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Mint Season 2 episode 9 welcomes Andy Artz who’s on a mission to advance humanity by solving the world’s hardest problems by investing capital across early-stage startups at Social Capital.
He’s also a major proponent of the decentralized social media platform BitClout following his own creator coin $ARTZ.
In this episode, we talk about:
- Understanding BitClout
- Weighing the risks of creator coins
- Curation on the blockchain
- Launching $ARTZ coin
- Trading social capital
- What will eat Web 3?
…and so much more.
Thank you to Season 2’s NFT sponsors!
1. Coinvise – https://coinvise.co/
2. POAP – https://poap.xyz/
3. Socialstack – https://socialstack.co/
4. Celo – https://celo.org/
5. PrimeDAO – https://www.prime.xyz/
Interested in becoming an NFT sponsor? Get in touch here!
Let’s just jump right into the basics. Tell me a bit about yourself. Who are you, Andy? What were you doing before crypto? And kind of, where are you now?
These days, I’m a social token influencer by night. By day I am a partner at social capital. I’ve been in the venture capital space for the last eight years. Before that I was a VP of analytics and finance at a gaming startup called O M G Pop. Kind of a precursor to crypto. In a way gaming communities feel very similar and very related to crypto. So it was building social games there. We had a game called draw something which was popular for a minute in March, 2012. Before that, I studied physics. So I was coming from a science background.
So you studied physics. Okay. Very far from investing, very far from gaming. How did you go from the physics route to the gaming route? And now it’s crypto? Like what was that transition like?
The transition was rough. I think all transitions are hard. There’s no such thing as a smooth transition, in my opinion. I was curious about how the world works. So I liked understanding, you know, like at the atomic level, protons, neutrons, quantum was very interesting, like a probabilistic view of the world. But going deeper into science was a different path I wasn’t ready for. So I got into finance. I had loans to pay, worked at IBM. Learned how to use Excel, learn how companies think about buying other companies. Got to see the flow of funds of who cashes out, where the values created at IBM, where this large company with a lot of loyal executives that were buying these smaller startups. And so I fell in love with that process and that’s what led me to join startups. So I reached out to a bunch of folks in my network. OMG pop got connected through a friend of a friend. And yeah, I really love the gaming space. I’ve always been a gamer, grew up playing StarCraft Diablo 2 Warcraft 3.
So at social capital, what do you guys kind of focus on? I know you guys are a relatively big firm and I feel like you’re agnostic, but what do you, I guess, more specifically, what do you look for as an investor?
Yeah, we’re a generalist firm. We’ve got a couple of billion dollars under management across venture funds SPACs . We do private credit as well, a bunch of different asset classes. I joined with Bitcoin in mind in 2013, so Chamath and I teamed up. We started thinking through where’s crypto going. We put on a big trade back then. Which has worked out well for us. We bought a piece of digital currency group. And so I’ve always been interested in tracking the frontier of how consumer behavior is changing. We did a lot of healthcare, education, and SaaS investing in social capital. That was our mandate. But slowly I’ve been drawn back more to the crypto side from last year, I’ve been focusing full-time on this and really on the consumer angle too. Like, how is crypto gonna enable new ways of communicating new ways of interacting. I think DAOs are interesting. New ways of governance, new ways of you know, culture we’re seeing in the NFT space.
I think you called yourself a social token influencer, right? Which I think respectively on BitClout, you’re obviously one of the top-performing creators out there, if you’re measuring it by your ticket price and also your level of activity. And you’re a very big advocate of these creator coins, right? However, you want to call them. What is it about social tokens that got you so excited to begin with?
It was new. It was different. It was weird. It was addictive. It felt like there was some new behavior that was being unlocked beyond, you know, I could go set up a Stripe account or a Shopify store, or, you know, I have Venmo and I have a PayPal account and that’s all fine and good. There’s something about the speed, the global reach, the fact that it’s crypto, it’s on a blockchain. BitClout is a layer one. And you know, this is not specific to BitClout but I think the idea of social tokens, I can’t set up a token on rally for example. I’m not a YouTube or a vine or Twitch or whatever streamer that has a huge following. So BitClout was just this very simple way for anyone in the world to go up and have a token. The simplest way in the world to issue a token right now, currently I think that’s, that’s on BitClout.com.
Have you ever thought about what a stable creator coin would look like? Does that even make sense? What do you feel about that?
Yeah, one of the first experiments had been, a platform, I called it StableClout. People to keep a peg of my coin price at $8,888 so that if it went over, people would sell and buy. So trying to replicate an algo stable coin of sorts with the community there were no real incentives. It was just for fun. But yeah, I think it’s a great point. Like a lot of people don’t want to be exposed to volatility on the day-to-day and that affects their user experience. So I think. You know, keeping it in stable coins and then there’s diamonds on the platform, which are basically a form of tipping, which you tip in your own creator coin, which is volatile. So you know, that piece is a little weird, but I think to your point, not everybody wants to be exposed to volatility in all aspects of what they’re doing. So that’s definitely something that we’ll need to evolve with the ecosystem.
What’s the current state of the social token market?
We’re very early. The social token wave is yet to crest. I think you know, there was a little bit, a BitClout mania upon launch. Rally and roll had a headstart, but this is the first consumer facing platform that’s reached a million users and is available to anyone in the world. This is sort of at the Friendster, if you compare it to the social network days. Where, you know, social networks,are not yet anywhere similar to how social tokens, not yet on the tip of everyone’s tongues. But I do think it will have its moment. And I think, you know, right now you mentioned NFTs are the focus. That seems to have captured the community’s imagination and how you have this piece of ownership and then connecting that to DeFi is interesting. And then, you know, what’s happening in gaming right now is interesting. I think people are getting more and more used to the idea that there are assets other than, you know, your standard layer one tokens or layer two tokens that have value that can be transacted in interesting ways. And social tokens takes that up a notch. If you spend any amount of time on BitClout, how many different interdependencies, there are the coin price, volatility, the tipping mechanism, you managing your own coin and your own cap table of coin holders. It’s a very complicated thing. Not only intellectually or financially but also there’s a social element too which I haven’t seen before in crypto. It exist on on other platforms.
A lot happened between the Friendster phase and the Facebook phase. What do you imagine the Facebook phase of web3 looking like?
Well, the biggest change that happened in the early 2000s was people getting wired up to the internet. So I think the similar phase where, you know, a couple, a couple hundred million users in crypto worldwide, I think people getting wired up to crypto is the biggest change that needs to happen. You, you know, BitClout was unique in that it focused on a different audience than the hardcore crypto community and some of the hardcore crypto community weren’t so impressed with the way some of the growth tactics and how it launched. So it kind of alienated some users early on, and there’s a small, very small subset of the global population that’s using this and experimenting with it. And it’s hard to onboard. It’s hard to go from USD using wire to confirm via your bank account to get a small amount of Bitcoin that, like you said, it’s a volatile asset and then convert it for BitClout and then convert to creator points. It’s like a five, six-step process. It makes no sense for your average user let alone fees too, you know, and in Nigeria as a user you’re to pay $20 a transaction fee to swap USD to Bitcoin. So there’s some barriers there.
Share with me the process of how you came to the conclusion to invest in Bitclout.
Yeah. I guess in my limited experience, in my career, some of the biggest value creation, examples, some of the biggest start-ups that have ever been created are, are innovating around human communication. Whether it’s WhatsApp, whether it was Facebook originally, whether it’s thinking about telegram, think about Snapchat, think about Twitter, it’s always some form of changing the way we communicate. And so at the core, I think inter human communication is a big problem to solve. And so anyone that sets out to do something different there, I’m already very interested in. In the case of BitClout , there’s a problem that’s very top of mind right now around getting canceled on centralized social networks. Do you really own your account? Do you really own your data? Do you really have a platform to speak? Who controls that? I think that’s a question that the community is struggling with, right now, at large. And so BitClout saw that and had a solution to that problem. So that was very interesting. That was very timely. I don’t know if people would have been as receptive to that idea five years ago or certainly 10 years ago.
How do you see the competitive landscape of decentralized social media platforms like Bitclout evolving over time?
No, I think a rising tide lifts all boats. I think people are just waking up to the idea that they don’t own their data . I think that’s starting to come into the consumer consciousness more. I think more examples of people trying to build this will only bring more attention and usage to these platforms. I happen to like the BitClout platform. It’s fast, it’s responsive, the developers are very committed. There’s a large treasury to support the project. It’s hard to do. I would really applaud Twitter and congratulate them if they can make it work. It’s also nice for competition to exist because then, you know, different teams can learn from each other what works. You know, copy each other, share technologies in certain ways. So I think it’s better. The more people that are working on this problem, I think the better off humanity will be. So I’m encouraged by it. I think BitClout has a first mover advantage. It’s a very smart team. They’re in pole position right now. If they keep executing the way they do over time, it’s going to be a long journey ahead. It’s speculative, but it’s, it’s also a long-term project.
How do you see curation protocols playing a role over the years and empowering platforms like BitClout or a future web three social networks?
Oh yeah. I think it’s super important. BitClout Is the data layer, the blockchain. And so the node operators are gonna have to figure out how do they engage their users and monetize. Maybe that’s one of the challenges BitClout faces is, has it encouraged a vibrant third-party developer ecosystem of node operators who will then go build consumer-facing applications that will then attract users to come and join and monetize and engage. So I think curation on that piece, the endless infinite scroll is the best part of TikTok. That sense of satisfaction that you get for completing these short videos. The dopamine hit and then the unlimited, you know, never ending scroll. Those are two powerful features. So I’m sure there will be some novel engagement tricks and techniques that will be developed by some of these node operators that we haven’t seen before. That are more crypto native, and maybe that’s, you know, you could imagine your wallet balance tops up as you engage for longer term. Think about like brave and bat, like maybe you’re benefiting from some of the ads that you consume and you’re, you’re constantly earning that way. I think, you know, with axie and the axie infinity play to earn. There could be a similar model here you know, of a scroll to earn .consume to earn, interact, or, and engaged, or, any kind of model that doesn’t really exist in a social network today.
How would that look? Like another example that comes to mind is the collaboration between Celo and Socialstack. And they implement this concept called proof of listen. So every time you would listen to a podcast episode, you basically get rewarded in whatever token. So that’s kind of like what you’re, you’re hinting at?
Yeah, exactly. What do we call it? Proof of engagement. Proof of activity, to that extent. Yeah.
I want to jump into your token $ARTZ. You’re publicly trading on the market. People can speculate on you as a person and the content that you push out. Off initial thought, did that scare you? Did that give you any concerns that freak you out at all? How was that process?
Maybe it should have. You know, not financial advice, I’m not, I’m not a financial advisor. I think, the regulation aside, it was play. It was, it was pure bliss. It was really enjoyable. It was a curiosity. No one knew what to do. I created an account called a Clout Taito account where I would send people a fraction of a BitClout and ask them to keep a slice and pass it on. And the community responded. It was really cool. We talked about the stable coin, stable clout . I started doing some, you know, some lightweight versions of raffles, some bounties. I just started experimenting with everything possible that you could do with having your own token. I have my own sovereign currency now, so…
You say you have your own sovereign currency, but in reality, I mean, technically it’s a currency, but what can you do beyond just trading? Like where does a utility come into play? How do you think about that?
Yeah, I think early on, it was a lot of speculation. I think by locking value into my coin. So I bought a bunch of my own coin. I exchanged BitClout for ARTZ coin, which then threw the bonding curve, boosted the price of ARTZ coin. So now I have this asset that I can distribute to people in fractionalized ways. I can give you a fraction of ARTZ coin. The first thing I would think about is access. I haven’t done anything with my community, but there’s some creators. Think about Craig who has a private telegram group that coin holders have access to. There was a sub stack sort of equivalent platform where you could write called sub clout where you could write a blog post and have that be pushed out to all of your coin holders. So I think at the very first, the way we, a lot of us thought about it was, it’s sort of like a CRM and your coin holders now are some your VIP users. And maybe you have followers on social media, on Instagram, who will like your content. But this is like the next level of engaged users who are actually willing to put real money in support you. And it could be a dollar, it could be a thousand dollars. You know, that the amount is that way. So that’s more about just gaining access to a creator, from a follower perspective.
The other piece that you mentioned is financial. And so what does this asset really represent on the financial side? What’s the underlying value? I think where things are heading is tying some form of cash flows back to coin holders. The first iteration of that, the platform launch that launched NFT sales. So I can mint an NFT, I can sell it. And then a portion of the proceeds can go back to my coin holders and I can tweak that ratio. So if I’m a prolific NFT creator, there’s a real incentive for my coin holders to hold my coin, because now they’re going to be receiving some cash flows from those NFT sales.
If a creator would come to you today and they ask you Andy, like I want to get into social tokens, I love the concept of tokenizing myself, keeping my users a part of the journey,but how do I promote this to people without it feeling too sketchy? Without it feeling like a cash grab? Like how do you imagine that line of communication?
Yeah, I think it reminds me of in the gaming world in the social gaming world, we had a concept in freemium games of a power users. We would call them whales, the users who had spent over a thousand dollars in your game. It’s usually a small fraction of the user base, less than one percent. Those are the users who drive 80% of the revenue. And so I imagine there’s a similar segmentation of a creator ‘s fan base. Who are the fans that are consuming, you know, 5, 10% of fans that are consuming 80% of the music, the content that’s put out, buying the tickets. And so I would not think about this as a product right now that’s suitable for your mass audience, but I would think about it as a product that’s suitable for sort of the upper echelon of your fans. And then the second piece is do you ask them to buy it? Do you ask them to put real money into it? Do you use it as a sort of fundraising platform for yourself for a monetization platform? Or do you think about it as more of an access platform? I, right now today think it’s better suited for access. So I would create a token. I would Boost the value of my own token myself. And then I would airdrop that to my top thousand fans, not asking them to buy anything. So now they have a piece. I’m rewarding them for, you know, in a way you think about like a cash back of sorts. Like it’s a reward for being a part of my community. And then empowering them.
You know, a lot of creators have this huge community, but they don’t know how to tap into the intellectual capital that exists there and to mobilize that for their own benefit. You know, if there’s a developer in my community and I want to launch a website, or if there’s some clever marketing that I need help with you know, paid acquisition for some campaign I’m running. Or there’s some musician and I need some help you know, scoring one of my, my TikTok videos. All those people exist in my community, and they’re probably a few that are highly engaged. I would love to use my token to at least connect with them, have them on a register of sorts, a CRM. So I can know who they are and then engage with them in a more meaningful way. And transact and send value to them for you know, completing bounties for my community. Things that I need help with things that helping me scale.
BitClout will let me say, Hey, here’s my top thousand followers. And I would need something on top of that. If the user chooses to remain anonymous or pseudonymous I would need something on top of that to stitch their email to their BitClout account or their phone number, and I could ask them. We invested a company called Moonbounce which is stitching those together so that a creator can say, Hey, you know, go to this site and put your email, your phone number, join your BitClout handles, so I know who you are. Sort of, you know, a lightweight KYC of sorts for creators so they can have their contact details of their top fans.
Since you launched ARTZ coin, what are some like major things you learned that you didn’t expect you’d find out along the way?
Yeah, I guess, you know, I realized I was really impressed by the Goodwill of the community. I thought going in that it would be like you know, the equivalent of like a stock price that people would rapaciously, buy and sell and looking at it from a profiteering motive. I’ve actually made some really good friends from folks who are coin holders, Douglas being one of them. It’s a pseudonymous account. We met up in person and we both hold each other’s coin. We saw each other’s activity on this and I made some great friends on the platform and it’s sort of transcended the financial aspect. It’s almost in a way, you know, I don’t want to go too far, but it’s almost as if how you think about treating family with finances. it’s not really business in a way. And so there’s that element where you’re aligning individuals you’re holding their coins.
I’ve seen these really long-term coin mutual coin holder sort of handshake agreements emerge where people want to be invested in each other and support each other. That’s another piece. There’s a psychological component to it. When you own a piece of someone, of their token, it changes how you interact with them. You want them to succeed. I’m much more generous with my time than I would be otherwise in the BitClout community. Partially because I hold these tokens and I think there’s a psychological hack in a way that where my brain says, these are my allies, these people are part of my tribe now, in a way that, you know, someone just hits me up in email and says, Hey, can we chat about this? I might be more reluctant to do so.
How do you feel about a Black Mirror scenario unfolding where everyone is tokenized and we judge each other by our price. Do you see that idea becoming a reality? If so, how do you feel about that? Is that scary to you? Does it excite you?
Well I think it’s up for grabs. It’s up to us to decide how we want to fashion that. I believe we have agency in shaping this. The interesting thing about crypto is we have an opportunity to refashion the world and the power structures in a way that don’t exist in the analog world. If we do nothing, you know, maybe they just map over one for one. Billionaires today, have plenty of power and status. And so if you’re saying someone with a billion-dollar coin price has power and status and it’s tokenized and maybe a billionaire controls, a publicly-traded company, and now they have their social token. That’s totally, you know, kind of analogous. There’s not a lot of difference. It’s different than the social media influencer that has a bunch of followers and maybe doesn’t generate income. I love the fact that things are a lot more transparent. I like the idea that everything you do is visible and you have to be accountable for your actions now. And those can be discoverable by anybody who has access to the chain and knows how to use a database or knows how to read the block Explorer. I like that a lot. And people can still obfuscate what they’re doing and hide it through other accounts and, you know, send it through tumblers. That’s always possible, but I like being myself on the chain. When I post a picture of my six-month-old baby it’s embedded on the chain and now everyone can see it and hackers and allies and foes and enemies. Everyone has access to that image now. It’s just cool that you’re kind of putting all your cards out there.
What’s going to eat web three? What do you think? Web two ate web 1.0 web 3.0 , the bet is going to be eating web 2.0. What do you think will be eating web three?
Hmm. Good question. What’s next, next. Well I think the arrow of time is pointing to the rise of the sovereign individual. And I think going from web one to web two to web three has given more and pushed for more power down to the individual to use technology, to interact with their world and their lives. I mean the first thing that pops into mind is the metaverse. I think there’s a lot of talk about that, but it’s the very, very early innings. And so the thing that would eat web three is if web three allows all of us to have an economic presence and the build out of these economic blocks online, where you know, the financialization of everything that we do, the crypto vocation of everything we do online, I think that allows us now a different way of interacting exchange of value, a seamless exchange of value. And what follows from that would be. Yeah, I suppose you would see more and more people setting up I guess building their lives increasingly online, more so than they’re already doing today. Today, we kind of think about the internet as the remote control for our real life. But maybe that flips and you know, we’re spending the majority of our time earning our incomes, our livings through these platforms. You know, if you think about breeding horses that run, maybe that’s just a joke today. Maybe that’s the tip of the iceberg where you know, these DAOs and these communities of people to economically be productive. That’s a hard question.
Web3 question continued…let’s say everything is on-chain. Is that a good thing or a bad thing? And why?
Well, everything already is on-chain in the sense that, you know, our interactions. Like if you think about the universe is the chain we’re already living on chain. It’s just such a computer that we don’t-. It’s a giant atomic computer, we don’t have the ability to calculate. So this is just dumbing, everything down and saying, okay let’s, you know, embed everything you know, on a chain we can actually read. I think that’s really cool because now it opens up a new possibility to have this third brain of sorts that we don’t have today. That is, you know, you could, on the one hand, you could fearmonger and say, oh, it’s this hyper surveillance police state that we’ll be living in.
On the other hand, you could say, oh, it’s, you know, all these apps that can augment my daily life that we can create based on the data that we couldn’t have before. So I I’m in that camp. You know, I want to put all my life on-chain. Think about all the biometric data. Tell me what to do. Here’s all the data. I love that idea.
Before I let you go quickly, plug yourself and where we can find you in the various projects you’re involved with.
Yeah. I’m Andy Artz. You can find me on Twitter as ArtzAndy, or on BitClout as ARTZ. Yeah, thanks so much, Adam.