00:00 Hello, I'm Seth For Privacy and welcome to season two, episode four of Opt Out. Opt Out's a show where I sit down with passionate people to learn why privacy matters to them, the tools and techniques they found and leveraged, and where we encourage and inspire others towards personal privacy and data sovereignty. In season two, we're taking a look at some of the privacy-preserving tools, FOSS projects, and privacy-focused companies in the space to get a better understanding of what they do well, what their limitations are, and what we all can do to help drive their tools forward.

Have you been wondering how you can secure and spend your Bitcoin without trusting a centralized wallet or software? This episode, we're going to sit down with Zach Herbert, co-founder and CEO of Foundation Devices, to chat about Foundation and the passport wallet that they've built out. Welcome on to Opt Out, Zach. Thanks for having me. So great to be here. Yeah, I'm super pumped to finally have you on, obviously. We've been talking off and on throughout, and I've followed you on Twitter for a while, and good buds with a lot of the people who've kind of come to join you, and I'm just really excited to learn more about the work that you've been doing with Foundation Devices, and I love the really poor ethos that you'll have driven home of a focus on open source software and hardware, and even the commitment that I talked about with Q&A on an episode a little bit back on Opt Out that you'll have made to using FOSS tools internally within your business as well, whenever possible.

So I'm super excited to chat about that. And for those people who aren't familiar with you or with what Foundation Devices is, do you mind just introducing yourself? Yeah, definitely. And thanks again for having me. This is awesome to be here. I've been listening to your pod, I guess, for some time now. And yeah, I'm really excited that you have this new season and that you're talking to companies like us. So yeah, so I'm Zach Herbert. As you said, I'm co-founder and CEO of Foundation Devices.

And we're building sovereign hardware is, I think, a good way to define it. We're trying to build tools that allow you as maybe a normal person, maybe someone who's not necessarily savvy when it comes to command line or Linux or anything like that. And we want to empower the normal, everyday person with sovereignty. And that's a long journey, of course. And we had to choose somewhere to start. And so we started with the Bitcoin hardware wallet called Passport.

And yeah, I'm excited to talk more about that today. Personally, I've been into Bitcoin for almost a decade now. I've been working in the Bitcoin or crypto space full-time since the beginning of 2017. And have just, before that, been lurking around the space for a while and using a lot of the Bitcoin-related tools before hardware wallets even existed. Using like AirGap computers, removing the Wi-Fi card, that kind of stuff. So really passionate about this entire topic.

And really fortunate and grateful that we were able to come together in April of 2020, in the beginning of the pandemic, and actually start this company. Must have been a crazy time to be kicking things off. But I'm sure you're pretty used to crazy times with being in the cryptocurrency scene full-time for four years now. It's true. It's true. Yeah, I mean, went through, I guess, multiple bull markets, bear markets, crashes. You know, it doesn't really phase you anymore.

Definitely was not the best time to start a company, if I'm being honest. But you sometimes just got to take that first step. And then once you take that first step and failure is kind of not an option, right? Then everything just hopefully ends up working out. Yeah, yeah. Seems to have been going really well so far. And I do want to get into foundation and passport wallets specifically. But I want to take a little bit of a step back and just get to know a little bit more about you and hear what it was that woke you up to the need for personal privacy.

Yeah, I mean, I didn't care about any of this stuff when I first started getting into Bitcoin. You know, I just wasn't even top of mind. I think most people that get really into Bitcoin go through a similar journey. And so apologies if I'm not really giving any unique insight. But yeah, my journey mirrored the typical, you know, long-term Bitcoiner where you buy some coins on, you know, Coinbase or whatever exchange. For me, it was Coinbase back in the day and first.

And then you start to spend more time on, you know, Reddit was really big back then. And then you're on Twitter and then you're listening to podcasts like, you know, Tales from the Crypt, which has been going for a few years with, you know, Matt and Marty. And of course, I know you know Matt pretty well. Stefan Lavera, you know, other stuff like that. You start to read books, you know. And then all of a sudden you realize that if you're using this better form of money that's supposed to be able to give you sovereignty, well, you better store it yourself.

And then if you're embracing that idea of personal sovereignty, you know, that doesn't come without freedom. And then that doesn't come without privacy. And so that's really how I fell into it. I didn't care at all. And then as I, you know, have been in the Bitcoin space for a while, all of the sudden privacy becomes really important. And I think that you just get steeped in it, you know, being in the space. You start to see every single privacy violation done by every company, whether that's Amazon, Apple, Google.

You're surrounded by all that kind of content, you know, and you're kind of in that echo chamber. And you really start to care about it both for yourself and for trying to make it, at least for me, trying to make it more accessible for other people. And I think that's a big driver of what we're trying to do. Yeah, yeah, I think it's really interesting that a lot of people, it seems like, have been driven to caring about both privacy and sovereignty through cryptocurrency.

I mean, I've talked a little bit about how I kind of fell down the Bitcoin rabbit hole and then ended up in Monero and the kind of privacy centric community around Monero. Just kind of helped to, I guess, red pill me on the concept of personal privacy and the need for sovereignty. And obviously, I think in the Bitcoin circles, sovereignty is more of a focus than privacy. But there is definitely a good core of Bitcoiners that are focusing on privacy.

But those two things go so well hand in hand. And like you said, once you kind of wake up to the issues around money and the issues around control of money and what something like Bitcoin can do, it really does help you to see the other issues that exist in the world. Like the constant surveillance state that's growing and surveillance capitalism and just a lot of the other things that kind of do pair with sovereignty issues. With you being able to control your life and be able to control what happens to you and where you are and how your money works and how you're able to save and all that fun stuff.

So I think a lot of people have kind of come in that way. Exactly. And I kind of like coming in from the Bitcoin standpoint or from the cryptocurrency standpoint because there's an element of selfishness and greed to the whole thing, which is basic human nature, right? You can't fight against that human nature, right? We all have our own, you know, selfish interests at heart. And so if you come in, if you try to get someone excited about privacy from maybe a non-selfish, an unselfish angle, I don't know.

Maybe it doesn't have the same amount of like sticking power as opposed to if you come in through one of these, you know, crypto communities, you know, obviously for me, Bitcoin. And all of a sudden you're like, I'm all about the sovereignty thing. But then, you know, what we talk a lot about at Foundation, we say, well, you know, sovereignty is like the umbrella category. But we do a lot of triangles. I guess like our logo is like a triangle. So we're always messing around with like pitch decks and stuff.

And I like thinking about like sovereignty having like three components, you know, like a triangle. You have the freedom, you have the ownership, and you have the privacy. And without those three, you don't get sovereignty. And so that's kind of how we break it down internally. And so when we look at the products that we're making, or I guess I should say the products we're either building or that we're using, we're thinking about, you know, does it give our users freedom?

Or does it give us freedom if we're using these tools? You know, do we have ownership over these tools, whether it's ownership of our money or our data? And are the tools private? And I think if you have those three components, you're kind of have this like, holy trinity of sovereignty. Yeah, it's a great pairing. I think I hadn't, I hadn't combined sovereignty into that triad yet, I guess. I mean, I've definitely seen the connection between privacy and freedom.

And I mean, really, ultimately, that's what privacy does is it grants you freedom when you're able to choose who you share information with, who you reveal yourself to, all of that. But pairing it with sovereignty in that kind of triad and how they all really do work towards each other's benefit. And you need all three to really have any of them is a, I think, a really good angle. Something I hadn't kind of deeply considered the ties between all three yet.

Yeah. And the most basic thing on the Bitcoin or crypto side is that, I mean, once you get some, you don't want anyone else to know how much you have. Like, and I obviously, I know you're, you know, you're super cognizant of that and you could argue that maybe Manero does, you know, better job than Bitcoin with that, you know, especially right now. But I think just in terms of basic principles, as soon as you start to achieve that level of sovereignty, that level of ownership and freedom over, you know, your money, let's say, you don't want to disclose that basic information to another party, whether that's the government or, you know, larger corporation or anything like that.

And so I just feel like

10:00 there's this i don't know it's like once you're pulled into this bitcoin rabbit hole or crypto rabbit hole i feel like there's this just gut reaction you know where all of a sudden privacy becomes important and maybe you don't realize why but it's just a core part of this entire thing yeah yeah exactly you really do start to grasp like why you need privacy is because you want to protect the sovereignty that you found and this money that you found and this uh kind of freedom that you found so yeah it's a really good really good connection there um and i think a good uh a good chance to segue into talking a little bit more about about foundation and about the passport wallet um so i'd love to hear like what was it that made you specifically want to to start off foundation with the passport wallet what made that kind of the the place that you felt like was a good start for uh for what you wanted to do with foundation devices yeah so i like i mentioned uh in my intro i've been using bitcoin for a long time and you know even before there were hardware wallets where

i remember using this cool piece of software called armory where you could actually uh separate out you know you could have an air gap laptop that is like the signing device and you can have the internet connected laptop or computer you know that is connected is also running a full node locally you could do your signing you know on the offline device so that's that's what i did you know for some number of years and then all of a sudden there were hardware wallets right trezor came out ledger came out and you know kind of birthed an entire new category made it a lot easier for you to manage um manage your own bitcoin self-custody and actually introduced the concept of seed words which is kind of interesting um i don't think we had that standardized seed word list uh before those hardware wallets came out i remember with armory it was like random like alphanumeric you know characters and so on um as the backups and so you know that was a huge leap in user experience and i switched over to using that and um

you know if i had a friend or family member or something that was interested in nothing not like that many people people were you know back in like 2015 or or 2016 um yeah but i would say you know you can you can you can you can use a hardware wallet i actually um sold hardware wallets on uh this decentralized marketplace called open bizarre i don't know if you've heard of it or remember it or yeah it shut down now right but i think it may have a cool approach for a while there yeah i think it shut down last year officially but i think it was pretty defunct for a few years and i think the the creators of that were on the wrong side of one of the bitcoin um fork wars as well and so you know a lot of drama back in 2016 and uh 2017 there but so anyway so i was i was actually on there i had hodl hardware shop uh and i was buying and selling you know hardware wallets and i was giving basic customer support and it was kind of fun you know being able to do that on a decentralized marketplace where

the transactions were performed you know just in bitcoin and over time one thing that really surprised me was that these devices were not getting easier to use it's almost like you had this huge leap from before hardware wallets to after hardware wallets but i believe like i'm really into just you know product design as you can tell from you know what we do as a company and i think what happens is uh especially to the companies that are like the early adopters i think you could see the same thing with like the mp3 players before the ipod you kind of end up in an echo chamber where you're your customers are the ultra early adopters and so they're not demanding the features that would actually make it easier to use they're end up demanding the more power user features and then you get stuck in this the cycle of you're not actually making the device more accessible to like the next level up in terms of users you know you're you're just kind of reinforcing uh your feature set for the existing users that you have and so i didn't feel like i had anything i could recommend to

like friends or family for hardware wallet nothing that i could have just given them and said you go get set up it would have been something where i have to sit there and set it up with you and that's still largely the case and we're in 2022 now which is insane i think um and even just using seed words i mean so many phishing attacks so much loss of funds is due to the fact that you get tricked into entering those words into you know like a like a website or something like that so that's all going on at the same time you know i started working full-time in the cryptocurrency space in in 2017 i dropped out of uh of business school um joined this company in boston that is building this project called sciacoin or scia which is like decentralized cloud storage network um they're actually one of the more credible ones in the whole space and still are which is kind of cool unfortunately there's not that many credible ones in the space and we did this crazy thing where we crowdfunded and designed and and manufactured in the usa and shipped over 12 000 units of asic miners

for sciacoin and for dcred and we did that between 2017 and 2019 and so i'm a mechanical engineer by training but all of a sudden i found myself joining the startup and like kind of running a lot of the day-to-day you know hardware development operations and everything that would go into running a hardware project and that was like a huge you know crash course for me and i never done this i you know did stuff in school but i never did any of this in the real world and so you know i and some of my team members uh in towards end of 19 uh sorry end of 2019 beginning of 2020 just start talking a lot about you know starting uh what essentially became foundation devices and launching a hardware wallet um as our first product that is just you know uh much easier to use uh than anything that exists on the market today and uh has a strong uh foundation on both you know being open source hardware and software and then also we care a lot about um the made in the usa angle um because we just thought like

hey you know we want to design this device for ourselves like we don't feel comfortable using this closed source hardware like a ledger uh and we also don't really want to use something that's made in china you know we want to know what's in it we want to know it's manufactured in a more trustable way and uh we want something that's just way easier to use and so we decided to quit in march of of 2020 and spin up uh what became foundation devices and officially started that in april that was awesome i actually had no idea that that spawned out of um cyan and engineers out of that space that's a that's definitely news to me and the history there um but i definitely agree on that i was gonna say i was i was ultimately chief operating officer for um for nebula sync which was the company that did cyanoblis and um uh i think that they've changed the name and stuff since then um but you know it was a really interesting experience and as you can see how that would also get me into the privacy angle

right of trying to do more of um decentralized data storage but i'm i'm much more on the bitcoin side of things you know i'm i've uh i i uh only you know i only own bitcoin and so i just felt you know i felt like i was excited to work in the crypto space especially in a startup in boston that i thought was like a bunch of really good people you know really ethical no sketchy icos or anything like that you know um but i definitely yearned to work full-time in the bitcoin space and so really fortunate to have been able to um to spin up foundation yeah and i just i definitely agree on the angle of hardware wallets and general user experience and cryptocurrency and i guess especially around bitcoin um just seeming to stagnate i mean i i've been using a or had been using a ledger for quite a while i think since 2018 and the the experience around that hasn't really changed at all um at least not the the core experience there it's been little touch-ups on the the wallet software and some wallets have added support for it and that kind of thing but i think there's definitely a

lot of room for improvement in the the user experience of of what it's like for someone to to secure their bitcoin and and use it um so i'd love to hear like hear a little bit more about what it is that you hope users get from using a passport wallet that they haven't been able to get um outside of that before now yeah for sure and um i think ledger is a good example of course i think um what i like to say is that like trying to even just trying to teach someone to enter a pin with just two buttons you know like an eight digit pin and how many times have you wiped a ledger or something by getting the pin wrong three times and just so there's there's a couple things right so one is just this general frustration of user experience we want to fix that and so we design passport specifically so that it would be familiar to you so that you go when you're picking it up and you already know how to physically use the device you already know how to navigate on the device you know how to select you know items on the

menu and while that might seem like extremely low-hanging fruit i i unfortunately think that it's not and it's just something really important from a industrial design perspective and from like a user interface perspective and so we actually intentionally made passport kind of look like a old school you know you know how to use the mobile phone uh because we wanted that element of familiar familiarity but also maybe even like a tinge of nostalgia if you're giving this to like your mom or someone right to to use the idea that like oh yeah i know how to use that that's what we want right so so that's a huge aspect of of passport um and another thing is that and and this is another way we really differentiate from like

20:00 or Ledger. Passport today does not ship with its own companion software. What that means is that you use Passport by connecting it to your preferred Bitcoin wallet of choice, whether that's Blue Wallet is a good example on mobile or Sparrow or Spectre on desktop. So we're kind of designing Passport to be like a hardware platform where you can actually connect it to one or multiple different software wallets and maybe even services in the future and has more of like a horizontal integration. And so that means that we're really interested in full compatibility with the ecosystem of companies and projects, wallet projects in the space. And that has a huge, I think, it ends up allowing us to create like a different kind of product where like a Ledger or Trezor specifically designed to use with their suite of software only. And yes, it works with other things as well, but it never seems to work like as well, or there's bugs or there's other issues or like a firmware update, like break support for a specific wallet, you know, or that kind of thing.

And so that's another big aspect of what we're doing. And overall, we just want to make it as easy as possible to have sovereignty, you know, over your Bitcoin. And we want to make it easy enough. And I don't think we're there yet, but I think we will be with what we're shipping in late February or early March. I want to make it so easy that you can actually give this to someone who's into Bitcoin and they can set it up for themselves and feel secure and feel like that they did it the right way.

And I don't think anyone has yet been able to achieve that in the industry. Yeah, that is a very high bar to set in the cryptocurrency industry. And I feel like much less the hardware wallet industry, because I do, I really love the physical approach that you'll take in with Foundation is to kind of take away one more barrier to entry, which is with other hardware wallets, often learning, like you mentioned, learning the whole user interface, learning the buttons, learning how you select things, how you don't select things, how to just do all of the things that you basically need to do to navigate the device. And then on top of that, you're having to learn, okay, how do I store this seed separately? And then how do I use this wallet that I prefer? And all of those details add up. So taking away just the initial physical barrier to entry, like everyone knows how to use an old T9 phone, or I guess everyone does now, like I said, that user group is becoming smaller and smaller, but it's a

still a familiar user interface for, for everyone. Exactly. And we actually, I was going to say, we actually, even things like seed words, you know, so we, we hide the seed words in the advanced settings. And when you go through the setup process, we actually give you a micro SD card. Um, and we walk you through doing an encrypted backup directly onto the micro SD card as part of the initial onboarding flow. So you have like a, essentially a password that's, um, six words, and then you have the micro SD card that's encrypted. And so even if you lose one of those, you know, uh, or I should say even better, even more importantly, if someone discovers one of those, you don't have any kind of catastrophic, like loss of funds.

I don't think that's a perfect solution, but I think for like a totally new user, it's actually better than having them write down the seed because too often, um, people just write down that seed without knowing what it means or represents. So then they get into trouble down the line. So we've been, you know, kind of pushing the boundaries a little bit with the default onboarding flows and keeping in mind that, you know, we want our audience to be, I mean, we have amazing advanced user features, but we also want the product out of the box to cater towards more of an everyday user.

That might not be familiar with something like a seed. Um, and we are, I can actually say it here. I'll do a little fun announcement. Um, but I'm not going to give too many details, but we are actually shipping a mobile app with our batch two device, um, to serve as a mobile companion app to passport does not mean that, you know, uh, you don't get stuck in our ecosystem, but we've noticed that the onboarding right now is more difficult when you have to kind of go into our website. You have to go back and forth from our website to like the screen of your device. So we think it'll be a little bit easier to keep things in sync. Um, when you have a mobile app where you can kind of be holding the phone, holding your passport and going through a really quick and streamlined setup process, firmware update process, and so on. And so, uh, we're going to release more details about that probably in mid February.

That's exciting. Does that, uh, does that require your phone to have an SD card reader? Is that not part of the connection between the devices and that the mobile app? So the mobile app can do most things over QR, but you hit the nail on the head right away where like you do need SD specifically for firmware updates. Cause the file sizes are just too big. Uh, so we are shipping, um, SD adapters for USB C and lightning, uh, with the batch two device. Yeah.

Nice. Yeah. I'm excited for that. My team, I have to be careful when I'm on podcast. Cause I always just want to like disclose everything, you know, and then it's really mad at me. That's good. You're, you're actually excited about the things that you're building. You, you want to talk about them. That's a, well, it's always a positive. And as a side note, I mean, it helps a lot when you're building for yourself, um, helps enormously to get excited about what you're doing.

Yeah. Yeah. And not just building for a market niche that you see that you can kind of jump in on, but you've, you've seen the need, you've run into the issues that you're solving. Like you want a good Bitcoin hardware wallet. So it's, it's definitely something that's a lot more personal than just solving some other need that you don't really care about. Cause you know, you can, you can make money from it. So exactly. It's a core piece. And I think that's what makes a good entrepreneur is someone who really does see the need and wants to do the thing for themselves.

And then sees that they can also sell that thing and benefit other people along the way. Um, so always, always a good thing there for sure. Um, and I'd love to also hear if there are any kind of limitations that users should be aware of, um, while using the passport, you mentioned that, that y'all don't ship wallet software yourself, which, um, I think is a really interesting. It's just a big one. Yeah. I mean, that's, it is a limitation, but it also frees y'all up to really focus on the hardware wallet and then focus on making the hardware wallet work with as many things as possible.

I love that you hit that, like you, you hit on that already that it makes your focus more on compatibility with a broader like swath of the ecosystem rather than just focusing on your specific wallet and forcing everybody into your ecosystem. Um, so are there, are there any other limitations or anything more you wanted to say on, on that specific topic? Yeah, I think, um, so I think there's a couple of things. One is I totally forgot to mention as well to, to the listeners that, um, two other things that are different about passport, right.

Is one that we have a camera and do camera and QR codes. Um, I know we alluded to it when we're talking about, you know, the app and firmware updates and so on, but, um, it makes it much easier to use passport with mobile apps. Um, and, but it also means passport is air gapped and meaning that we have an SD, a micro SD slot and we have a camera. And we have a screen, but we don't have any USB port. We don't have any USB data. We don't have any, any USB, anything.

So that is actually, it's, it's both an advantage and a limitation, right? Depending on what you want to do. And depending on how much you value, you know, that, that those trade-offs between security and convenience. And so a lot of users really like the air gap because, um, it means that you're not plugging in with USB. There have been hardware wallet vulnerabilities that have, um, been, uh, caused by the addition of USB. Um, nothing I think too significant, but just the philosophy of kind of removing attack surface, you know, uh, just making sure that like, Hey, no one's going to be able to communicate with this device.

Um, you know, there's nothing to plug in or anything like that. Uh, so that's, that's the security advantage. It's also a huge advantage. I think when you're using passport with a mobile app, because historically hardware wallets have not worked well with phones. Um, and the QR codes is actually a pretty magical experience. The downside of that though, is that you don't have that USB port. Uh, you don't have the ability to do transactions over something like Bluetooth either.

And so if you're doing, you know, quick transactions, the QR codes work well, but if you, let's say you have like some giant multi-sig transaction, there might be a decent number of QR codes to scan. And then also the firmware updates are too large to fit over the QR codes. Then you got to pull out the SD card slot. So I think that's like a, that's a key limitation in general, but like this category of air gapped hardware wallet. Um, there's a couple other companies that, that make, you know, an air gapped hardware wallet like this.

Um, I like to think that, you know, we are the only one that's, that's open source and, um, which I think is true. And I think we're the most reputable and most usable, um, you know, best design, but it's just a trade-off with the category. And so, um, you know, we're, we're looking at, you know, do we do a future product that has some of those trade-offs? Do we do a future product that has Bluetooth or USB in it and so on? Um, if we do, it would be a different product.

It would not be, you know, this same product. Um, so that's one of the big trade-offs. Uh, the other one is just, we've had a bunch of great customer feedback after shipping our first thousand devices. So we shipped, you know, a thousand founders edition devices, um, finished shipping those towards the end of last year. You know, we're doing a new batch now with a new updated industrial design where we're able to actually address a lot of the customer feedback that we received.

So one is that we did, uh, AAA batteries, which are awesome because they're user removable and they're re-reported.

30:00 really easy to just pop new ones in and then the device works standalone, right? You don't have to plug it in. It's like its own little, you know, computer basically, right? That you just pick up and use. You don't have to plug it in or anything like that. But AAA batteries are just total, total pain. The different capacities, different types, it only really works well if you use lithium ones. So that was just something that our customers told us is like, hey, the battery situation, you know, the battery life indicator isn't the most accurate it can be, or like you use the cheaper AAAs and they don't last very long and so on. And so we've addressed that for batch two where we are using a rechargeable lithium battery. It's still user removable, user replaceable, standard form factor, but we can give that much better battery life and a really accurate battery life indicator. So we've addressed that one.

Then the other big thing is the, I think, I don't know, it's a personal thing. I thought with the AAAs things, the device is like a little thick. I think it's awesome. It feels great in the hand. It has a nice weight to it, but we have been able to slim it down a lot with the batch two device that's coming. And so really, really excited to get the website updated for next month and, and, you know, release all the details and images and everything of that. Cause it looks pretty awesome.

Yeah. That's a lot of, a lot of big changes and that's like pretty quick iteration process. It's cool to hear that you've been very actively listening to people who are using it and those people who jumped in early on to get those first thousand. And that's awesome that you've sold a thousand already. It's pretty crazy. We can get really granular. I mean, we don't need to, but like, yeah, we're extremely responsive to customer feedback. And when we started the company, we did have to work with an outsourced, like industrial design firm because there were only four founders. Now there's a dozen of us total.

And, um, we have our own in-house industrial design and we've always had our own in-house electrical engineering, which means we can move like really fast. And so what I've noticed from like a lot of hardware startups is they launched their product and they don't touch it for like three years or something. And oftentimes that's because either they, they don't want to have to like pay for the tooling costs again, cause there's all these upfront costs, you know, when making hardware, like the tooling for production for plastic, for metal and so on, or they just don't want to have to, or I actually, I should say, or they're commonly outsourcing the design to another firm because, you know, it allows you to be leaner as a startup, focus more on like the software side of things.

Now that everything's in house, we can just move at this like insane speed. So expect to see other products from us too, fairly soon. Um, because we are just able to do that. And, you know, like a great example too, with this between designs, we had some customers saying like, Hey, sometimes I insert the micro SD card backwards, you know, because the slot we chose doesn't have a great way to tell you if you're like putting it in the wrong way, like you don't feel it immediately. So we switched, you know, we switched slots to something that people are going to like better. So those are the kinds of things. We're constantly looking at like every single aspect of the device, taking all that customer feedback into account. And we're going to be able to even make iterations between batches of the same product, which is really cool. And then also cut costs off of it. I should, I should have said, like, I think one of the biggest limitations just of our first, our first device, the passport founders edition was that we sold it for 299, uh, us dollars. Um,

that's a pretty good amount of money. Um, and we had to do that because, uh, our costs were, you know, pretty high, you know, we made it in the USA, we did more premium materials, uh, much faster processor than what you'd see in any of the other hardware wallets in the market and so on. But we shaved like a ton of money off the cost by doing a quick redesign between a batch one and batch two. And so we are pre-selling it at one 99 and it'll probably end up retailing for around 229. Uh, so we have like a special price. But yeah, that's, that's a big, you know, big, uh, cost savings. And so we're the kind of company that if we do that, you know, we're going to pass that on to our customers because we want to, you know, be able to make it more affordable and, uh, ultimately, you know, sell more devices.

Yeah. That's a, wow. That's a huge price cut for the second. Uh, that's exciting. Yeah. Yeah. To get that down and just kind of moves it into a lower category that's much more approachable for people. So super important there. Let's take a quick break from this episode to chat about the sponsors of Opt Out, Cake Wallet, and LocalMonero. Cake Wallet is a key tool that I use daily as it allows me to easily and quickly use Monero for private by default payments. It's available in both iOS and Android. It is a fantastic way to get started buying and using Monero with a simple and easy to understand user experience. I regularly onboard new users to Cake Wallet and hope that it will help simplify and ease your journey into cryptocurrency. If you're interested in purchasing Monero for the first time or helping to bring others into a parallel economy, I'd recommend you look at using Local Monero like I do to buy and sell Monero while maintaining your privacy and avoiding invasive exchange surveillance. LocalMonero is entirely peer-to-peer and is an important part of opting

out of the surveillance state and into a parallel economy. Thank you to both sponsors for their incredible support and partnership. And I hope you'll take a moment after the episode to learn more in the show notes or at optoutpod.com slash sponsors. I'm really curious. So I haven't used the Passport myself. I know a lot of people who do and I definitely want to grab one. I may actually have to pre-order one from this upcoming batch. But I'd be curious to hear your thoughts on like what are the practical use cases for the Passport? Like is it more focused on the people who are kind of like just holding funds, caring about long-term security? Or is it something that people who are spending Bitcoin frequently could use for spending? Is it more focused on one of those? Or does it really work for kind of both of the use cases or really any other use cases that you'll have to mind for the Passport and its specific approach to user experience?

Yeah. I think it really works for any category of storing Bitcoin. And it's pretty simple in that regard. There's no other features, you know, right now. It's just to store your Bitcoin. What I would say is it works particularly well, I think, in two use cases. One is if you're connecting with a mobile app like Blue Wallet. Or even now we have a new integration that just went live in our latest firmware from a couple of weeks ago, a simple Bitcoin wallet on Android. So now we have two mobile wallets that work really well with Passport. And so that's like...

What wallet was that? I think it's called Simple Bitcoin Wallet. Okay. And they've been around for a long time is my understanding. So that's... It's just like a completely different user experience when you're using your hardware wallet connected to your phone. You know, the keys are obviously being stored on Passport, but you're able to do transactions really quickly with a couple QR code scans. And that's just like, you know, totally different transformative experience. It makes it much faster to actually spend from your hardware wallet.

So it could work pretty well in a case where you want to be keeping your funds in cold storage, but spending more frequently. Then the other thing I think we really excel in is multi-sig. Ledger and Trezor don't work that well with multi-sig because they're not able to store the multi-sig configurations on device, meaning that they're not able to take in the public keys and derivation paths of the different signers and remember that, which means that they cannot typically cannot verify that a receiving address in your multi-sig configuration actually belongs to your Passport. And that's a huge problem with Bitcoin multi-sig. And there's going to be a lot of...

There's a lot... It's standardizing. So I think a lot of those problems will go away in the coming years. But for now, if you have a multi-sig setup, you can just import that with a really simple QR code scan into Passport. And then if you want to receive to your multi-sig, we actually have a cool feature where you can just scan a QR code of any receive address and Passport will tell you if it belongs to your multi-sig. And so that's really powerful. I think we might be the only ones on the market who do that.

And actually, I think Spectre DIY might do that and SeedSigner might do that. But we love it. It's a great feature. And I think it's really important to note that the older gen hardware wallets are not really designed for the multi-sig use cases. And so it's just top of mind as we're going about the Passport design process and the continuous improvements. Yeah, I'm glad that y'all are really, I think, thinking deeply about multi-sig because I think that's one of the features that's obviously it's been around in Bitcoin and most cryptocurrencies for a long, long time. But I don't think it's really been explored to its fullest what multi-sig can enable.

So I'm glad that y'all are not just kind of discarding that and making it a very conscious effort to properly support multi-sig and provide that to users. What kind of use cases have you seen people using multi-sig for, if you happen to know that? I mean, I think there's some pretty popular models. I've noticed that the two of three multi-sig model is really popular. And there's a couple different ways to implement that. I think one that works really well for users is when there's two keys in the user control and then one key kind of represents like a backup key. So you see this from companies like Casa or Unchained Capital, where they control one of the keys is like where you have to go through like a recovery process.

Like in Casa, for example, you have a key on your phone and then you have a key on your hardware wallet. And so you can spend however you want without waiting for approval from someone.

40:00 else. But like, if you lose your hardware wallet or if your hardware wallet breaks, then you can request the recovery key. I think it's really early. I know Square is actually pursuing something like that, but it could take them a year or two to bring that product to market. And so we're kind of keeping an eye on that. But I think we've barely scratched the surface. I mean, you can use multi-sig, you know, you can have keys on all your devices and have a pretty complex, you know, multi-sig setup. You could have multi-sig between founders or executives of a company or a fund.

You know, I think there's so much you can do. And I think it's going to be one of the most important Bitcoin tools that is really going to push Bitcoin to mass adoption. Because one cool thing about multi-sig, if you do it well, is that you don't necessarily need to write down the seeds. Because if you have a threshold, like a fault tolerant multi-sig, where if you, let's say you have like a three of five and you lose two of your devices, it's totally fine because you have the other three.

So we can get to that. We could potentially get to a situation where you don't have to write down, you know, any seeds. You don't deal with anything like that. That's what Casa does pretty well today. Yeah. The angle of really enabling, I think kind of a middle ground between, and it's not, it's not custodial, but it's kind of a middle ground and user experience. Yeah. Yeah. Yeah. That's a good way to phrase it. Yeah. I think that's a really interesting angle that hasn't been explored much past Casa. So I do hope more people explore that because I think that can be a very, very interesting and valuable way to enable people to have some more kind of custodial-like uses of Bitcoin without actually giving spending control to the third party that they're actually using. So I definitely am excited to see what companies and apps and projects will kind of come up with there because I think there's a lot of potential value in utilizing multi-sig to build that kind of, like you said, collaborative

custody. That's a really good place to sum it up there. I think the one trade-off which is especially applicable to this podcast though, is that all the collaborative custody kind of setups to date have huge privacy trade-offs. Yes. Because in Bitcoin multi-sig world, if you want to be able to sign a multi-sig transaction, you need all the different public keys and derivation paths. If you have all the different public keys and derivation paths, you know exactly every single transaction that's taking place in that wallet, the balance of the wallet and so on. And so you're making a huge trade-off today between the convenience or the security of that, you know, the redundancy of that and then the privacy of your funds. And so we actually are looking at one potential direction to improve that, not like fix it, but improve that. And we're going to see if we'll be able to offer something like that to our users in the future, but it's still pretty early.

Yeah. I'm glad you mentioned that. I had forgotten about the privacy implications there. And I mean, that would apply even to a private by default cryptocurrency like Monero. If you're giving up a multi-sig key and all of the addresses to that third party, they are going to gain visibility into those transactions. So that is definitely the big downside to that kind of collaborative custody or multi-sig where the third party is not someone you necessarily trust. You are giving up privacy for that. That may be fine in the specific use case or trade-off, but that is definitely something that people do need to be aware of. Yeah. So when someone picks up a passport for the first time and they start to really just get familiar with it and dive in, what are some of the settings or features that listeners should take a look at or get familiar with when they're starting to use a passport wallet?

I think there's probably two main things to highlight. I think one is the camera and QR codes, like I've mentioned a couple of times. Using it with the wallet like Blue Wallet, which is, you know, cross-platform on iOS or Android, just a totally different user experience. And so would highly recommend and encourage that. The QR codes, people don't necessarily think of them as like fast, but like they're extremely fast. It's almost like magic compared to having to open up the computer, plug in and so on. So that's a huge difference and a huge feature that I think really differentiates us.

The other thing that we spent a ton of effort on, which might seem kind of silly or might seem like obvious of a feature, but I'm really proud of is when you get dropped into the main menu of the device, once you get it set up, there's just a menu item that says, uh, pair, you know, pair wallet. Um, so what we did was we did all the legwork ourselves to figure out the different configuration settings, the different export formats, all the different formats and configs that every single popular Bitcoin wallet needs that's compatible with passport. So that you literally, like, if you want to use password with blue wallet, you just choose blue wallet from the menu. If you want to use Sparrow, you just choose Sparrow, right? There's no, and then asks you, do you want to do QR? You know, do you want to do multi-sig or single-sig? And then just spits out the exactly correct stuff over QR code.

What I've seen from the other wallets that kind of take this approach of, um, you know, being compatible with like the different popular software wallets and not having their own client software is they'll typically make the user like choose the right backend formats for everything. Um, there's different, different ways to export the data, like text files, Jason files. Uh, there's, there's, it's, unfortunately it's kind of a mess right now and there's no standards. I think we're going to be converging on some standards, but it's, it's frankly a mess. And so we don't want our users to have to like go look up on like the blue wallet support documentation to try to figure out what format they need, which it so happens. We use the electrum format to send the data to blue wallet. Like the users don't want to know that the users just want to be like, I'm just going to click blue wallet and it's just going to work. We were able to get that done. Um, like I said, it was a total pain, but now that we have it,

it's really easy to add a new wallet or make changes to an existing wallet. And it just makes the user experience like, so, so nice and like foolproof. Yeah. I think there's a, there's a big disconnect between technically compatible and easily usable in the cryptocurrency space. Cause there's a lot of times where you get told that something is technically compatible, but actually using it, like you said, it's going to require you learning deeply about the specific way that the wallet works, learning about maybe derivation paths or the specifics of how you need to set it up and all these different things, all these moving pieces. And yes, it technically works, but you're going to have to do a ton of legwork to figure that out. Uh, so I think that's, it's fascinating that y'all have really done that legwork for the user. And when you say something's compatible, you're doing everything you can to simplify that process for the user, um, which I'm sure is a huge step forward.

Definitely. I'm wishing more and more as we talk through this, that I actually had a passport that I used before coming onto this. So I'm going to have to get this and we'll have to do a round two. And I can kind of go over some of my specific thoughts and, and, uh, issues or, or just kind of, um, feedback on, on using it. Uh, cause I'm, I'm really curious that more and more I hear about it now. Um, but yeah, I think those are some really fascinating features. QR codes, I think are something too, that it's, I guess, starting to get a little bit more of adoption, but it's such a, such a great way to transfer information without, uh, connecting devices. It's a, it's a great way to maintain an air gap, um, without having to, to break that, to be able to, to transfer that data. So I'm curious to explore that more as well. Um, Yeah. It's also great by the way on, um, on iOS because iOS places insane restrictions on, let's say NFC on, on makes it difficult to do Bluetooth easily. Um, and so having QR codes means that you could be

universally compatible cross platform from day one without any kind of special, uh, integrations from the developers. And I think a lot of people think about QR codes in terms of like the security or the convenience or anything like that. And they don't think about it in terms of like cross platform compatibility, but that's a huge consideration. Yeah. Yeah. I definitely hadn't thought about that, that it allows you to do things on platforms where you don't have access to any of the other features. Basically, everything's going to have a screen and let you display information on the screen. So exactly.

I just got anywhere. Um, so you touched a little bit earlier on, on some of the different competitors or alternatives that are out there. Um, but any more thoughts on, on just kind of, uh, how passport differentiates itself from them? Yeah, I think, I think, you know, our main competitors are the other hardware wallets, right? So it's pretty straightforward. I think, you know, you typically have in Bitcoin world, what your treasure cold card, and there's also some cool DIY projects, you know, like a seed signer or specter DIY. I think just passport offers the best balance between like the design. And when I say design, I don't just mean aesthetics. I mean like the, you know, usability. Um, so the design, like the user experience, um, the performance in terms of it being extremely fast and responsive and, you know, reliable, then also just the open source aspect to it. Um, haven't really seen

50:00 seen that exact combination from the other products. Now, the other products have their own pros and cons, right? And I think a lot of it depends on the user. But if you're looking for something that really strikes that balance between the design, the UX, the open source, and the performance, I think Passport is probably a really good bet. The open source thing is especially important to us. And we're proudly not just open source software, but open source hardware. And we actually use CERN's open hardware license to OHL, which is really cool, specifically designed for hardware. And we're using copy left licensing. So we're using GPL, you know, as the software, and then specifically CERN's OHLS on the hardware, which is like their essentially their GPL for hardware equivalent. And so there's only a couple projects that actually are open source hardware, you know, right now. There's Trezor, which has done a really good job, but they're lacking that secure element. So they don't have the same security characteristics that

we do. I think we definitely have protection against like physical security, which Trezor does not. And then there's another one, there's, you know, Bitbox is also open source hardware, which you've got to give them the credit for. I think they're a lot more difficult to use, at least for me personally. So yeah, I think we strike like a unique balance, especially for beginner users. Yeah, I'm glad you touched on the open source software and hardware piece, because the open source hardware space is pretty, pretty small. I mean, even outside of cryptocurrency, open source hardware is very much kind of a niche and a cutting edge thing. So to focus on that when you obviously didn't have to, but you decided to focus on making sure that not only was the software open source, but the hardware was, I think brings a lot of value there. And it brings a lot of hopefully longevity to the project as well. Because even if something happened to, to foundation and went under something, obviously, that's not something I want to see happen. But if that happened, the hardware is still open

source, people would continue to maintain it, they could even someone else could pick it up and create new ones based on that. There's a lot of flexibility there. And obviously, the other key piece is it allows users' visibility. Most people probably aren't going to be able to inspect the open source hardware. I don't even know if you call it code, but inspect the open source hardware, hardware schematics and understand what's going on. But it does allow some more visibility and removes a little bit more of the trust that you have to have in the hardware they're using when it's not something that's completely closed source and locked down and kind of off limits to the user, which is super important and something that I hope to see more and more of as we go because open source software is vital and we've seen a good push there recently. But open source hardware has been something that's been really lacking, but definitely hopeful that that space will continue to grow. And thankfully, you all have kind of pioneered in that area and joined a couple other

manufacturers, but it definitely is pretty rare. Yeah, there's so many reasons. I mean, you mentioned a lot of the great reasons to be open source hardware. I think like for like if you're going to have this open source software like Bitcoin just feels really weird if it's running on like a closed hardware foundation. So there's that whole element of it where it's like open source software. If you care that much about the open software, the open protocols and so on, you want to run that on open source hardware.

Then there's another aspect of obviously the transparency, the auditability, but like how I mentioned ownership is a part of sovereignty. If you're buying a passport from us, you have the right to modify it. You know, you actually go on our GitHub and get the designs, you know, all the schematics and the CAD files and all the firmware files and everything like that. You can do whatever you want with it. And that's like really powerful, right? Because almost everything that we use today from a hardware perspective, from a software perspective, but especially from a hardware perspective, prevents you from doing that.

I mean, like what Apple has done in terms of reverse engineering, right to repair, all that kind of stuff. It's just a total mess. I'm losing you, Zach. I'm losing you, Zach. I'm losing you, Zach. I lost the last. Okay. Sorry, are you there? Yeah, I'm here. Sorry, I lost about the last, I think, 15 or 20 seconds. You were talking about how you allow users. Can you hear me? I'll piece it together if you just want to start back with how open source hardware allows you to take control of your hardware.

Yeah, by the way, you just cut out for a minute too, so I don't know. And I was checking my internet. It might be on your end. I'm not sure. I mean, it could be on my end, but hopefully the server got it basically. Yeah. But you can just piece it together. You can hear me now though? I can hear you fine now. Yeah. Okay, cool. Yeah. So what I was saying was that I think, you know, open source hardware gives users that ownership over what they're buying.

And I think that's the right thing to do. I don't think you should sell someone a device and then they're not allowed to do anything with it. They're not allowed to fix it. They're not allowed to modify it. I think that's ridiculous. And so that's really important. And then I think a lot of companies are afraid of open source hardware because they're afraid they're going to get copied, you know. But I think that, A, it's really easy to copy like hardware anyway.

It's not that difficult. You can just look at the designs and you can copy it. So it's not that big of a deal. Like for example, what's the difference between like a Logitech, you know, computer mouse and a, and a razor computer mouse. Like there, I'm sure they patented the hell out of everything, but like they both probably work pretty much the same way. And like the way we look at it is that we're just going to keep coming out with new iterations of products.

So like you're welcome to like use our designs. You're welcome to copy our stuff. But by the time you do, we'll already be on like the next iteration. And so it gives us an incentive to actually be fast and to be constantly improving and to not be stagnant. So while some companies might see that as like a huge disadvantage and like a risk point to their business, we look at it as like a motivation to keep improving as fast as possible. And I think there's less risk of having kind of copying issues and cloning issues with hardware because there's so much more that goes into actually producing the hardware.

So I think there's definitely a lot less risk of that in the open source hardware space, but there's an interesting angle to hear how its motivation to build and improve and iterate quickly because you know that a competitor could step up and use the schematics and the information that you're making public and try to build something on top of it. But obviously you have the user base, you have the feedback from those users that you're using to iterate on and those things are super important and will help you kind of keep an edge even though you've chosen to expose some of the information that many companies would keep very closely held as intellectual property.

But you're also obviously showing that you're in it for the long haul and that you're in it for the good of users and the good of the space, which is super important and I think should give people a little bit more comfortability with looking into foundation and using a passport wallet and that kind of thing. Appreciate that. Yeah, for sure. So there is one kind of pressing issue that has come into effect in the hardware wallet space and that is that the connection between someone buying a hardware wallet and actually giving up the information about where they are shipping info, user full name, like credit card information, all that kind of stuff.

Hopefully, obviously, obviously, Bitcoin address in this instance, but that information kind of has to be collected in some way for you to ship a physical device to a user. So what kind of concerns do you or what kind of way do you approach keeping that information secure or collecting as little information as possible? Kind of what's your mindset around how you protect users from issues around their data being leaked or hacked about them having a hardware wallet?

Yeah, this is a tough one to be honest, right? It could have been like there was a great opportunity for everyone to take a jab at Ledger when they had their big breach in the last year or two. But I actually think it's harder to secure customer data than it is to make a hardware wallet. It's like a completely different set of challenges. So I'll tell you what we do. One is that we have our own online store that's a WordPress WooCommerce setup, which means that we're not using something like Shopify.

So I think that's a great tool for you to use some component of their store. And I think that was one of their vulnerabilities. And so like first thing is don't have a system like Shopify or I don't know, maybe Square or something like that where like an employee can just literally check the records. Like that doesn't make any sense. You know, where like an employee at Shopify can just go into your store and download the list. Like that just don't don't set yourself up for that.

Right. So that's kind of one big thing. So use something like WooCommerce or some other kind of e-commerce solution that is self hosted. Another thing is, you know, we do have to collect like basic info, like your email, your shipping info, the items you ordered. And if you just have to collect your email, your shipping info, the items you ordered.

1:00:00 choose to pay with credit card, then that information is being stored with Stripe, which is the credit card processor we use. We're also collecting billing address. So what we do right now is we automatically purge all that data within typically 30 days, though a few items, that's 60 days after we ship to you. So we keep the data in our self-hosted WooCommerce store, but then once we ship it, it queues up an automatic deletion process. Now we are downloading an archive of that data on a regular basis, which we do need for sales tax and other things like that.

But that is being stored only by two of the founders that are completely offline and encrypted. We have the luxury of being able to do this because we don't offer any kind of services right now. If we do start to offer services in the future where you would consider paying something on a recurring basis, it gets even harder because then we actually have to store some of that information online always. So we're kind of in a good place right now where, at least for now, when we're just selling a device, we can purge the data completely from the online system and download it. One couple of cool things. One is that we're building our own internal tool to actually allow us to have like a fully encrypted data store for the company with like access controls that's self-hosted.

We're building that for ourselves internally, just so that we can figure out this issue and make it even better where like an employee wouldn't be able to access the data without like special permission, for example, or like you would need two founders to click like a button or like even approve something from like their passport, you know, in order to access it. So we are working on that internally to improve because we do plan on having services and stuff in the future that would require that we retain some amount of data, you know, online. Then another cool thing is that because we're using WordPress and WooCommerce, we actually run our own self-hosted Matomo web analytics as part of that instance.

And we obfuscate the last three digits of the IP address. And so we don't know the exact IP address or exact location of any of our customers, which I think is really cool. We have no way of associating right now IP with a specific customer. And then finally we use BTC pay on the Bitcoin side. So we're self-hosting that. And that means that if you do want to use like a pseudonymous email address, and you do want to use a shipping address to like a mailbox or like ship it to your place of work, you know, something that doesn't have your home address, you do choose to pay in Bitcoin, we really don't know much about you. And I think that's great. And I think it's really important. I think if you're in the space and you're accepting Bitcoin, you should not be using like a third party Bitcoin payment processor, you should be hosting your own BTC pay server. So those are just a few things we do. And we're constantly striving to, to improve that. And it's, it's really top of mind for us.

Yeah, that's a very detailed and well thought out approach. I think you, especially hit the nail on the head there that if, if someone who's running a service like this, selling like hardware wallets or something Bitcoin related, but isn't self-hosting the specific components that go along with that, like a BTC pay server and all that, I think that should be a red flag because one of the beautiful things about Bitcoin and about cryptocurrencies like Bitcoin is that we are, we're able to cut out the middleman. We're able to do transactions directly peer without having to rely on, some other service or some credit card processor or anything like that. So just a simple fact of actually self-hosting the pieces of the checkout process and keeping that data in-house obviously helps you not having to worry as much about third party hacks causing issues for you or dependency hacks, that kind of thing that are causing problems for you externally. And then obviously it seems like really, I think taking a very concerted approach to users' privacy, but also just offering those,

those options of obviously you're obfuscating the IP address of the user and then allowing people to pay And obviously there's a lot of ways that you can help your privacy on Bitcoin. So hopefully people are doing that, not just sending directly from like a KYC exchange or something, but it definitely is a very freeing piece of that and should be a core piece of that. So it's good to tell you that that's very much in a focus there. Yeah. The biggest problem that I'll be completely honest and upfront about that every company is facing the shipping, the shipping, physical things is the shipping because, and I don't just necessarily mean like the, obviously shipping address, you know, if that's the privacy aspect there, but I mean that you need to use a service to buy like the UPS labels or whatever. And even if you don't use a service, if you're using like the UPS API or whatever mail carrier, you know?

If you're using their API directly, like they're retaining that data. I'm pretty sure that like, if you break into a UPS store and like open up whatever computer was left unlocked, you're probably type in like the account number or something for that shipper and pull up list of all their shipments and packages. Obviously they don't, they don't retain that data indefinitely, but like if you're shipping internationally, those customs forms are actually uploaded with that. And so all of a sudden they have like name, number of items they order, the value, the address. It's really scary. And like, we're doing as much as we can, like what's in our control.

But I want to be upfront, right. That when you're shipping something physical, there are these trade-offs and like, you know, your listener should be aware that no matter what we're doing on our end, there's still those basic elements of like the thing has to get to you, you know? So definitely encourage the use of like, um, like a mailbox or PO box or forwarding service or shipping it to like a, you know, your place of work or a friend or anything like that.

Yeah. Yeah. I mean, that's a, and that's a tricky thing that you just can't really work around at the moment. So hopefully users take the steps that they can, but even then like a PO box, that's clearly linked to your personal ID. And there are not great ways right now to, to receive something physically without there being a relatively clear trail to wherever it's sent. Uh, but doing what you can minimize that. Yeah. And if there was, you'd be making the trade-off between like the speed and the, and the privacy, right?

Because you're not going to get it in two days if it's bouncing between like, you know, three different places and you're going to be paying more for shipping. And so, you know, there's always those trade-offs and I just, I like being honest about it. I don't want to like pretend like we have it all figured out and then like UPS has a breach, you know, people are like, how the hell did my information get leaked out? It's like, we're, we're doing everything we can, like the levers that we have and just trying to make it, you know, always, always better.

When are we going to get the foundation shipping service? Just handle it end to end. Not going to do that for sure, but it would be something cool for someone to look at, you know, as a potential startup, because there's all these like virtual mailboxes where they'll like forward it to you. But is that really adding, you know, a lot of protection? It's a layer, you know, which is cool, but I don't know. Hope either. Hopefully there'll be a solution for this at some point or the way I think about it too, with like Bitcoin.

I mean, everyone's going to be using Bitcoin, I think within the decade. So maybe if you're buying a hardware wallet in 10 years, like who cares? But I, I don't know. I do think the privacy aspect is really important and it's still an open problem. Yeah, no, I definitely agree. It's a, it's a tricky one to solve. So just a couple more questions for you, man. It's been a great discussion so far, but I did want to just touch on how, how is foundation funded or made sustainable?

I mean, obviously you're, you're a business, so you're selling harder wallets to people. Is there any kind of VC funding that's also part of that or customer funding or donations and anything like that, that, that helps to, to drive foundation forward? Yeah. So we are a VC funded is the short answer. We did a pre-seed round when we first launched and we did a seed round in this past June of 2021. Led by Bolt, who's a pretty awesome early stage hardware investor, been immensely helpful working with them.

And so that, that's how we're funded. Obviously we're selling products. We are making money. We're, we're generating revenue. And so we will get to the point where we are cashflow positive and, you know, we'll make the decision to no longer pursue venture funding, but we, we do expect to be around for a long time. And, you know, for, for right now we are dependent on the venture capital in order to keep kind of growing the team size and putting out, you know, all these products at a pretty rapid pace.

Yeah. Yeah. And I, I don't see anything wrong with that. Obviously it doesn't seem like it's compromising the ethos or the fundamentals that you're focused on. And it's, it's important that there is that initial funding to get these things off the ground. So I'm always glad when, when companies like, like yours, like foundation can, can find those people who invest early to build out something that's sustainable because sustainability in the, the FOSS space is very, very tricky.

And obviously you're also a hardware business on top of that. So there's a lot of difficulty there. So I'm glad you found good people to, to partner with there that have been helpful for you. And I think that's very important. I think it's funny. It's, it's easier to get that funding almost for a FOSS or I should say, I don't know. I never say FOSH, but if you're, if you're a free open source hardware project, I think it's easier to get funding because you're selling something physical.

Right. I know in free open source software, it's, you know, I know there's a lot of different types of business models, but it can be more.

1:10:00 complicated. I mean, there's obviously great models that work really well, like whether it's like a red hat model where you can point to all these open source software companies with big exits or big amounts of funding. But at least in hardware, it's like we're making something and we're selling it. And it's like we have to manufacture it and we have to ship it. And so it does create like a pretty no brainer business model, which is easy to wrap your head around for investors. Other funny anecdote, which I think you'd appreciate is that we actually had to get Bolt to change, to strike a clause from the standard VC like documents that you would sign for like a seed round. There's like this Venture Capital Association. They have like a standard document package, you know, that's pretty much used like as a template for all these deals.

And there's one clause in there that says something like no GPL software because like, you know, Google won't acquire you if you have GPL software. And this is this is not a joke. There's a lot of companies like you can MIT license software fine, right? But like GPL where it's copy left, that presents an enormous problem. So one, it's kind of funny. Two is it's kind of great because it means that like, you're not going to get ripped off by someone like Google, because they can't rip it off, because they'd have to open source anything it touches if you're using a copy left license, you know, like GPL. And three are, you know, our investors were happy to scrap that right away as soon as we pointed that out. So it was not anything that was contentious. We were obviously super upfront about our values and our strategy and everything and our emphasis on open source from the beginning.

And so there were no surprises there when we were going through like the actual legal, you know, set of things. I have never even thought of the effect that open source licenses would have on a like a VC funding. Oh, yeah. That's a fascinating piece of things that hadn't even crossed my mind before. It's a fun anecdote for sure. No kidding. Glad y'all got that. Y'all found that and all of the red tape there. So there was a ton to go through. But glad y'all found that and got that struck out. So last question for you, Zach, before we close out, is just really how can listeners jump in and help to support what you're doing with Foundation?

I think the easiest way is to consider purchasing a passport on our website. I think that's the best and easiest way to support us. Like I mentioned, we have this batch two coming up. We're going to be releasing a lot of details over the next month or so. We're going to have an updated website with details of the, you know, updated design. We'll have a, you know, we already have that lower price, like I mentioned, at $199 right now for pre-orders.

And we will be giving some cool details of the mobile app that we're going to be shipping alongside Passport. And so you can, you know, check out our website at foundationdevices.com. And of course, give us a follow on Twitter. You know, we're always posting updates and blog posts and that kind of thing. And so if you're not thinking about purchasing something, you know, keep up to date, right, with what we're doing. And maybe you'll want to in the future.

Awesome. Well, thank you so much for diving into that. I'm going to be looking into pre-ordering one from that next batch. And I'm excited to see the updates that come out on the hardware requirements you've made and you talked about today. And that mobile wallet too. But just want to close out by just saying thank you for your commitment to FOSS, to building open source hardware, to caring deeply about user privacy and customer privacy for y'all selling hardware.

And I'm just glad to see people in this space like yourself that are very committed to that and are not wavering from that commitment. Because it's so important to the longevity of Bitcoin and the Bitcoin space that people continue to carry on that real cypherpunk ethos that kicked all of this off. So great to see that. And I learned a ton today. And I'm going to have to do a ton of research and learn some more on how this thing works. But I've really gotten a ton of great details from you.

So I'm excited for listeners to hear this as well. Thanks, Seth. Love the podcast. Love what you're doing. It was a pleasure to be here. Have a good night, Zach. You too. Thanks for listening. And I hope you enjoyed this episode of Opt Out. If you did, please take a moment and subscribe to the podcast. Or if you're already subscribed, share it with one friend or family member this week. As always, you can check out the link to the guest content and contact info, as well as links to all of the tools we discussed in today's episode.

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