Author: Wu said blockchain
This article is a transcript of an interview on July 12. After a small amount of editing and GPT processing, there may be many errors. The interviewers include Wu Shuo, Planet Daily, Foresight, and Shenchao. The content of the interview is the personal opinion of the interviewee and does not represent the opinion of the media.
You joined OKC in 2014 and founded Binance in 2017. Ten years have passed. What are your feelings?
He Yi: The most impressive thing for me was probably when I just entered the industry, because the price of Bitcoin rose in 2013 and then rose to more than 1,000 US dollars. At that time, I felt that it was very exciting, and it was also the first time that I reflected on my life. That is to say, I have always said why I joined this industry and gave up the job opportunities such as the Travel Satellite TV at that time. It was because I felt that for the first time, something made me think about my life in a new way, that is, what is money? Because our parents have always told us that money is very important since we were young. I think that the price of Bitcoin rose to more than 1,000 US dollars in 2013, which gave me a great stimulation at that time. What is money? The thing that you used to think of as money may not be money itself, so this incident directly made me choose to enter the currency circle.
After joining the cryptocurrency circle, the most exciting thing was that I had just officially announced my joining, and then Mentougou went bankrupt. I felt like I was doomed. Today, the cryptocurrency circle has some big drops, which is really nothing compared to the history of 14 years. One day, Bitcoin should have fallen to less than $100. In an instant, you sat in front of the screen and watched the price drop. At that time, liquidity was not that strong. When selling, everyone was selling, and you really saw the price falling step by step.
In 2014, it was still a time when heroes are not around, but young men become famous. I often laughed at internal meetings and said that we should recruit more diverse people. I said that if I were interviewed here today, with my background and resume, I would not get an offer. So I think 10 years later, if someone with the same background comes for a graduation interview, he will definitely not get an offer, because we will ask him how good his English is and what achievements he has made, right? In other words, he will be very professional. You will feel that 10 years ago, people really saw us as a group of pyramid schemers, but 10 years later, they think that this industry is still a positive stimulus and cycle, whether in terms of talent or possibilities.
Who were the most famous people in the industry in 2014? I remember that they were Kaomao and Changjian. At that time, there were only altcoins, except for Bitcoin, so everyone was a fundamentalist. What is more obvious is that there was a big change in 2017. The emergence of Ethereum itself made some concepts that were discussed in the past, such as financialization, pan-financialization, or micro-finance, appear. In 2017, people really felt that there was an opportunity to start a business, and such companies were born.
I think the current so-called bull market is not driven by innovation, nor is it driven by huge changes in the industry. It is actually driven by independent events such as ETFs. So I think if you summarize the entire history of the cryptocurrency industry or the real innovations in each stage that have a positive impact on the industry, I think there are still many gains. At least I personally feel that innovation is ultimately driving the industry forward.
What are the most important criteria for Binance investment? Which track are you personally interested in?
He Yi: I can roughly align my understanding of investment with everyone. I think that relatively speaking, these project parties in Asia will still suffer a little bit, because after all, there are still some relatively typical venture capitals in North America, such as a16z, which are very focused on making large investments in the blockchain industry.
But it is true that there is a huge embarrassment for investors and companies in Asia. Perhaps these Asian funds themselves may not want to invest in Asian companies. This is a bit of self-deprecation. I think it is still difficult.
You can understand our investment as we hope to spread it thinly. You can also understand how far this industry can go in the end. In fact, it is still driven by innovation. To cross the gap, there must be real innovation drive. Blockchain technology can be popularized and used by more ordinary people. We don’t know who will succeed in the end, but we will support as many people as possible. To be honest, we may have invested in more than 2,000 projects. If there is not 2,000, there must be 1,000. But to be honest, I haven’t talked to most of the projects, and I haven’t communicated with them. But I think basically, investment depends on a few frameworks:
The first thing is whether the founder has a long-term vision. Do you believe in this industry? You will find that if he makes a quick buck and runs away from the industry, and buys a villa by the sea, he is actually no different from a gambler. Even if he succeeds, he will sell the coins and run away. So I think it is necessary to have a long-term vision and have confidence in the industry.
The second thing I think is very important is his skills. What have you done? Everyone's ability model, including whether your team's model is complementary. The third thing I think is actually his thinking structure. You can understand it as whether he can continue to iterate. You will find that many people are very capable in the end. Even if they start from a low point, they can continue to iterate. In fact, you can make a judgment in the process of talking with him. I think that if it is basically acceptable and the fundamentals are all okay, we are willing to invest some money to cultivate it. We cannot pursue the so-called 100% success rate, because this thing does not exist in essence. Look at traditional VC, he may invest in 10 projects and 9 of them fail, and it is also very common that only 1 succeeds. So I don’t think we should invest in this thing. I still hope that there will be more innovators in this industry who can come out and continue to build confidence for everyone in the long night, whether it is the long night of emotions now, or the long night before this technology has a very big leap. But in the end, if you don’t support others, you will eventually be a lone walker. If you are the only one on this road, I think this can’t become an industry, right?
I don’t comment on projects much, but I personally think that the next thing that may have a huge impact on human society is AI. I have spent a lot of time learning about this matter, but it doesn’t necessarily mean that we have invested in it. But I think you have to know the direction of the tide.
Is there any insider trading on Binance? What are the criteria for listing coins?
He Yi: When we often discuss insider trading, we all know that if certain tokens are widely publicized, they will inevitably be listed on a certain exchange, so this project will not be listed on Binance. However, from last year to this year, there are not many high-quality and popular projects in the market, which makes the work of our coin listing team awkward. We have not yet contacted some project parties, but rumors of listing have spread, and some people will even use such rumors to put pressure on them. If the project party does not accept their conditions, they will spread rumors of listing. If we choose not to list this project, we will sometimes be accused of insider trading.
We have strict standards and processes before listing coins. We screen projects and conduct internal audits in each cycle. If someone strongly opposes a project, it will not pass the audit. We try to minimize the time difference between the decision to list a coin and the final launch to eliminate rumors of insider trading. The decision to list a coin is not made by a single person, but through a multi-level evaluation process to ensure the technical foundation, market potential and investment endorsement of the project. Binance's listing standards mainly include the following points: Technology and market foundation: whether the project has a solid technical foundation and market potential. Popularity and attention: the popularity of the project in the market and the attention of users. Investment endorsement: whether the project has the support of reliable investment institutions to ensure that it will not run away easily. Project life cycle: whether the life cycle of the project is long enough and whether it has the potential for sustainable development. We will put all projects that meet these standards into a large pool for observation and evaluation.
One of the main challenges we face is the psychological expectations of users. Many users in the cryptocurrency community expect a hundred-fold or thousand-fold return, while traditional investors are already very satisfied with an annualized return of 20%-30%. As competition intensifies, opportunities for high returns will become fewer and fewer. We need users to understand the development and changes of the industry and adjust their expectations.
In terms of the selection of listed coins, if the project has VC investment, users will think that VC is cutting leeks; if the project is weak, users will think that Binance has listed a junk project. Therefore, no matter which project is listed, there will always be users who are dissatisfied. We hope to provide projects that are in demand, popular and relatively reliable in the market, but this does not mean that all projects will rise. We also hope that users can understand the fluctuations and cycles of the market. As industry competition intensifies, opportunities for hundreds or thousands of times returns with high information gaps are becoming fewer and fewer. The entire industry, whether in the primary market or the secondary market, competition is becoming more and more fierce. We hope that users can understand that in such an environment, it is not easy to find projects that can bring high returns in the long run. Ultimately, we need users to understand and accept reality and adjust their expectations in order to better profit in this fast-growing industry.
The second part involves the issue of conflict of interest and regulation. Is it true that most of the coins we list have conflict of interest with Binance? In fact, Binance has limited capital in most of the coins, and some even have only 0.1% of the shares. Other trading platforms may have more conflict of interest projects. Therefore, it requires effective argumentation to believe that Binance has conflict of interest with the coins listed.
Everyone hopes that all the coins on Binance will rise, but this is unrealistic. No investment market can guarantee that it will only rise and not fall. The fundamental function of Binance is to provide popular and hot projects on the market, but it also hopes to screen out those projects with the risk of running away and screen out potential projects.
What is Binance’s future business focus and direction?
He Yi: The essence of crossing the chasm is to better apply technology to the current industry. We are more focused on investing in more companies, hoping that more innovations will emerge in the industry. For Binance, we are a platform that allows more users to enter this industry. For example, we added new businesses last year, such as Plaza. The role of Plaza is to allow users who are not very interested in the cryptocurrency world to come in and take a look at it at any time, and gradually understand the cryptocurrency world and its investment.
Another aspect is that we have tried the stablecoin business, but it ultimately failed due to regulatory costs and threshold issues. In addition, since last year, everyone has paid more attention to Web3 wallets. Friends have performed well in external storage wallets, but everyone has a different understanding of Web3 wallets. Many peers regard it as an alternative plan (Plan B) for exchanges. When the exchange business is affected by regulation, transactions will continue to be conducted through wallets without KYC and anti-money laundering. But we believe that Web3 wallet Plan B still cannot avoid regulation. Therefore, we hope to use Web3 wallets as a long-tail business to cover on-chain services that existing exchange users cannot access, such as staking and on-chain transactions.
Although we are not doing well enough in Web3 wallet products, we still hope to improve the user experience, especially Web3 wallets with KYC requirements. The focus and direction in the future is still to solve global compliance issues. With the development of the industry, the global attention to the crypto industry has increased, and Binance must assume the responsibility of compliance, including regulatory communication, trust building and anti-money laundering in various countries.
I think if the industry can establish an effective reconciliation channel with the government, it is possible to become part of the Internet. But if it is in opposition to the government, it may become a dark web. Therefore, we hope to become an Internet industry that serves more people. In the current bull market, there has been no real huge innovation. For example, in the last cycle, everyone discussed that Ethereum was too expensive to support large-scale applications. Now, whether it is speed or cost, these are no longer bottlenecks. The real problem is that there are not enough valid assets.
What difficulties/desperate situations has Binance encountered before? How did it get out of it? What crises will occur in the future?
He Yi: Binance does not disclose its market capitalization, which may be confusing, but we do have over 200 million registered users, although not as many active users. Regarding the BNB market capitalization, I think it is a relative value. I don’t pay much attention to the market capitalization myself, mainly because of its cyclical fluctuations. Ups and downs happen naturally, as long as you do things well, the results will naturally be good. I have always believed that as long as you manage the present every day, you can achieve good results.
Since the first day of Binance’s launch, every step has been filled with crises and difficulties. For example, BNB once dropped 50% on the first day of its launch, which was probably the biggest dilemma for CZ. We also faced the situation of Amazon Cloud downtime, infrastructure and domain name cancellation. Therefore, our philosophy is to solve problems when they arise and manage every day well. If you insist on doing the right thing, you will naturally get positive returns.
From childhood to adulthood, we have a concept called "If you are poor, you should take care of yourself; if you are rich, you should help the world." But I think there is a flaw in this logic: when do you become rich? My understanding is that as long as what you do is positive for the world, can reduce costs, improve efficiency, and help users have a better experience, you are changing the world. This does not necessarily have to be like Elon Musk launching a rocket, nor does it have to be like Tesla. But if what you do has a positive impact on the world, naturally the company will become bigger and stronger.
In the process of development, we will naturally encounter different challenges, such as regulatory pressure or talent development challenges. The company is growing fast, but the talent training system may not be perfect. These are problems that need to be solved naturally. I have always maintained a positive attitude and did not feel that I was at the end of my rope when facing difficulties. Life is a wilderness, just take every step well.
I used to run 1500 meters in middle-distance running when I was in school. Every moment in life is a challenge, but as long as you push yourself a little more, you will find that you are constantly growing.
He Yi: I think I am a person with a strong sense of crisis. From the perspective of the entire industry, the biggest crisis is of course the regulatory crisis, and this is not just for Binance. Although we have just passed a level in this regard, regulation is always an important challenge. The second crisis is the crisis of industry competition and innovation. At this stage, the competition between exchanges is parallel, and the core skill points of each exchange are not much different. We are also constantly learning from others and continuously improving. The bigger crisis actually comes from unknown uncertainty and innovation. Therefore, we encourage continuous attempts at new things from an investment perspective and from the perspective of internal employees. If any colleague wants to conduct innovative business or has entrepreneurial ideas, we are very supportive.
In essence, all threats do not come purely from known competitors, but from environmental uncertainty and new innovations. If new innovations emerge and you are unaware of them, that is the biggest crisis, just like when mobile phone giants did not realize what the emergence of smartphone screens meant to them.
As the industry has developed to this day, it is difficult to exist as a niche startup like in the past. Now we need to establish effective communication with regulators and policymakers. I personally spend more time focusing on how to transform a startup supported by the charm and ability of the founder into a long-lasting company. This requires the improvement of organizational capabilities. If the organizational capabilities are strong enough, we can continuously cultivate good seed players.
What do you think of MEME?
He Yi: When half of the top ten currencies in terms of trading volume are MEME, what will happen if we don’t list these currencies? Users and trading volume will flow to other platforms. So many times we have no choice. Other trading platforms will also list these currencies, and there are even third parties to choose from. This does not mean that the entire industry is working for Binance, but that we must make a compromise choice to maximize our value and fundamentals as much as possible.
This phenomenon is not unique in different market cycles. In 2014, everyone thought that everything except Bitcoin was garbage. In 2017, everyone also felt that the hyped projects in the market were all garbage, and people had a strong speculative mentality. This kind of emotional fluctuation will appear in every cycle, but because the market scale has expanded a lot this time, many new players have entered, and the emotional expression is more direct, which is reflected on the Internet.
In the past, the industry was dominated by a small number of experts who had many years of experience in technology and gained influence in the market. People followed them to invest. If they made a profit, people would believe in their technology even more. In this round, with the emergence of some user-end products, people began to follow a new wave of influential people to hype, and market sentiment is still very volatile.
Whether it is the traditional financial market or the current market, it is indeed very affected by emotions. But this does not negate the significance of seriously making products and building business models. The craze and emotional fluctuations in each market will have an impact on the mentality of users, investors and entrepreneurs.
I often emphasize "unity of knowledge and action" to my team members. This is not because my name is He Yi, but because I have a deep understanding of this. Stick to what you believe in. Only by persisting repeatedly can the results appear. Just like we know from childhood that if we study hard, our grades will not be bad. If we want to lose weight and have a good body, we must control our diet and move our legs. But it is actually very difficult to do so because there are many temptations from the outside world.
The same is true for the entrepreneurship and investment markets. When you stick to your ideals and innovations, others may laugh at you. But if you look back, when Binance launched BNB in 2017, many people also laughed at us. At that time, some people even said that the trading platform was not worthy of issuing coins. But it turns out that it makes sense to insist on innovation and make effective products. We know that the industry needs product innovation and technological innovation, and products that really have users and applications. Although this is difficult, this is the direction we should stick to.
Personal future development direction
He Yi: I never thought that I would find something else that I would be interested in investing in outside of the crypto industry. My personal characteristics may come from my previous educational background and teaching experience. I like to help others succeed. I always believe that only by helping more people succeed can I achieve my own success. If it weren't for the crypto industry, it would be hard for me to imagine anything else that would be worth investing my time and energy in. I might just return to the investment field and output effective thinking patterns.
Although I did not choose to return to the education industry, this is also a passive choice. But this does not mean that I can do nothing, I will still look for things that can help the world. I think Kunbes's choice is understandable. Looking at the speed of AI development, it is indeed smarter than humans. The input and output of human thinking logic are relatively predictable, but also prone to errors because the gap between knowledge and action is large. From the perspective of human history as a whole, it is normal for people with wealth freedom to pursue immortality or enjoy the quality of life, but this does not mean that people who leave the industry are untrustworthy, nor does it mean that others have no opportunities. In fact, some people may create more opportunities for others after leaving.
I have emphasized many times that since 2017, I have not only been starting a business, but also making history. From the first day I joined the industry, I firmly believed that blockchain would bring revolutionary changes and unlimited possibilities to the world. It is precisely because of this belief that I have devoted myself to it. This also explains why I chose to leave when my previous company was preparing for IPO, because I saw the epoch-making changes that blockchain technology could bring. I regard this as my mission and am willing to invest in it. I hope to work together with more outstanding entrepreneurs and talents. Because belief is a spark, only by believing can you see more possibilities. If you don’t believe it yourself, you can’t do these things.