The Pomp Podcast - Bill Barhydt, Founder & CEO of Abra: Bitcoin and the Future of Asset Transfer

Episode Date: November 20, 2019

Bill Barhydt is the Founder & CEO of Abra. In this conversation, Bill and Anthony Pompliano discuss Abra's recent announcements, the need for better banking globally, how Bill sees Bitcoin becoming more important in the future, and where he plans to take Abra next. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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eToro.com. Again, that is eToro.com, where the entire team is ready to get you started in just a few clicks. And don't forget, go subscribe to the Off The Chain daily newsletter. You can go to offthechain.substack.com. I write a letter of news, analysis, and opinion every morning that goes out to more than 40,000 investors. See you there. What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Bill Bortheit is the founder and CEO of Abra, an application that allows users to exchange any digital asset with any other in-app asset anytime, anywhere. In this conversation, we discuss Abra's recent announcements,

the need for better banking globally, how Bill sees Bitcoin becoming more important in the future, and where he plans to take Abra next. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. Bang, bang. We're back. Bill is the third guest ever to come on off the chain

twice. Welcome. Thanks, man. Thanks for having me again. For sure. All right. We had an epic episode last time. There's a bunch of people who have not listened to it. Let's spend kind of two, three minutes just going over your background and kind of what you're doing with Abra. And then we can get into the fun stuff. Sure. So I'm a longtime technology payments banking guy. I've been doing this for almost 30 years. I was doing crypto and crypto meant cryptography, not cryptocurrency. I was at the CIA developing secure messaging systems back in the late 80s, still a Soviet Union, was on the team at Netscape that deployed our certificate server product when we created SSL. And so I helped develop certificate authorities even in different

countries when we were trying to do kind of 1.0 e-commerce. And then really got the payments bug about 15 years ago and spent a lot of time in developing markets trying to build money transfer products and the ability to use cell phones and feature phones even to do money transfer got the crypto bug about i don't know probably about a year after the the white paper was released i read it probably a couple of months three months later so i don't know really boards didn't quite like appreciate how like i i knew that they had tried to solve a double spend problem which i thought was huge but really it's probably about like eight months later when i was like you know i think this thing could be huge if this guy is right were you at the cia when you read it no

no that cia was in late 80s i mean this is a long time yeah just making sure yeah because you know i'm gonna ask if you thought the cia created bitcoin no i don't i don't think the cia has smart enough people to have created uh bitcoin i actually am very convinced that bitcoin was not created by an academic we can save that for another okay at the time i think it's there's too much practicality in what was done. Anyway, another time. But yeah, so like the last kind of eight years or so, I've really been super hardcore in Bitcoin. I was mining on a laptop, I think, in the very early days. I managed to get a bunch of Bitcoin that way. And then obviously, it was on all of the early exchanges and gave the first TED Talk in Bitcoin in 2012.

I think it was at like $2 or $3. And that was a huge run up, by the way. What was the reception to the TED Talk? Oh, a lot of people were like, I don't really understand exactly what you're talking about. But the idea that you can basically have a bit, I kind of likened it to BitTorrent, where you basically didn't have to trust anyone. That was the way that I could come up with of explaining a decentralized system. It was like, hey, you can't shut BitTorrent down and you probably can't shut Bitcoin down. And it was very early then. So the reality is you probably could.

But the theory is that because it's decentralized, you can't shut it down and try to explain it. There's a mix at TED in those days between the young and the old. And the old in particular, I think it was way, way out there for them. But hey, look, the talk is out there and still gets a lot of views. And there are way better introductions now. Seven years later, you look pretty smart now. Yeah, well, I get a lot of people come back to me now and say, I can't believe that you had the foresight to actually even want to give that talk.

seven years ago. And I said, well, for me, it was just interesting technology, really. It was about two years later after that talk that I had the idea for even using it to replace traditional banking systems. When I really dug in and understood multi-sig and some of the other technologies that were coming, I was starting to dig into Ethereum and the idea of having to complete smart contracts. And that all came later. I was just enamored with the idea that you can to have decentralized money and solve the double spend problem, which, you know, I was following DigiCash when I was at Netscape because we had a relationship with DigiCash. And obviously, the downside of DigiCash was you had to trust DigiCash.

But the idea of, you know, using cryptographic techniques to create money was very compelling. But why bother if you have to trust someone, right, to actually create the money? Now we're at a point where we can separate the creation of the money and the banking, right and have basically two different kind of crypto based solutions one for the issuance of money which is where bitcoin is going and another for the solution of banking which i'm guessing we'll get into um you know and and how to use crypto to make banking global i like in one to the noun and one to the verb and and so the noun we can never solve because of this trust issue we've solved that now or we've proven that and if we keep going down the path we're going and we

don't f it up we can we can solve it at global scale because not everyone can participate today and i hope that eventually everyone can participate this idea of trusting like the creator of the money um it recently just like smacked me in the face right we always talk about it but there was this photo uh that went uh somewhat viral on twitter and it's of the ecb governing council i don't know if you saw this i didn't see it describe it uh there are 24 people sitting at a dinner table uh in a very plush uh room that you would expect the elites to be in right you know really nice art on the wall the floor looks like you know the carpet it kind of reminded me of like you ever see the pictures of like donald trump's apartment with the gold everywhere yeah exactly

so uh they're all sitting there and there are 23 men and one woman uh christina uh lagarde i think right uh is the one woman there's not a person in the picture that's younger than 60 sure right and it's the ecb governing council and she posted it saying you know hey thanks so much to my colleagues for uh for uh you know coming together and us talking about the governing council and how we're going to do this etc so i took the photo i said look you can either trust these 24 people right or you can trust an algorithm that's transparent and controlled by no one and i think it's just such a clear wow this is going to be archaic you know 10 15 20 years from now uh that we literally were like wait a minute 24 people decided what happened to the money

yeah it's pretty crazy but i've also come to understand that we're trying to solve different problems right so so when i say we i mean those who accept the fact that the algorithm is is better like the way you're the way you i think you mean is is is a different problem than these central banks the central banks in my opinion are not trying to create stable money they're trying to create stable economies and they will basically do that at the expense of the value of your money right so so they'll create a managed house of cards like they when we saw in 2007 that hey this house of cards isn't necessarily always stable but their goal is not to say hey let's preserve Pomp's wealth.

Let's preserve Bill's wealth. Their goal is to get everybody employed, have relatively low inflation, and do that at the expense of your wealth. And in addition, preserve your wealth. So their job is managing economies, right? So that's why I say, I made this point online, I've made the point 15 times over the last 10 years,

is that the value of Bitcoin is very stable. The value of the dollar is plummeting. and that has been true forever and that is because these people manage economies they don't manage the value of your money actually they do manage the value of their money but they're willing to forego that yeah well they're willing to create a managed economy yeah there's almost in their eyes there's a sliding scale the more that you devalue over a long period of time then the more you can control the economy that's right right and the expansion and contraction the money supply and kind of the way that the system is set up

is they really fear the market corrections, right? And so what do you do is there's a way to keep kicking the can down the road and it's always the belief that five, 10 years from now we'll figure out when we get in that situation. Right, right, exactly. Now think about this though, right? So if you live to be 100,

you've seen the value of government created assets erode probably 90%. That's the person who it's most acute to. Most people don't appreciate how much government-backed or government-created money depreciates in value because either they don't live long enough to appreciate it. They don't have enough in the early days of their life to actually understand what's happening. But what happens when people start living to be 120 in the West? It's going to happen. Which is going to happen, right?

Technology, singularity, all this great stuff, exponential technologies, which is like the backbone of my life. All of a sudden, it's going to matter that the value of your assets is being eroded, right, independent of your investments. I mean, if you think, what, since 1913, we're sitting in 2019, you're talking a 98% decrease in purchasing power of the U.S. dollar? Absolutely. Right? Yeah. It's not like it was 20%, right? Like, never took 98%.

No, but again, this is their goal. Their goal is basically to manage an economy. They believe this is the only way to get everyone to work, to make everything affordable, and to create a quote-unquote level playing field, whatever that means. Is it sustainable? Well, every government-created currency has failed eventually, every single one. It's simply a matter of time. If you look at the history of bond markets and war and currency inflation, every currency has failed. Some more spectacularly than others.

Some have been on the way to failing and have been replaced. We even saw even the euro can buckle because of the inefficiencies across the different economies that they have, where one has to prop up another and they have to break their own rules in order to save the euro a few years ago. So I think it's inevitable that every currency eventually fails. The question is how? How long does it take? And what happens when it does? And so that's the future of the euro. That's the future of the dollar. That's the future of the yen. The question is, what do we replace it with?

And this really gets at the idea of kind of the separation of state and money, right? Which is if every single currency in history has been revolved around some governing organization, right? Whether it was self-governance of early cultures and economies or it became true governments. if they've all failed, is there going to be the separation of state and money in terms of the core unit of account? Or is this more of there will be alternative currencies that have the separation of state and money, but that core unit of account, because the economy is so dependent on that government control, we kind of have to have two parallel systems, but we never get rid of the legacy one? Well, this is a very long-term question. I think this is a decades

long question i do think that if i was to predict 25 well certainly 40 years out let's go 40 years out because i think my prediction is much easier and then one i'll be dead but two um i think i can see this happening even to the dollar in that time frame nothing like a prediction that only comes true when you're dead i'll have to be around to explain myself when it when it when it when it fails but but no i i actually think that we're going to evolve and and some people would say devolve to a point where you actually have competing monies and traditional fiat-backed or fiat-based money will fail. And there'll be lots of competing monies with interoperability right across those monies. And so you'll see not only Bitcoin, but you'll see money that's

more focused on maybe just payments, which is a little bit more ephemeral. And then you'll be able to exchange digitally between those currencies with on and off ramps when you need to. And different technologies will compete for consumer mindshare. Whether that's wrapped up in something that we know is Bitcoin or whether that's used as a collateral for something that we might call the dollar, I don't know. We'll see. But I think traditional government monies, certainly within a multi-decade time frame, will fail collectively. They will be replaced by something that is more competitive. I remember writing an outline for a book pre-Bitcoin that I was really considering writing about the future of money. And chapter one was something about competing federal reserves,

meaning have lots of feds and let them all compete with each other. Which is basically what we had when we had just states all had their own money. Absolutely. Right before there was a federal dollar. Absolutely. And Jefferson talked about the dangers of centralized federal money even before we had a central bank. And that was the Jefferson-Hamilton conversation. And so anyway, I think that the winner here is going to be the people eventually, but the governments are not going to go down without a fight. And I don't mean governments going down in the sense of the government's going to go away.

I think the government's value will be right-sized over time because when you can't print money, you have to right-size your services. And so that's the good news about all that. Yeah. And to me, this gets at there's a lot of people who have tried to create change and they've tried to do it one of two ways. Either they want to create kind of a groundswell movement that says, hey, the government is too big or too onerous or not effective, not efficient, all this kind of stuff. So let's apply pressure on the government and the government change itself. Maybe, but probably unlikely to is people have tried to get into the government. Right. So whether they're representative, the president, whoever, and they want to, quote, unquote, change something. Um, you can agree or disagree with what they want to change, but that's their strategy is,

you know, if you're an insider, then you can make that change. Uh, but both of those things, I think, given the way that our democratic system works, you know, if you get into control and you're there for four to eight years, at some point, the next person comes in and if they disagree, they just reverse it back. Right. And so it's really hard to create kind of systematic change here. What we're talking about is you actually go to the crux of the entire system And you say, we are going to change this from the ground up, but we're going to do it in a way where the government, one, can't stop it. But two is you have a whole network of people who buy into the idea that in order to change a whole bunch of things in society and the economy, you actually have to change the system. And people basically opt out of one system into the alternative system.

But it's an individual choice to do that rather than it be a government-led type initiative. Now, I'm also a big believer that history leaves clues. so there's a path that's likely to happen and and and if you travel the world like i do i go to the philippines mexico argentina venezuela and i i go to these places and when you talk to people who are older they've lived that history you don't need to go read about it you can just talk to them they understand they've lived through multiple currency devaluations or multiple currency creations in the case of like uh argentina venezuela zimbabwe right or whatever and and these people generally believe that whatever their government creates next is going

to fail anyway eventually right so they say yeah i'll just use a dollar if i can because it's just going to take longer to fail like they don't think that the dollar is a great currency they think that the u.s dollar is a better like let's call it shit shit coin government backed shit coin than all of the others yep right and may take longer so that in their lifetime it's less likely to fail. But in someone's lifetime, it is going to fail. And that's the difference. And I think that history has shown us that you can print your way out of short-term problems, but long-term, right? Different ballgame. It's a different ballgame. Yeah. How does banking fit into all this? Well, money is the noun, banking is the verb, right? So the noun is, hey, what is it that

basically we're going to use as the basis for banking? And that's money. And money can take different forms. Generally, people assume that when we talk about banking, we're talking about government-issued money, but it could be anything, right? What gives it, I actually have always believed what gives money its value for the most part is the coercion required to force people to pay taxes in dollars and to reconcile the tax bill that you have in dollars. Because we could actually create an economy based purely on sheep if we wanted to, but eventually we'd have to convert some of that sheep back to dollars in order to pay our tax bill. Now, I've talked about this with many, many economists, and they think I'm full of crap when I talk about this because

of the power. Sorry, a lot of people who think the economists are full of crap. Yeah, well, luckily, more people are coming around to our perspective. I think there's less people kind of moving in that direction and more people moving in our direction, even if they have a larger loyalty base right now. But over time, you know, like I said, I think that you're going to see this understanding that competition is better, that more money, more types of money is better, and you're going to see a banking system involved with a new stack. Back to your question, right? And the new stack is going to be crypto-based, right?

And what does that mean, crypto-based? Like what does it actually mean? Well, let me give you a general terms and then we can put it in average terms, right? So everybody's seen lately the announcement of the Apple Card. I've been testing that. It's a really cool product. I love how it's integrated with mobile. There was an announcement this week when we were recording this

with Citi partnering with Google for them to get into banking, checking. Now, what's interesting about that is that two things, in my opinion. One is crypto-specific, but one is every major tech company is going to get into banking in some way. I agree with that.

And they'll do it for, specific to their audience. The way Apple did it and the way Google did it should be very indicative to somebody paying attention of how their user bases are different, right? Apple focused on very high-end experience around a titanium-looking card with a really high spending limit that only focused on integration with Apple Pay in a very high-quality way that would focus on probably more of the wealthy.

And its credit. And its credit. And on the back, it's a big silver Goldman Sachs on the logo, right? So that should all tell you about who they're catering to with that product. Google's announcement focused more on the DDA, the actual savings account, which really, I think, should tell you that their user base in the U.S. is a little bit more kind of straight up middle class. And they want to tie that Android phone to that account. Now, when I look at both of those announcements, the company that I think should be most worried on the planet about those announcements, in my opinion, is Samsung. because Samsung actually is the one that actually competes the most with Google for mindshare, right?

Because it's the pixel versus – it's not really people making a decision about Apple versus a Galaxy. It's usually a Galaxy versus a pixel. Yeah, it's like Apple has what? I think it's like 14% market share or something. Google has or Android has 80-plus percent. And so once you get into the bucket of I'm going to buy an Android, then it's which phone do I buy? Exactly. Exactly. It's Apple's focus is experience and margin, right? They put a margin on their

experience and then they don't budge from that target. Whereas in the case of Samsung, there's like, hey, our market globally is wildly fragmented, meaning we have a massive customer base in every country. We can't do easily what Google just did and have it actually solve a problem for us because we have to deal with 75 countries. Am I going to put 75 banking partners in place in 75 countries to create savings accounts? I could, but if I had a single solution that actually did that for me, that would be really interesting. Well, that's what crypto does for us.

You could actually create the equivalent of DDAs using smart contracts that solve the same problem where the legal issues become one of crypto custody versus traditional banking. We've even shown through some of your other guests that we can actually pay interest on those accounts. So this is where I think Abra's going. Okay, so let's talk a little bit about what you've built so far, and then we can talk about kind of the future. Sure. Describe kind of what was the original idea for the company? So the original idea came when I was looking at the money transfer space where I was spending a lot of time.

I had created a nonprofit in Haiti after the earthquake. They were literally helicoptering money into the island. It's crazy. Have you seen the pictures of it? I was there. dude it is fucking wild it was wild right and so it's like pallets of cash just coming in through helicopters picture a helicopter um like in in vietnam of old vietnam videos that would be uh bringing in supplies those supplies like like when huge crates in this case that's money right

because western union outlets were destroyed banks were destroyed but the island gets or that half of the island of Haiti, gets 30% plus of its GDP from taxi drivers in the U.S., you know, from other, you know, people working in cleaning and other kind of service-oriented jobs in the U.S., 30%. So, one, everything was destroyed, plus the money couldn't come in because we couldn't pay it out. Yep, the infrastructure wasn't there. Anyway, so I spent a lot of time in the money transfer space in Haiti, Mexico.

Is that considered money transferring when they helicopter the money in? It certainly is. I remember, that's how I actually met a lot of friends that I have today from the State Department who were working with the Army to help solve this problem. And you want to talk about centralized, it's the money. I mean, my God. So one other story that I have that's similar to this is after Hurricane Katrina in Louisiana, some of the guys I was in the military with, they got called to go down there,

and they thought, you know, we're going to go pull people out of their homes and kind of the things you would expect that the military shows up in those scenarios and i remember talking with the guys he goes oh no dude i was walking around walmart with my m4 and i said what and he goes yeah because the uh the armored trucks couldn't actually come and pick up all the cash so he said what people didn't realize was we had you know two three four or five million dollars sitting in the back and we were literally armed guards to guard the cash because all the systems were down the infrastructure etc and i just remember sitting there thinking like we can think we're the most connected you know technology advanced civilization in the world the power goes

out game over right like we go right back to the archaic world that was that tv show revolutions from to digress but i remember that show it was super cool what happens when the power goes out pretty much for good ah i haven't seen it oh it's so good back to the the first season was awesome then it went downhill but like it was basically you're back to the to the stone ages or like within a few weeks right oh yeah yeah and ironically it was a science fiction show because it actually tells you you find out later why the power went out and it's all science fiction related. It's pretty cool. Anyway, okay. So today, Abra is a super easy to use global crypto wallet that allows you to store dozens of different cryptocurrencies. In the US, you can use your

bank account to add money to the app. This week, we announced that we dramatically increased our banking limits. So I think you can do something like $4,000 a transaction and like $8,000 a week in deposits. You can use your Amex card, your credit card, all to buy Bitcoin or any other cryptocurrency. We support all the major stable coins now, everything from Tether to Pax to True USD. We're launching Dai once they finish their upgrade in a few weeks, all within the Abra app. And you can easily, with one button click, exchange between those currencies. And we had a mandate in the company, we wanted to create an experience which was more like TravelX at the airport than a trading app. So you don't see any fancy ordering in the app. There's no limit in stop

orders. You want to take your, I'm looking at my app right now, you want to take some Stellar Lumens and you want to convert them to Bitcoin. You press exchange. It tells you which currency you want to go from, which currency you want to go to, how much, and you're done. Yeah. It's basically, there's a very big bifurcation in the market, right? There's kind of the advanced traders who are they need to stop limits they you know they're very precise in their pricing and hey i gotta hit that you know exact uh put you know type order and all that kind of stuff your user base is hey i want to buy some bitcoin i want to buy some stellar i want to buy you know i want to do something that is fairly straightforward and super simple i don't

need the advanced trading functionality correct and we also have a lot of people who want to use of this stuff to send money. So we have some users who use Abra to buy like their Bitcoin, their Ether, their Ripple, their Lumens. And then we have some people who will send it. And that's the history of Abra was, was that I was interested in figuring out a way of using Bitcoin as the basis for doing money transfer globally. And I had decided to create this idea of the synthetic assets, which was basically a Bitcoin backed or Bitcoin collateralized dollar or Bitcoin collateralized peso. And how does that work, right? So a Bitcoin-backed dollar. Yeah. So the way it works, we don't have much of that going on in the app anymore. Most of the assets have been since

ported to, because of all the stable coins that are out there, we didn't need that. But it really helped Abra out of the gate to be able to offer services quickly. The way it worked was we had these multi-sig contracts. Multi-sig is a technology in Bitcoin that allows multiple parties to sign a transaction as opposed to just one party. So you can create a wallet where I can only move money if two different parties sign the transaction. There's three of us that all have rights to it, but two out of the three of us have to agree to do it. Right. You can have any combination of that. You can have like six out of eight have to sign or whatever. It's very clever. And so we use that technology to basically create contracts that would say, okay, if the price of

Bitcoin goes up and you're trying to hold dollars, you're not holding too much Bitcoin. And we would actually take away some of your Bitcoin. And if the price of Bitcoin went down and you're holding dollars, you're actually not holding enough Bitcoin. So we would actually give you more Bitcoin. So the value of what you're holding in dollars would be stable and it would be the Bitcoin that would fluctuate. And we did that to the tune of like over a billion dollars in volume. So we, I think, ran the first truly successful global test of a synthetic asset based on Bitcoin. And it was all based on Bitcoin. We did a little bit of Litecoin testing when the system had issues when the mining fees skyrocketed because all of those transactions were on

chain, which was also crazy. And Litecoin helped us with that because when the mining fees for multi-sig transactions hit $40, they were only a couple of dollars with Litecoin. And Litecoin is more or less the same thing when it comes to multi-sig and the scripting languages. So basically, you're using Bitcoin rails to transfer dollars is the way to look at it. That's right. And that for us was originally meant to solve a money transfer use case, back to your original question. And we've since kind of morphed this into a really long term banking play where the first use case was about investing. So users in the U.S. are able to buy crypto. There's about 60 currencies in the app, cryptocurrencies. And then outside the U.S.,

we have a stock investing feature. We're actually going to become a broker dealer now in the U.S. So next year, you'll be able to do that in the U.S. You'll be able to buy stocks and you can basically load your money in the Philippines in pesos, for example, and convert that to crypto, you can convert it to Apple shares, you can convert it to Google shares, or you can convert it to Monero, right? And you can take your Monero and convert that back to pesos, or you can take your Monero and convert it to Apple shares, right? So we want to bring those capabilities to the US and have a global app that does all of that. And then the next steps for us will really push us more and more towards being that global bank, more payments capabilities, more money transfer

capabilities. We try not to do anything that's not global. In other words, if I enable you, Pomp, to transfer money to somebody here in New York, you should also be able to transfer money in our app to the UK, to Germany, to France, to Australia. To anybody. To anybody, right? And we have lots of users who figured that out in the app today. We want to make that way easier for people who really aren't necessarily into crypto, but take advantage of the crypto back to the point about Google versus Samsung. Google is going to have to repeat that partnership in a hundred countries in order to match their user base globally. We can do that out of the gate with crypto and not have to put those partnerships in place except the rails to get money out of

the existing system. Yeah. And what you're really talking about here is all of the regulation, right? This is probably one of the most misunderstood things by people who are just coming into the ecosystem is there are two separate systems, right? There's the fiat banking world and kind of the fiat financial system. And then there is the crypto native system. And really where the regulations become onerous it's not in either one of those separate systems it's when you try to go between them that's right so you want to take us dollars and turn it into bitcoin regulators that what are you doing right and and you're going to have a lot of hurdles to jump over or reverse i want to take bitcoin and go into dollars what are you doing a lot of hurdles but if you for example

mine bitcoin and then want to use it within a crypto native system and you don't ever want to go from bitcoin to back to the legacy world it's actually not that onerous right it's pretty easy yeah over 50 of our deposits right now are crypto um the rest are people coming in through the banking system and we're committed to both um now at scale more people will probably come in up front through the banking system but we're giving people crypto rails now because we have a lot of awareness for what we're doing in the crypto space but we need to grow apra right and so the way to do that is to go to every country in the world and actually say all right i'm going to make it easy for you to get money out of your bank account or like we're doing in for example

in the philippines we've made it easy for you to go from cash to bitcoin we run the most successful like in-country cash network in the world for converting pesos to bitcoin how does it work you walk into any 7-eleven or any pawn shop or any remittance outlet in the country and you basically say hey i want to basically i want to load pesos into my abra app unbeknownst to you what you're actually doing is buying Bitcoin, right? And then those Bitcoin are basically converted into whatever you want to hold on the phone using the process I described before. Yep. And we've done that with- And that's a process and a user experience that they're used to doing.

They're used to doing it because they do it for remittances. They do it for bill payments. It's just very common in the country to deal with cash. And so because all of these stores have Abra signs in them, the awareness for Abra in the Philippines is very, very high. And so what we've realized is from a marketing perspective, there's actually an advantage to being able to provide those ramps because it helps you to at the same time to create brand awareness if you're solving specific problems. So we had people who we have people in the Philippines are doing that just to invest in Bitcoin. We have people who are doing that to send money. We have people who are doing that to bypass the banking system. There's all myriad reasons why people are taking their cash, walking into a 7-Eleven and converting it to Bitcoin.

The bottom line is, is it works and it works really well. Now, we also have a lot of people in the same country who will use the banking system to get money into Abra or Bitcoin. So we literally have three different ways in that country, right? People are coming in. People are coming in. Now, in the U.S., it's like 80% bank and 20% Bitcoin. But they could come in via cash if they have a friend who they want to hand cash to who owns Bitcoin. And we have people who tell me that they do that as well.

I use local Bitcoins to get money into Abra, for example. Now, we're not integrated. They just do it on their own. And so once people get money in, where do you think this goes, right? So you've kind of built some functionality now that it's very obvious in terms of the value that it brings. But, like, how does this evolve over time? Yeah, I think Abra evolves to become the killer banking play globally. I think what happens here.

That is a bold statement. I love it. This is why I love talking to Bill. Yeah, so I look at what's happening right now with the likes of Apple Pay, Google's announcement, all the challenger banks out there. I've got a list that I track of about 100 challenger banks. I mean, there's a lot of companies trying to kill banks or change banking. The technologists are assaulting Wall Street. Yeah, but all these banking plays are basically doing the same thing as the banks themselves.

They're partnering with banks. They're using the same core banking systems. They just operate faster because they're startups. They're limber, more nimble. They have streamlined compliance systems. It's all basically about, in my opinion at least, better user experience, slicker design. That's right. Some kind of marketing gimmick on the front end to incentivize you to come in and things that are used to incentivize growth but in a steady state are unsustainable, right?

Really high interest rates and all that kind of stuff. And that's not what I mean. I mean, if you want software to eat banking, it's got to do it from the inside out, not just from the outside in. Right now, we're focused on the outside in. I want to do it from the inside out, which basically says let's build crypto-based rails so that every service we launch can be global. I can do deposits. I can do interest payments. I can do lending.

I can do even card payments, all basically using crypto rails in a way that makes it easy and transparent to the average user. So whether I'm sending dollars in the U.S. to pounds in the U.K. or making a pound-based card payment or using those pounds to buy crypto, it's all basically using a single global system that is perfectly legal in every country, provides the rails to get in and out of that system. right so this is where abra is laying the foundations to build that global bank now right and and we want people who uh we want to make it useful as we go right so all everybody uses abra to buy crypto today doesn't necessarily do it because they believe in the long-term vision of course they're doing it because it makes it easy to buy crypto today get the money in and out of my bank account send money if i have to send money to somebody else and we're going to keep adding value along the way even try to get to profitability in the next step but continue

building on that vision to become a massive global bank all right so a couple of uh tangentially related things that i'm generally interested in your thoughts first is um when i was at facebook one of the things that uh we probably underestimated our advantage but since i've left has become very apparent to me is uh a company like facebook has now they're probably over 80 million small medium-sized businesses so these smbs absolutely and so if you think of them as kind of like retailers right if you were to roll out a point of sale system or some sort of payments type product uh it's really a marketplace right you've got users who are the payers or the purchasers in that transaction and then you've got people who can receive it um i think a lot

of the technology companies focus on the consumer right like that that purchaser having the uh user base of the businesses already there uh and being able to incentivize them to adopt and things like that can be helpful. Do you think that in order for kind of this global crypto-based banking system that you're talking about, do you think that it's dependent on the adoption by the retailer? Or do you think that you get the consumers, the consumers are demanding it, and then the retailers are basically forced to start accepting it? Sure. Okay, let's break that down. So let's talk about the existing systems and talk about Facebook and then I think where I think it's really going. Today, the existing solutions

assume that the banking rails are in place, right? Card networks basically assume by and large that the network, the social network of connecting consumers to each other, connecting consumers to merchants is facilitated by the banks and they act as a network that connects the dots. Like the internet is a network of networks. That's what the internet is. Card networks are a network of networks where the networks are the banks. It doesn't have to be that way. Facebook has just showed us that, right? So the next step is to say, can we replace the, keep the card networks in place, right? And replace the banks with something else. I actually think if it was just as easy to settle with a stable coin, the card networks would gladly do it. What do they care? As long

as, as a matter of fact, the more middlemen they can eliminate in the transaction, the better for them, right? So that's going to happen in my opinion, right? Especially in places where they have less, the banks have less power within the big four networks globally. So expect that to happen internationally in the next 24 months. I would bet any amount of money you start to see stable coin-based settlement for card products, which completely bypass the banks. Now, let's relate that to the networks themselves. Well, the networks are the ones most threatened by the social networks getting into payments, right? Because they're the ones that actually have created via brute force the social network fabric that enables payments to happen today.

Facebook did it in less than 10 years, right, at a fraction of the cost in today's dollars and can basically overlay payments on that. Yeah, they have distribution. Absolutely. Between consumers and consumers, which is the Libra vision, or business and consumers, right, which they can easily do with their money transfer licenses. And they're starting to do this kind of, like, the thing about Facebook specifically that's pretty interesting is they actually have two plays in the payment space.

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So you can actually take your Bitcoin, you can deposit it with BlockFi, and get paid an interest rate of 6% in return. Go check out BlockFi.com slash Pomp. Again, BlockFi.com slash Pomp to sign up and start earning interest on your crypto today. They have the crypto play, which is Libra and the Calibra wallet, etc. And then they recently have started touting more and more of the Facebook pay, which is send fiat money in the regular world, you know, kind of legacy world across all of our apps and products. That's the short-term practical way to make money using the… It's like a long-term strategy and a short-term strategy. Right.

Now, they could have easily built Libra, by the way, using that model, right? But I actually think it's interesting that they chose to take a much more complex approach, which long-term separates, again, that noun from the verb to say, okay, let's separate the money from the actual banking services we want to provide. I think that they made it way too complicated for themselves and they could have made it much easier out of the gate, but whatever. I do think that if I'm Visa, MasterCard, Amex, a little less so because they're closed loop. But if I'm looking at this whole universe, the company that probably scares me the most right now is Facebook, right?

Even more so than Apple and Google because they have that connectivity tissue between their users that they created over multiple decades, right? And can easily overlay payments on that and incentivize people to use it. And people think, oh, people aren't going to trust Facebook. And that's a bunch of crap, right? The average user isn't paying attention to this discussion of Cambridge Analytica and this trust or that trust. they just don't care not only in the u.s is that true but it's definitely true globally globally they're growing like like crazy when i uh when i was there um i won't show the exact use of the country and kind of what we were doing etc but but basically uh from a structural

standpoint facebook had grown so rapidly that we were literally running out of people to bring on to facebook right like people with internet connectivity where there was not very many that's why they're trying to get into the business of providing the connectivity so we the only way they could grow we into i think it was 2014 or 2015 launched internet.org which was we're gonna go give the internet to everyone and and people hated the idea that google uh that that facebook would or google would provide services like that because google is doing the same thing because then they would own the user relationship and i'm like well wait a minute if they're gonna spend their own money to solve this problem let them do it we had something called facebook light

i may get the names wrong but i think that's what it was and basically what it was uh it was zero rated uh which for all intents and purposes means people could use it for free and uh there was a deal that got done where it got pre-loaded on hardware so if you went and let's say you were in ghana or nigeria or you know something like that and you bought one of these phones it came pre-loaded with facebook light uh and uh in some countries there was actually eight applications that it came with one of them was wikipedia one was you know i think a women's health facebook etc and i remember uh the results came back from like a user study and multiple people in there in some form or fashion said mark zuckerberg created the internet right and it was this feeling of

i accessed the internet through this portal this portal was created by mark zuckerberg and facebook so mark zuckerberg created the internet and i remember thinking to myself one that's wild if you say that the western world right people like how could you believe that but two is if you think that those people care about cambridge analytica or the meddling in the election they're not one not even aware of it let alone two even if they did it all they're saying is that happens in every country that's right like what do you mean exactly most countries it's legal to be a politician and a lobbyist so so you know it's only like in the u.s and europe where or maybe australia or canada where we basically have this kind of you know unique vision on on on how the the rest of the

world should work vis-a-vis our own well and it brings me back to this idea of it and i think what you're hitting around here is uh the connectivity right and so i have um pretty strong views i think in terms of there are two things that should be open and permissionless in the world right that's information and money so the movement of those two things is really important that we incentivize that to be as free-flowing as possible right there's other things like stocks and bonds and kind of the regulated financial system etc i'm actually much more comfortable with that not being in a free open permissionless system but but we can all right we can debate that right but and it's more of a i don't think regulators will allow people to transact securities back and

forth without them being able to step in and say time out not now right for sure yeah but but for sure money and information like you would have to spend a lot of time to convince me otherwise that shouldn't be open and free well facebook solved the information one right and it basically said look now it's not is it truly open and permissionless no but it's probably the best thing we have so far right in terms of staying connected to people around the world communicating in multiple formats in different multimedia um you know uh formats etc and so why can't they do money right it's not that big of a change if you're on facebook messenger and i send you a message versus i press a button i send you money yeah there's a little bit of difference there but

it's not much right the difference between facebook and visa is visa connects to the banks And Facebook is basically going to just connect to a stored value, whether that stored value is Libra or something they create that's centralized. Ultimately, it's going to work. Or Bitcoin. Or Bitcoin, absolutely. And I actually think— Come on, David. Come on, man.

Well, I actually know these guys. They're really good guys, and I've spent a lot of time with them. And I actually think that their biggest fear when it came to Bitcoin was, what happens if we turn on 100,000, even 100,000? And they have billions. If we turn out 100,000 WhatsApp users who immediately within minutes start spending money and sending money in our app, what's going to happen to the Bitcoin rails? And they basically came to the conclusion that Bitcoin is going to go to 100,000 and mining fees are going to hit $75. And this is not going to work for the kind of remittances that we want to do. And they wanted to do this relatively quickly.

And even though people are saying, hey, this Libra thing is going to take years, even if it takes two or three years, that's still relatively quickly relative to the Internet. and so they need this to work now in their mind and i think there was some some consternation that bitcoin wouldn't be able to scale even vis-a-vis lightning to do the kinds of transactions they want to do relatively quickly it's very important right you know you and i both know the same people there and i always am careful to caveat the conversation with these people are very pro bitcoin right absolutely and they were that i know actually are holding bitcoin personally and were very early yep bought in size they believe etc but what they believe is today it serves more as a store of value and what they really want is they want a payment right ass

avenue payments are ephemeral from a consumer's perspective meaning that how it goes from me to them and what happens in between is it's it's kind of gone in in a fleeting moment and i don't really care as long as it works. And I trust that it's going to arrive, right? In my money transfer days, people would say, I hate that I have to trust Western Union, but I do, right? And I'll gladly pay up the 10% in FX and transaction fees that I have to pay to send money because I simply know it's going to get there, right? Now, the reality is they don't have to pay 10% in fees for the money to get there, even without Bitcoin, right? They can pay a fraction of that. But they continue to do that because they trust that the money's going to arrive. Of course. So I think that

Facebook will get a certain amount of users doing things because they trust that when they use WhatsApp, it works. When they use Instagram, it works. And that's why they're going to start creating branding that makes people clear that when they're using Instagram, they're using a Facebook product so that when they send money from Instagram to WhatsApp, they know that it's actually going to arrive because it's all Facebook at the end of the day. So it becomes an identity management play here's the uh the unpopular opinion or kind of the contrarian view of the western world people trust facebook more than they trust the banks oh a hundred even in the west we look we we do nps net promoter score analysis on our own user base all the time we have very high

nps at abra uh it's on the order of like 60 60 65 that is pretty high it's very high now we there are banks in the u.s that have negative nps scores now let's let's understand what a negative nps score means that means you spend money to acquire a customer and that customer actually detracts value on a net basis from your entire user base because they hate your product so much after you've acquired them so so they're the least trusted industry on a brand basis right right is basically if you they do you know media banking etc and every year year after year it's the banks are the least the only other organization that would have a an as low an nps score would be congress if you could figure out how to create one for the U.S. Congress.

I'm not kidding. There literally are banks that have a net negative NPS score. So Facebook's NPS score is obviously not negative. So it's higher than the banks by definition, and they have a much bigger user base globally than Visa and MasterCard, probably combined. So at that point, maybe even Amex, and you combine the three, Facebook's network is bigger, period.

it right so obviously right for them to get into banking means getting into payments back to your earlier comment getting into merchant payments it's all the same thing at the end of the day as you think about building kind of this bank of the future right if you will and uh and the bank being crypto native do you worry about those large technology companies coming in and and i don't mean this in a negative way to them but just kind of like one foot in one foot out right so they kind of have multiple uh you know kind of pieces on the chessboard right so they've got a crypto play they've got kind of a legacy play maybe they'll have two or three other plays that they they kind of put out there and they're really they're pushing full speed on all of them but

they're trying to figure out which one is going to be the one that they can you know double and triple down on sure do you worry about um kind of that type of competitor if you will or do you think that uh you've really got to commit to crypto native and that's the future and kind of that's where we end up. And so having all of your resources dedicated to that ends up being the most advantageous thing. Well, I worry about Abra and I worry about adding value today, right? So that's what I focus on. I can't focus on what anybody else is doing except for myself. I do spend a lot of time looking at what I think I'm replacing, right? Meaning if I have a user who's using Abra to buy crypto, is this the first time they're doing it or am I replacing something

else? And it's a mix. I'd say the vast majority are using Abra as first time users, or if they got Bitcoin somewhere else, it was a standalone Bitcoin app, and they're moving into something that gives them access to lots of coins. Or maybe they want to use the Bitcoin for money transfer, and they're doing that for the first time, because I can send Bitcoin to somebody who receives pesos or dollars, for example. And Abra makes that very easy. So we think about it in that context. And we simply want to add more value as we go. And we know that if we're nimble and fast, and we execute really well in the user experience, which is our bread and butter, that we will continue to grow as a company. And that's what I focus on. I can't spend my time

worrying about what 17 other companies are doing to execute because our history has already shown us that when we execute well the users will actually use the product and more importantly they'll talk about it to their friends without me having to pay them oodles of dollars to talk about it well and part of this user experience advantage if you will right is um for those that have not built technology products before one of the the cheap tricks if you will if you want to increase growth increase engagement etc you can do simple things like make the page load faster Right. Like people don't think about it, but there's test after test companies I've worked at, companies I've built, and obviously companies we've invested in where if the page loads in two seconds versus half a second, the half a second can drive much more engagement, much more growth, et cetera. And so you can get things through performance wins, right, that drive growth.

But you also can get things through simply, hey, it now takes you two clicks to buy Bitcoin rather than it being four clicks. And so that user experience, I don't think that people put a lot of weight on it when you talk about it because it's such a qualitative thing where you can't really quantify what is the user experience. But when you look at data, you can really tell the difference. And it's been something that you guys have kind of hung your hat on in terms of being able to use that as an advantage. We track every click. Now, we don't know that it was Pomp that clicked here, but we know a user clicked here. We know that a certain number of users clicked here and didn't finish. Like, for example, if I want to load money via my bank account.

We know that, for example, X percent of our users every day start that process and don't finish. And so we're constantly talking. So it's like an aggregated anonymous. It's an aggregated anonymous information. And we say, okay, how can we improve this process? So we'll send out surveys and ask users, are you willing to talk to us about your experience with Abra? And a certain percentage are because they're very passionate users. And so that goes into iterating constantly on what we call improving the funnel.

The funnel basically says, okay, I have a certain percentage of users. We've had over a million downloads of the Abra app now, which is a lot in the crypto sphere. And we have six figures of active users every month. And again, this isn't trading. This is a much stickier retail kind of user. So we dig in with them. I'm looking at our app right now. If I take my thumb and I pull down from the top of the screen, I see a little scroll wheel that actually updates the entire portfolio.

We have users who log into the app all day to do that because it's the simple, easy, non-trader way to track prices. And they just open up the app, scroll down with their thumb, and they say, I love doing that. I love doing that every couple of hours. It's the dopamine hit. It's the dopamine hit. Exactly. And so, you know, we had a charts function in the app. It was kind of mediocre.

We ripped it out. In a couple of weeks, we're launching a new one. It's not meant for the trader. It's meant for the easy, like, retail consumer to look at the Bitcoin price or the Stellar price or the Ripple price and say, oh, I get it. It's moving. It's trending in this direction. I'm going to buy. That's it.

So this brings me to one of the areas I've started to think more about, right, which is you've come at the bank of the future, if you call it, right, from a wallet-first retail user, acquire an asset, send and receive, right? It's kind of the core functionality of what you built. You built a great product that obviously people have been very attracted to. It's grown very quickly. And I think one of the key differentiators for you is, and they keep coming back, right? So you've built this really great ecosystem. If you flip it on the other side, there's another group of people who are going after the same opportunity. I don't think that you're directly competitive with them, but their strategy has been build an exchange, right?

So go after the trader, look for volume and liquidity. and then once you have that then start to build out services etc today most of those services actually have been more trader centric so futures and all that kind of stuff i think that they're starting to tip their hand a little bit and say hey like they may get into some of the banking services etc how do you see going after that same opportunity is it a thing where they're going to have to come into the wallet you know many of them acquired wallets etc uh or is it something where a wallet you then expect over the future, you can add some of that more trader-centric type functionality and it gets you to the same kind of end result?

Sure. That's a great question. So my perspective on this was five years ago, I had thought about building an exchange. I felt like I had a lot of advantages in doing that. So maybe I should do it. But I also knew, and I was at Goldman. I understand how this stuff works. Oh my God, you worked at Goldman Sachs? Exactly. When it actually wasn't evil, you know, when to say that you were or when people were still like, oh, my God, yeah, I worked at Goldman. It was cool to have it on your resume. But the reality is, is that I wasn't passionate about that. I was passionate about solving real consumer problems. I came from the money transfer space. And look, the reality is, is that most of the money being made in crypto today is being made on leverage and not even just on trading.

It's being made on leverage. Right. That's why BitMEX is so profitable. I think the people who are making money in the crypto space are doing it because they offer leverage-based products. And that's fine. That's a product that a certain percentage of the population that's active in trading needs. That's not why we exist. And we have to follow our own passion and our own vision.

Otherwise, we're going to fail. If you create a product just because it makes money, right, and you don't know what you're doing and you're not passionate about it, you're not willing to really dig deep and own it, you're going to fail. And so we knew in our heart of hearts that we were here for a specific reason. And now, that having been said, we also believe that a lot of those exchange-based services are going to become commoditized over time. I think Coinbase raised their prices this summer. That's an anomaly, in my opinion.

There are so many exchanges out there that over time, right, there's going to have to be consolidation and there's going to have to be price competition because they all have the same APIs. They all have more or less the same prices. They all use the same stable coins with the exception of maybe Binance. They all offer this wide breadth of tokens where Binance just will offer anything, which is a really interesting perspective. But anyway, it becomes a commodity, and the stack has to change, and the stack has to evolve. And the stack evolves to look like a crypto-specific banking stack where, in my opinion, the crypto becomes what I call TCPIP for money. So for the viewers who don't know what that means is that when you use Netflix today, you're actually using this networking technology whose complexity is completely hidden to you as a consumer. There's another way to watch videos besides the way you're doing it.

You can actually write a little code, create a TCPIP socket, download individual packets of information, and recreate the video. Now, that's insane. Nobody would do that. But you could, right? So Abra is basically creating that Netflix-like user experience to hide that complexity of the crypto to recreate an entirely new banking stack that's relevant for the next generation of Snapchat users, of people who don't understand why we even had bank branches in the first place, but also think globally. And so that's how this is going to evolve, in my opinion, over time. And the exchanges will have a place in that system. They become more like the Goldman's of the world where they're

providing the equivalent of the repo and those money market accounts services that we need to run our crypto banking system. So they're laying the foundations for that today. And it's very important. Abra can't function without those exchanges, OTC desks, and everybody playing their part in creating a liquid crypto environment. We're simply saying the next evolution is to create a stack for banking that the retail consumer can use that hides that complexity. Just like you don't understand the complexity as the average banking customer of what happens in overnight repo markets and money markets and how the bank's doing fractional reserve banking and all that great stuff that has to happen for the existing system to work right so so long answer

your question but the bottom line is is that those exchange rails become the backbone of a next generation banking system and abra wants to be the retail component to that banking system and offer the deposit products the lending products the payment products with the high quality mobile user experience that people are going to want globally yeah to me it is um you've taken a strategy where if you own the end user right you have a lot of advantages and it's because they trust your brand that's right they trust that uh when i press this button on the mobile app it does what i want it to do right um my assets are secure and uh there's an element in crypto that um And we haven't seen it play out yet. But I think a lot about talk to our founders, which is doing things today that are short term focused will hurt you in the long run. Right. And so gouging people on fees, right, all this kind of stuff, because it's all around the brand and the way people talk about you, etc.

But if you take a really long-term view, 20-year view, and you say, look, we're going to do things the right way, and we're going to make sure that we have your best interest at heart, and we really align what we do with what you do, what you find is that's not a marketing message, right? It's not like you go slap that on a pitch deck or on a billboard, and everyone's like, oh, yeah, of course. Every company says it. But if you actually do it over a long period of time, you separate yourself, right? Because every other company succumbs to doing the things for the short term around profitability or revenue or whatever it is. And so to me, that is much easier to do when you have the direct relationship with the user than it is if you're behind the scene rails or you've got an exchange and then you are simply just trying to add more functionality, et cetera. And so it'll be very interesting to see how this plays out because I don't think a lot of people are thinking that way right now. But the people who do.

Well, they can if they don't have the users. Well, that's a great point. So we split test products all the time, right? So we have users who are getting new features that other users don't see. We do surveys every day, but it's not the same user base every day. They would get annoying. And so we can mix it up now because – and Facebook does this to the tune of millions of users, right? We can't do that.

We don't have millions of users. We were experts. So we do the same thing, but we do it from a slightly smaller perspective. We'll split test with hundreds or thousands of users and then deploy relatively quickly if we think something's working or pull back if we think something's detracting. For those that don't know this kind of A-B testing or split testing, it sounds like an easy concept, right? It's very hard. Which is simply, hey, Bill is a user, I'm a user. The product shows me experience A and Bill experience B.

and it sees what we do and they're optimizing for us to click a button right and uh if i click the button and bill doesn't then and enough people follow my lead and not bills then eventually they ship to 100 of the user base the button i saw versus the differentiated button that bill saw but um when i was at facebook we would do things like uh if you just take one button right or the edges rounded or squared what's the color what's the font is the font underlined is there a shadow is it not right is there um how much space is between the letters and the top of the button and the bottom of the button what is the shade of green and blue and in all of these variables and there was literally custom built infrastructure internally where you can basically put all the

variables in and then because they had so much traffic they would show all the different variables and eventually you know two three days later you would get okay here's the results right And this combination of no shadow, you know, square edge, this shade of green with this font, this underline, you know, whatever gets the most clicks. So we've even done that level of testing with our acquisition marketing. So when you are putting a message on a paid message on social media, for example, on Twitter or on Facebook, that's how we have acquired some of our users. And we'll test different messages at the same time. and then those sites are really good at giving us feedback on the click-through rates we're getting on different messages

and then we can test not only the click-through rate but the ultimate sign-up rate, meaning what expectations are we setting at the top of the funnel and how are those expectations being met at the bottom of the funnel. We actually tested some advertising in the Philippines when we rolled out the stock features that we had talked about there and our awareness for Bitcoin sales was so high in the Philippines that as we were testing the stock features,

a super majority of those users weren't using the app they were downloading to buy stocks. It was reminding them that there was actually an easy way to buy Bitcoin. That's amazing. They had already heard about. So it actually was more of a, it turned into a retargeting almost, for those of you who understand marketing, for a way to buy Bitcoin, even though it was advertising buy Apple. And we were like, what the hell is going on here?

And then when we dug in, we realized, hey, these people actually know Abra already. And you're reminding them that they should be buying Bitcoin inadvertently. It's amazing. When you were advertising Apple. And so we said, OK, well, but that pointed to another problem, which was we have users who are aware of buying Bitcoin who actually have never bought stocks before, who don't understand buying stocks, who don't even know what the letters E, T, and F mean. And so we had to start putting more content and awareness in place on that when we had assumed that we had to spend more content awareness on crypto. We had already created enough content and awareness in the crypto space that we'd have to go back and do the same thing in the traditional investing world because the international user base just didn't know. I actually did a talk in the Philippines and I think like 100 people showed up.

I would say maybe 10 knew what an ETF was out of 100. And these were all people who were putting real money into the app. So I actually did a few minutes on what a stock is, like what it means to have an exchange traded fund and mix it up in that regard. And people were so thankful that, you know, we've spent, in the meantime, there's guides on stock investing that we had to create when there's all kinds of, obviously, companies have spent millions, right? I mean, we're not the first to offer, you know, that kind of product. And so, it was, anyway, that type of testing led us to understand some things about even the marketing of this that we didn't come to appreciate. It's one of my favorite parts about building products and growth work, et cetera, is the human kind of bias and what you think is going to work. You're always surprised by what people.

Unbelievably so. I mean, we're always wrong. And the only way to get right is to get out there and do it and quickly iterate and test. Now, it's frustrating because as a startup CEO, you want to basically spend a dollar and put a dollar into the machine and get exactly X out the other side of the machine. And you can't expect that realistically when you're creating a new product or a new company out of the gates. You have to be willing to test and iterate. And you have to set expectations that it takes time to do that. But you also need the macroeconomics to work, right?

So this year, we've had a lot of ups and downs, right? So in the crypto space, for example, like things spiked for us this summer. And the volumes in exchanges have come way down. I think exchange trading volume has come down like 70%, 80%. Since this summer. Since this summer, right? And so we're not an exchange, so we don't see the same exact iterations. We do see peaks and valleys that follow price to some degree.

And so all of that talk on marketing presupposes that the market itself is there. You have to market a product that people do ultimately want or are going to use. Yeah, and what you're talking about is building a company is very scientific, right? I think a lot of people just think, oh, you create a product, throw it out in the world, and like cross your fingers and it exploded. And there's a number of equations, if you will, that if you really know what you're doing, you focus on, right?

And so, you know, for your business, I'm sure that you've got some number in your head of every time we sign up a user, they're worth X to us over the lifetime. And we know exactly what those numbers are today. And we talked about them in our monthly board reports. Yeah, and then the goal is, okay, I'll make up a number, right?

We're gonna make $50 off every user that signs up over their lifetime. and now how do we go find a new user for less than fifty dollars it's kind of a very easy one right and literally it's the cost to acquire that customer versus the lifetime value and so the part that always cracks me up is um you know there's a lot of people who are excited about building companies and all this stuff and they come in and and i really ask them like what is the science here right like like what are the important equations how are you making progress against them etc and what i find is that people just don't know but the second that they real you know

If somebody teaches them or shows them, okay, here's five equations. You need to figure out these. And if you show them in a positive light or you've done the work to get them where they need to be, you'll raise as much money as you ever want, right? And because you built a machine. And when you build a machine, it does come down to that put a dollar in, you know, get 100 on the back end. A lot of people are interested in being a part of that. It's a big lesson for wannabe entrepreneurs is study the whole funnel process, soup to nuts. There are so many books out there about how to really address this really well.

But what does it mean to acquire a customer? What does it mean to convert a customer? How do you manage the funnel? How do you manage unit economics? And if you can't do that well, you're never going to win as an entrepreneur. Or if you don't surround yourself with people that can do that well. So you've done this well. Abra recently announced that you've added a ton of new cryptocurrencies, etc.

or talked a little bit about the announcement. Yeah, so back to the point about listening to your users, the number one requested feature from our users was more cryptocurrencies. Just over and over again, more cryptocurrencies. Actually, higher limits was close to number one, but more cryptocurrencies was definitely number one. And you had how many before?

I don't know, I think it was like 30. 30, okay. 30 or so. So we've added another 60 in the US. We actually added 200 to the app. We're just making about 60 of those available to the US and it has to do with how we manage custody. We work with third-party partners who manage custody and the exchange of those.

And so we're beholden to their rules. So, for example, the services in the U.S. is available in, like, I think 47 states and not in New York and a couple of other states. We're working on New York right now because our service providers don't have the bit license to do that. Yeah, New York is still, frankly, somehow, some way decided that they don't want their constituents to use this. It's crazy. As a former New Yorker and also an American, but it is what it is. We'll figure it out. We'll do the work to get the license, either ourselves or our partner.

We're working with them now. And eventually New Yorkers will have it. But by and large, we try to make every product available to every consumer in the world. There's 200 new cryptocurrencies in the app. About 60 of those are available in the U.S. And the rest will be made available to our international users in the coming days and weeks. Got it. Where can people get the app?

So you go to Abra.com is the easiest way. How did you get that URL? It was hard. That's actually pretty legit. Yeah, it was pretty legit. And what was hard was not paying what they originally wanted for the URL. If I tell people what I paid, they'd be like, how did you do that? Because it was a company that actually had bought another company called Abra

in a totally different space, and they weren't using the name anymore, so they really didn't want it. So I got kind of lucky. And then I actually had some friends at the company that bought it, and I actually was able to finagle my way in there to the CEO and kind of have a heart-to-heart to say, hey, you don't really need this, come on. And by the way, I'm trying to solve real global problems here

and you can really do good by giving this up. And by the way, I'll give you some money, but it's not going to move the needle and you guys will really feel good about having done this. And you can go back to the old employees from the old app and say, hey, look what we're doing with this. This is kind of cool. And they agreed.

What a salesman. But by the way, that took six months. So to be clear, it wasn't a four-minute conversation over a podcast. So you're ready for this? I'm not going to say the URL because everyone will go bid on it, but there are multiple people who have bought URLs that they think I'll be interested in, whether they're around company names or whatever. Usually, there's some kind of press article or something. They go and buy it and turn right around and email same day and say, do you want to buy this $5,000, $10,000? I literally say to them.

So, I bought like PompXYZ or Pomp.XYZ and I came to you and I said, hey, why don't you buy it from me? like literally it recently happened um we invested in a company and uh somebody went and bought the url for that was like pretty close right and then came and said do you know do you want to do it and i said no right first of all second of all uh i hope you link to a bunch of stuff so it gives us great seo right like basically just you know what are these people doing but uh when you really need something right it's worth having the conversation so we originally had goabra.com goabra we didn't have we still do we actually own 50 variants to your point okay yeah so there's there's 50 different ways to get to abra.com we own them all i'm gonna go buy the 50 first and

then make you buy it i don't need it at this point so please don't do that mr uh pop audience uh and um when you go to abra.com there'll be a link to download from the app store or the play store you just go to the app store play store and search for abra uh and you'll find it And like I said, we get lots of downloads every day. And so, you know, please come join the family. Where'd the name come from? So that was a tough one. I went through a multi-month process.

It's like naming a child. It is like naming a child. As a matter of fact, this was harder. I actually came up with the names of my three boys much faster. That was my role. I actually named them since I didn't have to give birth to them. Both processes took multiple months? yeah yeah my ex was gracious and letting me letting me name the kids anyway another story

for another day Abra was tough um so I love the uh remember I was focused on money transfer remittances uh I had this idea for a better remittance app ABRA I was like that works that works that works really well um and my at the time my middle son uh was really into magic he was into cardistry you ever see people be able to do like um where they shuffle cards and they can actually hold like cards eight different ways in their hands at the same time he could do that at like 10 right because he's he's 16 now or 17 but but he was you know this was five years ago when i named the company and it was like abracadabra right so there was a magical component to that i said he's gonna love that and so between the better remittance app and the idea of magic

and the synthetic currency to me was very much like magic it was very simple um i love the idea of having a one one syllable word that will work in multiple countries right that it works in in an arabic speaking country in a latin speaking country in you know germanic speaking countries that's very hard too i went through that at netscape uh when we would launch new products and people couldn't say the product uh because we had a lot of people who were very you know mountain view centric right not even east bay centric right and then i'd go to timbuktu and they'd be like they couldn't say the product name and so we did even testing of that where i would actually uh call up friends who i knew spoke a foreign language and say do me a favor say abra

And I would listen to them say, all right, thank you. And I'd hang up. What the hell is Bill's crazy idea now? Right, right, exactly. So naming a company is really hard. And the more passionate about it you are, the harder it is because the closer to it you are. And so we had a lot of debates about it. And I was on the fence myself.

There was other names. I don't even remember them now, which is very telling. But one of my co-founders reminded me that there were other names that we were on the fence about. Change history, man. And Abra was the name from day one, and you're ready to go with it. But we have a holding company that owns the shares, and it's called Plutus Financial. Plutus is the Greek god of wealth. And so I wanted a holding.

I knew that that would never be a consumer name, but I had to call the company something. And so we just kept it in place because it was easier not to change. We may change it to Abra later. But if you look at our terms of service, it actually says your terms of service are with Plutus Financial, which is actually an interesting name in and of itself. I love that. The Greek god of wealth. But Abra is the right product name for us.

I love it. All right, man. Listen, I really appreciate you coming and doing this. You've got a very unique perspective, and I think you've been around, obviously, for a very long time. So the experience is well appreciated, and we'll have to do this again sometime in the future. You'll have to come back for time number three.

I want to be the first person to be on for a third time, so don't give that up. Deal. All right, man. Pleasure to be here. Thanks for having me. Absolutely. All right.

Hey, everyone. Pop here. If you like this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off The Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts.

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