From Facebook to ‘DeFi for the 99 Percent,’ Erbil Karaman and Huma Are Decentralizing Access
Centralized tech behemoths’ incentives are all wrong
Silicon Valley is a tough place for web3 believers. The goal of decentralization was a reaction to big tech’s tightening grip., but in the halls of tech giants like Facebook and Lyft, Erbil Karaman was always working to empower individuals.
Karaman started at Facebook in its early days, pre-Cambridge Analytica exposé. When he joined, the company was having a hard time transitioning to mobile. Karaman, a Turkish-American, knew that most people in the developing world couldn’t afford an iPhone, so he flew the entire team out to Africa to experience Facebook the way most of the world interacted with it.
They went to a second-hand phone store, purchased a data plan, and installed Facebook. On these low-end devices, Facebook didn’t work. In emerging markets, people’s needs were different. It was more about connecting with loved ones, rather than running the big blue app that used up all their data or storage. This revelation was precipitous for the Facebook Messenger app – a lightweight experience that was first rolled out abroad.
At the time, working for a big tech company building products that improved the lives of billions was how Karaman thought he’d do good in the world.
“The whole idea of decentralization isn’t just a technical term. It’s decentralizing the economy, decentralizing wealth, decentralizing value and decentralizing culture.”
“These companies do an amazing job drinking their own Kool Aid. Once you’re inside the machine after a certain period of time, you realize the set-up is wrong from the get-go,” he said. “I’ve noticed a clear shift pre-IPO versus post-IPO. Once a company goes public, they’re run by shareholders and their interests for maximizing profits, and nothing else. The people who helped Facebook succeed became their product and what they sell.”
While Karaman was interested in how to bring free Internet to the world, he found his colleagues were pre-conditioned to think only in the perspective of profit, views and eyeballs. He left Facebook “just as it started to rot,” he said.
Karaman moved over to the product team at Lyft. This was another huge shift, much like Facebook’s transition to mobile, Karaman said. Lyft marked both the GPS revolution and the jobs revolution, making the gig economy possible.
“Lyft was a societal shift. It was like taking a ride from a friend you didn’t know yet. We also offered alternative routes that were more affordable for the customer, such as scooter or bus. It wasn’t all about the money,” he added. Until it was.
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“The company was filled with people who want to do the right thing but there’s constant pressure from shareholders who have a very short-term profit view,” he said.
After riding out the Lyft vs. Uber fight for market domination, Karaman took the chief product officer role at Earnin, right when fintech was taking off. The company started as a response to payday loans – offering zero-interest, income-backed loans to individuals as an alternative.
Karaman’s decade in Silicon Valley was leading him to a revelation: he could bring income-backed loans to people in emerging markets through blockchain technology.
Big tech to blockchain
While at Earnin, Karaman met ex-Google employee Richard Liu. Disillusioned by broken incentive structures in the tech world, the duo were primed for a web3 start-up. In early 2023 they raised $8.3 million and launched Huma – to provide income-backed DeFi loans to those who need (crypto) capital.
Their thesis is that there’s a huge global unmet capital need for individuals and small businesses. Local institutions can’t help them and they can’t get loans in crypto because lending is built for whales who can stake their assets as collateral.
“The financial gap in emerging markets is in the ballpark range of eight trillion dollars. A few years ago, this number was two to three trillion. You also have a growing population in those markets. Alternative solutions will close the gap and create new competition, which is always good for the end user,” Karaman said.
Huma provides the infrastructure for short-term loans via the blockchain. For example, one partner, Jia, built on Huma to provide loans to rural clinics in Kenya and the Philippines. Another use case is short-term credit to market vendors in places like Indonesia, where locals have historically only been able to buy material supply for a day or two because they don’t have cash flow. This means they have to sell at a higher rate and soon enough, western giants swoop in and control the market.
“We call Huma DeFi for the 99 percent” he said. “We’re enabling our partners to build platforms that are a completely new type of fair, affordable and instant credit solution that decentralizes access and risk.”
Whereas Karaman began his work in the developing world by making communication more affordable, he’s applying the same philosophy to making credit more affordable.
“I always had a hard time working within hierarchical systems. Web3 was easy for me to buy into because it fits into my natural state of being,” he said. “With web3, we have the chance to create a more moral economy where users become owners and shareholders, not the product. The whole idea of decentralization isn’t just a technical term. It's decentralizing the economy, decentralizing wealth, decentralizing value and decentralizing culture.”