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50 Innovative Companies to Watch 2018

Above and Beyond: tZERO, a Leading Financial Technology Company, Continues to Push Boundaries in an Ever-changing World

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Our blockchain technologies aim to revolutionize the market and fix the inherent inefficiencies of Wall Street so that financial processes are less beholden to traditional, institutional market structures: Saum Noursaheli

The Financial Services industry is fundamentally about facilitating the trusted exchange of value between multiple, untrusting parties. Brokering that trust is an enormous responsibility and carries significant risk, which is why the industry has become increasingly reliant on costly intermediaries, manual processes, and error-prone reconciliations. Today, more and more Financial Services institutions are looking to blockchain to enable more efficient cross-organizational collaboration, eliminate intermediaries, and create disruptive business models.

tZERO is a financial technology company, headquartered in New York, which owns, develops, and operates a suite of fintech solutions for capital markets. It is blockchain-focused subsidiary and trading platform that supports equity tokens. The company’s product offering consists of brokerage services, an electronic private marketplace, digital brokerage, and Blockchain project development.

tZERO integrates cryptographically secure distributed ledgers with existing market processes to reduce settlement time and costs, increase transparency, efficiency, and auditability.

 Saum Noursaheli, tZERO CEO, spoke exclusively to The Silicon Review. Below is an excerpt.

Why was the company set up? And how did you expand your company and its offerings over the years?

Patrick Byrne has spearheaded the vision and progression of tZERO. Since our inception in October of 2014, tZERO has pioneered the movement to bring greater efficiency and transparency to capital markets through our proprietary blockchain and distributed ledger technologies.

In 2012, when no firm of $1 million in revenue yet accepted bitcoin as a payment method, Byrne’s pro-freedom political orientation led him to decide that Overstock.com, then with $1.4 billion in revenue, should accept the digital currency. Having gained familiarity with blockchain technology at the heart of digital currencies, such as bitcoin, Byrne created Medici Ventures, a subsidiary within Overstock.com, to build blockchain-based financial technology solutions. In 2015, Byrne used Medici’s tZERO securities trading platform to become the first person to purchase a digital bond entirely on the bitcoin blockchain, and in December 2016 Overstock was the first company ever to issue shares of a public company using blockchain technology.

What challenges did you face in your initial years?

In our initial years, we faced an educational challenge – showcasing the value of blockchain. Blockchain is a new concept that will disrupt the marketplace, just like other technologies has proven to do in the past.

When you are a pioneer, you have a responsibility and need to educate your audience to demonstrate the importance of why changing the status quo could be beneficial and more effective long-term. As time has passed, more and more people are aware of the benefits and potential future of blockchain, especially in the financial industry, but we find that there is still reluctance to embrace this new model.

About adaptability, how do you stay relevant to the consumer interests and needs in this high volatile market?

tZERO’s blockchain technologies aim to revolutionize the market and fix the inherent inefficiencies of Wall Street so that financial processes are less beholden to traditional, institutional market structures. Our vision is not only to increase transparency but also to reduce settlement time, operational and frictional costs and counterparty risk. We pioneered this effort in 2014 and are consistently innovating to improve and disrupt the status quo in capital markets.

How often do you innovate? Is it only when there is a need in the market?

You need to constantly be innovating in order to stay relevant and ahead of the competition. In August 2015, Overstock used tZERO technology to issue what we believe was the world’s first private security in digital form, a $5 million bond to First New York Securities. In December 2015, the S.E.C. declared effective Overstock’s registration statement to issue a digital preferred security that utilized blockchain technology. Overstock issued what we believe was the world’s first public blockchain security, OSTKP, the following year, utilizing tZERO technology. Most recently, in June 2018, we announced a joint venture with BOX Digital Markets to launch the world’s first regulated exchange for trading security tokens. These are just a few prime examples of how we continue to stand out from the competition.

Do you have any new products ready to be launched?

We are currently working through our joint venture with BOX Digital Markets to launch the industry’s first regulated security token exchange. This will be a first-of-its-kind platform that will integrate blockchain capital markets into the current U.S. national market system. We feel this is a historic endeavor that will shape the greater investing community’s understanding of how blockchain will change global capital markets.

As a question on sustainability, where do you see your company a couple of years from now?

What’s exceptionally exciting about working with blockchain technology is how rapidly it changes, so it can be difficult to predict the future. But we believe that we are on the right side of history in terms of innovation. These technologies are here to stay. As blockchain and cryptocurrency become more accepted, we expect to expand our trader and investor base, as well as our own tZERO team to increase our global footprint.

tZERO Leadership: A Brief Background

Saum Noursaheli: Saum Noursalehi is the CEO of tZERO, a global leader in the development and commercialization of blockchain-based financial technology, and a member of Overstock’s Board of Directors. As CEO, Mr. Noursalehi’s focus is on accelerating the implementation of tZERO’s fintech products, including its Security Token Trading and Digital Locate Receipt software. Prior to joining tZERO, he served as president of Overstock’s retail business, where he leveraged data and technology to provide customers with the best price, assortment, and convenience in the rapidly expanding home goods category.

Mr. Noursalehi received a Bachelor's Degree in Computer Science from the University of Utah.

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Dr. Patrick Byrne: Dr. Patrick Byrne is tZERO’s Executive Chairman, the CEO and Founder of Overstock.com, which he launched in 1999. Since then, Overstock has grown into a $2 billion fixture of the e-commerce marketplace. Dr. Byrne also founded Medici Ventures, a subsidiary of Overstock.com devoted to advancing blockchain-based technology solutions. He serves as Chairman of EdChoice, an organization leading the national push for school choice.

Dr. Byrne received a Bachelor's Degree in Philosophy and Asian studies from Dartmouth College, a Master’s in Philosophy from Cambridge University as a Marshall Scholar, and a Doctorate in Philosophy from Stanford University.

“Our vision is not only to increase transparency but also to reduce settlement time, operational and frictional costs and counterparty risk...”