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In 2018, we made a concerted effort to expand into cryptocurrencies. Among other initiatives, we launched new crypto trading tools, we added support for bitcoin futures on CME and CBOE, and we recently invested in the new CoinFLEX exchange. We recognize crypto’s potential, and we’re passionate about making sure our users have the best possible tools to trade in that space.

Even though cryptocurrencies aren’t new to us, we’re always looking to gain more insights into how blockchain technology is affecting both capital markets and other industries as well. That leads us to many conversations with a variety of blockchain and crypto companies, and one of those companies is tZERO. Growing out of, tZERO was an early adopter of blockchain technology and has remained at the leading edge of the industry today.

I recently visited tZERO in New York and sat down with the company’s CEO, Saum Noursalehi, in advance of the coming launch of the world’s first regulated exchange for trading security tokens through a joint venture with BOX Digital Markets. Below is a transcript of our conversation, lightly edited for readability.

– Brian Mehta, CMO

Brian: Really great to have you with me, Saum, thanks for talking with us. For our readers who may not be familiar with tZERO, do you mind giving a little background on tZERO?

Saum: Put simply, our goal is to leverage blockchain to make capital markets more transparent and efficient. The background on how we got here is kind of interesting. We were at—which sounds unrelated but ended up becoming the parent company of tZERO—when we first heard about Bitcoin in 2013.

During an interview, Patrick Byrne—Overstock’s CEO, who had been studying Bitcoin—was asked about accepting it as a payment method, to which he answered yes, we would in the coming quarters.

Brian: Which makes sense from a retail perspective.

Saum: Right. After that interview it just blew up in the media. The press went crazy over it.

So in response, we put together a development team and locked them up in a room and, within a week or so in January of 2014, became the first major retailer to accept Bitcoin for payments. We had no idea it would get the level of interest that it got, and from there we started to really examine the underlying tech behind cryptocurrencies and Bitcoin.

Patrick saw many of the applications of the technology, one of which was in capital markets. This is how tZERO was born. The benefits of the platform were, instant settlement, more efficiency, transparency, global access, improved liquidity and 24/7 trading.

I wasn’t part of the tZERO team at the time. I was actually working as President of’s retail business, a position I held for about two years. By the end of those two years, I was ready for something new, and the two areas I found most interesting were in data science/artificial intelligence, which is where most of my wins had come from during my time at Overstock, and blockchain.

So, as I entered my next chapter, I was looking to start a company either in AI or blockchain, and blockchain was a more recent fascination that grew since that earlier Bitcoin period. Around this point, Patrick offered me the opportunity to run tZERO, which I accepted.

Brian: And this was recent, right?

Saum: Yes, just over six months ago I made the move, and I’m mostly here in New York now focusing on that.

Brian: That’s great. And as we were talking before, making that move from retail or retail business to capital markets, what has been your biggest challenge, or some of the highlights from that?

Saum: It’s definitely been challenging. There is more to capital markets than what you initially see, but I would say the biggest surprise has been the regulatory challenges, because with Overstock and e-commerce in general, it’s all about quickly experimenting and throwing things up—what’s called A/B testing.

Brian: Totally. Test and learn.

Saum: Measure and just iterate, and you have the freedom to do whatever you want. But in this space, it is so heavily regulated—everything we do needs to be done in sync with the well-established regulations.

Brian: So what are you doing to ensure that you’re in sync with the regulators as you’re trying to build these technologies or trying to build these processes?

Saum: It’s really about taking an incremental approach to the innovation and being laser-focused on what the rules are for issuing and trading securities. We are working closely with legal advisors and regulators, providing them with regular updates. We want to keep the regulators apprised of the direction we’re headed. The SEC has been keeping a close eye on blockchain and digital assets, both with a view towards ensuring continuing investor protection, legal compliance, as well as with an eye on the potential for technological and market innovation. Understandably, the regulators are cautious.

Brian: Sure. You touched on this obviously in your background about—very different business model than tZERO, but tZERO is a portfolio company of So what kind of relationship do the two have, or is there any shared knowledge, technologies or personnel?

Saum: Yes, it’s actually very interesting and, on the surface, it may not seem to make sense together, right? E-commerce, retail business, and then blockchain and capital markets. But the relationship is that our core competency is really the utilization of technology.

Patrick Byrne started and eliminated unnecessary middlemen in retail by pioneering the drop ship model by leveraging web-based technology. tZERO is now making capital markets more efficient by eliminating rent seeking middlemen, by leveraging blockchain technology. The relationship revolves around our core competency of technology.

With tZERO being a top priority for Overstock and Medici Ventures [Overstock’s blockchain venture arm], I have been able to leverage a lot of the best enterprise engineers we have on the retail side, and blockchain engineers on the Medici side, and utilize them on tZERO. This is to accelerate the road map and turn our vision into a reality. It has been a huge advantage to supercharge our team with 50 to 60 of our most talented engineers—out of a pool of around 800 technologists.

Brian: Obviously then you’re pulling from different resources from different locations. Overstock’s headquarters are in Utah, correct?

Saum: Right.

Brian: How big is your team here in New York?

Saum: We have about 70 people in Utah, and it is primarily tech and product development. And we have approximately 30 people in New York. So we’re around 100 people overall, with the New York team leading on the business and legal front.

We have engineers in New York as well. It’s just a lot more prudent to locate engineers in Salt Lake City. Actually, a lot of Silicon Valley talent that wants to own a home, have a good quality of life and enjoy the outdoors—skiing, snowboarding, rock climbing—actually migrate to Salt Lake City, surprisingly.

Brian: So you have the best of both worlds going on.

Saum: Exactly! I fly back and forth, but the bulk of my time is in New York.

Brian: This summer you were working on an investment from GSR Capital, right? Can you tell me a little bit more about that relationship?

Saum: Yes. They haven’t invested yet—we gave them an extension to see if a deal can be finalized by end of February. Their intention was to invest at various levels—tZERO tokens, Overstock equity, as well as an investment in tZERO.

Brian: Interesting.

Saum: But in the meantime, we raised quite a bit of capital through our own token offering. There are strategic benefits of working with GSR as well. A lot of what they bring to the table is in terms of global expansion of our tech to international exchanges, as well as bringing quality issuers to the table. They have invested in many different companies and sectors, and a lot of these companies may be interested in doing token offerings. We could power all of this for them. That’s a significant reason for wanting to partner with them.

In fact, just last month it was announced that GSR Capital has retained tZERO to develop a smart contract token that will be utilized for an upcoming sale to offer recurring tranches of electric vehicle (EV) battery-grade cobalt. This is just a first step to build an ecosystem in Asia for tokenized commodity purchase contracts that would simplify the process of identifying, purchasing and tracking the supply of rare minerals.

But, of course, capital is capital, so that’s always nice too.

The second half of this interview continues here.