Exclusive: NEW! Interview With Lykke’s Sergey Ivliev
Time for the new interview! Lykke’s answers to our questions just popped into our inbox.
What is Lykke? Here’s an excerpt from their own website:
Lykke is a movement to build a single global marketplace with equal access for all. We start with a foreign exchange and expand to equities, fixed income, commodities, and other asset classes.
That doesn’t say too much, so obviously we want more. Let’s dig in.
1. What is your story? How did the team end up together? Have you done some previous projects together?
I’d like to refer to the story that our CEO, Richard Olsen, told about how Lykke came to be:
“I clearly remember in school, I was so horrified of what I had heard about European history, and my goal in life was – is – how to contribute such that a similar event doesn’t happen again. Because, if you look at the society, I mean after the Second World War people said we understood, but we haven’t done a commensurate change in how we run society. So, I started a search to understand how society works, and how we can create a society where individuals or groups of individuals can do the craziest thing, and they cannot derail society.So that was my objective – to find a framework where we don’t have to go to individuals and say, “Please do the right thing,” but actually people can do as they think, and the whole social system works smoothly.
I then had my first important breakthrough in 1974, there was the first oil shock, and the government made redundancy program in the following sense – they went to large corporations and said, “Look, we’ll give you $500,000,000 if you then keep these 10,000 jobs, and I asked myself, why didn’t they say the government bought 10,000 jobs at $50,000 each?I then investigated this idea and turns out that if employment contracts are recognized as having an intrinsic value, and we allow those contracts to be bought and sold, you can address unemployment, and you can change the deadlock between managers.
This idea was not described in the literature, but it was a major breakthrough, because I suddenly realized we could get rid of the unemployment problem if we would look at it in a different way. I knew that ownership of land had evolved that way – that it was originally an employment contract, which became long-term and, therefore, became a financial instrument, and ultimately land became a tradable asset.So, the idea was to do the same thing with jobs.
Then, studying at Oxford, doing economics, I had another very basic idea, and that was that democracy is actually a corollary to free markets, that in a free market you’ll have different products which compete, and people vote by buying one or the other products. In democracy, you have the political parties which kind of compete for their program. Then, after that I tried to find a broader framework, which would combine these big ideas and then spent a long time developing the so-called system theory, which today in the Alpha Engine is kind of the core inspiration.Later, I went to a bank, because I always was interested in how to combine theory or research with the actual, the real world and ideally to earn money in the financial industry or by creating products and then recycling them into research.
After a few years I realized “oops!” In a bank it’s impossible just to buy one, at the time, PC – you have to go to top management. And then I started my first venture called Olsen Associates, and the first objective of Olsen Associates was to build a real-time information system for financial industry. Just imagine the weather forecast at the end of the news. Wouldn’t it be great to have a weather forecast for the whole financial industry? I wanted to have database in big moulds.I did not know what would be involved, so we hired very good people from Stanford. They came to Zurich, and we built a real-time information system.
Obviously, I made all the mistakes you can imagine, but eventually we had 60 customers of the big- and mid-sized banks in Europe who used our service, and then in 1995 we organized the conference on high-frequency finance. Two hundred of the best economists came to Zurich, and it was a key instrument to launch market microstructure as in literature, but I realized I was in the wrong business and then wanted to move away from just providing an information service to creating financial product.This gave rise to launching Oanda, and we first released the currency converter, which was an instant success, and then in 2001 launched the first trading platform which had three innovations: straight-through processing, as opposed to all these separate steps – you have one computer which does it all. Secondly, you could, as a user, buy for one dollar at the same prices as if you were doing a million-dollar transaction.
And the third was second-by-second interest rate. Oanda was a shooting star. Then, in 2007, we raised capital to turn Oanda into the Google of market-making. That failed, because I lost my power base and Oanda became much more conservative. Over the years, the idea of how to build a company like Lykke today gelled, and then luckily I was able to start.”
2. From where the name “Lykke” comes from?
It means “Luck”, “Happiness” and “Good fortune” in Scandinavian languages.
3. The easiest way to explain Lykke to a friend, who doesn’t understand technology?
Lykke is an organization which builds a global marketplace similar to the internet itself, that is the idea. And the genius of the internet is that we can access any content from anywhere around the world, and we can publish any content from anywhere around the world.Now let’s imagine we have a marketplace where you can buy any asset from anywhere, and if you have any asset to sell, you can sell it into a global marketplace. And Lykke builds this software environment, the regulatory environment and, what’s even more important, builds the liquidity, so that when you sell there is a buyer, and when you want to buy there is a seller.
4. What are the biggest challenges and milestones for Lykke in the next 12-months?
The biggest challenge is the following: if you make a mind map of all the steps of which were required to build Lykke, you have a long list. There are no show-stoppers in the sense there’s not that one thing without which it’s not feasible. But when you start to drill down in each area there are so many challenges. Because there are so many challenges, there’s such a lot of uncertainty, and the big issue is that individuals who work in an area freak out because they say, “I don’t know that,” or “I don’t know that.” So, managing this uncertainty, is the biggest challenge.
To name a few most important:
- Lykke card products
- Regulations in different countries, especially in USA market
- Web-based trading
- Margin trading regulations: we already have a product, but need to provide the legal basis to launch it
- Adding a number of new assets to the exchange
- Introduce HFT API to attract marketmakers to the Exchange
5. What’s the biggest achievement you’ll celebrate with the Lykke team 3 years from now?
I believe that we will see at least 1 million digital assets issued globally by 2020. If significant fraction of it is on Lykke platform that would be a great achievement for us.
6. What makes Lykke a wise investment for a crypto investor?
LKK is not just another cryptocurrency. It is entitlement to a share of Lykke as a company with voting and dividends rights, and a participation in Lykke mission to build a global marketplace.
7. What is the biggest myth/misconception about Lykke, if there is one?
Many people think that Lykke is an Exchange. Or a Wallet. Or an ICO platform. Or any other product, depending on what their first touch with Lykke was. They are right, but they are wrong at the same time. Lykke is trying to embrace all the fields of the emerging cryptoeconomy, and to make all the products state-of-the-art. We have an exchange, a wallet, we help to make ICOs, offer B2B services, a crowdsourcing and collaboration platform, we have a strong team of professionals who work with regulators worldwide, we support social and ecology projects – and that’s just the beginning. In Lykke we try to mimic the nature and grow in all possible directions as biological systems do in nature.
8. If you were to invest into one cryptocurrency except Lykke, then what would it be? Why?
New scalable IoT-ready blockchains look promising.The blockchain technology evolves very fast actually so it is difficult to appoint a single leader.
We thank Sergey for his time and wish Lykke all the best going forward.
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