‘Most of my crypto net worth is in ether’
In 2017, the price of bitcoin rose from $1,000 to almost $20,000. ZebPay, owned by Mahin Gupta, Saurabh Agarwal, Sandeep Goenka, was then India’s largest cryptocurrency exchange. However, when prices of the cryptocurrency crashed in early 2018 and the RBI came out with a ban on crypto-related payments, business came to a standstill. A shift to Australia and Malta, and crypto-to-crypto trading didn’t salvage the business. The owners sold out to Rahul Pagidipati, an Indian origin lawyer in the US. Pagidipati does not fit the standard profile of a crypto professional. He is not a coder, nor a software engineer. Instead, he has spent most of his working life managing his family office and investing in and running health insurance companies. Mint spoke to Pagidipati to understand his journey into the crypto space and where he is headed now. Edited excerpts of an interview:
Can you tell us a little bit about your background?
I was born and raised in the US, but my parents came from India. They are doctors and hence much of my professional life has been spent investing in businesses connected to healthcare. I am a lawyer and also have an MBA degree from Northwestern University. I first came to India to start a business in 1999, during the dot com boom. I launched an insurance claims processing company for US insurers called Anion Healthcare Services. I later sold this company but continued to invest in healthcare-related businesses for my family office - Ayon Capital. This is essentially my own family’s money and we do not raise money from outsiders. I read Satoshi Nakamoto’s whitepaper on bitcoin in 2011 and I was blown away. At the time the price of bitcoin had gone from $1 to $10 and then dropped back to $3. It got me thinking about how to use blockchain for health insurance and I got more interested in cryptocurrencies in general.
When did you acquire ZebPay?
In 2018, ZebPay had shifted base to Australia and Malta from India, after the RBI ban and reoriented itself towards crypto-to-crypto trading rather than rupee-crypto. I acquired a minority stake in the company in that year and gradually got more and more involved in its operations. The company was losing money at the time, around half-a-million US dollars a month. In late 2019 I decided to acquire full control and staked almost my entire net worth for this. My family thought I was crazy! It so happened that just two weeks after my purchase, Binance (an international exchange) announced the acquisition of WazirX, another Indian cryptocurrency exchange. Keeping the company intact was tough but I persuaded most of the middle management to stay on, despite the RBI ban. Three months after my acquisition, the Supreme Court of India quashed the RBI ban and ZebPay took off.
Is there a bubble in bitcoin?
Absolutely not. The market is reasonably efficient when it comes to cryptocurrencies also. I think there are two fundamental reasons why the price has to go up. First, a large section of bitcoin users typically are hodlers (they do not sell easily). This constricts the supply. Second, good money tends to displace less good money. Bitcoin and cryptocurrency in general are technologically better than fiat currencies like the dollar and rupee. They will naturally displace the latter. I’m personally bullish on ethereum though. For nearly two years, I used to buy one ether per day and I will resume this soon. I have most of my crypto net worth in ether actually. Bitcoin is a store of value but ethereum opens up so many possibilities through smart contracts.
What do you charge users of ZebPay?
For a transaction on the exchange platform, we charge an average 0.2%. If you want to move money out of the exchange into a cold wallet, of course transaction fees will apply. This charge is the same for all cryptocurrencies traded on ZebPay. We have a monthly membership fee of 0.0001 bitcoin which is waived as long as you do one trade that month.
How should India regulate cryptocurrency?
There are broadly three types of cryptocurrencies. First, utility tokens like ethereum and BAT should be regulated as digital assets. Kind of like domain names. This should be done by some type of commodities regulator. Second, security tokens (those that represent another asset like a stock or gold) should be regulated as securities by a markets regulator (think SEBI). Finally stable coins (such as cryptos pegged to the dollar) should be regulated by the central bank (think RBI). The central bank should require issuers of stable coins to maintain equivalent fiat currency in reserve. There should of course be regulation, especially for consumer grievances.
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NFTs don’t need crypto, but crypto needs NFTs – TechCrunch
Spending millions for a digital work of art that could be screenshotted feels similar to traipsing around a strip of concrete as a tourist activity. The optics don’t make immediate sense — there’s hardly any appeal in something as accessible as a Google image or street.
That’s my best bet at explaining at least some of the confusion around the explosive rise of NFTs, or nonfungible tokens. The token, minted on the blockchain, can give digital assets a unique signifier. In other words, anyone could screenshot a piece of art, but only one of us will own the true, original piece of art. This context is part of the reason why Beeple, a digital artist, had his artwork sold for $69 million just a few days ago.
The reason this topic is coming up in a Startups Weekly newsletter is because of the impact it could have on the cryptocurrency movement, of which there is a growing tide of early-stage and late-stage startups. The popularization of NFTs, as I argued in Equity this week, could be what makes cryptocurrency finally palpable to the average human — beside the average bitcoin hoarder. Platforms that sell NFTs usually need you to use cryptocurrency (usually Ethereum) to purchase anything. Mix that with the fact that humans have an innate desire to own, protect and immortalize their assets, and you might have the perfect storm. Beeple, a digital artist, made $69 million for his work, and this isn’t just a big financing event, it’s a signal that crypto enthusiasts and crypto assets are getting to an inescapable spot in public dialogue.
Ownership as a way for a decentralized network to become mainstream is its own meta conversation, and I’ll be clear that the blockchain and NFTs have a long way to go before they are truly equitable, accessible and hit their stride. But, it’s hard to not to let your mind wander about the opportunities here.
It’s more than a screenshot, it’s about the potential of pixels having more meaning than they ever did before. And it’s more than a strip of concrete, it’s the Hollywood Walk of Fame. Finding exclusive aspects of accessible things in our lives is compelling to a consumer and could be great for creators.
In the rest of this newsletter, we’ll discuss Coupang’s competitive industrial edge, a startup hoping to be the Nasdaq for revenue and Google’s brains fighting Google itself. As always, you can follow me on Twitter @nmasc_ for my thoughts throughout the week and tech news.
The Amazon of South Korea goes public
Coupang, which some describe as the Amazon of South Korea, priced and started trading this week on the public markets. At one point on Thursday, the company was valued at $92 billion.
Here’s what to know: When Coupang first launched, it found that South Korea had an absence of third-party logistics companies similar to UPS or FedEx in the United States. Now, it wasn’t without competition, but it did have an opportunity to build an end-to-end logistics company that is now worth a boatload of money.
Other IPO news:
The Nasdaq for Revenue
Pipe has a compelling narrative: It’s anti-VC, doesn’t like naming its rounds and says its goal is to be the Nasdaq for revenue. The goal since it started was to give SaaS companies a way to get their revenue upfront by connecting them to investors that would pay a rate for the annual value of those contracts. It turns monthly recurring revenue into annual recurring revenue.
Here’s what to know: The startup raised $50 million in a financing event this week. In the first quarter of 2021, tens of millions of dollars were traded through its platform, reports TechCrunch’s Mary Ann Azevedo.
Can you beat Google with Google’s brains?
In our main Equity show this week, the trio discussed a slew of news that naturally lended itself over to a piece we wrote months ago, Meet the anti-antitrust startup club.
(By the way, if you want a huge discount for Extra Crunch, just use our code, EQUITY, when you sign up to access great articles like this one and most of our analytical work).
Here’s what to know: Neeva, built by a team of ex-Googlers including the guy who built Google’s advertising engine, is one startup to watch. There’s a lot to chew and we do it best during the episode, so take a listen and figure out if you’re team Natasha and Danny, or team Alex.
Other news bits:
‘Blaming the intern’ won’t save your startup from cybersecurity liability
As SolarWinds is showcasing, a company can be liable for the mistakes of its employees via a legal term called “vicarious liability.”
Cybersecurity writer Chandu Gopalakrishnan explains what it means for you and what you can do to stay on the right side of the law.
Around TechCrunch
A few house-keeping things this week:
Here is everything you missed from TC Sessions: Justice. It has recaps, videos and excerpts with embedded notes. Best enjoyed with a dose of reality, truth and coffee.
We are hiring for a head of product, so apply for a chance to join this wacky and fun team.
Check out the incredible speakers we have joining us for Extra Crunch Live this month.
And finally, follow Drew Olanoff, who leads Community for TC, because he’s constantly churning out cool stuff like discount codes, chances to hang and surveys so we serve y’all better.
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