Bitcoin and Entrepreneurship with Joe Kelly

0:02Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on fire brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Latinx in power. Today, we'll be breaking down Bitcoin and entrepreneurship. To drop these value bombs, I brought to Joe Kelly in the EO Fire Studios. Joe is a co-founder and CEO of Unchained, a pioneering financial services company specializing in Bitcoin custody and lending solutions. Joe is passionate about technology and its ability to drive societal change. His entrepreneurial spirit drives him to continuously explore new ideas and solutions within the Bitcoin space.

0:40In today's foundation, we'll talk about what is Bitcoin, how it's different from other cryptocurrencies, the case for Bitcoin, and oh, so much more. And a big thank you for sponsoring today's episode goes to Joe and our sponsors. The Next Wave, your chief AI officer, hosted by Matt Wolf and Nathan Lands, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Matt and Nathan are leading AI creators in your guiding light in the AI and technology frontier. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business.

1:19Listen to The Next Wave wherever you get your podcasts. Are you looking to start or grow a successful business? Attend the world's highest rated and most reviewed business growth workshop taught personally by Clay Clark and football great Tim Tebow at thrivetimeshow.com slash EO fire. Again, request life-changing tickets today at thrivetimeshow.com slash EO fire. Joe, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, John and Fire people? Great to be here. I, yeah, something most people disagree with. I think something controversial is about, you know, what has to be hard about achieving success or achieving things that look like success.

2:08I think a lot of us drive ourselves with like a manic energy and, you know, you have to do this, must do that. And I think I've been trying to over the last several years kind of adopt more of a mindset. It doesn't have to be that way. You can still kind of maybe get to the same destination, but more efficiently if you could just find joy in it and not find, you know, the hard hustle, you know, pushy kind of grindy type of fuel. So I've been really trying to remix my fuel personally. And I think there's a lot of grind culture out there, hustle culture out there. And so I think it's worth kind of holding up that with the lens and, you know, asking oneself, like, if that's really for you and, you know, if there's other ways up the mountain.

2:45And Fire Nation, it's a great start to a conversation today that's going to be all about Bitcoin and entrepreneurship. Now, Joe, listen, we've talked about Bitcoin a little bit on the show before. We've talked about blockchain in the greater world of cryptocurrency. But let's get your direct response to the question of what exactly is Bitcoin? How would you explain it to somebody who you recently met who's just wondering, what the heck is this thing? A lot of ways into this, Bitcoin is money. And then to explain money to people, then a lot of people grew up with different impressions or different, you know, sights on money.

3:27Some people believe gold is money. And I've liked this quip too of like gold has the purpose now of just being what is useful to explain Bitcoin to boomers. It's like gold just on the internet. And that's fair. I think a lot of the ways people kind of claim gold or gold as a money-like commodity or thing then can translate here in the Bitcoin world. And yeah, it's internet money. It's internet gold. It's digital scarcity, something that we never really had and has decimated industries like the record industry and a lot of media-based models. So, yeah, it's a revolutionary money that does require some technology to make it work.

4:13And it's hypermodern. It's only around and exists because of so much of the modern things we take advantage of, that cryptography, the internet, networked computers, and mining machines, building the hardware that actually mines the Bitcoin. It's all made possible through all that. So there's N number of dimensions you can expand into from just that question of what is Bitcoin and what makes it up, which is part of what makes it so fascinating and a really cool intellectual journey. What is your introductory story to Bitcoin? I started a data analytics company in 2009 with two co-founders. We sold that in 2013.

4:51And one of the co-founders along the way, he kind of got an interest in Bitcoin. And so after we sold that business, he told me, he convinced me you should buy some Bitcoin. For the first time in my life, I had some money I could afford to lose. So I thought, why not? I really didn't know much about it. But I was skeptical, like many of us, of just, what is this thing? It's probably a scam, but maybe there's something here. and yeah it was really kind of with his help i i joke he was my my sherpa up the sort of bitcoin mountain of understanding um because we all kind of need that you either you have to learn on your own which is a lot of reading and thinking and measuring against things you already know and may not know but he was he was there to kind of answer a lot of my questions about you know how does it achieve you know network consensus how is it actually resistant to nation-state attacks and what else could it be useful for or what what you know and then as he and i you want to apply more of our entrepreneurial talents.

5:43What kinds of products and services can we build with Bitcoin that are meaningful and could turn into a real business? Now, what would you say to somebody who would ask you the question of how is Bitcoin different from other cryptocurrencies? Bitcoin is, first and foremost, it had a virgin birth, more or less. It was birthed into a community of cyberpunks and people that understood a lot already about cryptography, cryptographic systems, and even all these attempts to kind of build money on the internet in a trustless way, or where you don't have to trust somebody else. And then we didn't know, nobody knows still who Satoshi was, who released Bitcoin and its white paper and its initial code out into the world.

6:31So that is, again, unlike anything, everything else kind of after that, you had somebody championing it and you had somebody trying to convince others of its worth or building a roadmap in a public and kind of central way. And so when it comes back to a lot of these problems that Bitcoin is here to solve, disintermediating versus with financial services or payment transactions that we just like to be able to pay one another with, there's some just reintroduction with almost everything else after Bitcoin of some centralized component or some choke point. Everything's kind of by an order of magnitude weaker in its stance against, I think, that kind of attack vector.

7:07So that's one thing. I mean, otherwise, I mean, Bitcoin as money has more of that target use case of a scarce limited supply and the enforcement of that and not mucking with how that supply is issued. That's pretty radically different everywhere else. and and then when when bitcoin and the people that build on bitcoin have adopted a lot of that mindset they're way more conservative too and then the the technology uh capabilities is and that's that's okay that's good you don't want um so many capabilities that you expose bitcoin and bitcoin holders to weaknesses and future cryptography or other things that are less well tested uh in versions of you know smart contracts and things that you've seen a lot of vulnerabilities and all these other chains on that front.

7:52So I also think part of what distinguishes Bitcoin and what we see at Unchained is there's a real community of people that hold it, that are, you know, everyday moms, dads, doctors, sons, entrepreneurs, real estate people, that for them it has utility as a savings technology, as something they want to save and set and forget or get to that 10 Bitcoin savings account or number and then, you know, not touch it forever kind of a thing. And also, So while there's a version of speculation of holding that for the long term, it's expecting the price appreciation. It is kind of a different mindset, I think, than a lot of what you see in other areas that are just more really true, like hype driven speculation on like a like a tech stock, you know, kind of a vibe of trying to make the number go up.

8:39But we see there's an everyday people, everyday person kind of mentality and persona that we work with at Unchained that are reeling out there. And it's not just like chat rooms full of people trading across non-U.S. exchanges on tokens and things. Now, you believe that Bitcoin should be an essential part of any sound financial and retirement strategy in the context of economic volatility and bad monetary policy. Can you expound upon that? Sure. I think it's something that exists. It's sort of extra-governmental, extra-jurisdictional. It lives outside of – it's not controlled by any one country or government.

9:21And especially in a world as connected as we are, as turbulent as the times can feel with the different presidents we have in the West and the wars and the things out there in the East, Bitcoin is more of a safe haven outside of these kind of concerns, if you will, more or less, that you can hold value, you can store wealth in something that you can transport across any state lines, across oceans. And it's your money. It's not dependent on a banking system you could be cut out of or have trouble getting your money out in a pinch kind of a thing. So it's really a lot of that, you know, that version of like, you know, when you get that bag of preparedness you have for if, you know, there's a earthquake or fire or whatever, your go bag.

10:08It's kind of a go bag for your wealth in a real way. Well, also, I think against all that and because of a scarce supply, it's going to have a purchasing power sort of reliability and an increase in its monetary value and dollar terms over a lifetime. Fire Nation, I really hope that you're understanding what this means to your economic future. There's a lot of opportunity that you can educate yourself on with people who we're talking with right now. And this is a really interesting conversation with Joe and what he's done and what he's experienced. We're going to be getting into more of what he's created to help us in these scenarios when we get back from thanking our sponsors.

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14:09Hey Joe, we're back. And I think a lot of people these days are kind of scratching their heads because obviously, you know, earlier this year we had the Bitcoin ETFs launch. Can you talk about ETFs? Can you talk about self-sovereignty? Yeah, it really builds on what we were just talking about from, I feel like strongly there's two dimensions to Bitcoin. If Bitcoin has the kind of price and the asset and the, you know, that which sort of the ETS track. And so for people, especially how I consider myself when I got into Bitcoin over 10 years ago was just buying some on Coinbase and kind of leaving it there.

14:43And so that modicum of financial exposure starts to give you a little more stake in the game and starts to pique your interest, your curiosity more about how it works, what is its relevance in the global financial landscape and what is there to care about with Bitcoin. And then I think it's going to perform well. I mean, as a financial asset, you see more institutions and endowments and folks buying into it. You see just more everyday folks and investors now have inside the brokerage accounts ability to get exposure. Where people bridge into generally over time as you do learn more about Bitcoin and its value, well, that value is maintained because of its property as something you can hold for yourself.

15:20There's really not many other financial assets out there that you can hold for yourself. Every year, you're kind of dependent on a custodian, a bank or a financial institution. When you want to store your stock securities or your cash, you can hold physical cash. You can't hold physical gold. There are obvious impracticalities to that. But for all those other kinds of assets that make up a lot of our portfolios, you're trusting someone else. And then we don't always know what those other people are doing with it or in the limitations of checking accounts and a basic account at Chase that has a$25 ,000 wire limit.

15:57If you have$50 ,000 in there, you can't get it all at once. It's not kind of, quote, your money. So there's just a way we're dependent on this network of financial institutions, many of which have failed, many of which will fail. And we kind of go through these crises or these banking failures, like last year with Silicon Valley Bank and Signature. I mean, those instances where a lot of people for a second got reawakened to. It's not exactly your money that when you have a deposit account, it's an IOU from the bank. And you're not guaranteed that they're going to pay you back when you need it.

16:28So Bitcoin, just unlike that, that kind of experience is something you can hold for yourself. You can have a lot of reliable assurity that the Bitcoin network is going to produce blocks every 10 minutes that you'll be able to transact if you have your own keys. it's again that porting over to even the coinbase experience it's a good uh on-ramp for a lot of people it's again how i ramped into bitcoin um but say your driver's license expired or say you know they got a notice from the irs or something like that and then your bitcoin could be frozen your bitcoin could not be able to be sent from you and part of what makes bitcoin valuable is that ability for me to send bitcoin to you john in puerto rico or anywhere you're in the world without an intermediary, but so long as I hold my own keys.

17:12And so that's a really valuable property that people can maintain when they do self-custody. And another good example is, I mean, the people in Greece that woke up and all of a sudden the government said, hey, we've actually just taken half of your money and there's literally nothing you can do about it. So it really is interesting when you kind of wake up to the things that can happen in this world. And we talked about Unchained in the introduction a little bit. We're going to talk about it more in a minute here. But before we do, you've had multiple successful ventures prior to Unchained. And I would love to hear that evolution story that brought you essentially to the actual creation and launch of Unchained.

17:54What is that evolution? I was born in Anchorage, Alaska. I grew up there until I was about 13. My mom died of cancer. and my dad, a brave man, courageous man. He took my sister and I aside and said to kids, I've always wanted to sail around the world. And I think now's a good time to do that. So we actually sold everything, moved into a motor home, drove to Florida, and he bought a 38-foot catamaran that we named after my mom called Jean. We moved on to that, lived on that for just over two years. I was a quote, first mate. And that was just a, I mean, that was a huge transition. I mean, for a family kind of in grief and dealing with the sort of shock that came out of that and then having the kind of whole world open up of like hey there you know there's an alternate lifestyle there's an alternate system of education or means to to be educated and make one's way in the world that doesn't depend on the u.s system or necessarily any any given system that's that was just a real big awakening for me as a teenager to get to explore all those those islands and those places latin america we went through the panama canal and a lot of that invigorated the sense for me of just wanting to be an entrepreneur.

19:00And so when I turned 18 and, you know, I did, you know, I did work for some in New York on, in the merchant Marines on tugboats, but I otherwise knew I wanted to kind of go to school or like, you know, figure out some, some place to land back in the U S. So I picked Austin, had a big school, a good business school reputation. And when I got here, you know, there's five cranes building things downtown. This is like 2007 or eight. And I was like, man, you know, the people are investing in this. It's got a commercial real estate thing happening here. It means it must have some future. And I'll say since then, there's been at least five cranes downtown ever since.

19:34So Austin's really been a growing, budding spot. And I'm thankful for all the opportunity that I've had here as a result. And, yeah, really getting into business school as an undergrad, it was pretty depressing. So that first year there, I really struggled to make friends. I really struggled to feel like I fit in. I had a lot of this kind of worldly experience seeing all these places and feeling somewhat self-sufficient and kind of adulting, you know, somewhat early when a lot of other freshmen are just leaving home for the first time. And even in the business school there at that time, they've since done a lot better.

20:05They've hired Bob Metcalf, who chairs like an entrepreneurial, you know, seat there and kind of works on building more entrepreneurial friendly, I think, programs. Back then, you know, it was really geared at helping people get jobs at Goldman Sachs or Ford Motor Company and these things. And I can remember there was a BA 101 course you had to take in your first year. And so I took it my second semester and you know you they do you do mock interview to kind of practice interviewing skills so you prove you can talk to adults i guess and then also they made you do a resume and in that resume that i submitted i put you know with my limited work experience or whatever i put in extracurriculars yeah first mate you know so what the caribbean two years and i remember that getting crossed off that the professor left a comment something like oh you know i think i think you know you should try to find more like relevant like professional experience kind of a thing and I I remember it's just so flabbergasted I was like well wait a minute I know I'm gonna be entrepreneur I'm gonna hire people someday and when I hire people I'm gonna look for you know things that make them stand out okay the things that give them like a worldly uh perspective and demonstrate that kind of experience and so um you know I think you're just wrong you know kind of a thing like what am I supposed to put you know volleyball coach or whatever I think I also have to stand out among you know my peers so it really you know that was kind of the center for me if I I think that's not the place for me.

21:22And I need to, you know, if I am so serious about starting companies or being an entrepreneur, I needed to call myself my own bluff. And so, so I left or I told my dad I wouldn't, you know, re-enroll or go back for the next year and kind of started making my own way. And that, that meant, you know, there were a couple of projects, things that were tried. The one thing that stuck for a little while was a residential contracting company doing remodels here. I had a friend with a lot of construction experience and I was kind of the business operator that did all right. And that, I sold my half of the business to another partner after meeting two grad students at UT.

21:57And these guys had started a project. It was called InfoChamps. I came in as a business person to kind of help pivot it into a business or commercial product. And that was that kind of four-year journey or that startup that we sold in 2013. And it was in the big data, data analytics space, which I thought was going to be a very transformational industry. It is. It still is. and go from there to cloud computing and AI, a lot of the stuff that is a fabric of our technological lives today. And then I think looking at Bitcoin and working in it was very much a similar bet to that. Drew, my co-founder here, and I saw it as a great wave that I think a lot of the reasons business fails is that there's not enough of a market.

22:39And if you can kind of catch a wave or see something that's a big enough market early and something that's likely to grow, you can mess a lot of other things up in your business and still survive. And so that's kind of how I feel about Unchained and how we've hung on for so long. It is crazy to me that that individual could honestly believe that sailing the Caribbean at your age and everything that would entail would not stand out positively on a resume and just be that worldly life experience that a lot of people would be looking for. To me, that's just really interesting. But I obviously kind of come from that more entrepreneurial background myself.

23:13So So let's briefly talk about Unchained because you have a mission with Unchained. I'd love to hear more about it and what Fire Nation could do to learn more. I think, again, part of what we learned out of that startup InfoChamps was, you know, always know who your customer is. Because we had, I mean, I was working with some of the people I thought were the smartest people I'd ever hoped to work with. We were doing things in big data with these large data sets, really advancing the technology stack around working with large data sets. And that's cool and all, but if you don't have that direct customer, direct customer problem you're solving, then you might not have a business.

23:52And so we kind of learned that halfway through, two years in, we pivoted the entire business, entire company to have a different target client, a different product, really different market even. But the only thing to say the same is the technology and most of the team. And that cost dilution, that cost a lot of pain and heartburn. And so when it came to starting this company, my co-founder and I wanted to know our customers from day one. And kind of now being more seasoned entrepreneurs, we can look around and see in like 2016 and 17, a lot of people making that same mistakes of the big data era of let's, you know, let's blockchain everything.

24:26Bitcoin may not be the end. Bitcoin, it's cool, but the real thing is that the blockchain technology. So let's try to take that technology and like throw it at every problem in financial services or data or record keeping. And then, you know, 10 years later, almost you see the results of that. And it's pretty nil compared to the success and traction Bitcoin's had. So our thesis, what we saw was that, no, the thing everybody's missing is Bitcoin holders are customers. Bitcoin holders are clients. And you can look at the way financial services and traditional banks and private wealth management people, they're just going to kind of continue to ignore the SaaS class, ignore these real clients, either due to compliance reasons or ideological reasons or something else.

25:09And then even when they do come into the space, they're likely to be behind in their technology. They're likely to not understand the culture and the proclivities of this target segment. And so we thought there was something to build that did understand those things and did bring that target and that focus on being the financial services company that Bitcoin holders want to use. So we started with a Bitcoin-backed loan product, lending dollars against Bitcoin. Nobody's really doing it. Soon after, you had places like BlockFi and Celsius and some of these others launch. And we kind of know what happened to them.

25:37I think they lost sight of some of that. What makes Bitcoin really powerful and important is the kind of business model and relationship you can have with clients when you help them hold their own keys, when you help Bitcoin to be not kind of rehypothecated. or a lot of those places were bringing the kind of playbook that you have in wall street and with traditional banking and applying that onto bitcoin uh in a way that they just got wrecked and so we've always had more of this bitcoin native approach helping people hold their own keys getting access to loans and financial services but then delivering those in a way that we aren't like re-hypothicating their bitcoin or re-lending out their bitcoin or engaging in these um very risky activities especially that are you know really heightened in the risks because of how immature the space is and how few good counterparties there are you could actually lend your Bitcoin to in a safe way.

26:28Fire Nation, a lot to take in here. And I know that Joe's going to give us a great place to go and learn more. But before we do, in just one sentence, Joe, what do you want to make sure Fire Nation gets from our conversation today? What is the key takeaway? Spend a little time making sure you understand what Bitcoin can do for you and your family. It's a long-term store of wealth and whether it's with Unchained or not you know consider how cool and valuable and important it could be to store your hard work your hard-earned capital in something that you know you can pass on to your kids and you can have stored you know anywhere in the world no matter where you are in a physically secure way that isn't you know able to be taken from you by the government or by, you know, someone else.

27:16So just kind of consider that extra next level. And I'd say within Bitcoin, there's a lot of debt there. There's a lot of realness to how it works in a way that is very satisfying when you get to know it versus that. A lot of other projects out there that are still experiments and just things being trialed by people. And if Fire Nation wanted to learn more, where would you send them? Unchain.com is our website. We've got a great blog, great learning center on there. A lot of good entries about the basics of Bitcoin and basics of multi-sig, how we help secure Bitcoin. And so, yeah, I think that that's a great resource for anybody looking to learn more.