An Entrepreneur Building the Next Bitcoin Empire
The Bitcoin and Cryptocurrency world has spurred a world of innovation and entrepreneurship in a short time span. It has made companies from scratch such as 112bit and Minersource; at the same time, it has also brought in entrepreneurs from the business world: like Josh Garza of GAWMiners.
Josh comes from the telecommunications world and has started many other successful companies, such as a nationwide broadband company. The things that make GAWMiners different are where they come from and their approach to sales and customer service.
Many startups in the cryptocurrency world come and go as fast as a Bitcoin transaction. When GAWMiners made its foray into the community, they knew they wanted to be in it for the long haul, and that meant taking a huge risk and going all out.
I got to speak to Josh of GAWMiners about his company and he showed me just how committed he and his company are to the crypto community.
I learned a lot about how Josh Garza is working hard to innovate the way we buy miners, and how grateful he is to the customers who took a chance on GAWMiners when they started out.
Could you tell me a bit about your company such as how and why you started it?
In Sept 2013 I got worn out by building companies, and I needed more time at home. While I was at home I could not just do nothing, and I got interested in Bitcoin. I was really interested in how it worked and how it was a self-perpetuating system. Once I got going mining I had about 10 to 15 Jupiter’s setup and got scammed a lot. I was not really from this space; I was from the business world where people generally do what they say they are going to do. There was a lot of adjustment coming into the space.
At the end of December, beginning of Jannuary 2014, I saw there were other types of digital currencies. There were so many of them, and they all had their own personalities. What I found in the Scrypt world was that there was a story behind most of the coins. People really believed in them and had a mission with them. I took a look and said we can buy these miners and build a new company mining these coins. I told my partners that we could do this and the best part about it is we would not need to have any employees.
About two months into buying equipment I figured we could sell to other people too. We were already buying in bulk. I told my partners that we could do this easily without too much work. I knew that as long as we treated it like a real company and answered the phones and took care of the customers and did a really good job, because so many other companies had a really bad reputation, we would do OK. We would be fine.
The first day we did $50k and were just blown away. We sold all of the inventory we had and all of our backup. Our first week we sold roughly 500 miners. Our first week in business! We have now been in business for over a month and if this maintains, we can exceed over $30 million in the next 12 months. We are the third largest ASIC distributor in the world, and we ship around 2000 miners a week.
We still have it in the back of our minds that if we keep doing a great job for the customers they will keep buying from us. We were literally shipping stuff out of our houses. The business has evolved so quickly, and that is this industry. edit: At the time of publishing their financial forecast has went up from $30 million to $100 million. That is exceptional growth.
What have been some of the challenges with growing so fast – shipping time is so important to customers?
Shipping is the greatest challenge. Having miners in hand has been much better than drop shipping. It gives us more control. We are able to get it shipped more accurately and quickly. It costs us a bit more, but we have more control and can get it out to customers faster. I would not have thought that way previously.
Can you tell me about how the huge price drops from Gridseed the past few weeks have affected GAWMiners? Many customers have been very upset with re-sellers dropping prices right after they purchased their miners. How have you been able to address that?
You hit the nail on the head. It is very difficult when there is only one guy in the business making what you need. It is a huge challenge, one I am not used to. I am used to where you get to a certain scale you create leverage with your vendors and can make good deals for your customers. I know that they are focused on the next version of their chips.
I don’t know if you know this, but recently Gridseed was going to choose their top four resellers in the world, and we had been in this business two weeks before they decided that. In that two weeks, we became their top pick for North America. When you think about that, the volume helped, but I think what helped even more was when I rang up their CEO and said this is not how you do business. While they do business in another way, I think that the customer should be first.
It has definitely been a challenge. We got stuck with the price drops. I know a lot of folks were mad, but we don’t control the prices and when Gridseed dropped their prices the way they did, they got mad at us. But when you step back and think about it. We could have kept the prices the same and not dropped them, or we could have reduced them which would make people upset. There was no scenario where we could win at that point so we reduced them. Any time in a business when I get to a fork in the road I know that if I do the right thing I do not have anything to cover up later. Choosing to bring the prices down with Gridseed at least I could tell them (customers) that we were honest.
I see you are starting to carry some of the Bitmain and Avalon Clone SHA-256 bitcoin miners. Is there a reason you are are adding SHA-256/Bitcoin miners as well?
I feel that our business model is needed in Bitcoin as well, and it does need it. I think the model of manufacturers selling directly to customers is flawed.
Companies like KNC, if you look at their support forum, they say support is basically through other users. That is not a good business model. You need to back up what you sell. And that is one of the things we will do; all those companies need to look out because we are coming after their sales. Our scale and size will allow us a lot of control over the supply line, we can force manufacturers to compete with each other, so they are forced to supply a better product at a better price. Those guys are making money believe it or not. Gridseed pays $15 for their chips and then sell them for a couple hundreds; their margins are hundreds and hundreds of percent. What should be happening is that they should be competing with each other. We want to focus on distribution model where people can buy them and be supported. We are going to make it work, and we are going to make it hard for other companies who do not support their customers properly to do business.
Could you tell me about why you also decided to launch miner hosting and how you got the space for it?
We had space all over the place to host the miners in our broadband data centers. When we first started out, the servers were big and bulky and over time they got smaller and smaller – we had all this space in our data centers already. My guys were like: “..this is what we should do. Let’s put them in our data centers.”
I saw that many people wanted immediate hash rate, so they do not lose money while waiting for delivery. At first we did not even charge for it. I saw in Bitcoin how time is money and if you did not get a new miner overnight to you, you could miss out on a lot of money. In Scrypt mining, the numbers are not as huge but just as important. If we can get other companies to do this as well, we would all have a lot of happier customers overall. That way we all make more money.
With that in mind how do you feel about somebody like Josh of Butterfly Labs that antagonizes and harasses their customer base? It leaves a bad taste in people mouths inside and outside the industry when people like Josh from BFL are literally trolling and antagonizing the community and people who buy his miners.
It is obviously not good. I think that action has to take place to fix it. I think with companies like ours getting bigger in scale, we can do things like that. Let me give you an example.
For example, a company I spoke to a few days ago is an ASIC company that makes a new Scrypt product yet to be released in Q3 to Q4. Great company, great product, great group of guys, very innovative but in no hurry. They have x amount of $ in seed money, and no one knows their product and brand. I approached them and said what if I could raise a million dollars in pre-orders for your product how would that move up your timetable? The guy was like “I can move my time table up two months.”
My goal is I want to help smaller companies who have great ideas and concepts get bigger faster. At the end of the day none of those guys (BFL) would be able to behave that way if they were competed against properly. It is one of the greatest things about the US is companies if they do not perform you can out compete them. My goal is to foster more competition by helping some of these smaller companies come to market by leveraging our scale and brand so they can properly compete with some of these other companies that have gotten so big without competition that they just don’t care anymore. If you cannot get a guy to change the best thing to do is to compete with them.
How has Bitcoin changed your life, and the way you approached money?
It certainly gives a new perspective on a universal currency and the value of everyone believing in the same currency. That is a big reason why I got into it to begin with. I would say, for me personally, it has helped me understand; I am not this guy who just believes my company needs to grow, I feel the industry as a whole needs to grow. For me, it is that we need to invest in what we believe in. There is no better way to show you believe in something than by investing your money and time. Back it up with your checkbook. For me, I believe in this industry, and I am willing to invest my money I have made in my other companies to support it and help it grow. That is how it has changed my perspective.
GAW Founders Club, could you tell me about it? What was the motivation behind it as it is a new twist on customer service I have not seen before?
One of my favorite companies are Amazon because the company forced all other companies to be better. An example is in the old days you wanted to return something you had to put back in the box, put it in the exact way it was and get the receipt – a crazy process making you not want to return something. On Amazon you just clicked a button and the UPS guy shows up and picks it up – no questions asked. They have really shown that you need to put the customer first, and it has worked really well.
That is the mentality behind our Founders Club. We are rewarding the first people who purchased from us. I would have never ever sent a company in their first day of business a couple thousand dollars, but a lot of these guys did, and that is the crypto industry. The industry gives everybody a chance. I chose to do this for those who purchased in the first two weeks because I felt like that was critical time frame. After someone has been around a month or two months, the risk factors get pretty low. In your first week or two you have to be pretty brave to give these guys your money. They could have been like “you guys get a couple months under your belts, and we will come over to you.” In a way, it was not even a difficult thing to show our appreciation to them. We show our appreciation to them with all sorts of things with the club, and there are even more ideas for them. We reward those who believe in us and make it easy for us to be in this business.
I asked Josh about their quality control as many vendors have had to deal with substandard equipment and feel the heat from their customers. It has been a hot button issue lately. What I found was Josh always personally approves of all equipment and makes sure it will be up to par. He is working to make sure manufacturers sell quality units and turn it around to hold them accountable.
I always personally approve everything we carry. There will never be a product that I did not personally approve. We will change the way these things work with vendors. Right now we have to submit ourselves to these manufacturers, and we have to take whatever they have and make it work. That will change very soon with our company. They are going to need us, and my goal is to turn it around. Our scale will allow us to do that. We will have them coming to us to say: “Is this good enough to sell to your customers?” We will be able to “yes” or “no”. They will have to do a better job.
I had also noticed that GAW, along with several other vendors, had been collaborating on several projects and I asked Josh about how he was doing this, as well.
Sharing with our competition helps us protect each other and the community in general. It will help the industry as a whole. This keeps the community and companies healthy and growing. Competition is great, but we want to see the innovation continue. I do not need this company to be bigger; my goal is to help make the industry grow and become bigger. I want to make it simple so that anyone can get involved and be comfortable getting involved. I learned in the broadband industry that everyone needs to win for it to work. No matter how big we got there was always Verizon and Comcast, etc. so working with other small competitors was a must to make it work.
When I went into this business, I thought the same thing. I was calling around to all these other companies and then all the sudden some of them would not even be around anymore which is really sad. I hate to see jobs be lost. We need to do what is best for our customers, that way the whole economy of this industry will grow. I feel that will happen when fewer people are afraid of this and more people are into cryptocurrencies. I am very proud of the fact that we have been able to help other people get into this business.
Is there anything we did not touch on that you wanted to add?
We have some pretty interesting things coming up. We have the wind at our back and are in a position to do some pretty crazy things – we are just getting started. We are going to do some things to keep customers happy and be coming back.
In talking to Josh, I got yet another view of the quickly evolving world of Bitcoin and scrypt mining equipment, sales and support. I found a successful businessman that recently came into the Bitcoin and cryptocurrency world. He did not try to adapt it completely to the old way of doing things; instead, he is looking to innovate and bring stability and growth to a fledgling industry.
I think that they have a good solid start so far as they have already brought new Generation A miners to the market while Gridseed is still the only game in town. This should bring prices down even more and give customers more choices. The specs on the new Scrypt ASIC’s look excellent as well with a 1 mh/s unit sipping only 30 watts of power. I am looking forward to what Josh and GAWMiners do next. They are definitely working hard to bring Bitcoin and cryptocurrencies to everyone.
Featured image by Shutterstock.