NEM Foundation update - a response to questions and anticipated questions


#1

Dear community,

To ensure that we continue to promote transparency; below is an update on questions and anticipated question from the media that we would like to publish to provide clarity to the community.

Reference: https://forum.nem.io/t/nem-foundation-message-to-the-community

Response to CoinDesk article:

Could you clarify on the submission of the funding request to the NEM community fund for 160 million tokens (worth roughly $7.5 million) which were to be ‘money used to rescue foundation’?

First, the request is not to the NEM community fund, there are dedicated NEM funds to support the contributors to the NEM ecosystem. This request will be made as a proposal to the community soon. It’s important to remember that the NEM Foundation operates as a separate entity and is one of many ecosystem contributors to the NEM open-source project. Therefore the NEM Foundation is not NEM. The NEM open source project remains strong and thriving and Catapult development is unaffected by the financial situation of the NEM Foundation.

Is it noted that layoffs are planned across its entire 150-person staff? Could you comment further on that?

The exact amount is not finalised but NEM Foundation is doing its best to ensure that existing team members transition to the new structure that is proposed. It is noted that there will be a significant majority of the staff that will have to be made redundant due to the budget cuts and change of focus to a product-based organization. Our HR team is working with the leadership teams to speak to all team members affected. Words cannot describe the difficult decisions we had to make to come to this point. We are only one month old as the new council, and to face the facts of where we stand is painful. We cannot apologize for the past decisions before we came into leadership, but we want to let you know that there is hope for the future.

How many people are you letting go?

We would like to emphasize that the NEM Foundation is not firing any staff. Due to budget constraints, there are layoffs. In addition, there is a complete structure reorganization underway. Those that have been laid off will be given consideration for current openings under the new structure if funding is awarded.

Could you elaborate further on the quote, “basically we realized we had a month to operate, due to the mismanagement of the previous governance council.”

During the transition from the 2018 Council to the 2019 Council, operating funds were temporarily inaccessible until the new leadership took office on January 1, 2019. This was due to transition registration problems with our bank. All operational funds were safe and untouched during this transition. When the 2019 Council took office, a financial audit was done and showed the new leadership had low operational funds and therefore could not sustain the burn rate of the previous 2018 operations. Therefore, a new Foundation restructure proposal was created and operations and staff were suspended until additional funding was secured.

It was mentioned in the article that the foundation’s 202 registered members will be asked to vote on the funding request in February, could you elaborate more on this?

This information is not correct. The registered members may not be voting on the funding request. The decision, process and voting on the approval of the funding request will be disclosed in due time as details are still being finalised.

Is it true that the number of layoffs will be determined by how much funding the community approves as quoted?

No. Layoffs are being made regardless of the funding approval due to the budget restrictions at the present moment and also the proposal to restructure the Foundation to be product-focused. The funding request is still subject to multiple factors and the council has made the decision to conduct the layoffs regardless if the funding has been approved or not.

If the funding request is approved, will there be the hiring of new team members?

Yes, priority will be given to past existing team member who had been laid off according to skillsets available and required first.

Is NEM Foundation really bankrupt?

No, the current Foundation is not bankrupt. We are running low on XEM and FIAT funds. The 2019 Foundation is currently preparing a plan to achieve funding for the rest of the fiscal year and the restructure was place as a cost-saving measure.

Have you told your staff?

Yes, communications have been to team members for NEM Foundation. Our HR team is also working the leadership to speak to all team members. There has been a community update here - https://forum.nem.io/t/nem-foundation-message-to-the-community/

What if you don’t get the funding?

NEM Foundation will have to stretch its budget and will look for other sources of funding to remain sustainable. We believe that NEM is owned by the community and we support the community’s decision regarding how future funds are spent.

What is Catapult?

Catapult is the NEM blockchain technology update that is slated to launch in 2019 and it is being developer by the core developers of NEM. The development of Catapult is not affected by the financial situation of the NEM Foundation.

Why do you think you can do this differently?

A lot of thought and reflection was put forth reviewing the 2018 Foundation’s failures and successes as well as understanding the general landscape of how other similar successful organizations are structured. We also concluded an audit of 2018 and based our findings, we made the decision not to move forward with the same organizational structure as 2018. We believe that the new foundation structure will be smaller but more effective and community-focused.

How can people interested in being part of the new structure do so?

There will be due process through the Foundation official communications channels on opportunities but this will be contingent on approval for funding.

80 million XEM was spent between Dec 2017 and Jan 2019, primarily on marketing - especially when Catapult was yet to launch, can you comment further on that? Why did the past management adopt this strategy?

The foundation’s original charter was to be the trustee of and make decisions for the public chain and spread its adoption. Awareness was a secondary goal of the foundation because it should increase naturally as a result of (successful) adoption. Therefore, in 2018 funds were primarily spent on marketing activities and training.

Since the new leadership came on 1 January 2019, the new strategic focus is to be product-focused and revenue-driven, changing the way NEM.io Foundation operates in its entirety. Decisions made by the past management had brought in value in different ways and the new structure would have to result lays offs and a focus on priority areas, one being the launch and commercialization of Catapult.

Is it true on claims by the anonymous developer that the past President ‘faltered when he used his visibility at the foundation to promote “sketchy” initial coin offerings such as Ecobit and ProximaX?

We can’t speak on behalf of the anonymous source but we can say that Lon Wong was a co-founder and the first president of the NEM Foundation which started in early 2017, two years after the launch of NEM. Lon left the NEM Foundation in April of 2018. Since that time he has been focusing on a project called ProximaX, in which is he the President. The NEM Foundation wishes Lon and ProximaX success in the future.

There was a comment that “there is still a great deal of work to be done in order to encourage developers to use the blockchain”. Can you comment on that?

Yes, a great deal of work will be required as NEM Foundation has a focus on the launch of Catapult. The new structure includes the creation of positions like a Chief Technology Officer and Chief Product Officer to ensure that developers are attracted to use the NEM blockchain. These roles are by other C-level positions like business development and revenue. Further updates can be found here - https://forum.nem.io/t/nem-foundation-message-to-the-community

There was a comment that there will be a “much more disciplined roadmap for 2019 and that teams are given specific budgets and required to perform more open-source documentation of their progress making tools for the NEM ecosystem”, can you comment further on that?

Yes, this is in line with the structural changes which will be implemented should the funding request be approved.

There was a comment on plans to “monetize the foundation’s activities in 2019, including enterprise training and affiliate marketing”, how do you plan to operationalise this?

The new structure will have a Chief Revenue Office who will be tasked to focus on monetization activities for NEM Foundation. In the meantime, we have been researching sustainability models and also pivoted all resources and teams to be revenue driven and product focused.


Other questions or anticipated questions (some questions may be similar to the above questions)

What happened to the former leader?

Lon Wong was a co-founder and the first president of the NEM Foundation which started in early 2017, two years after the launch of NEM. Lon left the NEM Foundation in April of 2018. Since that time he has been focusing on a project called ProximaX, in which is he the President. The NEM Foundation wishes Lon and ProximaX success in the future.

Is this simply a matter of philosophy? Reading this, it seems like self-promotion was the focus for the former team

The 2017-18 NEM Foundation was originally created to help promote and educate the community about the NEM technology and be the trustee to help make decisions for the public chain. The 2019 Foundation after consideration from the community and ecosystem partners has decided to move from an organization model where regional heads market NEM, to a more traditional centralized business model that focuses around the product development and service. We want to be clear that the NEM Foundation operates as a separate entity and is one of many ecosystem contributors to the NEM open-source project. Therefore the NEM Foundation is not NEM. The NEM open source project remains strong and thriving.

The newly elected 2019 leadership team is optimistic about the future of the NEM Foundation and it’s why the restructure was important.

Are there any changes in alliances?

The newly elected 2019 leadership team is optimistic about the future of the NEM Foundation and it is why the 2019 restructure was important. Support for partnerships is temporarily suspended until additional funding is secured but there has not been any specific changes to in alliances.

Is there any change in markets you’re approaching?

The previous strategy for marketing was a mixed bag approach with different regional leaders choosing different methods for adoption and awareness of the NEM blockchain technology. This naturally led to different marketing visions, execution, and policies. Upon securing additional funding, the 2019 Foundation plans to hire an experienced Chief Marketing Officer that will design and implement a unified global strategy for marketing. As result, we expect to see stronger alignment and support globally for the future NEM public chain marketing.

When you say XEM was frozen, what does that mean?

During the transition from the 2018 Council to the 2019 Council, operating funds were temporarily inaccessible until the new leadership took office on January 1, 2019. This was due to transition registration problems with our bank. All operational funds were safe and untouched during this transition. When the 2019 Council took office, a financial audit was done and showed the new leadership had low operational funds and therefore could not sustain the burn rate of the previous 2018 operations. Therefore, a new Foundation restructure proposal was created and operations and staff were suspended until additional funding was secured.

Can you clarify what you mean by "the new council discovered many XEM funds were frozen." How much was frozen and is this now spendable? How long would that last with a 60% reduced burn rate.

During the transition from the 2018 Council to the 2019 Council, operating funds were temporarily inaccessible until the new leadership took office on January 1, 2019. This was due to transition registration problems with our bank. All operational funds were safe and untouched during this transition. When the 2019 Council took office, a financial audit was done and showed the new leadership had low operational funds and therefore could not sustain the burn rate of the previous 2018 operations. Therefore, a new Foundation restructure proposal was created and operations and staff were suspended until additional funding was secured.

What has been the community response to helping with the restructuring funding?

The full report of the restructure and funds being requested hasn’t been given to the community yet, but is in its final stages of preparation and will be shared soon. Up until this point, the community’s response has been generally positive. A new Council was elected on the promise of change and so the community is welcoming the restructure.

Were people pinpointed and fired?

Nobody was fired, there are layoffs due to budget constraints. A cheaper, leaner and completely new organizational structure was created that moved the NEM Foundation away from a model with regional heads that were making decisions and programs on a regional level, to a global product oriented model with a CTO, CFO, CMO, CPO, COO, ect., making decisions for each area of competency. Those employees that were laid off are being reviewed to see how they can fit into the new product-focused foundation.

On the positive side, could you discuss the next milestone? Catapult?

We want to be clear that the NEM Foundation operates as a separate entity and is one of many ecosystem contributors to the NEM open-source project. Therefore the NEM Foundation is not NEM. The NEM open source project remains strong and thriving.

The newly elected 2019 leadership team is optimistic about the future of the NEM Foundation and it’s why the restructure was important. There is a new laser-focus on our mission-critical goals and as a result we are positioned to remain an industry leader and support through this ‘Crypto Winter.’

The upcoming launch of Catapult on the public chain will revolutionize blockchain’s future, and we are grateful for the community’s support in the next steps of this journey as the NEM Foundation pivots to better support the commercialization of Catapult.

Three things we expect to see in 2019:
1.) Expect to see more enterprise adoption utilizing Catapult.
2.) Expect to see more public and private chain transactions when Catapult launches.
3.) Expect to see stronger leadership, solid governance and more service to the community, partners and the world as we hope for a brighter future.


NEM Foundation - message to the community
NEM Foundation Update - vote for funding proposal 2019
#2

This should be the way, the current situation be communicated to everyone :slight_smile: good job


#3

Thanks for the quick and extensive response to the current uproar caused by traffic driven online journalism. :+1:


#4

Great work. Looking forward to the upcoming launch of Catapult.


#5

Thank you for taking the time not only to correct these issues, but also keep us in the loop while doing so.


#6

150 employees?! Oh dear, just layoff 80% and hire only devs in the future.

I am pretty sure that community will help with the marketing stuff for free.

It’s great to have these necassary changes, but don’t hire those guys who did basically very little in the past. Don’t spend funds to cover travel expenses and partying before Catapult launch.


#7

Yes, refreshing transparency and quick responses. We feel even better now about our choice to build on NEM now that Alex Tinsman and her team is leading the charge!


#8

Good move helping us to better understand the situation. Too much FUD everywhere. Good luck and stay strong, NEM is a great project.


#9

Thanks for keeping on communicating and lying about all of this and not running away from problems. Taking on issues head one is best way forward. I am sure if the market was not where it is at, NEM would have much more fund available.
A lot of people are over reacting as there a lot of blockchain platforms out there that even did ICO and they still keep all their dirty problems away from their investors.
Testing times ahead. Go Council !


#10

I suggest that the next time a statement is published, it should be drafted in a way that does not give the opportunity to the media to change the meaning of the information and have to re-publish a clarification.


#11

for real, the bankruptcy rumors were entirely unnecessary.


NEM Foundation - message to the community
#12

^ what can you expect from sensationalism & FAKE news
How many times have we heard of “Bitcoin’s CEO” in the news :slight_smile:


#13

GREAT very in depth response.

I would still like to see item by item where the money went 2017-2019! For example: If foundation paid for a employee to go to a conference to promote NEM I want to see how much that trip cost item by item and what was ROI of that trip.


#14

Product and revenue-driven foundation? This is awesome! Keep up guys!


#15

Yes, thanks @jleony for actively pushing this out to ensure there is awareness on this forum post too!

We will rise above this @shin ! One thing we noticed is how generally supportive is our stance towards transparency and this was we intend to as push forward for 2019/2020

Thanks, we intend to publish a roadmap for Catapult in the coming weeks.

You are welcome @zachamom we will continue to provide updated more regularly.

Yes you will notice a strong emphasis on technology and product development in the coming proposal, stay tuned!

Yes she has been absolutely committed to this and so it the council, even team members who may have had their jobs affected are supportive and sure that NEM will continue on despite the challenges we are facing. We see every challenge a an opportunity to step up!

Yes we will stay strong and work to ensure that the project lives on!

100%. We have taken the stance to respond to everything in black & white not, all written responses.

Completely.

Well, how we are measure is by the way we respond, we will continue to respond to this in the best way possible.

There will updates in the proposal but we want to make sure the community has the right amount of information. No paralysis from analysis and we need to make sure we have enough time to roll out with the plan.

Thanks @decentraliser , product-focused and revenue-driven and a community-oriented Foundation!


#16

NEM being one of early movers, however was too focused on huge marketing spending to work up price and name, instead of more real work. Knowing PR and marketing cost atomic bomb in crypto. But by putting adoption focus in passenger seat isn’t wise, as mentioned in here lacking on developers, while competition if heating up as many going mainnet this year. And NEM will be fighting over same developer pool. I have been following NEM’s social media and announcement. Seeing many MoUs signed with startups who has no directly benefit to NEM, but with one exception, NEM is one of first to work with Morpheus Labs (infrastructure tool/solution layer which helps to scale and lower entry barrier to users), yet I have NOT seen any real work been put in, instead seeing VeChain and rest started to work very close with them right now, and making a lot good moves. They are gearing up working with more blockchains, my feedback to previous team last year was futile. Hope NEM focus on working with real partner that aim to promote adoption, or at least do not lose out to your competitors who are joining them!!
Read and hope this will change


#17

Yes we will start working with a sharper focus besides just marketing, what is key is to ensure that we support the launch of Catapult, NEM’s technology update as well as work with the right partners to take things to the next level.

Once we set the KPIs and share this with the community, everyone will be able to see how priorities and work together to achieve it.


#19

Thanks Jason, I was in their event (last year) where NEM team was there. However don’t see any real work with them after the event but seeing more blockchains working with them on tech/Business/Marketing. As Xem holder, it worries me that NEM is missing out something here. There is reason why these blockchains working closer with them right?
Good luck and hope to see more real collaboration with good partners in real scalable adoption.
Happy Lunar new year


#20

Thanks, we are certain things will change with the new structure, the proposal is up now - NEM Foundation - Funding Proposal 2019


#21

With the new structure, there will be more focus on outcomes, more than ever.

If you are celebrating, wishing you a Happy New Year too! I am seeing a lot of red, I just don’t want it to be with regards to the XEM price!