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We've entered the golden age of crypto

building where we finally have the tools

and now it's about entrepreneurs coming

in and saying how do we use these tools

to make 10x impact for businesses or to

build new consumer experiences that were

previously completely impossible. And

the moment is now to break through

because we've done the infrastructure

work, the tools are in place, the stable

coins, the chain, and now it's about

putting it together into that magical

experience that grows like wildfire

across the world.

I'm really excited to be joined here

today by Jesse Pollock. Jesse is the

founder of Bass, which started life as

Coinbase's blockchain, but has since

expanded into essentially the everything

app for crypto. Right. You can use Bass

to trade crypto, store your own crypto,

and build community um with other people

in crypto. Thanks so much for being

here, Jesse.

>> Thanks for having The reason Jesse's

here is that Y Cominator and Coinbase

are together putting out a joint request

for startups building in crypto. We both

believe that there's never been a more

exciting time than right now to build in

the crypto world. And we're going to

talk about some of the reasons we feel

that way and what are some of the

specific ideas and areas that we think

founders should be paying particular

attention to as they go out and build

really awesome crypto products and

services. Okay, Jesse, in our request

for startups blog post, we mentioned

this progression from this idea of

fintech 1.0 0 through to fintech 3.0. Um

maybe you could talk us through how you

think about that.

>> So I think about fintech 1.0 as the '9s

things like PayPal where consumers for

the first time got comfortable paying

for things online. I think about fintech

2.0 as this wave of the last decade of

startups that built on top of the

existing legacy financial system to

deliver friendlier consumer experiences

with money. Now I think about fintech

3.0 know as the opportunity to rewrite

it all to basically start from the

ground up and say how do we make the

financial system work better for

everyone by building it on top of the

programmable software platform that

includes money and is crypto.

>> Okay, Jesse, so AI had its sort of magic

moment with the chat GBT launch. Do you

feel like crypto is maybe going through

its own chatbt moment right now?

>> Candidly, no. And I think the reason I

say no is because if you ask a friend or

family member, I don't think they'd say,

"Oh yeah, I have had a magic moment with

crypto." I think instead they might be

fearful. They might not actually know

what crypto is doing on a day-to-day

basis. And so the thing that's powerful

about that is that that's the best time

for us to be building. And the best time

for YC entrepreneurs to be trying to

break through. And the moment is now to

break through because we've done the

infrastructure work. The tools are in

place, the stable coins, the chain, and

now it's about putting it together into

that magical experience that grows like

wildfire across the world. What exactly

has changed? What exactly has developed

that um makes it feasible to build this

technology today that wasn't possible

even like five or six years ago?

>> Yeah. So, when we're thinking about

building crypto apps, we're building on

top of a stack. And that stack has a few

different components, but the ones that

I think have really progressed in the

last few years are a few. So the first

is chains have really matured and you

can kind of think about the chain as the

programming environment where you're

building all of these applications. So

to to AWS, the chain is kind of the next

generation of that where you can imagine

you write code, it runs on this globally

distributed computer. Anyone can access

it and participate in it. And that's

this substrate where you can build. And

the problem that we had with the chains

5 years ago was you could do that, but

it was slow and expensive. And so when

you were trying to build an application

and you wanted to maybe send a stable

coin or you wanted to enable someone to

create something, you'd have them try

and send $5 and it would cost $5. It's

like that doesn't work for building a

consumer application. And the thing that

has shifted over the last few years is

that those costs have come massively

down. And whether that's with Bass or

Salana, we we we actually have this

scaling that's happening where now you

can build those applications and instead

of it costing $5 to do something, it

costs 510 of a cent or 500ths of a cent.

And that opens up the aperture of what's

possible.

>> Yeah. I think this was like the classic

criticism of crypto years ago was just

hey like okay like it sounds cool but

actually it's like it's like cheaper to

send a wire transfer than like the gas

fees on like certain chains when they're

congested 100%. And we we think about

this as the broadband moment for crypto

where when we were in dialup of the

internet you couldn't have the

applications that exist today and then

gradually we scaled the throughput

scaled the bandwidth and that led to

these new breakout experiences that

really powered the growth of the

internet over the last 20 years. One

thing I think um people hear about but

they might not always understand in

detail is like the difference between a

layer 1 blockchain and a layer two

blockchain. Do you give like the

audience a little bit of explanation

like what what exactly is the difference

and what did layer 2 blockchains unlock?

>> Yeah. So, you know, when you're thinking

about a layer 1 blockchain, uh what the

way I think about this is is really that

it's a a piece of infrastructure that

sits at the bottom of the stack, right?

And the the big ones that people talk

about and and and use and kind of are

adopting today are Bitcoin, Ethereum,

and Salana. uh and they all play

different roles. They're all

complimentary in different ways, but

they all play this role, I think, at at

the base layer of being maximally

decentralized and trying to make it so

that they are a global platform that's a

piece of infrastructure that anyone can

build on without being, you know,

fearful of being censored. Uh and that's

this really important substrate because

you need that decentralization to make

it so that no one company or one country

can kind of co-opt what's happening on

that platform. Now the thing that

Ethereum pushed forward over the last

five years was they said hey if we want

to get to the sort of scale that can

enable you know the next Google to grow

that serves billions of people there's

inevitably going to be some trade-offs

around this decentralization and the

security that it provides and then the

scalability that actually lets you drive

down those costs. And so what Ethereum

said is we're going to think about how

do we build an architecture where on top

of that layer 1 we can kind of create an

ecosystem of what they call layer 2 uh

which take that infrastructure take that

decentralization and then bootstrap off

it build on top of it to scale while

preserving decentralization as a core

characteristic and this is exactly what

Bass does. So what Bass does is you can

kind of think about it like an HOV lane.

We sit on top of Ethereum. We take

millions and millions of transactions,

we compress them, and we publish them to

Ethereum. And that means that when we're

compressing them, we can get a ton of

efficiency, which lets us drive down

costs a,000%. But because Ethereum is

sitting at the base layer, it brings

that decentralization. It brings that

censorship resistance to make it so that

Bass can stay this open global economy

that anyone can participate on. Now,

Salana, I think, has gone to the other

side of the spectrum and they said,

"Hey, we're going to do it all at the

L1." And I think that that's a really

cool and and powerful design choice as

well. And this is one of the things that

I think is really exciting about where

we are at crypto is that we're exploring

a bunch of different paths. People are

learning kind of in every single part of

the world and then we're all converging

back those learnings to build out these

products and this infrastructure that's

going to enable that next wave of

adoption. Engineers whenever they're

learning a new technology like usually

often have like their own like go-to app

that they try and build to learn it,

right? Like I mean for me it's usually

trying to build like a simple blog like

engine or something like that. If

someone wants to start building with

crypto and sort of understand like what

the power of like a a layer 2 blockchain

is or base is what's your recommended

like you know hello world or or blog

engine app that they should one app that

I think will will just be really

powerful is building a interface that

lets you interact with a swap like an

AMM or an exchange right so one of the

really powerful things that crypto

enables it enables you to seamlessly

swap between assets uh you can swap

between Ethereum and a stable coin or

between multiple stable coins and the

way that happens is through uh what's

called an AMM or an automated market

maker, which is kind of an exchange

that's written in smart contracts. And

those things are really simple, right?

What previously was, you know, hundreds

of thousands or millions of lines of

code has been distilled down to a simple

formula and then written into hundreds

of lines of code that sits in a smart

contract that lives on base. And I think

one of the really kind of easy and cool

hello worlds is building a UI that

serves as a entry point into one of

those exchanges because then you can

see, oh, I can connect my wallet. I can

build this, you know, little interface

that lets me take an asset that's in my

wallet and swap it to another asset in

my wallet and I don't need to sign up

for an API key. I don't need to get

permission from anyone. I all I need is

to write a little interface. And so I

think that that's a a really good hello

world. Another thing that I think is a

really good hello world is, you know,

actually going in there and building

your own AML, right? It is literally

just a function that's kind of defining

the relationships between how one asset

swaps to another. And it's, you know, on

the order of hundreds or thousands of

lines of code and so that's a little bit

more complex like you're getting into

the smart contracts, you're figuring out

like how do I actually make these kind

of swaps work? But I think that that

learning experience of saying, "Hey, you

know, if you look at the New York Stock

Exchange or any traditional exchange,

this is huge amounts of infrastructure,

huge amounts of overhead, and now that

can be distilled into hundreds of lines

of code." I think that that's kind of an

aha moment for a lot of people.

>> On the regulatory front, because that

seems like it's a big catalyst um for

this particular moment in time for

crypto. Um there's lots of news around

like the Genius Act is going through and

you got various um bills trying to

regulate um the crypto market. In what

ways have you seen regulation hold

people back from being able to like

really innovate with crypto over the

past few years and how is that changing

now?

>> Yeah. Well, I think this is something

that really impacted startups of the the

type that are coming into YC and trying

to be successful, you know, and I've

been working with builders over the

last, you know, five, six years to try

and figure out how can I help them be

successful building on chain. And the

thing that has been really consistent is

that so many early stage builders and

latest stage builders ended up spending

like equivalent or more money on lawyers

than they were on engineers.

>> And you know if you're coming into YC

and you're interviewing and you're like

hey we're going to be spending more

money on lawyers than engineers. Like my

gut is that the YC partners are going to

say okay like maybe you're not building

in the right business here. Like really

are you as a threeperson team going to

be able to be successful?

>> Yeah. This was actually really what

happened for us a lot of the those

application cycles in 2021 2022 like we

will look at it and feel like okay like

what's the domain expertise you need to

build something really good here and it

was actually like you if you're building

a hardware company you're building

robots you kind of need to have like

some experience building hardware and

robots and we felt that with crypto it

was actually like you needed to really

be paying attention to the regulatory

aspects of it and understand securities

law and I know if you're putting like

real estate on the blockchain you need

to actually understand what all of the

legal implications of that were and a

lot of the time we've interviews and we

just feel like the teams had no

understanding of it at all and it was

unclear how you would ever go to market

or build.

>> Yeah. And the thing I would say is I

don't even think that that's an

indictment of those teams. That's an

indictment of the fact that the

regulation has been massively unclear.

Yeah. Right. Like there literally hasn't

been rules of the road for entrepreneurs

to build on this new platform and be

successful. And so the impact that we've

seen of that is that it's basically just

chilled out people from being

successful. Right? If you have to spend

more money on lawyers than engineers,

how can you apply the YC principles of,

you know, being customer centric and,

you know, doing things that don't scale,

like literally you're being forced to do

things that much bigger companies should

be doing instead. And so, I think that

that has been this massive kind of

constraint on innovation for the last

decade. And I think the thing that's

just started to shift, we're still in

the early days, but it's really

happening is that now that we're

starting to have regulatory clarity,

whether that's with stable coins from

the Genius Act or potentially with, you

know, all of crypto tokens with the

Clarity Act, what's that leading to is

it's leading to those entrepreneurs now

having more certainty. They, oh, these

are the rules of the road. And

therefore, that idea that previously I

would have to go get a ton of legal

opinions on, can I do this? They can now

just go and do it. And that is such a

lowering of the barrier to entry for the

entrepreneur in the United States or

outside of the United States that I

think it's going to lead to a ton more

innovation. And going back to to kind of

the scaling things that we talked about,

you know, and kind of what's enabling

this next chapter, we talked about

scaling the chain. I think that that's a

huge part of it. I think the regulatory

unlock is another huge part of it that's

changed. I think stable coins maturing

is a third huge part of it that's

changed where you now have programmable

money that's you know the money that

we're all used to that we can all use

and then I also think that we've kind of

had a bunch of breakthroughs on wallets

and simplifying wallets and making it so

that they can be integrated into the

user experience in a way that's not

scary and so those you know four things

chain scaling regulatory clarity stable

coins emerging as a really powerful tool

and then wallets getting simpler and

simpler I think have matured to the

point where we've entered the golden age

of crypto building, the golden age of

onchain building where we finally have

the tools and now it's about

entrepreneurs coming in and saying how

do we use these tools to make 10x impact

for businesses or to build new consumer

experiences that were previously

completely impossible because we

couldn't program things on a global

stage. We couldn't move money at the

speed of light but are now possible and

how do we actually use that to create

this value? I want to talk about stable

coins more. So like you mentioned those

like that that so far it seems to be

outside of trading like the killer use

case um specifically within the Y

cominator community in our portfolio of

companies. I was looking at this some of

our fastest growing companies at the

moment the AI companies definitely get

lots of attention but we have like

dollar app in Latam, Aspora in India.

These are essentially neo bank services

that are really built around stable

coins and their growth rates are

incredible. I'm sure you guys have seen

this at Coinbase too. Let's start with

this. Why have stable coins taken off um

in this way? And actually, I'm curious

as someone who's been around crypto for

so long, has it surprised you? Like, did

you think it was going to be stable

coins all along? I don't think we

thought it was going to be stable coins

all along. I mean, I I remember when we

launched USDC, I was in the war room at

Coinbase. We launched it in

collaboration with Circle. I think at

the time we felt like we got to go do

this, but we're not really sure what's

going to come from it. And candidly,

like the first two to three years of

USDC, we had launched it, but it didn't

grow that much. like it took us a while

to get to a billion of issuance. It took

us a while for people to be like, "Oh,

this is a meaningful thing." Now, you

know, there's almost $200 billion of

stable coins in the market. So, I think

it's kind of it feels obvious, but even

in 2017, 2018, 2019 when we were just

getting started here, I I don't think it

felt obvious at all. Now I think the

thing that stable coins unlock which has

been the primary thing that's driving

this is they enable programmable money

to come into the existing financial

system and give in particular

programmable dollars to anyone in the

world. And this is a big unlock because

previously prior to stable coins if you

were an entrepreneur outside of the US

or if you were just an everyday person

outside the US you actually didn't

really have a way to access dollars. You

couldn't open a dollar account. You

couldn't get a dollar savings account.

You couldn't get a dollar business

account. And that meant that um whether

you were trying to transact with other

businesses or consumers in dollars or

you were just in a you know economic

local environment where your currency

wasn't really working for you maybe

because it's massively inflating or

maybe because it it is unstable in other

ways. You were cut out of accessing the

dollar system that actually did work

pretty well. And so I think the first

big unlock that stable coins has done is

basically said okay now everyone in the

world can access dollars and not just

can they access it they can build with

dollars and they can build with dollars

on this new programmable platform where

those dollars can move instantly

globally and basically for free. And so

that for me I think was the first thing.

Now there's a ton of other things that

stable coins are going to unlock but

that alone was a 10x 100x improvement

for hundreds of millions of people

around the world. And I think it's the

thing that's led to this growth of from

zero to almost 200 billion dollars of

stable coins in the world today.

>> Yeah. And it seems I mean that maps up

pretty well with what we're seeing which

is where like in particular these sort

of like the neo banks the dollar app and

Apora like the killer use case really

seems to be remittances and sending

money internationally like instantly

cheaply. What are some of the other like

applications of stable coins that you're

personally really excited about or do

you think builders might not recognize

or um as great opportunities? Well, this

is one where I I think that there's an

opportunity that runs counter to the

narrative because there's a ton of

excitement about dollar stable coins and

I'm really excited about dollar stable

coins. I think there's so much more that

we can do with them. But at the same

time, you know, as I've talked to

builders and as I've talked to to

regulators and businesses in in

countries around the world, so many of

them have excitement about dollar stable

coins because they solve an immediate

need. You know, if I have inflation in

my country, I can now save in dollars

and that that helps me, you know, have a

more stable savings account or more

stable business account. At the same

time, when I talk to those folks, I

think that there is an intuitive feeling

of, "Oh man, we have our own local

economy and we don't want that economy

to be dollarized, right?" Like if I'm in

Kenya or Brazil or Nigeria or you know

Indonesia, we have excitement about

building our own local economy on the

Brazilian Royale or the Nigerian Naira

or you know that you know kind of

excitement about investing in one's

local economy and then the the I think

kind of intuitive feeling of there's

this tension between getting the value

from dollars but also not having dollars

dominate in a way where crowd out the

local economy. I think to me that is one

of the most exciting opportunities to

kind of lean into. And what we're seeing

start to be that opportunity is that now

alongside the dollar stable coins, you

actually have entrepreneurs in all those

countries who are creating stable coins

for their currencies. So you have a

Brazilian rail currency, you have a a

Nigerian naira currency, you have

Indonesia rupee currency, you have a

stable coin for every country. And what

that means is that you can take all of

the innovation that has kind of been

built on top of dollar stable coins,

whether that's, you know, uh, easy to

send or it's easy to borrow and lend

with, uh, or it's easy to swap to other

things and apply them to your local

economy. So now you want to do business

loans in your local currency. Great.

Take a bunch of the stuff that's already

been built and apply it to your local

stable coin. and that opportunity to

take this technology and make it so that

it's actually an empowering technology

for local economies. I think that that

is one of the most exciting things. And

it's still early. It's still small, but

for builders like the builders coming

through YC who are coming from all

around the world and who are excited

about taking on those hard challenges, I

think that that's going to be a place

where there's massive amount of

opportunity for impact. So for those

founders and those builders in those

countries, it maybe isn't clear in each

of those markets which the winning

stable coin like in the US it's USDC but

like in those markets it might not be

clear. So do you think those builders

should go out and try and like should

they start their own sort of circle

Coinbase consortium and and launch a

stable coin or should they try and pick

which they think is the winner and build

around that?

>> I think I think both, right? And you're

going to have entrepreneurs that want to

pursue different things, right? If

you're starting a local stable coin, you

know, it's going to look like working

with the government and working with

banks and figuring out how do you do

custody in a secure way. I think that

that's a massive opportunity. And we

actually just put out a request for

builders for base where it's like we

want to talk to entrepreneurs in every

single country in the world who are

doing that work because it's so so

important and we want to support them

and help them be successful. Now, at the

same time, a lot of builders might not

be excited about that, right? They want

to be building product instead of

building the relationships with banks

and figuring out how to custody. I think

one of the really really powerful things

about um crypto is that it's built in

such a way where it's composable, right?

And so if you build around one stable

coin and then another stable coin starts

growing really quickly and uh you think

it's actually going to be better for

your business, it's not going to be that

hard or that expensive to say, "Okay,

great. Now let's support that other one,

too." Because again, they're all running

in the same computer and they're all

programmable. And so you really can

build systems in such a way where both

can plug in. And so I'd say if I'm an

entrepreneur who maybe isn't interested

in starting the local stable coin, but

does want to be building solutions that

use local stable coins, I'd think about,

you know, how do I build my solution in

a way that works with all of these

stable coins? How do I make it so it

works with dollar stable coins, too?

Because I think that kind of

flexibility, that's actually what

consumers and businesses are going to

want. they're going to want the ability

to have my, you know, payments app and

be able to save in dollars, save in my

local stable coins, swap between them,

earn interest on both, borrow with both

of them. And I think really for the

first time that's actually possible with

crypto because it's all running on this

programmable platform. YC's Next Batch

is now taking applications. Got a

startup in you? Apply at y

combinator.com/apply.

It's never too early and filling out the

app will level up your idea. Okay, back

to the video. How about for like US

centric builders? Um how should they

think about the opportunities to build

in stable coins right now? And maybe I

um bit of a segue here, but I know that

Coinbase just launched like a commerce

payments protocol with Shopify. How does

that tie into this? And how does that

create opportunities for um founders in

the space? Now that we have the fast

chains, we have the the scaled uh stable

coins, we have the mature regulatory

environment, we have the easytouse

wallets, I think the opportunity is

basically looking at every single part

of the the financial system that exists

today and figuring out how do we turn

that from legacy systems that in many

cases are 50 to 100 years old into

programmable smart contracts that live

on chain. And you can look at every part

of the world and be like, "Wow, look at

this system that is written in cobalt

that, you know, has millions of lines of

code that has all of this cruff that has

massive fees. Can we write that into a

smart contract that's 500 lines of

code?" And the answer is yes. It's

literally yes. And this is exactly what

we saw with Shopify. You're talking

about, you know, this commerce payments

pro protocol that we built that lets um

any Shopify store in the world accept

USDC on base from anyone else in the

world. And the thing that we did to

unlock that was we embedded with the

Shopify team. And you know, shout out to

Toby and Shopify. They came to us and

said, "We think the moment is now for us

to look at all of our existing

acceptance systems and figure out how

can they be rewritten in smart

contracts." And what we did over a

nine-month period was exactly that. We

went into their systems which are

literally millions of lines of code

where they're doing things like escrow

uh they're taking taxes uh they're doing

you know fees tariffs uh they're doing

refunds chargebacks like all of this

business logic around accepting money

for a good which you know for most of us

I think is kind of behind the scenes but

for a business like Shopify like it is

the scene it's the thing that you're

doing and they said okay how do we now

translate that into a smart contract and

the crazy thing is that after nine

months of work we translated into smart

contract and that smart contract ended

up being about a thousand lines of code.

>> Huh. Interesting.

>> So literally like stuff that previously

was a million plus lines of code is now

a thousand lines of code because it's a

thousand lines of code running in this

open platform computer where you have

money built in. You have stable coins

built in. You have the ability to do

escrow. you have the ability to do fee

splits and value splits between all

these different parties all natively in

the code and I think you know still ton

more work to do there but the the mental

model that entrepreneurs should be

taking is there are opportunities like

that in every single part of the United

States and global economy

>> yeah I think like one of the lazy

criticisms of crypto has always been

it's like oh it was supposed to be a

decentralized system but then you need

chargebacks you need escrow and now

we're just like reinventing the same

thing over and over again there's no

innovation here. It's clear why this is

better for Shopify and Coinbase. So,

this is like way more efficient. It's

going to be faster, cheaper, and a

better user experience. How about again

for the founders though? How do they

build around this protocol? And how do

they what are the opportunities for them

to capture value for themselves?

>> I think it's a really interesting and

and important clarification, you know,

because I do I do think sometimes people

look at this and they say, oh, like is

this giving up the core values of

crypto? And and from where I sit, the

place where decentralization is really

really important is at the very bottom

of the stack, right? you need

decentralization at the Ethereum layer

at base because what that enables is it

enables this global platform that

everyone can come and participate on.

Now on top of that platform the thing

that we're seeing is that if you just

myopically say okay now not only does

the base layer need to be decentralized

every single thing that goes up and down

the stack also needs to to be

decentralized. You're basically throwing

out what we've learned about building

businesses for the last hundred years

and saying oh no no no like that stuff's

wrong. And actually like it's right like

Shopify is the world expert at commerce.

And so we should probably listen to them

and say, "Hey, what if instead of saying

they don't know what they're talking

about, we say no, they know exactly what

they're talking about and they can

figure out how to use these new tools

and that decentralized platform at the

bottom to build their existing systems

in a way that is more efficient." And so

I think the opportunity for

entrepreneurs is basically saying, okay,

let's say I'm a business that needs to

to do acceptance or I'm building a

product that needs to do, you know,

merchant acceptance. How can I take a

tool like the the the commerce payments

protocol and use it to build an

acceptance product that is 10 times

cheaper and 10 times faster than other

acceptance products on the market. And

there's going to be so many

opportunities like that, whether it's

with acceptance and merchants or it's

with lending and borrowing or it's with

other forms of credit or it's with

trading. That mental model of we now

have this new platform. How can I

translate it, lower the cost, lower the

barrier to entry, deliver that 10x

better product and use that to disrupt

incumbents so that I can go and get more

market share. I can build a more

important business that actually changes

the world in a bigger way. I think

that's the mental model that

entrepreneur

>> and who are some of the um who are some

of those incumbents that founders should

have in mind when they're thinking about

disrupting can you say that

>> you know I'm not going to name names but

I think if you look at the I think if

you look at the way the the the internet

works today the internet originally

didn't have money programmed into it

right and so what ended up happening is

you basically had to figure out okay how

do we add money to the internet and what

that led to is you have a small number

of intermediaries who played the role of

bringing money into the It theoretically

was supposed to be a native protocol,

right? But like

>> literally it was supposed to, right? We

were supposed to have payments in it,

but then we decided not to. And so that

led to this point where you have these

intermediaries, whether they're payments

networks or social networks that have

basically said, we're going to play the

role of bringing together these

two-sided markets. You know, the the

payments networks are buyers and

sellers. The social networks are

creators and consumers. We're going to

sit in the middle and we're going to

mediate the transactions happening

between them. We're going to enable the

buyer to to buy something from the

seller. We're going to enable the

consumer to interact with the content

from the creator and we're going to take

a fee for that because when we build

that network effect, we're going to

actually have proprietary access to it.

It is our network effect and then we're

going to monetize it. And I think the

thing that's shifting with crypto is

those network effects are being turned

inside out where it's when when we're

onboarding people on chain and we're

bringing them into these new systems,

they're actually entering an open

network where when you join the network,

anyone can now start to participate. And

so if you have stable coins, you can do

a payment to someone else with stable

coins. And that's not mediated by one

payment processor that's, you know,

checking out every debit card and credit

card that's going through the system.

it's sitting on an open platform that

anyone can build into and anyone can

participate in. And so I think the the

the thing to look for when you're an

entrepreneur right now is where are

those really scaled network effects that

have been built up around intermediaries

who are intermediating transactions

whether those are social transactions or

commerce transactions or financial

transactions, borrow, lending, trading

and then how do we use this new open

platform to mediate those same

transactions in a way that's 10 times

cheaper, 10 times faster and 10 times

more globally available. And I think

that globally available one is a really

really really important one because it's

going to be the thing that's going to

enable everyone regardless of where they

born, regardless of where they live to

participate in these new value creation

systems and I think it's going to lead

to the world becoming a lot better place

>> and actually like sparks some uh some

memory for me of like I think so like

the first cycle of crypto applications

we saw years ago a characteristic that

we also often felt of some of the teams

I probably the weaker teams is that it

felt like they were putting like the

crypto solution in ahead of the problem

and they sort of like hammer searching

for nail. The thing that's been really

exciting about some of the stable coin

companies that have broken out I think

is that it's not even clear that their

users know that like they're using

stable coins per se like it's just a

technology from their perspective is oh

now I can like send money back from

India to the US like instantly it's way

cheaper um the user experience is great

and I think our advice to founders would

definitely be look for those sorts of

opportunities where you understand the

technology deeply enough you've you've

read the commerce um payment protocol

paper you you know how this all works

but you're looking for like actual

problems And the users might not even be

aware that you're using crypto to solve

their problems. But I think that's

usually a better approach to finding

good startup ideas.

>> 100%. It's all about how do we solve

real problems for everyday people for

everyday businesses.

>> So if we zoom out like you could stable

coins are essentially just what like one

type of tokenization. Maybe could you

explain what does that actually mean to

sort of tokenize something and then are

there other types of assets you're

excited about seeing be tokenized and

brought on chain? If you think about the

the existing financial system, um you

you can kind of think about all of these

large classes of assets, right? Stable

coins map to uh you know fiat

currencies, right? You have the dollar,

you have the euro, you have the yen, you

have you know hundreds of fiat

currencies from all the countries around

the world. That's obviously not the only

class of assets. You also have stock,

you have bonds, you have real estate, uh

you have all of these complex debt

structures and all of that today um sits

inside of the existing financial system,

right? Maybe uh it's the the the stock

certificates that sit with the DC. Uh

you know, it's it's this whole world of

records that map to financial assets

that sit inside legacy systems. And so

when we're talking about tokenization, I

think one of the big swasts of

tokenization, I think the one that most

people think about when they're thinking

about tokenization is basically how do

we take all of those asset classes and

move them out of the legacy books and

records and into this new programmable

environment? How do we move them from uh

the the you know records that maybe

started 100 years ago when we had the

first stock certificates into smart

contracts that live on base? And that is

a massive opportunity, right? Like

again, there's trillions and trillions

of dollars of assets in the world. And I

think we can all imagine that if you

take all the assets that exist and then

you put them into a platform where they

can be programmable, they can move

instantly, they can move basically for

free, uh they can uh be accessible to

anyone globally in the world. That's

going to create a lot of value for the

world. And so we're really excited about

seeing that. And that's what we're

seeing every day on base right now. It's

like people are bringing stock, they're

bringing bonds, they're bringing more

stable coins like I talked about

earlier. uh they're actually you know

bringing collateralized debt positions

like every single thing you can imagine

it's being moved from the legacy system

into the new system. The other class of

tokenization that we're also really

excited about which I think is a more

emergent thing is um whole new asset

classes that don't exist in the

traditional world.

>> Yeah. What are some examples?

>> And and this is I I think a thing that

you know you have to squint a little bit

to see it and it can run counter to I

think the the advice you were maybe just

giving to entrepreneurs, right? I think

one way of thinking about crypto is

okay, how do we look for existing

systems that are broken and how do we

use this new technology to make them

more efficient and deliver value to

customers with that. I think the other

way of thinking about crypto that we

really believe in and we do not think

should be skewed is saying okay we have

a new platform what if there's stuff

that like wasn't possible before or that

we couldn't believe before that is now

newly possible in this new platform and

what if that is actually 10 times bigger

100 times bigger or a thousand times

bigger if we were in the early 2000s or

the mid 1990s I think you know if if we

said okay the big thing about the

internet is we're going to bring all of

the books on chain and we're going to

bring all the news things on chain. I

think a lot of people might have said,

"Yeah, that's the big thing." And they

all would have been wrong because really

what the big thing was about the

internet was all of the content that

like none of us knew even existed from

billions of people all around the world

that's now enabled by the social global

internet that exists today.

>> Are there directions like this that

you're excited about? Things that just

don't exist that can only exist in sort

of like a onchain world where there's

programmable money. Yeah, I'd say the

the biggest one that I'm excited about

and this is something that's a big part

of what's happening on Bass right now

and and what's happening with the Bass

app is the idea that um we have a whole

creator economy that's built right now,

but currently the the creators and the

content that they create aren't actually

valued as assets. And that is because

they are uh the the content and the

creators again they're kept in these

locked up systems where those network

effects are controlled by a small number

of corporations and those corporations

monetize it. they monetize that content

to the the tune of literally hundreds of

billions of dollars a year, but the

creators don't actually have access to

that value. And so I think one of the

biggest asset classes that we believe is

about to emerge is content and creators

and creator capital markets where for

the first time you're going to have

creators that start to say, "Hey, I want

to use this new platform to raise

capital for myself. I want to bring my

content into this new free market and

then I want to have that content be

valued by the market. And so for

instance on the base app, it's a new

social product where every single post

that you make is a coin and every single

creator is a coin. And what that means

is that the the the the content and the

creators are getting valued in real

time. So when I post, I get tons of

people trading that asset just like

they're liking and commenting on Twitter

or other social platforms. And what

emerges from that is a a value for my

content which I can then uh monetize by

borrowing against, lending against. I

have a whole, you know, suite of content

that now is literally valued in the free

market. And then b there's all of these

offflows of value from every single

trade that get routed back to me. And so

what we're seeing happen is that when

creators bring their content into the

free market, they make more money

because now that content isn't being

taken by someone else, it's being owned

by them and they're actually benefiting

from it. And so for us, when we look at

the internet today, we can see that

that's what powers it, but we can also

see that's not an asset that's realized

for creators. And so we're so excited

about bringing that into this new

platform and actually making it

something that people can access.

>> How about let's just talk about like the

founders and the teams themselves. I

mean, Coinbase is unusual in that um

you're both a product company and you

also like invest in these teams

yourselves. Like when you're looking for

teams to invest in in the crypto world,

what are some of the attributes you look

for? like how do you tell that this is

like um the type of team that can build

something great in the crypto world and

maybe what are some of the success

stories so far?

>> Yeah. And I'll start with one thing that

we don't look for which is that we do

not look for people in a certain part of

the world.

>> Okay.

>> Because one of the superpowers of crypto

is that everyone's on a level playing

field. Whether you're in the United

States or you're in Nigeria or you're in

Argentina or you're in Indonesia,

everyone has a fair shot because they

have access to the same economic

platform and they can participate in

this global economy that we're building.

So that's one thing we're not looking

for. everyone can build on base,

everyone can participate in this next

wave of innovation. Now, in terms of

things that we are looking for, I think

that they honestly mirror YC a lot,

right? We're looking for uh a small team

of people who are builders, right? It's

like, do they actually have the skills?

We we never almost never see it work

where it's like I have an idea and I'm

going to farm it out to someone. You

have to be a builder. And whether

that's, you know, writing the code or

building the community or creating

content, doing the work and being in it

every single day is the only way to

build a successful product, successful

startup. That's the first thing. I think

the second thing that we're looking for

is we look for people who understand the

technology, right? If you want to be

someone who breaks through and and

actually delivers that 10x improvement,

you need to see the connection between

how can I solve this problem with that

te this technology. And that requires

understanding the technology. And so

doing that work to write your first

smart contract or build the interface to

a DEX that is the learning that then

builds the muscle for having those

intuitions around okay here's the

opportunity that's going to enable me to

kind of break out in the next way. So

that's the second thing that we look for

and then we we have this phrase which is

that we look for people who are based

and what that means to us is it means

that they work hard. It means they do

the right thing. It means they uh push

boundaries with creativity. They're

willing to take risks. It means that

they put the team over the individual.

Like they're they want to go and do

something that's bigger than just

themselves. And that value set is again

and again the the sort of people that we

love building with because they're the

entrepreneurs who show up day in day out

when it's hard, when it's easy, uh when

people don't believe in them to try and

make the world a better place.

>> Another area that's obviously capturing

lots of attention right now is AI. And

we're just seeing all these magical AI

companies building great products and

growing really quickly. It seems like AI

and crypto should be a very natural fit

with each other. Um, so maybe can you

talk a bit about that? Like where do you

see the opportunities for those two

technologies intersecting and and maybe

how does Coinbase think about the

opportunities for founders there? I

think it is a special thing that crypto

and AI are growing up together right now

because when you look at the problems uh

that AI has, I think you can solve a

bunch of them with crypto and and two of

them stand out to me. One is in a world

where AI proliferates um it's going to

be really hard to know like what's real

and crypto provides a level of hardness

and verification that I think can

connect to AI in a way that solve that

problem. It's like if you have millions

and millions and millions of things

being created being able to use crypto

rails to authenticate them and verify

them and say, "Hey, these things are

connected. These things are real." I

think that that's going to be a huge

unlock. The other one which I I think

I'm maybe more excited about is that a

AI is about programmability. It's about

enabling agents that at their core are

computers and writing software and

reading software and consuming software.

And what better substrate for those

agents to be operating on than money as

software, right? If I'm an agent and I

want to be sending money to other agents

or transacting, I want to be using

something that's natively built for me.

And I think that's exactly what we're

seeing happen with crypto right now is

that crypto is plugging in as a platform

that enables agents to transact

natively. So instead of going and trying

to operate in a browser over the legacy

rails, they just called a smart contract

and it does the thing that they want to

do. And so I think that that kind of

substrate of crypto serving as a

platform both for verifiability and

money that agents can then transact on

top of as their native substrate, it's

going to be hugely powerful.

>> Yeah, it totally maps on to what we've

seen in AI too. It's like that people

you sort of anthropomorphicize that

agents a little bit and it's like they

actually to do the work they need like

their phone number they need an email

inbox like they need a browser that they

can like actually use and so yeah it

makes total sense that they would have

their own wallet and that would be a

crypto wallet.

>> I have a question for you which is that

you know you've talked to a lot of

companies I assume through the interview

process that are doing crypto. What are

the the crypto companies that have stood

out to you as like exciting for YC and

what are their characteristics? Yeah,

you know, I I mentioned a couple of them

like DollarP um Aspora um sort of both

in sort of like the I say like Neo Bank

built around building a new experience

for their users with stable coins in

particular but just more generally a

better experience for for users in those

countries. I think a really interesting

one that I I've personally been involved

with army side is called courtyard and

they started out as a sort of

collectibles marketplace and what they I

think they were doing was um interesting

innovative is that they wanted to like

actually verify that the collectibles

were like um authentic and so they would

they would actually manually verify that

like you the the baseball card was what

it said it was or the collectible toy

was what it said it was and then put

that onto sort of like the the

blockchain as just like you know

immutable proof of the authenticity and

then sell that on the marketplace.

Another question I have is you've now

seen the arc of um lots of startups

being built. What would you say to

cryptobuilders who are like we've been

here for 15 years, it hasn't happened

yet. Like we're tired.

>> Yeah,

very good question. I This time is

different. But like it really does

actually feel like that.

>> YC's philosophy first and foremost is

just like fund the best teams and fund

the best founders. And there's a

particular DNA of founder that we want.

It's like Brian, it's like you. It's

like very like technical like um

technically minded um engineers who are

willing to go out and learn about

customer pain and business to the extent

they need. Uh and I think the reason I'm

most excited about stuff now is just I

think there was a period of time where

crypto wasn't attracting all of those

people. Um and it was a mixed some of

them have always been there but there

was also just a lot of people who were

there for like the speculation and

basically trying to make money really

quickly. And I think now is the first

time I feel really that the stars are

aligning where like you're seeing like

really strong technical teams who want

to solve like real problems actually

sort of paying attention to the space

and I think it is largely what you said

actually like the chilling effect around

the regulatory environment on this stuff

I think just scared away a lot of those

people and now it feels safer to build

in the space and so we're just like I

feel each batch we're seeing like um

people coming in. I think stable coins

are sort of like the obvious entry point

into it because it's like you know the

most clearly regulated space and the

most clearly sort of um understandable

use case but I think you extrapolate

that line out forward like 12 18 months

from now we'll just be seeing more high

quality teams especially with that sort

of like YC and Coinbase DNA like working

on crypto ideas.

>> Yeah, the builders are getting better

and better. It's awesome.

>> Maybe do you have some closing advice

for some of like the technical founders

out there who want to build in the

space? Like what's one one bit of key

advice you could leave them with? Yeah,

my advice would be come up with a thesis

of what you think is broken and then

show up every single day trying to

either prove or disprove that thesis.

That work of showing up, talking to

customers and doing it is going to be

the thing that leads to the successful

startup. So, let me ask a final

question. Is YC open for business for

crypto?

>> Yes, 100%. I mean, like we absolutely

want to fund all the great teams that

are working on crypto.

>> I love it. So excited. So excited to be

here. so excited to be doing this and so

excited to hopefully see hundreds and

hundreds of incredible startups being

built on crypto backed by YC in the

coming years.

>> So, if you're um if you're a builder, if

you're an engineer and you're interested

in building a crypto startup, YC would

love to see applications from you and

we'd love to work together with Coinbase

on helping you succeed. Thanks so much

for being here, Jesse. Thanks for having

me.

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