Watkins really displays his understanding of the finance world is leaps and bounds ahead of most on Wall Street in this interview. He is the main reason I am confident about my investment in Entrex via RGLG. The FINRA delays are nothing but a speed bump on the way to uplifting this stock. The potential is tremendous IMHO.
Here's a copy of the transcript:
Georgia: So excited today because I have Steven H. Watkins. Mr. Watkins is here in studio today.
Well, not in studio, but he's in his studio. He's chairman and chief executive of Entrex. So
I googled Mr. Watkins. He's the real deal. He's no stranger to the business world. He's
been around the block. Okay. Founding a bunch of successful companies in the
information and business services realm. Actually, two of them even hit the billion dollar
market or market cap. But here's the kicker. Through all of his ventures, he noticed this
recurring struggle for entrepreneurial companies trying to get their hands on capital. It's
like there's this messy, inefficient maze that they have to navigate just to get funding. So
inspired by all these headaches, Mr. Watkins came up with this brilliant idea Entrex. It's
a sort of capital market tailor made for entrepreneurial ventures. And to really shine a
spotlight on the entrepreneurial scene, he started writing this financial column that
reached over 8 million readers nationwide.
Georgia: Not to mention he teamed up with a Dow Index folks to launch the private company
index showing off just how lively and kicking the entrepreneurial world is. He's also an
author, y'all, I got to get my hands on these books. One is called Capital Can't Fund.
What Capital Can’t Find. What a great name all about the struggles and solutions when
it comes to capital markets and funding for small companies. The other is called
“Romancing Capital. Get them at hello”. But that's why I need these books. I need to
figure out how, but less about me, more about Watkins who's not just sitting behind a
desk all day. Mr. Watkins is out there in the trenches rubbing shoulders with presidents
and big names and business at places like the US Chamber of Commerce and Fortune
Small business. He's constantly chatting with other CEOs of small companies about the
nitty gritty of growth and financing and getting that precious capital. That's what we all
want, right? Still happy to have you join us today. Thanks for being here. And can I call
you Steven?
Watkins: You certainly can.
Georgia: It's going to be weird because my husband's name is Steven. Okay. So it might come
with a tone.
Watkins: Okay, I'm ready. I'm used to that tone.
Georgia: Alright, so oh my gosh, you're like a jack of all trades, but all trades being financed.
How'd you get started in this?
Watkins: Well, it's funny, it's actually logistics. If you go back in my background, which is more
than you want to know originally, it goes back to my Dad did a $5 million IPO on the
American Stock Exchange, and he left the company with about 4 billion in revenue. You
can't do that story anymore, and if you're not raising a billion dollars, the markets just
really can't support you. And so after a couple successes we said, or I said, let's try to
figure out how to support what I define as entrepreneurs, and it's interesting, if you look
at the market, there's 18,000 public companies, yet there's 2 million private companies,
right? So the scale is massive and those companies really struggle on an efficient basis to
raise capital. So naively, we said, let's create Entrex as an entrepreneurial exchange.
Sounds so simple. The issue becomes you cannot be an exchange for non-public
securities.
Page 2 of 3
Watkins: So we had to argue with the SEC, we had to argue with finra. We had to figure out how
to get the broker dealers through a trading technology platform that brought broker
dealers originating transactions and broker dealers placing transactions and be that
efficient regulatory compliant vehicle in the middle. And this is back in 1999, 2000. So
we really pushed hard. Probably the pinnacle was 2015 when our broker dealer
managed the first trade on the blockchain of a security, which was kind of fun. Those
were big heady days. We did the overstock.com, TIGRcub security. And one of the other
things we did was we found that equities, traditional stock of private companies are
very difficult to value. If I sold you a stock today of a private company, how do you value
it more or less next week? And what we ended up finding, and we got a patent around
this for the securitization of a slice of revenue and the marketplace in which it trades.
Watkins: So it was a process patent and it basically said, look, Georgia, your hockey stick curve,
when your revenue user is going to go like this, what's the likelihood of it going to do
that? And you do a simple discounted cashflow on the anticipated cashflow from a slice
of that revenue. And so let's just say we take 1% of your revenue and then we divvy that
up in a security for everybody gets one 10th of a percent of revenue in their security,
and then every month you get that percent and now you can figure out what the value
of that security is. It was brilliant. And so one of the first ones we did on the blockchain
was with Overstock. I think it was six one hundreds of a percent of revenue, but we
broke it down into $10,000 slices and then it traded with institutional buyers. And it was
really an interesting business model. I don't think that market was ready for it. It was
probably a little too early. Now it's turned into a lot of crowdfunding and things that I'm
not necessarily proud of. But I think when you look at the testimony we did in Congress
and as we were talking, I met with Obama over lunch at the White House. It was just a
really interesting kind of things to try to propel that sector of the economy, the one
that's the growth sector of the nation.
Georgia: That's right. I like how you flippantly said, I had lunch with Obama, and I think that's
fantastic. You are always around these movers and shakers. Let me just ask you straight
what exactly, and you've explained a little bit, but what is Entrex?
Watkins: Well, so today you could argue we're a technology company that works together with
broker dealers, originating deals and those placing. And so we've taken the model that
supported the entrepreneurs and we said, let's go look at how the carbon market fits
into that. And you've probably heard about carbon, all these companies,
Georgia: Neutral,
Watkins: All that stuff. Well, last week Bloomberg said it's going to be a 20 billion market in a
matter of years, but it's all very illegitimate today. It's all done by under UN sanctions
and registrars that you double and triple sell the security, not a security. You double and
triple sell this offset because there's no tracking. Well, you and I both know in the
financial market, you cannot double sell a security. There's one security and one person
owns it at a time. The methodologies are incredibly efficient. Now the other thing we
found working with KPMG, which was kind of fun, was the trading a carbon offset on the
blockchain trading one metric ton took about one metric ton of power to actually trade
it compared to 216,000 trades on Wall Street for that same metric ton.
Page 3 of 3
Georgia: Wow.
Watkins: So the blockchain energy wise is just so inefficient. And so what we ended up saying was
we have to figure out how to make this easy for broker dealers to support their clients
that need carbon offsets. And we need to be able to produce those carbon offsets from
the originators of people that have carbon offsets. And so we look like NASDAQ or NYSE,
where in the middle you've got these securitized carbon offsets that broker dealers can
trade to their buying clients
Georgia: Clients. Wow. So let me ask you this. Is this carbon neutral thing, is it a fad or is it the
future? I think it's the future, but I want to know what you think.
Watkins: Well, hey, I'm in the middle. I'd love it to be real and I believe it's real. I think the past
election cycle, it was a big question, right? Was Trump or was Biden going to support
the trend? I think this election cycle, there's so much momentum behind it. The SEC last
month declared that the large issuers have to have what they call a scope two emission.
You have to count what your emission is. And based on today's emission, if you've
declared carbon neutrality by 2030, which nearly every public company has, you better
be on the way there. You cannot wait for that 2029 management team to be there. If
you've given yourself 10 years, you better be 10% there each year. Which means if you
can't create efficiencies and lower your carbon footprint, you have to buy carbon offsets
to minimize that footprint. So when Bloomberg announces we need a billion carbon
offsets, that's a billion metric tons of carbon. I don't think that market's going away. I
think it's here to stay. The legitimization of it is key, which is why the SEC and FINRA and
then creating a regulatory compliant marketplace for this matters to us. And why I think
Georgia: No, I was just going to say, so you guys are kind on the forefront of this and if people
want to who are listening or watching on our YouTube channel, how do they find out
more about it? How do they find out more about Entrex
Watkins: EntrexCarbonMarket.com? There you have it. Simple.
Georgia: Thank you so much. You are just like a bevy of information I could really take. I know
you have y'all, Watkins is so busy. He's got other podcasts to do. But I could take your
whole day up, but I know I can't. Thank you so much for being here with us today.
Watkins: Well, thank you for having me. Appreciate the opportunity.
Moderator: Remember, if you've got questions, we can help answer them. We'd love to hear from
you. Email us ww show@gmail.com or hit us up on social media at what's next Wall
Street. You can watch episodes of the show on YouTube. Just type at WW show into the
search box or listen, share. Take your Spotify email to friends, post it on your social
media so we can get more friends like you and join our podcast. I'm Dave Matthews.
Georgia: And I'm Georgia Alfredas. We will see you next time on What's next Wall Street.
$RGLG Long
This is not financial advice - Do your own DD
