While You Build Casinos, We Build Real Finance | LayerZero, co-founders

In order to truly change things, in order to build something great, you must have conviction. A college dropout poker

have conviction. A college dropout poker player. I didn't go to Harvard or MIT. I

player. I didn't go to Harvard or MIT. I

didn't go to, you know, amazing school.

I didn't have any connections.

We were nobodyies. And so I always wanted to prove that we could do impossible things. You can't do this.

impossible things. You can't do this.

Nobody can. When I hear that, uh, that's all I want to work on.

Reset everything. Think completely from first principles. How can I break it?

first principles. How can I break it?

How can I break it? And that the why matters more than anything. Why are we here? Why why do we get up in the

here? Why why do we get up in the morning in the shower when you're going to bed at night, when you wake up in the middle of the night, you have an idea is just like it's just a pure obsession.

Can we have high performance and maximum decentralization? It's the holy grail.

decentralization? It's the holy grail.

The impossible thing, an impossible problem. My favorite.

problem. My favorite.

What started as an idea now is a reality. We were the first company ever

reality. We were the first company ever in history to have both Andre Horwitz and Sequoia both co-lead around.

Vitalic said that trial was broken. He

means theoretically it's broken, but we actually broke it. There were no more bottlenecks.

I'm Brian Pelgro, co-founder and CEO of Layer Zero Labs.

I'm Raz, co-founder and CTO of Layer Zero. Zero is the last blockchain

Zero. Zero is the last blockchain that'll ever be built.

I woke up one morning, April 15th, and I sat down at my computer and there's a big seal of the Department of Justice, the DOJ, on the website. And what had happened was overnight they had banned

all online poker within the United States.

All of the websites are down. You can no longer play online poker in the United States. All of the payment processors

States. All of the payment processors are down. So, you can no longer move

are down. So, you can no longer move money between or do anything. And it was just like overnight like that the industry was just gone. And I think those were the first times where you said okay you saw the reach of of sort

of policy and government sort of impacting you in your real life. When

you're a kid you don't think about it too much. When you're a young adult you

too much. When you're a young adult you don't think about it but there's the first time of I need to literally move where I live to my entire life and it's sort of career just got taken away from me. Uh, and so I think that really

me. Uh, and so I think that really grounded me early on in kind of like the libertarian ethos of crypto and having something that uh was bigger than a single jurisdiction, was bigger than a

current like given regulatory regime uh had the ability to become something more.

For the first 24 hours, I just spent feeling sorry for myself, which I think is like a kind of natural reaction.

You're just like, "Oh man, my my career is over. All my money is gone." Like,

is over. All my money is gone." Like,

you know, you don't really know what to do. But then immediately after that,

do. But then immediately after that, like the next day, I woke up and I was just very I saw that the world was changing very quickly. And so, one thing that I noticed was that all of the main

poker sites were now gone, but there's a bunch of smaller kind of shady poker sites that still existed and that everybody was going to go and sign up on those because they needed to continue to

make a living. And I knew all of the highest stakes poker players in the world. So, I created an affiliate and I

world. So, I created an affiliate and I signed up all of my friends to all of these sites. I found them the best deals

these sites. I found them the best deals and I negotiated these things and it went from me making, you know, no money to me making like 20 $30,000 a month

within a couple of weeks, right? And so,

very quickly I saw that a changing reshuffle of a landscape created an opportunity and then that really drew me to entrepreneurship in general. I think

that was the first real catalyst.

I grew up in a town of 900 people, right? Like very very small village, not

right? Like very very small village, not a lot of opportunity, not a lot of anything. And so I really valued for

anything. And so I really valued for most of my life a meritocratic environment. I didn't go to Harvard or

environment. I didn't go to Harvard or MIT. I didn't go to, you know, amazing

MIT. I didn't go to, you know, amazing school. I didn't have any connections. I

school. I didn't have any connections. I

was a poker player who dropped out of college, right? And so what I really

college, right? And so what I really valued was the ability to to just do something where I could earn my own way or like prove my own value over time. So

poker was a perfect example of this.

Poker is purely meritocratic. It doesn't

matter anything about you. It's just

you're smarter or better at the game or you're not. Like that's it. It was very

you're not. Like that's it. It was very very linear. Those are just the systems

very linear. Those are just the systems and environments that I valued. And so

that was one of the things I was very drawn to in crypto. I didn't need to know the banking executives. I didn't

need to have an uncle who worked at Goldman Sachs. All I needed to do was be

Goldman Sachs. All I needed to do was be able to build something that was more useful to the world that actually had a higher degree of utility. It was just build the best possible system that you

can build and permissionless open access to anybody. Just build the best thing.

to anybody. Just build the best thing.

You know, I've been building with Brian since we're in school together. And

nobody would give us money cuz we were nobodyies and we didn't come from a great pedigree and we didn't have a great school. And so I always wanted to

great school. And so I always wanted to prove that we could do impossible things, great things. And so I'm always chasing is when someone says something's not possible, right? This is not

technically possible. this uh you you

technically possible. this uh you you can't do this, nobody can. When I hear that, uh that's all I want to work on.

And Brian was like uh our hero, like my hero, our like the older grade's heroes.

He's a genius to everybody. And so I always looked at the Brian and I wanted to be like him. I didn't know we were going to do that uh to be be working together basically our whole lives, the rest of our lives. So two things

happened through the crypto side. All of

poker, all the shady sites that remained, the only way to deposit because PayPal, Money Bookers, Netteller, Skril, they were all shut down, but Bitcoin was the way that you would deposit to these sites. So,

everybody in poker who was in the United States in 2011 era found Bitcoin.

Everybody used it as a way to deposit between. So, it was the first real

between. So, it was the first real product market fit. And then on the entrepreneurship side, I'd got really interested by this affiliate idea. And

that created a a doorway for a new industry which was called daily fantasy sport. Sort of a faster version of that.

sport. Sort of a faster version of that.

I went to them and said, "Can I just work for free? Like just let me do some affiliate stuff. I want to learn uh let

affiliate stuff. I want to learn uh let me just, you know, see how it is." And

they said, "Sure, great." And then the sort of board of the company said, "Hey, we actually want you to become CEO a couple months and run the company." But

I actually took my two co-founders here that I started layer zero with and I brought them in and we grew to being third overall in revenue. So we were just turning profitable. We were just doing this and then we got an acquisition offer and we sold it. It was

a hard time like in our lives like that was a hard the first time we felt like real hardship. Year and a half maybe 2

real hardship. Year and a half maybe 2 years of zero income and me working 80our weeks. Uh, every day I was on

80our weeks. Uh, every day I was on because it was just us maintaining a site that had, you know, tens of thousands of users with real money playing on our site and us taking every dollar we made. We were making money and

reinvesting into the business, reinvesting in the servers, reinvesting.

My biggest learning, the biggest takeaway was like I worked very hard with Brian on it. Brian doesn't really give up and I don't and my my whole life my father pushed me like never give up

on things. And it was the first time

on things. And it was the first time where I I I felt like uh, you know, wasn't going anywhere. We were out of money. I was paying money out of pocket

money. I was paying money out of pocket at this point from my wife's salary to like keep things alive with Brian. So

was Brian and we had an offer and it wasn't a great offer and Brian said we shouldn't I don't think we should take it. And I said I have to take it. We

it. And I said I have to take it. We

have to take it. I just need to tap out at this point. Like I I can't do it.

That was the first time I ever tapped out. Ryan actually came back to me later

out. Ryan actually came back to me later and said like, I really really believe that we can build something incredible and I promise you the next time that we do something, I will run my life into

the ground. You know, I'll I'll I'll go

the ground. You know, I'll I'll I'll go all the way to maximum suffering and everything uh and we won't kind of give up early. And we said, okay, like we'll

up early. And we said, okay, like we'll do that. And then Ethereum sort of was

do that. And then Ethereum sort of was launching at the same time. Ethereum was

this great layer that you could trust and you could build value upon, but it was slow and you could never build complex applications. It was really the

complex applications. It was really the spark of well now you can build something really interesting. We saw

that need very early on of of course you have to be able to move back and forth.

You write the code and you'd host it on a server. Maybe the server was in my

a server. Maybe the server was in my house or maybe it was in a data center but it was just like one computer and if the computer went down like the website your application was offline you know so you had to make sure that computer was

online and everything but now when you build an application you have a million microservices you have databases things that are optimized for throughput for speed for every different component and

we saw blockchains will really start to leverage that you'll have layers that are really optimized for storage layers that are really optimized for throughput and for high amount bunch of transactions layer that are extremely

security focused and there was a way to connect those all together to create something that was sort of more valuable than the sum of the parts. So I I called Ryan and I said like I know you said the

next time we did something we would like really do it. I I was like, I think now is the time. And I called him two days after Christmas. And within 10 days, he

after Christmas. And within 10 days, he had sold his house, packed up his life, taken his four-month old daughter, and flown across the world to come in Vancouver and be in Vancouver with me.

I want to I want to get the band back together and just start building again.

I don't think we can do this remote. And

I said, I'll be there in 2 weeks. And I

never moved back. My daughter didn't sleep well and she would be up all the time. Uh it was actually like the worst

time. Uh it was actually like the worst time to to go and take a shot and do these things. That's where I learned

these things. That's where I learned GPU. Every morning at I would strap my

GPU. Every morning at I would strap my daughter in uh to these straps and I'd walk around Brian's downstairs living room. I would read the docs and

room. I would read the docs and everything about that Nvidia had on how to GPU program, read textbooks without doing the work cuz I couldn't I didn't have a computer. So I was just do it in

my head from 2:00 in the morning to 7:00 in the morning every single day for 6 months. And then I sat down and just

months. And then I sat down and just started coding GPU. It was the worst time to go, which is the best time for me. Finances, stress, um, time, and, uh,

me. Finances, stress, um, time, and, uh, that's that's when like I have to hit my shot.

The first thing that happened that had been really interesting since smart contracts was you started to hear Binance Smart Chain, more volume than Ethereum, more users than Ethereum. It

was very strange. Uh, there was a bunch of other things that had launched, but nobody really used them. What could you build with that? Can you build something that leverages the speed here and then brings it back to the security over

here. We started to build this. We built

here. We started to build this. We built

some toy examples and then only then did we realize that everything we were building you couldn't send a message between the two networks. You couldn't

go between Binance Smart Chain and Ethereum. And so we started to build

Ethereum. And so we started to build kind of a better form of a bridge. And

then we very quickly realized, hey, this is this is really the problem is connecting these things. And that became that became layer zero. That was us solving our own problem. It was us building examples. But all of this stuff

building examples. But all of this stuff that we had done prior brought us to that. You know, what started as an idea

that. You know, what started as an idea now is a reality. And now we're sort of on the precipice of like really meaningfully changing a large part of

the financial system. November we did $ 38 billion. $38 billion is 5.5 times

38 billion. $38 billion is 5.5 times what Western Union does in a month. And

that is just like crazy to think about because you can really change how some of this works.

That's what drives me is solving hard problems. And I want to solve a hard problem that helps people. And it's not about how much money you make, but like how much better you can make their lives

overall, enriching others lives.

It's very easy to forget growing up in a country that was stable and wealthy.

There's a lot of places that don't have any access to any sort of financial infrastructure. And even the banks and

infrastructure. And even the banks and the financial institutions aren't trustworthy, right? They'll scam you.

trustworthy, right? They'll scam you.

They'll charge egregious rates. They'll

go under. There's fraud. Early on, what resonated about Bitcoin was that nobody could come and just seize your money.

Nobody could come and do these things.

You had ownership and control. I think

Tether is the best possible example of this where most companies really try to focus on a certain geography. So, you're

going to be Stripe and you're going to be in the United States and you're going to service institutions and developers there and then you're going to expand and you're going to expand. and Tether

went and they said, "We're going to offer access to the US dollar to all the places that don't have easy access." So,

Egypt and Nigeria and Argentina and places where their currency is inflating at hundreds of percent a year. The

institutions aren't trusted and the central banks aren't trusted and they really made arguably one of the best businesses in the entire world out of that, right? Hundreds of billions of

that, right? Hundreds of billions of dollars of assets, 15th largest holder of sovereign debt in the world. And all

of that was just by giving the average person just access to the dollar. And I

think that is uh as powerful a change as the world is going to see in a really long time.

A long time ago, the internet wasn't the internet. It was just groups of

internet. It was just groups of computers. And you would have a group at

computers. And you would have a group at Stanford and a group at DARPA. And they

each ran in their own cluster, but I couldn't talk to each other. And so if I had some data or something, I would have to take my disk of data, fly to Stanford, plug it in, run it on their

program, and then I would fly back with the results. And then we invented the

the results. And then we invented the internet. And the internet gave us

internet. And the internet gave us connectivity between all of these things, global connectivity. If you go back to the beginning of blockchains, what existed, it was exactly like that.

You have Ethereum, you have Salana, you have different environments. None of

them could talk to each other. There was

no way to take your money from here to there. There's no way to communicate

there. There's no way to communicate between an application. So all that layers did was exactly like the internet. It just connected these

internet. It just connected these environment. Strange and foreign

environment. Strange and foreign concepts early on. This was, you know, felt like fantasy land craziness. But

now 15 years later, every major institution in the world is figuring out how do we actually leverage this? And

there's more and more conviction. And

Larry Frink just stood up at the World Economic Forum in Davos and said institutions are not trusted anymore by the average person. And so like what does a world look like where there is not trust in the existing institutions?

What it looks like is a world where you don't have to trust and again is open to anybody. And so that's incredibly

anybody. And so that's incredibly important for us and again I think the only true thing of value within the space.

There's it's essentially a series of trade-offs and a trauma. You can choose two of the trade-offs but you lose one of them. You live somewhere in this

of them. You live somewhere in this triangle. Every blockchain has to do the

triangle. Every blockchain has to do the same thing. They're all in a network and

same thing. They're all in a network and they're all communicating with each other. And what is a block? It's a

other. And what is a block? It's a

series of transactions like so I'm going to transfer money to from from myself to my friend Bill and Bill's friend transferring money to somebody else or performing this transaction. And they're

a series of transactions. Every single

validator or participant in the network has downloaded executed. So they ran it and agreed on the outcome and then come to consensus with each other. And all

they need to say we all agree on this.

This is the new block. We all agreed to this thing. Now, since everybody's

this thing. Now, since everybody's taking turns doing this, they all need to have the same hardware. You know, the bigger the block, the more pipe they need, more network communication. And

so, the trilmma really boils down to higher TPS, the faster I want my blockchain to be, the bigger the device.

And the bigger the device means the less people who could run it cuz it's more expensive. It's less accessible. So, if

expensive. It's less accessible. So, if

you want somebody in a third world country participating and helping decentralize the network, um they can't if it's a, you know, $40,000 a month server that you have to pay through AWS, uh that's why Ethereum has chosen, hey,

we want maximum decentralization. And

so, they're giving up on performance.

Salana wants higher performance. So,

they're giving up on maximum decentralization. And this the the

decentralization. And this the the requirements to participate is you need to stake a lot. You need to have a big beefy machine. It eliminates that that

beefy machine. It eliminates that that uh ability to have that maximum decentralization. and and the more

decentralization. and and the more performant you go, the less decentralized it becomes. But nobody

could get the best of both worlds. How

do you have something that's really fast and high performant and you could build like the actual internet and like applications on internet on and like all financial rails like uh New York Stock Exchange, 2 million TPS, you're never going to get that even on a Salana. How

do you achieve that and still be decentralized? Uh it's the holy grail,

decentralized? Uh it's the holy grail, the impossible thing, an impossible problem. My favorite.

problem. My favorite.

What we needed was a spark. Our Wild

West is full of stories of freedom, of ghosts, of riches, of possibility.

Consider for a moment that maybe at last those stories might be true. What if the inevitable was finally here? The

building done, the rails laid. What

would you do if you saw it with your own eyes? Ethereum couldn't scale fast

eyes? Ethereum couldn't scale fast enough. And they said, "These layer

enough. And they said, "These layer twos, they inherit our security. go

build there. That's how we scale. When

they said that, I call that a noble lie.

A noble lie saying that you know, you know, we care about these principles. We

can't scale yet, so we need to lie to you, so you stay. And then we'll hopefully find a way to scale in the future. That lie struck a nerve with me

future. That lie struck a nerve with me and made me feel like no one is left to do this thing. It'll all for nothing.

This experiment will die. We'll just

have a more redundant financial system, but not a freer one. But it felt like the last samurai putting their sword down and saying, "This cause is over." I

felt like I had to pick it up. I felt

like I had to do it because I thought no one else would.

I don't care to build a technology that makes a bunch of money early on but then never gets used. Like we want to build a technology that is used everywhere that is a bit ubiquitous that is adopted

universally. So it's really a question

universally. So it's really a question of can we win. My favorite example of this is like Demis from Deep Mind is like my all-time just personal hero of like even from like he's never changed

his story in like 20 years and the industry like blew up in 2014 and then it died and then it came back and he's like the whole time been like pretty intellectually honest of like here is what is useful, here is what is not.

Like we're really focused on like protein folding and like solving real problems and he's just never wavered and he stayed at the very top of the field throughout the entire time. And I just think that kind of person is just like

inspirational. Like 10 out of 10, you

inspirational. Like 10 out of 10, you want to bet on them every single time.

There's been so many times even internally where it's so easy to say, "Let's let's compromise our principles so we win." This corner a little bit, just this one time. We get tested all

the time on how we build or decisions we make. Canada certainly showed that to us

make. Canada certainly showed that to us here in this country that I live in.

When if you donated to the trucker cause, you should be outraged at the fact that donating to a cause that they didn't like, they seized your bank accounts and turned off money you worked

for, you earned. I don't need more money. I don't I want impact. I want to

money. I don't I want impact. I want to I want a certain outcome for the world.

Forget anything in the short term. What

does the world look like 5 years from now, 10 years from now? How is the world changing? and how do we build the

changing? and how do we build the systems such that they are still useful then it's great that I can you know send money from unis swap here to something

you know across the two blockchains now what does it look like when the entire when every bank in the world has a ledger when all of the world's assets move on chain when stable coins are like the dominant way that these things

happen when global markets emerge right uh what does that actually look like how does everyone else do it great we can make it a little bit better it's reset everything think completely from first principles. How can I break it? How can

principles. How can I break it? How can

I break it?

That architecture unlocks a new internet. It would add more freedom

internet. It would add more freedom everywhere. And so web 3 for the first

everywhere. And so web 3 for the first time to me is real.

It is so hard to build a company. There

was like six different times we could have just like walked away. We could

have killed the company. there were so many times that you know we we almost didn't make it. You only really do that and you only really keep doing it if you really really believe in the thing that

you're doing without conviction. You

will just in any industry you will just never get there. And so I think you're way better off finding something you really deeply believe in and going for that even if other industries are more exciting at the time or whatever. I

think that's the only way you get like true success in anything. People are

really drawn to passion. And so one of the things I love about conviction, having conviction, is naturally you're you're more passionate about the thing that you're doing because you know you're not questioning, you don't need approval from anybody else. You know

that you believe that a thing is right, should exist in the world, like is the right way to solve the problem. And I

think people are drawn to that. I think

it's good to have something that's interesting and you're I think Toby from Shopify talks about them hiring for spikes. You don't really want a

spikes. You don't really want a perfectly well-rounded generalist. What

you really want is somebody with with crazy spikes. We were the first company

crazy spikes. We were the first company ever in history to have both Andre Horwitz and Sequoia both co-lead out and like that is very rare and we're about as atypical as you could possibly get

from like A6Z and Sequoia backed founders right they're normally Stanford grads who did a PhD who worked in a lab who worked at this big company and we're like went to the University of H New Hampshire like dropped out of school uh

but it really was that like spikiness I think we were completely convinced of the thing that we were doing we didn't we didn't hair like we didn't need them to write a check. They wanted to be

involved cuz they saw that we were like driven in a direction and so we were we were definitely going to build the thing.

I think what I would say to people is like the whole point of the space like the whole premise of everything crypto is that you shouldn't have to right trust but verify right? You shouldn't

have to trust me in what I say. You

shouldn't have to trust us. You're going

to be able to trust the code. You're

going to be able to observe it for itself. On February 10th, we're going to

itself. On February 10th, we're going to stand on stage. We're going to prove Ethereum's history real time verifying at a million transactions per second at 110 bits of security, right? Nobody has

ever done even remotely close to that.

And then every step of the way from now until September, we will show and like you will be able to touch and feel it. I

want people to go and do that cuz that's how you get somebody to have conviction.

Me telling you something, you're not going to have conviction.

Is it technically possible? Uh or so you might also get people saying, "Well, I had some of these ideas. They're not

that smart." Well, I think so. What? You

haven't done anything yet, right? Talk

is cheap. So, we're going to go out there and do it.

Building a company is unbelievably hard.

It's a thankless, miserable job most of the time. I could have never ever done

the time. I could have never ever done it without Raz. Like, no, with no question. There is zero doubt in my

question. There is zero doubt in my mind. Specifically, I mean, specifically

mind. Specifically, I mean, specifically him. There is just no way I ever could

him. There is just no way I ever could have done it alone. I would never.

People talk about how hard co-founders are and they talk about how they could never have a co-founder. I could have never ever ever done it alone. No

question.

Likewise, it's destiny is what it feels like. Like almost like everything that's

like. Like almost like everything that's happened, it feels like it was meant to happen. Like it was pre-ordained. I know

happen. Like it was pre-ordained. I know

it sounds crazy and like probably cringy, but it does. Like the right people show up at the right time for us.

And it's probably just a matter of us putting ourselves in those positions where that happens. Uh, I think about the first time I met you fairly regularly. Like it is a part like it is

regularly. Like it is a part like it is like a that was meant Brian was meant to pop over the fence and say, "Hey, I'm Brian." Right. And like I couldn't could

Brian." Right. And like I couldn't could not do this with anybody else.

Never heard some of this stuff before.

It's like emot emotional. You know, it's uh this is the best time of your life. You

are healthy. You get to work with your best friends and you get to work on something cool. whether or not we had

something cool. whether or not we had succeeded with layer zero, like before layer zero, we were not succeeding financially, but I was happy. I didn't

quite get that until like um a couple years ago when my wife kept asking me like, "When does this end? What is your goal?" And I and I and and I was I kept

goal?" And I and I and and I was I kept ask what is my goal? It's the doing the thing. So people like, "Are are you

thing. So people like, "Are are you stressed about February launch?" I'm

like, "No, it's just part of I'm just enjoying it. This is part of the moment.

enjoying it. This is part of the moment.

Every day is the moment. Enjoy it."

There's only one thing I can have people remember. In order to truly

remember. In order to truly change things in order to build something great, you must have conviction. Like it is that the undying

conviction. Like it is that the undying conviction and passion. Now as I drive into work, I listen to a lot of biographies. I'm listening to Elon's

biographies. I'm listening to Elon's biography and one thing that resonated a lot with that is uh he says like it's very easy to think that technology just progresses automatically, right?

Egyptians had the pyramids and then technology was lost. the Romans and the aqueducts and all this stuff lost in the dark ages like technology is not guaranteed to move forward. The world is not even though it's been moving forward in a wonderful state over the last

hundred years not guaranteed to move forward or even move in a positive direction like technology advances and the world changes because a group of

people are like really really passionate and work really really hard to make that thing happen. That conviction, that

thing happen. That conviction, that passion, that hard work should not be taken for granted. it's not expected and like it's cool and it deserves the utmost respect for anybody who's like

trying to do those things but it is a prerequisite to do and I think people should realize that that is what it takes and and decide that they want to do that thing and caring about something

is like again it is uh it's the best.

though. Yeah.