Musing about the dramatic shift in our society

The recent cryptocurrency development had put a serious dent in the crypto space. The bubble is clearly burst — very clearly. Speculative investors took quite a hit and the money flow from unknown and possibly dubious sources is drying out. What looks like a disaster to some is a very welcome clearance to others.

I’m a Crypto Valley Association Member and an investor and board member in Blockchain Valley Ventures, sitting right in the heart of Crypto Valley. Most recently I received tons of questions — “Where is it going?” “Is blockchain dead” “Is Bitcoin at its end” “Shall we sell?” “Is now a good time to buy?” So let me share my thinking and why I see a more positive future now than a year ago — when everything was just too glossy.

What the caterpillar calls the end of the world, the master calls a butterfly

Yes — some lost millions of Dollars

Remember what happened when the Internet Bubble burst? It wasn’t the Internet that bust but the greed of many investors who just hoped that the craziness would never end. But the Internet itself was never hurt. Today we have not millions but billions of Internet users. Because the Internet makes total sense.

Fast forward, 18 years later, the crypto bubble burst. It’s not the Blockchain that burst, but the investor craziness in a currency that has never shown any value in itself. In the future we will have millions of Blockchain users, using public and private blockchains. Because the blockchain itself makes total sense.

The Future of Blockchain & Crypto

The Crypto Valley Community is working feverishly on the next big steps, the evolution in blockchain technology and crypto currency. Like the software people in Silicon Valley, the blockchain people in crypto valley have a very clear understanding where things will go — because we are creating that future.

Demystifying Blockchain Technology

I feel it’s about time to demystify the blockchain technology. Unlike many people postulate it is NOT this magical architecture running on hundreds of thousands of servers simultaneously and consuming gigawatts of energy just to hide some data in an insanely complex security algorithm. Well you can use it that way — but I actually care less.

Innovative and disruptive smart contracts

The true innovation and in particular disruption to both the software world as we know it and the business process world as we have it, are so called “Smart Contracts”. And this is also why Crypto Valley is so much ahead of the rest of the world. There is a reason why nearly half of the world’s ICOs happened here.

Smart contracts is the actual ‘brain’ of the Blockchain. A Smart Contract does what general software never did: It executes a process autonomously. Very similar to Artificial Intelligence, it is an autonomous vehicle running through the net. And that creates the ultimate power of the blockchain. If an order is entered into a classic ERP system, it requires human action in every single step of the process. Entering the order, processing the order, confirming the delivery, reviewing the payment, observing the shipment and so forth. It makes it extremely slow, error-prone, and costly. The magic of the smart contract that it processes an order completely autonomous based on defined triggers, times, sensors, inputs and no human can intervene or manipulate that process. There is a good reason why IBM, SAP and other big player invested enormously and early on in the blockchain technology. They obviously understood the power of the smart contract technology — which in return requires a blockchain architecture to work in a trusted manner.

The dent in the wallet of a speculating investor will have no effect on the future of the blockchain. And all the current projects here in Crypto Valley show where this technology is already going. We also see why Etherium had such a peak in the meantime: It’s development tools, libraries and APIs had proven to be the most attractive to developers. Also, this will not change.

Shift To New Disruptive Blockchain Applications

As an Investor we obviously are the first to see new companies, new business ideas and possibly new technology shifts. But what we are also seeing right now, is a serious shift in startup quality. A year ago, we have been flooded with whitepapers, which all too often have been a copy of a copy and just yet another crypto currency. That has changed. Today we are very fortunately back to normal. The flood turned into a healthy stream of well thought out and disruptive business ideas. We no longer see the applications that allow a global government be run off of a blockchain but interesting applications in sectors like, supply chain, medical records, pharmaceutical logistics, gamification, business process optimization, IT security, trading, sales and marketing applications and many others where the autonomous processing of smart contracts play a key role for a serious new way of doing business.

Mega shifts on the Crypto side

The clearing air over the cryptocurrency side shows a very interesting development. We will have in the end two types: Security Token and Utility Token. For those not so familiar with the — so far very confusing — crypto side of this world a few words: Cryptocurrency was the “funny money” that transported rewards with the smart contract. If some contractual actions have been completed and confirmed “rewards” or crypto money was paid. That crypto money, very much like the points and other rewards in games or miles, have quickly become so valuable that its value started the craziness that we had until very recently.

In the next evolutionary steps, we are already seeing, we have those two, mentioned above, currency types:

Utility Token

These have a reward characteristic like air miles, points you collect when shopping and so forth. At one point there may be an option to trade it into something or allows you to use it for other features like renewing a software, getting a free flight and so forth. The universal character, the way we can possibly use them across platforms or even trade them makes it a much better vehicle that what we have today. Today’s situation is a convoluted mess of rewards, points and benefits that are so terribly different in their handling that it is actually almost cheating on the consumers to even offer those “benefits”.

Security Token

While they handled inside a blockchain very much like any other token, the purpose of a Security Token in the real world are fundamentally different. These are created to actually have a asset or money equivalent characteristic. Startups can offer shares in their company by using security tokens. The big advantage is that a security token can be traded globally at its designated value and a startup does not need to worry about countless currencies. BUT THAT is highly regulated here in Switzerland and very soon in the US and in the next months or years in other countries. The regulations are by order of magnitude as complex as an IPO but strong enough to prevent money from money laundries enter the ecosystem and will bring the sought after seriousness and investor protection into the game. This major milestone may actually have been the biggest reason for people to pull back their “money” from the crypto world of yesterday and cause the burst.

Looking forward to 2019, the birth of the Butterfly.

@AxelS

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Yes, we lost the leadership but maybe in the future there is no more single world leader. Maybe there are different leaders in different areas. We don’t need a global leader we need global collaboration. With connections across all countries we develop friends across all countries. And with friends across all countries we are less likely to start yet another war just to make the weapons industry happy. There are over 300 Million Americans who no longer want war, instead want to see the tax money put into education and innovation, both being the no.1 driver for jobs and wealth.

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The “new enterprise” as I call it is a network of highly engaged individuals or groups of individuals that may constitute the most successful organizationism in the future – organization + organism = organizationism. However it will be quite challenging to build the first of such “new enterprises” as many potential customers may require an organization they used to deal with: a big company. Only time will tell how this part of the business shift evolves. Here is an article from Gary Hamel “Three forces that will transform management” @ the McKinsey Blog that I highly recommend reading.

Let me share some vision for a structure where innovative leaders may create a company in the following way: Read more

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Y is after X – it’s that simple. But Y is very different!!!!

97% own a Personal Computer
94% own a cell phone
75% of the college students have a social network account

About 76 Million are entering the job space right now.
Businesses better get ready to know about the power and connectivity of that generation. If you are not connected you are out.

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Venture capital is out. The financial world is evolving and so are investment strategies. In a recent post Guy Kawasaki pledged for focusing on inexperienced entrepreneurs. About a week ago I was on a panel with Henry Wong from Garage Ventures inviting everybody who want to start a company to grab his business card. His pitch: “Don’t worry about valuation – think what you can do with all the money”.

An experienced entrepreneur would just roll his eyes and walk away. The ROI on Sandhill Road is no better than Wall Street. So why take the risk? VCs are in trouble and the latest post “In search of inexperience shows it”.

The 7 reasons why entrepreneurs avoid Venture Capital today:

1) Ownership
Creating a company and following the entrepreneurial instinct is more than just fulfilling a dream to be one’s own boss. It is creating something that is better than what we have today, a journey to find people who help shape the idea, will buy it because it is better and a journey of evolution, improvement success and failure. Entrepreneurs need partners and not a financial owner that takes 50% of a company for a hand full of dollars and make it their own.

2) Passion
Entrepreneurs are extremely passionate about their idea and need to go their way with no interruption and constant “help” from an investor. Passion is not a guarantee for success but a key ingredient that once broken, breaks the business

3) Founding Leadership
A recent report from Morgan Stanly compared the world leading innovators such as Microsoft, Google, Cisco and others. One of the metrics was passionate founders in the executive bench. 9 out of ten got a check. VCs typically replace the leadership team within 3-5 years and bring “experienced” executives to the team, making the founder a second degree player.

4) Business Objectives
VCs are in the business’ business. Making money from shoving around companies. Butting less and less money in the first place to invest in more and degrade to 1:10 ration of a winning deal to a 1:20 ration. It’s also called risk management. Entrepreneurs aren’t players who like to play in that category. Business objectives of both groups have departed to far from each other.

5) Disruption
True entrepreneurs come up with disruptive ideas and try to make a difference. VCs are not really looking for such ideas – even so they say so. When Google was founded, it was Andreas Bechtolsheimer, one of the founding members of Sun Microsystems who gave Google money not a VC – Jee who would invest in this where we have Yahoo. Since Google went public VCs invested in over 50 search engines. Very disrupting. VCs didn’t invest in MySpace or YouTube in the first place but now invest in 100ds of social networks or video sites – very disrupting.

6) Investment Profile
True Entrepreneurs ceased building their business plan to match a best practices list of people like Guy Kawasaki hoping that it matches the trend. The opposite is the case, true entrepreneurs have counterintuitive ideas, don’t follow mean stream and create businesses in very different ways. entrepreneurship is no longer matching the idea of a VC to invest in.

7) Venture Capital Success
Entrepreneurs became very critical when it comes to the success of a VC. While some entrepreneurs don’t really care as long as they get the money – true entrepreneurs do care. Today’s ROI of an average VC firm is lousy. They are under huge pressure to deliver results to their investors in order to maintain their management fees of several hundred thousand dollars per head and keep their Aston Martins and Ferraries. That pressure makes them irrational. And the downfall continues.

At the same time very attractive alternatives raised from that downfall. Healthy individual investors are much more likely to invest in disruptive technologies and true entrepreneurs. Large successful companies all have investment arms and seek people with new ideas and the ability to make the idea a successful reality. Even banks, which kind of evaporated from the entrepreneur’s scene, are back with very creative offers. And as Garage Ventures strategy is just a representation of what other VCs doing, seeking inexperienced entrepreneurs at all cost – the success rate will further decline until Venture Capital may completely reinvent itself sometimes in the very distant future.

Clearly people like me know that they are “unfundable” after stating their opinion. But that’s the point, we don’t care. Venture capital is just no longer of any interest – we are going after true investors who have only one goal: using their money to make more money – instead of expressing their opinions on tactical measures at board meetings.


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Our society is experiencing one of the greatest evolutionary steps in human history

Society_1~3,000 BC. About 5,000 years ago for the first time mankind evolved into a society. Egypt was the birthplace of a society never seen before. Cities were built, trade was created and business developed like never before.

Society_2~ 1,800 AD. About 200 years ago mankind went through yet another dramatic change bigger and faster than any change before: Industrialization. Technology came into our everyday lives, transportation of goods and people around the world was all of a sudden possible. Financial wealth of an average worker was as great as a kings rich several hundred years ago. We doubled average live expectancy and cut work load in half. We created technology that wasn’t even part of the most remote fictions. In just 200 years we changed the face of earth more than in the 50,000 years before that.

Society_3~ 2010 AD. We already see early signs for yet another dramatic change. This time it is not trade development or technology but a major social shift. In the next 2-5 years our economy will be affected by that change more than through technology in the past. “Democratization of influence” accessibility to nearly “Omnipresent connectedness” and “Direct Access to Experience” (not only expertise) is providing our modern society a tectonic shift that, in my opinion, has an equal magnitude than our technology development a few hundred years ago. Almost everybody can gain “connections” that just a few years ago was a privilege of  the top educated people or best connected business executives just 5 years ago. We already experience that business negotiation on all levels change faster than many people realize. Our society is on the verge to yet another major change. This third major step in our new and emerging society is yet another major evolutionary development of mankind – we will recognize the magnitude in maybe only 10 or maybe 20 years from now.

 

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