I invest in things quite regularly. I was urged to do this by some great mentors I’ve had in my career who gave me pointers on supporting talent when you see it. During the last few years I’ve backed software, products and even indie game studios. More recently I’ve been fortunate to get involved in cryptocurrency and to be honest, though I’ve been successful, I’ve also been a little disappointed.
When I moved to Switzerland in 2017, I was really encouraged by the way that Switzerland was placing itself as a regulatory vanguard during this so-called bitcoin boom; I’d come from living in Malta for 5 years, and those guys with their expansive knowledge of iGaming and regulation were super well-placed for crypto (and still are!) but, I was served a rather cautionary tale as I looked at the crypto landscape and wondered how we’d got to this place, and where we could go? So, I did some sniffing around and putting my journalistic hat on, I uncovered something nasty.
Go where the money is, right?
A close colleague of mine provides marketing, PR and whitepapers for new and exciting ICOs from the comfort of London and his direction from clients has always been the same: “we’re only interested in HNWI (high net worth individuals), they will buy way more than your typical Bitcoin advocate. Oh and, we’re only interested in buyers or interested parties who understand our coin offering.” For my friend, that used to make around 80% of his job’s focus on White Papers.
According to a recent survey, in Forbes, 30% of millennials would rather invest $1000 in Bitcoin than $1000 in government bonds or stocks. But what kinds of millennials? Is it a mildly interested person with a bit to spare or an ultra-hip start-up disruptor type; worth millions on paper but have no concept of exactly what crypto means for the future of wealth management and fintech. And outside of millennials, what about us? The Gen-X/Gen-Y folks with a foot in both digital native and early adoption camps? Why aren’t you talking to our generation?
Blockchain — You’re doing it wrong
Whilst cryptocurrency management is one thing, blockchain and ICO development is something else entirely. I’ve invested recently in a couple of niche currencies which have a sensible white paper and initial coin offering, more importantly they have a strong blockchain backbone, something that I couldn’t wait to shout from the rooftops about. When they went live, they dropped an extra few coin in my wallet because they’d overachieved on their ICO, such was their pitch.
In this era of evolution, there’s a new offer each day, and through my feeds there’s an amorphous cloud of new tokens to buy or get involved in. I think it’s amazing, but it’s headscratchy mostly because many of these white papers, ICOs and blockchains are going nowhere. They’re going nowhere because they are offering a kind of baseless concept with little need for the technology. How can this be an attractive concept for a buyer if it’s missing detail? Well because a lot of investors are looking for an investment that yields before they can move on. Not me, not my contemporaries and certainly not (some) of the notables involved in raising capital or driving tokens.
In short, I’m looking for something crypto to invest in with the same due diligence as the stock-related investments I make. Let’s put this in really simple terms using a game studio I invested in a couple of years ago. They came to me asking for some forward investment in support of their game launch, basically they needed a marketing investment. I looked at their previous titles, assessed their current set-up, reviewed their forecasts against previous titles and decided to help. I even rolled my sleeves up and lent some support to ensure my investment was safe. Each year I sit on an investment panel where we go through hundreds of applications, only 25–30 applications ever get through the screening process. And when I spend time with individual panels where businesses pitch, I apply the same practices. I wonder why, except for time restraints, aren’t the same processes being applied to cryptocurrency investment. I think it’s because the more things change, the more they stay the same. Prospectors, during gold rushes in the late 19th century were urged to not waste time. And it’s this notion of time which forces us as investor to make snap decisions. For me, however, I still like to spend some time looking at the white papers, maybe understanding the ethos of the offering and where it might go. I’m super enthusiastic in concierge or loyalty-based offerings, but they’re pretty thin on the ground.
Products as a Service
So, what of the big brick walls for me as investor is in the case studies of ICOs or blockchains who actually have no product. Coming from a games background, the purpose of what we create is to make something for our end users and our cousins over at the Internet of Things have started to understand the vast network of intellectual properties that you might have seen in everything from Sonic the Hedgehog to League of Legends come down to very simple details:
· Create something that your users want/need
· Monetise their experience
· Productify your service to them
In respect of a pharmatech ICO that I invested in a few months ago, I can rest assured that in Switzerland (one of the main centres of pharma) there is a backbone of wants, needs and products associated with this coin. Meaning that, the more I need their service, the more coin I will buy. “This whole topic of paying per use versus owning is a megatrend,” says Nils Herzberg, global GTM lead and senior vice-president in SAP’s IoT division. “Past generations wanted to own; future generations will just want to use.” I wonder why so many cryptocurrencies are falling at the first hurdle of evolution? Going after HNWIs because they have money to burn simply drives the cycle of high risk high reward into a weird circle jerk that causes crashes and breaks trusts.
Let’s wrap this up. Make your technology suitable for everyone. If you have to, apply basic design principles and drive your offering towards the future rather than the principles of the now. Make something that we need and start at the bottom building it up. You will be surprised by how much longevity there is in an offering that has product.
Remember to always take advice when investing and that the nature of all investments and financial activities means that funds can go down as well as up. Seek advice. I’m not affiliated with anyone and all opinions and tips are my own as a result of my activities and experiences.