Q&A: Sascha Mojtahedi, CEO of Bunz, the barter app that just launched its own digital currency
Bunz has changed the way a lot of Torontonians get new stuff. The bartering app, which began life as a popular local Facebook group, allows users to swap their unwanted items for other peoples’ unwanted items. Cash transactions aren’t allowed. At any rate, that’s how Bunz works in theory. In reality, many users resort to workarounds when the barter system doesn’t cut it. People will swap gift cards or TTC tokens as barely disguised proxies for legal tender.
Now, Bunz is offering its users an alternative to tokens. On Monday, the company launched BTZ (pronounced “bits”), a system of exchangeable digital points that Bunz is describing as “a cryptocurrency with immediate, real-world use.” Users can offer each other BTZ in trades, and they can also use BTZ to make small purchases at some Toronto retailers, like at the Drake General Store, where 1,000 BTZ gets you a $10 discount.
But are people who signed up to barter going to embrace a Bunz cryptocurrency? And, more importantly, will hoarding BTZ make us all millionaires? We spoke with Bunz CEO Sascha Mojtahedi.
Can you briefly explain what Bunz is, for readers who have never used it?
Bunz started as a Facebook group, founded by Emily Bitze, and it was a place where people would go to barter things. Essentially, you would post something that you weren’t using anymore, or didn’t want anymore, and someone would offer you something else in return for it. Then you would meet up and you would trade. That’s how it started. Now it has its own app that you can download in the Apple app store or the Android app store. And there’s also a website, Bunz.com.
Before you became CEO of Bunz, you had a series of management jobs at TD. Why did you decide to make the leap to the barter economy?
I think I was always more into technology than I was into the idea of a bank. At a certain point, I decided that what I wanted was to effect change and give benefits back to the community. The best way to do it was by going independent and building my own application with Emily. That’s how it started for me. It’s a pretty big departure, but I feel like it’s the best decision I ever made.
Bunz just closed its Series A funding round. You’re not disclosing the precise amount of money involved, but one of your investors is Fidelity, a major financial services company. What does that mean for Bunz?
We’ve just been fortunate to have really good investment partners who understand what we’re doing and continue to support us as we take steps into an unknown future in a very new space.
I use Bunz, and I’ve noticed that people often will find workarounds when the barter system fails. Like, later today I’m trading a guy a six-pack of Pabst Blue Ribbon because it’s basically nine dollars in cans. I’ve traded people gift cards, TTC tokens, other things like that. As far as you and Bunz corporate headquarters are concerned, should people ideally not be doing that?
First of all, I like to refer to Bunz headquarters as our community headquarters. I think when it comes to the barter economy, you have three issues. One of them is a value disparity issue, one of them is a medium of exchange issue, and the last one is divisibility of goods. What you’re referring to is a medium of exchange issue. The person maybe doesn’t have the thing that you wanted, and the double coincidence of wants aren’t met. That’s why someone goes out and gets a six-pack of beers.
Those problems you just described are the reasons the barter system isn’t the prevailing system of exchange. They’re why we have cash.
Those are the issues with the barter system. But the beauty of the barter economy is that it creates community. Since the Bunz app launched, we’re done around a million transactions. A huge number of people have met and built relationships as a result of that. There’s room for relationships when it’s not necessarily about you getting the most amount of money for your item.
Can you explain BTZ to me? How do people get it?
You download Bunz for iPhone or Android. In the app, when you activate your wallet, you get 1,000 BTZ. Every time you invite a friend, they get 500 BTZ and you get 500 BTZ. If you have a post and it becomes really popular and a lot of people engage with it, you earn BTZ that way. These are some of the early ways we’re enabling our community to earn BTZ. But you can’t actually buy BTZ right now. There’s nothing you can do to purchase BTZ. You have to earn BTZ by contributing to the community.
So you can’t buy BTZ on an exchange, like Bitcoin.
No, not at this time.
Can you mine BTZ?
There’s a number of things we’re working towards, but right now BTZ can only be used on the Bunz app. There are plans for us to expand that in the future and design ways for BTZ to live outside of the Bunz app, but you can’t at the moment buy BTZ or trade them on a foreign exchange.
Is the underlying technology blockchain-based?
I think that’s something that we’re going to be fully migrating over to, but in the interim it’s a semi-centralized solution, and there are a number of reasons to do it that way. I think we want to learn from the behaviours of our communities before we build more infrastructure to support that.
If it’s a centralized system at this point in time, does that mean if Bunz ceased to exist, whatever BTZ you possess would disappear with the app?
Yes. That will change when we allow you to take your tokens off the Bunz network.
For the time being, it sounds like this is more equivalent to a loyalty points system than a cryptocurrency. Would you agree with that?
Yeah, it’s a semi-centralized solution at the moment. We intend on becoming fully decentralized as we progress. I would say likely within a 60 to 90 day period. We’ve been working on this for well over a year.
You’ve signed up some retail partners, like the Drake General Store, who have agreed to accept BTZ in exchange for discounts on products. Is that a way of establishing a value for BTZ early on?
The strategy wasn’t around establishing a value of BTZ. It was more around making a cryptocurrency highly usable and figuring out how to allow people to interact with it in an easy and elegant way.
Bunz is a trading economy. BTZ is essentially a substitute for currency. Are you concerned at all about how users will react, considering that what they’re used to hearing from Bunz is that they should be trading items instead of money?
No, I’m not afraid of that. The vast majority of transactions are occurring with gift cards, or with subway tokens or something that is a medium of exchange. Really, BTZ is no different. BTZ, if anything, offers a more flexible platform. It’s really solving a problem for users.
How does this fit in with your revenue strategy? Is the idea that this will create some kind of cash flow for the company in time?
No, I don’t think this fundamentally creates cash flow. This is almost like a revenue-sharing model. Our revenue model will be very different from what people expect. We’ll likely have something to share in the coming months.
So the idea isn’t that Bunz’s executives are going to sit on a pile of billions of BTZ and become cryptocurrency trillionaires.
No, definitely not.
You’ve created a token with a free-floating value. What if I trade a bunch of my possessions for BTZ and the currency plummets in value?
We’re not quoting any value for BTZ just yet, outside of the ability to redeem it at a local shop.
I understand that, but there’s a perception that any self-described cyrptocurrency is capable of increasing in value very rapidly. Do you see any hazard in introducing the digital-currency concept to a community where people might not have much familiarity with the idea?
I think a healthy dose of skepticism is good. It’s very intentional that you can’t buy the coin. Some people will want to trade some stuff for it, some people will not want to accept BTZ, but the underlying intention of BTZ will become clear as we continue to develop our infrastructure and the strategy behind how the token works. We don’t want to do any harm. That’s not our intention at all. We want to be able to give back to our community.
If BTZ isn’t connected to an immediate revenue strategy for Bunz, what’s the business case for creating it?
I think it’s about decentralization. For a long period of time, we’ve built these large monopolies that have created a huge amount of value that is centralized into a very small number of peoples’ hands. If we can create a way that allows people to interact, while reducing the amount of value that’s extracted from them by large companies or entities, then that’s a great solution, because essentially it puts more value in people’s hands, rather than in one centralized institution’s pocket.
To me, as a user, that sounds really good, but if I were an investor I don’t know if I would be so excited by the idea of putting value in other peoples’ hands. What’s the pitch to somebody who is betting on Bunz becoming a billion-dollar company?
This is exactly the kind of conversation we’ve had with investors. I think there can be a huge amount of profitability while being decentralized and passing a lot of value to users.
Is there a bit of trendiness to this? Can you walk into a meeting with a venture capitalist, say the word “cryptocurrency” and immediately they’re 1,000 per cent more interested in what you’re doing?
Definitely not. There is some trendiness happening, but I think with the amount of media that has come out in recent months around cryptocurrencies, it’s not the perfect timing to be doing what we’re doing. But we believe it’s the right thing to do. I think there probably are venture capitalists who are super excited about this stuff, but I didn’t find that for us.
What was your best-ever Bunz trade?
I got a vintage Formula One t-shirt. It’s this amazingly thin shirt, and I traded two beers for it. It actually turned out that the guy lived down the street from me, so we met and hung out, and we became good friends. I’ve had a number of amazing trades, but that was one of my first and it still means a lot to me.