Why Zero Hash Rejected a $2Bn Offer to Build the Future of Financial Infrastructure

Name: Why Zero Hash Rejected a $2Bn Offer to Build the Future of Financial Infrastructure
Uploaded: 2026-02-10T20:34:19.000Z
Duration: 1 h 14 min 23 s

The Future of Financial Services and Blockchain

Business Resilience During Crisis

The speaker reflects on the near closure of their business during COVID, highlighting a six-week period where global operations nearly halted.

An aggressive takeover attempt was made by an investor who threatened to pull funding, showcasing the vulnerability of businesses in crisis situations.

Insights on Stablecoins and Usability

The growth of stablecoins is noted, with excitement surrounding their potential despite current usability challenges.

Emphasis is placed on improving usability and reducing friction to enhance global connectivity, which could lead to significant increases in adoption.

Introduction to Edward Woodford and Zero Hash

Miguel Armasa introduces Edward Woodford, founder and CEO of Zero Hash, a key player in blockchain infrastructure that collaborates with major companies like Stripe and Interactive Brokers.

Zero Hash has raised substantial investment funds and recently turned down a $2 billion acquisition offer from Mastercard.

Decision-Making Behind Rejecting Acquisition Offers

Woodford discusses the rationale behind rejecting the acquisition offer, emphasizing his belief in blockchain technology's future impact over the next two years.

He expresses confidence that as an independent entity, Zero Hash can achieve greater influence and success compared to being part of a larger corporation.

Emotional vs. Practical Considerations in Business Decisions

The decision to reject the acquisition was described as revitalizing; it reignited passion for the business amidst ongoing momentum.

Woodford acknowledges practical realities such as rewarding team members through secondary options and favorable market conditions for public offerings.

Personal Identity Separation from Business Success

Woodford emphasizes the importance of not tying one's identity completely to business outcomes, especially after experiencing near failure during challenging times like COVID.

He shares insights about maintaining mental health while navigating high-stress situations within entrepreneurship.

Understanding the Balance Between Business and Personal Identity

The Importance of Separation from Business

The speaker discusses the emotional toll of being deeply involved in their business, indicating that they have "grieved" it multiple times. They emphasize the need for a degree of separation to maintain a healthy balance.

They express excitement about building in their field, noting that their skills align well with current opportunities, but also reflect on the importance of not being overly attached to one idea or path.

Reflecting on Personal Choices and Impact

The speaker shares insights from their father about remaining open to various possibilities in life. They question whether their current path is truly the best outcome for themselves and their team.

Discussing identity, they reveal personal background details, including growing up in London and living in the US for over a decade.

Educational Background and Its Influence

The speaker describes their mixed heritage (half Spanish, half English) and how it shapes their perspective. They mention limited fluency in Spanish despite familial ties.

They recount moving to the US at 20 after being rejected from Oxford, which they view as a pivotal moment leading them to pursue education at MIT.

Discovering Interest in Financial Technology

Their rejection from Oxford motivated them to seek prestigious educational credentials, ultimately leading them to MIT where they were inspired by a professor's work on Bitcoin.

At MIT, they participated in classes that sparked an interest in cryptocurrency; notably, students received Bitcoin as part of an initiative.

Evolution of Business Ideas

The speaker reflects on how attending MIT broadened their horizons regarding entrepreneurship and technology's potential impact on business.

Initially founded as an exchange for institutions focused on Bitcoin, their company evolved into providing infrastructure services as customer needs shifted towards B2B solutions.

Understanding the Evolution of Fintech Infrastructure

The Shift from Consumer to Infrastructure Focus

The discussion highlights a common narrative in fintech where companies initially aim to solve consumer problems but discover that their internal infrastructure holds greater value than the consumer-facing product.

The speaker reflects on the attractiveness of an infrastructure business model, combining B2B costs with B2C margins, which enhances profitability and market appeal.

Disruption and Value Transfer

There is a belief that emerging technology will fundamentally disrupt how value is transferred across various sectors, emphasizing the importance of assisting businesses in adapting to this change.

The conversation mentions significant partnerships with large clients like Stripe and Morgan Stanley, indicating a strong market presence and credibility within the financial services sector.

Core Business Lines Overview

The company categorizes its operations into three main business lines: Trade (crypto integration for partners), Transact (stable coin movement), and Tokenization (infrastructure for asset tokenization).

Notable collaborations include working with Interactive Brokers for crypto offerings and Stripe for stable coin transactions, showcasing diverse applications of their technology.

Insights on Tokenization

Tokenization is described as a mechanism for decentralized ownership that can eliminate intermediaries; however, it’s not universally applicable to all use cases.

A clear distinction is made between tokenized assets and traditional forms of currency. For instance, while tokenized dollars are useful for transferring value, holding actual dollars may be more practical due to regulatory constraints.

Value Addition through Tokenization

Tokenization adds significant value primarily when money is in motion rather than at rest. This creates global connectivity by allowing anyone with a smartphone access to these technologies.

An analogy is drawn between the evolution of SMS interoperability and current trends in tokenization, suggesting that broader acceptance will come from enhanced cross-platform capabilities.

Understanding the Impact of Tokenization and Blockchain Technology

The Fragmentation of Blockchain Development

Various blockchain technologies are being developed, including Ethereum, Solana, and Canton. The integration of these technologies is crucial for unlocking their full potential.

Usability Challenges with Tokenized Dollars

Despite their complexity, tokenized dollars hold significant value for many people globally. Their ability to facilitate real-time value transfer via mobile devices is a powerful feature.

Growth of Stable Coins

A recent report highlights the rapid growth of stable coins, which are gaining traction despite usability issues. Improving usability will further enhance their adoption and global connectivity.

Global Access through Tokenization

Tokenized equities could strengthen the US dollar equity market by providing easier access to capital markets for individuals in regions like South America and Africa.

Economic Benefits of Blockchain Infrastructure

Blockchain technology serves as a global infrastructure that enhances access and transaction speed, contributing positively to GDP growth across economies.

Importance of Speed in Payroll Systems

Speed in payment systems matters significantly; it can alleviate financial stress for employees who often provide loans to their companies by waiting for paychecks.

Building a Strong Company Culture

The founding team plays a critical role in establishing company culture. Their influence persists even as the company grows larger and more complex.

Early Leadership Decisions Matter

Hiring early leadership members is vital as they have greater agency in shaping organizational culture compared to initial hires alone.

Selecting the Right Founding Team Members

The founding team comprises not just the first few hires but includes key individuals from the first 50 employees who contribute significantly to setting cultural values within the organization.

Building a Remote Company Culture

The Challenge of Remote Work

Transitioning to a remote-first company has made it harder to build team connections compared to the pre-COVID era when teams were physically together.

The importance of intentionality in sharing information and organizing global meetups every 12 to 18 months is emphasized to foster team cohesion.

Hiring and Team Development

Initial hires were not perfect; there was significant turnover before establishing a solid founding team, highlighting the iterative nature of building a successful team.

Reflecting on past decisions, the speaker acknowledges mistakes in choosing investors who did not align with their vision.

Lessons from Investor Relationships

A mentor helped navigate investor psychology during critical financial moments, emphasizing the need for supportive investors rather than those seeking quick exits.

Some investors pushed for early sales at lower valuations, which created stress; learning that not all investors are beneficial was crucial.

Managing Investor Dynamics

The speaker learned that if an investor is unhappy or unhelpful, they can be exited from the cap table, reinforcing that founders should not feel trapped by their choices.

Founders should encourage constructive feedback while discouraging negative agitation from investors, as it can harm company morale.

Strategies for Future Fundraising

When raising capital, it's essential for founders to assess potential investors' focus on influence versus power; those who prioritize influence tend to foster healthier relationships.

Conducting reference calls and ensuring protective measures are in place can help identify suitable investors amidst challenging fundraising environments.

Building Infrastructure and Product Decisions

As companies grow into infrastructure services, there's a risk of becoming overly reactive like a development shop instead of strategically defining what products should be built versus what customers should handle.

Insights on SaaS Infrastructure and Customer Relationships

Understanding Client Dynamics

The speaker discusses the challenges of identifying profitable clients in SaaS infrastructure, noting that projections can often be inaccurate. A clear vision of what to build is essential for success.

Balancing Responsiveness and Roadmap Clarity

Emphasizes the importance of being responsive to customer needs while maintaining a strategic roadmap. Allocating about 20% of development resources to customer requests fosters stickiness without compromising long-term goals.

Pricing Strategies in Infrastructure

Highlights the significance of pricing decisions, particularly in infrastructure where revenue often comes from a small percentage of customers. A monthly minimum with usage-based pricing aligns interests between the company and its clients.

Discusses avoiding an "all-you-can-eat" model to ensure shared upside with customers, which helps maintain a cohesive customer base and creates better alignment.

Value Over Price

The focus should be on delivering value rather than competing on price. This approach attracts customers who appreciate the service's worth, leading to stronger relationships and retention.

The speaker mentions that not being the cheapest forces businesses to articulate their value proposition clearly, ensuring they engage with clients who align with their mission.

Customer Selection Criteria

The speaker frames rejecting unsuitable customers as a strategic choice rather than outright rejection. It's crucial to work with partners who share similar values, especially in regulated industries.

They express willingness to turn down business if it doesn't align with their long-term vision or if potential clients are not ready for collaboration.

Trust as a Competitive Advantage

Trust is identified as the primary defensibility factor for their business model. It encompasses regulatory compliance and cybersecurity measures critical for financial institutions.

The discussion highlights that trust must coexist with innovation; startups need both elements to succeed in emerging technologies like crypto and stable coins.

Company Metrics and Leadership Insights

Key Company Metric: Revenue

The speaker emphasizes the importance of tracking revenue obsessively, stating it provides strength to the business. They monitor this metric daily.

Over the past three years, the company has experienced consistent revenue growth. The transactional nature of their business allows for real-time tracking of earnings.

Churn Measurement Innovation

The speaker discusses a new approach to measuring churn by weighting it based on employee performance. High-performing employees who leave are considered more impactful than lower performers.

This nuanced understanding of churn aims to provide a clearer picture of its implications for the company's health beyond just numerical percentages.