Simone Maini, CEO @ Elliptic, on Leading Through Crypto Winters and Building Elliptic into a Blockchain Analytics Leader

0:00Hello and welcome to another episode of Riding Unicorns. Today we're joined by Simone, CEO of Elliptic. Simone, thank you so much for joining us. It'd be great if we could just start with an introduction to yourself and the business. Yes, absolutely. Hi, James. Hi, Hector. It's really great to be here. Thanks for having me. My name is Simone Maney. I'm the CEO of Elliptic. And Elliptic is the leader in blockchain analytics. So if you don't know what blockchain analytics means, really what we're doing is building a kind of data and intelligence layer on on-chain finance. So that means that we're trying to understand a bit of who's who in crypto.

0:40And we do that so that we can help our customers with things like anti-money laundering, counter-terrorist financing, but also just having an understanding of who's using their blockchain, who's using their asset and really helping inform the crypto industry about trends and things like that. and Simone yeah amazing to have you on the show and um we would love uh to hear a bit more about your career and what led you to uh elliptic yeah for sure uh well i don't know that i would ever have imagined that you know having done a degree in history that i would end up um leading a blockchain analytics company it's pretty technical what we do here uh we we very much think of ourselves as a data intelligence company but yeah several key things I guess led me down this path so I spent about eight years at Deutsche Bank started on the graduate scheme and as you do in very large organizations moved around quite a lot had a really fantastic educational experience if you like while I was there just lots of different roles lots of teams I worked in different countries so was able to kind of build a pretty good foundation but also experiment with the types of things that I liked doing and that gave me a lot of satisfaction so that was a really good way of learning that because I didn't I didn't leave university going okay I know that I want to be a lawyer I want to be you know in finance or it wasn't clear to me and so it was a it was a really nice training ground from from there the one thing I didn't get to do at Deutsche was be in a client facing role.

2:20And so that's something that I really wanted to be able to do. And so that was what I did after, after leaving, I joined a consulting firm, and just wanted to scratch that itch, really, like, would I be any good at it? Would I enjoy it? And did actually really enjoy that part of the role. And had a really good sort of five or so years doing that. That was also a pivotal moment in another way in that I was exposed during that part of my career to topics of anti-money laundering and financial crime. It wasn't something that I deliberately went into thinking, OK, this is something I want to explore.

2:57I was staffed on a couple of projects as you do in consulting that involved that topic and actually ended up going quite deep on it, learning a lot about how is anti-money laundering handled in large financial institutions and learning a lot about the fact that it's pretty inefficient. it's very people intensive it didn't often work and there's uh was often a bit of a disconnect between how do we make sure that we're regulatory compliant versus how do we actually stop the bad stuff happening right like those two are not always the same and so when james smith who's one of the founders of elliptic and a good friend of mine from university called me and said it turns out we never set out to build an anti-financial crime product but we're building anti-financial crime products what do you think about joining on the journey like everything just sort of started adding up because I'd seen really clearly how it wasn't working in the big banks and I really loved the potential to have the opportunity to change that in the crypto world so tell us a bit about the that journey from so joining to maybe you joined as COO I'm not sure and then becoming CEO and you know how that journey sort of played out yeah I joined as a head of product actually and then I became the COO I think about six months later which you know it's a very small team as you guys well know like that just means you know it's a fancy title for do a lot of things.

4:30It was basically everything that wasn't writing code. So I was involved in all of the commercial functions, as well as the operational functions, getting lots of things set up, new entities. You know, I remember in the first couple of months, we had our first person ever going on paternity leave. Okay, we need a paternity leave policy. You know, the first time we're hiring someone in a new jurisdiction, okay, we're going to need a new contract, all of that kind of good stuff um and I love that role the thing that I learned about myself at Deutsche Bank is that I really love to have like fingers in lots of pies that's just my style I like being able to connect all the different things going on in the business and and help people see the bigger picture and so yeah as the COO I was I was able to do that component of it just going back to the last question was that I could also be client facing in that role.

5:23So it was quite commercial. So I was doing quite a lot of sales and customer success as well. So closing some of our early deals and onboarding our first big enterprise customers. And then just over five years ago, so it was just the start of the pandemic, James and I had a long conversation about what he was doing in his role and what I was doing in my role. And we were at a really important inflection point as a company it was also really important to us that we're both working on things that we enjoy and get satisfaction out of like after all in this type of business like it's everything right it's your whole life basically and if you're not enjoying it then you know you have to address that and James was really good at putting his hand up and saying I'm just not enjoying being the CEO as much as I was I'm less close to product less close to customer all the things that I got into this for and so yeah it was the beginning of a fairly natural evolution for the two of us to make some changes.

6:23I think it's a really interesting journey to have been through and one that a lot of founders sort of think about because so many founders are zero to one people and really enjoy that product build staying close to customers you know seeing things grow very fast and are less interested in the sort of organizational side of things and and so So for a company like Elliptic, I mean, you've raised like over$100 million at this point. At what point was it clear that that decision should be made for you to become CEO? Had you raised a lot of money? Did you need to talk to investors? And how did that sort of sit with the whole organizational sort of culture?

7:01Yeah, I think you hit the nail on the head, really. I think we were at that inflection point where managing the board and the investor base was a really important part of the CEO's remit, as was building, managing, coaching the leadership team. Obviously, if you're getting bigger and more complex, those two things were taking up a lot of time. And yeah, that took James away from that zero to one journey that you were talking about in terms of building product, listening to customer. And that's sort of very much the stream that he went back into. So we're really lucky that all three of our founders are still super involved in the business.

7:43It's just that we had to iterate a bit around what's the best seat for them to sit in and what did that look like? And it didn't mean that they had to be on the leadership team running big teams. Like they're having huge impact doing things that align with their skills and their interests. And so I think because also James and I had a very long standing pre-existing relationship. It just allowed us to get over any trust issues around the transition. So there was I can see in another context how that could be really challenging. But we were really lucky and it wasn't for us just because of where we were coming at it from.

8:24and what what did it mean in practice were you kind of already doing that job or were there new responsibilities that you had to sort of grow into and learn so I'll be honest I thought I was doing a lot of that job but the day it changes you realize it's not about what you're doing it's about how you're seen and the ownership that you have got as the ultimate decision maker or ultimate head on the chopping block like it it's not that what you're doing is different it's how how it feels and I hadn't anticipated that honestly and so while a lot of the things I was doing a lot of the decisions I was making a lot of the meetings I was in were kind of the same it took me a while to realize that how the team perceived me and how they heard what came out of my mouth had changed overnight almost so I think that for me was the biggest surprise and the thing I had to get used to I mean that's such a fundamental change I think it's you must have felt a huge amount of responsibility where the buck suddenly stops at you and how do you deal with that you know there's a lot of added stress that you may not have had before how do you cope with that change the first thing I did was to hire a chair and I was really deliberate to hire a chair who had been a CEO so had sat in the seat before and it was definitely one of the best decisions that we could have made was to invest in that person and to be really rigorous about the criteria we were using to hire that person as well we all as well as having been a ceo we also wanted them to be at least initially quite involved in the business more than what most chairs would be because i was very conscious i'm a first-time ceo i really want that coaching uh and so chris who's our chair helped like shoulder or helped smooth the way for a lot of that stress and burden I would say so that was really valuable and what kind just to jump in on that what kind of um do you have any anecdotes around you know how how he was so helpful you know any any specific issues that he was able to guide you through I think the the thing that he really helped me most with was around board and investor management that was completely new territory for me even as the COO I really I had some exposure I worked with James on some fundraisers but that's different from your ongoing board stakeholder management how to communicate how to communicate when things are not going well how much to share how often um how to anticipate how what they needed all of that was new for me and and so having Chris just in the room or at the end of the phone to help coach in those scenarios just helped me come up that learning curve much more quickly I think we used to be quite defensive about board meetings like you know no one tells you like what's a board meeting for how do you make them really productive how do you set them up so that you're actually engaging your board members and getting the best out of them no one tells you how to do any of that and you know with raising a lot of money comes a lot of investors and board members all of whom have come in at different stages have different priorities and objectives and so yeah leaning on Chris's experience both having run his own boards but also sitting on lots of boards now and having a perspective on that was um was really valuable so so this is a really interesting conversation because I think a lot of first-time founders and CEOs run quite unproductive boards where they're in sales mode and they're not wanting to talk about the things that are going wrong and the struggle and I think I learned the hard way that over communicating especially when things were bad was the only and best approach.

12:49Why? Because it built trust. And the way I thought about this, and I sort of had this really like moment of clarity, which with hindsight seems so obvious. But I thought about how do I want my own team to communicate with me, especially when things go wrong? I don't want them to just keep quiet while they go and figure it out and fix it. I actually want them to actively talk to me about, look, we're not going to hit this number or this project is completely off track. But this is what I'm doing about it. Like that creates so much trust through the transparency. And you're bringing me along for the journey and you're giving me an opportunity to give some input.

13:34and as soon as I started taking that same approach of my board I would say that something fundamentally changed. There's a real art to it and then finding the the right balance because in the same way as you have to communicate with your employees you know through a hard time or through good times there's a level of information that you have to keep to yourself and there are certain things that are better not spoken about so finding that balance is right but Have you developed any kind of framework? Like what gets talked about at the board and what doesn't? I mean, you're not going to talk about it on a podcast, but...

14:13Yeah, I have to be a bit careful here. Something that was really valuable that we did do as a board was a line around a key dashboard of metrics that we all cared about. And we felt like this is what's going to help us see from a leading indicator point of view that things are tracking or not tracking in the right direction. And so that gave us a shared set of metrics, but it also meant that I could talk to the elliptic team about this set of kind of North Stars from an investor perspective. And so having that common thread all the way through employees, leadership team and board, everybody was talking about the same, not just the same set of numbers, but the same key metrics that we care about moving them in one direction or another did create, I think, some cohesion that had been lacking.

15:08because often you can have the team really focus on a set of metrics that they feel are really important but they're not actually enshrined in the same set of metrics that the board is looking at yeah it's really interesting um hedge and i both invest super early so sometimes the metrics do change but eventually they've got to settle on the metric and then you want like every board means or every investor update to have the same number when founders start bouncing around choosing the metric that looks like success that's always a funny conversation um and then so we've obviously talked about you know there's always challenges in every business but is there a moment that you've really been able to celebrate where things really felt like wow we we've cracked it or we're we're really onto something or we're through the woods on that part of our journey yeah well look honestly we had one today today has been a fantastic day at elliptic we crossed the really important arr milestone today and we're doing it at an accelerating growth rate that's awesome yeah yeah thanks so yes i think we've also learned that it's important to celebrate those milestones that we've not always been very good at that but i think we really recognize now how how critical that is to do that work, to celebrate.

16:31And we've also had a massive product launch today as well. And while the product launch itself has been in the making like nine to 12 months, it is the result of many years of product vision. And so seeing that all come to life has been amazing. And I think crossing that ARR milestone with an accelerating growth rate today, I've been reflecting on the fact that the last 18, 24 months, it's been tough for a lot of startups and scale ups. The industry has changed in many ways. Investor expectations have changed. Availability of capital has changed. And then when you layer on the volatility that we've experienced in the crypto industry, it's been really tough.

17:20And so it does feel like milestones like today's are a bit of a kind of signpost that says like yeah we actually have really turned a corner as a company but also as as an industry and I think that's what been one of the most challenging things about building elliptic is we've been building a startup in a startup industry and that has just thrown up you know myriad challenges that we could never have anticipated yeah yeah that's great congratulations it's really exciting and what's the business model and has it had to change as you've scaled or has it kind of all been the same what what is it and yeah has it changed yeah so the business model is your classic kind of b2b sass business model so it is a kind of platform fee to subscribe to the various parts of the software stack and then usage ease.

18:18It's interesting that you ask about how's that changed because the product launch today actually moves us a bit from a SaaS motion more into a DAS motion so data as a service. So we're finding that our largest most sophisticated customers actually want loads more control and flexibility when it comes to accessing the data intelligence asset that we have. And so while it's not for everybody on day one yeah those those really big sophisticated customers are ready for that and so making that move from a b2b sas motion into much more of a kind of consumption model um it's it's really early days for us but it's it's an interesting sort of transition point that we're entering right now and saman i'm gonna ask for your help so we're both we're both early stage investors and always looking for signals of um you know what we should be looking for in founders, in teams, organizationally.

19:20And I wonder, what would you say we should be looking for? If you take the best parts of Elliptic, what are those parts that you think are visible at the really earliest stages that investors should be looking for? I think probably foremost is just a really deep curiosity for the problem space. Because you are going to hit road bump after road bump after road bump from the initial concept, testing it with early customers. The market's probably going to shift. But I think having that deep curiosity and passion for that basically equals resilience and persistence in this space. You know, Elliptic actually started out as a crypto custodian.

20:11I shouldn't say crypto custodian. It was a Bitcoin custodian. There was no concept of crypto when the company first started. And it's not that we were wrong in that. It's just that we were too early. And we pivoted after a couple of years to blockchain analytics because we really recognized that actually what the space needed was not a custodian at that time. It was a business that was going to help bring the trust and the transparency and the safety that would allow the Bitcoin ecosystem to become fused with the traditional financial ecosystem. But that took curiosity, creativity, a real passion for just the concept of Bitcoin as a financial instrument to not go, well, this isn't what we wanted.

21:04This isn't what we set out to do. it was a commitment to something that was bigger than that that helped us work through those initial years and find the product market fit so i and that continues to be really important today you know we've got product market fit in most of what we do but we're always innovating new products and there are some parts of the company where we don't have pma and so you've still got to have that motion where you're exploring and you've you're building the muscle for that resilience in pockets of the organization that's almost harder because you want like 80 percent of the company in one motion where you're scaling off the back of product market fit but then you want 20 percent of it finding new product market fit and those are oftentimes two to speeds what can you say to employees to encourage experimentation and autonomy for us it starts with our values right so we talk a lot about curiosity we talk a lot about failure and create like those things all add up to creating a psychologically safe space that says the only failure really is in not trying.

22:21So I think that's really important. I think it's also about creating enough space just in the product lifecycle to run experiments. Like, are we running enough experiments right now? In the crypto space, it's moving so quickly that we have to, we live or die by the number of experiments that we're running and the things that we're trying. Otherwise, we will get left behind. And so I think that's something that we've tried to build into the culture here. And although you're a SaaS or maybe not SaaS business, you're in the crypto space. And so there must be these like big moments where it goes up or it goes down.

23:04And suddenly the sort of macro lens of what you're doing changes quite quickly. Trump says something or does something and it kind of changes. how do you personally rationalize that as kind of the leader of the organization do you turn off the news and sort of block it out or not you know not get notifications on price volatility or do you have to stay close to it and just find ways to rationalize it and move forwards such an insightful question and something that i wrestle with a lot because we do experience quite extreme ups and downs. You know, we're in a moment of kind of almost euphoria in the crypto space right now and the circle IPO and the stock price continues to climb.

23:54We've had the Genius Act, which is a really important piece of legislation in the US for the crypto industry, passed the Senate last week, all sorts of things going on, which mean that you have to stay close to it you can't be left behind you've got to understand what's going on in the market you've got to follow the trends you've got to be speaking about them you've got to be relevant at the same time it's really important not to get carried away because as we have learned in elliptics history you know there are summers and there are winters and what goes up will very very likely come down and so the same way as in the last quite deep winter crypto winter you know we said to the team all the time like don't doom scroll like getting ourselves in that like deep pit of despair is not healthy the same also applies in the periods of elation and momentum.

25:00It's really positive, but we've got to be also a little bit realistic about how sustainable it is. And that really sounds like a bit of a downer, but I think part of my job is to try to keep us on an even keel without missing out on opportunities that the market provides. and that's quite a tricky balance to find. Probably one of our biggest learnings was that, you know, in the past we have gotten carried away with the market and we didn't necessarily stay true to who we were. We were more worried, like sort of affected by outside influences than what do we think is right? Like how do we want to control our destiny in all of this?

25:46And so we do talk a lot now about controlling our own destiny. what what did that mean in practice when so you you were reading news articles thinking shit we should be doing this hypey thing because someone else is doing it and they raised 100 million or what what did it mean in practice yeah a bit of all of that or we need a team on the ground doing this or we're not in that space and how do we scale something up quickly over there and yeah there's a lot of that kind of homo feeling that if we don't grab it now the opportunity will be lost and that's generally not true like you might come to the opportunity a bit later but it actually might be better that you come to it later and that someone else has opened the door so I think we're much more thoughtful now about yeah that's that's a fantastic opportunity for us to go after but we're not ready to yet either because there are other places where we're making bets or because the foundation doesn't exist yet for me to confidently say okay let's layer more resources on top and know that I'm going to get good productivity out within a reasonable time frame.

26:54So I think it's really important to us now that we maintain that discipline, even in this sort of environment where everything feels like it's taking off. I mean, you mentioned the crypto winter, and I wonder if there have been other times where, or any times where you just thought the vision for Elliptic was unattainable, and whether it So just you thinking that or the sort of wider sentiment of the team, how do you pick yourself up and the team up from that? I mean, if there has been a case. Yeah, there's definitely been more than one case. The one that comes most obviously to mind is we really hitched our strategy to enterprises getting into the crypto space.

27:43and so everything we did whether it was pitching as part of fundraising or setting ourselves up internally to make sure that we could sell to and service the needs of enterprises like we really hitched ourselves to that belief and there were numerous cycles where that just didn't happen and so you would have this doubt around it's just the is the belief fundamentally incorrect or have We just got the timing wrong. And then how do you sort of wait out? How do you modulate your investment to meet the timing of the market? And I don't want to call it too early, but it does feel like that moment is arriving.

28:29And I do think that all of those years of investment we put in place around not just making sure the product was enterprise ready, but all of those other things in the company, legal and compliance and infosec and all of the things you've got to do if you want to work with the large financial institutions are quite a big overhead they're actually now coming into their own like we're basically the only choice to work with because we have invested in all of those things and we're ready to go but that was hard to keep justifying because the team were having to put in such hard yards on like why are we doing all of these policies and why are we restricting ourselves in these ways because we want to be enterprise ready but the enterprises are not ready And I think what was really important for them to see was that the leadership team continued to just have such strong conviction and backing from its board around that belief.

29:21And so I think, you know, that allowed us to carry most people. It didn't allow us to carry everybody. And that's OK. Sometimes people have to opt out and say, you know what, I actually just don't believe anymore. And we've definitely had some cases of that. And I love that conversation. like I'd much rather you came to the table and said I'm just not aligned with this strategy than sort of sat around half believing or at worst undermining the strategy that's extremely damaging and I have every respect for anyone that comes to the table and says like it's just not for me and what does the future hold for a leptic is an IPO on the cards at some point does the the circle pop you know raise that as a conversation amongst the leadership team yeah well I think every board in crypto land is having the IPO conversation at some point it seems you know you never say never I don't know exactly what it means for us going back to what I said earlier what we continue to focus really hard on is being in control of our own destiny we're you know really close to cash flow break even and having the opportunity then to say you know we'll be able to choose our path at that point and the timing of that path rather than being kind of at the mercy of the market you know what how the market's doing at any given time that feels really good and I think that's what's really motivating to the to the team here but But, you know, we will definitely look at whether it's, you know, IPO or private capital raising to make sure that we continue fueling our growth.

31:02As I said, you know, we really feel like from a product perspective and a market evolution perspective, particularly when it comes to stable coins, we're a really key crossover point where the kind of scale that Elliptic's bringing in terms of being able to interrogate blockchain data and the needs of the market are sort of really meeting in the middle right now. And obviously, we don't want to leave money on the table or any market share on the table. And so that's really always a conversation. Awesome. It's very exciting. And so moving on to our just final couple of questions. So our first is a future unicorn prediction.

31:42So obviously, the show's right, a unicorn. So is there a company that you've come across or spotted that you think has great potential? Yeah, for sure. So the company that I'd love to talk about is a company called OpenTrade. And so they have done a couple of rounds of fundraising, actually, early stage fundraising recently. And they have really come out of the blocks really, really quickly. And they basically provide embedded access to stablecoin yield. So they're helping that concept of stablecoin yield go mainstream. and so people can kind of get out of the box access to bringing yield for their products.

32:22It's a really interesting component of the stablecoin ecosystem. And I think these guys have tapped into just a need at a really interesting time, really strong team and got some fantastic backers like A16Z Crypto, Albion and a ton of others. So I think they're definitely one to watch. awesome we love that we love an actual early stage company prediction because we get some people coming on dropping a series e-business and yeah it's not a not a huge swing to say that this company is going to be a unicorn that's great thank you for sharing that and then dinner party guest game so if you could have dinner with any three people who would they be i'm going to cheat a little bit i've got i've got two so i'm having one of my favorite kind of dinners tomorrow night which is a group of ceos three of them and we've all just really helped each other through the kind of chaos of the last couple of years and we're all in slightly different spaces but enough that we've got commonalities but no one's competitive or overlapping and it just means that we can like bring all of our problems and so i'm really looking forward to that because we'll have a good uh a good sharing session we'll probably whinge and moan about you know various things and um hopefully make make each other feel a little bit better a little bit less lonely in the job so um that's always a fun one but you know coming back to your your question um i was thinking about this and i you know i think who i'd really love to sit down with all together are three amazing women in the uk kind of financial and kind of venture ecosystem and that's Erin Platz who's the CEO of Octopus Ventures now and was previously at the helm at SVB and then alongside her Emily Turner who is now the CEO of HSBC Innovation Banking and then finally Poppy Gustafson who was the CEO of Darktrace and is now Minister for Investment and I just felt like those three all together I'm sure can solve you know almost any problem in the startup space in the UK.

34:37They all come at it from a very different vantage point and are very much like get shit done kind of people. So I think that would be a really cool dinner. That's going to be a great dinner. They've been through a lot, each of them. Yeah, that's right. Exactly. Like lots of battle scars, lots of stories and like still the kind of resilience. They're like, keep going, keep building. And I think that's really inspiring. yeah awesome well they would all be great guests on here as well so well that thank you so much Simone it's been really great to understand more about elliptic and your riding unicorns journey there's loads of stuff in there about how to manage boards and staying resilient and just focusing on what you can control so it's been really great to hear about all of that so thanks again for coming on and uh yeah it's been really enjoyable yeah great to be here thanks for the great questions.

35:33Thanks, man. That's it for this week. Thanks very much for listening. To stay up to date with the latest episodes, please follow or subscribe on your favourite podcast platform. We also have a newsletter called Reading Unicorns, which is another great way to get every episode direct to your inbox. Please tell your friends about it and engage with us on social media. And we'll see you on the next episode.