“Disruption” is often celebrated in the tech world, and since its inception crypto has been touted for its disruptive potential. But what is frequently lost in the jargon of disruption is the clear-eyed assessment of the need to reach mainstream consumers. For any successful tech business, the tantalizing potential of truly novel technology has to be balanced with a realistic approach to public appreciation and adoption of that technology.
This has been a guiding principle for Neil Bergquist, the CEO of crypto exchange Coinme, which has sought to strike a balance by integrating its tech into established cash infrastructure from companies like Coinstar and MoneyGram to create easy access to bitcoin.
Bergquist has charted a course that balances cutting-edge technology with regulatory compliance efforts and mainstream accessibility, and his journey offers insights for entrepreneurs looking to navigate starting an innovative but sustainable and accessible fintech business.
“At the time, the entrepreneurial mantra was ‘build fast and break things,’” Bergquist explained of the company’s 2014 origins. “We wanted to operate a money services business in the U.S. If you ‘break things,’ you risk going to jail. So we found the most competent fintech lawyers and subsequently went to the state regulators with a business plan, funds flow, and presentation on how a company could operate as a bitcoin exchange.”
Overcoming Early Challenges
But Coinme’s path to success was far from smooth. Like many startups, the company faced significant financial challenges in its early years.
“We maxed out credit cards, took out high-interest personal loans, negotiated payment plans with critical vendors, and did whatever we could to preserve cash,” Bergquist said.
The financial strain was personal as well. “I had to work nights and weekends to run Coinme for three years while not receiving a paycheck and maintaining a demanding full-time job,” he added.
One of the most significant challenges Coinme faced was managing the physical cash flow from their bitcoin ATMs.
“We had thousands, sometimes hundreds of thousands, of physical dollars in the ATM that needed to reach our bank account and, eventually, our bitcoin liquidity provider,” Bergquist recounted.
The company had to improvise solutions to handle large amounts of cash, highlighting the unique challenges that come with bridging the digital and physical financial worlds.
“After much discussion, we decided the best approach was to put on street clothes, visit the ATM late at night with a JanSport-type backpack, and stuff it full of cash from the cash acceptor,” said Bergquist. “Then we’d wait anxiously for the bank to open, wait in line, and then, when it was our turn, we’d empty six figures of cash onto the counter. The bank teller’s expressions were priceless.”
Building Trust, Accessibility, and Agility
Coinme has come a long way since then, reaching over 40,000 locations across 48 states and $1 billion in sales in its 10th year of operations.
Bergquist’s experience offers valuable lessons for entrepreneurs looking to navigate the fintech landscape.
First, understanding and adhering to regulatory requirements is crucial in the financial sector.
Second, in an industry often plagued by skepticism, building trust with customers, partners, and regulators is essential.
“Before diving in headfirst, start small and validate your key assumptions,” explained Bergquist. “Who is my customer? What are they willing to pay for this service? How much does it cost me to provide this service? Is it scalable? Defensible?”
Third, while compliance and trust-building are crucial, Bergquist also emphasized the importance of maintaining organizational agility. He pointed out that, despite starting as a business providing its own bitcoin ATMs, Coinme quickly realized the better route was to build out an API that could be integrated into existing machines. The company’s partnerships with established brands have been crucial in gaining mainstream acceptance and scaling quickly.
“Entrepreneurs often think about competitive differentiators as product-based features. However, I’ve learned that product-based features are a point-in-time snapshot. Organizational speed becomes the sustained differentiator,” Bergquist explained. “An organization’s ability to operate strategically and intelligently with agility and a sense of urgency will enable it to evolve and thrive continuously.”
Finally, entrepreneurs should have realistic expectations about encountering challenges. The path to success in fintech is often long and arduous.
“Starting a business or side hustle can be scary, exhausting, and risky, and it will consume whatever you can provide and more,” Bergquist warned.
When asked what he might do differently with the hindsight of 10 years as a co-founder and CEO, Bergquist highlighted the importance of thinking long and hard about the long-term challenges of building a business from an idea.
“I would have set more realistic expectations that building a company, let alone a heavily regulated technology company, will be a lot harder and take much longer than one may think,” he said.
Given the challenges, a deep passion for the vision is essential, said Bergquist.
“You have to love it. If you don’t love it, you’ll hate it.”
