Original | Odaily Planet Daily ( @OdailyChina )
Author | Wenser ( @wenser2010 )
Mass Adoption has always been an unavoidable topic in the cryptocurrency industry. In the new AI wave led by OpenAI, AI x Crypto has become an alternative solution for the mass adoption of cryptocurrencies. As one of the projects in the 6th season of the MVB Accelerator Program by Binance Labs, Sparkle recently announced its transition from an AI astrology application to "AI Disney" with the ambition to create a brand-new AI interactive entertainment platform through the encryption paradigm.
Odaily Planet conducted an in-depth online interview with Sparkle founder Harry to understand the unique approach of frontline entrepreneurs in the AI x Crypto field for the readers' learning and reference.
Odaily Planet Daily: 1. Let's start with a brief self-introduction and talk about the general origin of the Sparkle project.
Coming from a traditional internet company, I embarked on the "AI metaphysical psychology entrepreneurship road" by chance, believing in "Create Value and Make Impact."
Sparkle Founder Harry: I have a background in the internet industry and have been responsible for growth, creators, innovative business, and data science in internet technology companies such as Meta (Facebook) and Tencent. In early 2023, I officially started my entrepreneurship journey and founded Sparkle. Subsequently, the project was selected for the 6th phase of the Binance Labs accelerator program and received investment from the well-known venture capital firm Folius Ventures in the Asia-Pacific region. I have a wide range of personal interests, such as single-board skiing, ACG, and 3D modeling, and I am also an independent developer. I have independently developed some small projects since my student days. This is not only a personal interest but also to keep myself sensitive to the latest technology and industry developments at all times.
In the high-pressure environment of the psychological impact of the COVID-19 pandemic at the end of 2022, I noticed that many people around me were seeking fortune-telling consultations, and there were many jokes online similar to "psychological consultations more suitable for Chinese babies." This "metaphysical craze" phenomenon made me realize that it not only helps people with psychological counseling and emotional adjustment but also has certain commercial value. Personally, I also hope to do something "interesting and valuable," so, adhering to the core concept of "Create Value and Make Impact" (which is also related to my previous work experience at Tencent and Meta), we started to approach the product from the perspective of "AI astrology," and Sparkle was born accordingly.
Odaily Planet Daily: 2. How is the user feedback for the AI astrology product? What prompted the project to move towards the vision of "AI Disney"?
There were some difficulties at the beginning, but the user feedback far exceeded expectations; based on the core concept, the project is moving towards the larger vision of an "AI entertainment platform."
Sparkle Founder Harry: In fact, the initial product stage was much more difficult than we had imagined, especially in terms of compliance handling for app deployment (such as the restrictions of the Apple App Store). However, after the full version of the app was launched in May of this year, the user feedback data far exceeded expectations—our metrics such as next-day retention, 3-day retention, and 7-day retention are already on par with the industry's leading products. The commercial performance indicators such as product payment conversion rate also gave us strong confidence, and the product-market fit (PMF) has been initially achieved. The focus of the subsequent development mainly includes user growth, brand awareness building, and expanding usage scenarios.
The upgrade of Sparkle's vision is also a decision based on our core concept of "Create Value and Make Impact." AI astrology is just our first product, and with the second AI product already in the pipeline, the upgrade of Sparkle from an "AI astrology application" to an "AI entertainment platform" is a natural progression. Similar to the development process of ByteDance, where TikTok gradually transformed ByteDance into a platform-based brand, Sparkle's direction is also the same.
Odaily Planet Daily: 3. How do you view the combination of "AI x Web3"? What are the most important driving factors for the development of the Sparkle project?
AI x Web3 is a mutually empowering and problem-solving combination; Sparkle has chosen the direction of combining the two to address more diverse scenario needs; Mindset is the key to the project's development.
Sparkle Founder Harry: This topic is very broad. From a personal perspective, the combination of "AI x Web3" is nothing more than three ways:
First, AI empowers the Web3 industry to solve its inherent problems. For example, AI on-chain data analysis platform 0xScope;
Second, Web3 empowers AI to solve the challenges it faces. For example, projects like Render Network and io.net in the DePIN field.
Third, using the dual advantages of AI and Web3 to solve diverse problems in various industries and life scenarios, improving productivity at work or creating more interactive entertainment experiences.
These three directions have their own advantages and disadvantages, so the main consideration becomes:
- Market size: How large is the market behind the problem?
- Market maturity: Does the market have sufficient acceptance?
- Problem-solving difficulty: How to seek greater consensus and acceptance on a wider scale?
Different from the first two directions, Sparkle has chosen the third direction. This decision is based on our comprehensive evaluation of market size, market maturity, community consensus, and acceptance. We believe that real needs and applicable scenarios are the most important. Therefore, we focus on advancing the project in a mature market demand, rather than choosing directions that are difficult to implement or are merely conceptual. Moreover, the fields of entertainment and life itself have enormous potential and opportunities for continuous innovation.
As for the key driving factors of the project, I believe that the core is the team's Mindset. Take the user feedback feature of our product as an example. From a traditional perspective, this would require a large amount of operational resources to maintain. But from the perspective of an AI practitioner, this can be achieved with a simple "Chatbot + knowledge base" function. If we add the perspective of Web3, the knowledge base reserves and user feedback classification can be addressed through community incentives. Therefore, when we look at the same problem from a new perspective, we have a more efficient solution than before.
In addition, unlike projects in other fields, AI x Web3 projects need to have monetization capabilities from the first day of product launch. This is because AI projects require token (Odaily note: a unit of measurement for AI field API usage) consumption for the realization of reasoning capabilities using large models (whether it's Claude, ChatGPT, or privately deployed Llama), which involves token consumption (or GPU computing power consumption). Therefore, every token consumption needs to recover costs through commercialization, which is the biggest difference between AI projects and traditional non-AI projects. Just like in the Web3 field, the essence of cryptocurrency mining is to obtain tokens through computing power, and there is a corresponding shutdown price, which is the standard line for income to cover costs.
Odaily Planet Daily Wenser: This point is very well made. Simply put, in the Web3 field, Tokens are mined (strictly speaking, through the process of solving complex mathematical problems to verify and add transaction records to the blockchain); while in the AI field, Tokens are actually a unit of measurement, a cost of consumption, and this difference is very intuitive.
Sparkle Founder Harry: Yes, so after the token issuance of AI x Web3 projects, there is actually an implicit value anchoring, which is the consumption of computing power. The cost of token consumption during the project's development is the value anchoring point, and both user costs and project value fluctuate around this value anchoring point.
Odaily Planet Daily: 4. How is Sparkle's current development pace? How do you balance "product development vs. market expectations"?
The project is progressing smoothly, with the release of the second new AI product imminent; Sparkle has chosen the latter two elements in terms of time, quality, and cost, in order to gain long-term development advantages.
Sparkle Founder Harry: Currently, we have basically achieved the goals set in the Roadmap: launching the product, finding product-market fit (PMF), and implementing natural revenue generation through commercialization. The focus for the second half of the year is on user growth, which involves expanding the user base through brand marketing and market promotion, while also reducing customer acquisition costs and increasing gross profit margins. In addition, Sparkle's second gamified AI DApp, Prompt.Inc, is also about to be released and will soon enter the public testing phase to meet with community members. The successful release and profitability of Starry Book also prove that applying AI to life scenarios can create profound meaning and value. Therefore, we believe it is time to attract more people to join through Prompt.Inc, scale up, and create valuable AI applications. With this overall plan, we are getting closer to the time point of TGE.
Prompt.IncSneakpeek
Regarding the debate of "product development vs. market expectations," I believe that trade-offs at different stages are inevitable. In our case, in the early stages, to avoid the distortion of data caused by "product bugs" and "product hoarders," we took measures to handle a portion of the "product hoarders" in Starry Book. Subsequently, with the iterative updates of the product, we have also gained high recognition from many real users. Therefore, satisfying market expectations through practical actions, rather than excessively raising expectations and creating a false hype, is a better way of development. This approach has a positive impact on the long-term development of the project and the industry's reputation. After the project's TGE, the best way to meet market expectations is through "sustainable business development." At this point, the project's health, market value management, and more transparent governance mechanisms will become particularly important. Closer communication and more transparent governance mechanisms can not only enhance community cohesion but also better manage community expectations, thereby promoting product and project development.
Odaily Planet Daily: 5. What are Sparkle's advantages compared to competitors in the same field?
The key lies in time, quality, and cost.
Sparkle Founder Harry: In terms of product advantages, I believe it is necessary to review the current status of the AI field. Since the release of ChatGPT 3.5 at the end of 2022, the AI field has undergone significant changes. In the first half of 2023, the release of Agent and subsequent GPTs opened up more possibilities for scenarios, and the champion's throne of large models has also changed hands repeatedly. At the same time, the rapid development of tools in the multimodal field such as Midjourney, Runway, Stable Diffusion, and Sora has led to a significant transformation and reconstruction of the AI industry over the past year. It wasn't until the first half of this year that the underlying products of AI gradually entered a convergent state, providing an opportunity for the development of the middleware layer. Frameworks such as Langchain and RAG are still in the early stages, and everyone is exploring the best solutions.
In this context, every choice made by a startup company may face significant opportunity costs and needs to consider three key elements: time, quality, and cost.
Taking Sentient, which recently raised $85 million in funding, as an example, at this point in time, this project may have made certain sacrifices in terms of cost, achieving rapid high-quality development through a large investment of resources. When the AI hype was just emerging, many shell applications seized short-term dividends through rapid development and earned considerable income. However, these low-value-added applications have gradually disappeared because their model determined their limited lifecycle.
Returning to Sparkle, we chose to patiently refine the product matrix and underlying capabilities at a relatively low cost. From our perspective, the AI field has been overheated and unstable over the past year, and chasing hotspots and traffic may lead to significant resource waste, ultimately reflected in overvalued valuations, damaging the interests of market investors. As "high FDV and low circulation" projects are increasingly not recognized by the market, assets that are independently profitable, reasonably valued, and have potential for growth will become a trend. This, as evidenced by the recent actions of leading exchanges, can also be seen.
Based on these understandings, Sparkle has a competitive advantage in market opportunities, product quality, business health, and strategic planning. After all, we are committed to creating long-term value and sustainable business growth.
Odaily Planet Daily: 6. What support does Folius Ventures, as an investor in Sparkle, provide to the project? And as an entrepreneur in the latest market cycle, how do you view "high-quality assets and asset pricing"?
It has received great support in terms of resources and awareness; high-quality assets and pricing depend on different market roles, and Sparkle is prepared.
Sparkle Founder Harry: Folius Ventures is a distinctive investment firm, mainly focusing on the Asia-Pacific market and with clear investment themes. It has formed a large ecosystem in the Web3 application layer race. At the same time, Folius is an investment firm with a long-term vision, which makes me deeply believe that the next killer Web3 application will come from among the projects they have invested in. They also have layouts in the AI x Web3 direction, including top projects like MyShell. Founder Jason, as a well-known investor in the industry, provides comprehensive support to the Portfolio. He has provided a lot of help around different issues for projects transitioning from Web2 to Web3, helping founders improve their awareness and strategic height. He has also made significant efforts in overseas resources.
Regarding the topic of high-quality assets and pricing, just like doing business, the key is to clarify who the target audience for the assets is—is it users, institutions, exchanges, or market makers? Ideally, a high-quality asset should bring value to all relevant parties, although achieving this is challenging. Depending on the target audience, we need to further clarify two decisive factors: token distribution and expected holding period.
In the past, the interests of retail investors and VC investment institutions were largely aligned, with both hoping to achieve higher investment returns by increasing FDV (Fully Diluted Valuation). However, in terms of investment return cycles, retail investors tend to seek profits as soon as possible, while institutions face longer unlocking periods, so they are more focused on obtaining better chip prices in the primary market and realizing chip cashing out within a suitable time period.
Odaily Planet Daily: 7. In the AI wave, do you prefer UGC or AIGC? What role does Sparkle play in this? From an entrepreneur's perspective, which AI x Web3 projects can "survive" and even occupy a unique ecological position?
Ideas are priceless, and AI is a tool to improve concept development; the ability to create blood and a multi-product matrix are more conducive to occupying an ecological position.
Sparkle Founder Harry: In terms of comparing UGC and AIGC, the form is unclear in the short term, but in the long run, I believe UGC will still be mainstream. The essence of all content creation is to express creativity and viewpoints, and AI is just a tool to improve efficiency. For high-quality content, the most important thing is your Idea and Concept. All content is essentially a process of Concept Development, and AI is just a tool to improve efficiency. From the perspective of the entire industry, AI applications are still in the early stages, and for those who have not used AI tools, the threshold for effective questioning or prompts is relatively high. Sparkle's goal is to bridge this gap, and this is also the value mission of Prompt.Inc.
As for what kind of projects can "survive," from the perspective of an entrepreneur, the key to a project's survival lies in its ability to create business value. From the perspective of the industry's endgame and ecological position, personally, I believe it is difficult for the AI wave to produce giant companies like those in the mobile internet era. AI consumer businesses still need to rely on user volume and network effects to build barriers. Existing giants can quickly replicate new features or products through their existing traffic and network effects. Therefore, in the future, there may be more companies with annual revenues in the tens of millions, hundreds of millions, or even billions, but it will be more difficult for giants to emerge. For AI entrepreneurs, building competitive barriers through a multi-product matrix is a more practical development path.
This is also why Sparkle has positioned itself as a multi-product matrix project from the beginning. In the future, Sparkle will become a Holding Company, rather than the main business entity of a single project. By diversifying and implementing practical business models, we aim to maintain long-term competitiveness in a constantly changing market environment.
Odaily Planet Daily: 8. What impact do you think a entrepreneur's personal style and hobbies will have on the entrepreneurial process? Please share your thoughts based on your own experience.
Broad range of hobbies, ISTJ personality, very beneficial for entrepreneurship.
Sparkle Founder Harry: Of course. As mentioned earlier, I have many hobbies, especially skiing and model making, both of which require a great deal of patience and focus, so I have a strong focus on achieving long-term goals and enjoy the sense of achievement brought by delayed gratification. As a developer and creator, I often need to invest a lot of energy in details, and these hobbies also help me become a detail-oriented person. From the perspective of MBTI, I have a very typical ISTJ personality.
Odaily Planet Daily Wenser: I see. Hobbies and personality type are indeed an added factor for entrepreneurship. Among existing business leaders, Amazon founder Jeff Bezos and Apple CEO Tim Cook are also ISTJ personalities. Once again, thank you for the wonderful insights, Harry, and we look forward to more updates from Sparkle in the future.
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