An In depth interview with COSS founder, Rune Evensen
Hi Rune, thanks for having me, how did you come up with the COSS idea?
Rune Evensen:
Originally, back in 2013, I started to develop a one stop solution for social media. I was looking at the current platforms and realized twitter is undersharing, facebook is oversharing and LinkedIn is for professionals. You needed a different account for everything so I started building a solution. Unfortunately it was all 3d rendered and way too heavy. It was designed like a house with different rooms. I spent two years on that project and we were supposed to build-in something like facebook credits as an internal currency, but not a cryptocurrency because at that time I did not know about them. But when I showed my idea to people, especially here in Singapore, more and more of them asked me why don’t you make it as a cryptocurrency instead of credits?
Then I started to look into it, that was in 2015 but I found it quite complicated with a lot of hurdles especially for a beginner. So instead of working on a one-stop solution for social medias I figured I should build one for cryptos, because everybody talks about mass-adoption, but it is mostly IT guys, nerds and traders who are into cryptos. It is still way too complicated for people to get into it.
So I started to plan my one stop solutions, many long nights of work. To get a better understanding I signed up for a FinTech course at MIT. During one of the weekly sessions there, we were supposed to submit a business idea that we had and could implement into blockchain. That was the first time I publicly presented my idea. We 1200 people in this course, and the average score for the assignment was 25, my project got the best rating, 100. They described it as a great business idea with real potential to take COSS to the masses. That was quite an endorsement! I needed this endorsement to actually build this idea.
I had a consultancy company in Singapore with some staff. First I brought some of them in the project, then I met Dan from Romania and some months later we had the first drafts of the white paper. In November 2016 we moved to our offices in Singapore, in April 2017 we went live with the beta.
Until then we were 100% self-funded, and that was the time all the ICOs were popping up. At first we started looking at institutional investors, but they wanted too many shares of the company for money that would last us a year at best. I did not want sell a majority stake of my company in which I already put so much time, efforts and money.
The next natural step was to do an ICO and this is why we created our COSS token and came-up with the idea of the fee split allocation. We had to come-up with a clear use case.
We then built our advisory board, we picked our advisory board according to our road map and not specifically for the ICO. For example Anson Zeall who is the president of ACCESS, Singapore’s Cryptocurrency and Blockchain Industry Association. So we chose them so that they could help us to complete our roadmap.
We did every possible mistake during the ICO because we had no experience in it, none of us had done it before. We did not realize the power of community at the time, we did not even have Telegram at the time! You need to start building a community months before the ICO, you need thousands of people on Telegram and people being active in the community. This is the key to a successful ICO.
Nowadays we are actually asked for advices by companies doing their own ICOs because we did everything ourselves during ours. We did not do proper marketing too, we thought we could push it through social medias, that was a big mistake. Nowadays, you need at least half a million to start your ICO for marketing budgets etc… Some companies even offer funding to ICOs!
I remember we were approached at the time by TokenMarket and they offered us to take care of everything in our ICO. For 4 months of their work we were asked between 30 and 40k USD. Nowadays they do not work for less than a million.
It’s been a bumpy road, that’s why we call it the RollerCOSSter!
We raised 3.2M during our ICO.
How much did you estimate you needed?
Rune Evensen:
We were very ambitious because we made an audit through ICO ranker and at that time they scored us the highest they had ever done. So we thought we would reach our 50M hardcap really easily.
We were asked by the community what we were going to do with the unsold tokens, we did a community vote and the result was that everybody that joined the token sale would get 10x more token than expected. We decided to stay on Ether with the ICO money as opposed to go to FIAT. We only convert as we go and we still have two third of ETH we raised, which at today’s market price are worth 6M USD. For those who believe we have not hired more staff yet because of financial reasons, that is absolutely not true.
We are very careful with the way we use our money, yes we have a big office but we decided to rent it a little bit outside of Singapore’s center cause it is a lot cheaper. We got a big office because we know we want to hire a lot. We are 7 persons working at the office at the moment and 4 more will arrive in February. Three persons for compliance and one developer, Jay.
That was actually my follow-up question, how many people are on the current staff?
Rune Evensen:
We have a very decentralized team. We currently have 7 people in house, then we have the core dev team in Romania, which is Dan’s (one of COSS shareholders) team. It’s a 20 people team but only two of them are working a 100% on COSS. Then we have the UI team in Amsterdam, with 5 people working on COSS. We have our content manager also in Europe, we have our graphic designer in Indonesia, we have our internal security expert and our lawyer (also a shareholder) here in Singapore.
So we have a big team, but people need to understand the difference between team and staff. For instance we have Gary here in house for support but he’s managing a four people team that we outsource. They all came here for training but do not work here.
We are also planning to add 6 or 7 more in house developers. Mong (COSS’s 1st in house dev) has determined what kind of team she needs and she has free hands to hire and build the team.
Just to clarify, if she finds someone that would fit the team, she is allowed to hire him/her immediately?
Rune Evensen:
Of course, we still need to discuss it together. She cannot sign the contract all alone. But yes, she is free to hire! We want it to be as quick as possible. The very good ones often have a job, then we need to make good offers to convince them and once they accept they need to give notice to their former employers so that takes a bit more time. If there are some devs out there that can start immediately and fit our needs, then we will bring them in immediately.
Is it fair to say that Mong is COSS’ CTO?
Rune Evensen:
Yes, her contract does not say CTO but she is definitely acting CTO. It’s the same for me, I am leading the company but I do not have the CEO title.
What does your typical day look like?
Rune Evensen:
I’m normally at the office between 8 and 9, sometimes I try to hit the gym before coming there, not too much lately. At the office I spend a lot of my time acting as support role on Slack and Telegram, I help everybody that DMs me with issues. Maybe I made myself too available because now I am getting a lot of them everyday. Of course we have meetups with compliance team and the devs. Mong has taken over a lot of communications with the dev teams oversea. She is coordinating and leading the Amsterdam and Romania team. Before she came on board that was also part of my job. I also took part on the KYC process, which is now the compliance team’s responsibility. I’m also the one negotiating when a coin wants to be listed.
The priority is to get off your support role?
Rune Evensen:
Yes, as soon as support is up to speed, and can handle all the issues as fast I as I want to I will get off this role and go back to only leading the company.
You announced FIAT will be introduced by the end of Q1 can you give us more details?
Rune Evensen:
We will introduce FIAT through credit card for Bitcoin and ETH. We will add more FIAT pairs as soon as the engine is up and running. I do not have an exact date for the engine. We are in the process of designing the architecture we need and want to use. Once that is done I will be able to give a more precise timeline. This should happen by the end of the week or next week.
One question that comes up a lot, why don’t you buy the same engine as Binance?
Rune Evensen:
We want to build something from scratch for a few reasons. One reason is security, we want to have full control of the code. But mostly we want the engine to fit our business model, that requires different solutions than a standard exchange. So even if we bought Binance’s engine we would need to build a lot on top. We will speed up as much as possible the release of the engine, as long as that does not jeopardize security or quality.
There are now over 80 devs on the Trello board, what is their role?
Rune Evensen:
They are giving us feedbacks and come up with solutions. For instance what can be done to increase the speed of the site. Some of them are working for Microsoft, Facebook and other Fortune 500 companies. Of course they are already very busy with their job and they are only helping us because they have an interest in COSS. Some of them reached out and sent their CVs to us. That’s something I always rejected before because we did not have in house devs. I did not want to get more outsourced devs and put them under an already outsourced dev team. Now that we have a leading team in Singapore, I’m passing those CVs, of highly qualified people looking to contribute more, to Mong. Some of them will become COSS team members. That’s really the true power of community that I talked about in my Medium update. Yes we have the FUD, from time to time, but to see the activity we have on Telegram and Slack, I really believe we have an amazing community. I know you guys also have a huge french community. France is actually our second biggest market behind USA.
Let’s talk about security, it’s always an important concern from users. How do you improve and assess the exchange’s security?
Rune Evensen:
We are doing regular penetration testing, you can never say that something is 100% hack proof. My personal recommendation is to leave on exchanges only what you intend to trade and send the rest to your hardware wallet. You can get your fee split allocation on Ledger very easily. We do our due diligence and have never been breached, but some users have through their emails. I’m also amazed by how many people have not yet set-up 2FA. We might make it mandatory.
You mentioned earlier that you still have 6M worth of ETH from your ICO. How much volume does the exchange need to cover your costs?
Rune Evensen:
Right now, when we have 2 to 3M daily volume, we are paying weekly to COSS holders between 70 and 100k. That means we get the same amount for ourselves and that’s almost enough to cover our expenses. If we reach 10M daily volume we should be very healthy financially.
Do you have volume targets?
Rune Evensen:
My old predictions are already scattered because we said 25k accounts by the end of 2017 and 250k at the end of 2018. We now have 120k accounts and January is not over yet. I am working on an updated road map. Our new goals are 250k at the end of Q2 and 500k accounts by the end of the year. We calculate based on 20$ volume per user per day, in reality we see that it is actually much higher but we’d rather be conservative in our estimates. We are aware that we will lose some traders when our new KYC will be in place. Because a lot of people want to stay anonymous. That is impossible to avoid but we want to be as compliant as possible!
Let’s talk about marketing, what’s your current ?
Rune Evensen:
We have 50M tokens available that will be used for future fundings, not only marketing of course. Originally we had set aside worth 500k of tokens for our future marketing spendings, now that the price has gone up so much or marketing budget is definitely much higher. We have a lot of people who are interested in getting paid in COSS tokens. We might also want to run an ICO round 2 at some point to give away some of the 50M tokens.
We have already used some of our ICO budget for small marketing operations but we work in a different way than most start ups, we want to build a state of the art spotless exchange before we start to market it very actively. That’s why instead of spending lots of money in marketing at the moment, I hired 4 more people for our compliance team and I’m building a strong Dev team. We want to be fully compliant and have a perfect platform. We have very good connections with some marketing agencies, we will be extremely visible once we start.The customer acquisition cost is the same whether you have a bad platform or a great one, so what matters to us is that people we bring in stay on board. One thing we are actively doing at the moment is organizing trading promos, the coins we list who have trading promos on COSS are actively communicating about us. They are encouraging their communities to come on COSS. These users start by doing the trading promos of their coin, but then might get into the COSS Telegram and start holding some COSS to get paid fee split allocation in their own token!
We are also gonna have a COSS advertisement on some Premier League ad boards in february. During 8 Premier League games in February, COSS will be visible. In total it will be visible for 48 minutes during those games. I will publish on my next Medium update which matches it will be.
Also an award winning advertisement maker will shoot a commercial for us! We have already started to script it. We will shoot it in late February, we want to have like 10 more in house people before we shoot.
About compliance, could you explain what need to be done to be able to list FIAT pairs?
Rune Evensen:
Right now cryptocurrencies are unregulated in Singapore so in theory nothing needs to be done. However, the main issues right now for exchanges operating in Singapore, are that banks are not working with them and that regulation should be coming very soon. We have banks that have already told us ‘Yes, we will work with you, as soon as you are regulated”.
Until then we are currently negotiating with overseas banks to be able to add FIAT sooner. For the market to be regulated and for us to get a licence, we need to wait for the parliament to pass the bill. That is supposed to happen in Q1. Then it will become a law and we can apply for the licence. We will still be able to operate in the meantime, because you have 6 months to adjust to the new regulation. We will do whatever is required to get the licence that’s why we are building a bigger and bigger compliance team.
But while we are waiting we can still add FIAT through overseas banks. The reason we have not done it yet is because, once we do, the volume is expected to grow very fast and can potentially shoot through the roof. We want to have the new engine ready at that time to make sure we can handle that volume. In theory we could have FIAT now. On the current engine with some little tweaks we should be able to handle 30M volume but we don’t know if that is enough in the event we add FIAT.
A lot of people are asking, how does it work to get listed on COSS? Can you clarify how that works?
Rune Evensen:
Of course people want us to list all the popular ICOs, especially if they participated in them. Everybody wants to list different ICOs + the top 100 tokens. We are sort of in a niche at the moment where we mostly add coins that just got out of ICO, because then we can organize trading promos and benefit from extra marketing. Let’s take IOTA which is listed on some big exchanges. We wouldn’t attract anyone from Binance or Finex by listing it, people who are trading IOAT on these exchanges would just stay there.
We will have more of the big ones, once we are ready for it. Right now we prefer ERC20 tokens, it takes us 2 or 3 hours to list them as opposed to a few days for cryptos.
If you want to get listed you need to submit a request on our website. Then our compliance team will give a legal opinion and say that your business model is approved for COSS listing. Then we will reach out and manage the details. It costs 2 BTC to be listed on COSS but it’s free if you organize a trading promo, which is the option we prefer. Our website still states that it costs 200k COSS tokens to get listed, that was back when coss was worth 7 cents, I will update it!
I heard rumours about a 1M USD promo coming soon, can you tell me more about it?
Rune Evensen:
Yes, this promo will start on 16th of February, which is the eve of Chinese New Year. Everybody at this time wishes prosperity to others, so that was a good starting date for that promo. I will still not tell you, not even to you which coin that is!
Let’s make a deal, you tell me on friday before I fly back to Europe?
Rune Evensen:
Let’s see, can’t promise.
One topic that I know is important to you is charity. How is COSS involved with charities?
Rune Evensen:
Basically, we locked-up ten million tokens and the fee split allocation will go to charities every 6 months. We have stated that approximately every six months we will send the donations to charities. The first time should be in March, but we do not know yet if we will do it at this time or wait for the COSS party which will take place in June. Regarding the charities that we will select, we want as much as possible of the money to be actually used for helping people and not for administrative or NGO fees. Areas to target that we have in mind at the moment are countries like Laos and Cambodia but this is up to change. We might organize a community vote to decide which NGO we will support.
Doing it during the COSS party in Singapore would make sense because we will have at the same time sort of a charity auction.
The COSS party will be held in the Fullerton Hotel, which is one of the most iconic hotel in Singapore. The party will take place a day before my 50th birthday, so that’s also a good reason to celebrate! Most likely the ticket price will be 100$ and will be including food, drinks and entertainments.
What mistakes were made during the UI rollout? Why were those mistakes made? What changes were made to avoid future mistakes?
Rune Evensen:
The main mistake was the time pressure the UI team was set under. They gave a price quotation and a timeline quotation on building the UI and delivering it before actually having any access to the backend. They were anticipating that they could connect really easily to the backend, but that was not the case. Only the cosmetic part of the UI went through proper testing. So when they got the backend access it was very different from what they expected, so that ended up with a lot of guesswork and not much time left. A lot of time was wasted in communication between the two teams. The fact we now have Mong as active CTO will make these types of things so much more efficient. I also added some pressure on them because I told them the UI was originally planned for the end of the year and that I would not accept any more delays. They had a strong desire to deliver on time but they did not have enough to provide what was expected.
I am the voice, everybody knows me from the channels. But in many of the cases I am only a messenger. If somebody tells me something will be done in 3 days, then I announce 5 days to be safe. But if it is not delivered in 5 days I’m the one who published wrong information so I am responsible. In fact, I am a shield for the company and that is a role I am more than willing to take because I am the founder of the company and if anyone that works for me does not deliver on time that is my responsibility as much as theirs.
We were expecting a lot more to be in place when we finally went live. I take the blame for that because they did notify me some of the features were missing. So I asked “Does trading work?” They said yes and I said “We can’t delay anymore, let’s go live with this one, call it 1.0 and update it on a weekly basis.”
So we decided to go that way and we then had a bad incident which forced us to go down for 24 hours, again related to time pressure but also not following protocol. Because both teams worked until 4am, I worked with them literally around the clock. We pushed the update and did a few tests. Then the devs went to bed cause they were overworked, of course someone should have stayed up to monitor the system. I discovered a bit later the market order bug and, again, had to act as a shield for the company. I decided to roll back the 26k trades which occured in this time frame and to offer 100% fee split allocation for the next 2 weeks.
Now everything goes through thorough testing and we have a lot more testers on Slack. They have access to test servers and giving us feedbacks on everything we change. Once this is done we even push it to a second test server. The fact that Mong is now in charge will also help avoid those types of errors.
Thanks a lot for your time, I’ll see you tomorrow with some community follow-ups!
Rune Evensen:
You’re welcome, see you tomorrow!