The following interview is a conversation we had with Florian Wimmer, CEO of Blockpit, on our podcast Category Visionaries. You can view the full episode here: $15 Million Raised to Power the Future of Crypto Tax Management
Florian Wimmer
Hey,Brett, great to be here.
Brett
Yeah, no problem. So before we even talking about what you’re building there, let’s start with a quick summary of who you are and a bit more about your background.
Florian Wimmer
Absolutely. So I’m a software engineer by trade, so studied software development after studies, actually started working at KPMG. So not the usual route for software engineer, but learned a lot there for years. And during my time, I got into crypto. So 2015, bought my first bitcoin and yeah, so this is kind of the holy trinity of working at an audit firm, being in crypto and having a software development background and then living in a quite heavily regulated country, Austria. It’s strict on taxation, actually is one of the first countries that has crypto tax law, like a specific tax law for crypto. And, yeah, I had a big problem with my taxes. And so, yeah, it got me into building a solution and ultimately founding a company to not just build it for myself, but to also sell it to other people. In 2017, I’m one of the founders CEO, and basically, I think, held every position in the company that you could imagine so far from developing your marketing, and now mostly, like, public relations, investor relations, business development.
Brett
Nice. Very cool. And two questions we like to ask just to better understand what makes you tick as a Founder. What CEO do you admire the most and what do you admire about them?
Florian Wimmer
Probably the CEO of one of our partner companies, Delta Connects. So his name is Thomas Book. Not really well known, I think, but he built the company completely bootstrapped and had, I think, like seven really harsh years until regulation hit and his business went completely boom. And, yeah, like, the endurance and what he built in the similar space that we are in is something, yeah, I’ve learned a lot from, and I really admire him.
Brett
Nice. Super cool. I’ve not heard of them, but I’ll not heard of him, but I’ll definitely check that out. What about books? Is there a specific book that’s had a major impact on you as a Founder? And this can be a traditional business book or just a personal book that really influenced how you view the world.
Florian Wimmer
So the best book in terms of business I read is probably from Good to Great from Jim Collins. A lot of reflection there and just stuff that really came close to the experience I had in five years. The company, a lot of things we did right. A lot of things I would have wished to know earlier. But yeah, that had probably a lot of impact on how I lead the company, a lot of decisions that we’ve made. So I can definitely recommend that to anybody who is an entrepreneur.
Brett
Nice. One of the classics. Such a great book. It’s crazy how it’s still relevant and interesting all these years later. I think they published that like the 90s or something.
Florian Wimmer
Yeah, absolutely.
Brett
Nice.
Florian Wimmer
Cool.
Brett
Let’s dive deeper into block pits. I know you touched on the origin story there a little bit at the start, but let’s go back. So talk to us about that problem that you experienced as a crypto holder or a crypto investor and then how that led to eventually starting Blockpit.
Florian Wimmer
Yeah, so I can’t help myself. I have tried out everything. So I started actually like mining in my seller bitcoin back then. Then Ethereum came around and bought in there and suddenly I had like 20 exchange accounts because some coins that came out were not on that exchange that I was. And then decentralized finance came around and the wallets just started accumulating and I think 70 different depots and accounts and of course, like non standardized data not really readable from the blockchain either. Regulation kind of wishy washy, not so clear either. But it was just like, impossible for me to calculate my gains. And I tried with Excel and human error comes into that. And I think it was like 20,000 transactions per year. And the obvious choice was there needs to be a soft resolution for this. And there was nothing on the market that really could solve it for me in Austria.
Florian Wimmer
So taxation is always country specific, right? So every country has different tax laws. So I had the luck that I had my colleagues from KPMG that really knows new stuff about taxation while I was like, the tech nerd. And so the combination made perfect sense to basically solve our own issues. And we started out as a hobby, right. It was not a business in the beginning, so the MVP was just built for ourselves. And friends started like, I need that as well. I need that as well. Like, okay, I can’t do it for free. I need to charge money now. So we started off in Austria. Austria is like a great pilot country. It’s kind of like the smaller Germany, like a 10th of like, traction, but you’re really close. And so we kicked it off and then it was easier for us to also scale into other countries.
Florian Wimmer
The business itself changed a lot over the years. So we are coming really from this tax product for the individual crypto trader. And to build this, we had to build so much infrastructure, like the data crawling from the exchanges, the standardization, price, data asset classification, the tax frameworks for different countries, that we actually started selling infrastructure. And so I wouldn’t say it’s a pivot, it’s more like an evolution of the business. So we’re really coming from the software as a service business, but are now offering mostly infrastructure as a service.
Brett
Got it. A few things I’d like to zoom in on there. So the first one is just the fact that you were at KPMG. I think for a lot of people that’s a dream organization to be part of. And I think some people join KPMG early in their careers and end up sticking around there for the majority, if not all of their careers. So was that hard for you to want to leave KPMG and to start doing a startup or focus on startups?
Florian Wimmer
Actually, I’ve already left when we founded the company, so never going back into corporate, to be honest. I mean, I learned a lot definitely there. But it has its downsides, right? Organizational structures, it’s really hard to get decisions through and stuff like this. So I never looked back, like not one day. Loved experience that I got. But yeah, having your own company, being able to make your own decisions without big hero keys is definitely what I would never give up again.
Brett
Yeah, understandable. Once you go down the path of entrepreneurship, it’s probably impossible to go back. Now let’s talk a bit more about the actual customers there. So I think you touched on that, but is it consumers or the end retail crypto investors who are your customers? Or is this a B, two B play as well?
Florian Wimmer
It’s both, I would say. It’s still 85% consumers and retail. It’s just like the pain point is at the consumer taxpayer. And so it’s either B to C or it’s B2B to C because in the end, these solutions are offered to the consumer either through US or white labeled through a client of ours. Geographically we have a strong focus on Europe, especially EU regulated countries, but we’re also active in the US. So we have seven countries that basically have a strong go to market, which is Germany, Austria, Switzerland, France, Spain, Netherlands and the US. And this probably also the biggest challenge for us, like scaling the business, because every regulation is different and you basically have to build a new framework for every country. And of course you can recycle a lot of the infrastructure, but that’s what’s the biggest challenge in growing into new markets.
Brett
And for the B to C portion of the business, just understand what that looks like. So for example, an exchange. Instead of needing to build out these capabilities and features in house, they would work with you white label it and then they would instantly be able to offer this tax feature to all of their customers, is that correct?
Florian Wimmer
Absolutely correct. So this is of course then limited to the exchange, right? So if I’m as a user using multiple exchanges and multiple wallets, then it makes sense to connect to us. But there is a lot of closed systems where people just go in, they use one exchange, they have everything in there and then the exchange love to offer this directly white labeled on the platform and nobody wants to build it themselves. Right. Texas sort of topic where they really don’t want to do it themselves. So it’s basically kind of like a bit of a core banking infrastructure play. But for the crypto market and going.
Brett
Forward, what do you see that split looking like in the future? Are you going to double down on the B to C model or portion of the business or B to C or is that still to be determined at a later date?
Florian Wimmer
It’s already quite clear where we’re going because we are mostly dependent on regulation. So regulation is our driver, not so much the crypto market. It helps if the markets go up definitely in terms of traction. But regulation is really what’s building our path forward and we know a lot of regulation coming. So a lot of stuff has been finalized and passed in 2022 and now there’s implementation periods so far as to 2026 where especially for taxation, a global OECD country standard is going to hit. And then also our products need to reflect that. And this means if you summarize it, the regulation is going to be like every crypto service provider will need to hand over the transaction data and tax information of all of the QIC users to the respective government. So let’s say I’m a Coinbase or Finance and I have a user in France, then I have to report those users transaction and tax information to French authorities and suddenly the authorities have the information they need to crack down on tax evaders, which they don’t do right now.
Florian Wimmer
So it’s really hard to actually say with certainty how many people are paying taxes, how many are not. I think it’s still a small percentage in most countries. But that regulation is definitely going to kick off. Like the B, two B to C business still have just like a regulatory need to offer solutions. Well at the moment it’s more like a nice to have and offer it to my users as a feature. But with 2026 it’s going to be if you don’t have it, you’re going to get fined by the government.
Brett
Got it. Makes sense. And then talk to me about the scalability as you move from one country to another. Obviously every country is going to have different tax laws, different regulations that have to be complied with. So it’s not like you have an email marketing SaaS platform that can just roll through country by country and it doesn’t need to change that much. Every country is probably very different and very unique. So how do you approach scaling into a new country? Do you have to hire a tax expert or a tax team from that country to learn the laws and then build or adapt or software to work within that country or what does that look like?
Florian Wimmer
Yeah so we’re working with externals for those countries not just setting up the text framework initially but also keeping it up to date and getting it audited. So for us it’s really important to also get this trust stamp and having also the clearance. So to say when it comes to government reporting, depending on the country and the complexity, let’s say from a technical standpoint on really calculating a new country would take us between like one and a half months and three months I would say. And then of course the market is very important for us. Does it make sense to get into that country? How is the tax honesty there? How complex is it really? Do you need a solution like ours? And of course as well scaling with partners that we are integrating. So it’s highly dependent here on let’s say we have a wide lab partner that has a big chunk of his users.
Florian Wimmer
For example now in the Netherlands. So we started Netherlands because we have a big partner there and they said like we need Netherlands and Belgium and this is attraction that you can expect through us and so this is how we approach new markets.
Brett
Got it. And then are you actually doing the tax filing to the government directly or are you generating the reports so that the individual users can do the filing themselves?
Florian Wimmer
So we just generate reports. It’s not legally possible for us as we are not accountants file for someone and get approved of authority to do it. Also we don’t want to be the honeypot of data, of KYC data and tax data and financial data. So you can use services completely anonymous because not just in terms of hacking, but also, of course, in terms of criminal investigation. They would love to have everything in one place for all the users and the tax information. And, yeah, we’re not handing over any data, and so it’s better to not just have it in the first place in terms of being personalized data.
Brett
Nice, that’s smart. Now can you share any numbers just to highlight the traction, growth and adoption that you are seeing so far I.
Florian Wimmer
Can share a few numbers so I think probably like the most insane numbers. We’ve generated a million like text reports up to now.
Brett
Wow.
Florian Wimmer
And we get hundreds of thousands of transactions per day coming in via our user base. So people are still although in this market actively trading. So database is growing massively on the side of detraction. It’s still early in the business. So we have a few proactive partners and clients that really want to offer these services but I expect most of them to really wait until the last day of regulation and implementation phases. So what we’re doing here is quite active at the policy making already. So we are sitting in the EU parliament, in expert parties, also in the member states and building a lot of relations with those players is of course you’re also interested in policy affecting them. So yeah, as I said, 85% of business is still in the consumer side but we expect that to shift and swap and go into the direction of the enterprise side by 2024 and then going really extreme in 2026.
Brett
Got it makes a lot of sense. And can you talk us through just what you’re doing to break through the noise and capture the attention of all of those customers and users? Because I think they’re at least in the US. I’ve just seen a lot of crypto tax platforms and there are a number of them out there and I’m guessing that’s the case internationally as well. So what are you doing to rise above that noise and capture that attention?
Florian Wimmer
It’s mostly through the product. So the interesting thing that we learned as well is like doing advertisements for cryptotech software is not that effective because either you have the issue and then you need a solution now. So for us it’s really about bringing out a lot of content, positioning ourselves well in terms of search engine optimization because the inflow is just organic and then obviously the whole partnership stuff. So we don’t need to be there directly and be the blockbuster application and say users. We are really focusing on the infrastructure part and the distribution is happening then indirectly through our clients, through our partners. And as I said, it’s like the US market. There is a lot of competition in Europe not so much, which is why we are quite focused on the European side of business doing us as well. Mostly because our clients need the US.
Florian Wimmer
Everybody has US clients but in Europe we’re well positioned and here it’s really the policy work that we are the only ones doing, to be honest, that I think is going to pay off big in the future.
Brett
Nice. Very cool. And in terms of market categories, how do you think about market categories? Are you creating a totally new category of software here or does this just fit into an existing category that already exists?
Florian Wimmer
I think it’s an existing category I would say like Rectac. Like recnology tech. Tech that we know from the traditional finance world. Just the aspect is different and of course the big topic is decentralized data that we are now seeing with blockchain. But I think the category of the business is kind of the same as we know from traditional finance. So fintech is a subcategory.
Brett
Like rectang makes a lot of sense in terms of bringing this technology to market. And the software to market. What would you say has been your greatest challenge so far, and how did you overcome that challenge?
Florian Wimmer
I think timing is really the challenge. I think we’ve definitely been too early founding five years ago, the need is just not there. And so knowing a little bit, like predicting the future, it’s hard. And that’s been our biggest challenge. The more clarity we get with regulation, the better that gets. So, yeah, that’s definitely the biggest challenge for us to have the right product at the right moment in time when the need is high.
Brett
And let’s talk about the market a little bit. I read something in the news recently about something going on in crypto with a company called FTX that seems to be all over the place. What are your thoughts on the long term impact that all of this FTX and SPF drama is going to cause? Do you think it’s going to have a major impact or what are your thoughts there?
Florian Wimmer
I really hope so, and probably a long term, a positive one, because, yeah, I hope people learn, probably not all of them, but bringing more, like awareness and ultimately also compliance in the space is just important so that people stop losing money because of things like this, which resonates very well with our business. Short term. It hurts. It hurts privately, obviously, but, yeah, it’s a roller coaster, right? So it’s not my first bear market. And the cool thing is what’s coming out of those bear markets, because then it’s time, like, people to really build and also cleaning up a little bit, let’s say the shady players of the space. So ultimately, it’s definitely going to have a good impact on the business. Short term. It’s hurting the brand of crypto and blockchain, as happened many times before, but it seems like you can’t really kill it at all.
Brett
Yeah, but it seems like if this can affect it, then I don’t really know what can. And, yeah, you must be in a very unique position then, because if you founded this in 2017, you’ve been through, what, like two bear markets so far? Maybe three bear markets.
Florian Wimmer
Yeah, 218. 19 was the first bear market, so we just went out with the product in 18 and then everything crashed and so did our attraction and our hopes of becoming rich quickly. Luckily, we managed to get funded, which we did back then, with a security token, actually. So we issued the first security token under Austrian law, which is like it was a participation in the revenue of the company. And it was great plan in the bull market, right. Doing an ICO, but doing it regulated, so it resonates with the business and it was really hard then raising it when the markets crashed, but managed to do so. And then silence in those bear markets really let us focus on building products, because you get blinded in the bull markets definitely.
Brett
I feel like SEOs were the term that everyone was talking about. It was going to change the world and I haven’t heard anyone talk about them probably in the last three years. So that’s good to know that you guys got in and were able to pull it off.
Florian Wimmer
Yeah, the goal is definitely to get listed at some point in time. So what we did is we find ourselves out like this, but it’s like a private company still, but we do have the technical infrastructure to like at any point in time when of course all the things go together and the market is also nice to list this asset and make it tradable. And this definitely the goal to be like one of the first year, but do it in a regulated but convenient way. And I think, like long term all the assets are going to find their way on the blockchain because it’s just like way more cost efficient and secure and yeah, we are prepared for that.
Brett
Nice. And you said the word regulation a lot. Do you spend a lot of your time on regulation these days or are you out of that and is that path to other team members?
Florian Wimmer
No, that’s definitely sticking with me. And yeah, it’s a little bit dry, but since it’s crypto, it’s a little bit more interesting. So, yeah, a lot of stuff to learn and actually to kind of form it as well because we are still early. And what’s important for good regulation is to understand the technical limitations of what you are trying to regulate and not over regulate. And I think that’s where we can offer great value and you need to be a little bit of a tech nerd to do that as well.
Brett
Yeah, that makes a lot of sense. All right, last question here for you before we wrap. Let’s zoom out into the future. So three years from now, what does the company look like?
Florian Wimmer
So what we’re really wanting to build and what’s like the big North Side is like a standard, a reporting standard for on chain and off chain data. So the infrastructure business is the focus and establishing that standard really to be not only used by people who are declaring the taxes, but also by crypto exchanges and the crypto as service providers and also the government. Right. So you need a data standard to be able to do it efficiently. And this is where we want to position ourselves. So ideally, somewhere in the back end, nobody knows that it’s BlockBit but participating in every single transaction that’s done. So yeah, being the data standard, kind of like what SAP did for traditional finance, but being that for the digital asset space.
Brett
Nice. Amazing. All right, Gloria, and unfortunately, that’s all we’re going to have time to cover for today before we wrap up here for this interview. If people want to follow in with your journey as you build where’s the best place for them to go?
Florian Wimmer
Probably on Twitter. So Twitter is the most active space. Follow me, call. The company latest information is going to be shared there, but also on LinkedIn if you want to connect with me. Happy to connect. So, yeah, those are the two big platforms that we are using.
Brett
Awesome. This has been such a fun interview. Thank you so much for taking the time to talk about what you’re building, to share your vision and to really just provide some interesting insights onto what this crazy crypto market looks like and will look like in the future. So thanks so much for coming on and wish you the best of luck in executing on this vision.
Florian Wimmer
Thank you. Thank you. Best of luck for you too.
Brett
All right, keep in touch.
Florian Wimmer
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