The second part of the conversation with Bitcoin Suisse founder and Chairman of the Board, Niklas Nikolajsen about entrepreneurship, growth, banking license, the planned IPO and the future of the crypto-financial industry.
The continuation of the conversation with Niklas Nikolajsen. You can read his opinion about Bitcoin and gold as a safe haven in times of crisis, as well as the future of tokenization in the first part .
CVJ.CH: Let's get back to Bitcoin Suisse. Almost half of the total staff of Bitcoin Suisse are IT specialists. That has always been significantly higher than its competitors. What are the main considerations here?
Niklas Nikolajsen: I basically see two ways to build a crypto company: Either, as other competitors have done, I look for a provider for custody, a provider for the core banking system, perhaps an agency to set up my website and someone to design a trading platform for me.
However, we have a different philosophy. We have built all the components mentioned above ourselves. Of course, this also has to do with the fact that when we were founded in 2013, there were no corresponding suppliers for many things. But the main reason is that all these systems should work together seamlessly and must remain expandable. Particularly when new technologies come along, such as staking, we don't want to negotiate with a supplier first to see whether adapting their product really pays off for them, but we want to have the opportunity to offer this to our customers early on, if possible from day one.
Wouldn't it be an option to control the development yourselves, but have it done by an external provider?
Niklas Nikolajsen: That might be a viable solution for a project with a limited time frame. But our business is not a time-limited project. Technology is constantly evolving and our technical infrastructure should be able to take on new tasks. In addition, we always see potential for improvement. Our developers are always working at full capacity and if a development team is working at full capacity in the long term, it is not worthwhile to call in external consultants and developers.
In the last two years, the number of Bitcoin Suisse employees has more than tripled to over 145 people. What organizational challenges did this bring with it?
Niklas Nikolajsen: When we started, there were perhaps five of us. So clerly, most of us wore several hats. I, for example, was in both managerial and technical positions. So in such a small company everyone has to be a generalist. But when a company gets bigger, you introduce specialists and additional levels of management. The patriarchal model, in which one person overlooks everything and everyone communicates sufficiently with each other, has a logistical limit of perhaps 10, at most 20 people. Those who still believe that they have to micro-manage by questioning everything and not delegating decision-making power will not be able to scale-up any further.
What have you changed?
Niklas Nikolajsen: We introduced a clear management structure in 2017 and 2018, which began with Arthur Vayloyan taking over the role of CEO from me. Then other roles were added, such as Chief Risk Officer, Chief Financial Officer, Head of Trading and Head of Client Services. Of course, a bit of the family atmosphere was lost there. But it was clear that you had to professionalize. It needed measurability and clear responsibilities. The new management structure has simplified this.
How has the rapid growth affected the corporate culture?
Niklas Nikolajsen: Usually, people lose part of their identification and productivity [with growth]because people work differently when they feel part of a small family or simply see their work as a "job". However, we have been able to maintain this family spirit and sense of community very well so far. It is very important to me to come together as a "family" every now and then. We traditionally have a summer and Christmas celebration. On Friday evenings, for example, we often go out for a beer together and sometimes 10 to 15 people end up at my house, where we talk about the past week and have fun (laughs).
Last autumn Bitcoin Suisse applied for its banking license. Why did they actually do this?
Niklas Nikolajsen: Bitcoin Suisse is currently dealing with two different licenses: A securities-dealer license and a banking license. The former allows us to trade asset tokens (securities) as described above. The banking license allows us to hold client deposits.
It is already possible to have an account with Bitcoin Suisse - how else could I buy Bitcoin?
Niklas Nikolajsen: If you deposit CHF 10,000 with Bitcoin Suisse today, we can only accept this thanks to an exception in Swiss banking law. This states that a non-bank may also hold deposits, provided it has a sufficiently high default guarantee from a Swiss bank. We have such a bank guarantee in the amount of USD 45 million.
This ties up valuable capital. This is a clear competitive disadvantage compared to a bank that does not have to tie up its capital in this way.
There are already two crypto banks in Switzerland - is Bitcoin Suisse perhaps reacting too late here?
Niklas Nikolajsen: In a certain sense, we have been working on a banking license since our foundation 7 years ago by building up the necessary equity. It also took time to set up the necessary infrastructure and systems. Would it have been great to apply for a banking license much earlier? Yes! Would it have been possible? Would it have been possible?
Would it have been different if Bitcoin Suisse had opened the doors for investors earlier, as is the case with ongoing fundraising or the IPO?
Niklas Nikolajsen: We are currently in the middle of Series A financing, our first capital raising in the company's history. This is despite COVID-19, as we are firmly convinced of the attractiveness of the offer. If we had made such a financing round earlier, we would certainly have grown faster. However, we would not have matured to the same degree.
"It makes a huge difference if a kid gets a bike as a gift or had to work for it himself."
If you invest someone else's money, you have a different willingness to take risks and may not turn over every franc twice. Staying thrifty and lean, for example, has got us through the difficult times of 2014/2015. Today, very few crypto-financial companies in the world can boast a similarly comprehensive service portfolio, a similarly long operational track record and similarly high profitability.
Let us return to the current market situation and the typical question: How will things continue? What is your forecast for the Bitcoin course?
Niklas Nikolajsen: After the widely spread price losses in the financial markets we will see selective price recoveries. But it will take time until the economy gets going again. We are facing many challenges and logistical bottlenecks here. These challenges will deprive many companies of their existence, which makes shares and corporate bonds unattractive. Interest rates will also remain low or negative. In such an environment, gold and Bitcoin appear to be attractive alternatives and I wouldn't be surprised if we see a significant price recovery soon*.
(*Editors' note: At the time of this interview Bitcoin was trading just over USD 5,000)
How do you see the future of the crypto-financial industry?
Niklas Nikolajsen: The recovery will lead to new investments in crypto, which will advance the various block chain technologies and make them more scalable. In the long term, I believe there will be tremendous growth in crypto assets. With Bitcoin Suisse we are very well positioned to continue to lead the way as a pioneer and market leader. I am convinced that the technology will make our financial systems fairer and can do a lot of good.