NEM Foundation 2019 ROI Report
Please find the NEM Foundation’s 2019 ROI Report. A link to the document can be found here.
NEM Foundation 2019 ROI Report
If you are reading this, you are part of our tribe at NEM. Your participation has helped define this community’s culture and what the future looks like for the NEM platform. On behalf of the NEM Foundation, we want to say thank you. By supporting the adoption and development of the NEM blockchain project, you are empowering people across the world to make a better future.
The Symbol blockchain (formerly Catapult) is an amazing technological accomplishment, created almost entirely by the core developers. But even the best technology in the world can fail if it lacks tools and connections to the businesses that need it. The blockchain industry is competitive and Symbol must be well-equipped to battle for market share. As our leadership team took office in 2019, we had a clear vision of driving the launch and commercialization of Symbol. At the beginning of the year we mapped our programs, budgets, and people to the needs of the enterprise developers, companies, students, and end users who will all be critical to Symbol’s success.
For us, the challenges were substantial at times, including financial pressure during a volatile bear market. We fulfilled our promise to release the NEM Foundation’s roadmap based on our best information at the time for what we anticipated would be needed for future success. Software schedules are fluid and we missed some dates. In addition, the Symbol testing (that we hired through a third party) gave us and the core devs helpful information to determine the path ahead for launch.
Despite missed dates and ongoing testing results, our efforts had a big impact. We made important progress in nearly all areas, and in many others not on the roadmap such as migration decisions, transparency, governance, navigating global changes to regulations and compliance and also hiring experienced software professionals and subject matter experts.
Here is the 2019 ROI report to give context to our activities last year. First we’ll cover the spending, then the results.
NEM Foundation 2019 Budget
In early 2019, NEM Foundation secured a total budget request of $USD 8m. For the calendar year from Jan 2019 to Dec 2019, the total budget actual spend was at $6.7m outlined in the summary below.
Highlights of 2019 Budget Actual Spend:
1. Technology Development accounted for 43% of the total budget, with a strong emphasis on hiring top engineering talent, creating tools including wallets, SDKs, and explorers, working with vendors and developing the capacity for NEM’s platform to grow in 2020. This is in line with our mandate to focus spending on tech. (Link – Historical Tech Updates)
2. Business Development and Marketing consist of 15% and 12% of the budget respectively, with the majority of spending skewed towards the end of 2019 as we prepared for the launch of Symbol. Funding was spent on hiring the industry-leading PR agency Wachsman and Better Way Agency who supported the brand design and support materials for Symbol. We also maintained a steady stream of event engagements and built our partnership base to prepare for the launch. You can see our monthly activity update here.
3. Operations, Legal, HR and Finance, respectively account for 9% and 4% of the total budget, which was proportionate to our forecast in early 2019. Spending was invested in the team tools to succeed. This included software subscriptions like email and video conferencing tools, customer support platforms, project management tools, and more.
4. Of the total cost, the personnel expense was the highest at 61%, amplified by the Q1 2019 restructure and severance pay. Majority of the budget had gone to costs on people-related expenses. Towards the end of 2019, we also hired our CTO and other key C-suite leaders which added to the (expected) costs, an excellent use of funds. In the expense summary, there has been funding spent on NEM Middle East and North Africa (MENA), NEM Asia and NEM Europe at a total of 8% of the budget. This accounts for funds used for redundancies during the 2019 restructure as well as payment for all outstanding liabilities in 2018. It is unfortunate that those unexpected costs had impacted our budget but we ensured that all payments were made to ensure we conducted ourselves above board.
5. We brought on a strong technology development team, offered bounties for bug fixes, and used contractors and vendors for support. Vendors that supported us included the development of the mobile wallet, Japan market strategy and translations, including hardware wallet integration work. We also apportioned funding to support NEM Studios which are working on the backend development and the Catapult Go-To-Market support and which subsequently formed the Catapult Brand Steering Committee.
Results: 2019 Technology Development
The Foundation’s top priority in 2019 was supporting the Symbol launch.
We completely revamped the Tech Team and within a few months, we had engineering talent hired, and a suite of projects was in full motion. Some tangible technology highlights:
- New Symbol wallets (desktop and mobile) ready for public chain launch
- Symbol blockchain explorer
- Symbol Academy, a comprehensive online learning portal to train developers. This will be rolled out across our system integrators and partners in parallel with the launch.
- Symbol testnets
Much of this progress was driven by our newly hired Chief Technology Officer, Nate D’Amico. Nate is a veteran developer with product management experience at enterprise-grade software companies, including SugarCRM and open source projects like Apache Bigtop.
Greg Saive was another star player on the Foundation technology team, working alongside the core developers to ensure the front end tech is seamless with the protocol.
Additional technology support highlights:
- Better developer documentation, driven by our documentation lead, David Garcia.
- A group of qualified systems integration partners, including Tech Bureau, Opening Line Inc., Hatio, Techemy, FDS, and Labrys. These were made possible by our new vendor management process built on our Bonfire Service Provider Portal.
- Every technology project has had an experienced software project manager to hold the team accountable for deliverables on a daily basis.
- Foundation leaders joined efforts with NEM Ventures and NEM Studios on the Migration Committee in 2019. This committee worked out the difficult decisions around token and data migration, timelines, token economics, and other contentious issues. These decisions had to be thoroughly vetted with community, investors, devs, core team members, legal/tax experts, partners, and others in the ecosystem.
Results: 2019 Operations, Legal and HR
- We developed a “Transformation Team” to implement standards, processes, and policies in the new structure. We succeeded in showing the industry a more professional, more organized representation of NEM.
- We established a Secretariat office with designated staff to provide regular communications in the NEM Forums.
- We streamlined costs, such as leasing and operating costs of the NEM Blockchain Centre (NBC) saving the Foundation hundreds of thousands of dollars. An agreement was made for a third party to take over payment of the long-term lease and manage NBC as an event venue and co-working space.
- Transitioning from a regional structure to global structure, we shifted to a framework with more accountability through the set up of a Trust. The Trust is an additional layer of accountability for funds. The Foundation provides quarterly reports before funds are disbursed.
- We reshaped the organization to work in a “distributed workforce” environment. Our teams are dispersed across the world in about 20 countries. By using a shared software approach, team members can work together to access all of the Foundation’s resources without the management and expense of physical offices.
- The Q1 2019 restructure resulted in many redundancies. We engaged an HR service provider to make sure terminations were handled with appropriate severance and legal requirements and we paid the outstanding debts of the previous year.
- Another important operations hire was Adele Rom as Strategic Organization and Leadership Advisor. Adele’s 20 years in talent management and operations experience include positions as Vice President of Human Resources for JP Morgan Chase & Co and Head of Talent for Riot Games.
Results: 2019 Finance, Auditing, Accounting
- We engaged PwC, one of the big four accounting firms, to support our transfer pricing and financial matters.
- We brought strong financial knowledge around banking, compliance, and global exchanges through the hiring of an experienced finance team.
- We implemented a new third-party audit firm and set up a trust for the Foundation. This led to improved transparency and management of funds and kept operations accountable to a high standard.
- We consolidated and streamlined finances of various NEM entities in Europe, Southeast Asia and Asia Pacific. We have combined key bank accounts and expect further savings on financial services in the near future.
- At the Annual General Meeting and Extraordinary General Meeting we committed to have third party audited financial reports for both the Singapore and subsidiary Malaysia entities, which have since increased financial transparency.
- We also hired Lei Dong as our Chief Financial Officer. Lei brought strong financial knowledge around banking, compliance, and global exchanges thanks to his experience at Huobi.
- We secured new bank accounts ensuring we could operate globally to minimize risk.
Results: 2019 Marketing and Business Development
- We signed an agreement for the Catapult Go-To-Market support with David Shaw and NEM Studios. We subsequently formed the Catapult Brand Steering Committee. We worked closely with these teams to create and manage the approval process for a complete brand overhaul. We also signed a MOU for ~$750,000 with NEM Studios with funding to deliver upon the Go-To-Market strategy as well as back end development.
- We brought in marketing and PR experts including the PR agency Wachsman, and the Better Way agency to support our branding efforts.
- A comprehensive strategic marketing plan and market research were compiled to help Symbol fulfill its potential to become a world-class product. This included a Discovery Presentation, Competitor Social Media Presentation, and Competitor Creative Presentation.
- This work led to successful community votes on branding and the ticker. It also focused our efforts on specific industry use cases, such as healthcare, finance, insurance, gaming, and more.
- We began the creation of the Symbol website and marketing materials to be the face of the product.
- We substantially increased advocacy around regulatory efforts for cryptocurrencies and blockchain, including the V20 Summit in Japan.
- We worked with governments and financial institutions, including the Bank of Lithuania, on use cases.
- We worked alongside universities worldwide to contribute to curriculum for thousands of students and studies across the globe in building out Symbol Academy and the Developer Resource Center.
- We created a FinTech working group that worked on research, partnerships and planning for Symbol’s financial industry use cases. This research helped drive optimization of Symbol for the securities trading industry.
- Towards the end of 2019, we invested in establishing a Japan team, who are working on a number of projects and partnerships for 2020.
- We began the creation of Symbol Academy educational portal including videos, tutorials and use cases focused on NEM’s ecosystem.
More details on Business Development can also be found in our NEM Foundation monthly update for 2019.
We had many outstanding accomplishments this year, and without the Foundation’s efforts, the Symbol ecosystem of tools, developer resources, and support would surely be far behind where it stands today.
We made amazing progress starting with an all new team and building a well-managed organization with tech experts and subject matter experts taking charge. We focused on how Symbol will meet the needs of specific industries and we set projects in motion that will give Symbol marketplace momentum in the critical time after public launch. We did all this under budget.
We sometimes stumbled with project delays and communications. In areas like the Migration Committee, roadmap, launch date delays, and funding deadlines, we felt responsible for moving decisions forward, but we did not have the final authority over the decision-makers or open source decision-making process to end delays. This was a major pain point that will need to be solved as the ecosystem governance evolves. Many decisions had many rounds of vetting with many parties behind the scenes while the Foundation bore the main brunt of criticism. Still, the community looks to the Foundation for leadership, and we believe effective leaders will overcome these kinds of challenges. We did overcome them eventually, but we are challenging ourselves to improve our effectiveness moving forward and work with the core team, NEM Ventures, NEM Studios, and the Council on future solutions.
We move towards the 2020 public launch with renewed energy and confidence, and Symbol is well-positioned to meet the challenges ahead. The open-source distributed ledger industry is still very new, and organizations like ours must continuously adapt to meet changing markets and competitive landscapes. Change is the only guarantee.
But we at the Foundation have always held true to NEM’s original vision – fair, open, high-performance enterprise-grade blockchain will be an on ramp to the digital future.
With that vision, Symbol’s path to become an industry leader is clearer than ever. There are very exciting times ahead.
Thank you, community.
Alexandra Tinsman, President
Anton Bosenko, Council Member
Adele Rom, Advisor
David Shaw, Advisor
Dona Rinon, Council Member
Greg Evias, Interim Council Member
Jason Lee, Vice President
Jeff McDonald, Council Member
Laura Takenaka, Council Member
Lei Dong, Chief Financial Officer
Nate D’Amico, Chief Technology Officer
Niko Maenpaa, Interim Council Member
Pedro Guiterrez, Council Member and Head of Partnerships
Steve Li, Council Member
Previous ROI report: https://nemflash.io/nem-foundation-q1-roi-executive-summary/