Groundhog, rDAI, Raising Funds & Building Projects in the Ecosystem – Andrew Redden

hello everyone my name is Andrew redden I'm the co-founder and CTO of ground dog just before I dig in I'm gonna show of hands who here is hacking this weekend okay cool and who here would you know call themselves an entrepreneur full-time part-time whatever it might be cool all right cool so this talk is gonna be kind of framed about like what do you do after you build a really cool hackathon project and you either a want to build it start a company or it's a feature for something and it may be valuable and so like what what is that like what is it like raising money on something that you put together in 36 hours so a little bit about me you know i'ma I come from like a really small place in Canada Halifax Nova Scotia you know we don't have a large blockchain community startup communities just kind of growing tech in that size we have to export ourselves a lot you know hi Denver in order to actually you know gain a lot of knowledge you have it like you know some concrete experiences that actually help drive a business and drive value proposition you know and a part of my journey I've been involved in open source for a number of years now I first discovered blockchain back in 2010 and we kind of like pushing forward in that regard I'm an active member of the Medicare tel right exactly exactly what is it how's the Cobra dance go we're gonna figure that out still right okay I joined our died about six months ago in terms of helping you know shoot the project and kind of pushing that forward so eyeshadow to any art I people that are watching I'm also helped driving meta transactions with a gas station network you know user experiences for everybody in the etherium space need to improve if we're going to attract a bunch of users talk a little bit more about that later in terms of how it comes to driving a value proposition attracting users to your product sorry I also helped write a standard VIP one three three seven or something that we're trying to get to be a standard story it's about reoccurring payments on a theory I'm to drive better business models for people and that's what ground talk is all about so it's a it's a platform to allow for reoccurring payments inside SAS products taps checkout experience is very similar to stripe or PayPal checkout for that regard and something that happened that was pretty cool last year we saw the launch of a new stable coin dye replacing sigh and somebody had to sign the transaction to make that happen and that just happened to be me and so that's a there's a pretty interesting year I'm a competitive programmer and have been for a number of years and I think this might be my 30th or 40th hackathon that I've attended to date back in 2016 we attended the on largest at the time online virtual blockchain hackathon put on by the United State of Emirates so I was very fortunate to be one of four team selected as finalists to go and attend the world government summit that year in 2017 to be recognized for our product hyper give and so it was tackling the the the challenges around homelessness and in food insecurity you know just as a really unfortunate fact you know one in seven Americans don't know where their next meal is going to come from sometime in the next three to five days and that's pretty staggering considering you know where we are today and what we're building on is a future of money it's not entirely all-inclusive in 2018 I attended tech stars for a product that actually was how Groundhog came to be we are a subscription service targeting crypto consumers you know based around the ICO phase and projects and so it's actually during TechStars that we attended eath denver the very first one and that's where we had the idea is one of our pain points in our business was how Sheedy and how hard it is to monetize the subscriptions so I don't know if anyone here has built something that they're trying to like get paid for right now in web 3 but it's a challenge you know like as frictionless as we try to make it there's still a lot of Hoops and hurdles that a lot of users have to go through so we tried tackling that at that event we did pretty well we placed second overall but what that happened what happened after that was like sorry this is Groundhog what happened as a result of creating you know the the very were like you know very beta MVP like you know I wouldn't even call it an MVP version of groundhog it placed well but you know you think you're on top of the world you got ton of interest coming or inbound interest you know you think people want to throw money at you you're gonna raise a ton of money I'm in techstars right now so you know we're already in the process of raising money on a previous product but the amount of interest around subscriptions emile to monetize like it was like it was like crazy so you start thinking to yourself you're like well you know we thought we were building a feature for our current business to just roll it out for like a sub-sect of our users that were like complaining around how hard it was to go and do a seven-step checkout for an invoice so that's what it was Bitcoin litecoin aetherium you name it across the board but people had to come and actually pay us every month for our service and it's a daunting task to chase down users and say hey like I want the money for the service that you're getting provided right now or we're gonna need to like you know churn terminating I don't want that you don't want that but that's just how business works and so we pivoted aggressively our previous product was a service so the service closed it out after a couple months and we went all-in on this concept of like reoccurring payments and how do we enable this in the community like what does that actually mean you know how do we build a billion dollar business in web 3 that's you know that's the thought process we have while we're in the middle of techstars so you've got an MVP that you built in 36 hours you probably faked a bunch of it let's just be honest that's how it goes because a hackathon is all about what you present and what could be possible not always what you did right now but like is what you're trying to accomplish theoretically possible great but production is a whole other thing especially if you're dealing with people's money like we are off you know commonly in cryptocurrency and so there's monitoring there's logging reporting compliance if required for your industry you know there's also the hosting of it the deployment aspect you've got all the technical debt that comes with what you built in 36 hours your products probably not even real if it's an MVP so that's a large-scale refactor if you factor in test nets you gotta start looking at how you're gonna manage this these experiences for your users are you developer focused product if you are how is your documentation how much time have you actually spent on thinking what the pitfalls of the security of your product how fast can you actually run right now if you were to given the opportunity a hundred grand where is it gonna take you do you know how to drive a business have you ever run a business these are all the things that you get often get faced if you get first place or second place in these events because honestly it means you've built something that's captured you know the imagination in the hearts of the the judges the audience's and they want to see you succeed and so there are many paths that you can take to do that accelerators are really common grants get coin grants well lock down meta cartel tech stairs showed out represent Y Combinator is common you don't have an on here but should tacky on EF grants you know you can raise money from your community you don't necessarily have to go to venture capital route you don't necessarily have to go if you can be you know subscriptions you don't just to show them a little more if you could turn them on today and people would pay you for your business and you revenue positive with 20 users why would you raise money immediately at some point in time you you're gonna need money but money is often designed to help you grow and scale your business change your product in a way that's gonna attract tens of thousands hundreds of thousands of users because venture capital money they want you to put money in and turn capital into code as aggressively as fast as possible to gather the largest scale user base you can to turn profit and that kind of thing doesn't always work in our in our ecosystem so these are alternative funding methods that are really good but they only take you so far sometimes you know we're just starting to see quadratic freelancers coming out where you could actually you know maintain and you know be like self sustained by the public goods ecosystem for the work you do and that's amazing but for some products venture capital money does apply these systems do apply because they generally teach you how to run a business more effectively to look at your market and to actually see how you can capture and penetrate that because of web 3 is going to be sustainable our businesses need to be sustainable right we the grant money isn't gonna be there for forever you know but we need to be able to see how we can we can drive real value inside web 3 for both users and consumers alike but if you are going out and you're like I'm gonna go raise money there's so much money people want to just give me free money it's the rule of thumb is if there's money on the table take it but if you think you're ready for a big fish you're probably wrong because venture capitalists are very smart very very smart they know how to turn capital into code they've seen it and they done it very good ones know when a company is doing it effectively or not so I urge you out here all you would be hackers and entrepreneurs and anyone raising money goes to the fundraising process I'm gonna show a book that I read that I felt was very transformable or how I approached investors and we learned about this in tech stars it's venture deals by Brad Feld and Jason Mendelsohn just don't let the VC outsmart you just like you can approach your you know your valuation as a business let's say you create a really cool hackathon project what's that worth do you know venture capital is gonna put a number on it do you agree with it like when raising money or approaching these things try to find like an equally uncomfortable point when it comes to talking about what something is worth because then you're on to something but I seriously recommend it it's gonna help you navigate the waters when it comes to fundraising trying to really drive your product and if you actually manage to get someone that's interested in driving around and you come informed about how this is actually gonna go it's gonna translate numbers I promise you that so you are gonna go raise capital one thing you're gonna realize you're in the blockchain ecosystem if you're raising a web 3 for those that applies nobody has a clue sometimes we don't have a clue we push this crazy vision but you're gonna be people that you're like earning an education focused business our industry requires education to be provided up front for almost everything we talk about how many people here had to travel to this conference because they wanted to have like the leveling up conversation they wanted to meet new people who knew things that were that they didn't know and they could contribute and grow I know personally I did and so when you go and talk to an investor or anyone that's look that has capital that want to provide they're in the same kind of business right you are educating them because they're like oh there's this whole hot new market and you guys won something obviously it's cool how do I help how do I capture that so you need to be well-versed in talking about your product your design whatever it is that you're putting in a way that people who don't know anything about the space can start to grok it and understand because most people you're talking to aren't developers if your thing is so esoteric and abstract because it provides some efficiency gain or whatever like you can't like that is not what you're selling because people aren't listening they're not tuning in they're just tuning out like a golden rule of raising capital is everybody in the room is looking for the easiest path off the highway to not give a about what you're talking about so don't ever let them take that road so product or is it a feature do you require to some other third-party service to live on for forever No can someone cut you off who's your competition if you don't have any competition at all venture capital or potentially a lot of things are gonna look at you and say you know it's not worth doing if it was there'd be 12 people doing it right now how big can the market possibly be for what you're doing what's the risk associated with it how can I like how fast could it grow is it a one-year problem a two-year problem a five-year problem is it never actually gonna be like a hair on fire problem can you be easily replaced you know we work in the open source ecosystem like a lot of the things we published when it comes to like the code we write and the software are smart contracts we create like it's all open so it can be audited looked at thoroughly but you know we've seen that a couple times like in the ecosystem when ether Delta changed hands you know Fork Delta came out almost immediately because no one wanted to use new contracts they had associated this level of trust with the old ones so a fork was created Team Dynamics like these people that you're building with you created this cool project how well do you know though can you raise capital with them do you want to tie yourself to these people for potentially 2 3 5 12 20 years is this even real lol I can't even tell you how many times people look at you and say that's not possible we're all raising money while talking educate somebody and they still don't believe that what you're telling them is possible and then the dreaded question because if you've managed to navigate all of these you've gotten to the very very end of everything what's your business model I want to make money as a venture capitalist I want you to make money as someone that I'm going to invest in so how are we making money it's a problem we all face today in the ecosystem most people don't have a clue are you gonna charge subscriptions yes you should be you're taking transaction fees you know coming up soon is it gonna be based on staking rewards are you gonna be entirely sufficient based on grants you know shout out to the community for supporting these two clients I think that's amazing or is your goal to simply get acquired like you know is your hackathon project this thing you want to go create a bunch of noise and hopefully get scooped up to one of the larger firms there's absolutely nothing wrong with that but these are the things that you need to be prepared to talk about when it comes to how you're actually going to raise capital and go down the road it's not easy if it was everyone would do it but I will tell you it's an incredibly rewarding journey I'm Andrew redden I left a little bit of time for questions I care a lot about defy I try to use die daily that's like the screenshot from while is on the are die summit I'm a monolith user I think it's great yeah happy to take any questions and if none stories a little fast I'm around all day get me up thank you [Music] you