In Episode 2 of our Covid-19 miniseries, Matt Hayes and Rob May chat with Zac Prince,Founder and CEO of BlockFi, and Vishal Sunak, Co-Founder & CEO of LinkSquares, about the biggest changes they have made since the Coronavirus outbreak, how they are managing remote work, and the strategies they have for dealing with this new climate moving forward. Topics covered include:
Show notes:
Quotes:
In Episode 2 of our Covid-19 miniseries, Matt Hayes and Rob May chat with Zac Prince,Founder and CEO of BlockFi, and Vishal Sunak, Co-Founder & CEO of LinkSquares, about the biggest changes they have made since the Coronavirus outbreak, how they are managing remote work, and the strategies they have for dealing with this new climate moving forward. Topics covered include:
Show notes:
Quotes:
Hi everyone. I'm Matt Hayes and we are back with a nother PJC uncovered, a COBIT 19 mini series. Uh, and you know, I'm here with my partner, Rob may. Hi everybody. And we are talking to Zach Prince, who is the CEO of block by a and Michelle snack, who is the CEO of link squares. How are both of you guys doing today?
Speaker 2:Hey, this[inaudible] doing well.
Speaker 3:Hey, this is Zach. I'm uh, doing well. Also just, uh, enjoy working from home.
Speaker 1:Yeah. So, you know, on that note, I mean, how has Corona virus changed your business both for the good and the bad? Um, we'd love to hear perspectives. You know, we've talked a lot about remote work in the past and you know, everyone was pretty much forced into it, so we'd love to get, you know, your both of your perspectives on how this virus has changed things.
Speaker 2:Yeah, sure. There's a Michelle happy there, a kickoff off, very different. We will come to the office every day for the most part type of company. And, uh, I read that changed on Monday. Well actually, last week when I decided that, uh, the company would go remote starting, um, Monday of this week. And so we're, we're down through our first week of working fully remotely. So it's definitely when we were different, uh, than, than it has been in the past. Uh, so that's kinda been the immediate kind of first brush look at it. Uh, finding a way to stay in touch and stay in sync and keep the business guy. How are you Zach?
Speaker 3:Sure. So, um, we fortunately, uh, started preparing a little bit ahead of time. So two weeks ago today we did a mandatory, uh, work from home for everyone. And actually, you know, even prior to that, just block by as a company. We already have about half of our 85 person team that, uh, don't work in our main office in New York. So we're relatively familiar and you know, in general setup for, uh, you know, conferencing that includes people that are in different locations. And we've had a very, um, you know, a very flexible work from home policy even for folks that are in our New York office from day one. So we did a test, uh, two weeks ago and then Wednesday of last week, uh, we, uh, said everybody should, you know, start working from home and basically if you need to come get stuff from the office, you can do that. Um, but, uh, you know, start working from home completely, uh, last Wednesday and the bigger disruption or, you know, the bigger thing that we've had to tackle because we're a business that you know, is, uh, operating in the crypto market has, has just been the volatility, um, in a, in the crypto space more so than working remotely, uh, for now, but, uh, that, that might change over time.
Speaker 4:Interesting. And one question I have for both of you guys as CEOs is, you know, there's the last sort of decade has been this decade and startups are, we've talked a lot about culture and the importance of building certain types of culture. And, um, and you know, there are, there are cultures that are built that are more around an office presence and, and some companies, um, you know, like get hub or companies that are very remote, um, you know, build their culture a different way. Um, you, we'll start with you on this, uh, Zack on this question, but like what, what are you thinking about from a cultural perspective of how you sort of maintain, um, whatever culture you had prior to the, the coven crisis, you know, with your team and whether or not that will change going forward?
Speaker 3:Yeah, I mean, uh, hopefully it doesn't change too much in terms of our core, uh, company culture, which was, you know, really centered around, uh, the values that we have, which are related to, you know, how we treat our clients and, um, how we approach, uh, building our business. Uh, and so, you know, all of those, hopefully we don't lose any of those kind of core business building, uh, values and, uh, components of our culture that, you know, we all like so much. Um, we also really enjoy hanging out with each other though. And like, in general, uh, a lot of people, you know, that work at the company have become friends and it's a lot. Um, you know, it's challenging to stay as motivated when you don't have that, uh, you know, human to human, uh, connection and the interpersonal, uh, you know, um, interactions every day. Cause that is a very motivating thing. You know, people have said to us when they visit our office, like, wow, you can feel the energy in the room. And, uh, you know, obviously that, uh, isn't happening right at this moment. Um, but hopefully, you know, this too shall pass. And, uh, we'll get back in the office and from a business perspective it'll feel like a, we haven't missed a beat. Um, and from a, uh, you know, interpersonal, uh, friendship building, you know, team building type stuff. Um, we'll try and do things in the interim to still foster that. So like, uh, we're having a companywide happy hour, digital happy hour today, later this afternoon. Um, and we're doing some kind of teams specific, uh, lunches and events. And, uh, I think we're also having like a team, a digital, uh, Pictionary game sometime next week. So we're going to try and have fun with this as much fun as as we can, but we're also, uh, going to be very eagerly awaiting the day when we can, uh, get back into the office and go back to normal. So guys, I mean both of you just, you know, fortunately raised rounds of, and so how
Speaker 1:are you thinking about, you know, the plans that you put together and the budgets that you have and, and how are you thinking about cash burn going forward and how has that evolved in such a short period of time, if, if it has it all?
Speaker 2:Yeah, I'm happy to chime in first. Uh, because we closed around in February 12th and, uh, received the cash on that day and, and then announced kind of February 26th then working through 2020 budgets. It was actually a really interesting type of, uh, time for me. Uh, personally, we had just gone through the exercise of building out a beautiful 2020 model with my CFO and, and um, went in and presented it to the board in all different ways and actually got, got the approval on the plan and, and then like 10 days later, here we are, or two weeks later here we are thinking about, you know, everything has changed and some of the base assumptions are definitely different. Um, in terms of, uh, new, new business, new business bookings, our relate to cash flow. And I think what, what we're trying to do, uh, linked squares is, is kind of give it 30 days. Like obviously keep trying to close new business as much as we can and, and stay engaged with our customers. We're also in a really interesting kind of space with being in like contract analysis. Like the things that are written inside these contracts are now like pretty important, like forced measure. Um, the clause that can, uh, govern like a delay or an excuse of a service or, or an offering or even like physical components, right. Um, going through contracts and understanding forced measure is become like every lawyer's number one priority. And so, uh, we're publishing content with our customers, trying to get it out into their hands, uh, helping them understand how they could search their contracts for this type of language cause it's pretty important now. So, uh, the, the actual like cash burn and thinking about in the future is, uh, be more conservative now. Uh, think about, uh, adding new talent at a probably much slower rate than we may have anticipated or tried to forecast before and, and essentially ride the ride the downturn of, of however long this is going to be. And the night I had two board calls this week already, it's on everyone's mind and it's on my CFO's mine. It's on my mind. And we're, we're in a, we're, we're, you know, knock on wood in a, in a really fortunate position. Uh, it, it doesn't mean we're trying to be Mavericks or Cowboys in any way, but just thinking about it more conservatively, like a pipeline is falling out the bottom, mainly because people are distressed this week. It's their first week working from home and things are going to push, uh, try to be hopeful, like it could come back. But let's also plan for the scenario where it could be more than like 50% bookings goal miss. It could be like, we may only grow like 25, 30% this year. No one really knows. And having enough variables to say like, let's control what we can control. I tell that to my team a lot. Like we can control our, our costs of goods sold and onboarding costs and we can control, you know, our happiness of our customers and we can control how much we spend. There are other things we can't control. We're just going to have to kind of wait and see.
Speaker 3:Yeah. For, uh, you know, on my end, I think, um, uh, you know, block by, operates in the cryptocurrency market and so kind of by design were, you know, operating in this market that is, uh, global and digital and running 24, seven. So, um, we don't, you know, anticipate things, uh, necessarily slowing down. Uh, as a matter of fact, over the last week, we've seen a higher levels of activity across, um, you know, every product that we have in market today. And we have institutional clients, you know, who kind of like kind of like corporates, but those clients for us are folks who are, uh, also participants in the traditional financial markets, which, um, it also seems unlikely that, uh, you know, things are going to close or, or change true dramatically there just given the nature of, uh, this economic event, uh, which is very different versus, you know, the 2008, 2009 event where it was, uh, you know, question Mark around the stability of our financial system. Um, so I saw a, uh, I saw something on Twitter that I'm going to try and channel for the team and for our strategy and in messaging, which is, uh, Josh Brown from Ritholtz wealth management has this video clip up and he's basically saying, we will not be participating in this recession. And he's talking about his company. But, but that's the approach that we're taking at, at block fire right now. Um, our plans haven't changed. This is an opportunity for us to grab market share or, uh, accelerate new client adoption because the value proposition that our products have is incredibly relevant. Uh, for a time like this, you know, we offered a high yield on a high interest rate on dollars in a high interest rate on Bitcoin. Um, so we're going to try and capitalize on it. We're not necessarily at this point in time making any types of, uh, you know, contingency plans or slowing down the business plans. Uh, we actually think that we have a bit of an opportunity to, uh, accelerate off of a baseline that was already some pretty strong growth, uh, coming into this.
Speaker 4:Nice. Now, Zach, you mentioned before that you guys had actually done a little bit of a test run, um, before working remotely. And so now that, now that this happens, we come out the other side of the coronavirus. You know, I'm, I'm, I'm interested to hear from both of you guys about, you know, your perspective on whether this will change some of your, you know, scenario planning and business planning, you know, longterm will you put a plan in place for w, you know, is this something that you feel like, Oh, this is not gonna happen again for a very long time and we don't have to worry about it? Or will you have a sort of, um, you know, plan for, um, you know, a future, you know, pandemic like event that might happen. Um, and if so, you know, any thoughts on, on how it would work and whether you would just, you know, ramp it up if you saw something starting or, or what,
Speaker 3:I think this is a good stress test. Um, you know, we're a, we're a regulated financial services company, so, uh, regardless of what's going on in terms of actually needing to implement the plans, uh, we have to have things like business continuity plans and disaster recovery plans and, uh, operational security plans in terms of a, you know, key man risk with different senior executives. At the, at the company. Um, so, you know, I, I don't know that any of those will necessarily change, but, uh, we, we have definitely learned a few things, uh, going through this exercise. Like for example, when we're onboarding new employees, now we're going to give them two chargers for their laptop, not one, because the most common thing that people like didn't have at home was a charger for their work laptop because they had it sitting under their desk. Um, but, you know, uh, other than minor tweaks on the margin there, there hasn't really been anything, uh, that's emerged through this exercise so far. That makes me think we need to kind of, you know, fundamentally, uh, change the planning that we'd already do on an ongoing basis. Um, and, uh, you know, the way fundamentally we've been able to handle this scenario.
Speaker 2:Yeah. For us, it's, it's really been understanding the, the inner workings of our company, um, from a cost perspective. And, and we're, we're fortunate that the bank account is, is quite full right now. But if this were to happen in another time and another scenario like, uh, understanding the decisions we're making now, uh, is definitely useful for a future event. Um, the more, the more precise we are right now in the, in the more quick we are to take action that can help along gate runway through, through this kind of down cycle that might occur for you know, who knows, three months, six months, a year, 18 months, some say online. Uh, making sure that when we feel comfortable again, we can get back to thinking the growth that we were thinking about last year when I was running the fundraise and thinking about the opportunity. The good thing is like for us selling our software to in house legal teams. Like if, if someone couldn't buy this month but they still needed the type of product we had and we had a good conversation, uh, likely feel like a time in the future, it'll still be there. Uh, and, uh, continue to ratchet back as fast as we would open the pipe up in and let it go, uh, when the time comes. Right. Um, it's just an interesting time. Uh, we, we are though, like not stopping product development, I think, I think that's when like edge that we can create is like continue to push hard in the engineering and the product side and, and continue to make new features and new ad-ons and, and be ready for when things are in a better situation just generally so that we can be there right on the forefront. Uh, that, that's what really is the silver lining in all this for me personally.
Speaker 4:Cool. Um, and, and just kind of one last question for you guys. You know, when you, on a more practical note, um, what kind of tools are you using? What things are, you know, using zoom conferencing, um, you know, are you Slack users? Have you switched, you know, more over to email, but like what are the, what are the key tools that have really, you know, saved you in this, uh, this remote work world?
Speaker 5:[inaudible].
Speaker 2:Yeah, yeah. Go ahead Michelle. Oh, sure. Uh, zoom. Zoom is a very useful tool, right? I have a face to face interaction. So, uh, we're Slack users. Uh, we're, we're trying different things kinda to, to what Zach was saying, like virtual Hangouts and happy hours and uh, we're going to play link scores bingo next week with the whole company and we hand out some Amazon gift cards and we're also doing like executives are taking time on the management team to do smaller Hangouts like breakfast and lunch just so that, that whole like we like each other. We hired people that we like in generally like to be around missing. That missing that pieces has been probably the most challenging. And uh, doing health and wellness checks with everyone inside the company. How are you feeling? Uh, how, uh, how, how has it been impacting you? Like are your fit, is your family okay? Making sure that comes to the forefront always. Uh, we've been doing like type form type surveys, uh, and and trying to do scheduling via type form. Like, Hey, you want to have breakfast with Michelle next week at eight in the morning, like sign up here. And, and that's, that's been pretty effective. So continue to use G suite, calendar, zoom,
Speaker 4:Slack, stuff like that.
Speaker 3:Yeah, we're the same, uh, zoom, Slack, uh, all the Google products. Um, telegram is something that we use for, uh, communicating with clients and we're a heavy social media users in terms of our, uh, marketing team. So, um, kind of, you know, more of the same on a, uh, on those fronts.
Speaker 4:Sorry Robin. Matt, how, uh, how has it changed being a venture capitalist if you don't mind me asking? Yeah, well we did a whole podcast on that, but you want to answer that Matt?
Speaker 1:Yeah, I mean, it's just like, I think the craziest part is just you go from a, you know, a radical period of growth where, you know, companies are funded and, you know, plans are super aggressive to, you know, four days later, spending the whole day, calling all the companies that are in our portfolio, asking them how much runway they have, if customer stopped paying them. And if they've run sensitivity against, you know, their inability to collect on AR and it's just, it gets a lot less fun, I'll tell you that much. Uh, it was a lot more fun a few weeks ago, so that would be, that would be my take. It's, it's, you know, you have to do it, but it also, uh, you know, it also sucks.
Speaker 4:Yeah. I mean, and these, these cycles, um, you know, they, uh, things have been flow and this is a particularly bad down cycle I think. And you know, I, I think our advice to entrepreneurs is like, you know, try to try to raise bigger rounds, they're going to be more diluted because valuations come down. But you know, this is about survival. Um, and, and that's what they have to think about. And so some of our companies that we're in the process of sort of raising around, we encourage them to tack on some extra capital if they could get it. Um, you know, lowered evaluations if they had to, uh, you know, pull down some debt if they have it. Um, but it's, uh, you know, it's, it's when you haven't run a company through bad times, um, or you haven't been through that, right. It's, it's easy to get blindsided by these things. So
Speaker 6:yeah,
Speaker 4:it's going to be good to be going to be very, very interesting to see where, you know, how we come out of this and, and what it looks like and how long it takes to get back to where the economy was, um, from a sort of demand perspective. But, uh, you know, I'm pretty hopeful. Uh, and I, you know, I think it'll, I think it'll go well. So, um, so Zach, uh, Prince from, from block Phi and Michelle tsunami from link squares. Thank you guys for, uh, for being on the podcast today. And, um, you know, everybody who's out there listening. Thank you for listening in. We hope you're doing well, uh, and, and weathering this crisis. Um, and, uh, you know, if there's a, if there's questions you want us to ask or guests you want to see on the podcast in the future, please send those to podcast at PJ. CWC.