In a groundbreaking presentation at Solana Breakpoint 2024, Hivemapper CEO Ariel Seidman unveils how decentralized physical infrastructure networks (DePIN) are revolutionizing the tech industry and paving the way for innovative funding models in a post-zero interest rate era.

Summary

Ariel Seidman, CEO and co-founder of Hivemapper, delivered an insightful talk at Solana Breakpoint 2024, focusing on the company's decentralized global mapping technology and the broader implications for startup funding in the current economic climate. Hivemapper's approach to creating a fresher, more detailed alternative to traditional mapping services like Google Maps has shown remarkable growth, mapping 10 million unique road kilometers in just two years - a feat that took Google a decade to achieve.

The presentation delved into the challenges faced by startups, particularly those operating in the physical world, in the current high-interest rate environment. Seidman highlighted the stark contrast between the abundant venture capital funding of the past decade and the current scarcity, emphasizing the need for efficiency and new funding models.

Seidman introduced the concept of Decentralized Physical Infrastructure Networks (DePIN) as a innovative solution for capital formation in this new economic landscape. He explained how DePIN leverages blockchain technology and cryptocurrency incentives to build and maintain physical infrastructure, using Hivemapper and Helium as prime examples. This model allows for transparent reward systems and effective balancing of supply and demand.

The talk concluded with a call for patience and understanding as these new models mature, drawing parallels to the early days of now-established tech giants like Uber and Facebook. Seidman's insights provide a compelling vision for the future of tech startups and infrastructure development in a world where traditional venture capital may no longer be as readily available.

Key Points:

Hivemapper's Decentralized Mapping Technology

Hivemapper is revolutionizing the mapping industry with its decentralized approach to creating a global map. The company has developed a purpose-built device called the Hivemapper dash cam, which users can mount on their vehicles to capture mapping data as they drive. This innovative method allows Hivemapper to create a constantly updated, highly detailed map that can potentially surpass traditional mapping services in terms of freshness and accuracy.

The key to Hivemapper's rapid growth is its incentive mechanism. Users are rewarded with the company's cryptocurrency, Honey, for their contributions to the map. This has resulted in remarkable progress, with Hivemapper mapping 10 million unique road kilometers in just two years - a feat that took Google Maps a decade to accomplish. This decentralized approach not only ensures rapid map creation but also maintains the map's relevance through continuous updates from users.

The Changing Landscape of Startup Funding

Seidman highlighted the significant shift in the startup funding landscape over the past few years. He pointed out that the era of near-zero interest rates, which enabled massive funding rounds for companies like Uber, Airbnb, and DoorDash, has come to an end. These companies collectively burned through $30 billion before becoming profitable, a model that is no longer sustainable in the current economic climate.

The presentation included statistics showing a dramatic decline in venture capital funding, both in terms of total dollars invested and the number of deals. This shift has particularly affected startups operating in the physical world, which typically require substantial capital to grow. Seidman emphasized that this new reality necessitates a different approach to funding and growth for startups, especially those dealing with physical infrastructure or products.

Decentralized Physical Infrastructure Networks (DePIN)

Seidman introduced the concept of Decentralized Physical Infrastructure Networks (DePIN) as a potential solution to the funding challenges faced by startups in the current economic environment. DePIN represents a new model for capital formation, leveraging blockchain technology and cryptocurrency incentives to build and maintain physical infrastructure.

The key features of DePIN include a transparent ledger for rewards and revenues, visible on the blockchain, and the use of cryptocurrency tokens to balance supply and demand. This model allows for efficient allocation of resources and incentivizes participation from a wide range of contributors. Seidman used Hivemapper and Helium as examples of successful DePIN projects, demonstrating how this model can work in practice for mapping and wireless network infrastructure respectively.

Addressing Criticisms and Future Outlook

Seidman addressed common criticisms of the DePIN model, particularly the concern about lack of demand. He provided examples of growing demand for DePIN services, such as Helium's 100,000+ mobile subscribers and Hivemapper's contracts with major global map makers. He argued that, like many disruptive technologies in their early stages, DePIN projects need time to mature and demonstrate their full potential.

The presentation concluded with a call for patience and a broader perspective when evaluating DePIN projects. Seidman drew parallels to the early days of now-established tech giants, suggesting that the true disruptive power of DePIN lies not just in its technology, but in its innovative business model. He expressed optimism about the future of DePIN, predicting that in a decade, we might look back on this period as a pivotal moment in the evolution of infrastructure development and startup funding.

Facts + Figures

• Hivemapper has mapped 10 million unique road kilometers in just two years, five times faster than Google's initial mapping efforts.
• Venture capital funding has dropped significantly in recent years, both in total dollars invested and number of deals.
• Uber, Airbnb, and DoorDash collectively burned through $30 billion before becoming profitable.
• Tesla burned through $6 billion of cash between 2004 and 2019 before turning profitable.
• Helium, a DePIN project, now has over 100,000 mobile subscribers.
• Hivemapper is serving three of the 10 largest global map makers.
• The number of new "unicorn" startups (valued at $1 billion or more) has decreased to 2017 levels.
• Most current VC funding is flowing into large language models and AI projects.
• DePIN projects use transparent ledgers on blockchain for rewards and revenue tracking.
• Cryptocurrency tokens are used in DePIN projects to balance supply and demand.

Top quotes

1. "We're really building this decentralized global map, right? And so think how do we build a fresher, more detailed version of something like Google Maps."

2. "We have now mapped 10 million unique road kilometers, or 10 million unique miles. If you compare that to Google's review, that took them 10 years. So we're growing five X faster than Google's preview."

3. "When zero, when interest rates were effectively zero percent, VCs were encouraged to take riskier and riskier bets and they were willing to wait longer and longer for the return on that investment."

4. "Deep in is actually a new option for capital formation, right? So this is actually a new way."

5. "The big knock on TPIN for the last couple of years has been, yeah, yeah, yeah, you can grow supply, but there's no demand. Well, let's look at this."

6. "We are disrupting existing players, not so much through technology, but through business models."

7. "I think we should all be a little bit patient in terms of letting these things play out, right?"

Questions Answered

What is Hivemapper and how does it work?

Hivemapper is a decentralized global mapping platform that aims to create a fresher, more detailed alternative to traditional mapping services like Google Maps. It works by utilizing a purpose-built device called the Hivemapper dash cam, which users mount on their vehicles. As people drive around with this device, it captures mapping data in real-time, contributing to the creation and continuous update of the global map. Users are rewarded with Hivemapper's cryptocurrency, Honey, for their contributions, incentivizing widespread participation and rapid map creation.

How has Hivemapper's growth compared to traditional mapping services?

Hivemapper has shown remarkable growth compared to traditional mapping services. In just two years since its launch, Hivemapper has mapped 10 million unique road kilometers. This is particularly impressive when compared to Google Maps, which took a decade to achieve the same milestone. Hivemapper's rapid growth can be attributed to its decentralized approach and incentive mechanism, which encourages users to contribute mapping data as they go about their daily routines.

What is DePIN and how does it relate to Hivemapper?

DePIN stands for Decentralized Physical Infrastructure Networks. It's a new model for capital formation and infrastructure development that leverages blockchain technology and cryptocurrency incentives. Hivemapper is an example of a DePIN project, using this model to build a decentralized mapping network. The DePIN approach allows Hivemapper to create and maintain its mapping infrastructure through a distributed network of contributors, rather than relying on traditional centralized methods of data collection and map creation.

How has the startup funding landscape changed in recent years?

The startup funding landscape has changed dramatically in recent years, primarily due to the shift from near-zero interest rates to higher rates. This has led to a significant decrease in venture capital funding, both in terms of total dollars invested and the number of deals. The era of abundant capital that allowed companies like Uber and Airbnb to burn through billions before becoming profitable has ended. Startups, especially those operating in the physical world, now face a much more challenging funding environment and need to be more efficient with their capital.

What are the key features of DePIN projects?

DePIN projects typically feature two key elements. First, they use a transparent ledger, usually on a blockchain, to track rewards and revenues. This allows all participants to see how contributions are rewarded, fostering trust and transparency. Second, they utilize cryptocurrency tokens as an incentive mechanism to balance supply and demand within the network. In Hivemapper's case, the Honey token serves this purpose, rewarding contributors based on their mapping activities and the demand for map data in specific areas.

How are DePIN projects addressing the demand issue?

While a common criticism of DePIN projects has been a lack of demand, this is changing. For example, Helium, another DePIN project, now has over 100,000 mobile subscribers, and major mobile carriers are offloading data onto its network. Hivemapper is serving three of the 10 largest global map makers, with more partnerships on the horizon. These examples demonstrate that there is growing demand for the services provided by DePIN projects, countering the initial skepticism about their practical applications.

How does DePIN compare to traditional infrastructure development models?

DePIN represents a significant shift from traditional infrastructure development models. Instead of relying on centralized entities to build and maintain infrastructure, DePIN leverages a distributed network of contributors. This approach can potentially be more cost-effective, faster to deploy, and more responsive to user needs. However, like any disruptive technology, DePIN projects need time to mature and fully demonstrate their capabilities. The true power of DePIN lies not just in its technology, but in its innovative business model that challenges existing infrastructure development paradigms.

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