EP3: Prasanna Sankar, founder Rippling ($6.5b), on entrepreneurship, building Rippling, and crypto as the new economic engine

Conversation with Prasanna Sankar - whose most recent company, Rippling, went from zero to $1.35b valuation in less than 4yrs. We talk about his experiences working on startups for over 10 years, finding and scaling success at Rippling, and why he believes crypto will be a transformative new economic engine.   

Episode Highlights:

1. Getting started as a programmer in high school
2. Approach to building from first principles and becoming the top ranked coder in India
3. Moving from Microsoft Bing team to Silicon Valley and pitching to Paul Graham
4. Building LikeALittle - hyper-growth phase, passing on M&A, eventual crash and burnout
5. Joining Zenefits and the visionary genius of Parker Conrad
6. Founding Rippling - clear and ambitious vision requiring a large up-front build
7. Path to $1.35b valuation in under 4 years, leading to hyper growth and scaling phase
8. The blockchain movement and why it could be the next big thing
9. Thoughts on crypto use cases and framework for how adoption will grow over time 
10. Ethereum as the gateway into crypto-native activities 
11. Exciting infrastructure being built today - faster Ethereum, and high speed bridges between chains
12. Why blockchain will be the economic engine for the future, and how it allows creators to maximize wealth creation
13. Thoughts on planned move from the US to Singapore which is becoming the "crypto capital of the world"
14. Recommended reading: Tendermint white paper on Consensus without Mining

Links:

• Follow Prasanna on Twitter at @myPrasanna,  check out his terrific blog, and his AngelList fund
• For more of Prasanna's thoughts on crypto/blockchain, check out his blog post on Building a Trillion Dollar Crypto Business, and his talk on Blockchain- The New Steam Engine

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Transcript

0:06  
Hey there, you're listening to paradigm shift, a podcast about turning points in careers, companies and lives. I am Ashish. And I'm joined by my co host stain. And today we're really excited to talk to Prasanna, who is the co founder and ex CTO of rippling, about his entrepreneurial journey about his experience, founding, rippling, and what he's up to these days, persona. Thank you so much for joining. Thanks for having me, guys. So maybe we'll start off with a bit about your background. Do you mind telling us how you got into software?

0:36  
Yeah, definitely. I mean, I was not a great student in school, I wasn't very good at learning these things, I didn't find it very interesting. I was not a sort of a mediocre student at school. And then my parents bought a computer at home. And for a kid, you know, it's just like, great to play video games all day. You know, it seems like a lot of fun. And then when I sort of discovered that you can actually code these things. It felt like very interesting, as I started getting very fascinated to my son, who's growing up now, you know, he asks me Dad, like, what do you do? You know, what do you like, and I tell him, I'm a trader and a coder, you know, those two things I really sort of enjoy. And the reason for that, you know, early on, the thing that I discovered is you can build everything from first principles in these two things, right? You know, that experts don't matter. You can throw away the textbook, you know, if you're building something in a computer, there are only like eight instructions that fundamentally matter, right? Like, you know, add, subtract, multiply, then go to and, you know, if and, like, that's it, you can build everything with it. And you know, if you're building like, whatever, a printer driver or something, you can just ask yourself, how would I build it. And often in real world, you know, the way it's built is similar to how you would build it, right. So it was just a drawing canvas on which, you know, you could just have really long inference chains, you know, you can sort of just play chess, and moves deep. And the most likely move is, you know, you can actually predict the line, you know, for a really long time. You know, unlike in math, maybe you can sort of maybe do like five moves deep or something without knowing the rules. You know, maybe in physics you can, you can hardly go to moves deep, right? It felt like a fascinating way to live inside your head. I really enjoyed that as a kid,

2:07  
what kind of things would Did you enjoy coding when you were young?

2:11  
The first amazing thing that I remember was I built a very simple, I would be embarrassed to even call it a virus, but something like that, you know, my friend asked me for a game that I had the game was called Magic claw. I don't know if you guys remember, you know, when I was a kid, that game was pretty famous. But I had a CD and my friend asked for the game. So I sort of copied that CD over into a different CD. And on CDs, you know, in Windows, you have something called autoexec dot bat, which is basically you know, as soon as you put the CD in, that script will run. So what could possibly go wrong. So my friend puts a CDN, and his windows boot up screen, suddenly now showing a picture of Rajinikanth, which is a hero and Dumber movies and a painful five minute countdown that he needs to go through. Before it, let him pass. And if he wants that us he needs to email address, you know, killer coder@gmail.com or something, you know, for the antivirus. Right? The next day, my friend came to school, and he's like, Dude, what the fuck, man? Why did he give me that CD? My dad beat me yesterday, you know, like, infected his computer. And you know, he beat me up. And you know, I even got a mail from his dad asking for the antivirus. So you know that that was the first memorable thing that I ever coded. And you were being pretty nice in that situation, much more nefarious things he could have done. Yeah, it was a lot of fun. It was a huge job the next day,

3:32  
so you got into computers. And that was kind of like where you enjoy building things. How do you go from writing viruses to becoming like the top player in the country?

3:41  
Yeah, yeah. So that that was definitely game changing. For me, you know, most other subjects, I spend most of my time building some games on a computer and stuff like that, having fun. And my teacher put me into this contest called IOI, international Olympiad, in informatics. And they said, like, hey, please go represent our school. So there was a, there was a zonal test on that. And I was like, Hey, I'm a great coder. Right? Like, you know, I mean, of course, I should clear the test, you know, so I went, and I didn't know what the heck it was, many people prepared for it. So I just went into it. And the problems were, there is no computer, they didn't give me a computer, they gave me a piece of paper. And they asked me stuff like, Hey, listen, there are five points on a map, like how do you sort of go visit all these points once and exactly once in the shortest distance, right. So I didn't know like, you know, I didn't know much algorithms or anything like that back at the time, you know, I was in school. And, you know, these were the problems in that thing. And so I had to sort of just come up at that point with the solutions for it. And, you know, I sort of came up with the patterns. So all these examples, and I sort of walked out, and I remember, you know, I was the first guy who left that Hall, right, everyone else was solving it, including, you know, folks who are toppers in high school who prepared for that stuff for a long time, you were, you know, sort of really calculating n equal to like 10 or 20. You know, if you do exponential versus an algorithmically different solution, it sort of takes much different times, right. So I was able to sort of really finish it. The others were sort of really fruitful. The way I like my friends sort of came out and said, Hey, like, Why did you give up? And I said, I didn't give up, I actually did it. So, you know, that was my first introduction into this algorithms and stuff like that, you know, it's just like, discovered that, you know, I was reasonably good at sort of figuring out these patterns. That's when I got a bite of these algorithmic contests. And then when I was in college, Google launched this huge event called Code Jam. And one of my seniors was doing it in the computer science lab. He was like, Hey, I heard you know, you're a good coder. Can you sort of help me with this? So I sort of came in and saw, okay, this, these seem like interesting problems. I knew a little bit of algorithms at the time, not much, based on the informatics experience. And, you know, I sort of tried my hand at it, it wasn't my first ever contest, I actually qualified to the finals, the India finals. And I was like, pretty surprised by that, you know, I didn't know much. So then I actually, you know, I cleared the round. And, you know, Google India sort of invited me to the office to sort of go to the India finals, you know, I didn't know much computers and, you know, algorithms and stuff like that. So I started learning, I practiced for like, three months or something. And I went to went to the finals, I don't know if I did zero problems, solved zero problem successfully, or I solved one problem successfully. But I did pretty poorly that much. I remember, I didn't do well at all the India finals. But then I sort of came out, I learned from others how to solve these things. And it felt like I could have actually solved it, you know, I could actually learn and solve these things. So I put a lot of time into it. Because of course, nothing else in college is interesting. You know, nothing else in academic life is interesting. And this seems like a cool new thing. And it's Google, right? Google is everyone's dream job at that point, you know, like people who are studying computer science. So Google is sort of running it, it's feels like, you know, you could get a job at Google if you did it. So it seemed like a very interesting contrarian bet, you know, versus going straight forward, studying academics or something, seemed like a sort of farabee risk reward in retrospect, and I sort of went all in on it, for the next six months in, that's the only thing I read, I didn't go to much classes, you know, I just practiced computer science and algorithms and sort of went deep into it, again, played, lived in my head for a long time. You know, just like when I went to sleep, just was thinking about algorithms and the tough problems that I couldn't solve. And I just kept incrementally getting better, right. And six months later, you know, there is Google international Code Jam, that sort of came. So the Indian one was the one that happened. And then, you know, six months later, there is international one, Google international for Jam World Finals. So then, by the time I was like, you know, maybe I can give it a shot. And then there was ranked one in India by the point. So you know, it was just a fascinating, fascinating journey. And it gave me a lot of confidence, right? Like, that's the sort of core ingredient that I actually took away. It's like, you know, one, I can bet on something very contrarian, not take the traditional path, just like go this contrarian route. And to to sort of actually see it work on a massive scale. At that point, it was just like a rocket ship moment. For me,

7:47  
that was the key inflection point and a paradigm shift for you. So you get into programming, you start to get really good. And then at some point, you come to the US to work at Microsoft, it's pretty clear to me that you were destined for startups at this point, but you ended up at Microsoft for a bit. And then how did you then transition into startups? And we'd love to hear about your early sort of startup adventures?

8:07  
Yeah, definitely. For me, much of my qualities, Google was my dream job, right? Like, you know, I placed this contrarian bet on code, jam and topcoder, and stuff like that. And the payoff is actually a job at Google. Right? Like, that's the payoff I strive for it struggled for it for a lot of time into it. And I actually got the payoff, like, you know, like, second year, third year into college, I had offered the work, they're pretty mind blowing till then, like nobody from college has ever gotten a job at Google, right? They're like, Holy fuck, you know, this guy actually has a job from Google. And there's like Google Mountain View, right? Like, no one has ever sort of gotten hired over. They're not, you know, not even in the India office. So it was a huge deal. When I was in the second and third year of my colleges, I actually went came to the main headquarters, and people are just playing volleyball to the world finals. I came here and people are playing volleyball. And I'm like, that is the office again, you know, you know, people are playing volleyball chilling near the swimming pools. And, you know, my guide was telling me, like, all these guys are multimillionaires, you know, you play volleyball, and you become a multi millionaire, like, how does that work? How can I become that? Right? So it was a huge dream job for me at college. And then, you know, by the time I sort of graduated, kind of grew over it a little bit, you know, I had an offer from Google and Microsoft, and, you know, it seemed like, they were sort of competing. And, you know, Microsoft just paid me more. So I just said, You know, I took it, and, you know, it seemed like a dream job at the time, right, you know, the microsoft bing is basically an I wrote code, that's pretty low level c, c++, you know, it ran on hundreds of 1000s of machines. And you need to be very, very precise, algorithmically. There were small changes that I made, you know, which sort of saved like, you know, millions or 10s of millions of dollars, right? For a guy who's coming out of college seems like, Holy fuck, you know, I can do great job here. first three months, four months, I work like crazy. You know, like, I've not seen anyone who worked that hard. So like, you know, I worked like crazy for the first three or four months. You know, it seemed like an insane opportunity. You know, I remember one incident where the guy who hired To me, he was he was the founder of being he started being his name is Gaurav serene. And he sort of sent an email saying, Hey, you know, we have this huge issue, we have this huge use case that we cannot support, we need to sort of stop for team and build the use case, right. And, you know, I was this kid from college, you know, really hungry to prove myself, and I was sort of new to the code base, right? You know, that's sort of first month, they were sort of telling a goal, learn all the code base and stuff. So I was really hungry to prove myself. So that email, I got it at like, 6pm in the night, right, I sort of decided, you know, I'm going to give it a shot, I'm going to sort of make it a top coder problem, like, really quickly crack it, right. So I stayed up all night from six till like 10am, next day, and I wrote a code and I sent a patch next day, sort of sent an email with a patch in it, which is large diff not that large, maybe like, you know, find it line diff, which touches like, you know, maybe five different executable components along the Bing search pipeline to accomplish that feature, right. And I was just like, I didn't know what the fuck that was, that's the first time and I'm encountering that code. You know, I'm just like, testing it in local OS, and somehow making it work. And he sort of made it to work and sent the patch, right. So that those things were really amazing for me, you know, it was, it was a way to prove myself and you know, as like, I feel like a great guy, because I feel like, you know, I'm one of the few people who could pull this off, you know, so those were, like, very good moments for me to express myself, you know, express my art. So it was great in the beginning, right. And then, you know, what you sort of realized is, yeah, you can produce code, like really fast, but it just doesn't go anywhere. It just takes like forever, for anything to happen. So it started getting frustrating, pretty fast. It's sort of like, you've done sort of the meat of it. Now you need to get to the last 5%. And you know, there are people around, you will sort of like drag that 5% to eternity. And then you know, there are a lot of objectives, which are sort of make no difference, right? So you know, it started getting frustrating, pretty fast. And you know, you look around and see, hey, you know, all these people, you know, worked at Microsoft got married inside Microsoft, the average tenure is like 10 years or something. And then you ask yourself, fuck, this may peek behind me, is I mean, like, is topcoder my peak? Like, am I stuck here? Like, what the fuck? You know, then you kind of have this existential question, what am I doing with my life?

12:12  
How long did you spend Microsoft, I spent 15 months a year, I spent three years. And I think bang was one of the faster moving orgs. And

12:22  
actually, that's true, it actually had hypergrowth, in when a giant there was 50 people. And then when I left there are 2000 people. So there is there's quite a bit of hype about that. It is relatively fast moving, I say spent 15 months, right. But like the last four months, I didn't even go to office, you know, I didn't even like respond to emails, right? For months, and it took them four months to figure that out and fire me if that's not insane. I don't know, what is it, it actually took them four months to figure out there is this guy who never comes to office, who sort of like doesn't attend any of these meetings,

12:52  
I used to get like really good reviews at Microsoft. And it's weird, there'd be months where I'd show up at the office at like 11am. And, you know, like, everybody's gone by, like, find it strange that the company culture to Microsoft happens, you know, classic, big company experience, and then you're kind of, Okay, I want to sort of like work on something faster, moving something more challenging, I want my peak to be ahead of me. So you jump into startups. And then at some point, you do like a lot, which was this social network that had like this crazy growth for a bit Was that your first startup project, or just had to like, work your way up to that over a couple of iterations? What happened there,

13:26  
I mean, I left Microsoft, because obviously, you know, my life would be over in a state that I just couldn't do it, you know, anymore. But at the same time, Paul Graham was happening, nerds were getting rich. And you know, for the first time, you don't need to sort of better suit and convince a VC and raise $5 million to start a company, you just sort of you didn't need any connections, you can just apply on this website online. And you know, you can actually get rich and the hit rates were very, very high. VG is one of the first blog posts where like, 50% of the founders that he funded, you know, in the first two batches were millionaires, you know, by the time I was applying, this was even early to those nine. So it felt like, you know, there was a huge movement that was happening in the center of Silicon Valley, something that Valley has never seen and in the world has never seen. And, you know, nerds are getting rich nodes could start companies with like, very little capital. And I wanted to be a part of it, you know, I felt like, you know, that's the biggest thing that's happening the world at the point in time, and I wanted to sort of ride that trend. And, you know, I just wanted to make a million dollars, you know, I want to know, the fastest way to make a million dollars and you know, so that I never have to work at a shitty job at Microsoft ever again. That's all they wanted, you know, and you know, video saying, Hey, listen, look, shoot for a million, not a billion. And the hit rate on that was pretty high. So I really wanted to participate. I sort of took a flight and sort of came in to the valley on a tourist visa. And the first week we met with BG, and I pitched him my idea, which was a horrible, horrible idea. And PG was like, Hey, listen, you know, I read your idea. It seems pretty horrible. You know, we wanted to meet with you guys because you guys seem really smart. You know, obviously, you guys have done amazing things with your life. Do you guys have any other idea? Yeah, you guys are canceling. And you know, me and my co founder originally sold PG that, you know, hey, this is the next problem, you know, you need to bet on this. And PDS like, Well, okay, that didn't go very well at all. So, right out of Mike's already know what the fuck is doing right? Like I had no idea. So you know, I took a stab at it, you know, I sort of tried several different ideas like little was actually probably like, you know, the 10th idea or something, you know, that was like 18 months later, you know, we had burnt out, you know, trying like 10 different ideas, you know, trying to sell, nothing was really working. And like it was actually a copied idea. You know, at that point, we sort of gave up saying, fuck, we can't generate ideas, we just don't have it in us. And there was the social network that was taking off in my girlfriend's campus in Cambridge. And we said, we're just gonna just copy it. My girlfriend sort of caught me, she's now my wife, she called me and said one day like, Hey, you guys don't come up with good ideas. There is this thing that's taking off? Do you just want to copy it? And that's exactly the order. We did. Actually. That's the one thing that worked finally.

15:59  
So do you mind describing what like a little was I remember using it actually, in the early days I went to there was a thing called board at Butler, which was similar. Yeah, never expanded. But for the audience, it would be helpful for them to know how it worked.

16:12  
Yeah, yeah. So like little was an anonymous campus social network, it's what it is a flirting site. Right. So two thirds of our users were women 1/3 were men, predominant use cases, like something like a girl sort of seeing a guy on a library. And she's sort of making a post in like a little saying, see selecting, you know, the library as the location. And she's making a post saying, hey, the guy in like, you know, green jeans, I think your hairstyle is hot, or something like that, you know, they're expressing a tiny crush on a different person. And you know, what actually happens when you do that is like, everyone in the library is sort of guessing, who is talking about home? And there is this whole, you know, Amai, insane gossip that goes around, like, Who's talking about whom? And like, what is this funny thing that is developing? What is this sort of, like, you know, tiny relationship that's developing, you know, life. So that was very, very viral. You know, we launched it in Stanford, in sort of, in the first week, almost 20% of all Stanford students were using it. And you know, it was insanely viral, right? You know, and then we sort of learned some formulas for how to launch it in different campuses, we really production is that. And within the next six months, 20% of all US college students were using the site, we actually even went to the native sort of Cambridge where the competitor fit finder was launched. And we actually overtook them in their own campus, right, because by the time we had, we had gone through a lot of variations in the US learned a lot of strategies that were that don't work. And we sort of outperformed them in their native home territory. But it was kind of insane for a short period of time. And you know, Facebook wanted to made an offer to buy Google made an offer to buy it, and then it crashed. post that.

17:47  
So walk us through that what happened. So you decided not to sell? How do you look back on that, and seems like it was a very quick crash after that,

17:54  
like Brett Taylor, who was Facebook CTO at the time, he sort of came in, you know, tight by it. Paul bouchet, who's Rick Taylor's co founder, and his previous company, you know, he was amazing investor in the company. So, you know, there's interest there, you know, Marc Andreessen was the biggest investor in our company. And he was also on the board of Facebook. So that was like talking to him, as well. You know, Marissa Mayer was interested, you know, at some point, and we had like, those offers, you know, they're just like, oral offers, right, that we didn't sort of go through sort of due diligence or whatever, you know, they were in sort of the 50 to $100 million range, which was like, huge money for us at the time. We spoke to Marc Andreessen, he was like, Hey, listen, why would you sell something that's doing this fast? It's kind of crazy. And it's also like, on $1 per user basis, you know, Facebook was getting valued at $100 per user, they were willing to pay us like $5 per user. So it felt like, you know, they're, you know, it was kind of still cheap on $1 per user sort of basis on a relative valuation. And, you know, here's the kicker, you know, Facebook was like, you know, they would have paid like, 20%, cash, maybe 80% stock, and we were thinking, fuck, you know, 80% in this Facebook stock thing? I don't know, like, it's valued at $6 billion. And, you know, is it gonna be worth more than $6 billion down the line? You know, who the fuck knows? Right? You know, you're also concerned about that, you know,

19:09  
and that was the conventional thinking back. I used to think that too. And it's kind of crazy how wrong we were.

19:15  
Yeah, everyone is massively underestimated the size of these markets.

19:19  
So you know, how they sold it, you know, that would have been worth a billion dollars or something, you know,

19:24  
persona, was this before mobile, or was this on the iPhone as well, this was before mobile, because that also plays into this whole Facebook thing. You're like, Who knew that the iPhone would become like, this new shift, and that they would monetize even better?

19:38  
Do you turn this down and crashes? And then of course, like the next couple of years, you see Facebook continuing to grow in valuation. How do you think about that?

19:47  
Facebook then crashes that's pretty bad news for Facebook, you know, for the next couple of years. They couldn't raise money and all that, you know, you know, like, you know, well, it was a mirage anyway or whatever, right? I never kicked myself for not Selling. I don't think of it as like, Oh, I could have, you know, go back and think that way. You know, I think I still would have i'd You know, there were there were some data points in front of me, I made the best decisions with the data that I had at that point in time. With that same data, I would absolutely make the same decision again, even when it didn't work, I would still sort of make the same mission again, right. So I mean, I never sort of thought, Hey, listen, I should have made a different decision. But like, based on what I didn't know, that was going to crash, I don't sort of get ticks playing in a casino, like whether or not I will not lose, it just doesn't even bother me. So, you know, the like, little thing didn't quite bother me. What actually bothered me was sort of burnout after that. After that, we were back to the drawing board, trying out ideas. And there is another two or three startups, you know, there are 10 before and then there are two or three, that didn't actually still work. I was like, Fuck, it was painfully clear that, you know, I cannot do a successful start. And that bothered me a lot. You know, it was very personal. It's kind of me, it's not, it's not the markets, you know, I just could not come up with something that would work. And that was that was pretty painful. You know, I by that point, you know, I sort of like, quit everything, you know, I don't want to take up another job. Again, I was pretty burned out, I worked pretty hard for a long time enough. And then the biggest part of the burnout for a failed founder is actually the pretending the pretending to your friends. You know, I was I was having these sort of meetings and dinners with, you know, fellow yc founders, you know, who I mean, we were voted the hardest startup in our backs, right? at the time. I don't mean rippling, you know, I mean, like, rippling was also the hardest startup in that batch. But like, Linda was awarded the hardest startup in our batch, you know, which is what like Dropbox was voted or stripe was voted as, right. And then, you know, all these people are sort of, you know, memsql founders are meeting with me, and they sort of asking, you know, Hey, how are you guys doing? And you know, they're just raised like, $20 million round or whatever, right. And yours, you know, I'm sort of having to put up this fake face that, hey, you know, it's going well, and you know, I need to put up this face are all my employees will quit tomorrow. So there's a lot of charade that you go through as a founder, especially when things are failing, you can't really be honest, and that is what burns you out. Mostly,

22:00  
I can imagine that being super painful. So like little happens, you have a couple of other ideas, I assume you had maybe the same team or fasted and continue to work on stuff. And then at some point, you end up at zenefits. And then you go on to finally like, you know, after like 10 years in the valley achieve, like, really good success with with rippling, I got to see a little bit of that, because we were in the same yc batch. So we'd love to hear sort of, in your own words, how that came to be and what some of that experience was like,

22:26  
so yeah, I mean, post, like a little, you know, after these failures and burn out, yeah, and I was really sort of burnt out, you know, I said, fuck it, I can start a company left the valley got married, you know, spend some time in Netherlands, you know, it's chilling for a while. And I was sort of doing some stocks and trading and stuff again, you know, I kind of enjoyed that a little bit. But then I was starting to crave the action, you know, the best time in my life was still, you know, the hyper growth and like a little where, you know, the traffic was doubling every two days and stuff like that. So I really wanted to get back to hyper growth. And I didn't want to do consumer internet again, because users just can just suddenly leave your site. And you never know, if you're building something again, like, valuable or not till the very end. So I was I had a PTSD on consumer internet. So the opposite of consumer internet, you know, is enterprise where, you know, zenefits is the ultimate interface startup where, you know, customers will call and yell, hey, fuckers, you know, you screwed this up, I'm gonna, like, leave you guys. And they never do, they can't go anywhere, you know, zenefits is was the only solution the market that did what it did. And that's the sort of exact coin flip opposite of consumer internet, where people are like, Hey, I love the sides. It's so cool. So cool, so cool. And then, you know, three months later, they're not showing up on your website anymore. And, you know, they don't know why either. But they're not showing up. Right. So, you know, I like that, you know, it was just pretty fascinating for me to sort of, like, you know, live a different life, you know, on the enterprise side of things. It was a fast growing company in the world at the time, you know, they went from zero to $50 million in ARR, in two years, and, you know, they sort of achieved, you know, 5 billion valuation in a couple of years, which is the fastest in history even too late. So, you know, it was interesting, you know, there are a lot of common investors, Andreessen Horowitz was common. So I joined zenefits as the director of engineering, that's where I worked with Parker closely and saw up close that he was able to make pretty contrarian bets that I saw in front of my eyes played out exactly as he predicted, you know, he showed me like two or three levels, deep chess moves, which worked, which made a lot of sense and which worked in the markets. So I was fascinated by Parker. And, you know, as soon as he got fired from zenefits, I wrote him an email saying I wanted to work for him. I'm sorry to

24:29  
interrupt you. But I'm curious, would you be able to give like an example of a contrarian bet? That sounds really interesting.

24:34  
Yeah, definitely. I sort of consider myself a business guy, right. I you know, I'm a founder. You know, many people at zenefits are not founders. I can sort of marry engineering technology and business thinking startups and distribution. That's what I thought of myself and I will challenge Parker in late night sessions. I'll find him in office. And I asked him, listen, I saw the data and zenefits has a lot of untapped pricing power, being an insurance broker. You guys are the only source of distribution for insurance brokerages in the sort of subsections. In these counties, you guys are a monopoly, you can actually write raise prices on raise brokerage prices, and you know, they can't do anything, they have to pay the brokerage price. So there's a lot of untapped money here. And you know, you can sort of increase your revenue by quite a bit by doing this, I sort of mined the data. And I, you know, I knew what I was talking about, right? You can just like increase your revenue out of thin air, just by sort of saying, hey, the brokerage fee is not final dollars anymore. From tomorrow, it's $1,000. And I thought it was a genius, having figured that out, like, you know, there are 300 people at zenefits known, you know, figured that out, you know, I did sort of confronted Parker late night and asked him, you know, let's do this, let's do this, we can easily pull this off. And Part two is like, No, no, that's, that's a fucking dumb idea. And the reason for that is, okay, so let's say you're charging $1,000. And one carrier says, I'm out. And the other two says, amen. Are you going to send all your clients to the two shitty carriers and not to the one best carrier, and if you do that, you become a broker and not a broker aggregator, and the bigger business is the broker aggregator business where the customers trust you, the most amount of money you can make is from consumer trust. And the longer game, it's sort of like Amazon, letting the negative reviews, you know, be on their site, even though you know, it actually hurts the sales hurts the near term revenues and sales, it's the sort of longer game that you want to win. And he convinced me to sort of see that, you know, he sort of showed a path where the biggest revenue is not even from the brokerage business, which was 90% or 100% of the revenue at the time, the bigger revenues and the sort of being a platform to buy any SAS software, like for a business to have a platform through which they buy all these different SAS, software's, you know, Gmail, Slack, GitHub, you know, they're buying all of those things, you know, the bigger mission is to make them buy all of those things, through zenefits. And how zenefits can sort of make an insane amount of money, just like Microsoft was making to be a middleman or to extract rent out of every single SAS seed that gets sold not, you know, not the sort of tiny insurance business, although the insurance business was 100% of the revenue at the time, which is what we're doing at dribbling. And it's working fabulously well, right,

27:14  
Jen? Parker left, when you emailed him, you're like, hey, because obviously, you've worked together, right? But you email them, you're like, I'm in on the next thing. And what happened after that?

27:25  
I mean, he said, Dude, there is no next thing. You know, I'm chilling in Europe, by by and not doing startups anymore for this, you know, I'm too tired. And he went to Europe, he's, you know, I wrote back to him saying, You're absolutely gonna do a startup and you want to join you. And I wrote back the same thing. He didn't respond, he went for a month to Europe, he was chilling there. At the same time, you know, there was all this negative press, you know, then CEO, David Sachs was like, bullshitting him on the press, and, you know, blaming him for everything that went wrong at zenefits. And there was all this press that was happening. And then, you know, after a month, he came back, and he wrote me an email saying, I'm starting a company, and I would love for you to join,

28:01  
you guys be replaying, and rippling is kind of like zenefits, part two, where Parker realized the full version and not make some of the mistakes that you guys made scaling too quickly, when you decide to do yc. Again, what was yc? Like, the second time I remember, we were in the same batch. And actually, some of the experiences I have thinking back, if you were at yc dinners where you'd be coding be like the one guy like really seriously coding, and it was always like fun to watch, because it was really clear how hard you guys are working, and how much progress you mentioned the batch. So tell us a little bit about the yc the second time around, and and what was working with Parker super closely, like,

28:34  
I mean, I think Parker is the real deal. You know, I, I firmly believe, you know, he's sort of like the Steve Jobs or Elon Musk of our generation. And, you know, the thing with this is, like, you know, the biggest risk was always engineering, right? You know, if you have a very sort of clear vision of what competition is division is right, then the biggest risk is usually engineering. And you know, that that is something that I can handle. Right, you know, that's something that's not for me. And Parker, you know, had this like, really ambitious vision. But you know, it's sort of like building, you know, not quite like building a Tesla or sending a rocket to space, but it was still sort of like that, you know, we had no revenues for 24 months, we burnt $10 million. With a team of 20 engineers, no one other than in there is just 20, engineers and Parker, and two years and you know, we burned $10 million, we don't have a single dollar of revenue from customers. So you know, it was a heavy upfront build on an ambitious vision.

29:27  
Let's pause there for a minute. I know you guys built a ton of product. I think my company was one of the first early customers like, launched like yc companies first. So what was the strategy there to like, have no revenue for 24 months? I know you guys wanted to build the payroll and the SAS, but I don't think you did the insurance bit for a while with replaying What gave you confidence you'd be able to monetize after 24 months, what was the strategy and I also remember, you guys had this mad billboard advertising Blitz in the city at one point, so walk us through some of that curious to hear the behind the scenes on it. The reason

29:59  
why we didn't talk Any revenue or we didn't charge startups like you guys any money was because you wouldn't pay us any money. Because you didn't use us. If he asked for any money, right? I remember, you know, yc, first day of yc, you know, there was Parker was hidden co founder yc told us, you know, Parker shouldn't let him not show up for a first few dinners or something, because they don't want the news to get leaked in the press. So I was the only guy that showed up for the first few dinners. I remember sitting with you and other people trying to sell this product. I went around saying I have this sort of payroll system HR system, do you guys want to use it? And people were like, really interesting. But I'm going to go with gusto, I think. So. I couldn't convince anyone to use that. And then Parker joined the batch. And then, you know, sooner or later, everyone was using it, half the batch was using it. And it was a huge struggle, you know, to get anyone to use it, you know, forget asking anyone for money, even for free, they would rather pay gussto the money and use it then you know, users, right? So, I mean, in enterprise, there is a large, uphill battle to get anyone to pay anything. You start with the lower most dear, like, you know, startups who are okay with you, you know, screwing a few things up, and you slowly go up market, you know, painfully right, there is always that curve, but that curve was even steeper for rippling. Because the competitors by that point had caught up gusto and ADP had understood from zenefits. That all in one was the way to go. payroll, and HR and health insurance needs to be together in a single system of record, therefore, everyone had caught up. So we had to build at least that much before we could get any customers. The only guys who use us without health insurance, were the startups who actually had no health insurance anyways, yeah, that was us. So we had to beg and plead to get the yc companies into it. So it was an uphill battle, to close more and more companies. So there was a large build upfront, and we knew it going in. Like the biggest risk in my mind and target's mind when we founded the company, was how big is the MVP? How big is the minimum viable product of this thing? Like we knew that like, if you had all in one, that would be much better world, and people would use it. But as all in one, include your own Gmail system, you're on GitHub, you know, like valve doesn't even stop, right? Like, what are the sort of boundaries of that? We could sort of start without health insurance? And clearly the market said, No, no, not really, that doesn't work anymore. So we had to sort of build it later on. So the biggest risk always was what is the MVP in this thing? When is it even

32:31  
playing there was the pick and roll piece, which is priced extremely low, there was health insurance, and there is now there was like computers, I think you could like leave the computer. And there was a SAS piece where you could add seats, like you know, one click to sign people up to all of these different SAS accounts, including some like Single Sign On identity stuff. So what's the revenue split today? Like? What is it still insurance being the biggest? Or is it the SAS is the biggest the mind blowing?

32:59  
thing? Is it actually so diverse that our investors have never seen a diverse revenue stream like this before, that does not exist? companies that have a diverse revenue stream, even if, like even the biggest companies like LinkedIn, you know, there are a couple of revenue streams that are in like six revenue streams, right? So for example, you know, we are a reseller for Gmail, when you connect up your Gmail, we become the reseller on the email, we can add seeds remove seeds as employees join and, you know, leave the site, right. And Gmail pays us like a tiny revenue on the anvil SAS billing. And that is like, I think 5% of revenues right now, it is such a diverse split,

33:36  
that you have to negotiate these zones. It's all like based on existing rev share deals,

33:41  
got it for the big ones, yes, for the players like 401 K or whatever. The smaller startups which have didn't have any programs in place before this, we started with three and then finally negotiate

33:53  
your pitches, hey, free payroll software. And then you know, once you've got the system of record, you add in the healthcare and then the SAS seeds. And it's all part of this like one click to add an employee and remove an employee that so that that's basically will continue to be the free payroll and that sort of like, as a loss leader for everything else. In a sense,

34:12  
that was the original strategy. Now it's not payroll is also paid. And it works. Free sort of, we noticed that when we said free the conversion rate Felder is actually, you know, radiuses in this space not increases the ideal conversion rate. Peak maxima is when you exactly price matched gusto. At that point, that question doesn't exist anymore. That's one less thing a customer is thinking about when making a decision. And the thing about conversion rates is just like removing everything that need to think about before they make a decision. If you say free then they're still thinking about it, unfortunately.

34:45  
So recently, you stepped down from day to day responsibilities at every plane, what led to that decision. I know you did like four or five years of like, you know, working your tail off, and whatever you've been up to lately.

34:55  
It became fairly successful in a fairly short period of time and it's a life changing experience for Me, I'm kind of like done. And it was just mind blowing how quickly it happened. Even I was surprised by you know how much it took off. It's been only like, two years or three years since we launched, because

35:13  
two years of practically no revenue in two years, it exploded to like, 10s of millions of revenue, right? That's crazy. So it's almost like you guys knew when you had to turn on the switch, and

35:24  
it just worked. Yeah, it's more like the switch turned on kind of, you know, at some point, people started buying.

35:30  
Okay, so the switch was on. And at some point, the product was ready, like, it just started getting really good. And it started clicking Yeah,

35:35  
it was a health insurance that made it worth building the health insurance that really sort of made the, and

35:41  
why we take so long to add that in, because you have to get licensed in a bunch of different states, or you

35:46  
had active cases on em from the zenefits thing. And that's the only last thing he didn't want to, we didn't want to sort of enter. We tried everything we could to make it work without it. And then instead, I had to get health insurance licensed. And I had to become a licensed broker. And I had to create a, you know, separate company, which sort of sold health insurance to make this whole thing. Interesting.

36:09  
What's next a year, you said you're done, but you're not really right. You're working on a bunch of stuff, I know you are spending your free time. And so you're totally off of replaying Are you still dabbling a little bit? or How are you approaching it?

36:22  
Yeah, so I recently stepped down from a CTO role. I've been sort of passive for a little bit of time, ever since of the pandemic, like we hired a new VP of engineering, who runs the whole engineering team. There was a point I think, like, you know, four years and five years and four years and almost like, I was thinking, you know, I had these thoughts here, okay, I'm fully vested, you know, it's so much hard work. And when I wake up, my calendar is just I had a team of like, 100 people or something reporting to me, right. And the job at that point is just like meetings, after meetings, after meetings, McCallum from morning to night is just like, full of meetings. And it's about like, making sure these two guys are aligned. They know exactly, you know, they're not pulling in different directions. And, yeah, that was my job. And I wasn't feeling exhilarated about a patch schedule, you know, like waking up and doing that wasn't fun. I tried everything I could to sort of avoid these meetings. And you know, as a result, I was very ineffective leader, right? If you don't do the job, like, you know, the job is not getting done very well. So I was getting burnt out, I was doing it, even though I didn't like it. I was ineffective at it. And then you know, there was also sort of disagreements on how much chaos is okay, I'm kind of used to a lot of chaos with like a little and you know, rippling, and Parker is used to a lot of chaos as well at zenefits. But not in a good way. Right. You know, chaos killed zenefits. So Parker is very, very conservative this time around, he wants to absolutely make sure that, you know, it's a very well oiled machine, you know, it's a well run company, that's becoming $100 billion company, because it's, I think it's sort of, for ours, it's ours to lose at this point, it's, you know, rippling is clearly one, and it's, you know, if we don't do anything stupid, it's going to be $100 billion company, in my opinion. So Parker is sort of pretty concerned about not fucking it up again, this time, this the third startup, and he really doesn't want to back it up. And that kind of, you know, it makes a lot of sense, you know, 100% of my net worth is also in this startup, it makes a lot of sense for me to sort of, you know, like hand over the reins to someone who's actually excited about the job at hand, and execute on it. So that transition happened and, you know, pandemic hit, I actually, for the first time had a bunch of free time to sort of sit and think and relax, and like, figure out what I want to do next, I played a lot of video games all day all night, played with my son, there were periods that I didn't want to do anything, you know, I mean, there's no point in waking up and like doing something, you know, I'm just like, doing well, right? What is the point there is a lot of impactful projects that I could still started replaying, but I just, you know, couldn't get myself to do it. And you know, that that went on for that lull went on for a while, where I was like, sort of burnt out, didn't find any meaning or purpose. More recently, the crypto bull market happened. And I was absolutely fascinated by the amount of technological core technological innovations that happened in the space. And I felt it's a little way larger than me, you know, it was sort of like the Paul Graham thing that was happening, you know, that is fundamentally going to shake up the world. And it did. You know, today, 10 years later, a large part of my success is just being you know, riding that Bull Run, right? 10 years later, it has completely shook up Valley, India and startups all over the world, right? That's a huge movement. And it is very, very clear to me now that blockchain is such a movement, everything is going to be rebuilt on top of it. And it is also clear to me that others don't get it. It's an important thing that's fundamentally going to transform the world. And people still don't understand you know, people are just like, you know, when they hear blockchain, they're going and buying Bitcoin. I sold my last Bitcoin off like you know, last month you know, I think it's completely deprecated it is the new Bitcoin. So anyway, I mean, there are fundamental technological changes that are happening here. The largest market caps in the world today are like you know, trillion dollars for Facebook, you know, billion dollars for Amazon. All these tech companies, right? In a post blockchain world, they have no place in the world, these trillion dollars are absolutely going to obliterate to zero, you know, they need to find their footing. They're sort of the Walmart of the internet era, pre internet era, you know, Walmart is being generous, right? Walmart at least,

40:17  
let's unpack that. So what about blockchain Do you think kills Facebook?

40:20  
So blockchains are decentralized coordination mechanisms, you know, in a simple way, you know, blockchain is a database that everyone shares, votes on the finals, you know, on the state of the database at every point in time. Right. Now, when internet was founded, there was no way to do that there is no internet money, or a native internet database where everyone agrees on the common state. And therefore, all these companies like Facebook, or Uber or Airbnb, read it centralized coordination actors, like companies like limited liability companies, which coordinated people in the marketplace, if it's Uber, they're coordinating between the riders and the drivers. And there is a 30% rent that they charged for this coordination. And coordination is actually not the only thing that they add. Because you know, if that's the case, you could spin up a nonprofit Uber and try to make it work, that actually does not work, they actually add a lot more value than the coordination. The value that they add is there is a VC business model, which is basically early on subsidize cut costs, you know, run it at a loss for a long time funded by VC dollars. And then, you know, finally, extract rent a large amount of rent become a monopoly, right. And in one way or the other. That's the Uber business model. That's the Facebook business model, or that's the sort of Airbnb model in one way or the other. With blockchains. It not only solves the coordination problem, that riders and drivers can just pay with each other paid directly. It also solves the economics problem, like the bootstrapping problem, wherein speculators from all over the world, create this currency. And you can actually pay riders, you know, money to actually write on your app, you can pay drivers money to drive and you can completely make a loss. In fact, every crypto project that exists today uniswap, or, or compound, every one of them run on negative unit economics, right, like negative unit or think about I mean, adorably we're talking about like, what's your gross margin? 80%? Or 90%? Right? And here, you know, what is the whole negative is the gross margin is the question. They all run on it unit economics and the run on right, because, you know, what is negative unit economics, you know, you actually provide more value out than the value that's coming in. In the crypto case, crypto has like a few top banks, right? compound is one big crypto bank, it's it's the biggest crypto bank. And if you borrow from it, they'll pay you money. If you lend to it, they'll pay you money. Regardless, they will sort of, you know, pay you some extra money, which is the money is in the form of the compound shatters itself.

42:43  
So it's all subsidized by the appreciating value of the tokens, right? That's right.

42:48  
That's right. So essentially, the idea is, hey, you're a user, let you know, let's say, all the users pool together and fall form a community. And they sort of divide all the shares of the company amongst themselves and create this network in which users can directly transact with each other.

43:04  
Yeah, it's classic, like multi level marketing, right? Where the users when they get captured share the basis. I think that's brilliant, right? So that makes crypto so disruptive, also, like the next level of disintermediation. And I've also heard you talk about how it unifies markets in a sense, because not like each currency is its own market, right and loaded with crypto into like one global market. So all that makes sense. I think the interesting question is, how is it going to play out right, one of the first few use cases like replacing Facebook seems kind of hard, because the free product is just so complex today, the marketplace one is interesting. So what do you see as a first set of use cases that start to go mainstream in a sense and, and start to tip sort of like this movement towards like something that starts to replace like the legacy players?

43:51  
So if you spend some time in crypto, that becomes the front foundational question, you know, everyone understands and agrees, like the crypto native folks, there is no debate on if question if a crypto social adversary is going to watch the others or not. If a crypto Uber is going to sort of completely upend an Uber or not, the answer is yes of course. Yes. Everyone knows that there is there isn't like a lot of debate on that right. The fundamental question as to when so the Oneness the thing that needs to get answered? And you know, if you want to answer when you take you draw inspiration from the internet, or like the past bubbles that have played out, and you asked the fundamental question, why did it take till 2008 for an Airbnb to form even though internet existed for a long time? Why till 2008 for an Airbnb, in fact, there is a predecessor to Airbnb I don't know if you guys know if you know but there's there is a sink called couchsurfing where you can sort of stay on people's couches for free. So why did that work and are being you know, like, for a while, and then why did Airbnb happen much later? So if you even start asking these questions, my answer is in 1998, yes, you could have technically built this Airbnb. website. But if I have a home to list on Airbnb, and only 1.1% of the potential renters are on this thing called the internet, why the fuck would l list this thing on the internet? And then by 2004, couchsurfing started to work. And the question then becomes, hey, if I have a home the list on the internet, and only point 1% of the people even have a credit card to pay, then how the fuck will an Airbnb work? So that's why couchsurfing is free. And it worked before Airbnb worked, right? That is the sort of the timing question is around, you have to look at the Venn diagram of intersection between, you know, the product that you're building, you know, the potential target users and the users who are already on the internet, or in this case, are on on crypto native. So you have to sort of intersect these two things. And whenever the intersection is high, that's when you have a killer app. And you can use this model to predict what you know, the past bubbles on Krypton or the current bubbles on crypto pretty well. And you know, that sort of extends pretty well.

45:56  
It reminds me this model I heard Balaji talk about which is basically you have two axes. One is like the number of people in the world who own crypto and have a crypto wallet and the other axes is like the amount of transactions they do, you kind of need the number of people to grow to a certain point before the transactions can grow. which is I think, kind of what you're you're saying to you know, the thing I get stuck on is which market is likely to dip first, do you think it's going to be the US that do you think it's going to be like one of the emerging markets that are going through like currency? stabilizations How do you think about that? And I think this gets into like, you're thinking about moving right? So I'd love to get into some of that too. Yeah, I

46:31  
think for the longest time, that was the most interesting question. I was thinking about, you know, I bought my first Bitcoin in like 2010 or 2009 you know, during the like little days, but just after like a little maybe 2012 sorry 2012 2013 those days when I was doing like little you know, put $5,000 into it. That was the question I was thinking about I had a lot of models of like hey, countries are going to adopt it, you know, Bitcoin is going to tip I remained a Bitcoin maximalist up until 2017. And now, that's not the most interesting question for me anymore. That's completely irrelevant. For me, I don't play that game. I think that game is still interesting, but there are much smarter minds playing that game. And I sort of prefer the contrary initials, I stick to them, you know, that's the game that Morgan Stanley is playing, or Goldman Sachs is playing or the large macro traders are playing, you know, which country is going to adopt and stuff like that? I've sort of completely I sold my last Bitcoin a few months ago, I've turned into an eat maximalist. So what I have an edge on is predicting the evolution of this technology, and how it's going to get deployed, versus predicting the currency aspects. And I also think this is actually more important than the currency aspects, because the currency is going to get redundant, it is going to get completely replicated. So for example, aetherium does everything that Bitcoin does, but better, right? Faster than Bitcoin? It's more programmable than Bitcoin, you can have a lot of daps on Bitcoin. And for the user of aetherium. Most of my friends who are smart money, a theorem is the US dollars. Why do you have US dollars? Because it gives you optionality, you don't know whether you need to pay rent tomorrow or need to go to the hospital tomorrow, or you need to pay your taxes tomorrow, the US dollar pays for all of that, in the crypto world. aetherium pays for all of that. You don't know whether which Bitcoin you're going to buy tomorrow, you don't know what crypto activity that they are going to do tomorrow. But aetherium is your gateway into that

48:12  
incredibly flexible currency in a sense, right? You can use it as like currency, but also as like, shares and tokens and like so many

48:21  
EDM, you can actually buy these other tokens, right? You can buy crypto art with it, you can buy other tokens with it, if you want to do any crypto native activity, which is you can either borrow or lend or like, you know, buy some tokens or, you know, there are a few crypto native activities that exist today. And aetherium is your gateway to all of those crypto native activities, right? Bitcoin is not. And this for the smart people in this ecosystem. I mean, this there is a six $9 million people sale that happened you know, the it sort of raised eyebrows and headlines. That guy is has been a friend of Matagorda has been a friend of mine for 10 plus years now. And it was paid for and aetherium it was not paid for in Bitcoin, you know, that's the currency of choice for the crypto natives today. And when you have that kind of optionality, Bitcoin just gets completely deprecated. Like, why would anyone go to Bitcoin anymore? So I think that has already happened. And that's why, you know, I sort of think, the foundational question for like, which countries are going to trip? What is going to break is completely irrelevant, because they want to tip and then they need to make a move from Bitcoin to aetherium? Or what? Or maybe, you know, so I would rather just like go directly into aetherium. And then directly deeper into that, rather than get stuck on the market.

49:30  
So I think the what's going to tip question assumes, like crypto is gonna replace some existing world use cases. And I think part of your underlying thesis is that's not where the disruption is gonna start. It's gonna start with crypto native use cases, like totally new things that were not possible before. So we'd love to hear your mental model on how you think about a crypto native and then sort of like the replacing existing use cases because I know you've written about this.

49:53  
If you look at the Internet adoption, you can sort of learn that it sort of grew in concentric circles right in the biggest It was just a university that that had it. And then it opened up to a wider audience. And then only a few random people had it. They were just sort of artists or creators, they used it to the first big killer app on the internet was AOL. And I think, you know, it was just like random people showing up and they're talking with each other. Right? That is the first big killer app on the internet in 1998. And that grew, the internet audience, once you had a well, there was like, at least one nice reason to get on the internet. So that grew the internet audience. And then AOL had insane amount of market power at that point in time. I don't know if you remember that. I mean, I was too young to live through the.com. But I've learned recently that the world used to be like you raised $20 million from VCs, go and make a deal with AOL and give them $10 million. And give them 20% of your company. So that it will features you for a day on the chat messenger. Right. So it was the homepage of the internet. And it will had insane market power. You know, at its peak, it was the most valuable company during the.com era. So that grew the internet audience by a little bit by servicing the existing internet native audience, which were just random people all over the world, who came online to talk to each other, you know, talk to strangers, right? We're sort of living in a similar time in crypto right now, sort of 9899 pre pre explosion, you know, the big crash is sort of ahead of us. And there's a huge crash coming, right? There's a huge speculation and crash coming. It's unclear whether we were already there or not. So then you had Yahoo, which was the next homepage of the internet, which is like, okay, the internet was complex, a will was just featuring one startup per day, which is clearly not enough. Now, there are enough different startups that there was a directory of like, what are the top pages that you visit on the internet, so suddenly, your mom could get get online, she can just go to yahoo.com and click on the categories that she wants. And you can just go to these websites, right? Because otherwise, they were just disorganized websites. Today, we'll get to feature once in a while. So you had Yahoo, which was a new homepage for the internet, which is again, democratizing access to that AOL homepage, in some sense, right. So people sort of cut out the middleman, which was AOL, and went straight to Yahoo. And that now that's the new middleman. And then in 2004, or so then there was Google, which was like the number of websites on the internet kept growing, it became more and unmanaged, more and more and unmanageable to have a link tree, you just like, open up your box and search for it right? Now, that made it even more accessible. Like, you know, even your grandma could now sort of come online and search for something, she doesn't need to know yahoo.com and navigate a complex link tree. So it simplifies it even more, it is still for it is still meant to simplify the life of the existing internet audience. It's not like hoping that grandma comes online, it's still sort of a killer app for the existing internet audience. But that enables that audience to expand by another 10x.

52:46  
And I think part of it is the amount of content and the internet is also exploding, right. During AOL, there wasn't as much content Yahoo was like, that stuff. And then Google came along was like, you know, virgilian sites.

52:56  
So you know, in a similar analogy, you can sort of think of crypto as like, but first we had Bitcoin. And we had all these separate chains, which are just claiming we are a better Bitcoin model is a better Bitcoin, because it was private, or, you know, there was this thing called Litecoin is a better Bitcoin, because they just changed the variable so that it produces blocks faster, there are all kinds of like separate lines, which which were claiming to be better bitcoins, and they all sort of died or like washed out in this in this Buddha, and, you know, with aetherium, you know, he said, we're actually a better Bitcoin, because you can, you can actually do more, you can do everything that Bitcoin does, but you can do more, right? It's it's faster, cheaper. And then it's more extensible. You can you can sort of, it's a more general purpose, db, versus Bitcoin is like single ledger. So aetherium sort of came in and it sort of took over from there. It has only started working recently, right? So post 2018, crash aetherium ecosystem has completely exploded, there are multiple, like really large, you know, again, now the once aetherium users got very rich, the crypto native audience now is on top of aetherium, they hold a lot of Ethereum, they don't have a lot of real world assets, they may or may not have done any KYC with any exchange, and they certainly don't want to sort of alert their governments and stuff about about their wealth. So all this wealth is sort of locked into these coins. And you know, it needs to find a way What does it do? Well, it it buys Ark, so you know, you have this NFT grace, what does the wealth do? Well, it doesn't want to trade in exchanges, but it's who wants to participate? So you know, you have defy decentralized exchanges. These are risk takers, right? Some people want to lever up, some people want to lever down. So you had these banks, which are lending markets. And, you know, all these activity became within aetherium. So that's the crypto native audience today. And now the most exciting thing that's happening in crypto, like which is foundational, is actually the bridges are going live. So what is happening now is a PDM is the world computer. It's a single computer, it's fairly slow. It's expensive to run instructions on top of it because every instruction gets validated by a million other computers. So the obvious Next computational breakthrough is like how do we create faster aetherium, which you have a series of companies like Solana or like polka.or, Cosmos create in near creating faster aetherium, you know, so they're creating, you know, other cities, you know, think of aetherium as the New York of the world today. And these guys are creating some other cities like Thailand or whatever. And they created it, that dude is not going to the cities because aetherium is king all the money's here, it you know, nobody's going to go to your new city, you know, people are not going to settle there. So the only way out is to build high speed bridges between these two cities. And so far, the only bridges between these chains have been exchanges where you need to go on KYC. Today, there is the there has been a fundamental technological breakthrough, where there are these decentralized bridges that have already gone live in the last three months actually near as a bridge Cosmos as a bridge right now. So with these bridges, without going through any exchanges, you can, like one chain, which is a database can make an API call to another database, and they can actually talk to each other. Right? for the first time. It's still clumsy, it takes like a few minutes for it for the calls to succeed. But it works.

56:07  
What's like an example of a use case. Let's say I'm sitting on a bunch of Ethereum and I want to use near one of these new blockchains, what am I doing to get my ether over so you can

56:16  
think of Okay, so you read this in this database called aetherium, there is another database called near. And you can think of it as like a trustless API call where these two databases can actually interact with each other. So Mir provides a way for you to take your aetherium from the Ethereum network to the mere network, right, there is something called a bridge, which is a UI by which you can sort of Port over your ATM from here to there, without going through any Central Party, it's like programmatically guaranteed that this ATM balance will get locked here. And it will get minted here, right. So it's a programmatic way to do it. Once you get your aetherium veneer. Now near is insanely cheap, like aetherium, you know, if you want to do any transaction cost, like $50 per transaction, so only if it's high value, you're able to do anything, right. But once you come into the near land, then it costs like less than a cent for a transaction, you can play games on chain, you can do like whatever the hell you want. You can buy, you know, low value tokens, you can do high frequency trading, you know, I mean, like imagine reducing the price per action from $50 to like a cent. So you can do a lot of things on these sort of high throughput chains. And that's the fundamental breakthrough that has just happened. So suddenly, like on chain activities has gotten insanely cheap. And you can build like imagination is the limit, right? You can actually build social apps on top of it. If it costs less than a cent to like a post. Is it that bad? Like Can you can you actually build a place where people can like posts, there is a game called x infinity that's taking off, which is like a game on top of the chain. I'm not sort of aware whether which chain it's running on and stuff like that. But, you know, we are certainly entering a multi chain world connected with bridges with apdm as the center of this whole whole ecosystem.

57:52  
So you plan to move to Singapore, we'd love to hear a little bit about that. And then I want to ask you about your your angel investing. And I think it's always interesting to hear about where you're spending your time, and then also where you're parking your money.

58:03  
Yeah, so I've been very fascinated by the US mostly because you know, it aligns the best with my values. And I wanted to live the American dream, right? To go from absolutely nothing to something within a short period of time and to sort of make a fortune, I think us is the best place in the world to make it. And it has always been, there is one new United States, which is competing Now, with that. It is actually even more us than us itself. It's called crypto, it's the blockchain. It's not a country. It's a movement. It's an online movement. And you know, larger fortunes can be traded in shorter periods of time. It's even more meritocratic. And it's actually even less rent seeking, you know, like us sort of turning more and more rent seeking and us has to turn into more and more rent seeking. You know, there is a huge populist backlash against this tech wave, which has created insane income inequality, right. And USA, sort of definitely trending in the direction where there is a backlash, and this backlash is similar to what happened after the 1920 crash. And, you know, we live in an age of insane leverage, like, you know, I come from nowhere, right. And, you know, within within a decade, you know, I'm able to generate like half a billion to a billion in wealth. And that's just insane. The only other time in history where something like this was actually happening and was possible was early 1900s. In the 1910 1920s, the world completely changed. There is a peak of capitalism, you know, we found the aeroplanes we found the steam engine, we found electricity, we found cars, everything was happening in such a short period of time, and people are projecting that to infinity. And you are the 1920s sort of bubble and bust. Right? That was the time when steam engines were invented. And it flattened the world. Right. So the lowest cost producer in Chicago was now competing with the lowest cost producer of coal in Minnesota. And for the first time, you could actually transport that coal so you know, so it's sort of cool. So what that creates is like, you know, high cost producers go out of business. And there's a large aggregation of wealth. And the guy who created the steam engine makes a lot of money, the guy who founded the wheel for the steam engine makes a lot of money. And you know, you had this era where Tesla could just go in a room for like, a year. And that's exactly what he did. And he came out with a brilliant idea. And people like that became the richest people in the world at the time. Right. So it was that huge era that happened. And then we had a crash, post the crash, of course, the Federal Reserve started printing money and all that. But he also had a similar populist backlash from the haves and have nots, the income inequality is the widest and people voted populist policies and the tax rate went from less than 10% to for the next 50 years, it kept increasing at the peak was exactly 80%. And, you know, we're seeing something similar to that happening right now. And I think it will happen in the US. And I just don't want to get caught in that backlash. Now, the entrepreneurs and the creators, I mean, all through history, people have always taken money away from the entrepreneurs and the creators and given it to the masses, right. And this has happened all through history. Like, if you look at the GDP per capita growth of the world, over a long, like, over 1000s of years, the world was not growing much at all, just like less than half a percent per year, till about 1800, when America when when the United States was founded, and then it took off like this. And the key change, in my opinion for why that happened was, you know, right to property before the US successful Baker, after founding the third bakery, then found the fourth or the fifth, because the army would just come and take it instead, what what he did was, he hid the gold between his bread, so as to preserve his wealth, right. And, you know, the United States happened. And then they said, you can actually create as many Baker bakeries as you want, and we'll protect you. And then you know, you had entrepreneurs from which people are not taking money away from and then you had this insane sort of explosion called the United States, I think. And then even there, you know that there is England, young and populists always come back, and they sort of take the money back, and they sort of raise the tax rates 80%. And these things happen, right? But now we create is actually how a real opportunity called crypto. And it is not clear that the government's can actually take that money away at all. I mean, the famous story is the most famous Russian social network is called the quantity, it was the Facebook of Russia. And the guys who built it created this app called telegram. And when they launched the app, people were discussing, like anti Russian messages, and the gunman didn't like it, and threatened to throw them in jail. You know, they even sort of took away the contract out of the founders and sort of squeeze them out. And the founders this, you know, sold, the contract is takes one just one day, and put all their money in Bitcoin. They bought a novel passport or something, took the next flight to Dubai. And they started telegram, right? So it's kind of really unclear now, if there is an effective way to confiscate wealth at all, if it's just a private key, like, how does governments even interact with that? How does declaration even work? So you know, it's a very fascinating world, where actually creators can, you know, keep their wealth. And we're going to look back at this era of progressive taxation, you know, the progress of taxation is more like, if you make more money, pay more percentage of your wealth, as taxes, we're going to look back at like, you know, that was that was kind of a little crazy. There is sort of levels of doing it, right. I mean, at the most basic level, that is sales tax, like whatever you consume, pay tax on it, at this slightly higher level, you know, there's a percentage based taxation, whatever you make a percentage of it, the most extreme level is if you make more pay even a larger percentage of it. So crypto, it's sort of more around the sales tax ish. regime,

1:03:36  
crypto kind of replaces the progressive tax with a sale with the consumption tax, right? Because you can pay taxes, you pull things out through an exchange instead of brought it, how does that lead to you going to Singapore to Singapore have a like a really friendly,

1:03:49  
extremely crypto friendly, and that's where crypto progressives are moving, like Balaji Star medeco? And is there, you know, the binance CEO is that that's turning out to be a crypto capital of the world. Now, for the guys who sort of are exiles, you know, it has absolute privacy, you don't need to declare your wealth. You know, your wealth is your concern. They only care about their the business that you do inside of Singapore. So you know, it's a really sort of progressive crypto friendly country.

1:04:15  
So what are you investing in these days? I know you do some angel investing. You have a syndicate Angeles member, you invest outside that, too. So what are some spaces you're following are Akin investments in

1:04:24  
Yeah, so I do have a rolling fund in angellist. I used to do a lot of SAS, and you know, stuff that sort of related to rippling on the periphery. I still do that, you know, in exceptional situations. I certainly back you know, founders that I know. And I've known for a while and when they're doing something interesting, I certainly back it, but mostly I tried to spend my time on crypto so I mostly back crypto projects these days.

1:04:46  
Okay, so the last question I have is what are you reading these days any Top of Mind book recommendations can be fiction, nonfiction, whatever it be great to get like one or two books to recommend to anyone in the audience.

1:04:56  
The most interesting thing that I actually spent a lot of time on is the tender meant white paper which is a way to get proof of state to work which actually proves that it actually works. And this is actually very foundational for me because that's what converted me from a Bitcoin maximalist on aetherium maximalist, I thought it was all Bitcoin in the 2018 Bull Run, I thought proof of steak was actually not going to work, because you know, zoom out, the Byzantine general problem is a 50 year unsolved problem. And there is this mysterious guy called Satoshi Nakamoto, who came out and solved it. And he founded Bitcoin. It's just like a double whammy, rare event, it just never occurs. And on top of it, he's anonymous. Nobody knows who he is. So he didn't do it for the credits. He didn't do it for the money, because none of the money spent it. So what the fuck did he do it for? And he just created two major inventions in the history of the world and nobody knows him. So that's, that's a that's a huge sort of outlier event in the history of the world. You know, it's almost like you kind of question everything at this point, right? It has never happened. And you know, it will probably never happen again. So given that sort of founding myth, you know, with that 50, an unsolved problem gets cracked, what are the odds that within three years of that there is some, you know, 19 year old dude called vitalik, butyrin, sitting in Waterloo, who finds a faster, better solution to the same problem, I thought the odds were none, you know, wait, like buterin had a blog post about proof of stake, I thought it wasn't gonna work. There are lots of loopholes in it. And in the 2018 folder, and there are a lot of proof of stake coins, which got launched, every one of them got hacked, for one reason or the other. So I thought it just was not gonna work. You know, there is no second solution other than the Nakamoto consensus to this DB database consensus problem. And then now it's working when it came back to this bull market, you know, it's actually working. I mean, if you can break the proof of stake, consensus algorithm, you know, you stand to make hundreds of billions at this point, right. So the stakes are large enough that people have tried and, you know, the stood that's test of adversarial networks. So I think it's a it's a very important thing to learn and understand. And I certainly spent like a week going deep into it. Awesome.

1:06:52  
That's a great one. I look forward to checking it out. Well, thank you so much for your time person. I know we've run over. This has been a really, really fascinating and interesting conversation. Thanks very much. Great to chat and hear your thoughts in so many different topics. Thank you, man. Great chatting

Transcribed by https://otter.ai