Token sale over. Now what?
We get a lot of questions about what Verify is going to do, now that we’ve raised our $2.5m hard cap. Many companies at this point twiddle their thumbs wondering what to do with all the money. This is after they’ve splurged on mahogany desks and hired droves of developers from eastern Europe.
In this post, I’ll explain what we’re doing going forward but also, what we will not be doing which — as you’ll soon see — is just as important.
We’re in this for the long-term. Everything we’ve done so far — the tokensale, allocation, the lock times: they all revolve around this reality. You can bet the strategy does too.
Before defining a strategy, it’s important to do two things:
- Set a clear goal
- Start at the beginning
I’ve done this exercise dozens of times, and our strategy is largely influenced by the “Lean Startup” methodology. This methodology gained notoriety in the past few years, but companies have been using Lean (and it’s older brother Six Sigma for decades). As a Lean Six Sigma Leader at GE, I led various Lean Improvement Initiatives that directly resulted in over $5m in savings to the company. It works.
1. Setting a Goal
It’s important to define a clear role for the core team behind a token sale-backed project, so let’s do that:
Our responsibility is to maximize the value of the Verify network.
A corollary of the above is that our role is not to execute the white paper to a tee. If the white paper is built on assumptions that turn out to be faulty, we will not follow it blindly. Our responsibility is to ensure that we execute a plan that maximizes our chances of becoming a successful business.
Also, we are not a software development agency and our goal is not to deliver a “finished product”. We are a business with revenue and growth targets that we need to meet — our goal is to get paying participants on our network.
This distinction may seem subtle, especially since most businesses are indistinguishable from their main product (e.g. Dropbox, Snap). However, it is crucial to establish. If the product we set out to build does not prove its viability in the market, then we will pursue other options.
We serve no one by building to completion a product that we know won’t achieve market success.
The good news is: we know how to build a successful business.
2. Start at the beginning
The beginning for us is the problem we’re solving. Solutions, like Verify, are built on assumptions about the problem — and our job is to validate these assumptions: to prove them to be true.
Let’s look at Verify again:
Verify is a reputation protocol that facilitates trust-based transactions on the Ethereum blockchain. Verify Payments, the first application built on this protocol, enables buyers and sellers to safely transact without risk to either party.
There are several key assumptions that we’ve made here:
- That consumer protection is an important factor for buyers
- That consumers are interested in buying from unknown/new sellers, but worry about the risk
- That on-time payments and low fees are important to sellers
- That chargebacks are a big issue for sellers
These are perfectly reasonable assumptions, but if any of these assumptions turn out to be false, the solution defined in the white paper may no longer be effective. For example, just imagine spending months building the best consumer protection solution on the market, only to realize that no one really cares about consumer protection. We must confirm these assumptions before building anything.
You may have picked up a secondary assumption as well:
- That consumers are willing to use cryptocurrencies for buying things. There are some statistics that suggest that 90%+ of all money in cryptocurrencies is speculative.
This is secondary because while it would affect how the product functions, it doesn’t directly impact what we’d build: a reputation protocol. After all, we don’t have to accept crypto exclusively. We could accept fiat through various existing financial instruments and use crypto “in the background”. If we did this, the concept would remain intact.
3. Talk to customers
And I don’t mean pay a consulting firm to talk to a bunch of people and then deliver a “market report” that gauges demand for the product. This involves us actually talking to hundreds of sellers ourselves, and understanding their needs.
There’s really no other way around it. It is the single most important activity that the founding team of a project can engage in. The feedback we get from prospective customers at this early stage will inform the product decisions we make down the line.
The Game Plan
The steps described above explain the general approach we’ll be taking. Now let’s make things more concrete by setting a detailed plan for Verify:
Phase 1: Validate key assumptions
- Identify the highest-risk assumptions in our business
- Talk to customers
- In the case of Verify Payments, we have both sellers and buyers. Where do we start? Sellers. Without sellers that offer our payment method, buyers can’t use it.
- Which sellers? There are many verticals (industries), and the goal would be to start wide and narrow down options later. We could start with 10 fashion retailers, 10 online food sellers, etc. We continue until we’re able to accurately predict how the next participant would respond.
- Are the assumptions valid?
- If yes, we’ll start looking into solutions (see “Finding a Solution” section below)
- If no, we just saved ourselves months of hard work building a product that would never have succeeded for the intended audience. Thankfully, we’ve already identified — through the many interviews we’ve had — what the core problems are that sellers face. We can now think about how to adapt our solution to solve those problems.
“Leaders start with the customer and work backwards” — Jeff Bezos
Finding a Solution
- A solution is a combination of three things:
- Customer: This comes from Step 1 above. We’ve talked to many of them, and identified the specific problems they have.
- Unique Selling Proposition (USP): What is the one unique property of your solution that you think addresses the core problem this customer has.
- Channel/Distribution: How would you reach these customers? Also, in the case of Verify payments, what existing rails can you plug into to enable customers to use your product (e.g. credit cards, cash, local payment methods, etc.).
- We must test all 3 in unison. One USP may be a deal-breaker to one customer, but useless to another.
- We build the solution gradually through carefully constructed experiments. We start at the top with the most important feature, test it with users (ideally, writing as little code as possible) and compare the expected outcome with the observed outcome. Rinse and repeat.
- Once we find a combination that works, we build it out to a production-ready solution. This is now much easier to do, since we’ve already locked down the 3 crucial parameters: customer, USP and channel.
If the notion of the idea being so fluid has you scared, it shouldn’t. Many successful companies pivoted in their early days to get to where they are. Paypal started off as a secure storage app for PalmPilots and pivoted 6 times before it became the payments giant it is today.
Things we won’t be doing
With all our focus dedicated to the long-term growth of the company, we’re not going to be doing a lot of short-term things that other companies may consider “normal”:
- Hype, News Stories, etc. While this is great for driving the token price up, it has no real long-term impact on the company — and is a distraction. We’re a small team, and small teams have a huge advantage over larger ones: they move quickly. It’s important we stay focused and move in the right direction.
- “PR Partnerships”. Let me get this out of the way: we are not signing any agreement with Amazon, Dubai government, Souq or any other big-name retailer anytime soon. It just doesn’t make sense for either side at this point, and serves no real purpose other than the PR hype and short-lived uptick in prices. It also carries the net effect of making it impossible for us to live up to the expectations of the readers — diminishing our long term outlook.
In short, the goal of this post was to (1) manage expectations, and (2) explain the strategy we’re using to build and develop a sustainable business.
The Lean strategy we’re using will maximize our chances of success, even in the face of much larger competitors with deeper pockets. We will have battle-tested dozens of strategies before they’ve even finished developing their first product.
“If you’re long term oriented, customer interests and shareholder interests are aligned. In the short term, that’s not always correct.” — Jeff Bezos
Here’s to the long-term.