CoinList, which manages token sales, emerged from a collaboration between AngelList, an online network that brings together investors and startups, and software developer Protocol Labs. They initially joined forces to run the 2017 token sale for Protocol Labs’ FileCoin, a data-storage network and linked cryptocurrency then considered the largest ICO in history. Since then, the cryptocurrency market has slowed, and CoinList has moved beyond just managing ICOs to handling other aspects of token management and growth for businesses in the blockchain economy.
As part of a new series about how blockchain executives navigate growth and change, CoinList cofounder and president Andy Bromberg recently spoke with BREAKERMAG about how the company has weathered the crypto downturn and how it’s geared new services to what its customers need.
Tell me a bit about your background and how it’s shaped your work at CoinList.
There are probably two experiences worth noting. In 2012-2014, I was at Stanford, studying math and computer science, and along with a few others started the Stanford Bitcoin Group. I had a chance with the other members of the group to really dig in to what at that point was really just bitcoin. Then, the blockchain narrative started to emerge, and then the token narratives. The stage was a lot smaller back then, and I got a chance to spend time with a lot of people in the space. Watching it evolve over the past six or seven years has been tremendously valuable and informed a lot of what we’re doing.
After school, I started a company called SideWire, in the political media space. It was a platform for political experts to chat publicly about the news of the day. How those years have been really helpful in CoinList’s context is around some of the regulatory pieces and understanding how D.C. works—how all these agencies work together and how the legislation comes together, and knowing a lot of the players in that.
How did CoinList get started?
Protocol Labs was gearing up to run the token sale for Filecoin, which they were developing, and they looped in AngelList to help with some of the compliance and logistical parts of the process. They built this platform together to run the Filecoin token sale and, in the process, stepped back and realized every token issuer was going to need something similar. So, it made a lot of sense to spin out as an independent company. We left AngelList in the end of 2017. Since then, our mandate’s extended beyond that.
What kinds of help do clients typically need?
Really, the core piece of it is that running a sale is not, and should not be, a core competency for these companies. Really their focus should be on building communities, supporting their ecosystems and building the technical components of their products.
There’s a lot of work involved in running a sale: compliance, legal work, logistical work, investor support work, all the transaction processing and tracking. A lot of what we abstract away from them is all the logistics. Oftentimes they need help reaching investors, and we’ve built a community on our platform that we can alert to deals and give them a chance to get involved.
There is going to be more focus by issuers on running effective private sales, not launching publicly and trying to get tens of thousands of people involved.
We have what we call our full-sale service, which is kind of our marquee service. We do all the logistical support for the sale and then also help them get the deal out there publicly. For that, we’re very selective; we’ve actually only done five full sale deals in our history out of more than 2,500 issuers coming to us seeking our services. That’s not a bandwidth issue. That’s purely a kind of quality issue for us.
How have your services changed over time, especially after the recent downturn in the ICO market?
It’s driven us to expand and think more about other services we can offer to issuers beyond just sales services. One way we’ve been approaching that is thinking about how sales look different in 2019 and beyond than they did in 2018 and before.
One conclusion we’ve taken away is there is going to be more focus by issuers on running effective private sales, not launching publicly and trying to get tens of thousands of people involved. The times are always changing in crypto. We talk to token issuers, and they tell us, hey, we need help with something else, whether that’s distribution or building developer community.
What are some examples?
One, our Airdrops product, is about distribution. A lot of these issuers are coming to us saying they want to start distributing tokens to users. We decided to build a product to help them do airdrops. DFINITY gave away $35 million in tokens to tens of thousands of users. We think of it a lot like PayPal back in the early days, giving away $10 to every person using PayPal so they’d get a taste and hopefully return for more.
CoinList Build is our platform for launching hackathons with issuers. That came from a need we’re hearing from issuers. They say, “‘We need help building our developer community—how can we do that?” We came up with this online hackathon product where anyone can go and learn, read the documentation, get ideas, talk to mentors, get educated about the product and then go and build something. Our first one is with 0x [an open protocol running on Ethereum]. Anyone who enters can get $100 in 0x tokens, and their projects will be considered for tens of thousands of dollars in additional prizes.
You can imagine an issuer working with us for help with their private sale, and then getting help with their public sale, and then doing an airdrop to their users to get distribution and after that doing a hackathon to build their developer community. They could use all four of our services across different times of their lifecycle, maybe even over the course of a couple years.
How do you decide which products to build out?
Part of it’s a volume game—how many people are asking for which products? But it’s also a quality game. We’re going to focus disproportionately on products that high-quality issuers are asking for—issuers that we feel really good about and want to partner with publicly. There could certainly be products we look at where we say, this is interesting but we’re going to be bleeding money from it, so it doesn’t make sense for us to ship it.
What’s something you rejected that didn’t seem practical?
Early on, what is now our Token Sale Manager product, was purely a KYC, AML and accreditation checking product, and that’s all it did. That, on its own, I do not think is a commercially compelling product.It’s very much a race to the bottom in terms of pricing. There’s crypto companies that do it. There’s also non-crypto companies that offer those services. It’s just a commoditized service, and we’re seeing people realize that and having to compete just on price.
So we expanded that product significantly into our Token Sale Manager product which now offers a bunch of other services: analytics, document processing, help with payment processing. And that’s become a much more commercially compelling product.
What have you found works and doesn’t work when it comes to marketing?
How to market a token sale effectively is something we’ve been spending a lot of time on educating issuers on. It’s not always a core competency for these issuers right off the bat. They’re really focused on the technical infrastructure.
We have very high repeat investor rates. People that have invested in the token market already —and this is an unsurprising conclusion but helpful to see it backed up by data—are more likely to invest again. I think that new investors in the space—people who have not invested in crypto before—are way less likely to invest in a brand-new token as their first crypto investment. Marketing to people who have never touched crypto before is a very tough conversion.
We’re excited about partnerships with existing crypto communities and being able to tell our audiences about each other’s platforms and bring people in that way. It could be a newsletter exchange where we talk about them in our newsletter and they talk about us in theirs. It could be a business partnership. Even if you look at the 0x hackathon that we’re helping put on, we’ve been able to bring people to the 0x community from our community. They’ve certainly brought people to us as well.