Former Google Ads boss raises $40 million for ‘Web3’ search startup

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Sridhar Ramaswamy, senior vice president of advertising and commerce at Google

Krisztian Bocsi | Bloomberg | Getty Images

A senior elder Google executive wants to facilitate blockchain research with his new startup.

Sridhar Ramaswamy, who ran the internet giant’s advertising business from 2013 to 2018, has launched a new company called nxyz. The company officially launched on Wednesday after attracting investment from several major investors, he told CNBC exclusively.

Armed with a rolodex of prominent Silicon Valley connections, Ramaswamy secured $40 million in funding in May to establish nxyz as a separate entity from Neeva, a privacy-focused search engine he also owns. . The round was led by Paradigm, a prolific crypto trader and “Web3”, while Coinbase, Sequoia and Greylock – where Ramaswamy is a partner – also invested. Ramaswamy will remain CEO of Neeva while also leading nxyz.

Nxyz was designed earlier this year by a team of engineers from Neeva, a search engine that includes no ads and blocks online tracking tools. Ramaswamy created Neeva in 2019 after stepping down as senior vice president of Google’s $150 billion advertising business a year earlier, which he said was a disappointment with his relentless focus on maintaining growth at the expense of users.

In a March blog post on Neeva’s website, nxyz is described as “an experiment bringing the same user-centric Neeva search philosophy to web3.” Web3 loosely refers to the idea of ​​a more decentralized version of the internet powered by cryptocurrencies, non-fungible tokens, and other technologies. It encourages putting data ownership in the hands of users instead of Big Tech platforms, which use people’s personal information to target them with ads.

“For me, the big breakthrough with a blockchain is that it introduces this idea of ​​decentralized computing, where you upload a piece of code to a blockchain and the code runs there,” Ramaswamy said in an interview with CNBC. “No one is in charge. It’s decentralized storage that belongs to a collective. Additionally, they also have utility in the form of a native token currency that was designed to incentivize the system.”

Nxyz crawls blockchains and related apps to get sought-after data on things like how much someone is holding in their crypto wallet or what NFTs they are buying. It then transmits this data to developers in real time using tools called APIs. The platform currently supports Ethereum, Polygon, and Binance networks, and Ramaswamy says it is looking to include more over time.

Unlike Neeva and Google — the “Web2” juggernaut that Neeva wants to disrupt — nxyz’s Web3 search software is not intended for consumers. Rather, it wants to offer blockchain data unique to big crypto firms, much like how Bloomberg sells Wall Street institutions access to financial data and news with its terminal business. Ramaswamy named crypto custody firm BitGo as one of the first clients it partnered with.

Analyzing blockchain data is a complicated process, he explained. Smart contracts – programs that power crypto applications – can be assigned designated tasks. But once they’re in the wild, it can be hard to know what functions they perform in practice. As an example, bugs in key smart contracts known as blockchain bridges have opened the industry up to mega hacks, with bridges from Binance and Axie Infinity maker Sky Mavis suffering nine-digit breaches. . A better understanding of the performance of these tools could improve security.

“It’s one thing to write smart contracts that can do things. But you need to have a record of what they’ve done? And how can I bring that out?” Ramaswamy said. “It’s all about, ‘What’s in your wallet?’ to, ‘If you traded a USDC token with Ethereum, what was the trade and when did it happen?'”

The launch of Nxyz comes as crypto investors are reeling from a deep pullback in token prices, with bitcoins, the world’s largest digital currency, down 70% from its all-time high. Among the major factors behind the current so-called “crypto winter” are higher Federal Reserve interest rates and an industry-wide liquidity crunch.

This has led to a tougher environment for crypto and blockchain-focused startups looking to attract capital, with data from Pitchbook showing that venture capital investments in these companies fell 37% to 4.4 billion. in the third quarter, compared to $7.6 billion in the previous quarter. Among those who have managed to raise, several are seeing their valuations stagnate or fall. Nxyz declined to disclose its valuation.

Ramaswamy said the company was lucky to raise funds when it did. Talks with investors began in mid-April and ended in mid-May, around the same time the so-called stablecoin terraUSD and its sister token luna began to crumble. Asked about the bitterness of investor sentiment towards crypto, the entrepreneur said his company is “well funded to get through the crypto winter,” adding that it only needs about 20 employees. “I think it will be a very different trajectory” for Web3 and crypto companies that have run into financial trouble, he said. “We want to be very mindful of the current climate, build carefully and make sure we’re also generating revenue early on.”

The Nxyz team is currently split between Mountain View, Austin and New York.

While the stock prices of crypto trading platforms like Coinbase have dropped significantly, the infrastructure that powers “Web3” remains a hot target. Companies like ConsenSys, MoonPay and Ramp have raised huge sums this year. “Web3 developers today lack a fast, flexible, and reliable infrastructure to support their applications, which is preventing widespread industry adoption,” said Matt Huang, co-founder and managing partner of Paradigm. . “Nxyz has a truly superlative team that has built the best data indexing infrastructure for Web3, and we at Paradigm are thrilled to support them.”

Yet Web3 has been a punching bag for some Silicon Valley executives, like Twitter co-founder Jack Dorsey and You’re here CEO Elon Musk. According to John Lee, blockchain manager at an e-commerce company, a “general unease” people have about Web3 is that there is no “common term and definition”. Shopify.

“Every time someone in the mainstream has a conversation with someone in the industry, they get a different definition, they get a different explanation,” Lee said. “It’s confusing for people.”

Meanwhile, the space is teeming with scams, including infamous “carpet shots” where scammers flee from a fake token project once they pocket enough money. Ramaswamy concedes “there have been a lot of scams” on Web3. But he hopes more practical use cases like video games, concert tickets and remittances will eventually catch on.

As to whether Web3 can break the dominance of digital giants like Google and Meta, Ramaswamy said “the dice are loaded against” upstarts like his. However, staff at Big Tech companies are increasingly leaving to join positions at crypto firms. This includes Ramaswamy’s eldest son who, according to his father, recently joined a Web3 company.

Asked about his former employer, Ramaswamy said he believed the company had been a victim of its own success. “I think Google is an incredibly successful company,” he said. “But his growth mindset, combined with a monopoly position, is producing a poor result.”

“Let’s say there was one toothpaste maker for the whole of the UK. They’d be like, yeah, £1 isn’t enough. We’re going to take it up to £1.20,” he said. he adds. “Google is kind of like this, where it goes, ‘Everybody’s using us for search, you can keep raising the price and that’s fine.’ I don’t think it’s people who are mean” – a reference to Google’s “Don’t be mean” code of conduct – “I think it’s a system that demands growth at all costs.”

Google was not immediately available for comment at the time of publication. The company previously told The Telegraph newspaper that its adverts “help businesses of all sizes grow and connect with new customers”.

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