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Rising from the ashes | Rahul Pagidipati @ Zebpay
125 Plays4 years ago
In India, Cryptocurrency is one of those tech innovations that has hit more headlines than any other! From influencers promoting it on social media to companies sponsoring major sporting events, the popularity of these virtual digital currencies has risen in India.
In this episode of the Founder Thesis podcast, Akshay Datt speaks with Rahul Pagidipati, CEO, ZebPay, India’s biggest cryptocurrency exchange. He is a second-generation Indian American and has been a part of the global start-up ecosystem for the past 20 years.
Rahul fondly recalls his earlier days when he started numerous ventures in India and the US and fell in love with investing. This is when he came across Bitcoin and Blockchain and decided to invest in ZebPay. Little did he know that the company will face uncertainty due to RBI’s ban on cryptocurrency.
However, in 2020, after a two-year hiatus, ZebPay was relaunched, with Rahul taking over as CEO.
Tune in to this episode to hear Rahul speak about how ZebPay is disrupting the way people transact and invest with its ground-breaking financial innovations.
Key takeaways:
- Experience of running a venture in India in the late 90s.
- India’s response to cryptocurrency.
- The ZebPay’s survival story.
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Transcript
Introduction by Hosts
00:00:00
Speaker
Let's take a look at the video. Hi, I'm Akshay. Hi, this is Aurob. And you are listening to the founder thesis podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
Zepay's Role in India's Bitcoin Market
00:00:26
Speaker
Hi, I'm Rahul Pagadiapati. I'm the co-CEO of Zepay, which is one of India's biggest Bitcoin exchange. We help Indians all over the world, not just in India, help them buy Bitcoin.
00:00:41
Speaker
Crypto, Ethereum, NFT, Blockchain.
Rahul's Background and Entrepreneurial Journey
00:00:45
Speaker
Do all these words sound like Greek to you? Well, they sounded the same to us also till we heard this fascinating conversation in which Akshay Dutt sits down with Rahul Pagadipati, who is the crypto investor and also the co-CEO of Seppei, which is among the top three crypto exchanges in India.
00:01:05
Speaker
Rahul brings to the conversation a unique mix of perspectives. He's a second-generation Indian-American who started up a venture in India. He's a very early believer in investor in Bitcoin and cryptocurrency, and being a part of that ecosystem in the US, he's at the forefront of cutting-edge financial innovations that would disrupt how humans transact and invest for decades to come. Here's Rahul talking about how he discovered India and his journey.
00:01:35
Speaker
So Rahul, what's the connection to India? I mean, you don't sound like you've grown up in India. Did your parents migrate to the US? Yeah, sure. So actually, I live in Durham, North Carolina. And I'm here. My wife, she's a cardiology professor at Duke University. And you're right. I actually grew up born and raised in the US. My parents immigrated to America even before I was born.
00:02:05
Speaker
And really kind of fell in love with India, being an Indian American, you know, since I was a kid, but then I moved back to India when I was 21 and kind of fell in love with entrepreneurship, realized there was so much potential there and moved there to start up a company. And I lived there in my early 20s up until I was about 24.
00:02:30
Speaker
Five or so and the company which is still still around days at that company called an eye and health care services employs four hundred people and Because of that early formation of kind of let you know of living in India in my 20s had always loved it and
00:02:48
Speaker
have been, you know, fascinated with the culture and growth and all those. So what made
Challenges of Starting Up in India's Dot-Com Era
00:02:55
Speaker
you want to come to India? Like you did your undergrad in the U.S. and then... Yeah. So this was like a gap year thing? Like you thought you'll see the world before? Yeah. So it went to University of Florida, my undergrad in the U.S. And this is during the dot com bubble boom, you know, in the 90s.
00:03:18
Speaker
And I realized that there's so much phenomenal engineering talent coming out of India. Why don't we just go to the source? In a sense, it went searching for where all this stuff, all these phenomenal people come in and then fell in love with it. But I am now based in the US. Other than those three, four years where I lived there,
00:03:46
Speaker
spent most of my time in America, but I go back and forth quite a bit. Obviously, COVID has changed out in some, but I would always go to India a couple times a year and looking for really cool entrepreneurial and ventures and investing. And I would say I consider myself both an entrepreneur and an investor, and probably maybe an investor. I'm slightly more of an investor than an entrepreneur.
00:04:08
Speaker
And even though both, they're related because what investors are looking for is finding great entrepreneurs. And what entrepreneurs are looking for is finding great investors to back them. And the cool thing, because I've done both, you have a good 360 degree angle of how things work. So Raul, I want to know about your entrepreneurial journey from scratch. Tell me about how you ended up starting a company in India.
00:04:36
Speaker
Way back in 1999. This is when I was a teenager almost. I was 19, 20, 21 years old and had always been in love with building businesses. I would read books about entrepreneurship. My older brother, he's a couple years older than I am, he also loved it too. We were reading books about and magazine articles about all these really cool people doing technology stuff.
00:05:07
Speaker
At this point, there's stuff like Michael Dell. Michael Dell had started Dell Computers. He'd started it in college. And I was in college. I'm like, wow, hey, if you could do it, then I could do it too. So this is the very early days of the internet. And it was very clear to me the internet was going to be a massive game changer in the world. And so I thought, how can I make a big impact on this? And then where can I get the most bang for the buck?
00:05:34
Speaker
It was pretty clear to me that there's a lot of cool innovation happening in America and back then these are things like Yahoo and eBay and Amazon.com were out and really kind of saw that India was going to be the next big space for this.
00:05:50
Speaker
There is a really, you know, the company's now been sold. It's going to be called India World. My brother had met the founder. His name is Rajesh Jain. We almost invested in that company. It was pretty interesting. If we'd done it, it would have been a phenomenal return. We would have gotten like, you know, 20 times our money in like six months.
00:06:10
Speaker
Just because this is a dot-com bubble. But how did you have money to invest, like from the parents? Yeah, it wasn't a ton of money. It was just, you know, it was me, my brother, my sister and my parents. I mean, I would say it wasn't zero, but it was like, you know, $100,000, $200,000. These are, this is like... It repeats quite a bit. Yeah, exactly. But back then, you know, my parents are both physicians. They'd been running a small business.
00:06:39
Speaker
Was it vastly successful? No, but was it also tiny? It was like a couple employees and it was making enough money where the first step really is, can you start a sustainable business? But that's anything, that could be like a food truck, it could be like a small, it could be even a cab. You're making enough money that you're not basically on the street.
00:07:03
Speaker
The really step from going from there to the next step is basically just lowering your expenses so that you have savings. If you live beneath your means, you can then get capital to invest back into new ideas. That's what we did. It sounds crazy, but you do everything as frugal as possible.
00:07:28
Speaker
And so we had some money. We thought, you know, where do you want to invest this? India seemed like a really cool idea. The deal didn't work out with the founder of India World. And I was like, well, you know, if we don't do that, why don't we just start our own business? Instead of owning a small fraction, you know, a minority interest of India World, we can own 100% of, you know, a business we start up. So kind of to my parents, listen, you know, we were going to put $200,000 into this business.
00:07:54
Speaker
It's not to that, give me $200,000, I was 21 years old, then I'm gonna go to India and I'm gonna start a company, right? And the family can own this. And that's what it did. So just didn't use all $200,000 at once, spent like $5,000, then $10,000, then $10,000, went to India and then hired a team and built stuff,
From Tech to Healthcare: A New Venture
00:08:15
Speaker
right? And kind of learned from mistakes, a ton of mistakes, built a company up to 120 employees,
00:08:24
Speaker
And then, you know, we're making money than the dot com, you know, crash happened, we lost money and went back down to three employees. Right. And then
00:08:35
Speaker
Within a year, you hit 120 employees. Within about 18 months. What did you start? What was the business? It was a bunch of different stuff. Services stuff, building products. Lots of different things.
00:08:55
Speaker
Like a mini Infosys. Yeah. We were trying to do a mini Indian Yahoo. And some of the things were working, some of the things weren't. And then what wasn't working? You were in services or product also? Both. Both. And building an e-commerce electronic bookstore, things like that.
00:09:19
Speaker
And like I said, during the bus, realizing, hey, listen, we can't spend more money than we're making, right? Because a lot of the things I say is you should spend more. You should figure out how to borrow or just lean forward. That's why we had a downside. When we dial it back, like, hey, listen, let's only spend money, only spend what we can. And that's why we went down to three, four employees.
00:09:42
Speaker
focused on services, which is money making, right? And then we kind of moved into healthcare services. And so healthcare, the reason I picked that is both my parents are doctors, we kind of knew the healthcare space decently well.
00:09:56
Speaker
And that's actually what works. So what ended up happening was at this point during the low point, I was like, what do I do now? It was a good time to go back and finish up college. I also went and got my MBA and my law degree. But I was still the CEO of this company. We had three, 10, 15 employees that run that. We would be doing medical billing services or medical billing software or helping people figure out how to do coding online and things like that.
00:10:25
Speaker
During this time, this is on the entrepreneurial venture of what became big. The really big company was Freedom Health. My father, my brother, I, and my sister, we all worked together and said, hey, this insurance is really the best place to be. My dad, he's a risk taker, decided to basically take all of his net worth. We took all of our individual net worth. We put it all together.
00:10:53
Speaker
And we started a company called Freedom Health. And this is the thing about having, you know, you're talking about a background in the stories that, you know, at this point, we'd had multiple failures. So you say Anion wasn't a failure, but it definitely wasn't a win. It was like a zombie type company at that point. And you have to go through lots of ups and downs. But my dad had like started like, you know, 25, 30 companies of them, you know, and 90% of them had failed. Like failed or not done great?
00:11:21
Speaker
And this was like, you know, this was the 31st company. And so this was, these were like side hustles or like, no, yeah. So I would say yes, yes and no. The first business that I would say was doing better than, you know, than losing money was a clinical lab. And this is my mom, she was a pathologist, she ran a clinical lab. It was a small business. This is a business that maybe did like, you know, like $2 million in revenue and it probably made, you know,
00:11:48
Speaker
let's say $300,000 a year in profit, $400,000 a year in profit, right? So, you know, not amazing, but not tiny. It's enough to live a pretty good life in America. And so from this, that small lab, which is making a little bit of money, right? My dad said, you know what, I'm gonna take my entire retirement savings and the cash flow from the clinical lab and let's go start a health insurance company, right?
00:12:16
Speaker
And he had all of us kids kind of put in time. My brother moved back from New York from investment banking and we started an insurance company. We just basically took our entire net worth and said, you know what, let's see if we can... And it was about a couple million bucks, $2 million, $3 million altogether, but $2 million initially. And we started this company called Freedom Health.
00:12:40
Speaker
And what Anion became, Anion became like one of, you know, in a sense, because we knew how to run it. Like a back office for Freedom Health. Yeah, it became kind of the back office for this company. But Freedom Health is really the one that took off. And this company became honestly massive. You know, we went from zero to $100 million in revenue in about three years.
00:13:01
Speaker
Right. Wow. And without any external funding. Yeah. Through like lots of this is stretching and maximizing and we brought in a couple of smaller shareholders, we eventually cash them out. And at this point, we had basically, you know, spent literally every single dollar we had at the clinical lab, every single dollar we sold all of our real estate, like, you know, we had a couple of my parents had a second home, they sold that and put everything we got into this.
00:13:31
Speaker
At this point, probably about $10 million of capital have gone into the business. And this is what, like reselling insurance or like an actual full-time? It's a full-on insurance company, yeah. Full-on health insurance company, managed care company. And so with like underwriters and like the whole deal. And so it was complicated stuff. We grew it.
00:13:55
Speaker
You basically had to give amazing benefits, so we weren't profitable. We were losing money, but we were growing. It's called Freedom Health. At this point, we realized that, hey, listen, we're out of ammo. We decided we should probably find someone who can then become the majority owner. A guy named, a really cool entrepreneur named Dr. Kieran Patel had kind of been around the block before.
00:14:23
Speaker
He had sold his business for $200 million several years ago. He had a non-competed, it expired. He came in and he bought the majority stake of Freedom. So we stayed on as minority partners, and he bought the majority stake. And we basically took our money off the table, but retained equity, a big minority equity. And at this point, it was right from 2007 to 2008, right before the financial crisis. Very lucky timing by doing it right before everything had tanked. And he came in and he was,
00:14:54
Speaker
And at this point, I just finished my law degree, my MBA at Kellogg, Northwestern Law School.
Success and Sale of Freedom Health
00:15:00
Speaker
So I went back to grad school, kind of was still running and I'm still helping out with, you know, high level on freedom health. And then we sold, after we sold the majority sake of freedom to Dr. K, he grew it along with our help from $100 million in revenue to almost $2 billion in revenue. And it became the largest private health insurance company in America.
00:15:21
Speaker
at this point. And so over 10 years, it took about 10 years from 2008 to 2018. Lots of hard work, same thing. Every incremental dollar of profit went back into growth. We raised a little bit of capital. Dr. K put in some money. We raised about another $25 million of total capital. But other than our capital and that $25 million of capital that we raised, there's no other money that went in the company. And this company, we eventually sold for 2 billion bucks, almost 2 billion, about $1.8 billion.
00:15:47
Speaker
And yeah, and so and then during this path, what I was doing is I really loved entrepreneurs, but also loved investing. And so what happened was that within the family, my parents, you know, we're more physicians, you know, you know, kind of step back from day to day operations, my brother didn't move to more like as an operator, like we would invest in companies and businesses. And
00:16:11
Speaker
along that path, I took more of the investment role where I would basically like a value investor, you know, try to value businesses.
Investing in Bitcoin and Zepay's Growth
00:16:21
Speaker
If we had any excess cash that our business would throw off, reinvest back into it. If not, then we would then, you know, just kind of sit on cash or reinvest back into our, you know, our core operations. And so if we found a great idea, we'd invest, and it was a lot of small public companies, like these are small companies that are worth less than $50 million.
00:16:39
Speaker
And for three, four, five years, I really just spent... And you would buy a minority share or like a majority share? Significant minority stakes, like, you know, between... Okay. These are public companies, so called between 1% to maximum, like, you know, 10, 15%, but $1 million to like, you know, $10 million of capital would go in. And like I said, fell in love with, you know, investing, would be reading, you know, annual reports and understanding about, you know, about cash statements, balance sheets, things like that.
00:17:09
Speaker
And during this path of me, you know, you know, really honing my investing skills, stumbled upon to Bitcoin and blockchain. And it was still going on. We had the NIN team. I had one of the like three, four people team learn about Bitcoin, you know, what is mining, you know, how does all work. And
00:17:32
Speaker
They spent a ton of research on this stuff and said, hey, they came back with, this is really interesting, but we're not really sure what it is. And I said, okay, well, let's research more. And when we started researching more, we realized that this is something that could vastly change health insurance, which we were still doing then. And so... Okay. Like blockchain and technology. Blockchain and smart contracts could dramatically change the way health insurance could work.
00:17:59
Speaker
slowly, step by step, convince the family that we should make major investments in the space. By the time that we sold Freedom Health, we had made a decision to move, other than healthcare, our other masked head of
00:18:15
Speaker
investing would be in blockchain and so Put basically see the amount of capital into it's a crypto blockchain of that and very simple. It's Bitcoin and ether You know, those are those are very simple You know, let's say public tokens almost like, you know We believed in store of value we believed in the idea smart contracts and decentralized apps We're gonna be a mass thing and we thought these two are the leaders that they've already got massive market share and they're gonna continue to win market share
00:18:45
Speaker
And then I knew about Zepay. What price did you buy in Bitcoin? It's all over. We're still buying today, but we first started buying... I first heard about Bitcoin back when it was about $5 or $10, but we didn't buy until it was about $7500.
00:19:03
Speaker
Amazing. It really is funny because when I bought, let's say at $100, I was like, oh man, this thing used to be $5 or $10. It was like at 10X back then, right? But we've been buying back then and holding on and still buying now.
00:19:24
Speaker
And so I knew about Z-Pay and the Z-Pay team, and I met the founders and the management team at a Bitcoin conference in New York. And at this point, this is right when the RBI decision had happened on kind of making Bitcoin per se very hard with banking, right? People were saying it wasn't made illegal. It was just they put up a lot of, let's say, hurdles in place for, yep.
00:19:53
Speaker
and convince the founders that, hey, listen, you know, we're entrepreneurs and investors. We'd like to buy a significant minority stake in the company. We decided to do it at that time and then. So tell me a bit about Zepay's history also, like how did it start? And like, I believe it's almost like a seven year old company now. Yeah. Yeah. So Zepay, a really cool company founded by three phenomenal entrepreneurs.
00:20:21
Speaker
Mahin Gupta, who was really more the CTO role, Sarv Argywal, who was the founding CEO, and Sunny Goenka. Sunny, he was more like the CMO and COO. These three guys all have, you know, entrepreneurial backgrounds. Mahin had actually started kind of the very first Bitcoin exchange, and it was called buy-sell-bitco.in. And, you know, we actually bought some Bitcoin from him back then, too, so I knew about him, and I knew he was a very solid guy.
00:20:51
Speaker
Same thing because of regulatory hassle and whatever, he kind of like shut down buy some Bitcoin.in and I would say that kind of morphed into Zpay. Zpay ended up through by building a phenomenal product, ended up becoming basically the largest Bitcoin exchange in India during the 2013.
00:21:11
Speaker
15, 16, 17, run up in Bitcoin prices. And had 65% market share, they're doing really, really well. And then all of a sudden, the door got slammed shut with the Reserve Bank of India. And then they tried to go global. They tried to build a global, but it's hard. It was really hard competing against Binance and Coinbase. And the founders kind of decided, hey, listen, if we can't
00:21:37
Speaker
If we can't really operate in India, it's not really worth doing this stuff. And so they kind of wanted it to step down. I was like, well, listen, you guys can step down, but I don't want to quit. I think it's really important that ZEPE stays alive. When did you invest in ZEPE? The first investment happened in 2018. And then in the end of 2019, basically in 2020, Jennifer's 2020 was when I bought the majority stake of ZEPE.
00:22:05
Speaker
Right. And is anything happening in this scenario? I told the family, this is not the time to quit. We should really be doubling down on that. The family office, which is really, we now have a family office called Aon Capital.
00:22:24
Speaker
which is, it's all just family run capital. They didn't want to do the follow on investment exactly, but I believed in it. So I kind of took my own capital and then bought the majority stake. And that was roughly about a year and a half ago. What made you switch from being an investor to an operator, you know, and putting in your personal money into it?
00:22:52
Speaker
What made you want to do that? It's simple. Let's say love of Bitcoin, right? And so I felt see this before I was negotiating this before YZRX had sold out to Binance. I had felt that I'd see what happened with Mt. Gox. Mt. Gox was another Bitcoin exchange, which kind of had a ton of market share and it really kind of hurt the Bitcoin industry when it went down. And I was like, you know what? If Zepi quits,
00:23:17
Speaker
This is bad for the industry, bad for Bitcoin, bad for India. And sometimes you just have to, it's like in times of war, times of uncertainty, a leader just has to step up even though
00:23:34
Speaker
Even though you realize that I'm not probably even the best person for this, but if no one else does this, then we all fall down. And so decided that this is something which I was passionate about and this is something that I wanted to run until the very end.
00:23:49
Speaker
and convinced my wife that this was a thing that we
Leadership at Zepay and Crypto Challenges
00:23:56
Speaker
should do. And it was something that I loved doing. And she luckily believed in me too. And we did it. Decided just to jump into the deep end of the pool. So what was the peak of the value of transactions through the pre-RBI
00:24:17
Speaker
ban coming in or the RBI restrictions coming in? Yeah, sure. We did about $3 billion in volume total. The peak would have been maybe about $30, $40, $50 million a day, maybe about $20, $30 million a day. And like I said, it was massive. The Z-Pay was definitely one of the biggest exchanges in the world at that point. Wow. Okay. Okay.
00:24:41
Speaker
And so, you know, during that, like, like the long winter of crypto, so what did it come down to? And, you know, like, like, tell me about that journey. Sure. So, so exactly. So the RBI decision happened in, let's say, spring of 2018. Zedpe made the strategic decision to kind of expand abroad, but it's very hard. Right. Because we're competing against massive players. You invested pre RBI decision? Post, post, like right after that. Right. We invested roughly July of 2018.
00:25:11
Speaker
Very, very contrarian call. Exactly. I realized that, you know what, we believe in the company, believe in the team, believe in the brand. And we wanted to come, like you said, we want to invest into India and into the blockchain. And so during the crypto winter, it was awful. Like this is Bitcoin had taken from $20,000 down to $3,000. Ether had gone from like, you know, like $400 down to $100. And luckily, because I'd been through a couple of cycles, I realized that this is
00:25:40
Speaker
This is something that we believe in. So I convinced the family. I don't know when it's going to bottom, but as long as we invest over the long run, we'll do fine. And so that's what we did. So we were heavy buyers of Bitcoin and ETH back when everything was falling down. And we're not just Bitcoin and ETH. We made investments in Zepay. The family office also made investments in a company called Brave Browser.
00:26:07
Speaker
It's a kind of, I don't know if you've heard of Brave browser. Yeah, it's a price focused browser. We made investments in Coinbase and a lot of really cool funds. These are like things like Pantera and DCJ, crypto focused, you know, blockchain hedge funds and invested heavily, like, you know, and really made, like I said, blockchain, you know, the other focus year for the family office other than healthcare. And during this path this winter, you know, it wasn't,
00:26:37
Speaker
It wasn't, let's say, it was cold and dark and depressing, but you just had to put one foot ahead of itself and then move forward. Because it was cold, dark and depressing, that's why I think a lot of the old employees and the founders wanted to get out, so there's a lot of people left. I'd say a lot of the best people left.
00:27:00
Speaker
And so but luckily they listen a lot of really really good people phenomenal people stayed on and they believed in the product believe in the company and I was really lucky that to meet these people and then and then when I decided to become CEO
00:27:14
Speaker
Like I said, very lucky these people, you know, believed in the vision, they stuck on board. And, you know, we were 40 employees back when I became CEO, and now we're almost, you know, 200. We're 180 employees now. Right. And so got lucky, focused hard on on, you know, fixing the product, making better and better. And the RBI decision was overturned by the Supreme Court, you know, three months, four months after I became CEO.
00:27:38
Speaker
And then it was full steam ahead. It was just rebuilding brick by brick. The big issue is that we lost to I lead as being the number player by Nance, which it acquired Wise Your Ex, which is a very well-funded company, gave them a lot of capital and also, you know, let's say technical infrastructure on how to scale.
00:27:57
Speaker
And a couple of companies that are out there are also doing well too, but really what we realize is that you know what, we just have to stick to our core principle of what we want to do and we'll do fine. And that really is providing phenomenal service.
00:28:13
Speaker
up the game on the technology and the product, right, and doing it at a very, very low cost. And so that's what we're trying to we're trying to build, you know, build basically the best way you can buy Bitcoin, you know, at the lowest possible price and the best possible service.
00:28:33
Speaker
If you like to hear stories of founders, then we have tons of great stories from entrepreneurs who have built billion dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple podcasts and subscribe to the show.
00:28:54
Speaker
So, like, you know, what has the build up journey been like, like, you know, at the lowest, what kind of monthly transactions were happening? And what is it today? Yeah. Tell me about the company is doing really well is phenomenally profitable. And we actually plan on making these documents public, but like, you know, didn't even raise that much capital, but doing, you know, north of $35 million in revenue,
00:29:21
Speaker
almost like say $20, $25 million in EBITDA before I came on board, right? And this is a business which people were lining up to invest in. Like we had a lot of really famous Silicon Valley venture capital firms wanting to invest in the company. But then
00:29:36
Speaker
Like I said, they backed off once the RBI decision happened. And then really, your question on the revenue number exactly, it basically went to zero. During the time when we invested, it went to nothing. And that's the big reason why we decided, do we want to stay afloat? And Zepi, honestly, other than a week or two, there's a good chance that we just wouldn't have just shut down. So you know what, it's not working. We're gonna turn money to shareholders.
00:30:05
Speaker
And that was, in a sense, the plan. And what I realized is that, you know what? This is when I came on as CEO. I was like, you know, all we have to do is we just have to make enough money to not, like, we just have to survive and not die. Right. Yeah. And that was the goal. The goal for me coming back on board was thriving. It was not thriving. It was just surviving so that we could live to fight another day.
00:30:27
Speaker
But since then, we've come back and we've done over a billion dollars of volume a month. I don't know how much we're doing each day, but we do it, say, between 10 and, on really good days, $50 million in volume per day. I think we're probably the third biggest exchange now. We're number one. I think Wise Your Ex is probably number one.
00:30:48
Speaker
Maybe, you know, I see I'm seeing 26 is at 20 million. We're at 11.2 million, right? So and and what's your X is about 60. Right. So still still doing a ton of buying. But you know, our goal right now is is to, you know, build back more market share, drive the cost of buying crypto down to almost a zero.
00:31:10
Speaker
How would you do that? Yeah, so this is the innovation on the business model. And I've been really figuring out like, how can we build a long-term sustainable business? And the big asterisk here is what we've done now is we have a phenomenal leader named Avinash Shaker, who's a CFO, then became the president, and now he's now the co-CEO.
00:31:29
Speaker
And so, you know, he's still fine-tuned, but there's a core point on how to actually drive the questions here. You kind of need not just capital, you need business model innovation. And my thesis on this is that if we can become like a company which is more mutual focused, right? A company which is in a sense owned by its members. And what I mean by this, you know what a cooperative is, you know, is we want to become more of like a Bitcoin cooperative in the long run. And what my intent is,
00:31:59
Speaker
Because I'm the majority owner of ZEPE right now, I want to figure out somehow creating a trust, which would then give economic benefit of our company back to, not just at the show, but back to our members. And by members, I mean our customers.
00:32:15
Speaker
And there's a lot of complexities here. We're trying to figure out exactly how to do it, but we basically want to somehow have economic, you know, beneficial economic ownership back on the blockchain. And the way you can, like, you know, how do you, how can you, how can you drive the costs of buying something that is yours? It's kind of like this. Imagine if
00:32:35
Speaker
you know, you've heard like, you know, like a cooperative bank. What a cooperative bank works is that, you know, the actual people who are doing the deposits, they're the owners, right? So their cost of funds is lower. So at the end of the year, if we can basically take half of the money that we're making and give rebates back to customers, right? I envision that we can be a way, way, way low cost provider. The other way you can do stuff is this, is that you can make the trading fee zero,
00:33:02
Speaker
And you can also move some of the income into
Explaining DeFi and Crypto Security
00:33:07
Speaker
DeFi. You help people get money through decentralized financial products. DeFi is really cool because you have things called liquidity mining. People are probably wondering what that is. It's a way of adding capital onto the blockchain and you're basically getting paid because your money is tied up into a smart contract versus being tied up in cold storage. I don't know. Are you familiar with the word cold storage and what it is?
00:33:30
Speaker
No, there's a lot of stuff which you'll have to break down and simplify. Yeah, sure. Really, when you own something like Bitcoin, you kind of own it in like three different ways. You can own it, let's say, in cold storage, which is really, you've figured a way to own the private keys. This is like your password to your Bitcoin.
00:33:51
Speaker
in a secure manner, which is not really ever touched the internet. It's very hard for someone a hacker to get access to these because they're not, these keys are not directly connected to the internet. Like they're, they're in some, it's a seed key connected offline in a sense. Right. The other way you can do it is called storage.
00:34:09
Speaker
Okay, the other thing you can do is you can keep your your your Bitcoin in a centralized provider someone like something like a Z pay a Z pay or Coinbase or a block 5 and what we do is we then keep a good bit in cold storage. We keep some in warm wallets, hot wallets. We also lend some out to other customers, right? And the benefit of this is it if you lose your password, you can come back to us. The also benefit is we can we pay interest to it. So we have a really great, you know service called earn and land and you can make interest off of your crypto, right?
00:34:39
Speaker
Okay. And then the last thing you can do is if you want to, you can keep probably your crypto on a decentralized type of wallet. Imagine like a Brave browser. You can use a crypto wallet on Brave. You can use a crypto wallet like on MetaMask. You can use a
00:34:57
Speaker
a third party wallet, a decentralized wallet. There's a bunch of these, right? And so these type of wallets are also a bit, but you shouldn't really put a ton of money here. You should probably use more, this is more like, you know, this is the type of money you'd actually have in a real wallet, like, you know, a few hundred bucks at maximum.
00:35:15
Speaker
right? You shouldn't keep a ton of money in there. The most amount of money is you actually keep in more, in a vault or in a storage, right? So what Zepay is, yeah, go ahead. I still didn't get, what is a decentralized wallet? Yeah, a decentralized wallet would be like, see, you can actually put a wallet into your browser, right? Okay. And what this means is,
00:35:37
Speaker
And this is what Brave is. Brave has a crypto wall built into the browser. So when you're browsing, literally you're on like, let's say, a publisher and there's a paywall there. You click a button. The Bitcoin doesn't really live in your wall, but it's a simple password you put in and it's kind of built into your browser.
00:35:59
Speaker
And this is like a decentralized wallet. It's connected to, in a sense, the Bitcoin, but it's not as secure as what a cold storage wallet would be.
00:36:13
Speaker
So these are the three ways in which you can own Bitcoin. And you also spoke about DeFi, decentralized finance. What exactly is that? Can you break that down also? DeFi is fascinating to me. So it stands for decentralized finance. And let's say it's the opposite of centralized finance. And centralized finance is, I'd say, the current system we have right now. It's a current system which is widely used. There's central banks.
00:36:41
Speaker
They work with large, let's say blue chip retail banks, and any of these things like ICICI, HDFC, things like that. And they also have smaller regional banks as well, but like I said, the biggest banks have the best relationship with the central bank.
00:36:59
Speaker
It works in a lot of different countries, right? And so what DeFi works is you don't need decent finance, you don't need a counterparty to do actually financial activities. And so when you go to a bank right now, you go to a bank, you give them your rupees.
00:37:14
Speaker
you give them your dollars and they will then take that, they use their own capital. They'll then meet someone who wants to alone a house and they will underwrite a loan and say, listen, you give me the title of your house and I'll give you a 50% loan to value. Your house costs one core. You have 50 likes down. I'll give you a loan for 50 likes. And if you don't pay me, I'm going to foreclose on your house.
00:37:35
Speaker
In the same way, the way DeFi works is you have one Ether or one Bitcoin, right? And imagine it's one Bitcoin and you can actually go into a smart contract and you can lock up your Bitcoin into a smart contract and say, my Bitcoin is now worth $40,000.
00:37:49
Speaker
This this smart contract will then loan you 50% loan to value. They'll own you $20,000 and But the price of Bitcoin can fluctuate right? So the price of Bitcoin goes up great It goes to $100,000 and you're still well clouded with the price of Bitcoin drops Down to 30,000 bucks you have to give in another $10,000 of Bitcoin or what the smart contract will do is it will just liquidate $5,000 your Bitcoin
00:38:18
Speaker
Right. And now, so now what happens, your loan to value is better. Right. And it's just auto executes. It's pretty cool. Like, you know, someone can come in and bid on your Bitcoin. And so what the way and DeFi is pretty phenomenal because now there's there's I mean, there's there's like, you know, $50 billion in DeFi. It's more than that. There's this massive amounts of of a capital in DeFi. And most of it is happening on on Ethereum.
00:38:45
Speaker
But there's other chains, we're doing a lot of really cool stuff. And this is really where I say I think the world's going, the world's moving into a DeFi world. Okay, so how does this tie into your business model innovation at that pitch? Sure, sure.
00:39:03
Speaker
Yeah, so that's exactly it. So what I envision happening is DeFi is complex. It's kind of hard to understand and people want a lot of hand-holding, right? And so what I think ZEPE is doing is our goal is because we are in many ways a fiat on-ramp. We're helping people get into crypto using, let's say, traditional fiat rails.
Global Expansion Plans for Zepay
00:39:28
Speaker
We want to help, we want to make DeFi easy, right? And so we're working on a lot of different really cool things like that. Like, for example, you know, most people want DeFi type returns. DeFi can give you great, great returns, right? But they don't, they don't know how to use a smart condor. They don't know how to use a wallet. So we want to be able to come in and you just put your money in. Z-Pay and Z-Pay will do all the complex stuff for you and you'll get a good return. We'll just, we'll give you the, we'll give you the interest rates you could be getting on DeFi. I envision something like that. Like our goal is to make it really easy and simple for people. Hmm. Hmm. Okay.
00:39:56
Speaker
How far along are you in that product journey? We have two major products right now. One is called Zebpay, which is our main flagship product. The other product is called Zeb.com, which is essentially a transaction platform. You can buy, sell, and store crypto on the Zebpay platform. The other product is called Zeb.com.
00:40:17
Speaker
It's really like a simple version, like a much easier version to buy this stuff. And we already have a new product right now where you can get interested. And that's what a large part of things right now is being put into DeFi, right? And eventual app is you'll be able to borrow and lend from Zepay, but even the fundings can actually come from the DeFi protocols, not from customers themselves. So you'll be able to come in, deposit some Bitcoin,
00:40:42
Speaker
If you have one Bitcoin, you need some money to go pay a student loan or pay for your daughter's wedding. You can just borrow money on your Bitcoin and pay interest off it. It's actually live today, but like I said, we're constantly making the UI and UX easier and better. We brought on phenomenal new tech team that we're upping our game on all these things.
00:41:11
Speaker
Like, you know, what is the, I mean, are you targeting Indian customers only for this? Or is this like a global product? Yes, we're definitely a global, we won the few exchanges which does have a global, global presence. We're probably 80, 90% in India, right? And we're definitely, we're definitely targeting India is where we want to, we want to win and dominate, right? But in the longer run, you know,
00:41:39
Speaker
The blockchain and crypto is a global phenomenon. So what I envision happening is that we become a dominant brand within the South Asian framework for decentralized financial services. So it's easy for anyone who
00:41:58
Speaker
Our mission, we talk about this, is financial freedom. We want to figure out how we're fighting for financial freedom, and we think the best way is through blockchain, and specifically in India. So we want to win in India, but like I said, I do envision in the long run, the next couple of decades, is we probably have a South Asian bent, but we are working globally in places like the United States and Canada and the UK.
00:42:19
Speaker
Right now, we're in Singapore, Australia, and India. Those are our core markets. But we envision expanding. That's where we're legally measured. You can actually buy crypto in pretty much every place other than in America on crypto-crypto pairs. But we envision actually having crypto fiat, where you'll be able to buy Bitcoin for dollars or Canadian dollars pretty soon, in the next year or so. Okay.
00:42:43
Speaker
How did you do the build-up again? You told me that the team went down to a pretty small number and now you're back to about 200 people. So tell me about what all things you did once you took charge of that thing. Sure, sure. That was the hard part. Back during the crypto winter, convincing people that the spring and summer is coming is hard because it's totally dark.
00:43:14
Speaker
Should we just step by step? So luckily, a lot of people believed in the company, believed in the team, believed maybe in me as a leader. And convinced like you say four or five people to come join with us, they mostly stuck with the company. And really at that point, it's just step by step. It's just
00:43:32
Speaker
Like I said, stopping and bleeding, making sure we're not losing money. Once we'd stabilized, then just brick by brick and phenomenal person by person going out and recruiting people and saying, hey, this is what we're trying to build. We're trying to win. We want to build for the long run. Can you help us do it? Luckily, the team, it's amazing. It's getting better and better literally
00:43:53
Speaker
each day, right? We have phenomenal people who spread around the world. There's people in Australia, in Canada, in Europe, in America, in India, in Singapore. We have really great people spread all over. And just amazed at our team. In fact, the word we use within ZEPE is this idea of ohana. And ohana is a Hawaiian word for family.
00:44:20
Speaker
And even though I guess we're corporate informed, we're trying to manage, we operate with an Ohana framework. And the idea there is, we want win-win-win for all stakeholders. And I look at this as like, there's three major stakeholders for, let's say, in most, let's say, company type frameworks. There's the shareholders, there's the employees, and then there's the customers.
00:44:47
Speaker
And usually in most companies, they're kind of, hey, listen, your job is to create and keep a customer, but in the end, you're trying to drive shareholder value. Our ethos is a little bit different. What we want to do is we want to kind of
00:45:03
Speaker
have win-win-win where we kind of treat them all equally. We all treat everyone like a family. So our framework is if you treat customers, employees, and shareholders like family, like with a kind of this ohana ethos, and you actually get incentives and you get economics in place, this is where you can get win-win-win type frameworks. And what I mean by that is, so right now, customers
00:45:28
Speaker
You know, they want what's best for them, which is understandable. They want the highest quality product, highest service at the lowest price, right? Same thing with employees. Employees want a great work environment. They want to get paid well.
00:45:44
Speaker
a really, really great co-workers with happy people with kindness. And shareholders, same thing, shareholders do want, shareholders want to invest in companies which have great, you know, emissions and stuff like that. And so if we believe we can connect all three of these things, we can get honestly like, you know, a inflection point in growth. So now what, this is what Bitcoin has done, like Bitcoin,
00:46:11
Speaker
It hasn't really raised any venture capital, right? It's been able to become a trillion dollar asset because they've done a great job of connecting kind of product market fit. And I actually remind a lot of the ZEPE team is that don't look at ZEPE as being a company. Look at us as being an extension of Bitcoin and Ether. Our job, our ethos is that we're trying to blockchain the world through financial freedom.
00:46:35
Speaker
And what this means is if we make Bitcoin and Ether, if we make these amazing technologies widespread, we're able to spread them all over India, it's a win-win-win. And so that's what I envision happening over the next couple of years is that Bitcoin and Ether hodlers, people who hold this stuff, they automatically get economic benefit in what Zepay does. And so if you believe in Bitcoin and Ether, then you're going to believe in Zepay because Zepay is going to basically give you kind of extra returns back to you.
00:47:05
Speaker
So right now Bitcoin is pretty much like a rich man's plaything in India. Maybe it's not the case in the US, but here it's like people who have some money to burn are the kind of people who invest in Bitcoin because it's high risk and it is an unknown
00:47:28
Speaker
Like it's a
Bitcoin as a Premier Investment Opportunity
00:47:29
Speaker
mystery right now. It's considered high risk. One big thing which I'll really clear up is that a lot of people think that when you buy Bitcoin, you have to buy one single Bitcoin. Did you know that? You can buy actually a fraction of a Bitcoin. I don't know if you knew that or not. Yes, right. And I would say many people think that it is
00:47:49
Speaker
You know, it's already run away, right? It's already, it's already, it's only for rich people. The fallacy in that, and that's what I'm saying, that process is it, remember how like I told you, when I bought a Bitcoin about a hundred bucks? It had already gone up 10 times, right?
00:48:04
Speaker
My, and you know, the legal team or the compliance team is like, you know, everyone's talking about, you know, where's Bitcoin going? Is it undervalued or overvalued? I don't know if it's undervalued or overvalued, but I do know this. It's undervalued for the long run, meaning that Bitcoin price is going up. It has been in the past and I'm pretty sure it will in the future. The reason why is the supply is limited and the demand is going up. And so, I think Bitcoin
00:48:31
Speaker
is gonna go from $40,000 to $400,000. When? I don't know. It might be one year, it might be, you know, five years. But the thing is, it has a much higher chance of increasing in value than the rupee does, or the dollar does, or even real estate, right? So, let's say, you know, your current investments right now, you might be buying, you know, some sort of equity stock, say Apple stock, or you might be buying some piece of real estate. It's hard for Apple to go up 10 times in value. Apple's already
00:48:58
Speaker
a pretty big asset, right? Right. So if you look at the risk reward of what Bitcoin offers, right, it's still massive, right? Meaning that Bitcoin is a brand.
00:49:10
Speaker
is very likely to be the most valuable brand in the world. And people are like, what do you mean? Yeah. So I'm going to say, just a pop quiz, right? So what do you think the most valuable brands in the world are right now? What are the biggest brands? Has lots of brand value? Google, Microsoft, Apple. Yeah. Right? So that's exactly it. Google, Microsoft, Apple, Facebook.
00:49:33
Speaker
What are the biggest brands? Most people now have heard of Bitcoin. It's pretty amazing. Bitcoin as a brand is kind of like what Google was in 2005. People had heard of Google. They didn't really know what it was. Facebook in 2008, 2009, they knew what social network was, but they weren't really using it. Bitcoin is the exact same way. People heard of Bitcoin.
00:49:54
Speaker
They think it's expensive, but man, their brand value is just going to grow. As the price goes up, as more people are using it. And say anything with Ether, you've probably heard of Ethereum, right? Yeah. But then, other than those two, to show you about brand value, what are the other coins or cryptocurrencies that you've heard of? The ones that Elon Musk talks about. Yeah. Dogecoin, right? Yeah. Dogecoin, yeah. Have you heard of any other ones? No, no.
00:50:23
Speaker
Right. And it's really interesting. The reason why you're exactly right is that people don't care about the fifth or 10th or 100th coin. Right. And that's why Bitcoin will continue to accrue value because people want high reward plus also safety. And that's what Bitcoin offers. Bitcoin offers really good growth. But because it is a blue chip company, it's a blue chip asset, it won't go down as much anymore. But
00:50:51
Speaker
In a way, couldn't you say it's a collective shared delusion? I mean, see, owning Apple is owning a revenue stream. Apple makes products, sells those products profitably, you know, but what are you owning when you're owning Bitcoin other than like a shared
00:51:16
Speaker
You make a very, very good point, right? So Apple, when you own Apple, you own a share of Apple, and Apple is a company which sells products and services, right? But it is that, but it really is just a brand, meaning you're only buying an Apple product or service because you believe in it, right? It's like Nike. You're only buying a Nike shoe because you believe in it.
00:51:39
Speaker
Right now, it was saying a Bitcoin to see Bitcoin is not it doesn't sell iPhones or shoes, but you got to visit Bitcoin's a brand it stands for like financial freedom. So what you're buying when you buy a Bitcoin is this see see when you own one Bitcoin right now, you can do two things your Bitcoin you consider Bitcoin just put in cold storage, but or you can actually lend it out right now.
00:52:01
Speaker
Right. And so imagine you own one Bitcoin. It costs $40,000. It was literally on Zetto right now. I think you can get 2%. It's like 1% or 2%. So in some places you can get 2% per month or like a year. And now you're saying, oh, that's awful. It's not great because I can get 10% on my rupees. Right.
00:52:21
Speaker
The nuance is you can get 10% of rupees, but your rupee is going to depreciate against the Bitcoin, right? And so what Bitcoin gives you, it actually can give you interest in, and if you want to keep that interest in rupees, keep it in rupees. If you want to keep it in Bitcoin, keep it in Bitcoin. So with Apple right now, Apple will give you dividends. And same thing, Apple will give you like 100%. So I'm saying is the actual, the income you get from your Apple stock is actually less than the income you get from your Bitcoin.
00:52:51
Speaker
Right. So you actually can get money off your Bitcoin if you choose to. Right. It's not people who.
00:53:02
Speaker
I mean, how do you pay interest on Bitcoin? Who's borrowing it? And why do they borrow it? Yeah, sure. So there's a lot of people that borrow it. They borrow it because they want to basically short it. One, they want to hedge against it. Or the other thing is people are providing us collateral to do the loan. For example, like I said, you could borrow dollars using your Bitcoin.
00:53:28
Speaker
Just like some people want to borrow Bitcoin and then use it for buying more crypto or buying more ether or selling against something. So there's a lot of different people. There's a lot of different use cases. There's tons of them. OK. OK. And hasn't RBI again tightened the screws? I believe that.
00:53:51
Speaker
No, I would say we're still operating. Most banks are pretty open. It's really, honestly, a bit of a musical chair.
00:54:08
Speaker
Tell me, what is the mandate from RBI? What is it that they're... It's fully legal. Bitcoin's totally legal. You can buy it. It's still, in a sense, in limbo that there's no clear regulations on. It's considered a digital asset. They're not recommending it or not recommending it.
00:54:27
Speaker
But the core point is it's not illegal. RBI is doing it. And how is RBI discouraging it? They're telling banks not to allow people. No. No. I see. RBI is not discouraging. They're not promoting it. Right. And so some banks still believe that the circular is valid. Luckily, they cleared this up a few months ago.
00:54:50
Speaker
The circular has been struck down by the Supreme Court. Bitcoin is legal. What did that circular say? The original circular was that Bitcoin is, in a sense, highly speculative. We don't condone it. So we're going to cut off banking services to all Bitcoin and crypto businesses. But then the Supreme Court overturned that. It's too restrictive.
00:55:16
Speaker
And since that time, we have some good banking relationships. A lot of banks do accept it. A lot of banks are taking it now, right? But I say it can change the limit. Luckily, we've been around for seven years and a long time. We are a blue chip, say crypto financial services firm. So banks love working with us and we're always opening doors. We're always talking to new banks and we give them, they're great partners for us and we're great partners for them.
00:55:47
Speaker
So if I was to want to invest on crypto through Zepay, then I would just be able to use my debit card.
00:55:57
Speaker
Do the transaction. Exactly. You log in, you do your KYC, you connect your bank account and you just buy Bitcoin. Simple. You just log in and you just come in and you can buy some. In fact, what we recommend is basically dollar cost averaging. It's buying small amounts of Bitcoin over the long run. In fact, that's what I do. I actually, every single day I buy a little bit of Ether. And if you do this strategy, the thing I remind people is that
00:56:24
Speaker
You know, people are like, oh wow, Rahul, you knew about Bitcoin back when it was $10. Yeah, I did. And I did nothing about it for the first year, right? Right. Imagine if I'd put in like $1 per day back then. That's it. So $1 per day. And the same thing happens now. If you put in $1 per day and do it over the long run, you're going to get phenomenal, phenomenal returns. And that's what we recommend. And that's, in fact, that's what Zeb, our new app, is doing, right? And this can be automated. I can just give a mandate and
00:56:54
Speaker
it will just debit whatever X rupees. We have a thousand people that are doing this right now, and it's growing every single day. We recommend dollar cost averaging over the long run. And if you do this, I believe this promotes financial freedom in the world. And how are you going to make it more ubiquitous in India, more accessible to
00:57:23
Speaker
people beyond just, say, tier one city folks, you know, like, like, say, maybe the top 1% of India currently would be either investing or considering investing in Bitcoin. How do you go to the next 10% or, you know, the next
00:57:40
Speaker
30% like you know that burn has millions of users and so but yeah, we want hundred million users, right? It really is education, right? We're educating people that hey listen if you want to save for your your kids and grandkids and financial freedom Is it this is one of the best asset classes in the world?
00:57:58
Speaker
It absolutely positively is. And you should have some exposure. You should buy it a little bit. And if we educate people by getting really good influencers and really educated, say, financial advisors, that's how we do it. And so I think what's going to happen over the next couple of decades, people will not just own gold, not just own stocks, not just own real estate. Bitcoin is going to be one of the center
00:58:25
Speaker
you know, central points of a really well diversified, you know, financial, you know, it's a person's net worth. So what is your customer acquisition strategy like?
00:58:41
Speaker
Do you do like, you know, paid ads or do you do social media or like, you know? Yeah, it's all developed and it's a mix of, let's say, you know, paid media, you know, SEO, you know, advertising, you know, the other thing is referral marketing, you know, really upping the game on getting people to refer, you know, more of their friends and family to join. And it's good, you know, we're adding good.
00:59:08
Speaker
What is the strategy there? What is your reference plan? The main thing is people get 50% of the fees of anyone there for a certain amount of time.
00:59:25
Speaker
What we want to do ideally is not just pay a dollar a month, but also give us a ... Like I said, my goal is driving the cost down to zero. We're still working with the team on this, but we're trying to figure out ways of maybe adding in some sort of token with economics, which benefits the more people you refer.
00:59:46
Speaker
the more benefits you get. And we haven't figured this out yet, but it would be something like that. Imagine that if you refer 10 people, then you get much better deals and much better rebates. Got it. So what is the cost of transacting? You want to drive it down to zero. What is it that it costs you? And there would be some cost
01:00:12
Speaker
for you also, and what is it that it costs to the customer? Yeah, exactly. So luckily we're an open order book exchange. So what this means is that we don't buy and sell ourselves, we just help individuals buy and sell with each other, right? And so we charge about roughly 10 basis points, 10 to 15 basis points. It depends upon maybe 10 to 20 basis points on the maker versus taking meaning that whether you
01:00:42
Speaker
you're the one that hit the bid or ask me whether you actually, you can say I want to sell Bitcoin for $40,000 while the price is $41,000, right? And what will end up happening here is someone has to come and buy it from me. So that's what like a taker fee or a maker fee is. So we charge fees there. And the other thing we do, we do charge membership fees. The goal of this long term is we're trying to build a premium product where we have phenomenal benefits for our members, right?
01:01:10
Speaker
And there's also network fees. See, whenever you send Bitcoin on a network, you do pay a fee to the network. So we put a limit on there because we have wallet costs and infrastructure costs. But like I said, my long term goal is to be one of the highest quality exchanges at the lowest possible cost. So we actually compare ourselves to what the large exchanges do and we're constantly trying to drive costs down every single day.
01:01:36
Speaker
What is the network fee? Like how many Bitcoin? Yeah, so that kind of depends upon like each network is different. But so let's say like, you know, sending like, you know, one Bitcoin on the Bitcoin network might cost like say 0.0004 and then we'll charge 0.0006. Like we'll charge a bit more than that. Because we have to do all the accounting and mechanism and actually do the send fee, things like that. That fee actually goes to the Bitcoin miners. We don't keep most of that. Yeah.
01:02:04
Speaker
Right, right, right. Okay, okay. And so what if you were to become like a zero brokerage? Like a zero though. Yeah, like zero though. The idea is that in the longer run, we can eventually drive, I really do think we can drive the cost down to zero, right? And so my anticipation is that it might take, you know,
01:02:32
Speaker
one or two or three years, but once you're at scale, because, you know, this really is just a marketplace, you can make, you can, as you survive, you can get enough people coming on board, the cost can be almost nothing.
01:02:47
Speaker
And that's what we want to do. Because India is not a super wealthy country, right? We need to lower the cost as much as possible to make it widespread. So what stops you from doing that today and just finding investors to fund it? Yeah, I mean, that's the thing. We could go, that's the whole thing. Any investor who comes in is going to say, you can do this, but then they want an investment return.
01:03:15
Speaker
Like I said, if we're driving costs down to zero, how do we return the money back to investors? We're trying to balance both growth, high quality, high service, and also getting a ton of customers.
01:03:35
Speaker
And so it is a delicate battle. And we're thinking about that. We're actually trying to figure out whether do we want to raise capital? Do we want to go to our own? And we haven't this idea for sure.
01:03:47
Speaker
If you were to raise capital, what kind of valuation would you be seeking? Sure. I mean, you see a lot of this stuff now that, you know, it says, I think, coin switch raised about $200,000 at a Feynman R valuation. Sounds like coin D6 did, too. Suppose the coin D6 is raising capital in your billion dollar valuation. You know, I would say I think ZEP is worth around, you know,
01:04:08
Speaker
500 million to a billion dollars, right? So we're profitable, we're making money, we're growing, we don't need the capital. And so we're open, we're constantly talk with people, but I said like, because we don't need the capital, we haven't been actively thinking about it. Yeah. Okay. So like, you know, what do you think that they will be like, say 10 years from now? Yeah.
01:04:35
Speaker
So that's the main thing is that I envision us moving more into becoming DAO-like. And what I mean, DAO stands for Decentralized Autonomous Organizations. And what the heck does that even mean? I look at them, imagine the way Bitcoin is digital gold, a DAO is like a digital company.
Future of DAOs and Decentralized Innovation
01:04:57
Speaker
And what does that mean? So right now, a company has shares, has shareholders, customers, employees, they're legal structures.
01:05:03
Speaker
In the longer run, there's a really cool de-centered app called Uniswap. Uniswap is basically a DAO. And what I envision is, over the long run, ZEPE becomes more like a DAO.
01:05:21
Speaker
How would making Zephyr DAO benefit Rahul? Would you have a lot of coins after DAO then and therefore that's how it would benefit you? You are no longer a CEO then, right? I mean, there is no such thing as a CEO for a DAO.
01:05:39
Speaker
like a founder. Yup, exactly. In many ways, becoming a DAO, you have to be a little bit selfless. So I would say Bitcoin is a little bit like this. Bitcoin is a DAO. Satoshi Nakamoto, if he kept all the coins in Bitcoin, he'd be even more rich than he is now, but he isn't that rich because he kind of gave it away. And so if we become a DAO, in a sense, I'm giving up a lot of stuff. I'd be giving up a lot of equity and economic value. But the benefit here is by giving the value back to the customer and back to the consumers, right?
01:06:07
Speaker
The members win, right? And the members can decide there's no CEO, but there's a group of people who are running it. And if there's maybe a group like seven people or a group of 12 people, you don't need tons. And then it's more open source. If any innovation happens, it's happening through an open source framework, right?
01:06:30
Speaker
And if you go look at something, a really cool idea is if you look at this, these are things that are kind of like, let's say, if you go look at a browser, a browser is open source. If you go look at innovation happening,
01:06:44
Speaker
There's a lot of Wikipedia. Wikipedia is like an open source encyclopedia, right? See, you could eventually imagine making Wikipedia into a DAO, and then you know what? You have a premium version of Wikipedia which costs a bit extra but has, I don't know, some higher quality content.
01:07:00
Speaker
See, you could actually, you can design Wikipedia into a DAO, right? And I'm not saying it's a good idea or not, but the point there is that in the future, new business models and new organizations will organize around token economics and DAOs and then being venture capital back in corporations. Okay, that's like a pretty interesting vision of the future.
01:07:28
Speaker
I mean, you envision that, you know, like for the last 20 or so years, I believe that, I mean, most studies say that inequality is rising, you know, the top 1% is getting richer and the bottom 50% is getting poorer. But something like what you are envisioning as a decentralized kind of a future, would that like reverse the trend?
01:07:55
Speaker
Yeah, that's I would say a big part of say my personal belief, right? So I think I always use this quote says a lot is it see, you know, in my own personal mission, you know, my goal is to make you know, rich people more rich, which you're talking about, you know, if you're looking at Bitcoin, you're worried about that the riches getting richer. It's automate poor people not poor.
01:08:15
Speaker
And that doesn't mean poor people become rich. It just means if you can help people out of poverty, the world will be a vastly better place in helping rich people just have a ton more capital. And I think systems like this help solve that, right? Imagine Facebook is owned by the Facebook users. Imagine Twitter is owned by the Twitter users. Imagine you told me Google.
01:08:39
Speaker
Google is massive. In fact, one of our portfolio companies, Brave Browser, really, really cool company. It's got 35 million monthly active users, 13 million daily active users, amazing company. They are growing really, really fast, really because they're giving a lot of economics back to
01:08:59
Speaker
They're users. You should actually go to brave.com, download the browser. You'll see some really, really cool stuff. The more you use Brave, they have a really cool token called BAT, the Basic Attention Token.
01:09:15
Speaker
The more tokens you make, you basically make money. How do I do that? It's because... Right. Yeah. So you can actually monetize your attention. Yep. Wow. That's amazing. And listen, I've made $300, $400, $500 just for free browsing on Brave. Right? And you can too. Go to Brave, download it. And if you want to, you can keep it in bat tokens. Or if you want, you can convert it to rupees. Come to Zepay, convert that back to rupees if you want.
01:09:41
Speaker
Well, okay. That's amazing. There's four million people in India who are doing this right now. Say somebody who's earning a couple of lakhs a year, which means, let's say, he takes home 20,000, 30,000 a month and he's saving, let's say, 3,000 a month, would you recommend to someone like that to also
01:10:23
Speaker
But other than that, I think Bitcoin, Ether, BAT, these tokens are going to be some of the best performing assets in the world over the next several decades. It'll be almost impossible for any other asset to do as well. It's just because it comes down to supply and demand. It comes down to trends. It comes down to technology. But based upon a mix of all the above,
01:10:29
Speaker
take advantage of crypto.
01:10:52
Speaker
Bitcoin, Ether, these tokens are some of the most important innovations of our lifetime. This would be as liquid as investing in, say, a mutual fund or something. Oh, it's better. It's more liquid. More liquid. It's 24 hours, 7 days a week liquidity.
01:11:11
Speaker
And if they ever go abroad, they don't have to wait. If they're in Singapore, they're in Sri Lanka. They can convert it into whatever they want and then convert it back into that local currency. They can use it directly. I envision 10 years from now, you'll be able to use your Bitcoin to pay for a hotel in Sri Lanka. So these investment companies like Zero Time grow.
01:11:38
Speaker
If they start offering the same kind of product of, you know, like inventing in Bitcoin, then...
01:11:45
Speaker
So wouldn't that be like a pretty adverse event for companies like Zepay? Yeah, I think yes and no. Yes, in a sense, it's a new competitor. But no, in a sense, I think the more the merrier, to be honest. See, as Bitcoin becomes more widespread, the price goes up. And you want a ton of people taking this stuff. We do. Zepay itself is a large Bitcoin holder. We own Bitcoin on our balance sheet. We love it. We think other companies should own Bitcoin on their balance sheet.
01:12:12
Speaker
Right? And so, you know, zero doc should move in, you know, PayPal is already in the space, like, you know, grow, grow, be moving in. This is not a company that we're actually talking about partnering with a company called vested financial. Have you heard of them? Vested really cool company, they help help people in India buy US stocks.
01:12:33
Speaker
Right. Okay. Right. Right. Right. Yeah. Yep. Yep. And so if you want to buy Apple or Tesla, you can go through them. I think slowly over time, like a lot of, let's say FinTech companies will allow Bitcoin and that's, I think that's a good as a win forever.
01:12:50
Speaker
And are you also planning to offer NFTs on ZEPT? Yeah, so we were actually one of the very first people studying stuff. We haven't announced it yet, but I'll go and give you a preview now. We're working at a really cool company called YAT. And YAT, it's actually phenomenal. They've designed, if you go to Y.AT, YAT, or if you Google YAT emoji, what YATs have done is
01:13:14
Speaker
they've made these really cool emoji usernames. And to me, what an NFT, really cool idea for people who don't know, it's called, it's a non-fungible token. The idea behind this is that you can basically give a token value to almost anything, both a physical world asset, but also a scarce digital asset, right? And people probably heard, oh, someone's making an image and it's selling for millions of dollars. Images are just one thing. You can do this with, let's say, an MP3 with a video file with a, even a piece of software.
01:13:43
Speaker
Right. Or like Jack Dorsey's first tweet or something like that. Exactly. What yachts have done is they basically made an NFT out of emojis. So you can basically own an emoji. For example, you could own like, you could own I, if you go to my Twitter profile, you'll see that I own Apple, Apple, Apple. So three apples in a row. Okay.
01:14:00
Speaker
And you'll be able to type in Apple, Apple, Apple, for example, into the Brave browser. What it'll do, it'll go to my page. It's like a mix of a domain name, a crypto address, or an email address. And all these things will resolve in the backend. And what's amazing is they've sold tens of thousands of these things, tons of them.
01:14:23
Speaker
to tens of thousands of different people. We're going to partner with them. We're actually launching a zebra token. We're really excited about this. This is a zebra emoji. The idea behind the zebra token is the more zebras you have, the more value you're going to get. Actually, I'd love for you to test it out, man. The idea here is that if we can build an NFT with some unique utility value to it, there's a lot of cool things. Example, you have
01:14:53
Speaker
zebra heart zebra heart zebra like a five-letter emoji username with you know with your altering zebras and hearts this would be this would be like your ID now like they someone could I could send you Bitcoin to zebra heart zebra heart right and
01:15:08
Speaker
It can be Bitcoin, Ether, whatever. But what's also cool is you could actually make that your username and it's censorship resistant. So in the long run, I think people will eventually make, you know, this would be this would be like a really cool way for sell for online identity.
01:15:28
Speaker
And Zephie is actually one of the launch customers for this thing called YAT, where we plan on integrating it into our NFT platform and allowing users, we want to allow our users to buy high quality NFTs like this. So can you have a fractional ownership of NFTs also? Like say a digital art which got sold through NFT, can there be fractional ownership of that? Yeah. That is also like same as Bitcoin only, right? Yeah, absolutely. It's like a blockchain,
01:15:55
Speaker
Contract. Okay, for example, you know There's really famous little crypto punks. They're actually probably some of the most famous entities that are out there You can you can kind of since wrap them up and you can fractionalize them So a normal crypto punk costs now, I'm not caught $40,000 dollars, right? Just like a Bitcoin see You technically get you can take the only own one full crypto punk But the cool thing about fractionalization is you can own like a piece of it and that's what's happening People are buying pieces of art in a sense
01:16:26
Speaker
And so do you plan to make this available also? Yeah, so we're working with a really cool team right now. We're incubating a team to figure out how we can help artists, creators, and all the above move into this space. If there's one takeaway from this conversation, then it's this. Don't wait to invest in cryptocurrency. Head on to zeppay.com and start investing now.
01:16:56
Speaker
If you like the Founder Thesis Podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit thebotium.in i.e. t-h-e-p-o-d-i-u-n.in
01:17:12
Speaker
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