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

This episode is sponsored by Deckdolphin. Fun raising can be tough. You build a deck, you send it out and you hear nothing back. You don't get enough feedback. Deckdolphin changes that. Get honest, actionable feedback from real VCs within 48 hours. Submit your deck today, go to deckdolphin.com and start booking more investor meetings with a better deck. Hello 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 would 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 Manie. I'm the CEO of Elliptic. An Elliptic is the leader in blockchain analytics. So if you don't know what blockchain analytics means, really what we're doing is building 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. 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, using their asset, and really helping inform the crypto industry about trends and things like that. And Simone, yeah, amazing having you on the show. We would love to hear a bit more about your career and what led you to Elliptic. Yeah, for sure. Well, I don't know that I would ever have imagined that having done a degree in history that I would end up leading blockchain analytics company. It's pretty technical what we do here. 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. I 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 I 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 leave university going, okay, I know that I want to be a lawyer or I want to be, you know, in finance or it wasn't clear to me. So 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. And so that's something that I really wanted to be able to do and so that was what I did after leaving. I joined a consulting firm and just wanted to scratch that it, really, 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 kind of anti-money laundering and financial crime. It wasn't something that I deliberately went into thinking, okay, this is something I want to explore. I 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 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-money laundering product, but we're building an anti-money laundering product. 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 that journey from joining to maybe join the COO, I'm not sure, and then becoming CEO and 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 it's a very small team as you guys well know, that just means it's a fancy title for do a lot of things. It 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. I remember in the first couple of months we had our first person ever going on, paternity leave, okay, we need a potentially policy, the first time we're hiring someone in a due jurisdiction, okay, we're going to need a new contract, all of that kind of good stuff. And I love that role. The thing that I learned about myself at Deutsche Bank is that I really love to have 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 help people see the bigger picture. And so yeah, as the COO, 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. So 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 you know, we worked 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. 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 war. And so, yeah, it was the beginning of a fairly natural evolution for the two of us to make some changes. I 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 a less interested in this, at organizational side of things. And so for a company like elliptic, I mean, you've raised like over a hundred million dollars at this point. What point was it clear that that decision should be made for you to become CEO? Had you raised the dollar money? Did you need to talk to investors? And how did that sort of sit with the whole organizational sort of culture? Yeah, 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. It'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 have 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 that it wasn't for us just because of where we were coming at it from. And 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 online? So I'll be honest, I thought I was doing a lot of that job, but the day it changes, you realise it's not about what you're doing, it's about how you're seeing and the ownership that you have got as the ultimate decision maker or ultimate head on the shopping block. It's not that what you're doing is different, it's 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 realise 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 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 before. How do you cope with that trend that change? The first thing I did was the higher chair. And I was really deliberate to hire a chair who had been a CEO, so I 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. And so Chris, who's our chair, helped 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 of just to jump in on that? What kind of, do you have any anecdotes around how he was so helpful? Any specific issues that he was able to guide you through? The thing that he really helped me most was was around board and invested 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, how to anticipate, how, what they needed, all of that was new for me. 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, was really valuable. 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 this level. Yeah, and I think I learned the hardwarey that over communicating, especially when things were bad, was the only and best approach? Why? 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 me with me, especially when things go wrong? I don't want them to just keep quiet while they go and figure 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. And 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 right balance because in the same way as you have to communicate with your employees through a hard time or through good times, there's a level of information that you have to keep to yourself and there is certain things that are better not spoken about. So finding that balance is right, but have you developed any kind of framework? What gets taught about it at the board and what does it? I mean, you're not going to talk about it on podcasts, but yeah, I'm to be a bit careful. 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 scared 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 because often you can have the team really focus on a set of metrics that they feel are really important, but they're not actually in trying in the same set of metrics of the board sticking at. Yeah, it's really interesting. Had you and I both invest super early, so sometimes the metrics do change, but eventually they've got a set of a lot of 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. It's always a funny conversation. And then some of 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 cracked it or 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 is 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 learnt that it's important to celebrate those milestones that we've not always been very good at that, but I think we really recognise now how critical that is to do that work to celebrate. And we've also had a massive product launch today as well. And while the product launch itself has been like in the making like nine to 12 months, it is the result of many years of product vision. And so seeing that all come, you know, to life has been amazing. And you know, I think crossing that ARR milestone with an accelerating growth rate today, I've been reflecting on the fact that the last 1824 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. And 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 an industry. And I think that's what been one of the most challenging things about building a lipstick is we've been building a startup in a startup industry. And that has just thrown up, you know, Miria challenges that we could never have anticipated. Yeah, yeah, that's great. Congratulations. Really. And what's the business model and has it had to change as you scaled or is it kind of all been the same? What is it? And yeah, has it changed? Yeah, so the business model is your classic kind of B2B SaaS business model. So it is a kind of platform fee to subscribe to the various parts of the software stack and then usage fees. It'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 and so data is 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 SaaS motion into much more of a kind of consumption model, it's really early days for us, but it's it's an interesting transition point that we're entering right now. And so I'm going to ask for your help. So we're both we're both early stage investors and always looking for signals of you know what we should be looking for in in founders, in teams, organizationally. And I wonder what what would you say we should be looking for? Like if you take the best parts of elliptic, what are those parts that you think are visible at the really earlier stages that investors should be looking for? I think probably for most 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. I think having that deep curiosity and passion for that basically equals resilience and persistence in the space. Elyptics actually started out as a crypto custodian. I shouldn't say crypto custodian. It was a Bitcoin custodian. There was no concept of crypto when the companies started. It's not that we were wrong in that, it's just that we were too early. We pivoted after a couple of years to blockchain analytics because we really recognised 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, this 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. And that continues to be really important today. 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 PMR and so you've still got to have that motion where you're exploring and you're building the muscle for that resilience in pockets of the organisation. That's almost harder because you want 80% of the company in one motion where you're scaling off the back of product market fit, but then you want 20% of it finding new product market fit. And those are oftentimes to to speak. 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. So I think that's really important. I think it's also about creating enough space just in the product life cycle to run experiments. Like are we running enough experiments right now? In our in the crypto space, like 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. So I think that's something that we've tried to build, build into the culture here. And although you're a sassel, maybe not that's business, you're in the crypto space. And so there must be these like big moments where it goes up, where it goes down and 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? Ah, 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 in the circle IPO and the stock price continues to climb. We've had the genius act, which is a really important piece of legislation in the US or the crypto industry past 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 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 elitics history, you know, there are summers and there are winters and what goes up will very, very likely come down. So the same way as in the last quite deep winter, crypto winter, you know, we set to the sea more than time, like don't do scroll, like getting ourselves in that deep pit of despair is not healthy. The same also applies in the periods of elation and momentum. It's really positive, but you know, 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? And so we do talk a lot now about controlling our own destiny. What did that mean in practice? So you were reading news articles thinking, shit, we should be doing this hype thing because someone else is doing it and they raised 100 million or 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 flow-mo ceiling 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 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 lay our more resources on top and know that I'm going to get good productivity out within a reasonable timeframe. So 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. 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 a liptic was unattainable and whether it 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 pitched our strategy to enterprises getting into the crypto space. And 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. We really pitched ourselves to that belief and there was numerous cycles where that just didn't happen. And so you would have this doubt around, is the belief fundamentally incorrect or if 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 to you. But it does feel like that moment is arriving. And 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 info-seq 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. 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 just the buying 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. And so I think that allowed us to carry most people. It didn't allow us to carry everybody and that's okay. Sometimes people have to opt down and say, do 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 m- What's rather you came to the table and said, I'm just not aligned with the strategy, then sort of sat around half believing or worse undermining the strategy and that's extremely damaging. And I have every respect for anyone that comes to the table and says, it's just not for me. And what does the future hold for a lipstick? Is an IPO on the cards at some point, does the circle pop, you know, raise that as a conversation amongst the leadership team? Well, I think every board in crypto land is having an IPO conversation at some point that 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 destiny. We're 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, how the market's doing at any given time. That feels really good. And I think that's what's really motivating to the team here. But, you know, we will definitely look at whether it's IPO or private capital raising to make sure that we continue fueling our growth. So 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 cross-overpoint 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. So that's really always a conversation. Awesome, but it's very exciting. And so moving on to our just final couple of questions. So our first is a future unicorn prediction. So obviously this shows rather unicorns. 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 stable coin yield. So they're helping that concept of stable coin yield go mainstream. And so people can kind of get out of the box access to bringing yield to their products. It's a really interesting component of the stable coin ecosystem. And I think these guys have tapped into just a need at a really interesting time, really strong team and got some fantastic back in like a 16th Equuto, Albion and a ton of others. So I think they definitely want 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. It's 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 maybe. I'm going to cheat a little bit. 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 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 bring all of our problems. And so I'm really looking forward to that because we'll have a good sharing session. We'll probably win and moan about various things and hopefully make each other feel a little better, a little bit less lonely in the job. So that's always a fun one. But coming back to your question, I was thinking about this. And I think who I'd really love to sit down with all together are three amazing women in the UK financial and venture ecosystem. And that's Erin Platz, who's the CEO of Octopus Ventures now, and was previously at the helmet SBB. And then alongside her Emily Turner, who is Nancy, who has HSBC Innovation Banking. And then finally, Poppy Gassafson, who was the CEO of Dark Trace and is now a Minister for investment. And I just felt like those three, all together, I'm sure, can solve almost any problem in the startup space in the UK. They all come at it from a very different vantage point and are very much like, get shit done, the kind of people. So I think that would be 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 still the kind of resilience to 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, thank you so much Simone. It's been really great to understand more about Elliptic and you'll write a unicorn's 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 yeah, it's been really enjoyable. Yeah, great to be here. Thanks for the great questions. Thanks, Simone. 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 favorite 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. This episode is sponsored by Deck Dolphin. You build the deck, you send it out and you hear nothing back. Deck Dolphin changes that. You get honest, actionable feedback from real VCs within 48 hours. Submit your deck today. Go to deckdolphin.com and start booking more investor meetings with a better deck.