With crypto’s turbulence, what are the builders of a new industry working on at Shack15? Let’s take a tour.Cryptocurrency prices took a nosedive in May, confirming the doubts of many that digital money was another tech bubble just waiting to pop. So how is a hub of startups connected to that industry continuing to work away in a swanky space in the City? Let’s go get a different view inside some companies that are, in many ways, far from the plunge of Bitcoin and other cryptocurrencies.
On the top floor of the Ferry Building, bathed in sunlight glittering off the Bay, blockchain and cryptocurrency startups have set up shop in San Francisco. Different uses for the new technologies are being explored by more than a dozen small companies in Shack15, the trendy coworking space that opened in 2020.
Other innovation hubs have popped up in the Bay Area and changed the world, of course, from the earliest iterations of the Internet born on the Peninsula 50 years ago to the gig economy’s evolution in South of Market in the 2010s. But Shack15 may surprise you, in light of recent headlines.
Right now you cannot read about cryptocurrency — digital money — without the word “crash.” Bitcoin, the most widely used cryptocurrency, lost more than a quarter of its value in one week in May, during which cryptocurrency investors lost $300 billion, the New York Times reported. Blockchain — encrypted computer code used to build currencies and record transactions — and cryptocurrency can be used in many ways, including securely sending funds to projects in struggling countries, sharing medical records and rewarding users of online marketplaces with currency they can use in video games or other online experiences. And while cryptocurrency coin prices are most certainly plummeting, San Francisco blockchain companies are involved in building the larger industry, not mining or trading coins.
Let me introduce you to someone who is the opposite of a “crypto bro,” the nihilistic techies ridiculed by San Franciscans who resent tech. You’ll like this guy.
Adam Jackson is CEO of the blockchain and cryptocurrency company that was the very first Shack15 tenant. He started working in the space in 2019, before it was even officially open. His company, Braintrust, is a “public good” not-for-profit that helps workers get temp jobs with companies without the need for a middleman job broker. Workers using Braintrust get paid in dollars, not cryptocurrency, but it is used to secure gigs and reward users.
“The volatility doesn’t affect us. We’re not traders,” Jackson says. Comparing Bitcoin with Braintrust is like “comparing a gold coin with Linux,” the opensource computer operating system, he says.
What Jackson and his team were doing in Shack15 back in 2019 later helped tens of thousands of remote workers find work during the pandemic without giving up a huge chunk of their pay. His company doesn’t make profits or trade crypto currency on mercurial markets.
Congratulations, you like a blockchain and crypto exec who works at Shack15. Let’s meet some more.
Climbing the steps of the Ferry Building takes you to the top floor, just under the skylight of the historic building’s great nave. Shack15’s soaring, glassedin storefront both welcomes and stops you, as a receptionist asks who you are here to see.
Shack15 calls itself a social space dedicated to entrepreneurship and charges $1,790 a year to individual members who access the space. (That’s actually about half of what WeWork charges.) Small companies like Nodle, a wireless network, rent out separate offices.
We continue up a staircase to a vast open space encased in floor-to-ceiling windows and are greeted by sweeping Bay views and stylish Scandinavian furniture. Imagine what they would sell at an Ikea in heaven, complete with a blond-wood grand piano and cream-colored rugs. An elegantly lit bar serves wine, espresso, avocado toast and other treats. Stylish people chat over laptops on couches, at tables and at a long stand-up bar of workstations. You may experience a sudden queasiness at not feeling cool enough for it all, then slightly irked at what feels like an exclusive space. (Don’t worry, that’s normal.)
“Your heart goes out to people who lost money in any of the markets. Our focus is building things for the long term.” — Jack O’Holleran
“It’s a stunning place,” says Jack O’Holleran, CEO of the blockchain startup Skale Labs, which has offices in Shack15. And it can take a moment to take in the view. “But it is not a country-club vibe at all. They do a lot to encourage inclusiveness.”
To a certain extent, that is true. Crypto Underground, a club that held free monthly events, took hold here and fostered an emerging San Francisco cryptocurrency community before COVID-19 shut down the space for a year.
Those events established the blockchain and crypto crowd at Shack15, says its founder, Jørn Lyseggen, who leases the 45,000-square-foot venue, like the restaurant owners and shopkeepers below. (The name Shack15 comes from the first address of Meltwater, a company that the entrepreneur founded in a shipyard in Oslo, Norway.)
Early cynics of the space, such as SF Weekly (owned by Clint Reilly Communications, as is the Nob Hill Gazette), were skeptical. “Its website is full of airy, meaningless pronouncements like ‘Where ideas go to breathe’ and ‘For those who do extraordinary things’ that would be skewered in an episode of Silicon Valley,” the alt-weekly wrote soon after Shack15’s opening.
Fair point. But, like Jackson, CEO of the not-for-profit job network Braintrust, many blockchain and cryptocurrency entrepreneurs at Shack15 have high ideals. Shack15 cryptocurrency community member Tove Andersson used blockchain to help same-sex couples get married if they lived in countries that don’t allow it. Skale Labs, O’Holleran’s 35-person startup, uses dramatically less energy than Bitcoin and others. Skale’s computer infrastructure supports companies helping people in Africa to receive and send money from abroad.
Do projects like those redeem cryptocurrency from all its issues? Oh no, not even close. On the whole, cryptocurrency is still an environmental disaster, due to enormous amounts of electricity needed for computers to run complicated equations. And the crypto world is so packed with scams and criminals that the FBI recently formed a new unit focusing solely on digital currency abuses. Web 3.0 is also likely to be hit hard by any impending recession in terms of VC funding, as investors look for tangible returns.
And, of course, investing in cryptocurrency has been disastrous for many.
“Your heart goes out to people who lost money in any of the markets,” says O’Holleran. “Our focus is building things for the long term.”
But despite the collapse of the value of many coins, plenty of people still believe cryptocurrency’s time has come. It’s here. And San Francisco crypto currency companies are working to address those issues. Many — like Ripple, Kraken and Coinbase — are large companies with their own headquarters. But the Crypto Underground events born at Shack15 helped give their workforces a community. And the startups working here are hacking additional new uses for cryptocurrency.
Is the space as accessible to all as other parts of the Ferry Building? Well, no. But neither is a social media company campus, a gig economy headquarters or a WeWork building. Members can invite guests to visit the space, and some events are open to people who register online. If Shack15’s cryptocurrency community mixes schmoozing with working on new kinds of tech, that is how great ideas often incubate in Silicon Valley, they say.
“Another project leader might have experience with something we have a question about. We can drift over and talk and expedite three months of learning from them,” says O’Holleran. “Look, there’s a massive misunderstanding about our industry. It’s just great to be around other companies trying to make the world a better place.”
OK, our time is up. Ready to go? I know, you were just starting to get comfortable with the whole thing, right?