What It Takes to Run a DAO: Interview With Horizontal Systems

Image Credit: monsit/Depositphotos

We interviewed Aibek Esengulov, founder of our sister site, MakeUseOf, and the driving force behind his exciting new DAO, Horizontal Systems. His company has made the UNSTOPPABLE decentralized wallet app for Android and iOS.

Hi Aibek, can you give us an introduction to your new company?

Yeah ok, so we were actually building something else since 2014, we were trying to build a messenger platform for organizations like slack, it’s a messaging platform in a sense right? So we did the same thing and we built the product for mobile. The MakeUseOf app, for example, is a messenger platform integrated with some add-ons on top of them, but basically is a messenger right?

So we built this software, and it’s kind of difficult to compete in the ecosystem right now, because a few big companies control the space, and they are really powerful in a sense resource wise. It was kind of difficult for us to stay there, so we got into blockchain. we have been in this space for about a year now.

What we are essentially doing is building decentralized applications (DApps), and lately, a lot of people are talking about decentralized apps. There are some, but mostly it’s just decentralized exchanges, which are kind of very limited in scope. There is a decentralized youtube clone, but all of those are basically just websites. Even though they are decentralized applications, they are not really an application like the apps we are used to.

so what we are doing is building such kinds of apps, because we know how to build apps really well. We understand what’s really needed to build sophisticated and well-performing apps on iOS and Android ecosystems. At the same time now we know a lot about blockchain.

That’s what our company tries to do, we are building decentralized applications, and the very first one right now is a wallet. and it’s going to be released in about a month or so. That’s more or less where we are right now, so you get an idea.

Wow! Would you consider or do you have any plans to contract out and build apps for other blockchain companies?

That’s part of our concept in a sense, but as a company, we are doing something else as well. We are not really launching the company in a traditional way, like MakeUseOf for example, where this is a company with a legal address and so on. What we want to do with Horizontal Systems, is to launch it as a DAO, and what it would really mean is that there are certain people, and these people are those that own the [DAO] token, and these are the people that control the entire organization.

They can essentially keep the existing company working on the project and take a salary, or if they want to they can actually hire a new company or developer, so sort of like a blockchain governance. And that’s what we are developing right now, we have a product, there is a plan, and already minimum viable code for the implementation of this, but it needs to be tested really well.

Essentially, the plan is to launch a company and a brand which is a decentralized company. Anyone can be a part of it, and that company will be making decentralized applications. Like I mentioned, a wallet is the first one. That’s kind of an overview of everything that we’re doing right now.

So you’re running on Ethereum, and you’re going to use ERC-20 tokens to govern the company?

Yes, essentially there will be a smart contract, and that contract will be tracking the entities who own the tokens. It will regard those entities as owners. Within that contract, there is a certain functionality. I could go into the details, but the point I’m trying to make is that you put all the interactions between the board into the code, and within that framework, or whatever you put into there, a relationship is defined. That’s how I would explain it.

Ethereum is very convenient in that regard, you don’t really need to invent anything. Most of the infrastructure is already there, and you can go and create a secure app. But of course, in order to make a smart contract, you need to know what you are doing to make sure that that contract is safe. But the point is, it’s not really difficult to do the governance on Ethereum. It’s suitable for that and it’s very easy to implement whatever you want to do.

Ok, why did you want to run a DAO on a blockchain?

First of all, if you have some experience running a software company, a traditional software company, you have a lot of things that could have been automated and not really require any serious resources to maintain them. One such example is tech support. In any company, you have a lot of people in the tech support team. Most of the time they may be trying to fix problems in the back-end infrastructure, for the most part.

I really liked the concept of decentralization when I heard about it because of that. because when we were building messenger platforms, a lot of the time you end up spending on fixing issues on your backend. I suppose it could have been made perfect from the very start, but you don’t have that in many software companies. You have very buggy backend ecosystems, which require a lot of effort to keep it functioning well.

So, I like the concept of decentralization, it kind of really appealed to me. That’s really what attracted that, so we decided to go into blockchain and start making decentralized apps, but we didn’t really plan to launch a DAO. That really came afterward, but the basic idea here is that you can optimize the efficiency of running a company if it’s fully decentralized. If you launch a properly decentralized company in the current blockchain ecosystem, you end up needing far fewer resources to keep this thing going.

I think like Bitcoin’s blockchain, everyone uses it, and everyone knows that Bitcoin is great. There are a lot of people contributing to the protocol, for their own reasons. That’s what I wanted to do with the company. We really wanted to launch it as decentralized as possible. There are some things you cannot really decentralize yet, but for the most part, everything that you do in a normal organization, you can do it on blockchain as well—specifically Ethereum.

This sounds really harsh, but are you just riding on the blockchain hype? Is there any reason you didn’t use a “traditional” central database?

I don’t really have a definitive answer to this, but I’ll tell you how I perceive it myself. Our company is about four years old. There are fourteen of us, and for the most part, we are all programmers. So we started building this messenger platform four years ago. We considered WhatsApp and Telegram etc as our competitors. Essentially, the level of competition in that industry is really high. It’s really difficult to come into the market and build a messenger like WhatsApp and try to convince everyone to change.

Other than the marketing part, the hardest task is to actually build it. You don’t have many open-source libraries, you have to actually do it. Building messenger apps is tough, I can tell you that because we built one. It took us a lot of time to get a lot of things right. including the performance.

Knowing all of this, when I looked into the blockchain space, what I saw is that there are a lot of fairly mediocre companies, with literally nothing, like just a whitepaper, and maybe a little code, but something really simple, like a team, can do in a week really. Those companies were making a lot of money and generating a lot of hype, so it kind of occurred to me that going into that space, with the software development knowledge that we have would give us a lead.

If you have some experience with wallets, they are all bad for the most part. It’s really hard to use them, but that’s not something that’s difficult to build. It’s not easy, but it’s not that difficult either. That’s what really tells you what sort of companies are there now competing for the users, they are very weak. There are very few “good” apps, like wallets, and exchanges and so on. So, it’s an opportunity basically, and not a lot of good companies are competing there, so it was a good opportunity.

But at the same time, I found a lot of good things in that space. You have decentralization, which is really great in the sense that you can put an e-commerce system in your app and you don’t need to do it through some kind of payment API provider, which requires you to do a lot of things you don’t know how to do. You know, if you’re an IT person, you may not know about financial regulations. There were a lot of advantages like these.

How do you plan to make the wallet and the whole company profitable?

I have some experience monetizing the product. I’ve done this before, and went through this entire process with MakeUseOf. We were not making anything, and slowly, slowly, over the years we ended up having a huge team. And it was difficult. Monetising a publication is not an easy task. It’s a very difficult one, which I probably couldn’t do really well. With a wallet app, I don’t see any issues with that. I really take it as a challenge in a sense, because I think it would be fairly easy to monetize the application, as long as it’s really good and users are using it.

When I say monetize, usually when you’re in an app, and you need users to pay, there are a few things to do. You need to get credit card information or connect your app to some provider. There are a lot of complexities in that process, which make it difficult as an app provider, or whoever you are to get money from the user. If you are providing a wallet service, essentially for the user to pay you for something, it’s like a click of a button, maybe an interface. A few clicks of a button, enter pin, and that’s it. So I think it would be easy, and within the wallet, our plan is to monetize it by providing users with financial data.

When you get a wallet, essentially you are getting a list of wallets for each blockchain. There’s a wallet for the Ethereum blockchain with a balance of zero, and a wallet for the Bitcoin blockchain with a zero balance. And so on. You may have heard about Cardano [or any other project], but maybe you don’t really know what it is.

Essentially, what you are hearing is what the media tells you. You may not go to the GitHub page, look at the code, and really study it—not many people do this. You may not know much about the project, even if you look at the Coin Market Cap data. I would consider myself fairly involved and consume a lot of information, but I still don’t know most of those companies, and what they do. It kind of takes time. You select one, go, study it for a couple of days to get the picture.

I released that all of those companies, they have quite high market caps, about 50 million, some a few hundred million. At the same time, there is not a lot, and in some cases very little information about what this company does, whether they have a team, how they work, how many tokens they have, if they can mint as many tokens as they want.

The really important parameters about that data. So one way to monetize the wallet, which is what we are planning to do, is through that financial data. We can use our experience to analyze projects from the perspective of an IT company. We can tell users and potential investors whether it’s an overvalued token, whether it has anything or not, based on their whitepaper. So that’s an example, but to be honest, I’m not too worried about it. Essentially with the wallet, it’s important to integrate as many blockchains as possible, so that the user can have everything in one wallet.

That sounds great! What is your biggest challenge, in the run-up to building the app, and going forward with the company and producing new apps?

The wallet was the first app we tried to make, and the choice for making the wallet was simple. It’s how most people interact with blockchains, and so it was a logical step for us to learn the technology. You learn by creating a wallet for each blockchain. Right now we have a wallet which works on three blockchains. It supports Bitcoin, Bitcoin Cash, and Ethereum. So, I think for a few months we will be integrating support for as many blockchains as possible because it will also give us an opportunity to study each of them.

For the time being, I’m not sure when we are going to start on a second [app], but I think it’s definitely not something we’re going to postpone for six months, maybe for a few months, but it’s public, fully open-source. It doesn’t have any servers that it depends on, so essentially it means that anyone can go and contribute and make that wallet better, maybe suggest some improvements. It’s possible to do that on GitHub, and a lot of projects are being improved that way. That’s the plan for the wallet.

We want to make it really good before we jump on something else, and I think that is what we are doing with it. There are a lot of cool things about it from a technical point of view. I won’t go into details, but I think it’s definitely one of the best ones out there.

Do you have any advice to someone reading this transcript right now, who wants to make their own apps or blockchain companies?

It’s a great time right now to learn I would say, to learn Solidity, which is the smart contract language for Ethereum. Anyone who is able to learn it can make a lot of great apps on their own. You don’t need a lot of people to do that.

If someone is interested in making blockchain apps or something related to the blockchain, I think that’s the best way to go about it. Because in the apps and services space, we’ve yet to see anything. For the most part, there is nothing there yet. There are no popular apps which everyone is using. So we’re going to see a lot services like that. The very first ones are not going to be sophisticated, they are going to be very simple. There are some examples used on the blockchain right now with cool ideas which are working, and I think are working very well, so a lot of those will be popping up in the future. I would say it’s a good time for anyone who wants to create something or to do something interesting in the web space, learning how to do things on the Ethereum blockchain would be a good thing.

That about sums up all my questions for today. Thank you so much for your time Aibek, we’re really excited about your project! Are you able to share with us the link to your Github repository just yet?

Yes, essentially with the GibHub repository, we tried to put everything we have on there. I think the cool thing about it is when were say something about our app or about our project, anyone who is able to use GitHub is able to go and see that whatever we say is correct. It’s fully open-source.

Let us know about any projects you’re working on either in the comments section below or on our Twitter and Facebook communities!

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