Connecting the Blocks with Sam Cassatt, Amanda Gutterman and Joseph Lubin (ConsenSys) | Disrupt SF (Day 2)
11:01PM Sep 6, 2018
Let's just jump right in, I guess, to our next panel. We're going to be talking with the leaders of ConsenSys. Raise your hand if you're familiar with ConsenSys.
You guys win there's something under all of your seats, no, just kidding. Please welcome to the stage Joseph Lubin, Amanda Gutterman and Sam Cassatt and your moderator Jon Russell. Warm welcome, please.
Okay, good afternoon. We're here to talk about crypto blockchain and ConsenSys. We've got three people from ConsenSys, Joe, Amanda, and Sam. So he wants to start first what is ConsenSys?
What is ConsenSys? So let me start first, I'll do a sort of a more historical aspect and maybe Sam can jump in and flesh some stuff out, so a year and two the Ethereum project, we were getting ready to release version one of the Ethereum platform actually took another six months through various delays, but there weren't a lot of people building at the application layer of this decentralized application platform, so I started gathering some people, and there wasn't a lot of activity in the United States as well. We were a little bit afraid of building blockchain cryptocurrency related systems in the United States and set up in Switzerland for that reason, had some activity in Canada, but I had a presence in New York for a while and wanted to be in the United States.
So we gathered application developers, we started building a few different applications, App Store accounting system, realized it was very hard to build applications with no developer tools, no infrastructure, no ecosystem, not even a public release of the platform. So as a result, we ended up building a lot of that we built the Truffle developer tools and MetaMask and impure infrastructure that handles billions of transactions, inquiries from the ecosystem.
We started focusing on product and we ended up doing consulting over time fairly early on for companies, for governments, for central banks. And then we developed the need to do education in a systematic way, developed ConsenSys Academy and in time capital markets activities like venture investing in token launching. Sam was there very, very early and was instrumental in building out that first prong the private prong that
you guys do i mean today, right. So you're you're obviously pointing out that when you guys when you guys first got going, it was very small and Ethereum, which obviously you help to build right. You were kind of small and now 2018 you guys have 1000 plus people working for you. 1000 people. And you basically cover everything, right? So so
Not everything, lots of things in our little ecosystem, still not a huge ecosystem.
So. So I think some of that derives from the level of abstraction we operate at. I think a lot of people don't understand that. When I found Joe, and you know, at the very beginning of ConsenSys, we were really looking at an ecosystem design problem, right? right. A little bit like it's 1991, and we see Snapchot, we see Facebook, we understand all these application level things like games, financial products, prediction markets, custody solutions, etc.
But we don't we don't have an Apache web server. We don't we don't have a web browser. We don't even know what that looks like. And so what I set out to do along with Joe is is structure us at a level of abstraction where we can build a lot of companies at once, instead of trying to build a lot of products at once. We felt it was I don't know any company that set out to build 50 things at once and was successful. We also thought it was too early to make just a fund and start handing out money because none of the rails had been built yet.
So being a venture studio allowed us to make companies and just sit right at that level where we can build in whole, we can build a whole ecosystem at once. And then we've done that very successfully. As Joe said, you know, we've made a lot of the tools that everyone uses to build on Ethereum. We also do consulting so you know, it seems gigantic that we're over 1000 people, but it's because now we are a collection of other companies doing a lot of different things. Okay.
And also because the blockchain trustful infrastructure enables you to modularize and granularize functionality where if we set out to build a single monolithic product, we'd have to build an identity system for it. We might have to build an accounting system for it. These were all standalone things that we could, that we needed for interoperation in our different projects, but they could also be standalone products and standalone companies in time.
Right. So you guys have basically built all the infrastructure, if you like, that anybody else can use to build a decentralized or a blockchain based app or service.
Yeah. So some of the, the infrastructure that we've built like Truffle, which is the most used Ethereum and development framework, MetaMask, which is a Chrome plugin that you can use to browse the web free, and then Infura, which is a infrastructure layer. These are massively used in order to build products using Ethereum, and we created them in order to allow the developers and the ecosystem to have as many at bats as possible to create amazing products that people would want to use.
We created them because we needed them of guy who was building the app store was building tools to enable him to build the App Store and decided that building this tool suite, this tool chain was, was even more interesting. Our in house test network infrastructure ended up evolving into into Infura. And I think at DEVCON1 began to be offered more publicly.
That's how a lot of our things come about is just as Joe said, because we have a lot of the smartest people in the world, I think, working on Ethereum in one place, and if they need something, then they build it. And now Infura, for instance, is 8 to 10 billion API queries a day. You know, Truffle is what everyone uses to build on Ethereum with MetaMask has about a million users, so you know, we have successfully met our own needs and the needs of the market.
Sometimes the number of products you've mentioned, that you have over 50 products, is that right?
We have about 50 products.
In different states of maturity.
What does that mean?
That means some of them are very young and not released. So 50 different projects.
Okay. And in and you mentioned internally, there's a pipeline that has 10s, hundreds, thousands of other ideas that are sort of bouncing around.
It's hard to quantify, but there must be at least hundreds of ideas bouncing around. But you know, we're a decentralized organization in a number of ways. And we try to crowdsource from the community from within our company, different ideas. And we have a process that we call rock, resource allocation circle. It's a little bit like an internal VC group, where we take you know, we take ideas, we evaluate them, we fund them, we resource them, and we sort of pipeline them through a number of processes to get from idea stage to market validation to maturity. And that's how a lot of our ideas come about.
So some of them come externally as well. But a lot of them come just from our own needs and throw an ideation prototyping processes.
Yeah and many of those are core core ConsenSys projects. So Amanda might come up with an idea, we might flesh it out in some design thinking sessions and hire people for that. We may have a project come to us that's exciting and we put it through our process and adopt it but there are projects that are a little more peripheral to core ConsenSys projects that our ventures arm invests in.
We've got the Tachyon accelerator kicking off tonight and tomorrow where we're putting money in an accelerator context into 15 different blockchain projects. We help token launch our own internal projects and and a bunch of external projects are lots of different ways that we interact. We we security audit many projects and have significant impact in that way.
Right. So there's so many different arms races. So you mentioned one of them investment, so so what are the kind of deals that you that you do what are the kind of the the kind of projects that you're seeking out there blockchain or anything that's basically a blockchain based right
Yeah, so so things that are cool things that are relevant to our Ethereum ecosystem things that may be complementary to the Ethereum ecosystem, so project around decentralized storage, a project around inter ledger communication. We spoke with a very interesting project last night that is sorted of if this than that for different blockchain protocols sort of way of scripting and sequencing activities on different protocols.
So we're, we're using that function investing in the world. We used to think that because we had breadth and depth that our money was best spent internally. But things exploded, as we all know, 12 to 18 months ago. And now it just makes sense for us to pay a lot of attention and support a lot of what's going on outside of ConsenSys.
It's also a market maturity. So, you know, as I was saying, in the very beginning, it didn't seem like a good idea just just to make a fund, right, because everyone would have had to build the same things because there was nothing so right. No one had heard the word blockchain before it was just us building stuff and everyone thought we were crazy when you know, in 2015, we were walking into board rooms, everyone's at what? What are you even talking about?
You know, obviously, that's a little bit different now. But at that time, if we had just handed, you know, millions of dollars to a bunch of different companies, they all would have had to build the same rails right now, now that the market has matured, there are a bunch of new things that make sense, handing people money to build on top of the infrastructure that's already there does make sense now. And so that's a business model we employ also, we haven't really gotten into all of the, the structure of ConsenSys actually, it's it's very large, but somewhere along the way, people have asked us to consult for them, right governments, fortune 50 is central banks.
If you start googling Ethereum and blockchain, you find us pretty quickly. And so we get asked to build consul, on deliver solutions around that infrastructure all the time. So we spun up that as well that makes a lot of sense for us to so that that's another large part of how are businesses evolving? I think, you know, in the very beginning we looked like a bunch of kind of crazy crypto anarchists and as as things move forward, you know, we look a little bit more like maybe maybe an Oracle or something, right, where there's this core technology. And there are a lot of real businesses with real use cases on top of it, that need to implement it.
You know, you can't, you can't buy an oracle database or an IBM mainframe off the shelf and plug it in, you need someone to design a solution around it and deliver it. And so as we've as we've built all these technologies in our venture studio, as those things mature and become more commonplace, then, you know, it makes sense for us to help the world implement it and move over to the rails of blockchain.
Just to just to clarify, I think this was important we don't look like an Oracle, our protocol engineering team that's building a next generation Oracle like product to blockchain obviously, so our solutions group together.
We're most we're looking at an article for sure, but I think, you know, as as it matures, we need that too. So that's we have so many things going on.
We've also played a pretty big role over the past two years especially in telling the story of blockchain and Ethereum to the world and starting to really cross the chasm to users explaining what this is how it works, trying to optimize user experiences so they can actually get into the products and it's just been amazing seeing how many people know about blockchain Ethereum and how many people are building on it, and to see how that traces back to some of those efforts.
Yeah, so let's, let's talk about that when a bit. So at the moment, I imagine most people when they think of Ethereum they think of investing right so maybe if you bought it a year ago perhaps it was like you know $200 ish or you know that the idea is that people that didn't didn't get into into bitcoin early right this is a new way they could get in this is what most people think of right so so what is the future like, what is it really going to kind of gonna be like, what are the areas where you can use the blockchain actually make, you know, products that people in the in the audience are actually going to use.
So ConsenSys is very focused on the software side and on building blockchain software as opposed to focusing a ton on price and the cryptocurrency side. So one one example of software that we're building we have a company called civil that's actually doing their token launch on September 18. They're building out a whole media ecosystem on the blockchain, which includes decentralized government governance, basically not allowing any government or central authority to decide what is truth in media, censorship, resistance, permanent archiving, working with the Associated Press, actually, to ensure that syndication makes sense, Ethereum does a great job of solving the double spend problem online and they're leveraging that to help the AP and possibly work with some other news wires. So I think media is going to be a really great.
Okay, and you just say so on media. What could we say? Say a TechCrunch, right? What's the what's the pitch to us? What can we get from civil that we don't already have now?
Yeah. So civil civil is actually enabling any person to do their own token launch using the civil protocol to start their own newsroom. So kickstarting all kinds of different journalism platforms helping to augment and make local journalism more robust and also helping to bring across existing media platforms and companies to users so users can remunerate them directly.
Okay, what's my boss
that effectively certifies ethical journalists and journalism newsrooms that are ethical, it gives people who hold that token agency in determining whether a fact is true, or in flagging, whether facts should be scrutinized whether statement should be scrutinized, whether there's plagiarism, it basically gives people a voice that could be used to bump a journalist off a newsroom or to bump a
Bump a journalist off.
or to bump a newsroom off the power.
Okay. I like that ethical journal.
So someone like TechCrunch that spends a lot of time thinking deeply about what you publish. That would be something that would hopefully be you know, voted and remunerated on.
I mean, I think my boss is probably watching this you probably like pitch him about
I'm sure I'm sure you all saw you know Sheryl Sandberg in Congress yesterday, right? And there's a conversation in our in our culture right now about who is responsible for mediating and deciding about journalism and you know we have a different opinion or maybe maybe a an something to add to the conversation which is that let's make a decentralized platform that allows people like you know, the, the head of Columbia Journalism School or other people like that to be part of the conversation and to decentralize the way that our culture mediates its information.
And civil will have a foundation headed by Vivian Schiller of NPR fame that will continue to evolve the constitution and continue to evolve the platform. So there will be analytic services, lots of different ways of using the token to put new services on the platform.
Okay. And we sort of we sort of touched on, on the, on the price issue, right? Because obviously, as you mentioned, Joe, you know, the, the sort of the value of Bitcoin and other tokens went up very, very high at the beginning of the year, and it was in now if you're, if you're comparing it, it's, it's gone. It's gone down at practice, also, right, the back to school sale, so is that I mean, on the on the on the outside, if you bought, you know, crypto, it's not great. But as someone who's building out the ecosystem, are there some good points to that?
Sure. Right. Absolutely. So as Amanda indicated, we're a software shop we focus on building battling, we like to spell it sorry. Too complicated to get into.
like the opposite of huddle. Huddle was a term from from early to Google UI dl or hashtag Biddle, okay, and
essentially we've seen many rises and corrections in price in the blockchain ecosystem since Bitcoin arrived on the scene, and each one of those rises, looks epic. Looking back on it looks like a little pimple in the chart and each one of those rises gains attention to our ecosystem. It brings in consumer interest it brings in entrepreneurial technical talent, it brings in cybersecurity talent, it essentially this this latest wave has created an order of magnitude or more extra activity on our ecosystem in the form of new projects, in the form of talent joining old projects, in forming new projects, and building new fundamental infrastructure for our ecosystem.
And that tends to lag, the price rises. And, but right now, even as prices dropped, there's just much more activity in the ecosystem.
The, the, the talent, the quality of it, the amount of energy, the fact that we're in this room right now talking though, all you wonderful people, I mean, this is partly due to the price right? I mean, it's, it's interesting, people follow it. And there's a constant stream of entrepreneurs and talent coming out of big companies and banks to us, and I'm thankful for that.
Okay, I actually and I can tell you answering the question you asked Amanda while ago about building software. So we recently announced a partnering with Rocket Lawyer. Our open law system is a system for decentralized hybrid blockchain based legally enforceable agreements, you can actually put an agreement that's part pros and part program on the blockchain right now. If you want to be transparent, it can be on the blockchain or in decentralized storage. If you want it to be a confidential agreement, you can just hash it up or create a digital digest of it and sign that.
So this is open law technology that is a platform in its own right. But it's also being used by Rocket Lawyer which is a platform that serve 35 million customers that
house then so what like cut down on so
it says it brings them into the blockchain ecosystem. It enables network infrastructure to run the the execution, the implementation and construction of some of those agreements, and it enables an arbitration network and blockchain based identity to be brought into their eco cycle
Mad libs for legal agreements that automatically executes.
And it was announced today actually partnership. So you know all of the press part of the breath
I want to go back to what So Sam, you mentioned talent right that you get you seeing a lot of people came from big big companies coming to you guys and other people in the ecosystem we had a pretty lively panel on stage here yesterday and one of the theories put forward was that the uncertainty around the SEC not really not really coming out there and being and being very very clear is meaning that countries overseas are taking advantage and a lot of the tech is being built and developed outside of the US. Do you guys agree with that?
I think the SEC has a very hard job. The entire rest of the world looks to them as the exemplar of how to have a well functioning securities market and I think they have offered some clarity. You know, we have spearheaded some of that conversation through our project, the Brooklyn project, I think fairly successfully. And I'm pretty impressed with with what's come about so, so far, and you know, we're doing pretty well.
So Michael Arrington had some legitimate frustration especially a number of months ago. Some of us didn't feel like we were operating in a climate of uncertainty but the SEC in our estimation has a very good understanding of what's going on in our space. They have given us significant clarity with respect to Bitcoin, with respect to ether declaring neither of them securities both of them decentralized platforms with a consumer utility token.
Bill Hinman, Director of Corporate Finance of the SEC about 10 weeks ago said that about ether but even more importantly, he spoke of consumer utility tokens which can be sort of the business logic the glue of protocol based open platforms that enable network business models are Ujo Music Project is a network business model. So these things can bring in a bunch of different people or companies in different roles.
And that whole network can deliver product or services to consumers or other businesses. And if you structure the token properly, and if you market it properly, so you're not selling it in enormous quantities to speculators. You're not putting up billboards in Times Square and and trying to entice people to expect return on investment for the purchase. But if people are actually using the token on the platform, and they're sort of restricted to doing that, then that is a clean consumer utility token, it wouldn't be considered a security.
I would also add platforms like my shirt, right ham radio token is securitized real estate. I think they've done an excellent job. The regulatory community has done an excellent job of understanding platforms like that, because straight securities that happened to also be blockchain tokens are also a huge market, and we're going to see a huge influx of that. And there are a lot of amazing businesses to be built in that too. So I think their understanding is pretty good.
So you guys think basically, it's not true and that there is going to be enough tech
I think, I think we have a lot more certainty right now than we did a year ago. And I have the the New York bit license did cause a small number of companies to squawk and and maybe move out in New York. But I think the blockchain industry in the United States is very vibrant. The Bay Area is exploding right now. As technologists and entrepreneurs understand that the web 2.0 as wonderful as it is, has exploited people in different ways and we're having a rich conversation around that and how blockchain mechanism, self sovereign identity can enable us all to build better infrastructure.
And at the same time, it's true that there jurisdictions all over the world that are embracing blockchain and that are also very enthusiastic about it and open to it
in a decentralized way. Great.
Well, unfortunately we're out of time because I'm sure we could have gone on for a lot, lot more. But thank you so much, guys.