Bill Barhydt is the cofounder and CEO of Abra which is a digital wallet that supports bitcoin and over 50 fiat currencies. The company has raised over $35 million from investors such as First Round Capital, RRE Ventures, Lerer Hippeau and Digital Currency Group to name a few. Prior to this, Bill Barhydt founded three other companies.
In this episode you will learn:
- The adoption of crypto
- Bill’s top advice for other entrepreneurs starting businesses
- The games big companies play and the importance of having a moat
- Going from starting up to exit
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Bill Barhydt:
William (Bill) Barhydt (born in New York City) is a serial entrepreneur and the Co-Founder and CEO of Abra, a new type of digital cash payments app and network enabling the transfer of cash between any two smartphones.
Barhydt attended The Stevens Institute of Technology (BS, Computer Science, 1990) and has done graduate work (non-degree) at Stanford (Mathematics) and NYU (Finance.)
After working for the CIA, NASA and Goldman Sachs, Barhydt decided to join Netscape working on telecom and Internet banking deals, mostly in Europe. After the AOL acquisition of Netscape Barhydt founded WebSentric. The technology for WebSentric exists today in SAP’s online portal service.
Barhydt was CEO of KnowNow, VP Market Development for Plaxo and has been a Director or adviser to numerous start-ups including Meeting Maker, Ignite Racing, Particle Code, Sennari, Plaxo, Kopo Kopo and others.
Barhydt co-founded m-Via, a mobile banking start-up in 2008, now part of Digicel. As a recognized expert in Internet and Mobile technologies Barhydt has presented at The World Economic Forum, The US State Department, The Mobile World Congress, TED, and many Internet and mobile technology conferences.
Connect with Bill Barhydt:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone. Welcome to the DealMakers show. Today we have a founder that has had a very interesting journey. He’s built many, many companies and has been involved in the tech space since the very early days. I think we’re going to learn a lot about building, scaling, financing, exiting, so the full cycle. So without further ado, I’d like to welcome our guest. Bill Barhydt, welcome to the show.
Bill Barhydt: Hey, man. Thanks for having me. It’s a pleasure to be here.
Alejandro: So, originally born in New York City. How was life growing up in the city?
Bill Barhydt: I was born in the Bronx, an immigrant family from Italy, and the typical middle-class family trying to make it out to the suburbs, scale your life – typical New York story from the ‘50s, ‘60s, ‘70s, I suppose. I lived through the whole Bronx’s burning tales of the last ‘70s, with the brown-outs and watched the transition of New York back to a really fun, vibrant, safe city that it’s become over the last 20 years, which is fantastic.
Alejandro: Yeah, because right now, there are great areas in the Bronx, but back then, it was probably not very safe. So, maybe you had to live through that, as well.
Bill Barhydt: Yeah. It was not safe, and it was amazing the transition up and down. I’m really glad to see that the city is going through a multi-decade kind of revitalization. Not just Manhattan in the business district, but all parts of the city: Brooklyn, Statin Island, Bronx. It’s really fun to watch.
Alejandro: How did you get into computer science?
Bill Barhydt: I’ve been a math and tech geek my whole life. As a kid, I had a very strong affinity to mathematics. My father encouraged me when I was very, very young. We had a Terris 80 computer. Maybe some of the older folks in your audience know what that is. He taught me Basic programming when I was 11 and 12. It stuck with me. I started teaching myself other programming languages later. I learned C and then C++. I knew I wanted to study science and engineering but ultimately decided that I had such a strong affinity for computer science that it would be fun for me to use that as a springboard for whatever else I wanted to do in life. It served me really well and was definitely the right choice for me.
Alejandro: So, it took you a couple of rodeos before you landed in tech. You did NASA, CIA, Goldman Sachs, and then Netscape. So how do you switch so many times?
Bill Barhydt: Yes. It’s a good question. As a kid, I wanted to be an astronaut, no doubt. The opportunity to work in research for NASA and contribute to that in some way was just too much to pass up. I ended up moving to California. I had never been west of the Mississippi in my life. I came out here to Silicon Valley, and in those days, especially, it was paradise. I just couldn’t believe it. So, the idea that I could work for NASA, live out here, go to Stanford, it was just incredible. I really learned a lot about high-performance computing, supporting large research projects, what happens in the scientific community. It wasn’t necessarily my calling, but it was a lot of fun. I’m really glad I did it. I remember I was doing recruiting for NASA at Stanford, and I was at a recruiting session with a lot of companies. Some folks from Goldman Sachs were asking me what I did for NASA, not really knowing if they understood what I was talking about because it was all scientific kind of stuff. They came back to me sometime later, and said, “We love your background. We think you’d be perfect for this area of financial research.” They started describing to me what they do, and I didn’t understand a word they were saying. I said I have no idea what you’re talking about. I’ll take it on faith that this is relevant, but I don’t really get it.” So, anyway, I went out to New York, and I spent a couple of weeks talking to different people, and I was fascinated by the sheer intelligence of everybody I was meeting, how brilliant everyone was, and the idea of learning the financial markets was really interesting to me. So, I ended up taking a job there and fixed income and worked in fixed income research for several years and learned and sat on a trading desk for a couple of years and learned the business every which way possible. It was quite a journey. I loved it. I had this entrepreneurial bug in me and wanted to work in tech, software in particular. Eventually, I also wanted to travel internationally. When the opportunity came along, and I saw that the internet was going to be the next big thing, or potentially ‘the’ big thing, I had to be a part of it, and that led me to Netscape. I really haven’t looked back since. I’ve considered myself since the day I left Goldman an entrepreneur at heart, and that’s where my passions really lie.
Alejandro: How were those early days of the internet? Especially at this time, you had to experience the interesting fights between Netscape and Microsoft.
Bill Barhydt: Oh, my gosh. It was incredible. I’ve seen it all from an internet perspective. I’ve helped banks build their first online services. I’ve helped big telecoms like Deutsche Telekom, British Telecom, Telefónica build their first online services ever, even with dialup. I remember working with a couple of telecoms in Europe who basically were distributing our Netscape Navigator browser software, and Microsoft was basically offering to pay them money to not distribute Netscape, which is highly illegal, and fighting the wars with them, which we obviously lost. We were vindicated via the courts, but by then, it was too late. So, the lessons that you learned about what it can mean in a cutthroat-business environment has really stuck with me through the years, and what it means to build a moat around your business so that you can protect, but also add value as you go. Those were some pretty incredible lessons. I also ran a very large PnL at a very young age, and so that was also a big lesson for me in just basically diving off the deep end into the water and having to stay afloat. It was swim or die. We swam, and we made a good run of it. Like I said, everything I learned about running a PnL and dealing with competition and closing the deals, work incredible hours, and identifying people with shared passion. I really learned there. So I think between my MBA and entrepreneurship at Netscape, and my MBA in capital markets at Goldman Sachs, I got a pretty good on-the-job set of lessons.
Alejandro: Let’s talk about putting those MBAs into practice and all of that experience at Netscape because now you are on the fourth company. I’d like to touch on the last one, especially of all the world of crypto, which I’m sure that our listeners are going to really enjoy. Before we get into that, I’d like to touch quickly on the three prior companies. Rather than going through the entire story, I’d like to just touch very quickly on them, but most importantly, understand what important lesson was there for you on each one of those three companies? Why don’t we start with the first one, with WebSentric? Obviously, this was the first one right after Netscape. Tell us what was WebSentric, and what was your biggest lesson?
Bill Barhydt: Sure. This was late ‘90s. The dotcom boom was raging. AOL had just acquired Netscape, so I was all full of gravitas and ready to go out on my own and change the world. I think I was about 30 years old, so I had this arrogant idea that I was going to start a company, and it was going to be a big multi-million-dollar company overnight. Just really riding the wave of all the craziness going on in the dotcom boom. I was passionate about any services that would enable people to communicate via the web. So I started WebSentric, which was an early precursor to today what we call Zoom or Webex. At the time, we had – I remember there was a whole bunch of them, but it was an online meeting service. You could share documents; you could do simple audio conferencing but fully integrated into the web browser. In 1998, this was a big deal. There wasn’t a lot of that. I made every mistake you could possibly make as an entrepreneur. I took on too much work for myself. I did a lot of bottoms-up hiring. I was hiring individual developers; I was trying to manage marketing and engineering and finance and doing it all myself as opposed to going out and finding really seasoned people that I could trust, giving them a bunch of stock and making sure I could trust them to help me build this business. So, I learned the hard way that you have to have a core group of people around you quickly that you can trust in order to build a business. The second lesson, which I learned over the last few years, is that you have to get to users and customers as quickly as possible. The product doesn’t have to be perfect, but the product has to exist, and it has to meet some needs from someone, even if it’s a gaming product like Sennari. We learned right away that even if we didn’t have the best games, if we had games that were engaging, but we’re unique because, for example, we ran this prize-based gaming service, which was very early in the mobile phone business. Nobody else had it, and people who were interested in prize-based gamings would say, “You guys don’t have the best games, but we love this prize catalog. It’s super fun. So, we would get a lot of repeat users spending a lot of money on our gaming service. This whole idea of establishing product/market fit very, very early, and not trying to overengineer our product so that you can get in the hands of customers very quickly is something that has stuck with me over the years. Too many entrepreneurs are too focused on building this end-all, be-all product before they’ve released anything, and it’s too late by the time they do. So you have to get a product in the hands of your customers, business or consumer as quickly as possible. Get the feedback. See what you’ve done right. See what you’ve done wrong. Start to iterate. Then, you’re in business. So that idea of product/market fit has stuck with me over the last 15 years. Now, with my last company Boom and with ABRA, I’m very heavily focused on constant iteration and constantly getting a product in a consumer’s hands and getting feedback before we launch a product from real customers.
Alejandro: WebSentric was acquired by SAP, so not bad for being the first business – first good outcome. Sennari was the next one, so what did you learn. What was the lesson learned with Sennari, and then what were you guys doing at Sennari?
Bill Barhydt: We had a really good run at the beginning. This was before iPhone and Android. This was people using feature phones like the flip phones that we had in the U.S. or the candy-bar phones in Europe. We made games for those phones, and we were successful at it. As soon as the iPhone came along, that business went away because all of the usage went to smartphones. We didn’t make the transition quickly enough to the smartphone environments. There was no app store in the early days of the iPhone, and that also hurt us because Apple controlled the ecosystem. What we should have done was gone in very, very deep on smartphones as quickly as we could. Because we didn’t make that transition, we ended up selling the business at a much lower valuation than we probably would have eventually. The good news is that the acquirer was able to take advantage of the technology and integrate it into the smartphone world. That was a big lesson for me because, as a technologist, I knew the trend, but it was very obvious that the desktop was going to move to the phone – to me, at least. But we didn’t make the transition as a company, and that really hurt us. I think that even though we had a great product, and we had lots of users, we didn’t look far enough ahead to see what was coming, and that was a huge lesson for us. But, like I said, it was still a successful outcome, but I wish we had seen the trend sooner.
Alejandro: Got it. Sold to Emotive – second business, second exit, so good stuff. Then the third one, Boom Financial. What were you guys doing at Boom Financial, and what was the lesson there?
Bill Barhydt: Boom Financial had two different components to it. We had a nonprofit business, which did a lot of work in places like Haiti and rural Mexico and rural parts of Central America, helping people open bank accounts via their feature phone, or now smartphone. We had another business, which interacted with the nonprofit, which was money transfer via the U.S. So you could use your phone for doing very simple, quick cross-border money transfer services directly from your phone, and you could get a debit card, and that would turn into a simple bank account, and you could send money from your phone, and the recipient would then get a bank account, for example, in Haiti, on their phone, and they could easily withdraw the money in lots of locations that we would set up throughout the country. The idea would be that by lowering the cost of money transfer, we could integrate people into this new type of banking system that was geared toward migrant workers. We were pretty successful at it. That caught the attention of Digicel, which is the largest wireless carrier in the region, and they made a major investment in the company, which has led them to more or less run the business now. They run the business as their mobile money arm, which is also a big win. The company is still operating, and I’m a little out of touch. I know they’re getting some success. They’re operating in like 30 countries, and I know that it operates as their mobile money business in those countries, which is fantastic. So, it’s a very strong, mission-driven company, a lot of the same employees from the early days running the business, so I’m excited to see where Digicel takes that over the next few years.
Alejandro: This was the segue to Crypto after ABRA, so tell us about this.
Bill Barhydt: Basically, this whole Crypto story is really interesting. This is something that I’ve been looking at for almost a couple of decades since my cipher-punk days and the very early days of the internet, where we wanted this idea of money for the internet. Traditionally, you have to trust someone to create money. In the U.S., we trust the Treasury and the Federal Reserve. Ironically, we trust them to “responsibly” to manage our money supply, and if we watch what they’ve been doing for the last 15 years, they’ve effectively been printing money without end, which is not responsible if you actually care about the value of your money, and they don’t. Their writ is to manage an economy and focus on employment, not to manage the value of your money. They have no interest in the value of your money. If you focus on the value of money, it’s really interesting. Along comes this anonymous guy who figured out how to create money for the internet with no central trusted party, which even the idea of that seemed impossible, and it was a huge breakthrough. Not only that, it solved, on paper, a lot of the problems and challenges that you face in building a banking service, especially cross-border where the regulatory oversight and the licensing and the AML rules are incredible. So the idea that you could to peer-to-peer money transfer and peer-to-peer banking transactions with no financial intermediary. Wow! That is just a crazy idea. It turns out that it worked. This, of course, is what we know as Bitcoin today, and its underlying blockchain technology that enables these trustless transactions has been a huge breakthrough. That led me to this idea that maybe we could build a new type of bank that took advantage of this cryptocurrency technology in a way where we could finally build one single global banking application that worked everywhere for the first time. That didn’t exist before. That was the idea behind ABRA. Can we have one app that anybody in the world can download that becomes effectively their bank account? They can hold dollars; they can hold bitcoin; they can hold euros, and they can exchange between them. They can send money to each other. Eventually, they can pay for stuff locally. But it doesn’t matter whether you’re a poor farmer in rural Philippines or a rich banker in New York or London. It’s the same app. That’s the vision that we realized with ABRA. We have users in 100 countries. We have hundreds of thousands of wallets running today. In all of these countries, we have people with $5 balances, and we have people with hundreds of thousands of dollars or balances. It really is that first kind of global banking app. We haven’t completely eliminated all of those kinds of compliance issues. We run a very tight compliance ship, but the cryptocurrency technology enables us to service a global client base that we simply couldn’t do before. That’s just a huge win, and it can also be a profitable business, which is fantastic. So, we’re not profitable yet, but we’re well on our way, and I think in the next several months, we’ll actually achieve profitability.
Alejandro: How much capital have you guys raised?
Bill Barhydt: We’ve announced about 35 million in venture funding to date. We’ve got some corporate venture backing, as well, including American Express; Foxconn, the company that makes the iPhone; Arbor, which is a fidelity-backed venture fund out of Asia is a major backer; RRE Ventures out of New York; Lerer Hippeau and First Round Capital was our seed funding. They’re very well-known. You probably know them from Twitter and Square and Uber and other very successful Silicon Valley angel capital investments. So, we’ve been very fortunate to build a fantastic investment group around us that’s been adding a lot of value as we go.
Alejandro: It’s incredible the run of crypto to zero to hundreds of billions of dollars. Something really interesting was also, now that we’re coming out of this craziness that has happened with the uncertainty with COVID and how the markets have reacted. How have you seen the behavior of the markets around crypto as well in parallel to that?
Bill Barhydt: Yeah. That’s a good question. There’s a lot of confusion right now. We’ve been in this holding pattern from a capital markets perspective for several months now, where it’s just been sideways, and people are curious. However, the promise of Bitcoin was that it wasn’t what we would call an uncorrelated asset, meaning that it wouldn’t move and lockstep with stocks. For the most part, it hasn’t with one exception, and that’s when the capital markets like equities tanked in March, Bitcoin tanked completely in lockstep, and that had never happened before. What we’ve discovered is because it’s still very early and nascent and still getting a lot of the discretionary investment dollars that consumers have, if consumers feel they don’t have those discretionary dollars, then they don’t invest. So, in that regard, Bitcoin and Crypto are still somewhat subject to the extreme movements in the markets. I would say that day-to-day movements, not as much, but when you see extreme movements up or down, it does affect what’s happening in the crypto markets. Now, I suspect that correlation will get more and more diminished over time, but it’s an interesting phenomenon. What’s also interesting is the idea of institutional money coming into crypto was a crazy idea five years ago. People just looked at this and said, “Capital markets can’t even touch this.” Between the regulatory issues, the lack of understanding, complex technology, security issues, they’re just not going to touch it. That turned out to be completely untrue. The amount of institutional interest and focus in crypto from hedge funds – I speak to hedge funds all the time about Bitcoin to other – even mutual funds are trying to figure out if they should be offering cryptocurrencies to U.S.-based 401K and IRA retirement plans – looking at cryptocurrencies now. It’s really changed the landscape, and I think it’s becoming not quite yet, but will become a core staple of a rounded investment portfolio in the coming decade.
Alejandro: Yeah, because it’s interesting how Bitcoin is treated more as an investment rather than as a way to transact and purchase things between individuals. So, do you think that will change?
Bill Barhydt: That will change. I think of it as a banking stack. In the traditional banking and payments world, we have the Federal Reserve; we have the banks; we have the payment processors; we have the merchants. So we need an analogous stack to evolve in the cryptocurrency world. Right now, its best application is clearly store value has actually been very stable over the last year. It has some intraday volatility, but the price has been relatively stable. But we see some second-layer technologies evolving that will allow very efficient, very rapid, very low-cost microtransactions using Bitcoin that can scale to Visa-like numbers over time. As that second and third layer of services takes hold, I think you’re going to see a parallel stack to the traditional banking stack evolve in Bitcoin that’s going to breathe even new life into it from a payment’s perspective, not just an eGold perspective.
Alejandro: Let’s say here, Bill, that you go to sleep tonight, and you wake up five years from now, and you wake up in a world where the vision of ABRA is fully realized. What does that look like?
Bill Barhydt: Oh, that’s a great question. So, in five years – a great question. I think that ABRA has become a very important company in the growing global banking community. Consumers in any country can download ABRA onto a smartphone, open up a “crypto” bank account. So if I’m in Argentina or Brazil or Zimbabwe, or the UK or Germany, it doesn’t matter. I can store my dollars, my euros, my Bitcoin, my Ripple, my Ether. I can probably make, eventually, even stock investments all from one app, and actually move between those investments. I can send money to my family members, to the person sitting next to me. I can pay my bar bill, my restaurant bill. I can pay my electricity bill. I can probably get a loan. I can probably borrow against my assets where if I’ve established credit, I can get a small-dollar loan instantly by pushing a button in the app, and I probably have a credit score attached to that. It really looks like a traditional banking system, but all based upon cryptocurrency rails available globally.
Alejandro: Do you think in the future there’s going to be a point where we’re not pulling out our wallet and taking a piece of paper out of it?
Bill Barhydt: Oh, absolutely. That has to go away. There’s a couple of issues with that. First of all, money is disgusting. Let’s just point that out. Now, during the middle of a pandemic, it’s particularly easy to point out. I also spent a lot of time in Haiti after the earthquake, and if you remember, it was like a double-whammy we say in English because they also had the cholera outbreak if you remember, right after the earthquake.
Bill Barhydt: Which ironically came from a lot of the UN workers, I believe. So, you basically have the scenario where not only is the money disgusting, and you have to deal with that, but at the same time, the money itself is an untraceable bearer instrument in theory. You don’t necessarily want to have to trust banks for everything. But we don’t have a suitable replacement for the idea of a paper-based bearer instrument. That’s where Bitcoin and cryptocurrencies become very interesting because you can store your bitcoin online in a banking service like ABRA, and you can also store a small amount of it in a wallet that you carry with you that’s not online, meaning that nobody else has access to the bitcoin and it’s completely private. The key is private. So that’s a big breakthrough, and that replaces traditional money from a paper perspective with something that’s purely digital, and we’ve never had that before. That’s the other breakthrough that I think, in part, about digital money. It replaces all of the germs and everything that you don’t want on paper, but it also deals with the benefits of having a bearer instrument that you can carry around with you.
Alejandro: Of course. Bill, the journey that you’ve had as an entrepreneur is remarkable. This is now the fourth company, so there have been incredible learnings. If I were to ask you the question that I typically ask the guests that come on the show, which is if you had the chance to have a chat with your younger self and give yourself one piece of advice before launching a business, what would that be and why knowing what you know now?
Bill Barhydt: First of all, it’s really hard, and you need to be really passionate about the problem you’re trying to solve because you’re going to have so many bullets flying at you that you need to dodge to just stay alive as an entrepreneur, that if you’re not passionate about the problem you’re trying to solve, and can’t see yourself focus on that problem for many, many years, then you’re going to be disappointed because when it gets really hard, your motivation for sticking it out and dealing with those problems is not going to be there, and that’s why I tell people, make sure you’re doing this for the right reasons because those reasons are going to dictate what you do when it gets tough. And if you think it’s not going to get tough, you’re delusional. Every entrepreneur faces hard times, even Google. People see Google as this powerhouse today. Google was almost shut down by its investors several times. But they were really passionate about what they were doing, and they stuck it out, and eventually, they figured out a way to make money. But if you don’t have that tenacity driven by the passion for what you’re doing, it’s not going to work.
Alejandro: Understood, and that’s very, very profound, Bill. So for the folks that are listening, what is the best way for them to reach out and say hi?
Bill Barhydt: A couple of ways. I’m on Twitter: @BillBarhydt and @AbraGlobal, and I’m pretty active on those online forums. That’s probably the best way. We also do a weekly YouTube show called Money Talks on the ABRA channel. So, just search for the ABRA channel on YouTube, and we do an AMA every week where we answer questions about banking, crypto, how to use the app, what’s happening in the world, and basically, anything that people want to talk about.
Alejandro: Amazing. Well, Bill, thank you so much for being on the DealMakers show today.
Bill Barhydt: Thank you so much for having me. This was a lot of fun.
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