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Kik (the company behind the Kin ecosystem) recently launched their first beta app “Kinit” on the Google Play Store. The launch received polarizing feedback with both an out-pouring of positive reviews on the Play Store, but, some tough criticisms from both the community and reporters who failed to understand parts of Kik’s strategy.

A Quick Recap of the Main Criticism:

  1. From the Community: “They aren’t doing any marketing of this launch!
  2. From the Community: “Their future plans are only to market to developers!
  3. From TechCrunch’s John Biggs: “ By encouraging usage they drive up the token price and token velocity and by launching a general beta full of cutesy imagery and text they are able to avoid the hard questions about developer adoption until far into the future. While the KinIt app is probably not what most Kin holders wanted to see, it’s at least an interim solution while the team builds out sturdier systems.
  4. From CCN: “There isn’t any business model — how will this work?
  5. FUDsters and haters: “Kik hasn’t done much since the big ICO
Over the next series of posts, I’m going to address each of these points, explain why I believe they are fundamentally flawed, and address why I think Kin’s strategy is headed in the right direction.

They aren’t doing any marketing of this launch!

One of the main points that the community is making right now, is that Kik and the Kin Foundation are not currently doing anything to promote the Kinit app. Before we dive into the reasons that this is the right decision, it’s important to remember some background:
  • Kinit is a beta.
  • “Beta” in technology projects is very different than “beta” games which are normally just early access.
  • Kinit is limited to one country currently (the US).
  • Kinit is only available on Android during the beta.
  • Kin is still testing their new Kin blockchain (based on Stellar).
Given the above, there are two reasons why Kik should not be marketing Kinit to the general public right now. # 1 — Understanding the Chasm: Heavily marketing a beta launch, especially to the general public, is a horrible idea. Consumers fall into a number of different categories in terms of their willingness to adopt new products, and their ability to be forgiving about bugs and expectation gaps.
Image result for crossing the chasm
When a startup or new product launches into beta, they focus on a “minimum viable product” (MVP) which is essentially a first draft of their product with slimmed down feature sets. This MVP often acts as the beta for innovators and early adopters to help test, refine and give feedback upon. These users are part of an early market that exists outside of the mainstream. They are used to using early, incomplete, and complicated products, and will stick with the products even if there is a lot of friction or frustrating bugs. (Chances are, if you are reading this you are in the ‘Early Adopter’ category. Because crypto has not yet “Crossed the Chasm.”) After that early market group, you reach a point called “The Chasm.” This is the gap between early adopters and a mainstream market. “The Chasm” is tremendously challenging for products and startups to cross, and it often ends up being a fatal point in the growth trajectory of most startups. Beyond “The Chasm,” most consumers expect a complete, polished, easy to use and easy to understand product. These mainstream users don’t know anything about wallets or private keys and they’ll abandon any app that has simple bugs, including:
  • Frequent typos or grammar issues.
  • Poor layouts.
  • Auto-rotation glitches.
  • Issues with SMS/2FA.
  • Overlapping text.
  • Poor support on certain devices.
Not to mention that they’ll be far less forgiving on things like the amount of surveys, and amount of offers they want to be able to redeem on a recurring basis. Mainstream users are picky. Unlike early adopters (you) they don’t have emotional, ideological or financial connections to a product. They will look for any excuse to churn out and never use your product again. They also cost more to reach as you often have to educate them on the purpose of the product. #2 — The Leaky Bucket: In marketing, when we advertise to new users and try to get them to adopt a new product this is called our “marketing funnel” — the “marketing” that most people talk about is usually paid advertising that takes place at the “awareness” level of the funnel.
When looking at the effectiveness of a campaign, we take detailed measurements on a marketing funnel (I won’t get into these here, but if you are unfamiliar with funnel metrics I can highly recommend Andrew Chen’s post on “How to Create a Profitable Freemium Business.”) The most important factor to understand is that we pay out at the top of the funnel, but we profit from the bottom. Think of it like trying to fill a bucket at your tap. You are paying for the water coming out of your tap, but, you are only benefiting from the water that goes into the bucket. But, if you drop any water from the bucket, it goes down the drain and you can never put that specific drop back in your bucket. If your bucket has no leaks, then this isn’t a problem. But, your bucket does have leaks.
Related image
All product buckets do — but the goal is to minimize the leaks. Right now, when someone discovers Kinit the leaks are:
  • 100% of users who use iPhone.
  • 5% of users who use an Android device running versions older than 4.4.
  • 100% of users outside the US.
  • Users who are frustrated by bugs.
  • Users who can’t SMS verify.
  • Users who don’t feel there are enough surveys.
  • Users who don’t feel there are enough redemption rewards.
  • New landing pages which are still being optimized.
  • New onboarding flows which are still being optimized.
  • Lack of churn mitigation and reengagement from the app.
  • and many more.
Paid marketing funnels are tough for free apps, and so they need to have an air tight funnel. You may be thinking “Yeah, but, I hear of developers who get $0.50 — $2 cost per installs when marketing their apps so Kin should just go buy 1M users!” and while that is true, it doesn’t account for retained users and it isn’t viable at this scale. Paid marketing has a tremendous challenge wherein the larger the audience you try to reach, the less cost efficient it becomes. While getting 10,000 installs for $1 — $2 a piece is trivial, getting 1M installs using paid marketing channels is likely to cost more in the order of $7 — $12 per install at scale. (Math post to follow later in the series!) This matter is made worse by the fact that on average only 33% of users retain on apps after the first 30 days. This means Kin could be effectively paying $21-$36 per user (excluding gift cards) which would be a terrible strategy. $1M spent on partnering with established developers, apps that are growing and have higher CPAs due to freemium models, and partnership teams is going to go a lot further than 300,000 purchased users. The goal of Kinit is to act as a central wallet point within the Kin ecosystem, and so as the ecosystem grows users will naturally be on-boarded to the app. #3 — Kik is spending money on acquisition: Lastly, it’s important to realize that Kik IS spending money within their marketing funnel. They are just spending it in the “engagement” / “retention” part of the funnel rather than on awareness. The gift cards within the Kinit app are currently having their cost compensated by Kik. I’d hazard that the compensation is around the 75% mark. So even if we assume that a user only receives one $5 gift card during their entire beta, then that means Kik has spent $3.75 on making it easier for that user to earn the gift card and retain the user. Takeaways & TL;DR:
  • The app is a beta, and not ready for a picky mainstream audience.
  • Advertising to a mainstream audience before your product is ready for them makes it MUCH more costly to advertise to them in the future.
  • Spending money on awareness campaigns is wasteful until you iron out your conversion funnel.
  • Paid acquisition marketing (at the awareness stage of the funnel) is effective for small businesses. When trying to scale a company to tens of millions of users it loses efficiency and requires a much higher RoI margin that a free app like Kinit doesn’t have.
  • Kik IS spending money on marketing, by compensating the cost of user gift cards in Kinit. This is money spent at the engagement/retention phase of a marketing funnel, which is by far the most cost effective stage.

Curious what all the fuss is about? Check out the Kinit app where you can earn and spend the Kin cryptocurrency every day! [thrive_leads id=’3175′]
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Want to discuss this post? Check out the discussion on the NuFi forums!

One thing that we try to avoid at NuFi is wild and unfounded speculation. Instead, our wild speculation is mildly founded with rough interweb sleuthing. While most of the community has been on a fervorous hunt for bread-crumbs that they believe are evidence that Evan Spiegel (CEO of Snapchat) is the new board member, we here at NuFi decided to do some digging and come up with some other potential (long-shots) of who we’d really like it to be.

Here’s what we know:

  1. Ted mentioned that they’ve begun working with a new board member.
  2. Ted mentioned that the board member is an “independent.” (Not an employee of Kik.)
  3. Ted (et al.) have used gender neutral language when referring to this individual.
  4. The developer contest was decided upon with the help of an un-announced Kin executive. We believe it’s likely this is the same person.
  5. If Kin is hiding their identity it’s likely they are influential.
  6. If they are also working as an executive and a board member, it’s most likely someone who isn’t working at another company currently.

Here are some ideal candidates we picked out that we like, but, it’s probably not them:

#1 – Jan Koum

Who: Jan Koum is one of the co-founders of the popular chat app “WhatsApp” which sold to Facebook for $19B. Why it might be them: Jan is notably anti-Facebook and has apparently left Facebook in a “rest and vest” style. Leaving him open to other projects. Why it would be great if it IS them: Jan knows how to grow a kick-ass chat app. Why it probably isn’t them: He’s got a fair bit of money, and is likely still on non-competes from Facebook. It’s unclear what value Kin would offer him, and if he wants to deal with the chat space again.

#2 – Eric Ries

Who: Eric Ries is the founder of IMVU, The Long-Term Stock Exchange and the author of “The Lean Startup.” Why it might be them: IMVU is a Kin partner putting it on Eric’s radar and with projects like the LTSE, Eric has shown his commitment to disrupting economic oligarchies. Why it would be great if it IS them: Eric is a master of the concepts of lean and MVP. Having been a student in Steve Blanks’ entrepreneurship class he knows how to lead tight and effective product teams. Why it probably isn’t them: He’s already got two projects under his belt including the LTSE which he seems to be focused on full time.

#3 – Marissa Mayer

Who: Marissa Mayer is the former CEO of Yahoo, and former COO of Google. Why it might be them: Marissa Mayer left Yahoo during its sale last year to star a project called “Lumi Labs” focused on consumer facing products and working with startups. Lumi is Finnish for snow. In 2015, Ted Livingston registered a trademark for Snowball Labs, based out of the Kik building. The trademark was later abandoned in 2017. Coincidence? Yes, entirely! Why it would be great if it IS them: Marissa Mayer is a master of running a tight ship. Her operational knack helped Google grow to be the empire it is today, and helped turn around Yahoo. She has an eye for excellence and takes no prisoners on the journey there. Why it probably isn’t them: In her time at Yahoo, her salary was roughly $900,000/week, and her exit package from the Yahoo sale was another $260 million. Marissa can work on any project that takes her fancy, and to her a project like Kik is probably fairly small potatoes. #4 – Gagan Biyani Who: Gagan Biyani is the founder of Sprig, Co-Founder of Udemy, Former Head of Marketing for Lyft, and founder of the Growth Hackers Conference. Why it might be them: Gagan currently isn’t leading any projects, and seems to be focused on investing. He’s linked indirectly to Ted/Kik via a mutual investor (Justin Waldron of Zynga fame). Why it would be great if it IS them: Gagan would bring with him great connections to multiple startups, as well as some strong marketing and growth prowess which would help Kin grow to the next level. Why it probably isn’t them: When Gagan shut down Sprig in July of 2017, he updated his LinkedIn profile to note that he is taking time off to travel and learn. It’s unclear if he is ready to dive back into the professional world yet. #5 – Alexis Ohanian Who: Alexis Ohanian is the founder of Reddit and author of “Without Their Permission.” Why it might be them: Alexis was pro-cryptocurrency early on, and even explored a Reddit based cryptocurrency called “RedditNotes.” Recently, Reddit noted they are retiring the Gold program and replacing it with Reddit Coins. Why it would be great if it IS them: Reddit…. Why it probably isn’t them: Reddit…. – it’s a bit of a handful to run. He likely doesn’t have the time to think about other projects. #6 – Ev Williams: Who: Co-Founder of Twitter and Founder of Medium. Why it might be them: No longer active at Medium and exploring other projects. Why it would be great if it IS them: Ev brings strong experience in managing peer-to-peer social communities. Why it probably isn’t them: Ev as a knack for starting his own thing. He may not be interested in joining other people’s existing projects. #7 – Naval Ravikant: Who: Co-Founder of AngelList, Co-Founder of CoinList, Prolific investor. Why it might be them: He seems to have taken a step back from the day-to-day at AngelList and CoinList, and is probably the only person in the world that might be as deeply involved in crypto as Fred Wilson. Why it would be great if it IS them: He knows (and has invested in) most major startups in the last decade, Naval is the best way to open any door in the valley. Why it probably isn’t them: We believe the new board member is also a full-time exec at Kik. That doesn’t seem likely to be Naval as he tends to move quick and be involved in lots of projects at the same time. #8 – Matt Mullenweg: Who: Founder of Automattic (WordPress) Why it might be them: Matt’s long been interested in cryptocurrency and added crypto address listings to Gravatar early on. They’ve also been extensively interested in new ways to monetize hosted WordPress.com blogs as the team has had trouble launching a successful WordAds network. Why it would be great if it IS them: WordPress powers more than 30% of the internet, and is at the core of great content creation. Why it probably isn’t them: WordPress powers more than 30% of the internet, and it’s just one of the many products at Automattic, it’s a handful and it’s not clear that it’s something Matt is ready to step away from. #9 – Thomas Hartwig: Who: Founder of King.com Why it might be them: King.com is the undisputed leader in cross-platform games. But, the game monetization industry is getting hard and harder due to the walled-gardens of Apple, Facebook and Google. Kin is the perfect fit in solving this. Why it would be great if it IS them: Thomas Hartwig is lord of cross-platform games, with hundreds of millions of users world-wide using King.com built games, there may not be a greater adoption play. Why it probably isn’t them: Even though game monetization is a tough business, King.com is historically quite good at it and may not be yet feeling the pressure to change their tactics. #10 – Marco Arment: Who: Co-Founder of Tumblr, Instapaper and Overcast. Influential app developer and podcaster. Why it might be them: Marco hasn’t been active in a major project recently, but, he has a deep interest in content creation, mobile applications, monetization and content discovery. A number of his posts on marco.org seem to echo sentiments of Kin’s philosophy. Why it would be great if it IS them: Marco is influential in the developer space and could really help drive adoption among app developers. But, perhaps more importantly, Marco has deep relationships with a number of major content discovery platforms and understands the nuances of the publishing space. Why it probably isn’t them: Marco is quite self-sufficient living off of marco.org and his Overcast app. It seems he has really found his passion and is living the good live. Pretty hard to give that up. [adace-ad id=”2530″] #11 – Brian Wong: Who: Brian Wong is the Founder of Kiip, a rewards platform that works with major brands. Why it might be them: Canadian entrepreneur in the rewards space. Why it would be great if it IS them: Brian Wong is not only an incredible entrepreneur who knows how to move quickly, but, he also has deep connections to top marketing executives at major brands and millions of users to bring to the table. The fit would be mutually beneficial both for Kin and Kiip. Why it probably isn’t them: Unlike a number of other companies, Kiip isn’t hurting. In fact it’s thriving. It doesn’t really have any need to do anything different. While it may make a calculated risk to grow to the next level, it’s a bit of a harder sell. #12 – Led Rivingston: Who: Led Rivingston is the secret clone of Kik CEO Ted Livingston. Why it might be them: 2% secret sauce much? Why it would be great if it IS them: A powerful army of Ted Livingstons can descend on the blockchain world, being in all places at once and securing every partnership. Why it probably isn’t them: I can’t think of any good reason!

Who do we actually think it is?

While we don’t think it will be an entrepreneur who is quite at this level we think it’s important for us to not get too stuck on any single individual. The goal of this article was to show there are hundreds, if not thousands, of great candidates who even if they aren’t the most well known mega-successful entrepreneurs, they still have unique skill sets to bring to the table that can help take Kin to the next level.

Who didn’t make it on to this list but was on our radar?

Tobias Lute (Shopify) Tom Anderson (Myspace) Jeff Atwood (Stackoverflow, Discourse) Rich Barton (Expedia, Zillow, Glassdoor – now Benchmark Ventures, on the board of Netflix) Matt Barrie (Freelancer.com) Nathan Blecharczyk (AirBnB) Sergey Brin David Byttow (Secret) Garrett Camp (StumbleUpon, Uber – Canadian) Charlie Cheever (Quora) Dennis Crowley (Foursquare and Dodgeball) Roger Dicky (Gigster and key engineer at Zynga) Jack Dorsey (Square, Twitter, Speaker at Consensus in 2018) Scott Farquhar (Atlasssian) David Filo (Yahoo) Janus Friis (Skype, KaZaA, Radio) Logan Green (Lyft) Garrett Gruener (Ask.com) Reed Hastings (Netflix) Reid Hoffman (LinkedIn) Ryan Holmes (Hootsuite) Dave Hyatt (Safari, WebKit, Firefox) Brendan Eich (Firefox, Javascript, Brave BAT) Michael Jones (Myspace, Science Inc, Science blockchain) Justin Kan (Justin.tv Twitch.tv, Y Combinator) Max Levchin (Paypal – awards a prize in cryptography) Dustin Moskovitz (Facebook, Asana) Aswhin Navin (BitTorrent) Pierre Omidyar (Ebay and First Look Media) Sean Parker (Napster, Facebook, Spotify) James Altucher (Reset Inc, Hedgefund Manager, StockPickr, Bitcoin investor, recently aiming to found a bitcoin exchange) Mark Pincus (Zynga) Sebastian Thrun (Udacity) Justin Waldron (Zynga, Investor in Kik) Tom Preston-Werner (Gravatar, Github) – Resigned from Github Noah Kagan (Sumo.com, AppSumo) Kevin Lin – Cofounder COO Twitch Andrew D’Souza (Founder of Clearbanc, moved from TO to SF, advisor to Kik, previously at Top Hat) David King (Green Patch, Blibby)  Mich Kaufman (Fixer) Raj Kapoor (Lyft exec) Lynda Ting (Venture/M&A exec, broad experience, connected in crypto) Neil Shah (Exec at Twitter/Slack) Thomas Hatwrig (King.com) Daren Tsui (Imvu) Brian Armstrong (Coinbase) Fred Wilson (USV) Moe Adam (Bitaccess) Michael Kitchen (Wealthsimple) Michele Romano (Clearbanc, Buytopia, Snap Saves) Sam Teller (SpaceX, Tesla, and like tons of other stuff) Glad Gil (growth exec and investor) Adam Ludwig (chain.com) Brian Acton (WhatsApp and Signal) Evan Spiegel (Snapchat)
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