The news broke earlier this week that our portfolio company Coinbase has acquired Earn.com.

A lot of the press attention was centered around the fact that Earn’s CEO Balaji Srinivasan is becoming Coinbase’s CTO and the backstory about how Earn came out of a pivot from a failed Bitcoin mining company called 21.

But an overlooked aspect of this transaction is that Coinbase has acquired a business that is the crypto version of Mechanical Turk or, perhaps, Task Rabbit.

Earn.com allows a user to create a profile and earn Bitcoin by doing tasks. The tasks right now are centered around the crypto sector (analyze a white paper, accept an incoming email from a recruiter, etc). But if you squint, you can imagine how this mechanic could be extended to all sorts of other tasks.

Brian Armstrong, Coinbase’s founder and CEO, tweeted about this yesterday:

It is not enough for all of us to be buying, selling, and holding crypto assets. Earning them is a very important function in the development of an ecosystem. So I am excited to see Coinbase supporting and investing in a business where users can earn crypto assets and my hope is that this becomes something as meaningful as what Amazon has done with Mechanical Turk over the years.


Comments (Archived):

  1. William Mougayar

    Welcome to the crypto circular economy (which I have been describing for the past 3 years).- Earning / Spending- Buying / Selling Work can be active (doing something) or passive (sharing something). Value and benefits are shared with stakeholders, not with the central entity.This could be the sweet spot of the killer use case for the blockchain. For example, the Steemit blockchain has already dispensed more than $40M in rewards to its users.The best way to have crypto is to earn it. Many mobile Apps will have built-in wallets in the future, with real monetary value in them.

    1. Pointsandfigures

      Sounds like a job that earns fiat.

      1. William Mougayar

        But we need to imagine use cases that were not possible or practical in the fiat world.

        1. JamesHRH

          Nothing on the list today is in that innovative bucket.I would love to have a slice of coinable – its a digital Levi Strauss play of global proportions.Tip of the hat to Freddy / USV.

          1. William Mougayar

            well, it starts usually by copying what we see, til we invent what we don’t see.

      2. moeadham

        Picture digital nomads. We employ a set of employees full time who move around the world, and are paid entirely in Crypto.Where they pay taxes, spend their money, etc, is entirely their choice.This was not entirely possible before crypto (or at least was a logistical nightmare).

    2. jason wright

      quality or quantity?i earn if i tweet? imagine it.

    3. PhilipSugar

      Do you know what the killer app for me would be????You have to pay me crypto to send me an email.Think if Google and Microsoft put in that functionality.Game Changer.Now that would take serious scale.I’d even love it for employees. Send me too many emails you have to expense it.10 cents per email.

      1. LE

        You have a Silvia problem. Name of older woman who worked for me back in the day. She would constantly ask questions that were obvious and she didn’t need to ask me. She thought that was good ‘checking to make sure’ when I thought it was annoying. Get this I used to hate it when she stayed late at the office. I liked when she left. Then I knew I wouldn’t be bothered. And when I started in business my mom worked for me for less than 2 weeks. I then got rid of her for the same reason (and she was working for free). It was just to annoying to be asked each time ‘uh UPS charged $x and the price is wrong should I call them???’. (Really things like that my guess is that you have something equivalent going on with code or process, right?)Perhaps better than charging per email you have a game whereby there are prizes for the 3 people who bother you the least. By my theory (in my other comment re: distance from $$) that might work better.

      2. Lawrence Brass

        I like the idea, it could be extended to digital advertising too.10 cents to access my profile and send me some ad through the ad blocker.10 cents more if I don’t “skip ad”10 cents or 0.0000012 BTC that is.

      3. JamesHRH

        Funny you use cents at the end.

        1. benjamin

          I would use cents in the end too, lol.

      4. William Mougayar

        Yes, I like that one. In the Peepeth Dapp (decentralized Twitter), you have to pay a few cents to store your data on the blockchain.

      5. Drew Meyers

        I think we’ll end up in a world where that will happen, either with regular currency or crypto. I’ll have my “trusted circle” which can email me anytime they’d like, and my email inbox will require a small payment to look at something from anyone else. It’ll be the only way to keep spammers out.

      6. Twain Twain

        Google & FB are all about FREE, supported by ads. Here’s their version of Earn.com* https://www.cnet.com/news/n

    4. Richard

      If Earn.com (formally 21.com) little market penetration with $ payment, why is it a fit with cyptopayment.

    5. Ronnie Rendel

      I’m looking forward to the next crypto version of Kickstarter.

      1. William Mougayar

        what would it do that Kickstarter isn’t doing?

        1. Ronnie Rendel

          I would combine their services with Steemit concept of “pay to play”. I would build a network where “sponsors” pay a monthly subscription which earns them voting rights on which projects to fund. Projects are free to bring new users to the platform .but rather then being a one time event for big projects, it could be sponsoring smaller milestones. Ideally I’m looking for a network where a promising individual can garner token support from the network and create small pockets of value something like a work network or a distributed value chain . I can’t write it in a comment and I’m reading as many existing models as I can to see how this will pan out .

          1. William Mougayar

            These are good ideas. The trick will be in having something “different” than Kickstarter, and not appear to be a head-on change, but a different type of service.

  2. Vinish Garg

    I like the *utility* orientation in Earn.. Top stuff, I signed up when it was 21 and I have seen it on this maturity curve – strategic, fast, and adaptive.I think we may see more such services where people can exchange knowledge/expertise – objective, meaningful, and measurable. Waiting.

    1. Vendita Auto

      I keep pushing a close friend to establish Crore (dot) com

      1. Vinish Garg

        To test waters? Or, to dive in with some validation? In any case, that to me, is the future.

        1. Vendita Auto

          That’s his decision. It’s the cognitive establishment brand I was taken by not the waiting

  3. jason wright

    “Earn bitcoin by replying to emails…..”- a busy inbox finally has its reward.

    1. k77ws

      why couldn’t this same business model have taken off years ago simply by using USD?

  4. LIAD

    It’s not a native crypto behaviour. As in, crypto itself, didn’t facilitate this when previously it would have been impossible. So standalone, not uber exciting.Like it or not, and I presume many here do, the success of earn going forward will further cement coinbase as the central banker/king maker of cryptoville.You’ve X million users carrying out daily tasks, you choose which currency to pay them in… Effectively a mass daily airdrop by other means.I’d like coinbase to ‘acquire’ a self sovereign identity play. Then they can really run the table .

    1. sigmaalgebra

      “self sovereign identity”?

    2. awaldstein

      Interested in this statement:”It’s not a native crypto behaviour. As in, crypto itself, didn’t facilitate this when previously it would have been impossible.So to you unless the behavior is not tokenized, naturally incentivized, its not native?

  5. kidmercury

    Bitcoin cannot be a utility token inmho. Store of value/central bank insurance tokens are very different in their requirements and architectural needs than utility tokens.

    1. sigmaalgebra

      Can you be more clear on just what you mean by “a utility toke” and the “store of value …”? I have no idea what you are saying.

      1. kidmercury

        utility token = something you actually use to make purchases. store of value/central bank insurance = something you don’t spend, either because you think it will go up in value over time, or because you are holding it in case something goes terribly wrong and it will serve as an insurance policy of some kind.

  6. LIAD

    + I can’t see how Goldman or other won’t own CB within the next few months.Plunk down $5bn. Done and dusted.

    1. JoeK

      Too risky. The US Justice Department established the precedent of billion dollar fines for money laundering violations – throw in the additional possibility of Coinbase being used (by customers) for tax evasion and it’s hard to see how any Board could sign off on that.

  7. OurielOhayon

    it s mostly an airdrop machine. but i do see the point and an interest here

  8. sigmaalgebra

    So, hmm, …, Earn.com could have some synergy with ShopShops??At times, (A) some VC Web sites have claimed that the VCs at the VC firm had “deep domain knowledge”. Well, when it seemed they meant something technical in “information technology”, I laughed, upchucked, etc. at some Williams history majors and Harvard MBAs with a background in marketing having “deep domain knowledge”.Also, (B) some of the Web sites emphasized that the firm had investment areas, themes, etc. Again I laughed. Looking at their portfolios, upchucked.Also, (C) yesterday I got e-mail from CB Insights with their list of 100 top VCs for 2018. Right Fred was #19. Then I went to the Web sites of a few of the VC firms near the bottom of the list and saw, gads, what looked like junk sold at a garage sale or flea market that would make limited partners upchuck.But, in spite of (A)-(C), it appears that with crypto USV really does have “deep domain knowledge”, a meaningful investment “theme”, and some investments that …. Well, I can’t evaluate them so can’t laugh, upchuck, or say they are junk.Maybe crypto will get into legal, regulatory, or technical trouble, but I don’t know enough to have much of an opinion. And even if there is such trouble, maybe crypto will be able to get out of it. But if crypto really does become successful, and I don’t know enough to say that it’s not, and USV does really well financially, then that result will be one heck of an accomplishment and likely so far unique in VC and investing more generally. Hmm …. And it didn’t happen in either Silicon Valley or Boston!I’m more than busy enough with my startup (made some nice progress yesterday) and will not dig into crypto enough to start to understand it or dig into it at all, but at AVC I can watch the USV progress. For side projects, there are several I’d rather dig into than crypto, and I’m not pursuing those projects, either. But it will be interesting to see from afar the evolution of crypto! :-)!!

  9. JLM

    .So, the Task Rabbit of crypto is a thing?Sounds like it’s just a different currency.JLMwww.themusingsofthebigredca…

    1. k77ws

      I catch your drift here BRC. I’m not understanding the value of Earn. Is the idea of paying people to respond to emails really a $100 million business model (or more– presumably Coinbase sees many multiples of value creation potential beyond what it paid).Looks like a pricey and generous bailout by Coinbase.Or can anyone humor me this — what might this same business worth, if simply changing the unit of exchange from BTC to USD. i.e. “earn dollars” rather than “earn bitcoin” and is it still worth $100m?

  10. Frank W. Miller

    So, I’m actually curious, this is a genuine question and not meant to be snarky. Given the sheen coming off of the CC world as people look more closely at it, have you had any hesitation expressed by your LPs or other fund investors about the direction your firm is taking with investments in these CC companies?

  11. Mac

    This is one of those moments when I’m reminded that I’m still a student at the AVC Institute of Tech Investing. Just hearing of EARN.com. Checked out their website and still not sure what they do and how this works.If one of you ‘regulars’ would be so kind to provide enlightenment, or point me in the direction of an explanation, it would be very welcomed. AADD is my only excuse. Thanking you in advance.

  12. Andy Orr

    Can someone explain to me the transaction costs associated with cryptocurrencies?I have never had this explained satisfactorily in terms of actual costs and how this scales. The way the blockchain works, it never seems to add up.Thanks!

    1. DJL

      Ditto. I have said the same thing here numerous times with no response. I don’t see how any business can be built on a set of transactions that fluctuate in cost +/- 400%. If the cost of electricity and phone did that, you could never run a business.

      1. Andy Orr

        Just to be clear, I was specifically talking about transaction fees (often zero to the parties of the transaction because miners still get rewarded for now, but that still doesn’t mean they are free) and not the fluctuations in the currency’s price/value.No one ever seems to answer these questions.

        1. DJL

          I think I understand. But as the underlying coin changes in value then the “price” per transaction has to change correct?

      2. Matt A. Myers

        They charge 400% more than they’d charge otherwise, building in risk into it all. Interestingly, anytime the incentivized crypto-assets crash or go below someone’s buying price, there’s a rally to “HODL” until negative sentiment goes down enough – and likely when people holding a reserve of fiat currency can manipulate the price up again, giving new confidence to hesitant people on the edge of hype..Here’s a company that even will buy/sell for you based on HODL rallies, which happen when the price has crashed AND interestingly, when the price is high — because no one wants to cause a crash from a rush of sale more than people are investing: https://medium.com/hodlblog

    2. Matt A. Myers

      They’re all hoping it will go down in cost, and that transaction time will improve.. and that the world adopts it so their $100 initial investment turns into $100MM within 20 years..

    1. Lawrence Brass

      It’s not chance. Fred shines brighter in his town and his town is New York City.As a plus, we get the daily post at a decent time in the morning. 🙂

  13. LE

    What’s great about this is probably something that everyone is missing as far as the psychological aspect. Using bitcoin and especially with the changing value of it (and lack of stability) removes the person earning it farther from realizing what they are actually getting paid. [1] It becomes more like trading stamps or marbles (for kids) and close to when you could get free things for using your credit card but not cash. Or a good airline miles system back in the day. What this does is remove someone’s ability to see exactly how meaningless the reward is. That is really a good idea and not entirely obvious. [2][1] And then deciding it doesn’t make sense economically and losing interest.[2] Small example – I have my step daughter doing work at the office. She is not getting paid in cash. However I have posted on the wall a $100 credit for the Apple Store. I move it up or down on the wall depending on how well she works among other things. That is another example of shifting the reward system in a similar way. (More like marbles). The analog nature of the reward and how far you move from knowing exactly what the reward is works in this type of situation really well. It’s counter-intuitive and not easily understood. If I paid her and just gave her a small amount she would not (at her age) be anywhere as easily motivated.

    1. Matt A. Myers

      Yeah, it’s something people don’t really care about if it doesn’t take off, however it does start to more and more strongly vest someone’s interest in and shift their bias towards incentivized crypto-assets; the shovel seller is building tools to attract more miners, miners in the traditional sense..P.S. Moving the card up and down the wall, why doesn’t she just get a chair? I hope you’d reward her for getting a chair.. Love the idea anyway.

  14. Vendita Auto

    Valid question. Why remove two of my comments is it because I mention Stashinvest ? is there some unwritten line I crossed ?

    1. BillMcNeely

      AVC comment policy “No spam or token offering promotions are allowed.”

      1. Vendita Auto

        Thanks. Not Spam ? Stashinvest not Token/Crypto ? look it up

        1. Vendita Auto

          Well ??

        2. Matt A. Myers

          Curious how your comment related to today’s topic?

          1. Vendita Auto

            My comment/s were (as near as I recall) A small big thing IMO you cannot scale without footsie leading .com “Coinbase and Earn dot com , formerly known as 21 dot co until rebranding late last year” Totally understanding the social channel then something about liking the synergy with Stashinvest (dot) com which I’m guessing you will pick up on as I did ? If not venditaauto1 (at)gmail dot com

  15. Matthew Tendler

    If this idea takes off what stops Mechanical Turk or TaskRabbit from adding a crypto payment option and completely wiping out Earn?

  16. Salt Shaker

    Ah yes, a rewards system. Nothing really novel there, right? S&H Green Stamps (now obsolete) launched in the 1930’s. Prob one of the earliest rewards systems. Now they’re a dime a dozen. What exactly is fundamentally new or diff here? #confused.

  17. DJL

    I see the fit and love the idea of earn.com – but this seems like a bit of reach putting them together. Coinbase seems to be in a very enviable position in crypto, why start diluting effort into tangent companies? (One of the many reasons I am in the comment section and not making the deals. :>)

    1. Matt A. Myers

      They’re likely doing it because they have the leverage/resources, and they need to make sure more and more people get into the Pyramid-Ponzi scheme structure of incentivized crypto-assets in order to potentially realize all of the “profits” they’ve earned/would earn simply from demand going up..On another note, Basis just said $133MM for a stable coin – https://techcrunch.com/2018… – a step in the right direction, however still not the final product IMHO. The quote at the end is right though I believe, winner takes all.

  18. 0+0=0

    “Tie two rocks together and see if they will float.” (from memory therefore it is probably more or less correct) by Michael Arrington quoting his boss about the merger of AOL and Time-Warner. Same thing here.Fred: stop shilling about BitCon and crypto-nonsense.I can imagine you claiming essentially, “Oh but a bunch of greedy and myopic VCs decided to create a legitimate business…” Yeah. Umm. Sure. This is similar to mobsters opening a pizza parlor that sells flavorless pizza to launder money. Putting lipstick on a pig is your idea of propering VCing? P.T. Barnum is smiling somewhere.

  19. Kommon Cence

    i’ve been on earn for a while and only ecosystem i’ve seen is scammy ICO promotion. lots of it.

  20. cavepainting

    I do wonder though why a firm that valued itself as $310m in the last round will sell for ~$100m at a substantial discount not just to the last valuation, but also to the money raised.If the business is growing at a substantial rate, would you sell now?My suspicion is that maybe they figured out that a) distribution was hard, and they might need a bigger brand, b) the market required more education, and c) they needed more time.Coin base addresses all three questions. And it was very likely a sweet deal for the founders relative to investors.

  21. sigmaalgebra

    As athttp://www.businessinsider….andhttps://medium.com/basis-bl…USV and startups Basis and Tether?

  22. Jose Paul Martin

    I love the concept of earn.com – I’m on it. Think about, in the past, people had to pay to send you a mail, then (e)mail happened. And now you’re probably on hundreds of lists. I’ve posited this before, what if people had to pay for sending email, even 1 cent. This would reduce spam to a great deal. What I also like is you can decide on answering emails based on a value (presumbly of your reading/responding time). However, I have to admit – being listed on the blockchain list, I did get just too many emails.