Filecoin: Data Storage & Distribution, Ft Jonathan Hooker, Holon Global

In This Episode of Frontier3

Ray is joined by Jonathan Hooker, investor and emerging technologies specialist, based out of Sydney, Australia. Jonathan is passionate about Web3 and his work building next generation digital infrastructure and investing in Web3 has brought him to the forefront of future innovation in the space, now Managing Director of Holon Innovations, one of the leading investment firms in these areas. Jonathan talks about how infrastructure has to change and the advancements in cryptocurrency and collaboration on Web3.

Episode Highlights

• How players like Filecoin are scaling and creating digital infrastructure worth billions in less than 12 months.
• How media platforms like TikTok entering the NFT space gives power back to the creator.
• Why Financial institutions must adapt to Web3, and the good and bad strategies he’s seeing.
• Jonathan’s perspective on the potential of community led development of Web3 and why it’s crucial.

Episode Transcript

Ray Chohan: Well, Jonathan I’m excited to just have you on today. As I mentioned, I came across Holon actually on Real Vision, which I’m a huge fan of. I think you had one of your team on Real Vision, and just to talk around energy storage, the thesis on Tesla, it just caught my imagination. And your view on storage on how big the market will actually need to be, God, that just took me down, Jonathan, a crazy rabbit hole. I watched that interview twice after that because I was pretty speechless. So no, I just love the ambition at Holon, so then jumped on LinkedIn. Obviously, you’ve been a great builder there and a key leader in the team there, so thank you for coming on.

Ray Chohan: Should we kick off with a little bit just about your back story, Jonathan, how you ended up in Sydney at Holon, just your professional journey? If we could kick off there, if that’s okay?

Jonathan Hooker: Yeah, sure. So look, like most kids in the UK, I left to go to university. I was actually one of only five people in the UK to get on a broadcast engineering course with the BBC. It was a good course, but as I went through education, it probably wasn’t the right style of learning from me. So I bounced around a little bit and I never really got the best of it.

Jonathan Hooker: But a couple of years later, I actually started working for a digital agency in London, and that’s really where I really accelerated my journey because I have such a passion for technology software and just learning, and really learning off as many people as possible. So that’s where I got sent around the world to work on any digital project for a company called Concise out of London. I was literally sent everywhere. I was working for Blackberry, Microsoft, MasterCard, Visa, lots of big Hong Kong banks as well, so that’s really where I realized the world is truly amazing. You just have to go out and grab it basically.

Ray Chohan: It’s interesting because if you look at the founder of Outlier Ventures, which I know you are the Australian ambassador for, so Jamie Burke, his background’s in the marketing/agency world. I find a lot of people in this space, or actually even within the software space, start off in the world of digital marketing on the agency side. It looks like you develop some really powerful core skills there, which are very valuable further in your career. Have you found that looking back now your time at Concise has enabled you to get to where you are today and allow you to frame markets in a certain way?

Jonathan Hooker: Yeah. I think that’s really important. If you look at anybody that comes out of advertising, marketing, or digital agencies that create things for blue chips and banks, when we go into a meeting, we have to deliver and we have to see the problem really quickly. That’s the key with people like Jamie Burke and myself. We go through our career and we have to build the next step with the smallest amount of resources in the quickest time to get to the next round of investment, and I think that’s a key attribute that you get in those industries.

Ray Chohan: That’s interesting because you have to get your arms around a customer swiftly, don’t you? It can be just a one minute; it could be Blackberry or then it could be Black + Decker, or it could be Apple. So you have to quickly just get your arms around the value prop, the vision for project X, and then be savvy enough to present it in a clear and concise way. So I’m guessing that repetition and that muscle must be so valuable when you are deploying capital in opaque, unclear markets?

Jonathan Hooker: Yeah, yeah. Look, it also gives you the ability to understand people really quickly. I mean, that’s a broad sweeping comment and nobody really understands people, but because everybody’s complex. But when you pitch something every month to a new big company and you need to see the problems they’re facing, and sometimes you see the technology is not the problem, it’s getting their management buying it’s really the problem, then you just work smart. Right?

Jonathan Hooker: I’ve set up a few business in my time. Some have failed. Some have succeeded. The ones that have failed have taught me more than the ones that have succeeded, just because you realize how to manage yourself in, and that’s one of the key things. I think everybody underestimates when they’re actually in a new industry or trying to build a big new business is you really got to understand how do you manage yourself, and how do you manage this business to take it to the next step with founders.

Ray Chohan: Brilliant. So then I can see on LinkedIn, you were at TAPevents for a short while, then move across to Sydney, Australia. What was the backstory behind the move? Because it seems like they’re… Well, let’s see, Phonics Hero, you started your own business, so that seems interesting. Is that when you took your first leap as a founder back in 2010 in Sydney?

Jonathan Hooker: Yeah. So TAPevents was actually just… So, what people don’t realize is you get all these software languages that come out over the years, and each software language iterates on the last and can do something quicker than the last.

Jonathan Hooker: So TAPevents, we had a previous team in another company built this bit of software. It took 30 engineers around about two years to build this. It was an electronic events app service. So you turn up an event, you’d get a iPad, and you get all the event material on the iPad. The key thing is after… So in about 2013, there was a software come out at AngularJS and, basically, we replicated the previous company with one engineer in three months.

Jonathan Hooker: So, what I’m trying to get to here is, really, when you pick up new languages, you can actually build really new, smart companies off them that can leverage off that technology. That TAPevents that I set up, I actually sold it to a Hong Kong event company because it was being used by JP Morgan and Berenberg Bank, and that was only after the first eight or nine months. So after I sold that, I actually previously I've set up Phonics Hero and that helps children to read and spell with synthetic phonics. That actually took about four engineers four years to build. It’s actually one of the largest HTML five gaming platforms on earth. It actually got an award by Google, one of the best start ups in… I forget which year it was now. So, we all went out to Silicon valley and met a few people from Google to show what we were doing, which was great.

Jonathan Hooker: From that move, I was in London and after being back from seven years in Honkers and some time in the US, I just had the itch again and I just had to get and start a new life again in Sydney. That’s where I started doing some extra work for Phonics Hero, but that’s really… Just before that trip, I was actually… I’m actually friends with Jamie Burke. In the UK, we were talking about blockchain technology and I started my own angel investment in Sydney. That’s really where my deep dive into blockchain, Web3, and this whole revolution started.

Ray Chohan: Thanks for that context, Jonathan. A big part of Frontier3 is actually trying to engage folks on LinkedIn because I’ve spent quite a lot of time analyzing a lot of the posts. Obviously, crypto Twitter’s huge, right? That universe has got its own velocity, but it’s interesting on LinkedIn where you’ve got tons of Web2 practitioners. Most of the folks on LinkedIn are pretty much Web2.

Ray Chohan: What I still find on LinkedIn is the lack of engagement and awareness around Web3. It’s still insanely early. If I look at a lot of the comments on posts or just the volume of likes on posts, we’re still relatively early for people really getting it on how big actually Web3 will be. So it would be great just to set the stage and get a framing of what brought you into the world of Web3 and blockchain and the framing of it of what it actually will mean moving forward. Because I think there’s some nuance there, which everyone’s slightly explains it in a different way. So we’d love to just hear your view on Web3 and the future.

Jonathan Hooker: Yeah, sure. So let me explain it for my experience. I built a company, Phonics Hero, and that website or gaming platform has the ability to teach every child in the world to read and spell for a very small amount of money, like just the computation and the device that they need to learn on.

Jonathan Hooker: It dumbfounded me that why, why is it so cheap to teach kids to read and spell, but not everybody has the access? The world is an unfair place and I just have a passion to try and make the world a little bit fairer, and that plays into Web3. Because now, in Web3, we have all these decentralized networks where anybody can join at time; anybody can derive value from that network; and if you are a good actor, you will be repaid for it on chain in a trustless way. I think that is really a revolution and that’s why I’m here in Web3.

Ray Chohan: It’s fundamentally the underlying values of Web3 where it’s inclusive. And regardless if you are sitting here in London or Sydney, or a kid in a certain part of Africa, you can participate if you add value and you’re a good actor. It’s that leveling the play of playing field, which really resonates with your values I’m guessing.

Jonathan Hooker: Absolutely, absolutely. At Holon, we run a hackathon this year and one of the guys was from Cameroon. We had lots of people from RMOT in Melbourne. We have some people basically from Hong Kong, all over APAC and Oceania basically. One of the guys from Cameroon won about 5,000 USD at Filecoin. That’s because he rolled up his sleeve, he learned some technology, and he had a go. That, I think is really the ethos of what we’re in. It’s everybody can take part on this. It’s a fair playing field and that’s really what we’re investing in is this new breed of technology where everybody can be part of it.

Ray Chohan: I couldn’t agree with you more. I think that’s the underlying tech creates that perfect environment, doesn’t it, where everyone can participate. It doesn’t doesn’t matter what color, race, creed you are, if you add value, you add value, right? And so, it’s that bias is really removed from this new world.

Ray Chohan: If you dig it into it further, you’re going to have people who have their own pseudo digital identity, so they can be anyone. As long as they’re adding value, they get treated accordingly. So I couldn’t agree with you more on that front. So this segues into Holon. It will be great to get the backstory of Holon and what drew you to the organization, and the history of Holon, and the underlying investment thesis for the organization.

Jonathan Hooker: Yeah, sure. Look, the company started in 2017. It was originally an asset manager. So we have the Photon Fund, which invests in really digital stocks that are innovating the world. But Heath Behncke, the founder, and Luke Behncke… they’re twin brothers… had a vision to build an asset manager that could be really anything. You really want to think of us as an investment firm that invests in the bleeding edge and the innovative digital stocks that are changing the world.

Jonathan Hooker: So, the business has three arms. We have an asset manager, as I’ve said. We’re launching some digital asset funds next year as well. We've also got a Holon Wholesale Filecoin Fund, which is already launched. We have a VC arm, so we’ve got two investments, which we’re super excited about. I can’t mention them here, but we’ll probably announce them next year. We have an innovation arm, which is the area that I run.

Jonathan Hooker: On our side of the business, we’ve launched some Filecoin storage provider infrastructure. We want to be one of the largest storage providers in APAC over the next couple of years, so we’ve got the Filecoin project we’re running. And then, next year, we’re actually going to do some infrastructure for Ethereum validator notes, which will generate yield for investors and pension funds, and then we’re going to look at doing something within the Bitcoin space as well.

Jonathan Hooker: So yes, 2022 is going to be really interesting. But on my side, it’s really where we play with these new decentralized networks. The key thing is, Ray, as long as we keep the values of why we’re in this space and we always look for the unique value proposition, then I think that’s the key importance as we go forward in this space because it really is emerging. There’s lots of noise and it’s very important to filter the noise for valuable information.

Ray Chohan: You guys have a similar set up to… In terms of on the equity side, is it fair to say you’re similar to ARK Invest based in the US in terms of doubling down and having an exclusive focus on frontier tech businesses, innovation-led organization? Is that the asset management side very akin to an ARK in terms of view of the world?

Jonathan Hooker: Yeah, definitely. Any stock that’s going to go on an exponential tear for the next 20 to 40 years. We really think of things over a 20-year period, 10 to 20 years. There’s no point in… In the crypto space, everybody has a short attention span: what’s happening next week, next month, or in the next couple of months. But we really do take a long term view of all our stocks on the asset management side. You can really think of us as an Ark plus a Grayscale plus a Bison Trails – that was bought by Coinbase a couple of years back. Because ultimately, we’re going to see massive disruption in every industry that Web3 starts to disrupt.

Ray Chohan: Brilliant. So to your side of the business where you’ve got the Google X/pure innovation side, why did you guys select the Filecoin protocol and just the data storage part of Web3? Was there a background story to that? Does that tie into other parts of the organization or the wider vision for Holon?

Jonathan Hooker: Yeah. It’s interesting, that. I think the three and most important conversations going on today is governments are debasing money, so where do you put your money? Banks are ripe for disruption, so Ethereum is going to be the new business logic platform for the world. And as users, our data is being taken from us and we have no rights over that data, so that area is ripe for disruption.

Jonathan Hooker: Juan Benet, in 2014, raised capital with A16 and the Winklevoss twins to build out IPFS and Filecoin. Ultimately, at the moment, if you look at the way the internet is structured, every time you get a bit of content, you go back to one server, you pick it up, you go back to the server, you pick it up. It’s a really inefficient system of which is called location-based addressing, which is HTTP. Now, Juan created a thing called CID content-based addressing. What it allows you to do is it allows you to have any piece of data on the internet, which makes that piece of data immutable, so you know that piece of data is exactly that piece of data, and you can pick that data off from the nearest source.

Jonathan Hooker: So if you looked at that bit of content on your laptop and I was in the same room as you, I could get the contact from your laptop instead of going back to a server that might be 1,000 miles away. So IPFS, the underlying technology for Filecoin, is just more efficient way to run the internet. So, if we take that as a value proposition, this technology is a better way to run the internet and it’s a safer and mu more secure way, then how do we take that technology and incentivize people around the world to create infrastructure for that technology, so we can build this new architecture to the internet? Really, that’s what Filecoin is.

Jonathan Hooker: Filecoin is an incentive layer, Filecoin, over this IPFS technology. Filecoin is 6,500 times larger than its nearest competitor. It’s the big gorilla in the room and people don’t really know what it is. They don’t really understand it, but whenever I look at the top 100 I just… Every time I look at Filecoin, I just get absolutely blown away. It's just they've gone from no infrastructure to 14 exabytes, which is around 2.5 billion USD of infrastructure in 12 months. They went from no storage providers to 3,500 in 12 months. They have thousands of developers. They have hundreds of projects on the ecosystem. The capital is just flooding in because institutional investors like Holon see the opportunity and think, “Right, let not in, we don’t invest in wishy-washy hyped Web3 projects. We invest in big ideas that have big value propositions that have the people behind it that can execute.”

Jonathan Hooker: If you just do a bit of research, ConsenSys are also building technology for Filecoin so they can integrate Filecoin and Ethereum with one click. The Ethereum EVM will connect straight to Filecoin, so you’ll be writing your contracts on Ethereum and storing the data on the Filecoin network. So yeah, we’re pretty bullish in the Filecoin.

Ray Chohan: Yeah. I can definitely see it. I observed Filecoin from a distance back in 2017 because I think they also… I kick myself for this slightly because the underlier I remember, well partly reading the White Paper and also they’d done a coin list offering back in the day, didn’t they, if memory serves me correctly. So I have, from a distance, been observing the project.

Ray Chohan: But when I first saw Filecoin, and I know our audience will knee-jerk to this proxy immediately, don’t they go after… Obviously, you’ve got organizations like Dropbox, who’ve done a hell of a job in the Web2 world and, obviously, you’ve got the big three or four who have their own storage capabilities, and they’re huge and have huge balance sheets. So, is that potentially a risk for Filecoin fundamentally where you’ve got other Web2 players who could go down a Web3 route? Or is there a challenge of gaining market share?

Ray Chohan: Because when I first saw Filecoin, the concept made sense, but I knee-jerked and just fell back to Dropbox, or the other big three or four. I don’t know if you get that question often as a knee-jerk, just a rebuttal to Filecoin? So it’ll be great for the audience, as a seven year old would understand it, like what is the fundamental difference of the two schools of thought and why do you think Filecoin’s going to win?

Jonathan Hooker: We always get that question like, “What is Amazon going to do about this thing called Filecoin and how they’re going to compete?”

Jonathan Hooker: The key thing… Let’s go back to how it works. We take a lot of green energy. We then run some hardware in a data center. We make something called verifiable data storage. Verifiable data storage allows you to know that it’s there, know that nobody’s moved and nobody’s touched it, nobody’s looked at it and you control and own that data. That’s really important if you think about a Web3 Dropbox.

Jonathan Hooker: Now we are allowing you, Ray, to store your family data in this piece of software and you can cryptographically know that nobody’s touched it and you can decide how redundant it is. You can decide, “Okay, I want to keep my data in the UK and I want to keep it in the Netherlands and Germany, and I also want to have… if something happens to me, I want to hand all this data over to my partner.” The key thing is we are empowering you for this Web3 revolution. We’re giving you more power.

Jonathan Hooker: Now, how is Amazon going to partake in this Web3 data storage system? Now, I think, actually, they start using Filecoin for different parts of their technology stack, and I think that’s where any business starts using it. If you think about credit card details, you actually want to own and control those credit card details, but you want to give people access to them when they need it, and then take them away when you don’t want them to have it. I think of it as the next iteration of how the internet works. It’s really not a competition between old and new. You’re still going to need location-based addressing, you’re still going to need Amazon services. It just so happens that parts of the technology stack will migrate to Web3.

Ray Chohan: So what prevents someone like an AWS building their version of a Filecoin and their version of a decentralized offering, which has similar capabilities?

Jonathan Hooker: Well, Ray, it’s not really decentralized if it’s one player building it. We all know that and there’s a big argument, how decentralized is to decentralized technology, right?

Ray Chohan: Yeah.

Jonathan Hooker: You can have EOS, which only has 21 validator nodes that I’d probably just call a jumped up computer. And then you’ve got Ethereum, which is moving to proof of proof-of-stake, which will have hundreds of thousands of validators, or you can have the Bitcoin network, which is the most decentralized network where everybody’s running their mining machines all over the world.

Jonathan Hooker: So, Amazon can do whatever they want but if, at that time, Filecoin has 50,000 storage providers distributed all over the world, you just can use Filecoin because it just makes sense because you get optionality. You really want to think of Amazon as they’re in the data center game. They build data centers and data storage to them is a CapEx problem. But in Web3, Filecoin, it’s an innovation problem.

Jonathan Hooker: So you think of it like this. They build a data center; there’s a thousand racks in that data center. They spend a few billion on it and suddenly they’ve got to sell all that storage because they’ve already built it. However, if you think about distributed models like Filecoin, you can put a data center on the end of every street. So mom and pop can go buy a petabyte of data storage, put a computer next to it to deliver data out, and suddenly that little node is delivering Netflix for its local community. What’s happening there is we’re seeing micro data centers pop up, which is far more efficient for the delivering technology, but also scaling.

Ray Chohan: This is interesting, so this links to… There's a great project called Helium, which is more on the connectivity around 5G. So is Filecoin a close relative to Helium in terms of its concept where everyone be it a mom and pop shop, just a regular resident is part of the network and fundamentally is participating in storage or connectivity? Is it similar to Helium in that way?

Jonathan Hooker: Yeah, absolutely. So the way we’ve set up our storage at Holon is we have these three… Sorry. We have these four petabyte clusters and then we have a blade that’s connected to it. At the moment, in Sydney, we’re scaling our system to about 400 petabytes by the end of next year, that’s a lot of data storage. One petabyte equals 11,000 4K movies, so it’s a lot of data storage.

Jonathan Hooker: So you can think of the market will fracture into institutional players that get to exabyte scale. Then, you’re going to have providers that will get to 50 petabytes, and it will get smaller and smaller until you have 10 or 20 terabytes that will be on the corner of each street, which will be delivering data to the local community. Because it’s all built on blockchain technology, everything is verifiable and all the actors can be verified, so the distribution of rewards or capital you is done in a very fair way.

Ray Chohan: So, if I look at Filecoin, does it converge then with this whole thing around… Well, we’re going to get there soon. I mean, well, we’re already partially there. We’ve got all these devices on the edge, be it in our homes, one day… fingers crossed… autonomous vehicles at scale. So does Filecoin perfectly converge with the fact that we are going to need very much localized compute… Is that a big part of the long-=term bet at Holon on being so bullish on Filecoin?

Jonathan Hooker: Yeah, absolutely. We just think like with autonomous cars, but if you think about it really, metaverse, and gaming in the metaverse going from TVs to 16K visuals, you’re going to see a massive computation draw and a data storage need for NFTs and verifiable gaming assets.

Jonathan Hooker: Every time I look at this, I just think it just gets bigger and bigger because I think that’s just ultimately where the world moves to. I just think it’s really interesting when TikTok announced they were going to start doing NFTs. Because really, what they said there was, “Okay, you’re an artist and we’re going to allow you to own and control that thing, and we’re going to allow you to have micropayments around that content creation.” And really, if TikTok does it, YouTube has to do it.

Jonathan Hooker: So now, suddenly, they we’re going to have 8 million… At YouTube, they’ve got 800 million videos and they’re all going to turn into NFTs and you’re going to be able to own and control that data, and you’re going to be able to make micropayments out of all those videos if they draw a big crowd. I just think all these things will need edge computing, big data centers, verifiable data, verifiable data storage will really be at its core for all these assets.

Ray Chohan: So you see folks… Like, obviously, I know TikTok made a move in that space, but you even see entrenched players like YouTube making that shift where they start giving true ownership to the creators. Do you see them? Because their business model is that classic Web2 model where they’re very much strong on their take rate and the creators get peanuts, right?So do you see some of those traditional incumbents being forced to change and deploy a different model?

Jonathan Hooker: Well, let me ask you, if I could offer you a platform, Ray, where you got 80% of the revenue and you could see everybody that used your platform, your content, and it was trustless, transparent, and it had people using it, would you use it?

Ray Chohan: Of course, I’d jump across immediately, but I get it. It’s just… Oh God. I’m asking the questions that actually people will probably ask me around the dinner table at Christmas really. I think it’s just our minds, how we adapt to change.

Ray Chohan: I definitely see that future, but I see them being dragged, kicking and screaming, if that makes sense? They’ll only make that move if they see another emergent player in Web3 really gaining market share. So, for example, you have got Audius who are basically the Web3 version of Spotify. I think there’s a Web3 version of YouTube as well that the name slips my mind. But are any of those players gaining meaningful traction, which will force board level folks at some of those big organizations to really make the change soon, or is this five/six years out?

Jonathan Hooker: Look, I think any of this stuff is all going to be five/six years out, if not more. But ultimately, we’re going to have… Some companies are going to be a Nokia. One day they’re going to be here and then one day they’re going to be gone, and other companies will adapt quickly.

Jonathan Hooker: That’s really interesting. You look at MasterCard, which is on our Photon portfolio and they were doing nothing in Web3. They were just sitting there quietly and their whole business is payments. You just look at Circle or any blockchain technology in… Send money, near free, and it just makes sense to you that blockchain is that payments is going to be the first one it takes down. And then MasterCard started integrating Circle, will start doing Circle payments from any business to business. They’re empowering more crypto cards. They’re going to do payments in Bitcoin as rewards. So, anywhere in our portfolio, Photon, we just look for the most innovative businesses on earth.

Jonathan Hooker: So the key thing here is they’re either going to innovate or they’re going to die, and that’s what you have to look for. People at MasterCard are really going to smash it because not only are they a great business in Web2, but they’re going to be a great business in Web3 as well.

Ray Chohan: Yeah, I couldn’t agree more. There’s a couple of what you might call as incumbents or traditional names actually making some meaningful investments in Web3. Some of them actually surprised me to be fair really, but that’s great to see. I mean, inflation’s a vector, right?

Jonathan Hooker: Yeah.

Ray Chohan: It means different things to different folks. I think like when you look at the CPI print, which is complete nonsense, it’s just this concocted basket, which actually makes no sense. But sadly, 98% of the people still believe in the CPI print or actually have no clue that they’re paying an invisible tax. I mean, just that problem alone, I think the vast majority of the world don’t really get it. Obviously, people in the Web3 world and capital allocators, we get it, but this is another part of Web3, which I think is the purity of Web3 where it is trying to create some form of accessible defense to a monetary system, which is failing everyone.

Jonathan Hooker: Yeah. It’s interesting. If you look at crypto Twitter or… Australia is one of the most digitally switched on countries in the world, mainly because we’re miles away from anywhere. In some parts of the country, if you want to go to your local shop, it might take you four hours. Right?

Jonathan Hooker: It was really interesting like from my education business, I knew that a lot of education in Australia happens online, so I think the conversation in Australia is actually more advanced than people think. We’ve got some really great senators now that are pushing Web3 digital asset innovation to be… They’re pushing new regulations. So new digital custody laws and how we embrace this next wave of the internet.

Jonathan Hooker: I just see America, if you look at The Pomp, what he’s been doing over the last couple of years, I just see the millennials get it and I think the people under this get it as well. I just think there’s a big part in the boomers where they’re still struggling to understand what’s really happening.

Ray Chohan: I couldn’t agree. Pomp, for me, what he’s done is changed a big part of my life to be fair with you. I thinks like Pomp, there’s two chaps at Bankless, just all the other… So that’s why I want the part of this pod to be just if it just educates three or four people, that’s great. That can spread itself, but I still think… You mentioned the boomers. I actually think some boomers know, but they don’t care.

Jonathan Hooker: No. There’s three houses already.

Ray Chohan: Yeah. They’re on the good side of the train, which I think is a fucking selfish way to think. Excuse my French. I think it’s just, I’m guessing they’re going to have children as well, or rather younger nieces and nephews, but there are boomers and actually even traditional capital allocators who have a different narrative and they know it’s a false narrative, but they’re probably at an actual… or quite like they’re at a biological age where they don’t really care. They’re actually going like, “I’m at that part of my life where I spend, earn and grow the most is done. I’m now just trying to preserve and stay steady Eddie. Why am I going to subscribe to this new school of thought? It eats away at what I’ve believed in.”

Ray Chohan: So I’m finding this kind of cold war going on. You see it all over YouTube and I’m very much on supporting of the Web3 folks because I think the old world only helps a few, and the rest just get marginalized and don’t participate. So, I couldn’t agree with you more. And yet, folks like Pomp, they’re modern day heroes in a way. They spend most of their time educating layman folks around inflation, how to protect your wealth, about Web3. So I couldn’t agree with you more on that front.

Jonathan Hooker: Have you seen the video between Michael Saylor and Ross Stevens?

Ray Chohan: Yeah. I’ve seen Saylor verse… Oh, there’s a goldbug. What’s his name?

Jonathan Hooker: Peter Schiff.

Ray Chohan: Yeah, Peter Schiff. That's just more of a fun one, but I actually think I’ve seen that video. I know what you’re talking about. Is it with Robert Breedlove or is it on another…

Jonathan Hooker: Robert Steven… Let me… Ross Stevens. Ross Stevens from Stone Ridge.

Ray Chohan: We’ll add it to the show notes.

Jonathan Hooker: Yeah, absolutely. That video is I think one of the first moments where Ross Stevens is just truly amazing, but it’s the first time I’ve seen a conversation where two people where they really lead the conversation from the start to the finish where you can go, “Look, there’s this thing called fear of money. It’s been around for a while. These are all the things that have happened to it and let’s just step back and look at what’s happening to our money.” I think that conversation between them and Michael Saylor and Ross Stevens is where I send every person for the first video. If they get it and they watch that video and go, “Wow!” Then I start giving them more information. I think that’s one of the best videos that we’ve had today.

Ray Chohan: How are you finding it? Because I sometimes try sending my sister stuff, loved ones, friends. Do you do that as well just for fun on a weekend, like ping someone on WhatsApp a video like, “Hey, you might just want to check this out. This is happening in the world”? How are you finding that education phase? Do you find people go, “Wow!” Or do they just ignore it and then click on watching football? How are you finding just trying to help?

Jonathan Hooker: Yeah, look-

Ray Chohan: I don’t always get the response I want. It drives me mad. So how are you finding it?

Jonathan Hooker: Look, I went through a phase of like, “Oh, there’s this thing. I want to help the world. I want to tell as many people.” But not everybody listens; not everybody wants to listen and nobody cares, but that’s their journey. I think my mode now is if somebody asks, I send them to Ross Stevens and Mike Saylor. And then, I always ask them, “I want to know… Watch the video. Watch it twice and then I want you to come back and ask me anything you didn’t know.” If they come back with a whole load of questions, then I go, “Right, okay. I’ve got another Web3 person that’s going to join the revolution.” If they don’t come back, then there you go, then they’re not really going to learn and there you go.

Jonathan Hooker: But yeah, it is frustrating. I think everybody has their moment when they’re really going to get into this, and I think it’s probably when somebody goes, “Right, I need to buy our house. How do I make enough money for a deposit, so now I have to actually take investing seriously.” So then they better pull up their socks and start learning about Web3 or they’re never going to be able to make it.

Ray Chohan: Yeah. I mean, basic things like that are basically out of reach at the moment for the current generation: folks in their early twenties or starting their career. So they’re either relying on helpful and kind boomer parents, which isn’t really that fulfilling. Let’s face it. It’s just a hand me down, which it is what it is, but then there are…

Ray Chohan: Actually, I’m seeing… and you’re seeing it on LinkedIn now, and then also you see it all over Twitter, of this new generation who are the trailblazers who are on board, and they’re only looking to work for Web3 companies or spend time in Web3. That number’s only growing every quarter I’m finding. I see it exponentially growing in the next couple of years for sure. But obviously, we spun off a little bit everywhere, but back to scarce assets, Jonathan.

Jonathan Hooker: Yeah.

Ray Chohan: So, just to educate our audience to get their arms around digital scarcity and, obviously, then dovetailing that into Holon.

Jonathan Hooker: Yeah, sure. Look, anything we do we are just looking to hoard as much scarce assets as possible, like Bitcoin, Ethereum. Ethereum with EIP 159, watching that burning Ethereum every time it’s used, it is super important. So, we just see digital tech stocks like MasterCard, Visa, Alibaba, they’re just scarce assets of some innovative company that is really going to grow exponentially.

Jonathan Hooker: So yeah, really for us it’s anything on our Photon stock, any digital asset that really we look at them as like Bitcoin, Ethereum, and Filecoin. There are lots of others, but we don’t have big enough team to dissect everything. There’s a few other things in our VC portfolio, as I said before, that we just think that are businesses that will be able to go on an exponential tier for the next 20 years. Our asset management side could probably answer that question a little bit more clearer than I can, but that… I’m more of an engineer on our side, so yeah.

Ray Chohan: It’s interesting, you guys are very bullish on ETH, which… I mean, I love that team and I think they’ve got the network effect. They’ve got the developer community. But obviously, you hear the constant complaints around gas fees, cost, scalability, speed. You see the folks at Solana. I'm hearing cool things about Solana. What keeps the team there bullish on Ethereum as a platform? What’s your long-term view as that being one of the Layer 1s, which remains and wins long term?

Jonathan Hooker: This all boils down to one metric. There are far more developers on Ethereum than any other chain. You need people to build amazing things and if there’s nobody building it, it’s not going to go anywhere.

Jonathan Hooker: Something could be faster, quicker, cheaper from like Betamax. You can see these things that are just better, but doesn’t mean that they win. You just look at the network of effect of Ethereum and you just go, “Nothing’s going to touch it.” Now, there might be other things that come along and that do unique things, but you just… The same as Filecoin, when something grows to 6,500 times bigger than its competitor and it has over 1,000 engineers building on it, it just doesn’t… It’s just a nice idea and you saw this from EOS. It was quicker. It was cheaper. It was faster. It was all the hype. It raised the more amount of money: $4 billion. But what does it do today? Nothing.

Ray Chohan: Yeah. I mean, there’s also views of a multi-chain world where you might have ETH own X part of the market or do certain jobs really well. And then you might have Solana own other segments of the market like say high frequency trading or more VFS world. So, do you see a world where there isn’t just one winner; it’s a multi-chain world?

Jonathan Hooker: Yeah, absolutely. When I talk about Ethereum, like if I was going to put my assets into Ethereum, I’d just invest in Ethereum. Now I do believe that there will be… Ethereum’s going to be the base layer and there’ll be lots of other things that will build on top of it, but everything will resolve to Ethereum. But yeah, as an investor, I just might as well own the biggest network effect protocol there is. Because ultimately, it really is hard to go, “Where do these industries land on Layer 2?” Those things are still undecided. So risk versus reward, Ethereum’s a pretty safe bet.

Ray Chohan: Yeah. I couldn’t agree on the developer community side. I love the team at Polygon. Obviously, they’re an L2 for ETH who are really dedicated to Ethereum who already have great proof points, good velocity, and loads is getting billed on that L2 now, isn’t it? So you’re actually going to see, obviously, the team at Optimism. So all these L2s, which are there for Ethereum. I really see next year being a big year for the L2s. It seems like it’s trending that way. What are your thoughts on that front?

Jonathan Hooker: Look, I don’t think it’s going to… I think everything’s going to take number of years, whether it’s next year or year after. We don’t really look at it. We just see this as a 10-year bet and I think lots of things are going to come out and they’re going to go away. I think we need more regulation around all of this for it really to go from the 2 trillion mark to the 20 trillion to the 100 trillion. I think as soon as we get regulation in Australia, the US, I think that’s where we see serious amounts of capital come in from pension funds. When that money comes in, then I really think things get supercharged to really… companies really get the capital they need to execute on those big, big ideas.

Ray Chohan: Yeah, agree more. I think the pension funds, that domino has to fall because their current classic 60/40 model on an allocation, it’s mathematically prove it doesn’t work. When that domino falls and I think… Well, there’s rumors that there’s things really going to be happening next year on that front in terms of dipping-your-toe-into-the-water, type allocation, which will be meaningful. So do you think… I mean, this is all guesstimation, right? No-one really knows. But do you think some of the big pension fund players will start making a small allocation next year?

Jonathan Hooker: Absolutely. In Australia, we’ve got a mandatory pension scheme called a super, so we got a really large pension industry. At the end of the day, they’re just being left behind, which is actually there’s been some regulatory oversight here because some of them are really underperforming.

Jonathan Hooker: I just look at my personal portfolio and I’ve beat my super by 580%. I look at my super and I just go… I don’t even care. I don’t even know the website because it’s like they don’t really know what they’re doing. They don’t understand innovation. They don’t want to take part in digital assets or Web3, so I don’t open the website. I don’t care about it, but there’s a point in time where they’re going to have to because there’s going to be more of people like me go, “Where’s the extra 100% you’re going to make?” I think as soon as regulation comes in, the regulation to custody digital assets for pension funds, then I think that’s when they get involved, especially for Australia,.

Jonathan Hooker: If you think about all the custody services, we have none in Australia. Everybody uses the US ones and half those US ones are not even… are custodied with companies that haven’t got correct digital asset laws. The only place which does have digital asset laws is Wyoming and they’re still waiting for their speedy banks to come out the gate with Avanti and Kraken because they’re being held back by a few things out there.

Jonathan Hooker: So as soon as you can legally hold digital assets, which is ruled by the governing regulation, then I think that’s when pension funds come in. And ultimately, when they come in it’s like a rounding error for them is a billion dollars. So, that’s where they just start dropping big about some money. When they do, they drop it not only into funds which are one asset only, but they drop it into infrastructure funds, blockchain nodes, green mining, green verifiable storage, and they drop it into VC arms as well. That’s where teams go from 5 to 50 and teams go from 50 to 500. And then, really that’s really where Web3 comes in, I think.

Ray Chohan: Yeah. I think it’s definitely… I’m already hearing signals even up… We've had someone on our pod, he operates within DACH and in specifically the German market and there’s already mandates, which are pretty much nearly finalized. Some of the regulatory hurdles have already been… in certain parts of Germany been sorted out, so they feel bullish on next year on some form of allocations dropping and things changing there. It seems like Australia’s already ahead of the ball from a regulatory standpoint. It seems like you guys there are ahead of the curve compared to other parts of the world.

Jonathan Hooker: Yeah. I’d probably say, look, the place where they’re in the front of the pack is Wyoming at this moment in time. When those speedy banks get over the line and they’ve got banking regulation, which was rewritten by Caitlyn Long for digital asset custody, then I think as a pension fund, you can go, “Look, yeah cool, here’s a billion dollars. Hold our assets and we know that you’re not going to do anything nefarious with those assets. If something happens to you, we get those assets back on a bailment structure. So we give them to you to hold, but we always own them,” which is the key. You give some kind of money to a bank now, you lose the rights over those assets, so that’s the key thing that needs to happen.

Jonathan Hooker: Ultimately, we’ve got some amazing senators in Australia that are pushing for this digital asset custody, which needs to be held on shore. Because you really want to think of digital asset custody as a security risk, i.e. if we had the pension funds and, ultimately, if we had a trillion dollars offshore and something happened with that custody provider offshore, what’s the Australian government going to do about it when five million citizens suddenly have their savings wiped out? Well, there’s not much they can do. So ultimately, digital asset custody needs to go onto every shore of every country so they can have oversight on it.

Jonathan Hooker: Because you think about it, like me and you, we have Bitcoin wallets and we have Ethereum wallets, right? We have self-sovereigness over those wallets, but 80% of the country doesn’t want to hold a Bitcoin wallet and a Ethereum wallet. It’s far too hard, right? Who cares about private key? Who cares about where you store it and what happens if you lose your phone and suddenly you can’t get the QR code to log back into that wallet? It’s a pain, especially when I speak to my mom and dad. They’re not going to do that.

Jonathan Hooker: So, we need to get to a point where the other 80% in the country can just hold digital assets, but in a really secure way on shore. And then, once we do that, the regulations there, once they’re doing that, then we’re moving into a world where the financial industry consolidates. Because you don’t need 30,000 banks in the world. When everybody owns a digital wallet, you’re not really storing your wealth with a bank. You allow JP Morgan into Australia and you go, “You can run this financial DAP over the wallets and now you can provide lending to all our citizens as long as you are licensed.”

Jonathan Hooker: So you’re going to see all these amazing financial applications, but you’re not going to see 30,000 banks. You’re going to see 20 lending providers, which will become applications over digital wallets.

Ray Chohan: Wow! That’s going to unlock so many builders on top of those platforms then, so more services for the end customer.

Jonathan Hooker: Yeah, absolutely. As we’re talking Web3, we have money Legos in decentralized finance. You’ve got the wallet at the bottom, and then you have all these lending, borrowing, all these money verbs applications which sit over the top. Now that’s going to happen exactly the same for the other 80%. It just won’t be as self-sovereign because nobody really cares about owning and controlling their own application because it’s far too hard.

Jonathan Hooker: When I look at this and when I started out, there was… You have all these mobile phone providers, but really now, today, we just have iOS and Android, and then everybody makes the hardware. I think we’re going to see the same consolidation in the bank and it industry. You’ll have all these base layer of wallets, but you’re only going to have five mortgage providers in the whole world, or you’re going to have all these lending companies that will specialize in lending for boats, or you’re only going to have five in the world. You’re just going to see mass consolidation.

Jonathan Hooker: I think that’s really interest thing like in a Australian perspective because we have great regulation here and we do export Australian businesses really well like banking, and education, and all these kind of things. So I think if Australia really gets itself into a position where we can build these financial applications, which sit over regulated financial applications, which sit over digital wallets, I think we’ll see good take up at the Asia Pacific region, and the rest of the world.

Ray Chohan: Yeah. I mean, you’ve had a great story this year. I think Square acquired a business. It's called Afterpay, which I know that’s one of the darlings there, wasn’t it? There was just so many folks back in the UK who had no clue who Afterpay were, to be fair with you, but they were massive. I think often the Square deal, I think a lot of people saw the great work done there.

Ray Chohan: I think it was interesting that news story then opened up other questions, I noticed, regarding Web3 and in particular DeFi’s randomly, for some reason. That’s what I noticed from a lot of people within my network and I was like, “That’s interesting. After looking at the Afterpay story, what made you curious about DeFi or just FinTech as a whole?” It was interesting how that story just activated a different school of thought in some very traditional minds.

Jonathan Hooker: Yeah. So in DeFi, Australia has had some great successes. Kain Warwick that created Synthetix, that come out of Sydney. Right?

Ray Chohan: Oh, wow!

Jonathan Hooker: That’s an absolute monster. So I think we’re doing really well in the DeFi space – Australia. We can do that in the decentralized world and we can also do that in the regulated Web3 digital asset world. I really think of it as Web 2.5, Web two-and-a-half. You get all these benefits of blockchain technology, efficiencies, transparency, all those things, but it’s just slightly more regulated because not everybody wants to be in the crazy decentralized world where you can lose value very quick.

Ray Chohan: So Jonathan, this has been great to get an overview of Holon and, obviously, in particular, you are part of the organization. What’s next for the innovation arm? Because it seems like you guys are on… absolutely crushing it what you’re doing with Filecoin, but what’s the plans next year and the year beyond?

Jonathan Hooker: So at the moment, we’re scaling our Filecoin operations and we’ve got some really great partnerships coming out in Q1 next year. We’ve got a large partnership with a hardware provider that will really change the game for us, which will allow us to scale from petabytes to exabytes. So we’ll do that in next year, but we’re also going to launch Ethereum validator nodes system, so pension funds can make 6 to 10% yield off those validator nodes. And really, anything that we see as innovative and need for the underlying infrastructure of this change.

Jonathan Hooker: So look, we’re trying to keep focus in what we do. We don’t want to try and do too many things. Our engineering department is quite small. I think there’s five or six of us now, but we’ve got to scale that team next year. So the engineering team, probably at the end of next year, is going to be 15 staff. So we just keep untapping the potential of Web3 and Web3 infrastructure is the key, I think, for us.

Ray Chohan: Brilliant. What you described regarding Filecoin where organizations, people have that self-sovereignty and control over their data, that’s going to be huge in the classic enterprise space. So one of the bug bears, I’m sure you’re aware of this, in Web2 and enterprise software in our world is our customers, especially our larger ones, being really concerned, and there’s this big back and forth. We always get the deal over the line, but lots of questions around where’s that data stored, is it secure. Those classic boring questions you get in Web2. With this new model, that friction’s completely removed because the customer, the enterprise customer has complete control. So, it’ll also speed up our traditional Web2 enterprise software world with this model.

Jonathan Hooker: Yeah, it’s interesting. The last six months I’ve heard this numerous times, which is like, “Just sell me something that runs on green energy and allow it not to touch anywhere Amazon service.” Nobody wants to keep feeding the beast of Amazon, especially when you look at big companies out here.

Jonathan Hooker: We’ve got a big food chain called Woolworths. They compete with Amazon in one industry, but are giving them revenue in another industry and they hate it. You also look at people like LVMH and they mandate some of their suppliers to not use Amazon storage. So, it’s a problem. Nobody’s fixed it yet. But I tell you what, at the moment Filecoin is the infrastructure, the railroad, but over the next couple of years, the middleware is going to be built: all the SDKs and APIs. And the couple of years after that, we’ve got all the software, the easy things that look like Dropbox that are built over the top, and then suddenly, whole industries move quickly because it’s a problem now.

Ray Chohan: The fun part of our pod is the prediction part. So what’s your forecast for 2028-2030 in terms of the lay of the land? Where are we going to be in the maturity curve?

Jonathan Hooker: What, for Web3?

Ray Chohan: Yep, for Web3, Filecoin, just the areas that Holon focus on. What are some of your predictions over the next five/six years?

Jonathan Hooker: I think it takes us another couple of years to get regulation right, so that takes us to 2024. I think, after that, that’s when the big money comes in and that this really actually happens. Ultimately, we’re going to see much more value creation due to protocols deriving value from utility and from usage as well. So, I just see the whole Web3 industry being institutionalized after the 2025.

Ray Chohan: Wow.

Jonathan Hooker: Ultimately, I just see two parallel systems: the decentralized financial system and the regulated financial system built on the same technology. It’s just one you own your wallet and the other one you don’t. I just see there’s going to be a big play. There’s going to be this big tension between that industry and the regulated one because, let’s be honest, if you look at some countries, they’re not going to use the regulated industry. They’ll use the decentralized one. So I think that’s going to be a really interesting thematic of how those play out with each other.

Ray Chohan: Brilliant. [inaudible 01:02:48] a close neighbor also in New Zealand. What does Web3 look like in New Zealand? Because I know there’s some good techtrons there, a good university out there as well. So what’s it like in New Zealand? Is it similar to Australia?

Jonathan Hooker: We’ve been locked down in COVID for a year. Nobody knows anything at the moment. I’ll be honest. I don’t know. We’ve just been focusing on what’s happening in Sydney and around this country. But it’s been a funny time with COVID and we’ve only just been let out after our second stint inside, so it’s nice to be back out and start seeing people. So I’ll definitely have to go over to New Zealand and see what they’re doing next year sometime.

Ray Chohan: Brilliant. Well, Jonathan, it’s been great having you on Frontier3 today and, hopefully, we can do part two in the summer and get a lay of the land by hopefully see what’s happening in the next six/seven months. Because this space is moving exponentially quick, so hopefully we can do part two in the future.

Jonathan Hooker: Sounds good, Ray. Well look, when we hit 100 petabytes on chain for Filecoin, let’s have a chat next because I can tell you what we’re planning after that.

Ray Chohan: Awesome. Thank you, Jonathan.

Jonathan Hooker: Have a lovely day, Ray. Thank you, bye.

Ray Chohan: Cheers. Thanks.