Wealth Podcast Post

Streamlining Academic Scholarships with Ted Zipoy

George Grombacher July 17, 2022

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Streamlining Academic Scholarships with Ted Zipoy

LifeBlood: We talked about streamlining academic scholarships, the problems with the current system, how to benefit both students and donors, how education is evolving, how technology is enabling progress, with Ted Zipoy, Chief Innovation Officer with Sch0lar. 

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You can learn more about Ted at Sch0lar.io and LinkedIn.

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Our Guests

George Grombacher

Ted Zipoy

Episode Transcript

george grombacher 0:00
Come on let’s put this George G in the time is right, welcome. Today’s guest is Dr. Powerful Ted Zipp. Boy, Ted, are you ready to do this?

Unknown Speaker 0:18
I am. Thanks for having me today.

george grombacher 0:20
excited to have you on TED is the chief innovation officer with scholar. They’re a web 3.0 startup focused on radically innovating scholarships, and academic charitable giving. Ted, tell us a little about your personal life more about your work and why you do what you do.

Unknown Speaker 0:35
Yeah, awesome. So again, thanks for having me a little bit about me. I, my background is actually in industrial engineering. I attended North Dakota State University in Fargo, North Dakota, and learned a lot there about you know, traditional manufacturing, but also have the opportunity to delve into the space of innovation and entrepreneurship. You know, given my title, you can see that’s kind of the path I’ve chosen. A lot of that actually started, I had a fellowship through Stanford University in California and learned a lot about evangelizing innovation and entrepreneurship on a college campus. From there, I went to a large medical device manufacturer called Boston Scientific, where I led her innovation accelerator and incubator, basically taking two projects and two, that needed tools, resources, or funding, and spinning them off into their own businesses or even internal products. I’ve been in the web three space, you know, it’s kind of an interesting story, since about 2012 2013, when I was in eighth grade, started learning about Bitcoin and doing some starting things online with that, always been interested in the space and finally had the opportunity to make the pivot to scholar where today, I actually use a lot of those innovation and entrepreneurial skills to build what our product and what platform is. So my job is, namely responsible for building out our universal, sorry, user experience and user interface, as well as doing a lot of our kind of the business side of things. So how do we, how do we fund ourselves, how’s their operations, look, etc. So, you know, in the startup world, I think we all get to play a little bit of a Swiss army knife. And I definitely feel that and I’m happy to be part of that. But you know, what keeps me here is, you know, first and foremost, our mission and ethos, being a recent college graduate, I know that, that that that could have and really set some people back after they graduate. And secondly, you know, just the incredible talent and the the power of the technology that you find in web three, you know, as an engineer, and a nerd keeps me here. So it’s just, you know, kind of that really cool intersection of technology mission, and of course, our team being people.

george grombacher 2:35
Nice. Well, that’ll make sense. So, what is the problem that y’all are seeking to solve?

Unknown Speaker 2:43
Yeah, great question. So I think most of us in the US are well familiar with kind of student debt and the the impact that that has on students as they graduate. What it looks like in practice is right now, majority of Americans graduate have on average, around $23,000 in debt. And what happens with that is that it basically sets people back from starting their career as they kind of choose careers that they might not love, just to kind of start having an income. The second thing is that a lot of them delay having a family purchasing house, some of these big life events are set back by that lifelong student debt. We saw that as a challenge opportunity to innovate the way that some of that works, and where we focus is actually in on scholarships, and how the student funding mechanism works. So to talk about the problem today, as you look at the scholarship ecosystem, majority of them are distributed by two different parties, one private people, this would be you and me, you know sponsoring students that we have a passionate about, and the other, they’re actually issued from academic endowments, the best way to think about endowments is basically they’re the the financial arm of the university responsible for, you know, operations responsible for, you know, different buildings and management, and more than anything responsible for student financing, including scholarships. The issue is that these endowments are very inefficient, opaque, and you really don’t get that meaningful donor experience, just to add some fidelity to that. Right now, the average return that these endowment see is around 5% year over year, and they have very high overhead fees being around 4%. So in practice, what this means is when you donate, the reality is that your money is growing at about 1% a year in most places. And that’s, you know, kind of a high performing endowment. Majority of universities, especially as we think about, you know, technical schools to two year schools don’t even have an endowment in the first place. And so we saw this as an opportunity to improve how that process works, democratize access to high performing assets for these smaller schools. And lastly, provide a much more meaningful donor experience. So to talk a little bit about the origins of the project, we do have an existing what we call web two Oh platform web two Oh being you know, none of the web three or crypto blockchain elements. The best way to describe that is a dating app for scholarships. So instead of seeking them out one by one, taking the 30 to 45 minutes to apply to them on our platform, you fill out your profile once and your recommended scholarships based upon your cultural, academic and financial background. So it saves a ton of time for our students. Right now we have around 30,000 users, and I’ve done around $2 million in volume. And really seeing a ton of growth on that, as we built it. Again, we kind of recognize, hey, the other side of this token, the donor part on there’s a much more meaningful opportunity here. So on our platform, when you come on as a donor, you can donate directly to students. So instead of working through an endowment, and kind of having that transaction will see you again next year, you know, can’t wait for your check. Um, you actually get to see directly the students lives that you’re impacting. It’s been a much more meaningful and our donors have given us really positive feedback. It’s interesting, most people think that the number one reasons people give us for that tax break. But actually the most number one reason that people give us a feel closer connected to a social cause. So on our platform, say you want to sponsor women in STEM or black engineers, your money goes directly to that. And through the power of blockchain, we can actually prove that it went into the right students pockets. So it builds that trust and transparency in a space that really needs it.

george grombacher 6:14
Awesome. Well, that’s very cool. And impactful and meaningful. And, and, and all of those things. So from the idea of it to where we are today, how, how long did that? How long has that taken? Yeah,

Unknown Speaker 6:29
it’s actually been, you know, interesting journey. So that went to a platform I had mentioned, has been up in line for around 18 months, I joined the project is more of an advisory role. And then when we decided to start looking at web three and blockchain enabled, I think that we started that journey in around February of this year. So looking at our launch date here, we’ll actually have that, you know, the web three enabled part of this leveraging blockchain, leveraging decentralized, finance, live and ready to go within a month. And so I’d say it’s, you know, all in all, from a web to o platform having a year, and then the web three will take about, you know, eight to 10 months. So a relatively quick, in my opinion, just to kind of as a space moves really fast. Anyone that’s in the kind of web three, or in the crypto space, if you’re not building and not constantly delivering, you kind of get left in the dust? And we’d certainly feel that.

george grombacher 7:23
Yeah, yeah. I, I sort of understand that. So in terms of the the, the universities are just educational institutions, are you, you are giving them access? If if they say, Hey, we’re not being efficient, we are falling into that class of getting a 5% rate of return or expenses, or 4%. How are you helping them?

Unknown Speaker 7:49
Yeah, so majority of our partnerships are actually working with direct donors. And so instead of working directly with the endowment, you know, our target audiences are these private donors. And so they can actually manage their own funds and scale them, using what we call donor advised funds, where they can connect to different defy yield options, we highly recommend to, you know, basically do our due diligence and recommend stable coin strategies that, on average, earn that six to 10%. And then, of course, our fees are much lower, given that, but just to talk about our engagement with these universities, right now, the strategy is we work directly with their student financial aid offices to issue whatever scholarship directly to that student’s account. So it’s not like we’re extending, you know, a $5,000 to their students bank account, we actually kind of close that loop with the university confirmed the students, you know, basically cultural background, etc, etc. To build that trust and transparency, our partnerships with the smaller universities operating it similar way, we’re, we’re not necessarily managing funds on their behalf, but giving them access to these defi strategies that earn more, as well as are kind of lower yields. So they can have access to their students to issue the scholarships and then access again, to these higher performing funds. We’re just kind of the intermediary and connection point. The web three world is hard to navigate if you’ve never been there. And so what we really, really focus on is existing and what we call the web 2.5, or hybrid finance, where, you know, it feels like your Facebook, it feels like these really user centric tools, but has the power of web three without the you know, the technical scariness.

george grombacher 9:23
Yeah, we’re having this conversation on June 14. And that was that was one of the 2022. I was sort of what popped into my mind is, I don’t know what the what the demographic is for people who are consistently giving money. I imagine they probably skew a little bit older. And so web three and, you know, computers can be confusing for people of every age. How are how is that process

Unknown Speaker 9:50
bend? Yeah, it’s really interesting the demographics that our platform has been attracting. It’s definitely those traditional youth donors as you think about people that are well under the courier and looking to get back to either a cause a university that they believe in. But the really interesting one has been some of these, we’ll call it web three do you say de gens, but basically the, the young guys that have made a ton of money in crypto looking to get back and sponsor crypto projects, and so really good traction with them. And that’s actually opened our eyes to big opportunities, there seems to be a trend, you know, at least that we’ve noticed moving away from traditional four year universities. And while we’re definitely see that as a huge opportunity, you know, what we’ll continue to partner with four year universities, what’s gaining traction is what’s called certificate based learning. So these are students not going through the the four years, but rather taking, you know, eight to 10 week coding boot camps. That’s really popular in web three, and kind of the blockchain development. And a lot of these companies look want to sponsor students right now, there’s a huge vacuum, though, where students doing these boot camps, it’s all coming out of pocket, there are really no standardized scholarships, or even places to search for them. And so we plan on stepping up into that. And that’s really, you know, opened our world to, like I said, some of these younger guys that have made a ton of money and want to give back to the ecosystem. But the second part is some of these kind of corporate giving initiatives where they want to once basically build a pipeline of talent coming into the industry.

george grombacher 11:17
Yeah, it seems like a virtuous cycle. Right? Absolutely. And

Unknown Speaker 11:21
it’s, uh, I’m curious to see how that develops and matures. You know, since we are young, a lot of the eyes go come from the web three world, but as we establish ourselves, you know, our number one, you know, challenge, in my opinion, is capturing that more traditional donor audience and, you know, building that trust, because obviously, crypto is volatile thing. There are less volatile elements of it, though. And that’s how, you know, building trust and understanding will take a while.

george grombacher 11:45
Yeah, yeah, I appreciate that. Is there a cost for the students to use the program.

Unknown Speaker 11:51
So exciting right now it is free. We, there’s what we call a freemium model. So basically, they can apply up to $50,000 worth of scholarships per month, which in my opinion, is a it’s a pretty high ceiling. I know, majority of students, I can think back to my college days, after I was a college freshman, I just never went back just because it was so much work to apply to them. So one, we think that threshold is pretty high, too. It does drive traction, once they hit that, that mark, you know, we do have a token associated with our platform. And so the unique part of the freemium freemium model is that instead of paying your 999 a month for your Amazon service, or your Netflix, we actually have an opportunity for them to use what’s called staking in crypto, that’s essentially you lock up a certain amount of your tokens to help provide health to the network. And we record that. So long story short, to keep things simple. It’s the paywall that pays you because you’re earning yield, you’re earning interest, and that money is still yours. It’s just locked up for a period of time. So for us, it provides health to the network, but for them, it gives them access to premium content without having to pay that premium price.

george grombacher 13:01
Got it? How do you let’s assume that I’m a 65 year old that I’m interested in, in in, in donating money to have students not have to incur financial debt? How would you describe stable coins to me? Or if you would just describe stable coins? To me? Yeah,

Unknown Speaker 13:19
the simplest way to think about stable coins is that it’s a cryptocurrency tied to a traditional Fiat asset, the most popular ones, and in my opinion, the winners are the US dollars. And so right now there’s a number of them that you’ll see floating around like USD, T, USD C, A, B, basically there. For every think about the gold standard back in the day, for every dollar there is there’s a certain amount of gold that is in storage, similar to this and crypto, the Forever stable coin, there’s a US dollar tied up and basically a vault. And so it’s kind of backed one to one, given the volatility of stable coins, you know, there’s been different strategies. Right now, I think we’re gonna see a trend of over collateralization. So you’d have basically a one to one and Fiat with different crypto assets in a basket on top of it, the idea there is to provide stability to that price. In New York, kind of keep that as closely pegged as the term to $1.

george grombacher 14:15
Cool, thank you for doing that. And let’s just continue the the the example, let’s say that I’m interested in donating to to kids who are interested in STEM, and there’s a specific program that it’s a sort of It’s a certificate, let’s call it XYZ program. So kids that want to go to stem, do XYZ certificate program, and I donate $100,000. And I want to be able to actually see and track that. How do I do that? Is there a dashboard? Do I call somebody up? And they tell me?

Unknown Speaker 14:48
Yeah, so it’s actually a really simple process. We totally believe in the, you know, if you have more than four steps, you start to lose your users. And so basically, what it looks like the first step is creating your profile and choosing you Your causes and missions that you’re most passionate about. Think about this, like setting up your Facebook profile, essentially, very simple, straightforward. You know, once you’ve determined your mission and your cause, now you can actually, you know, it’s time to send that $100,000 over and start growing some that and doing some of the tax documentation. So that process is very simple. Right now we have a number of ways to do that. You can donate via Fiat or cash, you can donate via crypto, we can do wire transfer, and we’re starting to look at potentially some of those transferring in equities to be growth. But that’s maybe a bit down the road. From there, what’s really unique about our platform is that you can actually then connect it to a stable COIN strategy of your choosing. For donors that have never been in the web three space, we do provide a lot of education about what stable coins are how to assess risk. And you obviously have a lot of that education upfront. Right now, there’s some very conservative plays in the space that will earn you eight to 10%. And that’s mostly what we’d recommend our users use. So basically, you deposit choose your yield, and basically two clicks. And then from there, you just did, it’s time to distribute scholarships. So right now, we tend to see a lot of scholarship volume at the beginning of semester, so right before spring semester, right before fall semester. And then you open up your scholarship, basically say, so in three steps, create your profile, fund it, and then issue scholarships. Usually, we give around a two week window for students to apply. And then what’s really cool on our side is you don’t have to sift through, you know, 500 applications, we actually have software and you know, a team that basically shortlist of top candidates. So in a really simple, simple process, I know I’ve talked a lot, but basically it’s create your profile, fund it, choose your yield, and then issue those scholarships. You know, using our matching algorithm, we handle the back end actually closing the loop with the university closing the loop with the student. And basically, at the end of the day, what the donor gets is the tax break that they would expect we do have a registered 501 C three, as well as a thank you messages directly from the students saying how this is going to impact their lives.

george grombacher 17:11
I love it. Super cool. Well, Ted, people are ready for that difference making tip? What do you have for them?

Unknown Speaker 17:18
The difference making tip, it’s something you know, that I always live by it’s be bold, and challenge the status quo and everything we do. You know, I think people hear web three blockchain and crypto. And when we tell them we’re focusing in on traditional endowments, and academia, that kind of go, that’s interesting and bold, you know, so just always saying, you know, being creative, being innovative and challenging the status quo and being able to take that jump, maybe it’s easier said than done. But you know, I left that that corporate comfort job and took that leap into web three. You know, that’s where the radical change happens is when you take that risk and people.

george grombacher 17:55
Well, I think that is great stuff that definitely gets Come on. And I definitely commend you for doing that. I think it’s, I think it’s super cool. And everything you said, really resonates with me, I think that I mean, kids are kids up until they take on a bunch of debt, and then they have to go to work for a living and life totally changes, and certainly not for the better. So the more that we can help them avoid that and help people match their dollars with what they really want to have happen and make that as efficient and frequent. frictionless. That’s nothing but a great thing. So I appreciate everything you’re working on. Tell us how people can connect with you and how can they engage with scholar?

Unknown Speaker 18:36
Yeah, so the best way to connect with our project is scholar.io reminder that the O and scholar is zero so it’s sch zero L ar.io. You’ll find that same handle on Twitter, as well as discord Telegram, you know, all of the socials will be on that. Any personal connections are anyone wanting to partner with scholar, feel free to connect with me on LinkedIn. It’s Theodore zip boy, I’m sure it’ll be in the show notes. But always happy to have a conversation about potential partnerships. You know, or even people just passionate about the space.

george grombacher 19:08
Love it. Well, if you enjoyed as much as I did show Ted your appreciation and share today’s show with a friend who also appreciates good ideas go to scholar.io That’s S C H zero, L A r.io. And check out everything that we’ve been talking about. Find Ted on Insta or on the internet. I’ll list everything in the nets of the show. Thanks again. Thank you. And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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