![[3-Dan Romero.png]] *Dialectic Episode 3: Dan Romero - Why Information Should Flow on Protocols - is available on [Spotify](https://open.spotify.com/episode/2SIRpwG4YkE7K69fIeFREK) and [YouTube](https://youtu.be/ul2qXlKcRw8?si=2VC11_Id1Vj76Igw).* <iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/5GNtXP2MbMgqm7JZ2vvnOd?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe> <iframe allow="autoplay *; encrypted-media *; fullscreen *; clipboard-write" frameborder="0" height="175" style="width:100%;max-width:660px;overflow:hidden;border-radius:10px;" sandbox="allow-forms allow-popups allow-same-origin allow-scripts allow-storage-access-by-user-activation allow-top-navigation-by-user-activation" src="https://embed.podcasts.apple.com/us/podcast/3-dan-romero-why-information-should-flow-on-protocols/id1780282402?i=1000678868989"></iframe>  # Description Dan Romero ([Farcaster](https://warpcast.com/dwr.eth), [X](https://x.com/dwr), [Website](https://danromero.org/)) is the CEO and co-founder of Farcaster, an open Twitter/X-like social network protocol built on blockchain rails. Before co-founding Farcaster in 2020, Dan previously worked at Coinbase as a Vice President, among many other roles. He joined the company as the 20th employee in 2014 and left in 2019. He's thought about and used Twitter-like networks for nearly two decades and is passionate about open information flow, market-enabled progress, and individual freedom. # Timestamps - (01:39): We were promised flying cars and all we got was 140 characters - (8:48): Bring Your Own Algorithm (BYOA), RSS, Elon, and The News Channel-ification of Social Networks - (35:54): The Field of Dreams Fallacy: If You Build It, It Doesn't Mean They'll Come *Farcaster & Crypto-Focused Section Begins* - (44:25): Status as a Service and Building the Home for Crypto Status - (55:03): What is Farcaster? - (59:34): Why not counter-position against Elon? - (01:03:42): Programmable social and “Open APIs” - (1:14:22): The Future of Farcaster - (1:18:01): Farcaster's Value Capture  - (1:25:01): Sufficient Decentralization - (1:28:44): Why Dan has created NFTs but not tokens *Farcaster & Crypto Focus Ends* - (1:29:53): Product Market Fit, Focus, and The Idea Maze - (1:37:01): Dan's career arc, contrarian paths, distributed systems, and creative destruction  - (01:44:09): Coinbase: pre-2017 learnings, hypergrowth, comparisons between building a culture and social network, and anti-lessons - (1:49:20): Brian Armstrong and fostering repeatable innovation - (1:52:24): What do you wish Balaji [Srinivasan] could work on? - (1:53:20): Group Chats and the pendulum between private and public discourse - (01:58:55): Power: Elon, Zuck, Trump?  - (2:00:24): Politics, Populism, Going Direct, and the Podcast Era - (2:08:48): What have you changed your mind on this year?  - (2:10:22): Final Questions # Links - [RSS+](https://danromero.org/rss-plus.html) by Dan Romero - [The Rise and Demise of RSS](https://twobithistory.org/2018/12/18/rss.html) by Sinclair Target - [Status as a Service (StaaS)](https://www.eugenewei.com/blog/2019/2/19/status-as-a-service) by Eugene Wei - [The idea maze](https://cdixon.org/2013/08/04/the-idea-maze) by Chris Dixon - [Balaji Srinivasan's paper on the idea maze](https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf) - [The only thing that matters](https://pmarchive.com/guide_to_startups_part4.html) by Marc Andreessen - [v2 frames](https://x.com/dwr/status/1861191168501194938?s=46) - [FC AI/zk trends](https://x.com/dwr/status/1859266698446307535) Dialectic with Jackson Dahl is available on all podcast platforms. [Join the ⁠telegram channel for Dialectic⁠](https://t.me/dialecticpod) [Follow ⁠Dialectic on Twitter⁠](https://x.com/dialecticpod) [Follow Dialectic on Instagram](https://www.instagram.com/dialecticpod/) [Subscribe to Dialectic on YouTube](https://www.youtube.com/@Dialectic) # Transcript **Jackson:** You've had an eventful week, an eventful month. Bull markets are good for Farcaster. You also are pretty level set most of the time. How are you feeling? **Dan:** I'm feeling pretty good. We had a good early part of the year, and then it was pretty slow. The crypto market has been pretty slow for the last two years, so having signs of life is always a good thing. I was just talking about this yesterday on a Twitch livestream. It was my first time ever. **Jackson:** Maybe not the last, it sounds like. **Dan:** Exactly. Brian Armstrong has a really good perspective on this: the highs are never as high as you think they are and the lows are never as low. If you're going to make it in crypto, you have to try to keep an even keel. I try not to over-rotate one way or another. But I am a little happier if the Dow chart is going up. It has an impact on my mood every day. **Jackson:** I can confirm that stability of mindset every time I see you, which is periodic enough. ## [00:01:39] We were promised flying cars and all we got was 140 characters I want to start today not explicitly on Farcaster, but on a certain notion. Peter Thiel has this famous line: "We were promised flying cars, and all we got is 140 characters." For a long time, that notion was confirmed in Silicon Valley, especially around 2019. The sentiment was to work on something serious—hard technology, atoms, whatever it might be. We're now sitting here in November 2023, and it seems like 140 characters is pretty important. **Dan:** There's a deep irony in that the guy who's building the equivalent of a flying car—Starship is probably as close to flying cars as it gets—happens to also own the 140-character network. One might argue he is having a harder time making the 140-character network work than these amazing feats of engineering and physics with SpaceX. Thiel's always really good about saying something provocative. He gets 50% of people to say he's wrong, which is usually a sign that you're more contrarian or that it's a good statement. There's an argument to be said that Elon's version of Twitter, the support for Trump, and the ability to influence the algorithm relative to the status quo that existed a few years ago is now going to unlock a whole bunch of regulatory change in the United States. This will make the world of atoms actually move a lot faster. You could say that having a Department of Transportation that is extremely pro-self-driving, which very well could be the case over the next four years, gets you to the flying cars. You need the 140 characters before you can actually get to the flying cars. Thiel was early on that bet. In 2016, he was making that bet and said he had lost it. If you view Peter Thiel's bet on Trump and the MAGA movement more broadly as an angel investment, he's eight years in. If JD Vance happens to run in 2028 and ends up winning, that's a 12-year to IPO from someone who was directly working for him having the most important job in the world. This goes back to long-term planning. Both Peter in the stuff that he does, as well as Elon in the companies that he's building, show that when you have a goal over a long period of time and you're willing to work on it, you can achieve it. **Jackson:** Peter was very early on the Trump stuff specifically. Historically, Peter has generally not been pro-public messaging and has perhaps underrated direct attention and direct distribution. Elon, on the other hand, is the opposite. Along the line, he figured out with Tesla that owning the distribution matters a lot. There's one view that says attention, cultural reception, and distribution matter in the short to medium run. But in the longer run of 10-plus years, technology is an inevitable wave that's going to happen. My read of the situation, especially given Elon's calculus and what he's spent the last three or four years focused on, is that we're seeing in real time a case against the technological determinism of flying cars, self-driving cars, or rockets. The idea is that if you give science and technology enough time, they will come around, and you don't need to worry about what people think or about distribution, propaganda, or attention. Am I drawing a line between Peter and Elon correctly? You can make a case that if it weren't for Elon effectively aiming to control the airwaves and use his attention to swing this election, Peter would have been wrong, despite being so ahead of the curve ideologically. **Dan:** That's the Foundation series. Harry Seldon has this concept of psychohistory—macro, big predictions where the great man of history doesn't matter. It's about these big swings. So you could say that if Peter's betting on that, having Elon show up is the path dependency to make this whole vision manifest. It’s like Trump turning his head during the assassination attempt. You saw all those memes this week of World War III versus Occupy Mars, and you're talking about inches. That's a fair critique of it, saying that if you don't have Elon, maybe none of this happens and the bet ends up being wrong. But I am a big believer in the great man of history. I do think you have these exceptional individuals who push civilization forward, for better or worse in certain circumstances. If you read the Elon Musk biographies, you realize how close Tesla and SpaceX were to failure on multiple occasions. To think that where we are now—Tesla is leading this whole electric car revolution, SpaceX is catching rockets with chopsticks, and Starlink is ubiquitous internet anywhere... I think anyone who's actually been in the driver's seat of trying to build a company, regardless of what you think of Elon's antics, politics, or personality, has nothing but deep respect for the level of commitment and accomplishment he has made with those companies. And yes, there are all the smart people who work there and it's a collective effort, but you can't just assemble that group of people and assume that out of that room will come these companies. It's very founder and leader-led there. So I do think you need these individuals. And to a certain degree, I do think Trump, who has his own set of quirks and flaws, could have relatively easily lost after the election in 2020 and January 6th. Then for the 2022 midterm election to go really poorly—people were saying that night that this was the end of Trumpism. Yet he got back in the driver's seat, campaigned, and won the nomination for his party. To go back to Thiel's bet, part of it is you are betting on individuals, in the same way that with a startup you are betting on the founders. With early-stage investing, the media likes to make it out as this brilliant idea. But as you and I both know, most of it is not a brilliant idea. It's the founder being a smart, energetic person that's ready to wander for a while. In that sense, Thiel very much understands that. Bet on the person, bet on the founder. The name of the fund is literally Founders Fund. ## [00:08:48] Bring Your Own Algorithm (BYOA), RSS, Elon, and The News Channel-ification of Social Networks **Jackson:** To zoom in a little, one of the ideas you've shared with me that I find most interesting, which ties into the motivation for Farcaster, is this notion that if attention matters, then who controls information flow also matters a lot. People may be familiar with the idea of "bring your own algorithm." Jack Dorsey and Elon Musk have talked about this, though I would argue they've paid more lip service to it than substantively worked on it. You could make a case that Elon cares a lot about controlling the algorithm—he just decides he's going to bring his algorithm. This is also a question of stated versus revealed preferences: Do people actually care about controlling their algorithm, or is that just what they say? It turns out people want engagement, and the answer might be that 90 to 99% of people don't care. That said, you shared a metaphor that I found really interesting as a lead-in to Farcaster. It’s about how our ability to get information on health and nutrition has improved over the last 30 to 50 years. In the past, you trusted the food pyramid and whatever the government told you. Now, thanks to the internet, you can essentially choose your own adventure. Yet with information flow on a place like Twitter, it's like walking into a health food store and having them blast cocaine and sugar in your face. Can you talk about your initial frame for this and why you think this is an important problem? **Dan:** You brought up the food pyramid. What you put in your body has a huge impact on your physiological well-being, but what you put in your brain also has a big impact on your day-to-day mood. That in turn affects many other things in your life, including your health. In a world so driven by knowledge work, what you put into your brain over a long period of time has a material impact on your ability to succeed. It might even impact who you are, including your political beliefs. I've been addicted to Twitter since 2007. Part of that is a personality type that craves the stimulation of new information and learning about the world. That's one of the reasons I don't think Twitter has been as successful as a mass-market consumer product. Many people don't get the terminally online, in-group jokes that are highly mimetic of whatever is happening on the internet that day. Take the Ayla chart, for example. If you can visualize that chart, congratulations, you're terminally online. **Jackson:** You need a lot of context. Eugene Wei has this old line that there’s no lead-up to the joke anymore—it’s just punchlines. **Dan:** There's a really good book on the history of how written communication and increased literacy has changed Western civilization: *The WEIRDest People in the World* by Joseph Henrich. I highly recommend reading that book. You can extrapolate that Twitter is the extreme of that. **Jackson:** The weirdest people are the 5% who are Western, educated people. It's about 5% of people. **Dan:** There is the percentage of people who live in the West, and then there are the people that qualify on all those things. The way to think about something like Twitter is you've just injected a collective consciousness of the world into your brain. There is no editorial component other than who you follow and what the algorithm is willing to show you. **Jackson:** And a lot of Elon posts these days. **Dan:** Contrast that to if you were the same type of person 30 years earlier. Where were you getting your information? You were reading a daily newspaper. In some cases, people had an evening paper, so you could get two newspapers a day. There was television and radio. **Jackson:** Maybe you had *The New Yorker*. **Dan:** The quantity of information that was available to you just was not there. In a world where you now have a total abundance of information—too much information—the control of what's being shown to you is very impactful because time is zero-sum. It's crazy to think that up until recently—because I think Elon showing up at Twitter has fragmented the ecosystem in a net positive way. **Jackson:** Tribally or politically? **Dan:** I just think in terms of there being at-scale or growing decentralized social networks that allow for client choice. Ultimately, that's algorithmic choice. If I were to fast forward 10 years from now, we're going to go from a world where it's Twitter's algorithm. You could use the following feed, but they seem to always snap you back to the "For You" feed and the fight videos and Elon posts. **Jackson:** And critically, you have no control over the algorithm in the "For You" page. **Dan:** My perspective is that the average power user might like the idea of knobs to control their experience, but they don't actually know what they're doing. You're far better off thinking about it like a newspaper. The Wall Street Journal and The New York Times are effectively covering a shared reality. If there's something happening in the Middle East, both are going to run a news story, but they're going to cover it differently. They'll have different sources, prioritize different facts, and have different political agendas, even if they both claim to be impartial. The point is there's top-down editorial judgment at The Wall Street Journal versus The New York Times that results in different vibes. Over time, I think they've gotten closer. This is something Marc Andreessen always talks about: in 1950, you could find different universities where the history departments at Yale and Harvard were actually different. In the 2020 ecosystem, you've had a homogenization of these institutions. That's why the terminally online infovore is on Twitter—for the real-time feedback and the ability to follow a weird account and go deep on any topic. That could be genetics, which can get pretty spicy if you dig into the details, and that's a whole subculture on Twitter. You can also be in NBA Twitter or political forecasting Twitter. Thirty years ago, at best you'd get one story a day in The New York Times about polling. Now we have PolyMarket mixed with Nate Silver fighting Keith Raboy over the election results in Florida. All of that is available to you, and a terminally online person is willing to work through some of the clunkiness of the algorithm. **Jackson:** This is very much like Twitter in 2014. The only way to use it was to wade through the mud. You had to really put in the work. **Dan:** Even serious Twitter people today still do that. They get through the algo, they've turned the knobs and tried to figure it out. You turn off the retweets for that really noisy retweeter because that ruins your feed. **Jackson:** How many people are actually doing that? **Dan:** Most people don't do that. **Jackson:** Even most power users and sophisticated people. **Dan:** Yes. Having now built one of these apps myself, I realize that for any feature you build, you're going to get 5 to 10% of people to use it, max. And that's for a good feature. Most will be very low. The more sophisticated your product gets, the less likely any of these features are going to be used by your consumer, even if they're sophisticated. What really matters is the default algorithm. I'm of the mind that I could give you all the knobs you want for your algorithm, and you might take the time to set it up once, but you probably won't want to set it up again. Then you're stuck with that algorithm. A way better version of this would be if there were 15 different apps, and there's the app that looks at the same graph of data and makes me smarter. **Jackson:** One chance for an express preference at the very beginning. **Dan:** Or even better, there's no preference that you get to pick. This is what we do. Our whole goal is that this just makes you more intelligent, like The Economist. **Jackson:** The intent is set before I choose the app. **Dan:** The brand is the outcome. That's the point of The Economist. Once a week, you don't need to get caught up in the day-to-day news. We just tell you what was important. **Jackson:** It's almost like I'm choosing Paleo; now you tell me what to eat. **Dan:** To the degree that you want to flip over and get the random fight videos, you choose the more degenerate option. It's literally like opening up Comedy Central. Television channels are another good concept for this. An average Zoomer would ask, "What's a television channel?" But growing up, you could watch MTV if you wanted to see music-related stuff and flip over to ESPN if you wanted to see sports stuff. **Jackson:** Not to mention tribal TV channels. I'm curious to get to that later in terms of the different Twitter variations and how they become more tribal. But to double-click a bit since you're already talking about it, you wrote an awesome blog post called "[RSS+](https://danromero.org/rss-plus.html)." Do you want to talk about one of the things you highlight in the RSS context? I have one quote I'll read because I think it expresses both the ideological element of RSS and the fact that it's a withered technology, to steal from Gunpei Yokoi of Nintendo. It's from "[The Rise and Demise of RSS](https://twobithistory.org/2018/12/18/rss.html)": "RSS appears to be a slowly dying technology now, chiefly used by podcasters, programmers with tech blogs, and the occasional journalist. Though some people really do still rely on RSS readers, stubbornly adding an RSS feed to your blog even in 2018 is a political statement. That little tangerine bubble has become a wistful symbol of defiance against a centralized web increasingly controlled by a handful of corporations, a web that hardly resembles the syndicated web of Tim Berners-Lee's imagining." I'd love for you to reflect on the RSS piece. But also, as we get into what Farcaster is and its founding ideas, how did you get from this RSS idea to where you are today? **Dan:** My background is that blogs were the first thing I fell in love with on the internet. I still read blogs today, and I read them in an RSS reader. It's pretty amazing. There's a file—and files are a foreign concept at this point—but it's called an OPML file. I have literally had this same OPML file, adding and removing blogs, for as long as I've been on the internet. That's kind of crazy. It's like a single file, like having the same wallet for 20-plus years. What's amazing is I can take that file and put it into any RSS reader. There's this whole cottage industry of old-school nerds who still care about RSS. **Jackson:** What do you use? Feedly? **Dan:** I use a service called Feedbin, which is hosted. They have a really good default experience. Then there's Unread and another one I'm forgetting, which is for iOS. What's nice, similar to email, is you can host your RSS service in the cloud and then choose the best client—whether you want a good one on Windows, which I don't use, or a Mac client versus an iOS client. I read Tyler Cowen's Marginal Revolution—I've been reading it for 15-plus years—and Daring Fireball. Old-school blogs where people are still actually doing that. **Jackson:** Which is basically Substack. **Dan:** For newer people, this is what Substack is. It's interesting because it pushes content to email, and I get the appeal of an email newsletter. Part of this is because RSS was a little too hard to use. A second component is the writer's goal to get in front of you. If they can't get in front of you on social media because the algorithm is not favorable to links or a long-form post on why mid-range shooting in the NBA is underrated—if that's not going to play well in the Twitter algorithm—then the writer wants to figure out a platform that can give them that edge. Newsletters make a lot of sense. It strips away having to run a WordPress blog and hook up a different service. You just open a thing and get it to your reader's inbox. If you remember the website Medium, its history is that Ev Williams sold Blogger to Google, made money there, and then started Odeo, which was a podcasting thing. **Jackson:** He was pulling on a thread. **Dan:** He was pulling a thread. While they were working on the podcasting thing, which just happened to be too early, you can think of it as what all the podcast stores that exist today are. It would have been Odeo, but it just wasn't the right time. Jack Dorsey was an employee, and that's where Twitter came out of. This guy has been around every major information dissemination technology that we've had. After Twitter, he started Medium. At the time, this was an interesting thing because blogs were getting killed, which is why RSS didn't do as well. Twitter just ate it because it was way easier to type a 140-character tweet and immediately push it out to everyone who was addicted to using the app. It worked really well on mobile; you could write it on mobile. It was natural, in the same way that Instagram killed Flickr. **Jackson:** In many ways, early Twitter was a lot like RSS. Unlike Facebook or other social media platforms, it wasn't bidirectional; it was one-directional. You were following a person, basically saying you wanted to opt into their content. The difference from RSS, of course, is that you got it all in one feed that was more real-time than looking through an email inbox. **Dan:** The big thing is notifications. Originally, every Twitter account had an RSS feed. You could dot RSS and consume it. **Jackson:** They had the phone number thing, and you could text. **Dan:** You could text, but the whole point is that it was way more configurable. What Farcaster, Bluesky, and these open, decentralized protocols we're building today are is what Twitter was at the beginning. **Jackson:** Yep. **Dan:** Twitter increasingly got more centralized and closed. The point with RSS, though, is that basically everything on the web at that point had an RSS feed. You could get an RSS feed from The New York Times because none of these companies were thinking about social media as a… **Jackson:** Major distribution. And there weren't algorithms. **Dan:** Facebook was the first one to really push an algorithm, but Twitter for the longest time was just the following feed. It's who you followed in reverse chronological order, which is how your RSS reader works. There's no algorithm for RSS readers. News junkies and people who want to sit online all day would just love that because it's like tapping into the stream of consciousness of the collective Internet. Twitter wins because it's a vertically integrated experience. The bidirectional feedback is that if I reply to you, you get a notification. There were a whole bunch of weird, quirky pingbacks and other things in blogs, but it just didn't work. With mobile, you were able to build this dopamine flywheel loop of posting something. It really clicked when Ashton Kutcher raced CNN to a million followers. A celebrity could put a thought out. This was before Instagram ever became the behemoth that they are today. It was this amazing thing that if you were a famous person, you could put something out and immediately get all this feedback. It took Elon a while to figure that out, but once he did, he realized this is amazing. That is the thing that RSS could never compete with. It naturally appealed to more thoughtful, introverted, less dopamine-seeking behavior, so you're going to get outcompeted by the thing that is a dopamine casino, which is Twitter. When you put a banger tweet out, it feels good. You get this high. You open up the app and get 20-plus notifications every time. You click it, the whole thing. Even if they're bot accounts, you don't really care. It just feels like you're winning. **Jackson:** The talent show. **Dan:** That doesn't happen on blogs. If anything, blogs had comments, and most blogs had to turn off comments because they were just littered with spam. **Jackson:** So that's RSS, and that's why RSS loses. What is RSS Plus? What was the genesis of that idea, and how did it materialize? In that blog post, you talked about the notion of trying to go iMessage style and bolt this on top of RSS in the same way that iMessage gracefully turns into the green text if it isn't working. That's not the route you eventually went. **Dan:** My idea was, you already have all this distribution. All podcasts—this podcast, if you're listening to it—will be distributed via RSS. So RSS, with one exception now... **Jackson:** I guess Spotify could maybe kill RSS. Is the non-Spotify podcast the last remaining thread? **Dan:** The question is if your podcast is only hosted on Spotify, can you get it in another podcast app? **Jackson:** No, but even Spotify's creator platform will syndicate it on RSS. **Dan:** Okay, so that's how the bits are moving around the internet. My thinking was, you could use this huge installed base that exists of old-school people. All these apps would be able to make it work out of the gate. **Jackson:** Like podcast apps. **Dan:** Yes, podcast apps. It would kind of work. **Jackson:** Podcast apps are the one experience people today could actually relate to what RSS was like, where you choose your client. **Dan:** The idea was, could you start with this protocol and add tooling on top of it to make it more interactive? We explored that direction and realized we were going to be building our own protocol anyway. You could try to convince a bunch of old-school people who have not migrated to Twitter effectively or are simultaneously using Twitter. **Jackson:** Do you even want them? **Dan:** It would be much easier if you have a completely new stack. The thing that was exciting to me about starting to work on Farcaster is that it's really important to have the public square of the internet not be controlled by any one individual, company, or country. Elon on the margin is better than the previous regime because you are dealing with one person, and he's pretty vocal about his decisions. But it's still just as bad that what's happening is whatever his whim is. **Jackson:** Sometimes it's a whim, and sometimes it's really thoughtful. **Dan:** This is what a monarchy is. The public square should be a little bit more democratic and, if anything, a credibly neutral protocol. We have some great examples of this in cryptocurrency. Bitcoin and Ethereum are at a level of decentralization and credible neutrality—the Ethereum L1. Some of these newer chains are maybe a little bit more centralized, but that's how the public square of the internet should be. That was 2020. Elon showing up and buying Twitter changed my perspective of how that would shake out. I thought a clear protocol would get built while Twitter was in this stagnation phase. **Jackson:** Censorship concerns. We're in a very different world. **Dan:** It was this thing over to the side that probably wasn't going to have mainstream appeal. One protocol would build, start to get some momentum, and then you'd have a legitimate competitor to Twitter. Elon buying Twitter gave a huge tailwind to the entire space, which led to Meta building a short-text platform with Threads for the first time in their history. Say what you want about it, but it's got 275 million people using it every month, and they're adding a million people a day. Blue Sky has gotten a lot of growth as a result of people who don't like Elon. Now you've seen a bit of a political fragmentation. If you think of the big networks, Twitter and Threads are the two biggest. Threads is Instagram, normie, left-leaning; Blue Sky is more left of Threads; and X is now right. **Jackson:** Blue Sky is, "We're really mad that Elon runs Twitter, we hate Trump, and we are leaving Twitter." **Dan:** They're doing a really good job. **Jackson:** They're growing. It was also notably founded by Jack Dorsey while he was at Twitter. **Dan:** X is now right of center. Whether it's the user base or just the algorithm, it is very favorable to Elon and very favorable to Trump, which was not the case four years ago. Then you have some other subscale platforms. Farcaster is one of those. We're not explicitly political. We have plenty of left-leaning and right-leaning crypto enthusiasts. The average person would say if you're into crypto, you're right-leaning, but in my network, we have plenty of different political opinions. Nostr is another example that's more right-wing because it's Bitcoin. Then you have Parlor, Gab, and Truth Social, which are far-right. So there's quite a political fragmentation. My updated opinion is that I don't think there's going to be one protocol. It's going to be this archipelago of different flavors. Some will be decentralized, some will not be. I forgot Mastodon, which gets lumped in with Bluesky on the political side, but it's also technically part of the Fediverse, where Threads is. We're just going to move to an era where you pick your newspaper, which I don't think is the worst thing. In a world where some of those networks are default open from an API standpoint—Fediverse, Bluesky is built on a protocol called AT Protocol, Farcaster—you could build a client that sucks in information from all of them. We're getting closer to this world of RSS+, where because the APIs are now going to be open on a lot of these networks, you'll be able, as a developer, to build a client that could have a specific algorithm for at least some percentage of the content. Twitter's API is as locked down as it's ever been in the history of the company, so I have lower belief that Twitter's going to change. Substack is another good example. It has its own Twitter version for its writers that has a lot of users, and if you go on there, there's robust discussion. They're built on email, which is a pretty open protocol, and you can get an RSS feed. Does Substack at some point federate into one of these protocols? Yes. **Jackson:** So that's more competition. **Dan:** Yet another part of the internet is now in this open version that is remixable and open to different developers. The moment that is the case—and it's a little different now since I started in 2020 because of AI—I increasingly don't believe people are going to be using a pane-of-glass scroll feed. In a world where AIs can get really smart about how they feed you information, they're going to ask you what you are feeling and then be able to provide it on the fly. **Jackson:** Sort of like the Google Reddit search. Everyone realized you should append "Reddit" to a Google search, and complexity just does it for you. **Dan:** I'm optimistic that we're moving to an era of the internet getting locked down. If people have valuable data, they don't want AIs to train on it. Reddit has a famous deal now with, I think, Google and OpenAI; they pay Reddit to get access to the data. **Jackson:** 60 million for the first one. **Dan:** If you're Anthropic now, Reddit's off limits to you, which is not how the open web worked before. My sense is that these open social networks are going to have to confront this. I saw a story where BlueSky users were demanding to understand how the BlueSky data is used. BlueSky is a centralized thing built on top of the protocol, and they said they're not going to train anything from BlueSky data. But then people realized if everything is available over the API, people can just take it. People are going to have to figure all this stuff out. I am optimistic in aggregate, and I'm still very bullish on what we're doing with Farcaster. Over the next five to 10 years, a lot of the internet is going to be lit back up in terms of your ability as a developer to build your own algorithm for information sources. I think you'll see an equivalent to organic food or the slow food movement—getting back to the basics. You could imagine RSS and these open social networks where you can pull this feed in. Then you have an algorithm that says, "Don't show me anything that's going to be rage-inducing. Only show me interesting things that are academic or interesting." That will exist, and it'll probably be AI-driven. **Jackson:** We're making progress. **Dan:** Yeah. ## [00:35:41] The Field of Dreams Fallacy: If You Build It, It Doesn't Mean They'll Come **Jackson:** As I understand Farcaster, there are three core ideas. One of them, as we just talked about, is that information should flow in protocols. That's starting to happen, both due to what you are doing and more broadly. The second thing that you've talked about is that distribution is almost always underrated when building a new thing. People assume that composability will drive network effects, but it's the other way around: network effects are what make composability useful. You've called this the "Field of Dreams" idea. Was this something you knew going in? This is also the "product over protocol" idea. When did it become obvious that this is what you needed to focus on, rather than just building the most robust open tool? **Dan:** The idea is taken from Thiel's *Zero to One*. The idea is, "If you build it, they will come," and that's a fallacy. It's not going to happen. **Jackson:** A lot of people in crypto. **Dan:** Developers generally think the brilliant idea itself is the thing. Crypto is even worse because you have these extremely smart technical infrastructure people that see the success of a blockchain like Bitcoin or Ethereum, and then they go, "I'm smarter than that group of people." **Jackson:** And if I build the best design, it will win. **Dan:** Which we know doesn't actually work. **Jackson:** RSS arguably. **Dan:** The best tech does not necessarily win. Any student of history will say that. JavaScript is the most popular programming language in the world and was put together by a sleep-deprived programmer in 1994 in a crazy short period of time. The network effects of these things last a long time. The tech part is necessary but not sufficient. The sufficient part is actually how you convince people. How do they become aware of what you have, regardless of what you're trying to sell, whether it's enterprise software or a consumer app? Then you get it in front of them, get them to use it, and then keep them around. Sales is something that you can do individually. I can come up and try to sell you a car; I could try to sell you enterprise software. It's harder to sell you a social network. **Jackson:** You did personally on Google. **Dan:** In lieu of having a lightning-in-a-bottle idea, you have to do hand-to-hand sales. Generally, the way to do mass sales is marketing. People think of marketing as advertising, but a lot of that is also just a clear value prop: How do you get the word out? Whether it's word of mouth or a referral program. PayPal had its famous program where if you signed up, they gave you $5 and the person who signed you up got $5. It's a pretty good way to get people to sign up if you give them free money, and the growth goes fast. Uber famously gave crazy discounted rides and all that kind of stuff. The go-to-market and sales component of any great company is typically not well covered or well understood because it's much more sexy from a media standpoint to talk about the brilliant engineer. It's this Edison or Nikola Tesla complex: a brilliant engineer in a room comes up with the idea and it just sells itself. But go-to-market is a lot more messy. There are probably some shenanigans that happen one way or another for a lot of these companies. Google is a good example where they just built this better search engine and it went viral. Or Facebook is another one where it's just this idea that took over the world. The reality with Facebook is that while it went viral at Harvard and they were smart not to expand too quickly, they very quickly developed an aggressive growth team. Engineers don't like being called marketers, so they came up with the term "growth." How do you get around a school that might not have penetration? Get friends at other schools. There's a very famous, apocryphal story at Facebook: They slurped down the entire AOL Instant Messenger graph after a partnership and shut the partnership off four days later. **Jackson:** Oh my God. **Dan:** And AOL didn't even realize it at the time. There's an insinuation about Chamath, who was at AOL. But the point is that people just think a social network works and then grows virally. I don't actually think that's the case, especially if you're building a developer platform. In order to get people to have interest in your social networking protocol, you need users. A developer doesn't want to come and build on top of your tech stack. Getting the users is the hard part. **Jackson:** This is the field of dreams. **Dan:** You can't expect people to do that. Bluesky is a very good example of this. The people in the Mastodon ActivityPub world are a competitor. They're both federated networks, and they've all written critiques that Bluesky is not actually decentralized. Bluesky is literally referring to the app, not the AT Protocol. I have every confidence that the team will execute on getting to a good level of decentralization. I think that they're pretty principled people over there. But people are using that app, and because there's heat and there are users, people are building on top of it. The most important thing for a social or consumer developer platform is: do you have people using it? Windows is useful because there was a Windows desktop on every worker's desk in the '90s. Microsoft Office was the primary reason you would buy it, and that's vertically integrated. That's what they did. Then you get Adobe, gaming, web browsers, and all these other things because they've done the hard work of getting the install base. The other analogy I use is the iPhone. The iPhone didn't have third-party apps for the first year. Apple did the hard work of marketing and selling five to 10 million iPhones with all first-party apps, including Google Maps and YouTube. They partnered for the content, but they were the ones that built the apps. **Jackson:** It would be pretty easy if you knew less to go back and credit the early App Store as driving iPhones. **Dan:** The whole thing got started because the path dependency of the iPhone was a result of the company being in a healthier place because of the iPod—building the supply chains and understanding the Apple Stores. You can't just magically go from the brilliant idea of the iPhone. If you look at the history, they thought they were going to do an iPad. They were thinking about how to take an iPod and mix it with a Mac, and they were going to do a bigger one. Then they were able to make it smaller. What's crazy is how fast they were able to achieve it. All that said, I have a very, very strong point of view now that applies to crypto. You have all these very technical people who think their technical brilliance is the reason people are going to use their stuff. No, tech is necessary but not sufficient. The sufficient part is how good you are at sales. I just don't believe that most of the time you can outsource that. It's founder-led. That's what you need to do. Could you argue that Uniswap is a counterexample? Maybe. But you could argue uniswap.org is also... **Jackson:** An extreme example of utility. **Dan:** Right. But does Uniswap work if uniswap.org doesn't have good design and work nicely? It's a good question. It's hard to find that counterfactual. **Jackson:** It's a good question. **Dan:** If it was just a bunch of API docs and a white paper saying, "Look how brilliant this automated market maker is," I think you get your lunch eaten by someone else who builds the thing that just allows people to swap whatever token of the day. ## [00:44:25] [Farcaster &amp; Crypto-Focused Section Begins] Status as a Service and Building the Home for Crypto Status **Jackson:** This is the beginning of this section where we start to go much more deep on crypto, status within it, and Farcaster specifically. It will be enjoyable for anyone who's curious, but if you're not as interested, you can skip ahead in the show notes about 45 minutes. This gets into my read that if the first was information flow protocols and the second is this network effect idea, maybe the third core idea inside of Farcaster is the notion that ultimately we're playing status games and that's what people seek. Even if Uniswap could have worked on the utility basis, something else is happening on social platforms. I know both of us are quite influenced by Eugene's "[Status as a Service (StaaS)](https://www.eugenewei.com/blog/2019/2/19/status-as-a-service)." In rereading it, I was reminded how heavily he compares social platforms and cryptocurrencies. They basically both have this emergent form of capital, a proof of work around it, and thus increasing scarcity on some level. You have to believe in this new thing, whether it be money or a place to spend time. They both critically reward outsiders. This gets very much into what you were saying around marketing and growth. I'm curious for you: one, you have done a good job of rewarding outsiders. You talk about this all the time; you brought in net new people to Farcaster. But two, what does it look like in your mind to build the premier arena for status for crypto people? That seems to be where you've landed today. Maybe I have that wrong. **Dan:** We very much have tacked to being a social network focused on crypto. I don't believe in a post-Elon black swan event for short, text-based social networks that there is going to be one. **Jackson:** And that's changed since you started Farcaster. **Dan:** Yes. In 2020, it was compete against Twitter; Twitter is stagnant. In 2024, we are not going to win on a political vector. In that world, if you can't benefit from that tailwind, you have to find a different wind, because politics is what's driving growth outside of Twitter. Our wind, which seems to be picking up now, is that we're tied to crypto and we live and die by how crypto sentiment is. It's an area I've been in for 10 years, so I'm comfortable weathering the ups and downs. That is the bet to make for Farcaster. It informs a lot of our product decisions to make sure we are leaning into what makes us unique and differentiated relative to all these other networks. It's the fact that every user has a crypto wallet under the hood, even if that's abstracted away from them. The programmable aspects of the network pair really nicely with crypto. That is the updated strategy for Farcaster. **Jackson:** You have started to be a place where crypto-native status can be earned. **Dan:** It's still an extremely hard network effect to fight. We still have to compete against crypto Twitter; that is the status arena for crypto, which wasn't always the case. I started at Coinbase in 2014. Crypto social media was Reddit—r/bitcoin, r/ethereum. Vitalik was posting. But at some point around 2017, things shifted over to Twitter. My best bet is that increasingly people are on smartphones, and Reddit barely works on a phone. **Jackson:** The Reddit home view feels a little bit more like TikTok and Twitter, but for the way people like you and I use Reddit, I would agree, especially since they killed Apollo. **Dan:** That was the opportunity for Twitter. My sense is Twitter didn't explicitly target these people; it was just that more and more people were using it post-Trump. He had been using Twitter in the 2016 election, so the world started to get more on Twitter. **Jackson:** Is it possible that in 2017, crypto started to enter a phase that was more about evangelism than about the insular community? **Dan:** It grew in asset size, and you started to have crypto-native funds. The money started to get a lot bigger, with more people working in it professionally. That is where the status hierarchy in crypto is: on Twitter. Elon, in the last bull run, was talking about Doge and Ethereum and Bitcoin. That is who we're competing against. It is a competitor that we can chip away at because it's small enough within Twitter's overall portfolio of users that they're not specifically focused on crypto people. They don't like it; that's where all the scams and a lot of the spam come from. **Jackson:** And they've picked more of a side. Twitter, unlike YouTube or even Reddit, is more opinionated on things today. All these competitors do this too. **Dan:** The only area I was impressed with in the previous regime had two parts. One, they were able to clone Clubhouse with Spaces, and that product basically killed Clubhouse because you could get it with a much bigger graph and distribution. The second was they had a crypto team, so you could add a crypto NFT hexagon. We had added that at Farcaster as one of our early features and thought it would be a differentiated thing. Then they added it, and I remember thinking, what are we going to add that could actually be differentiated? Then Elon shows up and totally veers them away from crypto. It's just not a focus. That whole team got let go or disappeared. We're still very much fighting crypto Twitter for the status game. Where we've been unable to move is anyone who has a big audience, which makes sense. You've won a crypto status game on crypto Twitter. You've got 200,000 or 300,000 followers. Why am I going to move over? One riff on Eugene's essay is to think about the people who moved to the colonial United States. There was no one in the elite. We might have towns, states, and cities named after the elite in Europe. **Jackson:** You had to be desperate. **Dan:** Puritans were a marginalized religious group. You had thrill seekers and adventurers moving to California in 1849. The frontier is always populated by people who don't have power and status in the existing structure. To Eugene's point, you start to mint your own aristocracy, your own status hierarchy. Where we are finally starting to click is because we've been around for four years. We have users who have been around for four years, have accumulated larger followings, and have stuck around in this new thing because they have an incentive to make it work. Part of it is we also seeded the network. A lot of our early users who stuck around were developers. **Jackson:** If you build it, the developers won't come, but if you go actively sell all the developers, maybe they will come. **Dan:** Or they become your users and they're hanging around and they made friends. This is just a big group chat for them at this point. Four years later, we're entering a bull market, an expansionary market for crypto. People are starting to play around with things because everything is programmable, and that's naturally pulling people back into Farcaster. The quickest way to develop status in crypto Twitter is to deploy something on-chain that makes people money. The money games, relative to most social media, are pretty different than other systems, which goes back to the idea that our network is differentiated. It's a very fine line, though. There's a network, BitClout, that had a brief moment in the sun. It's very tough to do explicitly financialized status games because if you do, anyone who wants to be really high status—money is an indirect component of status. **Jackson:** You can't make it explicit. **Dan:** Even a successful, rich business person wants to be known for their business accomplishments, not for the money. **Jackson:** We don't talk about the money. **Dan:** It's very Puritan, but the point is that this is a very Silicon Valley thing. You have all these really rich people, but they're wearing sweatshirts. The whole point is they want to talk about ideas and the things that they're working on. They just happen to be rich. Whereas you think of the classic guy in Vegas or Miami who is all about bling and showing that they've got a lot of money. But everyone who's high-status thinks money is a secondary thing. That's not a judgment. You just have to have an honest assessment when you're building a social network. You have to deeply understand how the status hierarchies here work. If you tack too far in one direction, you're going to exclude a whole bunch of people. **Jackson:** You're going to exclude a whole bunch of people. **Dan:** Yes, exactly. Right now on Farcaster, there's a tack toward what people are doing on-chain, which is trading meme coins. There's this whole meta happening with Farcaster-native meme coins, which are arguably more sophisticated in a lot of cases. There's a class of meme coins on Farcaster that power applications you can use. Whereas a pure meme coin tends to be pretty nihilistic. It's just: will it go up or down? That's it. This is pushing the base-level activity to a slightly higher status. But then there's a whole bunch of high-status people, even within crypto, who say Farcaster has too many meme coins. You can get mad at one side or the other. Or if you're in the business of trying to build the social network, you just have to ask how you can police both. How can I make sure that the people who aren't interested in that are seeing different types of content algorithmically than the people who are? The easiest way for people to stop using your app is they open it, nothing they see interests them, they scroll a little bit, and if they do that three or four times, they're just not going to come back. ## [00:55:03] What is Farcaster? **Jackson:** We've talked a lot about the underlying infrastructure and design, and we've talked about the tribal component of it. Do you want to talk a little bit about what Farcaster actually is today? You've described it in a handful of ways recently that I find interesting. One is that, broadly, it's an economy. I think you said it could be the single best way to interact with anything in crypto. It's social, plus crypto wallets, plus programmability. If you're meeting somebody who has some familiarity with crypto, is it just a better version of crypto Twitter? What is it? **Dan:** The layman's pitch is that it's a social network for people interested in crypto. If I give you that pitch and you're not interested in crypto, then you'll probably say, "So what?" **Jackson:** What if I'm interested in crypto and I use Twitter? **Dan:** The question is, I already use Twitter. I follow some people from a crypto standpoint. Why would I care? For those people, this is where you're going to find the alpha. Whether that's the case is more work to be done. But more recently, in the last couple of weeks, there's been more alpha on Farcaster than ever before, and naturally user numbers go up. Behind every good consumer product, there's a seven deadly sin—a famous Sequoia framework. Farcaster is greed. Not everyone on Farcaster is greed, and I don't think that's the ethos of the network. But if you were to ask what is driving growth, it is that people think they can make money. **Jackson:** It's the combination of the two things Eugene talks about as status. It's the combination of the crypto status—the actual money alpha—and the cultural status combined, layered into one thing. That's pretty interesting. **Dan:** I did a bunch of user interviews about six weeks ago, before any of this current meta, and I was trying to figure out the direction to really bet the company on. We had had a lot of growth at the beginning of the year, and that had really leveled off. In talking to people who came in early 2024, a lot of them had come in when we had launched Frames, and then there was a new asset. **Jackson:** For people not familiar, Frames are like mini-apps on Farcaster. **Dan:** Think of it as if you're older, Facebook had the app platform: Zynga, Hay Day, FarmVille. If you're a little younger, Telegram and Discord have these things called mini-apps. **Jackson:** Any tweet, any cast can be a little application. **Dan:** You can launch it and be interactive. At the same time as Frames, an asset popped up on the platform. You can call it a memecoin, but it's somewhat more sophisticated, called Degen. What was interesting about it is anyone on Farcaster was eligible to claim this asset. Just like the government can print money, cryptocurrencies can create more supply. **Jackson:** Somebody asked me, how many coins are there going to be? **Dan:** The idea was Degen had a set budget, and they said anyone on Farcaster can go claim theirs. **Jackson:** Based on Farcaster use. **Dan:** You could tip it to other people. There was actual utility from day one, rather than it being a coin to speculate on. **Jackson:** Right. **Dan:** If you talk to a bunch of people, they came into Farcaster as a result of that, because Degen was a potential thing to make money. They heard that you can make money through Frames. A lot of people left after that big growth spurt. But for those people who stayed, they said, "Oh, I made friends," which is a classic story in crypto. The inclination to find alpha in crypto is very high. That's why people will sign up for Telegram or Discord or pick your flavor of whatever social media. Hunting, gold rush, let's go. From a pure audience standpoint, that is what this category is. There are a bunch of people building, and they're trying to make money too. **Jackson:** Is speculation just the oxygen in the air if you're going to build a crypto product? Can you possibly build a crypto consumer product without speculation? **Dan:** I spent four years trying to do that as much as I could. The incorrect bet there was if you were going to do that starting in 2020, you needed to build a left-of-center social network knowing Elon would come in, because then you would have benefited from all the refugees of that. ## [00:59:34] Why not counter-position against Elon? **Jackson:** A lot of people have asked, why haven't you gone more anti-Elon in response to this? **Dan:** I'm not going to be that kind of founder. I have immense respect for Elon. Antics to the side, I can separate art from the artist. My wife worked at SpaceX for a bit, so I got to see the inside of how Starlink rolled out. And now, having been a founder for four years, I see the difficulty of doing one company and having it succeed. To have that work in the physical world with both Tesla and SpaceX is challenging. **Jackson:** I just meant in the sense of counter-positioning. Maybe the answer there is you don't want those users. **Dan:** My point is that I have to be authentic in my positioning. There's no version of the world where I can counter-position against Elon as if he's bad. I think he's complex. Do I endorse every opinion? Of course not. My point is that I think Elon has improved Twitter on the margin. There have been some decisions I wouldn't have made. **Jackson:** Where has he improved it most? Censorship. **Dan:** I think people don't appreciate how suppressed and censored Twitter was before. **Jackson:** Got it. **Dan:** And I'm sure I'll get feedback for this section of the podcast, but people will say, "Oh, he just let Nazis on the platform." That is such a small segment of people on Twitter. The entire Overton window of Silicon Valley has shifted as a result of Elon coming into Twitter and allowing people to speak. Now, it is not such a group-mob, left mentality. **Jackson:** Maybe you wouldn't say this, but my anecdotal experience is that it started to swing in a pretty good way, and now it's basically right-wing propagation. **Dan:** I think the algorithm is awful. Every time I open it up, it's a tweet from Elon. **Jackson:** But he also said he was going to swing the election. And he did. **Dan:** That's basically what every newspaper publisher prior to the modern era used to do. But my point is that it got Silicon Valley out of this crazy woke lockdown. Brian Armstrong with his blog post and the overall trend had an impact, though it's hard to measure exactly. I also think firing 70% to 80% of the workforce allowed other CEOs in Silicon Valley a lot more leeway to express the full range of opinions. I think that is a net good in our society. And it's also good that there are alternatives at scale. If you don't want to be on Twitter, there are options. **Jackson:** To your credit, if I were building a network, I probably wouldn't want my core user identity to be, "We hate Elon." That's not a very strong founding. **Dan:** I think founding something on an anti-mentality is a losing strategy in the long run. **Jackson:** It might be a good way to organize people. I was listening to Lulu, Missouri talk about this recently, and she made this point. If it's the founding story, it might be a good way to find some people to go start chatting with. **Dan:** Yes. **Jackson:** But if that's the core thing. **Dan:** Those are the types of people who are going to complain about everything. I have much more of an abundance mindset, which is where I'm more aligned spiritually with what Elon represents in his good qualities. E/acc is a cringy meme—effective accelerationism—but my whole point is I want to see civilizational progress. I want to see us build 100 nuclear reactors. **Jackson:** Counter-positioning against Elon with a Twitter clone would probably be unlikely. ## [01:03:42] Programmable social and open APIs **Dan:** Because that group of people is happy with the guy who is catching rockets with chopsticks and electric cars; there's a high overlap with crypto. It's not going to be authentic, so there's no version of a strong counter-position. I can, however, counter-position by saying Farcaster is programmable and that the Twitter API is crap. **Jackson:** Let's talk about the couple of examples we've seen in the last two weeks. Frames is interesting, and you've launched Frames v2. But particularly in the last couple of weeks with some of these AI meme coin things, we've seen some pretty novel stuff, even if you don't like the speculation part of it. **Dan:** I view it as a line of progression towards who knows where. The point is, with Farcaster, you can spin up an account from a command line, which is very easy for a developer, and start posting to the network. The APIs are completely open. There are no rate limits. It's crazy. To have a barely functional app on Twitter now, just to run a bot that other users couldn't use, it's $500 a month. For an analytics tool, they limit the amount of calls. It's crazy to think how closed the premium API for Twitter is now. **Jackson:** He's also very afraid of... he's obsessed with the human/sybil thing, which maybe is part of it. **Dan:** He also doesn't want to leak data to OpenAI because they had scraped everything. It's $42,000 a month for anything that comes close to Farcaster's offering. If you spin up a hub on Farcaster, you can get that for free. That is a counter-positioning, and that's authentic. I do that all day long: Farcaster is programmable social. We've seen this play out. There was an AI agent on Twitter called Truth Terminal, where $50,000 worth of Bitcoin was sent to some random anon. That idea has started to play out on Farcaster because people saw it and realized it's easier to manage there. One of the AIs on Farcaster started deploying coins on Base, an Ethereum L2. Then the two AIs talked to each other after someone nudged them, and the two bots started going back and forth. The one that can create coins created one for the other AI, which is more of a philosophy-oriented art project. I just saw this today. That one's called Ethernet. Ethernet now owns 1% of a meme coin that has a $40 or $50 million market cap. **Jackson:** Is it higher? **Dan:** That AI has basically funded itself with a seed round just by creating a meme coin. If you look at that, you might go, "Okay, that's not sustainable or scalable." But if you squint and look back at where this could be going, you have these proto-AI agents that are actually interacting on an economic basis. **Jackson:** This is where people who don't buy into the crypto stuff see a truly novel internet money thing. **Dan:** Right. **Jackson:** There's no way. **Dan:** For example, Stripe released their agent kit. You can tokenize credit cards and use it for shopping. Perplexity released something similar that is far more likely to impact you day-to-day. You can go to Perplexity and say, "Get me airline tickets," or "Buy this shirt," and it will go do it. But you can't actually give an AI agent a bank account. The way the world works today is you have to KYC. This AI agent, if that private key is online on a server that the agent has access to, literally has a bank account and could control it. If you extrapolate AI progression from there, weird stuff is going to start to happen. To Chris Dixon's point, what people are tinkering with on the weekends is what everyone's going to be doing in 10 years. I look at this and see a total playground for mixing the leading edge of AI. It's a much better playground... **Jackson:** ...than something like Twitter because it is native to code; it's natively programmable. **Dan:** Yes. Every user has an Ethereum address, so the whole network is designed that way. You can't have an AI agent on Farcaster without an Ethereum address; that's just the way the architecture works. So even if you didn't want the payment, someone can actually send money to your AI, so you have to program for that. I think you're just going to get weird, emergent things that come out of it. If I could predict what to build that would be important, I would go do that. But part of the excitement of working on something like this is if you give people the actual Legos they can assemble, they're going to surprise you. **Jackson:** That's the actual Field of Dreams bit. **Dan:** Yes. We're starting to get there. This whole recent meta and inbound interest as a result of the stuff that people on Farcaster are doing on-chain is a result of these AI agent hackers. They didn't raise venture money for this. They hacked it together in a night or a weekend. **Jackson:** They're here because as developers or interesting technical people, they found Farcaster to be an interesting place to spend time. They started experimenting with things that emergently produced an alpha that people elsewhere cared about. And now you have a flywheel. **Dan:** Other than maybe the frames-degen combination, this is the first time we've actually had this, rather than us grinding to get there. Noncast is another one where someone took one of these coins and said in order to use this... **Jackson:** ...app. I have Noncast, for those wondering. **Dan:** This is pretty cool. They didn't even create their own coin. They took a coin that existed and said in order to use this app, you need 10,000 of this coin. Then they use ZK-proofs—zero-knowledge—which is giga-brain math that allows you to prove you have the balance without revealing who you are. Smart math people would tell you that it works. **Jackson:** It's basically like Yik Yak, but you have to own the coin to be able to post to the yip. **Dan:** Basically. They've already iterated multiple times on it. They have a Twitter account that is bigger than their Farcaster account, so you can view it as the Twitter account grows to siphon for the alpha. It's even more than that. Even if you don't want to use Farcaster, you might go buy this coin just to use the distribution on Twitter. **Jackson:** It allows you to post to either Farcaster or Twitter. **Dan:** You still have to post to Farcaster, but then you get promoted to Twitter. The point is, Vitalik participated. **Jackson:** Vitalik bought this coin, and people freaked out. It was the first, quote, unquote, "meme coin" Vitalik has ever purchased. Obviously, you and I would say this is something different than just a meme coin. **Dan:** I could care less about the meme coin. What's interesting is he's using this app. **Jackson:** To make it super explicit for people, the implicit premise here is that any Anon cast could be Vitalik. **Dan:** That is the most interesting thing. Now, imagine if you add to the anonymity set. Who are the holders with a sufficient balance? What happens if you get 10 more high-status crypto people who have several hundred thousand followers on crypto Twitter, and you know that they're in the set? Or you could even make a new account with new, smaller groups. You're starting to get to a potential where you could create a new version of this and only allow 20 people who have at least 500,000 followers on crypto Twitter—arguably the most influential people on crypto Twitter. They all have the coin, and you know the math works so that no one can get doxed, even by a central server, for posting to an account. Everyone would follow that account because you're getting a new type of speech. **Jackson:** The water cooler. **Dan:** It's actually the Federalist Papers, which was very highbrow and important to getting the Constitution through. It's James Madison, John Jay, and Alexander Hamilton under one pseudonym, Publius. Everyone in New York was reading this to understand why they should pass the Constitution. **Jackson:** Slight tangent, but I'm quite interested in pseudonymity. It's something I've been interested in on the internet for a long time and one of the first areas of crypto I got excited about. You guys explored it a little bit with NFTs early in the Farcaster era. You even had a feature about why stop at blue checks and instead use many different badges for verification, but you haven't really pursued that. Does something like Anoncast start to open up a world where I could form a credible reputation and identity on Farcaster that isn't "I'm Jackson Dahl"? **Dan:** That's starting to happen emergently. There are a bunch of different tools in the ecosystem that give you a score. **Jackson:** The Nadar score thing. **Dan:** There's one called OpenRank, and I think that will all become emergent. We allowed you to link a Twitter account, and that data is now on the protocol. It's one of the few APIs where all the data is permissionless. You can hit it and not have to let anyone know you're doing it. You could go do an API for an airdrop, for example, that has nothing to do with Farcaster. It just checks every single Ethereum address: Does this person have a Farcaster? What's their Farcaster score through a different API? Do they have a Twitter account? What's the information about that? Assuming you trust the data that we're putting out there, which I think most people would... **Jackson:** The benefit of an open protocol. **Dan:** People can just remix and do it, and you don't even have to let us know. All of that is happening. Going back to this Anoncast thing, if you play it out, you could look at the memecoin stuff and say this is stupid, this is nihilistic, this is just gambling. But when you pair it with a set of developer Legos like Farcaster has, you start to get weird, emergent new things. It's part art, part business. **Jackson:** The thing that people miss with the money piece of it is the stakes. Especially in a world of AI, abundant content, and AI slop, the monetary aspect of crypto is a bit of a counterweight—a form of physics that can layer on stakes. If anyone anywhere could post to Anoncast without any stakes, it would be much less interesting. **Dan:** Every improvement and interesting experiment in crypto, at least within Ethereum today, is immediately available to plug into Farcaster. It's this composability and reinforcing mechanism that is too hard to couple with another decentralized social network that's not native. Every Farcaster user, by definition, has an Ethereum wallet under the hood—that's how the whole thing works. By definition, every Farcaster user can natively interact with any of this stuff. ## [01:14:22] The Future of Farcaster **Jackson:** This is what people dreamed of in the early days of the internet: that all this stuff would work together. I have a couple more Farcaster questions. You just launched Frames V2, and we haven't talked about Channels at all, which is the subreddit idea being applied to Farcaster. What are you most excited about? What do you think is working best? Is there anything on the horizon, like Frames V2? **Dan:** Channels have been a good social exploration, but they have not been a growth driver for us. We haven't hit a community or topic where people think we have the best content on the internet for it. **Jackson:** Especially outside of crypto. **Dan:** Certainly not outside of crypto. It's been good for increasing the breadth of conversations on Farcaster, which helps with retention. People can hang out with friends here on a variety of topics. But the idea of joining Farcaster because it's the best F1 racing channel—that isn't happening. **Jackson:** They're a little confusing and they've changed a bit. Maybe people don't totally know when to post. **Dan:** You can always make the UX a little better. But things that work tend to work even if the UX is bad. If they're not working, making the UX better is an easy trap. Where Farcaster is working is that people are doing stuff on-chain. We've taken the brain damage of building on Ethereum for the last four years—moving slower and having more problems to solve relative to a different architecture. **Dan:** And that's paying off. Let's lean into that. We have other tools to fix things. To the degree that someone sees too much trading or too many memecoins, let them dial their algorithm. That can be an explicit dial or a revealed preference for something more intellectual or whatever topic they're actually interested in. Frames V2 offers far more interactivity in the app. You can think of it as an app within an app, with a big focus on allowing you to complete an on-chain action or transaction as easily as possible. **Jackson:** Play a game, any of these. **Dan:** Vote, do whatever. You can think of this as a verb with everything you're going to do. That should be accomplished on a blockchain instantly, cheaply, and invisibly. We're finally at a place where the infrastructure exists for us to do that. When we started in 2020, it didn't. **Jackson:** This is starting to paint the picture. When we were first talking about what Farcaster is, one frame was that it's the single best way to interact with anything in crypto. You could imagine a world where Farcaster starts to look more like a wallet or the portal to crypto. **Dan:** I'd say browser more than wallet. If anything, wallets will look more like browsers. It's one thing to have a balance and a number go up, which feels very much like a bank account. It's another thing to feel like this is my launchpad, my front door. Every app in crypto will look more browser-like. **Dan:** Whether you started as a bank account wallet and moved toward a browser or you're a social network that feels more like a browser. If you think of a feed, it's like a browser—it's a different type of browser. ## [01:18:01] Farcaster's Value Capture **Jackson:** That's where it's all going. Value capture. I figured I should ask about it. Being upstream of intent in crypto is pretty interesting; it probably means you're upstream of the transaction. Is that something you're thinking about more these days? I'm sure you get asked about it. One component of that is: when is the Farcaster token going to come out? Maybe you don't want to talk about that, but I'm curious. You are a business, or at least Merkle is. You're building this hopefully useful thing for everyone, but this is a question that comes up for people. **Dan:** The way to think about it is there are a couple of different layers. The most obvious place to monetize is attention. To your point, you can show an ad, which is pretty crude. If your eye looks at it and I can convince advertisers that you have, they're going to pay me. Intent is a lot more interesting because there's a much higher willingness to pay, especially in crypto. If you see something like a trade or an NFT and you can buy it on one of five marketplaces because it's on a blockchain, they may compete to be the default provider. **Jackson:** Yes. **Dan:** You could go build it yourself, or you can get other people to pay you. They make some profit, and you capture a lot of the value. The most famous example here is Apple paying Google. This has actually been ruled by the DOJ as illegal, but it's a different scale when you're Apple. The point is that it's known as TAC—traffic acquisition costs. Google would pay Apple somewhere in the order of $20 billion a year just to be the default. You can change it, but defaults are really important. **Jackson:** Clearly, it's worth it. **Dan:** Ultimately, it's about being in Safari. iPhone users are valuable; they tend to be wealthier. The equivalent in crypto can be done in a lot of different ways without inserting yourself into the transaction. There's another layer down where, for common actions, wallets monetize in the classic way. They already have you in-app, and when you go to click swap, they take a fee. **Jackson:** The difference with Farcaster is I'm not only making the intent for the action; I'm finding out about what I want to do. **Dan:** Discovery and intent are usually above your credit card. That's one way to think about it. It has worked the way it has in crypto because crypto is like having a bank account app where you interact with a page and have to explicitly link it every time you want to do something. That is changing. I think it's going to change to a world where you're browsing, think, "Oh, this is cool," and interact. It doesn't even matter if you kick out to another wallet because the wallet is not in the place to decide how to route that transaction. For a basic example, if you want to swap ETH for USDC, you can do that on uniswap.org. uniswap.org gets the fee and pushes it to MetaMask, but MetaMask doesn't get anything. You can do that from a command line directly with Uniswap for no fee. You get the cheaper fee, paying it directly to the liquidity pool. If you do that same swap in MetaMask, they get to take the fee. So it's all about where you start. **Jackson:** This is the thing that people haven't fully internalized about why Farcaster could be quite valuable. **Dan:** If it works and if it's at scale. I would view that as a Farcaster benefit to any app. Any amount of attention in the Farcaster ecosystem benefits any of the clients that exist. At the protocol level, the natural place to monetize is the storage fees. The idea is that there's a finite amount of space on a decentralized social network. **Jackson:** You still delete casts after a certain period. **Dan:** It works for Ethereum and Bitcoin. There's not an infinite amount of block space, so people pay gas. It can be cheap, and in the case of social media, you can do it once a year because that's a better pattern. But if you actually want something to be decentralized and not have exorbitant costs for the storage needed to run a full node, you have to limit the amount of space. The design of our network allows you to charge rent per year to users. We're keeping it lower for now, but over time the market will dictate the value of a Farcaster account. If there is alpha to be found or the reach of the social network is great, there will probably be some market-clearing price. I don't think it'll be exorbitant, maybe $5 or $10 a year. ENS does this today. **Jackson:** And this can happen at multiple levels of the stack. There might be clients that are potentially better at getting alpha, or it might be the network-level piece of it. **Dan:** Channels is a very obvious one where namespaces are valuable. For us, we've opted for the user namespace because it's important in the Ethereum ecosystem that people can use an ENS name, which they're already paying for. BlueSky has the same thing: you can get a free name from BlueSky or use your own domain. With Farcaster, you can get a free name from us or use your paid-for ENS. The user namespace is not necessary to monetize. I like that it's either free or sovereign—good options. But for Channels, which is a Farcaster-centric feature, we monetize that namespace. People are paying $25 a year for that. With 13,000 channels, you can imagine the potential. Reddit has several million subreddits, though very few of them are actually still active. The point is someone could be paying because they could be economic hubs. The point is that there will be natural places at the protocol to drive revenue for the protocol, which is important. People always ask, "When token?" My answer has always been consistent: What would it do? **Jackson:** And another question is when should a protocol ever launch it? **Dan:** My push has always been that you need to have something valuable before you have a token. We haven't gotten to a place where Farcaster has a Lindy-level value, where it's clear this thing is going to exist. We haven't even charged the storage fees yet. Why would you add a random asset where people just assume the number is going to go up when you haven't figured things out? Then you run the risk of damaging the network. With crypto people in the past, they just launched a token, probably got liquid somehow, and then other people were left holding the bag. I just don't think that that's our mentality. Build something actually valuable, and then maybe you could have a discussion about the best way to decentralize ownership of the network. It's the same as a company: you wouldn't IPO if you haven't found product-market fit. That's basically what adding a token is. Talk to me when we have product-market fit. Then I might have a better opinion on a token. ## [01:25:01] Sufficient Decentralization **Jackson:** A few people asked about sufficient decentralization when I mentioned I was interviewing you. That's been your North Star on the decentralization front for a while. There have been questions about to what degree that's still a priority. I heard somewhere that a third of the team is working on decentralization and protocol. What is the short story, and where are you today on that? **Dan:** In retrospect, I wonder if we should have ever wrote the blog post because it's very misunderstood. The term is very catchy. We made a play off the fact that "sufficiently decentralized" was a term Hester Peirce at the SEC used to refer to Ethereum. Our point was that sufficient decentralization with social networks means you don't start with building the most decentralized thing. You start from a centralized architecture and then work your way to the point of sufficient decentralization. **Jackson:** Who's going to hold you to that? **Dan:** It's squishy. If the market cared, no one would be using Bluesky, but people are. **Jackson:** A lot of people aren't going to like that answer. **Dan:** What the revealed preference of developers shows is that if they believe in the team's aspiration, trust, and credibility, you can go very long without having hit a level of sufficient decentralization, as long as they trust that the team is going to get there. From our standpoint, we've delivered on all of the things that we've promised. If we have delayed anything, we've been upfront and shared the reason for it. Last fall, a lot of people were pushing us to do this, and we did it. Anyone can sign up for the network directly with the smart contract. You don't have to ask. It used to be permissioned; you'd have to ask me for an invite. **Jackson:** Big deal. **Dan:** Basically, no one does any signups, so we did a bunch of work to make a couple of noisy people happy. I do think it adds to the credibility in the network. I think it's hard to remove some of the growth that we had this year as a result of people believing that it is credibly neutral, at least in that regard with signups and the underlying data and API hubs that actually work. It's not like you're hitting a hard database to get stuff. That said, our messaging system is not decentralized. You could define that a public broadcast social network like Twitter also needs to have a messaging system. That's an ongoing evolution and an honest assessment. I do agree with you that that actually should be there, but that wasn't part of the original scope. It was added later as a retentive feature. For channels, most of the stuff is available via API, but it's not in a smart contract. Is that sufficiently decentralized? For the average developer, they're fine as long as we guarantee the availability of those APIs and have a commitment to getting it into a more robust, decentralized place at some point in time. But every time I'm having engineers work on decentralization, those engineers aren't working on the next frames feature—the thing that could potentially grow the network 10 or 100x. We just balance it. And every time I ask developers, the ones who are most committed to the ecosystem with full-time jobs working on something Farcaster-related, would you rather have 10 to 100x growth or me work on this feature over here and have it later? They always say make the growth happen sooner. I think part of that is also they trust us. **Jackson:** And it's part of why having this type of conversation every so often is helpful. ## [01:28:44] Why Dan has created NFTs but not tokens One last fun question from Jamie Hoffman: Why hasn't Dan created a token on Clanker but did create NFTs on Zora? **Dan:** I think creating a token has significant, gray-area legal ramifications. **Jackson:** Is that why NFTs are dead? **Dan:** There's no secondary market for NFTs for the most part. Some can, but there's no expectation that you're going to really trade it. The Zora NFTs are pretty basic collectibles. You're paying three bucks and you could mint as many as you want. Facts and circumstances matter. And by the way, they're not directly from me. The money that I've generated for the protocol NFTs is all going to the protocol treasury. **Jackson:** So it's like selling some kind of company merchandise or something. **Dan:** If I'm creating a token on Clanker and it's going to the company or the protocol, it's effectively a protocol token. That wasn't very thoughtful. That would have been my answer. ## [01:29:53] (Farcaster & Crypto Focus Ends) Product Market Fit, Focus, and The Idea Maze **Jackson:** You've written about the [idea maze](https://cdixon.org/2013/08/04/the-idea-maze), which I think originally goes back to biology. You've also been building Farcaster very much in public with live, public feedback. On top of this, there's the classic Marc Andreessen post you've referenced that of team, product, and market, [the only thing that actually matters](https://pmarchive.com/guide_to_startups_part4.html) in the end is the market. This pulls us to the notion that product-market fit is when the market is pulling product out of you faster than you can produce it. You've had some progress navigating this idea maze publicly for a while, but you also seem to embody the Andy Grove utter paranoia, the Kobe "job's not finished" vibe. My question is one, where have you felt the pull the most on the product-market fit standpoint? And two, do you have any broad reflections on the idea maze four years in? **Dan:** Let me talk about the overall idea maze and then more recently, what I think is the closest thing to product-market fit for us. You will not be able to evaluate everything on pencil and paper upfront. You can't just ideate your way through the maze, as much as you can read history, know all the different startups and decisions they made, and read all the blog posts. Brian Armstrong has a line: "Action produces information." The sooner you have contact with reality, the better your decision-making is going to be. There's always a balance because you don't want to ship a true MVP that barely works, especially in consumer where there's a certain level of design and taste that you need. But at the same time, if my Farcaster experience has indicated anything, you just need to get out there and figure out if there is anything here worth making good design for. **Jackson:** For example, Elon Musk might buy Twitter a year or two into the thing. A lot can change, and you need to get feedback as soon as possible. **Dan:** Yes, and another important thing is to not over-hire. We've raised a lot of money relative to our progress, but we've been really frugal and determined not to over-hire. We're not money-constrained, so we could hire a big team with 50 or 100 people, but the scarce resource for us is founder time and attention. We're at a scale with 14 people right now where Varun and I can be in the weeds on pretty much everything. You're getting one to two founders' input, honing the best decision you can possibly make alongside an engineer or two who are empowered to own a pretty beefy feature. It's not some crazy team with a long, quarter-long deadline. That speed is really important for navigating the maze. You should not be thinking in quarters or months. You should have a rough six-week plan, then evaluate things weekly and potentially adjust daily in terms of scope, because every day actually matters. **Jackson:** And you're saying that even today? **Dan:** Farcaster has been a grind in that sense, but I give my co-founder, Varun, a lot of credit. I'm probably a little more likely to get distracted with a shiny object, and it's something I've adopted from working closely with him: How can we cut a day off this? If we want to ship it on a Friday, we ship it Thursday. **Jackson:** What can we say no to? What can we remove? **Dan:** Simplify. Is every decision you're going to do as a result of that good? No, but it starts to create a culture of asking: what is the thing that we need to actually go ship? Once you have something, for most features, 80% of it is actually what you need to get out. Then you can observe if it works or not. If it does, let's double down and improve it. We've started to improve. We have a designer now on the team, so the average quality of output that we're shipping from a feature standpoint is better. To be clear, the engineers on the team are all really great, so what they're shipping is quality. It's a little bit more that product thinking requires a lot of time, and a lot of the product thinking we're doing is the 80/20 version. If we really sat down and spent a week planning, we'd think through all the edge cases and you'd be able to present the engineer with a much more polished thing to go ship. Whereas our bias is: okay, this is simple enough. Let's get it out there and see what people will complain about. That also happens when we have a social network where people give real-time feedback. **Jackson:** There's less of an obvious correct decision at almost any time in a social context. **Dan:** The other thing is you can just copy other features. It's the most copied consumer industry. Everyone has a Stories feature. We actually don't have Stories, but Snapchat invented it, Instagram copies it, and then everybody else did at one point. LinkedIn has Stories now. A feed is a thing that everyone just copied. With social, it's very much about the velocity of output because you're looking for things that work. We didn't think frames would drive as much interest as it did. That was the closest thing we've had to catching lightning in a bottle. There's a version where we could have just kept going with frames this year because it was the closest thing we've had to product-market fit. The challenging part is that it very much rode an asset wave with Degen, so it was hard to know how much of this was frames versus Degen. Initially, frames clearly was the only thing that was doing this. But then the macro changed—Bitcoin had hit an all-time high in March—and frames weren't getting as much use. Even if we went and built frames v2, we could have had all this additional work and then nothing happening. The market has picked back up. There's more stuff happening on-chain. Now is a very good time to launch frames. Going back to the Marc Andreessen framework, that applies also to features. It's about launching a feature, sequencing your features, and making sure the feature is actually hitting the market at the time that you need. It's a little different in enterprise because of requirements. **Jackson:** It's also different in crypto. **Dan:** Yes, crypto is. **Jackson:** Crypto has a volatility. **Dan:** Yes. But the point is, for any company, knowing what feature to work on next is much harder than it sounds. It's not just that you ask your customers and seven of the ten say they want this as the top and that's the obvious thing to do. **Dan:** You probably have three features that three of them want, and then one person wants something random. Which one is the most important? At any point, one or two features could be the thing where getting those right and driving them from a sales standpoint is the actual growth engine for what you're doing. ## [01:37:01] Dan's career arc, contrarian paths, distributed systems, and creative destruction **Jackson:** That makes sense. Do you think 18-year-old you would be surprised, or would the broad arc of the career you've had make a lot of sense? **Dan:** I think it would roughly line up. I wanted to be in business and in technology. My original plan was to major in computer science, but my parents convinced me for a period that I should go to law school. I ended up being an English major, which was in retrospect a bad decision. **Jackson:** I don't know, it might have paid off. **Dan:** I ended up working in management consulting and I met my wife there, so that was a pretty big life decision. But if I was to go all the way back to 18 and ask, would I be working in Silicon Valley and then on a startup of my own? Yes, I would think so. I wouldn't have predicted up until late 2020 or 2021, when Coinbase was preparing to go public, that Coinbase itself would be the hundred-billion-dollar IPO rather than a ten-billion-dollar IPO. I don't think anyone would have. **Jackson:** It's a nice surprise. **Dan:** 10x is a very nice surprise. But to be fair, if you go back, of all the options I could have worked on in tech in 2013, by far the most contrarian was crypto. It was Bitcoin. You get paid in Silicon Valley by being contrarian. The people at OpenAI who are benefiting from this now were joining when they were lost in the wilderness. People forget OpenAI was making Starcraft bots. There was no clear linear progression on the LLM thing. A couple of them went to a talk at Google, decided to try it, and they did it. GPT-2 was a curiosity, and then GPT-3 was an overnight success. To that point, if you're thinking of your career over a decade or 15-year horizon, the thing you're working on today, if you want a lot of upside, should feel a little weird. If you're in something that's pretty conventional or that smart people or MBAs are joining, you might have a fine career from a stability standpoint. But if you want outsized upside, it should be contrarian or unpopular. **Jackson:** Is there a reason you think distributed systems matter so much to you? Maybe it's pure coincidence—Coinbase and then Farcaster—and obviously there's compounding there. But is it broadly about freedom of speech and encryption of value? Is it something else? A libertarian-esque view? **Dan:** The thing that I like about the internet is that it is decentralizing from a power standpoint. In the pre-internet era, you have X number of newspapers, X number of television stations, and the government. That's a very centralized power structure. With the internet, you've unleashed the creativity of anyone with a smartphone. That's a pretty powerful check on these big, centralized institutions. I tend to find big, centralized institutions to be ineffective at best and massively incompetent in a lot of ways. **Jackson:** Is there any irony to the fact that a whole bunch of people in tech now think they should be running big institutions? **Dan:** A lot of the smart people are just trying to build new ones. That's part of the ethos of startups: you don't go work for the big company and change it, you just completely make a better one. The most romantic of these now are the hardware companies, like Anduril, SpaceX, Tesla, and Boom. If you think of iconic post-war American companies like Boeing, it's a total mess today. Then you look at something like Anduril or SpaceX or Boom, and you realize this is the future of America. None of those people went and worked at the big company and tried to make it great. **Jackson:** It's just the cycle of how things have to be. **Dan:** Creative destruction has a lot of appeal. It's much more challenging with the government and anything the government heavily regulates, like healthcare and education. I'm not one of these crazy radical people who wants to tear down all these institutions tomorrow, but I'm very excited to see what Doge, for example, will do. I think it's a huge challenge. Fighting the bureaucracy... Trump will be a factor, but the bureaucracy is going to want to survive. **Jackson:** A new commercial level. **Dan:** You're fighting a new boss. In my lifetime, we've never lived through an opportunity to massively shape how the government works. The government has only just grown; that is the constant. A refounding of some of these core federal agencies and regulators could be a big unlock. I see it from my own perspective with how detrimental the SEC's lack of regulation and policy—or regulation by enforcement—has been in the crypto industry, including all the debanking. Mark Andreessen was on Rogan this week talking about people getting debanked. Everyone on Twitter and Rogan himself were asking, "What? People are getting debanked?" I was on the forefront of that in tech because I was in charge of the bank at Coinbase, so I'm well aware of this. Generally, most of the people in those regulatory agencies for the financial system are not malicious; they're just risk-averse. They don't get a star or a promotion for encouraging innovation. They get rewarded in the system for just keeping things stable. Stability is good on certain axes, but if you just tried to keep the economy stable all the time, you'd be Europe. You don't have civilizational progress. **Jackson:** Creative destruction feels like the right word for it. **Dan:** You can't have that for everything. People need some level of stability. But the beauty of capitalism is that it creates reasonable stability if you pair it with good government, while at the same time moving things forward quite a bit. ## [01:44:09] Coinbase: pre-2017 learnings, hypergrowth, comparisons between building a culture and social network, and anti-lessons **Jackson:** Can you tell me what it was like at Coinbase? You joined in 2014 and left in 2019. Things started to go well in 2017 for the first time. When you came in, things were decent. **Dan:** No, 2017 is the first good year. **Jackson:** What was it like in 2015 and 2016? What were you feeling, and what did you learn? **Dan:** It was pretty brutal. There were 50 people at the company and 25 of them left on their own volition. It was a lot of turnover. I got close to leaving because there was nothing happening. It took us adding Ethereum in 2016. Fred was the one that pushed for that because the identity of the company was a Bitcoin company. **Jackson:** Right. **Dan:** It's easy to say Coinbase today and think crypto, but Coinbase was a Bitcoin company. The term Coinbase is from the Bitcoin technical literature. It was good for me because I had a higher-stakes job managing these bank relationships, even though the company wasn't growing. I was learning a lot, and it gave me good visibility within the company because I was working on an existential problem. The amount of learning I had was crazy. From 2014 to the end of 2016, and then from 2017 through mid-2018, it felt like I got another two or three years of experience in that short period of time. The biggest takeaway from Coinbase is that I saw what hypergrowth looks like. I remember being a startup where we could all fit at two lunch tables, and then seeing it become a thousand-person company where you don't know anyone anymore. You understand the crazy hypergrowth challenge where at any given point, 30% of the company is less than three months old. Your culture changes, and you bring in these execs. That's really informative. What's funny is that's a skill set I have, but I haven't had to apply it to Farcaster because the company is small. But there are a lot of lessons and parallels to growing a social network. The culture on the social network changes. How do you manage that? We did a lot of employee comms and thinking about that. Now with Farcaster, I've been doing this every day for four years, but I think I have a decent sense for managing messaging to a large group of people quickly and directly. You realize some of this stuff translates. **Jackson:** Are there any anti-lessons from Coinbase? Meaning, things that you or others might be tempted to generalize from its success that you think were very specific to that situation? **Dan:** I would say two things. You can criticize Coinbase, and the reality is it's an extremely successful company, so take everything with a grain of salt. But we did not hire enough senior engineers early on, and that became a very hard problem. No one wants to come into a company with a bunch of junior engineers if they're senior. That really hurt us during the hypergrowth phase. To be fair, a lot of the people who are now senior engineers on my team went through Coinbase and learned on the job there. But it's very challenging scaling a company if no one has actually been there before. That was something that Vernon and I were pretty determined about: we were going to really focus on hiring senior people. I also think with junior employees generally, there's less emotional stability. You get a lot more drama as a result of people basically treating it as an extension of college. We haven't had any of that with a small team and a lot of senior people, which has been nice. The second is, from a strategy standpoint, we tried a lot of different things between 2014 and 2017. In retrospect, we should have just focused on the core business: on-ramp, expansion, and not all these other things. The company is actually fine now because their competitors have basically been vaporized from a regulatory standpoint because they were doing illegal stuff like FTX. **Jackson:** But that might not actually be the lesson. Maybe it was a coincidence. **Dan:** I think it's a good lesson in focus. It's easy to want to say, "Okay, we've made it here, let's go work on a portfolio of things." No, just be good at one thing and keep driving that until it really hits scale. That's a lesson for me that I will continue to apply. Fewer priorities, and just try to do them really well. **Jackson:** Brian seems to be someone who's hired a number of very opinionated, strong-willed people. On things like USDC and maybe even Base, he has not necessarily agreed with them, yet he has been able to disagree and commit and also empower or even maintain people. You think about somebody who's still there, like Jesse. You've talked a lot about learning from Brian in the volatility sense. Do you have any analysis of what enables him to do that so well? It seems pretty rare. We have a lot of CEO prototypes of the great-man, hero, top-down, Zuck-Elon type. Brian seems to be pretty good at finding these people who probably wouldn't otherwise work for someone and empowering them. **Dan:** Yes. He really started this obsession while I was there, post-2017 growth, though maybe it pre-existed Coinbase. He was very focused on repeatable innovation. He didn't want Coinbase to be a company that could only do one thing. He's very good at soliciting input from other wise people in Silicon Valley; he's basically a good student like that. He'll get the meetings or dinners, go and talk to 10 people, and then come back. Patrick Collison is also pretty well known for doing this. Brian came away with this Google framework that he likes, which is 70-20-10. It's 70% on the core business. This took a little while to develop, and I think is the right thing for their scale now. **Jackson:** Maybe it wasn't right for 2017, though. **Dan:** It's paying off now. There wasn't the same level of rigor in the framework in 2014. It was a little bit of throwing more spaghetti at the wall and hoping stuff would work. It was 70% on the core business, 20% on emerging businesses that are working now, and then 10% on completely out-there projects. The goal of the CEO as a capital allocator is to make sure that the projects have the right funding. **Jackson:** Yeah. **Dan:** And on the 10%, the thing that the CEO, especially a founder, can do is protect them from the inevitable execs who are going to kill them for whatever political reason. **Jackson:** And you need one or two of those. You need Base or USDC to work. **Dan:** Each one is always going to have a weird set of circumstances. I'm sure there are war stories as to what actually happened at Coinbase for Base to exist. I don't think it was an obvious win. I don't think anyone thought it was going to be as successful as it was, maybe other than Jesse. It’s similar to USDC. It’s not my story to tell, but that was a very interesting story of how it came to be. And Balaji was very involved in making the case for it, which is funny to think about. Balaji is the reason USDC is really successful, given it's the US dollar. But my point is, you do need a little bit of luck in some of that stuff. ## [01:52:24] What do you wish Balaji [Srinivasan] could work on? **Jackson:** Speaking of Balaji, if you could direct his attention to think about, work on, or even just talk about one thing for a year, what would you choose? **Dan:** I don't think he'd want the job, but he would be my pick for the person to run Doge. For a lot of people, that would be a nightmare. But having seen him work at Coinbase, he would literally be the perfect person to do that because he would drive the team to the right level of rigor. I don't know if he could work alongside Elon and Vivek in terms of personality. **Jackson:** Just let him in there for a month. **Dan:** And do a bunch of damage. Frankly, they're all big personalities. When Balaji gets obsessed with something, just make sure you're not in the path. ## [01:53:20] Group Chats and the pendulum between private and public discourse **Jackson:** Right. That was implied in my question. You seem to be pretty plugged into the Silicon Valley group chat as an idea. I've always said, along with Twitter, the best social product ever is the group chat. I have two questions on this front. One, to what extent are you thinking about capturing the group chat opportunity that Twitter didn't? So many WhatsApp, Signal, and even text group chats originated on Twitter but weren't captured by that product. To what extent are you thinking about that with Farcaster? And two, what makes a great group chat, and what have you learned from the best group chats? **Dan:** I would love for Farcaster to be able to have that. If you're not a dedicated messaging client, it's hard to hit the level of polish you need for people to use an app. Think of how buttery smooth Telegram or WhatsApp is, let alone Signal, which has best-in-class encryption and the brand that people feel good about. **Jackson:** It's also very easy to move to another app in today's world. **Dan:** People underrate how difficult it is to build that level of UX. Those are not good businesses. WhatsApp is a good business because it's part of Meta and it has crazy scale. Instagram is an amazing business. YouTube is an amazing business. Telegram is something on the order of 900 million to a billion monthly active users. I saw a stat that it's about a billion dollars in revenue a year, but it has a lot of costs. **Jackson:** It would create tremendous network lock-in, at least if you could get them for Farcaster or Warpcast. **Dan:** The issue is you need to get to scale for that to work. There are a lot of dead messaging apps on the way, so there's a bit of survivorship bias. The point is that Instagram generates 35 billion or whatever. The amount of value you can generate with a feed-based product as it relates to ads is significantly more. That's a real challenge. Just to hit the UX bar requires a lot of time and energy and goes back to this idea of focus. Is this actually helping grow Farcaster where it's uniquely differentiated? Probably not. It's a retentive feature for Farcaster. Chats keep people around. I'm sure for Twitter, people who use DMs are more likely to come back every day, even if their group chat isn't there. What makes a good group chat? My understanding is there were some group chats pre-COVID, but group chats really took off during COVID. I was in a few before, and it's like getting invited to a party. You have one person, and they add you to the chat. There's a level of "what's in the chat stays in the chat." If you're the type of person who talks about what they heard in a group chat and people hear that, then you don't get invited to the next one. Silicon Valley people are very good at optionality maximizing, so you don't want to lose your ability to get invited to group chats. That's why you don't see leaked Signal messages. **Jackson:** Got it. **Dan:** Think about journalists. You get a lot of third-hand stuff, but people are very sophisticated not to. **Jackson:** It's game theory optimal, actually. **Dan:** Yes, and you don't want to mess around with people who can hire really good security people. They have the N number of group chats to know that you were the one. That level of trust was built in an environment defined by the woke movement, from Trump 2016 through its peak. This was a conversation that used to… **Jackson:** Probably happen on Twitter. **Dan:** Yes. With increasing cancel culture, more and more people moved those conversations. Naval used to tweet all the time, and then it gradually reduced. That's an example of someone within Silicon Valley who moved his tweets to group chats. Think of the people who have the most followers in Silicon Valley. What changed during its peak in COVID, then accelerated, and has now broken out in the open is that Elon bought Twitter. This goes back to what I was saying before. It really changed things. They killed group chat culture. **Jackson:** Do you think people are back to posting publicly? **Dan:** Oh yeah, way more than they were. **Jackson:** Oh, interesting. **Dan:** Look at Marc Andreessen's podcast on Rogan. If you listen to that, the amount of things uttered would have never been said by anyone in Silicon Valley for fear of being canceled. Now it's uninhibited. I don't think anything was crazy or unhinged; you just couldn't talk about these topics publicly. The group chat culture was a response to the Trump era of peak wokeness. **Jackson:** It was a pure response to the public forum, with the town square no longer being a safe place. **Dan:** It's a fair criticism to say it was safe, but the Overton window for what you could talk about was limited. So naturally, people started creating Signal and WhatsApp groups. The other big thing is that Signal took time to grow, and then WhatsApp became encrypted, and people trusted that. People realized disappearing messages are important and wanted to make sure this stuff wasn't hanging around. ## [01:58:55] Power: Elon, Zuck, Trump? **Jackson:** Who do you think is more powerful: Elon, Zuck, or Donald Trump? Or Peter Thiel—we'll throw him in, given our conversation earlier. **Dan:** I think Trump. Call it Biden or Trump, that role is still very powerful. You can do a lot of damage. **Jackson:** If Zuck could switch today, he would take the presidency. **Dan:** I don't know him well enough, but if his goal was power and influence, sure. I think any of those guys would take it if you could magically be president for four years. Zuck runs a 2-billion-person network state, so he would want to try his hand at doing it. Elon is basically doing that with Doge. **Jackson:** I don't think Elon actually wants to be president, though. **Dan:** I think at a certain level of stature, there's a mentality of, "I could do that job." Again, I don't know these people directly. **Jackson:** Are you speaking personally? **Dan:** No. I think people are just interested in what they would do in those shoes. The point is that the job is largely ceremonial, aside from a few impactful instances, like controlling nuclear weapons. You're beholden to Congress on most things, and a lot of horse-trading goes into that role. That's relative to running a company where Zuck or Elon can make a snap decision, and that's how it works. ## [02:00:24] Politics, Populism, Going Direct, and the Podcast Era **Jackson:** Clearly, you're interested in politics on some level. Do you have a view on where things are going, either with the fate of the Republicans or the Democrats? Broadly, if we have four more years of Trump, it feels like we'll be in totally new territory. Is that something you think about at all? **Dan:** My sense is that populism is very much on the rise, fueled by the internet. The post-war coalitions are changing. Union members are voting Republican, and educated whites are increasingly voting Democrat. Minorities are increasing their vote for Republicans. That was not the case 50 or 60 years ago. So I think the country is going to tack more populist. I would expect another, probably younger, version of Bernie Sanders to run on the Democratic side—maybe AOC, which is a slightly different flavor. This goes back to our earlier discussion: the people who will be successful are good at going direct and having distribution. **Jackson:** The podcast president. **Dan:** You see this with AOC. Whether or not she's good on policy, she has an Instagram audience. She's learning that now and gets feedback. **Jackson:** She goes on live streams. **Dan:** That skill set is far more valuable than a rally speech. It is crazy to me that we're even spending time showing a little clip, because there are still boomers watching. **Jackson:** TV, who trust the preciousness and scarcity of that small format versus 16 hours of Trump on a podcast. Who cares? I caught a clip of it. **Dan:** That's why Trump had a huge swing with 18 to 29-year-olds. They don't watch the rallies. They don't watch MSNBC or CNN. I think that will be a big shift in politics. I said this during the Clubhouse Mania in 2020. It's so clear to me that the format of direct, long-form audio... **Jackson:** Not edited. **Dan:** You understand that person a lot more. I think someone will have a far better understanding of who I am versus if I give some canned five-minute YouTube video. I'm increasingly convinced that populist, direct-to-consumer candidate will outperform, and I think that both parties will blend. Populism is not focused on the issues that elites care about. The Democratic Party is very captured by a very small group of elites. The shift from 2020 to 2024 is that lower socioeconomic and minority groups shifted hard right on a relative basis. The populist policies, whether you're Republican or Democrat, need to resonate with people. They don't want Paul Krugman explaining that inflation is transitory or that the Biden economy is better than the Trump economy. That's an expert opinion that doesn't matter. When you go, you see the price of milk and eggs. I got a coffee in Venice the other day and it was $7 for a black coffee. It isn't a fancy place; it's just that they can charge that. Within a very short period of time, the economy feels like everything has doubled in price. **Jackson:** Meanwhile, the other side of the Democrats is saying, "Hey, you're a part of this identity politics group, so you should feel exactly how all the other Mexican Americans feel." **Dan:** I don't think that's popular either. I do think that populist policies will be focused less on whatever culture war issue people who are terminally online want to fight about. If you look at Kamala's campaign, viewing it only through Twitter, it felt like she was winning. Think about how good she was online—on TikTok, on all these places—relative to the debate. **Jackson:** Post-debate, I think. **Dan:** The debate is a great example. No one watches the debate, but the online people do. They think that there's some framework to say she won the debate. **Jackson:** This special moment, this constrained amount of time. **Dan:** And people are making their decision on the debate. That's so antiquated. It's the fact that Trump did Rogan and Kamala didn't want to, and then did this contrived appearance on *Call Her Daddy*. **Jackson:** That's the wrong example. She just didn't do enough of it. **Dan:** My point is, we're in 2024. You should be on every single one of these. **Jackson:** Flood the airwaves. **Dan:** You need to. Podcasters are not journalists most of the time. If you go on Rogan, he is not going to be hostile. **Jackson:** We're going to need more of that. If this continues as I think it will, you're going to need people who can push. **Dan:** But do consumers actually want that? The reality is, do I want to go listen to some... **Jackson:** We have to aspire to more. You have to aspire to have somebody who can really push Trump, as an example. **Dan:** I understand that sentiment, but what incentive does he have? Ignore Trump, because people just get so mad. Any candidate—why would you go on hostile media if you didn't think you could go on there and perform well? The whole goal as a politician is to get people to think you are doing well. **Jackson:** Isn't part of the podcast thing a level of authenticity, openness, and reality with this person? At some point, if they're just going on to get layups over and over again, people will see through that. **Dan:** But you can't ask the candidate gotchas every five seconds. That's one of the things about the debate: you're going to fact-check one side versus not. Whether that's true or not, who cares? If that's the perception, it's not a great situation. Regardless of whether everyone thinks we're going to have this civic society with tough journalists, if media doesn't work like that, there is no legal requirement that you have to deal with people you don't like. **Jackson:** It's a bit like the "Field of Dreams" thing. You have to have people show up and hear it. If the candidate isn't getting in front of people in a meaningful way that they actually care about seeing, then it's all moot on some level. **Dan:** Journalism in the postwar era is a function of a limited number of television channels, radio stations, and newspapers because distribution costs money. As soon as you can pick, there are people with massive audiences. What's stopping Mr. Beast from having one of the candidates come on? What I think will happen is there will be someone who realizes that there's an actual market for a nonpartisan, tough-but-fair person who will ask candidates questions, let them speak, and then let the voter decide—not with the gotcha question, but with the bumbling answer from the candidate. You will get the candidate to show up if there's an audience, and you will get an audience if you build the distribution first. Then you're able to ask those tough questions. **Jackson:** You have to trust the viewer and the listener and give them some credit. To his credit, I think Rogan has historically done a fairly decent job of this. **Dan:** That's why I think it was a huge mistake that she didn't go on. ## [02:08:48] What have you changed your mind on this year? **Jackson:** One of the things I really admire about you is you're a great version of "strong opinions, loosely held." Is there anything you've materially changed your mind on in the last year? **Dan:** I had an opinion that there would be a single winning, decentralized protocol, a single town square, because that's how Twitter worked. I'm increasingly of the opinion that it will be pretty fragmented. That's had a pretty big impact on our strategy. I don't think we can win at scale as this Twitter replacement, nor do I think others can. I think it'll just be fractured. We've tacked into saying our thing, at least in the near term, is going to be smaller than what we were aspirationally hoping for. But by being more focused and more crypto-native, it can be valuable and grow from there. That's been a tough one because going in, it was about building the thing to replace Twitter in the long term. Now I don't believe there will be one thing; it'll be many. What I'm hoping to build is something that is valuable and specific enough in crypto. **Jackson:** Do you remember the period or the moment where that switch started to happen, where you were forced to finally see the reality on that? **Dan:** It's been the last three or four months. I had an inclination before, but it pretty crystallized this fall. That's been an up and down for me. ## [02:10:22] Final Questions **Jackson:** My penultimate question: anything recently that really moved you or that you found beautiful? **Dan:** I get that daily with my two kids. That's a roller coaster of emotions as well. I don't do much. I work and I spend time with my family. I have a three-and-a-half-year-old, a soon-to-be two-year-old, and we have another one arriving fairly shortly, so three boys. The pure joy that they can create is a feeling you lose as an adult for the most part, especially if you're spending a lot of time working. You don't have joy happen. I don't get joy sitting in front of my computer most of the time, if ever. With kids, you can go from a crying, annoying, bratty kid to a moment of joy within a five-minute span, especially if you step back. **Dan:** That's cool. I recently went on vacation with my family. We were in Mexico. We went to the beach, and one night, there was just a beautiful sunset with the whole family. That was a very nice, calm moment. A call to stop arguing... **Jackson:** With strangers on the Internet for a little while. **Dan:** It was just a reminder of what it was about. **Jackson:** All right, my last question is, what is it going to take to get you to change the Warpcast logo? **Dan:** You've been on this for a while. Mike Rainbow is also a big believer. **Jackson:** For those who aren't aware, the Warpcast logo, which is the main client of Farcaster, how you use the product, is a purple square with a white W on it. **Dan:** It looks like the University of Washington. **Jackson:** Think we can do better? **Dan:** At this point, it's pretty iconic. If you hit that, you're… **Jackson:** Going to get some dopamine. I refuse to admit it's lindy. **Dan:** But we will have product-market fit. We will have a shining… **Jackson:** Wow. **Dan:** You'll know product-market fit has happened when the new logo arrives. **Jackson:** When the market is pulling it out of you. Dan, thank you very much. Anything you want to tell people before you go? You guys are announcing stuff left and right. I think you just announced starter packs, channels, V2. Any broader PSA? **Dan:** No. If you want to follow me, you can follow me on Farcaster, which is DWR. I'm also DWR on Twitter, if you want to ease into my hot takes. **Jackson:** We'll get the crypto newbies to pay a little more attention. **Dan:** Cool. Thanks, man.