As Facebook’s crypto project continues to lose talent, venture investors are giving alumni big bucks to do their own thing.
The latest example is Mysten Labs, a blockchain and cryptocurrency infrastructure technology startup founded by four former Facebook engineers, including Evan Cheng, who was director of research and development at Facebook’s Novi financial products unit.
Cheng, the CEO of Mysten, partnered with Sam Blackshear, Adeniyi Abiodun and George Danezis to start the company. They all worked together in Novi and departed in recent months.
Cheng told CNBC in an interview that Mysten just raised $36 million in a funding round led by Andreessen Horowitz. The cash injection will help the four founders build infrastructure technology to enable other cryptocurrency and blockchain-based companies to deliver technologies, Cheng said.
“We have been dreaming of doing something together for a long time,” Cheng told CNBC. “We are building infrastructure that, based on our previous research, will overcome many limitations.”
While the cryptocurrency market is booming with startups and investors, Facebook (now called Meta) has become an exporter of engineers, developers, and leaders.
Last week David Marcus, Novi’s boss, announced he was leaving after seven years with the company. Marcus was one of the founders of the Novi digital wallet and the Diem cryptocurrency. Fellow founders Morgan Beller and Kevin Weil left last year.
In October, Riyaz Faizullabhoy and Nassim Eddequiouaq left Novi to take top positions in Andreessen’s crypto team, which is called a16z Crypto.
“They’ve done an incredible job recruiting top talent over the last few years,” said Arianna Simpson, a general partner at Andreessen Horowitz, referring to Facebook. “So we’re excited to invest in the best founders, wherever they come from.”
Marc Andreessen, co-founder of the venture firm, remains on Meta’s board.
Facebook originally said it hoped to launch its cryptocurrency and digital wallet in 2020. The Novi digital wallet finally launched in October, powered by Coinbase. The Diem cryptocurrency, which is now run by an independent association, remains unreleased to the public.
In June, Andreessen Horowitz announced a new $2.2 billion crypto-focused fund. Mysten’s technology can benefit many of the company’s investments, Simpson said. The company is already working with Celo, an Andreessen-backed company that is working on a global payments platform.
“They’re really seeing a lot of interest from other companies in our portfolio,” Simpson said. “What they’re doing requires such a degree of technical expertise and really deep knowledge that sometimes even for very talented technical teams it’s a little out of reach.”
Cheng said that Mysten is embracing the business model that many other crypto projects are following. Instead of generating revenue from products and services, the company plans to hold tokens for the various blockchains it is working with and expects to profit as their value grows.
“We’re not building a service where we charge other people money to use this,” Cheng said. “Our partners get the benefit of having access to the technology and we become co-owners of their network. In return, we get back a portion of the network’s shares. So it’s a mutually beneficial type of relationship.”
Cheng said that while he enjoyed his time at Facebook and remains optimistic about the company’s efforts in cryptocurrency, it was very difficult to launch Novi and Diem “given the regulatory framework.”