Hey, hey, hey, welcome to this week's episode of Blockheads Blockcast. I'm your host, Takatoshi Shibayama. I'm also the head of APAC for Ledger. I aim to uncover the creative, intelligent and radical minds who are shaping the crypto industry today. I'm as crypto curious as anybody that's tuning into this show. We're doing this together, guys. Let's go. Mr. Nick Young. Co-founder and CEO Ko, welcome to the show.

Thanks for having me.

I would love to understand your journey into this space, whether it be crypto or even this platform itself. So let's dive right into that.

So yeah, I guess our first professional experience with the industry was we used to run a marketing agency. So my co-founder of O, we ran this business together and we used to work with a few different crypto projects on their marketing. And so if you kind of think of what the function of marketing agency is, it's spotting where like opportunities lie, what the narratives are, working out what's good about a business or a project, what's maybe not so good about the business and the project. And I think through that process, we came to the conclusion that although the technology itself is amazing and has really powerful applications, the actual applications which had been built for wider consumers we didn't feel were as effective as they could be and then there was a gap for using this technology in more of like a background way to appeal to billions more people and kind of be as much as that meme is kind of something that onboards the next billion users to crypto so that was our first like idea and belief for how okay i'm about and then from there was pretty natural we had always found the adult industry the spicy industry really fascinating it's one of the oldest most consumer relevant industries in the world it's i mean every demographic across the world kind of touches it but there's also like quite deep psychological parts of it and acts as like a interesting gateway to a lot of other interesting sectors and concepts and we felt that it was the perfect incubator for what we had just said where it's an industry that really needs crypto the flow of money operations transparency ownership is all quite messed up in that industry so needs the technology and was a sector which as i kind of mentioned is so widespread spread that if you can kind of build something within that sector using crypto in the background it would potentially be that that thing that billions of people touch which we are after

yeah so it's kind of like an only fans for the crypto industry actually using crypto but it's ai bots could you explain to us like how your platform works how people can interact with it i know it's created for builders and also for consumers so if you can touch on that it would be great

sure so o is kind of like the umbrella project and at the moment we have three different offerings within that umbrella. One of them is the consumer side. So as you said, it's much like a AI OnlyFans type platform. So users can come to the platform. They can meet a variety of different AI generated characters or AI powered characters. Some of them are digital twins of real world creators like OnlyFans models. And some of them are completely synthetic characters that don't represent anybody real. And those users can then swap text messages, images, voice messages, and soon videos as well. And those can be uncensored. So you can have some fun there. You can pay with crypto. So there is like a crypto angle to it. But we felt that to be that pure blood, like appealing to a billion people, we shouldn't force crypto into that same interface and experience that we're trying to appeal to a billion people. We felt that it was better to kind of have like another side of what we do, which is a platform which we're releasing in the near future, where essentially users can create their own synthetic characters. They own that character. It's represented in an NFT. So you'll be able to trade these characters as they grow value, as they receive 80% of the revenue that's generated on on that consumer platform. And then you can launch tokens associated with those characters and much of like the agentic stuff, which we're seeing at the moment. And then the final part is all of those models, which we've developed in house and power that whole experience. We also have as an API for like others to build experiences on top of. I think like the way we see it is sort of a, it's a web 2.5 and that's because there's a more web two angle to what we do and a pure web three angle. So if you kind of blend the two, that ends up with a 2.5, but yeah, there are kind of two different sides to what we do with our platforms

and what kind of problem do you think you're solving with this solution so you know being a curious man and also being Japanese love to kind of like play around with these things and then see what people are talking about I mean I have absolutely no interest in OnlyFans but I did check it out before and then you know just follow girl and then you know do conversations I could see the problem is that the conversation that you have with those people doesn't seem genuine it seems like there's somebody who's running the conversation and nothing to do with the girls and it's a bunch of eggplant emojis and splash signs and all that. I mean, it's obviously not a real interaction with the actual person that you're actually seeing. So I can see that, you know, this can potentially solve that because, you know, it's already an AI anyway, so it doesn't matter. And it's not some person somewhere who's a guy that's like texting you, right? So is that the kind of problem that you're trying to solve with this? Or is there something much bigger than

that? I think for users, that's definitely one of the bigger problems. So we have solutions for users, creators, and then investors would be the wrong word, but like stakeholders, I guess would be a better one. So for users, the problem that they have is what's a platform like OnlyFans did very well was provide exclusive or more private access to their favorite creators. And that was pretty revolutionary, but very quickly that kind of scaled too big for that creator to actually continue doing that exclusive private access, or it would just be simply too expensive for kind of obvious reasons, just market dynamics. So as you said, what happened was experiences became less or authentic teams would kind of get involved and impersonate the creator and so for the user it meant that you're spending a lot of money and you're wanting to get access to an actual creator but in fact you're kind of getting something else which you haven't really signed up for and it isn't very personalized it isn't available 24 7 and yeah kind of has these elements which we just said so for the user side what we're doing is now with this digital twin you know it's a digital twin so you know it's ai there's no trickery involved but because of how realistic it is and it's been trained on the real creator it's kind of as good as speaking to the real creator and in many senses as you said better than the experience on something like only fans but it's available 24 7 and at a fraction of the cost because the kind of cost to produce this content itself and the time constraints are completely eliminated so for users yeah basically better experience all the time completely personalized and cheaper so that's a problem which we're solving for the users for the creators their biggest bottleneck is basically their own time so they have all this value and like could be interacting with more fans and making much more revenue but there's only so many hours in a day so So with this concept of a digital twin and having content created by generative AI, all of their time constraints are completely removed and they can either focus on different elements of their personal business or just kind of kick back and enjoy life and let the money roll in. So obviously very, very appealing to them. And then the third part of the stakeholders is kind of everyone reads these stories about how much these types of creators earn, but there are quite obvious potential downsides of actually being one of these creators around like privacy and taboos and stuff like that. So what we're trying to there is that by owning these characters which don't necessarily represent yourself but you get the economic benefit from it you can get all of the benefits of being a creator without actually being a creator and then through either tokens or being able to kind of trade these characters there's also a way to like participate in the economics of this industry where before it's like pretty difficult to do because of vice clauses and like taboos and stuff like that there's basically two publicly traded adult businesses at least in the US which is the least for any industry on earth behind marijuana, alcohol gambling, anything. So if you're just kind of like a retail participant wanting to financially benefit from the sector that is entirely legal and you believe in, there's not really an option to do that at the moment. So that's kind of like what we're providing to them.

Yeah, that totally makes sense. And take us through the kind of experience as a creator. So I get to choose like a digital twin or I can completely make something from nothing. But how do you train this AI to actually be like you? I mean, how does that work?

At the moment, it's a manual process in the kind of curation of who will launch on the platform. So our CMO, Erica Koppel, was the global head of marketing and creator experience at OnlyFans. She was the first hire at OnlyFans, built up the entire marketing and creator experience. And something that she believes in, and as a result, we believe in as well, is that like having this personal experience with the creators is really important and like educating them about how to like get the most out of the platform and earn as much money as possible and give the best experience to users. So at the moment, we kind of like through her connections and then referrals from the creators that we work with and then some inbound leads as well. We essentially like chat to them we tell them about the offering it's a very personal experience we take the time with every single creator that we launch and work with and then there's kind of a legal agreement of course which solidifies revenue split and then also the creator can choose what level of spiciness i guess they want their twin to be so they have full control over that and they can choose that and then the actual training process we've created a bot on telegram which asks them a variety of questions about themselves and they respond using voice notes and that gives us most of the information that we need about who that person is and then enough voice content to train up their voice. And then we also ask for a variety of examples and like text messages and stuff to train like how they actually speak and text. And then we get like a few dozen images of them. which most creators have because they are creators. So it's pretty easy for them. And that's kind of all they need to do to then have a digital twin trained up. And from there, we do a lot of like the content creation and feed them stuff, which they can then market through their social media because we can do it at scale using the AI. So yeah, for them, like it's, I guess you could take an hour in terms of like giving the content to us and training up the twin. And from there, you then have limitless scalability and like what that twin can do. And as we add more capabilities, like agentic capabilities, which can take on Twitter accounts and market through there. Or we built an ability for the characters to set up their own Telegram accounts and then be able to proactively message users on Telegram. That same twin which has been created is now just gaining all of these capabilities for the creators. So it's just that upfront process really. And then how much they want to get out of it. The more that they market their own twin, the more that that twin will likely earn. So it's kind of aligning incentives there. They're constantly promoting that twin and therefore the platform as well.

And how do you think the user retention would be like? So... you know, I was just a kind of casual user for OnlyFans, right? I mean, I wasn't that particularly interested, but people who are very kind of engaged in this thing, I mean, what kind of data did you have from like, let's say OnlyFans or similar platforms? Like what is the normal retention rate of these users? And do you think that because it's an AI, basically you train them to be them, right? Not some guy somewhere else. So yeah, what do you think the retention rate could look like by having this platform?

Yeah, I think like one of the surprising things forward the OnlyFans team when we've spoken to them about it is how much they didn't anticipate just like the conversations and like the girlfriend boyfriend experience the companionship element of it to be something that fans and users really want so yeah I think that like in itself if you're building a relationship with somebody it's an always-on thing it's over a long period of time so it's a massive massive like retention driver and I think if you look at like the top leaderboards of the most used generative AI apps a lot of it is around companionship and type of sector because yeah it just naturally lends itself to something that you speak to all day every day where like more of an assistant app like ChatGPT you kind of like you dip in and out when you need an answer to a question so I think like the concept itself is a massive retention driver and then what we can do far more effectively than a platform like OnlyFans is that again it doesn't take up their time and it can be always on so there's no like breaks in it so yeah I think like it's a massive opportunity for really strong retention and we're seeing that I think the key thing for us like looking into the future a bit is it's obviously a very busy space. It's like AI girlfriend, boyfriend, companion sort of thing. And so while the concept of retention is strong in the sector, because there are so many players and they're all kind of offering pretty similar stuff, the retention between apps is pretty low. The competition is very high. So having something where we have an exclusive digital twin with this person, and if you are a fan of this creator and you have this like parasocial relationship with them, the only place that you can get it is with us. And so like you then retain to the app not just the concept itself. So it's a harder challenge because kind of anyone can just make these randomized characters. It's pretty simple with like open source technology that's out there. It's a much harder thing when you're dealing with like a celebrity with a personal brand and millions of followers and like there's a human on the other side of it. So it's a harder challenge, but we feel that like for the long term, it's a better challenge to be focused on.

Yeah. And you mentioned there's a lot of platforms like this. I mean, I'm assuming that's more on the Web2 space, but in terms of like the AI side, are there a lot of competitors to your business model at the moment? and can you talk us through like what you guys are doing that's different from others

yeah so there are plenty doing the like just generalized companion the AI companion type thing there are very few doing the digital twin part because it's just so much harder so yeah I guess it's kind of what do we class ourselves as we class ourselves definitely on the digital twin side and like more of the AI only fan side and I would say that we're the leader in that but yeah as like a generalized kind of an SFW or general companion conversations with an AI there are plenty out there and there are plenty of successful ones with like millions and millions of users, less so on the NSFW side. But I think character AI is essentially one of the biggest generative AI applications in the world. And so, yeah, I think it's the right level of like validation of the space because there are so many people in it and there's so many users in it. But within our niche on the digital twin side and the creator side, there are fewer players, which means that we can better dominate it. And then I think the API side as well. So I think we, from the beginning, uniquely placed ourselves in a situation where we have our own API and our platforms are a client of our own API. essentially, which means that we're now in a position where because our platform has a bunch of users generating conversational data that we can feed back into the models and improve them better. We're now in a situation where our AI is attractive to a lot of different platforms in our space or people wanting to enter our space, but not necessarily have to develop it themselves. So this like B2B offering is also quite interesting. And there's not many people playing in that space.

Yeah. During COVID, you know, my friend introduced me to this app called Replica and he said, just have a go at it. It's quite interesting. In the beginning, it's a little bit kind of buggy but then afterwards the conversation got a lot more smooth you know you can interact a lot more i mean obviously it's been like five years so i don't know where that application is right now but i'm sure that you know technology on ai has exploded since then so the machine's running on it's much faster and more data to consume so how is the conversation with these ai bots currently

it's good i think like it can always be better like the next frontier is sort of the memory and like long-term recall so i think that's something that replica does very well actually is like pick up details about the user without the user necessarily knowing about it and then being able to feed that back to the user so just like building up a profile of who is this person that the character is talking to and I think just that level of depth on the characters like at the moment it's all mostly prompt based and like quite randomized I guess some of the conversations we're building systems where these characters are now going to simulate their own lives so it's cohesive like what they're doing on a daily basis and like day to day week to to week, month to month, they're like actually developing as a person, which is kind of like the next level of, sure, it's fun to have like a quick conversation with this person, but like as I evolve and my life change and I go through different things, the person on the other side that I'm talking to and trying to have this like relationship with should be doing something similar or else like they're kind of stuck while I'm evolving. So I think that's like the next frontier. So in terms of like talking to an AI, it's great. But like, we want to get to a point where it's the same as talking to a human, if not better, in some ways, which is rather controversial, or we can kind of define what better means. But yeah, I think it's evolving really, really rapidly. I don't think at a pace that anyone could have foreseen. And I think it's interesting, like, as you said, replica has been around for many, many years. And now just in the space of like, a few months, people can kind of catch up on all of that innovation that they've done with what's going on in like open source AI, just generally in AI.

Yeah, I like the part that you mentioned about it can evolve with you, because I guess a lot of the relationships do break down because of that issue, right? They just don't evolve with you, or maybe they evolve differently. But this one has a bit more stickiness to it, because it evolves with you with the same kind of interest in hobbies or etc. That kind of hit a note to me.

Yeah. an interesting one actually with replica specifically is because it isn't intelligently evolving and i think like because we're very certain on like who we are and what we're trying to do here which is like a more nsfw side of the industry replicas had instances where they would just completely change their system or like from one day to the next they're like okay now we allow nsfw content now we don't and so the characters did evolve but it's such a like rapid pace from one day to the next that there are many cases where people like they kind of felt like they were going through a breakup or they felt that like their kind of partner had died because like now suddenly like that person just doesn't exist anymore and you can't talk to them which is like pretty traumatic for those users but yeah it's kind of a fine balance between like not changing at all and then just changing one day to the next and being like where's the person i've been speaking to

yeah i think i had that experience while i was on it actually let's talk about the kind of dark side of things right so i read an article specifically on replica i think or maybe it was kind of the similar chat applications that all a lot of the conversation obviously devolved into more like, you know, sexual abuse or like some kind of abuse, you know, something extremely negative about it. And obviously, you know, humans are humans, right? And then maybe particularly because it was during COVID, people were holding a lot of angst and negativity and they wanted to lash out on something, but they can't do that in the same apartment that their partner is living. So they rather lash out at their AI companion, right? And you mentioned about, you know, conversations that you can kind of tap into it. so that you can feed it to the AI. What can you anticipate? I know that you're still early in the project and maybe you haven't picked up a lot still, but that's kind of what I remember back in those days. A lot of people were just really destroying their AI companion because it had so much negativity in them. Do you think that is... still going to be the case? And how do you kind of accept that as a human interaction with AI companion?

I think it's entirely up to like the founder and the team to set those kind of principles. And one of the things which we saw when a lot of this technology was coming out and stuff like replica is that we felt that it could go to a dark place. And like, instead of standing on the outside and being like, that's really fucked up, we kind of wanted to actually get in and do something about it. So when I say like, it's up to the founder, there's like decisions that you can make where, for example, some of the things which have been happening on replica, or not specifically then let's just say like companion platforms which are positioning themselves as more of a companion girlfriend boyfriend type thing is that a relationship you're much more emotional and you lean on somebody else to help with your emotions and so naturally they have cases where people have learned on their emotions and they're like in a dark place and then the ai can't handle that well enough and then something happens like a suicide or something like that and from the beginning we knew that if we focus more on like the nsfw fun quick conversations and it's more of like an entertainment platform we're not trying to be something that we can't yet be with 100 certainty so we have like less of those types of conversations just as a one decision type of thing of our positioning. But then on the NSFW side, it's up to the team to choose how many guardrails you put in and how hard you work on making sure that the experience is safe. AI is just a tool. It's a technology. It's a thing that you can mold to be whatever you want it to be. So you can create apps using this technology where it's like, horrendous, just really despicable, dark things. And you can either do that on purpose, which we've seen some teams like lean into it. You can have some where they turn a blind eye to certain things like this, or you can like actually build in better consent and morals than like a lot of actual human platforms, which it's difficult to moderate every single conversation going on on something like, if you remember Omegle or like some of these platforms where you can just talk to random humans, you can't really moderate that at scale where With AI, if you choose to, you can build the moderation right into the kind of inception of the content and the creation of the content. So you can actually moderate much better at scale if you choose to. So as long as the team is like doing this for the right reasons and is principled and like in it for the long term, then I think this is actually like a potentially much better way to combat those types of conversations happening than leaving it up to like humans on humans and like some form of human moderation on the other side, which has like a whatever percent error rate or like miss rate.

Yeah, I kind of thought in that way too, but also at the same time, rather than them lashing it out on humans, it might be even better if the AI absorbs that negativity so that it doesn't happen in real life, right? I mean, that's another way to look at it.

Yeah, I think it's definitely interesting. And I think that's one of those things which I mentioned at the beginning, like this type of product or this sector then opens up quite interesting psychological problems and conversations. So I think like, research should be done i believe like at a low level is done on something like that where it's kind of a treatment for something which could be happening i guess the worry is like if a consumer team like a small startup is kind of making these decisions ourselves where we might be treating something for an existing problem we might be creating that problem for someone who like never had those issues in the first place and then kind of just falls into it with us so i think like a governmental, some form of body, which like works more closely on something like that should really look into this type of technology for like, as you said, if there are issues, you can kind of treat them or have a offering for those issues using AI where there's not like a human victim on the other side of it. But I think that's like a bigger question, which isn't something that should be dealt with by a team like us.

Yeah, I feel like I could talk to you about this for a couple more hours, but I totally left out the whole crypto side of things. So you will have an old token. You know, I'm assuming that the AI bots will also have create their own token as well. I mean, how do these kind of like relate to each other? How is it going to be used?

Yeah. So as you said, the plan is that the agents themselves, the characters themselves, both like the real ones representing real people but also the synthetic ones created by users will be able to create tokens for themselves with initially some like kind of ties to revenue so buybacks and burns those types of mechanics but i think as well like one of the compelling cases for crypto xai and like agents interacting with crypto is that it's a financial rail that they can operate on so like whether it's the individual owners of characters want to only accept payments in their own native token or something like the agent being able to scan the wallet of the person that they're talking to. And if you hold a certain amount of the token, they're nicer to you or they adjust the pricing or things like that. I think there's interesting things that we want to kind of be the layer in the protocol for and let people make these decisions themselves in a way. And then our token being kind of like that layer in that bedrock for it. So kind of enabling the creation of the characters and the function of the characters. And yeah. more things which we'll be announcing soon. But kind of, we just believe that tokenizing everything will kind of be the future. And what we saw with like Trump coin and things like that is like personal brands as well, having a token associated with it is probably going to be something that happens in the future. And then that like the stakeholder and economic participant part where if you have a favorite creator that you want to kind of like align yourself with and then be able to promote that creator to your friends and like just be a fan of that creator and make that creator bigger, this is a way to kind of like benefit from that in a financial way. And for the creator, that's obviously also beneficial for them. So I think it's just like another way of creators and fans getting closer together and like working together it's just a way to kind of tie that together financially

yeah i think a lot of crypto projects kind of launch like utility tokens with no actual utility you know in this model where you have like a fan-based token it does make sense right i mean there is an actual use case for it and it's already been explored even outside of the web3 space already so it's an existing model that

you could always use because sorry just to interrupt but like i think the issue before was that if you have a fan-based token but not all earnings of that creator on chain it's kind of like then a trust thing like okay i get x percent of whatever you make but like how do i know that you're actually kind of declaring all those different earnings to me but if it's like tied to the ai version and that ai version only exists in like a realm that kind of we're aware of and control and can see all the different things that it's doing you can actually take away that need for trust and make it trustless which is kind of what we all believe in and want to get to so i think it's like it's that concept but actually implemented in in an effective trustless way because it's an AI version of them, which we can see versus like the real version of them, which it's hard to verify.

And you mentioned about the two other platforms that you're looking to launch. I mean, you briefly mentioned about that, but could you explain to us more what they're going to look like and when you're looking to launch them?

Yeah, so one is just the API. So that's the models that are powering Ochat at the moment. It's kind of a B2B offering, which has people trying out our platform and enjoy our AI. They might want to integrate that into their own platform. So it's kind of like a more background part of what we're doing but it's kind of a side to it the other part is what we were just talking about there where a user is able to create a character launch that character receive the revenue that that character generates tie it to a token launch a token all that kind of stuff so that's what's coming out with this new platform it should be in the next few months that will be available

really looking forward to it i think i kind of reached the end of the recording are there any parting messages that you may have how can people continue to look for the progress of your projects about yourself

Our X is just O.XYZ, all spelled out. My X is NIC, O.XYZ, all spelled out. And I guess across Discord, Telegram, everything's kind of the same things. Keep an eye out on that. We're shipping things very quickly. Lots of exciting stuff happening. So look out for it. Awesome.

Thank you very much for your time. If you like what you hear, like and subscribe to Blockhead's Blockcast. It's all on your favorite podcast channels, Spotify, Apple. And for any juicy Web3 news, subscribe to blockhead.com. Thank you very much see you on the next episode.