“Unfortunately, I am not a bitcoin millionaire,” chuckles seasoned entrepreneur Weiting Lu.
That’s despite getting introduced to the digital currency six years ago by a crypto luminary.
“I actually met the founder of Coinbase, Brian Armstrong, when Coinbase was just one person,” Lu tells Tech in Asia. “He sent me 0.02 bitcoin for free.” Today, that’s worth close to US$200, so Weiting won’t be quitting his day job.
Undeterred by missing the bitcoin boat, Lu is now creating a cryptocurrency of his own because his four-year-old startup, Codementor, is about to dabble in blockchain for the first time.
The two main things that Codementor does – allow coders to connect with mentors and enable clients to hire coders for small projects – will soon get a crypto twist as the startup builds a blockchain system that will catalog the reputation of its coders and mentors. And payments will go through its cryptocurrency, too.
Well, that’s the grand plan Lu is revealing this week.
Join the hodlgang
To get this blockchain reputation system off the ground, Lu and his 32-strong Codementor team will launch an ICO by mid-year with its own cryptocoin called DEV. That same digital currency will be a payment option – along with a handful of other established crypto like ether – for those who’d rather not use credit cards on the service .
Why not just use Uber-style ratings to establish the reputations of Codementor users instead? “Blockchain will enable us to do certain things much more effectively,” says Lu, because it’s a tamper-proof system that’s transparent and publicly viewable.
“If there’s a dispute – in something as complicated as software development, the chance of dispute is a lot higher than, say, buying shoes online – the client can ask the developer community to review the case. We’ll rely on the developer community to settle the dispute,” explains the Taiwan-based founder.
He adds, “It can protect developers as well. For developers, that means no more clients from hell. And so if you’re a developer who works honestly, you can rely on your fellow developers to make sure you get paid for your effort. Fairly.”
Although he’s not the first to think of putting a community’s reputations and ratings onto the blockchain, Lu sees it as a fitting in very well with the tech business he’s already built.
“It makes sense for us to have a blockchain project because we were built to become a developer network right from the get-go. And I think having that foundational dev protocol that’s one layer underneath the existing Codementor platform, I think it does make sense. I think someone ought to build this, and we’d prefer this to be us,” he laughs.
With 300,000 developers and more than 9,000 vetted mentors on the service, Codementor is pulling in “mid to high seven figures” in revenue each year, according to Lu, though there’s no word on whether it’s turned a profit.
Lu can’t say when the rep scheme will be up and running, but he envisions it as an open framework that other companies can tap into.
“It is meant to be a reputation you can take with you, from job to job,” he says of the blockchain system, dubbed Dev Protocol. “We believe this will bring meritocracy to software developers, no matter where they live, whether they live inside or outside Silicon Valley.”
He believes this will particularly boost software engineers from outside the usual elite institutions and companies like Stanford University and Google.
A Stanford alumnus from the mid-2000s and Y Combinator graduate who’s on his second venture with Codementor, Lu is careful to separate the reputation system from the DEV token as cryptocurrencies have a whole range of issues – volatility in particular – that make them a challenge to use.
“If we were to look at this time horizon in the next five to 10 years, I have a difficult time imagining that this will not be going mainstream by then. But if we’re talking the next six to 12 months, then no,” he says. “There’s going to be a long transition period where we need to support both fiat and cryptocurrencies for payment. So we’re going to do everything we can to make the transition as smooth and quick as possible.”
The entrepreneur sees the current state of digital coins and blockchain tech as “like the internet back in 1994” – a time when a lot of early internet ventures went nowhere. “But that was also the time when Amazon was built,” enthuses Lu. “So I was hoping we can be like the Amazon of the cryptocurrency era.”
VCs vs ICOs
As the team starts to build this ambitious project, Lu has the “blessing” of his big-name investors – Alibaba, 500 Startups, and Techstars – to raise money from an ICO instead of asking them for more funding.
“We did debate this internally, whether it’s a good idea for us to do an ICO. Would having an ICO impact our future chance of raising a traditional venture round? It’s an issue everyone has,” explains the CEO.
While most ICOs are launched to raise money for projects that are barely more than a rough idea, Codementor is like Telegram – an established startup that wants to raise cash in this new way.
“We have a reputation to protect.” Lu says of the ICO risks. “We have something to lose. We have reputable investors, so we are going to make sure we do things properly.”
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