While the whole world is now buying goods at internet marketplaces for various currencies, Nikolai Mokhov, entrepreneur and initiator of the Dark Side of the Business network project, is developing FatcatsMarket, an international billboard for the cryptoworld. Via this billboard, one can sell a studio in Samara for Bitcoins, buy a smartphone for Ethereums or a vintage record for Altcoins. In an interview to Invest Foresight, this Russian businessman described the dark and light sides of the project, his first mistakes and the development of the marketplace in the forthcoming months.
– You used to be a journalist in Novosibirsk, and now you are an entrepreneur. Your LinkedIn profile lists all sorts of things save for competitor intelligence. How did you come to work in this sphere?
– You know, to answer this question, I wrote a book, Diabolic Trills. It is based on true facts, but the names there were changed on requests of the survivors. It was due to journalism that I found myself operating in this industry. Reporters are often recruited by secret services. In 2005, I was recruited by a corporate security service which wanted me to collect information on their competitors. To be more specific, I was recruited by now late vice-rector of the university I attended. I remember perfectly well I started making RUR 15K ($500) a month which I perceived as huge money.
Over time, I quite naturally shifted over to the information security and, jointly with some colleagues, started Knowledge Shop, a small agency. It’s a long story, so you better read my book. Currently, I have a foothold in this business but rather like a consultant. I give assistance to my partner, Legion detective agency. Evgeny Yermolayev, my companion in this business, is possibly one of the best specialists in domestic and international detective industry. My function is rather modest. I can at times give some advice. But since I am no longer on the forefront, I would not claim my advice is now as precise as it used to be.
– As far as I know, when launching a new startup, you lost a million dollars. What lesson did you learn?
– I lost a million dollars when I engaged in a fairly sophisticated IT project which is still operating, but without my personal involvement. It was about hardware and software packages for construction industry monitoring. What was the lesson I learned? Putting it simple, there is no point fighting the moonlight. Construction companies in Russia are not interested in monitoring themselves, not at all. I had an illusion though the corporate owners might have some interest in that. I then found out they have no such a desire.
– How did you get to know the cryptocurrencies market? Where did you invest and how large was the initial investment?
– I have a girlfriend, a true cryptoenthusiast since 2011. And she is most modest. At some point I figured out she is multifold richer than myself, as far as Bitcoins are concerned. That was a motivation, in a good sense. I started to familiarize myself with the subject, started charging Bitcoins for my services, instead of regular money. In fact, those were my investments. If I am right, it was about 2015. As far as I remember, I had somewhat under ten Bitcoins then. Then my dear girlfriend hinted I could pay attention to Steemit social media platform (its Russian equivalent is called GOLOS.io). If you post some interesting content, hit likes or submit comments, you get paid bonuses in cryptocurrencies. I happened to joint it at the right moment and to leave it at the very right time. The result was earning a couple of thousand dollars. It was a classic cryptoinvestment: get a coin, put it in a wallet and forget about it.
– How did the FatcatsMarket idea came to existence? Is there a similar billboard in the US, for instance, or did you from the very start follow Russia’s Avito billboard patterns?
– The idea emerged when I was in Cyprus. My then future partner in the Fatcats and myself relaxed there, walked around and discussed some cryptocoins which increased their value thousandfold. I said, it was all fine, but I did have some digital currencies while had no wish to exchange them for any fiat money, willing to buy something with them instead, a new iPhone, for instance. My partner said, he could design a respective internet platform within two weeks.
So, the process started. We first launched the marketplace having funded it all by ourselves. A month later, we though the time had come to find investors and arrange an ICO. Conceptually, there are some other similar projects, such as OpenBazaar, but they are not convenient in operation. Besides, if I am not mistaken, they have become mainly used for displaying products for adults. We are trying to balance our selection our and strive to have the goods on display which are also available in regular stores. The Avito pattern is not quite for us since holders of cryptocurrencies usually look for new iPhones, not for used ones.
– How many sale and purchase notices have already been posted at the alpha-version you have launched? Are there any accomplished transactions? Are their numbers meeting your expectations?
– We are now close to a hundred thousand posts at the marketplace. The figures constantly change since new notices appear while some people exchange their goods for cryptocurrencies and hence withdraw their posts. That is an ongoing process. As for the number of accomplished deals, it is still under a hundred. The figure is rather modest, but the project is yet gaining momentum.
– What is the mechanism of a deal between a buyer and a seller? Is it envisaged that a cryptocurrency is converted in fiat money?
– At the moment, our platform is a place for a dialogue. We make two categories of people, buyers and sellers, meet. After that, they negotiate the specifics of their transactions.
– What is mainly purchased with the use of cryptocurrencies? On your billboard, there are announcements of apartments being put for sale for Bitcoins. But have such deals actually taken place?
– I am not aware of apartments being bought for some Bitcoins. To be frank, nobody has heard of accomplished real estate deals involving cryptocurrencies. Items actively exchanged for cfryptocurrencies are sculptures, paintings, copters, iPhones and alike. The best sales are the goods of an unobvious value. We are now adding, for example, works of art and collectible records.
– Why didn’t you stay in Russia to further promote the project and decided to move to Cyprus? Do you plan to register your business there?
– We operate in a cryptoworld. We have a smart contract. Some of the agreements we make with our partners, are structured as smart contracts. Within the project we make and spend cryptocurrencies. So there is no point of having a company registered anywhere. What for? Why building a cryptoworld if to do that one still has to undergo a government registration in a formal office?
– You have had an ICO. How much has the Fatcats.Market project raised? Did the result meet your expectations?
– I had had no expectations whatsoever. I am equally pleased with making a single Etherium or a hundred. We could have funded the launch of the project ourselves, that would have taken a bit longer and generated a bit less publicity. A scrupulous reader can calculate the number of sold tokens and multiply that by a token price. Personally, I am not fond of the headlines stating a company has raised a million or a hundred million at an ICO. Let me put it simple, we have raised sufficient funds in hundreds of Etheriums. The project does not roll in clover, but is has got enough funding for further development. Fatcats are still gaining weight.
– At your account in a social media you wrote you spend very little funds on development while most of your costs are in promotion. What creative solutions have been used to draw public attention?
– An ICO turned out to be the best way to attract attention. Our team was the first one to make a research on cryptocurrencies and tokens holders (see the results). We recently had a meeting of our club in Cyprus. We invited experts to discuss trading for cryptocurrencies. Entry tickets to the event were sold for Bitcoins. We also launched a YouTube channel and most interesting and useful videos will soon be available there. Personally, I believe in socializing as a way of promoting a project at its early stage. At a start, there is no use in spending millions of dollars on expensive and sophisticated commercials. When launching a project, one must socialize, socialize and socialize again and to listen, listen and listen to one’s audience.
– It was reported by the Ministry of Emergencies that in early 2018 the number of cyber attacks against cryptocurrency wallets in Russiaгgrew four times. What security measures are employed at Fatсats.Market?
– Back in winter we used to swim in a pool with a notebook nearby connected to a regular socket, with all passwords being qwerty. During winter, we advanced a lot as far as security is concerned. We stopped risking out lives for no purpose while our passwords now have “!” at the beginning and “9” at the end. We certainly use a distributed cloud infrastructure, protected tunnels, SSL certificates, sophisticated passwords, renewed applications, firewalls, regular backups, etc. We have installed a multifactor monitoring of what is happening. We have not yet confronted some threats such as DDOS, hence we see no point in investing in combating them. Yet the major threat in our business has always been rooks. We are sort of competing with them. They make us implement KYC and a guaranty service.
– When referring to the monetization model, you said you will charge ads, promotion of specific posts at the marketplace, and a fee on internal payments. What are internal payments about and how large is the fee?
– This summer, we will introduce personal wallets. Upon registration, every user will get a personal wallet, just like an exchange account. Keeping money there is not a great idea, but it is convenient for effecting deals. The charge will be small at about 0.2%. It will be slightly higher if a buyer wants a deal to be guaranteed by the platform. In this case Fatсats.Market will hold the funds until the buyer gets the good or the service.
– You have got no long term project development strategy or startup pay-off forecasts. Why so? Are you only eyeing the world in a very short run? Or have you taken notice of Telegram messenger being now blocked in Russia?
– I just decline binding myself to some stupid plans of conquering the world. The most essential thing is staying adequate to the current moment. The adequacy or inadequacy are being figured out through communicating with partners and clients. At first, we looked at Avito as a lighthouse and hence we could produce a huge detailed plan of conquering the universe acting as a CryptoAvito. Stupid investors would probably feel better if it were like that. But once we started operating we figured out there was no point to follow Avito. Cryptocurrency holders shop totally differently if compared to the fiat money users. We are now amending the platform, redesign it, and within days, its mobile applications will be available. We move fast as we do not need to endlessly approve a useless fixed plan. In a few days’ time, Bitcoin may grow tenfold in value, and in such a case we will have to instantaneously react. It may then loose 90% of its price and we will have to act again. Any startup, over the initial years of its existence, at times has to review its tactics and strategies on a weekly basis. If that is not done, that is a mortinatus startup.
– Still, you are most careful in selecting your investors. Do you keep declining the US nationals? Do you take into account the risks of the governments interfering with your operations?
– We certainly keep that in mind. A huge dinosaur can easily smash us. It does not mean it will not die soon.
– If you were an initiator of a digital currencies regulation bill, what would you come up with?
– Regretfully, it is my standing not to answer such questions. I am a convinced cryptoanarchist. So states the way they are now, generate the feelings identical to those generated by dinosaurs on the eve of their extinction.
By Olga Grinevich