Speaker 1: I believe bitcoin will have more purchasing power in twenty years,
Speaker 1: as not year.
Speaker 2: To year, but certainly decade to decade.
Speaker 1: I get asked all the time, like what do I
Speaker 1: think is going to happen with the presspect and I say,
Speaker 1: I have no idea.
Speaker 3: Figuring out where it will be in ten twenty thirty
Speaker 3: years is easier than where it will be in ten
Speaker 3: twenty days. Twenty thirteen, You'll work in New Jersey and
Speaker 3: you said it was a big problem. How big of
Speaker 3: a problem?
Speaker 1: I would say, it ends up being a tech problem,
Speaker 1: in operations problem. So I'm just like, Hey, Wells Fargo,
Speaker 1: Hey Bank of America, are like, why don't you give
Speaker 1: bank accounts to people in West New York?
Speaker 2: And the answer was.
Speaker 4: Zach Townsend is the CEO and co founder of Meanwhile,
Speaker 4: the world's first bitcoin life insurance company. He was California's
Speaker 4: first chief data officer and the founder of a banking
Speaker 4: API startup acquired by Silicon Valley Bank. With deep expertise
Speaker 4: in finance, tech and policy, he's now reshaping how we
Speaker 4: think about financial security.
Speaker 1: Life insurance in particular can be like needlessly complicated. That
Speaker 1: complication partially exists because of the way life insurance is sold, right,
Speaker 1: I'm aligned entirely that like this is like a basic,
Speaker 1: fundamental tool. It's not just that it's boring, it's also
Speaker 1: that the associations that people have with life insurance is
Speaker 1: like this thing that's being sold to you, right, not
Speaker 1: a thing that I choose to buy because it's solving
Speaker 1: this like fundamental need I have in my family.
Speaker 3: Zach, thanks for joining me today.
Speaker 2: Glad to be here.
Speaker 3: You work in the most boring industry in the world,
Speaker 3: and I'm sure whenever you mention it, people probably run
Speaker 3: for the hills. But it's actually something I'm super interested in, cool,
Speaker 3: something I spend a lot of time with. But I
Speaker 3: think it's because people misunderstand the tool. Yeah, so the
Speaker 3: dirty word we're going to talk about is insurance. Maybe
Speaker 3: it's as bad of a conversation starter at a cocktail
Speaker 3: party as maybe taxes. Yeah right, But but it's a
Speaker 3: super powerful tool if you know to use it. Most
Speaker 3: people just don't, so I want to get into that.
Speaker 3: I think there's I talk about it because there's a
Speaker 3: way to build massive wealth, tax efficiency, legacy planning, and
Speaker 3: extra capital to even work with in some way if
Speaker 3: it's done right, but most people just don't understand that.
Speaker 3: So I think, oh, like insurance, like stop right, But
Speaker 3: there's a lot that I want to dig into. So
Speaker 3: before we get into all that, give me your bitcoin
Speaker 3: journey and tech and bitcoin and then why the heck insurance,
Speaker 3: But let's start with like tech, your early life in tech,
Speaker 3: what you've built, and then how you got into bitcoin.
Speaker 1: Actually to start a little bit before that, I worked
Speaker 1: for Corey Booker, who's now a Senator, but he was
Speaker 1: the mayor of Newark, New Jersey, and I was like
Speaker 1: the head of Innovation CTO of Newark. I had grown
Speaker 1: up in New Jersey, had like studied finance and data
Speaker 1: science stuff, and I got assigned the financial inclusion portfolio.
Speaker 1: So I was really asking this question of why do
Speaker 1: people in West Newark not have bank accounts and like
Speaker 1: why do they do check cashing? And that's sort of
Speaker 1: what launched me in this whole journey. So Corey decides
Speaker 1: to run for Senate, yeah, and I was like, I don't.
Speaker 2: Care about the Senate, Like you can't do anything in
Speaker 2: the Senate. Yeah, I want to build stuff.
Speaker 1: And I had this background in data science and fintech
Speaker 1: and getting stuff done, like interacting with this financial inclusion
Speaker 1: and I really just went on Hacker News, which is
Speaker 1: like WHI Combinator's forum. I was like, what's the most
Speaker 1: innovative fintech company that keeps coming up? And that's how
Speaker 1: I ended up moving to San Francisco. Is I got
Speaker 1: a job at Stripe, and I didn't really know much
Speaker 1: about credit card processing or much about them.
Speaker 2: Other than they were doing a cool thing using tech
Speaker 2: and finance.
Speaker 3: Yeah, what year was that?
Speaker 2: That's twenty thirteen.
Speaker 3: Okay, early, let's stop right there on that part of
Speaker 3: the story, the financial inclusion piece. Yeah, so if you
Speaker 3: can remember, that was a long time ago, a whole
Speaker 3: another world ago for you, Right twenty thirteen you're work
Speaker 3: in New Jersey and you said it was a big problem.
Speaker 3: How big of a problem? Do you have any remembrance
Speaker 3: of the numbers at that time? And and and why
Speaker 3: was why.
Speaker 2: Is that a problem?
Speaker 1: Yeah, it's why it's a problem. Is like still somewhat
Speaker 1: mys serious to me? I think that fundamentally, I would say,
Speaker 1: it ends up being a tech problem and an operations problem.
Speaker 1: So you go, I actually, because Corey is Corey, I
Speaker 1: got to talk to like big banks, and I'm just like, Hey,
Speaker 1: Wells Fargo, Hey Bank of America, Like, why don't you
Speaker 1: have give bank accounts to people.
Speaker 2: In West Newark?
Speaker 1: And the answer was it's actually unprofitable, like the accounts
Speaker 1: are so small, and the operational costs of serving those
Speaker 1: people and servicing those accounts makes the like union economic
Speaker 1: subside down. And my immediate takeaway at the time was
Speaker 1: that doesn't make any sense, right, Like the cost of
Speaker 1: a database entry is free, Like we're all like the
Speaker 1: transactions in the bank account are not more complicated than
Speaker 1: the transactions like running through Twitter or Facebook.
Speaker 2: Like it shouldn't be that expensive.
Speaker 1: Now, I would say, I like have a lot more
Speaker 1: nuanced there, like there's fraud, there's like risks, koc. But
Speaker 1: at the time, I was just like, these are database enturies.
Speaker 1: They should be like almost free. Thus everyone should have
Speaker 1: a bank account.
Speaker 2: Yeah, and now I've like been on this whole journey,
Speaker 2: but this sort of I skipped over. But like I
Speaker 2: grew up relatively poor.
Speaker 1: I mean my dad was or lower class, Like my
Speaker 1: dad was a postman, my mother was a waitress. Like
Speaker 1: we like clipped coupons. So I was like very inherently
Speaker 1: interested in this question of like money, but.
Speaker 2: Definitely spending time.
Speaker 1: I forget, but like twenty five percent of the people
Speaker 1: in New York at the time were using check cashing
Speaker 1: and didn't have a make account. So I was like,
Speaker 1: this is just like profoundly broken.
Speaker 3: Most people can't even imagine that they don't live in
Speaker 3: that part of the world. They don't realize that about
Speaker 3: a billion, billion and a half people in the world
Speaker 3: today have no access to banking. And that's not just
Speaker 3: the world, it's the US.
Speaker 2: Yes, that's now. I mean you gotta think ten twelve.
Speaker 1: This is like before Chime, before Square Halts, before Venmo, Like, yeah,
Speaker 1: there was, Yeah, it was a even a bigger problem
Speaker 1: than but I completely I am not to come to
Speaker 1: the president, but like that's partially why we my co
Speaker 1: founder and I are both profoundly interested in this. You
Speaker 1: mentioned a billion people. That's actually what we say. We
Speaker 1: want to serve a billion people, which is like ten
Speaker 1: times more than a number of people will have life insurance. Yeah,
Speaker 1: and the point is just that digital money.
Speaker 2: Well, anyway, I'm skipping way ahead and stuff.
Speaker 3: So let's go back. So then you move to San Francisco,
Speaker 3: you get a job with Stripe For those that don't know,
Speaker 3: they're one of maybe I don't know, the fastest growing,
Speaker 3: biggest online comment processes. They're certainly in the online niche
Speaker 3: for sure. Yeah. I was with them forever or they
Speaker 3: were great, and then about a year ago, for some reason,
Speaker 3: they decided to shut my account off. But I haven't
Speaker 3: been there twelve years.
Speaker 2: But I wasn't the risk.
Speaker 1: Them though, So yeah, maybe I made a mistakes all
Speaker 1: those years ago.
Speaker 3: Yeah, so so you went there? What happened?
Speaker 1: Yeah, basically I got to Stripe and it's sort of
Speaker 1: a funny story.
Speaker 2: Simultaneously to applying to Stripe, a good friend and I
Speaker 2: applied to y Combinator. Okay, so famous startup celerrator.
Speaker 1: And so I started at Stripe and then y C
Speaker 1: offered us an interview, and you know, it ended up
Speaker 1: being the best life decision I ever made, Like to
Speaker 1: do y Combinator and start a company. There's obviously like
Speaker 1: one of the worst financial decisions ever made.
Speaker 2: Because even the small amount of.
Speaker 1: Sock I had will would be worth I don't even
Speaker 1: I try not to, like, like tens of millions of dollars. Yeah,
Speaker 1: but I think even in the few months I was there,
Speaker 1: you do get inculcated pretty fast into like you can
Speaker 1: just do things and you can just build things, and
Speaker 1: like I remember lividly, almost every email in the company
Speaker 1: at the time would be BCC do an email list
Speaker 1: that you could subscribe to or you could like so
Speaker 1: you you like really see what the company was doing.
Speaker 1: I remember I woke up and I had, you know,
Speaker 1: three hundred emails and it was all Patrick, the CEO
Speaker 1: of Stripe, emailing our three hundred biggest customers, just saying like, hey,
Speaker 1: how's it going, Like is there anything we can do
Speaker 1: to change? So it was a very short but fast
Speaker 1: education in I think the ways of y Combinator of
Speaker 1: startups of you know, just being an agent in the world,
Speaker 1: an entrepreneur, and then you know, interview at YC, get
Speaker 1: into YC and.
Speaker 2: Start a company called Standard Treasury. Same thing.
Speaker 1: Standard Treasury built financial infrastructure. It was relatively another like
Speaker 1: boring topic. We built like API layers between banks and FinTechs.
Speaker 2: Stripe actually ended up being one.
Speaker 1: Of our biggest users with they like a company in
Speaker 1: a box product closed Stripe at lists and the.
Speaker 2: Bank you get a bank account when they open the account.
Speaker 1: But it was sort of all of this part that
Speaker 1: like how do I use technology to like lower the
Speaker 1: marginal costs of these like basic building.
Speaker 2: Box and finance. And that company was a little.
Speaker 1: People won't be aware, but like there are many successor companies.
Speaker 2: Maybe people have done this afterwards.
Speaker 1: Actually two of our engineers went and founded another company
Speaker 1: that did it. Another one of our engineers moved with
Speaker 1: the UK to start a bank. We were just too early,
Speaker 1: like we couldn't really get the bank partnerships working, and
Speaker 1: ultimately sold that business to Silicon Valley Bank, which was.
Speaker 2: A going concern in twenty fifteen. And you're a respectable
Speaker 2: place to tell the company.
Speaker 1: Yeah and yeah. In that journey, that's when I was
Speaker 1: first introduced to actually the very first time I ever
Speaker 1: heard about bitcoin, which I sort of regret, not like
Speaker 1: going is a bunch of the infrastructure engineers at Stripe,
Speaker 1: like we're mining bitcoin in their MIT dorm rooms. Yeah,
Speaker 1: and it was like a dinner conversation or something, but
Speaker 1: it seemed quite distant for me. And the first time
Speaker 1: I really got it.
Speaker 2: Was in twenty fifteen.
Speaker 1: I was selling Standard Treasury and Coinbase was interested in
Speaker 1: buying the company, not really because they wanted the financial
Speaker 1: like the tech we had built, but because we don't
Speaker 1: want to like payments expertise and KYC and AML expertise,
Speaker 1: and we sort of had that. We were a small team,
Speaker 1: but like we really knew that stuff well. And so
Speaker 1: the first bitcoin ever received, I don't remember if it
Speaker 1: was Brian or Fred, but like literally they like download
Speaker 1: the coin base app and like sent me bitcoin. And
Speaker 1: I understood a media even with the little experience at
Speaker 1: it Stripe, but then the big experience as Saren Treasury,
Speaker 1: like this was something categorically different, right, Like it was so.
Speaker 3: Fast, and that's because you had been focused on lowering
Speaker 3: costs and finance specifically, and so all of a sudden
Speaker 3: you saw that and it like clicked for you.
Speaker 1: Yeah yeah, yeah, but I guess didn't click enough to
Speaker 1: sell my company in Coinbase.
Speaker 3: Yeah.
Speaker 1: And then I, I mean, we can talk about the
Speaker 1: other parts of my professional life, but I've basically been
Speaker 1: like dollar costs averaging into bitcoin since then. Definitely, like
Speaker 1: sort of saw the Ico bubble of like eighteen nineteen,
Speaker 1: and so I thought that was ridiculous and really came
Speaker 1: back to it like when it was the rice right
Speaker 1: like moment in my life to start a company again.
Speaker 3: Yeah, Now I'm curious a couple of things. So one,
Speaker 3: it kind of shows your focus, right, lowering costs, more inclusion,
Speaker 3: things like that. But you said that, you know, going
Speaker 3: to the White Combinator and the short stint at Stripe
Speaker 3: and things like that maybe weren't the best financial decisions,
Speaker 3: but what worked really well. And you said that you
Speaker 3: had a short education, but something that was really impactful.
Speaker 3: I'm curious, you know, as you found in different companies,
Speaker 3: what are some of the key things that you've learned
Speaker 3: there that you continue to repeat in the businesses that
Speaker 3: you that you run.
Speaker 1: Now, yeah, I think I alluded to it, But I
Speaker 1: think that people often like need think they need permission
Speaker 1: from other people to do things. And I think being
Speaker 1: an entrepreneur is realizing that there's no one else to
Speaker 1: do the work and that you can just do it.
Speaker 1: Like I look back, even over the course of this company,
Speaker 1: we've been running it for about three years.
Speaker 2: I didn't know anything about life insurance when we started.
Speaker 2: I mean I knew a little bit about it.
Speaker 1: I knew enough about it to say, like, I think
Speaker 1: there should be a bitcoin life insurance company.
Speaker 2: But I just had to go and learn it, Like
Speaker 2: I had to like.
Speaker 1: Read legal documents and you know, write a business plan
Speaker 1: and recruit people.
Speaker 2: And I think that you can.
Speaker 1: And I was on this train too, right, Like you
Speaker 1: go to a good high school, you like get straight a'ge,
Speaker 1: you like do well in the SAT, you like go
Speaker 1: to a college. It all seems very laid out for you.
Speaker 1: And there's just like things you can achieve. And entrepreneurship
Speaker 1: is a lot of ambiguity and you just have to
Speaker 1: wake up and like decide what am I going to
Speaker 1: do today? Just like and like how do I push
Speaker 1: the company forward? And there's no one telling you that.
Speaker 1: And but you also like come to realize like you
Speaker 1: can just do things like everything it's actually this amazing
Speaker 1: like change your perspective, like everything was made by someone.
Speaker 1: How this microphone was designed, Like someone designed it right,
Speaker 1: someone on your team decided how to set this up.
Speaker 1: Like every single thing in the world is the result
Speaker 1: of agency, and most people just don't act that way.
Speaker 3: Why I I.
Speaker 2: Don't have a good answer. I've sort of always been
Speaker 2: this way. Maybe it's something I think a.
Speaker 1: Lot about, Like on my team and my and my children,
Speaker 1: those are different things. Is like how do you instill
Speaker 1: a sense that like the world is a place where
Speaker 1: you can be an author.
Speaker 2: Oh, it's harder, it's more uncomfortable. You fail a lot.
Speaker 2: And my first company is essentially.
Speaker 1: I mean it's looked back on, like I learned a lot,
Speaker 1: and venture capitalists and other people realize now think we
Speaker 1: were geniuses.
Speaker 2: We're just too early.
Speaker 1: But at the time, like I put three years of
Speaker 1: my life into a company and we sort of like
Speaker 1: failed up into like an acquis not an acquihire, a
Speaker 1: little more an acquihier with Seve and that's like I
Speaker 1: think it could be crusher.
Speaker 3: Yeah, I also think about this question a lot, so
Speaker 3: I was curious what your thoughts were on that. I
Speaker 3: think maybe as you become a father you think about
Speaker 3: it even more because I'm trying to think about my
Speaker 3: kids and like, how could I instill this in my kids?
Speaker 3: And is it nature versus nurture? Things like that, And
Speaker 3: we were just talking before we started recording. Last week,
Speaker 3: I went up to Canada. I took my youngest with me.
Speaker 3: I like to do individual trips with my kids. Took
Speaker 3: my youngest up there and we did some snowboarding and
Speaker 3: helli boarding and things like that. And I was asking
Speaker 3: her these types of questions. You know how she's fifteen, okay,
Speaker 3: and so you know, I asked her, like, well, we
Speaker 3: were talking about, like imagine like most people they get
Speaker 3: like two weeks of vocation a year. Yeah, Like we've
Speaker 3: taken two weeks offication this month, just as much as January, like,
Speaker 3: but they get two weeks a year. And I want
Speaker 3: my kids to think that there's this other world for them, right,
Speaker 3: And I'm like, why do you think it is that
Speaker 3: most people just want to work for forty years and
Speaker 3: get two weeks of vacation a year, like, imagine that life, right,
Speaker 3: And she's like, I don't know. I think you know
Speaker 3: because I guess going on your own is harder, right,
Speaker 3: kind of what you said, But I said harder, but
Speaker 3: they work way longer than I do. Yeah, right, so
Speaker 3: then maybe it's like the sense of risk. Maybe it's
Speaker 3: to the point that you said, where like we've been
Speaker 3: told to go to school, giggod grades.
Speaker 1: It isn't It's not necessarily true that you work harder,
Speaker 1: although you probably do work a lot of like me,
Speaker 1: like a lot of odd hours, and yeah, you know
Speaker 1: you're always thinking about it. But I think it's yeah,
Speaker 1: it's not it's risk. It's emotional risk, like it's risk
Speaker 1: about your self reception, it's risk among your peers, like
Speaker 1: if all of your peers are the fear.
Speaker 2: Yeah, I think it's a lot of fear.
Speaker 3: Yeah, or even like.
Speaker 5: I don't know, like arepreneurship puts stress on my relationship
Speaker 5: with my life right, Like we started this, but like
Speaker 5: now it really starting to it is like working and
Speaker 5: it feels that way, but we're in year three.
Speaker 1: Like the first year we just like work to get
Speaker 1: regulatory licenses, and in the second year we just like
Speaker 1: built tech and then we launched and then like now
Speaker 1: it's a year later and we're like, oh, like it's working.
Speaker 1: But that's three years where my wife has had to
Speaker 1: be very patient and gracious and and that's hard. It's
Speaker 1: hard to make that choice when you have kids.
Speaker 3: When you have people will rely on you, and it's
Speaker 3: certainly not a smooth path. I mean, my entrepreneur journey
Speaker 3: has seen feast and famine, boom and bust, right, so
Speaker 3: then there's there's that. There's that as well. So safety
Speaker 3: or or freedom or whatever right, safe, safety or adventure,
Speaker 3: I guess choose which one so to other lessons maybe
Speaker 3: if there's any lessons on management or like how you
Speaker 3: think about scale with the business. I mean you had
Speaker 3: to have learned some really good stuff both at Stripe
Speaker 3: and White Combinator. I'm just curious and.
Speaker 1: Yeah, yeah, I think there's a tolerance for risk. We
Speaker 1: talked about a realization that the downside maybe isn't as
Speaker 1: bad as you can imagine it, that you can do
Speaker 1: things in the world. I think Online Combinator and Stripe
Speaker 1: are both very focused on.
Speaker 2: Having you be focused, maybe.
Speaker 1: Like being really clear on what it is, yeah, or
Speaker 1: just like what matters, Like people can really even fill your.
Speaker 2: Time with things that don't matter.
Speaker 1: It's really easy, like in entrepreneurship sometimes like to go
Speaker 1: to meetings or go to conferences or talk to people
Speaker 1: aren't So when I did y see Hall Graham, who
Speaker 1: was the founder, was running it, and I think his
Speaker 1: line was something like you should eat, sleep, exercise, talk
Speaker 1: to users, and code and it's not on that list,
Speaker 1: don't do it right. And so there's a certain discipline
Speaker 1: there of waking up and saying, like what really matters,
Speaker 1: not what makes me feel good, not what's gonna maybe
Speaker 1: get me esteem or make me feel like I have
Speaker 1: his team. I find this actually a lot easier after
Speaker 1: having kids, because every hour I am working is an
Speaker 1: hour I'm choosing not to be with them.
Speaker 3: Put a new priority.
Speaker 1: Yeah, so it has helped me even like focus more.
Speaker 1: But I think that maniacal focus is something I definitely
Speaker 1: learned on management. Neither of those places when I was
Speaker 1: you know, when you're in YC, you have like it's
Speaker 1: you and your co founder or you and your two
Speaker 1: compounders and stripe. I think at the time there weren't managed,
Speaker 1: so it wasn't I think in the overall journey of entrepreneurship.
Speaker 1: You know, I just had I'm I'm in the process
Speaker 1: of raising some more money for Meanwhile my company.
Speaker 2: And I had a vc UH he wanted to interview
Speaker 2: they wanted to interview a bunch of my team.
Speaker 1: So this happened just this week actually, like interviewed like
Speaker 1: four or five minute people.
Speaker 2: And he was giving me a.
Speaker 1: Debrief just before I came over here, and he's like,
Speaker 1: these people like believe like this is a mission for them,
Speaker 1: And it's so corny to like say this line where
Speaker 1: you're like, you don't teach people to to build a
Speaker 1: or you don't tell people to build a boat, you
Speaker 1: like inspire them to long for the ocean, or like
Speaker 1: there are all these lines like this, but I think
Speaker 1: that's true. Yeah, and there's a lot of like tactical
Speaker 1: management things about like how you give empathetic feedback. But
Speaker 1: I think the most important thing I find is I
Speaker 1: need to believe what I'm doing. And if you really
Speaker 1: believe in what you do what you're doing, you to
Speaker 1: find a way to communicate that to others so they
Speaker 1: believe and then they'll run through mountains. Like then you're
Speaker 1: not asking telling people to work sixty hour weeks or
Speaker 1: eighty hour weeks or whatever. They're working those weeks like
Speaker 1: they you know, you might have to tell them they
Speaker 1: need to do this better or that better. But that's
Speaker 1: to me, like the core of management is to like
Speaker 1: think of it less about managing people and more about
Speaker 1: leading people.
Speaker 3: Yeah. I loved the I mean, both of those tips
Speaker 3: are amazing, But the first one, which was like the
Speaker 3: maniacal focus something. For the last like six seven months,
Speaker 3: I've been just really honed in on. I had a
Speaker 3: conversation about that earlier today, and I think about the
Speaker 3: difference of Elon Musk. Maybe the greatest tech on direpreneur
Speaker 3: that we have at least today, right and a homeless
Speaker 3: guy is how.
Speaker 2: They spend their twenty four hours.
Speaker 3: Yeah, that's right, or difference of me or you. It's
Speaker 3: like what am I choosing to read or eat or whatever?
Speaker 3: And it's like and then and then when you start
Speaker 3: thinking about that, then it's like what I what I
Speaker 3: say is like really being ruthless with how I spend
Speaker 3: every hour. And I love the point that you said
Speaker 3: about taking away from your kids. So I love that
Speaker 3: something Like I said, I think it's so I'm super
Speaker 3: passionate about right now and just like maniacal focus on
Speaker 3: that as well. Okay, So what I find interesting is
Speaker 3: you said that you know, working for Booker, you realize
Speaker 3: there was a problem with banking and people being unbanked
Speaker 3: and inefficiencies there, and then like going to Stripe as
Speaker 3: a company that sort of makes that easier. You set
Speaker 3: up another company that also helped with that as well,
Speaker 3: and like I think as a founder, like we're trying
Speaker 3: to create solutions to problems. Yep. Right, So now you
Speaker 3: have a company that's in the life insurance space, so
Speaker 3: you it seemingly would be that you saw a problem
Speaker 3: that needed to be fixed and you wanted to solve that,
Speaker 3: but you said that you don't know it or didn't
Speaker 3: know anything about insurance.
Speaker 2: Well, I didn't know a lot about insurance.
Speaker 1: I guess I should say, right, like, now I have
Speaker 1: to know like actuarial math and like tax rules. And
Speaker 1: I won't even bore you with the acronymics. I mean, like,
Speaker 1: there's so much about running a life insurance company, right, But.
Speaker 2: I think that you're right that it's interesting. Actually, in Bermuda,
Speaker 2: which is.
Speaker 1: Where our insurance company is based, they don't call it
Speaker 1: life insurance.
Speaker 2: They call it long term insurance.
Speaker 1: And that is what really attracted us to it, Like
Speaker 1: it's it's really about everything long term. It's retirement, it's
Speaker 1: what happens after you die. It's what happens if you
Speaker 1: live longer than you're supposed to and you didn't plan
Speaker 1: for that. It's it's this class of like savings. And
Speaker 1: that's really what animated us from the very beginning, is
Speaker 1: we said, Okay, there's this new economics system being built
Speaker 1: in front of our eyes, and it's an economy. It's
Speaker 1: not you know, it's not just trading numbers on the screen,
Speaker 1: like there's a new economy coming into the world and
Speaker 1: it's unique and that it's global and it's decentralized and
Speaker 1: it doesn't have a government as far as bitcoin. Bitcoin, yeah,
Speaker 1: right and that. But that economy, more and more people
Speaker 1: are going to come on to it, more and more
Speaker 1: people are.
Speaker 2: Going to use it. It's going to grow.
Speaker 1: That economy is going to have like basic fundamental financial
Speaker 1: institutions that are solving like core financial needs. And we
Speaker 1: came to life insurance like through that angle. We were like, Okay, yeah,
Speaker 1: there are payments companies, and there are banks, and there
Speaker 1: are exchange or things that like a look like banks
Speaker 1: and bitcoin and exchanges. We're really comfortable with a lot
Speaker 1: of regulatory pain. That was something like we realized about
Speaker 1: ourselves and we sort of naturally iterated to this is
Speaker 1: like a core fundamental financial like in the end of
Speaker 1: the day savings and it really fits into hoddling like
Speaker 1: this this just like cultural idea and bitcoin that you're
Speaker 1: saving for your kids, that you're passing on your generational wealth,
Speaker 1: that you're like hedging against inflation and currency debasement, and
Speaker 1: that like all fit together in our minds, like at
Speaker 1: very beginning, like we like we're like, oh, this is
Speaker 1: like what life insurance is about.
Speaker 3: I love I love how you said that it's they
Speaker 3: don't call it life insurance, they call it long term. Yeah,
Speaker 3: And I think back to kind of the intro where
Speaker 3: I said, like, insurance is the most boring subject in
Speaker 3: the world, and most people don't want to put away
Speaker 3: for a rainy day of something that maybe never comes
Speaker 3: sort of thing. But but I said that it's a tool, though,
Speaker 3: and if you use the tool properly, you can build
Speaker 3: massive wealth with it. That's how I'm I'm using it.
Speaker 3: Most just don't understand that, so they're not interested in it.
Speaker 3: But sort of what you.
Speaker 1: Said where it kind of just one thing I'm sorry
Speaker 1: to interrupt, is that there's also this undercurrent that insurance
Speaker 1: it can be like life insurance in particular, can be
Speaker 1: like needlessly complicated, and that complication partially exists because of
Speaker 1: the way life insurance is sold.
Speaker 2: Right, So there are.
Speaker 1: Agents who sell life insurance. Agents want big commissions, so
Speaker 1: they're incentivized to sell you products that have high margins.
Speaker 1: High margin products tend to be like complicated products. So
Speaker 1: there's like all these terms and indussies and optional options
Speaker 1: and riders and all this stuff, and it's I think
Speaker 1: it's it. I'm aligned entirely that like this is like
Speaker 1: a basic fundamental tool, Like I assume we'll get to
Speaker 1: me describing the actual product we have, but it is
Speaker 1: like a product from the eighteen thirties.
Speaker 2: It is like very simple, it's very straightforward. It's like fundamental.
Speaker 1: And I think it's not just that it's boring. It's
Speaker 1: also that the associations that people have with life insurance
Speaker 1: is like this thing that's being sold to you, right,
Speaker 1: not a thing that I choose to buy, because it's
Speaker 1: solving this like fundamental need I have in my family.
Speaker 3: Well, and I think it's like, okay, great, so I
Speaker 3: pay every month and then when I die, I get money.
Speaker 2: Yeah, but it's so.
Speaker 3: Much more than that if you use it properly. And
Speaker 3: I think that's what I'm alluding to, or it's not
Speaker 3: like just some boring thing where I just like pay
Speaker 3: every month and maybe if I die within this timeframe,
Speaker 3: I get some money, as opposed to like, oh no,
Speaker 3: there's a way I can actually build my wealth faster
Speaker 3: using it.
Speaker 2: So yeah, let's talk about.
Speaker 3: The product, So how does the product help me to
Speaker 3: build wealth, store wealth, transfer wealth better than just the
Speaker 3: old pay for twenty years and if you die within
Speaker 3: that time, we're gonna get some money.
Speaker 2: Yeah.
Speaker 1: Well, I'm gonna have to start by explaining some boring
Speaker 1: life insurance things.
Speaker 3: So our products are they're important, subjets, pay attention.
Speaker 1: Are our products a whole life product, so it lasts
Speaker 1: your whole life, as opposed to what you're talking about,
Speaker 1: which is term life which at last.
Speaker 3: Insurance survivorsus insurance you rent.
Speaker 1: Yeah, so a whole life last your whole life. And
Speaker 1: not to be the baar or bad news for anyone
Speaker 1: who's watching or listening. Since you will eventually die, there
Speaker 1: will eventually be a payout. Our product is called limited pay,
Speaker 1: so you don't pay forever. You pay for ten years,
Speaker 1: although a bunch of people prepay, so you'll sort of
Speaker 1: like pay up front and then there's a fixed guaranteed payout.
Speaker 2: So I'm just gonna use like relatively large numbers.
Speaker 1: You might pay like one bitcoin a year for ten years,
Speaker 1: and then when you die, your kid's wife beneficiaries will
Speaker 1: get fifteen bitcoin.
Speaker 5: Ay.
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Speaker 1: So what are you getting from that? It's it is
Speaker 1: so much more than the fifteen as you're saying. So
Speaker 1: the first thing is there is like literal protection. Right,
Speaker 1: so you put in one bitcoin the first year, get
Speaker 1: hit by a bus, your kids get fifteen, so there
Speaker 1: is some like chance you'll do tomorrow and you are
Speaker 1: protected from that in a again like inflation hedged, like
Speaker 1: durable store of value you know, fundamentally, if you bought
Speaker 1: a whole life insurance policy in twenty eighteen, you've seen
Speaker 1: the value of your that goes to your family decrease
Speaker 1: by thirty percent.
Speaker 3: Because of inflation, not nominally nominally purchasing and purchasing power.
Speaker 1: Yes, so you've seen that purchasing power go down, Whereas
Speaker 1: if you had bought the same policy in bitcoin, you've
Speaker 1: seen the purchasing power go up. So there's that protection
Speaker 1: in that store of value.
Speaker 3: So for round, I mean, we're just spitballing around the
Speaker 3: numbers here, but you're saying that potentially the amount of
Speaker 3: bitcoin I put in could grow by about fifty percent.
Speaker 2: Yes, that would be for like a forty year old, healthy.
Speaker 3: Forty year old yeah right. Versus, if I was doing
Speaker 3: a traditional FIAT based plan, I might see my wealth
Speaker 3: go up by one hundred percent or two hundred percent,
Speaker 3: but the purchasing power of that one hundred percent increased
Speaker 3: fiat went down. Versus, even though my bitcoin would buy
Speaker 3: fifty percent, Not only they get fifty percent increase in bitcoin,
Speaker 3: but I also got the other whatever.
Speaker 2: Yeah.
Speaker 1: Actually, just to explain why that is is there's sort
Speaker 1: of like a rate of return in the policy, right,
Speaker 1: so we turn ten into fifteen and we we will
Speaker 1: definitely talk about how we do that. But the like
Speaker 1: in a dollar policy, you go buy corporate bonds, there's
Speaker 1: like a treasury yield curve, like people can get seven
Speaker 1: eight nine percent returns and dollars and you compound that
Speaker 1: over your lifetime. In our policy, because it's in bitcoin terms,
Speaker 1: that is everything we do is every promise we make
Speaker 1: the whole company is entirely denominated in bitcoin. We make
Speaker 1: a much more conservative promise on the yield because getting
Speaker 1: yielded in bitcoin is you know, is something we're very
Speaker 1: careful about. Yeah, there are no like safe seven percent
Speaker 1: returns in bitcoin, so that's why the ratio is lower.
Speaker 1: That actually gets to the second benefit. So the first
Speaker 1: is the protection. The second is we are turning ten
Speaker 1: to fifteen two percent returns. Is at the policy, if
Speaker 1: you could could get two percent returns on your own bitcoin,
Speaker 1: which maybe you can, maybe you can't, you would owe
Speaker 1: income tax every year. So that compounding that growth inside
Speaker 1: the policy is tax free. So in that way, it's
Speaker 1: like a four one K or an ira or any
Speaker 1: number of like tax advantaged.
Speaker 2: Vehicles.
Speaker 1: The third thing, which I think you've alluded to a
Speaker 1: few times is that you can take a policy loan
Speaker 1: out of the policy. So you're putting this value in
Speaker 1: the policy. That value is increasing over time because of
Speaker 1: the savings rate is also increasing over time because of
Speaker 1: the price of bitcoin or the purchasing power ability of
Speaker 1: bitcoin is going up over time. And then we comply
Speaker 1: with all of these complicated US tax rules so that
Speaker 1: US folks can borrow again bitcoin out of the policy
Speaker 1: tax free.
Speaker 2: So that means if bitcoin.
Speaker 1: Is at a million dollars a whole coin or ten
Speaker 1: whatever you think it's going to be, and you need liquidity,
Speaker 1: you can pull value out of the policy without incurring
Speaker 1: new capital gains tax.
Speaker 2: So for most of our policyholders, we're really.
Speaker 1: Talking again about the hoddling, like this is about saving
Speaker 1: for your kids, but also there's this optional like be
Speaker 1: your own bank like wealth building element of it that
Speaker 1: if in ten years or fifteen years or twenty years,
Speaker 1: you did want to get some liquidity from your bitcoin,
Speaker 1: this is the vehicle to do it in because if
Speaker 1: you sold bitcoin like out of your self custody wallet,
Speaker 1: you would ow capital gains tax in the whole life.
Speaker 3: Most people sell it as like sort of like this
Speaker 3: infant banking concept, right, be your own bank kind of concept. Right,
Speaker 3: So instead of borrowing money from the bank at eight
Speaker 3: nimes whatever the interest is, I can borrow myself and
Speaker 3: pay myself. The key is paying myself back the same
Speaker 3: interest I would be paying the market se come out ahead.
Speaker 3: And so you're saying you could use it similar in
Speaker 3: a way.
Speaker 1: Yes, yes, yes, that we have some policy holders who
Speaker 1: like don't even yet aren't marited of kids, and I
Speaker 1: think it's both that they conceive of their bitcoin wealth
Speaker 1: as like intergenerational savings.
Speaker 3: I'm curious on like a typical whole life policy. You know,
Speaker 3: typically they have like a five percent guaranteed rate of
Speaker 3: return for example, right, you're saying it's like two percent,
Speaker 3: two percent guaranteed, Like they, okay, we have two percent.
Speaker 3: So typically, like I would have a five percent guaranteed
Speaker 3: rate return and then I could borrow at maybe five percent.
Speaker 2: Yeah, So ours works is that we guarantee you two
Speaker 2: percent returns and then in the future you can borrow
Speaker 2: and then our stated int straight charges three percent, which actually,
Speaker 2: like what companies do is they charge you what they
Speaker 2: expect they could earn on the asset. You're borrowing. Yeah,
Speaker 2: so you are like paying a little bit more than
Speaker 2: we're guaranteeing you.
Speaker 1: And how that works is we end up setting a
Speaker 1: maximum amount that you can borrow out the policy, which
Speaker 1: is like ninety percent LTV against like the saving the
Speaker 1: implicit value of the policy. And with that ninety percent
Speaker 1: LTV requirement, you can never owe more than the death
Speaker 1: benefit that you're owed.
Speaker 3: And you're paying two percent compounding. Correct, And so what
Speaker 3: a blood people don't understand is the difference of compounding
Speaker 3: versus simple interest.
Speaker 2: Ye.
Speaker 3: Yeah, So if I were to put fifty thousand dollars
Speaker 3: into an account and earn five percent compounding over five years,
Speaker 3: I think I did the math was like sixty seven thousand.
Speaker 3: If I borrowed the five percent back out and paid
Speaker 3: five percent interest, It's like it was like fifty four thousand.
Speaker 3: It was. It was a nine thousand dollars difference, whatever
Speaker 3: the exact math was. But even though I'm earning five
Speaker 3: percent and then borrowing at five percent, I end up
Speaker 3: with a nine percent, nine thousand dollars advantage because one's
Speaker 3: earning compounding versus one is simple correct. So I haven't
Speaker 3: done the math on your numbers, but potentially, right, even
Speaker 3: a two percent compounding beats the three percent simple or
Speaker 3: comes out someone.
Speaker 1: Yeahecause they come out basically flat flat.
Speaker 2: Yeah, that's sort of maybe the way to think of it.
Speaker 1: Okay, Yeah, and then at the end of the day,
Speaker 1: you never pay the well, you don't pay the loan back.
Speaker 1: You eventually die and again tragically.
Speaker 3: And then we don't get out alive.
Speaker 2: Yeah, and then it's like netted against the benefit.
Speaker 3: Right.
Speaker 1: So in the example I used earlier, where you've put
Speaker 1: one bit whinning a year for ten years, you're getting
Speaker 1: fifteen guaranteed when you die or your your kids are beneficiaris.
Speaker 1: And then you know, in year fifteen or whatever, you
Speaker 1: want to borrow five bitcoin out. You borrow that five
Speaker 1: bitcoin out. It's you know, you're being it's a loan,
Speaker 1: so you're like being charged the interest. So let's say
Speaker 1: that five becomes seven, you die, then your kids just
Speaker 1: get eight, right, the fifteen minus the seven.
Speaker 3: Right.
Speaker 1: So the expectation isn't that people would like actively be
Speaker 1: trading the loan, and that's one of the things that
Speaker 1: people find attractive, right, Like, sometimes you get asked this question,
Speaker 1: why couldn't I just go on ave or you know
Speaker 1: some DeFi protocol, or couldn't I go to the bank
Speaker 1: and borrow dollars against the bitcoin. But fundamentally then you're
Speaker 1: dealing with a currency mismatch, and you're dealing with like
Speaker 1: the potential like just you know, month over month volatility
Speaker 1: of bitcoin or you know, having a margin call or whatever.
Speaker 1: In our case, you know, you make the loan and
Speaker 1: like there's no, it's all in bitcoin terms. So it's
Speaker 1: in that way a lot safer and more secure, and
Speaker 1: you're getting the tax RFT.
Speaker 3: So when you say it's in bitcoin terms, that mean
Speaker 3: like when I come and make a make up, make
Speaker 3: a loan or request alone, it would be like, hey,
Speaker 3: I need two bitcoin, correct versus I need two hundred
Speaker 3: thousand dollars. But then that would also mean I have
Speaker 3: to pay it back in bitcoin again.
Speaker 1: But because you have this death benefit coming in bitcoin terms, yeah,
Speaker 1: it's not really like you're not really short bitcoin, because
Speaker 1: you're right right right, you're a long bitcoin on the
Speaker 1: death benefit.
Speaker 3: Yeah yeah, yeah, yeah. Uh. Debt works really well in
Speaker 3: an inflacenary economy. That doesn't work that works against you
Speaker 3: in a deflationary economy. So that's just something to keep
Speaker 3: in mind. And then I think you know, another strategy
Speaker 3: that people would typically employ on like a whole life
Speaker 3: policy would be like spinning down the death benefit, which
Speaker 3: I think is basically what you're saying, right, it's kind
Speaker 3: of kind of the same thing, right, and then when
Speaker 3: you die in this example as you proposed, right, so
Speaker 3: then my kids get the eight bitcoin for example, or
Speaker 3: war the fifteen whatever. Is that tax free?
Speaker 2: Yeah? It is income tax free.
Speaker 3: Income the way not capital.
Speaker 2: Is Yeah, it's capital gains and income tax free. Whether
Speaker 2: it's a state tax free is a life structuring question.
Speaker 1: So the state taxes, yes, state taxes. So that the
Speaker 1: way that works is you have a trust, you have
Speaker 1: a trust irrevocable. Yeah, you put you have the irrevocable
Speaker 1: trust by the policy, right which we have.
Speaker 2: You know users do that.
Speaker 1: So that the way you get insurance policy outside of
Speaker 1: your estate is the same way you get like any
Speaker 1: asset outside of your state.
Speaker 2: And you know, we.
Speaker 1: Have policyholders with a range of sophistication and you know,
Speaker 1: different structure goes, so that the estate tax is the
Speaker 1: only one that like you need like an extra layer
Speaker 1: of planning around and that's.
Speaker 3: Where you need to learn how to use the tool properly. Correct, Right,
Speaker 3: it's a tool, but some people know how to use
Speaker 3: and these.
Speaker 2: Things are actually someone in conflict that we've been talking about.
Speaker 2: Like if what you care about out is.
Speaker 1: Like spending down the policy before you die, you actually
Speaker 1: want to be the owner because you're the one who
Speaker 1: borrows against the policy.
Speaker 2: But if you're primarily.
Speaker 1: Using it as a tool to pass on uh bitcoin
Speaker 1: to your you know, more bitcoin to your children, then yes,
Speaker 1: you put it, you put it inside a trust.
Speaker 3: It gets it gets complex because my trust could borrow
Speaker 3: the money and then it could loan me the money. Correct,
Speaker 3: And we can do layers and yeah.
Speaker 1: Your your wife's a beneficiary. Yeah yeah, yeah, so consult
Speaker 1: your attorneys.
Speaker 2: Yeah.
Speaker 3: Well, and it needs to be done on an individual
Speaker 3: basis of course. So this is something that that does require,
Speaker 3: you know, I advocate for using tax strategists and tax
Speaker 3: attorneys and then a state state planners and attorneys and
Speaker 3: all those things. I mean obviously depends on the size
Speaker 3: of your state, the more intricate you'd have to be.
Speaker 2: But it's exactly what you said, Like I guess just
Speaker 2: to pause and say, to go back.
Speaker 1: To the financial inclusion story for a second, Like our
Speaker 1: ultimate vision, right is if you are a middle class
Speaker 1: person in Argentina, you do not buy life insurance because
Speaker 1: you are going to live longer than the Argentinian beso
Speaker 1: but most likely right, Like just historically there's been there
Speaker 1: have been many versions of the Argentinian beso over you
Speaker 1: might live longer than the US dollars, you might live
Speaker 1: longer than the US dollar, right, So that's a core
Speaker 1: fundamental beginning for us.
Speaker 2: Is most importantly, like.
Speaker 1: This is a tool in like the true global store
Speaker 1: of value, and like that is why we create the company.
Speaker 3: Now.
Speaker 2: It is also the case.
Speaker 1: That every country in the world basically that has taxes,
Speaker 1: has tax benefits and tax privileges for life insurance, for annuities,
Speaker 1: for various long term insurance products. And that's what we've
Speaker 1: gotten to this conversation about. So, if you're an American,
Speaker 1: we've designed the product specifically to serve to comply with
Speaker 1: the time actuals.
Speaker 2: So you can get those benefits. But it is like
Speaker 2: all these things at once.
Speaker 3: Yeah, So you mentioned Argentina, So is it available in
Speaker 3: Argentina or is only not your available? But that is
Speaker 3: an aspiration share, Yeah, so a couple of things that
Speaker 3: I think about. So number one, like when I think
Speaker 3: about using these whole life insurance companies, I think about
Speaker 3: will they be there in fifty years to pay that
Speaker 3: claim once I'm dead? Can they guarantee that five percent
Speaker 3: over a long period of time? You know, some of
Speaker 3: these companies has been around for a hundred years or
Speaker 3: long hundreds of years, hundreds of years. But then I
Speaker 3: also still worry that, like man, we had a decade
Speaker 3: of zero interest rate policies, and how far out on
Speaker 3: the risk curve that they have to go. And now
Speaker 3: with the COVID that we went through, like they're probably
Speaker 3: way off sides on their actuaries and like there could
Speaker 3: be a lot of potential risk there. So I think
Speaker 3: about that as we should right tor to mitigate that risk.
Speaker 3: From a bitcoin standpoint, it gets even more risky potentially,
Speaker 3: I would think. So number one, most people just right
Speaker 3: off the bat, they've been burned by the Celsius and
Speaker 3: the blockfis and et cetera. And so you know, not
Speaker 3: your key's not your coin. If I give it to you,
Speaker 3: I may not get it back. The counterparty risk that's involved,
Speaker 3: and then how much risk there is. So I'm curious
Speaker 3: how you think about mitigating those risks.
Speaker 1: Right, I'm whayed to use the word mitigate because like
Speaker 1: in some ways, that's all we can do is we
Speaker 1: are in build these things. We can tell our story.
Speaker 1: People come to trust us. We're very fortunate that a
Speaker 1: lot of policy oilers have come to trust us. But
Speaker 1: there's no perfect answer, right, Like, so you mentioned a
Speaker 1: lot of things, but let me start by saying, you know,
Speaker 1: we are regulated in licensed life insurance company in Bermuda,
Speaker 1: not the Bahamas. Bermuda is like a legit place where
Speaker 1: many life life insurance and P and C insurance companies
Speaker 1: are down the sid There are quite difficult tourists, difficult
Speaker 1: in the good way there.
Speaker 2: They like provid al of oversight.
Speaker 1: They're really the only offshore jurisdiction that's respected both by
Speaker 1: the American regulatory bodies and the European regulatory bodies.
Speaker 2: There's all this equivalence and stuff. But what that means,
Speaker 2: So why would.
Speaker 3: You go there as opposed to Bahama since it's so
Speaker 3: much more difficult, Because it's so much more difficult, so
Speaker 3: you could have more trust into we could have set
Speaker 3: this company like it took us almost two years to launch.
Speaker 2: We had to write a giant business plan.
Speaker 1: We ended to get internal auditor and external auditor and
Speaker 1: improved actuary, insurance manager. We had to like convince all
Speaker 1: these people, none of who've ever thought about crypto and
Speaker 1: insurance before. You know, we have a chief risk officer,
Speaker 1: chief compliance officer, like seventeen corporate policies under fifty corporate controls.
Speaker 2: We could have set this company.
Speaker 1: Up and came in or the Bahamas or British Virgin
Speaker 1: Islands a lot faster, but being in a jurisdiction that
Speaker 1: people know is trustworthy is super important. But critically they're trustworthy,
Speaker 1: they're difficult, they're maybe difficult, they're challenging. They provide a
Speaker 1: lot of oversight and this is also where coinbases offshore
Speaker 1: operations are. They're also like very innovative. They want things
Speaker 1: to happen on the island. And in that way we
Speaker 1: were able to have a dialogue.
Speaker 3: I think they're the first country with the CBDC. Yeah,
Speaker 3: they're very was it Bahamas?
Speaker 1: I think I I Other than they have a CBDC,
Speaker 1: they have a.
Speaker 3: What it called the shell CBDC.
Speaker 1: There's a very interesting history on the the monetary policies
Speaker 1: of you know that I won't get to do here.
Speaker 3: Anyway we want it. It was Bahamas. Yeah, sorry, it
Speaker 3: was Bahamas.
Speaker 2: I'm against it.
Speaker 1: So one is that there is a lot of oversight
Speaker 1: and like, true, we're not like Block five, who was
Speaker 1: essentially like acting like a band in this unregular fashion.
Speaker 1: Like we started by saying like we need to be
Speaker 1: regulated and licensed, and what that ends up meaning in
Speaker 1: practice is that, as I said, like, we're in the
Speaker 1: process right now of getting an external audit.
Speaker 2: You know something that many people in crypto have never had.
Speaker 1: Right, we we have to post a bunch of capital. Right,
Speaker 1: That's how insurance companies work. So we have we as
Speaker 1: a company have a bunch of our own bitcoin in
Speaker 1: a company and then users you know, pay us premiums
Speaker 1: and then we invest that corpus.
Speaker 2: But our our capital is like first of loss capital. Right.
Speaker 1: It's like we made some mistakes, the bermuna monetary authority
Speaker 1: would shut us down and we would have to like
Speaker 1: give everyone their money back, right, and we would be
Speaker 1: the ones who lost the like our bitcoin first.
Speaker 2: Right.
Speaker 1: So the way we gain trust is sort of like
Speaker 1: walking people through you mentioned how it's it can be
Speaker 1: like a complicated thing to think about every single policyholder.
Speaker 1: We have, every single person who comes to our website
Speaker 1: and signs up, Me or my colleague Ganny get on
Speaker 1: the phone and we talk to them and we talk
Speaker 1: them through the enterprise risk management framework and we talk
Speaker 1: them through. This is exactly why to go back. We
Speaker 1: promised two percent returns because, yeah, is there a chance
Speaker 1: we could be the wrong way on that. There is,
Speaker 1: but we definitely don't think there are seven percent risk
Speaker 1: adjusted returns to be made into COO and that's not
Speaker 1: where we want to be on the risk curve. So
Speaker 1: we deliberately made it a number that we thought we
Speaker 1: could achieve. And every single thing we do is in
Speaker 1: that conservative nature, like the product is priced conservatively. We
Speaker 1: to be honest, we reject a ton of people because
Speaker 1: every single person we take on that's a liability, right.
Speaker 2: So we do underwriting.
Speaker 1: We make sure you're healthy, but that not only is
Speaker 1: about that person, it's about protect ding the entire company.
Speaker 1: We have a you know, a credit committee, have.
Speaker 3: Sides on that risk correct the insurance companies go down.
Speaker 1: Yeah, and then on the asset management side, you know, look,
Speaker 1: we have something that no one else has in bitcoin,
Speaker 1: which is we have duration, right, like users are trusting
Speaker 1: us with their bitcoin for decades, and so we trade
Speaker 1: duration to counterparties. But what we want is credit production,
Speaker 1: and we're really conservative, like we want we're not going
Speaker 1: to a Voyager or three Arrows like respectable name brand
Speaker 1: institutional counterparties. We demand a lot of collateral or security seniority,
Speaker 1: and we're like running a private credit desk in.
Speaker 2: Bitcoin, and we walk people through that.
Speaker 1: All and again, I think we're fortunate that that has
Speaker 1: given a lot of people in assurance.
Speaker 2: But the tax benefits are good too.
Speaker 3: Let's talk about that a little bit, right, So if
Speaker 3: this is really fitting for a bitcoiner, which is, as
Speaker 3: you kind of said, a long term Hoddler holder, right,
Speaker 3: which which should be. I mean, if you're a bitcoin
Speaker 3: you should be thinking long term. I try to tell
Speaker 3: people all the time, and it gets annoying, but I
Speaker 3: understand this is where we are in society today. But
Speaker 3: you know, where's bitcoin going to be by the end
Speaker 3: of the month. Hey, it's January. It hasn't gone up,
Speaker 3: but you said it would go up in January, right,
Speaker 3: And I just tell people like, man, if you're looking
Speaker 3: at your portfolio on a monthly basis, like you're just
Speaker 3: you're never gonna move.
Speaker 1: I should say this is the best thing about running
Speaker 1: a life insurance company, is I tell like I get
Speaker 1: asked all the time, like what do I think is
Speaker 1: gonna happen with the press bitcoin? And I say, I
Speaker 1: have no idea. I don't know what's going to do today, tomorrow,
Speaker 1: this week, this month, even this year. What I the
Speaker 1: conviction I have to have and I won't try to
Speaker 1: get our pulseholders to have is I believe bitcoin will
Speaker 1: have more purchasing power in twenty.
Speaker 2: Years, in thirty years and forty years.
Speaker 1: Yeah, and that's the timeline that we're thinking on.
Speaker 3: Yeah, but I also feel like figuring out where it
Speaker 3: will be in ten twenty thirty years is easier than
Speaker 3: where it will be in ten twenty days or But
Speaker 3: what I was going to say, though, is so if
Speaker 3: you if you think about it long term, then a
Speaker 3: strategy like this can work. Because I'm thinking long term,
Speaker 3: and so ultimately my goal to get it from ten
Speaker 3: to fifteen over you know, decades makes sense for me.
Speaker 3: And so some of the ways I can do that.
Speaker 3: Number one, compounding at two percent great, but also like
Speaker 3: tax efficiencies, correct, right, So I mean if people are
Speaker 3: trading their bitcoin, they could potentially be losing up to
Speaker 3: fifty percent short term you know gains or whatever. So
Speaker 3: think about every you know, every time you try and
Speaker 3: buy and sell around the cycles, you're losing fifty percent
Speaker 3: at a time. As suppose you're just like so, I
Speaker 3: guess maybe some of the tax efficient strategies. What would
Speaker 3: be a couple of things that you would tell someone
Speaker 3: who is long term focused A couple of the things
Speaker 3: that they may want to think about as far as
Speaker 3: like really increasing their stack using this type of a
Speaker 3: tool in a couple of maybe ways that most people
Speaker 3: wouldn't think of that really helps them increase their stack.
Speaker 1: Well, there's a question of like this tool and in general,
Speaker 1: And I just want to start by saying I completely
Speaker 1: agree with you in that I think very few people
Speaker 1: have the ability to or the luck to like time
Speaker 1: the markets carefully. There's a lot of like transactional costs
Speaker 1: to like selling and buying bitcoin. I'm like relatively proud
Speaker 1: of just like setting it and forgetting it on coinbase.
Speaker 1: I'm not necessarily advocating for Coinbase, but like I just
Speaker 1: dollar cost average into bitcoin over you know, seven or
Speaker 1: eight years, and I think that was a great decision
Speaker 1: for me. I think like that that's a great way
Speaker 1: to think about it. But yes, this policy in some ways,
Speaker 1: like I'm designed a whole company to solve my own.
Speaker 3: Problem, right, Like, okay, I have two kids, that's the
Speaker 3: way to starts.
Speaker 2: Yeah, like I have two kids.
Speaker 1: I believe that bitcoin will be significantly more valuable in
Speaker 1: purchasing power terms in the long future.
Speaker 2: That's not year to year, but certainly decade to decade.
Speaker 1: And life insurance is for me. Both instills discipline in
Speaker 1: that like it's in this policy, and it has like
Speaker 1: the tax benefits that we mentioned. The other thing actually
Speaker 1: is like you know, there's a whole other angle, like
Speaker 1: we have a legal obligation to make sure your beneficiaries
Speaker 1: get the payouts like the best of our ability. And
Speaker 1: there are like tragic stories about people who like mismarriage
Speaker 1: their keys or you know, there they die and their
Speaker 1: like wife has no idea how to get their bitcoin
Speaker 1: or doesn't know where it's buried. So you know, that's
Speaker 1: also there's just like practical operational legacy benefits to insurance
Speaker 1: to the life insurance product. But I want to like
Speaker 1: connect your two questions and say, like we're very honest
Speaker 1: about what we do, right, like, and there's a lot
Speaker 1: of things that are uncomfortable, like you send us bitcoin,
Speaker 1: and there's a real reason for that, by the way,
Speaker 1: because the like a lot of what tax and estate
Speaker 1: planning is about is like getting whatever your asset is
Speaker 1: like just slightly outside your reach, because that is what
Speaker 1: makes it like it's.
Speaker 3: Not part of force the discipline.
Speaker 1: Yeah no, no no, but it's not just for I mean
Speaker 1: like legally, Like that's what makes it like not taxable, right,
Speaker 1: is that it's not something that you can like actively manage.
Speaker 1: So we take possession of your bitcoin, we have possession
Speaker 1: of everyone else's bitcoin, so there's like a hypothecation, and
Speaker 1: then we do like super conservative lending with the bitcoin
Speaker 1: mostly like way over claudalized. Actually, there's some interesting things
Speaker 1: we're doing there, but that's uncomfortable.
Speaker 2: All three of those things are comfortable.
Speaker 1: And what we find in every like bitcoiner's heart is
Speaker 1: this tension between a like like love and desire for
Speaker 1: self custody on the one hand, and they like, uh
Speaker 1: love a good tax optimization on the other And people
Speaker 1: are just on that spectrum. And the thing that we
Speaker 1: are very clear about is like maybe this isn't necessarily
Speaker 1: for all of your bitcoin.
Speaker 3: Well that's a great point, I was right.
Speaker 2: Like, people, you have some self custody, maybe you.
Speaker 3: Have don't put all your money into insurance. You don't
Speaker 3: put all your money in there like you own other things.
Speaker 1: Yeah, and maybe you have some at like costs our
Speaker 1: unchain and some multi six solution and maybe you have
Speaker 1: some in the ETF I don't know, and maybe you
Speaker 1: have like some in in this product. And like another
Speaker 1: thing that people love is we have a max. Like
Speaker 1: so our smallest policy size is one bitcoin, so that's
Speaker 1: a tenth of bitcoin paid over ten years. Our biggest
Speaker 1: policy that we'll accept is up to a death benefit
Speaker 1: of fifty but particularly for like really big whales who
Speaker 1: have been like burned five lock fine other things. When
Speaker 1: we say like we can only take like twenty five
Speaker 1: of your bitcoin, like you want to give us war,
Speaker 1: we can't take it, And I think that, like the
Speaker 1: point is, like we and that's so the reason we.
Speaker 2: Do that, by the way, is if if you take.
Speaker 1: Too much risk on one person's life and then you
Speaker 1: just get un lucky, that person gets hit by a bus.
Speaker 3: See, then you're screwed, right and like.
Speaker 1: Right, so we're like every choice we make is a
Speaker 1: choice to be long term. What juristiction we're in, like
Speaker 1: limiting our policy size, like who's our independent board members,
Speaker 1: like all the way down, because I fundamentally just to
Speaker 1: be selfish for a moment, like this is going to
Speaker 1: be a huge company, Like it is such a fundamental
Speaker 1: financial service, like in this rapidly growing economy, and the
Speaker 1: only way I'm going to screw it up just reselve it.
Speaker 1: The only way I'm not going to make like billions
Speaker 1: of dollars is if we screw up who we ensure
Speaker 1: or we screw up acid management. So like we do,
Speaker 1: we work really hard to make sure those things are
Speaker 1: are right. Yeah, I want to wrap this up, but
Speaker 1: I want to ask you one other question. So you
Speaker 1: know we're thinking long term here, we're thinking death benefits
Speaker 1: to our beneficiaries.
Speaker 3: We're gone. This is something I spent a lot of
Speaker 3: time thinking about. Legacy. You're a father. There's a big
Speaker 3: growing movement and especially really seems to be strong in
Speaker 3: the bitcoin community but also globally. Right, there's a best
Speaker 3: selling book Die with zero. Really, the FIAT system is
Speaker 3: designed to like save up, live off my savings and
Speaker 3: hopefully die at zero. Right, the books die with zero,
Speaker 3: and a lot of people, especially in the bitcoin community,
Speaker 3: I see, I'm saying, Oh, leaving money for your kids
Speaker 3: is terrible. Jimmy Song went back and forth with me
Speaker 3: on that, like, you can't leave money for your kids,
Speaker 3: You'll ruin your kids. Allahah, I disagree. What's your take?
Speaker 3: How do you think through legacy planning passing down to
Speaker 3: your kids, your kids, kids, kids kids? Is that good?
Speaker 1: Bad?
Speaker 3: How do you do? How do you think about that?
Speaker 2: Yeah, it's interesting.
Speaker 1: His a tension between like die with hero and like
Speaker 1: retire my bloodline. Those are like the two like estate
Speaker 1: planning or memes inside the bitcoin community.
Speaker 2: Look, I I understand.
Speaker 1: I haven't talked to him about it, but like I
Speaker 1: sort of understand this idea to go all the way
Speaker 1: back to like entrepreneurship to agency, like how do you
Speaker 1: inculcate in your children a desire to be more than
Speaker 1: what you give them and to strive to like make
Speaker 1: their lives better, to make their kids' lives better, to
Speaker 1: make the world better. And I sort of think that
Speaker 1: that's some thing that's so important and worth working on.
Speaker 1: But that doesn't mean that you should deprive them of
Speaker 1: of everything you've.
Speaker 2: You've worked for either.
Speaker 1: I think having a legacy for your children and maybe
Speaker 1: your children's children, although that's well, your children's children will
Speaker 1: know your children's children's children is a little more abstract.
Speaker 1: I think it's worth planning for, and it's worth thinking about,
Speaker 1: and it's worth.
Speaker 2: Designing, you know, a little bit of your life to
Speaker 2: think about that. I have to believe that. I guess
Speaker 2: I started the life insurance company.
Speaker 3: Right But how are you thinking about it for your Yeah? No,
Speaker 3: I mean they're young right now.
Speaker 1: I was the first policyholder of meanwhile, so I don't
Speaker 1: want to so I.
Speaker 2: Yeah, I think it's it's it's a hard question, you know. Sometimes.
Speaker 1: You know, I had a relatively tough upbringing, and I
Speaker 1: noticed of a lot of the entrepreneurs, I know they
Speaker 1: have some like childhood trauma or life trauma, and that
Speaker 1: like motivates them, and you don't want to You want
Speaker 1: your children to not be traumatized, but then you also
Speaker 1: want them to like work hard, and.
Speaker 2: I that that.
Speaker 1: I think that tension exists outside the question of whether
Speaker 1: you should leave them some wealth.
Speaker 2: I think you should.
Speaker 1: Because like what are you or that's part of what
Speaker 1: I feel like I'm working for is for my children.
Speaker 1: And then additionally, I'm also like think a lot about
Speaker 1: like how you inculcate those virtues in your children to
Speaker 1: not necessarily decide what I would decide, but how to
Speaker 1: you know, be wise.
Speaker 3: So the way I think about it is that money
Speaker 3: doesn't make kids bad. Yeah, okay, so if you're if
Speaker 3: you raise good kids, hopefully they'll be goo kids if
Speaker 3: you raise bad kids. So money seems to exaggerate or magnifying, right,
Speaker 3: So I loved what you said, right, which is like,
Speaker 3: you know, not just helping the kids, but the world.
Speaker 3: So I just think about, like we earn wealth, we
Speaker 3: create wealth by solving problems, which is providing values to
Speaker 3: the world. I think about money being important to help
Speaker 3: my family have options and help more people in the world.
Speaker 3: So if I think that we should use money to
Speaker 3: solve problems in the world, I want my kids to
Speaker 3: think about having money and solving problems in the world.
Speaker 3: So if my kids want to be actively solving problems
Speaker 3: in the world, they should have access to the money.
Speaker 3: If they want to have access to partying and drugs
Speaker 3: and doing nothing, then they probably shouldn't have access to
Speaker 3: the money, right, I shouldn't enable that, right, so then
Speaker 3: you know how good have I raised my kids? They say,
Speaker 3: the sign of a good father is not how good
Speaker 3: their kids turn out, but how good their grandkids turn out.
Speaker 3: So I think about that. And then what we've done
Speaker 3: inside of our trust is set up a family constitution.
Speaker 3: So then the family constitution is a guideline of what
Speaker 3: my values are, the way I view the world, the
Speaker 3: way that I think we should be bringing value to
Speaker 3: the world. We should take care of our health, we
Speaker 3: should take care of others, all these types of things.
Speaker 3: And then there's like restrictions. So then it's like the
Speaker 3: trust then is managed to a constitution, just like a
Speaker 3: US constitution would have, and then the trustee will determine
Speaker 3: if the errors and it could be kids, kids kids, kids,
Speaker 3: kids are living up to the terms of that constitution
Speaker 3: and if they're not exuding the values and virtues of
Speaker 3: that constitution, then they don't.
Speaker 2: Get access to the money.
Speaker 3: And then making sure that the money is there to
Speaker 3: help them do more but not hurt them. So for example,
Speaker 3: you know if they have if they are able to
Speaker 3: qualify to buy a house. Certainly will give them the
Speaker 3: money to buy that, like as a down payment on
Speaker 3: the house, certainly, right, But if they're just doing nothing,
Speaker 3: they don't get the money. If they want to launch
Speaker 3: a business that they have a sound business idea and
Speaker 3: plan for, they can have the money to start a business, right,
Speaker 3: And so the just guardrails put onto it things like that.
Speaker 3: You know, these are things like the Rockefellers did so well, right.
Speaker 1: That's actually that was immediately what I was thinking about
Speaker 1: as they the multi generational trusts like lack of Fellers
Speaker 1: or the Preskers.
Speaker 3: Yeah, so those worked really well. But then it comes
Speaker 3: with like what type of education am I put into
Speaker 3: the family? And the Rockefellers have taken it way more
Speaker 3: serious where they each generation then has to go through
Speaker 3: right education and all those things. But anyway, I was
Speaker 3: just curious you take on it, and I guess to
Speaker 3: the point that you said your money is where your
Speaker 3: mouth is, so to speak. Obviously you believe in generational
Speaker 3: wealth because you started a life insurance company. H Man,
Speaker 3: we covered a has gone long. That's great. I love it.
Speaker 3: Like I said, I spent a lot of time at
Speaker 3: this stage of my life as I've gotten older, my
Speaker 3: kids are getting older. I think about it a lot.
Speaker 3: I think just from a long term Hoddler perspective, Bill
Speaker 3: Gates said, who I don't like to quote, but Bill
Speaker 3: Gates said that people overestimate what they can do in
Speaker 3: a year, but underestimate what they can do in ten.
Speaker 3: And I think that really applies to building wealth, right
Speaker 3: because like kind of going back to the story I
Speaker 3: said earlier about people working forty years and getting two
Speaker 3: weeks of vacation a year, they hope to have a
Speaker 3: million or two million dollars when they retire, and so
Speaker 3: like to increase your stack by fifty percent, which could
Speaker 3: be millions and millions and millions, Like they don't underestimate that,
Speaker 3: Like the tax efficiencies you could gain could be more
Speaker 3: than what most people would hope to make over that
Speaker 3: time period. So good stuff. We're going to link to
Speaker 3: your stuff down in the show notes down below if
Speaker 3: anybody wants to get in touch with you guys. I meanwhile,
Speaker 3: we'll link to that down below if they want to
Speaker 3: get in touch with you, and they you also want
Speaker 3: to close it out with no.
Speaker 1: Thanks for having me, Mark, and I'm I'm so glad
Speaker 1: you're familiar with like the virtues of of life insurance
Speaker 1: and that we were able to talk talk through it.
Speaker 1: I'm you know, we we take it very seriously, the
Speaker 1: obligation that we're we're making to every single one of
Speaker 1: our policy holders, and there's nothing more important to us,
Speaker 1: and I'm really glad to have got to talk get
Speaker 1: through with you.
Speaker 3: Cool. Thanks, all right,