The 9-Figure EtherFi Revenue Machine - CEO Mike Silagadze

Transcript

So you get all the benefits of self- custody, control, and access to DeFi uh without any of the crypto nonsense. It's like truly a consumer product. >> Like how do they cross the chasm and go from La La Land into this real pragmatic business world? Which provides more value do you think to the business or like or like have you seen a differentiated, you know, uh revenues, etc.? >> Welcome back to the Rowup. We are your hosts. I'm Andy. >> I'm Robbie. And this is your home to learn from the biggest guests, the brightest minds at the tip of innovation.

>> Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. >> Welcome to the city. It's a way cooler today. I'm telling you, you picked the right day. >> Yeah. >> Yeah. Can't wait to get to here. >> Yeah, man. Um, so obviously we, you know, you you put me on the Ether card several several months back or I think maybe two months back. >> Uh, yeah. Maybe just to get because that's when we launched. Yeah, >> we had that podcast with Arthur Moustorms on the corporate card the the the there is if you look at the Dune charts that you've been posting is absolutely going up in terms of money spent. What are the numbers now? Uh what's the growth been so far? How are

you feeling about it? >> Yeah, so uh we have about 20,000 uh users that have signed up um uh which is pretty pretty solid growth numbers over the last two months. So we have um we're up to around 250 to 300k a day in transaction volume uh which is uh solid 2 months out. We were told by uh our our card uh issuance partner that we're the fastest program they've seen to a million dollars in spend. There you go. Uh which we hit within, you know, like a week. Uh which is great. um uh OTVL so the actual deposits in people's wallets non-custodial uh wallets which they use to spend is now around 50 million um uh

so yeah these are pretty serious numbers like to put into perspective the largest card program these are estimates because these aren't public numbers but the largest card crypto card program in the world does 5 to10 million a day in transaction volume so that's like the ceiling but >> who's Well, it's Crypto.com. Uh, again, these aren't these aren't public numbers. We don't know. >> Tear up your Crypto.com card yet. >> They sponsored the UFC. That's that's that's how they got it. >> Well, yeah, they make money on, you know, lots of different things. Um, I mean, I think we'll get to a couple million in transaction volume within a few months. Uh, daily transaction volume. Um, uh, which will would make us certainly one of the largest, uh,

programs. But what's most exciting to me about it is not I mean, there's a million cards, right? That's that's not particularly unique. What's interesting is it's a non-custodial card. Uh it's plugged into DeFi. It's the only card that actually lets you like borrow or spend your DeFi strategies. Uh so I would call it like the only cryptonative uh card out there. Um and it's a fully integrated product. Like if you download the app on on iOS, you try it out, it's uh I mean it feels like a fintech product. Uh there's none of the crypto [ __ ] that most people are used to with seed phrases and signing random hex transactions. Uh so you get all the benefits of self-custody control and access to DeFi uh without any of the crypto nonsense. It's like truly a

consumer product. >> Introducing Asset Runes, the future of decentralized finance. Stable coins natively on Bitcoin. Hedge against volatility. Diversify your portfolio. All directly from your Bitcoin wallet, secured by ZK Technology. This is asset runes available now exclusively on Starknet. >> I I think it's important to disclose Annie and I funded Angel into Etherfi. Um, and I'm glad we did because you guys, like you said, there's none of the crypto [ __ ] You guys treat this like a real fintech business. And I think oftent times we get in this kumbaya la land about oh build a

community launch a token you're going to end up finding product market fit thousand years down the road. Well you guys are taking a much more pragmatic approach. You're targeting distribution. You've already found product market fit for one product and now you're targeting a a new segment. And so I guess if you have advice to some of the companies that are out there that may still be in La La Land like how do they cross the chasm and go from La La Land into this real pragmatic business world? Well, this is, you know, it's a tricky question because the reason that one of the reasons that crypto, I think, has a an absence of product market fit and, you know, real consumer uh app adoption is because the path of least resistance

for making money or for getting money is some infra vaporware narrative driven [ __ ] Launch a token, cash out, call it a day, and maybe do that over and over again. Um uh and that I mean that's the path of least resistance and so that's where capital tends to go like let's do the 500th freaking you know L2 and L3 and whatever. Um so like how do you fight against that? I don't know cuz it's that that it's hard. I think >> ultimately I think it will change. The gambly aspect of it is naturally always going to be there, but I think over time as the market grows, like the market for casinos and gambling is large, but the

market for real [ __ ] is a thousand times larger. So eventually it does become, you know, a bit of a rounding error. It'll still be still be there. But the way this changes is builders that actually have a long-term focus um that spend time to actually do uh you know figure out real problems, do customer uh you know customer analysis and find find that product market fit. Um and that's just hard work. That takes time. Uh you're not going to make a quick it's harder to make a quick buck. Yeah. >> That way. Um so anyway, so that's the advice I guess. But like I don't know to somebody who's uh you know 22 years old uh launching a shitcoin am I going to tell them like no you're this disaster don't do it. I'm like look you have it you definitely have a chance of making

some money doing that way but >> I don't know that's I'm not interested in that. >> I I think you make a good point. It's like do you want to make some some money very very quickly or do you want to make sustainable wealth? And this is from an entrepreneurial perspective. The difference in sort of going into the gambling route and and launching the next infrastructure vaporware versus launching a sustainable business model and a pragmatic business. >> Yeah. >> Yeah. Like look, my goal I'm not interested in making I've you know I've had enough success in my life. I I don't I don't care about making you know a little bit more money. Uh what I care about is building uh something that is actually transformational, something that impacts millions of people. Like what gives me excitement is to hear people from all kinds of random

countries in the world saying I use a product. It's great. It actually helped me solve a problem. Uh and I want to build a you know an entity a project that's worth tens of billions of dollars. Like that's the scale that gets me excited. Um uh sort of a quick hit just doesn't uh you know doesn't do much. >> Yeah. So you you've been teasing about some new applications on top of uh EtherFi's like Neo Bank, DeFi Bank kind of uh foundation, right? So we have the cash card. What else are you looking at trying to build on top or you know are other people coming in to build apps on this foundation? What is that kind of shift?

>> Uh I did briefly kind of tease that. Um well so there's a road map. Um, as the product stands today, a normal person still, I think, would have a hard time using it because if you think about what what's required to use like the Etherite, we call it a DeFi bank. You know, you still, okay, you got to buy some go on Coinbase, maybe buy some USDC, send it from, you know, your Coinbase account to a specific wallet and then you you see it in Ether and then maybe you put it into liquid and, you know, when >> you say normal person, you're you mean like a normal person? Not pointer, right? someone who actually maybe got >> a CFI user. Let's call it let's say someone who's you know keen on crypto but a CFI user there's it's still too many steps what it needs to be if you if

you look at products like Wise or Revolute or Chime or whatever um >> like it's they're super polished like they have a level of polish that you expect from like you know like consumer apps these days. Uh you open the app in in two minutes you can have money in there and you could be spending it. That's what we need to get to. We we have about a couple months of roadmap to get there. That includes like all the payments apps integration, you know, Plaid integration, Pix integration and whatever ways of getting money in and getting money out um ability to support lots of different assets, token swaps, herps, believe it or not, all this stuff just integrated into the app so that it's, you know, really nice and easy to use. Um um that's like the very next road map. One of the other things that I

think would be really cool that I'm I mean for sure we'll do it at some point. It's just a question of when is I I really think there is an opportunity to create um I don't know how big this gets but like a whether it's apps or widgets or something that you can actually plug into this financial infrastructure and allow people to build like tools around this like maybe you want a robo advisor that automatically allocates you know some sort of index of assets for you non-custodial you know automated way maybe you want something that automatically like saves you know every time you buy something it rounds it up to the nearest dollar and like uses that to buy Bitcoin and it's just like a savings mechanism. Um you know like some sort of charitable stuff like you can do

you can come up with all kinds of different interesting ideas uh of like hooking into stuff and I think that um that could be really compelling because it almost gives you an ability to create your own programmable uh you know fintech experience. >> Yeah. So in that in that regard then with these new features um kind of thinking about applications that you can build on top of this DeFi bank when you're when you're looking to kind of go from the current state of revenue as to where you guys are now and and trying to kind of project out to your goals what do you think is going to be the driver of the larger revenue for Ether and how do you make the decision as a entrepreneur as as a builder in a very

competitive space to like subsidize uh early adoption versus start to actually, you know, turn on the fee switch, try to really generate uh value from your customers. >> Well, so we're profitable every month, you know, we generate revenue and we use that uh portion of that to buy back uh the token. So there's like a direct tiein between token and and protocol. So we I mean I having built a SAS business before uh it was much more in a much more difficult industry let's say uh it was higher education. So um uh but I'm very cognizant about unit economics so that you don't spend more money to acquire a customer than they're worth to

you. Um so far I mean uh yeah we I think we've done a really good job of staying disciplined. you know, our you know, take this these numbers with some caveat, but our average customer is worth about $1,000 a year to us. Our our proof is about $1,000 a year. Um, and our cost of acquisition, depending on the channel, uh, is about $50 to $100. So that means our payback period is, let's call it about a month. >> Uh, which is great. Like that's fantastic. Um once a few of those features that I mentioned are flushed out, we have a budget set aside and marketing budget to start really like pushing user acquisition. Um we have a $4 million set aside this year and our goal is to get to about 100,000 active

uh card users specifically. We in total we have a couple hundred thousand users. Yeah. But we want to get to a 100,000 users that use the full integrated product including like staking, the liquid vaults, the cash product, the borrowing, you know, and everything else. Um and the revenue opportunity that be beyond that then we look at margin expansion meaning um uh driving more revenue by by offering the user more products like token swaps, per you know borrows, more assets that they can uh they can use. Uh currently we generate about you know about 100 basis points on transaction volume on the interchange fee on the card. Yep.

Generate about 50 bips on the borrow uh borrow spread. uh we've got about 30 to 40 bips on the staking, about 200 bips on liquid, etc., etc., etc. So, there's this like stack of growing services that we can provide that are still the cheapest that the user can get in in the market, but it by by creating this vertically integrated stack, um it creates this like very powerful uh positive feedback loop because then that lets us spend more money and offer more perks, more cash back, more rewards or whatever uh on uh you know to to our customers. We have the travel booking stuff. I didn't even mention that. But that's uh you know we have 7% margin on that which is like >> what what is that travel? Like you can

book travel directly through. >> So it's like similar to like MX. >> Yeah. You know Chase. You go to this portal, you get 5% cash back on all your travel bookings. Uh and the hotel prices uh are super cheap. They're usually 10 to 30% cheaper than you know. Um uh and so that's a great you know especially with uh cans in Argentina right uh coming up uh I I had a question about another feature that you mentioned which was plaid but also some just broader onboarding integrations that you had mentioned >> and I'm curious how much some of the deregulation or regulation just positively has affected that. Is this something that you've seen or tried to do in the past and it really wasn't

feasible and now you know Plaid and some of these like traditional banking partners are becoming a little bit more accepting of crypto and it's easier to integrate those things >> for sure. >> Okay. >> I think that's exactly right. It's not that it was we're we spend so much money on lawyers. Uh we make sure every jurisdiction we operate in, every product we issue, like it it's literally to the point like every state you can use these two products but not this one and you you know you can get the card here but not there. Like Arizona is not supported for some reason. So every jurisdiction, every country were obsessive about this crap. Um, so it's not that this stuff was not allowed before,

>> but it's actually exactly as you say, now that the vibe has shifted uh to where like, oh, this crypto there's the Genius Bill, there's like, you know, like this stuff is actually like more reputable. Um, uh, all these services that in in theory should have been fine before are now just much more willing to to work with you. U, >> we we did, for example, like Mailchimp just like kicked this out recently. >> That's happened to us. Yeah. there no crypto. I'm like seriously >> so you know it still happens but um it's getting a lot better.

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So, are are you guys pretty much um let's just say uh finished with like the whole kind of like uh restaking kind of part of your business or like how does that's still very much active? >> Yeah. You know, generates a huge amount of revenue for it. >> ETH is out there still, right? Right. Yeah. >> Yeah. It's I mean it's six or seven billion dollars in in deposits. Um >> but how do you think about like the like like the focus between those two going forward? >> I mean the the this is the cool thing about being a vertically integrated platform. >> Yeah. the people that use the staking product were the first people to adopt liquid and adopt >> if you had everything was on there site probably >> yeah the people that are coming in you know from Taiwan or whatever yeah uh to

use the cash product deposit into liquid and then stake so it's we view it as very um as I said it's a it's a positive feedback loop this is uh I mean it's a playbook that's been around for like centuries like vertical integration is not something >> no yeah yeah I mean look you could I can see a future where that where that site just like the etheri dashboard has yeah travel it has trading it has like a per thing maybe it has a >> yeah it's a fintech >> yeah it has an AI agent like LLM dashboard where where you can like you know operate your your portfolio like >> for sure >> and if it's all in one kind of you know interface one place makes it much easier to operate from >> the exact same way that like you open up

your if you use Revolute or whatever you know Neo bank you use it's not like oh here's your checking account or here's your stocks. Like no, no. Like you can keep your cash here. You can buy some stocks. >> You can you have a credit card. Like all this stuff is in one place cuz that's what people want. >> Yeah. >> And so that's what a consumer product is. You you like do the thing that people actually, you know, want. So projecting like kind of skating to where the pug is going with with you guys. I I take it, correct me if I'm wrong here, from a competitive landscape, it's not the other crypto companies that may be around permissionless that you guys are thinking about that are going after Robin Hood.

>> Correct. >> Right. You're going after like that sort of that sort of echelon of fintech that are out there. >> The the broader space that we're going after is neo banking. >> Okay. Right. Um we are not a bank in that we do not take deposits but we are I think building and have already built a viable alternative to a to a bank. Um so that's the larger category that market is about $150 billion. >> You know all of DeFi all of it put together generates I don't know$1 to2 billion a year. It doesn't [ __ ] matter like the pump fund and the even hyper liquid like this is a rounding error. Like it's a rounding air on real [ __ ] right? Um, so that's the market and the market is growing really fast. The

neo bankanking space is growing 30 to 40% a year. This is going to be like trillion dollar market uh pretty soon and eventually it replaces uh you know traditional banks. So that's that's what we're going after. That matters way more than trying to take market share from some random [ __ ] card program that's got 12 users. >> Yeah. Yeah. Yeah. Yeah. >> Well, yeah. cuz you did kind of remind me of one thing which is that the traditional banking sector does seem like it's sort of it's sort of like cautious and looking at what's happening and could potentially get innovated because >> Yeah, for sure.

>> They're not nimble. >> They're not going to dirt roll over and die. Yeah. >> Right. Right. Um and I was thinking about this in the context of stable coins because now you have uh you have these large social media platforms that are thinking about launching stable coins and meta. Um, even X is starting to seem like it's potentially getting into that game. And so now these companies with distribution are starting to become banks. Even even Apple, right, it has Apple Wallet, Apple Cash, right? Hard. So, >> as you see the evolution of banking and traditional banking sort of being left in the dust a little bit, how how do you see this playing out from the social media side, the DeFi side, what do you think the evolution, you know, on on a

pick your time horizon, what do you think that evolution looks like? >> You know, it's so hard to predict. Um, I think the only this this there's no information, but like the only thing you could say is it's going to be very different 5 years from now, 10 years from now than it is today. Yeah. Uh I think the correct way to operate in this space is to focus on building a product that lots of people want to use and not worry too much about what you know Apple and Google and and Meta are are doing um or or even like Chase or other you know large uh large banks. Um the reason is because when you are in a growing market, a market that's growing by tens of billions of dollars a year, new revenue per year, like what you need to

do is just capture a meaningful share of that. Um and where the boundary lines, you know, get defined. I mean, it matters in the grand scheme of things, but when you're starting with, you know, from zero, how do we go to a billion in revenue to 10 billion in revenue? like the where wherever those lines, those boundaries end up being defined. Um, as I said, it matters, but like again, what matters much more is just this like maniacal focus on customers and creating a product that people actually want. And then you'll define your niche >> uh over time. Um, >> yeah, >> I'm I'm curious how much you you prioritize like the corporate uh card and the corporate market with regards to like the you know wealthy crypto user

market, right? like like what's your which provides more value do you think to the business or like or like have you seen a differentiated you know uh revenues etc. >> Yeah. So it's there in crypto I think there's a very powerful um virtual cycle feedback loop that occurs. We saw this actually with our staking product. The first product that we launched when we were raising our you know seed in series A like every pitch people would ask us okay are you focusing on retail or you focusing on institutional and my answer to that was look in this space I think you have to do both. The reason is because if you get retail users, that means when you go to pitch the large institutional uh investor, all

of their analysts, all the like 25year-old analysts who who work there are already using your product. Yeah. >> And so that cuts your sales cycle from, you know, 6 months down to like one month because they already they're already familiar with you. They're going to be pitching you internally. And vice versa once the institutions adopt that creates you know with brand awareness security and that helps you adopt get adoption on the person own retail side uh because and obviously you know your TV goes up and that that creates positive feedback loop. So you kind we had to service both uh and we we have you know a B2B motion I guess to acquire yeah >> business customers and the retail stuff and the exact same playbook I think applies in this case for our corporate card uh products

>> uh which is evolving um into more than just a card product but including things like expense management categorization treasury management and tracking all that stuff but then every single employee who gets a card automatically also gets a personal Ether account and with one click now they can create their personal card >> uh and collect cash back and rewards and points and and all that stuff. Um in a market >> like in a sense we're building like at least for now a vertical uh focused business. The vertical being you know crypto and DeFi. And so this like layers on a cake model is uh is the way that you build uh like a moat >> is you you know if someone's using you

for one product right >> they can churn someone's using you for >> three >> three or four different things >> your churn basically goes to zero in fact you get ne negative uh churn you get like positive dollar retention >> one last thing for you on the token side of things how much has the hyperlquid model do you think with with regards to the new administration that we're speaking about kind of newer uh abilities and flexibility. Then Hyper comes in the market, kind of does its thing. >> How how much of that of these two things have influenced your thought process on uh ETH token and and kind of how do you how do you like how do you think about creating value for for token holders?

>> Um I don't so we we had value acro and token buybacks from almost day one. So like I feel very strongly about that because I didn't want to just have a meme coin with the name of the protocol, right? Which is what most tokens are. >> Yeah. Nobody, right? >> So uh Hyperlid also chose that. Obviously they're doing it in much bigger size because they're you know the casino dollar. >> We need Ether peraf. >> Well, we are we are going to be integrating with Hyperliquid. So you will be able >> like on the front like you'll be able to trade on that liquidity on the Ether front end. Yeah. Yeah.

>> Um that's work in progress. Will you be able to get like fees from that or Yeah. >> Hyperliquid has a built-in uh >> that's the builder codes thing or >> Yeah. Yeah. Yeah. Yeah. So you can just tap into their front end or tap into their liquidity with any >> you'll be able to say okay take this chunk that's now collateral. Let me do some pers uh and then we'll be able to pass on fee savings because we get economies of scale with hyper liquid to the users. So um uh anyway so value crow token from day one that's been something that we we cared about. Um, it's really great to see like a lot of the best projects now starting to do that. You know, Hyperlid probably the they're the most aggressive about it and we've seen their token absolutely crush it as a result. A's

been doing that. Um, uh, there's there's others. Uh, so I think that's fantastic. I really think that's going to be a permanent meta where if you're not doing that, you're going to be kind of like, yeah, >> looked at kind of like what what like what the [ __ ] are you doing? >> Yeah. Like why are you >> separates the men from the boys? Cuz right >> it is a lot. Yeah, it's a line in the sand. Show me the money market, right? If you're not doing the buybacks means, oh, maybe you don't. >> But it's a tough question, right, for for builders because so many of these markets are so cutthroat in terms of competition of adoption, >> right? >> So you've got like a market like interoperability, right? For example, like bridging like if if anyone's going to start charging more, you just have

people that raise the wise and be like, "No, you know what? Screw you. We're just going to go free and just we want the adoption. We want >> Yeah, that's how the real world works. there certain industries like that are super low margin and they're big industries but they're shitty industries to fill in. >> Uh they're undifferentiated and yeah like that's that's reality that's good for people. >> Yeah. Yeah. Yeah. >> Which is like coming to light in a big way as the last sixish months here. >> Yeah. Like I think generally in crypto, maybe this is too strong a statement, but like broad horizontal platforms are harder to monetize because just eventually you do get crutched >> uh to zero because it's just like there there's a million of them and it just you get perfect competition essentially.

>> Yeah. >> Yeah. >> Yeah. And that's that's the fork of a fork. Like that's what separates, you know, the in infrastructure vaporware as you called it from the verticalized uh businesses with differentiation. >> Mhm. >> All right, Mike. >> Mike, thanks so much. >> Last thing for you. Um what are you bullish on in particular and what are you bearish on or fearful about? >> Um I mean I'm bullish on ETH. uh maybe almost like unreasonably so because I just I look around and I I think to myself like I don't know what other ecosystem you'd build on if you're doing something serious, right? Um uh and I think institutions are probably have the same from what we see have the same kind of mindset. So I'm I'm still bullish on

the uh Ethereum ecosystem. Um I'm bearish on you know uh the crypto ponzi [ __ ] that we saw across the last few cycles. I think um the market's getting tired of it and uh I I hope that like the the the capital exit out of that uh you know that the good stuff the real stuff which takes longer and is harder to build but is much more sustainable. >> Yeah. I wonder if we're going to see a massive market shift like out of all of these like out of 90% of tokens basically into like the 10% or 5% and like how that could look.

>> It's almost like you're seeing a bifurcation >> already, right? So like on the one hand like pure hyper gambling insanity like Barkcoin type stuff >> and then like legit serious business anything in the middle is kind of getting left behind. >> Yeah. Yeah. It's like mid-curving. It's like you're not just a pure memecoin with with no value. You're trying to create something but you also aren't making any money. So it's kind of like >> Right. >> Yeah. >> Mike, it's pleasure to have you, man. Uh thank you for being here. >> See you guys as always. Yeah. >> Enjoy the day. Um and sign up in the link below.

$50 off the first $1,000 cash back. Subsidized lending as well. I am borrowing against my wrapped e right now. I am not selling to pay for my Subway. Um, thank you, Mike. >> Cool. Thanks, guys. Sushi.