The Exchanges

Q Okay. Okay. So is, is the best equivalent here is like when I launch or anyone listening launches a SaaS company, they have 10,000 shares they issue of which 9000 are going to the core founder and a thousand are reserved for the team. It's sort of the same thing, right? Except you're talking about token values instead of exercise prices.

A It's a little different actually. Like imagine, so what you just said is like a typical kind of SaaS cap table seed round or pre-seed. With, with tokens, you actually want the majority of the tokens to go to your community because the community is going to do the majority of the work, right? There's no ESOP, right? So in, in, and there's a fixed supply in our token economy, you can't make any more, like you can't issue new tokens, right? It's, it's locked into our smart contract that we have a fixed supply, two hundred fifty million tokens, which is interesting, right? Because you can never be diluted, right? It's dilution proof. And so Um, we actually said like, okay, well, like investors will probably own eventually like up to 25% of that, that, that token cap table, and then founders will get, you know, ten-ish, and then, and then maybe another 10 for like core team contributors, and then the rest go to community.

AI assessment note: “It's a little different actually. Like imagine, so what you just said is”

Q And who controls what the treasury spends money on?

A Uh, two entities. First is the code itself. So the network software itself, uh, runs the referral engine. So if Nathan Latka comes in, it goes to braintrust.com, creates an account as a connector, right? There's talent who do the work, there's clients who hire the talent, and then there's connectors who are essentially people making intros. Nathan comes in, anybody can come in and get a code, unique code. And then if you refer talent and they start transacting, or if you refer a client and they start transacting, you're going to start earning bonuses based on a percentage of those transactions in the form of the brain trust token. Those tokens come out of treasury and it's all done via, via the code. It's a permissionless system, right? It's not like a person approving it. And so, and then the second way is the community doubt. So the, the treasury, a big chunk of the treasury is controlled by community members through the grants program. You can apply for a grant on brain trust and say, let's say a group comes to the grants program on brain trust and says, Hey, we're going to translate brain trust for the Asia Pacific region. And we're going to apply for a grant, you know, for say, you know, 500,000 e-trust to do that. If the community decides, Hey, that's a good idea. They fund it. They vote on chain and the, and the funds, the tokens flow out of the Dow. So it's, it's commun…

AI assessment note: “two entities. First is the code itself... And then the second way is the community”

Q Okay. So when I think of that, and I'm just learning about you obviously right now, but I think about, you know, sites like top towers or sort of Better versions of Fiverr or Upwork for more top tier talent. What are you doing different than TopTel?

A Yeah. So, so getting matching talent and clients is not a new thing. What we're doing from a business model perspective is brand new, never been done. So the old model is when you, when you run a two-sided marketplace, your job is to create a trusted transaction or place to transact, and then take as much of that transaction in the form of a fee as you can. Right. And those fees could be 20, 25%. It could be all the way up to 50 plus percent in, in talent marketplaces. That's where Braintrust gets very unique. We charge a flat zero percent fee to the talent side, so talent can come in, set their market rate, and earn a hundred percent of that rate, and then a flat 10% fee to the clients. And so what this does is it's not gonna, we're not trying to disrupt Upwork or Fiverr. Those are sites where you get a logo or a website We're looking to build large, you know, and facilitate building large software platforms, big, big projects, multimillion dollar projects that could never touch a marketplace.

AI assessment note: “We charge a flat zero percent fee to the talent side”

Q Now they won't do that unless they sense inherent future value of the token. So you have to sell the story. Sell me. What's the story?

A So here's the story. So, so let me back out to the real premise that makes us unique and different here. My co-founder and I, Gabe, we firmly believe That user owned and controlled networks will grow faster and be more valuable than founder and investor owned networks. Okay. So very different ownership paradigm here. And so how do you allow ten million people in 50 countries to own and control the network? Vote on the rules and all that stuff. Well, you just can't do it with shares of a Delaware C. It's physically impossible, right? It's, it's logistically impossible. So we, instead of shares of stock, we use Tokens. And these tokens are given out in proportion to, to given out to people in proportion to the value they drive, inviting people, vetting people, bringing clients on. And the usefulness of that token is voting control of the network. Okay. So, so right now the fee, the fee schedule is really simple. Zero percent charge the talent, 10% charge the clients, you know, People say like, well, why would, why do people care about voting on network rules? Right? It's like, well, I'll give you an example. Like you remember last year when DoorDash rolled out this new feature where you can tip your Dasher cash after the delivery? Well then, so they, they roll it for a year. DoorDash Inc. decides to book all those tips as revenue and basically steal the money. Right? If DoorDash …

AI assessment note: “So that's the incentive to get our token and have influence over this platform”

Q think I definitely like get that, but like, let's keep just like digging here for a second, right? So on the day when you start, when you, when you have these hundred fifty million tokens to issue on day one, how do you decide how they get split up or do they sit like in a vault somewhere and no one owns any and you start slowly doing them out?

A Yeah, great, great question. So, um, so, so even today before the live token is actually on the blockchain, we're still on test net today. We've, we actually have thousands of people working toward earning credits that will convert into our token, right? So we just keep track of them in a database. But these are people that are developers, designers, building the, you know, marketers, people making introductions to clients. They're all earning credits that will convert into this token when we launch next year. Uh, so, so when we launch a big portion of the tokens will already have been spoken for and will be distributed to these folks that have been helping us for two years now, the rest that had been unallocated will sit in treasury. And that's exactly, it's basically what you just described. It's this wallet that Nobody can touch that only the smart contract can give out to people who, who help build the network. And we basically distribute those tokens as bonuses for people who refer business. So Nathan, if you refer Microsoft to brain trust and you use your unique code and Microsoft, that product manager signs up at Microsoft and, um, and starts, Microsoft starts paying invoices. Our protocol is going to reward you some percentage of that invoice as a bonus for, In perpetuity, for as long as Microsoft transacts, you're going to get that bonus every month paid in token by ou…

AI assessment note: “a big portion of the tokens will already have been spoken for and will be distributed”

Q off in my head. Sure enough, shopping, the number was 80%, and two days later the SEC is coming down with two counts of fraud and he's in jail, right? So, because they would sell the utility value of their token and then convert it to Fiat makes no sense. So walk me through how you see sort of the BeTrust token working from a utility and marketplace value perspective.

A Yeah, absolutely. So, you know, a lot of, a lot to unpack there. You know, we, we never have a never will sell tokens to the public. There's no reason to do that. Um, the way our token works and I'll start by saying, um, it is not a payment layer. All the jobs done when your friend joins from Airbnb and does contracts with Pepsi, that's all done in cash. Okay. We don't need another payment layer right now. Um, our token, the brain trust token is used as an incentive mechanism. So we use it to reward people for building our network. What does that mean? That could mean actually coding and building the software for brain trust, but more, more likely it's inviting new talent, helping vet that talent. We have a peer to peer vetting system. So it's not just us vetting everybody and inviting clients. So we, we, we've raised a modest seed round. We're not, you know, most companies go raise hundreds of millions of dollars and they build out giant sales and marketing and product teams. We've raised six million so far.

AI assessment note: “our token, the brain trust token is used as an incentive mechanism”

Q Okay. And, and just quickly, this is an aside from a regulatory perspective, how do you actually like set that limit? What do you do to like register that or, or, or get it going?

A Yeah, yeah. So this is just built into the smart contract, right? When you write your smart contract in Solidity and then compile it and run it on Ethereum, you, one of the inputs is how many tokens are, are there ever allowed to be in existence? Once that contract is pushed to the blockchain, there, there's no changing it unless, uh, people decided to start over and we, you know, we started from scratch on a different network, but that is, that's locked into the blockchain and that's what gives the token scarcity, right? That means I can't change my mind later and dilute Everybody and dilute our members and that kind of thing. That's where the blockchain comes in, right? You, you just can't rewrite that. It's immutable. And that, that's why this is a new business model that couldn't have been done before blockchain tech.

AI assessment note: “So this is just built into the smart contract, right? When you write your smart”

Q next 10 years paying ten million dollars through brain trust. Who controls the multiple you're applying to the ten million in fiat as it relates to the value of a new Btrust token? Is, are you rewarding .1% of 10000000.1, you know, and that fiat is the conversion to the Btrust token? Like how, because whoever controls that ratio really actually controls the dilutive network of the token issuance, right?

A Exactly right. So, so what, what you're getting at here is if, if we're giving, let's say, one percent of, of all, uh, transactions on, on the person you referred, let's say one percent belongs to you, the person who referred, that one percent that comes in as cash, because Microsoft's paying its bills in US dollars, and so let's just say for round numbers, it's a 10,000 dollar bonus that you're owed. The, the, the protocol will actually buy 10,000 dollars worth of Braintrust token on the open market, And send it to you in the form of token. Now, so then it, so it doesn't matter what the price of B trust is, right? If the market determines that, right? So you may get a lot of B trust or a few B trust, but you're always going to get a reward denominated in us dollars.

AI assessment note: “protocol will actually buy 10,000 dollars worth of Braintrust token on the open market”

Q Okay, cool. Labor marketplace. So talk to me a little bit about what happened here. So it was 19 months ago. How'd you, how'd you, did you have anyone like you were issuing tokens effectively? Did you do like a token or to raise an ICO if you want to call it that?

A Yeah. So we, we started out, uh, giving people tokens that were basically off chain and weren't real tokens in, in exchange for, you know, they're like, like an IOU for a token. Right. And they were in exchange for helping us bring in more talent, vet that talent, bring on more clients, onboard the clients, all the things that you would do as a normal company, you'd raise hundreds of millions of dollars for, and have, you know, 25,000 employees. We, we invert that. We, you know, you have the community do all the work. Our core teams only have like, 30, 35 people working on them. Um, and so we were, last time you and I spoke, yeah, we were like, just getting out the gate, then COVID hit, remote work became the new normal, the brain trust model became really in demand, and then fast forward to September of 20, 21, last year, uh, our token hit the Ethereum mainnet.

AI assessment note: “we started out, uh, giving people tokens that were basically off chain”

Q would say there's a lot of old white males who are already rich VCs that are essentially buying the token to artificially inflate the price, or sometimes it was the company that had already raised VC dollars using their own money to buy it on ICO data to drive supply demand. So, I mean, is that a good or bad thing? And do you plan to do any of that?

A Well, so, I mean, to be really clear, we'll never do an ICO, right? We're never going to sell tokens to the public. We, the only way you can get our token is to earn it, is to help us build the network, right? So, so we, we, we did raise, uh, six million dollars from accredited, you know, from VCs like, like you normally would. Um, we, we're working on another round right now. We're just kicking it off where we'll raise from some more VCs, uh, not a ton of money, by the way, because the project's actually profitable already. And then, uh, once the public, the network publicly launches, Uh, we'll, we will allow tokens to be withdrawn and then it's up to the secondary markets to be created. We, we, we're not an exchange. We're not going to facilitate buying and selling of our own token. It'll be on the, the exchanges to, to pick those up and create secondary liquidity if they so choose.

AI assessment note: “to be really clear, we'll never do an ICO, right?”

Q And so how did you, what value did people you gave the fake tokens to before you were listed, how did they now translate into real value under BTRST?

A Yeah, it's totally market driven. So it's just, you know, total supply and demand dynamics, uh, when they were minted, uh, before the, the network, when they were IOUs, they had no cash value whatsoever. Um, and you know, it's a, it's a governance token. So there's a, there's a few different uses for it, but it's one token, one vote on the system. So all the, all the rules of the network, like how many, what fees should talent and clients pay? What should the product roadmap be? You know, what should we build next? Those are all sort of determined through Token voting. So it's a governance token. And then a recent protocol upgrade, the tokens actually used, uh, the pro the network requires clients to pay their network fees in the brain trust token. So you have the protocol going out and buying its own token.

AI assessment note: “it's totally market driven. So it's just, you know, total supply and demand dynamics”

Q investing in though? If you're essentially arguing that the network owns the equity value of the business. I mean, this is where I think I love the idea of the network owning the business, but this is where it starts to turn gray for me. Is what is the value of the company that you're creating? How do you pay your developers to build the system in the first place?

A Yeah. So let me, let me zoom out to, to try answer this question. Cause it is a new and weird thing. Trust me, like you're not the only one to be like, wait a minute, you know, uh, brain. So I use the, the analogy of Ethereum. Ethereum is, is what's called a public good, right? It's this thing that's out there that no one person owns. It's completely decentralized. A lot of people own it. And what it does is it creates this whole new platform for smart contracts to exist and operate and be secure. Secure and be immutable. And that makes the world a better place. There's tons of people making money on Ethereum because Ethereum was generated, you know, by people that wanted a public good to be there. And so you look at defy, there's tens of billions of dollars in defy right now. So brain trust is similar. We are building, I have a small for-profit company called freelance labs that, and I'm just one of dozens of companies. Building brain trust as a public good because all of our businesses collectively will be better when brain trust exists and is out there in the wild.

AI assessment note: “I have a small for-profit company called freelance labs that... Building brain trust”