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Alex Mashinsky is a serial entrepreneur and founder of seven New York City-based startups, raising more than $1 billion and exiting over $3 billion. Recently, he visited The Next Web Conference 2018 to promote his latest startup, Celsius Network, ‘the next generation of decentralized lending and borrowing products leveraging cryptocurrency.’ And, moreover, to share some useful advice for founders.
Mashinsky is one of the inventors of VOIP (Voice Over Internet Protocol) with a foundational patent dating back to 1994 and is now working on MOIP (Money Over Internet Protocol) technology. He founded two of New York City’s top 10 venture-backed exits since 2000: Arbinet, with a 2004 IPO that had a market capitalization of over $750 million; and Transit Wireless, valued at $1.2 billion.
He has received numerous awards for innovation, including being nominated twice by E&Y as the ‘Entrepreneur of the Year’, in 2002 & 2011; the Crain’s 2010 Top Entrepreneur; the prestigious 2000 Albert Einstein Technology medal; and the Technology Foresight Award for Innovation (presented in Geneva at Telecom 99).
Mashinsky did a talk about decentralization at TNW. His message? Crypto and blockchain will just be the vehicles for the further decentralization of data. The internet had somewhat the same promise, however, 40 percent of the internet is Facebook – and that is quite centralized. In this decentralization revolution, it is all about scale rather than revenue. That is why WhatsApp was so valuable for Facebook. The same thing goes for Ripple and Ethereum, that are worth billions nowadays.
Spotting this decentralization trend, Mashinsky founded Celsius Network. “Our job in Celsius is to bring 100 million people in crypto, and everyone in our team believes in that mission. Our company solves a clear problem: the problem with banks is that they exclude the majority of the people. Over 5 billion are underbanked – meaning: they can’t get a loan or credit. Banks used to be about the community bank, but we’re actually going to help the community and bring back the original reason why banks were created.”
Advice #1: don’t wait for VC money
“Nowadays it takes 15 years to go public or sell the company, while this used to be 2 or 3 years. The bar to go public has been raised in the last years. Uber and Airbnb haven’t gone public yet, since they’re not profitable yet. VC’s have a hard time competing against the ICO-model. At Celsius Networks, we did an ICO to convince people that we have a good product, not to raise the money. In Q4 in 2017 and Q1 2018, the ICO money topped the VC-money – for the very first time in history. I invested in 200+ companies and switched to crypto.”
Advice #2: be a visionary
“I think everyone has a skill, a unique skill. My skill would be to see how the future looks like. That is how you get the team and how you get the money: tell them how the future looks like (and get them there). Everyone has to go in the same direction. Ford and Jobs always said that they didn’t give the people what they wanted, but what they needed.”
Advice #3: win the category
“Getting the money isn’t the problem – it is all about winning the category. The problem in today’s world is that – even if you got a great idea – there is always someone that will do it better, cheaper or quicker. 2-3 years can be enough to disrupt you.
That is why investors wait a bit longer to go for a serious funding round. Unless you get that big funding, you don’t stand a chance to win the category. My startup GroundLink went bankrupt thanks to Uber subsidizing the price – and making terrible losses. Even an experienced entrepreneur can lose a business thanks to a new disruption. When my kids stopped using my app and started to use the Uber app, I knew it was over.”