1. BUILDING A GLOBAL HUB FOR DIGITAL FINANCE
2. Johann Gevers
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4. There are enormous advantages to creating a global industry hub: network effects, economies of scale, attracting the world’s best talent, building deep pools of capital and a rich ecosystem of resources and know-how for startup companies, nurturing an entrepreneurial culture, infectious energy, and strong trust relationships that make the impossible possible...
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6. At the dawn of the Age of Digital Finance, we need to build a global hub where these emerging technologies can thrive in a safe and supportive environment. I believe Switzerland is the location of choice. Why?
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8. Extract from Monetas’ July 2013 investor update:
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10. SOLID FOUNDATIONS
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12. It’s trendy these days to hastily hack some code together, hawk a slick slide deck, get funded, get users, sell to the highest bidder—and repeat.
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14. At Monetas we take a different approach. We founded this company to change the world. That’s not something that is done in a weekend. It requires uncommon vision, careful planning, solid execution, and deep partnerships and customer relationships that last a lifetime.
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16. We’re building this company and its products and services to fulfill an ambitious long-term vision. Tall buildings require deep foundations.
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18. TOP JURISDICTION
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20. The most basic foundation for a company is the jurisdiction it operates in. During our early startup phase, this was less important, but now that we’re scaling up our operations, building a substantial organization, and nearing the release of our first commercial products, it’s become a high priority. It’s very costly and in many cases essentially impossible to change jurisdictions later, not just because it’s hard to move people, but because of regulatory and tax constraints.
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22. For most of the twentieth century, the US led the world as the jurisdiction of choice for talented entrepreneurs and ambitious startups. Sadly, this is no longer the case—as evidenced in numerous international rankings and not least by the increasing corruption, breakdown of the rule of law, abuses of power, and outright targeting of individuals, businesses, and technologies that threaten politically connected special interests.
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24. In searching for a jurisdiction that will serve Monetas well far into the future we looked at a wide range of criteria. This eliminated most countries except a select shortlist that included Switzerland, Singapore (the Switzerland of Asia), and Chile (the Switzerland of South America). Digging deeper, we found that Switzerland stands unrivalled in a class of its own.
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26. Switzerland has the most decentralized political system in the world—a good fit for Monetas, the world’s most decentralized system for financial and legal transactions!
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28. Switzerland is the only country in the world where the citizens are truly in control—via direct democracy—and the government is truly the servant of the people. The Swiss threw off the shackles of centralized power way back in 1291. More than seven centuries later, the rest of the world still has not caught up.
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30. Switzerland is subdivided into 26 self-governing cantons (the equivalent of a province or state), and each canton is further subdivided into self-governing municipalities. In keeping with the principle of subsidiarity, most decisions are made at the local municipal level, some at the cantonal level, and only a few at the federal level. This generates vigorous competition between the cantons, and between the municipalities in each canton. The result is that social and business rules are friendly and flexible, taxes are low, and service delivery is high.
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32. This unique political system has produced a matchless business environment:
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34. Stable, predictable, neutral political system that is highly responsive to its citizens > Its decentralized, bottom-up political system is a natural fit for the decentralized, bottom-up digital finance technologies of the future.
35. The Swiss have the strongest privacy culture in the world, with the first bank secrecy law dating back three centuries to 1713.
36. Sound economic policies, including a strong currency with by far the highest gold reserves per capita of any country.
37. Global competitiveness > Switzerland is ranked number 1 in the world
38. World-leading infrastructure in transportation, telecommunications, financial services, technological innovation, etc.
39. World-class talent:
40. Switzerland’s educational system is ranked number 1 in the world, with many top-ranked educational institutions, and spends more on R&D per capita than any other country, and produces more Nobel laureates per capita than any other country.
41. While Swiss compensation rates are high, this does not necessarily translate into higher labor costs. Why? Because the Swiss are extremely productive, they work systematically and accurately, they are innovative, they are self-starters, and they are honest.
42. Workers with a low work ethic, low skill level, inefficient, error-prone work style, and who require handholding and supervision, cost a lot more, even if their hourly rates are lower—especially in the case of software engineering companies.
43. This phenomenon was confirmed to me by Brandon Cohen, head of engineering hiring at Google Zürich. There’s a reason Google’s Zürich office is their largest engineering office outside Mountain View.
44. Friendly business environment, with flexible labour laws, low bureaucracy, a sophisticated, respected legal system, low corruption, the rule of law, availability of investment capital, excellent domestic and global business networks, etc.
45. Low taxes > no highly developed, sophisticated economy can match Switzerland’s low corporate and personal taxes and high service levels.
46. Leading global financial centre:
47. the world's number 1 private wealth manager
48. world-class securities exchange: The SIX Swiss Exchange was the first stock exchange in the world to incorporate a fully automated trading, clearing, and settlement system.
49. the world's second largest futures and derivatives exchange, Eurex, is jointly owned by SIX Swiss Exchange and Deutsche Börse
50. The Swiss financial market regulator, Finma, encourages self-regulation rather than onerous top-down regulation.
51. The Swiss environment is friendly to new digital finance technologies and is resistant to outside pressure. Leading IT, security, cryptography, and digital finance companies are based here.
52. Proximity to global markets > Switzerland is in the centre of Europe, the same time zone as Africa, and halfway between the Americas and Asia, with excellent air, rail, road, and ocean connections.
53. Access to global markets > Switzerland has an extensive network of free trade agreements with most of the major trading countries.
54. Quality of life > three of the top ten global quality of life cities are Swiss, and Switzerland is top-ranked for health care, life expectancy, safety, life/work balance, etc.
55. Attractiveness for employees > Switzerland is ranked number 1 in the world for ease of attracting and retaining world-class talent.
56. Unparalleled support for entrepreneurs and businesses via the Switzerland Global Enterprise public-private partnership. SGE provides a level of support to businesses that is unheard of in other countries. They do everything in their power to open doors, arrange introductions, facilitate partnerships, speed government processes, and create optimal conditions for the success of Switzerland’s businesses—all at no cost. The invaluable relationships, partnerships, and opportunities that have opened to me and Monetas less than a month after my arrival are breathtaking—and this is just the beginning.
57. International respect of the Swiss brand.
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59. Not surprisingly, many famous brands and multinational companies have set up offices and headquarters in Switzerland, including technology giants such as Google, Microsoft, IBM, Yahoo, eBay, Electronic Arts, Disney, and Logitech.
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61. After meeting with representatives of multiple Swiss cantons and municipalities who were actively competing to attract Monetas to their region, as well as consulting various advisors and service providers, and researching locations first-hand, the canton and city of Zug (20 minutes from Zürich and Luzern) emerged as the best fit for our long-term vision.
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63. In Zug, corporate taxes for Monetas will likely be less than 10% (via so-called "IP boxes"), and personal taxes for many of our employees will also likely be less than 10%.
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65. Choosing a good jurisdiction for our commercial operations is a timely move, in light of the fact that the international community is in the process of closing the loopholes that traditionally allowed multinational companies to structure themselves to avoid most taxes by funnelling their profits through low-tax countries where they had little, if any, operational presence.
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67. While our leadership team and key operational staff will be based in Switzerland, Monetas will continue to operate as a globally distributed company.
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69. I’ve met with university transfer offices in Zürich and Luzern and discussed various ways—such as internships—to attract top IT students to Monetas.
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71. We are also transitioning Monetas to using the Swiss Franc as our operating currency. Our cash balances will be held in Swiss Francs. This not only makes Monetas less vulnerable to inflation and devaluation, but also provides greater privacy and independence.
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73. [End of extract from investor update]
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75. In addition to the points noted above, another key consideration is legal security and predictability. Other countries may offer attractive short-term incentives, but these can and are easily reversed virtually overnight, as we have seen in numerous cases the past ten years. If large countries or supranational organizations such as the US, the EU, the OECD, etc. pressure other countries, they offer barely any resistance and radically change their legal regime virtually overnight—in some cases even imposing retroactive penalties for actions that were legal at the time. (!)
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77. Such violations of the rule of law are far less likely in Switzerland. Given its world-leading, centuries-old rule of law institutions and culture of privacy, plus its decentralized, bottom-up, citizen-controlled political system, Switzerland is unique in the world in resisting foreign pressure to violate individuals' privacy and property rights. Even when Swiss politicians attempt to “go the way of the rest of the world", Swiss citizens usually prevent them from doing so, through the mechanism of direct democracy.
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79. No other country has such a deeply established culture of respecting citizens’ rights. In other countries, laws are frequently changed overnight to suit the government and its special interests. You have no certainty that the legal environment you're investing in today, will still be there a few years down the road.
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81. Bottom line: If you want to build your business with peace of mind, knowing that you won't have sudden nasty political "surprises" sprung on you, no other jurisdiction can compete with Switzerland.
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83. I HAVE A VISION
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85. I have a vision I want to share with you. Monetas is working to develop Zug, Switzerland into a global hub for the new generation of digital finance technologies and companies. We are calling it Crypto Valley.
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87. When people think "digital finance", the first thing to pop into their head must be "Crypto Valley, Switzerland"—just like "Silicon Valley, California" is the first thing that pops into people's heads when they think "internet companies". If someone wants to start a digital finance company, or wants to work in digital finance, or wants to meet the thought leaders in this space, their first thought must be, “When is the next flight to Zürich?”
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89. This vision is already on its way to being realized:
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91. In setting up Monetas here, we’ve learned many best practices that now make it very quick and easy for other companies to do the same thing. Already, we’ve attracted other leading digital finance companies to Zug, and—using our know-how, relationships, and network of service providers—helped them to get up-and-running within weeks after their arrival—complete with Swiss entity, work permits, office space, business tools, and operational infrastructure. All of this with sharply reduced startup time, and much lower startup cost, thus reducing their startup risk and accelerating their time to market. We are very excited to have these early pioneers join us here, and are already enjoying the first rewards of these synergistic partnerships. Many more companies will follow in the trail we are blazing.
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94. In October 2013, I co-founded the Bitcoin Association Switzerland and we've already had our first success: Partly through our behind-the-scenes efforts, Swiss authorities are taking a positive view of Bitcoin, and seeing Bitcoin as a unique opportunity for Switzerland to reinvent itself as a next-generation financial center. They are likely to treat Bitcoin just like any other foreign currency, which means no new laws or regulations are needed, and as a foreign currency it will not be subject to capital gains taxes, etc. This is excellent news for our industry! [Caveat: This is not written into Swiss law yet—the process will take some time to complete.]
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97. Monetas is currently spearheading a joint industry-government initiative to create Switzerland as the world’s friendliest jurisdiction for the new generation of digital finance technologies and businesses.
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99. We are creating and leading these projects because we take a long-term, big picture approach to things. It is very clear to us that we can only succeed as a company if we are successful in creating a friendly environment and supportive ecosystem for the industry as a whole—in Switzerland and globally. The powerful synergistic effects of a successful digital finance ecosystem will repay all of us many times over.
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101. If you’re a talented entrepreneur or engineer or investor, come join us in beautiful Switzerland—the country where, more than any other country in history, money, wealth, and property are safe and private—the country with the world's most decentralized political system—the country that is now reinventing itself as a leading global hub for the world's emerging new decentralized digital finance industry.
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103. If you're building exciting new decentralized technologies, and want to be at the nexus of it all in a like-minded community of talented technologists and visionary entrepreneurs, in the world's friendliest, most supportive business environment, come join us in Crypto Valley.
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105. Together, we're building a better world. The future has never looked brighter.
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107. Onward and upward!
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109. Johann
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111. Johann Gevers   CFA CA BCom BSc BA
112. Co-founder and CEO
113. Monetas
114. monetas.net
115. Zug, Switzerland
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117. +41 79 882 9676
118. johann@monetas.net
119. twitter.com/johanngevers
120. linkedin.com/in/johanngevers
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122. The world's most advanced system for financial and legal transactions.