Will Worldcoin have a ChatGPT moment? | Chain Reaction Podcast

Hey everyone it's jacyn melanic welcome To chain reaction a show that unpacks And Dives deep into the latest trends Drama and news with some of the biggest Names in crypto breaking things down Block by block for the crypto Curious hey everyone it's Jacqueline Melanic we wanted to share a bonus Episode with you guys that was a Fireside chat from a strictly VC Event In San Francisco that happened earlier This month it was with Alex palia the CEO and co-founder of tools for Humanity Which is the project behind worldcoin Alex and I talked about why the company Thinks there's a need for its World ID How the recent rise of AI is enhancing The demand for more digital Identification and its plans to become Cash flow positive we also dove into Other tools the company is working on as Well as its new model for its I scanning Orb that is coming out in the first half Of this year that aims to be more Friendly looking and similar to Apple Products hope you enjoy Hello everyone thank you Connie for that Nice introduction I am Jaclyn melanic I Am a senior crypto reporter at TechCrunch and as you mentioned I am Here with Alex blonia he is the CEO and Co-founder of tools for Humanity which Is the team that created worldcoin as She mentioned worldcoin is a crypto

Project that Alex co-founded alongside Open AI Sam Alman and Max novenstern and It gives World ideas to users by Scanning human irises and that gives you Access to the Project's application and Also uh quote unquote digital passport That you can use on sites like Reddit Telegram and so on I'm sure we'll get Into this but to start Alex I feel like I kind of want to know why did you even Get involved with something like this That some people might have been like a Little skeptical of especially four Years ago when you first got into it Yeah so um essentially I was actually Not at all in crypto wasn't even in Tech I was in theoretical physics and so I Was using pretty large neural networks To predict Quantum systems back then and Kelch in Los Angeles Sam and Max were Were already working on rcoin actually So I I got an email about this new Company Sam Sam's new company worldcoin With a quick pitch and it sounded Straight out of a sci-fi movie I drove From was to San Francisco I I spoke with Max and Sam back then and uh learned Much more and like it probably still Sounds crazy to you today but back then It sounded really really crazy like just Like four years ago and uh just the Simple proposition that AI is going to Happen and you will need Pro of Person Of the internet all of those things like

That back then sounded very very crazy And even though I I back then I decided All right like can my default path was To get into either find Computing or AI Back then so I thought okay the Opportunity cost of trying this out is Actually pretty low And um I remembered kind of these Paul Graham quotes that the best ideas sound Somewhat ridiculous but you can actually Figure out a way to make them work so I I sat down for two weeks and really Tried to kind of attack it from every Angle and thought well like it's pretty Unlikely probably less than 1% that we Might succeed but if it works it it's Going to change the world so I joined Max and Sam on the journey did most of The engineering and research on the First year and then became the CEO quick Uh rise to the Stop surely not everyone you spoke to Early on was on board with worldcoin I Know we've spoken before this and you Mentioned that some investors kind of Looked at it like it was crazy you Mentioned it felt like a Sci-Fi thing How did you kind of handle the initial Push back because now you have all these Bigname investors but it wasn't always Like that well first of all it obviously It help to have Sam so actually Sam back Then did the PCT series a but even Though even with that it was like people

Were mostly making fun of us actually um And it was it was right after it was a Complete crypto bear Market no one was Interested in crypto at all and AI was Not a thing open AI was not what it was Today so like all of those things Together with a with a pretty ambitious Large scale idea was uh was pretty hard To pitch so I think in the series a we Had we North 50 conversations to get the Round together but then actually recent Horz LED it Chris six from recent horz Which was awesome and um after that it Became easier and easier over time so we Raised three rounds in total 250 million So series a was Andre Horwitz series B Was vode Coos adventures and Andre Horwitz and then uh serious was Blockchain capital and and again Andre Horwitz so um at some point it got much Easier and I know we talked about this In the intro but I kind of just want to Get to like the Crux of this is like why Even create World coin why do we even Need this like I have face ID I have my Government ID I have user logins why now Is why is this so important to you yeah So the initial idea was actually Motivated by two fundamental things so The the first pitch I heard about rcoin Was okay AGI is going to happen and it's Going to change everything and in a Pretty fundamental level and we will Need societal infrastructure to react to

That and I will get back to that what That actually means and two crypto is Somehow around since so many years now But somehow it doesn't it doesn't break Out like somehow there's no matter who You ask there's like somewhere between 50 to 150 million users and somehow Things move relatively slow so the idea Was like okay what if actually it's Fundamentally about creating a large Network and and and getting to network Effects and what if all that matters is Getting to a billion people and getting To sufficiently high density how would We do that so the idea was simple what If we would launch something like Bitcoin but with not incentive alignment Around compute and security but Incentive alignment around scale in Terms of real human beings that actually Join the network because that these are Billions of dollars there's a billions Of dollars spent every year to secure Bitcoin we've never seen anything like That and we've never tried anything like That because we could not because we Didn't have something as simple as Verifying human as on the internet so Scale was a very fundamental part of the Of the idea and the other one which is Kind of amazing and it played out like This in that timeline Was that verifying humanness on the Internet is going to be a pretty

Fundamental thing it's going to go from Right now we need to verify that Something is fake we will need to verify That something is real and probably the Next in the next five years and Verifying that we are actually human Beings is pretty basic piece of that and Um Twitter X I think shows you that Really well right Elon talks about the Bots there and but that's only the Beginning it's kind of the internet is Going to change quite drastically and so Those two things brought together create The largest financial Network by Aligning it head with round scale and Building a fundamental building block For the internet proof of personhood Should turn out to be very important I Want to talk to you a little bit about The orb I know they have them over there If any of you want to scan your irises This is not me pitching it I'm just you Know stating there's an orb over there But why create that kind of object why Create it to look like that and how do You kind of see it evolving over time Maybe to Futuristic sci-fi look you know what I Mean yeah so the first question is like Why to do that at all like why do you Need a separate Hardware device and like That sounds pretty complicated Distributing around the world getting it In every country the the answer is

Actually pretty pretty fundamental and Pretty easy to explain is um all the Things that you use normally your face ID or all of these uh other systems a Fingerprint scanner at the at the door They verify that you the same person Again so this is again Alex signing up To a service but if we want to verify Humanus to the internet fundamentally we Need to verify that I'm yet another Person to join a network so it goes from One to one to one to many and you can Just simply draw kind of on x axis you Can draw error rate and you can draw all The different things we could we could Use we could use face ID we could use uh Just pictures we could use fingerprint Most of these things will break at tens Of Millions just mathematically the Error rate explodes and the thing that Actually works is is the eye uh that's Why many governments are using it and it Was a pretty tough Insight back then Like it we were four people we were not Eager to ship Hardware devices around The world and roll them out so this was Not like a fun decision or something we Actually wanted to do in fact we pushed So hard against that for for months but We we build prototypes for pretty much Everything else you could imagine and Just couldn't figure it out and so That's why the orb exists I think it's Just like for first principle reasoning

The only way we can solve this problem At a billion people scale and then the Design actually predates me so when when I when I came it was already all right It should be a should be a chrome orb And uh so that's why it looks very Futuristic actually Sam's first comment In one of the first meetings was the Biggest risk about this is that no one Cares uh I think that that definitely Helped so um people care and the the Next iterations will look quite Different we will have devices that are Not called orb they will have different Form factors they will look much more Friendly so it's it's going to happen Actually this was a prototype we didn't Want to launch with that but then also Launch fast okay well see when would That happen like those next devices First half of the Year this year okay we Will have to check that out um I want to Talk to you a little bit about the Massive rise of AI everyone's talking About it 247 more than they talk about Crypto which doesn't help me but that's Fine obviously World coin has a tie to AI with Sam Alman your own project has In its own sense that too how does the Rise in AI affect the way the project is Going and where do you see it evolving With deep fakes and other things going On I mean it was part of the fundamental Thesis four years ago it just now it is

Actually happening well personally one Of the coolest experiences about all of This is that working on something with Such a long time and is nothing you Usually can do as a Founder right it's Like starting a project with okay we're Going to Now work on this technology and It's probably going to get important Somewhere the next 5 to 10 years and if It gets it's just going to become one of The biggest things ever that's nothing You can usually do Straight of University so yeah I think AI is going To keep Accelerating and many other things like I mean obviously World coin will Accelerate too so hopefully we can catch Up with that and worldcoin has about 3 Million people signed up which which is Not a nominal number by any means and That's since July but when do you think It will have its own like chat gbt Moment so to speak I don't know I mean The open AI team didn't predict the cat Gbt moment so it's really hard I do Think it's going to be a big year for us In in many ways 3 million is is big for Crypto maybe but it's not at all big for What we try to do um so this is the very Very early Beginnings we try to get to Tens of millions really fast but what do You think it would be that would drive That explosion of Interest there's a Couple things I think one actually might

Be the elections this year this whole Idea of of bots on internet like it's Still relatively abstract but I think as It gets to the core of democracy uh it's It's suddenly going to accelerate from Kind of a little problem to something That is of societal importance and I Think there's eight elections happening This year so if there's one year but This will happen I think that's the year And I think it's a genuine threat I Don't think it's it's made made up in Any means so that might be it well I Think probably markets are going to pick Up and so the the financial piece of of This whole project will probably Accelerate quite a bit that will also Help and then the other thing is just Build products that actually help and Are useful and so we have pretty packed Product Pipeline and integration Pipeline over the coming months and it's Hard to predict which of these will pick Up how much but it's going to be Exciting for sure on the note about Elections have you been in talks with The US government or any government for That matter about kind of implementing a World ID to better prove that you're the One voting well one of the things about This project that is so weird is that Because it like I mean obviously because Sam is involved and there's like so much PR around it we talk to essentially

Every government we touch and and so yes We we we have spoken to many governments And also that kind of really the high Level government of Asian countries African countries European countries and Of course AI is top of mind for everyone I guess what do the governments want or Don't want from you guys well actually What what we just spoke about in terms Of Elections that is very much top of Mind for everyone like how will AI Affect elections this is this was Actually genuinely surprising another Thing that I guess is not as surprising Is that every government has a different Stance on crypto so a large part of the Conversation just involves okay like how Should we view crypto how should we be Behave how should regulation look like And many governments are open to that Others are really hostile others are Embracing it so that was also just Generally very interesting is to hear From decision makers how they view that Whole Space evolving and otherwise it's Just a lot of explanation I mean this Project is straight out of the sci-fi Movie somewhat and it's like explaining What it is takes time and I think that's Probably 80% of the effort okay I want To shift back to the Venture interest we Talked a little bit about that before I Think you said you raised over 350 Million

250 $250 million which is still a lot of Money especially during a crypto be Market as you mentioned what do your Venture backers expect when it comes to Returns along a timeline do they expect A normal timeline extended timeline Because this is new technology I'm Curious what those conversations are Like well I mean we have have so many Investors that I think the expectation Of each of them is very different I Think someone like we know from from Co Or someone like andr Horwitz Chris Dixon I think the timelines are very very long Right these are I mean especially V know Is a deep Tech investor and is very much Prepared for this to take 10 years and I Think that was that was good I mean the Other important statement is that return Wise it already was a very good Investment so I think everyone is pretty Happy for now and then of course what Was interesting about the world coin Fundrais is that I think we bridged Between very crypto investors and very Like Andre horwood Co aventures are like Very classical Silicon Valley investors And was very interesting as a Founder to Experience how different these cultures Are so yeah I could I could tell long Stories about all that but yeah yeah There's a lot to say about the two Categories for sure on that note how are You like making money I know that's so

Blunt and direct but like what are you Doing to generate revenue and Essentially hopefully become cash flow Positive I mean since the token launch We have a pretty heavy balance sheet so We have quite some time to figure that Out the thesis is very simple we raise Towards billions of users as fast as we Possibly can and we have not seen that In crypto just doesn't exist there is Many ways to capitalize it on when we Get there right it's like of course Identities is very valuable Financial Networks are very valuable so we have Very detailed answers that I don't want To get into here but um the timelines Are very long I think we talk about 10 Years probably 10 years for it to be gas FL positive all right cool and obviously The name tools for Humanity is tools for Humanity so I want to ask you about what Other tools are you working on what's in The pipeline you you will have to wait You got to share something with the Class come on well a new orb is coming I Think that's going to be cool and it's Going to look again it's it's just so Funny it's like here in the US people Are just so obsessed with this design of The orb like either hate it or they love It and so the next orbit is going to Look way tuned down it's going to look Like an like a like Apple product and Actually has Apple Roots so much more

Friendly we've heard it I think that That that is a big one the whole Technology stack oh actually important One is 80% on the engineering resources Is actually in decentralization so we Have 180 people and over half of that Are engineers and over half of that are Researchers the main focus is really Decentralize this whole technology stack Because we think if it turns out to be As successful as we think and as Important as we think being the entity That sits in the middle of all of that Is going to be very dangerous so we try To get out of there as fast as we can Okay and to wrap things up Alex my last Question is what do you think are some Opportunities that have not been Explored yet for the world ID going Forward I don't think there's been Anything explored well you got the Partnerships with you know Reddit Minecraft telegram you've got the Digital passport what else do you think Is out there that's top of mine I I Don't want to be overly self-critical But I don't think we we see any Major usage yet compared to what I Expect will happen in the next two to Three years I think one of the major Things to look forward to is actually I Think as as soon as I see the first Company raising money building on top of That infrastructure I think that's going

To be an important moment because you Actually want to see builders using that New primitive so I think that's going to Be the coolest thing for the year cool Excited to see what happens Alex thank You so much for joining us for and thank You everyone else for listening In We'll be back next week with Conversations around what's going on in The wild world of web 3 with top players In the crypto ecosystem you can keep up With us on Spotify Apple music or your Favorite pod platform And subscribe to Our companion newsletter also called Chain Reaction links to the newsletter And stories we talked about can be found In our show notes and be sure to follow Us at chain reaction on Twitter chain Reaction is hosted by myself Jaclyn Melanic and produced by Maggie stamitz With assistant from karney and editing By Kell Bryce Durban is our illustrator And Henry pette manages Tech crunch Audio products thanks for listening in See you next [Music] Time