Magic is a comprehensive enterprise-grade solution for companies that want to take advantage of Web3 capabilities while reducing the challenges associated with onboarding, security, and compliance. The platform offers end-to-end onboarding including authentication, fiat onramps and NFT services such as minting, drops and checkout.
Its solutions are trusted by Fortune 500 brands including Mattel, Macy’s and 7-Eleven and more than 130K+ developers globally. To date, Magic has created 25M+ wallets and raised more than $80 million in funding from leading investors like Northzone, PayPal Ventures, Tiger Global, Lightspeed Ventures, SV Angel, Social Capital, Alexis Ohanian and Balaji Srinivasan.
Our partner Wendy Xiao had a Fika with its CEO and co-founder Sean Li to discuss his journey leading up to Magic, building through the waves of Web 3.0 adoption, what challenges have been met and the next steps forward…
Magic is building solutions to solve Web 3.0 onboarding challenges. Give us a glimpse of what you were doing before Magic and more about what drove you to build the product.
I became a software engineer fascinated with creating tools for fellow developers. I entered the startup world around the time Docker was introduced at the PyCon conference in 2013. Despite Docker’s potential, it was challenging for mainstream developers to set up on Mac and Windows without using command lines. I was intrigued by Docker’s technology, so I delved into it and teamed up with two college friends to make the tool more user-friendly. The company noticed our efforts and, after two years, we merged our product with their tech team’s help, resulting in Docker Desktop – an immensely popular developer tool still used by millions monthly.
In 2016, I became obsessed with Ethereum’s possibilities, seeing beyond the speculative nature of cryptocurrencies. I was excited about its potential to facilitate non-speculative applications, allowing for secure blockchain-based program development across various industries. Similar to my aha moment with Docker, I recognised the need to simplify blockchain for mainstream adoption. Fast forward to today, my journey continues to focus on making blockchain accessible and bringing these technologies to the next billion mainstream users.
Sean Li, Co-founder of Magic
The Web 3.0 space has been continuously evolving and so has Magic since its start. What problems were you seeing in the industry that led to the solutions you’ve built? And how have those changed over the years?
Back in 2018, we started as Fortmatic before becoming Magic. At that time, application infrastructure and regulatory clarity were underdeveloped for inspiring use cases. This posed a challenge since infrastructure and compelling use cases often fuel each other’s growth. Many paradigm-shifting ecosystems have followed a similar pattern. However, our focus has been on supporting non-speculative use cases from the start which differs from the DeFi and yield farming trends.
Also, the rise of mainstream recognition for NFTs is significant because it paved the way for practical and non-speculative applications based on blockchain with a lower learning curve.
Owning unique digital assets on the internet has become a substantial concept, despite initial scepticism and jokes about selling JPEGs. Early days of various technologies such as PCs, the internet, Bitcoin, and NFTs faced criticism and limited use cases, but I believe having a clear vision for intended applications is crucial. For example, Microsoft’s success was not only in creating an easy-to-use operating system but also in developing applications that added value and productivity, akin to our approach.
There’s now a surge of interest from enterprises exploring Web 3.0 use cases like ticketing, membership, subscription gaming, and loyalty programs, similar to the early days of cloud adoption. Our journey has involved not just building infrastructure but also creating practical applications to demonstrate business value.
Magic is mostly run remotely and is entirely global. You’re based in San Francisco and have one office in NYC but the team is spread across the West Coast, East Coast and Europe. How do you look at your expansion with this distributed setup?
Building a remote company is exceptionally challenging. The evolution of Magic is proof–the impact of COVID-19 required a rapid transition to remote work. It was evident that committing to either a fully remote or hybrid approach is essential. For us, there was a preference for remote and a focus on hiring in North America to address timezone issues and ensure clarity.
Any remote setup demands extra effort for clarity and visibility. Having managers dedicated to specific time zones is very helpful and while there is overhead, it offers cost savings and flexibility. Magic maintains a New York hub for optional in-person collaboration, especially for tasks like product design and important team-building activities. I think both remote and in-person work have their merits: remote allows focused productivity, while in-person facilitates close collaboration, brainstorming, alignment, and team cohesion.
To address the important need for interpersonal interaction, we conduct in-person company offsites twice a year and are considering more frequent gatherings. The frequency and scale of these off-sites will vary, but they remain critical to us, especially for activities like setting KPIs for the upcoming year.
Wendy Xiao, Partner at Northzone
Sounds like a great setup! I’d also like to get your current point of view on the security landscape. It has become much more of a concern with the increasing sophistication of AI tools available. What advice can you give?
Security is a vast and crucial aspect, particularly in the realm of web technology. In Web 2.0 security, the reliance on passwords has led to vulnerabilities due to password reuse, making it extremely easy for malicious actors to gain unauthorised access. Addressing these efforts is being directed towards enhancing authentication methods, such as WebAuthn or Passkeys, which leverage hardware for stronger security. At Magic, as we utilise authentication technology, we contribute to the overall security of Web 3.0 applications.
Beyond authentication, ensuring security involves various complex tasks. Firms need to implement security programs, adhere to enterprise compliances, and conduct penetration testing. Mobile wallets, even if fully self-custodial, could be compromised if they incorporate a single malicious software development kit (SDK). To mitigate this risk, careful package selection and the use of trusted developer kits are crucial.
Promoting security extends to educating employees about risks like phishing and maintaining vigilance, as no system is entirely immune to potential breaches. I believe the ongoing challenge is to stay ahead of evolving threats in a landscape where essentially every human-created system has its vulnerabilities.
Of course. Lastly, it took Web 1.0 nearly a decade to fully integrate into Web 2.0. Where are you seeing real-world adoption in Web 3.0 from clients?
Early signs of interest are emerging in web technology evolution and real-world adoption in Web 3.0, particularly in the retail sector. Retailers and brands are exploring innovative ways to engage with digitally-savvy customers, like Mattel’s digital collectible initiative which allows collectors to trade between virtual and physical items. Cross-border payment cost optimization is also a significant focus for companies, and portable digital identity is starting to take shape, with companies turning employee recognition into verifiable resumes.
Zooming out, we’re amidst a trust crisis in society marked by low trust in institutions and corporations. This situation aligns with Neil Howe and William Strauss’ concept of the “Fourth Turning.” I believe blockchain technology offers a solution to reestablish trust. This shift could start with large institutions like banking or extend to digitising processes like going to the DMV or even digital democracy, addressing trust issues such as voting reliability. Blockchain is viewed as a foundational infrastructure piece with the potential to solve these trust challenges, even though the journey will be gradual. This trailblazing effort seeks to bridge the gap between highly technical concepts and their practical understanding by the general public.
How exciting! Thank you very much Sean for your time and insights.