- The speaker is interviewing Andy Bromberg, the president and co-founder of CoinList.
- Bromberg discusses his entrepreneurial background, starting with web design and marketing businesses in high school.
- He explains that his motivation to become an entrepreneur stemmed from not wanting to do other jobs available to him in high school.
- Bromberg attended Stanford University and took a class on startup engineering, which sparked his interest in cryptocurrencies.
- He co-founded the Stanford Bitcoin Group and later left to start a company called Sidewire, a platform for experts in politics to discuss news.
- Sidewire eventually shut down, but Bromberg emphasizes the importance of having supportive investors throughout the process.

- The speaker had 44 investors in their seed round, which made it difficult to get all of them to sign things, but overall they were supportive and not annoying.
- Having a large number of investors increases the probability of difficult ones, but the speaker had a great set of investors.
- The company built a product for a year, raised the last part of their round from Spark Capital, and launched the product.
- They had difficulty getting people to stick around on their platform despite having high-quality content and smart discussions.
- They tried different tweaks and business lines but ultimately decided that the possibilities couldn't be venture-scale businesses.
- The company decided to wind down and move on to their next project with the support of their investors.
- The speaker doesn't believe that even if President Trump called them fake news, it would have saved the company.
- People were not interested in reading long conversations and it was difficult to create a habit of engaging with their platform.
- The speaker transitioned back to the crypto space and got involved with CoinList, which was created to run Protocol Labs' token sale for Filecoin.

- A cryptocurrency is a scarce digital asset that represents ownership of a token network.
- Token networks are launched without any central control and are controlled by the users.
- Tokens and blockchain technology are like the internet, allowing for the exchange and transacting of value.
- Valuing tokens is difficult because they are built on different premises and have different applications.
- Filecoin is an example of a token that allows for the exchange and storage of files.
- Filecoin solves the problems of fees, censorship, and reliance on a single third party by connecting users directly to people with extra storage space.
- Filecoin uses a token as a mechanism of payment and solves trust issues through staking and verification processes.
- The supply of Filecoin expands over time through mining and rewards for verifiers.

- Blockchain and tokens are about incentive alignment, creating a trustless system without a central authority.
- The main purpose of blockchain systems is to remove intermediaries and allow transactions between counterparties.
- ICOs (Initial Coin Offerings) have raised around $15 billion in 2018, surpassing venture capital funding.
- However, the majority of ICOs are not expected to be successful due to the lack of norms and data points for diligence.
- CoinList supports ICOs by handling compliance, transactions, and marketing for a small number of companies.
- Airdrops, a way of distributing tokens to users, are becoming more popular as a means of network adoption.

- Tokens can be used to kickstart a network and raise funds for startups
- Tokens are most valuable in applications where parties don't trust each other or a central intermediary
- Businesses that rely on trust, like Airbnb, may not be great candidates for tokens
- Tokens create a different relationship between companies and investors compared to traditional financing
- Investors in tokens have less control and visibility, while companies have more freedom but may face misalignment with investor incentives
- Good investors are aligned with the entrepreneur's goals, have positive interactions, and provide value-add
- Due diligence and reference checks on investors are important in the fundraising process.

- The speaker suggests that the most effective way to close an investor conversation is to highlight positive feedback from others and set expectations for the relationship.
- The speaker explains the difference between security token offerings (STOs) and initial coin offerings (ICOs), and states that their platform is open to supporting both.
- The speaker discusses the concept of tokens as currency, stating that while some tokens can function as currency, not all do.
- The speaker is asked if Airbnb would be a good candidate for an ICO, and they respond that while it could be interesting, they would initially choose a centralized route.
- The speaker acknowledges the challenges of building token networks and the importance of avoiding middlemen, but also notes that there is a pragmatic side to business decisions.
- The speaker distinguishes between value and information, explaining that tokens allow for direct ownership and transmission of value within the network.
- The speaker agrees that networks can be rigid and difficult to upgrade, but believes that in the future there will be more infrastructure to support easier upgrades.
- The speaker mentions the possibility of forking in the crypto world, where users can create a new version of a network if they disagree with changes made by the original creators.

- Users have the ability to fork a cryptocurrency network and create a new version with changes if they are not satisfied with the existing version
- The success of a forked network depends on aligning users' incentives to participate on the new network
- Companies that create tokens through ICOs may hold a significant portion of the currency and have a voice on the network, but other factors such as mining also play a role in decision-making
- The future of the ICO industry depends on the development of infrastructure for asset-backed tokens and increased liquidity
- The future will likely have a small number of blockchains but a high number of tokens, with tokens being issued on top of existing blockchains rather than creating new ones

- Andy Bromberg, the president and co-founder of CoinList, discusses his entrepreneurial background and the challenges faced by his previous company, Sidewire.
- He emphasizes the importance of having supportive investors and the difficulty of managing a large number of investors.
- Bromberg explains the concept of cryptocurrencies and token networks, using Filecoin as an example.
- He discusses the purpose of blockchain systems and the rise of Initial Coin Offerings (ICOs) as a funding method.
- CoinList supports ICOs by handling compliance, transactions, and marketing for a small number of companies.
- Bromberg explains the difference between security token offerings (STOs) and ICOs and the potential use of tokens as currency.
- He mentions the challenges of building token networks and the possibility of forking in the crypto world.
- The success of a forked network depends on aligning users' incentives.
- The future of the ICO industry depends on infrastructure development for asset-backed tokens and increased liquidity.

YC Partner Geoff Ralston talks to CoinList Co-Founder and President Andy Bromberg.

Transcript and additional content are here: https://www.startupschool.org/videos/55

Learn more at https://www.startupschool.org/

Today is Thursday, which usually means that Adora or myself sit up here with someone notable and have a hopefully interesting conversation.

The someone notable we have today is Andy Bromberg, my friend and the president of CoinList, the president and co-founder of CoinList, which is this really fascinating company that is doing some interesting things we'll talk about.

But Andy, maybe we can start by you talking a little bit about your entrepreneurial background, because interestingly, even though you graduated from Stanford a couple years ago, CoinList isn't your first venture, is it?

So first of all, thank you for having me and thank you everyone for coming This is gonna be a lot of fun The entrepreneurial background for me started even before school in high school It's 1 of those people that started some web design and marketing businesses nothing really notable but I think it was really valuable to get that initial experience of building something and hiring a team and managing a team and firing people and figuring out how to do all that.

do all those things while you were in high school?

What was it about being an entrepreneur that attracted you while you were still in high school.

God, in high school, I was worried about other things.

It was really nothing about being an entrepreneur and more about not wanting to do other jobs that I was able to do when I was in high school.

You know, you can sit there and you can do whatever, serve pizza or scoop ice cream or whatever it is.

Yeah, it was fun, but I was looking at it and saying, like all these businesses in my town have awful websites and I've got a bunch of friends that do this stuff in their spare time

And that seems like just a way better way to make a little bit

of money while I'm in high school than serving pizza.

And so I went and did that and expanded out to videos, marketing photos, all that stuff.

But it was really less of I want to be an entrepreneur and more of I really don't want to do these other jobs.

And it then developed into a love for building things from the ground up and trying to create.

But at the time, it was purely an alternative, not a primary.

So did you – so you really weren't thinking of this as like I'm an entrepreneur and I'm going to – like my family's been entrepreneurs forever.

It was more an escape, an alternate route from sort of the normal high school, I'm going to get some maybe not so interesting job and do something more interesting.

And probably you made a lot more money doing it too.

And I think, and not to fall into some of the immediate kind of startup cliches, but I was doing stuff that I really enjoyed doing.

I was hanging out with my friends and building things, which was really fun.

We built a bunch of websites around just things that we liked.

And it wasn't necessarily that we're looking at it and saying, you know, I'm going to analyze this opportunity and do my TAM calculation and figure out this and the business strategy.

What if I made a website that reviewed soccer cleats?

Let's build 1 around how to dig into the internals of a Mac and do things with it.

And it was really based on these things that we just enjoyed doing, we had figured out how to do, and wanted to build these sites around our passions.

You get into a little school on the West Coast.

Did you ever have the thought, like, I'm not going to Stanford, I'm going to just, I'm going to, like, I am the next whatever, Mark Zuckerberg, I'm going.

Yeah, I don't, I think those really truly would have been kind of delusions of grandeur at that point.

They were, these were like little things, they were fun, and they made money, and I, you know, covered my expenses and was able to do what I wanted to do.

But none of these were going to be massive businesses.

And sure, of course, the thought occurs, you're like, I could just keep doing this.

But ultimately, I got a great opportunity to go to a great school and decided to do that.

And continued to do them for a little while while I was there and did some of that stuff, but kind of trailed off during the couple years I was there and then eventually kind of tailed off completely.

But the idea of starting companies didn't because apparently the bug hit you again while you were at Stanford, right?

So I was there for a couple years, had a lot of fun.

Really actually the most impactful bit there was tied into this whole entrepreneurship thing, which is I took this amazing class when I was there called Startup Engineering from a guy named Baljit Srinivasan who's now the CTO of Coinbase and formerly the CEO of Earn.com and formerly a partner at Andreessen Horowitz and founder of Council.

Amazing guy who actually lectured at the very first ever startup school.

And he taught this class about, you know, I think a lot of times university classes around entrepreneurship don't teach you the real skills you need to start a business.

They might teach you some really high level things or really basic fundamentals, but nothing around the pragmatic steps.

And he set out to build a class much like this 1 that said, no, if you're actually going to do this, what do you need to do?

It was a lot of time with guest lecturers coming to the class.

It was a lot of time with things like it was a computer science class.

And how do you do these different things?

And we took this class, a bunch of us, and had an amazing time.

And actually out of that, which we'll come full circle back to this, a small set of folks that were in that class ended up founding the Stanford Bitcoin Group back in 2012, 2013.

But yeah, so he convinced us all, you know, this Bitcoin thing is going to be real.

At the time, we're looking at him and saying, no way, man.

We're like, Bitcoin is magic internet money.

I don't believe you for a second, this doesn't work.

And so we started the Stanford Bitcoin Group and spent a couple years in school doing a lot of awesome research and evangelism and had a lot of fun running around, teaching people about crypto and building things or researching things.

But then, yeah, ultimately I did end up leaving to start a different company and left even that behind.

Well, so that different company was Sidewire, which interestingly seems like it's more relevant today, maybe more than Bitcoin, because it was all about like, real news, right?

So I built this platform called Sidewire.

And I, I left school in 2014 to start this company.

And I left early because I found what I think is the perfect partner for it.

My co-founder Tucker, who had a background in politics, and I had this background in computer science and building things.

And we came together to build this product that was a platform where the experts in politics could chat publicly about the news of the day, and everyone else could read and engage, but not participate on that same level.

We wanted to build Twitter without the noise.

What if you took just the experts and put them in conversation with each other?

And we did this really around the 2016 election.

It was 2014 to, we ended up winding it down last year in 2017, but it's really-

And I, you know, I talked to a lot of people that are building similar products, trying to separate out the signal from the noise.

And hopefully some of you in here or online are working to do that, too, because I think it's such a critical problem.

Turns out very hard problem for a variety of reasons, but I think it's critical that someone solve it.

So, maybe for the benefit of these folks, and never fear, we will talk about crypto.

Talk a little bit, if you would, about the process of starting the company.

You left school to do it and the winding down, like what happened?

And maybe if there's some lessons learned in there from that experience.

So the starting was really, it always is kind of the best part when you have this germ of an idea and you're trying to turn it into something.

And so we started, Tucker and I met and started talking, we were introduced by a mutual friend named Adam while I was still in school.

And we started talking about this concept that there's this crazy noise level in the discourse today, especially around politics and other topics.

We separate that out with a lot of different ideas around how to do it and iterate it through a million different things.

And ultimately, he was working at that time a great job.

I was in school, we're looking at it, as I'm sure many people are, saying this is a big leap to take to go from very comfortable situations.

He was again doing great at work, to make this leap.

And so we said, all right, we got to a place where 9 months in of kind of casual discussions, we were both working and learning, we said we think we know what we want to do here.

We're looking at this, this is right before summer 2014, so we know we've got some lead time up into the elections to build stuff and then launch into the election cycle.

We thought we knew what we wanted to build, and so we said, all right, well, we need to get some validation for this before we get going, which was just the state of mind that we were in.

I don't think this is always true for entrepreneurs by any means.

But our state was, we're both in great positions.

So we went out and said, we're going to raise some money.

And if we can successfully raise that money, let's go and do it.

And the commitment kind of was that if we could do that before the summer, I would go obviously over my summer and work on it full time and then beyond and he would leave the job and go and we'd do it together.

And so we were able to put together that money and get that validation and start building.

Lesson learned, and thankfully we didn't learn it in the negative way.

Having great investors is such a boon throughout the business when things are going well and when things are going poorly.

We'll get to the wind down, but even that part, having an amazing set of investors that were aligned with us, cared about us as people, and were supportive of what we were doing was so critical at that point.

And really digging in on what their motivations were was really important.

We had, I forget the exact number now, but something like 44 investors in our seed round or something like that.

you ever think that maybe that was too many?

The only time I ever genuinely thought that was too many.

Because you never really want to turn down money, right?

The only time I genuinely thought that was too many was when I was dealing with needing all of them to sign things.

But generally, again, it goes back to the quality of the investors.

They were supportive and not annoying and never nagged us.

We sent out our monthly updates and made sure they were informed and it was never a problem.

It was just sending out 44 docusigns is a lot of docusigns to send out.

You could imagine 1 issue with 40 or 50 or 60 investors is that even if you really try to only get high quality investors, the probability that 1 or 2 of those are difficult gets pretty high.

And of course, even within that set of 44, there was a spectrum of people ranging from absolutely perfect to slightly less perfect.

But on the whole, it was a really great set, and we were fortunate to be supported by them.

And so we ended up doing that, and the short story on the company is, we built for about a year, and then we kind of raised the last part of that round.

It was all 1 big round, but raised the last part of that round from Spark Capital, who were amazing investors, highly recommend working with them.

And they kind of completed our institutional seed round.

And then we launched the product and ran it for a couple years and ultimately wound it down last summer, yeah, 2017, mid-2017, I think.

Did you guys have any insight more than the rest of us about what was going to happen in November 2016 based on the expert discussions that were taking place?

Yeah, there's a lot of… Paul Jay That's exactly

Adam Draper That was exactly what happened.

Adam Draper There's a lot of smart people out there.

And this ties into what Sidewire was able to do, but also kind of who we were talking to.

We got this amazing set of experts on the platform engaging like crazy.

About 1,000 people, senators, presidential candidates, reporters, analysts, staffers, all the people you'd want to have talking, the really smart voices, the smart commentators, having these amazing discussions going back and forth, firing back and forth, being entertaining.

And we felt like that side, because it was a marketplace, right, you had supply of content and demand of content.

And just no matter what we did, we couldn't get people to pay attention to it, which we thought was so interesting.

So our thesis going in, and I think a lot of the time startups are about having a thesis and testing it, but a thesis we felt really strongly about, it wasn't so far as build it and they will come, but we thought this is a marketplace, a two-sided marketplace.

If we can get the supply, if we can get smart people to have smart conversations about the news of the day, then we will be able to get people that show up to stick around and keep engaging with those conversations and reading them.

No matter what we did, and there's no way to know what the issue was, we could not get people to come and stick around.

And people would show up and read 1 conversation and then would not come back.

And I think at the end of the day, what we felt like was in that space, people, it's hard to get people to care about the smart conversations.

People say that's what they're looking for and it might not actually be what drives them and what they actually want.

They want 140 or 280 characters of sensational tweets.

And I hope that that's not true, and I hope that we had issues with the product that were deeper than that or something like that that caused it to not be effective in retaining users.

But at the end of the day, we had a really tough time, even given just a stream of crazy high-quality content from the best people in the world on these topics.

Tough to get those people to stick around.

Okay, so this is a tough question for any startup to answer, which is, at some point you decided it wasn't an issue of tweaks.

It wasn't an issue of being able to find product market fit.

You could pivot 10 degrees, 20 degrees, 180 degrees.

It wasn't going to happen and you wound the company down.

Yeah, so we did try a couple other related, but more than 10 or 20 degree tweaks, but related topics, you know, a subscription service we tried for a little bit, and pitch some enterprise-related things.

Ultimately, we decided that what we were looking at, the possibilities we were looking at, even if they succeeded, couldn't be venture-scale businesses that we needed to be betting on.

And These are conversations we had with our investors, super honest, transparent conversations with them, with our team, with each other.

And we said, all right, well, our core business that we've envisioned and been working on for 2, 3 years, don't think that one's going to work, at least without some crazy change in how people are thinking, or us having some insane insight of fixing something that's terribly broken.

These other businesses we're looking at, other business lines, there's a possibility, but these aren't the type of returns that we're looking for, our investors are looking for when we started this business.

And so at that point we said, all right, instead of trying to keep this thing on life support, let's wind it down and move to our next thing and keep building from there.

And it was a decision that everyone was incredibly supportive of.

Again, this goes right back to the good investor thing.

It is easy for people to give you a lot of grief when you make a decision like that.

But we were incredibly fortunate to have an amazing set of investors that supported us in that.

Do you think if you could have persuaded President Trump to call you fake news, you might have been able to survive?

They'd be like, oh, this just doesn't, it doesn't do it for me.

And we'd talk to people and they'd say, yeah, oh, it's great, like the content's really good.

I just, I would never like, you know, go and read a ton there or like really pick it up.

And you know, there's not a lot of people out there that pick up the New York Times every day and read it cover to cover.

And that's effectively the same type of person that we were looking for, someone that cared about that

You have to somehow create enough value so that you get integrated into people's lives.

And I do think like the, you alluded to the like, people want 140 or 280 characters of crazy stuff.

Sure, there's an element of that that is, people want the crazy things that just spew up fake news this, fake news that, whatever it is.

But the other piece of that is that it's easiest to create a habit with something that's bite-sized.

And what we were asking people to do was read a real conversation.

It was kind of like an iMessage format, like people were going back and forth and having these back and forth conversations.

It takes you a few minutes to read, if not longer, to read these really engaging ones.

And they're smart people saying smart things.

You've got to think about what they're saying.

And jumping from not engaging with a service to engaging with a long conversation you have to read is a big jump to make.

And so I think, to your point, building habits is so crucial, and habits are easiest started with something very small that might eventually expand to something big and think about how much time many people spend on Facebook.

But it often starts with something really small there to build that habit.

Facebook has great things around, you sign up, connect with 10 friends.

It's all easy, it's all limited time, and then the habit starts getting grained and you can build it out bigger from there.

Okay, so let's transition to talk about Andy Bromberg phase 2.5, where you went back a little bit to, I won't say your crypto roots, but back to some of the work you'd been doing earlier at Stanford and got involved with, I guess, Naval and AngelList and eventually CoinList.

Brian Turner Yeah, so even to take a step further back than that, when I left school in 2014, I was crazy interested in crypto.

I was spending a ton of time on it with the Stand for Bitcoin group, my friends, and people in the industry.

And the reason I didn't feel comfortable doing anything in crypto at that time was because of a secular issue for me, which was, at that point, 2014, I couldn't make a decision.

I thought it was a coin flip, whether or not there was going to be 1 cryptocurrency forever, if Bitcoin was going to be it and that was going to be the end of it, or if there were going to be a ton of cryptocurrencies out there.

And I was looking at it and saying, startups, high failure rate already.

Do I want to add a 50% coin flip to that?

Because anything I could think of betting on relied on 1 of those 2 outcomes.

And I said, I don't want to add 50% more to an already high attrition rate, so I'm going to not do this for now.

By the time I came back, end of last year, middle

But yeah, double your chance of failure is not a good 1 to take off.

And so, 2017, I'm looking at it and saying, I'm now a believer there's going to be at least more than 1, who knows how many, successful cryptocurrencies in the long run.

We can talk more about what that number might be and how we should think about that.

But I feel comfortable going back to the space now.

And the story with CoinList is that CoinList started about a year ago, just over a year ago.

We just celebrated our internal one-year anniversary.

And it was created as a collaboration between Protocol Labs, proud Y Combinator company, and an AngelList to run Protocol Labs token sale for their product Filecoin, for their token Filecoin.

And I think that you have to unpack that a little bit because I was trying to think about how hopefully a lot of the people here and out there have understand cryptocurrencies and there's lots and lots and lots and lots that's been written and said about them, but maybe we can sort of very briefly outline what a cryptocurrency is, what a token sale is, what a token is, and why you might be selling them.

Yeah, so, you know, I think at its core, yeah, exactly.

At its core, a token is a scarce digital asset.

We'll talk more about what each of these things mean.

A scarce digital asset that represents ownership most commonly of a token network.

So the idea here is that when you launch a token network, it goes out and no 1 then controls it.

So Bitcoin, as a lot of you know, was created by the pseudonym Satoshi Nakamoto.

I don't know if that's a he or a she or a single person or a group of people.

Like this really important thing that's made and lost fortunes for people and maybe will be the basis of the future economy.

It's worth like $100 billion right now, the total market cap of Bitcoin, and no 1 knows who made it.

And in fact, Satoshi has some large number of tokens socked away in a wallet somewhere that has never been used.

We have billions of dollars worth of Bitcoin.

We have no idea who has that, literally No idea.

And so that is the ultimate ideal, how to think about it, that that's possible.

You can launch this token network and have it go out into the world and have nobody control it, and it just happens.

And so what these companies are now doing when they launch these new tokens, like Protocol Labs launching Filecoin, their intention is to build a network.

Got a lot of code to write, they've got to build this thing, and they're going to put it out there into the world, and they're of course going to continue to support it as core developers of the product and improve the network, but they won't actually have control over it.

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A Conversation About Crypto-currencies and ICOs with Andy Bromberg