Cryptocurrencies and blockchains are not yet mature. Like computers from the 80s and 90s, although they technically work, they’re fragile in practice. As such, most of their users are technical, and tend to focus on technical challenges rather than go-to-market challenges.
The technical people building these systems tend to believe, either wholly or at least partially, “if you build it, they will come.” Against all odds, this actually worked for Bitcoin after its creator left the project without providing any future guidance in 2011.
Many think this was also true for Ethereum, but this patently false. Despite being worth hundreds of million of dollars, Vitalik Buterin, the leader of Ethereum, basically lives in an airplane, flying around the world evangelizing, even though he obviously prefers deep research over public speaking. He works insane hours while perpetually fighting jet lag. While building what would be the first release of Ethereum, he somehow found the time and energy to learn Chinese in an effort to bring Ethereum to China. Beyond Vitalik’s evangelizing, the Ethereum Foundation pours resources into grassroots community building around the world.
People did not just organically come to Ethereum. The Ethereum Foundation brought Ethereum to market.
Given that all of these technologies are fundamentally open source, competitors will begin to copy one another’s code much more aggressively, and turn foundations’ own platforms against them. This is accelerating. In approximately chronological order:
And these are just some of the publicly known examples. The pace of copying, forking, and stealing is accelerating. There will be hundreds of examples by the end of 2018.
Given that all open-source code can be copied without permission, achieving network effects as quickly as possible is the only thing that matters. Achieving network effects is mostly a function of go-to-market strategy and execution. Therefore:
The logical conclusion is that the key to long-term, sustained success is go-to-market strategy and execution, and that technology and product are almost irrelevant.
For almost all crypto teams, this should be a scary thought.
I suspect if you asked every crypto team “Which function is strongest in your organization, technology and product, or go-to-market?” less than 1% would say go-to-market.
How might this play out in the real world? Some simple examples:
Competing with incumbents who have massive distribution advantages is going to be incredibly difficult. In most cases, this will require raising a tremendous amount of capital, and deploying it aggressively to bring protocols to market.
As it turns out, software doesn’t bring itself to market. People have to bring software to market.
Up until this point, most of the entrepreneurs who got into crypto were largely ideologically driven. But the next wave of entrepreneurs and executives getting into crypto are not ideologues. They’re experienced operators who know how to bring software to market.
Over the next few years, we’re going to see many teams get wiped out by competitors who literally steal all of the inventor’s technology. The hedonic treadmill that is capitalism dictates that this will happen. It’s going to be brutal.
There is already precedent for this. The concept I’ve described above is Rocket Internet’s business model. They watch for teams that achieve product/market fit in the US, and then fast-follow in Europe. Their model works.
As crypto matures, expect to see more Rocket Internet clones (oh the irony). Given the open-source nature of crypto, it will be even easier to copy protocols than companies.
Teams need to prepare to ramp up go-to-market functions aggressively as soon as they’ve achieved product/market fit. Fast-followers will use inventors’ tech to try to beat them at their own game.