Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder Mixergy where I interview entrepreneurs about how they built their businesses. Joining me is an entrepreneur who’s in the cryptocurrency space. It is a space that’s been full of potential and opportunity, and I wonder if there is profits and real businesses being built there.
Today’s guest says, “Well, one of the reasons . . . One of the ways that we can get more profits, more people involved in it is if it was easier to account for the cryptocurrency that people have.” And what he did is create what has been called the QuickBooks of cryptocurrency. His name is Alon Muroch. He is the founder of Blox. Blox allows professionals to do crypto, accounting, tracking, management. What is? Auditing, document . . . Everything, really, to keep track of your cryptocurrency. I invited him here to talk about how well the business is doing today. And you know I wouldn’t have him on if it wasn’t doing well today, but also about the vision, how we got here and what the vision is for the future.
This interview is sponsored by two phenomenal companies. The first, if you’re looking to do block change or any . . . Blockchain, not block change. Blockchain or any other technology and you need to hire the right developers, you should go to Toptal. And the second, if you’re trying to promote anything, trying to explain anything, trying to do any kind of marketing automation, you got to check out ActiveCampaign, but I’ll talk about those later. First, Alon, good to have you here.
Alon: Thank you. Great to be here.
Andrew: What is your revenue? Let’s talk about that.
Alon: Our revenue is growing. I won’t say any specific numbers, but I could say that we started our enterprise offering is just . . . We started at the beginning of this year, so 2019. We already have around 100 companies using the platform, and we are expecting to finish the year with probably around 130, 140. And so we’re doing very well in terms of getting clients on board, and we getting really, really big names from the industry kind of the top tier companies from the industry, which is great.
Andrew: Can we say over 1 million or under 1 million yet?
Alon: I’ll rather not say.
Andrew: You’re not even going to say that. All right. I’ve got the number here in front of me, but I guess you told our producer in private so I’m going to keep it to myself. It’s doing well. And it’s a subscription-based business, right? Yes, there’s a free model, but ultimately, if anyone has anything substantial they’re going to switch up to the $100 a month minimum plan, and it goes all the way up from there.
Andrew: Why did anybody need this?
Alon: Well, as it turns out that moving from or even managing crypto asset is very different than managing traditional assets both in terms of the actual tools you have and just standardizing the data. And crypto is one of the key aspects of it is what we call fluidity of accounts. It’s basically your ability to create wallets endlessly with zero costs which really kind of creates an issue for anyone who wants to track those assets and manage them because you can have hundreds of wallets on different blockchains, on different exchanges, and you somehow need to consolidate all of the data, organize it. There’s a lot of data types. Those types are getting more and more advanced all the time, new types are created and so on and so forth.
Andrew: Let me ask an ABC question, just really fundamental basics. Why do we need so many wallets when we’re buying cryptocurrency?
Alon: So, and funny enough you should ask. First of all, it’s one of the properties of crypto or blockchains in general. Creating a wallet is very, very cheap. Second, you have blockchains like Bitcoin where the actual wallet underneath it has a ton of different addresses. This is the way most wallets work specifically in Bitcoin and Bitcoin-like blockchains. And so kind of out of the gate, you’ll have a lot of addresses.
Funny enough you asked because a lot of the tax optimization, and gain and loss optimizations that companies can do is actually separating their different assets in the moment they bought them. And so kind of the way we see things going is that they will actually have more and more addresses just because they want to save under tax and optimize it just because of the way you calculate gain and loss and eventually pay taxes on them, but also the way you can actually optimize from a technology level itself.
Andrew: Wait. Because, I guess, in the U.S. if I hold on to a cryptocurrency for a year, then it’s taxed as its capital gains? Is that what the difference is?
Alon: So, yeah. I mean, so you have basically two levels here. One is how do you calculate those gains or losses? Obviously, you pay tax on your gains or if you have losses then no. And also then the rate of the tax depends on how long you are actually holding the rest. The thing is that most common method of calculating taxes or gains and losses are FIFO, so first in first out. The thing is that if it costs you zero to actually create different wallets, you can actually separate those assets into different wallets and then decide which asset you want to sell and when, thus kind of optimizing your gains and losses. And so the way we see that that actually companies will want to have more addresses and more wallet just optimizing the gain or loss.
And I will just make a note that the reason why everything is so . . . Both of the things are so important is because every transaction crypto which exchanges an asset to or from it, is taxable event. It’s not like currency where you can buy something or in a supermarket and there’s no tax on the differences and when you’ve got that currency and when you spent it. In crypto there is and so it becomes a big thing.
Andrew: Do you find that as Bitcoin price goes up and down, as Facebook decides they’re going to launch a cryptocurrency and then people become disillusioned? Do you find that as prices of cryptocurrencies go up and down that your business fluctuates, or is your revenue disconnected from that at this point?
Alon: So one of the neat things we’ve noticed is that because we launched our enterprise offering just the beginning of this year. It was, if you remember, the height of the recession in the crypto space. And so we did very well despite the recession, despite bad times in the market. But yeah, generally speaking, most blockchain businesses are very much influenced by the price and the market. If there’s price goes up, usually there are more companies trying out new things, they’re willing to spend more until the cycle goes on and on. And so generally speaking, yeah.
Andrew: You told our producer, “I’ve been in the block space for a while.” I looked at your LinkedIn profile, I don’t see . . . Well, I guess, because I kind of do see it. When did you get excited about cryptocurrency? When did you get into it?
Alon: So, actually, I got into it in 2012, 2013. At the beginning simply just kind of going into the . . . And reading everything I can about the technology, contributing some code to the different projects, like a little bit of code to Bitcoin to Ethereum. And then towards kind of the past four years I actually did professionally blockchain if you can say that in terms of working in blockchain companies and working on public projects, obviously, like Blox.
Andrew: I guess when I was looking back to see what were you doing before, it looks like 2012 you were doing home automation, right? Casalinga?
Alon: Yeah. Just after that it was actually a project with my dad. So just after that, we . . . Kind of making a long story short. I’ve studied economics in Rome in Italy from all places. And so I came back to Israel for, I think it was around seven or eight months to do that project with my dad. And then I came back to Rome kind of to finish my studies, and then I got excited about blockchain. I started to work in a local startup. And we were in an accelerator. And it was a guy that never stopped talking about Bitcoin all the time, every time. At first we just laughed and all of his conversation was always about Bitcoin. But eventually kind of got through and I started looking it out and kind of fell in love.
Andrew: What made you fall in love with it?
Alon: Well, actually . . . So, before I actually started looking at the technology, what happened was . . . And I tried to move a bit of money from my Israeli bank account to my Italian bank account because I lived in Italy. And that was . . . I don’t remember. I think it was 2012, maybe beginning of 2012. And what happened was, I went to the actual bank, right? It was 2012, I actually went physically to a bank and started asking how much it will cost. And the teller there told me, “Look, there’s a fixed cost, and then a variable cost and we have no idea how many banks and the way the money will go through, so we don’t know . . . I don’t know how to tell you kind of the, [calculate 00:09:22] you the final fee you’re going to pay.”
And I was shocked. Like, it’s not like somebody comes through the bank, actually, with bags of money and flies to Rome, right? Everything is digital and they couldn’t tell me. And so that was kind of a point where I said, “You know, I have no idea what Bitcoin is, but there’s no way we’re so in 2012 teller can’t even tell me how much money I’m going to pay moving money between two Western banks that have relations with one another. And so I started to dig in and fell in love with the technology, fell in love in how elegant the solution it is and kind of we started.
Andrew: I noticed that just before you founded Blox, you were working at a company called PayKey. If I understand it right . . . You smiled as I said that. Well, tell me about PayKey. What put a smile on your face as I said it?
Alon: Nothing. Nothing. I just . . .
Andrew: It was just that I was bringing back a company that you were part of. From what I saw, what PayKey was doing was they were saying, “Hey, look. The one thing that is consistent throughout all the apps that we use to communicate with people is the keyboard.” Like, even on an iPhone, you can change the keyboard. And so what PayKey decided to do was create a standard keyboard that you can type on your screen with, but it had a button to send money. So, if I was in Skype, I could send money in Skype, but if I was in Facebook Messenger, I could do it in Facebook Messenger. And it was marketed towards banks to enable them to let their users send money. Right?
Alon: Right. Actually, PayKey started in a different name called GetGems and it was a blockchain project at the beginning, at least. I can’t . . .
Andrew: When you were with it was it blockchain?
Alon: Yeah. I think they changed . . . I think the company was founded in 2014 and I think they changed to PayKey maybe in beginning 2016. I’m not entirely sure about the dates. But I worked like about a year before at GetGems which was . . . It’s PayKey, just in a different name. And we worked on a blockchain project . . .
Andrew: What was the blockchain project there?
Alon: So it was, actually, very similar. It was taking the Telegram source code, Telegram . . . I don’t know if now it’s kind of open source. Yeah. So it was or maybe still an open-source project. So we basically took the telegram code for iOS and Android, give it different colors and add this functionality to actually have a wallet, Bitcoin, I think just a Bitcoin wallet. And maybe also Ethereum wallet. I’m not sure. Built into as a native experience, and so you could basically, send Bitcoins to your friends using the Telegram chat.
Andrew: Got it. All right. And then you went to hackathon and you won. What did you win with? That changed everything. That’s what got you started with Blox?
Alon: Exactly. So I think . . . Yeah. So what happened was, I had that idea of, you know, I knew there was a problem for people to check their assets because I had Bitcoin and a bit of Ethereum back then. And I knew it’s an issue. I knew that it was just a pain. So I thought, “Maybe we can do something automated because at the end of the day, the data is there, you just need to wrap it up in a beautiful user experience.” And so what we did was we set out to create a prototype for a hackathon. Back then the hackathon had a pretty big prize, I think it was a $50,000 paid Ethereum. And so I said, “Well, there’s no way to better kind of test your idea to actually build something and let people vote on it.” And so that’s what we did and we won. And that was basically the first step in creating Blox.
Andrew: And so then you quit your job to go pursue it.
Alon: Yeah. I don’t remember if it was before the hackathon or after it, but, yeah, during that time.
Andrew: The thing that I’m wondering is the first version of the site wasn’t even about keeping track of different wallets. Right? So, what did you build in the hackathon that won?
Alon: No, no. So the version or the prototype for the hackathon was a really, really, really kind of simple user experience for taking your Ethereum address. And I think it was maybe a Poloniex exchange account, integrating them into the platform and showing all of the assets and transactions in it. That was basically it. It didn’t really work well because, obviously, it was a prototype. It didn’t look great. But that was kind of the core functionality for the hackathon. That’s what we built.
Andrew: And then the first version of your product did what?
Alon: So the first version . . . So, after the hackathon, we took what we built with in the hackathon and worked a lot to basically change everything. And we built it. Kind of the . . . I’ll say the beta version was web-only version. And then once we got that working, we decided that we need to kind of move to mobile because otherwise, people were . . . It’s going to be hard for them to use it. And so basically, the first version, the first real version, public version included iOS, Android, and a web app that all talked with one another so it’s a kind of single sign-on you can see all of your transactions everywhere and so on. That was the first version.
Andrew: And see all your transactions. I’m looking at the first version of the website. It was called coindash.io, right?
Alon: Yeah. Yeah, exactly.
Andrew: Or CoinDash is the name of the company. The website is coindash.io. It seems like what it’s allowing me to do is track my portfolio so that I can make better investments, and then also follow top investors so that I can get guidance on how to trade better, right?
Alon: Yeah. So what we thought was, we thought, okay, we can solve the issue of actually tracking the assets, but then all of a sudden, you have a ton of users or hopefully a ton of users who have a lot of data aggregated in the system, and so what we thought was, we can create statistics and analytics and tools so you can see movements in the market. So, for example, a shift between people holding 90% of their assets in Bitcoin towards maybe holding 80%. Right? It’s a big shift. And so creating those indicators, creating those statistical analysis tools, so to help people understand better what’s happening.
And actually we did that. We build that both in the mobile and the web. And we learned two things along the way. First of all, in a very, very volatile market like crypto, those indicators don’t have the impact we thought they would. So, they don’t really create value in terms of new insights for the user. And the second thing was, we learned that we should have really focused just on the tracking or mostly on the tracking because there were two other companies who basically did similar things and they had great success because they focused solely on the tracking answer.
Andrew: Just solely on tracking what people’s individual portfolios were doing?
Alon: Exactly, exactly.
Andrew: Okay. So there were already two people doing that. Why not the other part where you get to see what professionals are trading? Why wasn’t that valuable?
Alon: Whenever . . . So there’s a lot of things around it. So, first of all, regulation kicked in, but other than that, we didn’t see even the kind of the simpler indicators and insights really worked. And so building something even more advanced when the basic stuff doesn’t even make sense, just seems wrong. And so we’re on the path to build it. We just saw that the inefficiency of actually having those insights, it wouldn’t really . . .
Andrew: Got it. It wasn’t really useful.
Alon: Yeah, exactly.
Andrew: Got it. So there’s somebody doing the one part of your . . . Two people doing the one part of your business really well because they’re focused on it, and then the other part of your business is actually not nearly as useful as you thought it would be . . .
Andrew: . . . and you didn’t see it becoming valuable anytime soon, and so you decided to pivot. What was the pivot towards?
Alon: I don’t think we actually pivoted too much. I think that from the beginning tracking was the big thing because even if you want to create insights on top of the data, you still need the tracking really good, to have the tracking really well. And so I didn’t think . . . I don’t think we’ve kind of shifted towards a place where we didn’t feel comfortable before. We just really focused the offering. So we took everything we did and really narrowed it down to the things that really worked well. And so, yeah, I think we . . .
Andrew: But it went from being a social network to being a personal service, personal software, right?
Alon: Yeah. Yeah, you could look at it . . . I don’t think it was ever a full-blown social network. It was a tracking app with a ton of social features on top of it. That’s definitely the case. But it wasn’t I think kind of social network as we think of social network. It was definitely something we want to do, but we just didn’t saw the value. There is actually a thing of company which does that exactly, so it’s kind of a full-blown social network where you can integrate your wallets. I don’t know how well they’re succeeding, but yeah. So, we kind of decided, I think, towards the end of 2018 to really just focus on the tracking aspects because we saw there’s a big demand there.
Andrew: Got it. All right. Let me talk about my first sponsor and then we’re going to go back into the story. You’re now in San Francisco even though the company is based in Tel Aviv, right?
Andrew: So I don’t know if you noticed it, but on Market Street, there is an ad for Tatango. And I remember seeing this guy who founded Tatango, Derek Johnson, is like this guy was hustling, working hard. He came on and did a course for us at Mixergy. And at one point when things were starting to really grow with his company . . . What they do is they do text-based marketing software. When things were starting to grow, he needed to hire more developers, and so Derek decided to go online and use all the sites that made sense, and then he started getting a bunch of applicants and he had to go through the applicants, and then that took forever. And the quality is not necessarily good. How do you figure out who’s good, who’s not? How do you go through it fast enough? That makes sense.
He finally said, “This guy Andrew has been talking about a company called Toptal forever. Why don’t I just go try them?” So he went to toptal.com/mixergy, he hit that big button, he was scheduled for a call with a matcher and along the way works at Toptal is, you get on a call with a human being at Toptal who understands the quirky way your company works, what you’re trying to do, what technology it uses, and then they go and find someone who’s done that for another company in a different application.
And so they did that for him, and instead of giving him dozens of resumes, dozens of applicants which always feels impressive, they just, from what I remember, gave him two. Two. And so his CTO talked to both people. His CTO said, “Look, we can hire either one of them. We have to make a decision. Let’s pick one.” They picked one and they went with that person. A little while later, the CTO said, “You know, Derek, this guy is actually so good. He could be the CTO. He could take over my job. He’s that good.”
And that’s a level of quality that you get from Toptal, people who’ve done it before, who fit in with your culture, who are so good that they will blow your mind. We’re not talking about the cheap developers. We’re talking about the mind-blowingly good developers who love to work on big problems. So Derek in Tatango kept hiring from them and the company kept growing.
If you, Alon, need to hire developers, if you, the person who is listening, you need to hire developers, if you know someone who does, I really urge you to go send them not just to toptal.com, but to toptal.com/mixergy. When you go there, you’ll get 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period of up to two weeks. If at the end of the period, you’re not 100% satisfied, you will not be billed. That’s top as in top of your head, tal as in talent, toptal.com/mixergy, toptal.com/mixergy. I do feel like we need like a jingle almost, T-O-P-T-A-L, then people will remember. How did you get your co-founder? We didn’t even talk about him.
Alon: Well, my co-founder I’ve known him since I was at first grade or second grade. We grew up together in kind of a small place. We went our separate ways around 22, 23. And he actually went to China for 10 years, studied there, got married there, had a child there. And so I don’t remember when but I just flew there and I said, “Well, I’ll try to convince him to join in.” So I flew to Shanghai, spend a week with him. And lucky enough during that week Ethereum skyrocketed. And so it kind of helped . . . It helped in convincing him. But, yeah. I mean, we’ve known each other for, my guess is at least 15 years, probably, even more, probably.
Andrew: What were you like and what was he like? You said you grew up in a small place? Where was it?
Alon: Just a small place in Israel.
Andrew: What’s the city?
Alon: No. It’s not even city. It’s like 5,000 people.
Andrew: Oh, really? Okay.
Alon: Next to a city. Yeah.
Andrew: So what was . . . What were you two like growing up? What were you into?
Alon: We actually were really, really good friends. We are neighbors also. Our smaller brothers are friends as well. And so, yeah. I mean, we were just regular teenagers.
Andrew: I heard you were into computers a lot growing up. I read about that.
Alon: I was.
Andrew: You were.
Alon: I was. I was.
Andrew: What were you doing with computers growing up?
Alon: So just basic programming from as far as I can remember. I always liked it. I always kind of had a sense to it. Yeah. I mean, I just developed simple games when I was 13 years old, 12 years old, I remember. And so yeah, it was something that kind of I did all my life.
Andrew: Do you remember one game that you’re especially proud of looking back?
Alon: I won’t say I was proud of it. [inaudible 00:23:21].
Andrew: What was it?
Alon: I think it was . . . I don’t know how it’s called in English, but that thing where you have that kind of a line going on the screen and a bullet needs to hit stuff and you want to blow those things up.
Andrew: I forget what that’s called, but I know what you mean. Yeah. It’s an old video game. Yeah. You did that?
Alon: Yeah. Really, really old.
Andrew: Breakout. Breakout is what it was called.
Alon: Right. Exactly. Exactly. Exactly.
Andrew: So you did that?
Alon: Yeah. So a poor version of that, yeah.
Andrew: Were you doing it with the idea that you would sell it one day?
Alon: No, not really. I didn’t know anything about it. I only got into startups probably at the age of 21, 22.
Andrew: Got it. Wow. I would have thought that you’d want to do something like this. All right. So, why him? Why did you find him . . . Why did you say, “I’ve got to convince this guy to work with me”?
Alon: We were talking about blockchain for, I guess, three years prior. And I don’t know. It just felt right. It just felt like a good co-founder to have. So, yeah, we went for it.
Andrew: There was no . . . Were there skills that he had that you needed?
Alon: Yeah. I mean, first of all, he was a great salesman and he was in China for . . . As I reckon to remember. And China obviously, is a big part of the industry. Mostly, I just looked for somebody who has different qualities than I have and somebody I can trust, somebody that I know and just feel comfortable with, and so yeah.
Andrew: Hey, there’s an old Bloomberg article that says that you guys had $7 million stolen . . .
Andrew: . . . when you were at CoinDash. What happened?
Alon: So, back in . . . We did an ICO back in 2017. Back then was really, really chaotic. And people think backwards about just from experience how to do things and so on. There was no guidelines, there was nothing. I mean, it was really at [Bloomberg 00:25:19]. And so what happened was because ICOs became so big, they also become great targets. And so we got targeted. As far as we know, it’s an organization, it’s not a single person in the wake of the day the attack happened, and so on. Both the police and private investigators told us. But we did manage to get back a lot of the money back with pressure from the police and private investigators. So I think that was . . .
Andrew: How do they pressure them to give back the money?
Alon: They didn’t say. At least the police officers didn’t tell me, but it happened in two separate events. And every time I’ve talked with him about it and he said, “Yeah, when we’re doing things behind the background, I can’t elaborate, but that’s what we do.” And so I was happy because I got some of the Ethereum back.
Andrew: How much back?
Alon: I think it was 70%, 75% of what was stolen. I’m not tagging it to the actual dollar value because it was maybe fluctuating at that time, but in terms of the amount of Ether, it was around 70%, 75% back.
Andrew: Wow. So you guys had your initial coin offering. From what I read, you raised $7.53 million. And then at some point, you said, “Stop sending us money because of this issue.” Right? You shut down the website and you started investigating.
Alon: Yeah. It all happened in literally minutes.
Alon: I think it was around five minutes. But, yeah. I mean, what happened was when we realized we were attacked, we basically asked everyone to stop sending it, sending the Ethers through a smart contract. And, yeah. I mean, it was really fast, like, literally five minutes.
Andrew: Wow. And that shut you down. Were you able to still keep the money after that?
Alon: Yeah. So we work . . . One of the side effects of being hacked was that your sense of, “I want to get things right,” is much greater than otherwise. And so we worked a lot to make sure that, first of all, everyone who bought the tokens is happy and compensated, obviously. The people who sent the Ether to the hacker got their assets as if they send it to the CoinDash to the company. We worked really hard on the product. We worked really hard on communicating everything transparently, so every step of the way, what we’re thinking, what we’re doing and so on and so forth. And I think that it took us about two months, but I think that we gained trust back. And we managed to tell kind of the community, “Look, I mean, it happened, but we’re looking forward and not backwards. We’re trying to make things right. We still have a great product we want to develop. We still have a great community.” It’s one of those kind of pivotal moments where it’s kind of make or break. Luckily for us it was make more than break.
Andrew: How did you go through it? Let’s talk personally. I don’t want to pretend that everything was easy for you. What were you going through?
Alon: I actually have no recollection of anything that happened during those three months, believe it or not.
Andrew: Really? Because?
Alon: Well, that’s contrary to say, but I . . .
Andrew: You think you just blacked it out because it was so difficult for you?
Alon: No, I didn’t black it out. I do remember stuff, but I don’t remember as vividly or as in details as you would have remembered, let’s say, three months or . . .
Andrew: But you didn’t feel like . . . Did you feel anything that you remember, like, “My life is over. My reputation is over. My company . . . ”
Alon: No, no, no. It wasn’t.
Alon: No, no. There was a lot of obviously, not in terms of existential threat of my life. But obviously, everything we’ve done prior was at risk. It could have very easily ended up what we’re trying to build. And so there’s a lot of pressure on making sure that we are doing things right now in order to make sure that we are here to continue building products and continue to . . .
Andrew: But no moment of self-doubt, no moment of fear.
Alon: Oh, of course.
Andrew: You did? Talk about that. I want to understand what that was like for you. What do you like . . .
Alon: But I guess self-doubt is something that entrepreneurs probably feel every day, every single day. I don’t know what . . . It was kind of a . . . It was just a moment in time where everything was tuned up, it’s like a reflex, everything was tuned up to do a certain thing. And a lot of those things happen just with inertia of things. Again, it’s why I’m saying it’s kind of make it or break it moment because if you get pressured and make the right decisions, then it’s a make it moment, but if . . .
Andrew: You kept saying that to yourself even at the time, you think? You said, “Look . . . ”
Alon: No. I’m now turning in myself.
Andrew: But in retrospect, it was you do feel like your body instinctively said, “If you don’t fight this alone, you are going to break. So there’s no other choice. We got to do it.”
Alon: Yeah, I think so.
Andrew: That’s what it was.
Alon: Yeah. You need to be strong, first of all, for your team, right? I mean, it’s not like just you getting the heat. Everyone who got involved in project is feeling the heat. And so you need to be strong for your company, for the team, obviously, for the community. And you just need to push forward. There’s only one way to go from there or at least for me, it was.
Andrew: Got it. All right. And then you guys hired a private forensic team, but then also Israel’s Counter Cyber Crimes Unit stepped in to help you guys out.
Alon: Yeah. So the police, obviously, because we filed an official complaint and started all the kind of official investigation. And a private forensics investigation was kind of in parallel just to understand from an additional kind of party what happened trying to go backwards and so on and so forth.
Andrew: Wow, I would feel at the moment like, “This is the end of me,” until I could get my bearings and say, “No, I’ve got to fight. There’s nothing else I could do.” And . . .
Alon: Look, I mean, we could have just as easily used it as an excuse to not do anything. Hacking was pretty prevalent back in 2017 just because of how things exploded in the industry. I think what it really did for us at least was to really calibrate us to put in focus the important things because . . . And you need to keep in mind that 2017 was a crazy time in the crypto space. Everything . . . It was, like, everything is kind of an open bar and you can do everything, and in a lot of cases, people did a lot of things and kind of failed just because of that, they didn’t focus, they didn’t build the right stuff. And so for us it was . . . Because of what happened, it just made us more focused. We didn’t do anything that kind of had direct implications on the product. And so, for us, it was a very focusing moment.
Andrew: Okay. And so from what I’m seeing here on Crunchbase, your funding for the whole business came from two places. One, you sold a convertible note to Coinsilium Group. And then another was you did the initial coin offering?
Alon: Yeah. So, it’s not just Coinsilium. We have other investors. So we basically did a seed round where we raised money . . .
Andrew: How much?
Alon: I think it was just under 1 million bucks.
Alon: And so our biggest investors other than Coinsilium is also eToro, for example, which is . . .
Andrew: It’s what?
Andrew: Oh, eToro, one of your clients also.
Alon: Yeah. One of our clients, one of our investors, our biggest investor in terms of shares. And so we did that seed round. Also did the ICO as we said. And basically, from that time, I think it was two years ago, we are financing the operation from those two kind of sources. Yeah.
Andrew: Okay. So, when you started to pivot, was the vision to be the QuickBooks of crypto, or is that just a description that I happen to read when I was looking you up?
Alon: Yeah. I think the kind of the more accurate kind of description we would say is that we really put ourselves as a management platform for assets because at the end of the day, it’s not just accounting or reporting. At the end of the day, those professionals need a piece of software that does three things or several things really well. So tracking, reporting, their ability to go through audits, their ability to present data for their CPAs to calculate gains and losses, their ability to accurately export their data into QuickBooks or any under accounting software, and so on. So, they need kind of a multi-tool that connects them with different things that happened and kind of the day-to-day operations.
Andrew: Okay. Did you do any customer development calls before or during the switch? Were you calling up potential customers and understanding them?
Alon: Funny enough, no. But we did know that a lot of companies that had that issue. First of all, we had that issue as a crypto company. But we knew that from just knowing other people from the industry, they had the same issue as well. We kind of threw ourselves in the water and just started and it just kind of picked up from there.
Andrew: And so you . . . And you knew the problem for yourself. How was it different from what you discovered after you launched?
Alon: I think that, first of all, there’s a lot of edge cases. Every company is different, every company has that specific thing they want and really, really doesn’t work in it anywhere else. And so you find yourself kind of struggling between, “How do I build a product that I can get as many clients as I want but still getting it focused, but not developed, not becoming a software?” Just customizing everything to the death.
And so that is kind of our battle and deciding exactly what we want to do. And so for example, we track all of the requests our clients give us. And so once a certain thing kind of hits a few clients, then we know it’s something that might be interesting to go and put into development. And so that cycle really becomes kind of part of a feedback clients give us. A lot of our time is spent on fixing issues just because of the complexity of the blockchain space, there’s so many edge cases, there’s so many use cases, and you find . . .
Andrew: When it’s a lot of . . . Because you’re keeping track of people’s money with different wallets, you’re saying that the wallets change and their issues and you’ve got to pull the data out and that’s one of the big challenges for you.
Alon: Yeah, exactly. So just imagine on Ethereum we probably have tens of thousands of assets and every asset has its own kind of peculiarities and so on. And so it becomes, again, a kind of a race towards making sure that . . . Because at the end, when people pay for something, they’re expecting to work flawlessly, and so kind of their requirements are high. And so we want to make sure that we are portrayed as a really stable and enterprise-grade product. And so for that, you need to put a lot of efforts to making sure that all of those things happen seamlessly for the user.
Andrew: You know what? It just occurred to me. When I interviewed Charlie Lee, the founder of Litecoin, I started looking at his past seeing these different bulletin board messages that he had. And one of the ones that got a lot of attention was when he said, “I created this spreadsheet to keep track of all of my cryptocurrency. Does anyone want a copy of it?” And people just were saying, “Yes, yes.” It was a huge hit.
Alon: Yeah, yeah. I feel his pain. Definitely. I mean, it’s something . . . It’s crazy. I mean, we’ve stumbled across companies who are managing tens of millions and hundreds of millions on spreadsheets. And everything is done manually. The error percentage is so high and it’s so susceptible for errors that when you’re managing so much assets and so much money, if you have a 5% chance or a 5% error rate, that’s a go-to jail card. It’s not like a pat on the back, fix your things for next year. That’s a real problem.
And that’s what I kind of refer at the beginning of our conversation. What we do, we consider as a fundamental building block because you cannot create a $5 trillion industry where everyone is tracking grass, it’s on Excel sheets. The regular won’t accept it, the compliance officers won’t accept it. And so you have to have those things in place so to make it very efficient and very bulletproof for companies to manage those assets because at the end of the day, if they’re not reporting those assets correctly, they don’t report it even outside, but even internally for the board of directors, for their C level executives. If they don’t know how to calculate their gains and losses correctly in order to pay their taxes and so on, those are very dangerous things. We need to get straight in order to have a trillion-dollar industry.
Andrew: And that’s one of the things that you told me before we started that you really want. You want to help encourage growth of cryptocurrency and the only way it’s going to grow is if people can keep track of their currency properly. There’s no . . .
Alon: I think it’s a fundamental requirement, definitely.
Andrew: Okay. Let me take a moment to talk about my second sponsor. I’m actually going through your site to see like what email software you use. Do you use any email software. I see that you guys are hosted by WP Engine, you’re on WordPress. Do you?
Alon: I’ll have to ask our marketing director.
Andrew: I don’t think you do. You’ve got to go tell them to do this. All right. I’m going to make a pitch for you. I see you use Vimeo. I’m going to make a pitch for you to use ActiveCampaign if I’m wrong to switch to ActiveCampaign. Here’s why. So, you guys appeal to lots of different groups of people, right? So, if I scroll to the bottom of your site, I can see that you guys have the product is for businesses, it’s also for accountants and bookkeepers, it’s also for executives, it’s also for crypto miners. These are four different groups of people. Yes, they need the same product, yes, they have similar interests and needs, but they’re four different groups of people.
Now imagine if I’m on your site and what I do is I clicked on executives, and then I click away, and then I click on the for businesses. And then I spent a lot of time reading the articles and reading the information about the stuff that you have for businesses. And then at some point, I sign up to the bottom of your site where it says, “Ready to get started?” At that point, you should know without having me feel in a form saying, “I’m looking to do this for a business,” you should know because of what I’ve clicked on, because of which videos I’ve seen on your site, “Andrew wants to do this for his business.” Apparently he’s not a miner. Apparently he’s not a looky-loo individual. We want to target him based on that, and you don’t need to ask me. Just because of the pages I’ve been on your site, you can automatically tag me and automatically start sending me messages that speak to my needs so that I know Blox is for me.
Now, if I’m a miner, you wouldn’t want to talk to me like I was running a business, like I was an executive. You’d want to talk to me like I was a miner. And the only way to do that is to watch what people are doing on your site, watch what they’re clicking on, and even at times ask them, but don’t wait for them to tell you before you start to tag them based on their interest and based on what they’ve done on your site. That is the ActiveCampaign difference.
Alon, with ActiveCampaign, even though you’re not into what marketing automation software you use, you will still be able to use it. Like, if you decided, “Hey, you know what? I got to figure this out for myself,” it’s going to be so straightforward. You’ll actually use it. It’s so straightforward that people on your team will actually do all the stuff that I’m talking about. And if you decide, “Hey, you know what? We’re not just old technology of email. We want to do SMS, we want to do these other messages, chatbots, etc.” They will work with that too. I’m going to give you a deal. Do you like deals?
Andrew: You do. Good. Here it is. If you go to activecampaign.com/mixergy or if your marketing person goes there, they will get to use this software, try it out, see if it’s for you for free. And then if they decide to sign up, second month free. And of course, because we all need some help when we’re moving things over, we want to make sure that we’re actually using every feature, they’re going to give you two free one-on-one sessions.
And finally, if for some reason I missed it and you guys are with some other software and you want to migrate, they will migrate you for free. That’s activecampaign.com/mixergy, activecampaign.com/mixergy. Oh, I do see the software. You do have software. This blows your software out of the water. They will migrate you for free from your software. Just put it side to side with this you’re going to see it’s way, way better. I see what you guys are using.
Okay. All right. Yeah, you guys are using Amazon Simple Email Service and GetResponse together. My sense is Amazon SES is probably for the software and then GetResponse for when people are getting ready to get started with you. This is going to give you way more features, way more ways of being interactive with your people based on what they’ve done. All right. I got to shut up. Seriously, you’ll thank me. They’ll migrate you for free, ActiveCampaign.
Alon: I’ll connect the marketing director. I’m sure he’ll love it.
Andrew: Cool. Good. I guarantee they’ll love it. Let’s talk about how you’re getting people. So one of the things that I did with you was I was saying, like, “Where does he get his freaking traffic? Is he now . . . ” Because you guys reached out to us, I thought maybe you’re like on some kind of get links campaign or something. I went to Ahrefs, our partner for research, I typed in blox.io. You’re hardly getting any articles. The only thing that I see being linked over to you is like articles about bad stuff happening in cryptocurrency then they link to you. What’s going on here?
Alon: I don’t remember. Maybe you’ve searched for CoinDash not Blox. I don’t know. But we have a bunch of articles. If you go to our website, there’s a . . .
Andrew: On your site, but not other people writing about you and linking over. That’s the part.
Alon: I’m sure there’s a bunch of . . .
Andrew: There is?
Alon: Yeah, yeah. There was a huge campaign now. We did a huge research and report on with I think like 30 accountants from the U.S., the biggest firms doing accounting for crypto.
Alon: We featured all of them in one report and then it really hit a lot of different publications from Forbes all the way to Accounting Today and so on and so forth. So, yeah. There’s a lot of things.
Andrew: What was in that report?
Alon: So we basically tried to map all the different challenges that accountants or CFO of crypto companies face. Obviously, one of the biggest things are actually tracking those assets accurately and so on and so forth. And so what we really want to do is just get their take on how they . . . Because they’re the boots on the ground, how do they see that? What’s their challenges, and so on? And then we summed it up into various statistics to show you how many of them are facing that issue and so and so forth.
Andrew: Oh, I see what you did. You went out to them and you said, “Look, what are the problems that you’re seeing your clients have with cryptocurrency?” And then you put that into report. Am I right?
Alon: Exactly. I think it’s like a 30, 40-page report, very detailed, different subjects and so on because . . .
Andrew: I see it here.
Alon: . . . we read their kind of content or their responses and then we just simply bundle it up together.
Andrew: Only 5% of U.S. CPAs believe crypto . . . believe the clients are . . . Oh. Well, there’s a percentage that believe that clients are not disclosing all of their digital assets to the tax authorities. Right? So these are CPAs saying, “Our clients don’t have enough of a handle on this that they’re not reporting this properly.”
Andrew: Another one saying that they need the institutional . . . “Companies need better guidance on the legal and tax ramifications.” So, basically, you went to them and said, “Look, tell us all your problems,” and you started to organize the problems in this report. And this is going to freak people out and the only solution is to start paying attention to the cryptocurrency that they have. Am I right?
Alon: Exactly. We gave them stage to say exactly what’s on their mind because at the end of the day crypto is our assets and the financial implications are there and everyone knows them. And so I think really the CPAs, the CFOs, the bookkeepers are a lot of the unsung heroes of the crypto space because all of that is going through them at the end of the day. And so . . .
Andrew: Got it.
Alon: . . . we wanted to give them stage and give them the opportunity to speak about it.
Andrew: And then the way that people were . . . People were finding out about this, then they were signing up to your email list, and then they were hopefully joining and becoming your customers, right?
Alon: Of course, yeah.
Andrew: What else were you doing to get customers?
Alon: So we have a very active sales team right here in the Bay Area in San Francisco, actually. Not too far from you guys. And because we are very well connected to the industry, we are on the phone all the time calling out those companies. A lot of them are still using Excel sheets, so there’s some education involved, letting them know there’s other opportunities there in terms of using good software to solve their issues. But we are seeing more and more of them are understanding that there are solutions out there, and so we want to make sure that we are the first phone call they get in order to try out the system, and then starting an onboarding process. We do have kind of inbound leads coming in and people are calling us and leaving us messages on the website saying, “Look, we’re trying to . . . We want to set up a demo account. Let’s see how it works. We want to implement it into our day-to-day operation.” And so . . .
Andrew: And so your process is, if somebody fills out that form saying that they want to start out, you have a salesperson call them up soon after that?
Alon: Yeah. Within 24 hours you’ll get an email saying, “Let’s set up a call. Let’s talk,” and so on. Yeah. We were trying to get the right customers. We’re trying to explain to them what they’re getting because, again, it’s a new product, they didn’t use something like that before.
Andrew: And then do you guys also do any outbound calls it sounds like where you’re finding people?
Andrew: What’s that process?
Alon: Outbound, inbound. So, again, we’re very well connected to the industry. So what happens was, you get a client and then all of a sudden that client refers you to five other clients, potential clients. And so you’ll start to get kind of map out all of different connections and then just trying to get a phone call with a company first and then obviously the person in charge or the relevant person, and so on.
Andrew: I’m going through the signup process now just to get a sense of what it looks like. I don’t see where you guys have asked me for my phone number here, but you definitely did . . . You got my email address, and you confirm the email address.
Andrew: And then how does the phone call come in? At what point?
Alon: So you’ll probably . . . If you left your details, you’ll probably get an email from one of our representative saying, “Hey, you left your message on the website. Do you want to schedule a phone call for a demo?” and so on.
Andrew: Got it. And then what about . . . It seems like you’re also going to events. Am I right about that?
Alon: Yeah, definitely. A good place to meet the clients and people we couldn’t reach online is definitely the events. So we go to the big events. Some of them we have booths and so on. And yet, in any of them you can just come to us, get a demo, talk about the product, and see how we can help you.
Andrew: Got it. And then you guys are converting that way. What’s the enterprise product?
Alon: So we have a free tier. It’s the same product but has different features or limitations depending on the different tiers you have. And so the business enterprise and custom tiers are all the non-free tiers. You can start from basically 100 bucks a month. One of the first things we did was really cut down costs or prices against our competitors because we felt it’s a good way to break the ice and get into the company or start onboarding the clients. And so we can start literally from 100 bucks a month. And then depends on your use cases and how much you use it, basically, the monthly price goes up.
Andrew: I’m still trying to . . . I’m still looking to see where else you guys are getting traffic. I still see that the most powerful article . . . the most powerful links to you are more about problem areas with crypto. And I guess now you guys are starting to turn the corner on that.
Alon: Yeah, definitely.
Andrew: And then direct . . . Let’s see. Direct . . . I’m looking now at SimilarWeb to get a sense of where traffic is. Yeah, I guess it’s SEO is not big for you guys yet. Right?
Alon: No. We are actually starting to work on SEO, but yeah, currently the search for our search depth in terms of those solutions are still small, and so most of it is still door to door.
Andrew: All right. What’s the future for you? What are you looking to do?
Alon: We will really want to hit 1,000 companies, 1,000 clients by the end of 2020. I think that will set us up really good in terms of market share, in terms of just the amount of clients we have. We are getting real engagement and [inaudible 00:50:44]
Andrew: Oh, no. I think we just lost . . . Oh, there we go. You’re saying real engagement. When you were saying you want to get 1,000 clients by the end of 2020, it reminded me about an article that I saw on newsbtc.com where in there you said, “We will be the platform to help manage more than 10% of the total crypto market by the end of this year.” And that was last year. Did you hit that? Did you end up managing 10% of the total crypto market?
Alon: I don’t think it was 10% but we are managing I think around $5 billion through Blox today.
Andrew: And then what’s the total market? Eight-hundred?
Alon: No, I think it’s 220 maybe.
Andrew: Two-twenty. Oh, okay. I didn’t realize that. All right. So you’re doing well already. Why won’t you tell us what the total revenue is yet?
Alon: I think it’s pretty confidential, but we’ll be happy to share it in future
Andrew: All right. The website for anyone who wants to go check out its blox.io. They do have a free tier if you want to try out the software. I want to thank the two sponsors who made this interview happen. The first is the place to hire developers, it’s called Toptal. And the second . . . I should say toptal.com/mixergy, right? What kind of a marketer am I? I’m not even giving them the actual URL. And then second, if you want email marketing done right, especially if you guys at Blox are looking to try it out, go to activecampaign.com/mixergy. You’ll be glad you did. Thanks. Thanks, Alon. Thanks, everyone.