#511: Zach Herbert on Building Crypto Hardware

Zach Herbert is founder and CEO of Foundation Devices, which is building open devices for a sovereign internet powered by Bitcoin. In this conversation, we discuss hardware wallets, open source wallets, Apple, Google, decentralized internet, restricting innovation, and what is next in the suite of Foundation products. ======================= Exodus is an absolute game changer in the crypto wallet space, and we’ve teamed up to offer an exclusive discount for you, as listeners of the podcast. Sign up for Exodus today using my promo code Exodus.com/pomp. This is a no brainer for both newcomers and crypto heavyweights - go sign up today. ======================= Remote makes it easy for companies of all sizes to employ global full-time employees and contractors. We take care of international payroll, benefits, taxes and local compliance, so you can focus on growing your business. Learn more about Remote and their new Remote for Startups program at remote.com. ======================= Pomp writes a daily letter to over 140,000 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.

• 0:02Anthony 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. Let's kick this thing off. Zach Herbert is the founder and CEO of Foundation Devices, which is building open devices for a sovereign internet powered by Bitcoin. In this conversation, we discuss hardware wallets, open source wallets, Apple, Google, decentralized internet, restricting innovation, and what is next in the suite of Foundation products. I really enjoyed this conversation with Zach, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Exodus. They are leading the world out of the traditional financial system by building beautiful and user-friendly

• 0:45Anthony Pompliano?

  blockchain products. With their focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It's supported on both desktop and mobile, which allows you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Interactive charts let you view an asset's price history and your portfolio's performance over time. And maybe the best part, Exodus is integrated with the Treasure Hardware Wallet, making advanced security easy for everyone. Visit exodus.com for your free download, or search Exodus on the App Store or the Play Store. Again, Exodus, one of the most beautiful and user-friendly crypto wallets. Go check

• 1:29Anthony Pompliano?

  them out. I'm a big fan and you will be too. Next up is Remote. In 2021, every business is a global business. But how do you pay your global team and comply with international labor laws? Remote handles payroll, benefits, taxes, and compliance to help companies of all sizes pay and manage full-time and contract workers all over the world. No matter where your team lives and works, Remote's global employment solutions keep your team, your finances, and your intellectual property secure. Remote never charges percentages or fees, just best-in-class global employment solutions for a low, flat rate. The world's top global companies love Remote. GitLab, the world's largest all-remote Organization trusts Remote to manage their global team and so should you.

• 2:14Anthony Pompliano?

  Remote is funded by Index Ventures, Sequoia Capital, and a host of other top-tier investors. Learn more about Remote and their new Remote for Startups program at remote.com. Again, remote.com. Go check it out. I've had Yob, the CEO, on recently and he is fantastic. Lastly, don't forget that I write a daily letter to over 140,000 investors about business technology and finance. I break down complex topics into easy-to-understand language while sharing my opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Zach. I hope you enjoy this one.

• 2:53Speaker 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.

• 3:24Anthony Pompliano?

  All right, guys. Bang, bang. I hope you guys are all doing well. I've got Zach here with me. Thank you so much for doing this, sir.

• 3:30Speaker 02

  Thank you. Great to be on.

• 3:32Anthony Pompliano?

  For sure. Let's just jump right into it. What is your background and what did you do before you got into Bitcoin crypto and creating hardware for the ecosystem?

• 3:40Speaker 02

  Yes, so I'm a mechanical engineer by background. And then after school, I was working more on software product management. Got into Bitcoin back in 2013 and was lurking really for a few years, just working more normal jobs outside the space. And then I ultimately jumped into the decentralized internet, you know, more blockchain industry in 2017, where I joined up in one of the first roles with a company in Boston called Nebulous, making SIA, the Decentralized Cloud Storage Project. We also did Obelisk, where we were making cryptocurrency ASIC miners. And so I worked full-time in the space from 2017.

• 4:21Speaker 02

  Since and did everything from some software related stuff, but ended up spending most of my time on hardware and on building these miners and you know, hardware is what I'm most passionate about, you know, was always obsessed with like Apple, for example, since I was a little kid and building computers and all that. And so it's just really exciting that we started Foundation Devices back in April of last year. And you know, we're actually building a consumer facing hardware for Bitcoin and a decentralized internet.

• 4:50Anthony Pompliano?

  So what was the kind of impetus for us starting Foundation, right? Was it something that in the previous work you were doing, you're like, hey, I gotta go do this? Was it a specific product? You know, just tell me the stories, kind of how you originally thought of like, we gotta go do this under the Foundation brand?

• 5:04Speaker 02

  Yeah, so I think it was a combination of two things. One was like a longer term, more mission oriented. And then the other was a short term, like we want to make the specific product. So for the longer term, it was that we just fundamentally think that today's hardware devices, you know, everything from the consumer hardware, the chips, the operating system, the app stores, that they're just not really compatible with Bitcoin and the decentralized internet for a bunch of reasons. You know, they're closed source, they're proprietary, they oftentimes are hostile to user privacy, they try to control and restrict what you can do on the different devices. And so we just knew that, you know, thinking on like a 10 year time horizon, that we need to start a hardware company

• 5:49Speaker 02

  that is focused on building hardware that's compatible with, you know, the space. And then more of a shorter term and more like a practical approach is that we'd been using hardware wallets for a long time. You know, I remember back in 2013, 2014, I was even before hardware wallets existed, I was storing my Bitcoin on like an air gapped computer where I would remove the wifi card and you know, transfer things with like thumb drives back and forth, you know, then started to use hardware wallets like Trezor and Ledger and Cold Card. And one thing that we were shocked about was that

• 6:26Speaker 02

  Most of the Bitcoin was stored with custodial providers. And we were trying to figure out, you know, why is that? Why are people not taking sovereignty, taking custody of their own Bitcoin, their own cryptocurrencies? And, you know, like, what's the core of the problem? And we basically just had this gut feeling and kind of just knew that it was a UX problem. And we thought that we could just make a really like a next generation hardware wallet to make it much easier to, you know, store your Bitcoin and also just more secure. And to hopefully get all those coins into user hands, because this space only works if people have sovereignty and if people are actually storing their own keys.

• 7:09Speaker 02

  So we set off to make this product called Passport, this new hardware wallet, which we're on track to ship by the end of March. And at the same time, we're just kind of planning out this longer term product roadmap and figuring out, you know, how do we provide devices that give people sovereignty?

• 7:28Anthony Pompliano?

  Why do the hardware wallet first? Like, what was the kind of logic behind that specific product?

• 7:33Speaker 02

  So one is, I think we thought that we just had this really crazy sense of urgency. You know, we were working as employees and this was, you know, back in, we started talking about this more back in 2019 and then early 2020 came around and, you know, the halving and all that. And obviously the pandemic started and we were just saying to each other, like, there's going to be a new, a new bull market. And if we go through another bull market without like a hardware wallet that could appeal to a larger mass of consumers, then all of these coins might end up on Coinbase or other exchanges. And look, I mean, obviously there's nothing wrong with exchanges.

• 8:17Speaker 02

  That's currently the on-ramps in order to, you know, move your fiat into Bitcoin or other cryptocurrencies. But we really just didn't want to go through a cycle where, you know, I think it's like, oh, I think Coinbase has like over a million Bitcoin in custody right now for themselves than for other funds and other, you know, providers.

• 8:36Speaker 02

  And we're like, was it gonna be like, you know, 2 million, 3 million by the end of this new bull market? Like, what's that gonna look like? So we just felt this crazy urgency to start there. And then also, just practically, we knew exactly what we needed to do to make this product. There aren't any, you know, we weren't restricted by like manpower. We weren't restricted by capital. We knew what we wanted to make for this Gen 1 device, and we knew that we could bring it to market in less than a year. When, if we were looking at other devices, we weren't sure, you know, if there's a market for them, if there's enough demand. They might be more expensive to develop, or even much more expensive or difficult on the software side. So we just figured like, rather than be that startup that raises like all this capital and it doesn't ship anything for years.

• 9:19Speaker 02

  Like, let's raise a little bit of capital, and then let's ship something in less than a year. And so that's what we're doing.

• 9:25Anthony Pompliano?

  I love that approach of just get it out there, right? But make sure it's good. So you have this differentiated approach in terms of the actual product that you're building compared to maybe some of the other hardware.

• 9:35Speaker 02

  Yeah.

• 9:36Anthony Pompliano?

  Providers, talk a little bit about how you see the existing landscape and then kind of what you guys are doing differently.

• 9:42Speaker 02

  Yeah, definitely. So there's a couple of things about us that are a little bit different. And what we're trying to do is make the best combination of security, user experience, and then also just general kind of product design and feel. So that it feels like a really great product. So, you know, on the security side, everything we do is open source. And so the hardware designs, the hardware schematics, you could actually go download like our circuit board design files and see how the board is made. See what components are used. Then obviously, all the firmware, which is the software that runs on the device, is also open source. So that's really important because, you know, Bitcoin is open source. If you're trusting us as a company, you probably want to know what the device is doing.

• 10:26Speaker 02

  And so some, some hardware wallet makers, you know, like Ledger are not open source. And so that hardware represents more of a black box. And you can trust the company, and that's totally fine. But that's kind of the model that we have currently. We don't think that's the right model for this new, you know, Bitcoin-powered decentralized internet. So the open source is Important to us. However, we're also using a security chip, which is called a secure element, which makes it, you know, much more secure. So like Trezor is a great example of an open source hardware wallet. Their hardware and their firmware is also open source, but because they don't use a security chip, you can extract the private keys in like 15 minutes usually with with commonly available hardware.

• 11:09Speaker 02

  And Kraken has done some good posts about that. And so, you know, that's, that's okay as long as you, you know, keep your Trezor in a secure location or use a passphrase or something. But we think that, you know, we want to try to take the open source and then combine it with that, you know, extra layer of security, very similar to what Coldcard has been doing on the Bitcoin side of things. And, um, but we also wanted just to make it really easy to use, uh, make it look like, you know, a, a really nice device that's intuitive. You know, you shouldn't have to enter your PIN number with two buttons, right? Like, how do you enter an eight-digit PIN with two buttons? For example, um, you should just know how to use the device from the second you power it on.

• 11:49Speaker 02

  And then we also really wanted to encourage like fast use and best security practices. And so, uh, we use a full air gap, uh, with a camera and QR codes as the primary way of transacting. And that's what makes us really different from the, this existing generation of hardware devices where, instead of having to go to your computer, you know, plug the USB cable into your hardware wallet, take a few minutes to like, open up the software and, and send everything. You can just within like five seconds, scan a QR code from your phone, click the button and passport to sign that transaction, then scan the QR code back and you're done. And so what used to be like a few minute process where you have to go to, to the computer,

• 12:33Speaker 02

  becomes like a really, really fast and secure process that is a mobile first. It of course works too with desktop computers, either with like an SD card or a webcam. But we're really trying to make it mobile first. And the cool thing about that is, you know, and, and another way that we're different in approach is that our goal is like mass compatibility with every. Popular software wallet and service. So whether that's like Casa, Blue Wallet, you know, Unshamed Capital, hopefully even working with exchanges at some point. The idea that you can like withdraw your Bitcoin into cold storage, but you don't have to leave that existing user interface that you're in.

• 13:15Speaker 02

  And so you can kind of move coins back and forth, but you can use Passport as this like air gapped, ultra-secure signing device. And it really changes the idea of a hardware wallet where the vast majority of people who are buying, you know, Ledger or Trezor devices are relying on that Ledger or Trezor software. So we don't even make a software wallet. You know, we just make the hardware wallet. We're making sure it's compatible with all of the different, you know, popular Bitcoin wallets. And, uh, and then we're just gonna, you know, keep making the experience easier and easier.

• 13:45Anthony Pompliano?

  So there's a lot of people who are gonna watch this, they're gonna say, why is open source so important? Right? Like, like, I get it, people always talk about it, but why is it, especially in the Bitcoin world, why is the open source component so important?

• 13:57Speaker 02

  I think before Bitcoin, it was just not that important, right? Before Bitcoin, open source was something that you would expect to see for like, especially on the hardware side. You'd expect to see like very developer oriented products, like, you know, bare circuit boards and stuff as open source. More for like the hacker or the hobbyist community. But Bitcoin really changes that. I think the most practical example is like, you know, if you make a credit card transaction today and there's some kind of fraud, uh, it's not that big of a deal because you just contact your bank and then just reverse that transaction. Obviously in Bitcoin, transactions are immutable.

• 14:38Speaker 02

  And so there is such a higher likelihood that there's, uh, could be theft or could be mistakes that could cause the loss of your coins. And as the Bitcoin market cap grows. It actually incentivizes bad behavior because all it takes is like, you know, a single rogue employee or something at a company making, you know, a hardware wallet or some other device that's storing your Bitcoin to maybe insert some kind of backdoor or some kind of vulnerability in there and then your coins could be gone. And so hardware is really hard because there's always like, you're always in a sense trusting the company that you're buying from unless you're building it yourself from scratch.

• 15:19Speaker 02

  But there's a lot that we as the hardware maker can do to assure users that, you know, we didn't just throw this crap thing together and then release it and then keep everything closed source. We're open sourcing all of our work so that you can look at it, you know, you can audit it, you can see how it works, you can see if we've made any mistakes in it. You know, there's a really huge community of security researchers in the Bitcoin space that are constantly finding vulnerabilities with hardware wallets today. And that'll scale up as we, you know, we and other companies make other devices, whether it's, you know, laptops or phones or other things in the future. And so just the auditability and the open and transparent security is really important. And that's exactly how Bitcoin works, right?

• 16:03Speaker 02

  The Bitcoin core software is completely open source and it would have never succeeded if the software was was closed source and you didn't know how it worked. And then there's this one other aspect that maybe is a little bit more like, like a higher level that we think is important, but just that, like, why there's been so little progress in the physical world compared to the digital world? It seems like everything in the software world really builds on top of these core open source components. You know, if you're building a new app, you're not starting from scratch, right? You're you're going to GitHub and you're finding all these different open source components and you're integrating it, you know, these libraries, you're integrating it into your app. That doesn't exist in hardware.

• 16:45Speaker 02

  You know, you're almost always starting from scratch when you go to make a new hardware device. And so we kind of hope as like a secondary benefit that we can help lower the entry to other companies that are looking to make hardware. Then if we're building on the same kind of like hardware libraries or hardware designs, then if those designs have really been put under the microscope by security researchers, it gives consumers more confidence that like this hardware is secure. And like you look at most companies today, it's so difficult to make even like a security chip, like Apple's T2 chip that was in all the previous MacBooks for the last few years. It's completely just, just completely broken, right? Like you can, you, and, and so what we think is like, if Apple can't get it to work, right?

• 17:28Speaker 02

  If they have a chip that's been in computers for years that just, you can plug in a, a Thunderbolt cable and bypass the security chip. Why do we as a small startup before people think that we're gonna do, you know, any better? So by doing things in the open, it hopefully will make it just much more secure in the long run.

• 17:46Anthony Pompliano?

  So speaking of Apple, I think a lot of people, when they think of open source software, they say, you know, hey, there's a security element that doesn't eat those element, but the user experience sucks, right? Or the user interface is stuck. It's, it's kind of counterintuitive, right? Because you're optimizing versus everything else other than that. I think you've got this thought process though, that you can build open source hardware or software, and you can make it just as competitive from the beauty and the elegance and the simplicity that an Apple-like product would have. So can we talk a little bit about how you see the balance between open source software and then the user experiences that people today in the consumer internet have come to expect?

• 18:24Speaker 02

  Yeah, like as much as we're defining ourselves as an open source hardware company, that, that isn't like, it's, that's not our main like attribute, right? And it's almost like that we're trying to make a beautiful, really easy to use hardware for Bitcoin and decentralized internet that also happens to be completely open source. And that might be a little different than, you know, when you usually think open source hardware, it's usually like developed or created for this community that doesn't care at all what it looks like, doesn't care at all about the user interfaces. It's usually developers who want to buy like a Linux laptop or want to tinker with like a Linux smartphone or something like the Pine phone, for example, which is getting kind of popular in the developer circles, you know.

• 19:10Speaker 02

  Bitcoin kind of fixes the incentives here and for the first time ever gives normal everyday consumers a reason to want to buy an open source device. It's like if you're comparing two identical devices, let's say we in the future were able to make a smartphone that was identical to the iPhone in terms of most metrics, right? And then you know you're going to want to use it to store Bitcoin on there. Are you going to buy the closed source one? That's maybe made in China, you know, by, or are you going to buy the open source one that maybe is made in the US? I think if you kind of level that playing field and you introduce Bitcoin into the equation, all of the sudden you put value on the open source hardware because you

• 19:53Speaker 02

  know that it probably has a security model that is more transparent and potentially, you know, more secure because so many eyes are on it. And that kind of goes along with what I just said earlier. So I think the main thing is that, at least the way we look at it, and maybe even I personally look at it, is like, I never really cared about open source hardware before Bitcoin, right? Like, Apple fanatic, my first job out of high school was in the Apple Store, you know, all those Apple devices. And when I first got into Bitcoin, I didn't really care much about it either. I was like, oh, Bitcoin is just going to replace the banks and the trusted third parties. But now, you know, thanks to all the different podcasts and guests that are on, like on yours

• 20:33Speaker 02

  and others, you know, Stefan Laverat Tales From The Crypt and all those, I've gotten much more about, it's all about the sovereignty angle. It's about giving people sovereignty over their lives. And because of that, I just feel like the open source hardware, where the hardware maker doesn't try to control what the user does on their device, the hardware maker gives the users privacy, the hardware maker doesn't try to hide or obfuscate how the device works or how the OS works, it's all out there. There's now a reason to buy that kind of hardware. And maybe before Bitcoin, that reason did not exist.

• 21:11Anthony Pompliano?

  For sure. And so we talked a little bit about Apple, but there's also Google. And I know you've got some thoughts around this like duopoly and how Apple and Google may actually be disincentivizing or putting obstacles up in terms of Bitcoin, Bitcoin adoption, devices. Like, how do you think about that duopoly? What do you think the challenges are? And how do we kind of get around them?

• 21:31Speaker 02

  Yeah, I actually think that this is going to be the biggest challenge to mass adoption of Bitcoin and to decentralize internet over the next few years. Because we're getting really close to the point where I think this tech is going to go mainstream. And we're seeing all these really, really cool applications. Whether you're a Bitcoin maximalist or not, I mean, I think a really great example that I like to use is, you know, Brian Armstrong at Coinbase did a tweet storm a few months back about how Apple forced them to remove the DApp store from the Coinbase app. That's really bad, right? And, you know, a Bitcoiner might say, ha, ha, you know, it's a, it's a DApp store. You know, who cares, whatever.

• 22:16Speaker 02

  But I think if, if a company is trying to, you know, in this case, Apple, which is kind of acting as the gatekeeper, is trying to get involved and restrict what kind of applications you can run on your device. Our entire industry is about building these new business models, right? Streaming payments, smart contracts, machine to machine payments, you know, being able to, you know, automatically get rewarded with Bitcoin in a game. You know, being able to automatically, maybe if you read an article or listen to a podcast, then you can kind of stream Bitcoin back to that content creator. There's all these like crazy cool business models that I think are unlocked by this whole new industry.

• 22:58Speaker 02

  And the existing duopoly, you know, Apple and Google do not allow those business models to exist on their devices.

• 23:06Speaker 02

  Apple is obviously a bit more strict than Google. But Google too, I mean, Google had, has, you know, banned MetaMask multiple times. They've removed popular open source applications from their App Store. And it seems like censorship is just on the rise and these companies are constantly removing everything. And sometimes they get re-added back, right? But I think there's this idea of these companies have a direct incentive to, at least for now, fight against adoption of Bitcoin and decentralized internet. If you look at how they make their money, right? Google is all about collecting your data and then targeting you with advertising. That's like its purest, most simple form.

• 23:50Speaker 02

  So they have no interest in giving users any kind of privacy whatsoever on their devices. Their entire model is about, you know, capturing that data. And then they've also doubled down, you know, on their App Store. You can sideload apps into Android, but you have to like go into the developer settings and it's pretty scary. There's no easy way to like install a separate App Store on Android right now. And then Apple, you know, Apple has been increasing the amount of revenue that they make from services over the last few years, where I think it's over a quarter of their revenue now comes from services. And another enormous part of the revenue actually comes from a search deal with Google, which most people don't talk about.

• 24:31Speaker 02

  And so Apple has this strong incentive to extract as much value as possible from their current customers, because that's the only way that Apple grows without selling more devices. And they're kind of running out of people to sell devices to at this point. You know, it's like, they can make, you know, maybe they'll make an AR headset or something, continue to expand the market or like with AirPods or other things like that. But if you start to look at what they've been doing with all the different service plays and then doubling down on, you know, the App Store, like for example, with their public battles with Epic Games, the makers of Fortnite and then others. They really want to just capture a share of all that revenue on iOS.

• 25:11Speaker 02

  And how can they do that if developers want to start integrating Bitcoin into all of their different products, right, and to their different applications? And so we look at it as, you know, maybe, I think that maybe the only way these companies will come around is if they hold a lot of Bitcoin, maybe in their treasury, right? And then there's a strong incentive over time to change those business models in order to accommodate this whole new internet. I don't think we're there yet. And so I think we'll see over the next couple of years, more of these public SPATs, applications that developers want to launch, but they're not allowed to launch. And that's top of mind for us as we think about, you know, what hardware we want to build next.

• 25:51Anthony Pompliano?

  Yeah. How do you think that this plays into like just decentralized internet in general, right? We talked a lot about Bitcoin and kind of some of their hardware business models, but like, does that also disincentivize the adoption of the decentralized internet? Because it essentially kind of cuts off what they deem most valuable?

• 26:08Speaker 02

  I think it does. I think one of the things when you're building a decentralized internet is you want people to store their own keys and you want them to run their own infrastructure. Those are like the two big things. And that's when we think about the products that we make, you know, those are like the, those are the two things that are top of mind. And so none of our devices today are built around the idea of users running their own infrastructure. Everything is cloud-based, right? You're using Apple's cloud services or Google's cloud services and that's just part of the device. It's like integrated at the operating system level and it's very hard to opt out without degrading your user experience significantly. So if we want consumers actually running their own nodes, you know, running their

• 26:52Speaker 02

  own, you know, applications essentially, we need to provide them with a different type of product than the types of products that are being made by the existing, you know, hardware players. And we need to provide them with, you know, an operating system that is designed to be able to communicate back to like maybe their hosted infrastructure and or self-hosted infrastructure. And, you know, I just think that.

• 27:19Speaker 02

  I think that, you know, with, with, especially with Google and Apple with just the cloud storage element, I think that um, that's just not how you, that's not how you build the decentralized internet. And then there's this practical approach like on iOS too with uh, you know, you're not even allowed to run the applications in the background on iOS. So like, how do you have, how do you have a node? Or even if it's not a node, like, how do you have an application that is, you know, listening for communications with other applications running in the background on iOS, like some kind of smart contract or something, or even a Bitcoin wallet that is able to give you a push notification when a transaction comes in. If you don't have a centralized server, it's actually really

• 28:04Speaker 02

  hard to do. The Blue Wallet guys actually had to make their own server that you can run yourself if you want, but 99% of people just rely on Blue Wallet's hosted server to be able to serve you with a push notification when a transaction comes in. So it gets like that granular, you know, it's, it's, it's things that you don't expect. It's all these restrictions start to add up. And then you're like, wait a minute, like, how do I actually run these applications on a phone? I can run them on a computer. I can run them on a Raspberry Pi. But how do I run them on like, you know, a phone?

• 28:33Anthony Pompliano?

  Absolutely. Give us a kind of an overview. It's like, what is the product suite that you have today? And then let's talk about kind of where you think you'll go next in terms of what's on the horizon or on the roadmap.

• 28:43Speaker 02

  So today, we have one product, and that's, that's Passport. And Passport, you know, our goal for Passport is to be the best key manager and personal security device that you can have. And we're almost trying to create a new category of device. I think right now, you know, you have, you have a hardware wallet. And we've seen some of the hardware wallet companies like Trezor do some cool stuff with, you know, making it a FIDO token, you know, or using it as like a password manager. And I think it works, but it's, it's very early in that implementation. So we're interested in taking Passport, which right now is just a Bitcoin hardware wallet.

• 29:22Speaker 02

  And growing it into more of like your hardware wallet, your password manager, the place where you put your 2FA codes. It's really easy when you have a camera to be able to, you know, save those 2FA codes on the device. And, you know, basically allow it to become like your ultra-secure, air-gapped, personal security device. And that's going to be really good as more and more things move to be private key-based. That's one of those other restrictions on the current platforms, which is like everything is based on email and password. As we move from email and password to private and public keys, we're going to need to be able to give users a better way to manage those keys. And so Passport becomes, you know, that air-gapped device. And then for future devices, I don't know how much I want to talk about it,

• 30:06Speaker 02

  but we're aiming for the next product to be a, like a node product. But rather than being built with a Raspberry Pi, it's, you know, built completely from scratch with all open-source hardware, with a screen and integrated hardware wallet, a camera, so that not only can you like run your own self-hosted applications at home, but you can use your node as like a hardware wallet. And it starts to get really interesting as, if you think like, when you think hardware wallet, you think like ultra-secure, maybe air-gapped, maybe not internet-connected. But we think of it more as like every device is essentially going to serve as a hardware wallet. It's just that there's going to be different levels of security for these devices.

• 30:48Speaker 02

  So the idea that you could have like a Bitcoin multi-sig setup with, you know, like your phone, a node that sits on your desk or shelf at home, and then a hardware wallet, we think is a really, really cool future. And that you can kind of run your self-hosted applications yourself and kind of one-click install those with an app store. So that's the next thing that we're working towards. And then we're also starting to work on the architecture and... You know, also raise some more capital to be able to pursue a phone, which we think is kind of like the Holy Grail and incredibly important to building this this new internet. And thinking about doing it where it's all based around,

• 31:32Speaker 02

  you know, private keys with a Bitcoin wallet as almost part of the OS. Because imagine being able to, you know, really easily and frictionlessly buy apps with Bitcoin, make in-app purchases in Bitcoin, stream payments and do all these other kinds of things that you just can't do on this current generation of hardware devices. Then, of course, as we build all this, everything we do is open source, the hardware and the software. And as we make revenue, we're hoping to be able to reinvest that that capital into the lower layers of the stack. Things like making chips that are open source and more secure, doing, you know, vertically integrating our manufacturing so that we're actually owning our own facilities. We're making these products.

• 32:15Speaker 02

  A lot of those types of things that didn't really matter before Bitcoin now matter. And so we're really thinking a lot about the components we're using. How do we use components that are more trustable? How do we make our own? Maybe it's not a, you know, a whole processor at first. Maybe it's just we make an open source touchscreen controller chip. So you know that you can trust your touchscreen better, you know? And then, you know, we're owning our own facility, you know, here locally in the US. And we're able to make that ourselves without relying on trusting other people. So we're looking at at really addressing this entire layer of like the physical stack.

• 32:51Anthony Pompliano?

  Yeah. What do you think is going to be the biggest challenge between here? And like building some of the stuff you're talking about there? Is it just time? Is it money? Is it something kind of from an ecosystem standpoint? Is it regulatory? But what do you think is the biggest challenge?

• 33:05Speaker 02

  I think that there's definitely.

• 33:09Speaker 02

  Definitely a money component, I think, is probably the biggest challenge. And then I think there's also just a building a community and ecosystem component, right, to it. You know, as we make these devices, and it's really important to say this. Our early devices are not going to be as good as the existing generation of devices from like an Apple in the beginning, right? We're going to be better in other areas. We're going to be able to provide users with freedom, with sovereignty, with control, with privacy, and be able to do all this stuff as open source.

• 33:46Speaker 02

  But it's really, really hard to directly compete with that Apple level UX because so much of it relies on centralized infrastructure and also just having the, you know, the capital to be able to make these these custom chips and other things that Apple can do that are, you know, the best in the world right now. So we're going to be not as good in some areas and we're going to be really, I think, better in other areas. And then over time, we'll get better in all the areas. But I think it's going to require a community of early adopters that is willing to maybe trade off certain things. We trade off a little bit of speed or performance, be willing to, you know, trade off the camera quality because it's like

• 34:26Speaker 02

  most companies can't make, I don't think any company can make a cellphone camera, you know, as good as as good as what's on the iPhone. So it's going to require users that are willing to accept those trade offs in return for greater sovereignty and control over their lives. And then hopefully if we get enough of those users, then we'll be able to have enough capital to just really easily close the gap in those other areas.

• 34:52Anthony Pompliano?

  Yeah, absolutely. Before we get into the rapid fire questions to wrap up, if somebody wants to learn more about the device, where can they go to to learn more or purchase one?

• 35:03Speaker 02

  Um.

• 35:06Speaker 02

  You can go to foundationdevices.com and you can learn more about Passport on there. And we're doing a coupon code POMP for $10 off your order.

• 35:18Anthony Pompliano?

  Oh, amazing. People use the coupon code POMP at foundationdevices.com. They'll get some money off?

• 35:25Speaker 02

  Yep, exactly.

• 35:26Anthony Pompliano?

  Amazing. You had to think for a second about foundationdevices.com. I was worried for a second. I was like, maybe he's got some complex secret URL we don't know about.

• 35:34Speaker 02

  We have many URLs. No, I'm just, I'm just kidding. I was, I was already thinking towards, towards the rapid fire questions.

• 35:40Anthony Pompliano?

  All right. So here we go. Three of them and you'll get to ask me one to, to finish up. First is, what's the most important book that you've ever read?

• 35:49Speaker 02

  The Fountainhead.

• 35:50Anthony Pompliano?

  Why?

• 35:53Speaker 02

  I think that the protagonist there, who's an architect, and this is obviously not the, the most popular Ayn Rand book, right? Usually everyone goes for Atlas Shrugged or something, but I think the protagonist is, is looking to create in this book, you know, buildings that are completely unlike everything else out there. And he's ridiculed, you know, basically his entire career over it. And he's willing to, he, he's unwilling to compromise on his principles. And because he believes so much in his principles and he knows what he's doing is right, that he's willing to kind of take that societal ridicule until he ultimately, you know, finds some success later on. So it's crazy the amount of,

• 36:39Speaker 02

  I don't know if I want to say almost like the amount of pain that, that this, you know, individual can endure in order to, you know, stick to their, stick to their guns. So really amazing book and also just very design oriented. And I, I like all that kind of design stuff.

• 36:52Anthony Pompliano?

  I love it. Second question, a little bit more personal, sleep schedule. And this comes to us from our friends over at Eight Sleep. I sleep on their thermo-regulated bed. It's like an ice cube. I used to sleep six hours. Now I'm like eight or nine hours. I feel amazing. My wife says I'm way less cranky and just a better human being in general. What is your sleep schedule and how's that evolved over the years?

• 37:16Speaker 02

  Uh, it's a total mess right now.

• 37:20Speaker 02

  Because we got

• 37:21Anthony Pompliano?

  Wrong answer.

• 37:23Speaker 02

  We got a new puppy um uh about month and a half ago. And so

• 37:29Anthony Pompliano?

  Puppy and kids, puppies and kids are the two answers. People are like, yeah, it's not going so hot right now. Those tend to be the the culprits.

• 37:38Speaker 02

  Yeah, I'm currently at, you know, we like doing work late at night. And so I'm usually up till like 1am or something and it's not working because the puppy wakes up at, you know, 6:30 and so I'm uh trying to shift my uh schedule to be earlier. So I was very proud to go to bed at uh before midnight last night.

• 38:01Anthony Pompliano?

  The puppy is changing your life.

• 38:02Speaker 02

  But I am interested in trying some of these um uh smart, you know, mattresses and stuff. And I've noticed too that I'm big on the cold exposure and to do like a cold shower before bed, I sleep much better.

• 38:14Anthony Pompliano?

  Yeah, eight sleep is the best one, obviously, you know, the the forget all the other ones. Uh next, the question is aliens. Were you a believer or a non believer?

• 38:24Speaker 02

  Total believer.

• 38:25Anthony Pompliano?

  Why?

• 38:26Speaker 02

  Um, and uh, I I think after uh diving into um the Tic Tac stuff, I I've really gone off the deep end in that. Uh, thank you. Uh, is it, I think Mike Solano, right? Was was he on your podcast? Um?

• 38:41Anthony Pompliano?

  Yeah.

• 38:42Speaker 02

  I believe I listened to that episode after reading one of his posts. And since then, I've gone way down the deep end over the last um maybe six months or so. And uh, and I'm constantly just looking out my window over the, you know, Boston skyline saying, you know, am I going to see something darting around up there? Hopefully.

• 38:59Anthony Pompliano?

  All right. So first of all, I don't want to take any credit for making Mike Solana converts on this podcast, but I will say that you and a couple of other people have specifically. I listened to that podcast and I did whatever, whether it was go read more of his stuff, you know, something he said on it or whatever.

• 39:19Speaker 02

  Too much, too much.

• 39:20Anthony Pompliano?

  Yeah. He, uh, he, he may need a, an invite back at some point because he, uh, he came on and, uh, he did not hold back, which I wish I always appreciate. Uh, but I am a believer as well, as you already know. Uh, I don't know if you're gonna see a Tic Tac over the Boston skyline, but if you see one, uh, the thing I keep telling people is, uh, take a picture.

• 39:38Speaker 02

  Right. That, that's what drives all my skepticism because I watched the documentaries and I, I, I tried to listen to other podcasts, but they can get a little too strange. They get a little too weird, right? And so, um, my, my, the biggest complaint is why is there not more, uh, video or photo evidence? It's 2021. Like, come on, guys. Um, but we'll see. I, I definitely, I definitely do believe it now.

• 40:03Anthony Pompliano?

  So we will not see a headline, Zach Herbert leads the charge to a storm area 51, but, uh, he will have his camera ready.

• 40:09Speaker 02

  I think, I think the right thing to do is instead, I, I feel like if I actually like, if I took a year off and I want to just go find the stuff, I would go hang out at like the military bases and, and nuclear bases, you know, hang around there because that seems to be where there's a lot of strangeness happening. Um, so I just go, you know, go camp out like as close as you can get to the nuclear facility, right? Before, without getting arrested and, uh, see what happens. Maybe, maybe one day, but I don't think, I don't think we'll be having any time off, uh, in the, in the near future, working on the startup.

• 40:41Anthony Pompliano?

  I, I completely agree. What one question you have for me to, uh, to finish up?

• 40:46Speaker 02

  Yeah, just kind of in theme of what we're doing. Um, I'm curious what you think of kind of self custody, um, for institutions because that's something that I know nothing about. My sense is you know, a lot more about how it works on the backend there. And we think so much about self custody for individuals, but it's obvious that all these institutions are just going right to some custodial providers. I'm curious what you think, what you think we need in order for the institutions to actually hold their Bitcoin themselves.

• 41:13Anthony Pompliano?

  So I'll give you an anecdotal joke that I used to use, which was when I would talk to the institutions, I would say, hey, listen, and by the way, you know, we're going to put 15, 20% of the fund into Bitcoin. But just so you know, we're not going to be having me walk around the office with like a USB stick in my pocket. Right. And the whole idea was it was basically a joke on, hey, listen, you need to understand that there's kind of a cover your ass, right? Or career de-risking of like, I'm not holding on to the Bitcoin. I'm not going to run away with the Bitcoin like there's some other part of a qualified custodian or whatever. So a lot of it is less about like, do they feel technically capable of doing it? Or do they have an appetite for it? It's more so just a complete cover your ass de-risk from a career perspective.

• 41:58Anthony Pompliano?

  And so that's where qualified custodians and investment mandates and things like that come in. A lot of the external third party due diligence processes and checklists and all that. Now, with all that said, that was me being overly kind and excusing why they want to do it. I have yet to meet a institution, there might be individuals at an institution, but an institution in general, that is ready to do self custody. They're not informed enough. They don't have the technical capabilities. They don't have kind of all the things that you would need in order to do it with any level of success, especially if there was a material amount of their fund exposed to Bitcoin or some other asset. And so I think we are like really, really far away from the kind of average institution to do it. What might happen first is you might get some hedge funds that converted to family offices

• 42:43Anthony Pompliano?

  or somebody like that who they're kind of acting as like large individuals, right? But they're still kind of an organization. They'll probably be the first to do it. And then eventually you'll kind of get it to go through the, through the, you know, kind of waterfall. I will say though, that anyone who's acting on a fiduciary duty, so pensions, endowments, that type of stuff, I just never see them doing it because they don't do it with any other asset. It's not a Bitcoin thing. It's just any asset. And it's just pure like, I don't want to get fired. I don't want to, you know, have them come with pitchforks and tell me how, you know, I lost the Bitcoin because we self custody it and I forgot where I put it, or I forgot the seed or whatever.

• 43:20Speaker 02

  Right. Makes sense. Well, hopefully, hopefully that'll change. And we're hoping that we can in the future make some products to help standardize that. But I think you're right. It's, it's super early there and it's just great to see them buying Bitcoin at all. And hopefully a lot more of them do.

• 43:35Anthony Pompliano?

  That's, uh, that's the way I look at it, at least. Uh, Zach, where can we send people to find you on the internet? Or, uh, reach out if they got more questions?

• 43:41Speaker 02

  Uh, easiest place to just, uh, I'm Zach Herbert on Twitter. I'm pretty active on Twitter, so that's the best place to go.

• 43:48Anthony Pompliano?

  So am I, my friend. So am I.

• 43:50Speaker 02

  I'm aware.

• 43:52Anthony Pompliano?

  Awesome, man. Listen, thank you so much for doing this. I'm a huge fan of what you guys are doing. I think that, uh, we just need more people building this stuff, so, uh, keep going. We're, uh, we're big fans and we'll have to do it again in the future.

• 44:02Speaker 02

  Cool. Thanks so much. Thanks for having me on.