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Hello LPs and welcome to a very, very special episode of the LP show. Two varies. Two varies because not only is it special because
episode and our guest in and of himself and themselves special. But I think this is the first episode we're recording with a kindergarten ventures portfolio company. So disclaimer, kindergarten ventures, the small fund that I am a GP in is a very small investor in brain trust, but we are so excited to share a little more about the company and to have Adam Jackson, the CEO on to talk about brain trust marketplaces, the
crypto, the intersection between all of those things. Well, Adam has been doing things on the internet for a long, long time. But immediately prior to Braintrust, you were the CEO of Doctor on Demand, which we can talk about a little bit. And now is the co-founder and CEO of Braintrust. Welcome to the show. And thank you for joining us.
Well, thank you guys for having me. I've been an LP subscriber for a little while here. So fan of your work. And I have to ask, can you tell me anything about, and sorry if you've already said this before and I missed it, the naming behind Kindergarten Adventures? Because I have two kids in kindergarten, twin boys. There are a lot of things, but helpful with building this business is not one of them. And the two of you just in this short time, you've been involved in
I have been super helpful with brain trust. So is it like an ironic thing? Like we're going to help as if we're kindergartners? This is great. I don't know that we've ever told the story anywhere before. No, it does not have to do with current kindergartners. Nat Manning, my partner in kindergarten with the other GP with me, we met when we were in kindergarten back in Pennsylvania.
So that is the origin. And actually, he's a full-time founder. This is very much like a side thing for us. And we were debating what to name the firm. And we were debating between Kindergarten Ventures and sort of a fun nod to our history and Nat and David's Angel Fund. And we're like, oh, just go vanilla. And both of our wives were like, guys...
This is supposed to be fun. Like, you should just call it kindergarten. Hence the name. Well, it's a very endearing name. Having two kids in kindergarten, it's a pretty special time of life. So anyway, glad to have you guys on board. Ah, well, we're so excited. Let's just dive in. So...
Brain Trust is one of the first and certainly the first at scale that I know of user owned marketplace built on the blockchain and enabled with crypto. I think this is fascinating because I remember, you know, for years being a, you know, quote unquote marketplace investor, people talking about this and this being a, you know, an idea and thinking like, that's crazy what that actually happened. And here it is. So can you define what a user owned marketplace is?
Yeah. I'll rewind for a little bit of context too, to help explain why a user-owned marketplace might be a good thing and not
a disaster. And it's still too early to tell what this one will be, but so far so good. So web-enabled marketplaces were like the big innovation of the 2000s, 2010s. eBay is probably the first one where you can create a trusted place to transact, connect buyers and sellers electronically, and eBay and PayPal, and then on to Yelp, and then the gig economy, Uber, DoorDash, et cetera. The playbook there really has been
Then you can jack up your take rate. Yeah.
Yeah. And most never break out, right? Despite all the money raised, most never get there. And if you are lucky enough to get there, on the other end, you've raised probably billions of dollars and now it's time to pay those investors back, right? And rightfully so. Look, they were the risk capital. They should get a return. And so where does that return come from? The rake, right? And so that marketplace operator is a for-profit corporation. And that for-profit corporation, their fiduciary, their whole reason to exist is to
take as much of the transaction that they facilitate for themselves in the form of a fee as possible. What that does is it creates dramatically misaligned incentives. I think it maybe is even a little worse than that too. There's the incentive to increase the take rate when you reach scale. But I'm thinking about what like Uber is doing right now. It's not even just that. You're also incentivized to jack up prices to the buy side because then you're going to get a larger dollar amount as well.
Both. Absolutely. Yeah. If you're taking 30% of a pie, you want to grow that pie and grow the 30%. So you definitely do both. There's nothing wrong with that. That's kind of how the gig economy and these marketplaces have blown up into the giants they are. And I think they've provided and created a lot of value in some cases. And in some cases, I actually think they've been really just creative ways to make working class people work for even less money.
and have absolutely no say in the governance of those networks and in those businesses. So there's a spectrum of marketplaces that extract roughly as much value as they provide. I would put Airbnb probably on that end of the spectrum. So it's kind of an even exchange, but Airbnb may even provide more value than it takes. Who knows? They have insurance and trust and safety and blah, blah, blah.
And then there's the other end of the spectrum where they are extracting so much disproportionate value that one or more sides of the marketplace would essentially do anything they can to get the hell off the marketplace, right? And so Uber would be squarely in that bucket, maybe until recently, right? Prices have really gone up in the last few months on Uber. And now it's basically unaffordable for most people to use Uber. So
Okay, like maybe it's a luxury good now. And maybe that's more, I've heard of Uber drivers making 40, 50 bucks an hour, which is awesome. It's what they deserve. But- Or closer to home for you, you know, certainly Upwork, you know, five of those. Like if I remember right, those take rates are quite high. 25, 40, 45%. Yeah. And just going up, right? If you listen to their earnings calls, they just talk about how they're like, yeah, we're going to keep increasing the rake.
And so what that does is it creates this misaligned incentive structure, right? Between the folks who make their living on that marketplace and the operator itself. And because the operator is a for-profit company that must continue to grow, grow, grow. I'm sort of an engineer turned entrepreneur. I've been in Silicon Valley, you know, 16, 17 years. It sounds terrible when you say it out loud. And, you know, I've been...
as much a part of the problem here as anybody. I've built marketplaces in e-commerce, automotive, healthcare, and now talent, and invested in dozens more. And I sort of like realized, you know, a few years ago, I was like, you know,
There's got to be a better way to organize these things. So the users who make their living on the marketplace, instead of like ultimately becoming enemies of the marketplace operator, can be instead owners and part of the control and keep incentives aligned, right? And look, to be fair...
If Uber were going to do that when it started, like Uber couldn't give stock to 10 million drivers in 40 countries, right? It just doesn't work that way, right? But you can spread control of something globally with a token, a blockchain-based token. And so...
you know i was really got really into blockchain in 2016 and i was like you know bitcoin great it's awesome like hopefully that's the new hard currency or price gold whatever okay own bitcoin great like buy more whenever you can there's not much more to it right what else is there to do here what is there to do just buy more of it don't sell it right okay great anything else not really ethereum though is interesting right you got a touring complete platform where you can create tokens that in smart contracts you know that can represent
any rules you want. And then you can create this network and have the participants in the network control it. And so I was a full-time investor at the time I came up with this. I was thinking, or I was part of a firm called Cambrian that I helped co-found. And this was sort of an investment thesis looking for a team and there was just no one really doing it. So we thought, you know what? This whole idea of user-owned networks growing faster and being more valuable to their users is
It's a big idea. Why don't we just stand one up and just prove it, right? And so we picked what at the time sounded like an easy category, matching talent with clients, specifically tech talent with big clients. And so we wrote the paper for it and incubated BrainTrust out of Cambrian. You know, it sounded really easy. Here we are three years later, backsliding.
barely catching our breath. But yeah, I mean, that's kind of the big idea here. So to be clear, the marketplace now in this new world, we call it Web3, right? You'll hear that term a lot. How long have you been saying Web3, by the way? The term seems to have originated out of nowhere. Yeah, not long. Yeah.
I definitely didn't invent it. Let me be clear about that. Jesse Walden from Variant. Jesse's an early backer of Braintrust. We have been saying user-owned for a long time. Now, the confusion there, of course, is like ownership implies some right to profits or some dividend or whatever. And that's not what this is about. These networks are actually nonprofits. Like Ethereum. Ethereum is a nonprofit, right? Ethereum got its incentive system right where ETH is used to pay miners and
there's an ecosystem there that makes Ethereum work in a permissionless way. That's how Braintrust is set up too. That's how a lot of these other user-owned networks are. It's important to distinguish that, our model between something like a profit return mechanism where a protocol gets a bunch of returns from somewhere and then distributes them to token holders. That's the antithesis of what we're doing here, right? Our idea is create
software that can replace a middleman that's extracting disproportionate value today, like an Upwork or a Fiverr or whatever, and take that value that's currently being extracted and just give it back to the users in the form of low fees, right? So that's where the rubber hits the road here is instead of taking 25, 30, 40% of every transaction as a rake,
We take 0% from talent. So if you feel like you should make $150 an hour as an engineer, put that up there and you'll be in the marketplace there. And then we take a 10% flat fee from clients, which basically whoever brings the client onto the platform, we call them nodes in Braintrust.com.
Basically gets that 10% fee and it's meant to cover costs, right? Like whatever costs you incur on bringing an enterprise client on. So Braintrust, like the company, doesn't get that 10% in the form of revenue. It goes to the node that brought the client online. Exactly right. And even further, there actually is no Braintrust company. Braintrust is literally just smart contracts on Ethereum. There is no Braintrust Inc. Just like there's no Ethereum Inc., right? You have ConsenSys Inc.
which Joe Lubin owns. You have the Ethereum Foundation, which is a nonprofit that helps build tooling for Ethereum. We have similar things. We have actually like six core teams that from the start in 2018, 2019 got together to really just build this. Our little core team called Freelance Labs actually has no engineers.
I'm the only engineer and not even a very good one. So we have like our community does all the coding and that kind of stuff. So it's really like we kind of started it off decentralized so we wouldn't have to like contort ourselves later.
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I'm very interested in how you structure these types of things because everyone's doing it a little bit differently and there seems to be like a discovery right now, like a market discovery that's almost like price discovery on what the best structure is for these types of companies and it's total wild west and it's fun. But before that...
I want to go back to the centralized world just for a minute. Have you ever seen someone do it well where they have a 100-year view of their company? They're thinking, you know what? I'm going to create a lot of surplus of goodwill out in the marketplace for both supply side and demand side and keep the fees really low because I actually believe that is the way to fulfill my fiduciary responsibility of creating the greatest long-term value for my shareholders. Only one.
Who's that? Craigslist. Oh, interesting. I thought you were going to say Amazon, but... Oh, no. Amazon is so predatory. The way they channel conflict is totally insane, right? That is really bad. Yeah. I had no problem with Amazon until that. And it got proven and they got subpoenaed, Congress, all the lying. We had Brad Stone on after the Amazon Unbound came out. Brad broke it. Yeah, totally. I love Brad. He's an amazing journalist. He's the best.
I loved Amazon until they were proven and they were like, they lied to Congress about not doing it. Apparently like anyone can do now, but I say Craigslist because Craig Newmark is the only person I've ever met, Ben, who would fulfill that the first part of your question of like, hey, this is like the hundred year view. And like, we're here to like, cause he was disrupting newspapers.
Many newspapers were worse than gig companies. They were the ultimate chokehold on marketplaces and information. Newspapers used to be the best businesses in America. These companies had local monopolies and they would just churn out 70% EBITDA margins every year and just these cash flow geysers. Go to Hearst Castle.
newspapers built that place. Citizen cave, you know? Yeah. Craig's ethos was only charge in one category. That's
tech jobs in San Francisco. If you remember, you could post a tech job in New York for free. It was $75 to post a tech job in San Francisco. All the other categories were free. And that's how he built those amazing network effects. I think he's a self-proclaimed socialist too, right? He was not in it for profit. He would never sell it. He was not in this to maximize revenue. And that's why he always stayed private, right? And it's like he could only stay private. But if you have a publicly traded company in the middle of a marketplace,
There's no question what its motives are. The only other one that's worth a mention here is Chesky with Airbnb. Obviously, public company, but they've had their moments like we all do where we make the wrong decision. But, you know, that marketplace, like you don't hear about owners doing anything they can to get away from Airbnb, you know, and like when COVID hit and like all these things that had to be canceled, Brian went to the balance sheet.
and paid those owners off, right? And made them whole rather. There's a lot of good culture that coming. I think that's one of the marketplaces that extracts as much value as it gives back or gives back more. And therefore I think will be one of the last to be disrupted by Web3. Whereas like these food delivery networks are totally insane. These things push restaurants into negative margins on their menu items. They abuse the dashers. In 2019, DoorDash closed
collected millions and millions of dollars of tips and then booked them as revenue and stole them. Oh yeah, that was bad. You remember that? That was real bad. We covered that on the episode. It's morally reprehensible and frankly just bad for business, right? And so these kinds of extractionary networks that really just like punish the working class unnecessarily will be replaced by user-owned networks. It's just a matter of time. A lot of these remarks are like on the line of incendiary.
It's not in Sydney, but the way that you're positioning is you're taking a very significant stance that all these other marketplaces are effectively abuses of power, or at least abuses of the people that took a chance on them to join their system, and there has to be a better way. Have you sort of always felt this way? I think you're a several-time marketplace entrepreneur, or has this been this new realization for you? I've always felt that if something is good for business, but your customers hate you,
There's opportunity there for competition. Now I get called a socialist, like somebody from Bloomberg called me a socialist. Like, are you fucking crazy? I've been making money my whole life. Like I'm a red blooded red meat entrepreneur. I helped start a hedge fund. I am not a socialist. When companies, when
the marketplace operators or any company like is abusive to their customers to the point where like the customers are like trying to pass laws to change. Like I think there's opportunity. I don't believe in the government regulating those things. I think the AB5 here in California was complete, unwell thought out, corrupt horse shit, just like everything else the state does. But these are market created problems that markets can solve. And so if you operate a marketplace and half your customers hate you,
That's an entrepreneur's dream, right? And so the dream here is new technology, blockchain, powering a new organization model, user-owned, user-controlled,
eats away at these central rent seekers, right? Who are just disproportionately extracting value. Look, without blockchain, there's no way to compete with these guys, right? Like there's no one more operationally excellent than DoorDash, right? You have to really tip your hat to them. It's an amazing app, incredibly well-run business.
And Uber and Amazon and all. Yeah. All of them. If they're being abusive to a major part of their marketplace, then the door is open for disruption. I'm ashamed that I didn't also think of Craig Newmark as the one example, but he was a
was and is such a black sheep, right? Like he's a socialist, like an avowed socialist. So that's why Craigslist was built the way it was and still runs the way it does. I feel like everybody in Silicon Valley just kind of looked at Craigslist like, huh, okay, well, that's interesting, but I don't know what to do with that. But now with blockchain, there is this other way. So I'm wondering, can we specifically talk through on Braintrust how the economics work?
and why this problem gets solved with them. Absolutely. So user-owned networks, Web3, Braintrust, is all about keeping incentives aligned through...
Making sure the folks that want control that care about the rules of the network have control and have earned it in a fair way So I'll talk about like what that means on brain trust. So so the brain trust token to governance token We forked compound, you know, they built a great governance system and it's one token one vote and
And the only way to get the brain trust token is to help build brain trust. We did sell a small portion around 20% to early backers, kindergarten included. You know, to your point about traditional marketplaces, Web2 marketplaces raise tons and tons of money. How much money did you raise total? It was not a lot, right? We raised 30 million. We have 25 of it left. We have, you know, six core teams that represent maybe 30 individuals, right?
that are like kind of do this for their full-time job. And then we have tens of thousands of community contributors that contribute in some small way or some larger way. But outside of the small amount we've sold,
The only way to get the token is to help build the network. And so that could mean dozens of things. It could mean like writing copy for us or building UI or committing code or writing a smart contract or auditing those smart contracts, all the things. But more importantly, and sort of more scalably, it means, you know, what are the two most important parts of a two-sided marketplace? Referring and curating supply, onboarding demand, generating an onboarding demand. And so in BrainTrust's world, that is refer talent, help screen those talents.
Make sure they're not spammers and whatever, criminals or whatever. On the demand side, bring Nike over. Help onboard Nike. Nike's not going to self-serve, right? Goldman Sachs, huge client on BrandTrust.
Bring Goldman Sachs on. So these are all clients actually were brought in from community members and will be rewarded. It's a decentralized sales organization, essentially. That's 100% what it is. Now, let me be clear. We didn't go zero to one totally decentralized. I hired a couple of sales guys, which we still have, but we have three of them. And we have hundreds of what we call connectors who are just folks that come in and make introductions.
And so here's the way the economics work. Let's say, David, you come in as a skilled Java developer, and then you create your profile on Braintrust, and then you land a gig with Goldman Sachs. And Goldman, I'm using this example specifically because Goldman has like an insatiable demand for Java developers. So if you're out there listening and you're a good Java developer, come to Braintrust and work for Goldman Sachs. You can do it remotely. It's amazing. And they pay well. And quick sidebar, you can do it remotely. They pay well.
And you can also work for other people too at the same time, right? Which is amazing. I mean, that's the whole point, right? It's like work when you want to, from where you want to, get 100% of your market rate and do it whenever you want. Like if you want to work six months and travel six months, where's your place to do that? Good luck doing that at Google. Or Upwork. Or anywhere else. Also, I can't let you get away with make 100%, make 90%.
Ultimately, even if you're taking a 10% fee from the buy side, like it's still 10% of what the buyer's budget is to accomplish this task.
Well, the buyer's budget is set by what the supplier's rate is. Ben, I promise you, I'm going to checkmate you on this one. So get ready. I imagine you've thought about this. I get the question all the time. It's a fair one. But let's say David's rate is $150 an hour. He's like, look, that's just my rate. And I want $150 an hour. So Upwork's going to take whatever, $30, $25, $30, $40, whatever their rate is. At Braintrust, David gets his $150.
But then another 15 is tacked on and paid by the client. Sure, but that means the client's willingness to pay was 165. Well, then David should have changed his rate to 165. And then they'll be paying... Look, I'm not saying it's not deserved. There is literal economic value in matching supply to demand, which is the whole thesis of the company. But you are entitled to a cut of what the...
total customer's willingness to pay is by providing that service. Absolutely right. I mean, like we got to keep the lights on, right? That no one's getting rich off the 10%. It's meant for, you know, whichever node brought the business to the network. Well, that's the other thing too, is that's a little bit of a wrinkle here too. Ben, on the one hand, you are totally right. Like Goldman is paying more than $150 an hour for this, but...
Most of that incremental money is not going to brain trust, right? Remember, brain trust, it's just a smart contract, right? Like it goes to whoever brought Goldman in.
And it goes to like pay for whoever onboarded Goldman, whoever referred Goldman ultimately is probably going to be compensated somehow through that 10%. That's something that's being discussed right now. These things don't form themselves, right? And so there is some cost there. And so that's where that 10% landed. And look, who knows, maybe the community will decide someday, maybe it should be 5%.
Maybe it should be 11%. But we do try to lead with like, look, if David says his rate's 150 and that's what he wants to earn, then that's what the marketplace will represent him at. Clients willing to pay, different story. It's a fair point, Ben, but like the money is taken from the supply side and other networks. You're coming at it from a very pragmatic angle of operating the system. I'm coming at it from like a theoretical macroeconomic perspective. Yeah.
Yeah. Yeah. And you're absolutely right. So David gets the gig. Let's see, he bills out $150,000. You invoice through our system, through BrainTrust. Goldman then gets two invoices. One for $150,000. It's all done in U.S., right? We haven't touched the token yet. That $150,000 is paid, you know, however Goldman wants to pay, usually U.S. dollar wire transfer.
Goes through whatever node brought their business to the network. And then David gets an ACH for $150,000. It might be $149,998 or whatever. You might pay a dollar ACH fee or whatever. But there's no network fee. There's ACH fees. There's ACH fees. They'll get you. And then the second invoice Goldman gets is for 10%. So $15,000. And that $15,000 goes to the node. Now, there's some discussion there.
on the platform, this is like kind of early, has nothing's been voted on yet. But in our governance forums, there's been some discussion around, you know, maybe some of those fees should be paid in our token, in the Brain Trust token. So when whoever referred Goldman gets paid her reward and whoever referred David gets paid her reward in Brain Trust tokens, today those come out of treasury.
in the future, like that could deplete treasury, right? So like maybe there should be some recycle function there where client funds, you know, clients should have to pay some in token so the tokens recycle. So that's something that
is being debated and probably will be voted on by the community. That's the token economics. And so David gets his full rate. He's going to get some tokens, usually as a reward for being a good citizen, right? Like, hey, David, you got your first invoice paid from Goldman. Congrats. Here's whatever, 100 tokens or whatever it is. And then you use those tokens to vote. And
And propose new changes or vote yes on changes or vote no on changes. And the governance piece is always a funny, because like skeptics will say like, well, like, you know, nobody votes their Facebook shares, right? And, you know, like sure wouldn't matter if they did, because only one guy's vote matters over there. You know, that's true. And look where that got us, right? And so, you know, I would say I'd go back to the DoorDash example of like, well, voting matters when you make your living on that network.
At the end of 2019, when the CEO of DoorDash said, you know what, we're going to steal those tips and book them as revenue. You can't do that on brain trust. He would have had to propose it to the community. Can we steal your tips? Yes or no. We have 72 hours. Right. And so that's the great thing about these user-owned Web3 networks is the rules, the finances, the fees we charge, they're written in smart contracts. And those smart contracts can only be upgraded by the community. Yeah.
Let's go back to the transaction for a minute. There is also this element of a, I don't know what the right word is, like an anti-take rate too, in that new tokens are getting created and distributed to the participants in these transactions. And as of today, as of right now, when we're recording one brain trust token is currently trading for 10, about $10 a token.
So they have value. How do you think about that? Like, so there's the economics of the pure transaction itself, you know, the rate that that my hundred fifty dollar an hour rate that I set and then one sixty five that Goldman pays and the node getting the difference and all that. But there's also this element, other element here, too, where value is being dispersed to participants in the ecosystem. Right.
This network was designed to make the token valuable because of its usefulness on the network. And that is the primary usefulness is governance, right? Proposing, voting yes, voting no. There's other features like bid staking where you can actually stake some tokens along with a bid. Let's say you were bidding along 10 other people in that Goldman example. And you're like, you know what?
I'm definitely gonna be the best person for this job. I'll stake a thousand tokens along with my bid and that'll signal to Goldman that if I'm a no-show bad actor, I'll lose those tokens. They go into escrow and it's like putting skin in the game, right? And so now of the 10 bidders...
Goldman's probably going to only look at people staking, right? Because they're like, oh, well, you got some skin in the game. I'll interview you first. And so, of course, you show up, you're a good actor, you get your tokens back. So you just use those tokens to build your freelancing business and build it faster, better. So that's just one example. There's other kind of creative uses for the token that are in development. And so the token's meant to be useful on the platform. It's not meant to just...
be sold, right? Like if there were no cash value ever for the token, it wouldn't affect the utility of our network token. It's kind of a wild concept. It's almost as if every employment agreement had a breakup fee associated with it, like an employee side breakup fee, where you're saying, I want to work here so bad that if it doesn't work out, not only do I stop working here, but also...
It's almost like a reverse signing bonus. And the opposite. Here's what I think is cool about being able to dynamically build these incentives or disincentive systems using the token is we're now in a talent constrained environment. And so it's actually like the opposite of what I just said is actually normally happening. Like,
The client can't get enough applicants. And so what we're actually going to release first, which is tested really well with the community, is what we call client staking, where the client will actually put up a
a number of, say, a thousand tokens and say, we're giving these away and we'll divide them equally among all qualified applicants, whether you get the job or not. So to attract applicants. To attract applicants. So it's like a signing bonus before you even sign with the goal being not get someone signed because there are obvious rewards there. But to get people to even, because look, it takes, what, an hour, hour and a half to propose a thoughtful proposal. Like,
So in a talent constrained environment, why not compensate people for that? So we thought, obviously, like the community thinks that's a wildly great idea. And so that's implementing as well. What's more interesting here is like tokens are a good way to incentivize people
filling whichever side of your marketplace is more constrained. So we have this referral engine right now. And I'll say it's not the most sophisticated thing in the world, but we're getting there. And the referral engine pays tokens for any time someone you refer starts transacting. So back to David and Goldman, let's say Ben referred David. As soon as David gets that invoice, one
1% of that $150,000 is going to be kicked out to Ben in the form of Braintrust tokens to reward Ben for bringing this valuable David Java developer to the network. And so this is what I was getting at. So it's not that that 1%, I, David, don't lose that. I get my $150,000.
it's in the then current equivalent value of brain trust tokens on top of it that Ben then gets. That's exactly right. Yeah. So this is, it's like an anti-take rate. Like you're like, you're inflating the system. I don't mean that in a bad way. Like you're inflating the system with every transaction that happens.
A lot of marketplaces have this incentive to disintermediate. Like, hey, I stay in Ben's beach house on VRBO and hey, Ben, next time I'll just call you, right? So we can not pay the 30%. It's the opposite here. Like if you disintermediate, you're going to make less money. You're going to have less upside, right? And so the more you participate on platform and be a good citizen, the more token rewards you're getting. And it's not meant
to be a cash reward. Like it might have cash value, it might not, but it's meant to be like, hey, now you have more control over the network, right? And now you can build your business faster because you could stake tokens along with your bids, right? And it's like, it's meant to be a virtuous economy that way. Yeah, there's this, just a quick meta point
It's interesting how some of this or a lot of this would be possible in USD, like setting up these incentives or perhaps profit share grants or options or something like that. But until crypto, people didn't experiment nearly this much with marketplace incentives, labor incentives. It seems like in moving to a token-based world instead of a pure USD and stock-denominated world...
It's enabled like a new wave of creativity of people willing to play with incentives that we haven't seen in a long time. I totally agree. I think that is why I've changed my career in the last five years to just do this full time. It's also why we named the firm Cambrian. We're in this Cambrian explosion of creativity here, powered by this new technology, which is, look, blockchains are programmable money, Ethereum is at least, and you can co
code in all these incentives and all these rules. And for us, like, yeah, there's many talent networks that don't involve a token, but they're for profit. And they automatically pit the marketplace operator against the participants. And it's this tug of war and it's misalignment of incentives. Without blockchain, you couldn't have made this public good. Braintrust, it's a nonprofit, it's a protocol, it's a set of smart contracts that helps
people find work. So like if Uniswap is a protocol for matching buyers and sellers of tokens and Compound is a protocol for matching borrowers and lenders of money, Braintrust is a protocol for matching labor with demand for labor.
So can you walk us through how it works? So you raised $30 million and you've got these six teams and there's no company. Can you give us a little bit more color on like, what's the infrastructure look like for people to, you know, get paid for doing work? How do you spend that $30 million and how did it literally flow into what?
They were sold as SAFs. So an SAFT, Simple Grimit Future Tokens. And then that on September 1st of this year, those SAFs converted into actual ERC-20 tokens. And the investors are, they have a two-year lockup before they can access those one-year cliff. Where did that money go? It went to the core teams. And it went in as cash, obviously, to the core teams. And that's how we bootstrap the network. Are those teams C-Corps? Yes, generally, yeah. C-Corps and LLCs, yeah.
So did each of the teams own a certain number of tokens to start, which they then exchanged for the dollars so that 30 million could proportionally flow into the teams in a way? Exactly right. Fascinating. As complex as that sounds, that's the simplest way to do this. A lot of startups will be like, okay, well, we have our Delaware Sea here, and that's going to be...
XYZ Protocol Inc. And then we have the XYZ Protocol, which you can buy tokens in. So we're selling equity and tokens and who knows how they'll convert together and, you know, see you in court. It does seem like your version and basically like Solana, I think has like a very similar setup. Like it's kind of coalescing as the standard. The way I look at it is if you have a good idea, but have no idea how your token will work, sell equity.
Not tokens. If you have a great idea and you're pretty sure how the token can and will work, sell tokens. No equity. Never do both or do neither. That's fine too.
But doing both makes it really confusing. And what it's going to end up doing is pitting token holders against equity holders no matter what. Right. You have two competing incentives at that point, whereas at this point, at least everybody's incentivized for the same thing to go up. We're all in the same instrument here, right? It's like founders, those six core teams are tens of thousands in the community, purchasers. They're all in the same instrument and it keeps incentives aligned.
So why six teams distributed through six different entities instead of, you know, six teams in one entity called a company? There's no like playbook there. It's just how it came together. I'm with a company called Freelance Labs, which is one of the originators. There's like a group of like really sharp enterprise sales guys. There's like three of them that just know how to bring the Goldman's and the Nike's to the table and they have their own company. Oh, I see. And these companies pre-exist or predate companies.
The existence of brain trust. Yeah, mostly. So it's like a group of people that are like, hey, we could all form a new company and just for the sake of forming brain trust. But why? Because brain trust isn't a company. So why have a central company behind it? And so why not just have it be built by the people who want to use it? That's so great. It's Paki's liquid super team. It's like happening. So now that...
The network is live. And there's 30-ish million annualized GMV going through the platform. For development of...
brain trust are you just recruiting on brain trust like when does this become a recursive function yeah well it was recursive from day one so um freelance labs is is one of the biggest clients on brain trust happily i think nestle passed us so you want to eat your own dog food but you don't want to be the fattest dog eating your own dog food um
Every line of code and pixel of UI that has gone to developing the Braintrust ecosystem has been a job on Braintrust. And there's been dozens or maybe a hundred now of individual contributors or teams of people. You know, we have like a couple of blockchain teams that come in and pinch in on things. And those have all been done either for cash or tokens or some mixture thereof. But yeah, they're all jobs on Braintrust. Yeah.
If we couldn't make that work, we would have stopped. Right, right. That's sort of like you should at least be able to do that. Okay, so this is a great transition. To my mind, there are two really big ideas here embodied in the brain trust of brain trust. One is everything we've just been talking about, like a user-owned marketplace, or maybe the better way to say it now as the lingo has evolved is what a native Web3 marketplace looks like. Two, though, is...
The application brain trust itself and what it is enabling, which I alluded to a little bit earlier, but I want to spend some time diving into this. It's like, okay, you're a really talented Java developer. You could probably go work at any company you want right now in a traditional, be employed, get W-2, have your benefits, blah, blah, blah, get your paid time off. Or post-COVID now...
Why would you want to do that? And this is really a platform. If you're a very talented developer, tech talent, whatever, your work is liquid. You can work for multiple companies at once on your own terms and your own time. And like, this is to my mind, kind of the platform that enables that at scale, right? Absolutely. Braintrust got very lucky, I would say, in a couple of kind of mega trends that made this thing possible.
basically able to grow to the scale it already has essentially with spending no money, right? Spent $5 million or something over the last three years. So those are a couple of things. And I have like a couple of funny stories I can share that.
We'll elucidate this. So when Gabe and I, my co-founder started, and he and I know enterprise sales well, we're like, all right, we'll just pick the first five clients out of our backyard. And this will be easy, right? This is pre-COVID, right? This is like fall of 2019. And we'd pitch this like, hey, we're a user-owned marketplace. We have the best talent and you can get them at this like very low 10% markup. And a company...
we won't name them, but they're now existing clients would say, that's cool. Can you fly them to our office? And we pay $10,000 for relocation. We're like, that's not the point. That's not the point. The point is remote distributed engineering teams. And they're like, yeah, I mean, like, I'm sure someday people will do that. But until then, like you're coming to name your Portland, St. Louis, whatever, whatever.
You know, we're just like, shit, you know, like, how are we going to get this working? Then COVID hits and all those folks called back and they're like, hey, are you guys still doing this? Like, we've been locked out of our offices now. Like, this is kind of like, like management says it's okay. So we're cool with it. And so, so that like anachronistic response.
U.S. enterprise thing of like butts in seats. It just evaporated overnight in March and April of 2020. And so that was tailwind number one that really juiced this thing. And then number two, which is we're living through right now, which is David, exactly kind of what you're alluding to is like they're calling like the great resignation thing.
Right. Or we've been calling it the unbundling of corporate America. But it's exactly what you described. It's why would I trudge to a cube farm and...
Work on stuff I don't really want to work on and like virtual or otherwise even if it's a virtual cube farm like totally and then do a bunch of stuff that like only maybe a tenth of it I want to do when I can like peel out and specialize have autonomy and what nobody knows yet is make more money, right? That's like the real thing everyone's realizing and so it's the unbundling of corporate America where people get to specialize they get to work on their own terms set their own rates and
from where they want, when they want. And now the communication tools are so good, right? There's Asana, Google Docs,
blah, blah, blah. What we were missing is the piece that brings you the money, the jobs. You know, look, I think Fiverr and Upwork were like valiant efforts in that direction. And like our hats off to them for helping create a space for this. Brain trust is like the no take right way of doing it, you know, eliminates this, like need to like go pitch yourself and all these things that make freelancing annoying. You know, you could just come into brain trust and, you know, hopefully find a steady stream of work when you want it. Well,
Well, and your go-to-market has been wildly different than those other companies. I mean, the dollar per hour, I don't know about the right way to represent this, but the cost of the labor that you're starting with on Braintrust is like some of the most high-paying jobs in the world, especially around software engineering. I'm curious...
How did you think about attacking the market from the top rather than from what seems to be the most atomizable work, which is what has been done in the past? This is a great point, Ben. And it's something I'm really passionate about because you heard me speaking earlier about my general disdain for the gig economy. See, all the gig economy did was figure out how to make someone who should be earning $15 an hour work for $5 an hour, right? And buy their own gas and all. It's just...
I come from a family of that era and like who would make money that way. And like, it's just like, it sickens me that that's the main innovation of the gig economy. And like, I really wanted to start there, honestly, in 2018. I wanted to build a user-owned driver network. It was just too much. You know, I specced it out and I was like, you know, first of all, like you're using a token.
to incentivize someone to be a participant of your network, you explain what the hell a token is. It's hard to do now. It was impossible in 2018. I'm like, okay, well, we'll start with the dorks like me who do software for a living, right?
Software engineers are going to be the most receptive population to this. It was the lowest hanging fruit, honest to God. And not that interesting of a category. Take it from me. I've been a freelance software engineer my whole career and I've hired many of them. The field bores me to death too. But it's an important place to prove it out. It was important for us to prove that this stuff works and that the incentive systems can work. And now we've kind of obfuscated the token out of it a little bit.
Right. We've got a long way to go, but it's my greatest hope that someone will copy this and, you know, implement it in the real world, your food delivery, people delivery business, you taking lessons, hopefully from, from what we've learned. But yeah, to answer your question, it was just like, that was just the easiest place to start.
the beginning of covid and and then even still to this day these news stories come out right about like engineer working both at google and facebook or you know secretly working two jobs or three jobs and whatnot there was a whole wall street journal article about it a couple uh months ago that was great it was hilarious and like one way to look at that that i think 99 of the world probably did was like oh wow this is crazy like good for those guys like that's funny
The other way to look at it, which is kind of what brain trust has done is like, well, clearly people want to do this. So like there's an opportunity here. And Aaron Easterly, the CEO of Rover, used to talk about this all this time, all the time. There's a shadow market. There is a shadow market of people that were doing this before. How do you bring the shadow market into light and just enable it in the light for everybody? Like that feels like the huge idea here.
The biggest problem I had with that article was the tone was so accusatory and looking down on the
The labor, right? The guy who had three jobs or whatever, right? He's making probably a million dollars a year. It's like, yeah, you take a step back. What the F is wrong with that? Why is that bad? Whose fault is that, number one, right? Is it because those big companies don't know how to manage people and have massive bloated payrolls and no one actually does anything at those tech companies? Is that possible? Yeah.
Is it possible that you could lay off 80% of people in Silicon Valley and those ATM machine companies would continue to roll on? Is that possible? That is 100% unarguably the case. Right. And so like some clever person figured out how to get a job at all three of them and makes good money because it turns out you don't actually have to work at those companies. Right.
like to me, that's way more of a testament to the, the waste and inefficiency in corporate America. But to your point, like more interestingly, like yeah, shadow markets. I mean, let people work the how and when and the way they want to, and everyone's going to win. Right. Like this is better for clients too. Right. Like we never sing the client wins, but you know, Porsche,
opened a design and an R&D tech studio in, I think it was Sunnyvale. And they came to us and they're like, we can't get anyone to come here. This is pre-COVID.
And I was like, that's crazy. Like I would quit doing this to go work for Porsche, right? Like what? And they're like, yeah, we just can't get people to come here. And it's been really tough. And then COVID hit and they're like, okay, now it can be remote, right? So they have this huge Sunnyvale presence so they can have people in, you know, Poland committing code for them. And then it turned out to be like this huge lesson. They're like, oh man, this is such a better model, right? And like, they're now like a really thriving client and they're getting most importantly, they're getting important software built. This isn't like
build a marketing site it's like not that that's not important but they're like they're we're building software going yeah in the dash in the car yeah yeah and so it's like okay so porsche is really happy they're paying market rates for it with no markup right it's not like the deloitte and pwc and the big firms markup you know and now they don't have to worry about this footprint sunnyvale so it's just like it's a win on both sides thinking about this more from the the labor side
We won't use Portia because Portia actually is awesome. And I agree. I would like it'd be fun to work there. But let's take, I don't know, Pontiac or something. I don't even know what that brand exists. They sunset it 15 years ago, but that's it. It's a good example. This is a good example. Then if I'm an ambitious software engineer who wants to work in the, you know, do work for on cars, pre brain, pre the thinking this way, I had two options. I could go work at Pontiac and I could be miserable and probably want to shoot myself every day.
Or I could go work at Tesla. It would be exciting, but I would be grinding to the bone. And I'd probably be getting some Tesla stock, and that's good. But there's also a limited number of jobs at Tesla. I'd probably have to move to Silicon Valley, and I'd have to do all this stuff. Now, I can work on great software for cars, but...
for lots of car companies make more money uh anywhere like i don't have to necessarily work at tesla or i can work at tesla and do this other stuff yeah yeah it's all about specialization right and people when people can just do what they want to do professionally it's a win for everyone right like it's just like oh the output's going to be better it's going to be more fun the quality is going to be higher like specialization and unbundling is just a good thing here generally
So specialization is a pretty good way to dive into this. So when someone becomes a software engineer at a company, they probably on average stay, I don't know, five years. Like I think there's probably some interesting distribution where there's tons of people staying two and, you know, less people, but also lots of people staying 10. The...
ambiguousness of the work to be done is extremely high when they join and that's okay because they're deeply embedded for a long time. Meanwhile, you've got on the complete opposite side of the spectrum, you know, I go to Fiverr or I go to 99designs and I pay 99 bucks and I get a logo designed and the scope of that work is extremely well specified to my spec and it's extremely short term.
And so I'm curious where you're seeing the most common examples on brain trust, since it is in software engineering. Is it like, come be embedded in my team and dream up the features and code them, and it's going to last probably like six months to a year? Or is it more like, we kind of know what we need to do, and you need to come build it? It's both. There's a lot of both. And the good part about that is a lot of people want both things, want one or the other, right? There's not... One of those, even though like...
whoever's listening might think like, oh, I'm definitely in the second camp or whatever, first camp. Like there's a shocking amount of people who want one or the other. And so fortunately there are both opportunities there. So they're very finite project-based things. It's like, look, once this thing gets built, we're probably not going to need you anymore.
And, you know, good to go. And so count on six months or whatever. And then there's other things where it's like, you know, TaskRabbit's a big client. And they're like, hey, like come help us build TaskRabbit here at Ikea forever and ever and ever. As long as you want to help us, we'll have things for you to do.
There's 1099 opportunities. We do W-2. So there's no problem with tax cost. Oh, you do W-2? Absolutely. Absolutely. We support all that stuff. Yeah, because some companies require it, right? Some states have really strict laws around that. So our job is to help everyone be compliant with whatever local regulations they have. So we do all of it.
And, you know, I guess too, like I can totally see people wanting different things at different life stages too. I'm going to do a sprint where I'm going to do three projects at once that are tightly scoped. And then I'm going to do a year where it's more stable. You have people like signing off, right? They're like, Hey, I'll be gone for three months. You know, don't ping me. And, uh, that's awesome. Right. It's like, cause brain trust will always be here and they can come back and whenever they want.
All right. I have to ask you the question. It's like one of my favorite diligence questions whenever I'm looking at investing in a company because it always helps us out how the founder thinks about the world. Like, how could this go catastrophically wrong? Like, how could the world rearrange itself such that you're like, damn, it was looking good, but now this is not...
Not the right business. Did you steal this from Mobison with the... No. Absolutely not. When he was saying the premortems is one of the high-quality decision-making tactics. No, I used this to help me write my own investment memos about their companies. Maybe Mobison stole it from you. Adam, write the risks section of the investment memo in this company, in this nonprofit. Yeah, in this decentralized network. Well...
Three years ago, the list was two miles long. Then two years ago, it was one mile long. And now it's much shorter, mainly because it's taken a life of its own. And there's tens of thousands of people now who care deeply about this working because it's money for them, right? It's livelihood. And so...
Fortunately, like the core teams here, we're never going to go away, but like we can finally step back and like really let the community, we're seeing this in our governance forums. It's almost a little chaotic, right? Which is a good thing. But so existentially, I don't know if, you know,
Sam Altman figures out the AI and all these jobs get wiped out. You don't need developers anymore because the computers will write the code. Yeah, co-pilot got really good. It's just pilot. Yeah. And look, that'll happen, right? But humans will figure out other things to do and hopefully those other things will be categories on brain trust. I think we've gone past existential threats at this point.
You know, like we built this thing with really, it wasn't like some get rich scheme or like selling tokens to make money, you know, to the general public. It's like, hey, this is built by talent that want to build their freelance businesses for talent that want to build their freelance business. And the clients obviously love it too. So there's, you know, hopefully it's been de-risked.
Obviously, a major milestone was the listing of the token about a month ago. How did the listing impact things? You listed on Coinbase and other exchanges too, or just Coinbase? Coinbase is the largest. There's a handful of decentralized exchanges that picked up the token as well. Uniswap and 1inch, I believe, and some other ones I've never heard of. A couple of things. Like
The cash value of our token is literally technically meaningless to the protocol, right? It's the token has utility on the network, the users that have the token so far. And here's the proof of this. We got tens of thousands of people to participate in this token economy when the token was on Ropsten.
no cash value on testnet. Like literally no cash, no value, right? It was like, what's the price? Zero. It's just a token, right? 1B trust. We even got this question, like very skeptically, how the hell did you build a tokenized network for three years with no main net token? It's like,
It's like, well, because the model works, the model makes sense. Right. And so now that there is cash value, maybe there's more incentive for people to come play and come make referrals and whatever. But it's not important to us what the price is. And so we focus on, you know, making sure the community is getting what it needs and building the features we want. And we're staying aligned with our needs, our community needs.
Just to clarify something, in part, that's true because all your early mechanics that involved the token were governance-based, not price-based. So it literally didn't matter because only now you're starting to
integrate these features where you can sort of stake and you can promise pseudo monetary rewards. Whereas before it's like, well, do I want to be able to vote in the future of this thing so that the take rate stays low on the work that I'm doing or take rate stays zero? Like, yes, I do. And it was kind of binary. Exactly right. And that's why we've seen, you know, very, very few community members sell anything on Coinbase, which is shocking to me. But I'll say like,
The second piece, incentives matter. Liquid incentives matter even more. And we learned a couple kind of hard lessons as we got off the runway in September. One of them was someone in our community built something called Brain Trust Academy. So it's just one of the core teams. They just built this on their own. It's like a totally separate thing. But the academy is meant to sort of teach people how the ecosystem works and like teach people how to, you know,
bring more talent in or become a talent screener or like how tokens work or how like it's intro to crypto, that kind of stuff. It's like, it's an ecosystem academy and it would reward you for taking a course with like whatever, five or 10 B-Trust tokens or whatever. And the point was to bring people into the tent and then they would use those tokens to vote on new things, right? And it just never occurred to us. We just forgot that this thing was like giving tokens out for watching a three minute video.
Well, then Coinbase came and it's like, oh, the bots. We got bot armies now. Oh, my goodness. And it's like it was a fucking disaster, honestly. And to be super clear, this is because your token was worth $10 and then it was worth 40 something dollars. And like, will I go watch a video or will I spin up a bot farm to go watch a whole bunch of videos? Absolutely, I will now.
Exactly. That is exactly what happened. So that's always, that's my new piece of advice. Careful what you're incentivizing because the whole world will show up. So a lot of legit people came through and we're happy to have them. The group, the community grew from 50 to 700,000 in seven days. Wow. In terms of token holders. Yeah. Members of the community. Yeah. People who are actually here, we're thrilled to have them and, you know, you mop up the, the other messes.
Right. Because I guess before the listing, because when it was all testnet, the only theoretical holders were the SAFT holders and the founders, right? We actually had thousands of token holders that were just holding Ropsten credits.
And then on September 1st, we converted all those token holders into real token holders. And for folks who don't know, Robston's an Ethereum test network. Sorry. Yeah, that's the Ethereum test network. So it acts just like Ethereum. It's a copy of Ethereum, but tokens on that network, like they can't be traded anywhere. They have no value.
We had thousands of people that helped us build and were interested in the token because of its governance power and didn't care about its cash value. And so when that light flips, the game changes on you. But it's mostly positive stuff. I'm sure there have been other companies' projects that have gone through a journey like this one so far in Web3 and decentralized applications.
But I think you have to be probably the biggest scale one to live through this, you know, like sort of like first in history, right? Yeah, I really have a lot of respect for, you know, Ronil over at Audius, right? Like Audius has done... Our previous LP guest episode came out right before this one. Yeah, it's awesome. I haven't listened to that one yet. He's great. I got to meet him earlier this year and really impressive what they've built there. But that was one of the reasons we...
sort of built a business first and then decentralized it. It's exactly that reason, right? There's a lot of clever innovators and young entrepreneurs in this space that have this great idea. They write a smart contract. They push it on chain. And they're like, all right, I built it. Where are they? Right, which is very different than a business. Yeah, and especially a two-sided marketplace, right? It's very, very hard to build liquidity in marketplaces. And so that way, we wanted to bring real users. And the amazing thing is we polled...
All of our users, it was maybe six months before the main net launch, you know, have you ever owned a crypto token before? And the answers were, yes, I own one right now. Or B, you know, heard of it, never owned one. Or C, what's a crypto token? And 87% were two or three.
B or C. And so we're bringing, you know, 90% of the folks coming into this ecosystem are brand new to crypto. And, you know, this is the first time most of these clients on BrainTrust have ever dealt with crypto. And so bringing lots of new participants into this ecosystem is fun. The clients have tokens as well. Some do. Some want to earn tokens as connectors for making introductions and have done that. Others are like, we don't want anything to do with this token. Yeah.
But that's cool that some portion of clients, like some Porsches and Goldmans and Nestles out there are now being onboarded to crypto. Absolutely. Yeah, absolutely right. Well, Adam, the last hour, hour and a half has been super fun. I'm sure people will want to check out more about what you're doing and go look for their next potential employment opportunity. Where should they go and where can they find you on the internet? Absolutely. So Braintrust.com.
is the marketplace. And then I'm on Twitter at Adam Jackson SF. Awesome. Awesome. LPs, thank you for joining us. Adam, thank you. This has been a blast. So great to see you guys. Thanks for having me. So it's great. We will see y'all next time. See you next time.
