Good afternoon, Accelerate Crew. Thank you all for being here on our first day of Accelerate here in the afternoon, getting ready to close this out for the day. I have a special guest with us here today. His name is Michael Weisz. I've had a good chance to know Michael over the last few months. Michael has a deep background in fintech and private products, as we'll get to in a second. And we've been kind of ideating over the future of RWAs, how credit's going to grow on chain, how we're going to bring alternative assets on chain, and we thought it would be good to bring Michael in for a conversation today. Michael, you founded a company called YieldStreet a little while ago. Why don't you start us off by telling us a little bit about your background and about YieldStreet?
For sure. So, first off, it's great to be here. And appreciate you bringing me out, Kyle. So, YieldStreet was really founded with a very simple idea. The idea was, "Hey, all of the wealthiest people in the world and the biggest institutions are growing their wealth really through the private markets, through private credit, private equity, infrastructure, real assets, etc." And we wanted to make those products available to as many people as we could. And we wanted to do that digitally and seamlessly. So, lower minimums and very simple to engage with. Over the decade that I founded and led the business, we deployed over $6 billion and it became the largest direct-to-consumer alternatives platform for people to invest in these types of products. And, you know, it reminds me when we started the business was very similar to where we are today in terms of our ecosystem here with RWAs and the regulatory landscape. We launched YieldStreet right after the JOBS Act was passed. And nobody had ever solicited capital for real-world assets in private markets digitally at that time. The whole marketing rules, the whole regulatory landscape, the KYC, accreditation, qualified purchasers, all of that had to be reworked to live in a digital world. And we jumped in right when the opportunity became available and we really set out to do one thing different than anybody else was thinking of and that was thinking holistically about the customer's experience and the portfolios. So, not selling them one product, but rather helping them build wallet share and get multiple products. I think the greatest lessons learned there is in order to be successful in this ecosystem, you really need to solve for a couple of things at the same time. Number one, you need to build a beautiful user journey that educates the consumer and then invites the consumer in. Number two, you have to build a compliance framework where the issuers are going to be able to work with you and to bring their products forward. Number three is you have to have distribution. You have to be able to have your products available on platforms that are ultimately going to be able to distribute and scale in those products. Just bringing those products out front is not enough to actually get them to be undertaken by the market and be sold.
All right, Michael. What are you seeing kind of in the US market right now and like why specifically in this moment have you started to kind of get more engaged?
It feels exactly the same as it did in 2013 and 14 at that time where there's this tremendous interest, if not it's probably more exciting today. I would say there's three things. Number one, the regulatory landscape is like at a perfect moment in time, right? We have the Genius Act that was passed, we have the Clarity Act that I think we're all hoping for is going to come through very soon. We have an SEC that is a completely different posture than the last regime, a posture of inviting business, a posture of working together with companies and you have a moment in time where the industry is ready from a regulatory perspective to move forward. That's number one. Number two, you have institutional appetite. When we started the business, the institutions had no clue what we were doing. You guys at least have institutional appetite where the biggest asset managers are paying attention to what it means to be tokenized and what it means to enter DeFi and what it means for both efficiency but as well as distribution for them over time. And I think the third thing, the biggest thing, is we have 100 million Americans in the US that sit on the other side of the biggest brokerages. Think Fidelity, Schwab, E*TRADE, Robinhood, Vanguard, Interactive Brokers, etc. For over a decade, those two, the asset managers and distribution platforms, are trying to find a way to connect. The asset managers want their products sold to more people, better distribution, bigger audience. And the distribution platforms want to help their customers diversify their portfolios. They recognize 60/40 doesn't work. But the infrastructure hasn't been there yet. We weren't able to do it. That was the wall I kept running into. Today, with blockchain and crypto, we solve a lot of the issues that TradFi has been experiencing for a long time that doesn't or hadn't allowed us to connect the asset managers and the distribution platforms. That is what makes this moment in time incredibly exciting is these three things.
All right, so you're a TradFi guy. What do you do in crypto and like what does blockchain actually unlock? Sorry if you're insulted that I called you a TradFi guy.
I'm not insulted yet. Give me another 6 months, maybe I'll be insulted. Well, first of all, I would say, listen, I owe you a huge debt of appreciation and gratitude and a handful of other people that have had the patience to allow me to ask all of my questions to get to a point where I can feel incredibly excited and confident about what the ecosystem is building. But I think that for me, YieldStreet was an incredible experience because it was so early in the technology innovation for financial services or particularly for alternatives market that we actually had to build so much of the middle office and back office because it didn't exist at that time. Today, fortunately, there are standalone businesses that do a lot of those things on their own. But what we learned was we kept running into different walls, whether it was on the reporting, the transfer of assets. See, all of these assets, Kyle, are static. So, you buy, let's say, a credit instrument or an equity instrument, so aviation leasing or a sports team, okay? The credit instruments, if they perform well, they're going to deliver yield over a period of time. That's it. The equity instruments, if they perform well, they're going to appreciate over time. That's it. There's no staking, there's no borrowing, there's no lending, there's no "Hey, I have this huge portfolio of private markets, can I borrow some money to invest in something else? Can I loop it?" No. "Can I borrow it to go buy a house?" No. And so, you have these static assets that were sitting dead in people's portfolios. The biggest problem with that, beyond it's a shame, is that it's going to be difficult to scale adoption in private markets and to get real wallet share if people have no liquidity and can't even find ways to create utility out of those assets. This community has changed that. By bringing these assets on chain, by bringing them into a token format, by enabling them to access DeFi, by having a regulatory framework that allows us to transact in these ways, all of the sudden, what was once a static asset is now a utility. To me, that is a way to truly scale the adoption of the private market product, which everybody's been wanting for so long. So, I think I understand the infrastructure of it, I understand the functionality of it, and I understand the utility that's coming forward, and that's what gets me really excited about what you guys hear and what this ecosystem is building.
All right, so you're thinking about the architecture here, how you can roll this stuff out. What does that architecture infrastructure look like that you're envisioning to actually bring this out to scale?
