Flori Marquez is the cofounder of BlockFi, a fintech firm that provides wealth management products to investors in cryptocurrency.
BlockFi currently offers interest-bearing crypto accounts, crypto trading, and crypto-backed loans. In the last year, Blockfi has raised an $18.3 million Series A and a $30 million Series B from investors like Morgan Creek Digital, Fidelity, the Winklevoss twins, and Valar Ventures. Flori has spent her career managing alternative lending products, including a $125MM portfolio for Bond Street (acquired by Goldman Sachs). In this conversation, Flori and Aaron discuss the founding of the company, the new customers BlockFi is targeting, and why banking people across the world is challenging. Text Me What You Think of This Episode 412-278-7680 Flori Marquez’s Challenge; Take $100 and invest in something new or different. Connect with Flori Marquez
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Website support@blockfi.com If you liked this interview, check out our past blockchain and crypto interviews with Anthony Pompliano, Brendan Eich, and Joe Lubin.
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Piper Creative creates podcasts, vlogs, and videos for companies. Our clients become better storytellers. How? Click here and Learn more. We work with Fortune 500s, medium-sized companies, and entrepreneurs. Follow Piper as we grow YouTube TikTok Subscribe on iTunes | Stitcher | Overcast | Spotify Watson: Flori, thank you for hopping on the podcast. I'm really excited to be talking with you. Marquez: Thanks. I'm really excited to be here. Watson: So BlockFi makes financial products for crypto, and that can almost be like crypto itself is thought of by some, as a financial product. But as I came across the company and as I've been kind of paying attention generally to the space for last couple of years, this hopped out to me as particularly interesting because it just very relevant, relatable, accessible products that helped take the concept of the cryptocurrency just one layer up to, 'oh, I'm actually seeing a little bit of utility here.' So can you talk a little bit about what those products are for BlockFi? Marquez: Yeah. So at a high level, you can kind of think of us as a Chase Bank powered by crypto. And most recently, what we're really excited about is up until a few months ago, you could only use our products if you had crypto, but now you can actually use our products with cash. So the three things that we offer are interest accounts. So you can earn 8% on cash equivalent assets. The second product is loans backed by crypto. So the same way that you can borrow against your home, a lot of people have been investing in Bitcoin and other assets for a while and they want to access liquidity. So we allow people to borrow against those assets so that they don't have to sell and they can access cash. And those interest rates start as low as 4.5%. And the third product is trading. So you can send us cash and buy Bitcoin for the first time. Or you can just leave that cash on BlockFi's platform and earn 8%. Watson: Awesome. So leaving aside the trading for a second, that, that basic functionality, like you said, Chase Bank, you know, Banks through time and Memorial have done these basic functions, right? Like I'm going to leave some money with you. You're going to get a small yield because of that. Or this is going to be the institution where I'm able to get money lent to me. Now, the big difference is, I guess there's two differences, but the big difference is, you know, my current bank I'm getting, like, if I'm getting 0.1%, interest, whereas this is the considerably higher percentage yield. Can you talk a little bit about how that's possible, why you're able to, offer more? Marquez: Yeah, so there's a lot of things that can be said about crypto, but one of the most interesting things is the ability to do more with assets than you can with cash. So the reason why we can offer such a higher yield is because we're able to take cash or other assets that are deposited through BlockFi, turn them into crypto and then relend out those assets. So we do it two ways. The first way is for stable coin. And for those of you who aren't familiar with stable coin deposits, is it's essentially like having a Venmo balance. It's not cash. It's crypto, when you want to withdraw it, we turn it back into cash and you get it back into your bank account. So that's the simplest way to explain it. So we take those deposits and then we make the U. S. Dollar loans with those assets. The loans charge anywhere from 4.5%, all the way up to 10%. And then we make the spread between what we pay depositors, 8%, and then what we charged borrowers 10%. So that's how we're able to pay such a high rate. And then with crypto assets or with Bitcoin and Ethereum, the majority of that yield comes from institutional trading. So banks actually have their own trading strategies with crypto now, too. And we're one of the leading providers of assets for banks that want to borrow crypto to fuel those trading strategies. So we'll lend it out to partners like Susquehanna or Fidelity is big and crypto they'll pay us a yield to borrow that Bitcoin. And then we'll flow that yield through to our clients. Watson: And that element of it is almost a more conventional business model. So it's cause I do this research and there's, you know, defy and all these new coins that are popping up every single day. And ICO's, and it's overwhelming. It's overwhelming for so many people. But this is, I don't want to say simple, but there's a science to those spreads that have been, you know, executed and learned and iterated upon by banks for a very long time. So you're not starting from ground zero, you know, square one to build this model, it's taking something that's already been developed and reapplying it to this new space. Marquez: Yeah, that's exactly right. And I think there's two ways to build a company, right? You can either build a technology that's never existed before, like a Facebook or an Instagram, or you can do what we do. And it's take a extremely old business model, which is banking and then apply a new technology onto it to just make capital more efficient so that you can offer your clients better yields. Watson: Makes sense. Now, talk a little bit about getting something like this started because, you know, there's always a source of inspiration. Like where did the idea come from? But then there's these additional challenges of, I would be hard pressed to think of a space with more regulatory obstacles then finance and banking and crypto all at once. Marquez: I'm glad you recognize that because I say it all the time. You don't just wake up and start a FinTech platform. That's not something you can just make up. So both me and my co-founder had experience working in financial services and FinTech before. The idea was very basic. My co-founder had a bunch of Bitcoin and wanted to access liquidity and he was like, I need this product and it doesn't exist. And then I knew him for a long time because we both worked in FinTech. So we partnered up and started building it. One of the things that we did that was very different three years ago in crypto was really simplified the business model and not build it on the blockchain. So a lot of companies that were started had, you know, did an ICO or built all of their technology on the blockchain. And instead we said, let's just treat crypto like an asset and let's build a traditional FinTech platform, like any other lender, like a sofi or lending club. And just use Bitcoin, Ethereum and other assets in the same way that lenders lend against a home or a piece of art. The challenging part about what we were doing, to your point, was that no one had done that before. No one in crypto had said let's build a regulated financial services platform. So we were one of the first companies to go out there and start interacting with regulators and try to get licenses so that we could build this the right traditional way. Watson: And that's another really big part of this story, which is, you know, it's a marketing principle, right? Like you have to know who your customer or your intended customer is. And the, you know, earliest of early adopters you know, deep in a Reddit thread or wherever they may have come across this thing, is very different than either an institutional investor or just a more conventional retail investor. And recognizing how it, this isn't necessarily the solution for everyone, it is a solution for a very specific demographic that otherwise maybe didn't have a place to go. Marquez: Yeah. And that's another good point that, you know, back when blockchain technology was first invented, most of the people that acquired crypto didn't have to verify their identity or go through a regulated process to buy it. And a lot of it was anonymous. Which is why it had a certain stigma. We realized that if we wanted to build a financial services platform, we would have to access debt capital to finance the loans. And the only way that we would be able to access that capital is if we had clean crypto. Right. And if we had audited each one of the individuals that interacted with our platform in the same way that a banquet, so that the people providing us financing could be assured that that crypto is clean. So we built the same structure that banks have to verify identity, and that allowed us to get licenses and build our model in a way that, you know, Took a bit more time than other blockchain companies that weren't doing any of this work. But, in the longterm it's allowed us to scale a lot larger than some of our other competitors. Watson: And when we talk about scaling, we'll talk a little bit about like the really sizable series A and B that you guys raised, but just in terms of growth of revenue, growth of size, I think I saw somewhere that you 20 x'd revenue from 2018 to 2019, and there's a lot of, you know, heat on the space in general. Can you talk a little bit about managing something that's growing so fast? Like I felt like I had a big year and I went from like two to four people on the team. You guys are doing something way, way, way beyond that. Marquez: Yeah, I think at this time last year we probably had 15 people on the team and today we have a hundred employees in three different countries. It's wild and now we're all remote, which is even crazier. But, yeah, it's been really exciting. I think we benefit from being the first of our kind. And so, as a company we believe in growing by making products that people want to use. And in general, free money is something that most people want to use. And so, we found that the more people know about the technology, the more they know, Oh, you can put as little as $10 on the platform and start earning an amazing interest rate. People just essentially convert themselves. But with rapid scale come many challenges, right? There's always the decision to balance between growth and then managing risk. One thing that we have never compromised on is the regulatory side of things. And we have also never compromised on building the systems to scale before we scale. So one example of that is for basically all of last year focused on building the backend systems to support hundreds of thousands of clients, even though at the beginning of last year, we only had a couple thousand. The sacrifice that we paid in order to do that was our front end. So our website today isn't nearly as powerful or sexy as the backend systems that are supporting it. But we really believe that we needed the system to manage that risk. Before we had a hundred thousand clients making deposits every second. So this year now that we built those backend systems, we're focusing on, you know, can we release a mobile app? Can we have a sexy website? And can we have the front end that allows people in as fast as our backend can handle it. Watson: Yeah. And as those folks come in, one of the things that I think a lot about is you meet some of these, you know, high-level developers, or maybe they're creating the cryptocurrency itself or some sort of novel technology. And we've talked to some of these folks in the past. And there's a high technical literacy, but there's almost another literacy in place that you have from that background in a more traditional finance field of being able to translate this stuff to an audience that, you know, understands economics, is savvy, like has a lot of experience with investing, but is, you know, to some way, shape or form treading in new grounds. So when you think about the messaging around BlockFi, to some degree, you know, free money is a pretty solid pitch on its face. But how else have you gone about talking about this company and positioning it for folks so that they can really wrap their head around it and not immediately turn up their nose because of whether it's the anonymity or some of the other kind of more negative storylines associated with this space or just frankly people's lack of sophistication? Marquez: Yeah. That's a really great question. So as a company, we really believe in being simple, transparent, and trustworthy in terms of simplicity. One thing that everyone in crypto was doing when we got started was, you know, speaking really technical blockchain terminology, right. You'd go on a crypto website. And it looked like something that was built by blockchain engineers for blockchain engineers. So one thing that we focused on is how can we simplify this product? How can we make sure that when you're interacting with us, you understand exactly what the risks are, what the rates are, and that if you want to dig a little bit deeper, one thing that we've invested a lot into is extremely high quality customer service, which was also something that no one in crypto had. If you call us, we'll pick up the phone and a extremely highly trained individual will be able to answer any question that you have about the platform risks, even how the products work. And so that kind of goes into, you know, transparency, simplicity. And in terms of trustworthiness, I think the thing that really builds trust is twofold. One, the team. So we would never be able to build this business model if it wasn't for the executive team that we have our chief chief risk officer built and managed structured lending a bank of America for 15 years prior to joining BlockFI. So what we've done is focused on bringing executives who have built similar platforms outside of crypto and bringing that talent into BlockFi so that they can build it within crypto. We have, you know, our chief growth officer was at Amex for decades. Our CTO has built and sold multiple companies before. Right. So we really believe in kind of bringing in experienced individuals into the space to help it grow. And the second was as a result of that, we've been able to bring in truly high quality investors and partners. Valar, who has led our series a and our series B has backed companies like TransferWise stash and 26. So we're honored to be a part of that club. Watson: There is this whole class of kind of FinTech centric investors that similarly bring a network or an experience or perspective from having played in that space for a while. And. I'd imagine also, you know, either do or don't take, at least a hand on the reins in terms of helping to steer where things go. Can you talk a little bit about that dynamic in terms of, you know, some investors being, you know, hands-off let it ride and others really try to take an active role in the development of the company? Marquez: Yeah, I think we're very lucky. You'll hear a lot of founders tell horror stories about having investors or board members that are very active in a way that's not necessarily constructive. You're exactly right. That we're lucky that our investors be it Valar or Fidelity or the Winklevoss family office. They've all built similar products and they've seen a lot of companies both succeed and fail. I specifically have a very soft spot in my heart for Volare because both of the partners that run the investment are operators. So they really think about building businesses. And they also, I think, strike a good balance of trusting our, experience as experts in the field while at the same time sharing knowledge in terms of key learnings that they've had from past investments. And they're also aggressive. They like plans that center around growing quickly, as long as it's intelligent growth. Watson: So what does that element of the plan look like? Where you're already experiencing a lot of growth and we can go back to the free money concept with these relatively higher interest rates, but from a product roadmap standpoint, from a, just breaking into new markets standpoint, what's that picture, it gets painted when you're in those conversations? Marquez: So, it's definitely a big focus on speed because the products, as we talked about before that we're making are not novel, right. We're taking an idea that has existed for centuries and applying a new technology to it, which means if. Someone had the right team, anyone could build it. And so a focus for us is making sure that we are the first to basically become a household name within this space. In order to do that, our focus for this year is to expand within the U.S. So making sure that as people are thinking about how to invest their own portfolio, especially right now, anyone that had a manage portfolio at, you know, Fetterman or Ally, your returns, depending on what your risk setting was, are probably not looking great. So our goal for the end of this year is, as people are thinking about those investments, that BlockFi comes into the mix. In the future, once we figured out, you know, how can we make sure we're known within the U S, a huge focus for us as international markets. We're actually live internationally today. We just don't actively market the product. However, 30% of our traffic comes from overseas without us even trying. And the reason for that is because, you know, while it's really cool that I can offer a better financial product for people in the U S. The real interesting impact that we can have is offering US grade financial services to residents in other countries like Argentina or India, where there's an unstable currency or lack of trust in the government. A lot of citizens of those countries haven't ever had access to a stable currency, let alone a savings account. And so our long-term goal is to be able to allow those citizens to just download US grade banking right on their phone and access it instantly. Watson: Yeah. And as an outsider, that seems like the, you know, probably multi-trillion dollar pie in terms of the direction that all these FinTech startups are looking at, as people call it the under-banked or the underserved and the capacity to be the right vehicle for these enormous populations that just don't have an alternative solution. It's very easy to take for granted as someone in the US. Marquez: Yeah. And there's two main blockers on why most startups, that claim that they're going to do that are going to have a hard time expanding overseas. One is international transactions. So if I only deal in cash and I'm a bank and I want to open an app in Argentina, I have to partner with a bank in Argentina to be able to onboard, you know, pesos onto my platform. Crypto gets rid of that, right? So with crypto, you can send transactions anywhere without an intermediary banker platform. So I can instantly onboard someone in Argentina, without having to have a partner bank. And the second reason is a little bit more complex, but the entire US financial system is built on the concept of credit scores. Credit score is maintained by third party, private companies. That does not exist in many other countries in the world. So for example, in Spain, your credit score is determined by the bank that you've worked with for the entire history that you've been banking. And if you work with Santander, and then you want to switch to a different bank, that other bank will think that your credit score basically doesn't exist. So if you're a US company, you know, there's basically no way for you to start offering products in Spain because there's no credit score that you can access. And in Argentina or in countries where banking systems aren't as developed, it's even more complex because most people are fully liquid and don't have any credit history. Watson: And so, because of your model of saying, Hey, you have five Bitcoin, therefore we're willing to loan you X amount, you can then I guess not necessarily rely upon some sort of credit rating system for the basis of those loans. Marquez: Exactly. I don't care about people's credit history at all. We don't pull it on any of our clients. It's all asset-based right. It's all do you have the assets to pay back this loan? If yes, we can make you alone. Watson: Gotcha. So when I was researching this, one of, the things that I've seen before is, you know, one of the folks that have been incredibly successful in, tech startups, like Jeff Bezos or Mark Zuckerberg, who has all these shares tied up in a company that is continuing conceivably to grow in the future. Instead of liquidating the shares, they would take loans against those shares as a way to get some liquidity and be able to buy the things they want to in the short term, while still maintaining that equity. And, you know, maybe the presumption is if I'm getting this led to me at 1%, but Facebook is growing at 10% a year, it's well worth that trade-off. Is that kind of the similar model to think about this lending that's going on? Marquez: Exactly. So that's one big part of it, right? So most people that own Bitcoin think that it's going to go up in multiples, over the next few years. And it's been proved out over the past decade. I think it's been one of the best performing assets in the US. And the second reason is capital gains tax, right? So if you bought something at $10 and then you sell it at a hundred dollars, you have to pay depending on your state, anywhere from 25 to 35% in taxes on those gains. If you borrow against those assets at a value of a hundred, you don't have to pay taxes on a loan. And in fact, if you're a business, the interest that you pay is tax deductible. If you're an individual, if you use those, assets to reinvest that interest is tax deductible. So on one end it allows you to access liquidity without selling an asset that you think is going to go up in value over time. And the second is avoiding a tax burden. Watson: Gotcha. One of the other questions that I had was there was this whole craze, like two and a half years ago of ICO's happening, new coins being launched. And it was an opportunity to, um, you know, for some really interesting projects to get launched and get funded in a novel way. And also a lot of fraud and scams and other kind of nefarious activities to go on. Is your kind of bent or leaning as an organization towards, you know, having some ties back to more traditional lean into finance and just frankly, seeing this space to be played as making it more accessible to a broader audience. Did that play a role in the decision to not necessarily go that route, but to go this route of doing these venture fundraises and not necessarily jumping in the pool with all that craziness? Marquez: Yeah. And I think this ties back to. One of the key themes in how I built this company, which was when we came down to making decisions, like, do we raise an ICO or do we go the traditional funding route? We asked ourselves, does this make sense? And an ICO, it similar to an IPO, right? A company could essentially sell shares in a future product in this case. So a lot of companies are promising to build something and people could invest in that. And the construct in which they were using was basically saying that, in exchange for buying that it was called a token, those clients would then be able to redeem that token and access services later on. We took a step back and we looked at this funding model. And one, it was very complicated. And so we thought, listen, like we're already trying to sell loans collateralized by crypto. If in addition to this, I'm asking clients to buy a token and then redeem the token to access the loan and pay interest and pan origination fee. It's a very, high friction sell. And we thought that it would make it harder for people to use our product. And second, there was a lot of regulatory uncertainty over whether or not raising funds that way was legal. So we thought, listen, we're already a crypto startup. We don't need to take the additional risk of being under the eyes of a regulator that's upset with us. So instead, you know, we did the traditional funding route, which takes a lot of time and it's very difficult. But you know, we bootstrapped it and six months later we got our seed round. And it was really well-timed because we closed it right before the crypto markets crashed at the end of 2017. And it was good timing because it gave us enough capital to kind of get through that slump and continue building our product. Watson: Right on. Where are some of the, assuming you weren't doing BlockFi or you're just speaking to somebody who might be listening in early 2020 that is not of a more technical skill set, but of a more storyteller sales, marketing type of skillset. When you survey the landscape for blockchain, cryptocurrencies, are there particular directions or spots that interest you or you point to and say, man, if we could apply some great storytelling there it would really change things or kind of create some momentum in a positive way? Marquez: Yeah. I definitely think that being able to tell the story of what Bitcoin is as an asset in a very simple way that doesn't, you don't even have to mention the word blockchain. It would be very powerful, right? So, if there was a, I'm not, I'm an operations person, unfortunately I'm not a storyteller. But there are a lot of metaphors to kind of explain, you know, this, this is something that allows people to send stuff across the world instantly. This is the same price everywhere in every country, and you can trade it 24/7, and being able to kind of explain the power of that. Not only for people in the US but people overseas and how that can change the way that we think about financial systems. It's why you end up with, you know, Crypto anarchists who are obsessed with it and want to burn everything down, but at a very high level, it's a very powerful asset that I do think can change things in the longterm. I think we're very early in the development of this technology. I think it's going to be years before you see blockchain powering anything that we really interact with today. You know, there's a version of reality where you can order your Uber on the blockchain, but I think we're very far away from that, but I think that makes it a really exciting time to invest. Watson: Yeah. And just frankly, to be learning more about it, just to be paying attention to it and see something start at a kind of more seedling stage and then eventually blossomed down the line and have that context is really powerful. Flori, this has been awesome. I'm really excited to see BlockFi continue to blossom and you guys continue to operate and expand. Anything else that you were hoping to share today that I didn't give you a chance to? Marquez: You know, I think that this is a really interesting technology. I would just tell listeners to not be afraid to dabble into something new. And one thing that I definitely encourage people to do is to think of any questions that you have about our platform and email it to support@blockfi.com, just because we have excellent client service and they also love tough questions. So please keep them on their toes and send them something interesting. Watson: Awesome. I'm going to link the supportive blockfi.com email for folks in the show notes who want to check that out. Any other relevant links or digital coordinates, where we should be pointing people? Marquez: You know, we have @TheRealBlockFi as our Twitter handle, I'm @FounderFlori feel free to send us a message we love hearing from you. And definitely please if you're struggling with just a lot of cash in your checking account, which to your point pays you 0.01% or something insane right now, you know, let your money do your work for you. Check out BlockFi, check out other solutions. Watson: Right on before I realized that there was one thing I wanted to ask you about, before I have you issued the closing challenge to the audience, this is not a pawn shop. This is a financial institution, but I was wondering if you could tell the story of early on in the conversations with regulators, why it was originally confused as a pawn shop? Marquez: Oh, man. Yeah. So. Early on we were the first people to ever go to the state of California and try to get a lender's license. And the regulators, when we first applied were really confused about why a lender would want to take custody of an asset. Right? So when we lend to someone, they give us their Bitcoin, we give them cash. When they pay back the cash, we give them back the Bitcoin. The regulators were like, well, when you lend against a car, the client can still use the car. So why would you take the crypto away? If you're taking something away, then you're a pawn shop. And they actually told me that I had to get a pawnshop license. I really wanted to get the business off the ground. So I looked up how to get a pawn shop license. And the answer is you call a police department. So I called the Sheriff's office in San Francisco and I talked to a police officer and he actually knew what crypto was. And told me that because crypto was not a physical asset, there was no way that I could be a pawn shop. So I had to go back to the regulators and, you know, for the next nine months, get more lawyers involved so that they could speak lawyer speak to the regulators, and kind of outline why since Bitcoin is essentially like cash, the only way that we can lend against it is to take custody. And nine months later, The regulators actually apologized to us, which I don't think happens very often. And they were like, sorry, it was our bad you're right. You're not a pawn shop. Here's your license. Watson: Wow. That is such a good story. I mean, that's like the, the lore of a company right there and the grit, frankly, to operationally get something off the ground. Marquez: Yeah. I mean, you don't want to find yourself on the phone with a police officer when you're starting your company, but we do what we have to do. Watson: Right on. So before we let you go, Flori, this has been fantastic. And I'm so excited for people to check out and learn more about BlockFi, but, I want to give you the mic one more time so that you can issue an actionable personal challenge to the audience. Marquez: I think that there are really interesting investment opportunities right now. You were talking about oil on your last episode. And my personal challenge for listeners is to take a hundred dollars and put that money to work. Watson: Right on. I love it. Take the challenge, try something new. And the nice thing I found, I've taken that challenge personally, a couple of times, and even in the instances where it doesn't work particularly well, there is a learning from if you're all of a sudden now, You know, investing in oil or crypto or whatever the thing may be the skin in the game to pay closer attention to it. And the learning that comes from that additional attention, is kind of a way to turn it into a win-win or at least a win slightly less loss. Marquez: Yeah. I mean, one, one that I did, I wasn't willing to buy any plane tickets just yet, but I did buy some Delta stock. Watson: There you go. I dig it. Well thank you so much for coming on the podcast again. Marquez: Thank you so much for having me. This was fun. Watson: We just went deep with Flori Marquez. Hope everyone out there has a fantastic day.
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The Coronavirus (rightfully) gets most of the headlines. However, we are also living through an oil price war between Saudi Arabia and Russia that has worldwide ramifications.
Matt Wieszczyk is the Managing Member of Par City Holdings, a land services company that specializes in the acquisition of oil and gas mineral and royalty rights. At PCH, he has placed $15mm for various investors in SW Appalachia. Prior to Par City, Matt was Acquisitions Manager & General Counsel for San Jacinto Minerals. At SJM, he placed $39mm in 15 months, leading the mineral market in Washington and Greene Counties, in PA. In this interview, Matt and Aaron discuss the shale industry in Appalachia and how the price war could positively affect the region. They also discuss Matt’s business model and how he got into the industry. Matt Wieszczyk’s Challenge; Write someone a handwritten note. Connect with Matt Wieszczyk parcityholdings@gmail.com Mentioned Henry Hub Natural Gas Futures Eia.gov
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Piper Creative creates podcasts, vlogs, and videos for companies. Our clients become better storytellers. How? Click here and Learn more. We work with Fortune 500s, medium-sized companies, and entrepreneurs. Follow Piper as we grow YouTube TikTok Subscribe on iTunes | Stitcher | Overcast | Spotify 
LBRY is a place where they can find great videos, music, ebooks, and more. How? LBRY started as a new protocol that allows anyone to build apps that interact with digital content on the LBRY network.
Apps built using the protocol allow creators to upload their work to the LBRY network of hosts (like BitTorrent), to set a price per stream or download (like iTunes) or give it away for free (like YouTube without ads). The work you publish could be videos, audio files, documents, or any other type of file. Traditional video (or other content) sites such as YouTube, Instagram, and Spotify store your uploads on their servers and allow viewers to download them. They also allow creators to make some money through advertising or other mechanisms. However, there are some well-known drawbacks, especially for people whose material is perceived as not being advertiser-friendly. Jeremy Kauffman created LBRY because he fell in love with the idea of shared, global content registry that is owned and controlled by no one. In this podcast, Aaron and Jeremy discuss how it works and the challenges of building a new model for media. Jeremy Kauffman’s Challenge; Bet on your beliefs. Connect with LBRY's Jeremy Kauffman
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LBRY.tv If you liked this interview, check out other blockchain interviews with Brendan Eich and Anthony Pompliano. LBRY sync with YouTube
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Piper Creative creates podcasts, vlogs, and videos for companies. Our clients become better storytellers. How? Click here and Learn more. We work with Fortune 500s, medium-sized companies, and entrepreneurs. Follow Piper as we grow YouTube TikTok Subscribe on iTunes | Stitcher | Overcast | Spotify Watson: Jeremy, welcome to Going Deep with Aaron Watson. Kauffman: It's great to be here with you, Aaron. Watson: We've known each other for a while, and I was thinking of there's so many different ways and places where we could start this conversation. But I think the most relevant for the audience is that back in November you had a very exciting launch. And that launch by my estimation, from some of the data that you've shared publicly has gone pretty well. So can you talk about specifically what launched in November within the context of this project that you're working on and why it was such a big deal? Kauffman: Yeah. So the simplest introduction to all this is exactly what you just asked, which is a LBRY.tv. LBRY.tv Launched in November. And the surface level of that is like a, I don't know, we could say it's like a YouTube that respects people, or YouTube that treats people like, you know, adults, that thinks people should be able to make choices for themselves. You know, rather than having one company with a, you know, with a thumb on the scale of in a sort of at times opaque and secretive manner. Watson: Yeah. And another element of this, and the buzzwords can start to fly here and we can start to like venture into, you know, buzzword soup, but it is involving blockchain technology to make a platform where these media assets are not censored by some central authority. There is more sovereignty and control placed in the hands of both viewers and creators. Viewers not having as much of their data taken and used for advertisers, creators with more sovereignty and more of a direct relationship with their viewers. What's the next point? Is that the best synopsis? Kauffman: Yeah, yeah. Yeah. So LBRY.tv is that, the friendliest way of using LBRY and LBRY.tv, you can think of as like, yeah, this YouTube, that's a little bit more open, that's a little bit more respectful. But as you said, it's backed by a much more, a much deeper technology than just a website. It's backed by a protocol called LBRY that's a technology that's been published to IEEE and is documented very thoroughly and technically at the LBRY.tech website. The core idea of LBRY is that we wanted to take publishing digital content and take it out of the realm of where you surrender your content and your audience to a silo like YouTube or Facebook or these places. And take it back into, actually sort of like the land of email, people can be in, can use different services, can use different models, right? And when I use Gmail, I'm working with a big company, but I can still talk to the Microsoft and I can talk to the self hosted guy and I can talk to everyone else. And I have the ability to, if I want to, to exit and to leave and to take my ball and to leave Google land and to leave Facebook land and go into other lands. Right. And with content creation, that's not the way that it's working. Everyone is fighting to lock things away. Everyone's fighting to get the content and then to keep it tight and hold it tight and not let other people get it. And the LBRY, I think, you know, whatever this is a Silicon Valley or whatever it flips the paradigm, man. It really changes. It turns things on its head, the entire design. And we can get into that. Watson: And, and so I can remember, cause since we've known each other for so long, I can remember when the project just first came out in a public way before the actual LBRY TV. And I remember downloading it and like trying to make sense of it. And frankly, like it's, it's, you know, an MVP earliest version of a product. Like I didn't really, I didn't see where the application was, but for me coming to LBRY TV, I think I even sent a message to you and Grin after, you know, playing around with it a little bit. It's like, Okay. I see the usability. I see the similarities in UX to a platform like YouTube. And I can see how as this continues to evolve and how you continue to invest and build, this really is a viable alternative versus what I'm sure it was just the initial stages of building the infrastructure, laying the pipes, laying the cables. So that that next layer could be built. Kauffman: Yeah, yeah. The thing about these web 3.0 app blockchain based protocols, whatever, I don't know what the favorite term is around these parts, but they're all kind of interchangeable to me there. You've got to compete against very normal- sorry. User experience has been well-established so it would have a lot of time to work them out. And you've got an underneath layer that's vastly different. And a lot of companies, and this is something here's, this is your real advice whether you check out LBRY or not, I think this is something to apply to other companies, these places claim they've made this protocol, and then you go and how can you use it? And it's just a website, like, okay, like that's not a protocol. If Bitcoin had launched and it was just like, okay, yeah, you go to bitcoin.com and you login and you create an account and you send money. Right. That's Coinbase. That's PayPal. Okay. Like it's, it's not Bitcoin. And I'm not against Coinbase. I love Coinbase. I use Coinbase. I have an account. LBRY TV is Coinbase, right? LBRY TV is taking the LBRY protocol, what it did and making it user-friendly so that you don't have to. Do the harder core stuff, right? The more serious tech person stuff, but that tech layer has to be there. If you just have the layer on top, you've just built, you know, I don't want a good metaphor is, you know, you've got a castle on a cloud. It's just going to fall eventually when it comes to checking and saying, well, is the real thing there? It needs to be there. And for a lot of these blockchain companies, it's not there. Yeah, and we built that there first. And then we built the Coinbase. We built the Coinbase later. And so I think that's really important. And I think that's something you can use that as a filter with a lot of these blockchain companies, like, you know, have they done something serious or not? Well, can I interact with it in a truly decentralized peer-to-peer way? Or can I only interact with it through a website? Watson: And I love the way you've thought about it. And another thing, so one of the conversations that you and I have had in the past that has always struck with me was we were at a conference trying to sell for the SAS company that you previously co-founded, that I worked at. And you were kind of talking about how the maybe complexity or the technical challenge associated with that SAS firm was waning. It wasn't quite the same hot, bright light that had previously been when you were building it and its initial stages and how attractive this project was to you as a way of problem solving and deep thinking, which is really how I understand you. I understand you as a builder, as a problem solver in a kind of perpetual way. So, my question there is can you talk a little bit about how this idea initially gripped you and how long it held you as an interesting idea before you acted upon it? Kauffman: Yeah. It's going to be tough to answer the second question concretely, because the time gets fuzzy, but I think everything you said is correct in terms of what I find interesting. I started learning about Bitcoin and blockchain. And I started, you know, when I learned about something, I studied physics at one point I ended up, you know, with a degree in it and I was attracted to physics because of, you know, you're trying to get things to the essence of things, you know, what's the most fundamental of something. And, so that's what I started doing with blockchain and Bitcoin and, you know, and I actually still think, I'm skeptical of so many, blockchain applications. And at the same time, think it's only the tip of the iceberg of what we can do with blockchain, which can seem contradictory, but it can do so much. And the reason is it allows us to reach consensus without having one single party, one authority in charge of reaching that consensus money. The tradability of them is necessary for that consensus to work, and money is a really logical application and other finance type, you know, decentralized finance. It's all interesting stuff, but there's so many things that could be done with that. Right? And one of the things that I hit on, that I couldn't stop thinking about was this idea of using it for digital content, right? This idea of building a decentralized library, right? A library. If we already have good tech for accessing content in a decentralized manner, right. We already have good. Good tech for that, but what we don't have as good tech for discovering content in a decentralized manner for providing identity in a decentralized manner and providing discovery in a decentralized manner. And blockchain allows the ability to solve that. You have a shared entry that anyone can publish something into and no one authority can own it. You know, I thought there was a certain, like beauty in that and I couldn't, I couldn't stop thinking about it. Watson: And was there, so was there a point in which you realized, like, my chips are all in, I'm going for this thing? Kauffman: Probably. I don't remember concretely. I mean, like I definitely,it was gradual, but there probably was a moment when I realized that I was all in, I would say, but, but it wasn't, it definitely wasn't zero to 100 overnight or in a month or something, you know. I started poking, I started talking to people and then I found it taking over my mind, you know. But it didn't take over my mind instantly. It started as just a little, like as just a little spark, you know? And then you start talking, you start reading and then you start thinking, maybe there's something here. You know, I'm a skeptic. I'm not someone, I have lots of ideas, but then I, a lot of times like, nah, actually that idea kind of sucks. So like I'm good at generating ideas, but I'm also really good at hating on ideas, you know? Like I'm not someone who is especially optimistic actually. I don't think, even in my ventures, even if I'm trying to do something big, I like kind of at the same time, understand that it's not necessarily high probability, you know? Which is an interesting position, I'd say, for a CEO to be in at times. Because you're, it's also your job to be, you know, the number one cheerleader, right. Watson: Be the optimistic, gotta be the cheerleader, but you also, like, there's the saying only the paranoid survive. Like you have to have that real clear-eyed view of the risks that you may be facing and not just charge for it blind. Kauffman: Yeah. Yeah. Watson: So talk to me, this was one of my basic questions about media on the blockchain, and this is, you know, totally lacking technical sophistication. One of the things that has been a part of me secondhand is this notion that blockchains are slower. So the positive side is that they are, you can create a consensus they're trustless, but the flip side is they're significantly slower than, you know, if we're talking about like the Bitcoin example, the Visa or MasterCard database can go so much quicker process so much more, so much faster because it is that centralized point for processing and everything. So when it comes to building the eventual aspirations for LBRY, which is the, would be this enormous library of digital content and an enormous amount of storage required to do that, how does something like that still remain capable of performing at the speed that people are accustomed to when they're on the internet? Kauffman: Yeah. That's a great question. And you're right, right. In fact, what I'll even take this moment just to like briefly hate on blockchain before explaining how, how I think LBRY works. Despite these facts, like sometimes when I have to introduce blockchain to people, I say, well, okay, blockchain is the world's worst database technology. I actually usually curse, but I'm going to not do it on the show. You know? So it's awful. It's terrible. It literally has one good property. And to get that property, you have to give up a ton of other things that you want in a database technology, right. That one property is this ability to reach consensus without needing to trustma single party. You have to really, really want that to the point of tolerating, like a lot of other bad things, like slower transaction speeds, more expensive transactions. Watson: Right. Kauffman: And the answer is, in terms of payments, in my opinion, the answer is still unclear. There are promising technologies like lightning network and layer two solutions. To me, these are the most promising and library would expect to adopt those as well. When we're at, we have more capacity than some other blockchains, but we would have to adopt those kinds of technologies and maybe 2050X where we are right now. So it's not like an immediate problem in terms of scaling that part of it. In terms of data, the data is not in the blockchain, just the metadata is in the blockchain. So by that, I mean like the title and the signature of who made it and that kind of thing. So that's in the blockchain. The file itself is in a fairly standard, it's peer to peer based system. It's Bitcoin-like. We basically copied a lot from Bitcoin. And so in that regard, that scales, because that doesn't need to get into the blockchain. So just the metadata, how much does the metadata scale? Our current design would scale to somewhere between several hundred million to a billion published entries, which is still again, that's still a limitation. That's still less than say YouTube right now. We're only at about 3 million publishes. So got a ways to go before we'll be hitting our scaling limits, but we would, after again, we think, we think you can evolve the system and improve the design. But there are limitations to you, right? You can go wait, you can blow right past those numbers with other database technologies. Whereas with, you know, our design, you're going to have with blockchain based design too, it's going to be harder. And so there absolutely are trade offs. It turns out actually that this metadata thing is a really good problem space for blockchain, right? Like it doesn't require publishing and just the discovery aspect of saying, Hey, this thing exists. That doesn't require insane scalability, right? That doesn't require instant it needs to be acknowledged in three seconds and it needs to be right. So if we want to, if we sort of, we the people, I mean, and there is a sort of rebelliousness to this project, right? Like I'm someone who believes deeply in freedom of information and freedom of speech. And like this idea is kind of built of building this library of the people that you're taking back control of information on the internet, putting it back in the hands of the people, you know, rather than a small number of companies. And, and so I want that badly enough, but I think blockchain is a good solution for that problem here. Watson: So, like you said, you're slightly to the pessimistic and you do have this kind of sober acknowledgement of the limitations and the challenges associated with the technology. How do you then define success? Because one of the other interesting questions of these web 3.0 adapts to whatever, there's a more well-worn path of the successful startup that people have now kind of internalized in the entrepreneurial scene. It's either an acquisition or IPO, or it's, you know, fundraise after fundraiser, after fundraiser big, around, big, around, big around SoftBank. Or something like that. In the context of LBRY, my intuition is that you've thrown a lot of those kinds of standard markers out the window. But how do you evaluate or how do you goal set in that framework? Kauffman: Actually, we haven't. So we have some different ones and some new ones. So there definitely are some blockchain specific ones. And I can talk about those. A lot of them are pretty standard to what I would have done with a consumer SAS product, you know, a lot of people. So in order to get free rewards from us, you have to share your usage data with us. So we know how long people keep the app open for broadly in a statistical manner. Like what kinds of things people are watching, right. Just facts about usage behavior, right? We're not, we're not digging in and looking at, you know, what are people like specifically doing in that kind of fine-grained way, but where we are tracking a decent amount and people know this, we're all very clear about this, where we respect, you know, users rights in that way, but most people are willing to share. And so we do use that data a lot as both KPIs for how is the company doing? And to just see, Hey, was this a good change? Did this make the product better? Did this make the product question? But then there are blockchain specific ones, right? You're you've got this kind of token economy. So in our case, we might look at something like, because we also have this staking system, you know, how many tokens are being bound up versus used in terms of, and this may, we may be a weird company in this regard, we don't spend a lot of time looking at like the price of the token. Like in my view, a lot of these assets it's driven largely by speculation. We feel if we just continue to focus on like real users on the more traditional stuff than like, can I keep a hype cycle going, you know, that that will ultimately be where success comes from. That may be a minority perspective in the space. So we'll see where things shake out in a couple of years. But I think at this point, LBRY is one of the most used, you know, D apps out there. Watson: I mean, that's also the more durable, more anti-fragile mindset as opposed to the kind of quick trigger one. Kauffman: Yeah. Yeah. I don't know if you've ever done a, this is off topic for what we're talking about, I guess, but a business breakdown on like a AEDL versus MOU, like a case study and talking about that at some point it would be, I think a very interesting episode. Watson: Yeah. I've actually taken some space away from the professional Frisbee stuff, but it is something that, you know, falls under that similar category. Kauffman: Well, it's just, I guess I'll talk about briefly, cause it's a really interesting case study between you and one organization that did things very top down and like was really polished and everyone thought was really good. And then you had another organization that kind of people there's like kind of like scrappy and bottom up. And a lot of people thought it was like kind of insane. Watson: Yeah. Kauffman: And that was the one that won too. This is an interesting lesson. Watson: Yeah. Absolutely. No, I'm with you. I think that's the accurate assessment. So, one of the next questions I want to talk about is this framework for token economy. So you, you created a token. Can you talk a little bit, actually, let's start with the staking system. That's going to be a term that if I'm coming from a almost exclusively YouTube or standard social media experience, I'm not familiar with what it means to stake coins. I'm not sure how that's relevant to a media consumption experience. So can you kind of lay that out for people? Kauffman: That's a great question. And we also are honestly, still trying on our part to figure out how to both how to teach people about this stuff and how much to make it part of this part of the system. But one of the things that you run into in a decentralized system, and this even, this is like, there, whatever. I guess it'd be a computer science law at a law of economics around this stuff, but basically in, in decentralized systems, you're vulnerable to certain kinds of attacks. Basically like if people, how do you stop someone from creating a bunch of accounts? How do you figure out trust? How do you find out, how do you, if you want to set rules for like putting the best content at the top and putting what's interesting at the top, how do you do that without allowing people to cheat and game it and this kind of thing? Right? And so the tokens on the LBRY network, our scarce thing, we basically let people who have them use them as something like votes. So, and that's what staking is. You're basically saying I'm taking some of my token that I have, and I want to use it to boost Aaron because Aaron creates good content, right. And Aaron might take some of his tokens and boost someone else. Right. And that boost, when you're committing those tokens, the sort of technical term for that, which I said is staking them, and the specifics of the algorithm, honestly, they change. We're trying to figure out the right thing. We know it's an input, right? We know this says something. This staking communicates something about how the content should be trusted and how it's doing. We're still tuning those algorithms in terms of how they work. Watson: And that is probably one of the greatest challenges. If we're talking about the big, big, big macro picture of Disney+ just got their 50 million subscribers. Netflix has 120 million, whatever, however many they have, YouTube and they're, you know, enormous amount of users is their finely tuned algorithms are spectacular at ope. You open up that app, you open up that service and it serves you up two, three, four, five, six, seven things that are incredibly relevant based off of your viewing experiences, based off of your upvotes, your comments, all of these, you know, the language that they've created within their ecosystem. And so that notion within iLbrary of it on the platforms as a tip. So you tip a coin or two to this video that you liked is both simultaneously helping that video go get discovered by more people, but also informing LBRY 'hey, I like this and I like this and I like this.' Show me more things like that. Kauffman: That's right. That's right. And you're absolutely right that that discovery, ends up being a challenging problem. Right? Getting that working is definitely an active engineering effort for us. One but one, you know, And this is something we're kind of betting the business on. Right. But what, the fundamental difference that I think exists with library versus these other systems is like those systems, and we've seen this, I think that the systems have existed long enough. We're talking about more than a decade. They can only grow so complete before there is a sort of incentive to defect. Right? We've never seen, like Spotify has never, never gives you every song. Netflix is down from what it used to be. Right? In terms of how many movies that the completeness of its catalog. Right? It doesn't, it's weird. Like we should, we don't think that we don't realize that it's weird. It's really weird. And right. Like, it's really weird. Like imagine if like, like one day, like Walmart sold TVs, but then next year TVs weren't at Walmart and I have to go to Target. Right. Like, it's, it's weird. Like normally, like if stuff works, if we're allowed to like buy and sell goods, we expect there to be a store there or just have like, like there's no restriction, do you buy and sell things? Right. So how is it that there's not an online place where I can just go and watch everything? It's weird. Part of it that I think though is the incentives that end up being created by the, like both certain structures of IP and the economic incentives of the providers and the, and the rights holders actually creates an incentive to have these like multiple locked in places. Right. Also because we never own content. Right. So we can't really, even when you buy a movie on Amazon, you haven't bought anything because you can't sell to anyone else, which is generally what you can do with things you buy. And anyway, I think that the economics of LBRY are that like, that doesn't exist in the same way. There's if anything, there's an incentive to come on, right. Even if you don't want to, because you might be missing out on potential revenue, then there is to pull out and lock your content away. And so I think that a system with these properties, even if it's not ours, is likely to eventually overtime beat the design of the incentive design for like the Netflix and the Disney+. Watson: Yeah. I mean, there's so many different analogies that I could build off of that last statement of like, you know, the jujitsu, like use the momentum of the enemy to like your advantage, as opposed to like trying to just force it. Like allow yourself to be water to some degree. And there's a lot of different ways to think about cryptocurrencies and Bitcoin, all this stuff. But one of my favorites is what, you know, Anthony and Mark yous go over at Morgan Creek digital say is like, it's schmuck insurance. If everything goes wrong, if we've got schmucks running everything and you know, Shit hits the fan and I'm going to be glad that I had this. It doesn't need to be my entire portfolio, but like, I'm glad that I made that hedge. And in a similar way, that's how I'm thinking about syndicating all of our videos to library right now, which is like, I think we've made a hundred LBRY coins or something, which is like, a dollar, yeah, you go. So it's like, just like, it's not the business and it's not going to be the business next year. But, you know, given the far from non-zero chance that this thing really does work because you know, the ton of brain power behind it, but also just a really good idea. Then it's almost like that schmuck insurance for our media of if for whatever reason we get, You know, cut down or de-monetized or censored by one of those other platforms, like we have this other place to direct a piece of attention. And now I don't know why we would, but it changes everything down to the words that I would choose to say in this interview and every subsequent interview, knowing that there's a hedge there, as opposed to every single one of my eggs is in one single basket. Kauffman: Yeah. Yeah. I mean, I agree with all of that. I think publishing to LBRY is definitely a heads you in tales, nothing happens kind of proposition. So it's worth, it's worth taking. And we have a one-click sync process at LBRY.com/youtube for anyone on YouTube. One-click does everything for you. So again, super easy. It doesn't take you much time, but I would add, you know, and it's weird because I agree with you and like, why would YouTube ever ban you? It doesn't make any sense. And again, look at all the blockchain. Content that's gotten banned or blocked or demonetized repeatedly over the last several months. And so, I don't know, I don't want to speculate too much as to why YouTube ends up doing that. I'm not even claiming that it's like malicious or anything like that, but it's clearly happened. Um, we've seen when we've seen that because they've all been coming over to LBRY. Right. And then the other thing that I would say is. The upside of, of helping LBRY succeed is LBRY is fundamentally different, right? Like you're not, if you end up and we don't, we don't ask people to quit YouTube. All we do is say, Hey, co-publish and, and check in on it from time to time and, you know, maybe mention it to your audience and that kind of thing. And you are then, however, helping build something that is, again, fundamentally different. It's not hopping to going from YouTube to Facebook where you end up trapped in another monolith. Everything at LBRY is open source. Everything is designed in a way that's fundamentally like you're not going to get trapped. You're always going to have the ability to leave. The control is always going to rest with you. And the tokens that you're accumulating are basically like, you know, your say and your stake in the success of the system overall, which has a lot more skin in the game. And a lot, then, you know, YouTube is giving you and when you're making YouTube succeed, Right. So it's kind of a cool thing to be a part of, right? Like we're all building this together. There's thousands of us in a chat room. There's creators hanging out, you know, that our developers interact with the creators are like, try getting a hold of someone from YouTube. You can't do it. Try sending us a message. We're like, okay. Yeah. Awesome. Like, we love it. You know? So it's, it's also a chance to get like, just kind of be a part of something. And it's pretty fun. Watson: So another question that I think would be obvious to folks is if there isn't that central sensor, if there isn't that central blockage for content that does open the door foR whether you want to use the word elite goal or explicit, or these kind of we'll call it problem, a piece of media that could be created. And that can span a lot of different definitions for a lot of different people, but on the extreme end, that has to be a concern. Whether it's aimed at you as a point of leverage that a government could come and say. Kauffman: It's an extreme, personal, ethical concern. Let's start with that. Cause I think it's the most important one. Right? We can get into government aspects and so on, but like, right. It's something I'm spending my time building this and I don't want it. And, and it is a personal, ethical concern. The point that we even there's even like an ethicist that I consult with that's on our advisory team. The part of it is the bit the most fundamental and I'll get it. I can get into specifics of what we do, but first I want to just make sure we're getting the like conception right before we even get into the specifics. LBRY is like HTTP. Right. So it's partially or SMTP, which powers our email, right? Like there is no, so it's correct that there's no censorship layer at the protocol level, right? Yet nonetheless YouTube censors videos all the time, because YouTube is an application. Right. And so there will be tons of sensoring at the application level, right? The whole, and in fact, one of the beautiful parts of LBRY compared to YouTube and other ones is that we can have an even greater variety of experiences. We can have an experience that censors 10 times more than YouTube, right? If someone wants to have build one that way, Right. The right way to think of it though, is that library is a fundamental technology like HTTP or SMTP that the, at that layer, the censorship isn't there. LBRY.TV yeah. That's an app, right? That is something where we want to keep that clean. We don't want people to be seeing bad things, you know, on there. Right. So, and we don't want people to be doing bad things and spreading it around. Right. And so to that extent also, we do, receive complaints. So, if someone tells us that something is illegal or infringing in some way, our team validates that claim. We then put it on a blacklist. So software by default will not access content that's illegal. And we want people to have legal experiences. If someone does want to use LBRY in a way to do something illegal, can they still do that? They can, they're going to have to go a little bit out of their way to do it, but they can use HTTP and SMTP to do illegal things as well. And if they're ever doing something illegal, we will not be participating in it. We'll be doing everything we can to not let that happen. Watson: Gotcha. I'm sure that that's one of the most common questions. Kauffman: It is. It's a common question, but it has to be, it has to be asked. Right. And, and I, but I would suggest that, like this isn't all that different from any number of other technologies, right? Encryption is another one, right? Well, you know, yes. When you create encrypted text messaging, criminals will use it to send messages. They will so will normal people in oppressive countries so that the governments can't spy on them. So will normal people so that they can't be, you know, re-targeted by whatever spying software, it's on their phone, you know? So we'll normally like, so it's like, could, could library be used to do something bad? It's like, I mean, yes. So could like any number of other technologies. We have knowledge of like low amounts of copyright infringement. Like some people were posted some like music videos and stuff. There's really not much of it, you know, happening, right. It's not, LBRY is not this dark web den of, of stuff. We do see people who care about, you know, free speech who care about controlling their identity. We do see people who are on the fringes. Who are like, are getting blocked from YouTube because sometimes they say something that's a little bit offensive or whatever. We do see a lot of them. We also see tons of family content and normal people and like the most normal mainstream vanilla stuff, because everyone needs, you know, prefers technology that leaves them, you know, in control. Right? Watson: So my next question is how do you manage patience? Because there's, there's kind of this paradox of there's a real gap, there's a real need, like even, websites that you've referenced, like take back the net and this kind of concept of what is, what was the internet for? Like what are we here to do? And the need and the kind of fire that can be stoked by that versus the realities of nothing is like, you know, perfectly parabolic in the way that it just immediately goes up. And it has, you know, mass adoption in the blink of an eye. And even just the years of, of laying that protocol infrastructure we talked about before. So like, how do you process that in terms of, you know, perspective and advice for other entrepreneurs, builders, product managers, how do you think about that? Kauffman: Only via unhealthy practices. I don't know. I don't have good advice. I've been miserable honestly for like a while. I don't know if I handled it very well. I still, like, I feel like, I mean, I was always very excited about what we're doing, but like, you know, we had flat growth for a long time and like there's no. Like, it just doesn't feel good. You know, I don't know if there's anything, you know, and I don't know that it should feel good. Right. I don't know, like it, to me at least like a lot of, I guess try to find, you know, the unpleasant parts, like motivating, like try to take it as a, as a challenge. Something that helps is to understand the fundamental dynamics of growth. Also I want to pause here. Like I'm not, we're not, we are nowhere near out of the woods. Like we have a lot, I don't feel that it's like, we're not growing fast enough. Growth is a constant question here. And when I look at the fundamental rates of growth, which I'm about to talk about. I think that, yeah, like I definitely think we're not out of the woods. Right. But the, but the key is get to understand the fundamental growth. It's actually the same as tech. It's, it's easy because now you can consult every study of the coronavirus. Like that is the nature of success. It's the same thing as that. Like you, if Intel, while you're our zero is below one, you can't be successful. You can be temporarily successful by like taking a bucket of Coronavirus and like driving around town and dumping it out to like, you know, that's and that's marketing and paying people to try your product and these things, you can fake it, but until your fundamental growth is above one, or you're going to spend a hundred million dollars on marketing, you're not going to get anywhere. So you have to focus on what's the fundamental, what's that fundamental growth rate of my product. And you have to be tuning that to the point that it's above one for at least one cohort. It doesn't even have to be for everyone. So like maybe you found that, Linux users actually want to run desktop applications still put out and they're willing to go through more software headaches because they really care about free software. Okay. Like, let's just get them using it. And then that you've got some place where you're growing some ability to which honestly, again, that didn't even completely work for us, but that's an example of something that we're growing with Linux users much more now than we were 18 months ago. But, to understand that, like, well, how many people are coming onto my website or whatever, like that might just be the byproducts of like media attention or active marketing or something. Whereas like, if you're saying I want to build a sustainable business, you want to build a product that's like really hitting that fundamental success factor. And then if you hit that, a lot of other things will, I think, become easier. Watson: Yeah. Yeah. To address the first part, what you were saying, I think that it's important, like your honesty there was the thing that helps someone because it is the lack of complacency that gives it even a chance of succeeding. If there is complacency in the moment, There is someone else out there, there's some other team out there that does not have complacency and they're going to eat your lunch eventually. And so, I think that that is still helpful for people. And then the fact that you use, I didn't not plan this, but the fact that you took a marketing principle, it's like a level of like the natural world. I'm reading this book right now, how nature works, and, and I just think that's so fascinating how many through lines and metaphors of the natural world can be applied to business. Cause you know, we're beings. Kauffman: Oh, yeah. Watson: And we're our own biological system. I think that it's really helpful to jump out of whatever domain it is that you're focused on. If you are an engineer, if you're a marketer, if you're an accountant, whatever the thing may be and the capacity to find those metaphors across, across different areas. So, and connect those dots is such a powerful way for understanding the problem that you're addressing. Kauffman: Yeah, I completely agree, to look at at nature and lessons from nature, and you've got to build up from fundamentals. Yeah. And that's, what's more fundamental? Watson: Yeah. Right on. Well, Jeremy, as we aim towards wrapping up, is there anything in general that you were hoping to share today that I didn't give you a chance to? Kauffman: No, I thought, I thought this was great. Watson: Yeah. Talk a little bit about the like actual rate of growth though, because you did publish something exciting in March. Kauffman: Yeah. Yeah. So LBRY has we just last month we had a million unique visitors to LBRY.tv and that's after only launching it in November. It's definitely been, it's been going pretty fast,you know, doubling rate of the world from just 150,000, the first month in November to a million and. And the creator adoption has also been, you know, really big. The total reach of the YouTubers adopting LBRY is now it's like 250 million subscribers on YouTube. So that's been very big and, you know, I feel like it's still at the same time, like just just the tip of the iceberg. But there's been so much validation that this is something that well, one that people are enjoying using, and that also people really see the value in. They want to, you know, they want to be able to be content creators and not hand over the keys to someone in the middle. It's just a really cool idea. And it's been definitely for the first time after, at least a couple of years, several months have felt like pretty good. Like the more people are really getting this and seeing the value of assessment that's been pretty cool. And I would say to just, yeah, go check it out. I mean, right. Create an account. It's really easy. If you want to go whole hog and get into like desktop app and peer to PLN, you can do that, but everyone can sign up the LBRY.tv. It takes like three minutes and, you know, start to start getting some, some token for free for watching content. You're going to be on there right? People will be able to follow you? Watson: Yeah I'm already there. I've been syndicating stuff there for at least a month. I didn't actually, so I looked at it first and I was confused why I would like, not that I was losing LBRY coins, cause it's like these little things I had no previous attachment to. But I didn't, I didn't understand like what it meant that like I lost a 10th or a hundredth of a coin every time I publish. And I was like, should I not be publishing? Like, is this upgrading my resources? But once I can just spend like another day or two on there it made sense. Kauffman: Thanks. Yeah. And that kind of feedback is really helpful and we love stuff like that. So I'm also very accessible. So if you do end up using LBRY as part of this, you can always send me a little note, a little feedback. We're relentlessly working on the product. Watson: Cool. I'll link Jeremy's Twitter account there as well, LinkedIn, LBRY, TV address, all that good stuff can be found on the show notes for this episode, goingdeepwithaaron.com/podcast or in the app where you're probably listening to this right now. Before I let you go, Jeremy, I want to give you the mic one final time to issue an actionable personal challenge for the audience. Kauffman: Yeah. So have you ever talked about betting on your beliefs on the show? Watson: Maybe not explicitly. Kauffman: All right. So I'm a big fan of this and that it doesn't mean you have to make big wagers, but I think it's a great tool, both to sort fact from fiction among others and to help your own thinking be better. Right. Which is to try to make, you know, specific wagers around events. And we're at a time right now, and I'm not saying you have to make, you know, particularly provocative ones or anything like that. I'm not trying to say like the bad on everything, but we're in a time right now where the pundits get away, pundits and experts, I think get away with a ton, uh, with being wrong a lot. A lot. And betting on beliefs as a way to a powerful way to sort facts from fiction. So my challenges, the next time you find yourself in a disagreement with someone, you think someone might be, you're on two different sides of something. Find a way to bet on it. you can bet a six pack of beer. You can bet 10 bucks find conditions under which you would be persuaded that, Hey, that guy was right and vice versa, say, Hey, if this happens, you were right I was wrong, vice versa. And forcing yourself to put something concrete on it can kind of bring you out of fuzzy thinking land into a more concrete judgment land. Watson: Right on. Get some skin in the game. Kauffman: Yeah. Watson: Awesome. Well, Jeremy, thank you so much for coming on the podcast and sharing with us today. Kauffman: Thanks. It was great to be here with you, Aaron. Watson: We just went deep with Jeremy Kaufman, hope everyone out there has a fantastic day. 
Two years ago, Ian Rosenberger and his company took a leap forward by launching a backpack. It was made from Thread International’s first product, fabric made from plastic waste that had been recycled.
The backpack raised $571,000 on Kickstarter and represented an important new chapter for the business. At the beginning of 2020, they launched two specific brands; Day Owl (for consumers) and First Mile (for brands like Reebok, Puma, and Converse to buy the fabric). In this conversation, Ian and Aaron discuss the strategy behind the rebrand, managing a retail company through the 2020 Coronavirus pandemic, and how Day Owl re-tooled their facility to make Personal Protective Equipment for healthcare workers. Pittsburgh’s best conference to Expand your Mind & Fill your Heart happens once a year. Ian Rosenberger’s Challenge; Identify the Day Owls in your world and figure out how you can support them. Connect with Ian Rosenberger Day Owl Website Day Owl Instagram If you liked this interview, check out episode 336 for our first conversation with Ian Rosenberger where we discuss recycling waste, mission-driven startups, and the grit required to survive.
Underwritten by Piper Creative
Piper Creative creates podcasts, vlogs, and videos for companies. Our clients become better storytellers. How? Click here and Learn more. We work with Fortune 500s, medium-sized companies, and entrepreneurs. Follow Piper as we grow YouTube TikTok Subscribe on iTunes | Stitcher | Overcast | Spotify |
Show NotesFind links and information referenced in each episode. 
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