Shifting from Equity to Shared Value Agreements

Transcript

ah hi my name is Justin I'm gonna get started not much of a crowd but I guess it is lunchtime I'm here to talk about

our experiences with security tokens I know this is not as sexy as a topic right now as flash loans and things like that but I do think it's an interesting topic and I would love to share our experiences and to get and to get your insights on it as well so again my name is Justin I'm one of the co-founders at Quigley I don't know if you guys have heard of us but we started as a programmable equity platform basically built on top of building security tokens to use as kind of employee equity our major first use case was work for equity so let me just start by introducing a little bit about myself again I'm one of

the co-founders I'm the CEO at Quigley I did my University at the University of Maryland its tech claim to fame is Sergey Brin graduated from there he nothing to do with Google at the time but Maryland will tell everybody that Sergey Brin was a graduate good school I spent some time at KPMG doing M&A advisory so a lot of accounting financial due diligence was my first experience with securities dealing a lot with ownership equity of mergers and acquisitions that a crook that occur cross-border lis cross-border then I worked then I spent a couple of years with rocky internet I built three ventures with them in Southeast Asia all

in e-commerce with rocket my first venture I launched fashion fashion ecommerce platform in Vietnam we had an exit there in Thailand so that was also my first experience with exiting while owning ownership equity in a company and I'm currently based in France I'm here because I came to France to do business school and been here seven years a very lovely environment and I'm I'm happy to be here and I'm happy to talk about our experiences with you so a little bit about Quigley like I mentioned we started as a work for equity platform using tokens at a time

when security tokens was not yet something big at the moment we didn't we certainly didn't create security tokens but at the time when we started early 2018 it was like the beginning of people trying to build build out asset based tokens guys like polymath had just completed their ico Harbor was working on it as well but before this whole kind of security token concept became more fully realized yet we were one of the earlier teams working on bed today we've been backed by consensus through their tachyon accelerator as well as D lab which is a joint venture between SOS VIII an American VC as well as a mergo which is

not on aetherium I hope you guys will forgive us that they are the commercial arm of card Danno but again you know I can tell you more about our experiences with security tokens and what Quigley has evolved into now throughout the course of my talk so when we started as I mentioned we started as a work for equity platform and so our thesis that I can kind of review for you is we found work for equity to be a way to really give skin in the game to contributors particularly with startups and create like a new kind of wealth like I mean everyone knows about how like tech

companies and and and equity and equity plays a big part of like game changing financial like financial ganks and so my co-founders long who I actually met in business school in France he was the one that kind of turned me on to this concept very early on when he used work for equity to bootstrap his first startup this is tends to be effective when you have like no workforce no money in the beginning but you have a lot of a lot of confidence in your vision and your product as well as Anna bill to bring other people into your vision in your product as well so certainly a lot of traditional vc-backed ventures

tend to hesitate with this because as people as you may well know equity is kind of like gold for for startups like it becomes more scarce as you as your venture grows and it's and it's what gets converted into value at the end of your journey whether it's to IP or exit but I mean the mindset we look at and I think a lot of people in the web 3 and crypto space share this is that a hundred percent of zero really sucks compared to like 1% of something that's much more massive and so I mean work for equity we saw was a great parallel in what was going on with IC OS and how

people were doing bounties and airdrops and our whole our whole founding concept was well that's great but it's not exactly legal so how can we port a legal framework onto the tokens so that you can you can do this in a compliant way having said that we really do think tokens it doesn't necessarily have to be tokens but digitization of equities particularly private equity is something that needs to and will happen in the near future I mean you see how much easier it is particularly with transfers with fractionalization in public shares there's no reason why that can't be the case with private equity it's just a

matter of time as we realize it becomes more and more cumbersome and just a big proportion of any kind of value is always shifted off to the service providers like lawyers like accountants to ensure that this process is well done and in any case this goes well in parallel with like I don't know if you guys follow like andreessen horowitz at all one of the big American VCS Silicon Valley DC's this goes in line with what's happening with things that they call the passion economy that more and more people want to pursue jobs that are more in line with their personal values and their own vision and things like that and it fits perfectly with the flexibility that tokenization can bring to things things that are involved in

like financial instruments and then the last kind of vision we had was why we wanted to port securities on top of that is for us it was of the belief that normal people normal people don't really care about crypto and so how can you make a token something that your your your your parents your your friends that aren't in this space care about and our thesis again was that you could do it in the form of a security token where there's real asset backing the value of the token again sort of the trends we were looking at was more and more people were doing are pursuing work that they're legitimately interested in that they that they have a passion for as

well as at the same time just accessibility to wealth is is significantly decreasing I mean this isn't some kind of anti-capitalist tirade but at the same time more and more I mean the the the availability of like generationally changing wealth is less and less available and so equity tended to be historically has been bet but as I'll get into more later later as the road to IPO gets longer and longer it's less and less accessible to people who aren't investors who don't have kind of preferred shares in the ventures that are being built there they're working more on a and an employee basis and they're not they're not they're not

realizing the gains that are normally done through a traditional traditional like what used to be like a five-year roadmap to IPO so this was our first platform actually Quigley conceptually I can lay it out for you I mean it's react read except for on the front tradition I mean again we were not hardcore decentralisation lists here it's a security token it's based on securities you to do a heart to do an absolute decentralized tool for this is it's impossible it's built on Postgres but we leverage a theorem in parallel with legally binding contracts to create

a token that is a vehicle for the securities this creates I mean the automation and execution workflows that you can build around this create a lot smoother of a of a a completion of fulfillment and transfer process which brings a lot of liquidity not necessarily from exits and exchanges but as at the least in terms of transfers and we were building that on top of the ERC 1,400 standard I don't know if you guys are familiar with that but for example consensus with their codify initiative today that's that's basically how they're building out their tokens it's a standard that gives you a partial fungibility feature which then can be

used to replicate the excuse me the transfer restrictions and the rules necessary to really emulate real-world securities excuse me this is a further look onto the the previous front-end as you can see I mean it I think you can still check it out its equity quit dolly wee-wee we made our entire employee cap table public basically all the information is stored is actually stored on blockchain its recalled onto the platform and all the documentation all the all the

historic distributions everything is included for people to understand excuse me why they own what they own and and and and it's displayed for you in our work culture at least in our company culture transparency was another big reason for doing this if you're working is changing for value that's not yet realizable at the least we can provide a way for everyone to understand where they stand in terms of what they've contributed and what they've earned so my co-founder kind of doesn't like this graph because normally these kind of things are supposed to are engineered in a way to show you why you're better than everyone else in this space and as you

can see that's not necessarily the case in this graph but this is I guess where we this is more and more the reason why after spending almost two years working on this why we're kind of transitioning away while we're pausing away from security tokens at the moment there are a lot of great initiatives out there today regarding how to port real securities to tokens there are certainly bigger players than us as I mentioned like polymath which was something like a 50 ml IC or something like that harbor 30 mil a traditional equity raise just on a concept pitch but at the end of the day most people literally just want liquidity out of what their earnings are

you can talk about skin in the game you can talk about long-term future growth maybe that works for investors and founders and true believers but at the same time the majority I mean we had more than 30 contributors contribute to our early stages and many of them like they're really not thinking about the long-term they're thinking about how can I get value now today and as you can see I mean for us it's plotted out simply as what's a full turnkey solution to ensure your your your your your emitted tokens are compliant and how transferable and how valuable are those tokens made and I mean even the bigger players securitize for example it has

probably the best track record and they've only really successfully tokenized 11 companies today the biggest or probably well-known is blockchain capital and there it's also ERC 20 based so if you check out ether skin you will see virtually no movement in any of these tokens it's not realizing that kind of fully liquid vision that this this space has kind of been built upon I would say on our side we met we tried to build quigly as flexible as possible we we made it open so that you could apply any jurisdiction with your own legal contracts we would we would we would handle the technical friction but

that in turn created a lot of confusion what do I do with this if I'm not a lawyer how can I use this and we weren't prepared to be a consulting or advisory service to teach people how to do this and so I think fairly or unfairly I place us kind of in the middle but at the same time I would say even the larger players like securitized have have not really realized that fuller vision today just kind of to dig in to a little bit more about what I had mentioned I mean I think they sold this token in 2017 to to a huge kind of reception I think it was like 150 ml or

something like this ripple was like the main purchaser of these tokens and there's just no value there's no movement I think total volume since since launching 875 and most of that is just the emission compare that to Bitcoin for example the total volume is a little over 400 mil maybe it's higher in 2020 'if 350 mil and these are considered highly liquid in in the in the crypto market but if you compare that to for example Amazon on the public markets Amazon gets traded more than 5 million times every day so I mean this this this idea of liquidity I think is a is kind of the goal for a lot of these projects

and I think we're still a bit far from reaching that that's not to say we don't we don't appreciate this vision and we still do think that it is the future of securities but at the same time the the the vision I think is a lot stronger than the feasible use cases that that are available today though the a good framework for us to look at it I think I don't know if you guys are familiar with the Gartner hype cycle I would say security tokens had in our estimation have entered the trough of disillusionment again we do believe that this is a this is a space that will rapidly grow once the the initial

barriers are passed but today I think since 2019 2018 2019 and now 2020 as successive a success successively been declared the year of the security token the year of the sto and for if we're if we're Frank if we're realistic about it it still has not been super realized perhaps in other securities like for example a real estate will see some movement soon but where we played and I think where a lot of people do want to play in terms of ownership equity of businesses there is still kind of a big gap to be fulfilled so just to give you an idea of that just to show you I hope

you can appreciate we're not banging our heads on the same idea over and over and over we've we've taken numerous approaches since we have launched we initially started as programmable equity and really defined that as like a share per our system kind of like how I I don't know if you guys are familiar with slicing pie or Hyperloop transportation technologies we found that to be the most simple basic straightforward way to divvy up the value and extract value from building on top of blockchain a kind of dynamic equity split where you're not forced into an arbitrary like oh you and I are co-founders let's do 50/50 and then and I mean numerous problems can arise from that kind of that kind of corporate

structure and so we felt a share per our system is something that really flexes the benefits of blockchain and and would and would allow new new ways of Ventures of being built we very quickly found a lack lack of product market fit and realizing most people don't want to do share per our systems of building businesses we then shifted very very shortly off chain to be a legal template generator but we were quickly outclassed by all the best tools out there like Legal Zoom like like Clerke we didn't have enough nearly enough legal expertise and breadth of options to replace some of the existing tools we we

went back to program little equity and tried to do just like more of a standard ESOP employee based system because most of the the leading platforms today are focused on investors we certainly received this is I think the one we've probably gotten the most traction with today we had over 50 companies create their and create their structures and make distributions but frankly only two ever made them legal and there weren't so many transfers that were ever happening after we highly suspect they we can't contact them anymore but we highly suspect they just took the legal templates and are using them in a standard way without really using the token format having said that we learned

a lot from that and realized that a more expansive more non-traditional way of sharing equity is something that people are more and more interested in let's say you're a contractor let's say you're not a full-time employee but you still want to share upside you still want to give value to people you work with we it was something we were keying in more and more on and one of the last place we tried recently was a way to do that via phantom phantom stalks or synthetics and as well as revenue sharing using tokens but I would say a caveat that I didn't mention before is we are we tried very hard to make a user experience that was

accessible to non web 3 non with non crypto companies and again the the the addition of a token the utilization of a token created too much friction for our early users for it to be a sustainable product perhaps we could be better developers or better entrepreneurs and find ways to do it but trying to get irate quickly trying to do build quick and dirty products we didn't find as much traction as we thought would be would be a sustainable way to grow this as a business again the takeaways we take from this time are that the legal is a huge barrier to entry particularly

I think in the this is not meant to offend anybody or or create any sort of bad will like it's just I think there are many I think first-time founders in this space there are many people who have never really thought about the business implications of building a venture before and yeah I mean it's not an out-of-the-box tool at least the way we built it again maybe more talented entrepreneurs could have done it but even for example the leading cap table management tool Carta is it's it's not an out-of-the-box solution and we quickly found that we were more Consultants than software providers to a lot of our users and that was not our core business

we're not HR consultants we're certainly not lawyers although we worked with many law firms to build out the workflows we have and we didn't see a way to fully disrupt that space I think at a certain point blockchain and security tokens can really alleviate a lot of that pain but it will take a lot of manual work on the beginning on the beginning factors of that to create a truly successful product in a more automated regard we also found that financials are also challenging for a lot of CEOs and and and and and founders to internalize even if they are experienced entrepreneurs the only way to convince

them to use a tool that's not incumbent or like a service provider like a lawyer is to really make it really address hair on fire problems and the way we were approaching it or were not really turnkey out-of-the-box to that stand out significantly to us is a valuation which is fair it's it's not just a token problem it's for all early-stage startups equity is how do you value your business once you go through successive rounds of funding you can you you can you can base the valuation on how much you've taken in for public companies it's very easy it's what the market declares what you are but for a lot of mid small to mid-sized companies not

just startups it's not something they're prepared to do and then it becomes a kind of sensitive information to their employees so we found that to be a challenge as well as well as the idea of like the dilution that occurs when when you add more people into your cap table when you were when you were growing the pie this is natural but again for many people it's it's very hard to internalize and that created a lot of friction and it was not a very user-friendly experience for for our early users to to use as a long-term tool so why do we stay in incentives and compensation today if it sounds like I'm giving a very depressing emo

conversation I don't necessarily think that's the case I think we as I stated we are very much true believers in the security token and our our aim is to provide enough of our best practices and experiences to hopefully come up with a security token solution that can kind of address the sort of pain points that we do find and that have been validated at least in our ability at least to raise enough capital up to this date it's something that can be done it's just and it's a space big enough for a lot of people to do it so mainly this is a way to kind of share our learnings so far and in any case why do we do it well I mean

companies employee engagement today is a huge problem companies spend over two hundred billion dollars a year trying to create a great retention stream for their employees but it's just not sticky I mean more than 63 percent of employees today surveyed by human resources consultant say they don't care about the benefits of their firm they're just there for a paycheck and that simply wasn't the case before I think for companies they're looking for a way again to motivate that's competitive simple and cost effective and for workers it needs to be meaningful and has has liquidity and so for us I mean

tokens still represent a significant way to address that problem and this is why we we continue to work in this space I mean the solutions today are perks which again most employees don't care about are you how many of you are actually using that gym membership that they renew every year for you do you care if there's like beer in the fridge or a hammock in the in the restroom I mean bonus is cash are nice but it's it's it's certainly not generational wealth building assets there and as well as Aesop's and synthetic assets they just simply take they simply complicate the process for a lot of smaller companies but for us again where we really think

skin in the game is a very small is a very strong incentive I mean Microsoft Microsoft's IPO alone this the stats are always incredible to me like when they went public in 86 there are four billionaires that were minted immediately and over the course of the next 15 years 12,000 millionaires and all of them have went on to be like become involved in philip temple phil on tap philanthropy all of them have gone on to start many successful companies of their own i don't know if you guys are familiar with FY IFV it's it's why there was a very low churn rate during those years it's what microsoft employees used to tell each other it's a you invested and

it's it's it really shows you the power of what skin in the game can do for companies you can see that innovation in this space is extremely effective the best companies of the best new companies of today the companies of tomorrow all highly leveraged kind of innovation on ownership equity Airbnb and uber have been very publicly talking about how they can give how P they can share more ownership with their hosts and drivers Pinterest has shown a lot of flexibility in terms of how you can of the exercised times for options and equity it's the they who would imagine without kind of

holding over employees heads of very short exercise opportunity periods if you extend it from something short as three months to ten years your retention their churn is 10% which is significantly low for a Silicon Valley company Hyperloop transportation technologies as we mentioned it's a company valued over a billion and they all do it with they do it with paying most people in shares no cash all the money goes back into all the money goes back into capital expenditures things like that so we're seeing a lot of the bigger companies of today becoming successful because of their levels of inclusion and for us it's a good indicator that there is innovation still to do in this space however as we

mentioned as I mentioned a little bit earlier I mean the nature of work is changing the road to IPO has gotten longer as you can see here this used to be the case coincidentally of a French company that sell you you you were only raising private equity for max four or five years then you did the IPO and that's how you grow the value of your company longer and larger and the shares are immediately liquid for anyone at that at that time and so there's really no risk of holding on to shares but as you see more and more as access to the ironic thing is as access to venture capital has gotten easier companies are not going public as soon anymore and so maybe for executives and investors

that's something that they can tolerate but for employees that don't necessarily have the cash on hand to pay tax obligations for example on those assets that creates a significant problem in terms of how do they realize the value how do they get the gains out of something that they can't yet sell there's numerous kind of platforms and and and services and strategies to try to try to build a secondary market the secondary's market around these assets but they're there they're not quite there yet and again as I mentioned things that you can do with smart contracts and blockchain can really facilitate a lot alleviate a lot of these problems and so this is why we

think there is still room to play in security tokens and it's not just like a dud space again you can kind of see why IPOs are getting lower and lower too with access to capital very fast and not very good reception of companies that tech companies that are going public today I mean just drops in like the last in some of the last big tech IPOs are kind of showing you why there's a lack of enthusiasm to to go public for a lot of companies and so this really impacts workers not to draw a direct correlation but at the same time employee it's only one factor of many but employee churn rates continue to rise duration time spent at one company is decreasing more

and more and I think I think it shows that a level of inclusion that's not there that you saw during the enthusiasm of the early tech bubble years like with with for example Microsoft these kind of things are really impacting employee morale and you're seeing more and more people that's why it's an assumption of why the passion economy is growing more and more if I'm not going to make money at least I should not money pursuing something I love but from our findings I mean sharing value is more relevant than ever I mean the majority of companies and CEOs now only in my recollection to have told us they don't want to share more value with their with

their employees maybe that's a nice thing to say now with the zeitgeist of inclusivity but as we noted with the more successful companies of today just inclusivity and sustainability is more natural it's an embedded thing with a lot of the younger generation with a lot of the younger companies and frankly non-traditional work arrangements must be addressed more and more people are working freelance more and more people are working as a contract basis they're working on several projects at the things at the same time the definition of work is changing and so we need to think about how we can how we can port compensation to to to apply to the realities of what's in the ground having

said that there are several challenges that we need to take care of I think in terms of not we necessarily but that need to be taken care of to kind of create a more universal a compliant Universal compensation system the immediate things that we don't control but are possible I think are happening there's increasingly more digitization of things like for example cap table management has digitized a lot for private equity how you manage shares of ownership and businesses and that's becoming more and more available not just to large companies and tech companies but small to medium sized businesses mom-and-pop shops so that's happening and as we showed with Quigley

as we showed with other platforms the technical frictions can be addressed this has never been a technical friction problem and at the local levels it's it varies right its jurisdiction the jurisdiction is different but for example France as an example where recently with the la pact they have given you kind of like an amnesty to to use technology to manage your securities same with in the US with Delaware seekers they have they have stated that it is a valid way to to to manage your ownership structures I think the bigger challenges can can just be applied on a wider level a more global level particularly in this kind of audience

and this kind of user segmentation is global regulatory cooperation possible and I think that's where there's it's a legal friction and I think that's where more the question mark is and that's why we've kind of decided to hit the pause button on taking a security token approach today one of the things we're toying with today is crypto as a perk for those of you here I mean now have any of you ever been paid with crypto before okay and do you do you prefer getting paid in Fiat or like a traditional salary or do you would you

consider who among you will only accept crypto Wow so I mean it is one it is one consideration we're taking while valuation and skin in the game for unproven early-stage companies or small companies is a tricky thing perhaps you can perhaps you can use volatile new exciting instruments like crypto to serve as a proxy in the meantime we see it as good as entry point as a security token itself interestingly and I did you see the volatility I mean I chose to use Bitcoin but you're gonna play just as readily I and you see more and more

younger people are willing to at least if not completely be remunerated compensated in crypto at least they want to own it in some form or fashion so it's a potential option that we're looking at at the moment it's interesting to see how many of you are paid in crypto and are willing to be continued to be paid in crypto and so yet this is kind of our journey from moving away from actual securities to more shared value kind of assets and agreements it is again a very new kind of hot asset that young people are enthusiastic about I don't know if that makes me sound old but it is something I mean we're all here for this kind of

thing increasingly more liquidity options just not off just not on exchanges but through through the various dphi initiatives that have developed over over the the past year past few months and yeah it's it's something that we're thinking about at the moment so if anyone here is kind of interested in implementing that at their company or at on their project please come find me or talk to me afterwards and love to kind of chat more about building businesses sharing value creating smarter ways to distribute it's it's it's what it's our main vision and and and a Matt Quigley and regardless of what instrumentation is being used

financial or crypto it's one that will continue to to address so thanks for your time if you are interested in talking to me afterwards or finding me here my contact details yeah appreciate it thank you very much Justin there was an amazing talk I would like to ask the audience if there's any questions you guys like to do Justin for he lips I hope it was interesting relevant do you think that in the future we're gonna have more companies that owned by communities and products are gonna be developed by the

communities by itself taking the approach of of the Dow's sure those are an extremely interesting animal I'd like to say community based organizations kind of already exist open-source software for example is a huge example of that I mean for anyone familiar with open source software I don't think you'd be surprised with sort of the the the controversy is an argumentation that occurs in aetherium development it's just normal when you cram a bunch of people together with differing opinions and building ecosystems but I do think for example that it shows that community based businesses already can exist and drive what does will there be more and

more community owned businesses I think I think so we'd like to say so it'll take more time I mean the way we see it with companies that we talk to that do want to share equity with their communities for example I don't know if you guys are familiar with Boulevard the the open source mapping token app DEP that just recently shut down actually because he can raise more funding David was actually working with us to try to create a skin a compliant equity token for his best drivers and there's more there's more and more companies that are willing to try to open up their cap tables a bit but it wouldn't be majority

community-owned he was still kind of slicing a pool of his complete gap table together to try to do that so it I think that is a more radical notion within the less radical framework of capitalism but at the same time it's it's it's I think that's a more realizable way of community ownership rather than majority I don't know if you were meaning majority community owned but it'll take time right as we know with all these things do you have any examples that you can share of companies that are actually giving shares to their workers and you mentioned Hyperloop that is there any more that we can look at yeah I guess we can chill ourselves a bit we did it we

started that way we completely bootstrapped until first hooking up with consensus through their tachyon accelerator we worked with over 30 people all dynamically earning shares and the business at some at some points in the early days when we were all started because we started from zero it wasn't an arbitrary split some freelancers had more shares than me and so that's a that's kind of alarming but at the same time it was a very cool way to build a business when you had no immediate financial resources at your disposal my co-founder flora in the Beck he he built a virtual reality for in-flight entertainment startup using this concept it went through Y Combinator afterwards

he would not have been able to build up those resources to get to that point without kind of community crowdsourcing those early-stage developments if you want more large-scale success stories I think you see more and more companies engaging if not at least an ownership in phantom stock programs where it's it's cash but it's based on top of valuation other companies that were looking beat a lot of beat cores today I don't know if you're familiar with B core corporations it's not an actual entity or nomenclature it's not an actual structure but they're companies that their mission is to be more sustainable environmentally and socially a lot of these companies are for-profit companies

but operate like coops I leaned Brasi and I can get back to you later because I know who you are but Eileen Bracken she she the majority of her external shareholders are actually employees and it's a huge New York fashion brand and so more and more with the development with the unhappiness of how companies have kind of operated from like the 90s on I think you're seeing more and more companies that are trying to open up their their options pools and create more inclusive environments first of all curricula for the talk and I really believe in your vision and that's why phrases in giving classes about blockchain to lawyers because when

they understand the benefits of the smart contracts everything they feel more secure they are no more upper years and I think of the terms of other security tokens all the the all the the situation is the problem is the legal framework the lack of legal frameworks for that it creates a barrier to the market because for sure and is in business and financial terms all those talk is all your previous work would my to work right my being benefits for the investors so I think one of time in your presentation mention it that you're more

nowadays like a consultancy company instead of a software company and we are we have is same a similar you know a similar project in Brazil that 70 percent of our job is a legal job it's not technical in terms of in solidity terms of adapt is done everything works but our work is in legal terms to not be you know be regulated by a sec the others kind of stuff so again congratulations I really love it and my question to you is in terms of the employee you know shares so there's no SEC or female any other kind of

regulation so it's not under foul it's those doggies doesn't fall under those regulations yeah I mean we took a normal we're normal Delaware Secor it's not it's not to external investors for example so it doesn't fall under any kind of reggae or reg d framework it's it's when we started so we so it's clear you have a deep knowledge so I'm trying to unpackage it very audience friendly there's multiple instruments for equity right and so when we started we just gave normal plain vanilla preferred shares as we realized that there are tax obligations involved and they would at

the longer the road gets it would be kind of painful for the for people who don't have longer-term skin in the game I don't know if you could see in the screenshot but some of our our contributor shareholders I hold something like point zero one percent but to them that that that was significant enough they love the project good enough to do it so we moved on to us personally and we offered it on the platform we moved on to a framework using restricted stock units it's a way it's kind of like how big tech companies in the US have enlarged their cap table without getting on the wrong side of SEC regulation they're just basically coupons for stock offered offered because you're capped at something like

two thousand shareholders normally and Facebook was one of the bigger companies to use it in the beginning when they realized they they were already capped with investors but they still had a ton of employees that they owed kind of skin in the game too so yeah I mean we we created we emulated restricted stock units we had all the the terms and conditions available that would keep you on the compliance side of that you weren't offering anything like penalizing to to your employees so all those workflows are built in but unfortunately or unfortunately they were only tied to US companies and this this wasn't for example interestingly enough we had a lot of interest from German

companies I guess we found out very quickly that there is a very rigid stock option system in Germany like even even options for early-stage companies can be taxed highly by the government and so we had a lot of German founders looking for ways to kind of simplify that system but as you mentioned without a legal framework behind it the the tokens mean nothing the the it's not like it's not like Bitcoin or aetherium where we kind of communally come across across the value and as you see it on the exchanges it's it's it's done by law and Finance and we're these are the kind of crossroads that fit with not just security tokens but equity in general and it is a

challenge I agree with you it's it's it's something that the easy thing would be to say let's build a global standard but that's not a very easy thing to do right so we were hoping that we could at least grow with a lot of some early-stage companies but unfortunately most people were just using it like a normal cap table management tool so for us that told us it wasn't a huge hair on fire problem and it would be something hopefully that we can return to as we continue to build out different value propositions using the the core quigley technology thank you thanks for the question I love people that we love and hate we don't hate lawyers like we have

a very love hate relationship with lawyer exactly exactly thank you very much everyone for coming give it up for Justin once again and yep thank you someone I'll see ya run