The a16z Show - Financial Freedom, Company Building, More with David Marcus

Episode Date: November 28, 2023

with @davidmarcus @smc90This wide-ranging conversation covers company building, big to small -- including what cadence and when is the right "time" to ship; the relationship between centralization, decentralization, platforms, and financial freedom; moving from web2 to web3 in both crypto AND payments... as well as why bitcoin, views on remote work, and much much more. Our guest is David Marcus, CEO and co-founder of Lightspark; Marcus was also a co-creator of Diem (aka Libra and Novi, the cryptocurrency project initiated by Facebook). Before that, he was vice president of messaging products there, where he ran the Facebook Messenger unit; and prior to joining Facebook, Marcus was the former president of PayPal (which had acquired his previous startup).  This episode begins with an interview just to help kick things off and then features a rich set of questions from the audience -- as this originally took place live on stage at our Crypto Startup School 2023. As a reminder: none of this should be taken as investment, legal, business, or tax advice; please see a16z.com/disclosures for more important information -- including a link to a list of our investments.related readings:Regulate apps, not protocols series (2022-2023) - Miles Jennings et al, a16z crypto)What it will take to create the next great Silicon Valleys (2014) - Marc Andreessen (Politico, a16z)Why bitcoin matters (2014) - Marc Andreeessen (NYT, a16z)When one app rules them all: The case of WeChat and Mobile in China (2015) - Connie Chan (a16z) Subscribe to web3 with a16z: https://link.chtbl.com/web3witha16z Stay Updated: Find a16z on Twitter: https://twitter.com/a16zFind a16z on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.simplecast.com/Follow our host: https://twitter.com/stephsmithioPlease note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.  Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

No big team has ever built in software anything meaningful. It's always a small group of people that has zero process or very little process and flat organizations. And those are the best times. Freedom of speech is something we talk a lot about. But financial freedom is as important, if not more important. Lots of projects are taking risk in building here without the clarity that what they're building is actually going to be approved or. tolerated by regulators, we shouldn't undersell what it is. If you have digital gold at scale, plus the global money protocol or payment protocol for the internet running on top of this thing,

that in itself is huge. Humanity-changing huge. Every year, our crypto team runs a 12-week accelerator designed for the specific needs of Web3 startups. And while only a select group of founders get to participate in crypto startup school, today we're opening up one of these sessions to listeners. David Marcus, the CEO of LightSpark and co-creator of DM, formerly Libra, has had a diverse career journey, from tech startups in Europe to leading PayPal and Facebook's messaging unit. But a consistent thread that runs through his roles is a commitment to building an open protocol for digital payments, which he thinks still look like the telecom industry pre-internet.

So today you'll get to hear David's original pitch to Mark Zuckerberg, something possibly never said publicly before, but also why the project got renamed so many times and his take on why Libra didn't work. Together with Web3 with A16Z host, Sonal Choxy, you'll also hear David discuss the intricacies of company building, the dynamics of decentralization and centralization, the pursuit of financial freedom,

And his take on Bitcoin today, all topics that builders everywhere can take advantage of. This episode does come from our sister podcast Web3 with A16Z. So for more episodes just like this, make sure to go check out Web3 with A16Z wherever you get your podcasts. I hope you enjoy. Welcome to Web3 with A6 and Z, a show about building the next generation of the internet from the team at A6NZ Crypto. That includes me, your host, Donald Jaxi. Today's episode is a wide-ranging conversation on company building big to small, including how often and when to ship, to the relationship between centralization, decentralization, and platforms, to moving from Web 2 to web 3 in both crypto and payments, as well as why Bitcoin, views on remote work and much, much more. Because it's an interview with David Marcus, CEO and co-founder of LightSpark, which is building infrastructure for the Lightning Network to extend the capabilities and utility of Bitcoin.

Marcus was also a co-creator of DM, aka Libra, the cryptocurrency project initiated by Facebook. Before that, he was vice president of messaging products there, where he ran the Facebook Messenger unit. And prior to joining Facebook, Marcus was a former president of PayPal. Our format is a conversation where I just helped kick things off, but I left more time midway for a rich and trishing set of questions from the audience, as this originally took place live on stage at our crypto startup school a couple months ago. As a reminder, none of the following should be taken as investment, legal, business, or tax advice. Please see A6NZ.com slash disclosures for more important information, including a link to a list of our investments. Thank you so much for joining us today, David.

My pleasure. We're really honored to have you here today. And just to kick us off, I want to spend some time just laying the ground. When people hear about your career, it seems kind of random, like what ties it all together? I'd love for you to share with us the through line. Yeah, it actually all makes sense. There's a method to the madness. Yes, there is a method to the madness.

So basically, look, I started companies, tech startups, when I was back in Europe. And the last one that I did was actually at the intersection of messaging and payments because it was a payments company that built on top of mobile operators, billing capabilities, and was integrated into premium SMS and mobile messaging. And in 2007, when the iPhone came out, I was like, okay, you know, we're not going to sell ringtones and wallpapers anymore because you have an actual device that has access to the internet. So I moved to the U.S., built a company into a payments company that was Zong that got acquired by PayPal. At the time, it got acquired by PayPal, I thought I was going to stick around for a year and then go back to building a startup. but the CEO of PayPal then left to run Yahoo.

And unexpected to me, I was asked to replace him and run the company. And so I had to go from managing 250 people at most to 17,000 people. Wow. Which was kind of an interesting thing. Yeah. But then I realized that after a while that actually there's this political campaign expression of shaking hands and kissing babies. That wasn't really for me, you know, just managing processes and just,

culture and not being closer to the product. So I was ready to go back to building startups when Mark asked me to join Facebook and join him to start building a messaging product at Facebook. And so I did that. And then after a few years, it basically reached its cruising altitude. We had like about a billion and a half users. We had found a business model for messaging in the West, which wasn't that obvious, and it felt like it was really going to be doing well on its own. And that's when I got really excited about this idea of building an open payments protocol for the Internet with Libra and sold Mark on the idea. And then, you know, we tried to actually sell this to governments and regulators who were not super enthused with the idea, to say the least. And when we failed, I left to actually come and do what I'm doing now.

with lights, so it has like a little bit of a method to the madness. I want to probe you a little bit more on some more specific connections between payments and crypto, but before I do, I do want to ask about Libra. I think many of us in the room are probably very curious. And I know you've talked about it before, but like, why do you think it didn't work? So actually, I don't know whether I said this publicly before, but my original pitch to Mark was actually to do it outside of Facebook and for Facebook to own a minority stake into a company that would go and develop the idea. And I remember saying, actually, if we do it from here, it's going to be a very, very difficult uphill battle. And that was in

early 2018. And Facebook's reputation after that got even worse for a period of time. I think now it's a lot better, but for a period of time got really worse. And it was still worth a shot, right? because when do you get a chance to actually go build a standard protocol that might be adopted in the world because Facebook had 3.5 billion people using its products every month. And as such, like if we were to actually succeed, it would have truly become the open payment protocol for the Internet that we all hoped should exist, right? And so it was worth a try. Yeah.

And we sure did try. That's the one thing. I feel like I have no regrets. I was about to ask you if you did. I have no regrets because I feel like, first of all, I've learned a ton. Yeah. And it was the most intellectually stimulating almost four years of my life, hands down. And, you know, I met amazing people and we went to battle together.

And, you know, many of these people are actually with me at Lights Park now. And you asked why it failed. I think, you know, the association with Facebook was just too much for regulators and governments. and it was definitely a political kill job 100%. Yeah, based on who was the promoter of the project. That's good to know. Okay, I think that scratches that it. I have to just also ask a quick kind of curiosity check

because a lot of people in the room right now are building their companies. They're probably thinking about branding and naming. Why did the project go from, I don't even know the order, but like Libra to DM to Novi or the other way around? I often joked that I don't want to rename anything for the rest of my life. because I've done enough of it.

Yeah. But a lot of people said the narrative was actually a lot around like, oh, this thing got rebranded so that it becomes more palatable, right? Yeah. But actually it wasn't that. It's like, let me put it in a short way. Someone really messed up. Uh-huh.

And as such, we needed to change the name. Got it. So given the threat of your career so far, payments, messaging, crypto, in shifting to crypto full time. And of course, you did that at. Facebook, but as a startup founder, it's most definitely a different game. What is the biggest sort of, oh my God, I really didn't expect this for you? So for me, what matters at the end of the day is, and I think that applies to probably everyone here in the room, is you need to find the

thing that really pisses you off about the world. The thing that is really broken that you want to go fix. And for me, I've reached the conclusion that the one thing that's, you know, the one thing that's that I'm going to dedicate the rest of my life to at this point is really making an open protocol for payments on the internet happen because it's an anomaly in the world. It leaves too many people behind. It's unfair. And basically, the world of payments right now looks like the telecoms industry pre-internet. You had a bunch of large companies that were the only ones that had access to the underlying transport network and were able to set the prices. And at the time, we used to pay a dollar a minute for an international call.

Right. I remember that. $0.5 per text messages. And then the Internet happened, and it enabled the innovation that we're all benefiting from right now. And consumers benefited greatly. And right now, the underlying infrastructure that we use for the vast majority of payments in the world today in 2020, was built in the late 60s and 70s. And that's unacceptable.

And so when you find something that really, really fires you up every morning, that you want to go fix. And especially, you know, if you've had the opportunity, let me put it this way, to be in a position of failure after having tried really hard, then that doubles down the amount of energy that you want to put in to actually make it happen.

Yeah, you really want to make it work. But also what I'm hearing you say there, it feels cliche, but it's not. You have to really believe so strongly in that mission to deal with the ups and downs of a startup because if you're doing just like a spreadsheet and then I'm going to identify this business to solve, you may lose your mojo after a while.

There's a lot you have to do. Yeah. So on payments, I love thinking about the infrastructure and the analogy especially of like, this is what telecoms were then. But as a user, I am pretty satisfied personally. Like, I like going to my store, just Apple pay. I actually love PayPal.

Like, what's really broken about payments? Because feels fine to me. You know, I think that if you'd ask people whether they had a need for better communications at the time they were sending faxes, they would say, no, it's fine, it works. I can send a message. It comes out in a piece of paper

on the other side of the world. Why would I need email and WhatsApp and video messaging and all of these wonderful things, right? I think the same is true, but you bring up a good point, which is in the U.S., we have a very distorted vision

of what the vast majority of people in the world are experiencing. The vast majority in the world would love a Chase account denominated in dollars, but they don't. The vast majority of people around the world are experiencing super high inflation, hyperinflation. They're experiencing governments that are basically screwing them again and again and again because they're devaluating their currency. And they don't have safe and sound money. They rely on the cash economy.

They get mugged all the time because they live in high. high crime areas. And because there's no technological solution to address this, like a good, sound, safe digital money that you can transmit over the internet, right? And that's the reality that most people, the vast majority of people in the world are experiencing. But even here in the US, like there's still no interoperability protocol for money. If you're using the cash app, then you can send to only other cash app consumers or users. You can't go and send money across apps. the same way you send an email from Gmail to Yahoo or any other domain, right? It's not a neutral open protocol.

Yeah, there's no open protocol for value for money for payments on the internet, which is nuts. Yeah, it is nuts. And gosh, what do you think, especially given your former role and what you're doing now of PayPal's, you know, moves to essentially deep platform users and payments? I never thought I would see a day where this would happen in the U.S. Like, I was pretty shocked. Yeah, well, I think this. is just a sign of times and why crypto in general is actually very relevant to the world right now

because you need to decentralize the decision-making on what someone likes or what someone doesn't like, whether it's speech, money. And freedom of speech is something we talk a lot about, but financial freedom is as important, if not more important. And it's one thing that you get censored off of a platform that you use to communicate. It's another if people take your money away. So the work that we're all doing in this space is actually super important for humanity in general and for our society. Great context. Let's now go a little deeper into the specifics to those of us working in crypto specifically. Another question that's top of mind, and obviously huge Bitcoin fan, but why Bitcoin? What does it give you that you think you can't get elsewhere?

You know, as probably the only A16Z investment in Bitcoin, I can talk to that. Look, I feel like it depends what you're building. If you're building in Web 3 and you're trying to build functionality around that, then Bitcoin is probably not the right choice. Yeah. But if you're building for money and payments, then it's the only choice in my mind. And I have absolute conviction. Tell us why.

Well, I mean, first of all, when it comes to money and payments, as we've experienced with Libra, I still like to call it Libra. You can't offer any surface of attack because otherwise that's going to be leveraged to stop it. And when it comes to money, people are highly motivated in not enabling money to move in a free way. And as such, if you look at any other chain, you have people that you can get to,

that you can apply pressure to. You have companies that are very prominent, and Bitcoin is the only chain that doesn't have a visible leader. I hope we'll never know who Satoshi was or is, and is the most decentralized chain out there. And arguably, I think that for money application, proof of work, is a far superior consensus algorithm, if we can call it that, than any VMs and others.

So I think that the only way, that you build a true open payment protocol for the internet is to build it on something that is as decentralized and as leaderless as Bitcoin. Yeah. And just for your clarification, I mean, technically any decentralized cryptocurrency is leaderless in that it could operate just fine,

but your point is well taken. And again, if you're building NFTs or gaming applications, all kinds of different applications that look for a decentralized platform, then Bitcoin is not the place. Ethereum and other EVMs are the places to actually go build that. Right. I think that money is a whole different story and the level of opposition that you'll find

if you're building money things is just far greater than any of these other things. Yeah, I like what you said about how there's this built-in resistance to money moving around. It immediately made me think of gravity and this idea that money has this inertia associated with it. You just have to do so much to the system to be able to. to enable it to move simply because of how nothing is interoperable by default for all the reasons you just outlined. I never thought of it that way. There's a reason why money still moves on infrastructure that was built in the 60s and 70s, and that reason is not technological.

Is it regulatory capture? It's, you know, yeah, you can call it that. It's pretty clear that there's a lot of vested interest in things staying the way they are right now. Let's put it this way. All right. So a lot of the people in this room are also thinking in terms of product. when you think about this particular application that you're building and given your entire vantage point of everything you've worked on until now,

people tend to say design, UX, you talk about in your guys' work, about enterprise grade, what do these things mean? And what do you think builders in the space need to do? And I would love to hear an answer that goes beyond, we need better design in UX because I love that answer, but I hear it all the time. And so I challenge us to build better on that. Well, I feel that in our industry,

we've taken a very inside-out view of the world. Basically, a lot of times it's a solution in search for a problem. Yes. And not something that is actually mainstream. It's also not really internalizing what the expectations of either consumers or enterprises actually are. Yeah. And so you have to meet people where they are. You have to build a product and an experience that is actually what people need.

And so in our case, we're building on Lightning. It's a fast, open, interoperable, dirt cheap protocol for payments that is really great, but it's really amazingly hard to use. It's a channel-based payment system, and no one understands what that means to actually lock up liquidity in channels, find other parties to open a channel with them with inbound liquidity so you can receive payments. All of these things are not things that people or enterprises have come to, or are prepared to even deal with in terms of the level of complexity. And so you have to go and really see what you need to do to get to mainstream adoption,

not what you can do or what you think you should do. And I find that in our industry, not enough people are actually doing that. In some cases, you have crypto products that are so hard to use that come to wonder whether it's almost like a right of passage. Like, if you figure it out, you're one of us. Yes. So you can actually use the product. but if you can't figure it out, like you're really not.

I think that's absolutely true, especially of on-chain gaming currently. But in the case of payments, that would be absolutely awful. So when you sell your product, then, like, who are the customers? A lot of people in this room are figuring that out. So right now, we don't want to touch consumers. We want to stay at the center of the network and try to make it really, really easy to use this wonderful open payment protocol. And right now, there are a number of builders

that are building on top of Bitcoin things that were not existing, like ordinals and the equivalent of ERC20 tokens that are being built on top of Bitcoin. And that's clunging up Bitcoin because it was not really designed for that. And the fees are going up and the Mempool is getting backed up. And as such, you need an escape valve and lightning is great for that. So right now, the clients that are onboarding our platform are exchanges, their wallet operators.

And we shipped our product three weeks ago, and then this happened literally last week. And I'm like, this is amazing. Like, when do you get such a good alignment of stars? Oh, that's really great. So early on, you mentioned that you went from 250 people at PayPal, I mean, to your startup that was acquired by PayPal, to suddenly 17,000 people.

Then you were at Facebook, where you started this separate project. You ran a massive business unit. And now you're at a startup again. with like 29 people. Yep. What would you say, when you think about this transition

from small to big to small, what kind of takeaways do you have for people, especially, again, in this room, we're all kind of in the same phase of just starting out. That small is great. It's really the best. It's, you know, no big team

has ever built in software anything meaningful. That's right. It's always a small team. It's always a small group of people. It's always a small group of people. that has zero process or very little process and flat organizations. And those are the best times. For instance, we're very principled in how we hire. We are really hiring only the people we need. And we know we're going to need for a very long period of time rather than overhiring prematurely,

because I think that that in nine times out of 10 leads to premature death of companies. And so staying small for as long as possible is really actually. a massively underrated competitive advantage. You know, when you scale past a certain stage, you don't have 100% of the people who are there because they believe in the mission. You start to have people who are there because they think it's a good paycheck and they have stability and good health care plans. Right. And, you know, that's when you know that you've entered a different phase. But I personally really enjoy no overhead, small teams, hardcore types of experience. and that's where I have, you know, the most fun,

and I feel that you get the most stuff done. That sounds like for everyone in this room, this is your time to enjoy that phase. Okay, so lightning round before we open it up to questions. I'm going to give you like a quick prod or prompt, and I would love to hear like a super quick, like lightning-style answer. What is the worst advice you've ever received as a founder, either now or in your early days when you were starting out?

I got so many bad advice. One interesting story. So at some point, I got an invitation to join in very, very early days, the board of Shopify, which is a company that I really admire. And I think the world of Toby and the team there. And one of my mentors at the time was like, oh, you shouldn't join a board that's not in the same time zone or in the same place because otherwise, you know.

And so I'm like, you know, this guy has a lot more experience than I do. And so I turned that down at a time where it was pre-IPO. Yeah. It would have been a great, fun, valuable ride, and I didn't do it. So, you know, that's one advice. That's terrible advice. I can't believe, honestly, I can't believe you fell for it. I'm sorry, that's terrible.

Yeah, right. Like, you know, in hindsight, what I was thinking. I'm giving you a hard time. Okay. Now, what is a piece of advice that you heard over and over again early on, but that you believe that founders will, always hear, but they never believe it when they hear it. They kind of have to experience it in order to really realize this advice. Look, I think that stuff like I talked about around like

really holding your horses on hiring and overgrowth, but then you're in a thing where you've raised too much money. And you don't have the fear of death of your company at the end of the year or at the end of a period of time, which is a great motivator to actually find product market fit, iterate fast, be hard, poor, work nights and weekends and get things done. And you believe that to get to that point instead, you need to hire more people. And then you go in all kinds of other directions instead of being focused on one singular thing. And at the same time, when you hit a vein and you find product market fit and you have

the resources to scale, then you need to do it in a responsible way, not in an irresponsible way. Yeah. And so just trying to really understand the place you're. at in the life cycle of your company is really critical. I think, you know, that's one of the things. And then, you know, I feel like the one thing, that is actually advice that people can hear, especially if you're a startup founder, around really manifesting the reality that you want. Because so many times you're actually, as a company, you're about to die, and you need to make

magic happen to actually get your company to the next stage. And you have to believe it yourself because if you don't believe it yourself, if you don't project it, if you don't see it yourself, then you won't be able to make it happen. So really, really trying to project where you're going and see through the wall that you need to actually get through

is really a very important ability that successful startup founders have. Great. I want to make sure we leave time for the room. So one quick note before I switch into that, you alluded to it subtly. the regulatory aspects, whether for Libra or regulatory capture in the payments industry or any of these other things. What do you make of the current regulatory environment, especially given where you were when you're at Facebook, where you are now? I mean, you've seen it kind of, you've seen it all.

Yeah, look, I think that it's a shame for this country to be in a place of non-competitiveness for the lack of a better formulation. Some of the biggest technological revolutions of our generation happened here in the U.S. And right now, we're not in a place to compete because we don't have regulatory clarity. So lots of projects are taking risk in building here without the clarity that's what they're building is actually going to be approved or tolerated by regulators. And in the meantime, you have a lot of other jurisdictions that are really, really, really. driving competitiveness. And like, you can see it in Singapore. Now in Hong Kong, where you see China really taking 180 on the matter because they see Singapore leading and they feel like Hong Kong needs to be back in the game. You see the Gulf countries and the Emirates now,

like really, the UK too. Yep, the UK. They want competitiveness. And we're way, way, way behind the ball on this. That's like really not good. But I have hope. I feel like we have a House Financial Services Committee that is trying to push a few bills that might provide much-needed clarity for all of us. And so I still have hope that things will change. But right now, it's really not good. It's funny. Many years ago, Mark and I worked on an op-ed about regulatory arbitrage and this idea that you could essentially, as an entrepreneur, pick your jurisdiction to figure out how to run the experiments, whatever your technology, like self-driving cars in Detroit or wherever the neighbor, it was at the time of Arizona, wherever it is, or across the

the world. And on one hand, I think it's kind of also amazing that entrepreneurs have so much choice to decide where to go, where to build, where to really build these ecosystems. So that's exciting and interesting. Yeah, it's good for entrepreneur, but it's bad for America. And as a U.S. citizen and, you know, someone who wants innovation to be here, is kind of a sad thing. Yeah, I agree with that. So we kind of did the local and the global to just you, David Marcus, the builder, the person, the entrepreneur. That's fantastic. Thank you, David. So let's open it up to questions now.

So everyone, please come up and feel free to ask your questions for David. Hey, David, fantastic talk. You spoke to process when it comes to building out the team and how small teams create awesome products. And then if you grow, you start developing process that slows down the team. Can you speak more to how to avoid having, having process when you're, let's say, onboarding two, three, four people onto a team. And then the second point I wanted to get your perspective on is the shipping cadence.

What constitutes like an excellent product development flow and like a team cadence versus trying to have something look perfect six weeks from now versus like, oh, let's have something incrementally better tomorrow? Great question. The first one is you shouldn't think about process too much because, when the lack of process becomes a problem, you'll know it for sure. I feel like a lot of people have read business books and organizational things and have listened to podcasts and all kinds of advice. And the answer to this thing is like, you know, don't have process until you really

badly need it. And you really know when that actually happens. And it's kind of interesting for me personally because I spent a decade of my life in large corporations and the rest of my time was actually building startups for most of my life. And I had to remember and deprogram myself around how I learned how to operate for the last 10 years and go back to actually, no, we don't want process right now. We just want to execute and have people really focused on that and just do the minimal thing right now. On your question around cadence, you never ever want to ship something that is perfect. If you do, that means you're too late.

And at the same time, you have to ship something that you know you can fix forward pretty rapidly when actual people onboard the product. So you need to find that balance of finding the right moment. But remember that every iteration of your product is a massive competitive advantage. So you have other people who think that they know, but you don't know until you have real customers

onboarding your product. and using it for the first time. And as many iterations as you can get is as competitive as you'll be compared to whomever is building the competitive product right behind you. So ship often, iterate fast, and try to move as fast as possible. Thank you. Welcome. Iteration is innovation. Love that.

Yeah. Hi, David. Thank you for the awesome talk. My question concerns your role as a founder. I'm curious how that has shifted from the very, very beginning when there was ideas, stage when it's like three to five people, seven to ten people, and where the company sits today. So, you know, I feel that the first few turns of the wheel is really crystallizing the problem that you're going to solve and getting people excited about that. So can you actually recruit

co-founders? Can you recruit the first few people that are going to sign up on this vision of yours with actually very little clear path towards the upside that they're going to generate with you along this journey. And that applies to investors, and can you get investors on board? And then from there, can you scale? But I think the first few phases are really the most fascinating phases. And often the hardest when you live them,

but when you look back, those are always the best because we're talking about manifesting things. You have to manifest something that really only exists in your head. and then get all the people and the capital and the structure you need to actually go after it. And those are formative moments that are often the best moments, actually, because everything's possible. Then when you come and you face reality, then you realize that. Not everything is possible, right? Thank you for the fantastic answer.

Hi, David. Thanks for the great talk. I have two questions. The first one is mostly related to the payments part of God. Personally, I work at Airbnb Payments, Handling the Global. transactions and then as an immigrant I experienced different payment system I deeply understand how broken the payment system is and I believe that what you are doing is very important and I'm glad to see there a lot of people like you are building the solution to help simplify the payment system globally but my question

is as we know different regions have different consumer behaviors America is very credit card basis Europe is debit card basis is more like a mobile payment. So what are most use cases that the Lyspeaks clients are targeting, like the application level? Do you see any major obstacles to push the crypto payments adoption globally? That's a very good question. Let me unpack in a few little modules. The first one is what we aim to do, think of it as one or a few Satoshi's, which is basically

one Satoshi's, 100 millionth of a big. Bitcoin, on top of Lightning, we see it a little bit like a TCPIP packet for value, right? So just making that vision happen, like having an interoperability protocol where you can actually move value and attach whatever you want to it to actually transact globally is dial tone for money, basically. And that's the baseline that we want to establish. And what we hope is that if you have the lowest cost, fastest settlement time, open to build payment protocol for the intranet that actually happens, then you'll have a lot of

companies building on top of that because the next best thing is actually a lot worse, right? So we hope that a number of companies will actually build a lot of experiences on top of this new protocol for payments because it's going to be the best protocol for payments. And then the regional applications will actually be in the hands of people who are actually in those regions building the best solution. but the interoperability is really the key. Money moves not in an optimal way domestically here in the U.S. and in a number of other countries,

but cross-border, it universally doesn't move the way it should. It's expensive and it's complicated and cumbersome. So you mentioned that you've had an experience as managing payments in a large organization that not only needs to accept payments from consumers, but also payout to a lot of people in the world. This is extremely complicated, costly, People who work very hard don't get paid as fast as they should be.

That creates all kinds of capital inefficiencies in the world. So we believe that actually providing that net settlement layer for money on the internet is going to unlock a lot of value. And regional differences will be handled by different players. Got it. And then the second question is about the time zone. As you mentioned, you reject the offer because time zone. So I'm curious on how's the light spark operating right now?

Is the team like remote or at the same place? do you encounter any problem managing, like, distributed system? Yeah, so I've been called old-fashioned that way for a while because I actually like to have a team in an office. I hated every single minute of COVID and working remotely staring at a screen for 12 hours a day. I actually get energy from interacting with people, and I think people do their best work,

especially in creative phases of a startup in person. That doesn't mean that some companies are not going to take advantage. of having the ability to tap into a global pool of talent and organize in a global way. But if you have an opportunity to actually build in person, in my mind, and my personal preference is a much better way. And so we're 90% of our team of Lights Park is actually here in the office in L.A. And it's an amazing experience. And, you know, we're very lucky that a lot of people actually moved out of the Bay Area during

COVID and found themselves here in L.A. and in other places. So we've been able to recruit a really solid team in person. and very happy for this. And so we don't have to manage time zone. Good to hear. Thank you. Hi, David. I have a question around, like, what you think is the number one reason why something like a WeChat has not emerged anywhere outside of China.

I feel like what happened in China, especially around, like, all of the innovation that happened on WeChat, is basically that the country leapfrogged because it didn't have solid apps. at the time. It didn't have credit card penetration, so QR code-based payments and all of these things were able to actually start to exist because most of transactions were cash-based and not credit card or electronic-based. And so it leapfrogged. The question actually can apply to a number of other topics here where we need to leapfrog to the next version of things when it comes

to, in our case, payments or other experiences. But it's really important to understand in a certain market, what are the ingrained habits that might actually get in the way of changing things? So when you're launching a new product, for instance, are you actually displacing an ingrained habit that is mainstream? Because if you have to do that, that's really hard, right? Or can you actually leapfrog to the next version of the experience and start a brand new behavior? That's an awesome answer. I was just curious around Elon and what he's trying to do with the everything app. What do you think are some of the challenges he's going to run into, given your experience? experience. Well, it depends. The graph matters. One of the things that we've experienced when we were

building Messenger is that we had a graph that was name-based and identity-based rather than phone number-based. So for some applications, the nice thing with a phone number-based graph is that you actually have an explicit permission that you give someone to actually contact you because you share your phone number versus someone random finding you on Facebook and starting to communicate with you. And so the usage is different. Like, so your high value communications actually happen more in a phone graph where you have explicit authorization of who can chat with you versus loose connections that don't have your phone number. You know, that's one of the things that you need to internalize when you're trying to build a network effect of any kind for specific application.

So the question then becomes, okay, so what can Twitter be great at in the case of Twitter? I think, you know, all of the creator monetization stuff, and getting people to actually reach an audience and monetize that audience on Twitter, I think that would be great. Are you going to pay your plumber on the Twitter graph? Probably not, right?

So I think those are the different types of use cases that I think different graphs will lead to. Awesome, thank you. Hi, David. I'm wearing my lightning hat for the occasion. Much appreciated. We're doing multiplayer creative experiences. So basically, people get together to make art together.

So for us, it's very important that interoperability, make things on chain. We started to build everything on Ethereum, but at the moment Ordinals cannot came in. We started to work with it. So you're not the only one working on Bitcoin. We are like a deep on it.

So my question is to you, how do you see it right now, Bitcoin? Do you think that Bitcoin has another chance? Because this is the way we see it. Like this is the last chance for Bitcoin to become important again. It was taken from from us, just put this way,

and now we can build another layer on top. So I don't have a really religious, dogmatic view about Bitcoin. I just think that for certain things, it's really the only way, especially for money. I think it's really the only way. I think Ordinoles is kind of interesting because it can also tap into the immense liquidity

of Bitcoin, which is still by far the most successful asset by market cap standard. So I really think that there's also a lot of energy coming back to Bitcoin because the time of issuing a token and making a lot of money really quickly by not delivering a lot of value is just behind us now. And people couldn't do that on Bitcoin because the asset was already there, right? So I feel that you see a lot more development energy coming back to Bitcoin. But I think that we shouldn't undersell what it is. if you have digital gold at scale, plus the global money protocol or payment protocol for the internet running on top of this thing, that in itself is huge, as in like humanity changing huge. Like you have a sound and safe, decentralized, sore value that no one can take away from you.

And you have an open, interoperable internet for money that anyone in the world can access that has access to the internet. that's a huge deal. For me, I would be satisfied with just that becoming a thing and payments running on top of Bitcoin as a global thing and becoming mainstream, I think, is good enough. That being said, I think it's good that there's a lot more developer energy coming to Bitcoin again because for certain applications, I think it'll be a great place to build. Yeah, you're right. When my friends with the Tupper Wizards, our mission was to teach people about Bitcoin. One of our requests was to use lightning. So we kind of like I did the record transaction on lightning.

So I think Bin said that bringing the culture to Bitcoin also bring users. Because I think a lot of people that like NFTs, they want the NFT. They don't want Ethereum. But this is what Ethereum benefit from it. So that's our point of view on that. Yeah, I agree. I feel that it's kind of an interesting time. And I know this is a very Bitcoin-centric network.

But if you spend time on Nuster right now and you see the amount of activity around Zapps and people basically sending like 10 cents here, five cents here just as a way to tip people for comments and posts, it's pretty fascinating to see the adoption. So that's one example of bringing a cultural type of behavior to a network such as Bitcoin and seeing it come to life. I'm all for that.

I think that there's an interesting world where Satz or Satoshi's become like native magical internet money for a lot of things, which would be a great outcome. But I don't think we can bank on that. And that's why, you know, we're building the ability for people to actually transact on top of lightning with any currency that you want and enabling people to move value

and look at it just as a protocol to settle on the internet rather than an end-all-meets-all where people are going to buy coffee with Bitcoin, you know. Great. Thank you. Great. Welcome. Thanks so much. I wanted to ask about how you think about the tradeoffs between a relatively more unopinionated or agnostic base layer,

as well as the sort of diverging regulatory requirements of bringing that to the end user and how that kind of bakes into that more like protocol design process. Yeah, that's a great question. And when I get that kind of questioning, I always come back to what has worked in other protocols, basically. And so if you look at the Internet and the way that the Internet, has been organized and protocols on top of the internet have been organized. The protocols themselves are pretty open or mostly open in most parts of the world. And then you have companies that are building on top of these protocols that then are held to regulatory standards and they have to

adopt and adapt those regulatory standards to continue to exist. Otherwise, people go to prison and doesn't end up well. So the same is true here. SMTP for email is not regulated as a protocol, but if you're a big spammer, then you get in trouble. And I think the same should be true for other forms of decentralized protocols that are being built, which is don't constrain the core protocol, let it do its thing, but then hold companies that are building on top of these protocols that are interfacing with consumers and others accountable to regulatory standards that will protect consumers and enable that industry to flourish.

Thanks a bunch. By the way, there's a neat parallel to the history of the Internet. I don't know if you remember this. there was a phase when Van Jacobsen put the TCP into the TCP IP, when the internet, it wasn't ready to support, like, this multi-media use case. Anyway, it's really fascinating because the story that I understood from what you just shared is that innovation is about things kind of coming together, like by taping things together. Like, it's not beautiful, intelligent design.

Never is. Exactly. It's like you're kind of figuring it out as you go along. That's American innovation. Yeah. Thanks so much for sharing your incredible. story. I've always been fascinated by lightning and I feel further convinced by this talk. I guess my question was, if we were to zoom out on like a 100-year time scale, what do you see as

the optimal relationship between decentralized organizations, corporations, open source projects, and governments around the solutions for identity payments and communication? Well, I mean, if you look at the way that those networks have been built over time, it's been largely a sort of tacit public-private partnership where the governments basically set the rules of the road, but largely let the private sector innovate and build the capabilities. Even our payment systems right now, the most successful fintech startup of all time is Visa, arguably,

and it's a private company, and it's very centralized, but they've built a very large-scale payment network, and it's a private company that operates within the rules that have been set by the various regulators and governments. So I think that's a good model. The interesting thing with crypto specially and decentralization is that it offers an alternative. And the alternative is going to keep

the more centralized versions of these things honest because people will have a choice of where they communicate, where they actually bank or move money, and they'll have a choice. And that choice will actually put more, pressure and will benefit everyone because you have an alternative that is decentralized in nature that can't be controlled in the same ways. And I think that's very important for speech. It's very

important for financial freedom in the world. And I think that escape valve of sort is really critical, especially now at this time. I think people talk a lot about how crypto used to be the cool thing, but now it's all AI. You know, I love AI. I think it's fascinating what's happening right now and how fast it's moving. But I also think that the importance for society as a whole of having decentralized forms of systems as an alternative has never been more important in the world. And so I think the work that we're all doing in this industry

is really immensely critical in my mind. Thank you. Awesome. Well, David, thank you so much for taking the term. You're welcome. You're welcome. Nice pleasure. Thank you for listening to Web 3 with A6 and Z.

You can find show notes with links to resources, books, or papers discussed, transcripts, and more at A6NZ Crypto.com. This episode was produced and edited by Sonal Choxy. That's me. The episode was technically edited by our audio editor, Justin Golden. Credit also to Moonshot Design for the Art and all thanks to support from A6 and Z Crypto. To follow more of our work and get updates, resources from us, and from others, be sure to subscribe to our Web3 week newsletter. You can find it on our website at a6crypto.com. Thank you for listening and for subscribing. Let's go.