In order to give our customers and partners a few insides into what’s happening behind the curtain at Cake, we would like to publish our quarterly board report. Please understand, we have removed sensitive information where necessary. For more information please visit: https://www.cakedefi.com
Below you can see the full text, but if you want, you can access the board reports here:
Agenda
Q3 2020 Executive Summary:
DIRECTIVES Q4 2020:
Q3 Transparency Report Video:
Join us LIVE to discuss the Q3 Transparency Report on 22nd October 2020 at 8pm Singapore Time:
We hope you appreciate the insights!
Thanks for your support and happy baking — Have fun! :)
DISCLAIMER
This transparency report does not constitute nor imply a prospectus of any sort. No wording contained herein should be construed as a solicitation for investment. Accordingly, this transparency report does not pertain in any way to an offering of securities in any jurisdiction worldwide whatsoever. Rather, this transparency report constitutes a description of the development and distribution of Cake. Do not trade or invest in any tokens, companies or entities based solely upon this information. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. Investors should conduct independent due diligence, with assistance from professional financial, legal and tax experts, on topics discussed in this document and develop a stand-alone judgment of the relevant markets prior to making any investment decision.
This document does not constitute nor imply a final technical specification of Cake. Information presented in this transparency report, technical or otherwise, is meant to outline general ideas, designs and use-cases and is subject to change with or without notice. For the latest up-to-date technical specifications, check out the updates and documentations on the official website www.cakedefi.com. The graphs, charts and other visual aids are provided for informational purposes only. None of these graphs, charts or visual aids can and of themselves be used to make investment decisions. No representation is made that these will assist any person in making investment decisions and no graph, chart or other visual aid can capture all factors and variables required in making such decisions.
While this transparency report was compiled with the greatest care possible, it cannot be guaranteed that all information is complete or accurate. The information contained in this document may include, or incorporate by reference, forward-looking statements, which would include any statements that are not statements of historical fact. No representations or warranties are made as to the accuracy of such forward-looking statements. Any projections, forecasts and estimates contained in this document are necessarily speculative in nature and are based upon certain assumptions. These forward-looking statements may turn out to be wrong and can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, most of which are beyond control. It can be expected that some or all of such forward-looking assumptions will not materialize or will vary significantly from actual results. For any questions on a specific subject covered in this document, please contact us at partners@cakedefi.com
Cake Pte Ltd is registered in Singapore with UEN 201918368M at 7 Temasek Boulevard #12–07, Suntec Tower One, Singapore, 038987.
Message from the CEO about Q3 2020
Dear Cake Pte Ltd board!
To summarize Cake’s third quarter of 2020 in a brief sentence I would say that “Cake is successfully moving out of the infancy and toddler stage, into becoming a young adult”. We see this with our revenue, team growth, user numbers and infrastructure — which all have either been pretty much on our set targets or we even outperformed. Thus, I can only but say that I am very proud of our entire team, the work ethics and the attitude we approach daily problems with. We have managed to achieve all our set goals, except for a fiat onramp, which we had to delay to Q4 2020 as we restructured our Lapis offering. This cost us approximately 1 month of engineering work, but listening to our customers and seeing the growth that followed, it was definitely the right decision. You can read about all the details in the ten-point executive summary that follows, but I would like to point out some of the team’s highlights of the past quarter here:
- Q3 was another cashflow positive quarter for Cake, raising our liquid assets to over 15 months of runway in case revenue dries up. This is calculated by dividing our liquid assets by the operational burnrate.
- In Q3 we increased our revenue by 300% compared to Q2.
- Financially speaking, we are therefore in a very strong position and the only consideration to have, which we should discuss during the CEO directives, is whether we need to do a fundraise to go nuclear on the marketing front.
- As of September 25th 2020 our assets under management are also up over 300% in comparison to Q2. In Q3 we grew our assets under management by 10.7% week over week, which is just about the same rate as in Q2, just with way higher amounts.
- On the customer side, we grew our user base by 174% as of September 25th 2020. Our average week over week user growth in Q3 2020 is now 8.5%, up from 5.5% from Q2. This is very strong, but there is still room for improvement.
- Our social media profiles and media exposure has been exploding. A positive result of this is that we now have more non-German speaking users than German-speaking users.
- Aside from the marketing push that helped Cake grow that well, our product and engineering team launched one new service after another, allowing for our massive traction in the first place.
- July was mainly focused on restructuring the Lapis Lending Service to provide customers with guaranteed returns. This was not originally planned, but after lots of customer feedback, we decided to go this route. Even though this decision cost us a month in Q3, I am of the firm belief that this was the right direction from a risk and user experience perspective. In August, we prepared the launch of our VIP confectionary program, that got us fantastic customer feedback. And in September we launched USDT Lapis, allowing our customers to now get 11% cashflow on their USD. The only product update we had to postpone to Q4 due the Lapis restructuring is the fiat onramp. I believe this is a fair trade off, considering the importance of the product restructuring.
- Operations is mainly focused on streamlining and automating processes, which is absolutely necessary considering the growth of our company on all fronts.
- With our new Legal Council and Head of Compliance, we stepped the level and details of our contracts, making sure that we keep the company as safe as possible when dealing with our partners.
- Our team grew by 9 people in Q3, bringing our current head count to 28. Approximately half of them are in Singapore, the other half is working remote.
- This team growth could be felt in all departments, also in our business development activities. After very little activity in this field in Q2, we now started partnering with several associations, companies, media outlets and much more, which will all help us in the long term.
- With our R&D work for DeFiChain Foundation, we facilitated Improvement Proposal 1 and 2, helped to build the wallet, airdropped free DFI to BTC hodlers on Cake and focused on bringing Liquidity Mining to DeFiChain for Q4 2020. The technical details of our R&D work for DeFiChain Foundation will be covered in the DeFiChain Foundation’s public transparency report in October 2020.
Summarizing, I would like to express my gratitude to the entire team that made all this possible with their creativity, hard work and passion.
Please find the details of these highlights laid out in the 10 categories below. You will then find my personal thoughts on the upcoming quarter in the CEO directives.
I am very much looking forward to our Q3 board meeting,
Julian
ATTENDEES
Julian Hosp — Executive Chairman
U-Zyn Chua — Executive Board Member
John Rost — Non-Executive Board Member
Howard Fineman — Investor & Non-voting Observer
Bettina Hosp — Secretary of the Board
DATE & TIME
9 am on 1st of October 2020 (SGT)
9 pm on 30th of September 2020 (EST)
VENUE
[Zoom Link removed]
AGENDA OF APPROX. 2 HOURS
Section 1 — Approval (5 minutes)
- Brief recording (only this session and the very end will be recorded!) of attendance and statement of time & date
- Approval of Agenda
- Approval of Minutes from Q2 2020
- Approval of Next Board Meetings:
- Jan 15th, 2021 9 am SGT (2020 Q4 board meeting)
- Budget, Remuneration & People Discussion 2021
- Apr 9th, 2021 9 am SGT (2021 Q1 board meeting)
- Certified Accounting Discussion 2020
- Jul 9th, 2021 9 am SGT (2021 Q2 board meeting)
- Product & Business Strategy Discussion
- Oct 8th, 2021 9 am SGT (2021 Q3 board meeting)
- Processes & Operations Discussion
- Approval of 2019 Financial Statements
Section 2 — Reflection on Executive Summary (25 minutes)
- Finance
- Sales, Marketing, Communications & Community
- Engineering
- Product
- Operations
- Legal
- Compliance
- Human Resources
- Business Development
- Research and Development (DeFi)
Section 3 — CEO Directives (80 minutes)
Section 4 — Assign Action Items & Follow Ups (5 minutes)
Section 5 — Debrief (5 minutes)
- Brief recording (only this session and the very end will be recorded!) of attendance and statement of time & date
Adjourn Meeting
ATTENDANCE
Beginning:
I (full name) & (title) hereby confirm that I am attending the beginning of the Cake Pte Ltd board meeting at (date & time & timezone) via (technical medium or in person) and I have a clear line to understand (and see) what is being discussed and I can be heard (and seen).
End:
I (full name) & (title) hereby confirm that I have attended the entirety of the Cake Pte Ltd board meeting’s agenda of Section 1 to 5, at (date & time & timezone) via (technical medium or in person) and I have had a clear line to understand (and see) what was being discussed, and I was able to be heard (and seen).
- U-Zyn Chua — Executive Board Member
- John Rost — Non-Executive Board Member
- Howard Fineman — Investor & Non-voting Observer
- Bettina Hosp — Secretary of the Board
- Julian Hosp — Executive Chairman
1. FINANCE
Last quarter review
- Q3 was another cashflow positive quarter for Cake, raising our liquid assets to over 15 months of runway in case revenue dries up. This is calculated by dividing our liquid assets by the operational burnrate.
- In Q3 we increased our revenue by 300% compared to Q2.
- Financially speaking, we are therefore in a very strong position and the only consideration to have, which we should discuss during the CEO directives, is whether we need to do a fundraise to go nuclear on the marketing front. We have received quite a few offers from Investors, if we are looking for funds. We are staying in touch with them.
Next quarter review
- We are in a strong financial position, but have to stay vigilant to a changing ecosystem.
- The budget will be discussed during the CEO directives.
Challenges
- Should we do a fundraiser to add additional marketing budget? This should be a discussion point during the CEO directives.
2. SALES, MARKETING, COMMUNICATIONS & COMMUNITY
Last quarter review
GENERAL REVIEW:
- As of September 25th 2020 our assets under management are also up over 300% in comparison to Q2. In Q3 we grew our assets under management by 10.7% week over week, which is just about the same rate as in Q2, just with way higher amounts.
- On the customer side, we grew our user base by 174% as of September 25th 2020. Our average week over week user growth in Q3 2020 is now 8.5%, up from 5.5% from Q2. This is very strong, but there is still room for improvement.
- Our social media profiles and media exposure has been exploding. A positive result of this is that we now have more non-German speaking users than German-speaking users.
- We launched “The Confectionary” VIP Program
- Hired an additional Part Time person to assist with Tickets and KYC, bringing our CS staff to three team members.
- We hired a part-time content creator.
- We have done a great job in getting awareness to the crypto community
- This is the first quarter that we have more Non-german-speaking users than German-speaking users.
PLATFORM IMPROVEMENTS:
- Automated integration with Email Program for better targeting
- Reworking/Rewording of automated messages to users from the Cake Platform
EMAIL MARKETING:
- Creating Email Chasers to convert users (No deposits, No KYC, Unverified Mails, referral)
- Implementing No-Reply Addresses to reduce email SPAM
- Identify the biggest problems and most common issues and implementing automated solutions (Zendesk Guides, FAQ, automated messages)
- Implementing Automations & triggers in Zendesk for easier scaling
SOCIAL MEDIA:
- Nominating Community Volunteers Moderators in Telegram
- Setting up Bots in Telegram Groups to counter Spam & Bots
Week over Week user growth:
- Q4 2019: 2.6% week over week user growth
- Q1 2020: 3.9% week over week user growth
- Q2 2020: 5.5% week over week user growth (Target was 5% WoW growth)
- Q3 2020: 8.5% week over week user growth (Target was 10% WoW growth)
- Target Q4: 12.5% week over week user growth
Week over Week total assets under management (AUM) growth:
- Q4 2019: 3.3% week over week AUM growth
- Q1 2020: 11.2% week over week AUM growth
- Q2 2020: 12.75% week over week AUM (in BTC) growth (target was: 5%)
- Q3 2020: 10.7% week over week AUM (in BTC) growth (target was: 15%)
- Target Q4 2020: 15% week over week AUM (in BTC) growth
Next quarter preview
- Focus on Affiliate Program and Affiliate Promotions. For example, we are planning on running campaigns that give new users a bonus just for making their first deposit within 30 days and then an additional % on their total deposit amount. This can be expanded to the affiliate program with additional incentives.
- Use automated emails to bring up deposit percentages
- Focus on SEO
- Stay over 10% week over week growth like PayPal
- Continue Partnerships within crypto community and continue building and growing our Social Media Presences
- Hire Head of Marketing and Head of Communications
Challenges
Social Media companies not allowing ads.
3. ENGINEERING
Last quarter review
- We have added 5 more engineers to our team this quarter, growing our engineering team strength by more than 60%.
- Team has grown overall, internally we are split into multiple teams. Process-wise we have improved greatly on team management and project ownership.
- More structured engineering team organization with improved sprint plannings and tighter expectation and goal settings.
- Significant part of the engineering process now happens publicly on open source repositories.
- Team managed to iterate quickly through some of the shorter turnaround goals.
Next quarter preview
- SysOps engineer to be in charge of overall architecture and management of our increasing fleet of servers and nodes.
- Information and system architecture restructuring for better security, process and usability.
- Continue to grow our engineering team, especially blockchain engineers.
- Improved QA process with hiring of QA engineers.
- Engineering-wise we are starting to accumulate some technical debts with our rapid near weekly product release schedule. Some technical maintenance work planned for this quarter.
- With the scheduled use-case launch of DeFiChain — more integration at Cake with DeFiChain will be taking place.
- More streamlined release and testing flow.
Challenges
- Continue to grow the engineering team and not add too much unnecessary weight to our rapid scrum team.
- Attracting blockchain engineers, especially with live mainnet experience.
4. PRODUCT
Last quarter review
- Restructuring of Lapis
- From the previous odd 26-day batch to 28-day batch, enabling a full 4 weeks of Lapis.
- From trade-based with potential downside, to bonus-tier based with no downsides.
- Fee-less Lapis — more straightforward for our users.
- Affiliates program update for the new Lapis updates.
- Initial development of lending product at Cake.
- Confectionary (VIP program) launch
- 4 tiers
- Increased Lapis reward with each increasing tiers.
- USDT Lapis launch
- Accepted as ERC20 token. This also allows for further ERC20 acceptance at Cake.
Next quarter preview
- Fiat onramp.
- Multi-chain coin withdrawal: native chain and on DeFiChain (DeFi Asset Tokens)
- More coin acceptance: Bitcoin Cash (BCH) and Ripple (XRP)
- DeFiChain integration: user-friendly liquidity mining without needing to worry about DeFiChain and DeFi Asset Tokens.
- Website update and architecture update for better information presentation and improved usability and security.
- Potential partnership with a major project for an initial staking launch.
Challenges
- Fast iteration while paying off technical debts.
- Potential major architectural update while keeping site stable.
- UI/UX design to really simplify our new products.
5. OPERATIONS
Last quarter review
- Setup for new Lapis with guaranteed returns and no risk for our users.
- We worked together with Finance to add an operational as well as variable burn rate to the PnL for better overview.
- We restructured the setup and dividing of tasks within the Operations team, to better split between CS, Community & General Operations
- Support to Legal and Bizdev for Exchange Listings on Bittrex, Latoken, Hotbit etc.
- We worked together with Compliance to be able to finalize the PSA License Handlings in time
- In preparation for the PSA License we are currently working with Compliance with AML Screening Tools, including the appropriate KYC Process and to update our approved Country list for our users. Here we take emphasis to strike a balance between needed regulation, User experience and operational viability in terms of costs
- Operations assisted in researching, negotiating and onboarding lending partners.
Next quarter preview
- We are planning further expansion of our internal Admin Panel Overviews for Revenue Growth Numbers, AUM Calculations, better User Interfaces with Insights on User behavior (deposit/withdrawal behavior, Transaction monitoring, expanded Admin functions for CS such as VIP Status changes, etc)
- We will also be hiring another KYC Specialist.
Challenges
- Operations is highly depending on access to data and processes to be visible and implemented on our platform especially. In order to fulfill this we are actively working with Engineering to create efficient and quick processes on our Admin Tool that allows us to grow with the product launches and changes.
- In order to diversify our risks, we are constantly looking for alternative partners for products to work with, and also for our Custodial Wallets, as well as new bank accounts
- We need to expand automations of even more on operational processes to be able to divert workload for team members and keep processes efficient
6. LEGAL
Last quarter review
- Hired General Counsel & Head of Compliance
- Exchange listings
- Staking agreement with Hotbit
- Audit service agreement with SlowMist
- Introduction of USDT as the 3rd coin which can be utilized for Lapis services.
- Lending Agreements with partners
Next quarter review
- Continue work from above
Challenges
- Law and regulation on crypto is new and developing, which always creates uncertainty.
7. COMPLIANCE
Last quarter review
- Ongoing review of KYC processes
- Ongoing work with RegTech solutions to help with KYC
- Ongoing review of payment services license application
Next quarter review
- Prepare for MAS meetings and PSA work
- Continue review and improvement of compliance processes to align with MAS requirements:
- Work with Personal Data Protection Act
- Review draft Business Continuity Plan and implement with management
Challenges
- Same issues as per legal, also causing uncertainty in the implementation of compliance procedures.
- Aligning decentralized finance ideas with centralized finance ideas
8. HUMAN RESOURCES
Last quarter review
- Hired a Hiring Manager
- Decided to reduce the work with Hiring Agencies significantly which allows us to save on costs massively from Q4 2020 onwards.
- We restructured our interview process to focus even more on quality over quantity.
- Introduced Leave Tracking
- We hired 9 people in Q3 bringing our total head count to 28:
- CS & Community Manager
- Business Development Manager
- General Counsel & Head of Compliance
- Executive Assistant
- Senior Recruiter
- Junior Visual Designer
- Senior Frontend Engineer
- Javascript Engineer
- Content Creator - We revamped our Core Values into 7 Team Principles with focus on “actionable” goals for each team member:
i. Integrity
ii. Resourcefulness
iii. Radical Candor
iv. Meritocratic Decision-Making
v. Passion
vi. Customer-Obsession
vii. Ownership - Negotiations with Co-Working Space for a delayed move-in — at the moment preliminary delay of moving in has been placed till January 2021, though negotiations have not been finalized.
Next quarter review
- Evaluating a wholesome HR tool which will enable us for Applicant Tracking, Performance Reviews, internal Tracking and potentially also Leave Tracking
- Continuing to finalize the Interview Process within the Company
- Continuous negotiations with Co-Working on delayed move in date pending on COVID-19 Situation
- We are planning on adding 7–10 people in Q4 2020:
- 1x Head of Communications
- 1x Head of Marketing
- 1x SysOps Engineer
- 2x C++ Blockchain Engineers
- 1x KYC Specialist -> already signed
- 1x Junior Project Manager -> already signed
- 2x JavaScript Engineers
- 1x Content Creator
- For job applications go to https://cakedefi.com/jobs
Challenges
- Continuous hiring activities with focus on outbound of internal Hiring Manager
- Strike a good balance between aggressive scaling and sustaining team culture
9. BUSINESS DEVELOPMENT
Last quarter review
- Hired David, our Business Development Manager, who started in late July:
- Commenced PR push:
- Articles about Cake published on multiple sites including: Bitcoin.com, Cryptonews, Coincodex, Ambcrypto, BTCManager, Crypto Adventure
- Articles are picked up by many other news sites, eg: Bitcoin Insider
- Article in Portugese: CryptoPortugal, Article in Italian: Blockfoglio
- Links to articles are also posted on social media platforms: Twitter
- Mentions in organic articles, eg: Bitcoin.com
- Grown network of writers, journalists and media publications sites
- Cake DeFi / Julian covered on podcast Blockchainenterprisespodcast
- Joined as member of Singapore Fintech Association — certification pending
- Listed on Staking Rewards, a site that compares and rates staking platforms and tokens
- Established new lending partners, which are highly regarded in the industry
- Secured a new fiat to crypto onramp partner
Next quarter review
- Adding a new Head of Communications, and Head of Marketing to take over respective PR and Marketing strategies and campaigns
- Complete integration with our fiat to crypto onramp partner
- Expand into new markets currently
- Increase number of crypto / finance sites taking on our affiliate marketing links
- Expand partnerships with influencers
- Have Cake DeFi listed on more crypto lending comparison sites
Challenges
- Large partners may not move at the same agile speed as Cake.
10. RESEARCH & DEVELOPMENT (DeFiChain)
Last quarter review
- Lots of R&D work for DeFiChain Foundation that will be laid out in more details in the public DeFiChain Foundation transparency report. Cake’s board report will only focus on Cake relevant high level points.
- Stopped staking of foundation and investor nodes after community and tracker feedback. This is well accepted by community and set DeFiChain towards a better decentralization path.
- There was a DFI airdrop at Cake for BTC hodlers.
- Successfully helped DeFiChain to process and approve 2 DFIPs on Cake:
- #1: Bitcoin anchor reward source and mechanics adjustments
- #2: DeFi incentive funding
Next quarter preview
- Liquidity Mining on Cake for various tokens on DeFiChain with world’s first on-chain native consensus liquidity mining and swap protocol.
Challenges
- Hiring of blockchain developers, especially with live mainnet hard fork experience.
CEO’s THOUGHS ON Q4 2020
Dear board members,
in Q3 we hit pretty much all of our product and business targets. Moving into Q4 of 2020 I see the need to keep focusing on our aggressive growth percentages, even though the base numbers keep getting bigger and bigger. We should do this via the following three areas:
- Marketing & Business Development: We have a solid process, a good budget and get consistent results, but we need to ask ourselves over and over again who our ideal customer is. I also believe that a strong focus on our affiliate program, with incentives and bonuses for new customers, will help. I would like us to significantly invest in this area in Q4 with incentives and goodies for customers and active referrers.
- Product: After adding a fiat onramp in Q4, I believe we should focus mostly on revamping our website, adding yield farming as a service, and then focus on polishing and improving our current offerings — especially in regard to UX. We need to use Q4 to repay some of our technical debt and to make sure that our growth stays in line with our security and quality standards. At the end, user experience is what always ends up winning and our aggressive growth over the past year requires us to do some cleaning up.
- Positioning: We will discuss this in the strategic positioning in more details, however, I believe Cake needs to position itself as an easy-to-use platform for the average lay-man crypto user. The tech-focused cypherpunk should rather use DeFiChain’s applications natively.
A few other deliverables that we started in Q3 and will continue in Q4:
- Hire 7–10 new team members and focus on team culture
- Diversify our lending partnerships to improve returns and diversify the offerings for our users
- Repay our technical debt and work on UX.
Most of the things described above are straight forward, and I am happy to answer any question you may have. The points I would like us to spend most of our time discussing deeper on, where we actually need the board’s approval, are the following:
- Q4 Budget approval
- Decision on additional fundraising
- Decision on Cake’s strategic positioning
- Approval of CEO’s OKRs and No-List for Q4 2020
Please share your thoughts and ideas on these points. You may find some insights and background information in the following pages.
At the end of Q2, I used the analogy of all the puzzle pieces being on the table and us having to build the most amazing puzzle out there. Now, by the end of Q3, we have assembled a team that has shown to be capable of delivering in an extremely fast and productive manner and it is now about to scale even further. Q2 was about the right formation. Q3 was about starting to scale. Q4 will show what we are made of. Now it’s about true blitzscaling. We have to stay vigilant, as things will pop up and try to mess with our puzzle building. We have to keep doing the right things, keep focusing on adding team members with a like-minded mindset and keep listening to our customers for product-market-fit, for us to finish 2020 extremely strong. I am convinced that we, as a team, can do this.
I am looking forward to a fruitful discussion with you during the Q4 board meeting.
Regards,
Julian
PS.: On a personal note, if I may: Bettina and I will be “hardforking” a hopefully healthy baby boy in October 2020. With that I get to enjoy not only the fantastic growth of our company, but furthermore that of my own child. I want to express my personal gratitude to you as I know you have not only been fantastic business partners, but more importantly wonderful friends. Thank you for being part of this journey together with me.
DISCUSSION POINTS & BOARD DECISIONS
1. Q4 2020 Budget Approval
Background:
In Q3 we were cashflow positive. Considering that we want to grow the team by approximately 7–10 more members and our need to increase our marketing cost to keep up with our goals, we can expect a higher burnrate in Q4 than in Q3. Since no budget has yet been approved for Q4, the board has to make a decision on this.
Discussions Points:
Splitting our burn into operational and variable costs can help us make a decision how much budget to approve. With our increased head count I expect to increase our needed budget slightly. It’s important to point out that it will be difficult to adjust this amount downwards afterward. You can find all the financial details in the PnL in the Executive Summary.
Aside from that, we need to increase our marketing budget. Our marketing department prepared some details of our campaigns from Q3 that went extremely well and for now I believe we should continue our marketing strategies as we had them.
Since I am very confident in our ability to generate revenue at the moment, I would recommend approving this budget for October 2020 and then automatically approve it for November, as long as we are cashflow positive in October and then for December, as long as we are cashflow positive in November. This poses very low downside to Cake’s shareholders, while allowing me as the CEO to plan for aggressive growth.
Decision result:
Unanimously approved
2. Additional Fundraising
Background:
If approved, the budget laid out in Discussion and Decision Point Nr. 1 will put us in a strong position to gain market share in the space. However, it is tiny in comparison to the millions of dollars other companies are spending. The board should therefore discuss and decide whether Cake’s funding is sufficient to achieve its goals.
Discussions Points:
The point of additional fundraising is not an easy yet an important one. On the one hand, Cake is cashflow positive, growing strong and does not have any large investors trying to steer the ship. On the other hand, it is limited by its own current revenue and is lacking institutional partners that can open many doors. Especially over the past weeks, with the increased coverage in the media and the strong user growth, more and more investors have been reaching out to ask about our fundraising situation. For now, Cake has only been relationship building and no concrete talks have started. However, the board should weigh the up- and downsides of getting one or more institutional partners in.
Upsides:
- If Cake raises for example 10 million USD to go nuclear with its growth, this would bring the growth trajectory to 1 million customers with 1 billion USD AUM much closer than with self-funded growth.
- Institutional investors have connections and can open doors, that founders or angel investors might not be able to do by themselves and which might become necessary the larger Cake gets.
- Institutional investors have experience in guiding startups and may give advice on difficult crossroads.
- Institutional investors build even more confidence for customers.
- Having an actual valuation on the company drives exposure in the media.
Downsides:
- More money does not always mean more success. Sometimes it can actually backfire.
- Additional investors also means additional opinions and institutional investors will definitely ask for a board seat.
- Additional investors mean less equity for existing shareholders.
Decision result:
The board of directors unanimously decided that we are not in immediate need of fundraising, but agreed that the CEO should stay in talks with potential investors for DeFiChain and Cake to present concrete investment offers to the board. The main focus should be on additional reputation building when adding an investor.
3. Strategic Positioning
Background
Thinking from first principles, we can ask ourselves what are the main hurdles companies in the fintech space have to solve:
- Financial Literacy/Education in general.
- Access to the company/protocol, especially for users in excluded jurisdictions or users who are being excluded due to local regulation.
- User Experience, which is a general first principle problem for companies.
In order to tackle these 3 problems, two big trends have been emerging in the cryptocurrency space: CeFi and DeFi. Centralized Finance companies attract lots of users with easy user experience, especially with familiar login-password-tools and excellent customer support. Decentralized Finance Applications on the other hand, mainly win by being compliance easy, thus giving anyone access and by being completely trustless.
Discussions Points:
A CeFi based offering comes at the great cost of KYC and AML requirements. In the recent years, we have seen the significant increase in the compliance requirements of companies providing cryptoasset services to users. These costs can be easily as high as $10 per user per year. The way many companies such as Bitmex or Binance have been outmaneuvering this, is by registering in compliance-easy offshore domiciles. With upcoming global regulations, however, many loopholes are being closed and companies such as Bitmex are actually being sued. DeFi applications on the other hand have not managed to gain mass traction yet, mainly due to the lack of blockchain knowledge and difficult user experience for the average crypto user.
In order to get the best out of both worlds, we should discuss on how we at Cake want to position ourselves in these regards. Cake could appeal to users who want to get access to the financial system, without needing to get all the technical knowledge but want an easy user experience. Going this route would definitely cause some criticism from very cypherpunk-oriented users, since Cake itself will always be focused more on the average retail user. Setting a clear direction now is quite important as it will drive the focus of our branding and marketing, especially now that we are ramping up our scaling, I would like us to have this product- and business-strategic decision.
Decisions to vote on:
It was unanimously decided that Cake should appeal to the average lay-man crypto user and not to the crypto geeks or cypherpunks, as this shows a way larger user base going forward.
4. Approving, Rejecting or Adjusting CEO’s OKRs & No-List
Background:
Every year and every quarter, the board of directors lays out several OKRs and their action items for the CEO to work on. Additionally, there is a No-list of things that the board of directors does not want the CEO to work on. You may find both at the very end of this document.
Discussions Points:
The board of directors may approve, reject or adjust any point in the OKRs before it comes to a vote on Cake’s CEOs OKRs and No-List for Q4 2020. These discussions may happen at this point.
Decisions to vote on:
Is the board of directors approving the CEO’s OKRs for Q4 2020?
Is the board of directors approving the CEO’s No-List for Q4 2020?
Result: OKRs and No-List for Q4 were approved by the board of directors.
5. Ad hoc discussions and board decisions
Based on the Shareholder Agreement, the board may add any discussion and/or decision to be voted on, as long as the decision to include it passes a simple majority vote of all attending board members.
None were added.
2020 OKRs Reminder (set at the beginning of 2020)
OKR Nr. 1: Be one of the top 3 players in the crypto lending space
OKR Nr. 2: Be a sustainable company
Q4 2020 OKRs
Looking at the set OKRs for 2020, we should be well on track and therefore I suggest to completely align our Q4 OKRs including the 3 action items with our annual targets.
OKR Nr. 1: Be recognized among the top 3 crypto lending companies.
OKR Nr. 2: Be a sustainable and cashflow positive company.
NO-List for Q4 2020
- NO mobile app -> this is the Nr. 1 wish from our users though, so we need to consider adding this asap. I see it as a challenge in Q4 2020 and would like to address this next year when all our UX and tech is cleaned up.
- NO selling of Shares to other coins
- NO budget for events/trips
- NO other language than English, German, Chinese and Italian
We are looking forward to your feedback and questions in the comments.
We will keep focusing on our mission to bringing you cashflow from any type of blockchain asset in the most transparent and most attractive way possible in order to build a one-stop platform for you to manage all your finances in an automated AI-supported manner — be it crypto, real estate, stocks, gold, and much, much more.
We appreciate your trust and business.
Your Cake Team
LINKS & RESOURCES
Official Website: www.cakedefi.com
Twitter: www.twitter.com/cakedefi
Medium/Blog: https://medium.com/@cakedefi
Facebook: https://www.facebook.com/cakedefi
YouTube: https://www.youtube.com/cakedefi
LinkedIn: https://www.linkedin.com/company/cakedefi
Reddit: https://reddit.com/r/cakedefi
Telegram English: https://t.me/CakeDeFi_EN
Telegram German: https://t.me/CakeDeFi_DE
Telegram Italian: https://t.me/CakeDeFi_IT
Media & press resources: https://www.cakedefi.com/press/
For media inquiries, please contact: david@cakedefi.com
Interested in working at Cake? Here are all the positions we are currently looking for: https://cakedefi.zohorecruit.com/jobs/Careers
