Bringing together experts with different perspectives can be the most effective path to the critical thinking that leads to progress.
A case in point: the Center on Global Brand Leadership's International Conference on Crypto-marketing, held last December at CBS. The event showed alumni with varied viewpoints are leading the conversation in crypto, blockchain, and Web3 — and they’re also building the ecosystem and setting the rules of engagement.
At the event, we caught up with two alumni from different parts of the field to gain insights into what lies ahead.
The investor view: Thomas Klocanas ’18, general partner and head of venture at crypto asset management firm BlockTower, is betting big on crypto and digital asset enabled entities. With a long-term view, he’s tackling questions including how to bring the rigor of more traditional investing to the crypto and Web3 investing space.
The technology view: Alex Poon ’06 is no stranger to building technologies that push boundaries. As a serial tech founder, Alex has been a leader in the New York City digital community since founding his first AI startup in 2010. Today, he is building Web3 communities and looking at how blockchain tokens can be applied to decentralized organizations through his company CharmVerse and other ventures.
During their visit to campus for the conference, Klocanas and Poon shared what it’s like to work in crypto today and where the space is headed. Their conversation ranged from current issues to solutions, including better education and user experience (UX).
Their in-depth discussion was captured on video — and we’ve collected the highlights here.
Is this the end of crypto?
Addressing the FTX meltdown head on and other recent hits in the crypto community, Poon and Klocanas are quick to acknowledge how unfortunate it was that so many people lost a lot of money. But they are both optimistic. Despite the general public’s fears, they say insiders in the space have weathered the ups and downs and remain excited about the technology and use cases it can enable.
“Short term, I think this impacts the ecosystem across the board. Consumer interest and confidence is down. Investor, both LP and direct interest, is down,” says Klocanas. “But long term, this weeds out the bad actors, right? We are better off with FTX blowing up today than in 10 years; that would be so much worse.”
He adds, “Asset classes as a whole are sort of getting hit on the head as a function of coming out of a 10-year environment of near 0 percent interest rates, and that is no longer the case. Obviously, that's been accentuated in crypto, both because it's a risk asset class and because we've had a couple blowups from poor risk management practices within the industry.”
Is crypto too risky?
Both Poon and Klocanas note that the risk leading to such problems was visible in the structure of the space. They believe that these current issues will usher in a focus on value and quality and that opportunity remains for those with a long-term view.
“The crypto lenders — you could point to them and see that fundamentally, that was a very likely risk on the horizon. Their unit economics were negative,” says Klocanas. “From a VC perspective, their marketing was kind of too good to be true.”
Describing the low barrier of entry that helped create a perfect storm, Poon says, “All you need is a white paper and then launch a token — and then all of a sudden, there's millions of dollars sitting around for people to play with.” He adds that the disruption “forces us in the ecosystem to build things of value, to actually talk about those values, to actually be able to deliver those values.”
From an investor perspective, Klocanas agrees: “We're less interested in sort of the ponzinomics of, ‘Hey, look, my token just went from zero to a 100 million dollars’ worth in two days,’ because that just screams red flags. We're here for the long haul. It's certainly a branding hit in the short term, but hopefully the folks who are grinding and building good things will prevail.”
He adds, “You need to be zooming five to 10 years out, and you need to be focusing on real use cases.” Poon echoes that opportunities are ripe for those looking for more than just a flash in the pan.
The ecosystem opportunities: Less flash, more value
Opting for models that provide value and prioritize the practical over the flashy, Klocanas and Poon are watching areas such as private credit, payments, identity, identity reputation, and social media data management.
- Credit and payments: “At BlockTower, for example, we're focused on use cases like replatforming real-world credit, right? Not sexy but certainly valuable and can unlock trillions of dollars globally,” says Klocanas.
- Identity and data ownership: “The idea of owning your own data, owning your own history, and being able to selectively give that away or sell that if you like — I think that's super-exciting,” says Poon. When changing jobs, “you can take your work history with you, take your review with you.”
- Co-creation: From co-authorship to exploring new ways to engage super-users with rewards or community benefits, building communities, brand loyalty, and more, co-creation offers a wide range of opportunities. Klocanas notes, “I think you're going to see some weird stuff coming out in that segment, probably extending beyond media. Life sciences is also sort of something where the co-creation pieces could be pretty impactful.”
Five opportunities right now
From connecting with a wider community to leveraging tech, digital, and investing best practices, Klocanas and Poon agree that key opportunities in the ecosystem focus on building better bridges and bridging gaps, including:
- Giving more people an entry point. “We need to do better on education — and branching out beyond the crypto-natives universe. A lot of people have a negative perception of the ecosystem, and it's important that we onboard different types of backgrounds to change that and bring real-world usage to real use cases,” says Klocanas. Poon adds, “It is our job to do the education, to really talk about it in a humanly understandable manner instead of continuing to add more acronyms into how to get onboarded.”
- Improving the UX. “If you think about a credit card: My grandmother goes to the supermarket [and] has no idea that the money doesn't go directly from her bank account to the supermarket's bank account. There's a minimum of four or five companies in the middle,” says Klocanas. “When it comes to crypto, the tech is right in your face.”
Poon agrees, citing the attendance token giveaway at the conference: “As part of the process, you have to sign the transaction. … And honestly, the wallet does not [explain] what you’re signing except that you’re pressing the sign button. It’s a scary UX.” - Fixing hackable connection points. “Most of the hacks in this past year have happened over some sort of bridging issue,” says Poon. “Solving that issue, and not seeing hundreds of millions of dollars of hacks, goes a long way to stopping that brand erosion in crypto.”
- Borrowing from venture best practices. “I think we were in an environment where you had very little time to do due diligence. Valuations were crazy — again, that's just the product of interest rates,” says Klocanas. He adds that he looks forward to “real investors doing real diligence, real underwriting, and looking five to 10 years out and working closely with entrepreneurs … instead of backing 50 of them in a month. I think that will be a net big, big benefit for this ecosystem.”
- Building next-gen digital literacy. When it comes to educating the next generation of business leaders, both Klocanas and Poon place a high value on hands-on learning, emphasizing the value of hearing from practitioners — paired with the time to explore and opportunities to learn from case studies and internships. “I love that we're starting to see crypto, Web3, and blockchain be part of not just specialized fintech courses but part of the digital literacy curriculum,” notes Klocanas. “It should be a part of the broader conversation.”
There’s never been a better time to get involved
For those thinking about getting involved in the space, Klocanas and Poon say it’s not too late.
“I’ve never been more bullish,” Klocanas says. “Having been through a couple of these cyclical crypto-boom/crypto-bust cycles, I can safely say that this time around … the cat’s out of the bag, and it's not going back in.”
Poon also has a positive outlook: “I started building software in 1999, and there’s always this feeling of, ‘Oh, my God, I missed the wave; I missed mobile somehow; I missed the internet somehow,’ and it always turns out that no, it's just the right time. It’s about looking in this much longer horizon, five to 10 years, betting your careers on a particular subject. We’re at just the right time with blockchain and Web3.”