Ryan Villanueva | [Digital Money Series] Surviving the Financial Crisis at Goldman Sachs, Bitcoin, and Learning Model UN

John Corcoran 12:41

somebody is thinking, thinking about that, particularly at the beginning of the crisis? Well, I and I want to, before we get to talking about digital money, and Bitcoin and some of the changes that are happening, stable coins, things like that, I want to take a little bit of a detour and ask about leaving Goldman. So you survive it, you survived this period of time. You didn’t lose your job, fortunately, but you decide to become an entrepreneur. And I love to ask people about this. But they must have thought you’re crazy. Like I imagine there are some family members that said, you’ve gotten this dream job, Yale to Goldman Sachs. And now you’re going to go off and you’re going to work on this blog that you have on the side. I mean, that must have been a conversation that happened for you.

Ryan Villanueva 13:29

I think you’ve literally spelled it out actually word for word. And by members of my family, yeah, my parents.

John Corcoran 13:35

So are you talking to a record recovering lawyer here? Who did PSA similar? So I know exactly

Ryan Villanueva 13:41

what it’s like. But it all yes. So definitely from a family, from coworkers from friends that like, what are you doing? But I just remember thinking to myself, like, I’m 24 years old. Like I’m, I’m in a, I now think of it as like, I’m in a privileged position. Like, I’m fortunate to be in this position, like, yeah, we’re on Wall Street. And yeah, the pay was good. And there’s a prestigious, like a working there. And I’ve got I have that. And that’s, that’s great. And I don’t have like anyone to take care of like, my parents are in good health, like, I have a lot to be thankful for. So if this is something that I really want to do, and I really believe in, which is to start this model UN company, like what am I really afraid of, like, what’s my real risk here? And I was like, I’ve saved up money, I’ve got savings. Like, I know, I can, you know, give this a shot. And I feel like I’m like, I don’t know of all the people that I’ve met, I’m best positioned to do something like this. And to make a difference in this thing that made a difference for me, and if I don’t try it, I will probably regret it for the rest of my life. And so my biggest risk is actually the risk of regret. though that was my thinking as a 24 year old, and I was like, I got to give this a shot. And you know, here’s the risk mitigating factor. If it blows up in my face, I can still go back to business school. Right, I can still find another corporate job. And I’ll be fun.

John Corcoran 15:14

Yeah. How long did it take for you to figure out? You know, how to generate revenue from this business and make it something that could support you did take a while?

Ryan Villanueva 15:23

Yeah, I would say from 2010. Until, let’s say 2013. So we tried a business partner and I, we tried a lot of different ideas. You know, we were, we were blogging, we were kind of running, you know, one off workshops for schools. But what we ended up backing into was summer camps, actually. And our core business ended up becoming summer programs that we hosted at top universities across the country. So starting with Georgetown University, expanding to Berkeley, UC Berkeley, UCLA, UC Irvine, eventually, Harvard, Boston University, and just other schools across the country. And it was a summer camps business. Our particular unique was it was a Model United Nations summer camp. And that was unique in the market. Yeah. If you’re a kid that did Model UN, it became known that like, you know, if you really want to get good at this activity, go to a Best Delegate, model, un Institute program. And then for parents, families, kids who are like, hadn’t heard of Model UN, but they want to learn about global issues. They want to learn about public speaking, they want to explore this, you know, in school, then, oh, here’s this unique offering, Model United Nations and like, Yeah, let’s do it at Georgetown, let’s do it at UCLA. So we had a great, great offering in the market. And those were in person summer camps up until March of 2020.

John Corcoran 16:53

Yeah, I remember. You know, I, I heard the founder of Galileo Summer Camps speak in the fall of 2019. I think it was. And the they ended up my kids went to that summer camp, and he’s a former CEO, or, and unfortunately, they ended up having to file bankruptcy. What was it like for you, you know, when you realize that your your camps aren’t going

Ryan Villanueva 17:17

to happen? That was That was tough. I’m, you know, all businesses, industries, yours. So but just from my own experience, like, yeah, those are some of the roughest days as an entrepreneur. And had to execute layoffs in order to manage cash flow, had to pivot very quickly into a new business line. So taking our content and creating online learning programs. But I’m thankful that, you know, we’d good team, like a good customer community, a good community around us have people feel very passionately about Model UN. And that’s how we were able to survive is, you know, made that pivot between my business partner, and I like to say that he went on the offense figuring out like new products and programs. And I went on defense, how can we preserve cash flow?

John Corcoran 18:15

And what did you do about that? But you know, given your background, having worked in what you done, what you did at Goldman Sachs, how did you, you know, think about your cash flow at

Ryan Villanueva 18:25

that point. Funnily enough, the same way I kind of thought about a golden right at the model out like do a lot of cash flow forecasting at the time did not have like a CFO or fractional CFO. So I was I did that modeling. Number two came up with a liquidity playbook. So literally, just like with my partner, again, offense, what can we do to generate cash? And then for me, defense, what are the ways we can do to stave off cash, starting with managing payroll, including my partner and me like putting our own payroll on pause so that the business can keep going? Obviously, managing workers and employees like that was that was tough. And then eventually, with government programs coming online, like looking into those, and along with other entrepreneurs and business owners like racing to tap into both PvP and economic injury, disaster loan funding, yeah.

John Corcoran 19:21

And how how do you think about your business in terms of the way that it’s positioned now? Two years later I look at your website now and you’ve got a an array of different offerings. Did you feel more diversified now in terms of revenue sources and liabilities?

Ryan Villanueva 19:40

Definitely diversified in terms of like financially revenue streams, but I also think of it as like business units. And you know, COVID, as tough as it is, as it was for my business, in a way also created an opportunity which is like Okay, now we have this online educate A business that we can actually sell at a lower price point, it reaches a lot more people a lot more students bigger market and can be done globally, in a way that we couldn’t, we couldn’t do with in person summer camps. And now, you know, thankfully, like, I don’t want to call it to sue, but it feels like alright, things want to come back in person, we want to normalize things. So now we have an opportunity in front of us to keep expanding on the virtual offering, and like a certain price point. And then we’re able to bring back our summer camps in person at another price point, and like, serve more students this way. And that, you know, for us is really important for me, I believe, like we’re very mission driven company, and that there is a need to create both, like economic and financial value in a way that is aligned with like, our social impact. And like social value that we’re creating, right, it will serve more students, that’s our impact. And to be able to do it at a range of price points make it economically sustainable. That’s how we, the strategy is called Creating Shared Value, it’s that we create both economic and social value simultaneously.

John Corcoran 21:07

Yeah, and then just reflecting on, you know, there’s been so many kids that were cooped up inside, they don’t get to be with their peers, they’ve been away from schools. You know, it’s been, it’s been kind of a real crisis, there’s been, you know, you hear read about spikes in suicides and kids that are depressed. How do you think about the role that you’ve been able to play to help give kids some anchoring, give kids and an outlet to connect with other kids who share similar interests?

Ryan Villanueva 21:42

That was a big motivator, early on and cry in the COVID crisis, um, beyond just trying to get the business to like survive, but was like realizing like, yeah, how many kids are kind of stuck indoors and like, missing that sense of connection and community with their classmates and like meeting people. And I really felt and continue to feel that Model United Nations and our platform, doing it online, virtually, a gave students a way to connect with other students, like in a virtual setting, to just like, share what they’re going through, right. And then yeah, actually, like, make friends and make these connections like online, while at the same time, and I think this is the best part is that they’re actually building highly transferable skills, these lifelong skills. These are students that have to learn how to speak on Zoom, they have to learn how to collaborate on a resolution, like a working document, all online. They’re also using slack and like all these other tools and platforms. And I’m like, these kids are doing this kind of like negotiation and collaboration better than most adults. I know, whether it’s like business owners, entrepreneurs, or like the real United Nations. And I’m like, this is this is awesome. This is great. This is not like less than a regular module experience. This is Model UN. And these students are still achieving the same outcomes that we would want to see whether it was in person or online, which is understand more about the world work on their public speaking skills, and become leaders. And I’m like, I’m seeing that in online. I’m seeing that in person. And so that was a big, big motivator. And I’m really glad you asked that. That’s that question.

John Corcoran 23:29

It’s so nice to have that Northstar to help drive you as you go through such a difficult period but to to remind yourself that this is why we’re doing this this is why we do the work that we do. I want to circle back it kind of comes back full circle to your corporate treasury experience. And and some of the things that you’re seeing it all evolving in the world of digital money. Cryptocurrency Bitcoins, but you said that, actually it was around 2011 or 2012, or something was when you first started to hear about Bitcoin, but not until after the pandemic that you started to study it. So So reflect on that journey and how you first heard about it, and then also, when you started to really study it.

Ryan Villanueva 24:21

So that was like 2011. And this is one of my second conversation where my oldest friends boy did Maliwan with in high school, he ended up being a game designer at Blizzard, which he had mentioned earlier, and I remember he gave me this like, Wired article about like this Bitcoin thing and how he was taking his video cards and like, starting to mind this thing, and I’m like, What is this? This sounds crazy, huh? That is a 2011. Well, yeah,

John Corcoran 24:57

I hope he held on to it and didn’t lose it on a phone. Dry

Ryan Villanueva 25:03

like that episode of Silicon Valley now, yeah. Now he was pretty good with that. And, you know, he has, you know, create a successful gaming career design career, but like yeah became an active trader in Bitcoin I think other digital assets. So I that’s just what I like, that was my first introduction to it over the years like, Yeah, but here’s this thing when Bitcoin first spiked to like 1000 and then 10,000 Obviously a follow the news everybody else, but but felt like, you know, this, this whole this old investing Maxim right like don’t invest in what you don’t understand. And I held on to that I was just like, I don’t understand this, like, I don’t think I should touch this. And, you know, that continued through the pandemic, and 2020 I’m sitting at home like everybody else, and, like, Alright, let me learn about this thing. And it’s, it’s like spiking up even more, but even then, I still didn’t feel like I understood it. Only literally, like last month. When I connected, only then could I, I felt feel like, I am beginning to understand like a very, very, very small piece of this. But the amount that I understand, I feel like, I see the matrix, like, I now see the numbers kind of like moving around. And it really is, in my view, like game changing, it really does change, like how we can approach business and finance and the internet? And

John Corcoran 26:32

also, how do you see it changing things? For those who, you know, haven’t studied it?

Ryan Villanueva 26:39

So here’s the, I think the easiest way for me to try to explain it, right to a fellow business owner, to an entrepreneur. If you have excess cash, in your business, or personally, whatever, chances are, it’s sitting in a bank account, and earning what Blaye? Nothing. 1% Yeah, percent at best, maybe 1%. Effectively, nothing. Right. And with everything that’s going on right now about like inflation chairs is actually just losing value, like over time. Yeah, let’s just just sit with that for a second, right? And then what if I told you, you could take that cash and put it into an asset that is backed by US dollars, right, so the price doesn’t change, it’s going to be $1. And yet, that asset will yield between six to 10%.

John Corcoran 27:40

And now we’re not talking about Bitcoin here. We’re talking about stable coins.

Ryan Villanueva 27:43

So with different crypto, they think Bitcoin maybe Ethereum, but that that stuff, we do need to understand that but like, what really got me like, wait a minute, this is different, was realizing that there’s a type, there’s a range of crypto assets, one of them being stable coins, right, which are backed by US dollars, and there’s a range of these different types. So you know, there’s nuance to it. But you can get by converting cash into these stable coins, you can earn between six to 10% per annum. And that’s because

John Corcoran 28:18

they the company that you’re investing with is then lending it out, lending your money out. Of course, they’re doing

Ryan Villanueva 28:25

what like, you know, banks to do, right? And yeah, in this case, we’re talking about the exchanges right, so crypto.com Gemini Coinbase, a little bit not so much when it comes to the stable coin stuff. But yeah, Gemini right now give you like 8% on USD coin, and Gemini dollar, right, calm if you’re willing to lock it up for three months right now will return 10% per annum. So, you know, it’s just that realization, when I when I understood that, were when I realized that and I started looking into it, you know, obviously it triggered like my corporate treasury, kind of like training. I was like, wait a minute, like, we can be optimizing excess cash. I’m not even talking about like, stuff to like, that I want to play with right stuff that I want to see a higher return on. I’m just sitting on cash. Yeah. And, you know, what it really led me to thinking was like, wow, the way we think about, you know, corporate treasury, the way we think about portfolio allocation, right, like asset allocation for personal finances, academically, the way we think about like modern portfolio theory. Again, I didn’t study economics, right? It’s just like, yeah, when the stuff I was like, huh, the these things will need to change to account for what’s going on in cryptocurrency and digital assets. And so they started just looking into it from that perspective. And that’s when it unlocked. Like for me, like, oh, there’s all this stuff that’s going on that will change how we do business, personal finance, and again, like even the internet with web three

John Corcoran 30:00

Yeah, yeah. And then, you know, you, you worked on Wall Street for Goldman Sachs? Where are we in terms of the evolution and adoption of these new digital currencies? With Wall Street?

Ryan Villanueva 30:16

So I definitely can’t, I’m not going to try to speak from like some industry expert like, I’m not, I’m not back on. I’ve been out of the game for a while. I’ve been out of the game, right. But I have been thinking about it, which is, from one perspective for like, corporations, corporate treasury, like, I did some search and like, yeah, they’re looking into this stuff. And I realized, like, they must be interested in it, they’re probably looking at it, there is going to be a need for regulation, they need corporate governance around it. From a really like, technical perspective, like, how do you manage the private keys of all this crypto, or are you working with an exchange? Or like one of these, you know, another bank, a custodian to manage? Yeah. Right. So there’s like a need for training, and controls. So there’s an there’s this stuff needs to happen. But I’m like, my view, this is purely like not investment advice. That’s just like what I think I’m just like, but that’s, that’s just a matter of time, right? Like, if if I look at cash that generates zero to 1%, versus not the same as cash, but like something roughly equivalent that can get me six to 10, I should be allocating some portion to that stuff. That’s great.

John Corcoran 31:33

Because that was going to be my next question was if you’re advising a company that has $100,000 in the bank, a million dollars in the bank, $100 million in the bank, whatever it is, how do you approach that? What do you say to them? You know, what should they be doing with their money?

Ryan Villanueva 31:49

So I think that, again, just purely just my thinking, and my view on it, and I am thinking about in the context of my own my own business. Like, obviously, there’s, like one extreme, which is like 100%, just move it all at once. Yeah, your excess cash into stable coins? And I’m like, for my own business, like, I wouldn’t, I wouldn’t do that, like, I’m not gonna do that. But I do think something greater than 0% has to make sense. What I, and then from like, in, like, what is the optimal allocation? You know, I was like, what is the cost of capital of the cash I’m sitting on, right? For example, My God, and through again, government loans, they’re at four to five or whatever percent, right? What percentage of my excess cash do I need to allocate in a, say, an 8% yield, in order to, you know, just neutralize the cost of funding. So if I’m sitting on like, you know, I watch, I don’t think I should try to do the math, but it’s just like, you know, certain amount of cash that is costing me 4% a year, I should try to take half of that. And if I put into 8%, it will actually balance out. And then the other view is, depending on what I think inflation is that I could allocate a portion of my cash to counter the effects of inflation.

John Corcoran 33:07

Yeah. It sounds like maybe it’s partially just your, your risk tolerance.

Ryan Villanueva 33:14

So then what it really came down to, and what you know, really, I’m thinking about is like, and I think is a barrier for most business owners, entrepreneurs, is actually psychological more than like, logical or academic. Yeah. Which is, is just new, like we just did. And my current kind of thinking and approach and talking through with my business partner is like, you know what, let’s just take like x $1,000. And say, every month, we’re just going to move that amount into this stable coin. And six months later, let’s just see how we feel. Yeah, just take some small amount, it doesn’t even matter. Like how much it’s like, let’s just try it. Because again, anything better than zero is actually going to be better.

John Corcoran 33:58

Yeah, it I’m sure. You you read the news? Like I do. I mean, there are, you know, billionaires now that have allocated tremendous amounts of their net worth to, to Bitcoin, for example, Michael Saylor, the CEO of MicroStrategy, a big Bitcoin advocate. He’s saying, borrow as much as you can in US dollars and and put it into Bitcoin, because Bitcoin has gone up by some 140% a year over the last 10 years. As we record this, the last couple of months have been kind of shaky. But what do you think when you hear people talking like that?

Ryan Villanueva 34:36

I think that’s, you could say that, that’s, that’s great. Like, I’m gonna do my own research, and I’m gonna apply my own thinking to it. I really think there’s just like a lot of information, a lot of data out there. And that was my own challenge. It’s just wrapping my head, like around that and like, Who do I listen to and like what really matters to me? I do find it Right now like just trying a lot of things, I’m writing them down, I got a spreadsheet going with, like here the different ideas that I have, like what I see with, with where Kryptos going. And honestly just trying to keep more of like a curious and like learning mindset more so than, like, I need to, like do this now, way of thinking. And I honestly think that you know, the the key word I think is like on ramping, like, I’m still on ramping into the crypto world, like, I’m going through these, like, do these centralized exchanges, right? crypto.com Gemini Coinbase. Like, the next step is figuring out how to set up a wallet. And like using that properly and protecting your keys and all

John Corcoran 35:48

that it’s so different, isn’t it? Like, you know, like, these are things that you we didn’t either we learned when we were young, or it’s all kind of we’ve known for a long time, but all of a sudden that even the means of holding the asset is there’s various many different ways with big consequences for which, you know, which way you choose to hold it.

Ryan Villanueva 36:10

So that that I think is like the real underlying, like thesis, I think’s a super big idea, actually, which is like, yeah, that feels scary. I’m like, Oh, my God, I have my own wallet. And like, I’ve gotten my private keys, and, and all that. But what it’s doing is like, like, if traditional banking and commercial banks is like, centralized to finance, like, you know, the banks are capturing all this value, because yeah, they’re managing your money for you. And now there is an opportunity, or like just this new field, this new possibility, that allows every individual and every business to be their own bank. Yeah. And you can capture as much or as little value of that as you want. Because it’s truly decentralized, which is like the nature of blockchain. Yeah. And so that’s why I think like, there’s a, you know, like businesses, individuals actually need to understand this stuff in the same way that, you know, growing up, like, yeah, we need to study personal finance, you need to learn how to manage your money. It’s just that traditionally, that meant, okay, how do I work with banks to do that, right, putting into savings accounts or investment accounts, or whatever. But now, I think there’s a whole new field in personal finance that is going to need to include digital money, like, how do I on ramp? How do I manage a wallet? What percentage should I be putting here versus there? Right, and just like understanding it from kind of a fresh mindset, given that we actually can be our own bank, right? It’s a very powerful idea.

John Corcoran 37:45

Yeah. I mean, you know, I compare it to, it’s not a perfect comparison, but Airbnb, and Uber comes along, and it’s peer to peer money transactions, just like that was peer to peer lending out your car, lending out your house, it’s not going through a centralized authority, like those are, it’s a decentralized authority, but it enables you to lend out something that maybe you couldn’t lend out as easily as you

Ryan Villanueva 38:08

as before. Yes, quite, quite literally, like, people just going down. I think industry by industry, just thinking like, how would I apply, whether it’s blockchain or even just the concept of decentralization to like this thing? Yeah. Right. Like we actually are in that era, and like to get you mentioned, like my friend, he introduced me in like, 2011. And when I started Bitcoin going up, I’m kind of like, oh, man, I’m too late. I’m like, behind the curve or whatever. And then again, I’m like getting into stuff now in the last few months. And I’m like, holy cow, this is still early. Yeah. Like, we’re still super early in this.

John Corcoran 38:48

Yeah. A lot of people say that. Yeah. It’s interesting. You know, it’s interesting to hear that. And then it’s also you hear people who are like kicking themselves, because maybe when Bitcoin got to $1,000, they’re like, I’m too late. You know, we’ve got a long ways to go. Well, I know we’re running a little short on time. So I want to wrap things up. We touched on so many different topics here. You’ve been very involved in Entrepreneurs Organization served as president of your chapter. And that leads me to my final question, which I always enjoy asking, which is my gratitude question. So you know, if you look around at your peers and contemporaries, however you want to define that others who’ve helped you along the way in the various different roles and fields that that you’ve been in companies you’ve run, who would you want to acknowledge

Ryan Villanueva 39:32

publicly? There’s a lot of people that I get knowledge. And I know you asked me to not focus in on like my own team views that would be the first in a group like my team, the customers, the partners that have the pleasure of working with. There’s one person Josh Buckley, it would be my business partner, Kevin. He’s, he’s the incoming president for EO Los Angeles. And so we been on this journey together in entrepreneurship. And that’s been pretty, pretty wonderful and pretty great a lot of just learning along the way, also about crypto, and just being better and better entrepreneurs, and maintain our friendship through this time. So that would be my first, you know, gratitude thing. And then, if there’s a specific mentor, I’d like to call out, I’m thinking of a longtime mentor of mine, his name is Paul. And he’s been mentoring me, he ran way, way bigger business. And he’s just, you know, giving me the gift of his time, and wisdom. Much, much older gentleman than me, is meeting with me for years. And so really, really grateful. Grateful to him as well.

John Corcoran 40:48

That’s great. Ryan, this has been fascinating. Where can people go to connect with you and learn more about what you do? And I should also call out, we didn’t have a chance to touch on it. But you also do consulting through Crews Consulting Group as well. That’s right. That’s right.

Ryan Villanueva 41:08

So if you want to learn more about Model United Nations, check out learn model un.com. And that’s my K 12 education company. And if you want to learn more about what I do to help business owners grow the revenue, profitability and valuation of their businesses, you can find me at crewsconsultinggroup.com. 

John Corcoran 41:31

Excellent. Ryan, thanks so much.

Outro 41:33

Thank you for listening to the Smart Business Revolution Podcast with John Corcoran. Find out more at smartbusinessrevolution.com. And while you’re there, sign up for our email list and join the revolution. And be listening for the next episode of the Smart Business Revolution Podcast.