The Intelligent Blockchain Investor: The Investors Dilemma
We continue our series by looking into the some of the ways blockchain has impacted traditional investing frameworks. Follow along with us
We continue our series by looking into the some of the ways blockchain has impacted traditional investing frameworks. Follow along with us
If you’ve ever read the book ‘The Innovators Dilemma’, you’ll immediately connect with this article. If you haven’t, you absolutely should! It’s been listed as one of the most influential business books of all time, and cited by luminaries such as Steve Jobs.
Innovation is messy. It doesn’t follow a linear path. At the start it often doesn’t make sense to vast majority of people. It can seem crazy, wild and above all, risky.
Large organisations spend billions of dollars training their teams, contractors, third-party suppliers and partners on following a particular system and then along comes an innovator who says:
“Let’s throw this all out and do it differently”
How would you react?
How would your organisation react when the outcome seems…ill defined. Vaguely articulated. More like a concept than an actual 5 step plan?
Turns out most organisations don’t really do that well. They either:
As a result of outcomes 1–3, many innovators:
Above all, they have to choose if they truly believe in their idea and are willing to pursue it.
The challenge is that The Innovators Dilemma creates what I call The Investors Dilemma.
The Investors Dilemma: Identifying world changing ideas combined with world leading execution which result in changing the world.
The Investors Dilemma
Investors are faced with a challenge. They have free resources available for investing. They have a different perspective on a market or future market than established players, and are more willing to risk their free resources on a crazy-sounding idea.
But how do we connect these available resources with the amazing ideas?
Until most recently, the challenge has been solved through a combination of:
This works fine when we’re talking about a few organisations, or you have the backing of an entire Venture Capital firm.
However, blockchain has changed things.
The advent of blockchain is changing the previous approaches. I believe there’s four reasons for this:
If the promises of blockchain are to be believed, we are simultaneously experiencing:
If you read online content, we’re either experiencing the greatest collective delusion in history or the birth of a new way of doing business which will make the internet revolution look like a prelude.
So which is it?
History provides some great examples for us to consider.
We have Nokia to see what happens when innovation is missed. Going from a dominant mobile phone maker to effectively out of the mobile phone business is a pretty stark example. If you’d like to read about someones experience at Nokia walking through this journey and the lessons learned, I’d highly recommend Transforming Nokia: The Power of Paranoid Optimism to Lead Through Colossal Change.
We have the Internet Bubble to see what happens when innovation is overplayed or pumped up faster than the existing systems could handle. An index (NASDAQ) experiencing a ~76% decrease in value is frankly terrifying in today’s context.
We have the Tulip Bulb Market Bubble in the 1600’s to see what happens when a group of people buy into a frankly absurd (in hindsight) speculation event.
And we have our current crop of $1 Trillion (yup with a ‘T’) market cap companies, many of which were part of the internet bubble, to see what happens when you nail it.
So which is it?
Inevitably this brings us back to our dilemma.
A rational review of history would imply several conclusions we can draw:
As investors, our dilemma is two fold:
The first is an act of faith. No one can help you with that. The second is informed by analysis, insight and research.
Quick Note. This series does not provide investment advice. It is simply a framework for analysing the blockchain market. Make sure you do your own research :)
With our introduction to The Investors Dilemma completed, we’re onto to next stage of our journey: The Game Being Played. We’ll start by exploring The Technology behind blockchain.
As always, if you’re enjoying this series, take time to interact. Comments, claps, tweet mentions, LinkedIn mentions and sharing is a great way to interact with a community of people who can add to our exploration. A great way to stay up to date with this series as it comes out is by following me or signing up to our email distribution. A word of caution though — please keep it respectful, fun and polite. We want a safe place to learn and grow ❤
Articles in the Series so Far: