Sabira Skoblova interview with Liza Aizupiete, RigaCOMM 2018
I would like to start by introducing our guest Liza Aizupiete, who was previously a co-founder and managing director of Globitex. Now, for 5 months Liza has been managing a new project called Fintelum, which we will hear about during the interview.
I would like to start by saying that I consider you an influencer in the cryptocurrency industry. Do you consider yourself an influencer, or I am the first person to call you that?
Well, thank you Sabira for such a lovely introduction. Actually, I have been told this before. But in true honesty I didn’t expect I would ever come on stage and do any sort of presentations about cryptocurrencies and, even less, about my business. Because back in the day we had a different person designated for public speaking. Anyway, I would rather concentrate on Fintelum and on generally cryptocurrency environment. But if I had to boil down my experience with Globitex , as a founder and managing director, I would say I was just doing what was needed for the company at the time.
As I know, you are regularly invited to different conferences and meetings as a speaker.
Correct. Well, our public story really began when we launched something called an ICO. Which is, as I understand, a big interest of the present public here, as well. So, during that process, you have to be very vocal, you have to be public, you have to present your ideas to a wider audience. And that’s what I was doing.
What was the secret behind the success of the Globitex ICO campaign? You reached EUR 10m hard cap - what were the means used to achieve that?
Well, as you rightly mentioned, we had a limited hard cap; very small one; we were very moderate in what we’re expecting from the public. And that actually translated into us raising this money within the space of 24 hours. So it was a very quick one. In order to do that, we had to basically showcase our business. Showcase our business; tell the story where we’re going. Because when we were entering the space, we were doing it with a ready business. It was a product, that had obtained an Electronic Money License (EMI) in Lithuania. So, effectively, a crypto exchange with an ability to be a SEPA integrated bank. So, it was one of the kind developments in the crypto space back in the day. And that is still, actually, quite unique. So with these premises it was very easy to tell our story and where we are going next; how we are to develop business into commodities trading hub.. It was an easy task, should I say, because those are the things that we actually believe in.
And, you personally were participating in these exhibitions, and I understand it was your personality, that attracts people, as well.
I wouldn’t know that, it’s probably for you to judge.
Liza, I suppose that you would like to leave the Globitex situation behind, but I can’t exclude a question regarding this, because you dedicated 3 or 4 years for this project,
More like five, actually…
Five, yes. I would like to ask you - how did it happen that you were ousted from your own founded project?
Okay, well, this is a difficult question. But, I suppose, few of those who actually know me, already have heard the story behind. What happened is we had a very unlucky combination of agreements with our venture capital investors. Before we went into an ICO, we seed funded the project ourselves first. Then we had attracted venture capital funding. And the arrangement we had in place was very strict. Having missed some of the deadlines, in fact, invalidated our option agreements. After, having asked for additional funding to complete the product, unfortunately, we couldn’t negotiate back our option agreements. This is the basic story about why we had to make a decision to either ask for option agreements, or somehow get an agreement. And the venture capital investors never came back with an agreement, unfortunately.
How did your contributors react?
Terribly. And I still, to this day feel the pain. Well, actually, I’m the biggest loser, so to speak, in whole of this drama. And, I was attacked [on social media]. Enormously.
How did you respond?
Well, I had to be honest, as honest as I could. And I still talk to my contributors on the Telegram group that I still manage.
In conclusion, what would be the positive and the negative experiences that new start-ups could use?
Well, after 2-3 rather tormenting months, we sat down with my team. We discussed what were the takeaways from this experience. And, in fact, following that discussion, I wrote a blog post, which is available on Medium.com, you can read that. It’s pretty much advice to the two segments of this whole ecosystem. One is for start-ups; and the other one is for venture capitalists. So, for venture capital investors the takeaways are - it is not acceptable, it is not okay, to take businesses away from the founders. The founders actually deserve to keep their business. You shouldn’t be going into a company with an expectation of actually taking over the company. It is not what it means to be a venture capital. So that would be a lesson for venture capitalists. And for start-ups, it’s simply to be much more aware of what kind of financing you’re accepting; what sort of people you allow into your shareholding. And never lose control of your own company, pretty much.
That is correct, thank you. I have asked for comment from a person who has been with you throughout this journey. It is a surprise for you, please, turn on the video.
I’m very intrigued.
Arvis Ermins: The outcome of Globitex situation was very difficult for us, both personally and financially, since we invested more than three or four years of our professional life. However, we also learned some very important lessons. And also, the whole situation consolidated our team. And, as a team, we decided to keep on working in the same field, namely - cryptocurrencies, as we see it not merely as a speculative instrument, but it has a huge potential for the development of the finance at large. So our team is headed by Liza, and I’m personally very happy to work with her. There are three things I would say I love the most about her: her energy, determination and global vision.
Maybe you want to add something?
Well, thank you! Actually, never anyone has done that for me, thank you very much!
In the second part of our interview, I would like to speak to you about cryptocurrency in general. You graduated from the university of Geneva, with Major in Philosophy. Has your professional philosophy basis ever helped you to understand the mission and vision of cryptocurrency?
I’d say absolutely, yes. Because I remember back in the day, when I was actually choosing which department to go into, I had two choices: I wanted to do either philosophy or programming. Then I let go the idea of programming, because then I would have to program in French. I thought I’d be doing philosophy in French much better than programming. So that’s one thing – I’ve always inherently had interest in programming, in technical aspects. And having that philosophy background, which basically teaches you how to think. Nothing more or less. It doesn’t give you any specific craft or a specific profession, it simply teaches you how to think. I remember actually ending my studies with bibliography recommendations to my professors on the books they should read. Coming back to your question - yes, it definitely did. Because, in Geneva, while I was studying, I came across a very interesting political-economic thought called the Austrian Economics. And ever since I’ve been a libertarian in my beliefs, in my actions. In all of my professional life, I’ve always followed the pre-concepts of libertarianism. And cryptocurrencies pretty much answer that missing question of the era of gone-by gold standard. So, to me, philosophically speaking, having seen what cryptocurrencies, what sort of potential they hold, simply spells the best case in financial, economic developments for humanity as a whole. We haven’t seen such a revolutionary discovery as a human race ever since gold was mined, basically.
Please describe the moment that you discovered cryptocurrencies. Because the majority of the planet found out that Bitcoin existed only a year ago, but you have been deeply in this topic since 2013, if I’m correct. How did it sound in 2013, was it suspicious?
It was actually 2012-2013, when we went to London with some of my colleagues for the first cryptocurrency exhibitions, conferences ever. And I remember that being a very stark difference from what I was used to and I used to go to these trade fairs, high frequency trading (HFT) exhibitions, in which were, like, thousands of people. And here you come into this London, sparsely furnished room, with carpets, old carpets mind you. And the room filled with geeks and gold bugs. Gold bugs are those people who defend gold standard… And so this crowd fascinated me. All they talked about was this new technology, which spells the end to central banking the commercial banking, any, sort of, centrally governed monetary system. It was absolutely fascinating.
So was it suspicious for you?
Oh, definitely! It seemed like a scam to me at the first time I saw it. It actually took me over a year to get to terms with actually what it means from the technical perspective, this specific combination of protocols and game theory, and economics, and psychology. Only at the moment that I spoke to several cryptographers, who assured me that the possibility of breaking the code is very very minute. Only then, actually, I went in and talked to my team and said: ”Okay, we have to do something! This is it! It’s going to take time, it’s not going to be evident, but eventually - this is the future.”
This is the future. But now, cryptocurrencies very often is used as a marketing tool. To buy flight tickets, to buy real estate. I’m speaking about the situation in Latvia, for example. But how do you think, how will cryptocurrency find its role in our everyday life, maybe in next 5 years?
Let’s talk about cryptocurrency in general. For instance, last year there were something like 900 crypto assets in total, with a valuation of about 200 billion market cap in U.S. dollars. Today, a year on, the amount of crypto assets have doubled, but the valuation has stayed about the same. So what we have, the difference and how we’ve developed from last year to this year is actually more fragmented crypto space. For instance we have two bitcoins, no, actually we have something like several major bitcoins, now. Not just one. We have enormous amount of tokens, which are actually smart-contracts of various types. They’re not necessarily monetary units, they can be assets of various types, but the idea is that there are twice as many crypto assets today than the last year. But the valuation of them is still about the same. So, what it actually means is that those who use crypto assets are still a very tiny proportion of the total. So the adoption rate is extremely slow. It’s slow and it will probably be even slower. And to answer your question, what would trigger the use… I think by working in the space, creating useful products, making it available, pairing it with various other assets, something of a function that typically exchanges perform.
Education is one of the most important. And I’d say its not so much education in what cryptocurrencies are, but education in what money is. Because, honestly, this is something that we are not taught in schools. Not a single economics department will teach you what money is, unfortunately.
And you would like to say cryptocurrencies are an alternative for FIAT money?
Well, I’d say cryptocurrencies are [..] one of the rare possibilities in social human history, to have an alternative [monetary system], a decentralised alternative. Where you take away this paternalistic view of the world, where someone always tells you what do do, how you can or cannot transact, with whom you can or cannot transact. Living in this decentralised, permission-less, bottom-up system, it’s something that people simply are not used to. So it’s going to take time for people to understand; to get used to; to be responsible for their own assets. It’s a really long story, I don’t think you want to get me on about that.
Okay, you work on this industry, you educate people in this industry. Are you a real crypto user?
I remember having my first wallet as soon as I pretty much discovered what cryptocurrencies were. Then I opened up my Coinbase account as soon as that came about. And, quite frankly, I’ve had various types of wallets, I remember giving out a lot of bitcoin to friends and acquaintances, simply by just showing what it is. When the price was extremely low, back then. Either way, I used to do a lot of transactions in cryptocurrencies up until the split in Bitcoin. Because just before then, the Bitcoin transaction fees went through the roof, and that’s when the Bitcoin actually forked into two Bitcoins. So up until that moment, I was a very frequent user of Bitcoin as a transaction currency. AirBaltic, for instance, you mentioned. I used to buy tickets! In Riga, there’s one place where you can pay with your cryptocurrency for drinks, there are actually several places in Riga where you can use cryptocurrencies so yes, absolutely.
What are your price predictions for cryptocurrency market?
Well, as you saw it in the news this morning, there’s another 15 billion which was just wiped from the cryptocurrency assets today. So, we are still persistently in a down market and… the short answer to your question is, really, I don’t have a crystal ball… Okay, what would you like to know? Which asset?
For example Bitcoin. It’s the most popular.
There’s a problem with Bitcoin. There are actually two bitcoins, so it’s still a question - whichever is going to really survive? I would rather speak about the adoption, because once the adoption happens, the price will follow eventually. And I don’t think we should look at crypto-assets from the speculative perspective. Although, it’s perfectly normal for a nascent cryptocurrency to actually attract speculation and live off of it, because its what basically drives the adoption, in a way. But I would much rather see more businesses come to the space. Build useful products. Have exchanges list various assets against these cryptocurrencies, because once you have that ubiquitous access to cryptocurrencies, you will also see a much steeper price appreciation. I’ll tell you why there’s not going to be a number. Because a year has passed and the value of the whole market is still the same. That actually is a tiny fraction of a percent from the total value of other monetary units. Like all of the other currencies are about 85 trillion in value. And compared to that, cryptocurrencies are what, 0.2%? So it’s really nothing. But, that also spells you a huge potential. So theres definitely a very steep upwards pressure. But it will only come about when there’s enough adoption, enough use-cases, enough access to exchange against other values.
I would like to show you one more surprise from your friend, from your old friend. I asked him to tell something interesting about you.
Andris Kaneps: I know Liza for almost 10 years. We have been working on several different projects. And during this period of time, I have learned that she has two fantastic qualities. First, she has a vision. And second, she knows how to execute, and achieve the goals in the vision. And if you put those two things together, there is a very high chance that all the projects she will do will succeed. Myself, I am an early Bitcoin investor, I invested in the times when Bitcoins’ price was still at 6 USD and I did believe in the industry at that time and I still believe today. And I think that cryptocurrencies and crypto in general is the future of the financial system.
I would say that it was rather difficult to catch this man between his international flights and immediately after our short conversation he was preparing to board another flight to Kenya.
Sabira, now let me just thank you for this because, actually, Andris was my colleague at the time when we used to visit those London exhibitions. And in fact there’s a trivia, an interesting trivia - we found some coins on the carpet, on that old carpet, and one of those coins I actually gave to Arvis as a present, and the coin back then was worth 6 dollars exactly.
You know, the cryptocurrency world is absolutely dominated by men, you are surrounded by men, as we see in your team. How it is to be a strong female manager in a male oriented industry?
Hmm, actually many people ask me this, but I haven’t noticed the difference, to be honest. Perhaps I’m just lucky to have such a great team, who don’t really consider me different in that space. I’m just a human, really.
How did you find a new business idea so quickly? After Globitex?
Oh, you mean Fintelum, our current company. The funny thing is, after everything went shattering with Globitex I was actually approached by many and asked for help. So people were really asking for help. How do we do this the way you did it? I said - well, I didn’t really do that much, we just have a great team, we build great products, we have the technical ability, legal ability, everything. And it just came together that we should be able to help other token issuers to do the same. But in a much more professional way. So the idea came about from the market, basically, asking for it.
I have read your press release, about Fintelum and it seems that you have high hopes to make a big impact on this industry. And I’m sure that you have something special to offer – what exactly would that be?
Well, first of all, it is going to be a suite of products. So the first one will be a technical tool for ICO companies looking to raise funds. If there is anyone interested, anyone with a great idea, good team, possibly a great product, who are thinking of fundraising via an ICO process, you should definitely come and speak to me. So, the second product will be a wallet, an open-source wallet ready for peer review. You and I will be able to use it. Hopefully, our parents will be able to understand some of it. Intuitive, multi-currency, open-source, web based, mobile-based. We’ve packed into it most that we could and that’s completely for free to use for the community. And finally, as our know-how is in trading, we want to satisfy the demand, should there be such a demand in the market, within the space of six to twelve months, we’ll also have an ability for token trading.
So you will be a technical provider. Last year there was a big interest to invest in ICOs, it seems that now the situation is changed. How do you think, your professional opinion, what can stimulate this market?
Well, I don’t think ICO market needs simulation, per se. In fact, if you look at the numbers, in 2018 alone, there were over 700 ICOs and in total they raised something about USD 18-20 billion. So this year alone. Whereas last year, it was something more like 200-300 ICOs and the numbers were much much more modest. So you don’t need to stimulate market, per se, but yes, I agree, there is a certain slowdown in issuer activity. Simply because the regulator is looking at this whole activity with a much more keen willingness to punish. I think there is a certain fear amongst the firms. The other aspect of it is there is a perception there’s a lot of scams. And indeed, in fact, one research provided a number that there are allegedly about 80% scam projects amongst the ICOs. But then to those disbelievers in ICOs and the phenomena as such I would like to say - what about venture capital? Venture capital apparently also fails in 90% of the cases. So ICO phenomena is just really another type of go-to the capital market vehicle. It’s a tool, it’s a box which to use. And I truly hope that the regulators are not going to cut off the wings that the ICO market basically created. That they would rather go after true scam cases, after true criminals, who indeed put out the project, take the money and leave. Now that’s different. I’m wholly in support of punishing such types.
Ah, yes, I have read about this research in your Twitter. What can you recommend to a potential ICO investor?
Well, that would be a very good question for a research firm. Remember that I can only speak out of my experience. And my experience is such that it is best to look for a team that has been together for a long time, like we had. But again, you cannot truly always predict, so even a very good project like ours, Globitex, can actually encounter problems down the line. It simply is a start-up scene. You cannot do much about, you know, getting everything right. But you have to be sure it’s a good team, there’s a well-written white paper, you have to look at the actual product. Perhaps there is a beta-release or alpha-release, or even a live product, which is an income generating business. It truly does depend. The research does not differ from the one that you would probably on a typical other company. But then again, you have also the ability to invest in white paper ideas. And when did you have that ability ever before, right?
Yes. You know that we are in the closing part of this day of Riga COMM exhibition. Previously, I promised our audience to add in a little humour in this interview. So, Liza, how do you explain to your mother what do you do and what Bitcoin is? Because your mother is a woman of another generation.
Okay, well, this is a good one, because I think it goes to pretty much everyone in this audience, like, how do you say, if you’re in cryptocurrency business, how do you explain this to your parents, right? What exactly do you do?
Audience: You don’t!
Well, you don’t, exactly. I’ve tried, and the conclusion is still, I have no idea. It’s so nebulous, it’s so out of thin air. I think it really takes another generation to understand this phenomena. It takes another type of approach, a set of literature you probably need to read in order to understand what it is. But again, I’d like to go back to answer what you asked previously, I don’t think you need to learn what a cryptocurrency is, per se, I think you rather need to learn the basis of the financial system. Like - what is money? How does it work in our system? Should it be centrally governed? Or can it exist decentralised? Should you be solely responsible for your assets or should you entrust your assets to someone else? So these are actually the fundamental questions that should be approached already at the educational level, in universities, in schools.
Okay, my last question, and then I will give microphone to the audience. If you met Satoshi Nakamoto, what would ask him?
Why did you stop coding? Why did you give up the coding? Because he gave up the coding pretty early and I think I know the reason why. He didn’t consider himself able enough to do a quality code. But yeah, I think he did everything pretty well and pretty right, and…
He was a good guy.
He was definitely a good guy.
Okay, thank you very much for conversation!
LA:So do you have questions for me? I know there’s a… ah, there’s a hand!
Q1: Thank you for your discussion. Liza, I heard two times you mentioned that financial institutions don’t teach you about what is money. And you mentioned one more time about the importance to know what is money. So maybe you can comment on that, what IS money?
LA: Aha! Well, it’s a great question and I wish I had another hour or so to actually talk about just that. But in two words - money is the essence of human interaction. Even if we still have barter. The barter itself is actually money. So one of the assets eventually, one of the commodities eventually is bound to become this lifeblood of human exchange. And that’s what humans do - they exchange all the time. There’s one value, they’re always willing to exchange for another. Because we are never self sufficient. We always need teams, we need partners, we need other countries or groups of people with whom we exchange and money is what powers everything. Money is not evil. Money is actually the biggest good there is! It’s just a question - whether money should be centrally governed? Or whether this new phenomena of having decentralised money could actually spell an opportunity for humans? To take back their liberty, to take back their sovereignty.
Q2: So, I have a question for you. So blockchain seems like more a male oriented business and there are so many men in blockchain but there are not so many women. Why do you think it is so?
LA: I have no idea! Maybe because… Actually, I do have an idea. When I was a student in Geneva, I actually lived in university dorm with a Tunisian girl, who was doing her engineering degree at the University of Geneva, as well. And, the funny thing is, she was actually the one who showed me the reality of male perception against females in the technical field. Apparently, back in the day, I knew more about computers than she did, because in her male oriented environment, she was almost ostracised for being a woman, and learning was no fun. Whereas I had never encountered a male, sort of, dominance around me in terms of opinion or physical force. So I’ve never been subjected to this type of problems intellectually or physically, therefore I had the ability to learn, having the freedom to do what I want. The reason why, I think it’s still to do with our old ways, and I really hope that we do get over this as soon as possible. Because women have as big a potential just as males. We have the same brain! Maybe smaller, but it is definitely packed.
SS: Thank you for the interview!
Full interview: Interview with Liza Aizupiete at Riga COMM 2018