After serving as CEO of a successful software company for over 20 years, Ted has recently raised $5 million via token sales to create a user-generated content network where the members rule and are rewarded.
Davis Baer: What’s your background, and what are you working on?
I started Social Strata over 20 years ago when I created a message board application called the Ultimate Bulletin Board (“UBB”). It was the most popular way for sites in the mid to late 1990s to build communities. We transitioned from a downloadable software product to a SaaS solution over the years and our current community platform is called Hoop.la. Social Strata is unusual in that we bootstrapped from Day One and have never taken any outside investments. Our customers include Walgreens/Boots, Pinterest, and Dun & Bradstreet.
My other company, Narrative, which I will focus on for this article, was launched this year. Whereas Social Strata is a B2B SaaS company, Narrative is focused on building a consumer brand. With our many years building platforms for user-generated content, we wanted to create the ideal content engine, one that could be completely managed by the people using it.
We’ve had front row seats to the changing way online content and communities function over the past two decades and have worked with literally thousands of companies. With Narrative, our goal is to focus 100% on the people consuming, creating, and curating content, to design a network where the members have complete autonomy, where all actions are transparent, and where the revenue generated by the network is given to the members as much as possible.
We also fell in love with cryptocurrency and blockchain as agents of change — great equalizers that perfectly fit with our goal of democratizing content. And thus, we created our own cryptocurrency called NRVE (“nerve”) that will serve as the currency of Narrative.
We bootstrapped the initial alpha release of Narrative, but last March we raised approximately $5 million via a token sale, and that has helped us to continue the development of the project. The Alpha only supports one component of Narrative, but a more complete beta is coming very soon.
What motivated you to get started with your company?
For my first company, Social Strata, the primary motivation was to improve the way people communicated online. Back in 1996, I was fascinated by the fact that I could talk on bulletin-board systems with people across the world, but the technology was very clunky. The UBB software I created made it much easier to have online conversations and also made it easy for any site to add that functionality.
Narrative is the latest extension of that goal to improve communication online. This is a more ambitious project, however, because it is more about creating a true content economy. I think we all know now that online content and communities are important, but no one has yet devised a model that truly benefits the actual content community. We’ve seen top-down control over online content. My goal is to create a true meritocracy and prove that you can have a content network that is self-governed. I want content creators to be rewarded like never before, but also make sure that everyone involved is incentivized.
What went into building the initial product?
Because so many of us from Social Strata were involved with Narrative, the initial build process was amazingly quick. We’ve been developing enterprise-class applications for a long time so we can go from concept to reality faster than most teams.
We were also able to leverage a lot of the tech from our Hoop.la project to jump-start things. We actually created our initial alpha in about 6 weeks time, which is kind of incredible when you consider that the Alpha included an balloting system, auctions with eBay-style bidding, commenting, and appeals. The interface was rudimentary, but it all worked and has remained very stable throughout the alpha period (going on six months now).
How have you attracted users and grown your company?
We have a team of about 15 or so now. We’ve also been pleasantly surprised with the interest in the Alpha. After all, we are a content platform but in the Alpha you cannot actually create any content. 🙂
We have this concept called “niches” in Narrative. A niche is a unique subject that anyone can post to. It’s important that they are unique so that no two niches are alike. Each niche has an owner, who will profit from the niche, depending on the popularity of the content in the niche.
The Narrative Alpha is focused only on building out these unique subjects so that by the time we launch the beta users have a large number of niches to post to. And we’ve seen amazing interest in acquiring niches. Over 600 niches have been purchased so far and over 2.5% of our token currency has been spent by users acquiring niches. That’s over 1.2 million NRVE that have been spent. And the best part for our community is that all of the currency will be disbursed through our Network Rewards pool once the Beta goes live.
We’ve been focusing on social media to drive interest. There has been some paid promotion, but the majority of it has been viral. The nice thing about our model is that because our niche owners will earn revenue, they are incentivized to help get the word out about Narrative in general.
The more you can turn your customers/members into advocates for your service, the better, of course.
We’ve been thrilled with the response so far and we think it bodes well for when the complete platform is available.
What’s your business model, and how have you grown your revenue?
For Narrative, the business model is truly unique and would not have been possible prior to the advent of cryptocurrency.
For our model, all incoming revenue goes into a giant pot that we call Network Rewards. Then, each month, we take the proceeds from that pot and divvy it out to our members, based on the positive contributions they make. 85% goes to the members and the remaining 15% goes to our company. Thus, we can never earn more than 15% of the total revenue generated by the network. This does a couple of things:
- It aligns our interests with our members. We all profit as the network succeeds and our members are incentivized even more than we are to make sure it does.
- It forces us (the company) to spend thoughtfully and to live within our means. We cannot milk all of the revenue from the service and that expense of our members.
The thinking behind this from a corporate standpoint is something I call Evergreen Capitalism.
Crypto helped solve our biggest problem. As an infant social network, we know it will take some time to build a proper audience. So, how can we support the ecosystem properly in the early years, before we have the market share to bring in substantial revenue? The answer was to have a large amount of our NRVE cryptocurrency minted after we launched, and have it minted directly into our Network Rewards pool. That way, as the NRVE tokens increase in usage, the rewards pool will have a growing value, even in the early days.
With our Network Rewards model, we reward the content creators (they earn the most — 60%), niche owners, niche moderators, the elected Tribunal, voters, and all members who earn activity points. A Narrative member may have many roles in the network and can be compensated for all of them.
As long as you are contributing, you can be rewarded. Contrast this with most social networks, where a giant middleman makes all of the rules, takes all of the profits, and ultimately exploits its users.
What are your goals for the future?
The immediate goal is to release our beta. When that happens, people can finally start posting and consuming content on our network. We are projecting a release before the end of the year.
After that, we will be rolling out more features for Narrative and ultimately adding support for more languages. (The initial version will be English-only.)
Each language we add will be a separate instance of Narrative, each with its own unique content, niches, members, etc.
Our 2-year goal after the launch of the beta is to have 500,000 members. If we are successful, we also expect to be a Top-10 cryptocurrency one day. (Our goal is to be the first currency anyone thinks of when they think of content.)
What are the biggest challenges you’ve faced and obstacles you’ve overcome? If you had to start over, what would you do differently?
The biggest challenge for Narrative has been the cryptocurrency market volatility in 2018. The market has been down for most of the year, which has made it much more challenging for us to budget and plan for the future. Keep in mind that the money we raised in our token sale in March was cryptocurrency, so having to manage those funds has been much more difficult than we ever could have imagined.
The other challenge we have had is marketing a project that does not exist yet. Narrative’s model is so revolutionary that we want to spread the word well before launch, but when users can only see one component of the system, it can be challenging to get them to see the big picture. We’ve focused on social media marketing, identifying users who will most likely benefit the most or those who might be disgruntled with current services.
Have you found anything particularly helpful or advantageous?
I think we got a little lucky with the timing our token sale. We managed to raise $5 million, but if we had waited even another month, we might not have been successful at all, due to general crypto market troubles. A pessimist might also say that had we held our token sale a few months earlier, we might have raised much more. 🙂
We’re located in Charleston, South Carolina, not exactly known as technology hub, but we’ve actually seen it as a big advantage in many ways. It’s a lot easier to network in a smaller city, to find good people and contacts. And we’ve been pleasantly surprised by the quality of talent in Charleston.
Another helpful thing, however, was having Brian Lenz, our CTO from Social Strata, move out to Charleston to join us on this endeavor. He wears two hats now, like I do, with roles in both companies, but his commitment to Narrative has been instrumental in bringing the project to life. Having a team you can trust is critical to success.
Finally, having my wife, Rosemary, so involved in the project has been critical. She serves as co-CEO for Narrative and she’s a much better leader than I am. A lot of people think it is crazy to work with your spouse, but it works well for us. Having achievements we can both relish in, and completely understand, is kind of cool.
What’s your advice for entrepreneurs who are just starting out?
Make sure that you absolutely love what you do, or what you are trying to accomplish, because it’s a huge challenge launching a business. If you do not have unshakeable belief in your project, don’t bother.
Assuming you have the passion for it, the my advice is:
- Be very conservative with how you spend your money (even if you get VC money)
- Hire only the very best people and, if you make a mistake, let them go quickly
- Be involved in all aspects, but let your key hires take the lead on their areas of expertise
- Figure out very early what your key metrics of success are and execute on those relentlessly
- Don’t let the naysayers bring you down, but listen to your most trusted advisors
- Focus on doing what’s best for your customers
I’ve been a CEO for over 20 years now and I’ve had my share of ups and downs along the way. Ultimately, being a leader, and especially a CEO, can be a very lonely experience, if you let it be. No one is going to pat you on the back, no matter what you do. No one cares how much stress you are under. But on the flip side you will change lives for the better if you succeed and there is nothing more satisfying that seeing your vision brought to life.
And finally, try to make time for yourself and your family. It can be especially challenging in the early days, but as you build your team, carve out that time.
Where can we go to learn more?
To learn more about Narrative, please visit our website at https://www.narrative.org. You can get on the waiting list for the alpha… and remember that the alpha is not too far away now. You can also stay up-to-date on our blog at https://blog.narrative.network or via Twitter at https://twitter.com/narrative_hq