Hoard CEO Jason Davis wants you to be able to delete Venmo, Cash, Paypal, Coinbase and a litany of other payment apps from your phone. He wants his platform to be the simplest financial services app without ever holding your money. He wants you to have a slim Venmo-like interface that can pay your friend back for dinner and also make frictionless transfers between any cryptocurrency pair or world currency. Whether anyone else wants that or will use this app is up for debate.
One of the biggest problems for crypto startups is that they subvert traditional manufacturing. They build a product before anyone asks for it. They’re often funded by an ICO with “investors” who care more about the coin going up in value than the company actually building something of value. Well-funded, buzz-worthy projects will usually reach the prototype stage but it is the inverse of the tradition startup roadmap of finding a problem, trying a solution, testing it out, building, measuring, learning, and rebuilding. Hoard is no exception.
In short, Hoard wants to reinvent the way people bank without becoming a bank. Davis is a former senior UX designer from Wells Fargo. He’s joined by an AI veteran from the U.S. Department of Defense, Dan Lipert. Hoard wants to bridge the gap between cryptocurrency and fiat currency for investing and trading. Davis called our decentralized office this week to discuss.
Modern Consensus: Give me your perfect world scenario.
Jason Davis: “One world, one wallet. Right now we’re trying to do something that no one else is trying to do. We’re trying to simplify the process. I think people are missing the boat left and right. We’re trying to do globalized peer-to-peer in one platform. Crytpcurrency and cash. Venmo and cash work great, but we don’t have a cryptocurrency Venmo. If I want to send someone $20, I can do so. We’re trying to support everyone in the world, multiple blockchain and the assets. Chris Maddern left Venmo as Head of Mobile to build this.
MC: I think you use the word “wallet” twice in different contexts. You want the app to be the “wallet” that connects to each of your crypto wallets.
JD: You can generate your own keys or import keys. The centralized wallets you can’t withdraw. So we started from the other side, building a mobile wallet that doesn’t suck.
MC: We’ve been pretty savage to apps like Robin Hood and Abra that only let you look at crypto without ever letting you use it or transfer to another wallet.
JD: “We’re going to be giving you all of your assets. We’re even building out a feature that will do dollar cost averaging to you, like Acorns or Coinflash. Louis Lepat does this at Coinflash using the Coinbase API which comes with high fees and taking a piece on that. He called me a month and a half ago wanting to sell me Coinflash. I said no. The difference with us is we are far more of an entity than Coinflash. The transaction that will happen will be an ACH [automated clearing house]. You’ll be able to say, ‘Every time I get a paycheck, put this in a basket.’ There’s a lot of different cool rules, but they are relevant to people’s lives. The cool part is at the end of the transaction, they actually own the assets.”
MC: Yeah, but let’s not get ahead of ourselves. I downloaded your beta. It’s not functional to the degree that you’re talking about.
JD: “The one world one wallet experience to us is fundamental to what we’re doing. We’re going to support as many chains as we can. We can open source the front end and the back end. Any technically minded team can reproduce Hoard. We want to create trust and transparency to what we’re doing. To all the cypherpunks out there, they are welcome to pick and prod in our application. Or support it.”
MC: Something we say a lot around the office is, “Mass adoption will happen when you don’t need to know how it works. It just works.”
JD: “We use the same mass adoptions here so that no one knows we are using blockchain. For example, I’m going to send you payment. You’re a no-coiner. But you said “I’ll take $20 worth of bitcoin. You’re somebody I probably know. I can punch in your phone number or contact and I can send $20. You’re gonna get a text saying you got $20 in Bitcoin. It’s gonna have you download the app. This transaction can take a second. Let’s say you already are a Hoard user: I can find the person and send the money, just like Venmo or Cash app. These apps have ruined the need to know your bank account, your mailing address, your…”
MC: Right. But why do all this when someone can just Venmo?
JD: “Chris Maddern was the head of mobile for Venmo and is now the CTO for Button. I used to be a UX engineer for Wells Fargo, primarily on their mobile app. I look at hoard as a second layer solution. Trying to remove the friction and steep learning curves. We’re trying to make crypto transactions for a little fees as possible. We’re trying to remove Visa and Mastercard from the equation.”
MC: Elon Musk told his biographer that he still doesn’t think that even Paypal—the company he co-founded—understands the importance of peer to peer transactions, which are basically free.
JD: Or you can have a transaction of 4.5 to 5 percent on Paypal. We’re getting around that completely. We’re using a partner that can help us move cash between individuals and their bank account. It’s a large advantage. Bitcoin can only do seven transactions per second. That is three days faster than Visa. [Editor’s note: That may be hyperbole, at best.] With our tech on the cash side we’re can move from account to account in one second. No, not only remittance is one second, but settlement is one second. The merchant can reduce their fees dramatically and get their cash in a second. They can settle in that instant. Directly to their bank account.”
MC: Does that involve blockchain?
JD: “Not on our first pass. That’s cash.”
MC: Do you envision this work like ApplePay? Like people will pay using their phone with the app?
JD: “It won’t work like ApplePay. We’re going to use QR technology like WeChat Pay in China. The goal here is to select any asset that is liquid. It will automatically convert to fiat dollars and that cash is remitted to their bank account in one second.”
MC: But can you do a simple friend-to-friend transaction like Venmo? Like, send your friend $20 to pay the check at dinner?
JD: “It may cost them $20.05 or $20.07 to send you $20.”
MC: How does Venmo get away with it? People use it because when you send your friend $20 they get all of it.
JD: “They are owned by PayPal. They make money only when you use the credit card. They still have a revenue model there. They sign you up for a credit card. That whole social aspect is kind of odd. I don’t want people knowing that I just sent my buddy 50 bucks. We’re going to have a feed that is private to you. We’re not going to have a social network of crypto payment.”
MC: Wait. So you want to replace Venmo but also charge more? Even if it’s just $0.05-$0.07?
JD: “It’s a valid position. I don’t see a problem with the fee. I’m not charging 4 percent for a transaction. I’m charging a half percentage.”
MC: Yeah but you came from Wells Fargo. Venmo is the Amazon of payments. It’s frictionless and saves you money. How do you compete with someone who is playing a different game?
JD: “This is my biases coming out. We have to produce some education. You keep hitting me on the fees. But people use banks. They have the opposite of trust. You can put your money in the brick building over there and come back 20 years later and it will still be there. Trustlessness is a whole ‘nother topic. So we could do it and go broke. Or you go to a bank and they rape you with these fees. [Editor’s note: We are quoting his exact words.] I don’t see any issue with paying 7 cents to send $20. I have to deliver the application and neither one of us can say whether it will or won’t work.”
MC: How does Cash do it with no fees?
JD: “I do not know. They probably just absorb it. If they are anything like Venmo, the second you use a credit card, they probably charge you 3 to 4 percent. They probably have a deal on the back end to cut that in half. So they’re really only paying 2 percent.”
MC: So how is this revolutionary if the service costs more?
JD: “Phase 1 requires people to be banks. Phase 2 is international. Phase 3 is for the unbanked. We haven’t answered that yet.”
MC: What’s gonna make Hoard the winner?
JD: “Right now, it is trial and error. As with any startup, we have to be nimble. We have to make these decisions quickly and move swiftly. The first is looking ahead to the future and knowing we don’t know what it will look like. And users will decide the platform. From there, it will be a matter of adoption. You said a small fee would change the adoption curve. You just have to be a human being with some communication tool in your life. If you do have a cell phone and an email, I can send you money.”
MC: How big is your team?
MC: And that includes Chris Maddern?
MC: But he can’t be on your team because he’s over at Button.
MC: So you hired his company. How big is your core team? Like, where are you?
JD: I’m currently in Charlotte, North Carolina.” Our IP is currently held by a company in the Caymans. Our IT as a corporation is in Delaware. My CTO and main partner Dan Lipert is in Japan.”
MC: You came up with this idea?
JD: “Dan and I. Dan is an AI guy. He used to work for the Department of Defense. He was a whistleblower and they moved him out. [Editor’s note: We cannot verify this claim.] I was at a centralized bank—Wells Fargo. I wanted to make retail consumers work on a crypto environment. That was late spring of March 2017.”
MC: Who is full-time?
JD” “About nine of us, full-time. Mostly devs, product engineers, communications.”
MC: So who actually wants this?
JD: “I do. I have Venmo and Cash App. I also have crypto wallets. I can’t wait to have just one app. Our target is any of those people. We think Tether is an absolute scam. We’re not going to create a pegged currency. We’ll just leverage someone else’s. I think it sets us apart. Also managing assets. If I have EO,S I have to have an EOS wallet. And all these chains are going to continue to grow. And they are trying to build micro economy. But wallets that build DAPP browsers are not for the mass economy. But, c’mon man, Bitcoin is still an experiment. Same thing with Ethereum. So let’s remove all those experiments and put one wallet that holds you total balance. And we’re building a securities wallet. Everybody says keep your assets off exchanges. If they can be hacked they will be hacked. All these brokerage houses like Etrade will let you buy that stock and hold it in their wallet. And it’s insured. But we can’t insure crypto assets. While it’s in your custody. I know we’d all like that. I don’t know where that world ends up. But I do know that security tokens are the most illiquid asset that exists right now. You can invest in them, but you can’t do anything with them. That will most likely be another app from Hoard.”
MC: How will you attract users?
JD: “The $10 and $10. If you check the app out, you receive $10 and the other person receives $10, which makes it more real to the no-coiner or the person who is not that experienced. That’s a great perk and a great referral system.”
MC: Binance does a thing where you can pay your fees out of the referral bonus.
JD: “Crypto for your fees is borderline rent-seeking. They are there purely to charge a fee, like credit card transactions are today. If you understand the fee structure of a Visa transaction, you will see half of them don’t need to exist. If you want to have a coin just to pay a fee, awesome, you can buy the coin and it goes up. But can’t you pay the fee with the coin you’re already working in, whether in cash or otherwise?”
MC: Usually people are telling me all about their coin. But you’re only mentioning it now at the end of our chat.
JD: “It’s an ERC20. It’s a part of the second layer and the suite of nodes. Jack’s Wallet charges $125,000 to get your coin listed. With ours, you can just buy our coin. That’s developers speak again, which is not something everyone wants to get into.”
MC: That just goes back to what we said about banks.
JD: “When you have products that work, people will use them.”