After months of researching and writing about blockchain and a whole lot of flights, I finally made it back to Amsterdam. I know that the city is becoming one of the biggest startup hubs in Europe and given the explosion of blockchain-related startups, I figured there had to be quality projects originating from the city of freedom and business.
Given that the Netherlands is part of Europe, the Dutch regulatory approach towards blockchain still depends on decisions from higher up, but there are indications that the country is maintaining a hands-off approach thus far as in order not to stifle innovation. There is even a Bitcoin exchange machine at Schiphol airport.
Knowing Dutch culture, I understood that the companies I was about to interview were going to talk serious business, but I was still pleasantly surprised by the high quality and grand aspirations displayed by the 5 Dutch blockchain initiatives I spoke to.
This article features the highlights of these interviews, filled with valuable insights from the founders about blockchain technology and how it is to launch a startup in the space.
Whether it was the weather or the mutual passion for blockchain technology, the interview lasted far longer than our agendas permitted, during which Bart provided a clear overview of the problem Seal is trying to solve and shared his vision on blockchain technology and the industry as a whole.
My and my brother founded Seal and both have a vast track record of working with technology, having developed apps, founded several other startups and tech-related consultancy experience. We’d been aware of the immense problem of product counterfeiting and how it’s having a serious impact on a lot of global brands and had been introduced to Bitcoin and blockchain technology around 2011. Eventually, we understood how the one could solve the other, and Seal was born.
There’s a vast array of problems because of counterfeiting and the seriousness of these problems are largely underestimated. They can destroy brands by stealing large amounts of revenue streams but also because they have a strong negative impact on brand image.
Existing anti-counterfeiting measures don’t work and have actually given a boost to the counterfeiting industry by providing a false sense of security. Counterfeiters have become so proficient at copying anti-counterfeiting measures that oftentimes their product seems more authentic than the real ones. Intellectual property is violated on a large scale but every counterfeiting measure is cracked eventually. That’s where blockchain comes in.
The product Seal is creating ensures immutable authentication of consumer products.
This is made possible through integrating chips directly into each product, sort of a product’s passport. Through the Seal app, consumers can scan each product and confirm its authenticity, but also track its entire supply chain and see the exact composition of material in the products. The app can also be used for promotional activities and for product registration to prevent theft.
As Verschoor stated, Seal is built to protect both brands and consumers.
Seal won an award from the European Commission, making the blockchain startup the first ICO to receive a reward instead of a cease and desist letter from a governmental institution.
The European Commission understands blockchain technology and its potential very well, and one report states that it’s a perceived risk that only 13% of the cryptocurrencies have been mined inside Europe, which is a different perspective than most would suspect.
When asked about the current status of Seal, Verschoor had this to say:
The authentication process is finished. We’re running a pilot with a luxury winehouse in Italy, showcasing our working product. The app is still proprietary and we want to have our consumer app ready in a few months.
We’ve noticed that there’s a lot of corporate support for blockchain initiatives and are approached on a highly frequent basis. We’re trying to solve a real and urgent problem, indicated by our current overkill of requests. It has actually come so far that we’re in the middle of completely reengineering our internal processes to handle growth at scale.
It’s a very good problem to have as it legitimizes our company, but we have to be selective in our partnerships because of the overflowing demand. The restructuring is directed at creating an organizational structure that can really scale and is the biggest challenge we are facing right now. Once we’ve restructured, we’re ready to go big.
What Verschoormeans by going big is indicated by the bigger picture he sees and what role Seal has to play in this.
Product authentication goes much further than just verifying whether the product is real. We want to get the entire supply chain automated and transparent, so we can ultimately discover the real source of environmental neglect and waste.
In this regard, we’re seeing too little responsibility from companies and nations. They all shift the problem and because there is no global jurisdiction or consistency, we all end up paying the bill. I think blockchain fits in here, because we can operate on a borderless, immutable system. The end goal is to use all the data that runs through the Seal protocol to know exactly where our global problems lie and solve them accordingly and accurately.
The product manages itself, that’s we future we see. People often say that there will be a lot of novel blockchain applications that we do not know about yet, but actually we believe this is one of them. A self-managing product is something that was never possible. It can solve environmental, economical and criminal problems. That’s our vision.
On the blockchain industry in general, Verschoor shared his vision:
I believe blockchain will slowly disappear, but the ideology it has sparked won’t. It will give rise to completely new societal and economical structures, most prevalent being a return to a more equitable competitive business environment and the creation of a transparent and efficient circular economy. Accountability won’t be a luxury for those companies that can afford corporate social responsibility work groups, it will be intrinsic to every product of value.
That being said, I believe we’re in a pretty precarious situation with blockchain technology right now. What if the technology can’t make due on its grand promises? If blockchain won’t deliver on this, but will result in decentralized chaos, the pendulum might swing the other way and we’ll become super centralized. I believe it’s of vital importance to the industry to demonstrate its really value in the coming years.
On a sunny Sunday afternoon, I was invited over to the brand new office space of Blockport, which was still work in progress but clearly showed that a real company was going to take hold of it. After their successful ICO in January, during which the startup reached its hard cap of €12 million within 12 minutes, founders Kai Bennink and Sebastiaan Lichter achieved the financial means to create their dream: the world’s first social cryptocurrency exchange.
Given the project’s success within such a short period of time, I was really interested how the longtime friends experienced the process leading up to the formation of Blockport.
The idea to actually build this company started in May 2017. We had been into crypto for a while when we came up with Blockport and encountered a lot of issues with investing in and trading cryptocurrencies. When you’re just starting, it’s overwhelmingly complex which scares off a lot of potential investors. With Blockport, we want to make entering the crypto economy as simple as possible and staying in it attractive with a super intuitive user experience and a strong social element.
The more we started researching, the more points of frustration we discovered. Funnily, most of these problems have already been solved by most traditional brokers and exchanges but are scarcely implemented when it comes to the cryptocurrency industry thus far.
Honestly, most of the work leading up to the ICO was done with just a small core team of around six or seven people. Of course we’ve been helped a lot along the way by several talented people from within our network, but we realized that we really had to lead to make Blockport a reality. We started writing our whitepaper and designed our strategy, after which we got to developing the required technology.
Around the end of of August, we attracted our current CTO to join us and solve our technological challenges. We got extremely lucky with him and his enthusiasm and Zowie’s been working wonders, talent like that really makes the difference.
We assembled a development team around October orchestrated by Zowie, which is now a team of around 20 developers, which gave us space to concentrate on the endless list of other things that needed to be done to make our ICO a success.
On the question whether the fact that the team is Amsterdam-based helped the success of their ICO, Bennink and Lichter responded:
The moment we started with the release of the whitepaper we were nobody in the eyes of professional Amsterdam, just some guys with big ambitions trying to build a company and so we started from scratch with just our core team. Even though there were definitely other startups working with blockchain and cryptocurrency at that time in Amsterdam, we didn’t run into them and did all the pre-ICO work on our own.
This was an incredibly challenging period, which makes us more the proud that it’s going so well with Blockport at the moment. The ICO was a very important moment for us, not only because we reached our hard cap so fast, but more so because it really gave us the confidence that we were on the right track. It was a very strong signal of confidence in the real world value of our idea but also in our team.
Blockport has been making continuous progress ever since their ICO and their public beta is live, being actively used and the team just recently announced that it is officially going to integrate Bitfinex as an external exchange. I was wondering what the founders thought the role of the community in this process has been.
We’re really glad that blockchain is a global phenomenon, because that’s what made our ICO and is making our beta and platform a success. We’ve been receiving a lot of community support every since we started spreading the Blockport word and the effect of this is clearly displayed by how we raised our ICO capital.
It really was a crowdsale, with most investments coming from retail investors globally. We had no partners or private investors investing large sums, which was incredible to experience.
I think it also helped that we are building something that our investors can actually use themselves, giving us a good product-to-market fit. Also today, our community helps us on a continuous basis as they keep us sharp and every observed or perceived flaw is directly communicated with us, but they also provide us with feedback, new ideas and keep pushing us to make the most out of Blockport.
Even though the process has been going great for Blockport, the company still has a long way to go. I asked the founders what they see as their biggest hurdles at the moment.
We’re still running into a lot of challenges that are plaguing the industry as a whole as well. The absence of clear regulatory guidance has been difficult to work with, but the Dutch government is moderately displaying an informed, hands-off approach thus far.
The biggest challenge has been finding traditional financial institutions that are willing to work with us. We are completely regulatory compliant and planning to always be so, yet banks and financial service providers are very hesitant to work with us. In this regards, we can’t wait for clear regulations.
Even though it was around 5pm when I walked into the Guts office, it could just as easily been the middle of the day given the number of developers that were still focused on their laptops. I was received by Tom Roetgering, shareholder and co-founder of GUTS tickets.
GUTS tickets is a startup working on bringing blockchain-based solutions to the ticketing industry. The founding team had observed several serious issues in this industry, especially with ticket resales (the secondary ticket market) and with an absence of direct contact between artists and their fans.
A lot of artists we’ve been talking to want to control the price of the tickets to their shows to make them affordable for all their fans. Ticket resellers don’t contribute any value, but dramatically increase ticket prices and make exorbitant amounts of money. We want to remove this secondary ticket market and let the first price remain the price.
To tackle this problem, the team has started working with blockchain technology to tackle secondary ticket markets, but also to remove the large number of third parties involved in the ticketing process that raise costs. GUTS is the platform on which people can buy their tickets for the price the artists has set and this ticket has a dynamic QR code attached to the buyer’s identity.
When they want to resell the ticket, this can be done on the GUTS platform and on the GUTS platform alone, tickets issued by GUTS tickets can’t end up on secondary markets for multiplied prices.
Tickets bought through the GUTS platform are stored in the related app, which also allows for a lot of social features, giving tickets a social element.
Artists can directly communicate with their fans through the app, like sending some previews to get the audience excited or thank the audience after the show, but we could also integrate consumption tokens, discounts, marketing and merchandise tools.
GUTS is only really the start of a much bigger vision.
GUTS is the company we’ve created to learn, optimize and introduce our GET protocol to the world. which is our ultimate product with which we want to change the world. We want GET to become the engine of the global ticketing industry with our decentralized, blockchain-based Get protocol. The ticketing industry runs on an outdated technological infrastructure that is ripe for innovation.
How GUTS really got started is quite the inspiring startup story. The team had the idea and the vision, but lacked serious backing.
We tested the concept during a hackathon in Ukraine, in which we organized. Here we found out that tickets on blockchain could really work. Back in the Netherlands a big insurance company approached us to share knowledge and gave us some funding from an innovation fund.
To gain traction we decided to approach one of the bigger comedians from the Netherlands, Youp van ‘t Hek, because we knew he had objections against the current dynamics of the entertainment industry. We just went to his house, talked through the intercom and a few weeks later we talked with his management team.
Youp and his team were fully supportive and managed to attract several other big names in the Dutch entertainment industry to our company and provided us with national coverage.
About the future prospects of the company, Roetgering had the following to say:
The ticketing industry is very hard to disrupt or even enter because of the industry giants that have incorporated most of the supply chain, either through M&A or contractual agreements. It will take time, but we’ve been approached by many different parties that see the potential of what we’re doing.
For now, we’re working with individual artists, venues and festivals to optimize GUTS and complete the GET protocol. Because of our serious backing, we’re really confident that we’ll slowly but surely change the face of the global ticketing industry.
This interview brought me to the Southern part of the city, where a large number of startups, but also multiple established companies, are located. Safeguard is located in the offices of startup Bootcamp, an initiative to accelerate and connect Dutch startups.
Safeguard was actually born because we were approached by a large company if we could maybe create a product for alleviating work-related accident concerns. Me and my partner have been working together since 2012 on creating apps and were running to companies at the time we were approached.
We’d always been playing with the idea of solving work-related accident and the management of the process, which that company knew, and as soon as we started working on Safeguard we realized we were onto something.
We started with the Safeguard app, which has been up and running for a while and is used by 41 clients at the moment, including large Dutch companies such as KPN and BAM, but also several governmental bodies. We like to compare the Safeguard app and platform to the dashboard in a car. The dashboard shows how all individual components are functioning and gives out warning signals in case something is wrong, which is what Safeguard does for companies.
Through clever data processing and data analysis, Safeguard can greatly assist companies in preventing, signalling and documenting work-related accidents, which is a much larger cost for companies than most would expect.
For an app as Safeguard, you need cloud solution for which we use Amazon, but a lot of our clients indicated that they’d rather not have such sensitive data on external, centralized servers (the NSA and who knows could be watching). Blockchain technology provided the ideal solution to alleviate this concern, but also to create an ecosystem in which companies from all over the world can share work-related accident data and create applications and services to solve a lot of issues regarding this, making the envisioned Safeguard blockchain ecosystem a one-stop-shop for all services concerning work-related accidents.
Even though blockchain technology has the potential to bring the Safeguard’s services to the next plateau and dramatically increase the scope of the company, their actual move into the blockchain industry hasn’t been easy.
We were writing our whitepaper while Blockport’s ICO was incredibly successful, raising $12 million in 12 minutes. We were also thinking about our client base which would definitely provide credibility to our Token Sale and based on these two factors we were pretty confident in the Token Sale’s success.
We did decide to not approach our clients with the idea of our Token Sale and ask for investments before reaching our soft cap, because we wanted certainty before reaching out to our customers, who are very risk averse. The hypes and crashes of the market haven’t been good for the credibility of the industry, and we were afraid the Token Sale could lead to confusion among our existing client base.
We received a lot of attention and support, but then the market crashed. Even though the market showed no sign of recovery, we committed ourselves to do the Token Sale in May. We raised €250,000 worth of NEO, about one tenth of the soft cap, but that’s where it stopped.
After asking around we found out that people didn’t want to use their NEO after the crash (down roughly 60%) but wanted to wait until the value recovered, same went for Ethereum and Bitcoin which people didn’t want to sell. We really miss-timed our Token Sale and had to accept that raising funds publicly was not going to work during this bear market.
Even though we didn’t make our soft or hard cap, we’ve learned a lot from this experience and we decided that private capital through a private sale is the best way to go forward, after which we’ll resume our Token Sale once were confident enough in its success. We have the advantage that our main Safeguard business is being used with a growing client base (41 right now and we’re expecting to have between 60 and 70 before 2019), so this is definitely not the end.
One thing I’d really like to add as a word of advice to any aspiring entrepreneur, whether it’s in the blockchain space or any other startup climate, stick to your principles, remain control over your company and have every contract put down in black and white. There are a lot of sharks in the space that are trying to make the most money with the least amount of effort and they jumped on us after our unsold Token Sale.
We were promised a big bag of money by a private investor, but in return we’d had to give away a lot of control over the project and Token Sale. Even though we’d been through a lot and actually could really use the money for our blockchain endeavor, we still declined because we wanted to be in full control, which is something we are extremely proud of.
The founder of Safeguard had already told me about their connection with Effect.AI, saying that Chris Dawe has been a great help to them during their stressful startup and token sale period. Dawe even had his developers audit Safeguard’s smart contract framework (it has to be mentioned that this is not the first time Effect.AI has done audits, yet Safeguard was the first one to pass with a perfect score).
I sat down with Dawe in one of Amsterdam’s many historical, yet slightly tilted, buildings stemming from the Dutch Golden Age to discuss the high-reaching Effect.AI project.
When asking Dawe about his vision for Effect.AI, the scope of the company turned out to be much bigger than I’d expected.
We’re called Effect.AI because we as a company are building blockchain-based solutions for the development and trade of AI algorithms and to supply computational power to AI, but the Effect Network Protocol is so much more than an AI marketplace.
Given our background, it made sense to start developing our protocol form an AI perspective, but ultimately, any developer can build a dapp on the Effect Network Protocol, make use of our marketplace and cloud services frameworks, and built dapps for using our global labor force on demand.
The latter is what we’re focusing on right now. We’re doing this through the dapp we’re building on our own Effect Network Protocol, Effect Force. It will be the first dapp on the Effect Network protocol and is programmed to provide the infrastructure for our global human workforce on demand to annotate data.
We’re in the process of establishing labor hubs all over the world that can be used for AI algorithm training purposes, but of course such a labor force on demand can be used for a lot more. We’re always open for suggestions and proposals.
Effect.AI started out as a rather abstract idea, algorithms on the blockchain, which Dawe pitched to the 2 most talented developers he knew. They weren’ particularly enthusiastic about the initial idea, but it did plant the seed for what is now Effect.AI and the Effect Network protocol.
I was working with two extremely talented programmers that were looking around for new opportunities. Talent that good is extremely scarce and even though it was still early stage, I had to tell them my idea to try to get them involved. They did not like it, but it did give them the idea which finally resulted in the effect network protocol and effect.ai
We iterated the idea, started working on the whitepaper and doing the math for figuring out how to make our idea work out technically. We finished it mid-October, after which we sent out the whitepaper to several professors, blockchain professionals and the NEO core team.
NEO contacted us within 24 hours and we flew to Shanghai a day later, meeting with one of the most impressive NEO members, Malcolm Lerider. Additionally, blockchain icon Charlie Shrem became an advisor to the project and with these ingredients, we knew we were on the right track.
During Effect.AI’s ICO, the team managed to pull in a little over €11 million in funding, giving the project the financial means to start rolling out their ideas.
We actually just released our beta, during which we had 627 workers annotate 200,000 microtasks in 48 hours for an image classification company. Because we can create real jobs, the team has been travelling to Georgia a couple of times to talk to to government there and we’re having meetings scheduled with official institutions in Uganda, Nepal, Mongolia, Pakistan and Kenya.
We’re planning to build Effect social impact hubs in those countries. These are facilities that create jobs for the local community, whom are parts of our global workforce. Creating jobs in developing nations is something that gathered interest from the UN, who we’ve also been speaking to regarding potential collaborations.
When asked about his opinion regarding the Amsterdam blockchain startup scene, Dawe answered:
I really want to bring the blockchain startup scene in Amsterdam together. I don’t know if it’s a Dutch thing (Chris himself is Canadian) and I’ve been told by a lot of Dutch people it is, but I feel like all the startups need to stick together in this emerging, potentially world-changing industry, especially if you’re located in the same city.
We can make a really strong network of startups that stick together and share knowledge and resources on a frequent basis. What I really want to achieve is that as soon as people find out your blockchain company is based in Amsterdam, they know the company’s serious, quality business.
About the blockchain industry in general, Dawe had the following to say:
People working in the industry are super supportive because they all see the potential of blockchain technology, the industry is becoming a bigger and better well-oiled machine.
I feel like we’re beyond the tipping point and there’s no stopping it anymore. It will move into the future, all the large corporations are on top of blockchain. The technology is everywhere already, we just need to keep on developing it, which is happening on a large scale and will continue to do so.
Bringing It Together
After all these interviews, I had to conclude that Chris Dawe from Effect.AI was right about the dispersed blockchain scene in Amsterdam.
Even though there are thin lines of connection amongst the 5 leading blockchain startups in the city, strong ties are lacking which is a shame because these companies are targeting completely different industries with the same technology, creating the potential for a sound basis for open collaboration.
Based on the interviews, it was clear that even though a real startup alliance still needs to be formed, Amsterdam is a great location for these startups as the city clearly attracts talent, and shared office spaces for startups are abundant.
The potential value of collaboration is definitely heightened when looking at the quality, vision and progress of the companies.
Seal has the problem of being too much in demand, which is a very luxurious, though still challenging, problem to have. Safeguard has a solid client base and a working product. GUTS is closely working together with big names in the industry they’re targeting. Blockport is rapidly progressing to becoming a full fledged, social cryptocurrency exchange and Effect.AI is going full steam in establishing a global, on-demand workforce, an AI marketplace, cloud service provider to ultimately establish a one-stop-shop blockchain protocol for decentralized applications for all kinds of industries.
One very interesting returning element is that the projects trying to disrupt a particular industry are all working with a centralized company to promote, develop and optimize their decentralized protocol. They understand that to effectively launch a decentralized platform, you need an efficient centralized approach to start with.
It’s also interesting to see that the Amsterdam-based startups display a sound vision for the implementation of blockchain technology in their business models — no moon-lambo startups here! Even though the blockchain scene in Amsterdam is still relatively small and loosely connected, I’m definitely expecting a few gems to rise from this small yet industrious city over the coming years.