💬 Steemit and the new entrepreneurial age (long read)

Bitcoin is a multifaceted invention whose potential is far from being limited to the financial sector alone. Because it redefines the concept of “value”, the real target behind the “ideas” of the Bitcoin protocol (distributed consensus, blockchains smart contracts) is not finance but the “company structure” itself.

This new reality can already be observed through the young crypto-ecosystem where projects are designed in a way that escapes the standard rules of entrepreneurship. In this article, I propose you to clarify a little more these new rules set by the Bitcoin protocol, and in a future article I will focus more on how Steemit founders follow this new startup framework to build their service.


A new way to raise funds

One of the things that characterizes the startups ecosystem before Bitcoin is that an entrepreneur like Mark Zuckerberg or Larry Page (and their entire generation with them) had to pass through the ‘fundraising roadshow/VCs’ step to allow their projects to scale.

But with the resounding success of Bitcoin, Satoshi Nakamoto has not just offered a new form of currency, he mostly offered to all the hackers the ‘blueprint’ of a new form of economic organization that can scale without the help of the traditional funding system (angels < VC < IPO)

As a reminder, Bitcoin can be seen that way:

  • a hardware infrastructure which has a computing power 1000 times greater than the sum of the top 500 supercomputers in the world (built in roughly 4 years)
  • a decentralised organisation that employs and pays salaries of thousands of people (miners) working when they want and where they want worldwide
  • a service that works 24H/24, 365 days/365 and already meets several million users
  • a project that has made its creator Satoshi Nakamoto an immensely wealthy person: $ 700M (and growing), as well as his first employees (the first miners)
  • and all of this was made possible with ZERO funding

On the other side of the asymptote

"You take smart coders and you tell them they can’t do something, and that is very inspiring.”

Marc Andresseen talking about Bitcoin, Bittorrent, the hacker mindset

For a normal person, Bitcoin is a great anomaly. But a hacker will perceive behind the phenomenal success of Bitcoin a filigree message: “Why raise money if I can create it from scratch to build a company? If Satoshi Nakamoto can do it, I can do it too.” No challenge is certainly as exciting for a hacker as this one.

So while many are dreaming to be the next Zuck, Page or Chesky, geeks are already dreaming to be the next Satoshi Nakamoto. An important part of this hacker community has already migrated to this parallel world opened by Bitcoin.

Money creation in the hands of everyone

In the same way that the web is not structured around a single website, in this parallel world, the ecosystem is not structured around the Bitcoin protocol. It is primarily structured around the possibility of creating endless variations of this original protocol.

To understand the rules that govern this ecosystem, we must understand that the original Bitcoin protocol allows something that was simply inconceivable before its existence: Now everyone without exception can create his own monetary system and make it independent: Central banking, private banking, payment systems, all functions of these institutions are ‘unbundled’ and ‘re-bundled’ in the Bitcoin protocol. If you want to create a new monetary system, and a new economic space simply duplicate the Bitcoin protocol for the modest sum of $0.

Note that money creation was so far the privilege strictly reserved to the states/nations. No matter how disruptive and big businesses are, they can not afford to create money under the risk of being illegal. Today, the creation of a monetary system is definitely in the hands of everyone.

It is this incredible opportunity to change the paradigm of ‘a currency/economic space’ by ‘a currency/x’, where x is equal to what you want (business, service, project, person…) that defines the singular entrepreneurial rules of this ecosystem.

ICO : the IPO from day one

In the parallel crypto world, the key rule of the game is to bootstrap your own currency. By doing so you’ll be able to bypass all the traditional fundraising steps and do directly a sort of IPO. It’s the ICO. The Initial Coin Offering.

Initially, only a handful of crypto-savvy early adopters will take the risk to invest their money in your currency. But it will be enough to give a price to your coin an open a market where everybody can see how your coin evolves.


Organic growth & organic fundraising

As a publicly traded company, the value of the currency of these organizations react depending on progress made and challenges encountered. The difference is that in the crypto world this happens since the first day even if you have no users, no product (eg. ethereum).

If users are beginning to have an interest in the service that is built on top off your currency, first the infrastructure will grow organically (new miners will work for your project) but then, the value of your currency will also increase. Which mean that you may well sell part of your holdings at market price to raise funds if you need it.

There is no need to make a traditional ‘fundraising roadshow’ to raise your serie A/B/C or whatever, as in this universe all projects make their IPO ‘directly from their first day of existence. ‘Crowd-investing’ is the standard of this ecosystem.

Traction and key KPIs automatically fund your project

Ultimately, one can question the relevance of fundraising for these projects. Recall that a startup raises funds to develop its infrastructure and pay its employees and that a VC is willing to invest if the startup has traction and good metrics.

But the projects modeled on the blueprint of Bitcoin have three characteristics that completely challenges the balance of power that drives the relationship between startups and VCs.

  • These projects have their own monetary system
  • Their key infrastructure consists of independent miners
  • Their employees are the owners of these miners

We can then ask:

  • What is the meaning of raising money, if you can create your own money to finance your growth?
  • Why anticipate a fundraising round if your monetary system generates discretely the funds to adapt to the growth of the project?

A virtous cycle

If the service has traction, the value of the currency will go up, this will attract private investors but especially encourage miners to plug their mining rigs and work for the project. In this universe, it is the traction that organically generates funding and recruitment. For someone who is not familiar with crypto-currencies that sounds strange, almost impossible. But this is possible because the money creation and ‘the payment for a work’ (reward) are deeply tied to one another.

Searching for a business model VS defining a monetary policy

In the ‘normal’ world, monetary policies of our countries define the framework that startups need to respect and on which they have to find a suitable business model. But in the case of this new crypto-ecosystem, there is no monetary dogma imposed, the possible scope of economic models is multiplied by the ability to set our own specific monetary rules for each project.

Steemit is the most advanced example. Its relatively complex monetary system is based on 3 currencies (steems, steem dollars, steem powers) whose purpose is to protect the development of the service from speculators, promote long-term investors, reward users and ultimately create a new economic space around steem dollars.

One day people won’t ask anymore what is the business model of your startup? Instead, they will ask: “What is the monetary policy of your startup?”

Money creation, monetary policy, crowd-investing, decentralized infrastructure, are the characteristics of the projects that develop in the wake of Bitcoin at the margin of the entrepreneurial ecosystem. In a further article, I will describe the infrastructure of the steemit project as a startup.


Thanks a lot for reading this article :-)



This article is an adaptation of one of my previous articles originally published in french : https://steemit.com/francais/@jako/bitcoin-et-les-nouvelles-regles-du-jeu-entrepreneurial

Please, feel free to comment, argue, and spot the typos :-)


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