podcasts

Building a Web 3 Stack, Muneeb Ali Blockstak

podcasts

Building a Web 3 Stack, Muneeb Ali Blockstak

April 2020

Posted by

Jamie Burke

CEO and Founder

Over his career he has cultivated a powerful ecosystem of corporate partners, investors and government agencies to help the Outlier’s portfolio scale effectively earning their trust from a frank and honest approach to the space....read more

Muneeb talks about his journey leaving academia at Princeton to fix what he saw as a broken internet.

 

Posted by Jamie Burke - April 2020

April 2020

Posted by

Jamie Burke

CEO and Founder

Over his career he has cultivated a powerful ecosystem of corporate partners, investors and government agencies to help the Outlier’s portfolio scale effectively earning their trust from a frank and honest approach to the space....read more

Initially going through Y Combinator he and his co-founder continued to develop an end-to-end Web 3 stack that went on to become Blockstack through 4 years of R&D, attracting investment from the likes of Naval Ravikant, USV, DCG and Fenbushi uniquely not as a decentralised network but as a US domiciled startup with regular employees. He discusses the hard path of working with the SEC to conduct the first Reg A + token offering raising over $23m and taking a rigorous phased engineering approach to making Web 3 a reality, winning 8k active devs and 0ver 270 DApps.

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Transcript

Jamie: Welcome to the Founders of Web 3 series by Outlier Ventures and me your host Jamie Burke. Together, we’re going to meet the entrepreneurs, that backers and the leading policymakers that are shaping Web 3. Together, we’re going to try to define what is Web 3, explore its nuances and understand the mission and purpose the drive its founders. If you enjoy what you hear, please do subscribe, rate and share your feedback to help us reach as many people as possible with the important mission that is Web 3.

So today, I’m really happy to welcome Muneeb Ali, CEO and Co-Founder of Blockstack described as software for a user owned internet and we’re going to kind of unpack exactly what that means shortly. But fundamentally, they’ve been building a modular stack that allows for dap developers to give users direct ownership of assets and protect user privacy. Maybe it’s great to have you on the show.

Muneeb: Really excited to be here.

Jamie: So there’s a couple of reasons why I really wanted you as a founder on the show. Firstly, I think your approach around building this stack end to end stack. I know it’s modular. I know you talk about being able to move elements or components in and out. But fundamentally, you are trying to solve for a number of key innovations that any dap developer needs from identity, smart contracts, and then this execution and data storage. And I think this is an emerging trend that we’re seeing now with other protocols like Nir and what have you. And then the second one is that you

No, you’re rare in the Web 3 space, at least for having taken that the hard path of both domiciled in the US working directly with the SEC, on how you structured the sale. And then increasingly how users can participate in that network. And having been involved in a number of us projects myself, I know just how hard that is. So those two things are what I really want to kind of cover off today.

Muneeb: Yep, happy happy to dive into it. I think I think Netscape is a good example. If you look back at the early days of the traditional internet, if you look at what Netscape was trying to do, they wanted to bring the internet to a lot of users, right. And along the way, whatever technology piece they had to invent because it just didn’t exist, they would just go ahead and do it. Right. So JavaScript came out of that. Cookies came out of that, and even the client server architecture, it came out of. But Netscape was people think of Netscape as like a browser company. But these fundamental technologies had to be invented. So that, you know, normal users can access the internet. And I think a little bit of that is happening now with the next version of the internet or Web 3, as some people call it, where there’s all these, like different technology pieces that are missing. And really, you know, we just have to build it out, right, because they just don’t exist. And if they’re kind of like roadblocks, we have to make sure that we get over them so that we can truly enable a user and on internet for the users. And I think that’s why our approach ended up being like this full stack and it gives you solutions for all these different problems that developers

Jamie: Yeah, and I really like the way you know, if you listen to podcasts or interviews when you’re talking about the vision for Blockstack, you talk about it almost in 100 year cycle. In fact, I’m pretty

At one point, you referred to looking at block stacks pathway and potentially even its decentralisation on that kind of time horizon. And so, you know, really, at this stage you’re looking to to allow people almost to easily navigate from, from web to the current paradigm, which is where 99% of developers are into into this new space in in baby steps. Is that a good descriptor?

Muneeb: Yep. I think that’s absolutely right. And just to give you an idea of like some of the decisions we internally made in 2017, we were doing our first token offering to kind of like build the one point of the stacks blockchain. We were setting up our Treasury and we set the unlocking so the long term Treasury starts to unlock at year four after launch, and basically unlocks for seven years, right? So that’s. These are the kind of like time horizons that we were talking about in terms of how long we expected it would take for some of these various tech pieces to come together or slowly getting more developer traction and use attractions. Absolutely. I think this is one of those like 10 plus year long journeys where you know, that you’re you’ve taken on a very ambitious project, and it’s going to take a while.

Jamie: And I think it’s great that you’ve done the self-imposed these milestones into the release of capital, which is obviously very typical in how venture capital works in a conventional sense, you know, you reach a milestone and you unlock more capital to kind of have this kind of elevator step approach. And in many of the projects that was just missing, you know, almost blank checks were written, and often without much obligation to deliver anything and then the onus is the moral obligation is on the founders. But really, from day one, you’ve tried to make this look as conventional as possible or at least as understandable as possible to an investor.

Muneeb: Yeah, so I think already there. The key difference that that we noticed was, when you’re launching a blockchain, the Genesis block, the first block is really a once in a lifetime type event, right? So you’re doing a distribution of these crypto assets to investors or early developers and community. But you can only do it once. Because once the network is launched, like it’s decentralised, and you can’t really change these allocations or the supply. And what that does is that unlike traditional venture capital, where you kind of like show progress, and then you go out to the market, you know, the VC market and you try to raise more capital, and as you unlock the next level, you know, people will back you and give you more Capital. This, this is a little bit of a dilemma where you can only really allocate make these allocations early on. And once an epoch is live, it becomes very hard to make these allocations. And I think that’s why we saw some projects raise, you know, very large amounts of capital, but no, really our checks and balances on them. And our approach was like trying to find a middle ground that sure, you know, we know that the development of this technology and this network is going to take many years would require a lot of capital. But at the same time, we wanted to have like some checks and balances, so that it helps the team focus as well. And plus, you know, there’s this and these were self imposed, right, like back back in 2017. You could pretty much raise capital for anything, right? And we were, we were actually we were putting an upper limit on how much capital can a single entity put into the offering, right, because those were just like wild west type days and, and drinking too much money could also be beautiful. ematic and was the CIO was that design choice?

Jamie: Was that a consideration from the lawyers that said, Look, if you want to follow this pathway around the reggae plus offering, these are sensible things to have in place? Or was it was it much more about trying to establish trust in, as you say, a kind of wild west?

Muneeb: No, so wasn’t from the lawyers. And it was. So this was the This was done in the 2017 offering. So what we did was we the choice in the 2017 offering, we were really looking at legal frameworks for how to even do this, right. And if you if you remember, back then there was a, there was this, like, soft like structure that was being used by a lot of projects. And I’m a computer scientist, right? I’m not a lawyer. I just like from first principles, looked at those frameworks, and I just didn’t feel comfortable, right. Like there was the sense there was something in me was like, Hey, this is this is doesn’t, doesn’t feel right to me and I want to do some more research and even like, you know, law firms like I’ve talked to a lot of law firms and I would listen to their arguments but like I would, I was just feeling that I’m not getting the right answers. And we ended up working with someone who at that time, you know, the business and senior wasn’t was not very active in crypto offerings and work with his lawyer. Rob, Rob Rosen Blom, who’s like an expert in securities regulations, right? Like he’s the he’s the guy who got Angel list in Nevada. They can’t and no action letter for for Angel list and he’s worked at the SEC before. Absolutely domain expert in what he does, right, but wasn’t at that time. Not now. Now. He knows a lot about crypto but back three years ago wasn’t paying much attention to the crypto networks and what’s happening here.But I could sense that that he’s extremely deep into securities regulations and and how the SEC operates. And I basically started forming this partnership where I’m kind of like filling him in on on the unique characteristics of the crypto networks. He’s kind of like explaining to me securities regulations. But But when it made sense to me, right, like, like it was, it’s almost like a, like a math problem in a way, right. Like you figured out what these regulations enable you to do. What are the things that you can’t do? And then we came up with a fairly traditional structure where we were setting up these Delaware funds, like I think a lot of sophisticated investors understand deliver funds, they’re just becoming limited partners in these funds. And the LP agreement is structured in a way that they’re basically buying these crypto assets, right. And we had those milestones kind of like baked into the LP agreement. And at that time, another thing that we did back then was, we knew that because of securities regulations in the US, we cannot offer our community and developers kind of like participation. And that really bothered us, right. So what we did was, we were giving out these like vouchers, they were non binding, right? They were non binding, and they were for anyone in our community or anyone kind of like who heard about the offering, and was early to come and get that voucher so that they get the same price as the sophisticated measures. Right. And they were but they had to be non binding from from a legal perspective, and the offering that we did in 2019, the SEC qualified one, which obviously was a lot of work, a lot of people thought that, you know, we’ll never be able to actually get qualification or there’s no way that the SEC would ever allow crypto assets to be offered through through offerings like reggae, but we were able to figure it out. And interestingly, a big reason for doing that public offering other than kind of like, opening up the US markets to be able to participate was the voucher holders, right? Because we kind of like that. told them that we will work on a framework, and you will be able to get the same price as the sophisticated investors from 2017. And they did. And I’m extremely proud of that work that, you know, we,we made sure that our community and our early developers, like they were able to participate in, in a compliant way, even if they’re US citizens, and, and they kind of like we’re able to participate at, at the initial prices as well.

Jamie: Yeah, and I know, we’ll talk a little bit later, you’re, you’re continuing to try to push the envelope now, to have even greater participation by users in all aspects of the network. And again, that you know, requires you to probably educate and engage with the SEC. And it’s, it’s not easy being first it’s costly, it takes time. And as I’m going to hopefully unravel This isn’t necessarily somewhere I’d imagine you would enjoy spending all of your time focused on dealing with with lawyers. So if I can try to summarise your your background for the listeners, so you were born and raised in Pakistan, your life transformed when your father brought you and your brother, a computer and that sent you down this path of computer science and introduced you into this kind of open Internet culture. And the story goes that you travel to Sweden as a research assistant, I believe without funding, which is perhaps the first sign of entrepreneurial risk taking. And you ended up at Princeton, where you secured a PhD in computer science, and your thesis was nominated for the AC ACM sitcom award and during that time, You’ve really specialised in, in distributed systems. And I believe a lot of your research had been cited over, over 1000 times in various research publications. And ultimately, that all led you to the CO founding of block stack in 2013 as I happen

Muneeb: Yep. I think that that’s a pretty accurate description and I would I would if you were to summarise this right it would be that growing up in Pakistan, especially when you know, you’d have like a single state control television I think we had to one one was state control the other was semi state controlled, and and you you discover the internet and you have a computer and you’re growing up in a third world country and suddenly you’re just like your life changes right like you’re discovered this new world and it’s it’s magical and you know, there’s you have access to information, you’re connecting with people all over the world. And the internet was really like much more open and decentralised and friendly. Even Back Back in the 90s. And I think my journey was pretty much like trying to look under the hood of how the internet works like, how can I programme it? How can I change certain aspects of it and, and it just led me into computer networks and building other different types of internet protocols. In terms of my PhD, I think it’s like, yes, it’s a degree and all of that. But the motivation there was really like, there were certain people like, who are still alive in this world that I just wanted to work with, right, like I just deeply, deeply admired the work that they’ve done, and I wanted to learn from them. And the PhD was the excuse to basically get to know them and get to actually be able to work with them. I think we’ve been very fortunate to actually involve a bunch of these folks that I deeply admire with Blockstack with the project and I think that’s where even even the starting of lock sack is in the unconventional Because it really was a research project that was funded by VCs, right? That typically doesn’t really happen. Right. And, and I think we were pretty upfront about it, like a lot of our early investors, like, I think navall, rava Khan, explicitly. I remember this email he wrote, because he invested some money himself. This is like pre when we went to Y Combinator, it was right before that. And then he had his own syndicate on angellist. And I think the email he wrote was, this is a this is a science experiment with a high probability of not going anywhere. But when I’m investing anyway, and then the syndicate filled up overnight. I was like, navall, were you like trying to sell this or, like, No, I was just telling the truth. And so I mean, it’s interesting, I kind of when I was doing my research, there are a couple of different narratives about the formation of block stack. So I was aware that it was initially kind of this reading research projects and r&d projects in a way, as you mentioned, somewhere in the middle of all that you’ve got accepted into Y Combinator. And as I understand it, you you actually, I don’t know dropped out just before it got accepted or during, to go back to Princeton to to sit another PhD because you felt that the world had moved on so much that you needed needed to refresh it. Yeah. So I think this was, this is, this is slightly different. So basically, what happened was, I was about to get done with my PhD in 2013. Right, so this is I started at Princeton in 2008. You know, they have various requirements and that you have to kind of like clear, and I was like, pretty much getting, getting ready to finish my thesis. And that’s kind of like the average time a typical PhD student takes there. And I just didn’t want to work in academia, right, like I was, I made up my mind that I want to go into startups and I want to raise venture capital. Because the the entire, you know, working with the National Science Foundation and getting research grants was feeling very bureaucratic to me, right? Like I had to write like 100 page doc for 300 gain funding or something like that. Whereas in Silicon Valley, you know, people give you more money than that over a cup of coffee. Right? Like, it’s just just like day and night. And so I kind of like on purpose, took a leave, because finishing my PhD was a backup plan for me, right? There’s a startup fails, I’ll go back and finish my PhD and basically, tendency what I won’t want to do. So we went to Y Combinator, I met my co founder represent as well as apartment Yeah, right. And we went to Y Combinator. And it during Y Combinator, we were kind of like building the underlying infrastructure. So Blockstack, and also building the first app on top, right, so most people kind of like saw the app first. And this was

Jamie:This was one name, right? And did you build the infrastructure because the app needed it? Or was the app to illustrate the power of the infrastructure,

Muneeb: the app was there to illustrate the power, and the infrastructure was the thing that we were building, right? And so it’s basically, and more people knew about the app, right? Like so one name was the more like, dominant prominent brand. And then slowly we introduced block sack that hey, here’s the here’s the real thing. This is this is the this is the infrastructure over which any developer can do this, right. And now we have over 400 applications built built on a netbook. So the PhD thesis part let me go back and finish that loop. What happened was that we I was like, very surprised by the lack of sophistication at that time, especially I think things are much better now. Off the kind of like, technical works that were coming up in the crypto industry, like, like sophisticated researchers would laugh at those things, right? Like, like, it’s like anyone can just like write half baked ideas on a white paper and people are raising capital on it. And there wasn’t a lot of in depth reviews are basically even questions being asked that hit is this architecture even technically sound? And I think what we did was we were like, well, we have deep roots in distributed systems. So let’s just go back to the traditional computer science conferences and try to publish our work there and which was actually a little bit of a struggle because people didn’t really understand blockchains and this and that, but we were able to publish at some of the top conferences. And that enabled me to write a new pieces on block stack and submit it. So Princeton was very, very friendly to me in that sense, that a they let me be on the for a very long time, like just booking on blog site B, because I was able to publish that work. They allowed me to write a pieces on it and accepted the pieces. So in some ways, like I did my pieces twice, and they were different, and one of them is boxing. The the one that eventually got accepted is boxing.

Jamie: And I mean, I imagine that, again, you know, you have this focus on distributed systems, but really, I mean, you could be working in any number of different technology domains, you could be working in quantum or anything else. What was it that gravitated you towards the problem that block stack is is solving so why, why that subset of problems?

Muneeb: Yeah, I think it goes back to why I even left academia, right. Like, I think the core reason is that, I think, for example, like I find computer algorithms fascinating like, you know, I can I can be in the room, you know, just trying to work on like, really hard problem. And I enjoy that work. But what I enjoy a lot more than that is when technology can have a meaningful impact on the everyday lives of people. Right? So going back to like, why did I fall in love with the internet? It’s like, I could see how it changed my life, right? It changed my mental models, it changed how I think it changed who I became, like, like imagine, imagine a parallel universe where I did not get a computer when I was 16. Or I did not have an internet connection. I could still be living in Pakistan somewhere, right, like maybe interested in some other things. So the the power of, of changing someone’s life through technology. Like it’s just fascinating. And I think that’s why like quantum computing, like I’m intellectually like, super interested in it, part of me wishes that you know, I can lock myself in a room or a library and just I go deep on these things. But then when I think about the internet and think about, imagine even the virus crisis, right, like, imagine how critical the internet infrastructure is, like, I think life is a little bit still normal. And so many people are able to work, because so many things migrated to the internet. Right? And you were able to have this podcast right now. And, and you’re not like completely disconnected from each other. So it was it was that aspect of taking a technology and actually impacting people’s day to day life with it. That I think just just fascinates me more than anything else, more than even more technically complex problems, if that. That makes sense.

Jamie: Yeah, and I was gonna say, you know, I mean, I, I probably describe you as the kind of engineer, entrepreneur engineer, that kind of different founder types if we’re going to try to categorise people and I think one of the challenges you typically see when you speak to somebody that is, you know, very engineering lead, typically comes out of research is certainly their focus on product and on the kind of the marketing side of the building of a startup. And so how do you, how do you divide things up with your, your, your co founder, or your management team? Do you still touch code? You know, what’s that journey been like for you as? as a founder as an entrepreneur?

Muneeb: Yeah. So I think the biggest thing that stood out to me was it just the work that needs to be done so like imagine is almost like a video game, right? And there are some critical things that you need to do before you unlock the next level of it. Right and the only thing that matters As they’re given the resources that you have right now, the only game that is going on is can you unlock the next level? Or are you going to die on this level? Right. And this is a little bit like how I think about startups. And so given the resources that you have, what is the problem that you’re working on? And that problem keeps changing year over year, or whatever that timeframe is? And it really depends on what level of the game you’re at right now. Right? So over the course of the years, I it’s interesting, like, at some point, I realised that me writing code is not the most efficient thing for block stack. And the bottleneck was like, you know, just just people like really high quality people that should be helping us and working on block stack. So I remember my algorithm for kind of like, hiring was that who are the smartest people that I’ve ever worked with and can I convinced them to come and join. Right. So I was very fortunate that these two early scientists are there also on Princeton, Jude Nelson and Aaron blankstein, I was able to spend time with them. And I think the Judah took me like some, like six months, with Aaron, probably like, two, three months, just convincing them that this is the best thing that you can be doing with your time. They could like, you know, with their talent and their credentials, they could probably go and work anywhere. I think Aaron had an option to go work at some of the core systems at Google. Jude, you know, he’s his advisor is Larry Peterson, who’s considered a god in computer networking. And he could you could go and work with him and convincing him not to go work for Larry and come work at this small sort of like a is like a big thing. And so, so I remember like when especially when Aaron came, this is a there’s a record of this on GitHub. I think it Aaron joined April of 2017, which was my last Commit on public commit on GitHub. And Aaron started then like, it’s almost like I’ve handed something over and I got someone who was like, way better than me at what he does. And I started looking at other things. It could be legal, right, it could be something else. And the job kind of like just keeps changing all the time. And I really think of this in terms of levels. And what do you need to do to unlock the next level?

Jamie: Well, I mean, I must say, at least from the outside, I look at you know, how you’ve navigated the regulatory environment, the SEC, some of the market marketing that you’ve been doing with a can’t be evil. And, you know, some of the kind of media that you’re doing as a CEO, and you seem to be excelling in in all areas. So it certainly whatever you’ve got going it certainly looks like it exists, but thank you, thank you so much. I can I can share that internally, it feels that you’re just failing all the time. Things don’t work. is the same over here. So, so coming back to and I guess we’re thinking about hat. So how do you attract these best in field? Now clearly it’s you and your leadership, but it’s also the mission, the mission has to be big enough, juicy enough. And so you described it as the software for a user owned internet. Maybe we unpack that a little bit and why is it internet? Not web? Why Why make that distinction?

Muneeb: Yeah. So I think people kind of like use the term interchangeably. And even we use the term Web 3 because it has it has a meaning now in in the industry, internet is just a more technically accurate term, because we do touch the lower layers of the stack right. So we do provide solutions at the at the DNS layer, right. So naming naming systems built on blockchains where people can truly own what they Registering even public key infrastructure. So be it’s like the technically the World Wide Web or the web sits on top of the underlying internet plumbing. But the work that we’re doing changes the underlying internet plumbing as well. Right? That’s why we are going to use that term. But in general, like let me unpack the software for a user on internet. It’s basically, I think, think of this as the internet itself, in various ways is public infrastructure. It’s a little bit like roads, right? Like the public infrastructure. Anyone can use them even criminals, right? Like you can ban people from using roads. And this infrastructure was getting really old and in a lot of security loopholes were getting. They were like glaring holes that even the founding fathers of the internet they all agree that these are the current problems with the internet, right? Like even my entire PhD thesis is actually, in some ways. David Clark, the chief protocol architect of the internet, who’s a researcher at MIT, like, his design, influenced the original design of the internet a lot. And over the years, he has come up with new designs for how the internet should have been. And my thesis kind of like, extends that, right. So in some ways, like you can even think of what block sack is doing as implementing the designs of the original chief protocol architect of the internet, right? So it’s, it’s, it’s like, it’s like an upgrade of that 40 year old public infrastructure. And we are we’re with the initial years of the of the project, we have built out that public infrastructure. But now developers also need developer tools for interacting with the public infrastructure. Right. So we, again like it’s going back to the Netscape example that whatever needs to be done, we need to do it right. Like we want to reach the end goal and whatever hurdles there are along the way, we basically need to solve it. So not only that we had to build the public infrastructure, we had to build the developer tools as well, to enable developers to easily build applications. And I think a big challenge down the road is how do we make it easier for users like it? Like, yes, we have like more than 400 applications, but it’s still, you know, relatively hard to use these applications or people don’t get the, the true value of it. And and I think that’s just the next step in the evolution where you can clearly separate a web two app from a Web 3 app, the underlying plumbing works, right these things scale. They are secure. developers understand it. I think we are at the level of helping developers understand this, learn about it and easily use it. That’s that’s where we are

In terms of evolution, and then the next step is more about, like mainstream users. So specifically, I mean, there’s many things that you communicate about the problem that block stacks solving for that certainly I subscribe to and I’m sure anybody that would associate themselves to the mission around Web 3.At its heart, it’s this idea that, you know, the internet is broken, as you alluded to, it needs to be upgraded. It’s a bit of a black box. And I know you’ve you’ve stated that currently Google and Facebook is the internet.

And the internet is not free. Presumably because you subscribe to the idea that there’s this implicit you know, payment with data, which led to this why believe is a genius marketing campaign around can’t do evil versus Google’s don’t do evil, which they obviously dropped a few years back anyway. So I write to describe this as the mission is kind of this unbundling of the internet. Is this today? Yeah. So I think the that’s that’s the high level problem that basically what happened was, I think the the Internet of the 90s that I just have very fond memories off, did not have these large companies that everyone is kind of like connecting to and they are spying on you and they know everything that you’re doing. Right. And web 2.0, which felt like an upgrade.

At the beginning is really the problem that we are trying to solve. Right? What happened with a 2.0 is that you started the, like, think of this as web 1.0 was like desktops, right? That were and it was more peer to peer like everyone had their own website. Like, you would go on IRC to chat with each other. You’re not going through a company. Like right now you are like everything you do on the internet and And people don’t even realise these things at times that, you know, every website you visit, or at least 60 70% of them are reporting data back to Google about wherever you are, what you’re doing. And they’ve now started feeling this that, hey, I was at my home talking to my wife about some product and then I started seeing ads for it, right? Because now it’s, it’s creeping into voice as well as creeping into your location. And what the problem that people face like they can sense it. And it shows up in different examples all the time. like just yesterday, I think Kevin Rose was one of the investors and he was talking about how Grammarly, which is a perfectly fine product, right and helps you write better sentences and does spell checking and better grammar. Basically, literally stores every single keystroke that you have written. It’s like, scary to think about that that this company has every single thing that you have typed in your emails and browsers and whatnot. But then, so many other companies have, are doing that kind of data collection as well. And it is no longer your personal software on your personal machine that is private and you’re using it. And then a step further is we’re moving into a world of digital assets, right? Like there are internet assets now that you can directly own. And I think it’s extremely important to get this right, because you don’t want to be in a position where only companies own assets and people don’t have kind of like direct ownership of these assets, because they will they will, they will be left out of the internet economy. That way you wouldn’t have a true internet economy where anyone can freely participate if we keep on going down the the current path of large tech monopolies and I think even governments are realising that right so there’s a lot of talk about antitrust or regulation against these companies? I think regulations end up harming or doing more harm than anything else. Right? These are problems that can be solved at the technology layer at by enabling more competition by enabling certain models where it’s much harder to build monopolies like the ones that exist today.

Jamie: Yeah. So I mean, it’s really interesting that you talked about some of the founding fathers of the internet and the web, reflecting upon design choices that they made, how they may, may or may or may not have been right and what upgrades are possible. You know, I always think about the Declaration of Independence of cyberspace and some of the things that are contained in that which were, you know, very clearly political choices. One was specifically that you wouldn’t have identity and the other one was that you wouldn’t have property. Both of these construct seen as tools of the state. And you could argue, because there is no universal protocol for identity. This is why we have many of the intermediaries on the internet as it stands today. From your perspective, how do you is the document that you see being carried forward into Web 3? And, you know, what are the things that you think are fundamentally missing or fundamentally broken? That that need to be solved from an engineering perspective?

Muneeb: Yeah, so I think it’s, in many ways, web Web 3, if you simplify it, it’s doing two things, right. One is it’s introducing some new functionality that just didn’t exist in web two. And that functionality is mostly around ownership of assets, and smart contracts. Those are the really two things and even their length right. You usually own The the assets through smart contracts. And the other category is all about alternatives to things that already exist in web two. But you flip the client server model and you make the clients more powerful. And you depend less on the servers, which is a is a huge change from technical architecture perspective, right? A lot of plumbing needs to happen for that to take place. But for a user, it’s basically it could be a very trivial change as well, right? Like, for example, if you’re if you’re doing taxes in Web 3 private app, like you’re just all of your information is just with you. And it’s mostly running on your device. Versus You know, you’re giving all that data to a company and you’re using a server that a company’s running, right. So that’s, that’s kind of like it’s like, undoing the negative things in empowering the users plus introducing these new functionality that just didn’t exist. And I think that’s where most of the innovation is going to happen. And that’s where a lot of excitement is going with a lot of excitement is going to be because of because of these new features. You mentioned the founding fathers of the internet. And they’re, they’re talking about is there I think there there was this event in 2016, I believe is called the decentralised web summit. It was held at the Internet Archive head office, which is like in this beautiful church building. And I think it will be one of the historic events. If the biggest threat to Web 3 is actually mass adoption. I think the technology layer, we’ll figure it out, like we are almost there. different projects, and especially in the last few years, I think a lot of sophisticated teams have entered the space as well. And I’m very confident that you know, block sack has figured out a lot of this. Other projects are making a bunch of progress. The biggest challenge is going to be mass adoption. And we can we can get into that but And I think it will be one of the historic events. If the biggest threat to Web 3 is actually mass adoption, I think the technology layer, we’ll figure it out, like we are almost there. different projects, and especially in the last few years, I think a lot of sophisticated teams have entered the space as well. And I’m very confident that, you know, block sac has figured out a lot of this. Other projects are making a bunch of progress, the biggest challenge is going to be mass adoption. And we can we can get into that, but this is the room that, you know, it’s five years from now, 10 years from now, Web 3 is massively taken off. This is where, where all the internet traffic is. And you know, it’s like a trillion dollar economy or so on. I think a lot of the beginning would would go back to this event in 2016. And Sir Tim berners Lee was there, you know, inventor of the World Wide Web, when surf was there, the inventor of TCP IP you know, and and It was it was an event where some of these early project, early crypto projects, or Web 3 projects, all of the founders were kind of there. And they were there, or I think pictures of people interacting, and it really felt like one generation of elders, kind of like passing the torch to the next generation. And I think September’s Tim berners Lee, at that event, registered his ID on block sack. And that was like such a big event in our community that, you know, the, the father of the World Wide Web has officially signed up on on a Web 3 platform.

Jamie: And how do you I mean, obviously, I think Tim berners, Lee’s openly talked about this idea that the web is broken or it’s been hijacked in some way, and he’s having an attempt to fix that through through pods. I forget the name of the project. It’s escaped me but this idea of data pods, obviously that is an IT there isn’t a blockchain and there isn’t any tokenization And I think many people respectfully have said it’s it’s very it’s a very typical response kind of a generational gap or gulf between how Tim berners Lee would try to solve these problems compared to people coming through Web 3. Why do you think approaches like block stack is going to make Web 3 irresistible? And do you think that? Do you think that people care enough about privacy? I know they should. But do you think they actually care enough about privacy over convenience to to, I guess, bear with the inconveniences the current inconveniences of using it?

Muneeb: Yep. So I think let me let me answer the Blockstack question. So the box tag, I think there are two things that are very different. And one is that I think at a high level We know that there’s enough enough data that Web 3 will be built on top of blockchains. Right? I think technically you can have an approach where there isn’t a blockchain. There are some solutions. As you mentioned, Tim berners Lee is working on one key base comes to mind, right, like they don’t really use a blockchain and and provide some sort of a similar identity features and verification and apps even that can be built. But I’m pretty much in the camp. And I think a lot of other people as well are that Web 3 is going to emerge on top of blockchains. It is still unclear which blockchain right and that’s where you see, almost like even competition, which is a healthy thing. People are trying different experiments. I think we’re block stack stands out in that landscape is that we are actually innovating around the Bitcoin ecosystem, right? We truly believe that Bitcoin is by far the most secure network. The most Stable one. And by design, it needs to have a limited scripting language and it needs to have this property that it doesn’t change, right. So in many ways, we are adding the functionality needed for Web 3 and smart contracts in our blockchain, the Stax 2.0 blockchain and anchoring back to Bitcoin, but the thesis is that Web 3 is going to emerge anchor to Bitcoin, versus some other smart blockchain. So that’s, that’s one part of blocks. And the second is a is a is a more technical distinction. And this is, I think, the analogy sometimes I give as is the difference between a mainframe like approach or a desktop, a netbook of desktop computers type approach, right? So in some ways, like, block sacks, technical architecture is the inverse of aetherium, right, like aetherium and other blockchains that are really trying to do a lot of things at the blockchain layer. They’re kind of like mainframes, right? They can only do a single single transaction at a time. They really want to make that mainframe very powerful, and do a lot of computations and storage at that mainframe. Block stack is the inverse of that, like a very minimal network that mostly does coordination. But most of the storage and competitions they actually happened with the clients, right? So it’s a little bit like a lot of desktops that are interconnecting with each other and coordinating mutations. So that’s, that’s where we play in the design landscape. The question of like, you know, what people care about, about this, I think it’s more I think of this as if Web 3 is done right? It actually should be more convenient. And privacy is just like, nice to have feature that might, a subset of people might care a lot about, but the generally people are not going to care about, but I think it’s going to be these new types of features that just couldn’t exist in web 2.0. And people will come for those things, the new things that like imagine, like, you know, if, if you, as a user can actually make more money on a Web 3 app than a web two, there’s a very strong financial incentive for you to be on a Web 3 app, whether the privacy and user ownership and all those things, they come as a side effect of it. But your primary motivation might be that, hey, I wanna I want to do this, because I can be a better part of the internet economy a little bit like how, you know, companies like Airbnb or Uber enabled users to basically make more money from assets that they already own.

Jamie: And is this from? So that kind of financial motive is that? Because there are cost savings on transactional fees by removing middlemen? Or is it because there’s this incentive layer which directly rewards participation in in networks and by contributing resources or bootstrapping it in its early days.

Muneeb: Yeah, I think it’s a combination of few things. But the end result is that imagine some of the most successful companies on the internet, right? Right. Like, look at Twitter, look at YouTube, look at you know, medium is not at that level, but look at medium as a blogging platform. All of these things, they’re effectively user generated content. users are doing it. And in case of YouTube, yes, users get a slice of the pie, and they make some money as well. But not on Twitter, not not not in other places. And basically, what’s happening is that the company and not just the company, but all these ad networks. So there’s some optimization that these ad networks are fairly complicated and they can be removed and simplified and there could be a direct relationship between, you know someone who wants to pay you for your attention and your attention and And the other side of it is that if it’s your content and other people are making money on it, then why aren’t you making money on it? Right? So it’s like it. I think, what we see on the internet right now, like, a lot of people basically have this reaction that so world is not going to change from this model. Whereas the world is always changing all the time. Right? And it’s, it’s just a, it’s just like, you know, the future is already here. It’s just not widely distributed yet. Like, it is, in my mind, like a couple of years from now. As soon as you know, people would be like, people, you should be getting paid for watching any ad on the on the internet, right? Like it’s your attention and that’s what advertisers are paying for. And you can remove all these middlemen, same for content, right like your if your content is getting a lot of kind of like attention on the internet. You You should be directly monetizing that. And right now, you know, we’re in this like strange place where other companies kind of like benefit from the user without really giving anything back to the users forget about giving anything back. They, they track you, they like resell your data and all sorts of strange creepy waves. And it’s just a very broken system right now.

Jamie: And so as I mentioned earlier, you were the first kind of reggae plus offering around a crypto asset, I think you raised over $23 million. And that took you at least a year and probably several million in legal fees. And having forged that pathway. You’ve certainly shortened the the time horizon and the amount of capital with setting the precedent for other projects to follow. So I think you know, the industry owes you certainly adapt there. Now you’re focused on Looking at how you can include, I don’t know what you would call them retail users more actively in the network. I think you’re gonna, is that shifting away from app mining? Or is this a kind of an evolution of it?

Muneeb:  Yeah. So I think mining is separate. Let me answer that first app mining pilot that we ran for over a year. It was basically kind of like an incentive mechanism to get developers to come and try out our tools and build applications. And basically, in some ways, like, prove out that, you know, Web 3 apps can exist and can scale to millions of users. And we were very fascinated by this idea of can we automate certain metrics around quality of applications? Right. So we tried, you know, even getting reviews for UX off an app or checking you know, how How decentralised an app is or how actively it’s being used. And the interesting thing is that yes, you can make progress towards these things. But a fully automated algorithm is very hard, right? It’s basically whatever metrics you throw at people, especially if there’s money involved, right? So there’s a, there’s a distribution of the stacks cryptocurrency that can go to these developers if they are doing well on these metrics. So they rank higher on the colour of the app mining score. And any metric you throw at people, instead of improving their app, they might actually start gaming the metric itself, right. So our big really big takeaway was that we might require humans in the loop, right. So a little bit more like, you know, it’s very hard to automate Y Combinator, like, you know, Y Combinator, manually goes through a lot of startups and tries to curate the ones that that can be really good and helps them to build their apps. So I think app mining 2.0 there are various proposals around but I will be surprised if Fully automated approach kind of like comes back. But in general, I’m very much supportive of supporting developers and giving them incentives in your, in your ecosystem to basically come and build applications and build infrastructure. So that’s, that’s like where app mining is right now. But in general, the work that we’re doing is we’re in this like, a little bit of a strange situation where the the stocks cryptocurrency it’s a utility token clearly gets used in applications and users can register assets for that they can use it in applications and gets consumed as fuel for smart contracts fairly similar to ether in a way, but just because of our kind of like legal framework, it is currently not tradable, or easily accessible in the US rights. So outside of the US because it’s treated as a security in the US is treated as a security but outside of the US. You know, we got opinions from several jurisdictions and even in our sec offerings, we disclose them As non security jurisdictions where it’s treated as a normal utility token, and that’s why it trades internationally already. Right? So we are doing a bunch of work to figure out how can the US markets also open up for our users and even even potentially for trading? And I think that’s something where we have this approach of like an increased path to decentralisation because the the US securities regulations at the SEC, they use a different framework for looking at what can and cannot be a security and we’re basically trying to do and no one again, no one has ever done this before either, right? Like Yes, projects have been fined and you know, they they’ve had sec enforcement’s against them but no one has done this in a in a friendly compliant manner that here’s how you can start off looking like a security in the US and then even in the US are clearly not a security.

Jamie: Yeah, I mean, You know, I, I really am. I’m not a direct investment block stack. But I really wish you success with the project because I think that in the one hand just by virtue of when you were bringing the project to market and the pathway that you’ve chosen, which is ultimately to, to work with the regulator, to deliver utility, extend, you’ve kind of got one one arm tied behind your back in delivering that utility, which is the great irony where something like a theorem is out there in the wild. And you’re clearly being treated as a utility, even though there could be very little difference to how that was rolled out versus several other protocols. And, you know, if the aspiration of a given regulator is to increase the utility of a network, then clearly that’s about allowing participation and distributing the wealth, value and control of that network. So I really hope that you, you can help the SEC, I believe coming to a more open and kind of innovation first approach. Meaning it’s great to have you on the show, really looking forward to watch the progress of block stack in your journey as an entrepreneur. And hopefully, we’ll get you on again soon.

Muneeb: Absolutely, it was, it was great to be here. And one comment about the V sec, is that I think like some projects got grandfathered in, like, like aetherium. But but it’s very hard to tell that, you know, would you end up in a case like telegram where the enforcement was really bad for the project, or it would be something like us where, you know, they kind of got away with it. And the approach that we’re taking is that, you know, we’re, we’re not going to take that risk, and just make sure that we’re where we’re the clear and are complying with with the applicable law. But this was great. Really great talking to you, and thanks for all of you. support over the years. Right thanks many. Thank you.

 

Jamie: If you enjoyed today’s podcast please make sure you subscribe rate and share your feedback to help us reach as many people as possible with the important mission of Web 3.

Jamie: Welcome to the Founders of Web 3 series by Outlier Ventures and me your host Jamie Burke. Together, we’re going to meet the entrepreneurs, that backers and the leading policymakers that are shaping Web 3. Together, we’re going to try to define what is Web 3, explore its nuances and understand the mission and purpose the drive its founders. If you enjoy what you hear, please do subscribe, rate and share your feedback to help us reach as many people as possible with the important mission that is Web 3.

So today, I’m really happy to welcome Muneeb Ali, CEO and Co-Founder of Blockstack described as software for a user owned internet and we’re going to kind of unpack exactly what that means shortly. But fundamentally, they’ve been building a modular stack that allows for dap developers to give users direct ownership of assets and protect user privacy. Maybe it’s great to have you on the show.

Muneeb: Really excited to be here.

So there’s a couple of reasons why I really wanted you as a founder on the show. Firstly, I think your approach around building this stack end to end stack. I know it’s modular. I know you talk about being able to move elements or components in and out. But fundamentally, you are trying to solve for a number of key innovations that any dap developer needs from identity, smart contracts, and then this execution and data storage. And I think this is an emerging trend that we’re seeing now with other protocols like Nir and what have you. And then the second one is that you

No, you’re rare in the Web 3 space, at least for having taken that the hard path of both domiciled in the US working directly with the SEC, on how you structured the sale. And then increasingly how users can participate in that network. And having been involved in a number of us projects myself, I know just how hard that is. So those two things are what I really want to kind of cover off today.

Muneeb: Yep, happy happy to dive into it. I think I think Netscape is a good example. If you look back at the early days of the traditional internet, if you look at what Netscape was trying to do, they wanted to bring the internet to a lot of users, right. And along the way, whatever technology piece they had to invent because it just didn’t exist, they would just go ahead and do it. Right. So JavaScript came out of that. Cookies came out of that, and even the client server architecture, it came out of. But Netscape was people think of Netscape as like a browser company. But these fundamental technologies had to be invented. So that, you know, normal users can access the internet. And I think a little bit of that is happening now with the next version of the internet or Web 3, as some people call it, where there’s all these, like different technology pieces that are missing. And really, you know, we just have to build it out, right, because they just don’t exist. And if they’re kind of like roadblocks, we have to make sure that we get over them so that we can truly enable a user and on internet for the users. And I think that’s why our approach ended up being like this full stack and it gives you solutions for all these different problems that developers

Jamie: Yeah, and I really like the way you know, if you listen to podcasts or interviews when you’re talking about the vision for Blockstack, you talk about it almost in 100 year cycle. In fact, I’m pretty

At one point, you referred to looking at block stacks pathway and potentially even its decentralisation on that kind of time horizon. And so, you know, really, at this stage you’re looking to to allow people almost to easily navigate from, from web to the current paradigm, which is where 99% of developers are into into this new space in in baby steps. Is that a good descriptor?

Muneeb: Yep. I think that’s absolutely right. And just to give you an idea of like some of the decisions we internally made in 2017, we were doing our first token offering to kind of like build the one point of the stacks blockchain. We were setting up our Treasury and we set the unlocking so the long term Treasury starts to unlock at year four after launch, and basically unlocks for seven years, right? So that’s. These are the kind of like time horizons that we were talking about in terms of how long we expected it would take for some of these various tech pieces to come together or slowly getting more developer traction and use attractions. Absolutely. I think this is one of those like 10 plus year long journeys where you know, that you’re you’ve taken on a very ambitious project, and it’s going to take a while.

Jamie: And I think it’s great that you’ve done the self-imposed these milestones into the release of capital, which is obviously very typical in how venture capital works in a conventional sense, you know, you reach a milestone and you unlock more capital to kind of have this kind of elevator step approach. And in many of the projects that was just missing, you know, almost blank checks were written, and often without much obligation to deliver anything and then the onus is the moral obligation is on the founders. But really, from day one, you’ve tried to make this look as conventional as possible or at least as understandable as possible to an investor.

Muneeb: Yeah, so I think already there. The key difference that that we noticed was, when you’re launching a blockchain, the Genesis block, the first block is really a once in a lifetime type event, right? So you’re doing a distribution of these crypto assets to investors or early developers and community. But you can only do it once. Because once the network is launched, like it’s decentralised, and you can’t really change these allocations or the supply. And what that does is that unlike traditional venture capital, where you kind of like show progress, and then you go out to the market, you know, the VC market and you try to raise more capital, and as you unlock the next level, you know, people will back you and give you more Capital. This, this is a little bit of a dilemma where you can only really allocate make these allocations early on. And once an epoch is live, it becomes very hard to make these allocations. And I think that’s why we saw some projects raise, you know, very large amounts of capital, but no, really our checks and balances on them. And our approach was like trying to find a middle ground that sure, you know, we know that the development of this technology and this network is going to take many years would require a lot of capital. But at the same time, we wanted to have like some checks and balances, so that it helps the team focus as well. And plus, you know, there’s this and these were self imposed, right, like back back in 2017. You could pretty much raise capital for anything, right? And we were, we were actually we were putting an upper limit on how much capital can a single entity put into the offering, right, because those were just like wild west type days and, and drinking too much money could also be beautiful. ematic and was the CIO was that design choice?

Jamie: Was that a consideration from the lawyers that said, Look, if you want to follow this pathway around the reggae plus offering, these are sensible things to have in place? Or was it was it much more about trying to establish trust in, as you say, a kind of wild west?

Muneeb: No, so wasn’t from the lawyers. And it was. So this was the This was done in the 2017 offering. So what we did was we the choice in the 2017 offering, we were really looking at legal frameworks for how to even do this, right. And if you if you remember, back then there was a, there was this, like, soft like structure that was being used by a lot of projects. And I’m a computer scientist, right? I’m not a lawyer. I just like from first principles, looked at those frameworks, and I just didn’t feel comfortable, right. Like there was the sense there was something in me was like, Hey, this is this is doesn’t, doesn’t feel right to me and I want to do some more research and even like, you know, law firms like I’ve talked to a lot of law firms and I would listen to their arguments but like I would, I was just feeling that I’m not getting the right answers. And we ended up working with someone who at that time, you know, the business and senior wasn’t was not very active in crypto offerings and work with his lawyer. Rob, Rob Rosen Blom, who’s like an expert in securities regulations, right? Like he’s the he’s the guy who got Angel list in Nevada. They can’t and no action letter for for Angel list and he’s worked at the SEC before. Absolutely domain expert in what he does, right, but wasn’t at that time. Not now. Now. He knows a lot about crypto but back three years ago wasn’t paying much attention to the crypto networks and what’s happening here.But I could sense that that he’s extremely deep into securities regulations and and how the SEC operates. And I basically started forming this partnership where I’m kind of like filling him in on on the unique characteristics of the crypto networks. He’s kind of like explaining to me securities regulations. But But when it made sense to me, right, like, like it was, it’s almost like a, like a math problem in a way, right. Like you figured out what these regulations enable you to do. What are the things that you can’t do? And then we came up with a fairly traditional structure where we were setting up these Delaware funds, like I think a lot of sophisticated investors understand deliver funds, they’re just becoming limited partners in these funds. And the LP agreement is structured in a way that they’re basically buying these crypto assets, right. And we had those milestones kind of like baked into the LP agreement. And at that time, another thing that we did back then was, we knew that because of securities regulations in the US, we cannot offer our community and developers kind of like participation. And that really bothered us, right. So what we did was, we were giving out these like vouchers, they were non binding, right? They were non binding, and they were for anyone in our community or anyone kind of like who heard about the offering, and was early to come and get that voucher so that they get the same price as the sophisticated measures. Right. And they were but they had to be non binding from from a legal perspective, and the offering that we did in 2019, the SEC qualified one, which obviously was a lot of work, a lot of people thought that, you know, we’ll never be able to actually get qualification or there’s no way that the SEC would ever allow crypto assets to be offered through through offerings like reggae, but we were able to figure it out. And interestingly, a big reason for doing that public offering other than kind of like, opening up the US markets to be able to participate was the voucher holders, right? Because we kind of like that. told them that we will work on a framework, and you will be able to get the same price as the sophisticated investors from 2017. And they did. And I’m extremely proud of that work that, you know, we,we made sure that our community and our early developers, like they were able to participate in, in a compliant way, even if they’re US citizens, and, and they kind of like we’re able to participate at, at the initial prices as well.

Jamie: Yeah, and I know, we’ll talk a little bit later, you’re, you’re continuing to try to push the envelope now, to have even greater participation by users in all aspects of the network. And again, that you know, requires you to probably educate and engage with the SEC. And it’s, it’s not easy being first it’s costly, it takes time. And as I’m going to hopefully unravel This isn’t necessarily somewhere I’d imagine you would enjoy spending all of your time focused on dealing with with lawyers. So if I can try to summarise your your background for the listeners, so you were born and raised in Pakistan, your life transformed when your father brought you and your brother, a computer and that sent you down this path of computer science and introduced you into this kind of open Internet culture. And the story goes that you travel to Sweden as a research assistant, I believe without funding, which is perhaps the first sign of entrepreneurial risk taking. And you ended up at Princeton, where you secured a PhD in computer science, and your thesis was nominated for the AC ACM sitcom award and during that time, You’ve really specialised in, in distributed systems. And I believe a lot of your research had been cited over, over 1000 times in various research publications. And ultimately, that all led you to the CO founding of block stack in 2013 as I happen

Muneeb: Yep. I think that that’s a pretty accurate description and I would I would if you were to summarise this right it would be that growing up in Pakistan, especially when you know, you’d have like a single state control television I think we had to one one was state control the other was semi state controlled, and and you you discover the internet and you have a computer and you’re growing up in a third world country and suddenly you’re just like your life changes right like you’re discovered this new world and it’s it’s magical and you know, there’s you have access to information, you’re connecting with people all over the world. And the internet was really like much more open and decentralised and friendly. Even Back Back in the 90s. And I think my journey was pretty much like trying to look under the hood of how the internet works like, how can I programme it? How can I change certain aspects of it and, and it just led me into computer networks and building other different types of internet protocols. In terms of my PhD, I think it’s like, yes, it’s a degree and all of that. But the motivation there was really like, there were certain people like, who are still alive in this world that I just wanted to work with, right, like I just deeply, deeply admired the work that they’ve done, and I wanted to learn from them. And the PhD was the excuse to basically get to know them and get to actually be able to work with them. I think we’ve been very fortunate to actually involve a bunch of these folks that I deeply admire with Blockstack with the project and I think that’s where even even the starting of lock sack is in the unconventional Because it really was a research project that was funded by VCs, right? That typically doesn’t really happen. Right. And, and I think we were pretty upfront about it, like a lot of our early investors, like, I think navall, rava Khan, explicitly. I remember this email he wrote, because he invested some money himself. This is like pre when we went to Y Combinator, it was right before that. And then he had his own syndicate on angellist. And I think the email he wrote was, this is a this is a science experiment with a high probability of not going anywhere. But when I’m investing anyway, and then the syndicate filled up overnight. I was like, navall, were you like trying to sell this or, like, No, I was just telling the truth. And so I mean, it’s interesting, I kind of when I was doing my research, there are a couple of different narratives about the formation of block stack. So I was aware that it was initially kind of this reading research projects and r&d projects in a way, as you mentioned, somewhere in the middle of all that you’ve got accepted into Y Combinator. And as I understand it, you you actually, I don’t know dropped out just before it got accepted or during, to go back to Princeton to to sit another PhD because you felt that the world had moved on so much that you needed needed to refresh it. Yeah. So I think this was, this is, this is slightly different. So basically, what happened was, I was about to get done with my PhD in 2013. Right, so this is I started at Princeton in 2008. You know, they have various requirements and that you have to kind of like clear, and I was like, pretty much getting, getting ready to finish my thesis. And that’s kind of like the average time a typical PhD student takes there. And I just didn’t want to work in academia, right, like I was, I made up my mind that I want to go into startups and I want to raise venture capital. Because the the entire, you know, working with the National Science Foundation and getting research grants was feeling very bureaucratic to me, right? Like I had to write like 100 page doc for 300 gain funding or something like that. Whereas in Silicon Valley, you know, people give you more money than that over a cup of coffee. Right? Like, it’s just just like day and night. And so I kind of like on purpose, took a leave, because finishing my PhD was a backup plan for me, right? There’s a startup fails, I’ll go back and finish my PhD and basically, tendency what I won’t want to do. So we went to Y Combinator, I met my co founder represent as well as apartment Yeah, right. And we went to Y Combinator. And it during Y Combinator, we were kind of like building the underlying infrastructure. So Blockstack, and also building the first app on top, right, so most people kind of like saw the app first. And this was

 

Jamie:This was one name, right? And did you build the infrastructure because the app needed it? Or was the app to illustrate the power of the infrastructure,

Muneeb: the app was there to illustrate the power, and the infrastructure was the thing that we were building, right? And so it’s basically, and more people knew about the app, right? Like so one name was the more like, dominant prominent brand. And then slowly we introduced block sack that hey, here’s the here’s the real thing. This is this is the this is the infrastructure over which any developer can do this, right. And now we have over 400 applications built built on a netbook. So the PhD thesis part let me go back and finish that loop. What happened was that we I was like, very surprised by the lack of sophistication at that time, especially I think things are much better now. Off the kind of like, technical works that were coming up in the crypto industry, like, like sophisticated researchers would laugh at those things, right? Like, like, it’s like anyone can just like write half baked ideas on a white paper and people are raising capital on it. And there wasn’t a lot of in depth reviews are basically even questions being asked that hit is this architecture even technically sound? And I think what we did was we were like, well, we have deep roots in distributed systems. So let’s just go back to the traditional computer science conferences and try to publish our work there and which was actually a little bit of a struggle because people didn’t really understand blockchains and this and that, but we were able to publish at some of the top conferences. And that enabled me to write a new pieces on block stack and submit it. So Princeton was very, very friendly to me in that sense, that a they let me be on the for a very long time, like just booking on blog site B, because I was able to publish that work. They allowed me to write a pieces on it and accepted the pieces. So in some ways, like I did my pieces twice, and they were different, and one of them is boxing. The the one that eventually got accepted is boxing.

Jamie: And I mean, I imagine that, again, you know, you have this focus on distributed systems, but really, I mean, you could be working in any number of different technology domains, you could be working in quantum or anything else. What was it that gravitated you towards the problem that block stack is is solving so why, why that subset of problems?

Muneeb: Yeah, I think it goes back to why I even left academia, right. Like, I think the core reason is that, I think, for example, like I find computer algorithms fascinating like, you know, I can I can be in the room, you know, just trying to work on like, really hard problem. And I enjoy that work. But what I enjoy a lot more than that is when technology can have a meaningful impact on the everyday lives of people. Right? So going back to like, why did I fall in love with the internet? It’s like, I could see how it changed my life, right? It changed my mental models, it changed how I think it changed who I became, like, like imagine, imagine a parallel universe where I did not get a computer when I was 16. Or I did not have an internet connection. I could still be living in Pakistan somewhere, right, like maybe interested in some other things. So the the power of, of changing someone’s life through technology. Like it’s just fascinating. And I think that’s why like quantum computing, like I’m intellectually like, super interested in it, part of me wishes that you know, I can lock myself in a room or a library and just I go deep on these things. But then when I think about the internet and think about, imagine even the virus crisis, right, like, imagine how critical the internet infrastructure is, like, I think life is a little bit still normal. And so many people are able to work, because so many things migrated to the internet. Right? And you were able to have this podcast right now. And, and you’re not like completely disconnected from each other. So it was it was that aspect of taking a technology and actually impacting people’s day to day life with it. That I think just just fascinates me more than anything else, more than even more technically complex problems, if that. That makes sense.

Jamie: Yeah, and I was gonna say, you know, I mean, I, I probably describe you as the kind of engineer, entrepreneur engineer, that kind of different founder types if we’re going to try to categorise people and I think one of the challenges you typically see when you speak to somebody that is, you know, very engineering lead, typically comes out of research is certainly their focus on product and on the kind of the marketing side of the building of a startup. And so how do you, how do you divide things up with your, your, your co founder, or your management team? Do you still touch code? You know, what’s that journey been like for you as? as a founder as an entrepreneur?

Muneeb: Yeah. So I think the biggest thing that stood out to me was it just the work that needs to be done so like imagine is almost like a video game, right? And there are some critical things that you need to do before you unlock the next level of it. Right and the only thing that matters As they’re given the resources that you have right now, the only game that is going on is can you unlock the next level? Or are you going to die on this level? Right. And this is a little bit like how I think about startups. And so given the resources that you have, what is the problem that you’re working on? And that problem keeps changing year over year, or whatever that timeframe is? And it really depends on what level of the game you’re at right now. Right? So over the course of the years, I it’s interesting, like, at some point, I realised that me writing code is not the most efficient thing for block stack. And the bottleneck was like, you know, just just people like really high quality people that should be helping us and working on block stack. So I remember my algorithm for kind of like, hiring was that who are the smartest people that I’ve ever worked with and can I convinced them to come and join. Right. So I was very fortunate that these two early scientists are there also on Princeton, Jude Nelson and Aaron blankstein, I was able to spend time with them. And I think the Judah took me like some, like six months, with Aaron, probably like, two, three months, just convincing them that this is the best thing that you can be doing with your time. They could like, you know, with their talent and their credentials, they could probably go and work anywhere. I think Aaron had an option to go work at some of the core systems at Google. Jude, you know, he’s his advisor is Larry Peterson, who’s considered a god in computer networking. And he could you could go and work with him and convincing him not to go work for Larry and come work at this small sort of like a is like a big thing. And so, so I remember like when especially when Aaron came, this is a there’s a record of this on GitHub. I think it Aaron joined April of 2017, which was my last Commit on public commit on GitHub. And Aaron started then like, it’s almost like I’ve handed something over and I got someone who was like, way better than me at what he does. And I started looking at other things. It could be legal, right, it could be something else. And the job kind of like just keeps changing all the time. And I really think of this in terms of levels. And what do you need to do to unlock the next level?

Jamie: Well, I mean, I must say, at least from the outside, I look at you know, how you’ve navigated the regulatory environment, the SEC, some of the market marketing that you’ve been doing with a can’t be evil. And, you know, some of the kind of media that you’re doing as a CEO, and you seem to be excelling in in all areas. So it certainly whatever you’ve got going it certainly looks like it exists, but thank you, thank you so much. I can I can share that internally, it feels that you’re just failing all the time. Things don’t work. is the same over here. So, so coming back to and I guess we’re thinking about hat. So how do you attract these best in field? Now clearly it’s you and your leadership, but it’s also the mission, the mission has to be big enough, juicy enough. And so you described it as the software for a user owned internet. Maybe we unpack that a little bit and why is it internet? Not web? Why Why make that distinction?

Muneeb: Yeah. So I think people kind of like use the term interchangeably. And even we use the term Web 3 because it has it has a meaning now in in the industry, internet is just a more technically accurate term, because we do touch the lower layers of the stack right. So we do provide solutions at the at the DNS layer, right. So naming naming systems built on blockchains where people can truly own what they Registering even public key infrastructure. So be it’s like the technically the World Wide Web or the web sits on top of the underlying internet plumbing. But the work that we’re doing changes the underlying internet plumbing as well. Right? That’s why we are going to use that term. But in general, like let me unpack the software for a user on internet. It’s basically, I think, think of this as the internet itself, in various ways is public infrastructure. It’s a little bit like roads, right? Like the public infrastructure. Anyone can use them even criminals, right? Like you can ban people from using roads. And this infrastructure was getting really old and in a lot of security loopholes were getting. They were like glaring holes that even the founding fathers of the internet they all agree that these are the current problems with the internet, right? Like even my entire PhD thesis is actually, in some ways. David Clark, the chief protocol architect of the internet, who’s a researcher at MIT, like, his design, influenced the original design of the internet a lot. And over the years, he has come up with new designs for how the internet should have been. And my thesis kind of like, extends that, right. So in some ways, like you can even think of what block sack is doing as implementing the designs of the original chief protocol architect of the internet, right? So it’s, it’s, it’s like, it’s like an upgrade of that 40 year old public infrastructure. And we are we’re with the initial years of the of the project, we have built out that public infrastructure. But now developers also need developer tools for interacting with the public infrastructure. Right. So we, again like it’s going back to the Netscape example that whatever needs to be done, we need to do it right. Like we want to reach the end goal and whatever hurdles there are along the way, we basically need to solve it. So not only that we had to build the public infrastructure, we had to build the developer tools as well, to enable developers to easily build applications. And I think a big challenge down the road is how do we make it easier for users like it? Like, yes, we have like more than 400 applications, but it’s still, you know, relatively hard to use these applications or people don’t get the, the true value of it. And and I think that’s just the next step in the evolution where you can clearly separate a web two app from a Web 3 app, the underlying plumbing works, right these things scale. They are secure. developers understand it. I think we are at the level of helping developers understand this, learn about it and easily use it. That’s that’s where we are

In terms of evolution, and then the next step is more about, like mainstream users. So specifically, I mean, there’s many things that you communicate about the problem that block stacks solving for that certainly I subscribe to and I’m sure anybody that would associate themselves to the mission around Web 3.At its heart, it’s this idea that, you know, the internet is broken, as you alluded to, it needs to be upgraded. It’s a bit of a black box. And I know you’ve you’ve stated that currently Google and Facebook is the internet.

And the internet is not free. Presumably because you subscribe to the idea that there’s this implicit you know, payment with data, which led to this why believe is a genius marketing campaign around can’t do evil versus Google’s don’t do evil, which they obviously dropped a few years back anyway. So I write to describe this as the mission is kind of this unbundling of the internet. Is this today? Yeah. So I think the that’s that’s the high level problem that basically what happened was, I think the the Internet of the 90s that I just have very fond memories off, did not have these large companies that everyone is kind of like connecting to and they are spying on you and they know everything that you’re doing. Right. And web 2.0, which felt like an upgrade.

At the beginning is really the problem that we are trying to solve. Right? What happened with a 2.0 is that you started the, like, think of this as web 1.0 was like desktops, right? That were and it was more peer to peer like everyone had their own website. Like, you would go on IRC to chat with each other. You’re not going through a company. Like right now you are like everything you do on the internet and And people don’t even realise these things at times that, you know, every website you visit, or at least 60 70% of them are reporting data back to Google about wherever you are, what you’re doing. And they’ve now started feeling this that, hey, I was at my home talking to my wife about some product and then I started seeing ads for it, right? Because now it’s, it’s creeping into voice as well as creeping into your location. And what the problem that people face like they can sense it. And it shows up in different examples all the time. like just yesterday, I think Kevin Rose was one of the investors and he was talking about how Grammarly, which is a perfectly fine product, right and helps you write better sentences and does spell checking and better grammar. Basically, literally stores every single keystroke that you have written. It’s like, scary to think about that that this company has every single thing that you have typed in your emails and browsers and whatnot. But then, so many other companies have, are doing that kind of data collection as well. And it is no longer your personal software on your personal machine that is private and you’re using it. And then a step further is we’re moving into a world of digital assets, right? Like there are internet assets now that you can directly own. And I think it’s extremely important to get this right, because you don’t want to be in a position where only companies own assets and people don’t have kind of like direct ownership of these assets, because they will they will, they will be left out of the internet economy. That way you wouldn’t have a true internet economy where anyone can freely participate if we keep on going down the the current path of large tech monopolies and I think even governments are realising that right so there’s a lot of talk about antitrust or regulation against these companies? I think regulations end up harming or doing more harm than anything else. Right? These are problems that can be solved at the technology layer at by enabling more competition by enabling certain models where it’s much harder to build monopolies like the ones that exist today.

Jamie: Yeah. So I mean, it’s really interesting that you talked about some of the founding fathers of the internet and the web, reflecting upon design choices that they made, how they may, may or may or may not have been right and what upgrades are possible. You know, I always think about the Declaration of Independence of cyberspace and some of the things that are contained in that which were, you know, very clearly political choices. One was specifically that you wouldn’t have identity and the other one was that you wouldn’t have property. Both of these construct seen as tools of the state. And you could argue, because there is no universal protocol for identity. This is why we have many of the intermediaries on the internet as it stands today. From your perspective, how do you is the document that you see being carried forward into Web 3? And, you know, what are the things that you think are fundamentally missing or fundamentally broken? That that need to be solved from an engineering perspective?

Muneeb: Yeah, so I think it’s, in many ways, web Web 3, if you simplify it, it’s doing two things, right. One is it’s introducing some new functionality that just didn’t exist in web two. And that functionality is mostly around ownership of assets, and smart contracts. Those are the really two things and even their length right. You usually own The the assets through smart contracts. And the other category is all about alternatives to things that already exist in web two. But you flip the client server model and you make the clients more powerful. And you depend less on the servers, which is a is a huge change from technical architecture perspective, right? A lot of plumbing needs to happen for that to take place. But for a user, it’s basically it could be a very trivial change as well, right? Like, for example, if you’re if you’re doing taxes in Web 3 private app, like you’re just all of your information is just with you. And it’s mostly running on your device. Versus You know, you’re giving all that data to a company and you’re using a server that a company’s running, right. So that’s, that’s kind of like it’s like, undoing the negative things in empowering the users plus introducing these new functionality that just didn’t exist. And I think that’s where most of the innovation is going to happen. And that’s where a lot of excitement is going with a lot of excitement is going to be because of because of these new features. You mentioned the founding fathers of the internet. And they’re, they’re talking about is there I think there there was this event in 2016, I believe is called the decentralised web summit. It was held at the Internet Archive head office, which is like in this beautiful church building. And I think it will be one of the historic events. If the biggest threat to Web 3 is actually mass adoption. I think the technology layer, we’ll figure it out, like we are almost there. different projects, and especially in the last few years, I think a lot of sophisticated teams have entered the space as well. And I’m very confident that you know, block sack has figured out a lot of this. Other projects are making a bunch of progress. The biggest challenge is going to be mass adoption. And we can we can get into that but And I think it will be one of the historic events. If the biggest threat to Web 3 is actually mass adoption, I think the technology layer, we’ll figure it out, like we are almost there. different projects, and especially in the last few years, I think a lot of sophisticated teams have entered the space as well. And I’m very confident that, you know, block sac has figured out a lot of this. Other projects are making a bunch of progress, the biggest challenge is going to be mass adoption. And we can we can get into that, but this is the room that, you know, it’s five years from now, 10 years from now, Web 3 is massively taken off. This is where, where all the internet traffic is. And you know, it’s like a trillion dollar economy or so on. I think a lot of the beginning would would go back to this event in 2016. And Sir Tim berners Lee was there, you know, inventor of the World Wide Web, when surf was there, the inventor of TCP IP you know, and and It was it was an event where some of these early project, early crypto projects, or Web 3 projects, all of the founders were kind of there. And they were there, or I think pictures of people interacting, and it really felt like one generation of elders, kind of like passing the torch to the next generation. And I think September’s Tim berners Lee, at that event, registered his ID on block sack. And that was like such a big event in our community that, you know, the, the father of the World Wide Web has officially signed up on on a Web 3 platform.

Jamie: And how do you I mean, obviously, I think Tim berners, Lee’s openly talked about this idea that the web is broken or it’s been hijacked in some way, and he’s having an attempt to fix that through through pods. I forget the name of the project. It’s escaped me but this idea of data pods, obviously that is an IT there isn’t a blockchain and there isn’t any tokenization And I think many people respectfully have said it’s it’s very it’s a very typical response kind of a generational gap or gulf between how Tim berners Lee would try to solve these problems compared to people coming through Web 3. Why do you think approaches like block stack is going to make Web 3 irresistible? And do you think that? Do you think that people care enough about privacy? I know they should. But do you think they actually care enough about privacy over convenience to to, I guess, bear with the inconveniences the current inconveniences of using it?

Muneeb: Yep. So I think let me let me answer the Blockstack question. So the box tag, I think there are two things that are very different. And one is that I think at a high level We know that there’s enough enough data that Web 3 will be built on top of blockchains. Right? I think technically you can have an approach where there isn’t a blockchain. There are some solutions. As you mentioned, Tim berners Lee is working on one key base comes to mind, right, like they don’t really use a blockchain and and provide some sort of a similar identity features and verification and apps even that can be built. But I’m pretty much in the camp. And I think a lot of other people as well are that Web 3 is going to emerge on top of blockchains. It is still unclear which blockchain right and that’s where you see, almost like even competition, which is a healthy thing. People are trying different experiments. I think we’re block stack stands out in that landscape is that we are actually innovating around the Bitcoin ecosystem, right? We truly believe that Bitcoin is by far the most secure network. The most Stable one. And by design, it needs to have a limited scripting language and it needs to have this property that it doesn’t change, right. So in many ways, we are adding the functionality needed for Web 3 and smart contracts in our blockchain, the Stax 2.0 blockchain and anchoring back to Bitcoin, but the thesis is that Web 3 is going to emerge anchor to Bitcoin, versus some other smart blockchain. So that’s, that’s one part of blocks. And the second is a is a is a more technical distinction. And this is, I think, the analogy sometimes I give as is the difference between a mainframe like approach or a desktop, a netbook of desktop computers type approach, right? So in some ways, like, block sacks, technical architecture is the inverse of aetherium, right, like aetherium and other blockchains that are really trying to do a lot of things at the blockchain layer. They’re kind of like mainframes, right? They can only do a single single transaction at a time. They really want to make that mainframe very powerful, and do a lot of computations and storage at that mainframe. Block stack is the inverse of that, like a very minimal network that mostly does coordination. But most of the storage and competitions they actually happened with the clients, right? So it’s a little bit like a lot of desktops that are interconnecting with each other and coordinating mutations. So that’s, that’s where we play in the design landscape. The question of like, you know, what people care about, about this, I think it’s more I think of this as if Web 3 is done right? It actually should be more convenient. And privacy is just like, nice to have feature that might, a subset of people might care a lot about, but the generally people are not going to care about, but I think it’s going to be these new types of features that just couldn’t exist in web 2.0. And people will come for those things, the new things that like imagine, like, you know, if, if you, as a user can actually make more money on a Web 3 app than a web two, there’s a very strong financial incentive for you to be on a Web 3 app, whether the privacy and user ownership and all those things, they come as a side effect of it. But your primary motivation might be that, hey, I wanna I want to do this, because I can be a better part of the internet economy a little bit like how, you know, companies like Airbnb or Uber enabled users to basically make more money from assets that they already own.

Jamie: And is this from? So that kind of financial motive is that? Because there are cost savings on transactional fees by removing middlemen? Or is it because there’s this incentive layer which directly rewards participation in in networks and by contributing resources or bootstrapping it in its early days.

Muneeb: Yeah, I think it’s a combination of few things. But the end result is that imagine some of the most successful companies on the internet, right? Right. Like, look at Twitter, look at YouTube, look at you know, medium is not at that level, but look at medium as a blogging platform. All of these things, they’re effectively user generated content. users are doing it. And in case of YouTube, yes, users get a slice of the pie, and they make some money as well. But not on Twitter, not not not in other places. And basically, what’s happening is that the company and not just the company, but all these ad networks. So there’s some optimization that these ad networks are fairly complicated and they can be removed and simplified and there could be a direct relationship between, you know someone who wants to pay you for your attention and your attention and And the other side of it is that if it’s your content and other people are making money on it, then why aren’t you making money on it? Right? So it’s like it. I think, what we see on the internet right now, like, a lot of people basically have this reaction that so world is not going to change from this model. Whereas the world is always changing all the time. Right? And it’s, it’s just a, it’s just like, you know, the future is already here. It’s just not widely distributed yet. Like, it is, in my mind, like a couple of years from now. As soon as you know, people would be like, people, you should be getting paid for watching any ad on the on the internet, right? Like it’s your attention and that’s what advertisers are paying for. And you can remove all these middlemen, same for content, right like your if your content is getting a lot of kind of like attention on the internet. You You should be directly monetizing that. And right now, you know, we’re in this like strange place where other companies kind of like benefit from the user without really giving anything back to the users forget about giving anything back. They, they track you, they like resell your data and all sorts of strange creepy waves. And it’s just a very broken system right now.

Jamie: And so as I mentioned earlier, you were the first kind of reggae plus offering around a crypto asset, I think you raised over $23 million. And that took you at least a year and probably several million in legal fees. And having forged that pathway. You’ve certainly shortened the the time horizon and the amount of capital with setting the precedent for other projects to follow. So I think you know, the industry owes you certainly adapt there. Now you’re focused on Looking at how you can include, I don’t know what you would call them retail users more actively in the network. I think you’re gonna, is that shifting away from app mining? Or is this a kind of an evolution of it?

Muneeb:  Yeah. So I think mining is separate. Let me answer that first app mining pilot that we ran for over a year. It was basically kind of like an incentive mechanism to get developers to come and try out our tools and build applications. And basically, in some ways, like, prove out that, you know, Web 3 apps can exist and can scale to millions of users. And we were very fascinated by this idea of can we automate certain metrics around quality of applications? Right. So we tried, you know, even getting reviews for UX off an app or checking you know, how How decentralised an app is or how actively it’s being used. And the interesting thing is that yes, you can make progress towards these things. But a fully automated algorithm is very hard, right? It’s basically whatever metrics you throw at people, especially if there’s money involved, right? So there’s a, there’s a distribution of the stacks cryptocurrency that can go to these developers if they are doing well on these metrics. So they rank higher on the colour of the app mining score. And any metric you throw at people, instead of improving their app, they might actually start gaming the metric itself, right. So our big really big takeaway was that we might require humans in the loop, right. So a little bit more like, you know, it’s very hard to automate Y Combinator, like, you know, Y Combinator, manually goes through a lot of startups and tries to curate the ones that that can be really good and helps them to build their apps. So I think app mining 2.0 there are various proposals around but I will be surprised if Fully automated approach kind of like comes back. But in general, I’m very much supportive of supporting developers and giving them incentives in your, in your ecosystem to basically come and build applications and build infrastructure. So that’s, that’s like where app mining is right now. But in general, the work that we’re doing is we’re in this like, a little bit of a strange situation where the the stocks cryptocurrency it’s a utility token clearly gets used in applications and users can register assets for that they can use it in applications and gets consumed as fuel for smart contracts fairly similar to ether in a way, but just because of our kind of like legal framework, it is currently not tradable, or easily accessible in the US rights. So outside of the US because it’s treated as a security in the US is treated as a security but outside of the US. You know, we got opinions from several jurisdictions and even in our sec offerings, we disclose them As non security jurisdictions where it’s treated as a normal utility token, and that’s why it trades internationally already. Right? So we are doing a bunch of work to figure out how can the US markets also open up for our users and even even potentially for trading? And I think that’s something where we have this approach of like an increased path to decentralisation because the the US securities regulations at the SEC, they use a different framework for looking at what can and cannot be a security and we’re basically trying to do and no one again, no one has ever done this before either, right? Like Yes, projects have been fined and you know, they they’ve had sec enforcement’s against them but no one has done this in a in a friendly compliant manner that here’s how you can start off looking like a security in the US and then even in the US are clearly not a security.

Jamie: Yeah, I mean, You know, I, I really am. I’m not a direct investment block stack. But I really wish you success with the project because I think that in the one hand just by virtue of when you were bringing the project to market and the pathway that you’ve chosen, which is ultimately to, to work with the regulator, to deliver utility, extend, you’ve kind of got one one arm tied behind your back in delivering that utility, which is the great irony where something like a theorem is out there in the wild. And you’re clearly being treated as a utility, even though there could be very little difference to how that was rolled out versus several other protocols. And, you know, if the aspiration of a given regulator is to increase the utility of a network, then clearly that’s about allowing participation and distributing the wealth, value and control of that network. So I really hope that you, you can help the SEC, I believe coming to a more open and kind of innovation first approach. Meaning it’s great to have you on the show, really looking forward to watch the progress of block stack in your journey as an entrepreneur. And hopefully, we’ll get you on again soon.

Muneeb: Absolutely, it was, it was great to be here. And one comment about the V sec, is that I think like some projects got grandfathered in, like, like aetherium. But but it’s very hard to tell that, you know, would you end up in a case like telegram where the enforcement was really bad for the project, or it would be something like us where, you know, they kind of got away with it. And the approach that we’re taking is that, you know, we’re, we’re not going to take that risk, and just make sure that we’re where we’re the clear and are complying with with the applicable law. But this was great. Really great talking to you, and thanks for all of you. support over the years. Right thanks many. Thank you.

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