Lightspeed's Aaron Frank: agentic commerce is inning one — stablecoins won't fix the payment rails problem

bit more with more firepower um and and and you can run it just with solar panels like off the grid. Yeah, this is generally what uh not far from what S for Satoshi has been building with truffle, you know, the little orb, right? Personal

personal compute. Well, we have been keeping our next guest waiting.

Yes, we have Aaron Frank from Light Speed in the Ultra Dome. Aaron, I'm so sorry for keeping you waiting. Thank you so much. Can I just

tap back to follow?

How you doing? Grab a seat. I'm 6' 8. Thanks to you, too. This is fantastic.

Yes.

Welcome to the Ultra Dome.

Welcome to the Ultradome. First time in the Ultra.

Did you get to listen to some of that?

I It's actually like a hard act to follow.

It's a weird one.

It's like the most viral product uh that anyone has seen in a very long time. First interview. uh one of the most unique uh you know people don't typically build a viral product and then

talk about what do you say hookers and and blackjack something like that his words not mine

in the chat

um but uh anyways very very unique uh how are you doing though

I'm doing great flying into town head up to Santa Barbara this LA is beautiful I always get that it's a nice place to it's a it's not the best city but it's a it's a it's a great place

you're getting in trouble again saying that why does he live in LA if he doesn't think it's the that city. Um, anyway, sorry, first time on, uh, in the Ultradome. Please introduce yourself for everyone who

Aaron Frank, I'm a former founder, so uh, I'm getting old now. So, a decade ago, I started a company. Uh, we built the full stack credit card company. Okay.

Uh, sold it to Goldman Sachs. It became what is now the Apple Card. Obviously,

any project, thousands of people.

What was it called when you launched it?

It was called Final.

Okay.

So, did a lot in financial services. Uh, helped helped Goldman kind of launch that product and bring it live for

my years there. And then on really it's been six years I've switched sides. So it's how I met Jordy originally. Did a lot of angel investing and advising and just giving away free time to give back to the community. And then I've now been at Lightseed for almost two and a half years, three years going.

Yeah. When we first met you were just like it was on Zoom CO. You were in like a log. It literally was like was it a log cabin?

Oh yeah. Yeah. I mean we me and my wife

almost off the grid.

Yeah. We drove around the country during CO. So that I I quit Goldman during CO just uh there's better things in life than working for an investment bank. disagree, but to each their own.

Yeah. Yeah.

You switched teams, now you're now you're a venture capitalist. What have you been focusing on? What's interesting? What's uh what take me through like stage, scale, the type of founders you like to work with, the markets, everything.

Okay. Okay. Let's just jump right into something uh that I'm curious to get your thoughts on. So, uh specifically like a category that I'm going to guess you're spending a lot of time on. So with with multibbot, clawbot, you now have uh you know I there's a world where the the level of intensity that that software engineers have been using coding agents. You start to get everyday people that are now like firing off prompts all the time to like do things more than just like a Google search or a deep research report. And presumably like there's that's going to involve like money I imagine. And so I feel like there's been a people have had different thesis around Maybe stable coins play a part of this somehow. I haven't seen the most clear explanation for that. Yeah.

Yet. Uh maybe there's other new payment rails. Maybe Stripe just, you know, Yeah. It's a a commerce is a weird thing, right? Like we actually don't have the payment rails to enable agents to peripher Oh, man. Proliferate. Um we've funded some people doing that, building kind of L1's to essentially provide that next rail. But the reality is the biggest distribution networks are Visa, Mastercard on the merchant side and they don't have really a cost structure that sorry they have a cost structure that can support it. They just don't have a market force that forces them there. Um Stripe and Tempo launching well Tempo's not live yet but supporting kind of a new network there. Um ultimately stable coins may be you know the path there for at least how we transfer value but it's also just kind of a store of value right now. Um, agent commerce is just in any one because we also just don't have a use case. The joke I make is I haven't I haven't actually been able to buy anything with an agent and the news this week was what Shopify is tacking on 4% on top of transaction which

they're sending it to OpenAI but

yeah but like that just that's untenable for a merchant right

some merchants I mean there's plenty

for drop shippers it's fine but like but for any like

there are plenty of merchants that have 20% coupon codes in every podcast.

That's true. But so but that's a very small portion. If you think about like Walmart literally doesn't take Apple Pay because it doesn't want to pay the 15 extra or whatever it is basis points. So like when you get to large trillions of dollars of commerce,

agentic payments have to actually be more efficient for the system to be adopted. Otherwise, we're just going back to cart.

You need a lift in actual consumer behavior. Consumption needs to increase to offset that 4%.

Correct. E-commerce needs either basket size increase or checkout conversion increase and like a

Yeah, I was I was worried about a situation where somebody discovers a product on Instagram via an ad that a brand paid for and then they just go into chat GBT or another model and say like order this for me and then it's like and just an an incremental 4% you already paid to acquire the customer effectively

and depending on how great this integration is it might be that consumers just start to prefer that.

Yeah.

Yeah. It's an evolving field. There's a whole another thing is how do you trust an agent if I'm Lululemon and they just show up like I don't know whose agent this is? I don't know if it if it's personal or it's a business. And so we don't actually have a layer in the internet today that says you can trust this agent. It's not fraud. Um which if you think about how an e-commerce checkout store works today, they have multiple, you know, consumer puts in a card. There's multiple layers of fraud checks that happen. And so when an agent shows up from the same IP for 50 times in the same day, you have no idea what that consumer is. And then you lose all the downstream tracking that you do on a consumer per transaction.

Yeah. I mean,

it just it breaks the entire model of the internet.

I was I was I was sort of cautiously optimistic that uh that agentic commerce would roll out before Black Friday towards the the end of last year. That didn't really happen. I mean, I've had the same experience as you. I don't think I've purchased anything agentically. I've tried to buy flights and even search is bad for it's we just need to build more and more protocols.

I think the I I mean I think the the the current like use case or or like that would just be like you're trying to buy a single product and not a complex cart yet just something simple and it I think it can get across the finish line but again I haven't actually been uh like moved to do that and I'm wondering where GMV on Agentic platforms will land at the end of this year. It feels like there's going to be a massive push. All the integrations are happening. All the deals are happening. Like you can see the UI is is adapting to it. I think OpenAI already has my credit card in chatbt. They should be able to do this. But I'm wondering like consumer behavior awareness, education. There's a lot in there. There's an images tab. There's a deep research tab. Like there's just a lot that could put like a like a slowdown on the roll out there.

Yeah. There's an old saying in payments is that everything happens over a 10-year time horizon. AI clearly is shifting that shorter, but like until it's actually saving you time and you trust that they're doing they're getting you a discount, they're getting you the most efficient price or something like that. Yeah. Consumer behavior is fundamentally the hardest thing to change.

Totally.

So there's there's it it will exist. I'm sure there are people buying stuff. I'm sure like I will get slammed for saying like who's done an agentic transaction. But the reality is it's

I mean people are out there giving their

the classic thing last year was like I just just let me order just just let me order a a flight you know and I think we're now we're now getting close but

we're close

and we we've had agent commerce there there were when we were running final we had a ton of people using the product for sneaker bots.

Oh okay.

And and so it's it's a bot you know agentic commerce is bots by another name.

Yeah I guess that is agentic commerce technically

but it's just like you now have this layer of intelligence that an LLM gives you. So we can do complex coordination and complex tasks.

I had an auction sniper in like 2004 on eBay. Click the button right before the the auction ends.

They still exist. And there's a ton of volume flow, but you know what? It still still runs over the card rails because it's the lowest common denominator.

Yep. Yep. That makes sense. Interesting. So is is one of the strongest bull cases for uh stable coins still just lower transaction fees and

No, not at all. No, there's no domestic Oh man, I'm going to get slammed for this. Yeah. Yeah. So, so it doesn't seem like it doesn't seem like any any of the the the players that have the ability to get institutional adoption of stable coins have any incentive to be like, oh yeah, like

that it's going to be like 0.01% fees. Why would you why would you maybe want to be competitive, but it's there's no incentive to make it zero or close to zero.

You would do zero. So, you get the other side of the equation. And if you think about like a a store of value, like if you look at like a dollar, I give you a dollar, you know, it's worth a dollar. There's no risk transfer there at all.

Um, and that's actually like what we want in in payments. And it's actually why, you know, Visa, Mastercard are the largest factoring networks in the world. When you swipe at Starbucks, they don't get a dollar. They get 97.5 cents on the dollar because that is the risk that they were taking in taking your dollar. Um, stable coins, you would give it away for free. one because ultimately Visa Maser man we're going way deep in payments but are actually data networks. They actually don't transfer money. The money is transferred via settlement layer at Fedwire.

Yeah.

And so when you think about it like how would you do with stable coins? Well, it's still just a data layer and you actually just want to hold on to as much treasuries as possible

and make the yield from that. And so how would you aggregate volume? Well, you give away the transfer for free because data in theory as if you look at a bunch of network effect things as data goes up to the right the cost of that data should come down to the right and so you would just want as much volume over your network to win. And it's why you have things like tempo launching you have the other kind of L1's launching to try to aggregate all that data while you also have the incumbents who have a lot of money and a lot of market force to be able to try out new things to try to capture that volume back.

Are we going to stop launching new L1s? uh there'll be new use cases you can launch them whether you get adoption is a different question right like we backed one called radius technology building really interesting technology as an L1 um it enables uh transaction volumes I think Bobby would say in the millions um they came out of the Fed kind of the the the central bank digital currency project that died they turned project Hamilton into this company um and in doing so

yeah if you want to do agent commerce you're going to be talking about millions of transactions a second And you can't do that over existing rails in a way that doesn't also break a bunch of other kind of primitives. So yeah, we'll keep on launching L1's. What I was saying about stable coins is there's really stablecoin is just kind of a quasi bank account, right? We finally have true programmatic money. Um behind the scenes, there's a lot that happens to onramp and off-ramp, but what it enables us to truly take what is the US's biggest export, which is the US dollar by far, and export it globally without any barriers. Mhm.

So if I'm any other country friendly or not, my citizens can now get access to the US dollar.

And that is that is the demonstrable use case of stable coins. Everything is else downstream of that.

Yeah.

Like Venezuela is a great example right now. Like do you trust your central currency? Who is your like no you don't even trust a central bank? So I'd rather hold on to CAT US dollars which

yeah we were we were talking with Joe the co-founder of Ethereum yesterday just saying like interesting dynamic right now where Americans if you've had access to the US dollar your whole life and the benefits of it

uh you're like I want silver and gold and all these other assets but then elsewhere in the world you have people that are like

finally I can have something that sure it's inflating but it's not inflating 40 to 60% a month.

Yeah. I mean that's why in my like an independent Fed or a like is important because this is the the global currency. If you think about all the sci-fi we've all watched growing up, they had a concept of credits. We had some intergalactic currency.

How do we get like we're we're where we are today. How do we get to credit system, right? And the answer is probably something stable coins, some cryptoescoin that is tied to something that we I mean money is just a trust system at the end of the day. So something that we trust across counterparties.

Mhm.

And so like this is the biggest shift in my generation. I'm not that old. Like um at least I don't feel that. Uh that like we finally globalize the world.

You're ank.

Yeah.

There's one layer above which is elder. Okay.

No, two layers above. It goes then OG then elder.

Oh, got it. Got it. Got it. Got it. Okay. So you're a spring chicken.

Yeah. Yeah. That's great. There you go. uh where like what what is what's what does winning this year look like at Lightseed in your role? You're obviously focused on

Let's talk about venture is just like expensive emails that we all write to each other in venture and then every once in a while we convince a founder.

I know. But like is there is there uh this can be a tough one to answer but like is there a company that you feel like is uniquely enabled now that you haven't pitched yet?

Oh no. I I like

does everything get kind of pitched in some way or another? No, I think like there's many ways I I've been on this side for two two year like at the core I still think like a founder and like I had kind of forgotten what it was and then we launched our we me and a friend run a stablecoin conference every year and I was like oh this is what it's like to like start something from scratch and like build something and like

uh no not no he run stable con no it's called a very stable conference so me and I right um we're in we're six weeks out in March in SF um but no you know there's many ways to do this and like at the end of the day when I really boiled it down, venture is a people business. Like you're betting on people, especially as early as you can go. Um, and then you let them go cook. Like you give them money and let them cook is like my real mantra. So there's not people like that I feel like I've ever missed on deals or people like, "Oh, I can't get an intro to because there's also this style in venture of like you actually want to have to talk to this person, right? Like had a three-hour board meeting and I need to debrief with the founder and that's like another two hours potentially and I'm happy to do it." And if we have that vibe that works

what?

It's basically your whole day that you got to

Yeah. Yeah. But but if I have that vibe where I'm more than happy to like pick up the phone at 9:00 p.m. and just talk to them until 11,

that's the type of founder I want to work with. At least that's how I think venture should be. There's like other ways. There's people who just do massive prospecting. But as I've kind of looked at it, like life's short. There's lots of ways to make money and like find the people who are going to leave a dent in the world. So, if you're I I don't I I'm not apologetic for being like a weird human underneath, but like if I find other weird humans who I vibe with and who want to do something interesting in the world, then it's usually kind of a very good match made in heaven.

Yeah. Uh what do the various constituents coming to your conference in 6 weeks?

Yeah.

How do they want uh the do they want yield on stable coins? I'm guessing they do. How how are they all feeling about kind of the

Yeah. current regulation that um and maybe give us the update cuz I know it's kind of

and there's a bunch of market structure stuff that is like actively happening. So I I don't have the latest on that to be honest. Um last year it was in February 12th. It was the month before the Genius Act passed. So we actually had Governor Waller um speak at the conference and give a public speech and we actually had to live stream it because he's a public official and a governor can move the markets. Interesting.

Um we're working on a few other kind of high name people that haven't been announced yet. Um really the whole premise of the conference and it's really funny. So I had a kid a year and a two years ago now. Um thank you.

But so I was walking around in July with my kid strapped to my chest at 6 a.m. and called IO. My my coordinator. Yeah. As one does as you have a young baby and you're trying to like get get your steps in. Um and I said we're talking about stable coins and how it's changing the world and we're like somebody should host a conference.

And then we both stop and we're like oh [ __ ] we have to host a conference. Like how do you get really the whole premise how do you get all of the right people? Not like I don't need 25 people from every single company. I need the two or three right people at every company. Ideally, it's the founder, but like sometimes, you know, if you're a massive company, it's somebody lower level and put them all in the same room. Make the content interesting and make the networking good. And like I have a big belief in serendipity, doing interesting things in the world. And so, it's how do we create serendipity? I know of at least one or two deal, well, we did a few deals besides Lightseed who was a sponsor last year and sponsoring again this year. I know of two deals that happened as a result of like a founder showing up at the conference, meeting another top tier VC, and they did a deal together in stable coins. So, like our goal is not to like dominate the conference. It's bring the people together and get this thing like and keep the industry moving forward.

Um, that's great.

What's your take on the proliferation of stable coins specifically? There's like I saw a couple states talking about launching them and that feels like

I I might have it wrong but it feels intuitively like a step away from the universal credit system.

Yeah.

But maybe it's they're all credits.

Well, it's like slightly different credits rappers around credit.

Yeah. Well, it's it's a question of there's a question me and my friends have talked about which is like at what point does a central bank of let's just choose random country Colombia change their interest rate and nothing happens. Like how much of their citizenry needs to be moved to dollar? how much of their GDP needs to be in US dollar for the central banks to no longer be relevant. So this is them fighting back against I can no longer stop my citizens like they can hold Bitcoin but now they can actually hold dollars which are like not volatile. It's actually a better historically a better store of value.

So we've seen CBDC's central bank digital currencies. Um they certainly will provide efficiency in those countries in the domestic markets when they run

long term. How will they work out? I it's like I don't I I don't even think about it because it's just we're seeing this macro trend of dollars taken off. I mean literally today Tether launched their US compliance stuff. So like um and Tether is the largest by far and it wouldn't surprise me if they very aggressively shift a lot of money from USDT to USDT. I think it's a because it's Anchorage. Um just to show that there's massive compliant volume and the the world's just going to pick pick up. Like we're at $300 billion of stable coins I think today. It was 200 billion last year roughly. Yeah.

Um the number just keep going up.

Number go up.

Number go up.

Here. Let's hear some

our greatest our greatest export.

Our greatest.

Yeah, exactly.

Um

that's great.

Well, I'm excited for the event. Yeah.

Yeah. Thank you. You guys You guys are welcome.

What day is it?

March 5th at Terara. Well, Terra Gallery. It's It's invite only, so like apply at very stableconference.com.

Hit them up.

A great name.

Yeah.

Fantastic. Uh well, thanks so much for coming down to the TBPN Ultra Dome. Great to have you.

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