Bundil
bundil is a company from Dallas, TX, that wants to use a familiar service model[1] to help everyday investors put their money into crypto currency. Users of the bundil app can transfer the change from their everyday transactions to the service to have it automatically "invested"[2] on their behalf into the Bitcoin, Litecoin or Ethereum crypto currencies.
The entrepreneur who created bundil was a web developer who was constantly being asked by friends and family members how they could invest into crypto currencies but found the process of managing wallets, signing keys, and the rest too difficult for the average person.
The goal of bundil is to minimize the hassle of getting into crypto currencies and to streamline the process. The entrepreneur believes that the frictionless "set it and forget it" aspect of the service is what will set it apart from the majority of commercial crypto wallets.
The bundil service was launched sixty days before the filming of the episode and currently has 360 users. The entrepreneur plans to acquire new users through Facebook advertising and predicts that the average customer acquisition will cost $2.77 per user based on the users the service has attracted thus far.
The business is not yet profitable but the entrepreneur intends to become profitable by charging each user either $3 a month or $24 a year in reoccurring service fees.
This deal aired on Episode 10.03.
Making A Deal
Mark exited the deal early citing a conflict of interest having already invested in ChangeEd. Daymond exited because of the volatility of crypto currencies. Mr. Wonderful, however, expressed his interest in the form of $100,000 for a 50% equity stake in the business. While this offer represented a bite of $800,000 or 80% of the value of the company the entrepreneur walked in with, the entrepreneur, seemingly reluctantly, agreed.
Analysis
First of all, while crypto currencies represent an interesting and possible new form of money, the Stats Shark wants to emphasize that they are entirely speculative and have no inherent value. This means that, unlike speculating on something like a house, the investor could be left with absolutely nothing at the end. The value of crypto currency is based on the value the community of investors believe it has and are willing to pay for it.[3]
Daymond was also correct that crypto currencies are extremely volatile in the value that investors have assigned to it. In just 2018 alone, the value of a single Bitcoin started at $13,400, rose to $17,100 by January 6th, and has since fallen, hovering around $6,400 by the end of October in the same year. The idea that something that can swing so widely should be seen as an investment vehicle should really only be used by someone who can afford to lose whatever they put into it.
However, the entrepreneur was correct. Investing in crypto currencies is onerous and, to the average person, seem fairly opaque. And the idea of using the spare change funding model[1] does seem like a good fit for people to be able to get into the market without risking too much.
Whether Kevin's 50% offer was a good one is another question. 360 users, even sixty days since launching, does not denote a product on fire. It's possible Mr. Wonderful's presence might help it gain some traction. But even the entrepreneur seemed reluctant to give up so much equity for such a relatively small amount of capital.
Notes
- ↑ 1.0 1.1 If this model seems familiar, it's because it's the same idea that ChangeEd from episode 9.20 in Season Nine used, wherein a user links the service to their bank account. Then, when the user makes a transaction using their debit card, the service then takes the difference between the transaction and the next nearest dollar and transfers it to be saved, invested, or used to pay down student loans. So if a transaction for $3.55 was made bundil, in this case would transfer the $0.45 difference between $3.55 and $4 to itself to be invested. Acorns was among the first services to implement this model.
- ↑ See the Stats Shark analysis for more on why "investment" may not be the best term to associate with crypto currencies.
- ↑ This isn't unlike "fiat currency" actually. The dollar bills in someones pocket has no inherent value other than the fact that everyone else is willing to give someone a "dollar's worth" of goods or services in return for it. The major difference is that the US Dollar, while inherently carrying no value, is backed by the "full faith and credit" of the United States government, something makes most people feel safe enough to invest considerable time and resources into it.