Why Do Most Tokenisation Projects Fail?

Why do so many tokenization projects never really get off the ground? Why do they fail? >> People think that just tokenizing it creates that market. It becomes magical and instantly everyone wants it. >> So would you say then that's where most early stage kind of tokenization projects fail. Tokenization isn't the magic wand a [ __ ] asset basically. >> Does the model work without tokenization?

If the answer is no, chances are tokenization is not going to be the answer. What would you say is the most common failure point? >> Legal unstructuring. Tech is tech. It works in a manner. The difficult part is structuring. What are you actually building? What are you actually selling? Can you tokenize a cup of coffee? Yeah. But why? >> Yeah. What's the problem you're solving? There's not really a problem.

>> Yeah. 75% of Dubai residents do not own any Dubai real estate. It becomes increasingly difficult to do so. I hope people are not looking at this as trading it like stocks because it is not. >> Y we're not creating a market that doesn't exist here. We're just taking an asset class that's highly illquid. >> Native direct tokenization is the future. Do we know everything? No. But we're going to figure it out as long as it's not like a a one door route.

We can come back. We can change direction >> and ultimately just keep moving forward. And I think that forward momentum is so important in building a business. If you walk, you'll get there. >> Yeah. If you run and you fall down and you get up and you run and you fall down and you get up and you run, you'll still get there faster. Welcome back to this episode of Blockby. Today I'm delighted to be joined by Robert Farqua who's the CEO of Mina for Control Alt.

Control alt or an issuer partner of tribes and Robert himself is a member of the advisory tribe. We're going to talk about how building a tokenization platform often breaks. uh what founders or startups typically usually overengineer and why building a platform like tribe typically forces you to think about big things early on. I hope you enjoy the episode. >> Robert, welcome to Blockby. Thank you for joining us and took a took several >> several meeting requests with your PA, but we got you here.

So, uh good job, June. Shout out to to her from the get- go. >> Um and yeah, glad I sent across the questions so you're uh ready. >> Well prepped. Well prepped. >> Well prepped. Well prepped. Um, so I guess first and foremost, uh, obviously you come from a a background that has a wide range of experience and I would say most people know you for tokenization projects. Um, but could you tell us a little bit about how you got there?

>> Yeah, sure. It's uh, I mean it's very much like most people in the web free industry. It's doing something completely different. >> Nothing to do with tech, nothing to do with tokenization or blockchain and then falling into it. So I used to I used to head a number of fractional ownership company um uh various forms the FSA then moving into the viral side. Um I really fell in love with what tokenization can bring to the market.

>> Um different investor rides different ways that existing models can be improved and then I just started learning more um and then I was offered an opportunity which I which I took and then sort of landed where I am now. >> Very cool. Um, when we started Tribe or when we had the idea of starting Tribe, we got told, "You need to speak to Robert. You need to speak to Robert. You need to speak to Robin." And this was before you had a PA, so you can imagine how difficult it was to to get hold of you then.

And then eventually we spoke to you and like who is this guy? Like what what what is this elusive character? And um, needless to say, I think we we uh we struck a cord or or got on very mobile from from day one. I think it was you were back in the UK at the time in is it Liverpool Street or wherever the office was at? >> Yeah, just opposite. Yeah. >> Um and you know obviously started talking and I think >> like I said you're already well known in the space for good reason and and absolutely you played a a fairly significant and meaningful part in us deciding to go for it which is why we're here today.

So um an early thank you I guess is is in order. You mentioned obviously falling into the the space by accident, but you've since earned your stripes. You've seen a number of different projects um come and go. >> Yeah. >> And I guess this that's where I want to start, which is >> why do so many tokenization projects never really get off the ground? Why do they fail? >> Because they feel like tokenizing something makes it valid.

It brings the liquidity. And it's a conversation we have with with an enormous amount of people as you can imagine is I want to tokenize an asset because it's not selling or because I can't find a market for it. >> Yeah. >> And people think that just tokenizing it creates that market. It becomes magical and instantly everyone wants it. >> I think you know as you know very well >> you have to have a marketable product that you can then say okay now what does tokenization bring which is in addition to a great product.

If the tokenization is the great product, what you are is a tokenization company. Yeah. >> Not a distribution company. So we see an enormous amount. I think as well it's people that don't understand what being regulated means. So being in this market and being a regulated company is very different to how a lot of these companies have experienced business before. I mean I've been you know I've been privileged to be CEO of a couple of regulated companies now and that is first and foremost the important part.

>> Yeah. >> Is making sure that everything you do it's by the book done in a professional manner and you know we work in the real estate market in Dubai. >> Yeah. There's a lot of companies which do not fit that mold that they want to move into this space because they see it selling, they see it exciting, then they're learning a lot on how it happens to run a regulated company. >> So would you say then that's where most kind of um early stage ventures or early stage kind of tokenization projects fail?

Is it the the first or one of the first regulatory hurdles or is it something else? >> Yeah. Yeah. So I wouldn't say it's necessarily the first like the first one you've been through this process you know you getting on boarded like starting that process with the regulator >> it's a lot of work but it's not material you then go through that exercise of saying okay I'm going to show the regulator that I am fully operationally ready I have everything lined up everything good to go that is time consuming that is expensive and that requires a lot of knowledge that is where we see a lot of them fail as start moving through that things are starting to get serious now.

>> Yeah. >> And then they sort of drop off. Now the regulator is very good at helping people move through that process. >> But the companies have to be there ready to put in the air for themselves as well. >> Yes. I mean ultimately the regulators are there to make sure people are doing the right things in the right way etc. They're not there to be the drive the commercial driver of a business right.

They're not there to run the business for you. In fact quite the opposite. Um, and just like you say, tokenization isn't the magic wand to a, you know, a [ __ ] asset basically. You know, neither is regulation a magic wand for a commercial model. >> Yeah. You you've got to know what you're doing. >> Absolutely. So, would you say then what would you say is the most common failure point?

Is it legal structure? Is it regulation? Is it technical or commercial? Which one would you say you've seen the most kind of critical failure points? >> Legal and structuring. Um so the technical tech is tech >> it works in a manner. >> Yeah. >> Now we with a lot of our partners we provide that tokenization technology. So they don't have to build that. >> What they have to build is front end integrations make the whole shebang work.

But that's not the the very difficult part. The difficult part is structuring what what are you actually building? What are you actually selling? How are people's rights portrayed in an accurate manner? That's the thing that the regulator really cares about. >> Yeah. >> Because everything else can run. It's how are you protecting those investors? How are you selling something in the correct manner?

So the the legal and the structuring side is difficult for a lot of people. >> Yeah. I mean I think we can all uh we can all speak for from experience that there's >> you're almost like a professional juggler to get these projects, you know, not just off the ground but actually kept off the ground and and not letting one of those balls drop. So um >> gone are the days of uh you know um lots of lots of tasks you know master of none.

Now it's >> everything. Yeah. Yeah. No no I completely agree. >> What would you say in for those thinking of building um a tokenization platform of some description you know whether that's real estate whether that's other assets. I've seen recently you've you've tokenized uh diamond inventory. There's been the tokenization of gold and silver and so on so forth. As you look to build a tokeniz tokenization business, let's say, what would you say looks straightforward on paper on a whiteboard, but then quickly falls apart when you start putting it into practice?

>> I think the first thing you ask yourself is why are you doing it? >> And it's a it's a conversation and it's a question I ask everyone. They come and they say, I want to build this business and I want to tokenize it. And I say why? Because as we alluded to at the start, you there's a lot of companies that think it's a magic pill. >> Yeah. >> So unless there's a very clear answer as to why something should be tokenized, >> very often that's not the correct route.

Now you can you can force it into that route, >> but then the conversation is always going to be why are there additional costs? Why is there additional time? Why is additional tech work to tokenize something that you can just run normally? Now examples like a coffee shop. You can you tokenize a cup of coffee? Yeah. But why? >> Yeah, >> because that coffee is just going to be sold regardless.

>> I think when people are looking at what they can do, >> our focus at the moment is a lot on high quality assets that are illquid and that's why we started with real estate. >> Y >> you invest in real estate, you know what you're about. >> Yeah. >> But it's an illquid asset. Now, how can you start doing something with it? >> Yeah. >> Same with the commodities.

diamonds, gold, silver, these are assets that people want to invest in >> and they want to be long in that investment. >> Yeah. >> Then how can you start doing something more with that asset once you've once you've bought it? >> And that's where tokenization creates an additional revenue stream so you can start doing something with that token and getting a yield as well as being long on that assert.

>> Do you think you you've you've kind of sparked another question in my mind so I'm going off pieced already. I did quite well. Um, but you said earlier that people feel like tokenization is effectively like waving a magic wand at a, you know, call it a poor asset or a nonellable or nonattractive asset. Do you think there's a misconception in the consumer or investor's mind around tokenization as well?

Meaning if you look at real estate as a as an asset class, it is a long investment cycle, right? Or a long investment hold typically to buy, you know, ignore the last four years. But even so, four years is still long versus, you know, day trading stocks or crypto. So, do you think that people make the the mistake of thinking that tokenization equals day trading and and short-term investing? I would hope not.

Um, but do they do you think I think when you when you run up the costs associated to it cuz there are fees. You got DLD fees, you got platform fees, all of these fees add up. >> Now, we always used to have a rule that if you invest in real estate, you're in it for at least 3 years. >> Yeah. >> Because then you're covering your cost of that investment and then you can you can sell and depending on where the market is, you're going to be breaking even.

Yep. >> Here it's it's arguably worse because you have more fees when you go through one of these platforms. >> Now it's offset by the fact that rental yield is very high here >> and capital appreciation is very good here especially over the past four years but then we're talking about end of co onwards and they have been an extraordinary years. >> Yeah already actually 56% compound annual grow growth rate over the last four or five years.

>> Where else do you get that? >> No. Now I think it's crazy to think that is going to continue for the next 4 eight years. Um but we are still going to see very attractive capital appreciation and very attractive yield. >> My portfolio in the UK I get maybe like 3 4% net on Panom you know it's it's miles apart from what you're expected to get here. >> So I'd say the majority of the investors that I know that have have put in and myself I have as well we are in it for the long haul.

>> Yeah. It's just there is that option for liquidity. >> So if you have your own property and you want to sell the whole amount, you're looking for one buyer and that one buyer needs to have the full amount. So you may sell that on a distressed amount for the full the full um value of the property and you lose quite a lot of money. >> Now if you then say okay I want this in a fractional sense one benefits above existing market is you're not looking for an exit window every 6 months.

That exit window can be whenever you want. >> Yeah. >> So then you're looking at saying, okay, well that means the market is there buying constantly rather than pushed into that one one week window every other 6 months. >> So you'd see a more organic shift in properties. >> So then if you need to sell, >> there's a medical emergency and you need cash. Yeah. You want to sell it, fine.

>> Yeah. >> You might say, I'm willing to take a little bit of a loss. Even >> there's the market for that. >> Yeah. So, you know, maybe you say, "I'm going to trade at market price and someone's going to buy it because people are wanting to come in." >> A really long- winded way of saying I hope people are not looking at this as trading it like stocks because it is not.

>> Y >> um but it does give you that flexibility >> 100%. I think that that's something I want for Tribe, whether it's me on this podcast, you know, the guests, you know, the team members to continually hammer home that message, right? In that we're not creating a market that doesn't exist here. We're just taking an asset class that's, you know, very unaccessible for a lot of people and highly illquid in the, you know, for the most part and and attacking those two problems.

But we're not making it something that you can day trade and flip from one week to another or one month to another even. And I think like you said, if you have that mindset that if you're investing in real estate >> in whatever way, but particularly through Tribe on a tokenized basis that you should be investing with a three-year mindset in mind to make your money. Yeah, >> if you need to recover your money or liquidate, you know, urgently, well, then there's a there's an emergency exit like like you said.

So, so let's just um rewind a little bit. I mentioned we c, you know, we reached out to you as tribe in in the very very early days. I think even prior to to fully incorporating, you know, as we were looking at starting the VAR process, you're a busy guy. We've already we've already established that. And you have projects coming out of every orifice. So what what struck you about Tribe and what we were looking to do because at the time we were literally only looking at doing we hadn't done anything and get you to a point where one control alt you know would be a partner two you would be an adviser and three you know we would end up bumping into each other at you know exhibitions in different cities uh around the region.

what what caught your eye or or you know sparked something in your mind with regards to tribe specifically? >> Yeah, of course. And this is a fairly easy one. Um one I like you guys. Um I think you go about this the right way and that is in a professional way. Um but more so I believe very strongly in social impact >> and movement of of of classes. >> Yeah. >> So democratization I hate the word.

I think it gets overused. Yeah, but I think the whole benefit of why we started this, why we felt this was very powerful >> is because investors that weren't able to invest could >> Yeah. >> Now, I think you guys take that a step further. >> Mhm. >> So, we had uh a program in the UK and it was called shed ownership. >> Yeah. >> And it was where you could invest in a property and then the housing association owned the rest of the property and every month you could buy a little bit more.

>> Yeah. and you would only pay rent on the portion that you didn't own. So, it was a way to get people to start getting on on the housing ladder. And it was very powerful because as we know, >> deposits are the struggle for most people when they're looking to purchase a property. >> Yeah. >> Rent and mortgages offset. >> Yeah. >> It's that lump sum at the start that's difficult.

So what I really liked about your model of taking that a step forward and solving some of the problems that that the UK version had which is you know as you invest you get right of first refusal on tokens that come available. So you can start purchasing more and more of that property with an eventual outright purchase goal in mind. That was not in the UK version. >> There's also a case of you are an investor and a tenant.

So from the investor perspective, if you own 5% of it, you're paying 5% of the costs. You're getting 5% of the income. >> You also from the tenant perspective are paying that, but the costs of maintenance are spread throughout all of those investors as they should be. Yeah. >> And that was the biggest problem with the UK. The way they did it was >> all of the costs were borne by the the renter, even if they only own 5% of it.

So, I think actually getting on the housing ladder and with an aim to own that property that you're renting Yeah. is is super powerful and that that really appealed to me. I thought it was very good. >> Yeah. So, maybe something we haven't spoken about so far in the podcast is this point around the rent unown um structure that we've built within the tribe uh secondary uh market. Uh we call it a waterfall structure.

And the reason we've done that is because 75% of Dubai residents do not own any Dubai real estate. And now as people make this place increasingly their home for the long term. Myself, I'm now in my 11th year. Um I know many people that have been here much longer. And I know people that are now past the 5year mark and then all of a sudden before you know it, you're at the 10 year mark and so on so forth.

And if you don't get into the real estate game early in your journey here in Dubai, it becomes increasingly difficult to to do so. So that's why we created this rent and own mechanism. One, because we felt like something needed to be done, but in this case, tokenization made it possible, right? So, it's not necessarily a magic pill or a magic wand, but it absolutely is a technical and regulatory enabler of building equity over time in a legitimate way.

Um, and again, one that's fair acership perspective, a tenant responsibility perspective as well. So for anyone watching or listening, the way that it works within the tribe app is that when a property is fully funded and that property is then rented out long-term, the the tenant, whether the whether the tenant invested at the listing stage or not, the tenant by virtue of being the tenant has the right of first refusal on any secondary token that becomes available in that property for as long as they are the tenant.

The ultimate goal is to one get them up to a 20% ownership um position. That's ultimate goal number one. And ultimate goal number two is when the property is fully exited that that tenant also has the right of first refusal to buy the property outright. Again, solving for the property ownership delta that exists here in Dubai and one of the high priority items on the D33 agenda. So, so yeah, I'm glad you pointed that out.

is something that we haven't really spoken about before, but it's such an important point from a a mission perspective as to why Tribe exists. So, let's move a little bit to um you know, we talked about legal and regulatory, let's talk a little bit about technical as well and I guess the overlap and we get asked around, you know, what you know, how did you choose, you know, which chain to build on, you know, what what blockchain choices did you have and and did you make the right one, yada yada yada.

I mean that that conversation could go on forever and actually never end. But where does the complexity really sit when it comes to making decisions like that, you know, linked with regulatory restrictions or preferences and you know, you know what I mean? Like where do you see the, you know, that challenge lie for founders building in the space? >> Yeah. So, I'll cover the blockchain one first because I think that's that's the one that I get asked the most.

Um I bet >> cuz it's it's very contentious. Uh I mean you get maxis across every single chain. >> So you you cannot please everyone. >> Mhm. >> So we are we are chain agnostic. You know we integrate and we work on multiple chains. Um I think one of the important things to consider is not every chain is right for every product. >> Yeah. >> There are some chains which are very DeFi focused and if I wanted to do something quite crazy in that world that would definitely be the one that I wanted to use.

There are others which are more institutional and if I want to do institutional play something that's sensible gets a lot of security and people have trust in >> that's my movement. >> So one of the benefits of working with governments is they're very sensible about how they approach this. Some customers do not care. >> Yeah. >> I can place that on whichever chain I want and I lost.

>> Governments that's not that's never a a a point of non-contention. it's always something they want to spend a lot of time on. >> Yeah. >> Um we very often have uh evaluation committees from various members of governments, various advisers all come together and assess all of the different chains. >> So first port is always can the chain technically do what is required of it.

always has to be the first port of >> nearly every chain can do what we need in this scenario because what we're doing is we use a chain like a bowl and we place assets in that bowl and we move them around and they're recorded on that ledger. >> Um new and if every chain will do what we need in that regard. >> Yeah. >> Then it comes down to a reputation point. So they want to go with a chain that has the right level of uh gravitas but they want they want a chain that is >> suitable and is seen to be suitable.

>> Yeah. >> Um then we start going into what is average downtime over the past few years or generally over the life cycle. >> Um one thing that almost never comes into those conversations is cost. >> H it's it's almost seen as a the last point and we cover costs. So I think that's why it's not it's not ever on their minds. Um but it's always >> is the chain suitable. Can it do technically what is required?

>> Is it constantly up? Has it had a load of issues with downtime? Does it have a load of legal issues going on? How long has the chain been around for? Um so there sort of comments that we get a lot and we you know we work with those evaluation teams and and deliver a chain which is which is good for what they've done. Um and that's why in that their DRD model um all those tokens are placed on XRPL and Ripple.

Ripple is an institutional chain and well respected for for this sort of work. So it sort of like seemed like the natural fit for a lot of the members of government though >> and so far so good. We're so far so good here and XRPL. >> Yeah. Touchwood. >> Yeah. >> Yep. So, um, yeah, of course, and ultimately building within that ecosystem, tribe, uh, is working, you know, with with Ripple in that regard, too.

Um, so, yeah, hopefully we'll get them on, uh, get them on soon. In terms of the the the technical decisions that again, I'm I'm looking at this purely through the lens of early stage ventures. um whether that's true startups or whether that's branches of you know more uh established bigger organizations how early should the legal and regulatory environment or structures influence technical decisions you wouldn't I think necessarily impact a lot of a lot of technical decisions >> because tech ultimately is tech and the great thing about it is you can do almost anything especially in this space you can do almost whatever you want.

>> Yeah, >> it's always how do you structure that that suitable product in a way that is legal, is within the regulatory confines. Like maybe I'm biased because our tech team is very good, but there's never been anything that I've said I want to do. >> Mhm. >> And they've said no, we can't technically do that. >> It's always been a >> Okay. >> Yeah. Now there are some confines with certain custody providers don't necessarily work with certain chains or um certain chains don't integrate with each other like from an interoperability perspective >>

but um they're not really the sort of problems we can solve regardless um unless I wanted to mint something on one chain and then I wanted to see trades happen on a separate chain and there was no linkage between them no bridge >> um that would create a problem but then frankly speaking I would just mint and burn between chain and use an oracle. So there's there's ways around all of that objectives.

>> Um yeah, I think the main the main thing I would say to anybody that was looking to move into this space is partner. I think you know we we do and a lot of us do have a habit of saying because we can do something we should do something. >> Yeah. >> Um and the analogy I always use is a coffee shop and you've probably heard me say this before. You know, we can all start a coffee shop if we want, but we don't.

>> We go to a coffee shop and we buy our coffee. >> Yeah. >> Because I don't want the hassle of dealing with running a coffee shop. I don't want to know that much about coffee. I just want the end result. >> And I think a lot of that works from the technical space as well. You don't want to know how all of that tech works. You just want the result of it. And that's why we do very well when we partner with other people because we take all of that away.

>> Is it you want X, we will give you X. You don't need to know about A B CDE E FG that gets to that X. >> Yeah. >> That is just done. >> Yeah. No, that's that's a very good point. I think one of the themes that's coming up here is the the commercial aspect. So we said, you know, is it legal, regulatory, you know, tech or commercial that's, you know, the common trip up um or obstacle and it sounds like whether it's a coffee shop or tokenizing gold or real estate in our case, you have to come up with the commercial model first.

I.e. what is it that you're selling, how much you selling it for, and who on earth is going to buy it. >> And if you can't ask answer those questions, then chances are you probably shouldn't go any further until you can. Or if you can't answer the questions, just kill the idea and move on. Do something else. I think the the easy check is does the model work without tokenization. >> Yeah.

If the answer is no, then chances are tokenization is not going to be the answer. Yeah. It's always additive. It's always something additional. You can get operational efficiencies, cost efficiencies, some additional market participants. But if the model does not even work without tokenization, chances are it's not going to work with tokenization. >> Okay. From a technical perspective, um, let me ask a bit of a multi-layered question here, and you can attack it how you will.

Typically, what do people overengineer? What do they overbuild or or compensate for from a technical perspective? And on the other side, on the flip side of that spectrum, what do people underestimate or ignore? Any uh any good examples? >> Yeah. Um we find that so many people that we work with want to build out the tokenization engine themselves. >> Um and it's always a it's always a very strange one for me because I think >> I think the majority of people have no idea what's involved in that.

>> Yeah. >> So they want to start doing things like taking order books. They want to start doing the allocation of how many tokens are getting to be used. And this is all governance pieces that we run regardless. Yeah. Because we're never going to have a front end like a distributor which is doing the entire order book and we just take that. >> Yeah. >> Because when we issue the tokens, we have to be, you know, 100% clear this is definitely accurate.

>> Yeah. So I think where there's that that crossover between information that we get and information we give there's there's very often that order book is a normal scenario. Um people want to give us the end result. >> Yeah. >> We said don't give us the end result give us the information >> we'll we'll manage that and then we'll give you the end result. >> Yeah. >> Um so that's a common one.

>> I think that under is just the simplicity of use. We all know the best platforms are ones where the user journey >> is very very efficient. >> Yeah. >> We always used to do how many clicks does it take to get to >> this stage. >> Yeah. >> And I think too many platforms that I look at >> there's just so much so complex there so much on the page. >> Yeah.

>> And the majority of it's just not needed. I think it's just a focus of at the end of the day there is a user that's coming here and they want to do something. Yeah. How do you get them to that place in the easiest manner possible? >> Yeah. So that product side of it is the side that I see most often that is I wouldn't say not done correctly because it's obviously not my place. Um but I would say not done correctly.

>> Excellent. Um, no, no, I agree. The the UI the the UX component is so critical and typically when founders are building in the web 3 or blockchain space, they're either technically gifted and so focused on kind of infrastructure. They're less customerf facing and and don't actually do that groundwork. One of the things we did, you know, by design was just speak to people as early as possible in our journey to to try and figure out where we where did tribe belong because we're building in the web 3 space, but actually we want to be a web two product as best we possibly can because if we go to web three on people, then we're going to lose them before they even start, particularly from a mass retail perspective.

So I would agree with you there. I would >> what web 3 brings is efficiencies to web structures. There's already safety, security, structure. Like we already know how investing in real estate works. >> So the web free world brings some efficiencies to that. But you don't want to be a web free company just selling properties via crypto on chain. now, but it needs to be like how do you get people to invest, feel safe and secure, but get the benefits of of tokenization.

So, you mentioned partnering as one of the kind of critical aspects to succeeding if you will or giving it maybe maximizing your chances of success in in the space. But if you were if you were a founder an early stage founder today ignore your role at control alt for a moment but you were going out on your own and you were starting a venture in the tokenization blockchain web 3 in the VA regulating space to kind of give it that context that rapper what would you do yourself as that early stage founder to deliberately keep things simple and maximize your your own chances of success.

I would look at what can I provide in an ancillary context to the market. So I think there's a lot of players now that are moving forwards and I think anyone that is looking now at saying you know I want to be part of this I think they're missing the boat. I think there's a lot of people that are all very well advanced and everyone underestimates how long it takes to get a license. >> Yes I think yeah me being one of them.

>> So I would now say okay what can I do? what can I bring to this market which benefits all of these other companies? And we know that in mature markets, they're the ones that very often succeed. It's you're bringing in ancillary product to help other people in the market, which means you can help all of them. >> You're not there as a direct competitor. >> You are there to facilitate a product to as many of those other people as possible.

So from my business perspective, I would look at what's here already. I would then look at the D5 world and I would say what is an existing product in that D5 world that I can bring into the real estate commodity fund tokenization space. >> Mhm. >> Which is going to add a benefit to those individuals. >> Let's take an example. Um we could take two lending and valuations. >> Mhm.

Now we're talking about a 24/7 tradable asset. How often are valuations carried out on those assets? >> Yeah, once every six months, once every three months, right? >> So, what valuation are you working on? You working on an asset valuation, which is how valuations are done now, which is what is the value of an asset >> or you working on a deal like a yield valuation. So, if there's a property worth a million, next door is another property worth a million.

They're both on a on a fractional platform for investment. one the rent is 100k the other the rent is 200k an asset valuation would value them exactly the same >> but from an investment perspective one is clearly better >> y >> so I think maybe you look at you know I want to do some AI valuation on yield basis and I want to now integrate to a lot of these companies I want to sell that into that service >> or a lot of people want to borrow to invest or they want to release equity from um someone that has already invested, >> can I link banks and defy lending pools into that scenario to now enable them to lend and or borrow against their assets?

Now, that obviously requires, you know, full var permission, etc., licensing cover that >> good job. >> But but yeah, it's it's those those additional products which I think are going to add a lot of value. And I think the more valuable your proposition is, the simpler it is because you're not trying to carve out a USP like your product is the selling point. >> Yeah. Yeah. No, I agree.

And services is definitely well, it's ultimately a vital component of building a a platform or a product offering in this space that you almost don't have a choice as a you know, as a platform like Tribe to work with others. I think the the biggest concern I still have is the lack of choice. I think that kind of validates what you're saying. Um not that we would necessarily work with anyone different, but I think it is important that that that environment is continually challenged and and moved forward.

And the biggest one I would challenge is the client money account. >> Yeah, I mean, yeah, it's uh we all bank with the same bank. Um and I think there are people that are looking to move into the space. Um I spoke to um another Bank of Swiss bank recently that were looking to say okay how can they move into this space um and I'm you know I'm seeing more and more banks looking at this um ultimately it's a it's a difficult one because that client money account is is is for you the crux of what gives all of that comfort all but the majority of that comfort to your investors they know that any money they put in goes into that regulated account that is very hard to get.

Like I don't think like I don't think anybody listening or watching has any idea how hard that bank account is to get >> because it's so and expensive. >> Yeah. Yeah. No, my New Year's resolution was to not talk negatively about the banking infrastructure. >> It's really hard. It's possibly the the hardest New Year's resolution I Yeah. I've ever set, but I'm doing my best. But yes, I would love to see more, you know, more choice and and and and through that a higher quality uh of service both to us as the primary customer and then you know the you know tribes clients as well.

So looking ahead a little bit, what would you what advice would you give to uh if if I was meeting you now for the first time as a as a founder building in this space or any other early stage founder looking at this space because there is a lot of interest there's a lot of I mean there's huge room for growth right like you just mentioned around whether it's ancillary products direct tokenization platforms broker dealers issuers you name it there's obviously room for growth both here in Dubai in the UAE and around the world.

So if someone is looking to build in this space, what would you what advice would you give to those founders to get right before they try building something that's kind of institutional grade uh quality? >> I would say first and foremost Dubai is the place to do it. Um I think there's nowhere else in the world that has the opportunity to build new things like Dubai. I think if we were trying to do this in in many other countries, we would not have started.

>> Yeah. Because you require government to be on board, you require regulators to be on board, all to do something which has never been done before. >> Yeah. >> So you require a lot of people pushing forward. You need the ability for laws to be looked at pragmatically and saying, you know, is this the right approach? Should we change this law or shall we work around from a tech and like governance perspective?

Like what is the right approach? So Dubai is the place to do it. I think you know VRA do an incredible job of nurturing that ecosystem bringing people forwards. We mentioned earlier that they are a regulator and and that is their role but I think they do they do almost dual hat it and they do look at how can they build the ecosystem how can they actually support businesses that want to do something it's not just a case of rule book says no thank you it's a case of that's interesting rulebook currently says no but you know come to us and give us an idea of how you think this should work >> and then we'll we'll review it and you potentially will change.

>> So I think that you don't get really anywhere else. Um so Dubai a place to do it. >> I think then it's be very very sensible about what you want to do. >> Mhm. >> So come up with a plan for a solution. Not 10 solutions, not five different verticals all doing different things. It's >> look find a problem statement, >> solve it. Yeah. >> Don't come up with a solution and then look for a problem statement.

And I've had this many many times. >> Yeah. I bet >> it's someone comes to me and say, "Hey, I've got I've got this great idea." And I go, "What's the problem you're solving?" There's not really a problem. >> Yeah. >> Um I think >> there in lies the problem. >> Exactly. >> Exactly. I think the third one and I think probably the most important one for me is don't be scared that this is something new.

This is not my background. This is not your background. You know what I think we're both good at is solving problems and coming up with solutions which which benefit. >> I think as long as you've got that mentality, I don't think anybody should look at this and say, you know, I don't know anything about blockchain. >> Yeah. >> Doesn't matter. >> Yeah. >> You know, just crack on.

>> Yeah. Yeah. Just just move forward and learn. Yeah. I I must admit whether it's Varys I think we have to give a shout out to Vara for like you say their their openness and their receptiveness to challenge or or thinking um I don't know a regulator in the world certainly I don't have the experience but I don't know any other regulator where you could quite so easily have a coffee and start with a you know a fairly social chat and all of a sudden move into a you know regulatory framework discussion and and then all of a sudden you're seeing things happen you credit where credit's due in that respect.

But I think the the overarching theme and I agree with you that Dubai is absolutely the place to do it. Why? Something that I don't think is talked about enough is that there is an incredible amount of highly experienced, highly intelligent, very good people here >> and to, you know, we ultimately connected on this top because of this topic. But like you said, we're we're able to challenge each other and solve problems together and actually throw problems each other's way and open up networks and ultimately just keep moving forward.

And I think that forward momentum is so so important in building a business like you say cuz you don't know everything right now but you just have to keep moving forward. And if you can do that by surrounding yourself with like I said intelligent experienced you know good nice people that you going back to the coffee shop you know would enjoy having a coffee with. I think that's really important and that's something we've done with with real intent at tribe is building that advisory tribe to to bring in a diverse range of experience, skills, networks, perspectives so that we're constantly being challenged and challenging each other.

And that's the thing I think that excites me the most going forward is how we tap into that that level of of intellect and experience that I don't think we've even scratched the surface yet. So that would certainly be my advice to anyone looking to go into this space is how do they surround themselves with others that know not necessarily just more but you know have have other experience to add to their to their own.

>> Yeah. And I think one of the points that is it's an example I love using and I think it it really focuses on the people in Dubai that we have like you said the smart people the driven people >> is we always say if you walk you'll get there. >> Yeah. >> If you run and you fall down and you get up and you run and you fall down and you get up and you run you'll still get there faster.

M and I think there's that very much that mentality here from a lot of people is like, you know, we want to do things. Do we know everything? No. But we're going to figure out and as long as it's not like a like a a one door route, like, you know, we can come back. We can change direction, we'll still get there. If you just keep that movement going, keep the momentum up and and drive forwards. I think it's great for that.

>> Tokenization models. Very quickly, uh, looking ahead from your point of view, um, what ones do you think, what tokenization models, commercial models do you not think will survive kind of, uh, market movements, regulatory maturity? And other end of the spectrum, which models are you most excited about going into 2026, 2027? >> That's a super easy one for me. Um, so the main reason why we started like working with the DLD is because we saw a lot of tokenized fractional ownership companies in the market.

>> Yeah. >> And it was an unregulated token. It's just an NFT and it's saying, okay, you own a piece of this asset, >> but you don't. >> Ultimately, that asset is owned by someone else or that company. >> Yeah. >> And if you take them to court, you don't own anything. You just have a token. >> Mhm. So I think when you see now the model that we that we implemented and the way that we structure near nearly all of our projects is directly owning that asset natively that token is your ownership.

>> Yeah. >> So it's not necessarily that that token has all the legal rights behind it but that that token is the movement of that legal right. So when you move a token in in DLD it updates land registry. Yeah. So that's where you're right is at land registry that token is the the lever to make that happen. >> So native direct tokenization is the future and gone of the ways of just tokens being issued with a little bit of commentary in the metadata to say are you own 5% of this asset.

>> So legal regulated tokens. >> Very good. And final question, we're ultimately here on on block byb block uh building tribe in public and I would like your prediction for tribes uh road ahead. I would like I would like both the opportunities and the obstacles in whatever order you prefer. >> I think opportunities are residential real estate fine like that is that is your first and you move forwards.

>> Yeah. I think then it's like okay how are you now starting to diversify these portfolios. So I would say the natural next sort of steps for tribe are how are you how are you giving your investors more? >> Mhm. >> How are you moving away from we do real estate to we're now doing commercial real estate. We're doing off plan opportunities. We're doing international opportunities. You're now giving your investors a platform to invest in a very easy, transparent, democratized manner.

>> Mhm. >> Um, I think that's that's first and foremost. Now, I think I would love to see you guys then branch away from real estate and bring in other opportunities and become an investment platform >> rather than a real estate investment platform. Yep. Um I think there's there's an enormous amount of opportunities in this market for that. And I think when someone finds an investor finds a platform that they trust and they can put their money and they're seeing returns, it's natural that they then start saying, "Okay, what else?" You know, why am I going to this other platform when I want to invest in this asset?

>> Can you guys do that as well? I think multi-asset investment is is the way forward. >> Okay. And what obstacles do you think we'll face in getting there? regulatory. Um, you know, ultimately how and and this comes back to my previous answer. Um, we love doing things in a way that gives you as an investor a legal right of that. Yeah, that is hard. >> Yeah. >> Can I create a token and I can say it means something?

Yeah, that's easy. I can knock that out in 2 seconds. >> But it doesn't mean anything. >> At least I wouldn't feel comfortable putting that out there into the market. and I know you wouldn't be comfortable selling it. So, it's you're getting an asset in that token that when you purchase that token, you know completely that you own that asset. You have a right to that asset. And that requires a lot of work with the the the central register of those assets.

So, let's use an example. Say we want to sell gold. Gold's one we always love talking about for tokenization persactive. You can buy gold now and you can buy it on a platform and it's an option. >> Or you can buy it physically and you have that gold. That's that's pure ownership. >> Yeah. >> You can buy goldbacked tokens where there's a token and it has a price and it is backed by gold but it's not ownership of that gold but you can't redeem it.

>> Then there's a way that you can purchase that gold token where that gold is linked to that token. So you can then go to a vault. You can have it redeemed. So you can buy gold and then you can sell it and say I want that physical gold >> or you can sell it to someone else. You can use it for leveraging. That takes a lot of work. >> Yeah. >> That's when the regulatory and the legal stuff comes into play.

>> Tech is there. You do that. You know >> it's the legal and regulatory work which is going to be the biggest blocker >> to then move forward and bring all of those additional assets on the chain. So by focusing on I guess native tokenization of of real estate assets, you know, it gives us not only the the simplest structure, but actually the cleanest and the safest structure for for investors.

It's less counterparty risk. >> Those investors are not saying, "Ah, someone else owns my asset." >> Yeah. >> They own it themselves. >> Yeah. >> So they've bought it through you. You're managing it, >> but they own it. It's in their name in Dubai Rest. It's their title deed. They have their name on it. That gives you an enormous amount of trust in what you're investing in.

You're not giving your money to a platform and hoping they repay you. >> At the end of the day, you own that property. It's yours. >> Yeah. Well, like I said, that's the goal, right? Increasing ownership, uh, increasing participation, uh, increasing liquidity. Uh, Robert, thank you for joining us. Thank you for being one of the first people to well first of all listen to us because again um you know we had some we had some ideas many of which have stuck and many of which we've had to you know part way part ways with along along the journey.

Um but that idea has always been centered around that increasing access um increasing access to investment grade real estate uh investments and ultimately improving liquidity by using tokenization. Um, and and we almost stumbled into tokenization if I'm totally honest with you, which I'm I'm glad we did. But like I said, you're one of the first people that that first listened to us, but then very quickly challenged our thinking, challenged our assumptions, and uh, obviously we enjoy working with you, and um, we hope to continue that that relationship going forward as we get ready for launch.

Like I said, we're building this in public. This is a pre-launch podcast. Hopefully we'll you no not hopefully we will go through you know the operational launch and everything and continue documenting this journey. So I'm sure you'll be back. But on behalf of myself and the rest of the tribe team, thank you for your your input so far and and really a pleasure to work with you and obviously the control guys as well. >> You're more than welcome, of course.