Goldfinch with Co-Founders Mike Sall & Blake West

Transcript

foreign [Music] ation on the Pod today we have Mike Saul and Blake West who are the co-founders of goldfish Goldfinch is a protocol that enables people to access Capital um their target is basically delivering usdc financing to over 2 million people in businesses across 20 countries where financing can be difficult or expensive to access in the old Financial system so using crypto rails to provide access and financial inclusion to the people who have been gated from that access in the old system so um I think that that is an important pillar of the regenerative crypto

economic system because it uh access to liquidity and growth capital in a lot of these markets is hard to come by and if crypto can provide that then that's good for those communities but I also think that it kind of legitimizes crypto in a way because well if if for listeners who are around during D5 summer you just kind of had these self-referential yields you have these vegetable Forks that would give you veggie coin Forks like am finance and all of their Forks that would just give you yields uh based off of the creation of new tokens that's really had no value other than the medic value and with Goldfinch you're earning real yields that are based on real businesses and their returns and their growth and so peer-to-peer Finance for

cutting out Wall Street uh cutting out the middleman and using a protocol way of financing businesses I think it's cool because I think it disrupts the old Financial system it legitimizes crypto and it provides Capital to small businesses that are growing which feels kind of regen so um yeah goldfish is is a pretty interesting product and really happy to have them on the green pill Pod without further Ado I give you Mike's Hall and Blake west of Goldfinch enjoy coordination hair Dow is here to Route Around the middlemen in biomedical research for hair loss hair Dow is an open source investment and operating organization using the coordination tools of ethereum to begin exploring the frontier of biomedical research that Bureau Chrissy and Middleman have previously prevented did you know that

66 percent of men and 50 of women will experience hair loss in their lifetimes hair Dow has already done some crazy cool science stuff like their first research study on the impact of synthetic T3 and T4 thyroid hormones on the human scalp and is also the second doubt ever to Mint an IP nft so if you want to explore the frontier of the decentralized science movement and maybe also You've Lost Your Hair along the way check out hair Dow at hairdow.xyz what's up Mike what's up Blake thanks for joining me yeah thanks for having us yeah nice to be here so uh what's goldfinch and what are you all doing within the regenerative crypto space so Goldfinch is a credit protocol and the the underlying kind of concept behind it was just seeing a lot of

activity in crypto and see how a lot of what was happening was kind of self-referential doing other kind of crypto things but believing that there's really an opportunity for for defy and crypto to have more of an impact around the world and really expand access to Capital and the real key to doing that is getting the broader actual Global kind of economy into the defy space so it can benefit from all that interoperability and efficiency and so at a high level Goldfinch is building that bridge between all of the the crypto activity with the broader economy and we've focused first on Emerging Market lending businesses and fintechs by providing Capital to them and enabling them to borrow Capital where they haven't previously been as well

served and so that's a high level of what Goldfinch is and now Goldfinch has extended loans up to businesses in over 20 countries and over 2 million people businesses have now been reached by the capital with over 100 million dollars in loans and so that is you know already you know a big part of what both engine is doing I don't have anything to add to that pretty solid intro we can dive into as much as you want okay great I'm wondering so a question I get a lot from starting git coin and and that I sort of sharpened over time was why crypto um you know why do this on crypto rails couldn't you just do this on the old banking system wouldn't that be easier

was a question that I got and so I'm wondering what uh crypto and web3 enables Goldfinch to do that the old Financial system didn't enable you to do yeah I think that's a great question we also get that question a lot and you know an analogy that we think about here is like we actually kind of think about it so when you put cash flows on chain we kind of think of this analogy where it's similar to what uh the move was from documents being in hard drives and documents being in the cloud right so like before documents were still digital they existed on people's hard drives but if you want to like move them around if you wanted to edit them you want to give people updates and stuff it was difficult to do that right some people were you know might be

physically sending CDs in the mail maybe sending hard disks around um and you're printing stuff out and letting people know it was all just like kind of annoying even though it was still using computers um but the cloud really opened this up it allowed for uh public accessibility it allowed for editability allowed for changes to be instantly seen by everyone and it allowed for a lot of uh also like composability you cannot integrate these things with apps um that didn't talk to each other before and we think a similar thing kind of happens with cash flows on chain when you when you move them to crypto right so today we think of these cash flows if you're talking about a loan they kind of live in this this Silo of like a bank right and it's difficult for other people to get access to that

if you want to move that cash flow around it takes legal structures and and documents and it's kind of a hassle it's usually pretty expensive and people only do those kinds of things of like moving Cal shows around and tracking them up at scale um but within crypto again offers this way that's almost like moving into the cloud and now it becomes trivially easy to move cash flows around by just like sending a token and you also have this incredible composability that these tokens can be used with other applications that people are building um and you can you know trench it slice it dice it do whatever you want you have all this flexibility the programming uh gives you with those cash flows and so we think that opens up a lot of things like specifically around uh more liquidity more accessibility and more composability and like you know we can

talk about certain examples of how we think we're already seeing that with Goldfinch today but that's the that's a high level what we think crypto really does amazing um and I'd love to you know I think the question so far has been like what is goldfish and how does it help people but I'd love to like go from like having an inside out perspective to having more of an outside in perspective um can you tell us about some of the people that have have gotten capital from goldfinch and how that has helped them uh improve their businesses or improve the community around them what is sort of your Target customer and working backwards from them what kind of activity have you seen on the network yeah so when I described before of how Gold Branch is providing Capital to fintech and lending businesses uh they

are predominantly in Emerging Markets but also 20 of the Capitals in in the US so it's really globally and what these businesses do is they have they have expertise in the local markets for Lending to businesses or consumers and they use technology or some kind of like local advantage that allows them to do that and what Goldfinch is doing is essentially providing like Warehouse Capital giving them Capital to expand their businesses and uh you can share a couple examples so like one is a company called tegende they operate in in Uganda in Kenya and what they do is they provide motorcycle taxi loans so people who do kind of like the Uber of Kenya by giving people rise on on a motorcycle they they get a motorcycle it's like two

thousand dollars and it's like a rent to own model where they pay it back over the course of two years and again they provide these two they call them micro entrepreneurs they have over 50 000 of these customers who are doing this and it's a really great business model because if someone isn't paying back their loan ticket has like a GPS unit model a unit on the actual motorcycle so they can go and like reclaim the the motorcycle and so it's just like a very profitable business but it's also giving all of these people the opportunity to like really earn a living uh and like build their own sort of um business by by doing motorcycle taxi rides so that's like one example and so they have borrowed five million dollars through goldfinch and so now basically crypto is helping to fund this activity in Kenya

and allowing to get dates to expand their operations there by literally buying motorcycles to lend out to more folks I know other example is a company called Greenway and what they do is they have a a cook stove that's like a clean cook stove that doesn't use um like I guess doesn't use fires like and so it's like much more economically like eco-friendly to do that and so then they do a similar thing where they uh lend these uh cook stoves out to low and compound Souls throughout both Africa and also primarily in India and that allows people to to get the cook stove and then also do it in an eco-friendly Manner and so they also borrow 750k through the protocol uh going through one of the channel Partners we have

called Omnibus which is a a credit fund and so yeah those are a couple examples of how Goldfinch is enabling like the capital and crypto like really get into the hands of folks who are putting into like great productive uses in the world and it might also be worth uh adding some color around sort of the structural reasons why it's difficult for some of these businesses to get capital in the first place like you know I think an immediate thing is some people might think it's oh are these like bottom of the barrel businesses you can't get money anywhere else so they're coming to crypto or whatever and that's just like really not the case you know we did dozens of interviews with a lot of these potential many businesses early on right you know before we started goldfinch and uh you know we just heard the same story

over and over again that you know even though they have profitable businesses they're spending half of their time looking for Capital and it's just it's a huge pain point for them which is why they're willing to use something weird like crypto but a lot of that that uh pain comes from the fact that they're kind of existing in this in this gap of financing right so the people who come on Goldfinch they want to borrow between you know say like one and 10 million dollars or so uh maybe one you know 20 million is the largest loan we've ever done and um deal if you want to get less than a million they can often borrow that or find that within their local Capital markets and you want to get you know more than 20-ish million then you can start getting the attention of larger

Western institutions who want to write checks at that size but there is this Gap in the middle that's just really not well served and the fact that um also a lot of these Emerging Markets have fairly high yield government bonds tends to suck out a lot of the capital and crowd out the investment that might otherwise exist in the private sectors of these countries and so what's happening here you know cryptos is very Global phenomenon where the capital exists all over the world and you know they're not scared of Emerging Markets as a rule the way some Western institutions are and it's very easy to get that Capital around to any different country and so they're able to help come in and fill this gap of financing and say again between this kind of like one and 20 million dollar zone and then you know on the back of that I think we get

into some of these other advantages of using crypto that I was speaking about before of liquidity composability accessibility like you know we have over 2000 different investors who are in our senior pool right now and you know is nothing at a marginal cost you add you know another 2 000 investors because crypto makes it so easy people just put their capital in and once the repayment comes in from the borrower it can go out to infinite numbers of other investors and there's no additional cost to us and that's just kind of like accessibility piece um and then there's also it's more liquidity people can trade them around and there's composability we have other protocols also building on on top of all things that adds more utility to the investor as well so anyway I just want to add that kind of systemic color of why these businesses are coming

yeah it's amazing it feels like there's just like a real moment of opportunity between the old Financial system and the old way that these businesses would get credit in these new crypto rails um and you know because these these businesses don't have access to Capital in the old system you're basically by injecting Financial Capital you're giving them the ability to serve their communities and to grow um and create an impact in their local communities at scale that the old Financial system wasn't uh wasn't doing it and so I think for that reason it's it's kind of an example of crypto uh being good for the world although it is wrapped in a very Financial sort of container which I think a lot of um

a lot of people you know maybe suspicious of that feeling feeling a little bit like finance and um you know I wonder if you have any any anything to say to anyone who's suspicious of Finance uh that's listening to the to the podcast um you know like what would you say to an audience uh audience member that has that that kind of world view yeah that's interesting I think I mean I I totally understand let's see uh what do I say like skepticism of like Financial products and the financial industry generally to date I mean it tends to be um it has traditionally been kind of a whole system that is primarily served the wealthiest folks in the world maybe

I'll I'll State the the Steelman criticism and then and then you all can respond to it is that sure yeah sure cool um I okay so this is not something I think but I'm trying to build a composite of some of the critiques that I've heard um banks are uh vampire squid that is sucking the lifeblood out of our local communities Wall Street is sucking blood out of Main Streets uh by basically um sucking the returns out of out of business businesses and they're using it to uh justify or to pay for their large buildings um in I don't know on Wall Street in New York uh major executive bonuses and there's just trying to extract as much value as possible because of being like

there's there are these intermediaries and to me like as someone who who likes crypto um I think the ability of these things can be made into protocols where there is no intermediary is the big opportunity of crypto so I don't know that's like the steel man argument that that I would sort of make for like a lefty regen crypto person who's suspicious of of Finance so I'd be curious how y'all would react to that yeah uh so I mean I think that one exactly as you say crypto does allow for them to be fewer intermediaries right and already on Goldfinch these deals happen between investors who are just individuals you know people like you and me who want to get into these deals and they're having direct relationships with these borrowers and so their parents who are on the legal agreements right there's not some other entity in between

and so I think right there you're already reducing some costs I also think that the open nature of crypto and the fact that there is this composability between protocols and and tokens can just create more competition right and if you have more competition there should be less ability for people to rent seek and sort of extract value out of the out of the communities and and just broadly also say you know what we're both interested in what a lot of crypto is doing is not it's not Banks right it's not large uh institutions who are deciding what happens it's these direct relationships of borrowers who can come on and say hey I'm looking for a loan and people who can look at their information and documents and make their own decision about whether or not they want to provide Capital to that loan um I would just say you know Broad they

zooming out you know Finance can be done poorly Finance is kind of like a tool right it can be done poorly where it harms people but can also be done very well where it helps grow the pie for everyone and I think the the actual matter of execution how how much you know um transparency is there into the processes and the and the terms and the repayment schedules and how flexible can those be and like who are you lending money out and what is the money gain used for what purposes all those things really matter to me in terms of what the outcome is of Finance broadly um versus it just like always being a bad thing or always being a good thing it's not it's just like a it's just money right money can be used for any purposes whether they're good or bad

yeah I would add to that too that I I also believe that the concept of financial inclusion can often be a major sort of source of productivity and growth and prosperity in in communities in that like there there's one Viewpoint I guess you could take which is that uh these financial institutions are bad and we need to stop them or something or something like that um but I think that it's more about enabling more folks in the world to have access to those kinds of benefits they don't just go to the large buildings in New York that you described but like any anywhere else that can benefit from um that access to financial systems and that's where I see crypto really changing things both like removing The

Gatekeepers making it open and at the same time removing the frictions so that uh the the systems can be just more effective even in these communities that have been like traditionally overlooked by these these larger institutions right yeah I think so I think that's that's a that's a pretty fair take I'm wondering if you could extend out the attraction that you've had so far like in a world in which Goldfinch is maximally successful in 10 to 15 years what does that look like yeah a big so the the real the real goal we're trying to do is bring all of these kinds of private deal opportunities on chain and enable us to connect the world's Capital with growth anywhere in

the world and so that what that means in like 10 to 15 years is that any kind of a company or person that has earning potential that is looking to get financing on that earning potential has the ability to come to this open system on Goldfinch and access that that financing and I think of a comparison to where like public companies today because they have all of this information that is uh trusted and it really reduces the the frictions of due diligence they can they can raise Capital like debt Capital more quickly because it's it's reducing the the frictions around doing due diligence and in a system on crypto and Goldfinch where uh it's doing that not just for

really big companies but for for all kinds of businesses private or public and even individuals be able to come to the system be able to access capital and fund essentially that future growth that's really that's really where we see this heading and basically moving all of this kind of like private now private deals and private activity on chain and I'm not enabling anyone with earning potential to access funding you know Mike Blake one of the things that I really like about goldfinch and what it's doing is how it increases the legitimacy of crypto so I remember during defy summer vegetable farming and these kind of crazy games that where there was all this yield available and it turned out

to not really be a sustainable thing you know I remember doing gam finance and all the vegetable Forks that kind of came out of uh forking that and they were really amazing yields on there but they weren't really backed by anything and in in what I'm seeing in 2023 is the is is actually the production of real yields uh being available on the uh ethereum ecosystem and and I think you know part of that is like you know I run I've been running a Staker you can actually if you're watching a video you can see it behind me I have live validating blocks and uh earning a return by doing that and I also like when I look at the The Goldfinch website one of the things I think is really cool is that the yields that are offered on

on Goldfinch um which are currently advertised as 7.8 percent usdc apy um are backed by real world businesses so you know it's it's a stepwise increase of in legitimacy for web 3D from being in this just self referential vegetable for Farm like Loop to actually having yields that are backed by real assets and um so I don't know this isn't really a question but I don't know uh it's just a commentary that this is increasing the legitimacy of crypto I think to have products like like Goldfinch out there that are actually producing real uh yields for people who are investing but then also using crypto capital in order to invest in these communities that

don't have capital in the in the old Financial system so any comments on that would be welcome yeah I mean I think I think we'll see more and more of that partially just almost because what you described is like the other ways of doing it aren't sustainable so they those won't continue and we'll be left with only actual sustainable ways of doing it in this this approach that we took with Goldfinch from the beginning which is really focused on like real sort of real world productive uses uh sustainable forms of yield was is was two part one is it's just part of our mission it's part of why we wanted to start goldfish in the first place which is trying to have this real impact in the world and that was I mean that was something we even talked about like

during during deep by summer and and seeing all these like market makers and crypto Traders looking for for Capital like we we talked to them but just felt like they weren't quite a fit with this really long-term mission that we're after and also believe that like you know it they can be a they could they can like use the capital in that moment but it's not going to be very sustainable when you know over the long term and so they won't be the best kind of like borrower to go to anyway and so it was just we thought about it two parts just like very aligned with the mission then also believed oh when a a bear Market hits then like these sort of unsustainable forms of yields aren't going to be able to continue in that

environment uh whereas like there will always be productive uses around the world like real borrowers doing real things on the ground that need capital and I we saw that basically an action with Goldfinch where if you compare the yields that you can get with usdc on Goldfinch today to what was possible a year ago is the same because it's the same borrowers the same productive uses uh it's these like really sustainable forms like motorcycle taxi rides in Kenya haven't been affected by the crypto Market it's kind of changing a lot over the past year and so they spoke kind of like the Strategic part but also just really aligned with with our mission I would just add one other thing that I think this trend in getting more real world activity into crypto is also going to have this other effect of just

making this phase less volatile like right now since everything is so self-referential and it's all about crypto we see these just incredibly drastic swings up of you know 10x up and then like 90 down within the span of you know a year or two years and that's just crazy like I can't keep going people aren't going to want to you know put all of their savings into a system that does that and so we need to have something that's that's more stay people and you get that through diversification and you know when the world's economy goes up and down you know it goes up and down by like a single digit percentage points you know or less right and I think that's the kind of stability that crypto is going to need if it's going to start to actually go mainstream and have everybody trust it in a way that they

want to put their their own life savings on there and use it for everyday transactions yeah yeah I think that the question of like do I trust this is really an interesting question especially since you know Satoshi in the Bitcoin white paper who talks a lot about trustless uh systems and I think that like the chain of trust the epistemological chain of trust in the old Financial system is I trust this institution I trust these human actors um and the chain of trust in the web 3 ecosystem is just like the consensus risk and the protocol risk and the smart contract risk and in a way it's sort of comparing a hundred year Financial system that's evolved uh a lot more I I think evolve trust in a different way to a novel Financial system that's only 10

years old that's evolving still evolving trust and um I definitely think that like a priori the epistemological basis of trust in in crypto is um a more solid foundation for finance than it is in the old world which is kind of based on these social institutions and and you can also kind of give more yields peer-to-peer because there's not going to be that Wall Street intermediary in between the capital provider and the in the capital uh receiver so I think that that's that's really cool yeah I think it's you know for the mainstream person they may not understand exactly what's underlying all the blockchain technology and like why it can be so uh robust and resilient to to changes and everything but I think

they're gonna just see the high level of like oh this thing continues to exist it continues to work year in and year out and like they're eventually going to build up that trust that they can oh I can use this for transactions and more their friends will start using for transactions and whatnot and so I I think that's where crypto is going to be able to start getting more people involved um I also think it's interesting I think crypto can add a you know it is trustless in its own way but can also allow for more of like a Marketplace of trust like right now you kind of have to trust a particular institution and you have to trust you know the US government with the banks that they have and their chain of Regulation down um but I think you know in the true sort

of crypto Ideal World they're gonna be different people can almost create their own systems of Regulation and Trust on chain in a way where I can choose to buy into this human actors in their regulation address and or I could choose to buy into this one and put my money there I I kind of feel like that's a place where crypto can go or the things that it really opens up is it allows for there to just be more options and not like let there be a monopoly on the state regulation of how and who you can trust right so more competition is is better on both sides of the market yeah because I think fundamentally with Finance you're never going to get away from some sort of human judgment needing to take place and people do want to often delegate a lot of that uh you know

responsibility of choosing where to put their money uh into it to another human right like we people don't have the time and energy and effort everyone doesn't to uh to be able to decide what's a good investment and a bad investment I think you're still going to have some of these delegates in intermediaries just like naturally pop up as places to collect capital and the way that they're going to prove out their trust uh is through their actions and through whatever code they choose to decide how they allocate you know they can let the code restrict them to certain Investments or not certain Investments I think you have there's more options and more um more competition that's going to be possible through what crypto is enabling well um thanks so much for for joining the green pill podcast to really support uh been thankful for your support of of

the podcast and the movement in the past I'm wondering um if you're in the audience and you're listening to this how can people get involved in Goldfinch how can they find you all online and and get involved in these in these markets I think the the best starting point is the website goldfinch.finance and then also and I encourage people to join the Discord which is linked to through to the website and then also the Twitter account for Goldfinch is Goldfinch underscore Phi amazing yeah well uh thanks so much for joining the the green pill podcast I think there's a fun little symmetry between a green pill and a gold finch both having colors in

the name and uh both being part of this regenerative crypto movement it's been a lot of fun so um thanks again and we'll see you on the internet thanks so much it's great to be here [Music]