🎙 Braintrust's Adam Jackson: “Nike is in Crypto Now and They May Not be Fully Aware”

In this week’s episode, I interview Adam Jackson, co-founder of Braintrust, a user-owned talent network. Think Fiverr for web3. Braintrust runs on Ethereum, has thousands of users, household names like NASA, TaskRabbit, Nike and Nestlé are clients, it has processed millions of dollars, yet not many people in the crypto community have heard of it. And it may be by design, as the team has focused on building the platform looking outside of crypto.

Last month, Braintrust launched its token, which was distributed to thousands of freelancers who had never touched crypto before. Token holders can now participate in governance and control how the platform is run. We talk about how adding a token better aligns incentives across the entire ecosystem, creating positive feedback loops and more value for everyone involved.

Adam says Brainstrust is an example of how open-source networks and software will disrupt closed corporations and web2. Braintrust is a set of smart contracts with no one company that owns it, but many companies that maintain it and build on it. This allows it to offer services at lower fees than web2 competitors.

Adam believes the so-called gig economy is broken because platforms are incentivized to extract as much value as they can, leaving workers feeling like they’ve been cheated. The way to fix it, he says, is through market-driven solutions using web3, DeFi and user-owned marketplaces.

The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau.

🎙Listen to the interview in this week’s podcast episode here:

🙌 Together with:

• Balancer, one of the leading DeFi automated market makers (AMM) for multiple tokens. Dive into their pools at this link.
• Kraken, consistently rated the best and most secure cryptocurrency exchange, which can get you from fiat to DeFi
• Aave, an open-source and non-custodial liquidity protocol where users can earn interest on deposits and borrow assets.

👀 Only paid subscribers have access to the full interview transcript below.

Adam Jackson: Yeah, for sure. So my quick background, I'm a software engineer by training. I studied computer science at Vanderbilt University and then moved out here to San Francisco right out of school. And that was like 16 years ago. So I'm kind of the old man in the space. In my career, I'm pretty much an engineer turned entrepreneur.

So I've been starting and investing in two-sided marketplaces, web 2.0 marketplaces, if you will, pretty much my whole career. So my first one was an e-commerce marketplace acquired by Intuit. Second one was an automotive marketplace acquired by Advance Auto Parts. Third one is called Doctor on Demand, which isn't quite a marketplace because prices are set, but it does connect doctors and patients. And it's now the largest video tele-medicine system in the country. And then Braintrust is my latest project I've been working on since 2018. The whole idea behind Braintrust is we think user-owned and controlled marketplaces will grow faster and be more valuable for their users than investor-owned marketplaces. And so that's what brought me to the space. We're into almost three-plus years of building the Braintrust network.

“The whole idea behind Braintrust is we think user-owned and controlled marketplaces will grow faster and be more valuable for their users than investor-owned marketplaces.”

CR: Nice. Can you go into exactly what Braintrust is?

AJ: Yeah, absolutely. And maybe before I do that, I'll frame up why we think web 3.0 protocols are going to be more valuable and ultimately disrupt, web 2.0 corporate-run marketplaces. So the idea with a web 2.0 marketplace, the playbook has been, you raise a ton of money from venture, hundreds of millions or billions of dollars, use that money to subsidize one or both sides of the marketplace. I.e. grow supply, grow demand, you build some great software that can host the transaction and do invoicing and reputation management. And then if you're lucky enough to break out and get liquidity, which most aren't right, you gotta admit, it's really an amazing thing to watch the ones that have broken out.

You come out the other side with this investor-owned network and those investors very rightfully so need a return on capital, right? They were the risk money coming in. And so where does that return come from? Usually in the form of fees extracted off the network. So from eBay, the very first one, all the way up to the gig economy, giants like DoorDash, and Uber, and then even knowledge worker marketplaces like Upwork and Fiverr, which is where Braintrust plays, you have this misalignment of incentives because the company operating the marketplace by default is trying to get as much of the money as they can from the talent and the clients or the supply and the demand. And so incentives start to diverge, right? And so you have people trying to disintermediate. People will take big projects off the platform, things like that.

“...you have this misalignment of incentives, right? Because the company operating the marketplace by default is trying to get as much of the money as they can from the talent and the clients…”

And so the big idea here was why don't we replace the corporate for-profit marketplace structure in the middle, with software that is a non-profit, that has no need to extract value, that can bring buyer and seller together and do billing and store reputation and create a trusted place to transact. But it's a public good, right? Just like Ethereum is a public good for people who want to build smart contracts, Braintrust is a public good for a protocol that matches talent who want to do contract work for clients like big companies like Porsche Nike, Nestlé, Goldman Sachs that want that work done.

And so that's where Braintrust came from. It was really a token economic theory looking for a category. We started in tech talent, like we match developers, designers, product managers, with big companies that need them for usually very big projects, some ongoing, some finite, and because the network is owned and controlled by its users via the token, there's no need for the network to charge big fees to its users. So this new user-owned model, web 3.0, allows you to drop the fees basically to zero. So we charge a 0% rate for the talent and a flat 10% fee to clients to cover the costs of running the network. And so now you've got this user-owned network, super low fees. It attracts better talent, bigger jobs, big clients, and it's able to grow faster and be more valuable than something like a Fiverr or an Upwork.

“Just like Ethereum is a public good for people who want to build smart contracts, Braintrust is a public good for a protocol that matches talent who want to do contract work...”

Braintrust’s Layer 3

CR: Okay, can you explain exactly how this network works? Because it's still based on Ethereum, right?

AJ: Yup. The Braintrust token is an ERC-20, that's correct.

CR: The token is an ERC-20 token on Ethereum, but then you talk about Braintrust as if it was its own network with its own nodes. So how does that work?

AJ: Yeah, good question. This is where the terminology can change from layer one to layer three. So like a Bitcoin node or an Ethereum node, very much layer one. These are folks who run software on servers and get rewards for running proof of work or proof of stake. A node on Braintrust is really just a company that brings on a client and helps onboard that client. It helps facilitate fiat payments, and so they operate sort of a logical node of the network, but Braintrust is actually just a layer three on top of Ethereum.

CR: Okay. And layer three assumes you're using a layer two. Are you using a layer two scaling technology?

AJ: Yeah. Well not all layer twos are blockchain-based. So our layer two is mostly AWS. But we are actually partnered with SKALE Labs to build some of the marketplace logic out on SKALE, which is a layer two, WASM compatible, Ethereum compatible layer two technology. But all of the important stuff that relies on the blockchain actually just directly hits Ethereum for us.

CR: Okay. Got it. So you have your ERC-20 token, you use SKALE for what exactly? What are the transactions that you are recording on Ethereum?

AJ: So the SKALE thing is in development right now. That part's not live. But the main important transactions that need to hit Ethereum are the token balances themselves. So who has how many tokens, have they vested or not? And then also, the rules of the marketplace. So what fees should be charged? Like the zero and 10, I mentioned, that's in a smart contract. Which category should we be in? That's in a smart contract. And then there will also be a smart contract that holds treasury tokens. That's something that actually already exists, and it just hasn't been filled up yet. And so the way you upgrade and change and manage the pathway that the network takes, the business decisions that are made, which software upgrades should be made, is all through governance. And it's one token, one vote. We actually forked Compound's governance contracts, and just use them. And so that's the primary governance mechanism for the network.

CR: Got it. Okay. So you're using the token primarily for making governance decisions about the different parameters that you use on Braintrust itself. Things like 10% fees for companies and 2% fees for talent and so on.

AJ: You got it.

Token Economics of a Talent Network

CR: Okay so what is the token used for? Are freelancers earning in Braintrust token? Or how does that work?

AJ: Yeah, let me zoom out. And this is a part that's a little unique for Braintrust. I'll zoom out and say, like, where does fiat come in and where do tokens come in? They intermix here in a unique way. And so the Braintrust token wasn't designed to be a payment layer. So clients like Goldman Sachs want to pay in US dollars. That's just how the world still works. Most talent wants to get paid in a fiat currency, usually US dollars or euros. And so the marketplace software connects to PayPal and Stripe and TransferWise, and helps facilitate these payments on behalf of the marketplace participants. Where the token comes in, the token is the incentive mechanism and the governance mechanism. So you get the token by helping contribute to the network somehow. That could be dozens of ways, but that could mean something small, like copywriting or designing UI, or committing code, or doing a security test all the way up to, what's more broad use case is, referring talent, helping screen and vet those talent, referring clients, helping onboard those clients.

“...the token is the incentive mechanism and the governance mechanism. So you get the token by helping contribute to the network somehow.”

We actually have a referral engine that will pay Braintrust token bonuses to folks who refer clients or talent once those talent or clients start transacting. Actually that's how we got Porsche. The client came from Nestlé. Another client came from what we call a Connecter. So there's talent who do the work, clients who pay for the work, and Connectors who bring people in. Those are our three core user types. And the connector piece is totally permissionless. Anyone can sign up, get a Connector, a unique code, and then anyone that joins Braintrust and transacts on that code is going to get some percentage of those transactions kicked back to them in the form of Braintrust tokens. Then what do you do with those tokens? So voting, we talked about right, that's the main way to control the network and propose new things, that's been really popular, where we're averaging a new proposal a day right now in our governance system.

There are also features that we've been testing with the community called bids staking. So if you're talent, you can stake some tokens along with your bid and that'll basically put them in escrow and say like, hey, if I'm a bad actor, if I'm a no-show I'm going to lose these tokens. And it signals to the client that you're taking this job more seriously, right? You're, gonna put some skin in the game and vice versa. If a client finds themselves in a talent constrained environment, which we're in right now, clients could actually stake some tokens with their job posting and say, look, everyone who gives us a reasonable qualified proposal will get some tokens, whether we pick you or not.

And then that will grease the wheels and incentivize talent to participate and put the time in, maybe an hour, that it takes to build that proposal. So the point of tokens in a network like ours is to unstick the flywheel. All great marketplaces have a flywheel and tokens are a great way to unstick. For instance, it takes, you know, an hour to put together a really nice talent profile on Braintrust. So you'll get a reward for getting to a hundred percent profile complete, and that reward will be Braintrust tokens. And so that's how we've built the economy. We built the whole economy off-chain, and then just got on-chain six weeks ago, September 1st.

“...the point of tokens in a network like ours is to unstick the flywheel. All great marketplaces have a flywheel and tokens are a great way to unstick.”

CR: Nice. So one more question on that for now. Is the only way to get Braintrust tokens to earn it within the platform, or can people buy it on the secondary market?

AJ: It's on Coinbase and a few other exchanges now anybody can get them now, but up until it was available on exchanges, the only way to get it really was to earn it through the protocol.

Braintrust’s Token Distribution

CR: Okay. What was the distribution like? Who got Braintrust tokens initially and what mechanism did you use? What was it a DEX offering or how exactly was that done?

AJ: So tokens were given away to early contributors over the last couple years, really just on testing, out of our database. And they're basically IOUs for real tokens. And so when the platform went live on Ethereum mainnet on September 1st, thousands of people got their tokens. Most of them through a platform wallet, which is all sort of kept in one on-chain wallet and then you withdraw off the platform. And so you have thousands of community members that are token holders and unlocked on that day. And then once you hit mainnet it's sorta out of your hands, right? So there was a CoinList sale that happened, I think it was the first week of September. And then you started seeing tokens pop up on Uniswap and then eventually Coinbase and now other exchanges. It's actually a process like we're completely uninvolved in, it's just up to the exchanges in the community,

“...so you have thousands of community members that are token holders and unlocked on that day. And then once you hit mainnet it's sorta out of your hands...”

CR: Got it. And was the CoinList sale to your investors?

AJ: No, that was a community growth sale. So the max purchase price was $500. It was non-US only and it brought in something like 22,500 new token holders to the ecosystem.

CR: Oh wow. But you had raised $24 million, I think, in VC funding. So how did you manage that? Like the equity side of Braintrust with the token side. How will that look going forward?

AJ: Great question. A lot of projects do this a lot of different ways. The way we decided to do it was make it super clean and simple, so only sell tokens. There was no equity, there's six core teams involved. I'm part of Freelance Labs, which is one of them. But none of those teams sold equity in their businesses. Everyone is on the same instrument, which is the token. And so investors in our seed round, in our Series A were on a SAFT, which is an acronym for simple agreement for future tokens. There was no equity to buy. The SAFTs all converted into tokens on mainnet launch on September 1st.

CR: Ah got it. And how much did you raise with the token launch?

AJ: We didn't raise anything with the token launch. We had two SAFTs, about a $5 million SAFT for the seed round and $20 million for the Series A. And then when we went on mainnet, we just minted the token. That was not a fundraising event.

CR: Oh, I see. Okay. So you just distributed the token to your investors and your users of the platform.

AJ: You got it.

Difference With Web 2.0

CR: Got it. Okay, cool. So how do you think the token changes things, relative to Upwork and Fiverr? What are the initial lessons that you're seeing? Have the dynamics in users and companies changed at all?

AJ: Great question. It's been a crazy few weeks. The most surprising thing has been the absolute enthusiasm and fervor around governance. We always imagined this would eventually be the case, but we've got this pretty active community that cares a lot about the future of the Braintrust marketplace, because they make their living on it. They're the talent that pays 0% fees and gets access to amazing clients like Goldman Sachs and Nike. People that quit their corporate jobs to freelance for a living. And they are now coming to rely on Braintrust for much better income than they could ever find on Fiverr or Upwork. And so they're such different animals. Like on Upwork you're in this race to the bottom fee wise, right?

“The most surprising thing has been the absolute enthusiasm and fervor around governance… we've got this pretty active community that cares a lot about the future of the Braintrust marketplace, because they make their living on it.”

Because there's no vetting. Anyone can bid on anything. There's a lot of spam. And then they're just trying to disintermediate. A lot of talent are just trying to get a client, win a job and pull them off-platform as soon as possible to avoid that rake. And so that's bad for the clients. Then it gets a little scary. It's bad for Upwork, and it's not great for a competitive environment. It becomes very not market-driven. And so removing that whole process by keeping things on-platform and very transparent, no-rake, makes transacting and building reputation a much better experience. And two then it's the direction. The users of Upwork and Fiverr have no say over those products or those networks or the rules. You listen to the earnings calls of those companies. They're public companies. If you listen to their earnings calls, all they're talking about is how they're going to increase the rake and make more money, and that's not good for talent. And so it's just a different animal. Web 3.0 is so the opposite of web 2.0.

CR: How many freelancers do you have right now?

AJ: I pulled my stats this morning here. We have several different user types. So we have almost 83,000 registered talent accounts, about 3,400 of which have been approved by the community to actually bid on client work. And that part is important because in order to attract and retain big clients like Nestlé, Nike, Goldman, they need certain types of talent and they need vetting. They come here to be pre-vetted otherwise if they just wanted unvetted people they would just go to the resume pile in their careers inbox. And so the community does the vetting for them and actually earns tokens in exchange for that vetting. So it's an interesting part of our token economy. So about 3,400 approved. We have something like 7,600 non-zero Braintrust wallets, and then all those folks are serving about 490 clients, NASA, TaskRabbit, Nike, NextDoor, Nestlé ,Porsche. I mean, just big, big names that have a lot of demand for these skills. And those folks have generated about 1500 jobs on the platform. Our average job size is $67,000 now. And that number goes up every week.

“Our average job size is $67,000 now. And that number goes up every week.”

CR: $67,000?

AJ: $67,000. By the way the average job size on Upwork, when they went public, just from their S-1 was $500. And so when you lower the rate to zero, you enable a whole new class of transactions. You actually grow the market. So to say, Braintrust competes with Upwork and Fiverr is actually not accurate. We actually have much more valuable jobs, more ongoing stuff. It's not logos and websites. It's SaaS apps and machine learning systems and data warehouses. So $67K average job size. And then the network has processed just over $22 million worth of client GSV. We call it growth service value. That's just clients hiring talent. So it's growing 26% month over month, on GSV. So we're past the white paper phase with this one, it's actually a real network.

“It's not logos and websites. It's SaaS apps and machine learning systems and data warehouses. So $67K average job size.”

CR: That $22 million of value generated, that's the amount of money that clients are paying freelancers? Over what time period?

AJ: That's correct. Since inception. I think we started counting in July of 2020.

CR: Okay. Wow. And before I go on to the next question, how are you able to charge like lower fees? Because you're making that an important distinction versus other talent networks, but I still don't get exactly how a token enables you to pay lower fees.

AJ: Yes. So it's really the crux of the ownership model of the network, right? So you want to use Microsoft Windows, you have to pay Microsoft a license fee. If you want to use Ubuntu, Linux or some other open source version, it's free. And there is no business model with Linux or Android, right. It's like anyone can take it, it's open source software, it's a public good. And so the existence of that public good, this is why Google open sourced Android, enables the Android ecosystem, which is now what, 80% of connected devices. And so a lot of companies benefited from the open source of Android, namely HTC, Google itself, which makes a nice phone, Motorola, blah, blah, blah. And so similar here, right. Braintrust, the protocol is open source.

Anyone can use it. It was created as a public good by the initial core teams. And it exists to benefit the talent and the clients that are ultimately, owning and controlling it. And so it was designed to be non-profit. So it's for-profit entities underneath could do better. So Android is non-profit. It's open source, but Google is very much for-profit. And so it's very similar that way. So Braintrust is just a network. It's a set of smart contracts and software. There is no company that owns it. It doesn't need to generate a profit, where would the profit even go? And so it's the for-profit entities that help build and maintain and grow Braintrust to help build their businesses which are really the ones driving the protocol forward.

“Braintrust is just a network. It's a set of smart contracts and software. There is no company that owns it. It doesn't need to generate a profit, where would the profit even go?”

Tokens’ Impact on Open Source

CR: I see. Okay. And then you run one of these for-profit companies as well.

AJ: Freelance Labs. Yeah. We're just a little dev shop in California. We have a couple marketing people, a couple of token economics people, a couple of sales people, we are one of many, many entities contributing to the network.

CR: And how does Freelance Labs make money?

AJ: We build software. I've been a software developer my whole life as a freelancer. And we service clients like anybody else.

CR: What software are you building for Braintrust?

AJ: We built the core protocol. So we've built other projects that are unrelated to Braintrust and even to blockchain. It's like my little software dev shop basically. But we are contributors to the token economics, like how the token is designed and all that stuff, for the Braintrust protocol.

The actual development of the Braintrust protocol has actually been done by two of the other core teams, who are full-time dev shops that also contribute to building the protocol. And that's one of the reasons you raise a little bit of venture money upfront is so you can kind of bootstrap the construction of the protocol. So it's not all just done for free.

CR: Right. So is the business model for contributing to Braintrust that you then earn Braintrust tokens?

AJ: Yes. Anyone can contribute to Braintrust. The most common way to do it is by being a Connector. Like I mentioned earlier, create a Connector account, get your code, start referring to talent clients and start earning tokens. So that is the primary way. And another way is, some people are just contributing because they're passionate about the project and they make their living on Braintrust. And they like the fact that they can just pull clients off, do jobs and not pay marketplace fees. So we have some of each.

With tokenized networks you almost have the best of both worlds. You have commercially minded people, who will do things for tokens or whatever. And then you have the open source movement, who are doing things because they believe in supporting the public good. Before tokens, the open source movement was people doing stuff because they believed in it. Like Linus Torvalds who invented Linux. I don't really think he made that much money off of it. Right. It was Red Hat that ended up making a lot of money off of it when they commercialized it and closed sourced it. Tokens bring the best of both worlds.

“Before tokens the open source movement was people doing stuff because they believed in it.”

CR: Okay. And then the 10% that is charged to clients, where does that go?

AJ: That goes to the node that brought the business in. Because it's not, there's not no cost to onboarding a Nike or a Goldman. You have to have a couple people helping you out. You have to have business insurance, stuff like that. So the 10% is meant to cover the node's costs. But I'll tell you, there's been an interesting thing that just happened this morning. So we're kind of breaking news here Camila. There's been some governance chatter around proposing a change to the protocol that actually has some of that 10% fee, that's collected in cash, go to buy the Braintrust token on the open market and send it to the on-chain treasury in order to pay rewards, fund more bounties and grants and foment at the ecosystem. And essentially take some of that revenue that the node is collecting and put it back into the community through purchasing the token. And so that's an interesting idea. It'll go up for vote here probably, eventually we'll see how it does.

“There's been some governance chatter around proposing a change to the protocol that actually has some of that 10% fee, that's collected in cash, go to buy the Braintrust token on the open market and send it to the on-chain treasury”

CR: So wait, the nodes were the clients, like the companies in the network, like the Nestlés, the Porsches.

AJ: No, those are just clients. They don't care about blockchain. They're just here to hire talent. So let me walk you through an example, that might be a helpful illustration. So let's say Nestlé hires somebody to do a job they contracted for a hundred thousand dollars. The job takes a month. Talent does a great job. Nestlé's happy. They sign off, the Braintrust software will issue two invoices, one for a hundred grand that's payable directly to the talent it'll ride through our rails, but it goes to the talent. Braintrust takes no fees. For the 10% fee, so in this case, 10,000 US dollars, and today that invoice is paid in cash and it goes to the node that brought on Nestlé.

CR: Oh, so that's the Connector?

AJ: It's actually the node in this case Freelance Labs or there's other nodes, Distributed Labs. There's other companies that help process these clients. So then, I'll keep walking through, and this is new stuff, this is a little bit complicated. Our white paper has a full diagram, how it works if you want to check that out. But so the 10,000 gets paid as the fee. The protocol then looks at that invoice and says, oh, okay Nestlé hired Camila to do this work. Who referred Camila to the network? Oh, it was so-and-so. Alright. Give so-and-so 1% of the value of this in payable and BTRUST tokens. So Camila's wallet automatically gets some tokens. Oh, who referred Nestlé? Oh, it was this Connector.

Oh, pay the Connector's wallet some percentage in the form of BTRUST tokens. And the way the economy works is like the talent made a hundred percent of their rate. The node got some cash, some of that 10%, for the costs of bringing the business on, to cover their costs. And the Connector got her piece for making the introduction and whoever referred the talent in this case got her piece as well for making the connection for referring Camila. And so that's what keeps the flywheel moving. The proposed change here to the protocol, I believe, is to have that 10% cash actually buy tokens. So the treasury can get replenished. Because right now all of these rewards are just being paid out of treasury, which could eventually run dry.

CR: Got it. Interesting. How many nodes are there?

AJ: There's six operating nodes right now. And basically the community just votes to add more of them.

CR: Okay, cool. I mean, still a pretty small network. But what does it take to be a node?

AJ: You just got to bring business to the network. You got to bring clients in and have those clients understand Braintrust and help process the business. The nodes are the companies actually collecting the money and making sure clients are satisfied.

Getting Non-Crypto Clients

CR: Okay. And this is what I think is really interesting about this Ethereum-based protocol, is that you have huge names involved, and very big non-crypto native names. And I think that's been a bit of a struggle for Web 3.0 projects. It seems that much of DeFi, NFTs, Web 3.0 in general, it's just very endogamic. And Defiant included, it's like we all live in this bubble and talk to people in this bubble and cater to crypto-native projects. And you stay with projects around DeFi. It is still very niche. But at Braintrust you're here kind of bringing on these huge Fortune 500 companies. So how was that process? How did you do it? How did you manage this scale?

AJ: It's a good point. And it's funny, I think maybe even the first time you and I met, and this was a while ago. And you're like, ha, you got actual users and real revenue and real customers. Why have I never heard of you? And it was a fair question. It was probably like six months ago. And the reason is we decided to build a viable user-owned network with all of the attributes of a Web 3.0 Network, meaning owned by its users and thus very low fees. That's a better business proposition, bar none. And so we decided to go to market, off-chain, with that value prop and build liquidity first. And when we say liquidity, I mean, Porsche, Nike, Nestlé, hiring talent, engineers, designers, developers.

“...we decided to go to market, off-chain, with that value prop and build liquidity first. And when we say liquidity, I mean, Porsche, Nike, Nestlé, hiring talent, engineers, designers, developers.”

And so we did that for two years, basically off-chain, proving that we could make it work. Whereas a lot of projects will have a clever idea for decentralized network, decentralize, build everything on-chain from day one, and then be like, hey, like we built it. Where are they? It's just not how it works. And so we spent a long time building this network off-chain and then moved it on-chain in September. And it's like we already had this huge flywheel spinning. And so like now Goldman's in crypto and they don't even know it. They actually do know it. They're actually super savvy, but like Nike is in crypto now. And they may not be fully aware of that. Nestlé. Because they don't really care that they're in crypto. They care that they're hiring people on Braintrust that they could never get to come into their offices.

“Nike is in crypto now. And they may not be fully aware of that.”

Like full stop, no way they get these people by their own words. They've been quoted as saying that publicly. And so the power of crypto here is to give what was extracted as a huge margin by a Fiverr or an Upwork, compress that margin, give that value back to clients and talent. And that's the whole point of Web 3.0. Right? Now all these folks are in crypto. They don't really care that it's powered by crypto. Just like you don't care that your iPhone is powered by 5G. I don't care. It just works. 5G is better. Great. But funny enough, one last point on that, we actually have one of our more popular clients on Braintrust is Solana, Solana Labs. They're hiring engineers left and right on Braintrust. So we're very happy to be able to serve the crypto community as well. But yeah, like 95% of the GSV is brand new money into the crypto world.

User Behavior

CR: And how is onboarding like for all that talent who is getting Braintrust tokens and participating in governance and where do you meet? Are they on Discord? Or where's this governance happening and what's the onboarding been like?

AJ: For sure there's two important points there on that topic. So the first one is UX. UX in this space has just been tragic. MetaMask has come a long way. I actually think it's a wonderful tool now, but that was not true, until very recently. And Coinbase is great and whatever. But interacting with most DeFi protocols is really a phenomenally challenging experience. It's just not ready for the mainstream yet. It will be, and it's getting there. So we decided to build a wallet that was really easy. We have a Braintrust platform wallet that when you earn tokens for making a referral or writing a blog article, whatever it is, whatever you've done to contribute, you'll earn your tokens on the platform wallet first.

“...interacting with most DeFi protocols is really a phenomenally challenging experience.”

And that's just as simple as, it's off-chain, you're creating an email address and a password. And then you can withdraw those tokens, using any ERC-20 compatible wallet. You can withdraw them to MetaMask or the Coinbase mobile wallet or whatever. And now you're participating. You've got your tokens. Now you can propose things on Snapshot. Now you can vote on-chain, but with your tokens. And then the second part of your answer. So we actually polled our users six months ago, 87% of our users had never touched a token before. Bitcoin, Ethereum, all the way on down. So almost 90% of the folks that are coming into Braintrust are new to this space, which we think is really cool. And then the second piece is where all these folks meet. Mostly Discord and Telegram. We have a hundred thousand users, roughly, in each of those areas. That's where the governance happens and all the other great stuff.

“...we actually polled our users six months ago, 87% of our users had never touched a token before. Bitcoin, Ethereum, all the way on down.”

CR: How many of your users have actually cashed out their tokens into a Web 3.0 wallet?

AJ: It's something in the order of less than 1000 people.

CR: Ah okay so still a ways to go.

AJ: Well, that was really surprising to us. I mean, we didn't tell anybody to withdraw. We hold users tokens at Coinbase. So it's very safe. It's insured. We didn't tell anyone, you have to withdraw your tokens. We said, if you want to, it's fine. Here's how to do it. We actually, we actually hold little tutorials. Someone in the community built a little tutorial on how to do it. Because it's scary if you've never withdrawn a token before. So we certainly don't care whether people store them with us or store them on their own. We have something close to seven or 8,000 token holders. We were shocked that we didn't have more people withdrawing and selling in the last few weeks.

CR: Okay so 7,000-8,000 people hold Braintrust tokens through your own proprietary wallet. And those tokens are custodied in Coinbase.

AJ: Coinbase or Anchorage. We partnered with both.

CR: And then when those users hold Braintrust tokens in the Braintrust wallet, can they still participate in governance then? Or do they have to withdraw their tokens?

AJ: They can propose things, debate things, all the good stuff that happens in Discord. When the rubber meets the road to actually vote with tokens, today you have to do it from an external wallet, like MetaMask. Actually a feature was just proposed in governance to upgrade the protocol so people can use the platform wallet and vote from there so they don't have to pull off to MetaMask. Very intuitive question there.

CR: Okay. So still a ways to go, but pretty interesting that people are interacting with crypto, even if it's from a custodial wallet. It's a potential bridge into Web 3.0.

AJ: I think so. That's actually a really good way to put it. We don't want to force anyone on-chain. We don't take a position either way. It doesn't matter to us. We want participation. That's something that I thought would be tepid at first and I was just dead wrong. People care a lot about this thing. And I have pretty intense debates and whatever. Obviously we don't want people to lose tokens by doing something wrong or whatever. One of the other nodes built something called Braintrust Academy. We didn't even know about it. It's just this totally different platform from ours, but it's an academy that teaches the safety crypto 101. It's an ecosystem academy. This woman Shirley built it. And it's been awesome. It's been a great resource for all the people that are new to the space.

“We want participation. That's something that I thought would be tepid at first and I was just dead wrong. People care a lot about this thing.”

Unlocking Community

CR: Very cool. It's interesting that you were surprised by the amount of engagement. A hundred thousand users on discord and telegram. That's huge. What have you learned about building and nurturing an engaged community?

AJ: A couple of things, one is, be honest about what you're doing. We've been building in public here for, I guess the whole 2021. And building in public means for us, like every time the core teams get together and debate something, either the debate itself is recorded and put on YouTube or the output of the debate. It used to be monthly and now it's weekly. And pretty soon we're going to have a dashboard that's all real time stats. Those stats, I just read you, some of them are public information and the rest, I just took off our blog. But instead of having a weekly blog, we'll have up to the minute, or I guess a 24-hour lag dashboard. But transparency is the killer feature.

So if somebody screws up or there's a misstep, people understand. I'll give you an example. People always come on podcasts and talk about how smart and great they are and how great everything is going. And I'm happy to do that. I'll just share a story of something that was less great that happened. So we had, in the Braintrust Academy, some courses that would pay you tokens to complete the course. And when we had a token that had no cash value, you were just paying people 50 tokens, and then they can someday vote with them. And we just didn't think of it.

I mean, it's a different node, different companies. It wasn't under my purview. But then the CoinList thing happened and all of a sudden those tokens were super valuable. And armies of bots showed up just attacking the academy and trying to drain tokens. And fortunately the security measures worked and nothing was lost, but here we're like, wow, incentives matter. If you're gonna pay someone 50 tokens, and the tokens were $10, you're gonna get a lot of people showing up for that. So it's a lesson in intelligent incentive design. And on the flip side, we had some folks in the community that were being paid, you know, 75 tokens, an hour to do things to help. And then all of a sudden that became like, oh that's a thousand bucks an hour, you know?

“But then the CoinList thing happened and all of a sudden those tokens were super valuable. And armies of bots showed up just attacking the academy and trying to drain tokens. And fortunately the security measures worked and nothing was lost, but here we're like, wow, incentives matter.”

And so we honored it. But we were like, all right, we got to reset our incentives here. You're going to get mistakes like that. And so we were just really open about it. Like, hey, we're not perfect. And the community has just totally embraced that. We just have these phenomenally, genuinely great people that want to help and believe in what we're doing. And the network exists to make freelancers take more of their income home. So it's hard to not like that mission. But that's it, through the good and the bad, be open about it.

Web 3.0 Model

CR: After this experience, do you believe that token incentives and governance and user-owned applications on protocols, do you think that's something that can be extrapolated to any industry? Do you believe this will just be the way that things work in the future? Or do you think it'll be on a case-by-case basis? Like some companies will adopt this model, others will stay closed and tokenless. How do you see things evolving?

AJ: I love this debate, this topic. And it really is a debate now. I think some things are better decentralized and some things are better centralized and that might be unpopular with some of the crypto audience who think really everything decentralized is the ultimate future. I just don't believe it. Practically and morally, I guess. So on the decentralized side, any two-sided marketplace operator that is extracting more value than it provides to its community is going to get whacked by this Web 3.0 Model. And I'll give you a spectrum. On one end of the spectrum, there's Web 2.0 marketplaces like Airbnb, which I think provide just as much, if not more value than they extract via fees. They have great reputation, safety management, great insurance they offer blah, blah, blah.

“So on the decentralized side, any two-sided marketplace operator that is extracting more value than it provides to its community is going to get whacked by this Web 3.0 Model.”

It's a really great experience. On the other end of the spectrum I think you have the gig economy, which, I think the major innovation of the gig economy is tricking people into working for five bucks an hour when they were making 12 bucks an hour at their last job by hiding the cost of servicing your car and gasoline and no benefits and all that. And so that's why, on those marketplaces, at least half the users hate the operator, the drivers on Uber, the dashers on DoorDash, the restaurants on DoorDash. It's a bad business model if half your users hate you. And so the government's not going to fix that, right? These are tech-enabled market-driven problems. And I believe market-driven solutions through Web 3.0, and DeFi and user-owned marketplaces will fix these problems.

So that's where you're going to see a lot of Braintrust-type models overtake the gig economy. There will be a rider and driver owned network. There will be a dasher owned network, no question. And those will be tokenized. Things that could maybe academically be better if they're decentralized, but likely never will be? Social networks. Facebook's not going anywhere. They're absolutely not going anywhere.Even as tragic as all of these stories are and all the whistleblowers and all that. And as much as the crazy senators are going to capitalize on destroying Facebook, it's not going anywhere. And, if it does someone else will pick up the slack. The Snapchats or TikToks of the world or Twitter. And so it's all about curation there. Spotify is another one, right? Spotify curates music. It's not that there's no room for Audius. Audius makes perfect sense, but Spotify does this amazing job of figuring out how to deal with the record labels, providing a great product experience and it's a centralized service. Why not? And so that's my view on things.

“Things that could maybe academically be better if they're decentralized, but likely never will be? Social networks. Facebook's not going anywhere.”

CR: Don't you think though that for social networks and Spotify and YouTube, do you think curation can also happen in a decentralized way? Like in the same way that you have your own curators vetting talent on Braintrust? You can have creators on a decentralized network, classifying playlists, and making a decentralized music streaming platform work in a decentralized way and same thing for social networks and other social media platforms.

AJ: A hundred percent. I think the difference is where the money and the interest come from. So having decentralized curators of content, longer form blog posts, podcasts, things where people are really opting in with their time. A decentralized economy makes perfect sense because you can get the incentives right. You can tokenize incentivize the creator, you can token incentivize the curator. Creator and then curator, and then incentivize the audience to create a positive feedback loop. Which may be as simple as page views and getting through the article and time spent. And then you can tokenize the editorial process. And there's an amazing way to create an ecosystem around that. That doesn't make any sense on Facebook to me. They make more money by serving more junk and then serving ads against it. How does decentralization fix that? It's unclear to me. I could be totally wrong. But to me the garbage on social media is far different than something like The Defiant or The Information or the Wall Street Journal. It's just a different animal.

CR: I don't know. I think I disagree with you on that point. I really hope social media can decentralize. Media for sure. We're exploring that at The Defiant. And I think that makes a lot of sense, but I think social media does too. I think that there can be incentives placed correctly so that you can get all the junk that people want, unfortunately.

AJ: Well, listen Camila, I hope you're right. Because I'm not a Facebook user or on Instagram or any of that stuff, but I am a big YouTube user. And the YouTube algorithm is phenomenal. I subscribe to you and like 10 other folks on there. And I watch that content and YouTube knows what I want. It knows what I'm looking for. And it serves more and more and more. I love that. But they're so heavy handed. They censor people. They're kind of a bad actor as far as essentially controlled group goes.

CR: And especially with crypto, like they've been horrible with crypto. Like they just banned Pomp. He just put a tweet out saying that YouTube deplatformed him because he was publishing dangerous content. And I don't know if you've seen Pomp's channel, but he's all about teaching about Bitcoin and financial education. The opposite of dangerous.

AJ: I guess I haven't looked at it in awhile. But yeah he's got his two brothers on the show. It's kind of a funny show. But that's exactly what I'm talking about. It's such bullshit censorship by these tech companies. And I'm very cynical about the government's current takedown strategy of Facebook. The government and the old media just don't like how much power Facebook has. It's such bullshit that they actually care about what's on there and that it's interrupting democracy. I don't buy it for a second. And YouTube, what does YouTube think they're accomplishing? It's just five people in San Carlos making decisions. Same at Twitter. That censorship thing really pisses me off. And so look, I'm with you. I hope this gets figured out. It's hard though. It's harder than Web 3.0.

“The government and the old media just don't like how much power Facebook has. It's such bullshit that they actually care about what's on there and that it's interrupting democracy.”

CR: I'm optimistic on this. I know that people are working on it. I we'll see Web 3.0 fueled social media, but for now I'm glad we're seeing a Web 3.0 fueled talent network. It was awesome hearing all about how that's working out. And your view for work in the future. So we've come up to the end of the hour. This was an amazing chat. So interesting. And I'm glad to expose my listeners to Braintrust. Like I said, it's the biggest Web 3.0 project that you've never heard of, probably.

AJ: Well I'm a huge longtime fan of your show and I love how you just turn these protocols upside down and inside out. And we're so happy to be able to talk to folks that are in traditional DeFi, DeFi now so well established that we can say traditional DeFi. But we think Braintrust and things like Audius and these other user owned networks are the next extension of that. You know, Uniswap is a protocol that matches buyers and sellers of tokens and Braintrust is a protocol that matches people who do information work and people who need it done. It's kind of the same thing. Just a different matching engine.

“Uniswap is a protocol that matches buyers and sellers of tokens and Braintrust is a protocol that matches people who do information work and people who need it done.”

Share The Defiant

The Defiant is an information platform focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Spread the word and share!