5 Questions with Louis Hsu - VP, ETFs

Last Update 11/15/2022

Building Grayscale’s ETF practice is a key focus for the future of our business. As Vice President, ETFs, Louis Hsu is a leader on our team building new exchange-traded products and ensuring Grayscale and our partners are ready to act in the event GBTC is approved to convert to a spot Bitcoin ETF*. In a brief conversation, he shared his career journey from tradfi in San Francisco to crypto on the east coast.

*We use the generic term “ETF” to refer to exchange-traded investment vehicles, including those that are required to register under the Investment Company Act of 1940, as amended (the “‘40 Act”), as well as other exchange-traded products that are not subject to the registration requirements of the ‘40 Act.

1. What has your career been like, and what brought you to Grayscale?

Louis Hsu: My career has always been anchored in investing, but it hasn’t been linear. I started out researching active hedge fund strategies, I’ve spent the majority of my career as a portfolio manager, managing index/passive equity ETFs and multi-asset funds. More recently, I pivoted my career to manage the personal assets of startup founders and venture capital partners at a more boutique institution.

In the summer of 2021, a headhunter reached out to me for a job to lead portfolio management efforts at a crypto firm. While I was not looking to move, this signaled to me that crypto was potentially driving towards mass adoption, and it was at least worth an initial conversation. Interviews with the crypto firm were going well, but when I found out that Grayscale—the most established crypto asset manager in the world—happened to also be hiring for a similar role, I proactively reached out to a few employees on LinkedIn including our CEO, Michael.

To my surprise, Michael responded to me the day after I had reached out! The next thing you know, I was interviewing (remotely) with our COO, Hugh Ross, and shortly thereafter with Grayscale’s Global Head of ETFs, Dave LaValle. Even with such a great team, it was still a huge leap of faith for me, my wife and our two kids to move from the Bay Area to the New York metro area when I accepted Grayscale’s job offer. Looking back, it was well worth it!

2. What piqued your interest in crypto and why Grayscale?

Louis Hsu: Curiosity drew me in. Although I knew a few people throwing money into Bitcoin in the early days around 2012 when it was under $100 (I wish I did!), I first paid serious attention to crypto in 2017 when Bitcoin was rocketing towards $20,000. Regardless of the price of Bitcoin or any other crypto, once I saw the potential of blockchain technology to disrupt and reshape all facets of financial services as we know it, I was hooked.

3. Keeping this next question simple: why Grayscale?

Louis Hsu: Quite simply, Grayscale is the largest digital asset manager in the world, and I couldn’t pass up the opportunity to build a world-class ETF business with one foot in traditional finance, and the other foot in digital assets. Also, it was clear to me during the interview process that the people at Grayscale aren’t just extremely talented, but also humble and down to earth. Working at Grayscale is a lot of fun, and I love the entrepreneurial spirit that we all have here! 

4. As a portfolio manager, how do you think about valuing crypto, especially Bitcoin?

Louis Hsu: This is a fascinating topic that really depends on your point of view!  While there’s no universally accepted way of modeling Bitcoin’s value, in my opinion, here are three of the most interesting valuation frameworks I have seen discussed:

  1. Network Effects: under Metcalfe’s Law, Bitcoin’s value as a network (like the internet) grows exponentially rather than linearly with each additional user.  
  2. Digital Gold: Bitcoin is viewed as a store-of-value commodity that competes against gold’s market cap of roughly $10 trillion.  
  3. Fiat Default Insurance: Bitcoin is perceived as a “fiat debasement hedge” where it’s considered default insurance against a basket of say G20 nations’ money supply multiplied by their respective liabilities.

5. How do you support the growth of your teammates, and what do you wish you knew at the start of your career?

Louis Hsu: I try to help my teammates figure out what they’re passionate about, and guide them to develop the necessary skills to progress to the next level.  Moreover, I encourage teammates to ask a lot of questions as it’s good sign of someone trying to understand something rather than just going through the motions. It’s also okay to make mistakes, but learning from them is important. Over the years, I’ve learned that a successful career is a journey, not a destination, and I wish I’d understood this sooner.  A career can span 40 plus years, so it’s important to keep a long-term view.  It’s okay if your first, second, or even third job isn’t your dream job:  what matters is your attitude towards work and that you master the skills for the job at hand before you move on.

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