S2 Ep43: Michael Gronager, co-founder and CEO, Chainalysis

Update: 2022-10-28

Description

Our guest in this 30th interview episode with a unicorn start-up leader is the CEO and co-founder of Chainalysis, Michael Gronager.

Founded in 2014, Chainalysis is a blockchain data platform. It provides data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 70 countries. Their Chainalysis’s data powers investigation, compliance, and its market intelligence software has been used to solve some of the world’s most high-profile criminal cases and grow consumer access to cryptocurrency safely. The company reached unicorn status in 2021 and is now valued at $8.6 billion.

Ever since Michel Gronager was a kid, he saw himself as an innovator. He started his entrepreneurial journey, before co-founding Chainalysis, as the co-founder of Kraken, a digital asset platform and prior to this, he had a decade of experience in working on big data projects. He points out that the first thing he looked at when finishing university was virtual reality, and distributed computing platforms to do virtual reality. That led him to data, which ended up being his passion, because at the end of the day “data is growing way faster than anything else, and the opportunity of analysing that is huge.”

Gronager analysed data for high-energy physics and big science projects such as the Large Hadron Collider at CERN, the European Organization for Nuclear Research. When he stopped working in the public sector, he was bitten by this innovation bug to build something himself and have a private company. At the same time, he stumbled upon crypto, and at a moment when the industry was transforming and growing rapidly, Kraken’s Jesse Powell asked him to join the team. It became clear to him that there was a path forward with his expertise in big data, so he created a company that didn’t exist at the time, with a fresh idea: indexing and understanding all the data that is in the crypto space as it is growing, and this is where Chainalysis began.

The cryptocurrency sector is a peculiar one, where everything changes constantly, says Chainalysis’s CEO. There is a vast amount of innovation happening around crypto, so it means that his company must be deep in the product side and be constantly innovating and spending their efforts in building the right tools and products around the DeFi space. At the same time, another peculiarity of the crypto space is that it’s global. As Michael states, “crypto is everywhere and was born being global”. This also means, for a company like his, that they need to focus not on one market or one jurisdiction but work and think globally.

One of the things that changed when the company reached unicorn status back in 2021 is that it allowed him to make certain high-profile hires that would have been hard to make otherwise. Unicorn status “opened the door for talent”, he says, and this is important in a quite crowded space as technology. But Chainalysis has a couple of unique aspects that have helped them differentiate over the years. First, what they’re building is unique, so they’re not one of many. They’re building the market for themselves and growing the TAM every day and working with new customers.

Secondly, their business is very mission driven. What joins their public sector clients, more than 150 in 35 countries around the world, is that they’re trying to keep society safe, keep nations-state safe, and protect these from terrorists and other negative actors. They need to ensure they’re gaining the trust of these institutions, and a huge part of their culture is believing in their work and delivering high-quality data while maintaining humility and building trustworthy relationships with all stakeholders and customers. Staff at Chainalysis have a purpose because they see that getting better at understanding crypto and indexing it, could make the world a better place.

Michael highlights that there are many individuals who have had an impact on him as a leader, including Todd Olson from Tyto-client Pendo, and Manny Medina at Outreach. His greatest strength, he says, has been prioritising empathy and “trying to understand the problems in a business, and the problems that the individuals are trying to solve.” He also believes that this skillset has a lot to do with communication, not about trying to understand all the different areas of the business, as he’s no expert in areas such as sales or in a product function at the scale that they have today. But he can talk to the people there and build relevant connections, and that’s a crucial asset in managing and leading a business.

He also points out that he has always enjoyed communicating, and admits has his own style. He’s much better at improvising than at preparing, as his communications style is best suited to improvisation rather than practice. If he were able to go back in time, he says, he would speak to his old self and tell himself that “when you communicate, you need to overcommunicate.” Looking at things from a different perspective is important, and in any communicational exchange you need to understand that the receiver might have a different viewpoint. “When you say it three times, you probably need to say it three times again after that”, states Michael. The company now has more than 700 employees, and he still does onboarding himself once a month and has weekly office hours where people can ask questions or simply come and chat to him. These types of strategies are vital to the successful growth of a company.

The interview, as usual, was co-hosted with Russell Goldsmith of the csuite podcast.

We have distilled the most valuable, actionable insights from our first 15 interviews with leaders of unicorn companies and bottled them in our book ‘Growing without borders: The unicorn CEO guide to communication and culture’. You can download it here.