Have The Right Connections
Victor Hogrefe
Devin Miller
The Inventive Journey Podcast for Entrepreneurs10/9/2021
Have The Right Connections
The Inventive Journey
Starting and growing a business is a journey. On The Inventive Journey, your host, Devin Miller walks with startups along their different journeys startups take to success (or failure). You also get to hear from featured guests, such as venture firms and angel investors, that provide insight on the paths to a successful inventive journey.
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three things that you need essentially uh you can you can get along with one of them barely if you have two things it's good if you have all three that's great um namely the one thing is you can be an expert if you're an expert in the field that's already a great start right um you could have the money if you have a bunch of money that's already a great start as well you can you can buy the expertise or you can have the right connections which is another hugely important piece [Music] hey everyone this is devin miller here with another episode of the inventive journey i'm your host devin miller the serial entrepreneur has grown several startups in the seven and eight figure businesses as well as the founder and ceo of miller ip law we help startups and small businesses with their patents and trademarks you ever need help with yours just go to strategymeeting.com grab some time with us to chat now today we have another great guest on the podcast victor hagrifa and i am sure i slaughtered his last name but that is my best uh best attempt so victor um as you can tell may not have grown up in the u.s actually grew up in germany or germany uh came to the u.s for college studied philosophy but the decided the bill was too politically charged and so switched over to computer science he graduated friend asked if he had ever heard of bitcoin his friend told him so about bitcoin he got him hooked on that around 2017. study it came up to speed um his friend wanted or him and his friend want to do something area went to vancouver created an app um our business owners let them know that the app wouldn't work for paying bitcoin as well um so did a few other things with bitcoin got in the field of analytics and then made some connections in china project finished up phase one but didn't move to phase two friend call them about a trading algebra algorithm and got together with them put some money in bought brought on some experts and launched i think what they're doing today so with that much is a quick introduction welcome on the podcast victor wow you really summed it up there there's not uh not much for me to say hopefully there's a little bit more to say otherwise it'll be our shortest episode yet but no i summarize what is a much longer journey um so maybe unpack it a bit tell us a little bit about you know growing up a journey coming into the us for college and how your journey got started there yeah so uh growing up growing up in germany um has its pluses and minuses uh quality of life is pretty good there but uh for a certain type of personality doesn't really work that well like the anti-authoritarian people um and i always had a problem with authority and and this troubled me greatly when uh troubled my parents as well um trying to get a career going because i pretty much knew i could never work in a corporate environment just be hired by somebody and work there um not that i'm difficult to work with it's just that i don't like it um and so yeah i'm right there with you i you know i think there's a lot of uh business owners startup small businesses that part of the reason that they're doing that is because their personality is such a hey i like to do my own thing figure out my own urge chart my own course or do my own thing and it doesn't always fit into the box of working for someone else and so definitely understand and resonate right there with you exactly exactly so yeah um i came over to canada to study um philosophy because that was all i cared about really i had some fantastic professors in my first year which completely convinced me that this is where i wanted to go and i wanted to be a professor for philosophy the issue was that as you mentioned um in the summary as time went by i kind of came into the field thinking oh this is philosophy it's all about reasoned argumentation um i like to look at arguments i like to read papers i like to discuss things with people turns out that that was more or less a misconception about the kind of political environment that academic philosophy is in right now um and more and more i was i was kind of turned off from the field by just my fellow students and some professors as well because it was very political and the kind of argumentation that was going on was not in my opinion very good um it served various political purposes and i'm a profoundly non-political person so i don't want to uh be involved with that um so then i thought uh well i'm in my can i swear by the way try and keep it pg we'll let that one right and the rest of it um i was in my third year at the point and i was uh i was getting nervous because uh if philosophy wasn't going to work out for me then what the hell was i going to do so i took more science classes computer science statistics and greatly enjoyed those but by the time i graduated i had a philosophy degree and nothing else and i could say that i could do you know computer science but on paper i just didn't look very good i think um and that's another reason why i eventually decided to go independent because really i had no other choice so so if you don't have a backup plan i think that's a good position to be in especially if you're just fresh out of university um yeah so after i finished my studies i then went to other universities university of washington and i briefly spent a summer a semester at harvard which was a great experience after that i went back to germany um and was kind of lost i didn't really know what to do on paper i looked terrible and i uh i just talked to my friend who was still in university at the time and he was studying mathematics he introduced me to bitcoin i had kind of heard of bitcoin before but didn't really know anything about it i thought it was you know the latest gimmick maybe um now it's probably more legitimate than it used to be but i still think people in you know day to day are still trying to figure out what it means other than they see in the news that it keeps going up in value well so in the early days a lot of people had the experience especially in the computer science field they had the experience of being introduced to bitcoin and immediately thinking that it's a scam or that it's that it's just nonsense um and they they read about it and they they study it more and more and they try to figure out ways in which it's a scam and over time they figure out this is actually really robust and they become believers so to speak in the technology because no matter how you try to attack it or how you try to look at it it just seems to work really really well from a technical point of view that's not to say that the price volatility and all this kind of stuff that's all the speculation side of things but the technology side of things is what gets people hooked at least no and i think that definitely makes sense and you know so now so you go back to germany and you have a friend says hey have you you know have you looked into bitcoin it looks interesting you take a look at it and say yeah it does look interesting picks your interest and you get into it and i think at that point now remind me of that wrong was that the point you did your startup where you started to look and explore whether businesses could use it as a form of accepting payment yeah so i uh at the time i had no idea how startups worked how businesses worked nothing like that i just knew i wanted to do something with bitcoin and my friend was the same so we just uh i came back to vancouver and uh we just got together and we brainstormed a lot and we knew we wanted to do something and i had just completed a course in computer science in java which is what most android applications are based on and so i thought okay i'll just start coding something and um so i started creating this prototype um and my friend uh was going around local businesses and and asking some of his contacts and saying well you know are you interested in bitcoin are you interested in using this as a payment method perhaps it's this alternative currency magic internet money nobody really knew what it was but a lot of people were you know a lot of business owners i guess if somebody comes along and offers you something for free that might help your business in some way you're just gonna say okay i'll try it sure sounds good it works out great i make more money it doesn't work out you're the one that's out not me type of a thing exactly exactly so i mean the app um never got into it it went into the um minimum viable product stage so it worked but it looked ugly and it was you know not very good um and uh at that right about that time and the bitcoin mania started the hype cycle started i know if you remember 2017 but it started to get really crazy the prices went up and up and up and people were just getting into it and um around that time we we kind of noticed that nobody wanted to pay for anything with bitcoin because if you think that if you have 100 bitcoin now and you think tomorrow it's going to be 200 then why would you spend it on anything right um so that's kind of the issue with deflationary currencies is they decentrify disincentivize spending so so the whole payment app idea really was was uh not a good idea and we noticed more and more trouble with the fundamental uh concept of it which was that even if these business owners now had bitcoin what would they do with it like they had to switch it over into fiat currency because presumably they had expenses they had to pay they had to buy products they had to pay their employees so you have to switch it anyway um and at the time that that bridge between crypto and fiat was incredibly undeveloped so um it cost anywhere between five and ten percent to actually switch bitcoin into into canadian dollars or american dollars depending on where you were the atms were the worst they were you know 12 or so there were some companies come some broker companies doing it but they had high percentages as well um and the the way to do it back then was just to uh to reach out on craigslist or find someone you knew who had bitcoin and you would meet them in a cafe and give them cash and they give you bitcoin so that that was really early days um so yeah we we kind of scrapped the idea of the payment app didn't really didn't really work out um but we still knew we wanted to do something in space so what we did was precisely that we just we saw that the market was going crazy everyone wanted to get their hands on on bitcoin we knew how to get bitcoin so why don't we just offer our services to people to get bitcoin um so now one question just on that because you know you have a what do you think is a good idea and i think you know maybe not but my under limited understanding of bitcoin is it was tended to originally set up to be more of a non-governmental stable currency that could almost be used as an exchanger for buying things and that and then it almost kind of morphed into where people are speculating it or holding on to it because it keep going up and up and up and so it kind of switched from its original or intended purpose but as you're going through that trying to originally use it as a startup and do it as you know people can use it in order to purchase things and i even remember when it first came out or there was one of the first shows it was on netflix or amazon or something where people tried to live their their live a month only using bitcoin for any transactions they did and how difficult it was and how it really didn't work very well but with all of that said as you're trying to get that up and going was there kind of a point where you're just saying hey this is not going to work with you know not enough businesses are using it or if they are using it nobody's adopting it or how did you kind of come to the term or determination that while it may have been a in theory a good idea when you tried to put into business practice it wasn't working out uh i wouldn't say it was a particular point in time it was kind of a gradual recognition that this wasn't really where it was at um and then also at the same time this other opportunity came along where we said we can make way more money and we can make money right away by just buying and selling bitcoin to people who wanted to buy it and our clients were mostly like lawyers in fact the jewish community in vancouver was one of our first uh clients and they all recommend each other so that was very good for us um but um the i mean to an extent the debate still rages on um as you mentioned the original intent of bitcoin was a peer-to-peer digital cash um but uh the the bitcoin maximalist is very much argued for a long time and probably still do that once bitcoin is big enough once it's universally accepted once all that happens then the price stability will happen but if we look at other asset classes and other commodities and everything we don't really see that even gigantic commodities like gold or copper or anything like that you don't really have price stability um so so that's kind of i think unlikely to happen and but but people still hold on to it i mean el salvador just just declared it a national currency right uh under the assumption that it is actually a currency and um you know i fall on the decide of things where i say that it's not really a currency it's it's a some sort of asset um but uh yeah anyways but so now you see come to that realization it's kind of creeping you know kind of comes at an oversold period of time just saying hey who tried this you know had some people initially adopted it didn't work and eventually came to point that okay the business ideas isn't going to work out or is it going to be accepted so at that point then where did where did things take you from there where'd the journey go from there yeah so like i said we we um we just hustled a lot uh running around town selling bitcoin and buying bitcoin and making money off of the difference um and uh eventually it became so heated that we got turned off of that whole thing because we saw a lot of scammers entering the space people put their life savings into it it was very it got uncomfortable uh to the point where old ladies were asking us to put in you know all their savings because their nephew had told them that the 0x token was going to be the next big thing right at that point where we refused to sell anymore and it got too too wild so we got out basically around the peak and um then we got into consulting because around that time ethereum really came into the limelight icos went crazy people wanted to do token offerings for everything and i remember one specific meeting i went to at actually the university's bitcoin club they had a guest speaker who was one of the founders of axiom zen which had which created the cryptokitties um if you remember that so that was really mind-blowing because it showed to me it it uh it really enlightened how how much ethereum was capable of and what you could do with it and that this was really an interesting future pathway to go um and of course cryptokitties essentially all of the nft mania that's going on right now it's all based on cryptokitties more or less so anyway um we became consultants we we gave talks at law firms we um helped some companies do their tokenics we came up with all kinds of ideas we got very interested in stable coins we contributed some articles kind of to the to the general canon i suppose um theorizing about stable coins talking about stable coins and uh then um we we got into analytics so if you know bitcoin you know that it's kind of an open ledger it's transparent which means that every single transaction since the beginning of bitcoin can be traced and of course there's no names attached to those transactions it's just the bitcoin addresses that are that are openly available however based on a bunch of heuristic and statistical methods you could group numbers of addresses together and you can kind of figure out what belongs where and the movements of the coins through the network um and once you know that one bitcoin address belongs to for instance an exchange or a person or a dark market once you know that you can kind of um you can trace it through the network and kind of make these connections and say okay these group of addresses probably belong to binance or these group of addresses belong to this dark market and we saw that there's a there was a need for that um because as crypto was becoming more mainstream crypto businesses um especially in exchanges they were becoming more and more worried about regulation and kyc laws and anti-money laundering laws and so they wanted to make sure somehow that um the crypto that they had on their platform and from their clients was clean and wasn't used for terrorist financing for instance or illicit financial purposes so they started to require these services where there was a bunch of companies chain alice's for instance was one of them there was one in vancouver called um blockchain intelligence group they they sold their services to not only companies financial companies exchanges but also law enforcement cia fbi these kinds of places um we became interested in that and uh through a connection of a connection in china uh we found out that china was very interested in this of course so uh we were one of those i suppose startups that that got poached by the chinese and and we we raised a bunch of money uh in china or our chinese partners did um and then we flew over to china we opened up an office in shenzhen and hired a bunch of developers and and developed a software tool to uh to help the clients the eventual clients of the company which would include the government um uh trace trace cryptocurrency transactions and make sure that or at least increase the likelihood that these transactions weren't illicit somehow it was a fascinating experience in china i was there for a little over a month and then our office existed there for about six months until covet hit and then everything shut down and then our chinese partners couldn't come up with funding for the next round of investment so that whole project kind of just went away unfortunately but it was still a fascinating experience the way business is done in china is very different than here everything is based on connections with the party and the local local party and our chinese partners had those connections and many times we had kind of a full day of work and then in the evenings we went out to fancy dinner places with these party officials and uh they got blind drunk they they drank a lot um the way they drink is is they they force you to drink they all toast each other and then you have to drink and they get so drunk that they go away and throw up and they come back and drink more and they almost never discuss business during these meetings but it's kind of building about building that connection and then they just hand wave it away and say yes we'll do it it's no problem we're like yeah you're in the circle now of doing this business so now one question just to kind of fast forward so now covet hits and you say oh you know sounded like it was a pretty interesting business it was gaining traction and then unfortunately coped hit and things went away so now you kind of hear you know the second time saying okay we've tried our second startup again didn't work out now this time for different reasons it wasn't there wasn't initially demand but because you know people or because of circumstances outside your control kind of went away so then kind of where did you guys go from there where did where did your journey take you from there right yeah so um luckily i think a lot of people aren't in this position but luckily we were in the position where we just made enough money off of our startups to keep going so it wasn't they weren't big successes they kind of failed and or it didn't work out or um something else happened but um they they just made enough money for us to hang in there right um and i think that was really important because otherwise we could have just we would have just had to stop at some point right um so we we got back from china government happened nothing worked out um and then a friend called me who i had met in the crypto community here and he approached me with the project that he had been working on which was a trading algorithm and i was i was at this point very skeptical of trading algorithms in fact i've written articles about trading algorithms and i've tested some of them that were like available um gecko i think one of them was called and uh basically my my stance at that time was that trading algorithms rely solely on market that's in the rely on solely on data that's in the market and my argument was that that wasn't sufficient data to reliably predict the prices so my argument was that pure technical analysis was not possible in the long run because there's just not enough data in the market to make those predictions consider consistently and i was soundly proven wrong by my friend's ingenious algorithm which uses a combination of ai and sophisticated mathematical kind of models and execution strategies and uh yeah it worked out really well we put our own money in um tested it out for a long time saw kind of all kinds of scenarios happen and and addressed those problems um founded a company um around it to make everything official and have the have it all be uh secured uh ip wise and then we we started inviting our friends and our business network into this algorithm which made a lot of money um relatively consistently and then at some point it became so big that we decided we needed to this was getting a lot becoming a liability just from a from a regulations point of view we can't just hold all this money from people and we're not licensed or regulated brokers or financial entities or anything like that right um so we decided we needed a more sophisticated structure so we got together with another vancouver company hoovest who had all the licenses they were they were fund administrators wealth managers um and they created an offshoot fund that they own and we license the software up to them um and we're doing the same thing in the british virgin isles right now and possibly in the middle east so the company our company by the way is eon labs uh and and it's uh high frequency trading for cryptocurrency futures uh it's a bit of a mouthful but uh hey i i don't know if i could i would be able to get the mouthful off every time but i think the technology sounds cool it sounds like a fun journey so no that that definitely makes sense and it's interesting how you kind of it sounds like with each portion of your journey you learned a little bit more you tried some businesses they incrementally got more success and then this latest business is even gaining uh further traction so that's that's definitely exciting so well as we kind of walk through your journey got a bit up to where we're uh we're at in the present great time to transition to the two questions i always ask dana beach podcast so the first question i always ask is along that journey what was the worst business decision you ever made and what'd you learn from it the worst one i think was working with the wrong people um but it's often impossible to tell who the wrong people are uh hindsight 2020 of course but uh the red flags were always there but i chose to ignore them because there was always a financial opportunity or it was too tasty to say no or you know when you're kind of young and hungry you uh you definitely tend to take more risks and you are willing to ignore the red flags but one of the things i would say is that if there are red flags definitely be skeptical because um it can turn into a real headache later on and uh an older businessman um who kind of is a kind of mentor to me he said that businesses fail for two reasons essentially they either run of money or ego um and i've had an experience where it was well i've actually had both experiences but uh but the ego part is definitely i think even more dangerous than running out of money um no and i i think there's a lot of truth and i mean i think that you know it is it is hard because you get into startups and and people are you know the by definition people are getting the stardust because because they think they're smarter can do it better do it you know improve and the thing is improve upon what other people think and so you kind of have to have that personality but there is that point of you have to get people that while they are smart and intelligent can do things that are motivated and willing to take risks you also have to have that balance of personalities to where it isn't just you know ego driven and it isn't just you know people trying to show that they're better or smarter but actually convert it over into a product so i think that that definitely makes sense so second question i always ask is talking to someone is just getting into a startup or a small business what do the one piece of advice you give them uh i always say you need uh there's three things that you need essentially you can you can get along with one of them barely if you have two things that's good if you have all three that's great namely the one thing is you can be an expert if you're an expert in the field that's already a great start right um you could have the money if you have a bunch of money that's already a great start as well you can you can buy the expertise or you can have the right connections which is another hugely important piece and if you have all three of those then you're basically set if you're none of those then you might want to work on being an expert or getting the money or getting the connections well i think i think that's great advice and i like how say you might be able to get a little get buy with one two you'll do do well and three you'll be successful so i think that that's definitely a great a great piece of advice for all the listeners so well as we wrap up now if people want to reach out to you they want to learn more they want to be a customer they want to be a client they want to be an employee they want to be an investor they want to be your next best friend any or all of the above what's the best way to reach out to you contact you find out more well uh people can visit our website um eonlabs.com um or uh reach out to me i don't really have twitter and social media so uh um yeah eonlabs.com is probably the best way to reach us there's a contact form and all right well i definitely encourage everybody to check out the website reach out to them linkedin works as well actually sorry all right linkedin works as well every either way reach out to make connections and uh definitely is a great resource especially if you're looking to get into cryptocurrency so now with that um appreciate coming on the podcast it's been a fun it's been a pleasure now for all of you that are listeners if you have your own journey to tell you'd like to be a guest on the podcast we'd love to have you just go to inventiveguest.com apply to be on the show also make sure to like and subscribe and share the podcast so everyone can find out about our awesome episodes and learn more last but not least if you ever need help with patents trademarks or anything else feel free to reach out to us by going to strategymeeting.com and are always here to help well thank you again it's been a fun it's been a pleasure and wish the next leg of your journey even better than the last thank you so much for having me alrighty you
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