The Secrets Behind Matt Odell’s Bitcoin Empire
Matt Odell, Bitcoin entrepreneur, podcaster and enterprise capitalist, sat down with Bitcoin Journal for an unique interview to debate the way forward for the trade and the insights behind his success.
Well-known for having deleted his Twitter account with over 250,000 followers to maneuver full-time to Nostr, the open supply Bitcoin-powered social media protocol, Odell has had a long-lasting influence in Bitcoin tradition and the trade. Having began a well-liked Bitcoin podcast referred to as Citadel Dispatch, the place he has interviewed trade leaders weekly since late 2020, Odell is credited with iconic Bitcoin memes like “Keep humble, stack sats” and even branding the world “Zaps” to explain suggestions made with small quantities of bitcoin over social networks like Nostr.
“After spending over a decade utilizing Twitter as my solely social media it was time to maneuver my power over to a protocol that permits extra person freedom,” Odell instructed Bitcoin Journal.
Odell is a board member of OpenSats, a nonprofit centered on funding Bitcoin-focused open supply initiatives that will in any other case battle to discover a footing within the extremely aggressive, closed software program trade. He’s additionally a managing accomplice at Ten31, a for-profit enterprise fund that approaches Bitcoin VC work with a twin mandate: “Our first mandate is to make our buyers cash and make good investments and return capital. And our second mandate is to assist Bitcoin flourish as freedom cash, assist make Bitcoin a greater device for use by the person, to empower the person.”
Initially a critic of Silicon Valley and the enterprise capital world, he has shortly grow to be one in every of most renown VCs within the Bitcoin trade, main a imaginative and prescient for enterprise capital which posits that constructing free and open supply software program with person privateness in thoughts could be extra worthwhile in the long run than knowledge mining customers and locking them into “moats.” “All of our investments are constructed on high of open protocols. There’s no walled gardens. There’s not this complete thought of constructing a moat, like fencing your customers in, extracting as a lot knowledge out of them as attainable, getting them hooked on the app, monetizing their time and their consideration,” Odell passionately defined.
“After I was youthful, earlier than we launched Ten31, I used to be of the mindset that every one enterprise capital was unhealthy. And that was largely a product of my remark of the big enterprise corporations, the a16zs of the world… You see them throw tons of of tens of millions of {dollars} at shitcoin initiatives to dump shitcoins on retail. After which a venture that’s making an attempt to ethically construct within the Bitcoin area struggles to get funding,” Odell mentioned of the enterprise capital strategy seen in crypto.
The technique sought to seek out exit liquidity for seed buyers through ICOs or token launches, shortening the period of time it often took enterprise funding to get returns, from practically a decade to as little as a number of months.
Beside investments by ICOs, the normal funding technique pioneered by Silicon Valley — which Odell can be vital of — VC meant investing huge quantities of cash in startups to create high-growth corporations that purchase huge quantities of customers as early as attainable; then, attempt to ship glorious merchandise totally free, even when the businesses had been unprofitable for a few years.
The worth of the fairness in these conventional VC software program corporations trusted preserving these customers, their knowledge, IP, and controlling entry to the community results, whereas additionally increase the infrastructure wanted to function and scale. This technique was the norm throughout low U.S. rates of interest within the early 2000s after which once more from 2008 to 2015, pushed by the U.S. Federal Reserve’s financial coverage. The consequence was that a lot of low cost capital discovered its solution to VC corporations which may then hold cashflowing these begin ups for a few years till they both grew to become worthwhile or might be purchased out by a competitor.
However these occasions have modified and america’s financial dominance has been challenged by rising powers within the East. Low rates of interest can now not be sustained with out very seen inflation. Consequently, many Silicon Valley startups have needed to make exhausting pivots from high growth at a loss for many years, toward early revenue, favoring Odell’s funding technique: startups that may grow to be worthwhile shortly and begin constructing a bitcoin treasury.
Income and open supply don’t combine nicely; in actual fact, they virtually seem to be contradictory concepts. When requested how one can obtain sustainable open supply funding and enterprise capital in open supply he mentioned, “I believe there’s a center floor that’s tougher” referring to the trail taken by OpenSats and Ten31. He continued that, “since you’re constructing on open protocols, you may hit a scale that closed proprietary software program probably can’t hit.”
Odell additionally defined that, “Once we’re really in search of investments, the purpose is a bit of bit completely different than conventional enterprise capital, in that we’re in search of founders which can be, to begin with, constructing on Bitcoin and making Bitcoin extra strong, however which can be additionally prepared and capable of function very lean with as lowered bills as attainable and attempt to grow to be worthwhile as shortly as attainable.”
The VC financial calculus is sort of completely different once you consider bitcoin is one of the best cash ever invented and has an extended life forward of it. “In conventional investor land,” Odell famous,
“what you see is that this growth-at-all-costs mindset. They’ll burn $100 million, they’ll burn $200 million, after which possibly in 10 years, they’ll begin changing into worthwhile. However you may’t try this in a Bitcoin world as a result of what’s the value of bitcoin going to be in 10 years? And try to be measuring your entire income in sats, in bitcoin.”
Worthwhile Bitcoin startups can construct their very own bitcoin treasury reserves and over time grow to be very profitable.
The Ten31 Portfolio And Funding Thesis
The Ten31 portfolio consists of over thirty corporations that construct on high of open protocols whereas being Bitcoin-centric and fast to profitability.
Start9, for instance, builds Bitcoin-native software program that’s open supply from high to backside; it’s purposeful on most {hardware} with out basic Silicon Valley {hardware} restrictions like these pioneered by Apple. “Start9 is an ideal instance that can most likely by no means get a16z funding… Their complete stack is open supply. You may by no means pay them a cent, and you need to use all of their merchandise… However on the similar time, their purpose for monetization is twofold. You may optionally purchase a pre-built machine from them, and so they wish to add growing value-added companies on high — stuff like premium assist, proxy companies, stuff like that,” Odell famous.
Mempool.Space, maybe the most well-liked block explorer in Bitcoin, is one other instance of a profitable firm constructed round open supply. “Mempool.area is one thing that’s built-in in virtually each Bitcoin pockets. It’s a completely integral open supply software program… They monetize as a result of they’ve the transaction accelerator, which you’ll pay for with bitcoin… Additionally they have B2B enterprise agreements,” Odell instructed Bitcoin Journal.
AnchorWatch, a reasonably new Bitcoin firm that has tackled the very troublesome drawback of insuring bitcoin holdings from theft, is one other nice instance. The corporate builds on high of Bitcoin, attending to leverage its community impact but additionally bridging it to the insurance coverage market. “I believe the insurance coverage component is de facto fascinating, particularly self-custody with insurance coverage… It really gives a worth proposition to customers that’s higher than paper Bitcoin,” Odell added.
Of the cohort, Strike, the Bitcoin-focused fee app based in 2019 by Jack Mallers, is Ten31’s largest and most worthwhile funding. It’s obtainable in international locations everywhere in the world and delivers Bitcoin’s cutting-edge know-how to the general public whereas additionally navigating the complexities of regulatory compliance and a seamless person expertise. “When it comes to a pure funding perspective, Strike is by far the corporate I’m most enthusiastic about. We’re the most important investor. We’re the one exterior board seat… That firm is international. It has important product-market match. It’s extremely worthwhile. They’re stacking bitcoin to their treasury: They’ve over 1,500 bitcoin of their treasury… They usually’re worthwhile. So, each month, they’re simply buying extra bitcoin.”
OpenSats Funds Open Supply Improvement
Based in 2021, OpenSats is the nonprofit group that preceded Ten31. It funds open supply builders and entrepreneurs growing Bitcoin infrastructure that will in any other case be very troublesome to seek out funding for. “OpenSats had this dream that, okay, possibly we may resolve this drawback by plebs giving $50 a month, pledging to present $50 a month to open supply developer grants… That turned out to be far more troublesome than I anticipated,” mentioned Odell. In regards to the early imaginative and prescient of the group, which sadly didn’t attract as many dependable donations as wanted to fund open supply Bitcoin builders, he recalled: “Particularly, OpenSats is 100% pass-through as a result of plenty of charities have questionable practices the place they take a big minimize of donations.”
Odell added that, “Bitcoin is one of the best cash that has ever existed. However there’s this bizarre dichotomy that exists. It’s one of the best cash that ever existed, however cash for builders within the Bitcoin area is extremely troublesome to come back by as a result of, to begin with, you have got this overarching crypto ecosystem that drains a ton of capital. After which among the many folks that perceive the facility of Bitcoin, plenty of them are unwilling to half with their sats and have a tendency to carry on to their bitcoin reasonably than utilizing it to assist builders.”
However, OpenSats obtained a beneficiant donation from Jack Dorsey — co-founder and ex-CEO of Twitter — of 31 million {dollars}. “All of our giant donations are public, of that 35 million on the OpenSats aspect, 31 million was Jack Dorsey’s private charity, Start Small Foundation, which is our main supporter,” Odell mentioned. An fascinating truth is that even at present, after years of offering grants to Bitcoin open supply initiatives all through the world, their treasury is bigger than what they ever raised, as a result of they saved all that capital in bitcoin. “We even have extra in our multi-sig treasury than we’ve ever raised within the lifetime of the group. Which is fairly superior. Our treasury technique is the simplest, efficient treasury technique, which is: Each greenback that is available in robotically will get transformed to bitcoin. We simply hold 100% bitcoin reserves.”
The Bitcoin Coverage Institute
Odell can be a founding member of the Bitcoin Policy Institute, a serious participant in educating politicians in Washington about Bitcoin, the way it works and why it’s useful to the general public. The latest pivot of the Bitcoin trade towards participating Washington differs from the pure libertarian mindset of Bitcoin’s early historical past. To Odell, nonetheless, it is a pure extension of the 2 elementary pillars which have made Bitcoin nice — training and tooling. These pillars had been pioneered by the Cypherpunks of the 90s within the first “crypto battle,” and succeeded in making nation-state grade cryptography obtainable to the world.
“A part of the inspiration, too, is, you realize, I used to be fairly disenfranchised with politics. And Adam Again personally was an enormous inspiration for me by way of his expertise with the unique Cypherpunk motion and the unique crypto wars. When it got here to encryption, they fought it on two fronts. They fought it with instruments. In order that they made it actually efficient and low cost and accessible for individuals to encrypt issues, however in addition they fought it within the courts and in politics and in thoughts share,” Odell recalled.
These two pillars had been additionally seen from day one in every of Bitcoin within the type of the Bitcoin Discuss discussion board and the Bitcoin software program, each based by Satoshi Nakamoto. The pillars had been in a while prolonged to Bitcoin meetups everywhere in the world and the huge proliferation of Bitcoin wallets and {hardware} safety gadgets, in addition to developer tooling. Right now, BPI extends this training pillar to policymakers who typically know little or no about Bitcoin, the way it works or why it’s within the best interest of the public, which they, as public servants, are finally subservient to.
Bitcoin Park and the Social Layer
Odell can be a co-founder of Bitcoin Park, a group hub out of Nashville, Tennessee, which has gathered a major quantity of Bitcoin expertise within the U.S. and hosts occasions commonly. Earlier this 12 months, they expanded to Austin, Texas, buying the Bitcoin Commons, establishing their presence and attain in maybe the 2 high cities for Bitcoin in america.
“Bitcoin Park started at a brewery in Nashville,” Odell recalled. “It was a meetup at a brewery, and we shortly hit, like, 200 individuals a month for meetups. The brewery was mainly like, ‘you may’t come right here anymore’. And we’re like, okay, let’s discover our personal area. And that’s how Bitcoin Park Nashville was born.”
When requested what his imaginative and prescient for Bitcoin Park is, he mentioned, “I’d ideally prefer it to… simply be an inspiration for different communities to pop up world wide that aren’t managed by Bitcoin Park… I believe it’s straightforward to think about Bitcoin as a tech motion, however it’s actually a motion of people, proper? And the tech simply empowers the people.”
Odell’s Warning About Bitcoin-Backed Loans
Odell had a cautionary warning about bitcoin-backed loans, which he has a deep perception into by advantage of Ten31’s funding in Strike. Explaining the demand for this new kind of Bitcoin firm, Odell mentioned that “the principle demand driver actually is individuals are sitting on important capital good points, taxable if you happen to use/promote — which can be a tax on financial savings… For those who’ve been sitting on bitcoin since $100, $200, and also you’re promoting for $120,000, you’re paying the federal government like $30,000 — which is type of insane.”
He additionally warned of the draw back danger within the bitcoin value, a theme that’s generally mentioned; he advises customers of those loans to be “very conservative.” He additionally warned about the necessity to compete on this market with self custody — or as a minimum auditable buildings — that segregate the Bitcoin collateral from re-hypothecation. Stressing the necessity for competitors on this market, “I believe it’s a vital product as a result of they’re going to supply it for the ETFs, and it creates a really perverse incentive the place you’re higher off not holding actual bitcoin… It’s actually necessary for Strike and the opposite corporations within the area to supply a extremely stable, good product by way of loans in order that there’s a really sturdy incentive to stick with actual bitcoin.”
This publish The Secrets Behind Matt Odell’s Bitcoin Empire first appeared on Bitcoin Magazine and is written by Juan Galt.
