Man's So this is cool. This is one of my favorite reasons to do the podcast is that interesting people just reach out and tell me about their business. So,

Manzyl is,

this so this guy Sam reached out. He listens to the podcast. What's his last name?

Sam Malaco,

Halloween like that. Tweeted at me too. And,

So he was like, Hey, I got this business. You know, would love some help with it. Or just would love to chat. And so I said, okay. Let's let's chat. So I get on the phone,

And I end up blown away by what these guys are doing. So they teach me about something I've never heard of and is now very financed, very, very,

fascinating to me. So what they do is, Manszel does Islamic financing.

Oh, we What's that mean? We talked about it not on the podcast, but we talked about it offline because I was pretty interested in it. So,

Henry know what Islamic financing is? If you didn't know Legion, I don't think you'll go this one.

So Are you are you Muslim? I'm not. I'm Hindu. Well, I'm I'm neither, but, like, my my family is gonna do.

So I didn't know about this, but basically,

in the Muslim faith, there's,

actually,

sort of,

the advice is against,

traditional loans. So,

interest, which is known as like Ruba, I think, in the in in their faith, is, frowned upon, and these, so a traditional mortgage where you go to the bank, you have your down payment, you take out a loan, and you're paying interest

is actually not compliant

with,

with their with their faith and their law. And Which is co actually common in a lot of other different religions. Is that true? Yeah. So I'm I'm Catholic Christian and,

where I was raised that way. And there's definitely rules guarding handling money and interests and things like that. Yeah. And I I think the the fundamental basis, I'm gonna kinda bridge this. I apologize, but I'll I'll just trying to explain as best as I understand it.

So

so apparently,

you know, money,

sort of fiat current see, which is just not, pegged in anything. It's just a made up concept.

The the belief system is that money has no value, inherent value in itself. And so you should not be charged interest for borrowing money, which is this sort of abstract concept. So they have loans or they have, sort of, agreements,

which can work as long as both sides are taking shared risk,

and,

getting sort of shared shared upside shared return in way.

So there's there's Sam Islamic?

I believe so. Yeah. And his his partner Muhammad is also. And so they were explaining to me that, hey, there's big thing called Exlamic financing, and there's these ex Islamic challenger banks. And so if you ever heard the word challenger bank,

check this out. It's pretty, pretty cool. We know that banking's been around forever. There's these big bank brands that are, you know, in every country, there's there's big banks that are worth billions of dollars. And recently, over the last, let's say, five to seven years, There's these things called challenger banks or neo banks. They're called. And so in Brazil, there's a bank called New Bank, and New Bank. And and New Bank is worth ten billion dollars. One of the most valuable startups in Brazil.

In, the UK, there's challenger banks.

Oh my god. I'm gonna forget that. But challenger just A new one? That's a startup bank. Yeah. And they're they offer different things. So what what these guys did was better digital access. So mobile apps,

quicker ability to get sort of credit cards and and debit cards spun up.

And so there's, you know, there's a couple of them that are huge now. Few different multi billion dollar startups on this. What these guys have done is, they've done this for a faith based,

bank, which is basically saying, there's a set of customers out there, in this case, Muslims. Who are not being served well by the generic banks, and we can make a bank that serves them better. And the way we're gonna do it is you wanna take a mortgage out you can either take a sort of a mortgage out traditional mortgage, which is not compliant,

or you can take one out that's compliant with your faith. We've come up with a mechanism that is blessed by sort of the the village elders, you know, the the sort of leaders in the in the community,

that says, yes, this is I think Shawnia Law is what it's called. It's saying it's compliant with Shawnia Law. And then on the other side, this is,

this will this works as a mortgage. You can actually buy your home. And so these guys have this have this concept. And in other countries, this is apparently really big. So in Africa, Indonesia,

places where the Muslim population is the dominant population They've already solved this problem. But in places like US, Canada, where it's just a minority of the population

is is Muslim, they don't have these banks yet. So I love this startup idea because How are they doing? So how they're doing? So they're they've, they spent a lot of time making sure that they actually get it to be compliant and actually

get the financial mechanism to work. That took them a while over a year, maybe two years. Now they've gotten that to work, and they have, basically they have two sides of a marketplace. On one side, they have people who are investors because, you know, if you're gonna issue mortgages, their average mortgage is like five hundred thousand dollars, it takes a lot of capital to start this business. They don't wanna be the one they don't wanna go raise a billion dollars and then start issuing these loans. They want on one side to have investors

who will put in the capital to fund these loans. And on the other side, they wanna have the borrowees who are trying to buy a home who can pull from this pool of you know, sort of halal financing, you know, this, this financing that's compliant. And so they have ten million dollars committed on the, on the investor side, one point two million in their bank, ten million total. And then, and they're just every week, they're trying to close more of those checks. I think. Which is a small amount, but this this is, like, just inbound interest. This is not, like, they've they haven't really done anything yet. But ten million will let you let you do if you just do half a million dollar loans, that means they can do whatever twenty mortgages.

Right now, and every mortgage has a certain value. So it's about worth about, I don't know, twenty k a year to them is that mortgage just in their fee that they get on top of it.

And so, and on the other side, they have all these applicants I think, you know, about a thousand applicants, and these are what they call super prime applicants, because these are people who are doctors, lawyers, they have good jobs, They they have the money. They have the means to to to afford their homes. They're just looking for a solution that doesn't force them to compromise their faith. So I really like this business. There's a working model in the UK. There's a working model in, in Africa. There's working model in Indonesia. There's nothing in Canada where these guys are, and there's nothing really in the US. Where where How many Muslims do you think they're in in America? I think there's look this up. I think there's, like, a couple million, only two two million, I wanna say, roughly.

That's pretty interesting. I like that. I think that there's a bunch of

weird rules around banking. I mean, they're not weird. They should be there, but,

And so starting a starting a bank, I think it's it's almost like nearly impossible. It's very difficult. So what all the Neo banks do, all the Charter banks do is Not real They're not real banks. They sit on top of BBVA or they sit on top of these other banks, and they're just the app they're the consumer facing layer, but the banking happens with their underlying partner. And it's sort of like the lead gen model that you're talking about. They go to these banks and say, Hey, I can get you a whole bunch more customers. I'm gonna spend all the money doing the marketing. They'll be banking with you, but we own this sort of it. Yeah. And that's actually pretty common. I use this thing. My debit card is simple. Here's simple. Right. I've heard of it. Yeah. This is my debit card. It's pretty cool. I like it because the customer service, I can just text, and they're, like, these, like, young guys in Portland, and they, they're easy to chat with, and they answer twenty four hours a day. They were acquired hundred million dollars. And I was like, this is like a freaking bank. That's it. Yeah. And I did It's not a bank. Yeah. And it was what's it called? BBVA? Yeah. That's who they use. BBVA Compass have Exactly. They're under they're under there's a few that are underneath all these. Now the very first there's a now one of the challenger banks got their very first banking charter license, which is very rare. I forgot their name, but they just announced a couple weeks or last two weeks. That so the so now it's very interesting. Now once that seal broke, because it was so hard to apply for this. Yeah. I think we can And they all want it. Robin Hood wants their license.

Brex wants their license. It's just very hard for them to get this. I think you need five per or what's the number? I think you need ten percent

in reserve. Yeah. You need a certain amount of reserve. But that's not even that it's just that there's no incentive for government to give these out. They're like, you you kinda highfalutin, you know, tech startups. So I really wanna give this to you. You've only been around for so long. I don't know if I have the trust in you. Now the seal is broken. The first one got it. We'll see what what that means. But what I like about these guys is they're not a bank. They're not taking your deposits. They're just doing loan issuance. On one side, they have the reserve cap, the the investment fund. But they're using other people's money. OPM on one side. Yeah. Other people's money to make the the loans. And they're the broker, and they take one two percent of the transaction fee. And people are willing to pay a premium to have halal financing. Just like people willing to pay a premium for halal meat, or for vegan or kosher meat, you know, whatever, like, people are willing to pay a premium for things that are compliant with their faith. So I think this could be big. And what's interesting I think that they've had a hard time raising money from traditional VCs because this is They didn't understand. Hard to understand. Yeah. You have to, like, you know, most VCs are old white guys. And, you know, it's,

the sort of cliche, and, you know, I know they do look into it, but I think that there's

there's the natural challenges of any high aspiration startup,

they have those. The they have the problems at any any startup that's really ambitious. But then they also have the problem of, like, first, they need to educate you about this problem. Like, you saw how I stumbled through this explanation. And I talked to these guys for an hour, you know, and that's where I am after an hour of really trying to understand it. But you and you read this by furcon. Your your best So I ran yeah. I ran it by him. I introduced them yesterday. I said. Hey, furcon understands this. He's Muslim. He's an investor. He's a technologist, and he's an entrepreneur. If he doesn't like this, I don't like this. He's And what did he say? And so he so he he's like, I've looked into this. He's like, a lot of my friends really wanted this. I tried to look at what options are available in the US. They suck. They're really super high premiums. Is he practicing?

Yeah. Like,

you know, to an to an extent. Yeah. Like, what I wanna know is do really, like Like, he doesn't pray five times a day, but he doesn't eat pork. Right. So he's, like, culturally. He drinks, but, like, his dad runs the mosque in San Jose. And, you know, it's it's so even people who are, like, culture who aren't incredibly devout are into this. If he had the option, he would prefer Halall financing overnight. If it was convenient. He's like, the problem with all the existing options, they're not convenient, they're not easy to use, and they're very high premiums. He's like, if these guys did it conveniently, I think this could be big. So he's gonna talk we'll see. Like, I'm I'm not a practicing Catholic anymore. Are you are you are you guys Catholic? You're Catholic for sure. Right? Do you eat meat on Friday?

About it honestly. I went to, like, all boys Catholic high school. So Me too. I went to an all boys Catholic high school. I don't practice anymore, but that's another thing. I don't eat meat during night on Friday. So I try not to. So it's kinda it sounds like that's what it it's kinda like where it's like. People it's a spectrum. It's a it's a you prefer it, but not. Yeah. You prefer it, especially if it's convenient for you. You'd you'd you know, the way Henry just said that lot of guilt there. I'm like, yeah, I should, but I don't. So there's, you know, if you could make it where people do what they want to do

without lifting a finger, then they'll do it. You know, that's great. That's pretty cool. I like that I like that thing, or I like that angle of finding because I

don't anything about Muslim culture. I don't know anything about Hindu culture, which is you where where you're from. You I don't know. You probably don't know too much about Catholic. Yeah. It's kind of an interesting way to, like, look at how other religions do things.

Right. Another thing that we should talk about, not today, because I don't think we know what we're talking we definitely don't yet, is building things on top of banks. I think that's super interesting. But what do you mean by that? So, like, what simple did, and, like, what the what what's the name of this company Manzel.

Man spell it. M a n z I l. Manszel. Okay. Kinda like what Manszel did. A building

a building a front end on top of someone else's back end. Right. Which is the bank.

I think that that's really interesting. Simple dot com is my,

card. I didn't know they did this at first. This is kinda what drop thing is. So where you build the layer that says, I'm gonna get the customer to a landing page and they buy. Yep. But it's just gonna place an order with this other manufacturer

and they'll ship it directly to them. It's super effective I like that with banks because,

like, simple they did this. It's all I mean, it's it's a little different. The card is all white, and it's a slick looking app. And their app is really good.

And so it's kind of interesting. I I think this is kind of what Brex is doing. It's Right. What Brex totally works. It's hard. They're layered on top of Mastercard.

I I love these things. I I really like that.