How to Build an Industry-Leading Cryptocurrency Security Company
Before founding what is now one of the most successful companies in the cryptocurrency industry — Ledger, Eric Larchevêque and his co-founder opened La Maison du Bitcoin, a Bitcoin education center and co-working space in the second district of Paris. It was through chance encounters in this space that Ledger was born in the basement of 35 rue du Caire, where the company also operated a Bitcoin exchange desk and a handful of crypto miners. Eric joined us on Epicenter to discuss the rise of Ledger from a ten-person team to now nearly 150 people across three continents.
How did Eric Larchevêque’s fascination with Bitcoin and digital currencies led him to an unlikely path — starting a hardware company? The French entrepreneur understood that the security of Bitcoin was based on the security of the private keys — and the only way to keep them safe was through secure hardware. And while there wasn’t any good alternative to a hardware wallet, at that time no one really recognized the need and importance for such a solution — one that’s hard to scale and not even on your potential customer’s mind. That’s why Eric Larchevêque’s key entrepreneurial takeaway from the early days of Ledger was the importance of resilience, which was key to capture the attention of initial investors and customers.
The perception around hardware wallets change drastically about a year later, mid-2017, when the interest in Nano S, Ledger’s first product, skyrocketed with the onset of cryptocurrency boom worldwide. That year the company sold a million hardware wallets, significantly scaled the team and operations, and decided to raise another funding round to meet the unstoppable demand for their products. In January 2018 Ledger raised a 75 million Series B round with the goal to scale their R&D, ramp up internationalisation efforts and expand into enterprise-side level of business by building Vault, a security solution for financial institutions wanting to secure their share of the pie in the cryptoeconomy. “We need to move forward very quickly, our ambition is to build very large technological company who will provide solutions for cryptocurrency and blockchain applications”, explains Eric.
What are the biggest challenges related to building cryptocurrency products? First of all, there’s a need to deal with strong communities with strong opinions — while maintaining neutrality and not taking sides. And while Ledger is a true believer in decentralisation, Bitcoin, the vision of Satoshi Nakamoto, catering to all those competing crypto communities can take a lot of energy. Secondly, Ledger puts a lot of effort into educating its customers on how to secure their digital assets and why is it important. “You need to explain to people that they can lose everything they can have, and that’s not easy”, explains Eric. The new version of wallet software that Ledger is about to release should help newbies to enter into the cryptocurrency space securely.
This year the company has been focused on expanding their business focus to serve financial institutions — investment banks, asset management companies, LPs or hedge funds — who really do want to move forward into crypto, but lack secure infrastructure. “The biggest problem these institutions have is how to hold cryptoassets and keep them secure”, explains Eric. Ledger Vault, a fully managed SaaS solution addressing the need to safeguard very large amount of multiple cryptocurrencies while mitigating both technological and physical risks, is the company’s answer to that.
Ledger is also continually working on improving the security of its products in a dedicated lab, where security experts are continuously trying to hack their devices, as well as through hardware bounty programs. “Security is always a game of cat and mouse. There’s not such thing as ultimate, bulletproof security”, explains Eric. “But our objective is always to stead ahead of the game. And it’s always important to stay humble”.
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