How Abdul Al-Asaad of Basic Capital is Building a New 401(k)

I started my career at Goldman Sachs. I bought $100 of Tesla, and everybody basically like cracks out laughing. Like, $100 couldn't buy a single share of Tesla. And that was basically when it like it resonated with me. It takes money to make money. Something like 60% of Coachella tickets were financed via buy now pay later. And the radical assumption that we're asking at Basic Cap: Why can't I buy now pay later a share of Berkshire Hathaway? Everybody was working on the first. 2 problems, which is financial literacy and access, but you do not have capital, you're never gonna get rich. The purpose of Basic Capital is to give people their basic capital, give people their start. I started Basic Capital with the hope to make financing investments as easy as financing consumption. Basic Capital wants to flip that upside down. We want everybody to start with a lot of money, hold it for a long period of time, and end up with more money.

Welcome to the Just Go Grind podcast. I'm your host, Justin Gordon. On today's episode, we have Abdul Al-Azad, the co-founder and CEO of Basic Capital. Basic Capital closes the ownership gap by enabling Americans to finance investments. There's two sides to this. For employers, you can stand out with the only 401 that gives your employees more capital to invest. And for individuals, you can increase your investing power, get $4 in financing for every dollar you contribute. We'll get into all of that in this episode. This is a massive big idea just announced recently. So excited to have Abdul on the show. Today's episode is brought to you by Ro. With Ro, founders get a single pane of glass they can use to run and scale their business from day one. That's bank account, corporate cards, expense management, bill pay automation, and accounting to help you move as fast as you scale. Ro is trusted by thousands of companies ranging from 2-person YC startups to brands like Perplexity, Cal.com, Splitwise, and more. Ro, just like Basic Capital, is an incredibly ambitious company, and yet they take care of Everyone. The big thing with Ro, every customer has a person at Ro, 24/7 customer support, phone, text, email. They'll be with you every step of your critical journey at every milestone to help you build your company. To learn more about why startups choose Ro, visit ro.co today. That's ro.co today. Let's get to the episode with Abdul from Basic Capital. Abdul, welcome to the show.

Justin, thanks for having me.

This is an exciting time for you with everything you're doing at Basic Capital. I want to start this interview— because I know this is your first interview— just why are you building Basic Capital in the first place?

Yeah, of course. I'm building Basic Capital primarily for a problem that I identify with myself. So let me give you some context and some backstory. So I started my career at Goldman Sachs on the leveraged finance trading desk at Goldman. And, you know, when you are in the markets, in the trading culture, there's a big collegiate culture. So people come in every Monday morning and they talk about what they have in the PA, PA meaning the personal account. So this is not the bank's money. This is their own money. And they are like, oh, I'm long this, I'm short this, I own that. And my boss looked at me one day and he said, Abdul, I never get a compliance clearance request from you to trade. Do you not trade in the PA? Your boss has to approve your trade orders if you work in financial services. So I went and opened a PA, a personal account, and I did my first trade. This was in 2017. I bought $100 of Tesla. Tesla at the time was trading at $420. So I couldn't buy a single share of Tesla. And when that came through, my boss stood up. He rose his pants. You know, he was like, "Hey boys, market moving news." So all the traders like come around him. They're like, "Market moving news? Like what's going on?" It's like a basketball team is gathering around him. He's like, "Abdullah Assad buys $100 of Tesla," and everybody basically like cracks out laughing. Like $100 couldn't even buy a share. You know. And that was basically when it resonated with me that it takes money to make money. It takes money to make money. And in America, we're often told that, hey, in order to make money, you need 3 things. You need financial literacy. So you need to know what you're doing. You need to know that you should be investing and saving. You need to have access to investments. Which is a problem mostly solved thanks to Robinhood, thanks to Jack Bogle of Vanguard. The access problem is primarily solved. You can buy anything virtually now in an ETF in your app. And the last thing you need is capital. So you need education, access, and capital. And virtually everybody was working on the first two problems. Which is financial literacy and access. Now notice, if you have the first two but you don't have the third, like me, you're never going to get rich, right? You can be the most sophisticated, you can be the best poker player in the world, and you can have pocket pocket queens, pocket aces, pocket kings, whatever. But if you cannot bet, you're not going to make much money. If you cannot actually wager. You're not going to. Now notice if you have capital, but you do not have financial literacy or education or access, you can pay for the first two, right? So you can pay for an advisor, you can pay for somebody to manage your money, and you can pay for the access. And I wanted to solve that last problem. I'm not saying the first two problems are not important. I'm just saying there's a lot of people working on them. The entire Twitter fin tweet thing. The entire Substack is virtually a financial literacy thing, right? Like, let us teach you how to save, how to blah blah blah. Important.

It just—

I don't think I can have add anything new. There are people who are much smarter than me. They're doing this. The access problem, in my opinion, is entirely solved. Let's just buy the market. Like, I think the investing problem is actually simple. Has been solved decades ago. Just buy an index fund. Buy a diversified bond fund or diversified equity fund. Based on your risk tolerance, like that's solved. There is not much to learn, and you can access that very easily. But nobody is working on the lack of capital, and the purpose of basic capital is to give people their well basic capital. And in accounting terms, basic capital is usually the founding capital or the first capital that comes into the balance sheet. And that's our goal: is to give people their basic capital, give people their start. My frustration is that that's it. I'll stop here and cough.

I'm curious from that. How did your journey, your background, get you to this point? Because it's a very unique story, and I want to dive into that. How did this get you to this point now?

Yeah. So being working at Goldman Sachs, and I worked in credit at Goldman Sachs. I saw the power of credit, and what I noticed is institutional partners, institutional clients of Goldman Sachs, and high net worth clients of Goldman Sachs use credit fundamentally different than the average person does. Institutional partners of Goldman Sachs and ultra high net worth individuals, clients of Goldman Sachs, use credit to buy assets. So PE firms issue bonds, they borrow to buy a company. It's called leveraged buyout. Rich people borrow money to buy assets, whether it's a mansion, whether it's, uh, art, whether it's a company, whether it's stocks. Jeff Bezos borrowed against stocks, right? But everyday people use credit to consume. And that kind of really switched the flip to me, where you are sitting on the trading floor on a bond trading desk, and you see all these bonds come through. And you are like, what's the use of proceeds for these bonds? And every time it was an ultra-high net worth individual or an institutional partner or a PE firm, it was to buy an asset that goes up in value, an asset that generates income. And every time we looked at consumer credit, you're like, what did the consumer use these loans for? It was oftentimes revolving credit cards that they used it to go to a trip to Vegas, right? Or they used it to consume. Nothing against— or buy now pay later. Something like 60% of Coachella tickets were financed via buy now pay later. And the radical assumption that we're asking at Basic Capital is if I can buy now pay later a Coachella ticket, Why can't I buy now pay later a share of Berkshire Hathaway, or an index fund, or a bond fund? If I can buy now pay later a car, which is a depreciating asset, why can't I buy now pay later an appreciating asset? And what I noticed is a It's really easy to finance consumption in America, but it's really difficult to finance investing in America. And I started Basic Capital with the hope to make financing investments as easy as financing consumption.

I know there's a lot of complexity that goes into this, and you obviously have spent a long time working on this. I think you said online you had the idea maybe 5 years ago, so like 2020. How did you, in the early days, figure out what this was going to be and how you would launch this? Just in terms of like, okay, I need a co-founder potentially. I need to get capital in the company itself to then grow this. Take me— let's go to the early days. You have this idea. Let's talk about that because that's the most— I think it's very interesting part of your story.

I had the idea. I pitched it to my colleagues at Goldman. And I pitched it actually to Goldman Sachs, like, internal— it's called GS Accelerate, like the Goldman Sachs internal Startup thing, and they were like no. And I said why not? And they said the TAM is zero. And I was like what do you mean the TAM? The total addressable market is zero. What do you mean TAM is zero? And they're like nobody is using this. So then the TAM is zero. And that's how financial institutions think, right? They're like oh there's no pool of profits to go capture. And I was like no no the point is that we're going to create a new pool of profit. We're going to create a category that doesn't exist. And the way Goldman thinks is like, no, no, no. They they try to look for a pool of profit that already exists, and they try to say, is this a good source of profit? And how can we get in and like get market share in it? They think in terms of market share. They they do not think of market creation. They think of market share. That's how incumbents think. That's how Fidelity thinks. That's how Vanguard thinks. They think in terms of market share, not market creation. So when I pitched it internally at Goldman, they basically were like, pass. No, like, we don't want to create new markets. We want to go out after, like, student loans or consumer— we want to create the Apple Card. At the time, again, in 2018, the hour du jour, the topic of the day was Apple Card Goldman Sachs launches. You know, that's what they wanted. They were like, they wanted to go after an existing pool of profit. So I pitched at them, they said no. And I went to my boss and I was having like a hard day at work. I was like fighting with a bunch of people and, you know, trading floors are very toxic. And just one day in December, I decided last minute I want to quit and I want to go build Basic Capital. But given that I'm an immigrant, I came here as an international student, so I don't come from a wealthy family. I could not just quit and go just hang out for 2 years intellectually exploring An infant idea. I'm not that privileged, but I figured, listen, I can apply to business school and I can spend 2 years like at business school ideating on this, and if it goes well, I can keep going, and if it doesn't go well, I can guess, you know, I did not waste 2 years. So I, I get the idea to apply for business school on like December 1st. The deadline to apply was like January 5th. I took 2 weeks off for the holidays. I'm not from the U.S., so I did not go anywhere for the holidays. And for the 2 weeks off I took, I just studied for the GRE every single day from like 6 a.m. to 7 p.m. And I took the exams, I wrote the application, I asked for recommendation letters, and I put together— I applied to one school, I applied to HBS, and I got in luckily. And I went there and I loved it. I love being in a small town. I love being around professors. I have like a huge appreciation for academia and And I just love being in a place where you're exploring ideas for the sake of exploring them. And I begged every scout on campus to give me money, like the VC scouts. I'm sure you're familiar with this concept. And nobody would give me money because at the time in 2020, the popular topic was crypto. So if you're not doing anything in crypto, I have no cares. Just like now, if you're not doing anything in AI, I have no cares. So people were saying, Abdul, if you put your idea on the blockchain, if you find a way to put your idea on the blockchain, we will give you money. And I was like, no, like, like, I believe in decentralization. I believe in like blah blah blah. Like, I, like, I, I'm not against crypto. I'm pro crypto. But I was like, this is not a good application. Like, this is not, you know, like But I heard Bill Ackman was coming to campus. And I said, well, this guy knows something or two about finance.

One or two things.

So, you know, he's doing well. So I made a pitch book for him. It said, prepared for William Ackman. I went to the basement of Spangler Center at HBS, and I printed it with the first page see-through. And I don't know how you call it in English. It's like a wire thing, wire binded. And I took the pitch deck and I went to the talk two hours early, and I stood in line to make sure I get a front seat. And I sat down, and he came in, and he talked and talked. And he's very charismatic guy. It was a fantastic talk, packed auditorium. And right after he finished, I walked up to him. And I said, Mr. Ackman, I prepared this for you. I thought you ought to take a look. And he dismissed me. He's a very confident guy. He was like, dude, like, what are you doing trying to pitch me right now? But he kind of like appreciated the chutzpah. He appreciated the hustle that he wrote his email on the pitch deck. He's like, just email me. Now is not a good time. Just email me, and I'll take a look. And I went back home. And as soon as I went back home, I was very disappointed because it was a public humiliation. It was a public humiliation to walk up to somebody with a pitch book and like kind of be rejected. But he gave me his email, and I went back home, and I sat down on my desktop, and I was like, "I'm not gonna give up. I'm not gonna give in." Like I'm, and I emailed him, and I said, "Mr. Ackman, I really think you ought to take a look at this." And I sent him the docent, and I go to grab a water, and he's like a he's on it. He's on it. Like, you email him, he opens the email immediately. Like, I send the email, I go to the, to the kitchen to grab a water, and I hear ping, like email notification. William Ackman opened your DocSend. And I immediately click on it, and I'm watching him live. I'm watching him live go slide by slide. And halfway he stops, and I'm like, uh-oh. And then bing, another email notification, like from Bill Ackman, like, hey Abdul, this is really interesting. Let's set up a time to talk. Next thing you know, we pitch him, he likes the idea, and he was like, what's the idea? And I said, the idea is in order to build wealth, you need to have capital. You need to own assets. You cannot rely on your income to build wealth because your income is a byproduct of your labor, and your labor depreciates over time, meaning as you get older Your productivity gets lower. Capital appreciates over time and it feeds on itself. It's like this beast, it compounds. And my idea is that people need to buy capital to build wealth. Not my idea, very common wisdom. But to buy capital, there is a chicken and egg problem where in order to make money, in order to buy capital, you need to already have the money to buy it, right? So you're stuck into this like infinite vicious cycle. Living paycheck to paycheck, unable to invest. And one way to break this cycle is via financing. Think about the cycle of okay, in order to get a job, I need to have a degree. In order to get a degree, I need to go to college. I'm eighteen. I don't have the money to pay for college. What do I do? I finance my college. I'm not saying college is a good thing. I'm generally speaking, actually, short—

It's a whole other discussion.

That's a whole other debate. I'm generally speaking short traditional education, like don't go to college. But like, if that was a good thing, presumably like that's a good way to finance it, right? I want to go to work in a job 10 miles away. I live in the middle of the country. To go to work, I need to drive a car. I don't have the money to buy a car, but I need to get to my job. I finance my car. We've created solution to this cold start problem. I am a founder. I want to build a business. I don't have money to hire people. I issue a convertible note. This is called a cash flow time problem. We solve this in finance. There is a mismatch between cash flows, and we solved it via different financing ways. And I told him, I want to create a financing mechanism for assets. He was compelled by the idea. He's a capitalist. I'm a capitalist. He believes more Americans should be owners, more Americans should be capitalists. I agree. How do we get them to do it? One way to do it is to go beg the government to do something about it. I'm, generally speaking, short the government doing anything. So he was like, okay, I'll give you money to go explore this. So he gave me money. Do you want to keep going with the story? This is, you know, I can keep going.

This is very interesting.

So he gives me the money, and mind you, I'm alone. He gives me $1.5 million. We raised that round, and I'm alone, completely alone.

$1.5 million you raised from him?

Yeah, from him and from friends and family. And then I'm completely alone, completely alone. Like, I have no co-founder, no nothing. I worked at Goldman, but like nobody knows who I am. I did not go to Stanford or Berkeley or like a fancy engineering school. So I have— I know no engineers. And I hear that— I literally— I'm complete— I was not on Twitter. I got on Twitter 2 days ago. Like, and I go to one of my friends who works in tech, and I said, who are the best tech companies? And they said Stripe and Plaid. And I literally go online and I DM on LinkedIn. I got like LinkedIn Premium and I DM every Stripe and Plaid and Ramp engineer. If you are a Stripe, Plaid, Ramp engineer, please go back to your LinkedIn DMs and I bet you, you would get it. You got like a message from me. And I had no idea what's a front end, a back end. Like I'm probably like emailed like the wrong types of engineers, you know what I mean? Like, The best engineers are not on LinkedIn. Like, that's a whole other topic, right? Like, I just— I'm just an idiot. Like, I'm just that guy. I'm like, I need a co-founder, let's go. Like, and for a year I'm just DMing people. And after Stripe and Plaid, I went to Square, and I'm just DMing people for a year and nobody would join me. There were 2 people that were very close to joining me, one from Ramp and one from Plaid, but like last minute they got cold feet. They were like, I don't want to do this anymore. One of them was actually from Plaid, lived in SF. And when he said yes, he said, I will take a meeting, I'll take a call. I told him, I'm actually going to be in SF tomorrow. Do you want to get lunch? And I flew to SF red-eye to meet an engineer, my junior— my junior, I mean younger than me— to sell him. He was interested. He almost did it last minute. He was like, I kind of like being at Plaid making $400K a year. This is this crazy guy pitching me. I'm like, I don't want to do any of this. And he didn't. We're still very good friends, but like he pulled out. And it took me a year to find my co-founder. And eventually, through friends of friends, my co-founder's wife went to HBS. So like, she was like, listen, my husband, you know, we got connected eventually. And he was at Square for many years. He was at Uber under Travis for many years. I love Travis. He loves Travis. And then he was a founding engineer at this company called Level, Lightspeed, Tigerback. He was there for 5 years. And he's older than me. He's very smart, very thoughtful. And I sent him my white paper. I wrote my graduating thesis at HBS about basic capital. And I pitched him on it. And he was like, listen, you're a crazy guy. I kind of have made enough money in my life to take some risk. And, you know, and I'm bored. And I think people underestimate this. There are so many people alive but not living. They're just going through the motion. And I think there is a desperate desire out there for people to feel like they're living life. And you can go work at a spend management company. You can go invest at a spend management company. Another widget, another. It's interesting. Honest living. Nothing against it. There is something completely different about doing something really novel that goes viral overnight, and you're out there fighting. That's why people go to work at SpaceX. That's why people go to work at Tesla. It's this big vision. And I think a lot of founders mistakenly try to think too small because they're like, oh, it would be easier to execute on a small vision. I actually find that it's easier to execute on a bigger vision. Why? Because it's easier to recruit for a big vision. It's easier to sell a big vision to investors. And it's easier to be motivated for a big vision. If you're doing something small, you might think it's my odds are bigger, but actually your odds are smaller because you might burn out quicker. And everyone's competing at the small thing, and everyone's competing at the small level, and it's harder to convince people to come work at the small level. And also, like, there is a very good chance to fail. And I always taught myself, and I told the team this, I want us to leave no stone unturned. So if one day Basic Capital, God forbid, does not achieve its mission. I want us to go to a bar and be proud at the swing we swang. I don't know if this is a word, but said it.

In the early days, with you convinced your co-founder, it took you a year to get him on board. It reminds me a lot of Melanie Perkins from Canva. She took like a year to get technical talent she needed to build Canva. Now she has the largest, like. I think female-led venture-backed company. Like, it's insane. The story is insane, right? So you finally do this. You finally get your co-founder on board for Basic Capital. You've been in stealth, though, still for 2 years.

Yes, 2 more years.

Tell me about building the product, the early days, getting customers to test this out, and what you've seen in the early days.

Yeah, we— my co-founder joins. We start building the product, just him and I. We knew nothing about ERISA. 401s are regulated by ERISA. We knew nothing about securities law. We knew nothing about tax law. We knew some stuff about credit, but like not enough to like actually build like a new credit market. And there was just like 2 years of just us going down rabbit holes. And mind you, this is pre-ChatGPT days. I think ChatGPT is really great, but I think it's going to kill curiosity. I think now when every answer is so on your fingertips, there is no fun to the hunt. There is no fun to the hunt anymore. When I was doing this and there was no ChatGPT, I feel like a boomer saying this, but I'm going to say it because I'll— why not? Because it's true. When I was doing research before ChatGPT, there was a beauty to the hunt. If you had a legal question or a tax question or a securities question, or if you wanted to understand how like some credit vehicle worked, you had to go and Google it and go deep into like Wall Street Oasis or into like some niche subreddit or like some blog post that some company wrote or like— and you are literally like, you are calling your cousin's friend from college that you slept on their couch, you know his dad is a lawyer And asking him, hey, can I speak to your lawyer, Dad? And he's like a divorce lawyer. And you have like a, you know, like an ERISA question. And you're getting on the phone. I literally got on the phone with my friends' dads to ask them legal questions and structuring questions. I would call my bosses at Goldman and be like, hey, how would you structure this? Like, does this make sense? Do you think the trade makes sense? Like, do you think this would make money? Like, how would you hedge this? And like now with ChatGPT, it's very easy to get the answers. It's another thing if the answers are correct. But I think like when it's very easy to get the answers, there is a joy to the hunt that disappears on a personal level. It's not for everybody. But anyway, we spent two years really trying to cross every T and dot every I. We raised more capital from Lux. Again, we spoke to a hundred VC. Everybody said no. Everybody said no. Everybody said no. This is crazy. Like you want to build a new credit market. You want to build a new investing market. You want to flip 401s on its head. And what do I mean by flipping its head? The way 401s work right now is progressively. So you invest incrementally and then you end up with a lot of money if you are lucky. But the amount of money you end up with is not enough. Like if you make $100K a year and you save 2% of your income, like after 50 years you have $100K, assuming there is no compounding. I understand there is compounding and compounding will shrink that time earlier and somebody is going to Come in the comment section. What is that? No, but your capitalization rate on your annual income, assuming a 0% rate of return, is actually 50 years. So that's called incremental saving. That's how 401s work. Basic Capital wants to flip that upside down, and it wants you to start with a lot of money, hold it for a long period of time, and end up with more money. That's kind of how buying a house works. You buy the house, then you pay it. Called a mortgage. Otherwise, you would be saving for 30 years. Well, actually, you wouldn't be able to save because you know you're paying rent, and then maybe if you're lucky one day buy a house. But side notes: all of this when we were building Basic Capital, it was a really bold idea, and somehow I got an introduction to Dina Shaker. Shout out to Dina Shaker at Lux Capital. Dina was on Maternal leave, and she gets the pitch, and she kind of like is like busy. So she just forwards it to the like partnership like email list at Lux and says, "Hey guys, like anybody wants to take this meeting? There is this guy. Like I have you know idea what he's doing, but you want to take a look?" And it got picked up by Peter, who is the co-founder of Lux. Peter and Josh, and they read this, and they're like. Hold on, hold on, hold on, hold on. This is really interesting. And for context, Lux Capital invests at the frontier, so they only invest in like science, nuclear, AI, defense, rockets. They don't do fintech. Peter and Josh are very sophisticated. They used to work in finance. They're very smart. They're, you know, they've been doing investing for 25 years. They started Lux in 2000. When no one else was doing frontier investing, but they already understood like this isn't like a this is not a typical fintech. A typical fintech is very incremental in their approach. This is like actually very bold vision, and we like to back bold visions, and they gave us a seed round, and we hired the best lawyers in the country to help us structure our product. We hired the best investment bankers to help us structure it. We hired the best engineers that we, you know, that you can think of to come work on this vision of building universal basic capital, and the momentum got kicked off. And when it rains, it pours. I think that's something I try to remind founders. When it rains, it pours. When it rains, it pours. Momentum is very, very cyclical. It feeds on itself. And your job as a founder is to really, like, ignite momentum. So when things are going well, they compound on each other. So you got to stay in the game. You got to keep having that hope. You got to keep pushing.

To that point, you said you raised like roughly $1.5 million, friends and family and Bill Ackman, maybe others. You raised in a seed round. In between that, even between that, so even raising that initial capital, Then eventually raising whatever the seed round ended up being. What was the progress that you made from that, and how did that momentum kind of carry from there to today?

Yeah, well, the progress was I found a co-founder, so I convinced one person to join me. And that's something to think about as a founder. I mean, I also— we built some MVP, and we got some customers to sign up with a very minimal beta MVP situation. But that's the thing to understand. It's kind of like building a religion. Building a company is like building a religion. You need one person to believe first. So try to break it down to the most atom level in order to make progress. Don't think about the vision and the mission and the long term. Convince one person to join you.

One.

And that was my co-founder. And it took me a year to convince one. After that, it took me a month to convince the second. Then it took me 2 weeks to convince the third. Then it took me a week to convince the fourth. And now my DMs are flooding with candidates. So you gotta start at the most atom level. You gotta convince one person to join you. And then you gotta convince one customer. To actually use your product for a problem that's for them, that solves their problem. And you got to make their life really good. And then you get the second, then you get the third. You got to convince one investor to give you money. One. You need to be the hottest deal. I mean, after Josh and Peter gave us a term sheet, we became the hottest deal in the market that month. I mean, I was getting called, people were showing up to my door. But that's not before Peter and Josh moved. People said, oh, Peter and Josh see things early. Then they started calling us. But before that, nobody cared. So the thing to remember as a founder in terms of progress between the friends and family to the seed, I got a co-founder, I built an MVP, and I refined my understanding of the idea. The idea became more legible. And then we raised the seed, we built a product, we onboarded 5 employers, Thousands of consume, you know, and then we in you know we went out raising an A, etc., etc. So it's really interesting that like progress compounds over time, and it's really hard early on, but it gets easier with time. Actually, I take it back. I'm not saying it takes it. I'm not saying it gets easier. It just you start moving faster. It's equally hard, but you start moving faster.

Yeah. Other problems come up.

Other problems. You're just dealing with bigger problems, right? It's kind of like, I don't know if you're— I don't know if you're— I don't know, like, it's kind of like rock climbing. Like, if you make it up, the higher up you go, the more painful the fall. If you go up 3 feet and you fall down from 3 feet, who cares?

But if you're bouldering a, you know, 100-foot mountain, the harder you go up, the more painful One thing I'm curious about too, with, with that, while we're on that, the progression from like, see, like, you know, friends and family to seed, like Lux took a risk. I actually had Dina on a different podcast. She's great as well. But like Lux is an awesome team. They obviously committed the seed round. Is it something where like this type of business, because you're investing, you're essentially giving $4 for every $1 invested. Do you need to have like $10 million in capital, $100 million in capital? Like, what do you need to be able to pull this off, especially as incremental? You know, like, tell me more about that.

Yeah, so, you know, Yeah, this is a bit more technical topic. Like, these are 2 different sources of funding. So typically in a company like ours, there is a parent entity that raises venture capital money by issuing equity to our investors, by issuing preferred stock. And then essentially, when you need to originate financing to your customers, you go out and you open a different subsidiary, and that's called an origination warehouse or origination platform. And you contribute some equity into that from your parent equity, and then you raise some Debt on that thing, and the debt is secured by the underlying loans. And there is like a very articulate way of doing this, a very thought-out way of doing this, and it's a very standard way of doing this. And there's like that's how these companies usually work. So the money that we raise from Lux is not the money we're giving to our customers necessarily. This is more to fund engineering, operations, sales, growth, etc., etc. And there are different sources of funds that come for the for the financing aspect. You do need to raise a lot of money, not because it's— not because of the financing aspect that has a different capital provider, but because, like, when you are operating in an industry like ours, there is long product build cycles, because you cannot— like, you cannot launch with a half-baked 401. You'll go to jail.

It doesn't work that way.

It's not— you have to— you have to launch with a fully compliant 401 and a fully functional 401, otherwise nobody's going to buy it. Now, that's again why Lux was a fantastic investor, is because for most investors, if you take— if you tell them, give me seed money and I'm not going to launch for a year and a half, they're going to lose their mind. They're going to be like, what do you mean? I wanted to launch next month. I wanted to launch yesterday. But the nature of Lux investing at the frontier, investing in AI and defense, they understand that we're going to give this scientist money. He's going to go out. He's going to spend 2 years building something in a garage. And then he's going to commercialize it one day, and when it gets commercialized, it'll be really, really big. And I don't think everybody understands that, but I think there is a lot of alpha in that.

I know we don't have a ton of time left, so there's a couple things I just want to get to. And in simple terms, because if people haven't already gotten the point of this, tell me more about what is the product that Basic Capital has, and like easy to understand for people who are curious.

Of course, of course. The problem that Basic Capital has is that we're primarily a 401 platform that enables people to have more investing power, to add financing to their investing. This financing is non-recourse, meaning you're not personally liable for it. It's only secured by your investments. It has no mark-to-market, so if the value of the assets move up and down, It does not matter. You can keep the financing, and it's invested in not anything you want, like a Trump coin or a meme coin. It's invested into diversified stocks and bonds. The diversified stocks and bonds generate a larger yield than what you pay for financing, and that creates a positive spread or more capital, and you can reinvest that and grow over time. The way to think about it is when you want to buy a house. You take a mortgage. You put 20% down. You borrow the other 80, and you buy a house. Now imagine if you did not live in the house. You rented out the house, and you start making rental income. And the rental income is actually larger than your mortgage payment. Now you get to own the house for free, and you make an excess spread. That's how basic capital works. The problem is it's not—you're not investing in a house. Why not a house? Because a house has a big down payment. In order to buy the house, you need to buy the whole thing, right? A house is highly concentrated asset. You're taking a massive bet on your local zip code, basically. You're like, I really believe in Columbus, Ohio, or in San Francisco, Nashville, which is fine, but you probably should not put your entire life savings into one bet on your local zip code and take 5 times leverage on that. If you're going to take 5 times leverage on that, our proposal is you should probably invest in a more diversified pool of assets. And that's what we enable. So our customers are 401 platforms, where let's say Justin is an employee. He chooses to contribute 2% of his annual salary into his 401. Once he contributes his 2%, he can take this 2% and put it into traditional mutual funds, targeted funds, with no leverage, no financing. Or he can put it at Basic Capital Fund, or he can put it 50/50. He can choose how much allocation he wants to put between the two. If you put your money in a Vanguard Target Date Fund, for every $1 you put, you get $1 of investing power. If you put it with Basic Capital, for every $1 you put, you get $5 of investing power. You have to pay for the $4 we're giving to you. But you pay for them straight from the investments. You're not paying out of your own pocket. And what you're earning is bigger than what you're paying. And you have more chips in the market, so you get to compound more. And that works in a dollar-cost average way. So with every paycheck, you get to contribute as little as $20, $100, and you get to have $400 financing of it. So this way you're diversifying your entry point into the market. And over long periods of time, if the financial market performs, you're going to end up with more money than otherwise. That's basic capital at its most basic level. No pun intended.

No, I appreciate that because I saw the launch. And for people who didn't, like, open your eyes, I guess it's like 4 million-some views, way more than that, I'm sure by now. But obviously, because it's such a bold idea, the reason why I reached out right away was like, I love people who are like mission-driven and very ambitious. That gets my attention every time, regardless of how early you are. I know you kind of just came out of stealth, but that's why I was super intrigued by this. And for people who want to get more information, like I've looked at the website, you know, Basic Capital, they have everything listed of like, what is this exactly? Because I know people are going to have questions, right? And same with on Twitter and X, like you're responding to a lot of, you respond to a lot of questions. People are asking some very technical questions on there. You can look online for those answers. That's why I didn't want to talk about all that on this podcast, but it's very intriguing idea. What— my last question is just this. What does this look like if you're successful in 5, 10, 20 years and beyond?

Our vision is that in 5 years, people are going to have a mortgage to buy a house, like they already do. They're going to have a car loan to buy a car, like they already do. They're going to have a student loan to go to college. Like they already do, and they're going to have basic capital financing for their retirement. They're going to have a retirement mortgage where instead of saving up incrementally and ending up with a lot of money at the end, they get to start with more money and pay it off over time. Somebody wealthy like you might put down $200K down payment. And get $800K financing and pay off the financing over 30 years and have gains on $1 million of assets. And somebody more with humble means like myself might put $10,000 down payment, get $40,000 financing, and pay it off over the 30-year period. Our vision is that in 10 years, Americans are going to become— have a larger participation in financial markets. They're going to own more of the economy. We have the best economy in the world. We have the best companies in the world. We have the best innovators in the world. We're number one. But our economy and our stock market is highly concentrated in the top 5%. And the vast majority of people own nothing. They are asset-light or assetless. And our vision is to give them a way to unlock ownership. And the only way to unlock ownership is you either make more or spend less. But unfortunately for most people, they cannot make more easily because AI is taking their jobs. And they cannot spend less because inflation is at 8%. Most people live paycheck to paycheck. So if the vision and the mission is to unlock ownership, we need to think of a different alternative than spend less or earn more. And our bold assumption is, our bold premise, our bold idea is let them finance it. They already finance Coachella tickets. They already do dumber things with this, right? Like, and that's our vision is that people in the next 10, 20 years, the distribution of wealth in America is going to be a bit more smoothed out. We do not want people to be equal. That doesn't make sense. We'll never— we're not reaching for equality of outcome. But we want everybody to own a piece of the system. Because right now, most people are left out under protectionism and they don't understand it. They should not get it.

That's our vision. I know your DMs are flooded now, but to help you with one last thing, what do you need right now? Because if people are reaching out, they're hearing about Basic Capital. They're excited about it. Like, what do you need? What do you what do you need right now?

Yeah, I mean, sign up. We'd love to have you as a customer. We're basiccapital.com. We have a retail product and we have a 401k product. So if you're an employer, we'd love to. If you are a consumer, if you're a founder or an employer, I would love to talk. That's our priority. And we have a retail waitlist for the retirement mortgage for retail. Follow me on Twitter. I'm Abdul Al-Assad. If you Google me, you'll find me. Basiccapital.com. You know, what we really need is for people to be open-minded a little bit. We're not saying that, hey, like, this is the most Like, we're not— innovation works in progress, and we have this vision and mission of making Americans workers, and we're going to continue to make progress and iterate and improve. And we want all to think about what can we do to solve a problem rather than just sitting around and doing nothing about it. And I wish if our entire society had More of a solutions-oriented mentality towards the problems we have. Because a high agency person would say, wealth inequality is a problem, how can we create a solution for it? A low agency person will say, wealth inequality is a problem, let the government do something about it. And that's, that's all.

Abdiel, this has been A lot of fun. I'm very excited for you, rooting for you. Thank you so much for coming on the show today.

Justin, it was great. Thanks for having me.

Have a good day.