Revolutionizing the Trucking Industry

(upbeat music) (upbeat music) - I'm Douglas Borthwick. And this is Old Men New Money. And it's a great day today because we've got Todd Ziegler with us and Todd's with TCS. And TCS is an exciting coin that is not a security, but it's a coin that's helping the trucking industry. And it's listed on INX right now. Todd, could you please tell us about yourself? - Sure, Todd Ziegler. I'm the CEO of TCS blockchain. I'm an attorney by education, but I've spent the better part of the last 10 years working in the transportation industry wearing a number of hats. Cost of capital is the single largest problem in the $2 trillion US supply chain.

And that really was the impetus of TCS, utilizing a blockchain tech stack to provide faster and cheaper settlement to transportation companies. So I appreciate the invite and looking forward to taking a deeper dive with the two of you about that today. - Were you in the trucking industry first and then started thinking about blockchain? Or were you blockchain thinking about trucking? - No, trucking industry first, trucking industry all the way. Unfortunately, I was late to Bitcoin.

I didn't buy any Bitcoin until 2017, but I read the Satoshi White paper and I went back to it during COVID because obviously supply chain during COVID we're having a lot of issues. And I thought to myself like the thesis and I own Bitcoin and I never wanted to disparage Bitcoin in any way, but the thesis of Bitcoin was really not to be a store of wealth. The thesis of Bitcoin was this is a better tech stack in lieu of banking rails for peer-to-peer settlement, business-to-business settlement, disintermediating third parties, increasing speed, increasing transparency, those types of things.

So I started thinking about blockchain as a solution to this cost to capital problem in the transportation industry. And lo and behold, I eventually had to cross the tracks into the blockchain digital asset industry where I've kind of been working in tandem with the transportation industry for the better part of three years now. - On the trucking industry traditionally, how would truckers get paid? What are the terms? - Yeah, so about 70% of the $2 trillion industry is quote unquote factoring. So TCF is really resolving a payments problem.

In the transportation industry, I don't care if you're delivering widgets or bananas or steel pipe, the pay terms are 30 to 180 days. I worked directly with Fortune 50 customers in the US, names that the two of you would both know, who are on net 180 terms. And like people in the blockchain industry don't believe me, but it's like totally true. You deliver a load of widgets, you get an IOU, you get a receivable, saying that we'll pay this at 180 days. - All right, so let's just halt there. So I'm a truck driver. You tell me I want you to pick this up and drive it to some other place.

I spend a couple of hundred bucks, a thousand bucks on gas and my own time, drive it from A to B, but I won't get paid for 180 days. - 30 to 180 days is industry standard. - Yes. - So I'm putting out my own money. - Yes. - Pay for the gas, pay for myself, pay for my truck, but I paid for 180 days. By the way, in most cities right now, it costs anywhere between 12 and $1,500 to fill up a truck with diesel. - Yeah. - And don't forget who was the most essential worker during COVID.

- And these companies truly are the backbone of the entire US economy because I think the statistic is if the trucks stopped tomorrow, the shelves would be cleared in about three days. So they really are the backbone to everything that we do. - And how is this possible? - And there's a lot of bankruptcies in that industry, right? - Yeah, so the industry's unionized in the late 70s. It's kind of been a boom bust cycle in the industry since then.

This particular cycle has been egregious though because of the stimulus spending and all of the loose capital that's been flying around and just the difficulties that have been created in the supply chain, in routing guides because of all the changes that have been happening, right? And that's almost been exacerbated recently by the tariffs. But the interesting, I think the most interesting statistic for the industry that most people don't know is about 97% of the full truckload operators in the United States are three to five trucks, right? When we're on the highways, we see, you know, J.B. Hunt, Walmart, Werner, we see all these big guys.

They're only about 3% of the market. This is a market that is dominated by small business owners, entrepreneurs, libertarians, people who want to make their living on the road. - But if a trucker knows they're gonna get 100 bucks in six months' time, do they charge 110 bucks? Do they price it in? - They can't. Now, the interesting thing is, if I'm-- - It's very competitive. - Let's say I'm a three to five truck operator. I can probably, without a sales team, I can probably find my way into some Walmart break, right? I could be a contracted carrier for Walmart.

Walmart's a good example because they have the largest trucking fleet in the world, but they still outsource a ton of their capacity needs, right, they just, you know, they're never gonna own enough trucking assets to manage the entire routing guide. And there are a number of reasons for that. Any of these big shippers, including the Fortune 50s that are net 180, they'll let any three to five truck operator move their freight, but their position is, we pay on net 180 terms, we understand inflation. If you can't wait 30 to 180 days to get paid, then you need to go contract with a factoring company.

And those are the companies that TCS is looking to disintermediate with a faster, cheaper solution for the industry. - Are the factoring companies independent of the Walmarts of the world? - They are, many of them are subsidiaries of banks, but most of them are just intermediary financial institutions that are sourcing capital from senior lenders. - And what sort of interest rate is that? If I have a hundred bucks coming in in 180 days, what would I actually see if I wanted it in two days' time? - Kind of the insidious thing about it is these trucking companies, and this isn't just trucking, right?

This is logistics companies, brokerages, 3PLs, this full truckload sector within transportation is about half the industry, right? Full truckload's about a trillion of a $2 trillion domestic industry. But they all have this cost to capital problem. So typically what happens is I'm Ziegler trucking, I have a three to five truck operation, I need to go find a factoring company 'cause I can't wait 30 days to get paid. I sure as hell can't wait six months to get paid. So I'll probably get an industry standard 3% factoring agreement. Now 3% sounds pretty good to me, right? I'm not a trade finance guy, right? Well, 3% is 36% annualized interest.

- So it's 3% a month. - 3% a month, now it's, you know. - 3% green? - 3% of gross, right? So these guys are getting the equivalent of hard money loans. Think about this from an arbitrage trade finance perspective, right? They're getting hard money loans to monetize what is typically A to AAA rated Fortune 1000 commercial paper. And the reason the factoring companies are getting that is because there's the dawn of time. I mean, we could go all the way back to, gosh, we could go way back in terms of the history of trade finance, but there's really never been an alternative to conventional factoring on banking and Tri-Fi rent, right?

Blockchain was the better solution. So we're just now seeing blockchain oriented solutions come to market in the industry. - So is it 3% per month, whether it's Walmart on the other end or whether it's XYZ company that no one's ever heard of? Like, does it, is it strange? If it's Walmart, is it only 1% maybe because it's a well-known company? - Nope, nope. - Yeah. Walmart doesn't- - Yeah, 99% of the factoring companies, there's a gross figure and it's actually worse than that because there's also typically a 5% to 10% reserve on every single invoice, which is held back by the factoring company in the event of some default in the future.

The trucking company has to, the owner has to personally collateralize the contract, typically has to cross collateralize all of his business assets, has to pledge all the existing AR is collateral and all of the future AR is collateral. So not only are they stuck in the equivalent of payday loan, hard money, interest rate contracts, but they very quickly, even with a three to five truck operation, they very quickly build up a six-figure, multiple six-figure pipeline of AR and they can't get out of that factoring agreement until somebody buys out that pipeline. So they get into these agreements and they get stuck in these agreements.

- The reason the situation exists is because the trucking companies are fractional and that they're all over the place and it's three to five trucks. So they can't band together to go to someone like a Walmart or these other folks and say, listen, this doesn't work. Bring it from 180 days down to 30 days. - Right, and Amazon just had a press release that came out the beginning of last month saying that they're making a pivot to stablecoins for a B2B freight invoice settlement. Most people don't know this, Amazon's a factoring company. You're a carrier that outsources on the Amazon routing guide. I don't know what Amazon's pay turns are.

Let's say they're net 30. They'll pay you in three to five days, but they're gonna charge you more for it. But this is how the sausage is made. This is how goods get to market in the United States and it's just a map of opportunity. All right. - So I know we've been talking about TCS. Can you, Todd, just for our viewers, tell us what TCS stands for? - Yeah, it's an acronym for Truck Coin Swap. So we originally started out as Truck Coin Swap as a Wyoming-based LLC. And then we converted to C Corp status last year as TCS blockchain. - And so what does Truck Coin Swap do that solves this problem?

- Right, so we have an ERC-20 Polygon token that really is what facilitates faster and cheaper settlement. So let's keep the numbers easy. Let's say a trucking company who is onboarded with TCS. So they've gone through KYC AML. They've signed our settlement agreement, right? They've also onboarded with INX. INX is our premier centralized exchange partner right now. So they have to have an account and wallet at INX. So let's say they sell us $1,000 Target invoice, right? We don't have a contractual obligation to buy all of the AR that they send to us as an onboarded client. But if it's a Target invoice, we're gonna buy it, right?

- What does a Target invoice mean? - An invoice from Target. - From the retail giant Target, right? - Got it. - Sorry, probably should have picked it to remain. - Right. - Yeah. - The invoice. - So we buy the invoice. That day or the next business day, we're gonna transfer the USD value of that invoice, less our settlement cost in TCS token. We're gonna directly deposit those tokens into their wallet at INX. And in two clicks, they're back into Fiat. Now they can stay in Fiat at INX. If they wanna dip their toes in some Bitcoin or USDC, they can do that.

Or if they just wanna move it back to their business checking account, ACH, they can do that for five bucks at INX. And they've gotten their load completely settled in a one to two business day. - INX charges five bucks for ACH. - Which is an absolute deal because if you're with a factoring company and you need a wire or an ACH, they're gonna charge you a lot more than that. I've seen factory company charge $80. - Yeah, banks and everyone has like 20, yeah, banks and them charge 20, 30 bucks. But usually with your banks, you should get ACH even for free. That's a $5 charge still will add up.

Let me ask you this, what you said we deduct our settlement costs. So what is the benefit for the trucker to come to you, aside from instantaneous settlement, how much does it cost them when they come to you guys? - So on that 30 paper, we charge 1%, whereas most of the factory companies would be 3, 4, 5%. So we're literally cutting their cost of capital oftentimes by 50, 60, 70, 80%. - All right, so I'm-- - And where do you get your capital from? - We source our capital just like most factoring companies from liquidity providers.

So we have relationships in the DeFi world, and then we have what I would just deem senior bank triad-fide types of relationships as well. - All right, so I'm a trucker, I've got $1,000 that's owed to me, a counter receivable, and I'll get it in 180 days. I've onboarded with INX, they've done the KYC AML, they know I'm a real trucking company. I give you this invoice for $1,000 I'm gonna be getting in 180 days, and you'll then send me TCS equivalent of, let's say, what, $950 or something like that. And then that'll be-- - $190. - No, I don't know what their fee is. Yeah, it would be, I think it'd be $990.

Okay, as opposed to maybe $600 that I'd be getting if I was doing a regular factoring company. So huge savings there. Listen to my account at INX in your token, I can then sell that token on the INX platform for fiat, and then have the fiat and move it off to my bank account if I want to. - That's right, that's right. - Huge savings. - Yes, massive savings. And people ask me all the time, because everybody talks about this adoption curve, right? Mark Cuban has this famous quote like, I'll be interested in crypto once they start solving real problems in legacy industries. That's exactly what we're doing, right?

Like I tell people all the time, if you told most owners of trucking companies and logistics firms that they could cut their cost of capital by 50%, if they went and buried their invoices in their backyard overnight, and came back in the morning to dig them up, they would absolutely do that. We've not only made this about as seamless and easy as it can possibly be, right? You have an INX account, it's two clicks to get to fiat. We've actually made it easier than factoring. And I actually, I know this pain very well. I owned a freight brokerage. We were stuck in a horrible contract with a factoring company that I had to get out of.

And here we are paying this company to pay us in 10 days. So we didn't have to wait 30 to 180 days to get paid. And I ended up having to hire people to manage their people to make sure that we actually got paid in 10 days. Because if a remittance doesn't match inside of some transportation management system, the factoring company doesn't call you up to say, hey, we're sorry, we're not sending you that payment today. You just have to figure it out, right? So we're absorbing these massive costs of capital. And we're basically getting no service from it.

And it's funny, I had never met anybody in the transportation company who would refer their factoring company if they weren't getting a referral fee. Like these companies are hated. They are loathed. But there simply is no alternative to factoring if you can't wait 30 to 180 days to get paid. And I wanna zoom out for a second from a macro perspective. And I think this is a subject that you guys and your listeners will really appreciate. When you are forcing transportation companies to absorb this insanely high cost of capital, what you are creating is a silent VAT tax, right?

All of this rolls downhill to consumers and households every time they go to the grocery store, right? So the reason the cost of goods is going up is not just due to inflation. It's also due to the silent VAT-like taxes that these kind of dark taxes that we have. - It's the system inflation. The process has inflation along every step of the value chain. - And I was invited to the White House in March to meet with the National Economic Council because the Trump administration right now has a mandate to reduce cost of capital, reduce cost of goods and reduce cost of housing, right? And the cost of goods is the one that hurts the most, right?

Because it hurts the fixed income people. It hurts the low income people. Like everybody's gotta buy food, right? Notwithstanding a zombie apocalypse or something like that. So we really do have this insidious tax in the supply chain. And this is the exact, in my mind, this is the Satoshi thesis applied to the single largest problem in supply chains, which again is cough to cattle. - So moving back again, I have this $1,000, a kind of receivable to Target. - Right. - How do I, when I give that to you, this Target, is Target told, you know what? We're not paying Douglas's trucking company anymore. Now we're paying Todd.

- Yeah, that's a great question. I get the question a lot. Don't you have to have buy-in from these shippers and debtors? So if you have to have this institutional buy-in, and the answer is no. Everything is managed in, and this is true of factoring in most industries, everybody, everything is managed by operation of law and contract, right? So when a new transportation company on boards with us, one of the things that they do is they sign what's called a notice of a sign, right? And as soon as they onboard, they're giving us their list of shippers and debtors. If they move a lot of freight for Target's gonna be on that list.

And one of the first things that we're gonna do in the onboarding process is send that signed notice of assignment to Target, saying on all of ABC's loads moving forward, you're to pay TCS in lieu of paying ABC, right? We set up an ACH integration, and those funds move directly to TCS's business checking account on terms. - So you're fronting the money. You're fronting the money. You take a fee, and then you get the money from Target in that 180 days. Now, I guess the question there would be, why don't you just give them USDC? You're giving them the TCS token instead.

Is that because not everyone's gonna be banking out of the TCS token every day? And so you earn some carry on something? - That's the real skeleton key here. That's kind of the crypto magic. If we settled in USDC or Bitcoin, we would have to buy USDC and Bitcoin and settle in those vehicles of exchange, which is really no different than doing the same thing in fiat. Because we're settling in our own ERC20 Polygon token, and we minted that token at a zero cost basis. Now, we've had to make a market. We've had to build a brand. We've had to do all of these things that are associated with building a business that's got a real revenue model.

But when we settle in TCS token, we settle at a zero cost basis, okay? So, and we already proved concept on this when we were doing OTC transactions in Uniswap. As soon as we started pushing volume through the token, we got to very close to 3% secondary market participation. So we're hoping to get back to that figure at INX very soon. And I'll share too that we have active business cases pending right now at coinbasecrypto.com and Kraken, right? So we're hoping to be on all of the major domestic exchanges by the end of the year or maybe sometime next year. But when we settle in TCS token, most carriers are immediately selling, right?

They need to get back to fiat. So they're immediately divesting those tokens. TCS is the contractually obligated buyer of last resort. That book balance is now sitting at INX, right? Now, the secondary market, let's say you guys in your audience comes in and buys 3% of those tokens when a carrier sells them, right? Now that means that TCS is only buying 97% of that book balance. And here's what that really means. It means that we made 1% on the front end of the transaction and we make a 3% spread on the backend of the transaction. So we've actually made 4% on that transaction, even though we've only charged our user 1%.

That would make us the most profitable freight factoring company in North America if we were making a 4% spread on every single transaction. Our hope is, as the mission grows and the message gets out, we can get to three, five, 10% secondary market participation on all these transactions, which takes TCS to a very serious valuation. - Or who pays that additional juice? - Secondary buyers are buying the token, they're buying whatever percentage, if we say 3%, they're buying that 3% of the book balance that's sitting in INX when a TCS company sold. - And what did they get for that? - Yeah, that's the question, right?

I mean, why would I wanna buy the TCS token? - Upward mobility in the token, right? Now, I'll tell you that you guys know this better than I do. We don't exactly have the regulatory environment in place here just yet, but I believe very strongly we're gonna have it soon. And when we have it, there are going to be ways for TCS to further incentivize the secondary market. But TCS token is not a utility token, it's not a security token, or I'm sorry, it is a utility token, it's not a stable coin, it's not a security token.

But in addition to the opportunity to participate in upward mobility, we believe that there's going to be a way to kind of further incentivize the secondary market to participate once we have the regulatory framework in place here in the US. - And currently, do you have secondary market buyers participating or are you providing the entire liquidity-- - On Uniswap, we got up to almost 3% secondary market participation. As you guys know, Uniswap is a far bigger market than INX, right, this is gonna take a little bit of time to get to economies of scale.

This is why we're also hoping to be working with Coinbase and some of these other large centralized exchanges, but we believe very strongly that we can get back to that number and exceed it. - Couldn't you get it where you could get Target to buy TCS tokens and instead of paying in dollars, they could pay in TCS tokens to the truckers? - That question's like four layers deep into the onion, but if these larger shippers and debtors were wise, then many of them are, that's why they're paying net 30 to net 180, they understand inflation, they understand supply and demand.

There's actually, there's a way for them to kind of arb their own payable, right, at scale. So those things could happen. You could actually have some of these larger shippers and debtors, some of these institutional players get involved for their own interest, but that's obviously not something that we're talking a lot to the market about. - Yeah, they hate to figure it out themselves for legal reasons. - Yes, I wouldn't even wanna try to figure that out, but I'm sure there's a way to do that. - Got it. - Yeah. So factoring's a big problem, right, or a big, not a big problem, it's a big business.

Yeah, it creates a problem for the little guy, but factoring isn't just in trucking. You know, you've- - Yeah, why factoring just vertical? - Yeah, you're tackling that issue in trucking vertical because that's kind of where you were, but now you've tackled it for trucking, you gotta figure you can copy and paste this to different industries, no? - Absolutely, any vertical. - No, this full truck load is the tip of the iceberg for us. This scales to LTL, it scales to air, it scales to rail, it scales to every sector of transportation, and it scales to other industries.

I have people from other industries reach out to us all the time, but it ultimately come, and there's a lot of factoring companies that they've got their transportation sector, and then they're also doing healthcare, and maybe they're also doing receivables for companies that place W-2s with Fortune 1000 companies. This factoring problem is an issue in most industries where there are no other alternatives to the status quo.

But in my mind, our largest competitor, just to put this in context for you guys, and in the freight factoring niche or vertical, their service is slow, it's expensive, it's antiquated, their customers hate them, and I share this as a former customer of theirs. They have a $60 billion just in full truck load paper. So in my mind, it's like, I wanna solve this problem for the industry. That was the impetus of TCS in the first place. If all we ever did was get to a $60 billion rate, we're an absolutely fantastic company, but to your point, this can scale outside of the transportation industry.

It really comes down to days to pay, and it comes down to who the debtors are, right? Like, I really don't want Medicare and Medicaid as a debtor, right? I don't want insurance companies as debtors. Like, they're just very, very high production, very difficult to deal with. I had somebody recently reach out to me from the energy sector, huge opportunity, right? But the payables are four to 12 months. Your float on that is absolutely massive, and granted your default risk is probably pretty low, depending on who the energy creators are. But I mean, every industry is different as it relates to factoring and who the counterparties are.

- You just started with this vertical, which you're waiting to see what else you can apply. - Yeah, I mean, in my mind-- - It does adhere to economics, like let's say like with the long-term float. - Yeah, in my mind, if we can get to a $60 billion AUM with a faster, cheaper mousetrap and full truckload, kind of the world's our oyster at that point, right? Like, we could probably scale into a number of new opportunities in this industry and in other industries.

- Have you gone to traditional factoring companies that might see the writing on the wall that they're becoming outdated and antiquated and have them basically look at you guys as a buy versus build decision? - A couple of them have approached us about acquisition, yeah, I didn't have to go to them. It's funny, well, it's not funny. I don't mean to be disingenuous in any way. Some of these companies are so far behind, they don't even know what they don't know.

Like, they're starting to see that the puck is moving, but it's like most of these folks, they're so far away from understanding the genesis of blockchain and digital assets and crypto and understanding how to integrate that into the existing business and revenue model that I think we're gonna get a lot of acquisition opportunities. That's not really what we're interested in right now. We're definitely not interested in being acquired at the current valuation. And maybe that's an opportunity in the future, but the one thing that we'll absolutely never agree to is we're not gonna let somebody buy us and bury us.

And that wouldn't make any sense now anyway when you've got Amazon and other companies saying, look, there is a real benefit to pivoting to on-chain B2B settlement, right? Amazon's gonna use stablecoins, they're not gonna reduce cost of capital for carriers, but they're gonna use stablecoins. And I personally believe that we're finally in the mature chapter of crypto and digital assets where maybe in three to five years, all business to business settlement is gonna be on-chain because I don't think this genie goes back into the bottle.

When companies realize they can get faster and cheaper alternatives on-chain, they're gonna say, why are we continuing to do what we've been doing, right? When all of our competitors are reducing their cost of capital. - Yeah, I mean, the lesson here to me seems to be, I was thinking as you were talking, maybe this is like a good roll-up for private equity to roll up all the factoring companies, but the net of it is no, you wanna run away from the factoring company. These guys are making 30% and now they're gonna go down to making 2% or 3%, right? This is gonna absolutely destroy the factoring industry, which is great for you, I really agree.

- Yeah, the relationships, you scoop them up and then you have a far more efficient mousetrap. You provide a better financing terms to the end user. - Right, the thing is, we actually talked about that earlier, like buying a factoring company. I wanna tell you guys right now, there is no shortage of demand in the transportation industry for faster and cheaper settlement. We've done no formal marketing or advertising whatsoever, other than having some social media pages and being on podcasts and showing up at trucking conferences and conferences like The Future Fest that was put on by CT Digital Farm last month.

We have over 100 million in demand waiting to onboard. If we were actually out marketing and advertising and telling the market that we're ready to take on 60 billion in eight, I feel like it would come to us pretty quickly. - How much have you funded to date, total volume? - I would say total volume is probably in the ballpark of three to five million, but again, the major reason for that is we needed a centralized exchange partner to scale and a regulatory environment that at least wasn't adverse. Like TCS is one of the companies that got debanked during choke point 2.0, right?

Like here, we got all these people in Washington saying, "Where's the beef? There are no real world use cases. There are no main street use cases. Here we are building one and we're getting debanked in choke point." But we've not been able to get anywhere. - Great, guess who the bank's traditional client is. - And you know, it's not hard to go figure out like who's bankrolling, which politicians, right? - So you've just launched. - Yeah, and we've just created five million INX the beginning of April, right? - This is fresh. - Yes. - And you've got a pipeline that now you're beginning to fill the orders on essentially. - That's right.

- And you're right. And you don't wanna onboard a billion dollars. You gotta do this slowly and build up to it and see the volume start hitting. - Right, and as you guys might imagine, underwriting is critical, right? We have to underwrite and collect perfectly. - So do you utilize any eye for that for your underwriting criteria? - We utilize a little bit, but our underwriting and collections team, they're all, they have a combined 50 years experience in freight factoring. These are not folks that we brought in from blockchain. These are folks that we brought in from the largest freight factor in companies in the United States.

So they know how to do this. They know how to execute perfectly. And they are the, I mean, I'd love to take credit for it, but they're the reason that we have a 0% default rate on our AR. And I don't know if I shared this, but the aggregate default rate for all full truckload paper in the U.S. and Canada is only about one and a half percent. So it's very low in the universe of highly liquid commercial paper assets. - You're picking up 30% and there's only a 1% default rate. That's not bad. So INX does the KYC AML on the trucker. We both bringing them on. - The TCS does first, and then INX basically is-- - Is a capital layer, yeah.

- Now we've all seen the AI of the fake receipt for the steakhouse, right? How do you get over the fake accounts receivable from Target? Is there, is it because they've signed over their Target stuff, you can go into a Target like system and you can see, oh, you know what? This receipt is real. - Patrick, the invoice numbers or something? - It's very easy to detect, right? And before we are settling, like I said, in our onboarding process, we're getting a list of their primary debtors. We're getting NOAs in place with those debtors. We're talking to those debtors, like you are working with ABC. There is a relationship.

They're primary on this line and this, right? We're doing all the industry standard underwriting stuff. So I would never sit here and say that we are without risk that we'll never do anything wrong. I mean, again, the industry-wide default rate's 1.5%, so there is risk. But a lot of this is automated in the industry at this point, right? There's a lot of detection points that are kind of built into the existing infrastructure. This really is not rocket science. What the industry really needs to do is use AI and blockchain tech stacks to provide more automation in the future.

What we really need is more tech to kind of eliminate all of the human touch points. And I believe we will get there as an industry, but I think we'll probably have some years yet to go. - So the technology is not as bad as Dickens, and I'm thinking Bob Cratchit for a while here, but my guess is Trucking Company sends you, it gives you an API that sees when they have a new account receivable coming in. You can then ping that and check Targets API to make sure that this is real. And then from that, you can then release the funds. - The other great thing is, too, you've got two layers of KYC AML with two companies, and TCS will never send fiat.

We will only settle to the wallet address that we were given by the customer through INX, and as you know, Douglas BitGo is providing all the backend infrastructure for those wallets and accounts, right? But that kind of eliminates even more of an issue, and you guys know this better than I do, but if you ever wanted to do anything illicit, the last place in the world you're gonna go is the blockchain. It's like the worst place for you to go. So if we ever do send funding to the wrong party, or there's some kind of fraud or malfeasance afoot, we at least know exactly where the funds went. - Yeah. - Yeah. - Horrible. - Traceability.

You have accountability and traceability. - And I think that that's very important for people hearing this. I think that you hear a lot from some politicians that blockchain and crypto, it's all just about malfeasance. - Right. - But the reality is if you spend money with crypto, we can find you. - That's right. - Yeah, they give that shit 'cause they don't wanna get caught. - It's very, very traceable. Whereas cash is not. Dollar cash is not traceable. I think that if you're thinking about Senator Menendez, I don't think any of his eliciting activity was on chain. I don't believe, so.

- Yeah, no, it was inside of his coat pocket, stuffed with gold and duffler bills. - So Todd, what's the plan now? I guess you're the market maker right now in the INX platform 'cause you're the, essentially the bidder of last resorts. What's the plan now? Is it onboard the 100 million that you have sitting there on the side and moving it forward and doing light PR or is it, what are we up to? - The primary goal is to continue to build strategic relationships in both industries. I kind of feel like TCS is standing at this convergence of two trillion dollar industries. We wanna have more robust relationships in both.

I had a great time with Thomas from Galaxy. He joined us on the panel last week. Very excited about the Republic acquisition of INX. There's a lot of really fantastic things that are happening. And of course, in order to, the way that I see it, our only serious encumbrance to scale is liquidity, like a lot of businesses, right? We have no shortage of demand. We have no shortage of inventory, right? Because the demand brings us the inventory. They bring the commercial paper assets to us. But in order to scale to a billion dollar AUM or a 60 billion dollar AUM, you gotta manage a lot of flow. And you need robust credit facilities to do that.

So my, Mark. - Can you help your name correctly? - If you had the hundred million, could you fund it? - I think we could fund it quickly. Yeah, I think we could get inventory under it very quickly. It's fun. Like I get the question a lot, like how many customers do you guys need to manage a hundred million flows? I just spoke to a carrier in Tennessee that has 3000 trucks. They don't factor because they're at scale, but they have a number of shipper and debtors that are net 45, net 60, net 90, high friction, difficult to collect from.

And I've talked to one of their vice presidents and he's like, man, if you're not gonna wrap us into an exclusive contract, and we could only send the debtors to you that we would like to outsource, we could get paid in one to two days. We could cut all the W-2s that we have managing collections and remittances on all of those debtors. And it would probably do a world of difference to our P&L. And I'm like, you know what, you're absolutely right. So we're actually able to scale the companies who are not factoring right now. But to put this in context, I got a couple 40 truck operators that are in the process of onboarding right now.

A 40 truck operator is worth about 10 million a year in flows. So if you have 10 40 truck operators, if you have 400 trucks on your platform, you're at a hundred million in flows. So we don't need a thousand customers. Like if we have 50 really good ones or one 3,000 truck customer, like we're off to the races. - Yeah, I mean, it seems to me that the business plan works for the trucker, but you still need to be able to borrow capital at a level that makes sense for you. And so there's the lender that's giving the money to you that ends up going out the door towards the truckers.

And I'm sure you're going out there and you're finding as many lenders as possible now, but you have to be able to offer them a nice interest rate for them to get involved in this. - Well, the senior debt right now is in the ballpark of SOFR 250. And I'm not saying we're tapping that in perpetuity right now, but all of the economics of this work really well, even when TTS is only just getting that 12% spread on that 30 paper or the 12% annualized interest rate, the 1% front end spread. Where we're able to generate that backend spread, this works very, very, very well.

But to your point, cost of capital is a huge component for us, just like it is for these trucking companies. And we want to be working with the very large institutional folks who can provide the lowest cost of capital. - Why not be the funnel that takes crowdfunding and puts it in a pool and you enable like Joe Main Street to make a decent return?

Have it be collateralized and stuff like so, where you could have like two or three lenders that funded your operations, or you could have a hundred thousand individuals that don't have the time or the wherewithal to get a hold of these truckings, but they could come through TTS and instead of let's say making 3% on a CD, maybe make 7% and maybe you guys chop up what the profit is. But that lowers your ending, that lowers your borrowing cost.

- Yeah, and there's a lot of creative things we're gonna be able to do, but I mean, in a way we are kind of bringing in the, I hate to use the word retail, but anybody that buys TCS token as a secondary market buyer at INX or on another exchange, if the token is going up or let's say we get regulatory clarity and now there's also a yield that hypothetically paid out quarterly as a percentage of net revenue, something like that, but there is a way for folks to get involved.

And maybe they're not just chasing yield, maybe they also wanna support truckers, maybe they wanna eliminate these silent VAT taxes that we're all dealing with at the grocery store. I mean, people vote with their wallets in many different ways. - Maybe if I could buy the TCS token through you directly on your website at a 5% discount and then sell it at par on the INX platform, essentially then you're getting money floated to you at 5% annualized. - We do not sell tokens. We've never IPO'd, we never airdropped any tokens. TCS done is 99.9% of the token treasury.

And that goes back to our original thesis, which is very much predicated on Bitcoin. We wanted the trucking companies and logistics companies to be our miners. We wanted these folks to bring the supply cap to market. So if you're a secondary buyer of TCS token, the only way to get it is on an exchange after a transportation company divest. - Got it. - Yeah. - All right, well, look, this has been very, very interesting, Todd. Thank you very much for spending time with us today. And if our listeners wanna get in touch with you, we'll put a link to your website. Thank you so much. This has been Old Men New Money.

Please subscribe to us on Spotify, iTunes, YouTube. And thank you so much, Todd. - Thank you both. Appreciate that none.