One of the great thinkers in the blockchain space is Brock Pierce. Although I started working with blockchain in 2013, I really started to grasp its potential after seeing this keynote by Brock Pierce in 2017.
Here’s a fully searchable transcript, enriched with slides where I found that relevant.
To improve your experience in navigating the amazing insights and quotes he shared, here’s a table of contents:
- 3 Macro Trends Enabling Blockchain / Open Source Adoption
- Distributed Systems, the Spider and the Starfish
- Financing Blockchain Technology: Venture Capital versus ICO’s
- Regulation in the Blockchain Space
- Replacing The Centralized Corporation Model
- Decentralized Autonomous Communities
- How To Start A Community, A Movement
- How to Pitch a Blockchain Project
- Improving on ICO’s Ethics
- Blockchain will Replace the old Internet
- Competition and Integrity
In my early 20s I built up in China, a 400,000 person supply chain that was playing games like World of Warcraft and Second Life professionally, to mine digital currency that I was selling all over the world.
In the early 2000s I was PayPal’s largest customer in the world for three years, Google’s largest advertiser for a little while, basically built AliPay and a handful of other things. And that’s what eventually led to me getting into this business.
So, let’s talk about what are the things that are happening today that make this so interesting. What’s different than kind of everything else.
And it’s this combination of macro trends. If you want to understand where the world is going, try to understand one of the drivers. One of the big ones is this concept of open-source software.
We’re moving from a world of building proprietary things, for me or my company, to benefit me and my shareholders to a world of open-source things, where I don’t have to keep rebuilding and recreating the wheel.
I can start to leverage other people’s work in a way that we can co-collaborate and hopefully make the world better. This is a big thing that’s happening.
Historically, open-source software, which I think is already proven that it’s vastly superior, hasn’t basically replaced everything because it’s voluntary, meaning the people that work on open-source technologies today are volunteering their time. Either because they want social credit or they want some sort of bragging rights or philanthropic sort of things, that they just want to be a part of.
But, the problem is when everyone has to contribute their time for free, some people still need to eat. And so, what’s happened here in this space is we’ve added the incentivization layer to the open-source movement.
You can now make more money building open-source software, working for yourself, volunteering your time to whomever you choose and do better than working for someone else. That’s a very very big change, and the entire world is going open-source.
This concept of, again, proprietary ownership; I need to own that car, I want that big house; we’re moving to a world of shared things, where we can be more efficient in how we utilize the things that we are making in this world, which is a positive thing.
Lastly, we’re moving from a world of centralized systems to decentralized systems. Everybody in the world was an entrepreneur for the most part up until the Industrial Revolution. It’s the Industrial Revolution that creates these giant centralized institutions, beyond just the church and state and we’re flattening the world again now.
I want to focus on this one in particular. I’m one of the founders of Blockchain Capital and our logo is now a digital starfish. If you’re not following decentralization, you should read this book. It’s called The Starfish and The Spider. The idea is, if you cut the leg off a spider, what happens? It walks with a limp. A second leg? More of a limp. Etcetera and it’s at its dead.
Now, with the starfish on the other hand, if you cut that leg off it’ll grow back. But, if you cut off any part of the center of this starfish with that leg, it’ll become a new starfish. If you cut it five ways through the center it will become five starfish. This is this idea of decentralized systems, occurring naturally in nature. It’s the resilience of them. It’s their censorship resistance and such.
Where the world is moving from big centralized systems with central authority and control that isn’t a bad thing but corrupts over time, too decentralized and distributed systems. It might be worth just talking about this one today because we’ve had a lot of forking lately.
Forking isn’t bad. Forking is actually essential. None of us would be here today if it weren’t for forking and spooning. When a baby is born, it’s a fork. Not all Forks are bad, progress comes from it. It’s when we have contentious forks, which also sometimes lead to progress, it’s just messy progress.
When it’s open-source, and you see how the sausage is made, it might be not so pretty, but just understand that this isn’t a bad thing. This is how progress is made. This is how in decentralized systems if you don’t like the leadership, you can change it. And so, we’re seeing the earliest examples of this.
Don’t sell your coins if you’re not sure what you’re doing. Just hold them all because you don’t know for a while.
Everybody wants me to talk about numbers so I’ll do a couple of these.
All the world’s top VCs are investing. There’s one that was left off this list, which is Sequoia. They’re in. Congratulations. Welcome to the party.
This is the data that I found compelling for a while because everybody would say “overnight success, overnight success”. Trust me, working full time in this space the last years; six years has not been overnight, and nor has it been easy. In most cases, it resulted in anything but success. But, venture capital started coming into the space in 2014 on numbers that were similar to the Internet in 95 and in 2015 similar to the Internet in 96. Those are the sort of data points and comparisons you want to look for, to try and draw analogies and things that will help you hopefully find insight.
The big difference though is: back then, it costs you five million dollars to build a website to sell anything online. Today, because of open-source, because of things like Amazon Web Services, and blockchain-based storage and the things that are coming, this is going to be done very cheaply.
But the time that it takes to plant those seeds, water them and turn them into the – I call it the bridges the roads and the infrastructure – has taken this time. We now have that.
We’re now ready to scale, but you’ll see in 2016 we flatlined, and that’s because the generalist VC said:
- I don’t see enough revenue;
- where are the exits, I’ve got exposure!
And so as the entrepreneurs were coming in, and better and better ones. I mean this is
the stuff that kept giving me the conviction to keep working through difficult times, because I kept seeing new amazing people, voting with their feet. Walking away from million-dollar opportunities. And that’s what you ultimately want to see. You’re looking for reassurance.
None of us are certain about anything unless we’re maybe crazy. What happened is, the VC stopped investing, and so the entrepreneur is being tenacious; did what they’re supposed to do which is find another way, and that’s where the ICO model came back.
J. R. Willett invented the idea. We were the first ICO back in June of 2013, and it really wasn’t something that took off in a meaningful way for a while, because it was something you did if you had philosophical views about where the market was going and the technology that would drive it, or because you couldn’t raise money anywhere else.
And so, last year we had 64 ICOs, raising a little over a hundred million dollars and again, that was similar. It was philosophical views or people that couldn’t raise money elsewhere. That doesn’t mean they didn’t have talent, they just didn’t have options available.
One other thing happened that I’ve excluded from this list, and that is the DAO. The DAO, is an example of what not to do. Make sure you get security audits, make sure there’s not a lot of room for error in the space, and the consequences of making a mistake like that may cost
you your life. One thing again, if you’re working in this space, make sure you got proper legal advice, make sure you have legal counsel.
Every time I’ve spoken publicly since 2013, when people said there’s no regulation here, I’ve
said: “yes there is”. There are a lot of laws from the 1930s, 40s, etc., that do exist and they may be relevant to you, and the consequences for some money laws, a number of them are one of two things: it’s either the death penalty or life in prison.
The consequences in this sector, when you’re playing with monetary systems, are extreme, beyond your imagination. Make sure you’re getting advised. It is really important.
But, what happened with the Dow is something else very fascinating and that is that they raised an extraordinary amount of money, more than a hundred million dollars, in their ICO.
That sent a very important message to the market; it said that this model scales, even though they did it wrong.
The ICO model scales, and it’s caused entrepreneurs that might get a term sheet from Andreessen Horowitz, Sequoia, Goldman, whoever it might be. You might say that this is a better model now. You may forgo that in exchange for this new thing because it might be bigger and better.
And so, what happened this year, the numbers obviously have gone through the charts. We’re probably at about two and a half billion, three billion, seem to be happening in terms of resources contributed to projects in this space.
And I like this one, this chart is venture capital versus ICOs in the early stage. ICOs are delivering resources to innovators around the world at a rate four times greater than venture capital.
At Blockchain Capital, having seen this trend occurring, and having seen all these utility tokens, many of which I don’t like, and I don’t like the structure. I don’t have a problem with utility tokens, but I think the model can improve. I think we can do better and I think a lot of people were creating convoluted structures for the purposes of circumventing securities law at which, in many cases, they did compliantly, but what they did is they made an inferior product. They didn’t offer their customers, their users, their community, everything they can.
And so, we did this B cap thing more as an experiment, to show people a model that you can fork, that you can run with, that you can copy, this is open for all of you. This is not something that is proprietary. Take advantage of it, please.
But that was doing Blockchain Capital’s third fund, as an entirely digital security offering. We utilize the Jobs Act, Regulation D, and as specifically, full offering memorandums, the things to do it compliantly. In half an hour we raised our third fund from a ton of people across 80 countries. We wanted to show people that venture capital is kind of dead in its historical form.
Going forward, the structure is going to go away, but the role of helping entrepreneurs and innovators will not; they’re gonna need resources, they’re gonna need advice, they’re gonna need connections; they’re gonna need mentorship. The digital security is a big deal, and this is the one that is most interesting. Not as much to LA, but to the rest of the world. This is a global phenomenon.
Why that matters, is that most of the world’s innovation currently comes from the west coast of the United States. That’s not because we’re smarter, it’s not because we’re better, it’s because the capital to finance innovation has been here, and so we’ve had an advantage over everyone else in the world.
That advantage is about to go away. And that is that anyone in the world, if the next Einstein, Mozart or Mark Zuckerberg is in Africa, from anywhere in the world the best innovators are now going to have access to actually build. Where you’re born is not going to be the thing that determines your ability to get shit done.
I want to talk briefly about kind of my latest significant project which is Block.One. We’re making a thing called EOS, and the reason I want to talk about this is, I want to talk about some structural issues which have nothing to do with the technology in the world and that is this centralized system:
You’ve got three parties, all interacting through that central server. This is more or less the way the entire world is architected.
I think I can directly attribute many of the problems in the world to the corporation itself. That’s not to say corporations are bad, they came out of the Industrial Revolution and the railroad barons are the ones that created the corporation to be able to bring in the capital.
And we talked about how the world used to be to what it’s become; it was the Industrial Revolution that drove a lot of this.
It was this system where you have a customer, an employee, a shareholder:
- A customer wants the best products and service, often the cheapest, preferably for free;
- then you’ve also got the employee, that wants to do work that they feel good about, but also really wants to be paid as much as they possibly can for their services;
- and you’ve got the shareholder, who ultimately just wants to take a hundred percent of the profit to the extent they can, more if possible, right?
And so, you’ve got this misalignment of interest between these parties.
I think most of the world’s problems come from this, most of us that have done any business, understand when there’s a lot an alignment of interest between the two parties, that relationship is typically going to work well. And when there’s a misalignment of interest, no matter what the contract says, it’s normally gonna end in tears.
When you start to think about it, the structural foundation of the world is where the problem lies. And so, my partner Dan Larimer, introduced this idea of what’s called a DAC or a decentralized autonomous corporation or organization.
He invented the term in 2014 while doing BitShares. He eventually built SteamIt before doing EOS, and I think that this is the thing that can fix structurally a lot of what’s wrong in the world.
It’s because you’re open-sourcing everything.
And in that open-source sort of world, you’re delivering things like transparency and auditability and inclusiveness. Those things that are ultimately the objectives that we should be striving for. In doing that, you’ve aligned all the interests.
Because, what happens is to be a customer of a DAC, to be a token holder, normally you have to be a token holder to be able to buy that product or to participate in that ecosystem or that tribe in some way.
To do that means:
- that I’m probably benefiting from whatever that ecosystem does and however that token appreciates.
- And so, I’ve gone from being a customer and I somehow inadvertently become something that looks a little bit like a shareholder. Imagine if you can only buy Apple products with Apple stock; how that would change the nature of the relationship between the customers and the company.
- Now that I’ve done that, now that I actually have upside in everything that ecosystem or tribe is doing, I’m feeling compelled to contribute.
Whether that means I want to go tell my friends about the things that we’re doing, or maybe I want to start building apps and things on top of that platform.
I want to start figuring out what superpowers or skills I have that I can contribute to this project, and I start to look a lot like an employee, but in this future that we’re building there probably aren’t going to be jobs.
The jobs are going away, and that’s not a bad thing. You’re going to end up with tribes that you get to participate in and you’re gonna wear and participate in those things that are important to you.
But what happens is, you get this complete alignment of interests where it’s no longer about ME anymore. It’s not about that proprietary “how do I capture value, oh I’ve got some knowledge that I can trade on from my benefit”, what happens is when you re-align everyone’s interests, anything you do benefit me, anything I do benefits you.
And so we move from a world of ME to a world of WE.
When you start to do this reconstructing of incentives in the fabric or the foundation in the world in which we live, you can actually make things a hell of a lot better.
When you start to think about why you’re here and what the opportunity is, it’s this sort of stuff, we’re rebuilding the world at its foundation.
And so, what you’re building, any of your DAC, or building your ICO, or anything that you’re doing in this face, remember that you’re building a community.
The only way your project will succeed is if you bring in lots of people to participate with you and join. The differences between the successful projects and the unsuccessful ones are going to be around the leadership and their ability to build huge followings.
It’s probably not going to be because they have the best technology. These are big communities and I want to play this real quick.
I think that’s important. I’m one of Satoshi’s first followers, as I hope many of us are, but I also want to talk about something else here.
Everybody’s making lots of money in doing probably very well if you’ve been in this space at all lately. If not, probably re-evaluate the decisions you’re making.
I’ve been spending a lot of my time wanting to meet every billionaire I can. A lot of people out there raising money. Except for a billionaire to me is not someone with a billion dollars. I don’t care what money you have.
A billionaire to me is someone that’s going to positively impact and change the lives of a billion people. A unicorn to me is not a billion-dollar market can’t-kill-company, it’s a company that’s gonna positively impact the lives of a billion people.
When you’re building communities, that’s what it’s about. If you successfully are doing amazing things in the world and succeeding at those things, trust me, abundance and money will follow.
Because there’s a paradigm shift occurring, and that is this old adage ‘that money is power’ is changing. Having money won’t get you a seat at my table. I want to know what your superpower is. I want to know what you’re going to do to use those skills that you’ve developed and refined over the course of your lives, to positively do something in the world.
If ever you want to pitch me your deal, the right way to do that is not to say “hi, my company is X Y & Z, and I’m doing _, and I’ve gotten _. Please, advise me.” If you actually want to pitch me, please listen to this:
- introduce yourself by telling me what your superpower is, meaning tell me what you’re really good at. Tell me what skill you have, I don’t want to get to know you by your company I want to get to know you by who you are. Tell me what you’re amazing at, tell me what your skills are;
- then tell me how you’re going to apply those skills that you’ve refined to do something positive in the world;
- and then finally tell me, if we’re still having a conversation, exactly what that company that you’re working on is today, that will most likely fail.
90% of startups fail in their first three years. This is gonna be no different, so tell me what you’re good at and how you want to do it. Use that skill and what your current project is, which may or may not succeed, but that’s the proper way to meet someone.
There’s this concept of how to get to know people. If you want to succeed at pitching potential people, just start by doing a better job of it, which is introducing yourself properly.
And that is that in this new world money is no longer power. Technology is power, consciousness is power, community is power.
I like talking about this concept of Ikigai, and that is finding your life’s purpose and that’s what’s gonna happen in this world of tribes. The stuff that you’re gonna be a customer of; the
stuff that you’re gonna contribute to; this stuff that you’re gonna keep your store of value in.
You find this middle point, which is what the world needs, what you love, and what you’re good at. And, if you find the middle of that, you’ll clearly be paid.
I like this concept as well. It’s another Japanese term. I love Japanese culture and food and everything else, but Kaizen. It’s the concept of change and better, but that means continuous improvement when combined. Every single thing you do; show up and try to be the best you possibly can be. Everything you do; try and improve on it to the extent you can.
I don’t mean to recreate the wheel every time, but always be improving! Every situation that you have in life; how do you make it better? Which, I think, is an important one in this ICO madness. How do you make it better?
Another thing, if you want me to be interested in your deal, is telling me what you’re doing differently than the last person.
My wife crystal Rose will be talking today, but she did something that blew me away and that is that instead of offering her pre-sale to whales first, she offered her presale to developers first. She said “I’m in my pre-sale, going to be developer-only. You have to provide your Github activity, etc., and you get into the deal”. Developers got in first because they’re the most important people from her perspective in building her community. Not my idea, but that’s the point, you can all do that. Find a way to do something better than the last person.
Don’t do the same thing over again, and there’s a lot of other things you can do in that process. I think financial reporting is an important one. I think the market is softening right now, and you feel maybe as you’re looking at deals that maybe something’s wrong and there is.
You’re not comfortable handing over tens of millions of dollars to someone with a white paper and having no form of governance whatsoever existing there or minimal governance.
I think, one of the things that we can all do to be better is just start by committing to actually disclosing some details about what you’ve done with the money. If you want me in the deal, this is kind of important.
Show me that you’re going to issue quarterly financials, show me that you’ll get that audited at the end of the year, so I know you aren’t giving yourself multi-million dollar salaries; you’re not buying boats, and you’re not spending it on parties.
We don’t have any recourse. At least be transparent, this is a market about transparency. So, lockups and vesting, I think we’re already at that point. If you don’t have that sort of stuff in there, you’re already kind of a dead ICO in my opinion. You haven’t done what’s already been proven to be best practices. If we want to keep upgrading. If we don’t want to have a 1999-2000 bubble burst.
The way we avoid that is by self-regulating and hold ourselves to an ever-rising bar, that we all raised together. Transparency and reporting, and then going forward obviously, there are things like smart contracts where we can have milestones and KPI’s etcetera. But we can’t get to that point until we have some sort of post-ICO governance, because startups need to pivot.
If you committed to delivering X in the next year, or escrowed funds would be returned, that doesn’t work because you have to have a governance structure in place to be able to amend things.
Number one and number two, nobody’s doing transparent yet. There’s not a deal that’s been committed, so I hope if you want to stand out and lead; be a leader, do that!
A couple of predictions, people like this sort of stuff. I think we’ll see over a thousand ICOs this quarter. I said that we’d see over 4 billion raised in London, and I like it when I keep seeing my own numbers quoted when I pulled them out of my hat. 10 billion next year.
Security tokens, this is an important one, when you’re evaluating your project, don’t say “how can I be a utility token, how can I be a security token”.
Ask yourself what’s best for your users; what’s best for your community, and work backward from there. If a security token is what makes the most sense to your community, be a security token. If a utility token makes the most sense, be a utility token. But always operate from the perspective of what’s best for your community.
If you do what’s best for you, I promise you’ll fail down the road.
I firmly believe that the blockchain is a technology that will change the world, that’s far bigger than the Internet.
I mean, think of the old internet as basically just a system for insecure data transmission. The blockchain is now the system for secure data transmission. It’s going to replace everything because it’s just the upgraded version in a world where security matters.
But, technology is an enabling thing. It isn’t conscious, it doesn’t know good or bad. Money isn’t bad either, it’s an enabling tool. It’s what we do with it that matters, and so we have an opportunity to change the world, and the future could be very good or very bad. This will be determined by those of us who build it.
I beg you, I plead with you to operate with integrity in this new world of abundance that we’re creating, you do not need to compromise your integrity for anything and ever. This is a big family. For those of you that are newcomers and don’t understand how it works; those of us that have been building this system for a while, look after each other and we are about radical inclusion, everyone is welcome, but operate with integrity, and that’s basically the main requirement in this space …
Because we’re not competing, even if the person sitting next to you wants to do the same thing as you, you are not competing. It’s multivariant testing and you’re taking two different approaches to solve the same problem. And if you think that a person operates with integrity and is talented, you should be participating in their token sale. You’re not competing.
The only people we compete with, are people that show up here and don’t operate with integrity, because the future depends on it.
I encourage you to dream. People have been calling me a magician lately because they don’t know what other titles to give me, but magic is real. You can make it, I promise.
The EOS logo is a chestahedron. It’s the sacred geometrical shape of the heart discovered in the year 2000. You wouldn’t think that new geometry is being found this recent in time, but the reason we selected that symbol is that we love what it represents.
If you’re gonna build a technology to change the world, let’s do it with love and heart.
At least try to be the best stewards we can be of the systems and the communities and such that we operate from, and I, again, encourage everyone to believe we can change the world. Everything is possible.
Q: What are the two things people can do right now when they go back home, that can get them to where we want the community to go?
The main thing is that if you if you’re new, you don’t necessarily understand how these communities function. In a world where it’s about open-source, it’s about sharing of information, it’s about contributing.
If you’re new the main thing I would encourage you is don’t show up, thinking that there’s some fear of missing out. You are not late. If you are in this room, you are early. There are only 10 or 20 million people in this space. Do not panic.
Don’t go run in and start putting your money into things that you don’t understand. You are not late. And don’t go jump into the first project. If you’re new to this space and you want to learn. Start meeting people and figure out how you can help.
Don’t ask what you can get. Figure out how you can take the skills that you have to contribute to the projects that they’re working on; don’t commit. Sleep around.
You’re new to a space, get to know people and if you like this; it feels good, you may want to do more of it. Get to know people and at some point, once you’ve been in the space for six months or a year, you’re eventually gonna start to get a strong intuition. You’re gonna start to
understand the things that make sense to you, and the things that you want to do more of.
That’s the first thing, figure out, go meet a bunch of people today, and don’t ask what they can do for you. Figure out what you can do for them.