Written by Jerry Witkowicz and Sayed Wayzi
The old saying that the chain is as strong as its weakest link applies to blockchain technology projects today. After analyzing over 2,700 blockchain projects, we found their weakest link. The majority of projects we looked at have no practical business focus and have made no contacts with target users. They are simply engaged in another experimental blockchain project.
Blockchain vertical analysis – Many blockchain experts promote blockchain as the disruptive technology that will revolutionize how commerce is conducted in the future. Financial systems are targeted as the first to be impacted by blockchain solutions. With this in mind, BenchMrkPro chose to focus on finding blockchain projects that are actually developing a solution that will revolutionize the financial sector. We selected payment systems technology vertical as our target.
In our analysis we looked at 2,790 blockchain companies made up of a mix of companies that have completed their ICOs (Initial Coin Offering), companies that had an active ICO and companies that had an upcoming ICO. This mix represented today’s blockchain technology landscape.
For our selected vertical, our objective was to find which and how many blockchain projects were developing blockchain-based payment solutions that promised to modernize or replace today’s fiat based payment systems.
Critical weaknesses – Out of 2,790 active blockchain projects, we found 50 projects that were developing something or promised to deliver a blockchain solution that will enable merchants and consumers to make payments using digital currency. Of the 50 projects that came close to doing something in this business vertical, only a few (Bitcoinus and Stellar) shared a vision and plan to engage today’s fiat-based companies and systems to create an adoption path for blockchain technology solutions by classic businesses.
The balance of blockchain projects operate in a silo mode. Most lack clear business focus, have no engagements or contacts with classic businesses and lack a go-to market plan for introducing their solutions to today’s classic businesses. It almost felt like they were following an old and filed strategy, “build it and they will come”. This is a major weakness that will likely derail many of the blockchain companies and their projects. Unless these projects embrace the fundamental need to engage target customers and users early in their projects, blockchain adoption will be long and difficult.
What needs to change – If blockchain technology is to revolutionize how commerce is conducted, today’s classic businesses will need to adopt blockchain through mass adoption. However, this is not going to happen if blockchain companies work in silos. Blockchain companies must engage their target customers early in their projects. No successful company has ever developed a practical solution without first understanding their customers business and their needs. To understand target customers needs, it has to start with a conversation that follows with active engagements. Threatening the classic businesses like banks and others that blockchain will somehow replace them is not the answer.
In our analysis we find that the majority of the core leadership teams of the blockchain startups hold strong experience and passion in developing new technology. These young technology developers are driven to develop the next generation platform or system. What is missing in most of the core teams is strong business experience. This is like having a great soccer team without strong forwards or a football team without a strong quarterback. It’s this critical balance that must be present to drive these companies to create a mass adoption of blockchain technologies in today’s classic business. It won’t happen by just developing new blockchain technology. You can build but they won’t come.
Recommendations – For blockchain companies to become successful businesses, they will need to sell and earn revenue. To sell blockchain solutions to classic businesses, these solutions must enable target customers to transition from where they are today to blockchain. And they will need help.
With over 2,700 blockchain projects in the works today, finding practical business solutions is impossible. Almost all of the published white papers focus on two main areas. They describe in often great detail the technology being built and the justification for the company’s ICO. Very little to no mention is made about target customers, businesses, users and how the company will generate revenue. What this means is that each of these companies have no plan on what to do when they complete their project. Even in live conversations with many CEO’s the idea of addressing this critical segment is brushed off as insignificant. We will leave this point here for your own conclusion. To help classic businesses mass adopt blockchain technology, blockchain companies must expand their focus to include:
- Engage customers now – We strongly recommend that every blockchain startup that has no clear go to market plan start working on it now and not when their projects complete. Engage your target customers now and start learning how to transition businesses onto blockchain.
- Become unique – Building another and better blockchain platform is not unique. In fact it’s confusing to potential customers. Think about how your solution will differentiate from the other 2,700 solutions being developed. Describe how your solution will help your target customers and why they should consider it
- Create a revenue plan – To be successful, every company needs to be delivering value to its customers, value they will pay for and help your company generate revenue. It’s not sufficient to state that your company will charge lower transaction, have a distributed ledger, and eliminate banks, middleman and so on. Be specific who your solution is for and explain in a language that your target customers can understand and are keen to have a conversation with you.
- Create a sales strategy – No, even when you do build it, they won’t come. This old failed strategy hasn’t worked during the dot-com and it won’t work now. Your company will need to sell your solution for you to generate revenue. Hiring marketing and sales people alone is not a sales strategy. They will need to understand; your value proposition, how to sell, who to sell it to and where to market your solutions.
- Build a believable roadmap – A dead-end solution won’t sell. All of the roadmaps we analyzed state high-level milestones that have no clear deliverables or strategy behind it. Customers buying new solutions want to ensure that the vendors will be around in the next several years and that the solution will evolve. No one wants to buy a dead end solution. Create a thought through solution roadmap that is backed by the company’s business strategy.
- Create strategic marketing – Every new company faces the same two key challenges in sales, they are not known in the market and they don’t have customers. Select your target customers and market to them. Advertising on typical blockchain media channels is not enough to reach your target customers. Yes you will reach other blockchain companies and enthusiasts but not necessarily your customers. Learn about your target customers and understand where in they look for information and communicate your marketing strategy there. Know Your Customer (KYC) is more than knowing your ICO investors, it’s knowing customers who will pay for your solution.
Does it sound overwhelming? If it does, this means you have not completed your company’s plan to create a successful and sustainable business. You need to take action now to position your company and your business for success. If you need help, let’s have a conversation.
As a co-founder of BenchMrkPro, I leverage more than four decades of entrepreneurial experience in helping companies put the value of their solutions to work on behalf of their balance sheet.
As a serial entrepreneur and co-founder of BenchMrkPro with 15 years of experience, I am passionate about helping companies bring value to their customers and growing their business.