tomlaies 14 Jun 2022
In %, what is the likelihood of the bear case scenario of remaining "niche internet/underground money"?
reply
34 sats \ 1 reply \ @MaxAWebster OP 14 Jun 2022
Perhaps I'm naive, but I think bitcoin becoming a global currency is inevitable. Short term (over the next decade), I suppose with harsh regulation/misinformation it could remain niche (20%?), but as more people understand why fiat currencies fail, bitcoin will have no competition.
reply
10 sats \ 0 replies \ @tomlaies 14 Jun 2022
Love to see it!
reply
205 sats \ 0 replies \ @andyleroy 14 Jun 2022
Hi Max, thanks for doing an AMA. I recently found and have really enjoyed all of your writings. I have a bunch of questions that I'll add one by one - I'd love to hear any thoughts you are willing to share on any of these (of course leaving room for all of the other questions):
reply
106 sats \ 0 replies \ @faithandcredit 14 Jun 2022
How much time do you expect it will take for projects you invest in to turn a profit?
reply
111 sats \ 1 reply \ @k00b 14 Jun 2022
What's the most surprising thing you've learned investing?
reply
142 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
A few:
  • At the early stage, it's all about people and market. That's it.
  • Being a solo GP is a huge advantage as I can move very quickly and not waste time with overhead, bureaucracy, or trying to convince someone else of my vision
  • But being a solo GP can also be lonely and means I don't have as much bandwidth as I'd like
  • It's amazing to work with LN founders while it's still niche. At this stage, all of us are true believers and missionaries. Makes it ridiculously fun to do this job.
reply
114 sats \ 1 reply \ @k00b 14 Jun 2022
If you had to make venture deals based on one criteria only what would it be?
reply
131 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022 freebie
Founder all day every day.
To cheat, I'd say an A+ founder exploring problems in what could be a massive market.
reply
110 sats \ 1 reply \ @mf 14 Jun 2022
Besides wallets and banks, whatother types of projects do you encountet?
reply
21 sats \ 0 replies \ @MaxAWebster OP 15 Jun 2022
Infrastructure: monitoring, liquidity, node hosting, etc.
Lightning Service Providers (routing nodes with the potential for lots of users)
Regionally focused payment apps
New Internet apps with embedded payments (e.g. Stacker News, Fountain)
And all sorts of cool new stuff - hard to keep up :)
reply
0 sats \ 0 replies \ @faithandcredit 15 Jun 2022
Does the lighting network have any competition? If not do you think it will?
reply
10 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
Ok guys, I'll be signing off soon. But feel free to drop other questions here and I'll answer them later. Hasta pronto, Max
reply
110 sats \ 1 reply \ @0391398253 14 Jun 2022
Do you believe that we can move, at least on Bitcoin, from users being the product to users paying for services?.
Do you believe that the logic of current VC would work on lightning?, Imo that logic failed on the ico mania trying to replicate the startup approach. Rise capital, create a token, and having thousand of dollars before having anything.
reply
21 sats \ 0 replies \ @MaxAWebster OP 15 Jun 2022
Yes, I think we can at least give users the choice and many will choose to pay directly. I don't think advertising dies entirely though as some folks will still prefer ads. But you'll have much greater flexibility when designing biz models and products. I'm particularly excited about what unexpected new experiences are unlocked by value for value payments.
I do think the logic of traditional VC works well here. A big part of my thesis is that we're at ~1997 Internet level adoption (roughly 200M users). From '97 to '07, the Internet grew from ~200M to 2B users and lots of amazing companies were built (Google, YouTube, Twitter, etc.) I think the same thing will happen here. Bitcoin and Lightning Network comprise the Internet of Money and lots of amazing companies will be built on and around that protocol stack. What we saw with the recent token craze was not VC in my mind, but more akin to funding gambling on penny stocks with the hope of cashing out before the music stops. Not my cup of tea.
reply
110 sats \ 1 reply \ @LatiNodos 14 Jun 2022
Hi Max, Mexican here- really cool that you were involved in Bright
I'm looking for some advise, thank you in advance:
I would like to build an incubator for a niche segment of the LN user base, plus help connect LN entrepreneurs with Angel Investors.
Where do I start? How do I develop the X-ray vision for initiatives and partners?
reply
43 sats \ 0 replies \ @MaxAWebster OP 15 Jun 2022
A 🥚!
What sort of niche are you looking to focus on?
I'd personally LOVE to see more LN adoption in Mexico. Shoot me more info on what you're thinking max [at] hivemind [dot] vc
reply
100 sats \ 2 replies \ @mf 14 Jun 2022
When stacker.news sponsoring?
reply
114 sats \ 0 replies \ @MaxAWebster OP 14 Jun 2022
Already a proud investor :)
reply
11 sats \ 0 replies \ @mf 14 Jun 2022
Was so excited that i missed its onyour list :D
reply
0 sats \ 0 replies \ @Brunswick 15 Jun 2022
How do you envision lending for the average Joe wanting to buy a house or car in a hyperbitcoinized world?
Will lending be under a fractional reserve "free banking" system?
What do you think the interest rates for this collatoralized debt might be in the range of under such a world-wide system of pure free-market finance?
reply
0 sats \ 0 replies \ @fjc 13 Jul 2022 freebie
Hi Max, big fan of your thinking around LN. Thanks for doing this AMA (though I feel late to the party having just come across it).
I am personally uncertain about where value will accrue in the Lightning ecosystem, and that indeed it may be mostly to consumers. As big monopolies become undermined and inefficiency is trimmed away consumers will benefit, while proportionally less value will be redistributed to/captured by any one company than for Web2.
As an investor, how do you size this up –– and given positive lightning dynamics are beneficial to BTC price (with potentially even greater boosts due to network effect+SoV functionality), why is betting on LN companies better than merely on BTC?
To be clear I am a firm believer in BTC+LN and agree with your assessments of both, this is a question specific to converting those convictions to investment decisions.