#1053 Brandon Arvanaghi On Offering Corporate Treasury On Crypto Rails

Brandon Arvanaghi is the Founder of Meow. In this conversation, we discuss yield generation, why corporate yield differs from the retail yield products, Meow's new fundraise, onboarding new companies, the risks associated with this technology. and the future of Crypto and corporations using crypto rails. ======================= Crypto wallets and browser extensions are outdated, limited in features, and don’t meet the needs of today’s Web3 users. Core, the free, non-custodial browser extension built by Ava Labs, is more than just a wallet. Core is packed with features that give Avalanche users a more seamless, and secure, Web3 experience. Did you know you can also bridge Bitcoin natively across the Avalanche Bridge, and take advantage of the thriving DeFi ecosystem on Avalanche? This is just one of the innovative properties that make Core so powerful, giving users an all-in-one operating system that brings together Avalanche apps, Subnets, bridges, and NFTs in one high-performance browser experience. With Core, any crypto user can easily swap assets, display NFTs in a beautiful interface, and store your assets in a Ledger-enabled wallet. Plus you can put real dollars in your Core wallet in just a few clicks. Go to www.core.app to access the full power of Web3 on Avalanche! ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Valour (formerly DeFi Technologies) represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at valour.com =======================

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

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Brandon Orvanagi is the founder of Meow, a brand new company focused on corporate finance on crypto rails. In this conversation, we talk about yield generation, their brand new fundraise, why the industry is so quickly adopting corporations and their balance sheet, and what exactly the risks of this type of technology and these use cases are. I really enjoyed this conversation with Brandon, and I hope you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by Avalanche. Crypto wallets and browser extensions are outdated, limited in features,

• 0:46Anthony Pompliano?

  and don't meet the needs of today's Web3 users. Core, the free non-custodial browser extension built by Ava Labs, is more than just a wallet. Core is packed with features that give Avalanche users a more seamless and secure Web3 experience. Did you know you can also bridge Bitcoin natively across the Avalanche Bridge? And take advantage of the thriving DeFi ecosystem on Avalanche? This is just one of the many innovative properties that make Core so powerful, giving users an all-in-one operating system that brings together Avalanche apps, subnets, bridges, and NFTs in one high-performance browser experience. With Core, any crypto user can easily swap assets, display NFTs in a beautiful interface, and store your assets in a ledger-enabled wallet. Plus, you can put real dollars in your Core wallet in just a few clicks.

• 1:31Anthony Pompliano?

  Go to core.app to access the full power of Web3 on Avalanche today. This episode is brought to you by LMAX Digital, the number one institutional crypto exchange. They offer clients the deepest pool of crypto liquidity on the planet, underscored by 100% uptime track record through volatility spikes. They leverage LMAX Group's liquidity relationships and ultra-low latency technology. LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. LMAX Digital features a central limit order book that streams various cryptocurrencies, and it's all paired with US Dollar, Euro, and Yen. They also allow you, over the internet, to execute your crypto trading strategy with precision. LMAX Digital, you may have never heard of them.

• 2:12Anthony Pompliano?

  It's because they only serve institutions, but they're secure, they're liquid, and they're trusted. You can learn more at LMAXdigital.com/pomp. Again, check it out at LMAXdigital.com/pomp. This episode is brought to you by Valor. Valor represents what's next in the digital economy. They provide simplified trusted access to crypto, decentralized finance, and Web 3 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols through a single stock purchase on a regulated exchange. They're currently listed on the OTC at DEFTF and on the Canadian NEO exchange at DEFI. For more information or to subscribe to receive company updates and financial information,

• 2:57Anthony Pompliano?

  you can visit their website at valour.com. That's V A L O U R dot com. valour.com. Go check them out today.

• 3:07Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:30Anthony Pompliano?

  Brandon, welcome back. How are you?

• 3:32Speaker 02

  Thanks, Pomp, doing great. Great to be back.

• 3:33Anthony Pompliano?

  You guys raised a lot of money. Why do you need so much money?

• 3:36Speaker 02

  We were kind of going for it all here. Like, we're not just going for yields. Right now, businesses can sign up with us and earn up to 4% potential yields. We have a conservative yield offering, we always have. But face to the company is why we raise the money. It's not the end-all be-all. We're going for the entire corporate finance stack, and we think it can fundamentally be done better when built on crypto rails, but without making that clear to the end-user.

• 3:58Anthony Pompliano?

  Okay. What is corporate finance, for those that don't know? Like, explain, is that just like counting, hey, how much revenue we have and what our expenses are? Or what does that entail?

• 4:04Speaker 02

  Sure, yeah, specifically things like invoicing, things like treasury management, things like spend ultimately. Forex is a big one, but these are like the practical use cases of crypto, not the cosmic brain things. Like, anyone could pitch anything in 2021 and get funding.

• 4:15Anthony Pompliano?

  Correct.

• 4:16Speaker 02

  We come from the ground floor of an exchange, so we know what actually like people need. And that's kind of what we're going for. And that's what the money's going to be used for.

• 4:23Anthony Pompliano?

  So people so far, until recently, they come to Meow, which I'm saying it correctly, right? It is, and they look for treasury management, like yield generation, meaning that rather than have cash sit in the bank at whatever bank and earn 0.03%, I think is the average in a deposit account. They can come to you and earn up to 4%. Where does that yield come from?

• 4:47Speaker 02

  Yeah, so that's a great question. So how we've done things differently from day one, and this is back when we started in April of last year, 2021. We made it so that the customers actually had to pick exactly where their funds went. So it's not like a black box. You give the money and it says, all right, we'll give you an interest rate. They have to pick. Do they want it to go to an institutional lending desk like Chinese, do they want it to go to this desk? Do they want it to go to a DeFi protocol? Their money goes exactly where they want it to, and we also only face accredited investors. So we don't face retail. So those are the two differences for us, but it was mostly, it is mostly institutional lending desks that traditionally lend to crypto hedge funds, et cetera.

• 5:20Anthony Pompliano?

  So when I run a business, let's say I'm the CFO at some large corporation, I'm staring at, you know, tens of millions of dollars sitting on our balance sheet. I'm like, damn, we're getting crushed with inflation. I want to earn a little bit more yield. I come to the platform and I'm able to pick who the counterparty is in the sense of the actual lending desk. And there's a yield that is associated with that. What kind of diligence can I do or like, how do I decide, right? If there's 10 different options or five different options, like how do I, as just a regular CFO, doesn't know that much about crypto, know who to go with?

• 5:52Speaker 02

  Yeah, so it's kind of painful for us, but we have to write like 30 pages of like the risk profile of everything and explaining exactly what could go wrong with everything. And we get on calls with all of our customers and we make sure they understand the risks fully. We send them documents, we send agreements. And when they are accredited and when they understand the risk profile of these offerings, they pick what makes sense for them. Some corporates like to do pretty aggressive, high yield stuff, you know, ranging in like 6, 7%. Now, we never dabbled in the 20% stuff that a lot of the retail apps did. That just didn't add up to us. Like that was sketchy from day one to us, but we definitely curate to some extent, but it's ultimately up to the. The investor.

• 6:27Anthony Pompliano?

  So 4% sounds a lot closer to what you'd see in the traditional world than there was people running around offering 10, 11, 12, 13 crazy numbers. Why did those high numbers sound so risky? And what is your analysis as to what people were doing there that you guys don't do?

• 6:43Speaker 02

  Yeah, it's a great question. So unfortunately, retail only competes on one vector. So retail yield apps, for example, it's the rate. And retail investors tend to be uninformed, and that's why they go after the highest rate possible. And so one retail app would be offering 10%. And then the next one would try to one up them and say, we offer 12. And that would keep going and going and going. And the only way to do that in the crypto world was through the anchor protocol. That was UST. So pretty much all these retail apps, or the vast majority of them, were taking people's cash, converting it to UST, putting it into the anchor protocol, which, as you know, UST blew up, and giving a dollar liability to their end users. So even though the interest in the anchor protocol went back to the asset that was UST,

• 7:27Speaker 02

  the yield app was saying, we're going to pay you in dollars. So that was where the mismatch came. And when UST lost its peg and it went to zero, that's why they lost a lot of money. So those were the incentives for retail. Corporates is a totally different story. They care about being conservative. They care about like, you know, risk reward. They care about understanding the risk profiles. But that's why retail apps got in a lot of trouble this time around. And not all of them, but most of them.

• 7:48Anthony Pompliano?

  Most of them.

• 7:49Speaker 02

  Yeah.

• 7:49Anthony Pompliano?

  When you look at the corporate finance world today, of your customers, what percentage of their balance sheets are they putting in? I'm assuming it's mostly stable coins, maybe it's other things. But what is the percentage that is exposed to kind of yield generation in this new financial system versus staying in the old financial system?

• 8:05Speaker 02

  Yeah, so it's mostly like something like 10 to 20% of their balance sheets that they put with us are excess cash they weren't planning on spending, anytime soon at least. And they deal with dollars. They don't need to own a wallet to come with us. They go and they transfer this from their bank account like they would an ACH or a wire.

• 8:21Anthony Pompliano?

  Okay.

• 8:21Speaker 02

  And it's mostly web two companies, you know? That's what we're very proud of. That's why we were able to get a Series A done is because we proved that web two companies want a compliant bridge to these yield sources.

• 8:31Anthony Pompliano?

  Are you able to name any of the companies publicly?

• 8:33Speaker 02

  There are some testimonials on our site. Those are the ones that I'd be able to. Alt is an example of that.

• 8:40Speaker 02

  Yeah, and the site has some other ones, yeah.

• 8:41Anthony Pompliano?

  Okay, and when you see this, talk a little bit more about, I'm sitting there as the CFO, I've got this cash, I basically just ACH you, what is like technically happening for me to then get exposure to this as a corporation?

• 8:54Speaker 02

  So we have the relationship with a different lending desk, we have the bridge to a DeFi protocol, if you'd like to do that. Our team is some of the founding engineers at Gemini, so we built the rails to convert your dollars to the stablecoin, put it into the DeFi protocol if you pick that. But if it's an institutional lending desk, we have an incentive rate from them, and we just need to take your dollars and batch it with other peoples and send it to that desk and pass you through the potential rate that you're earning. So from your perspective, it's one bank transfer, you're done, you see your interest accrue daily, you know, compounding yields, and you can withdraw on one to three business days in almost every offering that we have.

• 9:27Anthony Pompliano?

  So what's interesting about this is if you go back to the late 90s, internet company, internet company, internet company, that's all I wanted to talk about. Now it's just companies, right? And quote-unquote, the internet, one, the retail users got normalized to it, so if I want an answer, I go to the internet, if I want to do something, I go to the internet, right? But two is also the user experiences, the user interfaces have kind of abstracted away a lot of the technical components, and a simple example being IP addresses, now there's human-readable domains, and many, many others. How important is it for all these different rails and all these different technologies that are being built today, which most people in the industry talk about, they kind of wave around, they say, look how shiny and innovative this is, look how cool it is, look what I made the technology do, versus, no, that's all going to go in the background, and you know, 10

• 10:13Anthony Pompliano?

  years from now, when true mass adoption is occurring, people will have no clue what we're talking about?

• 10:18Speaker 02

  Yeah, abstracting everything away is the right answer right now. Historically, the companies that make real money in the crypto space have been a bridge to the, you know, the IP of crypto effectively. So Coinbase was a bridge, OpenSea's a bridge, et cetera, and that's what we are. It's mostly been speculation to date, frankly, you know, Coinbase and OpenSea and things like that, but I think stablecoins are going to be pretty much the first use case that is not fully speculative. I mean, it is a superior payment rail to ACH your wire, especially when going in Internationally, and we want to be the first company that provides access to businesses as easy as, you know, their existing payment rails. So they think they're sending a dollar effectively and it's really going to a contractor. It's a seamless to sending a bank transfer right now.

• 11:02Anthony Pompliano?

  Yeah. How much money did you guys raise?

• 11:03Speaker 02

  We raised 22 million.

• 11:04Anthony Pompliano?

  22 million. And when did you raise the money?

• 11:07Speaker 02

  Uh, just a month ago, actually.

• 11:08Anthony Pompliano?

  Okay, so you fundraised during a market downturn. What was that process like and how did it differ from when you raised, I think in 2021?

• 11:15Speaker 02

  Yeah, 2021, like literally anyone, you say you're web three, it's over. Like here's your money. Like, and any company could do that. The thing that allowed us to raise in this market, which was egregious by the way, was the fact that we had revenue. So we were built on fundamentals. We were very close to being profitable. If we didn't have revenue, it would have been a very different story. No one was pitching on narrative right now. No one's getting deals right now, period. Like this month to the previous month is night and day. That month to the previous one is night and day. But fundamentals are very important to us, having revenue, being lean. We're only nine people.

• 11:45Speaker 02

  Yeah, that's really what, how everything's changed. Everyone cares about revenue.

• 11:48Anthony Pompliano?

  And what about the actual fundraising process? Did you have to go talk to like two or three times more investors? Was it just, no, we knew who we wanted as investors and the conversation was different?

• 11:56Speaker 02

  Yeah, we were thrilled with Tiger very early. I mean, the process took about a week. And there was intense diligence and we had, you know, we had multiple term sheets, which we're very grateful for, really, really good people, but.

• 12:06Anthony Pompliano?

  Oh yeah, people competing?

• 12:08Speaker 02

  Yeah, ultimately. Tiger was clearly like, you know, we were so thrilled. I mean, they're no nonsense. They do intense diligence, just so professional and all this. Yeah, we're very happy with them.

• 12:17Anthony Pompliano?

  What was the diligence process? Like when you, intense is a unique word to use during a diligence process. What was so intense?

• 12:22Speaker 02

  Yeah, so I mean, this is no joke. I mean, compliance is a big consideration now because a lot of the, you know, a lot of the yield apps are facing that scrutiny. We've been built compliance first from day one. So explaining that story clearly with our lawyers, with, with counsel on the other end. And there's a lot of, I mean, they make phone calls to people. 10 years in your past and the diligence. So, but yeah.

• 12:43Anthony Pompliano?

  So you're calling like old high school buddies and stuff?

• 12:45Speaker 02

  Yeah, physically. I don't know exactly who it was. Yeah, exactly.

• 12:49Anthony Pompliano?

  All right. And now talk to me about outside of just the treasury management. You mentioned kind of all corporate finance functions. So things like invoicing, like how do you think about where invoicing kind of intersects with this like brand new financial world?

• 13:02Speaker 02

  Well, yeah, you know, the 24/7 nature of like stable coins, low fee. That's just practical, right? I mean, this is like really the first non speculative use case for crypto. Besides Bitcoin being the greatest store of value in history, in my opinion. That's pretty powerful and things like contractors oversee. I mean, they prefer stable coins already. If they can get their hands on a stable coin, that's, that's what they want to do. People in Argentina, for example, the inflation is 20%. They want to hold dollars and it's a nightmare trying to get a bank account or hold dollars. So that's what we're focusing on is international payments. We think foreign exchange is really interesting as well. And basically we have the fundamental thesis that corporates and crypto is a very inevitable convergence. And if we build practical rails for them, that's, it's, you know, every, every corporate is

• 13:45Speaker 02

  going to want to use us instead of their traditional bank account ultimately.

• 13:48Anthony Pompliano?

  When you say foreign exchange, that's something that I think in crypto, most people just say, either I'm in like the crypto universe or I'm in the Bitcoin universe. There's really not any exchange between those two assets. How do you think about foreign exchange and like what you guys can do for corporations?

• 14:04Speaker 02

  So Circle just came out with a Euro stablecoin as well, right? And the markets are nowhere near as deep as traditional finance. For, For, For X is very deep for the major currencies, but feasibly if they get as deep, the, the trading pools, for example, between like USDC, USD, Euro, then you have a more efficient system. Anything done on chain involves less pen and paper, less transaction costs, 24/7, you know, weekends, you can have your money. We definitely see that happening. I mean, DeFi definitely proved that it works in this downturn. They were the ones who got paid first. They were senior on everything from all the, all the crashes. So.

• 14:39Anthony Pompliano?

  Explain that more. Like there's centralized finance, there's decentralized finance. You said that DeFi works and they got paid first. What do you mean?

• 14:47Speaker 02

  Yeah. So some of the people who pause withdrawals, for example.

• 14:51Speaker 02

  They had, they were borrowing from DeFi protocols. And if they didn't pay back those loans, they would have had their collateral liquidated. Now, in C-Fi, there's things like bankruptcy, there's cronyism, there's favoritism, et cetera. DeFi protocols are dumb in the best way. They're dumb in the best way, which means you can't call someone. You get liquidated. If you don't actually, you know, pay your interest, pay your loan back, it's over. And that's what you actually saw on chain. There is no nonsense with them. So that's product market fit. I mean, there's no question about people rehypothecating or repludging collateral in two different places. For example, it's, it's just you give the collateral in the form of Bitcoin to a DeFi protocol or ETH, and you have to pay or you get liquidated. And that was, that transparency was so key in downturns like this.

• 15:32Anthony Pompliano?

  When I hear people say that DeFi worked and C-Fi didn't, I think that is probably too much of like a reductionist perspective of like, obviously, Luna, UST, you know, those, that kind of ecosystem did not work. And then obviously, on the centralized side, there's companies, you know, take a Coinbase, right? Zero issue, all of that. So how do you think about C-Fi versus DeFi, given what we've watched play out over the last, you know, three, four months?

• 15:58Speaker 02

  So DeFi, I think, is very good at over-collateralized lending and borrowing because it can automate a lot of that. That's not a giant market, though. Ultimately, if more of this kind of lending activity takes place on chain, it's more efficient and it's at lower cost. So this world of kind of C-DeFi is coming out, which is really C-Fi but on-chain. There are protocols like Maple Finance, for example, that are, that are doing that. And when you have these protocols on-chain, you avoid pen and paper, you avoid Telegram chats, you avoid a lot of the issues. So there is certainly a place for both. DeFi is doing very well in over-collateralized right now. Under-collateralized is a different story.

• 16:32Anthony Pompliano?

  I've seen people pitching under-collateralized on-chain lending. Is that possible? And what are your thoughts in terms of how viable that will be in the DeFi world, but without the over-collateralization?

• 16:43Speaker 02

  It's extremely hard and it's not viable. Like, it's, in the long run, it probably is, but what is missing is the regulatory aspect. I mean, if someone doesn't pay you unsecured, you have to go to court ultimately. You know, you don't have my collateral if, if that happens. And so you need, we don't have, you know, police forces, we don't have court systems on-chain right now. And there's no concept of credit scores on-chain. So that's why collateral is king on-chain. That's why over-collateralized lending is, is the first kind of lending that takes place on-chain. So when you have these kind of court systems on-chain or... You know, regulatory bodies that recognize that this is a loan on chain and they come in and intervene, that's how you can do unsecured lending or credit scores on chain.

• 17:25Anthony Pompliano?

  You just said collateral is king. When the finance world of Wall Street kind of traditional system sees collateral is king on chain, why don't they all just run and be like, oh my God, we'll never lose money as long as we have over collateralized lending on chain?

• 17:39Speaker 02

  Yeah, I mean, because it's a very small market. That's not the point of credit in most cases. It's mostly, when you do collateralized lending, it's mostly for traders and there's margin lending and stuff like that. But that's nowhere near, I mean, the entire financial system runs on unsecured lending. And getting that on chain is going to be, is going to be a longer process than most people want to admit, but the over collateralized part is work is running like a clock and that's what we should be grateful for.

• 18:00Anthony Pompliano?

  Can you decentralize unsecured lending in the sense where reputation, credit scores, like all these things that we know the centralized system relies on, whether they work perfectly or not, like that is how the centralized system works. If you look at something like Bitcoin, the whole idea is that, hey, we can build these banks without rehypothecation. We can, we can essentially go back to kind of a strong financial system that isn't built on this huge credit component.

• 18:24Speaker 02

  Yep.

• 18:25Anthony Pompliano?

  Is the idea of bringing unsecured lending to the DeFi or like on-chain world, just trying to recreate some of the problems from the legacy system in the new world? Or like, how do you, how do you just think through, what are the pros and cons of doing that?

• 18:41Speaker 02

  Look, unsecured lending is going to take place, whether it's, you know, whether it's Bitcoin, whether it's ETH, whether it's dollars. It can be done more efficiently when you have basically an open API, like a compatible API everywhere, which is on-chain. So it's going to happen, whether, whether we believe in it or like it or not. And yeah, like things like decentralized credit scores and stuff, that's, I mean, it could be the case. We have big problems with like oracles right now. The truth is, what we need is like, what you would want is enforcement if someone doesn't pay you back. And there's no way to enforce it on-chain currently. You need like someone to hold you accountable, a court system or something like that. And we're a long way from that, obviously.

• 19:19Anthony Pompliano?

  One of the sayings in the Bitcoin crypto world is code is law. And to a degree, as you said, collateral is king on-chain. And so the code is the law in that scenario.

• 19:30Speaker 02

  Exactly.

• 19:31Anthony Pompliano?

  As we get more of these kind of recreation of the traditional world, like unsecured lending and many others, will some of the thought process around something like code is law change? Or is it just somebody has to figure out, how do you take the law and actually codify it so that it's enforced on-chain?

• 19:46Speaker 02

  That's a very good question. I think the Coda's law thing is its own, it's its own kind of saying, and it's a great saying, and that's why Bitcoin is like so solid, you know, there's only going to be 21 million of them. And then, yeah, for unsecured lending, it's regulatory bodies written on paper is law, as we have with the traditional financial system. So, you're exactly right. It's very different. They're two different kinds of law.

• 20:09Anthony Pompliano?

  When I think of the decentralized financial world, and I've said now for months, maybe even years, that it's not about decentralized finance, in my opinion, it's about automated finance. And the reason why is some of it will be centralized, some of it will be decentralized. You could look at, I'll, I'll use USDC as an example, second largest stablecoin, based on the last time I looked. They have centralization. They are not a decentralized stablecoin, right? But the technology is definitely superior to the legacy financial system. And so, when you look at that, is that considered DeFi? Or is that like this, you know, I call it automated finance, because now you can actually use economic value, stably backed by a dollar,

• 20:51Anthony Pompliano?

  and, and use it across the world in an automated fashion, but it's not decentralized?

• 20:56Speaker 02

  Yep, you're exactly right. Yeah, I was using the word efficient, you're using the word automated. It's exactly right. That's what we're talking about here. I mean, there's the hard assets like Bitcoin, then there's the efficiency automated aspect of the centralized world, and you can cut so many costs. I mean, the internet, what it did for efficiency, the internet was really just an efficiency improvement at the end of the day, right? So, like, I don't love the internet web three comparisons necessarily, but the efficiency improvements from kind of the crypto world is going to change the world as well, just from the efficiency improvements, not because we're recreating what government is, or think, like, we have more data on what government is than anything in the world. It's the efficiency automation that is extremely, extremely valuable.

• 21:33Anthony Pompliano?

  The Bitcoin world would argue decentralization is really important for security. Obviously, Bitcoin is the most decentralized network in the world, it's the most secure computer network in the world. As you mentioned earlier, it has proven to be a fantastic store of value over a long period of time, you know, decade plus. Most of the other components of the industry, they talk about decentralization. If you go and talk to regulators, they have this concept of a dino decentralized in name only. There's an idea within the community of like a spectrum of decentralization. It starts out centralized and eventually will become decentralized. But it sounds like you're actually making a different argument, which is like, maybe the ultimate goal of some of this technology is not decentralization.

• 22:16Anthony Pompliano?

  Because the security component of it isn't nearly as important as the efficiency. Like, if you think of those two as a trade offs, you get security or you get efficiency at the layer one. It sounds like you're making, no, the efficiencies where there's tons of value to unlock.

• 22:26Speaker 02

  Yeah, I'm not sure there's a ton of value to decentralize the US dollar. If people want to send US dollars, they could do it more effectively. Yeah, we've seen that. We've seen people try to do that before. But yeah, for the Bitcoin world, that is the most important thing. Decentralization is king. Bitcoin is just a child safety lock. We're protecting ourselves from ourselves, and that's why it exists. And that's why it's going to be tens of trillions, hundreds of trillions of dollar asset. But for the US dollar, I mean, businesses want to send US dollars places. Like, that's the world we live in currently, and you have a way more efficient way to do it. There's no need to be cosmic brained about this. I mean, a dollar is a dollar. There's going to be centralization on the backend. Now, if that entire kind of regime is going to fall, that's a different conversation. But yeah, there's no need to decentral. I mean, you just need reliable kind of proof of reserves. You need an easy on-ramp for that.

• 23:09Speaker 02

  And you get more people involved in the ecosystem, that's good for Bitcoin ultimately, which is a decentralized store of value that we have.

• 23:14Anthony Pompliano?

  You mentioned that Bitcoin is a child safety lock. What does Bitcoin as a child safety lock mean?

• 23:21Speaker 02

  It's, you know, it's, it's just, there's a fixed money supply in Bitcoin, and we can't bring ourselves to do that. It's like that CNN limitless where he says, oh, you know, there's no, there's no safeguards for human nature. You know, why don't we just like crack a beer and live off the interest? We can't do that. That's, that's the innovation of Bitcoin is we are preventing ourselves from inflating the currency. There's no way to change the currency value.

• 23:42Speaker 02

  That is a child safety lock, and that's why it's valuable, just protecting humanity from its worst inclinations.

• 23:46Anthony Pompliano?

  So I think you, myself, many people who are watching this, they get that. Do the corporations yet understand this? Or are they so focused on efficiency and the kind of the conservative approach to their balance sheets? That that is a secondary thought they may have later, but right now they're just focused on dollars?

• 24:00Speaker 02

  The truth, I would love to have a company that like 24/7 focuses on Bitcoin and the balance sheet. But it wouldn't be much of a company. Like we wouldn't do a series A. We have that as an option. We kind of, you know, nudge people like, hey, Bitcoin's great, right? So we're gonna, we're gonna do our part there, just to be clear. But what they care about is 24/7 settlement right now of US dollars, low fee transacting, things they can't get from Fedwire and ACH, things they can't get from their legacy bank accounts. So we are at now, we believe we've built a better solution for them, and that's largely on the US dollar rails, with the ability to buy Bitcoin seamlessly from that same account.

• 24:34Anthony Pompliano?

  What about things like payroll? Like, one of the big problems in the legacy financial system is that people only get paid every other week, so, you know, twice a month, or once a month. And there's tons and tons of studies that show, I think it was in 2019, the top four banks made like $8 billion of overdraft fees. And when you go and you actually analyze those overdraft fees, in many cases, it's not that the people don't have the money, it's that their grocery bill came in on the 12th, then their car payment came in on the 13th, Netflix says on the 14th, bam, they get paid on the 15th, but they actually overdrafted on the 13th and 14th because the paycheck hadn't hit yet. And so if we were simply able to pay people at the end of every day, it would drastically eliminate, one, the overdraft fees and that kind of whole part of the legacy banking system, but also, two, is it would give people more economic freedom and flexibility.

• 25:19Anthony Pompliano?

  And so is that something that stablecoins or kind of these crypto rails could help solve?

• 25:23Speaker 02

  Yep, certainly. You can't really do that in legacy finance. I mean, it's not, it's not a good UX. Things like Layer 2s can help with that. Right now, the gas is too high to do like microtransactions on a fraction of a USDC.

• 25:34Speaker 02

  But things like Layer 2s can help, and you can even do that, you know, partially in a database, partially on-chain. But yeah, you're certainly right. That's, that's a real use case. Like, when we talk about real use cases, I think stablecoins are dominating for legacy finance. Stablecoins are, are king, and we, we see their adoption about to blow up in a good way. And I think that's ultimately very, very good for Bitcoin. I mean, it gets everyone thinking about this space, and they start thinking, okay, this is how I'm using my payment rails. There's a much easier way to buy Bitcoin now with this, and that's, that's kind of where we, where we plug into that, too.

• 26:03Anthony Pompliano?

  You mentioned that you guys only have nine employees. That's a small number compared to many other companies that we've seen, both in the crypto ecosystem, but also just in technology in general. Why do you only have nine employees? And what the hell do they do?

• 26:13Speaker 02

  My co-founder says when everyone says it has a slightly uncomfortable amount of work, then you're at peak efficiency and everyone's slightly uncomfortable with the amount of work we have. And it's very much a FTX model. I mean, FTX, there's rumors that there are 20 people, there's rumors that there are 60. I don't know exactly how many, but they punch above their weight.

• 26:27Anthony Pompliano?

  It's like 250 to 400.

• 26:29Speaker 02

  Is it really? Okay, that's good to know. I like that. I like.

• 26:31Anthony Pompliano?

  It's a moving, it's a moving target. And I think that actually part of the beauty is that they don't want people to know.

• 26:35Speaker 02

  Yeah, exactly.

• 26:36Anthony Pompliano?

  And everyone thinks they have 20 people.

• 26:37Speaker 02

  The lore is fantastic. But I mean, you have things like automated infrastructure you can stand up and tear down in AWS. You have partners that eliminate the complexity. This is not like, it's much easier to build a company now than it was in 2004, when you'd have to build your own servers and bring them into your apartment or something like that. So if everyone's busy 24/7, you got a very good system and that gets us to profitability, that gets us to a lot of things sooner. It's the only way to build a company right now, I think.

• 27:00Anthony Pompliano?

  Yeah. When you were out fundraising, what part of the business did people get most excited about? Was it that what you've already built and kind of let's go scale this to the world? Or was it, okay, this is a great start. This will get people kind of on boarded and then let's go build out all the, the technology and services around it for the rest of corporate finance?

• 27:16Speaker 02

  Yeah, it was a little bit of both. What they got very excited about was compliance. No one was pitching compliance to them on the corporate treasury side. They got a lot of pitches. And the other thing that excited them was going after, you know, when I told them, you know, treasury angle is very much a wedge to get into the entire corporate finance stack, things like payroll, things like invoicing, things like spend. That excites them because they know when you have a superior payment rail, lower cost one, you can pretty much beat all the incumbents, which are, you know, deck of coins on margin. You have a lower cost way to do things and you can pass those savings on to your customers. So yeah, they were, they were excited about that part for sure.

• 27:53Anthony Pompliano?

  When you guys go sell the product into some of these corporations, who's making the buy decisions? CFOs, CEOs? Is it a combination?

• 28:00Speaker 02

  Yeah. On the treasury side, if it's like a series A company or earlier, it's very founder led. Now, when you get to series B, series C, the founder has sway, a lot of sway, but it comes down to the VP of finance or CFO at that point. And the things that they care about are very different. So at the seed and series A level, they might like partially over collateralized offerings. And when you get, you know, into bigger companies, they want fully over collateralized. Like we have an offering where we have 150% collateral in Bitcoin against any dollars that we loan out. So that one has really good product market fit with like the series B, series Cs, et cetera.

• 28:30Anthony Pompliano?

  And when you start to think about your process of selling, the company's name is Meow. That sounds insane, but also is memorable. Why did you name it that? What was that process like? And then have you had anyone be like, we can't take you seriously because your name's Meow?

• 28:43Speaker 02

  Yeah, and you know, we had no business naming the parent entity Meow Technologies Inc. When we started out, that made it really hard to get bank accounts and stuff like that. But there's like an S curve value to this name. We know what we're doing here. I mean, ultimately, it's a name that can be anything. It's a name that's in a high entropy space like the crypto world. You need to be able to be nimble. And it's kind of a burn the boats name, you know, like we have to succeed. Like there's no, it's not a hedge. Like we're telling everyone the name's Meow, and so we have to succeed. So that's the idea there. And it's memorable and the shirts are soft. So that's, that's the plan.

• 29:16Anthony Pompliano?

  Has anyone said anything, any customers been like, is this a real company? Or like?

• 29:21Speaker 02

  You know, it's, the people who were actually turned off by it are the people who never would have been customers in the first place. They're like the Wall Street people who would, they like to pretend that they were, you know, oh, they would have explored this, but the name is Meow, I can't take it. They were never going to be like, they're never open minded enough to do this kind of thing.

• 29:37Anthony Pompliano?

  Yeah.

• 29:37Speaker 02

  But no, people like the brand and I think we've, you know, we have product market fit. So I think we're past the hard part now.

• 29:43Anthony Pompliano?

  How do you measure that you have product market fit?

• 29:44Speaker 02

  I mean, the revenue and the metrics, like in the bear market, like I don't think there's many funding announcements in like June, May, obviously. So that was based on solid fundamentals. We don't take that for granted. We care about the customer very much here.

• 29:56Anthony Pompliano?

  What are the metrics that you look at on like a day to day basis that you find most interesting?

• 30:00Speaker 02

  Things like AUM, things like, you know, our conservative kind of risk management approach, like protected all customer funds, like every single penny. We didn't lose a penny for customers in this downturn. Things like revenue, month over month growth. And yeah, now we get to, now that we have like, you know, a lot of runway, the ability to scale the team, we can do the more ambitious swings for pay and spend. We have free USDC on our site, which a lot of companies don't have.

• 30:23Anthony Pompliano?

  Where's that mean?

• 30:24Speaker 02

  It's like you can, you can, from your cash account, you can send USDC at no gas, no, like no 2% trading fee or something like that. And it's really just like Circle and Coinbase that have that. And we're Coinbase is a great company, but they're not targeting corporates.

• 30:37Anthony Pompliano?

  Of course.

• 30:37Speaker 02

  They care about the top 50 institutions in the world, like the biggest 50 hedge funds, for example, and retail. So there's this corporate gap, which is just totally underserved in the market because no one thought it was a real market.

• 30:47Speaker 02

  And that's because retail is the early adopter to things. And we come around and we say, there's a corporate market. And that's kind of what we're focusing on.

• 30:53Anthony Pompliano?

  And when you look at the customer base today, do they start out with like 1%, and then go to 2%, and then 4%, and 6%, and they're growing into it? Or do they just show up and they're like, hey, let's do 10%?

• 31:05Speaker 02

  Some people get their feet wet with like 5% of their treasury, et cetera, and they grow to like a 10%, 20%. Some people like to go 60%. There is a scaling up. There is the build the trust relationship. And that's very important to us because we want to be around. We want to grow with them. That's why we also like serving startups that raise like 6 million, 7 million, because we get to grow with them. When they do their subsequent raise, we're around as well.

• 31:26Anthony Pompliano?

  Yeah.

• 31:26Speaker 02

  And to be part of their picture of the treasury effectively.

• 31:29Anthony Pompliano?

  That makes sense. You mentioned revenue. That's a wild concept for some folks to wrap their heads around. I know. How do you guys make money?

• 31:38Speaker 02

  We're able to take the difference in the interest that we pass back. But ultimately, we think it could be a sash play with the suite of offerings that we have for corporates. And just, yeah, we're going to go head to head with the big dog soon, I think. I mean, we...

• 31:51Anthony Pompliano?

  What does that mean?

• 31:53Speaker 02

  I think the Dec coins...

• 31:53Anthony Pompliano?

  Call them out. Let's go. Who are you going head to head with? We're going to war. Let's know who the enemy is.

• 32:00Speaker 02

  Things like Brex, for example. You know, like one of our branding, like our value props is like Web 3 Brex. That's kind of what we're going for.

• 32:07Anthony Pompliano?

  Why don't they do this?

• 32:08Speaker 02

  They're a great company, just to be clear. They're great. We think we can make a wedge that is kind of Web 3. And they can. But we serve different markets to some extent. We just want to be like head to head with these people. And I think we have the wherewithal to do that.

• 32:22Anthony Pompliano?

  Got it. I'm an investor in ramps. It'd be nice to...

• 32:25Speaker 02

  Oh, ramps. Yeah, they're both great companies.

• 32:26Anthony Pompliano?

  Yeah, Brex. No, I'm joking. When you start to think about this market specifically, you mentioned regulation earlier. What needs to change in order for people to get more comfortable to actually start to use some of this technology?

• 32:41Speaker 02

  I think it'll happen. I don't think it'll, I think regulation won't come as quickly as everyone wants. I think there's a lot of pending lawsuits that, that the SEC, for example, wants to see resolved before they make a larger, you know, statement or make things super easy. But I do think there should be a little bit more transparency in these CFI companies of what they're doing with the funds. Like the Terms of Service will say, oh, we kind of use yearn, we kind of use yearn and they're offering like 6% and yearn would be offering 1.2% at the time. So in our heads, when we saw that, we're like, what's going on here? Someone needs to keep these people accountable. You know, whether, whether your ethos is that's like a regulatory body or it's like kind of pure policing, there has to be more accountability, certainly.

• 33:19Anthony Pompliano?

  Yeah, that makes sense. What's your like 30 second pitch on anyone who's watching this that they say, hey, I want to learn more about this. Who's it for? And what do you guys do?

• 33:30Speaker 02

  Yeah. If, if your business wants, you know, free access to USDC, compliant way to buy and sell crypto and hold it, or a compliant high yield strategy in dollars, you can go to meow.co and sign up and we'd love to, we'd love to chat with you. That's the website.

• 33:43Anthony Pompliano?

  Meow.co is still the name. Name cracks me up.

• 33:48Speaker 02

  We have XYZ too.

• 33:48Anthony Pompliano?

  Meow dot XYZ?

• 33:50Speaker 02

  Yeah, it's like the web three thing.

• 33:51Anthony Pompliano?

  Yeah. By the way, the guy who, I know a guy who had the dot co, like domain ending. And that was the business was go convince everyone to buy dot co's and he targeted the startup world. That's why I took over in the startup world. He was explaining to me, and he's like, yeah, I took a dot co and I ran around and we went to accelerators and like all the stuff. And we're like, hey, you go try to buy the dot com, but the dot com's like, you know, expensive. Instead, why don't you get the dot co? And you want to know what the breakthrough for them was?

• 34:22Speaker 02

  What happened?

• 34:22Anthony Pompliano?

  Twitter deal.

• 34:23Speaker 02

  Really?

• 34:23Anthony Pompliano?

  If you ever see a shortened Twitter URL, it's T dot C O.

• 34:28Speaker 02

  Interesting. Yeah.

• 34:28Anthony Pompliano?

  And he's like, and then it exploded because if it's good enough for Twitter, right? Then every startup is like, hey, I guess I could use that too.

• 34:33Speaker 02

  The doc was like Columbia, right? That's, I think that's where it comes from.

• 34:36Anthony Pompliano?

  Yeah, whatever it was, right? So it's like when you learn about how some of the stuff works somewhere to you all, right? It's like one or two deals and then

• 34:42Speaker 02

  Exactly right.

• 34:43Anthony Pompliano?

  It's game on.

• 34:43Speaker 02

  Yeah, we don't need dot com. It's fine.

• 34:44Anthony Pompliano?

  Trust me, the guy or woman who owns meow.com is sitting there saying, somebody's going to pay me a lot of money for this one day.

• 34:52Speaker 02

  We explored it.

• 34:53Anthony Pompliano?

  How much was it?

• 34:55Speaker 02

  It was a million plus. It's not happening.

• 34:56Anthony Pompliano?

  A million dollars from meow.com?

• 34:59Speaker 02

  Yeah.

• 34:59Anthony Pompliano?

  I don't know if I'm surprised that, that it's over a million because that's high or low.

• 35:03Speaker 02

  I think it's like right around like, but we're not gonna do it. So yeah, they can, you know, if you guys want to play ball.

• 35:09Anthony Pompliano?

  You, you, well, uh, I've seen people even do like a little equity exchange. Like, hey, rent it to us. We, we'll use, uh, we'll use it. We'll give you like, you know, 50K, 100K of equity. And, uh, if we become the next Facebook, then like you're a genius. If not, then like you still own the domain.

• 35:24Speaker 02

  We, we, we wouldn't do that, unfortunately.

• 35:27Anthony Pompliano?

  I tried to help you. Uh, all right. Where can we send people to find you on the internet?

• 35:31Speaker 02

  Yeah. Uh, join meow is our Twitter handle. Check it out. That's me. It's my last name. It's a killer. It's Arvinaagi. Uh, but join me as our handle. We'd love to chat with you. If you have any questions, just talk to us. Uh, we're happy to explain the space, explain what we do. Um, yeah. If you need USDC or you need to, you know, high yield strategies for your treasury, uh, yeah, we'd love to chat.

• 35:49Anthony Pompliano?

  Arvinaagi?

• 35:50Speaker 02

  Arvinaagi, yeah.

• 35:51Anthony Pompliano?

  You know how many times I've said your last name and I never said it right?

• 35:53Speaker 02

  Have you actually said my name? It's always Brandon. This is Brandon.

• 35:55Anthony Pompliano?

  Well, cause I, listen, here's a secret. If I see a last name I don't know, I'm not even first, first rule of content is don't make a fool of yourself by trying to pronounce people's last names. Uh, last question for you is, uh, given the bear market, sleep schedule, has it changed at all since last time? One of the sponsors is Eight Sleep. I slept eight and a half hours last night. So I feel like a fucking boss right now. What, what's your sleep schedule changes, uh, in Bull or Bear Market?

• 36:18Speaker 02

  Yeah, no, bear market's quieter. I guess you sleep longer. Eight Sleep, I have that too. So let me, yeah, it's great, great product.

• 36:23Anthony Pompliano?

  You sleep longer during bear market. So you're not as worried because you're like, oh, there's not so much noise.

• 36:27Speaker 02

  It's quieter. Yeah. It's just, no, it's not about worry or anything. It's just like quieter. You don't get as many like people like the, the looky loo's go away in the bear market. You know, there's, there's

• 36:34Anthony Pompliano?

  That is true.

• 36:34Speaker 02

  It's just us again, you know?

• 36:35Anthony Pompliano?

  Yeah. It's the people who have been here and are gonna be here in the future. Not the, uh, uh, we're both in Miami and, uh, what was, uh, Art Basel, Bezel, however you say it?

• 36:44Speaker 02

  Basel.

• 36:44Anthony Pompliano?

  Uh, Basel. Obviously I can't speak English. Um, but, uh, when that came to Miami and the like NFT crowd and all that, I literally was like, this is insane.

• 36:54Speaker 02

  You can't do it. Yeah.

• 36:55Anthony Pompliano?

  There was people with yacht parties and this party and that party and everything. And it's like

• 36:59Speaker 02

  Too much. Yeah. We, we deserve the crowd.

• 37:02Anthony Pompliano?

  This probably is not gonna be acceptable. Um, all right, man. Thank you so much for doing, congratulations on the fundraiser and anyone who wants to go check it out, go to meow.co and, uh, and learn more, but I appreciate you coming on.

• 37:12Speaker 02

  Thanks a lot, Tom.

• 37:13Anthony Pompliano?

  All right.