Meet the Silicon Valley Entrepreneur Using Cryptocurrency To Create Social Impact Serial entrepreneur Nick Sullivan shares his vision for harnessing technology to create positive change.
By Jakhongir Azimov and Bonnie Stoller Edited by Jessica Thomas
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Long before launching four successful tech companies, Bay Area crypto connoisseur Nick Sullivan was accustomed to the high-wire act of balancing career and family. After having his first child at 17, Sullivan started working as a data entry clerk, copying and pasting by day and teaching himself to code in the evenings. Welcoming a quick promotion alongside the arrival of his second child, he doubled down to get ahead: "There was one week I worked 105 hours. It was like, come home, shower, turn around, get back to it, sleep under the desk," Sullivan recalls.
It was a later role as a web developer with Brassring in 1999 that launched Sullivan's technological career in earnest. As a high school dropout with a family to support, Sullivan credits his steady advancement to Silicon Valley's meritocratic structure: "It didn't matter that I didn't have a degree. It mattered what I could do, how hard I could work and what I could accomplish."
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Following a stint at Yahoo! in 2007, Sullivan brought Wikipedia to the investment ecosystem with Wikia. Although the project initially struggled to attract attention, it helped Sullivan shift his focus towards building ad optimizers, a technology fraught with transparency issues. Sensing an opportunity, Sullivan left Wikinvest to build transparency tools through a newly launched company called Krux. These experiences coalesced when the entrepreneur discovered bitcoin. "I read Satoshi Nakamoto's white paper in August 2013 and knew this was going to be revolutionary, not only for the digitization of money, but the reimagination of trust in society" he says.
Although for many, contemporary technology appears to be moving society in the direction of a machine-driven dystopian future, Sullivan is committed to establishing "a healthier intersection of humanity and technology" in which every action integrates heart and mind.
By all traditional metrics, Sullivan has enjoyed success in the field. His company ChangeTip was sold to Airbnb, and Krux was acquired by Salesforce for $800 million. In January 2020, Sullivan founded his most recent venture HeartRithm, a crypto quant fund, to follow his life's passion of creating a more beautiful world by harnessing the power of technology for positive transformation.
Over the course of a 30-minute phone conversation, Sullivan spoke about the importance of a decentralized decision structure, the potential of crypto to effect positive change, and the false dichotomy between making money and doing good.
JA: HeartRithm is a regenerative engine for social impact. How would you explain HeartRithm in simple terms?
NS: We like to say we turn code into money. Unlike a typical algorithmic crypto fund, HeartRithm redistributes capital to philanthropic causes and social impact projects. We plan to eventually allocate up to 50 percent of our performance fees. You can look at it as turning code into money, and money into good.
Currently, one percent of your performance fees go to social impact projects. Can you tell me what projects you are contributing to, or how this will be determined?
It starts off at one percent, but as we grow in abundance, the percentage we commit to social impact will grow too. Currently it is one percent, and it is projected to grow to 50 percent.
I didn't want to point a fire hose of capital towards good based solely on our internal political whims. It's dicey to use some top-down, autocratic process to even define what "good" is. It felt like the perfect solution was to decentralize the answer to the question "What is good?"
One of the hidden gems of the current crypto wave, based on decentralized finance (DEFI), is the ability to provide governance through tokens rather than corporate governance. Typically, the way this is done within a DEFI project is to have token holders invested in the ecosystem submit proposals for the future direction of the platform. Then token holders use their tokens to vote, determining whether that proposal passes or not. It can be messy and complicated and challenging. But in my mind, community and stake-holder driven governance is clearly a step in the right direction.
So, for HeartRithm, the HEART token is a governance token for directing the flow of social impact resources from the fund. By owning HEART tokens, you're able to submit a philanthropic project for consideration. Projects can vary widely — anything that is working to create a more beautiful world is a candidate. It could be an individual who deserves a grant, an entrepreneur who has a radical new idea for combating climate change, a healer who is doing great work with psychedelic medicines, or your favorite charity.
After submitting projects for consideration and carrying out votes, we execute a quarterly performance distribution from the HeartRithm fund. Our first performance distribution into social impact will be in the first quarter of 2022.
How different is being in AI and cryptocurrency from everything you've done so far?
There have been two meta themes of my career: teaching computers how to understand people and consumerizing difficult technologies. I would say cryptocurrency has been the highest rated in terms of impact.
It's interesting to look at different cities around the country and see how they define social status, because it tells you about their cultural quirks. New York is money, Los Angeles is fame, San Francisco is impact. The heroes of San Francisco are the people that had a tremendous impact on others. Elon Musk, Steve Jobs. With San Francisco being an impact area, I identify with that culture in a lot of ways. Bitcoin was the best I could find at that time to utilize my skills to maximize impact, more so than building software for consumer web.
In your experience building successful companies, what qualities do you look for in employees? How did you build the HeartRithm team?
In 2014, my company ChangeTip was the first crypto company to hire a full-time employee responsible for community. By investing in community, you can harness the collective energy of people who want you to succeed. Better community means better business. Great ideas, viral growth, and additional supportive content are all enriched. We just hired our first full-time community manager for HeartRithm, and we're excited about the energy that they will bring to our cause.
As for what we look for when hiring new people, I've found there to be several critical qualities. The "must haves" include integrity, reliability, fidelity and competence — the four pillars of our framework of trust. Beyond those, we also optimize for people that score very high on intelligence, passion and communication. Hiring in Silicon Valley usually focuses primarily on intelligence, but outstanding communication skills and a passion for purpose make for great employees and an uplifted culture.
What is your ultimate goal for HeartRithm?
HeartRithm's audacious goal is to be the largest source of institutional capital flowing into good. I think there is a false dichotomy that you are either making money or doing good. The current model, that seems to be accepted by most of the world, is that you are supposed to become a billionaire and then magically morph into a philanthropist. We are looking at billionaires to solve our problems for us. I want to break that down and rewrite the narrative of the rich from someone who holds resources and exploits others to a much better story; being a responsible steward of capital and directing it towards creating a more beautiful world.
