Claude Code, Stablecoin Adoption, and 2026 Trends | Weekly Roundup

I think we're going to continue to see this sort of existential kind of hollowing out of the middle in crypto venture.

And we're going to see more of the things that work get gobbled up by, you know, the generalist investors. The crypto VCs are going to have to figure out how to adapt to that.

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds or projects discussed.

Welcome back everyone. I do exist. Sorry I missed the first pod. I heard ratings were pretty good, but Nikita Beer crushed crypto Twitter. So, I don't even know why we're recording, Rob.

He can't crush the pod, though. He cannot crush the pod no matter what he tries. We're going to have to go direct to our listeners.

I feel like Kaido, obviously, we should talk about that, but I don't know if it's because I'm tweeting less or my tweets are less relevant, but I am getting very little engagement. My timeline is just not crypto-related at all. Like I'm seeing more Warren Buffett and AI and cloud work and stuff like that.

Is that true with you, Rob, too?

My experience with Twitter's totally changed. So, well, it's different for you than it is for me, too, because you've got like what 150,000 followers, right? And you know, your engagement is like some level much much much higher than mine, right?

But you should you should track it as like followers to engagement. That's when you know people bought a lot of followers. I think you get pretty good engagement.

Did you buy a bunch of followers?

No, not at all. I didn't even do the the pump hack of like follow unfollow. There was this hack where you could like follow a bunch of people and then unfollow them so that once you follow them, people would follow you back. So that was like a growth hack back in the day, but I I've not done any of that.

Got it. Okay. Well, I have not done that either. Apparently, I need to learn more about how to grow my follower accounts. I got a measly like like under 15,000. So, you know, measly like 10% of you prediction of the year that goes to 30. That's your prediction of the year. Unless markets nuke and like there's no sentiment. Uh but that that grows a decent amount, I would say.

All right, let's go. All right, you got to follow me.

No. So, uh, but I will I will tell you, so I mean it makes sense that everything is AI right now. Like that is just like generally true, right? Like AI is like eating everything.

I don't know if you've used Claude Code, but like I earmarked a bunch of time this weekend to play around with it. Have you?

Yeah. Yeah. So, we're we're playing around with it a little bit at the firm and it's the first time where I mean you've seen a bunch of people tweet about this, but you don't have to be technical at all and you can like build something that you know is really works and you know it's not you're not going to build the most complicated thing in the world, but you can take you know what would take a software engineer a week or two and you can do it on your own in an afternoon with Claude Code and not be technical at all.

Right? Like the world of software engineering has completely been upended and changed with Claude and you know we we've talked a lot about cursor and and maybe not on this pod but you know more generally and these things are obviously being used like very broadly by engineers. Claude is the first time that you can be a normal person you and I never done any software engineering and you can build something that's really cool.

And so like that is my, you know, my expectation is like that is going to like eat a lot of the conversation because it it it should absolutely.

And then I think Warren Buffett is just because you uh you're in your, you know, fundamental like, you know, value investor, you know, era right now. This is we should like superimpose Warren Buffett's face on top of you in the next uh the next empire.

All right. Well, I miss for price of sales. Insert Patagonia vest meme. Here's here's a little price of sales for you everyone out there. You didn't think you didn't think I was done with this, right?

Look at this. Talk about cloud work and what AI is doing. Uh this is you're seeing for anyone listening, this is a chunk 2021 to to today multiples price to sales for uh SAS company software as a service.

You know you have Salesforce and Adobe and HubSpot and Octa and Workday. some of the best sales like back in the day there were darlings that multiple gone crushed since like you could draw a line of when open AAI like started and like when it really accelerated and multiple is now back in the day it was like over 30 35 times price of sales it's down to five.

I'm paying attention to that I think uh I think there's some some value there potentially but I've also heard heard a lot of companies like on renewal saying, "Wait a minute, they're trying to jack up price, not worth it."

When Claude is, you know, I don't know, like what is it? Manis is like 40 bucks per month per user. It's like a bargain in my opinion.

But yeah, this is pretty crushing. By the way, this went from 40 to five. Who knows where it goes from here. As a gentle reminder, crypto price to sales for most networks are in the hundreds range. Maybe maybe 60. is like like bargain levels. But I'll leave it at that.

Interesting observation on cloud work. How are you um what would you prototype? Like I'm curious like maybe we should save this for another episode. But I'm actually really excited because I'm not technical, but I do have a lot of ideas and like I talk to my engineers and be like, "Hey, I want you to build this. Uh this is like how a financial product would look like for a company we acquire. Like go and show me a demo."

And now like you and I can do a demo. Yeah. It's great. a demo would have taken I don't know six weeks or four weeks to do. Now it's like a day less.

We've been doing some like little stuff like you know just managing and automating certain workflows like being able to take you know all of my notes from some calls and you know build a you know kind of a really interesting like CRM and um digging out like tidbits that maybe I wouldn't get otherwise. We've done some stuff around like an actual pretty um interesting tracker of like our deployment pace and our categories around our deployment and you know some some different things and no longer do we need a software engineer to do it.

We we have software engineers here. I mean uh both AE and and uh and Tom have have coded in the past. Um, but we like now I can do this stuff, right?

And you talked to the guys at Enthropic and like they're I I heard this from somebody else, not from gentleman directly at Anthropic, but that the one of the engineers anthropic was saying now 100% of the code on Claude was being written by Claude, right?

Cloud work was built in 10 days, 100% by Claude. Claude, yeah, it's it's crazy, right?

You and I talk about hiring at the board level. I will say like we are obviously paying for these tools which I think are bargain because we get so much productivity and everyone on the team is like you need to be an expert on this. You need to be on top of it because you get so much value.

But I I I think we're it does beg the question of like I've always like in my venture investments and talking at founders, they always will tell you that they have one or two when things get tight and they need to cut budget and they need to cut staff unfortunately. They'll say like there's always that one or two engineers that they're like we just cannot let these guys go. Like they're 10x engineers and I'm like well why didn't you just hire 10x engineers?

I think uh it really forces the question like I don't know if you're seeing it across your portfolio, but what is what is the pace of hiring look like from here and how do you think about like building teams?

Because before that it it would have been like a very important thing that you would discuss like hey you need to have like this organizational structure to support the backbone of a company and typically this is what you know these functions that you need to fail. I can tell you from my perspective like we're lean and mean and I don't necessarily you know there's certain roles that we're not needing now for us at least. Are you are you seeing that in your in your portfolio?

Yeah. Yeah. So one of the qu I mean one of the questions I ask uh all of the founders now is you know not you know really early but as you know we talk about series A and series B series C is you know how how many of your commits are at least AI assisted right at this point it should be close to 100%.

Right it shouldn't be shouldn't be far off from that for you know people that are generally you know uh just software companies. It's always been true in crypto that especially on the open source protocol stage, you just needed less employees, right? Like there was the that um the type of software engineering here did not require you to have, you know, a huge organization, right?

And so that's coming down even further for sure. Uh and now we're seeing this happen in, you know, traditional SAS, we're seeing this happen in, you know, uh across AI.

There's a lot of hand ringing right now and I I don't invest in the space so I'm not as deep as as maybe I should be but there's a lot hand ringing right now about the fact that potentially there's you know all of these organizations organizations are spending a bunch of money on you know Microsoft co-pilot and a bunch of AI tools and then they're like not using it nobody's using it like appropriately and so there probably won't be all these re-ups and so we're a little ahead of ourselves but it sort of feels to me like the pace of change the pace of additional productivity is outpacing like anything to do with um you know hey this this you know piece of Microsoft copilot or whatever doesn't work very well it's just going to get good enough that that won't matter and companies will keep spending money on it but yeah um it it should be changing the way every single person is doing work totally.

I always tell people you're not going to get fired by an AI you will get fired by someone you'll be repl you won't be replaced by AI you'll be replaced by someone that really knows how to use AI

I am one other thing that I was thinking about is like every time like there's like a race right in AI going on like every LLM like from Chad Manis all these companies and I feel like it's it's having like this creative destruction in real time where like I have kind of sympathy. I think about like venture funds investing in AI. Like how many of them have like portfolio companies of their theirs have gone to like zero because they were rappers and all of a sudden like Chad GBT enabled that functionality and you're kind of cooked at that point.

It really begs the question of like what is the moat for certainly like existing businesses like Workday and Salesforce and um HubSpot and what is the mode for like on the venture side?

Maybe the question relevant for the audience is like how does that impact like crypto? I could tell you from my standpoint there's like five or six portfolio companies of mine that I invested in that were like doing automated like threat detection on smart contracts. Now I think there's like a larger player traditional player coming into the space and I forget who it was. it was quite notable and I was like okay well you could almost see the writing on the wall for that type of very niche specific company.

But it is it is chaotic. I do wonder like if you're if you're what what's going to be the performance of these AI focused venture funds that made a lot of investments and maybe the better the better investment would have been just like punt the S&P.

Well, I I will tell you I bought um I don't trade a lot of equities. I'm usually just like kind of long ETFs generally. Uh the thing that I actually bought today for the first time and this is the first like kind of sector specific ETF I bought in size for a long time. Uh and it was SHLD uh which is the like it's the uh defense technology defense technology ETF because I I really think there's like two things there's like three things to go along right now which is um innovation in crypto innovation in uh in um you know AI and um seems like global unrest.

Yeah, those those are the things to be along right now unfortunately. God damn it, Rob. We're just starting the year. You can't. You're all you you quoted you tweeted me about there's something about your prediction for the year is all positive and you're calling me a bear and all of a sudden you're telling us you're the world's positive and crypto.

Yeah. Um crypto AI and defense but even even then like so I I'll tell you I've been doing a lot of thinking over the last couple weeks. Uh I read like just a ton of books on like really off of social media. I don't think I'll ever come like I'm tweeting way less or just reading more and just focusing on what I'm doing.

It's crazy to like read like historical anecdotes. I'm like I read like the guy that ran the banana trade, Ted Turner, like Boon Pickins, like all these guys across different centuries and eras and sectors. Uh, I read this really good book of Zam Cell that I've talked about in the pod and they all kind of say the same thing of like you really need to deconstruct an investment thesis with supply and demand.

And I tell the analysts seems like if you don't understand supply and demand, the curves and shocks and what can really then you haven't really understood a company really well. Um the reason I bring it up is like this creative destruction is very real in the supply side. Uh like the demand side for AI is like super strong. The demand for crypto is you could argue tied to macro and other stuff. Uh but it's growing.

So like I feel like most people don't disagree like the demand the aperture of crypto is growing. Stable coins are going to grow. So that demand is super strong. Like you can you can underwrite a hockey stick of of stable coin growth as an example and you've been very vocal about that. But really I think where you make most amount of money is if you really understand the supply the the supply curve like what is how how inelastic is it?

Maybe a company has a different slope than a than a an in like a a disruptor. Um, so I I I like now I'm of the mind that like supply is the most important thing to understand for you to make money because the demand is fairly easy to underwrite as stable coins as an example, you know.

Like for instance, for inance rain, right? like what does Ry curve look like because I think that forces what is the moat of that business in a world where everyone will want to kind of play a part in that and you have legacy players that have some sort of business that can eat into that and and I I mentioned Rain because it just obviously raised a great round. You guys are investors like one of the fastest growing companies in crypto you've been talking about constantly on the pot.

Yeah, listen, I think you're you're right. We're um I'm I'm speaking at a leadership summit for one of the largest asset managers in the world next week around like broadly what like stable coins and tokenization are doing to their business and what that could could mean.

And I bring that up because I think a theme that I'm going to have in that conversation and a theme that I've that's been around more broadly, we've been talking about it a little bit also on the uh prediction market side is that there is so much demand for new novel financial product, new asset management, new wealth management, stable coins.

There's so much demand for prediction markets, right? And it seems time and again that for these things that don't necessarily have really deep moes in terms of the tech or really deep moes in terms of you know some sort of like regulatory moat as well which are also are going away that a lot of these things are are more and more than than I've had in probably my entire advice career. It's really just been about like how do you distribute who what is the top of funnel? What is your aperture to bring people um into your product?

And Rain's a very interesting story because I I think I agree with you that there are very few businesses that I look at today where I I say nobody else is doing this and will be able to do this in the near term uh and anyway as effective as this company. And so they have a quote unquote supply mo to your point, right?

Rain is kind of that company and and we can talk about like you know where there are others in crypto but on the prediction market sides like obviously a lot of people can launch prediction markets. Koshi and Poly Market are by far and away the biggest um they have you know I would say a head start but they wouldn't have what I would say kind of an indefensible moat.

Rain in on the other hand has kind of this full package of like the best tech. they have the um regulatory mode in terms of having their MTLS only a few people have that um and as well as their um some of their international relationships and uh and kind of regulatory licensing as well as this you know kind of preferred principal member relationship with Visa which is very hard to get and you bring those three things together and they have like a head start that essentially nobody can uh in the market can compete with at the moment.

you see Bridge and Stripe have been trying to launch a product for a year that you know still they haven't really been able to and it doesn't really work. Um, and because of that, because of the fact that they are essentially, you know, it's not a sustainable long-term monopoly, but this kind of short-term monopoly, um, they've just eaten the entire market.

And they've grown by, I mean, I think they publicly announced that they've grown over 40x on the year. I can tell you in the 15 month frame, it's actually a big much bigger multiple than that. And they've because of that they raised in you know over the last year they they raised over you know $330 million right uh from a company that was you know call it a million dollars of revenue uh 15 16 months ago.

Yeah. And it's incredible story incredible business incredible founders. Charles and Farooq are awesome. And I think the um Jason's actually doing a pod with them uh next week.

Yeah. I met him at the Avalanche uh summit which is a small gathering you were part of too. And we actually have talked to them a lot. And when I think about like using stable coins in a way that consumers can use them, like not just hold them to speculate uh and trade in out of pairs, it's very much a Visa card that and when I find myself explaining how do you use stable coins in a traditional business, it's always you close that loop by saying people can receive dollars in a wallet and then spend them day-to-day.

And that was I think one of the missing pieces that was needed to really stimulate the demand for stable coins. Um so I'm actually very excited to you know we we think about that a lot.

What is for anyone that just is kind of waking up to rain like what is what is they double clicking on the the mo like they have a partnership with Visa right?

Yep. And so they're principal member so they do their own issuing so they don't need a bank. So so the way your credit cards typically work you have an AMX. A MX is the bank. They're the issuer bank. Um, and they're also the issuer processor. If you have a uh say a Visa or Mastercard otherwise, usually it's a Chase, you know, Visa, right? Or it's a some other bank.

And like this is true for for Bridge like Lead Bank is their issuer. So Brid works with lead to to do that. And so there's, you know, different people in the value chain that has you have to the fund flows work a little bit differently, the way the economics work a little bit differently. Rain it because they're a principal member with Visa in the places where they are the direct issuer which is not always true with all of their customers but in the places that they are um they hold like almost 100% of these call like interchange economics that would go to maybe different counterparties and that they control or the customer can control in some cases they have managed and unmanaged but they can control 100% of the way the fund flows and you don't have maybe an extra you know quote unquote bankop it's just their entities um specifically and so They then settle with Visa in stable coins.

Visa's doing I mean we talked about this but you know Visa announced that they were doing you know um $3 billion of annualized direct stable coin settlement. I think that's going to grow um you know tremendously this year.

And billion you said 30 billion I believe I said maybe 10 but uh I said 100 billion. Oh you said 100 billion. That's right. Yeah. Yeah. So I I think it's going I think it's going you know way higher.

So what um why maybe the uh layman question here is why wouldn't Visa do this directly?

Well, Visa doesn't issue its own cards ever with anybody, right? And why don't they do that? Because like they're the network. The idea around Visa, right, is that they take all of these issuers and all of these issuers have to use Visa to for authorization and for um essentially like the passing of information around um KYC and then use it in their network to settle from like the issuer to the acquirer, right?

And so they want everybody to use their rails because but they don't want to compete with, you know, the issuers themselves, right? because they want all the issuers to want to use Visa. Now, it's a little bit interesting because um Visa direct is the fastest growing part of their business today at least in terms of the transaction volume. So uh their services business is growing faster but on the transaction side Visa direct is the fastest growing part and Visa direct is their call it like alternative um off like the traditional rails system where and they actually just announced a a deal with BVNK where they can do these kind of like direct payouts through Visa Direct in a lot of the Visa Direct business in like emerging markets not through their traditional network rails.

And so they're they're really what it seems like Visa is doing is they're futurep proofing themselves a little bit because they see that a lot of fund flows are moving off traditional bank rails correspondent um bank flows especially for cross border are are getting um are getting eaten away at and so they're saying okay well we want to have these call it you know stable coin direct settlement with somebody like a uh like a rain and then we also want to do visa direct which is you know off our traditional uh network flows.

Where is most of the growth from Rain coming from?

So for them it's uh they don't actually have a lot of customer concentration. They have a just a lot of customers. So they announced publicly they have 200 C over 200 customers at this point. Uh people that are you know and it by the way it doesn't have to be true to use them that you have a you know a stable coin or a crypto wallet.

Yeah, I mean they they're publicly issuers of um like Etherize card, the public issues of read. Pays card. Um they do it for Cast. They do it for there's an Avalanche card. And so these are all people that have like a stable coin or crypto wallet, right? You swipe it and it spends down here stable coin balance.

But they also have clients I think they've announced um a um a Western Union partnership who they might have stable coins or they might have fiat. And if they have fiat, they have the capability to swap that fiat into stablecoin and still 365 days a year 247 settle with um Visa and Stablecoin. So they're doing both.

And so they're they're the only one who's able to do both with a direct um being being their own issuer who have the the licensing and also have really really good documentation APIs and um the the right kind of like wallet and logic infrastructure uh to do these kind of fun flows really seamlessly.

Who are the other principal members in that Visa network that could potentially compete it with RAIN or against Rain?

Well, so so right now there's I'm sure there are a bunch of people trying to get principal memberships today. The vast majority of people doing there's really kind of three players who doing stable coin backed car. I mean that's that's not true. There's there's more than three. There's some others. Um I think Monivate in Europe. Um Exo I think is also uh also a direct issuer I think. Um there's a business called Reap out of Hong Kong uh that is trying to do that but they don't have the same abilities on the on the like B2B TOC side and then Bridge is is trying to do it but today Bridge is using lead as the issuer.

Most of the issuers on the uh on the Visa network are banks right? Um and that's and that's pretty typical. Um, Rain's got a and we I don't have to go in, they'll talk about it next week, so tune in on the pod next week about like how they differentiate between some of those other players. But um, they, you know, built this business for, you know, basically two and a half, three years with very little um, I guess revenue. They were, you know, building traction and proof of concepts. Um, and then were able to essentially turn that on in a way this year that just, you know, accelerated like an incredible incredible amount.

And so, you know, I I mean, when is the last time? And so, for anyone who doesn't know, maybe we should saw this beginning, but you know, Rain raised $250 million series C led by Iconic, who is a legendary fintech investor. Um, and we were part Google Family office. Yeah. Originally, yeah. And then it and then they turned into like a much broader um, you know, LP base.

Um, and and we've been an investor. Galaxy's been an investor. Um and then the everyone else has been pretty much Sapphire Renters which is a pretty good fintech investor, software investor. Yeah. So everyone else was a fintech or or traditional or generalist investor. Sapphire, Norwest, Lightseed. Um Lightseed's obviously done a lot of a lot of crypto as well, but then call it the more like only crypto native funds have been US and Galaxy have been been investors for a few rounds now.

And so Iconic coming in in a big way and a $250 million round. We I mean maybe correct me if I'm wrong. I don't think we've seen a round like that with that kind of a stamp of approval from that type of investor that big of a uh of a of a capital push since 21. Like it's a it's a real statement in my mind that I Ribbit did maybe GA has done some in the space but not for a while. Yeah. Not to 21. They did Talos in 21. Fire blocks. Yeah, but again, Fireblocks the last race. I mean, great rounds and great business, but not since 21.

Yeah. No, you're right. I mean, look, it it's it's very impressive what they've done. And I think um it's very interesting. I I will tune on to that pod or help record that or just be there to ask him questions. Um but um yeah, very impressive. That that is the highest signal in my opinion, you know, in spite of Yeah.

Well, and it tells you a lot about I I think generally what the perspective is for the demand for you know retailer use of stable coins which people have been I think pretty um dubious about and a lot of people people still are but we're we're seeing the proof in the pudding but to your point part the the reason that they've grown as quickly as they have is not because it's not just because of this kind of retail demand and the Artemis guys actually put out a really wholesome report on cryptocards today. Definitely definitely check it out. Okay. Um but the it's because they're also basically the only one who is able to do this full suite of things that the the providers need.

Totally. And it obviously helps that Visa as a company Kai and every like has been very I guess a question for them is how much of it like to your point that they weren't able to turn it on so much this year like Visa I think made some key unlocks like that may have facilitated this in a very meaningful way like and I think it's um it's a very synergistic symbiotic relationship I would think that they have. Yeah 100%. Yeah.

And then the the other piece the Artemis guys I was I remember that report that came out last year where you guys I think cor collaborate collabor collaborated with them where the fastest growing sector of stable coins was not B toc is B2B. Of course rain carts could be issued like could also serve a B2B like or most of their business is just B2B TOC because he would cross retail. Yeah.

So, so most of the volume in these things is actually a B2B TOC. So, it's um it's an end customer. They're they actually rain actually started as like a Dowo tooling like business expense card management business like a ramp for Dows uh in 2021 and that's actually Yeah. Uh and then Dows don't really work. Um and and RAMP actually um not RAM, sorry. Reap, which is one of the competitors out of out of Asia, like that's kind of their core business. And you know they're they're they're a sizable business as well.

But how many of the best companies in certainly like not just in crypto have like pivoted in a very meaningful way? Like poly market was always prediction market but I don't know from your portfolio how many of them have had these kind of pivots. when I was there there's probably one that we're uh going to announce a large kind of series B into relatively soon that has had um that had kind of a real pivot. Uh but it was all I actually I would say this there we've had a lot of companies pivot. All of the companies who have pivoted have pivoted and done well have pivoted not that much. It's like a degree of change right?

So for like the rain guys it's okay well we're going to serve Dows or businesses. is well now we're going to do a B2B TOC product and we still can do that other product but the B2B TB toc product is the one that's like really exploding right and it's a there's changes in the way the infrastructure has to work a little bit there's some regulatory changes compliance changes but it's not it's very related right otherwise um we've seen there's a you know another business of ours that was more like you know doing stable coin related stuff that they you know before doing the stable coin related payments they were doing more like you know interoperability ility for like DeFi um DeFi APIs.

So it was a a lot of the infrastructure they had already built could be used and so you know that has worked for them. Um there's like a trading firm that kind of turned into like a DeFi protocol right and so but they were already you know very deep in this thing and we're building um kind of like this quantitative firm that they could then use a lot of that infrastructure for for DeFi. So, so there's stuff like that, but you know, people do pivot and there are success stories, but I don't know if there's a single person in our portfolio who's had a wholesale pivot and, you know, been a big outcome.

Yeah, I can think of Slack as like one of the best pivots. Um, uh, uh, mine actually have a good one. Path Dow, I was an investor in that. I I obviously at least 10% of my venture book was like in in gaming like Axi and alvium and all this stuff. Um and I invested in guilds and path was one and say they reached out to me and said hey listen we were paying attention to this AI thing and agents and thing and we want to make a pivot and I didn't think much of it and then that turned into virtuals um and long forgotten and you know of course you can argue but you know the token at least has done very well and I think it was it was one of the probably the hardest pivots I've seen but I would say at that point it's like the founders had a core technical competence that you know allowed them to like at the end of like the trading firm going into DeFi well like you're investing in a large part of it is like the founder skill set like they're financial guys so like they're going to figure something out and just I think I think not uncommon for people to pivot um maybe not full hard like pivot but soft pivots to figure out a viable business model.

How much of when you make a because you guys traffic in Ced, series A, series B. Um, does the weight like if you were to like have different criterias in your scorecard like Chimath like obviously everyone saw the memo that of Grock and he was like is this a special person? Uh, and you know that's sometimes you just kind of really simplify investment like is this person have the you know the capacity to build something great? Yes or no like it could be distilled into that. There's a number of other things that factor into that, but like how much of in your investment committee process like how much weight do you give to that versus like market supply dynamics