CMT Digital's Sam Hallene on Figure, NEWITY, and What He Looks for in Founders

Thanks for joining. Thanks for having me. We can you you look and sound great. Appreciate your time. Yeah, man. This will be fun. So CMT Digital, investing in blockchain since 2017. Sounds like you've been at the firm for quite some time, more than a 150 investments across the stack, protocols, tokens, companies. There's a lot going on here. What's up? Maybe as we kick off, would love your would love your intro if you're just, like, meeting someone for the first time of your role at the firm.

And I'd also love to go into, like, what's top of mind right now. We've been having a lot of interesting conversations. In some ways, it feels like we're kind of doing investor research with some of the founders we're talking to. So I'd love to hear what's top of mind for you. Investor research. Yeah. I'm interested to hear more about that, but it's great to be on. Thanks for having me. So my name's Sam Helene. I'm a partner at CMT Digital. I've been here for the last nine years.

I was the first analyst on our venture capital funds and have seen every investment that we've made, the good, the bad, and the the ugly, the the power law and effect as well. And it's just a really amazing business to be in. Amazing asset class to be in. Before CMT, I was at a bank, but but I've spent the majority of my professional career at at CMT Digital and learned about Bitcoin originally in in college in 2015, late twenty fifteen, and was enamored with the the technology ever since.

I would love to hear what you mean by power like, what what specifically on the power law? What you think is happening right now in that in that context? What do you mean by that? Oh my gosh. I mean, I think we see it with with even with the spaces SpaceX IPO that's happening this week. You know, these business like, some of these these these businesses that that plant their their their seed in in new asset classes oftentimes grow up to be, you know, monopoly type outcomes.

And and, you know, you never know in in your venture portfolio which company is gonna, you know, hit that stride when you're initially making the investment, but it's amazing to see, you know, some of these companies in the in the crypto space just absolutely blow up to be, you know, titans of the industry.

And that's been an incredible, know, pleasure to watch watching founders go from, like, seed, you know, basically kids with with an idea to, you know, publicly listed companies or just, you know, really full businesses that are changing people's lives. So that's what I meant by by that. Right? And,

of course, you don't get that. That's the that's the rarity, but that's kind of the joy and pleasure of of the venture business model. Yeah. When when Are there any about that. Go ahead, Zach. Sorry. No. I was gonna say, are there any specific companies in the portfolio that, like, immediately fit that med mental model? I think for me, the biggest one I see is is figure. Right?

We were talking about this earlier in the show, and it's one that I frequently bring up because, again, I think of tight end of industry in the RWA space when it comes to the provenance blockchain. And in some ways, though, it gets overlooked a ton. But, yeah, I'm just curious. Are there any would that be one of the prime examples to look look at in the portfolio for one of those, or are there any other companies that stick out? Yeah.

So so we we I don't I don't think we were the first check-in to into Figure, but we were we were pretty early with with them. And,

you know, we just we just met Mike and and realized pretty quickly that his his vision was was absolutely absolutely massive, really to to disrupt capital markets in in their entirety with with blockchain technology. And he has the he's he's got an incredible just mental horsepower. So he's he's an he's a brilliant idea guy. He also has incredible connections on Wall Street, which is something that we didn't fully comprehend, you know, how important that that would be for enacting change.

There's just a lot of bureaucracy and, you know, call it horse trading that you need to do to to to actually get, you know, Wall Street to move. And and I think, like, now it's it's the every firm Wall Street wants to be part of the the give Mike a lot of rep for this technology when people didn't wanna touch it. And so, you know, his his business is and stop me if I if I said this before, but his business is really like a capital markets disruptor to all ask. Yeah. Yeah.

So so so they they won't be like they they want to they want the open network to be like what the DTCC is is currently, but as a more open and user friendly transfer transfer agent and and and share registry. And and so, you know, the the main case that that I would point to is, like, there his views on securities lending, that that yield should be owned by the user and not necessarily by the the the brokerage firm that intermediate intermediates the lending.

You know, just like DeFi lending is is owned predominantly by by the user. You know, we kind of apply that same primitive to to to equities. And he I he so he's he's going about this in a in a really interesting way where he's, like, dogfooding all of the assets that he brings on to this open universe, be it these highly lucrative figure helocs that he has an expertise in originating or other assets that will, you know, presumably come down the the pipe soon.

So he's he's been an incredible model to watch and kind of develop pattern recognition around. You know, we've been investors with him for the last almost seven years, and it's just a it's just a pleasure to to get to watch him operate.

So cool. What do you think people misunderstand or glance over when it comes to Figure? Or I think you guys also wrote a check into Nuity. I think kind of similar mental model where, hey. Taking this archaic, you know, this archaic product, bringing it on chain, decreasing the underwriting time, making it more efficient to even underwrite these loans, lower the cost to the to the to the actual borrower.

Like I said, I was telling Drew earlier, I have a Figure HELOC on my house, and so I've kind of walked through this. I I sold them in another lifetime. But if you are first going to talk to somebody about Figure or even about, like, Nuity, what do they need to understand to really to really see how impactful these products are? Yeah. We'll tackle Figure first. I mean, I think, like, the the misconception about Figure

is, like, yes, they'll give you a really aggressively, you know, priced HELOC. They'll originate it for you quickly. Like, the user experience is gonna be, you know, unlike any of the other platforms that that you've ever used. But I think, like, the the reality is that they're they're not that that's not their end goal. Their their end goal is not to be a more you know, a a a HELOC originator.

It's to, you know, disrupt the capital markets and and and be a key kinda linchpin in this this this evolution of capital markets that that we're going into. And then and then annuity is is a really incredible Chicago based company that we invested into quite recently here. We absolutely love the the founding team of of Nuity. They're they're fantastic.

What they are the the opportunity that they're they're going after is is this long standing public private partnership between the small business administration and and and small businesses. So this the the SBA has a seven a program that allows you to originate small business loans and and actually get get, you know, pretty nice cost advantages on those types of loans because the government backs a portion of the of of the loan, which allows, you know, the lender to lend a bit more aggressively.

And so these are really attractive assets with the government guarantee, and annuities plan with several partners is to is to distribute these on chain. So get a really high quality financial assets on on chain. They're in the process of of standing this up right now. They have grown tremendously. This market is quite fragmented. Their technology is is absolutely exceptional.

Again, you know, bringing a twenty first century approach to originating small business loans and underwriting small business loans with with with AI and and API driven access to to, you know, some of these, like, kinda stodgy data sources. And so they but but the ultimate goal is to make this a a kind of a free market where, you know, the market is gonna tell you how they they price, you know, this this this yield, and they've done this, and they've they've gotten some incredible partners on the on the way.

They're they're live. They're, I think, the largest SBA originator by by volume. So really fulfilling the the purpose of of what the SBA is intended to do, which is small loans to lots of small businesses. And, yeah, hopefully, we'll be able to invest in these assets, you know, on chain very shortly. Course, not investment advice. Yeah. So interesting.

Do would you say that, you know, there's seems to be a theme here in some ways between the two of these use cases around helping these industries that are I like the term you I've never heard this term used, but I kind of got what it meant, like, trading horses. Like, there are barriers that exist, whether that is access or technological or just the way that things have been done take a lot of time. It's clunky. Like, there's a lot of pain involved with traditional finance and some of the things that happen here.

Is that a maybe a shared philosophy around what what CMT Digital at the firm is maybe targeting when it's going after some of these partnered portfolio companies, like companies who are disrupting that and making that sort of layer more streamlined? Like, is that something with with annuity and figure that we're seeing that applies to others in the portfolio? Yeah. Absolutely.

I mean, I think we we step back and and and we you know, as as capital markets participants are are ourselves, what I didn't mention earlier is that CMT Digital is a subsidiary of a thirty year trading and investment firm by background that has traded across many tens of of of countries in different regulatory jurisdictions globally, you know, experienced the the benefits, but also acutely experienced the inefficiencies of, you know, some of these these markets.

You know, our our view is that, you know, just from kind of, like, first principles, if you had one ledger that that unified all of, like, finance, where all, like, financial assets were were held, that would remediate all of the reconciliation exercise that has to happen on a daily, you know, basis. You remediate all trade breaks, things like that, and and also allow you to kind of unify capital markets globally in in a way that's that's never been been done before.

And so, you know, we kind of ask ourselves why that that that hasn't happened. There are very, like, logical reasons that it hasn't happened, you know, globally. Just humanity is is fragmented. You know, we we live in different states, and and and there are, you know, over a 190 countries in in in the world as well.

But but there is this through line where there are really practical implementations of of of this technology, both in payments and in and in and in capital markets that we think are going to create tremendous and already and will will continue to do so. And and ultimately, you know, the the table will flip where, you know, it's it's less common to use whatever physical cash than it is to use a stable coin or a tokenized deposit.

It's less common, you know, to have your equity, you know, held in, you know, in in some, you know, off chain environment than it is to be held on chain.

And I think there are gonna be, like, of course, tremendous cost efficiencies and every financial institution is going to be not only kind of, like, pushed, but actually forced into adopting this technology to realize the cost benefits and, you know, innovators that are using blockchain technology, but there's also gonna be tremendous benefits that are unlocked, you know, ultimately, that I think in in your to the to the user. So that's kind of the broad thesis that we're investing into.

Sorry if this is a bit delayed on on my end, Sam. Last maybe last question for you here is I know I know we're closing probably a bit early. The I was going through the portfolio, and I'm just seeing kind of like what you said at the very beginning. Like, you guys have been around, and you have seen you have seen so much. Like, the categories that CMT Digital has invested in, there's so many amazing stories here. It's it's almost intimidating to attempt to, like, capture all of them.

Like, you have, you know, so many companies that those have gotten acquired. You have so many incredible success stories. I'm seeing, Zero Hash here, TRM, Superstate. You mentioned Strike. Those that, you know, not for me personally, like, the one that stuck out was fun like, 90 cc, stories like that of founders who had had a ton of ambition and, like, focus, and the time and place was then. And there's so many so many interesting angles here. How do you how in your mind do you tie these together?

What are you looking for? Is it that insatiable quality that you mentioned might have? Or or how at the firm are you guys really thinking about the formula or the thread that goes through all of these companies? Yeah. I mean, I think it's, like, not one size fits all. There are some hard and fast rules that I'll that I'll get into. And we have some very hot like, very, like, top level theses that inform our, you know, decision making on on on where we go and what we'll focus on.

But sometimes we'll have an exceptional founder just approach us and say, hey, well, you really should be considering this, and this is why, and, you know, I'm the right person to do this. And we're like, okay, like, you know, where do we sign? No. But but I mean, I think it all comes back to the founder ultimately. So the the the founder drives the the outcome of of of a company.

It's people that have agency, people that, you know, have this talent magnetism, you know, how they described Steve Jobs, kind of reality distortion field in in in in his talent magnetism. But but it's really tenacity. It's it's really, you know, like, you're gonna get punched in the gut as a founder, like, many times. And how well do you respond to that?

How malleable are you to, like, you know, in in in kind of shaping the short term product vision, and then how loyal are you to kind of, like, the long term goal, and how do you reconcile those two things? I mean, everything, like, ultimately, you know, the longer that I that I invest on on behalf of CMT Digital, the more I just realized that it all comes back to to the founders. And some founders are just, you know, innately equipped to build the company that they're building.

Actually, the best founders, you know, it's like you almost feel like they couldn't have done anything else. Like, this like, this company that they're building is an the truest expression of, like, who they are. And and so that's what we look for. And it's not a you know, it's not it's not every day. You know, they're really, like, one in a 101 in a thousand kind of kind of people that

that we get the pleasure of of working with and knowing, and it's truly, like, the coolest job on Earth. I'm definitely bookmarking and saving that tagline. The company that they're building is the truest expression of who they are. I And hope people can look at StableDash and see that with me and Drew sometimes. I guess one final call to action for anybody that's watching this. If they are building in this space or have this conviction, they should reach out to you.

What what would those lanes be right now that are like, I wanna talk to this persona outside of what you just said with the conviction?

Yeah. Absolutely. Yeah. Shoot me an email at sholine@cmt.digital. I'm Sam I m two one nine four on Twitter. Pretty active in in my DMs. And, you know, you can you can reach out to us on our website as well. You know, if you're building something in the blockchain and digital asset space and, you know, think, you know, somewhat similar to me or or or actually if you have an emphatically different view as well, we'd love to hear it. So reach out. And, guys, really appreciate the the time. Yeah.

Thanks for sticking with us, Sam.

Really great, and I'm sure we'll talk again soon. Fantastic. For you here. If you have founders,

news, new teams that you're excited about, people that and we work we work often with investors and and folks who are really close to portfolios of founders. So if there's any, like, news or or companies, I think a lot of this list, we we are in touch with but haven't necessarily dove into. Like, One Money is a good example of of that. So Lumix.

Like, a lot of these are are close founders and friends, but keep us close if there are ways that we can support the portfolio, tell their stories better, highlight what they're building. Just keep us posted on that. Yeah. Absolutely. Appreciate the offer and absolutely will do. Awesome. Thanks, man. Awesome. Have a good one.