In the early 1990s, Halsey Minor was planning on starting a news-by-fax service company with a guy named Jeff Bezos. That didn’t pan out, but both men ended up doing okay for themselves anyway: Minor founded the successful digital publisher CNET in 1994, the same year Bezos launched Amazon. (Minor later co-founded the cloud-based software company Salesforce.) Now, three decades on, the almost-partners are competitors. Minor’s startup VideoCoin—a blockchain-powered video encoding, storage, and content distribution system—is entering a market dominated by Amazon Web Services’s cloud-based video platform.
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Minor says that VideoCoin, which uses processing power from otherwise idle servers in computer centers from all over the globe, will be significantly cheaper than AWS. Today, VideoCoin is announcing a new economic model, which involves both a utlility token (VID) and fiat-based payments; the network goes into beta in July. Minor was kind enough to explain it all to us. He also opened up about some of the personal struggles he’s experienced over the past decade-plus.
Can you explain, in layman’s terms, what VideoCoin does?
All of these media companies are getting killed by the cost of moving from broadcast and satellite to one-to-one streams over the internet. You have to do different compression for just about every device and every bandwidth. I would guess that the average movie on Netflix might have 5,000 different versions, in terms of different devices and bandwidths.
My CTO [Devadutta Ghat] built Intel’s video-streaming cloud that competes with Amazon Web Services’s video service. AWS’s video cloud is extraordinarily large, and extraordinarily profitable. Netflix runs on it, for instance. The competitor to AWS that Deva built was sold to Facebook.
[VideoCoin] can provide the exact same services that AWS does at a fraction of the cost, using computers that are just laying fallow. We know that about 30 percent of servers sitting in data centers today are characterized as “zombies,” which means they are not used. There is about $30 billion in capital expenditures that have been made in data centers all over the world where they’re generating nothing for it.
What media companies will you be working with?
I can’t tell you now. We’ll probably have an announcement in the early part of the summer. But it’s not hard, honestly, to say to these guys, “Look, we think we can save you 50 to 60 percent” and get people who are willing to try. Obviously, it all boils down to delivery. If we can do what AWS does at a fraction of the cost, it’s not hard to imagine that every media company would want to use us. So that’s kind of where we’re going with this conversation: Can you actually be successful at what you’ve laid out as your vision for the company?
Today you’re announcing a new economic model. What can you tell me about it?
What we’re doing is making some really fundamental changes to the way the market works. We’re doing things that nobody else does, and I think everybody else should. Let’s start with token inflation. Bitcoin has token inflation, so that model was carried over to all of these token projects, like ours [initially]. The problem is, the tokens are growing faster than the value of the services that they’re providing.
You have to ask yourself whether token inflation is necessary. And we came to the conclusion it’s not. It is no good to anybody in the ecosystem—not the token holders, not to us as a company, not to our customers, and not to our data centers. That’s a big change.
But doesn’t token inflation incentivize your workers, the data centers?
That gets to point two. Look at a media company spending a million dollars a month on us, having to go into the market and buy a million dollars’ worth of crypto and putting it in a wallet. When they buy the million dollars of crypto, they’re going to drive the price through the roof. And they’re going to have to have a trading operation going on. Then when they put the money inside of our service, the money value is going to go up and down. The data centers would be receiving tokens, and they would have to go to an exchange, and if they sold a million dollars’ worth, they would drive the price down.
These media companies, they’re not crypto investors. They want a service to be predictable, they want the cost to be predictable, and they need the least amount of friction possible. We came to the conclusion that there’s no way you can go after these huge companies, asking them to go into the market and buy and sell tokens. We realized that the only way for this to work was with tokenized fiat.
Our token actually works incredibly well as a staking mechanism. What happens is that the staking mechanism takes the data centers with the lowest cost and the greatest reputation to the top. The payment on the network is predominantly fiat, but [the data centers’] VideoCoin wallet also goes up, and that that process continues to increase their attractiveness to the network. The token plays a really important role in protecting the network from spamming and from people saying they’re going to do something and not doing it.
"Jeff [Bezos] is obviously a brilliant technologist, but AWS is open to competition from a better, cheaper architecture. And that’s what the blockchain enables."
You almost launched a news-by-fax service startup with Jeff Bezos many years ago. How does it feel to be competing with him now?
I mean, honestly, Jeff Bezos is doing like 400 things. My guess is AWS video gets about two percent of his time. What’s interesting though is nobody could compete with Amazon because Amazon lost money on everything they did. Jeff was vociferous about saying, “Someone else’s margin is my opportunity.” Well, all the margin in Amazon is in AWS. So it’s not like we’re competing against somebody who doesn’t make money. We’re competing against someone who makes all the money. Jeff is obviously a brilliant technologist, but AWS is open to competition from a better, cheaper architecture. And that’s what the blockchain enables.
You went through a difficult time beginning in the second half of the 2000s. You’ve been open about suffering from depression and going into personal bankruptcy. What got you through that time?
A family and kids, honestly. I’ve got a friend right now who’s kind of going through the same thing. My story’s a little more complicated because my father, who I never met, committed suicide, and my son committed suicide two years ago, so it’s a family thing.
My whole life I’ve been very positive and working relentlessly, starting all these companies, and then I just disappeared starting in 2006. By 2008, I basically didn’t go out until like 2012. It was kind of day-by-day, but I was very fortunate that, for whatever reason, in 2012 it sort of lifted. I started a company called Uphold [a Coinbase competitor] and have been back full-tilt since then.
Was getting into the blockchain space a salvation of sorts?
In 2012, literally the first business that I contemplated was based on bitcoin. So in terms of having something to focus on, and build, it was absolutely the first thing that I did. Ironically, a lot of the financial issues that I had were fights with banks. And honestly, if you were fighting a bank back then you’re never going to win because the government was absolutely interested in keeping the banks solvent, and they didn’t really care about anything else. So it is kind of interesting that what I ended up doing first was bank-less, if you will. That certainly is what got me back where I was in terms of being an entrepreneur, building things, loving my job—all the things that I’ve been so fortunate to have had before.
Correction: An earlier version of this article incorrectly called VID a stablecoin. It is a utility token.
This interview has been edited and condensed. Photo courtesy of Halsey Minor.