Video Of The Week: What Is Kin?
Our portfolio Kik announced last week that they plan to decentralize their messenger app and monetize via a cryptocurrency called Kin. Here’s a video they put together explaining how it will work and why it is important:
the more i think about this the more it seems like a block wall is being built around the original equity business. have you sent this same strategy memo out to all of your portfolio companies?
Let’s talk for a second about the excitement brought on by giving rewards to the developers. What are the actual rewards in dollar terms (a best guesstimate) of the amount of money that would accrue to a developer for their time and involvement? I think it’s a fairly well known principle that people will often do more at no charge than doing the same thing for nominal charge.  An example might be a $800 an hour lawyer doing pro bono work vs. turning down the same work if only paid $100 per hour. Or helping someone move for Pizza or for nothing vs. being paid $5 per hour. Point being that attaching a low or nominal money reward is often worse than having no reward at all. Because having a low reward frames what you are doing in a way that makes you feel that perhaps it’s a waste of time and that you are a schmuck.. Are these rewards bug bounty size? What exactly is the beef?Concept wise it’s a great idea. Just last night my stepson needed a credit card to buy something on Steam ($10 cost). In other words ‘better than nothing’ is often worse than nothing.
Confirming this based on my (mostly negative) experience with a revenue sharing program I designed and run on a social media site for over 4-5 years. We tried all sorts of distribution models… extremely difficult.
it might end up not being dollar-centric. for instance let’s say i have some kin, and you are on the platform selling marketing services (i.e. you will sned a message to your friends promoting something), perhaps you agree to accept 5 kin for performing this marketing service. you accept this because you believe someone else will accept 5 kin for doing something you want.this might be hard to believe, but that is essentially what is happening with the US dollar. we all believe in it and the nation (and its military) that back it. is the kik community strong enough to engender the belief needed in such a currency? we’ll find out…..though i’m delighted that at least the currency is coming AFTER the community, and not before it, like in all the other crypto stuff.
That’s actually interesting. In other words maybe it’s also like upvotes. They have little value (other than perceived social currency in a brain party) nominal ways to monetize  but you still care because they can ‘git you something’.In your example you are saying to detach the actual cash value of the kin from cash. Think of it more like a better ‘upvote’ actually useful for a ‘free entree’ . So it’s more like a barter system as well. I will send you 5 kin if you promote me and then you have to find some other non-cash way to spend the 5kin.  Could argue that upvotes can turn into money (know this happens on hacker news as only one example). Maybe on a site called ‘5kinner.com’ (get it? fiverr..)
If you are willing to accept Kin for work or goods, then how is it different from USD? All cash is is a trusted abstraction for stored value, and as long as we agree what the value is, Kin is cash. In the short term, these made up currencies are less liquid than dollars or euros, but that is the only difference as they gain more trust in their value and continue to increase the number of users willing to accept them as payment.
I am thinking that there is an entire age group of people that might/will.For example when I was growing up all rewards took the form of cash. Other than kind words or approval I will add. With my stepkids (and probably my kids although I don’t remember they are older now) they had no issue getting paid in marbles.Even better I have noticed that they will do things just for points or to be ‘the winner’.  And even further even when I tie a reward to money they often literally forget to collect the money reward. And they leave gift cards around there room as if they have no value. When I was growing up my Dad used to say ‘let’s see who can finish first’. My cousin would work very hard to be the first. I would think ‘what’s the reward who cares if no reward?’.
No good salesman will work for points. They want to win, obviously, but they keep score with cash. That may be the ultimate test of success for these new currencies — will salespeople accept them as payment,,,,
I agree (re: ‘good salesman’). Will point out though that for the number of mediocre salesman out there a pink cadillac will often do the trick:http://www.pinktruth.com/20…So remember when talking about the masses (and not the top performers who have a clue) there is a different standard.
But most companies know who their good salesmen are. Maybe a way to try this out is to offer bitcoin (or kin) as a bonus incentive when you’ve exceeded quota by 20%. These are also people who are drawn to gambling/risk, and are more motivated by the potential upside of a volatile reward, than have any sense of loss aversion.I think I’m convincing myself that getting salespeople to accept this as payment is the acid test of when it becomes a currency. I know lots who would work twice as hard to make that bitcoin bonus.
footnotes.com was recently for sale on Flippa.. not sure if it sold.
Hey kid – I’m curious what your thoughts on on the value transfer to early adopters based simply on demand going on? That transfer of buying power to me is unfair and unreasonable, e.g. $100 becoming worth $73MM – https://www.rt.com/business…
Is it any different than buying $1000 worth of MSFT at IPO (now worth almost $1M)?
Yes, absolutely – cryptocurrencies are *not* a stock on the stock market. Fred made that analogy, it doesn’t match. Cryptocurrencies are trying to be on the same playing field as currencies globally – very different. What all the implications are I’m not sure.
That isn’t what matters. If I am an early employee, or early consultant, or early service provider, I may agree to take a lower check in return for stock or options that may or may not have real value — 100% theoretical currency. I’m betting on the company succeeding, at least through to a liquidity event, and the stock appreciating more than cash. If I was Bill Gates’ admin, and had 100 shares on the day of the IPO, that’s worth 20M today. Similarly, if I bought 100 shares for 21/share on IPO day and sat on them, that would be $20M now — that’s not “earned money”, except that I risked a little bit 30 years ago. Why is that return fair and reasonable if you don’t think the currency return is also?Early adopters of a currency are making the same bet, just riskier/more speculative. Could easily go to zero and your early money is gone. Or, $100 could be $73M. This happens in forex markets quite a lot, especially if you trade on margin. You’re betting on Brexit generating enough of a movement that you can make millions by buying a contract for anything but pounds sterling using pounds before the event. The capital gains that accrue for taking big speculative bets based on what you believe is going to happen can be enormous, and seem highly unfair if you aren’t the person providing the capital for the bet. Why is one good and the other bad? I actually find arbitrage a lot more distasteful way to make money than profiting by being an early backer of a new currency.The only thing I take issue with is Kik keeping so much of this quasi currency for themselves — they should not have a vested interest in what happens to the currency based on their management decisions. It’s a big conflict of interest.
eventually the coin issuers will realize that attracting creating the most robust economy that draws people in will involve using the currency to reward all stakeholders in the ecosystem, through things like giveaways and other such welfare/stimulus policies. when done properly this will diffuse the economic gains realized through a new currency through the entire ecosystem.
What exactly is the beef is the question to ask. To me, the tech and the jargon are over-shadowing the actual use cases and the flow of $, and limiting understanding and debate on why someone would do this and how they would eventually make money from it.It sounds cool, but also feels like something is missing. I feel like Miss Clavel in a famous poem “Madeline,” by Ludwig Bemelmans, 1939.In the middle of one nightMiss Clavel turned on the lightAnd said, “Something is not right!”Or maybe I am just too dumb to understand this right away.
Or maybe I am just too dumb to understand this right away.When reading a blog post we never have the full picture of the product or most importantly the future plans or direction. Part of the issue with many of these ideas is they are fully fleshed out in the head of the inventor who typically doesn’t have the ability to present the idea in simple terms that anyone (with limited knowledge or interest) can understand.I am curious what testing is done with normals prior to ideas like this being presented. (Both the video and any writeup should be reviewed by people that are ‘just to dumb to understand’. That is what I did way back when designing mailing pieces..)
Or it could be just that something is not being explained simply and plainly enough because the creators are too much in their own bubble to see how people might engage or use the thing and what that might mean for its intrinsic value or the lack thereof.
This is a big bold move. Its key aspect is to change the playing field away from the advertising-based model.As I said to Ted in our interview, this is Kik’s weapon against Facebook who can’t copy this move, or it would blow up their business model.
Agreed. Blockchain belongs to the underdogs that have more to gain with a new business model than to lose by risking their existing business model. Hopefully we see more platforms in this size range waking up to this reality.BTW, great Token Summit this week!
Agreed & Thanks.!
Kik’s weapon against Facebook who can’t copy this move, or it would blow up their business modelHow so? Wouldn’t it be possible to do advertising as well as token rewards?  Loosely related: Years ago PBS had no advertising but it does now. Ditto for certain cable channels which are packaged but still contain advertising.
Facebook could copy this. With the current algorithm structure being used for cryptocurrencies, where the value of the coins goes up based on demand, if Facebook kept 90% of them and mined them all themselves – they could have the best chance of everyone adopting it, plus then keeping that treasure that early adopters are on a treasure hunt for; the whole $100 turns into $73MM buying power problem/unfair and unreasonable aspect of current structure – https://www.rt.com/business…Do we want Mark having another $xxx billion in value he’d control in cryptocurrency? I’m still looking for a chart that would show how much the value the early adopters gain depending on how early they got the coin, and how much buying power gets transferred to them simply out of demand. I don’t even know what you’d call this analysis?
That would cannibalize their ad dollars. Of course, in theory they could. But would they?
I agree it is very bold and i’ve been studying up since the announcement.Puzzled that this move by definition turns its back on the $B of corporate dollars that have no way to play on this platform to this audience.
I agree. We shall see how it unravels.
BAT is raising on the idea of an advertising token.
Several are. Yup, they were at the Token Summit.
Worth reading from Balaji Srinivasan and Naval Ravikant today – Thoughts on Tokens.https://medium.com/@balajis…
I did see it. Thanks 😉
Maybe you could help us understand how people who have Kin will actually make money and how the economics of this works? As exciting as it is, it feels very speculative.The reason the advertising model works is that there are real brand managers with $$$ who are spending for traffic and while not an exact science, they see some semblance of business results to want to continue to spend money on facebook and other social media.Apologize for the basic questions, but I have a hard time making sense of it, especially when we say Kin is not equity in Kik. Where is the real $$ coming from, how is it converting to Kin, and how is it converting back? If Kin is its own currency like the $, what drives its value? Holding Kin has value only if it eventually translates to the ability to buy goods and services in the real world.
They will do a token sale, so in essence raising money. Advertising interrupts users. The new way is to tie user actions to value they each create. Yes, you will be able to convert back to traditional currency.
yes, advt. interrupts and pollutes the experience. my point was that the parties involved were real who were buying attention inventory with real $, and measuring actual clicks and results without expecting any speculative appreciation.what might be the equivalent of an intrinsic value of a token. (Like a NPV or future cash flows for a stock?)This would have really made a lot more sense if the tokens represented some level of equity in the company. The equity in turn would be tied to cash flows or to valuation that depended on business activity in the network.By separating the concept of tokens (i understand the paid API key comparisons) and providing it a separate path to liquidity, I wonder if might end up driving speculative bubbles really not consistent with the underlying business.
I’m sure there would be a speculative disconnect initially, as there is with most other cryptocurrencies, but eventually these relationships will equalize.
I hate to be a skeptic, but this feels very speculative and unreal. When something does not have its own intrinsic value tied to real cash flows and instead traded only on hyped up demand for it relative to artificially constrained supply, it is a blinking fire alarm.I hope I am wrong. But this is nowhere near as definitive or deterministic as the experts make out.
I believe there is a neat way to tie the core resource for civilization (energy) and blockchain together. Some examples are out there, it could take off very rapidly.
if this works, then the foundation ted talks about at the end of the video is essentially like the new central bank, poised to grow and disrupt the federal reserve, bank of england, etc. exciting!
thoughts on Tilt’s demiss? https://www.fastcompany.com…
I can see how everyone tries to make new cryptocurrency and it`s a good move. But there are such an enormous ammount of them model of tying consumers together would hardly work