Snowballing Crypto to Financial Freedom with Jason Hitchcock

Jason Hitchcock00:07

And then my friend who works in crypto? He goes, Jason, you have some ETH right. You had ETH from like last cycle. Like, what are you doing with it? What are you doing with your ETH? And I was like, what do you mean, I'm holding it? And he goes, no, what are you doing with it?

And then I was like, are you earning interest on it? And I was like, what's interest. And, uh, and then he's like, let me show you some things. And he showed me how to borrow against my ETH, how to, put it on exchanges, how to earn yield. And the lightbulb went off. I looked at then my, my bank account and my life savings and I liquidate everything and I put it all into ETH and I'm like, let's go.

Hello and welcome
Jonas00:43

hello and welcome to defier the crypto storytelling podcast. That is like that good friend who lives a bit too far away. You don't hear from them every week, but when you do, you always have a great time. My name is Jonas. And today on the show, we hear the story of Jason Hitchcock.

Even though Jason this managing a large DeFi fund now he remains somehow very relatable. He is a gifted storyteller. In this episode, he tells us the story from his startup days to being acquired by Twitch And how he was sitting depressed at home during the pandemic, working in an unfulfilling job to betting it all on crypto, like a true degen and making it big, but also losing half a million to hackers.

This is a fast paced and interesting conversation. Jason doesn't hold back on details and specifics.

He reveals the astonishing amount he made just by farming airdrops and shares his thoughts and tips on what he thinks is the most important for people trying to make it in DeFi. For instance, building a chat group, with your friends that have the same financial goals.

Our conversation was recorded before the whole Terra Luna DeMarco. Just in case you're wondering, so let's jump right in after I've plugged my job board that is.

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Start of the conversation
Jonas02:24

I want you to know Jason, whatever you say, you have to final cut. So don't hold back.

Jason Hitchcock02:29

I have nothing to hold back. It will all be pushed forward.

Jonas02:33

Okay. And now imagine your entry music. What is it

called?

Jason Hitchcock02:38

Are you, going to play juice world for me? Come and go. That's my favorite song.

Jonas02:43

It will be here now. It's not here, but imagine it in your head

Jason Hitchcock02:47

Yo. Oh, this is great. I would love to enter to juice world.

Jonas02:58

Jason,

Introduction Jason Hitchcock

thank you so much to come on the show just very quickly who are you?.

Jason Hitchcock03:03

Who am I? I'm Jason Hitchcock. I'm the founder and GP of four moons where a crypto firm that we sub-advised for Kingsley capital, which is a large crypto hedge fund. So we manage their, their whole crypto portfolio. And then we also run validators and, we also have our own fund.

Prior to that, I spent 10 years working at early stage startups doing sort of different go-to-market roles. I would build out sales teams, business development teams, customer success teams, growth teams. I worked in ad mobile, mobile gaming and ad tech e-commerce. You're just making consumer apps.

One of those apps was a streaming app That was for Twitch streamers, and Twitch ended up acquiring it. It was a company called Bebo. And then I, worked at Twitch for about two years doing a thing called fandom strategy.

That

Bebo got sold for $850 million and bought back for $1 million

sounds amazing. I would like quickly to dive in just a short story of one of those many things you've done. Bebo. I've seen Bebo has been founded by like this, this guy, Michael Birch, a British programmer entrepreneur, and he's sold Bebo for $850 million to AOL then later bought it back for $1 million.

So we were the ones that bought that back. this is an interesting story. I just interrupted you go on.

Jonas04:21

No, that that's what I wanted to know is like, tell, tell me more about that story. I, I mean, it's a crazy story. These numbers are crypto like.

Jason Hitchcock04:28

Bebo was like the number three social network. They took over Europe. And, you know, at the time Michael and Xochi Birch, they were running the company they saw the writing on the wall. They were like, Facebook is going to take over the world. And, I believe it was, AOL that bought them and they gave a stupidly high offer, which was 850 million.

They would have actually sold it for far less. and so they get this offer, they take it great. They exit, like now they have a lot of money. They start investing like crazy around and all the companies that became the next generation of Silicon Valley. one of the things they set up was I think called Monkey Inferno, which is an idea lab.

What is that? It's a company it's like a lab that has unlimited funding, essentially. Shaan Puri, who runs the, my first million podcasts. He was the CEO of that. And then he recruited me to join on the executive team to run like growth. And, what we did was we had a mandate of building just apps that a generation of users would use.

And so we made like eight different apps. We made one that was kind of like Bitmoji before a Bitmoji. We made an app called Blab that got like 10 million users. It was like kind of like imagine Clubhouse but with video, we, we also made an app Oh, God, we, we, we made group FaceTime apps.

And then finally we made, the Twitch streaming app in the time though, while we were doing this, we heard that Bebo was going up for auction. And as it turned out, when AOL acquired Bebo, they did nothing with it. after a few years, they eventually sold it to some private equity firm that also, you know, all they did was. slap more ads onto it and like continue to let it die. And, we heard it was going up for bankruptcy auction. We sent down, Shaan and we worked out a bidding strategy and he then places a bid and the $1 million bid ended up winning. And so we got Bebo back and like, we just wanted the name, the page rank of Bebo.

It's such a good domain. We've got an email list of, you know, millions of names. And, we thought we could use this to launch other products, like surely this brand, we could use it. And we ended up finding out that the, the person that we bought it from had actually pointed all of the Google, like AdSense accounts to their personal bank account, not the actual company bank account.

And so we then sued him for a few million dollars for violating their fiduciary duty. And so they ended up having to pay us a little bit more. And so essentially we got it for free, like plus some,

Jonas06:52

Wow.

Jason Hitchcock06:53

and then, and then we launched like five different products named Bebo. And every time we launched a product, all these British users would show up and be like, can I get my old photos back?

And it was great because then they would use the app. And then, yeah, the final Bebo that we had was bought by Twitch. So it was like the whole story, like went full circle.

Jonas07:11

Wow. And at the beginning it was just like the social network, similar to Facebook. And then in the second round, when you bought it back, you, you added a live streaming to it.

Jason Hitchcock07:19

It. was never added to the only thing that was left after Bebo was we owned the IP. And so like we were, there was no more Bebo. we built a completely new product named it Bebo cause we could used a really great domain, a whole bunch of British people would find it.

And that was that. and then we would do our normal thing. I think this is a great name.

Jonas07:40

Definitely.

Going to the moon and back, is not something limited to crypto projects

Definitely. And it also, I mean, for me, what caught my attention is like this crazy difference of price that you have, like almost a billion, 850 million, then you buy it back for 1 million a couple of years later. does that these kinds of like numbers, prime you to think differently about money and what, you know, like that's something can shoot up to the moon, but also crash that is now, looking a little bit from a crypto perspective?

Jason Hitchcock08:03

That's an interesting question. the honest answer is no, I don't really see a connection between these things. Cause like, it doesn't feel like Bebo is an asset that like you can own and materially have it change your life. I'm sure there were two founders that owned that and they had to build that startup.

And it didn't just go parabolic. Like that was a long journey. And then they got like an offer. Like, I feel like parabolic is like a tracked asset that is priced and like you're watching it sort of move up in valuation and it doesn't feel like a very tradable asset. So I get where your question is coming from.

And I'll just say, no, I don't have those feelings about it.

Bebo got acquired by Twitch
Jonas08:46

Oh, no, that's good. And, speaking of assets, when Bebo get bought by Twitch, I believe it was also a little bit the human beings working there, especially the developers, et cetera. We're also seen a little bit as assets, right. it was not necessarily because like this app is so good and had so many users is, what, what do you call that?

The Acqui-hire

Jason Hitchcock09:05

Yeah. You know, it, it turns out we like, we had a fantastic, you know, streaming app, but, we didn't feel like we have. We had product market fit with a certain type of user, which was like new streamers. And we didn't actually think that that was a good market to win. we were trying to move upstream and figure out how do we win all the streamers.

And, while we were trying to figure that out,

it turns out like one of our marketing stunts that sort of was really interesting. we saw Keemstar who's a YouTuber was throwing these epic Fortnite tournaments. He would put up $50,000 in prize money, invite all the cool kids, streamers who were big Fortnite streamers, and they would all compete.

they're already playing fortnight every day. And so they're given this invite. That's like, do you want to play for 50 grand against all the other cool Fortnite streamers in a fun tournament that we make today is all about that, that Twitter is going to go nuts.

Like sure. I'll play in that. If you looked at the numbers, like six to 10 million people would tune in to watch these things like across all the streamers. And I don't think anybody really noticed that a Twitch noticed it, we noticed it. and so we started throwing our own tournaments. And then the idea that we did was we in our streaming app, we wanted to make it so like our app made it really easy to run these tournaments.

They were very hard to run. And so we built all this technology into the app that made running tournaments very easy. Sending out invite codes. People could log in our app would use computer vision to detect kills and keep score. And then it would send you money to your PayPal. Like it was very smooth

Jonas10:36

wow.

Jason Hitchcock10:37

Twitch at the same time was running a, building out a, an original content team for the first time.

And they wanted their first, show that they were doing was streamer tournament. So it was called Twitch Rivals. And so they were, they were also running massive tournaments. It's a massive operation and they were going to be building out software and they had the question of, do we build this ourselves, hire engineers?

It will take time or look at this company. They have all the people we need. They think about this daily, they're obsessed with this problem. We can bring them and slot them in right onto our team. And they could go and build this software internally for Twitch. And that was the story.

Jonas11:15

Hmm,

What's the killer application for crypto?

that's amazing. it almost seems like Twitch has seen that gaming and you guys as well. The gaming is actually, the most engaged audience and you can build almost a whole business around that.

And it's almost like the killer application or the killer use case for streaming. It used to be at the time, the earliest adopters. Now applying this for crypto, do you, as you are very deep into crypto and DeFi and you you're on your own fund, et cetera, do you see something going on right now in crypto that you say, Hey, this is actually something similar that's going on right now underneath our eyes or probably a few people know it, but this is the killer application of crypto?.

Jason Hitchcock11:51

So let me back up a little, cause I think where my answer to this question goes back to when I joined Twitch, it was really clear what every one of the companies should do, except for me, everyone was a designer an engineer. I was this very general to market person that did growth marketing and BD and strategy. And I came up with ideas and like, where do I fit in Twitch? And so they made me write a paper. They have this whole six page paper thing. And I wrote a paper about how I was reading all these articles, trying to find inspiration.

And I was just always thinking about how. I think fandom is a really ascended idea that like is a little bit more nuanced than just viewership. And, I found a really interesting article that sort of gave me inspiration for the paper. And I wrote something about how we should establish a fandom strategy team.

What we would do is we would come up with a framework for assessing the health of fandom. Are we doing the things we need to do to turn our viewers into fans? or are we doing things that could smother the fandom and turn our fans into jaded, you know, dispassionate, people.

And so. There were sort of like three things that we used in this framework. one, every one becomes a fan because they want to vicariously live through something. and they want to feel the emotions of that. Like, you're a fan of game of Thrones because you want a sense of adventure, but you're not literally going to go kill people and you don't literally want to be in those uncomfortable situations, but watching John Snow do it, activates these chemicals in your brain.

The thing that you love has emotional range. So it takes you on these highs and lows. And like that, that range is what makes those feelings so strong. when you have low lows, the high highs feel even better. Like, oh my God, the band hasn't had an album for a long time.

The new album just came out. Wow. Or, wow, like, this is a great music video. I'm looking forward to it. These are highs and lows.

Two, is self identification. Fans need a way to self identify. They need to look in the mirror and recognize a fan, whether they have merch, or, Hey, like I see that you have a silver status. Like I know what it takes to get that you had to apply like you're in the club or, or do you know the code words Jonas, like, only people that listen to the podcast, know about that theory about Arya stark all these things matter.

Because if you look like a fan and talk like a fan one, you're convincing yourself. You're a part of something. Two, you can recognize other fans in the wild and be like, oh my God, me too. Three, you can advertise to other people that aren't in the fandom: "Yo are you like us, like, you know, maybe you should join this fandom".

and then finally, the last thing, is social connection. Are there spaces where you can collide with other fans and become friends with them? Because if you share this obsession in pop culture, it doesn't matter what they look like, where they're from. You share this bond over something very specific.

You know, this K-pop group, this streamer, this video game, and you will relate to each other and become friends. And so you can look at these three things to say like, do we have the highs and lows? Self-identification social spaces. What's the quality of each of these things. And so now, fast forward to crypto, I am seeing fandoms around apps and it's completely new.

I've never felt strongly about using Uber or Airbnb or Amazon. I use them, but you have these protocols that are open source. All the information is completely out there. Everyone can learn, if you're using, you know, Curve, a DEX in DeFi that trade stable coins, you can learn everything about it, these protocols are companies, they have roadmaps there's milestones, there's key events and.

You know, they all have tokens. And so there's a range of ways to participate in a protocol at a bare minimum, you can say, oh, I learned about this. I'm interested. I will just buy the token. And like, maybe that's all you do. And, now you're invested in it and you care about it and you're, you're emotionally going to be following it.

All these things you start to see in the discord, familiar faces and you see on Twitter of people talking about it and suddenly. There's a fandom that kind of like, we all are in this together.

it's kind of weird because, these things are happening around really boring financial apps. And it's real. I can tell you, I don't like finance. I can't believe I feel these feelings.

it gets me really excited about when there's going to be applications that are not finance that are all the other things I love in life. we're seeing it with games new feelings are being created in this world and I'm really excited about it. I'm excited to see more fandoms emerge around software because those feelings are really intense.

And I think life is about feelings. So that was long answer, but I wanted to package it like that.

Why do Gamers have troubles accepting NFTS?
Jonas16:38

No, no, that that's great. should go in into your past and kind of want to fill in this gap between when you started there at the startup and now being kind of like a big hedge fund manager. So to say, but one thing I just quickly have to insert here is this question about fandom and, NFTs and gaming.

Cause they seem to be so close. However, there's so much hate going on. do you have like a, a theory since you also know the gamers and the fandom, why they hate NFTs so much?

Jason Hitchcock17:08

I don't think they actually hate NFTs?

gamers are really comfortable discussing products in public gamers, culturally scrutinized products. And so like, it's there amo to react like, is the game good? You know, how can the game be better?

Let's let's review the game and then, like. people dislike what they don't understand. if they haven't gotten to what we call the aha moment with the product, if they haven't experienced product market fit, they're going to explain why they don't use it.

And they're going to come up with all sorts of good reasons. they're not all crypto experts. And here's what they're doing. They're pulling one of the reasons out of the Zeitgeist that they've heard the environment, it's a scam. This is a Ponzi.

There's no value to this stuff. users are not the best at describing why they do or don't use a product. What they can do is they can give their feelings about it. And There's a reason why companies hire scientists to do this work. To figure out do people like our product, you know, every tech company has UX researchers and they go through, they ask questions in a certain way, because there's an answer beneath the answer.

And so I think that gamers simply haven't been presented with a crypto use case that they go, I like this, this is awesome.

Examples of NFT use cases in gaming that make sense
Jason Hitchcock18:30

imagine you're playing fortnight and at the end of the game, you won and then Fortnite, it's like, congratulations, like you won here is like a winner trophy. it's an NFT. Like collect this boom, it's in your wallet now. And suddenly this like activated perks in the Fortnite universe. If you go to the website, they detect it in your wallet discounts, they airdrop you Vbucks their in game currency every month, just because you have it in your wallet. And by the way, because you keep winning these perks compounds, you get more Vbox, you get more discounts.

Maybe when you get a hundred winner trophies, you qualify for. The Fortnite tournament. you don't even need to buy tickets. You just need to go walk up to that tournament. And I'm like, I got all a hundred of these trophes and they go go through the gate welcome.

How brands can make colabs through NFTs
Jason Hitchcock19:18

And then maybe one day another brand is like, Hey, we're Supreme you know who we are. We make really cool streetwear. We're doing a collection with fortnight, if you have a hundred of those winner trophies, you can come to the Supreme website and get a specific, you know, hoodie that is only for people who are champions and you can mint one and they send it to you.

I just don't think like this system has been constructed yet and you know, just the other day. So there's a company I invested in my good friend Furkan he was uhm co-founder at Bebo. He was the CTO there. He made it, he has a company called third web, which makes it really easy to make NFTs. so one of their clients is as hundred thieves.

One of the most popular e-sports teams in the world and a hundred thieves. They won a big championship for League of legends. I think it was League of Legends. And then they said, Hey, to all our true fans, next 72 hours show up, you can mint this championship necklace. And it was like this diamonds necklace that looks sick.

It was an NFT. This was virtual. And Yeah.

You can go get one for free. And so 750,000 people minted them in 72 hours. It's the third largest NFT drop ever. And so if you looked at the Twitter when they announced it, it was like, oh no, not NFTs but like yo 750,000 people got them.

I think they got something that they wanted, which was like, I think NFTs that properly facilitate fandom there's no debating it. People want it. People can talk about the environment, but their actions are I'm going to buy the car or like, I'm a, I'm a vegan, but I'm wearing a leather belt, there's contradictions all across our lives.

And so that's why I'm saying like, I don't think gamers actually hate NFTs. I think they just haven't been given something that they loved and every gaming company is actually talking about this. Now it's coming. Regardless of what game or say, I can tell you, every gaming company is now looking at this and starting to build stuff.

And they're going to be given stuff by companies that are very good at giving stuff. So

How Jason Hitchcock got into crypto
Jonas21:19

Yeah, no, that's very, very convincing. do come up with those ideas on the spot, or do you think about this all day long, I guess, but, um, I'm impressed by how well you could articulate that and ideas also that the examples, um, storytelling, if he would make a movie about you now, where would we start?

What would be the first scene?

Jason Hitchcock21:42

I think the first scene would be, it would be one of those movies where, okay. It would start. It would be like, when were you start in the middle? Kind of go forward a little bit. We go back to the beginning, tell some of the story. And then we pick up to where we were. So like the part where we would start would be during the pandemic,

I was in my apartment, locked in. It's been many months. I had a beard I'd put on weight, a dark circle into my eyes and I was sad. I was like, I was not at work where I get energy from people. And I felt like I was disconnected from our culture and I was crying, talking on like a Facebook portal call with my parents.

I was like, ah, I'm going crazy. I feel like I've had a long career on the internet and I feel like I'm bored of the internet. I don't love working at Twitch. It's kind of hard to work here. It's like a huge company. That's bureaucracy. And I have like important work I have to do that I don't enjoy doing and stressed out.

I don't is this what life is like, if I didn't do this, I don't know where I would work or what I would do. Um, then I, started crypto investing after that. And after that, I was like, I organized all my friends who were founders into a group chat and we were like, we've made other people so much money. I've sold Millions of dollars worth of products across different companies done all sorts of marketing. Surely all of us with our brains combined could come up with ways to make ourselves money. And, we would type in the group, chat our ideas and experiments like, oh, what about let's do a Shopify store for a streetwear wild, you know, bike shorts.

Cause Peloton is huge. Like people want to take selfies with cool bike shorts and all the bike shorts are too sporty or, oh, let's try this erotic newsletter. We'll buy ads on porn hub and we'll hire a writer on what pad. And they will write niche, erotic content and we'll charge 25 bucks a month. Or like we just came up with all like, here's an email app, $6 a month, you know, whatever.

Um, none of it worked. and then my friend who works in crypto? He goes, Jason, you have some ETH right. Like you bought and you had ETH from like last cycle. Like, what are you doing with it? What are you doing with your ETH? And I was like, what do you mean, I'm holding it? And he goes, no, what are you doing with it?

And then I was like, are you earning interest on it? And I was like, what's interest. And, uh, and then he's like, let me show you some things. And he, like, he showed me how to borrow against my ETH, how to, put it on exchanges, how to earn yield. And the lightbulb went off. I looked at then my, my bank account and like my life savings and I liquidate everything and I put it all into ETH and I'm like, let's go.

And,

Jonas24:22

wait a

second. Wait a second. That, that went quickly. You, you just see, you're just seeing that you learned a little bit

Jason Hitchcock24:28

th th the step there was simply going, okay, if I put this much ETH into the system, doing a strategy, here's how much money comes out every day. And then I just did the math. I go, okay, well, what if I doubled it? Does the output double? my God, It does. And then I just did the math. I go, how much money do I need to put in the left side, on the input side to get my year salary at Twitch on the other side, you know, I was making 115 grand a year at Twitch.

so that's $315 a day or something like that. And so how much money did I need to put into the machine? the DeFi strategy to spit out my year salary. So then I went to my, I sold that. I bought it. I bought that amount of ETH. I ran a strategy and it like came out and I was like, amazing.

Jonas25:13

How

Why Jason went all-in crypto

much did you put in.

Jason Hitchcock25:14

it was about 900 grand and it was like, I built up to that with chunks and it ended up being about, I ended up being a total of about 1.2 million, which was my entire, ever since I was like 13.

I'd like put every dollar I'd ever earned into like Apple stock. And then whenever I had any job I ever had all my savings. I just put it into the stock market, like Fang companies. And I didn't really spend any money in my life. I like would go on vacations here and there, but I was not a big spender and I never really did a lifestyle adjustment in my grown-up life.

And so I then just looked at my stock, my equities, and I was like, I'm going to sell all of this. And I put it all into crypto because I just, I understood what was going on there. I don't, I didn't think it was actually that risky. and then it was mainly to put it into a defy strategy that generates yield

Jonas26:05

which one? Which, Which

The first steps with DeFi

strategy was that? Sorry. W what was the strategy back then?

Jason Hitchcock26:10

The first strategy was really simple. There's a, there's a website called Haru. I don't know why it's not more famous because still to this day, it is kicking the crap out of everything out there. Haru invest H A R U. They, you can, it's like a centralized thing. You send the money kind of like by or Celsius, but instead of lending your money out, they actually run these low risk day trading strategies.

They have a blended strategy that generates, I mean, I just got an email yesterday. their explore feature earns 25% APY on Bitcoin, 22% on Ethereum of 24% on Tether. Like this is crazy. and so I put my money into Haru and it was earning every single day. I was getting ETH airdropped into my account.

You know, I've had money there for two years and they have not missed a day. they have delivered every single day for two years. there are corporate treasuries that they're managing. so Haru was the first like step of earning yield. And then after that, I was like, okay, let's learn about DeFi because DeFi summer was happening.

And so then I started, the next thing I did was I, I pulled a good chunk of ETH out of Haru. I then go to Oasis, which is a platform owned by a Maker DAO who makes, DAI the stable coin and Oasis you can collateralize your Ethereum and then you can mint DAI. It's over collateralized loans.

So, you know, if I'm going to make up a number, if you put on $200,000 into Oasis, you could mint a hundred thousand dollars worth of DAI. and so I put it all onto maker. I minted several hundred thousand dollars of DAI. I then did something risky here cause I actually I'm learning how this works.

I'm going to be making some boneheaded moves. Although I swapped it all for this token called the FARM token by this platform called Harvest Finance, which is a fork of yearn. And then I put it all there. And what's interesting is harvest is a, it's a yield aggregator. And so harvest plugs into tons of DeFi protocols that are earning yields.

It plugs into curve unit swap LP positions that are popular, like DAI / ETH. it plugs into mirror protocol, all sorts of protocols. It takes basically your money and it distributes it across a strategy. And then every day it's harvesting the yields and returning the money back to the farm token owners. And this was me first learning about like, well, how does it earn yield?

What's the plugging into, how do those things work? Where does the yield come from on those things? And like, from that I learned all of DeFi, basically like how it all works, how do exchanges, work, how do lending and borrowing protocols and money markets work. How do insurance protocols work? how do token emissions work?

Why do they happen? And, and along the way, I was like earning like really high APY on, on farm. Like it was like 300% or something like that. And so I was earning a bunch and then I take, I took a bunch of my earnings after three months pay down my debt that I like took out initially. So I wouldn't get liquidated.

And then I essentially bought the farm. I then took my, my farm tokens that had like, appreciate. and I like exited farm. Cause I was like, there was no way, the first thing I'm trying is like the right thing. That was like my, like, like you're born in randomly in the animal kingdom. And I discovered which animal I was and it wasn't like the lion, it was just a random animal in there.

And so I'm like, all right, let's go find on it. Let's go on a journey to find like, what is the optimal portfolio for me to hold in DeFi? And that's going to be like a mix of which tokens do I trust that are going to appreciate and generate high yield, to maintain that sort of like I'm no longer working my job.

I need to maintain like a certain amount