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Guardian Circle June 2019 Update

Mark Jeffrey
Jun 7 · 12 min read

Dear Guardian Circle Community —

Since June 1 or so, we’ve heard feedback from several directions that we have not been responsive enough in answering your questions.

We agree. We apologize for that, and we’ll do better at that moving forward.

And starting now, I will answer many of the most pressing Telegram questions at length here.

We did say that. We’re now six months late.

The front-end app is now 100% done on iOS and Android. There is no more code to write. It has been unit-tested at every step of the way.

The back-end — the servers that power the app — is all done and running, save one piece: Lambda-izing the $GUARD wallet backend server code (in English: making it incredibly scalable using the latest Amazon tools).

Once this is complete, we will test everything end-to-end. Then we will submit to Apple and Google PLAY stores. We cannot predict how long until the app is approved after submission, but our recent experience suggests a week or two.

Our best guess at this moment is mid to late June for Guardian Circle 3.0 to be released worldwide on both iOS and Android.

Two big reasons:

  1. The $GUARD coin originally had a bug in the smart contract used to issue it. The bug came from example smart contract code that NEO itself provided, and thus, most NEP-5 tokens had this same bug. We had to re-do our smart contract, get the contract audited by a third party and re-issue tokens. This process delayed us 2 months.
  2. Our original plan was to deploy Guardian Circle 3.0 on iOS only in Feb 2019. However, Guardian Circle 3.0’s back-end (API) was not compatible with Guardian Circle 2.0 (3.0 is a complete reboot). This meant Android Guardian Circle users would be in a different ‘universe’ than Guardian Circle iOS users. This bothered us greatly — what if someone created an Alert on iOS that Android-based Guardians could no longer receive? Chris came up with a solution: he would instead write GC 3.0 in Google’s Flutter framework. This would allow us to deploy GC 3.0 on iOS and Android at the same time. So we made the decision to go that direction. However, Chris now had the learning curve of a new environment, and we both underestimated the difficulty of that.

We kept announcing new dates, which we truly believed were legit dates at the time — and then Chris would run into a new, unforeseen tech hurdle. It was very unpredictable.

Also, quality is hard. We have to make sure we get this right on the first try. And it needs to be scalable, fast, modular, and easily extensible. Plus, third-party API’s need to work immediately, and the $GUARD wallets need to be secure and legally compliant.

NASH (formerly NEX) is in exactly the same boat: they were originally to launch in Jan 2019; it now appears that they will launch in July 2019.

We get one chance at this release and a lot is riding on it: it is NOT something we want to rush out before it’s ready.

We sold $3.5M worth of $GUARD in the token sale which ended June, 2018.

We spent a total of ~$1.2M in 2018. A lot of that was legal and accounting. Much of it also went into the product, professional design work for the app, roadshow for the token sale, conferences, etc.

Token sales are expensive: $250-$500K is what the legal work alone cost . Then there is accounting. Taxes (since it is revenue, it is a taxable event).

Like many others, the offshore entity that conducted the token sale was domiciled outside the US (in Belize, in our case). Company formation, compliance, tax planning (and paying) always eats more money than you hope.

Our corporate law firm is Perkins Coie (one of the best in the world). They were so busy with other client companies doing token sales — many of them paying several million for crypto legal expenses — that they literally had no time for us: we were too small a token sale.

So we hired a second law firm — a crypto expert — to handle our token sale. This also meant we had two law firms, and two legal bills.

After we spent $1.2M, we had $2.3M, mostly still in crypto.

Now, we have done everything VERY carefully, in terms of legality and compliance, at every step of the way. We have left money on the table because of this (we turned away many US-based participants, for example). We have moved slowly at times because of this, until we gained absolute certainty on an issue.

The soonest I could convert most of the crypto was in July, when the token sale was over. This was a direct result of the legal hurdles. However, we could not get clarity from our accounting team on the tax implications of converting from crypto to fiat in a Belize corporation, and then sending that fiat to the GC, Inc. (US corp) entity. So we hired a second crypto-specialist accountant to analyze the issues. That took more time to find the right accountant, and then to get our situation properly analyzed.

By that time, the crypto market was collapsing, major coins losing 90% of their value.

The remaining $2.3M quickly became ~$350K before we could get the legal clarity we needed to move it safely.

[This should answer this question:

NEO went from a high of $187 to $6 in this period.

We then started converting our crypto very, very slowly, taking only what we needed for Amazon hosting bills, and to survive.

Chris and I had very meager salaries in 2018 — I have not taken anything at all in 2019 (in fact, I am underwater $250K+ personally in GC. Chris also has a bunch of expenses he is currently eating).

We looked at ETH, BTC and NEO to convert. We decided we believed in BTC the most, and the least in ETH.

So we converted ETH first. (Reason: ETH was (and is) still not scalable, EOS and TRON are already far more successful app coins — so we converted ETH first. It was a hard call — we debated it internally a lot.)

We have since started converting BTC. We have not touched any NEO at all: we knew that NEO corp was working on significant upgrades and this would help the price of NEO at some point. And now, dBFT 2.0 / Cli 2.10.2 launched 48 hours ago — HUGE upgrade to the Main Net — you can see it’s impact below — this should eventually be reflected in NEO’s price:

As you can see from all the above, the crypto winter hit us (and others) hard. Millions quickly became mere hundreds of thousands. (We are aware of another company that had $50M at its peak; it has laid most everyone off. We know of another that sold $10M worth in 30 seconds, and is likewise struggling — we are in better shape — because we have spent so leanly).

Our plan WAS to hire up several engineers working for Chris in an office in Manhattan Beach. But that did not materialize due to the crypto drops.

[Side Note: Most apps are done with a team of 3–6 people working over a six month period. We’re trying to produce the same quality app on two platforms with ONE person — Chris.]

We then decided to go much, much leaner. Survive longer on less. Get Guardian Circle 3.0 out the door. Build up the consumer adoption and the capitalization from that point forward.

The companies that live through the winter thrive. That happened with the dotcom boom, bust, and then web 2.0 resurgence. Amazon, Google, LinkedIn, and Facebook were all companies that lived through a winter. We’ll do the same.

We currently have 12 months of runway.

If I put in more of my personal money, which I’m planning on doing if necessary: 18–24 months.

I am also talking with venture capitalists and other funding entities about a corporate raise. Once the 3.0 app is released and user base is growing, these conversations will get more real.

And this travel and conferences are WHERE I meet with some of these VC’s I am pitching.

You probably saw me at Consensus in New York two weeks ago. You see me on Twitter, smiling, with this or that person.

What you do NOT know is that I did not actually purchase a ticket to Consensus (I hung out in the lobby the whole time), and I found bargain basement hotel rooms and plane fares.

The whole trip — all in — cost $1.5K. Also, I paid for it myself.

I had three venture pitch meetings while I was in the lobby. I also met with NASH founders, found out where they were in their launch process, thanked them for their support of $GUARD on their exchange and assured them we were near GC 3.0 launch (they were very understanding, as they are exactly as late as we are with their own product).

I met four exchanges that expressed new interest in listing $GUARD. CMC lists two of these in the top 10. (unfortunately, two also want 30 BTC listing fee). The other two are having a look at listing $GUARD for free.

And I reconnected with NEO corp dev folks, applying to their new $100M fund that they announced at Consensus.

Recently, you saw pictures of me in Austin, Texas and in Palo Alto, CA.

There is a very big announcement coming about three new people who are getting involved with GC. I would tell you or hint more about in what capacity, but I want to save it for a PR burst / press release. All three come from a company that has been in the news a lot lately. If I blow the news value here, then that doesn’t help $GUARD (especially when NASH launches) or Guardian Circle.

Anyway. I was meeting with two of the three people on these trips.

I was also meeting with the head of Perkins Coie in Silicon Valley: “Firmwide Co-Chair, Emerging Companies & Venture Capital Practice.” THE top guy — to discuss GC fundraising and go-to-market partnerships for the app.

All in all: if you’re “out there”, you will meet people and things will happen that wouldn’t have any other way. I do keep the costs down. But these have all been worth it.

At events, people see that your project is still alive (the bulk are dead). They tell you inside information in person that you’d never hear otherwise. They talk to others about your project. They introduce you to new people.

I don’t drink (so drunk-people parties are not fun for me). I don’t like to travel, actually. I don’t like to leave home. True, I find ways to enjoy it once I’m there, but I don’t actually like to do it. But I know I need to. I’ll need to do more once the app is released, hit the streets and preach the app like crazy.

$GUARD is not a security. The Token Sale Agreement that all participants signed states this very clearly and repeatedly. We also have a lengthy Legal Opinion Letter from an expert lawyer that analysed our token and found that we were very clearly not a security. We have presented this letter to several compliant exchanges who agree with the analysis.

Furthermore, the relationship of the SEC with cryptocurrency is complex and ongoing. We know that BTC and ETH have been declared not securities. We also know one instance where courts found the SEC did not adequately prove that a certain token was a security that it claimed was one. The CFTC believes crypto is a commodity for example, and a Fed court recently backed them up as having jurisdiction, not the SEC.

We did our token sale EXTREMELY carefully.

However, $GUARD is not registered as a security — nor should it be.

Jason is a good friend and investor in Guardian Circle, Inc. However, Jason has also been a very loud anti-crypto voice — denouncing even Bitcoin. He is not a fan of any crypto, to put it mildly.

So he does not agree with our direction on $GUARD overall.

That said, he loves Guardian Circle and the mission of community safety. He put us on stage at the LAUNCH Festival in 2016. We owe a lot to Jason and we’re grateful for his corporate investment and friendship. He certainly hopes we become one more unicorn he can add to his stack of unicorn angel investments — he wins either way.

There was a winner of the Women’s Safety XPRIZE: LEAF Wearables, out of New Delhi, India. We loved the winner; the winner loved us, we had 5+ meetings about working together and deploying their winning hardware in India with Guardian Circle 3.0.

However: LEAF ‘only’ won a million dollars with the XPRIZE. This simply wasn’t enough for them to mass-produce their panic button hardware device. They had believed that winning the XPRIZE would enable them to raise another $6M-$10M, which is what you need at a minimum to create a hardware product at scale.

So, they put the hardware on hold for the time being while they try to raise more money. We’re hopeful we’ll pick the conversation up when they do, but for right now, it’s on hold on their end.

We have similar hardware integration conversations underway right now, but nothing I can report closure yet on (many are waiting to see GC 3.0 before committing). One is for 100,000 seniors in 8 states; the other is a $3B / yr hardware company with a name you’d recognize)

We have 10,000+ active users right now. Guardian Circle 3.0 is designed to be much more viral than 2.0 or 1.0, so we believe it will ramp much better than the earlier incarnations were able to. (Basically, the Contact Manager / Invite system never worked quite right in earlier versions — it does this time around).

Also the ‘news of the three people’ I alluded to earlier should help with consumer adoption quite a bit.

I know this has been a frustrating wait. Hopefully, this provides more detail as to what’s been going on on our end.

Please know: Chris and I work most nights and weekends. We have been this whole time, and we will continue to. Guardian Circle is our life.

The reason I haven’t done more of this kind of communication with the community is that I’ve prioritized other things. For example: I’m supposed to be putting together a customized version of our investor materials for our Perkins Coie contact right now — instead, I’ve stopped, and written this.

But I’ll take the time to do this sort of thing more often going forward.

Also, I will be in the Telegram room this coming Monday, June 10 at 1:00 PDT to answer any further questions you might have about all of this.

  • Mark

Guardian Circle

Community Emergency Response Network and $GUARD Token

Mark Jeffrey

Written by

Co-Founder & CEO Guardian Circle

Guardian Circle

Community Emergency Response Network and $GUARD Token