Enkidu’s product-market fit
Over the last 3 months, we’ve been working hard on developing Enkidu from both a conceptual standpoint as well as a product standpoint.
Several of the major questions include taxation at source — when an individual earns crypto, that is taxed differently from when an individual buys and holds it as an asset. Assuming 2 entrepreneurs from, say, China and Australia, are working together on a project that sells t-shirts, and an individual from Singapore makes a purchase on their project using Enkidu tokens, where the tax for the payment go?
Since it is an incoming payment, it will be taxable at source but since Enkidu works on the concept of “Flow-through” taxation, which country’s entrepreneur is taxed and by which jurisdiction’s rules?
This problem has been the bane of the Enkidu regulatory team for the last 2 months, and we’ve been focussed on solving this issue by severely limiting the subset of countries we work with, and work closely with regulatory bodies. Since we’re based out of Singapore, it seems like that will be the first location we’re going to run pilots out of. Things move slowly with the regulatory bodies and we’re trying to schedule conversations for early Q2, 2019.
The second problem that the tokenization team is working on is the instability of crypto for payments in general. Since we have a much smaller liquidity base then, say, Ethereum, we’re looking at adding adoption for ETH for Enkidu projects (we are avoiding BTC as it’s hard to run a smart contract based “split” function with Bitcoin). This is a solvable problem especially if we are piggybacking on Ethereum’s large tokenholder base.
Lastly, we’ve moved development to a more “closed-doors” approach over the last 3 months. What we’ve noticed is that individuals from the community who have invested very little capital (<10 USD) and with close to no regulatory or technological background drop in with random suggestions on product that we cannot possibly implement without violating either tax laws or simple entrepreneurial concepts (eg: one suggestion we received was to remove vesting, which would cause all sorts of problems). There’s a reason some of these rules exist in current corporate structures, and we’re trying our best to find out how best to integrate it in a new-age platform. While we ALWAYS appreciate suggestions and integrate quality feedback, we’d like to use this forum to remind folks that most challenges with this product are not technical, they are regulatory, and conversations around regulation move painfully slow.
Having built (and sold) several products over the years, we’re looking for the best product-market fit for Enkidu, which means thinking over the problems and finding a niche opportunity rather than mindlessly writing code and releasing new features. We’re gung-ho about crypto, but the market adoption for tokens isn’t strong enough for small entrepreneurs to jump ship and start using the product and abandon a conventional dollar (or equivalent) revenue source. When serious small entrepreneurs are given a choice, they will always integrate a Stripe over an Enkidu, and it will take years to change that mindset. This is a 5-year game, and we’re a little early to the party.
Pressured by the community to continue releasing features (simply to see a version number increase on a screen) is a resource hog considering that we will most likely have to go back and change the code on a better understanding of the problem. What’s generally happening with most crypto teams is that pressured by the community, the management puts counter pressure on the development team to continue building when the product flow is still maturing. We have a full-time + freelance team and we pay for all of the developer’s costs from Avalon’s own revenue rather than wasting Enkidu’s raised amount (we’d lose a lot of money liquidating our raise at current market value).
We’ve raised 1,311 ETH total in our private + public sale, which was a small raise in hindsight. 1163 ETH out of that amount has come from Purvi Capital, our largest private investor. We’ve kept them abreast of product updates and challenges faced over the last 3 months and we thank them for their support in helping make a few introductions to regulatory bodies too. Enkidu’s parent company Avalon Labs ourselves are an investment fund and responsible for several assets under management — over the next few years we might contribute some more capital to the Enkidu project to keep it alive, but timing the market to ensure great product-market fit is important, and we’d like to conserve the capital we have until that point. For now, Avalon Labs itself is committing $100k of its own capital to build and grow the project rather than liquidate raised crypto at its current state in 2019. Crypto excitement is starting to heat up again and we’d like to introduce the world to our beta at a point where the market is on a rise and there’s renewed interest in this asset class.
All we ask of the public community is to have patience and not rush us to waste too capital on the development side (we pay our remote devs on an hourly model and the Enkidu management team does not take a salary from the Enkidu fundraise) until we speak to enough entrepreneurs, regulators and project owners to build the right product instead of building a product and realizing we’ve wasted capital building something no one wants.
We’re trying to conserve (and generate from our other investments) as much capital as possible to run Enkidu when the market timing is perfect. Like I mentioned before, this is a 5-year bet for us, and you can count on us to be right here 5 years later too. The question lies as to where along the 5 year journey would be the best time to put the product into the market and garner adoption. Since our total raise from Enkidu is currently worth less than $200K , we need to conservatively use this capital to run the business over 5 years — we have to work on timing the market and optimally liquidating, spending and releasing features. Timing the market is a part of the journey of finding product market fit.
We’ve run companies before and believe in what Enkidu does. It solves a very important pain-point for ourselves (and if you’re an entrepreneur, then you too), and we’re committed to this project for the long term. We hope you are too. Thanks for taking the time to read this!