#365: Zac Prince on Raising BlockFi's $50M Series C Financing

Zac Prince is the co-founder & CEO of BlockFi, the industry-leading wealth management platform for crypto asset investors. In this conversation, we discuss BlockFi's $50M Series C fundraising round, an update on revenue and assets under management, and what BlockFi is working on for future product launches. ============================ BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. ============================ Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

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

• 0:00Anthony 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. Let's kick this thing off.

• 0:11Anthony Pompliano?

  Zach Prince is the co-founder and CEO of BlockFi, the industry-leading wealth management platform for crypto asset investors. In this conversation, we discuss BlockFi's $50 million Series C fundraising round, an update on revenue and assets under management, and what BlockFi is working on for future product launches. I really enjoyed this conversation with Zach, and I'm a proud investor in the business, so I hope you guys enjoy this one. But before we get into the episode, let me tell you a little bit more about BlockFi. They currently have three products. The first allows you to buy and sell crypto on a crypto exchange. The second allows you to deposit crypto and take out a US dollar loan against your crypto collateral.

• 0:53Anthony Pompliano?

  And the third is an interest-bearing account where you can earn up to 8.6% APY on crypto or stable coins. So definitely go check out blockfi.com/pomp. Again, blockfi.com/pomp, and you can join in on all the awesome things that BlockFi is building for crypto asset investors. Lastly, don't forget that I write a daily letter to over 50,000 investors about business, technology, and finance. I break down complex topics into easy-to-understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. Alright, let's get in this episode with Zach. I hope you guys enjoy it.

• 1:36Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:02Anthony Pompliano?

  All right, guys. Bang, bang. Zach is back. He's got some big news today. What's going on, man?

• 2:08Speaker 02

  You only want to talk to me when we raise money, Pomp. I don't know what it feels like. We have some good financing news and all of a sudden you let me come on the show again.

• 2:17Anthony Pompliano?

  I'm begging you to come on the show. Zach is too busy these days. Now, all right, let's just get the news right out of the way. For those that don't know, Zach is the founder and CEO of BlockFi. And you raised some money. So maybe just start with the news and then we'll do an do it overview of BlockFi.

• 2:35Speaker 02

  Yeah, so we are announcing, I don't know when we're going to publish this, but you know, Thursday, August 20th, that we closed a Series C round of funding for the company. $50 million all equity investment round led by yours truly, Anthony Pompliano at Morgan Creek. Pom's going to be joining our board, which is, which is really exciting. He's been, you know, instrumental in helping us get to where we are today. So maybe I'll turn this question around on you in a second, Pomp, and say, why'd you, why'd you leave this investment round? But we had some really awesome participants in the round, some of our existing investors like Valar, who led the Series A and Series B.

• 3:16Speaker 02

  Folks like Winklevoss Capital, Fidelity, some of our other, you know, institutional firms that have invested in subsequent rounds in the company. And we added some new folks as well. So we're not able to say their names, but we actually had direct investments from two university endowments, one Ivy League, one non-Ivy League. SCB 10x, which is the largest bank in Thailand. It's their venture arm. And an NBA player, Matthew Delvedova, AKA Deli, he actually did an interview with CoinDesk, so I'm curious to see if they quote him. And I'm really excited about maybe doing some more stuff in the, in the sports world.

• 3:58Speaker 02

  But yeah, you know, proceeds are going towards the same stuff that they always go to building more products, growing the team and trying to add more value for our clients and putting our capital position in an increasingly stronger and stronger place, which is really important for a company that's in the type of business that we're in. So, you know, we've actually raised equity capital every six months since we started the company three years ago, which is an insane pace and it's reflective of like how quickly we've been able to grow. And, you know, it kind of, it used to be like, oh my gosh, we raised the money. Thank goodness.

• 4:41Speaker 02

  Like we did it. Okay, let's take a little breather. This one felt very, you know, kind of opportunistic and operational. It's like boom. All right, let's knock it out. Get the term sheets, pick the one we're going with. Of course, we're going to go with Pom's term sheet. Pick, pick the one we're going with, close it and like just keep moving. So, so we're excited.

• 4:58Anthony Pompliano?

  Awesome. So I, I realized that there might be one or two people who are listening who actually don't know what BlockFi does. Maybe give us a quick overview of what BlockFi does and then we'll get back to the, the funding news.

• 5:09Speaker 02

  Yeah, sure. So, you know, the original idea for BlockFi was to build debt and credit markets for the crypto space. So I was working in fintech, specifically in the online lending sector. I was personally investing in Bitcoin. I tried to get a loan from a bank to buy an investment property in Texas. Love the Salt Lake app, by the way. Shout out to awesome Austin barbecue. And this is back in like early 2017. Price of my Bitcoin had gone up a lot. And so I included it on the financial statement that I submitted to the bank. And, you know, the bank freaked out and they were like Bitcoin isn't worth anything. We're worried that you're a terrorist or whatever. And I was like, you know, all of the stuff that

• 5:49Speaker 02

  has existed in the lending world for fintech is also going to need to exist in the cryptocurrency ecosystem. This is going to be a massive asset class. Banks are going to be slow to touch it. And that creates an opportunity, you know, to build a business around, around that idea. And so that was the original idea. 2017, we started, fast forward to today, we're really a financial services company that's focused on building products for cryptocurrency investors. So you can download the BlockFi app and earn interest on your Bitcoin, 6% interest on your Bitcoin, 8.6% interest on, you know, cash equivalents, stable coins.

• 6:31Speaker 02

  We also support Ether and Litecoin. You can trade, so you can wire money into your BlockFi account, earn 8.6% on it until you decide to buy Bitcoin. You can buy Bitcoin in the app and then you're instantly earning interest on the Bitcoin instead of the cash. And you can also get a loan secured by the value of your cryptocurrency portfolio. If you, you know, want some liquidity without having to sell it. So those are the three products that we have today. It's available on the web and in the mobile app and, you know, we're launching more stuff in the future, but that's what we do. 175 people at the company now, which is crazy.

• 7:07Anthony Pompliano?

  Absolutely nuts. So these three products, I think one of the key pieces for what gets me excited is most businesses in crypto start out as these brokerage businesses, right? So the example that I've used with you, obviously, for other people to understand is Robinhood, for example, in the traditional markets, starts out brokerage first and then tries to, from a growth perspective, go geographic expansion, you know, step one. Step two is add other products to kind of their product suite. It's pretty hard for a brokerage business to add other types of products if they're not other brokerage products, right? So you can add derivatives and futures and things like that, but if you want to get into credit cards, debit cards, you know, deposit type accounts, cash accounts, all that kind of stuff is pretty difficult.

• 7:53Anthony Pompliano?

  If you compare that to like a Square, Square starts out with deposits and payments. They then end up adding crypto, they add cards, they add, you know, PP, payment product, they've added fractional shares or kind of their own brokerage business. Like deposits and payments seem to be kind of a stronger place to start if your goal is to have a very robust product suite. And I think that in crypto, you guys have been kind of the leader or one of the the companies that realized this early and you started out with deposits payments. And now I've continued to add these services. Maybe talk a little bit about how you guys think about kind of the deposit being so important to the business model and then how you think about adding, you know, other products to the suite over time.

• 8:37Speaker 02

  Sure. Well, your, you know, your ability to monetize and create revenue on a financial services platform is generally a derivative of balances on the platform. So if you, you know, if you, if you have more customers who are holding more assets on your platform, then you have a better chance of, of being able to, you know, make money off of those assets. So it's kind of a, it's always a game about, you know, getting balances and then figuring out ways to, uh, you know, monetize those balances, which intersects with enabling your customers to do more things with them or, or, you know, launching more products. So, um, you know, that's the way we've always, we've always thought about it.

• 9:22Speaker 02

  One of the other reasons why this is important is, uh, financial services is a, is a, you know, kind of hyper competitive, um, industry. And I think crypto is even more competitive than traditional financial services because you're competing on a global scale, you know, with blockchain, uh, technology and, um, everyone, at least everyone that's in the industry already sees the opportunity. So there's a lot of, you know, investment and excitement and, and smart people working in the space. And so, you know, we believed, uh, from really early on that a core part of our strategy has to be, uh, constantly releasing new products that add value for our clients. So that, you know, one, you can add monetization into the platform from these balances that, you

• 10:07Speaker 02

  know, should be growing, uh, but two, you can create stickiness with folks. So we've, we've kind of thought about the end goal for us in terms of the client relationship that we want to have as being the equivalent to, you know, when someone gets a mailer, and this probably happens to you, I know it happens to me all the time, from a bank and they're like, hey, we'll give you $200 to open up a new checking account. And you throw it away, not because $200, you know, wouldn't be nice to have, but because you do all your stuff with a with a certain bank, you've kind of got your setup figured out in terms of, you know, where your checking and savings account are, where your credit cards are, where your, you know, mortgage is. And you don't want to go through the, you

• 10:50Speaker 02

  know, work and pain in the butt of of switching all that stuff just for $200. So that's the type of relationship we want to have with our clients. And the way you do that is create a compelling product suite so that someone can, you know, not only earn interest on their Bitcoin, but they can also get a loan against their portfolio if they ever need to, they can buy and sell it if they ever need to. Really excited about our first product that we're launching in the payment space, it's going to be a Bitcoin rewards credit card. So you can spend money every day on a credit card and earn Bitcoin as rewards for it. And that's just going to flow into your interest account immediately when you get the rewards. And if someone engages with all those products, and then they get a, you know, letter in the

• 11:34Speaker 02

  mail from another company saying, hey, we'll give you $100 worth of Bitcoin to come try and do some of those same things that you're doing with BlockFi over here, we want them to just throw it away. It's not worth it. I'm happy with BlockFi. They've given me, you know, great client service. I trust the team and the product. I'm familiar with how it works. It's really easy to use. And so, you know, that's, that's the end goal for us.

• 11:59Anthony Pompliano?

  Yeah. And one of the things that has been really interesting for me to see is this default digital currency world that you've created. So when somebody brings money into the system, it doesn't sit in cash ever, right? It sits in a stable coin. And so kind of explain how that works and why that's important. Because I do think that it also changes the mindset of a user, right? Like you are in this digital ecosystem. Let's talk a little bit about that.

• 12:27Speaker 02

  Yeah, so I mean, first off, just in case anybody doesn't understand a stablecoin. You know, imagine if, well, you know, Gemini, Coinbase, a couple of other folks have done this. Let's use Gemini for this example. Folks send them money, they hold it in a bank account and they, they, you know, get that audited and the cash just sits in a bank somewhere. But then they release one to one digital versions of those dollars in a bank account. For them, it's called GUSD, the Gemini dollar. And so when you fund a BlockFi account from your bank, which you can do via a wire transfer, it doesn't sit as dollars at BlockFi, it sits as GUSD. But that's basically interchangeable with dollars. You can, you know, wire it back out to your bank account.

• 13:12Speaker 02

  But the reason we represent it that way is that

• 13:16Speaker 02

  it enables us to kind of do some of the things that we want to do without falling squarely into traditional types of regulatory boxes. And you get all the benefits of having it as cryptocurrency, which are, you know, you can transfer it on blockchain payment rails. You're, you know, taking part in this, in this new ecosystem and it is a little bit different than just holding a dollar in a bank account, but in ways that are largely positive.

• 13:50Anthony Pompliano?

  Yeah, let's talk about how things are going. So people are going to read in the news, $50 million Series C. Obviously, things must be going well, but what metrics can you share kind of publicly as to how things are going with the business?

• 14:05Speaker 02

  Yeah, sure. So, you know, to touch on a couple of, you know, high level stats, we'll use the end of last year as a benchmark. So like, you know, December, December 2019, we made less than a million dollars in our, you know, in that month in terms of top line revenue. Today, that number is just under 10 million for the month of July. We had about $200 million in assets, you know, aggregate asset value on the platform. Today, it's over 1.5 billion. Uh, our team was uh, less than a hundred people. I think around like eighty, between eighty and ninety when we ended the year today. It's it's over a hundred and seventy-five.

• 14:46Speaker 02

  Um, and we didn't have a mobile app. We didn't have the ability for folks to send us money uh, directly from their bank account.

• 14:55Speaker 02

  And uh, our trading feature launched uh, like December fifteenth. So at the beginning of the month, you you couldn't buy and sell Bitcoin. And by the end of December twenty nineteen, you could buy and sell Bitcoin. But now we're starting to see uh, you know, real volumes uh, flowing through uh, that that product, which is which is awesome. So yeah, it's a, you know, it's it's been um, really incredible growth, including, I think, pretty notably through uh, the coronavirus, you know, situation that we're in and and the volatility that uh, the crypto market uh, experienced uh, i- in March when, you know,

• 15:33Speaker 02

  we were kind of digesting that news. And we've maintained, from a risk management perspective, our uh, perfect performance uh, all along the way. So, um, you know, we're doing a lot of lending activities. We've uh, grown those in in tandem with uh, the growth in our asset base. And uh, we've continued to have perfect performance, never lost a penny uh, across any of the lending that we do.

• 15:57Anthony Pompliano?

  Yeah. So for those that missed that, uh, in seven, eight months, you've almost ten Xed revenue. You've uh, increased assets by six or seven X, uh, all while keeping that perfect track record on the lending side. Talk a little bit about why is that so important and how do financial service businesses think about uh, kind of no loss of capital when it comes to those lending practices?

• 16:24Speaker 02

  Um, sure. So uh, I mean, it's um, it's important for a ton of reasons.

• 16:31Anthony Pompliano?

  Maybe the most important thing.

• 16:34Speaker 02

  Yeah, I mean, look, uh, as with any other type of, you know, investment or, you know, allocation of capital, uh, it's always better not to not lose any than than it is to, uh, to to lose some. So, um, one of the, one of the conscious decisions that we made in terms of, uh, what types of lending we wanted to do at BlockFi, uh, this is going very early on, you know, I came out of the online lending world where a lot of what happened, peer-to-peer online lending world, um, a lot of what went on there was unsecured consumer loans. And, uh, that's a, you can build a really big and successful business there, but you're dealing with defaults where you lose principal. And it's really hard to predict, um, because

• 17:18Speaker 02

  there's a lot of, uh, you know, variables, uh, related to the macroeconomic cycle or, uh, where someone lives or how they're doing professionally, um, what your performance is going to be on that loan book. Contrast that to the type of lending that BlockFi does, which is primarily lending that is collateralized with liquid assets. So if someone's borrowing dollars against their crypto portfolio, they're doing that at a maximum, you know, 50% initial loan to value ratio. So with $10,000 worth of Bitcoin, you can borrow $5,000. Um, and then on the institutional lending that we do, similar concept, but slightly tighter ratios. And this type of lending, which is most analogous to, uh,

• 18:02Speaker 02

  securities lending in the traditional financial world, is one of the least risky types of lending out there. So our chief risk officer, Renee Van Kesteren, who, uh, was a managing director at BAML before becoming our chief risk officer, he oversaw all of this lending within the prime brokerage arm of Merrill Lynch and then, and then Bank of America Merrill Lynch, and never lost a penny while he was doing it there, including through the, you know, 2008, uh, financial crisis. So.

• 18:32Speaker 02

  I like that type of lending better than stuff where you have defaults. It seems like, you know, when you've got an asset class like crypto, which is still so nascent and volatile when compared to traditional assets, you know, being on the conservative end of the risk spectrum in terms of the types of lending that you're doing makes a lot of sense and that's kind of, you know, how we operate.

• 18:55Anthony Pompliano?

  Yeah, and speaking of the lending, talk a little bit, the number one question I get from people who are unfamiliar either with this type of business or are looking at crypto for the first time is they see you can earn up to 8.6% APY on an interest-bearing account. Kind of give people the 60 seconds on how exactly you guys were able to pay that and why that product is so compelling to folks.

• 19:21Speaker 02

  Yeah, sure. So, you know, we're able to pay it because that's what we're, we're charging folks similar rates when we lend dollars to them in the form of stable coins. The reason that people who borrow those dollars from us are willing to pay those higher rates is because the cryptocurrency sector doesn't have access to the same types of low-cost financing that traditional sectors do because banks aren't here. You know, a lot of the largest kind of debt and credit focused asset management firms aren't here yet. And as a result, the cost of capital is higher in crypto. You know, an analogy there would be like the cannabis industry, for example, where, you know, it's newer, not as many banks

• 20:04Speaker 02

  are active. Maybe some folks are still figuring out how they feel about it from a regulatory and compliance perspective. And as a result, if you have, you know, a cannabis business and you want to get a loan, you have to pay much higher rates than if you're trying to get a loan as a, you know, more traditional business like a UPS store or pizza restaurant or something. And the same thing is true for crypto and that's why the rates are where they are. And why is it compelling? I mean, it's, it's compelling because I don't know a single traditional savings account or, you know, product from a bank where you're getting even over 1% these days. I mean, rates are turning downwards. The Fed has, you

• 20:44Speaker 02

  know, said that they intend to keep it that way at least through 2023, I think. So, you know, you can't get yield anywhere. It's crazy to folks our age to think that, you know, there was a point in time where you could earn 8% in a savings account. Like those, those days are gone. And so being able to do it with a company like BlockFi, because it's kind of doing similar types of activities, but within the cryptocurrency sector is really awesome. And you can just, you know, do the math, however much money you have in an account earning 0.8% at Marcus with Goldman Sachs or in the Allies high-yield savings account, multiply it by 10. Like, that's how much you'll earn if it's in an account with BlockFi.

• 21:26Anthony Pompliano?

  Absolutely. How has the macro environment, right? So kind of what's crazy to me is we obviously are seeing, you know, incredible growth at BlockFi at the exact same time that we're seeing the pandemic and kind of a recession, right? So you've got a pandemic that's got this public health crisis element to it. And then you've got, you know, 50-plus million Americans who lost their jobs, all those small businesses that are coming under pressure through the government mandated shutdown, all that kind of stuff. Would you agree or disagree with that has actually been a tailwind in the sense of people are looking for alternatives from that legacy system? Or do you not see any kind of connection there so far?

• 22:07Speaker 02

  It's definitely been a tailwind. There's the tailwind of people doing more things digitally out of necessity, right? Because of the health situation. So online brokerages in the financial world, you know, online services in general have done really well. And so we're, you know, catching a little bit of that trend. The other thing is that in a time where you've got central bank responses to this crisis being, you know, as expected to increase the money supply, and you have people sitting at home with a bit more spare

• 22:50Speaker 02

  time than they used to have because they're not flying, not socializing the same way they used to, reading about what this means, things like, you know, gold in the past have done really well. I think Bitcoin is, is part of that story now. And as a result, the cryptocurrency asset class is part of that story. So. More people are getting interested in it. We catch a little bit of that trend. And then lastly, we're part of a story within the crypto sector of more products and services being built specifically around this asset class. And more kind of traditional financial services companies and, you know, functions being available to crypto investors.

• 23:34Speaker 02

  So all of those things together kind of, you know, combined to have made, you know, the last five months or whatever it is since, uh, since all this, all this stuff started, the best five months we've ever had as business.

• 23:46Anthony Pompliano?

  Yeah, that's awesome. It's a lot of money on the balance sheet now. What are you guys going to do with it?

• 23:52Speaker 02

  We're just gonna, you know, we're just gonna keep going. We're launching the Bitcoin Rewards credit card. We're really excited about that. We think it's going to be a fun product for people who already understand and, you know, own some Bitcoin, but also a great product for people who are kind of crypto curious or have always wanted some, but they just, you know, haven't really taken the plunge because everybody's familiar with, you know, earning reward points on a credit card. It's a super low risk way to get some exposure. We've been expanding internationally. So, you know, we have folks on the ground now in London and Singapore. So we'll be growing those teams and growing our efforts in, in markets outside the U.S.

• 24:34Speaker 02

  And other than that, it's, you know, just, uh, just kind of steady execution, the same way we've been doing, uh, you know, over the last couple of years.

• 24:46Anthony Pompliano?

  Absolutely. Obviously you guys are continuing to grow the product, which means you have to grow people. Talk a little bit about what some of the roles are that you're looking for.

• 24:54Speaker 02

  Everything, man. If you have, I mean, if you have, uh, you know, skills, whether it's, uh, engineering or marketing or, uh, you know, institutional type of trading and risk management stuff, operations, finance. I mean, uh, if you go to, um, you know, if you type in like BlockFi jobs and Google, it'll take you to our jobs page and I don't know how many are posted right now, but we're expecting to be around 250 people by the end of this year. So we're definitely hiring and I think, you know, one of the things I'm most proud of is the quality of the team that we've built.

• 25:35Speaker 02

  And I think even in a world where we're not going into the office every day for the foreseeable future. We've done a good job of maintaining this, you know, culture that we have as a company of having people who enjoy what they're doing. We are super capable, who, you know, are a pleasure to work with. And we're just doing it through Zoom now instead of, instead of in the office.

• 26:02Anthony Pompliano?

  Love that. Two things that I know people, if we don't talk about, will, will tweet at us and we'll be doing customer service on Twitter. First is give us an update on the Bitcoins Rewards credit card. What does that timeline look like and kind of any updates there?

• 26:17Speaker 02

  Yeah, so we hit, you know, we hit, we hit a bit of a delay with COVID. Because in order to launch the Bitcoin Rewards credit card, we have to have a card network partner, a bank partner and a program management partner. I won't say which ones, but some out of that partnership set kind of, you know, struggled to transition as quickly from a world where you're in the office to a world where you're fully remote. You could probably guess which one, but it's still coming out. Teams working on it. We're really excited about it. I think we'll have the first cards in market this year.

• 26:54Speaker 02

  Those first cards are probably going to go to, you know, folks that work at BlockFi and maybe, you know, investors and influencers like Pomp. So you'll probably see Pomp recording videos, paying for things with his Bitcoin Rewards credit card before, before the holiday season. And then we'll have a broader, more public rollout early next year. You'll be able to get on the waiting list this year. We'll be releasing details starting in a month or two. About how it's going to work, who the partners are, what the rates are, what you have to do to get the card, what it looks like, all that good stuff. So. The wheels are in motion. We're really excited, man. I mean, I get mad every day, you know, like I'm

• 27:36Speaker 02

  buying something with my Delta AMX or my my Chase Sapphire card or whatever. And I'm just like, this sucks. Like, I don't these these things were kind of lame before. Now I'm not even flying anymore. What do I need? What do I need Delta points?

• 27:49Anthony Pompliano?

  I got I was hype when American Airlines decided to they like extended the you know, whatever the status that you had gotten, they basically extended it an extra year. And I'll say, oh, this is awesome. You know, this COVID thing will be over in a couple of weeks. And then, you know, I'll basically have a whole extra year. And then I was like, wait a second, I'm not flying anywhere. That's right. So it's not going to end up mattering. Second question is, there are certain states that you guys are not available in. And I get berated on the internet. My DMs are full of people saying, when, whatever state? What's kind of the update there in terms of how many states are you guys in? What's the the timeline look like to get the rest of them?

• 28:29Speaker 02

  Yeah, so we have some of our products available in every state. The probably number one thing that

• 28:37Speaker 02

  that people, you know, talk about and that I wish we could change, but we actually don't have any near term plans that look like this will change is that you're not able to earn interest on your crypto if you are in New York. So currently in the state of New York, the only product you're able to access is our loan product. But every other state in the US, you can earn interest on your crypto.

• 29:01Speaker 02

  And then there's about thirty five out of the fifty states where you can wire money in and out of our platform. That's an area where we're actively adding more states. Our regulatory construct is that we have an MSB registration at the federal level, money services business. And then we have lending licenses and money transmission licenses at the state level. That's second. State level license, the money transmission license is what we're in the process of getting in more states now. So as we get those licenses, like, you know, I know Jason Williams from your team was really pumped because we got our North Carolina money transmission license

• 29:42Speaker 02

  a month or two ago. And so people in North Carolina are able to wire in and out. We, we, you know, open up that functionality to folks in the state. So if you're curious what you can do in your state, if you go to blockfi.com/rates, then you scroll down on the page, it'll talk about, you know, whether you can get loans or an interest trade and move money in and out of your bank account, or only a subset of those things.

• 30:08Anthony Pompliano?

  Mr. Going Parabolic himself is, he loves BlockFi, as everyone knows. Last thing for you, and you don't know that I'm asking this, the interest that you have had in BlockFi from investors has been unlike pretty much anything else I've ever seen. The data speaks for itself. You, Florrie, the rest of the team's execution speaks for itself. You have had the fortune on numbers numerous times now on these investment rounds where insiders have preempted the rounds and kind of been able to, you know, give you a vote of confidence. What's your reaction when you get these term sheets, right? When it's kind of just

• 30:53Anthony Pompliano?

  like you're doing everything that you want, and then you're getting a term sheet without having to kind of go out and go through a whole fundraising process that most founders have to go through?

• 31:05Speaker 02

  Yeah, I mean, you know, to be completely fair, we usually go through a bit of a fundraising process because we don't want to, you know, get a term sheet from an insider and not do a little bit of a of a market check. But my reaction is always, you know, kind of one part excitement and one part, you know, pinching myself at, you know, how great this is. But that feeling, that feeling only lasts for so long because because then what happens is. You know, you sign the term sheet, you you figure out the allocations for the round. You close it and work doesn't stop while you're going through those steps. And then, once you get on the other side of it,

• 31:49Speaker 02

  it's kind of like, you can never really, I I don't, I don't have a good ability to just be like, all right, we're good. Let's all, you know, like, take a few weeks off and chill. It's like, no, we're on to the next thing.

• 32:02Speaker 02

  You know, so you know, you you were there. We had a board meeting last week. And we're not talking about, okay, guys, what do we need to do to close and announce the series C? It's like, we're talking about where we need to be by the end of this year and where we're going to be next year. And you you come out of that meeting and you're like, holy shit, we have a lot of work to do. So let's get to it. But it's great, man. Look, we're we're thrilled to be where we are. We're very fortunate to have a business that's able to keep growing and have

• 32:33Speaker 02

  you know, clients who continue to, you know, see value in the products and services that we offer. And so we're just going to keep going.

• 32:42Anthony Pompliano?

  What do you want this to become? Right? When you look 20 years from now, 10 years from now, what does this kind of evolve into or grow into?

• 32:53Speaker 02

  It'll be interesting to see. I've always said, you know, the the things that I want are a good outcome from a capitalist perspective for you know, the people who work at the company and, you know, everybody who works at BlockFi has a level of, you know, equity ownership in the business and and our investors who, you know, give it, give us money. And if those two people make money, I'm sure I'll I'll do just fine. So number one objective is let's have a good outcome. Number two objective is let's have fun in the process of doing that and not, you know, create an environment where we don't enjoy doing the stuff that we're doing and working with the people that we're working with to get it done.

• 33:36Speaker 02

  And then lastly, if if possible, let's let's change the world for the better a little bit. And so I think what that last piece for BlockFi looks like is

• 33:46Speaker 02

  More globally accessible financial services platform that creates

• 33:56Speaker 02

  you know, better pricing for the same types of things people already do with the traditional system, whether that's how much interest you earn or how much it costs to, you know, move money around. And that creates greater accessibility. Like, one of the coolest things about crypto, one of the things that drew me into it initially is like, okay, it's like the internet. Like, you can connect to the internet, you can access the cryptocurrency space. And there's a lot of, you know, there's a lot of bad stuff that goes on in the world when it comes to how governments operate and what they do with the money supply. And we're very fortunate in America here to have the world's reserve currency. And a lot of places don't have that benefit. And I think that the cryptocurrency space in general,

• 34:39Speaker 02

  and as a subset of that, our platform can be used to kind of better the financial services outlook for global society. And that's like insane, right? Like, I mean, that's the, that's the top of the, you know, potential dream that we have with BlockFi is you're sitting in a rocking chair 40 years from now. And you're like, remember that time we built, you know, globally accessible bank that was just like better than anything else that existed before it? I mean, that, that, that would be pretty cool. So we'll see how far we get.

• 35:11Anthony Pompliano?

  You're well on your way there, my friend. If anyone wants to sign up, they can obviously go to blockFi.com/pomp. If you go to slash pomp, I actually don't remember what you get, but you get discounts, treats, whatever it is. So go do that. What's kind of your, your closing thoughts for, for people who are evaluating BlockFi in terms of becoming a potential user? What would you say to them?

• 35:36Speaker 02

  We've got, you know, probably in my biased opinion, the best client service team in crypto. We might be the only place where there's a phone number at the bottom of our website. You can call and talk to these folks, you know, any, any time during business hours. You can email them, you can tweet at us. So try it out, talk to the team, ask us questions, give us feedback. We would, you know, we'd love to engage with you and potentially work with you as a client. I think we should, before the end of this show, like Pomp, you led this investment round. And, and I know you're interviewing me, but like, but why don't you tell people why you decided to be the insider?

• 36:17Speaker 02

  Who, you know, led a series C in the, in the block with all the information and, um, you know, stuff that you do at Morgan Creek.

• 36:25Anthony Pompliano?

  Yeah, I thought I was going to get away with not having to talk at all.

• 36:30Anthony Pompliano?

  Look, um, I, I think that there's two core things that, uh, you know, in this specific situation made this like a no brainer from our standpoint. So first of all, is, uh, my opinion nor anybody else's opinion matters when you just look at the data, right? And the data is very, very compelling that not only does the company have product market fit, uh, but it's also scaling. And those products have a lot of scalability left in them, right? So they're not products that are kind of, um, hey, we're going to cap out at a certain number of users. These are things that, um, you can make a strong argument are just starting and you can see a very long runway, um, to use it. Now, the benefit of that is there's a bunch of data points in the legacy world that we can kind of look at and see, you know,

• 37:12Anthony Pompliano?

  how did those wealth management services or those types of financial services, businesses start products, scale products? And kind of what were those outcomes? Um, and so I think kind of looking at the data today with that as the backdrop, uh, very compelling. The second thing is, you know, I'm not shy about my conviction in terms of kind of a future digital world, right? And so if you look at the services that the company provides, these are essential to convincing people to switch to the alternative system, right? And you just can't do that as much as we would like to think you can, you can't do that without debt, debt products, right? You can't do that without some sort of yield product. You can't do

• 37:54Anthony Pompliano?

  that without, you know, credit card type products. You can't do that without actually having a conversion point back and forth between fiat and digital currencies like with an exchange. And so I think that you just know that this infrastructure has got to get built. And if you go back to kind of that example I used where you compare like the Robin Hood or a brokerage type business versus a deposit and payment type business, I'm a very big believer that the deposit and payment business is a model that can scale really well, can be highly profitable, but it also can align value with the user, right? The users of those products end up getting just as much value, if not more than the company gets, right? So you don't get in a world where

• 38:39Anthony Pompliano?

  like the company's taking all the value and the user basically has no other options. They're locked into a product. And so when you look at that, I think a lot of people in crypto, the thought process is still, as every vertical, when people start these businesses, it's like, how do I build a company to sell it? Or how do I get to $100 million exit? Or like, if I reach really, really far, like imagine if I could build a billion dollar business, right? And those are all great outcomes. A lot of times they can be very profitable for founders, employees, investors, like there's nothing wrong with that. Every once in a while, though, I think a company comes along that has the potential to do something much greater than

• 39:21Anthony Pompliano?

  that, right? And, you know, when I say much greater, it's not only impact in the world, but it's from a market cap standpoint and kind of what they can actually build. And I think that it's rare to, one, have a business that

• 39:36Anthony Pompliano?

  Is set up in a way and built in a way that can do it. Two, to have a founding team that has a desire to go do that or an ambition. And then three is be able to access the capital and the investors that support that vision. Right. And so I think that you guys have done a great job kind of getting those three things aligned. And so to your point, like, you know, you're raising a round that most people would like literally be celebrating and kind of doing all this stuff. And it doesn't mean that you guys aren't happy about it or excited. But in the last board meeting, I mean, I don't even think it was brought up one time in terms of like the operation.

• 40:13Speaker 02

  Yeah, we did that. Like it's gonna.

• 40:15Anthony Pompliano?

  Right. I mean, it literally is like, how do we go from where we are now to 10x 100? You know what I mean? Like, like, let's go. And it's more of this money now allows you to slam on the gas pedal even more. They kind of double and triple down on what's working. So I think that it's a lot of little things. And, you know, for those that don't know the stories, Zach and I were talking one day. He was telling me some of the data and it was a conversation of just like, okay, you guys are gonna go out and raise more capital. Like, I want to buy every share I possibly can in this company. Right? Like, like literally Zach, if you'll sell me all of your shares, I'll buy all of those too. Right? Like, like literally whatever we can do here, like this is a no brainer deal.

• 40:56Anthony Pompliano?

  From a structure and a data standpoint, and I think that the, the, the really great position you find yourself in is we're not the only ones who believe that. Like, I think almost every investor at the table thinks that as well. Right? And so you, so you get in a situation where both insiders and outsiders all see the value in the business. And now it just comes down to, okay, capital is not going to be a limiting factor. Zach, Flori, the rest of the BlockFi team, it's just, can you guys execute? Right? And I love when we just compartmentalize the risk to, it's just an execution risk problem now. Right?

• 41:31Speaker 02

  You know, it's gonna be really fun too, if, you know, if it happens, which I know both you and I, yeah. Very much believe that it will happen is, you know, we'd launched, we raised our seed round in December of 2017. We launched our first product in January of 2018. We've been operating, you know, below all time highs for Bitcoin and, you know, some version of a, of a bear market slash, you know, range bound market.

• 42:00Speaker 02

  I'm like incredibly confident that Bitcoin is going to hit new all time highs sometime in the next, you know, six to 18 months. That's going to be so fun to like, like have all this stuff, you know, here and ready and built. And then, you know, have that available to folks in a scenario where, you know, all the mainstream press is paying attention again because Bitcoin hit a new all time high and they thought it was dead. I mean, it's gonna be wild.

• 42:28Anthony Pompliano?

  Well, and I think also it is going to be a thing where before people were making a binary decision, do I buy Bitcoin or not? Right? Because that's basically what you could do. And again, you know, I'm one of the biggest proponents of of this stuff. So I think that that was a good answer. Now, when we go into this bull market, again, I think what people are going to be able to say is, wait a second, I can buy the asset, I can earn interest on the asset, I can use this collateral, right? Like, there's things that I can do.

• 42:58Speaker 02

  I could donate my airline points and get Bitcoin instead.

• 43:02Anthony Pompliano?

  Of course. And so it's just the infrastructure, right? And BlockFi has been a big piece of that. It's not BlockFi only. Like, there's companies all across the industry that have built a ton of infrastructure that I think will just be more compelling to people. And so it'll be a lot of fun to kind of watch it play.

• 43:16Speaker 02

  All right, man. Always fun coming on the show. Thanks for having me.

• 43:20Anthony Pompliano?

  You got it. BlockFi.com/pomp. Zach is a going to continue going. So we'll do this again in the future.

• 43:27Speaker 02

  See you, man.