TFTC: A Bitcoin Podcast - #740: Hard Asset Lending For The 99% with Sadi Khan

Episode Date: April 27, 2026

Marty sits down with Sadi Khan to discuss AVEN's launch of a Bitcoin-backed credit card offering 10-year fixed-rate credit lines as low as 7.99% APR, the company’s mission to grind down consumer cost of capital through asset-backed lending, and how technology, regulatory clarity, and hiring for intelligence are reshaping modern finance. Sadi on X: https://x.com/SadiSKhan Aven: https://www.aven.com/bitcoin STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/yHGkvYxdqT Opportunity Cost Extension: https://www.opportunitycost.app/ Shoutout to our sponsors: Bitkey https://bitkey.world/ Aven https://www.aven.com/bitcoin CrowdHealth https://www.joincrowdhealth.com/tftc Unchained https://unchained.com/tftc/ Salt of the Earth: https://drinksote.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

You've had a dynamic where money's become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Sadi, welcome to the show.

Thank you for joining me. Like I said, before we hit record, it was like we're recording the podcast already. So I figured let's just get into this. A hundred percent. Well, thank you so much for having me, Marty. I've heard so many great things about you. We have so many mutual friends. So I'm just excited to have this conversation with you and get to know each other and talk

about new products and talk about AVEN. Yeah, well, I'm, I think, more excited because I've been telling your team that a product like you're launching today is something that many people, myself included in Bitcoin, have been waiting for. And it's a theme, it validates a theme that I think is going to be predominant for the next few cycles, which is this intersection of consumer finance and Bitcoin as collateral. And that's what you guys are launching at Avon today. But before we get into the Bitcoin specific product, I think getting a background on Avon, how it came to be and really leaning into and

starting with your mission, which is, I think, very ambitious, but also very virtuous, which is to reduce the cost of capital for consumers, uh, which is, uh, very important in the, in these days, especially a hundred percent. Yeah. As you, as you know, well, um, even was founded on this very simplistic mission, uh, which is our mission of reducing the cost of capital for consumers. Um, we are almost overly serious about it in some ways and very unserious about anything else.

We are extremely focused on this mission. and we believe that the way we can reduce the cost of capital is first by thinking about it from first principles what is the cost of capital right to consumers and to anybody it's the cost of the risk free rate plus the cost of the risk plus the cost of the transaction and our strategy at avian is to reduce the cost of capital by reducing the cost of the transaction and driving that down to zero by inventing and developing and deploying technology in 2022 we launched the avian home equity card which helped us drive the single largest change in the cost of capital on credit cards in u.s history we've now originated over four billion dollars in lines on our home equity

products and saved consumers over 300 million dollars in interest payments actually and the way we were able to do it is by attacking the largest source of unsecured capital which is credit card debt in the united states which is over a trillion dollars and consumers today in the us are paying over 20 percent api on that which is over 200 billion dollars a year in interest payments and our goal is with asset-back lending we can reduce the cost of the transaction of borrowing against the assets you already own and by doing that reducing the cost of the risk and passing on that savings in the form of a lower APR to the consumer. Going back again to that point of the cost of the capital is equal to the cost of

the risk-free rate, which as you know, and I know we don't control today, Jay Powell controls that. And hopefully in the next year or so, our friend Kevin Walsh will have more influence on it than not, but you and I, and you know, by and large, we are not in a position to influence that. So the cost of the risk is an information theory problem, where the more we understand about a consumer and the more we understand about the world, we will be able to price that risk appropriately. But the pricing of the risk isn't a kind of a strategic advantage for anyone in the long term. It's an advantage of, do we have enough?

The core problem of it is an information theory problem, which is how much information can we have about the underlying asset, an underlying person, and the world at large. And then finally, the cost of the transaction is where we can invent a lot of technology. And so we started off by approaching the problem of home equity, which is the largest asset class owned by Americans today, and extremely inefficient. And we developed and built a lot of technology to make that go from four to six weeks down to as fast as 15 minutes and reducing the cost of that origination by an order of magnitude, which by derivative then decreased the cost of the risk itself. And we can bundle those savings on in the form of a 50% to 70% lower interest rate for consumers and put that in the form of a credit card, which is both convenient and familiar for most consumers. And in our kind of philosophy of unsecured debt being expensive and irresponsible in many ways, because we want to give people credit for what they already own so we can drive down their cost of capital,

we think that also applies to what i and i think hopefully you also consider the most important future asset class for the world at large which is bitcoin and digital assets in general but bitcoin specifically i think i've heard from from garrett that you are you know similar to me an old-time bitcoin holder perhaps longer than myself i've been a hodler since 2014 um not a huge amount Mind you, probably not as big as yourself, but I've been a believer in the structural value of this, largely because I grew up in Bangladesh, Zambia, where inflationary currencies are the norm. And I think in a lot of circles, there's a lot of comparison between Bitcoin and the value of Bitcoin as an asset class compared to USD. And I think that's kind of a red herring, actually. I think the value of Bitcoin is against, you know, the Zambian kwacha and another inflationary currency.

And we can go through many of them. And I think for many of these people in many of these countries, having a cryptographically constrained asset to help them fight against arbitrary monetary policy is extremely valuable and important in the world. And that's why I've been a believer and a holder of Bitcoin for a very long time. and i could not be more excited about about launching and building the product that we were building today which i'm excited to talk to you more about before we get to the product really like humanize the problem here i think it would be i'm just curious having lived through um high inflationary periods lived under currency regimes with the debased currency what does that do to your psyche how does that affect your day-to-day living and more importantly what

does it prevent you from doing it's a great question i think there's a few elements to it right um one it it enforces and it emphasizes the imports of building systems that do not require you to to trust in other kind of human driven systems in and of itself um and i think that's one of the most powerful things where you know the reality of it is in these politically volatile kind of regimes the incentive structure for a governing body to make decisions that are inflationary to currency is quite high frankly um and you as a as an individual um in these countries who aren't often you know governed in the most responsible manner um is often subject to the whims of of arbitrary sometimes monetary policy sometimes desperate monetary policy

frankly um and it can lead you to to a place where you not only cannot trust your government you can't trust even the the dollar bills you've saved under your mattress for years and people lose their life savings people lose you know generational life savings sometimes not just you know what you've been able to say for yourself and so i think there's a real opportunity in the world for us to provide a a an asset class that consumers globally can hold that can give them uh give them an asset that they can trust in its value over a long enough time horizon historically as you know that it's largely been gold you know if you kind of look back in in world history and even today for example one of the largest purchases of gold

in the world is is the indian subcontinent right and in in many of these countries in in africa india and subcontinent gold is the asset class in which you store value um and and the reason for that is obviously withstood a long you know duration of time but it's extremely inconvenient and oftentimes you know people will buy and sell and trade in jewelry whether it be you know buying it with your savings and keeping that gold in a form that you can wear which is a convenient way of storage and and safety uh but also in in how they can exchange marriage vows and gifts right in indian subculture a huge amount of uh of the kind of the kind of the workings of a marriage is upon the exchange of gold between you know husband and future wife or wife and future husband

um and the reason for this is you know gold is oftentimes the store of value and the store of net worth effectively and to me the power of bitcoin is to be able to do that in a digital form um that removes the kind of the the physical security needs obviously there's other challenges we have to solve on physical security and crypto that we can talk about in some more detail um but it solves the kind of need to like store manage these physical assets um and be able to borrow and transact with them in some form that is sufficient that i think is super valuable by having uh an asset class like bitcoin and i think to me that is like the core of what i value a lot in in bitcoin as a digital asset and i think that value is tremendous in in much of the world um and

think it's easy for us to underestimate the value of that while we are in the united states or a western democracy which has a you know a strong and valuable regulatory regime that we can depend on but in many parts of the world people can't and in those parts of the world i think having asset classes into bitcoin are extremely valuable and i think we'll increasingly see that in the world i agree and i think one of the beauties of bitcoin is the fact that uh not only is it permissionless distributed but it's accessible on different scales you can save a dollar you can save a million dollars yeah and i was telling your team i think one of the big themes that i think is going to really take hold and it started a little under a decade ago but it's

beginning to gain steam is this intersection of bitcoin and traditional credit markets bitcoin being used as collateral as a hard asset to get credit on it. And I think in the notes that I have after talking to your team, like really bringing the tools that have been sort of siphoned, not siphoned off, but only for the Uber wealthy, that 1% where they borrow against their assets to realize liquidity without having to take on a taxable event or sell assets that they want to hold on

to and bringing that to everyday consumers and making that a widespread practice is an incredible sort of wealth multiplier for people who are holding these assets, don't want to sell them, don't want to take the tax hit, but have done a good job of being right and doing the judicious thing of saving in a hard asset over time, understanding that it's scarce and solving a problem for them, which is, hey, I have this wealth. I don't want to part ways with this asset specifically, but I would like to tap into it. And that is what you're launching at Avon today. And I think this is a good time to jump into the specifics of the product

because I think you're going to make a big wave because one of the biggest, two of the biggest problems that people have highlighted with Bitcoin collateralized lending to date is the rates, the cost of capital, and the relatively short duration that a lot of these products offer. And it looks like you're bringing both lower rates and longer duration, which is going to be a well-welcomed advancement in this particular part of the market. That's wonderful to hear that you're feeling as positive as we are about it. A quick

one-liner on the product that we're looking to launch is we're looking to to launch what we hope to be the best in class bitcoin back lending product which is a credit card secured by bitcoin with the ability to draw 10-year fixed rate plans with an apr as low as 7.99 interest rate nori hypo fixed rates over a long time horizon with ldvs that go to 30 50 and 70 of the bitcoin that you hold with a five-year interest only period we think this should be the best in class bitcoin back lending product in the market today covering the span of cases large purchases where you'll be able to draw down without a taxable event against your bitcoin holding um for large amounts in a fixed rate with a very low interest rate all the way up to smaller

transactions where you can use the convenience and the cashback and rewards of a credit card and we think that combination should holistically feel a lot of your needs of having to borrow or utilize and get liquidity on the bitcoin that you hold um we think that should be a very valuable product to hopefully many consumers our own research indicates that about today people who hold bitcoin in the us which is significant already and growing obviously um about 20 to 30 people have already tried or have a desire to borrow against their bitcoin today and we think you know we want to build the best in class product for these consumers so they're able to you know get some liquidity on the responsible decisions that they've made which is to buy and

hold bitcoin for a long period of time and we're excited to bring that to the market and we think and we hope you will agree and others will agree that this should be one of the best in class products in the market the uh let's let's touch on the cost of capital again this is your your mission is to lower the cost of capital um if you have a 30 ltv you're going to be able to get a 7 seven nine nine percent rate out of the gate uh in the space that is i i think the lowest that i've seen for um these types of products outside the world of defy which has its own uh sort of risk which i think the defy world is is finding out uh over the last few days specifically um but what is giving you the confidence to go out at the market with at that rate specifically

was allowing you to do that that's a great question um just tactically there is you know one or two things and i'll touch on that and then i can touch on the long-term view that i have about being able to borrow against bitcoin and digital assets in general um there's two really important things uh about even so first is we've built a reputation of building kind of world-class or best-in-class asset-backed lending products in the united states over the last you know over half a decade, we built the world's best-in-class home equity-backed credit card program. We've had billions of dollars of origination. We've built a world-class capital markets function that sits behind it and helps us power and grind down that cost of capital for

consumers who are borrowing against the home equity. We've taken a lot of that expertise in capital markets and legal and compliance, and we're now bringing it to bear on this market, on the NIST asset class, which is Bitcoin. And this has allowed us to navigate the market ecosystem and the regulatory and compliance ecosystem to bring down our cost of capital in a way that is safe, secure, and sound and pass that as a low cost of capital to consumers

who are going to be borrowing against our Bitcoin-backed credit card. So I would give a lot of credit to our capital markets team, to our credit team, and to our legal and compliance team for putting down this foundation over the last few years, actually, to enable us to come to market with a product at that price.

That's 7.99% interest rate. We're not losing money on that product. And we're making enough to pay our bills and add value to consumers at the same time. And we think that's valuable to the world. And in the long term, I believe this is just us getting started, Marty. If you think back about how we think about risk and how we think about the cost of capital, we actually think in the long term, our Bitcoin-backed credit card should be the lowest interest rate product and lending product that we offer.

Because in many ways, we're taking the minimal amount of credit risk relative to our other products. the ability for us to underwrite this the ability for us to to to take position and and liquidate that in case the market moves against it allow us to take much less risk on this product than some of our other products which in the long term i believe will lead to lower and lower cost of capital for consumers who are looking to borrow against the assets that they own going back to our theory and our philosophy is we give people credit for what they already own. And if you kind of think about the asset classes we operate in, home equity, now Bitcoin, and other forms of assets we'll

work on in the future, of all the assets that we, you and I, can conceive of, the digital asset class is probably the lowest risk asset class to borrow against for the consumer and also to lend against as a lender. And if you think back to that equation of the cost of the risk is the risk-free rate plus the cost of the risk plus the cost of the transaction, the transactional cost should be the lowest and the risk should be the lowest. In which case, if the risk-free rate is equal across all asset classes, the cost of capital should be the lowest for a Bitcoin-backed lending product compared to any other lending product. And we should be

driving towards that. Now, I think there's some gap between our, I would actually even argue, our home equity product actually has a lower EPR right now as a headline rate than our Bitcoin-backed products. But I think it's a matter of time before we grind that down. And I'm excited to work towards a world where our Bitcoin-backed product has the lowest headline EPR of all the products that we offer to consumers. All right, freaks. You know me. You know I don't take sponsor money from products I wouldn't use myself. So listen up. The Avon Bitcoin Visa card is one of the most interesting things I've seen in the Bitcoin lending space in a long time. Here's the deal. You can get a line of credit up to a million dollars backed by your Bitcoin without selling

a single sat. No gains, no annual fees, no minimum draws, and your Bitcoin is custodied by BitGo, which is one of the most trusted names in digital asset security. AVEN never lends it out. There's no rehypothecation. You stay in control. And guess what? You can lock in a fixed rate for up to 10 years.

That's 10 times longer than most lenders out there, or go interest only for up to five years. Rates start at 7.99% APR. For a product that lets you keep your stack and still access liquidity, it's hard to beat. I mean, the duration and the rates is the best I've seen in the market to date. You also get 2% unlimited cash back every time you use the card. Spend fiat, keep your Bitcoin the whole game. If you've been stacking for years and need liquidity without triggering the taxable event,

this is worth a serious look. Go to aven.com slash Bitcoin. That's A-V-E-N.com slash Bitcoin. Check it out. Sup freaks, this rip of TFTC was brought to you by our good friends at BitKey. BitKey makes Bitcoin easy to use and hard to lose. It is a hardware wallet that natively embeds

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If you have friends and family on the exchanges who haven't moved it off, tell them to pick up a BitKey. Go to bitkey.world, use the key TFTC20 at checkout for 20% off your order. That's bitkey.world, code TFTC20. You're speaking my language, Sadi. I've been banging the desk for years because you look at a Bitcoin collateralized loan and if you look at the risk profile compared to something like a HELOC where you're looking at a piece of collateral as a piece of real estate, you have to get it appraised, God forbid, somebody goes into bankruptcy or foreclosure and you've got to figure out how to offload that asset, what price you're going to be able to get for it.

and you compare that to bitcoin which trades 24 7 365. you're using bitco for your custody so if you have an agreement between yourself bitco the end customer for some reason god forbid they're unable to make their payments and uh you need to liquidate that collateral it can happen within minutes and i'll add to that right do it on the weekend if you need to right away exactly and by the way i just want to add that like we take like our regulatory compliance extremely seriously as a company we built our reputation on that over the last five to six years by building and serving some of the most regulatory complex products with a with a spotless track record on home equity home equity is one of the our home equity back credit card is arguably one of the most complex most

kind of regulated products on earth in the financial services we fall on our mortgage regulations and we fall on our card act and all the credit card regulations and we navigate the superposition of both of those set of regulations and we've done that you know with great help from our partner bank and from our for our legal and compliance team um in i think a very smooth fashion to date and we're bringing all that expertise to bear so to your point marty around like the risk pieces we are going to take this risk piece extremely seriously we do kyc we do ability paycheck we're actually going to pull uh pull do a soft pull on credit um as part of our application process which is a higher standard than than many of the kind of lending products that have existed

in the market today and the reason we do that is so that we can bring the kind of advantages of that safer and sounder practice that more compliant and highly regulated practice to bear so that we can drive down that cost of capital for consumers. This allows our capital markets partners to feel comfortable and safe with what we're offering so they can offer us a lower cost of capital that we can pass on to the consumers. And that is like a very real decision that we kind of very intentionally made when we were designing this product.

Because again, to our mission, we really want to drive down that cost of capital and we want to drive it down to be lower than anything else in the market today. and hopefully for a long time against any other asset class that exists, to your point. Why do you think it's taken this long for Bitcoin specifically? Do you think that's... Actually, another way to phrase that is why for Avon is the timing right now?

That's a great question. Two pieces. One is we have actually thought about this product since we started the company. So it's not like a new kind of idea to us that came to us at some point in time. we actually thought about this product for a long time we knew there was a timing element to us being able to do it um there are two elements to it one is we wanted to establish ourselves first

by building frankly one of the most complicated products that one could build which is the home equity back credit card which would enforce kind of the full stack built across every inch of the stack from processing to origination to advertising to servicing all the way to the capital markets And we need to build that so that we can build more asset classes that are, you know, hopefully a little bit easier to build over time, but at least gives us kind of a strong foundation upon which to build. The second piece is there did need to be kind of an increased degree of clarity in the market about, you know, where lending against Bitcoin and other cryptocurrencies exist. You know, I know there was, you know, great debates over the last few years, as you know, Marty, better than most around, you know, is this a commodity? Is this a security? How is it going to be treated?

And as a company, I'll tell you, at Avon, we generally do not take regulatory risk as a company. And so until we felt that there was clarity in the market around how this would be kind of treated by kind of the appropriate regulatory regime, we were not comfortable with launching and building a product. As that clarity has now emerged over the last year or so, we felt more comfortable about building and launching this product. And the third piece is, you know, we wanted to be able to kind of leverage the infrastructure on capital markets and compliance that we built out over the last few years. And obviously the technology infrastructure that has come together over the last few years to be able to build, you know, the best in class product. And a lot of what we build sometimes, in fact, many times, many of the products we build, we're not the first to market, Marty. Our home equity credit card, we're not the first people to build a home equity credit card. 20, 25 years ago, Capital One and others actually built a credit card backed by home equity.

We like to be, we don't like to necessarily be first. It's great to be first. We just want to be the best when we launch a product. And for the Bitcoin bank credit card, a number of pieces all needed to kind of come together. We need to have the right team. See Srinanani on the team that I think you've met with now, Garrett, are, you know, crypto natives, as I like to call them. They both, you know, cut their teeth on building wallet startups and going deep on L1, L2 chains. And they're the right people to build a product like this.

Number two, we wanted to make sure regulatory kind of clarity existed in the market. And number three, we want to come in with an advantageous product, to your point. We want to have the lowest rates in the market. That's what we take great pride in. We want to be able to come in with a product that has the best rates, has the best terms, and has the safety and soundness behind it in order for us to know that we can sustainably and continuously deliver this value to consumers, not just today, but over the next few decades, and build out that infrastructure and provide that value to consumers for a very long time to come. so there were a few pieces that all needed to come together i wish we could have done it faster marty uh but here we are today and i and i hope i hope you know the world loves it and i hope everyone uses it and will love it as much as i do so freaks when you take bitcoin seriously you

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CrowdHealth member for almost five years now. My wife and I have had two children while we've been on CrowdHealth, and I actually just got the last bill for our third child funded. It was $6,157. CrowdHealth negotiated down to $2,309, and we only paid $500. The rest was crowdfunded by the CrowdHealth network. If you're sick of health insurance premiums and having to pay deductibles and getting ripped off at the hospital, join CrowdHealth. It's an alternative way to pay for your health care it's not health insurance it's crowdfunded health care as you can tell they negotiate prices for you you pay in cash it's much cheaper overall we're much happier they have incredible perks go to joincrowdhealth.com slash tftc to sign up five years on

crowd health not looking back joincrowdhealth.com slash tftc use the promo code tftc once you set up your account you're going to get 99 a month for your subscription for the first three months All right, back after some slight technical difficulties, but I think the sidebar conversation is a good addition to the question I was going to ask, which was surrounding how you pick your team. And I was telling you that I watched an interview that you did earlier today in which you said you guys hire for intelligence specifically, which many people will say they don't do, but you think is a non-starter when hiring. And while we were going through our technical difficulties, we were talking about AI and how we're implementing it at our businesses. And I think you made the comment it's going to replace middle management, which I think is becoming very clear to people. I think Sequoia and the block, Jack and Olaf wrote that paper together. And and it's becoming clear that it's going to make the smart humans, the intelligent humans even smarter and more productive.

Yeah, I think there's there's a few elements to this, right? One is the massive accelerant. It provides intelligent people with a superpower to be more intelligent. And I think we you know, I think we talk a little bit about this. uh on the sidebar but you know it's worth talking about how we look at hiring talent so a couple of thoughts one is that we we run a very lean team so today for example we're only about 88 89 people ftes in the company um and i think you know we we've kind of shared this broadly but you know the last milestone we shared publicly is that you know we generate more revenue

per fte than most like technology companies do as a as a company ourselves today already and we expect that to accelerate not decelerate as as we grow and a lot of that boils down to like how much water we expect each of our individuals to carry and that requires them to be highly intelligent very hard working and mission aligned in what we are trying to achieve in the world these three things are the kind of pillars um that we look for and i know the intelligence piece can be sometimes controversial to to some folks but it is like you know uncompromising in how we you know our hiring process and our hiring bar and the reason for that is you know you know a lot of these you know tools ai tools we can call them and i call i consider llms to be like

the last chapter in a long series of chapters and ai tools that we've provided you know people for for probably over like half a century at this point um and i think this is just feels kind of incredible because of the way it like processes natural language and that can feel very you know i guess closer to how we communicate between humans and therefore it feels more magical than perhaps like you know an xgb boost model uh with like a large you know ensemble of trees in the background which is you know finding a node in the web that you know retrieves your query results but nonetheless these tools require i think a certain level of intelligence and diligence to used properly and i think we're seeing the the trajectory of the intelligent being like

super powered with with these tools um and i think the second thing is actually turning out to also be very interesting marty which is you know those will those with willpower now uh are actually unleashed at a degree that was not possible before in the past because they were blocked by their access to information, their ability to gain knowledge and ramp really quickly in a complex domain. And the joke that I've said to some people is like, the only moat left is human willpower. But wasn't that always the case? For a long time anyways. And I think we may just accelerate that to a certain extent with modern tooling. Another thing that I think is interesting, and i'm not i'm not very confident in this theory but it's an interesting theory um

is i wonder if the tools will enable us like at scale with sufficient distribution to actually increase the kind of intellect of the average human across the world across all spectra of iq by some like significant amount and even if it's like 10 20 points that's not something to to sneeze at if you were to take like the entirety of the human race and say we're going to like lift up like the baseline you know intelligent quotient sat score whatever metric you want to use to assess intelligence and give it like a 10 point 20 point boost across the entire world would that not be a much better world um and i think that that would be kind of incredible if were to happen and i'm i'm optimistic that maybe it can happen i'm not necessarily high confidence

in this theory, but I think it would be a really powerful place in the world. I think it's contrarian because I think a lot of people are expecting these tools to make us dumber because we're not going to learn how to do things from first principles. But I think I agree. It's in a similar vein, but a bit different is this idea I was telling you I've been leaning into AI. We've been leaning into AI heavily here at TFTC and I'm lucky to have really good friends really smart friends who have been playing around with these tools for for a while

and have watched the progress over over many decades now at this point and one of the best pieces of advice one of the i think the best mental frameworks particularly when it comes to prompting is you have this napoleonic view of uh of claude code in the terminal and what i mean by that is my friend described is when you're trying to get like good output out of these models you basically have to treat uh a claude code terminal like a scribe in in a war tent like napoleon yeah is is at war he's done battle for the day he goes into his tent and he's got 10 scribes yeah one who is sending a message back to refill armaments one who's uh writing down his thoughts about war flaw war um war tactics and another one about philosophy uh yeah and

and politic and it's really uh if you if you use these tools the right way because to get the output you need to know the context and uh what to what to feed the lm in the first place and if you're going to get good at these things you need to have that first principles understanding of what you're actually doing what you're trying to achieve um yeah i've seen this uh myself as well so i have like you know three coder sessions constantly up um and i'm probably a fairly heavy user of both actually gemini and cloud um i find gemini to be more optimal for queries that require recent web data that i think crawler is just superior today at least um whereas i find cloud to be quite valuable when it comes to just like navigating code i still do a diff review

every couple of weeks in the company um debatably you know valuable to to folks on the team but i find it valid to myself to understand you know what like little pieces of code in the company do so it gives me a sense of where the architecture is uh is weak or it's strong where there's kind of you know challenges for an engineer to like write code at velocity with high quality um and one of the interesting things i found is that almost every query i've tried to do with Claude has been okay not every query but majority of queries over the last like week or two for example I'll just pick that I've done with Claude has been like subtly incorrect in some like weird but important way and the the most valuable thing I found in my practice of using it is decomposing

the problem not so that Claude necessarily gets it right but that I can like manually review the code and be able to identify the mistake because it has written not too much code or at least like a sufficiently small enough amount of code that i can manually review it and go like oh that's actually what the problem is um and it's very valuable to me to be honest because i am obviously not as familiar with the entirety of our code base anymore and so being able to kind of snipe into an area and be able to you know you know produce a query of some sort is very challenging for me today at this point um so i need you know tools like this to be able to dive into an area and understand, okay, if I were to ask this question, how would the query be generated?

But I have enough context to be able to look at a small decomposed piece of that query and go like, oh, actually, that's probably the wrong column, actually, or this join doesn't quite hit what I'm looking for, and correct it. But yeah, that decomposition piece, and I think you, I mean, I'm sure you know this, but Napoleon was notoriously famous in his instruction set in that how direct and how short they were, his instruction sets. He was known for being quite voluminous in the amount of instructions he was sending out, the low

latency of his instruction to delivery, and the brevity of his instruction themselves. He's extremely famous for that, actually. And one could argue that is actually the most effective way to use these tools today, is to have short instruction sets that are extremely direct and precise. And I think that your metaphor is, I think, quite apt uh for for the current ai systems i hope you agree with that actually yeah i can't take credit for for creating it but uh as soon as it was that's a good one as soon as as soon as it was related to me i was like oh this makes a lot of sense and it changed the whole way i interact with

with llms yeah and i think it's uh it's been like quite i think the big shift for me uh was actually q4 of 2025 um i think that was when i first saw mlms do math correctly prior to that i think it was just like wrong in math all the time and you know i just don't trust people or systems that don't do math correctly um i still think it you know obviously has you know mistakes that it makes um but i do think it you know was like a step function improvement in the quality of its logic and math trees, which I think was very meaningful in its ability to be used in environment.

For us at Avon, I think the challenge we navigate and will continue to navigate, frankly, is that ALMs are largely high-recall, low-precision systems. You know, like ChatGPT will always give you an answer to a question. This is going to be wrong a lot.

That doesn't work for a highly regulated product in a highly regulated company like ourselves. So our investments are a lot about evaluation systems and how you constrain the system to operate in high precision and low recall. And we sacrifice recall to kind of get it to be, you know, answering fewer questions, designing these questions correctly. And then the second thing that we focus a lot on is using it instead of as direct-to-consumer, directly-facing-to-external parties, as internal tooling for our own employees and human agents. And I think we were speaking about this earlier. We invested an enormous amount of energy and engineering infrastructure on building what I call a really fancy I-don't-know engine. And we spent an enormous amount of time building out engineering infrastructure that effectively allows our agentic system to say, actually, I don't know.

Instead of having a bullshit answer, it says, I don't know. And this is effectively, the fancier way of saying it is that we sacrifice recall for high precision on the recall P&R curve. And we operate at a very high precision point in the threshold of the system. And we sacrifice a lot of recall. and then we deploy it to our human agents to help them get feedback and you know our evaluation of our agents shows that we're usually right in our answers about you know 85 percent of the time as a human and our agentic systems are and operate at about a 95 percent precision obviously a lot less recall our humans but for the recall that we get which is you know we sacrifice a lot of

recall for that but we're able to get to about 95 percent precision and give our human agents feedback to help them be more accurate and precise and improve and in our deployment of of our machine agents that are giving our human agents feedback when we deployed it that month we saw the single largest improvement in our human agents quality and and i think this you know is kind of the building blocks that we even are building towards you know how much of of a consumer financial banking platform can we can we run with machines and make it more efficient so that we can take that efficiency savings and pass to the consumer in the form of a lower cost of capital the theory that we have around this is something i call you know us seeking the carno efficiency

of an industry are you familiar with sadie carno um the the physicist um so it we obviously share the same name sati um and sati but he has a longer you know first name but sati is i think somewhere in his middle name but i call him sati carno other people call him anything and he produced this theory called the carno efficiency of an engine and it basically you know is a fairly simplistic formula that calculates what is the maximal thermodynamic efficiency an engine can run at and that is kind of the upper limit you can ever build on any engine like a thermodynamic engine that that there's the maximal efficiency you can run that engine out so you kind of constantly as a mechanical engineer or an engine builder trying you know

even remotely approach that degree of efficiency and in some ways um that even we're trying to find the carnal efficiency of banking uh which is you know what is the upper bound of like how efficiently you can build consumer financial products and how much of it can truly be machined and if we can machine it do we get more observability do we become more compliant are we are we actually obviously lower cost to consumers but are we also higher quality consumers by doing that and i think all these things need to be true and you know we take great pride in you know we're one of the highest rated on trust matter for any heloc lender in the united States. We take great pride in our NPS scores. We take

great pride in, you know, how much of a clean kind of historical track record we've maintained on our compliance fronts. We're a very regulated company. And so we go through, you know, something like two dozen state examinations in the last 12 months. And we kind of navigate that with, I think, a stellar record. Many thanks to our compliance and legal team and many thanks to also our engineering team who invest a lot of technical firepower on building a highly compliant piece of infrastructure for us to be able to operate these products

at scale. And I think we're getting at here to something that I've really come to appreciate as I've been doing research about even how you built the company. It's taking something like that's existed in traditional finance as relatively boring, but to your point like has all these inefficiencies that exist because it was built the primitives were built in an era by companies that were built in an era that wasn't really tech forward and you have all this institutional regulatory sort of calcification build up over time and you have these behemoths in traditional finance that are

oil tankers that can't or warships that can't can't be as agile so starting from scratch and bringing a tech lens to this part of the market starting with helox part asset lending more broadly seems like it affords you guys an advantage in terms of what you can actually do um from an efficiency standpoint then that efficiency passed on to the consumer with lower rates 100 if you think about like the core of what we've done right is is kind of not rocket science please you know helocs have existed for over half a century credit cards have existed for three quarters of a century neither of these are new products in the world what we've really done is grinded down the efficiency of heloc origination and put it in the form factor of an

accessible you know product that consumers are familiar with and we've taken the risk savings of a heloc and passed it to the consumer as a lower interest rate i would actually argue for the first few years of avon our you know risk models for our heloc were really no better than any other heloc lender in america we used you know fico debt to income ratio and loan to value ratios as the core of our hypothesis on pricing and line sizing. And sure, over the years now, we've built much more sophisticated models and statistical derivations of how to price consumers

and how to line size them. And that has reduced credit risk tremendously. But our initial kind of like versions of our product were actually fairly basic and worked really well, actually. And the real magic, the real secret to AVEN was the origination efficiency of a HELOC not actually you know significantly or a magnitude better credit risk underwriting it was actually the fact that we were able to originate a HELOC really efficiently and service that HELOC really efficiently that structurally reduced the risk

and thereby structurally enabled us or reduced the cost of capital for consumers and that's again a similar kind of vein in our bitcoin back product that we're bringing which which is like this asset class is structurally lower risk for the consumer. So how do we enable a really great capital markets function to operate on top of this asset class with all the kind of legal compliance frameworks that enable us to kind of continuously grind down that cost of capital and then bring that value of a lower interest rate to the consumer in the form of lower APR and put it into the form factor that U.S. consumers are familiar with and understand, which is you know credit card and you know to similar to our home equity product you know the

credit card just happens to be one of the access tools for this line of credit that we give a consumer just similar to our home equity product we have the ability you can literally click a button and get a 7.99 loan over 10 years with a five-year io in a click of a button um and that you can get to your to your deposit account of your choice i would recommend an avon deposit account that is now available to consumers as well um we offer great yields and great cash back on a deposit account with a beautiful metal card i might add um and so we think the the credit card is just one of the access tools i think it's a very powerful access tool it allows you to use it on a day-to-day convenient fashion but by no means the only way to access this line of credit

and you should use it you know for large purchases you know oftentimes being able to draw down a line with a fixed rate over a long time is super valuable um and i think i hope to see consumers use it for both of those cases so you have the heloc beachhead product now you have the bitcoin uh lending product uh as well what is your your long-term view of where even's going what what What is the end state of this business? That's a great question. I mean, in the very long term, we want to serve all the customers in the United States with the best financial products that we can build for them. And I think that should span the majority of their financial needs.

And I think there's four or five major needs that a consumer has. one is is is this financial products that are based on their home as a as the core core asset class that's mortgages it's helox are the two kind of major products in that space um i don't know if you know this already but in just the last few months we've started rolling out our test for uh for our mortgage products and we have one of the fastest cash out refinance products in the world today and that's in testing we're very excited about it it's doing really well and so there's a lot there's a lot more to come on that on that front um i think other asset classes as you can imagine we're starting with bitcoin we're very excited about it because we've been

believers in the long term on this asset um and we'll bring it to more assets both digital and non-digital and for example i think you know as you can imagine if we can do it uh if you can borrow against your Bitcoin, why can't you borrow against your stock in a way that is accessible to U.S. consumers? You know, the 1% are able to borrow against their stock. Elon Musk was able to borrow against his stock to buy Twitter. Why can't you and I? And how do we bring that product to consumers in a way that helps them reduce their cost of capital while helps them and encourages them

to actually invest and build in assets that accrue value over over the long time and be able to borrow against it at low much lower costs than they would otherwise yeah and so there's a lot more to do and i love to hear it because um i'm gonna choose my words carefully because i don't want to um i don't want to smirch anybody specifically but i think in the world that we live in today where if uh gambling apps are top of mind for a lot of people they're um every i feel like any sports game you put on or any billboard you see it's trying to push you towards gambling uh in the broader world of crypto there's a lot of um what i would degenerate speculation that is pushed on

on people and i think what people really just need is better financial products that that actually makes sense and i think hard asset lending to me at least could be wrong don't think i am yeah uh makes a lot of sense you own the asset it's not unsecured um people are adults they want to take risk by taking out a loan they can but there there is sort of an ethical framework in my mind that people should operate within seems like correct me if i'm wrong that's how you're approaching it too let's let's do sensible lending with sensible structures that's exactly right and look i think we happen to be fortunate to live in a country that has sensible regulations around this.

For example, in asset-backed lending, unlike unsecured lending, by the way, where if you're an unsecured credit card, unsecured personal loan with 20-25% interest, the irony of this is that unsecured credit cards, unsecured personal loans, none of them do any income verification. None of them are checking,

do you actually have the ability to pay back this loan? That's something that's really important to us. Every single customer, David, from the day we started goes through income verification which we must make sure that you have the ability to pay this this loan on our home product that's actually a regulatory requirement um we will also do ability to pay testing for our for our bitcoin back product as well to make sure you aren't in this position where you're just going to have to liquidate your your bitcoin we want to make sure you have the ability to pay back this loan that you're taking so that you can be

responsible in in how you borrow with uh with even bitcoin product um and we think these kinds of elements make asset-backed borrowing much more responsible much lower cost for consumers and i think they operate in i think healthier regulatory regimes for u.s consumers agreed well nadi thank you for your time and for um putting up with the technical difficulties i am uh excited for you guys excited for bitcoin excited for bitcoiners like i said And I think many of us in the industry and Bitcoiners more broadly have been looking at this sort of Bitcoin collateralized lending part of the market and saying this is number one, we think going to be big. And number two, it would make sense if the cost of capital was lower because of the risk involved with Bitcoin backed lending compared to other asset lending structures that exist out there. I think even coming to market with this product at this cost of capital, it's going to raise the eyebrows of many in and outside the industry and hopefully a rising tide lifts all boats and you get more sensible products across the board, more sensible rates across the board because of this.

So thank you for putting in the work and for building this out. I'm excited to see this hit the market. Thank you, Marty. It's been a pleasure. Thank you for having me on the show. And many thanks, frankly, to our team who made this happen and the hard work of Cason, Garrett, Ani, Gerald, and so many people on the team that helped build this product and bring it to market. And look, Marty, all I can promise you is that we're just getting started. We think there's a lot more to do.

We think that $7.99 is just where we're starting. My goal is to keep grinding that thing down with hard work and perseverance. and hopefully our Bitcoin-backed products will have the lowest interest rate, not just amongst our portfolio, but in the world. You heard it here first. Brilliant. Marty, a pleasure.

Thanks for having me. Thank you, Sadi. Peace and love, freaks. Thank you for listening to this episode of TFTC. If you've made it this far, I imagine you got some value out of the episode. If so, please share it far and wide with your friends and family.

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