Copper Founder: Building a Billion Dollar Company & Fixing Crypto Custody

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Block Works. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, folks. Back on Empire. took [music] a little hiatus there. Back on Empire. Very excited about this. We're actually recording live from D. So hopefully the sounds all right. Looks good. Got the better looking guy than me, Dmitri Tokarev. What's going on, Dimmitri?

>> Thank you for having me, man. >> Yeah. Yeah. So, um, yeah, I wanted to have Dmitri on because, uh, Dimmitri is actually our first sponsor ever of our first D in May of 2019. So, Demetri is the founder of uh, was the founder of Co Copper, raised like hundreds of millions of dollars. Yeah. High valuation and big business, and now building Bron. So what's going on? How's life? >> Life's been good, man. It's, uh, I think a lot of founders can relate. We were just talking, you know, that were roughly started businesses at the same time. Um, you know, when you get smaller team, you execute faster. Uh, you you closer to clients to product. So, you know, it's been very exciting. I think you're in a bit now. Um, roughly, yeah.

Building Brun and it's it's been fantastic experience. And, uh, and, you know, transition from Kappa was also >> pretty smooth. >> Yeah. Good, man. Well, I want to hear all about it. So we're um all right. So we got Dask behind us. We have 2,900 people here this year. What do you think about just like I don't know I like just Yeah. I love your macro take on how the industry has evolved and Yeah. We started Blockworks December 2017. You were January 2018. >> Yeah. >> Yeah. >> You know, I'd say the following. It was the same thing in this May 2019 when we were the, you know, sponsor. I remember you know we put together 10 20k or something of sponsorship fees are like okay we got to make it count and everything because everybody's like you know really poor and and and have not

raised at that time hundreds of millions of dollars etc. and uh but you know theme was kind of always the same uh the institutions are coming and so on and so forth. I mean we're sitting in Franklin Templeton booth right now so you know evidently right but I would say that a lot of people and projects that um originated in crypto um did so much more than than they anticipated probably themselves. uh some of them weren't already public like you know circle and bids go etc. Others uh gearing up to to go public I mean all of these uh shops were around uh in seven years ago but kind of hoping that there was you know

those institutions that are going to come and res save the day but it was actually them and all of us who who built this industry actually. So um the next and and you know we hear and again you you you hear people talking about the next wave [snorts] um which is traditional assets coming on chain and then again the question is is will the institutions come and save the day and bring those assets on chain or will it be you know players from the crypto industry that's going to do that directly and work directly with a with a with a with a consumer >> and what do you think Hey guy uh you know we're approaching it from both both angles you know on a copper site if

institutions there they need infrastructure they need companies like copper and they there is there's something good that's going to happen on that front and if it's going to be working directly with a with a with a customer itself then on the bronze side we're ready to support >> the one thing I would say is that >> the way people approach in generally u investing in digital asset face uh and I would say just generally investing I think it's changing right now. Um from the behavior of people uh we're seeing that they they're not really looking for a manager to manage their assets. Uh they're not looking really to buy an index being it an index in crypto just bluntly or being in an index in

traditional space. So there is a there is an increasing demand for people to understand themselves what the market dynamics are and then subsequently take either single asset exposure or single commodity exposure essentially be paladium gold silver they want to think for themselves so that's one and the second thing I would say that uh market cap of of crypto is what uh 2.5 3 billion trillion trillion >> on any given I mean that's the market cap of Nvidia Right. Like all of this today >> is servicing >> a market cap of Nvidia. No, no, but this is this is it. It's it's not that you know you're trying to hide it, I would

say. Because if this is what what it is today, service like this market cap, imagine when traditional assets are going to be here and infrastructure is going to be here and and all all of those things are going to have to basically live quote unquote blockchain life. and to live quote unquote blockchain life, you're going to have to have all of this essentially. All of these companies are going to have to service the that industry. So, it's uh it's super exciting and uh we definitely want to play quite a big part of it from the bronze standpoint as well. >> Yeah. Let's talk uh I want to hear the copper story. >> Yeah.

>> I want to hear the the real copper story. So, you guys how much money did you guys raise? >> 300 >> 300 million >> 300 million >> at what vow? >> Uh the latest one I don't know if it's public. Well, you know, I'll just say uh but the latest one was 1.25. >> Wow. >> B. Yeah, but I'll tell you like so copper for the first since like seed round for the first couple of years basically we were building a business right but in the zero interest rate era you can't do that right because you build a business you're kind of like sort of dipping in and out of profit you don't really spend much money but then nobody knows about you and that and and and that became a problem you know when you when you run a custody business you kind of want to basically everybody to

be aware of you because the awareness creates trust. So we're like, okay, we we got to raise. So then >> you had to raise because of the to spend money on marketing >> to spend money on marketing basically just just to to just to essentially just to be there just to be everywhere that's humanly possible to be. And um so we started raising as soon as we raise our competitors are raising more. >> Who are the competitors? Fireblocks and Bitco Anchorage I think is the I mean Coinbase custody to some extent uh became like a part of the competitive about it was like you guys were like an Anchorage or a Bitco Europe.

>> Yeah. I mean all four competitor like like I've lost 99% of deals. Let me rephrase that. [laughter] 99% of deals that we've lost went to Anchorage, Coinbase, Custody, Fireblocks, uh or BitGo basically. And so and all all the four companies are in the US, right? So outside of the US, we were kind of like the only one uh on on those type of deals. Um and yeah and obviously you know they raise they spend and and then you have to raise and you have to spend and everybody did the same across uh tech landscape really it's it wasn't just unique to for crypto um cuz capital was essentially cheap and people were looking to allocate more and more and more and then 2021 came around and that that's where the valuations insanity

began and and everything and we grew from there's a lot of there's a lot of stuff which is which happened in in in that 21 22 year. >> Yeah. >> Um super big rounds all across the board, extreme rapid growth of revenues, end of headcount. Uh and then subsequently, you know, when when interest rates started increasing, it's like you had to completely change your MO to like okay, well, we're now actually back to running a business, you know, where it dies. Yeah. Yeah. Exactly. Exactly. Which which was, you know, extremely hard. So um but I think the toughest piece there was not so much as raising capital and spending capital.

It's actually relatively uh easy is to is to cut the burn is uh the hat count essentially. So when we went from like 36 people in October like 21 to 236 people in October 22. So slightly less than one person per day that got hired, right? It's >> and then the whole system changes. >> It's I mean everything changes, right? The culture changes and and and you you can't control it. Now basically you rely on clusters of culture. Those clusters create their subcultures. The subcultures start colliding with each other. Um so it it's it's it's pretty brutal, but it's not um I I know the

companies that you know done it even faster. I think partially, you know what, I think partially that's what happened to FTX because they went from like 17 people to 700 in a year >> and that I I just I I I just just think like they just collapsed under this uh speed of growth. >> Would you do anything differently cuz now I mean maybe update folks you're out of copper. >> Yeah. Yeah. stepped down from copper in December 24, gen 25 and uh building bron and we're building bron with a much smaller team uh because I mean these days uh different times you know first I mean and it changes every day I don't know like you how you guys experiencing this whole claw type situation in the last three months but like >> we've been using AI since day zero but I

think three four maybe six weeks ago something like Um there is a full cycle that that's that you can now work very securely with with those models. Well, we work through cloth code and and and and changes completely. Right. So we actually stopped hiring because of that. Yeah. >> So we're we're under 40 people. >> Yeah. >> So >> would you if you started copper over again today, would you do it differently? >> Oh yeah. I mean of course. Uh I mean you you you live and learn, right? So there was a there was a lot of there were a lot of lessons and um >> well if if you're like a founder listen you know a lot of founders listen to it what what are the lessons >> I would say hire slow right because if

you think like that every problem uh that you encounter could be could be um solved by just hiring a person you're wrong like that's not going to happen sometimes it just means that you're just going to have to work Saturdays and Sundays and and and do it yourself uh until you figure out a scalable solution to it which is you uh you know has longevity and and you're just not trying to throw people at a problem and um that that's probably the the the main thing. Um uh then it's it's it's it's a lot to do with hiring I would say is how you hire people from where you hire people. Um there is a lot of um kind of like that's being

projected from like VC tech uh scene you know for example you know >> when people raise the round and they put like we're hiring I'm like why >> like why is this a good thing >> like why is this like you know so so it's like we're not hiring should be like >> you want to know the first company who I think changed that narrative >> was actually FTX Oh yeah. >> I think there was a point in time when when SVF talked about how small they were. >> Yeah. >> And he would brag about how small they were. And I think he was actually the first person I heard brag about how small and now everyone's doing it because it shows how, you know, clawed pled you are basically.

>> Yeah. Yeah. Well, I mean they went from 17 to 700 people, right? >> He blew it >> at some point. Uh because we we're right in the middle because we we're inte we signed documents with FTX to integrate them to Clear Loop in July 22. July of 22. >> In July 22. So there were they were about to they were about to and we announced it, right? It was there was an article and everything and like since then I've been chasing Sam. I'm like dude where is it? And so and every time you have a call it's like 4 hours of him sitting somewhere on the basketball court or something and just talking like some some nonsense like delusional stuff. And I'm like all right what when is the date that we begin writing code to integrate Clear Loop into FDX? like

yeah but this is this and this and that and then there is philosophy and I'm like okay this is not going anywhere and then basically I you know I talked with his team and I'm like guys what was like dude you don't know what's happening here like he's got 130 people direct reports right now right I'm trying to change the color of a button and and it's not happening right so so I think the whole situation the way it unwrapped I I would say there is no kind of like obviously all of this stuff that that they were doing is like crazy stuff and fraudulent da da da et etc I don't think it was just for the purpose exclusively of conducting like a mass scale fraud. I think it just like he just lost control over what's happening and then and you know there's a small maybe maybe at that

time it was like a small problem of them being able to leverage uh or take out clients funds through through FTT leverage from Alama's side and maybe in the beginning was like a million or two >> and then he with 134 people you can easily imagine that at some point when it became one to five billion >> hey you just can't stop >> yeah you kind of like oh what's that and then obviously you know having having one of your your largest competitor own like 10 20% of that how however much that was like you know that was a bit of an oversight one might say >> yeah what would you uh other than not hiring as many people what would you do do differently at copper >> um we're at that stage now where >> I would not try to do things but which

I'm not good at right so personally >> yeah so so um I'm a product person it took me a while to learn that I build stuff like that that's that that's what I really really enjoy and uh it depends what kind of scale of the company you want to be running but like some people get a kick out of sales some people get a kick out of management some people have OCD and they really like this admin tasks etc and some people have like so it's really knowing yourself and not trying to you know make a fish climb the tree like because you can't be good at everything and but the things that you're good at and the reason why you're sitting in the seat which you're sitting it it's it's that piece it's in spite eight of all the other stuff that you've

you've done in the business. If you don't know how to hire people, just like >> find somebody who knows and and don't ask them to do other things. Just ask them to do that. >> It's it's really playing on each other's superpowers >> and asking for help in areas where you know but >> that you're not good at but as a founder you kind of like expect it. It's like you you look at other founders, you're like, well, you know, Sam Oldman might be like phenomenal at all of those things. Like, I guarantee not. I guarantee that there's like definitely a group of people that's augmenting something that he, you know, he's not good at and he's just doubling down on things that good at. So, I think those are two kind of like >> large lessons.

>> So, you're out of copper now. Do you think um I was having a long debate with someone about this. Do you think that non founder-ledd companies can succeed at that at that scale? Like maybe you know like like Uber is doing quite well, right? Travis is out of Uber. They've got what's what's his name? DA is in DA and it's doing a great job. Yeah. >> But they're they're already a public company already at scale. Can you put a nonpublic can you put a non-founder in at series B or C or D and and and get big? >> It's risky. And like I was just catching up for drinks with uh with my friends from the head hunting firms that basically brought Omar to to Copper.

He's like look like from what we're seeing like this has been the cleanest transition we've ever seen essentially cuz you know you bring a person you need to stay stay out of their way right they're going to create a culture that they think is the best. They will create a plan and you need to back the CEO that you've brought in because there's no other way otherwise it's a a recipe for disaster. So when things don't go go well uh in those transitions that we kind of like keep hearing about etc. It's uh majority of this is basically because the the person never had a chance actually to implement what they really wanted to do because there was always founder that's standing on the way going no you should >> yeah yeah >> so it takes it takes a bit of discipline and it also takes like a lot of

self-awareness and like trying to you know shove the ego you know where sun doesn't shine and and kind of like go like okay we're here to do business and like let's let's let's focus on that. Um it is it is weird you know so and it is difficult >> it weird giving up your baby in a >> sense I never thought about this as like a a baby baby you know I have two kids they are my babies you know like so I I love the product I love the people I'm working with so but uh you you do it in a weighted way the thinking okay so what what what corporate strategy should be like that's that's was our thinking like so one is uh we should be closer to financial institutions, right? Uh

financial institutions are in America basically. So because like Europe, I'm sorry, but like you know pedestrians, right, in comparison to Wall Street. So you know, let's let's just call Spade a Spain. So two is what the exit would look like for the business. And I was like, okay, it's probably going to have to be also in America, right? >> IPO or an acquisition. >> Uh no, but any exit, right? Like any exit, but it's it has to be US, right? So you you do need to have a US CEO, right? American CEO, US-based CEO. Uh because otherwise such a core piece of critical like infrastructure like it just needs to have American like center of gravity. And that's kind of like what we wanted to achieve uh with this move uh essentially. So when you when you

give up the control, you basically know the reasons why why why you're doing this because unless you know Europe turns around or UK turns around say like okay we're now going to be the capital of not only crypto but the entire you know um capital markets you know it's not going to happen right in the next uh four five six years um so that was I think the the the main motivation uh and the main reason the other is that when you work in a regulated business. Um, the the limit the limits of what you can create as a product guy are basically bound as to what regulators are going to permit for you to create.

>> I built stuff that's sitting on shelf there [snorts] like that's never going to see a light of day over the next 10 years because >> and now I'm even more certain of that >> than I was >> because the regulators will just never >> because no like I I thought that it's just going to take them a while to understand it. I think like certain things that I've built and shelves like I don't think that people are capable of understanding this. >> Yeah. >> Maybe I mean Claude understands it but like I don't think people people can >> understand what >> uh the the the features the the the pieces of the products that that we've built essentially. Um because that's what I would do right if I would be running uh copper I would be building stuff and I think you know in terms of

building stuff if if you're limited to what regulators permitted to build it's like there's only so many things you could build. ZKSync is the bank stack of Ethereum. ZKsync's Pervidium is the only Ethereum secured platform that is purpose-built for institutions [music] that demand privacy, compliance, and full control of their data. ZKsync enables financial institutions to thrive in the [music] digital assets economy by launching and monetizing their own chains, tokenize real world assets, build programmable markets, and settle crossborder in [music] real time. Visit zksync.io io to learn more about the bank stack of Ethereum and book a demo.

As always, investments in blockchain technology involve risk terms and conditions apply. Hey all, Block Works co-founder Michael Aelito here. Quick break to talk about something we've just launched, Block Works investor relations. As the market shifts toward institutional capital, investors want more transparency, more standardization, and a higher level of professionalism. But the traditional IR model is slow, manual, and not built for how crypto works. If you're building on chain, your data is already live. Your business is already transparent. The challenge is turning that into a clear, credible story for investors. That's exactly what we're solving with Blockworks IR. It's a single platform that brings together real-time analytics, branded investor portals, and hands-on advisory support so you can

communicate what matters. If you're an onchain business looking to level up your investor strategy, check out Blockworks Investor relations at blockworks.cominvestor- relations. All right, back to the episode. >> What What are you doing with Ron? Well, look, there is a there is a whole gap that we've identified which is actually shocking to find out uh because six years ago, seven years ago on on your event actually I remember explicitly two founders of uh crypto custody companies were having almost a fist fight over will like MPC or HSM.

>> Yeah, remember I know who that was. >> Exactly. Exactly. And that was kind of the the last battle right since then >> everyone's using NPC right all the actors that are basically and you know for for people listening NPC essentially it's a technology where you don't have private keys so you know like all of you probably have to like write down seat phrases and create private keys like institutions just don't do that for the last five six years like that's just not a concept so no one sitting at black rockck or rather at Coinbase servicing Blackhawk and writing, you know, a seat phrase for bidd One, >> right?

>> Like like this doesn't exist. >> We lost the key. >> Yeah. I mean, it's funny to, but this is how basically crypto industry functions today when it comes to retail. And you know, we're talking about retail with like >> billions of dollars which are sitting on those napkins with 24 words and like etc. So, >> and so there are three generations I would say of wallets. There's gen one which appears straight out of the gate where it's you know generates your private key you write down the seed phrase like a software wallet right which is basically you know and it and currently they exist as well because they're quite convenient your private key just lives a inmemory like meta mask and trust wallet and whatnot right phantom then there's gen two which is like okay people like if this laptop gets hacked and memor is drained and

then there's like North Koreans that that is sitting and sniffing everything like it's easy to steal private key so like let's put it on the device so So it solved that problem >> like ledger >> ledger treasure like and so on. Let's put in device. So that solved that problem and then gen three solves the other nine problems remaining and and that's basically what Brun is doing. We are gen 3 self-custody wallet >> which and what are those problems? If you've lost everything you've ever created on Brun your devices and so on and so forth, we can help you recover. So you you can't lose that wallet, right? If you get hit by a bus, like you can appoint successors and your family and relatives are going to get access to your crypto, right? It's also this this

is probably creating the most supply reduction over the next 10 years. It's not the protocol itself. It's just like people dying and not telling where their stuff is. And that's already happening with >> Matthew Malin. I think the guy name Ripple put there's a bag of Ripple for like half a billion dollars >> that's gone gone gone forever. Right. Then increasing problem that people experience. Well, there's also, you know, you need to protect against fraud, right? So, you can't give your, you know, a lawyer or an accountant your seat phrase. That's that's crazy. >> So, you need to solve for that. We're solved for that. Uh then, uh, weirdly a lot of that happening in France, but there's so much more of that happening globally, which is gets under reportported are physical attacks.

>> Yeah, physical. Yeah, physical attacks are like very under discussed, right? >> Man, it's insane. I mean, I'm part of like several groups and again, you know, we can turn this podcast in a very very sad podcast and like and I'm in into hearts of like whether to tell people as to what what's actually going on. >> Well, I mean, give me I mean, give me the Yeah, give me the scoop. >> I mean, look like if you have any anything uh anywhere like on a wallet which has a seed phrase, you know, install Brun and don't have that. That's my advice because if somebody rocks up to you and politely asks to give it up, you're going to have to give it up, right? And >> but how frequent are these attacks happening?

>> Oh, weekly that I'm aware of. Yeah, >> probably daily. >> Is it mostly to big public figures or is it to people who they see in maybe like the ledger? >> It's mostly people big public figure. So you see like when you talk about like physical attacks, it's the the main thing there is to make yourself extremely unattractive. Like you you you don't want to be an attractive target. So if you're a public figure like the risk associated with robbing you is pretty high because people will care and people will try to you know that's one. Two is um you potentially are thinking about those things and you have security in place.

>> Oh so they're not really going after the public. >> Yeah because I mean come on like what you going to go after Michael Sailor, you know this is crazy. What you who you want to go after like or who criminals go after they figure out like who are the people who bought Bitcoin for $100. >> Yeah. And they're 80 years old. They live in Palm Beach and they don't have they have a dog as >> security. Exactly. Exactly. Or somebody who's flashing their portfolio for example. So somebody who's basically and and then you kind of get from the demeanor of like who's serious about their security or who's like paranoid and who's not because you know you don't want to also you know rob paranoid people because they have also processes in place etc.

>> Do you find the lowest? >> Yeah exactly. I mean, what's the best way to protect your brand your your motorcycle is to park it to a next brand new Ducati, you know, because like people people just going to try to steal Ducati first before you get to your bike. So, um, so there was a lot of that happening and and we're not like all of those things that I'm explaining like we're not going to move forward as a space. I'm surprised we actually got to to this state at the moment with with what normal people have as infrastructure. >> Yeah. it.

>> But most people don't do that. Most people just use Coinbase or Kraken. I mean, most people like the centralized exchanges just >> I mean, >> they all went to the exchanges. >> If you've got access to those exchanges, right, >> you you can lose access to those funds also >> during a polite visit by somebody with a machete right? >> So, two is biggest problem there is actually social engineering scams. This is another way to lose a text message saying from Coinbase.

>> Well, I mean the the most the popular mechanic has been uh lately is that they would bribe a support center person. >> Yeah. >> To leak uh the data for accounts then they would call people. I had three friends basically who got scammed that way and these are not stupid people basically like one of them actually like I had this like they made him to transfer $100,000 of Bitcoin to a different address. And I'm like asking him like because he knows me, right? like and I'm like way less reserved when I talk about those things off camera and I'm like this is why we're building Braun, you know, be paranoid, install everything, yada yada yada da da and I'm like did you think for like at least like 10 seconds during this this whole

like episode that they might be scamming you like yeah but they were so convincing like you know they have fantastic British accent and like and they had all my details they had all of his details they >> so they must have bribed a customer >> they bribed a system support person they identified they basically told him on which date which transactions he sent >> like those type of details like you know if if somebody calls you from AMX and said like let us identify ourselves you know on this day this is the amount that's been charged to your cart and this is like okay well let me also tell you some details like you know here's your this is when you created your card this is the address where we shipped your card you're like okay that's you can't really ask for more in terms of

like identifying right and the same thing Right. So, so people willingly just give up their crypto and they say like look in your account is not safe. We just need a confirmation code and number etc etc. >> Um sometimes like that that's more rare but uh also a mechanic you can also lose your crypto by just generating API key. >> Yeah. >> So like two things uh people should look out for like have a look at the API keys that generated on your accounts cuz like also sometimes even if there was a whit listing there's a way to steal through the exchange.

>> You know what I just saw? I just saw an API from BlockFol that was feeding into Blockfolio that had trading enabled. >> Oh >> Yeah. No, >> no, it never >> No one took advant I took I found Yeah, I just found it the other day. >> Yeah. So, so that's and the other thing which is kind of like also these days if you're use DeFi services. >> Yeah. Uh there is it's gotten so bad that uh US Secret Service uh UK National Crime Agency and Ontario Police uh formed a task force called Operation Atlantic I think which basically fighting fish and DeFi fishing scams.

>> So you can you like hook up your wallet issue an allowance on some website no private key reveal no nothing just gets drained straight away. It's similar to by bit hack actually. Yeah. >> Issue an allowance. That's all you have to do basically. It looks like a it looks like Amina, but like >> So why do you how do you guys solve this when someone like Coinbase can't solve this? >> Oh, the Coinbase would would on a Coinbase sites. Uh well, there are a few things. So >> or maybe don't just compare. So like yeah, >> on on the DeFi fishing side of things. >> No, not that, but just like how Yeah. How is how are you solving?

>> So there are a few things. So doesn't solve it. >> So So here's the thing. You only so one of the one so when we create you a a wallet there is no private key that's created that's how institutions do it you know it right like that's basically been the default case for the last 5 years right there are no private keys nobody in institutional space operates private keys right so it's orphase wallets so uh people use MPC which basically creates uh uh key shares right or aka shards right so one chart here etc so what the way it works is that one share it lives on your device be it laptop or a mobile phone and one share lives on a bronze server which you program. So you program the server um

the the share to do things for example such as hey if my cumulative transaction volume over the last 24 hours exceeds $100,000 I want this person uh that you added to your account to approve my transaction otherwise don't sign with me >> right or for example uh if uh we exited a million dollars right then I want 48 hour security delay activated on my account >> then we have protections against random crime Okay. So, if somebody on the street asks you to open a wallet, you you can basically hide wallets and from the interface, you won't be able to tell if they even exist. You >> showed me this. That was my favorite.

>> Yeah. Yeah. It's pretty cool, right? I mean, obviously doesn't help with organized crime because, you know, if people pointing out to your head, you'll quickly remember all your hidden accounts. But the policy engine does help with that. If you get hit by a bus, there is a full recovery mode that could be enabled by your successes. So, that's your inheritance feature. And if you just and people lose devices every single day or like that they just basically go through recovery process which takes 48 hours and you basically regain access to your key share that's lost is essentially Brun and a trusted third party that basically appointed on your behalf as a backup.

>> Brun and that trusted third party >> third party is like a sibling or a friend or something like that. >> No no we use we work with a company called Crypt. They do quantum encryption. So then then basically you inform them that hey I would like to basically recover my share and so after security delay uh we essentially print >> back the >> like a two of three multi >> yeah yeah yeah >> interesting why are you going after individuals >> I think because >> isn't there like a tech a worse business model >> olved >> we cannot be operating as a space where people, you know, going to lose their 401k savings because they forgot where they store, you know, a napkin or like

they their their I mean the stories I've heard. >> Guy had a backup at a bank. Bank burned down in LA fires, right? Turned out the and they called the bank is like we don't we don't know where it is. >> Gone. >> Gone. Yeah. Then uh one guy basically had it in a safe 6 ft like like like under his office basically in the basement. floods came >> gone >> gone so and I'm talking about like tons of millions of dollars gone right so so we we we can't continue as a space especially like you know it might have been also acceptable when the volatility was so insane that you know one day have million another day you have 100 million another day have 50 million etc but like now that it's more and more dying down and and it will turn like you know into

into more digital gold like uh type of scenario like you you would want to have a reduced level of risks associated with self- custody of such assets. >> So, so it's extremely important and then again crypto is part of the story of assets that live on blockchain. We will see other assets moving on chain and if you want to hold those assets you should be able to recover them. You should be able not to give up give them up that easily etc. >> Is there some new technology that made this possible for you guys? >> Well, NPC essentially that we just took what what what works in institutional world We just took what what basically we've been doing in institutional us and competitors >> 2021 like

>> yeah like basically since 20 exactly since 2021 everybody's been using MPC so we just took that and we applying but why because people deal with uh you know $20 million is a lot of money so we want to have proper infrastructure >> well $2 million is a lot of money and $20,000 is a lot of money so it it should be accessible to everybody so we're basically democratizing access to the technology that's been used by institutions for the last you know better part of the half a decade now. >> Yeah. How's it going so far? Do you raise you raise money or >> Yes. Uh to we we did something differently. So I've read a book by Chris Dixon, you know, from Andre >> read right on.

>> Yeah. Exactly. Exactly. As I was transitioning from copper, you know, I've sent you pictures from the beach. That's where where where I was reading that book because I like let me brush up on like what's this whole deal with web 3, right? And like I didn't learn much new, but it succinctly explain gave me an opportunity to explain to people what web 3 is. And web 3 is allowing your clients that help you early on building business to grow with you. >> And oh, this is where the bron token comes.

>> Yeah. And then we build the tokconomics essentially. We don't have so so so here's what we've done differently. Uh we don't have a company with equity. Doesn't exist. There's no equity. >> There is no there's no entity that has equity. And I and I know it's been kind of popular in in the blockchain space. There's equity company for founders and VCs and then there is a token for governance. It's >> like great. >> Now we're changing that because obviously that was the wrong model. >> I mean like for whom? [laughter] >> Yeah. >> For the Yeah. For the users. >> Exactly. For the users it sucks, right? So So we just decided essentially look it's just going to be a token. There is an opportunity to pay subscription if you don't want to deal with the token.

We're not shilling the token, you know. It's it's an option. It's a pure 100% utility token. >> So you have no equity at the company. It's just >> It doesn't exist. I only have tokens. Yeah. >> You have is it a fixed supply or unl it's a fixed supply? But here's another part. What people also normally do is they do timebased unlocks. Yeah. Right. >> What we do is KPI based unlocks. So the more users we have, the more unlocks we have. If we don't reach the users, our I think our first like time based unlocks are like somewhere in deep in 2030s. Why why would you um why would you have fixed supply?

>> Uh that model's like never made sense to me because it's taken from Bitcoin, right? So that's why everyone does fixed supply, but like copper didn't have fixed supply of equity. Like you go raise another >> Yeah. Yeah. No, totally. >> Yeah. It's it's it's actually a good question. You what I've done, I basically took Copper's fundraising journey and said like, okay, we probably before exit there might be another round like if we do that this way, etc. this is how this would look like and we literally just copy pasted and said like this is the final state of the >> token >> table right like it's not cap table right and so and and that was it right that was the idea um but you're right like there are there are definitely ways

of doing u you know you you you you dilute over time and you raise and etc >> but then again >> um times change you don't you don't optim optimize the business also like for like infinite fund raise cycles, right? Like you you you just build something which is sustainable and and and grows in line with the with the user base that you have essentially. And what's good about this model, by the way, is um normally in a SAS world, you have customer acquisition cost and you have lifetime value, right? And then your your your LTV could be like lifetime value. um you can calculate it over the you know five

year period of time and your calc you can calculate and say like so how many of those years essentially or months will this customer pay back for the acquiring for acquiring that customer the good model about token is essentially you get your LTV straight away so you don't have to wait for five years to get the LTV because the customer is already there right >> so again it's all super experimental it's 100% utility and um but So far it's been working working very well. We we're going to be continuing improving like how to tell the story, you know, about that. But then again, some people go like, "Listen, Demitri, you know, you're talking I'm not too sure.

>> No problem. You could just pay subscription." >> How were you guys the only place to buy Canton? >> Uh we were back. Uh we were we were Yeah. Yeah. So, so, so Canton's been has been uh Canton's a great project and you know he's super bullish in it because like when Wall Street is is is writing daml like you kind of like don't really need to know more like you kind of you know people the roots already going very very deep on Wall Street so so if if there are daml engineers are sitting at banks and writing code right so what we've done uh is that we were looking uh of like how the uh swaps ecosystem evolved and like what people are doing

uh in terms of like um you know swapping assets etc like unis swaps and 1 in and yada yada yada and so we uh stumbled upon u intense based approach intent intense based protocol and we really like it and we thought like you know why don't we launch uh intense >> so we launch intense uh and it allows essentially for you to do crosschain swaps and uh the first uh kind of like pairs that that were launched on the intense were were were count pairs >> because you were bullish Canton. Well, because because we're added Canton because you know we we know we know the team. I worked with the team also uh during the copper times. Yeah.

>> And as as as Brun went to production essentially it's like okay so what's what should we focus on? I was like you know and we were chatting with the team like okay why don't we launch counton so we added count on everything pretty like any blockchain we add we add automatically an ability to do the swaps. So so you can you can do you can do that and so extremely capital efficient. >> How do you track success? Is it aum are your assets on the platform? Yeah, we got to but it's it's a proxy. So we we're yet to determine what's our northstar metric is but it's number of users and and you know and the like average amounts that that these guys are holding on. So we're at about thousand users at the moment. We're at about a billion of assets.

>> Wow. >> So uh and yeah and mostly family offices, executives, founders. You know the biggest pro this is this is going to be the exercise for the next sort of like nine months. So one influencer does the Brun wallet review like kind of like posts it on YouTube comments are who in their same mind is launching a wallet in 2026 like what's the matter with these people etc because obviously retail have no clue what you know who who who are the copper people right so >> so like interesting and then and then basically I'm like so the problem that I'm solving is that >> the listeners of your podcast uh probably don't know what Bronn is or like or or or learning what copper is, etc., like some do,

>> but the guests on your podcast are Bron users. >> Yeah. Yeah. >> And that's basically kind of like that's >> Yeah. You have all I mean, that's why I wanted to have you on is like I mean feel you're like, you know, we usually don't bring on like early stage people, >> but uh >> Yeah. It's like all the founders and CEOs are now. >> It's all the founders. I'm like, if only but but again, >> it's kind of weird to go and ask them like, "Hey, listen. Can you like tell the whole world where all your stuff is at?" >> And they're like, Demetri, what's the matter with you? you know, just leave me alone. >> Yeah. No one wants to stay where they're >> stop texting me. So, um, but it it it will come with time. So, but you know, bridging this this gap and and

explaining to people, >> word of mouth was pretty strong as well because >> and this is exactly what we've been trying to achieve is that, you know, probably in your family circle, definitely my family circle, when people like have a crypto question, they come to me, right? It's like, Demetri, what do you do with this? And, etc. So um and that was the always the objective is to bring those cool people that are technically savvy or you know founders of the crypto projects or executives uh from from that are working on digital assets or working on Wall Street etc. get them as users. So then on the Thanksgiving uh you know day carving turkey they will tell people how to set up >> use. Yeah. Exactly.

>> What did you learn about raising raising money and do you think you raised too much money? There is no look nobody gives you option. Nobody gave you option to raise less money in 2021 2022 because if you raise less money you don't exist. >> Yeah. >> It was as simple as you know we had like >> you know have you seen our commercial with Rebecca Ferguson touching the waterfall and like you know there's like 60 people crew that flew to Iceland to film all of this stuff etc. Like it was insane. But you had to do I mean I mean the it cost so much money that I did not watch Dune part two not to remind myself how much we spend on that commercial.

[laughter] So I'm like >> how much you spend [clears throat] on that commercial? >> A lot man. A lot. Ask ask Tyler. >> Yeah I will ask. [laughter] >> So uh because because I think there's might be some paperwork and stuff like that involved into revealing that side of things. But um yeah, no like no nobody gave you no option. There was no >> thing that's happening right now with AI stuff. >> Um >> like it seems like you have no option but to raise massive amounts of money >> uh at the moment if you're AI project. >> Yeah, >> man. I mean AI like I mean cloud code has been ruining my life in February, you know. I've been like right you know been deploying stuff like you know I I'm

I'm I'm techy but I'm not like you know I'm normally I would not set up instances on AWS with S3 buckets and you know chron jobs and now you can do everything. >> Exactly. Exactly. So I'm like wow this is this is so cool. I wish if I would have had that at 24 as entrepreneur like it would have been so amazing. So right now if you're a founder, if you're 24 and you've got like and you're weird, >> like you just want to build stuff like there's just never been a better time. Yeah. >> Like and also like somebody said I've read recently like this is the dumbest that this technology will ever be right at the moment. So >> you feel it. It's like every month it gets better.

>> Every like like morning to afternoon, you know? So, so, um, in terms of like raising more capital, I'm not sure like I don't think it's a good thing at this day and age, um, the most important thing is is a is a customer, right? >> If you raised a lot of capital, it's easier to convince people to give you money than to a customer to pay you money right? >> Yeah. Yeah. >> So, the very first thing you should do and and again, it's just not to waste your time really. like you need to convince a customer to pay you real dollars for the product that you're building or build um and then the money will follow. So I would not start with a fund raise.

>> Yeah. What did you learn about spending a lot of money on marketing >> other than spending with Blockworks is a really really good idea. >> Yeah. Yeah. Of course. That's it. So I think one thing I've learned is that to build a brand it costs money like and and and there is no there's no kind of like a magic secret which is like spend $2 million here and then all of a sudden you've got a brand. Um so it takes time. Uh but it's it's totally possible and if you are present and if you are creating value for people you will build a brand.

Uh and so so And patience pays off as well. Like I I would say one one thing which is it was like nobody knows you, nobody knows you, nobody knows you, and all of a sudden it's like your household name, you know, like >> Yeah. >> How's how's that? >> That's how I feel about Blockwork. Nobody knew us for even like five or six years, right? And now it's like it's crazy. >> Exactly. And and and and that that's >> a lot of people I've loved Blockwork since day one. Long time. I was like, >> no, no, no. It was like like why we spend the $20,000 on this? This is the type of the conversation that people were having but you know you you build a connection with people you you have like let's give it a go let's try it right >> so brand building on marketing side is

is something that takes time you're not going to see ROI straight away and it will look like you know the dolls you burn um and one thing with this new AI type of situation which I think is is I'm I'm let me put it this way I'm super bullish on sales people again which is really Yeah, because uh fast forward two three years with all the AIs with all the people going to stop buying like that. People going to people going to basically go back I think we're going to go back to like almost closer to doortodoor sales people because this is going to be such an under it's going to be a life hack.

>> You don't think you'll just go into cloud and be like hey cloud what's the best CRM? Oh no no no like CRM [laughter] >> not gonna like it's it's it's going to be difficult right to to continue continue continue CRM businesses as as as it is right now. Um >> then where is where are the sales people? salespeople are well it depends what kind of a buyer you are right so um if you are buying for a corporation you can't point like why Mckenzie exists right you pay them so that cover your ass exactly like you won't be able to cover your ass with claude but like you know you're going to jump on a call with you know Jason or Dimmitri who's going to basically like trust me this CRM system is going to work so that you

commit your budget and then your CTO like is not going to fire you because you basically you know, just wasted $2 million on this project, right? And so, like, you need you need a person to tell you that so that you look them in the eyes to see how convincing those eyes are, right? So, um, >> so I'm super bullish on that. I think and the IRL events, right? It's it's it's also it's going to be disappearing. The whole like co era was done like really nice and well and that actually from the from the from the cop standpoint actually it gave us this >> bridged us in terms of the capital >> because all of a sudden it was a level playing field because it was booth to booth sales it because you couldn't go to events right and we did not have capital to be at events. So, so, so, so,

so, so, so that was great, but that was like pass people want to go and talk to people. People want to hang out uh together and they learn from each other. Like, we're not like we're already way dumber than AI, you know, at the moment. So, >> we're going to have to live with our monkey brain, which requires socialization and requires like, >> you know, couple of beers. >> Couple of beers. Exactly. >> Yeah. Yeah. Um, this is great, man. Anything else that you're thinking about these days? Well, now that you mentioned, I'm thinking about a couple of beers. >> Yeah, there you go. [laughter] Let's go get this.

>> Well, look, um, it's interesting how how how the space is is is gonna is going to move. I would say that this is the third Bitcoin funeral I'm I'm at, >> you know. So, and and last year like we're waiting for it. We knew that, you know, this this bull market is at some point's going to end and then everybody's going to be like, well, told you. And then there's quantum computers that's going to basically like all of this is now going to disappear. And like >> slightly started to go away even like from compare comparing to like you know 6 weeks ago cuz like six weeks ago a ago I was in Dubai with a meeting a friend of mine who's a very smart crypto guy.

He's like, "Listen, I'm worried. Like there's like now like 8% probability." And I'm like, "Dude, like you realize that this is like the bottom of the market. Like if you were like thinking that way, like this is this is >> I bought Bitcoin for the first time in like two years when uh >> when the when when we attacked Iran >> and Bitcoin went up a little." >> Yeah. >> And I was like, it should go down on because it goes down on the terrorists. It goes down. It kind of has been going down on any bad news. >> Yeah. >> And when it got down into the 60s, I was like, okay, this just feels >> Yeah. Yeah, >> feels bottom. >> The realized value right now is about $56,000.

>> So realized value is basically how much look what's the average global buying price for Bitcoin. >> Oh, across. Yeah. >> Across everybody, right? And people just really bad at fixing paper losses. >> Yeah. >> So like like historically it did not dip anywhere like like like lower like by far than than their real the realized value. It's it's pretty solid metric like if you look historically it's it's it's quite interesting. Um and all like I'm also tracking generally fe fi and grid index you know that's been that's been quite interesting to watch.

>> Yeah. It got to like four out of 100. >> Yeah. And it's like >> so then what do you buy? So you buy Bitcoin. >> Ignore your own token. You buy >> bit. So I've uh um I'm pretty bullish like and not a financial advice or whatever disclaimers I need to make. >> We've got enough. >> Yeah. But you you have you have it on your website, right, of like >> we have everything. We have all the non-disclos. >> So I I have uh the big three let's say you know the soul, >> Bitcoin soul. Um I'm super bullish on count on uh because that's something which I believe Wall Street is integrating and not just talking about integrating. I just think it's going to take a little bit of time before those things ship to production and then actual um like proper bank like industry like scale. Um and um

the the other things which I'm thinking about oh so um I got a little bit of zama uh yeah so full fully homorphic encryption. >> Yeah just basically you know on existing rails like you know so so Ethereum on Ethereum you know you can just basically make your USDT disappear and you can move it around etc. So I think that's pretty powerful. uh and also at the moment I'm thinking of potentially accumulating a bag of uh decentralized protocols uh for per lending trading options essentially because I think and this is what's it's there is there's there are quite a few things that we are working on on that in that regard a little bit of a teaser uh but uh the decentralized venues

>> like a hyperl >> like the hyperlquid lighter a derive a Camino uh Jupiter like there's quite a few protocols like some of them obviously some of them I think going to become absolutely massive hyperlink is already showing what's possible these guys are not stopping with hip three markets now hip four markets >> yeah yeah who do you think becomes massive there >> well I mean at the moment the best it's probably hyperlquid of course like you know with a with a >> with tenacity no ferocity >> uh uh and and and just discipline that these guys have built um if if that continues, if the strategy works uh and it looks like it's pretty solid, it it's

definitely going to be hard to catch up. But I don't think it's one it's a winner takes all. >> It's it's it's going to be the same situation we've seen in centralized exchanges, you know, like there's Binance with 50% of all the volumes and then but there is by bit, there's OKX and there are like bits and all the others which are also seeing their you know share of volumes. So, um, so that's basically a trend that's that I'm super interested uh keeping a close um track of. >> Nice. >> Awesome, man. Good to see you. >> Likewise. Thank you. >> Yeah, thanks for having me.

>> Sponsor, >> huh? >> When are you going to sponsor? >> Well, we we're going to discuss this now over those two beers that you mentioned, probably. >> Good. All right, folks. Good to be back on Empire. Missed you guys for the last two months. And uh Dimmitri, congrats, man. [music] >> Thank you so much. Cool. Good to see you. Thanks, folks.