SaaS Interviews with CEOs, Startups, Founders
759: He Shares How He Built His Company On Top of Cryptocurrency Ethereum and Why
22 Aug 2017
Chapter 1: What is Live Peer and how does it utilize blockchain technology?
Founder of crypto-based Livepeer, Eric, again, really coaches up on how this works and how a new company can be launched really based off a blockchain or blockchain network where the people actually using it are the ones that benefit the most. It actually creates value that you can then go use in real life in terms of spending on groceries or house payments or things like that.
It's potentially the future. This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination.
We just broke our 100,000-unit soul mark. And I'm your host, Nathan Latka. This is episode 759 coming up tomorrow morning. Brendan Candon joins us. His site has sold over $3 million worth of athletic gear, but not just any gear, used athletic gear. So who would pay for that? Tune in to find out.
Chapter 2: Why choose Live Peer over centralized solutions like Wowza?
Hello, everybody. My guest today is Eric Tang. He's a computer programmer and co-founder of a company called LivePeer, a decentralized video live streaming platform incentivized with the blockchain. He was introduced to the blockchain in 2014, and it's slowly taken really over his thinking in his life, and it's pretty much everything he thinks about now. So we're going to dive deep into this.
Eric, are you ready to take us to the top? Let's do it. Okay, so here's why I'm excited to talk to you. And here's why I think it's relevant for my audience. I've talked to a lot of people like the founders of Ethereum, you know, Anthony and some other people. So we have all, you know, I've talked to people that run exchanges.
But what I'm really interested in is how entrepreneurs like you are choosing to use blockchain and token issuances to essentially build new companies, right? So tell us what... If Livepeer was not built on cryptocurrency, name a company today that is like Livepeer. Yeah, so these companies exist today.
Chapter 3: How do decentralized applications operate without traditional servers?
You might not have heard of them. There's a company called Wowza that basically does video transcoding for people in a centralized way. So they run a server from, you upload your video, you stream your video to them, and they kind of make it available in transcoded version to the public. Called Wowza? Yeah. Yeah.
There are companies like big CDM players like Akamai that would do this service as well for their users, but they're more upscale, like much larger enterprise customers. Yep. So Wowza, like they have two pricing, the Wowza streaming engine and the Wowza streaming cloud that, you know, that's a typical kind of B2B SaaS, you know, plus pay as you go model. So why not just become a customer?
Why would I choose to use Livepeer over Wowza? Yeah. Right, so there are two different cases. One that I'm particularly interested in is this decentralized world that's popping up. It's a very great grassroots effort today, but application developers are building completely decentralized applications.
Chapter 4: What are the advantages of being a participant in a decentralized network?
which means these applications do not have a backend like your traditional applications. They don't have a server, and they directly talk to the blockchain itself, which is also not centralized, essentially owned. So they would have storage solutions like IPFS or Swarm that are completely decentralized as well. Are those like AWS, like versions of AWS that are crypto-based?
Um, they're, they're not as much AWS as, um, they're just providing very basic features. Like, um, they're able to, uh, you're able to have an identity, but you're not able to do like super, uh, high, uh, high intensity computation or anything like that. Um, and I would say they were more like, uh, like a front end application.
If you think of, um, there are a lot of applications that are built strictly in JavaScript, right? So there is no, there is no backend. Um, so, so if you think of that and, and lab ad, add the blockchain to that so that they can communicate over the blockchain. That would be the type of project that we're thinking about.
So with Livepeer, if you are creating a decentralized application and you want to add video streaming to the application, there is right now really no solution to do that because all the video streaming solutions are centralized solutions. And we are kind of the only solution for you. So imagine if you wanted to build a decentralized application to enable decentralized journalism, right?
Chapter 5: How do Ethereum and Bitcoin differ in their functionalities?
So say like in the conflict zone, the first thing that gets cut off is these centralized services. But if you were able to build a matched network, similar to the protests that happened in Hong Kong a few years ago when people started using FireChat to chat with each other, the government was not able to actually shut that down.
So if you want to build in video streaming into those applications, you would have to use something like LiveSphere. versus you couldn't use Wowza? Yeah, because the government will be able to figure out the IP of Wowza and block the service. I see, I see. Okay, interesting. And then, so here's a question I have.
Let's say I'm making this up, but the reason I'm asking this question is I want to understand how competition happens in a mature blockchain market. So let's say I love your idea. Let's say I'm a journalist and I'm leaving NPR and I love blockchain. I'm going to build a live peer competitor because I just got back from Syria and I tried to do live streaming and it was horrible.
So I got really passionate. What incentivizes them?
Chapter 6: What incentives exist for early participants in blockchain ecosystems?
Like, why would they create a competitor to you versus just getting involved on your chain and getting your tokens and getting behind live peer? Yeah, so the whole idea of the blockchain is that the participants are actually the stakeholders, right? So in a traditional application, Facebook Live, you are a user of Facebook Live, but that's it.
As much as Facebook Live grows, you're not gonna be benefited by that from your holding standpoint. But in decentralized world, if you are a participant in Livepeer, you actually earn Livepeer tokens. And as the Livepeer network grows, your token becomes more valuable. So as early participants, you're more incentivized to number one, evangelize the platform.
Number two, provide all kinds of different values to the platform to help it grow because it actually helps your holding to grow as well. Interesting. Like it actually grows your commercial value. I could go to exchange, exchange those tokens you've given me via Livepeer and actually put money to go spend at Whole Foods. Yeah. Right, exactly.
So if you actually look at this, not from a company standpoint, but from an ecosystem standpoint, you can look at an example like Bitcoin or Ethereum.
Chapter 7: How can blockchain technology create real-world value?
Most of the entrepreneurs who are building companies and building value around these ecosystems are early coin holders, right? Like Joseph Lubin, who was one of the founders of Ethereum, left Ethereum to start ConsenSys, which is now hiring, you know,
400 people just building applications, building open source projects around the Ethereum ecosystem to make that network grow as quickly as possible. Is that one of the reasons why it's beating Bitcoin in terms of what people are choosing to do their token launches and initiate ICOs on? So Ethereum provides a smart contract platform, which the Bitcoin network does not provide.
And the smart contract platform gives you a lot more flexibility in terms of the kinds of applications you can put on top of it. Yep, interesting. Okay, this is a more capitalistic question here for a second. So I understand your answer where that NPR journalist who left is incentivized to just use your platform because they basically, the more they use it, the more they become an owner, right?
They actually become part of the thing, right? Yeah. Why would someone create a direct competitor or would they ever? That's an interesting question. I think people will create competitors if they have a very specific belief that's different from what we offer. Like a different feature.
Chapter 8: What advice does the guest have for aspiring entrepreneurs in the crypto space?
Yeah, it could be a completely different feature set. But it's hard to, so for example, the difference between Bitcoin and Ethereum, right? You can say that they're competitors because they both support kind of like the money transfer feature.
But you can also say Ethereum is completely not competitive with Bitcoin because Ethereum offers this smart contract feature set that the Bitcoin use case is not focused on. And as these networks start to grow, it's very hard to compete with them because of the network effect. So all the code is open source. Anyone can start a new Bitcoin blockchain at any time they want.
The reason they will not be successful is because the Bitcoin blockchain now is so big that there are so many miners on the network that there is essentially no incentive for them to switch to a much smaller, newer network. And a miner would be like a user of Livepeer. They're mining coins the more they use your tool. Yeah, yeah.
So people can put their spare computing power onto the network to do this live streaming for other people. And in exchange, they will get a token. Interesting. Now, you just said it's impossible to communicate with blockchain. But again, Ethereum launched, and they seem to be growing fairly fast because of the smart contract concept.
Why can't someone else invent an interesting feature like that and beat both Ethereum and Bitcoin networks? Yeah. Absolutely. I think someone could, but it has to be a really great feature that's really needed by the public. And I think all of these blockchains will coexist. So it's not like Ethereum is going to exist and Bitcoin is going to go away.
My personal belief is that Bitcoin has its use case, and so does Ethereum, and they will that they will do all. Okay, but let me challenge you there, Eric, for a second, because network effects are very powerful. Usually in a network effect ecosystem, there is one winner because you can't beat the network. You just can't beat a network effect.
So you think there will be multiple winners in crypto. You don't think that the network effect on Ethereum is gonna just kill kind of a Bitcoin network. No, I don't think so. I think Bitcoin is a great way to hold value. It's almost like what gold is in the real world. It has digital scarcity, it has the biggest network, and that network provides a lot of security.
So people who are using Bitcoin today to hold value will continue to use that. And Ethereum is for a completely different purpose. Ethereum is really for a smart contract platform where people are building these other applications on top of it. In fact, Livepeer is built on top of Ethereum. We use the Ethereum platform to launch our token.
so that people can hold our token and not have to worry about how secure the Livepeer blockchain is because we kind of leverage the security of the Ethereum blockchain. If a VC came to you and said, I want to invest $100,000 or a million bucks in Livepeer, how would you process that? What's your response?
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