E149: Trezor CEO: How 98% of Crypto Users Are Vulnerable to HACKS (you could be next)

0:00What happened in the Czech Republic in 1953? The Prime Minister announces the monetary reform and basically what happened that people had to exchange their banknotes for new currency that got printed. They only had one month to do that and the exchange rates were insane. Literally people would lose more than 90 % of everything they owned. That's where Bitcoin makes so much sense. Exactly. Mate Jacques, the CEO of Trezor. Creators of the first hardware wallet and BIP39. Leading efforts to make Bitcoin accessible while upholding security, privacy and open source. Can you explain Trezor to your mom?

0:31I like the analogy of keys from your home. Something that you only should have access to because Trezor protects private keys from Bitcoin and other cryptocurrencies. Bitcoin doesn't live in the Trezor itself, but you need to save these keys to have an access to your assets on the chain. What is self-custody in Bitcoin and crypto? True ownership. True ownership. What does that mean? There is no intermediary. You have the full right to move the funds anytime, anywhere as you wish. You have the power to do it. You don't have to ask permission. Why does Trezor need 200 people to create and sell a USB stick?

1:03If it was just a USB stick, I could probably outsource it. But here we are talking about a pretty advanced security device that has been tested from all different angles to make sure that even if somebody gets hold of this device physically, they would not be able to extract those private keys, therefore they could not get to your Bitcoin encrypted. What really goes into the creation of a device like that? Blood, sweat and tears. Tell me more about the blood, sweat and tears. Of course. So... Hi everyone, this is the little bit that I know none of you like that can help us make a huge difference for this show and we're going to take it next.

1:3971 % of the people who regularly watch when shift happens have not subscribed and so all I'd ask you if you want to make a huge difference is the following if you've seen this show before and you like it help me help my team hit the subscribe button and we'll continue to build this show for you thank you oh yeah the weather is shit now like actually actually actually it's October it's normal right October November it's like the worst weather in Europe in general in Switzerland it's the same yeah people usually leave yeah

2:13in november i remember when i lived i was in switzerland for a year to build a company in november you go to bali or just go somewhere else you mentioned your originalist from switzerland right yeah i'm sorry yes from which part if you don't mind me asking i i forgot so i am i mean originary from valley yeah well that's what i thought because i go to valley all the time for for skiing or for uh flying for the park glider and climbing because that's the the biggest concentration of the 4 ,000 meter peaks, which I'm collecting all of those. Absolutely. Absolutely. So yeah, I've done paragliding also there too.

2:47Oh, nice. Yeah, with my dad actually like very long time ago. And Fiesch maybe? No, we're in, it's called Les Portes du Soleil. Okay. It's where, I mean, usually you go there to ski. So you have Champs-Péry, Les Crozets, Champs-Poussin, and then you have quite like good slopes on the swiss side but then if you go on the french side it's like 650 kilometers of slopes nice so we we went there with my family we've been going there like since i'm like three or four years old every weekend of every winter to ski and then sometimes my parents have like some some chalet and flats there and uh it's a dream for me and and uh sometimes in summer we would go but more with my dad I would go like a couple of days with my dad and we would do a mountain biking and I think I don't remember if it's because the weather probably not but one day maybe we were just like too tired of biking or whatever so because we would do the bike without help right without whatever electric bike or so you go for like two hours up and then you go down for like 10 minutes and then he said hey I have a surprise for you and then we did this park lightning it was fucking awesome like you do the you do the he pulls the at some point he says hey do you want to get some G's like in your face but it's gonna go much faster like and then you just like he pulls the the thing and then you just go down yeah ballet is amazing I love it I mean it's my dream sort of place where I wish I could at some point like a purchase you know something I know you guys don't like allow for uh europeans to purchase like uh property there as much or maybe some areas but it's like my dream area it's not allowed or it's just max one i think it's maximum one i think some places like the the sas style you know like a sas fair and stuff i it's i think it's not even allowed or maybe some crazy like if you invest you know like a couple million then but that's not me i would not be able to do that but like uh yeah we invest only in digital real estate Bitcoin no physical one yet in a couple of years yeah it's gonna be one or two Bitcoin to buy one of these sas fit properties hopefully hopefully but I love it I mean I'm there every year since because actually uh when I was like small my brother had some issues with with like lungs and he was treated in the hospitals luckily it's all good now but um the hospital organized trips to Valais like to climb there and run in the mountains and I've done that since the age I don't know between maybe 6 to 12 or something every year every summer we would go there and then and I fell in love with this place and now in my adult age I started coming back and every year I'm there at least twice because I really love it yeah so I'm originary from there but I didn't grow up there I grew up in Bern I mean Canton Bern like a small village it's very nice too I like Bern a lot.

5:51Yeah, yeah. Village beside the lake, 5 ,000 people. Not very famous for climbing or skiing, but amazing to grow up. Yeah. I mean, it's a beautiful area and the Bernice Oberland is awesome as well. Yeah, absolutely. Switzerland in general, I would say I never really appreciated that side of it because I was probably kind of blasey. You know, like you go to ski so much at some point, you're like i don't want to ski again this weekend i wish i had this problem like it's terrible like to think about it right and then and then like you go from my 20s i was just building businesses in london and then a bit in geneva dubai singapore and i was just not thinking about you know i'll go to a city i'm like ah what was maybe like thinking about where do i go party right that's it right right or and now i started to realize again i went to switzerland this summer and i I was like, holy shit, the nature is so incredible.

6:50Exactly. I've been to some, I live in Asia. You can go all around. It's like incredible. But like the Swiss nature is like second to none, I think. It is. Literally, it's the best. Really, it is so beautiful and so amazing. I just think many Swiss people actually don't go that much, right? First, it's very expensive. Second, probably because it's your home, you don't go that much. touristy where you're like oh let's go to spain let's go to france let's go to other places i think it's called the hedonistic adaptation like you get so much of the good stuff that you don't even appreciate it maybe maybe but yeah again like prague we're here in prague now uh beautiful city actually are you where are you from i i was born uh like 50 kilometers uh west from Prague but yeah most of my adult life I spent here I went to the school here to high school like the music high school which was pretty intense and like time wise so we're in the school all the time practicing and yeah so Prague is basically home who are you I am Matěj that's how you pronounce my name it's quite hard I go by John in Starbucks usually I was actually thinking before I was like my tage my John John is good I like it yeah to make it easier for people why John I mean it felt like something I also could pronounce well myself because I'm not always a native speaker in English so making it easier for me as well I guess Yeah, so I'm Matij Żak.

8:37I currently lead, I guess you could tell, you could say the Cheser team, which makes me super proud, especially these days. And I'm a climber, paraglider or paragliding pilot, musician as well, and product manager. I think it's the main sort of my professional focus has been always making products. And I like to think of myself as a sort of entrepreneur as well, because I think at least my definition of entrepreneurship is basically fixing problems in the world, aligning people around those and finding the solutions. So, which honestly I've always done. I don't know even why, but even since childhood, you know, I love to fix kind of problems.

9:27So you said, uh, I'm the CEO of treasure, which makes me proud, especially these days. Why, especially these days? Uh, so we have, I think, pretty big milestone of a launch that happened just yesterday. and I'm so proud because literally the whole company has united and pushed so hard around like delivering on the deadlines and the milestones on the product quality on the marketing quality in terms of the production of the event that we've made we've never made an event this big and this impactful and everybody was like ecstatic I felt like it felt like and I'm so proud of the whole team because there's so much like passion and people are so excited to really deliver pretty unique quality and unique experiences.

10:30So that makes me really, really proud. You're not the co-founder of Trezor. I'm not, yeah. You said I'm a product manager. You started as a product manager at Trezor seven years ago. Mm-hmm.

10:45what does that say about the company that you can start as a product manager seven years ago and then became i think the ceo three or four years ago i'm finishing my third year correct we are product led i think that's that's what what it says about the company um we just recently for example uh put together an official company strategy which by the way we didn't have for many years, like officialized. Of course, like we know what we are doing. We know why we do it. But as we grew, we realized we need to make it more official because new people are coming and they maybe don't understand exactly why we are doing what we are doing.

11:25So that's something I learned in the last year that it is really helpful. And I can tell that this strategy is basically very much product driven. It is not the opposite could be it is business driven, right? Like you like look at channels, you look at new business opportunities. but I think we look at it through the lens of, again, what kind of problems are there in the world and how we can fix them. And so those pillars, both problems and solutions that we already think about are actually pillars of the actual strategy. So I think we are pretty much product-driven. I think that's also the reason why I specifically became the CEO in the end because I worked very closely with the founders started again the company seven years ago and i've been working with them closely basically every week ever ever since right every week we have like one-on-ones and stuff and they're product people themselves they're technical as well they're engineers but um they're very much thinking in the sort of product ways and that's i think why sort of our energy and a synergy work quite well because as we speak the same language.

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13:15And last but not least, thank you to Mantle, a pioneering on-chain economy dedicated to revolutionizing the future of finance and blockchain scalability, and that seamlessly bridges traditional finance and decentralized finance. What does that mean to be product-driven instead of business-driven? for company concretely does it mean that you're leaving money on the table does it mean that you don't care about the money which obviously is not the case like what does it concretely mean it means that is it sorry but is it really is it really real or it's something that a company that is building a great product kind of has to say for people to believe the the story because at the end of the day a business is a business you have employees i think you have about 200 employees you need to pay them you need to make a profit otherwise the company doesn't survive it's a tough industry with a lot of up and down absolutely uh you know let me be clear i'm a capitalist right i really believe in making money and uh applying these the profits and earnings into again fixing problems in the world So that's, I think, the entrepreneurship and the capitalist kind of view.

14:36But that being said, I think the product way is focused mainly on finding these problems. It is sometimes, as you say, leaving money on the table, but for sort of bigger vision that ultimately gets more people into the industry or into our products because they are really superior to what the customers could find on the market, both in direct competitors and substitutions. So what I mean by that is, yeah, you focus around the experiences around the problems and not necessarily looking it through ways, oh, we would need to make another$20 million next quarter or next year or whatever. That's not the original question.

15:21The original question is, what are our customers or potential customers struggling with today that we can fix in a really amazing, innovative way. And buy the quality of the product, persuade them to give us the money for us to give them the product. So I think that's the difference. And I strongly believe, especially in our industry, that's the better way how to look at it. Not the business first, but the product first. With one maybe exception, because I also like this. I have the saying, people, product, profit, in this order. I read it in the book, by the way. It's not my, but I totally subscribed to it.

16:06People, product, profit. Can you explain? What I mean by this, you need amazing people. You need to really get people that are smarter than me, more experienced than me, even more expensive than me in some regards, like in terms of, I really believe this is important because if I would be just looking for somebody that I can manage easily, whatever, but they would not add more value than I or my closest colleagues in the sea level would add, then it would be like a death spiral, right? Like that would not work. So I think it really starts with people. And that's a big part of my job is really to take care of people in the way that, I mean, they need to, of course, have the right environment to deliver amazing job, but also find the right people.

16:54because sometimes companies call themselves families. I don't think it's the case. It's more of a sport team, right? Because if you're a coach of an ice hockey team, as an example, because ice hockey is big in Czech Republic, you have guys that, I mean, hold the stick like this and the other ones maybe hold it like this. And it's good for the wings, right? Because they can work more efficiently on the sides or whatever. And that's exactly how we would think as a coach. you will find maybe a big guy in the defense you know some smaller nimble guy and up front uh and that's how you would try to build a team together and that's you know big part of the job like to to kind of figure this out not being nice to each other just because we are like a family because you know if you have a second member and family whatever you take care of them of course and of course we take care of our people as well but uh it's more of a sport team less of a family so and then so that's people and then product that's the second because again like that that was the product-led approach that i described and only then you take care of profit because if you're an amazing product then the profits will come it is not a luxury to have i'm thinking about the founders who started the company and they might not have had this luxury in the beginning you know you're kind of like journaling beginning these different things you're like okay ideally i mean actually i can think about the for example this podcast right it's kind of the same the the you think about what's the best for us the product is each podcast right how do we get the best guest the best conversation the best production quality to make the industry look good and to make the guests and their company look good which by the way you said especially in this industry right if you do this this way you just stand out because there's so much shit in this industry that people will see oh these people are focused on quality so absolutely but I'm thinking about when you start the company it's probably less easy to say people, product, profit because you need to survive.

19:19Absolutely. I think, I mean, it goes hand in hand. And when I say that, for example, I was or I am still involved in product management, the core function of what's called product management is to connecting business, connecting user experience and connecting the technology. So it's like this Venn diagram where in the middle, it's where the business happens or where the actual product delivery happens. And so you need totally all those. You need the business as well. And it's true that especially for us as a company, from my experience, when I joined, it was like 30 people, right? So quite small.

19:59And we are struggling so badly when we are trying to scale up to find really good talent. And, you know, we would have to go maybe to headhunters, et cetera. And it would be quite hard, quite expensive, et cetera. Today, when we just post a job, do like a job post, we get, I don't know, 30 relevant candidates in the next 12 hours, which is amazing, right? And that's the power of the brand. That's the power that's really important as well. And that only happens, you know, after the years and years. So we didn't have this luxury when I started for sure. Um, so that was the challenge, but I think that's also, I guess the beauty of, of yeah, like the entrepreneurial journey.

20:54Trezor is a very technical company at heart, doing security in crypto. When did the company or the founders understand the that the brand was really important? I think they always understood it. At least the way I know the story from what they told me, they didn't expect this to be, you know, a successful business almost, right? They were fixing their own needs, again, fixing their own problems with how do we store and protect, you know, our private keys and how do we do it in a way that is easy for us to manage and etc and then because of the principles and i think because of their honestly moral code and moral standards that they hold um they're pretty strict about this the brand kind of built itself right so for example the ethos of bitcoin and the open source nature and the transparency and the kind of responsible disclosures that we are doing if we find any vulnerability even in our products.

22:09I think that's something that contributes to the brand immensely and it's super important for security. I think they understood it early on and I think we've seen it hundreds of times where these principles actually only made us more sure or basically made us sure that it really makes sense to go that way. And so in some way you could almost argue, then it's kind of easy to see what the brand should be about because we have these positive experiences and feedbacks from the community. If we are transparent, open source, et cetera. Can you explain Trezor to your mom? I like the analogy of, of keys from your home or your car, something that you only should have access to, or maybe your closest ones.

23:07And I think that's the best analogy. It's like actual physical keys. Because Trezor protects private keys from Bitcoin and other cryptocurrencies. The Bitcoin doesn't live in the Trezor itself. Of course, it's a chain. It's a blockchain. But you need to save these keys to have an access to your assets on the chain. So, so yeah, I like this analogy and it usually clicks with people with my mom included. We're in, we're recording this conversation from Prague. The HQ of Trezor is here in Prague. Yes. Why was Trezor born in Prague? I asked myself the same question before the keynote of our new premium product that we've just launched.

24:01because there are so many bitcoin companies in in the czech republic it's not just us why are there so many bitcoin companies in czech republic and exactly i was asking myself how is this possible uh and i and then since we invited a lot of hosts from all over the world a lot of guests uh i i was thinking well maybe they would wonder as well maybe we should have you know answer to this question because that was the first hardware wallet. The first mining pool is a huge conference that is Bitcoin only biggest in Europe. There's ATMs. There is, you know, the mining companies. There are a lot of educators.

24:42We have a YouTuber, Bitcoin only YouTuber that has now rebranded to more broader topics, but he was Bitcoin only up until now. And it's a country of 10 million people. and he has more than 100 ,000 subscribers, you know, like in such a small country. It's like a secret club. Nobody even speaks the language. I mean, just us, you know, it's not that you could open to other markets in the local language. So I was asking this question.

25:12And the short answer is, I think, the era of the communism and the oppression and the lack of freedoms that we experienced. because there is pretty strong sort of skepticism with the government, with the establishment. We are really not that sort of people that would generally trust anything we hear and say. I just recently posted this in the company that I think we are not, just as a theory, I don't think we are like a huge one, for example, motivational speeches or something like this. We are more like, why exactly are you trying to like hype me or what is, why you are saying, You know, like a bit skepticism towards pretty much anything.

25:54So I believe it is actually in the many years, basically 50 years of oppressions and the communism and including the monetary reform that we experienced and when people lost all their savings basically overnight. Can you explain that? I think it was 1953. Exactly. What happened in Czech Republic in 1953? So there are other countries in Europe and the Soviet Union that were experiencing, I mean, they were basically going bankrupt, right? So it was after the Second World War, the economic situation was not good, like generally, but also the communists kind of seized the power, right? And in Czech Republic especially as well.

26:44And there were other countries that were doing these sort of monetary reform. So they would introduce new currencies and, or some hyperinflation happened, et cetera. And that happened here as well, where exactly the story goes that the president, because there was this unrest in the population, it could be felt by everybody. so the president decided to go on national radio and he said don't worry there's not going to be any monetary reform this is not going to happen just to calm everybody down the next day after the banks closed the shop closed because they wanted to prevent run on banks and grocery stores etc in crypto we have a meme for that we call it steady lads yeah i mean i mean it's it was incredible so next day literally after everything closed the prime minister announces the monetary reform and the next morning the newspaper actually also prints you know because it was like a state-owned newspaper you would not have competition there at all in media um announces the monetary reform and basically what happened that people had to exchange their money, their banknotes for new currency that got printed.

28:07They only had one month to do that. And the exchange rates were insane. It was like, literally, people would lose more than 90 % of everything they owned, right? So if you had cash, you would have to transfer it to new money and you would get just like 90%. Life insurances, state bonds, and stuff like that was actually voided completely and simply it disappeared, right? So billions of Czechoslovak coronas were wiped out from the market. And till this day, I mean, when I was preparing for the keynote because I thought it was an important story, I also interviewed my grandparents, right? And they could still totally feel it.

28:53I mean, in my family, the communists took away a lot of the assets that the family had, you know, my grandfather, his family, there's still like a lake that actually has a name of the family. It was just taken away from them. And then the savings, again, the money in the monetary form was taken away. And yeah, I mean, and they still remember it, right? So it's not something like you would hear always, a history lesson or whatever. No, there are actually people that you can still talk about this. It's something that you learn at school? His story? Yeah, we do. In school, I think there's a quite...

29:36But I mean, depends on which school and how, but like, in general, yeah, it gets into the classrooms. But I think we mostly learn it from our families, honestly. Because I have so many stories. I mean, they hated the communists because they couldn't travel. You know, it was... Honestly, when I was studying for, again, like doing this prep, this research, it gets you so fucking angry. I was reading and I was like, how the fuck is this possible? They were like crooks, basically. They were not even educated. They didn't know anything about the economy. And by the way, when they introduced this monetary reform, the communists, the elite sort of, gave themselves better rates or even didn't have any rates.

30:16So actually, they even had the money, like a one-on-one and the same rate. And yet, they let the working class and stuff. And these people, they had to exchange it. So it was like, yeah, fucking crooks. Quick one. I want to thank our partners who help us make this show possible. Big thank you to Bitwise Asset Management for backing today's conversation. Bitwise is a crypto specialist asset manager with more than$15 billion in client assets across 30 plus crypto solutions, including ETFs, index funds, alpha strategies, staking, and more. However you like to invest in crypto, Bitwise has something for you.

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31:33Yeah, and if you think about it, it's someone somewhere who made a decision, okay, this is going to happen, and no human brain can understand the consequences of that. And if you extrapolate to today, are people really way smarter or do we still have people who make decisions that will have some impact that is unquantifiable because it's just too complicated for a human brain to understand and anticipate, right? If you think about the current system that we have in place. And so that's where I would say if you're someone who naturally questions everything, that's where Bitcoin makes so much sense.

32:17Exactly. When you read the Bitcoin Standard by Save Dinamos, you just realize, holy shit, exactly it makes so much sense yeah it's it's exactly i think it's like a must read exactly the bitcoin standard is a great example and maybe i i would love to give another one because that i again like recently read because of me trying to understand it's a little bit more um and that's from ray dalio why countries go broke it's like a book that he recently published and it's not about bitcoin at all i mean he mentions uh bitcoin maybe a couple times because he was i think the critic as well but he came to understand a store store value you know like okay bitcoin works there um so it's not about bitcoin but you read it and you're like like bitcoin fixes this like on almost every page you're like you know it's like it's so clear can you explain in a nutshell this book why can't we i mean can you answer the question yeah so i mean it's pretty complex there are a lot of you know graphs and stuff like that i'm not an expert i'm not an economist but but the nutshell is uh countries get a ton of debt they get leveraged uh they and also in the private sector so usually it would go in a way that the private sector would go leverage there will be bubbles for example or some catastrophes like uh like climate change or whatever you know like it could start like that then the countries um run to help the private sector because it was for example again leverage or whatever then the countries run out of money as well because also they have debts internationally then they mismanaged this debt and they need to print more money and there we go right so they bring more money they devaluate uh the they inflate the the money and then it's like a big vicious circle uh that ultimately can lead into a bankruptcy which is exactly what happened here well literally it cannot really the he says the bankruptcy can officially happen unlike in the private sector because the money can uh the the state can print more money but if they do it in an extreme way such as that the hyperinflation would happen or extreme taxation because that's either way then you get into these problems right and then and you're like well yeah bitcoin is a good solution here.

34:46And it's happening today, everywhere. And that's the crazy part because then exactly. So I asked myself this question, why checks Bitcoiners? And there's this amazing story. Um, well, very sad story about the 1953 monetary reform. And then you study some more and you're like, okay, is this, can this still happen today? And you realize, well, there are dozens of countries that this is happening. They are living this through today. uh right uh and and then it's yeah it's crazy also the private sector again as we talked about this vicious cycle cycle so i checked how many banks went out of business in the last 100 years like private banks globally and it's somewhere between 20 and 30 000 which banks are supposed to be safe right exactly so it's like i couldn't believe this number so i checked i mean it's ai I like a research as well.

35:40And then I checked with some economists as well. And they were like, yeah, it's about right. I was like, what the hell is it possible? And in this century and like the last 25 years, it is the number is some, somewhere between like 700 and 1000 banks, mostly in the US and Europe as well. So it's not even low and middle income countries. Right. So, and then, so, and then you are thinking, well, you know, it's, it's like. Happening today as well. It's not, it's not just a history lesson. and there's not supposed to be that many banks right so it's not like a small fraction of all the banks and on the top of that you add the I mean the classic things we always talk about in crypto in Bitcoin which is a the average lifespan of a fat currency seven 27 years mm-hmm the fact that if you look at the strongest ones Swiss franc or US dollar I think Swiss franc is down like 80 % over the last hundred years, US dollar, probably 90 plus, 95%.

36:40If you put all this stuff together and you realize that there is a problem, even in the best countries and the best currencies in the world. Yeah. Yeah, exactly. And then it's kind of, I'm always thinking about, for example, my girlfriend, she doesn't think about all this stuff. She's not stressed. Yeah. Yeah. Like I, I'm always freaking every, every... this you know make investing whatever i think about that and i don't know what's worse like to not care about that or to not stress or to be always anxious because you understand all that right yeah yeah exactly i mean i when you say they recently had an uncomfortable sort of conversation with somebody who used to be dear to me and they said something like oh you're in the crypto i'm not that much interested or something in this topic and i was like and it it hurt me a little bit because in a way it's like well we're talking about self-custody and we're talking about bitcoin and then we are talking about crypto those are very different topics and here we are now talking mainly about i would say the bitcoin and and the self-custody that's where it's i think it really is freedom technology you know and but why it sort of hurt me in this specific case is like because they are kind of oblivious to the fact that that the world has these kind of problems and that there are solutions to this yeah the fact that they're screwed yeah yeah yeah and and and so and but it's actually so it like hurts a little bit but on the other side and i'm thinking that's exactly why we should do this job and it motivates me so much.

38:25It's like, let's explain this to more people and let's persuade more people by again, amazing products that they should care about Bitcoin and self-custody. Right. Let's explain this to people. Let's. What is self-custody in Bitcoin and crypto? Explain simply. True ownership is the short answer. True ownership. What does that mean? There is no intermediary. You have the full right to move the funds anytime, anywhere, as you wish. You have the power to do it. You don't have to ask permissions. Let's get back to the 1953 example and say that Bitcoin exists.