Dear Cake DeFi Community!
Q3 2021 reminded me a bit of Q3 2020. We saw similar tendencies in the crypto markets impacting crypto sentiment, yet still, as a company we managed to grow our team, customer base and customer funds. Maybe not at the speed and pace we would have wanted to, but looking at our results, I am proud to say that we delivered significant value to our customers, team members and shareholders. Let me show off with a few of our Q3 highlights:
- We paid a company record 74 million USD in rewards to our customers, and considering we are in the same boat as our customers, our financial results in Q3 were mind-bogglingly strong.
- This naturally meant that our Q3 EBITDA was the best quarter to date.
- Our conservative treasury management has paid off dramatically, and we have all-time-high company funds to ensure the longevity of our company.
- The Cake DeFi team now has 70 active team members, with 10 more about to start, making it 80 in total. We are targeting 100 by year-end. As the CEO, I will be paying close attention to ensure that we retain our strong work ethic, company culture and team principles despite the growth
- Our PCAOB audit is in progress and our legal and compliance frameworks are stronger than ever.
Investors would easily pay over a billion USD for a company with these results, and even more if we keep growing and delivering. However, not everything went according to plan in Q3. As the leader of the company, I am constantly trying to raise our standards and own expectations. We are doing very well and other organizations would probably be thrilled with the speed and results we are having, but, if you are out to win, you have very little room for error. I am of the firm belief that Cake DeFi has the potential to be one of the world’s dominating tech companies. I believe being second is the same as being the first loser, so I want the entire team to continuously step up to make sure that we, as a company, win in all regards. In general, you have to be nimble and flexible to deal with obstacles that are avoidable going forward, and obstacles that are unavoidable going forward. The key is to fix the avoidable mistakes and be prepared for the unavoidable ones.
Let me list four reasons for headwinds that were unavoidable over the past three months. These would have hit us, no matter how well we were executing:
- First and foremost, we all experienced a negative crypto market sentiment. This was somewhat expected considering how strong the sell off was in Q2, and the repercussions could be felt all throughout Q3. This always affects people’s interest in investing into crypto. The great part about our Cake DeFi customers is however, that they are mostly very long term focused investors. Therefore, we still managed to grow our customer base and customer funds considerably.
- The second reason was that Q3 falls into summer for the Northern Hemisphere, which is generally a slower time for most non-seasonal oriented businesses. The same applies to other financial markets, which is where the saying “When in May, go away, but remember, be back in September” comes from.
- The third reason was due to the regulatory changes to crypto in the US and China. China pretty much banned crypto, which affected our Chinese-speaking strategy, and the US changed how they treat crypto from an accounting point-of-view, which affected our audit. We had to react swiftly, which we did.
- Last but not least was the reason for paying back “holiday debt”. Due to the pandemic, very few team members took days off over the past 18 months. With most countries opening up for tourism, most of our team members took the opportunity to take a well-deserved vacation. I had mentioned in many of my past updates that I had never seen a team work with such focus for such an extended period of time, and a large influence on that was the inability to do anything else other than being at home and work. Q3 2021 was the well-deserved payback time.
With those points having been shared, let me get to the key points that we can actively influence and those that I will personally watch out for in the upcoming quarter:
- We will run specific campaigns for existing and new customers, where we invest our own profits into the people that actually brought these profits to us. Nothing works better than word-of-mouth promotions by happy customers who love using Cake DeFi.
- Also, we will invest into key opinion leaders who will work with us long term. They are pricey, but worth it.
- Product-wise, the main focus for Q4 will be to have decentralized tokens and loans live on Cake DeFi. This will have a massive impact on our ability to conduct marketing campaigns and attract lots of new customers and funds. Having been slightly short-staffed in Q3 with many team members going on well-deserved holidays, we still managed to prepare most action items for this quarter’s launch.
- Additionally, we will put a strong focus on going mobile-first. This should help with the UX and UI of every key step in a user’s journey, especially signing up, completing KYC and adding funds to a service, which, when listening to our customers’ feedback, are the main stumbling blocks.
- The PCAOB audit will bring massive value to our partners and customers, considering that it provides the same certainty about our statements as any public company. This will allow us to attract even more customers, team members and funds.
- To increase our compliance and legal efforts, we will hire additional senior personnel in form of a VP of Compliance and a Legal Counsel
- We are receiving quite a lot of blockchain R&D requests, so in Q4 we will expand our efforts and work on current, but also future partners that we want Cake DeFi to integrate with. Eventually this will bring lots of value to our customers and, subsequently, to Cake DeFi shareholders.
- Probably not yet in Q4, but surely some time in 2022, we will go back to being a mix of remote and on-site company. Once the Singapore government allows for it, we will require local team members to spend at least 2-3 days per week in the office for team meetings, collaboration and socializing, while having 2-3 days to either work remotely from home. While I am sure we will receive some pushback from some team members at the beginning, especially because for almost two years they have only been working from home, I strongly believe in having such a mix. Additionally, we are planning on having 1-2 complete company get-togethers a year. I haven’t made up my mind if we are going to make them mandatory, as I see merits in both, making them optional or required. This will be a discussion a bit further down the road once travel opens up even more. All this will boost productivity, collaboration and the feeling of togetherness.
- A final piece of the puzzle will be to get a strategic investor on board, who will help us transcend from a 100-person company to a couple-of-thousand-people-company over the next few years. This is not about raising money, it is about structure, accountability and trust.
While it is important to focus on all the things we need to do in Q4, it is just as important to remind ourselves that it is always “the car we don’t see coming, that kills us”, meaning that we need to make sure we mitigate as many risks as possible. I split risks into three categories: Those we are not aware of — which are the most dangerous, those that we can influence, and those we can not influence.
- Risks that we are not aware of are the “riskiest”, because it doesn’t matter whether we can influence them or not — we are simply unaware of them. The best way to combat these risks is to hire team members that are smarter and more experienced in their fields of expertise than I am, and I believe we are doing that. Additionally, we have hired two Internal Risk Control Specialists who have an audit background, who will assist to map out potential risks and further on, mitigations with the teams.
- Of all the risks we can influence, the four most relevant are:
- Fund hacks, which we mitigate by using good wallet separation strategy and designs. Ensuring that key custodians are sound, processes are in place and only a limited group of people have authorized access to a larger amount of our funds.
- Data hacks, which we mitigate by having sound security engineering, social engineering mitigation, and clear and safe processes overall.
- Treasury volatility, which we mitigate by investing our treasury with the majority of funds in low volatility assets.
- Transaction errors, which we mitigate by using manual processes on top of the automated ones, such as Four Eyes Principle, before every large transaction.
- Of all the risks we can NOT influence, the four most relevant ones are:
- Crypto sentiment
- Crypto regulation
- Economic uncertainties
Comparing the lists, I believe that we are doing a great job minimizing our risks while maximizing our opportunities for our customers and the team. I want to finish with a reminder of our short, medium, and long-term focuses of our company:
Short-Term (3–6 months):
Cake DeFi will offer decentralized stocks, commodities, precious metals, and currency tokens. In what can only be described as an evolutionary milestone for the industry — for the very first time, a company will provide a seamless way for customers in over 100 different geographies to gain access and price exposure to multiple asset classes without the cumbersome hurdles that normally exist in traditional financial markets. Additionally, Cake DeFi will be undergoing a PCAOB audit for full transparency to customers, partners, team members and shareholders. Cake DeFi is easily valued at over 1 billion USD at this stage.
Mid-Term (1–3 years):
Cake DeFi will be adding an algorithmic decision-making functionality, built on top of various blockchain protocols offering any asset class, making it even easier for customers to pick investments based on their volatility tolerance, investment appetite and time horizon. This provides a lower barrier to entry and ensures that customers don’t have to learn complicated trading strategies, nor spend an arduous amount of time conducting their own research. Should they choose to utilize our service, the algorithm will suggest recommended investment strategies for them to opt into.
Long-Term (5–10 years):
Cake DeFi plans to become the world’s leading investment platform, not just enabling but also empowering people from all over the world to regain control of their financial and investment portfolios and manage in a simple, functional and safe manner. Customers will be able to add any form of value, and based on the search and functionality parameters selected via the algorithm, the system will automatically invest, re-invest and diversify their portfolio(s). By this time, the algorithm will be fully optimized so that customers can “simply opt-in and spend”, without having to worry about what, how and when to sell, etc.
If you are not getting excited looking at our roadmap for this rocket ship, I am not sure what will get you excited. I am more than enthusiastic about the months and years ahead on this journey. If you are an existing customer, I want to thank you for your continued trust, loyalty and support. If you are not yet, then what are you waiting for? Sign up now on www.cakedefi.com. Also, we have over 20 open hiring positions: www.cakedefi.com/jobs Have a look and if you see a role that fits, apply. We are an amazing team with a great work culture and an exciting roadmap!
I am so grateful for being on this journey with all of you,
PS.: If you haven’t done so already, follow us on Twitter (https://twitter.com/cakedefi) for all our updates.
Find the full version of this transparency report with all details on the various company departments here.