The Challenge of Decentralized Business Models | European Blockchain Convention

foreign [Music] yes awesome it's working better than expected so wonderful it's a good it's so good to to be here this morning uh I'm Miguel Arias I'm General partner at K fund which is a venture capital fund so we are the guys with the money willing to willing to invest and we recently launched uh 250 million euro fund trying to invest in what would be the fabric of the new internet enabling Technologies which you can build a business model on top of it right and I would say of course blockchain is one of these enabling Tech so I'm very excited to hear more about new business models you can build over over the blockchain of course Venture capitalists don't know much about anything so what we try to do is always try to find people who know more about things and are experts and I'm super happy to be with two great great extras on the field we have got here Allen Anton and I would love first of all to have them both in a one or two minutes explain what they do okay so again first for you okay so hello everyone sorry for my voice today typically I'm sexier maybe closer to Antonio Banderas but that's me today sorry for that so my name is Santo pastorita I've been in the industry pretty much in the financial industry for the almost 15 years for the last four years I've been in the BCG in the Platinum division that is our I.T strategy division in the in the BCG and I'm mostly involved from emerging Technologies deep Technologies and pretty much aligned with uh fi insurance and also supply chain uh project types awesome Alan hi okay thank you Mike for the introduction uh my name is Alan I've been in industry in the crypto industry since 2016. um I'm the CEO of a development company that is change the blog and also I'm the even that it says they're the head of product I'm the managing director in Spain of prosecutor crypto um I think that you all know prosecutor what we do but we are really focusing right now on the custody of different digital assets um and I'm really glad to be here with you guys hope this talk is a little bit interning for you and so please Mike thank you wonderful I love it how we are all Spaniards with cool names like man Mike Allen Anton will seem like foreigners here amazing so so let's stop whining about the crypto winter for a second I talk about making money with this right and it looks like a bit of what we have seen is that we're trying to reproduce the models of web 2 into the new Dynamics and new technologies of Wave 3 right and like my question to you and starting with you Anthony's do you feel like web3 business models are gonna just replicate what we've seen in web 2 or do you see some newly born examples and new newborns models that can be applied well um I think we are in a very special moment we are leaving the transition for what we typically call the platform economy that is a web tool where we are uh finding that uh yeah we are operating with more and more and more and more digital transactions but there's still a lot of intermediaries a lot of mans in the middle and we are progressing to a more let let's call it a token economy and in this token economy we are removing the intermediaries we are looking more for value proposition across the network and uh and it's very special because there is no only man in the middle but are contributors to the value proposition that are around blockchain and around the wet three uh so in this is our current reality and uh well we are moving these days from web 2 to web free business models uh reducing these um reducing these intermediaries I think more and more and more value proposition we are in leaving this transition yeah so just like we seal the static websites disappearing and being adopting more web to business models now we are progressing towards this web free we are in the middle there is a password that is called Web 2.5 where you can use blockchain but you are not aware of the usage of a wallet most of the loyalty programs these days are adopting blockchain and uh and the well this is a transition maybe web free is not very usable I'm I'm not seeing my mom connecting a metamask wallet in order to transact you know in a website yes yes and uh yeah it's a cool moment and we will see more and more with free in the future so from this transition that that Anton mentioned Alan can you give us some real life examples of things you've seen beyond the custody that you're doing at Prosecco whatever you see yeah yeah well I I told her with Anton that we are living a change okay so we are moving from web 2 to web 3 and there is a web 2.5 from the middle uh I think that there is some steps that we have to take uh before we get the mass adoption so one of them is the metamask thing on the wallet side um on that sense I see a lot of uh projects that are not so related right now with prosequel like for example there is one that I really like it that is win-based this is totally odds okay so um are you getting paid for this no I'm not getting paid yet yeah yeah okay okay so the the main idea is that they are giving for example the use of nfts with the web to use but taking all the advantages that with three hats okay so it's a little bit difficult to explain like that so I recommend you all to get into the website and to take a look on it um on top of that I see that there are other kind of protocols that are working a lot with this Mass adoption so again I'm really fan of ethereum okay I'm a material maximalist I'm sorry for this if you don't like it um but for example polygon is working a lot on this sense so what I see is there are a lot of um real products that they are looking a way to offer the web 3 while adopting adapting to web 2 and I think the adoption it's not because of web3 it's not ready it's because we are not ready okay so I think that we need to switch our mentality on the big corporations and here plus where it's working on that it's trying to change the way that I understand uh the connection that we have with the with the people on on with the internet so I think there is some of real examples paid examples Yeah you mentioned corporates and new at vcg you work with many corporates so can I give you some other or use cases that you see nowadays yeah I I would like to remark to projects that we've been working on that were very cool one it was for a car manufacturer uh what they were able to create an ecosystem around its supply chain model where different partners are on boarding and contributing to the to the valley proposition and the second one is around sustainability we mean working with a food company that what they did is the creation of a huge ecosystem of Partners to create sustainable food and to be able to track and Trace sustainable Foods so that they can in the in the UK because this is a UK based company you can know where the food comes from and I think it's it's cool wonderful and you both touched on the need for adoption right I mean it doesn't matter how much we talk about all these business model or technology being ready if the public is not is not ready then nothing can happen right but another relevant thing besides adoption or once adoption is is met is governance right I mean how do you feel that governance will be kept and maintained once a mainstream adoption is is achieved what do you think maybe this is for for you Anton first and then if Anna want to say something yeah yeah the the point on governance is uh when we talk about sticking governance is always true governance is always tricky of course but the point is that when we talk about blockchain and about the value proposition the value proposition is about how you are able to write the ecosystem and uh have partners that contribute to your network and bring value keep a fully decentralized governance is uh why I would say it's complex uh I would say actually it's very complex I see a lot of projects fail it is due to the lack of governance uh I in the past we have a couple of initiatives on on the finance space and if you as a bank are looking to rise your own blockchain network and you want other Banks to join there will be disputes so it is not easy and the reality is that if you take a look major blockchain networks were unable to raise a fully decentralized governance model what they did to govern was to write a foundation and the foundation they take care of the network and then you you are able to broaden the partners so so some best practices or at least lessons are pretty much three is one is the ecosystem thinking it's not your network is the network that writes the value for your clients set the governance rules I mean what are the rules the win-win what's the value proposition and how you have to contribute what are the type of Rights you have and last but not least is that you cannot ask all the network participants to have the same responsibilities you have to segregate secular roles and let every company to partner and contribute with the value that they can give you one you want to add something yeah yeah I will add so I I totally agree with Anton um the reality is that uh I'm I'm lucky enough to be part of a Dao okay uh with one of my friends here that is David from turning Capital um the reality is that I I agree with Anton but I think that there is a complexity when you take all this information into practice because again the theory it's really cool but when we start to work it's like a lot of work um and I think that the governance problem uh will be solved with the mass adoption on a sense and it will be upon another one but I think that the the main topic here on the way that I think that it should be uh solved is to arrange a segregation as he said like where you have different roles within the organization I know that is not the typical decentralized way of working but if you have some kind of roles or at least you have the rewards then I think there is the tokenized economy where it's going to be really important for this because if you get reward it's when you start working on this um and there you will have the solution to the governance problem because you are going to have a hierarchy that is going to be based on your work and you are going to be rewarded on tokens of something that you are creating so you have you know like on a bigger incentive to create more Economy based on that on that job or on that work and it will help on the on the governance side you mentioned a few very interesting topics both as usb4 one is tied about the need of a full-fledged ecosystem for this to work with all the parties benefit with writing incentives and and the right amount of trust among the parties so what do you think is missing for for this ecosystem play right now in web 3 models yeah I I think and again this is my point of view the the problem is again the lack of ecosystem thinking right what would that mean what is ecosystem thinking yeah the ecosystem thinking is that when you are defining the the platform or you are defining the product you don't have to think only in how do I deliver my product is how do I Rise a network of Partners or of contributors that helped me to deliver my product and they all contribute to the value proposition that I'm trying to do so and the blockchain has a lot of advantages for that if you want to set rules it's easier at least uh on the blockchain network that you set the smart contracts that you are transacting with your partners instead of signing boring legal agreements on one-to-one with with your partners second one is remove the idea of you are a consumer of of my product you are a producer for my product is about hey we are all users in this ecosystem and uh how we manage the Partnerships is hey let's manage partners are part of my value not ours just our us providers and for me this this is the mindset and how we have to rise the ecosystem thinking well covered by an island you want to add something yeah well I yeah I agree with with Anton of course um yeah I think that the way that it should work is um always thinking about that option and I think that the luck that we are having right now is a way to really adapt to to the to the mentality that we have so I think that the future is going to be really I hope so decentralized and we are all going to adapt to this new internet but to arrive to that point we need to move forward on a way to do it much easier and I think that one of the main problems that we are finding is the ux UI so when the user gets into this new world they have a lot of problems to to to Really interact with the technology it's what you said Anton before like your mother maybe it's not going to use metamask so we need to find a way to to solve that problem and again I know that this is advertising okay but there are a lot of companies doing like as I said before okay win base Etc um that they are doing a lot of um work on that sense to to Really integrate on I think there are a lot of companies that are really working on that um let's say capabilities or way of working as way of with people like Anton and they are they help you on the side of how could they really you know normal people use this technology so it's try to really get into the technology on a way that we could all use it and I think that's the luck that we are having the the mentality that let's try to make it easy to the people to get into this technology instead of them adapting to the technology I think this is the switch that we need and I think like this kind of help it's the it's the one that is making that change I understand you can also disagree with Anton if you want why you don't interview yeah and by the way we all like metamask okay it's just an example because well my mom is unable to connect it but honestly waiting for you they're coming for you so I mean when you have a hammer it looks like everything seems to be a nail right and and with all the blockchain uh fundamentalists or in your case ethereum maximalist I mean this is the idea that this can solve everything but what I mean we talk about the bright side all the time and it's good because we are evangelizing but what are the the biggest failures you have seen and this is made for you uh Alan on on implementing these models at at scale what what failed what could have been done better well um this isn't my personal experience okay so I have a lot of fails and uh an ecosystem on I think one of the main problems that we that we find here is that we try to solve everything with blockchain I know that it's a really great technology I love this technology but it's not the solution for all our problems okay so we need to really find um or find a problem that it could be solved with this technology or trying to find new kind of solutions based on this technology but we cannot use this for everything okay I I heard a lot of people that says Okay I want to install this blockchain technology and at the end you say why don't you do it with a database you could do it even with an Excel why to have a blockchain ah because it sounds really cool we are on hype why not to get money about this so I think that the the change should be there and of course blockchain is uh it's a great technology and I love to work in blockchain but I know that uh there is it's not the solution for everything so we need to find a way to really use it on real use cases that really give value to the user instead of using it only because it's blockchain and it sounds great so this is where I saw one of the main yeah barriers to tackle I understood yeah and you want to add something else oh yeah I think you made a fair point a very very very good point you agree with Alan yeah it was the time you know absolutely yeah so this is one of the biggest common mistakes is hey I need a local Ledger but I'm gonna build it in blockchain why because it's cool the the second common mistake we foresee is here at BCG we have the opportunity to work with very big companies and they say hey I like your speech about ecosystem I'm gonna write my own ecosystem uh maybe your partners are not ready but I want to do it call me oh yeah it is it's not that easy yeah I'm I'm the master so all the partners will join me for sure well this is something you need to work out and it's a common mistake and and the last but not least is a small companies or maybe not so small companies that say Hey I'm gonna be the next unicorn I'm gonna do something like Amazon with blockchain or anything of a big company with blockchain so this other blockchain flavor just to make it cool is also a big mistake and that was cool last year it's not so cool this year anymore so maybe not right totally yeah so we are nearing the the last minute two minutes of the of the talk so and we know we there are so many web free builders in in the room right so I would love for each of you to give like a few tips or advices from personal experience of what you're seeing to all the web three Builders trying to create great business models in this Frosty year and I know you are an entrepreneur yourself Alan so you want to start with your own experience and some tips and then to want them okay so the the first lesson is not to do it okay so don't be an entrepreneur because you're going to lose run away run away it's the time no really I think that the um from the web free perspective the the advice is again to really find a focus on really knowing that the technology is going to be useful and again this is really you know like the typical thing that you say to all the startups like try to find Value and try to make your customer you know that they really win something but on web3 is the same and again don't be afraid of asking other people okay so again I know that is a new world okay and there is a lot of people that really knows how to work here so maybe you pay a consultant or maybe you ask your friends or maybe whatever but let's do it um don't be um really close about the the blockchain that you use okay don't get locked there okay and think about the future on how to escalate because right now the blockchain technology is used for pocs on really small projects but there is going to be a point where it's going to be a mass adoption and you need to be prepared for that so let's start focusing on how the future will look like and this is my my advice that I'm not sure if it's well enough but yeah it is indeed so Anton last last tips on your side yeah thank you very quick just some additional tips on on top of the one from Orlando that are cool one is emphasize on the extra importance and deliver quick wins first don't do the don't try to do the whole project or trying to do the whole body chain just do the quick wins and after the quick wins do incremental delivery uh and uh well pretty much all I mentioned all all of them and the one last one I'm gonna say is uh be aware of the regulation if if your project can be impacted by the regulation or you're planning to deliver in different countries take into account the regulation and last but not least do a consistent thinking wonderful so thank you so much time is up my last piece of advice is to be lucky for all of you so try to be as lucky as you get and thank you so much to Anna and Anton for the time and I hope you enjoy it thank you folks thank you Mike thank you