Exclusive Interview With The Founders Of The Social Currency Company Cent.co
Our current age of innovation and technology has given rise to several prominent elements that helped to revolutionize the way content is shared and profits are generated. As digital technology continues to expand, so does the content it helps to spread.
As consumable content continues to boom, we are seeing the bubble of cryptocurrency expand as well. Recently, a new digital startup Cent.co has found a way to combine the two. Max Brody and Cameron Hejazi are the founders of the company and they spoke exclusively to Modern Treatise about a new way of providing value content.
Modern Treatise: Tell me about each of your backgrounds.
Max Brody: I studied philosophy. Originally, I was going to be a philosophy professor which I moved away from. I started getting heavily into math, and then specifically programming from philosophical lens. I thought it was the source of human knowledge and human creation and all that stuff so I got heavily into programming throughout college. I then realized I was better at design than programming. My first job out here was being the first employee for a startup RecipeIntoReality doing their design, which I did for a year, while I was working on this concept that I had had a while back. Which has a lot of relevance to what we are working on now.
Back then it was an idea of a social network where, instead of liking things, you could give a penny to something…. Where a little difference changed the outcome a lot. A little one liner I would use is, “A million likes. A million pennies is ten thousand dollars.” It turns it into something real. And so, I got pretty far on the development on that, but I hit a lot of regulatory issues, to say the least. I had to deal with all these fiat currency systems, the government, and all these banking regulations. Eventually, I a little break on the idea. But by very last iteration of this idea, I started to become fascinated by Ethereum. And started to figure out ways to incorporate Ethereum into my idea of being able to provide a monetary value to good content rather than a like. But then decided to take a little break. Since then, I have been working on design for augmented reality, which is completely separate and another space that I am super passionate about. It was then that I met Cameron. And we aligned on a lot of levels. He sort of reignited the passion I had for creating new social monetary systems that allow for creativity and impact to be correctly reflected back to you, and not towards advertisers or other sources.
Cameron Hejazi: I studied computer science at the University of Michigan. And out of college I took a job in a digital media and advertising company. I have a pretty technical background. I thought it was pretty cool. I learned a lot about how adverting works—how a lot of publishers make their living on the internet. I also saw a lot of flaws in that model. The first place where I started was the audiences who interact and engage with content by sharing it on social media or writing about it on Reddit. Aside from the usefulness of that, how come they aren’t earning any sort of revenue from their contributors. What could do to create a revenue stream? And so, I started by adapting that advertising model. It involves monetizing what actions that you take through ads with a link shortening service. So, when you share content, if you have one thousand followers, you earn ad revenue whenever your thousand followers clicks the link. Then I realized that ads are really sort hamstringing the ways in which we can monetize, so I started focusing more on micro-donations and stuff happening in the blockchain space. I saw a lot of potential to take this intermediary, which is like a platform that takes the advertiser out of the equation and just have it so that people can support other people for their quality of work in a sustainable way.
MT: How did the idea for Cent.co come about?
MB: When I started in the music world (I have a lot of friends who are not in the tech world and just in the creative world), I noticed that there is really no obvious system where if I create good musical content, I could get a legitimate income off that. Often if people are successful as an artist, they are also successful as business people. They have to have two minds. In my mind, that is not the idea scenario. Ideally, if you are just an incredible sketch artist or an incredible songwriter, you shouldn’t have to bea successful business person as well. There should be a mechanism for giving you value for doing that. With the first iteration of our system, we are just dealing with written content. One of the reasons from my end for starting with that is that one we can host all the content directly on the blockchain. More importantly is that it is a very even playing field. For example, if I want to be a video creator, I need a very expensive camera and editing software, which creates a sort of a barrier to entry. Whereas, with writing and thoughts, as long as you have a bone and a brain, you can do it.
CH: Just to add on to that, I was really fascinated about beliefs and how people recognize beliefs in other people. And they adopt them as their own. There is there is sort virality to stop that, which is very distracting. There is an inherent virality to beliefs and how they spread, and I saw that there is no real gauge of that value accept at like the highest level. Like if you are a celebrity, in which case, it is denominated by sponsorships or advertising dollars, the same principals still scale down to no-name individuals who just talk to a couple of people a day. So, combining our motivations, starting from where Max believes creativity is the final stage of mankind’s purpose, adding value to society, and then the notion of beliefs and how they spread, the process comes together in our product. That drives our vision for how we want the world to work. Thus, like Max said, we are working on text first. But we want all forms of consumable content.
MB: Just to add to that last point, specifically within the blockchain currencies, there is this interesting mechanism at play where these currencies are just code—just random bits on a hard drive. Now one bitcoin is worth more than what a lot of cars are worth. This is all based on the belief of whether it is in the strength of the U.S. government and the U.S. dollar and the belief in the technology behind a currency. That’s what really giving things the value. So, it’s that belief mixed with the creativity, in our vision of some future utopia. Is those two pillars will be at the very foundation of human society.
MT: If I am a new user and just discovered Cent.co, how does this work? What do I do? What’s the process like?
MB: Right now, we are starting with niche community of people who are already involved in the cryptocurrency world. So, a lot of these people are technical, and business orientated. Some are financially orientated. One of the things we noticed is places online where people can go. There are sub-Reddit’s and other forums that are very popular, but they are kind of disorganized. They are not designed for this type of discussion. The core notion is that if you are going to talk about a new service called Ripple, like all new services, it has a token, known as XRP in this case. And so if you were to write an article, or write an interesting thought, or simply just have an interesting question about Ripple that incites a lot of good discussion, Instead of having an upvote,you could earn the token that you are discussing. In short, you would earn XRP for helping the XRP community. It’s provides the most honest and efficient incentive structure to create value for these communities in ways that doesn’t involve investing your personal money or coding or doing something that more infrastructural for them. In a certain way, it’s almost like crowdsourcing the P.R. for these projects out to anyone.
CH: And then, from an accessibility standpoint, we have a web app where you can just go to our website. We also have a mobile app slated for later. So, you can just do all the publishing of content, tipping other people, write within your devices and have a native experience using Chrome.
MB: That said, we’ll start out with a niche market until we find something that really works and slowly expand from there. A lot of our vision from there relies around taking in more and more types of content around more and more types of topic, while providing a monetary layer to all of that. One idea we are kicking around an awful lot is the ability for individuals to create their own currencies. For instance, if I were to go to see a singer-songwriter at some local coffeeshop, I might think, “wow he’s just starting, but I really believe in him.” If I was able to invest in him, I’d be buying some of his currency. The way that these digital currencies work is that if I were to buy some of his currency, the price of his currency would go up. So, if more and more people were to buy his currency, the price of it increases; as he becomes more successful, like a year or two down the line or even five years down the line, I can make a massive financial return on helping him out at the beginning. It is a stock market for creative people. But that is kind of a larger goal that we feel is important to build up to both in reputation amongst the cryptocurrency community and in our ability as a team, along our ability to get a network of advisors and magnitude of funding that we can use to build that.
CH: We also see that getting creators onto our platform is a very important first step. Once we start having some people produce some content, it gives us an initial trajectory in which we can sort of calibrate in the pursuit of larger, more general forms of media.
MT: I noticed that what you are kind of taking here is a Facebook approach, if you remember the foundation of Facebook was a very small number of users. It started out with college students, before slowly rolling out to a broader audience once they had all kinks worked out. So, I like that you are taking that approach to your platform. In terms of content creators, is there a process through which to approve content or does anybody in the niche that you are focused on get to write content?
MB: No, not really, but in the sense that anyone can do it. One of the interesting things about using money or value as a core interactional layer rather than an upvote is that in a lot of other networks, the content that doesn’t have the most value are random such as cat videos. It gets very heavily weighted because there is no cost to giving a like. There is no cost to giving. It’s funny, whatever, I’m going to do it. But when there is a little bit of money involved, one of our hypothesis is that it’s going to lead to a lot more intentional thoughtful curation. And so, if the source of that curation is this community, anyone can go on and if you are writing content that no one’s finding valuable, you’re not going to be making any money. Maybe you will change what you do until you find something that is valuable because of this. Yet, a big part of what we are doing is for there to be no barrier to entry beyond passion. We’re enabling those people to be cryptocurrency holders.
MT: So, you are taking out the hierarchy, in terms of the way in which content creators have in some places, thus allowing the users to decide who is worth their value. By giving whatever amount of money they give in terms of cryptocurrency to them, that is going to be determining the value of that content creator. The content creators are going to be writing high quality intellectual content that users will want to read.
MB: Yes, and it makes a bigger deal if you are talking about a smaller, newer project. Let’s say that new project X has it token X coin, and very few people know about X coin. But you know that the technology behind it is impactful; you’re not a founder or investor, yet you are excited about it. If you start writing about it and you start earning X coin for helping with the P.R. of it, in a sense, you are giving value to everyone else who owns X coin. Because you are providing content that can broadcast to the wider world, the reason you are getting tipped in the first place is because of the fact the people that are going to tip you are those who already have X coin. Thus, if you can increase the value of their X coin by explaining it or providing some mental way of interfacing with this idea to a wider variety of people, it gives a value for value transfer.
CH: Mutual incentives.
MT: It sounds like you walk down Market Street (San Francisco) and you see street performers, and you you give them some change. And it goes the same way with this sort of content—allowing people to do the same thing. I know you are starting with written content. Why did you choose to go with written content instead of video or audio content?
CH: Part of it is technically motivated. Our service runs entirely on the blockchain, which is an innovation within itself because you can run applications now. We don’t pay any server fees for people to use our app. One drawback of that is that we currently restricted in the size of what it is that we can store. So, text is cheaper than pictures, which is much cheaper than videos. Which I think will bode well with the community. Yet, long-term we’re going to enable all these richer forms of media. There will also be better technologies down the line that will better enable us to do it in a still decentralized way. One of them is FilePoint, which is still a decentralized file source. Instead of storing all the text on the blockchain, we could store it in a set of hard disks to distribute around the world at a fraction of the cost.
MB: And just to hammer home a point that might not be as clear is that there is a lot of reasons why you might want to use blockchain. The most obvious is using it for currency and money. Yet, another major reason is this new level of permanence you have for content or for any sort of statement or claim to value. Your claim to ownership is your own, and beyond anything we are doing, all the content you create is going directly on to a chain. There is a claim to copyright [so to speak]. But it’s noted in a realm of digital space that can’t really be refuted—going down the line. We think that that mechanism in and of itself is one of the major reasons to use the system, and there are a lot of startups focusing just on that aspect of the blockchain. So, we incorporate that into an additional layer of being able to monetize it.
MT: So, I know you mentioned early on that dealing with cryptocurrency and regulations becoming part of that subject matter. So, tell what is happening in that arena?
MB: High level. The biggest regulations arise when you are selling what the government threat to security. Essentially a security is something that is purely speculative. A lot of these new tokens that are coming out are securities, although a lot of them aren’t. For instance, with Ethereum, their token is called an Ether Token. An Ether is not purely speculative because it has use within its network; it’s how the network sends transactions back and forth. This function is required to use computing power in Ethereum. On top of that, you can also speculate on it on third-party exchanges. Although this mechanism is of use, there is still emerging regulations. Yet, if there is another use for the token, it’s beyond purely speculation. Then, you can potentially circumvent this necessity of being called a security. And in getting around that. You get around a lot of the potential regulatory snags.
CH: I think a real applicable test is the Howey Test. There are three prongs: a.) An investment in money b.) in a common enterprise c.) with an expectation of profit from the efforts of others. So, it’s really about that third one; it’s always about that token, because there is always a sale. So, there’s an investment in money. In a common enterprise, everyone is always pulling together their tokens, but it’s about the expectations of profits and whether that looks like the primary motivating factor or not. And for a lot of these tokens that are launching, it is the primary motivating factor. There is also a real utility to them. Like Max was saying, without this currency you don’t have this network. Where I think this ecosystem is headed is that there will be regulation; the ax will drop on one of the startups that does the process and doesn’t exercise caution. They cross lines and end up getting sued. For instance, some startup is going to get sued because they let their investors down in a crowd sale. When that happens, that will be the prime opportunity got the SEC to come in and start cracking down; it’s just a matter of time. So, like Max was saying, clarifying the utility of your token, and the implications of that so that it is not just an investment vehicle. Assure that you are safe when this regulation does come down, because it’s going to come one way or another.
MB: With that said, I just want to reiterate my strong belief that this new process occurring. This ICO (Initial Coin Offering) has seen a huge rise in activity in the last year and a much higher rise this year so far. At least in my mind, new companies of all kinds will be funded. I don’t think in a few years you’re going to have a company that is funded in any other way than a token. Part of our motivation behind doing this is to intimately understand how the process works.
CH: And in part defining it.
MB: Recently, the largest IPO in history in under three hours, raised one hundred and fifty million dollars. Normally that would be a mountain of paperwork with months of dealing with Venture Capitalists. It’s important to note that it’s one hundred and fifty million dollars. They didn’t give away a chuck of their company and that’s a huge difference from the old model; it makes it sort of a Kickstarter for all sorts of things, with no head to mess it up, or some policy you don’t like. So, with our product, there is no other place to go. There are some haphazard things people have created, but no real centrally used thing to find out about the new ICO’s that are occurring. One area we also think we could provide lots of value to is to be up-to-date on new projects occurring that have not launched yet. Our objective is to have one place where you can see all the current information on it, ask questions, and potentially earn some of these currencies in what is called a pre-mining way. Before the currency is even sold in a crowd sale, you can get an IOU from the organization that as soon as it goes on sale you will get some for earning it ahead of time.
MT: Is the Cent.co platform open to anyone in the world?
MB: We’re only able to do this because we are standing on the shoulders of giants. We have Bitcoin, we have Ethereum—incredible enablers of capabilities. We’re just sort of adding what we think is a really good use case on top of it. So much of the value we’re adding is just structuring systems that have been created in a way that is accessible so these systems are global. These systems are super cheap to use; these systems enable all this stuff, and we’re just using in a useful way.
MT: Let’s say somebody in Slovenia writes content. I’m here in America. Will I be able to read it?
CH: I think that is an interesting question, because when you talk about content in the context of a decentralized system, that is inherently international. It is almost like from day one, we were trying to reach an international audience. First off, we are just focusing on things in English, but like Max said, Google Translate can come in and help. Language barriers will be a problem eventually, and we’re keeping that in mind.
MB: It’s also important to think about how the content won’t be in different languages. One of the cool aspects in societies is that numbers are these cool universal languages, and the core part of what we are doing is numerical. None of that really needs any translation. It’s like how no mathematical or scientific finding needs any real translation; it’s just the analysis or colloquial language on top of the numerical stuff.
CH: So, if you see a piece of content in Mandarin that has been tipped significantly, you can go ahead and translate it in your browser.
MB: We haven’t discussed this, but if you were to write an original piece of content in Mandarin, my thought would be that we would save it to blockchain in Mandarin. You would ideally translate it to look at it within your browser, but the chain content would be in English.
MT: Millennials are very focused on corporate and social responsibility in startups and new businesses they are going to be doing work with. Even more investors are having that kind of concern. So, how does that play out in Cent.co?
CH: Corporate responsibility is interesting in the context of our platform, because we are all about both dialogue and enabling, not just for people who are interested in projects, but also for people who are doing work for projects, and are invested in the projects. We’re trying to encourage a new level of transparency just by having increased dialogue. So, in that sense I think it will be healthy for the ecosystem. There is a ton of information asymmetry in cryptocurrency, specifically because that’s how a lot of markets thrive in their information. With that they can make smart trades. So, by offering a place where we can bring some monetization aspects in with an open dialogue, I think it will increase the responsibility and increase the transparency in the community, which right now, very opaque.
MB: One add on that is initially hard to comprehend, is this inherent responsibility—an inherent authenticity to any project. Essentially any project you invest in, you can look at the code for, and you can read the contracts. Everything about the way the company is going to function in a sense is to a large degree a program. It’s difficult to hide something. We think that the capabilities, one by the open source movement and by the decentralization of the governance, is a forcing function for corporate responsibility.
MT: There are lots of startups out there, with people doing all different kind of things. What makes Cent.co different?
CH: There are two things here. One is that media in the blockchain space sucks; it is tied up in special interests’ groups who hold it, slash nonexistent. We’re offering a crowdsourced open solution that can bring everyone into one place. The second thing is that among other startups in the blockchain space, one of our novel aspects is that we’re not competing against the other coins, but rather we work synergistically with them. We want to bring every coin onto our platform, so that they can use us as a lever, to interact with their audience and to grow their support and evangelism. Right now, every coin that comes out is a one-off that tries to establish their niche. We want to be able to support all these. That is unique to our company and a few others.
MB: A music metaphor you can think of is for other companies is, “I’m Taylor Swift, I’m John Mayer, I’m Ed Sheeran.” All that we want to say is I’m Spotify; we want to be able to help them succeed through this other mechanism. The other thing that makes us unique is that at this stage of blockchain technologies, a lot of infrastructural development is mainstream. One of our core motivating factors, from the beginning, from the way we talk about it, to the interface and design. We want to make this something that a normal person could use. So, even if it is starting with a more technical userbase, it’s not going to end that way. We really see this value and want to hit the mainstream in an intense way if it is presented correctly. I always have one foot in the world where people are not technical at all, but rather creative, such as people who are into painting and writing songs. We’re doing whatever we can to take this new technology, which as essentially given us superpowers and packaging those powers for people who don’t have to understand the code that goes into them.
MT: What are your long-term goals for Cent.co? By that, I mean are you looking to be the Zuckerberg of the industry or are you looking to be the startup that gets big and sells to someone else?
CH: Off the bat, one of the properties that influences my opinions on it is decentralization. And part of decentralization is that you don’t consider yourself the ivory tower. It’s more like you are a general or an army. In terms of long-term strategy, I see us as building an army of useful and interesting applications. Because of this, people can bring their own intuition about how decentralization can impact the world through our company. In terms of selling it, it’s not on our mind.
MB: We’re pretty involved in the community that is focused on the topics we have previously described. There seems to be a shift in consciousness on what it is to be an entrepreneur in this world. Even, five to ten years ago, the common motivating factor was the desire to be super-rich. That would be a common and supported morality structure. While probably every entrepreneur wants to create value, and get value. The bigger thing is the belief that this new technology cracked open an endless field of possibilities of stuff you can make. In the old technology world, a lot parking space is taken. People are just circling trying to look for a spot. In the blockchain, there are just miles and miles of open space, and despite that, I don’t sense the cutthroat, or the lack of inclusion. Maybe there is some of that, although it exists as us being at the perspicuous of a ton of capability. How can we make something that does create a lot of value? And if we do create a lot of value, we see us as a form of company that deserves a reflection of the value. That being said, I don’t think either one of us primarily monetarily motivated. We’ve seen enough that when other generations have been entirely monetarily motivated. It doesn’t always lead to the happiest of individuals. One of our favorite quotes is “Success is the progressive realization of a worthy goal or ideal,” is a much more powerful path to happiness then just increasing net worth every day.
MT: Switching gears I want to ask a few standard closing questions. What are each of reading right now?
CH: I’m bad at reading. So, the last book I was reading was The Lean Startup by Eric Ries. Aside from that, I spend a lot of time on Reddit. Because that is where the Ethereum community lives, and I’m pretty active on there.
MB: I love reading. I’m reading Zen and the Art of Motorcycle Maintenance by Robert M. Pirsig, and it is just amazing.
MT: Who is your role model?
CH: Vitalik Buterin. He is the creator Ethereum. Basically, he takes a facts first approach; everything that he does is grounded in this rationality of actors participating in a system. It’s a very systemic approach to thinking about what you should do, and how people interact with what you do. I think that is valuable for optimizing for your goals.
MB: In general, my heroes are people, who are not one thing. I love polymaths, Leonardo da Vinci, people like Plato who was a pro-wrestler and a musician and a bunch of other things. Right now, it is sort of the cliché to be a fan of Elon Musk, but I just like the attitude of the circumventing this assumption that you are one human. You do not do one thing in your life.
(Note: Samuel O'Brient contributed to this interview.)