In the volatile world of cryptocurrency, where jargon, seed phrases, and gas fees scare off even the most curious newcomers, one startup dared to ask a simple question: What if using blockchain felt as easy as logging into your email?
That question sparked a revolution—and a startup story that’s now reshaping how billions might one day interact with decentralized technology. Meet Magic Labs, the team behind the world’s first embedded wallet, trusted by over 50 million users and 200,000 developers, and backed by giants like PayPal Ventures, Naver, and Forbes.
But their journey wasn’t paved with hype or bull markets. It began in the ashes of the 2018 crypto winter—a time when headlines called Bitcoin a “scam,” investors fled, and most builders quit. Yet, two engineers, Sean and his co-founder, saw not collapse, but opportunity.
This is the human, gritty, and visionary startup story of Magic Labs: how obsession with user experience, lessons from Apple, and unwavering belief in a better web3 future turned a near-failure into a global infrastructure layer for the next internet—and now, for AI.
The Spark: A Frustrating First Encounter with Crypto
Back in 2016–2017, Ethereum was buzzing with promise. Unlike Bitcoin—seen increasingly as “digital gold”—Ethereum introduced smart contracts: programmable logic on the blockchain. You could build decentralized apps (dApps), prediction markets, digital art platforms, and more—without middlemen.
But there was a catch.
To use any of it, you needed MetaMask or a similar browser extension. Then you had to:
- Write down a 12- or 24-word seed phrase (and pray you never lose it).
- Understand gas fees.
- Sign cryptic transaction messages like “Approve 0x742d35Cc6634C0532925a3b8D4C9db96…”
- Risk losing everything if you made one mistake.
“It felt like assembling IKEA furniture… without the instructions,” one founder recalls.
Both Sean and his co-founder—former classmates from the University of Waterloo’s software engineering program—had tried Ethereum independently. Both were captivated by its potential. And both hit the same wall: terrible user experience.
Their paths crossed again in 2018 at an arcade bar in San Francisco called CoinOp. What started as casual drinks turned into a five-hour deep dive. They kept circling back to one question:
Why hasn’t anyone built a “Login with Email” for crypto?
That night, Magic was born.
Defying Web3 Dogma: The Controversial Bet on Simplicity
At the time, the web3 ethos was rigid: “Not your keys, not your crypto.” True decentralization meant users must control their private keys—written on paper, stored in safes, never digitized.
Magic’s idea—letting users log in with email, phone, or social accounts—was seen as heresy.
“We got heat on Twitter,” admits one founder. “People called us centralized. They said we were betraying the spirit of crypto.”
But the founders saw a deeper truth: mass adoption requires familiarity. If the onboarding experience feels alien, only crypto natives will stay. Everyone else walks away.
So they asked: Can we offer Web2-style simplicity… without sacrificing Web3’s core promise of user ownership?
The answer came in the form of a breakthrough: Delegated Key Management—a novel, non-custodial approach that lets users recover wallets via email while still retaining true ownership of their assets.
They even patented the technology—a move that later became critical in securing investor trust during a time when major crypto exchanges were being hacked.
This wasn’t just convenience. It was trust reimagined.
Surviving the Crypto Winter: Grit in the Trenches
2018 was brutal. Bitcoin had crashed below $6,000. ICOs collapsed. Media mocked crypto as a bubble. Most startups shut down.
Magic Labs had one month of runway left.
“We told our 8-person team we might not make payroll,” the co-founder shares. “But we also told them: We’re solving something fundamental. And if we don’t do it, who will?”
Instead of retreating, they doubled down. They open-sourced key components, engaged early dApp developers, and refined their product through relentless user feedback.
Their conviction paid off. Even in a bear market, apps like Helium, PolyMarket, and Immutable adopted Magic’s embedded wallet—because it converted users. No more 90% drop-off at onboarding.
By proving real demand, they attracted believers—investors who saw beyond price charts and understood that infrastructure wins in the long run.
Their seed round closed with just weeks of cash remaining. One founder even took a personal loan to keep the lights on.
But they never stopped hiring. Never stopped building. Why?
“If Ethereum died, my company died too. So I built as hard as I could.”
Lessons from Apple: Craftsmanship Meets Speed
Before co-founding Magic, one founder worked at Apple—on projects like integrating Apple Maps into Siri and developing tokenization pipelines.
There, he absorbed a core philosophy: obsession with detail. Steve Jobs’ famous “dent in the aluminum” mindset wasn’t just about aesthetics—it was about craftsmanship, ownership, and storytelling through product.
But startups aren’t Apple. You can’t spend years perfecting v1.
So Magic adopted a hybrid approach:
- Move fast in the “zero to one” phase.
- Ship early, gather feedback, iterate.
- Perfect later—once patterns emerge and user needs are clear.
As he puts it:
“Perfection takes time. But insight comes from shipping.”
This balance—between Apple’s meticulousness and startup agility—became Magic’s secret sauce. Every UI element, every error message, every onboarding step was treated as part of a narrative.
Because great products don’t just solve problems—they tell a story.
And the best story Magic tells?
“You don’t need to change your behavior to enter web3. We’ll meet you where you are.”
The “Wow Factor” and the Art of Invisible Technology
Steve Jobs famously insisted the Mac say “Hello” on first boot. Why? Because technology should delight, not intimidate.
Magic embraced this. Their “wow factor”?
You sign up with your email—and instantly own a crypto wallet. No extensions. No seed phrases. Just… magic.
But their vision goes further. Today, they’re building Newton Protocol—the world’s first policy engine for AI agents on blockchain.
Imagine this:
Your AI assistant books flights, manages investments, signs contracts—all while you sleep. But how do you ensure it doesn’t drain your wallet?
Newton acts like your phone’s permissions system: you set rules (“Only spend up to $100/day,” “Never approve NFT mints”), and the protocol enforces them on-chain.
In this future, crypto becomes the rails for agentic AI—and Magic provides the trust layer.
Their ultimate goal?
Make technology feel invisible.
Just like you don’t think about your car’s engine while driving, you shouldn’t think about private keys while using web3.
The best UI, they argue, is no UI—an abstraction so seamless, you forget it exists.
Why Enterprises Trust Magic: Compliance as a Superpower
While many web3 startups ignored regulation, Magic pursued SOC 2 Type II and ISO 27001 compliance early—even before targeting enterprises.
Why?
Because trust isn’t just technical—it’s institutional.
That foresight opened doors to PayPal Ventures, Macy’s, Mattel, and Naver. Today, Magic is the most compliant embedded wallet in the space—a rare blend of decentralization and enterprise-grade security.
This strategic patience—building infrastructure others deemed “boring”—is why they now power hundreds of millions of on-chain interactions.
The Non-Linear Path: Pivots, Fog of War, and Finding Truth in Friction
One founder likens startup building to StarCraft: you start in the “fog of war.” You climb a hill to see further—but it might not be the right hill. So you pivot. Explore. Iterate.
“Progress isn’t linear,” he says. “It’s chaotic. But inaction is fatal.”
Magic’s journey proves it:
- From a failed Y Combinator application with their first startup (Kitematic, later acquired by Docker).
- To open-sourcing tools that became Docker Desktop.
- To spotting the crypto UX gap no one else would touch.
- To pioneering AI-agent trust protocols.
Each “failure” was a stepping stone. Each constraint—funding droughts, technical limits, market crashes—became creative fuel.
“Diamonds come from friction.”
Final Wisdom: Obsession Over Exit
If you’re building a startup just to get rich, don’t.
That’s the raw truth from Magic’s founders. Startups are marathons of pain, punctuated by fleeting highs. What sustains you isn’t money—it’s obsession.
Obsession with the problem.
Obsession with the user.
Obsession with a future only you can see.
As one founder reflects:
“It has to become your life. Not your job—your life.”
And for Magic, that life’s mission remains unchanged:
Upgrade the world’s trust infrastructure. Bring billions on-chain. Make technology disappear.
Whether through wallets today or AI agents tomorrow, Magic isn’t just building products—they’re building the invisible foundation of the next digital era.
Key Takeaways for Builders & Founders
- Solve real friction—not just technical problems, but human ones.
- Challenge dogma when it blocks adoption (but back it with innovation).
- Survive winters by focusing on fundamentals, not hype.
- Balance craft and speed: perfect what matters, ship the rest.
- Think beyond users—soon, your customers might be AI agents.
- Compliance = credibility in regulated, high-stakes domains.
- Stay mission-driven, not outcome-obsessed. The path will twist—your “why” must hold firm.
The Road Ahead: Web3, AI, and the Ambient Future
Magic Labs’ startup story is far from over. With Newton Protocol, they’re positioning crypto not just as money, but as the trust backbone for autonomous agents.
In five years, your AI might:
- Pay your bills via smart contracts.
- Vote in DAOs based on your values.
- Trade assets while you sleep—safely, thanks to programmable guardrails.
And you? You’ll never see the blockchain. You’ll just live your life—effortlessly, securely, magically.
Because the best technology doesn’t shout.
It disappears.
And that’s the real magic.
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