Listen to the interview on iTunes, or Google Podcastor watch Youtube.
"I think this technology is truly revolutionary, will disrupt the financial ecosystem and will have a major impact on entire industries in the coming years." "Crypto should not be a quick way to get rich, we need to create meaningful products that solve the real world needs and solve the real problems." "If I'm right and the blockchain is going to be so transformative, will of course generate significant returns for investors who invest wisely.The ability for people to process without any middleman and for transactions to be recorded openly and settled almost immediately, the opportunities to leverage technology is breathtaking . "-Tomer Federman
Also check Top stories of February, the latest stories and homepage today.
Transcription of the episode:
Welcome to the podcast I'm here with Tomer. Hey Tomer, tell us a little about who you are and what you are working on.
Of course. I'm calling Tomer Federman. I am the founder and CEO of the capital Federman. We are a new hedge fund that is about to launch shortly, focused on investing in blockchain and cryptoasset technology. Of course, our goal is to invest in the entire asset class, from taking positions in well-established crypto-currencies to investing in real estate startups, blockchain startups, even before they go into production. As for my background, I have 15 years of experience in the technology industry, working in startups and big tech companies. I've spent the last three years at Facebook, where I've led the product strategy and global growth of some of Facebook's leading advertising products. I am based in London but have spent the majority of my … and in Silicon Valley where I got my MBA at Stanford. . Later, after completing my graduate studies, Stanford created a startup in incubation. Thank you for the invitation, really pleased to be here today.
Yeah, great. So you recently wrote an article about how you left Facebook and wanted to join the crypto space. Can you talk a bit about what led to this decision?
Yes, of course. Facebook is a truly amazing company and I have been lucky enough to work there for a few years. And it's not only that you know what the benefits and benefits you get, but it's also and above all that you have to work with the best and the brightest of my mind. And you know, working with products that have millions of advertisers and billions of users and millions of dollars in revenue. It was a unique opportunity in life and I learned a lot about the product. But for me, I wrote this post about why I decided to leave what I call the best job in the world. For me, there were mainly three reasons to create the fund and leave Facebook. The first is my passion for distributed ledger technology. I really believe that this technology is truly revolutionary and will disrupt the financial ecosystem and have a major impact on entire industries in the coming years. Secondly, beyond my passion for technology and the impact it will have, I think it's also a major opportunity. It's time for an investor to expose themselves in various sectors, such as financial services, identity management or supply chain management. The way we create data and share it with others, etc. It will have an impact on many facets of our lives. And so for me, at first, I kind of thought about starting a business. That's what I do, create products. But in the end, I decided to create the fund simply because I did not want to go very far in one niche and spend the next few years there. I wish to have a large exposure to blockchain and crypto in different sectors simply because I think it will be very transformative. That's why I decided to become an investor and an entrepreneur. And the third reason is really because I think there is a major opportunity here from the point of view of the investor. If I am right and the blockchain will be so transformative, it will obviously generate significant returns for investors who invest wisely. These are a few of the three reasons. It was certainly a difficult decision to make, but it fascinates me so much and I am really convinced that technology has a major impact. Sometimes in life, you have to go.
Yes, and what is your thinking about the symbolized assets and where you see some of these things unfold, because for me, I think about 2019, in which this episode will probably air. I've already told people that it would be the year of the security symbol. or STO. You know, offers and more and more digital asset tokenization operations and in this kind of direction. Do you have ideas there?
Yes, certainly, I think you are right, and there is a huge opportunity to move the STO forward. The financial ecosystem and its functioning have not changed for decades. As an Israeli who has attended school in the United States for a few years and now lives in the UK, I am very familiar and very lucky about the difficulty of transferring money across borders. It takes so long. The fees are so ridiculously high. Sometimes this is delayed if you wire large amounts of money. The bank is calling you. Nobody knows where the money is at times. There are so many intermediaries involved. It's just a mess.
I went through it recently, personally. I have a wire that knows where.
And you do not know, no? As you go through this and the money has not arrived yet. Several banks are sometimes involved, that's ridiculous. In fact, the first time I made a transaction using cryptocurrencies, the money was paid in seconds. I could see where he was and I could see him settle down. I was blown away and felt like I was coming to have a window on the future, and I could not stop thinking about it ever since. I think that right now it's a very early stage and very early. For me, the comparison is 1994 if we talk about the Internet. We are currently in the connection phase for the blockchain, and the infrastructure is not there yet. Scalability is not very good for most projects. For the most significant blockchains, the user interface is terrible. My mother would not know how to use it now. It s too difficult. The design is pretty mediocre for most of these applications. The fact is that the vast majority of Westerners have certainly never bought crypto or bitcoin. Even though they have heard about it, they have not used it yet. For me, the investment really consists of focusing on the infrastructure. In the next two years, I think there is a major opportunity to improve the infrastructure. And then, I can see mainstream apps evolve from there and have a major impact. We will focus primarily on infrastructure and problem solving of this type and over the next two or three years at least. I think the STO is a big part of that. … Talking about symbolized funds and things like real estate. We are already starting to see things like this happen, and I think it's super exciting.
Do you have an idea of what's happening with the cryptography markets? As we record this, the markets have been pretty low lately. There has been a lot of news recently about cryptography startups that had to fire people. Steam has certainly been removed from the market. Do you have an idea of what we are seeing with the current market right now? How does this affect your thinking?
Yeah, to be honest, I'm not really surprised. If you've been in technology for quite some time …
(setting the microphone dialogue around 9:00 am)
So, can you just restart your thought process, and the question was, how do you envision the cryptography market and the recent crash?
My point of view is a little on many of these topics. I would like to think that it is rather pragmatic and influenced by my previous experience. When you look at some of those cryptographic projects that had huge ratings last year with almost no use, and in some very ambitious projects in some cases. Many white papers use a ton of buzzwords to describe things like incredible speed, etc., but how they actually do it, no one really knows it. In my opinion, it's really very good what's going on right now. Of course, people lose money and it's never pleasant. It is unfortunate that this is happening, but alongside an industry, we need to focus on the fundamentals. While there may not be a way to do an analysis of BCF or LBO and there is no cash flow right now, it certainly must make sense. When you look at some of these projects that have raised tens of millions of dollars from retail investors, sometimes investing without really understanding the fundamentals and underlying technology, they're just not healthy and certainly not sustainable. We live it now. For example, the public market for ICOs is disappearing and companies have to choose a more traditional way to meet qualified investors, finance funds, etc., and to go through all this agreement before, in the vast majority of cases. case. they can offer it to small investors and receive the scholarships. If you are a retail investor and you invest in something that has been professionally approved by people supposed to at least know what you are doing, that's a good thing. I've heard horror stories, honestly. I think the people who have joined and who really believe in technology and share the vision of a more open financial system, beyond the improvement of the financial system as a whole and the way in which we keep records, they will stay and we will focus on construction. The price is almost a distraction at this point. People who need it to get rich quickly, if they are not now, are probably a good thing. Crypto should not be rich quickly. It should be about creating meaningful products that solve real world needs and solve real problems. In some cases, the blockchain does not make these products better, but makes them more expensive and difficult to maintain. If that's the case, it's probably not a very good fit for the product market. I think what is happening right now is really healthy in the long run. In a way, the 2000 bubble dot for the Internet was a good thing. We did not see pets.com and these types of companies, but in the years that followed, we saw companies like Amazon and Google emerge. I think we will see something similar also happen in crypto.
We sort of saw it even with social networks, I would say. You had your Friendster and Myspace, as well as your initial social networks. Then you had Facebook, on which you worked, who came to dominate this whole area. We have already observed this evolution of the technology industry before going through the phases of this initial explosion of energy and opportunities in a market, then things have faded and the real actors who participate in it in the long term are manifest.
You mentioned horror stories before. I've heard a lot, especially recently, with the market down. I've heard about a company. I think they collected about $ 30 million and I heard internal information, they had only about 5,000 users. This is what we are currently looking at with these cryptography projects. How can you raise $ 30 million, create a product and no longer have money to do marketing and create a user base? Now, they are focusing on growing the number of users, but it took them a few years to get there. I see that the same type of behavior is emerging, and now I see a new trend: users are trying to get users and trying to figure out what this user interface looks like, what this product looks like, so we can solve these problems for people.
Yes, totally. You see some things that really do not make sense. As a person who worked on very large products, I talked to a contractor the other day and he told me how the whole team was decentralized. So he is sitting in Canada and the chief engineer is in South America and part of the sales team is back in Europe. It will never work. Not never, but it will make the job much more difficult. When I was building products, I wanted my designer sitting next to me and the person doing the research sitting next to me as well. This closeness … and all those informal conversations that happen, without planning them, just make you move a lot faster. You get so many points of view that you would not have otherwise. You just talked to the designer and you say, "you know, I just noticed this and this problem." If you were sitting around the world, you would not plan a meeting for that. I call this craze for decentralization, and many of my interlocutors are trying to prove how decentralized the teams are. You know what? When I look at governance, I like to see some sort of centralization, with clear leadership put in place. A much more efficient decision-making process gives me a lot more confidence so that the team can realize its vision. The product must be decentralized. Decentralization has many product benefits, but that does not mean that everything has to be decentralized. My point of view on many of these things, rather than reinventing the wheel, we can take some good practices and learn from what has worked. The Internet has created some truly incredible businesses, and we should be thinking about how to improve them, rather than "breaking everything and starting from scratch" and reinventing governance and the way we run businesses. I'm not surprised that many of these companies are struggling. You make a very good point. I've seen companies collect tens of millions of dollars and have 50 users, not even 5,000. That's ridiculous. And this information is public. You can access many websites and track their usage. We need to go back to fundamentals and think about how we are exploiting blockchain technology to solve real problems, and I think there are still a lot of problems to be solved. I think blockchain is an amazing and revolutionary technology, but we have to be smart about it. There is also a lot of talent now that we are gradually moving more and more towards space. Over time, organically, we will see teams and projects of superior quality in construction. Granted, I already see a lot of exciting things happening, but I would say that a vast majority of them will still not work in the long run.
Some business models that people are trying to apply do not make sense. I totally agree that there must be a centralized component in some of these organizations and societies, as well as a decentralized component. These two must work together. Personally, I call them hybrid systems. I think people are going to have to take a step back and say "ok, I have to build a hybrid solution now," because that's where the technology is. We are at the beginning, as you said before, and that's fine. It's normal. It is normal to build a bridge, whether you are crossing a valley or a river, to get there. You should not expect to build a fully decentralized solution tomorrow and do everything you can with the centralized solution. The technology may not be there yet. At the end of the day, that may be the case, but that is why you are creating an investment company and investing in infrastructure and who will be these players. Scalability is always a major concern.
Oh yes. It's huge: scalability, the user interface. That's a lot of those problems, but again, we should learn from the great companies that have been created online over the past 15 to 20 years. There is a lot to learn there. There are many things that we can probably improve.
(video messed up, Tomer reformulates his thought)
Some of these companies are becoming custodians of some of these technologies, and decentralizing it and making it more open and transparent is a good thing. We should strive to achieve this goal, but we should use some of the best performing elements of leadership, governance and other examples. We can put a lot of value on the first-mover advantage and that sort of thing. Businesses and brands rising now seem almost inevitable, but if you look on the Internet, you will know who the ultraviste is. Some people laugh, but I remember using ultravista in my childhood. Ultravista was the number 1 search engine. The way this has changed is likely to also occur in the blockchain's space. Many companies, perhaps even among the top 10 in terms of market capitalization, will not necessarily be in 5 or 10 years, which is why this opportunity is so promising for an investor. The next Amazons and Googles in the world are under construction and may not have even begun to do so with blockchain technology.
So, tell us about your fund and your current situation? Are you still raising your fund?
Yes, we have not yet officially announced the launch. I hope this will happen soon. Fortunately, we receive a lot of positive feedback and a lot of interest from investors. At present, we only talk to a large number of investors interested in participating and creating the fund. I intend to make an official announcement soon.
Maybe when this episode airs or soon after. This is the HackerNoon podcast, so I have to ask you about a moment in your life when you had to hack something.
This is an excellent question. By the way, I'm a big fan of your podcast and I think you're doing an awesome job. I think the hacker mentality is an important part of it. I used to work for a company based on the idea of "a hack away". I can understand that in a way, but it's a hacking, if you will, as a life … related to my experience in technology over the years. I find that the more experienced and experienced you are, the more busy you are. For me, this has resulted in recent years in not doing a lot of exercise. I did not practice as much as I would have liked. In addition, I find that I can dive so deeply into things, I have the feeling that it is sometimes good to take a step back, to reflect and to see the situation as a whole. What I was doing recently is just long walks, where I walk for an hour to an hour and a half, often listening to podcasts. One of my favorites is HackerNoon. It's just something that has had a very positive impact on me. I do more exercise and give myself the opportunity to relax, breathe and think about things. It's a bit like a life can that worked for me recently.
I think it was also one of Steve Jobs's hack. He was known to take people on a walk. He sort of acted alone at first, then started taking people with him. He did hold meetings that way.
Yes, when I worked in California, many of them like to do walking meetings. In London, it's a bit more difficult because the weather is unfortunately unpredictable. Steve Jobs is definitely a person I can admire.
Well, can you give us your last thoughts on crypto, your investment company and everything we've talked about so far?
Yes, crypto is really an exciting time. People are talking about the market downturn, and the market has certainly collapsed this year. When you take a step back, even though Bitcoin was at the time of this recording of about $ 3,500, in general, even last year, Bitcoin was worth $ 1,000 at one point. Today, we are still talking about an asset class that has performed incredibly well in recent years. I think it is only the beginning, as I said earlier. Some of the projects I see now and some of the opportunities are just unlimited. The ability of people to conduct transactions without an intermediary and to record transactions openly and settle them almost immediately provides an incredible opportunity to leverage technology. I am hyper optimistic in space. I am really excited about the opportunities. If people want to know more, they should definitely look into it more. I remember people talking about the Internet and saying it would never work, so I can not wait to see what's coming next.
Yes, we know that decentralization works, just look at AirBnB and Uber. These are ultimately hybrid systems, where you have a centralized component and a decentralized component. They disrupted hotels and the taxi industry. It is only a matter of time before getting these similar disturbances. So where can people find you?
I'm on Twitter, it's one of the best ways to follow me. In addition, they can visit our website. We have a public email actively monitored at FedermanCapital.com. In addition, I write from time to time on Medium.
Thank you for coming in our show.
Yes, thank you for inviting me.