Raoul Pal: The Journey Man
00:07:41 · Micky Malka
[00:07:41] S1: We did. We we... This first company, this first broker dealer, we we... There was no VC money in Latin America. There was no venture. We were not the kids of anybody famous or we were middle class kids. So we had to raise money in The US. And we convinced a bunch of investors in The US to give us money to allow us to grow this. We grew it into Brazil, Mexico, Chile, all over the region. And in 2000, Santander bought the company from us in in the peak of Nasdaq. And once they bought it, they took it over. They merged it into their operations in every country. And when the Internet blew, they had zero conviction on the Internet after the dot com crash. So... Yeah. So we convinced them to to allow us to build an online bank in Spain called Open Bank, which still exists. We started... Lived in Spain, was behind that for a long time. We then left Santander after our contract was due and moved to Brazil. When Lula won, we had met Lula. Lula won. The new Lula is very different than the first Lula. And the first Lula was very much into trying to bank the unbanked, give them access to financial services, trying to get them into the ecosystem. Back then, Brazil had 40,000,000 bank people out of 160 back then. And we started our company. We started our technology company to serve the unbanked with financial products. So I lived in Sao Paulo for three years, did that, sold it to the largest bank in Brazil alongside with Wences. And then we moved together to Silicon Valley eighteen years ago. And that's been the whole different journey of our lives, our our fourth chapter... Third and fourth chapter.
00:09:22 · Raoul Pal
[00:09:22] S0: So talk talk me through that chapter. So then you... Did you go straight to start a venture capital business? Or
00:09:28 · Micky Malka
[00:09:28] S1: No. We came here in o seven right after the... Right before the financial crisis. We moved here in o seven. We had this idea that people were gonna pay with their phones. And bear in mind, this is before the iPhone. We knew that people were gonna pay using their phones. We knew that tapping gesture was the right gesture. So we came here to start literally a payment network running on stickers that had NFC on back of phones that you could tap and pay anywhere on feature phones. When the... Then the iPhone came out when we were here, and it allowed us to go a little bit faster. So we we we ventured back the company with VCs here in Silicon Valley because we learned that even though we were known and successful entrepreneurs outside, in Silicon Valley was different. You needed this... The seal of approval, but it had been the most meritocratic place. They didn't care who you were or where you came from. They cared more about the ideas that you wanted to build. So we started this we started this company, and it was scaling. It was it was going well, but it was too early, which as an entrepreneur is as bad as being too late. You have to know how to manage the timing of the execution. So when the... We were doing well, but it was not scaling at the pace that we wanted. And then the App Store shows up in 2010. So we pivoted the whole company to build the first wallet inside the App Store as a software company. And and that was the beginning of what I call the fintech revolution. It was probably around 2009, 2011, that era when when the App Store showed up, when the mobile browser was really functional, that suddenly, as we were doing this, we started to see many more opportunities and companies and ideas than we had seen in twenty years before. And it's because it was the right time. You had the right time of macro. You had a channel, the mobile phone on the App Store. You had a macro preparedness, which was the brands had suffered. All the incumbent brands had suffered through the financial crisis, so people had no trust in them. And we had unstructured data. So that was the beginning of becoming an investor. I decided that instead of being an entrepreneur of one company, what would it take if I can go help 20 grow worldwide with Adesis?
00:11:49 · Raoul Pal, Micky Malka
[00:11:49] S0: And I think you saw it early because of what you've gone through in Venezuela. You could see the issues within the banking system. You could see how you could create access to more people, you know, because you knew the root of the problems. [00:12:02] S1: That's exactly right. Everything I owe to who I became had to do with all that I lived growing up in Venezuela. Because even today, when you hear the headlines about inflation 3% a year, I'm like, a year? I remember being 10% a day. Like, this is... It's just like a different framework that allows you to just look at the world very differently. And it it made... I think that I was prepared twenty years as an entrepreneur to be ready to to launch Ribbit Capital when we had to launch it in 2012. [00:12:38] S0: And, you know, the story of Ribbit Capital has been an extraordinary story because of getting this thesis so right. You've got some of the, you know, really important companies in the space. So, you know, it's been an incredible success story. You know? [00:12:52] S1: There's a there's a long way to go. We're still early. [00:12:55] S0: We're still... Yeah. We are still early. So when does blockchain come into all of this?
00:12:55 · Raoul Pal, Micky Malka
[00:12:55] S0: We're still... Yeah. We are still early. So when does blockchain come into all of this? [00:13:00] S1: It came around 2010 when in... We... When we were working on that startup that I was talking to you about, it was called Blink Nation and The Lemon. We had some developers in Argentina, and they were, asking us to send some money through Bitcoins. And we're like, what is this? Early two thousand ten. And so we went into this rabbit hole to understand what it was and read as much as we could that there was not much to read, to be honest, but just spent time understanding it. So when we started Ribbit, we decided that I didn't want to start a venture firm because I don't think great investors need to be labeled. I hate being labeled. You're this or you're that. You're early stage or late stage. You do one thing. You do the other. Actually, we just are intellectually curious about the world and find opportunities where they where they have to be. So we are super early as a fund buying Bitcoins into the fund. And the problem was we didn't know where to store them. We had them on our phone. So let's... We should build a custody business, and that was the beginning of Xapo. And all of these things that started to come were the outputs of what... It was hard to buy. You needed bridges into the fiat money. So all of these companies that we backed was a lot of the pain of ourselves at Ribbit trying to trying to buy and hold Bitcoins.
00:14:25 · Raoul Pal, Micky Malka
[00:14:25] S0: That's a really intelligent way of going about a thesis is to solve problems that you've got yourself or that you deeply understand as opposed to, oh, that company looks interesting. It might make money. It's not based around that at all. It's like, how does this specifically evolve, and what do we have to do to make it work? [00:14:42] S1: That's been an art thesis all along. We sort of don't follow the trends as much as others. We try to spend time understanding a problem in every company that we backed. I would say not every, but almost everyone has one of those pain points that we suffer ourselves that we were trying to solve for. [00:14:58] S0: And when you saw blockchain, did you just think immediately this fits into the whole fintech thesis of where this is all going? You saw the whole idea of digital money and smart contracts and all of that as it started developing?