Blockworks raises at $192M valuation with 20 customers investing alongside VCs

Speaker 1: We will continue to chat about that and cover more tech stories throughout the show. But we have our first guest of the show, Jason from Blockworks.

Speaker 8: He's the co founder, and he's in the waiting room. And so let's bring him in to the TVP and LP Dome. Jason, how are you doing? Welcome to the Yeah. And what's going on? There's there's a by the way, there's a startup idea I think that you guys are missing there, which is I think the credit card companies should become gambling companies. They should let you so 50% choose blue, 50% choose red. You should be allowed to basically gamble on your purchases. So you go buy the Chipotle burrito, you can either pay $15 now, or you can double or nothing. Yeah. And

Speaker 1: I'm surprised this hasn't actually cropped up as some sort of, like, smart contract already. I feel like people would potentially play this somehow. I don't know. How do you buy in? It'd be a little bit tricky. But I feel like And then the credit card company takes a little vague or something. There's something there. I don't know. I've always liked when when when people suggest the the sort of like gambling on like tied into credit cards because because you're basically saying like, we should create a gambling product for debt.

Speaker 8: Debt fueled gambling, baby. That right.

Speaker 1: I mean, there there's Very American thing. There's some sort of UI designer that puts out these like cursed dark patterns. You've seen this guy before? Have you seen this? So No. He'll he'll he put out one that was like it was maybe like a DoorDash or an Uber Eats interface and it was like a double or nothing. Like you pay twice as much or you don't. There's been a whole bunch of these I think. Didn't Riley Walls at one point do like the the fog of war? No. There's Aiden Dunlap who did the fog of war, Google Maps like where everywhere you explore it reveals the map underneath. All of these like funny things. Everything will be instantiated in the era of of free software. But anyway, we're not here to talk about that. Although, if you want to share whether you choose red or blue, we'd always love to know. I think we gotta ask every every I mean, it's

Speaker 8: it's red obviously, but so Jordy's Claude said said red. Yeah. My Claude said said Blue, which is the wrong answer. So I'm just getting The wrong answer.

Speaker 2: Whole point of this is that there is no wrong answer. So it's a moral question. I don't know. It might it might depend on if you're on the free or the or the or the paid plan. I'm on the free plan.

Speaker 1: Yeah. You gotta you gotta let the let the tokens cook But

Speaker 2: yeah yeah. Thinking mode. We'll we'll we'll see. Anyway, please

Speaker 1: tell us about yourself. Tell us about the company. Tell us about the news.

Speaker 8: Yeah. Yeah. Good day. Good day to have a good day. We we just raised at a $192,000,000 valuation. So yeah. Good day to have a good day. So Peri Fi and reciprocal led the round. Bunch of folks invested. Coinbase Ventures. Okay. But probably the coolest thing from the round is 20 of our customers also put in money. So, you you know, founders, operators from Solana, Kraken, Canton, all these great crypto companies who use our product every day, and now they wanna own a piece of the company. So, yeah, we're stoked. Are you Switzerland

Speaker 2: in crypto? That's

Speaker 8: right. We I mean, we've always so we Blockworks has been around for so, Jordy, when we met, you were doing party round. This was probably four years ago. We had just kinda started the shift from, like, media and events. Right? So we Yeah. Built the business in December 2017. We we we launched there's really no there's two ways to build an information platform. Right? You can either stop start with the top of the stack or the bottom of the stack. Top of the stack is like soft information. It's news and podcasts and events and media. It's qualitative stuff. And then the bottom of the stack is hard information. It's like data. So most people obviously start with the bottom of the stack because you can go raise venture, and, you it's kinda sexy to build a data company. We started with the top because we thought it was way more interesting to own your audience and then go build the products. So we got to, like, 25,000,000 in revenue, bootstrapped the business, profitable since day one. And then only around when we started talking, this was probably 2022, 2023, did we turn on the data engine and start building the bottom of the stack. And now, yeah, now we're the largest data company in crypto, fastest growing, most revenue, most customers, and, yeah, we're we're in a good place. Wow.

Speaker 1: Very cool. Take us through some of the the the prehistory. Like, what's what's your road to crypto like?

Speaker 8: Worked in venture. Got laughed out of the room a bunch in 2016 showing them, you know, venture deals. I think it was Bitco, Coinbase. We looked at Kraken briefly. And, yeah, we basically did none of the the crypto deals. I was like the, you know, junior analyst at this venture firm. 2017, Bitcoin rips. We basically said, look. Eventually, the gray haired crowd, you know, the institutional investors, family offices, pensions, endowments are gonna come into crypto. BlackRock will come in. JPMorgan will come in. And, you know, they're gonna need something that looks and feels more like S and P, Dow Jones, Bloomberg, less like, you know, CryptoKitty on Reddit. Yeah. And so that was the that was the original idea. And, yeah, we started the kind of controversial thing that we did was we started building the media and events business. It's just a horrible business model. Right? Sponsorships and ads suck from an enterprise value perspective.

Speaker 1: No. I understand now. From an adventure scale perspective. No. We're we're No. No. Let's you bootstrap. Yeah. Let's do bootstrap in business, but it's from an enterprise value. Yeah. Yeah. How do you think about media and events? Like like, what what did you do first? What were some of the key decisions? Big, small, private, public, ticketed, sponsorship driven? Like, what how did you crack all of that early on?

Speaker 8: Yeah. We started so you with with the event space, it's super important to to own a niche. So the niche that we owned was the institutional crypto space, which, you know, there's probably a TAM of 200 people in the world who cared about that in in 2017. But we, you know, we basically cold called these people. We'd send cold LinkedIn messages. We'd wake up at five m every day, reach out to about 300 people a day. Wow. Of the 300 people, about three would respond to us. One of them would buy a ticket, and boom, we're off to the races. So Okay. Yeah. Tickets were $25 a pop, then a $100 a pop, $5 You a

Speaker 1: you would spend a whole day and make $75 in revenue. Wow. That's amazing. Yeah. So then you buy the ticket for the first one, like what are you actually going to? Is it like hotel conference room lunch panel speakers multi day? Like what what what are we actually

Speaker 8: what are we actually feeling? Yeah. At the at the time, it was a six to 9PM event in Chinatown at this, like, you know, I think the ceiling was leaking. Like, I think we paid $4,000 for the venue. Wow. Made probably $10,000 our first event. That's not bad. And that convinced us, yeah, to quit our jobs. We're like, wow. We're we're ripping. We're off to the races. $10,000. That's great. And that was that was February 2018. Yeah. And then what else were you doing on the media side? Because there's so many different, like We build the events. The events convert the attendees into the newsletter. The newsletter then lets us launch the podcast. We originally partnered with big names in the industry to go launch the podcast. So Anthony Pompliano and Charlie Shrem and Meltem and this guy Ryan Selkus. We brought these people into the, you know, into the the podcast sphere. We then built the audience big enough to then launch our own in house shows where we owned the IP. We owned the audience. We owned we owned the host. The host worked at Blockworks. Sure. We cut all our external shows, and then now we just have so today we own the largest, you know, podcast network in crypto, third largest podcast net financial podcast network in the world. Wow. About 15 to 20,000,000 listeners a year. And then we use that audience to convert the customers into our data and software platform. Interesting.

Speaker 1: And and do you do other deals, or are you able to, like, fully fill all of the possible ad slots? Like, we we had Doug Dumira on the show for a while a few times, and, like, he runs a lot of cars and bids ads, but he also runs ads for, you know, auto insurance because he doesn't have an auto insurance product or, you know, all sorts of different like companies that slot in because you can only get so much out of just running the same ad constantly.

Speaker 8: Yeah. We're in a basically two to three year moving this tanker of a, you know, from like all ads and sponsorships into all recurring revenue and software products. So Okay. You know, a couple years ago, 0% recurring revenue. Yeah. Then, you know, maybe two years ago, it's about 5%. Last year, it's about 30% recurring revenue. And this year, we'll pass 50% of the revenues recurring. And that's why and that's I think why, yeah, this round came together really nicely is because, you know, media businesses are I think they I mean, I think you guys did an obviously an amazing job. Think media businesses, if you want to sell for high valuation, selling to all software and AI companies should own a media company. They should think about that. Right? So I but I think if you're trying to sell to like Axel Springer or Wall Street Journal, you know, you're not it's

Speaker 1: It's a tough place to be right now. Yeah. Yeah. We've been talking like the box breakup. Institutional

Speaker 2: sentiment in crypto right now. I see the timeline. The timeline doesn't seem, you know, thrilled about about where we're at, but how are the institutions thinking about kind of where we're at in in the cycle and and what's their outlook?

Speaker 8: Yeah. You have two dichotomies happening in crypto. One is institutional crypto has never been better. Right? You have Jamie Dimon used to call crypto, you know, a scam, and now, you know, JPMorgan's pushing into tokenization, and, you know, they're gonna start custodying crypto and stuff like that. So institutional markets are ripping, and the token markets suck, basically. And the other thing that's happening is and I have a bunch of thoughts on why tokens are down only, essentially. You know? It's down only. It's They are. I mean, it's brutal. Yeah. They're down 95%. And then in in the crypto venture markets, it's pre seed and seed was so hot. Right? You used to be able to just I mean, Jordy, I think you remember these days, like, you could tell someone you're launching a token and boom, you raise $10,000,000 like that. Now Yeah. There's this you guys you know, I listen to the show. You guys talk about the k shaped recovery in the economy. You have the k shaped recovery in crypto too. You have the haves and the have nots, where most of the companies will be the have nots. Yeah. But the the select few companies, especially in the later stages, like, know, it crypto has been around for fifteen, sixteen years. It's, that's around the time when industries start to enter their consolidation period. So Sure. I think we're we're just starting to enter the consolidation period for crypto. Interesting.

Speaker 2: Are you expecting a product at the intersection of AI and crypto to have undeniable product market fit within the next twelve months?

Speaker 8: No. I don't I don't really think so. I mean, I I I think that I think that crypto a lot of the crypto AI stuff has not really worked out too well. I mean, there's there's this thing Venice. It's like open source ChatGPT or something like that. Like, I I'm not I'm not too sure. I think it's more just if the you've got the haves and the have nots. The haves gonna be the people who can completely AI pill their teams. Right? So for us, like, 70% of our code is built with AI. We're shipping about four to five times faster than last year. Our last three months of token spend represents 50% of all the token spend at the whole company and the history of the company in just the last three months. So that I think that's really the key the key difference.

Speaker 1: What about regulation? Is that a tailwind for you? It feels like they're the as the industry consolidates, this feels like your products and solutions become more relevant, more valuable, more important. Yeah.

Speaker 8: Yeah. Yeah. John, we should have put the round in front of you, my friend. We the yeah. The a lot a lot of the story here is, there's two there's two big things in regulation in crypto. So you had the Genius Act and Clarity. Yeah. So Genius kicked off this, like, ridiculous bull market for stablecoins, Circle, IPOs, stock pops 10 x, and it's just been kind of a ripper of a market for the last, you know, twelve months. That's about to happen, but with this thing called Clarity. So clarity is all around market disclosures. I would describe it as the make tokens great again act. Mhmm. Where right now tokens are in this down only period, and the reason for that is super simple. If you are an issuer of tokens, you're a founder in the industry, you've historically treated your you know, the users of your product and the shareholders of your token as the exact same thing. But, obviously, that's wrong. Like, you know, that Apple has their customers, and then they have the shareholders of Apple stock. Yep. That doesn't work in tokens. So what Clarity is gonna force is these disclosures. Blockworks owns the largest disclosures platform in the in the industry. You can kind of think of it as the Edgar online or, you know, we have this thing called the b one and the b two. It's kinda like the s one and the 10 q. And so actually, yeah, if Clarity passes, yeah, you know, we're off to the races. They'll they'll basically be mandatory disclosures for all token projects,

Speaker 2: which will, yeah, be, you know, big tailwinds for us. So we like it. Well, congratulations on the progress in the round. Yeah. Great to get the update. Congrats to the whole team on all the progress. And come come back on soon. Yeah. Let's do it again. We'll talk to you soon. Yeah. Have a good one. Appreciate it, guys. Great to see you. Goodbye. Up