Today's guest is Blake West, Co-founder and CTO of Goldfinch.
Goldfinch is on a huge mission to expand access to capital by creating a single global debt market. Goldfinch does this through a decentralized credit protocol on Ethereum that allows anyone to be a lender, not just banks.
In January of this year Goldfinch raised a $25M round led by a16z, with the aim to match the 154x growth the protocol saw in its first year of operation. Over the last year, the protocol crossed over $100M in active loans, reaching over 1M people and businesses across 20+ countries
We get into the detail of Goldfinch’s business model, how the company works and Blake’s candid advice for future crypto founders.
Hi, thanks for joining us on this episode of Peeling Back Web three, a podcast by and for founders and builders who are on the fence or dipping their toes into Web three. We're your hosts. I'm Ryan, and I'm Serena, and we're in the exact same boat. We're curious and optimistic about Web three, but also we wanna ask the real questions of what's really behind the door. Can Web Three really help solve real problems in the real world, or is it all just. We're a podcast produced by Orange Dow a Dow of over 1200 Y Combinator alumni. So it makes sense that our approach in this podcast is to interview builders, the ones out there creating and shaping the vision for the future. Let's get into it. Hi. Today's guest is Blake West. He's the co-founder and CTO of Gold Finch. Gold Finch is a decentralized credit protocol that allows anyone to be a lender, not just banks. They raised a 25 million series A in January led by entries in crypto. For those of you who have been following the show for a while, you know that this company is in. Passion, sweet spot. It's lending, it's on chain, and it's lending to emerging markets. So we go into a good bit of detail on the business model and how the company works, but probably my favorite part of this episode is just the really candid and thoughtful advice. That Blake gives about his journey and that he gives to future crypto founders. We really appreciate that and we hope you guys enjoy it as much as we did. Hey Blake, thanks so much for, for taking the time to chat with us. I want to start by talking about kind of the, the early days we, we read that you and your co-founder. Met as college roommates. Is that right? That is correct. And it sounds like you worked on a bunch of projects together, uh, and, and eventually both ended up working at Coinbase. Did you always know you wanted to, to start a, a company? So me, Personally, Yes, I pretty much have always known I wanted to start a company. Um, I, I was like, you know, starting like a lemonade salmon when I was seven years old, and I just like, thought it was fun to, to do stuff like that. And actually my, so my co-founder Mike, yes, we met, um, freshman year roommates. We were just like randomly paired together. We actually tried to start something there too. We tried to start this like music collaboration website. This was back in like 2005. It's like kind of early days of like social things getting going. I also tried to get like a Facebook app, uh, in college and then did like a music lessons company later on after I graduated college. Mike also since then is, I think Goldfinch is like the fifth thing he started. So short answer is yes, we've always wanted to start companies and have been trying to do it for a while in different forms. Um, and also just, just always like loved startups, right? And like, that's why both of us ended up coming out here to the Valley. We've been working at different startups here for, you know, almost 10 years. Cool. That's awesome. Thanks for sharing that. So something, you guys worked on, a bunch of projects together. You worked on, on a handful of startups, and then how did you first get, you know, crypto pills, as we call it? Or, or, or get about web three? Yeah, so for that, yeah, I was actually, I was working at a healthcare company at the time. This had been in like 2017. I started, well, I guess going a little bit back. Mike was kind of into crypto since 2013, I'd say. I remember we actually found like an old G chat from like when we, when we remember we were starting goal fight, we sort of were thinking about these questions of like, when, when did we start thinking about. Crypto and Mike, this old Gchat from us in 2013 where he was like, Yo, I just heard about Bitcoin. It's like this currency, but there's like no government behind it. And you know, we were both just like very fascinated by this and, and I didn't really do a lot. Mike, Mike did a little bit more. He was a little more interested than I was, I'd say 2017 for me. I started to get into it. The kinda that bull run time period was resurrecting some interest. I started to be like, Oh, you know, maybe there's something really going on here. Um, let me start. I've kind of read the Bitcoin White paper started. Try and kind of gro what was actually happening with a blockchain. You know, read about Ethereum and all the tokens that were kind of coming out around. Then, and you know, one, one of the things I think that really struck me as I was diving into it was this ability to have decentralized marketplaces. That was just very fascinating to me. You know, I was thinking like, Oh my God, like so much of the internet is built around, you know, these marketplaces where the centralized company controls all the data. And then, you know, that becomes a monopoly that's virtually impossible to break, and they're able to then, you know, charge sort of economic rent on top of that when most of the real value coming from the underlying users who are, who are doing it and not to take anywhere from the tech companies, right? I mean, like, they're, they're doing a lot of value too. But I, my sense was like, it would be better if. Multiple people had access to that underlying data, and the companies who were built on top had to compete on the things that, that their value ads, right? They had to compete on service, on speed, compete on good customer support, stuff like that, right? Rather than just being like, Well, we've got the data. What are you gonna do about it? Tough. And so, That thing was, I think for me, what was really kind of got me like, Oh, this is really interesting cuz this is a way to really kinda flip the underlying, I'd say like relationship and dynamic that people have with most tech companies. And so that was me that was kind of coming around like 2017 ish and I was thinking about starting to get a new job anyway. And Mike had just started at Coinbase. This would've. Early 2018 at that point. And so as I started to think about getting a new role, uh, started to look at Coinbase and eventually decided I wanna go there, really did, did enjoy the team. There was a lot of really super smart people there and kind of vibed as what they were doing. Really like their mission of expanding economic freedom. And, and Mike had a lot of good things to say about it, so ended up there. What was that experience like? Uh, where working at? Yeah. Um, and I guess I'll also say, since I know a lot of, you know, founders listen to this, this show. I like purposefully and consciously chose to work at Coinbase thinking I wanted to start a company soon, and I thought this would be one of the best places to do it. I was having like some personal, like, not exactly crisis, not the right word, but I was really asking myself, like after I was finishing my first job as an engineer, I'd been there for about four and a half years. I was like, What do I really wanna do next? What do I really wanna do? I was not sure right. Starting to explore various paths. Even like applied to work at like Radiolab It's just like, Cause I thought their show was cool and maybe I could do data stuff for them. I was like really not sure what I wanted to do, but as I like sort of really just like sat myself as like, I still wanna start a company. Like I haven't done this to the point I really want to. Like, I want that to be what I do. And so, but I also wasn't sure what I would exactly start at the time. It wasn't clear to me. And so I was like, The best thing for me to do right now is like, pick the job I think is gonna set me up to start a company the best. And I was fascinated with crypto. I thought it was gonna be this burgeoning area where there's probably gonna be just massive room to start something and thought maybe I could meet co-founders, maybe I could meet, uh, early employees, you know, just build credibility within the crypto space. And so I did consciously choose Coinbase for those reasons, which turned out to work. Great exactly what I was looking for. But anyway, to more your question about like what was my experience working at Coinbase overall, I would say positive. I thought there was a lot of really smart people there. It was, there was a lot of energy, especially in 2018. Um, I joined, it was roughly 400 people, so it definitely wasn't like a small company at the time, but now I think it's, you know, it's 10 x that size and they were growing very rapidly even in the time period. I was there for about two years. They like three or four x in size and so went through a lot of growing pains, learned a lot of stuff there. Met a lot of great people. Um, it was clear there's a lot of other people like me at the time who were there thinking that maybe I'll start a company in crypto and this is a great place to meet others. Um, cuz especially then in 2018, didn't that long ago. But really, I feel like crypto's just come such a long way in the last four years. Like, especially even back then, there wasn't many, like, I'd say like lightning rods for crypto enthusiasts. Right. It wasn't clear where you should work there or there wasn't really that many options. There wasn't. Now there's like hundreds of, you know, defi companies, but that wasn't around at all back then. And so generally, as I really liked it, met a lot of great people, learned a lot of good stuff. I think it has, its, its problems as any startup does, but all in all was a positive experience for me. Well, that, that's awesome. And, and I think that's, that's clever and it how you join Coinbase as sort of like as, as a way to start your next thing or figure out what you wanna do next, or you knew you wanna start a company that's, that was like a jumping up plan for it. I, I think that makes a ton of sense. And then, you know, how did you arrive at the. Idea for, for gold stamps that come. Yeah, so for Gold Finch, specifically, Mike and I, I'd say this was like late 2019, we were starting to see some of these kind of green shoots of defi. Like, uh, you know, uni swap and compound had been out since I think mid. 2018, they've been out for about a year. At that point. They were like starting to get like a little bit of, of traction and, and a few other, other companies as well. And we were finding that space to be like, pretty interesting. You're thinking, Oh, this could be where like crypto's really starting to see some, some product market fit. This could be an interesting place to start something. Um, but wasn't exactly sure what to do. And then actually the a z Crypto Startup School opportunity came around. I forget exactly how I heard about it, but that for those aren't familiar, that's this program that, uh, they ran once in 2020 and they just announced literally just like a few weeks ago and were. We're doing this in early November, 2022, but they like, um, just now it's a couple weeks ago that they're gonna do it again, and it's basically gonna be like YC except focused on crypto and this time they're actually giving investment. When we did it, there was no investment dollars at all. It was just like, let's get together people to talk about. Crypto ideas, but now they're doing I think, like half million of investment. And that's otherwise kind of very similar to yc. Definitely recommend going for anyone who's thinking about starting crypto companies. Uh, we had a really good experience there and met a lot of, uh, great investors, including people who became our pre investors. Um, so, you know, it definitely worked out and a lot of great companies came out of it. Like Phantom Wallet was there, we were there and um, Notional was there. Teller was there. It was a lot, a lot of companies currently Defile came. That batch. So we joined that and that really gave some time and space to think about the idea, but more specifically to your question of like how it kinda came about. We were seeing this stuff happening with Compound where they were like getting real traction on this lending piece. And it was all this, you know, on chain, fully on chain over collateralized lending using crypto assets. It's crypto assets as the sole collateral. And that's cool, but it really only kind of has this use case of margin lending and is mainly used by traders. And so we were kind of really wondering, is there a way for us to do something similar? Can we do this on chain lending? Which you think is gonna have all these incredible side benefits. I don't interest say side benefits, just benefits. I. But can we do that with what we call like real lending, right? Like actual companies out in the real world where all of their collateral is not fully on chain, right? How do we take that off chain collateral, whether it's reputation, income, actual assets, and build a system that we thought could still do the loan on chain? And so that was the kind of crux us doing like, Look, if compound can do this and have some success, actual lending is like a thousand times of a bigger market than this like margin trading stuff where the borrowers already had the assets. Cuz in general you borrow money cuz you don't have the money, not because you have more of it than you need. Right. And so that was kind of the idea and it took us a while to figure out where the, the bars were gonna come from. Right? It was, you know, it, everybody was like, Oh, it's gotta be crypto native bars. It's gotta be them. No one else is gonna do it. You know, we started talking to these people. Those people were reasonably well served in our opinion, um, either by compound or places like Galaxy. And we also view that as a very volatile business. It was very correlated with the rest of the crypto markets. And we just like, that wasn't very interesting to us. And so we really wanted to find someone outside of, of crypto and we eventually found that in. These emerging market lenders, and I said lenders, but they're actually our borrowers. They're also lenders. I can explain that. But these borrowers are FinTech companies in emerging markets. We did like just dozens of of customer interviews talking to different potential borrowers segments, and it was this group who really stood out to us as like, Oh, they've got a real pain point. Like they struggle to access capital, but they still have quality businesses. He started looking into it, realized it's all these real structural reasons why that takes place such. High yield government bonds, not a lot of capital in those markets in the first place. And bias against working in emerging markets for most of the Western institutions who wanna write bigger checks. And all those reasons. We were like, Oh, this looks like a real thing. And these people were jumping at the bit, they were like, Crypto, sure, whatever. Let me know when you guys launched. Like I wanna, I wanna dive in. And that was, that was the signal for us. Like, Oh, we think we've got something here and like, let's connect that with all this crypto capital that's sitting around doesn't have a lot of other opportunities to earn yield, especially ones that aren't correlated with the rest of the crypto markets. And that was, that was enough for us to feel comfortable. We wanted to leave Coinbase. That's awesome, Blake, that's such a good transition into just talking about Gold Finch, the idea and how the business model works. Like you've already covered a bunch of the stuff that I wanted to ask about. So Gold Finch's mission is to bring crypto lending to the real world, and you were just talking about that a little bit. Mm-hmm. why is that important to do? Like, why is it great for the average borrower, maybe in emerging markets to be able to take a loan on chain versus what they're able to do? Yeah, so I think we can talk about this in, in two levels. One of the borrowers themselves, these emerging market borrowers, why is it useful for them? And then we can also talk about broadly why is, you know, doing on chain lending a valuable thing. So in terms of the emerging market borrowers, so I was, I was just touching on this a little bit, but to, to get more specific, these are borrowers who are in countries like. For example, like we operate in over 20 countries today. Those include like Kenya, Nigeria, India, Singapore, Thailand, Latin America too, you know, Mexico and Columbia, et cetera. Right. Lot of these countries where there is, there is economic activity, it's, it's there and there's businesses that have real track records and can show you that they have real solid financials, but there isn't a lot of private capital investment. And that takes place for different reasons. I was mentioning there are these high yield government bonds. So to get lower Pacific, that's where like the government will offer you, you know, 8%, 9% of a government bond, right? And then all the banks in that area, and even most of the private capital is gonna say, Well, I'm gonna put my money there. That's pretty much risk free. I'm gaining eight or 9%. Or even more some of these places, Why would I put my money into a company over here like a, you know, a FinTech company, right? That seems too risky when I don't even have to think about it and I can get my money in the government. So those government bonds tend to crowd out that local investment, of which there isn't a lot to begin with. That's one of the other major pieces. And then, In terms of the Western capital that might go in, uh, they tend to, like, they wanna write like bigger checks. If they're gonna be going into these markets, they're not as, as familiar with, you know, like, say like 20 million plus. And so where Gold Finch tends to really be helpful is in this range, I would call it, of like a two to $20 million. Like if you wanna have a loan of around that size, that's particularly where Gold Finch has found borrowers that have the most pain and they're willing to use weird things like crypto, you know, less than 2 million. You can probably get that together in your local markets, more than 20 million, you can start getting attention to these bigger institutions. Um, but that gap in between is very difficult. And so there we, we see that's a niche that has, we call like an access premium and not so much a risk premium. And so for them, because they have to have this access premium, there just isn't enough capital in that space. And they, they need this money to grow their business for them. We're working with FinTech lenders primarily. All these lenders use technology in some way to have an edge in the lending that they do. So capital is a productive asset for them. They're not using it for like opex stuff, they're using it to like lend out and make money. That's their whole business. And so for them, I said they're, they're really willing to use crypto. That's the main advantage for them. Now, broadly speaking, what can crypto do for lending markets generally? Crypto can do a lot. I think around what we talk about is like liquidity and access. Being like two, two pillars to think about here. Private credit today is very opaque. It's very illiquid. And typically if you're gonna invest in a private credit fund, you know you're not gonna see that money for, for many years and you don't even really know what it is. And if you wanted to sell your position, it would be very difficult to do so, right? You'd have to like get legal documents for, you're not even really sure what your private credit firm. Doing what they're actually investing in. But the blockchain can change all of that, right? It can have all the cash flows showing up on chain. So anyone who wanted to buy it can have a really good sense of, has, have all the borrowers been paying back cause their real history there. You know that that kind of analysis can be more automated. You can trade it to anyone in the world very easily. Cash flows will automatically follow the owner of the token, like today. Let me like a good example of like something interesting that's already kind of happening I think shows some of these kernels of benefit that we're talking about. So the way Gold Finch works is we have these pools that borrowers present to the community and the community invests in those pools. Uh, people who invest can get back tokens that represent their investment. And so there's all these like NFTs that represent investments of various gold finch pools. There's another protocol, it's called lax. They've been built on top of gold finch. And what they've done, they've set up a smart contract that says like, we like these particular pools on gold finch, and if you wanna put your token into our smart contract, we can min you a fungible token that represents the collective earnings of all of these pools. So what they've done is basically create like a portfolio from a portfolio manager of people who understand private. They're saying we really like these pools, and they've created more diversification and more liquidity on those pools by allowing them to pool together. It's almost like you're, you're tranching together. Different things. Hey, we think these all have roughly the same risk. And this is what of course lets, you know, housing markets be extremely liquid in the banks because they're all people who put ratings on them and say, These are all this tier, this tier. And that adds a lot of liquidity because people can standardize against it. So someone has done that with our loans, but they didn't have to coordinate with us. They didn't have to coordinate with the credit funds. You know, in a normal one, you have to be like, Hey, credit fund, instead of sending your money to me, I went, I want you to send it to Ally over here, and I'm getting you to sign a new contract that can do that. All that stuff goes away. Someone just puts their token in there and those cash flows now just automatically follow and go into that smart contract and they can create this fungible token on top that allows for that diversification to happen, and that token then be sold onto other people. And so that kind of flexibility and portability and ability to remove the coordination that's required in today's system is I. That's where the real magic of Defi is gonna be, when once we get like a lot of these loans on chain over the next, you know, five to 10 years, that's huge. So I, Three questions. I think you've already answered two words. What is the value proposition to the borrower? Let's say in an emerging market it's access to capital, and then for the lender, it's that invest, Who's going to invest in a credit fund? On chain ones are more transparent, they're composable, and there's just a lot that you can do there, even with the ease of like getting your money back, pulling it out, fractionalizing it. There's a lot there. Mm-hmm. Let's connect the last of the three dots, which is do crypto investors who would otherwise invest in credit funds? Want to invest in emerging markets. Maybe that last link, like what you mentioned, that it's uncorrelated with other crypto assets, which makes a ton of sense, but in terms of the like rate of return, how do they view maybe the investment they're making through you? Yeah, so the, I mean, the way I would say this is, this is like a, this is an investor specific decision, right? Like emerging market credit is a thing. Like, it's not like we invented it, right? It's already out there. There are many investors and different investors have different risk return profiles and things they're gonna like, I think crypto investors in particular had kind of fewer options of what they could do with their capital in the first place. There just aren't a a ton of things to do besides like trade tokens right now. But like, you know, any investor who is interested. A sort of high yield private credit asset could be interested in this, right? Like these are still real deals. There actually are legal agreements going on and a lot of people in the crypto space just have a lot of this excess capital. Now that's course a little less true today than it was six months ago, but still they have excess capital that they want to earn yield on in things that aren't correlated. The emerging market piece, I think is. It's not gonna be every single investor wants that, but some of them certainly will. Right. And it's, it is a large and growing space where people recognize there is currently a, uh, funding gap that needs to be filled. And we're, you know, helping to fill that. And I think there are, there will always be some portion of investors who are looking for that particular slice of private credit. I agree with that. And it's a hugely important mission. You mentioned this, so digging further or continuing to piece together kind of the gold Finch business model, you mentioned all of Defi. Defi lending tends to be over collateralized, which like for folks who are maybe listening and not in the lending world, that means the borrower is staking more money on chain than the amount of money that they actually are trying to borrow. So I think Blake mentioned this earlier, but. A lot of people think it kind of defeats the purpose of lending, or at least means you're not borrowing because you don't have that money. You have it, but you maybe wanna get that money to be liquid somewhere else, which is different from what Gold Finch is doing. So you, how has goldfish, what is the hack that you've discovered to get around the need to underwrite loans, which is notoriously. Given that, you know, you're not doing the Overcollateralization method that most of other defined lending has been doing. Yeah, so what I would say here, I wanna be clear about a couple things. So go bunch loans are still collateralized, but they're collateralized by off chain assets and income, right? And so, which is different than the lending today. That happens most in Defi is collateralized by on. Assets and income. So I think it's really this on chain, off-chain piece. There was some kind of confusion early on about with Golding being like under collateralized lending, which is just like, it's not really true. Uh, there is collateralized, but just by these off-chain things. But in terms of the underwriting piece also, I think it's important to recognize. Yeah, Goldfinch does not eliminate. Underwriting as a, as a task, but it does allow underwriting to be distributed to anyone who wants to look at it. So the borrowers will put up lots of information about themselves onto the D, including information like their financial history and their data rooms, you know, broadly, you know, information about the team who's run, who's running the company, stuff like that. Which lets investors decide for themselves whether or not they want to participate into this deal. So underwriting, I'd say, is one of those areas where I, you know, I don't think crypto fundamentally changes credit risk, right? It doesn't change, or at least it doesn't change. You know, the, the need to do credit assessment. I think there are things down the line where crypto can help enable safer investing and can, uh, enable better, better, like enforcement of credit provisions, which can make the loans, which can reduce credit risk in that way. But, but you still need to always do the credit risk itself. What I think crypto is enabling again, is sort of better liquidity, better access, and those two pillars are where I think crypto add. I love that piece about decentralized underwriting, let's call it like mm-hmm. people can, I think the way that I've understood your model, it has this piece called backers, which is that mm-hmm. kind of anyone, anywhere, as I understand it, can back a borrower. And sort of provide that, I guess, reference that, Yes, I believe in this borrower, and they put their first cash down for that borrower. And that is a one way in which you underwrite these loans. Yes. In addition to that self-reported borrower data. Yep. That, that's exactly right. And so, Laura certificate, how it works today, there's like these backers and they're also, we call LPs, which put money into a senior pool that's kind of this global aggregated and diversified pool. And the backers provide this first loss capital and they're putting their money where their mouth is cuz it's first loss. And so as they put capital in, we see a number of backers, uh, decide they wanna put capital in. And then the senior pool sort of leverages what they do by putting additional capital on top. A portion of the, the interest earned by the senior pool is allocated to the backers to compensate 'em for this work that they're doing of the actual underwriting, as well as SOS taking on the extra risk of being in the first loss position as someone who worked in lending for several years. I think this is a really elegant solution and I also. Know that you guys are, according to your website, kind of only in phase one. Now, there's maybe two other phases of, at least of where you've seen Gold Finch evolving and the business model evolving to. Can you talk about that in just a few sentences? Yeah. I mean, I think where we'd like to see Gold Finch evolve over the years is certainly expanding in terms of which investors are participating, which types of borrowers are participating, what kind of. You know, we can serve what crypto geographies are serving. And I would also say one of the, the real things we wanna get to in the future is having more and more of these cash flows be on chain. Because I think that's where more of this, this magic of crypto starts to show up. You know, right now some of the cash flows are on chain. Like all the borrowers do make their repayments on chain. They're borrowing on chain. All this stuff is fully non-custodial. It's, it's fully there. But they then, you know, Off chain to their end borrowers, right? And if you can get those flows on chain such that the end borrower receives crypto even directly from our smart contracts, and they go do whatever they need to do and then pay back directly into that smart contract, not only does that add more transparency, you've also actually removed certain counterparty risk as well. And the liquidity is just higher. You're seeing all these flows kind of come in out all the. Because sometimes bars will, you know, if you have an intermediate lender, the way it works on Goldfinch and the way it works in tons of lending, those end bars sort of repay back into intermediate lender. The intermediate lender then repays back into a thing like Goldfinch or a credit fund or whatever, and the, you know, that represents counterparty risk, right? Those, uh, borrowers can. End up using that money for opex, use it for things that are outside of what is the lending agreement provides. And if you can sort of route around them monetarily and that money can come directly back into smart contract and you have full transparency about that. So if that were to like stop happening, you would know very, very quickly. Um, that just further reduces the risk, right? Which should eventually bring down the rates. It increases the liquidity. Number of investors who are willing to participate, Also increases supply capital. It should further bring down the rates. Like that's where I think a lot of this, this magic happens also can remove things. Having to like go through a court system in a foreign jurisdiction that maybe you don't trust as much and having to like enforce on your lending agreements that way. Um, that is a, a serious barrier to people wanting to participate. It's not the only barrier, but it, it's a real one. And I think crypto has the ability to reduce those as well too, but you have to get more of those cash flows on chain to, to see a lot of those benefits. And I think that's, that will take a number of years. We're not quite there. Many people like don't necessarily think about it this way, but lending in tradify is of many different kinds, is the backbone of our financial system. So I think as people think about crypto, a lot of people are like, Oh, lending in crypto, it's gonna be huge. It's gonna be huge. But very few companies are actually going out there and like putting a stake in the ground and business models and defi lending. Um, there still aren't that many, and I think your solution is, is really, really exciting. So I'm excited to see where you guys go with. So I wanna talk a little bit about founding a company in crypto. So, so we're speaking in November, 2022, and it's a hell of a time to be a crypto founder. How do you keep your team motivated in a bear market and, and how do you, how do you as a founder view the up and ups and downs down cycles of crypto and, and run your company to. Yeah, so great questions there. So in terms of, you know, keeping the team motivated, right? I think this is where having a strong mission, having hiring people from the get go who are aligned with what you're doing and what the vision is, is so important. If, you know, if you're just starting a company and it's sort of like a. Hey, we just kinda do this thing and like, crypto's hot right now, let's get on board. Then, you know, when the, when the bad times come in, people are much more likely to just kinda jump ship if they don't think they can, you know, make seven figures in a few months the way they did before or whatever. And so that's just key. But I mean, that's just the thing for starting a company in general, like companies are gonna be hard regardless of whether or not you're building a crypto and having a, a strong vision, strong mission, something that's gonna be like an anchor against all the wins of the world is, is very important. Also, you know, we've, we've tried to share with the. Mike and I have been through a, a previous crypto winner in 2018 when we were working at Coinbase and everything was falling apart from the 2017 bull run. Um, and we saw what that was like as well. And also just letting people know the history of, of crypto, making sure they're aware that this is what the fourth or fifth cycle that crypto has been through at this point. So this isn't the first time and it's gonna be. It's gonna be, it's gonna test people's, you know, resolve. But whether or not crypto is, is real. Everyone asks like, is this all just a joke? Are we, is this like, what's going on here? Maybe everybody was just hallucinating for a year there, but you need to keep the eye of the prize here. Right? Right. That there is a vision here, there is something that's real. It's these things we've been talking about, having increased liquidity, increased security to allow for capital to flow to all the, all the corners of the world more freely. And I think that's a, that's a vision worth, worth, you know, working. And so you gotta have some, you gotta have a story there, um, to keep them motivated and of course have, have some fundamentals, right? It's great that I think we already have traction. We already have real, you know, show. We've shown that there, there's some real need here, right? We are helping people and the protocol has, has revenue coming in. And so those things also just kind of help keep things going. Um, there's a product to be building on top of, and a product to be working towards. So that's what I say on that piece. And then I think the second question was kind of about. Crypto founder, just dealing with the ups and downs of the cycles. Is that right on that one? I would say yeah. You just kinda have to expect that as being part of the crypto markets. It's a tough thing. Like sort of more tactically, I think you end up thinking about hiring decisions and like when you're hiring too fast or too slow and you need to think about runway, I think a little bit more. And so, you know, we've, we, we did like slow down our hiring a bit. Um, we haven't, we haven't eliminated, we haven't done any layouts or anything like that, but we've slowed things down. I think we just need to be a little more conscious of that. Cause you're not really sure when things are gonna come back. And then otherwise, I think you always just gotta be focusing on the customer, right? There's ups and downs out in the world generally, but always sort of practically tied to your direct business. There can, you can still feel the pull of, of customers if you're building something that they, that they want. And so, um, you know, we're also trying to, you know, make sure we're, we're talking to our customers and understanding what, what they want and what they need so that we're building the, the right things for the. That makes sense. I think those are, those are, those are really good answers. Another thing I wanted to ask about, there's also a lot going on in, in crypto regulation right now, and, and I'm sure you have opinions on, on which way that that should go. We dug up a tweet of yours that, that we thought with, with Anderson in August you wrote, If the US government says E is great, we'll even force everyone and the banks to use. Only thing we ask is every human wallet is K by C, and if it isn't, that must reject them. We'll only look at who, if we have a warrant, would this make the world better? Why or why not? What, what's your own opinion on this? Yeah, I, I didn't write an opinion. I just posed the question, the world. But yeah, my own opinion is like, this would be. It would probably be a net better thing. It would, it'd be unfortunate. It's not the world I wanna see, but I think if I was like forced to make a choice between that and. The US government says we're shutting down Ethereum and, and blockchains aren't allowed here. I'd probably pick that, but I wouldn't be happy about it. I'll, I'll say that but I, I do think these other pieces, right, pieces like the interoperability, the liquidity, the global nature, you know, it's in transaction settlement, all that stuff is, those are big wins. And like KYC is sort of, it would be an unfortunate thing if K has to go along with that, but it, there's still, it'd still be. Well, I, I, I like that. I think that makes sense. Thanks for, thanks for clarifying. One more thing, you know, looking ahead, what do you think it will take to spread crypto to the next a hundred million or, or 1 billion users? If you're talking about that kind of scale, like, to me that, that's more of like a. That's a social media, that's a gaming, that's a something else probably other than finance, to be honest. Like finance, just as a thing, doesn't have as many users. You need to have, not just money, but like significant amounts of money that you wanna, like invest it. That's it. I think crypto could end up impacting that many users through finance, right? Like finance is still a major backbone. A lot of people end up borrowing from various sources or the businesses that they, they use, borrow from those sources in order to get their, you know, their materials and stuff and, I think it can end up having that kind of impact through finance and defi generally. But I, I think if you want direct impact, it's, it's gonna be, you know, some of the gaming social stuff, um, which is also gonna be super helpful to get just more people to have wallets and things like that. But more so I guess to your question of like, what would it take to, to get there? Take applications in those areas. I think it'll take scaling solutions, like, for sure. For sure. I think we even saw right, the in places like Binance Smart Chain, which you know, are kind of centralized and maybe don't have as quite as much respect as like a decentralized public chain. They were still seeing tons of users, especially in emerging markets, you know, like, but BSC was. Is one of the most popular things for, for Indian blockchain users because it's just way, way cheaper. Right. And so I think that's, that's the sign there. You know, hopefully we get that in a decentralized format through, you know, L twos on Ethereum or something sort of in between. I'd say like a Solana. But I think you gotta have gases get reduced like by, you know, 1,000 x really like a hundred x plus. I think from where they are now, wallets have to improve. You know, we're starting to see some good signs of life there. Like I think, um, On the ZK sync thing, they're gonna start having account abstraction, which is gonna be a big win for, for usability of. A lot of this stuff is happening, right? Like the L twos are happening, they're real, they're starting to get rolled out, and real apps are starting to go on them and there's real TV out there. Um, while it's arc getting better, we're getting things like account abstraction soon, like those things will take place. It's gonna take time for it to roll out. But I think if you get that combined, combined with some, some killer apps, either in the social or the gaming space, that could bring a lot of people directly onto the blockchain. And then I think finance itself as more institutions and stuff on there. Impacting a lot of people through crypto in the same way, just one or two, like maybe rounding out questions here at the end. If someone more of like your advice as a founder, as you know, someone who's had a lot of traction and raised a lot of funding in crypto, which is really exciting. If someone is sitting here right now, November, 2022, and thinking of founding a crypto company today. Given the market conditions, would you tell them to go for it or would you tell them to do maybe more of what you did, which is go to a company, um, that maybe has traction right now and hold off until maybe the next bull market to fundraise and start a company? Yeah, great question. So my advice to him that would be if you feel like you have an, an idea, You think is worth pursuing and you feel like you're, you're kind of ready to start a company in that way. Go for it. I don't think the market should be a reason you don't start a company. For me, the reason I didn't throw my back in 2018 and joined Coinbase, that wasn't a, a market decision. That was like a personal decision. Like I felt like I still wanted to learn a lot about crypto. I felt like I wanted to, I needed to like meet. You know, co-founders potential, other early employees. And I wanted also just like continue to grow as an engineer and stuff like that. So I had some personal reasons I was doing that, but not market reasons. And so that would be the distinction. I would, I would say, um, but I think never a lot of great companies have been started in bear markets. Um, and I don't think this time is gonna be any different. Awesome founders. You heard this here. First start your company, start your ideas. And last thing, what's been the most surprising part of your journey as a founder to date? Like the most unexpected thing. I mean, you've spent, you'd start, tried to start previous things, maybe in the past. You've been working at startups, you've been thinking about starting a company, but like when you really did it, um, at this scale, what surprised has surprised you the most? Let's see what has surprised me the most. I'm not sure I have like an, an awesome answer here, but I'll just, I'll list a few things. Um, I was really surprised at how quickly everything took off, you know, in the that 2021 period especially, but even, you know, late 2020, I think when my kind of, you know, started. We were like thinking, Oh, where could it be a year from now? We're like, Well, I don't know. Maybe we'll have like a few million dollars L out and like, maybe we'll have like five to eight people or something. But you know, it was just like way more than that, right? It was like an order, order of magnitude greater. And to me, that ended up sort of speaking to where I, I've come to view as like the real like, you know, trick of trying to start like a, a big company startup is, um, or a startup that can become a big company is you have to pick. The, the right wave. Now you have to also be able to like surf the wave, but you have to pick the right wave. And if you don't pick the right wave, it's just like never gonna work. And a lot of that is external to you and your efforts. Right? Like I think Paul Graham has talked about this a little bit. Like Google isn't like a pizza shop that just worked really hard, right? Like it picked a thing that was outside of them, a global, you know, movement of the internet and like all these people coming on and this content coming on, they found that wave and they learned how to ride that wave exceptionally successfully. And I think you have. About that. And then of course you have to also have the skills to, to, you know, actually surf that wave correctly. But if you don't get that part, it's just never gonna work out. And I feel like we had picked the right wave of this, like defi thing in late 2020, going to 2021. It just exploded. And it was just so fascinating to see how much that, like outside market really affected it. Like that wind is sort of everything and it just adds so much energy to, to what you're doing. And reverse can be true too. If there's nothing there, then doesn't matter how hard you work, it's. Happen. Yeah. You're telling that to the right person who had a clothing rental business in the pandemic, so rode the opposite wave, which is the market timing goes in the opposite. You're the wrong direction. You can really get screwed. But I guess just to follow up on that, cause I think about what, what you just said, I think about that a lot and I think a lot of founders do. Does that mean you'd go so far as to kind of think maybe the way that thesis evolves? if you don't have a big spike and you're a few years or a year into working on something, like maybe you're just not on the right wave. Cause that's a little different from, let's say the YC advice. That, or you know, what you hear a lot is like slogged away. For years, nothing worked, but man, in year seven, like it popped And then I'll think a lot of founders keep going. Of that feeling that maybe they just haven't gone far enough. And, and would you maybe say to them, I mean, it's not black and white, right? But maybe say that, you know, if if there's not a wave in the beginning, then you might not be writing in the wave. I know this is a tough question to answer. Ooh. I mean, at some level yes, though, like, You know, working for many years on a particular thing, and it's not working. It's not working. I guess it could start to work if, you know, the wave is picking up at that time and you were just like early on the whole thing. I think that is a, definitely a real thing. Like Open Sea would sort of be an example of that, right? Like they were working on NFTs, they had this business and like, kind of worked, I guess there was some traction, but it wasn't really great and then like, oh my God, it just like freaking exploded, right? And, but they, they had already built the business. Were ready for that way when it came in. And so, you know, that can happen. And getting that timing right is super important. But I do kind of think that like if you have something that works, like you will know that it works probably pretty quickly. Like someone will want it. It may turn out that not that many people want it, but like someone should want it really early. I think if you're working for years and you're not really getting single, that anyone wants it, that that does feel like you're just barking up the wrong tree and then you. Find a different thing there. It may not be a wave that's, that's huge, right? It may not be a global wave, like, you know, Defi was in 2021 or like internet eCommerce was for Stripe. Right? But it should be something. Something should be growing there and you should feel some pull that somebody wants it, I think pretty early. Usually there's always somebody who wants it. That's helpful. I think that kind of like, Black and white advice is really helpful for founders. So thank you so much Blake. We really appreciate you spending this time. Uh, this was a fascinating episode. Thanks a bunch. Thanks so much. I really appreciate it. And uh, great to be here, Ryan as well. Thank you very much. Thanks for joining us on today's episode of Peeling Back Web three. If you like the episode, please subscribe on Spotify or Apple Podcasts and share it with your friends. And to learn more about Orange Dow and the companies we fund follow at Orange Dow XYZ on Twitter. That's also the best way to reach us.