Value of the Stellar Currency
Stellar is fascinating. I’ve spent much of my day today learning everything I can about it.
I’m curious about what the total value of the currency is worth at this beta beginning. There’s a couple answers:
1) Stripe made a $3,000,000 loan to Stellar to fund initial operations. Stellar repaid this loan using 2% of all stellars*. This means $3MM / 2% = $150MM stellar market cap.
2) On reddit people are offering the following conversion rates:
- 4000 stellars for 1 hr of full-stack dev consulting work. 1 hr of a dev’s time =~ $100. So, that’s a 40 stellar : $1 ratio. There are 100 Billion stellars in existence. Which implies a stellar market cap of: $2.5B.
- Paying $2 for 5000 stellar. So that’s a 2500 stellar : $1 ratio. Which implies a stellar market cap of: $40MM.
Both of those are only offered rates. Nothing has actually transacted at those prices as far as I can tell. So, they represent the bid side of the bid/ask spread.
3) Stellar.org is giving away 19% of all stellars to owners of Bitcoin. This ratio implies a value of 1450 stellar : 1 BTC, which is a 2.4 stellar : $1 ratio (using today’s BTC price of $601.97). Which implies a stellar market cap of: $41.5B
This last # is pretty fishy because you don’t have to actually exchange your BTC to get your 1450 stellars… it’s just a gift for being an early supporter of bitcoin. So, it’s not really a conversion rate.
In conclusion, what is a stellar actually worth? Whatever someone will pay for it. Which of these valuations holds the most veracity, I guess the $150MM number… although $3MM is really just option value to Stripe, so it’s not perfect. The best valuation metric would be to know the salaries being paid in Stellar, compared to market rate alternatives.
* lowercase = currency unit. Uppercase = the non-profit company.
I’ve been taking the Cryptography class on Coursera recently, taught by Dan Boneh. It’s terrific… just difficult enough to be a fulfilling challenge, but easy enough that I haven’t churned (yet).
We recently studied a practical application of the Cipher Block encryption methodology called Cipher Block Chaining (CBC). Here’s a diagram from Quora that articulates how CBC works:
It immediately reminded me of the bitcoin blockchain diagram from Santoshi’s original bitcoin white paper:
The key relation in both images that the output cipher from each round of encryption is fed into the input of the encryption of the subsequent round, to create a chain. It’s very elegant. I never knew the origin of this structure before… and I’m sure its roots go back beyond CBC.
I love moments of abstraction connection like this… this is why I take Coursera classes. They’re very academic, which doesn’t seem useful at first, but I find they make me look at my day-to-day interactions through a new lens, which spurs serendipitous moments of creative connections I would otherwise miss.
Project Hieroglyph Close to Release
In 2011 Neal Stephenson penned an essay called Innovation Starvation about our current stagnation in accomplish big honking technical marvels. He is not alone in this worry, a classic fear often ascribed to pessimistic curmudgeons that pine for the good old days, but unlike that stereotype, Stephenson’s essay is great because it present a path forward, led by sci-fi.
The primary reason I read sci-fi is to be inspired by what’s possible, to view through a window a compelling and convincing possible future. Stephenson takes my interest one step further by saying that it’s sci-fi authors’ responsibility to create the hieroglyphs for future innovations. Hieroglyphs? Stepheson describes it best:
Good SF supplies a plausible, fully thought-out picture of an alternate reality in which some sort of compelling innovation has taken place. A good SF universe has a coherence and internal logic that makes sense to scientists and engineers. Examples include Isaac Asimov’s robots, Robert Heinlein’s rocket ships, and William Gibson’s cyberspace. As Jim Karkanias of Microsoft Research puts it, such icons serve as hieroglyphs—simple, recognizable symbols on whose significance everyone agrees.
I agreed back in 2011 when I originally read this essay, and the concept of sci-fi as hieroglyphs has been banging around in the brain every since. I saw a great quote tweeted out by Ian Hogarth today, quoting a blog post by Albert Wenger. He said, “[I]t is almost too easy to write a dystopia these days. The real challenge, it seems to me, is to write a new utopia.” Cue vigorous nodding in agreement, and the quote reminded me of Stephenson’s essay.
So, I googled the essay, and in the process of falling down the Internet rabbit hole, I discovered that the Arizona State University had partnered with Stephenson to create an organization dedicated to fostering the next generation of moon-shots, through sci-fi. It’s called Project Hieroglyph and their first anthology of fiction is being released in September. This sounds like a terrific read and I can’t wait to check it out.
Venture for America: Three Years Later
Three years ago, I blogged briefly about Venture for America (VfA), a non-profit that places America’s top college graduating talent into CEO apprenticeship roles in small business in declining US cities. This simple graphic from the About page really says it all:
This week, the VfA team kindly invited me down to Brown for a panel on Entrepreneurship*. Participating in this event gave me an appreciation for just how far VfA has come in three years. They’ve made some big splashes, like Tony Hsieh’s $1MM committment to VfA to help revitalize businesses in downtown Las Vegas.
But what was most striking to me was the evidence of true, organic growth, directly in line with the company mission. Because the organization is 3 years old and it’s a two year fellowship program, the data is starting to come in. The original class of fellows are graduating from their two year apprenticeships, and I had the privilege to hear about some of their journeys. The businesses the fellows joined were not rocketships (zero businesses are ever straight-up-and-to-the-right… despite the “overnight success” stories journalists love to write in retrospect), and the fellows had to deal with the same startup highs and lows I see founders deal with on a daily basis. All the stories I heard, positive or not, ended with lessons learned and new strengths found.
The most inspiring story I heard was of one fellow who was placed in a company in Detroit. Inspired by his experience, he’s forming a his own company at the end of his fellowship, a new CPG company selling dried pasta made from chickpeas. He has hired another VfA fellow to help him build the business, and they’ll be living in a Detroit apartment building with six other VfA fellows, some of whom bought the building and will be renovating and renting the property as a business. This is the VfA mission at work, playing out as well as I could possibly imagine. I was so inspired.
So congrats to Andy Yang, Eileen Lee, Mike Tarullo, and the rest of the VfA team on all their success. It’s amazing to see what they’ve built from scratch, and I look forward to their continued success in bringing more jobs into cities where they are most needed.
Spark’s Investment in Cover
When I first used Cover, I found the user experience to be delightfully simple. I walked in the restaurant, sat down, and said I’d like to pay with Cover. Then at the end of the meal, I walked out. That’s it. That’s how simple the experience is.
It reminded me a lot of the first time I used Uber. “What do you mean I don’t pay?” I remember thinking…, “Huh, I hope that tip was included…”, and “That was easy.” Cover has that exact same “A-ha” moment. It’s so easy, easy to the point of being unexpected.
With repeat usage the initial “A-ha” moment (I can just walk out? Whoa…) fades into a second “A-ha” moment: you’re a regular. Anywhere that accepts Cover now feels like a House account. You can just “put it on my tab.” It feels flattering, empowering, and, eventually normal. In line with the adoption curve of all interesting new technology: you feel joy first, and then in the long run becomes pleasant expectation.
If you’re in SF or NYC, give it a try the next time you go out to eat. Which leads me to the next reason why I’m excited to be an investor in Cover: the restaurant list. The Cover team has done a remarkable job of partnering with an impressive group of restaurants. Adoption by restaurants such as Momofuku Ko, Carbone, and Alder (the homes of world-renowned chefs) provide a level of validation I rarely find in early stage startups. It’s a testament to both the product experience and the persuasive hustle of Cover’s team.
Having a great product experience is an essential part of how I develop the conviction to make an investment, but it’s not everything. It’s also important that a company fits in Spark’s view of how Internet technology is evolving. In the case of Cover, mobile computing is a decade-defining technology shift, the important of which cannot be overstated. Every information-based service that was first disrupted by the Internet is now up for grabs again in the move to mobile, plus some additional opportunities that the Internet never quite nailed alone last decade.
Payments is an opportunity that was never thoroughly transformed in the Internet shift because only now, for the first time in history, does everyone have an advanced Unix-based computer humming away in their pockets, ready to run software to make paying for anything more dynamic, and (more importantly) more enjoyable. Only recently, at this point in time, is your “wallet” smart enough to hail your cab (Uber), book your hotel room (HotelTonight), and close out your check (Cover). The transactions in each of these products are vertically organized; meaning: they are single purpose payments. Today, Cover is manically focused on its single purpose: making the restaurant payment experience amazing. From that established beachhead, there will be opportunities to move both vertically and horizontally.
I feel honored to have the opportunity to partner with Andrew Cove, Mark Egerman, and the rest of the Cover team; and I’m glad to be joining Bryce at OATV for another tour of duty (we share investments in a few other companies).