Nansen, Binance, Solana execs on building crypto firms that can survive bear and bull markets
Of late, the crypto scene in Singapore has been rather quiet — quite the difference from what Monetary Authority of Singapore (MAS)’ Managing Director Ravi Menon called a “bloodbath” several months ago. Yet, the industry is still alive, albeit keeping itself low profile for the time being.
Certainly, many are still keeping a close eye on the industry, and waiting to see what new developments may arise in the cryptocurrency space.
At the Tech in Asia Conference 2022 held yesterday (September 21), executives of successful crypto firms were invited to share insights on the future of the cryptocurrency space, and in particular, how to build enduring companies in the Web3 space.
Navigating the bear and the bull markets
One thing that all the panellists agreed on was that navigating the boom and bust cycles that cryptocurrencies are prone to is key to ensuring that the company is able to stay afloat in the long run.
As a matter of fact, Alex Svanevik, CEO and founder of Nansen, revealed that part of how Nansen manages to stay afloat is that they manage their treasury to ensure that they do not have a crisis when the bear market comes around.
The thinking is that we want to hedge our own position. We hired a trader with a different mindset, so that he could create strategies and manage our treasury in a way that hedges the rest of the business. We ensure that we are able to think counter-cyclically in the way we get our revenue, and thats how we ensure that our treasury can last for a long time.
– Alex Svanevik, CEO and founder of Nansen
Svanevik credits this thinking to traditional economics, where counter-cyclical fiscal policy is applied by governments to save up during the good times, and spent to stimulate the economy during a downturn.
To illustrate his point, Svanevik cited the Norwegian oil fund, where profits from oil extraction and exports are invested in explicitly non-Norwegian assets and non-oil assets to ensure that the company has a diversified portfolio.
As such, the bear market that has hit crypto companies such as Three Arrows Capital and Terraform Labs is not as big a concern as it could be.
Leon Foong, head of the Asia Pacific market at Binance, agrees. He suggests that businesses at the end of the day are run by people, and that people are susceptible to market psychology. It is therefore important to be careful before going on a hiring spree during bull markets.
Instead, Foong advises companies that bear markets are a good time to hire the right talents for the company, with funds that have been built up during the bull markets.
In contrast, it may be better to focus on raising funds and taking care of the company’s cash runway during a bull market.
The future is practical, not ideological
The panellists also pointed out that the investment landscape for cryptocurrency companies is changing, and that investors are looking for better companies following the cryptocurrency market crash.
In particular, Akshay BD, Head of International Expansion at Solana, noted that “teams in cryptocurrency startups are now being held to a higher standard. Investors have gotten much more sober over the past few months, and now there is a greater focus on deliverables.”
As such, Akshay advises entrepreneurs that while building their teams, they should focus more on being practical, rather than being ideological in their products, especially given the ethos of the cryptocurrency community about decentralisation.
When teams look at what they are building through a product lens rather than an ideological lens, they will come to the conclusion that they want to have the minimum necessary data on chain that helps to achieve interoperability and composability.
– Akshay BD, Head of International Expansion, Solana
Therefore, Akshay suggests that for crypto companies to be enduring, they need to provide consumers with a product that they can actually use — applications for cryptocurrency and the likes, since “meaningful adoption only happens when we get users to use these applications.”
The Web2 world is still relevant
But how exactly can companies achieve such scale? For the panellists, the answer is simple — to position applications and products as a bridge between the Web2 and Web3 world.
While companies can rely on ideology to get consumers, this is not likely to be a long-term solution, according to the panellists. Instead, they suggest that entrepreneurs should work with Web2 companies to create something new.
In fact, Foong, suggests that such a partnership could be beneficial for all parties involved. Web2 companies can provide the user base for new Web3 applications, while Web3 companies can build these applications for consumers, to be used through Web2 products.
There have been a lot of projects that try to launch a token for the sake of launching a token, but during the bear market, these projects tend to fizzle out quickly. How many users would actually use their products if the tokens were taken away?
But for community-fi projects, if they can layer the right tokenomics, they present a lot of interesting opportunities. Community-fi projects really tap into Web2 companies with a real user base, and that gives us a real use case for these projects.
– Leon Foong, Head of APAC market, Binance
In addition, Foong also singled out NFTs as one of the new technologies within the Web3 world that could solve real-world problems. Referring to soulbound tokens, Foong argued that tokens can solve real world issues for businesses who need to fulfil know-your-customer obligations, or for resolving intellectual property disputes.
This encouragement for the Web3 world to cooperate with the Web2 world was also shared by Svanevik, who pointed out that “on-chain NFTs can be placeholders for real world NFTs”, and that on-chain NFTs could eventually be used to represent off-chain assets, such as property or infrastructure, and that other use cases such as providing loans could be made much easier through the use of smart contracts.
The Web3 world has seen quite the rise and fall over the past few years, and the industry has also earned itself quite the reputation. Yet, this industry remains at the forefront of technological progress.
While only time will tell if the industry can reinvent itself and make itself useful to the world, these panellists have offered us a glimpse into what goes into making their companies success stories rather than embarrassing failures.
And a surprising amount of their success is explained not by the abilities of the Web3 world, but rather, what they adapt from the Web2 world and other non-crypto institutions. Best practices, it seems, exist for a reason.
Featured Image Credit: Screenshot of TIA Conference 2022
Also Read: From growth at all costs, to path to profitability: Why are VCs now focusing on monetisation?
Circles.Life co-founder on disrupting the traditional telco sector and taking on the big boys
Since its launch in 2016, Circles.Life has been shaking up Singapore’s telco industry and taking on major players such as Singtel, M1 and StarHub.
In a fireside chat at Tech in Asia’s 11th annual conference yesterday (September 21), Rameez Ansar, the co-founder and director of Circles.Life, shares his company’s journey and talks about how he is challenging market incumbents.
He had described Circles.Life as a brand that has been feverishly trying to take on the telco industry in a very different, fundamental way by building an operating system for all telcos.
Their goal is to provide a better customer experience for end users, and offer multiple different services alongside that.
Driving change to an age-old industry
But what motivated the founders of mobile virtual network operator (MVNO) Circles.Life to start up and fight the telco incumbents?
Sharing about his motivation in disrupting the telco space, he said that it all stems from his personal experience. Back then, no one seemed to love their telco.
“We have all had personal experiences with the telco industry, whether it’s staying in a long queue, or being on the phone trying to get something fixed. If anything, it’s an inconvenience,” he pointed out.
It baffled him how an industry that ‘touches’ almost every single person in the world could survive in such a manner for so long.
Today, I think we’re [still] very far away from turning this industry into the most innovative industry that comes to mind. Nobody in the world ever said telco, and that’s the mission. We’re on it, and that’s what still motivates me.
– Rameez Ansar, co-founder and director of Circles.Life
Reflecting on his startup journey thus far, he said that if he knew everything that he knows now, he actually might not have stuck at this.
“I mean it in all honest ways, because it’s probably 10 times harder that I thought,” he quipped. The fact that they were going to attempt to change “one of the most stodgy, old industries in the world” felt rather naive, and obviously, no mean feat.
But being an analytical person himself, Rameez felt that such naivety is much needed.
“The long-term value for that decision was probably negative. But the question was not what could go wrong? The question was, what could go right? And if it goes right, what then? We imagine this industry changing into something that we all love and can actually get a lot of services from.”
“That day I was probably not thinking logically when I decided that this is going to happen. So you have to be naive, but prepared. More naive than prepared, I think.”
Be clear about the ‘why’ first
Although Rameez acknowledged that it has been tough building up the company, he shared that it has been equally meaningful.
To him, every tough moment serves as the building block of the company’s growth and makes it purposeful, especially since they’re going after something “crazy” like changing an industry.
Such moments come every now and then, and a memorable one is the time before they even launched the first market.
“This is a telco, there is no MVP (minimum viable product). You can’t just say ‘I built an operating system and I’m going to launch an MVP and see if it works or not.’ You have to be fully ready and prepared,” he said.
However, they faced manpower issues and only had 20 people — half the people needed. “This was four months before the company was going to run out of money,” said Rameez candidly, adding that every startup probably runs out of money a few times in their lifetime.
It was an urgent situation. They needed to quickly launch within a few months to be able to show traction, and only then, could they work on raising money.
To add fuel to the fire, Rameez shared that he woke up one day and found out that one of their competitors had launched something very similar to them in the market.
“They were a big player with the exact same name [and colours], even though we had the full IP and everything.”
He was frustrated at the news and every lawyer he consulted said that while they indeed have the rights, they cautioned against entering into a legal battle and fighting it out in court.
At the same time, he also received calls from investors saying that they have seen the competitor’s ads and they too voiced the same concerns. “You guys are done and should go home” — that was what investors had told him.
However, when he regrouped with his team, they were all on the same page. They strongly believe that they’re doing something different and that it was worthwhile going ahead with the launch.
“Money is not going to beat us. It’s the different way we’re thinking about it,” stressed Rameez. Recalling a book he read titled ‘The Hard Things About Hard Things’, he said that founders always live with some doubts — and this was the weak and doubt that took over him.
I think everyone faces this and I think you need to just be clear about why you’re doing this, because I can tell you that each one of these moments will take away something from you, but also give back something to you. The meaning and purpose will only come if you’re clear about the ‘why’.
– Rameez Ansar, co-founder and director of Circles.Life
Building technology and a sustainable business
When Circles.Life first started out, they were relying on two main insights. They felt that the industry was “so bad”, especially in terms of customer experience and legacy technology — and this is not an issue that’s limited to Singapore alone; it’s a global problem.
It wasn’t just the customers who were unhappy, the industry too was going through the lowest profitability of all times. An industry simply cannot survive if both the customers and business are unhappy, so the only solution to that is fundamentally thinking of the technology solution.
“You can’t solve it by just trying to do things differently. You have to get rid of it,” he said sharply.
He went on to cite the example of how ride-hailing has disrupted the taxi industry. Today, every region has its own taxi and ride-hailing companies, but he questioned why none of the taxi companies came up with the idea of ride-hailing first.
It’s not because they’re stupid people. It’s not because they couldn’t do it mentally or imagine it. It’s just, unless you take out the technology and build it again, you can’t really solve what is fundamentally an industry problem.
– Rameez Ansar, co-founder and director of Circles.Life
This is why Circles.Life built Circles-X, the company’s unique technology stack that enables it to launch new services in weeks instead of years, and to rapidly launch in new countries.
“Many people try to change the telco industry — they’re doing it by adding components, sort of providing the telco with something what we said we’re going to do, which is to have a full-stack solution — totally rebuild the whole thing, and then go out there and do it. It’s kind of like building your own end-to-end rocket solution,” he explained.
If someone wants to use their operating system, they could simply give the platform without them having to spend five years of R&D and billions of dollars.
Following their high-growth launch in Japan, Rameez said that Circles.Life is getting close to almost a “balanced revenue situation” between its B2B and B2C businesses.
“This is a business that was $0 in revenue two years ago, and now, it’s almost half of the [entire] business,” he said, adding that their overall annual revenue has achieved over US$200 million.
He also stressed the importance of building a sustainable business. “You can’t change the industry if you run out of cash,” he said simply.
While there are certain businesses that have a high burn rate such as those that acquire customers at an increasingly high cost and then eventually hope that it will turn into profit, he sees this as a very risky move.
“That’s like making a few bets down the road and I don’t think we’re that kind of company, though I don’t think there is anything wrong with such companies. I just don’t think the founders at Circles.Life are like that because we don’t know how to operate that kind of business. I’ll probably freak out everyday because I can see the end of the line.”
“The bottomline for us is we’ve always built the business in a sustainable way. We’ve never been gross margin negative.”
Innovation is in their DNA
Although Circles.Life has Singapore origins, Rameez acknowledged that this is indeed not the ideal space to be to building a global platform.
However, he sees the strong need for there to be a “category creator” in this region. Circles.Life is well-positioned to plug this gap, but he finds it hard to achieve this because nobody else has done something similar.
“There is a lot more dead ends and a lot more challenges. It’s also a lot more difficult to keep people engaged because we have to go through a lot more round trips, dead ends, and a variety of things.”
Regardless if it’s a vision or talent constraint, this is exactly something that the founders are determined to change.
“We want to make a statement — that you can build a category creator, no matter how hard it is, from Singapore and Southeast Asia. There’s no surety of success, but you know what? Let’s give it a shot and see what happens.”
At the end of the day, every business has to have its “curves”. If you don’t innovate every three to four years, you’re going to stagnate, he cautioned.
You have to think of your business in a pretty long-term way. No business in the world survives with just one act, so you have to keep thinking of these acts along the way.
– Rameez Ansar, co-founder and director of Circles.Life
Featured Image Credit: Screenshot of TIA Conference 2022
Also Read: Infrastructure, talent, innovation: Dr. Janil on building blocks of S’pore’s digital economy
Zuckerberg’s bet on the metaverse is a Putinesque delusion that may lead to Meta’s downfall
Disclaimer: Opinions expressed below belong solely to the author.
What does a Silicon Valley billionaire have in common with a Russian despot in charge of a country waging a ruinous war on its neighbour? Quite a lot, actually.
Just yesterday, the latter had to tacitly acknowledge his failures by mobilising reservists to hold as much of the occupied territories as they could to save his face in a tragedy that is entirely of his own making.
Give it a few years and we may see Mark Zuckerberg in a very similar situation, trying to find a way out of trouble his metaverse fantasies are pushing his business into.
Lonely at the top
People of significant influence in any area tend to grow disconnected from the surrounding reality, retreating behind the walls of their fame and wealth.
Political leaders, particularly those authoritarian types spending decades in power, gradually forget how real life looks like. They can’t go for a simple walk, visit a McDonald’s or go to a cinema. They don’t do grocery shopping, or take friends out for a beer.
Wealthy billionaires enjoy only marginally more freedom, typically hiding in their mansions, hotels, exclusive clubs, bars and restaurants for the elite. It’s small wonder, then, that they often grow oblivious to the obvious.
Just like Putin, Zuckerberg is being led astray by his ego, but can neither hear the warnings from their ivory towers.
He seems to believe himself to be a social media visionary, but the problem is that he has only ever invented one thing — the Facebook timeline displaying the latest news about your friends and content that you may be interested, in at a time when MySpace demanded that you actively visit every page and profile yourself.
That was the only innovation — however successful, of course — that Zuckerberg and, by extension, Facebook, have ever produced.
Since then, he has failed to predict the rise of image-centric social media (Instagram), video-centric social media (Snapchat and TikTok), and direct messaging superseding traditional SMS messages, and even phone calls (WhatsApp).
That is a lot of misses for a “visionary” in any industry.
Zuckerberg certainly feels added pressure of the declining attractiveness of Facebook in the younger, trend-setting demographics, suggesting that he and his company are behind the times, and he is clearly struggling to find a response. There is a real risk that within mere years, the social media giant may be dwarfed by younger startups which were able to understand users better.
Fortune favours the bold — or does it?
Clearly feeling the pain of these lessons, Zuckerberg has decided to leap forward and try to predict what the next social media medium may appear to disrupt the market and/or redefine human interaction online in the future. He lost on images, he lost on video – he won’t lose this time! Cue the “metaverse”.
Mark must have been thinking hard what the next technological step beyond text, images and video may be. How will people consume content in the future? Which nascent technology may one day supersede what we use today? The only answer, in his mind, could be virtual reality (VR).
He decided he would not be beaten to the punch again, so he delved into the technology head first. His bet on the metaverse is so serious, in fact, that he decided to relegate Facebook to a mere subsidiary of Meta — likely in a bid to define his company and himself as the dominant force of this future technology.
He did this, I believe, to avoid his earlier failures when some garage startup claimed the distinction of a pioneer, like Instagram or Snapchat. Meta is supposed to be Zuckerberg’s greatest achievement and the parent of the metaverse.
With that, Zuckerberg would be first somewhere for once (Facebook, after all, was born into an already fairly crowded scene).
However, it seems to me that his ambitions may, again, resemble delusions of Vladimir Putin, rather than the most accomplished of the Silicon Valley visionaries (like Steve Jobs, who — love him or hate him — was genuinely able to shake up several markets in his lifetime).
Modern-day Russian tsar sees himself as the leader of the Slavic, particularly Orthodox, world, whose mission in life was to write himself into the history books by bringing Ukraine — the birthplace of all Ruthenians — under the Russian banner again and revive the empire dismembered in 1991.
Those delusions have now ended in a disaster which the inhabitant of the Kremlin is desperately trying to find a way out of, hoping to save what is left of his reputation, having built it rather successfully for the past 20 years.
The same fate may await Zuckerberg, clearly believing himself to be the godfather of social media, who now went out on a limb claiming he’s building the future and, just like the Russian president, found himself widely ridiculed for having nothing to show for the billions sank into the project (while his core business is hurting).
Just months ago, people were mocked for dropping a few million dollars on an NFT of a monkey, but it seems that Zuckerberg blew them out of the water, with Meta having reportedly spent over US$10 billion on metaverse in 2021 alone and having this to show for the founder’s metaverse avatar:
Let’s remember that Meta’s VR hardware arm — the only rather successful part of the business — wasn’t developed internally, but acquired with the purchase of the leading innovator and manufacturer at the time, Oculus, eight years ago.
Despite spending nearly a decade and 11-figure sums, Meta itself has yet to prove it can turn it into something more (just as it has yet to do with WhatAapp and even Instagram, both of which have shown minuscule innovation since being taken over).
At the same time, the still-young billionaire CEO is clearly distracted by these novelties from running the core business at Facebook, which has recently posted disappointing results.
If you find yourself in a hole, stop digging
After its first-ever decline in revenue on a year-on-year basis for the quarter ending in June, the company’s stock continued its free fall, losing over 60 per cent from last year’s highs, wiping not only pandemic gains, but pushing the stock below 2017 levels — and costing Zuckerberg more than half of his fortune.
His dreams that metaverse may reverse this course were certainly not helped by results of Meta’s Reality Labs division, which posted a loss of US$2.8 billion (yes, just shy of US$1 billion per month).
Can’t metaverse succeed eventually?
You’d be forgiven for thinking that perhaps not all is lost for Meta and Zuckerberg, and that with enough time and investment, they can make metaverse work. Here’s why I think they can’t.
Most innovation gets people excited for one reason or another. As Steve Jobs said, people don’t know what they want until you show it to them. The problem is that Mark Zuckerberg did and everybody laughed.
Paradoxically, he also fails to understand that social media are so popular because they get us all more in touch with real lives of other people. We can discuss things, share photos, videos, and interact with each other through the technology.
What metaverse offers is a replacement of these real life experiences with virtual ones. It’s not connecting people — it’s disconnecting us not only from each other (since instead of seeing each other we’re told we’re touted avatars), but from real life too (by decorating virtual properties, living in virtual locations etc.).
It’s the antithesis of all the benefits of social media.
Just like Putin, driven by ego and blinded by delusions of grandeur, Zuckerberg went all-in on something that he didn’t think through and wasn’t really ready to handle, putting everything else in jeopardy as a result.
And just like the Russian president, Meta’s CEO has cornered himself. He can’t withdraw, concede defeat or, at the very least, admit that his actions may have been premature. He went to bet everything with a very weak hand and his bluff has become apparent very quickly.
It’s hard to imagine Zuckerberg rebranding the company back to Facebook, just like how it’s hard to imagine Russian troops being called back home, regardless of the painful losses. The ego of the powerful — whichever their domain — trumps reason and drives them to continue on their downward path in a desperate hope a turnaround may still be possible.
Of course, Russia is unlikely to relinquish control of every inch of the occupied Ukrainian land, just like Meta is going to be able to squeeze some money out of the market share it commands in VR and AR hardware.
In either case, however, it’s not what they set out to achieve and came at an unbearably high price, keeping them scarred for years and earning their leaders mockery instead of glory they sought, proving yet again the old adage that pride comes before the fall.
Featured Image Credit: Meta / Tonight with Vladimir Putin by BBC
Also Read: Why Facebook’s metaverse is destined to be the biggest flop in tech history
