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- [00:00]
CJ
I think it was in the early 80s, people were buying up the real estate next to the New York Stock Exchange. The coaxial cables like gave you a signal that was like just a little bit faster.
- [00:09]
Mike Wilcox
I was just trying to think back through the history of how tradfi markets were trying to do what crypto markets are doing, which is just speed up the flow of transactions.
- [00:18]
CJ
Do you think you got more comfortable with the concept of sunk cost being involved with stocks for so long?
- [00:23]
Mike Wilcox
I think so. And maybe even growing up playing baseball as well. When you're trying to hit a round ball with a round bat and the best are only successful at doing that 30% of the time.
- [00:33]
CJ
Ted Williams wasn't even 50%. Most exchanges might seem to pick a lane, retail or institutional.
- [00:40]
Mike Wilcox
What we've built is a really diversified, all weather crypto business model that has a lot of different levers to pull depending on the market environment. Doesn't necessarily lean only into retail or only institutional.
- [00:53]
CJ
Is this thing on Yesterday's price is not today's price.
- [01:01]
Podcast Host
Hey, Welcome back to Run the Numbers, the show where we talk with the world's top CFOs and finance leaders. I'm CJ a tech CFO and my goal is to unpack the frameworks and operating principles that make you better at allocating capital and leading teams. On today's show, I'm speaking with Mike Wilcox. Mike is the CFO of Blockchain.com, one of the longest running and largest platforms in the crypto ecosystem. In this episode, we go deep on how exchanges think about serving two very different customer bases, retail investors versus institutional ones, the different ways that exchanges make money, and the tension between blockchains being radically transparent and the unique first party
- [01:45]
CJ
data that exchanges generate.
- [01:47]
Podcast Host
If you like the show, please remember to like and subscribe. It helps us with the algorithmic overlords. And if you're looking to hire the best finance and accounting talent, I'd love to help you. I run a recruiting service that pairs you with thoughtful qualified candidates from our warm community of finance leaders, people who voluntarily debate LTV to CAC frameworks on weekends. If that's of interest, shoot me an email@talentostlymetrics.com and we can talk on to today's episode with Mike.
- [02:13]
CJ
Mike, thanks so much for joining me on the podcast today.
- [02:15]
Mike Wilcox
Thank you for having me.
- [02:17]
CJ
So you've spent more than 25 years across capital markets, sell side research in investment management. Now you step into the crypto world. What was the biggest change you had to wrap your mind around when you made that shift.
- [02:30]
Mike Wilcox
Yeah, you know, it's really kind of speaking a bit of a foreign language, you know, coming into the crypto world from traditional finance. But I've actually found there's a lot more similarities and differences, different nomenclature for products and services and things that we're doing. But we're all trying to facilitate, you know, the movement of capital in an efficient way and in a compliant and trustful way for consumers. So the more I've been able to kind of identify the similarities, the more it's been able to facilitate a seamless transition.
- [03:03]
CJ
That makes a ton of sense when you say it like that. We're all just trying to enable moving money around no matter what form it comes in or what term you use.
- [03:11]
Mike Wilcox
Yeah, that's right. That's right. And you know, this company has been doing it for a long time. Blockchain.com was one of the first, first crypto companies around. Started as a data layer, helping people understand the movement of money on the blockchain, and then evolved into a global wallet infrastructure platform operating around the world. Now with over 40 million verified users and having processed over a trillion dollars of transaction volume over our history. And now with the onset of more and more regulatory clarity, we've had an acceleration in institutional adoption on the platform. So it's exciting for us.
- [03:51]
CJ
We're going to touch on the data point. But sometimes I'm like a dog with a bone when I hear something. I'm just like chasing a car. It's so fascinating that some of the more durable companies start off with educating, so leading with analytics, leading with information, and then that becomes an on ramp to another type of commerce.
- [04:06]
Mike Wilcox
Yeah, you know, I think, you know, that that's just kind of been our, our DNA, build trust with the consumer, help facilitate knowledge and information and data and analytics. And now we've turned that into a real strategic asset for, for the company in terms of how data informs a lot of the decisions that we make and the insights that we have as a management team and as a company that helps inform product and service decisions that we make.
- [04:34]
CJ
Crypto has always had a rebel, contrarian DNA or streak to it. It pushes against traditional finance in a lot of ways. But you as the cfo, right, Sometimes I think of the cfo, everybody's playing offense. I have to play goalkeeper, I have to play defensive bit here. How do you, Mike, balance on the corporate side of rebel versus the rebel side of corporate, if that makes sense.
- [04:57]
Mike Wilcox
Yeah. The way I've always viewed finance is really just an embedded function within the business. It's not some separate department that's, that's like an audit or accounting function. Our goal is to really partner with the business to provide the types of insights that help inform better decision making, better capital allocation decisions. Because the more we can do that, the more we can identify the right KPIs and value creation levers within each team, the more that can roll up into the overall success of the organization. So I really challenge my team to get to know their product and engineering counterparts and their revenue counterparts to sit alongside them and really understand the challenges that they're trying to solve for and how we can partner together to really create lasting value both for our, our users, both consumers and institutions and you know, in crypto, native foundations and partnerships that we're creating, but also, you know, for, for investors.
- [06:02]
CJ
Do a lot of the members of your finance team come from a traditional finance background, say from FinTech or from SaaS and they just became passionate about crypto or. I'm just curious about the career trajectory of how people end up within a certain sector.
- [06:17]
Mike Wilcox
Yeah, it's kind of a mix actually. So we certainly have a few tradfi folks on the team, myself included. And one of the things I'm most proud of is how we've assembled people that have varied backgrounds, both internally, that have great pedigree and institutional knowledge of the blockchain.com platform and the products and services that we offer. But also some other world class organizations, whether it's Revolut or MasterCard, you really bring the best of both worlds where you have deep, powerful insights of, of our existing offering and platform with some outside perspectives on, you know, what some other world class companies have done in terms of setting up their financial and accounting infrastructure.
- [07:00]
CJ
That totally makes sense. And it kind of leads me into a question on banking relationships because that's been complicated in crypto. Right.
- [07:08]
Podcast Host
How do you think about building durable
- [07:10]
CJ
financial partnerships in a sector that, that some banks still approach caut?
- [07:15]
Mike Wilcox
The industry has a history where in some cases it's been difficult to onboard some of the global tier one multinational banks. I think the good news is with the improving regulatory environment, we've seen an increasing interest from a lot of those players who might have been reluctant in the past to help set up global banking rails and partnerships. That's helping us provide better solutions, better on ramps and off ramps for our users. And we really tried to build redundancy into the system in terms of our banking capabilities. This helps us reduce cost to serve for the consumer. It also creates that redundancy in business continuity if we ever have a challenge with a banking partner, if we want to upgrade level of service that we're offering. So I think that's just the key. It's just planning for redundancy in the system so that you can offer, you know, the best capabilities to the consumer.
- [08:15]
CJ
Stupid question. Can you explain what on ramps and off ramps mean? Because I have a conception of it in my head, but I'm not sure if it's right.
- [08:22]
Mike Wilcox
I bet it's right. But it's the way that you kind of bring, you know, your, your fiat capital into the crypto native, you know, infrastructure, you know, so you know, you may link a bank account to your crypto wallet so that you can bring capital into and out of the crypto ecosystem, you know, as, as you wish
- [08:41]
CJ
in that, that's pretty important for traditional banks, right, to figure out how to get money in and then get your money out.
- [08:47]
Mike Wilcox
Yeah, that's right. That's right.
- [08:49]
CJ
Most exchanges, Mike, seem to pick a lane, retail or institutional. How do you think about that split up blockchain.com.
- [08:56]
Mike Wilcox
yeah, so our heritage is, is primarily in the retail world. As I mentioned, we grew up as that data layer providing insights to, to users on, on blockchain transactions that morphed into a wallet. INF has grown enormously around the world. It's really diversified into this, you know, broad platform that offers what we call a consumer super app. So it's that wallet infrastructure to be able to buy, sell, swap into tokens, you know, across 90 million, you know, registered users and 40 million verified wallets on the platform. And then we built an institutional prime brokerage business which is really accelerated in the last several years and has quickly become one of the more dominant parts of our business, which is, is not for the lack of growth in the retail business. There's, there's just been so much institutional adoption and then, you know, more recently we, we launched this service called blockchain Market Services Infrastructure. And so this is where we really partner with crypto native foundations and protocols in, in helping bring their tokens to market. You know, so we seek out like the best themes that are taking place in terms of financial products coming on chain and help enable those tokens to find liquidity in the market, manage that liquidity, help with custody and staking solutions, you know, for foundations. And so, you know, what we've built is a really diversified all weather crypto business model that has a lot of different levers to pull depending on the market environment. And we're really, really proud of kind of building what we think is a differentiated mousetrap that doesn't necessarily lean, you know, only into retail or only institutional. There's good synergy between all three of the main pillars of business lines that we offer and that's been really effective in our go to market strategy.
- [10:51]
CJ
Hey, thanks for listening. We'll be right back after a word from our sponsors.
- [10:55]
Podcast Host
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- [14:10]
CJ
Maybe just to riff on this together for a second, and it doesn't necessarily have anything to do with crypto, but I often wonder with any business model, is it easier to go from retail or call it like B2C to B2B or institutional or the other way around? Mercury, right now they're extending their banking services from small businesses and startups to now people individually. I guess I have to say banking services with quotes there. Do you think in business it's easier to go upstream or in one direction versus the other?
- [14:41]
Mike Wilcox
You know, for us it really doesn't. We've, we've built the business in a way that has a common infrastructure platform. So the technology stack that we use for our retail business is, is very similar to the institutional business, so is the regulatory and licensing infrastructure. And so we've been purpose built in, in terms of, you know, building that modular infrastructure that gives us agility and flexibility to address new business opportunities or revenue opportunities as they come without having to build like an entirely new tech stack or back office infrastructure, you know, so that, that allows us to have really good unit economics as a business and, you know, a lot of leverage, you know, particularly when times are good to be able to scale up.
- [15:26]
CJ
That's amazing because you can kind of build once and use it multiple times.
- [15:30]
Mike Wilcox
Yeah, yeah. It's a pretty unique feature of the business model that we think really stands out for us and adds a competitive differentiation and advantage for us.
- [15:40]
CJ
I was speaking to the CFO of Rivian last week and she was saying that you have to sweat the capacity you have and a lot of that, I think goes to any part of business where you've already built the infrastructure. You want to have the most throughput possible before you go and build again.
- [15:53]
Mike Wilcox
Yeah, that's right. And we kind of take the same approach with personnel and say, look, this, this is the team we have on the playing field. We need to get the most out of them.
- [16:02]
CJ
From your CFO seat, how different are the unit economics of retail versus institutional customers?
- [16:09]
Mike Wilcox
We don't really break it out that way again because we do have that common infrastructure platform. So it's a shared resource and cost center for both the retail and institutional business. We don't really think about institutional and retail customers differently because there is interplay, there's high net worth in between there. You know, we see customers migrate, you know, across different areas of the platform over time. And so we've generally found it to be in our best interest to not really segment our user base that way. And so we don't really look at the unit economics in that way.
- [16:44]
CJ
I'd imagine though, there's a go to market strategy that's differentiated. Even if, because you make a great point, there could be a very high net worth individual who is as big on paper as, you know, medium sized institution. I'd imagine one is more product led growth and the other is maybe, I don't know, is it biz dev related?
- [17:02]
Mike Wilcox
Certainly the branding and the marketing that we do has a halo effect across the entire organization. We've certainly see that play out in terms of our ability to address consumer segments, build institutional relationships and really create strategic partnerships with crypto native financial services providers. But certainly on the institutional side there's a bit more of a white glove service component to that and a relationship building component to that. And I think one thing that sets us apart is the 12 plus years that we've been in the industry, we really are at the epicenter of everything that's crypto native. We're still founder led and our management team has over 70 years of crypto experience. And so we have broad and deep relationships across the crypto ecosystem, which really helps us in terms of business development opportunities and sourcing strategic partnerships.
- [18:02]
CJ
That makes a ton of sense. And I think when you earn the trust at the individual level, that person brings that trust into their company. I was riffing with somebody the other day about super bowl ads and so chatgpt and Anthropic, they spend a ton of money on super bowl ads and I'm like, you know what, this is both a B2C commercial and a B2B motion, because someone is going to use that and then bring it to work with them someday.
- [18:26]
Mike Wilcox
We have a strategic partnership with, with the Cowboys. It's been, you know, really successful in terms of driving retail awareness activation, but it's certainly very powerful too. And you know, we have the credibility with institutions and crypto native players of, of just the level of scale that we can play at in terms of our marketing and branding and certainly bringing them to events and having deep conversations about things happening in the crypto ecosystem strengthens our ability to really build those strong relationships.
- [19:00]
CJ
You have an incredible domain name and a lot of brand equity that goes along with that. As a cfo, how do you wrap your arms around something like brand equity? Can you point to it on the balance sheet? Is it just something, you know, I
- [19:12]
Mike Wilcox
think it's something that, you know, it's certainly an intangible. You know, one thing that it's done for us is really drive a super low cost of acquisition as there is great organic search, you know, when, when people are looking to do things on the blockchain or to open a wallet and things of that nature. So our founders were pretty visionary in terms of locking down that, that domain name as well as some, some related domain names. So we're very grateful. You know, having super low activation costs in a really large serviceable and addressable market of registered and verified, you know, wallets on the platform is, is just a huge advantage for us.
- [19:53]
CJ
I found your website just by clicking around, looking for stuff, not necessarily looking for you. I mean, I ended up on your website eventually, but then there are educational resources on there as well, which helps. We were talking about on ramps and off ramps when it comes to getting your money in and out. But what's the on ramp to understanding a new sector?
- [20:10]
Mike Wilcox
Glad you asked that. I mean, it's, it's, it's part of the process, right? I mean, crypto has been around for, for over a decade, but it's still a relatively new concept for a lot of retail users. And education is, is, is a big part of bringing them into the ecosystem. And so we, we do leverage the website to, to try to provide unique and interesting content, you know, so that as users come into the top of the funnel, that education process is in place, helps drive conversion, but obviously need to do all that in a very compliant way. In terms of the information that's provided in the blogs and in the research papers that we offer on our website.
- [20:49]
CJ
Do you find that retail and institutional investors are just as emotionally volatile Moving in and out of stuff or is that a misnomer? I'm just thinking like what a business react the same way as like me, if I was trading. Do you look at the institutions as more of the steady eddy that will always just, you know, do the same thing in a reliable fashion?
- [21:11]
Mike Wilcox
Yeah, I think that's generally true because usually when an institution is, is coming to be a part of the platform, they're there for a very dedicated reason. They have a business purpose, you know, revolving around participation in crypto markets. And to a broader point, you know, we really grew up in the industry trying to address crypto native, you know, retail users and institutions and foundations. Because what we generally found while the industry is volatile, the more that we can resonate with the crypto native users, whether it's retail or institutional, they tend to stick with you. But I think it's one of the aspects of our platform that's, that's helped helped us reduce some of the volatility that, that you see elsewhere.
- [21:55]
CJ
Just using analog. I have a lot of experience helping to run marketplaces. Not as much experience running exchanges, none actually. But I understand there are two sides to the equation. And when users are multi honing or they're working across different exchanges, how do you, how do you think about loyalty there?
- [22:15]
Mike Wilcox
You know, for us it's about getting the user the best price and the best experience in the transaction that they're trying to process. And so we actually position ourselves differently and not as an exchange and more as a brokerage model. And so for us we're really agnostic where we source liquidity from. We're not trying to aggregate it all in one place. We're happy to go out to all the different exchanges to source the best liquidity, the best execution and the best pricing for customers and think that's a real competitive point of differentiation. It really also helps us in terms of our partnerships with foundations and protocols. So when they're looking to list their tokens and bring them to market, they look at us as, as a strategic partner and you know, in a first choice in go to market strategy, because we can, we can help them post liquidity on all the exchanges because, because we are agnostic to it as a brokerage model. We're not looking to just have liquidity sit in one destination in a winner takes all format.
- [23:20]
CJ
And what's the fundamental difference between an exchange and a brokerage?
- [23:23]
Mike Wilcox
So in an exchange you're simply matching buy and sell orders. One platform. In brokerage, you know, we may have some of that, you know, where where we have an active buy and sell order from two different customers that we compare off. But we also have the liquidity and capabilities from a technology infrastructure standpoint to provide quoting and provide, you know, balance sheet and inventory to process transactions and then hedge out that risk and provide a, you know, a better price and better execution.
- [23:54]
CJ
Is there a difference then in how an exchange versus a brokerage make money? Are they both predicated on some sort of fee or take rate?
- [24:02]
Mike Wilcox
It's generally involves a take rate on the transaction.
- [24:05]
CJ
Cool. Hey, thanks for listening. We'll be right back after a word from our sponsors.
- [24:11]
Podcast Host
Being a cfo, you know how much
- [24:12]
CJ
I love tools that actually make the lives of accounting and finance folks easier.
- [24:17]
Podcast Host
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- [27:31]
CJ
How do you as a CFO square the race to zero so you got someone like a Robinhood, doesn't cost anything to do a transaction versus the premium service white glove. Like you mentioned, people are willing to pay for that. Is there a science to setting your take rate when you're trying to balance those two expectations of what's available in the market?
- [27:48]
Mike Wilcox
Yeah, we always want to be competitive and certainly willing to kind of look at any transactions that users need to process on the platform. I would say where we specialize in is is just the depth and breadth of of tokens that that we can trade. We provide access to a longer tail and so people come to us with more bespoke trading solutions and hedging strategies that they need more of a white glove service to execute.
- [28:15]
CJ
It's interesting because on the surface you can say oh well, there's so many places to go and transact. But when you dig deeper there are certain value propositions or Differentiators that would pull one person there versus the other.
- [28:28]
Mike Wilcox
Yeah, I think that's right. And you know, each, each place is, is going to have its own, you know, point of, of differentiation. We try to add, you know, other elements beyond the simple transaction to keep people engaged in the platform. You know. So I mentioned the blockchain market services infrastructure. So as we bring new tokens to market, you know, the fact that we have a broad distribution network of 39 plus million verified users, they really love the fact that they can get access to new tokens, new rewards that come through our blockchain market services platform. And similarly the tokens that are launching on our platform love the fact that we have that distribution capability. We try to create like this flywheel ecosystem. And so you're not just singularly focused on one element of it, say the transaction of, you know, a trade. There's more to it, there's more benefit to being involved, you know, on the platform, whether you're a retail user, an institutional business or high net worth, family office or a crypto, you know, foundation.
- [29:33]
CJ
It sounds like you're saying in addition to distribution and the long tail. Right. Those are multiplayer tools, they're also single player tools to make you smarter and want to stay longer.
- [29:43]
Mike Wilcox
Yeah. And like you've probably heard, you know, great businesses always think about the ability to cross sell and upsell. You can only really do that if you've got a great funnel flywheel in infrastructure to be able to offer the products and services that really resonate with consumers. And this goes back to some of the data capabilities that we have and the ability to listen to and observe and understand, you know, what our users really want and then bring that to market for them, I think helps create, you know, better stickiness on the platform for us.
- [30:14]
CJ
So how do you think about data as moat Mike? Because on one hand blockchains like by definition they make everything radically transparent, but on the other hand you're doing thousands of transactions or millions of transactions as you mentioned, which that has to generate a lot of first party data that you have.
- [30:31]
Mike Wilcox
Yes, some of the data on chain is, is certainly readily available. It's not super easy to actually process the sheer volume of data that's out there.
- [30:41]
CJ
Oh, I've tried. I didn't know what I was getting into. I'm like, yeah, I can't really make any, I can't make heads or tails of this.
- [30:47]
Mike Wilcox
Yeah. And you know, in each market is very different. So having the capabilities to look at the data in aggregate but then be able to look at local geographies and say, well, what is the use case in Nigeria, for example, and how do we use the data that we observe from the base set of users that we have there to go in with a local customized product of the crypto user base? You know, we were able to do that last year in a, in a really successful fashion. Nigeria being a use case for that. It's a market that has real world use case where there's some challenges potentially with the banking system or the reliability of the currency. And so our ability to listen and analyze data and explore what could be a great unique offering that would really resonate with the user base. There is just one example, a really successful example for us that we're hoping to replicate in other markets with that local market playbook.
- [31:43]
CJ
Mike, I want to talk about balance sheet and risk for a while. What's on a crypto brokerage's balance sheet that requires a sector specific lens?
- [31:53]
Mike Wilcox
Yeah, so we have a lot of assets and liabilities that are denominated in different currencies. Those could be different fiat currencies, but they could also be different tokens. There is some analogy to traditional finance companies that have assets and liabilities that could be denominated in dollars and euros or pounds or, or you name it. So, you know, what you want to be able to do from a CFO lens is to be able to think about the matching of assets and liabilities and making sure you're purposeful in terms of, are you tilting long, are you tilting short in any specific currency or any specific token, and what's the reason for doing so in terms of the overall potential volatility of the underlying asset or liability that we're talking about? From a regulatory standpoint, we have strict standards in terms of making sure that any customer liabilities that we have or deposits that are on the platform are perfectly matched, one for one. And so we have safeguards in place to make sure that we adhere to that. It's just an active part of, of, you know, the treasury function and one that we've invested in to make sure that we always have, you know, sufficient liquidity. And we think about duration matching, you know, of assets and liabilities, you know, with, with those underlying, you know, tokens. But it's a complex matter, but one that we're, you know, pretty well positioned to, to monitor and manage from a risk perspective as a cfo.
- [33:24]
CJ
Can you just speak to duration matching? Because I find it so fascinating being in a market where it's always on right it's not like on the weekend. It's like, hey, not much is going to move in between now and Monday.
- [33:35]
Mike Wilcox
Yeah. So, you know, for us, we always want to make sure that from a working capital perspective, that we have really strong buffers to be able to manage the ebbs and flows of transactions that the customers want to conduct on the platform. It's really just having a lot of oversight and deliberate focus on, on maintaining liquidity buffers at all times.
- [33:59]
Podcast Host
It's funny because no matter how complicated
- [34:01]
CJ
it gets, it really just is, at the end of the day, matching assets and liabilities. Right?
- [34:06]
Mike Wilcox
Yeah, exactly, exactly. You know, we've got a, a really strong treasury function and risk management function that it has, you know, great analytics, great dashboards to be able to monitor that in real time. And, and like I said, you know, we always, we always strive to maintain, you know, exceptionally strong liquidity buffers to respond to the market.
- [34:27]
CJ
This question isn't necessarily about crypto. I mean, it can be, but for a brokerage, can you just make me smarter on what risks a brokerage takes on a single transaction? So we talked about the macro or the larger picture of the balance sheet, but if we zoom into one transaction, how does that work with the proposition of who owns what and the risk?
- [34:46]
Mike Wilcox
Yeah, I guess technically speaking, in a brokerage model, if you're transacting with our platform and you want to buy Bitcoin, for example, we might be holding that Bitcoin in inventory. And as we make those transactions, if we're sending you the Bitcoin, we then are taking that inventory out of our system, moving it into your wallet. And so it creates an exposure for us, either long or short. And so what we have to do from a technology standpoint, we have really low latency ability to be able to hedge out any of the risk that comes from that. So the important part is, like, technically, you're taking on risk as a principle in that transaction. So I temporarily own the risk of processing that transaction with you as opposed to matching the order with another user. We have really sophisticated technology that helps us hedge out that risk in real time. So at the end of the day, we've really mitigated that risk up front through the investment in technology.
- [35:48]
Podcast Host
If you look back five or ten
- [35:49]
CJ
years ago, Mike, do you think it would have been much harder without this technology?
- [35:53]
Mike Wilcox
It's what's allowed us to scale and provide exceptional service to institutional players and retail users. And so they come to us for that low latency. It helps us provide narrower spreads on Transactions and better price discovery for the user.
- [36:12]
CJ
Everything moves so fast. Now I'm thinking back to, I think it was in the early 80s of how people were buying up the real estate next to the New York Stock Exchange exchange because the coaxial cables like gave you a signal that was like just a little bit faster so you could get an edge on any trade.
- [36:27]
Mike Wilcox
It's funny, leading up to this interview, I was, I was just trying to think back through the history of how tradfi markets were trying to do what crypto markets are doing, which is just speed up the flow of transactions and reduce transaction processing times. And I remember living through that. Financial services companies were locating as close as they could to the cables. You know, they were going into the New York Stock Exchange just so they could get just that, that micro edge in terms of execution speed and, and reduce latency.
- [36:58]
CJ
But like efficient market hypothesis, eventually that arbitrage always gets, you know, gets taken away.
- [37:05]
Mike Wilcox
Yeah, yeah. And then now you see this move to 247 markets to keep things liquid at all times. I think it's, it's all kind of in the spirit of creating, you know, access to capital and the ability to move capital in real time at the most efficient speed and cost possible. And cryptocurrency is helping enable that.
- [37:26]
CJ
My on ramp to crypto from at least an institutional or business perspective, has been trying to get smarter on stablecoins. Do you have a lot of CFOs coming to you saying, hey, how could I possibly incorporate this into my business?
- [37:38]
Mike Wilcox
Yeah, it's, you know, it's a, it's a huge part of, of what we do and you know, we are not like an issuer of stablecoins, but facilitate a lot of transactions, you know, and settlements and stablecoins. And we're actually one of the launch partners for, for one of the top five, you know, stablecoin issuers in the world, back to that blockchain market service platform that we offer. So, you know, that's, that's a bit of how we've participated in the ecosystem and certainly have a lot of engagement in terms of institutional players in that regard.
- [38:12]
CJ
How do you map out the different risk vectors in your business?
- [38:15]
Mike Wilcox
If we start first in terms of accounting and infrastructure, what we've been really purposeful around is building proper controls and risk matrices to make sure that we are capturing and aggregating all of the transactional activity that's happening in the business in real time and embed the level of trust and control in the business that will stand up to SEC scrutiny and institutional scrutiny. And trust is something that we've really prided ourselves on as an institution. It's what's helped us scale to the size that we are and having processed over a trillion dollars in transaction volume on the platform. So we continue to invest in trust and infrastructure and controls and governance in a significant way. In terms of the operating within a crypto environment, it's obviously a very volatile business. So we work really hard in terms of developing, you know, liquidity forecasting models, planning models so that we can try to improve the level of forecasting invisibility into the business. You know, one thing that we've really focused on strategically is building up our subscription and services components to, to our revenue so that you add more fee based elements and subscription based components to the business that provide extended visibility, more predictability to the business. So I would say those are a couple of the elements of risk management that we think about in terms of making sure that the business has the proper controls and governance around it, but then also as much as you can within crypto, building visibility and predictability to the business model.
- [39:59]
CJ
Is there anything unique about your annual planning process?
- [40:02]
Mike Wilcox
I don't think that there's anything probably super unique to what we do. We try to gather our, our business leaders around the world multiple times a year, dive into the consumer insights, institutional insights, and make sure that we are, you know, focusing on the big priorities, the big things that our consumers want for us in terms of top line initiatives. And then we set priorities around that and really drive accountability, you know, to deliver on, on those, you know, growth initiatives. And I think that that type of focus is, is what, you know, again going back to that all weather business model allows us to have initiatives in place that regardless of what the environment is offering to us in, in terms of how robust or, or not business environment may be, we have levers to pull that, that allow us to outperform and drive growth.
- [40:54]
CJ
We spoke to the CFO of Rocket Mortgage and I asked him a similar question. I'm like, dude, how do you possibly do this when you don't know if the Fed's gonna wake up tomorrow and change the rates on what mortgages are gonna be? And he said something similar. It all comes back to serving the consumer. And if you break that down into well, what's the 10 year vision of that, what's the medium term vision and what's the annual plan to execute on that? Like the other stuff is kind of just noise in between.
- [41:17]
Mike Wilcox
Yeah, I always found like the Best management teams. You know, in my career, looking outside in at companies were those companies that tended not to blame or credit the market environment that they were operating in, but spoke to the various levers that they had to pull regardless of the environment to drive, you know, growth and outperformance. And those are some of the disciplines that we're building here@blockchain.com and looking to leverage in continuing to drive differentiation and outperformance in the years to come.
- [41:50]
CJ
I'm going to take you into we call our long ass lightning round. I ask every successful person that comes on the pod, what's an example of something you've screwed up on the job before it could be here or a
- [42:00]
Mike Wilcox
previous role making a bad stock call, you know, you know, the best investment managers are right 55 to 60% of the time. So you have to deal with failure 40 to 45% of the time.
- [42:12]
CJ
Is that really what the ratio is? You're one of the best if you can do 55%.
- [42:15]
Mike Wilcox
That's about right. So you know, you learn a lot about, you know, maximizing winning bets and cutting off losing bets as fast as possible and you try to bring that into the office of the CFO as well. You want to make sure you contain things, you know, where you explore from an R and D perspective, things that you think are interesting. But if, if the thesis isn't playing out, you, you reallocate capital to, to the better projects.
- [42:39]
CJ
Do you think you got more comfortable with the concept of sunk costs or the sunk cost fallacy by, by being involved with stocks for so long?
- [42:47]
Mike Wilcox
I think so. And maybe even growing up playing baseball as well, which is an even worse success rate. You know, when you're trying to hit a round ball with a round bat and you know, the best are only successful at doing that 30% of the time.
- [43:00]
CJ
Right, right. Ted Williams wasn't even 50%.
- [43:04]
Mike Wilcox
That's right. That's right.
- [43:05]
CJ
More of a technical one for you. Can you walk me through your finance software stack? What tools does your team use to get the job done?
- [43:11]
Mike Wilcox
Yeah, so we use NetSuite as our ERP flowcast for a closed process and we use Workiva to help, you know, take those trial balances and put them into, you know, SEC ready financial statements and documentation.
- [43:28]
CJ
Last one I got for you. If you could tell your younger self something, knowing what you know today, what would you tell them?
- [43:33]
Mike Wilcox
To believe in yourself, have confidence, you know, try new and hard things. It's, it's the way to have a growth oriented mindset which I think is is is really critical for success and combine that growth oriented mindset with also having a owner's mindset in everything you do. Because I think if you can, you know, behave and act like an owner it really ingratiates you to founders, other management teams and investors that this person's going to wake up every single day trying to drive value for the business.
- [44:07]
CJ
I love that. Think like an owner Ear on the
- [44:10]
Podcast Host
Numbers is a mostly media production yelling an intro by Fat Joe artwork by Meg Delesandro show is executive produced by Ben Hillman. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me, a guy who feeds his dog way too much ice cream and has a history of net operating losses. Lol. If you like this podcast hit subscribe and give us five stars. It will take like two seconds and our algorithm overlords love it. Drink water, call your mom and have a great day.
- [44:38]
Mike Wilcox
Peace.