Jai Waterman | CTO & Chief Enterprise Architect, Co-Founder of Blockstation
Success leaves clues.
Today, Finance Strategists sat down with Jai Waterman, founder of the technology company Blockstation, a crypto-asset trading platform. He discusses the past, present, and future of the company, as well as the insight he has gained while running the business.
Who is Jai Waterman?
Q: Who are you and what’s your background?
I grew up in Edmonton, Alberta, before my family moved to Ontario when I was 7 years old. My father and mother were both entrepreneurs, so I was exposed to the ins and outs of business at a very young age and I followed suit pretty early on. I’d invoice my parents for chores I did around the home, and my mom would actually pay. In Kindergarten I’d buy an 11-card pack of hockey cards for a dollar, then sell each card to my classmates for 10 cents. Pretty ridiculous stuff.
I’ve been told I am a logical thinker and I suppose it’s the reason I question how and why things work the way they do. I’m always looking for a better, more efficient and creative solution.
I think that’s what makes a good entrepreneur. You always look at what can be better, what’s next, and you don’t sit around waiting for someone else to make it happen. You go out there, figure it out and just do it yourself. In that sense, the traditional system of going to school and getting a job working for someone else was never going to be my path. Rather, meeting highly intelligent people working together on amazing projects has been the most productive use of time and energy for me. Anything I needed to learn, from computer programming to enterprise architecture to marketing, I’ve been motivated to crack open a book, attend expert seminars, and just dive into getting real-world experience. In this way, I started building my own businesses in university and never looked back.
Through all that, I found that one of my strengths is systems processes, which explains my fascination with the blockchain. So many of the business challenges we have today are caused by data bottlenecks. Every supplier, customer, broker, you name it, has their own little data silo, and it takes a very long time to share information, process payments, and reconcile reports across databases. All of a sudden, the blockchain comes along, and we have a once-in-a-lifetime opportunity to transform how business gets done on the back end.
That’s why I’m so excited about the work we’re doing at Blockstation. The financial sector, and capital markets in particular, stand to benefit the most from blockchain technology, and we’re one of the FinTech leaders making it happen.
What is Blockstation?
Q: What is Blockstation?
Blockstation is an end-to-end solution for the listing, tokenization, trading, clearing, and settlement of digital assets – in full compliance with financial regulations around the world.
What this means in practice is that we make it faster, easier, and more efficient for companies to connect with investors and raise the funds they need to grow, through Tokenized Private Placements (also referred to as Security Token Offerings, or STOs) and Tokenized IPOs on a national stock exchange.
Remember the ICO boom of 2017, when hundreds of companies raised over $5 billion US all thanks to the blockchain? Our platform takes that same technology, bakes regulatory compliance into every function, and delivers it to every player in the capital markets ecosystem including stock exchanges, brokers, depository corporations, regulators, issuers of securities, and investors.
Q: What makes Blockstation different from other trading platforms?
We are the only FinTech company with a complete ecosystem solution designed for traditional institutions. A lot of companies play in the same space, providing tokenization services or wallets etc., but they don’t offer the complete package or address the needs of the ecosystem at large. In fact, the most consistent feedback we get from our stock exchange partners is that we are the only solution out there that satisfies the requirements of all their ecosystem partners from regulators to depositories to brokers.
At the core, we’re a technology company – not a trading platform, not a crypto exchange, not even a digital wallet service. What our platform does is provide that functionality to our customers. Stock exchanges use our technology to list Bitcoin, Ether and Tokenized IPOs within their ecosystem. Depository corporations use our solution to manage secure, cold storage vaults on behalf of their broker-dealers. Broker-dealers use our platform to onboard issuers and investors, who in turn use it to raise capital and make trades through their broker. The objective of Blockstation isn’t to break down and re-invent the financial ecosystem. We’re out to make it modern, efficient, frictionless, and transparent. The ecosystem has adapted to new technology before when computers and the Internet came around, and they’ll do it again. They just need the right service provider, and we aim to be that provider. What we offer is an off-the-shelf solution for these institutions to access the digital asset marketplace without having to invest in a costly, top-to-bottom upgrade of their existing infrastructure. And that’s just on for listing Tokenized IPOs on national stock exchanges, which went live earlier this year. Our Tokenized Private Placement solution will launch later this year, empowering companies to tokenize their equity, connect with investors and brokers, and manage their own vault. Again, our focus is to work within the existing framework, but far more easily than ever before.
Q: What led you to start Blockstation?
It was two things.
First, I could see this enormous gap between the crypto marketplace and business as usual. On the one side you had the regulated world with trusted players with their legacy systems, and on the other you had the blockchain, offering fast and frictionless transactions, immutable and auditable records… everything the traditional ecosystem wants and values.
The problem was compliance. At the time, nearly everything happening on the blockchain with cryptos was outside regulatory oversight. We could see the opportunity, though. All of the actions people were doing on the blockchain – buying, selling, listing, clearing, settling – were things financial professionals knew and understood.
I love technology, I love making things efficient, and I feel compelled to fix things when they’re broken. And I knew that the right platform with compliance baked in from the start could bridge that gap and fix this inefficiency.
The second reason was raising capital. As an entrepreneur, I’ve built a number of companies and fundraising with existing workflows was never smooth. It’s slow. It’s about building the right network over a long period of time. Going public is a difficult and opaque process, in many ways like an old boys’ club. I knew this technology could transform how entrepreneurs raise money, be it privately or publicly.
Q: What has the experience of building the business taught you?
My biggest lessons are about foresight and agility.
When we first started building this in 2014, we looked kind of crazy. The blockchain and crypto world was for the outliers and adventure-seekers, not the mainstream financial institutions. But when we looked at it as the best tracking system in the world, that’s what every single compliance officer wants. Real-time access to accurate records, instantaneous Anti-Money Laundering checks… we could see a real future for this technology. There was going to be widespread adoption. The big institutions were going to wind up saying “if you can’t beat ‘em, join ‘em.”
And again, it’s about having that clarity of vision. This wasn’t about revolutionizing capital markets. This was about recognizing the next logical iteration in how existing markets operate, and being the right company at the right time ready to provide a solution.
As for agility, we’re a small company. We all wear a lot of hats and do multiple roles, and we’re accomplishing things more quickly than a lot of huge organizations with endless resources. It’s so important to not only have that foresight and vision, but to surround yourself with driven people who have multiple talents, who can adapt to changing circumstances on the fly. As one example, the overall vision of bringing compliant blockchain to regulated financial markets hasn’t changed. But we’ve gone through multiple go-to-market strategies, we’ve changed internal priorities several times… it’s very dynamic. Large institutions take weeks to make decisions, go through planning and approvals. With us and our diverse skill set, we can sit down, have a meeting, hammer out a new plan, and move forward immediately.
It’s allowed us to take advantage of a lot of opportunities as they came up, and it’s gotten us where we are today: live with our first stock exchange partner, about to launch our private placement solution, and poised for amazing growth over the next few years.
Q: Where do you see things headed for you in the next 5 years?
What excites me the most about the next few years is the potential for digital assets to go mainstream, and for the emergence of true cross-company automation.
On the digital assets side, government regulation really is the key – and we’re finally seeing it happen on a large scale. The fact is, when you break down consumer attitudes, something like one-third are really adventurous and willing to take a DIY approach – those are the early adopters of digital assets. Then you have another third that might do things on their own, might go rely on banks and financial advisors, and are cautious and will wait for the majority to get on board before they do as well. And then another third just relies on their advisors to handle everything for them. So as government regulations finally free up traditional financial institutions to trade in digital assets, that’ll be the tipping point that takes them mainstream.
The blockchain has applications beyond capital markets, however, and that’s where my other project comes in. Over the past 10 years I’ve created a cloud-based ERP solution that can streamline virtually any business. Imagine a system where companies can transact with each other sharing transparent, accurate, real-time data for accounting, shipping, invoicing, etc., on the blockchain. No more data silos, no more time-consuming reconciliation challenges. Currently, the platform hosts small and medium-sized organizations across 12 industries, and we’re set to introduce a rebrand and prepare for major growth by the end of 2020.
The world is at a tipping point in terms of commerce and capital, and five years down the line the way we do business will be radically transformed. I can’t wait to be part of making that happen.