Ryan Lovell – Chainlink: The Infrastructure Pipes for Multi-Chain Finance (EP.491)

Ryan Lovell is the Director of Capital Markets at Chainlink Labs, where he leads the development of blockchain-based solutions for tokenized finance across banking and capital markets. Chainlink has powered more than $28 trillion in transaction value and powers the majority of decentralized finance. Our conversation explores the hidden plumbing of modern finance and the upgrade blockchains provide. We discuss Chainlink's critical role in connecting traditional finance with blockchain technology, the rise of tokenization and stablecoins, institutional adoption, and the intersection of AI and blockchains around a single source of truth for financial transactions. Learn More Follow Ted on Twitter at @tseides https://twitter.com/tseides?lang=en or LinkedIn https://www.linkedin.com/in/tedseides/ Subscribe to the mailing list https://capitalallocators.com/ Access Transcript with Premium Membership https://capitalallocators.com/signup Editing and post-production work for this episode was provided by The Podcast Consultant (⁠ https://thepodcastconsultant.com/https://thepodcastconsultant.com https://thepodcastconsultant.com/⁠ https://thepodcastconsultant.com/)

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

• 0:00Speaker 00

  If you think about what tokenization means, it means you're representing almost a legal claim in equity or fixed income into software, which is a smart contract owned by the issuer of that asset. We've now have this paradigm shift of it's not just the database entry that has Ryan owns 100 shares of XYZ. The entire representation of that asset is software. If that software can interact with other software, you can do a lot of interesting

• 0:36Speaker 00

  things that you were never able to do before on a 24 by seven, always on settlement system that has a lot of this permissionless innovation. If you think of blockchains as factories and data as oil, you need to get the oil to the factory in a highly secure, reliable, compliant way. We're the pipes that carry that oil. Without reliable data onto a blockchain, you can't build an application. That's the fundamental problem that Chainlink solved.

• 1:18Ted Seides?

  I'm Ted Seides and this is Capital Allocators. My guest on today's show is Ryan Lovell, the Director of Capital Markets at Chainlink Labs, where he leads the development of blockchain-based solutions for tokenized finance across banking and capital markets. Chainlink has powered more than $28 trillion in transaction value and powers the majority of decentralized finance. Our conversation explores the hidden plumbing of modern finance and the upgrade blockchains provide. We discuss Chainlink's critical role in connecting traditional finance with blockchain technology, the rise of tokenization in stablecoins, institutional adoption, and

• 2:02Ted Seides?

  the intersection of AI and blockchains around a single source of truth for financial transactions.

• 2:09Ted Seides?

  Before we get going, I recently returned from a week's ski vacation to Switzerland with my son Eric, the same son who shared his serendipitous encounter with the podcast last week. Snow conditions have been challenging almost everywhere this season, but we were excited to travel to Europe for the first time to ski. Our trip there back was full-on trains, planes, and automobiles. We got a taste of the beauty, food, and culture that everyone raves about in Zermatt. As for skiing, between snow conditions we're accustomed to in Vermont and a white-out blizzard our last two days, we only got two full days of skiing. But we certainly left the mountain better off than we found it for skiers the

• 2:53Ted Seides?

  next week. It would be safe to question my sanity for making the long trip to ski only two days, but the truth is, the number of full weeks I have left one-on-one with my 16-year-old son are numbered. So I took in every moment, even when our plans for an active week were shot. What we did have was plenty of time to listen to podcasts, although, as you may have heard last week, Eric wasn't about to listen to capital allocators. But that's okay. He's happy to encourage you to listen and to tell your friends and their friends to listen. What he doesn't know is that process will inevitably get back to him through his friend's parents, offering another opportunity for him to think twice. And one day, one day, just maybe, he'll listen too. Thanks so much for starting

• 3:37Ted Seides?

  a butterfly effect by spreading the word about capital allocators. That butterfly may be flapping its wings in the winter in Switzerland and one day find its way to Eric. Please enjoy my conversation with Ryan Lovell. Ryan, thanks so much for joining me.

• 3:55Speaker 00

  Pleased to be here.

• 3:56Ted Seides?

  I'd love you to take me through your path that ultimately led to you moving over to blockchain technologies and chain link.

• 4:04Speaker 00

  I was a marketing major during the financial crisis. When that was happening, everyone gravitated towards trying to understand why TARP failed the first time. Hank Paulson was up there begging everyone, I need $700 billion to save the world. When you're in college at that time, I was like, this sounds exciting and chaotic versus marketing. So I completely changed majors to finance. I had a great professor who had a great sense of humor. I'm always attracted to people that can enhance very boring topics with humor.

• 4:43Speaker 00

  Discounted cash flows, Excel sheets, CAPM, pricing models, some of the most boring topics humanly possible, but this professor just made it really exciting for me. So Central Pennsylvania didn't really have Wall Street aspirations, but back in the day, if you didn't go to, quote unquote, the target schools, Princeton, Harvard, Yale, it was hard to break into that type of job at a college. Vanguard presented an interesting opportunity. This was 2011, so they had 1 trillion in assets under management. I launched a very interesting team that catered to crazy institutional custom products.

• 5:28Speaker 00

  An example would be Amazon would come there and say, all this indexing stuff is super great, but I want something crazy, like a custom, stable value, actively managed, separately managed account thing. None of the existing systems could handle that because it wasn't scalable. But if you work in an institutional sales team and a large asset manager, and you're trying to bring in Amazon, Microsoft, you'll say anything. You'll say, yeah, I'll do that, which ultimately may bite you later. The idea was that, I know they have all this crazy stuff. We'll convince them to go into the normal, boring, off the shelf.

• 6:09Speaker 00

  Passively managed products, which didn't always come to fruition. So there's this big company, 20,000 people. It's all in Malibu, Pennsylvania. But I felt like I was a startup within a big company. Because this small group of folks at Vanguard managed the entire end to end portfolio management, middle office, back office, client reporting, talking with clients. Typically in a passive fund, you'd break all that out within seven or eight different teams. Everyone was specialized. What it afforded me is this is how the sausage is made. All facets of front, middle and back office. The closer and more curious you become on how the plumbing works,

• 6:54Speaker 00

  the bigger the gravitational pull that brings you to blockchain technology. Ultimately, finance is numbers in, numbers out. If you've ever seen their spaghetti diagrams of how everything works, it's millions of lines that connect to everything. I found that more interesting, which pushed me into a direction of programming, computer science. Most people, when they're using Excel, they're programming and they don't know it. It's possibly the greatest piece of software ever made. The moment you figure out how VBA works and you start coding it, it's like you figured out some wild magic trick.

• 7:34Speaker 00

  That was the gateway into programming coupled with curiosity around how the systems work. There was bootcamps online that taught yourself different types of object oriented programming. So that's what I did. At Vanguard, there was in the front office, a team that was spun up around 2017 to take a look at emerging technologies and how to best compare what the technology stack that's being used today to what the future could look like. Back then, it wasn't AI. It was big data, even looked at augmented reality. It was the future trader.

• 8:15Speaker 00

  Have you seen that scene from Monari Report where Tom Cruise is talking to the precogs? We were testing augmented reality and then my role was focusing on blockchain technology. So this is 2017, 2018. I had the privilege to be that early in this space. And also the privilege of working for an unbelievable team that was given the mandate to push the needle forward. Because at that time, this was probably eight years into my career. It was no longer 1 trillion, it was 5 trillion. So all you had to do was save a pip or a basis point and you would be 20, 30 million dollars. So the carrot was there to create a lot of impact.

• 9:00Speaker 00

  It all sounds good in paper, but in practice, there was a lot of experience I learned around the politics of navigating not only an internal organization, but also service providers. Custody for digital assets wasn't even a thing. What do you mean I'm going to manage a private key and I'm going to have a claim on a digital asset? All of that to say, it was unbelievable experience and a really good foray into this space. In 2017, there was this idea that there would be three blockchains. Most people have heard of Ethereum. A lot of banks were investing in certain private blockchains. There were certain alliances.

• 9:44Speaker 00

  When I was working at Vanguard, I was thinking, there's probably going to be a lot more blockchains than just three. How do I want to best position myself to be truly agnostic to the type of blockchain technology? And Chainlink was

• 10:02Speaker 00

  An easy answer. There's been many, shall I call them extinction events in our industry, where certain bad things happen and bad actors get carried out with the tide. But talking with our co-founder Sergey Nazarov and the team that he built was unbelievably impressive. Even in 2018, 2019, you could tell this wasn't the type of firm that had a temporary, short-term outlook. Sergey devoted his life and his intentions on how the world is going to work in the future. I was completely sold and I've been here for four years,

• 10:44Speaker 00

  working with the same type of institutions that I came from in helping them build out their journey on specific use cases that they're excited about. I'd like to think that the bet I made four years ago was directionally correct and we are at the infancy of all of this becoming a major part of society and how the future works.

• 11:09Ted Seides?

  What's the role that Chainlink plays in the ecosystem?

• 11:14Speaker 00

  If you think of blockchains as factories and data as oil, you need to get the oil to the factory in a highly secure, reliable, compliant way. We're the pipes that carry that oil. Now, there's not just one factory. There's multiple factories. This is something I learned firsthand at Vanguard. But without reliable data onto a blockchain, you can't build an application. That's the fundamental problem that Chainlink solved. Now, the problem we first solved is that blockchains are like walled gardens. They're very good at creating tokens, validating tokens,

• 11:55Speaker 00

  validating that Ted owns those tokens and Ryan exists and validates that transaction occurred through consensus. But for you and I, Ted, to build anything of value outside of creating tokens and moving tokens, you need to bring reliable data into that blockchain system in a decentralized way. Because if we just relied on a single API, That API could fall over and the application that you and I have built is essentially useless. Steve Jobs says the computer is like the bicycle for the mind. DeFi is like the financial bicycle for the folks that majored in finance, understand computers.

• 12:39Speaker 00

  It's completely open and permissionless ideation and deployment. What we've been able to see is providing the developers that have these ideas, giving them the trusted, reliable data to build those applications, has proved to be another type of paradigm shift in how the future of finance can potentially work. We sit all around the edges of the blockchain to ensure that developers can build these feature-rich applications that are truly groundbreaking.

• 13:13Ted Seides?

  If you think about a pipe transporting oil, what makes it technologically difficult for you to be able to do that in a way that others couldn't?

• 13:24Speaker 00

  A lot of the documentation of these specific blockchains isn't easily consumed from your average developer. There's a tremendous amount of research and development that has to go in to how that system works. Each blockchain has features that are specific to that blockchain. There are different types of protocols and languages that each blockchain uses. There's the world of Ethereum, which has their version of the computer, the Ethereum virtual machine. There's, for instance, Solana, who has their version of the world and the Solana virtual machine, EVM, SVM.

• 14:10Speaker 00

  And then there's a lot of emerging blockchain technologies like Canton, for instance, that uses a completely different type of technology. Those are three blockchains, just as a simple example. Learn about all the complexities in a reliable way, how all this idiosyncratic risks and understandings of how all of those systems works. It's a valuable thing that. We provide these essentially middleware services to ensure that that pipe is always going to work. There's a coordination within our middleware that is decentralized. To be clear, Chainlink doesn't run the software itself.

• 14:55Speaker 00

  We have tier one teams that run the nodes of the technology, such as T-Systems, Deutsche Telekom's, companies that are very good at running infrastructure. If you chose the redundancy and the value proposition of that system, the moment you decide to pick a single data point to feed that system, you've eliminated the purpose of why you chose that system to settle that value. It's a highly complicated thing that we have six years of production. This system has facilitated over 27 trillion in US dollar transactions,

• 15:37Speaker 00

  where people come to us because of that track record.

• 15:42Ted Seides?

  Who is it that's coming to you?

• 15:44Speaker 00

  The customers are DeFi. We power the majority of DeFi. We have tier one customers like Ave, who run borrowing and lending protocols that come to us and say, "I need highly reliable data because I secured $40 billion in value." There's also the blockchains themselves. When you launch a blockchain, which has been a popular thing to do over the past three, four, or five years, they want to attract utility venues. It's great that if you just create tokens, it's like, now what? You need utility. Utility is DeFi.

• 16:27Speaker 00

  There's a metric around the blockchains called total value locked, which is similar to an AUM, but the value locked is almost the trust in that system and the security of that system. The very moment you integrate Chainlink, that total value locked metric goes into a hockey Stick because people that have tokens all of a sudden can do things with those tokens. Decentralized finance, borrow, lend, earn yield, stake. So that's one aspect of the market. The other aspect of the market is traditional finance firms that want to work with us in several different ways. One is existing systems aren't going away anytime soon.

• 17:11Speaker 00

  There's too much value on those systems. There's messaging standards that have existed for over 50 years. A delivery versus payment swift message, why would you change that? It's a standard. So a lot of these existing traditional financial firms want to provide their customer base connectivity into this multi-chain world using their existing systems. They want to make that integration to extend the capabilities of their existing systems with a layer of blockchain connectivity. The other aspect of this is cross-chain interoperability. If I'm a token issuer today and I issue on just one blockchain,

• 17:54Speaker 00

  I am limiting the reach of that specifically to only the user base of that blockchain. A lot of people think the internet is one giant network. That's not true. There are several different public zones and there are several different private zones. TCP IP as a standard of messaging connects all of those different zones to be able to create transactions. Now, in the internet world, it's not transactions, it's message packets sending all around these different zones. But when you go into different zones, there's a different set of rules. If you go in the private zone, the compliance goes up.

• 18:36Speaker 00

  A lot of banks, a lot of FMIs have started their journey in the private chain world. People come to us for that connectivity. I need the TCP IP to be able to connect in a standardized, secure way, all of these different zones, because I'm not just servicing one internet. I'm servicing many different ecosystems and those ecosystems have wallets. Wallets are like the new brokerage account. I may have a wallet on this blockchain. I may have a different wallet on that blockchain. The story of fragmentation is going to be a continued theme. But we make all of this fragmentation and technical complexity very simple.

• 19:17Speaker 00

  And we are this single integration into all of this complicated world of fragmentation. The final piece is connecting both of those customer bases. And you're starting to see that now. When you just issue a token, we've solved, let's say, 25% of the problem. The other portion of that problem is giving it utility. Everything I talked about, those applications, Ted and Ryan can think of some crazy idea and we would build an application there. But there is this need for KYC AML compliance. You can't just have users interacting with a pool of customers at a bank or asset manager.

• 19:59Speaker 00

  You have an automated compliance engine, for example, because a blockchain wallet is just a random anonymous letter and string. We've created a lot of cool tools that allow the traditional finance folks to tap into that permissionless innovation in a compliant way. That's where we see a lot of traction now.

• 20:21Ted Seides?

  As in the last couple of years, AI has exploded. A lot of the crypto blockchain buzz has quieted down. I'd love to hear what's been happening behind the scenes. $27 trillion, that's a large number. So what are you seeing that you're able to power that have taken off the last couple of years?

• 20:43Speaker 00

  If we zoom out to talk about AI and blockchains, they're very complementary. You have to look at the origin story of both.

• 20:55Speaker 00

  AI comes from academia, big tech, going back to the big data story. Everyone's been through their big data moment. I went to AWS, I have this giant Snowflake database. AI comes from a different spot than this technology. This technology didn't come from academia. In fact, a lot of academia didn't have very positive things to say about this technology. It certainly didn't come from big tech. However, you're starting to see the light. When I see that AI is taking a lot of the mind share. AI is good at cheaply producing outputs that's hard to verify. It's a bit of a black box, isn't it?

• 21:40Speaker 00

  We're going down this path of it's becoming very cheap to impersonate people through video and audio. It's becoming very cheap to listen to this podcast and get a transcript. Maybe redo it and say, Ryan said that. We're headed into this path of there's an overabundance of information that is not quality. It's hard to tell what the truth is. If you look at the foundational value proposition of blockchains, it is a single source of truth. It is a unified golden record. I often say, if you ask seven different countries what the color of the sky is, you may get seven different answers.

• 22:23Speaker 00

  But if you ask them, what is the state of a fully decentralized blockchain? There's no rebuttal. It's a globally append-only database. Now, if you take both of those themes, over the next five to 10 years, I see both of these technologies being extremely complementary. We're at the infancy in how they work together. I'll give you a good example. Corporate actions for the United States equity and fixed income market is crazy. There's no standardization. You're the treasurer of Apple or Nvidia,

• 23:05Speaker 00

  and you need to announce to the world that there's going to be a 100 to 1 share split. You take human readable documents and you write paragraphs.

• 23:17Speaker 00

  And then your legal team goes into that Word doc and says, you shouldn't say this, say this, say this, blah, blah, blah. Then you take that human readable, more or less piece of paper and you email it to all these different people. We've taken a single piece of information. We've sent it to, let's say, 20 other people and they look at that email and then they rewrite it into their own version of what the corporate action share split is. Then it gets worse because as an asset owner or an asset manager who works with many of these different service providers, they all tell them, here's my version of this.

• 23:57Speaker 00

  One of the big industry initiatives that we've worked on with huge CSDs, banks and asset managers, the likes of DTCC, Euroclear, Swift, Wellington, UBS, I called farm to table data distribution, where you don't have to convince the treasurer of Apple or Nvidia to change their process. They never will. What you can do is use AI to look at the document and say, I'm going to output this into a standard format. What's the identifier? What's the share split? What are the critical dates?

• 24:37Speaker 00

  I'm going to post that as a single source of truth onto a blockchain. We've just cut out all the noise. They all can create value in having that unified golden record because it's validated from the source. One of the other cool things we did is that a lot of these different AI models, as good as they get, they still can hallucinate. It seems like every three months or so, there's a new leader in AI. Google wasn't there. Now Google's in the conversation, when six months ago, they weren't in the conversation. Through our technology, we were able to have the AI models reach consensus on that single piece of data that is the share split 10 to 1.

• 25:21Speaker 00

  OpenAI, yes. Anthropic, yes. Google, yes. We posted that on a blockchain as a unified golden record. Everyone is excited about that because if someone can go in and validate or attest to it that the AI is correct, could even be AI itself in the future, that's an enormous paradigm shift in how you can originate truths from source events. Ultimately, both of these technologies are unbelievably complementary. We think we have a very good role in that story and that ultimately this is inevitable because if it's become so

• 26:02Speaker 00

  cheap and democratized to create fake things, you need a way to go back to the source of an event that happened to prove that it wasn't the crazy AI thing that made Ted say this crazy stuff that ruined his reputation. You need a way to prove that you didn't say that. So, single source of truth, secure, highly reliable proof technology paired with AI, which is very cheap to make fake things, is where we're headed. I don't have any Terminator predictions, but you can create a lot of more transparency and guardrails over essentially these black boxes.

• 26:40Ted Seides?

  What are some of the other ways you've seen traditional finance players in the ecosystem adopting some of the blockchain technologies?

• 26:50Speaker 00

  If you look through history, there was paper. There was open outcry. Let me take my paper into this pit of brokers and have them fight. Then, when there was a trade, someone would write it down and then take it to the transfer agent who would rip up the piece of paper and then, great, Ted just sold some stock to Ryan. As a nerd of market history, that essentially blew the system up in 1969, known as the paper crisis. They had to shut the stock exchange down because they couldn't handle all the volumes of the stock trading at the time. If you look at what happened in the 60s and ultimately into the 70s,

• 27:35Speaker 00

  technology took off. NASDAQ was launched, I believe, in 1974, 1975. The paradigm shift from paper and open outcry was then upgraded to bash-based database technology, mainframe technology in 1975. Hasn't changed since then. When you own a stock, it's like you're owning some database entry that's very static. A lot of these firms are asking the question about how do I upgrade that system? Because it's time for a technology upgrade. Smart contracts and tokenization.

• 28:20Speaker 00

  If you think about what tokenization means, it means you're representing almost a legal claim in equity or fixed income into software, which is a smart contract owned by the issuer of that asset. We've now have this paradigm shift of it's not just the database entry that has Ryan owns 100 shares of XYZ. The entire representation of that asset is software. If that software can interact with other software, you can do a lot of interesting things that you were never able to do before.

• 29:04Speaker 00

  On a 24 by 7, always on settlement system that has a lot of this permissionless innovation. We've worked on several projects over the past year where you would take an internal process that still relies on that 1975 infrastructure.

• 29:26Speaker 00

  And have built feature-rich applications that do those processes today. A good example is Transfer Agency for funds. We worked with UBS Asset Management in Singapore, wanted to create a fund service, transfer agent, operating model on a public blockchain. And we were able to build that with them. We're entering, let's say, the glory years of finally having clarity where the United States is a leader. Once we fine-tune the regulations and start to build these applications on-chain, the rest of the world is going to look at us as that leader.

• 30:09Speaker 00

  Now it's happening at the mothership HQ level. You could even look at some of the roles a lot of these large institutions are putting out there. It's like head of stablecoin strategy, head of tokenization strategy. Two years ago, you didn't see those roles. It's a very exciting time in the States.

• 30:29Ted Seides?

  When you're providing what sounds like effectively mission-critical service in getting the data onto the blockchains back and forth, what are the other alternatives that someone can go to? That a blockchain that needs to get access to data, that a bank is trying to figure out how you communicate with all these different blockchains? What does that competitive landscape look like for you?

• 30:54Speaker 00

  The question would depend on how many blockchains you want to integrate your services into. If some folks want to do crawl, walk, run, and you just want to start internally with your own private blockchain in a nice controlled environment, you can build those services yourself because there aren't threat actors. It's all under your own walled garden. There's basic tools that you can use to get up and running there. But if you're building...

• 31:32Speaker 00

  A full bore commercial, you have a P and L. You almost have to have multi-chain integrations. Your application can't just sit on one specific blockchain. If you're an asset manager and you want AUM and your customer base is users with wallets that have stable coins, you're going to need a multi-chain strategy. We do have competitors at a specific type of service, but we do not have competition as a general platform that does all of these things like compliance, orchestration, data, interoperability.

• 32:15Speaker 00

  No one else can deliver all of those products at scale with the level of security and reliability and track record that we've had. We take our time. We ensure that things are highly, highly secure and reliable. And when folks really want to work at scale, we'll build it together.

• 32:33Ted Seides?

  What does your team look like to be able to do all of this in ways that other people can't?

• 32:39Speaker 00

  We're around 700 people strong. The majority of those folks are engineers that are working and building the chain link ecosystem. Where I sit is an unbelievable team of practitioners that have a ton of experience in capital markets. What has been missing in this space is that when you typically go to a technology vendor, they're going to be able to talk technology to you. If you go to a cloud provider, they may just say, well, here's how the cloud thing works. We hire people such as myself with strong backgrounds

• 33:21Speaker 00

  in these industry-specific verticals that not only understand the technology, but understand the business.

• 33:30Speaker 00

  It's way more important when you're trying to work with traditional finance firms. It's like, yes, I know what a broker dealer is. I know what post-trade settlement looks like. I know what an RFQ is. The wider you can get of taking the technology and simplify it into terms that a customer can, that's what we do better than anyone in the industry. If you come to us and you say, I want to build some very specific thing with a specific financial instrument governed by these regulatory and compliance rules. We have it covered because we have those experts in-house.

• 34:11Ted Seides?

  So Ryan, six years ago, you looked at what you were doing and said, it felt inevitable that a lot of the pipes and a lot of the processing in the financial world needed to be on blockchain. How far along are we today in the institutions that are comfortable or secure and can move forward with the technology?

• 34:31Speaker 00

  If you would have told me six years ago, the CEOs of all the major exchanges were saying, we need to get on chain. I would say that is a dream. I was just at a conference, I believe the CEO of NASDAQ was up there talking about getting on chain. So from a comfort level, we're there. From a execution level, we still have a ways to go. People think, oh, you just mint a token on a blockchain. No. These are the problems that we're solving. You need to think about how to connect that asset to existing standards and systems. What are the venues in which those tokens are listed at?

• 35:15Speaker 00

  How do those venues match orders and send post-trade settlement instructions to a blockchain? The simplest thing of delivery versus payment. Devils in the details, but we're only 300 billion in stablecoins. We've dealt with problems around how do I coordinate an on-chain asset with a traditional payment? We've solved these problems. It's tracking the payment, holding the token in escrow, sending it message back to the escrow and then releasing the asset. There's a good example, corporate actions.

• 35:50Speaker 00

  If you have an equity and it's minted across 15 different blockchains, keep in mind, blockchains don't understand time. None of them are on the same page as far as it's 2:40 PM Eastern Standard Time right now. All they understand is how they're programmed and they give strong guarantees about how they're going to operate over the future, but they have no idea what time it is. The real need for orchestration, and we have a fantastic solution for this called the chain runtime environment, is an off-chain orchestration tool that understands time, that can do asset servicing across all of those 15 chains by doing some type of reverse

• 36:34Speaker 00

  share split one by one. You also have to look at the problem of the latency in doing that in all these different blockchains. It's very simple if there's a simple database and you're doing a share split. You just make one entry and that's it. But if you have tokens spread out across 15 different blockchains, you can't exactly just send 15 messages out and do the share splits because the worst possible outcome is someone does something in the system where they have more shares than the share split and then they get double the shares. I'm just giving you an example of the full end-to-end lifecycle of an equity and a fixed income instrument or an asset-backed security.

• 37:16Speaker 00

  These are all the things that we have to figure out and it's all operational. It's a long-winded way of saying the comfort is there. I've heard it firsthand. It's how do we operationalize all of this at scale?

• 37:29Ted Seides?

  As you look out over the next bunch of years, what are you most excited about of applications that you think will be readily available and used in the market?

• 37:41Speaker 00

  First off, there's this thesis that the last large company happened because in five minutes, I can get an audience through social media. There's going to be many, many large companies out there that are managed by fewer and fewer people. Over the next 15 years is going to be, A, the biggest wealth transfer the world has ever seen into the millennial generation. And B, a unbelievable paradigm shift in how companies are built and maintained with AR. The real question is who captures the upside? It can't just be venture capital. If companies are becoming smaller and a lot of the upside in those companies is going to be restricted to a very few people.

• 38:25Speaker 00

  How do we democratize the access of the upside to those companies? This is a perfect use case for tokenization. But the problem with this is that when you give investors and retail investors too much choice and not passive indexing, bad things can happen. People invest in scams. There's this due diligence problem. What I'm most excited about is taking the concepts of direct indexing, separately managed accounts, diversification, and applying blockchain, smart contract, automation, and infrastructure

• 39:06Speaker 00

  around getting upside into the new generation of companies that are going to pop up over the next 10 years. Going back to my Vanguard days, it's very expensive to set up customization and scale. You also need justification to do these things. I'm not just going to do this for Ted and Ryan. I need 50 customers and $100 million to pledge to do this. The combination of all of that excites me the most. If I were going to predict anything, this style of investing, which means that people are going to need more good advice from financial advisors,

• 39:47Speaker 00

  more good financial advice from index curators, like the S and Ps, the MSCI's. They have a massive role in this as well. The investment strategy curators have a big role in how we democratize exposure to a lot of these smaller companies. Cause I think we're at the forefront of an unbelievable, positive economic boom around. All of a sudden, the tools to build a company and the cost of building a company right now have never been cheaper. And it's only going to accelerate. It's become easier and easier to build a company and we need to figure out how to democratize the upside to the masses of that.

• 40:29Ted Seides?

  Ryan, I want to make sure I get a chance to ask you a couple of closing questions. What is your favorite hobby or activity outside of work and family?

• 40:38Speaker 00

  Automotive. I am an unbelievable car owner. The very moment I turn this off, I shift into cars. Deval Ravikant said, "Freedom is an open road and a fast car." That's me. There's car culture, there's car art. You can view a car in many different ways. It's an emotional experience. If you're driving a ferocious loud thing, you're feeling it, you're hearing it, and then the people in the culture. It's almost like you never meet a bad car person. There's so much passion in that industry, and that is my number one hobby of cars and the brain, if it's not blockchain and chain technology.

• 41:21Ted Seides?

  What was your first paid job and what did you learn from it?

• 41:24Speaker 00

  Country club. I was always into golf. When Tiger Woods came back and won the Masters, I think it was 2009, that is the most incredible thing I've ever seen in sports at the time. So I gravitated towards golf. My dad was an engineer and my mom was secretary. Mom's the nicest person in the world. Dad was nerd engineer. When you work at a country club, you get exposure to entrepreneurs. And I'm from a small town. All you do is talk to the entrepreneurs. How you utilize those conversations is extremely important. I was the bad club person. It's like, Brian, go get my clubs, put them on a golf cart.

• 42:06Speaker 00

  I'm going out to play nine as they park their Porsche somewhere. But I used it as extracting as much information as I could from these people. What made you successful? How do you tick? And through osmosis of just being around.

• 42:24Speaker 00

  All of these people, there's a saying of to play better golf, you just play with better golfers. It had a profound impact on me just because of you interact with successful people. It changes you just like Chaiman. So I'm not the same person I was four years ago, working with all talented people here.

• 42:40Ted Seides?

  What's your biggest pet peeve?

• 42:42Speaker 00

  My biggest pet peeve and potentially blockchain things as well. So if you spend your life and passion devoted and really understanding something. And I mean, really understanding something. People give these hot takes. That's my number one pet peeve. In this space, a lot of people are still dismissive of it, still think it's a flash in the pan, temporary thing. It's just unbelievable to me that people still think that. That peeve is like, hey, it's just in general, stop these quick takes. Understand what you're critiquing or what you're talking about.

• 43:20Ted Seides?

  All right, Ryan, last one. If the next five years are a chapter in your life, what's that chapter about?

• 43:26Speaker 00

  Delivery and execution. I'm almost in this industry now 10 years, which sounds crazy. The next five years and change. Everything has been preparation up to this moment of executing the vision of finance at scale on new technology. It's a moment in time. I feel like we're at the takeoff moment. A lot of that is going to have to be execution, personal sacrifice in like, this is the time to do this. It's just a unique time in history to capitalize on. It's not a time to sit back and say, let's hang out on the beach all day and throw a frisbee. It's a time to lock in.

• 44:07Ted Seides?

  Ryan, thanks so much for sharing all this insight on how everything's working underneath the surface of blockchain.

• 44:13Speaker 00

  It was fun. I enjoyed it. Thanks for having me.

• 44:15Ted Seides?

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• 44:41Speaker 02

  All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of capital allocators or podcast guests may maintain positions in securities discussed on this podcast.