Shayne Higdon, Founder & CEO of the HBAR Foundation: Accelerating the Hedera Ecosystem (Part 2)

In part 2 of the interview between King Solomon from Genfinity and Shayne Higdon, Founder and CEO of the HBAR Foundation they speak about how the metrics to determine the success of a network continue to evolve, the difference between the HBAR Foundation, the Hashgraph Association, and the DLT Science Foundation, and much more.

Transcription

HBAR Foundation – Shayne Higdon – Founder & CEO
‍You know, after they initially delivered on their first promise, we've just been able to be more selective. But we've also known that it's in these markets that you continue to build, and so we continue to do that. We continue, despite all of the pressure that was on the cryptocurrency, the crypto market. We knew that we needed to continue to build, and we've done that, we continue to do that. The opportunities are endless. That said, we also know some of the feedback that we've received from grantees and non-grantees. And, you know, some people are responding because they're upset because we didn't give them a grant during this time, or some are just like, 'man, it took a long time.' Well, when you're running a small team, you're trying to be efficient. We've had, you know, thousands of grant applications in that same time frame. It's hard to weed through them and make sure that you're being good stewards of trying to pick the best project. We know that not every project is going to be super successful. That's okay. For the ones that are super successful that really make the network, we're excited to have made those relationships. And so, it's just caused us to be more diligent. Technical diligence was, you know, a big aspect which helped us as we chose these projects in this down market. We have a really solid team doing more technical diligence on how are you building, what languages are you using, etc., that we didn't have initially when we were making grants. But, you know, we've continued despite, despite the market. We've continued to invest.

Genfinity – King Solomon – Founder & CEO
‍That's awesome. Thank you so much, Shayne. I wanted to touch because you briefly mentioned the four different funds that the Hbar Foundation has right now. One of which is the crypto economy, the other is metaverse, the other is payments and fintech, and the other is sustainable impact. I think we can all attest to how important kind of the ESG and the Green Technology initiatives are going to be moving forward. But from the foundation standpoint, how important is it to consistently measure trends that are going on globally or regulatory trends, all these different aspects? And is there one fund right now that you see that is taking precedence over others within the foundation? Just would love some of your thoughts on the different funds and the ability to pivot, because this space consistently pivots.

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yes, so there's no one fund that I think is taking precedent. I think there is, to answer your question, we try to have our fingers, you know, and on the pulse of the regulatory environment. So, you know, our legal team comes from that background, George and his team, I think are just again, world-class, and you know him coming from, you know, a legal regulatory compliance background is helping make sure that, you know, we do the right things from a compliance and governance perspective within the foundation. To ensure we don't, you know, trip any wires as you know things like the library case and so many other things are happening that continue to make this hazy gray a bit more crystal clear, even though it's still murky. So we continue to, you know, we're watching out for those things all the time you know, from a fund perspective, you know, there's been a lot of interest certainly in sustainable impact, you know, even before Davos, but certainly heading out adopt. And then, you know, the metaverse fund which, again to me, and it's better if we call it, you know, the loyalty and consumer engagement, there's just been so much by way of brands, looking at how to engage in this Web 3 world with their user base, and doing it in a more real-time way than you know, the Web 2 world, you know, offered. And we're seeing just new ways of engaging customers, real-time, like in the sports industry, just during a game. Real-time engaging with your users, you know, while they're watching a given game. You know, it's exciting to watch these grantees envision, these new ways of doing that, and that's pretty exciting. And, um, I think that those two areas, I think, have been, you know, some that have, I don't know, tip of the spear. I mean, we've just seen a significant, significant amount of interest there. On the Enterprise side, we've started to see, more supply chain related investigation, and when I say investigation, just trying to understand the inefficiencies in supply chain and where can DLT really modernize if you will that, that process, and you know, in the medical field, certainly in the computer field, etc. and it that's, you've heard Dell talk about, you know, Edge Computing and making sure that you know data provenance or where the, you know, origin of data is, that you know, being able to follow that and understand it, you know, throughout its life cycle, has it changed, who is it being sent to, etc. Um, that's just, that's just new ways of thinking. I mean, who would have thought that you would have been able to do that or even talk about it, you know, 10 years ago? So there's new ways there, and then you know, tokenize that, that's, you know, is another area, that it really kind of, you know, and this is what's interesting, tokenization isn't just in a given fund, right? You've got certainly NFTs fit squarely, it seems in metaverse, but what types of NFTs? Is it arts and collectibles, sports media ticketing, you know, or in some cases it could be, you know, using an NFT for your digital identity? So it touches so many different things, so many different technologies and use cases, but tokenization is one that, you know, we're seeing, you know, in the real estate industry, we're certainly seeing the financial industry, we're seeing it, you know, in the financial industry related to private equity firms to settlements, and so it's just so many broad use cases, and unfortunately, a lot of these use cases take time. You know, smaller projects that aren't necessarily inside a big company, they can certainly move faster, but the impact that they're going to have on the network, particularly initially, is likely to be smaller. They could be live, but you know, they may have, you know, a thousand users, or even if they've got 10,000 users on a network like Hedera, you know, that's really a small. So, you have to have, you know, tens of thousands of those types of builders building on the network to make an impact. The opposite side of that is the Enterprises that, you know, they just simply move slower. The projects go live slower, but once they do, they have, you know, an order of magnitude impact on the network. You know, if they've been able to, you know, roll this out to either their customer base or inside their business processes, etc. And what we've tried to do with the foundation and Hedera, just more broadly, is we've tried to strike the balance of both, and, and we're not necessarily perfect, but, you know, we do have some great Enterprises, great Enterprise use cases that are continuing to go, we'll go live on the network this year and into the next few years. But it just, it takes some time while we've also got, you know, some newer projects that, you know, continue, to go live on the network, and we'll go live on the network that you know are in these in these four categories.

Genfinity – King Solomon – Founder & CEO
‍I wanna, I probably have like one or two more. I know that I could ask questions all day because you will never, you know, with you, you even said like, I don't want to get into the technicals because you might get bored. I'll never get bored. The technical stuff really fascinates me probably more than most other people. Um, I do want to ask though, from the Community standpoint, you know, what is some, what's the best advice that you can give to somebody that wants to come into a discussion and have a successful discussion with the Hbar foundation and alongside, you know, the best advice you could get, what are maybe some of the biggest mistakes that you see when you do get into discussions with people that are looking to attain a grant through the foundation?

HBAR Foundation – Shayne Higdon – Founder & CEO
‍A lot of the work that the team does today is upfront on specifically with the grantee trying to frame and crystallize the magnitude of problem they are solving or idea of what they want to create, and I think that that is the biggest amount of time spent, because some folks, you know, they have ideas and they're like, 'Hey, we think we can build this, this widget, and maybe it's not a widget, but I'm just using that again as just an example, but we're trying to build this widget. Well, questions that we want to understand are, you know, well, what problem, truly, and it is this simple, but you'll be surprised that the number of grantees that don't have this nailed. What problem is that solving? And we can ask the question just like that. And you know, they need to be very focused on what problem that truly is. And it doesn't have to be you know, solving world hunger, but it needs to be very discreet and focused on. We can solve this problem. Well, then the next question is, how big is that problem, right? Because at the end of the day, if you're going to be asking for a large grant, that problem needs to be big, right? And then, and then the third area is, who's going to use your product, right? The user base. And what we find is a lot of the projects don't necessarily know the Persona, who is going to be using it, why do they need to use it, right? And what problem is it truly solving for them, and what do they use today? These are constructs that are used every day in software companies, and you have to apply it here. You know, the days of just coming and thinking up an idea and going and getting a grant from a foundation, you know, you might get a five thousand dollar grant from, you know, name your foundation, but you're not going to get a serious grant that says, "I really have thought this out. I understand what problem it solves. I understand how big the problem is. I understand the Persona that is going to use my product, and I am really trying to create a real business." Those are key elements to sustainability, and I don't mean sustainability from an ESG. I'm talking about sustaining the network. Right, so have a business plan. You know, if you went to, and this is where part of the challenge was, that you know, and why in this environment, um, you know, in a bear market environment, not just in crypto, but you know, the macro environment, you see, you know, Venture Capital tightening up, and we saw a significant amount once Venture Capital started tightening up, and they, you know, weren't giving, all of these, you know, high valuation series A, you know, I don't know how many know about Venture Capital, but, you know, series A seed funding, series A would be a legitimate, you valued the company, and you know, you're taking, you know, x amount of dollars, and you're giving whoever invested preferred shares. At the end of the day, you know, Venture Capital tightened up, and they were like, "Wait a second, we can't continue to, you know, pay this money, high valuations, and you haven't really delivered to business plans." So all of a sudden, we saw this influx of people that could not raise Venture coming to the foundation, not just us, I'm sure other foundations looking for money, right? And in many cases, one of the things that we said was, "You know what interesting idea you have, certainly been able to tell us what problem it's all, how big the problem is, what the personas you're going after, what your Revenue model is, how you decide to build a business, but we still think it's high risk, and so if you can go get another, you know, investor in your project that's willing to write a check will match it, you would be surprised at the number of projects that couldn't get that right. And so again, as we think about knowing that we're funded by hbar, right, you know, and I say that because I want the community to know we take that really seriously. And so, knowing that you're funded by hbar, we want to make sure that we're putting invest. We're not good, again, we're not going to be 100% right. We're going to give people grants that, you know, they don't go anywhere, but we don't want to do that a ton, and we want to be able to say we believe in what you're saying, but we think it's a high-risk value proposition, for you know these reasons. But if you can go get, you know, someone else that would be willing to pay this valuation at this price, whatever, then we would be willing to match it with a grant. And the percentage of folks that would do that, single-digit percentages. So to me, that's where I would articulate to projects that we are very serious around making sure that the projects, their founders, their teams truly understand and what it is that they're building and how they plan to generate a sustainable amount of revenue or fees or a business around what they're doing because we want to do that and invest in projects that you know have that kind of mindset that are going to use a network for the long term, not let me just use it for a year, collect some fees, and you know, I go off and now I've made some money and I'm gonna, you know, spend the rest of my time doing whatever it is I want to do. We want people that have longer-term visions in mind that are using the network because that's how we're going to sustain this idea that Mance and Leemon had of building a hundred-year network.

Genfinity – King Solomon – Founder & CEO
‍That's a great answer. Thank you so much, Shayne. I did want to, we're going to get into some general questions here, we're going to try to wrap this in 20 minutes or so, but if you could touch base quickly, you know, recently we saw the announcement that there is um a half graph Association as well that facilitates grants, and I do know that you guys from even from the site it looks like you guys obviously have some partner aspects within that. Can you touch base on some of the key similarities between the HBAR Foundation, the Hashgraph Association, some of the key differences?

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yeah, I think the biggest difference is region, you know, we're a global organization, we're funded with a lot of HBAR. They're focused more on, you know, the European continent, and while we do have some folks in Europe that are working, you know, various grants, you know, they have a team, who you know really steeped in blockchain in particular, out of Switzerland, I appreciate Kamal and Stefan, that team. We've got a great working relationship. They did their grant program a little bit differently. And I think it's great, which is, you know, creating these, I think it's 30 cohorts. You know, and kind of segmenting the size of Grants based on, you know, these cohorts, but they're largely focused on, you know, that, that portion of the world, and we're not. You know, we try to there isn't really any overlap. We try to communicate with one another, making sure, sure that there isn't, you know, Grant Arbitrage, you know, if you will, from projects that go get grants from us, and then they try to do the same thing from, you know, the Hashgraph Association. So we, you know, communicate around those things. You saw that they did the Orange, you know, the French Telecom provider, the accelerator and grant funding. We weren't, you know, going to do that deal. We didn't have the, by the way, we didn't have the opportunity to do it, but we, that wouldn't have been, you know, a deal that we felt like we could execute on. But it's an area where, they're set up to do that really well with their focus, and you know, I think making sure, and then today, you saw the DLT Science Foundation. Maybe you didn't, but that, that's another Foundation. Yeah, I thought you know, that announcement just came out a handful of hours ago. That was fantastic. Yeah, and so, Paolo Taska and his right hand, you know, doing that and I think that's really key because you've got, you know, a lot of Education still required in this space. Why DLT? What's unique about it? And you know, partnering with some of the, you know, most fantastic, you know, universities in the world, from, you know, the London School of Economics to the University of Central London to, you know, um, all of the schools that they're doing, and making sure that as part of the curriculum, it's DLT, you know, and you know, Hedera and it's exciting to watch that kind of education happen, training classes, certifications, you know, it's really building a true ecosystem. So you've got, you know, these three foundations, you know, the HBAR Foundation, the Hashgraph Association, DLT Science Foundation, you know, as again, further decentralizing all that we're doing. We're all independent entities, but we do try to, you know, collaborate as any partner would, trying to build an ecosystem.

Genfinity – King Solomon – Founder & CEO
‍Yeah, I mean, this is for the audience, if you guys want to see a hell of a resume, go look up Paolo Taska's resume, and you tell me if that guy doesn't have the most ridiculous resume in web 3. All right, so I touching base on kind of, the board as well from the, um, the HBAR Foundation, more recently, we saw former control over the currency Chief legal officer at Coinbase, prior to him being Comptroller of the currency, Brian Brooks joining, joining the board of the, HBAR Foundation. I don't know if you can even talk about this. When you give a tiny bit of background about how that potentially came to be, and if you can't, maybe you just meant if you could mention how big of a milestone that you consider that personally, for the Hedera ecosystem and network.

HBAR Foundation – Shayne Higdon – Founder & CEO
‍You know, I think, so first of all, when I talk about us having a world-class executive team, that includes a world-class network of individuals, whether it was, you know, an outreach to Michael Dell by me to, you know, work on and get Dell on the council, to you know, Josh's relationship with Brian Brooks previously having worked with him, to relationships that David has. That, you know, some of those relationships are still in the works. We continue to work on, you know, and leverage our networks, you know, as best we can to provide, value in how and helping, you know, provide some oversight. You know, there are people that just have different experiences, as an example, than some of us have, and so we want to leverage that. Brian is a perfect example. I've never testified, you know, in front of Congress. Brian has, you know, and, and so being a part of that, having, and oftentimes in talking to these, you know, these,  personal brands, you know, it takes time. These folks are smart, they're informed, and, you know, it's not easy to sit and try to convince someone that they should be a part of you know, what it is that you're doing, particularly in a high-risk asset class like crypto. And so you know, I think Brian joining our board is a testament to a couple of things. One, a testament to him personally that he's informed, knowledgeable. Let me tell you, he did his research, certainly. And then secondly, it's a testament to Hedera and the way that this network has been built and governed. It is not, you know, and wasn't done like some of the other layer ones. You know, it's, it's kind of, I've used the, the tortoise and the hair, you know, example, you know, we have been more of the tortoise. We didn't come out of the gates, you know, doing all things, you know, Degen oriented. We came out the gates a little bit slower, more methodical, you know, and we're going to continue to do that. Why? Because we think that, you know, slow and steady can win the race. And so I think for, for someone like Brian, and as we continue to, you know, look at how do we govern what it is that that we are building, we're going to continue to take this, this kind of focus, this kind of approach, leveraging our networks and knowledge, you know, to be able to build this incredible network that, you know, everyone, I believe, across the world will come to, love and respect.

Genfinity – King Solomon – Founder & CEO
‍That's fantastic. So I'm gonna go over a couple of statistics here for you guys. I'm sure Shayne, you're aware of these. And then I want to frame it around a question. Transactions monthly in 2022 on the Hedera mainnet, I believe one of the highest months was around 78 million. Now we're seeing an influx of well over a billion plus per month transactions. Account creations in 2022, we've basically doubled any January, February, and March of 2023 has doubled any month in 2022. You touched briefly, Shayne, on potential use cases coming down the pike and going live that could even eclipse where we're at right now. I guess the question that I would ask is, which segments in which markets will you see can we potentially expect to see these use cases coming from? Supply chain? You know, trade finance, payment? Question?

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yep. Yeah. Great, great question. I think you're going to see use cases and tokenization that are going to happen. You're going to see use cases in supply chain, not just with Atma. You're going to see things like the coupon bureau going live, knock on wood, hopefully this year. You're going to see, and I know that they've continued to roll out things slowly, but you're going to see things in gaming in a big way. And, you know, for those of you that have been tracking some of those projects, you know, whether it's Khosmium them, it came from Ethereum onto us, or whether it's Liithos and some of the brand that they're building, you know, the numbers are big. And then a lot of what is happening in Sif, and when you have, you know, the Guardian and some of these marketplaces coming online, the transaction volume is going to increase significantly. And so, you know, I think that, you know, and then you're going to see, you know, the payments in fintech stuff. You know, we've got a few folks working on, you know, stable coins, some of which are public, some of which aren't. And so, you know, I think that there is a time and a place, and I think that, you know, so many people talk about patience, but it is, it is that. And we're continuing to be diligent, you know, with our various projects and governing council members that, you know, are doing a lot of great work. But, you know, when you think about scale, at some of the scale of the use cases we're talking about, you would rather it be methodical. You would rather it be tested, in making sure that once you roll something out, that, you know, it's truly ready to go. If any of you have ever been a part of a software development or project or any kind of software in any industry, and you realize that you roll something out too soon to a set of users, you may not get another chance if it's a horrible user experience or if it doesn't work like you thought it would, or if it runs in errors or if it opens up security issues. Sometimes you only get one chance, and so that's where, for me, I'm used to that kind of rigor and I would much rather many of these projects be focused on creating a quality product and rolling it out when the time is ripe, as opposed to rushing it. Because I'm also seeing, when I invested in some younger companies in the identity access management space, roll out a product that really wasn't ready because they got pressure from their VCs to roll it out, and guess what? It burned users, and ultimately the company suffered. And so it can have existential consequences, and I don't, I don't want to see any of that happen with us. If we can, we as a collective ecosystem can avoid it. But you know, I think that there is those are some of the key areas that I think you're going to see some continued use cases get built.

Genfinity – King Solomon – Founder & CEO
‍Do you think that Hedera potentially, in the Hedera network, potentially represents the first network in web 3 that you start seeing a shift in thought where total assets tokenized makes total value locked almost a byproduct of what's going on from real-world utilization of a network?

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Yeah, you know, I so one of the things that we've debated internally and that I've thought a lot about but I've not communicated a point of view, and, and this isn't communicating that point of view, but rather, um, which is, is TVL going to be the long-term measure of a network's value? And I don't know the answer to that. I wonder in many ways if given where we are today, if that is, you know, all that there is, or is it going to become more sophisticated? You know, over time, in use of a network. I mean, you've got, you know, developer ecosystem, developer ecosystem growth, you know, you've got, you know, the fact that we became open source, you know, in August of 2022. So that was, I mean, we're really young in terms of that type of thing. We're really young in terms of our, you know, decentralized exchanges that are running, whether it's, you know, Saucer Swap and Heli Swap and, you know, Bubble Swap and Pangolin now, etc. I mean, it's still very much a young network, so I think that there are going to be better ways that that aren't going to be, "Oh, TVL isn't relevant anymore," but I think it's going to be better ways to determine value, on a network, transacted on a network than today. So when I think about, you know, one of the goals of the foundation that I said was to increase commerce, how do you measure commerce, right? And that's one of the things we're trying to figure out, how do we get insight into, you know, not just commerce in terms of swaps into DEX or liquidity pools. But you know, if you're selling an NFT to somebody else, or what happens if somebody builds a ticketing app on top of us, and you know, how much does that ticketing app generate? I mean, those are some of the things that we're going to be working with projects to try to understand and characterize in the long term. So, um, we haven't figured it out, is the short answer, but it is something that we are keen to understand, and it's going to be, you know, a confluence of things, not any one individual thing that's going to make that a relevant metric.

Genfinity – King Solomon – Founder & CEO
‍Well, I know how busy you are, Shayne, and I just wanted to say from Genfinity, from myself, you know, thank you so much for taking the time out. We are at an hour here. I think we got tons and tons of value, and hopefully the community down there got it as much education as possible within this hour. We plan to obviously push out tons of shorts from this interview as well, and really looking forward to doing another one and looking forward to seeing everything that the Hbar Foundation facilitates moving forward into 2023. If you guys aren't aware, we do these Twitter spaces every month at 3 P.M eastern time in collaboration with HashPack, and shout out to Marc and May and Jacob and everybody with the HashPack team. It was quite the pleasure, Shayne, and really looking forward to nailing you down again here for like, you know, a couple of months down the line. So, it sounds good. Thank you for answering all the questions. I know it was just off the cusp, so, you know, fantastic.

HBAR Foundation – Shayne Higdon – Founder & CEO
‍Thank you for having me, and you know, I'm always happy to do these things, and you know, you're going to get a straight answer. I may not always be right, but that's okay, and you know, but I will give you my honest thoughts and opinion and hopefully be able to draw from some of the good experiences I've had over my career, and you know, I appreciate all the community's interests, support, everything that they've done to date to continue to promote Hedera as a network, a destination that I think so many people should take and pay attention to. So, thanks to everyone. Thank you, King Solomon, and chat with you next time.