Hi, Linh!

First of all, let me thank you for your awesome platform — Hacker Noon. We’re really glad that you’re developing it further! (This interview is part of the #10kqachallenge for 2019 — formula.geekforge.io)

Linh: Thank you :) We’ve still got lots of work to do!

What kind of past experience do you have and what has led you onto the path of the blockchain and investment relations?

Well, a very long-winding route, indeed. I didn’t set out to work in the blockchain or investment :-) My background is actually in education and community development. I started learning more about the blockchain from when I joined Hacker Noon. There’s a lot of amazing content on the Internet about the blockchain, but I’m convinced that we have some of the best blockchain articles on the Internet ;) My current favorite is the Surviving Crypto Winter series authored by Dan Jeffries. Or anything he wrote for that matter. I also learned more about the behind the scenes of blockchain development from our acquisition and investment talks with other companies.

Hacker Noon is one of the leading media platforms that sees the bigger picture of the blockchain industry. How come you don’t get tokenized but instead run equity crowdfunding? What were the main reasons for equity crowdfunding?

Great question. We have a lot of blockchain content, but we are not just about the blockchain or crypto. The early days of HN were all about devs, and to this day that’s the group we are catering to the most (or else we’d be called ‘how miners start their afternoon’ :-))

We didn’t decide to go with the tokenized route because we wanted to walk before we could run. Hacker Noon could be a much bigger site than it is right now with our own proprietary platform, but we’d like to build that up first and prove that we can be profitable again with the new site. We haven’t ruled out tokenizing altogether though.

As for why we chose equity crowdfunding, I wrote at length about it here. We chose this route because we have a great community. The best way to showcase the power of your community is through crowdfunding. Equity, because we believe everyone who finds value in our site can and should have a say in how the site works. We work for 1,000 bosses now!

What crowdfunding platforms have you considered for your campaign along with StartEngine? What are the most important pros and cons to consider for each of them?

We reviewed and spoke with a few platforms before ending up with StartEngine. But the main reasons we chose them is because the CEO, Howard Marks, has been a long-time HN contributor, and after we met their team, working together made the most sense.

In terms of the equity crowdfunding portal, StartEngine is the only one we have had experience working with and can attest to. While they are not perfect, we have enjoyed working with their team so far. Since equity crowdfunding is such a young industry (only allowed since the JOBS act of 2015), there are still a few hiccups they have to work through and the fees (escrow and platform fees) remain quite high. The pros are good customer service and transparency. We learned a great deal about the SEC, which is helpful for future rounds if we decide to raise more.

Who has provided you with legal advice on crowdfunding issues? Can you recommend them to others?

SE has their own compliance team who advised us on important SEC regulations. Our legal review was by Jeffrey Marks of Alliance Legal Partner, who we had great experience working with.

An independent accounting firm is very important in this process, too. They are the ones making sure your books are clean and presentable to the public and that there’s no suspicious information out there :) We worked with David Gosselin’s team at dbbmckennon and strongly recommend their services.

Did you make your pitch/site on StartEngine by yourself? What sources did you study to make it?

Yes! 100%. David and I worked on the copy and structure together: I proposed and wrote out v1 of the draft and David and I would edit them. We have a lot of good stats out there, so the whole process was very fun. Really enjoyed finding the data to make the best graphics about our business. Actually, every single thing you see on the page has been questioned and vetted by our lawyer, the independent accounting firm, or the SE compliance team. IMHO, when you do a public equity crowdfunding like this you are treated like you were doing an IPO. In terms of our inspiration, we did review past successful equity crowdfunding campaigns by companies like Minds and Everipedia (who is now a partner), but ultimately I think successful campaign pages come down to staying true to your company story.

In your experience, what should startups pay attention to in their pitches ?

Have lots of proof. You can say you have been profitable for years, but without the vetted profit and loss charts nobody would take it seriously. Make sure every statement is backed.

Tell a story. Compel them at the end and the beginning by saying this is why you should care about this story. We also did a short video explaining the pitch, which I think helped people connect the people behind the words :)

What were the thorniest questions from your potential investors?

You can click the “comments” link on the crowdfunding page and see the 158 responses to our campaign.

The most consistent comment we had to consistently say no to was about dividends. In an ideal world we would, but as an early-stage company we need to reinvest profits into the business. The most likely payout for investors is a liquidity event such as M&A.

We also received a lot of complaints from the residents of England and Canada, who wanted to invest but couldn’t due to regulations.

How did you market your fundraising campaign besides publishing on Hacker Noon itself? Do you have some statistics about the efficiency of different channels?

We simply put the link “own shares in HN” atop Hacker Noon’s homepage since day 1, which attracted 53k visits to date. 85%+ of all traffic to the crowdfunding page comes from hackerhoon.com.

Have you marketed your project to VC funds? Why?

The crowdfunding has been public information since late November and we’ve been directing people toward it. Our biggest investors are Alexis Ohanian and Garry Tan of Initialized Capital. We haven’t gone out and gotten meetings with other VC funds about the crowdfunding campaign. In publishing a good bit of venture capital content, we have made a number of quality contacts in the venture capital space, so I wouldn’t rule out venture capital in the long term.

What were the most useful StartEngine services for you? StartEngine writes that it has a community of over 160,000 prospective investors. Did StartEngine inform them in any way about your campaign?

Compliance team, great expertise. The whole team has been through the campaigns has been very responsive. Marketing-wise, I think whenever we hit $900k they sent an email about us to their entire investor base and that helped a fair bit :) Throughout the campaign they consistently mentioned us in their emails, but no one should ever rely on the platform to do their marketing. Successful crowdfunding campaigns are marketed by the company fundraising.

What was the most inconvenient thing about crowdfunding platforms for you as a fundraiser?

Lots and lots of fees. Also, the timing of crypto transactions. Even if fully subscribed, we won’t really have $1.07 million in the bank (Reg CF maximum amount to raise).

You said during an investor pitch that you could create a Hacker Noon token later on. Would it be a security or a utility token? (Would it be another round of funding or for the development of the community?)

Unsure. Like I said, we are still in the “walking” phase. We have had a few companies approach us about ICO help and we’ve told them all that we will have to wait and see. We believe crypto can make existing economies better, not that crypto can actually be the reason any economy works.

Do you have plans to support secondary market trading for Hacker Noon shares? Why? Have you considered any platforms for that?

No concrete plans yet, since no such platform has emerged. StartEngine says 2020 is their goal, so we’ll see.

You have more than 900 investors. What does investor geography look like?

We will do a thorough analysis after the campaign ends, but it looks like the majority is US-based. However, there’s a wide variety of other countries as well.

I tried to invest myself from Russia, but I was met with problems; the system didn’t allow me to buy securities. Do you know of other cases where investors were met with the same problem? Why does it happen — is that a problem of the StartEngine platform or is it because of regulation restrictions?

That’s strange. As far as I know, only UK and Canadian investors cannot make investments on the platform. I’d send them an email. Support@startengine.com is their main line. But thanks so much for the intention to invest! It’s been a pleasure publishing you and your team’s work, and it’s so cool that you think we are worth investing in. Again, sorry for the bug — equity crowdfunding is a young industry.

Can you give some general advice to all startup teams that are going to run equity crowdfunding?

Equity crowdfunding is not for everyone — it’s best if you are community oriented and independently owned :) it’s a young industry, so don’t expect it to be perfect. The pros, however, certainly outweigh the cons. It’s so cool that our most dedicated readers have become our shareholders. Thanks for taking the time to interview me!

Questions asked by Kirill Shilov