Decentralized Marketplace Social Kapital Aims At Longest Crowdsale Ever

Cointelegraph spoke with Sirus Knight, one of the experts at the core of Social Kapital, a decentralized VC fund and business idea marketplace similar to The DAO. On June 20th it launches a crowdsale campaign.

Whilst The DAO wants to achieve the complete automation of the Blockchain, Social Kapital places more emphasis on using the Ethereum to power its community and governance committees.

Here is what Sirus Knight had to say about their project, The DAO, and the nascent industry of decentralized organizations.

Business processes important

CT: Do you think some other company can reach similar results to those of The DAO?

Sirus Knight: The DAO was the first to the market and that fact has provided them with certain advantages. However how much you raise is not a predictor for success. You need to have the right processes to harness the wisdom, talent and connections of your organisation for the purpose of building profitable companies. I think we have the right business processes for an investment fund. That is one of the key factors for success.

New types of attacks

CT: Why have the developers of The DAO permitted alleged security flaws in their concept? What did you do to avoid repeating the same mistakes?

SK: In my view, putting an investment fund on autopilot is bound to be very challenging. Five months ago when we started iterating the Social Kapital business model we realised that building an organisation on the Blockchain presented new security challenges. It will not just be your code that will come under attack but your business logic, which is what you are encoding in smart contracts, will also be attacked. We have invested a lot of time in testing our assumptions and hardening our business logic.  

CT: What if there are more loopholes, inherent in the concept of decentralized organizations, still unaccounted for? If they are to arise, how is Social Kapital going to deal with them?

SK: We have got our legal structure sorted out. Community dynamics is also a big part of it. We have learnt lessons from bitshares. Social Kapital uses proof of vote (POV) and other participatory mechanisms to allocate profits to various stakeholding groups within the community.

There is a phenomena in the bitshares community termed the Anti Spending Movement. It seems to me that a large section of the community has lost confidence in the community’s collective ability to make profitable investments. That is a lesson learned. We are going to start with modest investments with an intense focus on profitability and the ability of some of our investments to generate revenue quickly using sources like Kickstater and Indiegogo.

DAO not immune to failures

CT: What major trends do you predict for the market of decentralized organizations? Will it become the new standard of doing business? Should we expect a major bust, similar to the one which followed the dot-com bubble?

SK: The benefits of decentralisation has been taught in business schools for a long time now, so it is not as if we are charting completely new territory here. The Blockchain provides a secure software platform for building decentralised organisations. Because we have the ability to create organisations on the Blockchain does not mean that all these organisations are somehow immune from market failure. In various industries organising as a DAO will have significant advantages over traditional organisation forms. Actually, Social Kapital will be funding lots of DAOs in diverse industries, but as we have learnt from the dot-com bubble too much of a good thing can be a bad thing.Yes, a bubble is possible at some point, but we are very far from that point.

CT: After five months of development, you have now come out of stealth mode.  What is your launch plan?

SK: The DAO might have raised the biggest amount in a crowdsale. We are going to make history as well by having the longest cypto crowdsale. The crowdsale will start on the 20th of June and will last 60 days.

There are good reasons for the 60 day crowdsale. Bearing in mind that Social Kapital and The DAO shareholders have simply pledged their ether and, in the case of Social Kapital, can move that ether by calling a contract function we have to build momentum before the crowdsale ends. Whilst the crowdsale is going on, we will be developing business ideas and creating important committees. At the end of the crowdsale we aim to announce our first investment which we hope will create excitement within the community, add value to our  organisation and keep our shareholders committed to the incredible and exciting journey ahead.