What explains the exponential growth of a company’s valuation in seven years? In Bitso‘s case, the first reason was the (long-term) bet on bitcoin, a crypto asset whose value has multiplied thousands of times over the last years.
Neither the great volatility that characterizes these assets nor the fact that there is no central bank regulation to back them up, are enough to deter those who speculate with cryptocurrencies, Bitso’s main clients. On the contrary, the expectation that after a fall there will be a recovery in value is what makes crypto so attractive.
In its sixth year, the company reached the mark of one million customers. In the following year, it added another million. Its exponential growth, unthinkable in a traditional business, attracted a $250 million investment round last May.
Alongside his technology team, Javier Martínez Morodo, the startup‘s chief growth officer, is the one responsible for outlining the strategies that will lead Bitso to reach 10 million customers in the next three years and deliver greater returns to its shareholders and users – in addition to creating new services based on blockchain. “I’m going to lead the development of financial products and services and the expansion in Latin America,” says Martínez Morodo, who worked 11 years at brokerage GBM, fintech, which in June became the third Mexican unicorn. He has known Bitso since its foundation: he was one of the first investors and users of the company.
Verónica García de León – How did a startup like Bitso get to be valued at $2.2 billion in seven years?
Javier Martínez Morodo – First because of the traction it has. Today we have 2.2 million users, a number that grows more than 10% per month. When projecting this growth rate in new countries and regions, the critical mass is very relevant. Second, because we are already a profitable company. We’re not like many new startups whose expenses and costs exceed revenues. And third, because much of the assessment [regarding the company’s valuation] is due to the potential to scale its operations regionally. Not just in Mexico, where we have 1.6 million users; but in Argentina, where we opened less than a year ago and we already have half a million users; we are opening in Brazil, and tomorrow it will be in Colombia.
VGL – What do two fintechs like Bitso and GBM have in common to achieve these valuations?
JMM – Their potential to make their businesses grow and expand, and without great costs. What it takes is to have an app that is built once and [then] sold a million times.
VGL – Unlike traditional businesses, what are the critical elements in managing a fintech?
JMM – Scalability. The similarity between GBM, Bitso, and Clip, and other unicorns, is that they all achieved that scale. GBM has over one million users, Bitso has over two million. And after scale, it is the growth rate that gives them strength in the eyes of investors and these market valuations.
VGL – How big are the profit margins?
JMM – When the company already has a technology team, a complete infrastructure, and so on, and wants to jump from 100,000 users to 2 million users, there is not much difference in fixed costs. If it costs 100 and the company has 100 revenue because it has 100,000 customers and wants to scale those customers to two million, there is no need to increase its expenses. You will go from being break-even to having margins of more than 90%. This profitability allows you to reinvest these resources and grow in marketing and other sectors.
VGL – What percentage of income does Bitso reinvest in technology infrastructure?
JMM – The rule is that at least 50% of the company’s personnel are from technology. This way we maintain a good balance and that same competitive advantage.
VGL – What is the size of your team?
JMM – We are a 100% remote company, with employees in over 28 countries. There are 350 employees hired by Bitso, in outsourcing, most of them in Mexico, but several also in Europe, America, Asia, and even Africa.
VGL – What is your mission at Bitso?
JMM – I am in charge, with my team, of continuing to develop products and services through our technological platforms. We are about to launch groundbreaking theses to offer the next generation of financial products beyond cryptocurrencies, leveraging blockchain technology.
VGL – What kinds of services will be first out?
JMM – The most sensible thing is to offer savings accounts in the short term and in the medium term to be able to offer credit issues.
VGL – With these strategies, how much do you expect the company to grow
JMM – We are going to end the year with about 3.5 million users and in three years we want to reach 10 million. My job is to figure out how we do that.
VGL – How do you counteract the fact that in Mexico cryptocurrencies are not legal tender, nor do they have the backing of the central bank or the banking system?
JMM – As a company, we are an authorized fintech in Mexico, we are regulated as an electronic payment institution. The custody of the assets is in Gibraltar, it is not guaranteed by Mexican banks but by private insurance in Europe that protects them against risks such as hacking.
VGL– What lessons could Bitso give to other startups and fintechs?
JMM – To bet on innovation, technology, and in the long term; Bitso’s exponential growth has occurred in the last 18 months. Five years ago cryptocurrencies were something that people did not consider viable; today it is a global reality.
Translated by Fabiane Ziolla Menezes