Invest Like the Best with Patrick O'Shaughnessy
Matt Huang - Investing At The Frontier - [Invest Like the Best, EP.420]
Tue, 22 Apr 2025
My guest today is Matt Huang, co-founder of Paradigm, a leading crypto investment firm with over $12 billion in assets under management. Before launching Paradigm in 2018 with Coinbase co-founder Fred Ehrsam, Matt was a partner at Sequoia Capital, where he led many of the firm's crypto investments. It’s widely reported that Michael Moritz called Matt “the only regrettable loss in Sequoia’s history.” In our conversation, Matt shares his framework for navigating the often illegible frontier of crypto, how his early investment in ByteDance (now worth 10,000x his initial capital) shaped his approach to identifying exceptional founders, and why he believes so deeply in crypto’s long-term potential. His firm, Paradigm, not only invests in many of the leading companies in the industry, it also builds open-source tools used by most of crypto. Matt has a rare blend of IQ and EQ that allows him to understand technical complexity, bring together unique talents, and ride out crypto’s notorious volatility. Whether you're crypto-curious or crypto-skeptical, I think you'll find his perspective valuable. Please enjoy my great conversation with Matt Huang. Matt Huang's Profile in Colossus Review. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus. – This episode is brought to you by Ridgeline. Ridgeline has built a complete, real-time, modern operating system for investment managers. It handles trading, portfolio management, compliance, customer reporting, and much more through an all-in-one real-time cloud platform. Head to ridgelineapps.com to learn more about the platform. – This episode is brought to you by AlphaSense. AlphaSense has completely transformed the research process with cutting-edge AI technology and a vast collection of top-tier, reliable business content. Invest Like the Best listeners can get a free trial now at Alpha-Sense.com/Invest and experience firsthand how AlphaSense and Tegus help you make smarter decisions faster. ----- Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes: (00:00:00) Welcome to Invest Like the Best (00:06:15) Matt Huang's College Years and Early Career (00:12:27) The Failed Startup and Lessons Learned (00:16:51) Matt's Pivotal Trip to China and ByteDance Investment (00:25:58) Sequoia's Culture of High Standards (00:32:51) Discovering Bitcoin and Crypto (00:39:33) Founding Paradigm (00:45:40) Building a Unique Investment Team (00:48:03) Challenges and Volatility in Crypto (00:53:10) The Relationship Between Legibility and Investing (00:58:40) Crypto as a New Financial System (01:05:19) The Importance of Stablecoins (01:09:54) AI and Crypto: The Next Frontier (01:16:19) Personal Motivations and Important Crypto Use Cases (01:29:23) The State of Regulation in Crypto (01:32:27) The Kindest Thing Anyone Has Ever Done for Matt
Chapter 1: What is Matt Huang's background?
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Chapter 2: What lessons were learned from his failed startup?
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My guest today is Matt Huang, co-founder of Paradigm, a leading crypto investment firm with over $12 billion in assets under management. Before launching Paradigm in 2018 with Coinbase co-founder Fred Ursham, Matt was a partner at Sequoia Capital, where he led many of the firm's crypto investments.
Chapter 3: How did the ByteDance investment shape his career?
It is widely reported that Michael Moritz called Matt the only regrettable loss in Sequoia's history.
In our conversation, Matt shares his framework for navigating the often illegible frontier of crypto, how his early investment in ByteDance, now worth 10,000 times his initial capital, shaped his approach to identifying exceptional founders, and why he believes so deeply in crypto's long-term potential.
His firm Paradigm not only invests in many of the leading companies in the industry, it also builds open-source tools used by most of the crypto world. Matt has a rare blend of IQ and EQ that allows him to understand technical complexity, bring together unique talents, and ride out crypto's notorious volatility.
Whether you're crypto curious or crypto skeptical, I think you'll find his perspective valuable. To learn more about Matt and Paradigm, I highly recommend reading our Colossus Review profile about them. Our managing editor, Dom Cook, spent time in their San Francisco office learning everything he could about them.
You can find that excellent profile on our website at joincolossus.com and in the show notes of this episode. Now, please enjoy my great conversation with Matt Wong. If you think about chunking your life up into early chapters, let's say up until you're like a professional, what are those chapters? What happened during them? Why would you segment it that way?
Let's see. I would say there's a childhood chapter where probably like a lot of other people, the primary goal I had was getting into college. And in hindsight, I think that's, for a lot of reasons, very depressing and not something I want to bring up in my kids. But that was like a very primal thing in my life. Both my parents were PhDs and professors.
And so becoming educated was the family North Star. Directive. Yeah. And I was very lucky. They were, if you think about stereotypical Asian parenting, they were very liberal relative to what you'd imagine as the caricature. So they were very supportive later in life when I took risks and Decided not to go down that path. But anyway, that was phase one.
Phase two was probably a bit of a walk in the woods in college of naturally figuring out what's next. Phase three was building a failed startup. Phase four was learning to become an investor. And I think I'm now in phase five, which is building paradigm and figuring out my self-expression.
In the chapter one, what is the first time that you remember being consciously aware of this family directive?
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Chapter 4: What are the challenges of investing in crypto?
But the aha doesn't really happen until you're in it. And I think the ambiguity of trying to create something new from scratch and the loneliness of the founder journey and kind of all the founder empathy stuff was probably the main takeaway. And I think that's the biggest thing that has helped me from that experience.
If I could somehow go back to that time, whatever the last day of that chapter was, and ask you, Matt, what is your worldview? What do you think you would have said at that point?
Well, I knew I wanted to be in technology and building things. I was definitely not sure whether tech Silicon Valley was the ideal place to do that. That actually connects to, I toyed with the idea for a little bit of going to build something in China. Because this was 2012 now, Silicon Valley, I felt at the time was somewhat saturated. Obviously, it wasn't. But the iPhone was released in 2007.
You had a lot of mobile apps get built. I think 2012 was the year Instacart and Snapchat were started. Those were probably the last two big consumer outcomes that were mobile first. I'm probably missing something. And that's what I was interested in. Enterprise is not really, I think it's super interesting for some people. It's not interesting for me.
And so China felt like the place where you could have that level of compounded annual growth of the underlying space. And I thought, hey, I'm Chinese American. Maybe I'll have an advantage there. When I took the trip, I realized, no, I'm not actually Chinese. It's a very different thing. But that ended up leading me to the ByteDance investment. And we can unpack that.
But when I came back, the next time I felt like there was that underlying multi-decade potential to compound with Tailwinds was crypto.
I have this visual in my head, like somehow what we were doing here is making a movie about you. The opening scene would be like you landing in China on a plane in this 2012 trip. And that would be like the opening vignette. Can we like do it in audio that way? Can you go like in crazy detail and tell us about literally in as much detail as you can muster this pivotal trip? We'll give it a shot.
If you visualize back in 2012, every U.S. venture capitalist and company was trying to go to China. China was entering Hollywood. It was very much a globalization at the forefront. And I thought maybe that's where I should spend time. I took vacation from Twitter. So this was like a week-long vacation. I had some mutual friends with folks who were VCs or tech people in China.
And so they helped me set up a bunch of meetings. And so I land in Beijing. And I had been there before. The summer before MIT, I went to do some language learning. But even in just that time, which was basically six years, the whole city was transformed. Like you land and it's a massive, massive city, very gray.
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Chapter 5: What is the role of stablecoins in the crypto ecosystem?
Chapter 6: How does Paradigm navigate the future of crypto?
Immediately at that time, I basically pivoted to a lot of the CS courses actually counted for the math major. So from there, just started to learn everything about how one would build things. And then with my roommates, started working on things that eventually led to the startup.
Tell us the story of the failed startup, the rite of passage.
We applied to YC twice. And the first time we didn't get in, I just think I remember flying out to California for the interview. And we interviewed with PG. And when he called us that evening, maybe they still do this, like it's the same day. And he's like, we love you guys. We couldn't hate your idea more. Can you come by again? Let's brainstorm.
Let's try to figure out something for you guys to do. And we did that and still couldn't come up with something they were excited about. And then I think a week later, he released an essay, something to the effect of like why young people have bad ideas. You're inspiring. Right, exactly. So I do think we were falling down all the obvious traps of young people. You overrate your own problems.
A lot of young people are attracted to like the problems they have in college, but college students aren't very representative of the average consumer. So anyway, from there, six months later, we had continued to build and hack on things. And eventually, the next batch, we already had a prototype with users. And it was still a terrible idea, by the way.
But if you remember back to that period of time, this was when streaming content was coming online for the first time. So like Netflix and Hulu, this was 2010. And so we were building a TV guide website for that era. I think in hindsight, it's just not a good idea. business and very concentrated.
It's a two-sided market where one side is extremely concentrated and the other side is super lazy, low willingness to pay. Just how you draw it up. Yeah, exactly. So we went to YC and raised some angel and seed money and continued to build and eventually it just wasn't working the way we wanted. So we pursued acquisition of opportunities and ended up getting acquired by Twitter.
And that itself was an interesting chapter. What did you learn in that M&A? In the M&A process? This was the era when they weren't acquiring the business, they were acquiring us. It was a talent acquisition. We interviewed there, Airbnb, and Palantir. Ended up choosing Twitter, probably the least well-run of the three companies.
I would say the most important takeaway for me, I don't think there's a lot of things to learn from failure or a failed startup on a substantive level. But I think there are certain lessons. I certainly learn this now much more or experience this now much more as a parent. Some things you have to learn by experiencing them. You can read all you want. You can think that you understand them.
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Chapter 7: What unique investment strategies does Paradigm employ?
Chapter 8: What insights can we gain from the state of regulation in crypto?
So finally, we get to talk a lot about Paradigm and crypto and everything that's happening in the world today. Paradigm today is a $10 billion plus asset manager focused on crypto. Maybe talk through what is it? How do you conceptualize what you want it to be and what it is like a high level overview?
I mean, our founding insight that both Fred and I had around Paradigm, we had a shared belief that crypto would be one of the most important technical and economic trends. We believed that to invest in crypto required being what we call crypto native. And we sought to build that. We didn't actually have a top-down plan.
What that meant to us was making sure that we had the right group of folks who could navigate that uncertain future. Back to the legible, illegible point. I think crypto, even today, but definitely back then, is a frontier that's extremely illegible. It's hard to understand what is valuable, what will be valuable, to separate noise from signal. It's a deeply technical space.
And we knew that hiring investors from central casting was not going to be it. We were lucky with some of our first hires that skewed us in a much more technical direction. And I think today, I would say two primary things that drive us at Paradigm. The first is we think of our mission as advancing the frontier of crypto. We care about investment returns, too.
But we're not primarily optimizing for that. I think if we advance the frontier of crypto, make crypto work, grow the pie, get a little bit lucky, I think we'll also generate great investment returns. But it's really that first thing of this is an important set of technologies that really needs to exist. We think a lot of value will also be created.
The second thing is that we try to build a team that embodies being builders, not just investors. Part of this is just aesthetic orientation of, I think both Fred and I liked building things and a lot of the early team do as well. And we're just oriented towards trying to figure out on the technical or product side where the frontier should be going.
But part of it's also, we think it's one of the best ways to also invest in the space. Perhaps the analogy is somewhat like biotech where It's so technical that you really need subject matter domain experts to understand what's happening. That's not enough on its own because you have to mix that with the commercial sense too.
But a lot has emerged from thinking of ourselves not just as an investment firm, but as a place that builds products and does research.
Yeah. The original chapter of Paradigm is so interesting because I think you raised hundreds of millions of dollars and effectively just put it all in Bitcoins. You tell that story because it worked out quite well.
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