Magdalena Kala: How I Invest in Web3

It started with blackjack. Magdalena Kala, aka “Crypto Mags,” used to play blackjack on the regular. She loved it. She was good at it. She even became a professional card-counter, fascinated by the game’s dynamics and strategy. “I’ve learned everything about human psychology, business and risk management from blackjack,” says Kala.

And it was Kala’s approach to psychology – specifically consumer psychology – that fueled her obsession with Web3. “With Web3, I love what it means to give people an ownership mindset, as opposed to a passive mindset,” says Kala. “These are fundamental things that humans care about. If we didn’t care about ownership, we wouldn’t be giving employees stock options.”

Magdalena Kala is speaking as part of the "Big Ideas" program at CoinDesk's Consensus festival in Austin, April 26-28.

Kala, who is based in Miami, believed in this thesis so strongly that she doubled down on it, launching an early-stage Web3 fund called, well, “Double Down.” (A nod, of course, to blackjack.) In late 2022, Kala raised $30 million for the fund (whose backers include blue-chippers including Chris Dixon and Marc Andreessen), and she now focuses on Web3 projects that impact consumer culture. “My overarching thesis has always been about the why and how people spend their time, money, and attention,” says Kala. People increasingly spend their time and money online. Web3 (in theory) lets them do it better and with more ownership.

But what does it actually mean to run a Web3 fund? What’s the job like? Where do you go to find ideas, hunt for an edge, and vet worthy investments? Kala opens up about what it’s actually like to run a fund, confessing that “basically, every non-sleeping, non-exercising hour I’m working on this, because that’s what I think about.”

Interview has been condensed and lightly edited for clarity.

You once made a joke on Twitter about how there’s the “Instagram” version of being a fund manager and then the reality. So what’s the reality like? How do you spend your average Tuesday? How many hours do you work?

There's no average day. And I don’t even know how to count the hours. And the reason is that I'm a big believer in work-life integration. I think when you strive for work-life balance you're just setting yourself up for failure. I love the work that I do. And, very frequently, I cannot tell you if the hour I'm spending is a work hour or a non-work hour.

What’s an example?

If I go to dinner and there's, like, six other Web3 people in Miami, is it work? Is it not-work? I don't know, we're all friends. And I generally love hanging out with these people. And we actually probably tend to talk 80% of the time about Web3 anyway. So that might be my normal brunch on a Saturday, right?

And this is what I read about in my free time. I don't know how to even consider that work or not-work, right? Basically, every non-sleeping, non-exercising hour I'm working, because that's what I think about.

So what I’m hearing is that your entire life is basically all-work?

[Both laugh.] But the work is just so varied, right? I do a lot of meetings, whether Zoom or in person. In Miami, people are constantly coming through town. I love to meet people in person.

How else do you spend your time?

I used to spend a lot more time on Twitter. Now it just doesn’t have that same signal-to-noise ratio as it used to. I spend a lot of time in Telegram groups, WhatsApp groups, the kind of smaller and private sets of people. And I actually spend a lot of time talking with other investors, too. There are a bunch of people in the industry who share my thesis, and we talk a lot about what we’re seeing both in general terms, and with specific companies.

Where do you go for investing ideas? Are companies coming to you, or are you scouring the space for under-the-radar projects?

In crypto, most people build in public because it's all publicly available. So whether it's Twitter, Farcaster [a Web3 social media platform] or group chats, people are constantly sending each other messages like, "Hey, try this out." My telegram is filled with DMs from friends who are, like, "Hey, have you heard of this?" Or "Hey, you should check out this product." So a lot of it is that people know what I like to invest in. People are pinging me saying, “Hey, have you seen this?" And I constantly play with new products and projects.

What do you look for in a project?

At the end of the day, it's all about the team. But unlike a lot of early-stage investors I don't think it's ALL team. In other words, I have to love the team, but if I don't believe in the product I'm not going to invest.

Part of the challenge is that so many teams building in this space are very technologist-first. And they don't know what it takes to build a scalable organization. So I love teams that combine industry expertise with a very Web3-native skill set.

How do you evaluate teams?

References play a huge role, because there's only so much you can figure out in conversations. And then one of the best predictors is just the speed of execution. You might not know everything, but how quickly are you iterating on your product? How quickly are you gathering insights? How quickly are you able to ship features?

You’ve been very bullish on investing in Web3 culture. How has your thesis evolved in the bear market?

The number one thing is that all of the most interesting applications of Web3 – of the practical ways that Web3 is different versus everything else – are the things that are making the [U.S. Securities and Exchange Commission] most upset.

How so?

The shared ownership and the upside [of digital assets], basically, is very security-like in the SEC's mind. Think about it this way. If I'm earning a token for free for an activity I'm performing, and then that token is going to appreciate in value, that should not be a security. I didn't even buy it, I just earned it. But people think it's a security, right?

And because I earned it, and I can sell it and people can trade it on the secondary market, it has all these characteristics. But rewarding people with things that have upside potential is such a core thing for me in Web3. And it's actually really hard to do well while not having a regulatory framework.

Last question. Your Twitter bio says that you are the “Queen of Hot Takes.” Give us a hot take.

I've been trying to tone down on the hot takes. [Laughs.] So this isn’t a hot take because I feel like everyone in the industry would agree on this, but the U.S. is shooting itself in the foot with the lack of a regulatory regime.

In general, we complain about Europe being overly regulated, but personally I think it's a better situation right now for crypto. It might be more stringent but you know exactly what the framework is. You know what is legal versus not legal, and you can work around it. And in the U.S. right now we can't. So a lack of clarity prevents innovation and doesn't serve anyone. Not users, not builders, not the overall economy.

I think you’re right. Most in the space would agree. Thanks again and see you at Consensus!