Once a $1B unicorn, Tampas Pocket Network eyes rebound from crypto crash

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Even by the up-and-down standards of the Web3 industry, Michael ORourke had a wild first half of the year.

Greece, Spain, Amsterdam, Dominican Republic, Colombia, Argentina, France I was probably home a month and a half out of six months, said the founder and CEO of Tampa blockchain services startup Pocket Network. For the rest of 2022, outside of things I actually have to be at, Im going to be at home here in Tampa.

Even at home, things probably wont slow down anytime soon. Since launching its services two years ago, Pocket Network has become one of the most buzzed-about tech startups in Tampa, raising more than $22 million in funding and building partnerships with developers all over the world.

A big highlight came in January, when the company received an estimated valuation of $1.5 billion, making it a rare unicorn in Tampas developing startup scene. ORourke said that based on the value at the time of POKT the in-house token that developers must stake in order to connect to a blockchain through Pocket the company was actually worth closer to $3 billion. But then POKTs value fell alongside that of Bitcoin, Luna and other cryptocurrencies. While startup tracker Pitchbook still has it listed as a unicorn, Pockets current market cap is closer to $100 million which is no small feat in itself.

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ORourke who graduated from Wharton High School and the University of South Florida still believes in the democratized, decentralized power of Web3, a version of the internet built on blockchain technology and the cryptocurrency marketplace. Headquartered at Tampa startup hub Embarc Collective, Pocket has 57 employees across 15 countries, its eyeing another funding round this fall, and ORourke believes it can be profitable by the end of 2022.

The important part is were actually building marketplaces for others to come in and participate, not just us, he said. I view this as were building a country, less so a company.

On a recent call, ORourke, 33, talked about Pocket Networks rise and valuation, the state of the cryptocurrency industry and more. AThis interview has been edited for length and clarity.

Do you have an elevator pitch for Pocket Network? How do you describe what it is to people who have no idea how the blockchain works, or even what it is?

When you load a webpage and it takes half a second or a second, were the thing you use to load that data on your webpage. In our case, its specific Web3 applications like wallets and games and DeFi (decentralized finance). That data comes from services like Pocket.

Can you give me examples of how companies are using Pockets technology?

Lots of DeFi apps are using us. I think the largest one is Aave. When you go to the Aave website, and you see your ethereum balance or your Aave token balance, part of that comes from Pocket.

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Thats a good question. I was born in the Dominican Republic but raised here, and Ive used Western Union a ton of times to send money to my family, because they all live in the DR I worked at a couple of local credit unions here, selling loans. I saw thousands of credit reports, and I saw how hard financial systems can be for people. Then 2013 is when I got into bitcoin, and I really started to believe in it. I became a developer and started working with different APIs (application programming interfaces), whether it was Google, Twitter, Facebook. And you can see how for things that are effectively public goods, but run by single leaders, they just make one change and it screws everything.

Did the pandemic act as a speed bump in your development?

No in the development (of Pocket), yes in the prospects for funding, at least at the time. We had to cut wages by 20 percent. We did that for 10 months. We ended up launching in July 2020 with about two and a half, three months of runway left. And thats when we actually managed to raise about $9.5 million. Once we launched it and proved it worked, they said, Okay, these guys actually believe they can build it.

Related: At Tampa’s Synapse Summit, all eyes on Florida’s tech innovation, growthMarket caps and valuations are always a little flimsy, because you never really know how much a companys actually worth. If the valuation of Pocket was $2.5 billion or more in January, and now its $100 million or so, its not like you’ve lost $2.4 billion. But its a big change. What does it mean to you that that valuation has changed so dramatically?

It doesnt matter to me, outside of certain conversations with (cryptocurrency) exchanges and custody providers. My view is that if we build something useful, if we build a sustainable two-sided marketplace, the value will fall to that. Ive been in this space long enough to see 95, 98 percent corrections, and not really care. So long-term, the price doesn’t really make a difference. If we build value, thatll follow.

Is the decline in Pockets valuation a function of the cryptocurrency crash in the last six months?

Once we got listed (on cryptocurrency exchanges), we got pretty correlated with the rest of the market. Its also a result of the costs of the network, actually. At one point, the network was costing and when I say costing, I mean the cost of the infrastructure that people are running to operate the network somewhere on the order of $40 – $45 million a year. Thats a lot of sell pressure to cover costs. That triggered the community and us to find better efficiencies for the network. We sacrificed efficiency for distribution, effectively. We wanted to prove that this network could operate at scale, and now were going towards efficiency and sustainability.

Related: Crypto firm Coinflip opening Tampa ‘experience center’ at Sparkman WharfIf the biggest blockchain story during the first half of the year was cryptocurrency and the crash, the biggest blockchain story over the second half of the year will be…?

Regulatory scrutiny. Across the board, would be my guess.

Does that concern you?

Not us. Were not in DeFi. Weve really done everything as above board as we possibly can. Were operating in a gray area. If we get a love letter from the SEC, well be happy to show them everything, but it doesnt concern our space so much. It more concerns me on the level of regulating stablecoins, DeFi, that sort of thing. My concern is blanket stuff rather than sensible things.

Has the year impacted you outside of work? Youve been investing in bitcoin for a long time, so your personal fortunes have probably dipped along with that.

Last year, I sold everything and bought Pocket. So Im going down with the ship.

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