by Y Combinator10/17/2018
We put together a list of the top YC companies by valuation as of October 2018. You can see that list at https://ycombinator.com/topcompanies.
Here’s a Q&A with George Melika and Akbar Thobhani, Cofounders of SFOX, one of the companies featured on the list.
What does SFOX make/do?
SFOX is a prime dealer of cryptoassets: we allow our clients to buy and sell BTC, ETH, BCH, and LTC from an account built for institution-scale trading. Our platform features proprietary smart-routing technology that allows traders and investors to get the best price execution without moving the market. We’ve seen over $10 billion USD in transaction volume to date.
How many employees does SFOX have?
We currently have 25 team members, and we’re actively looking to grow virtually every team within the company in the near future.
How many founders?
SFOX has two co-founders: George Melika and Akbar Thobhani. George has a passion for building trading solutions: he’s developed three trading platforms and payment solutions for UNX, Nuveen Investments, and Stamps.com. Akbar was formerly the head of growth and business development for Airbnb, where he managed payments in over 190 countries; he’s developed four trading and payment platforms for ITG, Boku, and Stamps.com.
What is your most impressive recent product milestone?
On September 27th, we launched support on our trading platform for Litecoin, providing the increased liquidity that will allow institutions and other high-volume investors to trade this cryptoasset at scale. Litecoin is one of the leading cryptoassets as measured both by market capitalization and daily active users. We believe that product updates like this are central to why we have been able to complete $10 billion USD in transaction volume as of the beginning of Q3 2018 and increase our client base by more than twelvefold since the start of 218.
What is the larger impact / societal impact of your product in the space you work within?
We believe that cryptoassets are going to ultimately create a more inclusive and open financial system for everyone. By providing access to worldwide crypto liquidity and helping to reduce the market’s volatility, we make it easier and less expensive for everyone to participate in that more inclusive and open financial system.
What’s an interesting element of SFOX’s company culture?
Even though our company’s name stands for “San Francisco Open Exchange,” our team is distributed all over the world: we have people working asynchronously everywhere from California to Mumbai. We do two things to make our remote culture work: (1) we only hire driven people who are passionate about blockchain and will raise the quality of SFOX’s average employee, and (2) we hold daily standup meetings focused solely on what we shipped yesterday, what we’ll be shipping today, and what (if anything) is blocking our progress.
Looking back, what motivated you to start SFOX?
Coming from Airbnb, problem of global payments was very obvious — but it was also obvious that, for crypto to be useful for institutions, you need a platform that’s built for institutional use.
Cryptoassets solve a fundamental limitation of today’s financial markets: they depend on trust, but trust isn’t a guarantee. You can see trust limiting financial transactions from New York to Nairobi — and, in 2008 (just a few months before Bitcoin’s release), Lehman Brothers showed us that the entire financial system can collapse without trust.
Airbnb showed us that the right platform could make international travel possible even when the host and traveler were total strangers; we believe that crypto can do the same thing for financial transactions. But for crypto to achieve this, institutions need a trusted platform through which to access blockchain and crypto technology. SFOX is that platform.
Is what you’re working on now the original idea or did you pivot?
SFOX remains the original idea we were working on during our time at Y Combinator. Our focus has been building out the platform with new capabilities to give our clients more and more of an edge in the market–capabilities like more cryptoassets for trading, and new algorithms to trade with. Our work is still not done yet.
Were there moments where you thought the company might die? Describe one of those and anything you learned from it.
Do you mean this week!?
Every time Bitcoin’s price drops (and let me tell you a secret: it drops fairly often!), many speculative investors run away from the sector. When we founded SFOX, we saw the price drop from $1000 USD to $200 USD. During this time, we saw other crypto companies — many of whom were our own customers–that lacked good business models fail to raise and eventually run out of capital.
At SFOX, we believed in the long-term viability of the space, so we continued to focus our efforts on building and improving our platform. Keeping our focus on making something people want–not on the price of Bitcoin–has been crucial in bringing us as far as we’ve come.
What was a particularly important insight you had about your market that made your product work?
As traders ourselves, we recognized that while everyone was trying to build a crypto exchange, no one was building a platform specifically for traders. In order to build that platform, we knew that we had to make it easy for anyone to buy and sell any amount of a cryptoasset from a single account–something that wasn’t possible for high-volume traders before we started SFOX.
We also knew that high-volume traders and institutions needed a platform that had clearly defined standards for which cryptoassets they decide to list. That’s why we’ve focused on remaining selective in the cryptoassets that we list, even as other trading platforms explicitly focus on listing as many cryptoassets as possible. We have a rigorous set of criteria that a cryptoasset must satisfy before we consider trading it. These criteria analyze cryptoassets across three dimensions: governance (what kind of entity governs the crypoasset, and how decentralized is that entity?), technology (how secure and scalable is the cryptoasset?), and community (how many people are already using the cryptoasset, what value does it provide them, and what value could it provide in the future?).
What’s one piece of advice you’d share with a young founder?
There are two things your company needs to succeed: product-market fit, and an amazing team. If you have an amazing team and have some trouble finding a perfect product-market fit, your company will probably find a way to sustain itself until you do find that perfect fit. On the other hand, if you have perfect product-market fit and a lackluster team, your company will almost certainly fail.
Focus early and consistently on making hires who are smarter than you and just as passionate about your industry as you are, and you’ll be setting yourself up for long-term success.
Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200). The startups move to Silicon