Flip the Switch Episode 30: Alex Sismanis
SOPHIA: Today on Flip the Switch. We have the pleasure of chatting with Alex Sismanis, the creator of a new crypto-currency app called “ben.co.” Our interview centers around how crypto apps are being formed and funded in the 21st century, along with how Ben.co fits into the crypto world. We cover incubators, VCs and all things Silicon Valley thanks to Alex’s unique experiences in the crypto-currency industry.
Let’s get into it.
00:56 AUSTIN: Welcome to Flip the Switch presented by Power Digital Marketing. We are very excited to bring you episode number 30.
01:05 JOHN: Feeling good about it.
01:06 AUSTIN: Very good about it. It seems like just yesterday we were rambling away back in October. I think that’s when we put out our first show.
01:11 JOHN: 30’s a big milestone.
01:12 AUSTIN: It is a big one. I feel really good about it. And to cap off such a great number that we’ve got to, we have a really good interview today. So we’re lucky enough to sit down with a guy who made a new app. A new crypto app.
He’s been working with VCs up in Silicon Valley… ever heard of it?
01:29 JOHN: (laughing) I have heard of it. Yes.
01:32 AUSTIN: And a lot of great information came out from him. Just to give you guys a little bit of background on who Alex is and why he’s so cool… Alex Sismanis is the creator of a new crypto currency app called ben.co. What Ben is is it’s an intuitive chatbot that is designed to help the average person become more familiar with cryptos and crypto trading.
You can take lessons. You can read industry news. And you can also–and most importantly–purchase cryptos. Bitcoin for now. All with the click of a button. So what makes Ben so cool is that it’s combining education and then also the purchasing of cryptos into one seamless platform. So you can hook up your bank account and then you can buy with US dollars right away.
It’s instant, it’s actually faster than Coin Base. And the money goes straight into your bank account whether you’re buying or selling. So you’re only dealing with dollars.
So we’re really excited to learn all about what this product is. Without further ado, here is Alex Sismanis.
02:28 AUSTIN: All right. Ready whenever you guys are.
02:30 PAT: Good. You good?
02:33 JOHN: Everyone’s good.
02:42 AUSTIN: All right. With us today we have Alex Sismanis of ben.co. This is a new crypto app coming out. He’s been up in Silicon Valley chatting to his fellow VCs and everything they can do about cryptos. So we’re really excited to have you on board, and just want to open up the conversation and welcome you on.
02:58 ALEX: Thanks for having me.
02:58 PAT: Course man. Cause I know that we talk about cryptos a lot on this show. It kind of like… it makes its way into the dialogue pretty often. It’s something that I know Austin and I follow really closely. So when we saw there was an opportunity to have you on the show, we tried to jump on it immediately.
One of our coworkers, Devon, that we know actually hooked it up, so it’s awesome for you to come on.
03:19 AUSTIN: Shout out, Devon.
03:20 PAT: Shout out Devon.
03:21 ALEX: Devon’s a great guy.
03:22 AUSTIN: Yeah, we like him.
All right so I think a great place to start is just inspiration. So we want to talk about how you got into cryptos. What’s the inspiration for Ben?
03:31 ALEX: Yeah, so I actually started looking at specifically Bitcoin back in 2013. And that kind of first, big mainstream bull run. I didn’t actually end up buying any. So I was working for NVidia at the time. As an intern. And obviously they make a lot of graphics cards. And so I started looking into doing mining.
And after seeing the prices of electricity and kind of calculating it out, and doing some research, I kind of decided it wasn’t worth it.
But it was kind of my first at least, look at it. But I didn’t really kind of go heads deep into it until early 2017. And so that was when my co-founder Miguel approached me. And I was working on another project at the time. And so I was getting lunch with him in Vancouver and he basically just kind of told me… We started talking about Ethereum and ICOs and he said, “I have this idea about a chatbot” And instantly I was like, “This is awesome. I’ve had my eye on crypto for a while.”
And then we just basically started building it right then.
04:48 AUSTIN: And so you’re from Vancouver, right? Or you were?
04:51 ALEX: No, I’m from San Diego. Born and raised here. I went to school at University of British Columbia in Vancouver.
04:57 AUSTIN: Nice. Fellow San Diegan then. Glad to have you on-board with a San Diego podcast of course.
So chatting more about your chatbot and all that is. You’re attempting to educate an audience ab0iut cryptos. That’s kinda of the point of it. And what you really want to accomplish.
What would you say your target audience is? And what do you want to prepare them with through this educational app?
05:18 ALEX: Yeah, so I figure our target audience is the people who… it’s not your people who are in the space right now. It’s the 95% of people in the US who have maybe heard about Bitcoin, probably haven’t heard about other crypto-currencies….
05:32 PAT: Little bit more of the casual investor?
05:35 ALEX: Exactly. The mainstream consumer who they don’t know how to get into this space. It’s one of the most technical environments you can get into and so even just figuring out how to buy or set up a wallet is like way beyond your average person’s ability to understand. So that’s kind of what inspired us to try to make this very conversational. Like you’re talking with your friend who’s an expert. And that’s what Ben can be.
And then on top of that we’re building a software wallet. So we never take custody over the user’s funds. You can also buy Bitcoin right now, and eventually other crypto-currencies directly through the platform as well.
06:24 PAT: That seems like it has a lot of utilization right now especially, just because… obviously it’s been going down a little bit… but for a while there it was headline news. It seemed like 3 straight months, that was the first thing that you would see on Bloomberg. BTC price drops or goes up however much…
06:41 AUSTIN: Seems like in the back half of 2017 we were talking about it nonstop, as we said. November, December specifically–all-time highs.
06:46 PAT: Yeah, and I was one of the people that needed to get educated on that. The whole concept didn’t even really make sense to me. I bet like 95% of the people that you ask that have money invested couldn’t explain what a block-chain is.
So is that kind of the purpose that Ben is supposed to serve?
07:03 ALEX: Yeah. I think it’s especially useful in times like these. Where it’s a bit more of a bear market. And people are less willing to just throw money at something that they don’t understand.
So it’s a good time for people… even people who are in the space now to step back and kind of look at the technology and not be buying into a bunch of shitty alt-coins. Even I’m guilty of that in the past.
07:28 AUSTIN: Absolutely. I think we all are on here.
07:29 PAT: Yeah. Testing a little bit.
07:30 ALEX: I mean it’s super-fun and…
07:34 AUSTIN: It’s fun. It’s just very hard to understand the technology, as you were saying. I think the hardest thing to even know is what even is an ICO? It’s an ERC-20 token. What is an ERC-20 token?
No one really knows, right? It’s a subset of Ethereum. So all these type of questions are the type of things that you want to be able to answer with Ben.
07:48 ALEX: Right. Exactly. No one’s got time to read a 35 page White Paper for every single ICO that’s out there. So obviously when we offer Ethereum and we grow to offer tokens and alt-coins. That’s a service we want to offer. We can have Ben kind of summarize all these things for you.
Not giving investment advice, but at least just helping you understand what you’re buying into.
08:13 PAT: That’s a pretty interesting point you bring up too almost… Because I think one question that we had was how timely is this, right now?
Especially like you were saying, it is that Bear market. It’s lower in value than it’s been in a long time more consistently across the board. So we were almost thinking is this something that’s going to be viable?
But at the same time, you raise an excellent point. That’s exactly when it might be the most opportunistic for this solution to come into this space, right?
08:40 ALEX: Yeah. Definitely.
08:43 PAT: Perfect. One question that we had as well. So just in terms of the features that Ben possesses. One of the biggest features that it has is its intuitive responses to user questions. So how… if you could get into the technology a little bit without revealing too much there–how’s it able to function so highly and so specifically with those questions that people ask?
09:03 ALEX: So we’re using a natural language processing library that’s built by Google. It’s called Dialogflow. And essentially, they kind of do a lot of the heavy lifting in terms of parsing the user’s response to Ben or question to Ben.
And then we use machine learning and AI to help kind of match what the user says to different pre-set answers that we have.
So you can ask a question in a number of different ways and this library kind of helps us… this API helps us connect that to our predefined answers.
09:43 AUSTIN: Yeah. That’s incredible.
And so is this library constantly updating itself? Or how does it work for new questions?
09:50 ALEX: Yeah, so we’re getting a ton of… especially at the start. It was tough to know everything that someone was going to ask. So even since our launch last week, we’ve been looking at all the questions and it’s amazing how many things people want to know about.
And it’s really going to help us guide Ben in the future, and make him super-helpful so he can answer pretty much every single question…
10:16 AUSTIN: I like how you talk about it as if he’s an actual guy. I think that’s probably what you’re trying to accomplish with the conversation. So it just… I really like the idea of just a seamless integration. Just you’re chatting with someone. Like you and I were chatting over Gchat or ichat right? It’s just a conversation that’s naturally flowing and you’re getting these questions answered. And then also buying and selling.
10:37 PAT: I have a question for you. How did you come up with the initial bank of responses? Did you…? Or taking a step back, how did you try to formulate answers to questions pre-emptively? How did you go about figuring out what the first questions people as a minimally viable product, the first set of questions that you are aiming to answer? How did you go about determining that?
10:58 ALEX: I think it was we kind of looked at our feature set number 1 and connected that to start. So someone wants to buy, add a bank account. Maybe ask about the latest news. Or connect to our lessons as well.
So those are kind of what we started with. And then from there we kind of started looking at general questions that someone might have about the space. Like, what is mining? What is the block-chain?
And then I think it’s going to just keep expanding as we start looking at more data. And yeah… that’s pretty much it.
11:36 PAT: And what would you say in terms of the themes of the questions that people are asking? What are some of the most commonly asked questions that maybe you hadn’t forecasted for initially?
11:45 ALEX: Let me think here. There was a lot of people asking about “How do I pay taxes?”
11:54 PAT: That’s a good one. I would like to know that one.
11:56 ALEX: Yeah. That is a very tough one. I’m struggling through that right now as well with tax season coming up.
We had just kind of general questions like “What are the mining fees? What are your fees on the platform?”
Couple people asking funny stuff too. We had one person say, “Hey, where can I find the hot girls at?” Or something like that. It was like, “Oh man.”
12:20 PAT: Not sure we’re have an answer ready for that one.
12:23 ALEX: Ben’s not ready for that.
12:24 PAT: Yeah, “here’s how you buy Bitcoin,” is the answer.
12:28 AUSTIN: Ben is not an actual person. It does not know about human interaction to that degree.
That’s funny. I think what I’m wondering too is are you guys going to stay away from investing strategy or you’re trying to more so on the side of just educating individuals about what these crypto-currencies and block-chain is but not necessarily what to invest in, correct?
12:46 ALEX: Yeah. I think at least to start, it might be something we look into in the future. There’s some regulations involved in giving investment advice. And then especially with everything in crypto being so unclear. Some of these coins over tokens might be securities.
So it just opens kind of a can of worms. So we’re trying to keep it simple to start. But it’s definitely something we’ll look into when the time’s right.
13:10 PAT: How do you guys see yourself adapting as time goes on here? Because we covered it on the show a little bit, but there have been Senate hearings, there’s been legislation that’s been trying to get pushed through different government bodies to regulate it more closely.
But at the same time, the argument is that defeats the purpose. And they talked about separating it as a utility and a security. How do you see Ben adapting to those changes in the future? In the market?
13:37 ALEX: Yeah, I think luckily for us, right now, the way we’ve built the product we’re a digital agent. So we don’t actually have to comply with all the regulations because we have partners that comply with the regulations themselves. And we just kind of connect into them.
Yeah, it’s definitely going to be tough. And we have to tread lightly. We initially actually looked into doing an ICO. And like powering our product with this token. And that was going to be how you pay our exchange fees. Kind of like a Binance model.
But I’m very glad we decided not to do it. Because everything’s just so uncertain in the US in terms of whether these things are securities. And it would have just been a nightmare. And a distraction frankly.
14:26 AUSTIN: So we’re in the middle of an ICO with another client right now, and the differences between a security and a utility are so murky. And we’re being very careful, because if you go the security route, then you’re dealing with the SEC.
And that in itself means so much. Because just the language around it, and everything that comes with it.
So what we’re trying to stay away from is saying like, “Investing.” Or anything that would emulate that you’re paying for something…
14:51 ALEX: Or “profits”…
14:53 AUSTIN: Or “profits” or anything. You got towards Crowdsail or Crowdfund and then once you acquire tokens… So the language is really important about how you go about your business. Because if you say something wrong, you fall under regulation… you could end up in a very bad situation.
15:05 ALEX: Yeah, I think I definitely during that time period, very quickly became a legal expert on securities law and the Howey test and all that really exciting stuff.
15:16 PAT: Super-captivating.
15:17 AUSTIN: You have to be so careful.
Yeah, but as you say, you have to be so careful because we don’t know yet what’s going to happen. From a state and a federal perspective…
15:26 PAT: But we do know the consequences for violating an SEC regulation are dire.
15:30 ALEX: I did not want to end up in jail. So I was very sure to make sure we were compliant there.
15:37 PAT: Very smart. Cool. Just taking a quick step back and looking at it from a little bit more of a higher level. Just from a business perspective. We cover a lot of different entrepreneurial topics on this show. I’d love to get into a little bit of the process of how…
I know we talked about how you started the company from a little bit of a technological standpoint, where your interests lay.
But really went into making this dream of you guys’ a reality? And to take off to the degree that it has?
16:03 ALEX: Yeah. So for Miguel and I… it’s my third company and actually Miguel’s 3rd company as well.
So we’ve kind of been through the steps and the process of…
16:18 PAT: Third times the charm, type thing?
16:19 ALEX: Third times the charm. Exactly.
So it’s a real learning experience… starting your first company is like… it’s hard-knocks. You learn a lot, but it’s a great experience. And I think being able to pull from that and also our network.
So we went through an incubator together in Vancouver that was started by the CEO of Hootsuite. Ryan Holmes? And so we met a network of really cool people there. Who are doing awesome stuff.
16:47 AUSTIN: And it’s called “Y-Combinator,” correct?
16:49 ALEX: No. So this was called “The Next Big Thing.” This was the one I did in college still.
And then now we just graduated from Y-C and that is like the Harvard… Well they were the first accelerator actually in the world. And they’re unreal. The things they… they’re so well connected in the Valley. They have so many companies in their portfolio that are just billion dollar companies. They just had their first company IPO, Dropbox. This week.
17:24 AUSTIN: That’s pretty big.
17:25 PAT: WE covered that too.
17:26 AUSTIN: WE did actually.
17:31 PAT: I have kind of a question about that. Why do you think that it was so beneficial to be involved with Y-C? Was it the resources they provided or was it more the insight into success versus failing on things and kind of giving you that… the results of other people’s tests essentially ahead of time so you knew what to do?
17:47 ALEX: Yeah, I think it was definitely a bit of both. The network is like invaluable. Just to be able to be instantly connected with all the other founders that have gone through Y-C. Not to mention all the partners who are there, who are former founders themselves. And just being able to talk over your problems with them.
It’s awesome. And going there every week and having these dinners where they have ex-founders come in. We had like, Air BnB. Dropbox. Steve Houston and Steve Huffman of Reddit came in.
So it’s a lot of cool people giving really interesting talks that you wouldn’t be able to see elsewhere. They kind of speak off the cuff, and it’s one of those things where they say, you’re not allowed to talk about what happens in Y-C outside of it. And…
18:40 AUSTIN: Is there… that’s incredible that you get to talk to these individuals and I’m just curious about them as people. Is there a characteristic that you see common between these people that have been able to take tech companies to be billion dollar companies? Or what is it about these individuals that make them who they are?
18:54 ALEX: Yeah, I think the commonalities are they’re all very driven. They… I wouldn’t say being like, super-smart is necessarily a commonality. It’s being also–can you can always surround yourself with really smart people. But being able to pick out the right people, being able to make the right decisions kind of off the cuff.
19:25 PAT: Good judgement.
19:27 ALEX: Yeah, good judgement. Exactly.
And yeah… there’s all these different types of leaders out there I find. And we actually just had a talk about these last night at our last Y-C dinner. He was talking about he was working at Pixar and all the different CEOs and leaders there how they all had different personality traits. But that was basically some of the commonalities that they shared was being able to interact with people and pick the right people and stay really driven.
19:58 PAT: That’s awesome. So just so that we get a little bit more of a sense of that–how long were you guys working through Y-C before you graduated? In terms of timeline, where does that fall?
20:10 ALEX: It’s 3 months. So we started in January and then they have weekly dinners and office hours every week as well. And then you can also just set up office hours whenever you want with your partners.
So it’s a pretty intense… and then it all culminates in this “Demo-day,” basically. Where you go… so this batch was 140 companies. It was their biggest one yet. It was a lot of people there.
And so we had this demo-day where you go and pitch on the stage. It’s a 2 minute pitch and there were 800 investors in the audience and even more watching online. And so you go every single company pitches just for the full day. And then they have a system where they’ll “like” you on the online system. And then you get connected with them. And most people try to raise a round out of that.
21:04 PAT: That’s awesome. It sounds like its modeled a little bit kind of like the Tech Crunch Disrupt too. Is that the same type of model?
21:09 ALEX: Yeah. I think so.
21:10 PAT: Okay. That’s awesome. What a cool experience.
So in terms of your guys’ trajectory as a company, would you say that the Y-C that you did was that the pivotal moment for you guys? Where you really felt like “we have this under control?” it almost validated it at all?
Or what was that experience like in terms of how you perceive your company progressing?
21:31 ALEX: Yeah, I think it was definitely a pretty surreal experience getting into Y-C. I… always when I started my first company I remember… the first podcast I listened to was Y Combinator start-up series teaching you how to start a start-up. And so it was always a dream of mine to get into Y Combinator.
So I remember getting the phone call and we were at a dinner with an Andreesen and Horowitz partner.
And also the second podcast I listened to was a16z which is put on by Andreesen and Horowitz partners. So I got the call and the partner was filming us say yes to get accepted. And I was like, “Holy shit. This is like… this is the peak of my life right here, I’m pretty sure.” At least my career.
And so definitely…it was definitely a lot of validation there. I still think we have a long way to go. It’s a tough road. Lot of hours to put in. We still need to grow and kind of prove the model out. And, yeah…
22:36 AUSTIN: Yeah. But the important part is is that you’re here and you’re already up and running. So there’s the fact that you’ve graduated in a year from Y Combinator to having a viable product. It’s gotta just excite your investors as well, right?
22:47 ALEX: Yeah. Yeah, definitely. It’s good to have a product in the market. We’ve been in development for about 8 months previous to this.
22:56 AUSTIN: And that’s actually a really big difference than what we see with a lot of ICOs. Which is a different route than you went of course. They’re attempting to get funding to a potentially build their block-chain network… or whatever exchange they want to do. Everyone has a great, big idea but they haven’t built it yet. So that’s what’s very instrumental about being a viable company in block-chain technology or in cryptos.
Is that you can actually put out a product. And I think that that is what will be long-term and actually be able to withstand the ups and downs of the industry.
23:23 ALEX: Yeah. You definitely see a lot of ICOs that are launching with just a White Paper and raising billions of dollars. Especially last summer at the peak of the craze.
And to me it’s ridiculous…
23:35 PAT: Yeah, we saw a bunch of pump and dump schemes with that, too. It’d just be like a company would release a White Paper. Get a ton. And then never….
23:42 AUSTIN: Finish.
23:43 PAT: Yeah, exactly. It’s like into thin air, you know?
23:46 ALEX: Yeah. I mean, you have no accountability at that point. And these companies, they don’t need that much money. Like it’s ridiculous to think that you’d need a billion dollars just to build another block-chain that’s slightly different. Or some new protocol.
So I think we’ll probably… we’ve kind of seen the first ICOs or the first coins fail. We had Bitconnect which was just a Ponzi scheme.
So I think you’re going to see–we’re going to see down the road…
24:19 AUSTIN: You can Google that if you want. “Bitconnect.” or it’s the second coming of Mt. Gox, but in a new way. It’s very bad.
24:24 ALEX: And hopefully it doesn’t bring down a lot more of the market down the road, as more of these companies fail.
24:32 AUSTIN: And that’s what the government’s trying to sift out right now. That’s why the market is a bear market right now. A lot of it is due to the fact that these companies have come in and pretty much ruined the reputation of cryptos to being with. And then the government’s saying “Well hold on. What should we do about this? We don’t know yet, but we can’t have that happening.”
24:48 PAT: I have a question around that actually if you don’t mind. So like we just talked about, there’s definitely been a little bit of fraudulent activity in the crypto market. A lot of allegations of pumping and dumping. Price manipulation.
Do you guys–especially when you’re going out and pitching–do you ever find an initial inclination…? Are people initially a little bit skeptical of you because you carry the stigma at all? And if so, how do you go about trying to kind of remedy that for them?
25:17 ALEX: Yeah, I think there’s definitely a stigma around the space right now. Luckily we are coming at it from an angle of education. Which I think helps people not think of us in that light.
25:31 PAT: Right. Not trying to just make a ton of money off of people’s exchanges or whatever, right?
25:36 ALEX: Exactly. So I’ve felt that… I haven’t really felt that much animosity from people or skepticism.
But I could definitely see it for other people who are just talking about doing an ICO. Even myself, I find being very skeptical of anyone who’s talking about an ICO. And there has to be a real use-case for the token. Like, I personally don’t think utility tokens are going to be around for much longer. Maybe securities tokens will be a big thing in the future.
And of course, tokens that power Decentralized Apps are needed.
But a lot of these ICOs you’re seeing come out and it doesn’t make any sense. And they’re raising a bunch of money…
26:25 PAT: Money that you’re saying they probably don’t need that much money…
26:30 ALEX: Yeah. I mean, we had some guys in our Y-C batch, the Quant Stamp guys. And they’re like a top 100 market cap coin. Really nice guys and they actually… their token makes sense. They’re building a decentralized security platform for auditing smart contracts. Which are built on the Ethereum network.
And they’re just like… it was funny to hear in our group pitches contrasting our problems versus theirs. They’re like “We have so much money. Should we hire more people? I don’t know.” So it’s just…
27:05 PAT: Like, “Pass it over here, man.”
27:06 ALEX: Yeah. Exactly.
27:08 AUSTIN: What did Quant stamp do in initial funding from the crowd sale?
27:11 ALEX: I don’t know what they…
27:12 AUSTIN: Can’t remember. It was pretty significant though. Cause they’re a high cap coin now.
27:16 ALEX: Yeah. I don’t remember what they did in their ICO, but I know when we were in the batch with them. I think they were at 2 or 300 million.
27:24 PAT: Geez.
27:26 AUSTIN: Yeah that’s huge. That’s what’s kind of bugged me about ICOs to is they’ll go to VCs and they’ll get funding first and then they go to the public and then they get more funding.
And they still haven’t built the platform yet. And you just have all this capital. And who’s to trust a security token or utility token that isn’t regulated by any government. It’s a very interesting playing field.
27:47 ALEX: And you definitely see other coins out there. Like Tron, for example, that was like top ten for a while. And they literally only had a White Paper. And it’s like, “Oh man.”
I was warning people…
28:00 AUSTIN: Justin Sun man. He has that charisma…
28:01 ALEX: Yeah. He really does, doesn’t he?
28:03 PAT: I Have another question for you too, kind of on that note. So you’ve obviously… You’ve worked with investors and I’ve always kind of wondered–and this is for any business–do you find that it’s more beneficial to have their expertise and involvement? And not talking about anyone particularly, but in general. Or is it a little bit of added pressure because there’s this almost take it as validation from somebody that you want to impress with your work.
28:30 ALEX: Yeah, I think we’ve at least tried to get investors who will help us in our long-term goal. We don’t want to just take any money. You can be really scarred if you take the wrong money. Miguel’s had that with his past companies.
So luckily we kind of learned from that experience. And we’ve even turned down money when we were first raising. Where it was just like we didn’t vibe with them or we didn’t think they would bring much to the table.
So our biggest investor is Shana Fisher. She’s based in New York. She has a fund called “Third Kind Venture Capital.” She was the first investor in Pinterest. Really early into Stripe. Class-pass.
So she know what she’s doing.
29:14 AUSTIN: I can imagine she’s got a few great ideas now that she’s been down that road. Has she come with new things that she wants to deviate from with them? Or what’s kind of the game plan to make sure you don’t make the same mistakes?
29:23 ALEX: Yeah, she’s really helped us in terms of like product direction and we have regular calls with her where she just says, “Fix this.” She’s really straightforward, which is what you need when you’re starting a company. You don’t want people lying to you.
So it’s been really helpful to have her on board and just kind of tell us… Not give us any bullshit and just tell us, “You need to fix this,” or “do this. “Kind of help motivate us when things are going wrong or when things are tough, she can help say “keep going. It’s all good.”
30:02 PAT: Has there been a time where she has said, “We need to pivot this way,” and… Do you trust her with that exact move? Where it’s like, “Oh if she says we have to pivot, we have to pivot.”
Or is there going to be a little bit more of that dialogue talking about why you’re going the way you’re going?
30:16 ALEX: I think we’ve had the same vision for the product since the beginning. Things haven’t really changed. The biggest pivot that she was pushing for really hard was when we were going to do the ICO back in September of last year. And she was really against that.
She was like, “I don’t understand… especially a mainstream consumer who’s coming into the space and probably doesn’t even know what an ICO is, now they’re going to have to figure out how to buy a token on our platform. And then use it to pay our commission fee…” It’s just way too confusing.
So it made complete sense to get rid of that model.
30:50 PAT: Yeah, and just in the discussion we’ve had today it sounds like it’s even more beneficial because you don’t have that associated stigma.
30:59 ALEX: Exactly. We totally would have had that stigma. And we had a few conversations with other founders. Adam Ludwin of chain.com he was telling us, “You’re going to get the stigma. It’s not worth it. Everyone’s going to… Everyone’s considered an ICO at some point. It’s an easy kind of get rich quick scheme.
31:19 PAT: Almost like a cop out.
31:20 ALEX: Yeah. But it also prevents… how does a company that’s ICOed exit in the future? Can you get acquired? Can you IPO? How does that work?
You’re basically exiting at the start. Before you even start a company, you’re like, “Let’s do it. Let’s exit. We’ll get some money. We’re done.”
31:35 AUSTIN: And then, of course, you have the volatility aspect of your token. So you don’t even know what you’re going to be worth in 6 months.
That’s terrible. I mean, that’s terrifying. It’s also terrible.
So is it just you and Miguel right now working on the company or do you guys have other employees?
31:49 ALEX: So right now there’s 8 of us. We are evenly split between San Diego and Vancouver. Miguel’s in Vancouver and we have 2 IOS developers and then a content person as well. We’re working on our content.
And then we have 2 Android developers. Myself included and 2 back-end developers here.
32:08 PAT: I was about to ask you about that too. So you’re obviously… you’re one of the co-founders. But what does your day-to-day look like? What’s basically your day-to-day involvement in the company and what are your roles? Roles and responsibilities, rather?
32:20 ALEX: Yeah, so I’m the CTO. My day-to-day in the last 3 months has been ridiculous because of Y Combinator. And we’ve been flying to San Francisco every week. I wouldn’t recommend that. That was very tiring.
But mostly it’s been kind of iterating on product. Helping manage the technical team. And a lot of coding, actually.
32:50 PAT: Really? So you’re still doing a lot of the technical work?
32:53 ALEX: Yeah. Yeah.
32:53 PAT: Do you see yourself trying to scale the programming team or the development team to the point where you don’t have to do that in the near future? Or as far as you guys’ staffing and hiring what would be the next move that you see.
33:04 ALEX: I think we’re pretty much done hiring for a little while. Maybe like, a QA intern. But we’re pretty maxed out right now. We want to try to keep it relatively lean even though 8 is a lot of people.
But I think that I’ll probably be developing at least for the next year or so. If not more. Just because it makes sense…
33:30 AUSTIN: Yeah, you’re wearing that hat at this point. It’s still a start-up and you’ve got to do everything.
33:36 ALEX: Exactly. I don’t see myself going off the dev team until we maybe raise a series A and we really have to hit the gas pedal and it makes sense. Like we’ve kind of proved out the business model, and yeah… The unit economics and all that stuff are there. We’ve got a ways to go.
33:57 AUSTIN: Awesome. It’s exciting stuff.
So I said I wasn’t going to ask any marketing questions, but I do kind of want to go down that hole a little bit.
34:02 PAT: We’re asking a marketing question.
34:03 AUSTIN: What’s your… what is current marketing strategy, right? Are you guys doing just word of mouth? Grassroots? What’s kind of the game plan?
34:10 ALEX: Yeah, so I’m sure you guys are well aware about the crypto ad bans on every single social platform…
34:17 AUSTIN: Twitter, Facebook, Google you name it.
34:20 ALEX: Snapchat even this week.
34:21 PAT: All of the above.
34:22 ALEX: So it actually and ironically I think it’s a good thing for us. All these big companies that have huge war chests that we’re competing with, we can kind of more… We can focus more on building a good product. And building that K factor in the product as well. Like, the virality and getting people to kind of share it with their friends.
So one thing we’ve built into the product is the investment circle where you can add your friends and see what your portfolio is ranking against theirs in a… not a price but a percentage fluctuation.
And so there’s also a ton of ways we can expand on that in the future that’ll make it more viral. Make you want to share it with your friends. So maybe you can see what coins your friends are buying or share it with them.
So we’re hoping things like that will incentivize people to bring in their networks…
35:13 PAT: I definitely think… even just as somebody that… So I definitely have a lot of familiarity with the crypto space, but as somebody who was a little bit more of that casual investor, I’m looking to my friends to see where they’re buying. A lot of times when I’m going to make my investment decision.
Cause I know that Austin has good judgment. If he says this is a good idea, I’m going to go with that. And then I also have a means on your guys’ platform to actually ask that question, right?
That’s cool. I think that it’s really interesting too that you guys have taken more of that information sharing route. And I’ve been looking around on your guys’ website a little bit and a lot of it comes down to thought leadership too. And I think that that can’t be discounted either.
We had this conversation last week. Especially with the ad ban. It’s going to come down to people that are producing quality content. That organically ranks well in the search results.
And just looking wat what you guys are doing, I think that you have a good baseline to get going on that.
36:06 ALEX: Yeah. That’s exactly what we’re going for as well. So Miguel’s done a lot of SEO. That’s how he grew his last 2 companies. So he is going to be focusing on that especially with our content, like you were saying. So all of our lessons are sharable and they also have web landing pages as well. That… we try to make it really digestible information. Something that like, you’re friend might ask you, what is Bitcoin? And instead of taking 20 minutes to explain it to him, send him the lesson. He’ll read it. He’ll see at the bottom the links to download the app. And then he might go and ask Ben some more questions or go through the other lessons as well.
36:42 AUSTIN: Miguel sounds like a man after my own heart.
36:44 PAT: I was going to say, he likes crypto and he likes SEO. Austin and him should definitely talk.
36:49 ALEX: Definitely.
36:50 PAT: That’s cool.
And then just one last thing that I did want to ask you too. As far as I guess, next steps for you guys. So we talked about, you guys aren’t hiring anymore. The product is out. Is this basically like an MVP model that you guys have put out and then you’re going to continue to iterate on it? Is that the next step? Just to continue to iterate on the product?
Or is there any big plans coming down the line that people should know about?
37:19 ALEX: Yeah, I think the next step is definitely iterating on the product. Making the bot better. Making sure everything works, there’s no bugs.
And then I think the next kind of big step is to add support for Ethereum. Right now we’re just Bitcoin.
And then once we add Ethereum, there’s a ton of directions we can take things. So whether that’s integrating Dapps into the platform so it makes it super-easy for somebody who might not want to go to Coinbase, buy Ethereum, send it to a wallet, download Metamass…. it’s crazy the steps people are taking to play just crypto-kitties alone. And even then with how complicated it is, people were still able to do it.
So if we can cut down all these steps and make just one platform where people can do everything, I think that’ll be super-powerful.
38:12 AUSTIN: I love that you just brought up crypto-kitties too.
38:17 ALEX: Yeah. I know. You gotta love it. It’s also a Vancouver company too.
38:20 AUSTIN: Oh really? I didn’t know that. It’s a viral game, for everyone who’s wondering what that is right now. Via block-chain. So it’s a block-chain based…
38:26 PAT: I can see John’s face and he’s wondering exactly that thing right there.
38:29 AUSTIN: It’s the future. It’s block-chain games.
38:30 ALEX: It’s crazy how much money is pouring into these ERC721 collectables. So that’s the protocol, I guess, that derives these tokens. That crypto kitties is built on.
And so one of our batch-mates in Y-C is they were building Open Sea, which is a marketplace to sell these collectables. So you can sell your crypto kitties, they had a Donald Trump crypto-celebrities sell for 85 Ether. Which at the time was worth $85,000.
39:06 PAT: Oh my God.
39:07 AUSTIN: How long does it take to produce that when you’re just using crypto kitties or the Donald Trump app? How long does someone have to typically go for to acquire this token?
Is that the right question? I’m just trying to work through how it works and explaining kind of what it is.
39:25 ALEX: Yeah. In terms of buying it, I think… it depends on the game. I think you can buy it through the Dapp interface. So it’s usually just like a web landing page. And then usually they’re all powered by Ethereum. So you have to buy it with Ether.
39:44 AUSTIN: Anyone listening, just Google “Crypto kitties,” and you’ll see everything on it. It’s pretty wild.
39:48 PAT: All right. Well, I think that just about wraps up everything else that we had. But again, Alex, thank you so much for coming on the show today. We had a great conversation with you, and looking forward to seeing what Ben does in the future. Going to be following closely.
39:58 ALEX: Awesome. Yeah, thanks a lot for having me. It was fun.
40:06 AUSTIN: Wow. What an interview we just had with Alex. My mind has been sufficiently blown by all that goes into creating an app. How incredible is this world of VCs? I had no idea.
40:16 JOHN: Yeah, it sounds like it’s crazy. But I feel like I would have a good time.
40:21 AUSTIN: This is the 21st century dream if you ask me. Creating ca crypto-currency app in Silicon Valley. You came out of a top incubator. You’re working with all these incredible individuals who have been super-successful already. I mean, I think Ben is definitely on the fast track for success.
40:34 JOHN: Yeah. I kept picturing Richard Hendricks the whole time. From Silicon Valley.
40:37 AUSTIN: Oh my gosh. If anybody hasn’t seen the show “Silicon Valley,” you need to go watch that right now, so you can understand the stereotype that is Silicon Valley. And tie this all together with what we were picturing literally the whole time we were interviewing.
So besides those points… definitely go down to ben.co It’s in Android and Apple so go check that out. And that’s going to conclude the show for us today. So thank you all for listening. Please check us out on Instagram, Facebook and Twitter. We have a Facebook Forum that you can be added to. We post a lot of news articles in there, and chat all the time. So if you want to talk to myself, John, Pat or Joe we’re always in there posting articles and giving a little bit of insight into news during the week.
We hope you all have a great rest of your day. And this has been Austin, Pat, Joe and John signing off.
