The RazReport

In this episode of The RazReport Jason talks to Chris Camillo, founder of TickerTags and host of the YouTube channel DumbMoney.tv.Guest:Chris CamilloTwitter: https://twitter.com/ChrisCamilloBefore founding TickerTags, the social analytics company that famously predicted Brexit results in 2016, Chris Camillo traded $20,000 into more than $2,000,0000 — in three years. Chris is an ordinary self-directed investor — not a broker, financier or asset manager. In 2007, just months before the great recession, Chris applied a social data arbitrage trading strategy investing $20k in the stock market. Despite his unconventional background, Camillo generated nearly $10 million of stock market returns from 2007 to 2017. You can ride along with Chris on his YouTube channel DumbMoney.tv as he pursues investment opportunities full time.Host:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

This is an excerpt of Jason Raznick's interview with Jake Paul, co-founder of  Betr, and Joey Levy of co-founder of  Betr from Benzinga's Sports Betting Summit.Guest:Jake PaulCo-founder of  BetrJoey LevyCo-founder of  BetrHost:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

This is an excerpt of Jason Raznick's on-site interview with Bob Parsons, founder of  GoDaddy and Parsons Xtreme Golf. Parsons opened Parsons Xtreme Golf's newest retail store in Detroit. The store is in Troy, a suburb about 25 minutes north of downtown. Guest:Bob ParsonsFounder of GoDaddy, Parsons Xtreme Golf.Host:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Sign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Transcript:Jason Raznick: What was your vision for Parsons Xtreme Golf? Bob Parsons: I only do things that I like to do. Things that I love doing, because when you love something you're willing to work hard or you spend more time doing it for the sake of just doing it better and better and better.I always was curious why golf clubs didn't get better every year. You get new golf clubs that perform pretty much the same or work maybe only a little marginally better. I talked to a friend of mine and I said "why don't these clubs get better every year?" And he goes, "well, you know, we do the best we can. We got price points. We got release schedules."My question to him was if you were in a situation where you didn't have any time or money constraints, and you could spend whatever you wanted, could you make a hell of a club? He said "I'd like to think that we can." And so I thought about it, I talked to him again and I said, "let's do it." And so, that was the beginning of Parsons Xtreme Golf.That was in 2013, we started working on our gen 1 clubs and when we finally got the clubs where they needed to be, I got a call from him and a couple of guys in engineering and said, Bob, "we've got a breakthrough."This breakthrough hasn't been duplicated by anybody, nobody figure out how we do it. So when we shipped our first clubs in 2015, they were unlike anything that's ever been done. Then of course we push the envelope, in every generation since. We interview a lot of people.Jason Raznick: You take on industries that have been around for years and then you dominate them.Bob Parsons: We're not like any other company. You'll notice a commercial that we put up, there's no other company doing a commercial like that.We just simply said "we killed it with these sticks".Jason Raznick: And that is your creation? Is that your idea?Bob Parsons: Always but it works. We have our own stores. And as long as it's good, that's the number one key for us to being successful.With our golf clubs, each release has to be noticeably better.Jason Raznick: So say someone's club snaps, can they just come to the store and then you guys fix it? Most clients don't have that direct relationship with the manufacturer. How many of these stores do you have?Bob Parsons: We have 13 now. We will have 14 in 2 weeks. And we will have 15 the following month, 16, the following month.Jason Raznick: And the last question is we hear about your covenant golf club in Scottsdale.Is there a deal where someone buys like 3 sets of clubs and they get to go out there? Bob Parsons: No, not even 50 sets.Jason Raznick: Would you ever take Parsons Xtreme Golf public?Bob Parsons: I'm not the type of guy to take any company public. GoDaddy went public and I was the chairman when it did, I resigned and became just a board member. I'm not a public company CEO.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

"Right now there is a lack of capital supplying an industry that has an incredible opportunity and that mismatch means that capital that is deployed is deployed at an attractive price," Ricky SandlerThis is a replay of Jason Raznick's interview with Ricky Sandler founder and CEO of Eminence Capital at the Benzinga Cannabis Conference in Miami Beach. Host:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

"The WWE athletes pay fines repeatedly because it is necessary, it is a healthier way to fall asleep at night, to take the edge off." Ric FlairThis is a replay of Jason Raznick's panel interview with:Ric Flair Professional Wrestler Tyson 2.0Chad Bronstein Chairman and co-founder of Tyson 2.0Adam Wilks CEO of Tyson 2.0  at the Benzinga Cannabis Conference.Iconic American wrestler Ric Flair and legendary American boxer Mike Tyson are retired champions in their respective combat sports. They also share a common interest in cannabis. Ric Flair Drip: The retired wrestler, popularly known as "Nature Boy," has partnered with the team at Tyson 2.0, Tyson's rapidly expanding cannabis brand, which offers premium and affordable cannabis flower, concentrates and consumables nationwide.The cannabis company is launching a new Flair-branded line of products called Ric Flair Drip that will feature edibles called "Wooooo Chews."The edibles will be similar to the company's "Mike Bites," fun ear-shaped edibles with a chunk missing in reference to the time "Iron Mike" took a bite out of boxing great Evander Holyfield's ear.   Host:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

In this episode of The Raz Report, Jason Raznick speaks with Jakub Rehor, Co-founder and CIO of Lucy LabsJason and Jakub talk about:What is a perpetual swap?How To Navigate Crypto VolatilityWhich is a better investment - USDC vs USDTWhat happened with Terra USD?Algorithmic Stable CoinsAdvice for retail crypto investorsAdvice for institutional crypto investorsWhat works in crypto trading vs what works in traditional financeGuest:Jakub RehorCo-founder and CIO of Lucy LabsTwitter: https://twitter.com/jakubrehorLearn more about Lucy Labs here!Host:Jason RaznickFounder, CEO of BenzingaTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Transcript:In this edition of the RazReport we have Jakub Rehor Co-Founder and CIO of Lucy Labs. Jason Raznick: This is going to be an exciting one because he has tons of experience working at hedge funds from Third Avenue and just being in this industry, being in the McKinsey. So I'm going to stop talking now and start asking questions, Jakub, you have a lot of interest in experience from crypto to equities being at multi-billion-dollar value fund for many years. But before we get into all that fun stuff, where did you grow up?Jakub Rehor: I grew up in Czechoslovakia, so it was in the 1970s and 1980s. So it was still a communist country and it was a very different place than then living here in the US now.Jason Raznick: So you went through the Velvet Revolution? Jakub Rehor: Yeah. The Velvet Revolution. One thing I might mention, because it has something to do with crypto is there was an interesting currency situation in Czechoslovakia.So you had the national currency, which was the crown and that's what you were to earn and you would spend in regular shops, but you also had hard currency stores that had stuff that the regular shops didn't have. And if you want it to be shopping in those hard currency stores, you need i the special vouchers that that were exchangeable for a higher currency.And you could go into these stores and use these vouchers to pay for, more luxury luxurious stuff. And nobody would really ask you how you got your hands on it. That it was a, it was just considered to be okay. And the third currency that was circulating in the country was the Deutsche Mark.If you were planning to go on a vacation abroad or you were planning to live it up and go to restaurants and buy some souvenirs you would use Deutsche Mark. So there was really like three currencies in circulation in the country. And there was a gray market where people would be changing from one currency to another.So I'm familiar with with a situation where technically you have a single currency, but you have actually in reality, multiple circulating currencies with fluctuating exchange rates. And the connection to crypto is that people are talking about now, oh, why would we even have something like Bitcoin running in parallel with whatever the country currencies is?And it's so strange and there will be never any need for it. And I'm like, no, that's normal to me. I grew up with that. That's just absolutely normal state of affairs.Jason Raznick: And so you going with those multiple currencies, do you think then, like the Bitcoin revolution will be here stay? Jakub Rehor: Oh, it's absolutely here to stay. Nobody will uninvent Bitcoin. We now know that it's impossible. Whatever happens to Bitcoin in itself somebody will come up with a new cryptocurrency. It's just you'll never put this genie back into the bottle. What Bitcoin did was to do something that was considered impossible.Prior to that, a lot of people have tried to create native internet currency, and a lot of them foundered on the same set of problems. They, it was centralized. It was easy to shut down. It was referring to an underlying FIAT or underlying commodity and it was difficult to keep the ledger synchronized around the world.And Bitcoin solved all of these problems. It really, it is a real breakthrough in computer science.Jason Raznick: It brings you back to when you were growing up in Czechoslovakia where there were multiple currencies.Jakub Rehor: Yeah. And the problem that Bitcoin solves are very often not problems that we have here in the US here, the payment systems work pretty well here.Banks work pretty well. You're not worried about your ATM stopping working tomorrow. So explaining the value of Bitcoin to Americans is a little bit like it, it sounds a little bit unreal, the problems that it's trying to solve, but you go outside of the US you go to countries like Cyprus or Lebanon, Venezuela Iran. They get it. They mean they understand that solves their problems today and here.Jason Raznick: So going back to your upbringing, you ended up going to school at Yale. Was that from Czechoslovakia or like how'd you end up in Yale?Jakub Rehor: So I was studying electrical engineering and Czechoslovakia, and I was involved in the students strike.I joined the national student strike coordinating committee, which was part of the Velvet Revolution. We basically built the check internet very early on.We connected all the universities across the country hook them up and we use that network to print and distribute all the materials that the the development revolution leaders were putting out. Our goal was to break the monopoly, the media monopoly that the communist media had and get all this information out into people's hands.And we mentioned to do that in a space of a week, about a week and a half. We we hooked up basically all the printers and copy machines and fax machines that we could get our hands on. And we were printing we're printing posters and materials by the tens of thousands. We had them on all the streets in the country.Jason Raznick: And did it catch on?Jakub Rehor: Yeah. When the student strike started it originally was just a couple of schools and then it snowballed it started at the theater academy. Then, we joined as the electrical engineering and pretty much all the schools very quickly joined on and 10 days after the start of the strike, we were able to organize a general strike where the whole country shut down for 2 hours. To send the message to the government that we can prove that we have general support for what we stand for.And in order to organize the general strike, you really needed to coordinate all this information, get it out, get it into the right hands. Early on we realized that kind of, again, there's a connection to Bitcoin.The problem really wasn't in trying to encrypt the communication on our network. We didn't really care if the secret service was reading us or not, because we were putting it out and posters and all that stuff. Anyway, the real challenge was to authenticate the information. We were worried that the state security would try to inject some provocative material in there to try to disrupt us by sending false information. And there, so authentication was, it was more of an issue than.And it's very similar to Bitcoin where all the transactions are visible to everyone. They're not encrypted, which address sent how much to what address, but the important part is authenticated. You cannot fake sending money. You cannot send money that you don't have.Jason Raznick: So then you make your way to America and you go to Yale. Did that change you? Did the Velvet Revolution shape the person you are today? Jakub Rehor: Yale was a wonderful experience. You are surrounded with a lot of bright, talented driven people and it's it was a great environment to encourage you to go and and pursue whatever interests you have.Jason Raznick: so from Yale, did you go right to your first job?Jakub Rehor: Yep. Went straight to McKinsey. Spent a couple of years at McKinsey doing consulting at various places. Jason Raznick: What kind of companies were you consulting for at McKinsey?Jakub Rehor: It was a very interesting batch of companies. My first client was a, it was an online service, actually, one of the first online services.This was before internet really caught on. So in those days you had the three companies, CompuServe, Prodigy, and AOL, and they had a strategic issue. What do we do about this internet thing? Are we just gonna ignore it? Because we have much content on our own network or are we going to take this bet that over the long-term the content that's available on the internet is going to be better than what we have inside our network.And okay. If you decide to take that bet what does it mean? What kind of technology do we have to build? How do we connect our customers with that? How do we do our marketing? It was really interesting times. It was the early days of the internet.Jason Raznick: Is that something that you were striving towards? Jakub Rehor: Yeah. It's like basically whatever I did, I couldn't get away from the internet and the technology. It just follows you everywhere.Jason Raznick: Then you left McKinsey. And is that when you went to Marty Whitman's Third Avenue?Jakub Rehor: Not directly, at first I went to Sanford Bernstein. Then I went to Putnam Investments and then I ended up at Third Avenue. So I actually started doing value investing at Sanford Bernstein. I was an equity analyst and then worked my way up through being more senior, all the way to PM level at the Third Avenue.And so I spent a long time analyzing balance sheets, analyzing companies, analyzing businesses and making investments and running portfolio construction, running a managing risk and all that wonderful stuff.Jason Raznick: So at Third Avenue, we came all the way to PM. How many people were there at Third Avenue?Jakub Rehor: At the time it was about 100 people, about 20 people were in the research department or in the investment.Jason Raznick: What made you want to go from McKinsey to Wall Street?Jakub Rehor: The best part of working at McKinsey was doing the strategy, research and thinking longer term, the hardest part of working McKinsey was doing cost cutting.So one of the studies I was on was that a electrical utility where, they had a capital budget that it was getting a little bit out of control and you had to go in there and start cutting expenses. So you would go and identify the projects that needed to be shut down. And that's it's pretty stressful situation because you talk to people whose jobs are linked directly to these projects.So they know that if this project gets canned, they may have no future of the company. So they will, they try to fight really hard to preserve it. So you end up in this like hand to hand combat where you fighting against the people you're trying to help. It's quite stressful. And it wasn't all that enjoyable.Going into Wall Street and equity investing is very much like becoming a strategy specialist, right? You're thinking about longer-term issues. You spend a lot of time researching what's going on, but luckily you don't have to go there and actually do the hard things that are required to run a business.Jason Raznick: So then you start researching this crypto space. And is that when you're like your co-founders you got ready to create lucky Labs?Jakub Rehor: Yeah, that was pretty much around 2017, early 2018.So my co-founders: One of them came from investment banking and private equity. He was actually the CEO of Lehman Brothers, North American Equity Sales. So he's very familiar with that side of the business, with things like prime brokerage execution, operations, all that stuff. And the other co-founder is a technology specialist and he started his career working at JP Morgan, working on their foreign exchange trading desk.When it first became automated in the early 1990s and his latest project before we started Lucy Labs was he was a consultant for ISDA, which you may be familiar, it is the is the organization that regulates over the counter derivatives trading. And they had a long project stemming from the financial crisis in which they are forcing over the counter traders to put up margin.Historically OTC trades were done without a margin. Which led to problems when Lehman Brothers blew up. And the ISDA, a margin project went on for several years to create the methodology, to calculate margin requirements for any derivative ever traded anywhere in the world. So you can imagine that was a huge project. And our co-founder Rob was was the lead consultant.Jason Raznick: What are the first two things you did Lucy Labs? Jakub Rehor: The first thing was let's figure out what works here. This is a completely new market that we don't know anything about, which is very exciting. A little bit scary too. So we rolled up our sleeves and start figuring out how to do execution here, how to find investment opportunities, how to get historical data, how to put it all together and roll out to an investment strategy.And so we did that, we were a prop trading fund for three years, we were doing it with our own. And investigating as much as we could about the market.Jason Raznick: Are there that work in traditional finance, but don't that don't work in crypto?Jakub Rehor: So I would say even most things in traditional finance don't really work in crypto. So coming in as a value investor, there's really no value investing in crypto. It's very difficult to figure out intrinsic value for any of these projects. People have tried, we have certainly tried it's a very difficult problem.And I don't think that anyone has found a way to make it. What does work is a momentum-based strategies. So momentum is something that has worked on all sorts of assets over long periods of history. And so when we started looking at crypto, we had this theory that, it probably will be working in crypto as well.And we were pleasantly surprised how powerful the momentum factor is within crypto. It is it is actually quite surprisingly powerful. Crypto is very much driven by sentiment by retail trading and a momentum just captures that very well. Jason Raznick: And this volatility is macro volatility. What do you make of it in the crypto space? The past few weeks? Jakub Rehor: We've been in this space for 4 years and this is just par for course, this is actually not even particularly. Painful period in the sense that we've lived through the bear market of 2018, we've lived through the 2000, 20, early years in the bear market in 2018.Just to give you a little comparison, Ethereum was down 95%. From peak to trough in a space of less than a year. That's a very painful situation. Bitcoin was down over 80% peak to trough. So that's what a bear market in crypto looks like. Similarly in 2020 to March, 2020, we went through a 24 hour period in which Bitcoin dropped 50% in 24 hours.In crypto you have to deal with the volatility. Your models have to take that into account. You cannot be leveraged you, your risk management has to be, on top and you just have to expect that there is a, there is always something scary happening.Jason Raznick: How do you guys go about trading in crypto? Jakub Rehor: So we do a bunch of things, so I can describe a few of those things.Let's talk about the momentum trading. We have a pretty active program in which we take long positions in crypto coins when momentum is positive and we go to cash when momentum turns negative. You look at the recent historical performance and in general, there is an autocorrelation of performance. So things in crypto that have gone up recently have a tendency to keep going up and things that have gone down recently have a tendency to go down. So that's the bet you want to be taking. The downside is you will miss the turning point. So when things start bouncing off a bottom or an instinct, things start rolling at the top.You're going to miss that, but that's actually over the long-term, that's a price that's beneficial to pay. So we would when there is a bear market in crypto thing, things start selling off, we will generally go into cash. And that's certainly what we've been doing. Most of this year in that our models started putting us into cash towards the end of last year, towards the beginning of this year.And we were almost completely in cash for the past month or so.And you don't necessarily even need a very elaborate models, any sort of trend model will tell you to get out of the market over the past month or so.Jason Raznick: Okay. So then how do you know when to get in? Jakub Rehor: You wait, you miss the bottom. You see the market turning around, you see the price momentum picking up, and then you jump back on with the expectation that you will probably get in 10 or 15% above the bottom price. But again, in the longterm, that's a very good trade-off to take.Jason Raznick: So are you guys getting back in now?Jakub Rehor: No, we're still waiting for things to stabilize.Jason Raznick: When do you think that will be? Jakub Rehor: One thing I've learned is not to try to predict the markets. it's way too hard. So I, I have no idea when this will turn is there more downside it's possible? Again, in 2018, we've seen 85 to 90% drawdowns in crypto. So it's certainly possible is that what's going to happen? I have no idea. We're going to, we're going to let our models tell us when to get in.Jason Raznick: Are you in straight cash or are you doing stable coins? How do you handle that? Jakub Rehor: There are a number of things you can do in the crypto market if you want to be market neutral. There are strategies that you can do to generate returns. So I can mention a few of them.So one is a trade in crypto that does have a counterpart in traditional markets. And it's called a Basis Trade. The idea here is you may have a derivative, let's say a future that's trading at a different price from the underlying, so you can have a future on Bitcoin trading at a premium to the spot price of Bitcoin.And a simple trade is you can go short the future. You can buy the underlying spot and at the future expiration, that gap is going to close. And you're going to collect that spread. So that's the traditional basis trade that works in traditional markets. People do this in US treasuries and commodities and all sorts of things. But it also works in crypto and in crypto, there's actually a slightly, different version of this.The dominant product in crypto trading is a Perpetual Swap, which looks a little bit like a future, but it has no expiration. And the way the mechanism works is that when there is a difference between the derivative price and the underlying price, there's a funding rate that goes from one side to the other.When the derivative is more expensive than the spot, the people who are long are paying people who are short. So you can put a short position in the perpetual swap. You can put a long position in the spot and collect the funding rates. And that's a trait that historically has been providing returns of about 10% to 15% per year. There are periods when it makes more money than that. When there is a lot of speculative excitement and speculative mania we have seen it book 30%, 40% annualized. And then there are times when people are running away from the market and you will be generating maybe 0% or low single digits.Jason Raznick: I personally put some money in stable coins, USDC right? What you were describing is too complicated for me, I won't understand.Jakub Rehor: Stable coins is a safe place to be when things start falling apart. But of course, stable coins, it's a minefield as well. There are multiple kinds of stable coins. There's the very simple kind of, that works like a money market fund in traditional finance. There it's a fully backed by reserves and the stable coin is just a token. It works like a share in the underlying fund. And the fund hopefully is fully collateralized and it always has a 100% of its assets in cash or cash like products. So USDC is a great example of that, right? That's a that's a stable coin that's fully backed.Jason Raznick: Would you say USDC is very safe?Jakub Rehor: I would. I would put also USDT with USDC. So people think that USDT is an algorithmic stable coin, but it's not. It's exactly the same idea as USDC. They are also backed by reserves. they started disclosing their reserves and the composition of their reserves. So you can look at their statements and figure out what. How well back they are and how much confidence you can have in them. So USDT is actually a fully backed stable coin and it's not subject to the same problem that the algorithmic stable coins have.Algorithmic stable coins are completely different. And there are really two kinds. You could imagine a situation where you do not have US dollar reserves backing you, but you can have crypto reserves backing the dollar peg value of your stable coin.Because crypto is so volatile. What you need to have is you need to be over collateralized, right? If you're issuing $1 worth of stable coins, you probably want to have at least $2 worth of crypto backing you because if crypto falls down 50% you are still fully backed.So over collateralized, stable coins are, they're not necessarily that great because crypto can fall more than 50%, but at least it's a reasonable stab at approaching this problem. There's a whole, another class of algorithmic stable coins that are under collateralized. So they issue $1 worth of liabilities and they have less than $1 worth of assets, and that is crazy stuff. And those are bound to blow up. And Terra USD was definitely one of those where they were under collateralized. They issued billions of dollars worth of the pegged stable coin. And the mechanism that they had was saying if a lot of people come in and try to convert to US Dollar at parody, we have these other things that that we can print unlimited amounts off, and we're going to print this thing and we're going to sell it. And that way we'll generate the value for the stable coin, which obviously is insane because when you have a run on the bank when you have a run on the stable coin, the value of the stuff that you are printing is starting to collapse so you have to keep printing more and more to generate the same amount of value. And you end up diluting that second asset to zero and you end up breaking the peg. Terra USD is not the first one where it happened. There was a bunch of other ones in the past. It is absolutely amazing to me that people keep falling for this. But here we are, people put tens of billions of dollars into this.Jason Raznick: What do you think got people so into it? Jakub Rehor: There's the old saying in the markets, "Bulls make money, bears make money, and pigs get slaughtered." People just got really piggish. These 20% yields sound amazing.I think that a lot of people did understand that these yields are unsustainable and they are they were funded by the VC investors or the launch of funds that that Luna the project behind the stable coins raised.So they understood that these 20% yields wouldn't last, but they thought, I'll just collect them for as long as I can and get out. And, as we know, getting out is the hard part.Jason Raznick: Getting out is the hard part. And so when you're in cash, do you guys do just say "Hey, I'm going to buy some USDC"?Jakub Rehor: Sure, we do that. Jason Raznick: What about Terra Luna?Jakub Rehor: No, forget it. Nothing algorithmic. We wouldn't feel comfortable with that.There is actually an interesting innovation going on, so I would say. There is one potential new kind of algorithmic stable coin. That is interesting to watch. It's tiny. It's still an experiment. We'll see if the experiment is successful or not. But the idea is similar to what I just described about the basis trade, right? So when you have a basis trade, you sell a derivative and you buy the underlying spot. What do you actually generate is like a synthetic stable coin. You create a synthetic dollar that. And there are people out there who are trying to generate to create synthetic dollars exactly. By doing this, by putting these offsetting positions on the derivatives and the spot markets, and they're doing it on decentralized exchanges. So that is an interesting idea because it's not really subject to the same risk that the traditional algorithmic stable coins are because even in Iran, you should be able to liquidate both sides and and be able to defend the peg.Now. It's still early days. There's only, I think few million dollars experimenting with this approach. And a lot of this depends on the infrastructure outside of these folks control. If you are issuing a stable coin like that, you need fairly liquid markets in the derivatives that you use to back this up, those markets have to provide a 24 / 7 availability. You have to be able to withdraw money fairly quickly. So the infrastructure really needs to be there. And the danger is that we are still too early and the infrastructure cannot support that. But it's a very interesting.Jason Raznick: And are you guys trying to get involved with these experiments or are you just watching it? Jakub Rehor: We're watching at this point and cheering on from the sidelines.The whole crypto space is a thousand experiments right now.Jason Raznick: Do you think there should be more regulation in the crypto space? Jakub Rehor: Regulation is coming, there is no doubt about it. Regulation makes sense when the market is a little bit more mature and it becomes obvious what is the right thing to do and what is not the right thing to do.Regulators are not really equipped to know upfront. What is a good idea and what is a bad idea. And right now, you see a lot of the regulators around the world, including the US stepping back and trying to figure out what the heck is going on. What should we allow? What should we not allow? And that allows the space to do a lot of experimentation and sort of by learning, we're going to discover what is a good idea and what we should just. Let it happen again.I think algorithmic stable coins is a very dangerous idea and we're getting a lot of evidence for that. And I think the regulation is going to clamp down on that. At the same time, fully backed, reserved stable coins are sailing through this crisis pretty well and I think the regulation again should reflect that and encourage that sort of product as opposed to the more algorithmic ones.Jason Raznick: Who is Lucy? Jakub Rehor: Our CTO came up with that. There was a fairly famous fossil form of the early human, like before humans really evolved to become modern humans. And it's so it's it hearkens to that. It's like early steps in this new world that is being that is developing in front of us.Jason Raznick:What else does Lucy Labs do? Jakub Rehor: So we have a blog on Medium we just launched, a blog talking about crypto products. The first post specifically talks about perpetual swaps. The history of them. It's a product that's unique to crypto doesn't really have an exact equivalent in traditional finance. So we spend a little bit of time explaining how it works and what are the tricky things to be aware of working with that. And we're really enjoying that. So I think we'll be doing a lot more to have that.Jason Raznick: What are perpetual swaps? Jakub Rehor: So perpetual swaps it's super interesting. It's a version of a future. Traditional futures of an expiration. So usually every three months or so the future expires and it's settled either with the underlying or it gets settled in cash. And when the crypto exchanges started taking off, that was the product that they offered and they discovered that retail investors actually had a real trouble.managing Futures, the managing the expirations. People would forget that, third, Friday in June or whatever is the expiration date. And they would log into their account once every two weeks. And one day they would log into their account and their position was gone and they will be like, oh my God, what's happening.The traditional futures turned out to be not a great fit for crypto. So a number of exchanges started experimenting and one of them called Bitmax which was based in Hong Kong in those days they played with different things. They tried to shorten the futures to have expiration every 48 hours then every 24 hours. And finally they decided what if we never expire this thing? Just make it perpetual. Then the issue you have, how do you make sure that the swap price doesn't drift away completely from the underlying, if you don't have expiration that will force those two prices to converge, how do you make sure they don't just, it just doesn't walk off into space.And the innovation they came up with is they first started thinking of referencing some outside interest rate that would and you were to charge the people who were on the wrong side of the trade. So if the future was too expensive they would charge people who were long. And the question is, how do you set an interest rate in crypto, like what is the Bitcoin interest rate? There's really no good answer for that. So they decided let's just generate it from the price itself. Let's just look at the difference between the price of the swap and the price of the underlying. And let's charge that difference.That will force people who are long to be paying a lot of money and hopefully it will incentivize them to close the position and sell the long position, which will force it back to the equilibrium price. And when they first came up with that, nobody knew if it would work or not. It was a real experiment. It was a kind of stab in the dark. And in the first 6 months, it was pretty hairy. The prices were all over the place. The swap price was drifting away from their underlying and it was a little bit chaotic, but after about six months ARPS figured out how to play this game and over the past 2 or 3 years, that market has really matured and it became the predominant way of trading crypto outside of the US. The perpetual swap markets are anywhere on the order of 5 to 10 times greater than the underlying spot markets.Jason Raznick: One of the things you mentioned earlier with Marty Whitman, you are an investigator and you're looking for opportunities to companies and you can value, invest and see stuff that people aren't seeing. Is this similar to that?Jakub Rehor: It's very similar. It's again, you're being a detective and you constantly ask questions like what's going on and why? The way we really wrapped our head around the perpetual swaps was we were taking regular positions in the spot markets, and then we saw liquidity as much better in the perpetual swap so why not start trading that we started trading that. We're getting hit with these funding costs. And we're like, oh, we hate paying these funding rates. Hear me out. What if we start collecting them instead? How would you go about it? And very quickly we figured out, okay, you can create the synthetic position and do this.And yeah, you stay, you learn by doing. The way you discover these opportunities, you are active in the space. You trade, you do experiments and you discover things that you didn't realize were happening and you'll find new opportunities all the time.And we'll help amplify your blog and get people to get the word out.Jason Raznick: What advice do you have for crypto investors?Jakub Rehor: I would say with retail investors, crypto is a very risky, very volatile asset space. You do want to be in it longer term, but be aware that these 80% drawdowns are happening and are likely to happen for the foreseeable future.So position sizing is the most important thing you need to worry about. If things get really tough. Can I survive this, don't put on too big a position and definitely do not put on leverage. Retail investors tend to get in trouble with too much leverage on their positions.But longer term. Crypto is very likely to be around for a long time. And learning about it is best done by trading and being active in the market. Be there and trade it. But keep it Small enough that you can afford the pain of the downturn, similar to what we're seeing today.for institutional investor, my advice is slightly different. I would still say you should be experimenting in this market. The interesting thing is the infrastructure for trading that's being built in crypto markets is, I would say a hundred years ahead of what's in the traditional markets that you are used to, the efficiency and effectiveness of the trading platforms is going to absolutely steamroll, the traditional trading venues.And I would recommend to start learning about how things work there so that when it happens, you'll be prepared. I'll give you an example, the huge difference between a traditional infrastructure and the crypto infrastructure in traditional infrastructure. Let's say you trade futures and the way you to say you're trading futures on wheat, for example.So you have to put up a margin and at the end of each day, your position is marked to market and the exchange calculates any additional margin that's needed. And you have until the next morning to come up with the cash to keep the position. OIn that period between the calculation of the margin and depositing of the cash, the exchanges that.If you actually go bankrupt, the exchange may not be able to collect. And, they have a fund to insure them against that. But it is a real business risk for the exchange, which is why they set the margins very high. To live with having that risk on their balance sheet.So the size of the margin is a function of the payment cycle and the settlement cycle. In traditional finance, the settlement cycle has to be at least 24 hours because the traditional payment rails take 24 hours to get, your payment from your bank to the exchange or the broker.So by nature, they cannot offer high leverage in the products that they. Just because of the settlement counterparty risk issue.You go to crypto exchanges and you realize that they have the recalculate, the margins at a much higher frequency. The exchange. I mentioned BitMax, actually, they started recalculating margin on every tick.So every trade happens, they go and go through a million accounts that they have and recalculate the margin requirements immediately. So they don't have that 24 hour delay for them to be at risk, they can liquidate positions much faster than that. Because of that they can lower their margin requirements. And some of these guys used to offer a 100 times leverage. Thankfully they reduced that now, but you can still get 20 to 25 times leverage on your crypto positions. The exchanges can afford to do that without putting themselves at risk because of this much faster settlement cycle that they have available.Now, if you are an institutional trader and you doing things like hedging, you're doing things like arbitrage. Where do you want to execute? You obviously want to execute at the place with lower margin requirements because you'll have a better capital efficiency. You'll have a higher return on capital.So liquidity is likely to stay at these crypto exchanges that have the newer techniques. And we're seeing that clearly in, for example, the Bitcoin futures market. CME rolled out its Bitcoin futures product in December, 2017. So it's four years now. And they only have about 5% market share in global Bitcoin futures trading, which is amazing.CME is leading venue for derivatives trading. How come they cannot get more market share than that? And the response is because of the, how slow their settlement cycle is. They are requiring 35% margin for any Bitcoin position while the crypto exchanges, they may ask for 3 to 5% margin for the same position.So again, as an institutional investor, you'll be better off trading on these new exchanges.Now these guys, the crypto exchanges are coming into the US so right now, there is a hearing in front of the Congress Senate Agriculture Committee. And and there is a application with the CFTC in which FTX, which is one of the leading crypto exchanges is trying to bring this 24/ 7 trading in commodities with instant margin calculation, and an instant settlement so T plus 0 seconds. If this gets approved and really, there's no reason why it shouldn't be it needs to work its way through the regulatory process, but if this gets approved and you will get a fully regulated exchange with these parameters, can you imagine what that's going to do with people like CME?The reason CME is doing things this way is that's how you did it in 1868. When you were started, when you literally had a guy, in the morning, run to the bank with a check. And deposited with the clerk on the exchange at 7:30 AM. And if the check wasn't there by 8:30 AM, the positions would be liquidated that's and it's baked into all of their systems.They are, it will not be easy for them to upgrade their system to be able to compete with this.Jason Raznick: Do you personally buy Bitcoin or were you an early investor in Bitcoin? Jakub Rehor: Oh yeah, way too early. I bought my first Bitcoin back in 2013 or something like that. It was $14. I was down 80% within a month of my purchase. So yeah, it was a small amount of money.Jason Raznick: Do you have a favorite crypto?Jakub Rehor: I'm still partial of the Bitcoin, my first love.Jason Raznick: The last one is what's your worst or your first job? That's a question I always ask.Jakub Rehor: I did all sorts of things. I painted houses. I work in the fields. I worked in bakeries. So it's a very wide range of things and honestly, they're all fine. I think any job is what you make from it. What you make of it. You can learn a lot of from just painting a house.Jason Raznick: And if people want to check you out, where should they go?Jakub Rehor: We are at https://lucylabs.io/.Jason Raznick: Thank you for coming on the RazReport. We appreciate it.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

This is a replay of Jason Raznick's interview with Fyllo Founder and CEO Chad Bronstein at the Benzinga Cannabis Conference.Jason and Chad talk about:How Fyllo startedData of the futureTyson 2.0Hosts:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Transcript:This is a replay of Jason Raznick's interview with Fyllo Founder and CEO Chad Bronstein at the Benzinga Cannabis Conference.Chad Bronstein is the most energetic driven entrepreneur that I am going to say in this industry. This guy not only has Fyllo , not only Tyson 2.0 and more companies, we are pumped to introduce the man, the myth, the legend, Chad Bronstein from Fyllo.Jason Raznick: So what time do you get up, what time do you end your day at ?Chad Bronstein: I get up about six o'clock in the morning.Go for a run. Then my son wakes up. Work pretty much until later on and then hang out with my son and my wife. And then I am in conference calls late into the night.Jason Raznick :Fyllo - how did you start this company?Chad Bronstein: So prior to starting Fyllo , I was running a large ad tech company and I was bored. And I just want to do something new.And so I had to make a crucial decision. I had a bunch of offers, I was doing well. I decided I'm going to go start a cannabis company.And we started Fyllo three years ago. And it's been a great ride. So we told Brian Spears, Britney Spear's brother. Hey, can you get us in front of Mike Tyson? Brian lived in Vegas. And so he got us to Mike's brother-in-law and then we brought Mike on as a strategic advisor to really talk about traumatic brain injury and the effects of psychedelics.Jason Raznick: And what do you do to stay in shape and to have these guns?Chad Bronstein: Right now I just do cardio.Jason Raznick: Do you eat healthy?Chad Bronstein: I eat really healthy, I don't eat red meat.Jason Raznick: What does Fyllo do in the most basic terms?Chad Bronstein: We offer multiple services.So we have brands like Dunkin Donuts, buying data from us and why they do that is because they don't know that Jason wears a Rolex. He drives a nice car. He shops at Nordstrom's, but they don't let Jason goes to Michigan and buys a bunch of marijuana. And there's all these different correlations you can make.You're literally spending $200 a week on weed. Why wouldn't Nike want to target you? Because they know you can afford it. Why wouldn't a car manufacturer want to target you because you're spending $200 a week on weed because they know you can afford leasing a car. pharma buys data, because they don't want to lose, share shift to the cannabis industry because instead of buying ibuprofen or Aleve, you're taking cannabis medicinal products.So we have over 7,000 brands buying data from us. And we're integrated into every major platform like Google trade desk, et cetera, where you can go into the platform and buy our data.Jason Raznick: Are you a much better Nielsen?Chad Bronstein: Nielsen is a great company. Fyllo is the data of the future. Cryptocurrency is now becoming more and more talked about and trend, right? You have gaming, which is a big conversation. Those data sets are where Fyllo is going.Jason Raznick: So you're going to get into other sectors. What's the sales process like?Chad Bronstein: So for us, what was great was we talking about something different and everyone opened up like "I ate edibles with my husband last night".So it opened up the flood gates to have more of an intimate relationship with them versus that uptight vendor relationship.So that was fun for us and we had to educate the large brands.Jason Raznick: So you're basically at level 1 with this company now in terms of revenue or scale, but you've gotten the acceptance by mainstream companies. So now what?Chad Bronstein: I think the thing for us is we're going to grow, continue to grow at scale. We have 300% growth YoY. Our growth is pretty astronomical and it's because we have a good team. We are 300 people.Jason Raznick: : Where are you guys based in, mostly in Chicago?Chad Bronstein: We just bought a data company called Semasio based in Germany. We are in a lot of major cities.Jason Raznick: : Can we talk a little about Tyson 2.0, so what's Tyson 2.0?Chad Bronstein: Tyson 2.0 is a cannabis company formed with legendary boxer Mike Tyson. We have become the most well-known brands in the space. We created Mike Bites and it went viral. We had Howard Stern, Jimmy Kimmel, everyone talking about it.We raised $8 million from some of the most strategic investors in the cannabis space. And so the key for our success was that we struck a deal that allowed us to get distribution.Mike is an advocate for cannabis. He smokes a lot of weed every week. It helps him and he's outspoken about it. And so it's very much on brand.Jason Raznick: Thank you for coming on.Chad Bronstein: I am honored to be here.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

This is a replay of Jason Raznick's interview with Kevin O'Leary at the Benzinga Pyschedelics Conference.Jason and Kevin talk about:Psychedelics as an investment opportunityWhy Cannabis Industry Attracts 'Zero' Institutional DollarsThe Most Successful investmentsHosts:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Transcript:BZ: I want to introduce the number-one shark Mr. Wonderful. Kevin O'Leary. When did you first get into the psychedelic space? 3 years ago. I was here and a young guy came to me and said, look, I want you to give me a few million bucks to invest in psychedelics.I said, are you out of your mind? That's an illegal substance.He said, no, I want to do FDA trials with it. And it was a very fascinating conversation because at that time everybody was trying to raise money for Bitcoin. It was very crypto oriented and I really got interested and I put a couple of guys with him to do some diligence.And Alex one of the guys that works with me, Alex rarely gets excited about anything. He's seen everything. He's just came back and said listen we got to own this thing. The potential here is huge. And he was right. The addressable markets are in the hundreds of billions of dollars.BZ: And so where is Mindmed right now?K: When I index a sector, I try and mitigate my risk based on trials. In biotech medicine, the outcomes are unknown. So it's very binary. You can chase a molecule for 10 years and you in stage three lose.And so you have to have multiple trials. I'm overweight MindMed, but I also have exposure to Compass. They're all doing things slightly differently, but they're all in stage two. And The minute one of them gets to stage three on any medicine, you're going to lift all the tides, so you want multiple exposure.BZ: How did you decide to get into psychedelics?K:How many times in your investment life, do you get to position yourself in a brand new sector?A completely brand new sector? Never is the answer. You've once in a lifetime, if you're lucky. And this sector, and I'm not talking about cannabis, right? And I'm talking about psychedelics as medicine, FDA approved trials, non recreational use. Remember what happened back in the early sixties, the whole movement overdosing LSD caused this to be elevated to a narcotic and put aside, even though there's lots of promising evidence that micro-dosing, it could have some good natural attributes.In terms of helping people with addiction, opioid addiction, alcoholism, anxiety, all of these different massive markets. It was ignored. And then we've tried all these other drugs like pumping kids full Ritalin and all this garbage. And we haven't explored this opportunity. And I think now we are.And so for me, it's okay. There's been nothing new for 30 years in mental health. Other than just drugging people with more drugs. This looks more interesting. Let's put some dollars aside for this.BZ: Are you invested in cannabis companies? K: Let's talk about what cannabis is. Cannabis is a narcotic and that puts it in a difficult place for institutional investors.If you have two states beside each other, one has legalized cannabis and the other hasn't and you are a shareholder. Somebody takes it across the border. and now you have aided and embedded transferring a narcotic that's punished by about 23 years in jail. I'm not that interested in that outcome for me.Why don't we just get it off the narcotic list?And so I represent institutional capital. We're always trying to put money to work but there isn't a dime of institutional money in cannabis industry.Recreational cannabis is great, but it's a nothing burger compared to what this would be if it was a medicine and the potential of THC in small amounts or medicinal amounts, be FDA trials, and then approved as a drug that would have been interesting for institutions. And I think frankly, and I look at markets like Ontario, as you mentioned, the most advanced market. That business sucks. They don't allow them to brand anything. So the people in Ontario simply buy it from their dealers at a 30% discount and nothing's changed and it's a miserable business. So that's not a great investment at all. And the PEs of those stocks have been crushed.You can't get me excited about that.BZ: So your point is people in Ontario aren't going to the stores as much. They're going right to the direct source. Their dealers basically?K: Now, either you arrest all the dealers and throw them in jail, like we've been doing forever, except that's a problem now because it's legal. So now you have to figure out the distribution channels in Canada, they don't allow branding. So THC is THC, whether it's an, a gummy or an edible or you're buying it in smokable.There's no differentiation. So the people that are making that are selling a commodity and their margins are getting crushed. I don't find any of this very exciting as an investor. I think in a conference like this industry should do some soul searching and say, how do we fix this? And you start by convincing the president to get it off the narcotic list.And you bring in billions of dollars into it for both medicinal and recreational. After you get it off the narcotic list. That's cannabis. That's not the problem with the psychedelics industry, it still can attract institutional capital.BZ: When is big pharma going to get in the psychedelic space?I think big pharma is starting to look at it because you're trying to figure out outcomes on massive addressable markets. And the way I view it is this is a personal opinion, but I look at this market, all the companies are going to to have to merge because they need each other and another $200 million.By the time they get this to a medicine, that's about a billion bucks. They've got a raise it's much better if they combined all these trials together. In my view, these companies all have their own management. I know them all. I, we talked about this two years ago. I said, guys, there's so much still to be raised here, but so much potential.We could get strategic in this thing. Let's merge them all together. That's not how they viewed it. So I own stock in all of them.BZ: You think there is gonna be one winner or you might maybe a big merger of all three? Do we have some breaking news here?K: No you've got the LSD crowd, the microdosing crowd and a lot of skepticism around that, but a lot of optimism too, depending on who you talk to, you've got the psilocybin crowd, then you've got the alternative molecule where you're modifying either of those, each trying to address different afflictions around mental health.There's a lot of anecdotal information coming out of the west coast in the programming field, even though it's illegal, they're microdosing LSD, and there, which I don't endorse, but it's obviously got the research crowd really interested in understanding how this works and that's why those clinical trials are so important, but psilocybin also has potential as well.Plus there's the whole counseling market where you take these drugs in addition to it, to a counselor. So there's a lot of different use cases to this thing, but I'm far more constructive on psychedelics for institutional capital than I am for cannabis, for reasons I just detailed, don't shoot the messenger.Everybody was so excited about. Those stocks have come down 80% in PE since this whole thing started.BZ: What's your best business?K: Here's what I've learned about this whole shark tank thing. Somebody walks out in the carpet. I've never seen them before we give them a million dollars. We have no idea what the outcome's going to be.We think we've got a winner, but we don't know. And then two years later, some ridiculous product that should have gone to zero ends up selling for a hundred million dollars. And so I have a different view about it now.A woman walks out on the carpet. Jesus. You take a swab and you stick it in your cat's orifice and you send it to me and I give you a DNA profile of when fluffy is going to die. And I thought that is so stupid. I can't even imagine the test kits are $29 and you can get a new cat for $5. But I invested in any ways because she had such a great track record as an honorable. During the pandemic all of the110 million cats in America got something stuck up their rear end because that business has exploded and I was wrong, but I own a nice chunk of it. So I'm pretty happy.BZ: How many investments have you done? K: So you can take a product. The number one reason companies go to business and venture is they run out of dollars to acquire customers. They go bankrupt advertising, but when you're on shark tank, you acquire customers for free. So you can take a marginal business and all of a sudden it's profitable and shark tank because it's in syndication and perpetuity.So we make a lot of money on things. I don't know if you saw the recent episode, banana loca, you So you can now send a banana in your kid's lunchbox filled with peanut butter, but unpeeled, how does that work? You stick a catheter up a banana and then press peanut butter into it. I thought what a stupid idea and Alex backstage said I have to own that.And all of a sudden, all the big banana companies are calling us saying, Hey, can we do a deal? The stupidest idea I've ever seen it's crazy.Lori taught me something. Stupid things made of plastic sell a lot.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

Episode Summary:In this episode of The Raz Report, Jason Raznick speaks with Anthony Zhang, CEO of Vinovest.Jason and Anthony talk about:How profitable it is to invest in wine and the yearly rate of returnHow much money is need to start investing in wine and the process of investingAnthony's favorite wine to enjoy as a wine investorAnthony's life as an entrepreneurLearn more about Vinovest here!Hosts:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Transcript:BZ: Very excited on this RazReport to have Vinovest CEO Anthony Zhang. Here's a way you can make money. This guy has created multiple companies and sold them. People reach out to me for advice on what to do for businesses. Next year they need to reach out to Anthony.Welcome to the show, Anthony.A:Jason, thanks so much for having me on. It's a pleasure.BZ: Before we get into your entrepreneurial journey, I just want you to quickly say what you guys do. What is Vinovest?A: We are a way for anyone to be able to diversify their portfolios into the asset class of fine wine. So we help people buy, store and sell appreciating assets, like investment-grade wines.BZ: How long have you been doing it?A:So we are rocking on year three right now.BZ: And how has it, how has the journey been?A: We launched actually March of 2020. So if you remember what was happening, that we were heading into a global pandemic. And I remember the first week me and my co-founder launched the business was when the stock market tanks like 20%, 30%.We looked at each other and think holy crap, is this the worst time ever to launch a new investment platform? Thankfully things worked out. Been able to amass, tens of thousands of investors. So now it's broader platform. And the wine work has been doing pretty well as well.It's 2020 it's at 17% returns last year, around 19%. And this year we're actually up almost 6% year to date.BZ: Anthony where did you grow up? what's your story?A: All right. We're in the bay area, but actually spent most of my childhood years abroad. Beijing, Hong Kong, Vancouver. But came back here for high school, finished up high school in Palo Alto, California, and then started college in LA. And I think that's when my entrepreneurial journey started with my first business, which was a college food delivery startup called onboard.BZ:Is that the one you pitched to Mark Cuban?A: Yeah. So after that pitch night with Mark I had the opportunity to join a fellowship program called the Thiel fellowship. For those of you who aren't familiar, Peter Thiel, every single year, gives out a hundred thousand dollars to about 26 people.And it is no strings attached except you have to drop out of college. I got that. I dropped out of school and actually pursued that food delivery startup full time. And over the course of the next four or so years, we were able to grow that business out to over 20 markets nationwide. We had hunted a thousand students using it, and we eventually sold that.We were able to get a really good return for our early investors. More than 2X. And if it's any indication, many of those investors now also back to my current company between 2X and 10X.BZ: So you sold Envoy. And then you said, what was the other company you sold?A: So if you remember what's happening in Hollywood in 2017, it was a Harvey Weinstein that was dominating the news and all the terrible things he did.And a similar story was unfolding in Silicon Valley where a lot of big shot VCs were getting called out in the news for pretty much doing the same thing, racial discrimination. Sexual harassment. As a guy, I definitely did not experience any of it. And it was shocking to me and talking with a lot of my friends who, were female founders or founders from other minority backgrounds, they were sharing some of their stories with me privately. And I was like, holy crap these stories need to be able to be out there, but in a way that doesn't hurt the storyteller right.In a way that can also benefit future powers. So maybe essentially like a rating app for venture capitalists and angel investors. And just because of the climate at the time that site really blew up pretty quickly. Hundreds of thousands of unique searches a month on entrepreneurs and other investors, actually just looking at that out, these other VCs and angel investors that they were potentially going to work with.BZ: Anthony is that one still around?A: Yeah. Now it's called Rate My Investors. So if you go to ratemyinvestor.com I believe it is still the largest database of vetted reviews on angels and VCsBZ:So what was it like working with Peter Thiel?A: So the program is pretty awesome. I think the biggest benefit that it gave me was seeing that "Hey, there are a lot of other young entrepreneurs that have taken a traditional path and they're taken out." I was, I was going into my sophomore year at college.I was working a ton on the startup and everyone around me was just living a normal college life. I feel like I had a community and joining the Thiel fellowship and being a part of that, I think just gave me that sort of tribe that I needed to feel competent dropping out. Or also would have just been in my college apartment, being alone all the time, trying to build a company.There's a quality standard that comes with becoming a Thiel fellow.BZ: So while you were at USC you had an accident, right? And are you cool talking about that? A: Yeah, absolutely. It's a part of who I am. So this was actually when I was running Envoy now. And this is about almost six years to this day, actually. I had a spinal cord injury and so those of you don't know what that is. It means that you pretty much get paralyzed from wherever in your spinal cord break. For me it was a surgical injury. So this was like up in my neck at the C5 vertebrae. And that meant I couldn't really move anything below my shoulders at first. And that completely changed my life because I was in the ICU for five weeks.I could not move anything. Multiple surgeries and was on a ventilator for almost the next four months. And, talk about having to learn everything all over again. I wasn't thinking about my startup or, investors or anything like that, even though I was in the middle of raising around it at the time obviously that round crumbled.But I was in full-on survival mode. I didn't even know if I could go back to doing any of the things I used to love. And recovering and being able to have even the drive to want to do something again, other than stare at the ceiling, getting in bed it was a really tough time and I'm really just fortunate to have my then girlfriend now wife with me.And she was really just by everything and helping me realize that Hey Anthony even though, physically, you're not the same. No, you're all there mentally. You can still be able to do what you love, which is running businesses. And you shouldn't go back to doing the things that you love.And so then during those five weeks or what happened to Envoy now and what, and just we'll go there first and then I'll. Yeah. It was honestly almost six months where I was away from the business by like co-founders took over, they were running the business in my absence. And, I actually refused to look at a phone for almost four or five months.Cause I was just fully in denial, what had happened and it was in the hospital in, in, in our rehabilitation hospital for pretty much the next year. And. Th like mentally professionally, personally, how did this change you or did it change you? Yeah, I think what really helped me really snap back into reality was a statistic that my occupational therapist read me.It was "they're saying that 80% of people have spinal cord injuries. They actually never go back to work." And I was like, holy crap. I don't want to be part of that 80%. I want to just go back to the real world and, be able to live life again. My life cannot just be in a hospital facility doing assisted care for the rest of my life.That's what actually led me to come back to the. I told him, I go fast. Okay, I'm coming back. I'm still in the hospital. I'm still going to be doing, five to six hours of therapy a day and work on me, but I want to get back to running the business. And that was that, that turning point that kind of gave me a new perspective of being incredibly lucky to get to where I was.But the fact that there was still so much more to go with the business. And I think that's also what I think helped to drive our company over the next year. So we've got to that eventual acquisition.BZ: You've gotten some mobility back in your body as well, Is that correct?A: I can definitely like move a few more things. I'm still in a wheelchair today, but I'm not completely independent. I still have to have the help of others to be able to get along with my every day. And I think that was honestly a biggest, big lesson I had to learn was actually to ask for help.Cause as an adult, like you don't do that very often. And it was very hard for me to Come to that realization that if I wanted to actually have the freedom that I wanted to have in my life, needed to be okay with that. BZ: So you do all this stuff, the delivery, investment crypto, how did you choose to get into wines?A: I came across an article in the wall street journal and it was talking about all these ultra wealthy billionaires and Luxury assets they were investing in that was making them richer. And how crazy are the terms? Are all these assets work? On the top of the list, there's things like wine and whiskey are like classic cars rare luxury goods. And all of them had really incredible double digit returns over the course of decades.And I was like, holy crap. Like I did not know art had those returns. I had not known why I'd had those returns and I was like, Hey, it sounds pretty cool. Being able to collect and invest in wine. And the worst that can happen is that I'm stuck with a bunch of nice wine that I can end up drinking.If I'm not getting those returns or pick the wrong lines, if that's my downside scenario, it doesn't seem too bad. Decided to start collecting wine and realized very quickly why you need to be very wealthy because I was spending tens of thousands of dollars on things like insurance custody, setting up the right storage, getting, trying to get into all these like exclusive auctions.And it's a ton of barriers to entry that I don't think would be feasible for any average retail investor or any even like most high net worth. So like the amount of work that it takes to actually properly and properly. Investing in wine is a lot. And I thought to myself that's ridiculous that we're in, we're in 2020, 2021, 2022, and this is still the way that you invest in wine.The easiest way to transact wine is to wait two weeks and go and auction. And your market is the people who are in the room, right? That's silly to me, especially being in crypto where everything is transparent, global 24 - 7, right? Instant. That's actually part of doing that on the side for a few years and realizing that Hey, this is something that I'm very passionate about and I want to give this sort of access that I've developed myself throughout the years.I want to give that to more.BZ: So how does the process work? So there's a lot of stuff that you've done behind the scenes that we need to talk about here. How have you actually pulled this amazing platform off. Did you have to become SEC approved? Like how many years did it take? This is fricking pretty impressive, man.A: . So this was this is just a lot of exploration between me and my co-founder and we realized that Even though a lot of people we think would be interested in investing in wine, but like yourself, for example, most people, first of all, haven't even heard of wine investing and they definitely don't know which ones to pick.So that's why we chose this product. Which is essentially like a guided or managed portfolio as a first product, right? Like you pick your risk appetite, you pick, a few other inputs, how much you want to invest and things like that. And then we'll, we'll do all the heavy lifting for you, we help you pick the one. We help restore store the wines. We help you show the prices and history. And when you should sell those wines, we really are the ones to be that sort of like educational guide as you start your wine investment journey. So why do you think wine is as good as not as good as the alternate investment?So I actually came from it from more of a crypto medical, right? Like people love. It's deflationary. It's something that has a very fixed supply, same with wine, and then get him to eat it. If you release a thousand bottles into the market, you can't ever print more bottles from that same year.And why don't even take it one step further where in addition to that, people are drinking those bottles every single day. So maybe after year one, that 1000 bottles turn into 900. And just given supply and demand. That means that the remaining 900 bottles were just going to be a little bit more scarce and valuable.On top of that wine actually agents, right? The profile of that wine actually changes throughout time and people prefer the taste of aged wine. So not only is this product getting more scarce over time, but it's actually changing and appreciating into a better product. And those two are really the key drivers of why wine goes up and down.When you pick the right one. And to me, those things that seem like very simple to understand and something that doesn't really go away. People are not going to stop drinking wine anytime soon.BZ:Do I invest buy the bottle of wine and you guys store it? Or how does that work?A: Yeah, so we store it for you by default.You can actually get it delivered to you and drink it if you want, but by keeping it within our storage facility. It makes selling the much easier, because it's like a, it's like buying a car where like the moment it's off the lot and it gets into like your garage, it's massively devalued.So by keeping it in our temperature controlled facilities that maintains the highest possible resale.BZ: How many facilities do you have?A: All over the world, actually, because our wine has grown all over the world. So if we're buying wine from France for keeping it in France, if we're buying wine from Napa, we're keeping it in Napa.BZ:Do you have to buy insurance on it?Yeah. So all of these facilities have pretty robust insurance on them because what if the wine breaks right? What if there's an earthquake? What if you know the runs out of power and it's no longer temperature control. So all of those protections we have in place as part of the Beano best program, so that you actually can have asset protection and be able to feel safe as a first time.BZ: Are you being the first robo advisor for fine wine? A: Yeah, I think it's a very good comparison because we do have algorithms behind that make it a fully automated process.And we're the ones that are seeing those and fully being able to manage it for. Of course I got human experts that do inform and update that algorithm, but it's really that combination it's so scale such a huge user base while not having to hire a ton of new people.BZ: How many investors are on the platform?So I think we're creeping up on 10,000 investors on the planet. And a lot of them are like yourself, right there. They're very much versed in the investing world. They're investing in other alternatives and they see this as just wasted bark, some of their money that doesn't have the same correlation to the other stuff that.BZ: Now there's a quote, you said "the main thing separating someone with a hundred million investible assets and a hundred thousand investible assets is not the stock markets it's access to alternative investments." What do you mean by that?A: I think access to quality alternatives is really that difference-maker because.Anybody can invest in stocks, and you can pick all the same stocks. You can pick all those same cryptos, but still, I think that role of alternatives is where there is so much information asymmetry. There's so much gated, right? It's not everybody can invest in the top real estate funds.Not anybody can get into the best startups. There's a, there's definitely a kind of a gate and a barrier there. And same with wine. Not anybody can invest in best wines in the world because of those reasons of, not having access or not having the right storage and things like that.WithVinovest, we're trying to do our part in helping to change that.BZ: Vinovest launched a live marketplace to buy and sell wine on February 3rd, 2022.Can you talk a little bit how that works?A: So this is very similar to. A trading platform. A lot of people are going to be able to make their own decisions on, Hey if I don't want the managed portfolio to pick those wines out for me, if I, maybe I'm graduating from the manager side or maybe I'm just a more active type of investor.And I like to make my own picks. That's the place for you, right? If you're really betting on the region of champagne, you can just buy all the champagne you want and be able to have a very concentrated portfolio. Or if you really love this one producer, do you think their line's going to go up, skyrocket, you can just do that.It's a more, I think active experience for our users. And so far we've seen a really great response.BZ: Can you give like a number of, so if I invested $5,000 today, In 10 years what will it be? Can ypu just tell me like a rate of return that you think I could get over the next year by percentage terms? A: So historical rates returned to the wine market at been around just over 10%.You can just compound that and do the math where it's a pretty stable asset. It's something that is going to have minimal drawdown periods during the sessions. And it's reliable, right. Line investing in wine has been around for how does. It just really hasn't been available.BZ: Okay. So it seems like a no brainer. Are there accounts that invest in like hundreds of thousands of dollars or even millions? A: Yeah, we had people up on, on that level and those are more so like the institutional clients, family offices where they're managing large sums of money.But most people are in the single digit thousands. They're just starting out the retail investors. They're looking to put some of their money in their overall investible portfolio into this asset, like wine and then build it up over time.BZ: Okay. And how does Vinovest make money? A:So we make money through our management fees.So this covers the storage, the insurance, and all those protections that we talk about. And for that's how we, that's how we monetize.BZ: Did you have to become SEC approved?A: So this is outside ofSEC because we're not selling securities, right?Currently is not deemed as a security, it's a collectible. And because we're also not selling shares that represent wine or selling fractional ownership, I think like a lot of the other, real estate or art sort of investment programs. That makes it so that you're just buying a bottle of why you're just buying a case of wine.And you can drink it too. So that kind of preserves the utility of the wine, which makes it a lot more flexible from a regulatory standpoint.BZ: So if I put a 100k dollars into. And I keep it in until 2025. Let's say the money stays with you guys and then you guys would say, if I want to sell the, you guys would send the money back, basically.A: So we'd sell your wines off to the next person, right? And then you would you'd get those returns, the Delta between what you paid for and what it sells for.BZ: I created my account. How do I fund my account? A: Pretty much any single payment option under the sun. You can write us a check. You can pay in crypto. Credit card, you can link your bank account.BZ: So can I do that online or do I need to call someone now all online so I you don't need to talk to anybody?A: You can do that.BZ: What is your favorite wine?I'll say a favorite recent has been Vincent Dauvissat Chablis. Super crisp. Just goes really well with, cheese, fish, and even chicken. And that's one that I've been really enjoying recently.So thank you for coming on.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

"Just like you use your dollars with an online payment service, you can still be defrauded USDC. It wasn't the dollars that defrauded you. It was the other side of it." Jeremy Allaire"I actually believe the web of value exchange. Whatever you want to call it, the internet of value is going to be extraordinarily more valuable and extraordinarily more impactful than the web of information." Jeremy AllaireEpisode Summary:In this episode of The Raz Report, Jason Raznick speaks with Jeremy Allaire, CEO of Circle.Hosts:Jason RaznickTwitter: https://twitter.com/jasonraznickSign Up to Benzinga Pro today to receive most exclusive interviews, news and stock picks fast!https://pro.benzinga.com/Click here for more episodes of The RazReport.Disclaimer: All of the information, material, and/or content contained in this program is for informational purposes only. Investing in stocks, options, and futures is risky and not suitable for all investors. Please consult your own independent financial adviser before making any investment decisions.Transcript:BZ: We're very excited to have on this edition of the RazReport, Jeremy Allaire founder and CEO of CircleYou're going to hear about building companies, building enterprises and Circle USDC, which is taking the world by storm in a good way. Jeremy, welcome to the show.J: Thank you, Jason. Psyched to be here.BZ: Circle your latest company, I think you've raised over 700 million over $700 million for it. Is that correct?J: that's exactly right.BZ:When you founded this company in 2013 is it where you thought it would be?J: when we founded the company back in 2013, there were a whole set of ideas that we had about digital currency.We were very excited about this idea that you could build what we like to think of back then as an HTTP of money, meaning like a protocol for money on the internet. And by money we meant traditional money.The liabilities of a central bank, what we think of as everyday money. But convey onto that money, the power of cryptocurrency.So Bitcoin obviously itself brought into the world, this idea of a protocol that could work on a decentralized infrastructure to enable people to directly exchange value in digital cash like way.We wanted to build on that same fundamental technology foundation, but enable people to exchange, stable value assets, like dollars or Euros. And we believe that a kind of protocol layer for money would eventually become possible on top of these blockchain infrastructures. And that was a core mission and goal from the outset.We experimented with realizing that idea through building on a lot of, kind of digital currency banking infrastructure, we built a consumer facing application that kind of brought that to life. We actually built it on top of Bitcoin, which was the first-generation blockchain that was available back in 2013 and 2014 and 2015. And in during that time period, and then eventually in 2016, when ethereum, which is the second generation blockchain technology really emerged, it introduced more of the building blocks that we had been looking for back in 2013, when we founded the company.ETH allowed us in 2017 to begin work on and then also release what's now known as USDC, which is in fact the protocol for dollars on the internet and eventually other Fiat currencies too. But founding vision was there, the path to it obviously takes many, shifts.The metaphor I like to use is you can see the mountaintop. You can literally, standing far back, you can see that mountain top and how beautiful that looks, but you actually don't know how you're going to get to the top of the mountain. And you may actually go up one path and realize, oh, I'm staring over a cliff. I need to go back down and go up another.BZ: Ethereum is what allowed you to go create USDC?J: So back in 2012 and 2013 there, there were a lot of technologists or not a lot, actually back then, there was a lot now, but there were technologists getting involved in this space. And a lot of us got really excited about ideas issuing other assets on top of the blockchain or smart contracts and programmable money and what it would mean if you could have if you could say issue a dollar token and have a smart contract that could enable the programmability of that was like a mind-blowing concept.Early in my career, I worked on programming languages, app development, infrastructure, developer platforms, content infrastructure, lots of things like that. And so had a background in thinking about, developer platforms and the idea of a developer, an open infrastructure that was like a developer platform for money on the internet was super exciting. And so there were a lot of ideas on how to do it in 2013. It just technically wasn't possible.The history of Ethereum is really relevant here because Vitalik, who also was really excited about a lot of these ideas of how you can extend this kind of blockchain infrastructure to do other things. A lot of people thought that might happen that Bitcoin itself as an open source project would evolve to do those things. But there was an ideological battle between those in the core development community who really wanted to keep Bitcoin simple and focused on being a kind of digital gold store of value.Then there's a whole other group of technologists that wanted to advance this into being something that's more like an operating system that you could build a lot of things on top of including things like protocols for stable coins,DEFI, NFTs, DAOs all these things that have emerged. So it was really that kind of forking off and development of a new infrastructure layer that then made it possible to pursue and execute something like USDC.BZ: Jeremy, where did you grow up?J:I grew up in a small town in Southeastern Minnesota, a town called Wynnona Minnesota. I went to college in the St. Paul McAllister college and studied political science philosophy and a concentration in economics.I got introduced to the internet in my dorm room, literally in, in 1990 had a high-speed internet connection, which in 1990, there was not a lot you could do on the internet, but I was down the rabbit hole became completely obsessed, made all of my educational work about it and started using it in my studies around what was happening in the former Soviet Union and what was happening in the sort of changing revolutions around the world and got me excited about the idea of an open network, open permissionless networks, decentralization, disintermediation, a lot of these themes that still show up today in the internet space got me into it. And then graduated college there and started working on my first company.BZ: Did you ever go to Mall of America when you were growing up?J:So mall of America merged when I was a little bit older, I think when I was in college.BZ: But as a kid, did you have side hustles where you like selling the newspaper? Like Mark Cuban was doing the garbage bags? Were you doing that?J: I was a paper boy, that was my first job if you want to call it. But I actually had, I got really lucky in a sense when I was a teenager. I convinced my parents to take, like some, a small amount of money. I had been passed down to me from my grandparents and was in like mutual funds, which was a big deal in the eighties. You had mutual funds. I convinced them to let me invest it into baseball cards.So in the kind of mid to late eighties, I ran Southern Cordillera sports cards. So I ran a trading operation and I would deal and I would go and basically do baseball cards. So that was my side hustle that helped me pay for my spending money in college.BZ:Did you have tables ? So you'd buy cards, flip them and did you make some decent money doing it?J:Absolutely. Yeah, so I took long positions. Okay. On on term sort of players. Mark McGuire, Jose Conseco, that's just some of the big onesBZ:What was one of your best trades?J: Brett saberHagan was, 19, he had just an incredible record and I like accumulated a huge bunch of those. And then that was a short-term trade. I keep thinking in a bunch and then flip them at a huge increase in value as everyone wanted the Brett Saberhagen for a piece that I think that was one of the best one of the best trades I did.I would do arbitrage.That's where I go to these shows. find someone who really, wanted X and I would just run around and find it, buy it for Y and then turn it around. So there's that. And then, I had I still have a fairly sizable collection.BZ: How did you get involved in internet in college?J: I had a T1 which was basically like a hard wire, it was effectively ethernet, but hardwired into a campus that were, and, campuses where some of the only places that had access to the internet for research purposes. And a T1 was, even now was whatever, I, that was back then 1.5 megabits per second, which was really good.BZ: You're in college and you're exploring this whole open network of sorts were your parents supportive of that?J: No, not at all. They were like, I don't know what this is. I don't understand this.I graduated college in 1993 the tail end of the first Gulf war recession.. I studied, what I would thought would be interesting to help understand the world and whatnot. And so I was like temping and but, and, on the side I was just going deeper and deeper into the internet space.And and I remember coming home, I quit my temp job and said, fuck this, I'm going to be an internet consultant. I called myself, which was basically like helping educate people about how businesses, how to use the internet and actually, working on the very, very first websites, this was before, even like Mosaic was out, was hacking around.Basically how helping organizations figure out how to build stuff from the web. And I went home and my father was just so distraught and just so afraid that, he didn't understand any of it. And he was like, this isn't a job, so concerned. I was following my bliss and it was good timing in 1993 to be really going down that rabbit hole and learning all the technology and figuring out what it was to. Build stuff back then. That led to the Genesis of some of the first products that I helped build and create.BZ: You called yourself an internet consultant?J: So there all these people learning HTML, and then in 1995, more people.I really wanted to be able to do interactive apps where you could connect a database, you could have interactivity. And my idea was that anyone should be able to build a global online service because back then, like the idea of an online service was you had to have AOL, or you have to have, CompuServe or whatnot.But I was convinced that an open network that anyone could publish to or any device could connect to, it would be a lot better. And so working with my brother, who's a much more of a computer scientist than I am, became the product manager designer for cold fusion and hidden the kind of chief architect. And we ended up working through a lot of ideas and building essentially the first easy to use web programming language and what is now known as an app server, an application server, one of the very first commercial app server, which basically was a piece of software you can put on a machine connected database, do transactions, dynamically generate webpages. And, that paradigm now, is everything from SAS and content management and everything else on, on the internet. So built that and, got super passionate about enabling developers to dream what they wanted to build on the internet, everything from content to community, to e-commerce, to all kinds of things and built, developer platform business.I find it, you can find it out there.There's still millions of sites with that are still run by that it's now owned by Adobe. That product line is owned by Adobe, which bought Macromedia, which is I merged my first company or we merged layer into Macromedia as public company.BZ: And when you started Cold Fusion, you and your brother, what'd you call the coming like the layer corporation?J:.We had a whole family of products. We had the most popular HTML web development tool in the world Homesite.Literally millions of developers use Homesite. So most websites in the 1990s were built using that. And it was one of the reasons why Macromedia wanted to acquire us because they had Dreamweaver and Dreamweaver was really popular with professional designers.But like the average Joe or Jane would get Homesite it was free. And it was like super powerful HTML editor. And so we had millions of people using that.So no, like no one used front page, because it was so awful because it forced you into like these templates you couldn't get control. So Homesite was like gave you access to the HTML and made it really easy to edit the HTML. And we gave it away for free. It was like a feed, it was a freemium product. We wanted to get it out there. And then we got other people into our more advanced products.BZ: So you were doing freemium before, that was even a word. Okay. Did you raise money for Cold Fusion?J:I think it was three rounds of venture capital and then like a mezzanine financing. And then we IPOed in January of 1999.We were a public company on NASDAQ for 2 years. And in January of 2001, we merged with Macromedia, which was about three times larger than us. And merged the two public companies. And I became the chief technology officer of Macromedia.BZ: IPO process versus the M&A process? Which did you like better?J:I like building. And operating. I I like that a lot. it's interesting, there are times and places where M&A makes sense both as a buyer and as a seller, obviously the vast majority of outcomes and business are some form of merger transaction typically or in bankruptcy. So the number of companies that remain independent is smaller.But I think both had a lot of advantages back at that period of time merging at the time was a really good thing for our company and actually gave us a much stronger platform that was, as you recall, when 9/11 happened and the entirety of the certainty of the market, and really the demand for internet software and stuff collapsed alongside the collapse of the.com.BZ: So Brightcove, how did you get to start that?J: So in 2002, when I was chief technology officer Macromedia, we put the ability to render video and PR and have video as like a programmable object in something called flash player and flash player at the time was the most ubiquitous piece of software in the history of the internet.98% of computers in the world had it. We could actually upgrade the internet to a completely new virtual machine that essentially like a new client in like less than 12 months. So we put video in and it was right before broadband came out and like for consumers.And it was really clear to me looking at broadband wifi devices that can be connected to those.And then having a ubiquitous playback mechanism for video. I got really excited, started incubating ideas inside of Macromedia for basically self publishing, self video publishing type of applications actually built something internally that the company did not want to bring to market. I was really frustrated.My vision was video's going to become as ubiquitous as text on the web. Everyone's going to become a video publisher. Every business is going to be able to distribute television quality video to devices everywhere. And so this was in like 2002, 2003. And so I got frustrated and left, went to a VC as a technologist and resident general catalyst and incubated brightCove.And then founded it in 2004, really with this idea that again, video was going to become as ubiquitous as texts on the web and that you needed a new generation of publishing platforms for it. That could integrate everything that was needed for either a brand like a corporation. Or an organization or a media company itself to basically do direct distribution of television instead of relying on cable and satellite and all the old ways and transform other media companies who work in television and video into being into television and video. So it was a video platform company, a SAS company, as we now call these and founded it in 2004.it had a really nice growth run. And I took it public in early 2012. And then stepped into a chairman role after about a year. Cause I had gone down the crypto rabbit hole in 2013 just became obsessed with.What was going on in crypto and made a decision to basically, start Circle.BZ: Mark Cuban emailed me a question, Mark Cuban's known you from his tech days. His question is "what did you learn from your layer or your database days that you are applying today?"J: it's actually really relevant. As I talk about the inspiration for circle and what, I've been inspired by, , in this space. in, in many ways, right?What got me super excited about the internet in the first place was this kind of obsession with the idea of the internet itself, being an open network that was permissionless that anyone could bring a computer to and connect, and that anyone who did that could take open protocols like the SMTP protocol or the HTTP protocol or the VOIP protocol, or these sort of protocols, which are really just public IP, intellectual property, that's open source it's in the public domain.People can write software to it and that you could connect anyone anywhere through these protocols and do really amazing things in terms of information, exchange, knowledge, exchange communications so powerful. That's what drew me into the internet in the first place and kind of an obsession with open networks, decentralized and distributed model.What that could unleash and really a belief that architecture could maximize access and could maximize the ability for people to to reach the most people in the world and entrepreneurship and ideas. So that's what kind of, that was what informed. The work around cold fusion back then. And so if I fast forward to crypto, that was fundamentally the insight for me in 2012 and early 2013 was this is just like a replay.This is just another open protocol on the public permissionless internet that solved a set of problems that hadn't been solved before, which was a way to ensure that data could not be counterfeited. And that transactions could happen in with certainty in an irreversible way without requiring centralization. And these are big ideas and it was like a fundamental new infrastructure layer. The internet was being born. And so when I looked at it and said, okay, This is going to do for the exchange of value. And I don't just mean moving value from point a to point b, I'm talking about the richness of what we do in exchanging value.As people, as entities, as corporations it's going to do for the exchange of value, what the web and those earlier protocols did for information and communications.And to me in 2013, like that was so profound because I actually believe the web of value exchange.If you want to, whatever you want to call it, the internet of value is going to be extraordinarily more valuable and extraordinarily more impactful than the web of information. And so it very much informed how I think about this and the work that we're doing here.BZ: When you started Circle, did you start with anyone else?J: I co-founded, the company was Sean Neville. Sean is absolutely brilliant. He he co-led the company with me almost like co-CEOs for a long time. And then several years ago, he just stepped into a director role. He's on the board of directors and he runs a crypto incubator, a crypto kind of studio incubator.But he and I had worked together back Allaire, my first company we worked together a bunch at Macromedia. We worked together and bright Cove. He's just one of the most brilliant minds technological minds, strategic minds, creative minds.BZ: Was Circle easier to raise money for than your previous ventures because of your huge track record of success?J: When we started the company, I went to people who invested with me and who had made money with me in the past and said, this is what I'm working on. And they're like, Bitcoin I don't get this. You're crazy. This seems crazy. But. We believe in you, so go for it. I mean that kinda kind of thing. So it definitely helped.2013 and then 2014, 2015, during that time, there were not a lot of quote unquote adults in the room, in the space. If people think it's a wild west, now it was an extraordinary wild west back then. And we had, seasoned entrepreneurs, technologists.We had a really strong proactive approach with regulators with kind of major fiduciaries and really worked really hard to try and build something that was compliant and that, differentiated us as well and allowed us to raise quite a bit of capital. I think, a couple hundred million dollars within our first few years of getting started.BZ: And were you personally buying Bitcoin back in those early days?J: Yeah, absolutely. And buying ethereum and when it was less than a dollar. Like Solana and it was less than a dollar.BZ: Do you still own some of that?J: I am a owner of crypto assets. I don't talk about my particular trading and liquidity strategies, I'm quite structurally long on crypto.BZ: How would you define a stable coin to a fifth grader ?J: On the internet today, I can download a piece of software like WhatsApp or or log into a service like Gmail. We're open up Google Chrome, and I can connect to anyone else. Directly, I can have a direct communication with them. It doesn't cost me anything. It doesn't matter where they are in the world.As long as they have a smartphone, they can get that piece of software. We can do that. Or if there's someone who has an idea and wants to connect their computer, the internet and put some content on it, as long as I have a web browser, I can connect to that. And that's generally the case other than, some authoritarian regimes that have great firewalls.But even there, like it's generally the case, you can connect to anyone. I can freely communicate with anyone in China right now. And that model is so straightforward. It's the air we breathe. We don't even think about it. the fact that this kind of open connect and open permissionless, global decentralized network of communications and information exists. So why can't we do that with money?Why can't we have a way. Someone can just download a piece of software from an app store. And and then someone else could download a different piece of software made by a different creator or a different piece of hardware, or log into a service and exchange value with each other instantly globally frictionlessly at no cost. it's really that simple is how do we make it possible for storing, moving dollars or digital dollars to work in exactly the same way we have with information and data. And that's what we set out to solve is that problem and doing it on the DNA of the internet, doing it around this idea of an open protocol that anyone could connect to. So that's really the fundamentals of what USDC allows for. And, but I think. Yeah the idea goes far broader because you now have essentially an open API for dollars on the internet and it's programmable dollars on the internet. And so you can do a lot with that. And the use cases are really exploding,BZ:How big is USDC these days?J:So USDC has grown really fast at the start of the pandemic, there were about 400 million USDC in circulation that was just like, let's call it six months. Or, there's a year after or so after we had launched.Then it grew to 4 billion in circulation by the start of 2021. And it grew from 4 billion to 42 billion in circulation. At the end of 2021 and it's already grown to to over 52 billion in circulation, just in the past couple months here.And so USDC is about that big and I supported, trillions of dollars of transactions. Just on the public internet using blockchains. And it's still early days. It's super early days. Our view is that eventually there could be more than a trillion USDC in circulation and could be used for every imaginable use case for money and use cases that we haven't even thought of because programmable money is not existed until now.BZ: How can USDC offer such nice interest rates when banks are giving 0.5%?J: Look so if you think about. And you have a kind of base layer, which is the sort of digital cash equivalent of USDC. And it's a regulated, digital cash instrument that exists. And it's very easy to exchange, right? With point to point as your friends or others, that you've talked to really straightforward to send it, receive it, use it.And it's become very popular as a digital currency to use in trading, investing, international payments, other things. And so as its utility has grown and as more and more people and firms want to use. +As a form of working capital as a new kind of electronic stored value working capital mechanism, there's higher and higher demand for people who want to borrow it. And so one of the really powerful things about blockchains is not only do they allow these fast transactions to happen, but you can actually build essentially, borrowing and lending models on top of it.And so there's grown over the past in particular, the past several years, the last two to three years, large, both centralized, what are often called CEFI lending markets and what are called DEFI lending markets, where the market of borrowers and lenders is convened by a piece of software on the internet. So you're not dealing with a company you're just dealing with a protocol, but nonetheless you have essentially interest rate markets of borrowers and lenders.The demand to borrow USDC is high. And the interest rate that borrowers are willing to pay is high. And that is the source of those yields. Basically you have borrowers and to put it fairly simply the other side of that borrowing and I'll use circle yield as an example, because it's the one I understand probably the most you lend us USDC and we lend it wholesale to institutional borrowers. So these are in fact, hedge funds, family offices, systemic trading firms, electronic markets, firms, or other major firms in the ecosystem that want to operate using USDC. And these are firms that are borrowing at a high interest rate, but who are generating returns in north of that.An 8% interest rate to borrow at an 8% interest rate or borrowed 10% interest rate. That's not unheard of in a lot of things. Our credit cards are 20% interest rates or 17% interest rates. venture debt, which is what startups borrow typically have interest rates of, 10, 12, 13, 14% on them. interest rates in securities lending markets, which is the interest rates that say an institutional fund would pay to borrow against their stock can be fairly high now, corporate debt that's underwritten where a corporation's borrowing against their balance sheet and their P&L and it's underwritten by an investment bank and has a coupon and rating. So that tends to be a lower interest rate debt product.But generally when you look at interest rates that people borrow, right? They vary from, most single digits to high double digits or higher. And so what you have in USDC is you have a borrowing lending markets that exist at the retail and institutional level, and those are floating right now. So in DEFI right now, you can borrow you can borrow you USDC I think for 3%. the interest rate markets adapt to kind of market conditions and demand.BZ: How secure is my money in USDC ?J:The thing to remember is USDC itself is is regulated examine it's the USDC itself is A full reserve dollar digital currency.Now, if you're lending your USDC to someone else you're determining what is the credit risk that I'm taking with, who I'm lending to. It has nothing to do with USDC. It has to do with what are they doing with it? So there are some major differences, right? Are you a secured creditor or are you an unsecured creditor? is this unsecured credit that's then being used to do highly speculative trading or is, this secured credit with known institutional counterparties? So you're dealing with a huge variance.I like to use the example of a bank, right? If you walk into a branch of Chase and you say here's $10,000, you're depositing, and you're not depositing $10,000, you're lending chase $10,000.And you have a balance that says $10,000. But actually what you have is you have a claim against their loan book. They're taking that $10,000 and they're lending it out eight times over. And you're basically saying, Hey, I think that they're going to be good for that, that the small business loans, the credit card loans, the home mortgages, the corporate debt, all the stuff that they're doing to take my money and lend it out on a fractional reserve basis eight times. But fundamentally, you've got an IOU and now, you might look at a dollar that you've deposited and chase really different than s let's say you went to a bank in Zimbabwe and they said, you can deposit your dollars. And you say I don't know, what are you going to do with my dollars? And so it all comes down to, w what in fact are you w what, in fact are you seeing on the other side of that?So we've tried to design something with circle yield, which is very institutionally friendly. It's regulated, it's supervised it's over collateralized and it only, faces the best quality institutional wholesale borrowers on the other side. And so we've just tried to build some. I think the kinds of features that make it attractive, it doesn't produce the highest yields. It doesn't produce the same yields you might see through some of these retail platforms, but there's a reason for that.BZ: Is there a chance of defaulting?J: this has become a major issue from an investor protection regime, right? So very clearly, like I think the SEC, his view is that these are lending products. They're not banks. And in fact, for the average person they're basically making an investment and a lot of these are offered as an, they're unregistered investment contracts in a sense. What is an S1? And that's one is a public disclosure document that a retail investor can read and understand. And you can decide, you can read through the S one and say what are the risks? What is this? What am I actually getting into here? And so that's fair disclosure. So that's people and, the review of a major regulator the SEC.And so that's one, one standard to look at, there are others that, don't have any of that. And so you don't actually know what the underlying risk is other than the reps that are made through marketing, or maybe some high level stuff. And so I think you have to, you have to look at this through, through that lens. now DEFI is a different story. if you get USDC. DEFI protocols have some advantages to them. But they also have a whole lot of risks to them as well.There've been DEFI protocols that were hacked. And this is like software and all of a sudden the money is managed by software and the software gets hacked and they, that's gone, but you have some, defined protocols that are more pressure tested. There's probably going to be more and more disclosure audit type requirements on defy protocols over time, as well as the market participants want to have better hygiene around them. I think, buyer beware on all this stuff.BZ: USDC has a brand. So do you talk to these exchanges to make sure that they're trying to make sure that borrowers are good ?J: Because USDC is a free floating digital currency it can be utilized in so many different applications in so many different businesses and so on. And you've got, electronic markets firms that might be.Doing a trade with someone with USDC for $300 million in one transaction, you've got other, NFT markets that are utilizing USDC for payments on pieces of digital content and the, and those are, multiple layers removed. it is important though, that we need to always ensure that people understand USDC as a dollar digital currency itself is safe, stable, transparent regulated, compliant, all these things.Just like you use your dollars with an online payment service, you can still be defrauded. It wasn't the dollars that defrauded you. It was the other side of it.BZ: Do you have a minute to talk CND ?J:We initially negotiated a merger with Concord acquisition and business combination agreement in July of last year.And getting through the SEC qualifications taken a bit longer than we had expected. We had thought it would be, consistent with other spots4-5 months it's just taken longer and which is fine, and we're getting through it. We're making progress through every round of comments. But as we walked into the new year the business outlook has changed pretty significantly. The company grew USDC really rapidly. We're in a rising interest rate environment.Our transaction and treasury services businesses are taking hold nicely. And so we looked at the actual deal was set to expire in April. And so we we re-negotiated the deal.We extended the timeline so that it had enough time to get through the dispatch and the, in the sec process.We also eliminated the pipe from the first year. we also issued revised financial outlook for 2022 and 2023, which are considerably stronger from from a both a top line and a bottom line perspective from where we were, nine months earlier or whatever that exact timeline is.And so the increase in the value of the company is really reflective of the tremendous position that we've put ourselves in with the business and obviously the new outlook.Support this podcast at — https://redcircle.com/the-raz-report/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy