Entrepreneur Office Hours - Issue #58
Thoughts on crypto and advice to founders closing their first round of VC
A reader sent a question about crypto. Admittedly, I’m no expert on the topic, and this isn’t a newsletter about blockchain. However, crypto is an important entrepreneurial opportunity space, and, in case you’re not paying attention, I suggest why maybe you should be.
On the more standard entrepreneurship side of things, you’ll find an article where I discuss what I wish I’d known about taking funding from venture capitalists before I actually took it.
And this week’s Web Masters features Genevieve Field, the founder of Nerve. Nerve was an early, risque Web magazine. Even if Nerve was a bit before your time, we’re all still feeling its impact. In fact, publications like Nerve are the reason the Internet is a space where anyone can publish anything (for better and for worse, I suppose).
VC can be great for your startup, but it can also create lots problems. Do you really know what you’re getting into?
The Editor Who Pushed the Boundaries of Online Content
Anyone can publish anything online... for better or for worse. However, in the earliest days of the Web, there were lots of questions about what kind of content would be acceptable. Those questions were answered thanks to risque publications like Nerve.
Hear how Genevieve Field built it on the new episode of Web Masters:
…or search “Web Masters” wherever you listen to your favorite podcasts.
FROM THE ARCHIVES…
I used to tell every entrepreneur I met that they should teach themselves to code. It’s actually easier than they think. In retrospect, I’m not sure that advice was very good.
Office Hours Q&A
Thanks for all the great startup wisdom you share. Love your writing.
I’m curious to get your take on crypto. Maybe from an entrepreneurial perspective? Are there still good early mover startup opportunities, or has that ship sailed and the space is too saturated?
I’m by no means a crypto or Bitcoin or Ethereum or Dogecoin or NFT expert. However, it’s definitely what all the cool kids are talking about these days, and, honestly, I’m not sure most of them are experts, either. So… sure… I’ll give this question a shot. Plus, I’ve been interested in crypto for a long time. As-in I’m one of those lucky people to have lost what would now be millions of dollars worth of BTC in the 2014 Mt. Gox theft. #StillPissed
Nevertheless, let’s start there… why I’m a big believer in crypto.
I hear lots of people giving their explanations about why crypto “matters” and why we should care, etc. Most of those explanations overlook the real reason I’m a crypto enthusiast. In order to explain that reason, I should note that I’m trained as a humanist, and my extensive research into the history of things like oral poetry, bookmaking, printing presses, and digital media makes me a “media scholar.” That’s a pretentious way of explaining I spend lots of time thinking about how the communications technologies we use impact society. It’s also a pretentious way of explaining why I’m a nerd. Consider yourself warned.
With that in mind, I believe in the importance of blockchain and crypto because I mentally try to think about crypto in the context of larger historical trends. Historically, human societies are based on geographic location. That makes sense because, for the vast majority of human history, someone in North America couldn’t communicate with someone in Africa. It just wasn’t possible. As a result, societal structures (i.e. governments) were built in relation to physical locations. Those structures evolved from things like tribes and villages into feudal kingdoms and small city-states. We’ve had empires and we’ve had colonies, and, currently, the world exists in a nation-state paradigm. (BTW, this is all a gross oversimplification since… well… this is a newsletter Q&A, not a scholarly monograph.)
The point is, historically, all those societal groupings were based on location. At the center of those groupings were/are governments, and two of the main roles of government are: 1) to establish and stabilize a currency for the purposes of trade and commerce; and 2) maintain order for communities through the enforcement of laws.
Still with me? Starting to see the connection? What happens when social groupings defy traditional geographic boundaries?
These days, thanks to the Internet, we can all be members of robust and enormous communities (like the Entrepreneur Office Hours community!) that have zero relationship to our geographic locations. That’s cool, but it also creates an interesting social challenge. How does commerce and trade happen in communities that overlap so many different nation-states and all their different currencies? And what about questions of ownership, property, theft, and so on? Who/what underpins digital commerce and digital ownership?
Those are the kinds of problems blockchain solves. It creates an “authority system” in distributed communities that don’t otherwise rely on the same geographic-based, governmental authorities.
Am I arguing crypto is going to replace traditional geographically-based governments? Of course not! They’re still critical. After all, being part of online communities requires physical infrastructure. We still need electricity, Internet, running water, police, fire, and so on. Instead, I suspect blockchain and crypto will ultimately (decades from now) establish themselves as the digital analogs to geographic-based authority systems, and the two will operate in parallel while being able to focus on the things they do best. It’s sort of like how the Internet hasn’t killed TV or books or radio, even though I suppose it technically could. Ultimately, every technology has its benefits and shortcomings, and, as new technologies emerge, older technologies shift to focus more on their strong suits.
Right now, traditional, location-based government “technology” (if I can call it that) is trying to support trade, commerce, and regulation in the distributed digital world. It’s doing an OK job, but it’s not great. Blockchain will eventually do a better job. That’s why I’m a believer.
With that long preamble aside, I guess I should answer the original question: are there still good early mover opportunities in crypto, or is the space too saturated?
The easy answer is: Of course there are tons of good opportunities! We’re still in the very early days, and none of us know how (or how quickly) crypto will evolve.
A more nuanced answer is that I suspect enthusiasm for crypto/blockchain is hovering around a local maximum in terms of entrepreneurial excitement, and that might cause some issues for a new startup. To be fair, it also creates lots of opportunities (e.g. increased investor interest). Either way, the best option is to ignore any hype or critique because it’s all mostly irrelevant to the work of executing a new startup in the space.
By that I mean anything you launch now is going to take years to mature, and, in the ensuing time, the environment around crypto and blockchain will change, so why worry about what people are saying/thinking/doing now? Instead, as with any entrepreneurial venture, ignore the hype, focus on solving a real problem, and focus on getting users/customers. Those are the things that actually matter.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!