Exclusive: Monetha ICO - Interview with Co-Founder Justas Pikelis
Cryptovest interviewed Monetha co-founder Justas Pikelis and discussed the project's ongoing development, strategy and future roadmap.
This interview is the first in our series of PICOR’s (Post ICO Reviews) on high profile startups which raised capital via their token sales. For this series, we will be focusing on the building blocks like Strategy, Product, Team, Go-To-Market and Budget - rather than getting caught up in the tech-hype, which can be distracting.
CV: I am here today with the co-founder of Monetha, Justas Pikelis. Monetha is a decentralized trust and reputation system for global commerce on the Ethereum blockchain. Today we are going to be doing a PICO which is a post-ICO review. So, Justas, great to have you with us at Cryptovest today.
Justas: Thanks for having me. I am really excited to talk with you and to your audience.
CV: Let’s start with recapping on the last three months for Monetha.
CV: So, in August your ICO ended and you did a deal with Pigu. September you listed on two exchanges and did a deal with Foodout Group. October you listed on another two exchanges and by December your coin value plunged nearly 17%. So, let’s discuss December.
In December, you ran a, what you call, a “strategy brainstorming” workshop where you gathered your whole team together in Lithuania. Now, most startups at the stage that Monetha is at already have a clear business plan in place – know what they are going to build, how there are going to get to market and how they are going to scale.
So, I found the timing of your workshop, this “strategy brainstorming”, a little bit strange because one: you are not live in market, two: you’ve got no live users and three: it was the same month your coin has taken a battering.
Hence, my question is, in hindsight, do you think you’ve sent out the right message doing that sort of strategic brainstorming in December?
J: I wouldn’t call it a brainstorming session. Why we gathered everybody from all around the globe, people from Israel, people from Amsterdam, from Silicon Valley, is because we felt it was the right time for us to get that sync up with all of the team, see if all of our goals are aligned. The most important thing in that strategic session was understanding what are going to be the next actions for the next three months and was very useful because we had some input from potential clients, from potential partners and that was something that was really kind of revealing when we understood it.
It is very important to us to catalyst the whole trust and reputation system but the trust and reputation system gathering the data both from the clients and from the industry experts was something that we really wanted to focus on. So, I wouldn’t call it a big kind of a pivot but we want to do this as a hygiene, you know doing these strategic summits every three months or so.
CV: Let’s talk MVP. Monetha recently published its first quarterly report, which was great, in it you stated that you won’t share your product roadmap until March 2018, which is seven months after your ICO. Your whitepaper encompasses some very ambitious plans, so I’m wondering what your MVP is going to be? And have you set yourself a hard deadline for when that MVP is going out the door?
J: Yes, the MBP has already been created prior to the ICO but we are calling this our first product milestone and as promised in our whitepaper its going to roll out in the first quarter of 2018. The deadline is the 31st of March. But how’s going to look...
I don’t want to reveal too much because there are of course some competitors, especially after the ICO, people who are trying to copycat Monetha’s model and want to do something similar. So, we don’t want to give them too much of a sneak peak of what’s going to be.
We are really excited and really want to share with our community what we are going to release on the 31st of March but again we better show, not tell. One thing that I can reveal is that it is very focused on the trust and reputation and that’s hasn’t been our hypothesis that has been just something hypothetical, non-tangible kind of data. Everything that we are doing is on the feedback loop and we are working very closely with the merchants that we have signed, doing user interviews, speaking with industry experts - our team consists of industry experts.
People who previously worked at Braintree, who previously worked at American Express, people who previously worked at PayPal - the companies who are really dominating the payments game – those people understand really well the infrastructure and what needs to be done and we are really glad that our philosophies are aligned toward the trust and reputation. So, the 31st of March – it is going to be a very disruptive for the trust and reputation field.
CV: Your whitepaper. You say you want to solve the reputational issue. You want to solve payments fee issue, which is great. But you also claim, in your whitepaper, that online merchants have a big problem accessing customers, buyers who want to pay using Monetha. Where is the research to back this up? When Hacked.com asked you this question in August, you gave them the answer by quoting the size of the crypto market by 2025 but that doesn’t really seem like an answer to me.
J: As mentioned, we do collect a lot of research from consulting companies but the most important thing for us is to back that up with empirical facts and experience and the feedback that we are getting from the merchants, people who are…This is no secret, everybody wants to be a part of the crypto game and merchants are the ones who are very closely looking at innovative solutions and for them to see how the market is growing it is…you have to be either living under a rock for six months not to kind of see how big the crypto market is, how fast it is growing and merchants they take notice of that and that’s why they are approaching us, they want to work with us, they want to accept crypto currencies.
But as mentioned, the payment processer is not something very hard to build. It gets down to more of a marketing a competitive advantage and for us it is more important to build that trust and reputation and having payments…registering them as a fact – the payment has happened and then only empowered by users who has done the payment for them to rate the merchant because without the payment, as many trust and reputation systems now work nowadays, you can rate a merchant or a service provider without even bothering using their services or buying something from them.
So, we want to collect those payments, we want to see the fact that those payments have happened and then built core trust and reputation on top of that. Not necessarily has to be crypto payments, we want to integrate permanent payment service providers in order for us to facilitate payments for them.
CV: Let’s talk courting trust. In Monetha’s whitepaper you outline fixing the trust problem between merchants and customers. How will the merchant port the Monetha trust rating outside the Ethereum ecosystem? Into the broader web?
J: I have an example for that as the users don’t really care where the reputation is stored. What they have to and what they want to know is whether that reputation is not manipulated or whether that reputation is immutable - can it be transferred to other platforms, selling unclassified ad marketplaces and then shifting, transferring their reputation into their e-commerce store.
From the research that we have collected it’s all about having the user experience, a beautiful user interface which a merchant and the buyer would see their reputation and not necessarily care what is the storage of that. Of course, we want to promote blockchain.
All the functionalities blockchain is giving because, as mentioned, before blockchain there was no ledger for merchants to record their reputation for that to be immutable and transferrable.
CV: I’d like to talk a little bit where this trust core sits. I noted with interest that Monetha is placing the trust at per smart contract level in your system, which would be at a per transaction model. Trust scores reminded me a bit of TripAdvisor. In TripAdvisor they wrap up all the trip ratings to give a hotel an overall score. So, my question is, are you going to give each merchant and each customer an overall score above the per transaction level?
J: Absolutely. And this is something that we are working on very, very hard in terms of hiring data scientists and people who understand that on a very high level. For those transactions: to accumulate and give the overall rating for a buyer, the user doesn’t need to go throughout the whole history and assume whether that merchant is trustworthy or not, he just has to see the overall kind of reputation and one level above that we want to personalize this reputation whereas some of the things may not be.
Reputation may not be displayed for different buyers in the same way because for different buyers, different things are important. Maybe for me it’s important to receive the goods faster rather than having a super flawless communication. Storing the reputation is not the hardest part. The hardest part is displaying the reputation as it actually is. For example, eBay has this problem where you can rate a merchant only positive, neutral or negative and let’s say you receive an iPhone and the corner of the box is bent, so is that neutral, is that negative, or positive? It is very subjective, we want to broad in that scale and then personalize and fragment the reputation.
CV: Mobile payments. Let’s clear up some confusion. Your whitepaper says that you are going to get the buyer to scan a QR code at checkout, using their mobile phone. Is that just for offline checkouts in the physical world, because the mobile user cannot scan a QR code on their phone at mobile checkout using that phone. It is actually physically impossible to do that. So, I’d like to understand more about how you are going to tackle mobile payments online.
J: Yes. When we started the ICO, we shifted. Not shifted but kind of giving the two options: the online and the offline world, and from the information and data that we have gathered, we really wanted to shift into e-commerce, and focus on online payments rather than offline.
The latter may come a little bit later but what we are seeing in...Again, we are going to do fundamental problem of trust and reputation. As we are focusing more on e-commerce rather than offline there might be some shifts in terms of the scanning of the QR code.
The first version of the product would really show that it is a functionality but it doesn’t change the underlying value proposition. We’re going to make the payments happen, not necessarily using the QR code, as we are shifting from the offline more into online.
CV: Monetha’s whitepaper talks about the merchant acting as bank. What happens in a decentralized world when the merchant accepts lots of orders, lots of payments but never actually delivers the goods. How does the buyer get refunded in that scenario? Because in a legacy payment world, when you pay with a credit card, you are insured against this sort of fraud. So, how is Monetha going to tackle his?
J: That’s right. The buyer protection works differently in different scenarios but for us is really important as a trust and reputation company to empower the buyers and the sellers with trust and reputation and that is going to happen by helping solving these problems to the end user.
That might be a refund; a covering the losses of our pocket - it depends on the scenario; on the case-to-case basis but we are really looking to be that arbitrage, which helps to solve that problem.
The main thing is prevention of those kind of fraudulent activities and that is being done by providing the seller and the buyer the ratings. So, we are more of a prevention tool for that to happen but if something happens wrong, and if something wrong happens, we do have to interfere and solve that as a trust and reputation company.
CV: Let’s talk walled gardens. Monetha’s whitepaper talks about how merchants are stuck in expensive closed networks like eBay and Amazon, how Monetha will offer these merchants a cheap alternative. But these merchants pay a high rep share to these marketplaces because these brands bring them huge volumes of traffic. Traffic that merchants couldn’t generate on their own. Monetha’s proposition only offers access to Ether currency holders, so how are you going to compete with these huge marketplaces like eBay and Amazon in terms of attracting merchants?
J: We do not compete with any of those marketplaces. We do not want to be a marketplace but what happens in these marketplaces is the race to the bottom. Especially when we talk about eBay or Alibaba, the one who offers the lowest price actually most of the times wins and merchants are getting really sick of that, as they don’t want to use it anymore.
We are getting all this feedback from the merchants and, yes, they cannot generate such traffic themselves but they use our trust and reputation as a third party, especially when we are talking about classified ad marketplaces. We believe that the problem lies in that because order formalization does not happen. For example, if you buy something from a classified ad marketplace you do not have the fact that the payment has happened; that the transaction, the purchase has happened.
We want to empower those sellers first in a more peer-to-peer commerce rather than going and trying to steal users of eBay and Amazon, wherever that might be, because we are not competing with a marketplace because of those reasons.
CV: Payment gateways. Monetha has defined itself as a payment gateway. Payment gateways by their very nature support multiple currency types to be a one-stop shop for merchants. Is Monetha planning to offer more currency types than just solely Ether and if you are how is this going to impact the speed with which you process a transaction?
Today in your whitepaper you claim that you are going to be 10,000 times faster than a legacy network and I can see how that would work when you are purely inside the Ethereum ecosystem transferring Ether but if you start to add on more cryptocurrencies outside the Ethereum ecosystem you are going to have a problem surely on how fast you are processing a payment.
J: Yes. Most likely, the first step is integrating more Ethereum-based cryptocurrencies, the ERC20 tokens, and that would come at the second product milestone. But when we are talking about the adoption of cryptocurrencies and payments in general, we do want to move to fiat-to-fiat payments world, partner up with payment service providers and accepting fiat currencies.
This is something that we are working on right now and that’s going to be rolled out most likely in the middle of 2018. So, the first product milestone, on 31st March, is still going to be only Ether but later we are adding ERC20 tokens and fiat currencies.
CV: The question probably a lot of your investors are curious about – your funding pot. I see a lot of stuff going on since your ICO but I am not hearing anything about product or build. How have you been spending your funding pot since your ICO?
J: We’re definitely not buying Lamborghini’s as other Ether idea were. No. The main part of funding is being spent on building a software development team. The top notch developers - we have to compete for them with companies like Amazon, to hire them. And this is where the main focus goes in, both the product owners.
We’re really looking into Amsterdam as it has great people there, when it comes to software development engineers. We are staying in the Central and Eastern Europe, as it is really well known for its developers, especially money-per-value – it’s amazing. It’s not about being expensive, it’s about people who want to be challenged, people who are looking into innovation of software development. That’s why a lot of blockchain developers are based in countries like Lithuania, Belarus, Latvia, Estonia, and Ukraine. And this is where our main funding goes in.
On the other hand, we do want to create brand awareness and product anticipation before the first launch, that’s why we are going to a lot of conferences, speaking at conferences, taking the time to speak to audiences, as yours, in podcasts, giving interviews.
I would say two parts: main part, of course, is the product building, the way we are kind of silent, I wouldn’t call it silent because we are speaking and promoting and talking about how our product is going to look like. We are not going into details because it’s not a lot of time, people don’t have to wait a lot of time. People only have to wait only three more months to figure out, to know how our product would look like. If we reveal any kind of code and functionality of the product... We do not want to do that for the purposes of not giving too much to our competitors.
CV: Hiring. Monetha says it wants to hire the best seasoned execs to help it scale but you also said this is costly. You’ve raised $37 million. All other tech startups, outside crypto, normally have to hire this types of execs on a budget of just a million, that’s typical of ECC ground, so I’m curious, do you feel you don’t have enough funding to make these types of hires? Why do you think this is expensive given the size of your ICO pot?
J: I don’t really know how to answer the question. Seasoned executives, people who are a top level – they are expensive by default. It doesn’t matter if you have $37 million; if you have $100 million, or $200 million whatever that might be. They are expensive as a default.
It doesn’t mean that they are expensive for us. We are definitely looking to hire top executives including chief product officer, including a CEO that might have done things in payments, in marketplaces but that comes at a price. It doesn’t mean that we won’t hire them and expensive is just a statement, it is not expensive to us, it is expensive to everyone.
When it comes to that, we really want to stress out how important that is and we will hire these people. It’s just a little bit too early at the moment. It is emotion but it is a little too early since the main focus is developing and releasing the product and there is more of an organizational building.
Now as we have the team, for example Laurynas who is product lead at the moment, he knows product inside out and we don’t feel that we need to substitute him for somebody else. He works closely with our CTO and development team and that would come in as we will establish what is the main driving force driving Monetha for the merchants.
And when it comes to these people, the hiring process takes a lot of time because those people are never free agents. Those people are working at major companies and you do have to, I wouldn’t call it “steal” from, but attract them not only with a high salary but with a challenging product, a very energetic team and different points which make the project attractive.
CV: Finally, Justas, I’d like to know what has been your biggest lesson learned, your biggest learning curve since your ICO?
J: I would say that community is as important after the ICO as it was before. That’s why we are really not closing communication, especially Telegram has been something that was and it’s still very active - people who are excited, people who are talking about and anticipating the product.
That’s not only online but also offline, so when we are travelling to these conferences, blockchain conferences and fintech conferences, for example. In the past three months we have travelled to London, Tokyo, Dubai, Abu Dhabi – it is hard to recall right now every city that we visited.
People are approaching us and we are doing not only conferences but our own meet-ups where people show up - people who invested in Monetha - and not only online but offline kind of caring community support happening.
We are taking the time, we are speaking to them, we are letting them know what is happening with Monetha. So community is a driving force, I think, for every ICO because the token holders - we have over 8,000 token holders - are the people who vouch for your product. So every city that we visited in the world, we do need our token holders, and even when you are walking on the street, people are saying “Hey Justas, how are you?”, it’s amazing, and it would really help drive the product to the option later on.
CV: Justas, thank you very much for joining Cryptovest today to do a PICO, a post-ICO review with us, and good luck to Monetha. Thank you.
J: Perfect, perfect.