Disclaimer: I’m not a licensed financial advisor and this review is not intended as investment advice. It is for reference only. Buying crypto-assets is very risky and you should seek the advice of a licensed professional before purchase.
VERDICT
Huge potential, but a sputtering start makes reaching product-market fit difficult. Support only to advance the mission.
MARKET | GOOD
Databroker DAO (DbD) has a dream. That dream is to control the flow of the most precious commodity of our age: data. Specifically, IoT sensor data that promises to transform how businesses and cities operate.
The winds of change are in DbD’s favor. In 2017, businesses and governments are expected to spend over USD $800 billion in IoT technology. (A staggering amount, considering IoT’s unresolved security concerns.)
Though the vast majority of that USD $800 billion flows to sensor manufacturers, there’s plenty for the kind of marketplaces that DbD is building. The company projects the market size for IoT data at 30% of the sensor revenue. That’s unrealistic. A better point of comparison is the market for platforms, such as IBM Watson IoT and Amazon Web Services IoT, which help companies capture, store and process the data they collect. The revenue from IoT platforms ranges from USD $1–2 billion and is expected to grow at 35% per year. That’s not quite the hundreds of billions DbD is promoting, but it’s still good news.
The high degree of fragmentation in the data exchange market also presents an advantage. These exchanges tend to be industry-specific and have no clear technical advantages over each other. With time they’ll face pressure to consolidate. DbD can get ahead of that trend by building a flexible platform and piloting it with conglomerates like General Electric whose massive reach spans industries. Of course, they’ll need to keep an eye on well-resourced blockchain competitors like Ocean Protocol.
TEAM | GOOD
There’s a lot to like about DbD’s 7-person team.
First, it has adults. The CEO’s sixteen years of experience in the financial industry is backed by academic training in economics and management. The CTO parlayed a CS degree into a career building enterprise-grade applications and APIs.
Secondly, it has a proven track record in commercializing blockchain technology. Since mid-2016, the founders have marketed their SDKs and toolkits to corporations looking to develop their own blockchain applications.
Lastly, it has a diverse team. DBD’s two women and two Kenya-based developers bring more than gender and ethnic diversity. They bring perspective. Specifically, perspective that’s less likely to be steeped in the unhinged euphoria of tech bros and banker bandits. That’s a scarce commodity these days.
STRATEGY | AVERAGE
In a surprising twist for an ICO, DbD has outlined a passable business strategy. Its focus, for now, is enterprise customers. That customer base splits into three segments: sensor owners, data processors and data buyers. DbD also highlighted network operators as a key partner and potential frenemy.
As the title suggests, sensor owners own the sensors and supply the data. Prioritizing the supply side is considered the best approach to bootstrapping a marketplace. Fortunately, this is what DbD intends to do. Unfortunately, they’ve said little about how they intend to do it. That’s damning given their goal of connecting 225 million sensors within 7 years. Let’s remember that DbD isn’t building a social network to share Trump rants and baby pics. It’s building a B2B platform for the exchange of valuable proprietary data. Linking 225 million sensors owned by corporate bureaucrats will be a cat-herding mission of unprecedented scale. If that weren’t alarming enough, DbD has also made the curious decision to charge a recurring fee per sensor in addition to taking a cut of data streaming revenue. This pay-to-play scheme is a barrier to enrollment.
DbD‘s approach to working with network operators is also perplexing. Operators are the telecom companies that control the flow of data from the sensors to the platform. Since their operating costs will rise with DbD’s success, the company is promising a 10% commission on data streaming sales. I just hope these telecoms don’t get to page 15 of the white paper, where DbD threatens to cut them out as soon as IOTA and other blockchain-based network operators get their sh*t together.
Where DbD’s strategy shines is in support of data processors. These are the companies that will interpret and enrich raw data with proprietary insights and domain-specific models. DbD anticipates that processors will quickly create a resale market. That’s a good thing, since raw data has limited value. DbD’s bet is that the resale market will grow to the point where the majority of data buyers will not be end consumers but data processors themselves. The company knows it must help processors along and has flagged ‘Data Enhancement Integrations’ as an upcoming milestone. However, it has not offered a deadline, so it’s anyone’s guess how soon data resale will take off and revenue will pour in.
PRODUCT | UNKNOWN
The beta product that’s available on DbD’s website as of Dec. 1 is not a beta in any meaningful sense of the word. It’s an impressive interactive mock-up. The UI is easy to navigate and gives users a clear picture of basic features. But by DbD’s own admission — logged in page 18 — this is not a cause for celebration. Good UI is table stakes. To its credit, the company has done a good job of anticipating user needs and outlining the features required to meet them. However, without a deadline-driven roadmap, it’s unclear how product features will be prioritized.
ICO | POOR
DbD’s ICO structure is harmless. The user allocation is set to a respectable 65%. The split between business and technical development is lopsided, but not unforgivably so. The founders are holding on to 10% of the tokens with a 3-year vesting schedule. On a white paper, everything looks dandy.
The real world story has played out differently. DbD’s pre-sale concluded in mid-October at 11% of target. Even with ETH’s November rally, DbD’s treasure chest is too light by USD $2.5 million. This result adds enormous pressure. With little pre-sale funding, it’ll be hard for the company to meet its goal of releasing a production-ready platform by the end of the year. A missed deadline, compounded by an anemic community (fewer than 1,000 followers as of Dec. 1), will lead to another underwhelming sale. To buy time for a turnaround, DbD has not yet announced a main sale date.
TOKEN | POOR
DbD claims its DATA token is required to make micro-payments profitable. With the token, sensor owners will be able to sell droplets of data or seconds of streams. That’s a solution in search of a problem. You would have to believe that a sufficiently large number of data buyers will want only a few hundred rows of data from IoT sensors. That’s unlikely if DbD’s customers are buying training data or mining insights for resale. It also implies a price curve that’s so steep that 100MB of data is prohibitively more expensive than 100KB of data from the same stream. If these problems indeed exist, then the token is an overwrought approach. You know that ether that’s used to buy DATA tokens? It’s also divisible by 18 decimals.
Even if you dismiss divisibility as a concern, there’s another looming problem for DATA tokens. Namely, how will they get into the hands of enterprise users? CIOs don’t usually prowl Telegram for a hot tip.
RISK | UNKNOWN
DbD has shared very little about the steps it has taken to reduce its liability exposure. Its incorporation location is unclear. It has not disclosed which partners are providing legal guidance, managing sale proceeds and distributing tokens. Though the company boasts prominent advisors, none have publicly outlined their reasons for support or scope of advisory. As with too many ICOs, DbD’s legitimacy can only be guessed from a professionally-rendered website and the team’s LinkedIn profiles.
SOURCES
- Verizon 2017 State of the Market IoT Report
- https://hbswk.hbs.edu/item/how-uber-airbnb-and-etsy-attracted-their-first-1-000-customers
BTT : https://bitcointalk.org/index.php?action=profile;u=1034105
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