Decentralized Messaging: Changing the Game | XMTP (Shane Mac) | Builder Series

How do you create what SMTP did for email, but in a secure way in the messaging world that we live in today that allows all of these new identities to communicate in a way that developers can innovate, but also sets us up for where the world is going? Hey everybody, and welcome back to the show. Today we've got Shane Mac with us, an absolute pioneer in the world of messaging and crypto. He's been at the forefront of some of the most innovative technologies in digital communication. Shane, how are you doing?

I'm great. It's so great to be here. Thanks for having me, Sam.

I'm excited about this conversation. I, I want to go ahead though and start from the beginning because I, I think that that gives us some proper context, uh, to XMTP. So let's go back to your early days, uh, when you were first playing around and got introduced to communication technology?

Yeah, for sure. You know, for me, I grew up in a tiny town, Bartonville, Illinois, about, you know, 8,000 people. I graduated with 9 kids in my class. Uh, and so for me, I was always just in this little cornfield in the middle of nowhere, and the internet always was that window into something that I didn't really understand in the early days, but then became this really optimistic and opportunistic place for people building a lot of awesome things. And you know, from the early days of eBay, I actually started selling bats when I was 13. I was playing baseball my whole career and I figured out between 10, 12, and 13, you have 3 different bats that have 3 different weight limits. And when you move into the next category and you move up in your, you know, young little league, you don't want the old bat. So I'd ask all my friends, do you want that old bat? And they're like, nah, I'm good. It's a, you know, it's a low weight bat. And I put it on eBay, $179, $40 shipping and handling. And all of a sudden they're just selling like hotcakes, which led me to really love the internet and connecting with people that I would never get to meet, transacting with people that I've never met. The idea of transacting with someone you've never met before reputation systems and the social internet was kind of a really crazy idea. There were so many frauds and scams with shipping and things going wrong. And, um, do you know if the quality is what you say it is when you get it? And that reputation, that star, I still have my eBay Power Seller Award, led me to really love the internet. And then if you go later, when I was in college, the social internet for me didn't seem crazy when everyone thought, oh, you're going to meet people online. I was like, I've seen this before, but actually it's the people I know in real life. And in 2005, I really started getting really excited about Facebook because it launched in my college. And right after that, 2006, '07, Twitter launched. And when Twitter started, it was called microblogging. It wasn't called Twitter. It was, it was Twitter was the name, T-W-T-T-R, didn't even have the vowels, but it was just an SMS protocol. And what it allowed you to do was a less friction way to publish thoughts online, right? But it was much like a blog. And the innovation of Twitter as a protocol was that there was no recipient. So you could text, but it wasn't to someone, it was just onto the internet. And that idea was a big idea. And, and then all of a sudden, you know, all these passionate developers developed around it. Um, and that got me really, really excited about the internet. I started building little, uh, tools on top of email to try to figure out how to get Twitter, uh, data and Facebook data and LinkedIn data to show up on top of Gmail, which now in today's world, that's how the internet works. But back then it was kind of creepy. You're like, how are you going to take all this data about people and aggregate it on top of email? And that's my LinkedIn personality. This is my Twitter personality. Don't aggregate these together. These are different versions of myself. So if you sailed out a little bit, you could kind of see that this is probably going to happen. Things are going to all come together. You're going to have an online identity. The offline and offline are going to merge. And at the time we ended up starting a startup that I got really lucky to meet this guy in Seattle who really took me under his wing. And I didn't know it at the time, but it was a legend in Seattle tech. And we built a startup called gist.com, G-I-S-T. And Paul Allen, the founder of Microsoft, was our first investor. Brad Feld from Foundry Group actually ended up leading the round and it got acquired by BlackBerry in 2010. And that for me was the moment where I saw BBM. And when I saw BBM, BlackBerry Messenger, and we were inventing the pin, the BlackBerry pin, the double checkmarks, so you knew that there was presence and you knew that actually the other person was there and you could see they read the message. All that innovation actually happened pre-WhatsApp. And just when I saw messaging, I was like, this is how the whole world should work. Not just people. This is how business and people communication should work. This is how I should be able to communicate with everyone. This is, I should never have to call anybody. I have a record of our entire history of our conversation. This should be groups and kind of everything, and it should be secure. And so that kind of led me to my journey into messaging, and I've been working on it now, you know, for over 15 years.

XMP came across my visuals because people were sending USDC instantly, you know, through the network. I'm curious to learn about, you know, the integration of adding USDC on top of this platform. And you know, I believe you all are using CCTP as well. Could you maybe talk and touch on some of those?

Totally. It's one of my favorite use cases. And really it started, my best friend in Nashville, Tennessee is a country music artist. He's from Australia. And one day he's like, man, sending money to my family in Australia is nearly impossible for the simplest things. We're buying my mother a gift for her birthday and they're like, hey, can you chip in $250 to like pay for this gift? And he's like, to get money just to be sent there, he's like, there's no Venmo, Cash App, Apple Pay doesn't work. All these things don't work. And so at the same time, I'm watching the developers on top of XMTP build USDC messaging as the core use case that allows you to send USDC globally for free instantly, as simple as a text message. And it's fully secure inside of the messaging so that you can communicate with that person and send money. And so all of a sudden I'm like, why don't, have you ever thought about trying this? And it works because Venmo and Cash App and Apple Pay, they don't work even to pay a friend in Canada, let alone Australia. Right? And what happened was I was like, holy crap. Like it works across apps. I can be in Coinbase Wallet. I can send, I can text you, Sam, send you $250 in USDC. You could be using Converse, say thanks for the text. But the fundamental thing about XMTP is you can verify that the person you are talking to is the person who owns what they say they own. And so what's, what's great about that is the place you're sending the money is also the place that you're communicating with, or at least it can be verified. And for me, that's where a lot of these frauds and scams happen. I get an email, is this the real email? How do I know? Can I verify it? And verifiable messaging tied to USDC as a global payment rails is like the superpower. 'Cause then I can be talking to you and I can verify it to you and I can see in your address, I can see your wallet, I can see your on-chain data, I can see the things we've done in common. I can see our past interactions. Okay, this is a person I've transacted before. You have all that information just present in the messaging app. And then I can send you money just like Venmo, Cash App, and Apple Pay, but it's global, it's free, it's instant. And I think one of the apps is built on Base, the Coinbase L2. And now in the app, it looks literally like Apple Pay, except you don't even have to know anything about crypto. And for me personally, that's what drives me. I get all the crypto stuff and the swapping and the bridging and the chains and the L2s and the private keys and seed phrases. I don't think anyone in the world actually cares. And what matters in this experience is they don't have to. And what's been so cool to see is the way that Converse did this, you can Log in with your phone number using Privy. You can literally get a wallet address underneath it in your account settings. You don't even have to know what it means. You can pick a username and it's just ShaneMac.converse.xyz. I have a QR code. I hold it up here. You scan it, you message me, and then I just hit the money button and I can say, okay, it says USDC. I send $10, I send $250. It doesn't matter. But what's happening underneath is it's using an L2 on base and all of a sudden it's the one experience they literally understand more than any, which is messaging. And the ability to send money for free globally that just works. And they don't have to understand anything else. They don't care that it's on crypto. They don't even know what an L2 is. They don't have to think about swapping. They don't do anything and it works. And for me, when I saw that, I'm like, this is the future. How do we go build a USDC messaging economy? How do we let everyone in the world have secure communication with secure money that can work for free, instantly, globally for everyone in the world?

So let me ask you, how do you integrate, you know, USDC? Do you directly integrate with our protocol or is it like a, a third-party SDK tool? That's, that's used?

It's the application. So developers can simply do it in the application layer. And then inside of XMTP, what we have are called content types. So content types, one is called a transaction content type. So whenever, imagine like, you know, sending an image, you can send an image, that's a content type. Well, now if I send $100 of USDC to Sam on any XMTP messaging application, they use what's called a transaction content type. And then that shows up with the metadata in the receipt of whatever the on-chain interaction was. So very simply, it's just Shane sent Sam $250. Here's the link. And if you click on that content type, it links back to the BaseScan and you can actually see the on-chain information. But in the message object, it just looks like, you know, kind of like Apple Pay or an image or a GIF or whatever. It's just a content type. And the combination of the, any way you want to send it, whether it's through the Ethereum, through L2s, it doesn't matter, tied to content types allow that to be like a very simple messaging experience. The composability of the blockchain mixed with the composability of messaging is the thing that actually allows people to send the money however they want. It doesn't matter what L2 they want to use. It doesn't matter if they want to do it on Ethereum. It doesn't matter if they wanted to use Base or if they wanted to use Polygon, like it doesn't matter whatever they want to do. XMTP is not chain specific, it's not identity specific. It actually works across any, and I think that composability mixed with the ability to just send messaging based on your public-private key pair is really powerful for developers to innovate in tons of different ways. They're not really constrained by anything. It's really, you can have private communication however you want and you can send USDC in any way you want with any chain you want. In the background.

So Shane, you know, we've been talking about, you know, all these, you know, different applications. You mentioned Converse, which I actually downloaded myself, by the way. It's really, really cool, really cool tool. I'm having fun with it. Could you maybe show a little demo of, of what it looks like in action?

Totally. And I'll, I'll, I'll show kind of Converse and Coinbase Wallet. What's cool for me is this is another developer use case. So one thing we see a lot of developers doing is that the biggest problem in crypto, the whole space of crypto, is that people don't have retention. They don't have relationships and they get a mint and they never see them again. And so the ability to mint and message or message and mint, or every time that you get someone to your site, say subscribe, and it's like, hey, can we send you updates about our drops coming next week, et cetera? That ability to do that is now possible. And so the developers that are realizing this are starting to drive retention via messaging, which is where all the retention came from in the past, right? Email, SMS, this drives all the value. So when I see this one from Paragraph, so this is one of my favorite use cases. The Paragraph team is basically like a Substack of Web3, and this is the channel from them. So I get all of my newsletters. You just go on the Paragraph site, hit and hit subscribe, but they all come into messaging now, right inside Coinbase Wallet. What's amazing though is this, I can click read inline and they use AI and they turn it into almost like what you see on Instagram. So when you just slide through Instagram posts and that's how you consume content. So I can read Fred Wilson's entire blog post without leaving messaging. What's even cooler is I can click mint on the blog post and I can literally mint it. And because I'm inside of messaging, I can now mint without ever leaving messaging. So I can mint things, I can support creators, I can send money, but I can also now do the voting for a DAO. Snapshots and integrated partners. So I get all of my Snapshot proposals right inside of Coinbase Wallet and Converse. And so what's starting to happen is developers are realizing that getting one-off, like, mints isn't growth. Like, people that have been in consumer tech for 15 years know that growth doesn't come from the top of the funnel. Growth actually comes from driving retention and relationships at the bottom of the funnel. It comes from the daily active users. It comes from really getting people in the habit of doing things. And so when I see smart developers like Paragraph building things like this, and Frameboard launched a Pinterest for Web3. That, I get that one every day too. And all of a sudden the Web3 inbox is any app you want to use. And if I go into Converse, I literally have one here. I have a bot called Daily Wordle and Daily Wordle sends me a Wordle daily and I can play it, but I can also click here and I can share it to any friend, right? And I can just play it with them. And all of this chatbot plus developers knowing they can drive retention, using frames, which allows you to drive actions and create more engaging content. The combination of those things is a surface area that I think is just ripe for total innovation. Our developer experience is dead simple. You can go to xmtp.org. We have a reference app for every surface area. We have SDKs for building across anything you want to do, native iOS or native Android or React Native or web. We have it all. And there's example apps, reference apps, And so you can click it, they're all open source, you can fork it, you can have an inbox in your app and, uh, kind of forking ours and building from there. And so there's just a developer playground to kind of do whatever you want. But then we have examples for OpenFrames. We have all of that. Um, if you go to community.xmtp.org, we do everything via XIPs. So our XMTP improvement proposals are all public. We do it all as a community. Everyone's working together. Um, and really there's just, uh, so much documentation plus reference apps. Really a developer community all helping each other. And so if you just come join us and really build in, in, you know, with us together, we have it all, all there at xmtp.org and community.xmtp.org is where all the conversations happen.

So Shane, we've spent a lot of time, you know, learning about your, learning about your past. We talked about your present. I've gotta ask, what do you see is as the future that we're gonna be seeing soon?

It's a great question. For me, it's not just about, can you build a better WhatsApp? I actually think WhatsApp's great. iMessage is great. We all already use it. It's what could be different here when these things come together. And for me, when you think about what's the difference between a messaging economy versus a messaging app, it's that an economy benefits everyone. It's shared by the whole group of people. And what actually I think is happening is the messaging economy becomes micro economies and groups of people are actually little economies. And so when I hear the words interoperable money and those crypto terms flowing around, what they actually mean to me is the future is that every single little group message is its own little micro economy and the ability for USDC or other tokens or other things people find valuable to be exchanged, to be used, to be tipped. The idea that if I said, hey, here's my top 5 restaurant, restaurants in New York, and then drop that message in a group chat with a bunch of friends. But if it's tied to the simplicity of, it's not about put a reaction on a message bubble or swipe to reply, it's actually tip a dollar USDC. And all of a sudden the, the message reactions on every single message bubble in the future, they're not just thumbs up, they're money. And that idea of creating value inside the application and the surface area that we use the most in the world that all become their own little micro economies that bubble up into a messaging economy that bubble up into an entirely new economy that we're all working on. For me is what's different. And the users are in control. The users are also able to be owners and the developers. And that kind of idea for me is just so exciting. It's not just about sending Messaging like WhatsApp, that's already here. We have pretty secure messaging. Granted, there's centralized players in the middle that can access your communication and they're kind of surveillance companies. But what's different and what's the surface area for innovation is turning messaging apps into messaging economies.

Shane, look, I really want to thank you for this time today. It's been an extreme pleasure to have this opportunity to speak and learn from you. You know, honestly, I mean, I I came here at Circle because I honestly believed that this technology was going to open up doors for developers and to hear your life journey only proves that. So I just really wanna thank you for joining and I can't wait for us to connect again.

Likewise, it was my pleasure to be here and I'm so glad I got to spend time with you today.

Well, everybody make sure that you go to XMTP, check them out, builder start. As, as Shane mentioned, start as a consumer, test it out for yourself, see what the capabilities of, and then go over and start building. We'll have all the information and the details below. To everybody watching, thank you, and I can't wait to see you next time.