Wow! What a huge achievement – Episode 100 of the Public Key podcast is here and we thank you all for making this podcast such a success. After hosting 100 episodes of the Public Key, Chief Marketing Officer, Ian Andrews switches roles and shares his thoughts on important themes including pig butchering, market manipulation, DeFi hacks and provides marketing and podcast tips to other founders and startups.
You can listen or subscribe now on Spotify, Apple, or Audible. Keep reading for a full preview of episode 100.
Public Key Episode 100: Exploring Public Key’s Journey and Lessons from over 100 episodes
In this milestone 100th episode, host Ian Andrews (CMO, Chainalysis) takes a break from his usual role and hands the reins over to Kim Grauer (Director of Research, Chainalysis) to discuss the biggest themes and topics from the last 100 episodes.
They reflect on the journey of the podcast, share behind-the-scenes insights, and discuss Ian’s transition from the tech industry to the world of crypto and some of the challenges the industry still faces after 2 years of producing the podcast.
Kim gets Ian to share some of the most impactful episodes, including discussions on pig butchering scams, market manipulation, and the future of DeFi.
Ian offers advice for marketers and shares his excitement for upcoming developments at Chainalysis, including the recent decision in the Bitcoin Fog case.
Quote of the episode
“Crypto is really hard to use. Like when we think about “Killer Apps”, like the ones that have gone most viral that like, as soon as it was launched, we all downloaded it. You know, 7 or 8 apps that you use on your phone every single day, like they have a great level of usability. I have never found that anywhere in crypto” – Ian Andrews (CMO, Chainalysis)
Minute-by-minute episode breakdown
- (2:30) – Ian’s background at Pivotal and decision to join Chainalysis
- (9:15) – Ian’s foundational technical knowledge and discovery of the global nature of crypto
- (12:30) – The new role of Chief Marketing Officer and the early mandate to grow the company
- (14:21) – Ian highlights the pig butchering and market manipulation issue in crypto
- (18:49) –Are the rules around accredited investors in the US protecting consumers or restricting them
- (22:00) – DeFi hacks, global crypto adoption and the impact of Bitcoin Spot ETFs
- (31:05) – Highlighting companies like Ironfish and Hypernative for their exciting innovation
- (34:25) – Marketing advice for companies to focus on storytelling rather than traditional marketing
- (38:39) – Ian shares his favorite podcasts, including “Pivot,” “Invest Like The Best,” and “Lex Friedman”
- (40:25) – Public Key’s dream podcast guestlist is revealed: Fei-Fei Li, Vitalik Buterin, and Gary Gensler
- (42:03) – How to start your own podcast in 2024
- (44:05) – What’s New For Chainalysis: The Bitcoin Fog Decision, NYC Links Conference and Huge Products being shipped in 2024
Related resources
Check out more resources provided by Chainalysis that perfectly complement this episode of the Public Key.
- YouTube: Chainalysis YouTube page
- Twitter: Chainalysis Twitter: Building trust in blockchain
- Tik Tok: Building trust in #blockchains among people, businesses, and governments.
- Telegram: Chainalysis on Telegram
Speakers on today’s episode
- Ian Andrews * Host * (Chief Marketing Officer, Chainalysis)
- Kim Grauer (Director of Research, Chainalysis)
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Transcript
Kim:
So Ian, 100 episodes in podcasting is huge. It’s a huge accomplishment. As the host, the audience doesn’t really get the chance to get under the hood of what you’ve been up to and your career and then what you spend your time working on. So are you ready to be in the hot seat?
Ian:
Couldn’t be more excited for this episode, Kim. I love the reversal of roles here. You getting to take the chair as the host, although I don’t know I’m ready for all these questions, but I just want to thank everybody who contributed the podcast over the first 100 episodes. We’ve had incredible guests, but there’s also a ton of behind-the-scenes people. We couldn’t have put this together obviously without Stephen Sargeant and the team at Airdropd. They’ve been here for every episode along the way, and then a ton of our Chainalysis colleagues who help edit the video promos that people see on social media, the posts that go up on the blog, it’s a tremendous team effort. Everybody gets to see my face when they download the podcast episode, but there’s a lot of work that happens behind the scenes to make these good. So thank you to everybody.
Kim:
I will say also when I talk to people, they always comment about how you’re a very good podcast host, you ask good questions. You make everyone feel comfortable. You’re like a natural at it. So we’ve been lucky to have you, too, hosting the podcast.
Ian:
It’s a funny story, actually, I’ll share it here. So about a little over two years ago, the team came to me and said, “Hey, Ian, we think we need a podcast.” My initial reaction was, “Look, there’s a billion crypto podcasts. Does the world really need a billion and one?” After some back and forth, I relented and said, “You know what? Let’s do an experiment. We’ll see if we can make five good episodes and if anyone listens. If we get that far, then we can make a decision about do we continue on.” Everybody got very excited and said, “Absolutely. Great. We’re going to make this an amazing show.”
Some time later, it may have been a week or two, the team came back to me and they said, “By the way, Ian, you’re hosting.” It was never discussed in the original planning, and no one thought to bring it up, I think because they knew that I probably would’ve shut it down if there was any discussion of me being the host. It was only after I had said yes where I got locked in. Honestly, those first couple episodes, you were on episode number one, it was a learn on the job experience for me. I’d never done anything like it before. So to everyone that has complimented me along the way, thank you. It’s given me the courage to keep doing it, ’cause for a while there, it was really hard.
Kim:
Yeah, they locked you in there really early, but it’s been great. So now we got to learn a little bit about your background and what landed you here at Chainalysis. So I wanted to start by talking about your pre Chainalysis career, and you spent much of your career working at Pivotal before it turned into VMware. So can you just tell us a little bit about what you were doing there?
Ian:
Well, I’ve spent my whole career now working in what I call emerging tech, generally, business-to-business technology that big companies around the world use to run their businesses. Prior to Chainalysis, as you said, I was at a company called Pivotal. We spun that out of EMC and VMware way back in 2013 and grew it up from very small to actually taking it public in 2018, which was this amazing experience. By 2019, we realized that we were on a collision course competing with VMware, and so we entered into a process to sell the company back into VMware and combine it with one of their divisions. We did that on the last day of 2019. So as the pandemic started in 2020, I was one of two executives from Pivotal that stayed on to help guide the integration and launch a new business unit for VMware.
By the end of 2020, like everybody else, I was spending a lot more time than I was used to locked in my house wondering what the future might hold. I got a call from a recruiter who I knew a little bit who said, “Hey, you should really look at this company Chainalysis.” I had never heard of the company before at all. So I start googling and after a couple of minutes of trying to figure out how to spell Chainalysis and finding the website, I realized it had something to do with crypto, which, to be honest, at the time was a little bit of a deterrent because I really didn’t know anything about the space. I had some basic knowledge in the public key infrastructure, public key cryptography broadly. So the idea of a blockchain made some technical sense to me, but I didn’t really understand the ecosystem of crypto. All I knew was at some point all the prices go up and then all the prices go down and then a bunch of people go to jail.
Kim:
That’s about right.
Ian:
So I was really operating at headlines of the industry level, what I would occasionally read on a site like TechCrunch, and so I felt very intimidated. I was like, “I don’t know that I can add a lot to this because isn’t a space that I know. There’s got to be more qualified people out there than this.” Luckily, the recruiter coaxed me a little bit and said, “Hey, at least take a meeting with our CEO Michael Gronager because he’s really interested to meet you.” Of course, as people who listen to the podcast probably know, I love talking to founders. I think there’s this special mental condition that you have to have to actually start a company and try and build something from nothing. So I’m fascinated to talk to anyone who’s ever attempted that, let alone been as successful as Michael and the team at Chainalysis had been by that point.
Over the course of the next month, I got to meet Jonathan and some of our board members. I actually talked to a couple of customers, and I was totally sold, probably still didn’t really understand what I was getting myself into, but I was very excited about the company and the potential. I remember negotiating an employment agreement with Michael over email. He was on a runway somewhere, I think, going or coming to Miami maybe from Copenhagen. This was over New Year’s weekend, and we came to an agreement. I walked in the first day back at work at VMware and turned in my resignation-
Kim:
Wow.
Ian:
… and started here two weeks later. So it was a whirlwind and it hasn’t-
Kim:
That’s incredible.
Ian:
… slowed down in three years. It’s still as crazy as that whole interview experience has that set the tone for the entire time I’ve been at the company.
Kim:
Yeah, it sounds like you were at a fast-growing company, went through IPO acquisitions, and you joined another fast-growing company in a fast-growing industry. I’m curious if there was an aha moment during the interview process of when you knew you were going to do it, what was it that really pushed you over the edge into joining Chainalysis?
Ian:
I think there were two insights that I gained that I didn’t have initially when I was maybe a little skeptical talking to that recruiter. One was that Chainalysis is a software company. We’re not building another Layer 1 blockchain. We’re not trying to launch a wallet. We’re definitely not shilling, some scammy token. So that made me much more comfortable, ’cause my experience has been building software companies for two decades, so I was like, “Oh, I actually can help with that. I need to go learn the industry, but I’ve got a lot that I can bring to the table here, I believe.” Then the second thing that got me really excited was at the time, I think Chainalysis had right around 300 customers.
We were maybe just under 50 million in revenue and only about 200 employees, and that combination of scale, but broad success and those 300 customers weren’t concentrated in Silicon Valley friends and family companies. This was globally distributed at the time, I think in 60 countries. That is such a rare combination that I looked at it and I said, “I may not fully understand this industry and some of the competitive dynamics, but it is so unusual to see a company have that much success largely on a referral basis.” There wasn’t a large sales team, there wasn’t really a marketing team at that point, but the products clearly worked and they met a need. So at that point, I was totally sold.
Kim:
Yeah, I think there might not have been a marketing team at that point anyway, if I remember correctly.
Ian:
There were six or seven key people, many of whom are still here today and some of my favorite colleagues and biggest contributors to the success of the company, so I give them way more credit than I would ever take myself. But we had to go build a team so that we could scale the effect they were having, and that’s what I think I was able to contribute.
Kim:
Yeah. So you’re joining this new crypto company, you’ve been sold by the wonderful founders and the fact that there’s all this potential. What was your level of blockchain knowledge, and how did you bridge the gap so quickly when you joined?
Ian:
Yeah, the only thing that I really understood coming in is I had worked over 20 years ago on a very large-scale public key infrastructure project. As part of that, I dove really deep into understanding public key cryptography, and so I had foundational technical knowledge. So when I started sitting down to understand, “Okay, what’s a Layer 1 blockchain? What’s a Layer 2 blockchain?” I was like, “Oh, I actually understand what’s happening here. I understand how a wallet works and how your public key and your private key work.” So I had a good technical foundation of the basics, but I had zero knowledge of the industry, and all of a sudden, I’m confronted with our customer list.
Half of the companies have either coin or bit or both in the names and my head was spinning. It was like, “I can’t tell these people apart,” and then it was amazing. I think the first night I had access to my laptop, I stayed up till 2:00 in the morning reading customer win stories and just going back in time, I think I went back 12 months, stayed up till 2:00 in the morning, and I was totally blown away at the location where these companies were. I just didn’t really appreciate how global crypto was ’cause it completely defied the adoption pattern that you see in most tech.
For all of my tech starts in Silicon Valley, it will move east across the United States, eventually jump to the United Kingdom, maybe hop into Germany as a secondary location in Europe. Two or three years later it shows up in the Asia Pacific markets. Crypto is not like that at all. It’s very Asia Pacific dominant. It’s very global South dominant, so a huge amount of activity in Latin America and Africa as we’ve seen from all of your research and the customers reflect that. So that immediately presented this huge challenge to me of, “Oh, gosh, we’re going to have to think about marketing a little bit differently here because we can’t run the same playbook that I’ve used in past companies,” which presented a fun challenge.
Kim:
That’s so interesting. I completely echo your approach to learn about the technology. Whenever anyone joins, I just say, “Go do a transaction. Just get down to-
Ian:
Yes.
Kim:
… basics because then you can build everything intuitively from there.” I think a lot of people in crypto have this blocker where they just… it’s too new. But actually if you just go down to basics and start from the very foundation, you can really learn. But the industry stuff is interesting. You were at Chainalysis’ first CMO, and what was your mandate for when you first started, and how did you go about paving the way as creating this new role?
Ian:
Yeah, I think the thing that we wanted to do when I joined was grow. Keep in mind this was January of 2021, so we were already in a bull market cycle. Chainalysis had just raised our Series C few months prior to my joining, so first time the company really had meaningful amount of capital so we could grow in advance of winning customers and booking revenue. So a lot of my time was spent figuring out, “Okay, what is the strategy for customer acquisition and where should we be applying resources?” Then, “Well, what people do we actually need in order to do that effectively?”
So it really was a build from the ground up approach and it was very collaborative with the rest of the exec team, ’cause we weren’t just doing that in marketing, we had to do that in sales. We had to do that in engineering, we had to do that in all of the corporate functions teams. I think we came close to doubling the size of the company in that first year, which is an amazing pace of growth if you look back on it. We also doubled the number of customers that we had in that first year too, which felt pretty good at the time that we had landed on something that was going to be incredibly successful.
Kim:
That’s awesome. There’s so many questions I could ask about marketing and crypto and the journey, but since this is the 100th episode, and I think it is a good time to look back on some of the best of. What were some of your favorite episodes? What were some of the episodes that did the best? What have you learned? So with that, I know that you guys pulled some of the best performing episodes. Are there any that you want to highlight in particular that really stood out throughout this past 100 episodes?
Ian:
Well, I think the topic of pig butchering has become a personal favorite of mine, so I’d probably start there. We actually just published an episode, so if folks missed it, go back in the stream a couple episodes in your podcast player and you’ll find it. They compiled clips from across five different episodes with different guests that we had done covering pig butchering. I think that this issue of scams really plagues crypto, and to me, it’s something that we’ve got to solve if we want to see more people gain benefit from the technology. You can’t wake up every day worried that you’re going to lose your entire net worth because somebody’s convinced you to click on a link that you didn’t mean to in an email or on a website.
So I think the scam problem is a huge one, and I think the episodes that we’ve done there has been terrific. Pig butchering honestly wasn’t a term I had ever heard of until the first episode. I think we had Alistair McCready on now almost two years ago from Vice News explaining that whole problem to us. Since then, it’s become this global phenomenon where it’s actually hard to read the news on a given day and not come across somebody referencing issues with these investment romance scams. But that’s probably my top set of episodes.
Kim:
So do you think that the pig butchering, it’s this issue, it comes up all the time. We talk about it a lot on the research team, it’s certainly in the news all the time. It plays to, I think crypto crime in particular gets put under a magnifying glass because of how we can see all the data, but it is also plaguing the industry. Do you think it’s getting the attention that it deserves? Do you think it’s hyped up? What do you think about the international attention on pig butchering in particular?
Ian:
I think we’re in a moment where it feels like there’s a lot of attention on it, but that doesn’t seem to necessarily be stopping, unfortunately, victims getting scammed, and it appears to be highly lucrative for the people behind the scams. We’re now seeing this industrialization of the scammer activity where they’re running large-scale physical plants with hundreds of thousands of people, many of whom have been coerced or even kidnapped into working in these scam farms. So to me, that says we still haven’t figured out a solution to the problem. It’s too profitable for the criminals, but there’s a lot of smart people working on it. I would say to listeners out there, the message is, if you get invited to participate in something where you are going to make an unbelievable amount of money with zero risk, that is probably a scam. Don’t do it.
Kim:
Don’t do it.
Ian:
Don’t do it. There’s certainly a lot of technical scams where people are fooled for other reasons. We’ve done a lot of things on approval phishing scams, and that’s almost a different category in my mind. I think the pig butchering scam, which implies this long con trust and confidence game, it really is this thing where I think people have this underlying desire to get rich quick and are a little too trusting. Unfortunately, the solve here may be just be more skeptical. Don’t believe it if it sounds too good to be true.
Kim:
Yeah. Yeah. That’s a lesson that’s not just in crypto, it’s in everywhere.
Ian:
Absolutely.
Kim:
Yeah.
Ian:
Totally, and that’s the thing, actually. I think pig butchering in some ways is maybe becoming synonymous with crypto. We’re a crypto podcast and we talk about this topic all the time, but a lot of these scams actually have nothing to do with crypto. We can obviously see the money moving in crypto much easier than we can through the traditional banking system, but my guess without having data to back it up is that there’s probably as much if not more money being scammed from victims completely outside of crypto. So I don’t think it’s a crypto specific thing. I think it is much, much broader than that.
Kim:
I totally agree. Keeping in consumer protection, another topic that you covered last week was pump and dump schemes in market manipulation. So what are your thoughts around how we can better protect consumers when it comes to market manipulation, especially with the current bull run that we’re experiencing and we know that there’s a little bit of exuberance when the price is running up so quickly?
Ian:
Well, I’ve definitely had quite a few friends in the last few weeks reach out and say, “Ian, this is now the time to buy Bitcoin.” I have to laugh a little bit at that. My advice, by the way, to everybody is don’t take financial advice from me. I’m a podcast host, not a financial advisor. The thing that I’ve observed in crypto, and I’m not a markets expert, so take this with a grain of salt, is that crypto markets are incredibly easy to manipulate. So just yesterday as we were recording this, there was a flash crash in Bitcoin, went all the way down to I think $8,900 on one exchange called BitMax, which has a very small spot trading venue, so very low liquidity. Now, on all the other exchanges, Bitcoin was trading around $69,000, but for about an hour on BitMax, if you had funds there, you could have bought Bitcoin in the spot market at or around eight to $10,000.
Kim:
Wow.
Ian:
So now there’s all this speculation about, well, was that someone intentionally trying to manipulate the spot market in order to take advantage of it in the much larger derivatives market that happens on BitMax? I don’t have any evidence of that, it’s unclear, or was this simply someone who was trying to transact and sell as quickly as possible a fairly large block of Bitcoin? Maybe they’d gained it through illicit activity. They didn’t want to move it to a different trading venue, they were just trying to liquidate into another asset so they could move it around. All of those are possibilities. We may never know the answer, but when you have situations like that in the asset that is the most widely traded, has the deepest liquidity has been around the longest, is arguably the most protected trustworthy network, yeah, there’s market manipulation happening in these assets. When you go to the long tail of things like meme coins or fly-by-night NFT projects, there’s a lot of people out there who are trying to take your money.
So I think if you want to participate, you should participate with knowing that. My advice to friends is, “Look, if you want to walk into a casino where you know you’re going to be playing cards against Phil Ivey or one of the greats of poker because that’s entertaining to you and you recognize when you sit down in all likelihood you’re losing all the money that you put on the table, that’s totally fine. We’re adults and we can make those decisions. You should spend your money on the things that entertain you and make you happy. If you treat crypto the same way, that’s great. So if you want to trade in these thin meme coins and see if you can grab one that gains 15,000% in a week, awesome. But you also have to be prepared that it could go to zero immediately or you could get rug pulled or something else could happen and your investment completely goes away. As long as you’re going into it eyes wide open, then have fun.
Kim:
I remember talking to Gronager a few years ago and everyone was saying it’s just financial entertainment. His response was, “Yeah, people enjoy that. That has value in and of itself if you want it to-
Ian:
Absolutely. We see this outside of crypto as well. Just like pig butchering, this phenomenon isn’t isolated to the crypto markets. It’s maybe more obvious measurable, acute in crypto, but meme trading inequities is the exact same thing. I think, to be honest, as an outside observer of Wall Street, the mentality probably exists amongst professional traders as well in all sorts of other assets that have nothing to do with the world of crypto. But obviously, we get a little bit more attention on it because this is new and it’s so much easier to understand what’s going on when you have tools like Chainalysis.
Kim:
So with all of this in mind, though, you do still have questions around, I think you had a conversation with this a while ago about what it means to be an accredited investor and what rules should be followed in order to allow for financial speculation, but also keep people safe if they want to safely invest. So do you think that the U.S. and other jurisdictions should adopt investors having to maybe take a test or before investing in digital assets, how do you think that the accreditation should unfold?
Ian:
Well, I think the U.S. rules on this particular topic are silly because it’s a means test, which says you have to have a certain amount of liquid assets. So it can’t include your house. It needs to be in something like stocks or bonds or cash in order to participate in certain types of securities offerings. So you don’t have to be accredited to buy Apple stock at Schwab, but you do have to be accredited to buy shares in a privately-held company that hasn’t yet listed publicly. There’s a lot more complexity to that. I’m, again, not a securities lawyer, but to me that just doesn’t make good sense. You’re excluding a certain portion of the population from participating in activities that could be wealth creating. That doesn’t feel fair to me just on the face of it. I know that there’s a strong desire amongst people that support that rule to say, “Well, we need to protect less sophisticated investors from being scammed or tricked.” As we just talked about, there’s lots of people out there looking to take your money.
So at some point there was a well-meaning intent behind the rule, but I think the approach is different. We actually had a guest on from the Asia Pacific region, I think they were in Malaysia if I’m recalling correctly. They explained that in their country it’s not a means test, it’s a knowledge test. So just like you have to pass an exam to get a driver’s license and be able to operate a car, if you want to invest, you have to pass an exam and demonstrate that you actually know what you’re doing. To me, that just seems on the face of it, incredibly fair. Anyone that can demonstrate reasonable knowledge is then allowed to invest in all sorts of exotic instruments. If you don’t take the test or you can’t pass it ’cause you haven’t learned the ins and outs, well, yeah, you probably should stick to buying Apple shares in your Schwab account. I love that approach. It would be tremendous if the U.S. adopted that model.
Kim:
Yeah, very interesting. Very interesting. Well, some other episodes besides consumer protection, pig butchering, market manipulation, which we could talk about all day, have been around decentralized finance, decentralized ID, cloud infrastructure, killer apps, smart contract audits. So I’m going to drill into a few just to get your thoughts on some of these topics that have come up because you get to talk to everyone. So you get to put your finger on the pulse of where everyone is and then come to a synthesized output or view of this. So specifically, Eric and I had a little bit of a disagreement on the crime podcast about whether or not DeFi is getting safer, and we have looked to different data points. We’ve seen that the amount hacked is down, but the number of hacks is up, but the types of attack vectors are changing. What is your thoughts on hacks on DeFi and bridge protocols?
Ian:
Yeah, I think the interesting thing about that conversation for me was if we look back over the last few years, there’s been some really large outlier hacks that I think play with the numbers a little bit. Axie Infinity was such an outlier in the scale because it was so popular at the moment that it got hacked, there was so much value locked in that bridge contract that I think it may be skewed some of the historical comparisons. So when we say the dollars are down year over year, well, yeah, it’s a hard compare. I can’t think of the Axie Infinity equivalent from 2023 because DeFi just wasn’t experiencing that boom moment. The play-to-earn games or an experiencing that boom moment. There just wasn’t as much financial value happening in the space. So rather than looking at the value hacks, I tended to look towards the number of successful hacks, and I think that number was fairly consistent year to year-
Kim:
It was.
Ian:
… which, to me, says we haven’t yet figured this out. But I did take some solace in the fact that the nature of the hacks are changing. So we went from, I think, predominantly key compromise and contract exploit. That was the mode of most of the large hacks that we saw in 2021 and ’22 to a lot of social engineering hacks, which to me says, oh, we’re actually improving on security because now the soft target is actually going after the humans. So I think that’s good news, but obviously, we’ve got to keep an eye on it this year, right?
As TVL is growing in the DeFi ecosystem, it’s going to become a more interesting target again. The folks who are coming after this are professionals. They’ve got one motivation, which is, take as much money as they possibly can. But I’m also excited about, we’ve had a lot of people on the show who are building security technology to help protocols defend themselves more effectively. So I actually think the problems we’ve seen over the last few years have motivated some awesome founders to really up the security game across the crypto ecosystem. So I’m optimistic that we’ve got the tools and the weapons to play better defense as we go forward.
Kim:
Oh, yeah. Some of these startups are just really pushing the boundaries of what’s possible to keep this industry safe. Now I think we’re just about adopting the right ones.
Ian:
Exactly.
Kim:
Okay, so this next one is actually one of my favorite questions, and I was really interested to hear your specific take on it, which is that one common theme is that many people say there’s no killer app for crypto and there’s no killer use case. What’s your reaction to that? What’s your opinion on that. When you’re at dinner and your distant relative says something like that, how do you usually respond?
Ian:
Well, so I think there’s a couple parts to this. Part one, is crypto is really hard to use. When we think about killer apps, the ones that have gone most viral that as soon as it was launched, we all downloaded it, or the seven or eight apps that you use on your phone every single day, they have a great level of usability. I have never found that anywhere in crypto. It’s incredibly hard to use a wallet. Every time I send a transaction, it’s nerve wracking. A bead of sweat forms on my forehead thinking about, “Am I sending this to the right address? Is it on the right network? I can’t believe that this is how this works.”
So I think we need to solve that layer of usability, otherwise, it’s going to be really hard to get to the killer app experience. So that’s part one. Part two is I think for you and I sitting in the United States, crypto is not an absolute necessary thing. We live in a country with generally pretty good rule of law protections, property rights, intellectual property, freedom of speech, freedom of the press, a court system that generally works, and a really robust financial system. If I want to send you $20, am I going to do it in crypto or am I going to do it over Venmo? I pay all my kids’ babysitters in Venmo. It’s really easy. It always works. There’s no complexity. It ties into the banking system really nicely. I don’t worry about transactions getting blocked ’cause touching crypto.
So I think for people that live in North America and most of Western Europe, the need for what crypto provides today is mostly absent. But I think when you go to other parts of the world, it becomes acutely necessary. So I’ve had guests on the show from all over Africa, from many parts of Southeast Asia, from Latin America, and in those countries you have a very different experience. You have a financial system that is generally considered to be unstable. In many cases, you have super high inflation. You have capital currency controls that make it really difficult even when you have money to get that money outside the country to buy something abroad, your currency may be worth nothing outside your own country because it’s got an artificial exchange rate, and you often don’t have rule of law protections, freedom of the press or any of the other things that we associate with modern democracy.
So you don’t really want the government knowing what you’re doing with your money because you may disagree with their politics and their philosophy, and so crypto is a amazing solution for all of those things. I think when we look at our Geo Reports adoption data, the countries where grassroots adoption is happening most frequently tend to correspond to the countries that have the characteristics I was just talking about. To me, that is the killer app today. Now, I think if we improve usability, back to point one, that suddenly changes the usefulness to people in North America and Western Europe because right now, their excitement is primarily playing in the crypto casino. It’s an opportunity for arbitrage and fun entertainment of trading and things like that versus it becoming a necessity, but I still believe we could get there potentially.
Kim:
I also get a little bit confused when people say, “What’s the killer app?” ‘Cause I’m like, “Well, what are you asking for exactly. Everyone knows what crypto is. They use it, they transfer value. What do you mean by killer app? What are you looking for?” So I think it’s an ambiguous question to begin with anyway.
Ian:
It’s true. It’s true for sure.
Kim:
So with moving on to the big exciting Bitcoin ETF, we’ve been waiting for that for so long. It’s been such a pivotal thing to come through recently. Dare I ask, what’s the next big challenge that the industry should overcome? We were laser focused on the ETF for so long, and that seems to have materialized. So now where do we go?
Ian:
Well, I think the ETF is really interesting because on one hand, if you’re a crypto maxi, I think this has to be a little bit of a antithesis to your theology, if you will, because the people who are buying crypto in an ETF really don’t touch crypto. You tell your wealth advisor, “Hey, put a few thousand dollars into this, buy some shares of this ETF,” you never have a crypto wallet. You don’t interact with a blockchain. You never actually hold the asset directly. If you sell the shares later, it’s redeemed in cash. The whole thing is very arm’s length. But I do think it’s interesting because to me, the entire financial system has been trending from the very real physical world to more and more synthetic digital, if you will, products over time.
The most widely-traded things or widely held in the United States are index funds where you’re not even picking a particular company, you’re just saying, “Well, I want all the companies that are in the S&P 500.” That’s where the most investible dollars sit right now.” It gets automatically allocated across fractional shares of the companies that happen to make up that index. So I think on some level, the fact that we’ve got an ETF for Bitcoin is really just continuation of that trend. It’s like, “Oh, this is another commodity. It’s a thing that we can carve up and that people generally believe in,” which is this incredible milestone. The fact that it’s worth anything is, in some ways, tremendous because it was created of nothing. It’s an entirely digital good with no association to any real thing. But on the other hand, it’s like, yeah, that’s what finance has been trending toward in a ton of different products over the long arc of history.
Kim:
The financialization-
Ian:
Of everything.
Kim:
… of everything is in the 70s and the 80s-
Ian:
Yeah. Yeah. It’s just a continuation of that. So I think it’s remarkable, but it’s also something that I think if you held a certain perspective, you could have predicted we would end up here. What comes next is unknown because in the U.S. right now we have this regulatory stalemate. The SEC very begrudgingly approved the 10 ETFs plus the gray scale conversion. It doesn’t seem likely that they’re going to agree to do this for another asset. Ethereum is the one that the applications are stacking up for right now, but I would expect at least a multi-year fight. Potentially, we have a change in the executive branch here in the U.S. with a new president coming in early next year, so that may lead us down a path where there’s an about face towards crypto.
But if that doesn’t happen, it seems likely that we stay in the stalemate, so I’m looking abroad. I think Europe passing MiCA actually brings an opportunity for that region of the world to have some major adoption. The Middle East is pushing ahead really aggressively, particularly in Dubai. Singapore, I was just there a few weeks ago. It seems like enthusiasm and support for crypto is certainly happening in the business community, and I think the regulators there, the monetary authority seems to be leaning towards more and more support. So I’m not sure which way it’s going to go, but I’m looking abroad for where the next big thing comes from.
Kim:
What can the U.S. do to stay relevant here?
Ian:
I think the U.S. is going to play a role in crypto because so many of the venture capitalists that are funding the companies that are going to make a difference are U.S.-based. The concentration of venture capital dollars is still anchored to the United States relative to financing from anywhere else in the world. I think a lot of the founders, people that have the mentality to go start a company, so many of them, it’s part of the American psyche. So I still expect companies to be founded here, but honestly today, if you’re thinking about starting a company and you’re in the U.S., are you going to pick crypto and fight uphill against this regulatory mess? Or are you going to pick something like AI and run quickly ahead before other companies? That’s a tough decision right now. So I would love for us to sort some things out and get to reasonable regulation that protects consumers, set some ground rules for the industry so we don’t have a repeat of 2022 and enables some awesome companies to be created here.
Kim:
I think it’s definitely, for a long time in crypto people were thinking of short-term wins, and now I think we’re shifted to long-term wins. So I guess shifting back to Ian the CMO, I think that anyone who watches the podcast would notice that you very much light up when you talk to technical founders because you are one of the very few truly technical CMOs in the industry. So when you’re thinking about some of the founders that you’ve talked to who are really, really deep into tech, what are some of the companies that really stand out that gets you excited, who’s got a great founding team, got a great tech stack, got a great vision you’ve had the pleasure of talking to on the podcast?
Ian:
Yeah, I will name a couple of companies here, and thank you for the compliment. I try very hard to play technical on the podcast. I don’t know that I actually am. No one’s going to pay me to write code, just to be clear, but-
Kim:
[inaudible 00:43:16] ChatGPT now.
Ian:
That’s true. I can pay ChatGPT to write code that someone else can pay me to copy and paste. I think one of the podcasts thinking back that I think is most interesting was the founder of Iron Fish. For people that don’t remember this episode, you should go back and listen to it. Iron Fish is this amazing… the entire blockchain is built on zero-knowledge proofs. Thinking about it from the perspective of Chainalysis, we have built an entire business around being able to understand relationships between entities on the blockchain and mapping that to the real-world people or companies that are behind those transactions.
Zero-knowledge starts to change that approach pretty materially, and so they’re developing an entire chain where every transaction is a zero-knowledge proof. That spun me off into a bunch of what if questions about what might happen in the future if all blockchains were entirely zero-knowledge, particularly for our business. But also I think for how most people have become accustomed to thinking about blockchain as this public ledger where there is a lot of information that can be gained and used to benefit. If it all suddenly becomes very private and opaque, does that really start to change the entire nature of the crypto industry?
Kim:
Very interesting.
Ian:
So that was one. The other one, actually, I’m going to plug an episode that we’re recording next week with my friend Gal Sagie, who’s the CEO at a company called Hypernative. This is going back into our conversation about security for DeFi protocols. I think what the team at Hypernative has done it incredible because it is actually real-time detection of threats across the cryptocurrency landscape. So they’ve been consistently over the last two years able to alert their customers ahead of an attack occurring against the protocol, giving you time to do things like block the attacker addresses or potentially pause the protocol if you need to take it that far, and I think that is a complete game changer. So I am super excited to record that episode next week and get it out to our audience soon.
Kim:
Oh, yeah, yeah, hypernative is a really cool company. What about for the marketer, the inner Ian marketer? Being on the marketing team, I’ve learned that marketing is really hard and so it’s really hard to do. So what advice do you have for a team that’s technically sound, got a great product, but they’re having a tough time finding a product market fit, communicating to the industry? Are there any easy things that companies can implement if they’re really struggling with connecting their product with an audience?
Ian:
Yeah, I would say stop trying to do marketing and start doing storytelling. The thing that we do best at Chainalysis is we tell stories. If we stood out there on the corner like, “Hey, we’ve got all this data, come buy some data,” I don’t think many people are going to engage with us. Instead, we start with, “Let me tell you about what’s happening on the blockchain. Would you like to know where crypto is actually being adopted all around the world?” What do we get with that? Well, we get a line of people out the door. Literally, thousands if not tens of thousands of people attend our webinars and download those reports. We do the same thing with our crime data. “Hey, everyone says crypto is entirely criminal activity. Well, do you want to know the truth? Turns out, it’s probably less than 1% of all transactions have anything to do with illicit activity.”
Obviously, we take the story further than that, but I think by starting with a story, it allows you to attract people. Whereas, if you start with the technology, you’re only going to get the people that already understand the thing you’re building and the problem you’re solving. When you’re in an emerging technology market like we are, that list is going to be so, so short. You might draw a crowd at East Denver in one of the technical breakouts who are also working on similar problems and really want to go nerd out on what you’re building. But if you’re trying to build a company, you’ve got to go get all the people that don’t understand your technology and probably don’t even know they have a problem that needs to be solved. To me, you’ve got to be able to tell a story that attracts them into a conversation so you can ultimately demonstrate the really cool thing you’re building.
Kim:
That’s a really good point. When I’m doing the crime reports, I don’t feel like I’m marketing, I’m just figuring out what’s going on and we put it into the world.
Ian:
So many people think marketing is a trick, like, “Oh, I’m going to have a trade show booth, and I’m going to give you a whole bunch of merchandise branded socks and T-shirts and hats. Then once I’ve got you into my clutches ’cause I made you sign up and give me your email address. Then I’m going to spam you until you relent and buy my product.” That is not an efficient way to market. It’s way easier if you can help give people what they want. Usually, in an emerging tech market that starts with education. People are hungry to learn, and so if you can be seen as a go-to source to actually get smarter, folks tend to trust you. They tend to come back to you. They tend to engage with you, and then that gives you license to tell them other things. So start with a story. Try and be educational. Try and be helpful. Don’t spam people. That’s just terrible.
Kim:
Sorry, did I cut out there for a second?
Ian:
You’re good.
Kim:
Oh, I’m good? Okay. Sorry, I missed the end of that sentence so it froze for a moment, so I’m just going to-
Ian:
Okay.
Kim:
Sorry about that.
Ian:
No, we’re good. We can keep going to the next question.
Kim:
Okay, sorry about that. Okay, so now I’m just going to do a few lightning round questions to get to know Ian. So we’ve talked a lot about this podcast. What are your favorite podcasts that you’re listening to outside of the public key?
Ian:
Yeah, I listen to a ton of podcasts, and some of them I listen to religiously every week, every episode. Others I jump in and out of, so I’ll just name three. Number one for me is probably Pivot, which is the Kara Swisher, Scott Galloway podcast. I’m a tech nerd. They cover tech and they’re hilarious, and they know everybody. They get good guests, but I’ll be out on a run listening and just laugh out loud with their banter, so ton of fun. Next one is Invest Like the Best. So the host is a guy named Patrick O’Shaughnessy. He gets fantastic guests. They talk a lot about investing strategy, company building, some really great insights from across a wide range of industries that I just love.
Then last one, number three is Lex Friedman. I used to really not like long form podcasts. I’m like, “How can I spend four hours on anything? This is insane.” Then I got very comfortable at listening at 1.75 speed, so four hours becomes two, and suddenly Lex Friedman is one of my favorite podcasts. He is one of the most enthusiastic, kind, caring people, at least his persona on the podcast. I don’t know him in real life, but it blows me away, his engagement and interaction with people. He’s also incredibly technically deep in areas that I find also fascinating, like artificial intelligence and physics and launching rockets. So he gets a ton of content on there that I love. So those would be three that I would recommend.
Kim:
Yeah, those are all great. What about, who would you in your dream world would you have on the podcast?
Ian:
Yeah, this is a tough one for me ’cause we publish every week, so I would honestly have anybody on the podcast that’s got a great story to tell. If you’ve got one, DM me on Twitter and we will arrange a time to record. But right now, I’m reading Fei-Fei Lee’s autobiography. So if you don’t know who she is, a pioneer in modern computer vision. She actually runs Stanford’s AI Lab, what’s called SAIL, pioneer in the industry. This is her autobiography I’m reading right now. She grew up in China, moved to the U.S. in late middle school, early high school speaking almost no English and had to completely relearn to communicate and has had an incredible career, incredible life story. So I would love to just talk to her about that right now. The impact that she’s had on artificial intelligence and computer vision is just incredible. So that would be probably guest number one.
Number two, and if I can’t get her as a guest, I’ll recommend everybody go read her book. Number two, I would be interested to talk to Vitalik. I’ve never met him. From the outside, he seems like almost a very typical engineer, quiet, reserved, someone that wants to go write code and build cool products, and he’s become this incredible celebrity. In the world of crypto, people go nuts to take pictures with him, and so I’m just so curious about how he’s dealing with that. What’s his mental thinking around the experience of becoming a celebrity, a rock star in the crypto world? I think it would be a really interesting conversation. Then the last one, because he’s so pivotal in our industry right now and painted as a villain, Gary Gensler. Again, I’ve never met the man. I don’t know anything personally about him, but I wonder maybe deep down he’s really a closet crypto fan. The whole thing is politics and charade and actually… or maybe he lost a bunch of money in a bad Bitcoin trade or his wallet got robbed or something like that.
Kim:
It all comes out on the public key.
Ian:
Exactly. I want to get to the root of the ire for the industry. I think it would be really, really fun to do. So that’s my list.
Kim:
That would be great if we could get those three on. What about for anyone looking to start a podcast? Now, you’re a podcaster now-
Ian:
I guess, so.
Kim:
You’re 100 episodes in. What lessons for someone who’s just launching?
Ian:
I think the biggest thing about starting a podcast is that you have to look at it similar to how I look at running a marathon. It’s easy to do one episode, just like it’s easy to run one mile, you can get to five pretty quickly. But 20 episodes is a lot of work, and it takes a lot of time and commitment to get there. So if you’re thinking about starting a podcast, you need to think about, “Well, where’s the finish line? What am I trying to get to? What’s my goal? How do I imagine I’m going to be successful?” ‘Cause along the way, there’s a lot of distractions. My full-time job is not podcasting. I do this as a side when I’m done with my full-time job.
So it’s easy to have conflicting time demands that get in the way or make it tricky to schedule recording with the next guest or planning the next couple episodes. So if you don’t feel like you can make that commitment, then I would say maybe podcasting’s not for you, but also it builds over time. So early days’ success, it’s not like running a web campaign where you put some ads on Facebook and Google and all of a sudden you’ve got traffic and interest and you’re selling products. I don’t know that anybody listened to our first handful of episodes other than maybe some of our colleagues who were being kind. But now we’ve got a pretty broad audience. We’ve got PR folks who regularly message me and say, “Hey, I’ve got a great guest for you,” but that’s two years on. So be patient once you start and good things will come.
Kim:
So it’s not just enough to have the idea that you’re going to start a podcast-
Ian:
That’s right.
Kim:
You got one more question in you?
Ian:
One more. Let’s do it.
Kim:
All right. So it’s the future question. So looking to the future, what are you excited about for Chainalysis? Any big launches, partnerships, or features that you can disclose?
Ian:
Oh, gosh, there’s so much stuff going on. Obviously, right now, we’re in the final preparations for our Links conference. That happens April 9th and 10th in New York City, so hopefully, everyone listening is going to join us there. We’ve got an incredible lineup of speakers. So that’s number one. Number two, we have had some amazing news the last few weeks. There was a large trial, the U.S. Department of Justice arrested an individual named Roman Sterlingov and charged him with money laundering for operating something called Bitcoin Fog, which was a pretty notorious crypto mixer regularly used by many of the large dark net market operators. We finally got a ruling in that trial. What was interesting is the defense challenged the reliability of Chainalysis.
Really, they went to town publicly in the press as well as directly with the judge questioning whether our product worked and whether the data in our product was valid. Our team did an incredible amount of work led by our expert witness, Beth Bisbee, who actually testified at length in the trial to demonstrate that Chainalysis’ products are both credible and reliable. The judge agreed, rejected the defense’s that our evidence produced using our products not be admitted, and so that was amazing. It was first of its kind validation in a court of law during a trial of the veracity of Chainalysis information and its usefulness in court to help jurors understand what’s actually happening on the blockchain. So that was an amazing win for the company.
Then the DOJ won a conviction in the case too, so that was a really great win for our customers, happy for their success there. So that’s probably number two. Then number three, I’ve spent the last three weeks with our sales teams talking about our product roadmap for the year, and we’ve just got some amazing stuff that we’re shipping this year. Our R&D team has been building through crypto winter, as the adage goes, and we’ve got some amazing stuff that we’re going to be unveiling, starting at Links, but throughout the year, that makes our technology more powerful, makes our data more accessible. So more to come on that front. It’s going to be a lot of fun. Yeah.
Kim:
Well, that sounds all amazing. Ian, you are officially out of the hot seat. That’s all I got for you.
Ian:
Thanks so much, Kim. This has been a ton of fun. I really enjoyed it.
Kim:
Thank you.