Venture capitalist Kent Ho meets with Stephen Short to discuss all matters pertaining to our imminent future: what are his thoughts on crypto, NFTs, Web 3, sustainability and Elon Musk? How do we navigate our web selves beyond 2022? Read on to find out.
WORDS STEPHEN SHORT
STYLING ALEX LOONG
PHOTOGRAPHY ALISON KWAN
MAKE-UP AND HAIR HEISAN HUNG
The morning I meet Kentucky- born, Stanford-educated, Hong Kong-based Kent Ho, founder of venture-capital fund Spectrum 28 (now S28 Capital) at London’s Nobu Portman, feels like time travel between two worlds. I’m anticipating the monumentally historic occasion of Queen Elizabeth II’s State Funeral, which starts only a mile away at Westminster Abbey at 10am, and will see an entourage of Her Majesty’s Armed Forces make the linear journey from London to St George’s Chapel, Windsor Castle to lay her to rest, watched by millions.
Ho is contemplating – and has invested in – a monumentally futuristic journey of no lesser – and perhaps greater – global import (involving billions), but one sprawling within the infinitudes of virtual space; namely, how to navigate the digital world from Web 2.0 to Web 3.0, stuck as it is in the halfway-house of Web 2.5. Such contrast in our respective positions is beautifully encapsulated by an event happening three days later, in which British artist Damien Hirst will open his feted exhibition The Currency (see page 12), and later burn a bunch of his collectors NFT’s worth US$15 million to coincide with the Frieze London Art fair this month. Talk about core values.
So how does Ho, former Goldman Sachs banker and early stage venture-capital investor in Zoom, Palantir and Coupang, who classes himself as a “generalist” investor, assess the investment temperature of the current IRL vs digital art divide? “Well, first of all, my belief is that you should buy things you genuinely like – perhaps find a connection with the artist you like and develop a relationship. However, I’m not sure that’s the underlying issue for a lot of people in Hong Kong.” He acknowledges the burgeoning role that culture and specifically art now plays in the city and how that’s made inroads into investment strategy. “It’s very natural, as people progress in their investment journey, and the role of culture has become something of greater interest, and something important.”
A fair answer, though something of a hedge. But what does he consider the best investment strategy for those wanting to capitalise on NFTs? “There are tremendous investments in the art world to be made. You could basically liken it to a venture-capital fund, and build a portfolio of artists, whereby some will lose and some will be great.” However, he cautions that the reality of the art world is that it’s still very much an insider’s game. “In terms of accessing the market, sourcing and accessing the primary and secondary markets, the underlying influences are actually very similar to my day job in venture capital. And if you really think about the driver of what’s happening in the art market, NFTs have been incredible.”
At which point, Ho – who spent a decade in Silicon Valley before moving back to Hong Kong in 2012 – leaves the thought dangling and orders an omelette breakfast with hot water. And then raises the temperature of the discussion.
“For NFTs, I’ve spent a little time in it, and I think it’s important to understand these new kinds of things. But NFTs are just one aspect of what’s happening in Web 3.0. As someone interested in technology, I spend time in Web 3.0 but the pace of change is absolutely incredible. From a tech standpoint, every decade on average there’s like a massive trend, a new computing platform that comes out, that really drives the next big thing. In my lifetime, it was broadband and the internet, then mobile, then smartphone, and then essentially cloud and SASS [Syntactically Awesome Stylesheets]. and cloud infrastructure. Web 3.0 is the next platform in terms of where we’re going.”
“So, NFTs.” He orders more hot water. “There are many ways to look at it. Most people now, everyday people, and the story of NFTs – what they’ve read in the media – it tends to be around apes, monkeys [he’s referring to popular NFTs Bored Apes and CryptoPunks, see our FAQ here] … which are really a supply and demand kind of thing. Some people do look at them as investments, but there are so many, it’s really crowded, and it’s such a crowded marketplace, it’s very hard to tell where it’s headed. So for me, I think at the end of the day, the most important question to ask is [he sips some more water] what is the utility and the foundation? And if there’s no utility, it doesn’t mean that something can’t be of value; it just becomes more of a supply and demand kind of imbalance in this equation.”
For those who’ve been sleeping under a rock during lockdown, NFTs exploded into being last year when Christies’ auctioned Beeple’s Human One NFT for US$69 million. Soon after, a single CryptoPunk – assembled from pixelated images of punk rock characters – sold for US$11.8 million. And three months later, a primate with a propeller hat and an earring (Bored Ape) for US$3.4 million. People spent a staggering US$44 billion on NFTs last year, according to blockchain data platform Chainanalysis. Bored Ape became NFTs’ most visible presence, lauded and invested in by the likes of Snoop Dogg, Paris Hilton and US talk-show host Jimmy Fallon, and became a badge of honour, a status symbol, as celebs swapped out their social-media profile photos with the images.
But then crash, bang, wallop, the market tanked. From November 2021 to July of this year, prices of some Bored Ape NFTs had fallen by as much as 72 percent, and NFT sales in that month were a mere US$1 billion, down from US$12.6 billion in January, 2022. Most NFTs are paid for in Ethereum, the web’s most popular cryptocurrency after Bitcoin, but the former saw its values plunge nearly 80 percent. And just as crypto prices began to fall, NFT and other metaverse and blockchain companies shared the pain. Blockchain.com laid off a quarter of its workforce, OpenSea cut 20 percent of its staff and Coinbase 18 percent.
“If you’re wondering what will happen with crypto in the long-term,” says Ho, “if you look at it from a utility perspective, and what actually becomes a currency; currency is predicated on a stored value but also on transaction volume and Ethereum is the largest transaction platform still, and if you believe in Web 3.0 going forward, I think there will be people who go via alternate chains, but still the most amount of companies will continue to look at Ethereum’s progression.” Go big on crypto then?
Not quite. “Still, there are a lot of bad projects out there, a lot of scam projects, so it’s important that people really go deep and understand. It’s like, there’s a whole penny stock world [penny stocks refers to company shares with low price and low trading volume]; in crypto it’s the same thing, there are scams, there’s false marketing. You know, the crypto community operates on just one platform, which is a messaging platform, and it’s crazy to navigate. A normal person will not go there and will not know what’s going on, so you’ll not even touch those, which also means you will miss the hundred or two-hundred backers, but it’s like the Wild West.”
The more we talk, the more I’m struck by Ho’s interest in the potential that NFTs are creating rather than the NFTs as investments themselves. “I’ve known about Damien HIrst’s project for a while and a friend of mine was given one of the works,” he says. “But although you can call it a great marketing scheme or whatever it might be, one of the most important things – and I don’t know how much Damien Hirst was thinking about this – is, if you think about the direction in which NFTs are going, is actually community building. After all, the internet has been an incredible platform for people building communities, and people finding each other where they never would have found each other before; so one of the challenges or things that you’ll see is NFTs being an interesting idea to build a community in a different way, or at least, that’s the way I would hope for.”
Ho it transpires, is a committed optimist. So we play devil’s advocate. Surely those communities and the marshalling of social media platforms by monopolistic and political players has in recent times tarnished the digital ecosystem. There’s the Cloud and then really dark clouds of influence. One thinks of billionaire entrepreneur and venture-capitalist extraordinaire Peter Thiel, who recently left his seat on the board at Meta and has uprooted from Silicon Valley, which he now calls a “one-party state”. In a time when the internet is increasingly being questioned as a force for good, even by some of its leading purveyors, where does Ho stand?
“Although I Iived in Silicon Valley for many years, and went to school there, I think it’s probably nice that I don’t spend all of my time there,” he says with subtle understatement. “It’s an interesting community of people, a lot of differing opinions, but it’s obviously still a platform to do incredible things. It’s all about who are the shepherds of that. Technology is still an open-source platform for everybody.
I’m very familiar, especially if we’re talking about media, we can certainly talk about the problems with politics, and technology, etc … but unfortunately these are the growing pains that I think we’ll have to continue to deal with.”
Ho is the son of Charles Ho, chairman of Hong Kong media company Sing Tao. Did he ever consider following in the footsteps at any point? “No, I sat on the board for many years and I helped them with projects, but I was always working on my personal business first. What I’ve learned is that media is very complex. My father has stepped away, he’s not running editorial for sure. If you chose to run it as a business you might do many different things, but for me it was always very clear to stay outside of it and focus on what I needed to do.”
One of which is a focus on enterprise SASS and cloud infrastructure SASS. Enterprise SASS is mostly about workflow; collaboration tools, productivity and impacts on marketing, HR and customer service. “So within our portfolio, we have a company that does sales-commission software, which touches many industries and they’ve built a cloud-based system that’s essentially replacing the spreadsheet in many companies.” The company is Captivateiq, and S28 Capital invested in the seed round of funding, and others have followed.
You’ve got to give Elon Musk credit – how much money has NASA thrown at space, and who is cost-effectively attacking space now? It’s private industryKent Ho
“If you really think about it, we all deal with Excel spreadsheets, but now you can put everything into a cloud-based system where everything is automated, calculated and you get sales reports; the salespeople can get benchmarking reports in real time. So workflows are beautiful, and nice to use – I call it the consumerisation of enterprise. This touches finance, insurance, so many industries and reflects how I think about productivity.”
How sustainable is his monetary mindset, and does he touch environmental, social and governance (ESG) investments? “We have one company in our portfolio which you could make an argument for it being an ESG company, around sustainability, as a matter of fact, It’s a SASS platform for people doing solar installation layout and enabling better software for greater efficiency and making it more accessible for houses.” The company is Aurora Solar and its current valuation stands at US$4 billion. “The revenue is massive, and they’re number one in the market,” says Ho.
He explains that while Aurora is not doing anything so grandiose as carbon capture, the environmental and regenerative sector for investors is one that still requires a massive effort on the part of governments. “I think governments need to be involved in different ways, and we have to start in different places, and that also starts with people, too, in terms of our habits. Some places are better than others, but Hong Kong’s not so great; it’s like 12 million plastic bottles a day, and they don’t even have the recycling facilities there – that’s a government issue. Every hotel is using recycling and sustainable products, but it probably just ends up in the trash and they have to alter that. Like many businesses, it’s just for show, for the customer, but if you actually go through it, a lot of that process is just not working right. But that’s also a cultural change, which starts with our kids [Ho has a son and daughter] – and my kids, if they see me using a plastic bottle, they’re like, “Oh daddy!” I think many of the Western countries understand this situation better, but for emerging markets it’s not a priority – but it’s important.”
S28 invested in an electric vehicle-charging company, as it was building a software platform, Ho mentions, which causes him to consider Tesla, one of which he drives, and the sector. “As far as electric vehicles go, there’s a question I still haven’t answered for myself yet – and I’m curious.” He means batteries, or how to better enact them. “Batteries are a big component of electric cars, and we talk about electric cars being cheaper but batteries are not great. So it’s interesting to think about what Tesla may do to alter that; a lot of the time people have talked about using lower-capacity batteries for better grid-management.”
So how does he assess “hyperpreneur” Elon Musk? “Certainly a controversial founder but an exceptional thinker, right, but he may be one of the only people that has a roadmap to think about all of these things, which is why all of his companies have ended up together. I mean, you’ve got to give the guy credit – how much money has NASA thrown at space, and who is cost-effectively attacking space now? It’s private industry.”
I tell him the quality or “manufacture” of the parts of Tesla cars seem at best mediocre, and realise I’m asking a very 2022 question. “That’s funny,” he grins. “Brands like Mercedes and Porsche have been asking us to test drive their electronic vehicles, and they always say: ‘It’s better than your Tesla, right?’ And I say: ‘I have no question that it may be a better-handling car, but when I buy an electric car, I’m not buying a car, I’m buying a software package.’
“I think of Tesla as a software company, not as a car manufacturer. An EV [electric vehicle] is mostly software, with its battery-management systems and all else, and I get a software update every couple of days from Tesla, but I don’t think Mercedes or Porsche is going to be sending those updates every two days. It’s also a data thing – Tesla has more data than anyone. I mean the next thing Tesla’s building is an insurance company; it offers insurance already in certain states in the US, and we’ll see more and more of that as it has more data on people and electric cars than anybody else. Tesla loves natural progression, so just think about that.”
And like a shot, he fast-tracks his way to Web 3.0, while I solemnly backtrack, albeit newly enlightened, to E II R.