Matt Odell, Bitcoin entrepreneur, podcaster and enterprise capitalist, sat down with Bitcoin Journal for an unique interview to debate the way forward for the trade and the insights behind his success.
Well-known for having deleted his Twitter account with over 250,000 followers to maneuver full-time to Nostr, the open supply Bitcoin-powered social media protocol, Odell has had a long-lasting impression in Bitcoin tradition and the trade. Having began a preferred Bitcoin podcast known as Citadel Dispatch, the place he has interviewed trade leaders weekly since late 2020, Odell is credited with iconic Bitcoin memes like “Keep humble, stack sats” and even branding the world “Zaps” to explain ideas made with small quantities of bitcoin over social networks like Nostr.
“After spending over a decade utilizing Twitter as my solely social media it was time to maneuver my vitality over to a protocol that permits extra consumer freedom,” Odell informed Bitcoin Journal.
Odell is a board member of OpenSats, a nonprofit targeted on funding Bitcoin-focused open supply tasks that will in any other case wrestle to discover a footing within the extremely aggressive, closed software program trade. He’s additionally a managing accomplice at Ten31, a for-profit enterprise fund that approaches Bitcoin VC work with a twin mandate: “Our first mandate is to make our traders cash and make good investments and return capital. And our second mandate is to assist Bitcoin flourish as freedom cash, assist make Bitcoin a greater instrument for use by the person, to empower the person.”
Initially a critic of Silicon Valley and the enterprise capital world, he has rapidly turn out to be certainly one of most renown VCs within the Bitcoin trade, main a imaginative and prescient for enterprise capital which posits that constructing free and open supply software program with consumer privateness in thoughts could be extra worthwhile in the long run than knowledge mining customers and locking them into “moats.” “All of our investments are constructed on high of open protocols. There’s no walled gardens. There’s not this entire thought of constructing a moat, like fencing your customers in, extracting as a lot knowledge out of them as doable, getting them hooked on the app, monetizing their time and their consideration,” Odell passionately defined.
“Once I was youthful, earlier than we launched Ten31, I used to be of the mindset that each one enterprise capital was unhealthy. And that was largely a product of my commentary of the massive enterprise corporations, the a16zs of the world… You see them throw a whole lot of tens of millions of {dollars} at shitcoin tasks to dump shitcoins on retail. After which a undertaking that’s making an attempt to ethically construct within the Bitcoin area struggles to get funding,” Odell stated of the enterprise capital technique seen in crypto.
The technique sought to search out exit liquidity for seed traders through ICOs or token launches, shortening the period of time it often took enterprise funding to get returns, from almost a decade to as little as a number of months.
Beside investments via ICOs, the normal funding technique pioneered by Silicon Valley — which Odell can be important of — VC meant investing huge quantities of cash in startups to create high-growth corporations that purchase huge quantities of customers as early as doable; then, attempt to ship glorious merchandise totally free, even when the businesses had been unprofitable for a few years.
The worth of the fairness in these conventional VC software program corporations trusted maintaining these customers, their knowledge, IP, and controlling entry to the community results, whereas additionally increase the infrastructure wanted to function and scale. This technique was the norm throughout low U.S. rates of interest within the early 2000s after which once more from 2008 to 2015, pushed by the U.S. Federal Reserve’s financial coverage. The end result was that plenty of low-cost capital discovered its approach to VC corporations which might then hold cashflowing these begin ups for a few years till they both grew to become worthwhile or might be purchased out by a competitor.
However these instances have modified and the USA’s financial dominance has been challenged by rising powers within the East. Low rates of interest can not be sustained with out very seen inflation. Because of this, many Silicon Valley startups have needed to make arduous pivots from excessive progress at a loss for a few years, towards early income, favoring Odell’s funding technique: startups that may turn out to be worthwhile rapidly and begin constructing a bitcoin treasury.
Earnings and open supply don’t combine properly; in actual fact, they nearly seem to be contradictory concepts. When requested the right way to obtain sustainable open supply funding and enterprise capital in open supply he stated, “I believe there’s a center floor that’s more durable” referring to the trail taken by OpenSats and Ten31. He continued that, “since you’re constructing on open protocols, you may hit a scale that closed proprietary software program probably can’t hit.”
Odell additionally defined that, “After we’re really on the lookout for investments, the aim is slightly bit completely different than conventional enterprise capital, in that we’re on the lookout for founders which might be, initially, constructing on Bitcoin and making Bitcoin extra strong, however which might be additionally prepared and capable of function very lean with as lowered bills as doable and attempt to turn out to be worthwhile as rapidly as doable.”
The VC financial calculus is sort of completely different if you imagine bitcoin is the most effective cash ever invented and has a protracted life forward of it. “In conventional investor land,” Odell famous,
“what you see is that this growth-at-all-costs mindset. They’ll burn $100 million, they’ll burn $200 million, after which perhaps in 10 years, they’ll begin changing into worthwhile. However you may’t do this in a Bitcoin world as a result of what’s the value of bitcoin going to be in 10 years? And try to be measuring all your income in sats, in bitcoin.”
Worthwhile Bitcoin startups can construct their very own bitcoin treasury reserves and over time turn out to be very profitable.
The Ten31 Portfolio And Funding Thesis
The Ten31 portfolio consists of over thirty corporations that construct on high of open protocols whereas being Bitcoin-centric and fast to profitability.
Start9, for instance, builds Bitcoin-native software program that’s open supply from high to backside; it’s purposeful on most {hardware} with out traditional Silicon Valley {hardware} restrictions like these pioneered by Apple. “Start9 is an ideal instance that may most likely by no means get a16z funding… Their complete stack is open supply. You possibly can by no means pay them a cent, and you need to use all of their merchandise… However on the identical time, their aim for monetization is twofold. You possibly can optionally purchase a pre-built gadget from them, they usually wish to add growing value-added companies on high — stuff like premium assist, proxy companies, stuff like that,” Odell famous.
Mempool.Area, maybe the most well-liked block explorer in Bitcoin, is one other instance of a profitable firm constructed round open supply. “Mempool.area is one thing that’s built-in in nearly each Bitcoin pockets. It’s a fully integral open supply software program… They monetize as a result of they’ve the transaction accelerator, which you’ll pay for with bitcoin… In addition they have B2B enterprise agreements,” Odell informed Bitcoin Journal.
AnchorWatch, a reasonably new Bitcoin firm that has tackled the very tough drawback of insuring bitcoin holdings from theft, is one other nice instance. The corporate builds on high of Bitcoin, attending to leverage its community impact but in addition bridging it to the insurance coverage market. “I believe the insurance coverage aspect is admittedly fascinating, particularly self-custody with insurance coverage… It really offers a price proposition to customers that’s higher than paper Bitcoin,” Odell added.
Of the cohort, Strike, the Bitcoin-focused fee app based in 2019 by Jack Mallers, is Ten31’s greatest and most worthwhile funding. It’s obtainable in nations all around the world and delivers Bitcoin’s cutting-edge expertise to the general public whereas additionally navigating the complexities of regulatory compliance and a seamless consumer expertise. “When it comes to a pure funding viewpoint, Strike is by far the corporate I’m most enthusiastic about. We’re the biggest investor. We’re the one exterior board seat… That firm is international. It has important product-market match. It’s extremely worthwhile. They’re stacking bitcoin to their treasury: They’ve over 1,500 bitcoin of their treasury… They usually’re worthwhile. So, each month, they’re simply buying extra bitcoin.”
OpenSats Funds Open Supply Growth
Based in 2021, OpenSats is the nonprofit group that preceded Ten31. It funds open supply builders and entrepreneurs creating Bitcoin infrastructure that will in any other case be very tough to search out funding for. “OpenSats had this dream that, okay, perhaps we might clear up this drawback by plebs giving $50 a month, pledging to present $50 a month to open supply developer grants… That turned out to be far more tough than I anticipated,” stated Odell. Concerning the early imaginative and prescient of the group, which sadly didn’t attract as many dependable donations as wanted to fund open supply Bitcoin builders, he recalled: “Particularly, OpenSats is 100% pass-through as a result of loads of charities have questionable practices the place they take a big reduce of donations.”
Odell added that, “Bitcoin is the most effective cash that has ever existed. However there’s this bizarre dichotomy that exists. It’s the most effective cash that ever existed, however cash for builders within the Bitcoin area is extremely tough to return by as a result of, initially, you’ve this overarching crypto ecosystem that drains a ton of capital. After which among the many people who perceive the ability of Bitcoin, loads of them are unwilling to half with their sats and have a tendency to carry on to their bitcoin moderately than utilizing it to assist builders.”
However, OpenSats bought a beneficiant donation from Jack Dorsey — co-founder and ex-CEO of Twitter — of 31 million {dollars}. “All of our giant donations are public, of that 35 million on the OpenSats facet, 31 million was Jack Dorsey’s private charity, Begin Small Basis, which is our main supporter,” Odell stated. An fascinating truth is that even at this time, after years of offering grants to Bitcoin open supply tasks all through the world, their treasury is bigger than what they ever raised, as a result of they stored all that capital in bitcoin. “We even have extra in our multi-sig treasury than we’ve ever raised within the lifetime of the group. Which is fairly superior. Our treasury technique is the most straightforward, efficient treasury technique, which is: Each greenback that is available in mechanically will get transformed to bitcoin. We simply hold 100% bitcoin reserves.”
The Bitcoin Coverage Institute
Odell can be a founding member of the Bitcoin Coverage Institute, a serious participant in educating politicians in Washington about Bitcoin, the way it works and why it’s helpful to the general public. The latest pivot of the Bitcoin trade towards partaking Washington differs from the pure libertarian mindset of Bitcoin’s early historical past. To Odell, nonetheless, this can be a pure extension of the 2 basic pillars which have made Bitcoin nice — training and tooling. These pillars had been pioneered by the Cypherpunks of the 90s within the first “crypto warfare,” and succeeded in making nation-state grade cryptography obtainable to the world.
“A part of the inspiration, too, is, you understand, I used to be fairly disenfranchised with politics. And Adam Again personally was a giant inspiration for me when it comes to his expertise with the unique Cypherpunk motion and the unique crypto wars. When it got here to encryption, they fought it on two fronts. They fought it with instruments. So that they made it actually efficient and low-cost and accessible for individuals to encrypt issues, however in addition they fought it within the courts and in politics and in thoughts share,” Odell recalled.
These two pillars had been additionally seen from day certainly one of Bitcoin within the type of the Bitcoin Discuss discussion board and the Bitcoin software program, each based by Satoshi Nakamoto. The pillars had been afterward prolonged to Bitcoin meetups all around the world and the large proliferation of Bitcoin wallets and {hardware} safety gadgets, in addition to developer tooling. At the moment, BPI extends this training pillar to policymakers who typically know little or no about Bitcoin, the way it works or why it’s in the most effective curiosity of the general public, which they, as public servants, are finally subservient to.
Bitcoin Park and the Social Layer
Odell can be a co-founder of Bitcoin Park, a neighborhood hub out of Nashville, Tennessee, which has gathered a major quantity of Bitcoin expertise within the U.S. and hosts occasions commonly. Earlier this yr, they expanded to Austin, Texas, buying the Bitcoin Commons, establishing their presence and attain in maybe the 2 high cities for Bitcoin in the USA.
“Bitcoin Park started at a brewery in Nashville,” Odell recalled. “It was a meetup at a brewery, and we rapidly hit, like, 200 individuals a month for meetups. The brewery was mainly like, ‘you may’t come right here anymore’. And we’re like, okay, let’s discover our personal area. And that’s how Bitcoin Park Nashville was born.”
When requested what his imaginative and prescient for Bitcoin Park is, he stated, “I’d ideally prefer it to… simply be an inspiration for different communities to pop up world wide that aren’t managed by Bitcoin Park… I believe it’s straightforward to consider Bitcoin as a tech motion, however it’s actually a motion of people, proper? And the tech simply empowers the people.”
Odell’s Warning About Bitcoin-Backed Loans
Odell had a cautionary warning about bitcoin-backed loans, which he has a deep perception into by benefit of Ten31’s funding in Strike. Explaining the demand for this new kind of Bitcoin firm, Odell stated that “the principle demand driver actually is persons are sitting on important capital positive factors, taxable when you use/promote — which is known as a tax on financial savings… Should you’ve been sitting on bitcoin since $100, $200, and also you’re promoting for $120,000, you’re paying the federal government like $30,000 — which is type of insane.”
He additionally warned of the draw back danger within the bitcoin value, a theme that’s generally mentioned; he advises customers of those loans to be “very conservative.” He additionally warned about the necessity to compete on this market with self custody — or as a minimum auditable constructions — that segregate the Bitcoin collateral from re-hypothecation. Stressing the necessity for competitors on this market, “I believe it’s a vital product as a result of they’re going to supply it for the ETFs, and it creates a really perverse incentive the place you’re higher off not holding actual bitcoin… It’s actually vital for Strike and the opposite corporations within the area to supply a very strong, good product when it comes to loans in order that there’s a really sturdy incentive to stick with actual bitcoin.”