Pod Insights a16z Podcast "Crypto Startup School" Documentary About this episode This 30-minute, behind-the-scenes documentary follows several students as they go through a new program for crypto entrepreneurs called "Crypto Startup School." Along the way, they develop crypto projects, try to find investors and build businesses, and face challenges that are familiar to every founder — all against the backdrop of an unprecedented pandemic.
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Transcript 4,589 words · 21 speakers
0:20 Speaker 18 What really kicked us off to crypto is that we need to like figure out a way for the community still in their data. It's a different mentality, it's like global mentality.
0:28 Speaker 7 We present ourselves an interesting opportunity to rewrite the culture from a blank slate.
0:36 Speaker 4 The kind of risk you take in finance is really, really, really high probability of success and low return.
0:44 Speaker 8 The idea of a decentralized computer that any developer could program on top of really fascinated me.
0:51 Speaker 20 There's some things that we've deployed that are now protecting billions of dollars, which is exciting and frightening at the same time.
0:58 Speaker 4 Basically, I realized that we had like a really big problem with our design. If you're a new engineer and you see this
1:06 Speaker 6 new thing growing and you commit to learning about it, that's like a golden ticket.
1:12 Speaker 2 I came to California for this program without really knowing many people. I was in tears, not knowing whether this community will be able to survive it and how we can survive.
1:32 Speaker 19 Going out and telling the world about this dream that you have and then getting pretty consistently shot down. You have to be pretty tough for that.
1:40 Speaker 0 It took a little convincing for me to tell my wife that I would leave my very comfortable corporate job to go and pursue Sarah with a guy I just met.
1:50 Speaker 3 I moved from Miami to San Francisco seven months ago with my whole family in a Jeep to join the DeFi Revolution here.
2:06 Speaker 3 Hi, I'm Jeff. This is Teddy. My name is Andre Anissimo.
2:11 Speaker 2 Hey everyone, I'm Tisa.
2:13 Speaker 3 Hi, I'm Tope.
2:14 Speaker 5 Hi all, my name is Sarah Reynolds. Hi, I'm Medicae, and I'm applying to be a part of Andreas' Crypto Startup School.
2:23 Speaker 3 I've been writing code since the age of nine and building commercial software for over 15 years now.
2:28 Speaker 2 I'm a former banker to Enceral Entrepreneur.
2:31 Speaker 3 Co-founder and CEO of Africa.
2:33 Speaker 0 We met at SF Blockchain Week. We actually took first place with our idea around interest rate swaps.
2:39 Speaker 5 We're currently finishing up our CS degrees at
2:41 Speaker 7 Cal. It would be awesome to really kind of drill in our knowledge into like a deep problem or project that we want to tackle together.
2:59 Speaker 6 Hi everyone. Thanks for being here. Very, very excited to kick things off. Good to have everyone. There were, I think, a series of conversations that led up to the program's conception. We had one meeting with an entrepreneur who has been in the space since they were a teenager. We realized, you know, there's a huge disconnect between entrepreneurs like this crypto native teenager and all the folks working in Silicon Valley today, and how are we going to bridge that gap in order for that to happen? A new wave of entrepreneurs needs to get started.
3:37 Speaker 9 I doubt many people here are in this just because they want to see the prices go up there because they actually believe in the technology, right? So picture a person running through a maze and there's treasure and there's monsters, there's all sorts of other things, and what and this is kind of the life of a startup is you run in the maze and you realize, oh god, no one likes this app and I'm gonna try this thing, and you you're kind of running around, and every once in a while a new part of the maze just kind of opens up, like mobile phones. Now you can do this, and like it's a whole new kind of area of the maze. Uh, our feeling is there's this very rich new maze, the blockchain maze. You can have computers that can make commitments. What can you do in this design space?
4:14 Speaker 9 I
4:14 Speaker 6 learned about Bitcoin in 2013, but it wasn't the currency that interested me at all. It was um it was actually proof of existence, which was I think probably the first app built on top of Bitcoin. And then like shortly after that, I think the Ethereum white paper started floating around. And that like read to me like a sci-fi novel that got me booked.
4:36 Speaker 7 Meta and I co-founded She256, which is a nonprofit that aims to kind of increase diversity and inclusion in the blockchain space. So my dad is actually
4:46 Speaker 5 the first person who kind of told me about Bitcoin. Yeah, there's like this cool thing, it's like money, you can like mine it, and I was really little and I was like, what does this mean? Like, how do you mine things? I thought it was like physical mining, and I just kind of didn't think about it. I don't like being siloed. I love being a generalist, which is why I really like the idea of entrepreneurship.
5:12 Speaker 3 I think the dynamics of being in the band of starting a band is very, very similar to to a startup. It's when you have nothing and you just try to have this sort of like zero-to-one move, and you are hustling and you can do whatever you want. There is really no like rules. My whole life I wanted to do two things programming and finance, and what is the coincidence that crypto is essentially just intersection of two, and that's the only thing I truly truly want to work on.
5:45 Speaker 2 Our worlds are converging through crypto. My
5:48 Speaker 7 background is in economics and finance.
5:51 Speaker 2 I grew up in constant denial of things that I end up doing. My parents were in diplomacy, and my father was an economist. Those two are undeniably the fun foundations of what forms our crypto societies. So, you know, the ironies of life. Right up passage.
6:13 Speaker 1 I got into crypto at a hackathon, actually. This dude was like, hey man, have you heard about Bitcoin? I was like, no, what is that? He's like, it's like this digital money, and he starts, you know, giving me the whole spiel. And so at that point, I started like, you know, learning about it, read the white paper, and I was like, okay, I get it. I ended up going to work at Consensus for a while. And again, that grew my knowledge, you know, dramatically. I moved to Nigeria and then eventually started a Bitcoin exchange. A4X is a multi-currency wallet. You can send money to anybody in the world using any currency of a choice. We do crypto and fiat. We put the tool next to each other so people can transact using whatever currency they want to use, whether that's like South African Rand or whether that's like uh Zcash.
6:59 Speaker 1 We want people to have the choice.
7:08 Speaker 16 China says the number of people infected by a mysterious respiratory virus has more than tripled over the weekend. There are now 218 confirmed cases of the new coronavirus.
7:21 Speaker 6 Welcome back to week two.
7:26 Speaker 15 This analogy is used frequently, but I would compare the present moment to roughly 2000 in the internet. Everybody had heard of the internet, but not everybody used the internet in you know 2000 on a daily basis. And that's very similar to kind of where crypto is.
7:43 Speaker 4 Started my career as an interest rate swap trader at Barclays in London.
7:47 Speaker 0 I
7:47 Speaker 4 was there for three or four years, and then I traded crypto again in London, and I moved here a couple months ago to start swap net with Jeff.
7:57 Speaker 0 Yeah, we met at the DeFi hackathon here in San Francisco. Teddy asked me if I had any ideas for a project, and I said I have a I have a very specific idea. It's to do fixed rate fixed term lending on compound. And his eyes got real wide because it was a stroke of luck. Yeah, because he was the interest rate sponsoring.
8:18 Speaker 4 Yeah, I think that there are there are some broad goals, definitely. Um we want to have all the code written. That that's big. And that like after that stage, then it's sort of like you socialize the code itself and like go to security audits.
8:33 Speaker 0 And also raising money. I guess it's
8:40 Speaker 14 because you don't know exactly what developers are gonna build, and if there's one thing we know about devs, it's that they have a great ability to take what is defined and really expand on it and push it forward. You don't want to stop people from continuing to innovate on your platform.
8:54 Speaker 3 I got pulled into this project with China Zen, who is also a crypto school. And I think she's doing something super super cool, which I think has a lot of potential. So it's a contract that synthetically simulates payoffs from Bitcoin mining.
9:15 Speaker 3 Investor exchanges cash today to receive future Bitcoin payoffs from mining activity. Miner, on the other hand, hedges their expenses by pre-selling their future mining revenue in exchange for cash today.
9:32 Speaker 2 Andre understood the essence of it. It's actually trying to create a liquid market to help the uh miners who are a huge part of the blockchain economy to hedge
9:45 Speaker 3 their risk. We have quite a large flesh organization that's currently working around the clock in many on many different continents.
9:53 Speaker 2 We have right now two amazing developers in Cape Town. We have people in this. Estonia joining our project. We have people from the states and from Beijing. We're not here trying to do a research project, but we're here trying to launch something useful.
10:14 Speaker 1 Yeah. Just
10:17 Speaker 5 another day, another dollar.
10:19 Speaker 1 You gotta start from where you are, and we already have like a set of users that we're you know providing great service for. As you grow it, the people in the community, you'll always find like one or two people that are like all about it, and then they start bringing in way more people. And that's like what gets them onto the app. We have like one guy on the app, he's uh he's an Uber driver, and he has a wife in Nigeria whom he sends money to every week. Uh I have uh another customer who's a business owner. He has a trucking company, and so he uses the app to like turn Naira back into dollars. You know, people use Western Union, but I think they'll be able to love Afro X.
10:57 Speaker 5 All the other teams are super excited. Some have like fully fleshed out projects, some are like us, like you know, we're kind of exploring what niche we're trying to focus into. We probably talked to every single mentor and a bunch of other crypto startup school participants about our ideas, and we kind of started with like uh five main ones and kind of whittle them down to two and then finally settled on this one. So we started off with interviewing about 96 people so far online and asking them uh what their preferences are in payment apps, what they currently use, why they currently use it, all things like that.
11:34 Speaker 10 That's like the
11:35 Speaker 7 from talking to close peers or friends of ours that have like tried to buy crypto in the past. Um, there's a lot of like friction in terms of onboarding. The idea is
11:45 Speaker 5 like finding an easy way to bridge from something like Venmo or like Apple Pay or something onto crypto. We really want to build like some sort of like really rough um like MVP like their bones.
11:58 Speaker 9 Um
11:59 Speaker 4 I can I can go next to this, but
12:02 Speaker 5 yeah,
12:02 Speaker 0 go for it.
12:03 Speaker 4 Oh, cool. We're getting a demo. Oh, I love a demo.
12:06 Speaker 0 I'm getting a demo. This is a like first cut of a UI that uh people will be able to come and like use to get fixed straight lines. You can lend or borrow die
12:15 Speaker 10 that will settle at each one of these maturities.
12:18 Speaker 7 Yeah,
12:18 Speaker 10 I think this looks awesome. Good job, dude. Uh
12:21 Speaker 7 yeah, no, this is awesome. Is
12:23 Speaker 10 this public? Yeah,
12:24 Speaker 4 take a look.
12:25 Speaker 0 You
12:25 Speaker 4 find a
12:25 Speaker 0 bug, I'll uh give you a candy bar. Nice. Um the first version would be a lot easier to audit. It'd be you know, something on the order of like 400 or 500 lines of code. The full version is probably you know, closer to 4500 or 5,000 lines of code. So that that's gonna take a few months to audit and like fully like feel comfortable like putting that on mainnet. The
12:47 Speaker 4 full swapnet thing uh includes partial collateralization as opposed to the overcollateralization that that exists in DeFi today, and when you include partial collateralization, you introduce like a lot of risk into the system. This swapnet light is something we could launch uh in the relatively near
13:08 Speaker 0 term. I really like Teddy. I think we work really well together. It's good to have someone you can be very direct and honest with. Teddy and I met in November. I told him right off the bat, ah yeah, I'm only having a kid next year. My wife is like 38 and a half weeks pregnant, so I'm gonna have a kid like in any day now. My wife and I talked about it. Like, opportunities like this don't come around like all the time. You you should do it, right? The global pandemic, I did not anticipate. Um, and that does add that does add a little like it's a little cherry on top of all this.
13:50 Speaker 13 Travel fans, face masks, and fear. We connect you through the latest as the novel coronavirus spreads to nearly a quarter of the world. The number of new cases reported outside of mainland shops.
14:09 Speaker 6 So the the coronavirus is here in the States, and there's a bunch of cases in San Francisco, and it's starting to disrupt things. It's kind of ironic that um crypto startup school has gone fully remote because we've now essentially decentralized um this network.
14:25 Speaker 11 Layer one blockchains are almost by definition uh owned and controlled by a broad and representative community. That is what people mean when they say that they are decentralized. Smart contracts are able to get people to trust in one another to be able to interact with one another because of their sovereignty, they were able to create this kind of common ground with enforceable rules that everyone can trust in.
14:55 Speaker 1 Just everyone is home right now. So this is my mother's house. It's a very crazy time, man. I don't think anybody could have predicted
15:03 Speaker 3 this. Um pre-empty, but I see the rest of it's still open. Wear a mask.
15:13 Speaker 5 So I'm about to go on my daily government sanctioned walk. So you can follow me around my neighborhood.
15:24 Speaker 0 All right, so this is my home office. So my desk is over there. It's a standing desk I made. There's not usually this bed here,
15:31 Speaker 4 but my
15:32 Speaker 0 sister-in-law is moving in. Uh, since we're having a kid
15:36 Speaker 6 any day now. There was sort of this staggered uh realization that not only could we not do the program in person, but we couldn't even live stream it from our offices. That's the moment where it really set in, where you know, holy shit, this pandemic is a serious crisis and kind of scary.
15:59 Speaker 4 I haven't met anybody in person, like related to swapnet for like not even Jeff for like over a month now. And it's sort of like you know, things have been moving apace, but it's like, is it all even really
16:16 Speaker 17 happening? It was another hideous day on Wall Street, a market's uh plunging uh today, uh, the Dow Jones uh industrial uh average its worst closing day uh since 1987.
16:33 Speaker 10 So for anyone who hasn't been paying close attention, yesterday crypto prices dropped by about 40%. It was basically the worst sell-off in one day in history. It happened alongside um massive declines in uh global financial markets. You know, it was the worst day since Black Monday 1987.
16:58 Speaker 4 Days like yesterday happen, you know, not all the time, but regularly, and and we need to be sure that our system can withstand that. We believe very strongly in what we're doing, and we're not gonna not do it. Like we're gonna do it kind of whatever happens.
17:14 Speaker 1 Yeah, it's a big deal. It's uh it's a big deal. I think it's uh if anything, accelerate the vision that we had at Afro X. Going to a bank branch is a bit difficult, right? Uh so people need like electronic forms of payment. There's a there's an economic downturn right now, like beyond just the virus situation, people aren't working. So there's actually uh a lot of remittance dollars passing. I'll do whatever needs to be done, you know. Sometimes that's customer service, sometimes that's coding. Uh, this is like a coding week, and then next week maybe something else totally. So
17:48 Speaker 2 I put an online last night. So uh Jess Water and Uber eats, and it's already dark. So I'm gonna try to find it there it is. That's good. I feel like some protein tonight. So productity on what I'm working on has significantly improved. Our auditor is the amazing auditor from Asia, who also audited for Maker Dow and major projects in DeFi. And they would like to contribute as a community contributor to this.
18:22 Speaker 3 One day, Tina, one day you you gotta have to teach me how to how do you make people work for free for you?
18:28 Speaker 2 Never for me. The key is to create a comment. The best idea wins, right?
18:34 Speaker 5 So this is a notebook where I kept track of all the CSS sessions and all the notes I took throughout this whole process. It's been nice having everything together in one place.
18:43 Speaker 7 We named our project Arsh. So Arsh is one of Jupiter's moons, and we chose it because we are kind of playing with the ideas of exploration, having, you know, quote unquote normal users, you know, not really interested in crypto, kind of explore this new space. I feel like when
19:02 Speaker 5 you're a founder just ideating, you kind of just think of these crazy things, but then it's like up to like the markets and like the mentors to kind of narrow the scope down, and that's one thing I think we struggled with. There was
19:14 Speaker 7 totally a week where Meta and I had like 10 calls like a day or so, like some crazy amount of calls. When you get to a certain point, there's totally a sense of fatigue.
19:27 Speaker 4 Um a couple weeks ago we had uh basically I realized that we had like a really big problem with um our design. And it was really honestly, it was kind of scary because it was like we'd we'd worked on this thing for like five months and sort of taken something for granted, and then it's like it's like feeling like the rug has been pulled out from under you a little bit. This particular problem was uh we discovered um. A video chat with an investor. Yes.
20:05 Speaker 0 So that was kind of funny. I made the website. And so when you typed in, like when you typed in like how much you want to lend or borrow, like it would sort of tell you what your interest rate would be. And it was moving around really wildly. And the investors like, is it supposed to move? Like that much? And then and then uh and then I'm like, I I don't know. I think the maybe the math is wrong. Friday morning we sort of found that, and Teddy like came back with the solution by like Sunday night. But it's a rough weekend, I guess.
20:42 Speaker 3 Something that it works well for building some type of social networks or some type of systems where you can easily revert any mistake. Um this approach doesn't work for for defile crypto. First of all, the big D force hack where 25 million USD worth of assets were drained from the protocol. There is also uh a bit of a drama around Hedic project where where incorrect variable name and the code uh cause the funds to be locked.
21:14 Speaker 2 I think I took an evening off just reflecting on the situation. I was in shock. I was even uh some like in in I would say in tears. I think it was about not knowing where we're going, whether this community will be able to survive it and how we can survive. We know that it will, but it's just that we don't know how long is the night.
21:44 Speaker 2 Um altered our timeline and strategy while we make sure that the smart contract part go through multiple audits.
21:58 Speaker 12 Smart contract development is the opposite from agile. It's the opposite from how software development happens um today. The smart contracts that we deploy are a lot more similar to hardware than software. Umce deployed, once shipped, um, very difficult to recall. I think in general, you want to um establish a really strong security culture in your organizations.
22:21 Speaker 3 Had a nice walk, gonna do a little bit more work. And uh, and yeah, we are still building, I think the audience is scheduled for the next week. Probably some fixes after the audience. More important is to make sure that we have a very high quality code.
22:43 Speaker 4 Fundamentally, if you want to do new things and like kind of push the envelope a little, getting the most out of the blockchain, it comes with risk. If somebody takes money out of it, like you just torch your credibility. Uh, and the trust that people place in in, you know, Jeff and I's team and and the product that we've delivered. Um, and that is like a that's
23:09 Speaker 0 like a real hit. We have done more due diligence than any like VC like could do on this idea, right? And so, like, I think we can approach this from like a position of confidence. What we've heard is like people are willing to invest, they're just gonna take a bit longer. This is a strange time to be raising money, to be honest with
23:26 Speaker 4 you. Uh, it's during no pandemic.
23:30 Speaker 1 We're trying to build a profitable business no matter what happens. Obviously, we continue to reach out to to investors because we want to build the best business that we can. But at the same time, uh we continue to move forward. I think any company that's able to come out of this period uh and to survive this period at all is gonna do great, you know, once the economy starts going up again.
23:51 Speaker 5 Bitcoin was made during the 2008 recession. So what will happen now? I'm I'm very excited to see um the projects that are gonna come out right now. The American government obviously is like printing out money like crazy. So our dollar is getting devalued by the minute.
24:07 Speaker 2 We've experienced the market in crypto uh really tanking, and we experienced the market resilience. My optimism is grounded in the fact of what we have been through in this such a short period of time.
24:27 Speaker 8 Every startup uses the internet, right? Like it's hard to imagine going and pitching a Y combinator or something and saying um we don't use the internet, and now you know I think the same thing is gonna happen with cryptocurrency where in five or ten years, pretty much every startup that gets created, it's gonna use the internet, it's gonna use AI, and it's also gonna use some form of cryptocurrency somewhere in that product. So you could imagine a whole new wave of uh startups being built where every upvote, like button, star, follower, etc. is powered by some underlying token, not some fake karma points, and early customers who help build those products are actually gonna be able to participate in the upside.
25:04 Speaker 6 I think the way that we're measuring success of the program over the long run is not only how many students go on to start companies from from this first batch that we had, but rather how many students go through the program online and over the next five, 10 years go on to start or join projects in the space.
25:27 Speaker 7 Hi, A6C CSS. I'm Sarah, and I'm Meta, and we're super excited to tell
25:34 Speaker 5 you a bit more about art. If you click into that earn details button, you're taken to this screen, which shows you a history of all the interest you've earned over time. Our first integration will be compound, but as the space goes, we imagine many, many more integrations. Hey
25:47 Speaker 7 Meta. Hey Sad. We still have to plan like our full day hackathon.
25:54 Speaker 5 Yeah, definitely. And I feel like especially if we love working in like the crypto space as well. That'll help us well.
26:06 Speaker 1 Here's your USD wallet where you can deposit or withdraw money from any domestic or international bank account. What makes Free X special is that behind the scenes we're leveraging the power of cryptocurrency to actually move the money. Welcome to the future of money. It's an amazing feeling. Getting a chance to do something special. People that should enjoy the beer out. You never know how it's gonna turn out.
26:30 Speaker 2 Honey Lemon is the non-custodial market infrastructure for issuing and trading future crypto mining and staking reward. We shipped a prototype during the program and plan to launch a um Bitcoin having specials contract on Mainnet through this mobile first simple interface in May. Honey Lemon, sweet deals in crypto mining.
26:53 Speaker 3 Over time, the strong projects will survive and will keep growing, and the weak projects will die. And I think this dynamic will make the whole industry much stronger. I
27:04 Speaker 0 really love the crypto space, and I really want it to succeed. And for that to happen, we need a lot more really experienced technical minds and product minds and marketing minds and just smart people. The way SwapNet delivers race stability is through an on-chain protocol on Ethereum. On the left, we have a version of SwapNet that we will be shipping very soon to Mainnet. Thanks for listening.
27:28 Speaker 6 Okay, great. Everyone, we made it. Um that was that concludes crypto startup school. So big round of applause for that. Talk to you online. Bye.
27:52 Speaker 3 Um, the beautiful thing about building crypto is that you have lots of people really excited about it. The whole concept of the flesh organization, it wouldn't be possible uh if it wasn't in the crypto space.
28:07 Speaker 2 So now I'm all settled into this ham open and just wrapping up the loose ends for Honey Lemon as we approach the finishing line.
28:21 Speaker 1 Now we do like 50,000 every day. That's that's uh drastic change. You know, I was super happy. I was like went outside and just drove for a while, called my mom. You know, she has no idea what
28:37 Speaker 4 combinator is. Yeah, we've got an affirmed offer. Um, so that's very nice. It ensures that we can continue. The
28:47 Speaker 0 due date is today, actually. But what do I know? I don't know anything.
28:52 Speaker 5 I think what's unique about crypto is that people are doing it truly because they're passionate about kind of what the outcomes could be.
28:58 Speaker 7 Figuring out, you know, what a cultural, you know, a global cultural movement looks like, and that's really what we're aiming for.
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