I had the pleasure of interviewing Marc van der Chijs, a founder of several companies in the blockchain and crypto-industry. Among others, Marc founded crypto asset management company, First Block Capital, ICO investment bank FirstCoin.com and Hut 8 Mining, the largest Bitcoin mining company in North America.
Gene: Thank you so much for taking the time to speak with me. Please give us a brief overview of your background and how you got started in this industry
Before I became active in Bitcoin I was an entrepreneur in China for 13 years. Among others I co-founded Tudou.com that grew into the leading online video site in China. That allowed me to retire to Vancouver when I turned 40. Right after moving to Canada the Cyprus banking crisis started and I happened to be involved in a company there which bank account got frozen. That led me to do research on how the global financial system really works, because I did not understand how a bank can stop you from taking your own money out of your account. I quickly learned that money in a bank account is actually not your money, but that it’s an asset of the bank. I started looking for alternatives and then came across Bitcoin in early 2013. At first I dismissed it as a pure libertarian idea but after a couple of weeks it suddenly hit me. It was on a Friday night when I suddenly realized that Bitcoin was more than a potential global currency because of the underlying blockchain technology. I got so excited that I literally spent the whole night reading up on the technology. At that point hardly anybody knew what Bitcoin was and even less people talked about the blockchain. It seemed not many grasped the potential of a distributed immutable ledger yet, but when I saw the opportunity it changed my world. I then started investing in Bitcoin and in blockchain companies, and started to travel to conferences all over the world to learn more and become part of the community.
Gene: Can you please tell us more about what your company does? I love learning about advancements in the crypto space, so please feel free to geek out with me on this.
My most important company in the space is First Block Capital, the only fully regulated investment company in the cryptocurrency space in Canada. We are the only company that can run crypto funds, such as our FBC Bitcoin Investment Trust and our upcoming Bitcoin ETF. First Block also invests in ICOs, altcoins and it incubates new blockchain companies. One of the companies we started was FirstCoin.com, an ICO investment bank. We just sold this company to Wall Street hedge fund billionaire Mike Novogratz, and it’s now part of his company Galaxy. Another company I founded is Hut 8 Mining, which has grown into the largest Bitcoin mining company in North America within a few months. By the end of 2018 we will have 200 MW of mining capacity in North America. We are currently in the process of listing the company on the Toronto Stock Exchange, in the latest pre-listing round it was already valued at over $500 million. For 2018 I have plans to start and list at least 2 other companies in this space.
Gene: Who are your competitors in this space? What makes your company stand out?
There is no other company doing what we do, we are building a conglomerate of crypto companies that create synergies for the other companies. There are of course several other crypto asset management companies and crypto funds, for example Mike Novogratz’ Galaxy Digital. But none of these competitors actively incubates start-ups or is fully licensed in Canada. For Bitcoin mining we have many competitors, but none of them is as big or as well capitalized as we are. We have the advantage that we work very closely with GMP Capital, the leading investment bank in the crypto space in Canada. GMP has a very strong team that is involved in all of the big deals in Canada and their CEO Harris Fricker is one of the few people in the financial industry who completely understands the blockchain space. Having strong financiers that have full trust in us is what really makes us stand out from the competition.
What sort of traction have you guys gotten so far? Are you a well known brand? Still in the startup stage? Or somewhere in the middle?
Without trying to brag, our traction has been faster than any other start-up I have ever been involved in, especially for the companies that we incubate. FirstCoin.com for example was acquired for tens of millions of dollars within 4 months after starting it. Hut 8 Mining is on track to become the fastest billion dollar company in the world. We are not doing any real marketing for our businesses and focus on strategy and execution. My business partner Sean Clark and I have been working 100-hour weeks for the past 12 months and are literally on a plane 5 days a week. It’s super exciting to see that everything we do seems to turn into gold, but it’s also a bit scary. Our biggest problem now is to find good people to lead our new companies, we just don’t have the time to do that ourselves anymore.
Gene: What is the most innovative project that you have ever worked on?I don’t have a most innovative project, but I would say that the ‘reverse take-over’ structure that we use to quickly raise lots of capital for blockchain companies is the biggest innovation we bring to the sector. What this means is that we start a company, capitalize it ourselves, grow it as fast as possible and then take it public by merging it with a listed company on the Toronto Stock Exchange. That has allowed us to become the leaders in this space, simply becausewe could raise capital extremely fast.
What are some up and coming coins that we should keep on our radar?My favorite below-the-radar coin is Emercoin (EMC). It’s a coin that has been around for 4 years already with a very strong development team. They are not just a whitepaper with some ideas but they have built all technology already. We look at a lot of coins and this one really stands out. First Block Capital and Bitfury invested in the team a few weeks ago and will help with marketing and business development for them. I believe this coin has the potential to get into the top 20 of coins this year (it just got into the top 100 in mid January). I am also a fan of Decred, a coin that has seen good growth over the past year. Other ones that will keep on doing well this year are Dash, Zcash and Monera. Of course anybody should also hold some Ethereum and Ethereum Classic. Keep an eye on Ravencoin as well, you can’t buy it yet but if it becomes available it might be an interesting investment.
Gene: What is your opinion on bitcoin? Is it still a good investment?
I am still a big believer in Bitcoin, simply because the Bitcoin blockchain is the best blockchain in the world. We are seeing a transition from physical data to digital data and the best and most secure way to store digital data is the Bitcoin blockchain. It’s not the fastest or cheapest blockchain, but nothing comes close in terms of security. That is what give Bitcoin its real value and that’s what makes Bitcoin stand out. Next to that I believe that the Lightning Network, a second layer solution that allows ultrafast and very cheap Bitcoin transactions, will be a game changer. It will go live over the next couple of months and will likely lead to an explosion in Bitcoin prices. I believe the Bitcoin price will hit $150,000 within the next 3 years, so it’s still one of the best investments you could do.
What sort of regulations do you think we can expect to see in 2018? How will it impact the industry?
Governments will try to create their own fiat-based cryptocurrencies, so they will make it harder to use Bitcoin and altcoins. I think this might ultimately be a good thing, because fiat-based crypto will make the general public more aware of crypto and people will eventually realize that Bitcoin is far superior to government-owned currencies. I expect central banks all over the world to work together to try to slow down the growth of Bitcoin, but they will ultimately fail. The thing is that they can’t ban Bitcoin, because it is a peer to peer currency. That means you don’t need the traditional financial rails to transact, but anybody can buy and sell without the government knowing about it. Next to that there will always be some countries that will fully embrace Bitcoin. As long as one country will support it Bitcoin can’t be stopped anymore. In practice I believe even governments don’t want to stop Bitcoin anymore, they just want to control it. They see the value the Bitcoin blockchain has and how it will change the world. Stopping that would not be in their best interest.
Gene: Who is your hero (In your business or personal life)? How have they inspired you to become the person you are today.
I have had a few business heroes over the years. One of them was Steve Jobs, I admired him for the way he built Apple into what it is today. He was a true visionary and for a long time I aspired to be like him. However, once I met him in real life during negotiations in his office my view of him changed completely. He may have been an amazing manager, he was not a nice person. I guess you can’t be both, but after meeting him I decided that I would never be the negative person that he was. My real hero now is Elon Musk, what he has achieved in the past years is astounding. He is not only a true visionary but he also executes almost flawlessly. He envisions what the future will look like, creates companies around that and builds them into the biggest and most disruptive ones in the world. He is super smart and is probably the most dangerous competitor in any industry that he enters. In a way I am glad he is not in crypto yet!
Gene: If you could jump into a time machine, go back in time, and change one aspect of your past, what would it be, and why?
You know, I don’t think I would change anything. Of course there are a few regrets, things like relationships that did not work out because of me not focusing on them, or not executing faster on a business idea, but in general I am pretty happy how my life has evolved. The past has made me into who I am now and I don’t think I would want to be a different person.
Gene: How will the work your team is doing impact humanity in the future? For example, bringing people closer together, creating more jobs, create killer robots that will destroy all of humanity (joking), etc.
I believe we are building the foundation of the biggest industry of the future, we are building the infrastructure that is needed to run the crypto industry. We are funding companies that we believe will change the world, or if we can’t find these companies we create them ourselves. Take for example Bitcoin mining, it is my strong belief that this might eventually become the most important industry in the world. What the oil companies and the banks are now is what the crypto mining companies will be in the future. Most people don’t see that yet. In order to be a leader in that space you have to think big, because only scale leads to efficiency. You need to innovate constantly to stay ahead of the competition and you can only do that with sufficient scale and capital. The blockchain will change the world and we will power that.
Gene: Throughout our careers, we have all run into a few roadblocks. Can you please tell us about a time that you failed? How did you motivate yourself to keep going?
Like every serial entrepreneur I have had a couple of failures in my life, one of them was when I co-founded online fashion company UnitedStyles back in 2011 in Shanghai. The company allowed people to design their own fashion and we would make it for them on-demand using 3D modeling and inkjet printing techniques. The idea was great but we were far ahead of our time. It was hard to raise money for it because investors did not understand our vision. In the end we decided to stop the company. It was painful because we had a great team and put a lot of personal money in it, but in the end you have to bite the bullet. I also realized that fashion was not really my passion and that I should focus on industries that are closer to my heart.
Gene: What are a your 5 tips that you would give to an inexperienced investor? Why?
As an investor I have a couple of rules of thumb that I always try to follow:
1. Invest only in experienced teams, success with first time entrepreneurs is much less likely
2. Invest in teams that are passionate about what they are working on
3. Don’t invest at crazy valuations, not even for the best teams. Chances that you’ll make your money back are much smaller because too much money generally leads to less success. That’s one reason why I pass on most ICOs that I come across, a start-up with 20 millions in the bank is often doomed to fail.
4. Make sure the team has a strategic advantage (a ’secret sauce’) that sets them apart from the competition. That can be a better network, more experience or simply an innovation that is hard to copy.
5. Never put all your eggs in one basket and start investing small amounts at low valuations and add more in later rounds. Or in the case of a coin: buy early and keep buying more when it keeps on going up.
Gene: If you could spend one day with any person (alive or not), who would it be any why?
That’s an easy one, I’d love to spend a day with Elon Musk to understand how he manages his time, his companies and his private life. I’d like to learn how he keeps up with all the latest technologies (I spend at least 3 hours per day reading, he does not have time for that) and how he makes time for his kids despite his stressful business life.
Originally published at medium.com