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Questions and Answers with Stellar Co-Founder, Jed McCaleb

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Jed McCaleb
Jed McCaleb

Jed McCaleb spends most of his time thinking about how to advance technology and how to use it to make the world better. He believes in leveraging technology to decrease inefficiency and improve the overall human condition.

Jed McCaleb is the creator of eDonkey2000, the biggest peer to peer file sharing network of its time. eDonkey was the first network to implement multi-source downloading and the first application of the Kademlia DHT. Jed is an advisor to MIRI (Machine Intelligence Research Institute at Berkeley) an organization that researches artificial intelligence (AI) for positive impact. He is also the creator of Mt. Gox, which was the first Bitcoin exchange.

Today, Jed leads the technical development team of Stellar. Stellar is an international financial network whose aim is to increase the economic contribution for all people. It is supported by the Stellar.org, a nonprofit organization that combines digital financial mastery with technology and contributes to the open-source software.

The Stellar Foundation

The idea behind Stellar was to link the world’s financial infrastructure. After realizing that too many people in the world were being left without resources due to broken financial infrastructure, Jed McCaleb and Joyce Kim cofounded Stellar Development Foundation in 2014.

Jed has always had an interest in Bitcoin. Once he was able to understand that Bitcoin distributed database could be used to solve other things other than creating a new currency like connecting financial institutions, he knew that he could use this technology to change the world for the better. Although Stellar was inspired by Bitcoin, it focuses on using its open source financial network to link siloed financial institutions. Bitcoin is used to transfer value from one individual to the other, whereas Stellar is used to connect these different financial bodies to each other.

According to the World Bank, 2.5 billion people across the world, who make up at least half of the adult population, are unbanked. These people do not have access to bank accounts, and they cannot save money. Also, in case they need to transfer money to their family, also known as remittances, the cost of transferring their money is astronomical. Financial institutions around the world cannot afford the maintenance costs associated with serving low-income people. Also, transferring money is costly due to inadequate connections between financial institutions.

The main aim of Stellar is to use an open-source fiscal network that ties the unrelated, siloed institutions together to allow the movement of money seamlessly and affordably. So far, there are already businesses and nonprofits implementing Stellar as a financial infrastructure, especially in the developing world. A good example of such institution is the Praekelp Foundation in South Africa. It has integrated Stellar into Vumi, an open-source messaging application that allows young girls in South Africa to save money in Airtime credits.

How does Jed McCaleb run his days?

Jed spends most of his days running a small team to balance between managing his businesses and leading technology development. He claims to have two modes of work- focused mode and reactive mode- which help him become more efficient.

When he is in his Focused Mode, he spends his time coding and building. When he is in his Reactive Mode, he spends his time replying to emails, request and all other things that revolve around running a business.

What technological trends fascinate him?

Jed McCaleb finds artificial intelligence both exciting and petrifying at the same time. He sees AI as an immensely powerful technology. According to Jed, in less than two decades, this technology will be able to solve a lot of problems, making people’s lives easier. This kind of technological advancement has only been seen in the agricultural revolution. It is for this reason that he has donated to MIRI to make sure the future generation of AI software is safe as well as to become an advisor.

What makes him a more productive entrepreneur?

Jed McCaleb spends a good portion of his time thinking about the best strategy possible and overall plan. When he is in the middle of a project, he tends to focus his time on what is necessary to get the job done. He does not linger or go beyond what is necessary and is very diligent about letting the unessential interfere with his work. Jed McCaleb believes that no matter how productive you are, it is all for nothing if you are building toward the wrong goal.

What is his advice to entrepreneurs?

Jed advises entrepreneurs to avoid focusing their energy on niche things. He urges them to focus on bigger ideas as their rewards are so much better than for the niche products. He also advises them to focus more of their time on creating great products instead of marketing them. The internet makes it easier for great products to flourish, especially if they can fill a need efficiently.

How does he overcome failure?

As an entrepreneur, Jed McCaleb reports having had multiple failures. However, he does not let his failures stop him. He understands that as an entrepreneur failure and endless setbacks are a part of the journey, and as long as you do not give up, you will succeed in the end.

What software and web service does he use and what does he love about them?

Jed McCaleb loves Stack Overflow and Google Docs because of how they work. Google Docs is easily accessible and makes teamwork easy. Stack overflow makes it scale easier to find answers, especially when programming.

Any book that he would recommend for people to read and why?

Jed highly recommends reading Black Swan. This book expounds on the principle of the Black Swan and the idea that certain activities led them to unplanned events like when the stock market crashed in 2008. And while economics and statistics are based on the Bell Curve, it is not always how things work. For instance, some businesses that fall in the bell curve like beauty salons and restaurants are not too risky, but they do not have immense upside potential.

Overall, he suggests that when starting a business, entrepreneurs need to be aware of their risk tolerance as well as understand what category their business falls into. Also, if possible, they should structure their business so that it can benefit from the upside potential.

Who are his biggest influencers?

Jed McCaleb’s thinking is influenced by Daniel Kahneman, a psychologist, and Author of the book “Thinking Fast and Slow.” He is also influenced by the Center for Applied Rationality (CFAR). These two resources relate to rationality and try to explore why some people fail. They deliberate on a long list of rational biases that people have, which tend to lead to their failures. They also show how being aware of these biases can be beneficial to you when making decisions.

Watch Jed McCaleb’s Demo Session on Stellar here:

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