Key Moments
How to Survive the Crypto Boom & Bust Cycle
Y CombinatorKey Moments
Crypto companies must endure brutal 'winters' by focusing on core users and long-term vision, or risk shutting down. CoinTracker nearly failed in 2020 but rebuilt by obsessing over users and shipping faster.
Key Insights
Bitcoin has been declared dead over 47 times in the past 12 years, highlighting the cyclical and often volatile nature of the crypto market.
CoinTracker nearly shut down in 2020, facing a 6-month runway due to lack of funds during a crypto downturn.
During the last bull run, CoinTracker grew 14x, but later users felt the product had lost its edge due to a failure to keep up with advanced on-chain DeFi activity.
CoinTracker rebuilt its product in 9 months by halting all other work, focusing on user obsession, and shifting its guiding principle from 'think long-term' to 'think long-term, ship today'.
The company's mission is to "enable everyone in the world to use crypto with Peace of Mind by building the leading cryptocurrency portfolio tracking and tax compliance software."
The best advice for those in crypto is to take a long-term view, stay humble during booms, and stay believing during tough times, as crypto is predicted to fundamentally change the world.
Surviving existential threats during crypto winter
Building a company in the cryptocurrency space is uniquely challenging due to its extreme boom and bust cycles. Bitcoin, for instance, has been declared dead over 47 times in the past 12 years. Chandan Lodha, co-founder of CoinTracker, describes the 'crypto winter' as a brutal period, potentially the lowest point for founders, marked by struggles in company morale and growth. During these times, the entire industry faces external doubt, with many declaring the space irrelevant. CoinTracker itself faced an existential crisis in 2020, being just six months away from running out of money and having to shutter its doors. This desperation stemmed from a feeling that 'nothing is working.' The survival strategy involved the co-founder's strong partnership, a long-term view on the mission's validity irrespective of the current market climate, and radical transparency with the team about the dire situation. Open, honest, and vulnerable conversations were crucial to rally the team and define clear objectives for regaining growth. Companies that successfully navigate these harsh downturns are positioned to reap significant benefits when the market rebounds. The lesson is that crypto winters can be strategically leveraged to emerge as a stronger company.
The origins of CoinTracker
CoinTracker was born out of frustration with traditional financial systems. Chandan Lodha and his co-founder, John, previously worked together on a fintech project unrelated to crypto. They found the traditional financial rails to be 'super slow and super inefficient.' This experience spurred a deeper look into the crypto space, leading to the identification of a critical pain point in 2017: the difficulty of tracking all crypto assets across different exchanges. This problem became the kernel for CoinTracker, initially designed to enable users to track their portfolios and later expanding to include essential tax compliance features. The company's mission is to enable everyone to use crypto with peace of mind by providing leading portfolio tracking and tax compliance software, making crypto more accessible and easier to use.
The painful realization of product stagnation
During the previous crypto bull run, CoinTracker experienced massive growth, expanding 14x and focusing heavily on user acquisition, particularly during 'DeFi summer' in 2021. However, as the market cooled, the company began receiving critical feedback from users. Many felt that CoinTracker had lost its product edge because the team had failed to keep pace with the rapid evolution of the crypto space. Specifically, the rise of more advanced on-chain Decentralized Finance (DeFi) activities, such as using liquidity pools and platforms like Uniswap, was not adequately supported. This feedback was a 'painful realization,' as users were indicating that CoinTracker was no longer fully solving their problems. The core issue was that while the crypto space diversified its use cases and transaction types, the product hadn't kept up. This underscored the need for a fundamental product reevaluation.
The 'CoinTracker 2.0' transformation
Responding to user feedback about a lagging product, CoinTracker made a bold decision: they halted all other work for nine months to completely reimagine their product and company. This period of intensive focus led to the development of 'CoinTracker 2.0' with two key shifts. First, they elevated 'user obsession' to a core principle, ensuring everyone in the company, from customer support to engineers, engages directly with users daily. This includes active monitoring of platforms like Reddit and Discord to understand evolving needs and pain points. Second, they modified a guiding company principle from 'think long-term' to 'think long-term, ship today.' This subtle change empowered the entire team with the permission to take risks, experiment, and build solutions rapidly. The impact was a dramatic acceleration in company execution, re-energizing the team and preparing them for the next bull cycle with improved product quality and features.
The long-term vision for crypto and its builders
Chandan Lodha emphasizes the importance of taking a long-term view in the crypto space. He believes that crypto is not just a fleeting trend but a technology that will fundamentally change the world on a scale that is hard to even imagine. Even in 2024, its impact is already significant and will continue to grow. Patience is therefore a critical virtue for anyone involved – whether as a user, investor, or builder. This long-term perspective helps in weathering the volatile market cycles. The advice is to 'stay humble when things are going to the moon' and 'stay believing when things are tough.' This mindset is crucial for harvesting the long-term benefits of one's efforts and for the sustained success of companies in this dynamic industry.
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CoinTracker is a leading cryptocurrency portfolio tracking and tax compliance software. Its mission is to enable users to manage their crypto assets and file taxes with peace of mind, making crypto more accessible.
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Mentioned in this video
A cryptocurrency portfolio tracking and tax compliance software company co-founded by Chandan Lota. It aims to make crypto accessible and usable with peace of mind.
A decentralized exchange protocol mentioned in the context of advanced on-chain DeFi activity that users were engaging with.
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