SaaS Interviews with CEOs, Startups, Founders
He Converted SaaS to Blockchain, Now $230m Market Cap to Kill Fiverr
27 Feb 2022
Chapter 1: What is the main topic discussed in this episode?
the cash value of the brain trust token is actually not relevant to the network, right? It's one token, one vote. The more tokens you have, the more influence you have over the network. So whether that token's worth $0.10 or $1 is not actually relevant to the operation of the network.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Adam Jackson.
He's the co-founder of Braintrust, the first user-owned talent network that matches tech talent with clients. Before this company, he co-founded Doctor on Demand, a popular video telemedicine provider with daytime talk show personality, Dr. Phil. Adam, you ready to take us to the top?
Hey, good to see you.
So I'm going off memory here, so correct me if I'm wrong, but you were effectively making the case about 19, 20 months ago that you were going to basically take and do what Indeed has done, but put it in Think More Web 3 and enable people who bring talent to the platform to participate in the upside the platform creates as well. Is that accurate?
Yeah, you got it. And it's a slight difference from Indeed. So Indeed's like a job board. It's like, hey, we posted openings, somebody fills it, it goes away. Braintrust is actually a marketplace. So the difference being you post a job, we actually host a transaction on Braintrust. All the reputation, work history, and all that good stuff actually accrues to you on Braintrust.
And so the whole process end-to-end happens on the marketplace. It's not just a job board.
I see. I see. I see. I see. So would you call it a closed ecosystem then? No, no. It's a labor marketplace. Okay, cool. Labor marketplace. So talk to me a little bit about what happened here. So it was 19 months ago. Did you have anyone? Were you issuing tokens effectively? Did you do a token to raise an ICO, if you want to call it that?
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Chapter 2: What is Braintrust and how does it differ from traditional job boards?
Yeah. It just means the brain trust token, BTRST, is now live on the blockchain and can be given to anyone who helps the network. It can be bought and sold on Coinbase. It's a live token ecosystem. It's not a test net anymore.
And so how did you, what value did people you gave the fake tokens to before you were listed, how did they now translate into real value under BTRST?
Yeah, it's totally market driven. So it's just, you know, total supply and demand dynamics. When they were minted before the network, when they were IOUs, they had no cash value whatsoever.
um and there you know it's it's a governance token so there's uh there's a few different uses for it but it's one token one vote on the system so all the all the rules of the network like how many what fees should talent and clients pay what should the product roadmap be you know what should we build next those are all sort of determined through token voting so it's a governance token and then a recent protocol upgrade the tokens actually used uh they were the pro the
network requires clients to pay their network fees in the Braintrust token. So you have the protocol going out and buying its own token.
Robert Leonardus Interesting. Okay. So when you list this, I'm looking at coinbase.com forward slash price forward slash Braintrust. In September last year, the token hit a value of $32.55, hit a low in January, well, last month of $2.13. Now it's up to like five bucks. What causes this kind of volatility?
Well, crypto is really volatile. I mean, it's just such a nascent asset class that I think these tokens, people are still figuring out what they're worth to folks on the network. To make a clear distinction, the cash value of the brain trust token is actually not relevant to the network. It's one token, one vote. The more tokens you have, the more influence you have over the network.
So whether that token's worth 10 cents or a dollar is not actually that relevant to the operation of the network.
Understood, understood. But if someone goes, man, I really like this Adam guy, can they buy these tokens or do they have to earn them?
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Chapter 3: How did Braintrust adapt during the COVID-19 pandemic?
Do they all now own a portion of your dev shop? They own tokens.
So the investors, the purchasers in those rounds were purchasing tokens. And so, yeah, the equity in my dev shop is not worth anything. So there's no reason to raise money.
Chapter 4: What is the significance of the Braintrust token launch on Ethereum?
So how did you convert the $23.5 million you raised before you enlisted officially as a token in September of 2021? How did you decide how many tokens $23.5 million in equity rates should get?
It was a pre-negotiated term of those rounds.
Okay, I'm totally uneducated here, Adam. So if I'm writing you an $18 million equity check in October 2020, walk me through that negotiation.
Yeah. So you've heard of SAFEs, right? Simple Agreement Future Equity. These investors bought SAFs, Simple Agreement Future Tokens. SAFs have conversion caps. SAFs have conversion caps, right? And so there was a conversion cap in the SAF. It's different levels for different SAFs, but- They were all somewhere below a dollar, basically. And that's the conversion price.
The token value.
Exactly.
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Check it out today at founderpath.com forward slash products. That's plural forward slash valuations. Again, both plural founderpath.com forward slash products forward slash valuations. So a SAFT is effectively... So I give you an $18 million check. We're saying, Adam, we're giving you this venture check so you can keep building the codes.
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Chapter 5: How does token governance work within the Braintrust network?
I don't know why either. Can you hear me now? So strange. Can you hear me now?
Yeah, yeah.
Now you're back. So I was just saying, when you say beginning, you mean when you launched in 2018 or when you first listed on Coinbase?
When you launched in 2018. Coinbase listing, all that means is some portion of the tokens are now tradable. It doesn't change the pie chart.
Yeah, yeah. Okay, okay. Interesting. You create a little bit of liquidity, right? People can buy and sell. Yeah. So, okay, how did you think about that, right? When you launched the company, how much did you reserve for Atom? The founders got, it was probably around 10% combined. Okay. Okay.
So is the best equivalent here is like when I launch or anyone listening launches a SaaS company, they have 10,000 shares they issue of which 9,000 are going to the core founder and 1,000 are reserved for the team. It's sort of the same thing, right?
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Chapter 6: What factors contribute to the volatility of the Braintrust token value?
Except you're talking about token values instead of exercise prices.
It's a little different actually. Like imagine, so what you just said is like a typical kind of SaaS cap table seed round or pre-seed. With tokens, you actually want the majority of the tokens to go to your community because the community is going to do the majority of the work. There's no ESOP. And there's a fixed supply. In our token economy, you can't make any more. You can't issue new tokens.
It's locked into our smart contract that we have a fixed supply, 250 million tokens, which is interesting because you can never be diluted. It's dilution proof. And so we actually said like, okay, well, like investors will probably own eventually like up to 25% of that, that token cap table. And then founders will get, you know, 10 ish.
And then, and then maybe another 10 for like core team contributors and then the rest go to community.
So when I look at the leaderboard and someone like Julia D has 30, are these 32,046 tokens? She's number one on your leaderboard.
Hang on, Nathan, this audio is coming down. Say again.
Yeah, no worries. Can you hear me now? Yeah. So when we look at someone like Julia D, who's at the top of your referral leaderboard when it says 30, 2046, that's the amount of tokens she's earned.
I just don't understand what's going on with this audio. The top of the referral leaderboard is where I lost her.
Yeah. Julia D owns 32,000 tokens. Those are tokens, right? 32,000? Tokens.
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Chapter 7: How does the community influence the treasury and token distribution?
At the same time, when we look at the 10%, you and the other founders carved out for yourselves at the beginning and look at the market cap today, 365 million. I mean, is it, can we sort of think about it? Like, okay, they've created 36 million bucks if they sold all today of wealth for themselves. Is that sort of an okay way to think about it? Yeah, that's not inaccurate. Okay, very cool.
All right, on that note, let's wrap up here with the famous five. Number one, favorite book.
Oh, man. I'm trying to think of what I said last time so I could say something different. Anyway, I'll just say it. Venture Deals by Brad Feld. Be smarter than your lawyer.
Number two, is there a CEO you're following or studying?
You know, I love Sam Bankman-Fried, CEO of FTX.
Number three, what's your favorite online tool for building brain trust? Google Docs. Number four, how many hours of sleep do you get every night? Six. And situation, married, single kids? Married, three kids. Wow. How old are you? 40. Last question. Something you wish you knew when you were 20.
Be more patient.
Guys, there you have it. If he has his way, Braintrust.com will eventually replace Fiverr, remove the middleman and save more of the project revenue for the people actually doing the work and the ones bringing the talent to the marketplace in the first place. Finally listed on Coinbase. So it creates a little bit of equity under the BTRST token, 345-ish as of today, market cap value.
But again, not doing it for that reason, really to build a marketplace where talent can find jobs, get paid and keep more of the spread. Adam, thanks for taking us to the top.
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