Episode 354 - The Founding of Zero Knowledge Systems with Austin Hill

Transcript

[Music] welcome to zero knowledge I'm your host Anna Rose in this podcast we will be exploring the latest in zero knowledge research and the decentralized web as well as new paradigms that promise to change the way we interact and transact [Music] online this week we dive back into the p asked with the third episode in our series on zero knowledge systems the legendary company from the late '90s that shares the name with this podcast in this episode I have the chance to interview one of the original founders of Zer knowledge systems Austin hill we discuss how he first got involved in

Tech in the early 90s the journey to build zeron knowledge systems and what the tech scene in Montreal and across Canada was really like during that era we cover everything from raising money in Silicon Valley during the dotc boom to the ambitious vision for the company the dynamic team that was put together and the mission of providing a future of privacy and sovereignty which was at the heart of their original product Freedom the company emerged at the start as a media darling a shining example of Canadian Tech potential but during the doc com bust it was forced to rethink its strategy eventually reducing its ambition and finding product Market fit as a B2B business Austin shares his personal Journey after zero knowledge systems including how he discovered

Bitcoin how he and some of the other zero knowledge systems alumni co-founded blockstream and how they navigated the opportunities and challenges of building a business around a revolutionary open- Source technology we wrap up with him sharing his new project machine phase systems and the field of Technology that's getting him excited today this conversation provides an amazing snapshot of a very different time in Tech when the dream of a private internet free from surveillance and censorship seemed with in reach but how Market forces circumstances and consumer preferences shifted the internet's trajectory in another Direction before you listen to this episode you may want

to hear the other two episodes in the series I'll add the link in the show notes in the first one I talk more about my own personal connection to the xal systems company so again I do recommend you listen to that before you listen to this one now before we kick off I do want to just let you know about the ZK Summit ZK Summit 13 is coming up it's happening on May 12th in Toronto this is the second time we bring the ZK Summit to North America the first being all the way back in 2019 when we did one in San Francisco if you've never been to a ZK Summit I definitely recommend checking it out this is the spot to find out about the latest research the newest applications to find out who are the most important players in ZK today it's also a wonderful way to get to know sort

of the larger ZK Community the application to attend is now open links as always are in the show notes and I hope to see you there now here is my interview with [Music] Austin today I'm here with Austin Hill Austin is one of the founders of the zero knowledge systems company we've been talking about as well as one of the co-founders of blockstream welcome to the show Austin thanks Hannah very nice to be here I'm pretty excited to have you on the show to talk about zero knowledge systems in even more detail than we've already covered it I do want to to listeners that if they haven't yet they should listen to the short episode I recorded where I discussed my unexpected connection to the zero

knowledge systems company I'll link to this in the show notes it's only 15 minutes but I do recommend listening to that episode before this one uh we also recorded an episode with one of the employees of zero knowledge systems Jonathan and I'll add that to the show notes as well so Austin I'd really love to hear about Zer knowledge systems but I think before we do that I want to kind of understand why you even wanted to work on these top topics what was the beginning point that inspired you towards this so I I grew up in Canada I was very much at kind of tech geek hacker I got my first modem when I was seven or eight years old I was running a bulletin board by the time I was 10 uh you know just having friends dial in and

you know acting like I was a lot older than I was on the message boards and uh then kind of got exposed to the internet just through most of us when to get access to the internet you had to hack a local University because there were no commercial internet accounts and so exploring the internet fascinated me and through that and reading early articles in 2600 Frack which were like hacker eign and magazines I started being exposed to the idea of civil liberties online and it really started after the FBI had done an operation called operation sundevil in 1994 where they rounded up a whole bunch of hackers and treated them essentially like terrorists when they were mostly teenagers

exploring the computer world when the rules and laws were still somewhat unknown and that's what led to uh the creation of the Electronic Frontier Foundation actually so John Perry Barlo who wrote the Declaration of Independence for cyberspace and Mitch kapore and John Gilmore Heroes of kind of the computer Freedom you know movement started saying we need to write civil liberties online and so combination with sci-fi reading I can't kind of read the cipher Punk stuff and the Cyber Punk uh I had started getting exposed to this and so when pgp first came out I was on the front lines I was on the cyppher punk mailing lists but it was a hobby of mine and I had started a company with my brother and our father

was an investor which became one of the largest internet providers in Canada I wondered a bit about this like this sounds like pretty vanilla technology company but why this well I I moved to Montreal and so in 1994 I moved to Montreal you could barely get an internet account there still wasn't a commercial internet uh the French government had in Quebec had announced that they were going to provide free internet for the entire Province but translated entirely into French because there were only 2,000 websites so they thought they could translate the entire web and provide free access to everyone so so no one was putting money into internet providers and I looked at their plan I was like

this is stupid this will never work I'm just going to launch an internet provider and so uh over the course of the next few years we became one of the largest operating across Canada we had 880,000 dialup subscribers and we sold the company and so once I sold that I was kind of I had a bit of money I was still very young in my 20s and right away I started thinking like with my partners what do we want to do next yeah and I was really obsessed with this idea that what if we could take some of the early tools that the cipher punks were talking about and they were talking about the social implications the math but it was still most of these tools have not been built yet like a mix Network to anonymize your online traffic

electronic cash system yeah uh you know a a privacy tool that could allow you to have a different pseudonym and email address that wasn't linked to your actual identity because one of the most famous remailers that would do this got shut down by the Church of Scientology because they were forced to reveal who was behind a pseudonym but was this this is more recently right no this was all in the 1990s oh okay yeah early 1993 94 was a non pet. which was shut down by the church Scientology so I was well versed in these issues and I'd been more of a lurker but observing all these conversations on the cypherpunk list while I was running my internet provider and so afterwards I kind of got together

with my partners and wrote up an initial idea for what became zero knowledge and freedom which was wow the founding idea was kind of if we had online identities that were separate from our real identities so pseudonymous totally separate identities combined with Anonymous networking like tour where we didn't have to reveal our IP address and we were protected from cookies and being monitored and electronic cash to pay for things then we could build and totally private internet where surveillance capitalism wasn't at the heart of it and that was the founding Vision we said the same way Netscape made browsing the net easy we need to make adopting cryptography that easy were these ideas

super well known in the cipher Punk world or was was the that combination kind of novel in the cipher Punk Community which was a small community but very influential yes these things were discussed all the time okay uh they drew ideas from sci-fi verer vinge true names and you know in the realm of cyberspace which was a famous book in the cipher punk you know the design of systems like Anonymous remailers some early code prototypes I mean that's where Adam back had done his hash cash implementation which was using cryptography to solve spam and they were discussing how can you adopt this and there was a lot of discussion around patents because patents at the time were one of the biggest blocking points because most of the encryption libraries

were all based off rsa's encryption yes or they were based on which you had to have a license and was restricted from export or they were based off some other you know open- source toolkits and all the electronic cash patents were tied up by David shom so there were a lot of discussion and awareness but in general Society people were still figuring out can I trust to put my credit card online yeah no one had any understanding of crypto interesting the year that we're talking about when you started to have the idea for zero knowledge systems is that 96 90 what what when is that it it was 97 it was 197 we sold the company kind of end of

9697 we spent a couple months coming up with the plan researching uh I you know Dove really really deep into crypto and understanding the algorithms and kind of studying at a deeper level how the protocols work and then yeah we put in a bunch of our own money and uh said okay we'll hire a team to start and then we'll raise some Venture Capital the work you had done on the ISP do you think that that like was there any connection there had you seen something in that work that felt like you know the lack of privacy was really dangerous for people like was there anything that had sort of yeah that you were taking along with you or was it kind of a brand new project it was a pretty much a brand new project obviously we were immersed in

everything that was the internet because we were you know People's First Call um and it was pervasive at the time when people said why won't you shop online oh I don't trust the internet with my credit card you know even like the SSL browser people didn't stand when it browser was in Secure mode I mean there was still so so much lack of awareness people didn't do banking online at the time because it wasn't seen as trustworthy Thea internet sure so everywhere you heard you heard the comment one of the biggest things preventing the growth of the internet economy is people's concern over security and privacy and we took that as validation that if we just built something easy enough we could sneak in this revolutionary civil rights tool

that was like NSA proof and could prevent even governments from tracking you and we could uplift the rights of individuals while still building something commercially viable we made a bunch of mistakes in that assumption but that was the founding assumption yeah would you say like were you and your crew kind of activist oriented to to a certain degree I mean listen I was a nerd I was a nerd who you know so to a keyboard Warrior yes I would get on and rant about things and talk about you know Phil Phil Zimmerman and you know the pgp case I you know when I I went to California to go to cypherpunk meetings and I timed it so I was actually at the court case with all the other Cipher

punks when you know there was a famous kind of crypto court case when someone had shipped the the pgp source code in on paper to test the law on whether or not you could export encryption interesting I think I know about this from from like the books on cryptography history yeah yeah so uh you know we were very much involved and I loved that part of it mhm some of my feelings towards kind of white hat hacking had emerged you know early on I had done some uh you know white hat hacking where companies paid me to essentially break into their systems so I had kind of grown up in that hacker kind of activist Community where the idea of civil liberties and

civil rights were very important and often discussed you know how to protect your rights against an overb overburdensome government uh and yeah I think somewhat you know my parents there is a little bit of influence there my mom comes from a family of you know civil rights activist and Union organizers my father comes from a family of lawyers so okay certainly you know and having a very large family I have eight siblings so dinner table was usually a very Socratic tear down of anyone's ideas and so that served me well when I hopped online and had to defend my ideas as an 11-year-old um yeah yeah so I all of that just mixed into we said why not

let's build it and we thought being in Canada was a great strategic Advantage because we could actually export encryption globally y that the US government couldn't regulate and so we felt it was a perfect storm of everyone saying privacy is their biggest fear we can actually build a privacy tool that is govern like totally government proof and we thought that was the ultimate test like the government trying to shut us down or the government ordering us to R an identity and we couldn't do it that's where the zero knowledge name came from we wanted to have zero knowledge about any of our customers did you know the cryptography as well I'm assuming yes yeah yeah well yeah I mean I had read when I did my deep dive I

would read Bruce SNY applied crypto I had looked at all the various techniques I looked at all the patents from David CH so I was very familiar with zero knowledge algorithms at the time which were still pretty new constructs yeah but the entire idea that you could prove something without revealing it was interesting from a tech point of view but we used it as kind of a broader representation of never reveal anything because you don't have to yeah you had zero knowledge of what was happening in the system that's perfect yeah you know I coined the terms later at blockstream uh can't be evil instead of don't be evil and I also coined the don't trust verify they were all kind of e those yeah kind of marketing slogans that I

came up with with but they were all based off the ethos of the cipher punks it wasn't something original of mine these were you know security through transparency you know these were open source was something I was raised in you never trusted anything that was an open source so all of the principles that to came from the free software movement from kind of the activist hippie kind of free software community that had emerged out of California those were some of my roots those were my heroes I read about these people growing up as a team so cool one of my questions was a little bit like why Montreal but I think you you sort of answered it with like the at least why Canada and you were already living in Montreal but talk about like building a team in Montreal at that time so this is still very early on and so

Montreal had a lot of uh programmers in the video game special effects Industries Montreal is kind of known for that but we were talking about building a new Internet Protocol an actual protocol routing like lowlevel TCP IP wrapping packets in encryption we were talking about doing encrypted protocols which not many people had experience what languages were you would you even be building this stuff in most of it was in C and C++ because we had a server component that had to write the server rerouting and do all the you know the email handling so we had to build essentially a core set of internet services like an encrypted mail server a mail routing server the packet servers

and then we also had to figure out how to build how we could get paid for our service without knowing the identity of our users so we had an ecash project yeah that was designed around reimplementing because if anyone could say Okay show us who you know John Smith spent money with you show us who his pseudonyms are the entire service breaks down tot we know who our customers are so right away we had designed conceptually how these worked I knew I needed protocol engineers and I knew I needed an incredible very famous cryptographer who could not only vet our design and Implement our vision but also lend the company some credibility because we were kind of coming out of nowhere I had lurked on the cipher Punk list but our plan was to hire as many of them as possible so I wanted an

emissary so I hired uh a friend of ours who was you know pretty Junior but uh a really enthusiastic software engineer at another company just because I had never built software I ran an ISP and I had hacked some code but I had never shipped commercial software and then we recruited two different groups one was a small group of protocol Engineers that were working and affiliated with Mill okay because Mill University actually had built a couple of the early versions early protocol versions on the internet gopher ways and Archie which were three ways of navigating the internet before the web wow were built in Montreal and so we found some team members who had worked on those because we figured okay

at least they've done protocol submissions they've dealt with the ietf they understand the networking staff and then I recruited Dr Ian Goldberg and that was kind of its own adventure he was world famous yeah how did you do that like so reading about him and reading about him even at that time like he was already a known person he had found this crazy exploit had published some amazing work already so how did you actually recruit him I knew he was Canadian that he had graduated from waterl he was attending Berkeley uh his email was out there he was on the cipher Punk list had seen I had been following Ian so he was one of my top five to Target but I wanted a Canadian so over the high holidays when he was visiting

his family for Hanukkah uh I contacted his family in Toronto I said I'd love to come visit your son and you for for a visit because he was in from California he was I think second year into his graduate degree that is so bold they let you f Toronto yeah flew to Toronto sat down and explain to his parents that my intentions were clear and I wasn't going to hurt their son or his academic future because they were terrified I was going to convince him to drop out of school which I did which you did do in the end but I I did not for I I promised that he would go back and finish his PhD which he did okay um so he took a leave of absence as opposed to Dropout um and

yeah I just sat down with Ian and Ian really put me through a ringer he tested my knowledge he tested my thinking have you thought about this attack what happens when they F this way have you thought about this protocol what happened and I guess so for over the course of that dinner he was impressed enough that he flew to Montreal met with the team of Engineers we had put together which were pretty impressive because they had built internet protocols and we convinced Ian to join the team as our chief scientist wow um at the beginning you are in Montreal you're kind of trying to find some ENT locally but you're saying like there's engineering talent but not exactly what

you want but you found some at m at Mill were you like training people up as well like would you have accepted other types of developers and like brought them into the fold we did and we had to and we ended up I mean over the course of the company we put a heavy focus on HR early so we were always in this recruiting you know get the best mind some of the same philosophy you saw adopted at Google or in its early days or adopted at the AI companies now we viewed cryptographers as one of the scarcest resource on the planet and our goal was not only to hire the best but then use that as a training model to grow the Next Generation so we actually had almost a month-long zero knowledge University when employees

onboarded where they had to go through the entire history of uh cryptography civil rights online protest they had to look at comparative systems and comparable even if they were working in customer service we wanted that everyone to understand the basics so they could talk intelligently about why what we were doing mattered we had an internal newsletters that talked about events in the world of cryptography I mean the company really had kind of a very strong Mission oriented stance as long as as long as we could before the market hit us in the face let's talk about the good the the Happy Days first though so you raised let let's talk a bit about like you had this initial idea you had a small team

I'm guessing investors started to be interested how did you make that happen you were at a kind of a great moment I think in Tech from what I heard yes and no so it was really interesting from reading the Articles everything you would read was all you have to do is you know drop your name and say I'm doing a doc com and Venture Capital would find you if you were in the valley so like money rain down from trees but no one really there weren't blogs there weren't guides there weren't podcasts no one had painted a picture to me I didn't have a m who said here's how you do it or talk to this guy yeah you would have had to like figure this out from scratch was there anyone in your family who could like well my father was a CFO of a large public

company uh he was an investor and he had joined us at zero knowledge to become our CFO uh my brother had uh been my partner in the ISP so we had raised a little bit of money but the environment in Canada is totally different than the us so we went to some local meetings we tested our pitch out but we knew we were G to have to go to the valley uh you know sent a whole bunch of blind faxes just because that's you know trying to get people faxing our business plan to a bunch of people yeah cuz most these the VC funds didn't had web pages back then yeah you were try to get their email address to email them plans but really got no response until we kind of tapped into the idea that we had the initial team going we had invested a

couple million I think of our own money uh to just get things moving but we knew we would need to raise more and so I at the time there was a very famous magazine in the Venture Community called red herring which was kind of like the tech crunch of its day yeah if you've ever read Tech crunch very focused on startups and the VC economy and they held conferences and they were holding one in Boston so you could apply to be able to go pitch as one of the hundred hottest companies they found and so we put a lot of effort into soliciting and kind of trying to convince the person who oversaw the invites that we should get an invite we got one mhm and so out of the 150 startups that they brought I think there

were like 10 of them that were invited to stand up in front of everyone and do a 90c elevator pitch and we were selected as one of the companies to stand up in front of a room of 400 people perfect and yeah so I was kind of the outside guy for the company and the pitch man and so but yeah it was nerve-wracking I was getting up in front of you know billions of dollars of capital and standing up and trying to convince them to invest in this crazy Cipher Punk idea that was so hard to explain to the average person that and I had 90 seconds to do it yeah were you scared at the time or were you pretty like confident I mean you had already like gone to was was Ian Goldberg

already working with you at this point yeah we had Ian Goldberg we had code being written I was very confident and I was a True Believer and true belief gets you 99% of the way and an entrepreneur just needs to believe their what they're saying like and so I didn't have any doubts I was just nervous I mean as the exercise went on I saw the first guy get up and like a third of the way in he starts fumbling his words he starts humming and hawing and you feel the entire room go a and you could feel the capital leaving his company and I'm feeling so responsible I'm like I got employees to pay if I screw this up this is our entry into the world so I'm raising the stakes in my head every time I see someone get up and they all

massacred it literally there was one way they all aad didn't do well okay Mass themselves most people if you'd say sell tell me about yourself in 90 seconds very few people can just stand up and do that or tell me about your company it takes practice for sure so I generally knew what I wanted to say but at one point I did start hyperventilating and I went to the bathroom I splashed water on my face and I just visualized I had done a lot of work in kind of NLP and uh you know visualization I had done like stage magic as a kid so like I knew how to hypnotize people and so I just went through like a little Mantra to hypnotize myself and I literally visualized everyone standing up and clapping and throwing money at me and so

I when it was my turn I G up and I nailed it amazing that's cool and so they asked the VC they said out of all of these who's most impressive and he was like I got to go check out those zero knowledge guys either they're the smartest people in this room or they're idiots for their companies there are knowledge and I want to go find out wow which was perfect so we had standing room only we had meetings backed up we uh someone set a private jet for us to Montreal to fly us to Silicon Valley because they found out we were going to meetings and they wanted to have an exclusive chance to convince us to take their money so it's kind of kickstarting and we got like a write up in the magazine as one of the hottest startups to appear there so it kind of started

this kind of darling kind of Cinderella story that we were able to continue for a number of years at some point you did raise money how much did you get if you don't mind me asking yeah so the first trch we raised $5 million that was from uh a couple of the early founders of one of you know preg Google competitors a company called intomy that did massive cloud computing that had gone public that was actually Ian Goldberg's Professor uh at Berkeley was the CTO there so yeah so we took some money from them and then that kind of let us start to scale up we started hiring top cryptographers we were still working on the software we were finding that the software was way harder than we thought

so I realized we would need more money so I think it was 1999 early in 98 or 99 the dotom boom was still flying yep we were getting calls non-stop from Big Public Market investors who were trying to get access to Canadian Tech stories so what was happening in the Market at the time is all these companies were going public in the first.com boom and U Canadian investors couldn't get allocations on the shares so by the time they could buy Netscape or by the time they could buy their shares it was like 10x higher and so some investors in Toronto and in uh Bankers essentially were calling all these Canadian companies and say we'll

take you public right now there's so much appetite and we knew we weren't ready to go public yeah we had no product we had no Revenue but the was so high that I structured well we structured a very unique financing where we essentially we went out for three days of fundraising meetings we were planning on raising $10 million and we were going to do it as what's called a special warrant to convert out of future later prices what is now a safe kind of it was a little different because we had already raised money at a price round okay and what we didn't want to do is we didn't want to take to a certain degree what we call and I hate to use this term because it's derogative but it's called dumb money but essentially non-strategic

money yeah that can add weight to your cap table before you bring in the Strategic guys so we were really focused on raising money from the best California VCS who could help us build uh a legacy era company so we wanted people like Kleiner Perkins at the time who had just taken Netscape public and Google public we wanted to be in that group but all these Canadian investors were saying take your take our money so we did three days of meetings and we thought we could maybe raise 10 million we had an order book for 125 million whoa you still didn't have your your strategic investor though didn't have the Strategic this was just the non-strategic capital but the way we had just structured it was we could raise that

money without suffering any dilution it was non-dilutive capital okay what most people in the crypto world recogniz as icos kind of yeah this was actually a prised two issue shares just after we raised the money from strategics we said either you get it at the IPO price or and so if if took advantage of the market but that gave us 25 million and allowed us to grow very quickly wait was that 25 or 125 we took 25 of the 125 that was expressed interest we knew if we took much more than 25 got it it would not be good but that 25 allowed us to grow so we grew up to almost 280 employees wow you know we opened an

office in Silicon Valley we were doing projects like with cell phone manufacturers to deploy our ecash because one of the questions everyone had is how do you bootstrap an ecash system and so we thought it would be perfect carriers when you go to pay your cell phone bill you just load another $20 in ecash on your cell phone on your cell phone and we were essentially all talking about stable coins because the idea of independent non-sovereign money like Bitcoin had really permeated the design space most yeah you know there were people who were very aware of the benefits of hard money and gold versus State function money but we all thought that the first ecash system would just

be a US dollar on ecash yeah or some one to one okay that's right we've heard about some of the funding to this point but now I want to go into what's happening in this company yeah how are you getting the messages out about what you are trying to build at this point so first What what is the at this so like in that phase I think we're talking 997 to about 9ish 2000 um are you already based on S ra when did you move on S ra tell me about that okay so uh we set up the office on S raw very very quickly okay so as soon as we had started hiring uh Ian Goldberg and doing that recruiting and the those early protocol engineers

and programmers we had the office on St laon it was right next to Schwarz you know the corner yeah yeah it was the Cooper Building uh on S La 3981 s laon Boulevard and we ended up keeping and having office space there for quite a while but we eventually grew out of that and went to the space that was down on S Den but uh we were hiring cryptographers I had reached out I started hiring other cryptographers like uh Dr Adam back uh Adam showstack we had gone to Defcon a few times and spoken about what we were working on so there were some early buzz in the ER civil liberties kind of like that Defcon Community was very tied to kind of civil liberties and you know I

started recruiting Advisory board members who we thought could help us that included some luminaries like Whit Diffy who invented public cryptography yeah yeah so we recruited Whit we recruited Bruce schneer so Bruce schneer came on our Advisory Board we started creating this kind of what we refer to a lot as a density of intensity we wanted the smartest people in crypto all together solving the biggest problems in privacy and anonymity and that was it and and so we were kind of like let RSA Focus about security we're going to be what RSA is to security we're going to be to privacy and Cypher Punk and you know there were a bunch of assumptions in there that we you know were were to later find out were very different than

reality but at the time Freedom was the central project um as far as I know right like from the start so were you building all those parts of Freedom or were you building one part of Freedom From the Start how are you actually approaching it there was a certain minimum set of features that just had to work for the loop to work in our mind we needed the anonymous networking so we had built servers routing protocols you know secure crypto signing of routes you know there's a whole in set of infrastructure such that you couldn't do a man- in the-middle attack you couldn't spoof the network you couldn't observe the network uh from a global surveillance point of view and

do traffic analysis so that you could associate packets here so we went all into this design we wrote white papers but Freedom was the central product but how to pay for your pseudonyms because we are charging basically per pseudonym how to get on the internet anonymously and then how to send email and interact which you know because email was the primary form of identifier that you used all of that we had to build and so we were building that uh I tried to buy digicash it had gone bankrupt at the time and we you tried to buy digicash oh interesting so I flew out to Silicon Valley and I met with a venture capitalist who had it in receivership and we tried to convince

them uh I worked with John Gilmore who was the founder of eff kind of incredible gentleman uh to come up with an idea on how we could set the patents free so it was essentially an open- Source patent license that would allow anyone to start Building ecash Systems cuz we we we really believe that that was one of the biggest barriers the VCS turned us down and took another offer uh because we didn't have a lot of cash but we found a PhD student who worked for David shom Dr Stefan Brans and he ended up he added the only other workable way to do blinded Anonymous electronic cash at the time and so we hired him and got access to his patents and so we were building the payment mechanism for ecash

and payment the networking and the software that ran on your local computer all at the same time yeah amazing what did you end up shipping well we shipped a lot of stuff but the the big release of Freedom 1.0 was something we celebrated I mean we took over our office building we had like a party on the rooftop we were so excited and everyone in like we had a waiting list of like 20 or 30,000 people which at the time was a lot you know for the product to be able to yeah and we had because I had spoken at like I had gone to Ted and Toronto and spoken on the Ted stage about the importance of privacy and kind of broadcasting we're going to be building a tool that gives you privacy we were covered a lot in the newspaper we did

some interesting what was kind of an extension of activism from my hacker days but we called it Flac deism so like Intel released a new CPU um that included something called the penm serial number which was a unique identifier on your CPU chip and they proposed that every time you browse the web people could track and authenticate you using this identifier and they said it would lead to better security because now no one can pretend to be you as long as you control your computer we of course as privacy people said this is horrible this is and even even in the pent like the Pentium serial number was going over badly but Intel made all these representations saying no one can

read it unless you get permission it's an opin authentication method and I said I've seen a system that's you know so I set one of my hackers on the team loose on it for a weekend and he found a way to bypass it and you know to essentially surreptitiously track you as you went on the web awful yeah and so we went on CNN and released it P Intel stock took a dive everyone freaked out Intel actually convinced mcfey and Norton to treat our software as antivirus because they were so pissed off at us who but like so we had this reputation like I was on CNN arguing with you know one of the

executives at Intel about what a horrible idea and how we're just showing users that their own claims were invalid so it built it built kind of a lore around the company where we had some of the best hackers applying to work we ran a very expensive ad campaign I don't know if you've ever seen it but it's a bunch of children with tattoos across their foreheads and barcodes on the back of their necks oh saying essentially I'm not your a piece of your in inventory stop treating me as anyway I'll send you a copy but crazy yeah I'll try by the way um I should tell the listeners we we do have a few pieces of material that Austin you've been nice enough to share with me I'm going to add some of these in the show notes I'll say something

more about it maybe later but um if you guys want to check out some of this imagery what you just described this is a question I have for you is like this sounds like I don't know if you knew this at the time adbusters do you remember that magazine very familiar like politically what was adbusters was almost like anti- capitalist you guys were more like free internet libertarian yeah libertarian free free market at that point in my kind of H age and kind of vary into like Atlas Shrugged and kind of going through that whole phase where you know uh rational objectivism and you know all that stuff

and in fact one of our ad campaigns we hid in we embedded in all the barcodes that all the kids were wearing a secret message and we leaked that there was a message so like everyone was out trying to Sol yeah yeah and it was you know it was a quote from Ian ran amazing so yeah but we did have this kind of activist feeling we had like you know fun gear and shirts and like when we would go to conferences everyone was trying to get a copy of one of our crypto shirts or you know and we had some of the smartest people you know in crypto working for us I feel like in every story you're telling there's like you're trying to do something there's probably a well-trodden path to do that but you're doing it in a very unusual way like the way you get your your

hiring and the way you're advertising like you you had sort of known or tapped into kind of mimetic controversial advertising before there was much knowledge about that right like to pick a fight with a giant tech company I mean that's crazy but awesome yeah I mean we believe that you know there were certain principles that we were fighting for and we literally would talk to employees we said listen the future of the internet will be decided in the next decade we will either be under an advertising model upon which everything is productized and every one of you are productized or we will be in a model where you own your identity you control who sees what and you'll pay for things with an onymous payments and we can have

a healthy balance between individual rights and economic results economic freedom Choice Sovereign yeah and we talked about Sovereign countries we talked about the dangers of sovereign censorship and uh you know we were on the front lines of the encrypt you encryption battles donating we you know contributed to things like social campaigns yeah we cared about this stuff it wasn't just you know it wasn't a marketing spin this was in our DNA yeah but you were like what you said to your employees at that time you it's 10 years it's going to go this way or another way I mean history sort of showed it did end up going the way of advertising there were a couple factors so I I spoke at

this conference a very popular conference run by uh Esther Dyson called PC Forum at the time it was kind of you know a big industry event and I was talking about privacy because everyone was talking about privacy but by then we started to see that people's what they say about privacy and what they do are never really correlated people make horrible decisions privacy this ephemeral concept that means different things at different times it's so contextual and people didn't just have have a Nuance understanding so I I made this kind of joke saying if I if I survey 100 people if they care about their privacy I can get 97 people to put up their hand if I get the same hundred people on another day and ask who wants to uh six months free big of McDonald's in exchange for DNA samples they'll do

that 97 people will put up their hand um and so it was just this unfortunate real it that people didn't understand what the real value of our stuff was unless they were cyppher punks so we've kind of built a tool for a very small Market even though the trends and the issues were right yeah and we started to encounter this we saw that the actual adoption rate versus interest wasn't there the retention you know part of that was just the tool was so early that it was slow there was latency uh so and we were subsidizing the infrastructure on the back end so it's costing us money and we're trying to expand the use case but meanwhile we've got just teams of some of the smartest people and every

time there was a privacy crisis we started getting phone calls yeah so like there was a major advertising Network that tried to do an acquisition that the FTC this was double click at the time uh they tried to buy a data broker company to make their ads more targeted and the FTC came in and almost shut it down because of privacy laws because everyone was debating privacy laws and so at the time we started talking about hey we can apply our crypto tools to a lot of different problems in privacy it's not just the consumer MH what if there's you know businesses that actually want to use data but need to have that data blinded once again an extension of the zero knowledge algorithms and the ideas so we started you know taking on some custom contracts we started doing

prototyping of Technologies including like the ecash mobile phone we were working on some technologies that would help people protect large databases and essentially anonymize data requests so we started expanding laterally before any one part of it was working and then kind of Circa and that's when we kind of peaked in our headcount and our spending levels and then two things kind of happened at once one the dotom crash which is what year is this 2001 20 yeah 2000 yeah it was 6 months into 2000 I think is the official time that people talk about the crash happening I remember at the time I had

like just started to look at stocks I think it's the only time in my life I really looked at stocks actually in the lead up to that because tech companies were kind of this interesting stock to look at it was like all of a sudden stock markets had this I don't know they were pretty dry and all of a sudden there's these like really interesting Tech things you'd kind of recognize the name there would like yeah there was some really cool stuff and I remember the crash quite vividly yeah I I mean to a certain degree there were a whole bunch of bad ideas that were horribly overfunded but there were also incredible companies that were just early and had needed some time to catch up I mean in the Crash Amazon went I think famously down to a couple bucks a a a share and you know a decade later

it's you know one of the biggest companies in the world because you know we saw the adoption of broadband that was driving you use and use cases because you could now connect at higher speeds but two things kind of happened simultaneously or kind of in a row there was a crash we had to go out and raise money to keep the lights on because we were now spending a lot of money and I found an investor and they basically as soon as they walked in they said assume that's the last money you're ever going to get you need to totally rehaul the company because you're spending way too much for how and they were right because we thought there were a lot of companies that would go public before they had found their perfect Niche they they were just famous internet companies yeah and

so to a certain degree we were were on that trajectory and we were like you know RSA went public many years before it was profitable um so it wasn't a crazy idea to go public based off aspirational long-term goals in that environment now we now know that it was way too early and a bunch of those companies business models didn't survive and they used way too much Capital um but so we were already looking internally and looking at what could we do differently how can we you know if we had to prioritize and then 911 happened 2001 2001 we had already had a working plan to shut down the freedom Network when it happened oh unfortunately even though that was our bity it was just costing us

way too much and I mean we had done a whole bunch of stuff to Market it we partnered with you know oppressed groups you know different select communities online you know victims of sexual abuse people in the glb T Community you know people we thought might have a more inclination to privacy we had you know done some affiliate marketing where we bundled we tried to do retail to see if we had a box next to semantic and maaty but it's an expensive game so we really had looked at all these different distribution strategies and way to scale and we couldn't connect the dots so we were we were rationalizing and looking internally and then 911 happened which obviously made you know not that we were afraid to be

activists or but you know they were passing the Patriot Act and we had you know we were screaming from the rooftop even if the FBI or CIA asks us you can't track us privacy in that moment was not popular had it been 12 years later 2013 with the Snowden Revelations it would have been the perfect time absolutely and pretty much every threat we talked about protecting was designed with all of the stuff we assumed was happening that we later found out from Snowden was actually happening they were running TAPS at all the isps they were running network access point T like you know internetwork access ACC Point Taps so the unwarranted uh Mass surveillance that we imagined was occurring was occurring so you had already decided to

to sort of wind it down um or not wind wind down Freedom yeah but you had all these other products I guess like did you basically find you kind of hinted at this too that that there were some companies that might actually be interested so you started you started with a very B Toc product this you would pay like the customer would pay they would get access to this private environment they would personally make you know all these different email accounts and everything but yeah at some point you're realizing you can't sell it so what yeah what what did you have left like what what could you actually sell to to businesses well we were doing some contracts but none of them individually were paying for the whole they were all

early stage initiatives doing customer Discovery what we now know is kind of minimum viable product or MVP builds we were still looking for that one that just had enough weight and and part of that was distribution strategies so you know we had done some deals in Japan to translate the software and we did a deal with tulet Packard to actually bundle our software on every computer that was shipped for a number of years every HP computer had both a semantic antivirus tool but then it had our tool for desktop firewall for uh protecting your privacy ad blockers so we had some components of the software that still worked in kind of a desktop security setting um and So eventually what we

ended up kind of transitioning to was actually a model like that where turns out people couldn't distinguish between what a security tool and a privacy tool should do nor Norton and semantic and maffy all added some ad blocker and anti-spyware features to prevent hostile code that wasn't viruses and so their their tools became kind of this all-in-one secur Prett sweet we then said well we need to respond just to be competitive because we're losing deals we licensed an antivirus engine from a third party embedded it and started to go head-to-head with mccy and semantic for deals and we focused on internet providers so we started to partner with

internet providers where they could go to their customer and say well you know we can scan your PC from here we found 40 pieces of spyware that's tracking and slowing down your connection for $5 a month we can protect you and so our tool was distributed by Tellis by Bell we knew internet providers because of our history there from your past yeah we have tried to do distribution deals with them before but it turns out that monthly service the same way answering machines gave way to voicemail on your cell phone or on your Hine right like it was kind of a natural transition that the ISP started to say we'll give you security protection for an additional few dollarars a mon and so over time from like 2002 to 2008

or n that business became very profitable and we shut down and had to shut down a lot of the other things which was sad because we had to let go of a lot of these incredible cryptographers yeah uh and and we referred to the staff as Freedom Fighters and people had moved from around the world to make this their job to make Montreal their home we had 20 or 30 people from Silicon Valley who had sold their homes and moved out you know so it was tough and we had to shrink that and we at one point got it down to 60 wow and then we started rebuilding the company and uh you know focus on something that was but it was very different from the original aspirations did you stay on through this entire time

most of it yeah it was 2006 2007 our business with the internet providers had really become it um I at one point had spent a couple years running another of the divisions that we tried to spin out which was doing the Enterprise data stuff so we were working with large healthcare companies and large Banks to anonymize the data in their database so that employees couldn't get raw access to people's data so we still kind of considered that on Mission and we did a couple multi-million dollar contracts like proof of Concepts prototypes but it wasn't ever something that we got off the ground sustainably and so when I came back to the company it was so different from what it originally was uh

my brother had done an incredible job instituting really kind of good management like accountability uh you know what are you doing what's it costing what's the case for it and he's great at that stuff and that was just never my mindset I was always more missionary than mercenary and you're very creative from what I gather too yeah it it was a it was tough and I I felt myself more kind of being like an executive at a tech company than someone trying to change the world with tech and that kind of led to you know me butting heads a little bit over culture with my brother and which really wasn't fair to him frankly because you know he had turned the company around and he had kind of really done the heavy lifting to

get the company operating and so me coming back in and saying oh I prefer to do things this way wasn't really you know kosher it's like when parents fight uh in front of kids so at one point I was just like you know what I love startups I love love the early stage I'm going to go back to doing that yeah and so I left the I left the company in 2007 they went on later to have a couple really good assets that benefited me and benefited our investors and family you know so they were able to sell off and kind of take some private equity and create some liquidity and I started doing Angel Investing and uh started working with a venture capital firm and then played my hand at a few other startups yeah one of which is pretty

well known as well eventually yeah before cuz that's like a whole another story before we go into that story I do want to ask you just a few kind of last questions about maybe the Heyday of zero knowledge I think you heard my 15minute story about my connection Point Jonathan has already shared some of this but you you made this company so I want to double check it with you and I also want to talk about some of the details of the space and this the location that you were at so as I described in that story soron Boulevard the main is kind of like a big it's actually the street in Montreal which like if you go east of it the streets are going east and and like it's a demarcation point between east and

west of the city did you have a sign on the Cooper Building no uh we didn't have a sign outside we had a rolling billboard that we use from recruiting I think I heard Jonathan tell that story so we were very aggressive with recruiting and we would send out a a mobile billboard to drive around every software company morning noon and after work to get all the employees kind of you know thinking about a career change but yeah I mean that was our neighborhood we were right next to you we were we would go out to dinner lunches at Schwarz or Coco Rico the chicken PL the Portuguese chicken place we would bring business associates into dinner and be sitting at the globe or buen not and uh I mean samon was our

hometown and that was our Main Street yeah and then we were down by St Deni which was the After Hours club was right next door and there was still kind of that night life stereo I think y you know this is a funny so you know I I found out that I was right across the street from one of your offices so when did you make the move down there I think it was 1999 2000 okay it took us a while to make the move we ran both offices in parallel because we had three floors in the new office so the minute one floor was ready we moved off a group of employees and then we slowly transitioned the rest okay I lived down near the other office office right at the time you were working you would like right around that time I think it was in

the year 2001 2 like summer 2001 and I don't know if you remember a bar called Biff Tech I think you were going to nicer places than this but I I was a waitress at fifte so we may may have crossed pass but yeah no I mean Montreal at the time was a great like we felt like a big fish in a small pond we were one of the few companies that was recruiting like we saw out in Silicon Valley where like this fight for talent so we had kind of a we felt like we had our pick of some of the best people that the town could offer and we were recruiting a lot of people and you know we had government support we had lots of press and

attention but you know everything that goes up comes down and you know a lot of the same reporters who chronicled our rise to fame enjoyed chronicling our descent and uh that's just of life was it really like this was you it wasn't your first startup but you were very young was it deeply painful like for you oh yeah it was I mean firing people is never fun letting people go through that's because of something that they didn't do letting High performer really talented people go just because the business strategy doesn't work the business requires a different set of skills you know there I personally recruited a lot of these

people and but we went overboard to try and do it the best way possible like we really said even if we have to lay off half our company today we kept the HR team they fired themselves last and we employed them as an outplacement agency and we told them none of you go home until everyone finds a job because it was a very tough environment in the background of the.com era uh people were laying off people so we wanted to make sure our people landed very well and so we spent a lot of effort in trying to make sure we did it in a in a very good way and over time as we began to to find a formula that worked we rehired a lot of those people but cool you know some of the skill sets just weren't applicable but no most of our people were legendary

in their field and so they landed on their feet very well but yeah it was painful I mean it was tough on me you know it was tough on everyone yeah to be honest I do have more questions on zero knowledge itself what it was like to work there the research group and some of the projects Jonathan alluded to some of these like maybe I should have someone on from thatp was there who was in charge of res Arch who led research um there were different people uh I mean the there was an evil genius's group that had and they were called The Evil Geniuses and it was uh Adam showstack Ian Goldberg you know Adam back was in there Al Mohler who did op SSL and was kind of a famous cryptographer anyway we

had a bunch Stephan BRS was in that group so that was kind of our Pure and applied research and then we also had like topend hackers on the window side protocol engineer so there was there was just a culture of very elite high-end engineers and you knew there were always smarter people than you in the room and that was a very invigorating environment to be in I feel like I want to I do want to bring someone on who is like in there Jonathan had been part of it but I think he was only part of it for a pretty short period of time and was like hired more as a a hacker to break stuff as as he described it I actually after releasing the first sort of story I I have received a few little notes from people who worked at zero knowledge

systems and I'm hoping to do at Le at least one more episode on this um and maybe quote some of them or yeah bring some of them up um it would be really fun to continue that happy to discuss offline if someone fits the bill for you but uh sounds good I think for many of us it was you know it was a combination of an incredible time it was very passionate and invigorating but at the same time uh you know it was a disappointing because a lot of us have throughout the years and I get employees who reach out to me at various times and they'll show me something in the newspaper I mean that's how I first discovered Bitcoin you know I literally had X employees emailing me saying have you seen this Bitcoin thing and I was kind of like I was still sour because we had spent

almost $10 million trying to build an ecash system only to see it fail and so I was my attitude initially was I'm glad someone figured it out I don't know if I want to spend time on it again because it's still pretty raw yeah okay now let's move on to another chapter you had left zero knowledge systems you were doing Investments you were kind of dabbling I was dabbling um but I had actually taken a break so sometime around 2010 2011 I had to put one of my startups in the ground which was unfortunate but it was just time to close it I had a couple other things just happening in my life and I kind of

hit that point I was in my mid 30s and I looked around and I was like for the last 20 years I've done nothing but build companies and work and that's been my entire life like most of my friendships were based in work because you know I didn't go to university I went right into building companies I dropped out of high school and started building companies so I was just kind of rethinking some things and so I took some time off I literally would pride myself on how many months I could go without looking at my email um and it became a matter of pride that i' gone like seven months without email um and I played some poker because I fell in love with the game of poker so I was playing a lot of high stakes poker and largely just kind of wandering and kind of you

know I felt like I would love to find something meaningful like Zer knowledge was so there was a little bit of searching but I act wasn't actively looking at it and then Adam back uh Dr Adam back I'm sure some of your listeners are very familiar uh you know quoted in the Satoshi white paper he had worked for me we had kept in touch over the years and in early 2013 he started sending me some increasingly adamant messages to stop screwing around with my life and start paying attention to bitcoin essentially he was much more polite than that but well he knew what you could do he had seen you in action I guess that's interesting what like he in the meantime had been at Microsoft or something he

had a couple stops he spent some time at Microsoft uh working on a lot of their security for their single sign on product passport uh which was the MSN kind of single sign on passport system uh after that he got recruited by one of the senior Executives at Microsoft who did another startup called picorp that then sold to VMware so he was the chief security architect and he was kind of what we refer to in the startup world as resting investing so he had to stay for four or five years to earn his payout um and but he had just you know finished kind of working very intensely in a startup so he had dived into Bitcoin very intensely and he of course went right to the protocol right to the

source code and he's talked about this I don't want to tell his story but he had spent a year working with a lot of the core developers proposing various ways to improve or change Bitcoin including adding Layer Two functionality through an idea called side chains which no one had proven was possible but the theory was there and so he had called me a few times and once he convinced me to actually pay attention and go down the Bitcoin Rabbit Hole I was within like nine days totally sold back into it like couldn't sleep okay I had read everything I had caught up on everything I understood why it was different and how it fit in my world mental model that

I had built up over a number of years working on ecash systems so I flew to Malta where Adam was living and we flew in a couple of the other core developers who are living in Europe and said hey here's our crazy idea we want to get funding for the core developers we want to invest heavily in improving the protocol and making sure Bitcoin can you know grow to its full potential we want to be a very engineering kind of science you know kind of think tank and get the best and brightest and so we spent the next couple months flying around the world meeting with core developers holding uh like hacker houses where we'd invite some of the top cryptographers in the world to test our ideas and at the end of that process it was clear that we could build side chains or at least

enough that we could put our name next to the idea and say this is what we want to do and I went out and raised money and so yeah we raised a $21 million seed round at the time it was just a list of people and me and a whiteboard wow and but I we were able to you know it was the right mix of incredible team uh incredible time in bit coin Bitcoin had just peaked to 12200 and then dropped back down to 300 but the Silicon Valley bug had been caught so most most BCS were looking to make a bet in crypto Andor Bitcoin and we were seen as kind of some of the thought leaders because of the incredible resumés and people we had around us interesting who are all

the co-founders because there's a long list on Wikipedia yeah so we ended up having around eight or nine co-founders so in these hacker houses we were constantly evaluating how people work together how people contributed good ideas who would we want to create a company with we were very conscious because we knew we'd be accused of trying to hijack Bitcoin for like corporate interests because it was an open source project Red Hat got accused of that when Red Hat became commercial and started working on Linux full-time so we were cognizant of hey certain people are better to sit outside because if we hire too many we're seen as a centralizing uh destructive in Bitcoin and we got those criticisms regardless

even though we were trying to design around that but we also wanted just people who are incredible Engineers who could work with each other very well so and most of these guys only knew each other through IRC they had very few of them they worked together for years on bitcoin Corp but they had in many cases hadn't done a lot of inperson meetings and so the hacker houses served as a way for these guys to live together hang out together work on ideas and emerging out of that was the core team so so uh it was myself and another Gentleman on business Jonathan was heading up our Network Security Administration Adam oversaw all the technology and science part of it uh and then Greg Maxwell who's obviously very famous in the crypto Bitcoin World he's

responsible for probably most of the incredible ideas that are still being realized he was behind tap rot he was behind a lot of these designs so anyway we had Peter woolly who had written more code he and Matt Carell had written most of the code I think it was something like 70 or 80% of the Bitcoin code was authored by one or the two of them mark freeden back so there was a whole group of really talented kind of core essential team we gave them all generous Equity packages uh we pioneered kind of a Bitcoin Bond program where we not only gave stock options but we also gave Bitcoin to every employee on investing schedule because we wanted everyone aligned with the mission of improving Bitcoin and yeah we raised a lot of money 21 million and then

almost very very quickly after that we raised another 55 uh just because frankly the market was hot and we knew that a a very obvious business model for a bunch of engineers in Bitcoin wasn't exactly clear because open source bu business models tend to focus on SAS subscriptions like you know webble month so they'll run MySQL on a hosted server and sell subscriptions to it it doesn't work on crypto when not your keys not your coins um this red hat model of selling support wasn't viable it's not a big business no one was paying support contracts on bitcoin core yeah we didn't want to become an exchange we didn't want to

become a financially regulated entity or financial entity we wanted to be kind of the Cisco of money is how we saw ourselves and we saw Bitcoin being the tcpip of money so we had this analogy in our head that you know there will be products in infrastructure but we're not exactly sure which ones are going to take off so we started just shipping open source code and we were like let's just ship open source code and see what emerges and we knew that to do that we needed a lot of Runway we needed a lot of cash in the bank to be able to sustain ourselves so yeah that's why we raised a lot of capital quite quickly were you buying Bitcoin like did you ever think of it as possibly speculative like almost running as a hedge fund meanwhile not worrying about Revenue we

had a lot of discussions we looked at mining some of those internal debates I I just as long as the company's still there and it's being run by Adam I don't want to go and you know be telling too many inside stories uh but yeah we we looked at everything and we dabbled in some different stuff I mean the company did go into doing Bitcoin mining and was providing infrastructure and tools and uh services around Bitcoin mining they acquired another team at one point that was doing Asic design uh and they started working with a lot of the uh chip manufacturers who are making Asic chips so there were you know kind of they went into doing a hardware wallet uh you know the blockstream Jade which is a great product uh we did blockstream satellite and a lot of these happened

after I ended up leaving blockstream but uh blo stream satellite was you know essentially a free service just to make sure that you know someone couldn't censor your access to the Bitcoin Network at the ISP level so we started to beam the blockchain from space so there was this mix of kind of open- source Community projects that we just did just to support the community and trying to find a viable business model that could sustain all of those and did you not while I was there and so I won't take credit or speak to the work they've done since um they've gone on to raise money they've gone on to you know continue to ship products Adam and has a great team over there and that team has changed over time as the you know Mission changes and companies also just evolve and grow they

need new Talent over time um I left uh blockstream actually halfway through 2016 so it was not even three years in and part of that was just I had spent the last year and a half living on the road I had spent maybe 25 days I think I looked at the calendar year because that for my taxes and I had only spent 25 days at home the entire year yeah um I was most of the team ended up being in San Francisco which wasn't the original plan originally we were going to have a big base of employees in Montreal and I thought I could like oh yeah damn we had started and we had some offices in Montreal but the original plan was that we were going to have everyone move to Montreal for a year get to know each

other work in the same room together and then evolve into kind of a hybrid remote decentralized structure okay um and we ended up going decentralized a lot faster than we planned so um between that and fundraising and I just I wasn't taking care of my health well and so at one point I was just you know had a discussion between Adam and I and we we both decided it was you know a good time we had just raised a lot of money there was plenty of cash in the bank um and so I left the company and did some Angel Investing after that but you know Bitcoin it was also right after the blocksize wars and the Block siiz Wars really I took personally oh you were in the trenches fighting uh it wasn't so

much my fight because I wasn't a core developer I wasn't taking it on the chin but I saw employees of mine who were getting death threats we had high security we had employees end up in the hospital uh you know with both physical like anxiety attacks to the point where they were passing out in the office because someone had swatted them yeah uh you know so it was a very toxic environment and these people who had really these people were the the least interested in monetary gain and they were entirely ethically like we had to write it in their contracts that they had a veto on company actions that if they ever felt we were violating something that was good for Bitcoin to benefit the company they could quit publicly and get a full like Severance have all their salary paid and they

could essentially shame us into doing the right thing and we designed that on purpose because we wanted to make sure that the company never went against Bitcoin and these people were being accused of tra being traders to bitcoin for fighting for what they really honestly believed was the best engineering choice and so the engineering had gotten so politicized that it was a very toxic environment and I was trying to help my people the best way I could and I didn't feel like I really could because it like once you get into a war it's very hard to get out of yeah I missed I like I joined this space I said this to Jonathan I joined the space in 2017 like after a lot of this had resolved itself I think what I saw was more like the ethereum Bitcoin battles uh the the left the the ends of that I

think eventually those chilled out as I mean I was friends with fal's father I still you know not not really friends but we were Associates in the business community and vitalic studied under Ian Goldberg at waterl before he dropped out of school um yeah I peered on a lot of panels with vitalic and you know certainly had our differences and but suffice it to say everyone felt like they had to pick the way they fought that battle in different ways and even inside of blockstream we didn't always agree we agreed on what we were fighting for but how to fight that battle wasn't unanimous and so you know there was kind of kind of this constant question of you know if you look into the darkness long enough do you become the darkness uh and

we were literally saying you know yeah there were lies out there being spread that we were you know part of the CIA Global Elite and that we were like involved in you know Bilderberg meetings and you know because one of our investors that had given us like a a nominal insignificant amount was associated with it so it's like just all this like fud and uh conspiracy and lies and it became a very toxic hard to get work done on environment yeah and I was so proud of our company and the brand and the ethics and the things we chose I took it really personally when we were getting like I I I I wasn't in the right mental and emotional state myself where I could just kind of let the stuff yeah slide off my back we had a couple people

worked for us who had worked at Mozilla and we had I was studying a lot about open source communities healthy communication patterns um and there were some academics who had actually done some great work and studying open source communities where they broke down why they Fork um and I got the name of this consult who led off offsites and workshops and he had worked with the tour group when they went through a lot of their challenges he had worked in crypto he had worked with Mozilla and I got Stellar recommendations from him and he I was trying to hire him both to help us do some internal mental health and communication skill development but also see if we could equip our members to bring some of these principles into the broader open source Community CU we saw how toxic things were getting and in

some cases I think some of that toxicity was in response to unwarranted attacks but it kind of became the knee-jerk reaction where like everyone is a scam all alt coiners are scammers uh everyone got into tried thinking and tribe mentality to such a degree that you know everyone feels like what they're doing is right and so you had people on the other end who were calling us criminals and saying we were stealing Bitcoin or crippling its growth by encouraging you know smaller blocks and it got pretty vicious and I tried hire this person it was so fascinating he audited did at us he met with the team and at the end he said I'm sorry I don't think I can help you and I'm like you're literally one of the few experts in the world who's done

crypto in open source and he goes yeah but never money he goes I got into this and open source communities for the ethos the kind of Hipp the free software and he goes I tap into that to get people to think we're all in this together we're building stuff together he goes but money is a zero sum game and everyone's incentives are always suspect when you assume the other person's getting rich off their opinion he goes I just don't know how you create a healthy environment when you can't build trust and he goes you literally guys are paranoid as it stands because you're all cryptographers whose ethoses don't trust and then every move by everyone including your own moves that are totally innocent get put under a magnifying glass and people accuse you of having unethical motives and it was

it was a wakeup moment for me that it was going to be a very very tough road and I think blockstream and the the small blocker community and the open source Community more than anything because ultimately it was you know the user initiative around the segwit and the you know which Fork to adopt it was kind of a mass consumer effort which I think strengthened Bitcoin and what anyone can look back and say that was the right decision Bitcoin shouldn't be decided by companies CEOs including us shouldn't be decided by edict or Kings Bitcoin is a Loosely bound consensus around protocols and there's a way to D deal with forks and debates and I think the right answer one out but I know that some of the after effects of

that are still you know it burned out a lot of incredible people it turned people away and who joined and I think started working on coins that had less viability or less technical strength or Technical assuredness and they went to that because they felt the community was less toxic and so you know Bitcoin was born out of steel and B born in a very hostile violent environment but you know no one wants to hang out and their afternoons in Mount Doom you know where the One Ring can be burked yes it builds the one ring it is very powerful but it's not where you want to take your lunch break and we were living in it all the time and so there there was it was healthy for me to step back and I did

some a little bit of Angel Investing including in Jonathan's company and Jeremy's company cloaked Wireless invested in a few uh Venture Capital funds that support the Bitcoin Community yeah I wondered if you did you leave Bitcoin or Did you sort of stay around like are you still following it are you still involved I don't follow the day-to-day anymore but I am a bitcoiner I always have been it's you know I've never owned another asset in cryptocurrencies never needed to I was very happy I used to track every single you know movement in the industry I'm not I'm not close to it at that level anymore and Bitcoin has also emerged to be a different point but you know I still talk to Adam regularly I talk to a bunch of ex-employees at different times

and I'm still very optimistic and encouraging of Bitcoin but I'm not Hands-On I got it you have sort of repeatedly though managed to find a topic before the rest of the world finds it I feel like naming your company zero knowledge long before zero knowledge was usable but it has since become quite usable is it's certainly encouraging to see more companies and see a podcast named Zero knowledge and uh you know I can go back and I'll send you some of the ads and some of the t-shirt designs we had some really great taglines oh that would be so cool even the domain names I had someone try and buy one of the zero knowledge domain names for me

recently I think I mentioned that to you and you know I was I was surprised by the offer it was like you know not insignificant amount of money which shows there's funded companies with money in the space interesting and who knows I may I may I may revisit that decision and sell it eventually but so you were early on these Concepts you early on bitcoin too what are you doing today I feel like it might be interesting for folks what what is exciting to you today so I mean I think we all want to be the heroes in our own journey and you know but I always kind of had this feeling that like I'm at my best when I don't feel like it's work it's play and we tried to create our companies around that and it was all always driven around some sort of very

overarching Mission like I said I was always more missionary than mercenary it was never about how many dollars can I squeeze out of this Market although I am a capitalist and I believe a healthy company is one that's measured by its profits and its efficiency but I didn't believe in rent seeking business models I I I always felt like if I have to choose between being parasitic part of an ecosystem or not being part of it at all I'm happy to walk away got it and part of that is just I've been incredibly lucky and very lucky to have found financial success kind of falling from one passion to another so I do have a little bit of choice and I thought I was done thought I was retired living in a country in Central America enjoying my best life beaches married at a very

different point in my life and once again a former engineer called me and said you need to pay attention to something and I won't stop bothering you until you give me some time uh I think my entire career is smarter Engineers than I kicking my ass and convincing me to send time on something funny but this was in an area that's so far out of my domain that I spent almost a good year studying and learning and it's uh positional chemistry for what's called direct mechanosynthesis which in a very simple terms is the idea of building something atom by atom turning atoms into Lego blocks and it was popularized by a scientist named Eric Drexler you

might know it as nanotech but this is real nanotech this is essentially you know we have you know stain resistant khakis that people called nanotech pants when it's you know actually just a a particle they spray yeah they but so a lot of stuff claims to be nanotech but this is actually rebuilding the world that we know for adom by atom it will be it will lead to breakthroughs in Quantum sensors quantum computers medical devices if achieved it's up there with AGI as the single most important technology will develop this century and it's the single thing that will end human suffering fastest if we develop it because literally we can manage disease suffering energy compute at the atomic scale and ever since fan gave his speech

in 1959 there's plenty of room at the bottom which is kind of a famous speech I've been fascinated but I never knew the science and Mark before he got into Bitcoin and block strein this was his passion and he had studied it and determined that it was just too early and after he left blockstream he Revisited that and actually found a bunch of scientists who had been working a decade on it in some secret lab and who had just been let go and we started working with them and figured out that we think in the next 3 to four years before the 70th anniversary of Fineman speech which was December 29th 1959 we think we can have a breakthrough that will unlock and Kickstart this the same way chat GPT did for AGI is it like

3D printing like atom like molecules it's essentially 3D printing of atoms to build molecules and then over time you can build more complex and you can bootstrap a factory of 3D printers that are actually atomic scale so you can start to build huge volumes because to build anything that's human size you would have to do hundreds of millions of atoms it's really hard to grasp the scale but I can give you some ideas like you know if you would think of the entire planet Earth being the size of an apple you know kind of relative scale that's what an atom is to the Earth you know an atom is the size to the Earth as an apple is to the Earth and so the idea

that we can build tools that can get down and manipulate at the atomic level was just sci-fi for much of the last 20 or 30 years yeah and there hadn't been a lot of attempts and latest breakthroughs in AI in Quantum sensing in a series of technologies that allow us to do detailed Imaging have shown us that we can actually start to do this and replicate it at scale and so yeah we can start to print 3D diamonds that are functional Quantum cubits you to build a quantum computer with like 95% less cubits because it has error free and it operates at every room temperature we can build Quantum sensors that can you know detect magnetic fields at levels never seen before it's one of

these transformative foundational Technologies up there with electricity the semiconductor we will have this and it will be it it'll be the engine that powers the next 100 or 200 years of our society and so when I saw that that was possible and Mark was showing me how much money he needed and knocking on my door for help I decided after I spent time and met the team I once again decided I would come out of retirement so that's what I'm doing full-time now nice looking back over all of this going back to the zero knowledge systems ethos and privacy and like the world I think picked up on what you were saying about privacy eventually kind of but do you feel like

like are we in a good way or have we like missed the boat on some of these things do you think we still have that chance of getting a private future I'm not one to give up hope but I I feel like to a large degree the Privacy battle has been lost um in the face of AI in the face of big data in the face of just the pervasiveness of data sources in an environment where politics and misinformation online have just overtaken a pretty much most debates in terms of you know first principal thinking or uh you know the idea that mass adoption of cryptography as kind of an individual civil rights I think it's

really really hard to get that idea through and it always comes at a cost uh and so you know people have to change their behaviors they have to give up on certain things uh you know there's a reason why these companies offer discounts for the shopping cart and all these things it's because they make so much money off that day data and so you're fighting entrenched economic interests that are very hard to displace uh National Security interests that are very hard to disrupt we saw you know what governments did to developers of crypto software or privacy enhancing tools and over time I just feel like that becomes even tougher because we have just more sensors more data you know our cars are sensors our cars are reporting in devices our phones are

devices we'll have Smart clothing we'll have embedded sensors in our body that are literally reporting at a molecular level our health and our response to things and so so one of the things we coined was privacy by Design we actually came up with that term and we held a bunch of workshops and conferences where we would bring in engineers and talk about designing privacy into the base Protocols of whatever you're building those ideas have survived and so there are people out there who take courses on engineering I still think we can do better I think we should have cryptography and strong privacy by default and our use of these algorithms is still very immature and not widely deployed but associating them with the use case becomes tougher and tougher and

tougher and the power of AI and the power of even deanonymization techniques just seems to grow yeah and so you're in kind of this asymmetric battle where I think the best we can hope for now is to make sure that there are always tools for dissension because our society won't survive without that and we're already PR seeeing the use of AI for Mass lying Mass hypnosis of the public you know turning you know large parts of our population uh you know into what one or both sides refer to a sheeple you know because everything's so political you know do you believe in civil rights well the point at the issue some person advocates for it one day and totally believes that person shouldn't have it

the next um and that's kind of not how civil rights work Bitcoin is designed for people you hate that was the whole idea you know cryptography is designed for speech that you hate yeah um it's not designed for speech that you love and so I would love to see those ideas persist and my best hope is that we have mature and very good tools so that if someone does find themselves having to speak out against oppression having to speak out against a government or an organization or a corporation that has too much power that we always have some set of tools that allow them like Satoshi to adopt a pseudonym and make their voice heard yeah and I hope that continues to exist totally do you think Satoshi might have worked at your

company zero knowledge systems so couple responses early on in my days in Bitcoin a number of us got together core developers and we talked about just what we wanted our stance to be because many of us assumed that one or many of us might know Satoshi yeah um and we really had strong deep ethical conversations about the dangers of doxing someone and you know contributing to their loss of pseud inity we had just seen Dorian Nakamoto be you know claim yeah yeah bothered and harassed we knew Fran halny was a good friend of ours most of us knew halny uh Hal and his wife Fran were harassed until he died and even after he

died she continues to get swatted um and so there was this dining cryptographers problem proposed by uh David shom years ago where if a bunch of people thought they knew a secret could you build a crypto protocol and it's around the idea of could someone pick up the tab but you could prove you picked up the tab without everyone knowing who picked up the tab but by proving you picked up the tab you weren't revealing your identity and so we kind of Drew even though it wasn't exactly that we all said you know what we're doing the world of disservice if we contribute to this now Adam was lab later named and there's a whole bunch of conspiracy videos naming him Peter Todd was recently named I think in a documentary oh and and Jack from Twitter back recently yeah so it was

funny I took just as a joke I took an ex-employee of ours who actually was murdered unfortunately and had all the skills to bit build Bitcoin Adam and I know he did not uh but I I fed it to a bunch of AI engines and said build me a story for why this person is Satoshi entirely convincing like I said it now if you don't know the person and you didn't know some nuance and details you read this and you are 99 he is a better candidate than than anyone has ever proposed yet I would never release that person's name because of what it would do to their family and I know for a fact that person isn't Satoshi so I think it just goes to say that there are there was a broader Community than most people

realize we had 20 or 30 people working at our company who were cyppher Punk Legends at the time who all were brilliant coders who studied this and looked at it there were other people that they influenced there were tons of people in Japan I knew some of the cipher Punk community in Japan and there were those people were very humble very quiet but knew all the coding knew the ethos I think there's a larger population than most people realize of potential suspects and I would never contribute to pointing a light at any of them that's fair Austin I want to say thank you so much for coming on the show and sharing with us this story of zero knowledge systems the story of this Vision the challenges sort of what

happened with the company and then how you went on to get involved in Bitcoin later block stream and yeah what you're doing now thanks so much for sharing all this my pleasure Anna thank you so much for inviting me and I'm happy to follow up offline and introduce you to a few other people of that era because I know I love it it's it provides some nice Nostalgia I think for us all totally thanks so much and I want to say thank you to the podcast team Rachel Henrik and Tanya and to our listeners thanks for listening [Music]