Why BitGo Went Public | Mike Belshe

What I expect is going to happen over the next couple of years, the digital asset industry, just on the, the current crypto components is going to massively grow. The reason it's going to massively grow is because we basically tripled our TAM last year as a result of the regulatory changes. And each time we get kind of another piece of goodness in it, like Clarity Act, if that comes through, I think it's going to double our TAM again in terms of companies are willing and able to participate. And they're going to be looking for infrastructure to use for themselves. And they're going to find BitGo there.

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. All right, everyone, very special episode coming up. We've got long time friend friend, uh, of myself and also of Blockworks, and also new, uh, founder, I would say, of CEO of a publicly traded company. So, uh, Mr. Mike Belshi of BitGo. Mike, welcome.

Jason, great to see you again.

How we doing?

I can't complain. I think it's been a pretty good week. Um, so, you know, we, we open a new chapter here at BitGo. Um, uh, now we are a public company. Uh, excited to share a little bit about what is the method and the madness behind why we would do that. Yeah, but no, it's been a great week. So many people did a great job. You know, the bankers lead you through a process, got a lot of faults to it, but they also got us like a really kind of stable launch. I know some people will be looking at the price of the stock every day and it's a long-term thing. It always has been. I'm excited to be where we're at.

Yeah, amazing. Walk me through, I was watching the video of you ringing the bell and I'm sorry I couldn't make it. I know, I really did. Stock opens at 18. Like what, you know, you're ringing the bell, you're high-fiving everyone. What's going through your head at that moment?

You know, I'd been getting this question for the last week and a half. Like, how are you feeling? How are you feeling? And you go through this roadshow. So the roadshow, just so you know, before an IPO, there's basically a 10-day process that every company, it doesn't matter whether you're crypto or tech or something else, and you, you go and you do your final chats with various investors and hopefully bring them into the book, and then they submit allocations, which go to your bankers. Your bankers add that all up, and then finally it culminates with, with the ring the bell. Uh, so people are congratulating me kind of all through this. Every investor you meet says congratulations. And look, it, it is true, like the IPO process is the Super Bowl of business, right? Um, it's where you finally take your, your, your, your hard-earned sweat and tears and labor and turn it into something that's strong enough, desired enough that you can take it to a massive capital market and hopefully hit in an appealing way. So that's true. It didn't hit me through the whole process, but maybe around the time you're ringing the bell, or maybe just a little bit earlier, we had a kind of a, I did a talk kind of down in the grand hall at New York Stock Exchange. And it makes me tighten up a little bit, actually, to so many investors, employees, the past employees, people like you, the community that help us get to where we're at. And I hope that we've played a role that's meaningful and influential. We're strong advocates of digital assets. We're strong advocates of self-custody. We're strong advocates of like changing the way the systems work for the better. And it's been a lot of people that helped along the way. So incredible gratitude. Yeah. Humility. It's not about me. It's about all those people that win and super happy to see they're having success. You know, whatever it is you do in your life, if you're watching this thing, right? Like you spend maybe a third of your day sleeping, maybe a little less. You spend a third of your day working, maybe a little more. And then the rest of the time you get to yourself, but you spend a lot of time in that labor. I hope everybody finds something they love. I hope they find something that's meaningful and I hope that along the way you see, you know, just some amount of pinnacle and award and ceremony that actually does show that the stuff you're doing matters and it's made a difference on the market and clients. And so, so we had just say, and it's, it's an exciting time.

Yeah. Is there anyone who bet on you either really early or at a really tough time in BitGo that you specifically like when you were ringing the bell or you're walking up to NYSE, like you're, you're, you're thinking about them?

Um, bunch. There's too many to count. Um, let's see. Uh, so for background, if you guys don't know me, uh, I'm, um, from Silicon Valley. I've been doing technology, you know, small companies, uh, for 30 years. Um, I've always been more of a systems— I started as a systems programmer at Hewlett-Packard, went over to Netscape early on. That got me the taste of small companies. And what I really enjoyed was you can make such a bigger difference, uh, in smaller companies. So much less is written. Um, it's really about like what each individual brings to the table and, and the aggregate makes up. So I did startups, you know, for, for most of my career through, through that. And then, um, happy to have you take this one. Look, my earliest investor, I'm so happy. Like, they have been so patient. This guy, Matt McCowan, he— we were the last investment in his fund, you know, and this is all the way back 2011. And, uh, you know, we're the only investment left, um, and he finally gets a really strong payout Whereas there's still a lockup and all that kind of stuff. So it's not, and by the way, it's not like you dump it or anything like that. So he deserves tons of credit. He's been on the board with me forever. I remember a couple of late nights sharing, you know, the better part of a bottle of tequila, you know, commiserating some things that haven't always worked out exactly the best. But you know, you keep building, you keep up the perseverance. It really is. I do think being Being smart and having grit, those are the two things that it takes. You're either in the game or you're not in the game. And if you're not in the game, you will not win. So you have to stay in the game. And we did that. And I'm really appreciative that these people have stuck with us so long. Another one, Antonio Gracias came in our Series B, bet big on us as we made the shift from a technology company to a financial services company, which we did all the way back 2017, I think that was. And, uh, you know, again, super good investors that, that helped, uh, all the way from the beginning. And then one guy that doesn't get enough credit, Bill Lee, co-founded the company with him. Um, you know, he's actually, listen, I hate talking about this, but so we have this patent on multisig, by the way, by the way, we don't, we don't use it as an aggressive patent. We give it away. Don't sue us. And like, we don't use it. Have fun. But Bill's on the co-author of that patent. Uh, definitely a big part of the inspiration from the beginning. Uh, definitely was a huge— he's just a, a fantastic magnet for bringing smart minds together, not necessarily in BitGo, but a lot of our early first clients, you know, he brought in. So, uh, you know, we've been on a different path. He, he never wanted to be operational at BitGo, but he helped get it off the ground. Um, and so we've, we've kind of come back together, and in the last, uh, last few months, it's been, been been really nice.

Nice. That's special. I'd love to hear more about the IPO process. Like, why? Like, I have a bunch of questions. Maybe starting with just why do it, right? Because there's this big trend. You spent, you know, 20, 30 years in Silicon Valley. The trend in Silicon Valley right now, and people oftentimes in Silicon Valley just follow the herd, is not to go public. You stay private later and later and later. And we see this with companies like Stripe, obviously, you know, SpaceX, other folks. Yeah, why are you going public?

Look, it's a great point. Like, from a just funds perspective, we don't really need to. Um, you know, private equity markets tend to value companies higher. Uh, you raise tons of money, could certainly raise this amount of money. Um, this wasn't about a fundraise, right? We actually are profitable. We don't need the money at all. One thing I hope people know, like, BitGo, we've been around the longest and we've raised by far the least amount of money.

How much have you guys raised?

A total of about $200 million prior to this. So we raised, I guess, a little over $200 million yesterday. That's half of what we've ever raised in our lifetime, and we didn't technically need it. We do have good dealings to put it together. We can talk about, put it to use. We can talk about that later. But no, the reason for us to be public, where we sit, is about bringing everybody in the industry into the ecosystem. And it's always been that way. In the early days was our technology. Later it became some of our regulatory components. Later it becomes our services on top of that. This is how we've grown. The next set of clients that we actively want to bring in is Wall Street. Um, it is the traditional firms. These are companies that have longevity of between 25 and 100 years plus. They tend to work with publicly listed companies. They are often public themselves, which means all of their board of directors has a fiduciary duty to their shareholders. And how do you get into the crypto space? How do you partner with technology companies or regulated firms, financial services companies that are private? It's really hard. So this is just our next evolution of being transparent. You can read everything about the company. It's good, it's bad, it's ugly. It's in that S-1. You can read it all. I don't know. 300 pages of magnificent fascinating reads. Um, but it's all there and this gives a lot of comfort to traditional firms and we think it's just next step. So we have to do that.

Yeah. Tell me about the process of going public. I, uh, let's say you were talking to a founder who's maybe, I don't know, they're, they're, they're 6 months out from the IPO. What did you learn, um, through, through the process? And even like, you know, your timeline, I remember you guys, I think filed in September. And then this only got— now it's, you know, January. So what, like, tell me about the whole process, uh, including like how was it working with the bankers? Did they price it correctly? What's the good and the bad of the banker? I'd love to hear like the behind the scenes.

Sure. Um, well, I'll go, I'll go back in time in a second, but, um, yeah, originally we thought we were going to get out onto the markets in October. Um, remember, yeah, yeah, the US government decided to take a little vacation, the whole thing down.

Oh, you didn't pause it because of the— I thought you paused it because of like liquidation, the whole, you know, October 10th and liquidations and the market was spooked.

No, no. Remember the SEC shut down on October 1st. I honestly thought we were going to hit the roadshow on October 6th. And, you know, so we just hit the timing of that. And what would they shut down for? A little over a month. And then it comes back on. You got like this little window right before Thanksgiving. Then you got a little window right after Thanksgiving. All right, December's a terrible time. And so here we are, still not necessarily like the optimal time. The Goldman Sachs, I mean, top-tier brand led us through the underwriting. One of the folks there, I mean, he said pretty early on, he says, the number one thing you want in an IPO is a bull market. That's the number one indication of how well you're going to do. It's like, okay, so the stocks you remember went in a bull market and the ones that you don't remember didn't. Um, I guess so. All right. Look, I, I don't really think that way. We're here for the long term. We're about building business. Uh, one last thing before, you know, going public, there's a whole bunch of reasons why you may or may not want to do it. Usually it's access to capital markets. In our case, we're in this rare situation where we actually think we get more business by being a public company than it's going to cost to be a public company. And the costs are astounding. Just a couple of things you may not expect. You know, the insurance that the company's required to hold, the prices just go through the roof, right? So we spend a bunch of insurance, millions of insurance that we didn't have to spend before. It's the same company it was yesterday. It's just we live in a litigious world, so get ready. You know, audits, of course, we've been doing audits like forever. I mean, we're a regulated firm, regulated firm here in the US, we're regulated abroad. Sometimes I joke with, with Ed, our chief financial officer, you must really like audits because you do a lot. I don't know how many you've done. Well, 20 or 30 audits a year. It might even be a little higher than that. I mean, it's a lot. And that's just the financial audit, by the way. There's other SOC control audits and other things that you do also for glory and fun. So there's a lot of cost in being a public company. Of course, we've got investor relations, a new sector of the company that we have to have where Got a bunch of people, they call in, they're like, how do I deal with my stock this way? You gotta communicate with them. I mean, there's a lot, a lot of work. So I don't know how much it costs exactly. I would probably, if you wanted to be really cheap on it, I think you may be able to do it for like $3 to $5 million a year. But I think more practically, it's probably more like $15 to $20 million a year for a company like BitGo. So, you know, you have to pick up a fair amount of business just to cover that cost. And usually you don't get business just for being public, but in our case is different. Yeah, let's see. So the process for us started, um, actually January of last year, 2025, and it started with a decision of like, hey, maybe we really ought to do this. Um, and we did have a new administration in. Um, we, uh, knew that other companies were going to start going. Um, remember, remember also the public process had been closed for crypto for a solid 4 years. In 2021, we had Circle, Bullish, eToro, Galaxy. Uh, I feel like I'm leaving somebody off.

Okay.

Well, Coinbase was public in 2020.

Oh, you're saying 2021? Yes, yes, yes. They all filed and then didn't—

they all filed in 2021. They all got stalled out for a full 4 years. All 4 of those companies are public companies as of 2025. So look, sometimes you look at the business, you look at where you're trying to get to, you look at the window and you say, you know what, we better get into this window. So we started the process. We did interviews with, I don't know, probably 8 different bankers. They all come in with their pitch. They come with a nice deck, super nice, big, you know, I guess it's 18 by 10. They're always the same. I don't know why they're all the same size.

The big beautiful table and then, yeah.

Yeah. And, and they, they, they've got their pitch and, and, and they're similar. And what are we looking for? Look, I mean, at the time, You know, you're, you're relatively novice on this. So, uh, you're trying to look for differentiation to some degree. It's like, who do you like best? To some degree it's brand. Uh, so of course we talked with Goldman Sachs, we talked with JP Morgan, we talked with Citibank. Um, we talked to a long list of others. Each one gives you a different valuation, different kind of view of the company, but they haven't really done much depth yet 'cause they're, they're kind of just taking it from what information.

And they're probably just trying to give you as high of a valuation as possible in those pitches. To convince you to work with them, I would guess.

I wouldn't say it's quite that, you know, negative. But of course they're incentivized to try to garner your favor. And if they say they're going to get better, look, whatever the prices are in those decks, I mean, I think really for the founders or leaders that are deciding this process, it's probably more about who you work best with and, you know, what brands you're looking to affiliate with more than anything else. You know, we had an investment from Goldman Sachs that dates back to 2018. So I had a lean-in for Goldman Sachs kind of from the beginning. I value the fact that they bet on us relatively early. And you know, I kind of wanted to go that way from the beginning. Then you learn about this syndicate and you have to build like, you've got your main underwriters, they're called the active book runners and, or the leads. Sometimes they're called the lead left is the guy that's on the front cover on the left side. He's the most important. And then the lead right. And you have a whole bunch of others. If you look at our S-1, you'll see, see all those, those parties. The other book runners and the passive book runners, and they call them co-managers, they're doing less work. They're helping keep an eye on the market. They are trying to get the word out to their clients, but there's a lot of overlap for these Wall Street investment banks. So you also look for some that are different. I would call out Cantor Fitzgerald for our industry. in my opinion, kind of head and shoulders, uh, more educated about digital assets, um, than, uh, than others. Uh, you also look a little bit for like international, um, so if you're looking for European coverage, if there's one regret, I think I would have looked a little bit more for European. Um, not because I feel like we is oversubscribed, so like that's another, we'll get to that part of the process later, but, um, uh, it would just be good to cover, cover investors. As you're getting into it, you don't know what it's going to be on the oversubscription, so you want to make sure you have a good coverage. Um, all right, then you start the process and basically you start working on what's, uh, what's going to be your S-1, uh, what's going to be your, your deck that you take through the test of waters process, which is kind of a beta version of your roadshow. Um, and that takes several months and you, you know, of course you got to have your finances all lined up. You got to get your auditors kind of brought along. You gotta keep these current as you go. So our initial confidential S-1 filing, so when you file, you usually file initially in confidential mode. I think ultimately those become public and we did that, I think it was September. And then you go a couple rounds with the SEC and when you feel like the comments are getting pretty light, you flip it public. You have to flip it public, I think for like 2 weeks before you actually do the roadshow. So you end up with some limits there. All right. Anyway, the investment bankers, they work super hard. They're really good at like the decks. They help with all that material. Of course, the S-1 statement, you got a CEO letter that goes into the front of that prospectus, a number of other decisions that have to be made and cleaned up around the cap table investors and how it's all going to work. Most of that's fairly mechanical and rote. And I think the bankers do a great job of leading you through most of that. Of course, you got to get your attorneys in as well. So we have our counsel. We use Fenwick, which I think did an outstanding job. They also were the counsel for Coinbase. We interviewed a bunch of really strong counsel. We had a lot of good options. Of course, the other side, your broker, the seller's broker, Goldman, they also hire attorneys. They use a company called firm called Kravath, also a great firm. Um, so there's a lot of people involved, uh, all these calls. You got your auditors.

As I'm looking at a lot of bills right there, I'm like, yeah, yeah.

Well, you know, right, we— so we pay our lawyers, uh, we pay our bankers who then pay their lawyers. Um, yeah, yeah, yeah.

How do you— how did you think about, um— I'm sure there's— sorry to cut you off— I'm sure there's more to the story, but one, one thing I'm curious about is how did you think about, uh, how to give allocations? And one thing I noticed when Bullish went public was Tom gave a lot of allocation to retail through Robinhood. So I'm curious how that process actually works and how you thought about that.

Well, let's, let's not skip ahead. So before you get allocations, you get these. So first you do these test the water processes in late summer, fall, uh, probably met with 100 different companies. You're doing pitch, pitch, pitch, pitch, pitch, like you're doing 50 pitches a week. Um, uh, the first one, I think 30 pitches a week. The second one, uh, It's interesting, you get very good at doing the pitch. You also forget what you said in this meeting versus the meeting an hour ago. And so you either omit or say the same thing twice.

You gotta, that's why you gotta use like Granola or some call recording software, you know?

And this is mostly, you know, myself and CFO Ed, Ed Reginelli did this. He turned out to be a great partner kind of here. It was mostly, it was probably 90% my talking and then, than, than 10% is. Some investors are more engaged and ask great questions, um, others a little bit less. Now for crypto, this is an interesting part. Like, who are these bankers bringing to the table as investors? They are connected to the largest funds, the largest pools of capital in the world. So, you know, you're talking to the BlackRocks, the Fidelities, the T. Rowe Prices, the American Centuries, like these big guys that participate in these IPOs. And All of these guys have had a deficit of crypto knowledge for the last 4 years. At the time we were going, we were talking to these investors after they'd seen Circle. I think they were excited about, can we find another Circle? Gemini, I'm sorry, Bullish and Figure had done reasonably well and then Gemini had not done as well. And so they were a little bit fearful of Gemini. Anyway, they wanted to see, okay, what's coming next in the crypto sector? Because they don't know that much about crypto, they're asking some pretty basic questions. These are kind of generalist investors. They invest sometimes in AI and sometimes they invest in soda distribution companies. They invest in everything, right? So their level of depth on crypto is largely shaped by what they read in the news. Saw different types of questions. We got the question, what is a private key? How does it work? What's it look like? You know, types of things, which is perfectly fine. I don't mean to criticize them. Like, of course, everybody goes through this learning curve. And if it's not your domain, I totally get it. But that was part of the process. All right, eventually, you know, you do the final stages, you do the filings with the SEC, you get the SEC green light to go, and then you get to the roadshow. And the roadshow is similar to the test the water processes, but this time is the final call. And at this point, a lot of these investors you've already met with, so they already know you. And now the conversations are much more interesting because they're looking at your final set of data that came out in your updated S-1, whatever that might be. In our case, remember the first filing we had, had our Q2 numbers in it. And then because we went through Q3, we thought we were going to have to file then, or we thought we were going to go in October. That had our Q3 numbers in it. And then this one, we're doing it just after January. So we haven't finished our 2025 audit. Um, so instead they do this thing called a flash. And so if you look in our S-1, you'll see kind of an abbreviated forecast of where the numbers are. Um, and because of where we're at in the whole process, I can't talk to you really about the numbers. Um, but of course everybody, everybody reads those. Um, by the way, some other interesting things that we saw, which, uh, are sort of unique to our industry, things that surprised me. I mean, if you look at our revenue, you'll see combinations of net revenue and gross revenue. Um, and it's a really weird thing to mix together. What I learned as part of the process here is that actually GAAP, and even, you know, I thought this would be all just rote stuff that they've got figured out for, like, I mean, there's a zillion companies that do trading and do the types of activities that we do just in different industries. Like, why is it hard to do the audit and accounting of these things? It turns out, you know, actually GAAP doesn't really cover it. So you end up with a, just a terrible thing, which is gross revenue on trading. Right? I mean, so I don't really think it's the right way to account for what we do, but for whatever reason, that's the way it works. And so we had initially filed in our confidential S-1, you know, to do a net revenue accounting. And towards the point where we were going to file that, I started to get some real, you know, kind of yellow flags from the auditors that are like, Hey, you know, it's not a GAAP metric. And I was like, is this a, is this a problem? I mean, this is how we think about the business. Like, anyway, it turns out, yeah, the SEC does ask like, well, what is this? What is this? Like, I think the SEC was pretty open to it, but it was taking time. We were having to go all these iterations.

Oh wait, just to make sure I understand that. So you, cause you guys had the, uh, if I remember the numbers correctly, it was like $3.1 billion of gross, but then you pass through some amount of that and that turns into the net. It was like $130, I'm $130 million of net. I assumed you wanted to show the $3.1 billion of gross because that's the big number, but it sounds like actually the auditors or the SEC requ— like kind of requested that you show that number.

I am not going to talk about the actual numbers because I, I can't. Um, but yes, in terms of what you just said, uh, we would have done completely a net revenue type of accounting, but that doesn't That's not the way GAAP works. So you have to get a special exception from the SEC to do that. I think the SEC was kind of open to it, but we don't want to, we're not trying to plod new ground here. I would've thought this would've been figured out like, I don't know, decades ago. Like why is this even an issue? But somehow it is. Now when you get into the technical accounting for how it works, whether are you principal, are you agency, is it a stablecoin, is it an asset? Is it a dollar? Is it not a dollar? There's a lot of little details that are defined in strange ways. But on the good news side, I think this all gets sorted out in a couple of years and the accountants will have a better answer that will work better for crypto and then they'll follow. But yeah, that's right. The gross revenue shows up for us, not because that was the way we wanted to account for it, but because that's the way the current system works. So yeah, that was interesting. All right, so that was a bit of a learning. Okay, finally you do your, your, um, roadshow, and then it's a 10-day process. And during that process, the folks that you meet with, uh, submit allocation requests. Um, and you know, basically this comes from what they call long-onlys and hedge funds. And that's an oversimplification of the types of investors that are out there. Um, but of course the bankers have a good familiarity with who these different parties are, and how they tend to take positions in any given company, et cetera. And when they submit these allocation requests, okay, so first off, at the beginning of your roadshow, you set a price. So that was in our S-1, that was $15 to $17. And that means that that's where you're indicating a vision. And of course, everything's a negotiation. There's always negotiation. You see lots of folks that raise those ranges. You know, we ultimately issued the stock at $18, which is outside of that range. So there's a number of things to go into this, but all right, everybody's now negotiating. And now, by the way, you're in the final stretches and you've got your banking team that is your seller's broker. And then of course they're also trying to bring in these other guys. So there's this natural, like they're trying to get the best price, but they represent kind of both sides a little bit. Anyway, the process is they request some amount. Usually they just put in a market order, which means they're, okay with your range. Um, sometimes they'll put in a limit. They'll say like, I only need to take it if it's, you know, the midpoint of that or the top end of that. And of course they know that your, your desire is to take it higher. Um, and so anyway, these, these things come in and then that's your, your gross demand. And, um, what I find, uh, mind-boggling about this is that you basically generate this list of what's gross demand, which is way oversubscribed, and you're setting yourself up for, you're going to disappoint 19 out of 20 investors because they're not going to get what they requested. But then because this process has been going on so long, they all know the game. And so they will put in, some of them, not all of them, will put in bogus amounts hoping to get more. Oh, and then, you know, you're worried about like, Well, you can't fill too much of this guy's order because then he'll think you were, um, uh, you were, you, you didn't have enough to fill it from anybody else because everybody's so used to not getting the amount that they want. So now you end up with this weird, complete gut instinct thing, um, uh, about how much really is there. And so then you focus on the, the, the top guys, the ones you start to narrow it down. You're like, okay, great. Here's the good investors, the high quality guys that we know what their patterns are. And then you start to focus on them and price tolerance. And basically the various bankers will reach out to them and try to get an understanding of how are they looking at the company, how do they think it's going to trade, et cetera. And you get sometimes conversations about discount upon discount. You're like, okay, well, we think it's going to trade here and we're going to try to discount it to there. And then like you want to give it, it's, it's ripe for improvement in terms of price discovery.

It's also, there's an interesting game between do you want to price it? You almost, you don't want to actually price it to perfection because the best thing for an IPO is the stock pops, right? But that then means you're leaving money on the table for the company. So if you remember when, you know, Circle IPO'd, stock pops, everyone said the bankers screwed them over, but did they? Because the stock was ripped. So it's a funny game.

There's a professor, I think his name is Jay Ritter, if I got that right. He's out in Florida. He's been analyzing and looking at IPOs for, I don't know, 20 or 30 years now. He's got all the data and kind of how they do and tries to read through this. I mean, it's very clear that, you know, there's a reason why the investment banking division is usually the most lucrative division of any of these large banks. They do take a big chunk, and then of course, the folks that are buying it are their clients as well, so there's more activity that way. Everybody knows this, and it's just kind of the way it is. In terms of the pop, like, from an issuer's perspective, from my perspective, I want all BitGo investors to make money. I mean, of course, they're investing and putting confidence in us, and you want them to get a really good return. So it's not about, uh, at least for us, it was never about, you know, just getting the best price. Um, you can add a dollar to it, you know, it doesn't really make a big difference. Um, on the other hand, having investors with a good experience and, uh, and whatnot, very important to us. So we were not optimized around price per se. Um, yeah. Yeah, some other question. What else is the thing you asked?

The only other question I was curious about, and then I really want to get into the business and the business model and product lines and stuff like that. But the only other question I had is how do you think about— it used to just be you give the allocation to institutions. Yeah, BlackRock and T. Rowe and Fidelity. Now there's two other people you could allocate to. One is retail, so you can give Robinhood allocations and things like that is the way I understand. I don't fully get it. And the other is now, uh, kind of like the on-chain world? Like, I saw Ondo had the ability— you had the ability to buy BitGo on-chain the day that you guys IPO'd, which was pretty crazy, through, I think, Ondo. So how did you think about these two new buckets of, of capital?

Yeah, um, well, let's see, on the invest institutional side, you can really break that down into the long-onlys and the hedge funds. So prior to having direct access to retail computers, IPOs really depended on those hedge funds, right? Like you need to give somebody some stock so that you can start trading. If you gave it to a bunch of guys that are just all long onlys and they're really going to hold it for 4 years, then you show up to the market and nobody trades. Yeah. So the way they solved this problem was with allocations of hedge funds and different hedge funds, of course, have different strategies. Some are partly hold, some are taking, uh, you know, just immediately, well, like what they can get, uh, it's going to be all over the map. These days you do have another option, which is retail. So we allocated a full 25% over to retail during this process of the roadshow. You know, the retail aggregators, which includes SoFi, Robinhood, Fidelity, MooMoo, ClickMarkets, Webull. I feel like I'm leaving somebody off. These guys go to their retail clients and they offer shares. The retail clients actually pony up the money right away. Like if you're on Robinhood and you say, hey, I want 1,000 shares of BitGo, you gotta put the money locked up. Now you can cancel your order, you know, if you want, but it doesn't happen a lot. But you actually lock it up. That's different than the institutions. The institutions are all just like credit lines. Now they show up, right? Institutions are more consistent. They know their reputation's on the line. And so I don't think anybody didn't show up with the money. But Uh, it's interesting. I think it's really, you know, you get thousands and thousands of retail people that have put money aside, uh, to the tune of billions, uh, in our case. Um, and they're looking for an allocation. You know, we didn't raise billions, right? So just on the retail side, a lot of that, uh, doesn't, doesn't get filled.

You had billions in demand from retail?

Yes. Wow.

Did, could you see where, which platform it was from? Like 80% was Robinhood, you know, 10% was Webull.

Yeah, we can see which platforms it's from and then those different parties, they give you stats about what they're seeing from there.

What was the biggest platform?

I guess I don't want to say that.

Yeah, that's fair.

I don't know if I'm allowed to or not, but—

You're in uncertain territory now, Mike. You don't know what you can say.

I mean, you know, I'm very transparent usually, right?

Okay.

I would not do well. Doesn't matter so much. But yeah, so then look, I guess I do think that we are here dealing with crypto, which is all about democratization of this stuff. How do we make it, you know, so more fair to everyone, put everybody on a level playing field. And yeah, we wanted to make sure there's a big allocation. The warning you get from the institutional side is like, be careful, those guys, you know, they're very moody, they're hard to predict. I think those things are true. But remember, like what happens if your stock does pop and go up a lot is that, you know, all of the institutions, they always have, you know, a thesis when they come in, they're like, okay, I'm buying at $20. And then like if it hits $25, I'm going to sell 20%. If it hits $30, I'm going to sell 50%. So like with those big pops, you know, a lot of the institutional guys did sell out, right? Not because they didn't have confidence in the company, but because you hit the price target and that's just what happens. It's already been set. So like with Circle, you know, they ended up with a lot at retail in the end anyway through that process. See, on Ondo and those guys, look, I think the digital asset markets are still forming. I think it's really great that they're able to do that. Those markets will get stronger. I don't know which ones can trade and to whom they can trade. Right now they tend to be kind of limited, like they can hit these people but not those. Again, I'm not just— I'm not criticizing them. They're just in the build phase. This is what we're all building for, right? Um, but yeah, in the future, you should get a great look at, you know, who really wants the stock and who's going to participate, both institutionally and retail. Um, and then one other thing, price discovery should be so simple. Throw it on a prediction market and tell me what the price needs to be, please. Like, why do we go through this complicated pricing process that, like, isn't even very good. So anyway, that's my biggest recommendation. Let's get the prediction markets flowing on this part. You kick off the prediction market right at the beginning of the roadshow and you just watch it. And I think you even price on these things. Yeah, probably needs a couple of iterations to get clean, but I think it'll be good.

Yeah, I love that. I actually even wonder, like, you know, we're probably many years away from this, but could someone IPO without going to the institutions if you had billions in demand? You know, and the on-chain capital markets will just get stronger and stronger. Like, why don't you skip the T-Row conversations, you know?

Yeah. Um, look, I think BitGo is a fairly brave company. Um, we did a big allocation. You saw, of course, Bullish and Figure both similarly. Um, you don't do an IPO very often. You kind of get one shot at it. And, you know, um, uh, I think going 100% retail would be, um, uh, I would love to run it. And then someday when you're at that choice, Jason, and it's your company, uh, you'll have a choice of do you want to run the experiment for everybody else?

Um, you never want to be the first one through the door.

I did grapple with this concept and, you know, um, I'll tell you, the institutional guys look at you like you're crazy. And, um, you know, I didn't grapple with it without very long.

I don't know. Yeah, there's some things you want to innovate on. You want to innovate on product. Probably even want to innovate on like company organizational structures. You probably don't want to innovate too much on something like this.

But also say, you know, like let's, in defense of the institutional side, you know, through this process, we built relationships with some of these guys. And I'm very happy with like, they learned about what we're doing. They've got their own goals.

That's a good point.

That's a good point. And this is not just a like, hey, thanks for the cash. See ya. No, no, this is a relationship. And everybody that we prioritize at the top, and there's, I don't know, 25 companies or so, we will continue talking with them on an ongoing basis for a long time. So I'm happy to have them, and I think they do a lot for us. To go straight to retail and exclude them would have foregone those business opportunities.

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So we're calling it infrastructure is what we're calling it right now, but Um, on the custodial point, look, I think it's convenient for some competitors to like try to push us down into a custodial bucket, but here's how you know we're not a custodian. Like, we never had a goal of being custodian. It's a means to an end. And you want to build financial services, you need to build on a rock-solid foundation. In the early days, what we did were no compromises on security. We do a 2 out of 3 everywhere, whether it's multisig or MPC or whatever technology it is. That is a super strong base. Then we take that to the custodial capability, run it all in cold storage. We operate that in vaults all over the planet and put that together with a go network. That's our foundation. Remember, Galaxy wanted to buy BitGo a few years ago, and I told Mike Novogratz, I'd shared this story before I ever even met him. You know, if you look at the pyramid of financial services, you know, the technology at the bottom is kind of the lowest cost. Custody is like a little bit above that, and then it gets super lucrative as you move up the stack towards prime brokerage. And, you know, folks like Novo, who had operated in, you know, previously Goldman and hedge funds and has a ton of experience, great macro investor, he wanted to come in on the top of that stack and go build all that prime brokerage component and, you know, just pay somebody peanuts to do the lower part. But when he got into it, What he found is like, uh-oh, there's all kinds of risks you're taking in the crypto world at that foundational level that you're not taking in the traditional world, which makes it frankly a little bit impossible to really measure the business that you're operating. Remember when you're doing trading and things like that, the cost of anything is the price of the underlying asset plus the profit you want to take, plus the risk that you have to cover for the nature of the business that you're in. And for the most part in crypto, for the last 10 years, people have been just padding up the profit high enough that they can cover a lot of risk without really being able to cover the risk. Just a specific example, when you're trading, right, we have lots of exchanges. These are pre-funded exchanges. We've never had a marketplace of any asset class anywhere where everything is pre-funded. Okay, this is unique to crypto. You don't do it in stocks, you don't do it in derivatives, you don't do it in bonds, you do it in crypto only. And that means you have to move your bearer instrument, Bitcoin, stablecoin, whatever it is, out to this platform. And if they should have a fault, which of course we've seen, there's been many, um, you have full 100% principal risk of losing it all against that counterparty. Um, so if you're going to build Prime Brokerage, this financial service, you have to have a really solid stack. So Rubico, like, no, we did not set out to build a custodian. It's just that we built the best custodian. And that's how you get to the next level and you start to de-risk it, which is why the next chapters are so exciting because we're finally getting to the points where those risk mitigations are paying off and they're going to be very, very difficult for others to replicate. So infrastructure for BitGo, look, there is the side of the business that we operate. We also do everything through APIs. So sort of like SaaS, but crypto as a service is a little bit different. So SaaS is like, you'll have some web services, you'll have some technology, maybe you'll have hardware in a SaaS type of business, but those are usually all technology. This is money. When it comes to money, regulation comes in, right? Regulatory standing comes in. Sometimes there's custodial license, sometimes there's money transmission license, sometimes there's a payment license in Singapore, whatever it might be. We acquire all of that and then we package them together. So it's not just software as a service that you're buying, it's buying software plus the regulatory. This is what we call crypto as a service. That's the infrastructure. So are you guys, you probably know Will Reeves over at Fold.

Yeah.

Yeah. So they're a publicly listed company also. They use BitGo and they don't want to go get all the regulatory capability. Instead, they use BitGo's crypto as a service. It goes through our AML KYC. Now they handle all the frontline stuff. So they're the B2B. We're B2B to Fold and then they're B2C to their clients. So it's B2B to C. But the interesting thing is like all of their clients get a full fiduciary protected custodial account inside of the underlying layers of BitGo's custody. Um, and they didn't have to build any of that. It's all through API. And of course it goes to our transaction monitoring. All our compliance has to do that. And they participate in that as well. They do. They, they want AML KYC on their clients. They don't want to just completely outsource it. Um, and the net result is that everybody gets that. So to some degree we've been building market structure, um, and we've been building this layer at the bottom, which is so secure that even institutions can use it. And then I, on, on market structure, I want to hit a couple of points and, and this gets into some detail most people don't think about. So we believe fundamentally everyone deserves to have a fiduciary protected account. And what that means is that it's bankruptcy remote from the holder. It's segregated from the holder's funds and the, the, the holder of it has a fiduciary duty to you to take care of your money. So if you think about it, when you go to your bank, your bank is a fiduciary to you. When you go to your stockbroker, he has a fiduciary duty to you. When you go to an RIA for an investment, he also has a fiduciary duty to you. And when you go to crypto, no fiduciary duty. Okay. Well, why? All right. Of course it should be a fiduciary duty. This is money. And with crypto, this is the future of all assets. Don't take it from me, take it from Larry Fink, CEO of BlackRock. He says every asset, every bond, every token, everything can be tokenized. So we think that that's just a fundamental premise. We've built that inside of BitGo. Part of why we got there probably earlier than most is because we focused on security, which led to businesses and institutions. And as we got into the regulated side, you know, they demanded this, like Institutions won't simply put $25 million on your balance sheet. And in fact, if you look at most of the retail exchanges that have done a fair amount of institutional business, you might notice that on the side of their exchange, they often bolt a trust company. And what they do is the institutional players say, hey, Mr. Exchange, I can't put more than $25 million on your balance sheet. I'm not going to do that. You have to fix this for me. Otherwise, I'm going to BitGo. Anyway, they end up building a trust company on the side. The institutions go there, so the institutions get the fiduciary protected account. They leave the retail, you know, out on their balance sheet. We think this is the wrong way to do it. We haven't done it this way. We think it's bad for the clients. We think it's bad for crypto. We think it leads to failures. And so we don't do it that way. Hmm.

What are your fastest growing product lines right now? I was trying to break apart the S-1. It looks like maybe stablecoins as a service. It looks like the Go Network is scaling pretty quickly.

Yeah, so the Go Network, real quick, this is basically instant settlement off-chain for any two clients. So we do this thing which the institutional world would call DVP, which is delivery versus payment. It's a funny name, but really all it is is like when you're settling a transaction, Jason, you've bought $10 million of Bitcoin. You're going to send me $10 million, maybe it's cash, maybe it's stablecoin. I'm going to send you the Bitcoin. We create that in one transaction and it either all goes through or it doesn't go through and it's instant. It's got no fee on it. And so one of the things that we focus on is just bringing clients into the platform. Because remember, every client on the platform is a potential counterparty to every other client on the platform. Of course, we want clients for revenue too. I mean, I'm not trying to be completely altruistic about it, but You know, the more you have, the more counterparties you have, the more settlement capability you have. So yes, the Go Network has been growing. People use this. There's all kinds of parties that are trading between each other on a daily basis. And each company that does significant amounts of trading, you know, can easily have, you know, 50, 100, 150 different counterparties that they're regularly settling with. And so we can turn that into just a few clicks and it all goes through policy controls and a bunch of, kind of administrative wallet stuff that you would expect.

Does this replace what, um, uh, was it Silvergate or Signature had?

Uh, both of them had. So both of those are banks. So they were— yeah, if you dial back all the way to like 2016 when Silvergate created Silvergate Exchange Network, um, now they were a bank. All they touched was dollars. So before Silvergate Exchange Network, what happened was this: we started having more and more trading. We had market makers, exchanges, they're all going. And then they're trading, trading, trading, and at the end of each day, they're like, okay, here's your Bitcoin. Okay, here's, wire me this cash. Da da da. It works great 5 days a week. And then on the weekends, it really sucked because the banks are all closed. So all of a sudden, like everybody's taking crazy risk building up over the weekend that they didn't want to have. Silvergate stepped in and said, we'll handle the cash part. And so now what they did is they made it so that any 2 parties could send each other cash. 24/7 over this, over the Silvergate exchange network, but it only handled the dollars. So what BitGo does is both the dollars and the digital asset, or it can be digital asset, digital asset, or it can be one way. We do all of those, um, but because we, we, we have the ability to service all of this anyway. Yes, it does, it does replace it, but it's also way better. Um, one last point about it, we build, um, we build this internationally and there's this thesis that we have, which I haven't heard anyone really disagree with. Um, you know, in the early days of crypto, people did actually wire money to Mt. Gox. It was hard, um, but they did it. Um, Americans would do that. Um, it's difficult to get money internationally. In the long run, we believe that Americans work with American banks, American financial institutions. Europeans work with European banks, European financial institutions, you know, etc., around the globe. So the reason we've set up this network And nobody else has this network of custodians. Nobody does. Again, all of it is just a foundation so that we could do the financial services on top, but it allows us to interface. We have partnerships with banks in each of the right regions so we can handle the actual fiat. And then of course, BitGo takes on all the digital form. As soon as you bring it into us in fiat form, we can get you in and out to digital. It's super easy. But now you can have one party that's connected to a, a bank in Singapore and BitGo Singapore, they never touch anything that's not regulated by Singaporean government. In the US, you got American doing the same thing. Now those two parties can trade together and BitGo settles it all across the BitGo Go network. So that's what the Go network is. By the way, today we give away the Go network. It's really just a way to kind of bring people in the ecosystem. We, we do well when our clients use more services. So we're trying to make that work. Staking, I think we're one of the largest staking providers in the world. Look, we have a lot of assets in custody, which obviously leads to having a lot that we can stake. We also partnered with like every staking provider early. Others acquired staking or built staking internally. Turns out when you really look at how this works, it works in a more decentralized world. People like to have the choice of do I want to stake I stake with Blockdaemon or do I wanna stake with Figment or do I go to Kiln or TwinStake or Peer2? You know, there's like 45 different partners that we have. That integration turns out to be more complicated than you'd think. Every one of them has different APIs. Each blockchain, by the way, has different ways that they account for staking. Some of them do staking on-chain, some of them do virtual staking off-chain. They come in at different time periods. There's a lot of work that goes into doing that, but that's worked out very well for us. Um, and then I think you can see that, uh, uh, our gross revenue has gone quite a bit up, uh, than the S-1, and that's driven by, by trading. Um, so trading is what's mostly accounted for gross. Um, and there, look, we've been building this, uh, for the last couple years. So in 2024, regulatory climate in, in the US was not very good. The head of the SEC at the time said All of these, 95% of these things are security. So we didn't trade them. We traded about 10 assets. And of course we wanted to have better trading capability. So we were building plumbing through Hong Kong, through Europe, Caymans. We also built out our OTC desk, which runs 24/7, follows the sun, so all our clients can use it. And that was all just to start getting the trading going outside the US. And then of course, 2025, the regulatory landscape in the US changed. And all of a sudden the new chair of the SEC says, yeah, most of these are not securities. So, you know, today, which I, I don't have the exact numbers, 275 or something trading pairs. Um, just a stark contrast. Um, but then the next thing that's happening is, and why we're so excited and why we need to be public right now, because Wall Street and traditional finance is now able to participate, and they're coming and they're looking for how they're going to do it, whether it's at the service level, whether it's the infrastructure level. Um, and their mental model is kind of blown. So in the traditional world, if you wanted to go buy some stock, Tesla, whatever, you go to your broker and he's got a regulated duty of best execution, which means he has to get to the best price on that stock, whether it's trading on the New York Stock Exchange or whether it's trading on the BATS or the Boston Exchange or the American Exchange. He has a duty of best ex. Traditional finance thinks, okay, if I come into crypto, I'm going to go to this exchange. They look pretty big. They're going to give me the best price, right? They don't have a duty of best ex. Yeah. Okay. Now BitGo, we do bet. I'm sorry, one last thing. Remember the US markets are tiny, right? Overall. So when you're talking about especially American institutions, they're looking to interface to an American counterparty. They are not going to go onboard to Binance. It's not going to happen. At least not for a while. Now, and that's not Binance's fault. That's America's fault. So the, so, so they very much like coming to a BitGo, right? So we are regulated US financial institution. We are now a public company. They can see exactly what our books and records look like. And then we take care of that. So since we're not an exchange, we've never been an exchange, we had to start building market structure a long time ago. And our clients had, you know, storage with us, cold storage with us. The exchanges, we, we, we built Go Network, which has a component where you keep your assets at BitGo and you can trade them at the exchange. And it's integrated with 7 or 8 exchanges globally today. It's growing pretty quickly. But exchanges have been a little bit reluctant to let us do that, which means the only way you can trade is you have to take it out of the cold storage that you've done diligence on, that you like, that's regulated, it's got all the features that we have, and then you have to put it on some rickety exchange somewhere. So what our smart order router does, I feel like I'm being a little bit wordy here.

Um, no, no, no, I like this.

What our smart order router does is it's an algorithmic form of best execution. It's what the folks from Wall Street expect that they get. It's what they deserve to get, frankly. Why shouldn't you get the best price? So the reality is you come to BitGo, we've already connected all the market makers, we connected all the exchanges. That's our relationship, our credit capabilities, our, our money. That's out on those various venues. You keep your assets in deep cold storage. We give you a better price every day of the week than any single exchange because any single exchange is just a subset of the market. It's logical and by definition that the BitGo price is better. And by the way, you can see this. So, try it.

No, no, no. I mean, keep going. Well, okay. So here, let me try. I actually have a question for you. Do you feel— so you do all these things that you've got best execution with trading. Do you do borrow, borrow, lend too?

We do some borrow and lend. Yeah. So this is all part of a path towards prime brokerage and being able to make that available. I haven't said that word yet. You said it earlier. The reason I haven't said it is because we're getting there, but there's more work to be done. But we're actually pretty encouraged because a number of parties are starting to use us as a prime broker. Even though we're really in the early rudimentary days. Um, but yes, we do borrow and lend today. What we do, however, is 250% collateralized. So, um, you have to have a lot of asset in order to get a loan. But then very simple, easy business is all open terms. We will be growing that. Um, uh, in terms of how do you make that better, it's really about the risk management that goes around it. Um, there's a number of parties companies that are trying to get to Prime Brokerage. The key element here is what happens when the crypto markets sharply go down. Think October 10th, um, and, uh, I think, uh, backward after FTX blew up, etc. Um, it's easy— no, it's hard to build all this plumbing for liquidity, but when you do build it it's hard to know whether that's liquidity that's real when you need it, when the markets are tanking or not. And it's, it's harder to know than you think. And, and crypto markets are still pretty small. That's part of why they're volatile. So if you're going to be doing lending in the space, how is it that you're going to get out of a position on some collateral if you need to? We do that with the, the, the heavy, heavy overcollateralized rate. Others give you, you know, much lower amounts. I, I, I don't know if anybody's still doing undercollateralized lending, like what happened in the, uh, 2022 blowup, I think it was.

Yeah, '22.

Yeah. Uh, but, you know, look, undercollateralized lending in our space is crazy. If you're doing that, you're, you're just on a path to die. It's just a matter of time. Um, if you're overcollateralized, how much are you overcollateralized? Obviously each asset is different. The stress tests that you need to run for a Bitcoin type of collateral versus a Solana versus a, you know, long tail of an Aptos or farther, very different. Um, but anyway, this is an area that's growing as it gets better and stronger. Yes, these are the, these are basically the 3 pieces that are core Prime Brokerage.

So why do you say, so you've got the borrow lend and the trading and the custody and staking and all, you know, all these different services. Why do you say that you're far away from Prime Brokerage?

Like I said, it's the risk management. So look, if you can't handle the 3-sigma event and get out of these positions? And if you don't know you can, you probably can't, then that's the issue. So like the lending that we do is a relatively small loan book today. And we manage that because, you know, we're going to manage it commensurate with the business. As the balance sheet grows, we can expand that out a little bit. But of course we take a very risk-mitigated approach. That's what our customers want.

If you look at the business today and again, I'm not sure what you can say and what you can't say. So we can just, you know, tell me if I'm asking anything that SEC will get mad about. If you look at the business today and that versus what it looks like in maybe 3 to 5 years, where what areas of the business are going to grow faster, what will start to become less of a focus? What will be different for BitGo of 2030 than BitGo in 2026?

A bunch of things. Look, the only thing I can't talk about with the SEC from the kind of the public thing, I, we, we have to give everyone the same information, right? So we can't have something that we share here that we haven't shared kind of in our S-1.

Everybody listens to Empire, Mike.

Okay. Uh, you sort, you sort that out with, uh, Paul Atkins and, um, but, uh, I don't mind. We, we, of course we can talk about trends and like how, how we, we think it's going. It's different, like numbers. I wouldn't want to say like product or something like that. Um, so, uh, in terms of how the business is going to grow, we are both building kind of this financial services component. Um, we are happy to have everything we do be given to others. Others can build prime brokerage on top of the Bicker rails, uh, just like we, we can. If they have a bigger balance sheet, if they come from traditional finance, they got another way to do it and think about risk, they can build everything they need to build a prime broker. All off of what BitGo provides. What I expect is going to happen over the next couple of years, the digital asset industry, just on the current crypto components, is going to massively grow. The reason it's going to massively grow is because we basically tripled our TAM last year as a result of the regulatory changes. And each time we get kind of another piece of goodness in it, like Clarity Act, if that comes through, I think it's going to double our TAM again in terms of companies are willing and able to participate, and they're going to be looking for infrastructure to use for themselves, and they're going to find BitGo there. Um, the second thing though is we've got an innovation cycle, um, and, uh, sometimes I describe this as, uh, similar to back 1995, you know. So I was around at Netscape, I mentioned that, and there you had this technology disruptor that was the web itself. And after you have that technology disruptor, you have like just this massive flurry of product innovations, business model innovations, all this stuff. And for those of your, your watchers that were around at that time, you'll remember there were like crazy businesses with commercials on TV. And we, we, we literally joked about it. People are like, that's never gonna work. And it's true. There's a lot of ideas in an innovation cycle that aren't gonna make it. And many of them died. But then also there's a whole bunch of companies. I'm sorry, there's a couple of companies that emerged there, like Amazon and Google, that were, that are now the heavyweights of today. So in our case, we're talking about the disruptive technology being Bitcoin, the blockchain, creating an open area for all financial services. There's going to be a ton of experiments. There's, as you can see, thousands of coins, and we all know that not all those are going to live. But out of the, out of this whole cycle, we will figure out, and the market shakes out the good products, the good business models, and then usually the infrastructure guys survive. So right now we're in this growth area. And then on the use cases, we're just starting to see them emerge. Started with the crypto one, that's going to grow just because of TAM. Stablecoins, I mean, duh, this is better payments, man. This is absolutely going to be the way you do payments in the future. It's probably going to be your bank of the future. I think we get to redesign banks. I think actually that's probably the most interesting one, which I think is for the better for everybody and really better in a good way. Okay. And the next use case, we're all talking about tokenized equities now that we have the SEC willing to allow some of this innovation to happen. And I think responsible industry participants that are all willing to help, you know, A, figure out what works, and then B, also make sure that they adhere to regulation. So that's coming, I think very quickly. Haven't talked about DeFi for a little bit. I do think DeFi gets sorted out here. So anyway, those are 4 different use cases. So we've got classic crypto, DeFi, stablecoins, and tokenized equities. All 4 of these are going to make tremendous inroads over the next 3 years. Yeah.

You mentioned Netscape. So you've been at Web 1 with Netscape, Chrome, Web 2.0, BitGo, Web 3.0. Everyone always likes to, you know, I'm always making comparisons to like 1999, 2002. I wasn't there. How, what do you think of, uh, well, I guess what similarities, what differences, what do you think of the, uh, the, the analogy of, you know, we're in 2002 today, we're in 1998? Like, yeah, would love to just hear similarities and differences.

Yeah, look, I think, um, I think Web 1.0 was just a really, a tremendous amount of optimism. Around technology brings all this stuff together, makes it so everybody can access the world's information at their fingertips. And it was really a very just kind of open, you know, humanity-friendly thing. Now there are a bunch of applications that got built on that and, you know, a bunch of those are good email systems and news systems and all kinds of things that we use. And then other things emerged, which I think we've later regret it a little bit as we start to realize, wait a minute, this now all congregates as data on a couple of big players. And then we kind of look at that one, we're not quite so sure. Um, and, uh, now by the way, we all saw it coming. We have no excuses. There's no regulator that should have saved us in, in the, in the mid-2000s. You were a little bit too young to know, but we were all joking about how much information we were giving Facebook.

Oh, ha ha ha.

They know everything about us. We all knew this was happening. And then all they did was, of course, they monetized it in more and more ways. And then after the fact, we all get upset. What? How could you do that to us? Everybody knew. I think it's just fake news to pretend that we need like a regulator to come in and save us. We willingly did it. We deserve the blame on ourselves. Okay. All right, so that's Web2. So the good news about Web2 is we end up with these great powerful services. They tend to be free. Bad news, paid for by data that we turned out we didn't like. Now we're talking about Web3. Web3 is money, right? So we are starting to extract away the data and the application a bit. I think that's good. I think also because it's money, it has some of the regulatory concepts of money that have to go with it. As you can probably guess, in general, I'm in favor of a lighter touch regulatory framework. But there's no doubt that there's a lot of fraudsters out there that do need to be cleaned out of the system and prevented from getting into the system. Um, you just don't want straight-up fraud. Um, and left to themselves, humans, we, we, we're not very good. Um, if you let humans just freely do whatever, there will be a bunch of bad guys that come out and try to steal. So, like, I think actually the Web2 is kind of a hybrid. It's, it's, it's a place where it needs a little bit of protection, maybe not as much as money. And then as you get into money, it gets even more so. So look, I'm also happy that I think Web3 is back to that optimism phase where we now have seen some of the dangers of like what can happen when you have too much aggregation of power at the data level. I think it helps set the stage for people trying to, starting to understand aggregation of power at the monetary level. Although to be honest, I think most people really just don't understand enough about money. I'm not under any illusion that this is particularly fixable, but given how much time and effort we all spend trying to acquire money, it's a little bit shocking that, you know, people know so little about how these, how these institutions work. All right, so back to optimism. I am optimistic that the systems we are working on are going to give us better banks. They're going to give us better stock markets. They're going to give us more inclusive of all of those. I think it's going to have to come with a lot of individual responsibility. You make your investments and you are responsible for them. There should be some amount of making sure that outright fraud can't happen. But, you know, if you make a bad investment, you can't come back later and just say, eh, you should have told me. So anyway, I'm optimistic that a few years we're going to have all good, good movement in all these fronts.

Good, good, good, good. That makes me happy to hear, Mike. Uh, if you're optimistic, I'm optimistic. So, um, do you, uh, coming— tying this whole story together, I mean, you started BitGo, you know, 13+ years ago. Is this where, um, I don't know, do you ever— did you think that you'd be at this point running a public company? I mean, you guys, you mentioned the Galaxy acquisition, like you had this, you know, billion-dollar-plus acquisition on the table that fell through for one reason or another. Like, just, yeah, maybe if we can tie together the, the journey a little bit.

Just to be clear, the only reason that thing fell through is because the SEC was not doing any IPOs in order to get— I'm sorry, doing any public listings. Galaxy had to become a public US-listed company in order to close the deal. It was just, it had to have, and there's mechanical reasons why, but there's no way to close it without it. So, you know, that's the only reason that thing failed.

Um, are you, do you count your blessings today that that deal didn't go through? I mean, that was a $1. $2 billion deal, and now you're valued way higher than that.

Um, look, everything happens for a reason. I'm happy with the path that we're on. And, uh, you know, life could be worse. I mean, I suppose having lots of—

also, what would you go do, Mike? You gonna go retire? What do you— what would you do?

No, no, no, no. I mean, I'm in this— I'm in this for the long run. Uh, you may know, sell any stock, uh, in this, um, You didn't sell any stock? No. Um, so I'm in this for the long term. Um, and like, I think there's just a lot more to be done. You asked me, was I thinking about this in the beginning? No. You can't start a company and say, hey, I'm going to go make a bunch of money and have that work. It just won't work. You have to be in it because you're trying to accomplish something, hopefully that other people see has value, and then they open up their wallets and give you their hard-earned cash. And prove to you that there was money that they were willing to exchange for the value that you're giving them. So you just build and, you know, you mentioned like, should we get acquired or should we not get acquired? Should we go public? Don't really think about that. Actually think about like, is there an acquisition route where you would be combining A and B that would make something that's so strong that it would be better in terms of what you're trying to accomplish, in terms of what you're trying to build or feel good about? That would've been a good reason to do it. and that was why we entertained that offer. And then now we look forward and we're like, look, we're a really strong company now. We're stronger than Galaxy ever was. And, you know, we have the opportunity to, to go to, uh, go to market and, uh, prove that the largest institutions in the world can come to us. We've got the best regulatory standing in the United States. We've got it replicated across the globe. And we built the market structure the way institutions want to see it. We're protecting at the bottom, you know, that fiduciary protection. Whether you're talking about trading, then we're giving you the best execution, even though we're not required to, we just did it that way. And I think this is gonna be a combination that wins. So being a public company is now just the next step forward in order to get what we're trying to accomplish. Yeah.

How do you spend your days today, Mike? And do you think that changes now that you're public?

Uh, look, I'm told by everyone around me that I work a lot. Uh, I don't feel like I work an outsized amount.

Um, but what are you doing while you're work— like if I looked at your calendar today, so you've got this podcast, are you doing internal meetings? Are you on product meetings? Do you talk to customers all the time? Are you doing recruiting? Like investor relations now? Like, yeah. How do you, how do you spend your—

well, the last 2 days have been tied up on, on IPO, so I suppose it probably goes a little bit in phases. Uh, right now it's been doing a lot of press, getting the word out, what's going on with BitGo. Um, so today's been pretty much a PR day. Uh, my normal days would be much more like hitting product and customers. Um, at the end of the day, there's only two things that matter. You gotta build a great product and you gotta figure out, you know, how to interface with the clients and, and partnerships. So, um, that's, that's the bulk of my time. Um, and then I'm fortunate enough to have staff around me that deals with a lot of the, I think, less, less fun problems for me.

But, you know, some of them find them Did you build an exec, uh, an exec team with— I know some, I know some founders who, when they're thinking about gearing up for an IPO, they go hire a bunch of external execs who have gone through, who have been, you know, been at public companies. Did, did you go through that motion?

Uh, I don't think we replaced anybody actually. Um, been super happy with the people that are, are, are here. From, you know, Jody's our Chief Operating Officer. She's been building our trust company for 5 years. She's got a tremendous amount of knowledge about everything related to the banking side of what we do and how do we replicate that globally. Um, our chief legal officer, uh, has been in the space. He's been at BitGo for a couple years, uh, been in the space for, I don't know, a long time. Um, and, uh, perfectly happy to have him guiding us forward. Uh, maybe the only thing we did was some of the outside consultants that we use, you know, so our outside legal, Fenwick, I mentioned earlier. Um, Obviously we have investor relations, we have to add that on. We didn't have investor relationship before, but no, no, we didn't have any, any changes. Yeah.

For founders who are listening to this, who are now in, I don't know, maybe they came into the industry in 2021, they're in year 3 or year 4, you're in year, you know, 13 of this, 13 plus. I guess what do you wish you knew then that you know now?

Um, I saw a quote from Elon today. Uh, he has this quote about, you know, being a founder is like eating glass and staring into the abyss. Um, actually, I mentioned Bill, co-founder here at BitGo. He's also close with Elon. That's Bill's quote, um, and Elon likes it.

Um, and does Elon have his, uh, his Bitcoin with BitGo?

I, I don't answer client questions like that. Um, so, uh, in some ways I've never liked that statement. Um, I think there's too much glory around, you know, being the founder and it kind of creates this image of like the founder, some sort of like superhero. Um, on the other hand, there's an element of it that's true. Um, what I, I would say is that if you're gonna start, start a company, You know, you might get lucky, maybe it goes pretty quickly. Um, you know, maybe you can get acquired pretty quickly. That's an option. If you really want to be a founder, it takes two things: being smart and having grit. So the grit part might be more of like what that staring into the abyss is, is like you just have to keep going. If you're not in the game, you can't win the game. Um, and, uh, uh, and then being smart is it's never a straight path, right? So you might think you're going from A to B, you think your vision is whatever, but look, especially over a 13-year time period, gosh, if you didn't change your opinion a little bit, like either you're incredibly smart, maybe, maybe that's what I need to be more smart. I think you can be smart about your decisions and, and, and be nimble and keep moving and be smart enough to recognize like where you were wrong and go ahead and change. So I'll give you an example there for me. Obviously I come from the tech side, really thought we would build this kind of SaaS-like service for crypto and that would be used by banks and brokers and financial institutions. That was very naive. Turns out that with money, like the adoption of new technology, especially with like something that's got so much different things like ours, that was not possible. There was a conscious choice. I had an all hands to the company when we did it. I said, we are no longer a tech company, we're a financial services company. And it was a thing, it was a turning point. So anyway, my initial thesis, our initial thesis is not just mine of kind of just being technology. We had to change it and you know, but you have to be smart enough and willing enough and not stubborn enough to be able to do that. Yeah.

Mike, anything, anything that we didn't touch on that you think is important to share with the market?

Oh, there's probably a lot of things. Look, I don't know, it's an exciting time. I think the world is changing. I do think the technology changes these things. I think we're going to disrupt banks. Maybe one last thing, everybody knows this, but yes, stablecoins should be able to give interest back to the holder. The idea that you can't is absolutely insane. And there's no good argument for it. And the fake arguments from the banks is completely self-serving, somewhere between incompetence and just outright lies. But all right, I know we're going to go through a fight. It's not like you should expect to disrupt somebody else's business and have them just go down without a fight. So all right, anyway, call your senators, call your congresspeople, tell 'em that you're not going to like them if they continue to side with these banks that take your money, put it at risk, And then return to you 0.1%. You should be getting at least the risk-free rate. It's called the risk-free rate and they can't even make the risk-free rate. What? What kind of bank are you? You call yourself a financial expert and you can't get me the risk-free rate? I would say you are not a very good financial expert.

All right. Mike, how do you feel about your, uh, you clearly feel a type of way towards banks, but they're also your customers.

Yeah. All right. I'll say something I probably shouldn't say. So you've read Innovator's Dilemma, right?

Of course.

I might have mentioned this on the show before. I've been talking about it for a couple of years, but you go to Silicon Valley, everybody's read Innovator's Dilemma. You know, um, you go to Wall Street, I think only about 40% have read Innovator's Dilemma. That's because they live in a different world. They don't live in like So the concept here is like, why is it that the incumbent who's got all the money, all the power, all the best employees, all the market distribution over and over in technology can get displaced by some small upstart? And this has happened in personal computers, hard disk drives, memory, all kinds of stuff in technology. And it turns out that the way innovation works, it happens. You can go read the Cliff Notes and find out more. All right, Wall Street hasn't heard of this because they haven't really been disrupted by innovation very much. So I view Wall Street as a little bit like the Galápagos Islands, and there's a bunch of animals on the Galápagos Islands that have never seen a predator before. And the predator is innovation. The predator is Biko. And they don't know that we are the predator. They kind of know, But we're chewing on their tail and they still haven't quite figured out that we are replacing them. All right, so there's my answer. Yes, they are our customers, but they don't really know that they're going to get displaced and they won't be able to pick up the innovation in time to stop it. And I'm sorry, I probably put too much as like BitGo's like a predator. It's more of a colorful analogy, but I do think it's true. I think that the incumbents, and this is not specific to banking technology, it's happened in the tech world over and over and over again. And the weird thing is like, why, how can this possibly happen? Um, and it's because innovation is increment by increment. It's that grit, it's the adaptation, being smart over time. It always wins. Innovation always wins. Um, maybe the one place where it doesn't win is if the government just puts a stop to it and uses regulatory capture. Yeah. Yeah.

Um, Mike, last question. What's on the wall behind you?

That's, that's the vault where we store your Bitcoins. We've got, we've got a private key painted on the wall behind that, and if you just peel the paint back, you'll see the key.

That's all the Bitcoins. That's all the Bitcoins. 2,000 or some that you have on your balance sheet. So awesome, Mike. Uh, pleasure having you on the podcast. Pleasure getting to know you over the last, you know, several years. And just congrats. And I know, uh, This is just, yeah, first stop on, you know, many, many big wins that you'll have over the many years.

So, well, thanks for having me, Jason. You know, your podcast has been going. I know you've gone through like all of the same types of how do you, how do you build a business type of trials and tribulations. And I think you're doing a great job of it. And I know great things are going to come for, for all of us in this space. So keep up the good work.

Appreciate it, Mike. All right.

Thanks, folks.