Entrepreneurs are the new assets in tokenomics, states the team behind 81-c. They are right, our Chief Editor thought, projects can launch without capital, premises, tools, but no businesses can launch themselves, with no entrepreneurs. We talked to the Jess Merrell and Dan Abbate, 81-c Founders, how they are to tokenize people:
Q) To most, assets may be real estate, capital, equipment, patent, brand value. You consider entrepreneurship as an asset. Why?
Because entrepreneurship is what makes everything operate. By definition, entrepreneurship has to do with starting things, bringing about change. It’s the spark of humanity that moves everything forward. So all of those other assets you mentioned are really just subsets of entrepreneurship. More specifically however, the bigger a company gets the lower the per investor return gets so when you’re starting with small to medium sized companies and growing those, there is much greater opportunity for gains.
Q) Memories are still fresh in the minds of many, of ICOs attempting to monetize time, connections. How will you separate your idea from those in the perceptions by investors, if you feel the need for this divide?
If we are understanding your question correctly, our STO is very much divided from the ICOs you are referencing. The 81-c STO is directly tied to established value in the form of already operating companies with significant revenue/profit and growth trajectories. The technology of the STO is simply used to manage the investment transactions (i.e. the stock market). A value investor like Warren Buffett could look at 81-c and using standard valuation techniques decide to invest. That is surely not the case with any ICO, ever. Nearly all the ICOs to date have been completely speculative startups. In order to be successful they have significant technical challenges to overcome, but even more challenging than that, in order for them to reach their potential they would need to have significant (many times total) shifts in entire industries in a relatively short period of time otherwise the required network effect will never come to be and the vision will not be realized.
Q) Let’s lool into bigger context. Social capital is a concept that gains popularity amongst traditional economists. Do you think your idea relates to social capital? If so, how?
Social capital is a fantastic concept. In our case, we are bringing together investors and entrepreneurs who under all previous circumstances have been kept away from each other by regulation (the process of getting these two together legally, is expensive and time consuming, so most companies don’t bother and just stick with the accredited investors only) and established company funding hierarchies (Angels, VCs, Investment banks, etc). Allowing entrepreneurs and investors to get together within the operating structures of 81-c, means they both are able to multiply their social and financial value to the other.
Q) Can you describe your business model? Lets imagine you are to descrive it now to someone who does not know anything about it.
You are buying shares of our company, which owns/operates many subsidiary companies. Like stocks on the stock market, but the companies are real life, tangible businesses normally not accessible to invest in by regular, everyday people.
Q) You describe 81-c “as a company that represents a solution that will contribute to the global challenge of financial inclusion by growing entrepreneur-led businesses that would normally never be available to the public”. Can you give us two-three examples?
99.99% of companies never go public, yet there are millions of great companies that make money and grow every year. Investors are historically excluded from investing in these companies as part of their personal investment portfolio. The entrepreneurs of these companies have limited access to capital because their only options are banks and accredited investors, not the public at large. We are giving both entrepreneurs and investors significant strength and power by connecting them under the 81-c brand.
Q) What do you expect of the STO?
We expect to build a large and ever-growing global community of investors that can calculate the value of their investments based on the growth and success of our established subsidiary companies. The STO is the mechanism that allows us to bring investors (non-accredited and accredited, professional and nonprofessional, retail and institutional) into our company. The STO allows us to communicate to and build this community.
Q) Plainly speaking, you give tokenized shares in your company in exchange of money, to be raised at Startengine? What kind of dividends may potential investors expect?
Of course, like any business we can not guarantee returns. However, historically in our previous experience, in growing and scaling SMEs in the way we are doing with 81-c, we have seen annual Return on Invested Capital of 30%-60% and our business model is targeting minimum 20% annual returns with risk management mechanisms built in at every step of the way.
Q) How do you see 81-c in short term (1-2 years), mid term 3-5 years, and in the long term (5+ years)
We our working to acquire new companies at a rate of four (4) in 2019, 20 in 2020 and 100 in 2021. If we hit our targets and the companies fit our projected starting sizes of $2mm-$20mm, you can do the math to figure out our market cap. Haha. See, exactly our point. If we do THIS, then the value is THAT. It’s all pretty straight forward – all along the way.