"Unfortunately, we've decided not to fund SwiftDemand. We were really impressed with the number of participants you have on the platform and the fact that people are doing transactions. However we struggled to convince ourselves that there was an underlying big business here. If this is going to be something that is economically meaningful to people to allow them to live on it, then it would be hard to for this to also be a billion dollar company and would probably be better suited to a non-profit."
The email shows two big misunderstandings in how SwiftDemand works. It's on me for not temporarily taking control of the interview once I realized the lens they were viewing SwiftDemand through.
Ouch. I started to write a reply to this but it ended up being more appropriate as a blog post as it cascaded a bunch of thoughts and feelings. https://www.ryanmercer.com/ryansthoughts/2018/10/30/an-open-...
Well, since an HN comment isn't under the pressure of a 10-minute speed date and you can take control of your own narrative right here in this forum... Can you gather your thoughts and explain in 1 or 2 concise sentences how SwiftDemand works?
Your concise sentences should basically answer:
+ What's the revenue model? Is it memberships/subscriptions or ad revenue? Why would the buyers (consumers or businesses) pay money into the SwiftDemand ecosystem?
+ how SwiftDemands YC's $150k seed investment at 7% equity turns into ~$50 million. (Those example numbers assume YC's 7% being diluted twice down to ~4% with subsequent investments, and a ~$1+ billion dollar exit valuation.)
Your webpage mentioning "everyone gets 100 Swifts a day" and "3% fee" doesn't really explain the commercial _value_ of the UBI blockchain. This would also explain the motivation of _why_ people would pay non-Swifts currency like $USD to convert it into Swifts UBI blockchain.
Your other comment summarizing it to "to become a global currency that focuses on social economic good in the form of UBI" doesn't really connect the dots of how YC gets a ~$50 million return on their investment.
A little more info on the revenue model:
There are 2 main streams of revenue, the first comes from transactions on the platform in which SwiftDemand receives a fee similar similar to that of Amazon. The second is that SwiftDemand receives Swifts for each identity that it manages (payed by the protocol itself). If we continue our growth we think it's more than possible to get 100 million users on the platform receiving $1-$10 per day generating around $0.10 to $1 a day in revenue per user that would put yearly revenue in the 10's of billions.
More details and justifications:
The first thing that needs to be understood is that there are essentially two separate pieces. There is the underlying Swift Protocol and then SwiftDemand itself. The Protocol is essentially a decentralized government with 3 components, Swift Citizens (regular people), Delegated Nodes (elected officials that have voting power and can forge new blocks), and Identity Providers (companies that can approve Swift Citizens and are responsible for preventing people from creating fake accounts). SwiftDemand is an Identity Provider that sits on top of the Swift Protocol.
SwiftDemand is incentivized to bring more people onto the platform since Identity Providers receive Swifts for each Swift Citizen that they actively manage. Identity Providers are also kept in check by the Delegated Nodes as they have the ability to remove Identity Providers that act poorly. If an Identity Provider did not have the motivation of profit, people would be less likely to create competing providers fostering less competition which would lead to a weaker ecosystem. We believe having a capitalistic system that is kept in check by the decentralized government is the optimal strategy to make the Swift Protocol successful.
To the numbers. We already have nearly 500,000 registered users with Swifts currently being value at somewhere around $0.001 to $0.005 based on transactions in the marketplace. User growth should remain relatively easy as our pitch to consumers is simply "sign up and receive free money" and we have achieved our entire userbase without any paid marketing. The trickier part is growing the economy part to the point where the value of Swifts can increase to $0.01 to $0.1 per Swift. We already have over 5,000 submitted products on the marketplace (mostly people that believe in SwiftDemand selling personal services), however our intention is to partner with bigger companies that can utilize our userbase essentially to give out promotional offers and consequently transition that into a larger economy over time. Based on our early adoption these numbers aren't unreasonable and should be more than achievable making SwiftDemand a strong investment opportunity.
To answer your other question:
- Why would people pay non-Swifts to buy Swifts?
Unlike most other currencies we're not really focused on getting people to trade between Swifts and non-Swifts. Our goal is to create a new currency with a fair distribution model. Our vision is to have people collect their Swifts, use their Swifts to buy goods and services that interest them, allow people to sell goods and services to receive more Swifts, and essentially create an entire economy without any need to convert their Swifts to non-Swifts or vice versa.
I'm curious if you have any suggestions on a better way to pitch the business opportunity to investors (YC and other). The consumer pitch is relatively straightforward as the value proposition is clear, but I do think I struggle on the investor side.
To me, your text focuses too much on the Swift currency side instead of the $USD side. For investors, the $USD is more important since that's the currency they get their investment multiple from. Even if your end users are adding products&services "in kind" (instead of paying $USD) to transact in Swifts, you still have to concisely explain how $USD gets into the business. You must have a clear explanation of non-Swift revenue.
Because you emphasized the Swifts instead of $USD, this leads to paragraphs that has a circular feel to it (we get paid in Swifts from Swift transactions) -- like this one:
>There are 2 main streams of revenue, the first comes from transactions on the platform in which SwiftDemand receives a fee similar similar to that of Amazon. The second is that SwiftDemand receives Swifts for each identity that it manages (payed by the protocol itself). If we continue our growth we think it's more than possible to get 100 million users on the platform receiving $1-$10 per day
That paragraph explains getting Swifts from other Swifts transactions (circular) -- and then suddenly it switches to them being worth $10. If a user is selling "20 HD wallpapers" for 500 Swifts, that doesn't explain how an investor gets a percentage of multiple transactions that are "worth $10" with a Swift-to-$USD exchange rate.
Let me give another example so you see the confusion in that type of writing:
You want YC investment of $150k $USD. Using your lower estimate exchange rate of of $0.001-to-Swift, you basically just need 150 million Swifts. Therefore, you could create a new identity account called "ycombinatorswiftinvestor" and give it 150,000,000 Swifts. It's your system and therefore, you just create 150 million Swifts out of thin air like a central bank. Your funding problem is now solved.
Obviously, that currency-swapping explanation would be unsatisfactory to you. You need the $150k of $USD more than 150 million Swifts! Likewise, your investors also need to understand the $USD cash flow more than the Swift transactions!
Further down in your comment is where I think you get closer to explaining the potential commercial value that attracts $USD:
>, however our intention is to partner with bigger companies that can utilize our userbase essentially to give out promotional offers
Is the idea to charge companies for "promotional offers"? (Like advertising?) Is that where the bulk of $USD revenue comes from? If so, you need to make it prominent and clear. (Instead of the revenue mechanism being buried way down in the comment after explaining technical things like SwiftDemand being the Identity-provider while Swift is the protocol, etc.)
Again, let's work backwards from a $1 billion exit valuation. Using a ~10x multiple of annual revenue as one possible valuation model, that's $100 million a year. If you're charging companies like Proctor & Gamble, Coca Cola, Toyota, etc to expose your users to their promotional offers, you have to present a convincing financial story that shows why those companies would pay that. You need to explain why they'd find your audience (userbase that want UBI) to be valuable to them.
Yes, I can see that you envision Swift to be its own large financial ecosystem without dependence on $USD. (As a semi precedence, Bitcoin itself started out being worth $0 -- and then somebody seeded it with real economic value by trading 2 pizzas for it in 2010 -- which then lead to $19k-per-bitcoin in 2017.) Swift could theoretically experience a similar virtuous cycle of people adding more and more goods & services to Swift. But that growth is irrelevant unless one of the services _inside_ of Swift ecosystem is a bank that converts Swift-to-$USD. (Because YC and VCs take their returns in $USD.) Therefore, the $USD that comes from outside Swift via promo fees takes precedence and must be convincingly projected as $100+ million in revenue.
As a side note: your Swifts protocol+marketplace to provide UBI is well-meaning but it also has some economics flaws (e.g. disincentives for value creators). I don't see them being addressed in your FAQ. My comment is long so I won't go into details but I suggest you discuss your UBI digital currency with people who like to study game theory of incentives and behaviors interacting with freemarket price levels (goods priced in Swifts) and an expanding money supply (everyone receives 100 new Swifts every day).
 got the Swifts marketplace link from your Medium post instead of your landing page: https://www.swiftdemand.com/store