How Do You Build a New Singapore? Inside Próspera’s Bet on Private Governance (Erick Brimen, Founder & CEO)

What if you could redesign the rules of society? Not tweak the margins, but start over entirely. That’s the question driving Erick Brimen, founder and CEO of Próspera, a private charter city in Roatán, Honduras. Próspera is a radical experiment in governance: a platform that lets governments and entrepreneurs build cities with new legal systems, regulatory frameworks, and institutions from the ground up. Brimen believes that governance itself can be innovated upon. That cities, like software, can be upgraded. His goal isn’t just to build one new jurisdiction, but to create an operating system for hundreds of prosperous, self-governing communities around the world. In this conversation, Erick and I explore what it really takes to build a modern Singapore from scratch — and why better governance might be humanity’s most powerful lever for progress. Together we explore: • How Brimen’s childhood in Venezuela shaped his understanding of governance and poverty • The historical precedents for charter cities like Dubai, Singapore, and Hong Kong • Why common law, trusted dispute resolution, and dynamic governance are essential foundations • How Próspera’s Governance-as-a-Service model aligns incentives between governments, operators, and residents • The current state of Próspera in Honduras, including its three hubs and economic impact • The political challenges Próspera has faced and how international arbitration has protected the project • Why regulatory innovation enables industries like biotech, crypto, and advanced manufacturing to flourish • How the model could be applied to “catch-up growth,” industry diversification, and accelerating growth in developed nations • The vision for a modern Hanseatic League of charter cities operating on shared governance principles — Thank you to the partners who make this possible GoFundMe Giving Funds https://www.gofundme.com/mario: One Account. Zero Hassle. Guru https://www.getguru.com/: The AI source of truth for work Tezi https://tezi.ai/mario: The AI agent for recruiting high-quality candidates quickly. — Transcript: https://www.generalist.com/p/the-170m-experiment-to-build-a-private-city — Timestamps (00:00) Intro (04:10) An overview of Próspera and charter cities (06:43) City of Próspera vs. the platform (08:06) How growing up in Venezuela shaped Erick’s entrepreneurial vision (12:36) The limits of seasteading and why Erick took a different path (15:20) The opposing philosophies that shaped Erick’s path (16:16) The moment that reshaped Erick’s understanding of poverty (19:57) The limits of learning from Dubai, Singapore, and Hong Kong (23:01) Building on the DIFC blueprint (25:12) From Arizona to Honduras: how Próspera built its first city (30:36) Why Honduras won (32:12) Inside the ZEDE framework (36:56) Próspera’s business model (43:45) Conditions on the ground in Honduras (47:14) A quick summary of how it works (48:24) Quick stats on Próspera’s scale and financing (50:47) What years of preparation made possible (52:44) The scale and purpose of Próspera’s three hubs (58:12) Próspera’s 10-year vision (1:01:12) The people Próspera was built to serve (1:04:10) Why less regulation unlocks more innovation (1:05:58) Próspera’s political headwinds (1:12:36) Why Erick remains optimistic that things will work out in Honduras (1:14:44) Addressing criticism of ZEDEs and Próspera (1:18:08) What’s next, and why the U. S. may be the greatest opportunity (1:22:30) Final meditations — Follow Erick Brimen LinkedIn: https://www.linkedin.com/in/erickbrimen Website: https://www.erickbrimen.com https://www.erickbrimen.com/ — Resources and episode mentions: https://www.generalist.com/p/the-170m-experiment-to-build-a-private-city — Production and marketing by penname.co https://penname.co/. For inquiries about sponsoring the podcast, email [email protected].

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Mario Gabriele?

  One of the things that when you read about Prospera is that this is a haven for Silicon Valley billionaires. How do we create a sincerely productive and progressive charter city? What do we need to get right from the beginning for this to work?

• 0:11Speaker 01

  The most important and impactful dynamic that we're seeing today is dynamism and customer-centric mentality. Some of the things that we're actually doing on the ground today, it wasn't mass plan five years ago. If there wasn't a profit motive and there wasn't a dynamic way to operate this where the private sector is the one actually operating on the ground, we wouldn't be what we are today.

• 0:31Mario Gabriele?

  Where do you sort of hope to be in 10 years' time? What's the optimistic but realistic view of things when you look at it from your seat today?

• 0:38Speaker 01

  Within 10 years, our projects here could have about 100,000 people involved on the ground between employees and residents. Beyond that, we want to see some of the largest companies, as well as some of the most innovative players, realizing that governance is an industry that can be innovated upon and that it is being done. And as imperfect as they may be, we're showing that it can happen.

• 1:06Mario Gabriele?

  How do you create the next Singapore from scratch? Eric Brimman is doing just that. His company Prospera has built a charter city in Rowatan, Honduras. It's a private jurisdiction with its own legal system, regulatory framework, and governance structure. Brimman's vision extends far beyond Honduras, though. He wants to create the infrastructure that enables hundreds of prosperous charter cities around the world, freeing millions from the constraints of bad governance in the process. Today, Eric and I discuss how his childhood in Venezuela shaped his obsession with institutional design, why special economic zones might be the key to human flourishing, and what it really takes to build a city and a new model of governance from the ground up.

• 1:51Mario Gabriele?

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• 3:16Mario Gabriele?

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• 3:57Mario Gabriele?

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• 4:06Mario Gabriele?

  Eric, I'm so excited to chat with you today. And I think we're going to get into some really unusual subject matter. Folks that aren't familiar with what you do, I think, will be excited to hear how you have spent your life building something quite remarkable. But maybe to set the stage, you can tell us a little bit about Prospera and give us a sort of frame of reference for what you are doing and why it matters.

• 4:32Speaker 01

  Thanks for having me. Prospera is a platform for governance as a service so that we can catalyze public-private cities that create conditions for people anywhere in the world to reach their full potential. The world we live in today is one in which governance and governments are conflated. We think of governments as the only way through which we can have the critical services of governance in a modern society, and that's just simply not the case. That's just the way things have evolved. But if you would allow a distinction between governments as institutions and governance

• 5:17Speaker 01

  as a service that they provide, there's space for partnerships to emerge where the private sector can insert itself and working with governments actually provide better governance. At what scale? Well, human civilization has thrived throughout the millennials at city scale. And that's why Prospera works with governments to create public-private partnerships to build city-scale projects that run on the Prospera governance platform.

• 5:48Mario Gabriele?

  I think a term folks might be more familiar with would be something like a charter city. What are the ways that Prospera sort of fits that definition? And maybe there are places where you feel it's not quite the right nomenclature.

• 5:59Speaker 01

  A charter city would be a particular city. And they're characterized by having separate rules and laws and regulations that are generally enshrined through a charter. So a charter city could be the, you know, the end product, if you will. Prospera is a platform to catalyze multiple charter cities. And for charter cities to have a governance system that they can run on. So there can be charter cities that don't run on Prospera, for example. And Prospera can power cities that we're not directly building. We're like the SAP for city management, if you will.

• 6:42Mario Gabriele?

  Yes, and this is more than than theoretical. You have created one of these charter cities in Honduras in a place called Roatan. You know, when we talk about the city versus the platform, how do you think about, you know, differentiating or distinguishing between those two?

• 6:58Speaker 01

  Sure, well, there's the city of Prospera. And the first one, you know, adequately called Prospera. Future ones may not. And then there's the platform, which is the the software that software and services put together to provide governance, which extends beyond a single city and can be provided for additional cities that join the platform. So over time, what you would expect emerges is something like a modern version of a Hanseatic League, where you have multiple cities throughout the world. They each have their own, you know, location, some things that are particular to them. But if they are part of the Prospera platform, then they're all sharing

• 7:40Speaker 01

  a modern version of common law with very efficient dispute resolution, very innovation and entrepreneur-friendly regulatory frameworks. And then you know what to expect if you're in a Prospera city.

• 7:54Mario Gabriele?

  Amazing. Well, I think we've sort of laid the table there for folks to understand the scope of this conversation. And we'll talk more about the platform and the city itself. But I don't think there are many people in the world who wake up one day and say, "My ambition is to make a modern version of the Hanseatic League." So perhaps we can go backwards a little bit. Tell us about your upbringing and how that maybe informed the ambition you have with Prospera.

• 8:22Speaker 01

  I was born and raised in the country of Venezuela until I was sent off to military academy in the US and subsequently college in Boston. I went to Babson College and studied entrepreneurship and economic development, then went on to do investment banking, management consulting, and then entrepreneurial endeavors. But I think what was transformative in my upbringing was having been born and raised in Venezuela, a country that unfortunately had, and now is worse, too much poverty.

• 8:58Speaker 01

  And it's tragic. Wherever you see poverty, it's tragic. But in a place that is so rich with natural resources, you would think that poverty should be a thing of the past. And that's not the case. And growing up in that environment, I couldn't help but to ask myself why that was the case, and if there was something that could be done about it. And I started down the path, a more traditional altruistic path of wanting to do charity work. And that evolved into more of a government-centric path of saying, "Well, maybe I ought to run for president and make a difference in my country." But then I studied entrepreneurship

• 9:38Speaker 01

  and the wealth of nations and really understanding what makes prosperity possible. And I realized through a mixture of disciplines, including economic development, that

• 9:50Speaker 01

  The prior two, the prior three, like, nothing really matters. Doesn't matter how much charity you do, doesn't matter how good a president is. If the institutions are not sound and there's no good governance, nothing else matters. Everything, you know, education, healthcare, all of it goes to waste and it doesn't take root. So having understood that what made the difference was good governance. The next layer up was how do you deliver good governance? And once you study and understand the modern systems of governments, whether it's democracy or variations thereof, you quickly realize that once a government takes hold,

• 10:31Speaker 01

  it's extremely hard to make profound changes that applies across the board. Because, well, you know, the, the good thing about democracy is that everybody in theory has a say. And that means that everybody has a stake in the system as is. And if you want to change it, you have to convince everybody, which means that you end up with a very low degree of differentiation. Because it has to be sufficiently acceptable to many different stakeholders. So transformative change is really hard, if not impossible, with democracy, save revolution or a significant breakdown in the system. But alas, studying entrepreneurship, you, you at some point realize that disruption is not such a bad thing.

• 11:17Speaker 01

  And that when you have very savvy institutions, that you can internalize disruption in such a way that it doesn't upend the, the mothership. And this in the business world is called intrapreneurship, right? So we came up ultimately with a balance between being able to do transformative change within existing institutional frameworks of governments by adopting what many people call, say, charter cities. And that's fine, but it was theoretical until it was implemented. And I think we're the first one in the world in modern era to actually implement it by developing an enhanced form of special economic zones, which are created often throughout the world.

• 12:01Speaker 01

  But if they get embedded with the enhancement that we can advise governments to include, then they can go way beyond our traditional special economic zone and actually grow up to be a charter city of the type of Dubai or Hong Kong or Singapore.

• 12:15Mario Gabriele?

  When I look at your, your background. You know, on paper, you might not see the level of openness and creativity and ambition that I think your project has demonstrated. You know, you see someone who maybe went through the finance route, went to banking, but clearly there was this sort of intellectual journey you were going on where you were thinking about these different structures. As you look back on it, were there, you know, maybe one or two or three turning points where you were introduced to sea steadying, you know, I could have imagined being a popular thought experiment at the time that you were sort of going through this journey or, you know, a first entrepreneurial endeavor that really made you realize like, I'm actually not built to be someone who is, you know, Brown

• 12:58Mario Gabriele?

  Brothers for the course of my career. How did you, you know, what was that that transition like?

• 13:03Speaker 01

  There've been experiments throughout history. So what we're doing is not entirely new, right? I mean, there've been experiments throughout history that have attempted and always do try to push the boundary of how to better organize society. And in modern era, sea steadying has been a pioneering attempt to achieve that. And I spent quite a bit of time with the Sea Steading Institute people and I agree fully with a lot of the objectives. You know, they're trying to create space for governance to be innovated upon. And the idea there is if you go out to the open seas, you don't have a national government to contend with. So you have a clean slate, so to

• 13:46Speaker 01

  speak. I looked at it and, you know, I think at some point that might very well be possible, you know, Waterworld style. But ultimately, if you bring it down to the essence, that that is a, that's a technical solution to a political problem. You're trying to figure out how to technically create livable platforms on open seas. That's a big technical challenge so that you don't have to deal with governments, which is a political challenge. And that seemed broken to me, you know, the technical viability of it was just not there. And in any case, even if you solved it, I imagined the political problem is not just going to go away. You know, there's, there's always a government that wants to claim jurisdiction. And sure enough, that's what's been

• 14:29Speaker 01

  proven so far. So that clicked, you know, you have to, the problem is political. You have to find a political problem, a solution, sorry, to the problem. And and that's where from from a strategic perspective, this idea of of creating special economic zones in partnership with governments, where the balance of incentives were sufficiently aligned for the project to emerge and then endure seemed like the best approach. And look, it's not guaranteed to work and we're we're certainly in the midst of it ourselves with ups and downs. And we're seeing the boundaries and and limitations of this approach. So there's no silver bullet, but I think to solve a political problem,

• 15:11Speaker 01

  you have to have a political solution, and that's what we're engaged upon. I would say that was one big turning point in the realm of what you mentioned. Obviously, in my life, personally speaking, being in Venezuela, I had many episodes in which I was touched profoundly. And then it was no longer just a theoretical thing of poverty, but it just became a bit of a life mission for me. And then at Babson, studying entrepreneurship, I had a professor, a great professor, Larry Moss, that's his name, and he was an arco capitalist. And I was I had I had him as an arco capitalist on the one hand, and I had another professor who was pro Chavez.

• 15:53Speaker 01

  You know, like he was telling me as a Venezuelan that Chavez and the socialist revolution was what was needed in order to solve the problem. So I had these like extreme opposite intellectual mentors, and I was developing a thesis around that. So that was definitely a moment where I was sharpening my my own intellectual thinking of how to solve the problem.

• 16:14Mario Gabriele?

  Yeah, you know, you you mentioned some of these formative moments in Venezuela. I think clearly that's such an important part of your inner landscape and the work you're doing. Yeah, if you had to sort of maybe pick one or or two of those moments that maybe revealed something about this project in hindsight, what what might come to mind there?

• 16:34Speaker 01

  There's two moments, one in particular. That didn't give me insights into the solution, but grounded me in commitment to do something about about the problem. Okay. And and that was, you know, I must have been somewhere between nine to 11 years old in Venezuela, going to school. I grew up fairly privileged, thanks to my parents. And, you know, every morning I would have breakfast and typical, right? Every other day or so I wouldn't get up on time or I would be running late or I would just be monkeying around playing soccer before eating. This must have been one of those days because I didn't finish breakfast on time.

• 17:15Speaker 01

  And, you know, I had to get going and I had to jump in the car and I still had my food. My mom, you know, packed it for me and I had to eat it before making it to to to school. And that was fine. I had an empanada, that's what they're called. We stopped at a light, you know, at a stoplight, probably halfway between home and school. And as I was there, just minding my own business in a nice car, being driven by a chauffeur inside of air conditioning, right? Outside, I all of a sudden hear a knock, you know, like and I look to my left and it's a kid. He must have been about my age, but you know, his his skin was a bit darker. Obviously, he was in rags and he was doing some sort of weird hand motion. I don't know how long it took me to to get it, probably two or three seconds,

• 18:00Speaker 01

  but it felt like a long time. And then I got it. He was like signaling that he just, he was hoping for food, right? He was, I think, was asking me for my food. Yeah. As soon as I got it, I just kind of rolled, you know, tried to roll down the the window. The light must have turned because the car drove. You know, just before I was able to, you know, hand him the empanada, what I had left, it just, I drove off and and, you know, that kid, that kid just stayed behind there. And, you know, it always made me wonder and it certainly it touched me as a kid. It made me feel sad, you know, it's just like to realize that. There are things that I took for granted that were definitely not available for all.

• 18:44Speaker 01

  But even as I think of that moment, I I get a bit emotional because

• 18:48Mario Gabriele?

  Yeah.

• 18:48Speaker 01

  It, you know, I went off to school and I've I've had tremendous blessings in my life. But that that kid, I don't know what happened to that kid. And and and I'll never know most likely, but there are too many kids like that kid around the world, even in the US, right? That lack of opportunity. And when you you when you bring it down, when you when you take everything else out, politics and what have you, there's no reason why we should have a world with that. I mean, there's abundance. The problem is that we have artificial barriers and most of them today. I mean, there are there are technical barriers and all that. But but the one that presents the biggest opportunity for positive transformation is if we can solve this issue of governance, right?

• 19:32Speaker 01

  Governance that is as reactive and as dynamic as a free market economy is when trying to solve problems voluntarily. We don't have that in governance. And if we want to make the world a better place, hell, perhaps if we want to survive as a species the next fifty years, we better solve this problem.

• 19:50Mario Gabriele?

  Well, I can understand why that moment stayed with you, and I thank you for sharing it. Uh, you you you mentioned that this is, you know, on the one hand, you're maybe the the only sort of or one of the few people doing this in the modern era. But there have been these historical analogues. And, you know, the three that I think are probably discussed most are Dubai, Singapore and Hong Kong. Correct me if there's, you know, another one we should be adding to that mix. But when you started to familiarize yourself with the stories of those, uh, you know, economic zones, those those cities, what were the pieces that you thought, you know, this is something that I need to try and hang on to. And this is something that, you know, actually doesn't make sense for, you know, the current era.

• 20:34Mario Gabriele?

  How how did you sort of start to take lessons from from history there?

• 20:38Speaker 01

  Yeah, tho- those three are emblematic and and they have sufficient similarities and differences to create a great conversation exactly along the lines of what you're describing. So I'll focus on those. Some differences to begin with, they were all created differently. Okay? So they are not very insightful for how to solve the process of creating charter cities, because though they ended up. Being in effect charter cities that were not created in a manner that is consistent across all three, nor in a manner that seems scalable and replicable. And that is precisely one of the things that Prosper has sought to solve for, and I'll talk about that.

• 21:21Speaker 01

  You know, in the case of Singapore, obviously became a sovereign country through a process of independence from Malaysia, relatively peaceful, there was no need to fight it. And that was a very unique moment in time. And then Hong Kong, obviously, was a result of the colonial era with the British Empire and Opium Wars, and ultimately the settlement agreement of sorts where Hong Kong would remain under the management of a colonial power then to be handed over back to mainland China. You know, that was, again, very specific to its time, but I think we're way past colonization and the idea that countries can, you know, govern other countries and things of that nature. So that's probably not very replicable.

• 22:05Speaker 01

  And then Dubai, Dubai is very unique because it is a very well-executed form of federalism of sorts, the type that we would want to have in the US, or you have a nation state, and then you have political subdivisions, you know, the equivalent of states of the US that are able to exercise a high degree of autonomy and do so. And in the case of the Dubai Emirates, they created not one city, I mean, it's an aggregate one city, but in reality, it's well over thirty-two special economic zones within a general area, and each of those has a fairly high degree of autonomy, and they compete against

• 22:45Speaker 01

  each other, and competition is the best force at enabling progressive excellence. So I would say of all those three models, there's something to keep and learn from. In all three, they run, especially in Dubai, when I talk about Dubai, I'm going to focus in the DIFC, the Dubai International Financial Center, because it's the closest to what we're doing and the most innovative. But in all three examples, they run on common law, right? Not on civil law, and this is key because common law has evolved over thousands of years, and it's the most natural form of law because it has evolved through judges and private parties, not just legislators.

• 23:28Speaker 01

  In all three cases, they effectively imported initially a trusted and experienced judiciary. In all three, they set up special courts with internationally recognized judges. So that when you set up shop, not only do you have better rules through common law, but you knew instantly that if there was a dispute, you had a trusted dispute resolution mechanism to rely upon. And so that's been standard across all of them. And in all three cases, they succeeded massively without reliance on natural resources. It's not like people think Dubai had a bunch of oil. They didn't.

• 24:04Mario Gabriele?

  Dubai was primarily a fishing economy prior to all of this, right?

• 24:08Speaker 01

  Correct. Yeah, it's always been a trading post. In fact, all three of them have been trading posts, right? So all of them thrive based on market economies of trade. And so those are the similarities. So if you could replicate some of that, you know it's going to work. It's worked everywhere. The question is, how do you catalyze it? And that is where our business model is innovative. And picks and chooses from them three and then all sorts of other projects. And we've come up with an enhanced former special economic zone that can be done in partnership with governments through relatively simple legislative procedures so that they can create this political subdivision. And then in partnership with said government,

• 24:51Speaker 01

  we can advise on how to create this international best practice governance platform. Embedded, it's already created in our case. And then we're off to the races. So I would say those are the best examples and differences between these three in particular and how we've innovated upon them.

• 25:08Mario Gabriele?

  I think that's really helpful. And so, you know, to go back to sort of circa 2015, 2016, maybe even a little earlier as these ideas were percolating in your brain, you sort of see the fact that, okay, you don't necessarily need the natural resources for this to work. You do need efficient dispute resolution that people can trust and a system of common law. But there's no obvious way to sort of catalyze this into being. How does that sort of? Kick off your search for the first charter city, which eventually in 2016 leads you to Ruatan. Like, what was the sort of little journey to get there, let's say?

• 25:48Speaker 01

  As most entrepreneurial endeavors, once you think you have something, you start going out to the market and you test it and you try to sell it. And in our case, we did that. But our customers, our first customer is our governments, right? Like, that's who we sell to initially. We want to partner with them to create conditions so that their people are lifted. And back to technical versus political problems and solutions. A key tenet to our approach is that we're solving for the objectives of a particular government, which tends to be focused on their people, you know? That they have to lift their people up. Every country needs to focus on their people first and foremost. So that's, that's the gist.

• 26:33Speaker 01

  We went out and started speaking with governments all around the world, from Eastern Europe, you know, former communist countries.

• 26:40Mario Gabriele?

  Wow.

• 26:40Speaker 01

  To the Caribbean, including Haiti and Latin America, all the way down, you know, Colombia, down to Uruguay. Initially, we decided to focus in the US. This was back in 2015, as a matter of fact.

• 26:57Mario Gabriele?

  I hadn't realized that, huh?

• 26:58Speaker 01

  We partnered with the state of Arizona. And the governor at the time, Doug Ducey, immediately understood the benefits of the concept as he was engaged in moving the state towards a freer market economy as a way to compete. We created a commission. He asked me to be the co-chair of a commission with his, at the time, chief of staff. And, uh, and we worked together for almost a year, developing the legislative infrastructure that would be necessary to create essentially what we now call charter cities in the US. It was a fascinating journey. We developed the IP. We have that, actually. It's, it's, it's now back a priority for us.

• 27:44Speaker 01

  But at the time, the, the way to get it done would have required federal, the federal government to participate. And Obama was the president. And that was going to be a bit challenging. So in the midst of all that, Honduras reached out and they said, look, we, you know, we love what you're trying to do in the US, like, we fully get it. In fact, we have a law in the books that I think it's really close to what you're trying to do. Why don't you come and check it out? And sure enough, we came down to Honduras, we met with the government, we saw the law that they had passed in 2013, the ZEB law, and agreed. It was a really good initial layer.

• 28:27Speaker 01

  It needed some work to be built upon. It, you know, it didn't actually create charter cities per se, but it enabled the creation of this very unique form of special economic zones. So, long story short, we pivoted entirely from working in the US at the time to focusing entirely in Honduras. It took us about three years of work to refine, you know, the, the legal framework, create the right regulatory layers. And in 2017, it got approved. 2020, we broke around, started building the first building in Roatan. And why Roatan? From all the examples around the world that have worked very, very well, the closest one is the partnership,

• 29:12Speaker 01

  if you will, or the synergy between Hong Kong and Shenzhen in China. So Hong Kong, again, different way of being created, but once created, became a hub of intellectual and financial capital. And it made it flourish, but also became a platform from which places like Shenzhen benefited tremendously. And obviously, the rest is history. From Shenzhen, there were dozens and then dozens and dozens of additional special economic zones that would leverage Hong Kong as a pathway for capital and, and talent. And then that's what's helped elevate China into a world superpower. We, we, we wanted to replicate

• 29:54Speaker 01

  a similar dynamic. So in the context of Honduras and Central America, the island of Roatan was the closest thing to Hong Kong. In fact, it's, it's one square mile larger than the island of Hong Kong. And it had, it has an international airport that you can fly in and out directly, daily from Houston, from Miami. And it's an English speaking population with, as a matter of fact, a common law set of roots because they were part of, they were a British colony before. So essentially, Roatan was a perfect place to start.

• 30:27Speaker 01

  As a launching pad for additional projects on the mainland of Honduras. And that's how we ended up here.

• 30:32Mario Gabriele?

  Fascinating. And so just to take one sort of beat back. You had this sort of Arizona work that you did, and then Honduras comes into the picture. When you were sort of thinking of Honduras versus some of the ex-US countries that you had talked to, Colombia, Eastern European countries, was the attraction of Honduras primarily that they had baked out? The ZEDE sort of framework just much more completely? And was more synergistic with what you were thinking of? Was that sort of the the main draw at that point?

• 31:06Speaker 01

  I would say that's what got us interested initially. And then, as we studied the country more and the island in particular, we realized that it is, it still remains, a massive opportunity waiting to be unleashed. I mean, Honduras is nearly 10 million people strong, but it is one of the poorest countries in the hemisphere. Yet it's strategically located, just as Singapore was strategically located, Dubai and Hong Kong, it's strategically located. Rawatan and the northern corridor of Honduras, which is where the second hub is intended, can be a very, very successful trading post, especially in modern era with, you know, a bit of a decoupling between the US and China taking place,

• 31:50Speaker 01

  where nearshoring is a huge priority. It's just, it's a gold mine waiting to be unleashed, not with natural resources, but with human talent and geographic location to serve both the US and the rest of Latin America. I mean, it's a phenomenally well-positioned and currently well-timed opportunity.

• 32:12Mario Gabriele?

  We've talked a little bit about the ZEDE, which is an acronym, Z E D E, for folks that aren't familiar with this. You know, to sort of bring folks into the conversation a little bit, can you give a sort of precis of what that stands for? And, you know, what it really means to the extent that it influences what you were able to do?

• 32:30Speaker 01

  Sure. The translation is Zones for Economic Development and Employment.

• 32:37Speaker 01

  In Spanish, zonas de empleo y desarrollo económico. And it's essentially a law for the creation of special economic zones. But what is unique about it is that instead of prescribing at the organic law level, the legal and regulatory system that would be inside of the special economic zones to be created through the law, it enabled through the creation of a commission that special economic zones created through its process could have different legal and regulatory systems. So it created an opportunity for the private sector and the government of Honduras through this commission

• 33:18Speaker 01

  to come up with the international best practice stack of rules that would apply to a zone. And then they could either replicate that for multiple zones or do another zone that would be different. And then another zone that would be different. And so what it got absolutely right is that instead of having a central authority like the Congress, come up with the specific operational rules for a zone. You know, it's like a big centralized decision for something that is very minute. It created a process as opposed to a prescription. And that process allowed us to work with this very forward thinking commission and curate from around the world the things that have worked best.

• 34:02Speaker 01

  And so we were able to co-create with the commission and therefore the Honduran government, a zone, which is now the Prospera Zone, that was best in class and remains. And I think will always be because of the internal dynamic nature of it. And so we were able to, so that's what made the law unique. Honduras is not known as an international destination of foreign capital. One of the reasons is because it's lacked legal stability. It's had corruption and lack of security and several important challenges. Most of those do not apply on the island of Robatan. All the reasons why we started there, like the security issues and all that. But the legal stability is, you know, was a concern.

• 34:45Speaker 01

  The ZEDE organic law was created through a constitutional reform that guaranteed a substantial amount of legal stability contractually. International treaties apply. And so we looked at it and we said, well, on paper, it's the most solid piece of stabilization framework that we could hope for.

• 35:07Speaker 01

  The question is going to be, will the government of Honduras honor it in over the decades? And we figured that they would because we were able to create very powerful incentives. Positive and negative, right? Negative being if they were to validate the agreement, very significant penalties would apply. Positive being if they just let us do our job. We were in a position to bring hundreds and then billions of dollars of investments and create thousands and then hundreds of thousands of jobs, of well-paying jobs for the local population. So we figured over time, the incentives were perfectly aligned to sustain this agreement. And we're in the middle of that gamble, you know, like literally.

• 35:51Mario Gabriele?

  Yes.

• 35:51Speaker 01

  We're in the middle of that gamble and I think the jury's still out. You know, the only reason why we're still operating after a very substantial change of government back in 2021, 2022, would have, which would have shot us down if they had their way politically. The only reason we're still standing is because I think those, those, those structures were and remain very sound and solid and we've worked our butts off to show results. While at the same time have very powerful institutional framing of protection that, you know, we have to, we have to play the game and, you know, we're in the International Arbitration Center to make sure we have our rights protected and revalidated, but, you know, the jury's still out, you know.

• 36:35Mario Gabriele?

  Yes.

• 36:36Speaker 01

  You don't get to change the world without some issues, you know, without some trouble along the way, if you will.

• 36:42Mario Gabriele?

  Yeah, to put it mildly, and, and you know, that foreshadows, well, I'm sure we'll talk about some of the challenges that you've had to face in these sort of past three or four years. But, you know, to, to come back to the inception a little bit of this first charter city, the, the city of Prospera. There are these few different stakeholders that I think it's useful for, for people to sort of have in their heads. There's obviously the Honduran government, there's Prospera, the platform. But there's also this sort of, you know, private capital element, you know, to, to help people understand how those groups interact. Perhaps you can walk us through that a little bit.

• 37:17Speaker 01

  I think this, this is a good time to explain the business model. Because it, in essence.

• 37:23Mario Gabriele?

  Cause it is a business.

• 37:24Speaker 01

  It is a business, it is a business. And when we were designing it, we wanted, I mean, look, let me take a step back. The US, right? I mean, the, the. Most powerful nation on earth and probably in history and in a very short amount of time. How did it get to be that? You know, it's because the founding fathers created at the time an innovative former government. Of the people for the people, right? Free market capitalism with constitutional order and it's worked great, but it hasn't been perfect. The extent to which it hasn't been perfect, you can, you can bring it down to two core things. That unfortunately the founders missed or didn't quite in bed, even though part of it was in the Federalist Papers.

• 38:07Speaker 01

  One is there's no effective exit. So it's intended to be a Federalist former government where each of the 50 states compete against each other. But there's no exit, so they're kind of trapped, right? And then on top of it, you add the supremacy clause of the constitution. And so it's like whatever the federal government says goes. And so, you know, there's no easy way for a state to, to threaten exit of the union. And if so, that would have kept the central government, you know, federal government a bit more in check. And two, the alignment of incentives is not there. You know, the, the system relied heavily on checks and balances, right? And, and the founders clearly wrote that it was a government for moral and ethical people, right?

• 38:50Speaker 01

  And at their, in their time, Judeo-Christian values. But it, it's a check and balance system that depends upon people being moral enough to wanna be in check and in balance. But it wasn't arousing through individual private incentives. That behavior over the centuries would be aligned to the founders intent. And, and therefore, you know, you get corruption and you get, you know, politicians coming up with rules that actually violate some of the core tenets of a free market economy and the American way of life. Okay, because the incentives are not there. So then take that to our business model and what we tried to do and how it all comes together.

• 39:34Speaker 01

  Is there value in good governance? The answer is absolutely yes. In fact, you know, only societies that benefit from good governance prosper. So it is absolutely valuable and it makes the difference between poverty and prosperity. So there is value. Unless you can internalize that value though. And you know, it, it doesn't matter, it doesn't shape behaviors as much. So there is value in governance. How do you internalize it to be part of the profit motive that keeps people acting a certain way? That's where our, our model comes in and we have, as I said, a partnership with governments to create these enhanced special economic zones.

• 40:15Speaker 01

  But the model of governance as a service is where a company like Prosper comes in. They sign the charter. They're responsible for operating the zone with the rule sets that are proposed and approved. And then if done successfully, what happens is that you attract investment and catalyze economic activity. And if you do that, and then you charge taxes, right? Governments charge taxes, the zones charge taxes. They have to be competitive. Zero controversy. If you provide a service, then you get paid for it. It's just that when you have no market dynamic and you call it taxes, people get a little iffy about it. But if they provide a service, you should pay for it. Okay. So in the zone, we provide governance as a service.

• 41:00Speaker 01

  People pay for it, but they pay for it as a percentage, a small percentage of the overall GDP. Right? I mean, again, taxes capped at a percentage level. So then you got the zone operator, us incentivized to bring capital so that economic activity can, can emerge. So that a small percentage of it equals high nominal revenue. So now we're aligned to creating attractive conditions to bring capital, people and activity. But then we're in it for the profit, not for the revenue only. Right? So then what comes after revenue, costs and expenses in a typical government? There's no profit motive, meaning that their primary motivation is actually to grow the cost and expense line as because

• 41:43Speaker 01

  with that growth comes more power, more influence. And if you think legitimately that you're doing something good, as a lot of these people do. Actually, you want to be bigger, not smaller, right? Which means that the budget grows out of proportion. I mean, it's a mess. In our model, you have to grow the top line and you only do it by having the right conditions and quality service. So you gotta have an operational structure which grows as the economy grows. But you only have profit. If your costs and expenses don't grow as much, right? And in fact, if you shrink that.

• 42:15Mario Gabriele?

  There's a sincere surplus.

• 42:16Speaker 01

  Yeah, if you shrink that, you gotta have a surplus. So unlike a typical governmental structure, our financial incentive is to keep the equivalent of a bureaucracy small and overall high value, low cost and expenses. That's our incentive. That's our investors incentive. Make a zone attractive, keep operations lean, make a profit.

• 42:39Mario Gabriele?

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• 43:45Speaker 01

  For the governments, the host governments, aside from the indirect benefit of we're going to bring foreign direct investment and employ locals, there are minimum conditions. For starters, it's not just employ some locals. It's 90% of the laborers need to be nationals. Okay, so the vast majority of the jobs are going for the locals. Okay. And and that people say, well, doesn't that create a problem in terms of access to skills? Like, you know, to do Hondurans have, you know, biotech, engineer and all these things? The answer is not in high volumes. But in the short term, you can bring foreigners where you don't find a Honduran to fill the role.

• 44:27Speaker 01

  As long as you're also investing in educating the Honduran population. Okay, so you have an alignment of incentive of employing locally, raising the skills. And importantly, we have a direct revenue share with the government of Honduras. So not only all the spillover effects, but a percentage of the top line goes directly to the Honduran government. Without them having any operational obligation, meaning it's pure profit for them, which is amazing, right? I mean, governments generally don't make profit. They don't have to do anything, but they get a piece of the top line. Exactly. We've invested in infrastructure. We run the day to day. They supervise, they don't administer, so it's essentially pure profit for them.

• 45:12Speaker 01

  This is the beauty of the model now. So and then the the final cap to it, as going back to the comment about the founders and and America. We have the profit incentive and we baked in exit. So when a part, when a company or a property owner really joins the jurisdiction, they're in it. But it's through a contract upon which we have obligations. They have obligations as well, but if we violate our our agreements, they can exit. In fact, they can exit if they want to exit regardless. There's a process by which to exit, but it's embedded in their incorporation agreement that they can exit. Which, again, that was not embedded in in the constitutional framework of the of the US.

• 45:54Speaker 01

  Sorry, the charter city can exit or Honduras can exit or the citizen can exit? Within our model, inside of PROCTRA, when you join, you know, you sign an incorporation agreement.

• 46:08Speaker 01

  That has the embedded right of exiting the jurisdiction. So if you are a resident, a landowner, and you enter the jurisdiction and now you're under this governance framework, you're not stuck in it for life, right? So aside from the, let's say, proper alignment of incentives, if you're not happy, you can exit. You know, you tell me what other governmental structure you have embedded exit rights. Nowhere else in the world do you have embedded exit rights. Here you do. Now, the way it's supposed to work is that there's supposed to be multiple zedas competing against each other so that we keep each other in check.

• 46:49Speaker 01

  Honduras has limited the capacity to create more zedas, so that dynamic is going to be not as powerful as we were hoping, but still, people can exit our zed and remain, say, with a municipality or go back to the central government oversight directly.

• 47:04Mario Gabriele?

  So many interesting threads there. I'm going to try and summarize a little bit to make sure I'm following you, but essentially the different incentives, you have the Honduran government who gets to say, hey, you're going to bring a bunch of foreign investment and talented people into this part of the country. You are going to take care of actually running this for us, but you give us a piece of your top line revenue, let's say, from taxes. The underlying business takes that taxation revenue and assuming it is able to keep its costs at a low enough rate, takes a profit from it over time. And the people that come into these jurisdictions have the ability to operate under these favorable

• 47:47Mario Gabriele?

  set of rules, but aren't bound to them forever because they have the right to exit from them. And then maybe the final piece is the local Hondurans are given access to all of these new jobs in which you have sort of mandates to hire 90% of Hondurans where possible, otherwise, you know, investing in education. And so these are sort of the different stakeholders and how they each benefit. Have I missed anything important there or muddled anything?

• 48:13Speaker 01

  Perfect. There's a good reason why you run a podcast. You can synthesize things very well.

• 48:18Mario Gabriele?

  Well, I want to make sure I'm following. Okay, and so. In terms of the direct investment, when you read about Prospero, you see a lot of names that I'm familiar with from the tech world, you know, Peter Thiel, Marc Andreessen, so on and so forth. How much foreign investment have you been able to bring into the city at this point? Because I imagine it's also been a bit challenged by some of the political upheaval.

• 48:42Speaker 01

  Yeah, it's been challenging, but as of right now, we've raised about $170 million in aggregate. It's a fraction of what we could have done by now, but you're right. There's been some political challenges in the country. The last four years have been extremely complicated, politically speaking. I had predicted by the end of '25, the number would have been at around $500 million. And I think it will be a lot more over the next four years, once the political challenges are resolved. Having said that, you know, $170 million, depending on where you're listening from and your context and your experience, might sound like a lot or a little. So let me put it in context.

• 49:26Speaker 01

  In a place like Honduras, our project represented about a third of all foreign direct investments into greenfield projects for 2021, 2022, that fiscal year. Our project has generated more jobs than, as far as I know, any other project in the country during this timeframe. Our project has brought more new industries into the country than any other project has ever into Honduras. And not just random industries, but very high-value industries in biotech and crypto finance. So aside from what we have already done, which again, in context, has been super relevant and significant,

• 50:10Speaker 01

  we have been setting up a foundation that has the potential to massively scale, not just because it's unique to Honduras. Scale at a global level, right? In industries that have transformative potential as a result for Honduras, but for the world as well. I mean, we are able to house extremely innovative biotech innovation, you know, gene therapy, stem cell research, all sorts of things that represent value, not just to the people of Honduras, but to the world at large. And that's just in four plus years, under extremely complicated circumstances.

• 50:47Mario Gabriele?

  As you, you know, started to break ground in 2020 and have built it up over these past five years, what have been the foundations that you've found most important? As you think about, you know, how do we create a sincerely productive and progressive charter city? Like, what do we need to get right from the beginning for this to work?

• 51:08Speaker 01

  To give our team credit, and not just me, but, you know, we've managed to aggregate a significant amount of experts and people to get this done. Those many years upfront that went into designing the system before we broke ground have proven to be time well spent. Okay. And what I mean is the most important and impactful dynamic that we're seeing today is dynamism and the customer-centric mentality. Okay, so these are things that you generally don't categorize with or associate with governments, right?

• 51:51Speaker 01

  Dynamism and customer centricity? I mean, those are like the opposite, right? You have bureaucracy and like bad service is what you think about. Because of those two things, some of the things that we're actually doing on the ground today is not like, it wasn't master planned 10 years ago. Heck, it wasn't master planned five years ago. They have been emergent opportunities, which we have been incentivized and capable of responding to because of the public-private design to this governance as a service structure. Had it not been done that way, if there wasn't a profit motive and there wasn't a dynamic way to operate this, where the private sector is the one actually operating on the ground, we wouldn't be what we are today.

• 52:36Speaker 01

  We would, you know, probably just be another. I don't know, traditional special economic zone with some warehouses or something along those lines.

• 52:44Mario Gabriele?

  To put some some numbers around it, you you mentioned that in 21 or 22, this was a Prospero was responsible for a third of FDI and has created all these jobs. What is the sort of size of the Charter City today? How many residents are there? How many businesses? Do you try and keep track of things like GDP per capita or whatever the sort of right metrics are for for this company in a way?

• 53:08Speaker 01

  Before we talk about Charter City, we got to talk about the governance platform. Because properly understood, Prospero in Honduras has three different hubs. Okay, so the the aggregate size of the jurisdiction, all of the incorporated land into the jurisdiction is just over 1,100 acres. The size of the DIFC is about 110 acres. So that's we're 10 times larger. The size of Monaco, I know another relevant example that we didn't talk about, but it's quite relevant.

• 53:45Mario Gabriele?

  Yes.

• 53:45Speaker 01

  It's about 550 acres. So we're twice the size of Monaco as a jurisdiction, 10 times the size of the DIFC as a jurisdiction. However, as I said, this is divided into three hubs. The first hub on the island of Robatan, which is the, you know, what people think of as the city of Prospero when they come here. That currently has about 420 acres. Okay, 420 acres. The remaining acres are in the two different hubs, the biggest one of which is on the mainland, which is the future Shenzhen. It's called Satu Yeh, and that has about 400 acres. In terms of people, we measure them in in two levels. You first have to be an e-resident before you can be a physical resident.

• 54:29Speaker 01

  So you being becoming an e-resident is kind of top of the funnel. Many of them come but don't necessarily live here permanently. And I gotta check the statistics, but we'll probably up to about 3,000 e-residents. And at any given point in time, about 10% of those are on the ground. But because we do conferences and events that will spike up to say 1,000 at a given sort of pop-up event. So the numbers still go up and down. The main bottleneck right now is real estate. We need more physical built space, more apartments and offices, like more built space. And we're working on that. The average GDP per capita, last time I checked, was about $27,000.

• 55:14Speaker 01

  And this is about 10 times higher already than the average GDP per capita in Greater Honduras. In Greater Honduras, the GDP per capita is about 3,000. And so, you know, for what it's worth, 27,000, which is lower than what we're targeting. But for context, it's quite substantial. And the type of jobs that are filled here vary from, you know, we have a hotel, for example. So, you know, you have the typical gardener and waiter and we're building. So you have construction jobs. But then we also have crypto finance. So you have high-paying finance jobs and biotech. So you have scientists that have developed some really cool IP and are selling very high-value gene therapies.

• 55:59Speaker 01

  So it's really nice to see in a short amount of time, the degree of variability that you can sustain if the conditions are right.

• 56:09Mario Gabriele?

  So, you know, one of the things that when you read about Prospera, I feel like shows up in every news article is that, you know, this is a haven for Silicon Valley billionaires. It sounds like that is a sort of lazy way of describing this. There's clearly, you know, a more prosperous part of the population compared to the rest of Honduras. But this isn't Monaco yet, by the sounds of it.

• 56:32Speaker 01

  No, not at all. In fact, most of the jobs are Hondurans, as I mentioned earlier. And, uh, and it's funny, I think, I think a lot of those articles that, that say that are attempt to somehow use it in a disparaging way, you know, like if we're creating some enclave for billionaires. And that is not what we're doing. To be clear, it isn't. But imagine the lunacy of the people writing to think that saying that about a place is somehow a negative. Like Honduras is not where billionaires go to, right?

• 57:09Mario Gabriele?

  Yeah.

• 57:09Speaker 01

  So if it were true that we're creating this, this amazing destination for Silicon Valley billionaires to go in a place that they just like it's, it's, it would be something to celebrate. Then as a matter of fact, we have had many, you know, Silicon Valley billionaires come and visit. And in fact, some of them are investors, but that's something to celebrate. And the reason why they're investing is because they see that the problem we're solving in governance, it's the world's most important problem to solve.

• 57:38Mario Gabriele?

  Yeah.

• 57:39Speaker 01

  You know, and so, you know, some people are trying to go to Mars in part because we might screw it all up here on earth and that's fine. And some of them are trying to find, you know, the cure to death because, you know, we want to live longer to, to solve problems and actually get us to the next wave. We're trying to solve earth, you know, we're trying to make earth the most prosperous place possible. And that is all about governance and a lot of these billionaires get it. And that's why they're investing. That's why they come.

• 58:07Mario Gabriele?

  You know, we were talking about the scale of Prospera now and, you know, three thousand or so de-residents that, you know, about 10% that are on the ground and maybe some more folks that are full time, assuming that this, you know, doesn't. Get totally waylaid by the new Honduran government. Where do you sort of hope to be in 10 years' time? You know, what's the optimistic but but realistic view of things in? When you look at it from from your seat today?

• 58:39Speaker 01

  I would answer in two dimensions. One is specific to Honduras and the other is more broadly. Okay. Within 10 years, in an optimistic yet realistic way, I think Honduras, our projects here could have about 100,000 people involved on the ground between employees and residents. And that is having activated, you know, at least two of the three hubs, noting that one of them is a much more massive development on the mainland with manufacturing, BPOs. Okay, so of those of those 100,000, let's say, people involved, probably 75 to 90% would be Hondurans, as I mentioned, and the other would be expats doing all sorts of high value entrepreneurial stuff.

• 59:24Speaker 01

  Beyond that, I would say at least three to five other prosperous cities around the world. And then we would be done with a different shareholder structure as they're designed to be. Maybe most important for us founders and our investors, we don't want to be the only company doing this. We we hope to see several several companies that have jumped into governance as a service and are carving a niche alongside us, you know, in competition, in cooperation, whatever. But we want to see some of the largest companies, whether they're the Bechtels or the Jacobs,

• 1:00:04Speaker 01

  as well as some of the most innovative players realizing that governance is an industry that can be innovated upon and that it is being done. It's not that it has been done before. It's being done and as imperfect as they may be, we're showing that it can happen. So we hope to see, say, at least three, maybe 20, you know, the more the merrier. Companies that are in the space, innovating alongside us, competing, but then transforming.

• 1:00:34Speaker 01

  And this is key, Mario, transforming the paradigm of how governance is delivered, be it that it's a service, okay, that you don't have to be limited to the elected officials. Like, they have a role to play, and that's fine, and we celebrate it. But you shouldn't rely on elected officials to solve every layer of the governance stack. They can stay up at the metastructure, sort of custodians of the constitution. But then everything below that can and should be done in competition through innovation with the profit motive and exit as being part of the stack.

• 1:01:10Mario Gabriele?

  You know, it strikes me that, as we've talked about this, we talked through the different stakeholders and why people, you know, benefit from the work you're doing. Maybe the one person that we haven't talked about, so to speak, is the prosperant themselves. What is it that drives people to become an e-resident beyond, you know, maybe believing in the vision as an investor or setting up a company there, you know, there's clearly, as I've heard you talk about this before, some tax incentives and other things. What are the main draws there, in your view?

• 1:01:41Speaker 01

  Well, part of the beauty of our model is that it caters to a very diverse crowd. And I don't mean that in the woke sense. I mean it in that, you know, some people are here because they just wanna chillax and they wanna have a place where they can, you know, keep what they've earned, not have to pay crazy taxes each year, in a beautiful destination surrounded by smart individuals. Like, that's a use case. Another use case would be the, you know, Hondurans that would have otherwise left their country because they are high potential, high intellect, and they could go anywhere and be a contender for high-paying jobs or even to start something.

• 1:02:21Speaker 01

  But they're choosing to stay here because it's their homeland, because they're close to mom and dad and their cousins and all that. And because, actually, in some industries, they wouldn't be able to find a better place anyways. And so, you know, this is the best. And then you have people that are coming from Silicon Valley and Europe because they're working in industries that have been heavily regulated over the decades to the point where you can't innovate any longer. Like it's only designed for the big players to inch their way forward, but little guys can't actually compete. You know, they find in Prospera a very welcoming environment for them to prove out their concepts, their technologies.

• 1:03:04Speaker 01

  And then, you know, perhaps go back to the, to the bigger playgrounds and compete with the bigger guys. Undoubtedly, you have some people here that are in it just for business. And then you have many people that are in it for ideological reasons. And they technically could be doing what they're doing somewhere else. A lot of, say, remote workers, but they understand what we're trying to achieve, the ethos. And they know that just by being here and being part of this economy, they're contributing. So we have a large spectrum, but the bottom line, when it's all said and done, the value proposition is about having maximum degrees of personal freedom with which you can create value, trade freely, keep the vast majority of the wealth you unleash.

• 1:03:47Speaker 01

  And then when you do pay taxes, you pay it to an organization that is aligned with your future benefits and is in check of not growing and becoming abusive as so many other governance service providers have become because of the ill-aligned incentive structures that have emerged.

• 1:04:09Mario Gabriele?

  And to put a tangible example around, you know, that, that sort of last cohort, you mentioned the Silicon Valley entrepreneur who says, hey, the industry I'm working in is too regulated. It's not giving me the freedom to innovate. What does that look like on the ground today?

• 1:04:23Speaker 01

  Well, it varies. You have things like advanced gene therapies. And, you know, you have this, as an example, this Don't Die documentary on Netflix with Brian Johnson.

• 1:04:35Speaker 01

  Amongst the places he went to throughout the world, it was prosper here in Rawatan because that's where he found some of the best and most advanced gene therapies for longevity. So that's one clear example. But you have drones flying around and people, you know, wanting to innovate in that space without having to spend, I don't know how long and how much money to get permission from the FAA, you know, to doing robotics manufacturing for construction, you know, balancing international business codes on the one hand in terms of intended outcomes, but being able to innovate in building materials and shapes and forms that are new and innovative and scientifically better performing, though not necessarily already included in the building

• 1:05:17Speaker 01

  codes of a particular municipality or city, to, you know, crypto finance and being able to bring real world assets on chain and transact in physical reality, like with an actual apartment, you know, having the mortgage on chain as an NFT, for example. I understand there's some of that going on. It's quite varied. I mean, as I said, if there is some ratio between, say, number of people and aggregate GDP and a diversity of things that are being tried, we have to, we are probably at the highest level of whatever that index is, like the variability for the amount of nominal activity is massive.

• 1:05:58Mario Gabriele?

  Well, let's talk about, you know, the challenges. You mentioned that you're sort of partway through this, this bet that Honduras will be able to stick to its agreement and that, you know, the, the sort of setup that you agreed upon is durable enough to survive the changes in government. To, to bring people up to speed, maybe you can give a sort of precis of what this turmoil over the past couple of years has been and where things stand at the moment.

• 1:06:23Speaker 01

  Well, leading up to 2021.

• 1:06:30Speaker 01

  There had been 12 years of continuous one-party rule. So the equivalent of the Republican Party in Honduras had been in power for 12 consecutive years. That party was responsible for the creation of the Zéde regime, amongst other things. Okay. But to give you an idea for US audience, the Zéde regime was to the National Party, what, let's say, the Affordable Care Act or Obamacare was for the Democratic Party in the US. It became a very politicized issue. It wasn't when the law was being enacted, okay? So I should, I do, I guess that's a very imperfect analogy, but it became that politicized.

• 1:07:14Speaker 01

  But when the Zéde law was enacted, it was quite bipartisan. You know, 120 out of 128 congressmen voted in favor of it. But it became very politicized because this party was in power for so long,

• 1:07:30Speaker 01

  there were tensions. And in 2021, a disruptor party, which was a breakout of the equivalent of the Democratic Party, but more radical towards the left, won the elections. They didn't win them single-handedly. They formed an alliance with multiple parties, à la European type of alliance. But bottom line is, they were at the head of the ticket and they ran and got it power. And as it's normal, you know, the political pendulum, you know, swings. And whatever the last guys did, especially if they were there for a long time, especially if, you know, it's bad and we must undo. And of all the things that they did, the Zéde regime was the most notorious.

• 1:08:13Speaker 01

  In part because it, you know, was so exciting, it has so much potential. They were very proud of it, so they were promoting it, you know, internationally during the election. So it became, it became the flagship, the legacy project of the prior.

• 1:08:29Speaker 01

  Power structure and in particular power of president. So when this new administration came in, they had several campaign promises. One of them was to get rid entirely of the ZEDE system and shut down those that were operating as it. You know, so imagine that, I mean, we made it into say, one of the top three campaign promises to shut us down and get rid of the system. And this was in 2021. It's 2025, almost to the end of it, and I don't want to count my checks before, but we're still operating for sure. And you know, very, very limited compared to what we could. But we're still here. Now, why are we still here? Well, because we're doing what we said we're going to do. We're bringing investment, we're generating jobs.

• 1:09:14Speaker 01

  We're creating and opening new niches of opportunity through innovative industries. And because the legal structures that were set up were super sound, very robust, very clear. And we have had the benefit of a very strong set of investors, financial where we fall included, that say, right is right, we must prove this. And this is what Honduras wanted, this is what Honduras negotiated. We agreed to it, now we're going to hold each other to account. So we have one of the largest international arbitration cases against a state currently active through the World Bank in Ixit. That is, I don't know, probably three quarters of the way through the overall process.

• 1:09:59Speaker 01

  These are long procedures, seven years or so. So we're four years into it. And so far, we know there've been four instances throughout the process where there's been, you know, where the arbitration tribunals had to make a decision in our favor or in favor of Honduras. And all four instances so far devoted in our favor. So we feel really good about where it stands legally. Like if it, if it keeps going, we're going to win a massive arbitration award.

• 1:10:32Speaker 01

  And at the same time, that's not what we're after. As in, you know, if Honduras indeed continues to not honor its agreements, that's where they're, that's where they're gonna end up. But what we're hoping for is that our rights are respected, you know, that they're reinstated fully. And there's an election coming up in about a month in Honduras. Okay, so the 30th of November, there's an election, depending who you ask, but the majority of the political analysts expect that the opposition, so not the regime, will win that election. And so we'll go back to perhaps a more sensible set of political circumstances. And I predict if that happens, then we're off to the races. I mean, we, we got the rockets full of fuel and we just need to be given the thumbs up.

• 1:11:17Speaker 01

  And we, we're gonna, it's gotta be massive. The next four years, if the election goes the way I, I think will, will be massive for us.

• 1:11:26Mario Gabriele?

  And so to, you know, maybe in a slightly caricaturish way, but I, you know, might be helpful to, to just make sure I'm understanding. When we look at this sort of current state of affairs, the set of outcomes that can happen from here feel like, you know, this less opposed party can, can come to power on November 30th, in which case hopefully that means you're back off to the races and, and things are sort of, you know, back to normal service, so to speak. You could go through another few years of international arbitration and perhaps you lose. That's, I guess, a possibility, even though things have been promising and, and you have to sort of wind down the project. And then the third path is that Honduras has to sort of pay some sort of

• 1:12:08Mario Gabriele?

  award or damages on the scale of many billions, right? As I've heard you mention it before. And so in that version of things, you sort of win, quote unquote, in the sense of, you know, there's a large outcome, but the, the project hasn't gotten the chance to flourish over the, the 50, 50 year cycle that you were hoping for. Is that like a decent summarization of what you see as the main options here?

• 1:12:36Speaker 01

  It is with a caveat that, you know, after five years of operations under very complicated circumstances, we have managed to prove the business model. Okay, so the primary loser, unfortunately, if things don't get back on track, will be the people of Honduras. Because especially with a massive payout, we will dust off and, you know, keep pushing the model somewhere else, where the government is more capable of honoring its commitments. But unfortunately, the people of Honduras will miss out. And so that will be, you know, quite tragic. And I don't think it's gonna get to that. Honestly, I don't. I think under all scenarios of a political outcome,

• 1:13:20Speaker 01

  there's a way to thread the needle. Because ours is not a political project, you know, like there are some political undertones just because, well, the way in which governance services are provided, end up being quite related to the political party in charge. And so they like to put labels on things and call it one thing or another. But ultimately, as I said, if you decouple, you know, governments and governance, there's no incompatibility with having different types of governance structures. If you are a political party, even from the left, like if you are a radical left political party, it's not unthinkable that you would allow within parts of the country, in special economic zones,

• 1:14:02Speaker 01

  you know, a much more free market oriented political subdivision. You know, if it's generating taxes, if it's employing people, you know, if anything, it's actually helping their socialist agenda of redistributing wealth that they otherwise wouldn't have. So it's not for sure a, you know, white or black type outcome. It's just gonna be more challenging to get there because you have to deal with politics and the way things look as opposed to the way things actually are.

• 1:14:33Mario Gabriele?

  I think anytime you do something that is quite revolutionary, this ambitious, that is changing a country in one way or another, you know, whether it's happened before as we've talked about or not, there's obviously gonna be criticism. And so There've been critiques that I've read that the ZEDs aren't bringing enough jobs in, they're not bringing enough foreign investment in. And I think we can argue about what range is acceptable. I think you've noted that by a percentage basis, there's some really good reasons to be positive. And then there's other sort of arguments around the fact that maybe this is too much of a libertarian fantasy, I think Paul Romer, the Nobel economist,

• 1:15:16Mario Gabriele?

  said. And these different critiques, I think a lot of that is just endemic to this sort of discussion. But if you had to sort of step into the position of one of your critics, and take up one of their arguments, where do you feel like the criticism is most justified? Or the place where you feel like, hey, maybe we haven't done enough here, or there really is something to be concerned about in terms of the sovereignty of Honduras?

• 1:15:44Speaker 01

  Look, I would say the biggest self criticism, though hindsight's 2020, like, if you could do it all over again, it does tend to be silly hypotheticals. But the biggest failure, and the reasons why, but the biggest failure is that we were not more proactively, transparent, and communicative in the early years. And so, in the absence of our voice, with tangible, solid evidence of what was actually happening, speculative voices, many of which were ill-intended and politically motivated, filled the void and started to

• 1:16:25Speaker 01

  create this caricature, negative caricature, of what the project was about. Okay, so the narrative was controlled by opposition groups, and we weren't loud enough. And again, there are reasons at the time, the party in power in Honduras deemed that that was the best strategy. But in retrospect, I think that that is by far the biggest mistake so far. And even with that, the number of people in reality that are actually against ZEDs in Honduras is very small. They're just a very loud minority. When this administration, the current administration, won...

• 1:17:07Speaker 01

  And one of their top three campaign promises revolves around getting rid of ZEDs. Gallup did a poll as to why, you know, they're trying to figure out, well, why did this party win in the end? Only 3.75% of the population said that they voted in favor of this party because of their anti-ZED stance. So it's a really small percentage. They're just very popular and it's the type of thing that lends itself to all of the caricatures of victimhood or massive risk or colonization. So it arouses the emotions, but in reality, it's neither that nor does it matter that much to that many people.

• 1:17:51Mario Gabriele?

  Yeah, you can attach like the most provocative language possible to it and have it sort of stand in as this specter for so many different things rather than maybe reflecting on it as it is.

• 1:18:03Speaker 01

  Anything new and innovative lends itself to that.

• 1:18:06Mario Gabriele?

  You've mentioned that there are sort of other places around the world that you hope to bring prospera. And I think you've said in the past, maybe there are five countries that you're looking at. Maybe that number has gone up or down since, you know, whenever that interview was. What's on the on the docket for the next few years? Like where, what looks exciting to you?

• 1:18:27Speaker 01

  Well, look, I I've begun categorizing in my mind the the type of conditions that create a very attractive opportunity for what we're doing.

• 1:18:40Speaker 01

  One is catch-up growth. Okay. And this is countries that are underdeveloped with poverty and what have you. And they have a lot of catch-up to do just to get to world standards. Okay. So get rid of poverty and be competitive. And we see Africa, obviously, as one of those places that unfortunately has a lot of catch-up growth to do. They have a massive, young and rapidly growing population that are very enthusiastic about the future. They read about online and they're gonna go pursue it and they're gonna go pursue it by migrating to Europe or because opportunities come to their home countries and we wanna be part of the latter solution. Africa's not the only place, obviously,

• 1:19:23Speaker 01

  that has a lot of ketchup growth. There's plenty of places in Latin America that have that as well, but ketchup growth is one of the, say, positionings. A second one, which is kind of in the middle of the three that I'm gonna mention, is industry diversification. So, you know, a country might be middle income and that's fine, maybe they're at a world standard, but they wanna tap into new industries to grow faster and diversify, maybe not be so dependent on natural resources, or in certain, you know, partnerships, that the, you know, country partnerships, they wanna try new things, they wanna diversify their economy, and they're kinda stuck with what they have. And so we can come in and be a

• 1:20:03Speaker 01

  massive catalyst of diversification because of how regulatory system works and how we're able to create very attractive conditions for industries that otherwise wouldn't come. And then the third is to accelerate growth and that, you know, the epitome of that is the US, alright? And so, ketchup growth is easy to quantify. You can, you can go to a country like Honduras and see, okay, your GDP per capita is 3,000, GDP per capita of Hondurans in the US who go to the US illegally within two years is 30,000, okay? So you have at least 10x growth if you stop exporting your people and import, you know,

• 1:20:46Speaker 01

  international best practice. So that's, that's sort of easy to quantify. What is less easy to quantify is to be in a place like the US and say, okay, your GDP per capita is, you know, whatever, 50,000. But it could be, what, what could it be, right? I mean, I suppose you could look at other places and say Luxembourg and say 150,000. But it's not very credible because Luxembourg is a very niche industry, very, you know, high value market. Whereas the US is massive, right? So what could it be? What could the US be? But the reality is that that's where I think the biggest opportunity actually lies, though harder to quantify.

• 1:21:26Speaker 01

  It's got the biggest impact for global prosperity to unleash the power of the American entrepreneur, right? To drive American dynamism, re-industrialize, sure, but also lead in every single innovative industry. And that is something that has been the case historically, but that it's it's under threat, right? I mean, it's why this whole movement in the US is going on right now. But they're trying to solve the problem with traditional tools, which have massive limitations, right? The traditional tools of trying to fix it all, top down or through traditional political structures and the traditional governmental institutions is not 21st century by a long shot. So we have 21st century challenges and opportunities.

• 1:22:11Speaker 01

  We need to implement 21st century solutions. And what we're doing in essence is that. And so by far, the country that to me represents the biggest opportunity is the US.

• 1:22:22Mario Gabriele?

  Amazing. Well, I'll keep my eyes open for for Arizona, Nigeria, and, you know, wherever else, you know, you might have on the the agenda. A final question that I like to close the podcast with. If you had the power to assign a book to everyone on earth to read and understand, what book would you like to assign?

• 1:22:42Speaker 01

  Atlas Shrugged. I mean, I couldn't have picked a better one there. I knew that was coming. Yeah, I mean, look, there's so many other amazing books, but because they're so good and they're modern, people are kind of picking them up. But Atlas Shrugged is such a philosophical book when it's all said and done. And obviously, you know, it's it's got some fiction dimensions to it, but it's got so much profound truth in current times, unfortunately, too many parallels to the world that.

• 1:23:16Speaker 01

  That is described there with Ayn Rand describing New York and the US. So for sure, I would say Atlas Shrugged. Read it if you haven't read it, read it. And read and don't go read about it, like read it. It's it'll take a while. You can listen to it in audiobooks and I think it's, I don't know, 60 to 90 hours, depending on what speed you have it read to you. But it's definitely worth it.

• 1:23:40Mario Gabriele?

  Amazing. Well, I think that's a perfect place to leave it. Eric, thank you so, so much for taking the time.

• 1:23:46Speaker 01

  Thank you.

• 1:23:48Mario Gabriele?

  That's it. Thank you for listening to this episode of the Generalist Podcast. Please subscribe on Apple Podcasts, Spotify or your preferred podcast app. Ratings and reviews help others discover these discussions. So if you enjoyed the conversation, I'd be grateful if you could take a moment to leave one. For all past episodes and more, visit us at thegeneralist.substack.com. See you next time as we continue to explore the future.