CoinMarketCap’s Interim CEO Carylyne Chan Talks Acquisition and Business Plans
Binance has recently announced its buyout of CoinMarketCap (CMC) for an undisclosed price, thought to be one of the top M&A deals in the crypto sector with rumored price at $400 million in cash and stock options. With the sale, CMC founder Brandon Chez immediately stepped down to “focus on family” and has been replaced as interim CEO by Chief Strategy Officer Carylyne Chan.
Questions regarding the commercial motivations behind the purchase, as well as concerns over potential conflicts of interest between the largest cryptocurrency exchange and the most referenced crypto ranking site, have been mounting while left unanswered in Binance’s public announcement.
On April 16, we (8btc) has the chance to invite CMC’s interim CEO Carylyne Chan to have an online AMA (Ask Me Anything) with the Chinese crypto community, discussing a wide variety of subjects, ranging from the motivation behind the acquisition and the company’s business model as well as its plans, to the spreading coronavirus’s impacts on the crypto market as well as opportunities it may bring.
Binance’s motivation behind the acquisition
Q: Many people are speculating on the intention of Binance’s acquisition of CoinMarketcap, can you share why Binance made this purchase? Is it just eyeing on CMC’s high traffic, or any other deeper considerations?
Chan: CZ has spoken publicly about his vision to make crypto more accessible to people around the world. And CMC shares the same vision. As I understand, he feels CMC is the best product out there and our high traffic and number of users prove that. As CZ has reiterated a few times, he sees tremendous value in CoinMarketCap as a standalone company and hopes to let it grow as an independent business.
Both of the teams have agreed that CoinMarketCap will remain neutral as it always has been. As you can imagine, there is no real long-term benefit to having Binance acquire CoinMarketCap, then destroy its brand and value quickly just to give Binance a temporary boost. CoinMarketCap’s interest is in serving our millions of users, and that trust and neutrality is essential to our business, for our users to continue coming back and using our data. The key is to think long term and understand how we can keep growing CoinMarketCap’s value to the space and to our users in the long run.
Q: Acquisitions usually happen for two reasons: 1. Expand and scale, in order to make sure that BNB will always have a marketing angle and utility; 2. Anti-competitive. Do you agree with it?
Chan: In the business world, acquisitions can happen for multiple reasons. In the case of Binance and CoinMarketCap, I understand it to be more in the direction of diversification and expansion of their portfolio. As CZ has publicly stated, he’s looking at a very long-term investment. From my point of view, Binance and CMC share a common vision to make crypto more systematically important to people around the world, and we are aligned. It also doesn’t make sense for Binance to acquire CMC only to spend its goodwill and trust with users so cheaply and quickly just to market BNB! It just doesn’t make any business sense to do so at all.
CMC’s user base and business model
Q: Which countries are CMC users mainly located in? What are your big name partners? (Knowing this may provide a basic understanding of the purpose of the acquisition)
Chan: Our user base is very international. In terms of countries, the United States continues to be the leading user geography, although we see many European countries such as Germany, UK, Russia constantly in the Top 10 too. The biggest two regions are Americas and Europe, and I’d say that Asia Pacific is growing fast too. As for our partners, you can see just by looking on our website! An example would be Crypto.com.
Q: CMC is an old brand in the crypto space, but it seems your company do little in product innovations for all these years. Though the traffic is high, but your business model is simple by providing data still in the initial stage and not be further processed. Two years ago, your traffic ranking once hit 111 in the world, it now falls behind 500. Do you have any plans of introducing new products to meet investors’ diversified needs, such as offering trading product or tools like that?
Chan: You’re right – our main product has always been the provision of pricing and market capitalization data. Starting last year, we have begun to innovate and introduce new features such as the interest rate product to help users easily compare crypto lending and savings platforms. Most recently, we added perpetual swap data on CoinMarketCap and introduced the Liquidity Metric to help our users to shortlist and find the best markets to trade on. In the coming months, we will be rolling out an improved version of the Liquidity Metric so please look forward to that.
We plan to continue improving our users’ experience on the site by adding new data types (e.g. more derivatives data), allowing for more interaction on the site (e.g. contributing to tags or upvoting/downvoting) and creating more value for users to log in and use advanced features such as synced watchlists and portfolios. We look forward to your support as we continue to innovate and add more features!
Q: CoinMarketCap has maintained its leadership as the No. 1 platform in user base despite skepticisms. What’s the reason for the continued retention of users? Do you have any plans to explore your revenue opportunies apart from the current advertising-based business model?
Chan: I believe there are a few key reasons as to why our user base continues to grow:
- Our products are well-designed and simple to use. It gives our users the information they need.
- There is brand recognition and people know that they can trust CMC to be neutral and fair in its handling of data.
- We command network effects. If you want to see all data across all exchanges and projects, you will want to come to CMC.
- We continue to improve the accuracy of our data provided to users. Recently, we introduced the Liquidity Metric to help our users to shortlist and find the best markets to trade on, and we continue to improve that feature. In the coming months, we will be rolling out an improved version of the Liquidity Metric.
Our business model is a mix of advertising and API, where we provide data to our users (self-serve and enterprise.) We will continue to explore new revenue opportunities with new products; we will do this with consultation with our users, clients and partners.
CMC’s benefits and challenges after the acquisition
Q: As the interim CEO of CMC, what impact do you think will this acquisition have on CMC?
Chan: The biggest thing for CMC will be the ability to learn from the best practices established by Binance. Being a relatively young team, with way fewer employees, we believe that Binance can share their best practices in HR, security, finance, and more with us, so that we can improve our business processes. I stress that Binance will not be operationally involved in the running of CMC, but will rather provide these best practices in a structured manner. You can also refer to my letter to our users for more details.
Additionally, with Binance being at a much larger scale than CMC, they will be able to support the growth of CMC in terms of capital and infrastructure, if we ever need them to. I think this is similar to the benefits that most acquired tech companies get from their acquirer, and I don’t think it will be different in our case.
Q: CZ expressed that CMC would stay neutral and transparent after the acquisition, but people still question it, what’s the future plan of CoinMarketCap in business and how do you establish greater trust with users?
Chan: CMC’s commitment to neutrality has always been underpinned by philosophical and business considerations. From a business perspective, it is in CMC’s interest to remain neutral to maintain the trust that our users have in our data, as that trust is key to CMC’s brand and business. Basically, remaining neutral is absolutely key to the business in the long run.
In terms of governance, CMC is held under Binance Capital Management, the global blockchain company, and is not held under Binance.com. We are committed to our users, and we do not prejudice against any client even if they are Binance’s competitors. I invite you to judge for yourself in the coming months.
Q: In face of the current bearish market, what’s the opportunity and challenge lying ahead for crypto data aggregators?
Chan: This is an interesting question. I believe that the pace of change for our industry will accelerate from now on, now that a larger group of mainstream/retail users are interested in crypto, and it gets easier to buy some for themselves via multiple channels these days.
Something for CMC to keep in mind is how to balance between the depth and breadth of content that people want to see as the industry changes. I can’t go into all the details (it’s strategic :p) but I think it’s crucial for us to keep a close eye on the trends that are shaping up – we do a ton of internal data analyses internally to keep up with the trends of what our users are demanding from us now, and also in the long run.
For me, personally, though, I think one thing that I would like to optimize us for is speed: speed to market and speed of execution. As with many other tech companies, speed will place us in the best position for us to capitalize on any trends that come up in the future.
Reply to fake news/misreading
Q: I’ve read news that after the acquisition, CMC will change to charge fees by month, what does that mean? What’s your main revenue lines? Could you disclose the revenues over the past few years? Will the profit model change after the acquisition?
Chan: You have probably read some fake news. CMC has always kept listings for projects and exchanges free to provide a level-playing field. Any project, regardless of size and financial resources, will continue to be given an equal opportunity to make a case for itself to be featured on the site. While there are no immediate plans to change this, we would not rule out introducing value-added features or services (such as data verification and reporting dashboards) to supplement the existing listing process. Our two main revenue lines are advertising, and our data API. We will explore further revenue opportunities, mainly through new product offerings.
Q: Why the founder of CMC stepped down after the acquisition? Why CMC downgrade the ranking of Binance after the acquisition, to avoid suspicions?
Chan: Brandon Chez, the founder of CMC, had already been working on the company for 7 years. It’s time for him to take a break after working hard on CMC for so long! If you look at the letter he wrote to our users during the announcement, you can see that he feels secure in passing the baton on to our team and to our new parent company at this point. As with any tech company, there are only a few paths to exit for founders, and Brandon believes that he has made the right choice here.
There’s no conspiracy here at all: Volumes from pairs with the category “Derivatives” are not included in adjusted volumes. Adjusted volumes are meant to account for Spot volumes with “percentage” fee types on verified exchanges. With all that said, we’ll keep trying to make the adjusted volume methodology clearer throughout this year. We’ll keep you all updated as we propose these changes!
About the coronavirus’ and bitcoin halving’s impact on crypto market
Chan: In terms of the halving, I think it’s interesting to look at the historical trends from a data perspective. Historically, halving coincides with a big rise in prices a year or so after the halving. That said, it’s just based on the past, so it’s definitely not guaranteed that it will happen again.
As for the coronavirus – I think this is an interesting one. For CMC, we don’t see any major impacts to the business yet, as people are still browsing and checking prices and engaging with our site as per normal, for the most part. But the most important thing that will come out of this is that people may start to question the fundamentals of money and what that really means to us as a society.
For example, given that a proportion of our users are in the US, we see the macroeconomic impact of the coronavirus manifesting itself in the “BRRR” memes that are happening there. People start to ask about what this means for their purchasing power, the inflation in the economy. We also see more young people looking at the stock markets differently, and understanding the value of cash and assets in their own way.
All of these macroeconomic factors will be interesting to watch as far as impact on “crypto” as a construct goes. Something interesting in the midst of all these discussions is the increasing interest in Central Bank Digital Currencies (CBDCs). As I understand, this is something that the Chinese government has been exploring for years as well. I do wonder how this will all shape up! We’ll definitely be following it closely.
Chan entered the crypto space in 2018 after exiting her AI startup. “Before that, in 2017, I received crypto as a wedding gift in my red packet, and many of my friends told me that if I can read AI papers, I would definitely be able to understand blockchain papers and enjoy the premise behind it.” And then she met Chez and got started at CMC.
In face of challenges and issues lying ahead, the young chief executive and her 40-employee team now have to shoulder the responsibility of keeping and building CMC into a better crypto data aggregator.
As the interim CEO of the world’s most popular crypto data tracking site, Chan was questioned for being too young. Chan replied that the whole team at CMC is relatively young, adding that “it is not the age that makes the person, but rather his or her experience and attitude…your biggest leadership wins will come when you discover people out there who are yet unproven, but are given a lot of interesting challenges and high expectations that will let them shine”.