Launch HN: Multis (YC S19): online business bank account for cryptocurrency

[tsahaghian]

Hi HN,

We're Théophile and Thibaut, and we're building Multis (https://multis.co): an online bank account designed for companies holding cryptocurrency. We're helping them store it, spend it and earn interest.

We have been in this industry for the past 3 years. Thibaut used to lead sales at Stratumn, a Nasdaq-backed company helping companies securing their shared workflows through cryptocurrencies. Théo built several decentralized applications before starting the company in 2018.

Wallets are the cornerstone of the industry: you need them to store and transact with cryptocurrencies. But these wallets are not designed for business. You cannot perform simple business operations like running a payroll, paying vendors, or earning interest, which you can currently do from your modern business bank account.

Cryptocurrencies - and particularly stablecoins - are a reliable, fast and cost-efficient medium of exchange. It’s a technology that enables anyone to move value and assets across borders, with no intermediaries. We believe it can help companies save a lot, since most of them are now actively transacting with partners abroad, from suppliers to foreign contractors.

The number of companies building and transacting with cryptocurrencies is growing (e.g. Stateofthedapp listings grew by 250% since 2017), despite still being in its infancy. Most of these companies are operating in the cryptocurrency industry, or are e-merchants willing to reduce payment fees and optimize working capital.

These companies struggle to manage their assets and make the most of them. They typically have between 5 and 10 wallets, none of them being designed for a business environment. This makes business spending and accounting still to painful and time-consuming. And cryptocurrencies sit idle, because there are just too many frictions.

We realized what was really needed: an application to manage cryptocurrency the same as a modern online business bank account, with features and financial services powered by both crypto and traditional currencies. In short, a crypto-first bank. Here are our main features today:

- Store - multi-user wallet with dashboard and transaction history

- Pay - spending policies and streamlined payment flows (1)

- Exchange - swap 70+ tokens with ethers, dollars and euros (2)

- Earn - savings account yielding interest on stablecoins (3)

- Soon: EUR and USD bank accounts

We will make revenues through commissions on financial services like fiat ramps, and through monthly subscriptions for premium features like accounting exports or fiat accounts.

Our goal of making a unified front end that works like a business bank account is challenging to achieve because the technologies we're using are very heterogenous:

- we have two databases: the Ethereum blockchain and Cloud Firestore

- we have two backends: smart contracts and Firebase Cloud functions

- we have two authentication systems: private keys stored on individual wallets (we're self-custodian) and email addresses

- we have two authorization systems: the multisignature contract owners and the owner/guest roles in our security rules

- we have two type of assets: cryptogoods and traditional currencies

- we will have two storages: IPFS and Firebase Storage

You can read more here about our architecture (4) and our approach to security (5).

Cryptocurrency is still a recent technology that generates understandable skepticism.The ICO craze did not help. We feel that payment is becoming a tangible use case though, and companies ranging from Facebook to JP Morgan are now actively investing in it. We believe more will join. There are still many uncertainties about regulations, accounting, and each new SEC or FinCEN guidance make the teams' hair turn grey. But things are moving forward on the ground, despite the excess of hype in the space.

We want to make Multis useful, so we have one question: what would be the key features and financial services you would expect as a company? They don't have to be related to crypto directly. We'd also love your feedback, your questions and your ideas. Thanks!

(1) https://medium.com/multis/introducing-direct-transfers-a-new...

(2) https://medium.com/multis/multis-launches-first-token-swap-c...

(3) https://medium.com/multis/our-new-compound-integration-lets-...

(4) https://medium.com/multis/imagining-a-leaner-way-how-to-ship...

(5) https://medium.com/multis/security-at-multis-9609d346c91b

[ike0790]

This is a very interesting approach of merging crypto with the legacy system. Good luck in your endeavours!

[twww → ike0790]

thanks a lot - yes we think that having fiat and crypto side by side can be interesting :)

[jatsign]

Great idea!

Just this week I was approached by a recruiter for a crypto-app building company that I know of and really like. I was (imo) a great candidate for them skill-wise, but they only pay in BTC. And while I'm a fan of crypto, I have bills to pay and they all want dollars. I don't want to deal with converting to USD every paycheck and figuring out if I need to pay taxes, transferring to my "real" bank account, etc.

I REALLY hope you all can help with stuff like that!

[twww → jatsign]

totally understand the hassle of figuring out how to pay taxes etc.

we definitely want to champion this idea of having fiat and crypto side by side, and how to do it properly.

going all crypto might be too brutal and we think the hybrid approach makes more sense: work for a company that pays you in fiat (for bills and legacy stuff ;)) and crypto.

life is an experiment ;p

[stzup7]

You need to be very careful when using the term "bank". It's a very sensitive and regulated domain and depending on the countries you're targeting, you may have to remove it entirely until you have the appropriate licences to use it.

[tsahaghian → stzup7]

You're absolutely right! We're still iterating on that one. "Banking account for crypto and fiat" rather than "cryptobank" seems to be the right way to mitigate risk for now (e.g. Mercury "banking built for startups"), but we certainly want to be extra cautious.

[pyython]

Very interested in testing out your product as it seems like it solves some real painpoints of ours. Is there someone we can reach out to directly and provide detailed feedback to after we have a chance to try it out?

[tsahaghian → pyython]

We'd love to help and get your feedback! thibaut@multis.co

[deftnerd]

You already mentioned payroll and vendors, so I think you're already thinking of what I'm about to suggest... and then I might try to talk you out of it.

When I think of business cryptocurrency financial stuff, I also think of those things. Employees need to be paid, and they might want their paycheck in crypto or in fiat, or a combination of the two. Vendors that need to be paid will usually just want fiat, either through some kind of fiat electronic transfer, or a "bill pay" check that's printed and mailed.

The problem is that payroll is HARD. That's why banks, who handle business accounts, don't do payroll and it usually falls onto specialist companies. Given the "global" nature of cryptocurrency, many of your customers will likely have employees spread across the world, which also adds payroll complications when it comes to withholding, legality of cryptocurrencies, etc.

You might want to just partner with a payroll company otherwise you'll find that most of development (business, software, and legal) will end up being sucked into that blackhole side of the business that doesn't even have a high margin.

Paying vendors? That's relatively simple in comparison. That's why most banks DO provide bill-pay and transfer services.

What I suggest for your "secret sauce" is being very internal bureaucracy friendly and give out employee corporate debit cards freely.

Build your system so when a business signs up, they can make accounts for all their employees and managers and set up authorization workflows. If Bob in accounting wants to buy a new chair, he should be able to submit the request for the funds. If it meets various criteria (ex: less than $500, only needs manager approval and not department head approval) and gets approved, then your system makes the cost of the chair (plus some buffer) available on Bob's wallet which has a linked Multis debit card.

If the business only provides debit cards to managers and up, then it would make the funds available to the managers crypto wallet (and associated Multis debit card) so they can purchase Bob's chair.

Lastly, if you put in place this support of business organization structure, use the same structure for the multisignature systems. One of the signatures could be Bob's manager, or maybe it would require the manager and the department head, etc... But not Bob and his wife, who happens to be a manager in an entirely different department at the business.

I've done crypto work before, and also have recently build a "corporate bureaucracy friendly" authorization system for a SaaS I'm working on so putting those two experiences together seemed natural :-)

[twww → deftnerd]

hey thanks for sharing your thoughts :)

agreed, payroll is hard - we actually mean only the payment part of payroll right now. we'll experiment on ourselves first by paying salaries in fiat+crypto to get a better idea of all the implications.

paying vendors is simpler indeed, and it's even better with crypto because you pay low fees (and not based on the amount you're sending)

we're totally aligned with what you're saying about the "secret sauce" - we actually released a feature called "direct transfers" that aims at doing that (except that it's not with a card atm) https://medium.com/multis/introducing-direct-transfers-a-new...

we need to go deeper in this "corporate bureaucry friendliness" though and have more levels (right now only owners/guests)

cool to see that you get what we're trying to do :)

[deftnerd → twww]

Oh, here's a random idea that might integrate with your business model.

Some companies like to offer profit sharing. You could support that by allowing the company to issue a token of some kind to employees on a regular basis as part of their pay check or manually as a bonus.

Either the ownership of their tokens could make them eligible for proportionate distribution of profit share payouts (during the holidays, or whatever) or the token itself could hold the value and the employee could convert it to another crypto when they want to cash out.

[twww → deftnerd]

interesting! that would be some sort of continuous employee stock-option plans

[deftnerd → twww]

Basically, but I would consider checking with your legal council on the exact terminology that you use to make life easier :-)

[Geee → deftnerd]

Payrolls are done by accounting, but they use an interface to the bank to make the actual payments. It's usually a CSV file or similar, which is uploaded by the accounting software, and has just the amounts and account numbers. Checks are not used outside of USA.

[tyre → Geee]

Having worked at ZenPayroll in the early days, I can say with confidence that this is not true. Payroll is not handled by accounting software and it sure as hell is not uploading amounts and account numbers.

As for paying people in crypto, we considered it (I was the engineer working on it) and then we decided against it because it’s a terrible idea.

1. Crypto transactions aren’t reversible so reversing fraud is impossible.

2. Users don’t fully understand how blockchainy things work. Providing customer support to explain wtf any of it means would be a nightmare.

3. Users can’t use crypto for anything. I mean maybe buying illegal things on DarkNet markets but other than that the entire blockchain ecosystem—billions of dollars of investment—has yet to build a single usable product solving a real problem.

4. Currency changes value all of the time. What if someone can’t pay rent because they were paid in Internet coins that lost value in the time between their pay period and the end of the month? They’re just…kind of fucked? And again, most people don’t really understand what’s going on here so “it’s their fault” is a very uninteresting response. Don’t set people up to make poor decisions with ramifications they don’t understand, even if we can absolve ourselves of theoretical accountability on Internet forums.

5. In the US you can’t pay people in whatever you want. These regulations exist for good reason, back from when companies would try to pay people in store credit. Is blockchain whatever a real currency or a narrow utility that locks people in? Legally it’s a grey area (or was when we worked on it.)

Overall, it’s just a terrible idea. No one is sitting at home thinking, “damn, I wish I could be paid in blockchain.” I mean, they kind of where when crypto was going up and up and up and it was some speculative get-rich-quick pump and dump, but not anymore. (And anyway, we maybe shouldn’t encourage people being paid in speculative coins with no real-world uses? I don’t know.)

[tsahaghian → tyre]

1. Was fraud a big issue at ZenPayroll? I would assume this to be an issue for fortune 500 companies, not smbs

2. We're helping crypto companies for now - they get it. Hopefully non-crypto people will get it too as crypto becomes mainstream :)

3. e-merchants like Rakuten started accepting crypto. Amazon could follow. Consumer apps offering higher interest rates than traditional banking could also be compelling

4. You're right! that's why we're bullish on stablecoins like USDC or DAI - value is pegged to USD

5. Still grey, but moving fast - you can now pay people with bitcoin as long as they get minimal wage in USD. Paying bonus in crypto is an interesting use case

[tyre → tsahaghian]

Fraud isn't something you can worry about after the fact. There are strict regulations around anti–money laundering and counter-terrorism that are less about de-frauding an SMB then spinning up fake businesses and using payroll as a conduit. The challenge with blockchain payments in payroll is anonymity and irreversibility (two of its significant differentiators.)

At that point, what are the benefits? Transaction speed is one, but you only really get that if the business pays in crypto (otherwise you still need to wait for the ACH payment from them or float the money (don't float the money.))

[tsahaghian → tyre]

- Is crypto really different from cash for this? Plus anonymity seems relative now as agencies like Tracfin can track back addresses.

- Our users generate revenues in crypto. Paying employees with it is just convenient, faster, and cheaper when part of their staff is abroad.

[Kiro → tyre]

> Payroll is not handled by accounting software

In many countries it is. Never understood what makes payroll so complex in the US that justifies another layer.

[twww → Geee]

we're also considering leveraging other crypto products for salaries https://sablier.app/

[novalis78]

Sounds like a very good idea. As a depository institution are you looking to acquire a banking license (like varo did)?

[tsahaghian → novalis78]

Thanks! For now, we will partner with regulated bank infrastructure providers - they have the licence. Just like neopbank players have been doing with Synapsefi in the US or Solarisbank in the EU.

[giltotherescue]

Glad to see you guys continually innovating. Wish you the best of luck. -Gil from Gilded

[tsahaghian → giltotherescue]

thanks so much Gil :)

[dmitrygr]

> Cryptocurrencies - and particularly stablecoins - are a reliable, fast and cost-efficient medium of exchange

May I respectfully ask for a citation on this statement's three claims please?