The Startup That Aims to Decrypt Blockchain for Business

Nikil Viswanathan is an uber-connected, fast-talking 32-year-old with a record of turning simple consumer apps into viral success. So why is his new company, Alchemy, in the business of blockchain developer tools? He’d like to draw me a chart.

Viswanathan grabs a dry-erase marker from his cofounder, Joseph Lau, who has just doodled a rocketship alongside what he calls the company’s “flywheel of innovation”, and draws a pair of axes. On one axis, he writes, “number of lives touched.” The other, “impact on each life.” He places an X in the upper right corner—the guiding star, you might say, for a certain type of Silicon Valley entrepreneur.

“We’re very idealistic, as you can tell,” he says, flashing a beatific smile.

The two men had long ago decided that software was the best way to reach a lot of people. But how best to have an impact was an open question. Four years ago, Viswanathan and Lau believed they had found the answer with Down to Lunch, a meet-up app that tried to recreate the easy bonds of college. It was a surprise hit, vaulting them to the top of the App Store, the front page of the New York Times business section, and into the arms of unsolicited, high-profile investors. Then came the dark side of virality. First, the strain of a sudden onslaught of users, followed by copycat apps and a slanderous campaign that falsely claimed the app was a hotbed of sex trafficking. The experience crystallized a discovery made by many following in the footsteps of Dorsey and Zuck: It’s hard to break through in social media.

Hence, a pivot to the axes of arcane and boring. Alchemy, their two-year-old company, builds software and developer tools that help companies deal with the technical quirks of blockchain. The industry is rife with hype and uncertainty; the two Stanford grads say want to make it more approachable to serious programmers and investors. Plus, they are adamant—adamant—that they’ve found a niche with world-changing potential. “We have the opportunity to be at the ground floor and to impact how the entire world uses money,” Viswanathan says.

There’s potential in building software that other companies depend on. Microsoft, Salesforce, and Amazon’s AWS cloud-computing unit can attest to that. But Viswanathan and Lau noticed that blockchain didn’t have many such businesses yet.

Anyone who has struggled to set up a blockchain application will affirm that the industry needs better tools. The original developers of blockchains like Bitcoin and Ethereum were primarily cryptographers—interested in the architecture of distributed systems, not analytics platforms and debuggers. In addition to developer tools, Alchemy’s main product is a software platform that ensures companies receive up-to-date, accurate data from blockchains like Ethereum. That solves a major problem for blockchain developers, because the usual way of getting data—running your own blockchain node—is liable to go offline or provide bad information.

Now, Viswanathan and Lau reason, talented developers don’t want to deal with that hassle. If it were easier, better developers would build apps that people actually want to use. They compare it to earlier phases of computing history, when developers went from the tedious task of programming computers directly—using punch cards or assembly code—to the ease of writing applications on top of modern operating systems and browsers. If the industry takes off, they want Alchemy to be the Microsoft of distributed computing—the default OS, home to APIs and other tools to make blockchain user-friendly.

That’s a lot of ifs. But Alchemy’s investors see a potential payoff. The company raised $15 million earlier this year from crypto interests like Pantera Capital and Coinbase, as well as backers of Down to Lunch, including Alphabet chairman John Hennessy, LinkedIn cofounder Reid Hoffman, and Yahoo cofounder Jerry Yang.

On a recent Monday in the Alchemy office, as the roughly dozen employees puzzled over a lunch order for a coworker’s birthday, the cofounders still seemed very down for whatever. Viswanathan and Lau, now 32 and 30, are liberal with high-fives and ample reminders to let them know how they can be helpful (including helping me “crush this article”). They seem entirely unfatigued by their viral journey at Down for Lunch, when the pair were known for on-the-fly A/B tests on college campuses and personally responding to endless user messages.

That attitude translates well to their current business, they say. Viswanathan and Lau remain heavily involved in the day-to-day. Scrolling through a long list of customer chats, Viswanathan alights upon a 1 am conversation a few weeks back, when a customer in Asia was experiencing node trouble; the men suggested tweaks over text while moving out of their apartment. (Until that evening, the two were roommates as well as cofounders.)

Their colleagues are unusual in an industry filled with ideologues and misfits. They include a number of Stanford connections, including neighbors from their freshman dorm. A few employees had toyed with bitcoin, but only one had previous work experience in the crypto industry. Instead, they were recruited from jobs at Facebook and Palantir and Microsoft.

Why ditch comfortable jobs for an industry that many traditional programmers scoff at? Part of the answer is the opportunity to work through odd engineering problems, says Ram Bhaskaramurthi, an Alchemy engineer. Plus, working in a young and relatively small industry is attractive to people tired of being one of thousands at Google or Facebook.

That was the logic, Lau says, that got the founders started in crypto. “One person can have huge impact versus if you're just working in tech in general,” he says. As Down to Lunch wound down in the summer of 2017, they took notice of friends and colleagues getting involved in crypto. Some were starting companies with initial coin offerings, or ICOs. It was the beginning of the bitcoin bubble, and a surge of investment that flooded the space with billions of dollars. They had continued launching new versions of Down to Lunch, in secret, under different names, but had a nagging sense they were left out of something big. “We sort of felt like we had missed crypto,” Lau says.

When the proteges told Hennessy they were getting into blockchain, the former Stanford president was skeptical. “I said, oh no, just what we need is another coin offering,” he says. He had already seen plenty of half-baked ICO proposals. But Hennessy made his name on semiconductors at the beginning of a different computing era; he steered them in the direction of infrastructure. That would be different than Down to Lunch, which they coded up in mere hours while listening to One Direction. But focusing on the basics meant they could differentiate their product with good engineering. They decided against a quick ICO.

The 2017 hype around blockchain did bring one benefit: lots of potential customers. Currently, a few hundred customers, from cryptocurrency exchanges to gaming studios, rely on Alchemy to handle the blockchain part of their blockchain apps. Most use Ethereum, and had spent their first months of life struggling to stay online. At Dapper Labs, maker of the once-viral CryptoKitties and other games, engineers were “doing nights and weekends and it wasn’t making the gaming better,” says CEO Roham Gharegozlou. Since moving to Alchemy, he says, the experience has been more similar to running an ordinary software company.

But Ethereum startups have had limited traction with users, and many have shut down. It’s clear that a company like Alchemy won’t go especially far if those startups don’t become bigger startups—or if bigger companies don’t get into blockchain. Recently, Alchemy brought on its first sales person to help seek more established companies with an interest in the technology: The IBMs and Morgan Stanleys of the world. That, according to Lau and Viswanathan, is likely the future. Fewer decentralized games and more tools for cross-border payments and for banks to share trading information. Serving those customers also requires a different model than one that involves a founder responding to customers at 1 am—a world of corporate policies and approved vendors.

The fate of the underlying technology is also uncertain. The team chose to build software for Ethereum, because that’s where most early developers chose to build apps. But other chains have emerged as competitors—a “Cambrian explosion,” as Lau puts it—attempting to make blockchains faster and more robust. Viswanathan says the company is building tools for some of the up-and-comers. “We want to make sure that we support whatever ecosystem is going to be the dominant one,” he says.

That may be an exciting proposition, the type of niche every young entrepreneur is looking to carve out in the age of Big Tech. But it remains to be seen what dominance in the blockchain industry looks like. Back at the whiteboard, next to the life optimization chart, Viswanathan sketches out a grand chart of computing history, tracking the PC and web from their origins as niche industries to ubiquity in 2019. Next to blockchain, for the latter stage, he draws a question mark.

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