Misfit Entrepreneur May 2020 - 198: Changing the Way We Think About Investing with Linus Founder, Mathew Nemer

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Dave Lukas Chats with Mathew Nemer

198: Changing the Way We Think About Investing with Linus Founder, Mathew Nemer

This week’s Misfit Entrepreneur is Mathew Nemer. Matt is the co-founder of GetLinus.IO, a fintech company that is changing the game when it comes to what banking is and getting great returns on your savings. Linus pays over 57 times that national average interest on clients’ accounts and is able to do so by taking advantage of blockchain technology and the decentralized, digital asset credit markets. Don’t worry if that went a little over your head, because Mathew explains it a lot better and simpler than me.

The important thing I want to discuss today is the future of banking and finance and how companies like Linus are at the forefront. And we are also going to discuss how Mathew was able to get a rag tag group of IBM’ers, former founders, and top software execs to join his crew and make Linus a reality.

www.GetLinus.io

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Show Notes

Matt’s career was launched in 2008. He started with a wealth management firm/hedge fund and hustled to make a name for himself. With all the carnage happening in the markets, he knew that the firm probably wouldn’t keep him, so he went to grad school and finished tops in his class. He worked at Chicago Board of Trade during school in the grain pits.

He then worked at Morningstar in 2012 as analyst. He started his first startup in 2012. As he says, he didn’t know what he was doing. It didn’t pan out. He then moved to Nashville and took a job with Vanderbilt University. It was at this time, he started to learn about Blockchain and Bitcoin and started following it.

In 2016, he noticed that BTC Media was gaining steam and Bitcoin meetups were becoming more common. He started doing work on the side for people doing ICO’s to get his feet wet. He then worked for BTC Media as their CFO. He was recruited by some other companies in the space and pitched an idea to one of them and landed with a crypto wallet company. This is where he met his business partner, who worked at IBM in the blockchain area. They were working on ideas on the side and decided to build the idea of Linus on their own. They got funding and put the pieces of the team together.

At the 10:30 mark, Matt and I discuss our current money system to set a baseline for what he does at Linus. (It’s best to just listen)

How does Linus work?

It is a cash deposit account, similar to a high yield savings accounts.
The difference is that Linus gives 4%+ interest.
They can do this by tapping into the digital asset credit markets outside the FED system.
Borrowers in these markets will pay higher interest to borrow US dollars.
Linus is considered a Fintech company.
They only deal with fiat dollars (like the US dollars), but use a blockchain concept.
The platform does the conversion of fiat to crypto assets and handles the lending process.
It functions like a bank account and you can deposit or withdrawal any time you want.

Break it down for us all to understand…

There are people that need USD to purchase cryptocurrencies and are willing to pay more interest for the ability to do.
Linus helps to provide this money. It is similar to a money market type of account.
It is a global market that Linus taps into.
Because people are willing to pay higher rates for the money, the amount Linus can pay customers is higher.
The borrowers put up collateral and have to store more collateral in escrow with Linus than they borrow, so that Linus has claim to it if they don’t pay.

How do you address that you are not FDIC protected, etc.?

Linus is outside the FED system, so it would not participate.
Linus does not do fractional reserve banking, so it would not apply to them anyway and they would not get approved.
The FDIC doesn’t even currently have to a reserve ratio because of the CARES act.
Matt says that if you do truly feel you need to know that the money is there no matter what in the matter of 3-6 months, then invest in something like a Marcus account.
If you are looking for a solution between traditional low interest savings accounts and investing in the markets, which carries minimal risk, Linus or a solution like it may be a good option for you.

At the 27 min mark, Matt talks about risk and the “efficient frontier.”

What else should we know about blockchain and the emerging digital ecosystems?

Matt is a big fan of Bitcoin and Etherium
Linus is built on the Etherium ecosystem.
Bitcoin is the largest and most widely used.
Bitcoin is more like gold in that it is a deflationary currency – it is predictable like gold.
There is a limit to amount of Bitcoin that can ever exist. It is finite.
A lot of people haven’t notice that most of the big players and banks are going into cryptocurrency and positioning themselves to be the players in the space.

At the 34 min mark, Matt shares the example of JP Morgan getting into crypto and creating it’s own stable coin (digital dollars).

The technologies JP Morgan/Chase and others are using are the same ones Linus is, so it confirms they are headed in the right direction.

What have you learned so far in this venture about entrepreneurship?

It is an interesting time to be an entrepreneur because ideas can grow so well.
We need to be careful not to get stuck in the day to day.
Take a step back and look at the longer-term opportunities.
It’s important embrace the digital world and interact with people as much as possible and in every way possible during this time.

“The best thing you can do in your life an career is put blinders on. Don’t waste energy worrying about things you cannot control.”

How were you able to get a team of top talent like you have pulled together for Linus?

The best place to start is with like-minded people.
Network through friends and those you work with currently.
Be open to people that are unique and have other skills sets or experience that lends it to succeeding in your business. Even if they don’t have experience in the business you are in.

What is your best advice for an entrepreneur starting today?

Put on blinders
Find joy in other things.
Don’t forget to learn lessons from all areas of your life.
Practice passive thinking. Sometimes synapsis fire and connect better when you are away from your business.

Best Quote

"The best thing you can do in your life an career is put blinders on. Don’t waste energy worrying about things you cannot control."

Be yourself. It sounds cliché, but it is actually really hard to put into practice.

Grow your network. You will owe a lot of people a lot of favors. Do your best to repay them.

Persistence is king. You cannot give up.

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