TL;DR Do you know any profitable B2B blockchain business? Yeah, me neither.
This blog post is the attempt to reconcile my different observations that I have in the blockchain universe. It acts as a brain dump for me. Anyway, here is what I observe:
- Blockchain is so insanely hyped it is beyond annoying. If you go anywhere in the world and try to connect with developers, there is no way of hiding from "Smart Contract Developers" and "Crypto Traders" (although the latter probably went back to drop shipping after the recent plunge of the exchange course). If you run a search for "Blockchain" on meetup.com you will find ~50 meetups for Berlin alone. And that is only for the meetups that have the word "Blockchain" in the name. It's gotten to a stage where friends that run startups are asked by their investors if they are utilizing the technology.
- The second observation is more about what I don't see: Proper blockchain companies that have a viable business model. Not a single one.
I will expand on the latter observation but before I do, I want to make clear what this post is not about:
- An argument on why all ICOs are essentially scams
- A cultural discussion why everyone in the Bitcoin universe is contributing to eco-terrorism.
- A statement on how ridiculous the idea of democratizing everything via distributed technology alone is.
I will be focusing solely on the argument how "Blockchain will make business processes so much more efficient and disrupt Finance/Supply Chain Management/Travel/Adult etc...".
This point seems very believable for a lot of people. But I wonder, shouldn't this theory be very easy to prove? After all, we are talking about the B2B space. And here, even more than in B2C: money talks. So all you need is an MVP, one client and a metric to measure their revenue increase or cost decrease. If your product moves the needle of the metric in the right direction: Congratulations, you are on the right track.
Yet whenever I look for actual case studies for blockchain products, all I see is "use cases". Elaborate stories on why a blockchain is a great application for a specific field and what great advantages could yield from that. I'm sure one can come up with a great story on how the floppy disk will completely change the game, but that doesn't mean it's automatically true only because enough people believe it. Even the top blockchain consulting firms, which I assume have a lot of clients and real-world experience, don't provide any proof that blockchain actually makes any money. They do however heavily feature logos of international players that they supposedly work with. Which brings me to my next point.
Slapping a logo of $airline, $bank or $cargo_company on your website can mean anything from: "Subscribed to our newsletter" to "Makes us billions of dollars". But for the sake of argument let's say all the companies featured on blockchain startup websites actually have legally binding contracts with them. If you research what they are actually doing it boils down to one thing: $corporation invested money in $blockchain_startup. Either by putting money into an ICO or by using their "innovation hub" for playing around with these technologies. And it makes sense, if I had money to spend and all my competitors are investing in blockchain stuff, I don't want to be the guy that is left out.
Which brings me back to my headline. Everyone that invests in blockchain seems to be driven by major FOMO which is an awesome premise for a marketing campaign. Slap "blockchain" on your slides and show that you know what you are talking about by using words like "distributed ledger", "zero trust" and "smart contracts" and the chances to get an investment increase. Sounds like a great marketing instrument to me.
My point is: other than riding on FOMO of investors, blockchain has very little to offer from a business perspective. I mean when did the hype start? Ethereum was founded in mid-2015 and I heard about the potential long before that. So far I have seen nothing substantial. For an industry that claims to "go fast and break things" 3 years is a long time.
Don't agree? Prove me wrong. Tweet me at @leifg and tell me about the ROI of your startup and how blockchain contributed to it.