Ouriel Ohayon is a serial entrepreneur and the CEO of ZenGo, a crypto wallet that enables users to securely store, send and receive digital assets without the need for private keys or seed phrases. He has been based in Tel Aviv for nearly 20 years and is an expert in venture capital, blockchain technologies, and product innovation. Recorded on January 25, 2022 for Crypto Packaged Goods Genius Call series.
Ouriel Ohayon is an entrepreneur and investor based in Tel Aviv. He was shocked by the the dangerous state of wallets and the need to write down 12-24 words on a piece of paper to safely store one's crypto. He set out to discover a better way and found that the future of the economy and possibly of society depended on creating a secure, simple, and delightful wallet experience. He put together a team of great minds and created ZenGo, the first wallet of its kind, that requires no security system built on seed phrases or private keys.
In this episode, you will learn:
Follow Ouriel at https://twitter.com/OurielOhayon
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Mikey Piro
Happy New Year everybody. I'm Mikey Piro and we are kicking off another season of our Genius Calls. It is my pleasure to introduce Ouriel Ohayon, who is a serial entrepreneur and has been here for a long time. He has spanned the globe and is working currently as the CEO of Zengo. So, Oriole, thank you you so much for joining us. Welcome to the pod.
Ouriel Ohayon 00:00:28
Pleasure to be here, GM.
Mikey Piro 00:00:29
As you said, it's really wonderful that we get this time to talk about all of the activity that's happening in Web Three, specifically through the lens that you have. So you are currently based in Tel Aviv. You've taken a lot of different serendipitous routes to get there and you've been an entrepreneur for a really long time. And for our cohort of accelerators, we most definitely value that experience. So I would love to start off by just telling us a little bit about yourself, where you're from and what you do and how you're feeling in this Web Three ecosystem currently.
Ouriel Ohayon 00:01:08
Right, of course. Well, I'm not going to be able to hide it for too long in your podcast. You can either buy the accent I'm French, I don't have Italian accent or whatever, they're not American. So I was born and raised in France, but I moved around for a few years. I lived in many countries in Europe. I lived in North America also. But now for the past nearly 20 years, I've been here, based in Tel Aviv, which I love and great place to be here, especially if you are an entrepreneur. It's one of the best hotspots in the world to take an adventure, an entrepreneurial adventure, and take risks and work with other people who like to take risks and are extremely talented and minded towards making the world a better place. Anyway, I've been here for 20 years, nearly, and for the past four years, actually five years to be accurate, I've been working in the crypto industry. I came to it, you know, what looks now to be a long period of time and it was actually pretty late. When I started, crypto was already way behind me, but now it looks like it's been here forever. And building Zango, which is a crypto wallet. We're going to talk about what is angu and why do we need why the hell do we need another crypto oil? And I love this industry and even in period of crypto winter, in particular in periods of crypto winter, I love crypto, which is great territory to build stuff, push the boundaries, bend the rules of physics and innovate in great stuff. So I love this space. And one thing to add to the color of the background, I've been an entrepreneur for the past 20 years, but I always also have been an investor. I worked in venture capital for many years. I co founded the Venture Fund in France, which is now one of the, I think one of the largest in France and definitely one of the strongest in terms of track record. So I've seen the other side also of what it means to work with entrepreneurs when you are an investor. I personally prefer the builder side, which is why I came back to it. I like actions and I like adrenaline and so this is my favorite spot, at least for now. And also, just for the record, I also was at the time of Gold era of blogs. I was an intense blogger and I founded the French version of TechCrunch, which was at the time extremely popular and now part of AOL. I don't know what AOL has become by the way, but anyway, it was acquired by AOL. So that's for the background.
Mikey Piro 00:03:46
Fantastic. I have a couple of different thoughts of where we can go and I would love to just dig in on. You were a venture capitalist and you were on that side of the table. What was it about Web Three and specifically this wallet angle that convinced you to come back to the other side of the table and start building?
Ouriel Ohayon 00:04:05
So first off, I always liked extremely difficult problems that touch the consumer experience. It's something that has always been fascinated. Because I'm a product lover, I love to try great products and I like to experiment with great cutting edge products with anything like as you can see, I have Apple Watch, Ultra and AirPods. And I always love to be kind of at the edge of whatever is the newest in product and in technology. And so when I came to crypto, I was in a major shock actually, because to me blockchain technologies, Bitcoin, Ethereum were those outstanding technologies that were opening new avenues for unprecedented innovation because it was enabling builders to create applications that cannot be stopped. And that was a paradigm change, right? If you think about the story of the first 20 years of crypto, you basically building applications on top of other platforms and one day they wake up and they turn you off, right? Whether this is Apple, Google, Facebook, Twitter. All of them. And so for me that was really the attraction and it was unlocking such a huge potential. But when I used the tool to build those things, in particular wallet, I was in a shock because they looked like completely inadequate, ugly, prehistorical, dangerous, tedious. I could not imagine when I was starting in crypto that this was going to be the future. So I identified a very, very interesting angle that to me was disturbing and I thought at first it was just me, right? And then I started to speak with other people and everyone was complaining about the wallet experience and I was hearing it over and over again, including by people that were building wallets. So I decided it was an interesting problem to pay attention to. The thing that got me really started and that really interested me to the most was more the vision behind why a wallet matters. Because it looks like that that a wallet is just like the simple basic calculator where you store and you send funds and whatever. But when you think about it, if every single digital asset is going to be put on the blockchain, whether it's physical or digital, whether it's created on the blockchain or not created on blockchain, but end up in the blockchain. If this vision is true and this is going to happen for the next 20 years, then it means that words are going to become the most important interface in software ever created. More than a browser, more than an email client, more than an instant messenger, more than anything, more than your bank interface. And so if that's the case, it's one of the most interesting problems to work on. And so I got attracted because of that vision and I wanted to find a way to resolve that both in terms of security and user experience. And I found it was a very difficult problem to solve and also very exciting problem to solve. And that's how I decided to spend time on how to figure out a way. And that was just the beginning of the problems. And then I needed to find a solution.
Mikey Piro 00:07:20
Do you recall the first kind of problem you faced in the journey of the wallet? Where did you start and what was the impetus behind? Like, this is the first thing that's broken and this is what I'm going to go set out to fix.
Ouriel Ohayon 00:07:35
So I started first the wrong way, not using a wallet. I started by using the equivalent of an exchange centralized service. And so I didn't feel the pain of crypto. There you go. I thought you were going for a second. I just started to kind of buy crypto, but not feeling the pain. And by the way, this is what most people actually do. They go to Coinbase or Finance or former FTX and this is their experience of crypto, essentially. But once you really want to take ownership and control of your assets, then you need to move to the other side. So what happened? I started to find out how to do that. And so I heard about software wallets. I started to download a few of them and then everyone was telling me, but now you need to do to get a hardware wallet. So I bought one of them right? Or two of them, I can't remember. I think I tried them all. And the first problem that I saw was like really a shocker and a revelation. They asked me to write down on a piece of paper 20, 412 words I can't remember. And so I thought to myself, how on earth the future of the economy and possibly of society is going to depend on a piece of paper and a pen? Like there's no way that this thing even works right. And I even remember that I made a mistake. I I wrote the wrong word. And when I tried to recover, I lost like $100 in crypto or something like that. I said, if it's been me working tech experimenting that then probably more people like me are going to do that. And then I started to do some research and discovered it was a huge amount of people that had problems with us. So the very first problem that they had was simply the first steps, the getting started, the getting from zero to one in a crypto native environment, not in an exchange environment, which is like, really not really crypto. It's banking to zero, but it's not really crypto when you really want to get into crypto. And now with web free, you have to have a wallet. You said it yourself at the beginning of your podcast, connect your wallet. You didn't say connect your exchange. So you need to have a wallet. So people have to go there, and so there is no shortcuts. You have to go through the tedious steps. And those steps are intimidating. They are prone to errors. They are extremely unsafe. They are forcing people to take all sorts of, like, crazy security measures that they are not equipped with, because most of us are not security experts. And the result of that is that people are losing their crypto every day. It's still happening today. And so no matter how much we have evolved in the past twelve years, we're still at like, day zero of innovation in security experience. So to me, that was a big, big problem. There were more problems that I discovered later on, but to me, that was big enough to say, all right, stop here. Okay? That cannot be the way the world where I want to look in the future. I want to look at something that feels safer, feel simpler, where I feel happy and delighted. The second problem that I experimented was nearly as bad. I had a problem, I can't remember exactly what. So I wrote to the support channel of this wallet. I can't remember what it was, and I didn't have an answer for days. And I think they answered like, three weeks later. And I thought to myself, okay, technology is cool, but if customer experience is broken and I cannot speak with the people I am supposed to trust to get, like, basic attention, then this industry is going to go nowhere. So to me, I was like, okay, green light for major opportunity signal. Let's go, Beadle, let's go build something. But now I have to figure out how, with who and the technology and how to kind of reinvent a little bit the rules. But it was very clear this industry had a huge, huge technological problem and customer retention problem. And so to me, that was exciting because that meant opportunity.
Mikey Piro 00:11:49
Let's turn to the product, zengo itself. And how you've differentiated yourself when folks hopefully go download the app themselves. One of the things that you'll notice in the App Store is a very high rating and glowing reviews. And you just emphasized that you really focus on customer experience. And customer experience is not just an intuitive app, it is also probably the thousands of support tickets like you mentioned behind it. So please step us through zengo and I have a couple of follow up questions after that, specifically about you mentioned the team that you assembled, but give us Zengo in a few sentences.
Ouriel Ohayon 00:12:30
So, Zeno simply said, is a wallet that does not require any security system built on seat phrases or private keys. It's a wallet that you control. It's an on chain wallet, like most wallets that are today enabling you to connect to web free and web free apps, but without requiring to manage creative and separate of private keys. And instead we've used multiparty computation cryptography. And I'm not sure I'm going to double click on what it means, but it's a new way, and not really new, but a way to do distributed security. Instead of relying on one secret, the seat phrase or the private key, you are distributing the security. And so you are removing from the table the single point of failure. And so it was the first wallet to really look at this that way. That was our first innovation. You get into the wallet and you never have to kind of write down these 24 words or twelve words or private key and remember it and store it somewhere safe and whatever so gone. And the second innovation, this is what people see, is we invented a new breakthrough way to do authentication. Typically when you do authentication, that means like a login or password, sometimes a second factor authentication. So you have to kind of choose a password, use a password manager, store this password, use a second factor. Usually it could be like an SMS code or whatever, or a TOTP rotating code, or sometimes a ubikey complicated. Most people don't do it, and when they do it, they make mistakes. So what we did is we invented what we call ingo's free FS three factor authentication, but that are not based on passwords. And so there is a very simple step that takes you from zero to one in 10 seconds where you just put an email address. An email address, you grant an access to a cloud service that you control, which could be a cloud Google Drive or Dropbox. And then you do face lock, selfie scan, locally performed biometric on your phone which identifies you. And that's it. And your wallet is created and fully backed up. And so the advantage of that is like super simple. There's nothing to write down, memorize, even when you recover your phone, even if you lose your phone. The second advantage is that no one except you can use your wallet, right? The number of people who lose their seat phrase is being used by someone else. This cannot happen. And in the history of Zango, we had zero account takeover. Like none, not a single one, which is like a huge performance in itself. And that's it. And so you set up in like 10 seconds. Very simple. So we passed the grandmother test, but also we passed the hiker test, where the hiker would have an enormous difficulty to take over your account, like close to zero. It's possible, but that's never impossible. But it's really, really hard. So that's kind of the first experience that you have with Zango, which is radically different from any single wallet on the planet. Now you will start to see wallets start to copy a little bit what we're doing. There's a lot of things that we have invented, but now that starts becoming standard. But this is really a major innovation in itself, the key management and the authentication. Then the second element is you will see a beautifully crafted app. I think we've one of the first that we have extremely cared for the experience and the cosmetics and the language of the app and the visual language of the app. And the third territory where we have overly cared about is customer support. So if you write to Zango at any moment in the app, from the first screen to the last, there is a customer support button. In one tap, you will speak to an agent, a human person, on the two minutes, any time of the day, anywhere in the world. This is an unbelievable promise because it's really hard to deliver at scale. And today we fairly large. So we've managed to keep that pace ever since we existed. And that allows you to never feel alone when there is a question or a problem or some sort of anxiety that you might have on the blockchain, because the blockchain is never simple, no matter what we do. So those are like the three pillars of Zango and what drives this feeling of great customer experience and invite anyone to try. You will see from the first pixel that you are in a different world and in a different environment. And so that's something that we're really proud of. We obviously constantly innovating. And I will talk about some of the web free innovations that we've brought to the industry. Again, where we were first to bring something to the industry and now it's starting to become a trend, the territory of web free security and transactions, which is very important. But really that's the core of Zango, a great wallet simple that you download on your phone that is super secure because there is no seat phrase or private key vulnerability that cannot be taken over by third parties because there's no possibility to fish you on seat phrases or seam swaps or things of that nature. Greatly cared app, great design, great visual language and outstanding customer operation to make sure that you never feel alone when you need help.
Mikey Piro 00:17:50
There's so much to unpack.
Ouriel Ohayon 00:17:52
Yes.
Mikey Piro 00:17:52
At the CPG accelerator we have the idea, the build and the grow, our phases that you pass through as a startup. Can you reflect on those early days of ideation and how you assembled that team to really think through this alongside you? Any sort of insights there? I think for a lot of our accelerator folks and I think the lens to look at it through is like how are you thinking about tackling a web three problem as opposed to a web two problem? And is there any difference? What are those considerations? Like, who do you need on your team and how do they have to look at the world?
Ouriel Ohayon 00:18:35
So that was probably the hardest part of the adventure. And by the way, it still is like finding the right people for the right adventure. I think you will ask any entrepreneur, they will all agree this is by far the most difficult thing. You just need to find them. You also need to keep them and you need to keep them happy. So when you start, it's even worse because no one cares about you. No one cares about who you are, what you have to say, what you're thinking, what your idea is. You have nothing. You have proven nothing. You are basically zero. You are a microscopic cell in the world of cells, right? So it's really, really hard to stand out. And there is only one thing that can bring, I would say, results to the need to find collaborators is the value of the ad and the passion with which you come to present it. That's it. In my case, I have nothing else. I have no background in technology that is relevant to the idea. Absolutely ignorant of this industry except the few things that I discovered by myself. And so I came very, very modestly to this space and I had to be extremely humble about the type of talents that I need to have. I needed to find people that are radically better than me in virtually every single important field. The first one being cryptography, the second one being security and the third one being software. Right, those three territories. And really needed three great minds. Really hard to find one person that knows those three things well, but three great minds to help me build those things because what is a wallet at the end of the day? It's a software interface that works on cryptography. So software that works on cryptography and that has to be secure. So you need to have kind of those three skills. So sure, you need after that to kind of build a great interface and to kind of have great customer operation and all of that. But those are layers that come on top. You need to start first with the basics. And in our case even more because we knew we could not build another wallet based on seat phrases and public and private keys. We had to reinvent the stack completely and there was no other way. So it was really a primary goal to do that. So I started to search and it was not fast. It took me time. I also learned from my prior enterprises that when you find a partner, you don't want just to test the skills, you also want to test your chemistry with them, in particular in tough times. So this cannot be done fast. It has to take time. You need to go through different steps, especially steps of failure, to make sure that you find the right person. A bit like before you get married, right? You just don't go on holidays and find out that everything was cool. You need to kind of fill the person in certain situations to know that you're going to resist over time. So that was kind of the moment. And to be honest, it was not easy. It took me a lot of effort, perseveration, and eventually I could find the first three collaborators and now the person that has become our CTO and my co founder, which is, well, not here today, but which is here today in this adventure. And we worked on that project for nearly a year without funding, without revenues, without anything. It was really battle testing our motivation and our capabilities because we had to know that we could even build that technology because it was not existing. So we had to build it. We had to show that we could build some sort of minimal viable product and VP, as you say, product terms. To say that this wallet without private key or secrets can even exist can be a thing. And so it took us time and we eventually managed to do that and it was good enough to believe that there was a possibility of creating a company. And then we went to raise a round of funding and that was just before the first crypto winter. All of that was just like this period just before the first crypto winter bitcoin at $20,000, then crashed down to nearly $3,000. So that was that period. It was a great, exciting period, but with an extremely high number of unknowns. Like, are we managing to work together? Will we even find a way to make this technology work? Is that going to make anyone interesting into what we do? If we present it? Is that going to excite other people, other investors, other people who want to join the adventure? Like an enormous amount of unknowns in an industry that was nascent, still very green. But there was one thing that drove us, is that we were all extremely passionate about the idea, extremely passionate about the industry we still are today. It hasn't moved an inch. I would say it has even increased. We love it more than ever. We really like the problem that we're solving and the mission that we have where the wallet is probably going to be one of the most important interfaces ever built in society. So we like that and it drove us forward. So anyway, a lot of talk but eventually we managed to get a small team and we had to find the first collaborators. Not just the founding fell but the collaborators. So there was a second kind of step forward and we were looking for extremely talented people in different fields like product and design and back end and front end QA and stuff like that. So it took us like a good year to figure out the first team, the first real product, not the MVP, the crappy MVP that we made and get the product out there.
Mikey Piro 00:24:33
Let's talk about that. Getting the product out there part of the journey. You hit crypto winter, you raise some money. You had sort of been ideating on it for a while like you had mentioned the MVP. So now you're at growth phase and you're trying to well you're actually more probably in like a hard build phase of like building the thing that can scale and grow. What are the challenges you faced at that moment in time with the web three kind of ecosystem that was emerging at the time.
Ouriel Ohayon 00:25:08
So as we came out with our first version, the market crashed. It was like the worst moment ever. And so the difficult thing when you're building something is to find a purse of momentum, right? That you need to feel this sense of feedback that what you're doing is right. Because if you don't sense that, you don't have any other money, doesn't buy that the only way to move forward is that you get this feedback from the user, from the market that what you're doing is right. And when you launch a product in a market that is crashing and contracting, how do you get that momentum? How do you get that purse? It's really really a problem. So when we launched we were hardly getting maybe ten registrations a day at best. And most of them were our friends, people that we knew. So not really real users, not really earned users. But there was something that kept us moving forward during all that period of winter is that every time there was a user that was registering and trying our app that we didn't know, not someone that we know and wanted to tell us cool and sweet. Not always wellness truth but someone we don't know. We nearly consistently had amazing feedback like one on one, right? Your product looks like really thing that I heard before or seen before. It makes me want to do crypto more, really like it, want to use it more, etc. So this kind of feedback which we by the way we're gathering through our customer support channel. So at the time we already had this muscle of, like, listening to our users every day at small scale. That was the fuel that kept us going for a few months until we moved from, like, ten registration a day to 50, like, times five. Still small, but a good progress. And then something happened in the market not related to what we did in particular. Just the market came back and so the numbers just increased. Was like kind of this bull market that happened, and our numbers exploded. Like, we multiplied all our matrix by ten in a few weeks. And so that was a different story. But for that period of time, I would say that the momentum that we managed to get from the qualitative feedback of our few users, that was something that was extremely material in our ability to kind of resist the temptation to give up or pivot or do something else.
Mikey Piro 00:27:46
What was the best piece of feedback that you received that you can point to now and be like, that was an insight that really helped us chart a different course. Can you recall one?
Ouriel Ohayon 00:27:59
Well, the thing that really opened my eyes at what we were doing, right? I could talk for hours about the innovation of the technology and the cryptography and all that stuff. And at the end of the day, people don't really care about those stuff. I know on Twitter and other social, it's very common to argue about the technicalities of solution, but most people don't care about that at all. Not only don't care, they don't want to hear about it. They have no time for that, no patience for that. The thing they care about is, does that make my life better? Can I save time? Can I save money? Can I make money? And does that make me happy? Those are things that people care about in real world. And one thing that I heard about our app that was kind of in those lines, but I could not sit until I heard it is someone that said something like that. He said, Your app makes me make less mistakes. And because of that, I love it, right? And so the fact that we were saving all those potential mistakes at every single step. So there was obviously the moment of registration, but the account also backup and recovery when you recover your account to a new phone, but also the experience of making a transaction, which is extremely stressful because you never know exactly what you're doing when you're making a crypto transaction. And the fact that we were articulating so clearly and simply with customer support always there. When I heard that someone said, your app make less mistakes than other apps, I said, oh, I think this is why people like what we're doing, the way we're doing it. It's not because we have, like, great technology and all this great new stuff. It's we just, like, help people make less mistakes in crypto. And that is an enormous step forward, right? And even today you see people making mistakes on crypto every day including people that work in that industry, me included. So I thought it was very very interesting insight and I think this is also a point that has driven us after that as a principle, a product principle. How can we design something that helps people make less mistakes in a world where there is a new set of language and grammar and articulated expressions and so many new things all the time? Like how do we reduce the iMGo from zero to one with as less mistakes as possible?
Mikey Piro 00:30:34
I want to double click into that feeling that you tapped into and exploring at the stage. I personally, as you mentioned, we've all made mistakes and we've all sort of clicked a button somewhere and waited for the magic internet money to disappear and reappear and it's terrifying especially for folks that are moving very large sums. Your articulation of the customer support, the support of the interface, the beauty of it. Where are we currently in the wallet phase and what is Zeno doing to kind of block against security and scamming? What are some of the things that somebody in the app right now could go do as their wallet interfacing with like Openc or Blur or some other exchange?
Ouriel Ohayon 00:31:27
So first off, the wallet space has enormously involved between the moment we started and now and there is a bunch of companies that are really doing really good work now, like seriously good work like at every single level. Security innovation, interface operations, innovation of services, all of that. That was not the case so many years ago. Many of those players by the way have disappeared and there is new players that have come up and coming all the time. Innovation hasn't stopped but the space is really more mature and so there is feels like more normal in terms of where we should be versus where we used to be. It doesn't mean that the job is done yet I think there is still enormous areas of improvement some not necessarily related to how a wallet operates just because the nature of blockchains and the fact that sometimes things are not instant or not always understood or sometimes not working as expected or just the fact that they are new. And so a little bit like when people started to connect to the internet they had to buy a computer and connected somehow to the Internet. And at first it was impossible, you had to have this modem and cigarette and then after it was like so simple and now you just get the phone and you connected to the internet. So we're still not at the phone phase which is instantly connected to the Internet. We probably had the computer phase with the modern at the AOL era where we used to be before at the Fax machine era. So we've made already good progress there. But I think that one of the areas which is extremely underserved and I'm going to kind of maybe surprise you, but it's still the territory of security, I think. Although there has been enormous improvement in how wallets are securing their users in their app, there is still enormous amount of risks related to crypto, both at the territory of how the backup of the wallet is operated and also how the transactions are being made and secured. In particular, when you operate or you connect your wallet with an application, you mentioned open C or Blur. And so until today, we still discover major issues and vulnerabilities A in those apps or two in the way they can be exploited by third parties. No longer than two weeks ago, we revealed off chain signatures, and I'm not going to get too technical, but off chain signature is simply a permission that you give to an application which in appearance look inoffensive and completely safe, can actually cause your wallet to be drained completely. Right? And of chain signature is something that you see, for example, on openSee. So one area that we decided to invest massively in Zango is the territory of transactional security. So not so much the account security, how your account is protected, but what happens when you connect your application and use it with an application your wallet, and you use it with an application built on the blockchain, which could be an NFT marketplace, a DeFi application, an NFD game, or many other things of that nature. And so we invented, we pioneered the first ever service which we call Clear sign is self explanatory. It makes clear what you are signing. It gives you an instant understanding in Newbury terms, in context, in the app, about what you are doing when you are interacting with an application. It tells you whether the app is safe, is risky or extremely dangerous, right? And whether the transaction related to it is the case. So think about it as a firewall for web free. So we launched that eight months ago. Now you have companies that are doing just that. There is maybe ten companies in the market trying to do just that. This is one of the services of Zango. This is one of the territories where decided to be excellent. So we're not only innovating as part of Zango, we're also contributing and open sourcing and producing documents and research to the community in that territory, some of which is already public and some of which will be soon public. So this is really a territory where we think it's extremely important. And in 2023, spoiler, we're going to invest massively in the territory of security for account management and transactional management. I think this is really the most important thing. That what it can do.
Mikey Piro 00:36:08
I completely agree. I wasn't actually surprised, but I'm thankful that you brought it up. Clicking on something that can wipe out your entire portfolio is a terrifying prospect and it's one that we're not going to see go away. I think even in traditional finance right now people are getting phone calls asking them in phishing attempts like these bad actors are out there consistently. I think what's terrifying about crypto at times is the speed at which everything can be facilitated and automated. And it seems like an obvious thing, but how did you zero in on that particular feature set for 2023 for the folks that are building? And I want to understand it less as though like we did research and more as a like a bit of your process, of what you were seeing from your process inside that developed this Goto account.
Ouriel Ohayon 00:37:17
So one thing that drives all our decision are extremely, we have very, I would say first principal way of operating the business. One of which, and it's been there from day one, but still until today we are extremely close to the feedback that we get from our users. So sometimes it's explicit like they tell us ABC can we have this and that. Sometimes it's implicit. We look at their basic behavior on chain, right? Everything is on the blockchain. So you can see what people do without them telling you they do ABC, right? You can see that they are going to send their wallets to an application. So we started to see this pattern of people both telling us but also telling silently that they were doing stuff on train and that it was making them nervous. And also one has to be blind but there was no a single day for the past nearly a year and a half where someone doesn't come to Twitter and say hey, I thought I was using that app. It happened to be a phishing scam. I gave away my seat phrase or I gave permission to this app that looked legit and emptied my wallet. And that was happening day after day. And we saw that, we saw those behaviors, we saw this feedback, we saw this noise in the market completely ignored and unaddressed and we said look, this is exactly what we should be about. We should first try to resolve that problem in our app instead of having something that is generic all purpose for everyone in our app and doing in a way that is extremely simple and compelling. And so we loved again the idea of addressing a very very complex problem and addressed completely ignored. And quite frankly, until today, if you're looking at all the major wallets, they are still today ignoring it completely which is like astounding they didn't do nothing in this space. It's still impossible to read the transactions in a MetaMask or a hardware wallet. It's really need to have a PhD in computer science and at best maybe you will get something. So we decided that it was an important thing to do, that we could be really good at it, and we decided to be pioneer into that. And why we decided to keep investing into it is that as the time grew, by the order of magnitude of problem became even bigger the problem became even bigger than the solution. And so we decided that it was a moment to kind of keep on investing into it. And just in the last few days, if you open crypto twitter, you will hear the stories of people who are extremely sophisticated in crypto who got fooled, right? And you just need like a microsecond of inattention. So the way we think about that is that people that are when they are using a product in particular in crypto, they are their worst own enemy, right? You need to protect the users from themselves and in that case it's the lack of attention, it's the lack of like desire to do any sort of research. When you read the famous Dy or Rd or on research, no one does that. No one will ever do their own research ever. Why? Because people don't care, they have no time, they are busy, they have a life, they don't live just on crypto and so people will not do that and so you have to do that for them. You have to help them remove the point of friction again, make less mistakes and so we wanted to again apply that rule to transaction and so how could we do that? We wanted to make transactions human readable simple so that people avoid making mistakes and prevent the mistakes they can cause to themselves. So just to give you an example, if we identify a transaction being dangerous, we don't just tell you it's dangerous. We tell you twice, we tell you it's dangerous. We ask you to understand that it's dangerous. And we make you say that again like that. If you want to die, you're really going to die. And you will not say, oh, I didn't see the message once. They are like this core principle of to understand that people will make mistakes no matter what people want to believe they will not do their research and you have to be smarter than them into accompanying them into that process. So we love that idea and we're going to explore even further in that territory. I cannot announce everything we're going to do but this is really in that direction.
Mikey Piro 00:42:00
There's an acronym I think for that besides do your own research and it's Pabcak and the problem is between the keyboard and the chair and that is generally where a lot of problems spawn is PABC. All right, I know something very common failure point. Let's shift our attention to the longer view. Let's take 2023 off the table and we'll put this vision of where you see web three going and put the lens on it of I'm an entrepreneur. I'm ideating right now. What are some things that as I build over the next couple of years that I should be considering that you are also thinking about in this time of what is really a market to build a lot of great products.
Ouriel Ohayon 00:42:57
I mean first let's start with your views. I mean 2023 is going to be a fairly bad year in general for the economy and I think it's going to be also a bad year for crypto. I'm talking like number wise. I don't think there will be a rush of people coming to crypto and I think more importantly there is a dire crisis of trust that has been spun off last year by a set of bad actors but that's going to drag the industry down for a while. So I think if I had to kind of like guess where the need is the most important is to build more trust or solutions that can be rebuilt trust in that industry and in my view that cannot be done with the ancient recipes of the past, namely banking recipes. When I say banking recipes is giving trust to an entity that controls everything I think we need to shift that balance back to the control of the user. I'm not sure that also the solution is like going to the other extreme where you say to the user take control of everything and figure it out, right? Which is like kind of the other extreme like people say not your keys, not your coins, get your keys so you get your coins. But one they have to also remember that your keys, your problems and so people hate to feel alone except maybe some people comfortable with that concept. But the reality is probably the right truce is in the middle where you give back control to the user, where they have critical control on things that really matter and some control they let go so that they have the comfort of usage and I think so solutions that will bring that are a future meaning that we will avoid the systemic risk of black box manipulation that we've seen consistently last year where a company, a protocol cannot do harm to the funds of the user. They cannot spend the funds of the user. They cannot steal the funds of the user. They cannot do things without their absolute knowhow and absolute permission. So I think this era has to come over and I think we are in a transition. We've seen funds moving out of exchanges back to Wallets and I think this trend is going to go on. But I think we need more and more solutions that enable kind of this reshifting by the way we sit with Wallets. But we also it in social media, right, where people want to get back control to their own graph, their own content and make sure that they cannot be turned off. And you start to see great solutions, hybrid solutions, things like, for example, Forecaster, which is a hybrid custodial solution for giving back control to the user, but not completely right? And so I think this trend of giving bad control but not completely is very primal, very important, I would say. Another thing to not forget is that 99% of the world is completely ignorant or not into crypto at all. So everything that has to be built, has to be built with them in mind first versus like being built for primary early adopters who are comfortable with complexity and most people are not. That's the reality. The smartphone business only got big not with blackberries and with pantrios but the moment iPhone and Android came out because they were order of magnitude radically better than their prior counterparts, right? Same thing with computer until the Macintosh or the prior computers they were like completely the tiny market was a niche market. So I think we need to build with that in mind that the majority of the world are people that are ignorant to crypto. They will not do their own research, they will not be security experts, they won't have the time and the patience to learn everything in crypto. They won't care as much as possible as the core principles like not your kids, not your coins that people are repeating as if it was a religion they won't control. They want to avoid most of everything like clear accident, systemic accidents and that's really what matters making their life better, easier, safer, with less risks and cheaper and also give them chance of prosperity. So those are the things people care about and less about the technology. So I would say those are the two guiding directions that I see and I think there is multiple industries in which there are opportunities I think still in Wallace there is opportunities for innovation. I think there will be innovation in the field of social media and social networks. Gaming is going to be a huge field of innovation. I think there is very clear demand for that. Also, people want to kind of really enjoy the fruit of their time invested in two games, which is many times their own world. And so there is like multiple verticals where this will be invented and my best guess is that it's going to take another generation. But crypto will be everywhere. Everywhere in every part of the society, not just this technology. I think we will see companies, societies, cities built on top of crypto technology. It will take a decade or maybe two but directionally that's the right way because this is how you rebuild trust in a society where trust has been extremely damaged and we've seen it in the past COVID crisis. So the bottom line is that the gray days are in front of us and there is a lot to be done.
Mikey Piro 00:48:49
We're excited to have Dan and Forecaster on a future episode of this podcast. 100% agree with you that social is a very interesting topic in the sufficiently decentralized vision of how individuals can take back their networks. And most importantly, it's been a passion of mine to look at how creators can really leverage a network that can travel with them, as opposed to being in a walled garden like it's currently with large tech companies. It felt like you put your VC hat on there a little bit. I want to put a little bit of a finer point on what you would look for in this particular phase as a venture capitalist. Again, for our accelerator folks of trends and things that predictions are worth what they're worth. But I think it's really fascinating to have somebody with a view that's done a lot of observation and investment in companies to put that forward. Before we take off, I would like to wish Ellie Steinbach from our pop community who made this connection, give him a very big thank you. It's really been great to have you on the show. We have a couple of minutes left. I want to be mindful of the time. So, as a VC, what are you I mean, I know you're very busy with Zengo, clearly, as the CEO, but if you had to put that hat on for fun, to get a little relief from being the CEO, what are some of the specific trends that you would look for in a team and what they're building in web three?
Ouriel Ohayon 00:50:31
So I think there are so many things that can be still interesting to innovate on. I would say probably one of the most important territories of innovation in crypto right now and probably for the next five years is I'm going to repeat myself that it is the field of security. I think this is a really underserved territory. So let's take just an example. You're building a smart contract and you need to have it audited, something that is very, very common. So you have to look for an auditor and it's usually a very painful process and also very expensive, okay? Because there are very few people to do that. Personally, I would love to see someone automate that, automate the search for a solution and automate the process of auditing so that it's really going to take down the cost and the time to do that in order of magnitude. Not because it's going to be cheaper, but because you will be able to do that way more often. And that's something that is broken with audits. For example, in security, you do it at the moment in time, but your code is evolving all the time. And you can't do an audit all the time because, again, it's expensive and it takes time. So if you reduce the cost and if you reduce the time it takes, then you are more likely to do that more often. So that's a good thing. So that's one territory, like how you can lower the barrier of the cost and access to security in crypto so that it doesn't drive builders nuts. Right because this is really the status today. And those who do crypto audits make a lot of money and it's great for them, but that's not good for the industry. We need way cheaper solutions, way faster solutions that are more automated.
Mikey Piro 00:52:23
A linter for security. I love it.
Ouriel Ohayon 00:52:26
Exactly. The second territory I would say is AI in crypto, right? I know I'm using like two buzzwords right now, but you're going to understand what I mean by that. I think right now we are at the dump level of crypto where you ask from the user to be smart when you do something, whether he's going to do a defy trade or kind of like NFT kind of landing or any kind of complex operation. It requires high CPU from the user. And I'm sure there's going to be and obviously there is a lot of public data out there because this is how public blockchains are built. They are public blockchains. There is public, there is all this data out there and there is no crunching of that data available to investors, available to users. There is no chat GPT for crypto. When you attack AI, the biggest problem is like where is the data? Right? Where is the data input? Well, it's there. It's been there for twelve years, out there for free. Just, like, use it, but not use it in a dumbware where you basically have to consume that data and maybe a few IP will be able to pay for access to that data that has been pre processed in some kind of way, make it truly available, crunch it in a way that will make people extremely enhance the life of the people when they make decisions. And so I think today there is close to nothing that exists in that manner. The user has to be smart for the blockchain, instead of the blockchain being smart for the user or the tools on the blockchain being smart for the user. And so I would love to see more tools that automate trades, that automate risk management, that automate portfolio rebalancing, that automate custody security, in the sense that you don't depend only on one kind of setup, but multiple, like all these kinds of things that could be automated and made more intelligence based on public data, right? I don't know if someone is working on that, but if I was looking, if I was finding teams in those territories and I was a VC with my hat, I would probably back them because they would change the game in order of magnitude. That's two directions.
Mikey Piro 00:54:58
We live in an amazing time where crypto and AI have reached this level of maturity, where they can start to make meaningful impact on the world around us. 100% agree that the intersection of everything that you mentioned really is going to change our lives for the better, I think making our lives easier. Who doesn't want that? I generally don't wake up in the morning and be like, how can I make my life harder? And I think what's fun about being an entrepreneur and what is driven is a lot of us wake up and we're like, that was not good. I need to make that better. And Zengo, I really encourage everybody to download Zengo and give it a spin. That was your passion. You woke up, you're like, this is broken. We need to fix it. And it has been managed in a very creative and innovative way. And so we are just about out of time. I'm going to give a quick thanks to Janet and Chad, who, as always, do a wonderful job behind the scenes, pulling together these podcasts and making them beautiful and wonderful to listen to. I'll give you the last word. Anything that you want to close out here with us before we say goodbye?
Ouriel Ohayon 00:56:22
It was really a delightful conversation. I invite everyone to try zango by the way, if some of you are really passionate about what you're going to see, we have an ambassador program called The Ambassadors, which is like a really cool program to be part of the community and you will find it on our website. We'll be happy to welcome more people who want to join the adventure informally. Van but really, I really enjoyed this conversation and I want to thank you and everyone for this opportunity and Ellie, for thinking about me.