An often-overlooked fact about the pseudonymous economy is that Bitcoin, a trillion-dollar asset with a globe-spanning network that would be the size of the big tech giants if it were organized as a company, had a pseudonymous founder: Satoshi Nakamoto. The next era of the internet, and one of the most important innovations of this century, was created by a pseudonym.

A pseudonym is different from being anonymous. As with a real-name identity, a persistent pseudonymous identity, which may or may not include ties to a person’s real identity like a real picture or their real voice, can carry an associated reputation and network. This is different from true anonymity, where no one knows anything about you —  a pseudonym allows you the chance to demonstrate a skill set, build a following, make long-term connections with other people, and even establish a professional track record and build a career.

Though I first stumbled into it accidentally 8 years ago, I’ve seen the growth of pseudonymity firsthand. I built an audience of 1.7 million with my pseudonymous Twitter profile, Bored Elon, and I’m now in the process of launching several products under this pseudonym.

This is not an isolated case. With the rise of web3 in particular, it has become more and more viable for creators and startup founders to opt to build their audiences and businesses using a pseudonym — and more are choosing to do so every day.

If you look at the recent wave of crypto startups, you’ll notice pseudonymity is becoming an ordinary, run-of-the-mill practice.
- Soona Amhaz, GP at Volt Capital

That said, it’s still early. There’s not a lot of information out there about why you might want to build a business pseudonymously, or how it can be done. This playbook is intended to answer the big questions that founders might have if they are contemplating going pseudonymous.

What are the advantages of going pseudonymous?

1. Creative experimentation

The core reason to be pseudonymous, whoever you are, is to give yourself a playground to operate without fear.

When you’re a public figure, there’s always a microscope on what you do and say. As Sarah Guo of Greylock recently wrote:

“Social media platforms have made all of us minor celebrities, and celebrity is an unpleasant thing. Celebrity psychology is fundamentally anxious, burdening us with constant performance, self-consciousness, and self-censorship.”

In other words, using your real identity can, paradoxically, make you afraid to be yourself, to take risks that might make you look stupid, or to try new things.

The problem is that trying things with a high likelihood of failure is synonymous with being a creator or a founder; building a company or creating something is inherently high-risk/ high-reward.

This is something I personally experienced — I was a bit more willing to try stuff and look dumb with a pseudonym, and most of the things I tried would fail. But once in a while, something would work out, and that only happened because I was more willing to experiment.

Pseudonymity gives you an extra layer of armor to try things out and test new ideas. It can therefore be a huge key to unlocking potential creativity.

2. Reputational firewall

A second major benefit of pseudonymity is protection from malicious reputational damage.

Balaji Srinivasan has described the phenomenon of a “social network attack”: a successful character assassination of a public figure that makes them radioactive professionally, sometimes for words taken out of context or said a long time ago. 

For example, after JK Rowling expressed her views on gender on Twitter in June 2020, her reputation and works have come under sustained attack (even though her work is unrelated to the topic of controversy), resulting in book burnings, the removal of her name from schools, media outlets arguing that it will "never be okay to make another Harry Potter series" or urging its audience to “imagine Harry Potter without its creator”, and venues canceling her speaking engagements — all within the last two years.

People should be held accountable for their mistakes and actions, full-stop. However it is important to understand that there are degrees of accountability; and the internet makes it very easy for misinformation and a bandwagon mentality to make justice a binary decision of good and bad. Justice is subjective, so sometimes what you see happen is someone’s reputation and livelihood undeservedly and disproportionately impacted. Most insidious is said accountability being doled out not by those being wronged, but by individuals who are weaponizing justice to benefit themselves by taking someone else down. 

In a world where this is a frequent risk, separating out your personal identity (tied to your government ID) and your career identity can be a good idea so that your ability to earn a living isn’t one outrage mob away from being permanently impaired. Perhaps even more importantly, you protect your family and friends who should not suffer from being associated with you.

3. Breaking free of bias

Finally, founders may want to consider going pseudonymous because it allows you to break free of credentialism and bias.

Founders often get pigeon-holed based on their past career, like actors getting typecast based on past roles.

For example, if you’re somebody who came up in the world of finance or medicine, but on the side you’ve really refined your skills or understanding of a completely different area where you want to build a business, it can be hard to start a company and raise money or gain influence when people only see you as credible within your original industry.

Pseudonymity can allow you to display your competencies more clearly and evade people’s biases in favor of credentialism. With a pseudonym, you don’t have to fight against residual pre-judgements that might come with your real-name identity.

Instead, you can be judged more based on merit; you have more flexibility to build a business that’s outside of your perceived skill set. As a founder, if you’re starting something new and outside of what people perceive you to be an expert in, it can similarly be useful to take advantage of a pseudonym that acts as a blank canvas.

Sometimes, credibility works in your favor as a founder — maybe you have expertise attached to your real-name identity. But this is unlikely to be as much of a leg up in emerging industries like web3. No one is an expert in something that hasn’t even existed for ten years. 

One of the benefits of credentials is that it signals competence and knowledge in a particular field — what Balaji Srinivasan calls “proof-of-skill”. With pseudonymity, the same thing can be accomplished. In fact, pseudonymity allows for the same person to build “distributed identities” that speak to different audiences, needs, and areas of expertise.

So it’s clear that there are benefits to you as a prospective founder that may incentivize you to go pseudonymous. But what about the other side of the table? Why would an investor back a project by a pseudonymous founder?

Why might investors want to work with pseudonymous founders?

A lot of companies these days conduct a blind interviews that block out a candidate’s personal information like their ethnicity or gender to help make more objective hiring processes. Why? It allows employers to avoid becoming prisoners of their biases and make better hiring decisions.

Pseudonymity affords the same benefit to investors. Being able to judge a founder based solely on observing how they think, whether they understand what they’re talking about, and if they have the outstanding drive and entrepreneurial character to build a business may be a lot easier if you are biased by possibly relevant signals that come with a person’s real-name identity.

Venture investing for the last few decades has heavily relied on filters and weeded people out using heuristics like what school the founder went to, what accelerator the company was accepted to, who do the founders know and who else is participating in their round, and less on having a conversation with founders to understand if they really know what they’re talking about.

Pseudonymous founders are a forcing function for first-principles investing. Being an outstanding investor requires an informational edge; seeing value where others don’t. This is impossible using the same old heuristics like social proof, credentialism, and past success as an indicator of future performance.

Pseudonymous founders can have a reputation, so it’s not that investors are investing blindly; it’s more that with pseudonymous founders  they aren’t relying on credentials alone to prove they’re worth investing in. The willingness to do this, in itself, can be a signal of confidence.

Investors may be more willing to listen to a pseudonymous founder than a well-credentialed founder using their real name who comes in with an ego and the assumption that they’re entitled to an investor’s time and money based on who they are.

What’s more, if you believe  that founders might exhibit more creativity and take more risk under a pseudonym, this can be a very powerful reason to invest in one especially in the newest and fastest moving verticals where nothing is more valuable than the ability to innovate and do something truly original.

What challenges should you anticipate as a pseudonymous founder?

If you’re thinking about becoming a pseudonymous founder, there are three challenges you should try to anticipate and try to solve for in advance.

1. Doxxing

When you choose to go pseudonymous, you always have to factor in the possibility that you may be doxxed and understand the harm it might do. 

One of the appealing things about old comic books compared to movies is that, in between each pane, comics allow your imagination to fill in the gaps. In Understanding Comics, Scott McCloud wrote that stories take place in the gutter — your mind “observes the parts but perceives the whole”.

Similarly, pseudonymity creates a mystery which allows people to fill in, with their own minds, the missing details about the person behind the pseudonym — it might be a celebrity, it might be someone you never expected. This creates a mystique and a magic inherent to pseudonymity that would be lost if you get doxxed. No matter what the real details are, they’re likely to fall short of peoples’ imaginations.

That’s why the pseudonymous artist Banksy said that you’d be super unimpressed with him if you knew who he was. If you manage to build up a large brand and following under a pseudonym, your business itself might take a hit if you get doxxed — not to mention that it will defeat the purpose of being pseudonymous in the first place — so it’s important to do what you can to avoid it.

Currently, it’s legally impossible in most countries to set up a business without at least some people knowing your real-name identity.

Understand that the more people who know you are, the greater the likelihood of getting doxxed becomes, and take what precautions you can to avoid unnecessarily revealing information about your identity.

2. Narrowed access to capital

Because the pseudonymous economy is still so early in its development, being a pseudonymous founder may block you from accessing more traditional partners or investors who don’t feel comfortable working with a pseudonym because they may think it’s the same thing as being anonymous and that at any moment a pseudonymous founder will just run away with their money.

This risk stems from a larger lack of education that still persists around pseudonymity. The reality is that traditional sources of capital, who are often also the largest, are likely to be late adopters — and as a result, you’ll have a smaller pool of potential investors to work with.

Of course, it’s also possible to go direct and issue a token as a pseudonymous founder if you’re doing a web3 startup. But not all pseudonymous founders will be web3 founders. If you want to raise from VCs as a pseudonym, figure out who is on the list of investors who are likely to be pseudonymous founder-friendly — chances are that investors or funds that work a lot with crypto, gaming, or other industries which are more central to the emerging pseudonymous economy will be the most likely to invest in you.

3. Building a team pseudonymously

If you’re building a team, something you should determine up front is whether you’re going to reveal your real identity to them.

It’s likely that everyone working together on a startup as a member of the founding team does need to know each other’s real name identity, as it’s important to establish trust in relationships as critical as the co-founder relationship.

Mutually-assured destruction is one way to enable this; if you’re willing to tell team members at a startup who you really are, that can establish trust. In return, you would expect them not to breach that trust as employees, and if they’re pseudonymous, you could ask them to reveal their identity to you in turn.

Note that currently, whether you’re a founder or investor, it’s hard to prevent revealing yourself to some people by necessity. You still need to sign legal contracts often, but you can use NDAs to help prevent doxxing.

How to become a pseudonymous founder

There are two phases right now if you want to become a pseudonymous founder.

First, you have to build the pseudonym itself, which means establishing a reputation. Remember that a pseudonym is not anonymous — choosing not to use your real name identity means starting from zero. It lets you jettison what’s irrelevant, but requires that you demonstrate a high degree of quality.

To build a pseudonymous reputation in advance of becoming a pseudonymous, you may want to spend 3-12 months (or however long it might take to establish yourself) building your profile and gaining a reputation associated with the pseudonym so that you’re a known quantity in the ecosystem before you start a company.

To do this, focus on establishing credibility in the main areas of startup competence you’ll need to demonstrate in order to win support from future investors, customers, and team members.

1. Product / idea - Demonstrate expertise or insight that shows your vision and ability to execute your product or idea is important and can be done in multiple ways — knowledge via writing blog posts on Twitter threads, technical ability via Github participation, or, best of all, a working MVP.
2. Team - Participating in projects under your pseudonym — telegram groups, discords, DAOs, etc. — can be used to build a network within a space and even find a potential co-founder or founding team.
3. Market / distribution - Build a following on social platforms like Twitter, or a large audience on blogging platforms like Mirror and Substack, to a) demonstrate your ability to get distribution within the market and b) show that you have enough status in the great online game to be seen as credible.

Building an audience is the easiest way for pseudonymous founders to gain credibility.

You can do this either by going broad and establishing an online presence that may not be specifically focused on the area where you want to later start a company; this path is more akin to what celebrities do in the offline world — people like Lady Gaga and Kim Kardashian who first get a lot of fame and then parlay that into a variety of products and companies to monetize their built-in distribution.

Or, you could build a very focused audience by building credibility as a thought leader in a specific space like web3 or emotional fitness or early-childhood education, and then build a business in that vertical.

A potential shortcut, if you’re already a successful person with an established network that you want to take advantage of by bringing in investors and supporters as partners for your new venture, is to have them agree to let you do so under a pseudonym. Your immediate partners will know your real-name identity and help you bootstrap credibility to your new pseudonym, even if the public doesn’t know.

Either way, once you’ve established a reputation, only then you can then begin building your business under a pseudonym.

Tools for Pseudonymous Founders

For pseudonymous founders, it’s a good idea to build out a stack of tools that will make it less likely for you to get doxxed (lose your pseudonymity) or dox yourself by accident.

The pseudonymous founder’s stack could include the following simple tools:

• A pseudonymous protonmail account
• An ENS domain and a crypto wallet
• A pseudonymous twitter or github profile
• Discord / slack and a remote-only team
• Oasis [disclosure: Bored is an investor] - a tool that lets you get on a Zoom call and instead of having to show your real face or a static image, creates a real-time human avatar.
• XMTP - [disclosure: Bored is an investor] a decentralized, crypto-native communication protocol that helps you protect your identity while synchronizing it across platforms.
• DAOs — while organizing as a DAO is an appealing option for ease of preserving pseudonymity, in many countries a DAO is not yet recognized as a legal entity so it’s a challenge in terms of enforcing contracts and paying out money to investors.
• Telegram or Signal for 1-to-1 messaging
• A PO Box or Address Forwarding Service
• An iron-clad NDA for when you do legally need to share your credentials with a partner. 
• A good VPN
• A virtual phone number that forwards to your real number like Tossable Digits.
• Browser extensions to protect against online activity trackers like Privacy Badger

As the pseudonymous economy continues to grow and mature, dedicated tools for pseudonymous founders will emerge and make life easier. But for early adopters, you have to be self-sovereign.

The Future Is Pseudonymous

The list of examples of pseudonymous founders and creators is large and growing — people like Zeus of OlympusDAO, a DeFi protocol with hundreds of millions in market cap, or until recently, the pseudonymous members of the Bored Ape Yacht Club, who recently announced an NFT project with Adidas. 

Another example of BAYC’s mainstream success: they were recently featured on a Jimmy Fallon interview with Paris Hilton, where both revealed that they had bought Bored Apes. However, garnering this level of public attention was not without its drawbacks. Two of the BAYC founders, “Gordon Goner'' and “Gargamel”,  were recently doxxed by Buzzfeed who searched publicly available business records to look for the address where Yuga Labs, the company behind BAYC, was incorporated. This address was associated with one of the founders — a cautionary tale for aspiring pseudonymous founders to avoid divulging any potentially compromising information publicly. 

Nevertheless, compared to 5 years ago, pseudonymity for creators and founders is becoming normalized. It’s a trend that will only accelerate because it unlocks so much untapped creativity for people to experiment without fear. Pseudonymity will be a multiplier on innovation, and innovation will be the engine of growth for the pseudonymous economy.

In the future, more and more people will earn money, build audiences, live their personal lives, and yes, build companies under separate and distinct identities.

In 2019, during a talk he was giving at San Francisco Blockchain Week, Balaji went so far as to say that “pseudonymity is as important as decentralization” as a socio-economic trend that would define the next decade. If he’s right, then pseudonymous founders are just getting started.