Creating the 1st Crypto Robo Advisor
Sadie Raney is the CEO and Co-Founder of Strix Leviathan, a systematic hedge fund that actively trades a diverse portfolio of digital assets. She is also the Co-Founder of Makara, the first robo-registered investment advisor (RIA) to offer digital assets and was acquired by Betterment in 2022.
Sadie holds an MBA from the Foster School of Business at the University of Washington and attended the IE Business School in Madrid for an International MBA exchange during her master's program, focusing on courses in Entrepreneurship and Corporate Governance. After completing her degree she joined Blue Box, a Seattle startup in the private cloud which was subsequently acquired by IBM.
Sadie has been navigating the legal, financial, and formation challenges of starting a business in a rapidly evolving and highly scrutinized industry. Sadie is an active mentor for the Barcelona Technology Transfer Group at IESE University, a partner in the Lotus Venture Builder, and works with a number of early-stage startups. She is also a board member and advisor for multiple early-stage start-ups, an angel investor, a contributor on InPeak, and a member of the Female Founder’s Alliance.
Eve #wealthwednesday Highlight 65: Sadie Raney, Co-Founder & CEO - Strix Leviathan
What was your first investment?
During college, my grandparents gave each of us grandchildren $2,000 to put into or do something with. I was about to graduate and wanted to be smart with my money so I used a financial advisor at this local place in my hometown. He was associated with Salomon Smith Barney at the time so I thought I was doing something smart. Eventually, I forgot about it. I was in my early twenties and it was not a big deal for me. I thought I’ll check on this again in the future because stocks are supposed to grow and It’s going to be worth so much when I’m ready to retire. Two to three years later, I finally got to look at it and see how much it was worth and it was $200. I was shocked. I couldn’t figure out what had happened so I went through all the bank statements. I found out that my financial advisor was taking a pretty hefty fee every month to manage my investment but hadn't done anything. He dumped it all into one bank stock that went under. That was a good, hard lesson for me to learn. I needed to pay more attention to what I am investing in. From then on, anytime I put money into something, I always do my homework and understand what I am investing in. That experience kind of scared me away from financial advisors for a long time. I have a great one now, but it took me a long time to be willing to find one again.
My first crypto purchase was when I worked at a company called BlueBox in 2014. We had a marketing giveaway at a conference and we thought it'd be really fun to buy a Bitcoin and use it as a giveaway. We bought two bitcoin for the winners but they never claimed them. There wasn't really much you could buy or do with bitcoin at the time and ultimately when the company was acquired by IBM we had to sell that unclaimed bitcoin because they didn't want crypto on the balance sheet.
How/why did you get into your space?
When BlueBox was acquired by IBM, Jesse Proudman the Founder pitched the idea to me of starting Strix Leviathan. He asked me if I wanted to be a Co-Founder. One long weekend, I decided to deep dive and read as much as I could about Bitcoin and Blockchain. I started to understand the concept of why it was such a phenomenon. Discovering its technology, security implications, and potential as a global decentralized financial system - I was hooked, joined the team, and never looked back.
What role do you play in the wealth space and why is it important?
My goal is to educate as many people as I can about finance, blockchain, cryptocurrency, digital assets, and what it means for the future.
Last week in my hometown, I did a presentation on 'what is Blockchain and Bitcoin'. I tried to make it simple and digestible. Afterward, at least 10 people came up to me and said they were a little more knowledgeable on what Blockchain and Crypto are - it was a huge win for me. That’s what we have to do, to demystify crypto and digital asset and make them less confusing to people. I think in 20 years, blockchain technology is going to underlie almost everything we do from social and financial perspectives. There’s a lot of fear, concern, and confusion because they don’t know what it is. If we can help people understand just a little bit and make them comfortable with it, it’ll make the industry flourish.
As to the financial side, our generation won’t have retirement or pension plans like our parents have. Our generation and our children’s generation will have a completely different financial future. Helping people understand and feel more empowered with it is important to me.
On the side of our hedge fund company, Strix Leviathan at first it was only limited to qualified purchasers due to regulatory considerations. Family and friends wanted to invest but couldn’t so they tried to manage things on their own. There were a lot of scams happening but we couldn’t advise or help them. We started to look at the technology we’d built and went to our compliance team to make a product that everybody can use or invest in. Regardless of their economic status, they don’t need to have certain qualifications. We talked to our compliance team and they told us that we could be a Robo advisor. They gave us the model and all the technical requirements needed. We looked at our technology stack and realized that we already had those capabilities so we just charged ahead and became the first SEC-registered Robo advisor for crypto to launch a product in the market. It was well received and people were super excited about it.
We created what we call “baskets” which are similar to index funds. We would take a theme of crypto whether it be Defi or Metaverse and we would create a basket of tokens that fit into that theme and rebalance those for people periodically.
What do you believe is the most exciting thing you’ve learned and want others to know?
It’s exciting to know the number of people that want to learn about crypto. There's a huge amount of people who just want to learn about digital assets and better understand them. We were happy to see people realize that it’s a long-term play. There are a lot of people who are looking for the crazy run-ups of certain coins, but in general, the average investor just wants to understand what it is and is really curious.
People may feel like they're missing the boat, they don't know how seaworthy that boat is so they don't really want to get into it, but they kind of do. Trying to understand what's out there is important to people and people really respond to that - which was an exciting thing for us.
What advice would you give to someone getting started?
One thing I always caution people about is how dangerous word of mouth is. People get excited because they hear about a friend who's invested in this amazing thing and has made all this money. A lot of times those are dangerous propositions because there’s a very small number of people who can extract wealth in that kind of scenario.
If you want to invest in crypto, use your latte money and not your house payment money. A small part of your portfolio should go into crypto. You should have other alternative assets in your portfolio besides crypto if you can. Diversification is key.
Is there a person or a company that’s really inspired you?
I am inspired by Somi Arian, the founder of InPeak platform. Originally, it was founded as FemPeak but has moved now to an inclusive platform. The whole purpose of what she’s building is education and empowerment in this space. She focuses on building community and helping people understand what NFT, crypto, and blockchain in general are. She’s an expert at this point and she’s already deep into the space. She’s a high-energy person, driven, and truly passionate about helping and getting people into this space.
How can we stay in touch?
LinkedIn is always a good place to reach me. You can reach out, connect and kind of tell me how they heard my name or why they're reaching out. I do read all those messages. I tend to not accept ones if I don't know what the sources are, but I've started a lot of great conversations with people there.
I'm also on Somi Arian's platform, InPeak. I am also a contributor there, I do a lot of sessions to help people and educate people on crypto. So. That's also a good way to connect with me.
Have thoughts on this week’s topic or questions for me or Sadie? Post your thoughts in the comment section. Until next week. 🙂
DISCLAIMER: The thoughts and views expressed in this video do not constitute financial or investment advice.
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