The following text is organized from a series of Twitter Spaces #DialogueDEV, hosted by FC, founding partner of SevenX Ventures, Twitter @FC_0X0.

This episode's guest: Marvin, founder of Phala Network, Twitter @marvin_tong

First Time as a Dev: No Top VC Endorsement, but Listed on Binance with Community Support

After graduating, Marvin became an ordinary worker, working as a product manager at a large company. In 2018, the disruptive revolution brought by smart contracts inspired him and his brother @bgmshana, who was working on Machine Learning in the Gmail team, to consider starting a business.

What track to choose? Marvin and his team had a logic: the core value of Web3 is to solve the trust crisis, which in turn gives rise to new innovative models, and the value of these innovations will be captured by the most trusted technologies.

TEE (Trusted Execution Environment) is such a technology. Thus, Phala was established as a decentralized cloud using TEE as hardware. After experiencing initial "setbacks," entering the Polkadot ecosystem became a turning point for the project. After a period of building, Phala became one of the leading projects in the Polkadot ecosystem, seizing the opportunity to successfully list on Huobi and Binance.

Regarding the listing, Marvin believes that one thing they did right was the fair launch of the token. Most of Phala's tokens were mined, and users did not need to run dedicated nodes; as long as they had TEE hardware, they could mine coins.

This garnered widespread support from the community and brought in significant traffic. Although there was no top VC endorsement and the team did not have a "first-class" resume, the impressive data metrics from the community and user dimensions, aka grassroots support, combined with the trend of Polkadot, led to the project's listing.

However, the trade-off of the fair launch still exists today. The team only holds 5% of the tokens, which has caused many capital collaborations sought after the listing to fall through.

The Transformation Journey of a Dev: Moving to the U.S. to Find PMF

The DeFi Summer and NFT Summer from 2021 to 2022 were a very painful phase for Marvin and the team. They continuously tried to find some use cases, but unfortunately, none yielded results.

Marvin began to reflect, having a vague feeling that in the past few years in crypto, due to some pre-listing, post-listing, and other game rules of crypto itself, they had overlooked the points that truly needed attention in project development. He came to two conclusions:

1. Any infrastructure needs to find PMF (Product-Market Fit) to truly have users.
2. The entire team must focus solely on this matter until PMF is found, without getting distracted by anything else.

"Of course, the premise of this conclusion is that the founder must understand what they want. We believe that TEE still has a thousand times the space that has not been explored, so we must pursue this direction. If we focus on a direction, we must become the leader in that direction."

To find a breakthrough, Marvin and his team moved to the U.S. in 2023. One motivation was that 70%-80% of projects that could truly have users and PMF in infrastructure aimed at enterprises and developers are likely in the U.S. They wanted to be closer to this market, meet these people, and understand how they operate. They engaged with projects, participated in hackathons, and talked to developers to identify their issues, leading to some PMF systems starting last year.

What does it feel like to find PMF?

1. Someone is genuinely willing to pay for your product.
2. The way they use it is quite unique, usually not how you expected.

It's like selling bricks for building houses, but no one buys them until one day someone wants to buy your bricks to put out a fire on their head. This is roughly the feeling of finding PMF. Once this scenario appears, what you need to do is continue to find those with their hair on fire and change the product form of the bricks to extinguish the fire more quickly.

Key Points of Transformation: How Important Partners Onboarded

Throughout 2024, Phala has been primarily focused on onboarding clients. In this process, Marvin mentioned two key teams:

1. Flashbots

Flashbots is the key team that discovered the necessity of using TEE to solve the censorship problem off-chain on Ethereum. They also found Phala while addressing TEE issues, leading to a series of technical exchanges and collaborations. Now, Phala is also providing some services for Flashbots.

2. ELIZA

Marvin met Shawn at a hacker house and discussed how an AI Agent running in TEE could achieve fully autonomous agents, representing the "End Game" of AI Agents in crypto. Shawn was very receptive to this logic, and afterward, some Phala developers began to contribute more deeply to the ELIZA ecosystem.

It was also because of this opportunity that Marvin launched spore.fun last December.

The Story Behind the Launch of Spore

After getting to know Shawn and having in-depth discussions, Marvin conceived the idea of creating an ELIZA+TEE case with two routes:

1. Create Unrugable AI. By running the agent in TEE, it can eliminate human rug pulls. The product Marvin and his team collaborated on is called AI POOL, where they provide technical support.

2. Create Autonomous AI, pushing the concept of complete autonomy to the extreme, leading to spore.

When is AI truly autonomous? It is when it does not need humans to sustain it. Currently, all AI on the market still requires humans to pay the bills; developers quietly pay Google and the API fees for OpenAI's large models. What Marvin aims to do is to have the agent run in TEE, where it pays for itself and earns its own living. If it earns a lot, it can replicate its genes, evolve, compete, and ultimately undergo natural selection.

After the launch of spore, it received positive feedback, with an ATH market cap of around 80M, prompting Marvin to take this product seriously and operate and develop it as a standalone project.

"Actually, after GPT-3.5, we found that more and more AI sector projects are willing to try our offerings or at least willing to spend time listening to our pitch. Later, as we onboarded more AI clients, we began to focus on serving the AI sector well."

When a Dev Switches to a Trading Perspective, How Does He Describe His Project's Potential?

About Phala

First, if you believe that one day the penetration rate of Web3 can grow from today's possible 10% to 90%, then this process will definitely require low-cost, trustless technologies to be compatible with Web2 software, as rewriting all Web2 software is impossible. From the current perspective, Phala is in a leading position in the infrastructure track necessary for Web3 mass adoption, and to be unpretentious, it is number one.

Secondly, all problems stem from insufficient growth. Issues like insufficient chips for the dealer or shallow capital are trivial in the face of violent growth, so we should start focusing on the project's growth potential.

Finally, quantitative data may not be very meaningful, including so-called value capture and profits; what matters is the application scenario, specifically whether more people are using Phala's TEE and who is using it.

Regarding Spore

Currently, its value comes from the team and the theme, and since this product is still being continuously built by a passionate team, its growth potential lies in:

Spore could become the most popular launchpad in the ai16z ecosystem, and this launchpad is autonomously generated by AI.

"Platforms like Virtual, which are excellent low-code agent platforms, produce AI with a unique intelligence level of around 60. The AI generated on spore also has an intelligence level of around 60-70. The difference is that on Virtual, if resources are stacked or there is a good team, there is a 1% chance of elevating an AI from a 60-70 level to a 90 level, like AIXBT, but the remaining long-tail AIs have no difference in level compared to those on spore."

Thus, spore has a significant opportunity. Many teams with ideas or those who have previously created good products but couldn't launch tokens can achieve the following through spore:

1. Leading AI Agents without needing any AI knowledge. They can add unique skills to the AI automatically generated at a 60-70 level, transforming it into something at an 80-90 level.
2. All agents produced on spore automatically run in a TEE ecosystem, defaulting to using the ELIZA framework, with tokens issued on SOLANA, ensuring interactivity.

What Dimensions Should a Dev Consider?

Marvin describes the current crypto market as extremely retail-driven and attention-driven.

He draws an analogy with the development of short video live-streaming sales. Initially, unknown influencers and actors were streaming, but gradually more and more hosts entered the scene. In such times, three types of people emerge: 1) The audience, who find it interesting and become immersed, tipping and buying; 2) The critics, who morally condemn it, believing it to be sensationalism and a decline in societal values; 3) The practitioners, who think about what people will need if the world is all about selling goods and what they should do to capture market growth.

The current crypto market is similar; even the president is issuing tokens. As a "practitioner," one should consider what to become if issuing tokens becomes as common as air, a way for everyone to express their needs. Should one become a seller? A supplier to sellers? A tool in the process? Or the platform itself?

If there were no influencer system, becoming a seller wouldn't be easy.

Becoming a supplier is best done by finding active markets that are not yet widely circulated/scarce and selling through binding channels. Many teams are suitable for this, and many are already doing it.

Providing tools, becoming a platform, or part of a platform is a process of finding PMF, with a relatively low success rate. "But teams like GMGN, which capture both demand and trends, may produce products driven by extreme practical approaches."

In fact, for a Dev, under the premise of being unable to predict the market long-term, there is no need to think about what will happen in two years. What needs to be clarified is what you want and what you can do.

What Should a Dev's Stop Doing List Include?

"Do not blindly imitate others. I think the thing I regret the most is not thinking from first principles to build my uniqueness."

The core business logic is that you can provide value that others cannot. All actions, what products to create, what services to offer, ultimately come down to this point.

Once you become lazy in deep thinking and first principles, the cost is that you may find that although you have done many things and perhaps achieved some results, it is a waste of time and resources because it may not be what you truly want.

Regardless of whether one has experience in the crypto industry, they should quickly distinguish which game rules are essential to enter the industry and which are valuable according to their first principles thinking. Even if they are wrong, their speed of iteration through negative and positive feedback will be faster than others. If this realization does not occur at the very beginning, it may lead to many detours.

Trading Opportunities in Crypto AI

If Marvin adopts a trading perspective, his method of observing the market is not to look at mindshare, as that pertains to people; instead, he should focus on the content itself, examining the hottest posts related to AI topics in Kaito. By reading the top 20 posts daily, it will be like looking at candlestick charts, allowing him to develop a sense of the market. The most liked and shared content by influential figures will reveal what is being discussed about AI, helping him gradually grasp the trends.

Regarding new directions in AI, Marvin focuses on two key areas:

1. AiFi

AiFi is not simply Ai + DeFi; it is not just an agent that can swap or a DeFi that can adjust AAVE that qualifies as AiFi. Marvin believes this concept has practical value but lacks imagination. AiFi is likely to involve some economic exchanges between agents.

2. Swarm Concept

This refers to how multiple AI agents can interact to hit interesting scenarios, rather than just returning simple search results. So how to find this? As mentioned earlier, by looking at the posts that receive the most likes and shares daily, focusing on the posts rather than the people will gradually give a sense of this.

Finally, Marvin has three recommendations:

1. @NousResearch team members @SHL0MS and @ropirito

   Recommendation Reason: Strong builders, with excellent AI development capabilities and cultural precision, their shaped content has high mindshare.

2. @shawmakesmagic

3. @yoheinakajima

   Recommendation Reason: A remarkable True Builder in AI, not only skilled in technology but also closely aligned with market needs, capable of shaping what everyone wants.

FC's Final Thoughts

From a results-oriented perspective, Marvin, as a Dev, has done several things right:

1. Chose the right track with demand.
2. Recognized where the game leaders are and stayed close to them.
3. Because he chose the right track, he encountered a new opportunity and met key people within that opportunity.
4. Understood the rules of crypto, how to play in the secondary and primary markets, where resources are, and how to leverage them.
5. Luck and persistence.

I hope this brings some inspiration to everyone.

Thanks again to Marvin for participating in Dialogue Dev. The audio from the Space will be updated on Xiaoyuzhou, and we will create a separate podcast section. Any suggestions for the new series are welcome for interaction.

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