Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Brock Pierce: From Digital Goods to Digital Currency

Episode Date: March 21, 2016

We’re joined by , Chairman of the Bitcoin Foundation, investor and all around emblematic figure of the Bitcoin ecosystem. Brock tells his story, from his early beginning a entrepreneur in his teens, to the massively successfull video game industry businesses he built in the early 2000s. As Chairman of the Bitcoin Foundation, he gives us his perspective on how the Foundation’s role has evolved over time and its areas of focus going forward. Brock also weighs in the recent debates around governance and block size. Topics covered in this episode: The lemonade-stand beginnings of Brock’s entrepreneurship story How he became involved in gaming and pioneered the sale of digital goods The 400,000-strong professional gamer supply chain he built in China His first contact with Bitcoin and the initial concerns he had Blockchain Capital and how he ended up investing in dozens of Bitcoin startups The blocksize debate and whether Bitcoin needs an explicit governance process The future of the Bitcoin Foundation Episode links: This Week in Startups with Brock Pierce The Finanser Interview with Brock Pierce Blockchain Capital Brock Pierce – Bitcoins Are The Digital Gold 2.0 This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/123

This is Episode 203 with guest, Brock Pierce. This episode of Episode of Bitcoin is brought to you by the G-Tech Blockchain contest. If you have an idea for a blockchain-related project, make sure you apply for your chance to win awards for 50,000 euros. Go to epithertoBitcoin.com slash G-Tech, that's G-T-E-C. To learn more about G-TEC, and how you can apply. Hi, welcome to Epicenter Bitcoin, the show it talks about the technologies, projects, and people driving decentralization and the global cryptocurrency revolution.

My name is Sebastian Coutieu. And my name is Brian Fabernic. Today we have a person on that probably most of you know in the cryptocurrency in Bitcoin space is Brock Pierce. Brock Pierce has been involved in so many projects that if he listed all his titles and all his involvement, it would take up the first 10 minutes of the show. Perhaps what he's best known at this point is that he's the chairman of the Bitcoin Foundation and he's also the managing partner of blockchain capital. Washington Capital has invested in lots and lots of companies in this space,

like probably half of the companies that most people know. And yeah, he's been involved in lots of projects here. So I'm super excited to have you on, Brock. Thank you guys for having me. I'm not sure it would take 10 minutes. Certainly not the title's worth, I guess, worth stating. But that being said, so we have sort of gone through your background. And I think that's one of the things that's really impressive and astonishing,

just the wealth of different projects you have done. I'm curious. So how did you become such an entrepreneurial guy and starting constantly starting new projects? Well, I think, I mean, in some ways I was born an entrepreneur. You know, I mean, even from the ages of probably what, five or six, I was building lemonade, you know, stand like businesses one after another. I mean, every little silly thing you would expect, you know, a kid to be doing. I think I was selling software by second grade.

And I've found like this, remember these games, word munchers, number munchers, Oregon, trail, and things of that nature. Anyway, one of the places I used to hang out frequently as a kid was one of the districts. there and they would throw away any boxes that had any damages or anything else. And I had kids jumping in the dumpster to pull all the software out, which then I would rent at school in like first or second grade for a dollar to rent it, which at the time mean you'd just install it. You'd pay $5 if essentially you wanted the box and the manual and all the sort of supporting materials. Otherwise, you would just return it a couple days later. But I built lots of businesses like that in elementary school and then more as a teenager, which eventually, led to starting my first real business when I was 17, and then that led to another and another and

somehow I ended up as a venture capitalist. Cool. Yeah, that is, I mean, first the lemonade sand is sort of, you know, the stereotypical American entrepreneurship story. So everybody's got to start somewhere. Yeah. Now, one thing that I thought was particularly interesting, perhaps we can dive a little bit deeper in there is your involvement in gaming and digital goods because I think that also sort of ties into then how that led to your involvement in the Bitcoin space. Yeah. No. So I had raised like $88 million for my first company when I was 17. Business ended up spending 96. Obviously that didn't work out too well because we didn't have much well. We pre-signed $150 million.

million dollars worth of advertising contracts, but we were never able to meet the fill rates required to actually collect. That business was dependent upon broadband penetration rolling out, which clearly took about 10 years longer than every analyst had forecast. But at that point, I found myself post the first Internet sort of 1.0 bubble having collapsed it's mid-2000. And I said, okay, well, at this point, the only skill I arguably have is as an Internet entrepreneur were at a time where there's no one in the world that wants to finance or even be pitched an

internet idea. I said, okay, well, what else do I got? I can go get a job or start something. And having grown up playing games, I had identified a market, you had these early emerging what you'd call massively multiplayer games or persistent worlds. And because these worlds were persistent in nature, the assets that you would accumulate in them had value. And so I identified that the people playing these online games had a desire to buy and sell the digital currency or the digital goods that they've accumulated. And this is really before any game company in the world was buying and selling them. So I started testing that model in 98 and 99, kind of just in the background, but didn't have time to do it seriously. But following the internet bubble burst, I went ahead and started the business

called IGE, which was initially focused on EverQuest and Ultima Online, and then games like Final Fantasy 11 and, you know, Ashron's call and others as they emerged, eventually World Warcraft. But it was, you know, quite an interesting thing. So if you were someone that had too much time on your hands, you may have more inventory than you needed. And if you were someone that might be working too hard, you might have more money than you need, but you lacked some of the things that you wanted in that game world. So I was making a market between, you know, players essentially. I took that business from 2001 to 2004, from zero to 100 million in revenue. The problem I had is I had more customers willing to buy than I had players that wanted to sell.

And so I had gone and taught the Chinese how they could play games professionally to mine digital currency, which led to building up a supply chain of about 400,000 people in China that would play these games professionally to mine the digital currency that I would then sell into the Western markets. And I'm still doing over a billion dollars a year in that business today. So you started that thing because I mean I've certainly heard about you know basically you know factories, quote unquote factories in China right where people basically play video games to get digital goods and then sell them and that was your company that kind of started

that industry. Yeah yeah and it was interesting because again I had more people that wanted to buy than I had people that wanted to sell and so I was like okay how am I going to get more inventory. And I was looking through all of my sellers. And I noticed that I was starting to see a few people emerging in Eastern Europe, a few people in Latin America, a few people in Asia. This is what it dawned on me that all someone had to have is a computer, an internet connection, the game software, and the ability to pay for it, and they could play from anywhere in the world. And if you were a good gamer, you could make a couple hundred dollars a day, which, you know, if you were in China in 2001, you know, that's a lot of money depending upon where you are in China.

And so I said, okay, I see, I definitely need to take this, you know, sort of, you know, great job opportunity to the developing world. Now, the question was where? And I thought that the Chinese in particular had the greatest propensity to game. I mean, and as you've noticed, it's a huge gaming market similar to like South Korea, more so than, you know, call it the rest of the world. And so China seemed like the obvious place. I knew nothing about China at the time. And so basically jumped on a plane, moved to Hong Kong, opened up a phone book, you know, got a lawyer, got an office, got an accountant, you know, hired a recruiter

and just started hiring people because I decided that I needed to be near the epicenter of where I thought my industry would emerge. Then I set up shop in Shanghai and set up a team of hundreds of people that just started to educate everyone about how you can make more money than your dad who's a doctor and a lawyer, you know, by playing games. And that is how I ended up creating the supply. chain that I needed to sort of meet the demand in the developing world. That's really fascinating.

And so then how did you transition then into Bitcoin and blockchain? Well, that came, you know, quite a bit later. So I ran that business until about 2007 as founder and CEO, then went on and started a number of other businesses, which, you know, I don't think we're going to want to spend time on here today. But having had a background in this, and I'm still in the business, I just operate as chair. I'm not the day-to-day sort of management team anymore. And that business, I guess I said, still doing about a billion dollars a year.

In places like Korea, you know, we've got 99% market share in China. We're very active, the Western world. So we're all over the place. But, you know, anytime someone was working on a digital currency project, it was fairly common that I'd get a phone call. And so Bitcoin was on my radar from, you know, more or less the very beginning. I mean, the first call I got was, hey, Brock, if you take a look at this sort of white paper thing, what do you think? I'm like, hold on, I'm on the other line. Let me call you right back. The reality is I

hadn't heard of it. I didn't want to be like, no. So I did a quick Google search, you know, at least, you know, formed a 10-minute opinion, made the call back. I'm like, yeah, well, Bitcoin looks interesting. This or, you know, something like it is clearly the future. I just don't know if the future is now or 25 years from now. And I'm like, okay, yeah, that makes sense. and I went ahead and at that point played around a little bit of mining. Nothing actively. I wasn't convinced or sold that this is something I needed to focus on. Because if anything, what I learned from my experience as an early entrepreneur is that market

timing was everything. But at that point, started tracking Bitcoin and checking in on it every few months. I wasn't an active participant in the community until about 2012. And that's when it had become clear. that momentum was, you know, building critical mass, you know, was forming. You were starting to see entrepreneurs, you know, building businesses. You were starting to see capital taking interest. And that's when I said, okay, I should start thinking about moving all of my time and energy into this market, which I did shortly thereafter. At least it took me a little while to start

talking very publicly about it. Because my first concern was regulatory in nature. I'm like, this looks really interesting, but I could see governments reacting very negatively. I know orange is the new black in fashion, at least, but I didn't think I would look very good in that color. Strike jumpsuits, I don't think, worked too well on me either. But that was how that migration had happened. And there's not just me, there's a lot of us that came out of, call it the video game sort of aspect of virtual currency. Jesse Powell, the founder of Cracken ran a website called loot.com and, you know, Hayden Gill, and I know dozens of us in this space that ended up here through that path versus, you know, one of the

three or four other, you know, kind of most likely paths that would have brought Bitcoin, you know, into your scene in the, call it 2011-12, sure. So then what, why is it, do you think that there are so many people coming from that, from the sort of gaming ecosystem and coming into the Bitcoin space. What are the type of things that you learned in your previous businesses that are of good value to now that you're in the Bitcoin space? Well, I mean, it's pretty simple in the sense that 10 years ago, someone would say, Brock, you're selling hundreds of millions of dollars

of digital currency that only exists in games like World of Warcraft. They're like, that doesn't make any sense to me. Why would anyone pay for that stuff? Because if you didn't play these games, you didn't understand it. The insight, for me, was the same insight that led to Bitcoin, and then obviously that insight is expanded. And that was that just because something is intangible doesn't make it any less valuable. Very simple insight.

And almost all great businesses are built off something simple like that. But to the average person, you know, 10 years ago, that would have sounded kind of insane. And I think that's what allowed the people that came into the industry with my back. background is we already have established that, you know, something being digital in nature didn't reduce its value in any way. If anything, it might have increased its utility. So that was what caused us to at least, I think, say, okay, Bitcoin is very fascinating from this perspective. And you're starting to see that, you know, there's value being ascribed to it. Markets are emerging. Transaction volumes are increasing. And then you start looking at,

obviously, all of the other applications of the technology. You start to then as a matter of curiosity, start studying the history of money, start understanding issues with the current financial system, which causes the peeling back of the onion in this industry that we all go through. And I imagine we're still all peeling back the onion. We might be pretty deep into it. But I think everyone found, for all of us, there was something, some hook that caused us to become interesting, interested in what's going on here and then start to figure out kind of the many layers that exist in Bitcoin. I don't know what level we're all. but it feels like if it were a video game where, you know, maybe level 37 or something of that nature.

And it might be one of those games that, you know, never ends. Right. I'm curious, when you were running the game, the company with all these people playing video games in China, how did you do payments back then? Was that also part of the thing that you sort of saw on Bitcoin? is like, oh, this would be an easy way to handle payments for this? Well, that was, again, a big part of what I learned. Anyone that sold, built any substantially commerce business online, has learned

that payments, you know, are one of the biggest problems of being on the Internet, certainly 10, 15 years ago. It's gotten a lot easier because of businesses like Square and Stripe if you're trying to just be a domestic business. But, yeah, my company was, I think we were the PayPal's largest merchant for about three years in a row. There was a project code name Project IGE, which was I helped design and actually caused PayPal to create their external credit card processing piece. If you wanted to, if you used PayPal as a merchant, call it 10 years ago, and you sent a customer

off to pay for something, PayPal would require that user to sign up for PayPal to be able to pay you with a credit card. I said, that's unacceptable that you're creating friction in my transactions. And they said, well, we're not going to do it any other way. So I shifted, you know, 50 or $100 million of transactions to a competing platform that would allow me to do that. And they said, okay, wait, wait, wait, wait, we'll build it. And so that's how the external credit card processing business got built. So that was on the sort of Western side.

And after eBay, we were the largest driver of new customers. I mean, keep in mind when PayPal was early on in the 2002, 2003, 2004 period, There were no Walmarts using it. There were no big merchants. It was companies like mine that were the largest in the world that were getting PayPal all of their early customers. That also then led to becoming essentially the main business, driving all the initial customers to AliPay, or if you're familiar with Alibaba. So Alipay had approached us and said, you know, we would like to, we understand the value that you've driven to PayPal. You know, can you, you know, start using us to process all your transactions in China?

I said, well, I'm not sure I really want to do that. because I'm going to start to enable all of my Chinese supply chain to be able to accept payments from my customers abroad. Eventually, I'm going to be fueling the competition for my own business. And they're like, no, no, no, no, no, what do you need to be able to drive us all of our initial business? And this is when AliPay was nothing of the company. I said, well, I want an exclusive on all digital assets. And so we did enter into an exclusivity contract, which, like a lot of things in China. It wasn't worth the paper it was printed on.

But, you know, I was definitely an early pioneer in the world of payments. And as a result of that, recognized the friction, the value of something like Bitcoin. I mean, and one of the arguments I've been making for many years now is that only about 25% of the world's population has the ability to participate in the Internet economy. Bitcoin is democratizing, you know, the global financial system, but in the area of Internet payments in a way where everyone is going to be able to be able to. to participate in the internet economy. And that's a big deal. And that was one of the sort of many, I think, reasons why I saw this, you know, to be such an interesting opportunity.

Cool. Fantastic. And then you got involved in Bitcoin sort of properly in 2012. What did that look like? What kind of projects did you pursue back then? Well, again, it was mostly just dedicating a lot of time to what do I want to do. acquiring Bitcoin and Bitcoin mining was the area where we started, which led to eventually having about 10% of all of the batch 1 avalons.

So I've got a good little mining operation. And the reason I got into mining, well, at first there's the allure of buying a machine that prints money. You eventually start to build better calculators and predict difficulty. sort of rate increases. And then mining starts to lose some of its allure. And, you know, most of the hardware was prototype. So learning to manage it and just keeping the hardware online, you know, starts to become a full-time job and, you know, building scripts to set off alarms when things aren't working and you end up not sleeping for well for months at a time. But it was a lot of what I would call or I think as Eric Voorhees had called when we first started

shagging, he's like, oh, you've been like one of these Bitcoin ninjas. I go, yeah, I was just kind of nervous about, you know, publicly, you know, kind of getting out there. I think I started talking very broadly, not just within my sort of smaller social circles. I became very open about everything I was doing by the San Jose Bitcoin conference. And that's when I'd said, all right, I looked at, you know, kind of a few dozen opportunities. Historically, as an entrepreneur, I normally would start one company and start building that. But I saw dozens of interesting opportunities. couldn't figure out which was best. And so I made a decision to start just incubating companies.

You know, I'd build one after another, after another, and that led to, you know, a number of, you know, there was a Bitcoin sort of long fund in there, similar to Bitcoin Investment Trust. I decided not to go forward with it because I didn't think the fees were very interesting and scaling it, you know, looked at building a public ETF, got pretty far along the path of doing that in Canada. I actually had full approval to do that back in 2013. And it's funny, we didn't start seeing that until more recently. But my view was it's easier to do that internationally than it was domestically, and I think that's proven probably true in retrospect. Starting companies like GoCoin and a handful of others, but what I figured out very quickly there is I also couldn't scale. There's only so many

businesses. I think I'm the founder of about 12 companies that are operating today, and that takes up a lot of time, and the ability to add any new businesses is essentially impossible for me. And so if I wanted to continue to get broader exposure to the sector, the only way to do that was as an investor, which is how blockchain capital got started, you know, decided if, you know, I want to broadly participate in the overall ecosystem. I have to buy my way into everything, which is, you know, essentially what I've done the last now a few years.

Let's take a short break to talk about the GTech blockchain contest. Gtech, the German Tech Entrepreneurship Center, is a new center in Berlin for entrepreneurship, and they want to support exciting projects happening in this space. So that's why they're running a blockchain contest together with RWE, which is one of the largest energy companies in Europe and Globalmbuds, a foundation supporting entrepreneurship. You can participate by submitting your idea for your project

and win up to $50,000 in free grant money. That's equity for you. Just take the money and do what you want with it. Anybody can apply, whether you're an early stage startup, and perhaps you just have an idea, a blossoming idea, or you can apply if you've already raised funding and are well on your way to becoming the next multi-billion dollar company.

And anybody can apply whether you're in Berlin and Siberia, in Shanghai or in San Francisco. There's no geographical restrictions. And anybody who applies can win up to 12 months of free office space in Berlin, free mentoring, legal support, etc. Of course, that's totally optional. If you want to stay in Siberia

and work on your blockchain startup, you can also do that. The application deadline is March 31st, so make sure you submit your idea as soon as possible. You can learn more about the contest and apply by going to EpicenterBitcoin.com slash G-TEC. That's G-T-E-C. And we hope you'll win.

We hope you'll make it to Berlin to collect your money and that will get to hang out in person. Now, we would like to thank G-TEC, R-W-E, and Globombus for their support of Epicenter Bitcoin. So let's talk about the Bitcoin Foundation, of which you are the chairman. So it seems that the Bitcoin Foundation has lost, in my opinion, I think Brian would probably agree that it has lost a lot of its visibility in the space. I mean, maybe because there's been so much debate, like this black-sized debate has been taking up so much of the interest of everyone. But for other reasons as well, I'd like you to tell us what is the current state of the Bitcoin Foundation?

How has this role evolved since perhaps two, three years ago when it was a lot more present, it would seem, in the community? Well, I mean, the Bitcoin Foundation early on, you know, was performing an important function that no one else was performing at the time. You know, it was the first organization that was set up to, you know, advocate and educate on behalf of the industry. It was set up to help finance core development at a time where, you know, that hadn't been occurring. So, you know, and then building, you know, conferences that brought many of us together and great conferences.

I mean, you know, San Jose was phenomenal. Amsterdam. I don't know if, you know, I'm assuming quite, quite, I imagine, quite a large number of the audience was there. And these were great events. You know, but like all things, you know, the industry evolved and the organization needed to evolve along with it. So the foundation made it a couple of, you know, substantial missteps. One is, you know, like all of us, and understandably so, when Bitcoin. was on that big run in 2013, you know, that balance sheet of Bitcoin starts looking like a lot of money. And, you know, most of us were like, okay, it's going to go from 500 to 5,000 to, you know, I mean, we were all kind of, you know, we were all drinking the Kool-Aid and probably, you know, a little bit getting a little too excited. And that was true of every company. I mean, look at all the companies in the space. They started ramping up, you know, staffing levels and engineering and advertising to things like the Bitcoin Bowl.

I mean, there was this, you know, kind of like the internet bubble of 1999 or any of these things, everyone got a little excited, probably started spending more than they should, you know, just because everyone was, you know, we were on the roller coaster ride at the moment and everyone is quite excited. Now, the mistake the foundation made is it didn't, you know, it failed to recognize that organizations like this are never going to receive massive amounts of money. they normally wouldn't. And that like a pension plan or an endowment of a university, you know, that capital needed to be better saved because you're not going to get more of it. The reason we had a big balance sheet is because we had received lots of Bitcoin early on and we had benefited from the appreciation. So we spent too much money.

We scaled that back. We consciously made a decision to move core development out of the organization. So, you know, very happy that, you know, Gavin and, you know, and team ended up over at MIT, which I think is a much better place. I mean, that happened as a result of Patrick and Gavin having run around the industry and said, okay, if we're really going to be financing development here, we need millions of dollars. And, you know, the thing that we had heard from, you know, the companies that had the funds or the VCs that had the capital to be able to do this was we would rather see this inside

of an academic institution than inside of the Bitcoin Foundation, you know, with its elected board and, you know, it's issues and things of that nature. And we said, yeah, that makes sense. And so that, I think, was a great outcome, you know, for the industry. And clearly more core development is needed. And I'm glad anytime anyone's supporting that. And the foundation has had to ask itself, okay, is there a role for us in the industry? Because now there's not just the Bitcoin Foundation. You've got other groups like, you know, Coin Center and things that are focused on policy. We decided as an organization. And we're still the largest membership organization in the industry by far. the most recognizable organization in the industry by far. And it's called, as the stewards that are

governing, you know, governing this entity, what should we be doing? Okay, we shouldn't be, you know, financing core development because we don't have the money to do so. And there are other organizations that are better situated to do so. We don't believe that we can represent our constituents in being deeply involved in policy because, you know, there's always going to be a large group of people with different opinions. You know, we shouldn't be saying that here's our political position other than what we've decided, which is, you know, we believe in, you know, we don't want to encourage regulation. We think that this is a, you know, an industry that's young and it needs time to flourish and grow before those conversations start. You know, we're very much aligned with the EFF, which I think is the right position to take from a policy perspective and, you know, get too deeply into lobbying of governments.

So then's what's left? It's advocacy, it's education. I think we've got a pretty good board with the new recent board members. I don't know if you followed that. And we've got a strategy that we hope to announce by the beginning of Q2, which is April 1st. And that is that I think we've determined a path to be able to grow the Bitcoin Foundation's membership to a million users and to be a hub for sort of connecting the world's Bitcoin enthusiasts, which I think is a good role for us. And we as a board, if we can't figure out how to make the organization, you know,

if we can't figure out how to have a material and positive impact on the industry, you know, then we'll become, you know, irrelevant. You know, we've been through, you know, a difficult period, like a lot of Bitcoin companies today. I mean, we've been in the bare market. It's not just the foundation. Philanthropic organizations are going to suffer more than for-profit ones. But, you know, I mean, if you go talk to Bitcoin companies today, it's been tough.

You know, we've had a very, a very important. very rough, you know, 2014 and 15. We've had, you know, the last six months have been a bit positive, but whatever positive sort of growth we've seen around the Bitcoin price, which is the primary sort of barometer or sentiment, whatever, you know, benefits we've seen there, we've lost, you know, in this sort of Bitcoin block-sized debate, which has created a great deal of uncertainty. You know, forget about, so you have to think about our industry as, you know, the perspective of us that are in it, you know, looking out. And then the out, outside world looking in. You know, financial markets really hate, they dislike uncertainty,

and, you know, we as an industry are, you know, starting to suffer, I think, a great deal from the external perspective. You know, the people that were thinking about getting involved, the people that like the technology, the people that, you know, had ambitions or plans to play here, a lot of those people are being turned off by what I like to think of as, you know, self-inflicted wounds. It's interesting. You mentioned one thing that I thought was interesting. interesting is that you said that the foundation would focus more on enthusiasts, but you didn't mention companies in there and industry players. And so as a trade organization, I imagine that is obviously one of the mandates is to also cater to the industry. But one of the things

that's obvious is that startups that were around in 2013, 2014, and before that were most focused on consumer products with wallets and services and remittances and that kind of thing. And since about a year, we've seen a shift and now things are moving more into B2B and industry as regards to the use of the Bitcoin blockchain, that is, not so much on the consumer side. How does the Bitcoin Foundation plan to, or how is the Bitcoin Foundation evolving to to serve this new use of the Bitcoin blockchain in industry? Yeah, I mean, the early Bitcoin companies were focused on, you know, what I like to refer to as just basic infrastructure. You know, building of the bridges, the roads, the tunnels, you know, kind of what people

referred to as Bitcoin 1.0. And the reason you see less new companies in that area is because as investors, you know, you don't normally want to invest in the 10th, you know, Bitcoin exchange. certainly exchange this benefit from network effects. And so that's where capital has migrated to this concept of Bitcoin 2.0, that sort of blockchain application layer. And we've seen a lot of that, and that's continuing to evolve. But as the foundation, yeah, we've got, I mean, obviously I got elected as a representative of the industry membership, which is not surprising when you've invested in 40 plus companies

that, you know, the company, I mean, everybody, they all knew me pretty well. Maybe the, the, the individual membership didn't, but, you know, it was, it was probably, it's not unlikely when you invested in everyone that you're also going to get their votes. But, you know, and that's also because everybody, you know, knows you, obviously. But, you know, the, the industry membership is, I mean, obviously the perspective that I operate from, but I'm not sure. if we're going to be as able to play as big a role there as I think we can in the individual membership. I mean, the thing that the Bitcoin Foundation has is the largest individual sort of membership base. We have thousands of people. And if we eliminated the need to pay,

you know, to become a member of the Bitcoin Foundation, if we eliminated the affiliate program that existed where you had to sign a, you know, a 30-page contract and give up half of the revenues that your affiliate chapter generated, and if we made that free and picked, you know, kind of the best people in countries all around the world to head up the foundation's activities. If we said, you know, if you want to become a member of the foundation, it's free to sign up and then have various paying tiers, you can see there's probably an easy path to organizing the world's Bitcoin user base. And so that you have that, you know, million person email list. And the industry members, I think, benefit more than anything by having a channel to be able to communicate with

everyone because not everybody hangs out in Reddit. Not everyone hangs out in Bitcoin talk. There are a lot people that are, you know, enthusiasts, huge believers spend a lot of their time, but they don't hang out in those sorts of forums or channels. And figuring out a way to communicate with, call it the broader Bitcoin community all over the world, I think is, you know, a potentially achievable task for an organization like ours. You know, and again, there's, you know, when you have an organization that's small where most of your staff is volunteer and you don't have a whole lot of money, you know, you have to pick your battles. You can't try and boil the ocean and do 10 things at once. It's called where can we add value? Where can we be most helpful?

Again, on the lobbying front, you've got great organizations attempting to do that. In terms of the financing core development, you know, we've got academia, you know, supporting that. So where, you know, our job is not to compete with other organizations. Our job is to figure out how can we continue to add value in the same way that, you know, we did as a foundation early on. And hopefully we can continue to do that going forward. Sinbad, S-I-N-B-A-D. Head over to let's talk bitcoin.com to sign in, enter the magic word, and claim your part of the listener award. So, Brock, you mentioned before the block size debate and how that has harmed the industry in the past six months.

What's your personal view on what's going on there? Well, I mean, I think that this harm is inevitable. And that's part of the problem with an open source development project where the debate is public. You know, everyone gets to see how the sausage is made. And it's not pretty. And this is different than any other open source project because you've got billions of dollars of value involved. And so people are going to, you know, take these decisions much more seriously than they would in call it other sector. sectors. So it's not surprising to me that, you know, the things are going the way that they're going

and creating this sort of uncertainty from a public perspective. But I believe it's going to be a successful experiment when we eventually reach consensus. You know, we're going to look back on it. And I think we're going to say, you know, Bitcoin's governance, you know, is a success. You know, this idea of consensus building around distributed systems. But, you know, as we go through this. It creates a lot of uncertainty once it's been solved. Everyone's going to say, ah, I see how that works, assuming it's solved. From a block size perspective, you know, or can we scale? I guess the best thing I like to frame this as when people bring this up with me, they're like, oh, yeah, isn't Bitcoin have scalability issues? Oh, didn't Mike Kern just say

Bitcoin's a failed experiment? Blah, blah, blah, blah, blah. I say, well, let's start and take a look at the first aspect of this. Bitcoin is so successful. It's It's scaling exponentially, and as a result of that, or growing exponentially, we're running into scalability issues. These are the problems that Facebook has, you know, has. This is the problems that WhatsApp has. This is the problem of very, very successful technologies. So let's start and make sure that we understand that we're not talking about Bitcoin as a failure. We're saying Bitcoin is a success, and as a result of that, we need to scale it.

So, you know, I think that's an important way for any of us when talking to external parties, you know, that we're framing the issue correctly. Bitcoin is becoming a victim of its own success. So that's issue number one. Now, the question is, is it scalable? My belief is absolutely. It's not a matter of if. It's just a matter of how. And so what's going on now is you've got a lot of very, very smart people, core developers that carry a great deal about Bitcoin that are putting forth their proposals as to how to best scale this. And, you know, we have a number of different opinions, which is not surprising. And, you know, will come to a resolution at some point, hopefully sooner, in my opinion, than later. But, you know, I'm not the, I don't think I'm the person that's best qualified to say this is

the right approach. I just hope we find an approach. You know, my guess is that we're going to end up with a two megabyte block size increase sooner rather than later, probably before the having, because that seems to be what everybody wants, even though that might be sooner than some people think we should do it. You know, that probably goes to first. and we probably end with, you know, segregated witness at some point. But again, I'm going to defer to, you know, the core developers, and I spent a lot of time talking with many of them trying to understand why they have differing views and, you know,

hopefully, you know, and then trying to help bring people together so that people can, you know, understand concerns, you know, that another might have so that we reach consensus again sooner rather than later. Right. I mean, talking about the governance process, right? So you can, I think, that's one of the big problems here, right? It's because you sort of have two discussions going on at the same time.

One is the discussion about, you know, what is the right thing for the system? What's the right thing for the network? Like, you know, can it handle this block size? Should we do this before the other thing? You know, is segregated witness, good scalability solution, all of those questions. And then at the same time,

you have all those discussions about what's the right process to even discuss this and reach a decision and who should have what to say here. And I think that makes it really hard to make any progress because you have these questions on two different levels at the same time. And it's sort of also a way, of course,

if you disagree with one party about the content of the question, you can sort of just move the discussion to the process side or the other way. And I think this way, this has made it hugely difficult to make real progress there. I mean, hopefully it will be resolved. But personally, I think there's a real problem there and that there is not really more of an explicit way

to say, here's how we're going to discuss those questions, and here's how we're going to reach decisions. Yeah, I mean, as an industry, we could have been a little bit more organized than how we ran through this process. But, you know, I feel that's coming together. You know, we may end up with two competing sort of development teams or more. I'm not sure that's a bad thing. Competition is probably good, though I think we need

consensus and resolution sooner rather than later. But, you know, yeah, I think that historically the core developer community had, you know, not done a great job of, you know, communicating with the rest of the industry, but, you know, I think that's improving rapidly, you know, the mining industry, you know, staying deeply, you know, being in constant communication with core developers is something that wasn't happening historically, but I believe that's happening now. I mean, we're growing up, we're maturing and we're having to put together these better processes, hopefully so that we get to the best answer in the short term, but also so that we, you know, these, we have less of these issues going forward.

You know, we're putting in place, you know, a process for how to continue to update the underlying code. I believe that we'll get there. And I believe everyone's learning how to work together, even though, again, it's been a painful process thus far, and it doesn't look like we're near the finish line just yet. So assuming you can't reach an agreement, right, assuming that it's not like core developers or the developers get on the same page and say, okay, this is the way forward.

What do you think is the right way to resolve this? Is it the right way that, you know, you have different clients and kind of the miners aside by, putting their hash rate behind, you know, the client that they support. Yeah, I mean, I mean, that's one path forward that may happen. I'm not sure that's going to be the best path, but it's a path, and it's a path that's possible at this point. And, you know, you could end up with hard forks and two Bitcoin networks.

And then, you know, when we think about the sort of the governance and the democracy of the system, then the third portion of the ecosystem, so you got the. developers that are, you know, putting forward code and proposals. You got the miners that are deciding what runs and gets processed. But then you've got the payment processors and the exchanges, you know, the coin that wins in a fork is also going to be the one that's the most useful. So, you know, if BitPay and Go Coin and Coinbase and others say, you know, this is the coin that all the merchants are accepting, that starts to matter. And so what you start to learn is that everyone in the ecosystem is important and has a role in this. It's not just the core developers. It's

not just the minors. There's no one party that really has the control over Bitcoin like we used to debate. We used to think, oh, it's the miners. The miners have too much. It's the core devs. Everybody has a role to play in the industry in terms of reaching consensus. And depending upon where we are in the process, some people may have more influence than others. Obviously, core developers have the most influence over the code getting written. But you don't need all the core developers together. In theory, I guess one core developer could end up writing the code that ends up being implemented, right? you know, and the mining piece has got its, yeah, I mean, we'll see how this all plays out. And, you know, we could end up seeing a hard fork.

I think that that's going to have a negative impact on price in the short term. But in the long run, it might be healthy. Again, I don't have a crystal ball. And one thing I've always learned in life is you never know if something is good or bad until you have the benefit of hindsight. And I mean, a lot of hindsight. It normally takes many years. I mean, I know lots of stories and I'll keep it short, but, you know, I've met people that have

come to me and said, ah, this is the worst day of my life. Oh, my God, this was so awful. What happened to me? Oh, I had this job. I, you know, I was a founder. I can't believe my partner screwed me. Whatever may have happened. You know, they end up selling their stock, you know, and three years later, they're the only ones that made any money on the company. So what was the worst day of their life? I ended up being the best day of their life. And again, until you have the benefit of hindsight, it's difficult to know whether something is good or bad. You know, but again, financial markets really dislike uncertainty. And I think Bitcoin is suffering, you know, we're suffering from self-inflicted wounds as it relates to the external world, you know, looking in. I tend to agree with Brian

that this whole process has been really messy. And it's strange because we've seen this before. And you were there in the 90s at the dawn of the internet. And I think you probably remember what it was like working with, you know, building websites back then, that kind of thing. And then, and how every industry player had their own standards. And, you know, we came to build standards because of organizations standardizing bodies like W3C or the IEFT. And I think that at some point, if Bitcoin wants to be taken seriously by industry, key industry players like corporate, a large corporate companies, enterprise, as well as just governments and states, Bitcoin will need to be to become standardized in some way, whether that means joining the IEFT or simply creating another standards body for Bitcoin and potentially even blockchain technologies as a whole that would borrow some of the concepts and some of the standard process that they've developed and has tried and tested to come to consensus around these kind of things.

Brian mentioned earlier that we, or perhaps it was before the show, that we had Manu Sporni on. couple weeks ago, who he's at W3C and is working on on the payment standard proposal there. And he's, you know, he's very close to the Bitcoin community. And what he mentioned is that every time that he's tried to bring up the idea to people in the Bitcoin community that, you know, these are the standards, the standard process that we have at the W3C, the Bitcoin community should look at these as a potential way to come to consensus that he's. most often been met with resistance. And I find that kind of alarming and I find it too bad that the Bitcoin community, rather than try to do things in a disorganized way, wouldn't just look at these other processes that we already have in place

to come to consensus. What do you think about that? I believe in, you know, you don't have to reinvent the wheel every time you do anything. I mean, the idea of using a, a roadmap that has worked successfully in the past, I think is a great idea. Again, I think the issue here is the fact that there's billions of dollars, you know, at play. And that just adds another, you know, another element to it that makes it probably, you know, more complicated to reach consensus by an order of magnitude. And yeah, everyone's seeing how the sauce is just made. And the really

unfortunate thing is the timing of it all. You know, it's taken all of us working in this industry until really 2015, 2016, for the broader world. to finally take what we're doing seriously, at least in recognizing that there's merit and the technology of nothing else, right? And now as these large organizations and governments and things are taking a look at what we're doing very seriously, you know, Bitcoin is basically, I think, getting dismissed in a big way when, you know, it has potential to kind of really reach the world stage that we had all been hoping for.

And so the timing, I don't think, could be any worse. You know, it's literally as organizations like IBM and, you know, made, you know, banks and governments around the world are looking at this. They're going, okay, yeah, we like this, Bitcoin bad, but they could get potentially over that blockchain good, oh, but we don't want to have anything to do with Bitcoin's blockchain because that's got all this uncertainty and, you know, all these sort of infighting and things that make it, you know, an unreliable platform, which is really unfortunate because things are moving elsewhere, again, due to self-inflicted wounds. And the timing, I don't think, could be any worse. In 2014, it wouldn't have mattered very much.

And it may not have mattered as much next year. But the decisions are being made in boardrooms around the world right now as to where and how to build on this technology. And, you know, Bitcoin, sadly, is, you know, missing out on a ton of interesting opportunity. You know, again, it's why I hope we find consensus sooner rather than later. And, you know, some of the damage this is doing is going to be permanent. You know, not permanent, but at least it's going to set back the industry. by years and it's allowing competitive solutions to achieve scale that might not have otherwise.

Yeah, I think that's exactly right. The timing here really did not work out well. I mean, I think there's, of course, there's been some other challenges that probably were in the way of having a larger scale adoption. In particular, I think the consumer adoption has sort of been underwhelming. So the consumer adoption has been a bit below expectations, especially, you know, if you think back with 2013-2014, you know, because you sort of saw that scale. Okay, everybody adopted. We can use it as a payment system and this will have a huge tremendous positive impact. And that has sort of stayed behind. And I think that has also contributed to, you know, people being much more hesitant to build on Bitcoin.

I mean, I personally certainly felt that was a big factor in evaluating opportunities in this space was that, you know, if the success of your company is like fully dependent on Bitcoin adoption, it just layers risks up, right? You have all the regular startup risks. And then you have this risk of this thing. Does it get adopted? And what time horizon you don't know. But then, yeah, of course, the block size debate here is definitely been a big. Big negative because otherwise maybe we would have seen much more adoption, especially on the payment system side.

And maybe one would have seen integration into things like PayPal wallets. Yeah, so, I mean, the consumer adoption piece is something I now understand. I think we all had kind of been hopeful in the same way that, oh, we had our eureka moments and we're all like, ah, Bitcoin is the future. Bitcoin is our savior. all of these sorts of, you know, when you have that epiphany. But, I mean, when you first heard about Bitcoin, how long did it take for you to acquire your first Bitcoin? You know, what was the time between when you first became aware of it and when

you actually got access to your first Bitcoin? Oh, it was like three weeks, something like that. It was pretty, I heard, learn about it. I became immediately obsessed. It was summer of 2013, I started listening to all the old Let's Know Bitcoin episodes. caught up on everything and I was pretty pretty quick to be you know fairly all in and that was incidentally it was also sort of the price just started rising I mean at the time it wasn't very high it was like $790 or something like that but it was just when he started picking up and I think that also contributed a little bit to the sort of wrong impression I had at that time which was that

you know I've discovered this it makes so much sense the price is rising the whole world is waking up to this, obviously this is going to just take off. I think it might have been different if I had discovered it in a time, you know, when it wasn't doing so well. But since I was just taking off, I think it had to contribute also to a little bit of a wrong impression. Yeah, it did that for anyone during that time period. It was a very exciting period.

And we just saw this path that we're going to go from a million users to 10 million to 100 million to a billion to a billion and this is going to take over the world. And we all saw that path forward because we were looking at it from our sort of vantage point. So your three week time is very fast. So for those of us that listen to this show, we are, you know, forward thinking, early adopters, technology sort of centric lives, you know, people that think for ourselves. And for people like us, it takes days, weeks, months, or years from when we first learn about this technology to before we start using it. So how long do you think it's going to take the average person? Eventually, I do believe we'll reach a tipping point, but the consumer adoption,

I'm not convinced, but I think it's highly likely, but it's going to take a long time. And when we start to see consumer adoption, I think it's going to come in one of two places. It's going to come in the developing world where it's most needed, you know, Latin America, Africa, Southeast Asia, you know, much in the same way that, you know, M-Pesa, became very popular in Kenya because the people didn't have an alternative. For most of us that live in the developed world, we've got a bank account, we've got plastic in our pocket that lets us conveniently pay for things, we've got rule of law that's there in theory to protect us, and we've got a currency that most everyone around the world wants more of. But in places where you,

you've got a huge percentage of the population on bank, they don't have payment infrastructure. That's where I could see something happening fast. But even then, or places with great economic uncertainty, the Venezuela, Argentina's, etc., where Bitcoin is less volatile and is clearly, I think, a better store of value. But, you know, that's where that could happen. But I think most of our growth is going to happen in ways where the consumer doesn't know. If you look at businesses like Abra, they won the launch festival last year as number one startup, and you never heard the word Bitcoin once in their pitch. They're rolling out what I think is the most interesting Bitcoin remittance business. But again, you won't see the word Bitcoin

anywhere in their product. And that's because they put Bitcoin into the plumbing. It's in the way that they move money across borders. So what is Bitcoin good at today? You know, there's a lot of theoretical use cases where we say Bitcoin could do this. Bitcoin can do that. But does it do it better than the alternatives today? In most instances, no. Bitcoin is a very interesting speculative meaning that it's a scarce resource and as more and more people want it, it's going to go up. So that's an interesting use, which is the main use that most people started using it for. Everything else was theoretical. But today, though, it is better, faster, and cheaper.

It may be the best way to move money between borders through a lot of country-to-country corridors. It does it faster and cheaper than a lot of the traditional financial system does today. And that's a real use case that's starting to work. problem is convincing people that they need to use Bitcoin to do that. If you can actually as a business use Bitcoin to do that, but just tell customers, I'm better, faster, cheaper than Western Union, the minute you add the Bitcoin element, you're going to probably have a harder time convincing users to use your product than just using Bitcoin as a business and not telling them

about it. And so I think a lot of our growth over the next couple of years is going to come from smart entrepreneurs and businesses figuring out how to use Bitcoin, but not putting it in to their consumer product. I think consumer adoption is going to continue to grow much in the same way that we've joined, but it's going to be much slower going than we would like. Because it's a long process for people to say, okay, I understand why I want to use Bitcoin directly. So I think most of the growth, again, will come from businesses that intelligently figure out how to integrate it rather than convince consumers to use it, though I think both are going to continue to grow in parallel.

So you think that both users that use Bitcoin directly and users that are using Bitcoin without knowing about it, will grow in parallel of the sort of equal pace and at an equal capacity? I think the users that don't know about it are going to grow much more in terms of number of users. The users that do know about it are normally going to be higher volume. So I think probably from a volume perspective, they'll grow at equal pace. But in terms of individual users, I think the people using Bitcoin directly is going to grow at a much slower pace like we've seen. It's just, it's a long process. It takes guys like us, days, weeks, months, or years, you know, to start using Bitcoin, I think the average consumer, unless there's a strong need,

you know, again, if you're in Kenya and, you know, you're paying the high rates that M-Pesa charges, there's a strong incentive to switch to Bitcoin and use BitPesa. If you're living in India, I was just in Bombay teaching at the Singularity University, like a week or two ago, excuse me, Mumbai. They have a huge population of people that are working in the Middle East today. You know, and they're having, they're the biggest remittance country in the world. So I'm working in the Middle East. I'm sending money back home. I'm spending small sums of money. The ability to save 5% is a really big incentive to use Bitcoin. And all it takes is one person that starts doing that in that community. And then they tell their friend and their friend is like, I can save 5%. I can save 10%

when I desperately need that money. My family desperately needs that money. You know, then I'm going to show my friend how to do it. And they're going to show five friends how to do it. And they're going to show five friends how to do it. Those are the areas where I can see substantial consumer adoption. It's going to be not amongst people like us. It's going to be amongst people that need it the most and have the strongest incentive where it can improve their lives materially substantially. I mean, Bitcoin does not change most of our lives. I mean, it does, you know, from a philosophical perspective, it does from, you know, but it's not really changing our lives other than if you had a lot of Bitcoin early on and benefited from the appreciation, we believe in the long-term impact it's going to

have, but it's not really radically transforming our lives today. But if you're working in India, sending money back home and you're able to get 10% more home to your family and your kids, that is going to radically change your life for the better. And that's where I think you're going to see substantial adoption. So, but for the foundation, though, as you mentioned, as an organization that advocates to end users on using this technology, if the majority of people are using, and I think this is one of the use cases that's going to grow where we have companies using Bitcoin and the blockchain

to power services where people don't actually know that they're using it. That's probably the best way to deploy this type of technology to a mass market. But what does that mean for the foundation? Those people are not going to sign up for the foundation to be members, much like there's no internet foundation where like every user of Facebook gets a membership to the internet foundation. I'm just, I guess I'm unsure what the future of the foundation is if mass adoption is just of people that don't really understand the technology. You're not technologists, but just regular people. Yeah, I mean, again, I think this is not a one year or two year process.

It's a 10-year process. I'm not advocating or saying that consumer adoption isn't going to happen. I just think it's a much longer road than we all had hoped. You know, it's the sort of thing where, you know, we can go from a few million people using it to a few million more to 10 million more. And, you know, in five years, you know, hopefully we're at 50 or 100 million. And at some point, though, like Malcolm Gladwell would say, you reach an inflection point or a tipping point.

And I think at some point we'll get there. I just don't think it's going to be in the next year or two as much as I wished it were. But, you know, unfortunately, wishing and hoping isn't going to make it happen. But there's still a role for us to continue to educate people about why Bitcoin matters. And it actually gets much easier to say, oh, you're already using Bitcoin. They're like, what do you mean I'm already using Bitcoin? Well, you're sending money back home to the Philippines. How do you think you're doing that?

And they go, well, I use this service ABRA. And you go, that is Bitcoin. And it's a lot easier, I think, to convince people to use something when you're able to show them that they're already using it. But the consumer adoption is essential long-term for Bitcoin to achieve many of the use cases that we all talk about. If it's purely a payment rail in the background, it still has a ton of potential, but it's going to be a very different Bitcoin than the Bitcoin we think of. And I'm not giving up on the long-term consumer adoption side of this.

I just think it's going to be a long road. But, you know, sometimes great things take time. So let's come back to the topic of your fund and blockchain capital. Can you tell us a little bit of background about how it is structured? The fund was started by me and my two other partners, which are Bart and Brad Stevens. I got to know them more than a decade ago. They were an investor in my old virtual currency business. So they ran a half a billion dollar hedge fund, and they had three or four venture capital funds that they were running.

One of their industries they were investing in was media and games. So they owned a 9.99% of the 9, which was the publisher of World of Warcraft in China. They were an early investor in Tencent, which owns Riot that makes League of Legends. And they had been very active game investors. And the way that they would tell the story is they were playing World Warcraft, doing their research. and development. And they started buying digital currency and digital goods. And one day they had their like aha moment.

They're like, hmm, we're spending $100 or $200 a month with this company and we only pay Blizzard $15 a month. There's a good business here. Let's start doing some research and figure out who owns it. And then they went and looked up the top five or 10 sites and then they started doing who is searches and doing background. and they saw my name behind all of them because I operated the top eight brands, which made it harder for anyone else to start up when I'm both the Walmart and the premium shops.

And I was running them all with different pricing strategies. And they eventually got a hold of me and they ended up participating. They invested a few million dollars in my old business along with Goldman Sachs and a number of large institutions that financed me at the time. And the Goldman's of the world found it interesting because I was essentially running a proprietary trading desk for, you know, 30, you know, call it 500 virtual countries. You know, each game server, you know, looked like it had its own currency, which, you know, traded against, you know, every other currency, you know, on its own at a different supply and demand type base. So, we live in a

world with, call it, 200 countries and currencies. I was essentially running the currency markets for another 500 or 1,000. And so if you were a, you know, if you worked on a proprietary trading desk on Wall Street, you would kind of understand what I was doing very, very quickly. So they invested in that business. One of the things I wanted to do back in, I don't know if it was late 2012 or early 2013, but I had gone to my board of directors of my old virtual currency exchange and said, I want to buy this company called Mount Cox. And my board's like, what's that? They go, it's the largest Bitcoin exchange in the world. And Goldman Sachs was like, black Bitcoin, you must be kidding me. And that was essentially the reaction of my whole board at the time, including my partners today. And I said,

all right, well, our industry, we've got all the market share. Our sector is only growing at 10% a year that impacts, if your industry is not growing rapidly, the way that your business is valued is not that impressive. Your goal is to get a big multiple of revenue or a big multiple of earnings. And if your industry isn't growing, you're not going to see that. I said, we need to expand into a new market. I'm convinced that this, you know, this Bitcoin thing is going to be a big deal. And let me tell you a little bit about Mount Gox. It's the biggest exchange in the world. They own this sector by far. The management team is maybe the most incompetent I've ever met. And their technology is awful. But I said, we've got management and we've got technology.

They've got market share. This is a perfect fit for us. And so we went forward, almost bought Mount Gox at the time. They ended up, so I went back to the board, whatever, three months later, after I had sent them a bunch of research material. So we went back on a call. I said, I'd like to buy Mount Gox again. And they laughed for a second time. And this is when I got a little upset. I'm like, I mean, I've been building digital currency businesses for a long time.

You guys have invested nearly $100 million in me in this particular field. And I said that this Bitcoin thing is very real. And you need to understand it so that we can have an informed conversation about this opportunity. And I sent you all the research material and none of you bothered to read it. I'm really, really disappointed in all of you. It's one thing to disagree with me. It's another not to have done your homework and shown up and been ready to debate my view. So I called up my partners following that board meeting, and I said, guys, you're young.

You invest in technology. You understand digital currency. What's going on here? And guilty is charged. They made a point of saying, Brock, okay, you're right. and they spent a month researching the sector talking to cryptographers, mathematicians, economists, venture capitalists, anyone they could. And they took a very deep dive research project, which led to they shut down their hedge fund.

They were running a half a billion dollar hedge fund, and they shut it down to then come work full-time with me. So I ended up being successful, not in buying Mount Gox, but in terms of convincing some of my investors that they need to come get into this business. And my other board members went on to Fund Circle and, you know, a number of other businesses in the space because that's how they got their early education. Mostly with, you know, me presenting what seemed like a joke of an idea to them at the time. But so blockchain capital is the first venture capital fund to invest in, call it startups in the space on a sector-focused basis, meaning we don't invest in anything else. All we do is invest in this space. We've now got 44 portfolio companies, and we're investing out of our second fund, which had its final close in the Q4 of last year.

And so we're actively investing like the first collection of companies where what we'd call those basic infrastructure-type businesses, Bitcoin 1.0, a lot of Bitcoin companies. The second sort of phase of companies we've been investing in our sort of blockchain SaaS or enterprise services businesses, providing software to, you know, financial institutions and the likes. And the area that we're investing in most these days are sort of non-financial use cases for blockchain technology. I don't know if you're familiar with companies like stampery. They're focusing on legal services and, you know, notaries on the blockchain and creating immutable records. Focused on, we've invested in a company in Israel called Wave, which is very cool recently, which is focusing on the global sort of shipping or global trade.

That whole industry runs on a bill of lading and a letter of credit, and so they're doing some cool things there. Just invested in a company called Tyrion, which is focused on some health care and insurance applications. Again, asset registry. We invested in a company called STEM out of Los Angeles, which is focused on content creation and bringing transparency to an opaque market

and getting money to content creators or artists quickly, which, you know, so we're investing in a lot of these sort of edge use cases that are not yet obvious, you know, to everyone. And we're, we're, we're, uh, you had mentioned before the show, but we've also been very active in Ethereum. I mean, uh, I was a, I've been very active in sort of the Ethereum ecosystem, both as a large investor in the crowd sale and then, uh, having been friends with most of the, the founders and watching its development up and into this point. So I think you're going to see a number of interesting announcements related to the fund, you know, stepping up and being the first fund of actively finance a lot of companies building in and around that emerging ecosystem. You're starting a fund to just focus on Ethereum? No, no, no, no, no, no, no. Blockchain capital has always been, well, we're stage agnostic, meaning we'll invest in seed stage all the way up to whatever stage.

I mean, we were an investor in Coinbase's Series C, for example. Most of the deals that we've done are seed stage or Series A, because there's only been a couple of Series B type financing in the entire ecosystem, but we're stage agnostic, we'll invest at any stage, and we're geographically agnostic. We'll invest anywhere in the world because we're... But the fund size, because I read somewhere that you guys raised a $10 million fund, is that just a part of it?

Yeah, no, so the second fund is like a little over a 13, called a 13 and a half million dollar fund. We also have an angelist syndicate, if you're familiar with Angelist. Yeah. And we co-sindicate, you know, a number of our deals, which, you know, probably, it takes the fund from being called a $15 million fund to about a $25 million fund. And then we have a number of sort of billionaire and high net worth LPs that have an interest in investing in some of the deals. And what we'll do is we'll create what are called SPVs or special. purpose vehicles to allow our LPs to invest more than our typical check size. In some of these deals, we'll write checks that are three, four million dollars.

We can theory could write checks as big as 10 or 20. So our fund is called it the equivalent of a $50 million fund, though in terms of the committed capital, it's only about 15. And that is because you haven't had any institutional investors that have funded funds in our space up until the point that our fund had its first close. I think that's going to be very different this year. but in the same way that we're geographically agnostic, stage agnostic, we're also blockchain agnostic. But obviously, the bulk of our investments have been around Bitcoin or Bitcoin's

blockchain to date because Bitcoin still is 80% of the market in terms of market cap and in terms of venture capital investment. It's 95% of, you know, or 90% of everything that's out there. And so Bitcoin still is obviously very representative of, you know, every, you know, everyone's portfolio that plays in the space. I was actually curious about that, whether or not you would invest in other blockchain startups other than Bitcoin. Well, we're an investor in Ripple, for example. And that would be a perfect example of something that wasn't Bitcoin, clearly, and hasn't

been for a very long time. But we're blockchain agnostic as a firm, but again, the bulk of our investments are around Bitcoin and Bitcoin's blockchain to date. Right. Do you guys have an explicit investment thesis or it's sort of is involved by a bigger view of the space and then your assessment of specific projects and teams? Yes. I mean, our strategy as a firm is we typically don't lead investments. We typically co-invest, preferably with, you know, other generalist type venture firms. and that's because we have so many investments. You know, we're about to hit our 45th investment. And so as a firm with three partners, and I don't know if you know Jeremy Gardner,

but Jeremy's, you know, works with us full-time, and he's the fourth sort of most active person, I'm in Will O'Brien. But for a small team like that, a normal fund can only manage, you know, call it six to eight deals per partner. And so, you know, call it that would cap us at about 20. 24 deals, maybe 30. And so we don't want to lead investments because we want to continue to invest. And it's because we see the world a lot like the Internet in 1994. I know this Internet thing is going to be a big deal.

There's going to be lots of amazing businesses that get built in and around it. But could I pick them all in 1994? No. And so our strategy is instead of using a rifle, we're using a shotgun. And so we look a little bit like an index fund. And that is we first and foremost want to back great entrepreneurs, you know, that are pursuing ideas that we think have. lots of potential and it's not, you know, the eighth person trying to do something and where

we believe the timing for that is right. And then we choose to invest with the hopes as the industry continues to develop, that we have a thesis as it evolves. You develop an asymmetry of information and then we'll, you know, hopefully be in a position that by this year and next year, you know, you're backing up the truck around, you know, the best and biggest ideas in the space. as a venture capitalist, we manage other people's money with the intention of delivering returns. I'm a big investor in Bitcoin and things like Ethereum, but that's not my fund. My fund is no, you know, there's no Bitcoin component of our fund, though a lot of our LPs are obviously investors in Bitcoin. I think we have 15, you know, sort of Bitcoin CEOs

that are, you know, advisors or investors in the fund, you know, people like Bobby Lee and Charlie Lee and again, Will O'Brien and the list goes on and on and on. Okay, well, Brock, thanks so much for coming on. We're at the show at the end of our show, and we also don't want to keep you stuck here because you're heading to South by Southwest, which I'm sure will be lots of fun. So thanks so much for coming on.

It was super interesting talking to you and exciting to hear about all the projects you've been involved in and interesting ways you've been supporting this industry. Well, thank you guys for having me. We still got lots of work ahead. Absolutely. So I think I'm sure we'll have you back on at some point to talk about all the interesting changes the industry has gone through in the meantime.

Sounds good. Again, thank you. Yeah, so thanks so much for listening for listening. We'll be back next week if you want to. It's a real part of LessopiCorps network so you can check out lots of great shows on lessop Bitcoin.com. If you want to listen to our episodes, of course, you can subscribe to our show on any of the podcast. application or you can watch a video on youtube.com slash episode of bitcoin and the other thing we do is if you leave us in iTunes from you and you send us an email at show at episode of bitcoin.com then we'll send you a t-shirt like this we've sent out certainly over 50 to countries all over

the world so if you won't want to then please do that so thanks so much and we look forward to being back next week I'm going to be I'm going to