After a decision by the Brazilian government put hundreds of employed home help workers out of jobs, the team at Crafty saw a way for blockchain to shake up the job economy. Their app doesn’t take a profit, but instead works to connect those looking for domestic help (like cleaners) with people in their area who can provide this service. This app has a wide social and cultural impact, and this is demonstrated by their steady growth since launch.
Today, I’m chatting to Crafty about their unique business model and how it’s helping more people on lower incomes find the work they need to feed their families.
Tell us about Crafty - what do you guys do?
In short, we introduce service providers to contractors, with no charges, through a digital marketplace reachable through the web or a mobile app. This makes things absolutely simple and accessible by almost anyone with an internet connection.
Things start to become a little denser when you add a layer representing the most important aspect of this type of work: the reputation.
That’s our most important value and we really care about it so much that we developed the concept of shared curatorship which we also call a “chain of trust.”
We try to transfer to the digital environment the behavior of social networks. (By that, we refer to real-life social networks, not social media).
Why home services? Where did the inspiration for Crafty come from?
One of the co-founders, Mariano, is a well known Brazilian singer (and single!). His, let’s say, “unconventional schedule” for gigs doesn’t give him much time to clean his house, It’s a total mess. He needed someone to help him to keep his home clean.
Mariano is close friend with our CEO, Reinaldo Silva. Over a couple of beer, Mariono asked if Reinaldo could create an app to help him find out someone trustworthy in a big city like São Paulo. Immediately Reinaldo called another friend, Normann, Crafty's CKO, and proposed the idea.
This is not as easy as you’d think. As you know, we are Brazilians. Here we don’t have just Carnival, beach and soccer, but much more problems than you can imagine. Some of them are related to excessive government intervention.
In 2015 our government tried to regulate domestic work, giving to the workers as many labor rights as they have if they employees of the industry and commerce.
This made labor costs skyrocket to close to 100% of wages, with free weekends, a one month vacation and 13 salaries per year, plus stability for pregnancy and 6-months special licence after the baby’s born. As well as this, including time for feeding the baby after each shift, and so on.
The new law – which had the original purpose to guarantee rights – became a nightmare. Employers didn’t have enough money to face these additional costs, so they fired their employees and instead hired professional contractors on a daily basis.
While this was going on, our CKO – also one of the co-founders – started to develop the concept of a platform to connect both parties for free.
So, two days after that conversation at a local bar, the group started to talk about how to implement Diarissima (meaning something like a superlative of daily), and the app has been working now for almost two years.
Apart from as an investment, who would receive the most value by investing in your ICO?
It’s difficult to be precise about who benefits the most.
For sure the middlemen do not love the platform, but professionals who will be able to offer their skills to the market without costs or paying for advertising are among our strongest supporters, as are the contractors that hire their services without intermediation costs.
In fact, the whole chain will be much more efficient. Therefore, the unblocked values tend to be used to increase the expenditures in other services or products, with an increase in the velocity of circulation of money and, consequently, of the GDP.
Obviously, the base of the social pyramid – people with lower incomes – will see more benefits because of smaller marginal propensity to save. This means there's more probability that we’ll see this additional amount being carried to direct consumption.
How does Crafty differentiate itself from its competitors (if there are any)?
Since the beginning, with Diarissima, we tried to find out straight competitors without success, which lead us to register a patent of the business model at USPTO.
There are several characteristics that make us different. The most obvious is the fact we don't charge anybody to use the system.
There are several different businesses acting in this field of services, but they are basically of two types:
- a marketplace, which regulates and establishes standards of prices and quality, obviously taking part of the amount received as a service fee and,
- a media service, in which professionals pay to be included.
Another different aspect is the mutual evaluation, which constantly improves of the quality of services provided.
Apart from this, we are going to pay the users with utility tokens (CFTY) for their evaluations, which is definitively new.
How have you grown Crafty's presence in the market?
Basically, all of our growth is due to AdWords and word-of-mouth.
Until now, the company has been fully bootstrapped and this means (using a popular saying in Brazil) we needed to “take our milk from the stone”.
We tried several formulas to reach the best conversion rate at minimum cost (less than US$0.50), but now we’ve reached a plateau that’s difficult to overcome without investment in conventional media.
This is why we are going to invest up to 60% of the raised support in mass media, keeping in mind that the bigger the user base, the larger the possibility to hire and be hired within the platform – network effect at work.
Introductions by users into the platform will be compensated in tokens too in the future, emphasizing the word-of-mouth and lending its effects from the real to the virtual world.
Anyway, the results reached so far are impressive.
- Almost 80,000 downloads
- More than 25,000 users
- More than 170 cities with registered transactions and/or active users
- Almost US$1 million hired within the platform.
How is your team structured? What benefits do you believe that brings?
Our team is everything but conventional.
The CEO comes from the IT industry and started his journey too young at the very beginning of the Internet in Brazil. He became the CEO of a group of companies at 25. He's absolutely unstoppable and a total perfectionist. He used to say that he was the proud inventor and most important promoter of the "UMXGH DevSys - Ultra Mega Extreme Go Horse Development System".
His main activity is to show everybody that crazy things are not crazy at all, just a little bit different. Impossible is something that never spends too much time at our offices.
The CKO, the team's grandpa, is an economist with a bunch of international experience and specializations, among them Knowledge Management and Environmental Education, giving him an out-of-box thinking.
The IT team is absolutely top level, all of them full-stack, with specializations in artificial intelligence, neural networks, deep learning, computer vision and POS terminals, which allowed us to develop the platform in a very short time. Just to give an idea, the chief of the IT's team has as a hobby the study of BF programming language, which gave him his nickname.
Besides this team, we have advisors with international expertise in several areas like econometric models (Raúl Catalán), deep learning (Daniel Freitas), civil society organizations (Mirian Coura).
What are the biggest challenges in the industry you have had to overcome?
What we are proposing is to rebuild the way different parts reach each other and develop their relationships. There is a strong cultural obstacle to remove because we are so accustomed to wasting of resources that we think there's no better option.
The struggle against the wastage means not just developing the tools needed, but also convincing the people that another way is possible. It is something like Stockholm Syndrome – people are bound to the middlemen so they think they couldn't live without someone to take away part of their money.
People ask about their responsibilities with this new structure, and sometimes just can't believe they will not pay for such services.
On the other hand, conventional VC's are not interested in even starting a conversation after we answer their first question (“How much is the company's income?” “Zero, nothing, nil.”).
The point is the monetization system has no straight relation with the activities promoted, but with the adjacent transactions at the same value chain. This not easily understood, not because of its complexity, but because of the cultural shift required.
How have you found starting a cryptocurrency and trying to take your company global?
Crafty is a business born to be cryptocurrency-based.
The most important reason is that it's a decentralized business. Despite the fact there is a central command just like a traditional company, everything works because of the network, (or rather, because of the network's nodes.)
This means the business would not be feasible if there was no interaction between persons/users/nodes.
It’s absolutely crucial to recognize the importance of each node by remunerating them for each interaction, nonetheless, the individual rewards are very small.
This is a very important point because, from the perspective of the system, when you evaluate the individual amounts to be paid, the transaction costs to transfer tiny amounts of conventional money to each user would make the payment unfeasible.
Transferring amounts from and to internal accounts would be almost free, but it's necessary to guarantee the legitimacy of the system. The blockchain solves this problem.
Another important aspect is the fact that cryptocurrencies enable easy transfers, both domestic and international.
We envision a world without frontiers, and this means the platform will be useful to any professional who offer his/her skills on a remote basis. They can be hired and paid from any part of the world with very low transaction costs.
The utility tokens CFTY will allow almost immediate transfers with no additional charges beyond the blockchain charges.
What’s next for Crafty? Do you have plans to grow, expand or diversify?
The original plan was to develop the entire platform in Brazil and then start to develop other markets, but because of several opportunities that arose, we’re evaluating the possibility of simultaneously increasing the number of professions and covering other countries. This is still an embryonic possibility.
The platform has three variants to grow:
- new professions
- geographic expansion
- additional services
Points 1 and 2 are self-explained and the third can't be detailed yet, but we anticipate financial services and micro insurance will be among them.
Where would you ideally like to be in 5 years?
5 years is a long time to look ahead, but our roadmap points to a worldwide presence within 3 years.
We took the decision to include only the technological tools we already have under control in our white paper, but within the next few years several improvements will be available.
Generally speaking, we’re working to have the platform available through every device, which means obviously cell phones and computers, but also personal assistants and a deep connection with IOT. This means identifying how the system can take autonomous actions related to the needs of the user.
Being present in different countries means we’re going to face different regulations and laws, requiring adjustments for complying with each. We’ll likely establish local or regional partnerships in order to deal with such particularities.
If you had to give one piece of advice to an up and coming blockchain entrepreneur, what would it be?
We are living in the most incredible moment in our history. Finally, we are able to promote deep transformation in countless fields.
That's really exciting to see the opportunities ahead. At the same time, we often see vague ideas being promoted as huge innovations, with the clear proposal to take money from innocent people.
If the only target is to make money, we strongly ask you to avoid to use the blockchain tool. Every successful scam makes it harder for good projects to reach their target, and improve society.
If you are conscious about making this world better and your idea can help to lead us along such a path, please, have guts, go ahead. Use a hard helmet to protect your neck! If you don't try, you'll never know if you could succeed.
Social enterprise is huge right now, but it hasn’t really passed over into the blockchain world, until now. Crafty are leading the way for other companies to develop ways to provide valuable services, especially in developing countries.