Brock Pierce has been at the heart of almost every major innovation and event in Web 3 from being an early investor in and Chairman of The Bitcoin Foundation.
Brock has raised more funding for crypto startups than anyone else on the planet, pioneering the first Initial Coin Offering with Mastercoin in 2013 which triggered the lead up the $20bn 2017 ‘ICO Boom’. He co-founded Blockchain Capital the first blockchain VC and with them conducted the first STO (Security Token Offering) and with EOS conducted not just the largest ICO but largest crowdfunding event in history raising $4bn. As an investor, he was one of the largest backers of Ethereum ICO but also cofounded Tether the first asset-backed stablecoin. He talks candidly about how being an early founder in gaming and esports in the 90s and 00s gave him an edge in understanding the rising importance of digital currency & assets like NFTs as well as how we grow a powerful community of founders, once described as the ‘Crypto Illuminati’, to build information asymmetry to spot market opportunities.
- The origins of digital assets in gaming
- Market timing innovations
- Utilising information asymmetry
- Fundraising in Web 3
- Growing new digital markets
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.
Okay, so today I’m really happy to welcome Brock Pierce, Founder and Chairman of the Bitcoin foundation. I could have listed him as a founder, co founder of several projects, Brock Yeah, I’d probably try to describe you as Serial Web 3 entrepreneur, not just in Web 3, but also domains like gaming, longtime advocate really pushing the cause of the space, testing the edge of the regulatory boundaries, and an investor in some of the most kind of seminal projects. It’s great to have you on the show.
Brock: Thank you for having me.
Jamie: So you’ve probably got the most complete journey of a founder in a classical sense, in that you’ve been a serial entrepreneur, you’ve gone on to be an investor advisor, Chairman to several unICOrns in the space. And throughout your career. It seems like there’s this interplay or at least parallel track between crypto and gaming. So it’s going to be interesting to know you know, which came which came first which inspired the other the interest in the other and hopefully if we get time, perhaps talk about how they can come together in concepts like the map This so the first time I became aware of you was on a panel at I’m pretty sure it must have been Europe’s first Bitcoin conference held here in London, which, as far as I can account was least six years ago. That was the event that inspired me to go on and found out live ventures in 2014. I think the same time that you co founded blockchain capital with the Stephens brothers. And since then, I’ve had the pleasure to be on panels with you both at your D 10. event in Amsterdam was the first one. And then since then all over the place. Vienna, Austria, Singapore, I’m sure you can’t remember as much as I can’t. So, but we’ve never really had a chance to go deep. You’re always a man in a rush, you’ve been whisked off. You’ve always got a mob around you. And so it’s been very difficult to get one on one time. So this is my excuse to get that one on one time with you finally.
Brock: well, it’s a pleasure in long overdue. Our orbits have been rotating together for yes six, six plus years and it’s been a pleasure to to get you get to know you and and see your sort of steadfast support for this ecosystem’s development.
Jamie: So I’ll be honest, as I was kind of doing my desk research was there some things I knew about you and some things I didn’t know about you. And as I kind of went through the LinkedIn profile, and was clicking links and checking out various companies, I wasn’t aware of just how much success you had had before you entered Web 3, had a couple of exits, and you’d really kind of developed a profile in gaming, but you’re also very early into Asia and China. So I’m going to try to do my best job to summarise it. Almost impossible task to be honest with you. So I mean, you’re famously a childhood actor. I don’t want to spend too much time on that because otherwise, we’re going to talk about Anything else, although as interesting as it is, but as I can record, you know, you did your first startup was Dan digital entertainment network in 9799, which was around delivering entertainment over broadband, which I guess makes sense, you know, given you coming from the entertainment world, that raised over $88 million, including from a lot of corporate ventures, Microsoft, Intel, NBC. In 2001. He founded he ran it as CEO all the way to exit that look, looks like it was your first exit. Is that right?
Brock: Yeah. So Dan was in the internet 1.0 phase, you know, there’s not many people as young as I am that actually lived through founding companies and internet 1.0 because I was 1718 years old. That idea was basically YouTube, Hulu, Netflix, and we were Still credited by people in that business as having been the pioneers. The problem was, we were too early broadband didn’t roll out at the rate that everybody’s everybody anticipated. And so when the internet bubble burst in 2000, we went bankrupt like 99% of the other internet businesses at the time. And something those of us in crypto are familiar with, we go through these cycles and if you’ve been around for a while, you’ve seen a few of these and the first wave of projects are mostly gone the second wave projects are mostly gone or you know, zombie sort of state and now we’re in this kind of third phase again, but probably not worth focusing too much on the the the acting portion of my life. But the origin story of what led me here also started during that time, I was a very entrepreneurial kid, you know, building all the lemonade stand businesses One could think of, from literal lemonade stand businesses to paper routes, to mowing lawns to shovelling snow on the kid from Minnesota. But the part that Most interesting is I got very active in collecting baseball cards and playing cards. And I got very active in the trading of cards and can I take you know, you know, $10 and turn it into 100 over time, you know, the story of the red paperclip. And I became very fascinated with that and saw arbitrage and became an effective sort of childhood trader, which eventually led to things like magic the gathering, which eventually led to, you know, I was a very active gamer as well, you know, the equivalent to what you’d call a pro gamer. But back then, we didn’t have, you know, an Esports industry, it would be going to the arcades and playing Mortal Kombat competitively, you know, for prize pools and things of that nature. And so it really was in you know, call it Magic the Gathering and baseball cards. That led to me recognising as games became multiplayer in the late 90s. That as assets existed in these worlds just because they were intangible didn’t make them less valuable in the same way that people wanted to spend. real money for things like a Magic the Gathering card. And it was that that led me to basically building all of my games businesses and all of those games businesses around kind of the pioneering the markets of virtual or digital currency in games is what led me here. So it’s it’s, it’s it’s a lifelong sort of journey.
Jamie: Yeah. So that fusions interesting, I think, also the idea of timing. And that’s something I definitely want to pick up later. Because, at least on paper, it looks like you’ve got the best timing in Web 3, involvement and launching various projects. But, um, so I was actually papers largest merchant in 2003 2004. Just to give people concept to the scale.
Brock: You know, we were Yeah, it was, it was massive. So if you’ve ever played things like World of Warcraft or second life, we were the market makers. So we were buying all the digital currency from people that have more than they needed, you know, people that were playing games but lacked income to, you know, buy beer and other things. Maybe pay rent. Tuition Probably not. This was generally interfering with school and people were probably more dropping out anguishing with these funds. But we were market makers and we were the the exchanges and we were the the websites where you would buy digital gold. You know, inside of these games, we ended up building up a supply chain of 400,000 people. This is in the early 2000s that would play video games professionally to mine that digital currency principally in China. And so I moved over to Hong Kong in 2002. to basically figure out how to teach the Chinese to play games professionally because I couldn’t source enough inventory from regular gamers. And so I needed to basically industrialise a massive supply chain of inventory to meet the demand of gamers all over the world. And, you know, as a result of that, we got very good at you know, payments, because we were selling digital gold and World of Warcraft. This was such a novel idea that we were often confused with With a gambling company, you know, people were like, what do you mean people are paying money for digital gold inside of a video game? Is this gambling? I mean, that was the assumption. And so when dealing with the credit card and the merchant processing and the banking, they they were often lumping us into, you know, a category of business that was highly regulated and difficult to process payments. And so we struggled with that for a long time. And I developed all my payments sort of expertise around that. And a lot of the people from industries like Internet, gambling, and others would all come to me and ask, you know, can you help us figure out the payment problems? You seem to be good at this? And so I learned a lot about the payment issues that existed and call it other high risk industries. And we It was quite big. We were moving hundreds of millions of dollars a year eventually, you know, billions of dollars a year. And so yeah, we were PayPal is largest merchant for three years. We launched Ali pay in China, because we were PayPal second largest originator of new customers, and eBay being number one, but he Bey wasn’t a singular customer, but they were onboarding Lots of new users to paypal after eBay, it was us. And so Ali pay when they were launching, said, well, you’re the second largest originator and your whole business is centred around these Chinese gamers, you know, will you help us? You know, launch Ali pay. And this is when you know, Alibaba or Taobao wasn’t, you know, quite the big business that they are today. And Ali pay essentially didn’t exist. And so we were very involved in that piece. We were even Google’s largest advertiser in a month for a moment, you know, because we were there building this business as Google launched their advertising business. And you know, we were very quickly spending a million dollars a month and this is before any traditional advertisers were using Google. And again, PayPal probably was similar. You know, Walmart, and major companies didn’t use PayPal when they were a startup. And so we also launched PayPal as credit card processing division. So in the old days, to use PayPal, you had to have a PayPal account. And I eventually said, Why am I you know, I have to send my users to credit card processing, or I have to send myself users to PayPal, I decided to try running everything through PayPal for a little while. And then I’m like, Well, I have a lot of attrition. When users are like, I have to create an account to make a payment, why can’t I just, you know, give you my credit card? I said to PayPal, I’d like you to allow me to process payments without accounts. And they said, Well, sorry, that’s not our policy. You know, we want everybody has it? Well, if you don’t do that, I’m going to turn credit cards back on again, and you’re going to lose, you know, 70% of my sales, which at that moment, I had that conversation with 70 million a year. And PayPal was like, No, don’t take that business away. And I said, well, then you have to learn how to accept it. The actual project internally at PayPal was project IGP. And I was on their merchant advisory board. And so I have a long background in cross border payments, which I think was also very relevant to, you know, the issues that exist in this space and one of the early sort of use cases or theoretical use cases for cryptocurrency.
Jamie: Yeah, I mean, there’s obviously loads of applicable actions. Within that, both in terms of understanding the regulatory arbitrage required to innovate at the edge of gaming, what might be conceived as gambling, understanding digital assets, as you say, the marketplaces that that form around them. And so that led you to set up Zam in 2003 2012, which was kind of a network immediate network around the gaming community and these massively multiplayer games you mentioned, that was my user acquisition strategy I, I needed to make gamers aware. So I rolled up all the biggest fan websites. And again, this is before you had things like where you Google you can like add the Google box to your to your website, and they’ll just deliver ads to you that product didn’t exist. Back when this was happening. You only had basically networks, advertising networks, and they would only work with websites that had you know 10 or 20 million pageviews. So if you were a subscale website on the internet back, then you had no source of revenue, there was no way to generate revenue. So anyone that was a big fan of a game would make these websites. If you ever played World of Warcraft, these were things like thought bought, wow, head and Alakazam. And so instead of buying ads on these platforms, and then having to compete, it was almost cheaper to acquire them. So I led about 30 plus acquisitions, rolling up all the biggest websites around the massively multiplayer game space. And it ended up being a top 100 web property, what you know, in terms of traffic, it was a huge network. And we did sell that in 2012 to Tencent, and so sold that ultimately to one of the biggest Chinese players because I had very good relationships and with all the major Chinese and South Korean companies.
Jamie: Right. And so the kind of interest in gaming didn’t stop there. I know you set up clear stone gaming fund in 2011. There’s perhaps a couple of forks I guess this is where things start to go in parallel. I kind of follow the fork into into bitcoin and crypto. So in, I forget the year but just after 2011 you became chairman to Kate Kenzie miner, which had exclusive distribution rights to the ASIC mining devices in China. You set up Express coin, which was from what I can see one of the first Bitcoin brokerages. And then as we mentioned earlier, in 2014, you co founded what came to be called blockchain capital, which was the first dedicated venture fund in the space also bid angels which is kind of an angel syndicate network. And then in 2014, I co founded tether, which is the first stable coin an asset backed token. And in 2017, you co founded block one, and there’s lots of other stuff that happened in all of that, but if I kind of list all the firsts, and this is why I kind of had to have you on the show and I had to have you in the first Seven that we launched in this series because you were not only an early investor in in Bitcoin but you were the chairman of the Bitcoin foundation. You did the first ICO, which most people don’t know about, which was massive coin in 2013. You were one of the largest participants in the theorem ICO in 2014. In fact, I think this is roughly when I got to hang out with you a little bit in Amsterdam, and I remember you frantically checking the eath price during that moment.
Brock: And it’s actually this is in a large part, the origins of block one and Eos. I was cornering the market on all of the AMD processors, that moment, because the Ethereum price had gone from like two to $4. And I was good friends with Dr. Gavin Wood and a lot of these sort of people and so I felt that there was an opportunity to, you know, to jump into the Ethereum mining space, due to that quick price, you know sort of jump. And we literally bought out every internet retail graphics card in the world that was good for mining a theorem. And then we bought out all three wholesalers in the world, we literally bought up everything. And if you go back and read gaming forums at the time, you can see some people complaining that someone just bought every graphics card in the world. It actually surprisingly, only cost about I think $4 million at the time. And and Brendan bloomer who CEO block one and I have been working together since he was 18. I acquired his company at AIG back in the day and and moved him to Hong Kong which is you know, in part why block one is set up there. It’s a lot of people from the IGE business were involved in that. But I Brandon’s like Brock let me let me participate in this and because I went straight from Amsterdam to India, and Branden became one of the main investors in cornering the market have a theory and with me, which is what brought him into crypto full time, you know, staying on top of, one of the largest graphics card mining operations in the world.
Jamie: Interesting. And it doesn’t stop there. So, after blockchain capital, you did the first sto for blockchain capital in EOS, which he co founded. It did the largest crowd sales, not ICO crowd sale ever, an eye watering. I mean, I still can’t believe it, to be honest, you fought for billion dollars and then tether, co founded tether, which was the first stable coin and asset backed token. So, I mean, there’s a litany of firsts in there. So clearly, you have a appetite for risk, but But somehow, you know, I mean, all of those things in their own way would have been fairly painful to bring to market. You know, the, the meetings you would have had to have and costs invested with lawyers doing something for the first time. So I mean, being first what is it about being first, and how do you, is it instinctual when you know that the time is right for a particular innovation? Or is it just perseverance? And so, there are a number of firsts that we haven’t heard about that have failed.
Brock: Yeah, so I there’s definitely that’s a wonderful list of things that I’ve done that have worked out, I probably have an equal number of things that have not, as I like to say, I’m I’m wrong 49% of the time.
Jamie: And so that’s still a pretty good ratio.
Brock: You know, I have a pretty good batting average, I would say. I’ve mostly at my I’ve been right about the market and the concept and the timing, almost always. And the the issue of being right is in the execution where I failed to execute and, and and hit my marks and as a result, you know, that market did take off, and it did end up being successful. Maybe I was a little wrong on timing, but I do I failed to execute effectively. And that’s normally my issue because it’s not that hard. You know, this goes back to my first company, the den or the digital entertainment network failed, because we were too early. And so for me, that was business school, I really understood the importance of market timing. And I learned that being too early is probably even worse than being too late. When you’re too early, you eventually just die on the vine. If you’re too late, someone else still may acquire you for team and talent and technology. Right? You know, it won’t be a good outcome, but you’ll there’s still the potential of you know, recouping capital. And so market timing has always been kind of a core thing for me. I have kind of the equivalent of a crystal ball that allows me to see the future. And when I say that, I don’t mean a literal crystal ball. I have an asymmetry of information. So as you were pointing out, I’ve started so many companies in this space. I had a background of knowledge that brought you know, a lot of skills to the table. And then I also founded as many companies as about anyone in the space. So what did I really have, is I had a 70,000, or even higher foot view of everything happening in the ecosystem. And when you have more information than everyone, you kind of see the map clearly, I see what’s happening, I see what’s coming up, and then you have enough knowledge of what you think the next most likely things are going to be. And you’ve got data sets to operate that kind of show you what’s happening before it’s happened. You know, it’s, I’d like to say that that’s probably the thing that I had that differentiated me more than anything, is I had more information and with more information, I was able to make better decisions, which resulted in me being at the right place at the right time, you know, on a number of occasions, and as you pointed out, an appetite for risk, because again, I’m not motivated by money. I’m a serial entrepreneur, I enjoy the process of creation. You know, creation is like you know, you know, and anytime that you’re on the visionary pioneering end being one of the first to, to prove out a new concept. For me that’s incredibly rewarding. I enjoy doing that, which is why I have the appetite for risk and the comfort with failure and the willingness to fail or lose that I’ve been on the frontlines of innovation so many times, because that’s what I enjoy. Though it is painful. It’s you, it was a pioneer you you take a lot of arrows in the back, because you’re you’re pretty much constantly challenging the status quo. And I don’t just mean the incumbent world, challenging the status quo, even amongst those of us that are futurists. You know, I remember going around and pitching tether to all of my sort of friends that were pioneers in the industry. And pretty much everyone thought it was a bad idea. You know, everybody was like, why would anyone want us dollars? We don’t believe in that. But we’re all about Bitcoin. I go well, but US dollars still kind of have a very important role in the world. And wouldn’t it be better to be able to move money from one exchange to an another in dollars so that you don’t have to always move it in Bitcoin or have to take money back into the you know, call it the banking system and slowly send wires and pay large fees. Wouldn’t that just be convenient? Also, if you trade cryptocurrencies, wouldn’t you like to just be into a you know, anytime that you want to short the market or sell Bitcoin or reduce exposure, to just be able to go into a digital dollar and then back and then go from a, you know, a consumer perspective, if, you know, financial inclusion, which is something we talked about is really one of the great use cases for this technology. The people in Latin America, Africa and Southeast Asia, are not looking for Bitcoin, they’ve never heard of it. What they want is US dollars. And if using this technology and these wallets, there’s a way for us to deliver a digital dollar to them, where they see a Bitcoin symbol in their wallet every time they open it. Wouldn’t that be a great way to onboard millions 10s of millions, hundreds of millions, maybe billions of people, and everybody was like, I don’t see it. And and I was pretty clear in articulating the thesis I said also, you know, eventually central banks and governments may say that they want to utilise this technology for their currencies in our original pitch, you know, we were going to prove out, you know, the model that would allow China and the other nations that you’re, you know, seeing do this to that there’d be efficiency in this. And I thought, from a strategic perspective for our industry, if government and large industry saw the value of what we’re doing, that would act as validation, and it would largely de risk the industry. You know, if you were around back in the early days, you know, how,
how this industry was perceived, you know, it was sensational headlines. I mean, if you said that you worked in Bitcoin, the assumption was that you were automatically a criminal, you know, that you were a drug dealer, or you were involved in very shady things, because that’s really all the press wanted to highlight. And when when you’re being portrayed to the world as a very shady industry pretty much all the time. You’re really at risk of government taking action. And so I really wanted to show the world that there was more to this technology than then than the things that The media wanted to highlight and making arguments to show that, you know, call it the incumbent world could benefit from this in some way, I think was a very important argument, which is really how we got into the story of blockchain. Right. Back in the early day. It was it was just cryptocurrency. And when we, when we separated the technology from the call it the the first use cases are first applications, it really gave us the story, to be able to story tell to the incumbent world that there’s more than just a cryptocurrency here are an alternative or parallel monetary system. This is a technology that can upgrade the entire world and provide better security, greater efficiency, X, Y, and Z. And those are really the arguments that you know, I think, kept the government’s at bay, from you know, trying to round us all up and arrest us. Because, you know, we were getting validation from, you know, real industry saying no, there’s something here more than just Bitcoin. And so, you know, it’s been what an exciting ride just and it’s only been six or seven years.
Jamie: so I was gonna say I was gonna say I didn’t say it’s nice. It’s only been six years. And so I mean, so within that what’s really interesting is you talk about this asymmetry of information. And I can understand as a VC, now I get to see so many startups, especially if you’re doing pre seed seed stage, just concepts. It gives you a few years advantage on the rest of the market, because you can see what’s coming down the pipe, like most founders aren’t starting out in that position. Right. So how do you get that asymmetry? when you’re when you’re just a founder? And my intuition is that we were talking kind of off air before we came on. And you were saying that this, the lockdown is this kind of false lockdown is the first time you probably spent consecutive weeks at home, you’re normally a man on a plane, you’re at conferences. So I mean, I’m guessing that you get a lot of that asymmetry by just being in the mix.
Brock: tranYeah. Okay. It comes from a bunch of perspectives. So one is I started a bunch of companies, you know, so I started out doing A lot of the mining stuff in 2012 in early 2013, because that’s all there really was we didn’t really have a startup ecosystem yet. We only had the first bit instances and, you know, five or 10 companies that have been created. And my background was more as a founder. And so when you’re a hammer, everything looks like a nail. So the first thing I was going to do is start some companies. And I couldn’t figure out what companies to start. And so because there were so many things that I saw as opportunity, I decided to operate more as an incubator and I was starting a new company every 45 to 90 days. And so I was just churning out new business after new business after new business, trying to learn as much as I possibly could and so through the starting of go coin, I learned every you know, I learned tonnes about crypto pain, you know, the payment market and realise that there’s not that’s not a big industry people don’t like to spend their crypto to the degree that you need. I mean, even today, there’s really only enough you know, crypto be crypto being used for payments are happening just to a degree. There’s only a room for really one you know, nice business and you’ve got hundreds attempting so it’s a it’s a crowded space where very little you know sort of value is truly being created at this time. But you know, we also built out the Bitcoin ATM industry. Yeah started out with some of the early Bitcoin brokerage and exchange. And so kind of having started a few companies, I got to know lots of founders, you know, early speaker, we started hosting dinners with Matt Rosetta and all the conferences. This was like the, you know, people call it like the Bitcoin Illuminati. We call it the Bitcoin supper club. And the idea was invite the CEOs of every major company at every conference to a private dinner, which we did. And because no one else was doing this, I mean, this is something that you saw in every other industry, because I’d worked in lots of other businesses. If you went to conferences. There was always someone sponsoring and maybe with some law firms or sponsors supporting it, that would invite all the who’s who to have dinner and pay for it and a nice restaurant. There was no one doing that in crypto. And so Matt rose and I were like, let’s, let’s facilitate those dinners, and then I would go around And have everyone introduce themselves and remind everyone, that we’re not competitors. I know you might see someone across the table from you that you view as a competitor, but they’re not really your competitor. We’re all operating very small businesses with a dream of potentially changing the world. And a very small market at that time, right? Yeah, we’re tiny. It’s called, we’re Co Op petition at worst. And when you look at that person across the table, and you have fear that you know, they’re your competitor, what you should really be seeing is that that is someone that understands you, that is someone that is going to bed and waking up every day with the same mission as you. That is someone that probably knows more about what you do every day than anyone in the world and probably is filled with information and knowledge that you could benefit from greatly. So instead of being afraid of that person sitting across the table from you, you should probably recognise that that person may end up being feeling like a family member or closest friend, and you guys may decide to work together you may decide to merge, you may decide, you know, all sorts of things can happen. So Let’s figure out how to support each other, you know, as a small emerging industry, rising tides raise all ships. And so through these dinners, people became, you know, very, very open kind of like young presidents forum type of stuff, where everyone would talk about their challenges share their ideas, and it just it created a really friendly sort of ecosystem where most of the call it movers and shakers, you know, came through these dinners that we hosted all over the world, that I also realised I couldn’t run more than 12 companies at a time, you know, I probably couldn’t run more than six at a time, certainly not well, and I still had an appetite to do more and more and more and so the only way to do that was as a VC, which is why my my energy shifted over to blockchain capital, you know, where we’ve invested in many dozens of early startups in the space and a lot of important ones, you know, from the coin basis to the crack ins to the Zappos to the circles. And so we’ve funded all sorts of businesses. And so yeah, as an entrepreneur, being in all the conferences as a speaker posting the primary sort of dinners as a VC. And as someone that barely sleeps, you know, you add all of that up. And yes, I had a, I had an incredible amount of information that essentially very few others had. And as a result of that, I was able to predict the next major innovations and a bunch of instances. And so, but that’s how it worked. You know, that’s the joke of I had a crystal ball. No, it’s a lot of blood, sweat and tears and a lot of frequent flyer miles.
Jamie: Yeah. So. So as a founder, obviously, you’ve been founder, co founder, founder, Chairman, I’m sure over time and with success, that the type of founder that you are has changed is evolved. But what type of founder are you? So how would you describe the thing that you do in a co founder mix? And how do you complement that with other people? What do you look for in other co founders? And I guess that then follows through until What kind of founders feedback as an investor?
Brock: Yeah, so I like that the superpowers are the main sort of things that I would say I, how I add value today, I’m spread so thin that I don’t really want to be the, you know, Product Manager sort of side of the business. I don’t want to be in the weeds doing the product development. I’m happy to be involved in how share, you know, kind of perspective on best practices and other things. But I don’t really want to be the product person. I also don’t really want to be the operations person. I don’t you know, that again, these are, these are full time commitments, and I’m spread so thin and often involved in many things that I can’t, I can’t wear either of those hats successfully with the lifestyle that I lead. And so the main thing that I do is I am a storyteller. And so I know how to take a very complex idea, you know, something that may be in the ether, and I know how to pull that sort of concept out of the ether and really define it. In in really simplistic terms and a simple sort of elevator pitch, so that you can take an amorphous idea that hasn’t yet, you know, basically manifested itself in this reality. And I can frame it in such a way that, you know, we can, you know, actually start to try and bring that to market by sharing that idea with people. I also have a pretty good network. And so I know how to get this concept, you know, call it into the Zeitgeist of, you know, call it industry leaders, I know how to share this idea with you know, call it core critical investors, I know how to open up those doors. My involvement often makes raising capital or bringing in resources much more efficient because I have a track record. You know, as an investor, you understand this, you prefer to invest in projects where people have been there and done that and had prior success. That doesn’t mean that’s a requirement. But it just gives you a lot more comfortable when you’re looking at a team that’s been around the track before and successfully. And whenever you See that patina of success around a project, your interest level is going to be higher. And so when you combine that with, you know, call it the right product managers, the right operations sort of people and the right sort of storytellers or marketers, I’m more of a marketer, probably than anything else that understands capital formation, you know, you put all those sort of ingredients into into a creation story, and you start to have it you know, sometimes again, when you’re a hammer, everything looks like a nail. And so one of the things that we all need to be, you know, good at if we want to be effective founders or effective at creating things, is realising it’s we always like to, you know, when we look at things, we look at it from our individual perspective. And we like to think that our skill sets are the main skill sets that make a project work, when in reality, we’re just, you know, part of a team required to make things work. And it’s really important to understand what are the other ingredients necessary to make success, and then you’ll start getting good at identifying other people that have the skills that you lack or the things that you don’t want to practice. And then you can start to form a team to help All the core elements necessary to create something successful. And so one of the problems we have as an industry is the developers tend to think that it’s a developers world. And it’s only about the developers, when the reality is look at the successful projects in our space. Having the best developers in the world is not enough, right? Having the leading developers in the world is not enough. Because you can, you can build the greatest mousetrap, you can build the Field of Dreams, but unless, you know, unless people show up to that product, it doesn’t really mean anything. The best technology usually doesn’t win. Historically, from VHS, Betamax, we can look at the whole history, the best tech usually doesn’t win. And so a big part of what makes things successful is the ability to get the message or the word out there. And to really build community community is a big part of what separates or differentiates the winners from losers in this space. And so this is kind of what I’d say I do is i’m a community sort of developer, you know, sort of capital formation person, and I can you know, quickly And I’m a wealth of information. So I can, you know, help us avoid mistakes, you know, that have been repeated before, because I’ve seen it done a bunch of times. And like, we may want to not do it that way. And here’s why. And, and just because something historically hasn’t worked doesn’t mean that it can’t work today, right? You know, some things just need to be at the right time and the right place. And so having that sort of judgement as well, and I just enjoy it. And what I found and part of the reason I’ve been able to do so much, is again, I’m not motivated by money, I think of myself as a conscious capitalist. And so the, what’s the most interesting sort of thing that I’ve learned in the last few years is I stopped caring about whether I earned anything. I stopped caring if I made anything off a project. Because one of the main problems you have when when a project is coming together, and the reason why most projects fail in their infancy, is because you have a misalignment of interests or incentives. In the beginning, everyone’s like what’s in it for me, everyone’s fighting over equity. In the cap table, and the reason you might found this company with this, which might go to zero, right? I mean, you know, people are fighting over something that might most likely will go to zero, exactly. But that’s normally most people, most projects die in their infancy because of their fight or squabbling over economics that don’t really matter much at this point. And so having been around the block enough to know that it’s a binary outcome, right, it’s a zero or a one. Let’s not focus on, you know, squabbling over the, the economics in the beginning for in my instance, let’s focus our energy on producing the binary outcome of making something a success. Because if something is successful, there’s normally enough to go around everybody does well anyway. So let’s just focus and optimise everything we do to success. And so what I would do is I’d meet up with founders, and you know, they’d be talking about some idea and I’d be like, Well, I’m not sure about that. And here’s why. And here’s the other projects that have happened, and they’re like, oh, wow, I didn’t think about that. I didn’t think about that. And then something would happen, you know, just talking to people that are you know, that are committed trying to build something. And then we’d start talking about another idea that might be tethered, for example, and start talking about this concept of a stable coin. What if we put the US dollar on the blockchain? Oh, yeah, that could be interesting. I would know how to do that, you know, and so Craig sellers and Reed Collins, you know, this is kind of how that story happens, for example, and next thing, you know, we’re starting a company. And so in a lot of these conversations, though, in the last few years, you know, the entrepreneur would be like, Wow, thank you for that idea. That sounds great. Let’s do it. And they’re like, but Oh, rock, how much of the company do you want to own? And, and their expectation is like, I’d want to want 80% and I’m gonna give them 20% to be CEO or something, right? Like I’m hiring them. And I’m going, I don’t want anything. And like, What do you need? You don’t want anything? I go, George, you can run with it. You make this company. And they’re like, but I want you involved. I go, I’m involved. Like, I’m helping you right now. And they’re like, but but but I go, how about this? How about you just run with this idea for a little while. I don’t want anything and But if you decide that you need me, or you’ve decided that I’m going to add demonstrable value, you know, we can talk about my participation at that time. And that can be in a month, three, six. And when you do come to me, and you offer me something in the company, I’m probably not going to negotiate much, because I don’t really care. And here’s an interesting point, if you give me nothing, I’ll probably still help you just as much. And the entrepreneurs are just sitting here going, What? He doesn’t want anything he’s offering to help. I don’t have to give him anything. And what I’ve done though, is I’ve eliminated the friction, you know, that person that normally would be negotiating with me, and going do I want to do this? Do I not want to do this? Do I feel like this is the right economics, when I eliminate all of my self interest from the equation, I’ve eliminated essentially all the early friction in the process of creation and so that founders just like, they feel like they won the lottery. And the likelihood of them building that company or pursuing that idea has just gone up tenfold. And that’s part of the reason as well, I think that I’ve been able to do some So many things so many times is because when I’m sitting at the table of creation, I’m not focused on what’s in it for me. And that increases the likelihood of, you know, us taking a shot at doing whatever it is that we’re contemplating.
Jamie: So I think one of the challenges that this space is having, this is the central but the two biggest ones that I can see as an industry as we’re trying to transition to a technology set that can transform into products and products that people actually begin to use is there’s been a lot of focus on infrastructure, in large part rightly, you know, you’ve got the capital markets infrastructure, you’ve then got the developer tooling that needs to happen alongside that. And inordinate amount of capital has gone into that and does capital inhibit innovation and discipline sometimes and founders and what do we need to do as an industry to move forward and kind of cross the chasm in the next couple of years?
Brock: Well, I mean, capital is the lifeblood of your business. Starting, you know, most projects, so it’s it’s either for good or for bad. It’s a requirement it’s needed. But what I’ve seen is over capitalization, it has not been very effective. And that’s what we saw through the ICO craze. You know, we put very large amounts of resources in the hands of founders who had not often, in many instances had prior success, often didn’t have all the necessary ingredients to make something a success, you know, tended to be very developers sort of white paper, academic, theoretical, heavy, and not enough sort of execution capabilities, marketing capabilities, you know, just call it experience in general. And sadly, we saw a lot of those projects fail. I think more of those things would have been successful. had those founders been given very little in the way of resources. Remember, venture capital is this concept of milestone based financings, you’re given just enough capital to get to level two, and then you’re given just enough capital to get to level three and so it By giving the founders all of the money up front, you’ve kind of created, you’ve gotten ready this step ladder, sort of milestone focused, you know, world, the VCs, you know, keep the entrepreneurs focused on what’s important, which is getting to that next major event so that they can get that next round of capital, it kind of puts the blinders on to a little, little degree, but it keeps the project often on the track. It’s, it’s, you give founders too much money, and they can very quickly get lost into the, oh, here’s a new shiny object, or perfection becomes the enemy of progress. And you just or or you just become lazy, you know, I mean, there’s a whole lot of things that can go wrong. And and we’ve seen a lot of that, you know, again, with the with the ICO phase. And so I’m not a believer, though, at the same time. I’m not a huge fan of venture capital. I mean, part of the reason that I created vicap, in the security token was to hopefully bring, you know, reduce the significance, the importance or the requirement of venture capital, right? I wanted to democratise ties the ecosystem so that everybody can participate and ultimately bring us to something closer to an ICO or an Sto. Because I would love to see the that that capital formation layer that has so much control over the world of what is created, I’d like to see that that role diminished in a major way. And, and so I love the idea of ideas having more money than they need to execute. But it needs to have adequate controls and governance and systems and checks and balances. And so I think that the way that you get there, if you’re like this idea needs 100 million dollars to work. Instead of, you know, just saying here’s 100 million dollars to a group of people with ideas. We could give 100 million dollars to an idea, but we as the contributors maintain voting or governance over it and if the team is failing to execute, you know, we can upgrade the team. You know, you if you add some of the venture capitals, sort of call it governance systems to that capital. Allow us as the community to have governance over who receives that capital, like we often do with foundations. I think it can work. But you can’t just give 100 million dollars to a group of young people and with no transparency, no governance, no checks and balances and expect good outcomes.
Jamie: So it’s interesting now so I mean, you’re absolutely right. You look at venture classically, it’s incredibly inefficient at allocating capital. Most funds don’t return to their LPs. And, you know, I’m with you in that. One of the one of the promising things for me about the space, the potential of it anyway, was that especially open source projects, great open source projects can get financed, there was in a way of business model to, to open source but obviously, without those constraints, without the accountability of equity, as you say, it again led to quite inefficiency or ineffectiveness, in how that capital got to the right people and how it was used. But interestingly, The capital now actually, I mean, there is no, there’s no, there’s very little VC capital for this space, certainly outside of the US. I mean, I know a 16 just closed, a very large dedicated fund. But the amount of capital venture capital being deployed into the spaces has shrunk dramatically. And perversely, now, it’s protocols that are the VCs, but they have the same inherent problem. So that outlined we have a number of conversations now with different protocols who are trying different ways to get people to build sustainable startups on their protocol. Not a PRC, not running a hackathon, but like an actual business that that drives utility and utilisation and network. So what are your What are your thoughts around that? How can protocols really as the VCs of this space now deliver genuine startup innovation on top of that protocol?
Yes. So I’m a big believer in this. It’s It’s why a block one, we set up espc with a billion dollars to, to essentially implement this at scale in the biggest way the first time. And the way that I envisioned that happening at the time was, let’s go anchor five or 10, maybe even 20 funds around the world. But in specific geographies, let’s anchor a fund in the United Kingdom. Let’s anchor a fund in India, let’s anchor a fund in China with anchor a fund in South Korea, let’s anchor a fund in Southeast Asia, let’s anchor a fund in Germany, you know, in Brazil, and Argentina, let’s go like go give, you know 510 $25 million to 10 or 20 different groups all over the world. And then let them try to raise matching funds or more than that from local government or large family offices or local strategics and enable this autonomous network of call it VCs to fund the local ecosystem around a particular protocol. And then we can reserve that the capital to do the later stage financing. And I thought that this was the most effective strategy to enable development because we have a lack of VC. And because the ICO or ieo market is, you know, so inconsistent, it’s like hot, cold, hot cold, that if you’re a developer in this space, you’re really malleable to developing on the platform that provides you with funding. And so I thought, you know, developer adoption is probably the most important thing to making a protocol work. And if you’re a protocol with a big balance sheet, you should be using that balance sheet to incentivize developers to build on your protocol. And that can be also with hackathons. That can also be with grants, it’s basically you know, do all of the things to encourage development on your platform. And so that’s what I attempted to set up with, with block one and iOS VC. And I still believe it’s the right thing for every major protocol, and that’s essentially what you’re seeing now. You know, tasers is doing that stellar is doing that cardano is doing that algorithm. Doing that all of the major protocols now realise that and you’re and you’re also seeing it from, you know, exchanges like finance as well. You know, basically strategic players are become the primary finance ears, and that they’re, they’re funding startups or developers because they want you to build on their platform or they want you to launch on their exchange. And so that’s become call it the main source of, of capital. The good news for entrepreneurs is because they’re strategic investors, they’re less price sensitive, you’ll often get better terms out of these groups than you would a blockchain capital. You know, a blockchain capital has a fiduciary duty to try and make a return for its limited partners. You know, a tasers Foundation, or cardano. You know, they’re not really focused on maximising ROI. What they’re focused on is maximising high quality developers building projects on their platform, and so they’re less price sensitive. Also, if they’re an exchange like finance, they’re going to make money. On the listing and the trading, and so they can afford to pay double because they’re going to generate revenue off of the projects they invest in. So it’s a, it’s a very different sort of model. And I think it’s great because it’s providing a consistent, you know, reliable source of revenue. And it’s forcing the protocols to compete with their, with their wallets, to compete with their balance sheets to attract developers. And, you know, I think it’s, I think everyone’s doing a mediocre job right now. You know, your as a VC, you know, I think that most of these organisations don’t really understand how to be a VC yet in the space, but I’m glad to see that they’re funding things. I’m curious, you know, question for you. Are you working with any of these foundations and supporting them with capital, because one of the things that these groups need is they need people like you to basically manage, you know, call it a $5 million fund, you know, just a sidecar from your day to day thing, like, you know, XRP ripple could give you $5 million of XRP to have an XRP fun to look at things or you could do Deal with stellar normally, they probably only allow you to do one of those and say you have your generalist, you know fund but here’s a little sidecar. If you see project that you think are suitable for our, you know, call it protocol, or they might give you a bunch more money. You know, we’ve seen, call it five to $25 million, seems to be the number that the protocols are prepared to give to other called asset managers. But I think that’s what they’re doing. I think most of these groups shouldn’t be trying to manage the capital themselves. what they should be doing is giving the capital to professionals, you know, that understand their local region, understand the local regulation, understand all the nuances of funding startups, and just let you do it as a as an LP, and they you know, it’s an end to end 20 model, they still get 80% of the return. And now they’ve enabled you to strategically be out there convincing developers to take their money. And I think it also is, you know, in a blockchain space, we’re always trying to get away from centralization. And so, centralised command Well, I and having a background having worked with strategics I’ve never seen A large strategic investor long term succeed. The only example of that really working is Intel capital. And I’d say barely, you know, I’d say mediocre at best. You know, the reality is, it’s hard that you can’t manage a billion dollars in venture and do it? Well, certainly not at the seed stage, you’re better off giving it to localise groups that manage 510 $20 million, who just get up every day to look at all the European opportunities and fund Europe, that you can never really do that flying. In my experience. I’ve never seen it work. And so I think that, you know, these protocols should be looking to guys like you, you know, if I was still interested in being an asset manager today, if I wanted to run a fund, that’s what I’d be doing. I’d be going to a major protocol and saying, Hey, give me $50 million to manage. I’ll be you know, leading those investments, but I’ll do lots of community development. You know, I’ll help tell the story and sing the praises of you know, call it the use cases of what your platform can do. and attract lots of developers, and then I’ll give money to those developers to help, you know, drive growth. And I’d like you know, to also not just get measured on my financial ROI, because so much of what I can do for you is community and developer adoption. I’d like to separately be bonus based upon, you know, bringing successful, I might bring things that are hugely successful to the protocol, but may not deliver a lot of revenue. And so if, if I were you, that’s the type of thing that I believe the conversations I’d be having today.
Jamie: Yeah, I mean, it’s funny you say that, so we’re, we’re in conversation with several protocols at the moment. And we’re actually not a GP LP structure. So we’re LLP partnerships. So it’s our capital that we deploy, it has been for six plus years. But what they’re most interested in is that we have an accelerator, a pre seed seed. And the problem that I think they’re all having is two folds. One, you’ve realised that ventures hard right to go from PRC to startups hard. But the second thing is how do you get the rest of the venture ecosystem to care about that startup, in a way that you as a strategic investor care about it, because it’s building on your protocol? Well, somebody else still has to fill out the rest of the round, you know, they’re going to have to hopefully get to series A, if you want a Unicorn, the rest of the ecosystem has to be engaged in that process. And what’s interesting is, when you start doing that, you actually have to deemphasise the technology. So a lot of venture at the moment are not interested in the technology you leverage in your stack. They want to know the market the use case, and as you say, you know, the entrepreneurs and how they’re going to implement it. So there is this kind of phased approach to bringing a Web 3 startup to market that is much more than just, you know, will they have an element of a given protocol in the stack, but I appreciate the plug that was, that’s going to be helpful for me. I’m going to edit this one down and circulate it to the production says, Give Jamie 25 million.
Brock: This is what I would be doing today. I mean, if I wasn’t preoccupied, I’d be having a conversation with, you know, Cardano. And I’d be having a conversation with tasers and others and I’d say, you know, I have a pretty good track record, as a VC, I’ve got a pretty good track record in terms of community development and helping bring adopters to protocols, you know, or, you know, or to block one, give me a, you know, 100 million dollars to manage and I will go, you know, continue doing what I do should be doing is finding people like you or people like me and giving us money to do that. I’m not interested at the moment that so go have the conversations with Jamie.
Jamie: Exactly. You can redirect them to me for the month. Cool. So the last thing I want to talk about really is given you’re in a unique position to comment on the convergence of crypto and gaming. Where do you see all that going? I know it’s with Corona. There’s a lot of hype now around the metaverse. You know what’s the what’s the moment that we should be pointing towards? They’re given your immaculate timing for these things?
Brock: Well, um, you know, I have a background in what you call NF T’s before there was Bitcoin, right? All these video games sort of assets and things. And so there’s some interesting NFT stuff happening. There’s also a project called robot cash, which is very interesting. What they’re doing is they’re launching basically something that’s like steam for anyone that plays games meets GameStop so it’s a place where you can download games but you can sell your downloaded games as an asset you know, you’ll be able to eventually hopefully sell your in game assets so that’s really a continuation of kind of things that I’ve been doing and and by using that this new scheme when you’re not using your graphics card it mines cryptocurrency to earn credits into your account. Kind of all automated, so it’s probably one of the coolest things I’ve seen to to bring call it gamers you know Broadly, you know, into the space through a combination of mining and accessing and reselling of gaming goods and things. These are called the near term, you know, sort of ideas, long term, I really hope that, you know, we eventually build something more akin to Ready Player One, you know, I really love the idea of call it you know, augmented reality and scavenger hunts, you know, you know, again, think of like, Ready Player One imagine burying a million dollar the Bitcoin somewhere in the world and, you know, people playing a game to eventually, you know, uncover it through clues and quests, you know, these are the sorts of things if I had time I’d be building Okay, and, and I think clearly, we’re seeing virtual reality take off in a big way. Now, the Oculus quest is a game changing moment for VR. Obviously, virtual reality has been around for decades. The problem is, it’s it’s really only been available to a smart small number of people because you needed a multi thousand dollar computer, which is a barrier to entry that will always keep it in a niche market. But now that you know for 4 or 5, 600 dolloars you can buy an Oculus quest which is a standalone device to access VR. I think this is the VR moment this is the tipping point over the next few years you’re gonna see tonnes and tonnes and tonnes of successful applications if you don’t have an Oculus quest like I would highly recommend buying it because this is the time to you know it’s gonna happen this is the iPhone moment for VR in my opinion.
Jamie: this is possible to buy one of the motors you go go online, I know friends that have just kind of got round to go maybe maybe I should get one Forget it. The supply chains are just totally.
Brock: well, I think they’re just marked up now. I think you can probably still get one instead of it being you know, 500 bucks, it might be 800 bucks. You may pay a few hundred dollar premium but if you’re in quarantine it and you can afford it it’s worth it is a great time as I like to tell everyone to learn. Right? You know, I’m finding myself more productive than ever. Right during the times, I mean, it’s important not to fall into depression, you know, and all the things that can also happen during you know, these, these this time of crisis, it’s very easy to get lost and to lose hope. Remember that this too shall pass and don’t and choose love over fear kind of thing. But really, the thing to remember is that this is an opportunity. Now this is an opportunity to get your house in order. This is an opportunity to like get organised and I don’t just mean that literally, I I mean, figuratively as well, you know, this is an opportunity to reevaluate your life to take a look at everything that you’re doing, and decide what aspects of your life are the things that you’re happy with which things that you’re not happy with? What are the things that you’ve been putting off for a long time that you’d like to focus on now whether it’s reading those books, doing that yoga, getting into a regular meditation, practice, whatever it might be creating a start up, right? Most people are gonna have this is a great time to be building, you know, thinking about big ideas. You know, this is an opportunity you have been given all this time. What are you doing with it, make use of it, spend it wisely, you know, when this is all over, hopefully we don’t return to normal. Hopefully we create a new normal, a better normal, a better world through this process. And so when this is all said and done, if you’ve used this time wisely, you’re going to come out of it as a better person, and better prepared, you know, for the world in front of you that you wish to co create.
Jamie: Well, Bro, I don’t think we’ve got a better ending than that. Let’s, let’s stop, stop while we’re ahead. Thanks so much for your time, great to go deep with you and get a one on one. I’m sure it’ll never happen again.
Brock: We can do this again. Happy to come back on again. And I’ve been playing around with the podcast, you know, maybe what we’ll do is I’ll have you on mine, and we’ll do a little role reversal. I’ll focus on the work that you’ve been doing. And that’s, by the way, I think part of the reason that most people don’t know that much about me is when I give talks, I really never talk about my accomplishments. I don’t like get on a stage and be like, Hey, I you know, I’m this guy, and I’ve done this and I’ve done this and I’ve done this and I don’t give a speech. about myself, I normally talk about ideas.
Jamie: You don’t take too long anyway, brock. Right? That’d be that’d be a 15 minute presentation in of itself.
Brock: Yeah, so I skipped over that piece but I think it’s probably useful for you know, some people to you know, I’m not, as much as possible, I’m happy to kind of be the Satoshi figure. I’m happy to be the man behind the curtain. My preferences, anonymity. And so one day I’ll be able to talk about a number of other firsts that I was involved in. We did cover one, the cornering of the aetherium mining that’s not really anywhere out there that is kind of baskets, untold stories, and those are really interesting ones. And there’s a bunch of other ones that maybe we can get into overtime,
Jamie: Awesome in Well, we’re gonna definitely have to have you back on again. Later in the year. Brock, thanks so much for your time.
Brock: Thank you. Stay safe, stay healthy.
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 employees. mission of Web 3.