Author: Wu Shuo Blockchain
This article is a shorthand transcript of an interview on July 12th, with minimal editing and GPT processing, and may contain many errors. The interviewees include Wu Shuo, Star Daily, Foresight, and Deep Tide. The interview content represents the personal opinions of the interviewees and does not represent the views of the media.
In 2014, you joined OK, and in 2017, you founded Binance. Ten years have passed. What are your feelings?
He Yi: The most impressive thing for me might be when I just entered the industry, because in 2013, the price of Bitcoin rose, and then it rose to over $1000. At that time, I felt very stimulated, and it was the first time that made me reflect on my life. I always wondered why I joined this industry, giving up opportunities like working in a travel satellite TV. It's because for the first time, something made me rethink my life, what is money? Because since childhood, our parents always tell us that money is very important. I think that when the price of Bitcoin rose to over $1000 in 2013, it gave me a great stimulation. What is money after all? What you used to think was money, maybe it's not the essence of money itself. So this directly made me choose to enter the coin circle.
After joining the coin circle, the most stimulating thing might be when I officially announced my entry, and then Mt. Gox collapsed, and at that time, I felt like it was a disaster. The big drop in the coin circle today is really nothing compared to the history of 2014. One day, Bitcoin should have dropped to almost below $100. It's like you're sitting in front of the screen and watching it drop rapidly. At that time, liquidity was not that strong, and when everyone was selling, you really just saw the price dropping bit by bit.
At that time in 2014, there were no heroes, and the sons were not famous. Because I often laughed at our internal meetings, saying that our recruitment should be more diverse, because I said if it's an interview today, with my background, with my resume, I wouldn't get an offer. So I think 10 years later, if a person with the same background comes for an interview, he definitely won't get an offer, because we will ask how good your English is, what achievements you have, right? It's very professional. You would feel that 10 years ago, people really saw us as a bunch of pyramid sellers, and 10 years later, they think that this industry is still a positive stimulus and cycle, regardless of talent, possibility, or a positive stimulus.
At that time in 2014, who were the most famous people in the industry? In my memory, it was Roasted Cat and Chang Jia. At that time, they were all altcoins, really, except for Bitcoin, they were all altcoins, so everyone was orthodox. It's quite obvious that in 2017, there was a big change. The emergence of Ethereum itself allowed some concepts, such as the financialization that was previously discussed in the past, the pan-financialization, or micro-financialization, to appear. In 2017, when real opportunities for entrepreneurship emerged, companies were born.
I think the so-called bull market now is not driven by innovation, nor is it driven by huge changes in the industry. It's actually driven by independent events like ETF. So I think if you summarize what real innovations have been left in the history of the coin circle or what positive impacts each stage has had on this industry, I think there are still quite a few gains. At least personally, I feel that ultimately, innovation is still driving this industry forward.
What are the most important criteria for Binance's investments? Which track are you personally interested in?
He Yi: I can roughly align my understanding of investment with everyone. I think relatively speaking, Asian projects may still suffer a bit, because after all, North America has some more typical venture capital, such as companies like a16z, which are very focused on making large investments in the blockchain industry.
But indeed, for Asian investors and companies, there is a huge embarrassment. It may be that Asian funds themselves may not want to invest in Asian companies, which is a bit of looking down on themselves, I think it's very difficult.
You can understand our investment as hoping to sprinkle pepper. In the end, you can understand that the industry can go as far as possible. It's still driven by innovation. To cross the chasm, there must ultimately be real innovation driving it. Blockchain technology can be popularized and used by more ordinary people. Who will succeed in the end, I don't know, but as much as possible, we want to support more people. The projects we have invested in, to be honest, may exceed 2000, not 2000, but definitely 1000. But most of the projects, to be honest, I haven't talked to them, I haven't communicated with them. But I think the investment is based on several framework things:
The first is whether the founder himself has a long-term view, whether he believes in this industry, right? You will find that if in the end, if he just runs away after making a fortune, living in a villa by the sea, he is no different from a gambler, even if he succeeds, he will sell the coins and run away. So I think it's still about having a long-term view and confidence in the industry.
The second point I think is very important is his skills, what have you done, right? Everyone's ability model, including the model of your team, whether it is complementary. The third point I think is actually his thinking structure, you can understand whether he is in a continuous iterative state. You will find that many people are very good at tossing, even if they start from a lower point, but they can keep iterating. In the process of talking to him, you can make a judgment. I think if it's basically acceptable, the fundamentals are okay, we are willing to invest some money to cultivate it. You cannot pursue a so-called 100% success rate, because this thing essentially does not exist. Look at traditional VCs, they may invest in 10 projects, and 9 of them die, and only 1 success is also very common. So I think it's not about investing in this thing, but I hope that this industry can have more innovators who can come out, and can continuously build confidence for everyone, whether it's in the long night of emotions that everyone is experiencing now, or in the long night before a very big leap in technology. But in the end, if you don't support others, you will end up being a loner, right?
I don't evaluate projects much, but personally, I think the next thing that will have a huge impact on human society is AI in nature. I have spent a lot of time learning about this, but it doesn't necessarily mean that we have invested in it, but I think you need to know the direction of the tide.
Does Binance really have insider trading? What are the listing standards?
He Yi: When we often discuss insider trading, everyone knows that if certain tokens are widely publicized, they will inevitably be listed on a certain exchange, then 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 has made the work of our listing team embarrassing. We have not contacted some project parties, but the rumors of listing have spread, and some people will even use these rumors to exert pressure. If the project party does not accept their conditions, they will spread rumors of listing. If we choose not to list this project, we are sometimes accused of insider trading.
We have strict standards and processes before listing. In each cycle, we screen projects and conduct internal reviews. If someone strongly opposes a project, it will not pass the review. We try to minimize the time difference between the decision to list and the actual listing to prevent rumors of insider trading. The decision to list is not made by one person, but through a multi-level evaluation process to ensure the project's technical foundation, market potential, and investment endorsement. Binance's listing standards mainly include the following points: technical and market foundation, the project's popularity and user attention, reliable investment support to ensure it will not easily exit, and the project's lifecycle and potential for sustainable development. We will observe and evaluate all projects that meet these criteria in a large pool.
One of the main challenges we face is the psychological expectations of users. Many users in the coin circle expect returns of hundreds or thousands of times, while traditional investors are already very satisfied with an annual return of 20%-30%. As competition intensifies, opportunities for high returns will become increasingly scarce. We need users to understand the development and changes in the industry and adjust their expectations.
In the selection of listings, if a project has VC investment, users will think that VCs are taking advantage of them; if the project is weak, users will think that Binance has listed a garbage project. Therefore, no matter which project is listed, there will always be dissatisfied users. We hope to provide projects that have demand, popularity, and relative reliability in the market, but this does not mean that all projects will rise. We also hope that users can understand the market's fluctuations and cycles. With the intensification of industry competition, opportunities for returns of hundreds or thousands of times with high information asymmetry are becoming increasingly scarce. In the entire industry, whether in the primary or secondary market, competition is becoming more and more intense. We hope that users can understand that in such an environment, it is not easy to find projects that can bring long-term high returns. Ultimately, we need users to understand and accept reality, adjust their expectations, and profit better in this rapidly developing industry.
The second part involves conflicts of interest and regulatory issues. When most of the coins listed on our platform are related to Binance, is this true? In fact, Binance has limited holdings in most coins, some even as low as 0.1%. Other trading platforms may be more involved in related projects. Therefore, it requires valid evidence to claim that Binance and the listed coins are related.
Everyone hopes that the coins listed on Binance will rise, but this is not realistic. No investment market can guarantee only gains and no losses. The fundamental function of Binance is to provide popular and high-demand projects in the market, but we also hope to filter out projects with the risk of exit and select potential projects.
What is the future focus and direction of Binance?
He Yi: The essence of crossing the chasm is to better apply technology to the current industry. We are 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 Pionex. The role of Pionex is to allow users who are not very interested in the coin circle to come in and gradually understand the coin circle and its investments.
Another aspect is that we have tried stablecoin businesses, but due to regulatory costs and threshold issues, it ultimately did not succeed. In addition, since last year, there has been more attention on Web3 wallets. Competitors have performed well in external storage wallets, but there are different understandings of Web3 wallets. Many peers see it as an alternative (Plan B) for exchanges. When the exchange business is affected by regulation, they continue to trade through wallets without the need for 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 have not done well in the products of Web3 wallets, we still hope to improve the user experience, especially for Web3 wallets with KYC requirements. The future focus and direction are still on solving compliance issues globally. With the development of the industry, the global attention to the crypto industry is increasing, and Binance must take on the responsibility of compliance, including communication with regulators in various countries, building trust, and anti-money laundering issues.
I believe that if the industry can establish effective channels of reconciliation with the government, it is possible to become part of the Internet. But if it confronts the government, it may become the dark web. Therefore, we hope to become a part of the Internet industry that serves more people. In the current bull market, there has not been a significant innovation in the true sense. For example, in the previous cycle, people discussed that Ethereum was too expensive and could not support large-scale applications. Now, whether it is speed or cost, these are no longer bottlenecks. The real problem is still the lack of sufficient assets.
What difficulties or crises has Binance faced in the past? How did it overcome them? What crises may arise in the future?
He Yi: Binance does not disclose its market value, which may be confusing, but we do have over 200 million registered users, although not all of them are active. Regarding the market value of BNB, I think it is a relative value, and I don't pay much attention to market value, mainly because of its cyclical fluctuations. Ups and downs are natural, as long as we do things well, the results will naturally be good. I have always believed that as long as we manage the present well every day, we can achieve good results.
From the first day of its launch, Binance has faced endless crises and difficulties at every step. For example, BNB once dropped 50% on the first day of its launch, which may have been the biggest crisis for CZ. We have also faced situations where Amazon Web Services went down, and our infrastructure and domain names were delisted. So, our philosophy is to solve problems when they arise and manage each day well. By persistently doing the right things, we will naturally receive positive returns.
From childhood, we have a concept called "When poor, be self-reliant; when successful, help others." But I think this logic has a flaw: when is one considered successful? My understanding is that as long as what you do is positive for the world, reduces costs, improves efficiency, and helps users have a better experience, you are changing the world. This does not necessarily have to be like Elon Musk launching rockets or like Tesla. But what you do has a positive impact on the world, and naturally the company will grow and become stronger.
In the process of development, we will naturally encounter different challenges, such as regulatory pressure or challenges in talent development. The company is developing rapidly, but the talent development system may not be perfect. These are problems that need to be naturally resolved. I have always maintained a positive attitude and have not felt that there is no way out when faced with difficulties. Life is a wilderness, and it's okay as long as each step is taken well.
When I was in school, I used to run the 1500 meters in middle-distance running. Every moment in life is a challenge, but as long as you push yourself a little bit more, you will find that you are constantly growing.
He Yi: I consider myself a very crisis-aware person. From the perspective of the entire industry, the biggest crisis is of course the regulatory crisis, not only for Binance. Although we have just passed a test in this regard, regulation is always an important challenge. The second crisis is the competition and innovation crisis in the industry. 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 the uncertainty of the environment and new innovations. Therefore, we encourage continuous experimentation with new things from an investment perspective and from the perspective of internal employees. If a colleague wants to start an innovative business or has entrepreneurial ideas, we fully support them.
Essentially, all threats do not purely come from known competitors, but from the uncertainty of the environment and new innovations. If new innovations appear and you are unaware, that is the biggest crisis. Just as in the past, the giants in the mobile phone industry did not realize what the appearance of smartphones meant for them.
The entire industry has developed to the point where it is difficult to exist as a niche startup company. Now, it is necessary to establish effective communication with regulators and policymakers. Personally, I spend more time focusing on how to transform a startup company supported by the charisma and abilities of the founder into a long-lasting company. This requires an improvement in organizational capabilities. With strong organizational capabilities, good seed players can be continuously nurtured.
How do you view MEME?
He Yi: When half of the top ten trading volume coins are MEME, what would happen if we don't list these coins? Users and trading volume will flow to other platforms. So, many times we have no choice. Other trading platforms will also list these coins, and there are even third parties to choose from. This does not mean that the entire industry is working for Binance, but we must make compromises and maximize our value and fundamentals as much as possible.
In different market cycles, this phenomenon is not unique. In 2014, everyone thought that everything except Bitcoin was garbage. In 2017, people also thought that the projects hyped in the market were all garbage, and people's speculative mentality was strong. This emotional fluctuation occurs in every cycle, just because the market size has expanded a lot, and many new players have entered, and emotions are more directly reflected on the Internet.
In the past, the industry was dominated by a few experts who had many years of experience in technology and had gained influence in the market, and everyone followed their investments. If they made a profit, everyone would believe more in their technology. In this round, with the emergence of some user-end products, people began to follow a new wave of influential figures for speculation, and market sentiment remains very volatile.
Whether in traditional financial markets or the current market, it is indeed very influenced by emotions. But this does not negate the significance of making products seriously and building a business model. The market's enthusiasm and emotional fluctuations will impact the mindset of users, investors, and entrepreneurs.
I often emphasize to team members the concept of "unity of knowledge and action," not because my name is He Yi, but because I have a deep understanding of this. Believe in something and stick to it. Only by persisting repeatedly will results show. Just like we have known since childhood that studying well leads to good grades, and that controlling diet and exercising leads to weight loss and a good body, but it is difficult to do in practice due to many external temptations.
Entrepreneurship and Investment Market
When you persist in your ideals and innovation, others may ridicule you. But if you look back, in 2017 when Binance launched BNB, many people were also mocking us. At that time, some even said that exchanges issuing their own coins were not worthy. But the fact has proven that persisting in innovation and creating effective products is meaningful. We know that the industry needs product innovation and technological innovation, it needs products that truly have users and applications. Although this is difficult, it is the direction we should persist in.
Personal Future Development Direction
He Yi: I have never thought that I would find something else outside the crypto industry that would interest me to invest in. My personal characteristics may stem from my previous educational background and experience as a teacher. I enjoy helping others succeed. I have always believed that only by helping more people succeed can I achieve my own success. If it were not in the crypto industry, I can hardly imagine anything else worth my time and energy investment, and I might only return to the investment field, outputting effective thinking patterns.
Although I do not choose to return to the education industry, this is also a kind of 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 Kunbei's choice is understandable. Look at the speed of AI development, it is indeed more intelligent than humans. Human thinking logic input and output are relatively predictable, but also prone to errors because of the large gap between knowledge and action. Throughout human history, it is normal for people who are financially free to pursue immortality or enjoy a better 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 in entrepreneurship, but also in making history. From the first day I joined the industry, I firmly believed that blockchain would bring revolutionary changes and infinite possibilities to the world. It is because I firmly believe in this that I have devoted myself wholeheartedly to it. This also explains why I chose to leave when the previous company was preparing for an IPO, because I saw the era-changing potential of blockchain technology. I see this as my mission and I am willing to invest in it. I hope to work together with more outstanding entrepreneurs and talents. Because belief is the spark of a star, only by believing can we see more possibilities. If you don't believe in yourself, you cannot accomplish these things.
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