I spent 12 years running FloSports as the founder and CEO. In that time, the company raised more than $40 million of debt and equity financing and became one of the leading direct-to-consumer OTT sports subscription services.
I’m now running Rokfin, a creator-first subscription media company and the first blockchain media project with a practical application of the technology to compensate creators for the network effects they generate.
I know firsthand the stark contrast between running a more traditional media company and a company in the blockchain space. Over time, I expect the best of both worlds to merge. For that to happen, though, these 4 elements need to be present.Members of the Rokfin Team
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What Blockchain Projects Can Learn From Traditional Businesses
1. Before we go big, does small even make sense?
What is the product that people are willing to pay for? Just because you get free content on the Internet doesn’t mean there isn’t an economic model. It just means you are the product, and the data you give up is valuable to Google and Facebook to advertise against you. “Free” doesn’t just magically work.
I see lots of blockchain projects that relate to cryptocurrency for the sake of cryptocurrency without even having a product. There are also plenty of companies who over-promise on the use of blockchain and then under-deliver when it counts.
Right now, it’s all sizzle and no steak with many blockchain companies, and the reason is that their products do not make sense on a micro level. As Nassim Taleb says…
“It’s much easier to bullshit at the macro-level than it is to bullshit at the micro-level.”
2. Aligning incentives
Blockchain has an opportunity to align incentives between stakeholders better than any other technology thanks to its decentralized nature and the beauty of smart contracts.
This should be celebrated, and certainly, people pay a lot of lip service to this.
Unfortunately, many blockchain projects keep tripping over themselves and paint the entire technology in a negative light by stacking the cards in their favor in an unfair manner.
That is to say, when founding teams issue their own tokens, raise money through ICOs, and then reward themselves by cashing out their tokens when their underlying product has no utility, it damages their credibility and casts a negative light on all other projects (ICOs or otherwise). A cautionary tale is XRP.
In business, discomfort can be your best friend warning you. When there is a scarcity of funds, every dollar counts and your feedback loop must be incredibly short to identify problems and pivot before it’s too late. Any company that has ever bootstrapped their business can relate. Finding traction and product-market fit becomes a relentless pursuit.
This is healthy.
When the opposite is true — and companies have a surplus of capital — it can obscure problems. Companies flush with cash may lose the sense of urgency required to grow a business sustainably. A CEO may feel less inclined to keep a steady hand on the tiller if s/he isn’t worried about the immediate consequences of cash loss.
Think about this in terms of your personal health. When your body is in pain, it’s a signal that something is wrong and needs to be addressed. If you mask the pain, it can make the damage worse.
Far too often with blockchain companies who raise funds through ICOs, they step into a cash windfall before their business is proven. This creates an unhealthy environment prone to missteps and skepticism.
You may argue that the same conditions apply to VC-backed companies — and it’s true that there are similarities — but it’s important to understand the distinctions. Accredited investors perform a thorough due diligence process prior to investing, and they allocate an amount of money to companies based on their stage (i.e. pre-revenue, seed, post-seed, etc.). With ICOs, many companies are raising incredible sums of money without demonstrating any business fundamentals, and it’s dangerous.
What Business Can Learn From Blockchain Technology
In any digital industry where the whole is greater than the sum of the parts, transparency is critical for stakeholders to understand the value being transacted so they get their fair share. Without this visibility, it creates an impediment to reaching agreements. Trust is difficult to earn, and for good reason. Everyone is wary of how they could get taken advantage of.
Take the media industry, for example, where there are digital platforms, content creators, and consumers. Currently, digital platforms gain leverage because they conceal the true value of the content from the creators. This dynamic creates friction to getting deals done and prevents (or at least delays) the potential for exponential value to be attained.
Is this just the price of doing business? It doesn’t have to be. Imagine a dynamic where each stakeholder has a clear picture of their value. How much easier would it be to transact and facilitate deal making? This is what blockchain technology can enable. I know this is scary for people who are rent seekers, but this is invigorating for anyone who can’t wait to stand on their merits.
The Path Forward
The Rokfin team and I are intent on building a sustainable company that builds trust through transparency and utilizes blockchain technology and RAE Tokens to solve a really big problem in the media world today. We didn’t raise funds through an ICO, and we are being open about our progress.
We are trying to blend the best of crypto and business into a transformative company that is creating a new paradigm for content creators.
By being honest and upfront in everything we do, aligning incentives with our stakeholders, focusing on the micro-unit economics of our model, and being financially prudent, we believe that we are giving Rokfin the best chance to be successful.
In doing so, we hope this serves as a model for other companies — both in crypto and throughout the business world at large.
- Martin Floreani, Rokfin CEO and founder
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What Crypto And Business Can Learn From Each Other was originally published in Cryptocurrency Hub on Medium, where people are continuing the conversation by highlighting and responding to this story.