Swyftx Founders on Tough Times

[ad_1]

With some 700,000 users behind it, Swyftx is now the second largest crypto exchange in Australia, behind only Coinspot. However, the recent crypto bear market saw the company lay off 40% of its workforce after previously growing its user base at a phenomenal rate under more favorable market conditions. The company’s two founders – Alex Harper and Angus Goldman – sat down with The Chainsaw to explain how it all started and how they are weathering the current tough times.

Swyftx was founded by Brisbane natives Alex Harper and Angus Goldman, two Australian entrepreneurs who originally met at a coding camp and later launched Swyftx in 2018. Harper is the managing director of Swyftx, while Goldman is the chief operating officer. In past lives before founding their company, Harper (who has a background in math) worked as a software developer, while Goldman was in finance and banking.

In good times, during the bull market, Swfytx won two gongs at the 2021 Lord Mayor’s Business Awards, winning Young Businessman of the Year and one for High Growth. But then the crypto world fell off its perch and fell on hard times, which led to Swyftx laying off much of its staff.

Swyftx – at the start

The Brisbane entrepreneurs met in early 2011 at a Google-sponsored coding camp at the University of New South Wales. However, it wasn’t until six years later that they came together to build the crypto exchange that would become Swyftx.

Goldman is a tech guy through and through. “I got into bitcoin in 2013 and was really interested in the technology side. Alex was interested in the investment aspect.

Harper’s first foray into business was at age 10, selling fruit juice. He also had a lawn mowing business and provided IT support in his local neighborhood. “I have always been very driven to build financial freedom, and so I invested in the stock market from an early age. [long] also took an interest in crypto from an investment perspective.

Harper and Goldman’s business marriage had fruitful moments, culminating in 2021 as Swyftx rapidly expanded in a market bull run that saw the crypto hit record prices.

However, as the market entered a bear cycle in early 2022, things started to change. In November 2022, the Bahamas-based FTX, one of the largest crypto exchanges in the world, crashed dramatically, further plunging the crypto market into a tailspin.

Bear vs Bull Markets

When things are going well in the crypto space, just like in the traditional stock market, it is referred to as a bull market, which is surging. When things go wrong, it’s called a bear market, which is heading into hibernation.

While all markets tend to run in cycles, the current crypto bear market continues to experience active bloodshed. More recently, this included the collapse of US banks Silvergate Bank, Silicon Valley Bank and Signature Bank. These banks have been heavily involved in funding innovative technology companies, including cryptocurrency platforms. Banks have also worked with some crypto platforms to allow customers to change everyday currency to crypto and vice versa. With the collapse of these banks, this has put additional pressure on the crypto sphere.

An SVB employee speaks with worried customers. bravery in battle

Goldman, however, says he and Harper have been pre-hardened in other bloodshed situations. “It’s worth knowing that we built Swyftx during the 2018 bear market,” he says. “So we are fully aware of what the bear market brings, and we understand very well how it is happening and what we should expect from it.”

Bear markets don’t last forever, if history is to be believed. Says Harper: “Looking at Bitcoin historically, it’s definitely a cyclical industry. But as with any new market, as it grows it matures and becomes less volatile. We have been in this current bear market for 462 days. I think historically bear markets have lasted about that long. And every four years, Bitcoin undergoes a halving, where we typically see an appreciation in the price of the asset. So the next [should be] this time next year.”

All of this may be indicative of the light at the end of the tunnel. But a lot can happen in the crypto world before that light comes on again.

The bear market blues

Swyftx has not been immune to the same pain that other crypto firms have felt in bear market conditions. In December 2022, the company announced that it had laid off 40% of its workforce.

Harper says they were forced to cut staff to survive:

“It’s been a tough year all over the world for technology in general. The way we run the crypto exchange in this market probably isn’t too different from the way we run any business – it’s what put us in a strong position after going through a tough time. .

Harper also claims that Swyftx is self-funded and generates revenue: “We don’t have the same luxury as other companies that might have invested in a venture capital fund or an angel investment,” he says. “When it comes to the bear market, we have to manage expectations on that front. [Laying staff off] was a very difficult decision to make. We have taken many other steps at the same time to bring our cost base back and ensure that we are operating in a sustainable way over the long term.

Unexpected growth

Before the bear market began, Harper and Goldman say Swyftx grew from 50,000 customers to over 600,000 in about 12 months.

Harper continued, “It was definitely everyone on deck in terms of hiring and trying to plan for the growth trajectory we were on. We had unfortunately over-hired for the environment.

However, they had to keep profitability and the ability to continue to serve customers in mind. Of this, Harper says “It’s the number one priority as a private company.”

“We had hired for specialist roles in-house where you might normally hire contractors, so we had videographers and designers in-house,” Harper continued. “We wanted to optimize the quality of the product we build and so bringing those capabilities in-house was the best way to do that. We have now moved to external contracts to better manage costs. We’ve also probably over-invested in the size of our engineering team, given the environment, so we’ve reduced our engineering resources as well.

Swyftx and regulations

The subject of crypto industry regulation is one that will not die. Some people say that cryptocurrencies like Bitcoin were created so that people who use it could operate outside of a corrupt banking industry and away from tyrannical governments. Thus, they believe that regulation by any government is the antithesis of why it was invented in the first place.

Others say that to be widely accepted, cryptocurrency needs to be regulated and safe for users, so they are protected from shady operators looking to scam people. As the row rages, Harper and Goldman say they want full regulation and are trying to work with government agencies to achieve it. This is no easy task, given that few politicians and regulators understand the innovation around cryptocurrencies.

Harper says they have the ambition to be the first fully regulated Australian crypto exchange. “We believe regulation is important for the long-term security, growth, and adoption of crypto. Since our launch, we have been AML compliant, which means we comply with Australia’s money laundering rules. So we’ve been here since day one.

Break down banking barriers

Australians have unique challenges when transferring Australian dollars from their bank accounts to crypto exchanges. Customers are frequently subjected to panicked calls from banks warning them not to move their money, even if they are using an established crypto exchange.

Goldman says it’s a misunderstood space. “We raised the issue with Stephen Jones, Deputy Treasurer and Minister of Financial Services at industry events. We work with the Treasury to provide information on Fintech. »

Goldman says the crypto industry must have equal access to the banking system to build strong, robust, and regulatory-compliant products.

As other countries embrace crypto and attempt to regulate the industry, and Australia catches up, it looks like the US is in an all-out fintech war.

According to Harper, “The US seems to be taking a very anti-innovative approach to the crypto space, almost trying to save face from the FTX fallout. I feel like there’s a lot of posturing around the closure of Signature Bank. So it doesn’t make a lot of sense. I think that view was also shared by many public figures.

Confusing environment

Goldman says that because crypto is a relatively new industry and a lot of innovation is happening, they need a clear path forward. “I guess that really means we’re working in a gray space while trying to innovate and meet our customers’ needs, but without clear communication. It’s hard to know what we can actually do,” he says .

Harper notes that here in Australia, the Federal Treasury has reached out to industry to support the regulatory process. On this, Harper notes, “It’s good to see them taking a thoughtful approach. The government’s priority, like ours, is consumer protection and we believe you can achieve this without stopping innovation.

Could crypto exchanges like Swyftx be even safer than banks right now? According to Harper, “From our perspective, we operate very differently from a bank. We do not lend our clients’ assets. Everything we hold is held on an individual basis.

Other challenges for Swyftx

There are other challenges faced by exchanges such as Swyftx. Harper says media stories can be boring: “When prices go up, the line is that crypto is the future. And when the price goes down, Bitcoin is dead. I think what’s important is to talking to people about the usefulness and functionality of blockchain solutions.I think that’s the narrative that doesn’t get enough light.

As the world worries about a banking meltdown and people seek a safe harbor for their funds, the prices of the two largest cryptocurrencies by market cap are on the rise again, at the time of writing.

Is this the start of the next bull run? Is crypto the future or is it dead? That remains the million dollar question.

[ad_2]