The following is an edited transcription of our interview.
A little bit about Monetha
On: Okay, so let’s start with you, if you can tell us a little bit about yourself, and your background.
Justas: My name is Justas Pikelis, I’m the co-founder at Monetha, and before Monetha I had been doing a lot of things when it comes to startups, when it comes to business. I had been studying entrepreneurship and innovation management in a very new-school type of university, a new-school type of program of the university where actually I met one of the co-founders in there. So I had a few projects when it comes to robotics, and a few projects when it comes to IT, one of them has been successful, other ones not too much.
I have always been into blockchain technology. Actually I remember the exact date when I heard about blockchain technology, that was the 28th of January in 2014. So almost five years ago when I heard a podcast by Joe Rogan, in which the guest was Andreas Antonopoulos. He spoke about this digital currency and about the possibility of being your own bank. And that was a really interesting concept to me as I’m attracted to these kind of libertarian views.
My background is business development and the organizational building of the company is something that I’m very passionate about. I’m very interested in working with people externally with my business, getting partnerships and things like that.
At Monetha we started everything in the early days of 2017. From our own problem, and I guess all of the best startups actually start with founders facing a problem and they want solve it. So in 2017 as we -- all of the 3 co-founders -- helped cryptocurrencies. We asked ourselves a question about why we cannot spend them especially when it comes to e-commerce where it should be as easy as possible. So we started to really navigate the idea of creating a cryptocurrency payment processor and we did that.
Later on the project shifted a little bit into more trust and reputation because there are lot payment processing companies, but there needs to be some kind of competitive advantage and competitive edge, and when it comes to that and we saw that payments really correlate together very much with a reputation. So these two issues are one of the main pillars of the blockchain technology and we said that’s a perfect combination and we decided to do an ICO for few reasons. One of those reasons was because we definitely needed the token ecosystem, the second reason was that it’s really hard from where we are operating -- that’s Northern Europe -- it is really hard to raise venture capital. And that’s because if you’re not in Silicon Valley, if you’re not in London, it’s really hard to do that. So we decided to go the ICO route and I guess everything else after that is documented a little bit better.
On: Great, sounds great. Sounds great. Tell me where is the company based?
Justas: We are based right now in Switzerland and we have moved our business operations in the main headquarters in Switzerland because the regulation there is really friendly, and the people are really knowledgeable about the blockchain technology. Whereas our software development office is in Vilnius Lithuania which is in the Baltic States. It’s really great to be there for the engineering purposes because they have really good developers when it comes to the price, and when it comes to the value. We have two big headquarters, one in Switzerland and Zoom, the Crypto Valley, and another one in Vilnius Lithuania which is more a development offices.
On: Nice, how many team members do you have at the moment?
Justas: Right now, we have 23 people full time and we have a dozen contractors all over the world that are working part time.
On: Nice, and how many did you have when you had the ICO running?
Justas: At the time of the ICO we had a lot of people who were working part time when we hired them, and later on full time. But at ICO I would say we had somewhere around like 10 people that were working full time, and we were in this small small offices of 17 square meters which is about I don’t know, 200 square ft. so it was really really hard to be there but we’ve managed to get our bootstrap and everything, very efficiently. And you know how it is.
On: Sounds great, the way that I like it, bootstrapped.
Justas: The thing is that right now a lot of the ICOs, when you raise a ICO the equity is already split. Projects already have investors, and in our case all three co-founders just equally put the money into a budget. Everything has been from our money. Right before the ICO we had spent around $300,000 and that was everything from our own bank.
The importance of decentralization
On: Ohh very impressive. Very impressive. Tell me, you did start explaining before but you just touched it very very quickly and I would love it if you can extend it much more and explain why your business model or venture needs to be decentralized?
Justas: That’s a really good question and we see ourselves as not seeking decentralization, just because that’s a buzz word. We literally need it when it comes to reputation. It’s not as needed in payments, where the blockchain is mostly serving to eliminate intermediaries, in order to have the smallest transactional fee and afford it to be really fast in a peer-to-peer fashion. But when it comes to a reputation, decentralization is very important. Because right now reputation platforms, for example whether that would be eBay, or Amazon, or Airbnb that is a very decentralized type of method, and that method is being captured within a big company. So what I mean is, if you're a merchant and if you want to sell your goods somewhere else not necessarily on eBay but you want to transfer it to Alibaba, you cannot transfer your reputation, you have to build it all over again. What we're creating with our products is that you will handle your reputation on the blockchain which will be transferable to other marketplaces. Whether that would be Craigslist or classified ad marketplaces or that would be eBay or whatever. You can show your reputational passport, and it can be transferred through other platforms. So you’re not stuck within the platforms, people claim that “oh I have a 99.99% positive reputation on eBay” but decentrally you don't have it, eBay has it. Because if you want to get that reputation and use it somewhere else, you essentially just cannot do that.
On: Definitely, definitely! Most people don't really understand what you just said. (laugh)
And it's very important that we l try to explain that to them. That leads us actually to the next question and you already answered half of it. And that's about your competitors and about them being centralized. So my question is what do you think might happen or aren't you, let's say, afraid that one of the big giants will actually make a significant change to their business model or let's say add another business model beneath the main business model and then will be a huge competitor for you which right now they are not?
Justas: That's a really good question, the kind of question that can be used for any business. The hotel industry did not foresee Airbnb, the taxi industry did not foresee Uber. Nokia had a lot of resources and could have done a smartphone that navigated through touch mechanisms and they did not. Blockbuster only in the last few years saw that online is the new model, that a subscription model is the new model. These big giants they don't necessarily do that because they're a big company. It's really hard to spark a lot of innovation when it comes to going beyond technology.
The other side is that those companies would rather buy an existing technology by an existing business that has already solved the problem rather than building it themselves. Because that’s just more efficient for them economically. So we're definitely not afraid of this, just looking at this not necessarily from the blockchain domain perspective but just from the logical kind of business perspective.
On: Aha, aha. I see, I see. Tell me what do you think is your competitive advantage?
Justas: So obviously I would say internally it's the team. We have great engineers, we have people who are essentially masterminds in this industry and they really do their jobs very well. But externally I believe that we have the first mover’s advantage. We’re the first company that started doing this kind of decentralized trust and reputation platforms for e-commerce, for commerce in general. And I would also see our competitive advantage being the capital yes. Of course, that’s quite an important one because we have raised a lot of money.
But when it comes to the payment gateways and having the payment wallet, the decentralized trust and reputation system is the main competitive advantage. It's quite a complex mechanism and if people want to read more about it we have published a lot of content about it, whether that would be easily digestible, or we have videos that we create every week, or if they want to read our whitepaper it has said what is a decentralized trust and reputation system. But essentially that is our main competitive advantage externally and internally of course the capital that we have raised and the great talent that we have.
On: That was great. Let's talk about about some of your blockchain and crypto competitors, if you think you have any, and not one of the big giants that are very old for us. Do you think that they are any main competitors for you? Do you think that they are other competitors that exist but you just do things better anything that you can tell us about that.
Justas: One company that really has claimed that they are doing things better than we do was Utrust and that was actually part of their, I would say one of the main kind of things that they have done with their ICO and one of the marketing messages was that. ”We're just like Monetha but we're doing it better than they do.” And it's interesting because as time went on, they do an absolutely different thing than we do. So I would not say that they are competitors and I don't know how well they do with their company. I just don't essentially pay attention because they're just not in our field of competition.
The other thing is that after our ICO, because lot of people saw that it was successful, and a lot of people wanted to replicate that success, it's interesting that a lot of projects try to copy the same message that we do but we saw that was more of a money grab and something that they want to do as a get rich quick type of thing. And I don't see those companies anymore. I don't say that we don't have competitors in this field, it’s just right now it's a little bit too large of a gap for me to really pay attention and see them as something that we should be concerned about.
The importance of community
On: Tell me, how would you define your community, do you define it strong community and if yes... why?
Justas: Yeah I definitely say that we have a strong community and it's worldwide; we have people, big supporters, especially in Japan, in South Korea, we have people in Russia, in Switzerland, in Italy, Netherlands, UK, and Canada and all over the world. And this community is quite active, and it’s active even after the ICO.
So before the ICO it was really we had the largest Slack community of all time. We have switched from Slack to Telegram because that's just a more efficient platform. And in Telegram we have a lot of people that really, everyday write us messages and not only just a happy message or positive or negative vibes. It's also real advice that we’re getting from our community. They're really trying to help, they're really trying to know what are the newest announcements from the company. So we receive a lot of support, people taking pictures with Monetha t-shirts.
So that's one of the strong backbones that we have in our company and it helps both in a substantial type of way, but also its a big morale boost for our company as employees look at Telegram and they see that people are saying “have a beautiful day”, you know you're working hard, you see that you're super happy. It's a good thing to have, really.
On: Wow! Impressive, impressive, very impressive. Tell me, what do you think made the community as it is? I mean obviously you have great vision, obviously you were successful with your ICO, but let's talk about before the ICO because you built the community before you actually did the fundraising. How would you define the success of the community building that you did? I mean what made it become so good, and let's put aside for a second the product and the vision... and so on.
Justas: I think that they have given us the same thing in return that we have given to them, and that is transparency, and that is communication. We were really communicating a lot during the ICO process. After the ICO, every week we published a video report of what had been done over the week in Monetha's company. We were picking up the phone whenever we had a call, Facebook has my phone number publicly so people can call me, we can talk about Monetha's project. I see no problem in that, I enjoyed doing that and people essentially saw that the founders of the company are also in the community, they're not waiting for it to happen through the community managers. We were the ones who spoke with our community directly. So people actually responded the same way. They were super friendly with us, they were communicating with us, there are a lot of positive comments towards us. I think the strength of the community really lies in how much effort you put into building that community and people definitely recognize that. When they recognize that they reward you.
On: Sounds great... sounds incredible. Sounds like the real way to build a community. (laugh)
Justas: Yeah, there are no shortcuts. If you want to buy Telegram users, it's just too easy and people are buying Telegram groups, they’re buying Telegram users and you have 75,000 telegram members and they're like 3 messages per day, it's just quite embarrassing. So when you build it organically and you build it, really, not only with passion but also very genuinely... people recognize that.
On: Yeah yeah makes sense... definitely. Tell me, let's talk about one of my favorite subjects which already started with the community part, but let's talk about some more of your marketing efforts. And if you can tell us anything that you can remember that went really well for you like what are of the main channels that you manage in order to get the ICO investors, for example.
Justas: I would say there are a few, but talking very specifically I would say one of them is Facebook advertising, which obviously right now is way more tricky but at that time we were probably the only project that really put that much of a budget into Facebook ads. Not a lot of people believed in Facebook advertising because they thought that people from the crypto community don't spend time on Facebook. But we said, you know everybody spends time on Facebook so we were super surprised that Facebook advertising cost that little. We really doubled down on that and we have done a lot of e-mail marketing so we sent updates through emails and it seems like it’s just such an old thing but it really works. So once we did that, and you know those are distribution platforms so in my opinion, they are important but they are not the key to the marketing.
The key to the marketing is the content that we are pushing, is the message that you are saying, and then in that regard we said, alright we're going talk about the technology but we're also going talk a lot about the people. Because the people are something that everybody understands. Everybody understands who is the general manager of PayPal, everybody understands that here is the vice president of sales of Braintree, and everybody understands that this is our CTO. People understand these things, but they're not necessarily going to pay so much attention or have knowledge in detail about the technology. Everybody knows and recognizes a good profession.
On: Sounds good. Tell me, do you have any specific let's say you mention Facebook, you mentioned e-mail marketing, definitely serious channels. Can you tell me more about other specific platforms or any specific websites that you can remember that you advertised on, or even if you had any kind of PR, published on one of the websites that you remember getting a lot of traffic or a lot of attention or whatever.
Justas: I cannot name a single one. I would say that these paid marketing activities were effective, but when it comes the PR, when you focus on the niche and when you focus on crypto type of publication, we were more interested in that rather than the wide media. We had published it on The Next Web on Huffington Post but the main thing was they were still crypto related because people who have the knowledge were there. At that time crypto was still not that prominent, not a lot of people had heard about it. That is everybody had heard about crypto, but not a lot of people heard about ICOs. So I would say as a tip or advice focus on crypto media.
Looking back at the ICO
On: Aha that's definitely great advice. What companies did you partner with or were you interested in partnering with before the ICO, at the ICO stage, or after the ICO stage? Is there anything you might have done that you can tell us?
Justas: Before the ICO we were working hard at on-boarding big ecommerce platforms on big merchants. We had that, and we had companies of caliber, generating a hundred million dollars of revenue every year. So right now it has shifted a little bit and what we are interested in is somebody that could gain value from our reputational framework. And that would be definitely some ICOs, some decentralized applications. If you're reading this and you're a CEO, or a business developer, or founder of a decentralized application, or somebody that you know is and needs reputation data, please contact us we're really interested in working together. It has shifted a little bit but partnership is an important resource for us.
On: That was good... tell me how much did you raise during the sale?
Justas: So at that time we raised 95,000 ether, At that time by the prices of Ether that was $37m, and we raised it in 18 minutes. The hard cap was reached in 18 minutes.
On: That's amazing. (laugh)
Justas: Yeah that was a really quick sale, we could have raised 3 times as much. We had transactions that were filled with a hundred million dollars but we had to decline them just because it was a hard cap. We understood that $37m is enough for us to take one big step into the global market.
On: Amazing. I'm sure that there are many disappointed investors out there that couldn't get in.
Justas: I know, I know people were mad about it, and I'm still apologizing for that but it's just the survival of the fastest.
On: Of course. Can you tell us more about the use of the token itself like what is the plan for token users beside holding the token and enjoying its value?
Justas: When it comes to our token models it's quite straight forward. We collect from every transaction a 1.5 percent transactional fee, and a third of that goes into the main pool. From that pool people can claim their tokens which proportionately if you hold let's say, 10% of all token supply, which is really hard, almost impossible, but let's say you have that, you get a proportional amount of that revenue but you don't get that in terms of money, you get that in terms of vouchers which can be used in our ecosystem. That's the utility of the token whereas it is not a dividend base where you can lie on bed and get money, you can only exchange those tokens in exchange for a service or an item.
On: Aha that's good, that's good. You actually have a use for your utility token if we compare it to hundreds of others that are just using the buzzword utility token.
Justas: Yes actually.
On: That's good.. that's good. (laugh)
Tell me if I would ask you what would you do differently if you could go back one year ago?
Justas: We have not made a lot of mistakes but we have made a few. I probably would have said a maximum cap on the investments for the ICO contributors, just for them to be more segregated because it took us a long time, and we have more more token holders, some people were disappointed some people bought a big amount of tokens. So that would be probably one of the things. The second thing I would probably set a better kind of matrix in recognizing how hot we were at the market and correlate it with our hard cap so essentially increase the hard cap. But other than that we were pretty smart plus lucky in terms of how we managed our capital after ICO, how we built our product... I'm actually very happy with the team’s performance, they’re doing a great job.
On: That's good that's good. Tell me what are the biggest challenges that you expect to face from now on?
Justas: I guess the challenge that everybody has in a crypto space and when it comes to a decentralized application, is the adoption of the cryptocurrencies Whether that would be the payments or general awareness of the cryptocurrencies. I feel like this is the problem that everybody faces, and this is a challenge that everybody has. Of course us and other decentralized applications, they’re really trying to help us as much as possible by building great products, by speaking about crypto. I think that's very important and I think as time goes on it will definitely be done. It’s just the adoption doesn't come overnight, and if I would have to name one challenge, the challenge is universal for everybody that’s in the crypto space, and that is cryptocurrency adoption. Wouldn’t you agree?
On: I would definitely agree. (laugh)
If an entrepreneur comes up to you now and asks you for advice to launch an ICO that he's working on, what would be the advice that you would give?
Justas: I would definitely say that you have to understand whether you need a token. If you don't, it's like if you cannot do an ICO don't do it. But if there's no possibility, if your product definitely needs a token then do an ICO. That's simple advice. A token should need you, you shouldn't need the token.
On: Yeah you shouldn't make up the token just because you wanna do an ICO. (laugh)
On: I get what you say. Any last words that would like to say to the crypto community anything at all, any general message?
Justas: I think that when it comes to the crypto community, we have a lot of tourists, and the tourists really fluctuate the market and the tourists really set a narrative with their sentiments of positivity or negativity. As for people who are the residents of crypto, if you know what I mean, they should stay calm... They should use cryptocurrencies not only hold cryptocurrencies. They should think about how they can help the whole blockchain community, the whole blockchain initiative, whether that would be by building their own products or maybe reporting on crypto or maybe telling their friends or maybe just building their knowledge. I think this is what's needed... a real substance something of tangible value that people can create.
On: Sounds great, sounds great... That was all the questions I had, thank you for your time and insight.