Fireside Chat: Privy's Henri Stern | Manasi Vora & Henri Stern - Privy

Here we go. There it is. You have to turn the mic on. Women in STEM. Um, all right.

So, I'm so excited to introduce the next conversation. So, we have Moni, who leads content for ETH Denver. Um, and they're going to have an awesome conversation. and give it up for our next panelist for the intro.

Hi everyone. How's it going? Let's wake up the room. Bring some more energy here. Let's do it.

Woo. Awesome. Um, I'll quickly introduce myself, but I'm so excited for this fireside chat with Henry. Um, my name is Mani Vora. I led content.

So all the programming and content you're seeing at ET Denver, I was a part of it and I hope you're enjoying it. Um besides that, I've been in the crypto space for 7 years working on infrastructure projects from decentralized data storage to ZK to now working on a crosschain project. And prior to that, I was in chatfi. Uh what a world. But enough about me here to talk about Henry and Privy.

Henry, so excited to have you here. You've had an incredible journey. You know, back in 2021, 2022, if we, you know, a new crypto user wanted to um use a crypto application, they would have to go to that application, but then go to another website, download an extension like MetaMask, figure out their you know, password or 12 phrases, 12 word phrases. Um, hopefully they don't forget it, go back to the app. Such a complicated US UX project.

And I think you and ASA saw that you know UX challenge that was essentially stopping the industry from a lot of adoption and jumped into it and built Privy. Since then 3 years down the line we are you know 100 million users right now at Privy acquisition by Stripe uh powering some of the most fastest growing crypto applications from Blackboard, Hyperlquid Cloud now. Um such an exciting journey. Um let's talk about what was the aha moment. Let's start at the beginning.

What made you solve this problem first?

Yes. Um oh that's loud. Hi. Um thank you so much. So for those of you who aren't familiar with Privy, we build embedded wallet systems.

So the core idea is that self-custody and general custodial systems asset ownership should exist within apps you're already familiar with and using on a day-to-day basis. So rather than they have to get kicked out to a third party extension, a third party app in order to basically hold assets, um you should be able to use crypto as part of any product that you're already using. Uh and so we built these systems, embedded wallets. We weren't the first to do it. I think we had probably a few core insights and I would say, you know, what was the aha moment?

We we didn't start doing this. We started focused on data privacy and I think our take was

uh a lot of crypto is too hard to use because you don't know who your users are. So you should be able to associate real world user data to the traditional sort of consumer wallet. We started there and just found that no one wanted our product. So that the first aha moment was just basically a huge slap in the face of man these products are incredibly hard to use. And more or less the world of crypto the the sigmoid the the ram curve to decide that you want to use crypto is so aggressive that the people who've already self- selected into this world are willing to trade off all the UX in the world basically to do the things that they were here to do.

And I think that led to the realization of potentially this means use cases that can find you know product market fit in crypto are hampered by the UX because the users are already so religious and if we can simply uh lower the cost of getting into the space the activation energy that a user needs to start using a product. If we can make crypto a part of products they already use and love um then we can really widen the space of what can find PMF with crypto rails. And so, as you said, we work with folks like, you know, Hyperliquid, Jupiter, Pump, very cryptonnative products that are using these rails um in extremely novel ways. But then on the other side, we're working with folks like Clara, um Fuse, which is an energy company in the UK that wants to reward people based on their grid usage, so that you are using power at the time in which power supply via renewables is cheapest. So I think our goal is to make it that you know 5 years down the line the question of who is a crypto user doesn't really make sense and anymore in the same way that saying like you know who uses the cloud today is such a strange question to ask.

Yeah expanding the crypto user pie but you know what did product market fit felt like? Um you you talked about the aha moment no one was using your previous product and you stumbled upon this UX challenge. From there on you built out a product and then what was the validation process? Um when did you know this is working and this is where you want to continue pushing the boundaries and then what were the challenges that comes with you know really scaling from 0 to 100.

Yeah. So I would say we probably had call it four chapters so far in the in the the startup journey. The first was you know building a product that no one wanted to use. uh we were very lucky that we had nice friends who were like we will of course try this for you and then we would get them to iterate on stuff and it was like pulling teeth and so I'm lucky that I work with a much more wise and mature co-founder who was like Henry no one's wants this and I was like no of course they do they just don't know it yet and it took me a few months more uh than her to to realize that she was right but uh but eventually this is the start of chapter 2 which is actually we need to lower the UX bar for actually trying these products and building self- custody securely into your products so this is the relaunch bunch of privy and at that time we set very simple goals let's try and add five customers a quarter who really are asking us for things where we are kind of fighting to get them what they need in real time so uh Q1 of I think 23 which is when we launch relaunch the product we our goal was to have 10 customers in prod Q2 it was 25 Q3 it was 35 and we got very lucky because as we were doing this we just were working very hard with tinkerers who were trying various things and uh one of those folks was a a builder and and and a team that was building a product called Steelcam and uh they were iterating and they built a second product called Frentech and um that app blew up. So basically in August of 23 we had some very strange Slack messages like you know usage is going up 40x overnight and then it kept going for days on end and uh and basically through that next 3 4 months period we're like okay this is our time we are working really closely with folks on the base team with you know everybody to make sure this app can stay up can like really thrive and and show people what you can do with crypto consumer products and at the time they were doing a number of innovations they were using PWAs I'm somewhat happy that we've moved moved to doing native apps.

Now I think PWA were a a good temporary form factor but they were really innovating on how you could do this and our goal was just to hang on for dear life and make sure that one uh we scaled with them. Two um our systems remain secure and um could basically fit changes in assets for users. You know you had users who were starting with zero dollars in balance and then a week later had hundreds of thousands or millions of dollars in their wallets. Obviously the configuration for a wallet system is going to be different in those cases. Um, and so basically that's what you know, uh, product or market fit felt like.

This is maybe an old adage, but if you're asking whether you have product market fit, then you probably don't. And, um, if you're struggling to just show up every day and figure out what the last fire to put out is like, uh, then you do. And I think we were very lucky because FTC inspired a lot of the market. We saw a huge wave of, um, social five products, DeFi products, um, crypto products use us. And then from there we expanded into traditional finance, stable coins and so today we work with uh a number of banks, financial institutions and things like that.

Yeah. So and you know how does a product evolve to serve so many diverse use cases um and not just in crypto now even outside of crypto with enterprises and fintex tell us a little bit about the product evolution journey and like how do you find patterns that can you know solve all these needs without having to customize for each use case. Yeah, it's a really good question and I think I think very early on like two two things I think kept us kept us focused. The first is we have faith that wallets are kind of an infinite problem space. If you pull on the right threats, there's so much to build to make developers lives easier and to help uh consumers find value in the products that they're using.

Um and so that made it easy for us not to to stress too much on like you know are we going after something too small or anything like that. Um I think the second one is there's such a shiny object syndrome sometimes in crypto where you will chase the latest hotness.

Exactly. So um it's not very nice but uh uh Eve Denver maybe it was 2 years ago I came away from the conference scared shitless being like a we are wasting our time 4337 is the only thing that will matter and basically if we're not building onchain accounts we are completely lost and we built support for um onchain accounts we serve customers who were absolutely innovating in the space like Zora and others who were building like really state-of-the-art things but we were like we also believe that a lot of these apps are going to be crosschain and so we need to support first class EOA products and today with 7702 we get to do a lot more and so I think that's part of the answer that you're looking for which is we build very closely with customers everything we do every single item on our road map has a customer champion we will not build something unless we know who we're building it for and unless they're giving us time to basically iterate with us and obviously the the the hopeful exchange is you get a team that is mega motivated to make the system work for you and then we try to figure out is this a problem area that other customers are running into and we're serving you know frenche, zora, clarna is going to be representative of a type of problem that other people will have. So for example this morning we launched uh custodial wallets. So you can use privy to have custodial and self-custodial wallet side by side. It's a very modular system.

Today we work with bridge as a custodian for assets. But this is something we found working with a lot of traditional fintexs which is self-custody is a very unknown uh uh model for them and they want to be able to on a per wallet basis decide whether they want a custodian for the wallet or whether they want a user to manage their own assets. This is something that we've built with partners that I can't name yet and um but that we think is is very representative what the market needs.

Congrats on the launch and you know your strategy clearly is working. Last year you got acquired by Stripe. Um congrats again on that. Um tell us more what is in the plans? What does this acquisition mean?

How does stripe integrate you know bridge privy um its payment processing its distribution and like what is the vision here?

Yeah. I mean I I think in many ways we're so early and so that was the uh the hard thing about this system was we're so early and there's so much for us to do but we can do it so much faster within Stripe. And so I think the way in which um we're working is we get to run our roadmap, our product, our brand autonomously within Stripe. And at the same time, we hopefully get to, you know, infect Stripe with all of the right things that make crypto so exciting, that make self- custody so exciting within Stripe products. Um I would say at the at the end of the day, we kind of have two core missions.

The first is we want to make sure that every Stripe customer, every Stripe user um can benefit from these rails. Uh you know, stable coin payments, payouts, uh are global. They're instantaneous. They're much cheaper. There's a lot of things that we can unlock by adding this rail to other rails.

And I think Stripe is a mega pragmatic company and they want to do whatever is best for the user. And sometimes that'll be via crypto rails and sometimes it won't. But this needs to be a capability that we can build extremely well. Um, and that is, you know, true across Stripe products from uh obviously payments to money management to link to other places. There's just infinite problems that we can help just bettering Stripe products with the underlying crypto rails, you know, stable coin orchestration and issuance that bridge is building and then obviously wallets that we're building.

Um, the second piece is we want to be purveyors of crypto tooling that developers can love. At its core, Stripe is a developer tooling company and we think that if we can make it easier for anyone to build with these rails, then again, we can widen the market for what can be built on crypto. Um, and so for example, we're mega excited about agentic payments and everything happening in that realm. It's kind of the meeting of multiple things that are very interesting, but we think crypto has a huge role to play in enabling agents to securely control balances on behalf of users. Um, and so these are, you know, mix of areas in which we're playing.

I mean, I want to go back to, you know, what were the challenges as well because this sound like a great strategy and, you know, some of it is in hindsight. What were some of the struggles or challenges that you faced as you were scaling, growing so fast that the audience here, builders here can learn from?

Yeah, I I mean, you know, I think I think starting and running a company is a deeply painful endeavor uh by its very nature. So, the challenges are are many and numerous. I think I mean probably the the worst day that I remember having was a day in which we lost two customers. This is when we had call it 20 customers. So 10% of our customer base.

That hurts.

Yeah. Which which really was painful. And one of them churned. They were a customer that decided to leave us for someone else. And one of them we were in a bake off and they decided to go to that same other party.

This was maybe three years ago. And I think the hard realization was we are doing the wrong things. Like clearly our product is not good enough and if we put ourselves in the customer's shoes, they're right to be making the decisions that they're making. And so we ended up completely reshaping our road map to address what we felt were the problems that we were learning from. But I think that's kind of the the problem at any given time is are you focused on the right things?

There's always going to be something broken and is it the right thing that you're focused on fixing. If it's not, then you're just wasting your time. And if it is, then nothing else matters. But finding that conviction and being both steady enough to not make rash decisions and shred your road map every other day, which means you don't make progress. Uh but conversely being responsive enough cuz we're not getting any younger and we're default dead.

So if we don't move forward, what are we here for? Um so I think that's been the most painful is in in in seeing places where the product isn't as good as we want it to be. understanding is this one of the three most important things we should be doing right now or is this just pain that we have to live with and figure out how to be very you know forthright with our customers. this isn't as good as we want it to be, but it's not getting fixed just yet.

And the right thing is what customers are not just saying, but validating by their demands and asks and

and then picking the right customers. Again, I have endless love, frankly, for for for Racer and Shrimp, the the FTC founders, because they were so demanding. They were extremely pushy with us in so many ways around UX. And we were like, well, we don't understand what they're building all that well. We don't understand their users so well, but they understand them extremely well.

And if we just do what they say, we will build a better product. And I feel like we've just lucked out time and again by having fantastic customers who've been pushing us to to build the things they want.

Where do you see the future of wallets going? Um you know I think you mentioned this somewhere where your identity is not the same the way you are at a crypto conference is not the same as you know with your friends. um is the future world multi-wallets but then do we again fall into the fragmentation problem like what's your thesis?

Yeah. Um those were like two questions. So I I'll take the first piece about what is the future of wallets and then I'll talk about fragmentation. Um so it took us a long time being okay to say we build wallets because I see us in many ways as an identity company. I think the point is we help users codify ownership into their online accounts and it just so happens that we've built in crypto rails that make ownership so simple to build via signatures uh which is back where the wallet comes in.

That's a convoluted way of saying like ultimately uh we think of what we're building as like accounts through which you can own things online and those should sit within products that you use. Um, and I think hopefully where wallets are going is just to become a very ubiquitous part of how people and machines transact on the web and hold on to assets and beyond that hopefully identity. I mean, we started off doing uh KYC for DeFi onchain which is a complex like very nuanced and and morally veilent topic. Uh, but I still see a lot of the advantages of not having to fill out forms 15 times would be would be great and I think we we have a role to play there. Ultimately, I think wallets are going to become one of the core constructs that any app that touches value on the web has to help their users control that value in the same way that an email login is used somewhere.

Um, I think the shape of a wallet is really going to change though as we move from a place in which crypto is a choice that you make as a consumer to just it being a part of of what you have. Um, uh, Johan from from Robin Hood was here earlier and he was saying like ultimately we don't want to think about Robin Hood's crypto users and non-crypto users. They're all users in the same way. Um, and so I think that's where it's going. And in that sense, I think fragmentation is both a key problem and kind of an impossibility result.

If you want to let an app like Robin Hood really build UX that is worthy of their product and their brand and the things that they want, then they will need levels of control over the wallet that are um extremely permissive from the user. And so um you'll want to be able to create segregated accounts across different apps so users can basically entrust the app with the ability to do things on their behalf. For example, if I want to place a limit order on a given app, can I do so with having the log back in and potentially miss my shot? And so, I think there's a lot of innovation to do here. Again, hearkening back to to base and the work that Wilson there's been doing.

There's a lot of interesting stuff around sub accounts that is worth doing. I just think it's a massively complex problem. And so, in a sense, I think fragmentation is to some extent inevitable. And what we need to ensure is that users always have a place they can go back to control their assets in aggregate. So, we've built something for privy users which is called privy home where you can go and you can see your wallets across all the apps that you've used and hopefully get an easier way to do it.

But the way I see it is most users will come to crypto through apps that they love

and then they will graduate into thinking actually I want this to be my own. I want to think about it as a personal thing and they'll move to basically wanting to reconcile their identities.

Love that. We only have 30 seconds. What are you excited about with this market? What's you know besides wallets and privy? Yeah, I mean, um, I'm excited about Walt and Privy.

I'm excited about the stuff that we've got cooking on the on the privy and the stripe side. I I honestly, this is a bit cliche, but I get very excited in down markets and in when people feel shitty, it is exactly the right time to build. Exactly. And I I find that basically a lot of the things that never really made that much sense get washed out and we get to focus on the things that do. And so, um, I think over the next year, I think three things are going to happen.

One, a lot of people building with stable coins are coming to market. We work with a number of folks that again we haven't been able to talk about just yet. We've been working with them for the better part of a year and they will launch in the next few quarters and I think that will change the market in meaningful ways. Two, I think DeFi and finance are merging in very deep ways and I think we can build the infrastructure that makes it that an end user can for example have a savings account that um uh can do things either onchain or offchain very easily without them having to think about all the underlying mechanisms and securely. Um, and then I think three, um, it's very early, but there's very interesting experimentation going on around aentic payments, around agentic value, and I'm excited to see where we end 2026 on there.

Awesome. Thank you so much, Henry. This was a pleasure. Thank you all for listening.