Stablecoin Statesman

Driving to Facebook, in Menlo Park, on a late-November day, my Uber driver and I soon get lost amid Facebook’s multiplying campuses. The press rep has told us to look for Building 52, but that’s easier said than done. We inadvertently tour the original 1 Hacker Way Campus with its famous sign (and many yellow, red and blue buildings), and then, taking a wrong turn, inspect parts of the glassy new Frank Gehry-designed West Campus (which has many trappings of an actual town).

Eventually, after a U-turn, we find where we need to go. Or almost. Luis drops me short of 52, and I cover the last bewildering yards in a Facebook shuttle bus moving incredibly slowly. I’m immediately struck by the extent of Facebook’s footprint, such that it would 1) run shuttle buses and 2) have no end of numbered brightly-colored buildings along the Californian sound.

The home of Facebook’s blockchain subsidiary, called Calibra, is modest compared to the other offices: a two-story concrete-sided building typical of a suburban business center. The interiors are no more flash: unfinished wood, a cement floor and plenty of Calibra ads featuring diverse teenagers smiling for no apparent reason. There’s an elaborately stocked snack bar for the workers, but that’s about it.

I’m here to meet David Marcus, the 46-year-old French-born co-founder of the Libra Association, and head of Calibra. Marcus, a lifetime entrepreneur and ex-president of PayPal, has been at the center of a maelstrom since the June launch of Libra. He has appeared twice before Congress to answer for Libra, tried to keep 20+ partner companies and organizations on board, and met with numerous regulators, officials and members of the media, many of whom either don’t understand blockchain technology, or don’t care enough to know what they don’t know. Through it all, Marcus has taken it on the chin, showing few signs of fatigue or impatience.

Marcus is the urbane, quick-witted face of the Libra project, the entrepreneur who does not crack under pressure, despite constant haranguing from all quarters. When Mark Zuckerberg says Facebook may not be the “ideal messenger” for Libra, he has Marcus – who is warmer, more cosmopolitan and better spoken than his boss – to take up the mantle.

Friends say he is persistent and resilient. “That type of opposition and that type of resistance, I think it is what fuels him,” says Hill Ferguson, who worked with Marcus at Zong, a mobile payments company, in California.

The only question is whether anyone, even someone as accomplished as Marcus, can convince the world to trust Facebook with the future of money. After a series of recent scandals (Cambridge Analytica, Russia), Facebook’s reputation has plummeted in Washington, making regulatory approval harder to come by. Facebook says it wants to get an official go-ahead here first before going global.

In five months since launch, Marcus has maintained an enviable sangfroid and looked every inch the corporate statesman. If some journalist hasn’t speculated already about a future political career, now might be time to start tongues wagging about a run for office. This guy can keep his head while other heads are flagging, even if what he is fighting for is open to scrutiny and perhaps even censure.

Marcus comes into the ugly conference room where we’ve set up for filming dressed casually in a green shirt and sneakers. In person, he is friendly, unassuming, and at ease. His hair is short and combed to a peak above his forehead. He has discarded the frameless glasses he sometimes wears in public appearances. As we speak, he sits calmly in the garish purple chair we’ve dragged in from the hallway. He never shifts eye contact and answers questions directly, if a little too on-message for a journalist’s liking.

I ask if he’s frustrated by the reaction to Libra.

“Of course, it’s been a bumpy road up until now, just given the amount of inputs that we got,” he says. “But it’s not frustrating to me, because I think that it’s all part of the process. I was certainly expecting a lot of feedback.”

Marcus puts this “feedback” down to Facebook’s “distribution” (another word for its size and reach) and “the fact that Facebook is involved in it,” he says. “When those two things are combined, it just creates a lot more scrutiny. Which I think is deserved.”

“I try not to really pay attention to what is pure backlash, and hone in on what is the reason behind some of the backlash,” he adds, mentioning the risks of money laundering, terrorism funding and sanctions violations. “When it comes to money and the way money moves around the world, there are a lot of vested interests for things not to change.”

Marcus, who moved to Geneva in his teens, started his entrepreneurial career with a series of disruptive telecoms startups. He likens the current state of financial services to telecoms in the 1990s, when it cost an arm-and-leg to make a phone call, just like it costs a lot to transfer money today. Then came Skype, WhatsApp and cheap cell phones, and suddenly calling your cousin in Lagos was no more expensive than Slacking your friend in the next cubicle. Marcus thinks money transfers are ripe for the same kind of upheaval, if only regulators and politicians would open their imaginations to the possibilities.

“I participated in the liberalization of the telecoms market in Switzerland. And there was definitely always something in me around the injustice of a large institution charging more than [it] should and how that impacted a lot of people,” he says.

“We now are in a world where anyone with a $30 smartphone can have unlimited communications for free. We hope we can do something similar with how money moves around the world with Libra.”

Growing up in Geneva, Marcus might have chosen a career in banking or insurance (his Romanian father was a banker). Instead, he always wanted to be a tech entrepreneur.

He started coding aged eight, dropped out of the University of Geneva before finishing a degree, and started his first business (GTN) with three friends and a bank loan of just 100,000 Swiss francs (about $100,000 in today’s money). They sold GTN, an ISP and long-distance telecom provider, to Global Access in 2000.

The same year, Marcus set up Echovox, which did SMS voting for TV shows like Pop Idol in the UK. He moved to Silicon Valley in 2008 with his third startup, a mobile payments provider called Zong, which was later bought by eBay for $240 million. When Marcus was drafted to become PayPal’s president in 2012, he went from managing a team of a few hundred to one of 15,000. He joined Facebook, to run Messenger, in 2014.

Marcus didn’t always have the confidence and assurance he displays now. “He was very successful in Switzerland, but coming here to the U.S., he has grown tremendously,” says former Zong colleague Ferguson, who now runs a telemedicine startup. “He’s always been optimistic and determined. The key to his success is just his persistence – he is willful to get something done. It’s always been a trait that I really admire.”

Once settled in California with his family, Marcus quickly built a network of mentors and friends who could help him advance.

“Silicon Valley is a place that generally likes to help and he has a natural ability to cultivate that. Within a few years, he was the president of PayPal. That tells you about who he is,” says Ferguson.

Marcus still speaks with a slight middle-European accent. But in every other respect he is a can-do Silicon Valley entrepreneur. He radiates optimism and sees business as a challenge to solve tough problems that others ignore.

“For some reason, even though I’ve lived more time outside of the U.S. than in the U.S., I've always been kind of an American citizen at heart,” he says (he has since become an actual U.S. citizen).

“Entrepreneurs and creators must have optimism, otherwise they don’t end up creating the companies that we all enjoy services from. It takes a great deal of optimism to actually suspend disbelief and continue to press on with very hard things to reach these levels,” he says.

Libra launched in June and ever since it’s been under attack.

Maxine Waters, chair of the House Financial Services Committee, asked Facebook to pause operations, pending a review. French Finance Minister Bruno Le Maire vowed to block Libra in Europe, citing its “political” ambitions. Key initial partners, including Visa, Mastercard, PayPal, and others, pulled out. The Financial Times, a marker of elite opinion, described Libra as “nonsensical, pointless, stupid, risky, badly thought-out and blockchainless.” More than a few pundits have questioned whether Libra, which is seeking U.S. regulatory approval before going global, will launch as planned in 2020, if it launches at all.

Perhaps this should not have been surprising. Libra is ambitious and novel and Facebook is increasingly unpopular these days for lots of reasons that have little to do with digital money. Still, the backlash has been fierce. It’s likely that no company has ever faced such a reception for a product launch, especially for a product that has a decent chance of helping lots of people. What’s more, other controversial organizations – including JPMorgan and the People’s Bank of China – have also proposed stablecoins and faced nothing like the same reaction.

When Facebook unveiled Libra in June, it may have been the internet’s most important moment since bitcoin came barreling into view in 2008.

Here was a business of incredible scale proposing something radically consequential: a global payments system outside the control of commercial banks, and perhaps competitive to central banks. Finally, it seemed that a company – or an association of them – was about to make good on borderless money, the idea that value should move as easily and cheaply as email.

Marcus said in congressional testimony that Libra is a different animal from Facebook proper. It won’t control the multi-party organization: Marcus is one board-member among five.

“We have done a lot to democratize free, unlimited communications for billions of people,” he said in D.C. “We want to help do the same for digital currency and financial services, but with one key difference: We will relinquish control over the network and currency we have helped create.”

“Trust me, you know, if you were experiencing any of our days here, you'd realize that we're very much in a democracy,” he tells CoinDesk now. “It’s a democratized process where we have a lot of different constituents. No single private company or company or entity should control a network of payment networks such as Libra.”

Libra presents an exquisite dilemma for anyone who indulges the dream of peer-to-peer money encapsulated in the bitcoin white paper. Libra shares some of bitcoin’s big ideas, particularly in disintermediating banks and governments. But it offers none of that network’s un-censorability and pseudo-anonymity.

Marcus’s own views on bitcoin have evolved. In 2012, while at PayPal, Marcus became fascinated with the premier cryptocurrency, buying it and studying it. At one point, he even considered setting up a crypto exchange, according to Nathaniel Popper’s Digital Gold, a history of bitcoin’s early days. Now he’s more dismissive. He says, 11 years in, bitcoin has shown itself to be a poor medium of exchange, useful for little other than storing value and holding on to it.

“If you’re talking about a medium of exchange that is used by hundreds of millions, if not billions of people, and you want anti-money-laundering and identity on the platform, all these things have to be different [on Libra],” he said. “That's just the reality of the world we operate in. But I do think that bitcoin and Libra are going to end up being very complementary to one another, and serve very different purposes.”

That doesn’t please bitcoiners and ethereans.

“It’s not an internet open standard that was born on the internet,” Twitter and Square CEO Jack Dorsey, who has invested in bitcoin technology rather than a Libra-like system, said this year. “It was born out of a company’s intention, and it’s not consistent with what I personally believe and what I want our company to stand for.”

Ethereum co-founder Joe Lubin likes the idea, not the company. “Facebook does not need to be the one to do this: in fact, they definitely shouldn’t be,” he told CoinDesk.

“With 2.3 billion users, and the track record it has of exploiting and manipulating users and improperly managing the security of their data, leading a project like Libra and Calibra is a problem,” Lubin continued. “Facebook deploys advertising technology to exploit people’s personal information and attention, and as a negative externality has become a weapon of mass social manipulation.”

Facebook has consistently broken promises to protect people’s privacy and has, arguably, co-opted the ideals of the internet’s founders. Facebook’s version of the web isn’t a system of open protocols for information transfer. It’s a classic walled garden where it owns our data and identity and expects us to be grateful for it.

Marcus has partners, and he may not control Libra. But he does plan to control a key on-ramp: a wallet to store and move around coins that eventually could be a platform for all kinds of financial services (and data gathering). Aside from his role at the association, that is Marcus’s main focus: to build the best wallet possible for getting in and out of the stablecoin.

In theory, Facebook will face competition from companies wanting to build their own wallets, but that seems somewhat unlikely. If you ran a software company, would you build a product to compete with Facebook on a network it incubated and birthed into the world?

“It is not a walled garden,” Marcus says, rejecting the idea of a captive market. “From day one, the access is the same for anyone. Wallets like the Calibra one will have to compete on all sorts of dimensions from price to features to privacy. It's going to be a very competitive network. And that's definitely the way that we hope it plays out. Because if it plays out that way, then consumers would benefit from a great deal of choice and more competition.”

In many ways, Facebook is exactly the company to take the dream of money-like-email forward: it has 2.3 billion users a month, some of the world’s best engineering talent (handpicked from Marcus’s extensive contact book), and it just knows what it is doing in ways other companies don’t. Any outfit that can convince 2.3 billion people to reveal their most intimate feelings and desires can probably convince a few folks that transferring money with a stablecoin is a better idea than using, say, Western Union. After all, it’s not a hard sell: on average, internationally, it costs 7 percent of transfer amounts to send money cross-border; in some corridors, it’s appreciably more costly than that.

Facebook could save the world billions in financial services costs if it implements its stablecoin platform. There are some 1.7 billion “unbanked” along with many more who arguably pay too much for financial services, like you or me, who could benefit from that. Facebook’s do-good mission here seems real, because implementing a stablecoin, like Libra, may be the right thing to do to drive down costs, even if critics these days would prefer that Facebook wasn’t, to some degree, running the project.

It’s up to Marcus to square the circle: on the one hand, advocating for a world of cheaper financial “communications,” and on the other, answering for Facebook’s reputational problems. Marcus will need every ounce of optimism in the months ahead as he faces the continuing backlash against Libra. He is expecting more resistance from politicians and regulators next year; If Libra cannot get regulatory approval next year, it may not be able to launch until 2021.

“I’m assuming that things will get harder before they get easier, just because this process and this project is really looking at rewiring the way that money moves around the world. It will be hard to change those things,” he says. “There’s a good reason they haven't changed for the most part of the last half a century.”

This post has been updated to include a missing last paragraph and to clarify the timing around Libra’s launch.

The paintings in this article were commissioned from Trevor Jones, an artist based in Edinburgh, Scotland. Trevor became fascinated with art and tech collaboration soon after graduating from university in 2008. He was one of the first professional painters to incorporate augmented reality. Since 2017, his work has concentrated on cryptocurrency. These original oil paintings will be auctioned by the artist at Bitify.com, with 20% of the sales being donated to two worthy charities, BitGive and the Manny Pacquiao Foundation. Contact Trevor at trevorjonesart.com / @trevorjonesart for more information.