Episode 449 | Jess Houlgrave, CEO of WalletConnect

Greg, thank you very much for having me. I'm very excited to chat with you today.

So, I was born in Devon, which is in the southwest of the UK. I think that's probably where I get my love of the sea from. It took me a little while to get back to the sea. Now, I live very close to the sea in Lisbon in Portugal. But in the meantime, spent many years working in London, traveling all over the place, doing a bit of work in the US and in Dubai. And then I've been here for the last couple of years where I escaped the British weather and get a little bit closer to the beach.

Yeah, so after school, I studied economics at university and like many of my peer group at the time, I kind of followed everybody into the City of London, became an investment banker. Didn't really know what else to do to be honest. Neither of my parents had very traditional careers and so that just seemed to be where the crowd was heading. So I worked for Credit Suisse for some time and then for a Canadian pension fund. And this love of economics kind of hit me again back in, I guess, 2014 where I started to learn about Bitcoin. One of the things that I'd written about at university was the history of monetary systems. For me, seeing Bitcoin evolve was like watching monetary systems change in real time. So, I became very interested in crypto. Left the work that I was doing in private equity and throughout 2015, 2016 was really investigating crypto and blockchain a lot. I wrote a master's thesis on the applications of blockchain for the art world and built my first startup in the space where we were using this technology to track the provenance of physical assets like high value artworks to create this immutable record about their history. One of the things I learned there was that there's a timing for everything. We were way too early to start putting this tech into the art world. But I enjoyed it immensely. And after that I joined a payments company called Checkout.com, which is a European-based acquirer. I was chief of staff there, worked across the whole business, but specifically especially during my latter years there was very focused on our crypto strategy and so worked a lot with both our crypto customers but also thinking about our crypto payments strategy. I left Checkout at the beginning of 2023 and what I was really looking for was something that was like pure play crypto again and where I could really get involved in building the next generation of financial system. And I met WalletConnect through some of their investors and some of their board members. It was already this pretty well-established project within the crypto space. I as a crypto user had used their services and products a lot, also built some things with their products, and so for me it was a real honor to be able to join the team. And I spent the last two years growing it, evolving it into what it's become today, which is this really global network. We have about 700 different wallets, over 70,000 different applications, and we move about $400 billion a year across that network.

There's definitely a few people who've been there a lot longer, but I've definitely been there long enough that I've got plenty of gray hairs to attest to seeing those ups and downs. And it's been a real joy to see that space evolve. And I think particularly for me, having worked on the traditional payment side as well as the pure crypto side, there's this really glorious moment right now where these two worlds are really converging and we're seeing the adoption of stablecoins and of crypto and of blockchain technology really kind of driving forward in the more traditional payment space. So, it's a very fun moment in time after all these years to see these two things start to work together.

To use a traditional payments analogy, you could think of us a little bit like Plaid or a little bit like ISO 8503 messaging or SWIFT messaging. What we basically do is provide a set of messaging standards to the industry which allows them to communicate securely with one another. So on one side of the network we have all of our wallet partners. Those include wallets that might sit on your mobile phone like a Trust Wallet or a MetaMask wallet, hardware crypto wallets like Ledger or Trezor that people might use, all the way through to institutional and custodian offerings, people like BitGo, Fireblocks, Crypto.com, Custody. And on the other side of the network, we have about 70,000 different applications. These could be a crypto-native application like an NFT marketplace. It could be a DeFi trading protocol. It could be prediction markets which are top of everyone's mind at the moment like Polymarket. And it can be a more traditional merchant or a payment processor who wants to be able to accept crypto as a payment mechanism. And we basically connect these two sides of the network so they can communicate with each other. So on the wallet side, we have a suite of SDKs that wallets can integrate. And on the app side, we have applications that work directly with some of our SDKs. But we also have a whole range of channel partners effectively through whom applications and payments companies can access the WalletConnect network. So Coinbase Commerce uses WalletConnect as part of their offering to merchants as part of Coinbase Business. We work very closely with Mesh Pay, Mesh Connect which is another solutions provider for crypto specifically for the payments industry. Privy who are owned by Stripe also are partners for the WalletConnect network. There's a whole range of ways that applications and payment providers can integrate with the network either directly with us or with a partner.

It very much depends on the specific use case. So, interestingly, only about 20% of the connections that go through WalletConnect actually result in an on-chain transaction in an on-chain value movement. So, for a lot of those payments use cases, we take basis points on the flow. For some of the other use cases, things like verifying a wallet for a travel rule compliance purposes, which is a different messaging type, we charge per message, or we can charge more like a SaaS subscription fee. So, it really depends who we're working with, if it's a DeFi company or a payments company, and what the different use cases and which pieces of our products are being used.

I think we have this very broad base, but if I narrow down to the payments use case, which is probably most interesting for your audience, I think in Web 2 payments, the traditional payments I'll call them today, we're very spoiled with the user experience. Super seamless. I just take my phone into a store and I tap it and everything is done. Or I through an e-commerce flow have a one-click express checkout. It shares my shipping information. Everything's kind of done and dusted. If I want to pay with crypto today as an end user, that user experience is much harder. There's scanning of QR codes, multiple buttons to be pressed. I have to understand which chain my asset is on. Does the merchant accept that specific asset on that specific chain? Do I have enough gas fee in my wallet to be able to complete the payment? There's all of these aspects of user experience in crypto that are crypto-specific that really compromise the user experience when we compare it to a Web 2 payment. So a lot of what we're working on at the moment with the participants in our network is how we upgrade that experience so that in 18 months time a crypto payment is as seamless as a Web 2 payment. It's a one-click tap or it's a one-click button. The information is exchanged, all of the compliance is handled, all of the messaging is handled really easily because we know that consumers want to be able to pay with crypto. If you look at the cards that are linked to crypto wallets today, the volume going through there is small on an absolute basis, but is really rapidly growing. And so there is definitely an appetite for consumers to pay with crypto. And we know also that there's an appetite for merchants to be able to accept crypto payments partly because it opens up a new customer base for them. Stripe for example, who are a WalletConnect partner, when they opened up crypto payments they saw some of their merchants really increasing revenue as a result just of being able to accept new customers through crypto payments. But also, crypto payments are much, much cheaper for merchants than using a card payment. They're almost instantly able to be settled. So, the funds can go from a crypto wallet via a PSP and out even to a merchant in a matter of seconds rather than days. And so, there's a lot of attributes of a crypto payment that are really attractive on both sides of that payment flow. But in order to make that happen and bring it to reality, we've got to improve that user experience. And so that is really central to our roadmap over the next 12 months. We just published a new paper this week outlining the steps that we're taking towards doing that. We've got a large number of our wallet partners who are on board. So I think over the next 12 months, we're going to get that payments experience with crypto much, much closer to what we see in Web 2 today.

So we're very unusual in the sense that we don't really have a direct competitor for what we do. The alternative to using WalletConnect is really for an application to build bilateral integrations with every wallet and we know that most application builders don't want to do that. It's very clunky. It also disrupts the user experience because one wallet behaves differently from another when you make these types of integrations. So, we're kind of unique in the crypto space in that regard. So we've really come to think of our competitors less like 'okay who's connecting crypto apps and crypto wallets' as to 'who's moving money around the world and how can we provide a better experience for end users.' It doesn't matter whether it's a crypto rail or a traditional payments rail really, we're out there to make money movement much, much simpler for consumers. And so I guess if you take that slightly step back look, who our competitors are really they're the payments networks. And I think as we see crypto adoption growing, the idea of using crypto for payments is just going to become that much more obvious to many people.