00:00 Speaker A
Well, stablecoin issuer Figure Technologies is going public on the Nasdaq today, set to trade under the ticker FIGR after raising more than $780 million. Want to toss it over to Yahoo Finance Executive editor Brian Sozi, who’s with the Figure Technologies co-founder and executive chairman, Mike Cagney.
00:23 Brian Sozzi
All right, thanks so much Julie. Mike, uh good to see you. Congrats on this debut. Um, look, uh I think investors are very intrigued by your story. When you in the lead up to this debut, Mike, what did you hear from investors because I’m getting indications that this might open around $34. It priced above the range. Clearly where investors were excited about something in your business model or many things.
00:54 Mike Cagney
Yeah, I think Figure is using blockchain technology to transform capital markets and we’ve proven to be very effective at doing that in the credit domain. Over $17 billion dollars of originations on public blockchain, over $55 billion dollars of transactions. And I think the market resonated to the product market fit with blockchain, but also the financials. obviously doing 340 million of revenue and over 100 million in E last year, being gap profitable and growing at the pace at which we’re growing. There was a lot of enthusiasm there. So we were excited about the market reaction and excited to get this IPO done.
01:31 Brian Sozzi
In its simplest form, uh uh Mike, you know, I think a lot of the average investors that are on Yahoo Finance, they will read the prospectus, uh they will slightly understand what you do and how you do it. but for those that don’t get it, uh because it is a little bit of a complicated business. How should they think about the figure model? What what do you do?
01:54 Mike Cagney
Sure. The the beauty of blockchain is it allows you to displace trust with truth. And and that allows you to change how markets trade, how they’re financed. So, you know, if you think of of something like the stock market as an easy example, seven parties sit in between buyers and sellers of every transaction. blockchain has the ability to distill that down just to two. Um every time we swipe a debit card, five parties sit in between that the buyer and seller, blockchain can distill that down to two. So when you disintermediate those actors, you’re you’re freeing up trillions of dollars of market capitalization. And I think that’s why the market’s excited. but it’s not just the the disruption of the existing businesses, it’s the green field opportunity as well. Blockchain allows you to create new markets that didn’t exist very much like what we’ve done in private credit where we created a liquid private credit marketplace for both the trading and financing of assets in a market that didn’t exist before and and really could only be done with blockchain.
02:51 Brian Sozzi
That is a large uh slug of money that you raised Mike, almost $800 million. Where will some of that go? what technology are you going to put that uh that money towards?
03:03 Mike Cagney
Sure. and and look, I mean in in our last company we did a billion dollar raise from Softbank, which was the largest private company raise ever done and and, you know, we used that balance sheet as a weapon, um to be able to take risks that our competitors couldn’t. I think that’s perfectly analogous here. I think having that balance sheet’s going to allow us to lean in and really push disruptive blockchain use cases in a way that not having that capital would would be difficult.
03:32 Brian Sozzi
Is this the perfect environment for stable coins? Curious your take on uh how the regulatory environment has changed this year even compared to when we talked a couple months ago.
03:45 Mike Cagney
Yeah, I think I think on a first order basis, obviously the genius act is hugely beneficial for the stablecoin industry. The the second order effect of of the stablecoin aspect, especially as money flows into Treasuries, out of bank deposits introduces a tremendous opportunity for decentralized finance, which is really at its core what blockchain’s for. And so, you know, we’re excited to be a leader in in the Dfi side and and really, you know, leaning in and looking forward to how that market evolves over the next year.
04:22 Brian Sozzi
I hope I got this right. Are you using Open AI to approve mortgage loans? How how does that work?
04:33 Mike Cagney
No, we we we use a lot of AI through our process. Um but but we tend to underwrite in a very boring way. Um what we do is we don’t use humans. And so by taking people out of the process, we have over 170 third parties that use our technology to originate assets on chain and they all do it the exact same way. That homogeneity of those assets coupled with the certainty of blockchains allowed us to bring liquidity into that market where again it never existed.
05:08 Brian Sozzi
What are you seeing in the in the housing market?
05:13 Mike Cagney
Uh look, I I think obviously rates are beginning to come down. uh that’s beneficial. That’s that’s great for all lenders including ourselves. Um reduces debt burden, reduces DTI considerations. Uh but you know, how far it goes, I’m not sure we’re going to retest those lows of COVID. Um and so I think, you know, the folks that are in 2% mortgages are still going to hold on to those mortgages and that’s great for for home equity line of credit and second lean. But over 20% of our volume now is first lean mortgage and and we expect that to continue to expand especially as rates fall.
05:50 Brian Sozzi
Is it right to think you could be sitting on a very profitable year next year once rate cuts uh do start to flow in and the housing market hits some new gear that it hasn’t been in for a couple years.
06:03 Mike Cagney
Yeah, look, I I think there’s certainly some macro catalysts out there, some tailwinds around uh the market, the interest rate environment. I also think, you know, what you’ll see from us over the coming years is is coming next 12 months is expanding the blockchain application into other asset classes. So just as we’ve been able to use it for private credit, we think it’s equally applicable in equities and commodities and currencies and and so, you know, we look forward to leaning into those asset classes and driving new innovative use cases.
06:36 Brian Sozzi
Is the stock market just outdated, Mike, I see what you’re doing. I it’s fascinating technology but you know, I I look at the New York Stock Exchange even the Nasdaq, I mean they’re phenomenal companies, entities, but I see what you’re doing and I just think the whole game is about to change in a big way.
06:58 Mike Cagney
I think we’re right on the cusp. I I think if you looked at how much we accomplished over the last four years in a very, very difficult regulatory environment and the environment that we now have with a different SEC and with with an administration that’s supportive of the technology, I think an enormous number of things are going to happen. It it’s sort of the proverbial slow and then all at once. and I think we’re really at a tipping point. I think blockchain is going to be uh responsible for moving more public market cap than ever any technology has ever done before and probably ever ever will after.
07:34 Brian Sozzi
I think about the the business you created over at Sofi Mike. Now you’re out here uh with Figure. Clearly you have a passion for, I wouldn’t say personal finance, maybe I I should. what what has driven you to to spend so much of your career and so much of your time in this industry?
07:56 Mike Cagney
Yeah, so I I I’m very passionate around connecting sources and uses of capital. If you go back to when we started Sofi, that was the thesis behind it. We take alumni to invest in loans from students from their schools and have an affinity bond and and where both parties could improve versus the bank as a capital allocator. And you know, with Sofi we were a victim of our own success. The loans became so popular, we just relied on the wholesale capital markets to finance them. Figure gave me a second shot at this with blockchain and with Dfy. And so we’re very excited about standing up a platform we have called democratized Prime where we connect sources and uses of capital and really disintermediating traditional capital allocators and letting individuals make their own lending decisions. And I think that ultimately is where the world’s going to go to. I think with the stable coin bill, the genius act, the second order consideration, again is with all that money flowing into treasuries, it’s coming at the expense of bank liabilities. That’s going to force some kind of alternative way to look at credit. and I think decentralized finance is that way.
09:02 Brian Sozzi
Well, congrats on your big day. Thanks for always making time for me uh and the Ya Finance team. uh good luck for the rest of the day. I’m sure it’s going to be very busy. uh figure uh executive chair, uh Mike Cagney, appreciate it.
09:14 Mike Cagney
Thank you.
