Lucas Asher on the Next Generation of Wealth Creation using API Protocols
Harvard in Tech hosted a webinar with Lucas Asher in July on how the next generation of wealth creation will be driven by API protocols.
Lucas Asher is the CEO of Tower Equity and a serial technology entrepreneur who has founded 7 companies and has invested in over 36+ disruptive tech startups including Virgin Hyperloop One, Robinhood, Pinterest, Palantir, Adaptive Biotech, Flexport, SoFi, Betterment, Planet, SpaceX, and many more.
Lucas also has an incredibly inspiring personal story. He grew up homeless and in abject poverty. He taught himself to code and started to build and became a millionaire through his own startups and investing in others. His mission is to employ a million people over his lifetime, accelerate the advent of space commercialization, and donate 100% of his capital to education, child poverty, and science-related causes.
So what is a protocol? In short, protocols enable the transmission of data between different devices and generally encompass architectures that structure the data and data infrastructure more broadly, including APIs (application programming interfaces that allow software to communicate with each other).
Lucas shared the relatively unknown story of Abhay, Vint, and Tim, who invented the earliest and most foundational protocols in the modern day internet, namely FTP (file transfer protocol forming the basis for email exchanges) and HTTP (hypertext transfer protocol), which truly helped the web scale. Collectively, these 3 individuals created $20.5 trillion in wealth.
While FTP and HTTP were some of the earliest protocol examples, the lens through which we define protocols has grown much broader. SpaceX, for example, can be seen as a protocol. In this context, earth is a software, and SpaceX is the infrastructure for space commercialization. Bloomberg recently published an article on how the first trillionaire may make their wealth from asteroid mining, further underscoring the value creation that can be made possible by protocols. Similarly, Starlink (SpaceX’s low latency, broadband internet system powered by a constellation of satellites) is a protocol that future applications can be built on.
Blockchain is another example of a modern day protocol. Lucas saw the potential of blockchain early on in its role as a monetary protocol, which led to his successful early stage investment in Ripple years ago.
Applications have been and will continue to embrace open protocols. Microsoft’s massive acquisition of GitHub is one example of big tech’s shifting the power of network effects in open protocols.
Similarly, Tesla has made their patent portfolios more accessible online. Twilio has built a massive, $40 billion, publicly traded company by focusing on APIs alone. JPMorgan has launched its own blockchain project. Also in the fintech space, Plaid was sold to Visa for $5 billion, underscoring the wealth that can not only be created, but also captured through great API businesses.
In media, we see the antiquation of closed platforms like Bloomberg and Thomson Reuters, and the proliferation of open knowledge sharing platforms.
In a more out of the box example, the International Space Station is another space oriented protocol that countries can tap into through partnerships just like engineers can access data and software through APIs.
While much of the entrepreneur and VC focus has been on application layer software, infrastructure is much more scalable. All applications need to use it, and no one wants to rebuild this foundational layer. The next generation of value creation will stem from this ubiquity, rather than externally enforced monopolies. We have notable historical examples of the success of this approach: the big tech companies offering access to everyday tools like maps and video creates free infrastructure that anyone, individuals or companies, can tap into and are collectively worth trillions.
Even recent events with the COVID-19 crisis have shown us how siloed data is. There is no one source of truth on cases, for example. Robust APIs could solve this problem.
Looking ahead, we have already begun to see a wide range of opportunities in the infrastructure layer from autonomy (like Boston Dynamics’ open API) to transportation to fintech to space.
Founders and aspiring entrepreneurs should see the world as an operating system. While large companies have certain natural advantages, they are ultimately inhibited by the fear of cannibalizing their existing application layer products, which creates a massive white space for ambitious founders to build in the protocol layer.