Transcript 0:00 [on hold music] Hello, and welcome back to the Sporting Crypto Podcast. 0:14 Back again with another episode, and I am very delighted to say that I am joined by Denny Morawiec, who is the MD of Germany for Coinbase. Denny, how's it going? It's going really great. How are you, Pat? 0:26 Yeah, I'm not bad. Smile on your face 'cause I kept getting your name wrong and your title wrong just before we started rolling. So, uh, I'm glad that take three was better than take one and two. [chuckles] Yeah. 0:36 That's perfect. Uh, thanks for having me. Why don't you start by giving us a bit of a background on you, your journey, and how you ended up at Coinbase? Oh, sure. Yeah. 0:45 So my first career, so to speak, was actually in sports. That's why I'm more than excited to be with you today. Uh, not in football, but in speed skating. 0:54 So I was, back in the day, and that's more than twenty years ago, on the, on the German national team for speed skating and, uh, my big dream, you know, was to win an Olympic gold medal. 1:04 So I was really following the, the Winter Olympics, uh, uh, last month with quite some passion. Yeah. And that, that was that. 1:11 And then, um, I turned from legs to brains, uh, so to speak, and went and got a business degree, um, and started my, my professional career really, uh, in consulting. 1:22 Spent ten years, almost ten years at McKinsey, various different places. But the common thread there was that I was always working on, on growth topics at mostly for, for digital business models. 1:34 So at some point when I wanted to move from advisor to, to being operator, then I-- it was-- path was clear that I would work on growth topics. 1:44 So I had a couple of different operational roles in e-commerce and payments, and then, uh, about two years ago, uh, Coinbase tapped me. 1:53 And I've been a, a longtime fan and, and user of, of the product, been a shareholder even before becoming an employee. So yeah, that was a big natural fit and I'm re-really excited to, to drive Coinbase business. 2:08 You mentioned, uh, having some Coinbase stock. What was the, uh, interest for you as an individual in the crypto space? 2:15 So initially, it was really about diversifying assets and investing into a potentially high risk, high reward, yeah, asset class. I do remember that the first crypto buy I did was the day before my older son was born. 2:32 So a good friend of mine who went to uni with me, he was raving about this thing, Bitcoin [chuckles] and, uh, and then I was looking into it, and, uh, I remember that I asked him, "Okay. 2:42 So how did you go about buying your, you know, your first crypto assets?" And he's like, "Yeah, you should use Coinbase. They're like the well-established players." So this was, uh, early twenty eighteen. 2:53 You know, trust and easy-to-use product was basically the reasons for me to join as a user back in the day. 3:01 And, um, I have to say, w-it's still the same reasons why, uh, you know, uh, hundreds of thousands of users, uh, join us every year, uh, still. Yeah. 3:11 I, I remember my own Coinbase journey starting around about the same time actually, Denny. 3:15 But then when I tried to get some more exotic assets, being the idiot that I was back in the day, uh, there were some other exchanges that I, uh, had the pleasure or displeasure of using considering the UI and the UX compared to Coinbase back in the day. 3:29 And look, obviously Coinbase have come a, a super long way since then. Why don't you actually tell us a little bit about what the difference between the company you joined is and the one it is now? Yeah. It's... 3:41 Coinbase is an exciting place to work, yeah, a-a-and to, to drive forward. Uh, I think ultimately we believe that, uh, all assets will come on chain eventually or basically inevitably. 3:55 Our mission is to increase economic freedom in the world and enable people, you know, to make their own decisions. So that's why we really built kind of a one-stop shop for, for everything to trade on chain. 4:08 And depending on the jurisdiction you're in, you know, uh, some more asset classes are a bit already available to you and in other jurisdictions that's, that's still some way to go. 4:17 But I think that's the, the biggest change. I think the, the company I joined was mostly a crypto exchange, yeah, and kind of we're becoming the future of finance, right? 4:26 So it's, it's a bit of a bold and big vision obviously, but, uh, it's one that, that we're excited for. Let's dig into the sports side of things. Coinbase have obviously done a lot. 4:35 You know, we've got, um, NBA partnership. We've got Golden State Warriors, if I'm not mistaken. But one that's probably most close to your heart is, uh, Borussia Dortmund. 4:44 Why don't you give me a bit of the top level vision of like why Coinbase has done stuff in sports from a marketing perspective, and then let's kinda dissect the differences between a league-wide campaign in the States with something like a football team in Germany. 5:02 Yeah. Let me try to dissect that, uh, a little bit. 5:04 I think what has to be said first and foremost is that we are a product-driven company, so we work really hard every day to build the best possible product for the user that fulfills their compliant standards in the jurisdictions that we operate in. 5:19 So that's what we, we focus the most on. 5:22 Having said that, right, uh, the best product might come to the user by itself, yeah, by distribution and just word of mouth, but usually it involves, uh, some form of, of marketing and go to market as well. 5:35 For Coinbase expanding internationally, it was important to, number one, obtain a local license. So Coinbase Germany was the first crypto player in Germany that obtained the license from BaFin. 5:48 This was back in twenty twenty-one. Can you drill into like that's pretty difficult. 5:53 BaFin are known globally as being a regulator that not necessarily moves slow, but is particularly cautious compared to some of the neighboring countries there, and then even in modern times compared to potentially even the, the States and Dubai and Singapore. 6:09 So that's a big deal. You've kinda brushed over that, right?It was a big focus area because, um, you've just shared some of your early experiences, right? 6:18 And, and trying to maybe buy some assets that were harder to get, so to speak. Uh, and for us, it has always been important to be the most trusted and most secure brand in, in the business. 6:29 And o- one core anchor of that is to obtain the required licenses, yeah, to operate. 6:34 So yes, that is obviously a, a long, uh, journey and one that requires lots of hard work from, from many people and experts and to build the right team. But yes, that is what the company has done. 6:46 And basically to create a pillar for international extension was to, um, obtain the license, uh, on a local level. 6:52 And once you have that established at the same time, you wanna, uh, make sure that, uh, users know about you, right? 6:59 If the market is going up, right, uh, quite naturally we come into the focus area of potential users, people that want to start, invest into crypto because we have that very, um, easy-to-use and very secure, uh, product. 7:14 But at the same time, you have to also signal some brand and some brand trust, right? So I think that that's important. So I think 7:23 that's one area of consideration when, uh, back in the day the de- decision was made to, to partner with Dortmund, yeah. Because, I mean, so let's take a step back, right? 7:32 So Dortmund is one of the most well-known football clubs in the world really. 7:39 Has been very well performing on the sports side of things for many years, for many decades actually, and is known for a, a passionate group of supporters, right? 7:50 That, uh, if you've ever been in that stadium, I can really tell you can feel it, yeah, during a game. 7:55 But it's like they have a pretty big group of supporters, not just with- in Germany, particularly strong in Germany, but also beyond that. 8:03 So I think one consideration in, in entering the partnership has really been to say, "How can we find a local partner?" So we're having the license. 8:12 How can we find a local partner that has very strong reputation, is known for hard and good quality work, you know, and that, um, we could associate with. 8:23 So, uh, that was one of the main considerations to come to an initial agreement, uh, with Dortmund. And talk me through that agreement because obviously these things are not easy to do, right? 8:35 They are usually quite long deal cycles. They involve pitching, convincing, getting the right inventory. 8:43 I guess first things first, what is impressive to you when you speak to any sports team, right, when it comes to potentially partnering together? And why did Dortmund specifically impress you? 8:57 Yeah, I think, uh, in sports it's like the mood on Monday is always, uh, basically depends on how the game went on, on Saturday. So it's pretty volatile, right? 9:06 So if a club manages to build a brand that kind of goes beyond the day-to-day performance of the team, yeah, that is something that is impressive, right? 9:15 So I would almost argue there are a few, uh, clubs that if they, uh, win the championship would become number second or third or a season or two are just, you know, somewhere w- in within the top ten for established brands like Dortmund that doesn't really do harm to the brand, right, if it's not for longer period of time. 9:35 So that's something that is, I think, impressive of that club in particular. I think I have to caveat that I personally was not the one involved when we started the partnership, right? So I, I, I took it over. 9:45 So I've heard obviously the, the stories and, and how it came together. As usual, you know, the things happen over time and it's a step-by-step approach. 9:55 But in a data-driven organization like ours, it's, uh, pretty interesting because let's say you start a performance marketing campaign. So basically on day one you can measure the impact, right? 10:06 You can measure click-through rates, you can measure sign-up rates. You have a whole conversion funnel and we are very diligent on these type of numbers when we spend marketing money. 10:16 In sports partnerships, that's harder to quantify, harder to measure and also harder to build the case, right? 10:24 So what you need is a long-term conviction that you're playing in a market and that you're there to win and that you're willing to make a longer term investment, right? 10:32 And I believe that's what, what Coinbase basically expressed, right, with that, with starting that partnership. 10:38 Like obtaining the license was a basically a big commitment and at the same time finding a, a partner and entering in a long-term partnership is also a big commitment. 10:47 So it, it signaled to users, "Hey, we're here to stay. We're here to support you." And because, uh, ultimately, um, financial investment's something you do, uh, ultimately for the long run. 10:58 So, um, you wanna do it with a trusted partner. 11:01 And also the other thing that I wanted to kinda touch on is I spoke to a lot of marketers at the end of last year and there was a lot of people talking about how the global south and LATAM was a big focus point for crypto adoption, crypto payments adoption, et cetera, et cetera. 11:19 And there were a couple of people who were like, "Actually, Europe's gonna be our biggest growth area this year." 11:24 And so just touch t- talk to me a bit about one, the ROI side and how you guys view it internally at Coinbase, Coinbase Germany, and then secondly, why Europe's become this now "Don't go there at all unless you have to," to, "Oh wow, we could actually grow in these markets." 11:41 Yeah. Let me try to tackle both. Yeah. Let's start with, with the ROI side of things. Um, in principle, I do look at three different areas in order to make an assessment if a partnership such as this one is successful. 11:54 The first one is simply around brand, yeah, and, uh, brand awareness, brand recall. And here we, we do our own studies. We also work together with the, with the club and we look at, uh, how does... 12:08 is the perception of our brand changing within Germany, but also what effect has it on a more global level. There are different, right, methodologies, uh, to do that. 12:16 I think ultimately it comes back to the point w- that I was making earlier. You need to be in it for the long run and you need to have conviction that, uh, you wanna build a strong brand in that geography. 12:29 The second area for me is really-If we simplify, it's kind of, it's new customer acquisition, right? 12:35 So it's like, okay, how many new users, how many new assets on platform, and ultimately what trading volumes and revenues result from that partnership, right? 12:46 Uh, now every marketeer will say, "Okay, you have an attribution challenge," uh, because it's not a straightforward performance marketing channel where that's so easy to do. 12:56 But it's, uh, still that doesn't hold us back from... That's something that we, we look at and, and we try to understand. 13:03 And we also, beyond the fact that we, we are visible in the stadium and so on, we, uh, use the, the partnership to have players, uh, as testimonials, for example, yeah, to, uh, that we can use in, in certain assets. 13:18 So the-- one of our best performing assets at the moment in social channels is, uh, uh, of a Dortmund player, right, who talks about, uh, Coinbase and in a very short clip, just a couple of seconds explaining what it is and, and, and people like to engage with that. 13:33 So that's the second area. So basically new user acquisition. 13:36 The third area, and I think that should not be underestimated, although we are a consumer business, is really around, uh, retention and creating a unique experience for our most valued customers. 13:51 So for our VIPs, the Dortmund partnership creates a possibility to engage with them, to invite them to a game, to talk about everything Coinbase, crypto and sports, yeah, and basically create almost like a money-can't-buy, uh, experience. 14:09 So just recently when, uh, we had one of those games on a, on a Saturday, we had twenty-five customers there. We had, uh, some people from Coinbase there. 14:19 We were basically talking a lot about product and people were, you know, sharing product feedback and so on. 14:24 But we also had a former Dortmund player, world champion, one from the twenty fourteen squad, who came in and talked to our customers, right, and, and basically, uh, told them that he is a Coinbase customer as well, that he has a portfolio, and how is he, how he's interacting with customer service and so on. 14:41 So that was something that was inspiring. So I think that third area is, is also important. 14:45 So what we do is really we track who are those people that, that we manage to engage through a partnership like this, and how is the business relationship that we have with these customers, how is it evolving in comparison to, uh, another cohort. 14:59 And I suppose you must, in your position, get pitched a lot from agencies, people in the sports business, entertainment business about, "Come on, spend some of your marketing budget with us, Denny." 15:09 And I wanna ask you, what is a bad pitch? You know, without naming names or getting too specific, what is a kinda like, "Oh, I'm gonna archive that email straight away," compared to, "Okay, that's interesting. 15:20 They've really thought about this." Yeah. So it is true that lots of outreach is happening there, and that's just understandable. 15:28 It's also true that these kind of partnerships from a corporate side, they are done over a long-term period. 15:36 Very often, like if we talk about take seven-figure budgets, right, we don't make these decisions, uh, from one week to another. We, we actually budget for them on a year-by-year basis. 15:46 So it's not that often, right, that we, uh, would make such a deal just purely opportunistic, and it would come within a few, uh, weeks. 15:55 But I think you wanna strike a balance between understanding what's out there and understanding, like, what's happening and almost trying to understand where's the white spot, which sponsoring asset is unfairly priced. 16:09 I try to do that, but we have a very strong, uh, marketing team and team of specialists, right, that look at this, and they try to understand that. So I think-- so let's now reverse. 16:18 If you are selling, right, so I think that's exactly what you want to point out, right? You, you either... I mean, you try to understand what's your, what's the asset you're actually selling, right? 16:27 Is it reach or is it a very, very highly trusted brand? 16:31 Yeah, or is it s- basically almost an asset that's mispriced, yeah, because the sport is growing so fast and people have not yet jumped on the bandwagon, and prices haven't reflected that. 16:42 And then if people have done their homework, we recently had an early conversation with someone who basically understood our strategy. 16:49 It was like, "Okay, we are a Germany-based company, but we are expanding into the US, so hey, um, you are, you know, the number one in the US, so isn't there some value?" 17:00 So that's basically what the conversation focused on very quickly. 17:03 Yeah, so having said all of that, I, I do appreciate the, the outreach, but, uh, as, yeah, ninety-nine percent of, of those result in the end in no business relationship, but rather probably an exchange of ideas. 17:17 If you don't shoot, you don't score, as they say. Fair. Yes. Before we move on to part two to talk a few other things, we'll take a quick pause here to thank the sponsors that make this podcast possible. 17:28 I'm happy to remind you that this podcast is sponsored by the Hedera Foundation. The most beloved sports brands understand that what fans want is simple: a reason to be passionate. 17:36 The Hedera Foundation enables brands and fans to share their passion on chain using the Hedera network, the most used sustainable enterprise-grade DLT for the decentralized economy. 17:47 [upbeat music] And so le- let's take a little step back, right, and go a bit more macro. 17:57 From a broader industry perspective, I suppose we've kind of shifted in a lot of these companies, the, the crypto business is becoming really big, uh, like Coinbase, and becoming mainstream. 18:11 They're now like mainstream big tech businesses that have an abundance of different products across their business. 18:18 And I suppose we saw a lot of like between twenty twenty-one and twenty twenty-three, a lot of more novel partnerships within these two intersections, a lot more integration of technology, a lot more-In the weeds trying to integrate the technology within the, the kinda stack of the consumer base that they're targeting, right, through the, through the sports partnership. 18:41 But I seem to get the feeling that some of the really big companies are starting to look at this more, as you mentioned, like a traditional tech business would, right? 18:50 And you're ascertaining brand VIP treatment, but then also, you know, acquisition, and I think that maturity is quite interesting. 19:00 Do you think there is still that room for, you know, a Coinbase with the infrastructure that, that you have to kind of become a bit int- more integrated, maybe not with a, a brand like Dortmund that are tried and tested, have been there forever, and maybe a, a little bit more, more cautious, but maybe you have conversations with upstart sports that are a little bit more experimental. 19:20 Maybe they wanna look at putting their tickets on chain. Maybe they wanna look at stablecoin payments for the fans and merchandising online. 19:28 Maybe they want to, um, have, like, a yield account integrated into the platform that they use. Maybe they wanna have a tokenized fan engagement platform, like whatever it may be. 19:39 Where you sit in your seat, where is it, like, right to have those conversations, and when does it become more of a, "Okay, these types of conversations fit in the three pillars of, like, brand acquisition and retention"? 19:51 It's a great point. I think over the next years or, or decade, right, I expect these sort of partnerships to really move beyond traditional sponsorship and branding. But it's not a P-zero priority, a-as we would say. 20:05 And, and why is that? That's because, I mean, to use, like, the textbook quote, right, strategy is, is not what you do, but what you don't do. 20:12 So right, like, we are really focused on, on a few things and executing them really, really well. And I think crypto has always created very high expectations, right, for, for use cases. 20:25 People get really excited around it, and many of the use cases that you also just said, but then couldn't deliver on these high expectations, inflated expectations, yeah? 20:34 So basically, what my point is, I do expect that these partnerships move beyond. 20:39 I do expect that, you know, there's so much potential in ticketing and moving ticketing on chain and, yeah, ensure that the actual clubs, yeah, uh, can ensure they, they capture the revenue, right, that's being generated for, for, uh, for ticketing and not resellers, for example, yeah, uh, capture the revenue. 20:57 So to, to give you one example. It's just, um, in a matter of being focused, like our number one focus is basically to be the most trusted and secure platform for our consumers, right? 21:08 And that's not what we are focused on right now. To go one step back to your point of crypto is so well established now in twenty twenty-six, I do see there's still so much room for growth, yeah? 21:18 I mean, uh, on the consumer side, look, Germany alone, depending on what, uh, numbers you look at or what source you look at, but only about ten to twelve percent of, of people own crypto assets, yeah, and many of them in insignificant amounts, yeah? 21:34 So there's, there's a lot of room to grow on the consumer front. Um, on the institutional front, we do see a constant increase in adoption, yeah, of, of, of crypto assets. 21:46 And I think on, in the infra- underlying infrastructure front, it's inevitable, yeah, the, with stablecoins and, and yeah, basically just people will use crypto without noticing that they are using crypto rails. 21:58 But I think it's, it's important to point out that on the consumer front, there's still so much, so much room to grow, and that's why it is important to focus on brand, customer acquisition, and retention. Yeah? 22:08 So very long-winded answer, yeah, and, and probably not that exciting for people that wanna push these new use cases. 22:16 I do see them rather developing and materializing over the next years instead of over the next, uh, months. Yeah. 22:23 With that in mind, though, have you had any interesting inbound conversations with anyone where you've had to kinda bat that idea away of like kinda deeper integration? 22:33 Or do, do you still think it's a little bit too early? No, I think one example, and I hope it's, it doesn't sound boring. 22:39 To us, it is exciting, is that, uh, we have a partnership with Aston Martin Formula One racing, and that one, uh, is being paid in USDC, right? 22:50 So it's, it's being paid in stablecoins, and that has been a, a major innovation, yeah, um, I, I would argue. We do see these cases, and it's happening. Well, look, I think this was awesome. 23:02 I really loved the way that you've positioned. I think it was really deep and meaningful, insightful explanation on, like, how you've thought about this and, and how you've tried to get the most out of it. 23:14 Is there anything I didn't ask you or anything that we didn't cover that you wanna go into, um, so on the podcast? 23:19 Look, I think why is sports exciting, yeah, because in it ultimately it's, uh, something you can be really passionate about, and you have strong performance, yeah, and it's about the human beings, yeah, the performers. 23:32 Uh, and I think the same is true, uh, for finance and, and for crypto in particular. 23:36 Uh, I just recently had this situation where, you know, we spend so much time behind our screens, right, uh, working on code, building products, but it's important, like, why are we doing this, and for whom are we doing it? 23:49 And we are-- we do it for the people, right, for the people that ultimately use these products, that we try to help them to increase their economic freedom. 23:57 That's what we do it for, and I think there's a quite some good overlap, right? 24:00 I would argue there are some people that are as passionate for crypto as Dortmund supporters are for their club, and I believe that's a good thing. I believe that's, uh, that's really a good thing. 24:12 The one thing I've been thinking about as well is when people are putting money into these long-term partnerships, there is an aspect of kinda like, I know there's this idea that AI is gonna disrupt everything and replace everything and blah, blah, blah. 24:26 But I've seen a lot of, like, partnerships happen with companies, and then that company goes and, you know, fires twenty percent of its employees, or their stock is down seventy percent. 24:36 But I suppose when you're looking at marketing spend in sport, that's, like, not something that's gonna happen. You and I are not gonna watch the robot version of Borussia Dortmund anytime soon. 24:45 Well, I hope so anyway, Denny, within our lifetimes. That would be, that would be quite rubbish. I'd have to rip up my Arsenal season ticket. Yeah. 24:52 I mean, I'm really excited for AI and the power of AI and how it can innovate the way we work. I see it happening on a daily level now, and we as an organization r-really work hard to be on the, on the forefront there. 25:08 We do empower all our team members to use, you know, a bunch of different, uh, tools and to... It's this hotbed of innovation right now that's just super exciting, uh, that's, you know, happening on a daily level. 25:20 But yeah, ultimately, we do it for the people, right? Uh, and yes, I would love to continue to see human beings playing football instead of robots, although robots might be better at playing football at some point, yeah. 25:34 Um, but, uh, it's, it is exciting to watch human beings. Yeah. Yeah, I think that's what we're gonna keep to for now. Denny, where can people m- find out more about you and what you're doing over at Coinbase? 25:45 Well, I mean, I guess most important is that, uh, if you wanna trade with Coinbase, uh, coinbase.com or go to the App Store, yeah, and, uh, download the app and use it. 25:55 And me personally, I think, yeah, you can reach me via LinkedIn. It's probably the easiest. 26:01 Well, you can find us on sportingcrypto.com or newsletter.sportingcrypto.com if you wanna subscribe to the newsletter, or on YouTube or X, LinkedIn, or wherever you get your podcasts on Apple and Spotify. 26:13 Please do subscribe, leave us a review, give us a like, and tell us what you thought about the podcast. And, uh, hopefully we'll have Denny on soon when they next do another partnership in Germany. [outro music]
