This week, Worldcoin, a team that aims to serve as a personality test in a world where every day it’s harder to tell a human from a bot, raised $115 million in Series C funding.
Led by 10-year-old venture firm Blockchain Capital, whose stakes have included Coinbase, Kraken and OpenSea, the investment brings Worldcoin funding to at least $240 million, even as the controversial organization, founded in 2019 by OpenAI CEO , Sam Altman, has a lot to prove.
Yesterday, we spoke with Blockchain Capital general partner Spencer Bogart about what gave him confidence in Worldcoin, which aims to create a global ID, a global currency, and an app that enables payments, purchases, and transfers. Like many others, we wonder how you can achieve your goals when, at least right now, your mission is primarily about convincing tens of millions of people to allow Worldcoin to scan their irises using futuristic, technological balloons.
Below is part of that conversation, edited by its extension. You can also listen to the longer conversation here.
Its co-investors in this new round include previous backer Andreessen Horowitz, Bain Capital Crypto, and Distributed Global. Did Khosla Ventures or Tiger Global, who are also previous backers, go up again?
They can be part of this financing; I don’t think they’re a big part of it.
What percentage of the company do investors own? I guess Sam Altman is difficult to deal with given the power he wields and also his extensive experience across the table as an investor.
That is a correct characterization. Sam is a terrific founder and knows how to run a cap table. Again, I apologize. He is not a figure that I have in front of me right now. Generally, companies sell 20% of the [equity] in each financing. Of course things can move down or up from there significantly. I think that in this case, the number will be significantly lower than that of Serie A, Serie B and Serie C.
How long have you been talking to Worldcoin and what motivated you to lead this deal?
The original genesis was Sam wondering: what if he could create a cryptocurrency that he could distribute to everyone in the world and everyone would receive an equal share of it? To me, from a risk perspective, that’s certainly interesting. [though] I don’t know if it’s something that we would be very excited to go and subscribe to based on the things that our team is typically interested in.
[Meanwhile] this basically requires making sure that no one person can accumulate a disproportionate share, which requires people to be able to identify unique humans. And this really gets into the part that we’re excited about, which is World ID. It is this ability to easily distinguish between machines and humans on the Internet. [because] most of the internet is supported by ad revenue and it costs just as much to serve bot traffic as it does to serve human traffic. That is why various applications and service providers have used CAPTCHA to distinguish between bots and humans. But that is no longer viable in a world of advanced automated systems and, in particular, AI-powered things. It also doesn’t differentiate between unique humans, so I don’t know if the same person is consuming a resource in excess.
That leads us to: well, how can we provide a means to distinguish between humans and bots and make sure that each human is unique?
What leads to biometrics.
The root of what defines humans is biometrics, and my first thought was: why create this custom hardware to scan eyeballs? Like, billions of people are already walking around with an iPhone. Why don’t we use Face ID right? The problem is that human facial structures do not have enough randomness or entropy to distinguish between unique humans, on the scale of tens of millions or hundreds of millions of people.
I didn’t realize that was the case.
It’s not something that occurred to me either. I didn’t think about the fact that once you surpass a hundred million people, there will be a lot of people who will look like Spencer Bogart; his facial structures will be indistinguishable enough from mine. Fingerprints have the same problem; there is not enough randomness in the fingerprints.
That brings us to two viable options, DNA that has enough randomness to be able to prove human uniqueness on the scale of billions of people. But you are providing too much information with the DNA. Then there are the irises. It turns out that there is an incredible amount of entropy and randomness in the human iris. And in this case, the team has built in an incredible amount of protection. You get an iris scan, it doesn’t store your iris by default. It is deleted on the device immediately. It is only used to create what is called an iris code, which is a unique mapping or encoding of your iris. And it compares with all the others. And now, with these iris codes, we don’t know his name or location or anything. The only thing we know about all of them is that they are unique human beings.
I guess a business strategy (helping companies reduce their interaction with bots) is the most lucrative opportunity right now for Worldcoin. I could also give this cryptocurrency to everyone, although it’s not clear to me how people would use it. But before any of this can happen, you need to have a significant number of people in front of these orbs that are strange and difficult to access, when people are already nervous about biometrics and cryptocurrency. Worldcoin says that it has now scanned the eyes of 2 million people. How many does it take for this to be meaningful? A billion?
These are the correct questions. It’s about: do you have a network of probably unique humans? And that will only be interesting for applications and companies at a certain scale. But I think it’s going to depend on the use case. By the time you hit 10 million unique users, there’s already a range of apps that would like to use that, while others won’t be interested in using it unless you’re on a network of 500 million or a billion or 2 .billion people.
Some of the other challenges here are yes obviously orb distribution. Currently there are between 200 and 300 [orbs] in the wild today, with another 2,000 having been made and waiting to be deployed. Then there is this question of public perception. Ssomething that we flag as part of the investment is: is there going to be so much negative perception of this that no matter how sure we are that this is 100% viable, the public perception is going to be so negative that people don’t want to participate?
So far, the data says otherwise. Worldcoin has already onboarded almost 2 million people by operating a fairly capital intensive startup strategy, and this is only in beta testing. This is without pushing or pulling any marketing levers; this is without having the protocol live on the main network. This is only in the initial tests.
As for some of the things that could use this, Elon Musk has been very vocal about a bot problem on Twitter and has promoted the idea that if we make everyone pay $8 a month, that will help solve the bot problem. We believe that World ID is a less complicated way to solve the same problem and will be a higher fidelity solution. And there are a range of new apps and services that have not existed due to our inability to make this distinction historically. What they are, I don’t know, but we are interested in financing them.
Again, you can hear a lot more about the investment here, including why OpenAI could become a major Worldcoin customer one day, why Bogart didn’t bother when hackers recently installed password-stealing malware on the devices of multiple orb operators. of Worldcoin, and why he is fascinated with fast transactions on the blockchain.
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