‍Mike:Welcome to another Around The Coin podcast. Today's guest is Ziv Keinan, thefounder and CEO of Simetria. Simetria is building a secondary market solutionto allow people to trade secondary shares in private companies. We talked abouthow the public markets work behind the scenes, the technology they use, thecomplexities of regulation across different countries.

How you shouldthink about investing in public companies versus private companies, and why andhow the secondary market is effectively booming because the private market ofcompanies is ballooning. The public markets are effectively stagnant. Therehasn't been IPO in a while. The IPO market is drived up, and so as a result,one of the largest, if not the largest challenge in the financial industry iswhat to do. How do you grow liquidity in the private markets when no companiesare going public? So we talked about in great detail. Ziv has an awesomebackground and is perfectly suited to speak about these topics as he'spreviously led, legal and other really successful financial companies. So hopeyou enjoy this conversation. If you do, please share it or give us a thumbs up.Subscribe wherever you're listening. And without further ado, here is ZivKeinan.  

Mike:All right. All right, Ziv. Well, I'm excited to dive in with you and talk toyou a bit more about the world, what you're working on, thoughts on, we werespeaking a little bit about universal basic income.

I'd love to, before we even dive into any ofthat, I'd love to get a quick arc of your career.

You mentioned a fewreally interesting and unique. Occupations you've had before starting Simetria,which you're currently working on. Do you wanna just highlight for me a coupleof the more interesting and educational roles that you've had throughout yourcareer?  

Ziv:Yeah. thanks Mike for having me today on this show. It's such an amazingopportunity and I really appreciate it. Eh, so. I started my career as alawyer, as a corporate and securities lawyer. And at a certain point I decidedthat I want to break free and, start my own practice and do things that I love.In, in 2017, I started the law firm that was focused on blockchain technology.

And cybersecurity.But it later, very quickly became like blockchain tech technology. And we hadlike an Israeli US office, and we've done two things. First is we work withcompanies that want to implement blockchain technology in like real worldassets. In 2017, there were securitized and there were some other harbor and,and other that were polymath that was active in this space.

That was called atthe time security token. And so we, we have those guys, we have companies thatwanted to run an sto a compliant offering of tokens. And we also helpedcompanies that were doing something which is related to social good inlockchain technology. And there was a notion at the time that blockchaintechnology can release a lot of social good, it could generate equality andmaybe today, after ftx, blockchain is associated with something else.

But I can tell you,like for us, the, the, the generation of 2017, blockchain is still a tool forequality. And. That led me. So, so I've worked with several of those startups,some in Africa, trying to release like local coins with Rodick type of product.And eventually that led me to work with a project by a company named Ito, whichprobably many listener knows.

Bless you. And theywere sponsoring a universal basic income project with cryptocurrency. Theproject was still like very at the beginning when I joined and it was the ideaof of the CEO of, to name Nyasia, which wrote an article about, how economy canbe transparent.

Basically it'scalled like, it's called the visible Hand. You can look it up. And I've joinedthis project, and today it's one of the largest DeFi project in the world withuser all over the world. It's called The Good Dollar. My role there I basicallyhelp provide the legal background for the company to launch and write the, thewhite paper.

So I provided alegal opinion that was later adopted by a large office named Laton Watkins LawOffice. And, and the project launched. And it's, I think it's a, it's aninteresting experiment. It's an experiment where there's a protocol compoundprotocol which generate income and it donors has put some money into theprotocol and they like the.

The income that'sgenerated through this protocol is going into reserve, which is backing a Coin.So when you receive the U B I, there's actually some U S D C or there's somecurrency that is actually backing it. So a really interesting experiment thatcan actually lead to, I think, in today's environment when you can get intereston top of your shares.

This expense canactually, Materializing real life as a universal basic income project.  

Mike:So interesting background.  

So let's talk alittle bit about the world today. So 2023, mid 2023. We're reporting this inJuly. You started in 2020 with Simetria, I believe. Where do you view thebiggest challenges?

And maybesubsequently the biggest opportunities with cryptocurrency. Not in any specificcoins, but just with the general technology and impact on civilization.Certainly with the constant context here in the United States seems to bewaffling whether or not it's going to even allow crypto regulation in the shortterm, which is a tragedy.

You're based inIsrael, which is, a different, different set of priorities entirely. How do yousee the industry evolving now, and where do you sort of see it going in thefuture?  

Ziv:So, when you're building a startup, what you're looking for is is pain. And Ithink that cryptocurrency would come in everywhere or blockchain technologywould come in everywhere where there's a big pain that needs to be solved.

So. Before we spokeabout universal basic income and equality. I think this is a really big problemthat needs to be resolved. And I think that, cryptocurrency can actually comeinto play. And we've seen experiment through the World Bank and world food,food program with blockchain technology.

So definitely onthe social impact side of things. I believe that adoption can play a majorrole. The second is what we do, which is basically the rails which thefinancial system is working on is extremely, extremely old. If you go to astock exchange, like most stock exchange there system will build in somewherein the eighties.

They use aprograming language named Bul. And it's haven't been like renewed since. Sothere has to come like a new technology that that replaces the, the oldinfrastructure. And what we've witnessed with cryptocurrency is that everythingworks really good. In terms of, the operational part, the way that you dosettlement with those coins and the way that they transact it's actually agreat technology to represent shares, to represent stocks.

And what we do,which is trying to unearth equity by which is private and not created and. Giveit value using it as an infrastructure for that could release an, an enormousamount of of value. And I think that people start to see it in terms of like the,the, the cryptocurrency world, which we used to know until now.

I think it's goingto change. Bitcoin would remain, a store of value. But then like the, and maybelike the speculative aspect of some of the Coin. For some investor you wouldstill be appealing, but it's not going to be the way that it was until now.Yeah. It's not gonna be as big as it was until now.

Mike:  

You mentionedcobalt as the primary technology for the financial infrastructure. Is thatspecifically for Israel? Like how, how does the, under the hood, how does thecurrent financial infrastructural layer look? Is it quite US dominated and, andcentric? Is it country by country?

Like what, what areyou sort of seeing?  

Ziv:It is country by country. There, there's Amazing US products. NASDAQ is also atechnology company that markets products, but it does not suit to old markets.US product has a very big problem. And if you're listening to this productpodcast, then you know, this could open like 100 million startups, because USproducts in many places where we seen are not compatible with other market.

So they'redeveloping Silicon Valley or in, other places in, in the us and it's verydifficult to migrate them. So for example, like, capital table managementsoftwares, which you, which develop in Silicon Valley, Calta, Pooley, whatever,are not compatible with other markets. So in Israeli companies would.

Probably can useCarta, but it could never use any of its like high level function, like signingand everything. Why is that? Because the software companies need to do somekind of compel abilities need to do localization of their products and theyjust don't do it. And they also have to go and speak a little bit with theregulators like the tax authority and ask guys, like if we sign.

The, the warrant onour system. Is it okay with you? So it's a simple question. They can do it,it's not much investment, but the fact is that eventually it's difficult. Like,in Israel there's a lot of funds, so there's a lot of high techs, a lot ofinvestments, there's a lot of funds.

And there was alarge software company, which you probably know that developed like, findoperational. SaaS solution, which pulled out because they didn't wanna handleall the localization aspect of of working. And we've seen it all over again.Where in, in India, for example there was Carta tried to pull into.

In India, they havetheir internal capital solution named pita Capita Capita. So, the, it's. The,the American products are not compatible in many cases. This is why they stayin the us. And in terms of like the infrastructure they, infrastructure is veryheavy. So you have, like, you have a trading system and you have a system thatdo settlement.

It's a separatesystem. And you have brokers that trade and you have custodians. So it's, thoseare all like different so like solutions. And in today's market, what you seein like digital securities exchange, and there's many of those, like there'sATSs in the states, there's in the uk there's one there's in Singapore one andthere's in, in Germany digital security success.

So it's a, atrading platform using blockchain technology as an underlying solution. Whatyou've seen with those guys, They are everything at once. So they're thecustodian, they're the settlement solution. So in the US you have like us dtccthey're also like their own dt, ccc and they're also licensed to do custody onsecurities.

They're all thelevels at once. And they, one of the reasons where they can do all of this isthat they rely on a single ledger. They rely on a blockchain ledger. Which is asocial truth which, if the if you settle the transaction, the transaction issettled immediately through an atomic swap, for example.

Yeah. And then, Youactually don't need all these additional infrastructure.  

Mike:Okay. So you were saying that the, that there seems to be an increasing trendon financial products that are focusing nationally. So, so would it be true tosay that soft financial software products as a class or, or a sector arebecoming more nationalized, less global?

You, you give a fewreferences there with Carta. Yeah. And that it seems to be that regulation is aforcing function. It's not a US problem particular, it's just that othercountries seem to be capable now of having more sophisticated financialproducts. And so the need to bend the regulations per country is decliningbecause, India, Israel, maybe other countries have their own products.

I would imaginethat that's a function of what's available. Like, if there wasn't anything inIndia, for instance, or if India was smaller and didn't have anything that,they're just gonna open up the gates more. Are you seeing that, do you agreethat this is a, is a trend?  

Ziv:I, I, I, I'll tell you it's, it is difficult for me to understand why ithappening exactly.

But what we foundat Simetria is that, If you take all the large cap companies like the unicornsin the world and you see like qua deform you'll find out that 50% of allunicorns in the world are not US-based. If you go to the 50% that are US-based,there's about 1,200 unicorns. If you go to the 50% that are US base, you'llfind that at least like half of them.

Are not like USfounders. They're either like Israeli, Indian, Australian founders, and thosefounders have a large development center in their, their homeland. So Israelifounders would usually have like a development center in, in Israel. And, andthat means that if you are developing solutions to manage cap table orsecondary solutions for those companies, Like you have to take into account thelocalization aspect.

Otherwise, you arelooking at about 25% of the market. So as a capital management company, forexample, like you are looking only at, a fraction of the market, you are losingthe 100 unicorns in Israel and the 120 unicorns in India. And the 100 unicornsin, in in Europe.

There's a lot ofthere's a lot of market, which, which you're actually losing.  

Mike:  

You mentioned a captable company, I assume that's like the company you're working for at Simetria,but speaking more broadly, why would a company ever. Operate only locally. Iassume the only reason they would do that is due to the lack of integrationinto the other countries.

I mean, it takestime, it takes money, it takes attention to watch in. In different countries,companies have limited resources. When we think of a company as being locatedin a country, enlisted on a stock exchange, Maybe explain a little bit how thatworks. So, if I'm a US company listed on nasdaq, that means NASDAQ is operatingor managing the ownership ledger for at least some part of the shares that arepublicly traded for that company.

If a company is ona Canadian stock exchange, for instance, and I as a US citizen try to purchaseit, purchase it on the Canadian Stock Exchange. What's happening? And then, andthen maybe even think about this as like, more country by country. If, if acompany is listed on a Indian stock exchange can I purchase that company?

Is there any risksassociated with that? Like as people think about investing outside the US moreand more, what should people be thinking about and understand about howownership works?  

Ziv:Yeah, so first of all, like, just want to make a small correction. We're not acapital company. We're a, a second of markets solution.

So we have softwarethat managed secondary events and, and a marketplace for, for secondary deals.And we decided to not to pursue like the capital management solution because wedidn't think it was a solution to the problem which we're trying to solve,which is settlement. So, okay. That's about, that's about, us.

The way that stockexchange work is, that is stock exchange. When you are listing as a publiccompany, you are actually moving the share that's going to be created into anagent called in, in the US as a transfer agent. And then those shares are goingto be listed. So in the capital of the company you would say like, 98% to thename of the transfer agent, and then.

Those share aregoing to be registered with with a, a DTCC or with a settlement facility. Andthen it's going to go and be traded. And with every exchange in the world,there's a different settlement solution. Okay. Set like a settlement agency anda, and a transfer agent. And the process of moving a share from one exchange toanother is quite It's quite complicated.

So it's not likeblockchain where I sent you a token and you receive the token. The minuteafter, you have to delist those shares from one exchange and list them onanother exchange. And those agreement between the large exchanges about howthis process is going to work and it happens daily.

And you see thatthere's like small arbitrage that's been created between different exchange. Inthe market which we work in, which is the private market there's there's nosettlement. And there's no real solution for, for the way that assets aretraded. So we can see like there's, could be like large differences between theway that SpaceX stock would be traded on one exchange which is a private marketto another private market.

Mike:Okay. So just to lay this more simply, if I wanted to purchase a company thatwas on an Indian stock exchange, is there any like centralized place to go? Or,or does this happen frequently? Like should people, usually what happens,people  

Ziv:are, yeah, yeah. Go for it. What happens usually with large comp cap companies thatthere's process called a dl.

So you take youtake a Chinese company that is trading in China and you just buy, a bunch ofstocks and you put them in a safe, and then you take those stocks and list themon the US Exchange, and then you can list them on, on the, you can trade howwe, for example, on the US Exchange.

Okay? You're buyinglike a big bunch of stock and then you list them you put 'em in a safe and youlist them on on the US Exchange. This is called adr.  

Mike:How about individuals? Do you see like individually wrapped companies? Like we,could you take say, say Symmetra was public enlisted in, in the Israel stockExchange.

Like could, isthere, is there a, like a synthetic version where somebody buys a millionshares of of the company and then list that value for sale on the nasdaq? Doesthat ever happen? Like individual company transfers in that way? So, you knowwhat I'm saying?  

Ziv:Yeah. A company can list on, on two exchange, it can list on the Israeli stockexchange and the NASDAQ at the same time.

That's it meansthat some of it's shows going to list on the Israeli stock exchange and some ofit's shows going to list on the Nasdaq. So yeah, there's, there's. It, it ispossible.  

Mike:Yeah. Interesting. But for the most part, the exposure that you would get wouldbe, would come through the form of like an etl.

So somebody, so anorganization, probably a brokerage is purchasing a bunch of different stocks torepresent a class like, okay, Chinese real estate. Right. And then they'remm-hmm. They're buying it maybe a, a few billion dollars worth of that. Andthen they're listing the value of the company that purchased that real estate.

On the Nasdaq. Andthat would, that would give you exposure indirectly to that particular marketas a way of getting  

Ziv:Yeah. This is adr, this is this is one, one of the solutions that is outthere.  

Mike:And, and that's from my take. That's fairly common. That's not new. What is newnow? As the world is becoming more connected but also more separated at thesame time?

What area offinance is, is new newly accessible to investors? Obviously blockchain is atechnology, but it's not, it's not necessarily something that that enables newtypes or new innovative ways to invest. Like, does the question make sense? Doyou see areas like you're obviously secondary markets are interesting, right?

No. You have thiseffectively this locked up value of shares that people own and. Offering it topeople on a secondary market is really exciting because now you are effectivelyexpanding the size of the publicly traded funds. Right. Is that a good way todescribe the purpose of a secondary market?

Ziv:Yeah. We, we need to, talk about size before everything. So if you take at the,if you look at the private markets, the public, the public markets are likethis. You look at the. Private markets, they're like this. So, this is likethe, the size. What is that? Take the times bigger in the world.

Yeah, it's, yeah,it's 10 times bigger because at least, yeah, because like on the privatemarkets, like the non-traded market, there's imagine like all the real estate,all the companies, including not only tech, but you know, Industrial companies,everything which is not created. And the way that we structure regulation isthat either you're public and created Yeah.

Or there's nothing.So, wow. Like if you are private, if you private, you don't have any they don'thave any trading facilities. There's no, the regulation is really relaxed ifit's like an accredited investors. So if you are public, Then you need todisclose and you need to put like, disclosures, like ongoing disclosure.

If you're private,you don't have to put like, almost anything. So there's like a high dichotomybetween the private and the public market. And the p private market is the bigmarket, is the, the large market where most of the money is invested through.Yeah. Startups, for example, are private companies.

And we know that instartups we are giving like options to employees. And you can see that publiccompanies are doing the same, right? They're doing like public companies aregiving to employees and private companies are giving like op options toemployees. But the employees of the public companies are looking at very differentlyfrom the private companies.

Because for thepublic company, if you are an employee and you receive like, stock options,yeah. Or, or like, restrict your shares, then it means that it's actually cash,right? You can cash it out, you can sell it on the market. But if you'reworking for this private company, even bigger than the public company, even ifyou are working for.

Like, let's say thebiggest public tech company that I know is the company that holds TikTok. Okay.So if you are working for them, for example and you got like, private chairs,where can you sell it? What can you do with it? So employees of privatecompanies tend to undervalue the equity that they're given, so, And thereforealso private companies need to give more equity to to private companies wherein, in the, in the public company.

If you're receivingup RSUs, like restricted stock units, this is actually cash. You can actuallycalculate it into your salary.  

Mike:So why is that? Is that just, do you look at this as an antiquated regulationthat doesn't allow private companies to be public or make the bar to go publicso expensive and costly that very few are as a percentage of the market?

And if so, what,what, what should be done? Should we. Ease regulations to allow companies tomore freely access the public markets and open up to market.  

Ziv:Yeah, so the, so I think like, definitely it's, it's regulation that hasn'tbeen been paying attention. So I'll give you an example. Right now, the publicmarkets are closed.

There's no ipo.Like if you go back in history, You need to go to 2015 14 to witness this draftof I P O. No one is going public in the US, for example, and worldwide as well.So companies are not going public. It means that there's no more private companiesand the private companies are getting bigger, so they keep growing, gettingbigger each year, right?

Why is thathappening? And you. Because a, a company produced like cybersecurity solutionsand there's, they're, they're good. They're selling their products. So yearafter year they're getting bigger. And what happens is that you, you see amarket where there's a lot of fairly large private companies and they have zeroliquidity.

Mike:why aren't they going. They should be going public, right? Why? Why wouldn'tthey be going public?  

Ziv:They can't raise, like the public market today does not offer them enoughincentive to go public. You can put your money in the public, public market ona very, like traditional dividend paying solution or even like government bondsand receive six, seven, 9% year over year.

So they're offeringthis, the incentive for companies to go public right now is very low. It meansthat's a small big, large companies and those companies has needs. So whenthere was a small company of 100 million they had an ease of plan that was lost10 million. About 10%, and now they're a billion dollar company.

There is a plan is100 million. So it means that all of the 50 employees that were at the start.Now combined owned about a billion dollar in value. So they need some kind ofan exit. And let's start to speak about, like the early investor in the companythey invested 15 years ago, they still didn't see like the money back and theysee all their friends, investing in government bonds, so like, and doing thisongoing recurring revenues.

So early investorwon exit as well. Growth investors. Tiger Global, the big huge fund just openedits entire portfolio to bids. So they wanna exit as well. The growth investors,which invested for the company to go i p o, they want their LPs, want liquidityas well. So when we started this interview, I told you this is the biggestproblem of the financial markets.

And I since insiston it, that is the biggest problem of the financial markets. And I think thatblockchain is, Part of the solution for this.

Mike:  

So it seems likethere's multiple problems when you parse into it. One is that there may be toomuch, too much regulation to allow private companies to go public, andtherefore it's too expensive for them to maintain the overhead to being public.

There certainlyseems to be some negative externalities of going public. You have to discloseyour financials, which companies would prefer to not do, and other things likethat. Mm-hmm. So there's some costs and there's some call it downside to goingpublic. I I assume that when you say the public market IPOs have dried up, thatit's because of a lack of public funding.

So if a companywere to go public ipo, they're just not gonna get as much money raised on the IP O as they once would. Is that the problem? Is there not enough money frompublic investors? Yeah. Or is there just too much regulation and cost to gopublic? Because I would think if it's, if you could just push a button and say,go public, most executives would push that button and just offer somepercentage of the company to be traded.

But the, theproblem is so much cost and time and everything else.  

Ziv:Yeah. Yeah. First of all, it's a good question. Like there's there's is areally good question. And why, like, why company go i p o and I think thefinancial incentive is like their most important incentive here. And that thisis the question, companies do not go i p o today because they don't have enoughfinancial incentive.

And. And that meansthat, there's more companies staying private eventually. And they will remain,the situation is going to probably remain the, the, the way it is in the, inthe coming in the coming years. So it's not going to change. The private marketsis continue going to continue and grow.

Mike:I, I guess the, the thing I'm hung up on is I don't conceptually see adifference between private and public companies. I, I, so here's how Iunderstand it, right? Like, tell me why this can't exist. You have 10 millionshares in a company. The company has 10 people in it. They're doing a milliondollars in revenue.

They take 1 millionof those shares and they list them on a public market. People can buy and sell,trade, do whatever they want. Now, scale that to a thousand people, 10,000people, a hundred thousand people in, in the company. 1 million, 10 million, ahundred million, a billion in revenue. Why does anything need to change?

Why can't a companygo public at 10 people? Like where, where, what is the, what's theconsideration on going public too early? Why did we even create this regulationin the first place?  

Ziv:First of all, I think compliance is a big thing. So in my past, I used to workwith public companies. I, I think that, And you have to like really witnessthis, you have to leave it to understand how painful regulation compliance canbe.

It has a reallygood reasoning, you don't want the, someone who's uninformed to buy stocks. Andif you are marketing it to retail investors, which is like this house housewifefrom Arizona. Yeah. You wanna make sure that she has access to all theinformation about the company.

So this is a veryjust reason to have all the compliance. But what happened actually is that eachgeneration adds its own regulation. So you start like with a very le, flatlevel of regulation and then. Something happens, everyone happens, and thenlike you have additional layer of regulation.

And then like,there's a guy named Gary Gensler, he comes in, he says we want to have addadditional regulation. And, and the, the, the bottom line result is that,There's a lot of regulation on public companies. You have to actually beprepared to go public if you want to go public. And there's also a lot ofexpense.

You have to pay,minimum, minimum a million dollar a year just to like lawyers, accountant and,and so on. So you have to be financially prepared for it. And you also have,all kind of governments governance, within the company. So public companiesbehave differently. The I think that the freedom that their CEO has is, islimited compared to private companies.

So you've seen,like Elon Musk been hammered about, smoking a joint or putting tweets, aboutgoing public and the s e c going against him, and rightfully so, he's, he'smanipulating, he's potentially could manipulate the market, with his streets.So you have to be very careful about everything that you do as a publiccompany.

It's not a solutionto many companies. And even in a very, the best times of the public markets,many companies still do not. I p o most of the company would stay private. Thenthe exit event would be either one of two m and a, a merger or a secondary. So,the, and. And that those are the two exit.

So scenarios, theonly exit scenarios for those companies.

Mike:And

when you think of the word, when we say theword secondary, effectively, referring to the private transfer the, thetransfer of privately listed company shares. And I almost think of when we saypublic first, private, to me it's a bit of a misnomer, I think, of Nasdaq andthe Dow like organizations who list these companies public.

Yes, they'reavailable to individual retail investors, but they're effectively a. Stamp ofapproval. If you're listed publicly, you've gone through this million dollarlegal certification, you have standard ways of reporting financial gaps and allthat stuff. There could be a secondary stamp of approval.

It might say, okaylike, There's this, there's this, a stamp and there's B stamp, and then there'sC stamp, and then there's, get it on your own. And there's no, there's noguarantee. Do you see secondaries market as just a a stamp of approval that acompany like Simetria would put on a company to say, okay, we're gonna not putthe same overhead financially that we would if you were publicly traded, butwe're still gonna have some.

Standard disclosureand standard process for listing your shares. You're not just letting anycompany come in. I'm sure there's some process to come in and become listed. Tome that's still, if it's accessible to retail investors, it's just different,which to me is much better. But maybe tell me how do you sort of see the, thepurpose of secondary and where it's going?

Ziv:Yeah, so secondary is, is transaction between a shareholder and the company. Ora shareholder. Yeah, a shareholder in the company or sometimes in a, it is anspv, so they don't hold directly, but through an spv to another investor whobuys the shares from the first investor. This is a secondary it's like tradingon a public market just with private shares.

Right? And those,those trade is done pre preliminary with between accredited investors. So thoseare sophisticated investors. That the law in the US and in other places in theworld decided that if you have this amount of money or, or experience then youcan buy those shares. Because we believe that you can hire the accountant, thelawyers, you can do your own DD and decide like whether to buy those shares ornot.

And I think this isactually a good solution. So I think it's a good solution. There's some thatwould say, yeah, but then like all the retails do not get the sameopportunities, so it's a good argument. And then we have to think about how youdefine who's accredited, who's not. Maybe you can take a test and if you arelike financially literate enough, Okay, you can actually buy those assets.

And this is also asolution for someone who want to trade crypto in the us. Just take a test,prove that you are financially literate like you, you understand what you'redoing and you know how to read like financial reports and you'll be able totrade them. But today you have to have like a certain amount of money.

This is one of thecases and. Usually those investors, they're family funds. They're, they're,they're represented by bankers and brokers, and they do a due diligence ontheir assets, which they purchase. And, and usually the company that at leastin our cases, most of the company that we work with, the, the company would puta lot of information out there to the, to the buyer.

Yeah. Becauseeventually the company understand that secondary is also the interest of thecompany. So they don't wanna lock their employees into the shares of thecompany. So there's some level of cooperation always from the company, andsometimes even the company hires us. So, for example, for us, when we started tolook at this market, we saw the, there's a lot of small sellers, they'rerunning around and they're funding looking for someone to buy the shares fromthem.

And usually theywould go to a broker and say, can you find me someone who would buy the shares fromme? So, and then they would go back to the company and say, guys like, let mesell my shares, and can you please like, provide some information to the, tothe buyer? And we found that this, way that it works is like so cumbersome, ittakes  

Mike:like, yeah. It seems like an old school market ages.

Ziv:Yeah. It's like, take ages and until the comp, until , the transaction is setat a long time. So what we do, we built a, a solution. Where the company has aplatform within the company and it can open a window once every year, forexample, and allow everybody in the company to sell.

So they wouldsource liquidity from the market. They would find someone who want to buy 50million of the company shows, they would communicate it back to their employeesand voila once a year, everybody in the company can sell some of their shares.And and, and meet and meet money and this

Mike:yeah, I

would think that even, even to have it once ayear seems like an inefficiency, it should just be available to sell in asecondary market any time.

Ziv:Yeah. Yeah. This is also a solution. But, providing a windows where, a cellcan, can happen is I think, from The way that, we know about how this marketworks and manage, I think it's a it's a good solution. We also have a demo of asolution where the employee in the company can communicate with the tradingplatform and can see how much the shares are trading on the secondary marketdecide to tap into this market and sell directly to the buyers or either, Putlike an ad, a notice in the market saying I'm selling at this price.

So we do have, we,we also designed a product like this, but we didn't find any demand currentlyfor this type of a solution. And the demand that we found was more like like anorganized company event. It's called like a sponsored secondary company wouldsay, When you join the company as an engineer just know that, yeah, twice ayear we opening training windows.

We'll give you somedisclosure about, what the company worth and so on, and then. If you like, youcan sell some of the equity and actually with money.  

Mike:So given the fact that the private, private market is 10 times bigger than thepublic market and that most retail investors, even accredit investors, spend alot of money in the public markets, I would assume that the private market pentup demand is huge.

That there shouldbe, like, when I think about, okay, as an accredit investor, What percentage ofmy attention and, and money should be in the private markets on secondary?What, what do you think? Like, should I, are accredited investors, maybeindividuals, are they dramatically under investigate, under investing insecondary markets?

Should, is it, isthere any risks to be aware of? Should I just go in and buy, 20% in secondary?Like, what should, what should I be thinking of? Cause it's a relatively newproposition.  

Ziv:Yeah, actually it's an amazing question. Like, it's a really good question.Private markets are highly liquid still.

So when you'reinvesting, imagine that you are investing right now in a company. When you areinvesting, you have to take into account the illiquidity premium. So I give youtwo options, okay? You have an option to invest in a startup like a blockchainstartup or private company. And you have an option to invest in a creditcompany or even like a bond.

Okay? So, with acredit company, things go south, you sell, you can take this money, put it inNvidia, everything would be great. Yeah. In a public, in a private company,you're stuck, right? Like this the, the level of liquidity in this market is,does not exist. So you have to calculate the illiquidity premium of yourinvestment.

And I guess, formany investors only like a percentage of their entire portfolio would be inalternative investments. Alternative investments, like a, a name for privatemarkets, real estates, startups and, and so on. And most of the money wouldprobably be in in traded markets unless you are venture capital, which is like,highly risky.

Okay, investment vehicles.  

Mike:Okay,

so convince me that I should invest in thesecondary market. Why is this worthy of my time and everyone's time to diveinto Simetria or some other company and like start investing in secondary,assuming I have no experience doing so, but I have decent experience investingin public markets and investment brokerages and that sort of thing.

Ziv:So I, I'm not going to convince you to invest in anything or the secondarymarket. I'm here just to say that first of all, like there's a lot ofopportunities in the secondary market for sure. Make it big.  

Mike:Oh, yeah. Not, not, not financial advice, just like making the argument. No,not financial advice.  

Ziv:What, what I can tell you again, like, I want to point out the, the problemsand opportunities really, without saying financial advice or, or anydisclaimer.

The opportunitiesis, looking at technology that's, that is emerging, let's say AI for example,okay? Mm-hmm. All those opportunities are in the private markets, right? Youdon't have enough like AI companies created because this is very newtechnology. Open AI, for example, is a private company.

So if you want toinvest in open AI or want to invest in new technology, the private market isthe only place where you can do it. And you mentioned secondary market.Secondary market. Investing through secondary market, you basically it's likecheating because you're not investing directly in the company, you're buyingfrom someone else.

So we have anopportunity to, to check from the outside and maybe, maybe even like, securesome kind of a discount on the secondary market. So there's also opportunitiesin the secondary market. And, putting the opportunities aside the problems aresomething that has to be solved.

So, the problemthat as an employee you can, you, you have problem to access liquidity as aninvestor, you have an problem to access liquidity the way that liquidity ismanaged within the company. It is something that has to be solved. Because it'sjust the way that it works right now. It's not efficient.

And the secondthing is that is the way that those transactions are settled. So like right nowwhat happens is that if you are a buyer and you seller, and they meet togetherthe time, which takes from signing, agreeing on the price to you actuallyowning the, the company shares and me owning the money.

Takes a lot oftime. So at Simetria we're also develop a solution to provide settlement in, inprivate assets which is very efficient and we hope that it can unlock a lot ofvalue. But again, like there's a lot of people that have been trying andfailing. There's a lot of companies in very large companies, but everybodyrecognized that the opportunity is there.

That this is mostof the market. And and, and, and, and I think, the price is really big. So, ifyou can unlock this problem, if you can provide the solution to this problem ofof assets, being not creative and so on private assets. Then you can unlocktremendous amount of value.

You can be biggerthan most of the. Traditional stock exchange.

Mike:And  

do you see one ofthe competitive advantages that you might have being in Israel, is that you'dbe focusing on different company, sorry, countries earlier. So I would imagineyou have to go country by country to unlock the potential to trade secondary.

US is a big market,but there's many other big markets. Do you, are you taking, I'm sure othercompanies are doing this as well, allowing secondary market trading. Are, areyou taking a different tactic there on bond strategy?  

Ziv:Yeah, so, so again, a great question. The thing with trading securities is thatyou have to be regulated.

Like there's noquestion about it. It's not like, am I a security token or utility token orwhatever. You have to be 100. Percent regulated. The solution that we found isthat we partnering with regulated securities exchange. So we partnered withGerman Exchange, Swiss Exchange, Canadian Exchange Singaporean Exchange, andthe US Exchange ats.

In the US it'scalled ats. And in, in the Europe it's called mtf. And what we offer to thoseguys, we offer a. Our technology with our training board, we have a trainingboard that we developed and a settlement solution. And a package that has allthe assets. So companies already brokers that listed in companies assets wannabuy or wanna sell.

So if you plug intoour api, you immediately getting like your own secondary market. And sinceyour. Let's say situated in Canada and you are licensed to provide tradingservices in Canada, then you are marketing those assets through your throughyour own licenses. And this is how we solve like the, the license problem ofbeing regulated in one place and offering the, the assets in many places in theworld.

And the what, likethe next phase of what we are doing is trying to solve or provide a solutionwhere, Those assets can be traded and settled between the different exchange.So the Canadian Exchange and the German exchange could settle transactionbetween them. So a Canadian investor would go into the Canadian Exchange, whichis regulated C assets that the German that listed on a German exchange.

And then by andsince the German and the Canan Exchange that we partner with, yeah, Finn Havenand WAN in Germany are both. Blockchain securities exchange. Yeah. They use bothuse blockchain technology. So the, the settlement between those exchanges ismuch swifter. It's happens very quickly.

Interesting. Soeventually, like where we heading is or where we want to find ourself, and Ibelieve this is the solution for the private market problem that we saidbefore. Is that all of those exchange would be interconnected. So all of thethose global exchange would be interconnected and liquidity and assets wouldflow from one exchange to another.

And the underlyingtechnology would be blockchain four.  

Mike:And you see the current problem today as technologically integrating thedifferent networks across different countries on the public markets as opposedto regulatory.  

Ziv:There's. Yeah, I think, yeah, I, I don't think there's actually a problem. LikeI think that there's several solution out there.

And I think thatit's a challenge, but it's not a problem. Like I think that's something thatit's really solvable. This is like what, DLT technology is is designed todo.  

Mike:Awesome. Well,  

where are you guys?How, how far along? You started about three years ago. How many people have youlaunched?

Are you likepre-revenue, revenue? Can people try it out?

Ziv:We, we post revenues. We post revenues. We actually, like this months, weclosed $7 million in deals. Still small, but But it's, it's exciting. Yeah,there is. We had, we had launched two and a half years ago when we launched.

Really few monthsafter we lost, we got like a regulatory permit in Israel to operate ourexchange. And the first product that we launched before the exchange was, Thistender management, this system where employees can sell. It was really, camefrom a place where we wanted to unlock this value for the people that actuallybuilding companies, not only investors, but they actually, the founders, theemployees.

So we built thisplatform where, The company can offer people to sell some of their shares. Andwe had some success with this. We had two very large companies that sign upwith us. Then when the financial crisis, the current financial crisis hit, likeit's kind of, the, the demand for this product a little bit diminished.

And we continuewith our plans to launch this global exchange. We're planning to launch. Thisnext month is a bulletin board. So bulletin board is like a communicationsystem between buyers and sellers. So we won't have we won't have settlement atfirst phase, but down the line we'll introduce also settlement to this bulletinboard.

Exchange.  

Mike:Nice. Awesome.  

And where are youguys in terms of what you're looking for? Are you trying to raise money? Areyou looking for customers to do secondary trading? What, what else?  

Ziv:Yeah, we actually like, we all the time, like we find like amazing partnershipand we are always looking for partnership.

We now looking to,we're examining partnership right now. Like, I'll give you an example from witha very large cap table management provider in Asia which is the largest inAsia. So they do India and Singapore and Malaysia and so on, but there's a lotof tech. So we're providing them our tech and there's a wonderful synergies.

But what we do andwhat we do and what they do, because we don't have a capital managementsolution and then don't have like a secondary solution. So there's a wonderfulpartnership there. There's a wonderful partnership with all the digitalsecurities exchange around the world because from day one, we bring thembillions of dollars in assets.

So they're, thoseare small exchanges. They're looking to have trades happening on the platform.So we're introducing trades. In, in, in, we have a lot of assets that arelisted with us, so we producing them it to, to other exchanges. So there's apotential for them. So we are looking to partner with small exchanges, not theNASA and so on, but like the small ats mts, so smaller that are looking, thatare looking for assets mainly.

Okay. And there's,yeah, there's some other great partnerships.

Mike:So yeah, so anybody out there who's listening, that's a data, small dataexchange, sounds like you're looking for partnerships primarily. Awesome. Ireally enjoyed speaking with you. Congrats on all the progress and hope to dosome secondary trading on Simetria.

Ziv:Today we have, by the way, we have about 20 blockchain companies listed withus. Secondaries induction companies. It's a really interesting space because itis the only secondary where you can get actually warrant for a token with asecondary. It's not. So, it's not only like equity, there's selling, but alsosome warrant to buy tokens of the blockchain company.

And there'sblockchain companies which are so high in demand, which is impossible to getany allocation in. And there's some that you can buy, some allocation in whichI believe, could explode in the, in the coming years. So I would suggesteverybody to look at secondaries. Also in the blockchain space cybersecurity,quantum computing, you can find secondary opportunities.

So, reallyinteresting space.  

Mike:Cool. Well, thanks again. I enjoyed talking and I'll talk to you soon.  

Ziv:Okay. Thank you.

‍