Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Elizabeth Rossiello: BitPesa – Building Financial Platforms for Frontier Markets

Episode Date: December 27, 2017

The prospect of providing digital cross-border payments for the world’s unbanked and underbanked population has always been one of the key use cases for Bitcoin. Cryptocurrencies can be seen as a way for people in developing countries to participate in the global financial market by allowing easy cross-border payments, cheap remittance transactions, and simplified lending options. We’re pleased to be joined by Elizabeth Rossiello, CEO and Founder of BitPesa. BitPesa provides companies in frontier markets with the financial infrastructure to facilitate commerce and payments, where traditional financial markets are known to be fractured and expensive. As an early Bitcoin company founded in 2013, BitPesa is now present in a handful of African countries and provides essential financial services to businesses, allowing them to send and collect payments, and perform quick and affordable Forex trades. Topics covered in this episode: Elizabeth’s journey to Bitcoin and BitPesa BitPesa’s vision and how it compares existing mobile money platforms present in Africa BitPesa’s offering and how it has evolved since the company was founded in 2013 The primary pain points and barriers to doing business in developing African markets Foreign exchange markets in Africa The challenges and opportunities regarding blockchain adoption in African markets The future of Bitcoin as a payment system Episode links: BitPesa Elizabeth Rossiello Describes How BitPesa Slashes International Payment Fees BitPesa Founder Elizabeth Rossiello Keynotes at ConsenSys' Ethereal Summit Elizabeth Rossiello on Twitter This episode is hosted by Brian Fabian Crain and Sébastien Couture. Show notes and listening options: epicenter.tv/215

This is Epicenter, episode 215 with guest Elizabeth Rossiello. Hi, welcome to Epicenter, the show which talks about the technologies, projects, and startups driving decentralization and the global blockchain revolution. My name is Sebastian Quichu. And my name is Brian Fabian Crane. We're here today with Elizabeth Rossiallo. She's the CEO of Bit Pesa. But Peser's been around for a long time.

Actually, I think we, I mean, I've been aware of the company certainly for, I guess, around four years or something like that. And it's always been sort of, at some point, we should do an episode on that. that. We were also reaching out to Elizabeth a while ago, but somehow it took a long time for us to schedule that, but I'm super happy to finally have your honor, Elizabeth. So thanks so much for joining us today. Thanks for having us. Yeah, we got started in 2013. We're OGs of the space. Yeah. You know, one thing that stands out to me about Bipesa and what you guys are doing is that, you know, when we got into Bitcoin, which was also around 2013, there was this big story

about you know bitcoin and cryptocurrencies changing things in the developing world and bringing this financial inclusion and remittances and that was kind of a main selling point and when people would explain bitcoin that's one of the things they would bring up right and it's like oh people pay so much from remittances bitcoin's can make that so much better but you know in reality most of us didn't actually know very much about the developing world didn't really have a lot of exposure to that, you know, it was more sort of a hearsay thing. And very few were actually working on on those problems. So you're one of the few companies that did that. Yeah, it just, we were like already there. So I guess a lot of other people learned about Bitcoin and then went to

go test it in these markets. And we had a bit of a reverse story. So a bit of good timing and a bit of just, um, the product came to where the market needed it. So you, you, Originally from the US, but then you spent some time working in banking and in different countries. Like, how did you end up in Africa and what drew you to Africa? Yeah, I mean, I've told the story before, but there's not a lot of people like the VepaS team here in the ground. We're really unique in that all of us have worked in many countries, specifically across Africa and Europe and the US and Asia. So I would say that in the early 2007, 2008, 2009, there was this kind of tech boom happening in Nairobi, Kenya. And a lot of people came from all over the world, a lot of expatriates, a lot of other Africans came down here.

And something called the Silicon Savannah started up. And there was a lot of excitement, some tech hubs were here. And I had actually come to Kenya for a different reason. I was working in investment banking to pay off my student loans. I've said that's a bunch of times. but I spoke a bunch of languages, so they sent me to Zurich, Switzerland. So I was working in Switzerland in Credit Suisse, where Credit Suisse was centralizing all of their foreign exchange services and products and teams, which was super interesting because at the downside of the market, I was still working in a profit center. And that stuck with me, that even when things were going really shitty and people were cutting back costs, the biggest funds in the world were still outsourcing their FX and outsourcing their FX risk mitigation.

And that was really interesting. But I cashed out, and I left in Jan 2009, and I started to work for a French microfinance agency called Plenifinance. And they had a bunch of microfinance companies, investments, advisors, and a rating agency. And I went to Paris to start with them and thought they were going to send me to the Philippines. And by chance, they just sent me to Nairobi, Kenya, which was crazy.

So I arrived down in Nairobi at the tail end of the microfinance bubble, which I say is like the first FinTech bubble, where all these investors around the world were like, we can do good and make a return. And I remember when I was in grad school at Columbia, everybody was doing these little short courses on microfinance and all the coolest speakers coming over where it had just been in the field in Uganda and Mexico and Peru and Philippines running microfinance. And Muhammad Yunus had just won the Nobel Prize for microfinance. It was like this super hot topic. But when I got sent down, it was like a reality check because I was a ratings analyst.

And I had to go around visiting microfinance institution after microfinance institution writing a rating, and I'm giving them all like D's and Fs. And I'm telling investors like Deutsche Bank and the UN and Gates Foundation, like, this is like the emperor wears no clothes. There's like so many of these companies are not performing. So I just became kind of like a realist and a practitioner on the ground teaching these companies, what is best practice, how do you get the right technology at the right time at the right price and roll it all out, just like going really deep into ops across like 15 different countries. And I led the office for Plenty Finance in Nairobi, Kenya.

And at the same time, all of my friends were coming to Nairobi to do tech startups and to work in all these cool things like agrotech and micro insurance and solar. And even Mobius, Joel Jackson just did a TED Talk. He's the founder of Mobius Motors, building an SUV in Kenya. So many cool companies were just getting. started at that time. And it was just the perfect time to kind of move over there because we had seen Empesa, which is mobile money. And I think you guys might have heard about this, Vodafone, UK, had a subsidiary in Kenya called SafariCom, and they started this domestic payment system

using USSD technology called Mpa. And it was replicated in a few countries, but never really had the monopoly critical mass effect like it did in Kenya, where literally the entire GDP goes through this. So that took off in 2007. So you had the end of the microfinance, when you have a bunch of experts kind of living and swimming around and international investors looking for the next thing to invest in, you had this like tech bubble and this focus from the government and private entrepreneurs on how to promote tech in Kenya, and you had this really cool monopoly product that was available to just kind of play around with. So they give it like the first blockchain. Everybody was like, how do we build on this? How do we use this cheap

technology to build cool products in agro or health or finance? But then the problem was, was that that SafariCom said, wait a second, people are using our platform to build other stuff that we don't have control over? And they started like whack-a-molling down a bunch of startups. So I left microfinance and became an entrepreneur right at that time. And I was like, well, how do I do things that I know and love, which is foreign exchange and risk mitigation and financial across Africa? But how do I build on a platform that's not going to smack me down? How do I build on a platform that's like interoperable, that's global, and that's cheap enough for me to get started. And that's how I bumped into Bitcoin in September 2013.

Cool. Actually, maybe this is a little bit of a detour, but I'm really curious to hear a little bit more about this, because of course, I also remember reading and hearing a lot about this whole microfinance, microlending stuff. So was this kind of a bubble and disappeared and it's kind of gone? No, no, it's still here. I mean, like, there's still tons of microfinance institutions. And I guess the time when I came in was before the regulation. And this, again, we had 20 hours, I'd talk about this forever.

But it's just a really quite cool parallel where you had this innovative new product come out of Bangladesh. People all over the world were testing it out. You had greenfield institutions just sprouting up, testing the methodology. You had bigger banks scaling down and trying to do it.

And you had all sorts of kind of like newfangled derivations of it, iterations of microfinance. And then you also had like a cultural system of microfinance, like church group lending. Even in Germany, they say Germany was the first place where they had microfinance. You had these like community geschaelschaft cooperatives and stuff. So I mean, you take all those different things together and then you add on all the international dollars and that's where the bubble happened.

But I think after the bubble and the ratings came out, they started to become more best practice for microfinance. and a lot of the regulators started putting out regulation. So as a rating analyst, I helped the Bank of Tanzania develop their legislation for this and Nigeria. And now 10 years later, I'm going back to the same regulators helping them write the regulation for Bitcoin, exchanges and wallets and investment vehicles.

And I think it's just a ton of parallels in what that happened. But microfinance is still there. It's regulated. You still have informal cooperatives, community lending, and even more formalized versions called deposit-taking institutions. And they're very different from bank or financial institutions. So most African countries have financial institutions, non-bank financial institutions, and savings and cooperatives.

And they all have different kinds of levels and different forms. And all of that information just really helped me give me a lot of added value when I started a bit past that because unlike a kid who maybe was really into Bitcoin in Vancouver, who wanted to come down to Africa, I'm starting. with like all this knowledge about legislation and financial markets. So that's, I think, the difference in what made Bitpast us so successful. So I think perhaps you're probably one of the guests we had on that's the most knowledgeable about the African market. And so I'd like to ask you, what do you think are some of the biggest misconceptions people have about Africa and particularly the economy and the development of the economy there?

Well, Africa is not a country. That's also my favorite Facebook page. It's hilarious. Go look at that. But it's so diverse wherever you go. And I just feel so, so lucky. And I don't mean to sound like a female founder. I'm not lucky. I'm glad I chose early on a job where I worked not just in one country. Like when I was in Switzerland and I was focused on German-speaking Europe for Credit Suisse, it was so niche, right? But then when I come into this job with Plenty Finan, I had to go to East African market, then Central Africa, then West Africa, then Anglophone, West Africa, Francophone, West Africa. It's just so different all across the board. Most of the law is based on UK common law, but French law, but then it's like tweaked and twirled. So like even in the East African community of Uganda, Tanzania, Kenya, it's still very different.

And right now, we are allowed to do very different things in each market. And then you go to South Africa, and that's like another planet, you know, it, you know, It looks different. It feels different. The regulations are different. The market size is different. The needs are different. Connectivity, risk levels. And it's just super cool to kind of get to know each of these markets because so many people are like, ah, it's too diverse and too scary. So I don't want to go there. But when you come here and you learn about it, there's such a cool need and there's not a lot of competition, but you do have to kind of commit. So I think a lot of people think, oh, I'll go to Africa and I'll just, you know, I'll do that last. And then they come here and they're like, oh, no, like Nigeria is totally different than Ghana and wildly different than Kenya. So you need to either do what I did, which is spend a decade here, or, you know, build a team that knows how to work across these markets. Like Uber and Jumea and the other big companies that have kind of gone Pan-African already have learned out kind of a model on how that works. As an entrepreneur, I mean, coming from the European perspective, like in Europe, it's quite

easy, I guess, to start a company in one country and then expand to another because a lot of the backbone infrastructure is the same. You're talking about the same sort of regulation that's generalized across a lot of different countries. As an entrepreneur, how do you navigate this just, this diversity in culture, legal frameworks, things like connectivity, language, currency, how do you navigate that as an entrepreneur? I mean, it's just like how much can you take? How How tough can you be? How bad boss bitch can you be? If you can handle it, you can do it. It's tough, believe me. But I think it's about like, what kind of entrepreneur are you? Where do you thrive? Do you want to go into super precise detail in one area or do you want to go abroad? I mean, I grew up in Queens,

New York, which has more languages spoken than any other county in America. It's a super diverse place with a wildly cool melting pot of cultures and a way that like a lot of other areas of New York or not. And then I worked in Europe as an American during the Bush years. So like I had to learn to blend in quick, you know, and I am like dying laughing, thinking about my Swiss boss who would make such a big deal when we went from Zurich to Lutern, which is like less than an hour train right away. And we would do the meeting in a different Swiss dialect. And he was like, oh, it's going to be so different, you know, and like, it's like they wear this kind of Hublo watch instead of this kind. And like, our coffee has, you know, this level of acidity and that.

And I was always like getting so deep into like the intricate differences between cultures. And that's just always been my thing. And then you come, when I came back, well, I say come back because I really do feel like coming to Africa from me, it was like going home because I feel like Europe, it's just like so perfect. People have so much free time. They just go, it's like L.A. They just get so intense into like elaborate diets of like known gluten, vegan, whatever.

Because they've just like tons of fucking free time because everything. works, you know. But like I felt like coming to Kenya was a lot like going back to Queens in that. It's just a lot of chaos, a lot of stuff, and people just trying to make it work and hustling. And you just learn to adapt. So for me, it was a perfect fit. But I think it's tricky. And my number two, Charlene Chen, who was a good friend of mine for a long time and is very similar. You know, she grew up in North Carolina. She went to a boarding school. Her parents were like the first Taiwanese people in Alabama, Birmingham, Alabama, like the seven She just been through a lot, and she came to Africa as an MBA student and worked in Ghana,

Tanzania, she speaks Swahili. So I paired up with her, and we were just, we knew how to operate in multiple countries. And we seek out what we call like a special bit person who really just gets how to do it. We had a guy we hired who like we sent to two countries in a week and you like had a nervous breakdown and we're like, you're out. You know, my friend Joel has this hilarious story about hiring this guy who on the taxi ride from the airport in Nairobi, the battery of the driver melted in the trunk and like melted his whole suitcase.

And when he opened the trunk at the hotel after arriving at the Nairobi Airport, all his stuff was melted. And he was like, I can't handle this. Go back. So I think you just like, if you can get past that, what I call fluff, you know, and you can just be tough, there's just so much beauty in working here. And like I met a guy, I don't want to shout him out, but a very big remittance company who I admire.

And I met him and I was like, oh, hi, you know, waiting to meet you for so long, so cool. And he's like, yeah, yeah, I worked in Nairobi for a summer. How can you work there? It's so difficult. And I was like, wow, in like one second, I just lost all respect for him because I was like, Wimp, you know, like, it's so cool to be able to be exposed to all this cool stuff and face all these things because you realize you're solving problems. But if you're the kind of person who, like, can't have it and needs to have his, like, flat white coffee in the morning,

perfectly brood, you know, you're going to struggle. Cool. I'm just thinking like Brian's closet. Like how many Hugel, hubel, how do you have there, Brian? So like, cultural differences between Swiss Canada. Yeah, I don't have a single one. But yeah, I know. I mean, I'm from Switzerland. And it is, it is kind of a weird thing how in Switzerland, you know, there's all these, like, perception of big differences between different parts of Switzerland. Yeah. I mean, when we arrive there, you know, I speak fluent. And my husband and I were driving over the border in our little car when we first got the

Javan-Critus. And we turned on the radio and we're like, oh, we speak German perfectly. And the Swiss radio was on and we're like, oh, no, we don't understand anything. The dialect is so different. And people were like, as if we had come out of like Mongolia. We're like, we've been living and working in German forever and they're like, you're nothing like us. We're like, the cultures are the same.

But they're so in tune to like minute differences. But here you meet people who speak six, seven languages. And, you know, they grew up on Lake Kasumu, but now that they live in Nairobi, but they are married to Kuyu, and they work in English. And they're just used to it. And, like, going back and forth twin cultures, because you have, like, hundreds of tribes in each country. I think there's thousands of languages in Nigeria.

So you just kind of, like, get over it, and you just learn to adapt. Cool. Yeah, I know this is awesome. That's really great for you to kind of, like, share a bit of this sense-fung gets from working in a place like that. So you mentioned a little bit about this, you know, discovering Bitcoin and kind of your background. But can you share a bit more about that? Back then when you learned about Bitcoin, like, you know, was, did you first have the idea of creating this kind of FX company and then you saw Bitcoin and said, okay, this is the way to do it?

Or was it, you know, Bitcoin first and then you kind of had an idea for BitPesa? So what was kind of the original germination of that vision? Yeah, I mean, like I said, I have been always working in financial services, and I had worked in FX at Credit Suisse, or at least with funds who were focusing on macro, and that was a big part of what they were looking for. But I first learned about Bitcoin from a guy who I knew from the microfinance sector, and he was like into crypto for a while,

like way back when there was like that crypto cruise they did every year. So he was like, Elizabeth, have you heard of this thing called Bitcoin? It's like international mobile money. That was how he first presented it. And I'm like, oh, cool, because I'm just hitting my head against the wall with the restrictions of mobile money. Because it's like, you know, you're in Kenya. You can't use it in Uganda. And like I said, everybody's constantly going between cultures.

So it just made no sense. And I was really struggling with the fact that all the banks I was working with and microfinances institutions, they were lending in dollars or euros and then on lending. in African currencies. So no matter how hard they tried, at the end of the year, if their currency slipped, they were screwed. They would lose all their profits. And I'm like, you have to mitigate your FX risk.

And they were like, how? How can we mitigate it? There are no products in local currencies that are anywhere near affordable. And most people just trade spot. So when I heard about Bitcoin, the first thing I thought was, wow, this would be a really cool way to get funding from abroad in and quickly change it

into local currency, without. having to worry about that dollar risk. So I was thinking that someone can make a payment every week or every month to a microfinance institution instead of taking out a loan in dollars for two years. So I was thinking about short-term FX mitigation because the process was cheaper and easier. That was the very first thing that I was thinking about.

And the guy that explained it to me was like, no, no, no, let's use this for a national currency in Somalia where they don't have, like, their own currency. And so it's kind of like all these ideas together. And I just went around and did a ton of interviews And I talked with bankers and then Somalis and remittance companies and FX companies. And I came to the idea like, why don't I do a product which basically takes Bitcoin and allows you to instantly cash it into Kenyan shilling?

And let's see what people use it for. Are they going to use it for individual remittances? Are they going to use it for business payments? So the first idea was just be able to purchase African currency from anywhere in the world. So if I was in Uganda on a business trip, I could purchase Kenyan shillings. cheaper than going through mobile money or cheaper than a bank transfer, which nobody used. So that was the first, how to purchase African currencies. And then later on, we had an intern a few months later who was like selling Bitcoin on the side making a killing on local

bitcoins. And he's like, why aren't we selling African currencies? And we're like, yeah, duh. So we started selling African currencies. And that's when we got in trouble with the regulator because someone went online and was like, you know, you can sell African currencies so cheap. And that's when we first started getting noticed. So we were effectively just buying and selling Bitcoin with Kenyon chilling. And then later on, about a year or two in, we realized most people were using it for business transactions. And our average transaction volume was going up from like $200 to more like $1,000 or even $5,000. And then with the regulator and the KYC that we were collecting, it was getting expensive to do like a $2 transaction. So we started just

doing bulk transactions to one like wholesale buyer. And then he would sell to the to the smaller buyers. So then we had like, our portfolio was like 25, 30 bulk buyers. So we were like providing the liquidity for all of the like informal exchanges in the market. And then we evolved from there to just kind of go up and up and up. And now our average transaction size is like $25,000. But I think the very first press article we had in like November 2013 was with Bloomberg. And somebody, the title was like Western Union Killer or something.

or like BitPesa slashes prices is going after Western Union. So it wasn't even really intentional, but our first press article was that. And that just kind of like our branding was remittances. Even though we were doing like all sorts of stuff, that kind of became what we were famous for, I guess. And since everybody had in their mind that like remittances, Africa, Bitcoin, they had this preconceived notion.

We just kind of like went with it. But from day one, most of the people that were using us were doing it because they were like professionals or businesses or, you know, or like not exactly your, you're like $5 or grandma sending money for a birthday gift. So I just want to kind of wrap my head if I understand this correctly. So you said in the beginning you started with, okay, basically allowing to buy African money. So that would mean, let's say if you use the written example or maybe a company or something, they would then buy Bitcoins abroad and basically,

sent him to bid Pesa and then they would receive Kenyan Chilling and those would be sent to M-Pesa or a bank account or some kind of... The first one was M-Pesa. So our first customer was a Canadian guy who already owned Bitcoin and he was like, oh, cool, I'm a techie. I'm an early adopter. I love Bitcoin. And my family is at home and I need to give him this money.

So our first customers already own Bitcoin. So we weren't really thinking like, first you have to buy the Bitcoin. Because there were all these like tech people around and all these cool guys. building these products, they were like, oh, we already love Bitcoin. Now we can use it to buy Kenyan chilling. So it was just kind of we were building for our community. And then we tried to convince like the average Kenyan diaspora in London. We went up to London and we were like handing out barbecue food at like churches, Kenyan churches. And we like giving out Pessa branded water bottles at like soccer matches. And we were like, look, why don't you guys buy Bitcoin and then

use it as an intermediary to send money home. And like literally within six weeks, we're like, this isn't going to work because there was no great UK exchange. And Circle was like, we're launching, we're launching. But it took them two more years after that to launch. And we all know how that's gone. So I mean, we were like, wait until Circle launches. You'll be, it'll be great. And it never launched. And to use other things, like a lot of our friends had Bitcoin exchanges in the UK, but it was like 5% to buy. So that never really took off. So then we already, We just went to remittance companies that had like hundreds of thousands of customers already, and they're doing like a couple of hundred thousand dollars a day,

and it makes a lot of sense for them to use Bitcoin because the price is really small, it's super quick, and it's really just an easy way for them to pay us. So that's how we do it. We basically use Bitcoin as an intermediary between us and larger businesses, and doesn't matter if the minor fee is like $1 or $10 because it's still a super small price given the size of the global transaction. Now, in the end, the people being paid out is still that $100, $200 omittance,

but between myself and my client and my customer were doing larger volumes. So what has been some of the biggest challenges you've had in educating people about this technology and getting them to adopt Bitcoin? I mean, even though it's just the underlying payment layer, you know, they still have to sort of, I guess, perhaps more in the early days,

understand the technology. Did you run in this any challenges? Yeah, I mean, when you're the pioneer, you're an educator. It's all you do. We had like so many educational materials, videos, cartoons, handouts, conferences. Like, we've literally done it everything. And, you know, it's frustrating because you're a startup and you're trying to, like, do your business and you still have to tell them, like, what you're even doing.

But that's just part of it. I think very quickly we saw split. People who cared about the Bitcoin and wanted to learn about it and they were attracted to us because of it. and they were tech savvy or they thought that was going to be cool in another way. And then people who were just like, I don't care, get my payment, like, settled immediately. And for those people, it's a question of compliance. Are you compliant?

Are you licensed? Do you have liquidity? Are you safe? You answer those questions, which any other business has to answer as well. And then you're golden. It doesn't really matter. Definitely there's like the very few, I'd say, like, 5%. Or like, if you mention the word Bitcoin on any article in your office or any document

anywhere in your life, we can't work with you. But that's very few. I think the rest of them are like, solve these compliance questions, make me feel good about that you're going to do what you say you're going to do, and there's great customer resolution, and we're okay. So as a company that's based now in many countries in Africa and operating at different levels there, can you talk about some of the partnerships you've had as a startup,

like what kind of companies are you looking to partner with, like in Africa, but also perhaps in Europe or in the U.S. or elsewhere? Yeah, well, let's divide them into the Bitcoin companies and the non-Bitling company. So, you know, very early on, we really benefited. And people say like, oh, you're just using Bitcoin to be, you know, hot for investors or whatever. But actually, the reason was that it was such an interesting technology and it was free and available.

And I was all the way in Kenya and I was able to use it. And it was like we could build our prototype super cheap. and it was cool. But the second thing that happened was that arms reached out to me from all over the planet, like Charles Haskinson and Barry Silbert and, you know, Peter Smith. They just kind of like, whoa, what are you doing down there and just like helped us build this business? And I thought that was awesome. And that does not happen in other sectors. And a lot of my friends who work in like solar or energy or whatever else, they are not getting that kind of help in that sense of community. And that was awesome and that really helped my business in a lot of ways.

And not just an investment. A lot of these guys didn't invest. Even Vinnie Lingham has never invested, but, you know, he reached out. He gives a lot of advice early on. So I think those partnerships, those guys introduced me to so many people who are now starting companies, and a lot of them are dead. And a lot of them, and the ones that are still alive over the years, we've had a ton of relationships from exchanges like all the great exchanges like Cracken and BitSdam.

We know the teams really well. They work with us all the time. Genesis has been our OG partner forever. We love Michael Morrow and he's gone out in a limb for us and we've launched a couple of co-products with them. DCG portfolio in general has been amazing and we've met so many cool people there from Sonny at Una Coin to Tony at Corbett and just that's been awesome all along the way whether we're sharing notes or comparing stuff. And then like Radislav from BitBond, who I know you guys had as a guest introduced us.

That was really cool because he had his own microfinance lending portfolio. and, you know, that's our jam. And he's like, I just need a local currency partner. And he brought in Jumea, which is, you know, the Amazon of Africa. And that, like, tripartite partnership happens super quick because we were all basically interoperable from the get-go. So that was cool. And I don't think that would have happened in a lot of other sectors

because you don't have that kind of speed and that kind of ease of interoperability. And just the willingness. I think it's already just, like, it's, like, self-determining. If you're using Bitcoin, you're already a certain kind of company. And that's been really cool. And, you know, from Bitwala to Melodic, a ton of cool guys, like wire, a ton of guys across the way.

Like, anybody who's going to help us expand our reach, we're interested in that. And then for the non-Bitcoin companies, we're looking always for those companies that want to use us for payments in and out of emerging markets. So we work with some Fortune 10 companies. companies and Fortune 50 companies who have foreign currency problems across multiple African markets. And so they onboard with us. And then we kind of solve their payment needs and their treasury

needs across the whole region. Well, maybe you can dive in a little bit on the BitP bond examples. And since I'm quite familiar with BitPBonds. So Bitcoin is basically a P2P lending platform right for for, that's using Bitcoin, right? So that the payment rails a little bit like with you are happening Bitcoin. So how exactly is the integration there with BitPesa? Does it mean that loans are dispersed to people in Kenyan chilling with BitPesa? And then you guys also convert the payments? Yeah, I think we're past the time where it's like, are you a Bitcoin company and you just do everything?

Like now we're like, we're doing foreign exchange and local payouts and local currencies. And we are Bitcoin friendly, meaning we accept it. we use it as a source of payment and a source of settlement. And I think Bitpon is like a lending company that uses Bitcoin for disbursement. So if you think about it more like a lending company and a local liquidity and FX provider have a product together, but guess what? They're not using SAP. They're using Bitcoin.

That's how we think about it. So whenever BitPon, you know, he's making loans in many markets, but when he makes them in our seven African currencies that we offer, he's able to pay out or receive via our network. So I'd love to dive in a little bit at this point, the sort of, you know, the reality of using Bitcoin at this point. Because, you know, for example, we have been running a company with this podcast for a few years. And this is sort of a side company, but, you know, still a company and made some revenues, had some employees. And, you know, for us at least, and from the beginning, we didn't have a bank account, right? So we were only using Bitcoin.

And that worked great, right? So we had some people in India that we paid and some different people that we, that were working for us and that we paid. And advertisers paid us in Bitcoin. But it has really gotten to the point at this point where it's, it doesn't work anymore, right? Like Bitcoin is just, the fees are too high for this to be sensible. And so it's very noticeable there. Like, okay, this is, I mean, okay, hopefully lightning is going to come and like lots of other technologies,

but they're not here yet. So I'm wondering, do you also see that? Is that something that concerns you that the kind of Bitcoin... Wait, you said Bitcoin doesn't work for you personally, like your company, or you're saying Bitcoin doesn't work at all for anything? No, I know, not at all. Of course, it works for some things, right? But it's just like in this specific instance, right, of us running this company,

Bitcoin has gone from being like really good, except that the accounting was a bit of a pain to not a good solution, right? And I'm curious, kind of like, is that something that worries you? Do you see that to some extent? Are you looking at other solutions? No, I'll remember. I'm trading Nigerian Naira, which, why don't you look at the volatility of the Nigerian Naira this year? So, I mean, for the volatility part and for the trouble with accounting, my accounting is in 12 countries in like 15 currencies.

I already have accounting and reconciliation and banking issues and all. lot of the markets. If I was a euro-only company just working between Germany and France, you know, and that's what you are, probably wouldn't be as helpful. But for me, it's another means of payment, another channel of payment. First two years we were in operation, we didn't have a company credit card and we couldn't get one. We had 12 bank accounts, but our local bank would only let us have a $5,000 credit card and we had to put down $6,500 in cash, which means we had to prepay more than we were allowed to spend. And with one plane ticket from Kenya to, like, San Francisco would, like, break our whole balance.

And then it took, like, four days to make the payment to get it back. So it was just so insane. We, like, literally couldn't buy plane tickets. So many of our friends in Nigeria at the same situation. And, like, some assholes on Twitter were like, it's just geo-fencing. Just unlock it. I'm like, it is so much more than that. You have no idea.

And I just tweeted the other day about, I have all this. like money in an account here for our business reasons, and I went to withdraw it, and you're not allowed to take out more than $1,000 other than in your branch where you opened it. So I happened to live way out in the suburbs when I was here and opened it, and now I work an hour and a half away. I have to travel to my branch to withdraw money

with a paper check. And then I get all the way there, and they don't have the paper check. So I mean, in places like this, I honestly, the problems with Bitcoin right now are a tiny blip in its efficiency in comparison to what I'm already dealing with. So I don't care as much as somebody who might, if you were working with the Swiss banking system.

You know, one of our really good friends just had two wires for $1.2 million, totally lost for seven days. And they lost 1,000 clients a day while those were in transit. So I mean, in places where this keeps happening, if Bitcoin is going to take four hours or even like 10 hours, and it's going to cost $20 instead of $5, it's still way better than what I have available to me, most of the time. So we are still happy to use Bitcoin in a lot of ways to make payments. I mean,

there's no faster way for me to pay my lawyer in San Francisco than with Bitcoin. There's no faster way for me to pay my developers in Europe. And there's no faster way for me to pay my suppliers. So that's still the easiest way for me. Now, you know, is it annoying that it's getting so expensive when like I paid it my cousin and it was like 40 bucks? Yeah, that's super annoying. Do I think that there's going to be a solution on the horizon in the next 12 months, yes, or I think there is going to be a mass exodus, but I think there's a lot of, and I hate to give this answer. There's a lot of people with a lot of smart people working on this, but, you know, where they're launching the beta right now for lightning. So Laulhu and Elizabeth have been working

really hard on that, and I think that's, I'm excited to see what that brings. But I mean, as a business, you do have to hedge your risks. And so just take the example, like, take the, the case where perhaps Bitcoin transactions get absolutely high. Yeah, I mean, like during the fork, we use ether. I'm not against it at all. I'm down for whatever liquid. If you show me that everybody's using Bitcoin cash and it's super liquid and there's no slippage and I have brokers in six of my markets and they're going to give me

liquidity and they're going to give me, you know, like a line of credit or whatever it is, let's do it. It's not like I have like some tattoo on me and I'm not like a crazy Twitter troll that's psychotic about it. I'm like practitioner here. I got a business. I have like 50 people working for me, and I'm not going to let go hungry. This business is going to go on. But right now, I think a lot of it is just like hype, and I still don't see a fundamental problem that's affecting me. During the fork, we did use ether.

I am down to use ether. Not a lot of brokers have that kind of ethel liquidity. Recently, it started to grow, and I'm excited about that. It does give us another option. But we're a long way away from like Bitcoin Cash being able to provide that, kind of network of liquidity and brokers. Right. I do agree. I mean, from our perspective, what's become just unusable of the Bitcoin is just the fees.

I mean, we're making small transactions, right? Transactions, you know, a few hundreds of dollars or perhaps even less. And when you, when the fees are, you know, maybe 50% of that transaction, it just becomes useless. I mean, I make a couple thousand dollars and paying a monthly legal bail. So it's like not a big deal yet. So coming back to BitPesa and the way. in which your customers are using it.

Can you talk about, one thing I think was interesting about your blog and some of the presentations that you've given, I've seen some videos online, is how companies are leveraging BitPesa and that platform to access new markets like European markets and Asian markets. Could you expand on that? Yeah. So we have three main customer segments. Of course, we have people who just want Bitcoin and whether they're investing it or are buying games online or using it to then make their own payments or remittance.

You know, I don't know. I've got some ideas. So that's just about like 15% of our business and that's pretty cyclical. So it goes up or down to like 5% to 20%, but stays pretty much pretty small. And most of those guys are buying in bulk. The next use case are remittance companies. That's our biggest use case. So these are guys that have no other way to buy African currencies in multiple markets. And they're usually, you know, there's two kinds of remittance companies, the Western unions and moneygrams who come down and like blockbuster video the entire map of the world and put like brick and mortars everywhere and have their own infrastructure. And then there's like the other 300 remittance companies who basically work with partners in

each local market. And for them, they come to us. And once we figure out a fund flow where they pay us either in Bitcoin or they pay to a Bitcoin broker that comes to us or sometimes they just send Fiat, they're like, where can you take us? You know, Bethesda, where are you available? And if we show them a new market that we've just opened up, they'll market it, and they'll end up with the funds in, and it's awesome. And so we've definitely helped companies come to new markets.

We've helped companies reopen markets that they closed because it was just too expensive, because our operating, we help these companies have a lower operating cost structure. I mean, that was my original business in Africa. How do you, you know, show companies how to be more efficient? And then our third customer segment are our businesses doing operating across Africa. Some of these are African businesses, so they're going from like South Africa to Uganda or Nigeria to Zambia. And they have crazy high rates because those currency pairs are not available. So using our model and our own infrastructure, we're actually able to offer currency pairs that didn't exist before. So that's super cool for us and that gets us super excited.

And again, those companies are like, oh, wait, I can collect payments from Mozambique with you. Cool. let me operate in Mozambique or, you know, we stopped operating in Nigeria because it was so difficult to sell our Naira, but with you, we can do it. Awesome. So, you know, we love hearing that and we love promoting African business. And then, you know, we have some companies that are looking to do exports into China, but their model was taking like four weeks to pay and their cash was tied up. And when we show them a quicker way to pay to China or to Dubai or Korea, you know, it just makes it that more exciting. Like a lot of car imports in East Africa come from Korea. and Japan. So, you know, helping small mechanics, instead of importing like just $10,000 worth of parts, they can do like $5,000 every week and just showing them a different cash flow structure for how to run their business because it's cheaper and easier and more transparent. So from the point of view of, again, from the sort of European point of view, We kind of touched on this question of diversity, and you need to have a special kind of like

DNA, right, to like go and work in Africa and you need to be ready to work in this very diverse environment and not, you know, expect your flat white coffee every morning or something like that, right? What kind of opportunities do you think that platforms like BitPesa provide for, say, European businesses that would like to establish an Africa, but don't necessarily have the experience or don't think that the infrastructure is there for them to access those markets. I just want to be clear, I had two soy cappuccinos today from the cafe upstairs in my Nairobi office selling. Did you pay in Bitcoin?

I did, actually. I did. I kept the guy because he's like, oh, but Pezza, you always come in here. You're never giving me tips in Bitcoin. So I actually did give him some Bitcoin. So then you went to Bitcoin cash and I was like, oh, shut up. So what's it called? So I do want to like break down that stereotype that it's like the jungle here and there's nothing.

This is like, if I open these shades, you'd see like a gorgeous office building with amazing companies everywhere. I mean, there's a lot happening. But you're right. There's not everybody wants to come down to markets that are much smaller than the entire European single market and geographic distances and differences in regulation are quite tough. So we love to be that like one point in, multi-point out. And there's some companies that do that kind of thing in Africa, whether it's like your logistics go-to-point,

we'll help you with logistics across Africa. And you see that really in every emerging market. There's companies that help you gain access or the gateway to Latam or the gateway to Southeast Asia or the gateway to China. We're just like super excited to do that. for Africa because we're passionate about this continent and specifically sub-Saharan Africa. And I think the Bitcoin thing helps as well because so many cool new companies and startups

are using it. So it's kind of like seeing a friend, you know, like, oh, yeah, cool. And they also use that. Like, oh, yeah. Oh, and you write in Python? Awesome. You know, it's just like that touch point of familiarity. It's the new, does your dad play at that golf club?

It's like, oh, yeah, you accept ether? Cool. You know, I love that. And we're excited that we're bringing that here. Yeah, I totally agree. I think that's one of the wonderful thing about Bitcoin and blockchain. It's the sense of community and the sense of like kind of being in this thing together and how one can and how this is a global thing extends across all countries.

And I guess that does bring me kind of to my next question, which is that so you were a big pacer, right? I was very early in doing this in Africa. And of course, since then, a ton has happened, where we have seen in it in a long, enormous explosion in interest in Bitcoin, but also Ethereum and enterprise blockchains and all kinds of other stuff. So what did you see in terms of the development of a blockchain ecosystem in Africa, what kind of startup, what kind of projects, and what type of development? Well, it's the same as globally.

I guess we all thought there'd be way more exchanges by now, right? You really would have thought there would have been a lot more competition, but you have like, you can count on one hand, how much. many like verifiable exchanges they're on the United States. And they're not right now. Or like the UK, seriously, how many British exchanges are there still? It's still so hard to buy Bitcoin with sterling. That's bonkers.

You know, so same thing. We were like, oh, my God, there's going to be exchanges everywhere. So we just started running and hustling and building. And at one point, I was like, one board pack, Barry was like, why are you guys moving so fast? Like, I mean, I'm glad you're moving, but you're running so fast. And I was like, I just thought there being. more competition by now and there's not because the regulation is super tough and you have to get

regulated by the same kind of framework that like a payments company would or in the worst case the deposit taking institution or a digital wallet and those kind of licenses as I mentioned before already exist here since mobile money was here there are digital wallet e-money licenses all over the continent that you have to respect so a lot of people were like oh yeah Elizabeth you're just operating down there because it's total freedom. No, I'm operating down here and putting a ton of time and investment into making sure I don't get arrested. And we had big trouble in Kenya where they banned us and they had as close down the bank accounts. But yet I'm sitting in my Nairobi office where I have 15 people because we work with the government on finding the way forward. So I think a lot of other

companies in Africa and globally just kind of got to the same point where they lost their bank accounts and they were like gave up or they ran out of money or they were like I got a bank account this is not what I signed up for I wanted like a non-bank futuristic company but unfortunately this is like this shitty hybrid purgatory where we are now in the middle we're still relying in a lot of the banking infrastructure where hopefully I see progress where we either change what that looks like or we go to the next step which is completely away from it I'm curious if I don't even know if this is on your radar because you you sort of operate in the Bitcoin ecosystem and specific loan payments.

But have you seen or can you sort of report on sort of adoption of blockchain technologies more on the enterprise side in Kenya or any of the other countries that you're familiar with? Well, first of all, there's like a not, I don't want to sound like a hater. There's just so much hype. Like I'll get an article in someone's like, Elizabeth, Senegal just launched an e-token and they're doing an ICO. I'm like, I'm literally sitting at a meeting with the central bank, and that's not happening. And that company doesn't even have an office in this whole country, you know, and like someone will, that's the thing that's like the media in the sector. I don't want to hate on this, but like the media is so unchecked.

Somebody will like write a press release about something they hope will happen one day, and then it'll just go viral since there's no reporters on the ground, and you get a lot of this kind of hype. So that happens a lot. but true companies on the African continent, there's Luno, which is a wallet and an order book, and then they do some enterprise stuff elsewhere. There's Alcoigne Trader, which is in South Africa only, and there's Ice Cubed, which is the worst name, but one of the oldest exchanges in South Africa as well.

And besides those three South African exchanges, there's a few handful of super tiny and formal exchanges with very thin liquidity, maybe in like Botswana, Nigeria. none in Kenya. And then there's local bitcoins in a bunch of countries, but still pretty low volume. Nowhere else is there any activity or any project. There was this thing that was like, Tanzania launches this blockchain project with Gates.

I was with the team that built that, this company called Software Group. And I'm like, tell me all about this. What does it look like? Turns out it has nothing to do with blockchain at all. It's like a single database run on SQL, like literally. And you're like, but it's sad. It was similar to.

to the blockchain and they were like, I don't know why they got in the press release. So I think there's still a ton of hype, but nothing yet. I mean, we had IBM sniffing around for a while, really pushing to all the governments that they were going to do blockchain without Bitcoin, and no one could explain what that was going to be. So I'm racing behind them at all these meetings being like, that doesn't mean anything. Don't sign away like the entire records of the country to IBM. So there is definitely people taking meetings, but nothing's happening. I also get like a lot of calls from UN agencies or development agencies and you know we've had World Bank funding we contribute to research at the World Bank and the IMF and the IFC and we have

for a long time we're part of the UN women program and like they'll come to me and be like Ripple was here and Ripple wants to build a whole new currency for the Horn of Africa so people are taking meetings and they're pitching that stuff but nothing is live and again you know it is really hard to operate on the ground are they going to send a team of 40 down here to get this going. A lot of people will threaten me and say, like, let us in, connect to us or else. And I'm like, let's have lunch in Lagos. You know, I'll see you here.

Come here and show me you mean business. And we'll, you know, I think Ola at VidoA says the same thing. Everybody's like, Ola, partner with me or else. I'm going to come and crush you. And she's like, I'll see you in Dubai. And like, nobody can get there and does what she does. So she's the only one. And I think, you know, that's what drives people.

entrepreneurs in these markets to really invest and take the time to build something slowly because it is hard for competitors to come in. And I just think that the regulation is still very vague in a lot of countries. So you either have to get existing regulation, which is cumbersome, but that new lightweight regulation doesn't exist yet. I guess so last week, actually, we had Chris Fabian of UNICEF Ventures and Sean Conway of I I know that IXO is doing some stuff down in South Africa with regards to humanitarian work and proof of impact.

And I mean, I guess that project is sort of just getting off the ground. Yeah, I mean, it just talks about it. There's what we call letters of intent and RFQs, like RFPs and requests for proposals. And we've submitted a bunch of them and then we go, we give a presentation. And everybody goes, yes, yes, blockchain, yes. And then you're like, and now, I'm like, well, what do you mean? We just did it. You're like, no, that was just a presentation.

Like, yes, we did it. It's done. Let's put a breast release. And you're like, what just happened? Like, we didn't do anything. Let me reassure you, that happens here in Europe, too. It's not unique to Africa. And they're like, let's do it, put it on a panel.

And four people are talking about it. And you're like, am I on Ambien? Like, did something happen when I was sleeping? Like, what are you? Like, as somebody who builds a product and there's like, how much revenue does I make this? this bump and how many customers do I have? It's mind-boggling that that happen.

And here, more than anything, because you do have this layer of development-ness. Cool. Well, it seems like you have built Bitpacer to kind of, you know, a decent point, right, where it's like a functioning business, a real customer, real usage. And, you know, we also seem to be at this kind of inflection point, right, where there's an explosion of adoption and companies like Coinbase

are growing at just completely. completely insane rate. Where do you see this going forward, both for the kind of technology as a whole, but also BitPesa as a company? What's your vision for like three or five years from now? I'm glad you asked. I literally just posted my strategic goal to my board. I mean, from day one, I'm here to build a really big business. Like that's just my been my objective. And I love to be part of the Bitcoin community, and I love to use it as much as possible in all my products. Is it going to, if it kills my business, will I back away? Yes, but am I going to hedge my bets when the price is down? No, because the price doesn't affect me as much. So I'm able to,

given the fact that I use it just for settlement with a certain amount of brokers, I'm able to kind of power through the times when the price is low or people don't like to use the word Bitcoin. And if you look at our performance, it has not correlated with Bitcoin price. So I feel lucky that my business can still keep building even in times of turmoil. And we've been through places where it's like really cool to say it and really embarrassing to say it, right? And I think that's a difference between us and someone who's straight up just selling Bitcoin. So our business, I think, is going more towards foreign exchange products.

And I really would love to offer futures in local African currencies. And I'd love to have people be able to buy Bitcoin derivatives and Bitcoin products and other crypto products around the world using us as an entryway. I mean, I just think that it's crazy to say the African consumer can't do that or they're not ready for this, which, you know, the Kenyan Central Bank just told me the other day, well, what's the African context for this? I'm like, what do you mean? Are your citizens different than other people? Like, if they are accredited investors, if they have the knowledge and they're fully informed, why not let them participate in global capital markets? So our view is to just bring the same products you see everywhere else to these markets. And whether that's forwards or futures or, you know, custom effects. risk mitigation stuff, that's where we're interested in building. And I think globally, I just would love to see more market entrance. I think it's dangerous to have two major U.S. exchanges that everybody's using that go offline at times of high volume, you know.

That makes me really nervous as someone who's trying to always mitigate risk and worried about long-term sustainability. You know, there's some good and bad things about it. There's, you know, a lot of reasons why it is, but I would just love to see more market entrance and I think if we don't have those market entrance come in, we are going to, we are going to face some serious bottlenecks. Cool. Well, thanks so much, Elizabeth.

So for people who want to learn more about BitPesa, get involved, or is what's, or what kind of, what kind of companies would you like to work with where people should look at BitPesa? Well, we're launching our order book. We've never had an order book before. We've always been a broker model. but we are launching a Bitcoin and Ether orderbook in Q1. So anybody who wants to help work on that or wants to take some cool stuff,

reach out to us. I'm on Twitter. Our whole team is up there. Mincy, our product manager, DerG our CTO. So just reach out to us. We have some really cool structured 4X products coming out in Q2, Q3,

so that's excited. And then anybody who's looking to do a crypto project in sub-Saharan Africa, reach out because, you know, we have local licenses, local bank accounts, local setup, local teams. We're happy to help you get started and to partner with you and local liquidity.

Awesome. Well, thanks so much, Elizabeth, for coming on and sharing so much about BitPesa. It's super interesting to hear what an exciting business you've built and what's going on in Africa and with BitPesa and Bitcoin. So thanks so much.

Cool. Thank you so much for having me. And of course, thanks so much for a listener for once again tuning in. So we're going to be back next week. In the meantime, if you want to support the show, you can do so by leaving us and iTunes review review in another platform. Thanks much.

We look forward to being back next week.