Bitcoin Billionaires

by Ben Mezrich

  BitInstant was simple, and just maybe, as Charlie believed, a rocket ship. Cameron and his brother had hoped to find that rocket in Silicon Valley, but Silicon Valley had unfriended them.

  Charlie was welcoming them with open arms—through Azar, who had grown up around the corner from Charlie in the same insular community, and who was now hoping to put together an investment team to fund Charlie’s company—specifically, a team of identical twins with deep, deep pockets.

  Cameron looked around. If there really were already ten employees at BitInstant, they were probably sharing desks and even chairs. So far, Charlie Shrem had raised $130,000. Ten thousand from his mom, and the rest in a single check from a colorful investor he had met after doing a live webcast at a conference in New York. Charlie had been telling the online audience about BitInstant, how none of the investors he’d approached understood Bitcoin and would fund him, how he just needed a little financing to make it work. Four hours after he was off the show, he’d received a Skype from a famous Bitcoin enthusiast named Roger Ver.

  Ver, known in the Bitcoin community as “Bitcoin Jesus” because of his proselytizing and the many investments he’d made in the industry, had begun the brief Skype conversation by asking Charlie how much money he needed; when Charlie had thrown out a number, almost off the cuff, Ver had instantly agreed. And just like that, without ever meeting in person, they’d struck a deal; Ver had wired Charlie $120,000 for a 15 percent ownership of BitInstant.

  From what Cameron had read about Ver, he held philosophical beliefs similar to those of Voorhees but seemed even more radical, even more of a fundamentalist. Ver had even once run for the California State Assembly under the Libertarian Party but then had immigrated to Japan after spending ten months in a federal prison back in 2006 for selling illegal fireworks over the internet.

  Ver had begun buying bitcoin since the early days and had seeded more than a dozen fledgling companies like BitInstant. Cameron and Tyler had never met Ver, they had only been cc’d on a few emails with him; at present, there was no way to know whether he’d remain a silent angel investor, or become more vocal and involved as BitInstant grew.

  Voorhees and Ver were driven by ideology, but they were also subject matter experts. Charlie was less driven by ideology, and more by passion, and was maybe a little deluded: all traits that good entrepreneurs shared. All of them were evangelists, talking about changing the world; and they meant it.

  Despite some obvious concerns, Cameron knew that every early-stage startup deal had its warts. Something was telling him that getting his feet wet in Bitcoin by investing in BitInstant was the right move. This kid, Charlie Shrem, full of bravado, hubris, and a touch of deluded naivete, might just be the rocket ship they’d been looking for—even if it would just be them, Bitcoin Jesus, and Charlie’s mom on the capital table.

  Earlier in their conversations, Azar had mentioned that there were other suitors for BitInstant—specifically, investors with experience in the crypto space, who were already considering making a play for Charlie’s term sheet. If Winklevoss Capital was going to be competing for BitInstant, then they had to move fast.

  Cameron knew what steps he had to take next. He hadn’t closed a venture deal yet, but they weren’t in Silicon Valley, they were in the Flatiron District. This was New York, a city whose restaurants and clubs weren’t shy about turning away even Silicon Valley tech-stars. This was downtown Manhattan—the Winklevoss twins’ playground.

  He thought he had a pretty good idea how to impress a kid like Charlie Shrem.

  8

  CHARLIE

  Sometimes you ask and you ask and you ask for a sign, for just a little hint this way or that, for a bolt flashing down from the sky, lighting the way in front of you, and you get nothing, not a blink, not even a firefly.

  And sometimes, you get a goddamn burning bush.

  Better yet, Charlie thought to himself as he stepped through the oversize double doors that led into a living room surrounded by plate glass windows looking out on a balcony big enough to sport what appeared to be an actual apple orchard—not potted plants, not some terraced bullshit with vines poking through latticework from IKEA or Pottery Barn, but a real live orchard, apples and all—forget the burning bush, why not a SoHo loft filled to the brim with European runway models.

  Then again, to call this place a “loft” was a truly unimaginative use of the English language. If he couldn’t feel Voorhees a step behind him, practically pushing him through the threshold and down the short steps that led to the carpeted main level, Charlie would have thought he’d passed out in the short cab ride over from the Flatiron District, and had entered some sort of fugue state. Places like this weren’t supposed to exist, outside of the tabloids. Everything around him was just so damn glossy.

  From those ridiculous windows to the furniture, all of it modern, curved, undulating, beneath recessed lighting beaming down from a ceiling that had to be twenty feet above his head. And the people, my god, the people. There had to be a hundred people in the place, and yet it wasn’t crowded, it was social. It was SoHo, the way SoHo was supposed to be when you read about it in a travel guide or watched it on Bravo; everyone was too tall and too thin and decked out in hip clothes that didn’t need designer labels to show that they came from boutiques where you drank champagne while you shopped.

  “Now this is a party,” Charlie said as Voorhees moved next to him, taking it all in.

  “It certainly is.”

  Charlie could tell that Voorhees was holding himself back; to be fair, Voorhees was always holding himself back. He was smart like that. Even though he was only five years older than Charlie, he was already a real businessman, a gifted speaker and salesman. Roger Ver had introduced Voorhees to him; shortly after wiring that business-saving six-figure investment, Ver had told him that he had a perfect guy for Charlie to hire. Charlie had first responded—“I’m not going to hire some random guy from New Hampshire!”—but the minute they’d met at a tech event in New York, Charlie had been sold. Voorhees understood the macroissues, he was one of the smartest economic theorists Charlie had ever met and was as eloquent as he was tough, when professionally necessary.

  Voorhees was never going to see the world the way Charlie saw the world, which was probably a good thing. He didn’t come from where Charlie came from, which was a lot farther than New Hampshire. Somebody had to keep them tethered to reality. Because at the moment, Charlie was lifting off, and damn it felt good.

  “Our hosts,” Voorhees said, pointing through the crowd.

  And there they were again, like something out of Greek mythology. One was over by the fully staffed bar, talking to a guy with a goatee and dreadlocks, and a few feet away, Tyler, or maybe it was Cameron, who the hell could tell, was sitting on one of the leather banquettes, next to a brunette in a silvery cocktail dress that started halfway up her thighs and ended well before it should have. The woman’s skin was so pale and shiny and porcelain she couldn’t possibly be real, she had to be some sort of marionette that had escaped its strings.

  But then Cameron, or Tyler, or Cameron, was waving Charlie over and saying something in the woman’s ear, and she was smiling, actually smiling, and patting the banquette next to her. She was real, and she seemed to want to talk to Charlie.

  He started across the carpet, doing his best not to run into any of the obstacles that seemed to suddenly be appearing out of nowhere. A huge, plastic chair shaped like an open palm, fingers reaching out at him, trying to grab him. A pair of waitresses, in what looked to be black-and-white French maid outfits, pendant curves billowing up out of leather bustiers, threatening to smother Charlie as he moved. A B-list cable television star, offering up a funny-looking cigarette, beckoning him to stop, to pause, to slow.

  Truth be told, Charlie was already way too drunk. Not buzzed, he’d passed buzzed hours ago, somewhere between the short walk from the BitInstant offices, where he and the twins had met earlier that afternoon, for a second time, pregamin
g in a group circle with NEFT vodka shots, to Tyler and Cameron’s still-under-construction headquarters, where the twins had offered up a guided tour. Though it was still a hard-hat site, an open jungle gym of Sheetrock, wooden beams, and plaster dust, the scale of the place was hard to ignore. Five thousand square feet looked like the Taj Mahal to Charlie, who had grown up in rooms where he could usually touch two walls at the same time. No doubt Winklevoss Capital was supposed to make an impression. Say what you wanted about the twins, but above all else, Tyler and Cameron made an impression.

  “Charlie,” whichever twin was on the banquette said, reaching to a sleek, Nordic-designed table and retrieving two champagne glasses, “meet Anya. She’s from Bulgaria. And she wants to hear all about Bitcoin.”

  Charlie stuttered out some sort of hello, then took a deep sip of the champagne.

  “It’s the future of money,” he finally managed, and the girl laughed. Then she launched into a story about the last time she was in Paris, for fashion week, and wanted this pair of shoes, but all she’d had was Bulgarian cash, and anyway, who wanted to calculate the exchange rate between a lev and a euro, and was Charlie going to do something about that? And then she laughed again, and Charlie realized this woman was actually interested in him.

  “This is incredible,” Charlie said, realizing a second too late that the words weren’t just in his head. The twin laughed.

  “No, this is a Saturday night. The really good parties are all midweek. But I think we can salvage something. It’s not even eleven yet, and we’ve got a couple more stops to make.”

  He reached back to the elegant table and grabbed a bottle of Dom Perignon, then leaned toward Charlie’s glass, topping it off, doing the same for the Bulgarian beauty between them.

  “Buckle up, guys. The night’s just getting started.”

  * * *

  Three hours later, Charlie was steadying himself against the back wall of a speakeasy in the East Village, focusing on the shot glass full of rum that had somehow found its way into his other hand. Next to him, Cameron—now he was sure it was Cameron, because that had to be Tyler over by the jukebox, talking to a phenomenal-looking blonde whom Charlie was pretty sure was either Tyler’s current girlfriend, ex-girlfriend, or soon to be girlfriend—was telling a story about the Olympic Village in Beijing, something that had to do with a South American rowing team, a Russian boxer, and a bout of food poisoning—but Charlie was having a hell of a time keeping everything clear. Not only because the shot was at least his third since they’d found their way into the hidden bar, through a door at the back of a loading dock, but also because the Bulgarian model was still with him, just a few feet away, dancing with two of her friends who had been with her in Paris that time she couldn’t get those goddamn shoes. And every now and then, when she wasn’t pressing her body up against one of her friends, she was smiling at Charlie.

  Voorhees was never going to believe that things were going as well as they were. Voorhees had tapped out an hour earlier, cornering Charlie on his way out, telling him not to make any decisions until they were back at the office on Monday. Charlie knew that Voorhees had some reservations about taking the twins’ money. He was impressed by them, and much preferred them to the Silicon Valley establishment, but they still weren’t Bitcoiners, at least not yet. It was one thing to teach them about Bitcoin and encourage them to invest in the ecosystem, but it was an entirely different thing to get into bed with them by taking their money.

  Ver, on the other hand, was much more adamant. Since Azar had first advanced the idea of the Winklevoss twins getting involved, Ver had voiced his reservations: he had told Charlie that the Winklevoss twins didn’t share the same vision that he, Charlie, and Voorhees did for BitInstant. As Ver put it—these were guys who loved to sue people who didn’t see eye to eye with them. Plus, BitInstant didn’t need their money, business was doing great, they didn’t need any more cooks in the kitchen.

  A recent Skype call with Ver over the twins had actually gotten heated, the first real disagreement Charlie had ever had with his initial investor. Ver had argued that dealing with the twins could only complicate things for them. But Charlie had dug in his heels. He agreed with Azar on this issue, that the Winklevoss twins were just the kind of jet fuel that BitInstant, and also Bitcoin, needed right now. Ultimately it was Charlie’s company, and Ver had no choice but to concede.

  Charlie believed that Ver was reflexively against the Winklevoss twins because of where they came from, what they represented, or what he thought they represented—the Establishment. But Charlie had now actually met them in person and spent time with them—unlike Ver, whose only impression of them came from a movie. Despite what they looked like, underneath they were fiery and determined. What else had driven them to the Olympics, to all of their accomplishments? Regardless of how they might have appeared, they had something to prove. To themselves, and to the world.

  Ver was unbending in his views, almost combative toward anyone or anything that was in conflict with them. Erik Voorhees might have some offbeat opinions, but Ver’s strain of libertarianism was on another level. Charlie thought it came from a good place—Ver truly believed that free markets would bring the highest standard of living and the greatest happiness to the greatest number of people—but it made him, and to a lesser extent Voorhees, see governments, states, borders, and regulation as something to fight. And as far as Ver was concerned, the Winklevoss twins, celluloid “Men of Harvard,” were the Establishment’s wet dream.

  Charlie wasn’t an ideologue. He was just trying to scratch his way out of his mom’s basement. He respected Ver’s and Voorhees’s minds, but he believed ideology was something you had time for after you’d made it, not before.

  He smiled back at the Bulgarian model. Shit, she had to be half a foot taller than him, and she had that skin, and that majestic, wavy, jet-black hair, and that silvery dress, hugging the angles of her body like the skintight scales of some sort of magical fish, and … damn, he was drunk, really, really, really drunk.

  And suddenly he was on the move, right past Cameron (or Tyler?) and then past Tyler (or was that Cameron?), and then down a long, narrow hallway that led to a wooden door with a picture of a sombrero. He’d almost made it past the urinals to the stall when he vomited, right on his sneakers.

  When he finally got control of himself, recovered enough to make it to the pair of metal sinks across from the urinals, he realized he was grinning. Drunk as he was, he was happier than he’d ever been. Voorhees could have all the reservations he wanted, and Ver could flat-out disagree, but Charlie knew that his decision was already made.

  He ducked his face under the faucet and let the cold water put life back into his cheeks. He’d just thrown up on his shoes, but he wasn’t going to let that slow him down.

  9

  STEPFORD, CONNECTICUT

  “I still remember when there was just one boat. All that blue water everywhere and just one boat with two crazy kids pulling on oars. Every time I think about it, it makes me smile.”

  Howard Winklevoss was leaning against the white wooden fence, elbows on the top rail. What was left of his distinguished-looking white hair shifted in the breeze, and his aviator-style glasses shielded his eyes from the glare of the midmorning sun. Although Tyler was a good head taller than his father, at sixty-nine his dad was still such a large presence in his life, he felt fifteen again, peering down to where the meandering coastline of Long Island Sound intersected with the park surrounding them.

  The view from the peak of Tod’s Point—a sprawling, 2.6-mile network of dirt trails, picnic areas, and parkland that was also the original site of the town of Greenwich, Connecticut (purchased from the Sinoway Indians for the princely sum of twenty-five fur coats in 1640), was like a painter’s palette before the brush touched it and broke the colors at their seams. The yellows, greens, and blues were still intact: bright sand, lush grass, crystal water. Tyler could make out at least seven boats cutting across the current, whi
te against the blue, the young men and women within the boats little more than blurs of synchronized motion.

  “It’s still surreal seeing so many boats,” Tyler said.

  The fact that the boats were out on the water—that the sport of rowing was growing and thriving in Greenwich, engaging hundreds of people every year—meant something to Tyler and his family, because it was something they had helped build from scratch. He and Cameron often thought of crew as their first real startup; those kids were out there on the water because Tyler and his brother had taken a risk years ago.

  “It looks so easy from up here, doesn’t it?” his father continued. “All the complexity, the hard work, the pain, the physics, hidden beneath the calm surface and all that beauty.”

  Tyler smiled. He looked over at Cameron—he knew they were both thinking the same thing—this was the way their father always saw the world. Everything in terms of the math behind it. Howard Winklevoss couldn’t just look at boats on the water; he saw mechanical centers of gravity, torque, leverage, and thrust versus drag, friction, all of it combining to create balance, harmony. That was how his mind worked, always seeking to turn reality into mathematical problems that could be solved. Chaos into order, a sort of reverse entropy.

  * * *

  Howard Winklevoss hadn’t been born in a place like Greenwich, Connecticut. His was a true American success story; he’d bootstrapped himself, and the whole Winklevoss line, up into the upper class by way of that mathematical, gifted mind.

  Howard Winklevoss’s great-grandfather August Winklevoss, the twins’ great-great-grandfather, was a coal miner, a transplant from Hanover, Germany, who had settled in Pennsylvania Dutch country and then promptly died of black lung. His son, the twins’ great-grandfather, became a coal miner at age eight. Toward the end of his years, he had a permanently fused, L-shaped back resulting from a life spent bent over, digging coal in caves and shafts with a heavy pick balanced over one shoulder. His brother, the twins’ great-uncle, had lost a leg in a mining accident when a mine cart ran over it—his mangled leg was sawed right off on the family kitchen table by a county doctor.