A Conversation About Crypto-currencies and ICOs with Andy Bromberg

Y Combinator2018-09-14

YC#Y Combinator#Andy Bromberg#Geoff Ralston#Startup School#Coinlist

9K views|5 years ago

💫 Short Summary

The video features Andy Bromberg, Co-founder of CoinList, discussing his entrepreneurial journey from high school to founding startups. He emphasizes the importance of practical skills, value creation, and engaging conversations. The discussion covers the challenges faced in startup funding, the role of tokens in blockchain technology, and the potential of cryptocurrencies like Filecoin. The video delves into the complexities of token sales, the rise of security token offerings (STOs), and the decentralization of control in the crypto space. It concludes with reflections on the future unpredictability of the ecosystem and the need for adaptability.

✨ Highlights

📊 Transcript

✦

Andy Bromberg's entrepreneurial journey starting from high school.

00:31

Bromberg's desire to avoid traditional jobs and make money in a more engaging way led him to venture into entrepreneurship.

Building websites and running online businesses became a passion for Bromberg.

His journey evolved into a love for starting ventures from the ground up.

✦

Speaker's early entrepreneurial ventures during high school.

04:29

Built websites related to personal interests rather than focusing on business opportunities.

Enjoyed and profited from projects, covering expenses and exploring passions.

Considered emulating Mark Zuckerberg but ultimately chose to attend prestigious school.

Interest in entrepreneurship reignited by class on startup engineering, emphasizing practical business skills.

✦

Creation of the Stanford Bitcoin group.

05:30

The group focused on practical skills like deploying code and using GitHub.

Despite skepticism, the group believed in the potential of Bitcoin and conducted research and evangelism.

The speaker left to start a company called Sidewire, a platform for political experts to discuss news.

Sidewire aimed to provide expert analysis without the noise of social media, emphasizing the importance of separating signal from noise in information dissemination.

✦

Importance of Validation and Angel Investors in Business Start-Up.

08:04

The founders stress the need for validation before starting a business venture.

Angel investors played a crucial role in the success of the business.

Supportive and aligned investors were key to the growth and stability of the business.

Understanding the motivations of investors is essential for a successful partnership.

✦

Experience of raising funds from investors and managing challenges.

10:57

Importance of having quality investors who are supportive.

Positive overall experience despite variability among investors.

Additional funds raised from Spark Capital, completing institutional seed round, launching product.

Success in engaging experts and key figures in discussions on platform.

✦

Challenges faced by a startup company in scaling their business model.

13:59

The company experimented with subscription services and enterprise pitches but none were scalable.

Honest conversations with investors and team members led to the realization that the core business model was not viable.

Despite efforts to address issues, the company struggled with retaining users and providing engaging content.

The difficult decision to shut down the business was made due to these challenges.

✦

Importance of building habits for startups.

16:27

Start with small actions and gradually expand to create lasting habits.

Challenge of engaging with long-form content in a world of quick, easily digestible information.

People are drawn to sensational news, but sustainable habits require thoughtful conversations.

✦

Transition back to crypto after initial hesitation.

19:03

The speaker was initially hesitant due to uncertainty in the market.

Involvement with Stanford Bitcoin group and decision-making process that led to delay in crypto endeavors.

Belief in the potential of multiple successful cryptocurrencies in 2017.

Creation of CoinList, a platform for token sales, in collaboration with Protocol Labs and Y Combinator.

✦

Importance of tokens in cryptocurrency networks.

21:54

Tokens represent ownership and scarcity within networks like Bitcoin.

Launching a token network with decentralized control.

Example of Filecoin's token by Protocol Labs as a network without direct control.

Comparison of tokens in blockchain to the internet in delivering value to consumers.

✦

The complexity of valuing websites and tokens is discussed in the segment.

23:09

Tokens, such as Filecoin, facilitate file storage exchange and address file storage and transaction issues.

Valuing tokens presents a unique challenge compared to traditional assets tied to cash flows.

While websites can be valued using economic concepts like net present value, tokens operate differently.

Filecoin is highlighted as an example of tokens serving different purposes in the blockchain ecosystem.

✦

The challenge of storing files with a centralized service like Amazon S3 is discussed.

25:29

Issues of censorship and reliance on a single third party are highlighted.

A decentralized approach similar to Airbnb is proposed, where individuals with extra storage space on their computers can rent it out.

Filecoin and IPFS are introduced as solutions to directly connect individuals with storage needs to those with surplus space, eliminating the need for a trusted intermediary.

These solutions offer a token-based payment mechanism.

✦

Overview of Filecoin storage system.

27:24

Users are incentivized with tokens to store files securely and are required to stake tokens as collateral.

Verifiers confirm correct file storage by asking specific questions and ensuring accountability.

Users receive tokens back, file owners retrieve their files, and verifiers are rewarded with newly minted tokens.

Filecoin system creates a market where all parties are motivated to fulfill their roles effectively.

✦

Importance of Blockchain and Tokens in Incentive Alignment and Trustless Systems.

29:51

Tokens are crucial for startups to raise funds through initial coin offerings (ICOs).

CoinList helps companies with token sales, but not all startups benefit from having a token.

For some startups, tokens can be a valuable asset for fundraising and operations.

✦

Concerns and challenges in the ICO industry.

34:08

Lack of diligence and data points for investors is a major issue.

ICOs raised more money than venture capital in 2018, but industry's rapid growth raises worries.

Speaker questions the belief in ICOs and emphasizes the need for better understanding and due diligence in token investments.

Early stage and uncertainty of the industry are highlighted as key factors.

✦

Lack of quantitative data in ICOs compared to YC process for admitting companies.

35:09

Aggressive investor mentality in ICOs leading to excessive capital inflow.

Majority of ICOs unlikely to succeed due to insufficient funding for winners.

Explanation of ICOs and token sales for raising funds for network development.

Importance of token distribution for incentivizing user participation and aligning incentives within the network.

✦

Overview of Token Functionality and CoinList Initial Coin Offering

37:35

Chrome is the first token supported by the network, with CoinList raising $205 million in their initial coin offering.

CoinList provides assistance to companies in conducting token sales, including compliance work and legal involvement.

Airdrops are used to distribute tokens to users, such as PayPal's initial offering of $10 credits to new users.

Tokens are used to incentivize users to participate in a network and invest more capital.

✦

The value of blockchain technology is in applications where trust is lacking between parties or a central intermediary.

40:56

Blockchain is not suitable for products like Airbnb that rely on trust.

Tokens are ideal for systems lacking trust in intermediaries, providing a decentralized solution.

Trust in institutions is decreasing, making specific token use cases more valuable.

The video also explores the advantages and disadvantages of tokens compared to convertibles for startups and investors.

✦

Differences between traditional funding and token investing.

42:30

Token investors lack control over token networks once released, impacting company price.

Token investing offers flexibility but results in misaligned incentives between investors and companies.

Investors may lack visibility into company updates and engagement with the project.

Potential drawbacks compared to traditional equity funding.

✦

Rise of token sales in fundraising.

45:17

Investors can participate without meeting founders, offering quicker returns compared to traditional startup investments.

Token industry is moving towards venture capital practices with vesting schedules and lockups.

Companies are transitioning to multiple token sales resembling seed, Series A, and Series B rounds.

Despite similarities, key differences exist in what is being bought and the impact on relationships among stakeholders.

✦

Importance of aligning investors with your goals to prevent conflicts in the future.

47:46

Positive and friendly interactions with potential investors are essential.

Value-add investors are not necessary as long as they believe in your business and provide capital.

Conducting due diligence and reference checks on investors is crucial for fundraising success.

Investors who can introduce valuable connections and provide feedback are beneficial for your business growth.

✦

Discussion on Security Token Offerings (STOs) versus Initial Coin Offerings (ICOs) in the crypto space.

50:13

STOs involve tokenizing real-world assets like equity or real estate, offering more tangible backing than network-based tokens.

The speaker's platform supports STOs but does not consider it a pivot, seeing themselves as infrastructure providers.

The type of token (asset-backed or network-backed) does not impact their support, focusing on the viability and fit of the offering instead.

✦

Overview of running sales in the context of tokens and currencies and the different regulatory considerations.

51:39

Tokens can be categorized as exchange or store of value, with Bitcoin being used as an example.

Possibility for companies like Airbnb to participate in ICOs and the challenges of creating token networks.

Development difficulties highlighted, with Augur mentioned as a pioneering ICO.

Emphasis on the complexities and uncertainties in the token and currency space.

✦

The launch of a new project at Airbnb required a significant amount of work, with a focus on building processes and infrastructure.

54:12

A faction in the crypto world is promoting the idea of replacing central authority with a trusted network based on narco-libertarian philosophy.

It is important to distinguish between value and information in online transactions, as they involve the transfer of symbolic representations of value.

In a token ecosystem, the value is held within the network itself, removing the necessity for entities like credit card issuers or banks to oversee the value.

✦

Ownership of tokens on a network provides direct access to value and keys.

57:30

Transmitting value through tokens enables direct interactions between nodes without third parties.

Decentralization of control in networks prevents unilateral changes by companies.

Users can fork a network to create new versions with different rules if they disagree with changes.

Changing protocols in the crypto world is feasible and can result in new versions of cryptocurrencies.

✦

Importance of aligning users on a network to prevent forking and maintain compatibility.

01:00:50

Anyone proposing changes to a network emphasizes the democratic nature of decision-making within networks.

Influence of companies and creators holding a significant portion of the currency on network governance.

Differentiation between good and bad actors in the crypto space, emphasizing the ideal of tokens and blockchain networks.

Role of miners in network decision-making.

✦

Bitcoin's code can only be changed with the approval of core developers and all miners, who have significant influence.

01:03:52

Miners, not developers, ultimately hold the power over the Bitcoin network.

The success of ICOs is dependent on multiple factors, and not every startup needs to tokenize.

Asset-backed tokens are becoming more popular due to increased liquidity and interoperability.

Venture capital is shifting towards quicker liquidity, with tokens being a key player in this evolution.

✦

Tokenization of equity discussed in the context of blockchain technology.

01:04:35

Tokens should represent equity rather than being speculative ICOs.

Infrastructure needs to be in place for tokenization to be successful.

Future of blockchain predicted to have fewer blockchains but many tokens.

Potential for asset-backed tokens, such as buildings or company ownership, mentioned.

✦

Uncertainty of future outcomes in the ecosystem.

01:07:01

Predictions can be equally positive or negative.

Speaker stresses the unpredictability of future events.

Any forecast made today is just as likely to be incorrect as it is to be correct.

Audience encouraged to stay tuned for future developments and expressed gratitude for their time and attention.

00:00today is Thursday which usually means

00:04that

00:05adora or myself sit up here with someone

00:09notable and have a hopefully interesting

00:11conversation the someone notable we have

00:14today is Andy Bromberg my friend and the

00:17president of coin list the president and

00:20co-founder of coin list which is this

00:24really fascinating company that is doing

00:29some interesting things will talk about

00:31but Andy maybe we can start by you

00:35talking a little bit about your your

00:37entrepreneurial background because

00:38interestingly even though you graduated

00:40from Stanford a couple years ago coin

00:44list isn't your first venture is it

00:45that's right so first of all thank you

00:47for having me and thank you everyone for

00:48coming this is gonna be a lot of fun the

00:51entrepreneurial background for me

00:52started even before school in high

00:54school it's one of the people that

00:55started some web design and marketing

00:56businesses nothing really notable but I

00:58think it was really valuable to get that

00:59initial experience of building something

01:01and hiring a team and managing a team

01:03and firing people and figuring out how

01:04to how did you do all those things while

01:06you were in high school I did yeah I got

01:08started was a lot of fun what what made

01:10you do that at like what was it about

01:13being an entrepreneur and that that

01:16attracted you while you're still in high

01:17school

01:17got in high school I was I was worried

01:19about other things it was really nothing

01:22about being an entrepreneur and more

01:24about not wanting to do other jobs that

01:26I was able to do when I was in high

01:27school you know you can sit there and

01:29you can do whatever sir pizza or scoop

01:32ice cream or whatever it is I worked in

01:34a supermarket yeah that was awesome I

01:36did the scooping ice cream too

01:37yeah it was fun but I was looking at it

01:39and saying like all these businesses in

01:40my town have awful websites and I've got

01:42a bunch of friends that do this stuff in

01:43their spare time and that seems like

01:45just a way better way to make a little

01:47bit of money while I'm in high school

01:48then you know circle pizza and so I went

01:50and did that and expanded out videos

01:52marketing photos all that stuff ran a

01:54few websites that did pretty well but it

01:56was really less of I want to be an

01:58entrepreneur and more of I really don't

02:00want to do these other jobs and it then

02:02developed into a love for building

02:04things from the ground up and trying to

02:06create but at the time it was it was

02:08purely an alternative nada

02:10not a primary so did you

02:13so you really weren't thinking of this

02:14as like I'm an entrepreneur and I'm

02:16gonna be like my family's been

02:18entrepreneurs forever it was more an

02:20escape an alternate route from sort of

02:24the normal high school I'm gonna get

02:27some some maybe not so interesting job

02:31and do something more interesting and

02:33probably you made a lot more money doing

02:35it too yeah absolutely and I think and

02:37not to fall into some of the the

02:38immediate kind of startup cliches but I

02:40was doing stuff that I really enjoyed

02:41doing I was hanging out with my friends

02:43and building things which was really fun

02:45I enjoyed that we built a bunch of

02:47websites around just things that we

02:48liked and it wasn't necessarily that

02:51we're looking at it and saying you know

02:52I'm gonna analyze this opportunity and

02:53do my Tam calculation and figure out

02:55this and the business strategy we just

02:56said I love playing soccer what if I

02:59made a website that reviewed soccer

03:00cleats alright let's do that we made one

03:02of those did really well what you know I

03:03like messed around with computers let's

03:05build one around you know how to how to

03:07dig into the internals of a Mac and do

03:09things with it let's build that that's

03:10it pretty well it was really based on

03:12these things that we just enjoyed doing

03:14we had figured out how to do and want it

03:15to build these sites around our passions

03:17I'm intrigued so this was going pretty

03:19well you're you're probably senior in

03:22high school you um get into a little

03:27school on the west coast did you ever

03:30have the thought like I'm not going to

03:32Stanford I'm gonna just I'm gonna like I

03:35am the next whatever Mark Zuckerberg I'm

03:37going yeah I don't I think those really

03:40truly would have been kind of delusions

03:42of grandeur at that point they were

03:43these were like little things they were

03:45fun and they made money and I you know

03:46covered my expenses and was able to do

03:47what I wanted to do but it was not none

03:50of these were going to be massive

03:50businesses and sure of course the

03:52thought occurs you're like I could just

03:54keep doing this I'm surviving on this

03:56this would be fun but ultimately I got a

03:58great opportunity to go to a go to great

04:00school and decided to do that and

04:01continue to do them for a little while

04:03while I was there and did some of that

04:04stuff but kind of trailed off during a

04:06couple years I was there and and and

04:08then eventually kind of tailed off

04:09completely well but the idea of starting

04:12companies didn't because apparently the

04:15bug hit you again while you were at

04:17Stanford right yeah that's right so so I

04:19was I was there for a couple years had a

04:22lot of fun really actually the most

04:24impactful bit there was

04:26tied into this whole entrepreneurship

04:27thing which is I took this amazing class

04:29when I was there I'm called startup

04:31engineering from a guy named Paul DS

04:32furnivall son who's now the the CTO of

04:34coin basin formerly see over and calm

04:36and formally a partner andreessen

04:37horowitz and founder of counsel amazing

04:39guy who actually lectured at the very

04:42first ever startup school and and he

04:45taught this class about you know I think

04:48a lot of times university classes aren't

04:52on entrepreneurship don't teach you the

04:54real skills you need to start a business

04:55he might teach you some really high

04:56level things or really basic

04:58fundamentals but nothing around the the

05:00pragmatic steps and he set out to build

05:02a class much like this one that said

05:04know if you're actually going to do this

05:06what you need to do there's a lot of

05:08time with guest lecturers coming to

05:09classes a lot of time with you know

05:11things like it was a computer science

05:13class how do you deploy code how do you

05:15you know do revision control on code and

05:18how do you put on github and how do you

05:19do these different things the practical

05:21pieces and we took this class a bunch of

05:23us and had an amazing time and actually

05:25out of that which will come full circle

05:26back to this a small set of folks that

05:28were in that class ended up founding the

05:30Stanford Bitcoin group back in 2012-2013

05:32I hope they bought some Bitcoin not

05:36enough ever enough but yeah so he

05:39convinced us all you know this Bitcoin

05:40thing is gonna be real at the time we're

05:42looking at him and saying no way I mean

05:45this is 2012 were like this Bitcoin is

05:46magic Internet money I don't believe you

05:48for a second this doesn't work and and

05:50he said come on let's do it and so we

05:52started the stand for Bitcoin group and

05:53spent a couple years in school doing a

05:55lot of Awesome research and evangelism

05:57and had a lot of fun running around you

06:00know teaching people about crypto and

06:01building things or researching things

06:03but then yeah ultimately I did end up

06:05leaving to start start a different

06:06company and left even that behind well

06:09so that different company was side wire

06:11which interestingly seems like it's more

06:15relevant today maybe more than Bitcoin

06:18because it was all about like real news

06:22right yeah so I built this platform

06:24called side wire and I I left school in

06:272014 to start this company and I left

06:30early because I found what I think is

06:32the perfect partner for it my co-founder

06:34Tucker good background in politics and I

06:36had this background in computer science

06:38building things we came together to

06:39this product that was a platform where

06:42the experts in politics could chat

06:44publicly about the news of the day and

06:46everyone else could read and engage but

06:49not participate on that same level we

06:50wanted to build a Twitter without the

06:52noise what if you took just the experts

06:53and put them in conversation with each

06:54other and we did this really around the

06:562016 election there was 2014 - we ended

06:59up winding it down last year 2017 but it

07:01sounds like we need it really badly I

07:04think we still do it you know I talked

07:06to a lot of people that are building

07:07similar products trying to separate out

07:09the signal from the noise and hopefully

07:11some of you in here or online are

07:13working to do that - because I think

07:14it's such a critical problem turns out

07:16very hard problem a variety of reasons

07:18but I think it's it's critical that

07:19someone solve it so maybe for the

07:23benefit of these folks and never fear we

07:28will we will talk about crypto TED talk

07:32a little bit if you would about the

07:35process of starting the company you left

07:40school to do it and and and the winding

07:42down like what happened and and and

07:45maybe if there's some lessons learned in

07:47there

07:48from that experience yeah absolutely the

07:51starting was was really it always is

07:54kind of the best part when you have this

07:55germ of an idea and you're trying to

07:56turn it into something and so we started

07:58Tucker and I met and started talking

08:00were introduced by a mutual friend named

08:03Adam well I was still in school we

08:04started talking about this concept that

08:06there's this crazy noise level in the

08:08discourse today especially on politics

08:10and other topics we separate that out

08:11with a lot of different ideas around how

08:13to do it and iterate it through a

08:14million different things and and

08:16ultimately he was working at that time a

08:18great job I was in school we're looking

08:20at it as I'm sure many people are saying

08:22and this is a big leap to take to go

08:25from very comfortable situations out a

08:27couple years left school he was again

08:29doing great at work you could make this

08:31leap and so we said all right we have a

08:34we got to a place where you know nine

08:36months in a kind of casual discussion so

08:38we're both working and learning we said

08:41we think we know what we want to do here

08:42and the timing was I mean was great

08:45we're looking at this this is right

08:47before summer 2014 so we know I've got

08:49some lead time up into the elections to

08:51build stuff and then launch into the

08:52election cycle

08:54we thought we knew what we wanted to

08:55build and so we said alright well we

08:57need to get some validation for this

08:58before we get going which was just the

09:00the state of mind that we were and I

09:02don't think this is always true for

09:03entrepreneurs by any means but our state

09:05was you know we're both in great

09:07positions this is gonna be really hard

09:08let's get some validation so we went out

09:09said we're gonna raise some money and if

09:12we can successfully raise that money

09:14let's go and do it and the the

09:16commitment kind of was that if we could

09:18do that before the summer I would go

09:20obviously over my summer and working at

09:22full time and then beyond and he would

09:23leave the job and go and and and we do

09:26it together and so we're able to put

09:28together that money and get that

09:30validation and start building did you

09:32race from angels then yeah almost

09:34entirely from angels yeah and we had an

09:37amazing set of investors lesson learned

09:40and thankfully we didn't learn it in the

09:42negative way having great investors is

09:44such a boon throughout the business and

09:45things run well and when things are on

09:47poorly we'll get to the wine town but

09:48even that part having an amazing set of

09:50investors that were aligned with us

09:51cared about us as people and you know

09:53we're support of what we were doing was

09:54so critical at that point and really

09:57digging it on on what their motivations

09:59were was was really important see we

10:00raise from a lot of people we had I

10:02forget the exact number now but

10:04something like 44 investors in our seed

10:07round or something like that ever think

10:10that maybe that was too many yes and no

10:12the only time I ever genuinely I never

10:15really want to turn down money right

10:16yeah the only time I genuinely thought

10:18that was too many was when I was dealing

10:20with meeting all of them to sign things

10:22but but generally again it goes back to

10:25the quality of the investors they were

10:27supportive and not annoying and never

10:29nagged us and we sent out our monthly

10:31updates and you know made sure they were

10:33informed and it was never a problem it

10:35was just yeah sending out 44 Dawn's a

10:37lot of DocuSign son send out but imagine

10:40one one issue with like 40 or 50 or 60

10:44investors is that even if you really try

10:47to only get high quality investors the

10:51probability that one or two of those are

10:54difficult gets pretty high yeah

10:55absolutely and of course even within

10:57that set of 44 there was a spectrum of

10:59people ranging from absolutely perfect

11:01to slightly less perfect but but on the

11:04whole it was a really great set and

11:05we're fortunate to be

11:07by them and so we ended up doing that

11:09and and the the short story on the

11:10company is we've built for about a year

11:12and then we kind of raised the last part

11:14of that round it was all one big round

11:16but raised last part of that round from

11:17spark capital who were amazing investors

11:19highly recommend working with them and

11:21they kind of completed our institutional

11:23seed round and then we launched the

11:25product and ran it for a couple years

11:27and ultimately wound it down last summer

11:29yeah 22:17 mid-2017 I think from a

11:35product perspective just just just

11:36before you get there yeah so you went

11:38all the way through the 2016

11:40presidential cycle did you guys have any

11:43insight more than the rest of us about

11:45what was going to happen in November

11:472016 based on yeah the discussions that

11:51we're taking place I can say and things

11:53I can't say but the yeah what you know

11:55we're talking to a lot of things you

11:56can't say exactly there's there's a lot

12:04of smart people out there and and this

12:07ties in to what side water was able to

12:09do but also kind of who we were talking

12:10to you we got the this amazing set of

12:14experts in the platform engaging like

12:15crazy but a thousand people senators

12:18presidential candidates reporters

12:20analysts staffers all the people you

12:23would want to have talking the really

12:24smart voices the smart commentators

12:26having these amazing discussions going

12:28back and forth firing back and forth

12:30being entertaining and and and we felt

12:32like that side it's a marketplace right

12:34you'd supply of content and demand

12:36content no one is paying but you know

12:38supply and demand we crush the supply

12:40and just no matter what we did we

12:42couldn't get people to pay attention to

12:43it which we thought was so interesting

12:45so our thesis going in and I think a lot

12:47of times startups about having a thesis

12:49and testing it but a thesis we felt

12:51really strongly about it wasn't so far

12:54as build and they will come but we

12:56thought this is a marketplace a two

12:58sided marketplace if we can get the

12:59supply if we can get smart people to

13:00have smart conversations about the news

13:02of the day then we will be able to get

13:04people that show up to stick around and

13:06keep engaging with those conversations

13:08and reading them no matter what we

13:09didn't there's no way to know what the

13:11issue was we could not get people to

13:14come and stick around and you know

13:16people would show up and read one

13:17conversation and then would not come

13:19back and I think it

13:20the day what we felt like was you know

13:23in that space people it's hard to get

13:25people to care about the smart

13:26conversations it's not people say that's

13:28what they're looking for and and it

13:29might not actually be what drives them

13:32and what they actually want they want

13:33140 or 280 characters of sensational

13:36tweets yeah yeah and and I I hope that

13:39that's not true and I hope that we had

13:40issues with the product that we're

13:41deeper than that or something like that

13:43that caused it to not be effective in

13:45retaining users but at the end of the

13:47day we had a really tough time even

13:48given just a stream of crazy high

13:51quality content from the best people in

13:53the world on these topics it's tough to

13:55talk together as people with sticker

13:56okay so this is this is a tough question

13:59for any startup to answer which is at

14:04some point you decided it wasn't an

14:08issue of tweaks it wasn't an issue of

14:09being able to find product market fit

14:11that this you could you could pivot 10

14:15degrees 20 degrees 180 degrees it wasn't

14:17going to happen and you wound the

14:18company down how did how did you guys

14:20come to that decision yes so we we did

14:22try a couple other related but more more

14:26than ten or twenty four twenty degree

14:28tweaks but related topics you know a

14:30subscription service we tried for a

14:32little bit and pitched some enterprise

14:33related things ultimately we decided

14:36that what we were looking at the

14:37possibilities we were looking at even if

14:39they succeeded couldn't be venture scale

14:42businesses that we need it to be betting

14:44on and it's these are conversations we

14:46had with our investors super honest

14:47transparent conversations with them with

14:49our team with each other and we said

14:51alright well you know the business our

14:53core business that we've envisioned and

14:55been working on for two three years

14:56don't think that one's gonna work at

14:58least you know with it without some

15:00crazy change and how people are thinking

15:02or us having some insane inside of

15:03fixing something that's terribly broken

15:05these other businesses were looking at

15:07other business lines there's a

15:09possibility but these aren't the type of

15:11returns that we're looking for our

15:12investors are looking for when we

15:13started this business and and so at that

15:16point we said all right instead of you

15:17know trying to keep this thing on

15:18life-support let's wind it down and move

15:20to our next thing and and keep building

15:22from there and it was a decision that

15:24everyone was incredibly supportive of

15:26again this goes right back to the good

15:27investor thing it is easy for people to

15:29give you a lot of grief when you make a

15:30decision like that but we were

15:32incredibly fortunate to have an amazing

15:34investors that supported us in that okay

15:35last question on side where do you think

15:38if you could have persuaded President

15:41Trump to call you fake news you might

15:43have been able to survive you know it's

15:45that we've talked about that a lot um I

15:48I don't think so I it's it's so bizarre

15:51and you know we could talk for hours

15:54about this but people would show up and

15:57engage and then they just kind of like

16:00disappear

16:01they'd be like this just doesn't it

16:02didn't doesn't do it for me and we

16:03talked to people and they'd say yeah oh

16:04it's great I like the contents really

16:06good I just I would never like you know

16:08go and read it on there like really pick

16:10it up in him you know there's not a lot

16:11of people out there that pick up the New

16:12York Times every day and read it

16:13cover-to-cover and that's effectively

16:16the same type of person that we were

16:18looking for someone that cared about

16:19that one you have to somehow make it a

16:20habit this is true for any startup you

16:23have to somehow create enough value so

16:27that you get integrated into people's

16:29lives and it's hard to do that with news

16:31and I do think like that you alluded to

16:33the like people want 140 or 280

16:35characters of crazy stuff sure there's

16:38an element of that that is people want

16:39the crazy things that just spew up fake

16:42news this big news that whatever it is

16:43but the other piece of that is that it's

16:45easiest to create a habit with something

16:47that's bite-sized and what we were

16:49asking people to do was read a real

16:50conversation it was kind of like a I

16:52message format like people going back

16:54and forth and having these back-forth

16:55conversations it's not bite-sized takes

16:57you a few minutes to read if not longer

16:58to read these really engaging ones and

17:00there's smart people saying smart things

17:02you got to think about what they're

17:03saying and jumping from not engaging

17:06with a service to engage in with a long

17:08conversation you have to read it's a big

17:10jump to make and so I think yet to your

17:12point building habits is so crucial and

17:14habits are easiest started with

17:16something very small that might

17:17eventually expand to something big and

17:18think about how much time

17:19many people spend on Facebook but it

17:21often starts with something really small

17:22there to build that habit Facebook has

17:25great things around you know you sign up

17:27it's connect with ten friends they've

17:29got these like numbers if you need to do

17:30this you need to do that it's all easy

17:31it's all limited time and then the habit

17:33starts get ingrained and you can build

17:34it out bigger from there okay so let's

17:38let's transition to talk about

17:43and II Bromberg phase 2.5 where you went

17:50back a little bit to I would say a

17:53crypto roots but back to some of the

17:56some of the work you'd been doing

17:58earlier it's at Stanford and got

18:01involved with I guess nammal and an

18:03angel list and an eventually COI list

18:05how did that transpire yeah so even to

18:07take a step further back than that when

18:09I left school in 2014 I was crazy

18:12interested in crypto spending a ton of

18:13time on it with the the Stanford Bitcoin

18:15group my friends and people in the

18:16industry and the reason I didn't feel

18:18comfortable doing anything in crypto at

18:20that time was because of a secular issue

18:23for me which was at that point 2014 I

18:25couldn't make a decision if I was a coin

18:27flip whether or not there was gonna be

18:29one cryptocurrency forever Bitcoin was

18:31gonna be it and that was gonna be the

18:32end of it or if there were gonna be a

18:33ton of cryptocurrencies out there and I

18:36was looking at it and saying startups

18:37high failure rate already do I want to

18:40add a 50% coin flip to that because

18:43anything I could think of betting on

18:44relied on one of those two outcomes and

18:47I said I I don't want to add 50% more to

18:49an already high attrition rates I'm

18:50gonna not do this for now by the time it

18:53came back end of lather good news

18:54attrition rates so high that 50% hardly

18:56makes a difference double double your

19:00chance of failures is hard I want to

19:03take off and yeah and so I you know 2017

19:06I'm looking at it and saying up I'm now

19:07a believer there's going to be at least

19:09more than one who knows how many

19:11successful crypto currencies in the long

19:13run we can talk more about what that

19:14number might be and how we should think

19:15about that but I feel comfortable going

19:18back to the space now and the story with

19:20coin list is that coin was started about

19:22a year ago just over a year ago we just

19:24celebrated our internal one-year

19:26anniversary and it was created as a

19:29collaboration between protocol labs

19:30proud Y Combinator company and an angel

19:33list to run protocol labs token sale for

19:36their product file coin for their token

19:37file corn and I think I think that you

19:40have to unpack that a little bit because

19:41I was trying to think about how

19:46hopefully a lot of the people here and

19:48out there have understand crypto

19:51currencies and there's lots and lots and

19:54lots and lots that's been

19:55written and said about them but maybe we

19:57can sort of very briefly outline what a

20:01cryptocurrency is what a token sale is

20:04what a token is and why you might be

20:06selling them yeah yeah everyone yes you

20:12know at its core yeah exactly at its

20:14core a token is a scarce digital asset

20:18we'll talk more about what each of these

20:19things mean a scarcity lasts that that

20:21represents ownership most commonly of a

20:22token network so the idea here is that

20:25when you launch a token network it goes

20:28out and no one then controls it so

20:31bitcoin is a lot of you know was created

20:33by the pseudonym Satoshi Nakamoto and if

20:36that's a he or she or a single person or

20:39a group of people no one knows who

20:40Satoshi is and somehow she's weird right

20:44like you make this this really important

20:46thing that's made and and lost fortunes

20:50for people and maybe will be the basis

20:52of the future economy no one knows where

20:54it came from weird right yeah like

20:55really let that settle it's worth like a

20:57hundred billion dollars right now the

20:58total market cap of Bitcoin and no one

21:01knows who made it and in fact Satoshi

21:03has some large number of tokens socked

21:06away in a wallet somewhere that has

21:08never been used

21:09we have billions of dollars worth of

21:12Bitcoin we have no idea who has that

21:14literally no idea if anyone has anyone

21:16right and so that is kind of the

21:19ultimate ideal how to think about it

21:20that that's possible you can launch this

21:22token network and have it go out into

21:24the world and have nobody control it and

21:25it just kind of happens and so what

21:28these companies are now doing when they

21:30launch these new tokens like protocol

21:31labs launching file coin their intention

21:33is to build a network got a lot of code

21:35to write they've got to build this thing

21:36and they're gonna put it out there into

21:38the world and they're of course going to

21:40continue to support it as you know core

21:42developers of the product and improve

21:44the network but they won't actually have

21:46control over at the users whoever those

21:48users may be in whatever categories they

21:50may fit into that specific network are

21:52the ones that have control of it well

21:53talk about what protocol Labs was doing

21:54because because the token is that

21:58protocol Labs is first token that coin

22:00list was working on was was not like you

22:05could say bitcoin is a value you know

22:07itself it's like a new currency but the

22:09token

22:09for protocol Labs was inextricably

22:11linked to a different value that was

22:13being delivered to consumers right yeah

22:15yeah we should talk about that one other

22:17thing I want to mention just on tokens

22:18in general and this analogy is a little

22:20bit of use but there's one reason I'd

22:21use it I would think of tokens and

22:24blockchain technology which powers many

22:26tokens like the internet for one really

22:29core reason if I asked you hey Jeff I've

22:31got a website and here's a bunch of data

22:35about it how do you value it it's

22:37impossible to answer that question

22:38because if that website is nytimes.com

22:41or amazon.com or google.com or

22:43facebook.com those are all totally

22:45different businesses they were all built

22:47on the Internet

22:48sure but you look at each of their

22:49revenues they've got different multiples

22:51how do you think about how these

22:52businesses are built saying how do you

22:53value a website is kind of a meaningless

22:55question you have to know much more

22:56about the specific use case and how it's

22:58built and in the same way I think

23:00there's a lot of discussion I get the

23:01question a ton from people okay but how

23:03do we value these tokens and to me

23:05that's a little bit of an impossible

23:07question because tokens are built on

23:09different premises and of different

23:10applications and you can break them down

23:12into categories that go to how to value

23:13each of those categories in the same way

23:15you could say well how do we value a

23:17social networking website or how do we

23:18value a news website or how do we value

23:20you know a CPG website but you have to

23:23think about those categories and the

23:24idea of a token or blockchain technology

23:26is really just this kind of meta concept

23:29it allows for other things to be built

23:30on top of it and and one more piece of

23:33that analogy would be yeah I draw a

23:36similarity between the Internet is

23:38infrastructure for exchanging and

23:41transacting information it moves

23:42information around tokens and token

23:45networks are infrastructure for

23:47transacting or exchanging value so for

23:50the first time we can actually kind of

23:51programmatically exchange value in this

23:53in this core way what are the strange

23:55things about the whole conversation so

23:59so here's how I would answer your your

24:01question about how to value a website

24:04and actually is the way people have

24:08always valued things which is well I

24:10would say huh let tell me about the cash

24:13flows that that website will generate

24:15over time and then historically we've

24:18figured out ways to value those things

24:19using things like net present value and

24:21all these

24:23these economic concepts but tokens seem

24:28somehow different because they don't

24:29necessarily seem to be tied to cash

24:32flows see yes let's talk about file coin

24:35like you were saying it just as an

24:37example and this is again just one

24:38example of many in one of many

24:40categories

24:41I'll give kind of a quick description of

24:43file coin and how it works we can go

24:44into it more in the QA so file coin is a

24:47token that allows for the exchange of

24:49file storage of files it's aiming to

24:52sort solve this problem of how do you

24:54store files and transact that until the

24:55market for storing files and so if you

24:58think about the simplest solution to how

25:01would one build a business to solve that

25:03problem the simplest solution probably

25:05looks something like Amazon s3 if Jeff

25:07has files that he wants to store and I'm

25:09say I'm gonna start a business that

25:10helps him store these files I'm probably

25:12gonna buy a bunch of servers and Jeff's

25:14gonna hand me files I'm gonna put them

25:15on the servers when he asked for them

25:17back I'm gonna hand them back and he's

25:18gonna pay me so that that works bigness

25:21today built like that but it has a few

25:23problems so one you've got someone

25:25that's taking fees I'm charging on top

25:27of the storage costs for him to be able

25:29to do this but there's also issues of

25:31things like censorship so I now have

25:34access to his files I can censor them I

25:35can look at them I can do whatever I

25:37want to them and you're relying on a

25:39single third party not to mess anything

25:41up so I could corrupt the files I might

25:43have downtime and not be able to return

25:45them and see you start say well is there

25:47a better solution than this and the

25:48first version of a better solution I

25:50think looks a lot like kind of the

25:52Airbnb of file storage where you'd say

25:54all right well instead there's a whole

25:56bunch of people out there who have extra

25:57storage space in their computers

25:58yeah raise your hand if you have extra

26:00storage space on your computer you're

26:02not seriously raise your hand come on

26:04all of you you all have extra space no

26:06your computers are full okay let's do it

26:09we're pivoting so you know I would say

26:14maybe all right well now Geoff Hammil

26:16your files I'm gonna find someone out

26:17here I'm connected to all of you I've

26:18got software on your computers I'm gonna

26:20put the files on your computer and then

26:21you know Jeff wants them back I'll ask

26:23in the back I'll take them I'll give

26:24them to him he'll pay me I'll pay you

26:26okay so these people

26:27the few people who raised their hand so

26:29we'll rent like Airbnb they'll rent a

26:31piece of their stores that are not using

26:33to the network so that so that's a good

26:35solution but it doesn't solve all the

26:37problems we talked about it does first

26:38of all make it a little bit cheaper most

26:40likely because this is kind of late and

26:41storage space is cheaper than buying new

26:43servers but still there's a middleman

26:45right there's an intermediary me who

26:47could go down I could have downtime I

26:50could sense where the file is gonna look

26:52at them

26:52so you're still trusting someone so file

26:54coin protocol Labs building file coin

26:57and the underlying thing called ipfs the

26:59interplanetary file system does the

27:01coolest name for a file system ever said

27:03is there a way to solve this can we

27:05connect Jeff directly to people out here

27:07who have extra storage space with no

27:09trusted intermediary that's the problem

27:11that by Allah coin is trying to solve

27:13they build this token for a few reasons

27:16one file coin is used as the mechanism

27:18of payment so Jeff pays you to store his

27:20files with file coin but there's a

27:23couple interesting problems we have to

27:24solve first of all what if one of you

27:26does something bad you corrupt his files

27:29you lose them you don't return them fast

27:31enough so there's first step of the

27:33solution is to make each of you that is

27:35storing his files for him already have

27:38file coin so if you have extra storage

27:40space you already have to a file coin

27:42and you do what's called staking you

27:43take those tokens and you put them up

27:45effectively in escrow and you say here

27:47I'm putting my own tokens up and putting

27:49something at stake and if I get caught

27:51doing something wrong if I don't return

27:53his files fast enough I don't you know

27:55return them at all then I lose my tokens

27:58so you are disincentivized from doing

28:00something bad to Jeff's files that's

28:02interesting

28:03step number one you're on to the second

28:05problem which is who's the judge of that

28:08if we're not trusting a central

28:09intermediary how do we know if you are

28:11not storing the files well or corrupting

28:14them or how do we know if you're not

28:15returning them fast enough and that's

28:16where it's step two of this really

28:17interesting solution comes into play

28:18which is that there's a massive network

28:20outside of this room thousands of people

28:22of what they call verifiers

28:24I'm gonna oversimplify what they do a

28:26little bit because they have this crazy

28:27thing called proof of space-time over

28:30the top you talk for hours about it but

28:31a simple solution for how to make sure

28:33that each of you is storing his files

28:34correctly is that a thousand different

28:36people come to Jeff and they each say to

28:39Jeff hey Jeff what's the 46th letter of

28:42your file what's the hundred and twenty

28:43seventh letter of your file what's one

28:44hundred and ninety-six letter of your

28:45file and Jeff says

28:47it says J a and K right and they go to

28:51each person that store in the files and

28:52ask that exact same question that person

28:54who asked about the 47th letter says hey

28:56what's the 47th letter of the file

28:57you're storing you answer that J and

28:59they check a K and now all of a sudden

29:01when enough verifiers do that we can say

29:04with confidence that the person storing

29:06the files for Jeff is doing so correctly

29:08and at that point the network says great

29:11job everyone

29:12Jeff pays you for storing his files you

29:15get your state two tokens back Jeff gets

29:16his files if he wants them and the

29:18verifiers get rewarded by the by

29:20effectively mining new tokens are minted

29:22by the network and given to the

29:23verifiers for doing that work which

29:24makes the supply of coins expand over

29:26time exactly and so then you have this

29:29market where each of these three parties

29:31the person with the files the person

29:33with the storage space in these

29:34verifiers are all incentivized to do the

29:36right thing disincentivize we're doing

29:38the wrong thing and there is no trusted

29:41intermediary and you avoid all those

29:42problems I sided with the S three

29:44example at the beginning and that that

29:46really gets to the core of what this all

29:47is and I'll I'll stop rambling in a

29:49second here but block chains and tokens

29:51are about incentive alignment it's about

29:53this question of how can you build a

29:55trust list system a system where no

29:57party has to trust any other party in a

29:59system without anyone being involved in

30:02managing that and the way to do that is

30:04to properly incentivize everyone and

30:06build these economic systems that allow

30:08for that interaction to happen and it I

30:11think that's one of the best

30:13articulations I've heard I've heard of

30:14what the blockchain based tokens are

30:18about incentive alignment but they're

30:19about one more thing isn't it true that

30:21they're also about removing aligning the

30:26incentives of the folks in the network

30:28so that you can remove the central

30:30authority so that you can remove Amazon

30:34in the s2 case or the United States

30:37government the Fed in the Bitcoin

30:41case right right and that's that's for

30:43any number of reasons and that goes back

30:44to could be for pricing reasons it could

30:46be at the middleman is charging fees

30:48that are unreasonable could be for

30:49censorship reasons in the domain of

30:51censoring it could be for fear of

30:52surveillance it could be for any number

30:53of reasons but ultimately the most

30:55common and effective use of these

30:57blockchain systems is to yes remove that

30:59middleman and make it

31:00this trustless system can exist just

31:02between the counterparties that need to

31:03be involved in a transaction kind of the

31:05ultimate ultimately Democratic version

31:10of networking right markets for

31:12everything yeah so so everyone out here

31:16in start-up school world might be asking

31:18themselves cool crypto cool tokens what

31:20does that have to do with me what what

31:23does this have to do with startups and

31:25and you know we um

31:26you know I've talked a bit about the

31:28history of investing in we've come to

31:31this place where where tokens are in

31:33fact an important component of of how

31:35startups raise money and and exist maybe

31:39you can talk a little bit about this

31:40this evolution to where I SEOs initial

31:45coin offerings and the role coin list is

31:47playing yeah so so it probably a little

31:50bit of an unusual perspective here right

31:51yeah

31:52coin list we run token sales we make

31:54money when people work with us to run

31:56their token sales that's great I think

31:58today token sales are a good idea for an

32:01incredibly incredibly incredibly small

32:03number of companies I think of the

32:06twenty-seven thousand is that right

32:08companies in start-up school there may

32:10be a few where it's a really good idea

32:12for a token to exist

32:14not all 27 thousand today there are

32:16cases I can make four in the future and

32:18making sense for a broader set but today

32:19I think it's a very small number just

32:20give you a data point on that coin lists

32:22we've existed for about a year

32:24we've publicly worked with five token

32:27sales in the last year we have had

32:29inbound people asking us to work with

32:31them more than 2,500 token sales and

32:35that's not a it's not a bandwidth issue

32:36that's not you know it's not being able

32:38to service that that's us sitting there

32:39and saying yeah these 2495 tokens not a

32:44good fit for us and that that's kind of

32:46it that's like like like the one of the

32:50largest euphemisms not a good fit for

32:53you meaning maybe not quite legit maybe

32:55so so there's certainly a large set we

32:58see of scams and spam and frauds and

33:01people that are you know bad actors or

33:03just how much how much just to riff on

33:06that for one second how much has been

33:08raised on icos and 2018 thus far yeah

33:13very it's a tough industry to study but

33:15probably somewhere around 15 billion

33:16dollars it's a big number more than

33:18venture capital just just to repeat that

33:21in case someone maybe didn't hear that

33:24clearly more money has been raised in

33:27ICO than has been delivered in venture

33:30capital to companies in 2018 thus far

33:32yeah and and some people look at that

33:35and say wow what a great sign for the

33:38ICO industry we are thriving I look at

33:40that and say that seems really

33:41concerning to me because venture capital

33:43has been around for as we've talked

33:44about before almost a century of like

33:47real kind of true development and

33:48venture capital especially for

33:49technology companies pretty well

33:51developed industry we figured out kind

33:52of the norms and how these things need

33:54to be created the idea that ICS have

33:56really only existed for four years and

33:59really in kind of their mass for about

34:01two years the idea that we could surpass

34:04that so quickly in that stage of

34:05development I see is actually a more

34:06concerning thing than a positive thing

34:08for the ICO industry one thing it shows

34:11is demand because these are proxies for

34:14investing in startups but it also I

34:18guess shows a propensity for people to

34:20believe things that maybe they shouldn't

34:24be believing yeah I think that's right

34:26now

34:26you know it's also just a function about

34:27being a new industry that its brand new

34:30it's really hard to diligence for these

34:32investors there aren't norms there's no

34:34data points right now on what tokens are

34:37successful and which ones aren't we're

34:38so early into the industry and that's

34:39it's not because everything's failed

34:41it's because it's just too early to know

34:42and so investors don't have a good sense

34:44for how to do diligence I think about

34:46you know understanding what they

34:48represent right because at least if

34:50you're buying a penny stock you still

34:53know that that penny stock represents a

34:55claim on the future cash flows or that

34:57company in one way or another admittedly

34:59that is a theoretical thing but at least

35:02it's grounded in something concrete a

35:04lot of times these I SEOs aren't rounded

35:06in anything but I also I don't think it

35:07has to necessarily be quantitative I

35:09think about the YC process for admitting

35:11companies and all the data you guys have

35:13on years of startups and what succeeds

35:15and what does and what are positive

35:16signals and what are and how you look

35:17through those applications that you just

35:20can't do that

35:20in tokens right now there's no training

35:22data to look at and so that's resulted

35:25in this kind of we've got to be over

35:27the aggressive mentality from investors

35:29of let's get in let's get in these

35:30things gonna make us rich that's I think

35:32pumped up the amount of money that has

35:33gone into the space past where it really

35:36reasonably should be and it may be that

35:38that's an important step in the cut in

35:39the industry's development do you need

35:41this kind of huge infusion of capital to

35:43give the winners enough money to start

35:45to win and then you can sort out how do

35:47diligence it better going forward but

35:48certainly the vast majority of that

35:50money that has gone into icos

35:52is going into I SEOs that are not going

35:54to be successful so just for for the

35:57edification of everyone here could you

35:59just step back and say what is what's an

36:02ICO so what are these token things

36:05what does coin list like why would you

36:08use coin list

36:08I can't you just do it and and and then

36:11maybe we can transition to like to

36:14answer the question you sort of talk

36:15about ladies who should think about

36:17doing an icy on who shouldn't yeah so

36:19and just on terminology for folks that

36:20are kind of newer to this space I tend

36:23to use tokens coins cryptocurrencies all

36:26synonymously crypto assets even some

36:28people have slightly different

36:29definitions I tend to use them all the

36:30same and then I see oh token sale kind

36:33of the same thing in my eyes so those

36:35are generally synonymous an ICO or a

36:38token sale is ico initial coin offering

36:41is when a new network is being created

36:44and a company is issuing tokens for the

36:45first time in this network concerned to

36:47distribute them and they've run this

36:48token sale to do two things generally

36:50one to raise money for the future

36:52development of that network and support

36:55that network in the long term and two to

36:57get early distribution of those tokens

36:59because these networks like vile coin

37:00only works if there are people who have

37:03it to store files people who have it to

37:04you know give files to be stored and and

37:07kind of incentive alignment around that

37:09so you need a way to distribute these

37:10tokens initially one way to do so is to

37:12sell them and so they they go out and

37:15conduct these sales where they go and

37:17sell tokens to investors or to users

37:19that want to eventually participate on

37:21the net right and that's a case where

37:22the the network literally does not work

37:24unless you have a token yeah that's

37:26exactly right

37:27and so while chrome is the first token

37:30sale that we supported a coin list they

37:33raised a staggering two hundred and five

37:35million dollars in their initial coin

37:37offering and we've worked a number of

37:40other ones

37:40since block stack and props in origin

37:42trust token and what coinless does is

37:45for that small set of companies we

37:48support the logistics of the token sale

37:50so there's a bunch of compliance work

37:52you need to do which is probably not

37:53worth getting into but you'll hear these

37:55buzzwords know your customer kyc anti

37:57money laundering

37:58you need lawyers to be involved and and

38:00we have many of them and and so we you

38:03know handle the compliance we had all

38:04the transactions have payments work and

38:06money comes in we handled you have to

38:08know how this is gonna work with the SEC

38:10cuz they're they're going to be already

38:13are intimately involved right lots of

38:15open regulatory questions lots of closed

38:17regulatory questions you need to know

38:18how to be able to answer correctly and

38:21we support these companies that process

38:22and then we'll you know market some of

38:24these deals publicly or offer them to

38:26the investors on our platform to be able

38:28to invest in we also have four other

38:30services like that just compliance piece

38:32without the marketing as much we do for

38:34a broader set of token issuers this

38:36whole other airdrops product to give

38:38tokens away to users um so you'll start

38:40hearing this buzzword airdrops more and

38:42more I think this is a way of giving so

38:44we talked about icos being a way to

38:45fundraise and to distribute tokens to

38:47users sometimes you might not need to do

38:49the fundraising part and you might just

38:50want to distribute tokens to a wide set

38:52of users how do you do that giveaway and

38:55the the first example of an airdrop I

38:57would argue one of the first was was

38:59PayPal when they got started and he

39:01signed up for PayPal you get ten bucks

39:02of PayPal credits wasn't a token

39:04obviously but they were saying we've got

39:06a network we need people to use this

39:08network we just need to give them a

39:10little bit of money to get started they

39:11can send some money you send it to a

39:13friend pay for something and then

39:14they're gonna get really addicted and

39:15start to put more money in and that's

39:18what an airdrop is it's a way of saying

39:19and it worked it worked yeah you can

39:22give tokens away to people they can

39:24start to use on the network and then

39:25hopefully they become such a fan of that

39:27network that they put more of their own

39:28capital in to use it so who amongst

39:32start-up school world should think about

39:34tokens as though as a way to kick-start

39:38their network to raise funds potentially

39:41and who shouldn't yeah so so today and

39:44this is again where I differentiate

39:45premier today and and you know tomorrow

39:46or the future today I think the most

39:49valuable applications of this technology

39:51are applications where you have parties

39:54are not willing to trust each other

39:56they're not willing to trust each other

39:58they don't want to trust a central

39:59intermediary either and you to build

40:01this trust --less system this does not

40:03describe a lot of businesses but where

40:06Trust is is somehow fundamental to the

40:12functioning of whatever product you're

40:14creating exactly so if we look at an

40:16example that I would say is is a not a

40:18great candidate for a token there's

40:19possibilities but not a great candidate

40:21would be Airbnb so on it on its face you

40:25would say this actually sounds pretty

40:26good I want to stay somewhere someone

40:29out there I've never met before has a

40:30home that I can stay in I don't trust

40:32that person I've never met them before

40:33I've got no connection to them but I do

40:35trust Airbnb so you can have this

40:38intermediary I've no problem trusting

40:40Airbnb I stay in them all the time and I

40:42say alright if the Airbnb is vetted them

40:43and they're backing me up they've got

40:44their insurance thing we've got all this

40:46no problem I trust Airbnb let's do it

40:48that means not a great candidate for a

40:50token but if you start to have systems

40:52where you don't trust even the

40:55intermediary much less the person the

40:56other side that's where a token might be

40:58a good fit and the reason I'm not giving

41:00a Russian version of Airbnb maybe maybe

41:04you'd want a coin for the totally

41:06possible or in it yeah absolutely

41:08and Trust in institutions is is fading

41:10there's all sorts of research on this

41:11Edelman puts out a great survey on trust

41:13every year and and and so there is an

41:15idea that this could be more of a thing

41:16in the future but the reason I'm not

41:18answering your question with just a slew

41:20of examples I can give you of like if

41:22your business fits this do if your

41:23business fits this to a token if your

41:24business is because I just do not think

41:26there are that many today and so it's

41:27it's more about finding these very

41:29specific use cases where it's

41:31particularly valuable to have a token

41:32than to try and fit into a category that

41:35could have a ton of tokens coming out of

41:36it I want to say some time for questions

41:38but but just before we move on

41:43you've talked in the past about pros and

41:46cons of of tokens versus say

41:51convertibles of various kinds like YC

41:54safe that that probably most startups

41:57used to raise money now both from the

42:00the perspective of a start-up company

42:02and from an investor maybe could could

42:04we talk a little bit about those yeah so

42:06you know everyone in here

42:08you're in this class has done a lot of

42:10thinking about traditional financing and

42:12things like where you will if you have

42:13it yes absolutely keep an eye out for

42:15those lectures things like investor

42:17protections what rights do investors get

42:19how do you have to deal with them how do

42:20you fundraise for them you sit down and

42:21talk to them you follow up you do a call

42:23there's all these things that go into a

42:25traditional funder things we think about

42:27with tokens a lot of that is flipped on

42:29its head so probably the biggest

42:30difference is that when you buy into a

42:33token and this goes back to our original

42:35discussion of what a token is the

42:37company does not control the network in

42:39this ideal form they release this

42:41network and it goes out to the wild and

42:42you own tokens on that network you own

42:45part of that network but that means you

42:47have no formal relationship to the

42:49company as an investor in these tokens

42:50and as a company technically you have no

42:53formal relation to the investor that

42:55owns your tokens and so there's this

42:57idea right now in startups of you know

42:59we talk good and bad investors like they

43:01may call you they may check in you've

43:03got an obligation to update them you've

43:04got an obligation to get them to sign

43:06documents at certain times and

43:07transactions happen when people buy into

43:09a token network released by a company

43:10none of those obligations go and there

43:12are pros and cons to that certainly on

43:14both sides of the equation on the

43:16startup side you know on one hand way

43:18easier these people don't have any stake

43:20in your business you can do whatever you

43:22want with the company itself there's no

43:23control that they have there the

43:26downside of that is they are not

43:27necessarily aligned with you so the

43:31upside of equity is that it's upside

43:33when someone wins with equity everyone

43:35wins with equity in the in the general

43:36case obviously there's some some edge

43:38cases but incentives are aligned and

43:40that's that's awesome with tokens the

43:43incentives of the investors are not

43:44necessarily aligned with that of the

43:45company so if the token is pumping up

43:47for some reason of flying up the charts

43:49an investor who invested a ton of money

43:51doesn't have any lock ups on it they may

43:53just say yeah I'm getting out I'm up 10x

43:55right now that seems totally worth it

43:56I'm getting out and they dump it and it

43:58hurts the price and it hurts the company

43:59by kind of second-order effect there and

44:02so you get this kind of misalignment you

44:04win because they don't have any stake in

44:06your company but you lose because they

44:07don't have any stake in your company and

44:08from the investor perspective the exact

44:10flipside of that which is on one hand

44:13you're not obligated to the company at

44:15all you can do whatever you want you

44:16just own tokens on a network they've

44:18released but the other side of that is

44:19that you might not get as much

44:20visibility into what's happening

44:22get those monthly updates you might not

44:24be as engaged with the foundries you may

44:25have never met the founders the idæan

44:27startup fundraising of raising of people

44:29that you've never met before does not

44:31really happen that much occasionally you

44:33see a little bit with certain things but

44:34and you usually advise against it

44:36usually advise against it in token world

44:39you know many of these sales have had

44:41hundreds or thousands of investors that

44:43just signed up on the website

44:44you know coinless facilitates this

44:46people come and invest in sales where

44:48they have never met talked to you can go

44:51to coin lists right now and sign up for

44:53token sales you certainly can you can

44:55only participate if you're an accredited

44:56investor unfortunately site regulation

44:58sadly but but yes you may have no

45:00relationship to the founders again pros

45:02and cons on on both sides there yeah

45:05it's kind of amazing from an investor

45:07perspective because if you invest in a

45:11startup company usually before you see

45:13any return it's a lot of time five ten

45:17years but with a token if the token goes

45:21up tomorrow you can you can invest and

45:23sell the next day right now do you think

45:25we are converging tokens again our young

45:27repeat this myself all the time there is

45:29such a young industry they are

45:31converging a little bit more towards

45:32venture capital we're starting to see

45:33vesting schedules and lockups for

45:36investors trying to get this incentive

45:37alignment a little bit tighter than kind

45:39of the freest version that I was just

45:40describing and I think a lot of its

45:42gonna converge that way you know early

45:44in the ico market companies raised once

45:46they said we're gonna raise one monster

45:48token sale that's gonna be it will never

45:49need to fundraise again more and more

45:51we're seeing people talk about kind of

45:53stage things that start to look a lot

45:54more like a traditional seed Series A

45:57Series B and so it's gonna look more

45:58like venture capital future I think but

46:00there's still going to be these key

46:01differences of what it is that you're

46:03buying and what that means for the

46:04relationships between the people

46:05involved awesome so in the time

46:08remaining if there's any questions on

46:11any of the topics we've talked about

46:13okay right here in front room

46:18[Music]

46:20I have two questions one about venture

46:24investors you said good investors if you

46:27could share with us like three big

46:29points okay okay hang out there we'll

46:33get we'll take each one and turn so what

46:34are um what are the characteristics of

46:37good investors in your view yeah so talk

46:41about a couple characteristics and a way

46:42to find out the characteristics that I

46:44think are really important for investors

46:45is one alignment with whatever your

46:48goals are as an entrepreneur not

46:50everyone's goals in this room are going

46:52to be exactly the same some people might

46:53be saying for me this is a ten billion

46:56dollar business or bust that is it that

46:58is all I'm going for and I will always

46:59make the decision that leads towards

47:00that outcome others might say listen if

47:02I built a ten million dollar a year

47:03revenue business I would be super happy

47:05and I'm looking for investors for that

47:06if investors are not aligned with that

47:08goal you're going to be in big trouble

47:10because you will eventually make a

47:11decision that runs exactly counter to

47:12what they want and so you need to make

47:14sure they're aligned with you on that

47:15second how you interface with them is

47:18the interaction friendly it can be

47:19intense they may do diligence and maybe

47:21some real back-and-forth and firing back

47:23and forth but do you walk away feeling

47:24good after your interaction with them if

47:26you do not that is not a good sign

47:28because you are talking to them at a

47:30time when it's supposed to be really

47:31positive you're talking about joining

47:33forces a one plus one equals three

47:34situation if you're walking away and

47:36saying this does not feel totally right

47:38that's a really bad science at some

47:40point in all likelihood hate to break it

47:42to you things will not go perfectly I'm

47:44not saying the business gonna shut down

47:45or anything but you will have a tough

47:46time at some point and if an investor is

47:48not great when things are good or you're

47:51talking about possible ways to work

47:52together and build something amazing

47:53they will be really bad when things are

47:56going poorly and so I'd watch out for

47:58those those are kind of my two biggest

47:59things the last one is people argue

48:03about this all the time but the idea of

48:05value add I don't think every investor

48:07has to be some sort of crazy perfect

48:10they're gonna make some amazing

48:11difference in your business but if

48:12they're aligned and you need capital and

48:15they believe it's a good investment that

48:16can be fine you don't necessarily need

48:17someone that's going to do everything

48:19but when you can find those investors

48:20obviously that can make that

48:21introduction for you give you that

48:23customer feedback whatever it may be

48:24recruit someone that's tremendously

48:26valuable the the last thing I would say

48:28on that is that

48:29super underrated part of fundraising is

48:32due diligence and reference checks on

48:34investors so few people do this but it

48:38is amazing you talk to an investor

48:39you're getting towards it you're saying

48:40Jeff I think we've got a great

48:41relationship here I'm really excited

48:42about working with you I think we could

48:44do something amazing and I would I would

48:45love to work with you as one of my

48:47investors um is it cool can I talk to

48:49some people that you've invested in

48:50before I just want to go since you're

48:51working style and kind of like how we

48:53could work together in the future now

48:54first of all they say no to that

48:56really bad signal right anytime someone

48:58says no to reference check bad signal

49:00they'll probably say yes and talk people

49:02that he sends you maybe talk a couple

49:03other people that you know he's invested

49:04in that he didn't send you and just ask

49:06them those questions because every

49:07founder that's head an investor can give

49:10you a very intuitive gut check on Jeff's

49:13amazing he was actually their darkest

49:15days like things were tough he came into

49:16the office helped us figure out product

49:18stretch this happened that happened and

49:20then you go back to him and you say to

49:22him you have I'm even more excited now

49:25because I talked a bunch these people

49:26and they said you were so helpful on

49:28this you were so helpful on that I let's

49:30make this happen that's the most

49:32exciting way to close an investor

49:33conversation highest chance close to the

49:35money and you've now set expectations or

49:37on what you hope the relationship will

49:38be like and so I definitely do those

49:40calls it takes time but it's worth it

49:42for investor that you're looking at work

49:44so that was a that was a solid gold

49:46answer so please please please pay

49:49attention pay Andy's wisdom there yes

50:06okay so the question is given the

50:09nuclear winter of in crypto land is

50:13coinless looking to pivot to stos

50:16or are you going to stick firmly with

50:19icos yes so to unpack that a little bit

50:21sto is a security token offering and

50:23this goes back to what we're talking

50:24about before around the blockchain and

50:26token infrastructure being something

50:28that you can build a lot of different

50:29things on one of those things that

50:31people talk about is what's commonly

50:32called a security token or an

50:33asset-backed token and this is an idea

50:36of taking an existing asset something

50:38that exists in the real world the

50:39traditional world

50:40maybe startup equity real estate maybe

50:43gold bars whatever it may be and

50:45building a token that represents that

50:47asset so one token equals you know one

50:50percent of this building or this

50:52buildings revenue streams whatever it is

50:53and and the question is you know we

50:56looking to support those where

50:57traditionally we supported i COS of

51:00these tokens that are more kind of token

51:02networks that only exist in the network

51:04itself and not in the actual I guess you

51:06could do an IC o---- of an STL it's

51:07really it's like it's a little totally

51:10so that's right where I'd go on that is

51:11that um we are certainly looking to

51:13support offerings of security tokens we

51:16don't see that as a pivot we actually

51:17see ourselves as just infrastructure to

51:18support sales of tokens thus far they've

51:21happened to be what are commonly called

51:22protocol tokens where these kind of

51:24Network tokens and they function on

51:26these on these networks alone if the

51:28tokens were offering our asset-backed

51:29instead of network backed that makes no

51:32difference to us as the platform we just

51:34have to figure out if it's a good fit

51:35for our investor base and if you know

51:36that can happen but ultimately the

51:38process for running those sales is

51:39exactly the same awesome yeah

51:44our tokens currency regulatory answer

51:47totally depends practical answer yes and

51:51no in the kind of colloquial form of

51:52currency where you're using something to

51:54exchange for something else absolutely

51:55most of these tokens are some sort of

51:58object fits into that category some

52:01might not be so one example often refer

52:04to bitcoins value as a store of value

52:06and that means some really think of

52:08Bitcoin most analogous to digital gold

52:11gold is not a currency you can use it to

52:14exchange for things but it's not really

52:16great for that it's more used to store

52:18value put value into it you take value

52:20out of it and that's how I see the value

52:21of Bitcoin I don't think it's the same

52:22for every token more of these tokens

52:24fall into that an exchange category but

52:28from a regulatory standpoint of

52:30colloquial definition the answer largely

52:32is no to that but in certain cases maybe

52:35yes again depending on the exact

52:36characteristic so we could talk about

52:37specific examples and bitcoins

52:39complicated because there's Bitcoin cash

52:41which is maybe a currency totally

52:45different token so Bitcoin cash but it's

52:46a totally different currency although

52:47yeah okay maybe maybe that's too much

52:49yes

52:54[Music]

52:55if everybody did so if Airbnb started

53:00today would they be a good candidate for

53:03an ICO I don't think necessarily I again

53:06I go back to I trust Airbnb I have no

53:09problem with that and yes I'll go

53:11forward and rent someone's house through

53:13Airbnb and be happy with that there are

53:16arguments that it could be successful in

53:17that manner because maybe it's less fees

53:19if there's less of a middleman but

53:21Airbnb does provide valuable services to

53:23me as the consumer and I'm willing to

53:24pay for those services I don't feel like

53:26Airbnb is taking unreasonable fees on

53:29those transactions because they provide

53:30a lot of services and so you know do

53:33they need a network I don't think they

53:35need one

53:36could it be an interesting service could

53:37be a potentially competitive service

53:38absolutely but I if I were starting that

53:41business today I wanted to connect you

53:43know homeowners or apartment owners to

53:45people that wanted to stay there I would

53:46probably go the centralized route

53:48initially but with an eye on the crypto

53:51space and seeing if there might be

53:51opportunities in the future the last

53:53thing I would say on that is it is

53:55underrated today how hard it is to build

53:59these token networks it is so hard

54:02they're so young the tooling is not

54:03there

54:04development is incredibly challenging

54:05augur was really the first ICO that

54:08officially launched in a big way three

54:11years from there ICO to launching they

54:12just launched this summer and the amount

54:14of work that went to that is

54:15unimaginable I mean you have to replace

54:17the human beings at air and be Airbnb

54:20who are building the processes and

54:22infrastructure to make it a trusted no

54:25precedent for how to build these things

54:27and so you know even that alone you're

54:29looking at it as a business trying to

54:31you know raise as little money as

54:32possible and push forward of what you

54:34have it's a tough move but do you think

54:36it's fair to say that there's a faction

54:38of crypto world that says central

54:41authority bad and we should replace all

54:44of those with a network a trusted

54:47Network absolutely and I think a lot of

54:49crypto has its roots in this kind of a

54:51narco libertarian philosophy that I

54:55think was incredibly important for the

54:56early days of crypto because that is one

54:58of its core use cases this avoidance of

55:00middlemen and driving the industry

55:03forward with that philosophy is

55:04incredibly important but that's very

55:05different from looking at it from a

55:07a really pragmatic from this side and

55:09there may be some crossover there but

55:10it's not 100% right over there

55:16[Music]

55:17one question at a time because it's

55:20really fun to pile them on but there's a

55:21lot of people who want to ask questions

55:22so ask them that's the one you really

55:24want answered first how do you

55:36distinguish between value and

55:38information yes it's a really important

55:41question I think at its core you can

55:44represent value in information right so

55:46I can make online transactions with the

55:49internet without tokens and move value

55:51around but what that's really doing is

55:54moving symbolic representations of value

55:56around and directing different entities

55:58to move it so when I make a payment with

55:59my credit card on the Internet sure it

56:01is just information that is moving I'm

56:03sending authorization codes my CVV goes

56:06here and this happens but ultimately

56:08what happens is it goes to one issuing

56:10it the credit card issuing entity and

56:12conveys them the information and II just

56:14spent $10 on this merchant please debit

56:17$10 or you know put $10 on a nice

56:19balance and then merchants please here

56:21are $10 you have now been paid for your

56:23services what didn't happen there the

56:26internet did not actually transmit that

56:28value those entities on either side push

56:31the value from one to the other they may

56:32have done it over the bridge of the

56:34internet but they were the ones that

56:36were maintaining the value what's

56:37interesting with this token ecosystem is

56:39that the value is actually totally

56:40contained in the network there are no

56:43entities that are actually holding that

56:44value for you there's no credit card

56:46issuer that is keeping an eye on my

56:48balance and taking payments for me and

56:49there's no bank on the other side that

56:51is holding on to the the merchants money

56:54instead all the values representing the

56:56network and people actually own that

56:57value so I have my own keys on that

57:00network I own those tokens or I own the

57:03representation of those tokens I'm not

57:04just owning information that gives me

57:06access to someone else owning that value

57:08so at the end of the day going just a

57:11single player example my bank account

57:13it's my money but it's not really my

57:15money the bank has the money and I just

57:17have information that allows me to

57:19access that money in the world of tokens

57:21I actually have ownership of that that

57:23is those are my tokens because I have

57:25the keys to access that and no one else

57:27can do anything with it aside from me

57:29who has that

57:30access and so when we talk about

57:31transmitting value as opposed to

57:33transmitting information it's about

57:34direct interactions between nodes I can

57:37pay Jeff with tokens and it never

57:39touches a third party at all

57:41where's with information it requires

57:42those third parties where you're

57:43informing them to move money between

57:44each other yes so this is I guess more

58:12of a comment on the rigidity of networks

58:16once you put them out there it's hard to

58:18then go and change them and upgrade them

58:21and make them backward compatible to

58:23other things do you agree with that yes

58:25and no I think again early days so there

58:27hasn't been a lot built around the

58:28upgrade ability of these networks and

58:30once you put them out there it's harder

58:31to make those changes especially

58:32breaking changes there's more and more

58:34infrastructure being built that supports

58:35that it's something that I'm not

58:36incredibly concerned about in the future

58:38it's something that feels inevitable

58:39that will get to a place where these

58:40networks can be easily upgraded at the

58:42same time goes back to this idea no

58:45company controls that Network and so

58:47they can't dictatorial II make that

58:49change if they make a change and the

58:51users on the network don't agree with it

58:52the network will do what's called

58:54forking we could talk for hours about

58:55this where you get to difference and

58:57this is where the Bitcoin Bitcoin cash

58:58piece came in you know Facebook makes a

59:01change I can't just like make a new

59:03Facebook that goes back to the old

59:04change that doesn't work I don't have

59:06access to all of Facebook's

59:07infrastructure and code in the crypto

59:09world if you know say Protocol Labs me

59:12to change the file coin that people

59:14didn't like it would be totally possible

59:16for people to start back right before

59:17that change happened with the entire

59:19history of transactions with all the

59:21code and make a new version of Pyla coin

59:23by coin cache and it's out of file it's

59:25out of protocol ABS

59:26wholly controls yep so as you vote again

59:28goes back to this incentive alignment

59:30thing that sure maybe someone has can

59:33write to this version of the protocol

59:34and make changes to it but they have to

59:36make sure that all the users are aligned

59:37from an incentive perspective to

59:39participate on that same network going

59:40forward instead of forking it or not

59:42because you can fork and

59:44then that fork is then

59:45backwards-compatible and the new one

59:47isn't it or vice versa and so maybe it's

59:50easier because of the ability to fork

59:52absolutely yeah more questions over

59:56there is it possible for the someone

01:00:07who's a node a person who's part of the

01:00:09network to propose a change that then

01:00:11gets incorporated into the network yeah

01:00:13absolutely so any one node or otherwise

01:00:16can try to fork a network and create a

01:00:18new version of it with a with a change

01:00:20there's again no special control that

01:00:23these companies have over these networks

01:00:24other than some sort of moral authority

01:00:26right if they created the network I

01:00:28probably trust them to be kind of the

01:00:30best stewards of that network and know

01:00:32how to build it they're probably the

01:00:33biggest experts onyx they built in the

01:00:35first place so you're gonna probably go

01:00:37with their version until there's a

01:00:38reason not to and as soon as there's a

01:00:40reason not to which could either be

01:00:42because they do something bad or because

01:00:44because someone else proposes something

01:00:46better they could be going on a great

01:00:48path and making a great product but if

01:00:50someone else in other node anyone in

01:00:51this room says I've got an improvement

01:00:53to Bitcoin I think it's to be better

01:00:54than what the existing core developers

01:00:56are doing I'm gonna propose that I'm

01:00:57going to align people around it and get

01:00:59people's attention around it that could

01:01:00for can be more successful and it's

01:01:02totally up to that person to do so let

01:01:04me argue that for a sec please isn't it

01:01:07true that to really let these these

01:01:10these decisions become somewhat

01:01:12democratic and so the network decides

01:01:15but isn't it also true that these

01:01:16companies that that do i SEOs and and

01:01:20are the creator of a token tend to hold

01:01:22a significant portion of the currency

01:01:24for themselves and therefore have the

01:01:26biggest voice on the network yeah so a

01:01:27couple things one is when I'm answering

01:01:30these kind of high-level questions about

01:01:32crypto I'm thinking purely of the good

01:01:34the very small set of good tokens there

01:01:36are lots of bad actors out there that

01:01:37build in all sorts of weird ways to

01:01:39influence the network but just talk

01:01:40about the kind of ideal of these tokens

01:01:41and blockchain networks that's where

01:01:43we're going on these on these questions

01:01:44absolutely some of these issuers have

01:01:46significant stakes in the network but a

01:01:48couple things happen to one the voices

01:01:51are not always based on who is the

01:01:53biggest stake in the network

01:01:54you know a really important voice is

01:01:56whoever is is mining and this is a whole

01:01:59nother topic for what the consensus

01:02:00mechanism is so on Bitcoin the Bitcoin

01:02:02core developers there's a group of

01:02:04people that have kind of access and can

01:02:05try and change the code of Bitcoin but

01:02:07it has to be adopted by all the miners

01:02:09which of these people running huge

01:02:10server farms doing work on the Bitcoin

01:02:12network if those people choose not to

01:02:14adopt it even if they've you can think

01:02:16of a Bitcoin core developers as being

01:02:17from the entity that created Bitcoin

01:02:19which isn't really true in that case

01:02:20again created by a pseudonymous Satoshi

01:02:23Nakamoto but you know the the the miners

01:02:27have the power they're not the people

01:02:28that are kind of core developing it and

01:02:30so it depends on again how the how the

01:02:32network makes it so it's complicated it

01:02:34is complicated okay a couple more

01:02:37questions right there yeah so what what

01:02:49develops would I expect to see in the

01:02:50ico industry before they become a viable

01:02:51path for more startups it really depends

01:02:54on and again this goes back to it's a

01:02:55really good question what we mean by so

01:02:59when we say ICO we're talking about

01:03:00Mitchell coin offering when we say coin

01:03:02or token what are we talking about and

01:03:04that's where it's it's so many different

01:03:05things so what we've really been talking

01:03:07about here is a history of successful or

01:03:09you know looking to be successful

01:03:11protocol tokhes these tokens that are

01:03:13network based that have have this trust

01:03:15avoidance our trustless networks I don't

01:03:18think there's a world where every

01:03:20startup is going to need to do that I'm

01:03:21you know I trust my corner store to give

01:03:23me good food I trust my guru you know so

01:03:25that that will always exist and so I

01:03:28don't ever think that every company will

01:03:29need to do a token of that blend but you

01:03:31can imagine a world go back to the SEO

01:03:33question where there are tokens that

01:03:36represent company equity and I am

01:03:38purchasing company equity via a token

01:03:40instead of some other document than

01:03:43equity round or safe or whatever it may

01:03:45be and maybe it's it there's an

01:03:47underlying safe below it and there's a

01:03:48token that represents it for that to

01:03:51happen I think what we'll need to see is

01:03:52just a lot more infrastructure we built

01:03:54out there's reasons that that is a good

01:03:55idea to have these asset backed tokens

01:03:57things like increased access to

01:03:59liquidity there's all these exchanges

01:04:00being built and liquidity pools for

01:04:02increased liquidity for these asset

01:04:04backed tokens they're interoperable with

01:04:05each other so you can move them around

01:04:06more easily I think

01:04:08was the trend Jeff and I've talked about

01:04:09before generally the arc of venture

01:04:12capital bends towards increased

01:04:14liquidity and speed to liquidity and

01:04:15these things come faster and faster a

01:04:17little bit of a speed bump in recent

01:04:18years but generally I think moving that

01:04:20way and tokens will only continue that

01:04:22trend so I do think as infrastructure

01:04:24gets built out it may make sense for

01:04:26companies to raise equity with tokens

01:04:30that represent that equity and that is

01:04:32not some sort of crazy ico phenomenon

01:04:34will you be able to go out as a seed

01:04:35stage startup and say you know my token

01:04:37is worth 200 million dollars no it's

01:04:39it's gonna represent the equity and

01:04:40it'll be worth what the equities worth

01:04:41maybe with some premium for the benefits

01:04:44of tokenization on top of it but we need

01:04:47infrastructure there and until that

01:04:48infrastructure exists I don't think it's

01:04:50worthwhile except as maybe a proof of

01:04:52concept for people to show that it's

01:04:54possible but we need more built there

01:04:55and hopefully that gets built in the

01:04:57coming months or years great one more

01:05:00question right here yeah do I think the

01:05:15futures gonna be a handful of block

01:05:16chains are hundreds of block chains and

01:05:18you know I think it'll be a relatively

01:05:21small number of block chains but a

01:05:24relatively high number of tokens and to

01:05:27explain that for just a minute here many

01:05:30of these token networks allow for other

01:05:33tokens to be issued on top of it most

01:05:35common buzzword you'll hear aetherium

01:05:37which is the second biggest

01:05:38cryptocurrency out there it's got a

01:05:40blockchain the ethereum blockchain and

01:05:41they've created standards on top for

01:05:43theorem to issue other tokens on top of

01:05:45ethereum and the one you'll hear a

01:05:46tossed around a lot is in ERC 20 token

01:05:49this is a token that is issued on top of

01:05:51the etherium blockchain

01:05:52but represents something other than

01:05:54aetherium and its price is not

01:05:55necessarily correlated with that of

01:05:57aetherium I don't think there's a need

01:05:59for hundreds and hundreds and hundreds

01:06:00of block chains to exist because they

01:06:02are a pain to maintain you need to all

01:06:03these users on it you know with

01:06:05different mechanisms for how they

01:06:06interact with each other but I do think

01:06:08we're gonna have a world with a lot of

01:06:09different tokens maybe not as many as

01:06:11some people think I'm not kind of a

01:06:12tokens for everything but if we get to

01:06:14this world of asset-backed tokens where

01:06:16all of a sudden buildings could have

01:06:17tokens to represent their ownership or

01:06:18companies kind of tokens represent their

01:06:20ownership

01:06:20that's a lot of tokens that are possible

01:06:22out there but they will they will not

01:06:23all have their own block chains that

01:06:25would likely be built on something which

01:06:27will be very error-prone if they do

01:06:28right because because it's all new code

01:06:30and there's a brace for it to be safe

01:06:33and secure and so maybe they'll all be

01:06:35on ethereum or stellar or one of these

01:06:37other networks but lots of tokens

01:06:39relatively few block chains would be my

01:06:42prognostication the last point I would

01:06:44make on that is once again we are less

01:06:46than a decade into crypto at all we are

01:06:49less than five years into tokens beyond

01:06:52you know the very basic building blocks

01:06:54at all that is the earliest earliest

01:06:57days imaginable of this ecosystem and

01:06:59any prediction that makes day stands

01:07:01probably a worse chance of being true

01:07:03than than a good one so who knows we'll

01:07:05see you the next day in the coming

01:07:06decades that's great wait and thank you

01:07:08very much for your time and thank you

01:07:09thank you guys

01:07:10[Applause]

01:07:21you

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