Sridhar Ramaswamy, head of advertising and business at Google
Christian Bocsi Bloomberg | Getty Images
Top ex Google exec wants to make blockchain search easier with his new startup.
Sridhar Ramaswamy, who headed the internet giant’s advertising business from 2013 to 2018, has launched a new company called nxyz. The project is officially launched on Wednesday after attracting investment from several major investors, he told CNBC exclusively.
Armed with a number of prominent Silicon Valley connections, Ramaswamy secured $40 million in funding in May to establish nxyz as a separate entity to Neeva, a privacy-focused search engine he also owns. The round was led by Paradigm, a high-performing crypto and “Web3” contract developer, while Coinbase, Sequoia and Greylock – where Ramaswamy is a partner – also invested. Ramaswamy will remain CEO of Neeva while also leading nxyz.
Nxyz was conceived earlier this year by a team of engineers at Neeva, an ad-free search engine that blocks online trackers. Ramaswamy built Neeva in 2019 after leaving his role as senior vice president of Google’s $150 billion advertising business a year earlier, which he says was disillusioned with its relentless focus on maintaining growth at the expense of users.
A March blog post on Neeva’s website describes nxyz as “an experiment that brings the same user-first ethos of Neeva search to the web3.” Web3 loosely refers to the idea of a more decentralized version of the Internet powered by cryptocurrencies, immutable tokens, and other technologies. It encourages putting ownership of data in the hands of users instead of Big Tech systems, which use people’s personal information to target them with advertising.
“For me, the big advance with blockchain is that it introduces this idea of distributed computing, where you’re uploading code to the blockchain and the code is running there,” Ramaswamy said in a CNBC interview. “There’s no one in charge. It’s a distributed repository that’s owned by the collective. Plus, they also have utility in the form of a native token that’s been designed to incentivize the system.”
Nxyz trolls blockchains and related applications for coveted data on things like how much someone keeps in their crypto wallet, or what NFTs they’re buying. It then streams this data to developers in real time using tools called APIs. The platform currently supports the Ethereum, Polygon and Binance networks, and Ramaswamy says it is looking to add more over time.
Unlike Neeva and Google — The “Web2” craze Neeva wants to disrupt — nxyz’s Web3 search software is not intended for consumers. Rather, it wants to offer big crypto companies pure blockchain data, like how Bloomberg sells Wall Street institutions access to financial data and news through its terminals. Ramaswamy named crypto custodian BitGo as the first client it has partnered with.
Sorting data from the blockchain is a messy process, he explained. Smart contracts—programs that power cryptographic programs—can be assigned to designated tasks. But once they are out in the wild, it can be difficult to know what actions they actually perform. For example, errors in major smart contracts, known as blockchain bridges, have opened up the industry to mega hacks, with bridges from Binance and Axie Infinity maker Sky Mavis suffering nine-digit breaches. More insight into the performance of these tools could improve security.
“It’s one thing to write smart contracts that can do things. But you need to have a record of, what did they do? And how do I find out?” said Ramaswamy. “It’s everything from, ‘What does your wallet contain?’ to, ‘If you’ve exchanged USDC tokens for ethereum, what was the exchange and when did it happen?’
The launch of Nxyz comes as crypto investors reel from a deep pullback in token prices, with bitcoin, the world’s largest digital currency, fell 70% from its all-time high. Among the main factors driving the current so-called “crypto-winter” are higher interest rates from the Central Bank and an industry-wide liquidity crunch.
That has led to a tougher environment for crypto- and blockchain-focused startups seeking to attract funding, with Pitchbook data showing VC investment in such companies fell 37% to $4.4 billion in the third quarter from $7.6 billions of dollars in the previous quarter. Of those who have successfully risen, several see their valuations stagnate or fall. Nxyz declined to disclose its valuation.
Ramaswamy said the company was lucky to raise capital when it did. Talks with investors began in mid-April and ended in mid-May, around the same time the so-called stablecoin terraUSD and its sister loop Luna began to collapse. Asked to dampen investor sentiment toward crypto, the entrepreneur said his company is “well-funded to sit out the crypto winter,” adding that it only needs about 20 employees. “I think it’s going to be a very different trajectory” than Web3 and crypto companies that have run into financial trouble, he said. “We want to be very aware of the current climate, build carefully and make sure we’re monetizing early as well.”
Team Nxyz is currently split between Mountain View, Austin and New York.
While stock prices of crypto trading like Coin base have shrunk considerably, the infrastructure that powers “Web3” remains a hot target. Companies like ConsenSys, MoonPay and Ramp have raised significant amounts of money this year. “Web3 developers today lack a fast, flexible and reliable infrastructure to support their applications, which is holding the industry back from widespread adoption,” said Matt Huang, co-founder and managing director at Paradigm. “Nxyz has a truly great team that has built the best data logging infrastructure for Web3 and we at Paradigm are excited to support them.”
Still, Web3 has been a punching bag for some Silicon Valley leaders, such as Twitter co-founder Jack Dorsey and Tesla CEO Elon Musk. A “common malaise” people have when it comes to Web3 is that there is no “common concept and definition,” according to John Lee, blockchain lead at an e-commerce company. Shopify.
“Every time someone in the public has a conversation with someone in the industry, they get a different definition, they get a different explanation,” Lee said. “It’s confusing for people.”
Meanwhile, the space is full of scams, including the infamous “rug pull” where scammers flee bogus token projects once they’ve pocketed enough money. Ramaswamy admits “there has been a lot of cheating” in Web3. But he hopes more practical use cases like video games, concert tickets and cash payments will eventually catch on.
As for whether Web3 can burst the dominance of digital giants like Google and Assess, Ramaswamy said “the dice are stacked against” antics like his. However, employees of big tech companies are increasingly leaving to join roles at crypto companies. Among them is Ramaswamy’s eldest son who, according to his father, recently joined a Web3 company.
Asked about his former employer, Ramaswamy said he believed the company had become a victim of its own success. “I think Google is an incredibly successful company,” he said. “But its growth mindset, combined with its monopoly position, is causing a bad outcome.”
“Let’s say there was only one toothpaste manufacturer for the whole of the UK. They’d be like, yeah £1 isn’t enough. We’re going to chalk it up to £1.20,” he added. “Google is like that, where it goes, ‘Everybody uses us to search, you can keep raising the price and that’s fine.’ I don’t think people are evil” – a reference to “Don’t be evil ,” Google corporate ethics – “I think this is a system that demands growth at any cost.”
Google was not immediately available for comment at the time of publication. The company previously told The Telegraph newspaper that its ads “help businesses of all sizes grow and connect with new customers.”