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Choon ICO review

16th March 2018

Choon is an upcoming ICO that looks very interesting at this stage. They describe themselves as:

a music streaming service and digital payments ecosystem powered by the Ethereum blockchain designed to solve some of the music industry's most fundamental problems

Basically a streaming service like Spotify, that uses smart contracts to handle compensation for individual artists and each member in a band. As of now there is no public product, the open beta is set to be released in the spring of 2018.

Review summary

Review Summary

The team

Choon has a solid team, with skills in building a business, solid tech background, blockchain understanding and great domain knowledge, but I don't see enough marketing background in the core team. That shows in the low marketing grade below. The team page doesn't specify what position each person has at Choon, something that I think can be rather worrying. Is Gareth a core team member or mainly a name to attract attention? We don't know from the publicly available information.

Gareth Emery has a solid background in the music industry and adds valuable domain expertise. I can't seem to find him on LinkedIn, but his web page has a lot of information. He has a large Twitter following and a Wikipedia entry. Apparently discovered Bitcoin in 2013, so a rather early adopter.

Bjorn Niclas has both entrepreneurship experience and a music background, a great combination. He worked with Gareth Emery 2009-2014 with the global tour. Solid Angel list profile with multiple exits.

John Watkinson has an interesting background, having created Cryptopunks. His and Matt's company Larva Labs has done some interesting stuff. He doesn't mention Choon on his LI, so I can't help but wonder if he and Larva Labs are contractors that will do the Android and iOS apps for Choon, rather than being core team members. Clarified on Telegram, both John and Matt work full time for Choon.

Matt Hall has mainly worked at Larva Labs with John, so not much to add. They worked on Cryptopunks together. This adds points both to tech and blockchain knowledge. Probably not part of the core team though.Clarified on Telegram, core team.

Scott Sartin is the CFO and has a solid background in Music industry taxation. Another team member with domain expertise.

The team tokens are vested over 36 months with monthly cliffs. Advisor tokens are not vested. It's unclear if the token lock is coded into the smart contract or not, but the wording implies that it probably is.
Team and advisor vesting

Team summary

Solid domain expertise in the team, multiple team members that really understand the music industry and presumably have good connections. Rather light on technical experience though, with two technical members, neither of them mentioning Choon on their profiles. Both are focused on app development but have worked on a blockchain project.

The team should be extended with specialized blockchain developers, backend developers and web developers in my opinion. Most likely developers for desktop applications as well, if they want to compete with Spotify and the likes.

Marketing is another area that is missing from the team. They will need a big marketing team to acquire users in a very competitive industry.

Advisors

Ben Chan - Director of Engineering at BitGo. Should bring much needed blockchain and multi sig experience. Background at Microsoft. Solid advisor, but doesn't mention Choon on his LinkedIn profile.

Matt Colon - solid artist management background. Should have good connections in the industry. Doesn't mention Choon on his profile.

David Hyman - founded MOG, acquired by Beats by Dre and became the CEO for a brief period. Founded Gracenote, bought by Sony, and was Senior VP at MTV. Does mention Choon. Solid advisor, a superstar for sure. Brings domain expertise, business knowledge and marketing to the table.

André Allen Anjos/RAC is a DJ that released his album EGO via Ethereum in 2017.

Cindy Charles - Entertainment lawyer with a background at Amazon and MTV. Have done consulting for Beats Music, Yahoo, RIM, Spotify, Soundhound, Nintendo, PopSugar and many others. Does not mention Choon on profile.

Alvin Jiang - VP of product and engineering at Tenx. Formerly PayPal. Solid advisor.

George Li - Co-founder WeTrust, formerly Google and McKinsey.

Min Kim - Has advised many hyped ICOs.

Jeremy Seow - Partner at ChainRock. Does mention Choon on his profile.

Bobby Runway - Talent management background.

David Ireland - Marketing and entertainment background.

Max Graham - DJ and crypto enthusiast.

Advisor summary

Some very solid names with great background, especially Ben Chan, David Hyman and Alvin Jiang. The advisor quality makes up for some of the gaps in the core team background. Maybe a bit heavy on the music industry side and not enough on the technical side. It does worry me that most of the advisors have no mention of Choon on their profiles. Making sure everyone changes their LinkedIn profile to include Choon would surely remove some worries.

Change in advisors

Datsik was an advisor, but was removed. A user mentioned the recent sexual abuse allegations on Twitter and the team quickly reacted and removed him as an advisor.
Datsik allegations Datsik removed This shows me that they are willing to listen to their audience and react when something is bad - huge props for not becoming defensive or trying to cover it up!

Token Metrics

The token price has not been communicated, but with 20 000 000 tokens for sale and the Whitepaper mentioning:

We have therefore budgeted total salary and employment taxes for this five-year period at $3.0 million, which equates to 30% of total expenditure.

We can deduce that the total ICO market cap would be $10 million and the price per token should be around $0.5 unless anything changes. This is a good level IMHO, I hope it doesn't change. The total number of tokens sold is 20 million, a nice low number in this time of multi billion token ICOs. The max tokens ever created is capped at 80 million, with 40 million released right away. The Whitepaper is a bit unclear on exactly how the other 40 million will be created, mentioning the rest as "Retained for streaming", ring fenced and held in transparent public wallets. They also state:

NOTES is not a mineable cryptocurrency in the traditional sense, but, in the firstfive  years  of  Choon’s  existence,  50%  of  the  total  supply  can  can  be  ‘mined’  byartists who upload their music to Choon.

So this seems to indicate that all the tokens are created right away. This would change the token metrics a bit, losing 0,33 points on Percent sold, turning it red, but still keeping the full score for Total tokens. I would prefer the percentage to be higher, but it's not a huge deal considering the rest of the token metrics.

The market cap is pretty perfect at $10 million. It leaves plenty of room for growth.

The tokens do seem to play an integral part of the ecosystem, mainly because of the use of smart contracts to distribute fund to the different contributors of a song or album. Tokens can also be used to tip or buy merchandize. Without the smart contract part of the platform, it could be argued that the tokens could be replaced by a simple monetary transaction in fiat.

Product

Prototype

There is a kind of prototype of the basic principle behind Choon that you can use to play a song and NOTES are distributed based on a smart contract to the two creators and the manager. Neat concept, you can see in real time as the NOTES are distributed. Obviously a far cry from a fully functioning product but it seems like it's actually powered by a smart contract already.

There does seem to be a more advanced version build and tested privately though:
Beta

I asked in the Telegram channel about a GitHub and quickly got a response:
GitHub Their GitHub repo contains a Smart contract written by John Watkinson, just two commits. Not enough to really get any points for GitHub, but it's a good start. The repo has a good Readme though.

Idea

I like the reasoning behind the product itself. A fair and transparent distribution to the artists without middlemen is an appealing thought. It has kind of been tried with Tidal though, and that has not really been a great success when it comes to market penetration. Gaining adoption with end users will likely be one of the major obstacles, like many would-be Spotify killers have learned before. Spotify and Apple Music have become very powerful default choices, and changing user behavior is not easy.

Type

Choon is basically a double sided marketplace for music. As such, they will have the chicken or egg problem. They will need enough artists willing to publish their music on Choon to attract listeners, while at the same time convincing artists that there is enough listeners on the platform to make it economically sound for them to publish their music on Choon. Musical platforms, especially paid platforms, are not that well suited for multihoming since users would have to set up their playlists on multiple platforms. A playlist import and export function would remove some of the problem.

Choon will implement a rather brilliant way to solve the artist side though, with "mining through streaming" of a fixed amount of tokens each day that is distributed to the artists. That creates a heavy incentive to be early on the platform.

Marketing

The Telegram channel is still small, only 541 member as I write this, but it's still early days. If they can get over 10 000 members before the ICO (for sure doable), they would get the maximum 1 score for Telegram, making their total score over 80%. That is of course granted that they don't incur penalties by using bots and scammy tactics to boost their following. So far, I see no signs of anything to worry about though. The admins do answer quickly to questions and try their best to be transparent and nice to the users. As they grow, an experienced community management team will be needed. Something that is not factored into my scoring at the moment, is reach in traditional media. With the media heavy background of the founders and advisors, I suspect that they will be able to get a lot of coverage quickly.

Business

If this would be a traditional angel investment, I would need a bit more information on the economics and business plan to make an investment. There is not much mention of how they will make money, other than this:

Share
80% of profits from streamed music or media sent directly to the content creators, retaining just 20% for operational costs.

By removing almost all intermediaries, artists regain control of payment flows and can earn hundreds of times what they presently do.

This shows that there is thought given to how they will earn money/tokens through the transactions done on the platform. I suspect that they will have to lower their percentage as they grow, but it will also be on a (hopefully) much larger volume.

The background of the founders does seem to indicate that they will be able to run Choon as a profitable business. That's crucial to the long term survival and success of any ICO in my opinion.

Whitepaper

The Whitepaper is well written. However, it completely lacks design, it doesn't contain a detailed roadmap, the roadmap that is there seems to be outdated and there is not much details when it comes to the technical implementation itself.

What is there though, is a good description of the problem being solved and a high level description of how they will solve the problem.

The Whitepaper would benefit from being update with a detailed roadmap on a technical level as well. This should of course also be included on their web page.

The score for the whitepaper is currently not factored into my total scoring algo, but will be within a month or so.

Warning signs

As of now, I haven't been able to find any warning signs. Datsik could have been a red flag, but the founders solved that problem quickly after being alerted to it. The only major things I've found so far are the lack of mentions on advisor profiles (common in early stage ICOs) and the lack of clarity of the team status of John and Matt.

I can't find any issues on ICO Check and very little negative on ConcourseQ, only the problem of regular users using a wallet to pay for streaming.

Other

As of now, there are very few public reviews, so I set a 50% score as to not skew the total score either up or down compared to other ICOs.

Final thoughts/TL;DR

Choon does seem like a promising ICO with a rather strong team. The token metrics are good, the team seems solid but needs more tech talent as well as marketing people. The advisors are great but most doesn't mention Choon on their profiles, a potential red flag.

The early prototype is promising but more of a proof of concept than a full platform for streaming. The marketing side is still early, with few Telegram followers, but the number will most likely increase when they get closer to the ICO. The admins are responsive and nice in the chat.

From a business standpoint, things are looking good. They have a plan for income from the transaction and experience running startups. The whitepaper needs work, especially design, technical details and a detailed roadmap. There are no major red flags and so far very few public reviews.

Final grade

Possible improvements that can affect the grade:
Assuming GitHub is released and looks good (+1 point), a good size Telegram following (+1 point) and a 75% positive review (+0,25 points) on major ICO review sites (Yeah I know, ICO bench is not the greatest, but they are big and well known), they could get to a 85,79% rating. The current rating is 78,76%, still a respectable score! Adding a well rounded CTO that has experience from building a music platform would further increase the score, as well as adding an experienced marketer.

Closing remarks

This is not a paid review and it contains to affiliate links or other marketing. This is not financial advice, just my thoughts summarized as I've gone through what I can find about Choon. The review has been posted to the official Telegram channel and the founders have been asked to comment if anything is misunderstood or wrong. If so, I will be updating this post.

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