The Biggest Problems in most Blockchain-based Projects, and What Can Be Done to Solve them.
by The Blockchain Diary on 2019-03-14
1. Lack of communication
Communication is crucial in every aspect of life. Everyone knows it: it goes in different directions, such as from below to above, from above to below, horizontal, between friends, between customers, B2B, B2C, etc.
I'm not sure why, but I see an insane amount of crypto projects struggling with that. It's really important within the organization itself, and a communication structure is not about "should we use WhatsApp or Telegram", it goes well beyond that. It's about the different channels, and who is responsible for each one. I see a two side approach in most projects, and that is marketing on one side and development on the other. That makes sense from an organizational point of view, but there should be a clear communication path between all members involved in something; for example, what the marketing team is going to do can impact the development team, and vice versa. Having a bad internal communication can have a negative effect in:
If employees don't get the information they need, or they get it in batches, or even don't get any information outside their department, that can hinder their work.
Lack of communication can lead to anxious responses, as information is needed in every step of the way. Furthermore, sometimes it can happen that the lack of information leads to bad results or employees getting questioned about the bad performance, and that can lead to frustration. Stress impacts productivity as well.
Communication is important to get a clear overview of where the project is going and what's being done. Managers need to know that in order to take the best decisions.
Lack of communication, or bad communication can lead to negative effects on the relation between employees, or employees with managers, and that can have an impact on focus, stress and productivity at the same time.
There's not a single solution for handling communication within an organization. There are people that study and research this topic, but the general idea is that every company is different, so the solution needs to be flexible. There are a couple of things that can be done, such as establish a plan before starting the work (be it development, business activities, marketing, etc.). The reason is that it's more difficult to change a process once it's been initiated. When the company is small there's no need to write a plan, because managing communication is easy (everyone knows what everyone else is doing), but when it starts to get bigger, to work on more projects at once, it's crucial. Another thing that can be done is have one person handling the structure of communications from the beginning: internal, external, in crisis, etc. that will start delegating work when the company grows. Nothing wrong in doing it in-house, but it's important to keep in mind it's not as easy as it may seem.
On the other side, communication is really important when dealing with B2C channels, especially on this space, where clients are usually mixed with investors, supporters and speculators, and it's difficult to know the difference. Sometimes I get the impression a lot of companies give the responsibility of communication to interns, and there's a phrase that is one of the most important things to have in mind at all times in that regard:
“It takes 20 years to build a reputation and five minutes to ruin it." - Warren Buffett.
It's very simple, I see a lot of projects that have not recovered after a disastrous PR move. Think about a celebrity, and then imagine the police discovers that he/she is a rapist; boom, career's over. There's a lot going on when you communicate to clients/users, and it should be well structured and well thought. Having a plan when things go wrong is a great solution I don't see most projects having. Communication in crisis should be prepared in advance.
2. Promise a lot and accomplish nothing
There's a tendency on this space to make political campaigns instead of marketing ones, promising this, and that, but ultimately failing to deliver anything of substance. Nothing wrong in glorified research centers, I'm sure we'll see a lot of innovation because of researchers getting a huge amount of money, but it's simply not sustainable.
I see a lot of people sharing the advice of underpromise and overdeliver, instead of overpromise and underdeliver; not the worst strategy, and if you have to promise things, better err on the side of caution, but there's a much much better strategy, that will grant you a lot of friends:
Say that you are going to do one thing, and then do it.
Simple, effective, elegant. Obviously it's not always possible, it's very difficult, and involves an insane amount of effort, but it pays off.
There are a lot of examples of companies that did exactly that, through the years. It's not about only promising what you are 100% sure of, but building trust in the most powerful way, the Nike way: Just do it.
There's a reason that campaign resonates with everyone. Sometimes you don't even need to promise or say anything, you just need to see a problem, and fix it. Action inspires trust. No matter how big or small, if you say that you are going to do something, and then you do it, and you repeat it and stay consistent, you will start building a reputation. The same can be applied to crypto projects. They have ideas, concepts, money, teams, partners, investors, etc. but what they truly need in essence is to build cool things, over and over again, until something great is created.
3. Lack of focus
I don't think this is a specific problem with this space, it's a startup problem. The difference is that here projects have an insane amount of money.
It's difficult to transform an idea into something real that solves a problem. Every idea that founders have is new, exciting, game-changing, because if they did not thought that, then they would be bad founders lol, but putting that idea into the real world is difficult and there are a lot of obstacles. What I see within the space, is that most projects don't have the right attitude about the future: they seem to think once they get the money, they can start developing the idea, and that's not how it works. Money is just a tool; it's not going to solve every problem your project has. What ends up happening is that they get the money, and then they fail to produce something meaningful, because one thing is for sure, if you don't know what direction to take, money is not going to change that (you can always use Google maps for free). The result is paying insane amounts of money to engineers, expecting them to solve every problem, and sometimes they hire a huge amount of people. That's what happens when your product has such a demand, that you need to scale fast, because you can't keep up with it, not when you don't even know what you are going to do.
Focus is crucial. The difference in this space is clear: a project without focus researching blockchain tech is a glorified lab. It's important that focus can be feasible and achievable as well, because if not, it's a researching center with good focus.
The solution to this is not easy, and that's why mentors come into play: people with more experience that can guide great ideas that get lost in the real world. I don't have the data in my hand, but I would dare to say that projects that truly listen to what advisers have to say, have more probabilities of succeeding that those who don't.
Focus is multi-factorial. There are a lot of factors that shape what it should be done, such as data, opinions, feedback, inspiration, passion, etc. but I believe the most important thing, at least regarding technology is that it needs to solve a problem, specially a clear problem that needs a solution that currently is not available. Technology should be a path, not an obstacle. If you find a problem, and you have an idea to solve it, then what needs to be done can be found easily.
4. Bad business management
Starting a business from scratch is very tedious, and requires a lot of hard work and dedication. It helps if you have previous experiences. In this space there is a clear lack of good management in a lot of startups, and that leads to a lot of problems.
Nothing wrong on starting a business for the first time. In fact, that's the attitude that leads to progress and innovation, but it's important to have people that understand how to build something from A to B, and what goes in between. More important is to listen to them, and let them help you. The tech industry is getting more and more competitive, and far away are the days where you could get away with building something without knowing how to manage a business.
In the blockchain space, traditional errors get amplified, because it's a new market, with new products, and, as ironic as it may seem, trust is the most important thing for companies that operate with cryptocurrencies. A single mistake can cause a chain of terrible events.
Business management is about everything that takes a company from point A to B: hiring, funds management, legal aspects, business dev, vision, problem solving, etc. If I had to point out one of the most important mistakes a lot of blockchain companies make, that would be money management, meaning how and where to spend that money. It's quire unfortunate that some companies have lost +50% of their funds due to bad market conditions, as well as bad forecasting and planning.
I'm not going to claim I know everything about business management, because clearly I don't, and I'm on the "starting a business for the first time" boat, but a problem is still a problem, and pointing it out is quite easy if you look in the right direction. Now, for the solution, I may not have all the answers, but here are a couple of things that are starting to work for me:
Identify what you don't know regarding management and start looking at ways to learn them, either:
- Listening to people/professionals that have more knowledge
- Asking the right questions
- By experience
- Looking around you for inspiration/resources
If you can't work around something, delegate it to someone that knows, instead of pretending you know how to do everything (this is very important to blockchain founders that think because they raised a lot of money they are omnipotent gods or something).
Management is not about knowing how to run a business from start to end, but it's about knowing what the company needs in order to be successful, and providing all the tools for that to happen.
5. Zero accountability
When any startup, in any other market, gets money, they are expected to follow guidelines on what to spend the money on, and there are rules and legal contracts. Be it funding, or getting revenue, every single startup is accountable for what they do. If founders spend the seed round on yachts and a year on vacation, then they can be sure they are not going to receive a single penny for the rest of their lives. Equity equals ownership, meaning if private individuals invests in your private/public company, founders are not only, legally responsible, but one can argue morally responsible as well, for the actions the company takes.Now, let's change perspectives, and go to the crypto market. Tokens are more related to money than equity. Furthermore, tokens-except security tokens- don't represent any share, or right, or anything of the sort; they are pieces of code that are supposed to incentivize/power a network, service or product. So, if anyone invests on a token, then the company behind it receives, effectively, free money, without any responsibility. It's a dream for unsuccessful founders. Morally, yes, the same argument can be made, about your relationship with investors, but when money is on the line, if the only responsibility is about morals... That's why due diligence is very important in this space, and why so many people shout #DYOR everywhere they go.