In a surprise announcement over the weekend, Tyler Winklevoss, co-founder & CEO of crypto exchange Gemini, tweeted, “Let’s play a game: Spot the @Gemini Crypto Bus. Reply to this tweet with your pics and #CryptoBus, best one wins 1 bitcoin (BTC). Right now they are in San Francisco, Chicago, and Washington D.C. Happy hunting!”
A bold move considering that San Francisco is home to Coinbase, Gemini’s direct competitor in the regulated cryptocurrency exchange space. Gemini, a New York-based company, is not a household name in San Francisco and to many residents the Winklevoss twins are still better known as the Harvard classmates who sued Mark Zuckerberg for stealing their idea for Facebook.
For the seed stage startup to challenge Coinbase on its own turf takes moxie, particularly considering how Coinbase has grown into a behemoth valued at $8 billion having raised over $300 million from some of tech’s most influential investors including Andreesen Horowitz, USV, DFJ Growth, SVAngel, IDG Ventures, Y Combinator, Adam Draper, Garry Tan, and more. According to their website, Coinbase currently has 20 million users with over $150 billion in trades.
An even more formidable competitor is perhaps Robinhood, the SEC-licensed broker-dealer which offers commission-free trading not only in crypto but in stocks, options, and ETFs as well, allowing retail investors to pursue greater diversification. Valued at $5.6 billion, Robinhood is one of Wall Street’s most anticipated IPOs of 2019 and is also headquartered in Silicon Valley.
So it was no surprise when Robinhood trumped the Winkelvoss tweet announcing their own giveaway, “Open Account, Get Free Stock.”
It will be interesting to see if Gemini ups the ante in response to Robinhood and seeds all of their new accounts with something of value like a fraction of a bitcoin. The one thing that’s certain, competition is great for the customer.
Davids vs. Goliaths
Gemini might be small compared to Coinbase and Robinhood but you wouldn’t have known that at SXSW where fans packed the house for the Winklevoss keynote session.
Tyler acknowledged that Coinbase has had a head start in retail. “We started off as a New York trust company early with a little bit different approach, more institutional, but we’re starting to flex our retail muscle more with the Gemini app which launched just a few months ago.”
Following the app’s debut in December, Gemini kicked off their rebranding campaign with slogans like “Revolution Needs Rules,” “Money Has a Future,” and “Crypto not Chaos” plastered across New York City buses, subway cars, and cabs. They told the SXSW audience, “When we ran our advertising campaign in New York in January, we talked to a lot of people on the street and they believed in crypto, they just weren’t sure how to get in and engage with it. A lot of it is education and engaging with customers in an accessible way and it’s also talking with regulators and helping shape thoughtful regulation.”
Early investors in crypto and now Bitcoin billionaires, the brothers shared tales of their experience losing money in Mt. Gox and how it shaped their belief that gaining investor trust is key to mass adoption.
“We learned a lot from our experiences in crypto like seeing the Mt. Goxs of the world implode and lose hundreds of millions of dollars. There’s a lot of carcasses on the road of crypto. When Mt Gox was having problems, a lot of people were thinking, ‘I can just build a technically better exchange.’ That’s one piece of it. It’s compliance, it’s regulation, it’s security, it’s product, customer services and support, all of that stuff. At the end of the day it’s really a trust problem. Bitcoin has never been hacked. The math doesn’t need rules, it’s the humans. You need some kind of regulation to promote positive outcomes.” They added, “Our motto is ask permission, not forgiveness. I think we’re the only crypto company in the world that waited to get our license before we operated. There’s still a lot of non regulated exchanges overseas.”
When asked about long-term goals for Gemini, Cameron summarized their ethos, “We have conviction in this asset class and we’re playing the long game. We’re building a centurion company that will last one hundred-plus years. We’re not going for unicorn status. We think that follows suit. If you look at some of the greatest financial companies like JPMorgan, Bank of New York, State Street, they’re 100, sometimes 200 years old. That’s what we’re trying to build—longevity and trust—and we think valuation will come with it.”