Bitcoin Billionaires

by Ben Mezrich

  Cameron had refused to let his optimism fade. But as he followed Tyler through the crowd, passing tables weighed down by pitchers of beer, mountains of fries, charred burgers and dogs, he wondered if the stares he was getting were indicative of something new.

  He pushed the nagging thought back down, as over his brother’s shoulder he caught sight of a squirrely-looking kid. Freckled, skinny, a dagger-like face under a shock of red hair, wearing a bright green T-shirt, the kid was sitting alone at one of the round tables, a half empty pitcher of beer in front of him, three filled glasses at the ready.

  Tyler reached the table first, and the kid was half out of his chair a second later, nervous and sweaty and shaking their hands like he was trying to pump water out of a well. He was smiling, but even before Cameron had taken a seat next to Tyler, Cameron could tell that something was wrong. He slid into one of the stained, wooden booths that was covered in the carved signatures of past patrons. Even here, entrepreneurs were striving for immortality, the chance to be remembered forever. Being memorialized on a few inches of wood in the heart of Silicon Valley was better than nothing.

  Just a half day earlier, on a phone call before they’d boarded the plane for California, this same kid—his name was Jake, he was two years out of Stanford, and his company had just pivoted from mobile advertising into the realm of VR—had been exploding with enthusiasm. Jake was going to be the first real investment of Winklevoss Capital, to the tune of one million dollars.

  But less than a minute into the conversation, before Cameron could even taste the beer in front of him, Jake had launched into an apologetic monologue, a sort of verbal yoga tied in so many knots it was hard to understand what the hell he was apologizing for. Until the end, the last few sentences, which were abundantly clear.

  “See, guys, I’d really like to take your money. I thought we were going to take your money. I talked to the board about increasing the size of our round, and um,” he sputtered, “they say we’re already oversubscribed, and, like, we have to turn you down.”

  Cameron could see the splotches of red growing on his brother’s cheeks. He decided to speak first, before his brother let his anger get ahead of them. Maybe there was a way to salvage this situation.

  “But when we spoke earlier, you weren’t oversubscribed. That was about eight hours ago. You wanted us on your cap table, we were already talking about giving you free office space when you expanded to New York. Are you saying something changed while we were in the air?”

  The kid ran a hand through his hair.

  “Yeah, um, yeah, we got like, oversubscribed.”

  “Just be straight with us. We flew out here to sign the stock purchase agreement. Out of respect, just tell us what the hell is going on.”

  The kid paused, then glanced around them at the nearby tables. People were looking, but nobody seemed close enough to hear. Then he leaned forward, lowering his voice.

  “Between you and me, I want to take your money. I just can’t. We’re oversubscribed. Guys—I gotta go.”

  He started to rise from his chair. Tyler looked like he was about to reach out and grab the kid, but Cameron kept his voice calm.

  “Come on, Jake, give us a minute. Oversubscribed? Our dollars are as green as anyone else’s. Please, tell us what’s going on. We deserve that much.”

  “It was a hell of a long flight out here,” Tyler added, evenly.

  The kid looked around again, then lowered himself back in his seat. He took a drink, rather gulp, from his beer mug, then shrugged.

  “You see where we are, right? Facebook’s first headquarters, you could throw a hard drive from here and hit it. Their new headquarters is about five miles down that road.”

  Cameron felt himself sinking farther into the booth. He had an idea of where this was heading.

  “You see those kids at the table next to us?” Jake continued. “I know them, they were in my class at Stanford. They’re working on a startup to make digital postcards. What do you think their endgame is? Those guys by the arcade machines in the corner? They’re working on video compression. Their exit strategy? They’ve all only got six weeks of runway left before their startup runs off a cliff.”

  Entrepreneurship was a game with historically bad odds: most startups failed gloriously, which meant that every entrepreneur had to go into the business with a plan B, C, D, etc. Silicon Valley was a town made up of engineers who thought in frameworks, decision trees, and game theory. Everyone needed money—but just as important, optionality. When things went bad—and for 99 percent of the people in that restaurant, they would—a face-saving acquisition, or “acquihire,” by a larger company like Facebook would ensure future funding for their next startup idea.

  “It might be optics,” he continued, “but optics are important in a land of dreamers. They might want your cash, they might not have anything against you, in fact they might really like you, but they don’t want to cut off all the branches on their tree either. They have other investors too, as well as board members—you think the suits would let them take a penny from the two guys Zuckerberg hates more than anyone else in the world? Your dollars might be green, but they’re marked.”

  “This is crazy,” Cameron said. “You make it sound like we couldn’t even give our money away if we tried.”

  The kid didn’t even crack a smile.

  “Not here. Right now, we might as well be sitting in Facebook’s cafeteria. Every restaurant in the Valley—all anyone is talking about is Facebook. Who are they going to buy next? How many millionaires are they going to mint tomorrow? When are they going to IPO? You should be glad this place will even serve you a hamburger.”

  Silicon Valley may have been an oasis for tech entrepreneurs, but for the twins, even sitting literally in the Oasis, it might well have been a desert.

  The kid took another chug of his beer. Maybe he hadn’t meant it to come out so harshly, but his words hit Cameron like a ton of bricks. All his optimism—gone. The fire of redemption that had been growing inside since they’d left Lake Carnegie and the Olympics behind, the exuberance that they could start over and change the narrative and still be part of the entrepreneurial world—stripped away, smothered, left for dead.

  This too somehow, Zuckerberg had taken from them.

  Jake stood up again, his eyes apologizing, and then reached into his pocket and took a crumpled twenty-dollar bill out of his pocket. And Cameron and his brother watched as this kid, who probably didn’t have enough money in his bank account to buy a proper wallet, dropped the crumpled bill on the table in front of them.

  Because in this place, this young entrepreneur chasing his dreams was afraid to be seen even letting the Winklevoss twins pay for his beer.

  4

  IN THE BEGINNING THERE WAS FOAM

  July 2012.

  Three A.M.

  Ibiza.

  A Mediterranean party island ninety miles off the coast of Spain.

  When you’re six foot five, 220 pounds, and there are two of you, you can’t just curl up and disappear …

  Tyler used his oversize shoulders to push his way through the middle of the crowded dance floor, lowering his head every few minutes to dodge half-naked acrobats swinging from rubber cords attached to the ceiling. The music was so loud Tyler could feel it in his bones, a throb of electronica that seemed to come right out of the ground. Along with the acrobats, giant neon cherries bobbed down over the mob of beautiful people that surrounded him, and every few minutes he had to shield his eyes against pinwheels of brightly colored laser lights playing across the undulating revelers. The crowd was young and lithe and perfect, but Tyler wasn’t looking to meet anyone tonight and did his best to resist eye contact when he wasn’t shielding himself from the retina-burning lasers. At the moment, he wanted nothing more than to be anonymous. As if that was even possible; at thirty, Tyler hadn’t been anonymous for as long as he could remember.

  To be fair, this hedonistic dance floor lodged along the coast of one of
the most beautiful party islands in the world wasn’t the sort of place you went to blend in; Pacha nightclub, a former “finca”—Spanish ranch—turned disco—had grown into the premier stomping ground of the European elite, as well as a decadent playground for Hollywood royalty. Young people from all over the world descended on the club, famous for its multiple dance floors, multimillion-dollar sound system, VIP rooms, and celebrity DJs. In fact, that very night’s party was called “F@@k Me I’m Famous”; on the way to his and his brother’s VIP table, he’d passed Naomi Campbell, Kate Moss, and Paris Hilton. And even Hilton had stared at him as he’d passed by. He’d done his best to pretend not to notice.

  “Well, this is sufficiently insane.”

  Tyler stumbled through the lasers and the crowd toward the voice, and nearly ran right into himself. Cameron grinned, giving him a facetious thumbs-up. Cameron was wearing a ridiculous lei made of flowers and bright red cherries around his neck. There was also a fleck of foam on his cheek, the remains of another party going on next door—where, Tyler assumed, the dance floor was periodically flooded with white bubbles. Wonderful, he thought. I guess it could be worse. I could be miserable and covered in foam.

  Now that he was with Cameron, Tyler felt even more conspicuous. When you were an identical twin, of course you got noticed; in high school, it had mostly been affable curiosity. Not only did they look the same, but they had also been rowers who had been training together since freshman year of high school, and pretty much everyone in Greenwich, Connecticut, knew who they were. At Harvard, it was much the same: they were big names on campus, varsity athletes who were also prominent members of the Porcellian Club, the most elite of the final clubs, a place that had groomed presidents and kings.

  “What the hell are we doing here?” Tyler finally responded as his brother surveyed the crowd around them.

  “Having fun, I think.”

  A glow-in-the-dark beach ball bounced perilously close to Cameron’s head, then continued on its haphazard journey across the top of the crowd.

  “Do I look like I’m having fun?”

  “You could try the foam party,” Cameron said. “But don’t swallow any. I’m pretty sure that’s how you get Legionnaires’ disease.”

  Tyler pointed toward a bar at the far end of the hall, draped in women wearing bandoliers of glowing test-tube shots. Although alcohol seemed almost redundant in a place built on such sensory overload, Tyler figured it was the appropriate way to end their evening.

  It felt strange, being on vacation. He and his brother hadn’t taken a real vacation in their entire lives. Usually free time had meant training; after they’d graduated from college, they had trained six hours per day, six days per week, fifty weeks per year—taking only two weeks off to recharge after each season.

  But that was over now; they weren’t competitive rowers anymore. Likewise, apparently, they weren’t investors either. After their meeting at the Oasis, after Jake had gone off script and told them the real reason why they hadn’t been able to make any headway in their quest to become Silicon Valley venture capitalists, they had retreated back to New York. It seemed completely absurd; nobody would take their money, because everyone’s endgame was the same. Facebook had become this huge vacuum, sucking up every entrepreneurial dream in the area, and that meant Tyler and Cameron were poison. They had a last name that nobody dared put on their cap tables, no matter how badly they needed cash. Winklevoss money was the kiss of death.

  Tyler had thought they’d hit rock bottom before, but they had dived even lower. Back in New York, taking stock of the situation, they had tried to figure out what to do next.

  Simply taking their settlement, no matter how much it was, and walking away wasn’t a possibility. Maybe Eduardo Saverin, the other Facebook castaway who had successfully settled for much more than Tyler and Cameron—reportedly billions—could take the money and run, but they couldn’t; it just wasn’t in their DNA. Saverin was rumored to be living a high life in Singapore—but Tyler and his brother felt they were cut from a different cloth.

  Even so, they had to face reality. They refused to give up, but maybe they needed to recharge, reset, and find a new path forward. It had been Cameron’s idea to try to do that in Ibiza. Tyler had regretted the decision from the moment they’d gotten on the plane. They were single, young, and enjoyed a good party, but they had always had a plan. It was hard for Tyler to adjust to living in the moment.

  He was halfway to the bar, staring at those evil-looking test-tubes, already thinking about hopping the earliest flight back to the States, when a stranger caught his arm, stopping him with a grin and a heavy Brooklyn accent.

  “Hey, are you the Winklevii?”

  It was a nickname that had been given to them in high school and later immortalized by the movie, one that had stuck in the press.

  “We’re actually on our way out,” Tyler tried, but the guy wasn’t going to give up so easily. Tyler looked at him: young, maybe early thirties, muscled and compact, pectorals pressing out against an open, short-sleeve shirt. He had wild eyes and a tightly shaved head, but his smile seemed friendly enough.

  “I need to talk to you about something. Something important. Revolutionary, really.”

  Cameron had caught up and seemed more amused by the man’s aggressive approach than Tyler was. Cameron was like that, sometimes. Tyler didn’t suffer fools, but sometimes Cameron felt the fools were the most fun to hang out with. In Ibiza, that was probably truer than in most places.

  “We’ve already taken part in a revolution. It didn’t work out that great for us. But thanks anyway.”

  “Facebook?” the guy said. “Facebook isn’t the revolution anymore. Facebook is the Establishment.”

  Sounded crazy, but Tyler knew it was true. What had started as a revolutionary idea, putting people’s real-life social networks online, upending the way people met one another and communicated and shared, had once been new, almost indie and rebellious. But in the few years that had passed, even in the months since that meeting at the Oasis, Facebook had come to dominate the internet, sucking the oxygen out of the Valley, corralling massive amounts of data and monetizing information in such a way that for many, Facebook often seemed more Big Brother than Robin Hood.

  “So what do you have in mind?” Tyler asked. “Another social network?”

  The man smiled again, then did something truly confusing. He reached into his pocket and pulled out a U.S. dollar bill.

  “Hell yeah, man. The oldest social network on Earth.”

  5

  THE BASEMENT

  Charlie Shrem descended the stairs two steps at a time, keeping one hand against the unadorned cinder block wall to his right as he navigated the narrow slabs of wood that went down, down, down into his basement command center, his operational headquarters, his corporate throne room—his bat cave.

  Every nerve in his fragile, five-foot-five-inch frame was firing in tune to the freakishly loud EDM music piping through the plastic buds jammed into his ears. He’d been on an electronic music kick for two weeks straight, ever since a friend from college who’d taken a job at one of the investment outfits on Wall Street had taken him out to celebrate the impending launch of Charlie’s new company. His friend had got him past the line at one of the clubs over the bridge in Manhattan, a place in Chelsea, Charlie believed, though the night had gotten hazy enough by 2:00 a.m. that the details were mangled. What he did remember was that the place was banging, going off, filled with city girls in tube tops and shorts and ridiculously high heels. Then again, Charlie was pretty sure he didn’t actually talk to any of those girls; it was New York, after all, so most of them were a head taller than he was anyway, and besides, his buddy had a corner table stacked with vodka, and not the cheap stuff Charlie was used to. Working for an investment bank had its advantages, including a corporate credit card. And for the moment, plastic was still king.

  Charlie hit the bottom step and launched himself over a pair of cardboard boxes overflo
wing with broken keyboards and injured wireless routers. Similar boxes were stacked up to his right and left, leftovers from one of his previous businesses, the one he’d actually started in high school. While the other kids at the nearby Yeshiva of Flatbush had been busy studying their Torah—and yes, a few of those boxes contained menorahs, prayer books, yarmulkes—Charlie had been sneaking away from the urban campus during his free periods to make house calls all over the neighborhood, picking up broken electronic equipment, computers, routers, DVD players, even cassette recorders and bringing them back to his bat cave to fix. He’d called the company Epiphany Design and Production, mainly because he liked the word “epiphany.” Eventually, in the year between high school and college, his first business had morphed into a second one, a daily deal online retail site called Daily Checkout.

  Hence the boxes, stacked all over this basement in Brooklyn, scaling the cinder block walls in pyramids so high they would have made Ramses himself proud. Beyond the boxes, there were also corrugated metal shelves lined with the tools of his old trade: soldering irons, circuit boards, pliers, wire cutters, and extension cords running in every direction, like living creatures.

  Charlie picked his way through the chaos, finally approaching his desk— a small wooden affair, barely big enough for his equipment: a computer, three monitors standing side-by-side, and his keyboard. He didn’t care that it was the same desk he had been using since junior high, then in high school at the Yeshiva, and then while he’d made his way back and forth to Brooklyn College for his undergraduate degree.

  He knew that one day this place was going to be on the cover of magazines, maybe even carefully chopped up and carted off to the Smithsonian, to sit right next to George Washington’s teeth and Steve Jobs’s first Mac.