Category: Exclusive Interviews

  • From a Thousand Euros to Over 100 Million – An Interview with Damian Merlak Co-Founder of Bitstamp

    From a Thousand Euros to Over 100 Million – An Interview with Damian Merlak Co-Founder of Bitstamp

    Young people often dream about how to get rich quick. But according to 31-year-old Slovenian millionaire Damian Merlak, there is no shortcut, and:

    “Sometimes you also need luck.”

    Merlak is a co-founder of Bitstamp Exchange, Tokens.net (crypto-to-crypto exchange), and Quantum Project. He’s also in the 37th place on the rankings of the most influential Slovenians and the country’s youngest millionaire.

    Seven years ago Damian Merlak bought his first bitcoins, for about two dollars each. He doesn’t have those bitcoins today anymore.

    “Practically nobody who bought bitcoins for a couple of dollars each hasn’t kept them until today. Perhaps only someone who forgot he owns them.”

    With those words, the myth of millionaires who spent a few hundred dollars for the initial purchase of bitcoins was broken down. The first stop on the road to his own fortune was mining bitcoins.

    More than seven years ago, he entered a specialized shop in Kranj, Slovenia and ordered the two newest, most powerful graphics cards, which he wanted to connect with the slowest processor and worst memory card (RAM).

    All the PC specialists were confused: “What are you going to do with such a computer?” asked Nejc Kodrič the owner of the mentioned shop, and was quickly infected by Merlak’s enthusiasm over bitcoins.

    In 2011, they were hanging out and debating about the crypto world which soon turned into business cooperation when they founded the Bitstamp exchange.

    They received $10 million in startup funding to develop their idea. At that time there was Mt. Gox, a Japanese exchange platform, which offered a poor user experience. Getting money to Mt. Gox and getting it out was very difficult, as well as completing orders for sales and purchases.

    The user platform was dull and useful only for technically trained people. According to publicly available data, they calculated that Mt. Gox was earning $10,000 a day from commissions.

    “We calculated that if we’re as bad as they are, we can earn $10,000 a day.”

    In the meantime, many exchange platforms including Mt. Gox did not integrate well and did not succeed, but Bitstamp remains one of the largest crypto exchanges in the world.

    It has its headquarters in Luxembourg and offices in New York, London, and Slovenia, where its center of development also is. More than 100 people are employed at Bitstamp, while Merlak and Kodrič, each of them with more than $100 million dollars of assets land in the group of most rich and influential Slovenians.

    From Crypto Startups to Farms

    Damian Merlak considers himself to be a serial entrepreneur. And in order to pursue all of his business ambitions, he resigned from the executive position in Bitstamp, but he remains a 32% owner and member of the Supervisory Board.

    He got into some of his projects through the issuance of crypto coins (ICOs – initial coin offerings). The Quantum Project based on this idea, which offers trading strategies, collected him $4.12 million.

    With the Tokens.net project, which is a crypto-to-crypto exchange, he raised an amount of $15 million through an ICO. In addition to crypto enterprises, Merlak also focuses on more tangible things: he owns a farm which has 1,100 living animals. He also owns a veterinary clinic and a retail store with textile products, as well as several real estate properties.

    Let’s dive deeper into the man behind Bitstamp and find out how he got to where he is today.

    Can you give us a quick introduction to your background? How did you get where you are today and what does your company do?

    A colleague with whom we worked on projects told me about bitcoin in 2011. When I checked the subject on the Internet, I first said that I was not interested. At that time the price was about two dollars. Two months later, I accidentally caught the price of it between 15 and 20 dollars. This difference aroused the interest in me.

    Then bitcoin fell again and I started buying. I was also interested in technology and the system that runs the background. I started to participate in the forums. First I was only buying bitcoins, then I saw an opportunity in mining them.

    I went to a classmate and ordered graphics cards and everything that was needed to mine bitcoins. The thing started to interest him, but his brother, Nejc Kodrič was blown away too and soon started to explore the topic, and within some time we together formed the idea of Bitstamp.

    At the moment, there is a large assortment of crypto exchanges around the world, and Bitstamp is one of the largest and it is the only licensed company in Luxembourg. On our exchange, not only individuals but also institutional clients can buy and sell crypto coins. A fund or an investment bank can’t operate in an unregulated entity or with a “Monkey Business,” as I call it.

    Bitstamp maintains the strategy of the fiat to crypto exchange and vice versa. We have a large array of new virtual currencies and projects that are funded through ICOs. I think that these supporters need to provide adequate infrastructure, so I decided to establish Tokens.net. The exchange platforms are complementary to the activity and services they offer.

    When did you make your first million? Can you remember the first thing you bought?

    It was in 2013, I was 27 years old. When I earned the first million I bought a car – a Tesla model S. I invested the rest in my business.

    Did your life change when you become a millionaire? How so? Have you gotten many new “friends”?

    Not really, I might have lost some. I do not think the money changed me. I think the information and insight into the system at first hand have changed me. Now I know a lot of things that I didn’t know before, that’s why I respond differently to things that are happening around me.

    Probably your friends, acquaintances, and colleagues ask you how to make quick earnings. What do you answer them?

    I avoid giving financial advice. You don’t gain anything from it, just a problem when the market reverses, and people only really like the green numbers. Do you know how much more a 10% loss hurts compared to the sweetness given to you from a really good 10% profit?

    Would you say that investing in crypto is like gambling?

    Of course, there are risks. I advise people who invest, to learn about the technology itself, what it offers and what its weaknesses are. Many will burn, many have already. I also suggest that people invest in the largest, credible coins and don’t seek quick benefits in various schemes that someone sells door-to-door. The most important thing is to invest when the value is low and not when it reaches its all-time high.

    It is the same as Stocks of Tesla, Twitter, Snapchat and various. The average daily volatility of bitcoin is mostly 3% (let’s leave aside the crypto-bubble, which was created in December of the previous year). That can be compared with many technological stocks on the US stock exchange market NASDAQ. Investing in tokens (ICOs) is actually investing in startups. Profits can be huge, but the successes will be rare.

    Have you been lucky entering the crypto world?

    Seven years ago, I was firmly convinced, and that is why I also invested all my thousand euros of savings in bitcoin. If only then I had more savings… [ laughter].

    Many crypto millionaires are moving their crypto-money to real estate – from virtual to physical, including yourself. Why is this a good idea?

    Simply, the fortune has to be dispersed. The majority of my properties are linked to the success of the cryptocurrencies, and it makes sense to bring some of it to a bigger range and some other fields.

    Where else do you have your money invested?

    Shares and stocks of US companies, real estate for tourism, private companies with good cash flow. I have a farm with 1,100 living animals. I plan to build a boutique hotel. Due to great growth, my shares make me apprehensive so I protect them by buying options.

    What made you decide to buy shares?

    I have been trading with traditional shares for more than 10 years. That brought me to the world of cryptocurrencies. In recent years, I have been doing this with a distance, mainly because of staying in touch with cryptocurrencies.

    I use the options because it is much easier to limit the risk with them, and they also allow earnings in the form of a premium on possible sales in short periods of time.

    Changes in the crypto world are very fast. Do you get any sleep at all?

    Otherwise, it would not be fun! We’ll deal with boring business in 20 years.

    Where do you live and what does your workday look like?

    I live and work from home, from my small house in Malta. I decided to cooperate with Maltese local financial companies and the country of Malta in new projects because it regulates and is open to the possibility of licensing and dealing with cryptocurrencies.

    Moreover, winter is not really my favorite season, and the Maltese climate was only an additional advantage in deciding.

    You have enough to retire, why don’t you do that?

    I’m already somewhere warm, and I think I’ll never really retire. I love doing the things I do and living the way I live and I can’t imagine what my retirement will look like.

    What do your parents say about your success?

    They are proud.

    Did your parents help you financially with your entrepreneurial ventures?

    No. My fortune in life is that I come from a rather modest family, so I had to create everything by myself, which made me value my work even more. People who are born with everything tend to achieve less.

    What advice do you have for people just starting out with a business or trying to make their fortunes?

    It is necessary to perceive what is happening around you. If you are passive, things will pass you by. You have to be up-to-date with international flows and understand them. Expand your view. You have to set up a big, realistic and with a little luck accessible goal. Try to work with companies from industries and activities of your own interests, connect with them when you’re educating yourself.

    If you create wealth slowly, you have a completely different perception of it. If you hit the lotto overnight, wealth can be a problem. But if you build a company and you don’t earn anything in the first year, you might start paying your salary in the second one. The third year you might reach some higher growth and start paying your salary, as you always wanted.

    This is the organic growth, personal growth, that makes you understand money. After six years, Nejc and I agreed to have reached that point. Today I have a healthy attitude towards money, which makes me have less true friends than I used to have years ago.

    Featured image from Instagram •Damian Merlak (@damianmerlak).

  • Want to Attract Investors? You Need a Solid Team and the Perfect Pitch

    Want to Attract Investors? You Need a Solid Team and the Perfect Pitch

    Are you looking to attract investors? Do you need to find funding for your killer idea that will propel your business or project into the next billion-dollar startup? If you are, you’d better not be flying solo. According to CrowdfundX CEO Darren Marble, the most important ingredient for attracting investors is your team… along with the perfect pitch.

    Darren-MarbleAs a UCLA college dropout, Marble had no background in capital markets, banking, or marketing, yet found success as the founder of a company that’s marketed historic Regulation A+ IPOs to NASDAQ, NYSE, and OTC Markets Group.

    He’s heard thousands of pitches along the way and assessed all types of projects to work with. So, I figured I’d tap him for advice on what makes the moneymakers get their checkbooks out and what it really takes to attract investors. Check it out:

    What Do Investors Look for When Deciding to Fund an Idea?

    “A strong team with a compelling product or service, with some unique differentiation from their competitors,” Marble says. “Your team is more important than anything else. Ultimately, investors are asking themselves, “Can this team really pull this off? Do they really have the collective skill sets and resilience to succeed?” If investors lack confidence in your team, they won’t invest, period.

    Having tech is great–in fact, it’s a huge advantage–and you certainly need passion as an entrepreneur. But if your core team has gaps, you’re in trouble.

    That’s why choosing the right business partners early on is so important. It will likely make or break your company, so choose wisely. Don’t rush into partnerships too quickly. Lastly, you need a proper founder’s agreement, which generally means four years vesting with a one year cliff.”

    What Key Elements Does the Perfect Pitch Need?

    “The perfect pitch has a strong emotional hook and is backed by the opportunity of tremendous financial reward for the investor. What this means is that your company needs be solving a critical problem in a large market–it can’t be a niche play, or investors generally won’t be interested.

    The perfect pitch will sell your vision, mission, and values. Those are things that inspire investors if told right. You shouldn’t be selling the “what,” but rather, the “why.” Why do you do what you do? What’s the driving force behind your company? If you can articulate this clearly and simply, you can effectively inspire investors.

    Once you have them hooked, you need to deliver the knockout with the promise of potential returns. How big can your company actually be in success? Truthfully, you should be aiming to build a billion-dollar business–it will excite your investors, and it should excite you, too.

    How Long Should the Perfect Pitch Be?

    “Generally speaking, less is more. You want to lure in investors by whetting their appetite with a short but compelling pitch and get them to ask you to provide more information.

    Go to Apple’s website and see how they advertise their products. Look at Apple AirPods, for instance: they’re marketed as “Wireless. Effortless. Magical.” That’s it. Just three words. It draws you in. That’s what you want your pitch to do–to draw investors in.

    You should have a clean pitch for email, and also memorize a 15-second, 30-second, and 60-second verbal pitch. Use your best discretion as to which pitch you use in different circumstances. Ultimately, less is more.

    How Should You Pitch? What Comes First? Is There an Order?

    “Over email, I would generally start with a few sentences outlining the vision, problem, solution, and market size, and include a link to a ten slide deck. Again, your goal is to make the investor ask for more.

    Behind the deck, you should have the following documents prepared and ready to send when asked: a white paper (if you’re in digital securities or cryptocurrency), a 5-year pro forma with use of funds, a pro forma cap table, a term sheet for your round, and all of your company incorporation documents including founder’s agreements.

    A common mistake is to send all of these documents at once. A better approach is to think of your dialogue with investors as a drip campaign: start with a simple email and deck, and make them beg for more.”

    Is This Something You Can Learn? Can You Train Yourself to Attract Investors?

    “You can absolutely learn to pitch investors. Practice with your family, then your friends, then a mentor or advisor. Once you’re comfortable and confident, start pitching small investors, and work your way up the food chain from there.

    It’s ok to be shy as long as you learn how to pitch an emotional hook and the opportunity for a financial return. To be sure, being charismatic isn’t a surefire strategy to winning investors, either. If you’re over the top or too aggressive, you can turn off investors quickly.

    More than anything else, you need to be authentic, transparent, inspiring, and you need to know your numbers (market size, financials, projections, etc.). If you can master these four pieces, you can raise money.

    Before you start pitching investors, you need to ask yourself, “Is my business solving a real problem?” Most businesses fail because their product or service doesn’t deliver real value. Entrepreneurs need to audit themselves and really dig deep to ensure they are not going down a bad path. Once you’re certain that you’re solving a real problem, keep your pitch to investors simple.”

    Anything Else You Would Like to Add?

    My best advice for an aspiring entrepreneur is this: never give up. Being an entrepreneur isn’t easy. The odds are always against you. Success feels impossible. It will make you question everything. You will find your rock bottom. But sometimes, the moment you’re closest to failing completely is actually the moment you’re closest to breaking through.

    It’s possible to succeed through sheer will and perseverance. It helps to have talent, and you can also get lucky with timing. But based on my own journey, my philosophy for success is simple: resilience above all.”

    Featured image from Shutterstock.

  • Want to Build a Successful Business? Serial Entrepreneur Halsey Minor Says Don’t Get Lost in the Weeds

    Want to Build a Successful Business? Serial Entrepreneur Halsey Minor Says Don’t Get Lost in the Weeds

    Halsey Minor
    Serial Entrepreneur Halsey Minor

    Ever heard the expression of not seeing the wood for the trees? Or just having the feeling that you’re too close to a project to see the bigger picture? According to serial entrepreneur and multimillionaire Halsey Minor, a lot of startups fail because their owners get “lost in the weeds.”

    Like a dog chasing their tail, they’re caught up in an endless cycle that may keep their business afloat but doesn’t bring in the big bucks.

    Who Is Halsey Minor?

    If you’re wondering who Halsey Minor is, he’s made a long career out of building successful companies around emerging technologies. As Founder of CNET (one of the first internet media sites to focus on technology, consumer reviews, and videos), Halsey presided over one of the web’s first profitable companies. CNET became a NASDAQ 100 company and was acquired by CBS Corporation for an eye-watering $1.8 billion in 2008.

    He was also a co-Founder and early investor in Salesforce in 1999 (to the tune of $19.5 million), co-Founder of Google Voice, Founder of Uphold, an early Coinbase competitor in 2014, and latterly, immersive video company Live Planet, and blockchain startup VideoCoin. Are you keeping up?

    With a host of other accolades to his name, you could say that Halsey knows a thing or two about running a successful company. He’s also used to building businesses around technology and ideas that don’t exist yet. And surviving boom-bust cycles and speculative bubbles with dexterity and skill.

    So how did he find success while other companies were going under? How did he steam forward without losing focus on the finish line? I caught up with Halsey at the World Blockchain Forum in London last month to find out.

    See the Bigger Picture

    The only way you can be a visionary and maintain your self-belief while others around you are folding is by standing back from the day-to-day. Having started multiple high-tech businesses, you might imagine Halsey sitting at his desktop writing code or leading the development effort. But that isn’t the case.

    “I did some programming in college, but I’m not going to sit down with the programmers every day and check every line of code. A business owner shouldn’t get lost in the weeds.”

    A recurring complaint from millennial employees is that owners and managers don’t give them the space they need to do their jobs. The fact that they need mentors, not managers ties in well with what Halsey is saying.

    By focusing on the bigger picture, you can steer your company forward while keeping your employees engaged and productive at the same time.

    Hire the Right People

    Obviously, a successful business isn’t one in which the owner is out playing golf and the minions are updating their Instagrams. But running a money-making company isn’t just about giving your employees space; it’s about hiring the right people for the job, giving them the tools they need to do their best work and then getting out of their way. Halsey is very clear on the need to hire the best talent and let them take the lead.

    “I’m very good at getting the best people working on projects. I hired Devadutta Ghat to build the cloud for Live Planet.”

    To give you some context, Ghat isn’t just good at what he does. He’s one of the only people who does what he does, having built Intel’s video streaming cloud. “He’s one of the few people in the last 10 years who’s actually built a video streaming cloud,” Halsey explains.

    Devadutta Ghat
    Devadutta Ghat

    When you hire the right people and are confident that they’re doing their jobs, you can continue growing your business. Ghat is now one of Halsey’s not-so-secret weapons. He brings with him not only experience in building software but also running data centers, encoding, storage, and streaming.

    “We’ve got some interesting companies [Live Planet and VideoCoin], we’ve got very deep crypto experience, in my case back to 2012, we’ve got deep experience in video and a highly profitable business.”

    Be Better Than the Competition

    Ask Halsey what he’s passionate about and he probably won’t tell you it’s customer relationship software, emerging technology, or even making money. It’s more about the challenge of taking on the competition and winning.

    “With Salesforce, we went after big companies and their customers,” he says. “With CNET we forced many Internet giants out of business.” And that’s exactly what he’s got in mind for VideoCoin.

    The company isn’t about competing with the likes of Google Cloud or Microsoft Azure; it’s about knocking them out of the picture completely.

    Would Halsey say he was somewhat addicted to the challenge, to the adrenaline of taking on the big players and winning? “I think that’s why we all do it,” he laughs. And it’s a pattern that emerges starting with CNET all the way up to his latest venture VideoCoin which, unsurprisingly, sees Halsey venturing into exploratory terrain again.

    Go Big or Go Home

    A quick peek on VideoCoin’s website may lead you to brush the company off as another blockchain content platform trying to fix the broken system. But, VideoCoin isn’t about individual customers. Halsey doesn’t believe in aiming small. And in fact, VideoCoin isn’t just about taking on the likes of Facebook and YouTube either, but AWS as well.

    In true Halsey Minor style, he’s looking for large corporations as clients, like 20th Century Fox Film Corp and AT&T Entertainment Group. VideoCoin is as much about decentralized storage space as it is video content distribution. Large corporations make the perfect target since they have excess server capacity. These are otherwise known as “Zombie Servers” that could easily be monetized.

    In fact, it’s estimated that around one-third of virtual servers are zombie servers that many companies are running without external communications. They consume electricity but serve no purpose. Through VideoCoin’s decentralized computer storage on the blockchain, Halsey’s created a whole new business model again.

    Solving a problem, tapping into a need, and allowing businesses to utilize this computer space that’s going to waste.

    “That’s how I invented Google Voice [Grand Central Communications, the technology Google Voice is built on was sold to Google in 2007]. I was on the road a lot and no one could reach me and I needed some way of getting all my notes and messages in one place. A lot of my businesses were designed to solve problems that I had and ended up being useful to others as well.”

    Business Acumen Counts

    You’ve probably heard enough times about the importance of a strong leadership team when investing in a project. But you may wonder why bringing in advisors and CEOs from non-related business fields or different disciplines helps. It’s because business acumen counts. Experience counts.

    And when it comes to churning out money-making businesses one after the other (even withstanding the dotcom bubble) you don’t get more storm-seasoned than Halsey.

    When asked about the changing regulation surrounding the ICO space and the reason so many ICO companies fail he says, “It doesn’t make sense to ask people to invest in an idea. You have to show them a working product.” It may sound simple, but after seeing blockchain startup after blockchain startup requesting funding for non-functioning ideas, it’s also extremely logical.

    The Takeaway

    Want to run a successful business? Start big picture thinking. Not just what’s already in the market, but what could be in the market. Don’t try to stay on top of every last detail, but understanding the importance of hiring the right people and letting them do their jobs. Evolve with new technology, find solutions to people’s problems, and go all-in on your idea. It’s worked for Halsey Minor. It may just work for you, too.

    Featured image from Shutterstock.