Special New Year Episode & Building in Regulated Industries with Edward Woodford

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Transcript of our conversation with Edward Woodford:

Immad (01:40.565)

Hey everyone, welcome to Founders in Arms Podcast with me, Immad Akhund, co-founder and CEO of Mercury.

Raj (01:46.992)

and I'm Raj Suri, co-founder of Lima and Tribe. Happy New Year, everyone. It's 2025. This is our first podcast of the year. Emad, how was your holidays?

Immad (01:56.53)

Yeah, they were good. I managed to stay in San Francisco for most of them went to Tahoe for a few days, but it was actually nice to be not traveling. I did a six, six weeks sabbatical over the summer last year. So I feel like traveled out and it was good to just be here. Although my heating stopped working at home. So it was freezing for a lot of it. How about you?

Raj (02:18.545)

Wow. yeah, I had a good holiday. was in, took the kids and, um, wife to the Costa Rica for a week. Um, got a chance to see, yeah, I got, it was super nice and warm. It was, you know, um, you know, nineties during the day and, know, seventies during the night. Uh, so really beautiful weather and really beautiful country, like very modern. Um, I thought, and like, uh, you know, great support for like English and.

Immad (02:27.413)

yeah, I love Costa Rica. Was it nice and warm?

Raj (02:46.535)

Even US dollars. So yeah, yeah, yeah, easy to get around. know, it feels like a country made for tourism. You know, it's like one of these things like kind of ideal for tourism, which you do. I didn't really expect would be there in Central America, you know, in the middle of like, you know, Nicaragua and Honduras and some of these countries you hear horror stories about, you know, because of like unstable government. But turns out Costa Rica doesn't even have a military. It's like it's that's how stable it is. It doesn't it doesn't feel like it needs a, you know, an army.

Immad (02:46.909)

Yeah, the food's really good there as well, I love it.

Immad (03:15.003)

Yeah, I wonder, there's like a weird quirk about Costa Rica where it's almost all European as well. Right, there was, I mean, I think sadly they just killed all the indigenous people there or something like that. Like it's very different from the rest of Central America.

Raj (03:30.034)

Yeah, yeah, yeah. I think it also helps being near Panama, which is in the news these days because it's, you know, the US wants to take it back or release the canal. But yeah, it's a truly beautiful country. I recommend everyone going. They're adding more direct flights from SF next year or this year in 2025. So it's actually, yeah, it's actually getting easier to go.

Immad (03:46.367)

Oh really? Yeah, last time I went, I don't think there was a Daru flight. You took a Daru flight?

Raj (03:51.808)

Yeah, there's only one a week. It was only one a week. So I flew in on the one direct and came back on the same flight. It was Saturday. It comes back on Sundays. So yeah, yeah, yeah, from United.

Immad (03:57.043)

Which days are?

Oh, that's interesting. Yeah. Yeah. That's always one. When I moved to San Francisco, was always like, oh, I'll go to Central and South America all the time, but it takes forever to get there. It's like never a direct flight and it's

Raj (04:10.4)

Yeah, it is and the super east it doesn't feel like it's going to be like that east but you're basically flying east most of the time you know so um yeah

Immad (04:18.496)

Yeah. So we thought it would be nice to do a kind of personal chat, talk about predictions for 2025 before we fire into our guest, which is Edward. And we're going to talk about crypto. So let's start with that. I guess before we get into predictions, like what are your kind of personal and business goals for 2025 Raj?

Raj (04:41.749)

Yes. you know, another big year. think, you know, I have I'm running two different things these days, Lima and tribe. We don't really talk about it much. Actually, we're always talking about our guests. But Lima has actually been very relevant over the holiday period. Right. We're helping high skilled immigrants come to the US and, you know, it really was a

Immad (05:04.926)

god, I forgot about this whole India H1B debate over Christmas.

Raj (05:08.255)

Yeah, yeah, I mean my phone was blowing up. It was crazy You know to see that like Elon like kind of take on the MAGA, you know restrictionist, right? Which you know, I didn't really expect that to happen over Christmas

Immad (05:18.722)

Yeah. I mean, I'm really glad that like, I actually think the, worst aspect of, uh, the worst potential aspect, at least from my perspective is immigration of, uh, kind of Trump's potential presidency. Uh, yeah, last time he was in power, they kind of paused H1Bs for I think year and a half, uh, which was very disruptive to a lot of people and tech companies, especially, but like real human lives affected by this stuff. It's like people.

Raj (05:40.673)

Mm-hmm.

Raj (05:44.034)

Tech companies, yeah.

Immad (05:48.844)

people set up plans and like now they can't move, et cetera. So I'm glad that Elon came in very pro high-scaled immigration and Trump kind of backed him up as well. Was that the take from your perspective?

Raj (05:59.361)

Yeah. Yeah, absolutely. Absolutely. So I work directly with these immigrants now. you know, I spent some time with them and get a chance to really know their lives. And, you know, and my goal is to help them. Right. Like Lima is really focused on helping immigrants, talented immigrants, you know, live their American dreams. And, you know, it is truly heartbreaking stories. And these people have already been approved for a green card. Right. Like 10 years ago. And they're like, you know, talking about like director levels at like Metta.

And people who are pretty senior, very experienced, maybe former founders, some of them are founders, and they're trapped because our immigration system is really backwards and actually is discriminatory against Indians and Chinese in particular because there's extremely long wait times to get a green card. What happens with these folks is they actually have kids who are going to age out of the process. even though they've been approved for a green card, their kids cannot get a green card after they hit a certain age, just like, what, 21?

And so they, you know, basically their kids are getting too old. So the kids will have to go through their own 15 year, whatever. Well, no, we try to get them into a different category of green cards, which is a little bit faster.

Immad (07:02.083)

Jesus. So what's the solution? Like there's just no solution.

Immad (07:10.724)

That's kind of funny because you think Biden and Democrats would be better about immigration, but they didn't really fix these things either.

Raj (07:19.397)

So that's a misconception. think the Biden team has helped on the margins. They've helped with making O1s easier. You might hear about O1 visas. Many founders are getting O1 visas now. A lot of YC founders who are coming from overseas are getting O1s. And Biden made it much easier to get O1s. So for entrepreneurs, actually, Biden has been very helpful. But they can't change the laws. So some of these things are actually built into the statutes. And you need congressional will to get this done. And the whole immigration debate

Like everyone will tell you, especially, you know, I say on the Republican side, but even some Democrats, can't, we cannot change anything about the immigration laws until we fix the border. Right. And so the border has really held this whole thing up. Right. And even if you look at what Trump is looking to pass, like his first priority is going to be border law. Right. Like it's going to be more focused on border law. The truth is that like of the 1.6 million immigrants that came into the country last year, I think that was a stat.

Like only 100 or 200,000 were skilled immigrants. know, like it's still a drop in the bucket compared to like, you know, the migrants.

Immad (08:23.365)

But only those were legal immigrants as well, right? Like everyone else basically walked across.

Raj (08:28.185)

Yeah, yeah, yeah, yeah. And all the attention goes to the illegal immigrants. so, yeah.

Immad (08:33.273)

Yeah, so what are your big aims for Lima this year?

Raj (08:36.4)

So we grew a lot last year. We're helping hundreds of immigrants now. We hope to get to thousands this year. It's one of the fastest growing things I've ever worked on in terms of impact and helping people. And it's very gratifying to be able to get people approved for like

Immad (08:52.773)

So is that like kind of a services based legal side or you're helping with technology?

Raj (08:56.654)

Yeah, it's really services. It's really like a high touch service. And that's something I've never done before, which is like a service type of business. But we're not like doing AI. We're not doing anything there. That's it's it's it's we're just helping people like that, you know, and people need help. mean, being an immigrant is very lonely. You know, it's it's like it's very personal, right? Because it's your own status on the line. And like I believe what's right for this space is like a very high touch personally. So it's a concierge service is kind of the way we describe it.

And we just help people solve problems. The other thing about Lima is that I believe that there's an opportunity for an organization to really be responsible for bringing in the best talent into the US. So there's no one's job in the US government to bring in talent. there is like, you your job at Lima is you probably see part of your job is to bring in the best talent or your job at Mercury is to bring in the best talent to Mercury. And I felt my job as CEO is always

Immad (09:54.513)

Honestly, it's too hard to bring in international talent like we, we don't try that often. Yeah, I guess we don't have like a super specialized need like AI or something like that. But, but it's true. Yeah, there should be someone trying to bring the best people to the US. Yeah.

Raj (10:00.229)

Yeah.

Raj (10:08.86)

Yeah, and there's no there's no Department of Talent in the US, right? So it's like we almost have an HR team, but not a talent team or recruiting team, you so like at the country level. Yeah, yeah, yeah. Basically, you know, people are trying to block people from coming, but not people from attracting, you know, and I think that there's an opportunity, you know, to to have an organization that's really focused on talent for the United States at large. And so we've started doing this like and our goal is to actually build offices worldwide to scout talent and bring them to the US.

Immad (10:15.271)

Hardly even in HR team.

Raj (10:37.88)

and actually compete for talent globally. So bringing the best Russian scientists, for example.

Immad (10:45.553)

Are you going to work with companies as well? Are you going to be like, hey, like meta, who do you need? And we'll go find the talent or

Raj (10:51.421)

Yeah, yeah, but we're talent first So I think it's almost gonna be like a talent agency from that perspective Like we're gonna be like representing the talent and then we'll work with employers to connect it. Yeah. Yeah. Yeah So I probably you and I haven't even talked about it, you know in detail, but that's kind of it's a long-term thing I mean, I I believe I mean Lima is gonna be around until I die, you know, I think it's gonna be like like it's a long-term thing I really believe in immigration. I believe in bringing the best people to the US. So

Immad (10:59.961)

That's a mission, I like it.

Raj (11:18.782)

And then, know, tribe is something completely different. It's like a next generation group chat app, which, you know, we haven't talked about publicly really much at all. It's, know, I believe group chats are one of the most delightful online integration, online interactions you could possibly have. I think it's quite different from like Twitter and like, you know, even Instagram, it's not performative. It feels a lot more authentic. You and I are in a lot of group chats. We've had some of the best conversations of my life. I've been on these group chats to some of the, you know, the best relationships I've built are through group chats.

Immad (11:47.646)

Yeah, it's also kind of a callback to the early internet. Like I grew up on IRC and like, you know, it's basically group chats online and they kind of died out with kind of the initial wave of social media.

Raj (12:00.094)

Totally. Yeah. And there's something about like a private group chat, you know, that's focused on a specific interest of yours. It's like a, it's like a dinner party that's, you know, kind of divorced from like time and space because like normally you go to a dinner party, at a certain time, it's at a certain place. But when you have a group chat on your phone, you can talk to them anytime in any place. And so you're, you're free from constraints and you, you know, that means is that you can actually build relationships with people over time.

which actually builds a lot of trust and I think you can build some great relationships. So I personally have like 20 or 30 different group chats I'm part of, right? And I feel like it's really helped me like learn a lot more about my interest and also meet a lot of great people. And so I want to build the best possible group chat experience out there. And you know, if we can do that, I think people will enjoy it. think people will feel more actualized as people, you know, and

get the chance to meet more people and build good trusting relationships with them. So it's very experimental, it's very new. I still think we're very early on this group chat adoption thing, even though it's kind of hit the Zeitgeist recently, you see a lot more media coverage on group chats these days, but I still think we're very early. So it's one of the things that's another 10 year type of thing. So my goal is to move that forward.

Immad (13:14.378)

Yeah, I think the hardest thing with group chat is discoverability, right? Like I'm only in the group chats that I guess like close friends are creating. It'll be interesting to kind of focus. I mean, is that some major focus of yours, discoverability?

Raj (13:28.744)

Yeah on tribe you can discover group chats right now. You can there's a there's a way to search and you know We have a small library. I think over time it'll be much bigger I actually believe group chats are better when they're smaller though So I don't believe I don't believe in these hundreds of people in a group chat or even thousands Like I actually believe a small intimate group chat like less than 50 is the best thing

Immad (13:47.254)

You know what's kind of interesting and I mean, it's tricky to do. No one's pulled it off as there was this cool app called back channel that I was invited to. And basically what this team did is they, it's all done off test flight. So it's not launched on the app store and there's a different test flight with a different back channel for like 80 founders at a time. So there's three or four of these, but you only have 80 people and it's fully anonymous, but there's only 80 people in there.

Raj (14:15.232)

Mm-hmm.

Immad (14:16.085)

I thought that was kind of smart because it's like, can basically like fractally fork out and have like 50 of these and it's just 80 people at a time. And that never has the problem of like being like too big.

Raj (14:23.243)

Yeah.

Raj (14:28.459)

Yeah, yeah being too big is a real problem, know for group chats. It's kind of like it can't be too small It can't be too big. I still think there's a lot of interesting ideas out there in consumer social and like I think you know vcs have given up on it way too early but I understand why they have because like there's only been like a very few big successes in this space But I think there'll be a lot of medium successes as well So we'll see how things go because the market size is way bigger than you know, when you and I started our careers so yeah, those are two big, professional things and then you know

I think from personal perspective, my kids are turning four and six this year. So it's great to, you know, kind of entering that, that, I really can feel it. We're entering that, kind of a promised land or like, you know, of kids ages. And you could, you can tell like, it's like the kids are super fun to hang out with these days. You know, this doesn't feel like a lot of work. feels like, you know, you're actually having really good quality time with them. And I probably have this until like they're teenagers, but you know, it's, it's, only limited time. mean, I realized that.

So how about you? Tell me about your personal goals and professional goals for this year.

Immad (15:32.527)

I guess you started with business first. So our big goal this year with Mercury is to expand outside startups. So, you know, we really dominate the startup banking space, especially post SVB, which is a great space to be and it'll still be our main focus. But most people don't realize it's, you know, that's only about 20, I think it's 27 % of our customers. So we're pretty big in kind of e-commerce and professional services and

and real estate, but it's all of that growth has been pretty incidental. I wouldn't say accidental, but it's not been a major focus. So next year we really want to, well this year we want to make it an actual focus. So how do we grow? I think the three places we want to grow is e-commerce, professional services and personal banking. So all three of those, you know, in terms of volume, much bigger markets than startups. And, you know, the fun thing in

in banking and FinTech is like any any niche sounding market is probably like a $10 billion idea. So there's a lot we can do that and we kind of just early innings there, especially personal banking. Do you use Mercury personal yet? yeah, you do. Yeah. Nice. Yeah, same for me. It's it's so such a nice experience. So yeah, I think there's a ton to do that.

Raj (16:37.006)

Mm-hmm.

Raj (16:45.283)

Yeah, I love it. It's become my main bank. I switched away from Bank of America and whatever else I use. It's way better.

Raj (16:55.0)

Yeah, it makes so many things easier. And like, you know, one of things I love about it is like transfers are so easy, you know, with Mercury. And like you guys are really going the extra mile on getting that right. And that's a big headache. And like if any legacy bank, I hate it. I hate working with like Bank of America or any other bank. mean, they're not that good. So Mercury has really nailed that experience. Yeah.

Immad (17:14.309)

Yeah, or searching for something. I don't know why banks make it so hard to search. When I started Mercury, I was like, there must be a law. There must be a law that makes it so hard to search. Because you know, like if you go past three months, normally you have to go through PDFs to find things. Yeah, there's no law about that. You would think there was a law because it's so consistently a problem every bank. But yeah, it's this. You know, one of the

Raj (17:21.571)

Mm-hmm. Mm-hmm. Mm-hmm.

Raj (17:28.581)

Mm-hmm. I know. Yeah. Yeah. Yeah. Yeah. Yeah. Just a bad experience.

Raj (17:36.943)

Yeah.

Yeah, and you guys pay good interest rates too, right? that's another thing is like it's a you have really good, you know financials as well

Immad (17:45.989)

Well, yeah, so I'm really excited about those things at Mercury. I mean, there's a ton of other things happening as well. So it's kind of funny when like Mercury is now an 800 person company. So it used to be the case where you could just have one focus and you're like, this is what we're going to do in the next six months. But now it's like, okay, well, that's one of the 50 things we're doing. But yeah.

Raj (18:05.336)

Yeah, you're actually money multiple companies within the company. like you're basically these are different like business units, right? Yeah

Immad (18:10.406)

Yeah, yeah, basically. I mean, even each product, know, FinTech is really hard, which you'll see more from Edward later in the podcast. But even each product, we do last year, we were working with and we're rolling out more kind of lines of credit. Sorry, lines, letters of, I guess lines of credit. So giving e-commerce companies like some cashflow. And it's a pain. Like you have to...

Raj (18:34.363)

Mm-hmm.

Immad (18:37.267)

have a whole underwriting engine for that. You have to go get licensing in every state for lending. There's just so much to do. And it's a small-ish line item for us, but it's definitely like a whole startup worth of work, a whole complicated startup worth of work just to provide an extra financial services feature. But yeah, it also makes it fun though. I feel like...

Raj (18:50.636)

Mm-hmm.

Immad (19:04.955)

One of the reasons I started Mercury is I feel like most startups, once you do that one thing, you then spend a lot of time kind of scaling that one thing. It's like, now I'm doing better sales and marketing, or like now I'm building like, I don't know, enterprise octa features or something like that. with Mercury, there's just so many complex kind of startups within it that you can build over time that at least it's like, you know, I'm a, I like that zero to one motion. I think it's like kind of fun. Yeah.

Raj (19:25.936)

Mm-hmm.

Raj (19:31.09)

Totally. Yeah, I love to see that as well from working all the new products you keep coming out with the product launches. It's great because you're right. It's a big space. There's there's a lot of room to grow. There's a lot of like, you know, dinosaurs in the space that need to be disrupted. So it's for me as a user, I'm very excited, you know, to see everything you guys are doing. You know, are you excited for the next four years, you know, in a more deregulated environment?

Immad (19:45.062)

Yeah.

Immad (19:56.628)

Yeah, I think it'll be interesting. you know, I don't expect it to change that much, right? There's a summer. think there's some spaces that have like a little bit more direct, like, you know, the president changes that administration changes and then everything changes underneath. Whereas in banking, there's so many regulators and and you know, these are big organizations, the FDIC, there's the Fed, there's the

OCC, there's the CFPB. So any change from the top is going to be fairly diffuse. And yeah, there's generally bipartisan support and like, you know, stopping money laundering to Russia or like whatever, right? There's like, there's a reason all of these kind of regulations and laws exist. So I expect it's going to be a little easier, but I don't, I don't think it's going to be like instantly dramatically different. And, you know, one thing that

people I think don't see from the outside is, I guess like 2018 to 2021 was kind of like a massive boom time in FinTech. And in general, it was quite easy at that point, right? And that was over both Trump and Biden's kind of regulations. So, the pendulum kind of swings where it's like, oh, we didn't regulate the stuff and now like,

you know, some crazy stuff happened like there was BlockFi, there was FTX, was SVB's failure, there's kind of more recent synapse issues. So, you know, to some extent we're like in a situation where the pendulum's maybe swung too far towards kind of oversight, but it's not gonna be like an instant swing back either. Like a lot of these things haven't been like fully baked in and you know, all the regulations and guidance and all that is not done.

So that's on the business front. On the personal front, I'm actually having another baby in March. So that's going to be, I have a seven and 13 year old. So that'll be disruptive. The exact opposite of what Raj is going to feel this year. And, and my big thing this year is I'm trying to reduce my body fat percentage. I've got 28 % right now. So I'm trying to try to get it down to 12 % is my aim. That might be unrealistically low, but I feel like it.

Raj (22:00.485)

Mm-hmm. Congrats. Third, right?

Raj (22:14.837)

Mm-hmm.

Raj (22:20.319)

Wow.

What's your strategy for that? Like, just eat less, work out more?

Immad (22:26.583)

yeah, it's mostly diet. I think it's very hard to work out enough to make a dent on these things. Like if you do like one, one, one hour of like very extreme exercise every day, maybe you can, but, generally eating less is the way, I'm the main thing I'm doing is skipping dinners. I feel like not just skipping dinners, but like basically like doing intermittent fasting, only having like a little bit of protein in the evening.

Raj (22:37.866)

Mm.

Raj (22:51.992)

I know. Yeah, I love kids food, you know, I'm like

Immad (22:52.044)

I just find I snack a lot, especially with kids food around. There's just always something to eat. Yeah, it's tasty. That's why the kids like it too. All right. Let's see. What is your biggest kind of tech innovation prediction for 2025?

Raj (23:02.1)

Yeah.

Raj (23:12.587)

Yeah, answer one last point on your thing. It's really hard to control your diet with with like young kids with newborns. I find like my my diet went out the window when I had kids, you know, like so because your sleep cycle is odd. Yeah.

Immad (23:23.916)

I'm pretty good with rules. Like if I have a rule that's like, I'm just not eating anything but like a protein shake from like 3pm onwards. I'm pretty good at doing that. If I have any ambiguity, if it's like, I'll just eat less than I like, don't follow.

Raj (23:30.136)

Okay. Okay. Good.

Raj (23:37.047)

Yeah, will say though if you have a newborn and they're like just disruptive sleep cycles, it's a bit it's a bit harder, you know, all them all Yeah You'll have a night man. Yeah Your sleep is okay. Yeah, you're an experienced dad at this point, but know, yeah, you know with kids, the nannies don't solve all the problems. but yeah, anyways, okay. Yeah. So what was your question again? The tech track tech transit. Yeah

Immad (23:42.485)

Yeah. Well, I have a I have a night nanny, so I'm hoping my sleep is going to be beautiful. But let's see.

Immad (23:55.499)

Of course.

Immad (24:01.38)

We're talking about tech trends. Like what is your most anticipated tech trend of 2025?

Raj (24:07.584)

Yeah, it's a really exciting year, I have to say. It feels like there's so much happening in this space. I'm obviously working in the consumer AI space. We try, but we have actually big AI component as well. Sorry, am I frozen here?

Immad (24:26.114)

Just your video.

Raj (24:27.415)

Yeah, what's going on? I look weird. right. Yeah, OK. Device struggling to record. OK. Yeah, so let me see. They're suggesting I turn off some apps. Should be OK, though, right? We've been here doing this for a while.

Immad (24:29.421)

Maybe just switch it off and on.

Raj (24:45.433)

Okay, should be okay now? Is it better? Good enough, okay. Yeah, yeah, exciting year for tech. know, obviously, I'm working in consumer AI. I'm really bullish on consumer AI. Like, I think there's a lot more AI applications for consumer that people have not yet discovered or not yet implemented. So I, as you predict, will see a lot more interesting consumer AI applications. There's obviously a big trend in vertical AI and like B2B AI. mean, most of YC companies are still...

Immad (24:47.469)

Yeah, that's fine.

Immad (25:14.243)

But what's a consumer AI application that you use that you like?

Raj (25:17.477)

You know, like, you know, what we saw in the last year was like character AI and like these types of like, like ways for consumers to interact with AI. So we haven't really seen AI agents really become a consumer application so far. you know, one of things that bothered me the most is like booking travel. Like I hate booking travel. It's really complicated still. And like, I know there should be an AI agent that just books travel for you. Like you just give it some specifications.

Immad (25:37.005)

yeah.

Immad (25:43.662)

Yeah, because your preference is almost always the same. It's like, hey, don't make me wake up at 6 a.m. Don't do this. Like, okay, yeah, but yeah, it's weird how hard it is.

Raj (25:49.836)

Yeah Yeah So i'm i'm really excited for people to nail these like very basic things in their life like Or like applications that that nail these very basic things in your life even for like hey you're having a newborn so An ai agent should should actually be ready for you at every given stage. Hey, you know the newborn's turning one month old They'll probably need these things. Have you bought them? Like, you know all these basics like helping you guide you through stuff that are very predictable in your life, right? so

I don't know if it happened this year, but it should, know, AI is ready for it. the technology is there. So it just needs the entrepreneurs to go in and deliver that stuff. You know, one of the immigrants we're helping is like working on like, know, AI music, an AI music app where like, you know, obviously you can generate music, but it can help you like, you know, refine your own tastes in music. There just could be a lot more stuff. Spotify rap last year had a really cool AI podcast where like it actually

They generated a full AI podcast based on your own, what you listened to that year. So it was really interesting listening to a podcast based on your own music interests. I recommend everyone try it out.

Immad (26:57.525)

Google has this cool podcast thing as well where you like kind of shove a document into it and then it generates a podcast out of it. Have you seen that? Yeah. Yeah.

Raj (27:03.267)

Yeah, they used the same technology. was the same. It was notebook LM, right? I think it's a yeah, so But it's it's super cool to see that and and you and I may have started seeing some cool AI videos like some fully AI generated movies with a human script And I really will see a lot more of that

Immad (27:19.997)

They still suck, but I hope they do improve. definitely the power of human potential of like, you know, someone sitting at home and generating like a full movie. I think that we're not there yet, but that will be really cool. Yeah. Yeah.

Raj (27:33.948)

Yeah, but a tik tok video right like a lot of fun tik tok videos. I've started enjoying tik tok ai videos. Um, yeah. Yeah, i've seen a few of them now that are like entertaining, know, like like one one simple like um simple video that i've started to see a lot of tik tok is like basically like uh kings and queens from different countries, you know, they just generate like what a king and queen from like a different country could look like and like and it has some cool music and it's just like short clips right like a bunch of short clips

Immad (27:40.208)

No, really. Like the entertaining or the educational.

Immad (27:59.068)

Yeah.

Immad (28:02.619)

Yeah, yeah.

Raj (28:03.58)

It's just interesting to see that and you know, and then i've started seeing like ai clips for like historical events that's also cool to see like what they interpret like, you know, you know, the birth of jesus christ to look like or something like that or like, you know Like there's just some there's a lot more stuff that can be done and like ai video is getting much better So i'm excited for that from the ai perspective. You know, i'm excited for the you know, movement forward in robotics. I I still feel like

Immad (28:16.43)

Yeah.

Raj (28:32.796)

We haven't hit that chat GPT moment in robotics. Funny enough, that's exactly what Jensen Huang, the CEO's keynote this week talked about is like, we're ready for the chat GPT moment in robotics.

Immad (28:41.842)

Yeah, well, know on Fatma and I had an interesting use case like we kind of want to get a dog just from like a security perspective but My seven-year-old is allergic to dogs and yeah now they're making these like dogs you can buy Like what's the company it starts with a it's a Chinese company. But anyway, they're selling this dog for like a thousand six hundred dollars It doesn't quite have all the security features, but you know, you can imagine like

Raj (28:55.304)

Hmm. Robotic dogs, yeah.

Raj (29:02.512)

Yeah, I've seen those, Yeah.

Immad (29:10.268)

recognize someone, have some voice control to say like, hey, calm down, or like, you know, be able to like hear a noise and start barking. Like, yeah, there's no reason robots can't do all of that. And even better, like they can call the police, right?

Raj (29:13.981)

Mm-hmm.

Raj (29:21.3)

Yeah, yeah, yeah for sure. No, I think those types of things are also less like high stakes and you less like sort of product you much smaller products back then like a humanoid robot, right? The humanoid robot may take many years to get to but a robotic dog, you know, be much easier to get to. So I'm excited for that trend. What do you think? What are your tech trends for this year?

Immad (29:42.591)

I think the consumer AI stuff is still like a year or two away, but I think AI bringing efficiency to B2B processes is here, right? Like we've had basically a year and a half of people developing kind of CS agents, like document validation tools, SDR agents.

There's just a ton of things that happen that involve humans in like back office spaces. And yeah, I think mercury is relatively efficient and like has a lot of technology, but there's still, you know, we have like 120 people and kind of risk ops, and compliance and things like that. So there's just a ton of places where humans are doing things that could be done much faster, much more efficiently, automatically. so.

Raj (30:25.215)

Hmm.

Immad (30:38.298)

And I think basically AI is there. So you're seeing this everywhere. mean, obviously FinTech is one space. I know tons of like companies that are selling to lawyers, to doctors, to therapists, to, yeah, there's a company I've talked about before. basically like half the time a doctor spends is not with the patient. They like have to write up notes. They have to like do summaries. They have to like send it off and to get a pharmacist to like do something. So like if you imagine, you know,

In the most extreme case, like maybe you can get 70 % efficiency, but let's just say on average, you end up with 10 % efficiency. But it's today, right? Like you could get a 10 % efficiency across like large industries. And like that kind of productivity boom would be huge in America, but everywhere really. Like if you think about, know, the reason the 1990s was so good is because of productivity boom due to the internet and computers kind of being fully.

distributed, but I would find it hard to imagine we can't get like five to 10 % consistently for the next three or four years through AI spreading through knowledge and service work. ideally robotics too, but we're probably a little further away from having GDP level effects from robotics. But I really think this AI efficiency is today. We are here and we're gonna...

Like it's going to get into mass adoption this year, think.

Raj (32:09.505)

At Mercury, or even Personal Life, are you any of the AI tools consistently beyond chat GPT or anything like that so far? Are you writing your own AI tools?

Immad (32:18.623)

And one fun thing at Mercury is like we're using it everywhere. I know that there's like a bunch of specialized tools. So I'll give one specific use case. Let's say you're doing a new landing site, right? There's just a lot of rules about what you can and can't say when it's a financial service, right? You can't you can't make claims about, you know, we have the best interest rate in the world, right? There's a lot of like

Raj (32:22.549)

But chat GPT or what are you using?

Okay.

Maybe name two or three.

Immad (32:47.223)

things that like, you maybe you could get away with saying in a non-regulated space, but, and that's like obvious one, but there's lots of subtle things that you can't say, or like every time we mentioned banking, we always have a disclaimer saying banks, banking services provided by X. So you can imagine like every single time there needs to be a new change to any of the landing pages. We previously had a human look at the new change and say, okay, this is good or not good. Now it's like,

an AI will do the first pass. But the cool thing was like, I didn't even know we were using it. And someone pitched me, they were like, oh, are you using this thing? And then I went and talked to the compliance team and they're like, oh, no, we're not using that, but we're using this AI tool to do this. But it's like that across like tons of different things. it's not, you people sometimes think about it as like, oh, you're going to replace every compliance worker with this. I think the

Raj (33:29.9)

Mm. Mm.

Immad (33:41.516)

At least right now, the more powerful things are like take very specific use cases and like, do you make AI do the work that a human was doing? But do it automatically and do it like, yeah, and like probably better, right? Like you can probably train the AI to spot like, you know, some niche law in Nevada that that has to do with financial services that like, you know, a human would have a hard time like making sure they encapsulate.

Yeah, so there's lots of these kind of little things we're doing across like everything we do.

Raj (34:13.412)

So you are using a bunch of AI startups, sounds like, like AI tools, not really like the chat here.

Immad (34:16.464)

Yeah, I mean, we sometimes there's a little bit of like, just hit open AI to go do something. But, you know, from our perspective, and like, maybe the generalized things will get good enough over time. But the specialized stuff is specialized, right? Like, and it's, and rather than us working to like, figure out all the ways we could train a model, or fine tune it, and worry about all the edge cases, like I'd rather just, you know, we would rather just use an AI startup or

some other company that does it.

Raj (34:47.375)

Cool, that's great. Yeah, I think so you already seen that in your business and you're offering you're doing so many you're solving different problems. So you're probably you know at the cutting edge of what's going on there. So yeah, it's gonna be a big one thing we haven't talked about is like you have a big investment, you know, you do a lot of investing too. So is that when we're big thesis for investing?

Immad (35:09.177)

Yeah, mean, AI has definitely been like the trend to invest in for the last two years. But it's interesting, like what, what you end up investing in an AI changes every six months. So yeah, maybe a year and a half ago, was still kind of more deep infrastructure stuff. Like there's like eval services or like foundation models or there was a

Like how do you make an AI, you browse the internet. Like there's a bunch of like infrastructure stuff. Yeah, eventually like most of the obvious things are like overfunded kind of thing. And then you kind of have to move on. I think this style of thing kind of basically like fine tuned AI for like specific use cases. I think there'll still be more of that. I don't know if it's like the most interesting thing to invest in today for a.

pre-seed seed investor, which is what I am. Like that was probably the most interesting like six to 12 months ago. I still think like these AI agents are interesting and there's a lot of different ones you can do. So that's a good space. And then I think just B2B apps that are enabled via AI, right? Like it's not, it's still like a B2B SaaS app or something like that. But it's just like massively juiced up because of AI. And there's a bunch of people working on that in lots of different spaces.

but yeah, I just spoke to one yesterday. That's like, I guess I shouldn't go that deep into it, but yeah, you can imagine there's all of this like unstructured data that's around with businesses and like, how do you kind of suck that in, make structured data and like, give people insights, workflows, all of these things on top of it. Like a business is full of like PDFs. Anything to do with like a PDF or an email, like how do you turn that into structured data is like a powerful use case.

Raj (36:42.536)

Totally.

Raj (36:54.248)

Yeah, yeah, yeah.

Raj (37:01.0)

Do you have goals for your fund too? Like do you have a certain number of investments you want to make this year or something like that or?

Immad (37:06.472)

Yeah, mean, yeah, I've fairly consistently made like 20 to 30 investments a year. That's kind of the target for this year. And yeah, we'll mostly seed, pre-seed and yeah. It's such a fun way to learn about interesting ideas and startups. So that's really like the main reason I do it.

Raj (37:28.36)

Yeah, and you can source great opportunities just from what way your company is using your company. One of your team members says something is good. Yeah.

Immad (37:32.346)

Yeah, that's true too. Yeah, or like, you you see problems within the company as well. It's like, I wish someone would solve this and that can drive interesting thesis as well.

Raj (37:40.242)

Yeah. Well, we should stop talking about ourselves for a bit and then invite our guest to come join us. We have Edward Woodford waiting for us.

_______________

Immad (00:01.03)

Hi everyone, welcome to the Founders in Arms podcast with me Immad Akhund, co-founder and CEO of Mercury.

Raj (00:07.431)

And I'm Raj Suri, co-founder of Tribe and Lima. And today we have Edward Woodford, who is the founder of ZeroHash. Welcome to the show, Edward.

Edward Woodford (00:17.987)

Yeah, thanks for having me, gents.

Immad (00:20.043)

also fellow Brett, but you live in Chicago, right?

Edward Woodford (00:23.917)

Yes, fellow Brit, been here for about 10 years now. And yes, in Chicago.

Raj (00:30.422)

Wow, why Chicago?

Immad (00:30.456)

What was your kind of entrepreneurial path and how did you end up in Chicago?

Edward Woodford (00:36.523)

yeah, mean, Chicago sometimes is seen as a little bit of a flyover city. but, but, but, but I love it. Yes, exactly. but, came to the States, did my graduate degree at MIT, founded a business, did that for two years. Learned some good lessons. we were able to exit, you know, small return. but it really, it was a regulated business. And so it really taught me the tough lesson that.

Raj (00:43.277)

Especially in tech.

Edward Woodford (01:04.727)

Regulation is a necessary condition for success as opposed to a sufficient condition for success. And so it really inspired me to build my next business, ZeroHash, which is an infrastructure business, right? Which allows you to so-called fail fast. It's very hard to fail fast in FinTech. And so that experience led me onto ZeroHash, which I founded in 2017 and have been building that ever since.

Immad (01:26.746)

What was your previous regulated business?

Edward Woodford (01:29.811)

It was called Seed and it was a regulated commodities market with the CFTC and our focus was around what we called alternative commodities. So that was effectively, so it included industrial hemp, effectively legal cannabis, included avocados, limes. We were even pushing on a Bitcoin contract. We were pushing on events-based contracts, but...

Immad (01:39.247)

Like what?

Immad (01:51.535)

Wait, so you just woke up one morning and you were like, hey, I would love to trade avocados on a futures market.

Edward Woodford (01:57.231)

Yeah, I mean, it's really interesting. The US is really interesting from from from like there's a lot of niche, niche in this space. There's a lot of politics that goes into it. So actually, there's very few things that are illegal in the United States to build contracts on. Actually, one of them is onions. So it's illegal to build an onions contract. There's a reason why chicken contracts don't exist because people hedge out chicken risk by just basically hedging out corn and wheat. People just see chickens as whatever they eat.

And so I got really, really fascinated on this. I realized that a lot of people, somebody cornered the market in the 1950s and they effectively said, we will make this illegal. Same thing with movie theater receipts. If you believe it or not, Dodd-Frank made it illegal to create a futures contract on a movie theater receipt because Hollywood didn't want it. So I love this kind of nicheness.

Immad (02:28.369)

Okay, are onions illegal?

Edward Woodford (02:49.455)

And ultimately what we were doing was probably overly niche. We were probably 10 years too early in terms of the adoption of our core markets. But we got regulated. We sold the regulated entity onto a group called Tasty Trade, which then built the small exchange leverage in our infrastructure. And so it did go somewhere, but it wasn't the VC success story that you want to talk about, so to speak.

Immad (03:15.057)

And zero hash. I mean, maybe I'll butcher the explanation, but you guys are building like an API to do stable coins and other crypto things as well, just stable coins.

Edward Woodford (03:28.493)

No, both. So we provide infrastructure for both crypto and stable coins. So we solve two problems for our partners. One is licensing and regulation. We're regulated in the US in every single state. We're regulated in Europe, Brazil, Bermuda, Australia, New Zealand, Canada, all over the world. And we provide an ability for people to launch a crypto and stable coin product very simply and easily. Secondly is the technical complexity, especially in stable coins. People don't necessarily understand this, but if I want to send you a stable coin,

We now have multiple stable coins such as RL USD, USDT, USDC, and then it's even more fragmented in that it's multi-chain. So USDC now is built on 15 different chains. Our focus is on allowing account to account transfers of stable coins. So abstracting away the complexity of different stable coins and different chains so that customers don't need to think about that. Some examples that we've launched, you know, in the last six months are for example, account funding. So if you've heard of Caoshi, one of the largest events-based contract marketplaces,

we allow you to fund and redeem real time using USDC. Similar story with remittances with groups like Felix Pagel, payouts, you know, if you're a freelancer around the world, paying somebody in the Philippines or in Brazil with stable coins, we power that with groups like Stripe and then tokenization rails as well. So groups like Securitize and Republic and Franklin Templeton all leverage our infrastructure to access 24 seven three six five, the movement of value.

that is stable coins. And then of course we service more traditional crypto brokerage like products and that includes groups like interactive brokers, effectively Coinbase out of the box is how you can see that kind of crypto as a service part of the business.

Immad (05:07.732)

Was there was this billion dollar acquisition by Stripe for Bridge, right? Was that a competitor of yours or is that different space?

Edward Woodford (05:14.148)

Yeah.

Edward Woodford (05:18.083)

Yeah, I I think in some ways that they are, they're significantly smaller than us from a revenue perspective. And so I think it was a great mark for us and clearly has garnered a lot of attention and interest in the stablecoin space that we've been building in since 2017. So, yeah, I I think the stablecoin story is evolving. I outlined some of the use cases that we see.

it's going continue to scale and evolve. think traditional acquirers and processes will move into the space, traditional brokerage platforms. And our goal is, you know, we power, for example, today's Stripe in some use cases that Bridge doesn't offer, and I don't think will.

Immad (05:58.742)

How did you, what's your kind of psychology as a founder when you see like a smaller competitor get acquired for a lot? are you like, nice, they're out of the space. So you're like, my God, now Stripes in the space. Like, how do you kind of view that change?

Edward Woodford (06:16.003)

Yeah, look, for me, I think I've become a lot better at managing your emotions, right? Like, especially in this space of crypto and stable coins. I mean, we've known each other for a couple of years now. And since we've known each other, we've gone through maybe three or four cycles of hype and fear, right? so if you, exactly. So if you let those things impact you too much, I always say the hardest thing, and there is a trade off, right? The hardest thing in building a startup, and I think especially in a startup,

Immad (06:28.95)

Just don't look at the market too much.

Edward Woodford (06:44.087)

in a space that even has these kind of like, they're electrified even more than building a normal startup. You've got to narrow your emotional bounds. You cannot become overly fearful when FTX happens. You can't become overly bullish when this Stripe stuff happens as well. The reality is that you've got to try and narrow those emotional bounds. The hard thing is just not becoming unfeeling, right? Because you narrow your emotional bounds so much that you forget to celebrate some of the successes and you sometimes can forget to empathize.

when this noise does impact other people on the team. for me, what it does for us, mean, every single, we already power some of Strikes competitors like Shift 4 and Nuve. I think other groups are going to accelerate into this space. And so those groups in some ways really bridge was a competitive in that narrow lane of what we do. I think that positions us incredibly strongly there. But.

Yeah, I mean, look, it's a great mark. mean, the interest from VCs is always a little latent to the reality. And so, you know, it creates a good mark for us.

Raj (07:51.38)

Edward, one question I have, I'm coming at this from like somewhat of a less sophisticated perspective, but maybe some of our listeners also will have this, less prior knowledge. There seems to be momentum in the stablecoin space of crypto. Why? mean, what's happening? Why is this valuable? Would you describe Bitcoin as a stablecoin?

Edward Woodford (08:16.161)

No, so a stable coin is effectively a tokenized representation of a dollar. So sometimes I break this down by three levels, right? So there's blockchains and then there's assets on top of blockchains and then there's accounts. So blockchains are, for example, Ethereum, Apto, Sui, the Bitcoin network. And people have built on top either native assets. So for example, on the ETH blockchain, there is a native token that is Ethereum.

Raj (08:17.033)

Okay.

Edward Woodford (08:45.123)

but you can also build other assets on top. And some people are tokenizing, for example, tokenized money market funds, such as Biddle, which is BlackRock's tokenized money fund. And then there's also, for example, a tokenized representation of a dollar. And that is what a stable coin ultimately is. And then the third layer is accounts. So I want to send Raj a stable coin. Right now, I need to consider it is the same, or if you don't use zero hash effectively, you need to consider is this

the same stable coin and is it on the same chain? Because if I'm sitting USDC on Solana and you have a wallet for USDC ETH, guess what? It doesn't work. So that's why the technological infrastructure that we offer is helpful. To your question as to why, what's changed? Stable coins have existed for a long time. My personal view of what's changed in the last 12 months is the infrastructure around stable coins and what I call the...

the core bank and the core account structure. So where clients have their money today. So in the last year, groups like New Bank in Brazil with a hundred million clients have offered stable coins. Revolut now offers stable coins. Robinhood now offers stable coins. PayPal now offers stable coins. So that's effectively close to a billion people now have access to a stable coin through their core infrastructure. And so that allows me to use it much easily.

I'm not a big believer that most people should hold stable coins as a store of value. Why, right? You miss out on interest. There's all these other reasons, but as a mechanism for transfer, very little can compete with it as a cross border mechanism of transfer. And so that's what's ultimately changed is that, for example, if you want to trade on Cauchi on Sunday night, previously you couldn't do that. You'd actually have to wait for an ACH to be pulled and you'd miss the ability to trade on the election on this Tuesday. If you have a...

an account at PayPal or you have an account at Revolut or you have an account at Newbank, you can effectively convert that into USDC real time and send that on chain and fund your account real time. So that for me is what's changed is that the infrastructure has become so much broader. And now you can build these applications on top, almost like people use the analogy of the distribution of the iPhone allowed for the app store to be created. I kind of view the equivalent of the app.

Edward Woodford (11:01.711)

that the iPhone distribution is the same technology distribution that has existed in USDC and USDT and others over the last 12 to 18 months.

Raj (11:10.284)

Okay, I think I understand. So it's basically a faster conversion mechanism or faster trading mechanism basically, especially cross border.

Edward Woodford (11:20.207)

It's a faster transfer of mechanism of a dollar representation exactly.

Raj (11:24.002)

Yeah, yeah, got it. Yeah, and that can be valuable for companies like Stripe because they do a lot of transactions, right? Is that what they're primarily using it for?

Edward Woodford (11:31.887)

Yeah, let's use like, in my business is a great example, right? You, for example, have freelancers and people that you need to pay globally. A lot of people, one, can't accept a dollar. They don't have a dollar bank account. And then secondly, even if they do, my assistance is in the Philippines, for example, and we use a traditional payroll provider to pay her. She's not being paid on time over the last three months. It's almost impossible the number of hops that they have to go through.

And so we now use stable coins to pay her and she then does the local last mile into Filipino peso herself. So that's a great example. It's the power of stable coins is that it's a mechanism to transfer dollar representation 24 seven three six five to anybody that has a phone. That's ultimately what it means.

Raj (12:19.257)

Yeah. Yeah, no, I can see that. That's powerful. And banks, bank transfers internationally are so complicated and, you know, they often go badly. So I can see why probably Immad is very interested in this technology.

Immad (12:33.2)

Yeah, the swift international payment systems suck. It's like, you know, to send money from like a US bank to the Philippines, there might be three or four banks in between. This stuff is not like on a chain. is like the way this money is being sent is by files. Like you send a file to a bank, the bank acknowledges the file in like in minor even acknowledge it might just go in some ether. There are some like cool improvements to

Swift that do let you track it every hop, but even those haven't been adopted by internationally. mean, like you can just imagine like the US has 6,000 banks. I don't know how many banks in the Philippines and there's maybe a bunch of banks in between all of this like massive coordination effort is just like very tricky. So USDC definitely like solves that like tech just by overlaying a technology on top of it. I think it's pretty powerful.

The trickiest part and like part of the reason why mercury does not support stable coins that edward and I have talked about this is Yeah, there's a lot you get in terms of You know when you're sending something to swift you have to have someone's name you have to have someone's address You know, you can do sanctions checks. You can do money laundering and active activity transaction monitoring, etc How do you address that question at word when someone's like hey, like how do you make sure that you're compliant with kind of?

BSA, AML, and all these other kind of laws around money movement when you just have like an ether address.

Edward Woodford (14:06.819)

Yeah, absolutely. one is stable coins are one of the most tracked mechanisms globally. It's completely all on chain and all public. We have lot of responsibilities. For example, every time we send a transaction above a certain amount, we have to report on the travel rule. And that means that we're sharing the name of the person that is sending the funds and to whom with the recipient on the other side, the other centralized platform.

Also, I think it's really important that with stable coins, the issuers can lock stable coins. So they can simply say, no, when you don't, you've used this stable coin for nefarious activities, that gets locked down. If you actually look at the stats around stable coins as a whole,

Immad (14:51.369)

When you say lockdown, say like some government find out that a stable coin was used for drugs. Now the issuer can say we will no longer let you redeem this stable coin for like USD.

Edward Woodford (15:04.024)

It's actually, it's effectively canceled on train. Yeah. So effectively USDT, USDC.

Immad (15:08.682)

But then if I just have an ether address like on my local machine and someone sends me USDC, how do I know it's not like locked USDC or like real USDC?

Edward Woodford (15:19.951)

Yeah, look, with any control, always this kind of friction between autonomy and that. So there is a risk of that. I think Tether has announced that they've locked over $100 million of USDT in the last month or two. So this is a tool that is used consistently. I think it's just pertinent to note that Zerohash is highly regulated. We're regulating every single state. We're regulated by NYDFS. Yeah.

Immad (15:42.698)

Alright, so let's just finish this. So USDC is not necessarily fungible. Like if I receive a USDC, I have to go check like is this still a safe USDC?

Edward Woodford (15:51.567)

It's not that you have to check. mean, if it can be transferred, it is. I haven't looked into the exact locking function, but it's all public source code that you can look at. And effectively now any stable coin issuer has an ability to lock assets. It's called like a lock function on a stable coin. I'm just giving that prelude.

Immad (16:09.855)

And is there not good enough mixes, I guess, for people listening? Mixing is like when you shove a bunch of coins from a bunch of different sources and then you kind of release them to separate wallets and it becomes confused by everything you get from.

Edward Woodford (16:23.587)

Yeah, so we're gonna go down a rabbit hole of whether technology in and of itself should be regulated. And there's been a lot of interest in court cases in the US around the concept of mixers. The reality is that if an entity uses a mixer, those assets are tagged and no group will accept those assets. So the beauty of the stable coin is that I can see every single hop since inception. So if that hop has gone through a mixer, we won't accept those assets. Those assets will be locked.

on our side. much of this, the transparency that is created by stable coins actually makes it a very inefficient way to move money, especially for bad purposes.

Immad (17:03.156)

If some, how can you reject accepting something? Like if you have a address, you can't stop someone sending you something, can you?

Edward Woodford (17:10.927)

So I think maybe it's important to take a step back. There's a difference between a platform like Zerohash, which is a centralized regulated platform and a self-custodial address. So I think you're alluding to the fact that with a self-custodial address where the private keys are stored on your phone, for example, that is a very different complexity. So we do have the ability for our partners now to say that they will only send and receive to other centralized platforms that also are on the travel.

that effectively travel for all compliant. And that gives a lot of comfort to regulated platforms. So what that means is, it's very similar to like a plaid of, like I don't wanna go into too much detail, but say for example, you're looking to send funds and let's say Mercury said, hey, we wanna make sure that those funds do not go to self-custodial addresses. What we do is we effectively force that client to log into a centralized platform, link their account, link their address, and those funds will only be sent to that address and we can name validate.

So in that instance, it creates some friction. It's certainly a step that some people don't like in terms of what stable coins were, know, were some purposes of stable coins, which is effectively to give less, less power to governments and some people's mind. but, but these are solved problems now by zero hash. And we create a lot of flexibility for groups that do have these concerns. But again, if you look at the data from groups like chain analysis, there is a lot.

less, if you actually look at the stats, there's very, very, very little bad actors done on stable coins relative to, for example, physical cash, relative to, for example, checks, relative to, for example, some banks around the world. So I think it's always important to compare what is the actual data showing, and it's incredibly transparent.

Raj (19:08.772)

So one question I have for Edward is, how does the stablecoin industry and also what you're working on, how does it change in a new regulatory environment going forward? Obviously, we're about 10 days away from an inauguration here. Is that something that is a kind of tailwind for you and more friendly direct? I mean, I'm guessing it'd be a huge tailwind, right?

Edward Woodford (19:33.913)

Yeah, absolutely. think, you know, we spent a lot of time in DC and I'm going to DC just before the inauguration. It's funny, DC has now become not only a political hub, seems, but also a business hub. But I would bifurcate Stables versus crypto from a regulatory perspective. Stables being tokenized dollars or tokenized euros in the US. There is very large bypasses and support around stable coin acceptance in the US.

Raj (19:46.339)

Mmm.

Raj (20:02.774)

Already, even in the Biden administration, that was, yeah.

Edward Woodford (20:03.755)

or yeah, before to some degree, even on crypto. So there's a couple of things. I think one of the challenges for the crypto industry is to say, what do we want? Right. There's a lot of talk and a lot of hype, but what do we want? I can, I can tell you what we think is needed, but there's a couple of things that have happened. So over the last few years, there's been this instance of regulation by implication.

And what I mean by that is effectively governmental agencies saying if you do something which is completely legal, we will make your life a misery. And that's what's happened repeatedly. So for example, they created a rule, the SEC created an accounting bulletin, incredibly nuanced, an accounting bulletin called Saab 121, which basically dissuaded any publicly traded firm, dissuaded any regulated broker dealer from trying to...

Raj (20:44.26)

Thank

Edward Woodford (21:00.311)

offer a crypto service. They did the same thing to banks and Coinbase has done a huge amount of work collecting information from the FDIC. I wrote a blog on X around the debanking experiences that we faced. It was to the degree that a bank was sponsoring an event that I had won, an award that I had won. And I got an email the night before saying, you're not invited, you can't come to the event because they're paying for your meal. I mean, it was that extreme. That's how scared banks were of servicing.

the crypto unstable in space. Just to be clear, we're incredibly well-banked, you know, now, and we've remained banked. But there was this regulation by implications. I think that's one of the big things that will change at this point is the change in governmental agencies. Correct. Correct. And then that got a lot of, you know, a lot of interest on X, you know, David Sachs tweeted about it. Just to be clear on banking side, and you'll know this better than anyone, is...

Immad (21:41.018)

Is this what was called choke point 2.0 or is this a separate? Okay.

Edward Woodford (21:55.373)

Banks could make risk determinations themselves. Hey, we don't want to accept a certain risk profile. But what was happening and what was ultimately where people get confused about debanking and I've had discussions with people say debanking wasn't real. Operation choke point 2.0 wasn't real. The point of operation choke point 2.0 was effective saying this industry in of itself, we deem to be super risky and you should not bank it.

That is not the way that banking works and actually explicitly against the OCC guidance as to how banking should work in terms of risk assessments, in terms of those decisions.

Raj (22:29.96)

It's remarkable, yeah. And so, yeah, I can imagine seeing the end of that would be a big relief to you. And I certainly understand that these agencies sometimes feel like they can take the law into their own hands and interpret that and use their investigation powers to stop whatever they believe is something that shouldn't exist. So that can make life very difficult for entrepreneurs.

Edward Woodford (22:53.827)

Yeah. And that's what people call regulation by enforcement, right? That is, you know, effectively enforcing or subpoenaing or well noticing people. Regulation by implication is a lot more subtle, but it actually is incredibly effective. And I gave you two examples of sub one to one and letters sent by the FDIC. And you've always started to see this to your question Raj. In the last few weeks, there's been multiple articles about, you know, bank holding companies.

that have brokerage businesses like Charles Schwab and Morgan Stanley E-Trade. Both have either publicly stated or it's been reported that both of those entities are now looking at supporting a crypto product. And that is fundamentally because of the confidence in the overturn of sub one to one, which was not a law, was not a rule, it was an accounting bulletin. And then secondly, the kind of the perception of the Fed and other regulatory agencies. Again, we're not espousing

that, you know, not no regulation, we're spousing very clear regulation enforcement of that regulation, as opposed to using ambiguous, you know, regulation by enforcement is effectively not based on law, not providing guidance, just enforcing an implication regulation by implication is a term that I've coined is a softer power that can be used.

Raj (24:12.296)

Interesting.

Immad (24:12.83)

Edward, you said you're going to DC. You know, we've only been very lightly involved with kind of policy work at Mercury. It sounds like you've done more. You know, I guess like how would you kind of if you were talking to another entrepreneur, like would you advise they get involved in DC early? Or I think, you know, a few years ago, it was mostly like ignore DC and until you're like freaking huge kind of thing. how do you think about it? And if someone

did feel it was important in the regulated industry, what would you advise them in terms of what they should do?

Edward Woodford (24:49.251)

Yeah, I mean, I think...

I would say I definitely don't have the secret approach that has it all figured out. I think the best piece of... Well, I mean, you could probably tell, right? Like I've lived in the US for a long time, but my accent gives away, I'm not from here, which sometimes has its benefits and sometimes has its cons. And so I do bring along my American colleagues to a lot of these meetings.

Immad (25:00.064)

You know, you know, in deep with the deep state.

Immad (25:09.661)

Hahaha!

Raj (25:10.793)

You

Edward Woodford (25:23.235)

But I think the key point that's being said to me is that if you aren't in the conversation, the risk is that you're just forgotten. so often rulemaking is made without consideration of your use case. So for example, zero hashes of B2B2C business. The rules that need to be made need to consider those sorts of B2B2C businesses, right? I am more skeptical of associations personally.

just given my experience, think associations are only valuable when there's a huge existential threat to the whole industry and everyone can coalesce. Otherwise they become incredibly political. But yeah, I...

Immad (26:01.775)

Well, the cell, I do want to hear the rest of what you think, but the cell to me on why we are part of actually two associations, I think the cell to me with associations, which made sense is a politician that like goes and listens to Edward might be seen as like someone that's like, you know, biasing towards one particular company and listening to them. Whereas if a politician goes and listens to like the trade association for stable coins, then then they're just listening to.

Edward Woodford (26:05.006)

Yeah.

Edward Woodford (26:20.1)

course.

Immad (26:29.219)

constituents and they're listening to the industry as a whole. So I think there is like some power to like associations in that sense,

Edward Woodford (26:36.463)

You're spot on, but I would say that you're probably a big member of that association. The problem with associations, I would say to earlier stage founders is you are a smaller voice. And so the association will speak for the industry, but not necessarily your interests.

Immad (26:54.83)

And you might even be competing with most of the, like you might be disrupting the people in the association, right?

Edward Woodford (26:58.703)

Exactly. The experiences that I've had, look, the big four, the big four accounting firms, it's so funny. I've spoken to multiple lobbyists and they say they always get what they want. And the reason is, is that the four accounting firms effectively come together and they say the same thing altogether. And so exactly your point, the challenges for an industry is where a politician hears one thing from one person and something different from another person. It's very hard to understand the noise around these places.

But I think for us it's been an agitation process. Yeah.

Immad (27:31.363)

Okay, so coming back to this original thing, associations don't work, what does work?

Edward Woodford (27:36.463)

I wouldn't say social institutions don't work, I would just say that you've got to be cautious. I would say what works is creating relationships with staffers and

Immad (27:39.459)

Well, yeah.

Immad (27:49.305)

But how do you do that? Like using lobbyists? So what's the practical way to do that?

Edward Woodford (27:52.559)

Yeah, we've engaged lobbyists. We only engaged lobbyists in the last year. Maybe you say I'm naive, but I do think if you come to good ideas with a table and a low ego approach, accept what the industry needs to do better and build that trusted relationship, you can build pretty organic relationships with relatively highly senior people. Of course, American politics is one that money does talk to some degree.

from events and donations and packs and that is something also to be aware of.

Immad (28:32.475)

Have you engaged in like packs and things like that or avoided that so far?

Edward Woodford (28:35.791)

So as I'm not a permanent, I'm not a US citizen, so it creates more complexities about myself giving funds, but there's a lot of rules around PACs. But yes, I mean, as a business, and as an executive team, we do engage a little bit in that process.

Immad (28:39.601)

Are you not a citizen yet?

Immad (28:55.653)

Raj, have you done anything on immigration and pursuing Kennedy?

Raj (28:55.686)

Even if you're

Raj (29:01.988)

Yeah, yeah, i'm pretty involved in immigration stuff So I actually know exactly what you're talking about talking to staffers and like actually congresspeople and and even the agencies I just talked to someone from usis a few days ago. I mean I have built relationships over time So I know I know people now who are actually like ended up becoming pretty senior. know in in these in the federal agencies And actually the number of people who care about like, you know, improving legal immigration is relatively

Immad (29:15.269)

Like do you just cold email them or what are you doing Raj?

Raj (29:31.917)

like small so everyone knows each other and and so Yeah, it's like It's a bit different I would say that you know then probably what you guys are doing But but there's actually a lot of immigration stuff happening right now and there's there's a so that's a whole separate topic and Like there's there's like something that's happening in the new bills that are being put out like so we could talk about that separately but but what are you talking about in terms of like building relationship with staffers is like What I've heard

is like the go-to move, you know, like, and the go-to move is you build a relationship with like the chief of staff of like congresspeople and like, or like, you know, their, you know, their senior team and they bring ideas to like the congresspeople. And often it's like the people who are on the committees that you, you know, you want to target because the laws are made in committees. So yeah.

Edward Woodford (30:13.561)

Yeah.

Edward Woodford (30:20.902)

Yeah. I think that the biggest things for me that I've learned is most of these politicians are continuously fundraising. You they have nine to 15 fundraising events a week. A lot of them are just on autopilot. Yes. No, all the time, all the time, all the time. And so these people, a lot of the time, they don't even control their schedules. So they're tying it up. And so you've got to be, for me, it's one is saying, being very precise with your message.

Immad (30:33.939)

9 to 15 per week like the year before elections or in even when it's wow that's insane

Edward Woodford (30:51.51)

being somewhat engaging because these people are bouncing around, being wheeled out to different events, flying around on the 5 a.m. flights to DC to come to Chicago for a fundraising breakfast. Just imagine, like imagine your mindset if you're that person. So it's gonna be very precise, very clear and memorable. And that's sometimes where being the English accent in the room and Ahmad, I know that you've had these advantages as well. Sometimes people just remember you for that reason. And so I think it's just...

understanding the psyche to Raj's point, that the staff is the one who goes often very, very deep into a problem and figuring out which staff is passionate about that problem and being a resource and sending information, not selling, it's information, it's not selling.

Immad (31:35.262)

Hmm, that's super interesting. There's some interesting parallels with VCs as well. know, VCs are doing like 15 meetings a day and like, you know, it's like, it's very easy for them to lose attention and not be engaged in like your particular pitch, even though it's the most important thing to you.

Raj (31:35.463)

Interesting.

Edward Woodford (31:50.457)

Yeah, yeah. I mean, I remember the advice that you once gave me on VCs, which was one of the best advice that I received in terms of just talking to VCs. it is... You said to me when you talked... Feel free to edit this out, but you said to me once when you talk to VCs, treat it as your marketing time. It's not necessary. You're not going to get this massive eureka strategic moment and don't go in trying to get a strategic moment from VCs. You are...

Immad (31:59.614)

Wait, what did I say?

Raj (32:00.69)

Yeah, exactly.

Edward Woodford (32:20.079)

trying, you are marketing, is the mouthpieces in the industry. So just treat it as your marketing time. And as soon as you said that to me, honestly, this isn't tooting your horn, I just got less frustrated in those meetings. And so you approach it very differently. This is my marketing time, this is my schmoozing time. Same thing with regulators. It's your schmoozing time, it's your time to be very precise, very content, but there's not gonna be this big eureka moment. It's more of a slow burn.

Immad (32:45.898)

Yeah. And to be clear, that's like for businesses like Mercury and ZeroHash that makes sense. Like when you're selling to other portfolio companies, when you're selling to tech companies, it makes sense. You know, might not make sense to someone who's not selling to that space. But yeah, I do remember that conversation.

Edward Woodford (32:53.773)

Yeah, of course.

Raj (33:01.235)

One way I always thought about those meetings is like it's just practicing your pitch or practicing the way you talk about it and thinking about like how to make it simpler. So every time you do it, you're like trying to think out how can I make this better? So just like practicing with an audience, right?

Edward Woodford (33:08.142)

Yeah.

Immad (33:18.136)

Yeah. I think the other way that also helps, which is I feel like it's kind of the opposite advice to marketing is like, yeah, most of these VCs are pretty smart and interesting people that are around other interesting ideas and people. So I think it's kind of fun to just like have a conversation and like learn from them. And yeah, they're not going to have necessarily like a deep knowledge about your particular business, but they do know a lot about a lot of different things as they have like a perspective that's very broad. So you can like just

learn from them and have an interesting conversation and come in with that mindset as well.

Raj (33:47.604)

Yeah, they have their ear to the ground so that they know what's happening around the industry and other companies are doing. So they may have actual information about another company in the space. So that can be valuable.

Edward Woodford (34:02.575)

Yeah, last piece of advice from DC and it may be a little trite is try your suits on before you go or try your formal wear. is one of the few places in DC, I think if you're not wearing a suit in DC, you'll look, even I don't wear a tie and that's kind of dressed down and it's still the only place in the world where I'm asked for business cards and where I wear a suit.

Immad (34:05.473)

Yeah.

Immad (34:09.694)

man, do you always wear a suit?

Raj (34:22.644)

Ha ha ha ha ha ha ha ha ha ha

Immad (34:24.941)

What do you think would happen if you didn't show up at the suit on? Like they'll just not take you seriously.

Edward Woodford (34:29.315)

I think given the space that we're in, which is crypto and given the look of SPF and others where there was this mindset of being intentionally scruffy, yeah, I mean, I think there is still an element of old school-esque and don't give people a read, like people are very quick and emotional to make a read on you. Just wear the bloody suit.

Immad (34:38.065)

You're not showing up with your crazy hair and sandals.

Raj (34:38.91)

Yeah.

Raj (34:42.997)

Huh.

Raj (34:54.516)

Yeah.

Immad (34:54.7)

I think there's an element of respect as well. I think it's like, you're not treating the institution with respect if you're not dressing up.

Edward Woodford (34:59.18)

Of of course.

Raj (35:01.022)

Yeah. You know, I've noticed like how different like the culture is in DC, right? Like it's, you know, having interface with people and people really go in four-year cycles there, right? Like, and, you know, even people's jobs, like everyone, you know, like they're used to these cycles. So it can be, it can feel like a very temporary place too. Like, because like a lot of the people, they're just for these four years and they know that, right? And they're like, yeah, I'll be, I'll be, you know, and they don't know actually before the election, they don't even know if they're going to be out or not.

So there's this feeling of like uncertainty there.

Immad (35:33.849)

So if you're a staffer and you're going to lose your job after four years, what do you do? Just go to industry? Or is there like another, is there a set of jobs for democratic staffers that like kick in?

Raj (35:44.085)

It's going to be like a lot of these staffers, think in Democrat, like, you know, they're going to go to things like climate, you know, consultancies or things like that. Like there's going to be, I think many of them will end up in consulting, I think in some form of consulting like McKinsey consulting or something like that. Yeah.

Edward Woodford (35:58.084)

Yeah.

Immad (36:00.857)

I see.

Edward Woodford (36:01.047)

I would say the time cycle is even shorter than four years because effectively, if you're a congressman, your term is two years. And then even for a presidential election, you're ramping up for fundraising and also people have already moved on and the House and the Senate have also changed. And so the conversations that we're having is that the next 18 months is really the critical period of a four-year term. Everyone knows that Trump can't, well, assuming Trump isn't gonna rerun.

Raj (36:07.969)

Yeah.

Edward Woodford (36:31.654)

you effectively almost become lame duck in 18 to 24 months, which is terrifying. you're absolutely right, Raj. The velocity of change can play to your benefit if there's a change in your path, but also those relationships have to be consistently built on both sides of the aisle because it is such a quick evolving space, even shorter than the very short terms that Congress people already have. And that's why they're continuously raising money.

Immad (36:57.883)

Is this healthy or unhealthy? I mean, for the US system, I guess, like there's an element to the US system where like, it's supposed to not, you're supposed to not get much done in politics, right? Like that's part of the system. It's supposed to be like slow and hard to get things done. So maybe that's healthy, but it seems bad that there's like very little long-term kind of planning and thinking with this.

Edward Woodford (37:19.395)

Yeah, I mean, I think there's a reality of that. mean, people have their views on money, you know, but the Supreme Court has decreed that money for a company is freedom of speech. And so that is how people view it.

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