A Smoke Network Tale Of Two Pivots…
A pivot is a major change in a companies core value props. Choosing when, and especially how to change directions within a company is a tough decision for any CEO, and generally takes a lot of decisions. Like a ripple in a pond, these decisions can have resounding effects on the future of a community, especially when launching a Mutual Aid Society For Stoners.
Measuring the success of such a change is absolutely necessary and requires constant attention and focus to know ultimately if those paths you choose are positive.
Smoke Holdings IBC is a company writing the open source code for the Smoke Network, with the premise of building a decentralized application for cannabis users to earn rewards for their contribution to the network.
At Smoke Holdings IBC we have gone through two major pivot events in the past 6 months. The first took place in January after the crypto bull run.
We changed our budget for marketing and development from the pre-sale funds.
The contributions from the Pre-ICO in August, where held in EOS intended to supply the network with bandwidth on the EOS blockchain. As such, our initial contributions totaling ~$50,000 grew to over $300,000. With the new capital injection, we were able to divest capital into outsourcing a lot of development and planning a large marketing campaign (Which you are seeing now, through major press releases, banner ads and more…).
More recently we pivoted from building on top of the EOS blockchain and build our own based on the open source Steem blockchain.
With this change, our distribution model changed and allowed us to hold our own airdrop campaign (on-going now on our airdrop page) to gain users that are aligned with the interest of our network as well as start development in earnest on a blockchain specifically designed for the needs and wants of cannabis users. More information about these changes can be seen in our updated whitepaper.
As the CEO and point person at Smoke Holdings IBC metrics and growth has been a daily routine. We believe whatever we do, it is vital to have executive members looking at the analytics and data, popping it in spreadsheets and tracking the growth and performance.
For the team at Smoke Network it has proven an invaluable way to process information and make informed decisions.
To get started and allow you insight into what I will present later, lets first take a look at our basic growth chart:
Our go-to market strategy was to start with a small, pre-sale and use the funds as bandwidth on the EOS blockchain, while building a DApp (Decentralized application) on EOS with our small team of unpaid core staff.
We started gathering traction (or so we thought) during our pre-sale with a small group of about 100 investors from around the globe, excluding the U.S., and where able to raise ~$50,000 in Bitshares.
We signed up around 1000 users onto our opt-in, opt-out mailing list during the pre-sale and spent a total of around $3000 in marketing and product development at the time, all other work was done unpaid by our core team.
The results looked something like this:
- Total Spend: $3215
- Sign ups: 1132
- Total Revenue: $50,000, which was invested into EOS for bandwidth.
By December our first prototypes had been designed and yet the EOS blockchain development was still changing every day and constantly under heavy API changes, which made designing EOS contracts extremely difficult.
Meanwhile, the value of our EOS had grown to a staggering $300,000. Sign ups and traffic declined heavily, despite our efforts to engage with the EOS community and explain our value proposition they would have had, if they had engaged with us on a EOS airdrop solution at the time. Despite us wanting to airdrop onto EOS holders, we were censored and generally dismissed by the EOS community.
We overlooked two core issues:
- While EOS may have a wide and fair distribution, because EOS main-net has not yet launched, the current EOS community largely only cares about EOS as an investment, and as such are not aligned with the interest of a single Mutual Aid Society or DApp being built on their network. Users in the EOS community, instead censored the Smoke Network project on all their social media platforms and essentially squashed any interest in the project with FUD (Fear and Doubt).
- Due to not knowing how much EOS bandwidth we would need to run our DApp succesfully, it left us unable to tap into any of our reserves for to speed up development and market our application.
We believed in the community and vision of Dan Larimer so much that we assumed we on track to success. The first person to point out our issues was our advisor, @officialfuzzy. In January, challenged us to find a promising and sustainable model to grow our community without the help of EOS. In other words, if we had to take the reserves from the funds we had set aside for EOS, what would we do?
Converting EOS reserves into bitUSD
We could not grow the community at a sustainable rate with zero marketing and development among the core team had stalled in favour of waiting for the EOS blockchain to be further into development.
We reluctantly agreed amongst the executives to start converting EOS into bitUSD, BTC and other assets to diversify the companies funds. We then started looking for developers and quotes to build out our application as well as planning a marketing campaign and budget for the main ICO.
We set up 4 major goals and started to structure a budget for each and how it might look from the funds held in EOS and quotes acquired from experts in the industry:
- The quotes acquired from various blockchain experts where roughly similar.
- Front-End design, Blockchain and development and marketing costs where cut by using in house staff for as much as possible.
- Spending on marketing our ICO, we would hope, have a positive ROI on revenue during the main sale.
Consequentially this pivot came at a time when the bull market ended and we saw a major correction in alts including EOS.
- We started liquidating EOS at ~$14 per piece and converting it into bitUSD.
- We managed to lock in ~$200,000 in bitUSD.
- We managed to maintain $100,000 in various cryptocurrencies
- This gave us a reserve of ~$300,000 by the end of January
If we had held all our reserved in EOS we would have a current reserve of ~$200,000. Having locked in bitUSD from this decision Smoke Holdings IBC was primed and ready to take full advantage of its reserve and put it to the best use possible.
One of the first things that needed to be done, was redesign the Smoke Network hompage, update all our branding and move from a small time DApp in the shadows to a powerhouse in the field.
We made a list of insights we got from the data:
- Better conversion rate | A simple and fast loading UX was helping users see the value in our offering and community.
- Lower bounce rate | Users where interested in seeing more about our product by browsing to various pages.
- Increase in referrals | The community loved the new design and where eager to show it off to their friends and the wider crypto community.
- New users | The updates had a surging effect and created new interest.
The months since then have felt insane! In early February we knew we had made the right choice and started to think about our next problems we where having such as returning visits and coin distribution strategies.
Pivoting To Our Own Blockchain
The decision to pivot away from EOS and start building our own blockchain was not an easy one and the team and I had many days debating the merits and disadvantages going down this route. The Research and Development time spent on looking through the Steem whitepaper, on chain history, and code took 1000+ man hours and at least 100 grams of weed.
Some, but not limited to the things we discussed included:
- Which blockchain to use as a starting point?| The team came upon the conclusion to use a fork of the open source DPoS (Delegated Proof of Stake) Steem blockchain as our base, while we decided to remove and change a few protocol rules that can be seen by reading our whitepaper here (notably the dollar mechanism is removed in our test-net).
- How to fairly distribute new tokens. | It was ultimately decided that we would airdrop 50% of the coins to bounty participants and those that sign up to the network on our airdrop page.
- How to drive viral growth to be a part of our launch. | This was achieved by implementing our airdrop system that allows users to earn SMOKE daily by completing social tasks that help the network grow.
What happened next was mind blowing. . .
On launching our airdrop and bounty campaign traffic exploded as the community scrambled for a piece of the airdrop. Daily users increased to 20% as well our social channels started exploding with enthusiastic users eagerly awaiting the launch of our blockchain and application.
Our sign ups sky rocketed and within 2 weeks of the airdrop we have over 3k daily entrants participating with over 50,000 social actions completed! :
Looking back over the past few months we wished we had pivoted sooner. Resources are limited and any time spent heading in the wrong direction that could be spent growing the community is time wasted.
Deciding when and how is critical and having a game plan to go by is a must, as is a strong team and community that can adapt positively to the changes you swing at them.
Make sure to study all the data available to you before making rash decisions or sticking to ones you may have thought where the right choice initially.
Those companies that do not adapt, will not be around for very long.
For more information on our network visit: https://smoke.network/