Nexo had its 5th birthday a few days ago and it was only right to take the celebrations straight to our monthly AMA session for an overview with yours truly, Nexo Co-Founder and Managing Partner Antoni Trenchev. It took 5 years for one of the most exciting editions of the AMA to come up, but we’re sure the wait was worth it. Read on and learn how it all started at Nexo years ago, what propelled our company to a leading position today and what are the plans for the future from the man himself.
Nexo never got caught up in the ICO mania: “we had a clear vision and built upon that roadmap relentlessly”, claims company Co-Founder and Managing Partner Antoni Trenchev.
“We are exploring and building market share elsewhere, after the company’s long-planned exit from the USA – a happy ending to a turbulent saga”, Trenchev adds.
Those holding NEXO tokens since 2018 and their trust to remain on the platform ever since is all the validation Nexo head seeks and “the highest degree of satisfaction”.
The company is pushing ahead to become a fully-fledged bank with third-party payments – “I want Nexo to be your financial universe”, Trenchev says.
”We need to keep our DNA and adapt quicker – artificial intelligence will make up an important part of the next five years.”
Q (04:05): When you look back at those 5 crazy years, what do you think Nexo did best and what do you think could've been done better and needs to be improved?
Antoni: Very early on even, before the ICO, we had a very clear vision of what we wanted to do. The product that we wanted to develop was a product we needed as users – Kosta’s idea. As early Bitcoin adopters, we wanted to be able to borrow against our crypto, so that we can continue to hold Bitcoin, Ether and other tokens. A lot of companies started it backwards: “Okay, now it's an ICO frenzy, I can raise money, I'll figure out what to do after I raise the money”.
We opted for the exact opposite – we had a very clear idea what we're going to do with our $52.5 million raise. 90% would go to financing the loan book so a clear, simple concept and we executed upon that roadmap relentlessly, tirelessly and to the satisfaction of all you.
The other thing that I think we did rather well is listen to our community and our clients as to what they want to see next. We started with something we had in mind – crypto-backed lending, and when we distributed the initial proceeds of Nexo, we had to get creative in order to finance ourselves. That's how we invented the Earn Interest on crypto. It was on stablecoins initially, because of the business that made sense – to borrow from retail and extend it to the other side of the loan, making profit on the margin spread between the two interest rates at which we borrow and at which we lend.
Another thing that I think we did rather well is not get caught up in all the “more assets under management, $500,000 customer acquisition costs per customer stuff” – all this nonsense that a lot of our competitors did (who, funnily, are not around to do ask-anything sessions for their 5th birthday). We stayed humble, focused, consumer-oriented, we stayed conservative and didn't get sidetracked into the ICO mania or the NFT mania or the go-long-5x-with-customer-funds. We wanted to build the infrastructure and the business in a way that makes sense both in bull markets, bear markets and sideways markets. Going forward we have to be even quicker to adapt.
Q (10:21): Will we be able to use Nexo as a bank in the future, with third party deposits and payments? 😏 Rather use Nexo than my bank. Happy bday.
Antoni: The sentence before the last one really melts my heart – when people say “I trust Nexo more than my average bank and I would like to keep my funds at Nexo.” This is the highest degree of satisfaction that a co-founder and a manager at a fintech company can ask for – this is all the validation we're looking for. This is what we have been all about – creating trust in the brand, in the financial prudence with which we operate and I'm glad to see that we are succeeding.
We are working on making Nexo a fully-fledged bank – I'm hopeful that we'll have good news on that horizon soon. We are working on third-party payments. I think that a testimony to that was what we launched recently, whereby Nexo clients can now have their own IBANs with their own name on the sending site as well. So when you send funds to whatever bank you're using, your funds come in as being sent from you, which alleviates some of the AML and Compliance challenges.
We're working on making it possible for you to pay third parties whereby you obliterate to a certain degree the need for a traditional bank account. This will require documentation especially for larger amounts because AML and KYC are policies and procedures that we take very seriously. I think this is also part of our success, because if you look at the Nexo wallets, and we have examined this up close, we have I would argue the cleanest wallets in the industry.
Q (17:57): How will the departure from the USA affect past relationships, such as the stake in Summit National Bank and the partnership with Fidelity?
Antoni: The departure from the US is not something that came overnight. We have been very observant of what is happening in the USA, the regulatory changes that were visible and audible through the grapevines. And just like the signals that various different administrations have been giving, we took this decision a long time ago – we worked on our departure from the United States close to 18 months with our legal council in the USA, with the various regulators, so that we do this in an orderly fashion.
We have been exploring new markets, building a market share elsewhere, shifting our communications and products in a way that we can make up for any potential territorial loss.
About Summit National Bank – we are investors there, we had plans for utilizing them in our infrastructure. It's not a huge amount that we invested – our equity stake there is in the single-digit millions and I think the investment is performing well. With regards to partnerships such as Fidelity and MasterCard, they are well beyond just the USA so I don't think they will be impacted in any meaningful way by our departure.
It is a happy ending of a very turbulent saga, which we are happy to put behind and focus on other markets. If you have been following the news cycle this past month or two, you'll see that we’ve taken the right decision. Nexo settled and exited the USA in an orderly fashion – this also tells you a little bit about the reasons for our success story.
Q (28:40): After UST crashing, CeFi services collapsing, FUD and all the fear you can get, Nexo are still standing and offering new services. What is your secret?
Antoni: There is no secret – the secret is transparency, hard work and a clear vision executing upon our roadmap, listening to our clients, never getting caught up in what the new cool thing is. Refusing the temptations of easy money, it takes conservatism, focus, resolve to not yield to the easy stuff that at the end of the day – when it's too good to be true, it usually is.
Rather, focus on what is important and sacrifice assets under management, stay humble, stay working and that's it – it's not rocket science. All good business practices can be narrowed down to a few simple rules that I highlighted. You have to have the vision, be at the right place at the right time in the right industry, but apart from that – it's just hard work.
Q (38:04): How do you see Nexo developing in the next 5 years?
Antoni: I see us keeping our DNA, so that we can continue to work relentlessly, listening to you and then develop an entire suite of products and services that caters around any possible financial need. First time buying Bitcoin, exchanging it for the various exciting assets, or storing your value (whether it is in a centralized, custodial manner so that you can earn interest while you are not investing your assets or non-custodially, because you believe that this is the right thing for you) – I want us to have everything on the platform.
I want you to be able to pay your supplier, send money to your kid, your spouse, your business partners to make investments. I want Nexo to be your financial universe for you to use as much or as little as you see fit.
I am certain that artificial intelligence will make up an important part of the next five years – whether it will help build better products, gather feedback or guide you through the product in an efficient way, I think we have only scratched the surface with chatGPT.
My vision for Nexo is to be underpinned with its security infrastructure on the legal and compliance sides, so that it becomes a bulletproof, Swiss-vault type of security in every aspect, so you feel absolutely confident that we have your back just like we did the previous five years and that we'll continue to do that in the next five years.
I would like to thank you so much for joining me on this incredible occasion which is Nexo’s 5th birthday of the launch of the platform. The next five years will be nothing short of phenomenal, so stick around – we're here for you, we'll always be here for you.