Live from Plan B Conference in El Salvador with Erick Brimen on Prospera & Charter Cities!
Erick Brimen is a Venezuelan-born entrepreneur and U.S. citizen, founder and CEO of Próspera (Honduras Próspera ZEDE), a pioneering charter city and special economic zone on Roatán, Honduras, focused on economic freedom, low taxes, and innovation to combat poverty.Show more He is also CEO and Chairman of NeWay Capital, LLC which develops free zone opportunities worldwide. His career began in finance at Brown Brothers Harriman, followed by M&A advisory, consulting at Ernst & Young in London, and CFO roles in LATAM. He founded ComparaMejor.com, Colombia's top online insurance brokerage.
Inspired by Venezuela's governance failures, Brimen champions "governance as a service" through Próspera, backed by investors like Peter Thiel. He speaks frequently on charter cities and lives with his wife Colleen and three young children.
More at erickbrimen.com or @erickbrimen on X. Show less
Viva Fry, former Montreal litigator, turned current Florida Rumbler in El Salvador to Bitcoin Conference.
The world is weird.
I've got Eric Bryman on, and I was doing my homework on him last night because when you meet new people, you got to get to know what they do, understand what they do in order to conduct a meaningful conversation.
But I won't mangle it.
Eric, you were born and raised in Venezuela.
You left when you were 14 years old.
And I often describe Canada as like what Venezuela is now in terms of what Canada will be in 20 years.
I always say like things happen slowly than all at once.
What was your life experience like being born and raised in Venezuela and then leaving when catastrophe struck?
Well, thank you for having me.
I am sad to say I feel that Canada is indeed heading in that direction.
And for a while, the U.S. was as well.
When you see all these movements slowly progressing, but incrementally, it's scary.
For me, growing up in a place like Venezuela and then seeing how it all fell apart just felt like tragic.
I had the option to exit, which I did, but too many people didn't.
And mind you, Venezuela is a country that is incredibly wealthy when it comes to natural resources.
So ultimately, it's just a big tragedy.
It gives you a lot of impotence because it feels like you can't do anything about it.
And I left wanting to do something about it.
And that's why we created Prospero.
All right.
Now, the themes of these conferences, I've now been to the one in Lugano.
It's about decentralizing.
And I appreciate people know what they know about Bitcoin and have their opinions on it.
The essence or the zeitgeist behind Bitcoin is decentralizing from government operating freely from government, which government typically doesn't like.
So explain what I know what Prospera is.
We're talking about creating basically chartered cities that operate beyond the government framework, but flesh out what Prospera does in a way that, you know, when I read about chartered cities, they strike me as being potentially HOAs on steroids.
So tell us what Prospera does and what your dream is and how what you're creating is going to be hopefully independent of government and beyond its control.
Yeah, honestly, I wouldn't describe it as HOA on steroids because I hate HOAs and most people hate HOAs.
I would say it's a move towards private governance over physical space as opposed to only public governance over physical space.
In this context, what we are doing, actually, technically speaking, is building public-private partnerships that focus on the governance as a service layer over specific and limited territories, which governments charter so that we can develop by bringing investment, building infrastructure, and handling the backbone of what the governance services stack is within those zones.
They are legally created as special economic zones on steroids.
So if you want to put on steroids, it would be special economic zones on steroids.
But they are envisioned from the beginning as being city-scale, industry-agnostic, and for all aspects of socioeconomic living.
So in Honduras, where we have the first, these are places where anybody from any economic strata can participate, any industry.
And the first happens to be on a Caribbean island.
And we can talk about that.
So what is naturally occurring are more value-added industries like biotech, crypto generally, but Bitcoin in particular, and education and a few other things.
But the idea is, what if you can separate the service of governance from governments as institution, and you can have governance delivered as a for-profit service that makes money to the companies providing it in proportion to whether or not they do a good job at governing a particular territory?
And that, I think, is what makes all the difference in the world, aligning the incentives.
And I don't want to trivialize it in terms of my understanding materially.
How does it look like?
I've never been to Rotoa.
And when I picture chartered cities or incorporated cities, you think Disneyland where they have their own police force, they have their own administration.
They sort of operate beyond the government, but nonetheless under its supervision.
What does it look like in reality on a day-to-day basis?
Yeah, frankly, the boring way to say it is that it's the natural progression of things that have already been happening and that are working better than the alternative, but we're pushing it further.
So you talk about Walt Disney, and in reality, that's the Reedy Creek district in Florida, and they have a significant amount of autonomy from the state.
And there are other incorporated cities in the United States and abroad.
And they have police and they do zoning and planning.
But the difference in what we're building is that you go far deeper.
You don't just stay at the local legal and regulatory layer.
You actually absorb what for the U.S. would be the equivalent of the state and most of the federal government role, which means that at a hyper-local level, you can have regulatory control over finance, healthcare, fill in the blanks.
And that means that if you have a whole bunch of these units competing against each other with the capacity to compete, you see in the U.S., the idea that you have 50 laboratories of competition, which is, I think, what the founders intended, negates the fact that in reality, they have very small space with which to compete.
The federal government handles taxes and most regulations.
But what if you can push most of that to the hyper-local level and have hundreds of them?
And then through competition, you find out what works best, and you have a tendency, a dynamic to improve, just like competition everywhere does when you have decentralization.
Okay, now, for those of us who are having trouble visualizing then how it works, is there a minimum threshold, say, mass that you need for one of these chartered cities to exist?
Do the call them citizens?
Do the residents pay taxes to the corporation?
The corporation, which is Prospera, administers its services, governs the people, and then pays a portion of the profits to the government that authorizes them to do this?
It's so first size.
There's no minimum per se.
They can be rather small.
So Dubai, the DIFC, which is a city within a city, it's only about 110 acres.
Prospera's Public-Private Partnership00:10:24
And it's very successful.
Practically speaking, you probably want to have at least 1,000 acres, and then from there, you can grow a lot.
But in our project in Honduras, we have almost 1,200 acres.
So for sizing, I think the sweet spot is to be at at least 500 to 1,000 acres.
When it comes to the corporate entity that runs it, technically speaking, it's not that a company provides governmental services per se.
The company doesn't become the government.
The government creates a political subdivision which continues to govern but endows that subdivision with a lot of governmental powers, which can then be administered in partnership with the company.
Okay, so it is still always the government because in the world of today, governments are not about to let go.
But if you can fractionalize the subdivisions and empower smaller units to have a lot more localized control, but on steroids, then that enables innovation and competition at a scale that would otherwise not be possible.
So it's like a city that has both state and federal regulatory powers, but for only their physical territory.
And if you have 100 of those, you change the world.
Where has there been a successful example of this in the real world?
You got Dubai?
So Hong Kong is the closest example in reality.
Hong Kong was always part of China, but it had a very distinct legal system operating on common law with private property, et cetera, et cetera.
The issue is that the way in which it came into being was rather, let's say, conflictive.
It emerged out of a war and it was a partnership, you could say, or an agreement between a public and a public government, right?
The Chinese and the British.
What we're seeking to do is, in an ideal scenario, end up in the same outcome, but not through a war where you subordinate a party, right?
But rather through agreement, through voluntary agreement.
And instead of a public-to-public relationship where you have two sovereigns, that one outpowers the other, you have a public-private partnership where the private entity is subordinating itself to the sovereignty of the partner, but in a charter that allows us to manage essentially a subdivision.
So we're trying to productize the creation of more Hong Kongs throughout the world as an engine of economic development, not just to innovate on technology, that is part of it, but as an engine of economic development, because when you drastically improve the legal and regulatory environment, you massively accelerate economic growth through ease of doing business, investment attraction, and job creation.
Okay, and now, to me, it sounds like something of a corporation that's operating, say, a larger property.
Does it have employees or are they citizens who come and work on the property, on whatever the acreage would be, and then they go back to their homes in terms of...
I'm trying to figure out who...
Both.
So I mean, a city is a city, right?
So people live inside and work inside.
Some people only work there, but live outside, like New York City, Manhattan.
Some people live in New Jersey and commute in, but live outside.
So it's a city.
Some people will live and work.
Other people will only work.
Some people only go there to play.
But as it relates to the, let's say, the public administration, right?
What we think of what government does, that stack of services, what do I mean?
public registry, security, justice, whether you get a permit or not.
So what you would normally go to the public, the governmental bureaucracy for, that is what our company does under a charter that delegates the responsibility to run the day-to-day.
Now, it's not just to administer a crappy set of rules.
It is that first and foremost, if they want us involved, they have to adopt the prosper governance framework, which is an aggregation of best in class set of standards, which are proven and tested throughout the world and time that if you implement those standards in any given territory, it's just a matter of time and not that much, like 10, 20 years, where you leapfrog in terms of prosperity the population that gets to interact with that jurisdiction.
So it has to be our governance standards.
And then from there, we manage the day-to-day.
So we do have a company, we do have employees, and those serve in lieu of bureaucrats or politicians.
What would be the incentive then of the government to actually relinquish its own blob of an entity to either sub-delegate or contract out the administrative part of a government?
So we focus on greenfield sites, so nothing there before.
They have to provide no capital.
This is all private capital and in addition to what was there.
There's a revenue share.
So there are taxes that you pay, but because the environment is so competitive and taxes are fairly low and easy to pay, you generate a lot of tax revenues with time and you do tax revenue sharing with the host government.
And then we have an agreement that most of the employees have to be natives, have to be from the local country.
So in Honduras, it's 90%, 9-0% of laborers have to be from the local country.
And then you have all of the positive spillovers outside, you know, all the supply chains, all the people who don't live inside but work inside.
So it's a massive boost of economic activity in its own right, a center for job generation and a source of fresh, free and clear from any operation, from any obligation cash flow.
This is like the one source of revenue that's net profit at 100% margin because they don't have any operational requirement within the zone.
They only get positive cash flow out of it.
All right.
Now, you've been operating out of Rotoa, Honduras.
Last I looked up, it's an extremely successful, safe island in Honduras.
This is mildly dependent on government collaboration.
And governments change depending on what country you're in every four years, eight years, sometimes never.
And from what I understand, I haven't dug deep into the arbitration that you're involved in.
Now, new government came into Honduras and is giving you grief or maybe not collaborating or cooperating as much as the prior government.
If you could explain that specific situation and also how you would operate in any other country where you might have a more or less reliable government in power or to come into power to replace the one that you dealt with.
Well, I would first say you're being extremely nice and polite about the dynamic between us and the regime that took over.
It's not that they're wearing collaborative, it's that within their campaign before they were in power, they promised that they would shut us down in the first 100 days.
It was a principle campaign promise.
So it was more than just not collaborating.
They were after us and have been trying to shut us down in multiple dimensions.
And I have no plans on going to Honduras anytime soon, but what was the political reason to say as a matter of policy and setting an example and a matter of getting elected, we want to shut you down?
What was the problem that you were posing to them politically?
Look, 80% of it is based on a Gross misunderstanding at best and politically convenient way to distort the truth about what the project is about in a context where a populist regime is looking for as many things to build a populist campaign around.
And having this idea of a colonialist mind or example where the US, as we are US companies, coming into the country and sort of taking over, you know, sovereign territory, it just made for a very juicy story, if you will.
But it's all a lie.
It's not true.
You know, all this has been done in partnership with the government.
It's there largely to benefit the local population.
We haven't taken land away from, I mean, the land is very much there.
It's just all a big folly.
However, that regime is no longer in power as of three days ago.
As of three days ago, they're gone and we're still here.
And not only are we still here, but we're stronger than ever.
We have grown at a fairly rapid clip under any circumstance, but especially if you consider that we were facing existential threats day in and day out.
So we are better positioned than we've ever been to accelerate our growth.
And we have proven what was only before a hypothesis, merely a promise, that the way we have set things up has the ability to withstand political adversity.
And this is a lot more than adversity.
This was hostility.
And so it's probably not the right forum to talk about the multiple dimensions through which we were able to withstand the attacks.
But as I said, they're gone and we're here.
And we're stronger than ever, more excited than ever.
And the new administration is actually the same political party that enabled the legal system upon which we're operating.
So I am extremely optimistic, not only that they get it, but that all this nonsense will be part of the past and that we will be better positioned than we could have ever been five, six, seven years into the project, precisely because they tried to kill us and we not only remained alive, but stronger than ever.
We live in a world where one screen, two films, people look at the same thing and see it in diametrically opposing ways.
I don't know the politics of this government, but I presume they looked at this and said, even if you're employing 90% local population, you're bringing in capital from abroad and you're exploiting the local population.
So I assume they demonized it by basically saying this is a safe haven for outside capital to come in and exploit our locals.
How do you convince someone that this is not intended to be, or in fact, in reality is something that exploits the locals, but rather that creates opportunity for the locals?
By being open and transparent and also showing how inside of our zone, employees and laborers actually have greater labor protections and effective human rights.
Rights and Real Estate Leverage00:13:07
Because, you know, one thing is to say a thousand rights on a piece of paper, but for people to have no way to enforce them.
And another is to have fewer rights, but very, very solid that you can actually put to use.
So in reality, inside of the zone, the minimum wage is higher.
They get paid in a US dollar or Bitcoin by default is up to them.
And if they have a dispute with their employer or any third party, there are effective dispute resolution mechanisms that are there and available to them at a very cheap or free rate through arbitration that gets immediately enforced within the zone.
So it's just a matter of them reading and then coming to see it and experience it.
And I'll tell you, we've had so far a hundred percent success rate of people who were against what we're doing based on what they were reading.
And then they come and they experience it and they leave saying, holy crap, this is not at all what I thought.
And it's actually quite good and I'm happy that it's happening.
If I may, I would have liked to do a little more deep dive into your business experience before, but how did you get from where you are now?
How did you get into Prospera from the prior businesses that you were involved in?
Well, in a way, this has been a lifelong mission.
So it's more like I took some detours and then came back to my true purpose in life.
When I left Venezuela as a teenager, I was thinking about how you could actually make a difference of this nature.
How do you deal with the problem of governments going rogue or being inefficient, let's say, in the best case scenario?
So this is what I've always been doing.
In the meantime, whether it's to pay back student loans or just pay the bills or scratch an entrepreneurial itch, I've done other things from investment banking, management consulting, tech startups that I've sold, and then I had the ability to fully focus on this.
So I've always been thinking about this.
And it was because of the partnership with Honduras that an abstract, idealistic vision actually had a platform upon which to become real and physical.
And all the credit to them for being wise and innovative and willing to do it.
It did emerge out of desperation at some point in the 2009-2010 range when Honduras was really suffering.
But be it as it may, the stars have aligned and we're proving, we've developed the business model, we're proving it, and now we're ready to expand within Honduras and beyond.
Within Honduras at Rotorua, what is the primary business in Rotoa?
And also, what are businesses that are ideal for this and businesses for which this model simply wouldn't work?
So on the island of Roatan, sorry, Rotan, which is in the Western Caribbean, not far from the mainland of Honduras, the businesses that have taken root in the short term have been everything around medical tourism, in particular, biotech, and frontier tech within biotech, like advanced gene therapies, stem cell research.
I mean, all sorts of really cutting-edge things that, though safe, have a huge regulatory hurdle, both time and cost, to be implemented in the US or in other, let's say, more traditional markets.
And yet, there are direct daily flights from major hubs in the US to the island.
So, if you have advanced med tech and biotech, it's easy for people who want that to fly in and out.
And we've had, well, pioneering, successful, longevity entrepreneurs like Brian Johnson coming over and had their treatments.
Now, so biotech is one.
The traditional fintech label to be boring as we need to in most cases has taken root.
But let's say Bitcoin in particular, we're the first jurisdiction in the world, even before El Salvador, if I may say so, by a year, that effectively made Bitcoin legal tender.
You can pay your taxes in Bitcoin in Prospera.
And we are the first, and I think still the only jurisdiction in the world where you can make Bitcoin your official unit of account.
You don't need to be translated into some fiat currency year in and year out.
Beyond that, education has also taken root out of necessity internally.
And as you can imagine, real estate development, because we're still very much in the early stages of growth.
As to what else could fit there, frankly, almost anything.
We are catering to young families where at least one of the parents is an entrepreneurial leader and can take advantage not just of the beautiful Caribbean lifestyle that we have per location, but the global advantage of the regulatory system that we have to do businesses largely in the service space that they can be physically there but offer their clients anywhere in the world.
There is a second hub which is on the mainland and that's Greenfield still.
We haven't built anything, but that is looking to replicate, let's say, Zhenzen.
Whereas on the island of Roatan, we're looking to replicate Hong Kong, service economy, capital, et cetera.
On the mainland, we're looking to replicate Zhenzen, and we're targeting near-shoring operations, more traditional industries, factories, and what have you, that are looking to move out of communist China closer to the US, to be in the same hemisphere, and not as exposed to the trade wars that are only going to get worse.
This might be an ignorant question.
I'm going to ask it nonetheless.
How do property rights work on the island or within the district?
Do people own their own property?
Yeah, yeah.
We run on common law standards.
So you own fee title, heaven to hell property rights, and then those get constraint, not through governmental mandate, but through CCNRs.
So within our master plan, and now that is not government, that is a real estate development entity, has a master plan in place, and then it places some restrictions contractually as to what that particular lot is for, and then how can you essentially change its zoning over time so that it's done in tandem with infrastructure development so you don't have congestion issues.
All right.
And would that pose any reasonable, not constraints, but rather fears on the transferability?
If someone has to sell it, they're going to have to sell it to someone who's going to want to buy into it, into that particular structure.
You own it, you can transfer it, no problem.
But you do need to be at least an e-resident, meaning you have to agree to operate with the legal system that we run on, so common law.
But that's no different than when you sign a contract.
When you sign a contract, it's either implicit that it's based on, let's say, the law of the land where you signed it, or it's explicit, because you can say this contract is governed under the rules of whatever, right?
Delaware, Texas, or perhaps some private alternative.
So in our case, as long as the parties are both agreed on the choice of law, anybody can own property inside.
They do go through a basic KYC because AML, the jurisdiction, has to be compliant with international standards of money laundering and anti-terrorism funding.
And so that does have a little bit of friction, but not different than what you would do anywhere else, any other country that you're going to do business in.
You have to do some level of KYC.
All right.
And now, in terms of, I say, the constraints on growth right now, I'm curious if you actually start from ground zero step one.
You show up in another state, another country.
What's the first thing you need to do?
How much money do you need?
What capital do you need to raise?
And how long does it take to get from having the idea to actually building this chartered city?
Yeah, so we're still working on our first.
And so we are refining the model, to say the least.
By far, the first and most important step is nothing physical.
It is all about enabling legislation.
Is there a legal framework that enables the creation of this type of enhanced special economic zone that allows for a public-private partnership to result in a private company running the public services within?
Okay, that is by far the most important thing.
And so we spend a lot of time consulting with governments and helping them understand the merits and the benefits.
But then ultimately, it's up to them to pass or not enabling legislation.
If and when they do, as Honduras did and others are considering doing, then we would go through the process that is created in law to apply for and eventually get a charter, which then triggers either preemptively or after charter granting the need to acquire the physical place where you're going to do it, right?
Sometimes they're designed so that you first have to own land in order to apply for the charter, or the charter is preemptively approved, subject to you getting enough land within a period of time.
So, yes, you get the land and you either buy it or you partner with somebody who has it.
The point is that whoever is the owner of the land has to incorporate said land voluntarily and with a bunch of legal requirements into the special jurisdiction.
The landowner has to say, I get that this is different and I'm signing the charter and I'm now incorporating the land under that set of rules.
Very interestingly, our governance stack is the only one in the world that by design gives you the legal right to exit the jurisdiction.
You have that nowhere else in the world.
Generally, you're kind of stuck.
If you're, let's say, in Texas, maybe you think you're in the best jurisdiction in the whole state, but good luck trying to exit the jurisdiction of Texas or the city upon which you're incorporated.
The way we've designed it is you can get in, you can get out, obviously, just from a jurisdictional perspective, not having to move the land, because it's a service.
We think of governance as a service.
So, okay, either you buy the land and you incorporate it, or you get a person who owns the land to incorporate it, and now you have magic.
That particular piece of land is no longer what it used to be.
It is basically zoned for prosperity, for innovation, for growth, but it's greenfield.
And then that's where real estate practitioners come in and you do a master plan ideally.
So you know more or less where you should do the roads and what you should phase in and phase out.
And then you start building.
And that obviously it's its own science, its own work.
But to your final question, how much money does it take?
Well, so far we've invested about $180 million in the first.
But we've had to develop the IP from scratch.
We had to develop the softwares, the laws, the regulations, like everything from scratch.
As you can imagine, much of that is just, it will scale like software.
So we'll use the same core technology, both the legal system and the technology as in the software itself, everywhere else we go.
And I was asked this before, and I was thinking, what is the minimum amount of money that we need to use in order to essentially be able to start building the city, right?
So that you have a startup city.
And I've estimated it's about $5,000, $50 million, which is nothing in the grand scheme of things, right?
And $50 million is not, it's what a lot of these tech companies burn in just a handful of years with nothing physical to show for it.
And I presume this is because of the jurisdictions in which you're building are developing nations or nations that are not necessarily where the cost of construction is what it would be in, I don't know, America.
In part because fundamentally, we need not be the providers of capital for the full stack of physical buildings.
We just need to secure the charter and either buy the land or secure purchase options over the land and then do what we call catalyst projects.
So in an ideal scenario, you leverage, you have operational leverage.
So if that is the property eventually makes for the city and there's a master plan on it, maybe you only need to own that little hole right there, like 2% of it.
You need to own that and have a purchase option over the rest and then invest some money to build the initial buildings and a community center, right?
You create a seed so that people have an excuse to come and do something of value, but then you generate demand ahead of having to build anything.
And since you have options over the whole, you build top of funnel demand because you have the most valuable real estate available.
And with that validated demand, all real estate developers would want to build.
And so when you have a tower pre-sold, funding it and building it, it's the easy thing.
It's about generating demand.
Why would somebody want to buy an apartment or an office there or rent it for that matter?
Well, hell, if you pay a lot less taxes, if you have a lot more freedom and you're being part of something world-changing with a community you're excited about, that's how you generate demand.
So you don't really need a lot of capital upfront.
You just have to get it going, prove the concept, and then be at the ready to serve real estate developers with a space and with proven demand.
Now we're out of time, but the last question is: I'm not sure who you're, if you're looking for employees, if you're looking for investors, where can people go to learn more about this if they want to know what you're doing or whatever?
You can go to prospera.co.
Invite To Tomorrow00:00:39
And what I'm looking for, and I have a presentation tomorrow, and I invite you all to come.
But basically, Bitcoin, by and large, has won.
There are some growing pains, some adoption pains, but I think by and large we won, right?
It is now understood to be a valuable asset.
That does not mean we have won the fundamental objective for liberty.
We have unleashed part of the stack of coercion and repression, which is how fiat currencies used to steal our wealth.
But there's a much more important layer that follows, and that is the dimension of governance.