When I speak to Peter Smith, he is mid-juggling three events in as many days: a board meeting, moving his entire London team to new offices, and the office Christmas party. “We haven’t even had the office opening yet, but it’s all been fine,” he reflects.
The first of these requires a day trip to Luxembourg, but it’s good news: “we’ve just had our strongest quarter ever,” says the chief executive and co-founder of Blockchain, the largest bitcoin wallet in the world. This year alone, the company went from just over 5m wallet users to well over 10m across 120 countries.
But Smith and co-founders Nicolas Cary and Ben Reeves never even intended to start a company. “It was just a side project. When we started out, very few people were interested in what we did or even the technology behind it. That’s changed, but it didn’t become a real business until early 2013.”
What’s more, says Smith, he and Cary had “never had real careers before Blockchain. I’d been doing different things in the Middle East, East Africa and South East Asia… Ben [Reeves] had always lived in northern England, so that’s where we came together.” For a year, the company, which describes itself as building an “open, accessible and fair financial future one piece of software at a time” was based in York. “People always think I’m saying New York, but I do mean York in Yorkshire.” The firm eventually migrated to London because “there are only so many people you can hire up in the north”, and went on to open its second office – in New York.
More than sexy
The bitcoin wallet enables users to manage, store, send and receive digital assets. Blockchain is doing between 100,000 and 120,000 transactions a day. “The likes of Transferwise are doing around 12,000 to 15,000. We’ve got more active users than any other digital wallet that isn’t built by a bank.”
The wallet, says Smith, gets talked about a lot “because it’s sexy”, but it is just one strand of what the firm does. As one of the first movers in the world of digital currencies and blockchain it a) managed to take the name “Blockchain” and b) can now provide one of the most advanced infrastructure platforms in the industry.
This platform gives customers access not just to the wallet, but to data and analytics across the sector (“think of it as a Bloomberg for public blockchain and digital assets”). It does several hundred million impressions a month, making it one of the top 1,000 websites in the world, and in the top 50 in the UK. Blockchain also enables other developers to build on top of its infrastructure. Many of the biggest companies in the industry were originally built on its app.
Now, Smith and his team are dealing with “a huge volume of requests every day – the number of people who logged in every month 18 months ago is now logging in daily.” The way of coping with the traffic is to “keep hiring great people and shipping a lot of new code”.
The difficulty for any company in the sector is finding those great people. “There is a talent war. There’s probably only 100 to 150 people in the world who know how to do this stuff, and 80 per cent of them work for the same two or three companies.” But it’s not big banks who have the talent, it’s the tech giants, Smith adds.
Don’t talk about it
The final area of focus for Blockchain is R&D. This year, the firm announced the introduction of Thunder, an implementation of the Lightning network, which significantly reduces transaction costs for users. It’s also working on projects with large institutions – “but none of those products have come to market yet, so we don’t talk about them”.
This is a mindset that sets Blockchain apart in the tech sector, says Smith. “A ‘don’t talk about things until they’re done’ outlook is unusual for the tech industry, where you have a lot of people talking about things they think they may have built.”
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In the early days, there was pressure on Blockchain to move to the West Coast. “To raise money, we’d have had to have moved. But we got bigger, and that meant we had more negotiating power.” They stayed put and raised $30m in one public round. “We’re really proud we’re London-based. If you’re in the Valley there’s a high chance you’ll get caught in the echo chamber. We have to be international, and London is the best place to hire people who are literally from all over the world. We have 27 different passports in the office.”
Smith says behaviour in London is also “less mercenary”, with his West Coast competitors seeing their entire engineering teams turn over almost every year. “Liquid labour markets are of course good, but we really wanted to build a company of missionaries.”
I ask Smith what his take is on bitcoin’s supposed decline in favour with VCs in recent months. “It’s not that VCs aren’t interested, it’s that this sector is heavily financed already, and investors don’t want to back our competitors because it’s already clear who the early winners are. You have to remember that there haven’t been any big rounds in the bitcoin space for a while – or the blockchain space ever. If we go another year with no-one raising, that might be worrisome. But we don’t need capital at the moment.”
In terms of Smith’s own products, 2017 will “see some new systems come online. The one I’m most excited about is tied up in regulatory approval, though” (which means he can’t talk about it). For him, regulation is a feature of daily life – if you’re in the crypto and blockchain sector, you’re often working in uncharted territory: where, for instance, does liability sit if it’s an algorithm that executes a contract?
Love blockchain, hate blockchain
Incidentally, Smith thinks the media gets “too excited” about smart contracts. “There’s no example of a product. When there is, that’ll be the time to get pumped.” And it’s the same story for the investment banks testing blockchain: “there’s been a lot of experimentation, and now they’ve come full circle. It was ‘love blockchain, hate bitcoin’. Now banks realise things can only happen if there’s a token. I don’t have an opinion until they’ve built a product… But then I am a stodgy conservative person. One of our board members always says, ‘Peter is the biggest pragmatic optimist I know’.”
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This extends beyond business. “One of the things we don’t talk about enough in the tech industry is how to take care of our people, including people who run companies. How do we build companies that are globally competitive but also great places to work? And how do we, chief executives and co-founders, do it so we can live our lives in a way we’re really proud of? It’s a big challenge, particularly in London, where there’s a lot of influence from the finance industry, which is perhaps not totally healthy.”
Smith makes time every week to do volunteering that’s totally unrelated to what he does at work. “It’s a way to keep you grounded about who you are and your place in the world, whether you’re working with at-risk youth or a charity that works with street people. Whatever it is, I always encourage founders younger than me to find something outside of their jobs that reminds them a) in a way, how insignificant they are and b) how much they have to be thankful for.”