BeeToken ICO Needs to Answer 6 Questions Before it Gets My Money
BeeToken ICO has a lot of tech talent on its team, but there are a few questions I feel they need to answer.
Beetoken is a startup aiming to create a peer-to-peer blockchain ‘rentals’ marketplace to disrupt Airbnb by bundling simplified Ethereum protocols into a dApp. It’s been given good ratings by ICO reviewers, but upon closer review of its white paper, we’ve come to think that the team has left some questions around its product proposition unanswered.
1. Where’s the Beenest?
Why has the Beetoken team not used the white paper to fully lay out what the front-end product and the marketplace will do? There isn’t even a mention of Beenest as a front-end in this paper, which seems like a major oversight. It appears to be focusing entirely on the back-end, ignoring the front-end - not a good sign for such a user-centric platform.
2. Are you out of your Airbnb mind?
The white paper very briefly touches on third parties like Airbnb integrating into Bee’s protocols. Why would Airbnb want to share data on its users with a direct competitor like Beenest by integrating into its protocols? Does Bee seriously think it’s a case of ‘’you can be part of the problem or part of the solution’’?
3. Why does your arbitration create more problems than it solves?
Bee states in its white paper that arbitration is one of the cornerstones of its solution. It says hosts and guests can go into arbitration by paying a fee (bee tokens) to incentivize the community to ‘arbitrate them’. This is where it starts going wrong:
- Hosts know going into arbitration hurts their score, making them less attractive for guests and thus reducing their income. So hosts won’t be willing to do this.
- Guests will wonder why they are being asked to pay for arbitration when they didn’t want to pay for the rental in the first place.
- The community won’t assume the risk of being arbitrators because you can get penalised if either party is unhappy with the decision and requests an appeal.
- Both the host and the guest could get stuck in arbitration because the speed with which you get ‘arbitrated’ depends on how many tokens both parties are willing to throw at it. How is throwing lots of tokens viable for low-value rentals like single nights?
4. Does this really offer Airbnb renters a better deal?
Bee challenges Airbnb’s business model in the white paper by saying its commission is 0%. But look more closely and you find that hosts will have to withdraw in fiat, which is going to cost them 3.99%. Then there is the potential expense of getting caught up in arbitration and possibly appeals.
On a $35 Airbnb rental, the host pays Airbnb 20%, which comes at $7. So, the host walks away with $28 in their pocket. On Bee, this person needs to deduct about 4% from the $35. That’s $1.40, which leaves the host with $33.60.
So, a host using Bee gets a cost saving of $1.40 (keeping the token to fiat exchange fee in mind) on a $35 rental. How much of that extra profit is the host going to offer to the guest by way of a reduced fee? Perhaps 50 cents?
Thus you have a scenario where an online user can choose to book with Airbnb for 50 cents more or go with Bee for 50 cents less and risk getting caught up in Bee’s heavy arbitration process. What would you choose?
This example is useful to consider from the host’s point of view. Would you choose Airbnb for 50 cents less in profit or Bee for 50 cents more but risk being caught up in their arbitration process? The latter could end up costing you a lot more than the 90 cents in additional profit you just made by picking Bee.
5. Why does your deposit scheme only benefit high-value renters?
Bee says the higher your score, the more of the deposit amount you pay is reduced. In some cases, your score could be so high that you pay no deposit.
Deposits on Airbnb are optional and most budget rentals don’t require it. It’s the high-end rentals that normally insist on deposits.
So, is this really a kickback benefit for budget renters, not being charged on Airbnb in the first place? As for high-end renters, they can typically afford to pay a deposit, and the large amount they lay down forces them to be good guests.
To sum up, although Bee’s score-linked-to-deposits scheme looks good on the surface, in reality, it’s like offering users free air.
6. Is the CEO lacking the commercial experience to properly scale this?
Bee’s CEO has a very respectable, solid engineering background. However, his LinkedIn profile shows no previous product or commercial roles. This means he’s never scoped out what works commercially with a product, nor sweated for hours over user stats. More importantly for a CEO, he’s never had to set up a scaling strategy and work out how to convert and retain users. He’s never had to craft a market entry or think about pivoting his business model.
It seems risky to install such a hardcore engineer in a key commercially strategic role. This might explain why the white paper makes no mention of the front-end product, the marketplace. It could also explain the current weaknesses in the business model.
Once again, my intention here is not to bring the project down, but is to share legitimate questions that I feel the project should answer.