Micky Malka on Ribbit Capital's 'token factory' thesis: fintech, crypto, and AI are converging into one category

seamless ad buying across the globe. And we hopefully have Mickey Mala. How you doing, Mickey? Good to meet you. Hi, guys. Good to see you, John and Jordy. How are you guys? Welcome to the stream. Great background. Good. Yeah, great background. What's going on? Background. Break it down for us. Those are some NFTTS.

Wonderful collection from an artist called Bright Moments. They did a exhibition all over the world. And these are cryptocitizens from the 10 cities around the world where they had their exhibitions. Amazing. Amazing. Uh it's great to have you on the show. We've been excited for this.

Uh you guys have been on a absolutely crazy run and it's awesome that you're starting to talk about it a bit more. Yeah. I I want to start with like your background.

I think that you might actually have a non-traditional path to venture or at least uh a very interesting entrepreneurial journey prior to launching a venture firm. So, uh can you just give us a little bit of background on your history and how you wound up running uh Rivet?

So, I'm an entrepreneur and I'm still entrepreneur. It just happens that I started when I was 17 years old and uh that's all I know how to do and I started in financial services. Uh, growing up in Venezuela in the early '9s, it was inflation, crisises, bank failures, all the things that you need to learn in your life.

I had them by the time I was 22 years old. Speedun. Oh my god. Yes. Light speed through all of that. So, uh, I started four different companies around the world before the the word fintech or crypto even existed. always trying to do something in in around the internet and making money better.

Simply that was the whole thing. And and what did and what did what did some of those first companies look like? Were they specific to problems that you were having in in Venezuela or were they global by nature? The first one was uh it was the first online trading platform for Latin America.

A little bit what Robin Hood is today. Yeah.

But imagine that in 1998 in the beginning of the internet and you could trade online stocks of every local Latin American market, Mexico, Argentina, Venezuela, Chile, we had a Brazil, we had a we bought it stock exchange uh seats in all of them and we were able to allow people to trade.

So that that was the one of the first ones and then I I And you were you were you were like 20 at this time? I was 23 24 when I started. Yes. Wow. that company and um and there were no venture capitalists in Latin America. There was nobody. Uh we had to convince some people in the US and New York to fund us.

Uh and headquartered in Miami to avoid any kind of problem with choosing a place in Latin America and and that company uh became the largest online broker dealer in South America. Wow. Insane. Um and then where did you go from there?

Uh I went to Spain because my first company was acquired by a Bing Spaner bank and the internet had blown up a little bit like when they think it was all hype. Uh it will happen to AI eventually when it all people will think it was it was all wrong in eventually the future.

But um and I started the first online bank in Europe. There was no online banks. Uh it was a bank called Open Bank because it was supposed to be open 247 365. It still runs uh in Spain and it was Were you Were you the Was was adding open to the start of a word?

Were you the first person to do that because openings were taking over the open words these days? Yeah. Pay me my fee. I I coined that. Uh yeah, that's wild. Uh what uh who was the first LP uh to kick you off? Like what was the story?

Well, well, first I have to ask I'm assuming there wasn't bank there wasn't like 20 banking as a service platforms back then. How did how did you get how did you how did you convince a bank to in uh in Europe to to bank? Well, I I I had to become regulated.

By the time I was 25 or 26, I was regulated by eight central banks. Wow. To uh go through the whole KYC bank approval process myself. What was the secret?

Is it more just like you filled out the forms perfectly, you sent the right messages, or were you like kind of knocking on doors trying to grease palms to make it happen? All of the above. All of the above. Uh depending on the country, you had to do a lot more.

Some were a lot more technical than others, but definitely you had to see they had to see that I was not just this kid who didn't know anything about finance. And then I had to pretend I knew a lot about finance. Mhm. So yeah, you want to continue with that? No. From where where did that go?

I I I don't want to leave a cliffhanger. So So that business uh grew to the fastest bank in Europe.

I sold it back to them to the uh to the bank that uh we were partnered with and then I moved to Brazil started and I got approval by the president of Brazil back then Lula was which is again president now to approve a new banking license granted so we could start a bank to serve the unbank with financial services so I lived in S Pablo did that for three years became the largest retail bank in the country serving almost 15 million customers that was now I'm seeing a trend I'm seeing a trend on you like No, no.

I was going to say you seem to like being the fastest growing or the number one in your category. You You know what I like is making allowing people to when when people have access to better money. It makes their life better. It's not about having more money or less money. It's just making money better.

And better money means you should be able to invest the same way I can anywhere in the world. You should be able to get the best loan and not get your knees beaten up if you don't pay back a credit. You should be able to get a good insurance product no matter where you are or what you're trying to do.

That's what I call better money. So, I think the journey of my life has been one of pursuing that better money makes life better. And moved to Silicon Valley 18 years ago to start a company in payments before the iPhone came out. I I had a feeling people were going to tap and pay with their phones.

So, uh, we were one of the first companies tapping on NFC stickers, putting them on back of the phones. You could pay for in merchants and and that when the app store came out with the iPhone, we were the first wallet in the phone. Wow.

So, that moment was like an aha moment when you saw mobile and you saw the app store. This is like this is what I had been waiting for 20 years as an entrepreneur. that moment in time when suddenly you can compete with incumbents in a playing field that they were not looking at.

So that's where Rivet Capital started instead of building one more company because I always consider myself even though we always moved the ball forward. I was a fail entrepreneur because the best entrepreneurs never sell their companies.

So, I decided to start Rivet as a way to say this is the one I'm going to run until the last day I want to run it. That's fantastic. Um, sorry, now we're now I'm going backwards.

Uh, can you talk to me about some of the wedges that you used in the previous companies to actually drive adoption of a new banking product or a new bank online? um the so many different I have to imagine I have to imagine starting in markets like you know Spain, Brazil uh etc.

help helped you you know many it's been the narrative violation over the last 20 years has been that uh developing countries adopted fintech faster they adopted new methods of payments new uh you know much faster than developing countries in many ways because there just wasn't that legacy infrastructure so I'm curious if you even think you would have been successful if you had had just tried to come and only crack you know the the US market no I would have been afraid uh I would not understand uh the world.

I I'm I was never the best student at school, but I was a student of life.

and walking through the streets of all these countries and seeing how people behave with money was the best class and the best master class I could have gotten because at the end everything you do is building a brand and you and brand means trust and it's very underrated to understand how long it takes to build trust and how fast can you make it shake or disappear or fracture and then how long it takes to bring it back.

Mhm. So if you see a pattern in everything that we've done is working with teams that we believe can build a brand and working with them because that is the only moat that you can build that gives you the chance to succeed in financial services because every financial product at the end it's a commodity.

It can be copied. You can start with free commissions it will be copied. You can start with free credit scores it will be copied. You can start with free interest rate lendings or tipping it will be copied.

So it has to be the brand and that's a special DNA that I got to understand from working in markets where people's level of trust was even lower than in developed markets. Yeah. Yeah. Yeah. How do you actually build that trust and build that brand in some of those markets? Is it different in Brazil than other countries?

Are you talking about the the feel of the product or actually just the marketing and telling people what your brand stands for or does it infuse through the interactions with a a bank teller in the virtual environment? Probably I think it's all the above. It's in the little things.

It's really uh telling a story in a way that people believe and consistently see that you're doing that and everyone every company does it in a different way. So there was a a story I remember from New Bank in Brazil when we backed them super early.

You know in Sao Pablo they are 18 million people but there's I think there's like four million dogs. It's almost like one dog for and so whenever they saw that you you had a transaction on your credit card for a a a vet you you they will send you cookies to your house. Wow. Right.

Uh because it meant that your dog was sick or something was happening. So imagine, but those are little things that you do that with consistency. And if the message is we care about you and we're paying attention to what's going on in your life, that's how you build that trust. It's a bunch of little details.

There's never a big thing, but it has to be genuine. And you can see when when CEOs or teams are not genuine, you can see it 10 miles away. How do you feel about so so you did the first institutional round of Coinbase and Robin Hood? Correct. Yes.

And do did you did you think at the time that that those companies did you have a feeling that that if they were successful they would end up ultimately competing with each other? Because it's not exactly head-to-head yet, but you can imagine 10 years from today these companies will just be going at it.

And maybe that's just because of the trends around bundling in fintech, right? If you can create one product, you can add a bunch of others. If you can earn someone's trust in one category, you can expand out.

Uh but I think we're at this really interesting moment where the last 10 years were about you had uh leg, you know, traditional fintech and you had crypto and they were these distinct categories, but it seems that it seems very obvious now that they will be, you know, massively overlapped in ultimately just one category which is money.

Yes. So we we were the first institutional round to Coinbase and Robin Hood but also to Revolute which is in the same camp and and also to Newang. Yeah. Also to we were super early and we build with Marcalo Libre Marcalo Pago which is a competitor of Newang now.

So if you had told me back then that all these companies were going to be competing for this uh we would have never guessed it ever. And and the reality is Well, I'm surprised you say that because it seems like you have a bit of a you got a secret crystal ball or something.

If you were Well, five years ago, we told our our our LPs, our investors in our one of our investor day meetings that the rails of crypto and and financial services were actually starting to blend and it was going to be indifferent and then companies that didn't do both were going to be completely spaced out or lost the window of chance to build.

So five years ago we started to see it but now it wasn't obvious before that uh because there were different geographies and all of that but now they're competing globally to each other.

So the way I think about it is the first decade of all of this momentum was the few companies that will have the right to win and they've earned it by building brand by building teams by delivering on services by getting licenses by doing all these things that they needed to do.

So now we have a call it 30 or 40 players worldwide that we call the compounders. The one that will deliver and compound for the next decade. Now this second decade of those 40 names or 30 names is the decade where they steal market share from every single incumbent because so far they haven't that much. Yeah.

But this decade with AI, with crypto, with the way they're building new products, with the way they're using their own brands, with the trust they have, with the government regulators leverage they have today versus five years ago.

Buckle up because what's coming is going to be really fun if you're an incumbent and really tough if you're an incumbent. What lessons do you think the uh the company, the Coinbases, the Robin Hoods, uh, etc.

of the world learned in 2020 dur in 2021 during that sort of chaotic market cycle that uh it it it feels good and that and that many of them uh learned various lessons.

I was also told to ask you about um are you talking about uh COVID era or or Yeah, just the whole like you know you know the SVB crisis felt like Robin Hood that felt like you know the Robin Hood GameStop saga those moments it feels like there was a lot of hard ones lessons and then we've started this new cycle this new bubble whatever you want to call it uh and hopefully a lot of them have taken those uh taken learnings from that and are are implementing it whether it's around risk management things like that yeah so I think the lesson from that time was when COVID started most of these companies were not ready to turbocharge.

And what happened during COVID if you look back is that you probably fast track four or five years of customers and growth into 12 months. Yeah. And none of these teams were prepared for that. being at home, not being able to do much more.

It just supercharged all of these companies and they overhire and they were working remote and they didn't have capital, you know, frameworks in place because the growth was unexpected.

And we remember getting a bunch of calls during that time, the beginning like this is amazing and then like this is getting tough and this is going to be problematic and and it it can crack here or there.

And when we got the phone call at 3 4 or 5 in the morning from Robin Hood saying the GameStop day and what needed to be done and we funded them in four hours almost half a billion dollars that we didn't have that we asked a bank to lend us to do it. Uh we've all called in an old favor from an old friend. Yes.

Literally a favor from literally a favor from an old friend. Uh and that's what it takes to build relationships in banking. need decades of that so you can call in that favor when it's needed. Um, and that day and look at how long it took for the brand to regain the trust of the market.

It was almost two and a half years. Yeah. From that moment. And you got to be a special leader and a special team to go through that turf and come back out of it. And now they're hitting their cylinders, but they got their story right.

So you can see it in the Brian Armstrongs, in the Nikolai Seronskys, in the Vlatenev, in the David Veles. They have that now. Uh they went through that and they're on the other side and they're all between 38 and 41. So they got the best decade of their life coming coming their way. Yeah.

What does that mean for competition at the early stage?

feels like it's it was really it was in in in retrospect it seems like a no-brainer to back disruptive technologies in this huge market finance but now you have if you're starting a company that's going to carve out a little slice of oh Robin Hood's not touching this yet or Coinbase isn't touching this yet it's like well those companies are incredibly well pack capitalized and they're run by founders who are not about to retire anytime soon seems kind of dangerous so where are you seeing pockets of opportunity and the early stage.

What are you seeing in the next generation of founders that might actually go and be able to carve out enough of a slice to grow into a generational company? Yeah, I think what's coming for I'm more excited for what's coming this next decade than the last decade if you ask me.

Um the last decade was just a setup for this decade. uh and there will be a bunch of new teams and companies and we have been spending time with the young generation like kids who are between founders who are between 19 and 25. Yeah. And or 19 and 27 call it their brains are just faster.

Their ways of thinking about how to build products is just different. They are they they spend the best years the the year of COVID learning and learning how to think really fast. And I've been blown away on how quick they are understanding and how quick they are to build.

So we have this thesis that we've we've been we've been uh we wrote it took us almost a year to write which we call it token factories. And it's this world where forget about crypto rails or or fintech or AI all of these things are blending.

If before it was fintech here and AI and crypto here and we said that they blended. Now we have financial services, we have crypto rails, we have AIS and the thing between all of them is that they're all tokens. Everything is a token. So we we call it the token factory er token revolution era.

And tokenizing information, tokenizing money, and tokenizing power. And how those three things combine is where we're seeing some of the best entrepreneurs working. So that's what gots us really excited. So we found a bunch of small young teams who are building what we call now token factories.

Companies that are building either access tokens that give you abilities to connect anywhere they want in the world to do anything. There's expert tokens.

These are companies that are generating knowledge or expert information that is solely unique that is going to change the way you manage wealth management, wealth advisory, the way you manage insurance product, insurance um agents.

Um and then you have what we call asset tokens and stable coins is the first of the asset tokens outside of Bitcoin. It's the first of the of the true asset tokens. Talk to me about real estate. I feel like that's the that was something in the at the peak of the crypto boom 2022.

We were starting to hear about mortgages on chain, physical assets on chain. Uh we're now starting to see uh stocks get on chain and and obviously US dollars which are uh much more tangible than artworks for example.

Um, but uh it feels like most of this generation's entrepreneurs probably learned a hard lesson during the global financial crisis of like the risks of over financialization in the real estate markets, but maybe like how do you see things developing or or or real estate assets playing out uh generally over the next decade?

So I I I think you you John you said something that was really important. If you look this wall behind me Yeah. Uh, artists always tell you where the future is going before we get there. Sure.

And NFTTS was a and it wasn't about just about the beauty of the art and the tokenization and the provenence and and the transferability and the democratic.

It was the first asset that was truly put on chain that you trusted that you knew there was only one of each that you knew who had it and you knew when it was minted and you could finance you can lend against it, you can pledge it, you can do whatever. So guess what? Artists did their job.

They showed us where the world was going. So to me that I I'm very grateful because that's how we learned what was going on. And then we found companies like Figure who tokenize most of the mortgages that you hel right now. They're the biggest helo tokenizer in America.

Then you had the circus of the worlds and the Tethers tokenizing dollars and there's like 10 more coming behind them. Then now you have Robin Hood tokenizing stocks. So I think the problem with mortgages is that they don't move that much out of all the financial assets.

They probably transfer themselves 10 times in a in your lifetime, maybe five. Maybe you buy a home, you have a four. So it's not the lowest hanging fruit need of a tokenized asset even though it's a great asset to tokenize. Mhm.

Um, but I think we're going to get there because right now the SEC and the all the regulators have put the real rules in place to see tokenization and the best organizations you're not going to see. You're not going to realize their tokens. Yeah.

But suddenly you're going to be able to click make two clicks and get a mortgage against this. And you're going to be able to do one more click and swap to another mortgage issuer and not miss a beep on your payments or or in your servicing. those that's what the consumer is going to see.

That's what the consumer is going to see with Robin Hood uh token stocks. You don't you're going to have the same UX experience and just trade stocks anywhere in the world not knowing that they're tokenized.

And that's that's where we get super excited uh because we're just at the beginning of that ecosystem which is probably like growing up again in the 1970s when you're about to electronic create electronic uh payment transfers.

uh how how have you thought about uh the investability of stable coins as a category when it feels like a feature for so many of the companies that you've already backed? I know I know you guys did Privy which uh recently sold to Stripe, but that Bridge Yeah, you did both. What was the other one? Bridge. Bridge.

Oh, there you go. All of them. I love it. It sounds like I we we told the Strive that we're shareholders. We love them.

We're good friends with Patrick and John and the whole team and will we told them that we felt that we were we were we were their core dev team because the two investments we did in stable going infrastructure they took out of our plates in less than a year. Yeah.

Wild but how but yeah so so you you made some infrastructure bets. Are there are there consumer bets that you see going forward?

I I know there's a bunch of different potential use cases, but again, it's so easy for an existing company to add stable coins and they already have the distribution and the customer network to uh quickly uh you know uh service. Yeah. So, it's a great question, Joy.

We we've been trying to find we've been looking worldwide for consumer applications that start with stable coins first as a user experience. we haven't found one that will say this is the way it's going to work to scale globally at a scale that matters.

Uh so that's why we have been backing much more the infrastructure providers of all these schemes because they feel like they have a lot more uh growth potential than than the consumer side. But I think we're just starting.

I think now we're starting to see the beginning of agentic experiences with uh crypto rails and and AI with through agents. And I think in that intersection, we're going to find native stablecoin retail brands that are going to provide services that you don't expect.

So we've been we've been investing a lot there in learning. We've been testing ourselves a lot there. We have our own thesis on how it's going to work. So, we're actually building some of them and learning, but we expect to see entrepreneurs worldwide working around them in the very near future.

My guess is in the next year, we will be surprised to find a few already. Well, when we when you come back on and and uh hopefully you'll come back on many more times between now and then, but in I'm assuming in 2030, we'll have the same conversation again.

And you got every single new stable coin pure play that mattered. Uh what about on the issuer side? Uh, I feel like the big now that stable coins have clear regulation, uh, it seems like we'll see a lot more people start to issue them. Is that needed?

Do you see use cases or are the USDC's and the tethers uh, like providing kind of enough value right now? I think uh, people underestimate how important the Tether brand is worldwide. I think when you when you are in Argentina or in Venezuela or you're in Indonesia, they don't even say USDT.

They just call it Tether, right? And I think Tether has a chance to be a really global brand that most people will will under imagine the scale of it. Ciro has a great reputation institutional side, but we're super early. I mean, think about it. We're only $250 billion into stable coins. Mhm.

We should be in two trillion dollars in the next year or a year and a half or two. And if we're not there, something's off. So for that, we will probably need like five, seven, 10 more names. Now, you're not going to care as a user, to be honest. You may have a preference.

I remember growing up, uh, my parents and us to to save money from inflation in Venezuela. Every Friday we walked to the bank branch and we bought travel checks and and it was a way a way of saving which is literally the same as stable coins today.

And those travel checks in the era you could buy American Express travel checks. You can buy Thomas Cook which were Mastercard travel checks and there was another third brand I forget. I didn't care which one we got. All I care was getting the dollars and being able to save.

So I think but over time I remember my family's Q2 American Express travel checks for whatever reason it had like a better recognition brand.

So I think we're still in the early days of that and that's going to happen and I think uh we're going to see five to 10 and we're going to see the incumbents issuing their own token and stable coins and now the bridges of the world are going to be super important because they're going to be the bridge to connect all of them no matter what what what you're doing and it's going to be very simple to solve.

So my guess is five brands in the next five years. Wow. Great. Great. Very exciting. This was awesome. Yeah. Thanks so much. You're a legend. Hoping on. Come back on again soon. You guys are doing amazing job. We following your show and congratulations.

It's really fun and you bring super fresh content and news and people to the show. Thank you so much. Talk to you soon. Looking forward to it. Bye. Bye. Up next we have Casey Neistat. Recently