Investor Opinion
I have been running an angel investment group for 3 years now and have seen dozens, if not hundreds, of Blockchain proposals of one sort or another.
At first I was also wooed by the allure of the un-hackable distributed algorithm.
But not one of the business ideas presented to us has actually solved a problem.
For example:
One company wanted to use the blockchain to allow consumers to bid on specific seats on an airplane when making a reservation.
We passed because booking flights is already much more complex and painful than it needs to be. Adding a new layer of complexity may in some perverse way make the airlines happy, but as a public service we thought we needed to stop this one in its tracks. (We also didn’t think the airlines would be so excited about the additional level of complexity on their side.)
A concept we did like aimed to use the blockchain to verify the authenticity of luxury goods over time.
We thought that had a nice ring to it. Fighting counterfeiting sounds attractive. However: the luxury goods manufacturers we talked to weren’t interested because it added complexity and cost in a way that added only a small amount of value. They were much more concerned about how this would slow down the point of sale experience than the impact on counterfeiting. So that one died.
Then there were the earbuds that were doing to stimulate the brain with electromagnetic waves. When we looked at the presenter with disbelief he threw in a blockchain connection — these earbuds were going to be connected in some way to something that was going to work through a blockchain algorithm. I’d explain it better, but I can’t.
Neither could he. It was a last-ditch effort on his part to throw in a buzzword.
A buzzword is essentially what blockchain technology has become. Just throw it in and hope that people are so enamored of the trend that they will invest to catch the perceived wave of interest and investment.
But that wave isn’t there and it isn’t going to happen, unless you count the stupidity around initial coin offerings which are just unregulated pyramid schemes.
These will all fall apart soon enough and hardly warrant interest from serious investors (gamblers maybe).
So what do you do if you think you have a Blockchain solution to a real problem?
Start by testing your business model and your story before you invest in the technology (or ask others to do so).
Your business model is what makes money, not the technology.
Remember that investors don’t care about the product or the technology, they care about how you are solving a valuable problem in the market.
You should (must) be able to give an entire pitch and entice investors without mentioning Blockchain once.
Think of it this way: Blockchain is like the electricity that is powering the lightbulb. Nobody cares about electricity, they care about light.
Electricity was a boring topic that only interested academics and then Edison invented the lightbulb. And still nobody really cared about electricity but they did like the light.
Now we can’t live without electricity. But,Electricity just makes it possible and exists in the background.
My recommendation, if you really want a business that works and can earn investment, is to stop trying figure out how Blockchain can solve a problem and just solve problems.
And please stop telling me how great Blockchain is, I am not buying it.
After sitting through a thousand pitches and liking about a dozen I thought I’d start sharing some of the lessons I have learned.
If my writing is useful, helpful or in any way interests you please let me know.