When Asta Li and Henri Stern decided to launch a Web3 startup, they decided to take a different approach from many others: build stuff consumers actually want to use. The result was Privy, a wallet tool that is powering the likes of Blackbird—a hot new dining service featured in the New York Times—as well as the sports card site Courtyard.
Privy's approach, which Stern describes as combining the modular and privacy benefits of Web3 with the simple-to-use interface of companies like Facebook, is connecting with consumers but also with investors. On Tuesday, the startup disclosed it has raised an $18 million Series A round led by Paradigm, and with participation from earlier investors including Sequoia Capital.
Privy works with mainstream companies to build blockchain-based services to complement their operations. In the case of Blackbird, launched by the founder of reservation service Resy, independent restaurants use Privy's wallet tools to stay in touch with customers and offer regulars perks and rewards.
While digital loyalty programs are hardly a new idea, Blackbird's app relies on cutting-edge crypto technology like private keys to integrate the best features of Web3—notably the ability to control access to data—into familiar, easy-to-use app designs. This includes Friend.tech, the blockchain-based social media app that broke new ground by letting users access Web3 features by using their existing Twitter login.
"Consumer crypto is here—enabled by cheap base-layer fees and an emerging software stack—and we're excited to back Privy as an essential part of that stack," Paradigm founder Matt Huang said by email. "My partner Caitlin Pintavorn saw the power of Privy firsthand in her work with FriendTech, and we're eager to see what creativity Privy can help unleash across the crypto ecosystem."
Privy also announced on Tuesday that Huang, a former partner at Sequoia Capital and a board member at Stripe, is joining the startup's board.
An alternative to the 'Mad Max' crypto experience
Stern says the idea for Privy came in part from his frustration with the existing Web3 user experience, which has typically forced users to jump through a variety of hoops such as buying "wrapped" versions of digital assets. This raises the question, though, of how exactly Privy plans to improve that experience while also preserving crypto features.
According to Li, Privy's primary goal is to provide tools that will let clients connect their users to the blockchain regardless of which device or browser they are using—and then let clients decide which crypto-style features to add.
In the case of Blackbird, the "FLY" tokens the restaurant app provides as rewards are managed on an internal system, which makes them more like Starbucks-style points than a crypto product. Stern suggested this may change, citing a paper by Blackbird that suggests it intends to make FLY exchangeable on Ethereum or another blockchain in the future.
Stern acknowledges that the companies using Privy are building "walled garden" experiences fenced off from the broader world of crypto. But he says that's not necessarily a bad thing given that the broader Web3 world is still rife with predatory scammers.
"People talk a lot about walled gardens. But what’s the universe beyond the garden? The image that comes to mind is the desert from Mad Max Fury Road," he says, alluding to the post-apocalyptic hellscape from the popular movie franchise.
As an intermediate step between a pure walled garden and the wide-open crypto hellscape, Stern says Privy offers features that will let users "peer over the hedges" and, if they like, use their ability to control their wallet's private keys as a means to explore. In practice, this could mean eventually spending the tokens they collect at brands selling everything from ice cream to sneakers.
For now, it's still early days for Privy and it remains to be seen if it will be able to build on the early niches carved out in order to help Web3 break into the consumer mainstream. But for now, the focus on easy-to-use apps appears to be paying off as the startup says it has over 500,000 monthly average users who are moving hundreds of millions of dollars across its wallets.
