Fundamental Startup Analysis: Gem — The Enterprise Blockchain Company

Abstract:

Founded in November 2013 by Micah Winkelspecht, Gem, www.gem.io, has begun to tackle the endless opportunity that blockchain technology has revealed. By aiming to construct a fundamental software platform, Gem connects individuals and companies to reduce data-silos and orchestrate cross-industry workflows. With a experienced team of thirty-five employees, this early stage venture delves into the realm of Fintech, Security, Health Care, Software and the Internet. As of November 2017, Gem has raised over twelve million dollars in Seed, Angel, and Series A funding, with its most recent funding of $7.6 million lead by Pelion Venture Partners.


Team:

Micah Winkelspecht (CEO & Founder, Gem)

Micah is the current CEO and Founder of Gem. He received his B.S. at the University of Southern California in Business Administration, Entrepreneurship, and International Business. He consistently publishes articles about the future of Blockchain or is mention on sites such as PRWeb Sitemap, Coindesk, Fortune, and Built in LA. He has spoken at multiple events such as Consensus 2017 and Distributed: Health and is regarded as a leader in this industry, regularly hosting community Bitcoin and startup events. Micah seems to be extremely passionate about the field he is currently expanding and has over ten years as a software developer, giving him an advantage in leading a technology-based team. Micah’s colleagues have many positive things to say about him who they believe Micah excels at research and planning and is a great team member who looks for the best solution, not just the quickest or easiest.

Siva Kannan (VP of Engineering, Gem)

Siva is the current VP of Engineering. He received his B.S. in Computer Science at the University of Madras, India and attended the University of Southern California where he completed his MBA program in Finance. His colleagues describe him as extremely easy to work with, calm, and has a huge attention to quality in a rapidly changing environment. One of the aspects of his personality that stood out was his will to listen to other’s opinions and positively construct new ideas in which all opinions are considered. He focuses strongly on positive self-growth and holds ethics to an extremely high level. Previously, Siva has worked at Phoenix Technologies as the Director of Engineering and VP of Engineering and at myDevices as the VP of Engineering. He helped to grow myDevices into a new age of Internet of Things and currently is leading the engineering team at Gem to develop the next generation blockchain platform.

Jeff Shelton (VP of Product, Gem)

Jeff is currently the VP of Product. He received a B.A. in Comparative Literature and Cinema Studies at the University of Washington and was on the Dean’s List for six quarters. Jeff’s colleagues love to work with him due to his refreshing attitude of empathy towards the user in action. His analytical skill supplements his creativity leading to an unmatched technical ability as the VP of Product. Also, Jeff ingenuity does not interfere with his love for teaching and mentoring people of all levels, allowing for a more efficient process of learning for everyone. Jeff has previously worked as a Product Manager at Baseline, a premier provider of film and television data, and VP of Product at StudyMode, where he ran strategy, execution, and brand focus, before joining Gem.

Beyond just a solid team, Gem also has five current board members that help to guide the direction of the company. This board consists of former executives in the tech atmosphere who are invaluable resources to the company’s success and acquisition of funding capital. The board members are Scott Kriz (Founder & CEO at Bitium; Angel Investor at Gem), Howard Morgan (Co-Founder & Partner at First Round Capital), Jai Choi (Founder & Managing Partner at Tekton), Jeff Parkinson (Managing Partner at KEC Ventures), and Ben Dahl (Venture Partner at Pelion Venture Partners).

Market Opportunity, Size, and Strategy:

Currently, blockchain is a relatively new concept with untapped potential. A sliver of its potential has come from the introduction of cryptocurrencies such as Bitcoin and Ethereum which have a total market capitalization of around two-hundred billion dollars. Blockchain technology has ushered in a new wave to combat the highly-centralized web and reconstruct the fundamental foundation of the current internet.

However, cryptocurrencies should not attribute to the market size of blockchain based companies. In 2016, the market size was estimated to be $210.2 million and expected to grow to $2,312.5 million by 2021 with a compound growth rate of 61% annually. Blockchain is an underlying core feature that will be able to fuel unimaginable technological advancements in the coming future. The most difficult obstacle to overcome will be the initial hesitation by traditional companies who do not fully understand blockchain and its abilities. As it currently seems, Gem is focused on a Business-to-Business strategy that will grow through automated integrity and logic frameworks to share consumer information safely across networks to connect customers to products and services.

As with most startups, the initial direction of a company can be severely altered as time passes. At first, Gem focused on being a Bitcoin API to minimize or eliminate the security risks that typical bitcoin wallets inherently have. By storing bitcoin addresses on a local server, they are subject to data breaches, however, with the initial Gem API, this would be reduced by creating wallets based on multi-signature technology and not retrievable by a compromised key but stored on a blockchain.

This direction shift is a huge positive aspect for any startup company due to the need for startups to react to the situation and market and create a product that drives demand at that current time period. Consumers desire a more streamlined approach to data and no one enjoys duplication of accounts, especially when information is extremely delicate in the aspects of healthcare, which drives Gem forward in this space.

Market Competition:

One of the greatest advantages of successfully implementing a product based on new technology is the ability to pioneer that industry’s growth. Gem, and its GemOS platform, has the ability to emerge as the necessary abstraction of blockchain infrastructure. While the digital age continues to exponentially grow, tech giants like Amazon, Microsoft, Google, have all entered the enterprise cloud, however, they approach the area with a similar conservative centralized architecture. Indirectly, these large conglomerates are currently lacking the understanding of the future in this industry. This has led to an evolution of small startups that are redefining how interconnected platforms of storage are developed.

Gem has very little direct competition as of November 2017. Possibly this can be a large red flag for investors who rely on the business application of survival of the fittest. Like-minded competition fuels large technological advancements and drives forward innovation. Hopefully, Gem can continue to push forward and garner a large head start in this industry before other companies appear to tackle the same issues. Other players with motivation in this market, such as Google or Microsoft, could devote heavy resources to also create a platform of decentralized middleware. Gem has been contacted for their input on how they plan to differentiate themselves, or compete with, new players in this market. As of January 29th, there has been no response from Gem on this matter.

Product:

In an early stage startup, the team provides a large indicator of the possible success of a company, even more so than the product itself. However, the product is still essential and in later stages will be the driving force behind the company. For a new innovation to be successful, a factor of ten times more advanced than the current technology is a common guideline to base opportunity off of. But still, there is no exact quantifiable determination of what is deemed to be this exponentially more technologically advanced. However, in this case, due to the lack of current competition, the growth rate and potential of blockchain, and the implementation of the product, Gem has surpassed all benchmarks and is far more advanced than the primitive solutions found in today’s market.

Gem has tackled a problem that plagues our society and developed a well-thought-out, low-level solution for businesses and industries alike. This technology has unmatched advantages in transparency, security, and efficiency. Gem is working towards building a blockchain network to reduce “data silo”-ing and our multiple internet personas. Every time a consumer interacts with a new platform or business, a digital persona is created, unlinked to the plethora of other personas that same user has. This leads to a large reduction in efficiency by duplicating and mis-recreating identities, and spurts the growth of fraud, waste, missing records, and manual reconciliation. In reality, users are one person and Gem is planning to solve this problem by creating global identifiers to link individuals through blockchain.

Gem’s prized-possession is their GemOS, an enterprise platform to develop and deploy applications that connect existing systems to blockchain networks to process identities and power complex automation. This currently has branched into three full-scale components: Healthcare, Auto Insurance, and Supply Chain. In the Healthcare branch, Gem has solidified a partnership with Phillips to explore a patient-centric healthcare approach. This collaboration with an industry leader will prove to extremely important to maintain and establish a working reputation. A decentralized healthcare platform helps the inter-platform communication and exchange of patient data through encrypted keys in a distributed registry. Instances across GemOS do not have access unless allowed by the holder of that data whose identity is protected by watching updates on the blockchain. In the Auto Insurance branch, Gem is creating an ecosystem of a new generation of identities and applying that collection of individual data to better tailor insurance policies. Current auto insurance is based off of a limited data set of odometer readings and telemetric data. By extrapolating the data gathered outside of the individual car, a personalized policy can be created from the additional data points collected from their activity. Finally, Gem’s final partnership is with Xpansiv for Supply Chain. This model is growing to help encourage interconnected businesses to support carbon offset tokens based on sustainable natural gas production.

Final Thoughts:

The evolution of GemOS will prove to be essential for the growth of this company. As Gem is in a fairly early stage, no financial data is available at the time of this report. Gem has been contacted to hopefully receive some further insight into their metrics and revenue generation strategies. The adoption of this blockchain application will not only help in the sectors of Healthcare, Auto Insurance, and Supply Chain but rather have a global impact on the reliability and effectiveness of a decentralized network of information, other than cryptocurrency. Gem seems to be confident in their team to create an integrated medium, GemOS, to power and give access to a low-level technology from a high-level application interface and abstraction. Gem ties together resources, blockchains, API, schemas, data, and transactions to fully standardize resource representation and data connections. With their solid team and a fundamental understanding of what their consumers want, the disruption in the industry could be immensely profitable. However, it will be interesting to see how Gem plans to overcome the technical boundaries of blockchain networks and monetization in a decentralized environment. The initial impression of Gem (including website, publications, and members) was incredibly friendly, however, non-technical business owners may have trouble deciphering the convoluted technical terms and buzzwords buried within the website and media. The team’s ambition and the desire for a solution are there, however, Gem’s next directional moves will be integral to the success or failure in fusing blockchain networks and individual identity.