Usebraintrust Revenue & Funding (2024)

[00:00] Folks. My guest today is Adam Jackson. He's the co founder of braintrust, the first user owned talent network that matches tech talent with clients. Before this company, he co founded Doctor On Demand, a popular video telemedicine provider with daytime talk show personality, Dr. Phil. Adam, you're ready to take us to the top? [00:14] >> Hey, good to see you. [00:16] Glad So to be you I'm going off memory here, so correct me if I'm wrong, but you were effectively making the case about nineteen, twenty months ago that you were going to basically take and do what Indeed has done, but put it in Think More Web three and enable people who bring talent to the platform to participate in the upside the platform creates as well. Is that accurate? [00:34] >> Yeah. You got it. And and it's a slight difference from from Indeed. So Indeed's like a job board. It's like, hey. We posted openings. Somebody fills it. It goes away. Braintrust is actually a marketplace. So the difference being you you post a job. We actually host a transaction on Braintrust. All the reputation, work history, and all that good stuff actually accrues to you on Braintrust. And so the the whole process and then happens on the marketplace. [00:58] >> So it's not just a job board. [00:58] >> Is Adam. [00:59] I see. I see. I see. I see. So it's a it's a would you want would you call it a closed ecosystem then? [01:04] >> No. No. It's a labor marketplace. [01:06] Okay. Cool. Labor marketplace. So talk to me a little bit about what happened here. So it was nineteen months ago. How'd you how'd you did you have anyone like, were you issuing tokens effectively? Did you do, like, a a token or to raise an ICO, if you wanna call it that? [01:19] >> Yeah. So we we started out giving people tokens that were basically off chain and weren't real tokens in in exchange for know, they're like credit like an IOU for a token. Right? And they were in exchange for helping us bring in more talent, vet that talent, bring on more clients, onboard the clients. All the things that you would do as a normal company, you'd raise hundreds of millions of dollars for and have, you know, 25,000 employees. [01:42] >> We we invert that. We you know, you you have the community do all the work. Our core teams only have, like, thirty, thirty five people working on them. And so we were last time you and I spoke, yeah, we were, like, just getting out the gate, then COVID hit. Remote work became the new normal. The braintrust model became really in demand. And then fast forward to September of twenty twenty one last year, our token hit the [02:04] >> Ethereum mainnet. [02:06] Okay. And what does that mean for folks that are not familiar with crypto? [02:09] >> Sure. Yeah. It's it just means the braintrust token, BTRST, is now live on the blockchain and can be given to anyone who helps the network. It can be bought and sold on Coinbase. It's it's a live token ecosystem. It's not a test net anymore. [02:25] And so how did you what value did people who you gave the fake tokens to before you How did they now translate into real value under BTRST? [02:35] >> Yeah. It's totally market driven. So it's just, you know, total supply and demand dynamics when they were minted before the the network. When they were IOUs, they they had no cash value whatsoever. And there you know, it's it's a governance token. So there's a there's a few different uses for it, but it's one token, one vote on the system. So all the all the rules of the network, like how many what fees should talent and clients [02:58] >> pay, what should the product road map be, you know, what should we build next. Those are all sort of determined through token voting. So it's a governance token. And then recent protocol upgrade, the token is actually used they were the pro the network requires clients to pay their network fees in the braintrust token. So you have the protocol going out and buying its own token. [03:21] Interesting. Okay. So when listed this, I'm looking at coinbase.com/price/braintrust. In September last year, the token hit a value of $32.55 hit a low in January well, last month of $2.13. Now it's up to, like, $5. What causes this kind of volatility? [03:40] >> Well, crypto is really volatile. I mean, it's just a it's such a nascent asset class that I think, you know, these tokens people are still figuring out what they're worth to folks on the network. You know, to to to make a a clear distinction, like, the the cash value of the braintrust token is actually not relevant to the network. Right? It's it's one token, one vote. The more tokens you have, the more influence you have over [04:03] >> the network. So whether that token's worth 10¢ or a dollar is not actually that relevant to the operation of the network. [04:10] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:34] your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:58] get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:20] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you're [05:46] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second. But if [06:08] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the [06:34] interview. Understood. Understood. [06:36] But if someone goes, man, I really like this Adam guy. I wanna I want can they buy these tokens or they have to earn them? [06:43] >> You can buy them. [06:44] >> Well, they can't buy them from us. So you'd have to go go to Coinbase. Yeah. Yeah. Sure. [06:48] But like, let's say I have no intention of bringing freelancers onto braintrust, but I believe in the vision, and I think you're gonna beat Fiverr over the long term. I might today go in and buy 10 BTRST tokens at $5, and then let the system keep doing its thing. And then one day maybe it goes up to $60 and I wanna cash out a little bit. Right? So why do you say that the token value doesn't [07:09] matter to the ecosystem? Isn't that an important part of this? [07:12] >> I mean, it's not irrelevant. Right? But the functionality of the token doesn't depend on cash value. Right? The folks that have earned we've had, you know, 40,000 plus folks earn tokens over the last couple years in exchange for helping build the network. Invite talent, vet the talent, invite clients. A lot of those, the vast vast majority of those folks have kept their tokens because they they represent control, influence, voting power over the network. And that's where [07:41] >> the cash value piece doesn't matter. Right? Like, it's always one token, one vote no matter what the token's worth in US dollar terms. [07:48] So right now when I'm on Coinbase, it says there's 87,900,000 circulating supply. And then under it says that's 35% of the total supply. Where's the other 65%? [07:58] >> You got it. Yeah. The other 65% is basically sitting in treasury waiting to be given out to further contributors. [08:05] And who controls what the treasury spends money on? [08:09] >> Two entities. First is the code itself. So the network software itself runs the referral engine. So if Nathan Latka comes in, it goes to braintrust.com, creates an account as a connector. Right? There's talent who do the work. There's clients who hire the talent, and then there's connectors who are essentially people making intros. Nathan comes in. Anybody can come in, get a code, unique code. And then if you refer talent and they start transacting, or if you [08:34] >> refer a client and they start transacting, you're gonna start earning bonuses on based on a percentage of those transactions in the form of the Braintrust token. Those tokens come out of treasury, and it's all done via via the code. It's a permissionless system. Right? It's not like a person approving it. And so and then the second way is the community DAO. So a big chunk of the treasury is controlled by community members through the grants [09:01] >> program. You could apply for a grant on Braintrust and say, let's say a group comes to the grants program on Braintrust and says, hey, we're gonna translate Braintrust for the Asia Pacific region, and we're gonna apply for a grant, you know, for say, you know, 500,000 BTRST to do that. If the community decides, hey. That's a good idea. They fund it. They vote on chain, and the and the funds, the tokens flow [09:23] >> out of the DAO. So it's it's community controlled or software controlled is how those tokens are distributed. [09:28] Currently, who is the biggest voter? Do do you know who it is? [09:33] >> I don't, actually. It's a it's a, you know, semi pseudonymous network. Mean, if you go actually, there's a leaderboard of people who've earned tokens. If you go to info.braintrust.com, you could see if you scroll down kind of three quarters away through the page, there's actually a leaderboard of folks who've earned tokens for referring. So that's a good indicator right there. [09:55] I see. Interesting. How many how many employees does braintrust have full time working for you? [10:01] >> Yeah. So this this is kind of the interesting part. So braintrust is just the network. Right? There's no braintrust inc behind it. There's now seven core teams, so little companies that kind of like spend a lot of energy and resources building Braintrust. Those seven core teams probably have like thirty, thirty five, 40 or so full time employees. And so it's a relatively small or each? Total. Total. Total. So it's a relatively small core group, but [10:26] >> then you have 40 something thousand people in the community all contributing at some level, whether [10:31] it's Which of those cores are you part of? Like, what like, pre because pre last year in September, you had to something. Right? You raised 5,000,000 seed round in 2018. I'm assuming there was an entity that was the LLC that that money went into. [10:42] >> Yeah. Yeah. It's my core team. It's called Freelance Labs. [10:45] Freelance Labs. Okay. So that is one of the seven core teams? [10:47] >> Yeah. You got it. [10:48] I see. How many people are on your team? [10:50] >> It's about 20 of us. [10:52] 20 of you. Okay. Got it. So how do you pay those 20 people? [10:57] >> We have a software development firm that makes money. Like, it's a it's a dev shop just like anybody else's. Most of the other nodes are either dev shops or sales groups that make money off servicing clients. The whole point of a user owned network is to build the network as a public good. In our case, the public good is connect clients with the talent that need them. And so it's built and maintained and upgraded by our [11:21] >> talent. Right? Which is it could either be, you know, individual freelancers who write code or design UI or write product specs or groups like agencies like mine. [11:30] Mhmm. Okay. And and so how did you so what happened to the the 5,000,000 seed you raised in 2018, the 500 k in 2020, the 18,000,000 venture round in October 2020? Do they all now own a portion of your dev shop? [11:46] >> They own tokens. So the investors, the purchasers in those rounds were purchasing tokens. And so, yeah, there's the equity in my dev shop is not worth anything. So I wouldn't there's no reason to to raise money. [11:58] So how did you convert the 23,500,000 you raised before you listed officially as a token in September of of last of twenty twenty one? How did you decide how many tokens 23,500,000 equity raise should get? [12:13] >> It was a prenegotiated term of those rounds. [12:17] Okay. Just I'm totally uneducated here, Adam. So if if I'm I'm writing you an $18,000,000 equity check-in in October 2020 Yeah. Walk me through that negotiation. [12:26] >> Yeah. So you you buy you've heard of SAFEs. Right? Simple agreement future equity. These investors bought SAFTs, simple agreement future tokens. SAFTs have conversion caps. SAFTs have conversion caps. Right? And so there was a conversion cap in the SAFT. It's different levels for different SAFTs, but they were all, you know, somewhere below a dollar, basically. And that's the conversion price. [12:50] The token value. [12:51] >> Exactly. [12:53] I see. So so a Saft is effectively so I've given an $18,000,000 check. We're saying, Adam, we're giving you this venture check so you can keep building the codes. You can eventually list on Coinbase, launch your own token, launch your own decentralized network. But in order us to write you this $18,000,000 check, you're agreeing that when you do list, you're reserving a portion of the tokens for us, and the the token value will be 50¢ for [13:16] for for the 18,000,000. So 18,000,000 divided by 50¢, we can calculate how many tokens the VCs own. [13:21] >> You got it. [13:23] I see. So of the current out now is the VC dollars, those are not the 65% in treasury. Right? Those are the 35% in circulation. Right? [13:32] >> Some some most of the VCs are still locked up. The one, the, some, the some that have been unlocked are in circulation. [13:39] Okay. But the locked up one, they're still in treasury? [13:41] >> That's right. [13:42] Oh, I see. So of the total 100% pie of all the tokens in treasury and in circulation, what percent are we know this. Right? What percent are owned by the VCs or or investors before you listed? [13:53] >> Around 22 or so percent. [13:55] And how does that compare to other folks that have gone down this sort of same path you have? [13:59] >> I I think it's roughly the same ballpark. I think so what's interesting is token projects on on par kinda raise less money than equity projects because the community is doing more of the work, right, and and getting more of the ownership. Right? So like a typical startup who's two years old like us wouldn't have 45,000 shareholders. Right? But we have 45,000 ish token holders. Right? Because it's just a it's a more efficient way to sort of [14:27] >> crowdsource development and upgrading of the protocol. [14:32] I see. I see. I see. And so 45,000 token holders, including the three or four VCs that wrote checks beforehand. So those four or five folks control 22% of the total 100% supply of tokens. [14:44] >> There there's actually there was probably a 140 investors in those rounds. [14:50] Oh, so these were, like, super angels writing 100 k checks adding up to, like, 23,000,000. [14:54] >> Yeah. There's a there's there's a couple big VCs in there as well, Homebrew, True Ventures, Blockchain, Acme, Multicoin, Pantera, and then and then some strategic angels as well, like Scott Belsky, who's the CTO of Adobe, Robert Leshner, founder CEO of Compound, folks like that. [15:10] I see. Interesting. Okay. And and someone listening right now might be going, wait a second. So what does Adam own? Right? So so typically in an equity business, you would own whatever you haven't sold off the VCs and whatever you don't have in the ESOP pool and whatever your co founders don't own is what Adam has left. How should we think about that now? [15:26] >> Yeah. I mean, I I you know, founders will carve out a piece for them themselves at the beginning, and that's typically kind of what they live with, and and then they get diluted down. [15:37] Say of what? The company formation in 2018 or when you listed as being Sorry. [15:41] >> I lost your audio, Nathan. [15:42] Yeah. Sorry. Beginning being in 2018 when you launched the business? Or [15:45] >> I I don't know why I can't hear you. [15:48] I I don't know why either. Can you hear me now? [15:50] >> So strange. [15:53] Can you hear me now? [15:54] >> Yeah. Yeah. Now you're back. [15:55] Yeah. So was just saying, when you say beginning, you mean when you launched in 2018 or when you first listed on Coinbase? [16:00] >> When you launched in 2018. Coinbase listing is all that means is some portion of the tokens are now tradable. It doesn't, like, it doesn't change the pie chart. [16:09] Yeah. Yeah. Okay. Okay. Interesting. You create a little bit of liquidity. Right? People can buy and So so okay. How did you think about that? Right? When you launched the company, how much did you reserve for Adam? [16:20] >> The founders got it was probably around 10% combined. [16:26] Okay. Okay. So is the best equivalent here is like when I launch or anyone listening launches a SaaS company, they have 10,000 shares they issue, of which 9,000 are going to the core founder and a thousand are reserved for the team. It's sort of the same thing, right? Except you're talking about token values instead of exercise pricing. [16:43] >> It's a different actually. Like, imagine so what you just said is like a typical kind of SaaS cap table seed round or pre seed. With with tokens, you actually want the majority of the tokens to go to your community because the community is gonna do the majority of the work. Right? There's no ESOP. Right? So in in and there's a fixed supply in in our token economy. You can't make anymore. Like, you can't issue new tokens. [17:09] >> Right? It's it's locked into our smart contract that we have a fixed supply, 250,000,000 tokens, which is interesting. Right? Because you can never be diluted. Right? It's dilution proof. And so we actually said, like, okay. Well, like, investors will probably own eventually, like, up to 25 of that that that token cap table, and then founders will get, you know, and then and then maybe another 10 for, like, core team contributors, and then the rest go to [17:34] >> community. [17:35] Mhmm. So when I look at the leaderboard and someone like Julia d has 30 are these 32,046 tokens? She's number one on your leaderboard? [17:43] >> Hang on, Nathan. This audio is coming down. [17:45] Say again? Yeah. No worries. Can you hear me now? [17:47] >> Yeah. So when we look at [17:48] someone like Julia d, who's at the top of your referral leaderboard, when it says 32,046, that's the amount of token she's earned. [17:57] >> I I just don't understand what's going on with this audio. The the top of the referral leaderboard is where I lost you. [18:02] Yeah. Julia D owns 32,000 tokens. [18:04] >> Yep. Those are tokens. [18:06] Right? 32,000? [18:07] >> Tokens. Yep. [18:08] Okay. So you could argue at the current price of $5, she's created a $160,000 worth of value by contributing to the network. [18:15] >> Mhmm. Exactly. [18:16] I I see. Interesting. Okay. Interesting. And when we have on the right side average market rates for, like, engineering, Centos, Active Directory, Elastic Security, are these all, like, are these all of the seven core teams, or are these outside developers wanting to contribute? [18:28] >> No. So these are actually skills on the marketplace that transact. So let you know, look at so say, like, you know, Elastic Security. That's a DevOps skill. That means of all the clients hiring talent on braintrust for that skill, that is the average hourly rate. [18:48] I see. [18:48] >> Yeah. So it has nothing to do nothing to do with core teams. That's all this is all data just coming right off our marketplace. [18:53] Okay. Interesting. Alright. Last question. I started, like, three months ago getting notifications on my YouTube of people posting on your interview going, like, scam. You know, they now look. I don't know who these people are. Right? Because they're anonymous. So we have to take this with a grain of salt. Right? But Chase LeBlanc said scam. This username host two said rug pull pyramid scam. Did you do something four months ago that pissed off the community, or [19:14] what could make them say something like this? [19:16] >> You know, crypt crypto all crypto assets are very price volatile from the big boy Bitcoin all the way down to small tokens like ours. And I think when, you know, retail traders lose money in volatile situations, they just call everything a scam. [19:36] But you haven't had a lot of volatility between November 2021 and last month. It was between $5 and and $2.50 versus volatility at the beginning where you dropped from 32 down to 5. I could see where they complained then. But these were complaints four months ago. There wasn't a lot of volatility. [19:51] >> How do you know when they bought? [19:54] Well, these comments all started coming in four months ago. So when I go back to your price chart four months ago, and go back to October of twenty eighth, right, between like October and November, the price was fairly stable. There's nothing to complain about. There's no big dip or gain. So I'm just trying to think, can you think of something that may have caused them to be upset four months ago? [20:14] >> No, no, no. Was definitely the price. You're not looking at the chart, right? If you look at from from October 15 to November, pick a date, there was there was a lot of volatility. [20:25] It went from $10.21 down to $5.93. [20:29] >> 50% reduction. [20:31] Is that a lot of volatility considering that when you launched, you went from $32 down to 9? That's way more volatility. I mean, that's losing 70% value, right? [20:39] >> I mean, dude, if you wanna know why someone called us a scam, you should call them and ask them and have them on the show. [20:43] Well, I don't know. That's something that's all with a grain of salt. Right? These are random YouTube users. I'm trying to ask your prediction on on what you're saying your prediction is because the the the token lost $3 in value, you're saying that's probably what caused you to be upset. [20:55] >> I I that's the only thing I could think of. [20:57] Okay. [20:57] >> I mean Okay. [20:58] >> I'm not running a scam, if that's your other question. Like No. No. If I if [21:02] I if I thought you were, I I would have asked you, are you running a scam? And I wouldn't have given up until I got a good answer. Yeah. That's not what I'm saying. I'm trying to ask you to predict what what why the perception of your business from two random YouTube video use commenters are scam and pyramid scheme. And what you're saying is volatility in crypto. [21:20] >> And idiots on the Internet. [21:22] Yep. Now to counter that, the the token value has increased over the past, you know, $2.13 in January 21. It's almost doubled up to today. What like, are you seeing does activity increase on the system? Did you get a influx of applicants and the price goes up? Is there a direct correlation between utility value and the price or no? [21:39] >> Yeah. Yeah. Good question. So look. First of all, like, you know, we're not obsessed with price. This is, like, not why we're doing this. Like, we're building a useful network so people can find gigs and not pay any fees. Right? We're built for the talent, by the talent, owned by the talent. Last week, there was a community protocol upgrade where the community basically said, hey. That 10% fee collected from clients in cash needs to be paid [22:04] >> in braintrust token. The community developed this new smart contract called the fee converter, which takes US dollars from clients like Goldman Sachs or Nike and and sends it to that smart contract. That smart contract buys braintrust tokens on the open market, sends it to the DAO. And the DAO is used to fund more community development, more protocol development. So that creates a link between activity on the marketplace, I. E. Fees being generated and demand for the [22:31] >> braintrust token. Now I personally had nothing to do with that upgrade. You know, it was a community led thing. But if you think about it, like, that that could create different, you know, demand dynamics for the token. So that could be one explanation there. The other explanation is, you know, [22:48] why does Bitcoin go up and down? Right? [22:50] >> It's very hard to say. You know, there's a lot of speculation in this market. [22:54] Yep. Yep. Yep. And is it mean, if if we look at just, again, you know, founders build things to build freedom in their personal lives, great personal wealth, and change the world, right, at the same time. When we look at the 10% you and the other founders carved out for yourselves at the beginning and look at the market cap today, $365,000,000, I mean, is it can can we sort of think about it like, okay, they've created [23:12] $36,000,000 if they sold all today of wealth for themselves. Is that sort of an okay way to think about it? [23:17] >> Yeah. That's not inaccurate. [23:19] Okay. Very cool. Alright. On that note, let's wrap up here with the famous five. Number one, favorite book. [23:25] >> Oh, man. Should I I'm trying to think of what I said last time so I could say something different. Anyway, I'll just say it. Venture Deals by Brad Feld. Be smarter than your lawyer. [23:33] Number two, is there a CEO you're following or studying? [23:38] >> I love Sam Bankman Fried, CEO of FTX. [23:42] Number three, what's your favorite online tool for building braintrust? [23:45] >> Google Docs. [23:47] Number four, how many hours of sleep do you get every night? [23:49] >> Six. [23:50] And situation, married, single kids? [23:53] >> Married, three kids. [23:55] Wow. How old are you? [23:57] >> 40. [23:58] Last question. Something you wish you knew when you were 20. [24:04] >> Be more patient. [24:06] Guys, there you have it. If he has his way, braintrust.com will eventually replace Fiverr, remove the middleman, and save more of the project revenue for the people actually doing the work and the ones bringing the talent to the marketplace in the first place. Finally listed on Coinbase, so it creates a little bit of liquidity under the BTRST token, $3.45 ish as of today, market cap value. But again, not doing it that reason really to build a [24:28] marketplace where talent can find jobs, get paid, and keep more of the spread. Adam, thanks for taking us to the top. [24:33] >> Thanks for having me, Nathan. Great to see you. [24:36] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday one [25:01] pm Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. Make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the world, whether it's an acquisition, a big fundraise, [25:24] a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up for [25:46] that at nathanlatka.com slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We [26:05] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. [26:12] >> See you.

Introduction hello everyone my guest today is adam jackson he's a software engineer turned tech entrepreneur and investor who started four bc backed companies and an asset management company over the last 16 years he's looking to create open equitable marketplaces that use customer focused technology to boost collaboration between users without the cost and friction of conventional channels adam you're ready to take us to the top absolutely all right let's do it yeah so make all that sort of real for us explain how customers using brain trust sure so braintrust is a global talent network that connects high-end experienced tech people like engineers designers product managers with fortune 1000 us companies that desperately need this kind of talent and just can't hire them in-house and especially now with covid where everyone's office is shut down and hiring is even harder uh brain trust is especially filling this hole for enterprise companies that need to keep digital innovation moving forward okay so when i think of that and i'm just learning about you obviously right now but i think about you know sites like top towers or sort of better versions of fiber or upwork for more top tier talent what are you doing different than toptel yeah the so so getting matching talent in clients is not a new thing what we're doing from a business model perspective is brand new never been done so the old model is when you when you run a two-sided marketplace your job is to create a trusted transaction or place the transact and then take as much of that transaction in the form of a fee as you can right and those fees could be 20 25 it could be all the way up to 50 plus percent in in talent market places that's where brain trust gets very unique we charge a flat 0 fee to the talent side so talent can come in set their market rate and earn 100 of that rate and then a flat 10 fee to the clients and so what this does is it's not gonna we're not trying to disrupt upwork or fiverr those are sites where you get a logo or a website we're looking to build large and facilitate building large software platforms big big projects multi-million dollar projects that could never touch a marketplace okay so let me just let me try and break that down is braindressed exclusive tour development talent or any kind of talent it's today it's just for product development talent so we have engineers ux designers product managers those kinds of people okay and so let's say a product manager that just got laid off from airbnb in san francisco wants to find work they're now remote only they list on brain trust what what might they list as their price yeah we actually have people who've been laid off from airbnb and uber and various other tech companies here in the bay area that have come on created brain trust profiles and then they can list whatever they they feel like they want for for a market rate most people's market rates are between you know in in the u.s it's going to be more expensive between one and two hundred dollars an hour in other places around the world it'll be cheaper than that okay but that's it's an hourly rate it's not like a salary or a monthly retainer it's an hourly rate we start with hourly rates but a lot of companies will come in to brain trust and say look we're going to want 10 data engineers we're going to want five ux designers and we're gonna want them for indefinitely so they'll go ahead and contract a monthly rate at that point i see can okay so let's say her name is sarah she's an ex airbnb product manager lists at 200 bucks an hour pepsi has a new project that's software oriented they hire sarah on their platform they use it for a hundred hours 100 bucks an hour they now want to move to a full-time contract with her what does that look like can can pepsi or coke pull sarah off your platform essentially they can be because in a lot of platforms will charge you steep penalties for pulling people off the platform we don't care the reason we charge very low fees and no penalties for leaving is because we're actually owned by our users so it's not just me and a couple investors our users actually own the network so we're fine if people get plucked off so let's talk about that right so there's a bit i believe of sort of a blockchain like thesis here right which is look i used to interview in fact i had the shopping founder on right after did an ico and i grew up the hell out of them and my question i learned to always ask anyone doing an ico is what percent of the ico did you convert to fiat after the ico closed if they said anything greater than 20 the fraud things are going off in my head sure enough shopping when the number was 80 and two days later the sec is coming down with two counts of fraud and he's in jail right so because they would sell the utility value of their token and then convert it to fia makes no sense so walk me through how you see sort of the be trust token working from a utility and marketplace value perspective yeah absolutely so you know a lot of lot to unpack there you know we we never have a never will sell tokens to the public there's no reason to do that um the way our token works and i'll start by saying um it is not a payment layer all the jobs done when your friend joins from airbnb and does contracts with pepsi that's all done in cash okay we don't need another payment layer right now um our token the branches token is used as an incentive mechanism so we use it to reward people for building our network what does that mean that could mean actually coding and building the software for brain trust but more more likely it's inviting new talent helping vet that talent we have a peer-to-peer vetting system so it's not just us vetting everybody and inviting clients so we we've raised a modest seed round we're not you know most companies go raise hundreds of millions of dollars they build out giant sales and marketing and product teams how much waste we've raised six million so far okay and so we we actually instead of hiring all those people in-house we have our network do it for us refer clients refer talent all those things and we give them our token in exchange for that and so our token is used as an incentive mechanism now they won't do that unless they sense inherent future value of the token so you have to sell the story sell me what's the story so here's the story so so let me back out to the real premise that makes us unique and different here my co-founder and i gabe we firmly believe that user owned and controlled networks will grow faster and be more valuable than founder in investor owned networks okay so very different ownership paradigm here and so how do you allow 10 million people in 50 countries to own and control a network vote on the rules and all that stuff well you just can't do it with shares of a delaware c it's physically impossible right it's logistically impossible so we instead of shares of stock we use tokens and these tokens are given out in proportion to given out to people in proportion to the value they drive inviting people vetting people bringing clients on and the usefulness of that token is voting control of the network okay so so right now the the fee schedule's really simple zero percent charge of talent ten percent charged to clients you know people say like well why why do people care about voting on network rules right it's like well i'll give you an example like you remember last year when doordash roll out this new feature where you can tip your dasher cash after the delivery well then so they they roll it for a year doordash inc decides to book all those tips as revenue and basically steal the money right if doordash had been run like braintrust where it was a user-owned and operated network and rules had to be approved by the users first they couldn't that money could have never been stolen so that's the incentive to get our token and have influence over this platform you make a living on so just be clear it's it's not bitcoin in a sense of a payment layer but it is a contract sort of token erc 20 token built on the ethereum blockchain it's an erc20 token built on the ethereum blockchain exactly right roger that so so you have to decide how many tokens there are at the beginning for people to compete for and there has to be limited supply otherwise if anyone can get them at any time there's no value to them so how many tokens did you start with we're gonna we're gonna start with an initial supply of 250 million tokens we can never print it anymore okay and and just quickly this is an aside from a regulatory perspective how do you actually like set that limit what do you do to like register that or get it going yeah yeah so this is just built into the smaller contract right when you write your smart contract in solidity and then and compile it and run it on ethereum one of the inputs is how many tokens are are there ever allowed to be in existence once that contract is pushed to the blockchain there there's no changing it unless uh people decided to start over and we you know we started from scratch on a different network but that is that's locked into the blockchain and that's what gives the token scarcity right that means i can't change my mind later and dilute everybody and delude our members and that kind of thing that's where the blockchain comes in right you you just can't rewrite that it's immutable and that that's why this is a new business model that couldn't have been done before blockchain tech this is what eos was trying to do it to do with with their dapps idea that kind of a decentralized application they're trying to launch their own facebook where every time you know a user uploads their own comment or a picture a selfie they get a little bit of like the new facebook sort of token so that zuckerberg can't steal your data on self advertiser so i think i definitely like get that but like let's keep just like digging here for a second right so on the day when you start when you when you have these 250 million tokens to issue on day one how do you decide how they get split up or they sit like in a vault somewhere and no one owns any and you start slowly doling them out yeah great great question so um so e so even today before the live token is actually on the blockchain we're still on test net today we've we actually have thousands of people working toward earning credits that will convert into our token right so we just keep track of them in a database but these are people that are developers designers building the you know marketers people making introductions to clients they're all earning credits that will convert into this token when we launch next year uh so so when we launch a big portion of the tokens will already have been spoken for and will be distributed to these folks that have been helping us for two years now the rest that have been unallocated will sit in treasury and that's exact it's basically what you just described it's this wallet that nobody can touch that only the smart contract can give out to people who who help build the network and we basically distribute those tokens as bonuses for people who refer business so nathan if you re refer microsoft to brain trust and you use your unique code and microsoft that product manager signs up at microsoft and um and starts microsoft starts paying invoices our protocol is going to reward you some percentage of that invoice as a bonus in perpetuity for as long as microsoft transacts you're going to get that bonus every month paid in token by our smart contracts who controls um let's say someone brings in microsoft who ends up over the next 10 years paying 10 million dollars through brain trust who controls the multiple you're applying to the 10 million in fiat as it relates to the value of a new be trust token is are you rewarding 0.1 percent of 10 million and 0.1 you know and that fiat is the conversion to the be trust token like how because whoever controls that ratio really actually controls the dilutive network of the token issuance right exactly right so so what what you're getting at here is if if we're giving let's say one percent of of all uh transactions on on the person you refer let's say one percent belongs to you the person who referred that one percent that comes in as cash because microsoft's paying its bills in us dollars and so let's just say for round numbers it's a ten thousand dollar bonus that you're owed the the protocol will actually buy ten thousand dollars worth of brain trust token on the open market and send it to you in the form of token now i see so then so it doesn't matter what the price of b trust is right if the market determines that right so you may get a lot of be trust or a few b trusts but you're always going to get a reward denominated in u.s dollars so what's the day one market cap of the companies the last round valuation you raised your fiat on the vc round like who comes up with that because that is ultimately what sets the benchmark ultimately and and the market will ultimately decide what that day one price is the the money we raised last year in 2018 we raised six million dollars it's it's on a convertible instrument so it hasn't been priced yet what's the cap um the cap is um uh 33 cents per token and and so times 250 million so about an 83 million dollar network cap is that the cap on the note you rate the 6 million note you raised that's correct Raised holy crap you did a capped you did an 80 a note 6 million dollar note with the 80 million cap on that's the largest cap i've ever heard on a note and you know the reason for that is because you can never be diluted right so this is you know this is a fixed supply of tokens that can never we can never print any more of them so you know crypto investors are like well like if this you know this labor marketplace is going to enable this whole new set of transactions that could never touch a traditional high fee marketplace you know like maybe that's interesting right so the the it's it's an interesting valuation metric used in crypto networks how the hell did you convince i assume this was trueventure the true ventures lead uh we actually my own firm led the initial round uh i helped start a firm called cambrian and so with this this project was spun out of cambrian uh it was a token economic paper looking for a category and so uh yeah so we set the initial terms got it okay so it makes it a little easier to set the terms if it's essentially coming from your own firm and and to be clear also if you ask nabc about finn venture capitals evaluations they will tell you finn venture does very little in terms of getting um appropriate valuations they have very little sensitivity to valuations they'll give you whatever sort of value you want so there you're really betting on a vision here obviously the cap is what sets the initial price when you do bring the token to market and and that so i'm just trying to think one of the one of the one of the downsides to a lot of the icos was people would say there's a lot of old white males who are already rich vcs that are essentially buying the token to artificially inflate the price or sometimes it was the company that had already raised vc dollars using their own money to buy it on ico data to drive supply demand so i mean is that a good or bad thing and do you plan to do any of that well so i mean to be really clear we'll never do an ico right we're never going to sell tokens to the public we the only way you can get our token is to earn it it's going to help us build the network right so so we we we did raise uh six million dollars from accredited you know from vcs like like you normally would um we're working on another round right now we're just kicking it off where we'll raise from some more vcs not a ton of money by the way because the project's actually profitable already and then uh once the public the network publicly launches uh will we will allow tokens to be withdrawn and then it's up to the secondary markets to be created we we we're not an exchange we're not going to facilitate buying and selling of our own token it'll be on the the exchanges to to pick those up and create secondary liquidity if they so choose what's the vc investing in though if you're essentially arguing that the network owns the equity value of the business i mean this is where i think i love the idea of the network owning the business but this is where it starts to turn gray for me is what is the value of the company that you're creating how do you pay your developers to build the system in the first place yeah so let me let me zoom out to try to answer this question because it is a new and weird thing trust me like you're not the only one to be like wait a minute you know uh brain so i use this the analogy of ethereum ethereum is is what's called a public good right it's this thing that's out there that no one person owns it's completely decentralized a lot of people own it and what it does is it creates this whole new platform for smart contracts to exist and operate and be secure and be immutable and that makes the world a better place there's tons of people making money on ethereum because ethereum was generated you know by people that wanted a public good to be there and so you look at d5 there's tens of billions of dollars in d5 right now so brain trust is similar we are building i i have a small for-profit company called freelance labs that and i am just one of dozens of companies building brain trust as a public good because all of our businesses collectively will be better when brain trust exists and is out there in the wild um you haven't launched this sort of model yet today is there a leaderboard i can go see somewhere to see who of the network has earned the most credits so far yeah good question we haven't published a public leaderboard yet but it is on the roadmap so you will you will make a public leaderboard oh yeah interesting yeah so what i'm thinking is i have an email list is it worth it for me to email my email it's about brain trust and it comes down to well how many tokens do i think i can earn and what's the value of the token going to be when when when you know you finally launch it and do i believe in you and your vision and this idea 100 so what we'll do so we haven't publicly rolled this out yet but we have what's called a connector program that's the thing that pays out that percentage basis of everything you refer and i mean it's like an affiliate program on steroids exactly yeah and so once we open it up to the public today it's still it's still invite only once we open to the public you could sign up any one of your viewers could sign up get your unique code and then go send it anywhere you want and anyone that signs up through that code is going to get permanent attribution to that and you have probably different weights for if they sign up a company versus a talent this is the cool part okay so today it's all just one per it's you actually get no percentage first for for referring talent because we have a lot of talent you get one percent refer referring clients but all two-sided marketplaces eventually become the you're either resource you're either supply constrained or you're demand constrained and that may change every day right i mean uber has always been driver constrained my last company doctor on demand was doctor constrained or was patient constrained until recently now we're doctor constrained right but it always goes back and forth and so the algorithm built into our brain trust protocol is actually going to change the referral reward based on what we need more of so let's say surge pricing or reverse exactly right it's a reverse so let's i'll give you an example so porsche the car company's one of our big customers on brain trust let's say they've got a big machine learning contract coming down the pipe and they know they're going to need 10 tensorflow engineers that's a type of machine learning engineer and brainchest only has five well so the software will actually see that job coming down the pike and say okay we're going to start with a 0.5 referral bonus for machine learning tensorflow okay it's got two days have gone by all right let's kick it up 0.75 all right you know and and so the software will keep ratcheting up the reward until the rolls get filled what's awesome about that is instead of you know the the end of the value of the network is then given programmatically to whoever helped us build it right like not some employer not some you know stooge vc you know sitting back uh collecting all the value right it's the most fair way to build a two-sided marketplace most smart business people say if i could just get the right incentive plans in the right place everything will be good this token idea allows you to align incentives almost perfectly with the value the tool adds to the world but here's the thing if the the bigger the reward the the more incentive there is to game it right you become a honeypot and in term in security terms right so i if you increase the reward to get these ml engineers i'm gonna go figure out a way to get my grandma to set up a new gmail account and she's gonna i'm gonna make her look like she's harvard grad who knows cs i'm gonna get her to sign up so i can earn the reward so how do you make sure that stuff doesn't start to happen well your grandma better be good at tensorflow the only way you're gonna get paid for her is if she gets paid invoices i see so so it's it's cash in cash out right it's it's it's once your referral starts actually getting paid invoices that 10 fee we collect i mentioned earlier we collected from the client part of that 10 feet goes to pay the vig out to the people who referred i value at about what's vague oh vig is just a term for uh for uh like a cut right okay real quick so getting off the crypto stuff for a second let's talk about economics today you started the company in what year Company launched in 2017 uh we started this in the summer of 2018 2018. okay and how many i mean what's your key kpis the number of products of the platform or how much gmv through the platform today yeah so uh gsv we call it gross service value just same as gmv gsv is our main kpi uh we will do something around 2 million bucks this year in 2020 of gsb and what does that convert to in terms of like total number of projects or Currently serving 24 customers total number of clients paying for that two million yeah um today we're at about probably two dozen active transacting clients it'll be 60 70 by the end of the year uh we've done i think we have 200 or so active projects on the platform right now and it's ramping it's growing about 30 month over month right now that's interesting and what do you define of actively transacting at least a dollar to the platform in 30 days or what yeah i mean the the smallest job we've ever done is probably 10 grand the average job size around 55 000 and and so yeah active means you're you you paid an invoice this month got it and 29 so 2 million this year 2019 what you do uh almost nothing we were building most of 2019. okay just started this we just we just came out we got into private beta in jan 2020. that was funny sorry nice month in january nice month in february march we see every the lockdown hits we see everybody hit the brakes at the same time we're like oh like we're done i mean we're out and then may uh april sucked down 55 may was awful and then in june we we started having clients pick up the phone and say well look i mean our stocks didn't go to zero like we thought they might in march and like the world didn't explode and now the fed is buying our etfs so we have and now we have cheap debt capital too well and they're like well look and we got us we still got to build these damn software projects but now we're three months behind so we saw this flood of new projects come onto the platform uh and then we so we came out of stealth and they had some nice press last month and that you know made the flywheel turn even more so it's it's sort of a hyper growth mode now before sort of the 55 drop uh or actually maybe not even up till today how much gst through the platform so far this year uh this year we're at like around around three quarter million okay so 750. and so can i i mean can i just multiply times 10 percent you guys Monthly recurring revenue made about 75 grand yeah that's the take on the platform exactly interesting interesting so you'll still take that take once you launch the be trust token and that's how you'll feel like your engineer's salaries to keep building the platform you got it it's a very very capital efficient platform right because most of the people contributing are actually doing so in exchange for tokens right if you're going to build a user owned network like get your users involved early and so it's a it's a very very low burn operation that's why it's already profitable on the the six million we raised two years ago yeah that's yes okay so you raised that six million been building it for two years have you gone through how much of that six money has stolen the bankrupt you invested most of it yeah we have about three point two left oh wow okay that's that's plenty uh but you're okay so you're profitable what are you saving the money for uh oh mostly onboarding right so so if you're gonna bring nestle or porsche or even nasa we we just signed a couple months ago these guys don't self-serve right you like you need operations people to bring you got to get through procurement legal Team size of 8 so it's mo we only have eight full-time employees mind you okay yeah most of the work being done is but is being done by engineers and designers and people on the platform even our all our marketing is done by freelancers on the platform um but it's so so like our opex internally it's mostly ops operations yeah like what are your total expenses right now per month in cash not in like the conversion to be trust tokens just cash fiat yeah we burn about eighty five thousand a month right now okay wow okay so wait so how are you profitable today if your total revenue this year has been 75 grand we'll be profitable on the seed round so we'll our burn will become zero we'll we'll generate cash probably march april next year oh i see so you're still burning today but before you run out of the three any more money i see i see icic okay so what you're you're burning through what about 60 70 grand a month right now in that burn about 85 net burn 85. yeah yeah interesting um interesting so let me ask you this why haven't you been able to convince your developers to save you cash to earn be trust token or credit instead of getting paid by your fiat round you know your round money some of them do some of them don't it's a funny like and you know look look you can't use uh fake internet tokens to pay rent and buy food right so we don't expect people to take full salary in this half of the core team doesn't take any salary at all they're just doing i mean i'm doing it because it's my passion project but others are doing it some people are doing it for all tokens some people are doing it for a mix it's not my place to judge like you know people need real money and that's that's why you raise money how many engineers on the eight none i'm the only uh i'm the only technical person so i'm the chief architect of the token and the platform all of our engineers and product managers and designers are freelancers on brain trust oh fascinating so see see i think entrepreneurs like you and over the next 10 years i think first of all i i love this idea i mean i'm trying to i'm trying to be devil's advocate and like poke at it as hard as i possibly can but i haven't found like many weaknesses obviously but i mean your your ability i mean really what this comes down to it's your ability to sell the vision it's the it's what people are going to fight for these tokens today because of the value they think it will have 10 years from now and you're and it's going to really come down to your ability to sell that yeah i mean look the people people are are earning credits toward this token that doesn't exist yet because they love the idea of calling the shots of being in control of the marketplace that they rely on to make a living right i mean you've seen how this plays out this plays out negatively in the gig economy we're seeing it already right like the gig economy all the gig economy did was effectively lower the minimum wage from 12 bucks to five bucks that's that's georgetown did a study on that it it made you know the uber ipo 85 billion ipo it made five guys here in san francisco even richer right deca billionaires meanwhile a third of all uber drivers live at or below the poverty line some of them live in the cars they use to deliver the service right they saw none of that value they have no say over the rules when surge pricing happens uber inc keeps it when doordash keeps the tips they have not so we're building a new paradigm here to give that control back to the users to give that value the middleman steals give it back to the users and and just quickly to touch on uber because it's just in the news and it's popular and everyone knows it you would you could argue i mean what do you think uber spent on building the technology over over you know seven eight years i mean look at let's be fair ten years ago a location aware mobile app on a crappy iphone 4 that was hard to do for sure right i was a mobile developer back then look they maybe 10 years ago they could they spent 10 million bucks on it today me and you could you know get a case of red bull and do it in a weekend yeah you know tech tech is trivial now right it really is right like the value of a network is its people where are the where are the drivers where are the riders right that's the if we were to steal uber's database that's the value uber app we can knock that off in a weekend adam put your evil head on for a second i just rise way over time but i've lost myself because i'm just intrigued um there there put your evil hat on okay if you wanted to consolidate power in this new model where the network owns the token i'm trying to think of how how would you do that as the guy that owns what you own 60 70 80 percent of the company on the equity side oh no first of all there is no equity it's only token right but what did the investors invest in they bought they bought tokens they bought something that will convert into tokens it's called a staff okay i don't understand that explain to me how that works so so so convertible note converts into equity right yes or a safe you've heard of the the safety i see right a simple agreement for future equity a saft is a simple agreement for future tokens same thing it's except instead of you you take out the equity and you put in the tokens and so there's no equity cap table there's only a token cap table and so um and so that's what the founders have that's what the investors will have and that's what all the users have we're giving it'll be something like sixty percent plus or minus of those token that of the total token supply...