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Since 1971, heads of state and industry have been gathering for five cold, January days in the Swiss mountain town of Davos for the World Economic Forum. The event has provided a powerful platform for discussing anything from trade deals to economic policy to challenges affecting the entire planet.
For the past few years, a bustling community of “unDavos” has also blossomed along side the official event. It attracts tech leaders and investors to mingle with the official invited attendees. While the official event hosts approximately 3,000 delegates, unDavos has swollen to several times that. The days are filled with fascinating, intimate panels, while the parties go to odd hours of the morning. It is a pricey experience, both on your wallet because of the hotel (aka ski cabin) prices and on your health because of the demanding 18-hour days spent socializing. Most will tell you however, that it is well worth it.
A number groups and companies host their own expos to grab attention from the world’s biggest movers and shakers. This year Facebook, Salesforce, and Tradeshift, among others exhibited along side government and private organizations promoting economic development in India, Hong Kong, Russia, Ukraine and more. I joined in support of the first Ukrainian House and sat-in on a venture capital panel.
So with that context, I was expecting to come to an economic development and innovation event but somehow ended up in the middle of a Crypto conference. Every single panel and every single speaker mentioned Crypto and/or Blockchain. It is as if Artificial Intelligence, Augmented Reality, 3D Printing, and breakthroughs in biotech are old news.
Crypto has gotten a Trump-sized amount of media coverage since mid-2017 due to the meteoric rise of the value in cryptocurrencies but ironically they are being used as anything but “currencies.” As a quick premise for the uninitiated: there are hundreds of tokens being floated through an Initial Coin Offering (or ICO) process which is essentially a mini-IPO. Also most of these tokens are not shares in the companies but more like Kickstarter-on-steroid credits for their various future services. Goes without saying that this is a very polarizing phenomenon where the world is divided into true believers who think blockchain will change everything under the sun and those who think it is a complete scam.
I fall somewhere in the middle – though as a venture practitioner and entrepreneur, I’m an irrational optimist by nature.
Having read numerous white papers–which are something in between a PhD thesis and seed stage startup executive summary–my expectation is that 98% will go to zero. This is not at all out of the ordinary for a 1st generation wave of companies in a new industry. Think back to the dotcom days, if you were around then. What’s worrying, however, is the amount of amateur investors jumping in thinking they are nearly guaranteed to get rich. This is far from the actual odds and they will get burned when inevitably this initial cohort of companies fails to produce anything viable. Hopefully the good, fundamental projects don’t become collateral damage and prolong the trough until the resurgence. The Gartner Hype Cycle very much applies.
Here are the most insightful bits I’ve learned from talking to blockchain leaders in Davos non-stop for a week:
So, no one is completely clear on where we are headed but everyone is excited. This might be the next Internet boom or just a Beanie Baby craze. Proceed with caution. Oh and none of this was investment advice. 🙂