Marrying Quality Issuers with Quality Investors on a Global Scale—Syed Hussain—Liquidity Digital

Tracy Merda:  Good morning. Good afternoon or good evening depending on where you are in the world. This is Tracy Merda with the future tech podcast. This morning I am very excited to welcome a special guest, Syed Hussain, CEO of liquidity digital. Liquidity digital is a startup with the vision to go ahead and develop the most scalable and emerging block-chain infrastructure to solve pressing issues in capital formation. Welcome. Syed, thank you so much for joining me so early.

Syed Hussain:  I think it’s earlier for you than it is for me. And I’m a Wall Street guy, so our day starts a lot earlier than the rest of the world and it ends way later than most of the world.

Tracy Merda:  Well, why don’t you jump in and tell us a little bit about, well no, I want to know a lot about liquidity digital and what you guys are aiming to do?

Syed Hussain: Absolutely. So liquidity, it’s a, you know, when you gave the intro it was, it was quite a mouthful, right, where we’re looking to, with what we’re looking to accomplish. Essentially for, let me try to explain it for the layman, right? The way that I say, it is a traditional form of capital formation or simply not keeping pace with what the demands are for capital information given the increasingly accelerated pace of growth that the world is experiencing, right? So the Internet, intranet 1.0 came and took us to a completely different level. Internet 2.0 came to the point where we are now, and this is where blockchain comes in and brings in the realm of Internet 3.0 and within that what we’re doing is through blockchain. Right? So you’ve got this protocol in which trust and incentivization are inherent within it. And through this, what that allows you to do is disintermediate. Once you can disintermediate, then all of a sudden what you’re doing is you’re bringing efficiency into a particular process, which then leads to efficiency being within a company to efficiency being within an industry. And all of a sudden you’re changing the way that everything functions. So with liquidity, what we’re doing is we’re looking to apply blockchain technology in a regulated, compliant manner. And that’s crucial is the regulated and compliant manner, and bring that to the capital markets. So taking the same notions of how traditional capital formation works and by automating it and putting it onto the blockchain through what we call digital security issuances. And these digital securities are going to essentially be programmable smart contracts in which things have already been agreed upon in terms of how they’re going to be executed. And, what that will lead to is that leads to qualified issuance being put in front of qualified investors and essentially globalizing and democratizing the capital marks specifically markets which traditionally have been illiquid. So what liquidity is doing, liquidity digital we’re doing is we’re building an end to end ecosystem, which will allow for this entire process to take place.

Tracy Merda:  So Syed, what was it that inspired you or what was it that kind of, you know, give me a little bit more on your background in particular as to how you, you know, recognized the need.

Syed Hussain:  Oh boy. Yeah, absolutely.

Tracy Merda:  So I’ve got my coffee cup. So go for it. And we could sit here all day.

Syed Hussain: I’ll give you my background, but I’ll preface it by saying this as well, right. As far whenever I hear, what inspired me and whatnot, I would love to sit back here and say that yellow man, you know, I’m such a sharp guy. This is what I figured out. And here’s where it was and this is how he came up with this. The reality is that ultimately, what led to all this is, I’ve just been blessed to have been surrounded by people that are way, way, way smarter than I am. And I just listen to them. I listen to what it is that they’re saying or when they’d be gone and then I’m like, okay, yeah, that makes sense. Let’s do it. So that’s really been my secret sauce is surround myself with people that are a lot sharper, a lot smarter than I am. And that’s essentially been the reason behind the success of liquidity and what it is that we’re doing. My background is I’m a serial entrepreneur, so I launched my first company when I was a senior in high school, which was right around the time that the .com boom was taking off. And again, I didn’t know much about the industry at the time, but I knew people that did. So I partnered up with them and by the time I graduated high school, I had an opportunity to jump into the fortune 500 worlds. So, I was with GE corporate. And from there I started getting exposure towards the various business units of GE and they dabbled in everything. But the one that intrigued me the most was GE capital. From there I started to get more and more exposure and towards the capital markets and then I decided to jump head first into it. So once you go work for Wall Street, I was with Credit Suisse and then spent a couple of years there and just learn, you know, it was a great way for me to understand both the marriage of emerging technology with the emerging finance and understanding the whole notion around how the world of finance works from that to financial engineering and creativity within that industry and how technology, leads to innovation across the board. So my last corporate Gig, I used to be the head of data analytics for Neuberger Berman, which used to be the asset management division of Lehman Brothers. I went in post-Lehman collapse when the powers that be at Neuberger excited, they didn’t want to be a part of the new Barclays entity. And I went into during the split and essentially built that laid the groundwork for their business intelligence and then what falls into the data analex division, built that out from the ground up. And then a couple of years into that, the entrepreneurial bug started nipping at me again. So I decided to leave that world and started a company focusing on artificial intelligence, data visualization, natural language processing, and ended up getting picked up by a larger firm that was looking to expand into the northeast. So it was there for a while and then ended up getting approached by a larger firm, which was focusing on digital transformation and in between those two firms. That’s where I came across this thing called bitcoin. And initially came into Bitcoin, as a cynic.

I’m like, well, what is this thing? I’m like I’m someone who understands the technology and I’m someone who understands capital markets. I’m going to be that guy who’s going to expose this thing for the fraud that it is. So, rolled up my sleeves and I’m like, well, there’s a lot of opinions being thrown around. But let me formulate my own. So I went directly to the source. I went to Satoshi’s white paper and I started reading it and what was supposed to be a 15-minute read, turn out to be a two and a half hour analysis where I’m just like, Oh my God, Oh my God. Every sentence. I’m like, holy crap, this thing is so much more than what people are calling it. And most people have no idea about the implications of this thing and where it’s going to be. So that was it for me. That was the Aha moment where, but not an Aha moment for a solution, but just an Aha moment and realizing that we’re on the break of something far greater than most people when thinking of this. And immediately I was like, the impact that the Internet had on the way that we interact with each other is going to be the impact that this blockchain technology is going to have on the way that we transact with each other. And immediately I was like, this is what, this is it, this is my calling.

This is what I need to get into. So I started to immerse myself in just learning more and more and more about it. And the one area where I saw an immediate need for was what I called the tokenization of assets, real-world assets and the ability to be able to digitize and securitize them onto the blockchain and it was going to go off and launch a firm focusing on that when I came across, I needed someone on the back-end to be able to execute on the technology. And that’s where I came across bank x and met with the founder and the CEO of bank x. They had a really interesting project that they were developing around them, they called the proof of asset protocol and it was something that executed right. It was something that I was like, yeah, this is it. Our visions align. So when I spoke with him, he said, look, why don’t you, we’re well funded, come on board and join us as one of our key executives. So I joined the organization as their global chief commercial officer. And then eventually, I climbed up the ranks and I ended up becoming the CEO of the Americas and was building that out. And it just sound, again was, very extremely fortunate to just have a Rock-star team, on the America side that we were building this thing out.

But then when I started to see that, you know, most people tend to put a focus on the vision and the ideas. But what I always say, again, this is coming from a serial entrepreneur, but ideas are a dime a dozen, right? I don’t put much value in ideas. To me, it’s always about the ability to execute. And if you lack that ability to execute and your path of execution is not right, then nothing is going to come about. And what we were doing here in the Americas, that started to deviate from what the rest of the organization was doing. Our path of execution was a bit different. I wanted to focus more on the institutional aspects and he had the watching aspect of it rather than the Crypto in the retail aspect of things. So that’s where the deviation occurred and I said, listen, say it doesn’t make sense for us to continue battling back and forth around this. So I resigned in January. I told the team, and immediately the team followed suit as well. And that was essentially the genesis of Liquidity. So, you know, myself along with our two co-founders, Marina Shostak, and Jitin Jane, our CTO and really the brains behind all of this. We came together and that’s where liquidity came into existence. So fast forward into April and here we are and we’re well on our way to developing and building out our platform. We’ve got more issuances our way just quality issuances that we’re looking to do our due diligence on doing the listing out and we’re looking to educate the rest of the world in terms of the impact of this technology and what it needs. So here we are now.

Tracy Merda:  I love that started with you try to debunk that coined.

Syed Hussain: I was just talking about this on a previous podcast that I was on and I mentioned to them, that kind of a mindset is what’s needed in our industry and I think one of the things, and without getting too political and turning this thing into a political conversation, but I think one of the things that are lacking in the world today is our ability to be able to have healthy conversations, always any perspectives. I think that if we have more and more of those, that’s where the real value is going to come out. So more than, I actually enjoy conversations with people that have opposing perspectives from me than people that sharing on the same perspectives because when the people that share it on the same perspectives, it’s just an echo chamber. I’m not learning anything. So, those that oppose, I’m constantly growing and getting better and better as a result of it. And I think if we were to apply that same concept into the world of Blockchain, I think you’re gonna start to see this thing grow by orders of magnitude.

Tracy Merda:  Look what happens when you challenge it, you know, and like you said, opposing views off it opens up a lot more windows. I mean the news today should keep you busy then this is all worth the shit going on.

Syed Hussain:  Well, the problem is if I start to look at the news then I won’t be able to do anything else.

Tracy Merda:  Don’t. I know I haven’t even turned the TV on. Well, let’s get back to talking a little bit more specifically about Liquidity Digital and the process. I like to look at, you know, give me like a real use case from kind of start to finish as to how it would work throughout your process.

Syed Hussain: Sure, sure. So, okay, I’ll give you a real use case without getting into specifics in terms of Layman’s case. Let’s do it that way. So today, right, the one issue that, across the board, people need is if you’re an entrepreneur, if you’re looking to raise capital, you’re very limited in your ability to raise capital, right. Because it takes money to make money. And right now, the question is, well, if it takes money to make money, how am I going to get that money that’s going to take, in order for me to make? And that’s where the capital formation process comes in. There’s an entire industry that deals with capital formation and we call that capital markets. And the problem is that there’s a massive cost that’s associated with traditional forms of capital raises and the reason behind that is because, yes, we have a very, very mature industry. It’s been around for not decades but centuries. But it’s an involving process. However, with where technology is today and with the sort of market demand that is needed, we need to get more and more creative, we need to get more innovative about this whole capital formation process. And the reality is that the capital markets and the width they are structured right now. And I should know, I come from them. It’s incredibly, incredibly inefficient. Inefficient in the sense that, they don’t have the ability to be able to capitalize on the existing technology because all of the technology that’s being leveraged is built off of legacy systems. Well, incomes in this technology called blockchain, which now gives you the ability to completely disintermediate and where it doesn’t necessarily have a dependency on the old legacy systems. Now all of a sudden the world starts to wake up and says, oh, okay, if we can actually incorporate this in and do it in a way which is regulatory compliant and automate the process. And all of a sudden it’s the overall evolution of the space is right in front of us and it’s going to happen very, very quickly, right? It’s going to be occurring at a very rapid pace. So with liquidity, what we’re doing is we are enabling that process of disintermediation and who were doing so, through that build out of our platform. So if you’re someone who is, you have to meet certain qualifications, right, from all perspectives. And it’s so long that you have, the number one requirement is that you need to be a quality issuance. In other words, you need to have a solid business model behind what it is that you’re seeking to raise the capital for. This is not the wild, wild west of the ICO days where anyone had any silly idea. Because it’s all of our reputations that are on the line. And again, at the same time, what we’re also looking to do is we’re looking to bring those two, we’re looking to create a healthy market and a healthy market, It’s created through quality, not necessarily quantity. So while the focus in the past, within the industry, has on quantity, now that shift is starting to occur we’re now the focus on quality. So the number one criteria for us is whether it’s an actual quality issuance that we’re putting on. Generally, it’s going to be something that is asset back, has some sort of an asset that’s backing it and then what we do is when we take a look at the amount of the raise. So if it’s something that works in order for you to come on board, unless we see some imminent strategic value in it, it needs to be at a minimum of a $10 million raise. So, once you know that what comes in, then what we’re doing is, we’re digitizing that entire process. We’re going to structure the deal where we work with folks from the traditional markets and we’ll bring this technology to them that will allow them to automate the whole process of, you know, what you’re doing a capital raise, all of the components that go into it, right. So things like due diligence, KYC, AML, AIB, right. For those that don’t actually understand the terminology, I can go into details around that. So, KYC Know Your Customer, AML Anti Money Laundering, AIB credit investor checks, right. All those regulatory components that are needed before one can actually do issuance or invest in something. They’re all automated there. That gets put together. Then there’s the actual structuring of the deal and the issuance of the security, whether it’s going to be digital security in the format of equity or in the form of a debt instrument. We’re going to put that out then it’s the creation of smart contract that’s going to govern how the transaction will actually occur, both pre and post-issuance, taking custody of the assets and then there are distribution channels. Once security has been issued, which exchange is going to get listed on so that you can actually get liquidity for those that want liquidity, putting those out distributing it out, and then the entire process that the entire life cycle of the security itself, right. Things like tax compliance, things like dividend distributions, investor management, voting rights management, on-boarding transfers. The entire life cycle of it will continue to be managed in an automated way through the liquidity digital platform. And in turn, we’re connecting them with investors who are, who have an interest in investing within that particular asset class. And by doing that, by automating this entire process, what we’re doing is we’re bringing quality issuers and we’re marrying them with quality investors on a global scale, which deals in a highly economical way as compared to how the traditional markets were today.

Tracy Merda:  So how would you say, or who would you say like your ideal partner?

Syed Hussain:  Partner in terms of client or partner in terms of our distribution channels?

Tracy Merda:  Both.

Syed Hussain: So look, I mean I think I spoke about it earlier in terms of the client who our ideal client would be is someone, who actually had a business model. Look, the way that I explained this thing to people is, you know, anytime someone hears the word blockchain, we’re living in a world of hype when it comes to any sort of technology, not just blockchain, right. This happened during the Internet 1.0 days, this happened during the Internet 2.0 days. And it’s happened now with the Internet 3.0 as well. What we need to do is we need to get away from the hype. Unfortunately, the problem is that you have two sides. You’ve got one side, which the moment they hear anything associated with blockchain, they’re like, yeah, yeah, yeah, this is the greatest thing since sliced bread. And then you have other guys on the other side of the spectrum who are like, oh, blockchain, oh nope, scam, fraud. Don’t want to deal with it. Don’t know, don’t care. Right, when the reality is that you have to take it for what it is. Blockchain is nothing else but a tool that enables, it enables you to do things in an efficient manner. What’s crucial, so the way that I explained this to people is that issuing the digital security for your platform, that’s the icing on the cake, right. But what’s critical to understand is that what people are looking to buy is not the icing, which unfortunately is how most people sell these things is, you know, anything they’re launching on, there’s some icing. People don’t care about the icing. People care like the cake and the cake is the actual investment that they’re putting into, which means that the fundamentals of investments don’t change, right? Is it something that, you know, what’s your risk management strategy? How are you mitigating it? What are your governance controls in place? What does the management team comprise of? What’s the return on the investment that I can look at? All the same, things that people are going to ask for a traditional investment remain true. So you need to have a quality investment that you’re looking to bring in front of an investor, right? So that’s the number one thing that we look for. Then once you have that, then everything that digital security brings is just the icing on top of that, which is going to make your investment, even that much more lucrative for the investor. And they would take this before anything else because it’s automated, it’s transparent, it’s efficient, right. And it brings in the one thing that every investor wants, which is liquidity across the board. So that’s what we look for. What we’re looking for is a quality investment, right. Because before we can put it onto our platform, we have to be sold on it. So if it’s something that gets us excited, then yes, that’s something that we will put onto our platform. So that’s on the client side. On our distribution side, really what we’re looking at is, its people incorrectly assume that we’re going to be in competition with the investment banks and with the distribution channels, because, you know, through our technology, we’re going to replace them. Look this stuff, it’s not going anywhere, right. Banking, it’s not going anywhere. How banking is done is what’s going to get changed right. I mean, before banking was primarily done on, on paper, now it’s barely done on paper, right. Just similar to that, the whole capitalism processes it’s going to go digital. It’s going to get automated and you need to have some sort of a technology platform or some technology built out that’s going to enable you to be able to do so. So rather than the assumption that people have, which is that they’re seeing them as competition, they’re actually embracing us because they’re seeing our technology platform as being the one that’s going to power the future of their business model moving forward. So for our distribution channels, we’re targeting and we’re looking at a lot of the traditional players, those that bring, that are looking for quality issuers as well as those that have access to quality investors and they’re leveraging our platform to automate that process.

Tracy Merda:  So what’s on half for liquidity digital in the rest of 2019 and going forward?

Syed Hussain: Oh boy. A lot of sleepless nights for us, look we’re an incredibly, incredibly fast-growing startup. And we’ve really been just surpassing our own expectations and believe me, we got very, very high expectations for ourselves and that’s a credit to the team that we have. And I’ll sort of give you a little bit of a teaser but there should be an upcoming announcement in or the course of the next few weeks about the fact that we got our seed funding in as well, which means now if we thought that we had pressure before we had our funding, now that we have funded the pressure has gone up even more. So that means now we have to, perform even more than where we thought we have to. So, there’s going to be three fronts that we’re going to be operating on. The first one is on the continued build-out of our technology platform. The second one is going to be in terms of continue to bring on quality issuances, bringing on the right clients. And then the third one is going to be continuing to build on our distribution channel and our partnerships And it’s just go, go, go from that point forward. So look out for a variety of announcements across all three of these things.

Tracy Merda:  So Syed what’s the best way for people to get information or to reach out to you if they are interested in becoming involved?

Syed Hussain: Yeah, I was gonna say with the traditional way, which is, you know, feel free to email me at syed@liquidity.digital. But the reality is, this goes to show you the insanity of how quickly technology evolves, where, you know, we’ve gone from snail mail to email and now I barely even check my email. Now if you want to connect with me, the best way to do so, it’s going to be through social media. So reach out to me on Twitter. It’s @serieltechx. So follow me on Twitter and I’m pretty accessible. Any questions you guys have, let us know. And like I said if you guys have a quality issuance that you want to explore the digital securities world. Or if you’re interested in being a part of us, being a part of this world and being a part of liquidity digital, hit me up. I’m here.

Tracy Merda:  Awesome. I love that. Thank you so much again for our audience. This was an awesome sit down with Syed Hussain, the CEO of Liquidity digital. Thank you so much and I wish you the best of the rest of your day. I’m sure it’s busy.

Syed Hussain:  Thank you so much. It’s going to be a long one, but thank you. I appreciate it.

Tracy Merda:  Have a great long weekend.

Syed Hussain:  You as well. Thanks.