An Update on Cryptogulch – 11-21-17

So Ben Fitts just released a video on Cryptogulch about his investor pulling out which pushes back his growth plans in a big way.

This has resulted in several dozen emails to me asking if I am said investor and if my confidence in Cryptogulch has changed?

That is really two questions so let me answer both one time so I don’t have to again. 

1.  Am I the investor? – No, I am not the investor, I never was and have not “invested” in Cryptogulch in any form of equity or debt.

2.  Have I lost confidence? – Absolutely not.

Here is were we are at, Ben could just take a shit load of orders and try to let cash flow solve the problem.  But if he did this what would happen?  Well, he’d end up with a huge back log of unhappy people.  Frankly my best guess is that his investor backed out due to his slow growth model in the first place.   In other words this investor wanted fast money over smart money.

His investor was doing venture debt, not venture equity, in other words a simple loan with repayment terms.  He in the end simply probably didn’t like his time to ROI under Ben’s sane and rational growth model.

I am going to work with Ben over the Holiday to see if we can come up with a way to raise sufficient capital to get things moving in a creative way.  I have been known to come up with those types of things.

In any event I am not the investor that backed out.  I have been clear from the get go that my relationship with Ben here is as follows.

1.  I am an affiliate and earn a small commission for each customer I refer.  I have elected to take this commission in mining gear.  Meaning the better I do the larger my stake in his success becomes.

2.  I am a customer at Cryptogulch in fact I was the first customer, customer 001.  I generally never ask anyone to spend money on something I won’t spend it on myself.  At this point I have purchased a rig and 6 GPUs from Ben out of pocket.

3.  I am a long time personal friend and business partner on many projects with Ben.

4.  As to Cryptogulch, in addition to being an affiliate I am an unofficial advisor to Ben and how he advances the company.  It is important to note that due to our long time relationship I would be doing this, even if I had no stake in the company.  Ben and I do this for each other in a lot of ways.  He is part of my very small core network.

So again I am going to try to help Ben develop a path forward with CryptoGulch.  I have posted a comment with one proposed solution on his video at YouTube, if you have thoughts about that comment please feel free to email me about it, or comment there.

My view is we will find a way though this period, it is a good problem to have mind you, more customers than you can take and people clamoring to get in as a customer.   The fact that Ben is being thoughtful and not taking stupid risks is exactly why I am working with him here, and why I have done so for 19 years.

 

 

6 Responses to An Update on Cryptogulch – 11-21-17

  1. Hicups in startups are expected and usually straight forward solutions are available.

    Two pieces of information would be helpful:

    1) How much was the loan commitment for?  And,

    2) How much has the first traunche of 20 customers committed?

    Thanks…Fred

    • Well there is no loan commitment to comment on because I ain’t in charge and it is just a suggestion.

      Personally if it were me it would be a minimum of 10K over 36 months at 5% simple interest payable in credit to buy gear. This is very weighted to the company vs the investor but the investor only wins if the company wins. I would also require a 10K minimum, and limit it max to ten people and would want to lower that number of 10 people if possible.

      I’d personally buy a share at that rate, because I want this to succeed and it creates a very good situation for the company. But again I am NOT in charge of anything. I based this on needing about 100K of operational capital which from conversations with Ben seems about right and creating a repayment schedule that would be easily be met with cash flow.

      As to how much, I am not totally aware of every customer but from my commission alone it is significant. If I did know I would not say because something like that should be for company owners and managers only to reveal.

      I am sure if Ben went ahead with something like my suggestion all terms, projections, etc would be spelled out.

      I’ve been trying to think of other perks to investors too, and being always at the front of the line for upgrades, add ons, etc, seems like a good one.

  2. Good points. If the $100k number is close, could be as simple as launching the company with 20 “founding customers” who have sufficient band width to also take a $5k note with reasonable terms.

    While 200+ people want to get onboard immediately, launching the company on a financially strong and supportive customer base would provide a high level of assurance that the business will succeed, and actually ramp customers onboard more quickly.

    Seems like a quick mid course correction that is easy to implement.

    For the existing first 20, they could go to customer #21 in if they don’t have the spare $5k today.

    • That is pretty much my idea, I just have the level of participation higher at 10K the LESS people you have in such a pool you own money to the better.

  3. Do to that fact that someone new can’t get on the waiting list for cryptogulch where would someone go for another mining opportunity? I looked at genisys and they limit the time your money buys you to mine.

  4. Ben, you may want to join the dynamite circle, it’s run by the guys that run the Tropical MBA podcast (worth a listen since you’re starting up a business).   I don’t doubt their network can 1) come up with a solution, 2) help with funding.   One of the guys that runs it lives in Austin and I do believe their next global event will be held in Austin.

    Alternatively, Austin is a turn full of wealthy investors.  I don’t doubt some of them are looking for a crypto play right now.  I’m happy to ask some of my investor friends if they’re interested, they’ve had no problems raising >1M for all of their past projects.  Let me know.

    Join the DC

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