David Orban, Managing Advisor Beyond Enterprizes

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PEMO Welcome David, I’m so glad to be able to speak to you again. I know we spoke in the early days when the crisis hit, and I’m wondering where things are now as far as your investments and your business go.

DAVID ORBAN So definitely this period has been challenging for a lot of parts of the economies that have a direct relationship with the physical movement of people and goods and how they meet. But it has been extremely interesting for the digital economy and for the people that are exploring and implementing new solutions that allow us to engage across any distance in so many different forms. So with the Beyond enterprises, where I am managing advisor, that is what we do. We help projects succeed at the frontiers of digital innovation.

PEMO I’ve spoken to a few investors just recently, now that I’ve started the podcasts again, and they all say it’s been fabulous for investments, because of what you just said about the explosion in the digital economy. But obviously, there are also huge ramifications as you mentioned earlier globally: suffering and loss of businesses and changing the world, really I don’t think it’ll ever go back to being the same. What are your perspectives on the shortfalls for all the businesses that have had to you know? I had to let go of my business in the form it was taking because I couldn’t do live events in March last year in Silicon Valley, so I just wondered what your perspective is? It is great that the digital economy is booming but there is also a lot of suffering. Some people like losing it mentally because of all the restrictions. Do you have any perspectives on that?

DAVID ORBAN So you touched on at least 2-3 important and different points. Let’s start with the last one; I think our global conversation around mental health must become more transparent, more relaxed, less prone to fall into easily prejudiced reflexes. and we understand that just as we have to care about our physical fitness, we have to care about our mental fitness, every one of us. Those who are in a situation where they are more vulnerable, need our support; first of all from their friends, their families, but also the kind of professional support that everyone understands when I say “hey I’m going to go I will go to the gym. So for the next couple of hours I’m not going to respond to calls or meetings because I will be taking care of my body” and the same must be understood in a very profound manner for our mental health as well.

All over the world, you know not only New York was going to the shrink is a universal practice right? From Woody Allen downwards. Now the second thing that you said is how the pandemic exposed the vulnerability in the lives of individuals who are exposed to an extreme degree to their environment, their economic environment and how many people didn’t have them, for example, necessary savings to be able to weather the storm over an extended period of a year or more. So definitely as many of us as possible have to realize that yep civilization is great, society is wonderful, but we have to balance our desire and ability to rely on others with a degree of self-sufficiency. even something as simple as having savings, which the vast majority of families in the US do not have. Too many families have just very very little on the side. They go from paycheck to paycheck, and when the paycheck is not coming they fall further and further and further into that.

The third thing that you mentioned is about the structure of the economy and what can be expected from a given type of society to offer relief or even specific support for the people who need it. and in the US it was very interesting for me to see that the checks, proudly signed by Trump, the Covid Relief checks, actually represented a kind of basic income for millions of people, at the time when they needed it. It potentially broke some kind of a dogmatic stance and it did show to the American society that is, by and large, pretty much leaning towards social Darwinism that it is the interest of society at large to support the individual when there is a need.

PEMO Really good point. And, of course, that basic living wage has been bandied around for a couple of years before this all happened, so that’s great the way you’ve brought that together. and on that second point, I’ve got a little code phrase for myself and everyone that I meet, that this crisis has stimulated a lot of resilience and resourcefulness in me, and I hope and pray that other people also have that experience because you are thrown back on resources within yourself, as you said more self-reliance. We are all part of a community but you also have to have some basic backbone and strength within. Thank you for that, that was fabulous. Of course, our great passion for the crypto domain has gone through quite a few ups and downs in this crisis. Could you give me your perspectives on that and where you think we’re heading?

DAVID ORBAN So I am not able to predict what will happen in the world of Bitcoin tomorrow or next week, whether it will go up or it will go down. There are a lot of people who are reading the tea leaves and applying certain kinds of analysis, and they share that passion with others. Sometimes their projections become, at least in the short term, self-fulfilling Prophecy, amplifying the volatility of Bitcoin and other cryptos because of that kind of behavior that aggregates a lot of people around. Of course, cooler heads taking a step back can put in place the opposite moves, often being able to gain the upper hand in these zero-sum transactions. What is my opinion not zero-sum is the long-term view of what Bitcoin and blockchain are becoming, because when institutional investors up to and including heads of central banks are taking notice, and either for the first time commenting upon the role of Bitcoin or reversing their previous critical position to be at least neutral or to be a position that is not neglecting or it is not a snide remark towards the technology, that means that over the past 13 years Bitcoin has achieved a position where it can only further progress. In my opinion, anyone who says, at this point, that Bitcoin and blockchain technologies are a fad is willfully ignorant, and it is bound to be constantly surprised by reality not matching their expectations.

So I’m very excited about how so many initiatives and projects, both in Bitcoin, as what is called the layer 1 protocol, and as well as on top of Bitcoin and others like Ethereum, are being built. and these are exciting solutions that are starting to be able to scale exactly in proportion with the interest that they are generating across the world.

PEMO And how do you feel about the fact that obviously, El Salvador has led the lead in that using Bitcoin as a currency? What’s your perspective on this because it sounds like other countries are thinking of doing it.

DAVID ORBAN So I don’t know if everybody realizes that El Salvador did not give up their national currency to adopt Bitcoin. The decision of giving up their national currency has been taken many many years ago in favor of the US dollar. The so-called Dollarization is something that El Salvador shares with other countries that decided for one reason or another that it was better not to reap the rewards of monetary sovereignty if it came at the cost of having to manage their weak currency in a smaller economy, potentially in a country where the separation of economic and political power is not sufficient, and corruption thrives. so that is the decision that El Salvador took, and now basically they said “wow, this new thing, this new technology seems to be very promising, very interesting” and they are certainly making a big leap, a leap of faith in many directions; one that buying and holding Bitcoin as a central reserve currency is going to pay off, and they are not alone in this: the United States, for example, had the opportunity of holding onto Bitcoin reserves many times, and each time they decided to instead sell the Bitcoin that they gained, for example, through criminal proceedings. Tim Draper, an investor, was the winner of the auctioning off of the Bitcoin previously held at Silk road, and that purchase blossomed into a multibillion-dollar worth of Bitcoin holding. The country of Bulgaria would be able to pay off its national debt if they were to liquidate its Bitcoin holdings.

So the one bet that El Salvador is making is that, from the point of view of their reserves and their ability to leverage or collateralize, or you know, doing whatever they want to do around their macroeconomic controls is going to be improved by their Bitcoin holdings. The other bet that they are making is that in a population, where digital natives are a minority, where even some basic skills like reading and writing are not universal, analphabets is present in percentages that are higher than in other countries, well they believe that they will be able to improve people’s abilities by incentivizing them to install and manage their digital wallets on their smartphones. This process is not something that happens in one day; the incentive is real because they are sending anyone who installs the local wallet the equivalent of $50 in Bitcoin. For the poorer residents of El Salvador receiving a gift of $50 from the government is a big deal

PEMO Yes, of course!

DAVID ORBAN There are a lot of parallel experiments that are being carried out. Not everyone is on board; there are accusations against the president of him being a budding dictator, that is ramming through these decisions without sufficient debate in the country, but, you know, from the outside it is fantastically interesting, and I am rooting for it to succeed. what I expect is that the volatility over the years during the coming decade of Bitcoin is going to progressively reduce, and it will become more and more stable, not in the sense that its value is going to stabilize against the US dollar, for example, but that the ups and downs of its exchange rate are going to be narrower and narrower on a trajectory. Of course, there are new technologies that have been developed and deployed throughout the past few years like Lightning, where Lightning, on top of Bitcoin, allows the Bitcoin blockchain to be capable of managing massively more transactions than the ones it could do before. So, that is why I’m saying the interest around Bitcoin and blockchain, in general, is growing in proportion with the technology solutions that are available to serve that interest.

PEMO So interesting, thanks for all of that information. The other perspective, I wondered if you could talk about, is China’s situation of banning Blockchain, Bitcoin in the country, and we also now know how its own monetary or financial system has been exposed with every grand. So could you talk a little bit about what you see is happening there, and how that’s going to affect the digital or the digital economy? 

DAVID ORBAN So, for a long time, we have looked at China condescendingly, pitting the Chinese behind the great firewall, deprived of the digital freedoms that everyone else enjoyed. We didn’t realize that actually, the protected environment enabled a local ecosystem to strengthen and to blossom, and to give birth to giants that now are rivaling any other company from the Us or Europe in the digital realm: Alibaba, Tencent, and others. The ecosystem of extremely rich integrated solutions that users of WeChat are enjoying are supporting the kinds of innovations that can be built on top, that are not only equal to what we see in the digital world outside of China, but many many times are going further.

We look at Amazon and their next-day delivery or in New York, for example, for many items they deliver in an hour or so your order, and that is a pretty common experience in China where the e-commerce platforms built thousands and tens of thousands of not only regional, not only city but sub-city located and distribution centers. They coordinate, for example, the promotions that people receive in what they could buy at the bargain price, by pre-populating these distribution centers with the products that will be promoted of course, so that then they can be delivered in literally a few minutes after the order. so this is an example of the traditional digital economy, the centralized digital economy.

Another area where China is ahead of most countries in the world is in the issuance, and management, and experiments around central bank digital currencies. In coordination with Alibaba, they created a wallet that can receive, and handle, transactions of a cash-like digital token. These designs are being studied everywhere, including the U.S. or the central bank of Europe, and so on. There are a diminishing number of central banks that are not looking at how to address these challenges they are seeing. The parameters with which these new cash-like digital tokens are going to be designed are crucial because the driving principle in China is different from the west. The common good, harmonious society trumps individual interests and the right to privacy. So the design of the digital currency is such that the anonymous nature of cash is not necessarily present.

So we must look at those experiments, we must learn from them, and we must be very alert and very aware of how equivalent designs are going to be in the west because we must preserve the anonymity of our financial transactions with these cash-like instruments. already they are limited: when you travel, for example, any time you could be stopped at border control, and if you have more than $10.000 or equivalent with you, you have to fill a form or it will be taken away from you. in many countries in Europe, for example, if you buy a good, you cannot transact the purchase of that good, if it is more than a few thousand Euro. so already we have severe limits on how we are allowed to use cash, we must fight to preserve what remains. It is a first amendment issue right? Financial transactions are speechlike, and we must preserve our ability to speak freely through our financial transactions. and the central bank digital currencies are running the risk of taking that freedom away.

PEMO I remember when, many years ago, a few companies were trying to share your transactions, and I’m an extrovert but I’m also very aware when my privacy or security is going to be affected, and I was horrified. I thought “why would I want to expose my financial transactions to anyone else?” or you know, to the general public. I thought that was the most incredible attack or leak of personal information. That’s how close your financial sort of life is to the very personal. I would prefer to have more personal things exposed than my financial transactions. I don’t do anything untoward, it’s just that I just feel they’re so personal. 

DAVID ORBAN That’s right, you are perfectly right. And I always confirm and repeat: privacy is important to the individual, but privacy is even more important to society. If it doesn’t respect privacy, it is unable to evolve and adapt to future needs, because anything that deviates from the norm at the given time can only happen if protected by anonymity. but after a while it can become the norm; the latest example in the US, for example, is legalizing marijuana. it used to be a criminal act in California or New York, people would go to jail, and today it is not. How did that happen? It could happen only through the fact that Marijuana was partially tolerated in a society that was not fanatically going against extinguishing any kind of conversation around, it and then it could become something that more and more people feel felt fine about, and the same with the same-sex marriage, and the name with many other behaviors.

So that is why China is balancing a very delicate situation, where they understand that their huge country has immense differences. We don’t even realize but the Han majority is just one of the ethnic populations in China. There are more than 100 ethnic minorities that are officially recognized and these are different people, different languages, and China needs to keep them all together. So how can they do that? Can they do that in a relaxed manner? Well, they are certainly self-confident but they don’t feel yet that they can relax about it. so they are trying to balance what can be allowed and what cannot be allowed, and I don’t think that we can dictate solutions to them, we have to observe them, we have to understand what they are doing but we cannot pretend that we know better.

PEMO I just wanted to add a point there. I’m a Tibetan Buddhist and have been for most of my life since I was young and I still don’t think that China had any sense of human rights with the Tibetans. Some of the videos I used to see 40 years ago of what they were doing were horrendous. and Now of course the Uyghurs have attained a lot of world view about what’s happening to them, as well as entertainment and stuff. There is a very dark area that the Chinese are trying to cover up, where human atrocities are happening.

DAVID ORBAN Back to Bitcoin or cryptocurrencies declaring them illegal is like declaring mathematics illegal. It is a declaration of such a lack of self-confidence, it is a declaration of weakness. and doing it over and over again, as they did over many years, is dangerous because there can be people, and there are people, in China who are pointing their finger and say that the emperor is naked, because when you are powerless, then a lot of things that you do will be decidedly seen as laughable by a growing number of people.

No, I don’t think that China is going to be able to stop the spreading of Bitcoin and blockchain within its territory. and we have seen that their decision hasn’t hurt the exchange rate of Bitcoin to the US dollar either, so the market overall just shrugged and said “Okay, well we move the miners, we move exchanges, Chinese are going to have a harder time to trade in crypto”. And the rest of the world just went happily along.

PEMO Yes, it was like a little bump really, as far as the financial markets went. It didn’t, like, crash or anything totally so it was interesting. Just love talking to you David, and I’m probably keeping you too long, but if you’ve got a few more minutes would you give me your synopsis on the global shipping crisis, and apparently what’s underneath that is the fact that the US has gone crazy with purchasing. it’s not just the fact that they can’t unload at some of the ports and stuff. What’s your opinion about why the crisis would have made people want to buy more staff? And the US is famous for that of course anyway.

DAVID ORBAN So supply chains are very delicate and the issues of restocking shelves are not something that is hitting the US alone, it is happening in the UK too, self-inflicted by their exiting the European Union and they’re sending away truck drivers back home, as they would be claiming now they are trying to lure them back unsuccessfully. I think this is the aftershock, and we will see additional aftershocks of the pandemic and we have to learn important lessons around them. There are so many ways that we can learn if we keep alert analytical open minds. ransomware attacks: what are they doing? They are strengthening our digital infrastructure, they are exploiting vulnerabilities and every time an organization is impacted, well their peers hopefully are immediately running to check if they are vulnerable. when regulators are crying wolf around wonderful innovations like DeFi, which are exposing to sophisticated financial knowledge, waves of people who previously were shielded from them, Regulators don’t realize that these people deserve to learn, and then through the power of that acquired knowledge, they can make reasonable decisions that previously they were not allowed to make because only a very small set of individuals could take advantage of the kinds of and instruments that now DeFi is is giving access to anyone.

There are so many things that, as long as people who are curious as you, and your listeners are alert, these phenomena are leading towards a more resilient, better educated, more empowered, and emancipated world. That is what is supporting Bitcoin; the understanding that technology is a key to the world of the future, and it is the belief that that world is possible, that is supporting Bitcoin against naysayers everywhere.

PEMO So inspiring and such a fantastic-wise perspective. I appreciate talking to you again David, and it’s made my day, and I’m sure it’s going to make my listener’s day. Thank you so much and hopefully, we’ll get you on again sometime soon.

DAVID ORBAN Anytime, thank you very much.

PEMO Yeah, stay safe and well thanks again.

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Pemo Theodore

Pemo Theodore is a Media Publisher & Event Producer and a great people connector.. She is Founder/CEO Silicon Valley TV which has served the San Francisco Bay Area for 11 years! She has produced Silicon Valley Events for Investors & Startups for 9 years. Pemo loves to video interview venture capitalists & founders to engage the human behind the success stories.. She has been Executive Producer of FinTech Silicon Valley for 5 years, organizing twice monthly FinTech talks & panels in San Francisco & Palo Alto. She believes in learning through a great discussion with experts in the domains. Pemo has a talent to bring the right people together and is an incredible networker. Pemo's events have been seen as supporting Venture Capitalists & Angels in sourcing great deal flow from startups who attend her events. Many founders have received funding through meeting investors at her events. Her favored medium is audio & visual media and she has built up a great body of work of podcasts & videos of panels & interviews in Silicon Valley.startup ecosystem.

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Written by Pemo Theodore