Podcasts Business SaaS Interviews with CEOs, Startups, Founders 784: Crypto: How ICO Companies Turn Money Raised Into Cash-In-Bank To Fund Growth

784: Crypto: How ICO Companies Turn Money Raised Into Cash-In-Bank To Fund Growth

Published: Sept. 16, 2017, 9 a.m.

Joe Zhou. He\u2019s the founder and CEO of FirstBlood, an eSports startup that recently broke the speed record for crowdfunding, specifically in the crypto world. Prior to founding FirstBlood, Joe co-founded Alt-Options, a Boston based fintech or financial technology startup that built the first American style option trading platform for digital currencies. Joe holds a BSBA from Boston University Questrom School of Business and an entrepreneur residence at Babson College.

Famous Five:

  • Favorite Book? \u2013 Lean Startup
  • What CEO do you follow? \u2013 Elon Musk
  • Favorite online tool? \u2014 Slack
  • How many hours of sleep do you get?\u2014 6
  • If you could let your 20-year old self, know one thing, what would it be? \u2013 Joe wished he was less concerned about how he was perceived in school

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Time Stamped Show Notes:

  • 02:11 \u2013 Nathan introduces Joe to the show
  • 03:00 \u2013 FirstBlood is a platform that allows players to play games, not just for fun but for money
  • 03:23 \u2013 FirstBlood charges money for each game or tournament played
  • 03:49 \u2013 FirstBlood was launched in April 2016
    • 03:55 \u2013 Joe\u2019s co-founder, Anik, is also a big gamer
    • 04:08 \u2013 They were both fans of League of Legends
    • 04:14 \u2013 They attended a Hackathon where they were challenged to build an application that has never existed before
  • 05:00 \u2013 Joe co-founded Alt-Options while he was still in college
    • 05:15 \u2013 The technology was built from scratch
    • 05:18 \u2013 There were about 2K users during the testing phase
    • 05:50 \u2013 It was bootstrapped and $50K was raised from families and friends
    • 06:02 \u2013 There were a group people who wanted to get into the space and Joe worked with them as a consultant for half a year
  • 06:44 \u2013 Joe decided to do the token issuance because of the support they were getting
    • 06:55 \u2013 DAO was successful until hackers were able to get into it due to a bug
    • 07:19 \u2013 FirstBlood was one of the most promising projects that was going to DAO
    • 07:26 \u2013 DAO or Decentralized Autonomous Organization is like a decentralized venture capital firm; it was managed by every person who has a token in it
    • 07:52 \u2013 FirstBlood was operating under Project Tron in the DAO community
    • 08:15 \u2013 After the bug, FirstBlood started building what was needed to run a successful crowdfunding campaign
    • 08:52 \u2013 Joe and Anik gave talks and presented multiple ethereum meetups regarding their project
    • 09:37 \u2013 Joe came home with a budget of 3-5 years runway for the entire team
    • 09:46 \u2013 They\u2019ve raised $5M in funding
    • 09:52 \u2013 Team had 6 people and now they have 15 people
    • 11:14 \u2013 They\u2019ve calculated the ethereum\u2019s pricing and deployed the contract to the network
    • 11:51 \u2013 FirstBlood raised the money in just the first four blocks and processed in just 7 minutes
    • 12:41 \u2013 FirstBlood has sold 465,313 ether tokens
  • 13:10 \u2013 Joe shares why they released their own FirstBlood tokens
    • 13:16 \u2013 Ethereum has some limitations
    • 13:34 \u2013 The FirstBlood tokens are given unique utilities that are crucial to making the network work
    • 13:42 \u2013 First layer is the transactional level utility where both ether and FirstBlood tokens work
    • 14:20 \u2013 Witness program utility can only be run by FirstBlood tokens
  • 14:52 \u2013 DotA is the first mobile strategy game and now is a stand alone
    • 15:53 \u2013 When a game is settled, a set of information is sent to a network of witness nodes
    • 16:02 \u2013 Witness nodes will then run tests using computational power to fetch the data and cross reference the data to make sure that it is valid
    • 16:14 \u2013 The data then gets published into the blockchain and smart contract
    • 16:32 \u2013 The winner of the games will pay a small percentage fee to the network
  • 17:40 \u2013 The token price isn\u2019t that important for the team
  • 18:14 \u2013 The ratio of the token is arbitrary
  • 19:24 \u2013 A lot of Dapps don\u2019t have a real money function yet
  • 19:39 \u2013 FirstBlood is closed to launching the beta
  • 19:59 \u2013 Currently, there are 1592 people who have FirstBlood tokens
  • 20:51 \u2013 Joe doesn\u2019t think that it\u2019s risky for them to have a lot of people handling the network
    • 21:06 \u2013 The selection process has a cap rate on how one will get selected
    • 21:19 \u2013 \u201cWe did cap at 1% for a maximum impact\u201d
  • 22:20 \u2013 Joe can\u2019t disclose the amount he owns from FirstBlood tokens
    • 22:50 \u2013 The allocation for founders is around 10% of the tokens
  • 23:24 \u2013 Nathan asks Joe if it\u2019s possible to cash out a million tokens into real dollars if he ever needs it
  • 24:35 \u2013 FirstBlood made the headlines because they raised a $5M equivalent to ether
    • 26:38 \u2013 The fund is owned by the project
    • 27:08 \u2013 The ether can be used to keep buying the project
  • 27:30 \u2013 Some of the money from the funds are used to pay the team
  • 28:03 \u2013 FirstBlood liquidates 80% of the ether post cross-sales and 20% remains in the smart contract
  • 28:39 \u2013 FirstBlood has around $4M in the bank that pays salaries and other company expenses
  • 29:55 \u2013 The technology of FirstBlood has made people more interested in the project
  • 31:00 \u2013 The decision to raise $5M was from the advice they\u2019ve received regarding what it takes to increase network profitability
  • 31:51 \u2013 Ether was valued when Joe liquidated the 372K shares at $11 per share
  • 32:38 \u2013 Joe didn\u2019t wait for the share value to increase because they needed the money to get the project running
  • 34:25 \u2013 The Famous Five

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3 Key Points:

  1. In crypto, startups create their own currency if they think their network will be better of with it.
  2. Listen to your advisory board\u2014if it\u2019s time to raise for specific purpose, your business might be better of because of that decision.
  3. People will become interested in your project if it\u2019s first in the space and they believe in your technology.

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Resources Mentioned:

  • Simplero \u2013 The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
  • The Top Inbox \u2013 The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka - Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio \u2013 Track your business performance across all departments for FREE
  • Hotjar \u2013 Nathan uses Hotjar to track what you\u2019re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling \u2013 Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator\u2013 The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible\u2013 Nathan uses Audible when he\u2019s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books

Show Notes provided by Mallard Creatives