Smart Humans Zac Townsend Transcript

FULL TRANSCRIPT



[00:00:00] In this episode of smart humans. We talk with Zac Townsend about his startup, Meanwhile, which is the first company that's able to wrap life insurance with Bitcoin, instead of having to be dollar denominated, you're able to use Bitcoin to invest into your life insurance. He talks to us about the future of crypto and the future of fintech innovation.

Hello and welcome to the latest episode of smart humans. As always, I'm very excited for today's guest. We have a pioneer in the world of insurance, specifically as it relates to crypto. Zac Townsend, [00:01:00] co founder and CEO of Meanwhile. Welcome. Thanks. Happy to be here. Yeah. So we always like to start with the same kind of open ended question, given that crypto is an alt and also a new startup is an alt, how did you even get here?

How did you get into the world of alts? Where did it all begin? Go far back as you'd like. Yeah. I think like a lot of folks, you know, you mentioned both tech and crypto, and I think I made a choice to be involved in those things. And then I've actually learned a lot more about on term and investing through over time.

So I actually worked in like. The government out in the East coast got really interested in like financial inclusion, financial empowerment issues. I really was just on hacker news, Y Combinator's site and wanted to work in FinTech and applied in 2013 to what looked like the best company in the FinTech space.

So I ended up as like employee 36, 37 at Stripe. And. Obviously keeping Stripe stock or having earned [00:02:00] Stripe stock would have been the best possible introduction to alternative investing possible, but in what was probably the worst thing I've ever done financially, but maybe like the best life decision, I got into Y Combinator with a startup.

And at that time since like 2013. I wasn't even accredited. Right. So actually like people would ask me to do angel investing. And I couldn't, so a friend and I actually, my co founder in that first company, which was called Santa treasury, we founded a like really small, like million dollar venture fund.

And mostly invested in like YC companies in like 2013, 14. So I'd say that that's really maybe like indicative of the two major paths that led. And also my like general alternative exposure, which is like, there's equity and startups I've started. First, this company called Sarah treasury, which was backed by like index and entries and Horowitz and Y Combinator eventually sold that business to Silicon Valley bank in [00:03:00] 2015.

And now I have the current startup, which we'll eventually talk about. And then the other hand, really just investing in startups first through the fund, and then I've done just, I think I've been really, really lucky. I've made like six or seven angel investments. Just not that many, but one of those was bridge, which just sold to Stripe for something like a billion dollars.

And another one was this company called Astronis, which builds geostationary satellites and is also a unicorn. So I have a really high rate on, on angel investing. But I don't think that's because of skill. That's just sort of because of well, I'm just gonna say luck. I was pretty lucky. And then more generally, you know, in my first company, what we were doing is we were trying to build a bank that was like an Amazon web service of banking.

And we really were starting on the payments and bank account side. This became a whole space. We sort of like invented bank account as a service. So Stripe Atlas was built on top of us, which is this the service where you can really just open a like whole, start a whole company from scratch, including getting a bank account.

And [00:04:00] that was built in our infrastructure. And at the time I was thinking about Standard Treasury starting a bank. I went to the UK and we did a lot around like starting a challenger bank and there's all sorts of reasons we couldn't do that mostly because we couldn't raise the money to do that. But that led me on this really long path of thinking about bank balance sheets and that's actually How I ended up in life insurance.

So the problem with banks is you collect deposits. So you're like, you're like, Oh, people deposits. And then you make these like long term loans. Right. And that doesn't make a lot of sense because deposits can walk out the door. Like happened in Silicon Valley bank when they failed. So life insurers have become this.

Huge buyer of alternatives, particularly private credit, particularly, you mentioned, you know, real estate, really the whole world of assets that have long durations. And that's just super interesting to me personally. And I think there's a real premium in life and [00:05:00] individual decisions, but also investment decisions when you're willing to deal with illiquidity and to like think in the longterm.

So life insurance for me is partially really an expression of this interest I have in alternatives. Even if I haven't myself, other than angel investment, investing, like being rich enough to like, I don't know, write a 10 million check to KKR is private credit funding, whatever. All right. Well, very interesting background.

You had me at obviously employee 36, 37 is tribe. So let's just back right up to that, which is Why did you join Stripe? How did that happen? Yeah, it really was. So at the time I was working for Cory Booker, was the mayor of Newark, New Jersey. And I was like head of innovation, CTO of the city of Newark.

So I was like using tech and data to like try and improve city services. And I got assigned the financial inclusion, financial empowerment portfolio. So like, why do people in West Newark not have bank accounts? Like, why do they use check cashing? And as a young Like brash technologist, I just found it really confusing.

Cause it was like, you know, the marginal cost [00:06:00] of a database entries is free. So like bank accounts should be like approximately free. So like, why are there minimums? Like why doesn't whatever big four banks open. Bank accounts for well income folks. I know a lot more about that now, but anyway, like I was somewhat naive about like how the world worked.

I was like, okay, I want to work in financial technology. Like marriage is these like two things I'm really interested in. Like one hand, I like tech and data and software engineering and the other, you know, I had like studied finance as an undergrad and like all the power of all that. So when Corey decided to run for Senate, I was like, and he's now a Senator, I was like, I don't really care about the Senate.

Like, I don't want to work in a Senate office. Like it's not, you don't really like do things you like, I don't know, talk about things is my opinion of like, like moving from a mayor to being or a governor to being a Senator. So I was young. I thought I wanted to work in FinTech and literally I just applied to like on the website of what seemed to be the coolest FinTech and it was pretty [00:07:00] early, but you know, they had a valuation, I think in like the 500 million.

I mean, it was quite not nothing. Even in. Yeah, not like already in 2013, it looked like it was going to be a really interesting company. And I could just see from Hacker News, which is this like forum that Y Combinator runs, like Reddit for Y Combinator, that they were really responsive, that they were like in the comments, like they were part of the community.

So I really just went to their website and applied And I got the job. But what also happened is Before I had applied to Stripe, I had a buddy and I also applied to Y Combinator. So I started at Stripe and then got the interview to to, yeah, to apply to YC. And obviously, although Stripe seemed like it was a rocket ship, I didn't know it was going to be worth 50 to 100 billion dollars.

And I actually think if you're a certain type of [00:08:00] person, like ambitious, like person who themselves wants to take over the world, being early at a startup is both good training, but also it's like you start looking around saying like, I think I could do this. I think I, and that itself was like true in the sense that I could start a startup, but you know, it's not yet been true that I could start a company as big as Stripe, but you know, it was hard.

Hard to know that all in 2013, but you did end up working at Stripe. Is that right? Yeah. Yeah. For like three months. Okay. For three months. Gotcha. Yeah. Did you get on to overstate my, either my impact or, or, or the financial impact on my life? Did you get to vest any shares? No, no. Oh, that's challenging.

Like you said, considering, you know, even the math of if you came in at 500 and it's worth, you know, let's even call it 70 billion today. That's 140. It's some dilution. That's a solid 100 X. Yeah. Just saying, just saying. Yeah, actually, I'll I'll tell you the one One other story, which is, ah, so I ran this company, Standard Treasury.

[00:09:00] We built a like really kick ass engineering team done a lot of cool stuff. At the end of that, we sort of like failed into what I call like an acqui hire plus. Like we had built some interesting tech. We couldn't raise an A. We had this crazy idea of starting a bank, as I said. So we got offers to buy the company.

And the offer we ended up taking was Silicon Valley Bank. And partially that was because it was like more cash compensation, but also it was because like selling your fintech to a bank was like, is relatively high signal. And this was like before JP Morgan bought WePay. It was just like, it was very unusual to actually have a bank by a fintech company.

And we thought that would be amazing. The other offer we had on the table was Coinbase and would have had us be like employees, like. I don't know, 40 to 45. They really needed a team that like understood payments ops and like AML ATF. So that's like another a hundred million dollar chance that I, you know, just, just missed.

[00:10:00] So you're either super lucky or super unlucky, or it's just called life. Yeah, I think it's just life. Amazing. These are great stories. So you go from Stripe to starting Standard Treasury, exiting to SVB, Then starting your new company. Is that correct? Is that true? Is that the trajectory? Oh, there's some stuff in between.

I did another state and government service. That was the first chief data officer of the California state government. Which is the whole interesting rabbit hole. What year is that? 20, like 17, 2018. Nice. And then my son was born, who's now six and my wife. Started a startup. It's like her churn, I might be a good way to put it.

So it was my turn to like, just get a job that like paid the bills. So I worked at McKinsey and was like the COO of the North American fintech practice. And in particular, no one really knows, but they have this whole practice where they like build companies from scratch, so I would like go to an incumbent and like be the general [00:11:00] manager of a new like division.

And then I like train my replacement and then like replace myself. And I did that like one of those projects a year for basically three years. The long and the short of that to like completely summarize those three years is incumbents are really bad at building anything, but if you build something good inside an incumbent, they tend to really be able to sell it.

So I can like, Have these big claims. Like I started three businesses that got to like 25 million in GMV incredibly quickly, which really isn't a result of how amazing the thing we built is. Although like they were pretty cool things. It's that like, if you can hand the enterprise sales force of Comp, you know, incumbent X or incumbent Y a good piece of software, they can like really distribute it.

Amazing. It sort of comes back to that. I think it's Alex Rampell has this old quote, quotation. That's like the fundamental battle is between startups, [00:12:00] innovating and. Incumbents like adopting innovation or distribution, right? The scale. So we're going to get into your new startup here in just a minute.

But before we go there, I'd love to understand a little bit more on your point of view across all. So you already teased us a little bit with your amazing track record on angel investing, you know, two out of your six or seven are already unicorns, which is amazing. You had the exit. Obviously there's others that you probably know a lot about crypto.

And then, you know, we look at art and collectibles. We looked at real estate and private credit. How much of your net worth would you say you put besides your actual company, which is an easy answer, which is a ton of your net worth. How much of your net worth would you say is in alternative investments, not your typically 60, 40 public stocks or bonds?

Yeah. It's interesting, you know, I'm probably overweighted in network. Like if you took out my company, yeah, of course. And then you took out like my, my real estate I live in. And then the other bucket that's hard that I haven't probably optimized is, you know, I have a ton of retirement savings, right? [00:13:00] Like you just, in the sense that you like should max out your 401k.

Anyway, I want to give like simple financial advice, particularly when you work at McKinsey, you should like absolutely max out. Cause they have like these huge, amazing matches. So there's. And then it's relatively hard, not impossible, but it's relatively hard to take those accounts and like invest them in alts.

Now, I think that's changing. And in fact, it like absolutely should change. What I find like so perplexing is that your retirement accounts are actually the place where you should be most comfortable with duration, right? Like I literally can't access my 401k until I'm like, whatever it is, 60 or 65. So that should be the place that I, like, I wish I could just.

I think there are ways to do it, but like, just take my Roth IRA and like, put it in venture funds. Yeah, there are, it's just becoming, it's becoming easier, but it's always been historically very complicated. The whole self directed concept. Yeah, exactly. And I think Apollo and KKR and others are like working on this even harder because they're, it just sort of, [00:14:00] Yeah.

And it just makes sense. Right. So, so anyway, so we take away my, my equity, my house and my retirement accounts. Right. So then you have like liquid net worth. It's probably pretty high. I don't know. I don't even track it very well, but like, are we talking like 60 or 70, 60 or 70%. Right. Nice. Partially for the exact reason that I'm saying, which is you're already stuck with your duration stuff in your retirement, et cetera.

Yeah. Yeah. And, and just that, like, what's in some ways, I think for me, there's like cash and cash equivalents. And then there's like a whole question about how to optimize that, which I have sometimes been good at, like doing treasury ladders and things like that. But in my current, like running a startup mode, it's just like, there's cash in a savings account that like yields, you know, whatever it does for four to four and a quarter.

And then You know, the rest is, yeah, like angel investments. There's this tool I've been playing around with called composer, which allows you to do like, [00:15:00] like quant, like set up like quant finance type stuff in the public markets. But then there's this sheet, you know, you have a huge tax drag, which sort of, you know, if you're actively trading something and then.

Yeah. And then crypto exposure, I put a lot of my crypto exposure because I have, I mean, we'll talk about my company, but like, I'm so long book Bitcoin in my company, like so absurdly long Bitcoin that actually my personal crypto portfolio now is a lot of like stable coin yield stuff and not even like the craziest stuff, just like trying to get like 10 to 15 percent yields.

What do you like to put into these days? You know, the thing that, again, there's. I'm always on the lookout for, like, spending less time on this stuff. Yeah. So, you know, it starts with like, I'm there with my wallet, like doing stuff. And then recently there's this company backed by Paradigm and Han called Exponential.

I think they're exponential. fi. And they're almost like, You do have to like pick, [00:16:00] but they're like a wealth front for DeFi or something. Like they, they do a lot of the like management and they like sell the reward tokens. So you're just like getting yield. And if you go to their website and you sign up, then they like have this list where it's like, okay, are they, you know, Yields like 11 percent and like curve in USD yields like 14 percent and like fluid yields 14.

2. And then you can like allocate dollars across these various strategies. And then they write these really detailed risk reports about like every strategy. So you can pick. So I've been, that's like one way I've been managing like defy yield, just angel investment, defy yield. Sorry. And then I'm sorry.

Do you just give them a chunk of Bitcoin or a chunk of stable coin and then they put it across those or you choose, you have to pick, you have to pick, got it. Okay. And then I would say the last bucket, but they make it easier because you don't have to be super easy. You don't have to be in those defy markets in Aave, et cetera.

You can kind of just use this as a front layer and they [00:17:00] take a fee. Yeah, yeah, yeah. And actually they just charge. I'm not, I have no investment in this company. I just like them. Yeah, they charge a 20 basis point, like in out fee of the strategies, but they don't charge like an AUM fee. And yeah, you, you pick the strategy and the thing that they do that I really like is sometimes there are like reward tokens, like you're like lending on.

In some like prime lending marketplace. And then there's this exhaust of like an extra token. Cause you did it. And what you really want to do is like, in my opinion, what you want to do is like sell that token regularly and they like manage that. Right. So they're really just managing it to like a dollar yield, or they also have like an ETH yield strategies and like Bitcoin yield strategies.

So you can like pick amongst these things. High level. How long do you think you've been doing something like that? On my own, probably like since the ICO boom, like three, four. Yeah, yeah, yeah, yeah. What kind of yields have you been getting, like, even as you've been kind of letting others do it? Yeah, again, I'm trying to like, I'm probably in [00:18:00] the more conservative range of trying to like, Get approximately 10 percent yields.

It's there. There are like, yeah, yeah. But in defy land, there's like crazy stuff you can do where like, levering up some basis trade over and over again in some circle. And then like you have a really small margin, but you're getting 40 percent yields. Like the, I don't do those things. All right. So beyond crypto, sorry.

And then the last, yeah, the last thing I'd say is I'm very fortunate as a to a lot of the funds that I, sorry, venture funds that have invested in me, they'll often have like founder sidecars. So these are like low fee or low carry sidecars. So you're getting exposure to fund X or fund Y. But. Like an advantage way.

That's not, I guess something that like everyone has access to, but I do have like some of my net worth and that stuff. Amazing. And then anything for [00:19:00] incremental real estate yield that oriented stuff? No, you know, we fought a lot about it. My wife and I, and the short story is we have like occasionally.

Like we pandemic moved to Austin and then we moved back and for a while we were like, okay, well we had this like beautiful mid century modern house, like right next to Barton Springs. Like we'll like do a rental. And then we're just like, actually, this is a huge pain in the butt. Too much. It's just too much work.

Give me D five. So like in principle, I'm interested in real estate. You know, you mentioned art too. Like in principle, I think that's a really fascinating asset class, but just a little outside my Totally fair. My current wheelhouse. Yeah. Next topic. Really open ended. What do you think of the market?

You could take this everything from Trump coming into office to the economy, to inflation, to crypto, to at production right now, BTC just went under 90, 000 and then jump back up. Yeah. So [00:20:00] take this wherever you want. What do you think of the market? We just got into 2025. What's happening? Wow. What a question.

You know, I, I just like dispositionally tend to like you know, be a little contrarian and it's not that I'm like pessimistic, but I would say I'm like, probably not as optimistic as everyone else is. But that's also like a fool of Aaron and self, right? Like in 2014, if you like really pressed me, I probably wouldn't like the market can't go forever.

And then like went out for another eight years. Right. So that's sort of what it feels like to me right now. I don't pay a huge amount of attention, but like PE ratios, again, seem to like really be going off the charts. The whole market's like dominated by the big tech players. And although I'm in like credibly long the power of those platforms, it also like does seem like disproportionate.

But then I don't actually do anything differently, you know? So it's like an easy intellectual thing to say. Like, I think we're like they're too excited about Trump [00:21:00] post election. Like I have no idea. Like, I think no one else does about like, what are there going to be tariffs? Are there going to be tariffs on everything, on nothing?

Like, is that going to be good, bad? Like there's like these big structural risks when I look out over the year. But do I have conviction around those things? No, in the sense that like, it's not like I'm taking my entire retirement portfolio that I mentioned, like putting it in cash to wait. So I think that's one of the things that I realized about myself is Outside like a few, like just funny examples in history.

Like I made a bunch of money on GME options. Cause I just like yellowed, you know, 10, 000 game stop. Yeah. Game stop options. Yeah. I I don't, I tend to think that when I reflect on my, like what I know and believe it's that like [00:22:00] technology and the disruption that technology companies can bring to markets, like.

Is meaningful. But I think I believe that like decade over decade longterm. Yeah. And so I tend not to do anything in my personal portfolio or my portfolio allocation that makes me That exposes me to like short term risks and it's not even by the way that I'm not like an efficient markets hypothesis guy like I do think there are ways to there is like people make money.

It's just like not what I have optimized like my life around knowing a lot about but I got real philosophical in your question so I can avoid it. You know, like anyway, yeah, things seem frothy to me. So I'll actually one tactical question then in the area that you know so much about, which is crypto.

And you say you're so long BTC. Give me a little perspective without you obviously knowing the [00:23:00] future. What is 2025 hold for BTC?

Yeah, so I'll, I'm gonna, I'm gonna dodge the question by saying we'll get it just in brief. I run a life insurance company that nominated Bitcoin. All right. Well, anyway, we'll talk about what that means. But one of the reasons that I love that company, the idea and that we started the company is I don't know, like, I don't know what the coins going to do this week or this month or this year.

And I'm not even sure I know what it's going to do, like next five years. But I do know like, this is a, like, It didn't have to be, but I think it's, it's a global decentralized store of value that's like outside the control of any person or government and that, like, maybe a social fiction, but it like is a social fiction that, like, has come to pass.

And, or like all money and what I believe that means is that, like, so [00:24:00] many people in the world will continue to face currency risk and regime risk and inflation risk. And those problems will persist and thus like Bitcoin will be more valuable on a like purchasing power basis in 10 years and 20 years and 30 years and 40 years.

So you mentioned actually Bitcoin going down to 90, 000, like, over the course of running the company, Bitcoin's been at. You know, 65 and then it like went down to 16 and then it like hovered around down there and then like, you know, peaked at 105 and now it's down to 90. Like we own a lot of Bitcoin.

And I, like, that's been a good trade for us on some level, but more importantly, like. I think the question is, what is Bitcoin going to be worth in like 2030 or 2040 or 2050? And I think it will be worth more. So give me a number, 2030 or 2040? 2030. I think it'll be like. Mid six figures, like two to 300.

[00:25:00] That's my, I think the, the, the curve will slow down a little bit because, you know, can't, it's like when you, when you have a child and they like in the first week and you're like, okay, well, if they keep growing at this rate, they'll soon be larger than the universe. Like, you know, sometimes people will mention Bitcoin numbers.

They're like, well, if you multiply that out, it would like be worth more than like all day in America, which like just doesn't intuitively make sense. But I think on some timeframe, like having the market cap of gold, which I think is something like 700, 000, like that makes reasonable sense to me. Is that going to be 2030?

I don't know, but like it, it's sort of conceptually when I think about it compared to other assets, like those ranges make sense to me. Okay. Market cap of gold. I like that. So Meanwhile, your business, the first life insurer using Bitcoin. Explain that. What does that mean? Well, let me take a step back and basically [00:26:00] say that you know, life insurance is this critical financial service.

And part of what life insurance and annuities ends up being about. There are these deep, like structural reasons that these things exist, right? Like you don't know when you're going to die, or you don't know if you're gonna live longer than you're supposed to. And then like, how do you share and pool that risk?

And because of that society and governments have decided that like life insurance is good. You know, so that like widows don't starve and like orphans like get, you know, pay have some cash. And because of that, every country in the world that has taxes tends to have tax privileges for life insurance and annuities.

So our product is entirely denominated in Bitcoin. So we have this company in Bermuda. Regulated by the Bermuda monetary authority. Bermuda is like a legit place to have a life insurance company. Many of the world's largest life insurance companies are there. And it operates like any other life [00:27:00] insurance company.

It's just entirely in Bitcoin. So people pay premiums in Bitcoin. People we pay out claims in Bitcoin. If Bitcoin is a 700, 000 or 7 million a coin, like we're paying out in Bitcoin. And then we do all the mechanics, like the reserving and the capital government insurance company does also in Bitcoin, but what users are getting Is one they're just getting like The people, as I said, like Bitcoin is this global store of value.

So if you were concerned about particularly, I think inflation risk like protecting your children or protecting yourself in some ways with Bitcoin dominated life insurance, like intuitively makes sense. And by the way, we're not, although I think some of the people I assume a lot of people who listen are interested in Bitcoin, but some of them won't be.

We tend to not try to convince people like ex ante that they should own Bitcoin. It's more like if you've already decided that you want Bitcoin exposure, then [00:28:00] this life insurance policy is a great way to like save inter generationally like for your kids. And then you're getting that protect, like literal insurance protection.

You get hit by a bus, your kids get more Bitcoin than you put in. The second is, Our product, you know, let's say you put in 10 Bitcoin, we promise you 15 whenever you die. We churn 10 into 15 basically through private credit. Like we lend Bitcoin to institutional counterparties at like two to 3 percent yields.

We pass it on to you. Even if you like, Slava or your user was doing all that work, you would owe interest income tax every year, right? So that compounding inside the policy having a tax benefit being tax free is minimal. The third thing is like every sort of whole life insurance policy people can take loans against the policy and then the loans are tax free.

So Bitcoin does go to $700,000 a coin or 5 million or whatever. You could borrow [00:29:00] Bitcoin outta the policy. And it's like new tax basis Bitcoin. And then the fourth thing that people get is, and I think it's cool, is just a lot of people are worried about managing their bitcoin. Like doing keys and like, how am I going to make sure my kids are going to get it?

Even inside the context of like big platforms like Coinbase and you know, like literally a life insurance company, like one of our duties is to just make sure that we find your beneficiaries and we like get them their Bitcoin. That was super helpful. So just going back at you with those benefits.

So it was managing the Bitcoin. So you don't have to think about the keys. It's getting those interest free loans. It's being able to get the inflation hedge by having the BTC growing. And what was the fourth? The tax free growth. Got it.

So. You did a better job than me, Slava. I'm just like, damn. I'm, I'm just listening. Summarizing it. Just listening. Just listening. You're just listening. So.[00:30:00]

What do I need to be to be a customer? Do I need to have a certain amount of wealth? Do I need to have a certain amount of Bitcoin? Do I? Yeah. How do I become your customer? Yeah.

Our minimum, basically the way the product works is you pay over 10 years. So let's say you pay one Bitcoin a year for 10 years. So you've given us 10 Bitcoin. And then we, as I said, we probably promised you 15. People can prepay. Our minimum policy size is one Bitcoin. So that's certainly a limit. And it's not accredited.

It's like the Bermuda equivalent. You do have to have like you should sort of think of it like accredited. Like you have to, you have to be able to label you as a sophisticated investor, which I, your listeners will be. And then it is an insurance policy, right? So you have to be able to KYC and we underwrite [00:31:00] you.

So. The underwriting isn't invasive. We tend to be able to use like data sources that are available to insurance companies to underwrite you, but you do have to be like relatively healthy. You know, we reject people who you know, aren't healthy and as lots of life insurance companies would. So really that's, that's it.

You know, some baseline net worth And an ability to pass KYC and underwriting. Okay. So let's just use me as an example, since I'm not a customer yet I believe I'm reasonably healthy. I believe I'm reasonably sophisticated. Hopefully it can pass the bar. Let's just use that one Bitcoin minimum, if that's okay.

So I would want to put in one Bitcoin that's across 10 years, meaning one 10th per year, or how does that work? Correct. Yeah. You, what you would owe us is a 10th of a Bitcoin a year for 10 years. Lots of people like said, I didn't forget it. And just like, send us the Bitcoin. And also sort of structurally it's, it's interesting.

We have some users. I don't [00:32:00] know if you have one Bitcoin who want to dollar cost average into Bitcoin. So they say like, Oh, I'll buy this 10th of a Bitcoin every year. And we have other users who like have a Bitcoin or a thousand Bitcoin and just like send it all to us at once. Either of those are fine.

I sort of structurally say to people, like, I'm not recommending you short Bitcoin. The reason that we have the, what's called the 10 pay you pay over 10 years is that that sort of allows us under the internal revenue code, like we've structured the product to make sure that you get the most tax benefits possible.

So, but to go back to your question, like you go to our website, Meanwhile. bm, There's like an application, you fill it out, we underwrite you, we like do KYC checks, we present you With your offer based on your underwriting, you sign up then you file the forms and then you owe us a 10th of a Bitcoin a year for 10 years.

And then you have you know, we're promising [00:33:00] you in mine example, 1. 5 Bitcoin whenever you are promising your beneficiary is 1. 5 Bitcoin whenever you die. And then inside the policy. There's like this savings account. You could think of it. It's like amortizing over time. It's becoming more valuable and that's what you can take policy loans against.

So, so I'm five years in, I've given you half of a Bitcoin. Has that appreciated a little bit because of the work your team is doing? No, you actually have a little, you have a little less than what you've put in because we've provided you mortality protection in the sense that like you could have gotten hit by a bus.

So I don't know the exact numbers in year five. It also sort of depends on how old you are. But it's, it's a little, it's actually like it stayed less than you've paid in. Until like year 12 or 13. I think. So let's say it's your five though. And I'm I need to just buy a house or something. Can I access already in your five?

Yes. Yes. [00:34:00] Okay. And if I take a two year cooling off period, so you can't use the policy for money laundering, but after that you can borrow value out of the. Okay. So you're five or putting half a Bitcoin. Let's just say, I want to try to get out 0. 2 Bitcoin. Can I do that? So that 0. 2, am I paying interest on that 0.

2 back to you? You do pay interest on it. But you'll never like we're essentially paying you a certain amount of interest and then we're charging a little bit more than that if you take the policy loan and you can never borrow more than we'll pay out. Gotcha. Gotcha. And that way it's like netted again, in some ways, like you're borrowing against your beneficiaries.

Gotcha. And then now let's say we're in year 15. And have I hit my 1. 5 Bitcoin now? No, no, no. It amortizes to age 100. So. Okay. Got it. Let's just say it's at 1. 1 or whatever it is. Yeah. So 1. 1, let's say. Yeah. Yeah. So, you could borrow more out of the policy than you put in. Right. Right. So what's my interest rate that [00:35:00] I'm like paying back?

So if I take out. We have the right to change it over time, but like in general, you should think if you really want to know our economics, like we're promising you a guaranteed return. Okay. There's a lot of actuarial math here of about like 2%. And then we, in general, try to get 3 percent returns on the Bitcoin lending.

And then that 1 percent difference is like how we make money. So what we charge for policy loans is we just charge 3%. So it's like our opportunity cost of having invested that money, that Bitcoin that we're giving back to you. Super helpful. Super helpful. So when did you start taking your first dollars, your first insurance policies?

Q3, 2023.

Amazing. And is there anything you want to share to give? a sense of scale, growth, traction, any sort of metric you'd like to talk about?[00:36:00]

Yeah, we have hundreds of Bitcoin from users, not yet thousands of Bitcoin. And yeah, we're very, yeah, we're very happy with the growth and look, if I'm like, now I can say this you know, it's a big leap of faith to be like the fifth policy holder or the 15th policy holder. I think we're like over that hump now.

You know, we're still a startup and we are making people like very long term promises. And there's a lot of like regulatory and legal and governance and compliance infrastructure to like make sure that we are really careful. And I, by the way, I, I think that this business is like one of the most powerful ideas in crypto to actually go back to the whole like thing about alts and long durations.

Like I think crypto is here to stay. And I think that for so much of the world, if you live in some people think America, [00:37:00] but if you live in Argentina or Nigeria or Turkey, like you don't buy life insurance. Because you're going to live longer than the Argentinian peso, right? And so these insurance policies, like high net worth individuals use insurance to actually to wrap LP commitments, to like cover estate tax burdens, like you put them in tried trusts, like we help people do all this stuff just in Bitcoin.

You know, for the type of, like, long term store of value and inflation hedge that you talked about. And, but that, so I, I, like, we grew something like 50x from 2013 to 2014. I'm sorry, 2023 to 2024. I'm not sure what 50 X this year, but like, you know, I think we'll have another great year. The only way that I think I'm not going to end up with the larger part of my net worth, which is in this company, like being worth a ton of money is if we aren't [00:38:00] careful either in that we don't manage our liabilities well, which means we underwrite people who aren't.

Healthy. So we're like really careful about underwriting people. I'm really careful about the risks we take on. It's not just enough that you say you're healthy. Like we like really double check that. And then the second thing is on the lending side like we're, we, we have this. Balance sheet that is sort of unique in crypto and that like we can take on duration.

We can lend institutional counterparties Bitcoin for a year, not a day. And that's a really powerful idea. And, but what we sort of get from the market for that is we do a lot of like structure. We get a lot of credit protections. We like really make sure that we are protecting the Bitcoin we have.

And the reason we do that is for selfish reasons. But yes we have more and more users. They I'm so grateful for their trust. And then we, we keep growing. Amazing. [00:39:00] That's like some pretty crazy growth. Obviously you started by creating something brand new. So that's amazing. Yeah. Is there anything else you want to tell our listeners as it relates to Meanwhile on the insurance product and the innovation you've created?

Yeah. The only thing I'll add is just that you know, it's we've gone over at some here, but people have questions. It's complicated. Literally you sign up on our website and me or my colleague reach out to every single person. And tend to have a conversation. I'm not, I think we might have like one or two policyholders that did like push through the whole thing.

Having like listened to me on a podcast, you're seeing me talk, but I, there's a long way of saying people don't have to think that they like have to make this as they come to the website and then they just like have to do it. You, we, we like hold everyone's hand because we know how these products are complicated.

And people tend to be very, for good reason, like careful with their Bitcoin. So you're just so knowledgeable in so many areas. What is it that you like to listen to watch or read that you [00:40:00] could share with the audience? That makes sense. That makes sense. Zac. Well, let me answer that two different ways.

The, the podcast I probably listen to every single episode, which is completely like not a finance podcast per se is conversations with Tyler, just Tyler Cohen has this. Like super fascinating sort of podcast where you just like interviews people. I think on the alt side you know, I love your website and the bottom and sort of all your work doing on that.

And the other one one of our investors runs Alt goes mainstream. And he has a weekly newsletter like AGM weekly. So that, that that's another one on the sort of Alt's finance side that I really enjoy. Amazing. So bringing it home here, we're going to put you on the spot. We have something called three years out, which is, we love to hear from our experts.

What's a prediction of a public company, you know, right there in the public stock market that you think will be strong three years out. And then one private investment. It could be anything across any of the asset [00:41:00] classes. That will be strong three years out. So Zac, what are your picks for three years out?

Well, maybe the private one first, which is well, I think Bitcoin on some level, and then Bitcoin rational life insurance policy, obviously even better. But more particularly on that I, I'm really been looking at like AI application companies. I think that that is both like a really cliche thing to say, but I also think like the investor market is like over indexed to these, like big model companies, I think they're giving an example of an application type company.

Oh, they all have like names that sound the same. You know, I'll just give a different answer. Cause I can remember, I'm really bullish on on Ripley. I really like Parker. Okay. I think that's something you could like probably buy on the secondary market for sure. I mentioned that other annual investment astronauts, I think they're completely under the radar and no one knows who they are, but they build these like small, I [00:42:00] mean, big compared to.

Some satellites, but they build geostationary satellites and they provide like. Telecommunication coverage. And it's just this, like some of those hard tech companies are really amazing on the public side. Look, if I was going to invest in anything for three years, I guess it'd probably be like, it, it's so. Boring to say, but like, like QQQ, I mean, yeah that's where my head goes. I have a little exposure to the triple QQQ, but you know, you can get into weird. Sometimes that like outperforms, sometimes I don't want to perfect.

Well, we've had an amazing conversation here. It all started with, you know, the becoming a Stripe employee number 36, 37 for three months. Obviously you had your time as being CTO the city of Newark with Cory Booker, which is amazing. You had your first startup standard treasury sold out to SVB. Maybe could have gone somewhere else, but SVB was a good result.

And then you have had so many [00:43:00] successes along the way, both as a public servant and doing the entrepreneurial thing, you give some really innovative ideas, whether it's like collaborating with the website composer or the way you work on DeFi, which is a little bit simpler with is exponential. fi, which sounds amazing.

You did give us a prediction on BTC, which I love. About 200 K around 2030, but not trying to predict tomorrow. But you did say you think you could get to the price of the equivalent of goal, which is plus minus let's call it 700 K. Your company sounds amazing based in Bermuda being super innovative.

Meanwhile, able to put a life insurance wrapper all underwritten in Bitcoin. You gave us the four major benefits, which is. The hedge against the inflation, tax free growth, able to do the interest free loans, and also just managing the BTC for you so the person doesn't have to think about the keys and losing all that themselves.

There is a one Bitcoin minimum, but other than that, just be healthy and be able to be, you know, AML KYC. Already have hundreds of Bitcoin that you're working with across all your customers. You [00:44:00] gave us some podcast suggestions. And of course, three years out, you mentioned BTC wrapped his best with rippling and then also Astronos and with public, you went a little safe, but that's okay.

Cause you're quite innovative with QQ. Zac, thank you very much. Thank you.

Smart Humans with Slava Rubin is a podcast brought to you by the team at Vincent. Any data, text, or other content in this podcast is provided as general market information and not as investment advice. Past performance is not necessarily an indicator of future results. For more information on alternative investing, check out Vincent at www.

withvincent. com.

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