The Future of XYO

Scott Scheper

Published in

XYO Network

19 min readMay 29, 2019

Dear XYO Community,

For our long-term XYO Geohackers and Founding HODL’ers, you know me very well.

I am writing to you today with one of the most important messages I have ever written to our community (which now totals over 150,000+ XYO Geohackers).

As some of you know, in the current surging cryptocurrency market, the price of XYO has not increased with it. In fact, it’s gone in the opposite direction.

Technically speaking, XYO is not a cryptocurrency. It is not intended to be used as an alternative to fiat currencies. It is not a “Bitcoin, but better because it’s more private and it scales!”.

Rather, it is a “crypto-asset”, specifically a Utility / Protocol Token that serves as an incentive mechanism for our geospatial data network.

Reaching our vision of creating the world’s first people-powered geospatial data network will not be achieved through explaining to people that they should buy a device or install an app on their phone because “it will enable a “decentralized geospatial data network!”. That is simply too complex of a concept to explain to the masses.

For this reason, as many of you know, our intention is to create consumer-facing geospatial dApps (decentralized apps) that has a more consumer-friendly appeal.

Take our fast-growing COIN app, for instance. The appeal is to “earn crypto while you explore the world (be that traveling, commuting to work or jogging).”

COIN has been doing exceptionally well.

Yet, while refining our Roadmap for 2019, myself and my two other co-founders of XYO realized that we had way too many initiatives. And we were trying to accomplish all of them at the same exact time.

Take, for instance, our initiative in the world of Enterprise Partnerships. XYO’s massive value will come from the geospatial data comprising its network. We have 45 partnerships to-date. We have progressed with all of them in varying capacities.

I see the most amount of “Demand” for XYO’s data coming from the enterprise sector in the long-term.

“Supply” of the geospatial data will come from people. From consumers. From creating a people-powered geospatial data network. And in addition, it will come from operators of massive networks of IoT-capable devices.

For Ethereum Developers, this means enabling one to write Ethereum dApps, that can gather data from XYO’s network in order to execute a smart contract. Basically, in blockchain terms, XYO is an “Oracle” (that’s what the “O” stands for in XYO!). It’s a geospatial data oracle.

We have about a number of core “initiatives” involved in our Roadmap, which I went over on a high-level last week.

Over the past 6 months, we have tried to divide and conquer them all.

However, we knew the golden rule to live by for any thriving organization is one thing. Focus.

In taking the “divide and conquer” approach to building XYO, it slowly, but surely resulted in a lack of focus. In a lack of a shared and clear vision.

Different employee groups were focused on different stages of the XYO roadmap.

From a high-level, here is our Roadmap:

XYO Phase 1: Take Over World

For the non-hype version, this means creating a people-powered mesh network of devices that cryptographically verify the data of other device(s) and sharing that with an open, decentralized network.

In order to “take over the world”, we intend to create this through the following items:

Initiative #1: Mass-scale Consumer Geodapps (Powered by XYO’s SDK that acts as an XYO Sentinel Node and Bridge Node)

Our goal with this initiative centers on creating a consumer-facing “XYO Geodapp” that has the appeal and ability to get into the hands of hundreds of millions of users.

This is what COIN is. And we’re off to a GREAT start.

Here are the COIN numbers thus far:

Not bad considering COIN launched on February 6th of this year!

Initiative #2: Mass-scale Integrations of XYO into a mass-scale level of devices.

Second, we have a significant number of Software Development Kit Integrations in progress.

This means working with device developers and owners (such as iOS/Android app developers, T.V. Set Manufacturers, Smart Fridges and more) to have XYO’s core SDK integrated in them (with libraries available in devices that run the C programming language, iOS devices and Android devices). The ultimate goal centers on having XYO integrated into every single “smart” IoT device one can imagine.

The vision for this is an “Intel Inside” type of sticker, but instead, “XYO Inside”.

The reason and incentive for both the end-user and developer/manufacturer centers around monetization (at least initially).

Right now there are two primary ways of making money for App Developers and Manufacturers: 1) Provide value users are willing to pay for, or 2) Give away value for free and show users ads, which advertisers pay for.

XYO introduces a third monetization method: The ability for the owners of any device (phone, refrigerator, IoT device, etc.) to be able to work together to collectively collect and cryptographically validate data in the real world (geospatial data), which enterprises or others then pay for.

We believe that this unlocks a new model wherein app developers, manufacturers and others can build a business that, instead of showing users ads (i.e. Google and Facebook’s model), enabling the developer, manufacturer or end-user to get paid in micro-amounts for the data that they collectively have helped verify (such as the location of a package).

Crypto-assets are the perfect mechanism enabling this type of ecosystem (programmable money that does not face the delays, slowness and centralized barriers plaguing fiat currencies).

I won’t go into all of the details now. We have enough resources for that (starting with the Research Section on our website).

Now, in addition to these initiatives, the following initiatives are also on the docket in Phase 1 of XYO taking over the world.

Initiative #3: Creating the very best Decentralized Location Oracle for Ethereum dApps to request Geospatial Data from.

This was the initiative and messaging we led with a year ago because it was easy to explain to people, yet technically accurate (i.e. creating a people-powered GPS).

However, if you read the white paper, you knew all along that the idea of XYO is much bigger than this idea.

The idea of creating a people-powered location network that decentralizes GPS is just one application of XYO.

It’s much bigger than just proximity and Location heuristics.

The word “Heuristic” is used to describe “Geospatial Data” collected from the world.

Here is a definition of the word “Heuristic” from the XYO white paper (on page 19):

From page 9 of our white paper — which has stayed the same ever since we wrote it a year-and-a-half ago — we explain this, but also why location data ties everything together:

The idea of using this system to create a Decentralized Pay on Delivery functionality on top of Ethereum Smart Contracts is a big enough idea by itself.

But location is just one heuristic.

There are many other heuristics (geospatial data) that enterprises value and have a strong demand for (meaning they need XYO to call out and request data from the network)

The idea of creating a geospatial location protocol standard is massive.

It unlocks the ability for smart cities, enterprises, supply-chains, and many other applications to share and connect a variety of data sources — with end-user privacy in-mind and built in.

I won’t go into this in detail now, but this is the backbone of the whole concept of “Dataism” and creating a “Dataistic Network” — one in which data flows freely.

If you have tuned into my livestream videos this year, you’re familiar with this by now.

Initiative #4: XYO Specific Integrated Circuits (Aka XYO Hardware Devices)

Similar to the concept of ASIC’s (application-specific integrated circuit) in the world of Bitcoin Mining, in the world of XYO we have a concept, which I’ll refer to as called XSIC’s (XYO Specific Integrated Circuits).

In plain english, this means hardware devices built specifically for “Geomining” geospatial data using XYO’s protocol.

Here’s a picture of our first such device, the Sentinel X (which is a re-purposed XY4+ Bluetooth Tracking Beacon with firmware rewritten from scratch for XYO).

This initiative involves designing and creating many of the devices I spoke of in this year’s, “State of The Future Address”.

This includes the following:

The “Motivus” Device: Turning your car into an XYO Geomining Node via a device that plugs into a vehicle’s OBD-II Port.
An XYO Phone: One in which does not run on one of GAFA’s monopolies (GAFA = Google, Apple, Facebook, Amazon), but instead is a phone built with cryptographic and blockchain technologies pre-loaded into it (end-to-end encryption and a crypto wallet, for instance).
An all-purpose XYO Specific IoT Device: Code-named the “Osiris”, this concept centers on a multi-faced IoT device collecting many types of heuristic data.
Archivist and Diviner Devices: Push-button XYO Node Devices for the Archivist and Diviner XYO Nodes.

There are other hardware devices on the list, some of which are even cooler than those above! But I won’t go into them now.

All of this encompasses Phase 1 of XYO. Now, let’s talk about phase 2.

XYO Phase 2: Take Over Space

Now let’s talk Phase 2.

Phase 2 centers on bridging the ground-based mesh networks to one another.

Initiative #5: EtherX LEO Satellite Launch on SpaceX Falcon 9

We intend to do this by launching a variety of Low Earth Orbit Satellites (called LEO Satellites). What makes this unique is that these will not be owned by a single company or single government entity.

But instead to do this ourselves and creating the framework for ANYONE to do so.

This is where our XYO Satellite “EtherX” launching on SpaceX Falcon 9 Launch Plan comes into play (available through our launch partner — Spaceflight Industries.)

We’ve named our very first satellite on our launch on the SpaceX Falcon EtherX as an ode to Ethereum and the platform they have built. They have pushed forward the applications of blockchain technology in an amazing way.

I have not provided an update on our XYO Satellite and SpaceX plans in a while.

So here is the update:

It’s a full 100% go.

We have continued to fund the launch, and a little over a week ago, on May 17th, we executed the definitive Launch and Deployment Services agreement to launch on the SpaceX Falcon 9.

The ability to bridge and connect our ground-based mesh networks is huge for XYO. And we are taking this project very seriously.

I was hoping to launch in the launch window of Q4 2019 or Q1 of 2020.

Unfortunately, I have some bad news to some: it most likely will not be in Q4 2019 or Q1 2020. I do not know specifically when it will be, but I’m going to do something I rarely do — I’m going to hold off on asserting any new dates until I am very confident on when it will be.

The theme that I will be talking about in the rest of this letter centers on the reason why we’ve decided to push back the launch.

But first, let’s talk about the next phase of our Roadmap.

XYO Phase 3: Take Over Moon

Initiative #6: XYO Moon

This phase centers on deploying devices on the moon that will do the four things comprising the XYO Network: 1. Collecting data (aka what XYO Sentinel nodes do while using cryptographic signing and validation), 2. Transferring Data (aka what Bridges do), 3. Storing the transferred data (what Archivists do), 4. Querying the data (what Diviners do — i.e. an Ethereum Diviner).

We will be doing this wherein the data is accessible by ANYONE. A truly peer-to-peer geospatial network.

If you’re incredulous at this point, get ready for the next phase ;)

XYO Phase 4: Take Over Mars

Initiative #7: Operation XYO Mars Compatible

This phase centers on deploying the XYO Network and its nodes on mars.

This is useful for a variety of reasons.

With estimates of colonizing Mars and becoming a multi-planetary species by with the first cargo mission in 2022 and the cargo and crew mission in 2024, the topic of humanity is going to increasingly center around “mars” and whether or not your business or technology is “mars compatible”.

GPS is a system comprised of ~24 Satellites orbiting the earth (owned by the U.S. Airforce).

Currently, this is the world’s #1 location infrastructure piece.

Yet ~24 satellites that orbit the earth are not going to serve any value to the coming “mars boom”.

A location network built on relative nodes that cryptographically verify data around them, on the other hand, is “Mars Compatible”.

XYO is unique in that it’s a relative location data network — a peer-to-peer mesh of devices (not one such as GPS with a centralized authority).

It may seem outlandish, but we’ve been invited to some big events in this new frontier and have begun rubbing shoulders with NASA, SpaceX and other pioneers in this world.

Space.com featured a news story recently about this: https://www.space.com/blockchain-for-space-cooperation.html.

Arie Trouw who is XY’s CEO, my fellow XYO Co-founder and my very first boss that took a chance on me in 2009(!) recently spoke at the Humans to Mars Summit. Here’s a video of it if you have the time: (https://livestream.com/viewnow/HumanstoMars2019)

Summary

So the summary is this…

First, we do not lack ambition and vision. And second, we are borderline-crazy to even attempt to take this on.

Yet, what we have built since we launched a year ago, at a time where most new cryptocurrency projects were failing (and continued to fail at over the next year), led us to grow. And we grew. Fast.

We went from 7 employees to over 80 people in the past year.

We wore it as a badge of honor and I (hopefully not too pretentiously… flaunted our exciting growth).

Now…

While having a bold vision and saying “screw it, let’s do it” is a positive trait (in my opinion), it can lead to a real lack of focus.

To echo the words of Warren Buffett, the sole job of a company’s leadership team is one thing: capital allocation.

Recently, my Co-founders and I sat down to take a hard, honest look at our Roadmap and how well we have been doing in terms of “capital allocation”.

In brief, I don’t think we’ve been doing as good of a job as we could have. We have bitten off way more than we should have at one time.

Little-by-little we morphed into an organization that was attempting to do too many things at once in my opinion.

Looking at our upcoming Roadmap, we could have probably ignored this uneasy feeling and pressed on. It would have been the easy thing to do because change sometimes takes courage. It means admitting that your strategy is not the picture-perfect genius plan you thought it was.

However, at a certain point, it became crystal clear that the right thing to do would be to focus on ONE thing.

And that “one thing” is this: Initiative #1 from the list I covered above.

It is to focus everyone’s resources and energy on creating a consumer-facing “XYO Geodapp” that has the appeal and ability to get into the hands of hundreds of millions of users.

Our ONE FOCUS is on this: COIN powered by XYO.

We’re not a massive company. Facebook has 35,000 employees, Google has 72,000, Apple has 132,000, and Amazon has 566,000 employees.

XY — The Persistent Company (which is jump-starting the development of the open, decentralized XYO Network) = 80 employees.

Now, even at “only” 80 employees, we realized, that if we did what we believe to be the right thing (actually focusing on the most mission-critical item, which is COIN powered by XYO, then that would open up the question of asking — well, from a capital allocation standpoint, how many people do we really need?

Unlike venture capital-backed projects, we don’t have the luxury of sitting back, burning through VC money and hoping for the best. We need to be agile and fund our operation ourselves. The funds that we have are from the profits of our businesses (selling XYO devices and Bluetooth hardware beacons) as well as our community-driven fundraising from the SEC’s Reg A+ Program.

This makes things a bit scarier in the short-term, but it forces you to make very intelligence capital allocation decisions which should positively impact our efforts in the long-term.

The idea of what “focusing on one thing” was something I had been resisting and battling internally with for the past few months. It has been really stressful and anxiety-inducing for me personally.

Reason being, I consider every single one of our team members as friends. They’re people I greatly admire and respect. From our Customer Obsession Team (Customer Support team) to our Warehouse and Shipping Team. To our beast of a Marketing team and our engineers.

I have gone against the age-old advice that one should separate business and friendship.

But quite frankly, I do not regret doing that. It’s more important, in my opinion, to be yourself. To be authentic. And having a business-friendship harmony is who I am. Compartmentalizing the two is just not me (at least at where I am right now in life).

My other two Co-founders, Arie and Markus, are a bit different than me in many ways on this front. They stay authentic to who they are.

This is why we are a good team. Good teams do not equal having a collection of robotic people who all think the same. Good teams have differing traits.

You probably know where I’m going with all of this…

See, at XY, I believe we have an obligation to the following people in this order:

1. Our Customers
2. Our Stakeholders (XY Shareholders and XYO Token HODL’ers)
3. Our Employees

The Harsh Reality Is This…

Having 80 employees focusing on OVER 7 different and major initiatives at the same time was negatively impacting our Customers and Stakeholders.

However, by having such a scattered focus, in the long-run, even the employees would be hurt (by not having executives really have a strong prioritization or interest in their job function).

In the short-term, of course, they’d prefer to probably have a job, but it’s unfair for us to keep them in a role that really doesn’t fit the top priority and vision of our organization.

Our focus centers on getting our fast-growing XYO Geodapp (aka COIN) into the hands of as many people as possible.

For this reason, Arie, Markus and I made the determination this past Friday (right before Memorial Day Weekend), that we needed to make a change on this front.

I will give you a brief, personal experience of what it feels like to be faced with the reality of having to lay off over 40 employees, many of whom who are also your closest friends

First things first, I have poured everything into XY and XYO. My friends and family are stakeholders. My dad’s retirement is in this. I consider our Customers my friends and my employee’s friends. I am super lucky to even have this type of life.

Arie and Markus are married, they have kids, they have lives. But they balance it really well with work.

On the other hand, I am not too good at balancing things. When I get into something, I go all in.

I am 33-years-old. I have no wife or girlfriend. And I have no kids (that I know of, at least).

I don’t even have a dog, because I’m not capable of taking care of something even remotely close to a companion! Ask anyone. I practically live at XY/XYO’s headquarters in Downtown San Diego.

That said, I am responsible in some ways.

I mean, I have 3 cats. But no joke, I cannot even properly take care of them. I pay a “cat-babysitter” to help play with them and clean up their litter box so that I don’t forget to do it for a month.

I have not opened my mail in a year and a half. My assistant, who’s much much more than that (but not in an Ironman/Pepper Potts having sex kind of way). She’s the backbone of my life enabling me to focus on the insane commitment required in building a blockchain startup.

My grocery store equals a downtrodden 7–11 surrounded by skid-marks of, what I’m sure, is not dog shit, but shit from our species.

My dinner is usually comprised of beef jerky and Quest bars.

That is just a glimpse of how incapable I am in many areas of my personal life!

It’s not too healthy of a lifestyle long-term, but I’m having fun building a movement, a community, and a company.

Those in our community total over 150,000 people!

What I’m trying to get at is that my closest personal relationships, and my primary friends, are my co-founders and my employees.

Laying them off is devastating for me.

However, the alternative is worse.

The alternative centers on ignoring capital allocation priorities. And that would mean prioritizing our employees over our Customers and Stakeholders.

That is just not an option.

We need to put ourselves in the best position for success.

And that means making hard decisions.

And that is what we did this morning.

Around 9:30 am PDT this morning, we went through the excruciating process of downsizing our company by about a half.

After on-boarding the rest of our team, I began writing this piece that you are reading right now — and I have been going non-stop since then.

To our Customers and our Stakeholders, I wanted you to be sure to hear the news directly from the source.

And that is what you’ve just read.

Now… What does this mean for our Customers, XY Shareholders, and XYO Token HODL’ers?

For our Customers:

Your Dedicated VIP Concierge Contact may have changed. In place of this, we have decided to have our CORE TEAM be dedicated to doing at least some, and in some cases all, of the Customer Obsession work (aka Customer Service).

This includes me as well! I will be taking calls and helping our customers directly.

Our goal is to have a customer-centric focus at XY/XYO. And it is to facilitate the mainstream growth of blockchain and cryptocurrency by helping the mainstream public understand how it works.

That means EVERYONE (including me) cannot have their heads in the clouds. It means we need to regularly speak with and interact with our customers.

Furthermore, I believe that our Customer’s experiences with our products will be world-class. When we have our entire resources focused and moving in the right direction, our Customers will benefit significantly with 5-Star Products.

For Our XY Shareholders:

This means you have a company laser-focused on its highest probability of success and allocating your capital as efficiently and effectively as possible (even if that means Scott having fewer friends and amazing people on the team).

For Our XYO Token HODL’ers

For our XYO Token HODL’ers, this means more focus on the absolute most immediate and high-impact initiatives.

While our core-focus and concern at XYO centers NOT on the short-term price of XYO, it is concerning to see the value of the asset decline in the short-term due to our scattered focus. Especially in times where there are exciting upward movements in the cryptocurrency space.

I believe the new focus at XY/XYO will shift the direction of this, while at the same time enable us to build out the core necessity of XYO (creating a network of scale), and also creating a strong demand for XYO.

Currently, XYO can be used to stake XYO Nodes so that it prioritizes your data and provides network security (through having the data collected having something at stake).

In the near-term future, we will be rolling out the following features of COIN:

User-created XYO Geodrops:
- This means the ability for users to use their XYO in COIN to Geodrop XYO in different areas for other people to collect.
- In the short-term, this will be geared towards fun things like games, giveaways, etc. (Think Pokémon Go).
- In the medium-term, this will power an incredible platform for Incentivizing people to show up at certain geospatial locations at certain points in time for cryptocurrency rewards (Geodropping XYO, Ethereum, Bitcoin, CryptoKitty NFT Assets and more).
- Plus more
- XYO is needed for this and the demand for holding and owning XYO should increase significantly.

2. Reward Multipliers for Holding and Staking More XYO

This means, for instance, if you hold 10,000 XYO you get 10% more rewards of any asset Geodropped for instance). In the short-term this means collecting 10% more XYO; in the medium-term, this would include collecting 10% more Bitcoin, Ethereum Collectibles NFT or other assets.

3. Making Use Out of Your Multiple Sentinel X Devices

For our customers who own multiple Sentinel X devices. For instance, people who own 8 Sentinel X devices that come with the Geomining Kit or in some cases 24 as a result of owning multiple XYO Geomining Kits!).

We will be rolling out the ability to claim the Sentinel-X Device, and give it to a friend who then claims it to their COIN App.

This will enable you to earn a bonus % of XYO on top of everything that they earn.

4. Coupons of 500+ XYO to share with your friends (or be Geodropped!)

5. To our XYO Founding HODL’ers on the FHR, something in the short-term is coming for you as well! I won’t spoil it.

Last, but certainly not least…

To our Customers, Stakeholders, and Employees, this is something you will notice right away

Here’s something new…

I will be actually writing to you regularly.

I no longer will be delegating this job to an employee.

You will be hearing from me more often. And you will get what I’ve always tried to deliver — No B.S. explanations of everything we do and where we’re going.

You will also be hearing from our Content Goddess whom I love very much. Our very own Jenn Perez.

She’s the one at the center of this prank:

When you have 80 employees, we were forced to have a marketing machine and team to fund the operation.

This meant receiving a lot of emails and sales pitches to purchase our products.

With the downsizing and refocusing of our team on being a BLOCKCHAIN COMPANY, this means we no longer need to do this so aggressively.

We are ditching the aggressive marketing approach.

You will be hearing from either myself or Jenn Perez via email.

And I will always shoot things to you straight from the gut.

I look forward to once again interacting with you all.

And as always, when you receive an email from me, it’s actually from my email! I read all of your replies and try to get back to them.

Love you all and love this community.

#XYORevolution

#DataErgoSum

And last but not least…

Screw it, let’s do it.

Authentically yours,