The Crowdsale Analyst: Golem Preliminary Thoughts

Golem just announced a draft white paper for their upcoming crowdfunding (Golem blog). Since they are asking for community feedback I thought I would gather some of my preliminary thoughts here, based on my approach to crowdfunding evaluations.

I will not score each section, only highlight some key comments and questions in each category. Hopeyfully I’ll be back with a full analysis once the final white paper is up.

Project: The Golem Project

Golem aims to build the first decentralised supercomputer and together with that a market to price computer resources on this decentralised computer. The easiest way to understand it is as a decentralised Amazon AWS service.

Team/Founders

Do these guys have what it takes to succeed as entrepreneurs? Track record and previous projects? Experience and formal education?

The Golem team is already at 11 people, of which I think all work full time on the project. This means they already have a foundations for being able to scale their operations somewhat efficiently if/when raising a lot of funds. They mention a goal of growing the team to 20 people which is absolutely doable given their current size.

The white paper lacks any real bios and backgrounds of the founding team and why they will be able to succeed in delivering this ambitious project — this is one of the most important points that must be addressed in the upcoming final white paper.

Market Potential

The cloud compute market is a multi billion market dominated by large IT companies (such as Amazon, Google, Microsoft and IBM). Golems main advantage will be the possibility to offer lower cost compute resources based on more efficient usage of already purchased and not currently used resources in homes and enterprises.

The main limitation will probably be to convince the market of the security and reliability of the platform. I’m missing a discussion of how to reach outside of the crypto market.

Product/Business/Operating Plan

Proof of concept available? How many iterations are done? MVP available? Is the product validated by outside users?
They have an alpha release available (github) with a working implementation of distributed Blender/LuxRender rendering.

What is the current operating plan and why do they need funding now?
It is not clear what current funding they have, but clearly they need new funding in order to continue and ramp up development work in the project.

What is the go-to market strategy?
None in the white paper, which clearly needs addressing.

Roadmap
Brass Golem — 6 months after crowdfund
Clay Golem — no time frame
Stone Golem — no time frame
Iron Golem — no time frame

The milestones are very roughly drafted and no time frame is given except for the first alpha draft, I hope a lot more information is given

Competition

Do they have a clear view of the competition? How do they plan to beat them?

Clearly they know about the other cloud PAAS and IAAS providers. They mention more efficient markets, the application repository and web 3.0 infrastructure, but they don’t address the competitors directly.

Valuation

Is the valuation sane?
They will be raising between 150 000 and 820 000 ether, with 6 % going to the founders and an additional 12 % to Golem Factory GmbH. This puts a maximum current value of Golem to 100 000 ether or roughly 12 million USD.

Crowdsale and token structure
I think the crowdfund structure as described is less than ideal for several reasons:

• All money is available upfront
• No vesting for the founders — should be at least over two years
• No way of raising more funds through the GNT token, either if the project have difficulties or if it becomes a huge success
• No token lockup period for investors

It would like to see a discussion form the founders regarding these points.

Legality

As an investor?
The GNT (for resource usage) is used in much the same way as Ether (for gas) in the Ethereum ecosystem, so it can probably be argued that they can piggyback on the Ethereum arguments in relation to SEC rules (and similar in other jurisdictions).

Legality of the business
Should be the same as other cloud computing operators

Security

Proof of external security evaluation?
Not available that I know

Special security needs for this project?
The security needs of the Golem projects I would say are the similar to that of the Ethereum project itself (=very complex). The projects have similar level of complexity, and as seen it will probably take a long time after the first live implementation to reach a stable and secure version. They address several attack vectors using a system of white lists and black lists, but the system is so complex so there will surely be unknown security holes.

Conclusion

Golem is a very interesting project, but I would like to see a much more comprehensive and accessible package of information before the crowdsale begins. My main areas where I would like to see improvements in the current white paper are:

• More and better team info — show us this is a killer team that can deliver the grand vision of the Golem. The team and their ability to execute will always be the most important part any startup project.
• Budget — the min and max cap size differ around 5 times. From the description I don’t see the “Additional features” offered in the max cap scenario being 5 times as complex as the min cap scenario. This leads to questions about how efficient funds in a max cap scenario will be used
• A market strategy is needed
• I hope to see some external due diligence of code they have published so far — from a security and ability point of view
• A much better roadmap is needed so that the investors can hold the developers accountable for the progress of the project
• The crowdsale strategy could be improved in order to give the project, founders and investors better incentives to create a great project
• More and deeper security discussions are needed, along with time tables

It’s very refreshing that the Golem does provide this information beforehand, it shows they are serious about this. Hopefully they will continue to work with the community and be transparent as they progress with the crowdfunding plans.