Garry, an early investor in Coinbase: I have enough foresight about Bitcoin

The listing of Coinbase has been a topic of sustained and intense interest these days. Many past events about Coinbase’s growth have been reported on the Internet, and many of its early investors have also written articles about their thoughts and experiences of investing in Coinbase. I think these articles are worth reading carefully by every investor who wants to find a "book" in the investment market.

Carefully analyzing investment cases like Coinbase, and observing the original behaviors of its founders and investors' understanding and judgment from various angles can greatly improve our ability to judge potential projects and outstanding project teams. Why worry about our ability to find our own investment opportunities in the future?

Paying attention to these is far more meaningful and valuable than paying attention to whether XX coins are worth buying now.

In yesterday’s article, I shared with you a few details that touched me deeply when I read about Coinbase’s early growth experience. Today I will share with you some memories of early investors of Coinbase when they invested in Coinbase.

Garry Tan participated in the seed round financing of Coinbase in 2012, the eve of its establishment.

In yesterday’s article, I once wrote that in that era, Bitcoin was only a very fringe thing. What did the original investors think about starting a business around such a fringe thing?

Garry talked about his thoughts back then:

First of all, like other investors, he didn't think this thing was hard to believe, nor did he think it was impossible, but after seeing the news about Bitcoin, he tried it himself. At that time, the exchange he tried to buy and sell Bitcoin was Mt. Gox, and the experience was very bad. It was this bad experience that made him feel that Bitcoin has no future if it goes on like this, so he thinks how to improve the transaction experience of Bitcoin is worth doing.

This is a point of view that I highly respect and summarize:When we invest in a field that we don't understand at all, we can't analyze it completely according to the usage scenario, but use "logic" to analyze it.

What does it mean? In the case of Bitcoin: If you look at the usage scenario, fringe things like Bitcoin only had such a small transaction volume and such a small audience. Is there any prospect for such a usage scenario? Is such a business model likely to succeed? Thinking along this line of thought, we will fall into speculation about the future: what might happen if there is a future, and what might happen if there is no future?

In my opinion, instead of falling into this kind of speculation about the future, it is better to change another way of thinking: no matter whether this thing has a future or not, we have at least seen someone trading it, then we can see its status purely from the logic of trading. How is it? Obviously Garry’s experience was that the trading experience was very bad, so purely from the logic of the transaction, there is still a lot of room for improvement, so the Bitcoin exchange is something that needs to be improved, so companies that focus on this thing have investment the value of.

This is to look more at logic and less at scenes.

Note that this idea is only for those very early startups or projects that were born. For those projects that have matured and become big white horses, this method is not applicable. For big white horses, specific data must be used to judge.

Garry's investment in coinbase also benefited from his belief in Bitcoin. As early as 2005, 7 years before he invested in Coinbase, he once read a book "The Dollar Crisis".This book depicts the history of the development of the U.S. dollar, and the history of the decoupling of the U.S. dollar from gold made him deeply feel the bleak future of the legal currency。So when he saw Bitcoin, he thought that this emerging thing has incomparable advantages over legal currency in many aspects, and it is something worthy of attention.

Because of this, he is willing to try buying and selling after getting in touch with Bitcoin, and he will not reject start-ups like Coinbase.

Garry's experience is very consistent with a point of view I firmly believe in:In the field of investment, many times, the root cause that supports us to make some key decisions may have nothing to do with the investment itself, but comes from our cognition in other fields. The acquisition of this kind of cognition requires a lot of reading and a lot of thinking, and it depends on the precipitation of time and the accumulation of experience.

This is why I said that in the investment process, I do not recommend that ordinary investors spend a lot of time on short-term games and toss back and forth staring at the fluctuations in the market every day. Instead, they should choose a long-term strategy and operate regularly to save money. time to read and think.

I hope these experiences of Garry Tan can inspire each of our investors.