It was December 2016, and myself, Henry and Aleks sat together to decide the inevitable. Our pre-seed investor backed out and we were left with just 3 months of our own personal survival money to put food on the table. We had two options, move on, and find work putting our dream on hold or come up with a solution that could get us that pre-seed investment we most desperately needed. We worked hard and had failed to show an investor our concept was worth investing. Most people, would quite, stay safe, and find work as the easy approach to survive. But instead, we wanted to beat the odds. So we did the opposite and decided we should scale.
The story begins in February 2016. Myself and Aleks had met at school studying at the Economic University of Prague. The following year, we started working on small projects together with the ambition to make one of the projects a running business. We were interested scholars of crowdfunding and worked on their own small campaigns, which is where we found Henry.
At the time, Henry had a job helping run a Kickstarter campaign for a tech company, when I also joined the team as a part time gig to learn more techniques and strategy. With experience from doing our own small Kickstarter project, we were looking into a new product to work on. An eco-friendly tech integrated backpack.
For this new project in mind, I recruited Henry to join the team. To get started, Aleks suggested an interesting test by posting a survey on Reddit titled, “What is your ideal backpack?” In the Reddit feed we mentioned after you fill out the survey we would give a reward, which was a discount if the product would become a reality. To our surprise we had over 100 fill it out, with amazing detailed feedback attached to it. We were even sent messages on FB regarding the project from people filling out the survey wanting to know more.
At the same time, we were fans of the book Bold, by Peter Diamandis where he talked about the future crowdsourcing and the story of how Henry Ford wanted to give back to his customers and employees. Henry Ford wanted to give away his shareholders’ dividends to his employees and customers. As they were the ones helping and working and supporting his business. His ideology, was to give back to the crowd who supported his business, because they would in fact buy his cars and would increase long term growth of his business. Unfortunately, he lost in court and the idea of creating a chain of supporters was lost.
This is when the idea clicked. What if we built an application based on giving back a share of revenue to to people who support businesses by participating in co-creation? With a quick pivot, CH was created.
We found a developer in June and began working on our alpha, and launched it with a group friends to test it out. At the same time we had been speaking to an angel investor regarding a 30K investment in December to begin. But all did not go to plan, which is common barriers you need to anticipate when running a startup. From the the angel investor backing out, it was that fateful meeting on December 20th, we planned our strategy.
Aleks, a former Google employee, had all the training materials. We sent out internship opportunities, that had the new interns go through Google trainings from an ex-Googler and described our vision of Crowdholding. To our surprise many applied, and by January, a team of four became a team of 10. At the same time we met Rosario, our now CTO, who was introduced to us from our adviser Paolo a former Product Manager from Skype. Rosario was our first senior developer as a former architect for Oracle. Our executive team now had a CEO, CMO, COO and a CTO. It was time to work hard and show an investor we meant business, and by March we received our first investment of 30K. We tackled our first barrier.
We launched our beta in March with a new UI/UX design. Our concept allowed businesses to share future revenue to a community of affiliates, that supported them by working on tasks. It was a way to allow early stage startups to gain a team of community members to help them without spending cash they didn’t have. If they succeeded so did their supporters. However, we ran into a new problem. You may have heard the saying, everything runs in 3’s. Well, we can adhere to this in the business world. We had three main problems from our beta test. And they were:
Startups wanted to share a piece of their revenue, but they were scared a future VC wouldn’t invest as “profits for shareholders are usually number one reason to invest.” and future revenue given out, would reflect in a cut of future profits.
We had too many industries representing the startups testing our application. This made it difficult to recruit a user base with a vast knowledge of different industries.
Lastly, transparency. It was hard to get a business to ask questions that was more internal. Basically they had trouble asking a community questions they would ask their employees.
When we learned this, we realized we needed to make a change and fast. At the time we were completing negotiations with a VC investor for a seed round worth $250K. When we analyzed the digital currency market, we noticed 3 solutions to our 3 problems.
A token could represent an asset of a company (whether a utility, or a security). And startups in this industry were eager to get support by sharing a % of this asset.
We could focus on one industry rather than segmenting into too many industries. We could in fact concentrate on users who were enthusiasts of this new decentralized movement.
The industry was all about transparency with businesses showcasing their whole business plan to the public and their strategy how they will achieve it. This new industry was about gaining a community to support and work for that company by earning tokens for their support.
From this research we thought if it as a no brainer. And reported to the VC investors thinking they would agree along with us. And weren’t we wrong. While we stood there on that fateful day presenting to 8 board members of the VC firm about the new plan, and in no way did the VC firm want to be a part of it. They then dropped our project, and we were back at square one, reminding ourselves of that day back in December 2016.
As for us, we saw this as a technology that was disruptive, that also could facilitate the same ideology of CH for which we started a year ago. With no capital, we decided to again to do the impossible, to raise via an ICO.
To this day, our three founders live together in the same apartment. At the time, the incubator we were working at had shut down for a week due to water and internet issues. So we invited our whole team to our apartment to tell them our new plan. We were going to launch an ICO.
We spent some time making our business plans more presentable online in preparation for the ICO. And began planning each section of our WP and our new pivot for our company, which involved setting up social media accounts tailored for the industry, and we began coming up with a growth hacking strategy to get the word out of what we were doing. This was mid-July and we were racing to prepare and launch our pre-ico August 15th. Everything was being moved fast and we had prepared everything in time for the launch. Our goal, raise the capital by utilizing crowdfunding, for which us founders had experience and new very well in the past. Following a reasonably successful pre-ICO round, we began preparing our ICO launch for the 1st of November. With funds low and the advent of the ICO looming, another angel investor stepped in to support the company, but little did we know the difficulties that would ensue after the November launch.
You could feel in the office concern after the first week of very little investment in the ICO. At this time there was a slow down with ICO’s and chatter that maybe the ICO hype was over. We had spent marketing this time, and showed showed little affect. We had traveled to events to discover potential participants were already matched with a business before hand and had no intention to get involved with ICOs out of their circle. So what we were doing wrong? It turns out that people were watching and waiting to invest at the right time when we were closer to hitting our goal.
By the third week of November we asked our community if we could delay our ending date to a new date next year. With a beta product out which was rare for a project back then, we saw ourselves with an advantage and couldn’t give up that easily. We got approval from the community and continued pushing our product forward introducing the development of new features and putting together an improved smart contract developed with great feedback from our users. And as we slowly raised so did Ether to the point of new heights coming from the beginning of January, which increased towards our goal of 2,000 Ether. On January 12th, we completed our ICO followed by bringing in our first new executive Malte as Head of Sales. Out of the interns from our start, Giga became head of customer success, Jonny head social media manager and Kseniya head PR Manager. They stayed with us and became vital roles to our company.
We discovered a menace of legality work that took much longer than expected before hedging for the needed capital. Making the mistake of not hedging fast hurt us from the crypto drop of Ether. But because we lost value in our raise, this in fact pushed us to begin developing revenue streams. Thinking this first, while others in the market were thinking, “we don’t need customers, we have plenty of money to last us for years.” And weren’t they wrong, as everyday companies were going bankrupt from the bubble burst of 2018.
In 2018 we developed usability improvements, new features such as social media share bounty, admin console for businesses to create tasks and top up their tokens, which included a new rewarding system that allows voters and commenters to earn, while hiding the upvotes until the task expires to name a few. And by the summer, we established two revenue streams. CH services and token revenue from each task produced. By Q4 we have been generating on average 25K in revenue a month. As you may recall, everything runs in 3’s. And our current barrier we are working diligently to cross is surviving the crypto bubble pop. How we survive it, is all about generating revenue.
Recently we got our first subscriptions for our product adding a third revenue stream and on December 15th, executives at CH put together our OKR’s Q1 (stands for Objectives and Key Results.) Where our goal is double our revenue for Q1 and pursue profits at CH. In order for us to succeed we must keep the grind going.
So on that fateful day in December 2016, has brought us to here now. But what is our lessons learn now for 2019? Below are ideas generated from our team and community we are currently examining. Lets share.
Need to make incentives to use YUP
We need features that allow you to spend YUP to gain more influence on CH. Currently the YUP cycle has our first few business purchasing YUP through our monthly subscription. However, the volume is too low to have it showcase in the price. We have some ideas thanks to even feedback from our users:
Stake small % of YUPs per vote to earn more YUPs in return
Purchase with YUPs your own username you own on CH
Allow users to purchase services or products from businesses (possibly a discount on price for spending YUPs)
Allow user to post tasks attaching YUPs for information or work they need as an individual freelancer
Drastically increasing amount of tasks
There is a correlation between number of tasks and number of active users. When we add more tasks we increase the amount of active users as there are more things to do daily on CH. So the question is for 2019: How to increase from 10 tasks a week to 100?
Possible solutions involve allowing individual users to post tasks or even removing the approval process for business, allowing anyone to set up a project more easily. However, we need to consider the risk of scammers. But keep in mind, users are not paying money to these businesses, but instead the risk is their time. We will need to do research and think of the possibilities to initiate more tasks to scale.
Evolving the YUP into a security/utility hybrid
This idea coincides with the core idea of CH, which was rewarding users with a share of revenue from companies they support. We are considering distributing a share of our revenue to users holding YUPs. However, it’s important to consider, we must sustain operations efficiently with revenue before implementing this idea. We plan to make this a reality from pushing revenue success this year with appropriate timing. You can check out this idea from our past task here.
Introduction of Stable Coins?
An issue we are facing has to do with core value proposition. We allow people anywhere in the world to get value in return for their time. This brings up the idea of attaching stable coins to the reward from all paid subscription clients. Therefore subscription costs would go to purchasing YUP and converting % to Stable coins as rewards for the task. We believe this could be very appealing for non-blockchain related companies who still want to use our app.
Widget?
One very effective way that we feel would increase our active clientele and user base, would be creating a widget. Similar to how intercom is used on our website, business can have the CH task creation widget directly on their website just by putting a few lines of code in their code base. Thus, participants and tasks would show up on CH’s newsfeed, but the businesses can direct their users to their website to get crowdsourced support. This could be a very intriguing opportunity that could improve our total active user base dramatically.
We are currently examining our best options and putting together our roadmap for 2019.
The future is bright, but we can’t do it without you. Keep up the great work and if you are new to CH, make sure to sign up here and join a vibrant and creative community. Click on https://www.crowdholding.com to join us!