Jayendra Jog left Robinhood and raised $35m to start his own crypto startup (Sei Labs). Before he left, he got jaded about software engineering career ladders yet was coasting through promotions at Robinhood. I asked him about how he did that along with a bunch of questions about when to leave your job, how to raise money, and what to expect as a founder.
Check out the episode wherever you get your podcasts: YouTube, Spotify, Apple Podcasts.
Timestamps
00:00:54 - Big tech internships
00:07:58 - Big tech vs startups discussion
00:10:16 - Getting jaded about Robinhood career growth
00:16:04 - Coasting and getting promoted
00:18:54 - Gamestop stories from the inside
00:30:25 - Learnings from raising $35m
00:34:07 - What value does crypto provide?
00:37:47 - Learnings and when to leave
00:40:41 - Advice for his younger self
Transcript
00:00:54 — Big tech internships
Ryan:
[00:00:54] You started your own crypto company where the market cap of the coins is worth over $10 billion. I want to go over your career story, hear each of the legs at Facebook, Robinhood, what made you want to leave? So maybe we can start with the Facebook part of the saga. How did you first get into big tech?
[00:01:14] What’s the story behind that?
Jay:
[00:01:17] I feel like life is not linear for anyone. I mean ups and downs, but when there are ups, they tend to be kind of like step function improvements versus just being linear growth. In my case, when I was in college, I really wanted to get one of these brand name internships.
[00:01:32] I don’t have a good reason for why; I think it was just mimetic in a way. At that time, it felt like there were two internships that were the cream of the crop, which were the Facebook and Google internships. I really wanted to get this.
[00:01:48] When I was a sophomore, I was grinding all the time. I was fortunate to be in a spot where I was able to get interviews with a lot of these companies, and I decided to go into hermit mode and try to get one of these internships.
[00:02:05] At that time, I was not necessarily very good at the LeetCode type of problems. What ended up happening was one of our friends, Vic, organized this event called LeetCode and Chill, where a bunch of CS guys got together one evening, it was like a Friday night, and we were solving LeetCode problems together.
[00:02:27] There was one problem we went over called number of islands, which is a classic problem where you either do a breadth-first search or depth-first search to identify the number of connected islands. That ended up being the exact question I got during my onsite Facebook internship interview.
[00:02:41] If I had not gone to that event, I would not have gotten my Facebook internship. Without that Facebook internship, I don’t think any of the things that happened afterward in my career would have materialized. It was just a totally random lucky coincidence.
Ryan:
[00:03:02] You said Google and Facebook were the cream of the crop. What about those other ones? If I recall correctly, Palantir was pretty good back then. There are also the finance ones too.
Jay:
[00:03:14] I think what you value is a function of what other people around you value and are talking about.
[00:03:20] My social circle wasn’t really talking about those other companies as much. If, for example, you went to a different college, then maybe these high-frequency trading shops would be viewed as more prestigious. Among my social circle at UCLA, it was very much at that time Google and Facebook. After I became older in that circle, I noticed other companies started to be viewed as more prestigious, like Palantir and a lot of these pre-IPO companies as well.
Ryan:
[00:03:45] You got the internship at Facebook, which was the dream at the time. How was the experience when you were actually doing the internship?
Jay:
[00:03:53] It was not that fun, to be completely honest. It felt very impersonal in a way. It was better than my previous internship that summer, but I wanted to explore being in a smaller environment, which led me the next summer to work at Pinterest.
[00:04:14] That was like his recline Perkins Fellows. I thought I would get the full kind of startup exposure. Pinterest was definitely a much better experience. Part of it was just that it was based in San Francisco, so it had a much better culture just being in the city at the time.
[00:04:30] Because it was a smaller company, there was a much closer-knit intern class, allowing me to have much more meaningful friendships. From my Facebook internship class, I’m not really in touch with too many people. From my Pinterest internship class, I’m still in touch with like four or five guys, and I’m super close to them. It was just very different in terms of the atmosphere they created.
00:04:51 — Joining Robinhood
Ryan:
[00:04:53] You had the Pinterest internship, and then after school, you decided to go with Robinhood.
Jay:
[00:04:56] Exactly. At that time, I was about to graduate. This was like September, October, my senior year.
[00:05:04] I had a couple of options. I could either go back to Pinterest, but I wasn’t too enthusiastic about that. I had a great internship experience, but a lot of my friends weren’t going back, so it might not make as much sense to go back if the biggest reason was a social one.
[00:05:23] The second option was getting a master’s degree. UCLA has this fifth-year program where you can automatically get admitted to the master’s program, so I was seriously considering that. I decided to interview for a few different places as well.
[00:05:45] I was looking for a small environment where I felt I could be surrounded by people doing significant things in the future. Robinhood was one of the places I talked to. I went to this event called the Greylock Tech Fair, where they rent out Oracle Arena, the big stadium in SF.
[00:06:07] They invite a bunch of interns to come over, but it’s invite-only, so most companies don’t have long lines to talk to them. In the case of Robinhood back in 2017, that was the longest line. There were a couple hundred people waiting to talk to those folks from Robinhood. I thought it was interesting to learn more about because I didn’t know too much about trading back then.
[00:06:22] I wasn’t managing any brokerage accounts. That led me to talk to the folks over there, and I thought it was a really strong team. In hindsight, I feel like that was absolutely the right decision. Getting a master’s degree wouldn’t have mattered for my career.
[00:06:38] Going to Pinterest wouldn’t have been as positive as going to Robinhood. At Robinhood, the caliber of people joining at that time was really high. Around a third of my new grad class went on to raise money and started venture-backed companies, which is a much higher percentage than you see at most companies.
[00:07:14] When you’re at a company that’s scaling quickly, you run into scaling problems, and you get exposed to a lot more stuff. You learn a lot more and have much faster career growth as a result. Definitely more so than at a smaller startup where things don’t really change year to year. I’m very grateful for that experience at Robinhood.
Ryan:
[00:07:32] What series was Robinhood at the time?
Jay:
[00:07:34] When I signed the offer, it was Series C. When I joined, it was Series G, but when I signed the offer, it was around a hundred people at the company. It was basically one building, two buildings across the street from one another, and one of them was actually a house.
[00:07:48] They had bedrooms in that house where people were working from. They had standing desks where engineers were actually working. It was a much smaller environment than Pinterest.
00:07:58 — Big tech vs startups discussion
Ryan:
[00:08:00] The common take for the high-tech job for a new grad is to go to big tech, get the stamp, and go into that big environment.
[00:08:10] I feel like you have a completely contradictory opinion to that. What is the rationale for smaller
Jay:
[00:08:19] To be fair, I think I did have the stamp from the internship, so I think it might’ve been a different decision if I didn’t have that, but I do think that you basically have to pick what you’re optimizing for in your career.
[00:08:32] If you’re optimizing for TC, you’re not going to be hitting the ceiling by going to a big tech company. The only way you can get the max upside is by going to a very early stage company and hitting it out of the park. If you’re trying to optimize for learning, you’re definitely going to have much better learning opportunities at a smaller company that’s actually growing very quickly.
[00:08:51] I think you need to figure out what that thing you’re optimizing for is. In my case, it became clear I didn’t care as much about money as I did about growth, both from the learning standpoint and also from the career growth standpoint. That’s why I decided to go to Robinhood.
[00:09:06] I don’t think my career growth is actually as fast as I had anticipated it to be over there. It kind of felt like a normal company career growth, but I do think it ended up being much better from the learning standpoint.
Ryan:
[00:09:19] Yeah. That is a common thing that I hear. You go to the small company for learning.
[00:09:23] I do feel like the small company is the high variance path. I could see a case where you learn much more, but I could also see a case where the company stops growing and you’re not learning as much. I can also see cases in big tech where.
[00:09:42] The team is getting reorganized like crazy.
Jay:
[00:09:45] Yeah, I think across the board it definitely depends on how lucky you get with whatever position you end up in, right? Probably the biggest thing you can control is the kind of person you’re going to be working with because you don’t know what the career prospects are going to be for any startup.
[00:09:57] Maybe you’re working on something that sounds brilliant at the time, but then it just isn’t able to get as much traction as you need to raise the next round of money, for example. I do think optimizing for surrounding yourself with really smart people gives you the best chance of learning a lot more than you otherwise would.
[00:10:12] That could be a pretty good heuristic people use when they’re deciding where to go.
00:10:16 — Getting jaded about Robinhood career growth
Ryan:
[00:10:15] Definitely. So you said you started working at Robinhood, you were expecting a lot of growth and it sounds like it was not what you expected.
Jay:
[00:10:25] I went in thinking that I’d be able to have pretty fast career growth. For context over there, I think I honestly just joined a bit too late. By the time I started, it was Series D, and the people that joined around Series A and Series B timeframe did end up having the kind of growth that I was hoping for, which is moving up the ladder really quickly, becoming engineering managers or even higher in like a two to three year time horizon.
In my case, I joined and I think at that point it was already starting to manifest into more of a big company type of progression. At my three month mark, they were having performance reviews, but I couldn’t participate in them because I joined one or two weeks too late. I had to participate in the one six months after that. By my nine month mark, I went through the entire performance review process and I’d been working hard for the nine months before then.
There were several days where I was working till 2:00 AM. Our on-call rotation back then was also horrendous because there’s this thing called overnight batch where after the market closes each day, you need to do a bunch of stuff before the market opens the next day. In our case, there was a lot of manual intervention required.
Hopefully now it’s fixed. If there are any Robinhood engineers listening, hopefully it’s better for you now. Back in our day, it was just horrendous. There were several times that it went to like 5:00 AM, and it was dangerously close to causing a business issue for Robinhood.
If you’re not done with the batch process by the time the market opens the next day, there’s definitely a lot of downside there. The batch process involves things like trade settlement that needs to happen. You need to be working with a lot of different counterparties externally to make sure that all the different parties have accounted for everything to be the same across all their systems.
It’s basically just a bunch of batch jobs that need to run one after the other, but if any of them fail, you need to figure out why it failed and then fix it. If there’s some kind of issue from the code side, get it out and then move on to the rest of the process. Imagine that there’s some deployment that happened and then there are hundreds of different batch jobs. There could be three or four different deployments that happened that day. There might be two issues that got deployed, and then these batch jobs fail, let’s say at 11:00 PM. You need to page the person who wrote that, they need to fix it, and then you have to go through that process again.
I do think that Robinhood’s codebase has not been architected in the most stable way possible, and they ended up having a bunch of tech debt as a result of that. The core point was that I felt like I’d been working really hard and then I got a performance rating of five out of five. That’s pretty atypical for people to get, so I’m happy about that. But then there was nothing else tied to that. There was no promotion, no compensation change tied to that, and I was just like, why did I do this?
When you’re 22, there are a lot of things you could be investing your time into. I felt like if I had just not invested so much time into work, I would’ve had a lot more happiness. I don’t know if that actually would’ve materialized in the same way if I hadn’t been, but it did feel like the amount of time I was putting in was not commensurate with the reward I was getting. I was just like, okay, so then I should just kind of be a little more checked out and just try to go through the motions of playing the game. That just made me super jaded about the big tech environment because it does feel like a lot of people are just going through the motions, playing the game. I felt like there could be something bigger to work towards than that.
Ryan:
[00:13:59] And that happened nine months in. But you were there for three and a half years?
Jay:
[00:14:05] My situation was a little complex because of a couple of reasons. There was a death in the family, which made it harder for me to leave.
On top of that, they also gave us options that were expensive to exercise. It would’ve cost me $400,000 to exercise my options, which I didn’t have lying around. I would’ve needed to take a loan or something. My game plan at the time was to just stick around until there was some way to get out of that, which would’ve either been if you stayed long enough, then you wouldn’t need to exercise the options before leaving. They give you seven years afterwards. That was one strategy, or the other strategy was to just wait for the IPO to happen. The IPO ended up happening in July of 2021, and that’s when I kind of had my handcuffs removed. I could do whatever I wanted to at that time.
That’s when I started going a lot deeper into crypto and exploring what we could be building over there.
Ryan:
[00:14:56] When you look back, you mentioned compensation starting at a pre-IPO startup compared to if you had worked in big tech. Did it net out to be higher pay?
Jay:
[00:15:09] Yeah. It’s an order of magnitude higher than it would’ve been spending three and a half years at a Google or Facebook type of company. I think financially that was a fantastic decision in hindsight. At the time, I felt like I was locked in without too much flexibility.
I think that also distracted from my happiness, and we definitely got lucky over there as well. Most of my friends that joined pre-IPO companies, some of them ended up IPOing, so they were pretty happy about that. But a lot of them still haven’t IPOed, so they felt like they’ve invested all this time and then their stock options didn’t really end up being worth anything.
We got pretty lucky too because I graduated in 2018. There were a lot of tech IPOs that happened in 2021. My graduating class was pretty fortunate with that timing. I think after that the IPO market cooled down, and there’s been less and less IPOs. Someone that graduated in 2020, for example, I don’t think they would’ve had that same kind of liquidation opportunity.
00:16:04 — Coasting and getting promoted
Ryan:
[00:16:04] When it comes to your career growth, it sounds like you were a little checked out. Were you going for promotions or getting them, or were you kind of coasting?
Jay:
[00:16:15] I was. I still got promoted in the second performance cycle, and then afterwards, before leaving, I was technically up for promotion.
At that point, I was playing the game still, but I wasn’t really investing too much mental energy or time into it. One weird thing about it is I was putting in the bare minimum to make sure that I was close to average. Then I was spending my time elsewhere.
Ryan:
[00:16:38] When you think about, as you were playing the game, doing the minimum but still getting promoted, how did you do that?
Jay:
[00:16:46] Yeah, I think at Robinhood, it was probably easier than it would have been at a bigger company. I joined, and the company just grew 10x after that.
[00:16:56] I became a domain expert pretty quickly because we were hiring a lot of people and starting to build a lot of new services. I was the only person that knew how to do like 10 different things.
[00:17:09] Once you’re given that much responsibility, it’s easy to become someone that’s viewed as an expert and can be relied upon to solve different problems. I was a competent engineer that knew a lot of stuff, and that made it very easy for me to get promoted the second time.
[00:17:25] I think that’s what was happening for my second promotion. I was already an engineering lead because I was doing stuff for a few different systems. I was just kind of given that responsibility.
Ryan:
[00:17:38] I see. So it sounds like just by default in a high growth environment, if you are competent, you become load bearing.
Jay:
[00:17:46] Yeah. I definitely think that if it’s a high growth environment where both the team grows and the work to do also grows, then a hundred percent. Because of that, there were also a lot of opportunities I got that I probably wouldn’t have gotten at a bigger company. I mentored three different people.
[00:18:04] My first mentee was about a year and a half into my job there. In a lot of bigger companies, that might be less common. You don’t get your first mentee or intern until you’re much more senior.
Ryan:
[00:18:19] Right. So it sounds like a lot of career trajectories are based on opportunity and luck, things outside of our control.
[00:18:27] But it sounds like two things that were a through line here were that you sought out talented people and you went towards a high growth environment. Those things just kind of working together led to promotions, even though you weren’t really trying for that.
00:18:54 - Gamestop stories from the inside
Ryan:
[00:18:48] I understand that you worked at Robinhood during the whole GameStop saga. What was that like from the inside?
Jay:
[00:19:02] Yeah. I mean, for anyone that doesn’t have context, when the GameStop saga happened, there were about 12 stocks.
[00:19:09] It was GameStop, AMC, and 10 others that I don’t remember right now. All of them were just skyrocketing because this was during COVID when people had received their stimulus checks. People were gambling a lot.
[00:19:25] These stocks started going up in value, so hedge funds and a lot of institutional traders thought that based on fundamental analysis, this valuation no longer made sense. They decided to short it because they thought it would eventually return to normal. The issue with shorting a stock is that you have to borrow the stock, sell it, and then when you want to close that position, you have to buy that stock back and return it.
[00:19:41] When you buy that stock back, it leads to the price of that stock going up. So when the price is going up and people have to start closing their short positions, that leads to more buy pressure from those shorts being closed, which causes a short squeeze.
[00:20:01] All these toxic short squeezes were happening. In a way, it was like the little guy was beating the big guy because these institutions were leading. Robinhood was the place where everyone was going to trade. Then on January 28th, 2021, Robinhood just turned off buys on all these meme stocks.
[00:20:18] I found out about it when I woke up, and I was like, damn, this is crazy. That day, so many people reached out to me like, “What the hell is going on?” A lot of them were financially invested in this as well.
[00:20:31] When Robinhood turned off buys as the price of GameStop started to go down, they were understandably quite upset. It makes you feel super powerless when you’re an insider in a situation like that. One thing I realized is how archaic our current financial system is.
[00:20:49] In the case of Robinhood, that happened because of the concept of T+2 settlement. Back then, it took two days for trades to settle, and during this time, Robinhood needed to have collateral for the positions that people were opening. They needed to give counterparties billions of dollars on January 28th if they wanted to let people keep trading these assets.
[00:21:07] Normal people don’t know about any of that stuff. It exists because of the ramifications of the traditional financial system that was built 40 years ago. It made it clear to me that we will need much better financial rails in the future, and that was one of the inspirations for SEI.
Ryan:
[00:21:26] Oh, that’s interesting. I remember that moment when they turned off the buys, and the public narrative was that they were doing it on purpose to manipulate the price. But it sounds like you’re saying it was just logistical; they couldn’t support the trades.
Jay:
[00:21:43] Yeah. Robinhood did not turn off the buys because they were trying to manipulate the price. They turned off the buys because they needed to put up more collateral, and I think they miscommunicated this potentially on purpose. They were saying that they didn’t turn off the buys for X, Y, Z.
[00:22:02] Even though that was actually the case, I think that’s because they were actively fundraising; they needed to raise billions of dollars at that same time. It was a difficult situation for them. I don’t know what the right way to handle it would have been.
[00:22:17] They were fighting for their company’s existence, especially when regulators didn’t really like them to begin with. Things could have gone very wrong. All things considered, they navigated it in an okay way, but they could have communicated to the public a lot better.
00:22:34 — Leaving Robinhood
Ryan:
[00:22:33] So it sounds like you were getting promoted, but you were disengaged and trying to leave. What’s the story behind you eventually leaving and wanting to start a startup?
Jay:
[00:22:44] Yeah, growing up in Silicon Valley, the people that are the most respected there are not sports stars or Hollywood stars.
[00:22:54] It’s basically entrepreneurs. Growing up, everyone would talk about Steve Jobs instead of Madonna. I think everyone growing up in Silicon Valley considers starting something at some point. I did the Kleiner Perkins Fellowship, which seemed a lot more accessible. There were a lot of folks there that had started their own companies or were considering starting one.
[00:23:15] Being surrounded by that kind of group when I was 21 made me think it was doable to start something. In 2019, my co-founder and I decided to start building things together after my promotion didn’t work out. I was wondering what to do with my life.
[00:23:36] Nights and weekends, we were trying to get an AWS cost management startup off the ground. It’s a boring space because your job is to help people cut down on cloud costs. If there’s a super high growth company, they’re not going to be interested in working with you because they’ll find it easy to raise more money in the future.
[00:24:00] The only companies you can work with are those that are atrophying. Because we’re small, it wouldn’t even be the big companies that are atrophying; it would be Series A or Series B companies that have stalled out in growth and need to start cutting costs.
[00:24:15] That’s a horrible customer to have. We didn’t find much traction with that. Honestly, thank God for that because I don’t think I would have liked spending several years working on that. That was the first thing we did back in 2019.
[00:24:30] In 2021, we decided to spend more time in crypto. We looked into different ideas, but ultimately we wanted to build something like Robinhood in a decentralized way. The thinking was that if it was built in a decentralized way, we could solve the issues that arose during the Robinhood saga.
[00:24:53] That led us to initially build a central limit order book-based exchange on-chain. I’ll avoid going too deep into the details, but we were initially trying to build an exchange, which is an application. Then we realized it was better to build the infrastructure for that application, which led to SE.
[00:25:11] That’s around when I quit my job, and we went all in on it. What did you need to see before you went all in? In our case, we had a team of people willing to work part-time with us, which helped. We had a good relationship, and we started seeing some initial excitement around what we were building, and that’s when I pulled the trigger.
[00:25:34] My bar for pulling the trigger was lower than it would be for a lot of other people because the IPO had just happened. Financially, there wasn’t much downside for me to do that since I was hitting the end of my four-year grant anyway. I thought this was the time, and in hindsight, that was a fantastic time to pull the trigger.
Ryan:
[00:25:52] Imagine that Robinhood had a compensation wise, let’s say it had a middling performance or it was just normal, as if you had worked at Google or a big tech company. Do you think you still would have left to start your own company with the same conviction, or do you think that money is a big part of that?
Jay:
[00:26:16] It would’ve been even easier to make that decision, honestly, because the six months of equity that I left on the table was still a dollar value that was pretty high to me. If it had been like a normal kind of compensation that I’d be leaving on the table, I don’t think it would’ve been a hard decision at all. In general, I think people tend to be way too scared of leaving their jobs. Most of the time, if you’re competent, things will work out anyway. I don’t know too many people that are good at their jobs at company A that are not able to find any work again after that.
[00:26:47] Actually, I don’t know anyone like that. Typically, if someone’s good at company A, they have no trouble finding a job somewhere else. So yeah, I think people tend to over-index on how much risk they’re taking on when they leave to start something.
Ryan:
[00:26:57] I see, I see. Okay. So you’re saying it’s not that big of a deal and you can just go back or you can find another opportunity if it fails.
Jay:
[00:27:06] Exactly. I mean, if you’re a software engineer working in tech, there’s such little downside in a way. There’s just the opportunity cost for the most part. If you spend a year trying to get something off the ground and it doesn’t work out, you’re actually more valuable to a startup or any kind of company.
[00:27:20] If you’ve been through the reps of actually trying to start something, then you would expect. A lot of people are worried that if they’re not working as a software engineer for a year, then it’ll be hard for them to get a job. But if you’re going through the reps of actually trying to build a product, you end up learning a lot more that makes you more valuable to any kind of business.
Ryan:
[00:27:41] What are those things that you learn?
Jay:
[00:27:42] For example, getting product validation, coming up with a product idea, being able to see if people actually care about it, then working through the entire lifecycle of designing the product, actually building it from the engineering side, going to market with it, the marketing side around that, the business development side around that.
[00:27:58] There are so many things that as a normal engineer, you don’t have to do. In this case, you end up just learning all of that, which when you go as an engineer to any company, if you’re able to play the roles of being a marketer, being a product manager, being a business development person as well, I think you’re able to do a much better job of building the product and you’re also able to play a much bigger role in the eventual go-to-market of that product as well.
Ryan:
[00:28:24] What about in the bear case? Let’s say you quit your job, you’re working on something where you don’t establish PMF, and you don’t have a marketable milestone in that thing that you did, but you did get the skills. Who’s going to give them credibility if you just wandered and explored ideas?
Jay:
[00:28:46] I don’t think big companies will give you that much credibility. I think a lot of early stage startups would. If you go and interview at a seed or pre-seed startup, they would be very happy to work with an engineer that’s been a previous founder, much more so than they would a normal engineer, just because that founder can be much more impactful in the zero to one process that you’re getting started with.
Ryan:
[00:29:09] Right. Okay. So it’s kind of, if you do choose to make that career decision, it doesn’t necessarily pigeonhole you, but your career starts to bias a little more towards smaller companies.
Jay:
[00:29:21] I think smaller companies are where you’re going to excel more. But I also think there’s this other side of it where people that try to start a company are already biased towards smaller companies, so they’re much more likely to only interview for these smaller companies after their startup doesn’t work out. That’s going to be where there are more interesting problems for them to work on anyway. You probably do see more examples of people leaving to start a company, failing, and then going to another small company.
[00:29:45] I don’t think that’s just because big companies say so; I think that’s also because that’s the environment that those founders want to find themselves in.
Ryan:
[00:29:50] Yeah, there’s definitely some confounding factors for sure. I’ve seen examples of people leaving big tech, starting something, failing, and coming right back to big tech, so that’s true.
[00:30:03] You can definitely do that as well. I want to talk about fundraising because your startup, thankfully, was successful and you raised a lot of money. I don’t know the total; maybe you could.
Jay:
[00:30:15] We raised $35 million in total. We raised a $5 million seed round and then afterwards we had strategic rounds that ended up being for $30 million.
00:30:25 — Learnings from raising $35m
Ryan:
[00:30:24] Okay. So you raised $35 million. You must have learned something in that process. I’m curious, what was that like?
Jay:
[00:30:32] Yeah, so our seed round, we started raising it right after there was this blockchain called Terra, which is one of the biggest blockchains out there. It collapsed, and then we started raising our seed round three weeks after that.
[00:30:45] That was one of the worst times in the history of crypto to be raising money. We learned a lot about rejection, obviously, because most investors said no to us. We learned what the end-to-end lifecycle for fundraising looks like because we hadn’t raised money before then.
[00:30:59] The intro calls, then eventually meeting the partners and talking through the team, the product, the vision, all that kind of jazz. It’s actually not that scary in a way. There are a bunch of group things that happen. Initially, everyone’s kind of skeptical, and then once one fund becomes excited about something, it makes it much easier to convince other funds to get on board with it.
[00:31:21] There are a lot of investors that are on the sidelines trying to maintain as much optionality as they can, and they give excuses a lot of the time, like, “Oh yeah, we’re still doing diligence. We’ll get back to you in a week or something,” just to see how the deal plays out.
[00:31:34] There is definitely that aspect of trying to get people more excited about the investment.
Ryan:
[00:31:41] I see. So it sounds like the most impactful thing here is you get a good lead and then all the sheep will come.
Jay:
[00:31:48] If you get a tier one lead investor, everything else is super easy after that.
Ryan:
[00:31:52] So then how did you get your lead investor, and what’s that process look like if you’re just an engineer with a product?
Jay:
[00:31:59] In our case, we just got an intro to a bunch of different, basically every top tier investor in crypto. One of the funds we talked to was Multicoin. Multicoin was the biggest investor in Solana and they’ve made billions of dollars from that investment.
[00:32:15] I would say they’re regarded as one of the top five to ten investors in crypto. We had really good conversations with them, and they ultimately decided to invest in us. After that investment, everything just became much easier. Initially, when you’re getting started with something, if you don’t have a track record, everyone’s kind of skeptical of you.
[00:32:35] But once you get that stamp, it becomes much easier to open a lot of doors, whether it’s for business development opportunities, future fundraising, or anything required for the actual launch. It just becomes significantly easier. The other thing I’ll say is that for crypto, it’s very different than traditional venture.
[00:32:53] In traditional venture, it’s probably even harder than it is in crypto. In crypto, most projects have a seed round, a Series A, and then afterwards there’s some kind of token launch event that happens.
[00:33:08] They don’t typically raise institutional venture capital rounds too much after that. In AI companies or most web2 companies, there are several rounds of fundraising that need to happen, and there’s a lot of revenue and financials that people look at. In crypto, there are a lot of software metrics people look at, but there’s not really the same concept of revenue if you’re helping build the blockchain.
[00:33:24] In web2 companies, it’s like, “Okay, this is your ARR,” and that’s a very fundamental metric, like how quickly you’re growing around that.
[00:33:41] In the case of crypto, it’s much more about how much excitement there is around this project and how many teams are actually building with this. It seems reminiscent of 1995 to 1997 in internet investing, where there were a lot of alternate metrics. People came up with like the number of eyeballs looking at a website, for example.
[00:34:01] I think it is much more of a subjective space to be investing in if you’re an investor in crypto.
00:34:07 — What value does crypto provide?
Ryan:
[00:34:07] Let’s say I’m a skeptical software engineer looking at crypto. I think there’s a lot of grift there. What’s the clear case of here’s the value that crypto provides the world?
Jay:
[00:34:20] Yeah, so I guess there are two separate streams of thought over there. The first is that any early stage industry tends to have a ton of grift and things that don’t make sense. When web2, when the internet was getting started, for example, arguably the biggest use case for it was porn, right? That was one of the biggest things taking off in web2 back in the mid nineties. I would argue that the internet has completely changed society. It does take time, and there tends to be a lot of grift in any kind of new industry that’s getting started.
With AI, we’re probably seeing semblances of that, where a lot of people are raising money but aren’t really building anything super meaningful, and they’re likely misusing a lot of the funds they’re getting. In crypto’s case, there’s been a ton of events like that. We’re starting to see those events become less and less typical through a couple of different things. The first is that there’s starting to be more regulatory clarity. Once the government gets involved and sets clear guidelines around what’s acceptable and what’s not, that grift naturally goes away.
There’s also the kind of social policing that happens. If people see patterns where certain actions result in bad outcomes, others tend to be less supportive of investing in founders they think might engage in those actions. It’s becoming much less common to see that kind of negative stuff happening.
In terms of where I see crypto going, my view is that crypto will play a very big role in changing the financial system in the future. Right now, there are two things that crypto has been really good at: payments and trading. The reason for that is that with a distributed ledger, it adds a ton of cost because you’re basically doing the same thing many times across different machines. The benefit of that is verifiability. You can trust whatever this computation is because you’re doing it yourself as well.
The only use case that really makes sense is finance. When there’s actual money at stake, that’s going to be the biggest use case where crypto can be really impactful. Right now, it’s already playing a big role in international remittances from the stablecoin side. In the future, as we see more stablecoin adoption, that will lead to more financial rails being built around those stablecoins. We’re going to have some version of a completely decentralized Wall Street that will be globally accessible, allowing anyone to trade and make use of it.
If you’re in a country that doesn’t have a stable currency, what do you hold your money in? Unless you’re investing in some kind of stock market, you don’t want to hold a currency that’s inflating 30% in a couple of days. In that case, you’d want to hold US dollars. But if your country doesn’t want you to have easy access to US dollars, what do you do? Crypto is becoming one of the clear solutions where people buy USDC or USDT and hold onto it for transactions.
That’s another use case where crypto’s been picking up. In Southeast Asia and Latin America, it’s being used a lot more for actual payments. It’s starting to become more widely adopted. I definitely think in the long term, the verifiability that crypto offers will be really useful for allowing computation to happen between people who don’t trust each other, which will create many financial use cases for people around the world.
00:37:47 — Learnings and when to leave
Ryan:
[00:37:47] Coming to the end here. When you look back on your career, which time do you feel you had the most growth and why?
Jay:
[00:37:56] 2022 was the year that I had the most growth, undoubtedly. And that was when you started the company? Yes, when we started. When you’re at a job, there are a lot of rails to help support you. When you start a company yourself, you’re all by yourself and need to figure everything out. As a result, I learned a lot. But I think basically every single year since then, I’ve probably learned more than I did during any of the jobs I worked for other people.
Ryan:
[00:38:25] I see. And these things that you’re learning are more of the non-engineering things?
Jay:
[00:38:34] I think the engineering side of things is generally pretty easy. Definitely. Once you’re going up the ladder at a company like Meta, you’re solving really difficult problems. I don’t think most businesses have those kinds of problems and don’t need support to solve them. Most businesses are solving pretty mundane problems. From the aspect of building a product that people use, you typically don’t face those scaling problems. If you’re a competent L4, then I think you can do perfectly fine as a founder from any kind of engineering side.
Ryan:
[00:39:16] So, let’s say I wanted to start my own company. I’m a new grad. Would you recommend staying until you hit that minimum bar of technical competency?
Jay:
[00:39:28] If you know what you want to build, I think you should just go for it. You’ll be able to either build that technical competency or more likely hire for it. If you have a good idea, it’ll be pretty easy for you to raise money. If you raise money, then it’s going to be pretty straightforward for you to grow a team from there as well.
Ryan:
[00:39:47] When we look back, hindsight’s 20/20, but your startup has been successful. How has the team grown over the last few years? I’m curious about that compared to big tech levels and what those promotions look like.
Jay:
[00:40:06] Yeah. So when we got started, there were about five to seven of us in 2022. Now, across multiple entities, if we combine all the entities, it’s around 60 people working full-time. We’ve been pretty lean in terms of our growth relative to what I’ve seen in places like Robinhood. I think that was absolutely the right decision. If you grow slowly, it allows you to maintain the culture and prevents the scaling issues you see with bureaucracy and people being clueless about what to do. That allows you to move more quickly as well.
00:40:41 — Advice for his younger self
Ryan:
[00:40:41] I think the last thing I want to ask you is, if you could go back to yourself right when you graduated from UCLA and give yourself some advice, knowing everything you know now, what would you say?
Jay:
[00:40:54] The main thing that comes to mind is to not be so scared. I think I’m naturally more of a risk-averse person, and as a result, I’ve been more hesitant to take big leaps of faith. There are other people I know for whom it’s very easy to do that. I think there is some kind of middle ground. You should think through any decision you make, but then afterwards, pull the trigger quickly. I shouldn’t have been scared at all about leaving my job at Robinhood, even potentially earlier on.
Ryan:
[00:41:25] I see. So in a perfect world, you would have left earlier.
Jay:
[00:41:28] In a perfect world, I would have left earlier. But I don’t know if things would have played out the same way because I might not have started a crypto company in that case. I think it would have been like that AWS cost management company. I don’t think it would have had the same outcome.
Ryan:
[00:41:44] Cool. Well, thank you for your time, Jay.
