Blockchain for the Billions at Web3 Investor Day: The Finance of Web3
With Brett Harrison, President of FTX, Cami Darling & Alejandro Ballesteros of Decasonic, Co-hosts of Blockchain for the Billions Podcast
By Alejandro Ballesteros, Venture Investor, Decasonic
It was truly a pleasure to have Brett Harrison from FTX.US join us at Web3 Investor Day. Brett gained operating experience at Jane Street Capital, Citadel Securities, and Headlands Technology prior to joining FTX. At Jane Street, Brett led the firm's trading systems development group. At Citadel, Brett held senior technology leadership roles, including Head of ETF Technology and Head of Semi-Systematic Technology. While Brett worked at Jane Street, he overlapped with Sam Bankman-Fried, commonly referred to as SBF. Eventually the two reunited in May 2021 when Brett was appointed president of FTX US.
At Decasonic we believe strongly in forming long term accretive partnerships with outlier builders like Brett. Brett’s outlier talents can be encapsulated in a simple quote from Sam:
“When we were at Jane Street, Brett was always the best developer to call when you absolutely had to get something online. He combined great technical skills (way better than mine!) with a clear view of the business needs and priorities. And most importantly, he's just a great guy. I'm really excited to work with him to help massively scale out FTX.US."
Decentralization As a Spectrum
We had the chance to speak to Brett about his views covering everything from CeFi to DeFi, scaling a company intentionally, and regulatory compliant financial applications. One of the best quotes from our chat came when Brett was speaking about the delineation of decentralized vs centralized platforms and how we tend to binarize platforms to neatly fit them into one category when the reality is much more complex and interesting:
“When you think about DeFi vs CeFi it really is [about] whether there are just about any intermediaries in the middle of some kind of finance… centralized finance has basically stripped away all intermediaries except for one, but DeFi is really removing that one intermediary. Of course, we can argue about the degree of centralization within DeFi, but what’s important is giving people access to financial services around the world that otherwise they wouldn’t have access to.”
Brett’s comment alludes to the ways in which we expend so much energy debating the degree of decentralization in financial services applications instead of focusing on how reliably, scalably, and affordably we can provide access to these services for people who traditionally face large barriers in accessing them, which is ultimately what is important. At Decasonic, we focus on real adoption and commonly refer to this idea as the delivery of a high quality value proposition that leads to mainstream adoption.
Hyperfocus on New Value Propositions
In line with this thesis, Brett goes on to talk about how excited he is to see lending and borrowing services expand and deliver high quality value propositions to mainstream users who traditionally face extremely large costs of capital as a result of rent-seeking intermediaries. He also expands on the importance of interoperability, and just how groundbreaking it is that DeFi protocols maintain interoperability and an open source nature from day one:
“I like the idea of interoperability, and I don’t think you need DeFi for interoperability, but I do think DeFi provides a sort of de facto requirement for interoperability. If you deploy a smart contract, well now it’s open source and anyone can interact with it as opposed to needing to trust that some company is going to keep their API open and interoperable with other things forever. As all these tech companies are incentivized to make things that are walled gardens and difficult to pull data outside of, it becomes very difficult to convince them to make things that are interoperable.”
This comment says so much in so little words. Brett has nailed down the importance of open systems, and one of the huge value propositions of Web3 native business models: they actually incentivize open source software, which lends itself to composability and lower barriers to innovation using existing tools.
Another huge portion of our conversation revolved around Brett’s ideas regarding FTX’s values and growth strategy. He reinforced the idea that as a startup, it is incredibly important to focus on scaling productively, and not in a way that actually distracts from your efforts to grow revenues or achieve profitability at scale. In order to do this FTX believes in investing in their people to take on large responsibility and become very productive, while only using hiring as a tool when it is absolutely necessary, a sentiment he thought would be a huge learning for startup companies as a whole in this market environment.
All in all, the top takeaways from the conversation are that composable open finance will accelerate both mainstream adoption and innovation, lending and borrowing is a huge use case for open source finance that will drive adoption, and startup companies should focus on growing productivity instead of headcount.