Crypto-focused companies have come a long way since their beginnings in terms of corporate structure, employee motivation, decision-making systems, compliance and other aspects of their operations. While the early 2010s saw startups founded by small groups of crypto enthusiasts, the space has since grown to become home to large institutional businesses.
Still, crypto companies are engaged in business, and business is alien to anarchy. The rapid growth of the cryptocurrency industry in the 2010s transformed small, independent businesses into huge conglomerates with thousands of employees and offices worldwide. Investment funds and professional investors own shares of them, many have functioning boards of directors, and their corporate structures have dozens of departments and divisions. But does all this bureaucracy destroy the very philosophy of cryptocurrency?
Like any other company, most cryptocurrency businesses got their start when their founders came up with the idea to launch a business. The difference, however, is that crypto is not only a new form of finance but also has an ideological foundation that combines the spirit of decentralization, freedom and anonymity. Over the last decade, cryptocurrencies have challenged traditional fiat currencies and rejected many of the rules of the financial world, causing confusion in the measured life of the global investment industry.
From the very beginning
The cryptocurrency exchange Huobi was founded by two co-founders, Du Jun and Leon Li, in September 2013. By November 2013, Huobi had already reached a Bitcoin (BTC) transaction volume of 1 billion yuan (around $6 billion at the time) and began receiving funding from prominent investors. In its first year of existence, Huobi’s headcount grew to exceed 100 people, and the exchange now counts more than 2,000 employees in its corporate structure. It has rapidly transformed from a cryptocurrency startup to a large company with a multibillion-dollar turnover. Institutional investors such as Chinese venture fund Zhen Fund and Sequoia Capital bought stakes in Huobi back in 2013 and 2014, respectively.
1inch Network, another exchange, was founded at the ETHNewYork hackathon in May 2019 by Sergej Kunz and Anton Bukov, engineers with many years of software development experience. Today, 1inch is a decentralized network of over 100 contributors distributed all over the world. From what can be gathered, the company does not have an office, and employees can work from anywhere in the world. Nevertheless, it has a corporate structure, as well as funding from Binance Labs that it received in August 2020.
Corporate colors
In 2014, Frederic Laloux’s book Reinventing Organizations was published. It was the result of a three-year study of 12 companies (including Patagonia, Zappos and Sounds True) that promoted unconventional management practices and principles. In the book, Laloux identifies five types of companies, which he categorizes according to their form of corporate governance: red, orange, yellow, green and teal. According to the author, teal companies represent the highest form of organization. They are characterized by the absence of a hierarchical structure, maximum transparency and employees’ great freedom to make decisions and express their opinions.
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Unfortunately, Laloux did not study financial organizations, much less financial startups, so there is no information in his book about which color cryptocurrency companies could be classified as. Nevertheless, an executive at Huobi and a founder of 1inch told Cointelegraph that they consider their companies to be teal.
Describing Laloux’s theory of the evolution of organizations, Jeff Mei, director of global strategy at Huobi Global, told Cointelegraph that teal represents the final stage, characterized by “complex adaptive systems with distributed authority, often structured as decentralized, self-managed teams or networks.” In this stage, “static pyramidal hierarchies give way to fluid natural hierarchies, where power shifts to the people with the most experience, passion or interest.”
Mei said that this description “coincides with Huobi’s core beliefs as well as the underlying values of blockchain itself.”
1inch co-founder Bukov told Cointelegraph he believes that his company’s efforts “to create a ‘teal organization’ are not only successful but also quite sustainable in the long term. While a corporate hierarchy may work for some companies, it is not very suitable for decentralized finance projects. In fact, the less hierarchical the project structure, the better.” He added:
“But consistency between different teams is vital to make sure they are on the same page. Adherence to rules is absolutely normal for DeFi projects, and freedom should by no means mean breaking laws. Freedom and decentralization remain core values of 1inch…
cointelegraph.com