Spindl acquired by Coinbase launches on-chain advertising inside Base's new social app

only. Adqubines technology out of home expertise and data to enable efficient seamless ad buying across the globe. And next up we have AGM coming in probably talk about ads too because the timeline was in terms we were talking about AI uh AI ads but I want to talk about a whole bunch of stuff.

Uh kick us off with an introduction. How you doing? I did good. Um I'm uh talking I dressed it up for you guys by the way. I've got fantastic on as Jord mentioned. I've got the Patagonia fleece. I look like I trade bonds at Caner Fitzgerald. Yes, you do. You guys trading uh trading tariff rebates today. That's amazing.

Cool, man. So, yeah, I'm What's new in your world? What's that? Yeah. Yeah. Just what's new in your world? So, bit of a product announcement today. Um we a little bit related to a guest you had two weeks ago. You had Brian and Jesse on there from Coinbase. Yep.

I'm here to announce uh we're launching ads or sponsored offers as we like to call them inside the new app that Coinbase launched uh which is a new social app on chain. Um it replaces the previous wallet.

Uh it's really quite cool and interesting and um yeah, I mean it's it's kind of the fulfillment of the spindle vision. So we recently got acquired by by Coinbase. Yeah. And um you know I'm I I was a little late to crypto to be honest. That's how I bought some Bitcoin in 2013.

But um you know circle 2022 when board apes were worth like a million dollars and FDX hadn't happened yet and crypto was pumping. I mean it's pumping now but it's pumping even more. You know what crypto needs ads. Well no no no no no. That was not the first thing.

The first thing is I talked to I I talked to the head of marketing. I won't name the names of like billion dollar crypto companies and I asked okay so like what's your CAC? What's your LTP LTV? What does your retention look like? And the guy looks at me and says what's LTV? I I I don't know what you're talking about.

Yeah. And I I I basically had a personal existential crisis that I couldn't believe that people in crypto didn't know their LTVs. And so we actually What do you mean the number the number goes up? That's all that matters. Well, no, that's that's that's part of the problem in crypto.

Often numbers go if money is free, then cats don't matter is kind of the problem. But um but money doesn't always stay free forever.

So, um, we first built what's called an attribution system, which I know sounds super wonky and may not be totally familiar, uh, to to all your listeners, but basically, whether you realize it or not, every time you click or install an app or monetize on your app, an event is getting fired into an attribution system that's trying to figure out where you came from and how much you're worth.

And this is like a billion-dollar business. It's incredibly disorganized. There's literally billions of events firing a day. I worked inside one of these big attribution companies. And I just remember like, what if we just had one database? What if everyone just agreed what happened in the world?

And then when I really got into blockchain and Ethereum and ecosystem, I realized, oh, look, this is the consensus layer of truth that we actually need and we also have user identity and we also have a payment layer. The blockchain is going to be the biggest marketing database in human history, right? Yeah.

And so the question is, how do we build it? How do we take the best learnings from web two world and then build it into the onchain world in a way that by the way respects user privacy and all the rest of it, but also kind of functions in in in a much better way than than Web 2 ever did. Yeah.

I remember hearing the original pitch for spindle and being like uh there was a lot of like froth and stuff and I was like this feels like enterprise ass for crypto. This feels like it's like valuable regardless of what happens with everything else.

All the craziness you don't need to you know feel about like oh what's the value of art it's like so subjective but it's like it was like you and like that other company chain analysis I was like no matter what happens in crypto chain analysis is going to be a good company.

Uh so congrats on on the uh on the deal with Coinbase and coming into the team. uh bunch bunch of questions about how this actually manifests. I imagine that the first advertisers will be web 3 companies. Is that the correct way to think about it or is this kind of untapped low CAC for outdoor voices or something? Yeah.

Yeah. And by the way, you you totally put your finger on John. My my goal in life is providing actionable analytics and enterprise SAS in the morning. And I I love it. I I'm not joking.

I genuinely love it cuz it's like I the value is very traceable and not built on any sort of like okay there's like some perpetual motion machine over here that we're going to find out about. It's like no like this is just like what people want. You wake up at 2 a. m. You wake up at 2 a. m. What's your first thought?

Enterprise workflows. Let's go. I love work. Um that's legit. Uh so yeah. Yeah. First users, I imagine you're onboarding folks right now. Uh who who loves this? Who wants this? Yeah. Yeah. I mean it's it's heavily it's heavily biased towards DeFi option.

When we started Spindle actually I thought gaming and web3 gaming was going to be like a thing which who knows it it might still be but as everyone knows gaming was one of the biggest drivers of like mobile ads attribution and like that whole that whole cycle from 2010 2015 was basically mobile casual games and zinga and the rest of it and I assume that would be the earliest adopters.

Web3 gaming I I understand is still the perpetual technology of the future.

uh you know it's it takes a while to make these AAA games in Q4 maybe it'll change but actually it was it was DeFi apps actually because of course they actually I mean there stable coins have PMF and DeFi does have PMF and there's protocols like some of our advertisers Morpho I can call out a few other ones that have billions of dollars of TVL on chain in which people are actually earning and you know they they they basically function like a lending and and borrowing institution and so yeah they're they're the biggest ones and what's interesting is that getting back to LTVs right like the MAUs in crypto might be relatively small say to the WhatsApps of the But the LTVs, like the actual individual user value, LTV or RPO, however you look at it, are can often be significantly higher, right?

Like like or where where have where where have companies like Morfu advertised to date? Are there like if they're if they're DeFi app? Are they running can they even run ads on on Meta?

Is that is that like Yeah, I mean that's it's Morpha, by the way, because if I don't if I don't correct you, I'm going to get an email from the the CEO in a second. Um but um yeah, the answer is nowhere, Jordy. And and that's the problem, right?

Like we built all this amazing measurement technology like comparable to the best in web 2, but it's like the growth guys like this is all great, but like what do I do with this? Like where's the other leg of the flywheel where I go and like target the users and figure out and provide like a compelling user experience.

It didn't exist. And so Spindle's big obsession and part of the reason why we joined Coinbase is, you know, consumer crypto where you have a wallet connected user who actually interacts with the chain is is an important step and you're seeing more and more of that.

Just to site a random company that I'm not involved with at all, Stripe bought Privy, right? And why did it buy Privy? Because Privy is a wallet provisioner and it gets people on chain in a very seamless way. And then boom, suddenly a user's on chain. They don't even realize it, but they are.

And so we've really kind of exclusively focused on really compelling crypto consumer experiences where that where that wallet is present and where the user can engage with things on chain, whether it be content coins, NFTts, lending and borrowing, sending money to their family overseas, whatever it might be. Yeah.

How how will uh ad like what what role will play will ads play in the overall base ecosystem? I imagine some of that money might flow like where does it flow to? Um well it's a good question. By the way, one thing I have to mention and we've got like a blog post dropping on it. Everyone hates the word ads.

Like it gives everyone the if in crypto, but just just as a quick little comment, everything in crypto is an ad.

Like literally you scroll through every wallet and every publisher, every mint, every swap offer, all of it, whatever you're looking at usually gets a referral kickback as a function of the value of the transaction. So like literally everything is an ad. Well, and and here's a funny story.

So back in 2021, I uh my my team at Party Round, we made we realized if you send someone an NFT, it will just sit in their wallet that other people look at and track. And if they want to get it out of their wallet, they have to figure out a way to burn it. Send it send it off into the ether. So I was like, great.

So I can spend five, whatever it was, $5 to send an ad that's just permanently sitting in their wallet. And so we sent like NFT ads out to a bunch of different people. And I was like, oh, I can go to Dylan Fields wallet and see an ad here. That's really great. Really great actor. Really, really, really white hat work.

Jordy, to be clear, Jordy, I hate to break it to you. Most wallets figured this out and they don't surface uh the junky NFTs anymore. was I was I was early. I was early. I I'm the reason I'm the bad actor that caused that change.

No, it was there was much worse actors that were like if you click one of these NFTs, it'll like take your all your money. Yeah. This was this was just um Can you can you can I question? I'm going to answer your question though. Where does the revenue go?

So part of the spindle vision was always that like the publisher could be anybody, right? So like an influencer who like pumps a thing or endorses a thing and has an audience, you know, affiliate marketers, consumer apps, anybody can be kind of a publisher.

And and one of the unique things like like our ambition is not just to like equal Facebook ads is actually to be better and a little bit more user conscious than than web two ads. And one way we're better is that we can pay people that otherwise wouldn't kind of get paid, right?

If if you're a I mean on YouTube you do get a rev share with ads but broadly speaking and then with Elon Bucks you get a little bit of the Twitter thing but broadly speaking if you're a creator and you have an audience you have to monetize in some other way and it's really just your top of funnel.

Sure in the case in the case of BAP that's that's not going to be true. Um anybody who can drive like real user actions that advertisers or builders or developers want can actually share in that revenue. And again the the the blockchain just makes it much easier.

I mean, there's there's this wonky thing called multi-touch attribution, which is always the dream of every web two marketer. What that means is if someone converts to Pavont and by the way, John, you're going to fly right into an ad after this, I'm sure.

On because they see because they see TBPN, but then they go Google it on Google, guess who gets all the credit? Not you, John. Google, right? And it to it totally sucks because attribution is broken. In the crypto world, it could be different. You can make a cut of that, too. Yeah. Yeah.

And you see this online where like let's just say like a new protein bar is going viral and it takes a while for a health influencer to actually set up a deal and set up an affiliate code, but like you could potentially do that on the base app like like at on in an ad hoc way so that as soon as you repost you're you're you're basically tied into the affiliate program.

Yeah. There's something there's something amazing too about um there's something amazing.

every time uh we get our Elon bucks I'm like wow I'm getting paid to post I was doing that for free and it's a weird thing but at the same time like these apps have no value if the users don't post right like we every user is like coming together to create value whether you're just providing attention or you're providing content and um yeah most of the value kind of will acrue to the people that are creating the content and that's and that's probably right but uh but yeah just kind of taking another look at these systems is is worth doing.

And that's how it works on Bass App, by the way, to plug the app side of it rather than the outside. Users get users get paid to post. If you're like a mega poster on base, you're going to see your wallet balance just go up. And again, it all just happens effortlessly. You're not setting up a Stripe account.

You just like check your balance and oh, there's like 100 bucks there and it wasn't there yesterday, right?

Like that's Yeah, that's the other Yeah, that's the other like you know do you know uh making the the feedback loop faster where you know Elon bucks or what what they hit every every couple weeks um you never really know but if you can effectively like stream like getting closer to kind of like streaming payments based on how much attention you're capturing that's pretty cool.

Can you bridge the uh outdoor outdoor voices kind of case study that we just ran through to uh to like how how crypto companies are thinking about CAC to LTV. Uh and it doesn't need to be outdoor voices specifically.

There's just a you know we all live through the DTOC boom and the Facebook ad boom where you know 99% of VC dollars are going to Facebook ads that whole meme. And there was this time where companies didn't understand their LTV from really when they crazy scaled their advertising budgets on digital platforms.

But pretty quickly DTOC companies at least figured out the analytics. What does that look like today in crypto? Are people thinking about it more? Is there are there still like case studies of crypto companies that like raise too much VC?

Because I feel like a lot of crypto companies, they do a lot of incentives to onboard users, but they do it with like their own tokens that they created. So there's maybe less bankruptcy risk, but walk me through how that works in in web 3. Yeah. Yeah. Yeah.

I mean, so crypto marketers have gotten a lot smarter about LTV and CAC since 2022. Most of our advertisers actually understand that very well. Sure. Um and I think one of the one of the innovations that crypto introduces is the business model.

So the the DTOC thing that you're talking about typically operate in a world in which you you paid what's called CPA or CPI, cost per action or cost per install. In other words, you paid Google or Facebook literally if the user installed the app. You you didn't pay if the ad showed up in front of them.

That means that the ad system actually takes on some of the risk of the conversion and advertisers love it, right? But you're still juggling the LTV, what the user is actually worth versus what it costs to acquire.

One of the business models we offer that you're not going to find on Web 2, and again, we're trying to build a better ad system than Facebook is what we call CPV. It's ad tag, so it's got to be a three-letter acronym. And what CPV basically means is cost per value.

And what what that means is um you can actually literally pay like your bid is not like I want to pay $30 for a user. It's I want to engage in a 40% rev share with the publisher on the lifetime value of the user. And that's like a baked in two and a half or whatever it is ROI.

And and that again you can't you can't do that in Facebook. I I can't tell Facebook, look, bro, Zuck, I'll I'll split I'll go have these with you on the LTV going forward as long as you acquire me a user and they retain. There there's no way to do that right in the web world.

And you can do that actually inside BAS apps very naturally because again you have you've got a consensus truth like I know how much that user is worth. I know how much they stuck around and by the way I have payment real because it's because you can see it on chain. Right. Exactly.

There's mutual transparency on both sides. By the way, the publishers can look down for Yeah.

Because Zuck doesn't want to Zuck doesn't want to do that deal because he's like, "Well, I'm going to have to like get I'm going to have to keep hitting you up every month for years to figure out what you know if the user stayed subscribed or whatever and it's just too much of a hassle.

" So, you do the work of figuring out the cactile TV kind of analysis and if it's not a good deal, just stop running ads basically or or figure out different creative and and make it work. Exactly.

Well, in this world, right, the publisher, the new base app can actually look downfunnel via the blockchain and say, "Okay, I I I know how many users I showed ads to and I know how much value I drove, right? So, you can't you can't, you know, stiff me.

You've got to give me what you said you would, which is 30% or whatever it is of the LTV. " And that's again that's the advantage of having a consensus sort of reality layer and there's no way to do this in web 2.

It's basically right now it feels like online advertising is dominated by search engine ads whether that's in Amazon or Google and then social media ads on X and uh the meta platforms and Tik Tok. Uh what does the ad ecosystem look like in the future? How big is the crypto ad slice versus the AI LLM ad slice?

How do you see these two things playing out? Because I I I feel like there's bull cases for both of those and but there's only so many ad dollars flowing around, right? Even though it's like a trillion or several.

Well, in this case, I mean, the exciting thing about this new product is there's a lot of advertisers that can't advertise elsewhere that can now get sure AGM's ad product and and have these kind of um splits. But yeah, we we were quoting um Yeah, we read your post yesterday.

I would bet my entire net worth that one, we will have ads and AI. Two, if they will take the if they take the form of highly relevant offers, users will welcome them. They'll have sky-high conversion rate and web shopping will die. And three, they will be necessary to pay for the computers. Love the take.

Love the parlay. Uh forgot to like it. I'll leave a like on it now even though a thousand people have already liked it. Um but but yeah, give me give me your take on the evolution of the ad ecosystem more broadly. Yeah. Yeah. So to be clear, I don't think it's a zero sum between crypto and AI.

I think it's different sets of budgets and at some point they're going to intersect. I mean people are going to start using crypto inside I mean for microp payments and AI agents, crypto is the natural way to do it and Coinbase is building stuff there as well. I mean just to switch the topic a little bit to the AI side.

I mean I'm obviously an AI mega user. I barely use Google anymore. I probably fire up chatbt over 100 times a day. Yep. And it's what's interesting is that again ads dollars actually aren't limited. Human attention is limited because we only live so many hours a day.

But the amount of intent I can actually express inside an AI is fascinating. I think so much about what we do is so skumorphic to like the pre- internet world. I don't have to remember the before times. Like why do I go to an e-commerce site and it's organized by type of thing?

Like when I go to Instacart, why is it organized by food type? I want to make bofin or whatever it is. Here's the seven things. Just buy me those seven things. I don't want to go to seven aisles. And yet somehow the internet websites or even PDFs still reflect like the pre- internet world.

I should just be able to tell the AI, get me the recipe for this complicated thing I want to make and then just like go buy the things or I want to travel to Paris and not pay more than $3,000 and stay in this place and I should see a big green go button and I just buy and transact and it's done, right?

The business of having to go to three different websites. It's just I mean Kayak I I like it, but it drives me crazy. The fact that we're clicking little radio buttons and drop downs, it's ridiculous. We've been doing that for 15 years. I don't understand how we haven't proceeded beyond that UI.

And I think AI is going to be the absolute gate to that to that intent and that desire. And what's going to be interesting is e-commerce sites that are, you know, typically buying ads are going to have to surface offers. And what does an AI ad mean, right? There's nothing to see strictly speaking.

But when the AI scrapes your website and sees the product metadata and sees a price, you may want to service given the personal like, oh, this user hasn't bought from me before. Here's a 10% off coupon. And that shows up in the results that AI returns, which by the way way defays the expensive AI cost to go to.

3 in my tweet, right? And so you're going to have to have some way to actually channel intent and actually get paid for that intent. Um, and there's also issues around I mean in cloud. Yeah.

what what are the what are the kind of like potential traps or you know the people the Mark Cuban's I think primary concern is that that the the uh the the results are just going to be they'll be like profit maximizing conversations and our our take was like this has been solved in search it's been solved in the influencer space like ads should be disclosed uh and if you just have disclosure it's probably uh fine but um but I think there's yeah I find it funny that a guy who fortune selling ads suddenly finds ads ads problematic.

I'll just say that off off the bat. Um I Yeah, he's like ads he he said something and we're we're going to have him on the show to talk about it, but he said something to the effect of like ads are about manipulation and it's like okay well do you want to ban them all then?

Should we just have So I I I take the under on that and in fact I think people actually like Instagram ads for example as a form of discovery.

I think the clickthrough rates, the the revealed preferences of how users actually react, the click-through rate is probably higher on some of that paid content than is on the organic content. Yeah. And I think users, if it's a good ad, and if it's a crappy ad, I agree it sucks.

But if it's a good ad and gives you a discount and helps you discover a product you didn't discover before, users will like it in the only way that matters, which is what is their engagement and conversion rate. And dozens of founders have tried the it's it's this but paid, no ads, and it rarely works if ever. Yeah.

I mean, I think I think the interesting thing is, you know, like it it makes like I like paying to not have ads on X because the ads were never that relevant to me and it's nice and I use the app a lot so it's nice but the fact that Meta doesn't have an adree at scale adfree product says a lot when people use that app I'm sure more on a I don't know more more on average than the only people that would upgrade would be people whose uh whose arpoo is higher than the price.

I feel like it's like if they're getting if they're getting $1,000 worth of ads against me, they're going to be like, "It's $20 a month. " And I'm going to be like, "Yeah, I'll buy that every day. " And that's bad for them. And then the people who are like, "Oh, I'm only driving, you know, $50 of ARPO a year.

" Well, they're not going to upgrade. And so they're like, it's going to actually wind up with lower revenue. I would imagine that's the calculus. I don't know. Yeah. I mean, look, ads pay for the internet, right? I mean, as much as you might dislike them, it pays for a large swap of the internet.

And I think we've we've done the experiment for 20 years and users aren't going to pay $200 a year for for Facebook, which is roughly their aroos, right? Like they're just they're just not right. Yep. Uh last thing, I want to ring the gong for a big product launch, but I also want to get a wrist check.

What's on the wrist today? It's the great. So I I posted this earlier today. Um I've got the I've got to This is somewhat ironic. The War Rolex I got on. I've got the Rolex Submariner that I bought with my first YC. Let's go full full dig here. I bought this thing with cash when I sold my first YC company.

And then on my other side of the wrist, a little brief product pug. I became a Whoop American to me so I can actually see exactly how bad my how bad my sleep is. Uh so yeah, that's what's amazing. Well, congratulations on the product launch. We'll ring the dog for you. Hit it. There we go. Good stuff.

Uh great great having you on finally long overdue. Yeah. Yeah. Yeah. Yeah. Congrats. You come back on and and just chop it up with us for a little bit. We could talk about so much other stuff if we love some other things. Yeah. Yeah. Uh, but congratulations. Good luck with the rest of the launch. We'll talk to you soon.

Have a good day. Bye. Uh, I'll be right back, John. I'll let you kick off the next one. I will be kicking off a bezel ad. If you want to get a Rolex Submariner, just like AGM had on his wrist, you can