Former Google Ads boss raises $40 million for start-up “Web3” search

A peak earlier Google the manager wants to make the search in the blockchain easier with his new start-up.

Sridhar Ramaswamy, who led the internet giant’s advertising business from 2013 to 2018, has started a new company called nxyz. The venture will officially launch on Wednesday after attracting investment from several top investors, he told CNBC exclusively.

Armed with a number of eminent Silicon Valley connections, Ramaswamy secured $40 million in funding in May to establish nxyz as a separate unit of Neeva, a privacy-focused search engine he also owns. The round was led by Paradigm, a prolific crypto and “Web3” trader, while Coinbase, Sequoia and Greylock – where Ramaswamy is a partner – also invested. Ramaswamy will remain as Neeva’s CEO while also heading nxyz.

Nxyz was conceived earlier this year by a team of engineers at Neeva, a search engine that includes no ads and blocks online tracking tools. Ramaswamy built Neeva in 2019 after leaving his role as senior vice president of Google’s $150 billion ad business a year earlier, which he says was disillusioned with its relentless focus on maintaining growth at the expense of users.

In a March blog post on Neeva’s website, nxyz is described as “an experiment that brings the same user-first ethos of Neeva search to web3.” Web3 loosely refers to the idea of ​​a more decentralized version of the internet powered by cryptocurrencies, non-fungible tokens and other technologies. It calls for putting ownership of data in the hands of users instead of Big Tech platforms, which use people’s personal information to target them with ads.

“To me, the big advance of a blockchain is that it introduces this idea of ​​decentralized computation, where you upload a piece of code to a blockchain and the code runs there,” Ramaswamy said in a CNBC interview. “No one is in charge. It’s decentralized storage owned by a collective. In addition, they also benefit in the form of a native token currency designed to incentivize the system.”

Nxyz trawls blockchains and associated applications for coveted data about things like how much someone has in their crypto wallet, or which NFTs they buy. It then streams that data to developers in real time using tools called APIs. The platform currently supports the Ethereum, Polygon and Binance networks, and Ramaswamy says it wants to include more over time.

Unlike Neeva and Google — “Web2” behemoth Neeva wants to disrupt — nxyz’s Web3 search software isn’t aimed at consumers. Rather, they want to offer pure blockchain data to major crypto firms, the way Bloomberg sells Wall Street institutions access to financial data and news with its terminal business. Ramaswamy named crypto custody firm BitGo as an early client it has partnered with.

Analyzing data from the blockchain is a messy process, he explained. Smart contracts – programs that run crypto applications – can be assigned designated tasks. But once they are out in the wild, it can be difficult to know which functions they perform in practice. As an example, failures in key smart contracts known as blockchain bridges have opened up the industry to megahacks, with bridges from Binance and Axie Infinity maker Sky Mavis suffering nine-figure breaches. More insight into the performance of these tools can improve security.

“It’s one thing to write smart contracts that can do things. But you have to have an overview of, what did they do? And how do I arrive at that?” Ramaswamy said. “It’s anything from ‘What’s in your wallet?’ to, ‘If you have exchanged a USDC token 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, down 70% from a record high. Among the main factors driving the current so-called “crypto winter” are higher interest rates from the Federal Reserve and an industry-wide liquidity crisis.

That has led to a tougher environment for crypto- and blockchain-focused startups seeking to attract capital, with Pitchbook data showing that VC investment in such firms fell 37% to $4.4 billion in the third quarter from 7, 6 billion dollars in the previous quarter. Of those who have successfully raised, several see their valuations remain flat or fall. Nxyz declined to disclose its valuation.

Ramaswamy said the firm was fortunate to raise funding when it did. Talks with investors began in mid-April and ended in mid-May, around the same time so-called stablecoin terraUSD and sister token luna began to crash. Asked to play down investor sentiment toward crypto, the entrepreneur said his firm was “well-funded to sit out the crypto winter,” adding that it only needs about 20 employees. “I think it will be a very different trajectory” than Web3 and crypto companies that have run into financial trouble, he said. “We want to be very mindful of the current climate, build carefully and make sure we’re also bringing in revenue early.”

Nxyz’s team is currently split across Mountain View, Austin and New York.

While the stock prices on crypto trading platforms like Coin base has declined quite a bit, the infrastructure that powers “Web3” remains a hot target. Firms such as ConsenSys, MoonPay and Ramp have raised significant amounts of cash this year. “Web3 developers today lack 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 partner of Paradigm. “Nxyz has a truly superlative team that has built the best data indexing infrastructure for Web3, and we at Paradigm are excited to support them.”

Still, Web3 has been a punching bag for some Silicon Valley executives, who Twitter co-founder Jack Dorsey and Tesla CEO Elon Musk. A “general uneasiness” people have when it comes to Web3 is that there is no “common term and definition,” according to John Lee, head of blockchain at the e-commerce firm Shopify.

“Every time someone in the general 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 rife with scams, including infamous “rug pulls” where scammers flee a fake token project once they’ve deposited enough money. Ramaswamy admits “there has been a lot of fraud” in Web3. But he hopes more practical use cases such as video games, concert tickets and money transfers will eventually catch on.

As for whether Web3 can break the dominance of digital giants such as Google and Meta, Ramaswamy said “the dice are loaded against” upstarts like his. However, employees at Big Tech firms are increasingly leaving to join roles in crypto businesses. That includes Ramaswamy’s eldest son who, according to his father, recently joined a Web3 company.

Asked about his former employer, Ramaswamy said he believes the company became a victim of its own success. “I think Google is an incredibly successful company,” he said. “But its growth mindset, combined with a monopoly position, produces a poor result.”

“Let’s say there was only one toothpaste manufacturer for the whole of the UK. They’d be like, well, £1 isn’t enough. We’ll work it up to £1.20,” he added. “Google is kind of like that, where it goes, ‘Everyone uses us to search, you can keep jacking up the price and that’s fine.’ I don’t think people are evil” — a reference to “Don’t be evil,” Google’s code of conduct — “I think it’s 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 to grow and connect with new customers”.