Kraken Exchange: 'If we put a million dollars into the money machine'...

Host: Nick Price (Co-Founder @ DOT)

Mar 20, 2024

DOT Ads is the crypto ad network with a Google Ads-like experience. Discover a self-serve ad platform and get your ads on 300+ crypto sites.

Kraken is a US based cryptocurrency exchange, founded in 2011 and is currently a Top 5 exchange by volume, globally.

If we put a million dollars into the money machine…

What comes out?

Just one of many questions Matthew Barby, VP of Growth at Kraken asks when setting his strategy to grow one of the worlds largest crypto exchanges.

We share his insider thoughts including…

🏎️ WHY Kraken sponsors the Williams FORMULA 1 team

🏢 The HUGE opportunity for growth in the RETAIL segment

🚨 The RISKS of growth, and Gary from the SEC

🤔 MEASURING outcomes and staying nimble

📖 Read the Interview

[00:00:00] Matthew Barby: Ultimately they are building a media empire. The F1 is. And it's transcending just sport. And I think for us, the global reach, the ability to do local activations around each of these events, it's what brings a lot of, like, there's a huge amount of value that you could get from this.

[00:00:24] Matthew Barby: How do we give localized experiences for customers in Germany, Canada, Australia, the UK, Spain, where you have like more native payment options, strong payment rails, which is something that we've kind of always really been been known for. How do we diversify the list of assets and move faster to markets?

[00:00:44] Matthew Barby: How do we offer in certain jurisdictions more complex derivatives? How do we build out institutional offerings that service these different customer segments in different geographies and cater to their individual needs, while still having this cohesive experience of the product that everyone can enjoy all at the same time?

[00:01:02] Matthew Barby: While we're shifting a huge amount of our energy into the retail segment and building this like kind of huge run rate of consumers that are driving in, which has been one of the biggest growth areas through last year for us, we can't perfectly measure the exact return of every single one of these dollars that we spend on sponsoring the Williams F1 team. In every other area we are like incredibly scientific with the way that we do this with a huge data team.

[00:01:27] Nick Price: I'm pleased you mentioned F1. I'm a huge F1 fan, so I definitely want to speak about your sponsorship of the Williams F1 team. Before we get there, though, you mentioned, of course, underneath you, you have many different components of your growth team, whether it's the product led growth, whether it's the SEO team, the affiliate marketing team and obviously your media team.

[00:01:48] Nick Price: Would you mind just briefly digging into those different areas and how you've built those areas to push Kraken forwards and also, I'd be very curious to know how you managed to keep the ship efficient with so many different areas going on at the same time.

[00:02:04] Nick Price: How would you stay consistent in your approach and make sure that everyone is fighting in the same direction?

[00:02:10] Matthew Barby: You've got the customer segment, so you know, institutional, the kind of retail users, which we'll call consumers, and then our pro users, which are kind of in between the consumer retail and the institutions.

[00:02:21] Matthew Barby: So deep focus on that. Then we have the country level. Individual markets require a completely tailored marketing approach. We have individual country level managing directors that we build cross-functional pods that we work with. So we have the regional MDs, commercial strategists, BD, M&A teams partnered with people from each of my growth channels, the horizontal teams.

[00:02:44] Matthew Barby: So we have organic search, conversion rate optimization, we have the affiliate team refer a friend program team, we'll have the performance marketing team, brand media team, I'm gonna forget loads, lifecycle marketing team. Then we have the growth, the regional growth team, where we have individuals facilitate a strategy, owners for individual geos that we go after because we think about growth as like, hey, how do we drive more users in through all these different channels? Stuff like that.

[00:03:13] Matthew Barby: Even bigger unlock compliance, regulatory, payment rails, activation improvements, KYC efficiency like, these tiny percentage increases, right? You increase KYC verification rates in a region will give you like 100x the outcome of improving efficiencies in customer acquisition cost on like a performance marketing channel.

[00:03:35] Matthew Barby: So lemme come back to like the efficiency. We anchor these teams against very specific KPIs, anchored against these vertical kind of pieces around customer segments that we're going after in specific geos so we can drill down even deeper.

[00:03:47] Matthew Barby: We also have MarTech sits in my team as well. So we have a lot of the tech infrastructure that sits under it. And then we have like our, what's kind of the North Star. North Star for growth ultimately is new transacting users and ARPU, right?

[00:04:01] Matthew Barby: The area where we scrutinize probably the most is the unit economics of our various paid activities, whether that be brand media spend, and trying to find a proxy to how we anchor that back to either monthly transactions or through ARPU growth.

[00:04:20] Matthew Barby: Or whether it be in like more direct performance marketing. And this is why we use a combination of attribution models where it's like multi-touch attribution comparing against last touch. Forward modeling with, you know, whether it be like basic linear regression modeling or much more advanced techniques to say, hey,

[00:04:39] Matthew Barby: if we put a million dollars into like, the money machine, where's the most efficient place, market wise, channel wise, that we can spend this? And then, we go after and look and see how we can scientifically prove out where's the best use for all of this.

[00:04:52] Matthew Barby: There's a lot of moving parts, there's a lot of complexity as well. You know, one wrong email or one email sent to the wrong jurisdiction to the wrong user can literally mean an implosion of a whole market. It's that level of kind of scrutiny that we have to put on this. A single tweet can trigger, you know, Gary and the SEC to come down harder.

[00:05:15] Matthew Barby: Risk reward is the juice worth of squeeze sometimes? Are we, do we have processes internally that facilitate our ability to be agile and aggressive? Whilst having fail safes that don't avoid us kind of moving into the realms of hubris or negligence. And that's a difficult balance.

[00:05:33] Nick Price: So you, you guys really have gone from zero to a hundred in the past year from having almost no marketing function and being purely, or majoritively, product led. You do now have now have a very sophisticated marketing function across so many different areas.

[00:05:49] Nick Price: It's impressive. Come on, let's talk about Formula One. I'm a fan. Are you a fan?

[00:05:54] Matthew Barby: Absolutely. Me and my wife. My wife even more so. But yeah, we're both big fans.

[00:05:59] Nick Price: It's an interesting one, Formula One, because obviously you guys, Kraken, sponsoring the Williams F1 team. We have, I wrote it down here, we've got OKX sponsoring McLaren. We've got crypto.com sponsoring Aston Martin. We have a few. What is it, do you think, I'm not gonna talk about those guys, but

[00:06:17] Nick Price: what is it, do you think about Formula 1 that attracts crypto? I'm curious to know your thoughts on that.

[00:06:24] Matthew Barby: Listen, I was listening to a podcast today from the Financial Times and they did a bit of a deep dive on the F1. And they talked about the big rebrand that the F1's been going through. And they mentioned that the F1 has been trying for a long time to pivot away from their core audience being old white guys wearing Rolex's and into a much more diverse, younger market, affluent market, capturing a huge female audience as well at the grassroots level. And I think what we're seeing right is the global appeal of F1 and the media engine, the entertainment engine. This is entertainment sports, and that's what we're seeing across this. I would say golf as well as starting to become here, but

[00:07:00] Matthew Barby: ultimately they are building a media empire. The F1 is. And it's transcending just sport. And I think for us, the global reach, the ability to do local activations around each of these events, it's what brings a lot of, like, there's a huge amount of value that you could get from this.

[00:07:17] Matthew Barby: Working with the team, the Williams team, has been fantastic. They do tons with us, so we get a lot of value out of that partnership.

[00:07:24] Nick Price: I can imagine. Really cool to see the Kraken logo at the back of the Williams car, it looks great. Alright, final two questions to wrap up this interview then. Alright, question one, price of Bitcoin end of 2024 care to speculate where we'll be.

[00:07:38] Matthew Barby: I'll say peak price 74K. I think we end December around the low seventies and we just get started to absolutely go on a tear in 2025.

[00:07:48] Nick Price: Who's gonna win the F1 season this year?

[00:07:50] Nick Price: Driver team. I'd love to say Williams, of course. But do you think Verstappen gonna clinch it again this year?

[00:07:57]Matthew Barby: No, I think this is William's here. We got it's William's here. That's what I'll end on.