[AGM Podcast] Republic Founder & CEO Ken Nguyen on championing the retail revolution and democratizing access to private markets

Today, we have a guest who is powering the retail revolution by democratizing access to private investing.

Ken Nguyen is the Co-Founder and CEO of Republic, a multi-asset investment platform for private markets. Republic recently raised a $36 million Series A led by Galaxy Digital, with participation from Nomura, Motley Fool Ventures, Tribe Capital, Prosus Ventures (fka Naspers), and Broadhaven Ventures.

This was such a fascinating conversation. We talked about:

* Ken’s drive for starting an investment platform that could enable everyone to participate in wealth creation in private markets.

* How investing and owning equity is part of the American Dream.

* How Republic has unlocked access to private markets for all investors.

* “Lean back vs lean forward” framework applied to investing (h/t Rishi Garg of Mayfield Fund for the “lean back vs lean forward” framework).

* How community is such a big driver of Republic’s growth and success as a business.

Ken is a pioneer in the private markets investing world and a serial operator who knows how to build businesses.

He's helped grow Republic to hundreds of millions in gross transaction volume over the past 3 years after Republic spun out of AngelList.

After Ken was an instrumental part of building the investment and regulatory infrastructure at AngelList as their General Counsel, Ken founded Republic to create a leading equity crowdfunding platform for both non-accredited and accredited investors.

While their incredible progress on the retail crowdfunding side is remarkable (over 1M users and over $280M in GTV since inception), Republic's platform and vision is so much more than simply a retail crowdfunding platform - they also have an accredited investor platform and they enable investors to invest into everything from real estate to esports and gaming financing to small businesses.

Republic has done the hard things first - they have built the investment infrastructure for private investments.

And they combine that with a Robinhood-like investing experience for the private markets for both retail and HNW investors alike.

They've also been innovative in how they engage consumers by creating a Republic Note, a security token, that has created network effects on their platform for users.

It's been fun to watch this team execute at a blistering pace from the time they started out with the idea of enabling investors to invest in startups at $10 minimums to building out a comprehensive private markets investment platform. 

Ken has been instrumental in that success with his infectious energy, tireless work ethic, and drive to create democratized access to investing for people around the world.

You can find this podcast on Spotify here, Apple Podcasts here, and on Transistor here.

I hope you enjoy.

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This was such a rich and thoughtful conversation that I also wanted to do something different for this episode - share the podcast transcript for those who want to read the text.

Here’s the transcript of the podcast below (Note that this transcript was created by AI software. It is not an exact translation of every word in the podcast).

Transcript

Michael: [00:40:00] Today, we have a guest who's democratizing access to private investing. Ken Nguyen is the co-founder and CEO of Republic, a multi-asset investment platform for private markets. Ken is a pioneer in the private markets investing world and a serial operator who knows how to build businesses. He's helped grow Republic to hundreds of millions of dollars in gross transaction volume over the past three years after Republic spun out of AngelList.

After Ken was an instrumental part of building the investment and regulatory infrastructure at AngelList, as their General Counsel, Ken founded Republic to create a leading equity crowdfunding platform for both non-accredited and accredited investors. While their incredible progress on the retail crowdfunding side is remarkable, Republic's platform and vision are so much more than simply a retail crowdfunding platform. They also have an accredited investor platform and they enable investors to invest into everything from real estate to e-sports and gaming financing to small businesses.

Republic has done the hard things first. They built the investment infrastructure for private markets. And they combine that with a Robinhood-like investing experience for private markets, for both retail and high net worth investors alike. They've also been innovative in how they engage consumers by creating a Republic Note, a security token that has created network effects on their platform for users.

It's been really fun to watch this team execute at a blistering pace from the time that they started out with the idea of enabling investors to invest in startups at twenty dollar minimums, to building out a comprehensive private markets investment platform. Ken has been instrumental in that success with his infectious energy, tireless work ethic, and a drive to create democratized access to investing for people around the world.

Today's conversation was fascinating. Ken shared his drive for starting an investment platform that could enable anyone to participate in wealth creation. We talked about how investing is part of the American dream, how Republic has unlocked access to private markets for all investors and how community is such a big part of Republic’s success.

I hope you enjoy.

Michael: [00:02:30] Ken, welcome to the Alt Goes Mainstream podcast.

Ken: Michael, thank you so much for having me. It's such a pleasure to be here.

Michael: Oh, it's great to see you. I love that background of New York.

Ken: I am in New York. So, art mimics real life or the other way around.

THE FOUNDERS STORY

Michael: [00:02:46] Well, you've had a busy year, so congrats on everything. But before getting into Republic and all the things that you're doing, I'd love to hear your story. I mean, you've had such an incredible story of how you've gotten to Republic. So what is that story?

Ken: [00:03:01] Yeah. Thank you, Michael. I definitely have a bit of an unusual founder story.

My family immigrated from Vietnam to the Bay Area in California. And so growing up in the late nineties, early 2000’s, you hear these stories of companies going IPO and tech and Google and Facebook. But just because you were smack in the middle of Silicon Valley, it doesn't mean that I or my family had anything to do with it.

We definitely weren't accredited, but that fascination early on, I think, ended up, staying with me. I ended up going to law school. Started out as a litigation attorney in New York and went into finance. And along the way, I think the story, the headline news that caught my attention the most was always tech companies. You know, you hear more and more of Facebook and then Airbnb.

I had the opportunity to go back to the Bay Area and academia. I spent two years as a Teaching Fellow at Stanford and studying corporate governance. But Stanford happens to be also a tech hub. And so more and more, the different stages in my life just inserted me more and closer into the tech ecosystem and then I had an opportunity to join AngelList when they first launched their first syndication product. So I joined. I think the first non-engineer hired as the General Counsel back in 2013, 2014.

Part of that work led to a change in the law, which is regulation crowdfunding in 2016. And I'm sure we're going to go into it. But in short, between the Great Depression in the 1930s, all the way to 2016, you had to be a millionaire to invest privately. In 2016, all of that changed. It's like opening up the flood gates. And that's when the team and I set out to found and launch Republic.

DEMOCRATIZING ACCESS TO INVESTING

Michael: [00:05:04] That's fascinating. And it seems like you really have a variety of experiences. Everything from the kind of legal and regulatory side to working in startups, to working in private companies. Was there really a specific moment in your life that has driven you to make it your mission to democratize access to investing?

Ken: [00:05:25] I think there were three moments. Thinking back, probably the first moment was when my oldest brother who was 15 years older than I am and was already very established by the time I graduated college and he was an accredited investor – the first one in the family to be accredited.

And he was like, Hey Ken, do you know how I can invest in this company called Facebook. And I was probably one of the earlier users, one of the earliest users of Facebook. And I'm like, great question. I'm an Associate at a law firm and I have no idea how you can do that. I asked around - no one knew how. Right in the middle of New York City, every law firm partner is a multi-millionaire and they're like, yeah, this is Silicon Valley stuff.

So I think that piqued my curiosity, but also I had a desire to be like, Hey, I want to be in. I use this product. I really like it. And wanting me as a stakeholder to be a shareholder. So, I would say that that was the first moment.

The second one was when, after two years of spending my time at AngelList, I realized that the accredited only model could only go so far. AngelList did open up the venture ecosystem to a lot more people, but you still have to be in the know, have to be accredited. And, I think that moment when AngelList shifted their attention to focus more on upstream institutional family offices, that's when I was like, wait, there is this law that's going to be effective very soon. And this is exactly what I, as a teenager growing up in Silicon Valley, wish that it was the case that I could get in. So, I think those two moments, rather than three in combination, probably culminated in the idea and the passion for retail investing.

Michael: [00:07:31] Well, you're bringing up a really interesting point, right. And it's been during a time where value creation in private markets has far outpaced value creation in public markets. And yet, so many people really up until the past few years with what you're doing with Republic and others have done opening up access to private companies, is enabling people to access some of this value creation. How do you think about that and why is it important for people to be equity owners in things.

Ken:[00:08:00] Well, investing has traditionally been dominated by large financial institutions and ultra-wealthy investors at the earlier stages. Right? And so, when a company matures from inception to raising more and more capital to the point of going IPO, much of the wealth generation, much of the upside is captured during those private stages.

And that world - private investing - traditionally has been dominated, if not exclusively, the purview of the ultra-wealthy leaving the vast majority of everyone else on the outside, looking in, and really limiting the diversity of ideas and founders that I think can shape our future generations.

So, being able to invest or allowing and encouraging and enabling people to invest earlier, I think that aligns passion with profit. It aligns power with profit. And I think particularly the next generations – Millennials and Gen Z - that's what they’re looking for. By the time a company is listed on the NASDAQ, your ten dollars, your hundred dollars, your thousand dollars matter almost nothing to the company. But, when a company is still growing with 10,000 investors or customers, and not a million or a billion, that thousand dollars of investment, of purchases that you make, matters a great deal. So, I think enabling people to align their passion with the desire to generate profit is at the heart of the retail revolution that we see.

Michael: [00:09:49] Passion and profit, power and profit. I love that. I love that way of describing this and I think we are seeing this groundswell of interest into private assets or investments where people feel they have some level of kind of interest or passion for them to your point.

THE WHAT AND WHY OF REPUBLIC?

Michael: [00:10:00] What you're really getting at is equity, right? People are now able to have a share in something that they might not have had a share in before. And that's kind of the underpinnings of Republic and it's really open to everybody. So, what is Republic, and what's the vision for the business?

Ken: [00:10:24] It's funny that you mentioned, or that you pick up on, how we describe what we do in between power and profit and passion. Our tagline is profits to the people. And what we are is that we are hopefully the leading, or one day the leading, investment platform that empowers people to invest in the future that they believe in. Invest in startups, in real estate, in crypto, in music, in sports, and yes, one day, even public companies. If you are very passionate about Apple and Nike, we want you to be able to do that on Republic one day, as well. Right now, we are focusing on the more rarefied, the more difficult ones, which is early-stage private investing. But yes, our goal is enabling, powering people, and catalyzing profits to the people.

Michael: [00:11:26] And why offer this comprehensive platform across private markets, across various assets, rather than just a single asset and private markets.

Ken: [00:11:36] That’s a great question. When the decision of building a business ultimately, a founder or a team has to ask, what is the ultimate goal? Why are we doing what we are doing rather than just the profit or how we are generating revenue? So, if the goal is just to generate revenue and build the easiest business model, focus is easier than distraction from a diversified suite of products.

But Michael, our goal is, as I mentioned, to be the go-to investment platform where people can go and invest in whatever they're passionate about. So, how can you roll out any platform with that mission and interest? Enabling healthcare or sustainable companies, they are powerful missions to love, but many people are more passionate about blockchain technology.

I'm certain that many of the older generations, in particular, are more passionate about real estate. So, we want to make sure that people can come to Republic and find and match their passion with potentially profitable investment opportunities that speak to them.

Because of that, we have no choice. Our mission requires a multi-asset, diversified suite of products so that we can, hopefully, one day have billions and billions of people coming to cast their votes with their investment and their dollars.

Michael: [00:13:16] So, you talk about something which is really interesting and a strategic decision to some extent, which is, you want all sorts of people to be able to access different assets based on what they're interested in and passionate about wanting to invest in, and see returns potentially in.

When you think about that, how have you thought about constructing the platform in the context of, should this be completely self-directed where investors get to really choose what they want? Or should it be more structured? Because there's a real question, a philosophical question, in the Alt Space of whether or not investors should just access structured products. So, products that are manufactured by these platforms and diversified in and of themselves. And then investors just get exposure to a broad space or completely self-directed where somebody goes onto Republic and can invest in any startup they want to. So how do you think about that balance of self-directed, kind of choose your own adventure, versus a more structured or curated way of building investment products in the platform?

Ken:[00:14:19] Mike, when it comes to structuring investment products, rather than types of products or types of industries to offer, we also want to provide a range of options for people, because I think investing, the new world of investing, has three main elements. So, passion is one and experience has to be another one and the third one is convenience. Now everyone's time and attention spans are so limited. So those three things are taken into consideration.

We all know that hardly anyone is passionate about mutual funds. If you put ten dollars into a mutual fund, you're not thrilled about it. You know that it's going to generate consistent returns over time. So, for those whose interest is low on passion and want upside exposure to a certain asset class, we definitely, we currently, and will build products that enable them to do so in a simple, maybe in a diversified basis.

But for some people like myself, getting to know a company, getting to know a technology, getting to know a founder, is much of the value and the fun of private investing. And so, that ability to invest directly and have a conversation with that company, with that team, I think that probably still is going to be the dominant part of Republic as an investment platform for the foreseeable future. But we also will have structured products as you describe, as we continue to grow.

LEANING BACK, LEANING FORWARD, AND LEANING DOWN

Michael: [00:16:25] What you're getting at is something so fascinating, which I'm going to give credit to Rishi Garg, who's a partner at Mayfield, who was talking about this with me in the context of consumer social apps, like Clubhouse and things like that.

He made the contrast between lean back and lean forward apps. Where lean back is totally passive, totally unengaged, but you can do it and maybe benefit from it. But lean forward is like an app where you actually have to spend time engaging on maybe it's Twitter, maybe it's even in-person.

I think there's actually a really interesting analogy there in the context of what you just said in investing. So how do you think about that kind of lean back versus lean forward mentality when it comes to private market investing?

Ken: [00:17:07] I love it, Mike, with that analogy. I have not heard that before except for I think Sheryl Sandberg's book called Lean In but in an entirely different context. One is about being more proactive, more intentional. And I think obviously intention and proactivity - another way of describing it is passion, right?

So, when people want to do something that they really care about, it's leaning forward and caring about maybe, you know, social issues. It may have nothing to do with the core reason why you invest, which is always return on capital. But if you can add on other things that speak to you, that makes you more intentional and proactive, that's leaning forward. Leaning backward is for, you know, let's say you are a retired lawyer or that you're a Goldman MD. And you're like, hey, I just want to have exposure to this asset class known as crypto. I don't understand it yet. I think it's a little crazy. So, I want to have some exposure to it. So, can I just basically invest in some major pieces with a small amount and lean back?

I would add a new category which is lean down. There again, you don't have to do anything. And, you know, we are thinking, not thinking, we have already integrated, but we'll definitely even push that product even more - retirement funds, illiquid. Currently, everyone, most people, have tens of thousands of dollars, most professionals, in their IRA deployed in some random mutual fund. So that's our lean down approach, which is you can use money, not from your checking account, not from your savings account, that you can't touch for another 30 years. Leave 5% of that or 2% of that and through Autopilot, diversify into real estate, crypto, female founders, whatever it may be, but you can just lean back and let it generate a return. So, between lean forward, lean back and lean down, we hope to capture them all over time.

Michael: [00:19:28] No, that's a really interesting point on the IRA assets because the self-directed IRAs are really a great fit for longer-dated assets, private equity, startups, which may take seven to 10 years to mature or have a liquidity event, so that seems to match really well with the timeframe of an IRA.

I do want to touch on one thing that you said around the lean forward part of really getting involved and engaging with the companies, the investments that people make. You've done some really interesting consumer things with Republic, in terms of having people create profiles, sharing with companies where people can help.

Talk about how and why you've done that and how the creation of community is maybe different than how we've been experiencing investing in the past.

Ken: [00:20:19] I would observe two trends, two technological and social trends in the past four or five years that I think have influenced our product ideation and creation. One trend is digital community adoption. You even see Facebook now driving or focusing a lot more on Facebook groups. That's how people interact now. Clubhouse is a fantastic example of - we are just at the early days of - new iterations of communities. So that trend - humans by nature will work as community, social creatures, but technology has enabled the formation and the sharing of information in a way that wasn't possible just a half a decade ago.

The second trend is the intentionality of generation after generation that Millennial more so than the generation ahead, in Gen Z even more so, on wanting impact on and caring about the consequences of their actions to the larger society. My parent’s generation, as an example, when they were in their twenties or thirties, recycling wasn't a thing. Buying products that would help the world to be greener was not in anyone's psyche.

So over time, in the Seventies and Eighties, people started seeing the impact of what they buy - their purchasing power. And I think when it got to our generation, and now the newer generation, is the shifting of everything that you do, even the clothes that you buy, but more than that, investment, even in public companies, I think the need for, or how much people care about the consequences, the social consequences of their activities are definitely amplifying over time. And that's a great thing. It’s really amazing.

So the two of the trends in combination, I think led us to focus a lot on building products that have community potential and that can enable people to learn not from a single source of truth, not from a long newsletter or blog that we send out about the value of the Black Swan Theory or the Black-Scholes Model or Black Swan events, but about normal everyday folks sharing maybe even 20 video clips on Twitter and TicTok explaining why they're passionate or why they think an investment opportunity is good for them and learning from that.

So I think those two trends definitely dictate or play a heavy role in our product and ideation process.

FUNDING ON REPUBLIC

Michael: [00:23:21] And are companies that come to your platform to raise from the community of Republic investors - Are they finding this valuable or is that one reason why they're actually coming to the platform to raise capital?

Ken:[00:23:32] That's a very interesting question, Michael. It goes to the question, it relates to another question that I often get - Are people looking to community funding, retail funding as the last resort and you can't get VC capital. Then you come to us. And that question is related to yours in this way.

Any company that is consumer-focused wants to engage their customer even more. If you can get a customer who loved you so much to part ways with their $50 that he won't see anything back for a while, why would that be a bad signal ever for any institutional investor or sophisticated investor?

That's an excellent signal. So, the type of companies that I think in the early phase of the retail revolution definitely lean heavily on B to C. These are consumer-focused companies and because of that, the customers, their consumers, matter a great deal. So, Republic managed to attract not only companies that have large customer bases, but we get rave reviews for the product and how easy it is to use.

And, hopefully, we're going to grow it and maintain that reputation. But I think that's a key part. Republic has two sets of customers - founders, but also investors on our platform. Companies are not going to be happy unless their customers are having an amazing experience on our platform and because of that, we focus on building products that seem to be targeting or emphasizing engagement and education or an interaction, just to give everyone a very good inclusive experience.

But Michael, if I may make an observation about what you said earlier about how, if you are a shareholder of Apple or Starbucks, that statistics show that you are more likely to buy Apple over Samsung or Starbucks over Pete's coffee.

And I think it is so true, but it's even more true when you're an early investor. Let's say there's a small coffee shop owned by a couple down the block from everyone. And it’s down the block from where we live. And you're able to invest a hundred dollars into that couple’s coffee shop business.

And whenever you go back there, you have a little table for investors. I imagine whether you are a student or retiree, whether you're a lawyer or a carpenter, when you go and buy that cup of coffee or a glass of water and hang out with your friend, you’re naturally going to go to that coffee shop, right? The same with an early investor in a beer brand, in a vodka brand, in anything that, that we consume.

So that psychological alignment is a remarkably powerful value. That's why a lot of companies look at retail fundraising, not for money, not for a source of capital as the primary motive, but as a marketing and engagement force.

Michael: [00:27:04] You've now built the infrastructure to enable people to invest in startups, crypto tokens, real estate, even venture funds. So, talk us through both of those things. So, one, quality control and curation, which is key to any marketplace, and then two, the infrastructure that underpins that.

Ken: [00:27:23] We are an investment platform, first and foremost, and return on capital is ultimately our customer's number one objective. They can add passion and impact to their investment decisions, but if they don't make money in the long run, we are going to have zero customers. So, because of that, we focus heavily on curating what we believe to be credible, high-quality investment products, but venture by one area of return is just one type.

A coffee shop in the example that I just gave you earlier is unlikely to ever be acquired or raise venture financing and go public, but it very likely can generate robust revenue. And, if you enable customers to invest under the form of revenue sharing, out of one hundred dollars the coffee shop generates, it passes back ten dollars to early investors. It is very aligned and still can be a very attractive, compelling investment product for many. Real estate in the same way. You are never going to see a 10X return, rarely ever. And you very rarely see a one hundred percent loss.

In an early-stage tech company, doesn't matter if it's YC or backed by Sequoia, if you invest in one deal in the seed stage, the probability of losing all of your money - doesn't matter if it's on Republic or anywhere else - is exceedingly high. So, all of these things we have to deliver in terms of information, but we want to make sure that what we bring on and curate and present to our community are credible and are, in our best judgment, of high quality. In the long run, I very much believe that there's a thesis as to what we do here, which is the crowd of retail investors. You will have case studies I think in a few years out that show that companies, backed by the retail investor in the earliest of stages that were outside of the venture lens, just in tech, may be just as competitive in terms of viability and how robust of an investment opportunity they are. So, this is a notion of the wisdom of the crowd. And I just want to focus in on tech as a vertical first, because that's still the main dominant vertical on Republic.

There's a narrative here that you only want to onboard companies that are either already backed by VC or that are venture backable, because those are deemed to be of high quality. There's definitely truth to that. A company backed by you, Michael, or by Alfred Lin at Sequoia is more likely going to succeed. But what about the founders and companies that don't have access to you, don't have access to Alfred Lin. And statistics very much show that mostly female, older, or founders who aren't in Silicon Valley or the two coasts, have very little access to venture capital. So, we do present investment opportunities that we find to be credible and hope that if they speak to a larger retail public, that they may get the capital they need to grow and grow to be of a stage where they can be appealing to you and to Alfred.

So we view venture retail investing as additive, contributive in the long run to the ecosystem rather than being competitive, so to speak. It's a long-winded way of answering your question, Michael, but we value very much on traditional indications of quality, as well as testing out models that can speak to people's passion, even if they fall outside of the traditional VC lens of credibility.

Michael: [00:31:42] Well, you're hitting on something that I think is so important, which is that early-stage investing, in many respects, is about finding outliers. But in some cases, finding outliers means going outside of the mainstream or what's more traditional or even going outside of different networks.

We've talked about community in one sense, which is having people and investors, consumers support companies. But you've also built community around creating a diverse set of people who can help you find the right companies, funds, and assets to put on your platform that may be overlooked by others. So, I'd love to talk about community in that respect because that's something that's so core to what you're doing and so different from what many others have done.

Ken: [00:32:29] The notion of inclusion and access I think has to be looked at under both lenses, which is the founder’s access to capital, customers, and businesses. You know, it's a crazy statistic, but even when it comes to business loans by the government, apparently female founders representing fifty percent, give or take, of all small businesses comprise less than fifteen percent of small business loans, which are supposed to be pretty much, if you have revenue, you get the loan. So, this lack of information and access permeates all throughout the different forms of capital sources and businesses. But then you also have the customer, the investor base on the lack of opportunities. You know, it's funny, but we noticed, and we hope, that as Republic continues to grow, that we make it easy and comfortable for that high school student, perhaps in Detroit, whose parents are not sophisticated investors, but in a classroom, instead of Fidelity or Apple donating computers, maybe they donate a thousand dollars in grants to the entire high school class.

And each student gets a chance to invest ten dollars for fun on a platform like Republic as financial education. I imagine if you do that, even with any sense of life skill, you're going to have a whole new generation that are much more financially sophisticated. Certainly would be more than me. My niece and nephew now are more financially sophisticated than me when I was in college or law school even.

And I think that financial equity is very much a solution to social inequities, the many inequities that we see. So, our focus on access and inclusion applies on both sides of our customer base.

Michael: [00:34:30] I love that - financial equity is a solution to social inequity. I mean, that really gets to what you're saying here, which is that talent may be evenly distributed, but the opportunity is not so you have to help find that - help people find those opportunities. So, what have you done in terms of building out this community of venture partners and this network of people who've helped you find investments in different places where others may not have been able to look?

Ken: [00:35:00] Michael, I can't really take credit on my own because I've been - one of the most fortunate thing about my journey building Republic has been able to convince such a committed, talented, and most importantly, diverse team of colleagues to join. So, my colleague, Cheryl Campos, who heads Venture Growth and Venture Partnerships for Republic, through her work she has launched a Venture Program and now does a Venture Fellow Program for those still in MBA programs.

And soon she will do a Venture Associates Program that's meant to go even deeper to undergrad. But the notion here is that in order to attract diverse founders, and to improve access inclusion in the space, you also have to incubate and support diverse venture capitalists as well. And I think that, as when I first started out at a law firm, I may have been the only Asian American law associate in a class of approximately 60. Now, across the board, some 15 years later, it's much more diverse.

And I think that with the proliferation of venture capital as a business model, you now have diverse talent in venture as a percentage, much higher than what you saw 10 years ago. So, the Venture Partner Program is to build a community to support, and to also get them to help evangelize for what we are building because the notion of access and inclusion certainly applies to venture as well.

I would not be able to do that myself because I'm just one voice, one lens and one experience. And I think that to build a community, you need people with the same mission, but all different backgrounds so that we all can communicate and understand and a different lens and get more to join the mission and the journey.

THE REGULATORY ENVIRONMENT

Michael: [00:37:12] Interesting. Interesting. And then to some extent, the regulatory environment, which you've actually been leading the charge on - you've been in DC, helping legislators, regulators figure this out. What's been going on from a regulatory perspective that's enabled you to unlock access to private markets to retail non-accredited investors?

Ken: [00:37:36] Well, since the great depression in the 1930s, in the infinite wisdom of Congress, someone decided, hey, if you're not a millionaire, you should not invest privately because it's too high risk.

I mean, it makes no sense. It stopped making sense a long while ago. In 2010, for example, private investing was legal for most people. Gambling wasn't but buying lottery tickets was highly promoted. So, it obviously is not making sense. But I think that people are truly waking up to the power of that false narrative - this is the example of the Reddit and Game Stop saga that we saw very recently. It used to be that people thought that the public markets were much more low risk or safer for the individual retail investor and it's decidedly not so. Market timing, insider trading, and predatory behavior can result in very, very risky and just pitfalls that you don't see in the private markets. So, I think both in Congress as well as at the SEC regulatory level, people understand that, people see that, and they are taking a close look.

And there's no question in my mind, that you're going to see more and more easing of the rules and regulations around allowing retail investors to invest in more asset classes. At the end of the day, you have to make sure, and that’s the goal and the rule, and the reason why the SEC exists is to protect investors, first and foremost, but what it means to do so, and how to do so, changes with time. Technology and society change faster than the law, just by the construct of it.

But there's no question that laws and regulations will follow. They have been following and I have no doubt that they will continue to follow. So, you are going to see this retail revolution, is really driven in part by a more relaxed regulatory framework around investing.

THE REPUBLIC NOTE TOKEN

Michael: [00:39:51] Well, so retail revolution - I want to extend that point that you're talking about. So, one part of that is fractionalization of assets, which you are in part, along with some others in the Alts Space, kind of a pioneer on, and it's really unlocking opportunities in all sorts of alternative assets. You've done this in a few different ways, but one way you've kind of extended this even further is with the Republic Note. So tell us about this Note, because it's really an innovation in private capital markets.

Ken: [00:40:23] Michael, if I may first share a view about blockchain or distributed ledger technology and how it relates to FinTech and to Republic and how it is so core, instrumental to our mission of global adoption of private investing.

My ultimate goal, and I think right now we have a community of over a million members, it's not a success until we have a community of like a billion members, but I think it would make me happy, and I definitely would smile when my distant cousin in a small village in Vietnam can invest five dollars into a startup or some investment products on Republic. Currently, that is not possible. To make that investment cross-border, the fee is like 30 bucks and they don't have bank accounts. And most banks in Vietnam don't synch so easily with JP Morgan and Bank of America. Now Vietnam happens to be a very crypto-friendly country. Surprisingly, enough people, even in small villages do own a fraction of Bitcoin or Ether. So, the ability to enable global participation at a tiny scale, five dollars may not be a lot for a college student in the US at Columbia or at the University of Michigan, but it's a lot of money for a single mom, middle-class woman living in Hanoi, Vietnam even today. Right?

So, how do we enable more investment, more activities, more transactions at scale globally? You cannot do that without blockchain, without this technology. And it has already enabled, to accept investment globally at a far smaller minimum amount than we did before.

So the ability to factionalize and automate, factionalize any assets to tiny, tiny pieces, therefore lowering the minimum amount and the ability to automate and streamline the process of confirmation payment settlements are key parts of FinTech and retail adoption. The Republic Note Token, we do have our own token as you mentioned, this currently is the only, as far as I know, revenue sharing digital token in the US and it happens to be available to our entire community.

So, the theory behind that, Michael, is that we want it so that even people with just a dollar can somehow share in Republic's success, as we are still a very private company. We have a million members plus. If they want, or they used to be able to, buy or earn some tokens, some Republic Note Tokens. And, as we continue to grow, they're going to earn a little bit of payout potential and dividends.

So the goal, the ultimate goal, is this: In the year 2030 or 2028, a company that had raised on Republic in 2017 and now is as large as Uber or Coinbase is going public. And this is the headline news across the New York Times and the Wall Street Journal about company ABC’s IPO. You know what Uber did then? About a thousand early investors had a big smile on their faces and about 200,000 Uber users and drivers had a big frown because they got nothing – it was not relevant. We hope that when company ABC that raised on Republic a few years ago, and in eight years goes IPO, that you can have, not only the early investors in that company to but 5,000 investors in that company, being very happy, but every Noteholder, hopefully, at that point a hundred million. They may get five dollars back. It's not going to make anyone rich. They may get three dollars per Note, but for once they feel like a part of the story on that front page, in that newspaper. And I think that's what people ultimately want and care about. Money and making profit and investing is not just making money for money’s sake. It's about buying happiness and security. And you know what, being a part of something, feeling like you matter in a larger society. Two dollars payback, but yes, you are a part of this narrative. I think that part of our mission of what we are building is that we hope to contribute a little bit to a societal sense of fairness and hopefully, more societal stability, especially compared to the year that we just went through in 2020 and earlier this year.

Michael: [00:45:29] And it also sounds like they get access to everything that's on the Republic platform. So, they're getting this diversified access to private markets, which as you continue to build that flywheel of private companies of crypto assets, of real estate projects, of video game financing projects, they're going to get access to everything.

Ken: [00:45:46] Yes. I'll give another shot at defining the Republic Note Token a little bit more succinctly. So, the Note is a revenue-sharing digital token. We can share a portion of that upside back to the token holders. So, in many ways, it's like a perpetual bet into this growing basket of companies. And even if a thousand companies fail, if one company succeeds, a little bit will go back to each and every single token. And that's what I meant earlier by saying that we hope that by doing that, and if we truly made sure and become the go-to platform for every and any company that looked to raise and grow, that the Noteholders have broad exposure and would be linked to the success of literally tens of thousands of companies and more down the road.

Michael: [00:46:58] That's really cool. Because it just gives people access to all sorts of assets in the private markets that some of which may be very successful, others which may not work out as well. But by having diversified access, then they can benefit from everything on the platform, which I think is such an interesting innovation.

 Ken: [00:47:18] Michael, it just occurred to me that the Note Token may be the ultimate example of the lie down and lie back example.

Michael: [00:47:25] Yes it is.

Ken: [00:47:27] You can earn the Notes if you don't want to buy the Note and then have broad exposure to the entire ecosystem and be part of this story without having to do anything.

Michael: [00:47:38]Yes, that’s fascinating. So that maybe that is the right definition of the lie down part of the lean back-lie down lean-forward, and you can participate in any of those ways. If you want, to your point, to get engaged in and help some of these companies on the Republic platform, you may be able to earn tokens for that.

Ken: [00:47:56] I am going to have to give credit to you when we file that lie down-lean back investing trademark application as a description of Republic.

Michael: [00:48:06] Oh no. Give credit to Rishi. He was the one who shared that with me. But yes, I'm sure he'll appreciate that as somebody who's worked at Twitter and Square, so he's seen it, he's seen things from kind of the financial services perspective and the consumer social perspective. But, no, that's fascinating.

THE ROUND ANNOUNCEMENT

Michael: [00:48:22] I think we have to touch on some of the big news that just broke. So, you raised a substantial round to grow your business. People are very excited about what's going on with Republic. Why did you decide to raise capital and what are you going to do with this additional capital?

Ken:[00:48:40] Okay. Thank you so much, Michael. It's been four-plus years. And part of the reason why we raised this financing round was to show to the world, and ourselves, that what we are building now is of institutional-grade - is no longer like a fringe, quirky business model. So, we're first of all, so honored and Broadhaven, of course, has been an early supporter and we're delighted to be a portfolio company of Broadhaven, but Galaxy Digital, Nomura, and Naspers are in the round together with Motley Fool Ventures.

So these are traditional brands. Nomura, it doesn't get more traditional and institutional than that. Naspers is one of the largest, I think they go by Prosus now, is one of the largest venture firms in the world, and they've never backed a crypto project before. The Republic Note Token is Naspers’ very first crypto investment.

So, all of these institutional investors’ involvement, I think not only validates what we do at Republic, but also the industry. That is the retail industry, the blockchain industry as an ecosystem, and this notion of the future of why adoption of retail investing is a model.

Michael: [00:50:08] That’s fascinating to see the traditional financial services worlds blending with the next gen version of financial services, which is the democratization of access. But that's both in terms of traditional company equity and also the crypto world and the DeFi world, which it seems like you're really with your investor base, but also with what you're building kind of the blending of all of those things as you institutionalize and bring more institutions onto the platform like a Nomura which is fascinating.

Finale: Favorite Investment

MICHAEL: [00:50:39] So to wrap up, I always ask everyone what is their favorite or best investment idea?

Ken: [00:50:47] I'm going to share my investment idea that I came up with when I was in college, no first year of law school. I don't think I was of an age to invest in college. Once a week, my recommendation now to my sibling’s kids, my nieces and nephews, is that vice that you spend money on once a week, or at least once a month, just cut back on that vice, that one vice. Use that dollar to invest. Buy stock, public stock back then, and now invest in whatever it is that you care about. But be consistent. So, don't one day put it in shoes on StockX and on another day put it in wine. Just pick one thing and be consistent with it. Literally, one cocktail in Manhattan is like eighteen dollars, in a college town maybe like six dollars. These things add up. And if you do that, it's going to be a really fun learning experience. In my case, I can't tell you what I've been reliably putting my money in, but it has done very well for me over the years, but I'm old.

MICHAEL: [00:51:59] Well, no, I mean, I think what you're getting at is something really fascinating, which is, and it's ironic that you're drinking a Starbucks right now while we're having this interview. But basically if people, and I saw a statistic on this the other day, that if people had the three or four dollars they're spending a day on coffee, if they had put some of that money into crypto or Bitcoin, or it could be in startups or the Republic Note Token, that capital has the chance to appreciate in a way that those three, four dollars spent on a Starbucks coffee every day may not. So, I think that that's fantastic, fantastic advice. Even as you drink your Starbucks.

Ken: [00:52:37] Michael, you asked me a question that you ask everyone. What is their investment idea? May I ask you a question that I've been meaning to ask people that I know, but I have yet to, which is, I think the future is no longer about investing in a given range of options, but the question is what would you want to invest in that you currently are not able to. Because that desire for people to want to invest in new things, I think necessarily will make that happen.

So, I would love to hear what is one thing that you have not been able to invest in. For any reason that you really want.

MICHAEL: [00:53:22] That's a great question. You know, I think it's actually starting to become true already with some of the infrastructure that's being built. We're just starting to see the early days of this. But I think so many people in the world love sports, me included. I played soccer. I collected football cards, basketball cards, growing up as a kid. And I think the ability to marry - exactly what you said - passion with the ability to invest, is so powerful. Right? And there's so much to learn. For people who've never learned or understood investing in a more traditional sense, because maybe they find it really boring or hard to and inaccessible to learn about stocks. They may be able to do that with something like sports cards if they love LeBron James and they could learn all about LeBron James. So, I think we're starting to see this. Some of the infrastructure is being built in the sports card space, where people are now able to invest in sports cards in either fractional ways or in more, or in larger ways and invest into cards.

But I think, I would love to see that happen because, for me, I love sports, but the ability to marry that and combine that with investing, I think is just the kind of perfect collision of those two things. So, it's not something that's not totally possible. It is starting to become possible, but I'm super excited to see that become more of a reality and financialize itself as an asset.

Ken:[00:54:52] Michael, I promise you, I will do my very best to bring sports investing to Republic within this year.

MICHAEL: [00:54:59] Well, the other one is, is not just cards, but sports teams, as well. I think talk about the kind of combination of community and fandom with the ability to invest in something. And I mean, sports teams are, whether it's English, you know, English football teams, and it doesn't have to be the Premiership teams, it could be the local town teams where people grow up as fans and they love those teams with a passion. They pass that down to their kids and their kids' kids. Imagine if they had the ability to invest in that as well, not just be a spectator on the sidelines, but have the chance to be in the game with the team and the owners and the players.

I think that would actually be a really, really cool thesis. Cards are a financial asset or representation of players, but sports teams themselves are proving to be potential good investments as well. I mean, you look at the value of MLS teams have gone up massively. I think we'll see the same in women's soccer with the NWSL.

So that's actually one where if the Republic platform could give the crowd and fans the ability to invest into sports teams, I think that would be super cool as well.

Ken: [00:56:10] Maybe we give every investor an NFT that is issued by the sports team. If they hold onto the investment they have that NFT. If they sell the investment the NFT goes with it. 

Michael: [00:56:25] All the leagues are going to have to contact you because I think there's absolutely something here that they should be thinking about.

Ken: [00:56:32] Send it my way. But yeah, anything that anyone is a distinct holder in - fan of a sports team or a fan of a movie, I think they definitely should, and hopefully one day you can become a shareholder or stakeholder.

Michael: [00:56:52] That's a great way to end this podcast because I think you've touched on community, you've touched on passion, you've touched on profit, and it's just also so exciting to see, having known you for the past four years and seeing you when you were just starting out Republic, just to see you build this business into something that really is based on the passion that is associated with investing, the community that's associated with investing.

I mean, you're truly democratizing access to financial services, which is such an important piece of what the next wave of financial services looks like.

Ken: [00:57:24] Thank you so much, Michael. And thank you for all your encouragement and support along the way, even during days and months that was so new and early and no one believed in us just yet and you did.

Michael: [00:57:37] Hey, the one thing I've learned is never doubt Ken Nguyen. So …

Ken: Thank you, sir.

Michael: Awesome. Well, thanks for having you on the Alt Goes Mainstream podcast.

Ken: Thanks for having me.

Michael: [01:08:34] Thanks for listening to this episode of Alt Goes Mainstream. I hope you enjoyed it. You can find more episodes of the podcast at any of your favorite podcast sites. And you can read more about Alts on my Substack AltGoesMainstream.substack.com and follow me on Twitter at @MichaelSidgmore and @GoesAlt

[01:08:52] Thanks a lot. Have a great day.

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