Hi all. I'm Jillian Williams, partner at Field Ventures. I'm an early stage venture investor who's been in and around the FinTech space for the last 8 years.
I'm super excited to be launching season 2 of the FinTech AI podcast on This Week in FinTech. Last year's series was awesome, and if you haven't listened yet, you should go back. We were able to cover a lot of emerging use cases for AI across lending, risk, compliance, etc.
And honestly, it was a lot of fun to be able to come back only a year later. I sound like a broken record, and you've definitely heard this before. But so much has changed even within that year in the AI space. And that's even true for financial services and FinTech, which people usually see as a pretty slow-moving industry.
But throughout the series, we actually get to see that that's not quite the case. And there's a heavy emphasis on some of the hottest innovations, including agentic payments, stablecoins, accounting, and even ERPs. And it's really impressive to see just how far AI has infiltrated all aspects of financial services in such a short period of time.
There's a prevailing notion that not much happens in terms of a massive step change within financial services, and they're not necessarily the best first adopters to go after. This is because of the red tape, regulatory considerations, etc. However, I think taking a step back and just seeing how much has happened within the last 3 years gives a very different view.
Whether it's replacing some of the legacy systems, legacy infrastructure, or selling to some of the largest institutions in the world, we're really seeing AI proliferate across all aspects. And yet, it's still very early on. So with that said, we're excited to jump into season 2 of the FinTech AI Twist series. We've got some exciting conversations with awesome founders and operators who are at the forefront of this massive shift. So let's jump in.
For our first conversation, I was lucky enough to interview Jesse Pollak, head of Base at Coinbase. This is a fun one to kick off because we touched so many aspects of financial services and where AI is and will be taking hold.
Of course, we chatted about one of the topics du jour when it comes to AI and fintech, agentic payments, but also more broadly where crypto and stablecoins are going, how traditional financial service companies are operating, and what it's like to take a pre-AI public company and evolve it for the AI age.
This is the start of a couple of episodes around agentic payments and stablecoins. So, I'm excited to dive into the space with you guys starting with Jesse.
Maybe to dive in, would love to just get your introduction first and like, yeah, your background and how did you get into crypto in the first place?
Yeah, so I'm Jesse. I lead Base, created Base about four years ago at Coinbase. Prior to that, I ran all the consumer businesses at Coinbase on the engineering side. So, Coinbase, Coinbase Pro, Coinbase Wallet, I built all those teams out. And I joined Coinbase through an acquisition of a startup that I started, dropped out of college to run after my first year of college, after my second year of college. And so, that was kind of my journey. It was like went to college, was a builder, dropped out to start something in the kind of crypto-adjacent space and then joined Coinbase and I've been here for almost a decade.
And I got into crypto, I actually just was like sitting at lunch one day at college my first year and someone came up to me and talked to me about the Bitcoin white paper. That person ended up being Olaf Carlson-Wee, who was the first employee at Coinbase. He was on his way up to join Coinbase and that was my first introduction to the whole thing and I was pretty much immediately hooked with this idea of building better money for the world and using that to upgrade the financial system and figure out how to provide more people everywhere more access to, you know, basic and not-so-basic financial services that could increase economic freedom.
And so, yeah, it's been now 13 years of working on crypto, and it's, yeah, it's been the greatest joy, and it's, you know, always gone a little bit slower than I wanted it to. It takes a long time to upgrade the whole financial system.
And so, given your 13-year tenure now in the crypto market, obviously, it is a pretty volatile market, both from actual price changes, but also regulation changes, appetite. Like, I'm just curious, like, what has it been like to be building and working on the inside for that whole time?
I mean, definitely lots of ups and downs, you know, the prices of crypto assets have gone up and down, sentiment has gone up and down. You know, through all of that, I definitely try and just keep my head down and stay focused on building, and that's, you know, sometimes easier said than done, but you know, I think Coinbase always had that culture of like, we're going to do things right, we're going to, you know, build for the long term, we're going to, you know, go through the ups and downs of the market cycles and try and not look at the prices, try not be distracted by the froth or the, you know, negative sentiment, and instead just focus on building great products that our customers love.
Um yeah, so that's been the ethos. I'd say, you know, one of the things that I've gotten the kind of opportunity to do in this journey has been starting something inside of Coinbase, and that I think has been, you know, one of the really awesome parts of my journey is just getting to be an entrepreneur again, but getting to do that inside of a larger organization and navigate all of the trials and tribulations that come with that.
And I think Coinbase is a pretty unique place where there is that kind of entrepreneurial spirit that is not just alive, but it's also really, really actively like celebrated and recognized and leaned into by the rest of the business. That is mostly coming from, you know, Brian, who's just a real visionary and committed builder and wants other people to be building with him. And so, that I think has been a particularly awesome chapter of this journey and something that, you know, I think, yeah, just makes my day-to-day awesome.
And that's great also because that ethos is usually pretty rare once it comes to being public. So that is great to have.
I was just talking about that this morning with a friend of mine. I feel like Brian consistently, even though of course the public markets are going to be public markets, he's someone who kind of puts all that aside and just thinks for the long term and it's like I'm not afraid to pick a dot out in the future and be like that's where we're going. And sometimes it's risky and sometimes it doesn't always work, but I think that's what's led to Coinbase being able to continue to innovate and build new products and, you know, just break out of the mold of being a traditional public company.
So, I want to definitely dive into Base and all things agentic payments, but before that you mentioned that you were kind of running all things like consumer products at Coinbase. And so, like what did that look like? I guess when I think of Coinbase, when I think of most crypto, at least in the US, it's the speculative trading. And so, what did that look like? And what was kind of the vision for the consumer side?
Yeah, so I was leading the engineering parts of it. And so, I worked with Max Branzburg, who now runs the product side of it. We were kind of engineering and product partners and that kind of, I think for me that partnership is always one of the funnest things about getting to work in traditional product engineering organizations. You really have a kind of a partner in crime who complements you and who has a different skill set and different perspective.
And then you jointly get to come together and figure out, okay, how are we actually building this thing? And where are we going? And what do we actually want to deliver? You know, I think that in those five years, Coinbase's consumer products were and are pretty focused on the kind of speculative trading aspect of crypto. You know, and that was of the era. You know, I joined at the beginning of 2017, went through 2022 in that, or I guess mid-2021 in that leadership role.
And so a lot of what we were doing was basically just expanding the kinds of assets that customers could trade, simplifying the way they could trade them, making it so that people could be long-term investors with dollar cost averaging so that they had better access with things like ACH, you know, deposit and direct deposit and, you know, launching a card, making it so there are more financial services. And I think a lot of the focus there was just giving people access to everything.
I'd say that has expanded now in the latest era of Coinbase really to this vision of the everything exchange where the consumer business has gone beyond crypto to now offer equities and offer options and derivatives and prediction markets and basically anything that people want to do with their money, whether they're investing, whether they're trading, whether they're spending, whether they're earning, Coinbase is kind of a single app that lets people do that.
And it's been cool to see that transition for the business out of kind of a pure play crypto business into this much more diversified financial services offering. And I think this is, you know, largely reflective of what we're seeing in crypto broadly, which is that crypto is increasingly becoming an enabling technology where when you look at what are people doing with crypto today, well, they're doing fintech. Right? It's just like fintech 3.0 essentially where you now have this new global platform where you can build any app or business with money.
And instead of having to integrate with all of these legacy systems that, you know, require, you know, FTP uploads of files in order to communicate with them, you get to integrate with software and you get to build new software systems that work natively with money and that allows you to build totally new kinds of financial products and offer them to a global audience.
And so, a lot of the businesses that I'm seeing Coinbase lean into and also entrepreneurs outside of Coinbase lean into is really that space. It's like how do we use crypto to build better payments, to offer more kinds of trading, to offer credit in new ways, financing in new ways. And I think that is basically just letting people have access to better financial services, which is then increasing their economic freedom.
So, then let's dive into Base a little bit more. And so, tell me a little bit more about what you're building in Base. Started in 2022 and I'm curious on like what that original vision was and how that's changed especially with kind of like the rapid proliferation of AI and the growth of kind of focus on agentic payments.
Yeah. So, what we're building with Base is the blockchain for global finance. And basically, you know, I was talking earlier about how you're seeing this next wave of fintech 3.0 businesses being built, whether that's Coinbase or neo banks that are popping up around the world or existing kind of web two, you know, traditional neo banks or brokerages that are expanding into new markets and new product offerings with crypto as an underlying technology. And you can think about Base as the platform that those products are now being built on.
And so, Base provides the trading infrastructure, the payments infrastructure, the borrow and lend infrastructure that makes it really easy for these new kind of financial services products to deliver a best-in-class experience to their customers in a fully global way. And so, instead of, you know, a historical world where if you wanted to provide a borrowing or lending product or you wanted to provide a trading product and that meant having to build something special-purpose for a single jurisdiction and then figure out, okay, how do I go jurisdiction by jurisdiction and build the back end in a new way in each place, with Base, you can now build it once and then it works everywhere.
And so, it's this incredible change where businesses that were previously very constrained in terms of the markets they could serve are now completely unconstrained where they can actually access the global markets in a new way. And what we're then seeing alongside that kind of global growth and expansion powered by Base is a ton more innovation because not only when you're building on these new financial services are they available everywhere, they're also defined in software and so they can compose in really interesting new ways.
And so for instance, you hear about the tokenization of equities, once you tokenize an equity, you can then build really interesting new borrow and lend and credit and derivative products on top of it that then everyone else could leverage as well. And so Base basically sits as this kind of software platform for money that is starting to be the back end for all these financial services companies all around the world.
And so that's what Base is today. I'd say where Base started when we launched it was really a back end for Coinbase. Right? Like Coinbase was our first customer and we were basically seeing Coinbase had kind of built this crypto business but so much of the business was still done in kind of a traditional way that existed, you know, pre-smart contracts because Coinbase started in 2011 and smart contracts didn't really exist until 2017.
And when we started Base, the thesis was, okay, what if we build kind of a platform that then lets us take the parts of Coinbase's business like the trading infrastructure and the payments infrastructure and the financing infrastructure and move them onto this new platform so that they can reach new markets and so that they can offer better products. And so one example of this is Coinbase has a borrow product that they offer to their customers where you can borrow dollars against pretty much any crypto asset on the platform.
So if you have Bitcoin or Ethereum or Ripple or Solana or whatever, you can take out a loan that is dollar denominated versus that collateral. And so if you have $1,000 of Bitcoin, you could borrow two hundred dollars, or three hundred dollars, or four hundred dollars of cash. And this is something that people really love because they don't want to sell their crypto. They want to be long-term investors, but they also want to have access to kind of liquidity against that crypto.
And Coinbase has basically seen that customer need and then built a product on Base that delivers exactly the experience they're looking for. So today you can go to the Coinbase app and basically instantly you can get a credit line against your Bitcoin. And there's no signing of forms. You literally just tap one button. And behind the scenes, there's all these smart contracts on Base that are composed together to deliver that offering.
It takes USDC, it puts it into a protocol called Morpho with your Bitcoin. It then borrows that back and puts it in your Coinbase account. I think there's actually like five or six different transactions that hit Base directly, but all of it's abstracted into a totally kind of seamless customer experience. And that product is now, I think it has like one and a half billion dollars of originations. It's a super fast-growing revenue line for Coinbase.
And importantly, it's a better borrowing product for most customers than anything else they have on the market because they're basically able to get lower rates powered by Base because of the global capital market that Base taps into. And so that sort of product is basically what we started out building Base for, to take all of Coinbase's financial services and power them in this new way.
And then as we've kind of scaled up that market to serve Coinbase, it's become really apparent, hey, like it's not just Coinbase who needs those things. It's also every other crypto exchange and brokerage. It's also every other legacy brokerage that's trying to expand into new markets. Let's take those offerings and make them available there as well. And so that's the, yeah, that's the TLDR.
I'm curious, were you surprised when you guys opened it up and you started getting demand from like the large institutions? I think on the website you have like Amex, JP Morgan. I remember like not that many years ago you had Jamie Dimon saying that like crypto was not it and neither was blockchain. And so I guess I'm curious in terms of like what did it feel like seeing that shift? Obviously that might have been pre-Base but just like seeing that shift and then seeing that appetite really grow.
Yeah, I definitely don't think it was pre-Base. I really feel like we've crossed the chasm with these large institutions just in the last 18 months. Where like even 18 months ago I think there was a ton of skepticism of like is this thing going to be real? And now like all anyone can talk about is stablecoins and tokenization.
What do you think changed?
I mean I think the technology matured to the point where we actually had product market fit for it. Like up until a couple years ago you didn't have the kind of full stack of infrastructure required in order to make stablecoins super useful for an everyday business. And now it's like if you're sending money across borders, there's no better way to do it than stablecoins. And now that just wasn't the case two or three years ago.
And I think, you know, when you ask was I surprised, look, I'm an eternal optimist and sometimes a little bit too optimistic in my timelines. And so there was a part of me that was like, oh we're going to launch Base and like literally the whole world is going to adopt it in year one. Now that didn't happen. It's been slower, but I think what we've seen is basically it just takes time to build out the full stack of kind of product solution that businesses need in order to solve their problem. And that means that adoption kind of is bottlenecked on that build out.
And so a good example of this is stablecoins. You know, we launched USDC, which is today the second largest stablecoin in the world. You know, trusted for tons of use cases from cross-border payments to financing to trading to basically anything you can imagine people doing with money they're now doing with USDC. And we launched in 2017 and no one cared about it. Like for like 3 years. Like the 2017 to 2020-2021 era of USDC, it didn't grow very much. There wasn't that much you could do with it.
And then basically we just kind of gradually built up enough infrastructure where I was like, oh, now there's liquid markets for USDC on chain. Oh, now there's simple APIs that let you convert dollars to USDC. Oh, now those APIs are packaged into the even simpler cross-border payment solution that someone can just use if they have entities in two different countries.
That build of like you have the chain at the bottom and then you have the stablecoin and then you have the, you know, protocols that sit on top of the stablecoin and then you have the, you know, primitive APIs and then you have the more easy to use APIs and then you have the GUIs that use the APIs. Just takes time because you are building out really complex financial infrastructure. And I think that's just taken a little bit of time to get to where we are today.
But in the last 18 months we basically turned the corner where when you look at stablecoin adoption today or you look at tokenization and the trading of those assets that are tokenized today, it's just up into the right. Like unlike any other chart you've seen in crypto where I think historically it was very kind of like oscillating. You'd have price spikes and then it would go down. Stablecoins and tokenization, they're not going down.
And I think that's going to be the case until everything is tokenized, whether it's a dollar becoming a stablecoin or an equity becoming a tokenized equity. We're basically over the next 20, 30 years, in the same way that the internet upgraded all of information, going to see crypto upgrade all of money as this new back end that lets us have a global connected economy that works better for businesses and for consumers all around the world.
Might be an optimist, but you have me sold from that. I do want to dive deeper into agentic payments. You might sell me here too, but why do AI agents need the crypto rails at all? Like why does it have to be tokenized versus just running on fiat?
Yeah. And I think one thing I'll caveat up front is I think that you'll have agents, you know, doing things in fiat as well. You know, what we're seeing on Base, I think with Coinbase, is that agents, their native language is software. And so, the really powerful thing about crypto is that it's like software money.
And so, if I'm an agent, I'm like reaching for a tool, and one option is like I can go fill in a form with like a credit card that like someone has to go and provision for me, and, you know, I have to go figure out how to like interface with the form, and then like that maybe interacts with like an API or whatever it is, and this is kind of foreign to me, and I don't have a, you know, a mailing address or any of the things that people are used to, that agents are not.
Or the other option is I make an API call, and I have a wallet that's, you know, software defined that I control that I can just attach a little metadata for an X220 payment on, and that converts the transaction immediately. My guess is that agents are going to pick the latter over the former most of the time.
And so it really is almost like, what are the affordances that agents have for using money? And a software affordance is going to be much better than a legacy banking affordance that was created 20 years ago before agents really existed. And so I'd say that's the primary driver. I'd say that's also what we're seeing in the data today.
You know, both like anecdotally, I have my own kind of like agent harness and all that stuff, and, you know, my increase in transactions that have been processed via crypto rails is like going up pretty dramatically just because it's so much easier to do these micro payments for data, for inference, or for other things using those rails in an agentic harness.
I also think we're seeing it in the data kind of on a more macro level. It's growing pretty consistently, the number of people who are starting to execute these agentic transactions using crypto rails because once you just set up a wallet, it just happens kind of behind the scenes, and you don't even think about it. So, I'd say that's the second reason why I think it'll happen.
And then the third reason I think is kind of the first principles reasoning where if you assume we have, you know, billions of agents, trillions of agents, like that's just like such a big pie. If crypto is this new rail that is going to be upgrading money at the same time, you got to think that a big chunk of that pie ends up happening in crypto. We'll see how much, but especially because it's a new market that has to grow, my sense is again because of that affordance, we'll actually see a lot more of the agents convert to crypto rails than the traditional rails.
Do you think that the majority of the agentic payments on the crypto rails is going to be kind of as you described where it's kind of those micro payments used for tokens, etc. versus having an agent buy my groceries for me or do my online shopping for me?
I think it'll be both. I mean, I think the place that we're seeing the most adoption today is kind of the things that are most easily exposed by the edge and that are most in demand by the edge. And so like inference is like a new category where there's a ton of innovation and so people are exposing that via crypto payment rails. Similarly, lots of data is kind of this commodity that people are trying to figure out how to monetize and so they're looking for ways to do that and they're using crypto rails.
That's pretty different than e-commerce where it's like, okay, like this is very entrenched how people do things. It's just going to take longer to move there. And then on the other side, I think the people who are kind of most likely to be using agents on a regular basis are also the ones who are most likely to be paying for like meaningful amounts of inference or trying to access data to do, you know, analysis or whatever it is. And so you kind of have this market that's being made there. But I think that it's going to expand over time.
You know, my sense is that one of the big ways it expands is you basically have payment processors, or not payment processors, you have commerce networks, which I think you can conceive of like Shopify as a commerce network or even Stripe as a commerce network where they actually have like people both on the supply side in the form of merchants and on the demand side in form of consumers.
Shopify has Shop Pay and then Shopify merchants, Stripe has Stripe Pay or Stripe Link and then Stripe merchants. PayPal has, you know, PayPal Pay and then PayPal consumers. I think that we'll basically start to see kind of behind-the-scenes upgrading of those networks where, you know, right now the default is pay with a credit card, but if you can replace the credit card that has the, you know, 3% fee or 2.5% fee with a stablecoin rail that can support a much lower minimum fee and happen faster and settle instantly and then have all this programmability that otherwise wasn't possible, I think that will be kind of a no-brainer for folks at some point and that will just kind of like, without consumers even knowing it, change their behavior.
And so I do a little bit on this kind of like burn down, it's like, okay, if 0% of these networks are currently running on these rails, like how quickly do we get to 100%? Just because the natural inertia for these payments, particularly in these closed loops where you have like a single kind of entity that's controlling both sides of the marketplace, the natural inertia is going to be to go to the fastest, cheapest, easiest way to settle.
