Bridge Founder on Their $1.1B Stripe Acquisition | Zach Abrams

Transcript

stable coins create a means of moving that same value in a way that is much more efficient and therefore much much much more scalable you can see that in like a number of ways where you can move the same value for almost Real Time with almost no cost to people all around the world across dozens of different countries you're not like making a bet that something will happen like I guess you can and and that's one way to build a company but much better way to build a company is to make a bet that you can make something happen scale is the blockchain that is Simply Built different other L1 networks have costly transaction fees clunky user experiences

and lack true adoption in Ai and onchain gaming explore the gas-free ecosystem at scale. spacecosmos to get started tired of losing track of all your tokens Unis swap wallet is designed to easily manage store and swap your crypto all in one place access thousands of tokens across ethereum and more than 10 other chains instantly by using Unis swaps wallet today download it today it's available on Chrome IOS and Android hit the link in today's show notes to get started hey everyone just wanted to let you know

that mantle is releasing two new assets cm eth and cook these tokens will allow the community to more easily participate in reaking and earn cook rewards in addition to other yields through meth protocol be sure to give at meth protocol a follow and X to stay up toate with the latest news in the ecosystem hey everyone Jason here there's a reason why Ledger is trusted to secure more than 20% of the world's crypto assets today check out their newest devices The Ledger stacks and The Ledger featuring the world's first secure touch screens take your security seriously hit the link in the show notes of today's episode to check out their latest devices trust me you won't regret

it what's up everyone welcome back to Empire we've got Santi we also have uh the man the myth the legend uh we've got Zach one of the co-founders of bridge uh Zach welcome to the show man yeah very excited to be here thank you for thank you for having me yeah you got the you got the champagne right next to you you like uh so for context folks Zach just sold uh the business I I don't know if it's fully the acquisition is fully done yet but um uh Bridge sold to stripe um and we want to have Zack on it's the first time that he's really gone on a podcast talked about the acquisition so I think we'll start this off talking about the acquisition zoom out talk about future of stable coins um and the future of money on chain so Zach I mean

let's just start with a big question on my mind and probably everyone's mind like tell us the tell us how the this acquisition came to be man tell us the real story oh man it's a good it's a good question I mean we um I I think probably like the the the truth is that it's like pretty boring and that uh it started when we launched our apis a couple months ago and spent or or 18 months ago and um over that time we just had a ton of folks build like core payments use cases uh using stable coins we had you know big global companies use stable

coins to manage their treasury we have fintex use stable coins to um to to build Neo banking experiences we have um you know businesses use stable coins to do crossb payments and um through that we kind of showed I think a lot of the world how stable coins can and will likely become core you know regulated Financial infrastructure and um I think that like caught a lot of people's attention um at least now in hindsight uh and so you know more than any like you know moment or uh you know

spark that happened somewhere it like started with the product and the and the problems that that we were solving um and a lot of those problems that we were solving overlapped with folks who were building and using uh things uh with you know various stripe products nice um let's talk about I mean I'm gonna push you to go deeper on this deal so you so you you hit up stripe and I mean I'm assuming on your end you're like they're they're a dream clients so you start reaching out to them did you originally reach out about an acquisition did you originally reach out about a deal a partnership I mean we we started building a relation ship with the with folks on the stripe team uh a while ago I mean stripe has

has sort of been making a a push into payments they built their on-ramp product they built uh uh and most recently maybe like uh at the last stripe sessions they launched the pay with crypto product um and so you know John Callison got on stage and talked a bit about the importance of that product for their um for their customers and and and the excitement that they had internally to launch that product so there was increased effort for them to build using blockchains and uh see what resonated with uh with stripe merchants and uh around that time we we had known many

people at stripe but we started spending time with with the folks there and um we built a bit of a relationship with their with their crypto team that was probably like you know a year ago or so what what does that actually look like this kind of okay so the reason I'm going to push you on a lot of these questions is because uh I you know called some friends at stripe and at seoa before before the podcast and they said Zach is it was the most masterfully executed ex acquisition they have ever seen so I'm just curious like how you really went about this like and how you kind of I heard you kind of put on the full court press with like different Executives at stripe and I'm curious like when when it

turned from a hey we could partner with these guys and they seem to really like us to oh wow I think there's a I think there's a deal here and then oh wow there might be a you know several hundred million maybe billion dollar deal here I mean I guess I would say like the first thing is like we we we didn't start the company to sell it we didn't go into any conversations to to with the objective of selling the company um you know like we we started the company because we wanted to Sol like we thought that stable coins would be a core global payment rail like we thought that this could happen and no one was

building this infrastructure and um and and you know we solve these crossb payments problems we solved these treasury problems we solve these payout problems we solved these F Tech problems and and uh as we did that we gained more and more confidence that what we believ to be true like would happen and not just like would happen like we could help make it happen and uh we believe that more deeply now than than ever and uh we're still super early in this journey so there's like years and years and years of investment that's needed to actually make what we're talking about be true we're just showing there's just like glimmers of Hope right now um and

so we didn't go in to go in to sell we didn't start this company to sell um and you know our when we started talking to Folks at stripe we wanted to we wanted them to be partners and we we thought that they would be a um a great you know uh uh user of our apis um and we thought that there would be many stripe Merchants around the world who could benefit from uh using stable coins and it really like that's that's sort of that's sort of our focus is like layering on more and more use cases that show people what's possible and then get other people to build more stuff with

stable coins um yeah maybe I'll jump in with a question here like a lot of what I've thought about is like how hard has before the acquisition like how hard was it to you know acquire these customers and convince them of the opportunity that you saw so clearly versus going in with stripe and just you know their distribution and how is that math for you like I can continue to do this maybe it's a bit of an uphill battle strip's already built massive distribution it's probably better this way like I'm curious like one where you facing a lot of resistance I know you have really big customers that you're already working with before the acquisition how did you think about that tradeoff and you know what went in into

your thinking yeah I mean we uh it's a it's a really good question I mean I mean I I would say that probably um we're trying to affect a change in like one of the largest most regulated uh markets in the world and um it it was certainly true to us or or certainly like a core belief that we had that um to together we could uh affect that change much faster um and um you know we'll see if that plays out but uh we certainly believe that to

be true I think that uh the thing that we have you know we're not you know we announced the acquisition but the acquisition hasn't closed and we're not working directly with the stripe team in any way right now but post the um announce ment we've immediately seen a change in tone across like Banks across potential customers and so on and and an optimism around what could be built here and it's uh what we hope happens is that this you know in a lot of ways before before this we'd go into a conversation with some regulated partner or regulator or what have you and we would kind of

enter the room and start at like you know neg five and we'd like spend the first conversation building our way back to neutral and then maybe like the second third fourth conversation we can build our way into the positive territory and now we're able to start at neutral um we're able to we're able to start at maybe even positive one which is like immediately speeduns you know a whole set of a whole set of conversations and so we're seeing um the benefits from just the announcement alone play out which is great and it and and it's not like anything changes it's

just that it opens people's minds and gets them to be receptive to the fact that this could be solving a core problem that this could be a useful technology that there could be a lot of promise and investing internally in stable coin pay amounts payments or stable coin treasury management or whatever else yeah what uh what do you think was going on um you know John and the rest of the stripes team's mind you know I'll quote um I think we all saw this tweet which is incredibly powerful I think we're going to be seeing it time and time again it is definitely in my pitch deck I'll tell you that I'll quote so Patrick cson one of the tri says

stable coins are room temperature superconductors for financial services thanks to stable coins businesses around the world were will benefit from significant and speed coverage and cost improvements in the coming years stripe is going to build the world's best stable coin infrastructure and to that end we are delighted to welcome you guys stable coin you know brid to stripe so unpack that for us the core belief is that you know if you think about moving money like all around the world moving Fiat around the world is you know creates huge amounts of friction um and requires huge amounts of effort effort to to to move settle store transact in and so on and um stable coins create a

means of moving that same value in a way that is much more efficient and therefore much much much more scalable um and you know I think that you can see that in like a number of ways where you can move the same value for almost Real Time with almost no cost to people all around the world across dozens of different countries which is like just not possible um in the world of in the Fiat world and I think that one of the things that they're super optimistic about and we're super optimistic about is that um as you unlock this new efficiency you enable

all sorts of new use cases to be created because now you can um now that all of this friction is removed uh the the uh like um you know I think that I think that we've seen over time like when I was at square or when I was at coinbase or what have you when we created new core Financial surfaces that enable money to move cheaply it opened up all sorts of new economic activity that wasn't possible before and one of the things that we're most excited about here is all of the new e omic activity that will be possible when this friction uh is is removed um and you know I think

much like you know what could be possible with room temperature superconductors um the same thing will be possible you know with money yeah it's it's actually real not unlike a room temperature um superu exactly be the only flaw that I that I I'd point to to this analogy which is great um yeah maybe this would be a good time to zoom out a little bit for people that are not really familiar with what you've built to you know really unpack with the lens of you know Stripes done a lot to facilitate you know through apis just remove some of this friction out characterize there's some systemic

friction that because the financial system is just a patchwork of systems and very Antiquated you know really stable coins are that next like step function Improvement but U you know walk us through kind of what you've built how does it um perhaps differ from other Solutions in the market you know you have coinbase Commerce you have other type of infrastructure but yeah walk us through that journey and um um for you know for listeners yeah I mean our one of the reasons why we started the company is I look back I I spent most of my career in v Tech you know Shawn who's my co-founder Shawn and I started

another payments company we sold the square I SP time at Square in coinbase and and brex one of my Reflections after leaving brex was that um so much of fintech was built on the back of cards and cards were this huge new payment platform and people talk about new platforms like uh you know AI now but before that you know cloud or mobile or Internet or what have you and cards were the you know Financial Services version of a new of a new platform and you had all of these companies build and create value on the back of this new theoretical platform obviously the networks but then you know the stripes and the addins and the and

the squares and um even the Brees and so on and our view was that that platform was maturing and that stable coins could become the next payment platform that would unlock a whole bunch of new economic activity that was not possible and over the next decade or so uh a bunch of a lot of new core Financial Services would be built on top of it and it's probably not you know from being honest the best reason to start a company because we didn't know like specifically what use cases it would solve but we thought like theoretically there were many that existed and so we built a pretty generic set of apis that enabled you to you know

are our sort of mental model was that you had a a Fiat layer that was sort of like a base layer and then you had a scaling layer that would be these stable coins that set on top and stable coins are kind of like a layer two on top of the Fiat Financial system and money would move up across and then back down and we built bridge to facilitate all of those money movements so you'd have money in like the Fiat layer and move up and settle in a stable coin and one stable coin settle in a different stable coin or in a stable coin and settle in Fiat and and those were our core orchestration apis and we launched those apis 18 months ago um and we immediately we built with a few design partners that we thought

were going to be um successful and um what ended up happening is we um we had some inbound customers come that we didn't know about they built a bunch of crossb payments use cases and showed us what was possible with crossb payments in stable coins and specifically they were taking you know Colombian pesos converting into stable coins sending into the us or Mexican pesos converting into stable coins and sending into the US and using this to sort of replace FX and Swift flows and then we had the US government come to us to disperse Aid payments and then we had a bunch of fintex come to us to build dollar based apps and then we had like big global

companies come to us to do treasury management and we've seen that like we've built these lowlevel that enable you to do any of these money movements um and they're generic enough such that uh anytime someone is thinking about building something with a stable coin they could come to our come to bridge talk to us about it and our apis could help them support whatever use case they might be dreaming up and the market has like kind of shown us what is possible uh almost all of my experience was and has been in the US and almost all of the product Market fit for stable coins is outside the US um and you know we wouldn't be great at building like in

consumer or in business experiences for an individual in Argentina or a business in the Philippines but there are many people around the world who know those markets and have come to us and told us and what infrastructure is necessary to build those great experiences we haven't yet entered the phase where people are building entirely new things that weren't even possible at all because now you have these room temperature superconductors that can that can move money you know effortlessly anywhere around the world that's yeah walk us through I can almost imagine a listener saying well that sounds too good to be true you know like a compliance off Bank saying wait a minute wait a minute I

hearing Colombia pesos and crossb payments like how do you how how does compliance work here how do you make sure that money laundering and fraud and all this stuff is mitigated and works within you know the current system really is good at that you know kind of mentality like I'm just you know for all the Skeptics out there you know Zach's gonna yeah tell us why not I mean it's a it's a great question and one that like we get all the all the time um I mean uh a about half of our team focuses on compliance as a result of uh as a result of this like we um it it

is you know I think that that that um I was asked this by someone recently and I think the reality is we have the exact same compliance requirements as any other entity that's moving money globally but the but the reality is is that we have to adhere to a significantly higher standard because there is an assumption of guilt um because weing stable coins um and um so it's been you know compliance you know AML uh all of this has been an incredibly important part of the offering that we built um and an incredibly important you know uh uh means through which we've

gotten our banks and so on you know comfortable over over the last year we've had we've done you know billions in transaction volume we've had less than one basis point of fraud like it is like we have an unheard of low level of like malicious activity moving through moving through our apis because we've been super super selective around who we've worked with and how we've wanted to do it knowing that we've kept sort of like the long game in in our sites like there were certainly ways along the way to work with folks that would have given us more volume or more revenue or something along the way but would have you know uh maybe damaged our reputation and in some

capacity um and I think that's like played out for us but you know it's still a really long journey uh to build and like we handle complicated money movement you know it's crossborder payments it's onboarding people all around the world it's like B2B payments and so on uh which are um yeah complicated yeah give us an overview in your into your kpi dashboard both from like you know your partners and also what you're tracking like maybe from an onboarding perspective let's just start there like do you go and convince like a starlink or some company that's doing Global Payments because they have a global Workforce or do you go and Target relationships with local banks that you

know there's a lot of movement like do you go through both like how do you think about the goto market and then yeah tell us your kpi dashboard looks like yeah our kpis are very simple we like solely focus on active developers so how many developers that we have on our platform that are moving money um that's like the most important thing to us like we we've seen over and over again um it's not how many customers we sign it's not like you know if we have if we have more active developers developers moving money then ultimately we have more developers who are growing and then ultimately we have more developers who are moving more

money through our system and then more developers who are using more of our products um and then all sorts of good stuff flows from that but it's like by far most important for us to have um developers who are you know not just hitting the apis and so on but actually actually moving money um that's that's the number one thing for us I mean volume is um important metric for sure and one that like most payment companies measure themselves by but ultimately volume is Downstream of you know of you know in custom you know people building products that are useful people you know s you know using our apis people signing up

and so on so that's where that's that's where we focus and then on the go to market side we've been super fortunate like we our business has basically been entirely inbound driven from the beginning um we when I when we first launched when we first launched uh I we got all of our leads because I would tweet about it and like you know I have like at the time you know now I have like 7,000 Twitter followers or something which is not a lot and at the time I had like 2,000 you know and and which gives you like a sense for the reach um that that I had

and I would like say like you know you could look back through my Twitter profiles probably like very shortly in like April of 20 23 or something when we when we launched we're like hey we have this product and then we would get like five people to come to the website and they would sign up and we might sign two of them and then the next month we would tweet and we would get 10 you know and then the next month I would tweet again and we would get like you know 15 and um and then word of mouse started where people would see our product in the wild and they would come and use us or they would talk to another developer and they would come to use us um and so it's been pretty much

entirely um inbound the other Dynamic that is true for us uh which I'm guessing is true for a lot of other companies that are sort of building in a phase that's similar to ours is that it's really hard for us as a startup to be able to invest the time to convince someone to use stable coins like if you don't already want to use stable coins or believe in crypto or what have you there's a whole journey you have to go on and I don't have the time or resources to take you on it but I hope that someone else does no you I'll just I'll just hold on I'll do the work for you I'll acquire them and then just bring it bring it so we can use uh that's the conclusion that I came at

seriously I just I got tired of convincing people I'm like I've been trying to do it for 10 years and came to the conclusion that I need to do a buy up fund to to go and do it yeah exactly exactly what is the use case that you're not good at you know what are the areas the particular applications or vertical that you're just not going to you're not good at or or you just decide not to serve curious if they are yeah I mean I mean I would say today there are there are like core areas of our product where we like heavily rely on partners that are not like our area of expertise like today you know with

wallets and custody we rely on Partners to support us there like we don't do key management and and that sort of thing which is a core crypto competency that um that we have not built inhouse um I would also say that um that on the like regulated side uh at least to date we have not you know pursued we we are sort of regulated in the US and Europe and we have like pretty complete um payments infrastructure in both of those regions but our payments infrastructure outside of those regions is extremely limited or non-existent um in many other places in

in the world and we're solving that with other core products that we're building like we're building a card product so that anyone who has a stable coin balance you could issue a card on top of it and spend and so on which is a more scalable way of solving some of those problems uh but building local rails and being licensed locally in you know 70 different markets is a really really complicated task and not sure it's one that we would tackle specifically on that point just want to double click you have to get the licensing or can you just partner with someone that has a license in a particular Market it it is very likely that we will partner with folks in these local

markets like um for instance in Latin America we we bitso was one of our first really big customers doing crossb payments um and we partner with them uh to do local payments in you know Brazil and Argentina and so on um and so we will likely find Partners in a lot of these regions and like one of the great things that's happened during like the last runup is you had a lot of I'm sure you all know this but you had a lot of local exchanges that hit sort of like crossed a threshold of liquidity that they became like really viable sort of like FX businesses because in most of these

markets stable coins represent the overwhelming majority of volume on an exchange and as a result the local exchanges the bsos the yellow cards you know the coins St PHS and so on over the world are serving as like the connective tissue between these stable coin rails and local currency um and we need you know we're we're probably like you know four or five years away from a lot of those gaining the depth of liquidity and building out the underlying payment infrastructure for um payments to work in to end across a ton of different markets um but it's like you can you can clearly see it happening

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which don't just simplify your digital transactions but also keep them extremely safe these wallets are virtually impenetrable to online attacks because they store your private key in a secure offline chip you can manage more than 5,500 tokens and install up to 100 apps choose the most trusted name in Hardware wallets and take control of your digital Security today at ledger.com or hit the link in the description of today's episode to check out their latest wallets Zach what um I've already gotten two pitches by different Founders saying we're going to go build build a company like do it better and then try to sell to there's all these companies that are going to want to buy a whatever you know

is going want to buy um uh what do you think were some of the most critical decisions that you guys made early on that got brid to where it is today um honestly I I think like um so so I was a PM before starting this you know I started another company but then I spent my time and as like a product manager and so like you know I I had a very high I put a high importance on like the products that you build and the product strategy that you pursue um I I think the thing that that that um but but starting this company it sort of made it

showed me that like if you are just this is like yeah I mean maybe obvious but if you are just really long-term oriented um and like a like a a like good actor um it is meaningfully differentiating in the market like I just cannot like even begin to begin to express like um we we are like super vested in all of our developers like you know we only think we succeed if they succeed we like wave fees we wave minimums we go out of our way to support them and in most cases that's like Roi negative for us but over time the the

trust that that builds creates like Amazing Word of Mouth and more people want to build on us and it creates opportunities to get lucky with some with some other person or or you know some other developer when they choose to come or they ask for referrals or what have you and being really long-term oriented you know not making short-term tradeoffs to boost volume or not making you know going into a market that you feel like could be a little bit dicey and it might put you in jeopardy with bank Partners but it's super lucrative or you know what have you especially in the payment space there's enormous opportunity there's so much payment volume that's that's like that that is struggling to find you know Bank partners and so on that folks could take

on and grow really really quickly um and probably you know we've had a lot of success in a relative ATIV L short period of time but I think so much of that success has just been not optimizing for some gain month over month and letting sort of trust and relationships compound over over like a two-year period And it's like free I mean it is free you don't have to be super smart or like what have you as long as you go into a market that has legs and there's some customers there is if you act that way um it is it it's like meaningfully differentiating the other thing I think that we did is that

that's more specific to us is that we've been super honest with ourselves that we are not going to be the Arbiters of what isn't is not successful in this market like you know I said I mean I know the US market I do not know what's going to be successful in Argentina or the Philippines or uh parts of Africa or what have you and so we have have purposefully stayed incredibly agnostic and built our apis to be very lowlevel so that anybody building a use case across any of these markets could come and build with us and show us what is possible show us what can be built on this platform and show us where we need

to be investing to build out our um our infrastructure and you know uh that's been probably the best decision that we made and like very early on people were like oh clearly crossb payments is working you have to invest there or then like clearly payouts is working you have to invest they want you to build apis for crossb payments or apis for yeah or even go down and build like consumer applications you know clearly crossbo payments why don't you just go and like build a consumer application or a B2B application and like win that use case into to end because you know Bridge you're making X but your customers are making so much more um M and we never did it and I

still don't think we should do it I mean yeah what do you what do you think it was in the acquisition that got them over that got them so excited was it was it the tech stack and those low-level apis was it the team was it the revenue set was it the customers like what was the standout thing there I I also don't know um but but I would say that it it was who knows about this acquisition i' like to I'd like y y's trying to sell his company to um to Tru too you know Patrick if you're listening to this my man I got nice media business for you um so so I mean I I think it was all

of those things like I think the only way this this worked was with was with all of those things um I mean our team is like we have have an exceptional we've assembled like an exceptional group of people like they are um a lot of people who worked with us who were very early square a lot of people who worked to us we were very early coinbase um a lot of folks who have built like distributed systems a lot of folks who've like built like really really scaled infrastructure um and so it's a very unique team that's been able to like build as quickly as we have like like our our to give you an example of Stu on our team is that we have you know we have 50 people we have zero Management

in the company and everybody parallelizes so we're able to work on like 20 different projects all at the same time and the only reason why that works is because we've we've hired a like a large number of people who are very senior and can work independently which has enabled us to build so many things over an 18month period um you know I think the other big thing was you know the the deep practical use cases you know that were so clear and like working and scaling you know um and I think that that their team has sort of believed that things were theoretically possible with stable

coins but seeing people build those things that were theoretically possible and bring them to life using our apis um and so many folks doing it all coming inbound um and many of those products really working it was very very exciting um yeah and and and that was probably it and I think the other thing that that I also mentioned like in our announcement is like just for us and them like we're just a really developer oriented company and and so are they you know so there's like an immense cultural alignment and who we serve and the and the power that comes from

serving uh those audiences really really well yeah before we go to the future I want to spend some time on the present put put some meat on the bone like what tangible cost savings um you know our businesses getting you know from you know maybe give us a few examples different type of um you know selfishly I'm really interested because this what I'm trying to do yeah yeah yeah I mean I mean we had um so so one of our early customers was was um a government agency dispersing Aid payments and before using stable coins

about 60 cents of every dollar was getting to end recipients so these were like large number of payments going out to many many many different recipients across Latin America they um these payments were uh were small and so you know they would send send the money to another Fiat provider who would send it on to another Fiat provider in Latin America who would then do the local payment and at each step there was a fixed fee in a variable fee taken out of the transaction um sometimes there were even three partners and so as a result you know around 60% of the value was getting to the end recipients they moved over to stable coins and now basically 99.9% of the Val value is landing in the end Landing in the end recipients uh

wallets which is um which is like an immense saving for the end for the end consumer um the other thing that we see in a very different use case is crossb payments you have um a business you know taking a Mexican peso and sending it into the US um there are you know the crossb payments Market is sort of roughly segmented into three areas where you have consumer you have Enterprise and you have like small to mediumsized business the consumer Market Market is pretty efficient um but not like wildly efficient and so you see companies like Felix pgo uh start to emerge over the last year who are competing in the

consumer Market in the most competitive remittance Corridor which is the US to Mexico doing so against many of the largest companies you know like remitly and so on and able to be price competitive with them even though they have no volume and that's because they are able to take dollars convert them into stable coins and use a company you know you and then convert those stable coins into Mexican pesos at basically the interbank rate um and um the other thing you're able to do with these stable coin payments uh across border is you're able to do local payments local pay-ins and payouts on each side of the transaction so like wise the way they

can get money to move so quickly is they use a domestic us payment in and then they would do a domestic you know payment in Mexico out and they do netting on each side so you have to hold money on each side well with the stable coin you can get the same benefits of netting local payment in local payment out but you don't have to hold working capital so you can actually move the money between the two places so it saves the business who's running that meaningful cost because you don't have to add Millions tens of millions of dollars into every single new country that you stand up um the other big thing is like we see lot of fintechs building with stable coins if you're a fintech and you're serving people in 50 different countries

it is literally impossible this is why you do not see um like cash app is still in the US even after they've tried to expand into many many different countries like revolute which is probably the best in the world at expanding internationally is in like seven or eight countries um but if you're building on top of a stable coin stack you're Global from day one you build on top of dollars you can offer wallets to anyone all over the world day one um and so it like not only unlocks a huge opportunity but if you theoretically were pursuing that with Fiat infrastructure the cost would be in the tens of millions of dollars um yeah I could keep going on like you know in

the US you have FBO banking products this is the way every fintech is built today um an FBO bank account is a pooled bank account on top of which you know balances are ledger so if you use chime or or uh cash or venmo or whatever all your money goes into an FBO bank account well all these companies spend enormous sums of money building and maintaining the ledgers tied to these FBO bank accounts over time all new fexs are going to be built with stable coins because you get those ledgers entirely for free um this is like what a blockchain provides and so your C your not only is it easier to stand up and more scalable and Global from day one but you remove an immense source of like

engineering uh cost and complexity by not needing to build and maintain maintain the ledgers yeah from a working capital standpoint I would imagine as well right there's just so much trapped cash in the system especially in these Novo noo accounts like for for corresponding banking networks all this stuff I mean it's just even locally in the US like you know Merchants get paid t plus at best three to six days maybe even more the smaller you are the worse it gets um but even internationally I mean these banking networks are are have a huge drag on working capital that you know it's just yeah totally I mean I mean this never went anywhere but this is like a

crazy anecdote that I like to tell we had a we had a government reach out to us pretty early on um and there were reasons why I didn't go anywhere but but but practically it should exist um it's a government that is entire like a country that is entirely run on dollars um and uh but it's outside the US so they entirely operate in dollars but they're outside the US so as a result they're completely dependent on the intermediary banking system to uh move funds and um they are thinking about they still might over time it's just going to take them time moving from dollars to stable coins because once you move to stable coins

you can do a stable coin payment and then a dollar settlement in the US without the need of going through a singular intermediary bank so a country's funds are not funneled entirely through one single pinch Point um and there's a lot of ways in which like the existing system is like tacked together through these like you know very unscalable systems where stable coins enable those flows to be ported over and then and then used in a much more efficient manner yeah I describe it for a long time as like a imagine a big blanket which is different different fabrics and patchworks and it gets built on top of it and ultimately stripe and

all these fexs you know they have to work with this fabric that you know they can improve interoperability and whatnot but the underlying fabric is just a patchwork of antiquated systems that at some point you just face a wall that you're not going to reach more efficiency until you kind of move to this new Paradigm which is you know from like from built from scratch digitally native a ledger that is immutable that everyone can agree on and like I think it's just like my theory if you ask me why stripe acquired you guys is because they realize that their growth at some point is going to be limited that they realized that some of this friction was just not going to go away and that the the future for them to be competitive and to be continue to be a leader was to

move in this direction and the fastest way to do is acquire you guys as opposed to building it themselves and just expand them with some of the great work that you guys have done already um let's um let's like talk about a little bit about the future what it how do you think about now that you're presumably the exhibition closes what's next for you I mean you've done so much in 18 months um what are some of your Milestones what are some of the things that if we talk to you in another 18 months what do you want to accomplish H I mean I I certainly hope in I mean I have been completely you know a year ago or 18

months so so the week that we launched our apis so maybe this is over 18 months ago but but literally the week we launched our apis was the week that usdc deped um and so we launched this was like svb went under we launched on like a Monday and we were like we're live this is amazing let's go and by Thursday we were like oh my God we need to move all of our money out and our business is 100% gonna be worth zero on Saturday and uh it's amazing to me how far we've come since since then and like it's felt like you know eons but um you know I thought that we would be serving mostly Crypton

native businesses for a long time then maybe a few fexs then maybe some regulated companies in like three years or so on and then maybe like Banks and governments and you know what have you in like six seven years and you know we we started serving you know the government uh government agencies and you know within four months after launch or so and so um I've been in our first 18 months I've been consistently um I have consistently underestimated what has has been possible and how quickly things would move as I look ahead to the next to the next 18 months I certainly hope

that all of the like I hope that every company like I I think it is possible that like every company that is in more than 10 countries in more than like you know five countries is has some team somewhere that is working on stable coin services for their customers payouts stored balances you know Global cards treasury management what have you uh and I think that we will power a huge number of the folks who are who are building those things I also really really hope and it's hard for me to predict what this is that we start to see a bunch of use cases where people are using stable

coins in ways that were not possible that that unlocking use cases that were not even you know right now there's a lot of use cases that are phenomenally expensive with Fiat but somewhat possible um I hope that they start unlocking use cases that were not possible at all before um yeah yeah I do have a sense of what so last year strip processed over a trillion dollars in payments across like three to four million Global clients if you had to project out not 18 months but let's say five years in the future what what amount of that payment volume ends up moving into stable coins well 7 trillion was settled last year if I

believe like very good Visa dashboard and so MasterCard seven I think seven billion n billion those those metrics on stable coins are tough because so much of it is related to trading and there's like you know yeah yeah I mean I I certainly hope that um stable coin volume like through bridge over the years to come is in like the hundreds of billions um and you know in five years it's hard for me to tell maybe in five years we're at a trillion um and like I certainly I mean I mean just you think about the use

cases that payment solves for like just moving money internationally via Swift you know just a US dollar payment from the US to Europe very simple or us to you know Mexico all staying in US Dollars never doing an fx transaction those use cases should 100% move to stable coins it's just transferring the same value from country a to Country B there's many many trillions in that one flow Alone um and the main the main you know limiter to adoption is comfort with storing and moving money in stable coins um but but the use case is there and

this is like this is what I love about financial services generally is that they're just like they're very rational like super rational you can move money quicker you can move money cheaper you can save people time you could save them money like they over over the Arc of time they use them uh and adopt those things but right now the perceived risk is high the perceived complexity is high and all of those things will go down as we have regulatory Clarity and as like wallets and indexing and you know sending and retries and all this stuff is abstracted away what do you need to believe on this just Assumption of continued growth stable coin for commercial reasons not pure speculation within the crypto

markets um I've heard from a few companies in the space that you know higher up the stack where closer to the customer particularly like B2B or b2c is that you know Merchants Merchants are still in a position where they'd rather not risk introducing marginally more friction for having a customer pay with a stable coer setup a wallet that they'd rather eat the four to 5% or more that they're paying because they're just so afraid of losing the customer which is not what you're saying it's not rational right because you can do a lot of modeling say okay even if you lose x% even there's this marginally more churn you're still going to come out ahead but businesses

particularly smaller ones are just very reluctant to technological innovation um what do you need to believe for like some of the this adoption you know I think the crypto uiux has improved quite a lot account abstraction um you know gas list transactions bundling batching all these things of like three years ago I get it today totally different experience from an end user standpoint but from your from where you sit like what are you looking at and and kind of what do you need to believe for for for the to really take off I mean I I honestly like I think you could zoom in and like think of like oh we need to solve you know kyc or

compliance issues are oh we need to to solve like scalability issues on chain or what have you but but I actually I actually think it's like simpler than that you just have to believe that the compounding continues like um like I mean it is like it's just the most important Force uh in in this space and like you just look at the way um you know the crypto spaces compounded to eliminate complexity over the last 10 years um and all those things that you mentioned were problems that are now that are now solved and there are like you know

hundreds more that other teams are solving that the coinbase team is solving that you know that that that like you know a bunch of folks all across the industry whether it's like wallet side with with fire blocks or whether it's decentralized exchanges or you know whether it's just protocol teams or what have you are solving to eliminate a bunch of the complexity in the space and like the Fiat payment world has compounded for decades you know and like a and wires are horrible systems horrible horrible underlying infrastructure but there's been compounded investment over many years to smooth those rough edges so that most

consumers don't feel it and uh the same thing is going to happen here but you're starting with a much much much higher base um and so I think that if you just believe that the compounding continues then this like migration becomes inevitable um and and it's really not a question of whether it happens but just how quickly things compound whether it's in you know three years or five years or 10 years or what have you and and that's where I've been like consistently wrong is that you know I I underestimated you know the compounding that occurred and how quickly thing you know that that trajectory can change with like a few Investments that like unlock big big

sort of opportunities for folks to start building yeah I would even go as far as saying that the uux is Superior in crypto than it is in traditional fintex like I was just reminded today putting account like AC wire information and approving that like my God scan a QR code and send the transaction click of a button like it's faster than Apple pay you know it's it's just really that simple I mean I mean another thing I mean that people often don't talk about but is like super obvious is to me is that like with crypto you know when someone received the money like isn't that amazing like holy holy crap like like

like I mean I had that today wire I was like did you get it yet they're like I haven't got it I was like well it says it says you got it on so yeah yeah I mean I mean just like it is we just forget because like a lot of this stuff has been smooth over by like years of you know comp complacency and other service you know other tools and what have you but like super basic things don't exist with Fiat payments um and it gets even worse when you send something internationally like you know yeah yeah so Zack uh let me ask you a question so imagine that um you're not doing what you're doing right now you've uh you know and you had say hypothetically a

billion dollars to go and acquire businesses what would you do uh I would uh I would probably you know acquire uh uh I would probably start a rollup that was acquiring uh you know traditional businesses and migrate them over to using stable coin infrastructure uh um but how long are you gonna be at stripe like put that you put it in my pitch deck all right I don't know what you're talking about I don't know yeah Zach could you see do you think stripe could ever

launch their own stable coin um I I think it's possible I have no idea whether they will or not um but uh but but like one of the core like we do stable coin issuance that's like one of the core services that that we offer for folks who are building on our on our apis and one of the reasons why we why we offer those apis is because we believe that people will want access to the underlying economics tied to stable coins and want to um control the way the reserves are managed um and over time want to build specific functionality into the smart contracts tied to their stable coins so you think

the world will have tens of thousands millions of different types of stable coins yes we think that there will be tons and tons and tons and tons of stable coins and and um and it's purely you know rational so so there will be a Nike stable coin an Adidas stable coin a Starbucks stable coin actually I guess there already are things with yeah exactly you just you just will never know that they exist like I don't think that they will all trade on Unis swap you know like I don't I don't think that you'll see pairs between all of these stable coins but they will be underlying infrastructure used and then maybe whenever a stable coin leaves the Nike

ecosystem it leaves in the format of usdc or leaves as as you know PUSD or USD or whatever other you know sort of like public stable coins exist but but like this world where you like go into the stable coin store and you like select you know from like seven different dollar formats is like kind of silly so so I think that decision is going to be totally abstracted away from you um as you move money around I love that that makes a lot of sense um yeah can I um I I know you can't actually say too much about the acquisition I was kind of like poking at you earlier with it there are actually I mean I'm sure you

know a lot of these Founders too there are a lot of Founders who started in their crypto businesses they've been doing it for a while and they are like there are some like big m&a transactions happening right now um where Founders are in the sale process and so again I I don't know how much you can actually say but um I just love to hear like what it was like negoti negotiating that deal and did you hire Bankers did you have lawyer like did you work with lawyers like were there any sticking points in the deal where you're like oh my God they care about this like with maybe the end the end user of this feedback being a Founder who's going through this type of deal right now I have an in of one experience well I guess an in of two experience so uh we sold our first we

sold our first company um to to square but it was totally different we had like zero product Market fit and uh five people and um and you know we were thankful that that anybody found us valuable um in this circumstance we we didn't go in to sell um and so you know for for us everything was you know my like main focus was on you know evaluating on my side whether this helped push forward the vision that we had um and helped

accelerate the business that we wanted to build um and that we could do it while sort of maintaining the team and culture and like the things that sort of make us us um and that was my main my main focus um and like you know the the sort of like deal and the terms and all all the other stuff sort of work themselves out over time but like those were the things that were that were un that I that were sort of uncompromising for me uh like I just like and it's probably different for other folks but we're just super early um and there's a lot that we believe needs to be built in

this space and and like one of the things that is like more clear to me now is that you know at least for us all of us like building in this world you know you're you're not like making a bet that something will happen like I guess you can and and that's one way to build a company but a much better way to build a company is to make a bet that you can make something happen um and you know I think that in many ways Bridge has like showed a lot of people what is possible with stable coins and proven that a lot of use cases are like real and super valuable and and so on and there's a lot

more that we have to prove to people to make you know stable coins are important and growing super quickly but still small in the grand scheme of the payments world and so there's a lot that we have to prove so I can't like answer directly I know on like specifically what we negotiated how we thought about how how we thought about things but that's what was really really really important for us and it was wildly different from the first time we sold our company where our where our company wasn't working at all and we were like just thinking of like where's the best place for us and the team to land to learn and grow and build something useful yeah I think if I were to say something if I could just add in here and I'm not a Founder but hearing you talk about this reminds me so much

there's a great book getting to yes but the like negotiation strategies and it's this idea of a of a it's called a bat now which is your best alternative to a negotiated agreement and and when I heard you say that it's like there two things come to mind one you always want to be well capitalized because you own your destiny so controlling cost is so important and the second one is is believe that what you're building is so powerful and it's going to work no matter what and if you're well capitalized you can continue to build and execute and so you can walk away from a deal and it's sort of you you don't doing you're not doing it out of necessity you're just from a Phil like from a standpoint of just saying is this going to accelerate my vision and the execution of it but I'm perfectly fine

walking away I don't need to sell and it's more of is this a right partner and you're you're it's like a matchmaking it's not you trying to pitch it and sell it to them it's are we together going to do 1 plus 1 equals 3 kind of thing yeah yeah exactly exactly and and I I don't like I don't think anyone like acquisition or you know process is the same you know I think our situation is like incredibly different from you know uh like people use the comparison of like YouTube or something there's like probably very little that we that we have that we share in common um with with with like a deal a deal like that or um you know some other

acquisition that's a tremendously late stage you know and the company and the culture and the team Dynamic and what have you are are very very different um yeah yeah Z did you know this was going on or was it just uh you and Sean and then you brought it to them one day and you're like hey we just sold to to stripe um it was more of the latter but uh there was obviously a lot of leaks leading up to the deal some strategic leaks my friend are some which were extremely challenging for us um we we um we we we really didn't like you know this is obvious like this you know once

it was announced has become tremendously distracting and um we didn't want this to become distracting for the team in any way and so we tried to minimize as much sort of noise that could you know exist as possible but you know probably two weeks or three weeks before um from somewhere news started leaking and then that like found its way to our team uh and then obviously like the week before it was like crazy with like a bunch of news articles that were like uh it was hard to avoid yeah of course well Zach man it's it's uh it's amazing to hear the journey and just uh Ben Ben has been pushing to have us uh have you on the

podcast for a long time and uh yeah just just rooting for you man it's like very cool to see uh you be able to I think help take move honestly move the industry forward um move stable coins forward and yeah like very hopeful that this deal gets done and I know it's kind of out of your hands now it's probably what with The Regulators now or something like that so hopefully The Regulators can get this thing passed pretty quickly and yeah I think Santi and I just both rooting for you in a big way yeah I really I really appreciate it and like I think probably like my closing closing thoughts are like there's just a phenomenal amount that's still to be built and like you know I think a lot of us are incredibly optimistic about what can happen but

that doesn't happen if people don't build it um you know the future is not inevitable um and uh even like small teams working on what feel like small projects can have a huge impact and so um you know we're super you know regardless of what happens here like you know we're we're incredibly vested in like continuing to sort of push forward and build and like make this reality happen and um really really excited for you know other people to do you know the same as we like all compound to push the push this space together 100% cool Zach

thanks for coming on appreciate it yeah thanks for having me thanks thanks sh really treat hey everyone thanks for watching today's episode just wanted to quickly thank today's title sponsor scale scale really is one of the best chain experiences out there today and I've used so many different chains there's a reason they are gaining so much adoption in both gaming and AI use cases hit the link in the show notes to explore the scale ecosystem syst [Music]