By: Julian Moncada, Senior Associate
I sat down with Abra’s founder Bill Barhydt and Jeremy Welch and Carolyn Reckhow from Casa for a conversation on the blockchain space at our recent 2018 Lerer Hippeau Summit. Bill, Jeremy, and Carolyn have operated in the blockchain universe for years. They’ve lived through their share of breakthroughs as well as disappointments. Across the board, they’ve thrived as operators by matching their relentless enthusiasm with ruthless pragmatism.
Here are some takeaways from our discussion that founders inside and outside of crypto can use to evaluate blockchain opportunities and grow alongside the ups and downs of this new technology.
1. Blockchains aren’t the right solution for every business use case
The upsides of trustlessness and decentralization come at costs, most notably speed and scale. While it’s exciting to see the wide range of applications aiming to leverage blockchain tech, the fact remains that users and businesses alike will need to see ROI on using blockchain-based applications. For certain use cases, namely storing and transferring value, the ROI is there today, whereas, for other use cases, the benefits of trustlessness and decentralization are actually quite few and far between.
2. No matter how hot a market is, never take your next fundraising round for granted
In the Summer of 2018, the broader U.S. stock market was still riding a 10 year bull run. Many investors in both public and private markets had pointed to downturns on the horizon only to see their statements eclipsed by headlines that heralded “all time highs.” Nevertheless, the fact remained that few startups had yet see or survive their first true market cycle. At the same time, the crypto market had dipped about 50% from its “all time high” in only six months.
To this point, businesses need to maintain a sense of conservatism during bull markets. Getting caught up in the wave of positive news can easily lead entrepreneurs to expect financing as a given. Nothing puts you in a worse position than building plans on top of assumptions about an inflated market, only to have the rug pulled out from under you.
3. Culture saves companies during upswings and downturns
Balance sheets aren’t the only thing businesses worry about during market downturns. Downswings are a true test of internal and external stakeholder trust in a business. Hiring the right people and building a resilient culture saves companies and projects internally during market downturns. Bringing on team members who are true believers in your mission is critically important for this reason alone. Hiring doesn’t necessarily get easier during upswings, as more competition for candidates is inevitable, but maintaining a focus on core principles when engaging potential hires is the best way to cut through the noise.
4. Customer trust in the brand is critical
Externally, building a brand that customers trust is key. Even in a space built on the concept of trustless computation, earning trust among individuals, users, and customers is paramount. As such, a trusted brand is a key asset for businesses and projects alike as their markets or industries experience volatility externally. Trust comes from transparency and a dedication to upholding the company’s and stakeholders’ values in every decision. And that practice should apply not only to product and culture, but to partnerships, communications, and even financing decisions.
My excitement for the companies building tech in the crypto space is matched only by my empathy for the operators within it. I’ve found that the first principles of being an effective operator continue to apply to blockchain-enabled businesses and projects. To me, that means founders across sectors should take notes from this space and crypto-native founders should continue to learn from their peers and those that came before them.