“When crypto goes mainstream, then the banks will come in.”
“When crypto goes mainstream, then the banks will come in.”To have breakfast with one of Asia’s preeminent entrepreneurs in blockchain does not take me to fine dim sum in a glass tower overlooking the harbor. Instead Kris Marszalek requests we eat closer to where he lives. It is a Cantonese deli with no English name (the characters in its name are pronounced Chu Sui Kee) and no website, and no geolocation. I have to get there the old-fashioned way.
It is a trip through time as well as across the entirety of the Hong Kong territory. I must get to Yuen Long, just a hop away from Shenzhen. I booked a taxi by telephone, and the driver’s radio is non-stop chatter about pickups and locations. I am back in the world before mobile phones, in the time of coordination before blockchain.
Marszalek had told me to get off at Yuen Long Theater; not even the old taxi drivers would know the café, unless they’re from Yuen Long. My driver must be over 70. He needed a magnifying glass to squint at my phone’s map, as though my use of mobile technology this morning was the aberration.
I underestimate the distance and arrive late. The canteen is more outdoor than in, with an open kitchen that serves up noodles, congee, fried tofu and other local fare. Kris is waiting for me, dressed casually in jeans and running shoes – it’s only the Crypto.com branded on his black polo that suggests this is a work day.
He and two co-founders set up Crypto.com in 2017, originally under the name Monaco. Today the company has 150 people, including a back-office team in Bulgaria, serving 600,000 customers worldwide with an app and a Visa credit card to allow people to buy, hold and spend crypto-currencies. Marszalek’s motto is “Crypto-currency in every wallet”.
The coveted domain name is a recent achievement. A university professor had owned the domain since 1993 and rebuffed hundreds of offers. I have heard rumors that Marszalek and his partners paid $12 million for it, but when I put this to him, Marszalek won’t be drawn into a discussion. He simply replies: “The way we approached it was to understand what drives him [the professor] and find a reason for him to say ‘yes’.”
Crypto.com, as the company is now called, is his fourth startup, so he has learned something about negotiation. But when it comes to business models, he says the fundamentals are pretty simple: “You have to solve problems for customers. Period.”
He has lived in Hong Kong since 2003 and he orders our breakfast in Cantonese. I am impressed, and so are some of the locals waiting in line behind me. He orders us a pair of ice lemon teas, rice noodles with beef for himself and fried tofu for me.
Marszalek started his first company in university, selling hardware; following a customer’s offer to provide some connections in Hong Kong, he came here, and later worked in Shanghai – which is where he met his current partners.
As we tuck into our food, I ask him what drives his entrepreneurialism. He tells me he grew up in a tiny village in Poland during the communist era. His father had been tasked with running a state-owned farm. “I remember empty supermarket shelves,” he says. “When you’re 10 years old, the switch from communism to capitalism makes you appreciate things a bit more.”
I have known Kris for several years. We were both named e-businessmen of the year in Hong Kong by Alibaba, back when we were running other companies. The Alibaba publicists plastered my face all over town: the MTR, the airport, the backseat of taxis. But I hadn’t seen Kris’s face. I ask him about that. He doesn’t like so much attention, so he had sent his business partner at the time to the photo shoot instead. “I’m too conservative for a crypto guy,” he says.
But there’s nothing conservative about the company’s goal, which is to drive mainstream adoption of digital assets. Crypto.com’s mobile app and wallet provide a bundle of services, including robo-investment, financial advice, and lending, all in crypto-currencies.
The company has also won the support of Visa, which in 2017 allowed it to issue credit cards. So far it has done so in Singapore, Hong Kong and other Asia markets, offering customers cash-back schemes up to 5% of spend and free Spotify accounts. Marszalek says the really big payoff will be when bigger Asian markets, Europeans and Americans start to use it, with the U.S. launch date set for now: July 14. He wants to go after big markets and not get bogged down in the compliance and other complications of smaller countries.
“It’s a full banking experience without a banking license,” he says, outlining all the services the company already offers. It seems that some of crypto’s early promises – the freedom of digital money in a trustless environment – are being met, quietly but steadily.
“The roadmap is exciting,” Marszalek says. “There’s nothing similar to us out there.” But the real test hasn’t come yet. The company’s competition is not other blockchain companies, but banks. “When crypto goes mainstream, then the banks will come in,” he says. “That will be real competition. So we need to move fast, and accelerate the world’s transition to crypto.”
The race is on to build an unassailable position before the world’s big financial institutions can replicate what Crypto.com does. The company’s milestones are all defined on its website, for all to see, but it boils down to giving users a great experience first, building a community for constant feedback, and supporting it with blockchain technology.
Our discussion pauses as a passerby stops at our table and steals a toothpick. It seems like a good chance to switch topics and ask about funding.
The company, he says, has never taken venture capital. Instead it has done a pair of token raises, first an ICO for a token that reflects its old name, MCO, and then a second under Crypto.com. Its MCO token’s market cap is $90 million, but the CRO token is valued at $800 million, he says. All the employees are shareholders. A lot of that money will go to an aggressive hiring spree in Shenzhen, where Marszalek intends to hire another 100 engineers.
“We need development and product people who know how to iterate and scale to 100 million customers,” he says. He goes back to the need to move quickly. “It’s all about speed. It’s going to get harder and harder to start a business in crypto now, because of the security and compliance costs.”
Among his backers is Antoine Blondeau, a prominent technologist and investor in artificial-intelligence (among his achievements was foundational work in the tech that became Apple’s Siri). Earlier, Blondeau had told me that Marszalek has a compelling vision of blockchain-enabled financial services and infrastructure. “This is not a fly-by-the-seat-of-your-pants endeavor,” Blondeau had said.
Blondeau wanted to know how Marszalek’s vision for Crypto.com has changed since he launched the business. So I ask Kris now, although before he can answer, an older man wearing a Jesus T-shirt and carrying a cage of singing birds takes the table beside us. He lights a cigarette and looks our way. Perhaps he too is interested in hearing Kris’s story.
“I wanted to do something in fintech,” Marszalek says. His curiosity was piqued by disasters such as the hacking of Mt. Gox, a Japna-based crypto exchange, and the DAO hack, an event in 2016 when the first attempt to launch smart contracts on the Ethereum network revealed a flaw spotted by criminals. These incidents made Marszalek put some of his plans on hold, until he could come up with the right business model. The advent of initial coin offerings opened new paths to financing his ambitions.
“I love building companies, but I need enough capital to build them,” he says.
I pick up the bill. There is nothing electronic in this shop, so I pay with cash. It’s been an analog experience the entire way this morning, discussing the near future when, if Marszalek is right, digital cash will soon be the reality.
Chu Sui Kee
Po Yik Building, 7 On Leung Lane, Yuen Long
- Bowl of noodles with beef
- Fried tofu with soya sauce
- Lemon tea x2
- Total: HK$89 (US$11.41)
- Paid with cash