Publishing our revenue

I’m always pretty intrigued in bootstrapped businesses that are building an honest and true business that have a right to exist (= profitable).

Lately a lot of businesses (including in blockchain) are fuelled by token sale or large VC investments. While these sources of funding do provide an initial boost, the reality is that some of them may struggle to maintain healthy unit economics. As a result, they often face the challenge of keeping a money-losing business afloat for as long as the funds allow, which can pose practical difficulties in the long run.

Doing it differently: the revenue dashboard

In 2013, Buffer decided to transparently share their revenue (monthly recurring revenue) in a bid to become more transparent as a business. Later on many more startups and scale-ups have followed their lead. Right now — I’ve chosen to follow the same path as well in order to give everyone a peak behind the curtains. Especially on building a business with a path to profitability on top of the Algorand blockchain.

Therefore, I just launched chaintrail.io/revenue. On this dashboard you can see our MMR (Monthly Recurring Revenue), the amount of memberships sold per month and a progress bar to reach (operational) profitability.

This way you can follow the chaintrail story at any given moment. See how we’re trending on the path to profitability and potentially over-performing on it.

Why the goal of ~4.7k ALGO MMR

It translates to roughly $500,- per month which is mostly spend on infrastructure costs, domains and some tiny marketing related budget. Currently we spend a little bit less than the MMR to be reached, so there’s a cushion for growth. Plus we don’t want constantly change the goal, while chaintrail is growing the coming months.

The reasons for this is that building a blockchain analytics & insights tool on top of Algorand, is quite heavy in operations. Right now I entirely focussed on building the smart engine that can be fed a block with transactions (and do this whenever I want). This results that we only keep a portion of the transactions (lets say last 60 days) in our database and work with aggregated history tables to cover the long-term. The rest is deleted afterwards.

As blockchain transactions are immutable, we don’t have to store it for long. We just need to process them, knowing that the transactional information can always be retrieved again later on. This results in a minimal infrastructure costs, but it still has its downsides. Half of my time is constantly spend in architecting and fixing performance issues in order to drive more volume through the platform or make the platform faster.

With the extra cushion, I can scale-up our infrastucture further, provide more real-time insights on actual transaction level rather than aggregated tables and start slowly going back in history (to cover early 2023, 2022 and 2021)

This obviously doesn’t count for any type of salary yet, so therefore any time spend would then still be funded out of my own pocket (I’m no robot and need to eat as well. Ramen as a minimum: http://www.paulgraham.com/ramenprofitable.html).

Strategic investments, token sale or xGov

I’m not against any of the three above, however it needs to be based on the right fundamentals. Getting a strategic investment without a platform (MVP) live is to me considered a no-go. This could happen in 2020/2021, but it’s 2023 and any type of business should show some sort of metrics / traction that what they’re building is worth expanding on. I’m not there yet (as you can see on our revenue dashboard), so it’s not the time.

Same for a token sale. Token sales are often used to fund blockchain related projects. But to me the same dynamics apply here as well. As long as there’s no traction on the product itself, the token sale will only distract rather than add value to the project at that time. A lot of retail investors might jump on it, hoping that it will go 10x or 20x. But for any founder, this shouldn’t be the goal. The goal should be to build a valuable product, with healthy unit economics (no matter how small) and real traction. And only then start considering crowdsourcing for funds. If you don’t have the money to at least fund the initial stage (MVP) of a business yourself, then it might not be the right time to start it either.

Same for xGov, but the threshold and value can be quite a bit lower than the previous two. Which makes it less impactful on one hand, but also more chunkable as it’s mostly milestone driven. It could be used to boost a small project for a bit longer, but eventually it’ll still go back to the fundamentals: healthy unit economics.

Ending notes

I’ll be planning to share more stories around the process of building an Algorand blockchain analytics & insights service. Hope you like to read these ‘under the hood’ thoughts from a builder on Algorand and hopefully the transparency inspires other on-chain projects to do the same.

— @NFNomad / @chain_trail