Gabriel Delgado | The Próspera Master Plan

Timothy Allen: I don’t actually like riding myself. I love to ride, but I just don’t. I wish there was a place I could live and ride, but I don’t love it enough to be inconvenienced by it that much. Where do you live, Gabe, just out of interest? Are you around a mountain?

Gabriel Delgado-Ayau: Yeah, I live primarily in Guatemala, Guatemala City, which is where my family is from originally and everything. Then in Próspera, for the first seven years I came almost every other week, but I couldn’t move because my kids were young and they were in school, kind of like yours embedded. I think I saw you had, did you bring two daughters with you this time?

Timothy Allen: Yeah, I brought two. I saw them and they were sat in front of me once on their phones. It seems to be pretty boring for them, is it not? Do they like all that stuff?

Gabriel Delgado-Ayau: My 21-year-old liked some of it. She was struck by Sid’s story of his cancer. They liked the Tomás Pueyo chat, which I thought was really good, and she liked a couple of the other science-minded ones, because she’s science-minded. My 14-year-old was bored out of her mind, but I really wanted them to see what was going on here with the entrepreneurs that were coming, the people that were coming, so they can get a sense of it and so it rattles around in their brain, even if they’re not paying attention to that right now.

Timothy Allen: Well, look, that is one of the things. This is why I’ve come out here for the month, right? I’m already reaping the rewards of being around all these people. I’ll give you an example. Yesterday was a Sunday. I started work at six in the morning and I was working until 10:30 last night.

Gabriel Delgado-Ayau: No kidding.

Timothy Allen: Yeah, on a Sunday.

Gabriel Delgado-Ayau: Sunday?

Timothy Allen: Sundays back in the UK, I’m like, leave me alone. We’re cooking, we’re hanging out, we’re doing… When you come here, there’s just this energy.

Gabriel Delgado-Ayau: Yes, absolutely. That’s the problem.

Timothy Allen: Is it a problem?

Gabriel Delgado-Ayau: Well, it’s not a problem. For me, it’s a problem if I come with my kids, because basically what happened, I flew in on Wednesday and it’s been non-stop for me. Non-stop. The only time I spent with my kids, myself and my two daughters that are here, was yesterday afternoon. We went to lunch, we watched a movie, we went swimming. Other than that it is, hey, let’s meet, let’s talk. And I want to meet and talk because there are so many interesting things going on.

All the guys that came for this event, this event was probably the highest quality, density-wise, of interesting people. We’ve had individuals that are better known, like when Naval came or something like that, but in terms of the density of people that were here talking about interesting things and how they’re moving the world forward, this was probably one of the best.

Timothy Allen: I would say that’s to do with Niklas inviting them. It’s not necessarily that more people know. Is that right? Would you say that?

Gabriel Delgado-Ayau: I don’t know. To have the quality of people here that are now coming, I think it takes a couple of things. Number one, enough time has gone by that the name Próspera has percolated in the environment, so people are starting to get really curious. The other is you have a sort of L2, a company that’s set up like Infinita, with a leader like Niklas who really is out there lobbying and saying, hey, you need to come, you need to check it out, you need to experience it, you need to see how this can benefit you. He’s pitching it and pitching it and pitching it to the point where they say, hey, island in the Caribbean, startup city, or whatever you want to call it. That makes it so interesting and so compelling that they end up coming.

Now the beauty is these guys came. Now the other guys that haven’t come are thinking of coming, because they have to come see it.

Timothy Allen: That’s right. So it’s like a snowball slowly rolling. It’s an interesting time, isn’t it? I feel that after our conference at the end of last year, I was absolutely buzzing. I was recording, I didn’t see a lot of talks, but I was recording interviews constantly. Just from that, the percolation, the excitement, which is why I said, look, I’ve got to immerse myself further in it. It’s not enough just to…

I live a pretty disparate life. I live on a farm down the end of a track, and I have online meetings and I do all this kind of stuff. But really, you can’t beat being around people like this. Getting in a lift and saying, which floor are you on? By the end of the lift, you’ve had a conversation about some weird thing, and this guy is your new best friend. It’s that kind of thing.

Gabriel Delgado-Ayau: I couldn’t agree more. I live in a building in Guatemala. It’s my office, it’s my home, and I work a lot out of there. But when I come here, you just have serendipitous meetings with people. You bump into different people, and people from all over the world, which is amazing. Germans, Ukrainians, Belarusians, Hondurans, Guatemalans, Argentinians. So all these interesting people are converging, and there’s something about physical energy that you cannot get in a Zoom call.

Timothy Allen: Also, the structure of the life that you were living just disappears, and it’s very noticeable if you’ve got children.

Gabriel Delgado-Ayau: Yeah, it’s true.

Timothy Allen: I don’t have to. I can be incredibly selfish here. All I do is get up, decide what I want to do, do it, and then go to bed in the evening. Yesterday I didn’t even have food. Obviously things like this will all get sorted, but I got to 9:30 at night and I’m like, oh, I should pop out and get something to eat. I couldn’t find it. Everything’s closed on a Sunday.

Gabriel Delgado-Ayau: Are you kidding?

Timothy Allen: Yeah, but these are things that will get solved.

Gabriel Delgado-Ayau: I agree.

Timothy Allen: I’ve had some conversations with people where they’re, oh yeah, what about this, what about this, what about this? I said it’s very difficult to criticise something like this, because what do you expect? If you look at it as a whole, you’ve got this phenomenal… Imagine what planning, what meetings, what conversations, what effort, what energy went into building this whole thing.

So if you pick on some little gripes, you’re not doing the place a service there, because they’re going to get fixed. This is a frontier. In fact, Próspera is very obvious when you look at it. Currently it’s like a bunch of monoliths that have been inserted and they’re not quite connected yet. You can see that, but that’s absolutely fine. That’s almost the way it’s supposed to work, in a way. It’s not like we just dump everything in one place and then see if it works. The model is different to that. I don’t know whether you agree with that.

Gabriel Delgado-Ayau: I agree with that. What I tell people, I hear people sometimes want to talk to me primarily to gripe or if they have an idea. Those are the two main things, right? When they gripe, I say, hey, on the other side of that gripe, there’s an opportunity. Are you going to come and fix it? Because what we’re about is creating the space so people can come fix problems and create value for others.

Whether there’s no food at 9:30, why don’t you set up a DoorDash, for example, or set up a dark kitchen? Then you provide food at those hours. I think we live in a world where people are used to seeing something they don’t like and living in an environment where somebody can say, oh, but you could have solved it this way. All they have to do is pick up the phone and solve it that way.

Próspera is different, absolutely, because everything has to be built from zero. When people gripe about the cost of power, okay, let’s set up a solar farm or let’s bring in power generation. People argue about the cost of real estate development, the cost of a square metre. Yeah, we have to fix the logistics. We have to fix how we bring things into the island, how things are transported. All these things are opportunities. The beauty is that these opportunities can be solved because the regulatory environment doesn’t get in the way. In other places, you can’t solve them because the regulatory system is in the way. Even if you have agency in these other places, you can’t get around the regulatory barrier because that is an enormous lift. But here you can.

Timothy Allen: I agree with you. If you come to a frontier expecting not to face any problems, you’re insane. Imagine you’re a pioneer.

Gabriel Delgado-Ayau: Exactly.

Timothy Allen: You’re a pioneer and you have to have a pioneering mentality. Imagine settling the US and expecting no problems.

Gabriel Delgado-Ayau: Exactly.

Timothy Allen: Come on then, let’s talk about problems. What are the main things that you think at the moment really need solving, or at least need energy put into them? Correct me if I’m wrong, but the Próspera model is very much a kind of put-it-out-to-tender and have someone come and fix it, rather than someone in government or power or central authority saying, right, we’re going to do this, this and this. That’s my impression.

If I look at what’s actually being developed, you see Nomad Village. That’s these people coming in and building something. Bitcoin City, Bitcoin Village. Is that a correct way to look at it?

Gabriel Delgado-Ayau: Well, tender, if by tender you mean somebody sitting in an office thinking, oh, we need this, let’s put out a tender for that project, not exactly.

Timothy Allen: I mean it as a colloquial term.

Gabriel Delgado-Ayau: But if it’s spontaneous tender, yes. What I mean by spontaneous tender is that there are all these opportunities. Próspera is like it used to be, and like it should be. Whatever is not against the law, you can do. If you have agency, just come and do it.

So you have Nomad, and you have Bitcoin Village, and you have all these places that are spontaneously happening. Somebody sees an opportunity in the market. What if we serve the market this way? What if we bring the community here? What if we bring the Bitcoiners here? They go out and create the solution.

Have you met Ivan, who’s doing Darién in conjunction with us? He’s from Ukraine.

Timothy Allen: I don’t know.

Gabriel Delgado-Ayau: He’s a good guy to talk about. What’s a Ukrainian doing here, right? He and I are doing a village in the back of Duna. It’s called Darién. It’s short-term rental, small apartments. But he’s also doing a music festival place because he saw the opportunity. He said, you know what, I like music, I like festivals, I like art, why don’t we do this thing? So in a way the tender is there because you can go and do it.

Timothy Allen: You’re creating a venue for music festivals?

Gabriel Delgado-Ayau: Yeah.

Timothy Allen: Whereabouts?

Gabriel Delgado-Ayau: He’s looking at a property we have just to the west of here, walking distance, and it’s on the water, so it’s going to be really nice. You have live bands playing and you can have DJs and food and people hanging out, and it’s next to the beach. I think it’s going to be a phenomenal thing.

Timothy Allen: Have you got a long-term vision personally? When you imagine it, is it just evolving? Could your own particular vision of this place be completely wrong, for example? Or do you really think, yeah, I know what it’s going to look like eventually?

Gabriel Delgado-Ayau: I think within a certain framework, the vision that we have is the vision that’s going to happen. But it’s not that granular. We have a master plan. If you talk about real estate specifically, we have a master plan. The vision of the master plan is how do you create a city that’s not car-centric?

Right now it’s very car-centric. Unfortunately, we don’t have the two properties linked through an internal road. Once that happens, you’re going to have bikes going back and forth and golf carts going back and forth, and you’re going to have people walking back and forth. The vision is to have a walkable, dense, more packed-together place, because that’s what people really enjoy for the most part. I think nobody enjoys getting into a car to go visit their grandmother. It sucks. But you enjoy walking over to your grandma’s. You get to walk and you get to bump into people and all these things.

What are the buildings going to look like? I don’t know. We’re having spontaneous types of architecture happening all the time here. Duna is one way, Darién is going to be another way, Nomad is going to be another way. So I think the architecture is going to be fully spontaneous. We’re trying to push things towards an alternate mobility scenario, but the property is also quite sparse.

If you look all the way to the east of the golf course, and I’m sorry I can’t show people visually what that looks like here…

Timothy Allen: I’ll overlay it over there.

Gabriel Delgado-Ayau: Okay. All the way to the east right now, we have no buildings there. It’s just a golf course. Eventually there are plans to have buildings there. So how are those buildings going to fit into everything else? There’s a business district, and that business district is a mixed-use business district, similar to what you would expect in a European-type city, where you have first floor maybe commerce, restaurants and bars, second floor might be office spaces, and maybe top floors would be living spaces and that type of thing.

There are some examples like that that are non-spontaneous, like Cayalá in Guatemala, Santa Catalina in Costa Rica. These villages are models for what the vision is. But one thing I can tell you is we all hate having to get in a car and drive around. By the way, that’s one of the biggest things people gripe about, how people have to get into cars right now. But it’s going to get solved, as you said.

Timothy Allen: It’s not even getting into the car that’s the problem. It’s having to drive out of Próspera into the middle of the island and then back. So is it a simple procedure to connect here to Pristine Bay, just straight physically directly? Is it hilly?

Gabriel Delgado-Ayau: No, the problem isn’t a problem of hills. It’s a problem of property. The owners of the property don’t want us to create a road.

Timothy Allen: I thought there was a land bridge there. Is that not true?

Gabriel Delgado-Ayau: A land what?

Timothy Allen: As in you own land all the way to…

Gabriel Delgado-Ayau: Not yet, no. We have the right of way. So where we are right now, which is the Beta District, we have an adjacent land to the east, which we creatively call the 9.55 acres because it’s 9.55 acres.

Timothy Allen: Very creative.

Gabriel Delgado-Ayau: That’s where the Bitcoin District, I think, is going, and that’s where I think the music festival place is going. We have a road that connects there and we have a right of way to use that. But from there on to Pristine Bay, which is only about 500 metres, we can’t build because they own the land.

Timothy Allen: Fair enough. People have property rights.

Gabriel Delgado-Ayau: Property rights.

Timothy Allen: So what do you think might happen there?

Gabriel Delgado-Ayau: I speculate that what’s going on is they want us to buy the land, or have somebody that’s friendly buy the land, and that’s why they don’t want the road. They figure if we give them right of way, they lose the incentive to buy. We have a lot of land already, so I think what needs to happen is a third party can come in that’s friendly and buy the land, or we might eventually buy the land. It’s something we want to solve. We want to solve the road.

Timothy Allen: Why wouldn’t you buy it? Why would you want a third party?

Gabriel Delgado-Ayau: We would want to buy it ourselves, but the needs of capital and the uses of capital are enormous for a project like this. There are so many things you need to do. We also have the property on the mainland that we need to enable, which is the nearshoring hub, Satoye. Have you been there?

Timothy Allen: No, I haven’t.

Gabriel Delgado-Ayau: It’d be interesting for you to go out there and check it out.

Timothy Allen: That’s not residential though, is it?

Gabriel Delgado-Ayau: It’s going to be a city just like this one, but it’s more industrial-focused.

Timothy Allen: If I get this right, there’s also going to be traffic between there and here on the sea?

Gabriel Delgado-Ayau: Yeah. There’s a port. The property is right next to the current municipal port, but on the east side rather than the west side. It’s a pristine property, a greenfield. There’s going to be a lot of nearshoring activity there, industrial activity, energy, exports. That’s the vision for that.

Timothy Allen: This is why I say you can’t come here and criticise what’s going on, because these are very big thoughts to have and very long-term thoughts as well. You don’t do this place a service if you pick on the small things. This is what my wife does that I hate. I do something really impressive, but there’ll be one small thing that she didn’t like and that’s the thing we focus on.

Wow. So the port on the mainland will presumably be a hub for things coming in and then they’ll get directed here?

Gabriel Delgado-Ayau: Do you want to know the original high-level vision? You have the Hong Kong-style hub in Roatán, which is where we’re at right now: services, biotech, fintech, living on a beautiful island like Roatán, hilly with views from every corner, warm water, connected to the US and everywhere.

Then on the mainland, you have the more industrial-type city, like Shenzhen. The beauty of that model is that you need to try to keep costs as low as possible for manufacturing. Prices of land need to be low so your infrastructure prices can be low. When you pass that on to the consumer, which everything needs to be passed on to the consumer, those costs are low. On the island it’s expensive. Energy is expensive. Land is expensive because it’s finite and it’s difficult to get. But the vision is you have the Shenzhen of Central America, or of America, on the mainland and the Hong Kong on the island, and they’re connected by drone.

Timothy Allen: How long does it take? What’s the flight time?

Gabriel Delgado-Ayau: It’s close. It’s only about 60 kilometres.

Timothy Allen: Drones going 60 kilometres freaks me out, but it obviously happens quite a lot.

Gabriel Delgado-Ayau: It’s going to happen more and more. We’re headed in that direction. Autonomous flight is coming. We already have autonomous two-dimensional driving with Elon Musk’s Tesla, and three-dimensional is easier.

Timothy Allen: There’s not much to bump into.

Gabriel Delgado-Ayau: Nothing to bump into. No people running across the street from you. I think it’s going to come much quicker because the technologies are converging. You have the drone technology that’s very safe, where multiple levels of failure can happen and you can still fly, and then you have the flying autonomously part. What’s important about that is that if you don’t have pilots, you decrease the whole price of the whole stack.

Timothy Allen: It’s funny. I remember four years ago, whenever the first time we came here was, people showed me drawings and pictures of things like that and I just thought it was a nice idea, but very wishy-washy, very unrealistic. But it’s not.

Gabriel Delgado-Ayau: It’s actually taken longer than I thought, but it’s coming. I have no doubt about it. You already see in China, there are taxi services that are drone-based, 100% drone-based. So that’s going to happen here. Why not? And from a regulatory perspective, that’s not a problem, as long as you have insurance.

Timothy Allen: What would happen if you were flying taxis over the ocean there? Presumably, do you have regulatory autonomy? Not at sea?

Gabriel Delgado-Ayau: No, but I think with the current government, and that’s one of the issues that we’re working on, the situation with the government, which I think is always on people’s mind. With the current government and with a friendly government that understands, that’s very solvable. You would need to look out for a few things. You need to coordinate with the national aviation authorities because of international traffic and local traffic. That’s easy to solve. Then within the zone itself, that’s easy to solve because that falls back under the zone itself. So you need to solve the piece that’s in the middle from a permit standpoint, and you can dovetail that right into the current administration’s flight authority.

Timothy Allen: In your experience, do they get it? I know the former government didn’t get it and didn’t care and were ideologically opposed to it. But do the new guys get it? Can you have that conversation with them when you say, look, there’s going to be flying stuff and there’s going to be this and there’s going to be that?

Gabriel Delgado-Ayau: No, we’re having those conversations. They really get it. Now, there’s politics involved, and politics involves popularity and power because of how people support you or don’t support you. So they have to be careful, but they really get it.

The problem is always, how much time do you have? If these guys do a good job, and from everything I’ve seen, they have everything, it’s theirs to screw up. Really, it’s theirs to screw up. They have a tremendous number of people who are really disgusted with what happened in the last four years because their own personal results were bad. There were no jobs. There were no increases in productivity, salaries, loss of opportunities. These guys come in, everybody’s excited about what they’re doing, how they’re presenting things. Investors are looking at the zone, at Honduras in general, even beyond Próspera, and thinking, wow, there’s an opportunity here.

If they do it right, they can get another four years. Another candidate of a similar-minded party, it doesn’t even have to be the same party, but as long as they’re similar-minded, you can conceivably see eight years down the horizon where things are happening for Próspera. Eight years is a massive amount of time. Look at what we did in four years with the whole opposition. Everybody thought we were going to be swept into the ocean, and we grew. Everything was up and to the right. Population, jobs, companies, tax revenue, by the way, which we paid to the government, their share. So I’m very excited about what’s going to happen here.

Timothy Allen: This is something that if you’re in this ecosystem, you understand, but you can’t underestimate how important Próspera still being here after all the shit you’ve just been through is. It’s a massive deal.

Gabriel Delgado-Ayau: Yeah.

Timothy Allen: I don’t think people get how massive it is. But if you’re building in this space, you have a proven model now. I always say this to people, but socialist governments are like the final boss for these places.

Gabriel Delgado-Ayau: I love that analogy, by the way.

Timothy Allen: They are, aren’t they? You have to get all your potions ready. You’ve got to be powered up. Essentially Próspera was powered up. They shut you down but didn’t shut you down. They said no and nothing happened, and now it’s better than ever. This is brilliant news because they weren’t just a dodgy government. They were a proper anti-free-market government. The legal protections worked, the community protections worked, all the stuff that everyone had been working on for a while.

I know something’s better and something’s whatever, but it doesn’t matter now. There’s a working example of what happens when the worst thing happens. Not just niggly problems, the big problem. I think when you start trying to build these things, you’ll probably understand how important that is. You can go to a government in Costa Rica now and say, look at this. Look at what’s happening. Look at what happened and look at how much better it is now.

Gabriel Delgado-Ayau: It’s amazing. We were there the night of the election. We stayed up. It was a big deal.

Timothy Allen: I was watching Polymarket for weeks afterwards as well, going, come on, man. I think everyone had a sense of what was going on, but they let it drag out.

Gabriel Delgado-Ayau: I think we learned a hell of a lot about things that we never hypothesised about, about what could happen. The founders of the ZEDE system in government thought out, this can happen, A can happen, B can happen, C can happen, so let’s put in this protection, this protection, this protection, this protection. Those protections worked.

I think what we always expected was not to have to have that political side as well, because what we wanted to do was come and build the systems, the city, attract people to come and live here and build value and all these things. But it ended up being that we needed to make some pretty critical choices when the last government won the election.

I remember we sat down in the conference room here in the Beta Building and it was like, all right, these guys won. They hate the concept. They hate it. They’ve sworn politically, as their top priority, to get rid of it. Do we push forward? Do we pause and take a wait-and-see attitude? Do we redeploy somewhere else and try to start? But there was nowhere else to go because there was no framework anywhere in the world, and there still isn’t as far as I know, that’s this broad.

So the decision, which I think was very, very courageous, was we’re going to lean into it. We’re just going to go for it. It’s going to entail a bunch of risks in terms of capital consumption, in terms of personal risk and all these things. To our surprise, there were people that stepped up, investors. We raised a bunch of money right after the negative election. I was like, wow. I think people saw in us just guys that weren’t going to give up.

Timothy Allen: Do you know what I saw? It’s not… It’s a bit more primitive than that. I saw bad socialist ideas losing in the end. You can’t look at the idea of free market economics and private places and private governance, you can’t look at it and understand it and decide it’s a bad idea. There are parts of it that you want to do well and streamline and get better, but when you compare it to the ideal that wanted to shut you down, which is the polar opposite of it, it’s a really bad idea. I’m not saying that because I’m on this side of the fence. I’ve thought deeply about both of them and it is a bad idea.

Gabriel Delgado-Ayau: I agree. What happens is many times really good ideas are killed, and then you look back and you say, oh, it was a bad idea to kill it, but by that point you’ve killed it.

Timothy Allen: Yeah, but there’s an idea. It’ll pop up. I know that the ZEDE law was rescinded and all this kind of stuff, but I think the idea is out now. It’s resurging.

Gabriel Delgado-Ayau: Yes, but I want to qualify that if I may. I think the idea definitely would have survived. More people would have tried, but I think we would have been on different curves. If Próspera had not survived, then Morazán wouldn’t have survived and the other one wouldn’t have survived either. So the idea would have survived, but it would have been a slow-burning idea until some other country decided it wanted to try it. That might have been five years, 20 years, 100 years.

By Próspera surviving, as you said, now there’s a model that people can look to and say, hey, look at Honduras. That thing survived the guys that wanted to destroy it. That place is attracting enormous amounts of investment. It’s catalysing an economic boom in Honduras that hasn’t been seen in maybe 100 years or 200 years, just doing all of these things. So you’re on a different trajectory with respect to these ideas in other locations.

I said it in one of the panels: the most important thing that can happen now with this new government for every other project out there, for every other entrepreneur city looking to do this in other countries, is for Próspera to be successful. Because the more successful we are, the more people can point to us and say, we’re going to replicate that in our country.

Timothy Allen: I definitely agree with that. We were talking about this prior to the election as well. This was a very hot topic of discussion amongst everyone. We knew that. Plus, I had lived through two and a half years of talking about these things without a proven model. It didn’t surface a lot, but it did surface in the end. Whenever you’re discussing these ideas, you always end up hitting that ceiling at some point where it’s like, okay, but they’re ideas. Show me the practice.

Even though Próspera existed and was running, the main thing is that the protections worked. Without the protections, you’ve got no property. Without property rights, you’ve got no protections.

Gabriel Delgado-Ayau: I’ll say something quickly about the protections. You have to have the protections, but you have to have the willingness to use them. That’s where I give our team a tremendous amount of credit, because there were other cities, who I respect, the founders of them, but they chose to dovetail behind us, which is fine.

For Próspera, the courage it took for our leadership and our team to say, there are all these protections and we’re going to use them. It’s like you have a gun and there’s somebody walking in through the window. You can choose not to use the weapon, and who knows what’s going to happen. Maybe they’ll take out your stuff, maybe you’ll get killed. Or you have the option to use the weapon. In our case, I think the courageous thing was that we chose to protect what we had with everything we had, at the risk of failing massively, because we could have failed massively.

Timothy Allen: Also at the risk of PR. I know Próspera, you’re not the greatest at PR sometimes, I’ll be honest with you. But in this particular instance, I saw it spun very quickly into, billionaires are trying to sue the Honduran people. Obviously, that was the way they were going to frame it. Props to everyone. Brilliant result. It’s like you watch a football game and it could have gone either way. It really could have gone either way. Shot off the post. But when you’ve actually won, you can celebrate that fact and get on with stuff.

Gabriel Delgado-Ayau: Yeah, I agree. There’s another thing about that that Eric and I in particular talk about a lot. There’s a feeling that providence is on our side on this. I cannot explain it, but there’s this deeply held belief that it’s going to work out. We’re going to put in all the effort we can, but there’s also something that’s helping us.

Tolkien has the word eucatastrophe. So this is our eucatastrophe in a way.

Timothy Allen: Explain that one. I’ve never heard that one before.

Gabriel Delgado-Ayau: Catastrophe is when things go terribly, terribly wrong. Eucatastrophe is the opposite of that. Things are going to work out. It’s a term Tolkien developed to describe his universe, his Middle-earth universe, and how the forces of evil embodied in Sauron looked like they were going to sweep everybody into the sea and off the board. Then this little hobbit from the Shire managed to destroy everything.

If you think about it in a way, it was the hobbits versus Sauron. We are just a bunch of guys. We have no political power. We don’t have any tools other than our minds and our desire to get this done and to enrol others into the cause. That’s what we did.

Timothy Allen: No, you’re absolutely right. So how much can you talk about the current situation with regards to the ZEDE law, the talking with government, the new government? Whatever you can say.

Gabriel Delgado-Ayau: Sure. Let me talk first about what happened with the law. There are two aspects of the law. There’s a constitutional amendment and there’s the organic law. The organic law is the details on how to implement what was mandated constitutionally. The organic law was repealed, so that means all the details on how to create a zone and the institutions that were there to supervise the zone were repealed.

Now for existing zones, the law can’t apply retroactively. So for existing zones, our argument has always been, fine, you can’t have new zones, which is a disadvantage to Honduras, but it’s not a disadvantage to us because we already exist. We already made investments. We already attracted all these things. So we have a legal stability agreement, a 50-year legal stability agreement, and that applies to us.

Now the constitutional mandate was not repealed, which means that the zones continue to exist constitutionally. If this government wanted to re-enable the system, they would need to create a new organic law for new players.

Timothy Allen: Sorry, that’s interesting. I assumed, and I’ve always heard, that the actual constitutional change was repealed.

Gabriel Delgado-Ayau: No. What happened was something different. They failed at repealing the constitutional change, so they went the judicial route. What happened was there was a change in the Supreme Court of Honduras. A lot of politics goes into that, as everywhere in the world, but here too, and they declared it unconstitutional.

Timothy Allen: Hold on a minute, which? The constitutional change?

Gabriel Delgado-Ayau: That’s right.

Timothy Allen: So the headline is, the constitutional change is repealed.

Gabriel Delgado-Ayau: Well, not really. If you dig into the text of what the Supreme Court said, it doesn’t mandate anything. It uses very loose language and blah, blah, blah. So these guys claimed the political victory that in reality didn’t mean anything.

Timothy Allen: The bit that I observed was pretty much that when they were on the back foot, the narrative changed to, well, we’re stopping any new ones happening. That was a good sign for me when I saw that. I was like, hey, that’s great, because that’s basically them admitting defeat because they’ve just lowered their achievement. Until you just said that, I assumed the repeal of the constitutional change had happened. That’s fascinating.

Gabriel Delgado-Ayau: The guy to talk to about that, if you can, is Jorge Colindres. He really has the fine detail of that and why it doesn’t apply to us, why it’s still on the books, and why it can still start up again. We’ve had a lot of independent opinions written about that too by top law firms from the region and international.

There’s something else that I think is very important, which is that the previous government used the ZEDE as you use a piñata at a party. When it’s time to distract the guests from anything, you pull out the piñata and beat the crap out of it. If something’s going on that you don’t like, you bring out the piñata again and beat the crap out of it again. Every time something bad was happening in the country, they would talk about ZEDEs. They would talk about loss of sovereignty, which is not true, by the way. They would lie, make all these things up about the zone, about Próspera, about the investors in Próspera, about the leaders of Próspera. All these lies were easily dispelled. All you needed to do was a little bit of research. That was the piñata. So I don’t even think they cared so much about the ZEDE. It was just a very useful political tool for them.

Timothy Allen: I’m almost certain that that’s true. The other really interesting thing that’s happened over the last couple of years is your interactions with the media have changed, on account of you interacting with different types of media and bigger YouTubers, and places where you get long-form explanations for the thing. It’s amazing when you think about the fortuitousness of the situation you find yourself in. There are a lot of things that are new, like the alternative media scene. Pretty new, isn’t it, really? Sitting and talking like this is pretty new. But after you’ve listened to the actual explanation, who would go and listen to a five-minute snippet on the news and try to work out what’s going on?

Gabriel Delgado-Ayau: Probably somebody just ideologically minded that wants confirmation bias to what they already think. I couldn’t agree more. The fact that we can put our own story out, that there are these long-form conversations where you can ask tough questions and there are answers, or not.

Getting back to the government situation, which you asked earlier, it’s important to have in mind the actual legal status of the framework and the non-retroactive nature of what’s happened. When we attempted for a year to negotiate with the previous government and got nowhere, they didn’t even want to meet with us, that’s when we activated the arbitration clauses in the bilateral treaty with the US, which is called CAFTA. We actually sued the government in ICSID for a substantial amount. We were criticised for that too, but we were just protecting the rights of the investors that had come here and in good faith made the investment that we made.

With this government, there’s a completely different mentality. Their mentality is, how can we move Honduras into the 21st century? How can we attract a ton of investment? How can we help investors set up? How can we change the perspective of what Honduras is in the minds of foreigners, for it to be a forward-looking nation?

It’s interesting because Bukele in El Salvador has had a pretty interesting effect. He’s a competitor, right? If you’re a country like Honduras or Guatemala and you look at El Salvador, you’re thinking, damn, that guy’s really screwing it up for me, because now I can’t talk about my usual talking points politically. Now I need to do something about it because, in reality, El Salvador is a very safe place now and all these things.

So what’s the best tool in my arsenal? Turns out the best tool in Honduras’ arsenal is this project, because now they don’t have to change a bunch of things. They don’t have to establish a certain level of credibility in the changes they have made to attract investment. They can say, hey, you have a platform. It’s right there. Let’s execute on it right now. Let’s bring billions of dollars in investments, create thousands and thousands of jobs. It’s already here. So they have a massive tool that they can leverage.

Timothy Allen: I love that.

Gabriel Delgado-Ayau: And they know it. They know it. We have a lot of friendlies now. It’s a minefield. There are mines everywhere politically. If you act as if the ZEDEs are the last Coke in the desert and you’re a politician, you’re going to have a lot of opposition to that position. So you need to navigate that cleverly and you need to be astute about how you navigate that politically. But they have the tools. What we’re saying is, look, let’s not waste any time. You guys only have four years. There might be a re-election of sorts, but you only have four years. We need to get this done quickly so that you can bring a ton of money into the zone right away.

Timothy Allen: I love the fact you’re just describing competition in governance, which is another one of the memes that’s been proven.

Gabriel Delgado-Ayau: Yeah, absolutely.

Timothy Allen: Talking of that, is the new government going to be tough on crime a la Bukele? You’ve got a pretty serious crime problem in Honduras as well, is that right?

Gabriel Delgado-Ayau: I don’t know. I haven’t sat down with anybody who’s looking at that aspect.

Timothy Allen: Can you really compare it to El Salvador? El Salvador got all the press about the gangs, but I know, for example, that Choloma, which is right next to Morazán, is well known for being an absolutely terribly violent place.

Gabriel Delgado-Ayau: I don’t know what this government’s going to do. I would be surprised if they didn’t feel like they wanted to act decisively about it, because the thing Bukele did is he showed that if you act in that manner, there are political winnings for you. From a political perspective, there’s the right thing to do as an execution leader in government, which is to make the country safe, but it was always fraught with this idea that you were violating the human rights of the criminals and all these things. What Bukele showed is that you can actually be tough on crime and win politically. That is an enormous example, and I would think that the government of Honduras is probably going to see that and react accordingly.

Timothy Allen: From talking to people, I understand that Bukele is not interested in any kind of projects like this.

Gabriel Delgado-Ayau: No.

Timothy Allen: I wonder why that is. He’s just got his vision, right?

Gabriel Delgado-Ayau: I’m going to speculate again. I’ve not spoken to him directly. I’ve spoken to some of the people around him. I think Bukele has a very Lee Kuan Yew vision for El Salvador. Like Lee Kuan Yew, a brilliant, brilliant politician. You see the results and you’re like, wow, amazing. Top down in terms of political leadership. Probably saw the problems that happened when you weren’t tough on certain things. That’s his vision and that’s what he’s going for. I don’t think he wants any competition within his own country.

Timothy Allen: The lesson, I suppose, is that in Latin America, if you have a thing, his thing was the tough-on-crime thing and maybe the Bitcoin thing, and in Honduras you’ve got the ZEDEs. If you’ve got that unique thing, that unique selling point, hopefully you get a lot of attention. In Bukele’s case, he’s worldwide famous now for what he’s done. It’s amazing really, when you think about it, for such a small country.

Gabriel Delgado-Ayau: You do have a problem, and that problem happens in the two best-known countries right now in Latin America, El Salvador and Argentina. The question always in investors’ minds, and keep in mind from my perspective, you only win if you’re able to 10x your investment into a country like this, because otherwise you won’t really move the needle. You need to 10x the amount of investment.

The question in investors’ minds is, is that going to last about four years, or however long that president is in power, or is the pendulum going to swing right back? In four years I made billions of dollars of investment and now they’re taking them from me. That’s the advantage that Honduras has, because Honduras has, through the ZEDEs, through Próspera, 50 years of legal stability. There’s a contract that you sign, and you sign a contract that gives you those established conditions, so you can sue against that contract. Who’s going to sue Bukele? Who’s going to sue the government of Bukele or the government of Milei? Nobody.

Timothy Allen: The most important part is you did sue and it worked.

Gabriel Delgado-Ayau: It worked. You had a carrot and a stick. Unfortunately, you need to have a carrot and stick.

Timothy Allen: What about other countries in the area? Do you have people coming over here to check you out?

Gabriel Delgado-Ayau: More and more. We’ve also gone out and talked to other governments. It depends. There are a couple of things that have to happen. One is, is it an ideologically minded person that gets it? Gets competitive governance, gets legal stability? If they get it, then they get the idea. Then the question mostly in their mind is, is what they did in Honduras going to survive? How would I apply that here? Would it be a net positive or negative politically for me? At the end of the day, their incentive is towards power. Our incentive is towards the creation of value, because then we create value for our shareholders. So it’s a different set of incentives, and you have to keep that in mind.

There is a country right now that’s pursuing an MOU with us. We didn’t go to them, they came to us. There are other countries that we’re trying to entice into what we’re doing. I think the best way to grow this, honestly, is to make the Honduran example such a powerful example that everybody wants it.

Timothy Allen: And would your purpose be to franchise the Próspera brand in other countries?

Gabriel Delgado-Ayau: We have two models. What we provide really is governance as a service. We capture a lot of that value through the real estate. We don’t have to be owners of 100% of the real estate. The way we set it up here is we have a legal entity that we’re eventually thinking of floating as a REIT to be able to get capital in and capital out to investors. So the two models are: we can license the governance-as-a-service model and then third parties operate it, or we partner, we JV, or whatever. We’re looking at some of that right now.

Timothy Allen: It’s amazing to think of where it could all go. That’s what I’ve started thinking about in this last year. It really can go amazing places. But really not in the traditional sense of starting a business and running it. It’s a completely different thing. It’s a cultural change. It’s worldwide. I’ve always known it’s a movement, but for the first few years of mixing in these circles I felt a little bit like it’s something that is going to happen. For the last six months, for the first time I feel like it’s actually happening. It actually is happening now, and I’m watching it, albeit at a very early stage. It’s an incredible feeling.

Gabriel Delgado-Ayau: It’s an incredible feeling. I just spoke to an Italian guy who is really enthusiastic about the idea because he sees it as a parallel to what happened in the 1800s and 1700s, I guess, in Italy. We had the Duchy of Milan, the Republic of Florence, all these republics, all these city-states if you want. Granted, you don’t have city-states anymore in the sense of full sovereignty, but they competed intensely against each other.

The beauty is we now have a world where semi-autonomous zones can compete intensely with each other again and create the same amount of wealth and innovation. They don’t have to be new nations. There’s no need to carve out new nations from existing nations. It doesn’t need to be that way.

Timothy Allen: The innovation there is the 50-year legal stability. When you put it like that, that is the number one most important aspect of this whole thing.

Gabriel Delgado-Ayau: Yes, I agree. We have a signed social agreement, which is 50 years in the making, and you can renew it another 50 years. You don’t have to stop at 50 years.

Timothy Allen: It is amazing when you actually think about it. I’ve been on a long journey with all this stuff, and those kinds of things are a couple of layers down. It’s easy to look around and go, oh yeah, it’s great because the entrepreneurs are here, they’re doing this, there’s biotech, there’s this. But actually the foundation of all this stuff, which is now shown that it has an extra abstract power, it’s a really strong abstract power that basically holds the whole thing together. Without it, you don’t really have a ZEDE. You have a place. You’re just building a place.

The legal structure is the most important one. What are the other important protections that you see, having been through the process?

Gabriel Delgado-Ayau: The ultimate protection is to have a large amount of people, families, living in the zone who are nationals of the host country, who have political say in national and municipal governments, and who basically can see that their well-being derives from the zone itself. I have four kids. I’m going to do everything I can to make sure those four kids have a good opportunity and can have a better life than I did.

Timothy Allen: For sure. That’s a good point. There are two schools of thought in the free city world. One is you attract outsiders, and the other is you basically shouldn’t really care about outsiders too much, this is a local market economy. When I hear you say that, it sounds like you’re saying, no, this is for locals. But what we see at the moment is very much, there’s not a huge amount of Hondurans here compared. I’ve only lived here for three days, so forgive me, but everyone I’ve seen, bar a few people who are working here…

Gabriel Delgado-Ayau: Have you heard of the saying, I don’t know if you can say it in English, nobody’s a prophet in their own land?

Timothy Allen: No, I don’t know.

Gabriel Delgado-Ayau: In Spanish there’s a saying: nadie es profeta en su tierra. Nobody’s a prophet in their own land. So you create this amazing system, and who were the takers? Foreigners. Hondurans had the same opportunity to do it as we did, but they were suspicious of it because probably they were suspicious of the people pushing it. We didn’t have that baggage. We just came in and looked at it. It took a long time and it was difficult, but we took it on.

The same thing happened with the maquila in Honduras in the 1980s. The maquila in Honduras, these free zones where you can import raw materials and export the finished product, were done by foreigners first, and all the top brass in those companies were foreigners. Within a few years, the companies were Honduran and the top brass were Honduran because they were trained up.

Arguably, one of the biggest things that’s going to happen here is you’re going to train up a local population to do things like biotech and fintech. You’re already seeing a lot of Honduran entrepreneurs coming in and rubbing shoulders with the foreign entrepreneurs, and their ambitions become larger, their visions become larger, and the value they can add becomes larger. But I think it’s natural to see first the foreigners, because they’ve been trying to do things in their own country and haven’t been able to do it because of regulatory barriers, come do those things here. Then the locals see that and say, hey, we can do that too. The foreigners want the locals and the locals want the foreigners. Then you create more value because of the synergy there. Eventually, absolutely, there’s no doubt in my mind this is going to be primarily Hondurans, 100%.

Timothy Allen: There’s building going on. Sorry about that. Someone’s building something as we speak. Morazán has a different model, the Ciudad Morazán model, which is basically built for locals.

Gabriel Delgado-Ayau: Primarily, but more residential in nature initially.

Timothy Allen: It’s interesting. When I came into this space, it was always, ah, this is a digital nomad type scenario. There were a few people at the Charter Cities Institute who pointed out, no, the best market, if you’re taking it purely from a business perspective, which is a good idea as well, is you want to build cities that are better than the cities that are there. The ideology, the legal stuff, it doesn’t actually matter. What matters is, do they want to move there because it’s a better life?

But I do see now that I think you should invite everyone. A lot of people have not talked too favourably about the digital nomads recently, because they say, oh, well, they come, but they don’t stay. I agree that that’s kind of true, but they’re also really good at other things like publicity. They’re brilliant at publicity. When digital nomads arrive at a place, you might get a couple of years of a lot of clutter and a lot of buzz, and that’s all good. I think it’s all good. The strategy should be come one, come all. I personally think it’s a mistake to build something just for digital nomads hoping that they’ll stay, because if they’re digital nomads, there’s something that compels them internally to move around.

Gabriel Delgado-Ayau: Sure. People only end up staying once they have kids or once they establish a family, because the kids need to go to school and you have some stability. Some of the digital nomads that end up being in families will end up staying, because this is where their families now live, this is where the kids go to school, this is where they have their friends and their social life. But if they’re just digital nomads, no kids, more than likely they’re going to move around.

Timothy Allen: I’ve been speaking to a few of the nomads here who’ve got new projects on the horizon. The best ideas I’ve heard recently are about how to get families to nomad family villages. I can’t believe it hasn’t been done before, because it’s true. When you talk to nomads, and I’ve been a traveller my whole life, I often have conversations that end with, oh yeah, but I’ve got kids now.

Gabriel Delgado-Ayau: You and I were talking about that earlier. When we looked at who would move here, the guys that are most likely to move here are the guys who are entrepreneurial-minded, or local, non-entrepreneurial-minded people who don’t have kids, because if you have kids, they’re in school. They have friends, they ride horses, they have all these things, they have a life. I couldn’t move here 100% because I had four kids that were in school. I’m divorced, so had I not been divorced, maybe I could have brought them all with me. It’s interesting that you have to think of community as well, and not just a legal system that you’re trying to build.

Timothy Allen: No, I agree. If I were to criticise the way you have done things in the last few years, I’d say the community was the weakest thing that you had, and that meshed together with PR as well, because the unsung heroes of your PR should really be the community. They should be fighting on your behalf. It’s a criticism, but it’s not that I think I could have done it any better. It’s just obvious to look at from the outside.

Gabriel Delgado-Ayau: You point out something that’s important. I wish we would have done things differently, but I don’t think we could have because of the necessity of where we were. We needed the thing to survive, and that required us to talk about the things we talked about, defend ourselves, talk about the benefits, talk about the investment, which doesn’t necessarily talk about how to bring kids here.

Now, I think our message is going to change. We actually have a sort of dual track. We have the statecraft, which is talking about the things institutionally that Próspera does, and then how do we attract all these amazing people out there who are trying to do things that are great and can’t do them where they’re at, or they just want to go somewhere where this energy exists.

The thing you and I were talking about too is this energy that exists here. You talk to Eduardo, you talk to Ivan, you talk to Niklas, you talk to all these guys with these amazing ideas, and everybody is go, go, go, create, create, create, build, build, build. For a guy like me who’s an entrepreneur, this is like you’re sitting in your own cocktail sauce, marinating in it. It’s just wonderful.

Timothy Allen: Agreed, 100%. I suppose we better talk about the plans before we go.

Gabriel Delgado-Ayau: Sure, let’s talk about that. I have a few more minutes.

Timothy Allen: Try and lay out some timelines for the future.

Gabriel Delgado-Ayau: The most important thing on the horizon in the short-term future is coming to an agreement with the government of Honduras. There’s ongoing litigation in ICSID. There are different institutions involved. There’s the government of Honduras’ lawyer, which is called the Attorney General of Honduras, there’s Próspera’s legal team, and there’s the World Bank ICSID team with arbiters. All that needs to be wound down legally if we come to an agreement, which I expect that we should. That’s really, really important, because what that’s going to do is provide the legal certainty that what we’ve been saying all along, that this is a project that’s here to stay, is true.

Then we focus heavily on attracting more entrepreneurs. We can start the mainland hub, which is a nearshoring hub. It’s an enormous amount of investment that’s catalysed by companies that want to come. There’s a port involved, there’s light manufacturing involved, there’s manufacturing involved, there’s energy involved, all these things that are involved in a part of Honduras that’s sort of forgotten. We’re not going to compete with what’s already established. We’re bringing new things to a place that’s already sort of forgotten. That’s really, really big. It takes time to build. You don’t build a port in two weeks.

Timothy Allen: Is it a port already? Is it deep water and stuff like that?

Gabriel Delgado-Ayau: No. There’s what’s called a port. It’s a small ferry port, so it’s not very deep. You need to dredge.

Timothy Allen: So you’re going to have to literally…

Gabriel Delgado-Ayau: Yeah, you have to literally dredge. You have to change the angles of the arms of the port. It’s a massive infrastructure job. We’re talking millions to a billion dollars’ worth of investment.

Timothy Allen: Blimey. In a country like Honduras, that really moves the needle, right?

Gabriel Delgado-Ayau: And it’s going to be deployed over years.

Timothy Allen: You’re telling me. Just on the legal stuff, what’s the timescale on that realistically? Are people like, yeah, let’s just get this done? Because that’s closing the lid on the whole thing, pretty much, isn’t it?

Gabriel Delgado-Ayau: Ideally it would happen before the first semester is out. Ideally.

Timothy Allen: Will it?

Gabriel Delgado-Ayau: I think politically, this is when you have the most political capital, these first hundred days. So it makes the most sense to do that. It’s like when you wake up in the morning, you should do the most difficult task early. This is like doing the most difficult task early.

Timothy Allen: But it’s not having an effect on the way you’re moving forward necessarily anyway?

Gabriel Delgado-Ayau: No. For us, part of the situation before used to be that we would talk about everything we were doing positively, and the government would come out and speak terribly of us. For an investor, you’d be like, well, who do I believe, Próspera or the government? Usually, they end up believing the government. So the negative rhetoric really hurt. If we can get over the hump of that, and we’re already seeing it privately, then great.

Timothy Allen: Well look, Gabe, thanks for coming in. You’re a busy man. I saw the text you just sent me. That sounded crazy. I won’t say what it is, but that seems like a very strange person to talk to. Do they even understand?

Gabriel Delgado-Ayau: They understand it and they’re excited about it.

Timothy Allen: I’m surprised.

Gabriel Delgado-Ayau: They’re learning more about what we’re doing, and they’re providing ideas on what we could do.

Timothy Allen: I’m surprised too. Great. I’m a positive guy, and that is super positive. Anyway, thanks for coming in. Many, many, many congrats on everything. It’s so good to be here.

Gabriel Delgado-Ayau: I’m glad you’re staying a month.

Timothy Allen: Me too.

Gabriel Delgado-Ayau: You’re going to become a local for a month. That’s amazing.

Timothy Allen: Why not? Not only because I wanted to, but because this is the time to as well. You can see the wave happening. It’s like when the Bitcoin law passed in El Salvador, we went out there. Why not? I want to be there when it’s happening. All the ideas and understandings that you get from that, watching what’s happening, you can see the same things here. You can see that early stage and the supreme optimism and the attracting of can-do people, rather than people complaining about stuff.

Gabriel Delgado-Ayau: I think you nailed something on the head. There’s no more optimistic place than Próspera today, I would think.

Timothy Allen: Amen to that. Amen.

Gabriel Delgado-Ayau: Thank you so much.

Timothy Allen: Cheers.