P2P E-Commerce Network: OpenBazaar CEO Gives Talk To Packed House In San Diego
In North Park, a hip and central bedroom community of San Diego, local businesses Airbitz and CoinStructive hosted an evening of craft beer and Bitcoin discussion at Union Cowork last week. Founder of OpenBazaar, Brian Hoffman, who comes from San Diego but lives in Washington D.C., held an hour-long speech about the state of his company.
Founded by CEO Hoffman – who previously worked as a cyber-security and IT consultant at Booz Allen Hamilton where Edward Snowden contracted – open-source project OpenBazaar (OB) strives to create a decentralized network for peer-to-peer e-commerce devoid of fees and censorship. As OpenBazaar states, “…it’s the baby of eBay and BitTorrent.”
The OpenBazaar client (a downloadable application) allows you to create a product listing like Etsy and eBay – such as model trains or old laptops – on your computer. Once the listing is published, anyone searching on OB’s distributed p2p network for model trains or laptops can find it. They can either pay the price you’re asking or make a counter-offer. Once the terms are agreed upon, the OpenBazaar client creates a contract with the users’ digital signatures. Hoffman hopes to carry on the original spirit of the Internet.
When the Internet was created it wasn’t created as a photo sharing platform. It was created to network computers around the world for time sharing purposes so that researchers and scientists could pull their resources together and create this massive global network, and it seems to have succeeded. It makes life much more efficient and shows the power of networks.
OpenBazaar, which strives to be an alternative to centralized services like eBay, Amazon, and Etsy, has the goal of putting power back into the hands of its users by connecting them directly, without third parties. To a degree, for Hoffman, it’s a personal issue.
“I really hate eBay and love to piss on them whenever I can, based on personal experience. eBay wasn’t originally created to be this asshole-ish. Pierre Omidyar,the founder of eBay, wanted to create this network, this site, that would create a perfect market where bidding would create this balance between all the different people participating on the network,” Hoffman told the audience in San Diego. “Everything would be priced exactly where it should be priced because people would be bidding against each other and only pay what they should have paid.”
“Unfortunately, as time goes on, you see they get investment, they go public, all these things happen, it distorts that original vision,” Hoffman added.
Where OpenBazaar differs from Etsy and eBay most notably is in arbitration.
Whereas eBay and Etsy handle all arbitration within customer service departments, OpenBazaar approaches the problem differently.
“We have this concept of moderators, which are this third party part of the transaction process. They aren’t selling goods and services, they aren’t buying goods and services, they’re providing value to the users of the network,” Hoffman said. “For that they can receive tips and they can receive fees based on how much value they provide the users.”
“On eBay you’re paying 10% and that covers those services, and its mandatory,” he continued. “In this case, if you want those services, you can bring the moderators in. We think that’s a pretty different approach to doing this.” This idea landed OpenBazaar $1 million in funding.
“We got in front of Union Square Ventures and Andreessen Horowitz and they asked, ‘How the hell are you guys gonna make money, why should we give you money?’ And we said, ‘We have no clue,’ and they said, ‘Well, this sounds really fucking crazy, and we like that and we’ll put the money in,’” Hoffman recalls.
I can’t explain why somewhere along the line they felt like it was a great idea. Chris Dixon, our partner at Andreessen, worked at eBay for awhile, and sold his company to eBay, and so is very familiar with the challenges of those kinds of market places.
But in what exactly did Andreessen Horowitz invest since OpenBazaar is an open-source protocol? They invested in the first business on top of OpenBazaar. As Hoffman explains:
“A lot of the news articles said OB gets funding,” Hoffman said. “Not really true – OB is just an open project. They invested their money in OB1, which is supposed to be the first business on top of Open Bazaar.” With the interest in the project and the funding, OpenBazaar expanded upon its original vision, which has caused a delay in the release of the application.
“I skyped in June 30 last year, I think, and told everyone it’d be ready in something like August of last year, so we didn’t meet our [goal],” Hoffman admitted. “But I think the project gained a lot of visibility, and the scope kind of broadened, which has been one of the challenges we’ve had.” As for the team built up around OpenBazaar:
“It is a six person company, three founders and three employees. We have [people in] Greece, Australia, Chicago, New Hampshire and two in Virginia,” Hoffman said. “We are basically working full-time to finish OB and drive the community forward, and hopefully once that is done we will be able to build a value-added business on top of the platform just like anyone else.” Things have picked up recently for the OB team.
“The last few months have been quite a ride,” Hoffman said in the most serious tone of the night. “We’ve been trying to get our funding, and put together a full-time team, which kind of slowed us down a bit.”
“Right now our road map shows that we are aiming for a full release sometime around Thanksgiving this year, which means that everybody should be able to download our core app and start doing all the stuff they want to do on OpenBazaar,” he said. Many have questioned the project’s relationship to Tor. Hoffman addressed these concerns.
There have been some misconceptions about our support of Tor. Our investors would like us to say we don’t support Tor and don’t plan to support Tor because it makes it easier for them. [However], our stance is that Tor is very important.
Hoffman also revealed that, in order to make its platform more available to the users of Etsy and eBay, OB is considering incorporating USD transactions. After the speech, a brief Q&A session took place, and more local craft beers – like Ballast Point – were consumed before some of the attendees headed around the corner to City Tacos – a Bitcoin accepting Mexican food place – for dinner.
Images from Hacked, featured image from Shutterstock.