Today, Foundation announces its $7M seed round. We took the occasion to sit down with Zach Herbert, Founder and CEO, to get his perspective on how the crypto landscape is changing in the wake of the FTX crack-up, the relationship of regulatory agencies to the industry, and what future optimism looks like.
Zach is determined to make digital sovereignty accessible. Foundation designs intuitive software and hardware products that lower the barrier to self custody for the increasingly mainstream crypto user.
After leading the pre-seed round at Foundation back in 2021, Baukunst GP Tyler Mincey began going deep on how crypto and web3 technologies will fundamentally change connected devices and our relationship to them, presenting his thesis at the Baukunst Creative Technologist Conference last spring. Last week, Ledger announced that Tony Fadell, ”Is Trying to Build the iPod of Crypto.”
Smart people who understand intimately how personal computing paradigms shift are paying attention to this space.
BAUKUNST: What do you think is the appropriate role for governmental regulatory bodies in the crypto space?
ZACH HERBERT: Well, I think most of these governmental agencies are pretty corrupt. These regulatory agencies, especially the SEC, typically go after the smaller actors. They don’t go after the bigger actors for some reason. We’re seeing that right now with FTX who was working closely with the SEC to try and carve out a regulatory moat it could use. And FTX is not even an American company. It’s based in the Bahamas. The SEC has regulated by enforcement actions without giving any clarity to our industry regarding what is actually illegal or not. They won’t give you a straight answer as to what’s legal. And I think you can extend that to other agencies, like the Department of Treasury that, for example, made a move against Tornado Cash a few months ago.
BAUKUNST: How do you think the implosion of FTX is shaping the crypto landscape?
ZACH HERBERT: It’s a wake-up call around the importance of self-custody. It’s now beyond clear that storing your coins on an exchange is extremely risky. I also think it’s a wake-up call in terms of corruption and the fact that regulators are not actually protecting you. And then, it’s a wake-up call regarding the media. The mainstream media coverage of FTX has been horrible. I mean, horrible. There are accounts on Twitter giving excellent coverage of the clear, premeditated fraud that took place, but The New York Times, The Washington Post, these very respected media outlets, I don’t know how you can read their coverage. On Twitter, you can find drastically better, much less biased coverage. And people are waking up to that. But the unfortunate thing is a lot of people have lost their life savings.
BAUKUNST: Foundation’s products are manufactured in America. What drove that decision?
ZACH HERBERT: There's a geopolitical imperative, and a security imperative, to manufacture in the United States. I think we’re moving toward a multi-polar world and it’s only going to get crazier. I personally would never trust a device to store my Bitcoin that was made in China. You can look at Apple moving a lot of iPhone production to India...they’re starting to get out of China.
And I want to be on the ground at the factory myself. We manufacture in New England and I live in the Boston area. I’m at the factory at least every couple of weeks, if not more frequently.
BAUKUNST: What role does design play in your products?
ZACH HERBERT: Design is core to everything we do, and you can tell that by looking at our products. We aim for a design that’s distinct and breaks from trends in the tech industry, which are dominated by ultra-minimalism. The monochrome. The black and white. Everything kind of looks the same and comes from the Jony Ive vision at Apple, the idea that a sheet of glass is the ultimate form factor. I think that needs to change. We call what we’re aiming for Digital Deco, inspired by the visual language of Art Deco. We’re embracing color and ornate design. The cryptocurrency industry has focused on dark colors for some reason. I think that’s completely wrong for our industry. I think it should be about futuristic optimism. Bitcoin is supposed to be a counter to the dystopian future, and our design should reflect that.
At the same time, the Web 3 and NFT sub-industries have moved in a direction that’s almost playful and game-like. That doesn’t appeal to us, because a physical device that allows you to potentially store your entire net worth is a serious thing. It should not be game-like or whimsical, but it should be very futuristic and very optimistic.
BAUKUNST: As far as the pessimistic and optimistic future goes, what most scares you in terms of where we might head as a society? And then, what most excites you?
ZACH HERBERT: I think we're getting really dystopian, really fast. And people are distracted and have their heads down. The timing is unfortunate. It’s unfortunate that this is happening when people are hurting and we're entering what I think is obviously a recession (though the people in charge refuse to call it that.) So people are worried about living day to day – about food, gas, their home. It’s hard to get people to care about anything else, and understandably so. I think the scariest thing is the idea of Central Bank Digital Currencies. And this idea of instead of having a checking account with say Bank of America, you have a checking account with the Federal Reserve who can monitor, and perhaps dictate, every transaction. This kind of thing is already happening in China with social credit scores. It's insane, but it's actually happening. And it's being entertained, and researched, and talked about very openly here in the U.S. and the rest of the western world. I think that's terrifying.
Obviously, what excites me is the rise of Bitcoin as a counter to that. I feel every type of technology can be used for good and evil. With nuclear technology, you can make a bomb or a power plant. With blockchain technology, you can make a Central Bank Digital Currency and go for a dystopian future, restricting what the public can do with their money and surveil everything. But you can also create Bitcoin, which is completely decentralized, permissionless, and uncontrollable by any governing party. I come to the mantra Fix the money, fix the world. I think it’s the most important thing to pursue at this point in history.
This interview has been edited and condensed.