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- [00:07]
Host Announcer
You've had a dynamic where money has
- [00:09]
Saadi
become freer than free. If you talk about a Fed just gone nuts, all, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for bitcoin. If you're not paying attention, you probably should be. Probably should be. Probably should be.
- [00:37]
Marty
Saadi, welcome to the show. Thank you for, for joining me. Like I said before we hit record, it was like we're recording the podcast already. So I figured let's just get into this 100%.
- [00:47]
Saadi
Well, thank you so much for having me, Marty. I've heard so many great things about you. We have so many mutual friends. So I'm just, I'm just excited to have this conversation with you and get to know each other and talk about new products and talk about even.
- [01:02]
Marty
Yeah, well, I'm, I think, more excited because I've been telling your team that a product like you're launching today is something that many people, myself included in bitcoin have been waiting for. And it's a theme, it validates a theme that I think is going to be predominant for the next few cycles, which is this intersection of consumer finance and bitcoin as collateral. And that's what you guys are launching at Aven today. But before we get into the bitcoin specific product, I think getting a background on Aven, how it came to be, and really leaning into, and starting with your mission, which is, I think, very ambitious, but also very virtuous, which is to reduce the cost of capital for consumers, which is very important in these days, especially 100%.
- [02:02]
Saadi
Yeah. As you know, well, Aven was founded on this very simplistic mission, which is our mission of reducing the cost of capital for consumers. We are almost overly serious about it in some ways and very unserious about anything else. We are extremely focused on this mission and we believe that the way we can reduce the cost of capital is first by thinking about it from first principles. What is the cost of capital to consumers and to anybody? It's the cost of the risk free rate plus the cost of the risk plus, plus the cost of the transaction. And our strategy at Aven is to reduce the cost of capital by reducing the cost of the transaction and driving that down to zero by inventing and developing and deploying technology in 2022, we launched the Aven Home equity card which helped us drive the single largest change in the cost of capital one credit cards in US history. We've now originated over $4 billion in lines on our home equity products and saved consumers over $300 million in interest payments actually. And the way we were able to do it is by attacking the largest source of unsecured capital, which is credit card debt in the United States, which is over $1 trillion. And consumers today in the US are paying over 20% APR on that, which is over $200 billion a year in interest payments. And our goal is with asset backed lending, we can reduce the cost of the transaction of borrowing against the assets you already own. And by doing that, reducing the cost of the risk and passing on that savings in the form of a lower APR to the consumer, going back again to that point of the cost of the capital is equal to the cost of the risk free rate, which as you know and I know, we don't control today. Jay Powell controls that. And hopefully in the next year or so our friend Kevin Warsh will have more influence on it than not. But you and I, and by and large we are not in a position to influence that. The cost of the risk is an information theory problem where the more we understand about a consumer and the more we understand about the world, we will to price that risk appropriately. But the pricing of the risk isn't a kind of a strategic advantage for anyone in the long term. It's an advantage of do we have enough? The core problem of it is an information theory problem, which is how much information can we have about the underlying asset, an underlying person and the world at large. And then finally the cost of the transaction is where we can invent a lot of technology. And so we started off by approaching the problem of home equity, which is the largest asset class owned by Americans today and extremely inefficient. And we developed and built a lot of technology to make that go from four to six weeks down to as fast as 15 minutes, and reducing the cost of that origination by an order of magnitude, which by derivative then decreased the cost of the risk itself. And we could bundle those savings on in the form of a 50 to 70% lower interest rate for consumers, and put that in the form of a credit card which is both convenient and familiar for most consumers. And in our kind of philosophy of unsecured debt being expensive and irresponsible in many ways, because we want to give people credit for what they already own so we can drive down their cost of capital. We think that also applies to what I, and I think hopefully you also consider the most important future asset class for the world at large, which is bitcoin and digital assets in general, but Bitcoin specifically. I think I've heard from, from Garrett that you are, you know, similar to me, an old time bitcoin holder, perhaps longer than myself. I've been a Hodler since 2014, not a huge amount, mind you, probably not as big as yourself. But I've been a believer in the structural value of this largely because I grew up in Bangladesh, Zambia, where inflationary currencies are the norm. And I think in a lot of circles there's a lot of comparison between Bitcoin and the value of Bitcoin as an asset class compared to USD. And I think that's kind of a red herring actually. I think the value of Bitcoin is against the Zambian Kwacha and another inflationary currency. And we can go through many of them. And I think for many of these people in many of these countries, having a cryptographically constrained asset to help them fight against arbitrary monetary policy is extremely valuable and important in the world. And that's why I've been a believer and a holder of Bitcoin for a very long time. And I could not be more excited about launching and building the product that we are building today, which I'm excited to talk to you more about before
- [07:12]
Marty
we get to the product. To really humanize the problem here, I think it would be, I'm just curious, having lived through high inflationary periods, lived under currency regimes with the debased currency, what does that do to your psyche? How does that affect your day to day living? And more importantly, what does it prevent you from doing?
- [07:35]
Saadi
It's a great question. I think there's a few elements to it, right? 1, It enforces and it emphasizes the importance of building systems that do not require you to trust in other kind of human driven systems in and of itself. And I think that's one of the most powerful things. Where the reality of it is in these politically volatile regimes, the incentive structure for a governing body to make decisions that are inflationary to currency is quite high, frankly. And you as an individual in these countries who aren't often governed in the most responsible manner, is often subject to the whims of arbitrary, sometimes monetary policy, sometimes desperate monetary policy, frankly. And it can lead you to a place where not only can you not trust your government, you can't trust even the dollar bills you've saved under your mattress for years, and people lose their life savings. People lose generational life savings sometimes, not just what you've been able to save for yourself. And so I think there's a real opportunity in the world for us to provide an asset class that consumers globally can hold, that can give them an asset that they can trust in its value over a long enough time horizon. Historically, as you know, that has largely been gold. If you kind of look back in world history and even today, for example, one of the largest purchases of gold in the world is, is the Indian subcontinent, right? And in many of these countries in Africa, India and subcontinent, gold is the asset class in which you store value. And the reason for that is obviously withstood a long duration of time, but it's extremely inconvenient. And oftentimes people will buy and sell and trade in jewelry, whether it be buying it with your savings and keeping that gold in a form that you can wear, which is a convenient way of storage and safety, but also in how they can exchange marriage vows and gifts. In Indian subculture, a huge amount of the workings of a marriage is upon the exchange of gold between husband and future wife, or wife and future husband. And the reason for this is gold is oftentimes the store of value and the store of net worth effectively. And to me, the power of Bitcoin is to be able to do that in a digital form that removes the kind of the. The physical security needs. Obviously, there's other challenges we have to solve around physical security and crypto that we can talk about in some more detail. But it solves the kind of need to like, store manage these physical assets and be able to borrow and transact with them in some form that is sufficient. That I think is super valuable by having an asset class like Bitcoin. And I think to me, that is like the core of what I value a lot in Bitcoin as a digital asset. And I think that value is tremendous in much of the world. And I think it's easy for us to underestimate the value of that while we are in the United States or a Western democracy, which has a strong and valuable regulatory regime that we can depend on. But in many parts of the world, people can't. And in those parts of the world, I think having asset classes into Bitcoin are extremely valuable. And I think we'll increasingly see that in the world.
- [11:27]
Marty
I agree. And I think one of the beauties of Bitcoin is the fact that not only is it permissionless distributed, but it's accessible on different scales. You can save a dollar, you can save a million dollars. And I was telling your team, I think one of the big themes that I think is going to really take hold and it started a little under a decade ago, but it's beginning to gain steam. It's this intersection of bitcoin and traditional credit markets. Bitcoin being used as collateral as a hard asset to get credit on it. And I think in the notes that I have after talking to your team, really bringing the tools that have been siphoned, not siphoned off, but only for the uber wealthy, that 1% where they borrow against their assets to realize liquidity without having to take on a taxable event or sell assets that they want to hold onto. And bringing that to everyday consumers and making that a widespread practice is an incredible sort of wealth multiplier for people who are holding these assets, don't want to sell them, don't want to take the tax hit. But I've done a good job of being right and doing the judicious thing of saving in a hard asset over time, understanding that it's scarce and solving a problem for them, which is, hey, I have this wealth. I don't want to part ways with this asset specifically, but I would like to tap into it. And that is what you're launching at AVEN today. And I think this is a good time to jump into the specifics of the product because I think you're going to make a big wave. Because two of the biggest problems that people have highlighted with bitcoin collateralized lending to date is the rate, the cost of capital and the relatively short duration that a lot of these products offer. And it looks like you're bringing both lower rates and longer, longer duration, which is going to be a well welcomed advancement in this particular part of the market.
- [13:42]
Saadi
That's wonderful to hear that you're feeling as positive as we are about it. A quick one liner on the product that we're looking to launch is we're looking to launch what we hope to be the best in class Bitcoin backed lending product, which is a credit card secured by Bitcoin with the ability to draw 10 year fixed rate plans with an APR as low as 7.99% interest rate, no re hypo fixed rates over a long time horizon with LTVs that go to 30, 50 and 70% of the Bitcoin that you hold with a five year interest only period, we think this should be the best in class bitcoin backed lending product in the market today covering the span of cases, large purchases where you'll be able to draw down without a taxable event against your Bitcoin holding for large amounts in a fixed rate with a very low interest rate, all the way up to smaller transactions where you can use the convenience and the cash back and rewards of a credit card. And we think that combination should holistically fill a lot of your needs of having to borrow or utilize and get liquidity on the Bitcoin that you hold. We think that should be a very valuable product to hopefully many consumers. Our own research indicates that about today people who hold bitcoin in the US which is significant already and growing obviously about 20 to 30% of people have already tried or have a desire to borrow against their Bitcoin today. And we think, you know, we want to build the best in class product for these consumers so they're able to, you know, get some liquidity on the responsible decisions that they've made, which is to buy and hold Bitcoin for a long period of time. And we're excited to bring that to the market and we think, and we hope you will agree and others will agree that this should be one of the best in class products in the market.
- [15:33]
Marty
The let's, let's touch on the cost of capital. Again. This is your, your mission is to lower the cost of capital. If you have a 30% LTV, you're going to be able to get a 7, 99% rate out of the gate in the space. That is I think the lowest that I've seen for these types of products outside the world of defi, which has its own sort of layered risk which I think the defi world is finding out over the last few days specifically. But what is giving you the confidence to go out at the market at that rate specifically what's allowing you to do that?
- [16:14]
Saadi
That's a great question. Tactically there is one or two things and I'll touch on that and then I can touch on the long term view that I have about being able to borrow against bitcoin and digital assets in general. There is two really important things about aven. So first is we've built a reputation of building kind of world class or investment class asset backed lending products in the United States over the last over half a decade. We built the world's best in class home equity backed credit card program. We've done billions of dollars in origination. We built a world class capital markets function that sits behind it and helps us power and grind down that Cost of capital for consumers who are borrowing against the home equity. We've taken a lot of that expertise in capital markets and legal and compliance and we're now bringing it to bear on this market, on the NIS asset class, which is Bitcoin. And this has allowed us to, to navigate the markets ecosystem and the regulatory and compliance ecosystem to bring down our cost of capital in a way that is safe, secure and sound and pass that as a low cost of capital to consumers. We're going to be borrowing against our Bitcoin backed credit card. So I would give a lot of credit to our capital markets team, to our credit team and to our legal and compliance team for putting down this foundation over the last few years actually to enable us to come to market with a product at that price, that at 7.99% interest rate, we're not losing money on that product and we're making enough to pay our bills and add value to consumers at the same time. And we think that's valuable to the world. And in the long term, I believe this is just us getting started. Marty, if you think back about how we think about risk and how we think about the cost of capital, we actually think in the long term our Bitcoin backed credit card should be the lowest interest rate product and lending product that we offer because in many ways we're taking the minimal amount of credit risk relative to our other products. The ability for us to underwrite this, the ability for us to, to, to take position and, and liquidate that in case the market moves against it, allow us to take much less risk on this product than some of our other products, which in the long term I believe will lead to lower and lower cost of capital for consumers who are looking to borrow against the assets that they own. Going back to our theory and our philosophy is we give people credit for what they already own. And if you kind of think about the asset classes we operate in, home equity now, Bitcoin and other forms of assets we'll work on in the future. Of all the assets that we, you and I can conceive of, the digital asset class is probably the lowest risk asset class to borrow against for the consumer and also to lend against as a lender. And if you think back to that equation of the cost of the risk is the risk free rate plus the cost of the risk plus the cost of the transaction, the transactional cost should be the lowest and the risk should be the lowest. In which case if the risk free rate is equal across all asset classes, the cost of capital should be the lowest for a bitcoin backed lending product compared to any other lending product and we should be driving towards that now. I think there's some gap between our I would actually even argue our home equity product actually has a lower APR right now as a headline rate than our Bitcoin backed products. But I think it's a matter of time before we grind that down and I'm excited to work towards a world where our Bitcoin backed product has the lowest headline of all the products that we that we offer to consumers.
- [20:02]
Marty
All right freaks, you know me, you
- [20:04]
Sponsor Voice
know I don't take sponsor money from products I wouldn't use myself.
- [20:07]
Marty
So listen up.
- [20:08]
Sponsor Voice
The Avon Bitcoin Visa card is one of the most interesting things I've seen in the Bitcoin lending space in a long time.
- [20:13]
Host Announcer
Here's the deal.
- [20:14]
Sponsor Voice
You can get a line of credit up to a million dollars backed by your Bitcoin without selling a single sat. No games, no annual fees, no minimum draws. Bitcoin is custody by Bitgo, which is one of the most trusted names in digital asset security. Ava never lends it out. There's no rehypothecation. You stay in control and guess what? You can lock in a fixed rate for up to 10 years. That's 10 times longer than most lenders out there. Or go interest only for up to five years. Rates start at 7.99% APR. For a product that lets you keep your stack and still access liquidity, it's hard to beat. I mean the duration in the rates is the best I've seen in the market to date. You also get 2% unlimited cash back
- [20:54]
Host Announcer
every time you use the card.
- [20:55]
Sponsor Voice
Spend fiat. Keep your Bitcoin the whole game. If you've been stacking for years and you need liquidity without triggering the taxable event, this is worth a serious look. Go to aven.com bitcoin that's AVN.com bitcoin check it out.
- [21:11]
Host Announcer
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- [21:51]
Marty
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- [21:53]
Host Announcer
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- [21:55]
Marty
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- [21:56]
Host Announcer
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- [22:06]
Marty
You're speaking my language, Saadi. It's, it's. I've been banging the desk for, for years. Because you look at a Bitcoin collateralized loan and if you look at the risk profile compared to something like a HELOC where you're looking at the piece of collateral as a piece of real estate, you have to get it appraised. God forbid somebody goes into bankruptcy or foreclosure and you got to figure out how to offload that asset. What price are you going to be able to get for it? And you compare that to bitcoin which trades 24, 7, 365. You're using bitcoin for your custody. So if you have an agreement between yourself, Bitgo the end customer, for some reason, God forbid they're unable to make their payments and you need to liquidate that collateral. It can happen within minutes and, and
- [22:54]
Saadi
I'll add to that. Right.
- [22:55]
Marty
Do it on the weekend if you need to. Right away.
- [22:57]
Saadi
Exactly. And by the way, I just want to add that like we take like our regulatory compliance extremely seriously as a company. We built our reputation on that over the last five to six years by building and serving some of the most regulatory complex products with a spotless track record on home equity. Home equity is one of the. Our home equity backed credit card is arguably one of the most complex, most kind of regulated products on earth. In the financial services, we fall under mortgage regulations and we fall under card act and all the credit card regulations and we navigate the superposition of both of those set of regulations. And we've done that with great help from our partner bank and from our legal and compliance team in I think a very smooth fashion to date. And we're bringing all that expertise to bear. So to your point Marty, around the risk pieces, we are going to take this risk piece extremely seriously. We do kyc, we do ability paycheck, we're actually going to pull, do a soft pull on credit as part of our Application process, which is a higher standard than many of the kind of lending products that have existed in the market today. And the reason we do that is so that we can bring the kind of advantages of that safer and sounder practice, that more compliant and highly regulated practice to bear so that we can drive down that cost of capital for consumers. This allows our capital markets partners to feel comfortable and safe with what we're offering so they can offer us a lower cost of capital that we can pass on to the consumers. And that is like a very real decision that we kind of very intentionally made when we were designing this product. Because again, to our mission, we really want to drive down that cost of capital and we want to drive it down to be lower than anything else in the market today and hopefully for, for a long time against any other asset class that exists. To your point, why do you think
- [24:55]
Marty
it's taken this long for Bitcoin specifically? Do you think that actually another way to phrase that is why for Aven is the timing right now?
- [25:03]
Saadi
That's a great question. Two pieces. One is we have actually thought about this product since we started the company. So it's not like a new kind of idea to us that came to us at some point in time. We actually thought about this product for a long time. We knew there was a timing element to us being able to do it. There are two elements to it. One is we wanted to establish ourselves first by building, frankly, one of the most complicated products that one could build, which is the home equity backed credit card, which would enforce kind of the full stack, build across every inch of the stack, from processing to origination, to advertising, to servicing, all the way to the capital markets. And we need to build that so that we can build more asset classes that are hopefully a little bit easier to build over time, but at least gives us kind of a strong foundation upon which to build. The second piece is there did need to be kind of an increased degree of clarity in the market about where lending against Bitcoin and other cryptocurrencies exist. I know there was great debates over the last few years, as you know, Marty, better than most around, you know, is this a commodity? Is this a security? How is it going to be treated? And as a company, I'll tell you, at Aven, we generally do not take regulatory risk as a company. And so until we, you know, felt that there was clarity in the market around how this would be kind of treated by kind of the appropriate regulatory regime, we were not comfortable with, with launching and building a product. As that clarity has now emerged over the last year or so, we felt more comfortable about building and launching this product. And the third piece is we wanted to be able to kind of leverage the infrastructure on capital markets and compliance that we built out over the last few years. And obviously the technology infrastructure that has come together over the last few years to be able to build the best in class production in a lot of what we build, sometimes, in fact many times many of the products we build. We're not the first to market. Marty our home equity credit card. We're not the first people to build a home Equity credit card. 20, 25 years ago, Capital One and others actually built a credit card backed by home equity. We don't like to necessarily be first. It's great to be first. We just want to be the best. We launch a product and for the bitcoin backed credit card, a number of pieces all needed to kind of come together. We need to have the right Sison and Ani on the team that I think you've met with now. Garrett are crypto natives, as I like to call them. They both cut their teeth on building wallet startups and going deep on L1 L2 chains and they're the right people to build a product like this. Number two, we wanted to make sure regulatory clarity existed in the market. And number three, wanted to come in with an advantageous product. To your point, we want to have the lowest rates in the market. That's what we take great pride in. We wanted to be able to come in with a product that has the best rates, has the best terms and has the safety and soundness behind it. In order for us to know that we can sustainably and continuously deliver this value to consumers, not just today, but over the next few decades, and build out that infrastructure and provide that value to consumers for a very long time to come. So there were a few pieces that all needed to come together. I wish we could have done it faster, Marty, but here we are today and I hope, I hope you know, the world loves it and I hope everyone uses it and will love it as much as I do.
- [28:44]
Host Announcer
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- [29:52]
Sponsor Voice
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- [30:46]
Marty
All right, back after some slight technical difficulties, but I think the sidebar conversation is a good addition to the question I was going to ask, which was surrounding how you pick your team. And I was telling you that I watched an interview that you did earlier today which you said you guys hire for intelligence specifically, which many people will say they don't do, but you think as a non starter when hiring. And while we were going through our technical difficulties, we were talking about AI.
- [31:19]
Saadi
Yeah.
- [31:19]
Marty
In how we're implementing it at our businesses. And I think you made the comment it's going to replace middle management, which I think is becoming very clear to people. I think Sequoia and Block, Jack and Olaf wrote that paper together. And, and it's becoming clear that it's going to make the smart humans, the intelligent humans, even smarter and more productive.
- [31:44]
Saadi
Yeah, I think there's, there's a few elements to this. Right. One is the massive accelerant. It provides intelligent people with a superpower to be more intelligent. And I think we, you know, I think we talk a little bit about this on the sidebar, but you know, it's worth talking about how we look at hiring talent. So a couple of thoughts. One is that we run a very lean team. So today, for example, we're only about 88, 89 people FTEs in the company. And I think we've kind of shared this broadly. But the last milestone we shared publicly is that we generate more revenue per FTE than most technology companies do as a company ourselves today already. And we expect that to accelerate, not decelerate as we grow. And a lot of that boils down to how much water we expect each of our individuals to carry. And that requires them to be highly intelligent, very hardworking and mission aligned in what we are trying to achieve in the world. These three things are the kind of pillars that we look for. And I know the intelligence piece can be sometimes controversial to some folks, but it is uncompromising in how we are hiring process and our hiring bar. And the reason for that is, you know, a lot of these, you know, tools, AI tools we can call them. And I consider LLMs to be like the last chapter in a long series of chapters in AI tools that we've provided people for probably over half a century at this point. And I think this just feels kind of incredible because of the way it processes natural language. And that can feel very, I guess, closer to how we communicate between humans. And therefore it feels more magical than perhaps an XGB boost model with like a large ensemble of trees in the background, which is finding a node in the web that retrieves your query results. But nonetheless, these tools require, I think, a certain level of intelligence and diligence to use properly and I think we're seeing the trajectory of the intelligent being super powered with these tools. And I think the second thing is actually turning out to also be very interesting, Marty, which is, you know, those with willpower now are actually unleashed at a degree that was not possible before in the past because they were blocked by their access to information, their ability to gain knowledge and ramp really quickly in a complex domain. And the joke that I've said to some people is like the only moat left is human willpower. But wasn't that always the case for a long time anyways? And I think we may just accelerate that to a certain extent with modern tooling. Another thing that I think is interesting, and I'm not very confident in this theory, but it's an interesting theory, is I wonder if the tools will enable us at scale, with sufficient distribution to actually increase the kind of intellect of the average human across the world, across all spectra of IQ by some significant amount. And even if it's like 10, 20 points, that's not something to sneeze at. If you were to take the entirety of the human race and say we're going to lift up the baseline intelligent quotient, SAT score, whatever metric you want to use to assess intelligence and give it a 10 point, 20 point boost across the entire world, would that not be a much better world? And I think that would be kind of incredible if it were to happen. And I'm optimistic that maybe it can happen. I'm not necessarily high confidence in this theory, but I think it would be a really powerful place in the world.
- [35:43]
Marty
I think it's contrarian because I think a lot of people are expecting these tools to make us dumber because we're not going to learn how to do things from first principles. But I think I agree, in a similar vein, but a bit different is this idea I was telling you I've been leaning into AI. We've been leaning into AI heavily here at tftc and I'm lucky to have really good friends, really smart friends who have been playing around with these tools for a while and have watched the progress over many decades now at this point. And one of the best pieces of advice, one of the, I think the best mental frameworks, particularly when it comes to prompting, is you have this Napoleonic view of, of Claude Code in the terminal. And what I mean by that is my, my friend described is when you're trying to get like good output out of these models, you basically have to treat a Claude Code terminal like a scribe in, in a war tent, like Napoleon is, is at war. He's done battle for the day. He goes into his tent and he's got 10 scribes, one who is sending a message back to refill armaments, one who's writing down his thoughts about war tactics, and another one about philosophy and politic. And it's really if you use these tools the right way, because to get the output you need to know the context and what to feed the LLM in the first place. And if you're going to get good at these things, you need to have that first principles understanding of what you're actually doing and what you're trying to achieve.
- [37:20]
Saadi
But yeah, I've seen this myself as well. So I have like, you know, three quarter sessions, constantly up and I'm probably a fairly heavy user of both actually Gemini and Claude. I find Gemini to be more optimal for queries that require recent web data. I think Crawler is just superior today at least, whereas I find Claude to be quite valuable when it comes to just like navigating code. I still do a diff review every couple of weeks in the company. Debatably valuable to folks on the team, but I find it valuable to myself to understand what little pieces of code in the company do. So it gives me a sense of where the architecture is weak or it's strong, where there's challenges for an engineer to write code at velocity with high quality. One of the interesting things I found is that almost every query I've tried to do with Claude has been okay, not every query, but majority of queries over the last week or two, for example, I'll just pick that I've done with Claude has been subtly incorrect in some weird but important way. And the most valuable thing I found in my practice of using it is decomposing the problem. Not so that Claude necessarily gets it right, but that I can manually review the code and be able to identify the mistake because it has written not too much code or at least sufficiently small enough amount of code that I can manually review it and go like, oh, that's actually where the problem is. This is very valuable to me, to be honest, because I am obviously not as familiar with the entirety of our code base anymore. Being able to snipe into an area and be able to produce a query of some sort is very challenging for me today at this point. I need tools like this to be able to dive into an area and understand, okay, if I were to ask this question, how would the query be generated? But I have enough context to be able to look at A small decomposed piece of that query and go like oh actually that's probably the wrong column actually. Or this join is not going to quite hit what I'm looking for and correct it. But yeah, that decomposition piece and I think I'm sure you know this but Napoleon was notoriously famous in his instruction set in that how direct and how short they were his instruction sets. He was known for a being quite voluminous in the amount of instructions he was sending out. The low latency of his instruction to delivery and the brevity of his instruction themselves is extremely famous for that actually. And one could argue that is actually the most effective way to use these tools today is to have short instruction sets that are extremely direct and precise. And I think that your metaphor is I think quite apt. For the current AI systems. I fully agree with that actually.
- [40:14]
Marty
Yeah, I can't take credit for creating it but as soon as a good one, as soon as it was related to me I was like oh, this makes a lot of sense. And it changed the whole way I interact with. With LLMs.
- [40:24]
Saadi
Yeah. And I think it's. It's been like quite. I think the big shift for me was actually Q4 of 2025. I think that was when I first saw MLMs do math correctly. Prior to that I think it was just like wrong in math all the time and I just don't trust people or systems that don't do math correctly. I still think it obviously has mistakes that it makes but I do think it was a step function improvement in the quality of its logic and math trees which I think was very meaningful and its ability to be used in environment. For us at aven, I think the challenge we navigate and will continue to navigate frankly is that LLMs are largely high recall low precision systems. ChatGPT will always give you an answer to a question this is going to be wrong a lot that doesn't work for a highly regulated product in a highly regulated company like ourselves. So our investments are a lot about evaluation systems and how you constrain the system to operate in high precision and low rec. And we sacrifice recall to kind of get it to be answering fewer questions. Designing these questions correctly. And then the second thing that we focus a lot on is using it instead of as direct to consumer, directly facing to external parties as internal tooling for our own employees and human agents. And I think we were speaking about this earlier. I think we, I call it we invested an enormous amount of energy and engineering infrastructure on building what I call like a really Fancy I don't know engine. And we spent an enormous amount of time building out engineering infrastructure that effectively allows our agentic system to say actually I don't know. Instead of having a bullshit answer, it says I don't know. And this is effectively the fancier way of saying it is that we sacrifice recall for high precision on the recall PNR curve. And we operate at a very high precision point in the threshold of the system, and we sacrifice a lot of recall and then we deploy it to our human agents to help them get feedback. And our evaluation of our agents shows that we're usually right in Our answers about 85% of the time as a human. And our agentic systems operate at about a 95% precision, obviously a lot less recall on humans. But for the recall that we get, which is we sacrifice a lot of recall for that. But we're able to get to about 95% precision and give our human agents feedback to help them be more accurate and precise and improve. And in our deployment of our machine agents that are giving our human agents feedback, when we deployed it that month, we saw the single largest improvement in our human agents quality. And I think this is kind of the building blocks that we at AVEN are building towards how much of a consumer financial banking platform can we run with machines and make it more efficient so that we can take that efficiency savings and pass to the consumer in the form of a lower cost of capital? The theory that we have around this is something I call us seeking the Karno efficiency of an industry. Are you familiar with Sadi Carnot, the physicist? So we obviously share the same name, Sadi and Sadi, but he has a longer first name, but Sadie is I think, somewhere in his middle name, but I call him Sadi Carnot. Other people call him anything. And he produced this theory called the Carnot efficiency of an engine. And it basically is a fairly simplistic formula that calculates what is the maximal thermodynamic efficiency an engine can run at. And that is kind of the upper limit you can ever build of any engine, like a thermodynamic engine that has the maximal efficiency you can run that engine at. So you kind of constantly, as a mechanical engineer or an engine builder, trying to even remotely approach that degree of efficiency. And in some ways at aven, we're trying to find the Carnot efficiency of banking, which is what is the upper bound of how efficiently you can build consumer financial products and how much of it can truly be machined. And if we can machine it do we get more observability? Do we become more compliant? Are we actually obviously lower cost to consumers, but are we also higher quality to consumers by doing that? And I think all these things need to be true. And we take great pride in we're one of the highest rated on trustpilot for any HELOC lender in the United States. We take great pride in our NPS scores. We take great pride in how much of a clean kind of historical track record we've maintained on our compliance fronts. We're a very regulated company, and so we go through, I think, something like two dozen state examinations the last 12 months, and we kind of navigate that with, I think, a stellar record. Many thanks to our compliance and legal team and many thanks to also our engineering team, who invest a lot of technical firepower on building a highly compliant piece of infrastructure for us to be able to operate these products at scale.
- [45:57]
Marty
I think what you're getting at here too is something that I've really come to appreciate as I've been doing research about AV and how you built the company. It's taking something that's existed in traditional finance that's relatively boring, but to your point, has all these inefficiencies that exist because the primitives were built in an era by companies that were built in an era that wasn't really tech forward. And you have all this institutional regulatory calcification build up over time. And you have these behemoths in traditional finance that are oil tankers that can't or warships that can't be as agile. And so starting from scratch and bringing a tech lens to this part of the market, starting with HELOCs, hard asset lending more broadly, seems like it affords you guys an advantage in terms of what you can actually do from an efficiency standpoint, then that efficiency passed on to the consumer with lower rates.
- [46:58]
Saadi
100%. If you think about the core of what we've done, right is kind of not rocket science. HELOCs have existed for over half a century. Credit cards have existed for three quarters of a century. Neither of these are new products in the world. What we've really done is grinded down the efficiency of HELOC origination and put it in a form factor of an accessible product that consumers are familiar with. And we've taken the risk savings of a HELOC and passed it to the consumer as a lower interest rate. I would actually argue for the first few years of aven, our risk models for our HELOC were really no better than any other HELOC lender in America. We used FICO debt to income ratio and loan to value ratios as the core of our hypothesis on pricing and line sizing. And sure, over the years now we've built much more sophisticated models and statistical derivations of how to price consumers and how to line size them. And that has reduced credit risk tremendously. But our initial versions of our product were actually fairly basic and work really well actually. And the real magic, the real secret to Evan was the origination efficiency of a heloc. Not actually significantly or order of magnitude better credit risk underwriting. It was actually the fact that we were able to originate a HELOC really efficiently and service that HELOC really efficiently. That structurally reduced the risk and thereby structurally enabled us to reduce the cost of capital for consumers. And that's again a similar kind of vein in our Bitcoin backed product that we're bringing, which is like this asset class is structurally lower risk for the consumer. So how do we enable a really great capital markets function to operate on top of this asset class with all the kind of legal or compliance frameworks that enable us to continuously grind down that cost of capital and then bring that valuable lower interest rate to the consumer in the form of lower aprons and put it into the form factor that us consumers are familiar with and understand, which is, you know, credit card and you know, to similar to our home equity product. You know, the credit card just happens to be one of the access tools for this line of credit that we give a consumer just similar to our home equity product. We have the ability, you can literally click a button and get a 7.99% loan over 10 years with a 5 year IO in a click of a button and that you can get to your deposit account of your choice. I would recommend an avid deposit account that is now available to consumers as well. We offer great yields and great cash back on a deposit account with a beautiful metal card I might add. And so we think the credit card is just one of the access tools. I think it's a very powerful access tool. It allows you to use it on a day to day convenient fashion, but by no means the only way to access this line of credit. And you should use it for large purchases. Oftentimes being able to draw down a line with a fixed rate over a long time is super valuable and I hope to see consumers use it for both of those cases.
- [50:25]
Marty
So you have the HELOC beachhead product, now you have the Bitcoin lending product as well. What is your Long term view of where even's going, what is the end state of this business?
- [50:43]
Saadi
That's a great question. I mean in the very long term, we want to serve all the customers in the United States with the best financial products that we can build for them. And I think that should span the majority of their financial needs. And I think there's four or five major needs that a consumer has. One is, is, is financial products that are based on their home as a, as the core, core asset class. That's mortgages. It's HELOCs are the two kind of major products in that space. I don't know if you know this already, but in just the last few months we've started rolling out our test for, for our mortgage products and we have one of the fastest cash out refinance products in the world today. And that's in testing. We're very excited about it. It's doing really well. And so there's a lot more to come on that front. I think other asset classes, as you can imagine, we're starting with Bitcoin. We're very excited about it because we've been believers in the long term on this asset and we'll bring it to more assets, both digital and non digital. And for example, I think as you can imagine, if we can do it, if you can borrow against your Bitcoin, why can't you borrow against your stock in a way that is accessible to US consumers? The 1% are able to borrow against their stock. Elon Musk was able to borrow against his stock to buy Twitter. Why can't you and I and how do we bring that product to consumers in a way that helps them reduce their cost of capital while helps them and encourages them to actually invest and build in assets that accrue value over the long time and be able to borrow against it at much lower costs than they would otherwise? Yeah. And so there's a lot more to
- [52:33]
Marty
do and I love to hear it because choose my words carefully because I don't want to, I don't want to besmirch anybody specifically, but I think in the world that we live in today, where if gambling apps are top of mind for a lot of people there, I feel like any sports game you put on or any billboard you see, it's trying to push you towards gambling. In the broader world of crypto, there's a lot of what I would need to be degenerate speculation that is pushed on people. And I think what people really just need is better financial products that actually make sense. And I think hard asset lending to me at least could be wrong. Don't think I am. Makes a lot of sense. You own the asset, it's not unsecured. People are adults. If they want to take risk by taking on a loan, they can. But there is sort of an ethical framework in my mind that people should operate within. Seems like, correct me if I'm wrong, that's how you're approaching it too. Let's do sensible lending with sensible structures.
- [53:41]
Saadi
That's exactly right. And look, I think we happen to be fortunate to live in a country that has sensible regulations around this. For example, in asset backed lending, unlike unsecured lending, by the way, where if you're unsecured credit card, unsecured personal loan with 20, 25% interest. You know, the irony of this is that unsecured credit cards, unsecured personal loans, none of them do any income verification, none of them are checking. Do you actually have the ability to pay back this loan? That's something that's really important to us. Every single customer, even from the day we started goes through income verification which we must make sure that you have the ability to pay this loan. On our home product. That's actually a regulatory requirement. We will also do ability to pay testing for our bitcoin backed product as well to make sure you aren't in this position where you're just going to have to liquidate your bitcoin. We want to make sure you have the ability to pay back this loan that you're taking so that you can be responsible. Responsible in how you borrow with the Evan bitcoin product. And we think these kinds of elements make asset backed borrowing much more responsible, much lower cost for consumers and I think they operate in, I think healthier regulatory regimes for us consumers.
- [54:57]
Marty
Agreed. Well Nadi, thank you for your time and for putting up with the technical difficulties.
- [55:05]
Saadi
Oh, it's a pleasure.
- [55:06]
Marty
I am excited for you guys. Excited for bitcoin, excited for bitcoiners. Like I said, I think many of us in the industry and bitcoiners more broadly have been looking at this sort of bitcoin collateralized lending part of the market and saying this is number one, we think going to be big. And number two, it would make sense if the cost of capital was lower because of the risk involved with bitcoin backed lending compared to other asset lending structures that exist out there. I think aven coming to market with this product at this cost of capital, it's going to raise the eyebrows of many in and outside the industry and hopefully a rising tide lifts all boats and we get more sensible products across the board, more sensible rates across the board because of this. So thank you for putting in the work and for building this out and I'm excited to see this hit the market.
- [56:04]
Saadi
Thank you, Marty, it's been a pleasure. Thank you for having me on the show. And many thanks frankly to our team who made this happen and the hard work of Cesan, Garrett, Ani, Gerald and so many people on the team that helped build this product and bring it to market. And look, Marty, all I can promise you is that we're just getting started. We think there's a lot more to do. We think that 7.99 is just where we're starting. My goal is to keep grinding that thing down with hard work and, and perseverance and hopefully our bitcoin backed products will have the lowest interest rate not just amongst our portfolio, but in the world.
- [56:38]
Marty
You heard it here first.
- [56:40]
Saadi
Brilliant. Marty, a pleasure. Thank you for having me.
- [56:43]
Marty
Thank you Saadi. Peace and love Freaks.
- [56:46]
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