Over just five years, crypto has exploded from a curiosity to a cultural touchstone, with millions of boosters, Super Bowl commercials and billions of investment in the belief that a new financial system, built for the digital age, is being created.
And along the way crypto has become highly divisive. Its most ardent supporters are hardly known for their understatement, giving crypto the whiffs of both libertarianism run amok and a speculative frenzy that’s given cover to all manner of grifters. The Gold Rush mentality isn’t a bad thing, according to Jason Yanowitz, co-founder of Blockworks, a crypto-focused media company that expects to top $20 million in its fifth year.
“Bubbles are good,” he said on this week’s episode of The Rebooting Show. “They bring in capital, that’s how innovative technologies get built. Railroads went through a massive mania from 1840 to 1870 with all these bubbles. But obviously railroads got built. Bubbles just bring talent and capital.”
Jason and I discussed how four-year-old Blockworks has built a $20 million business by positioning itself as the go-to resource for financial institutions to understand the fast-moving world of blockchains and crypto currencies.
Believing in crypto’s inevitability
As newcomers to crypto in 2017, Jason and co-founder Mike Ippolito saw a nascent industry stuck in boom and bust cycles and with its scruffy edges. But they believed one key thing: crypto would eventually become a very large institutional asset class.
“The white space that we saw was around information in the industry. In 2017 there were basically two media sites, CoinDesk and Cointelegraph. You had one or two podcasts, and then a bunch of information on things like Twitter and Reddit. We would go to these events, and they were clearly run by a bunch of scammers. And then you'd look online and it seems like a bunch of people pumping different coins. But 1% of this feels real. We've done so much wrong over the last four years, but the one thing that we got right is believing that crypto would eventually become an institutional asset class and that we would need better information, insights, data analysis, news, research, et cetera, for the massive cohort of capital markets and people coming into crypto.”
Building from events
Blockworks started out in events, hosting its first one in February 2018. Went into the business full-time in May. Blockworks only then branched into content with a podcast network, including popular crypto podcaster Anthony Pompliano. It was only in January 2021 that Blockworks launched its news site. The advantages of this approach: Blockworks was generating revenue from the start.
“We've never had to raise outside venture funding because we started with conferences. We ended up building a community of some of the most valuable people in the world: money managers, hedge fund managers, portfolio managers at endowments, family offices. And that turned out to be a really valuable audience for this institutional bucket of crypto companies that ended up getting built in 2017 to 2010 – Fireblocks, BlockFi, Gemini, Coinbase, all these institutional crypto brands – and they used Blockworks to acquire customers.”
How to “get crypto”
The crypto world is awash in complex jargon and impenetrable acronyms; this serves a vital purpose in establishing in-group dynamics. Outside of the true believers, most people have little interest in drilling into the complexities of different staking mechanisms and parsing wagmi from ngmi. The crypto booster’s response: Normal people use the internet every day and have no understanding of HTTP and other technical infrastructure.
“Do you believe that the world is going more digital? Do you believe that we should be able to send money instantaneously around the world? Do you believe that it's too hard to issue equity? Do you believe that the payment rails that we've built on – ACH launched in 1972, – should that be improved? Do you love your banking experience? That is the narrative for crypto right now. That is why all this stuff is getting built. It's not this esoteric movement. It's just an improvement upon financial
The opportunity in mainstream media’s crypto skepticism
The crypto crowd is naturally distrusting of institutions, including what they consider mainstream media. That’s why many rely instead on Reddit, YouTube, podcasts and anonymous Twitter accounts rather than established financial publications.
“Media has done themselves a disservice because they’re hyper-skeptical of crypto, and therefore they don't cover it very well. The coverage is a solid two out of 10. That leaves a massive white space for crypto media companies to come in. Why isn't The New York Times and The Wall Street Journal taking this seriously? That is mind blowing to me. This is a $2 trillion industry. If you look at our website right there, It doesn't come as much of a surprise of who we took inspiration from. It looks like Bloomberg meets Wall Street Journal with some cool crypto images on it. That’s because we have 120 people from JP Morgan that subscribed to our newsletter last month. Those JPMorgan people need something that looks and feels like something they understand.”
Expanding the Blockworks focus
Most publishing brands start focused but find ways to widen the aperture. For Blockworks, that focus was squarely on the institutional view of crypto. But crypto is unique in that it is, by and large, a grassroots movement in which individuals have led the way rather than institutions. What’s more, the entire ethos of crypto – Bitcoin was born in the wreckage of the financial crisis – is for regular people to build a better financial system. For Blockworks, that means the opportunity is to build from its institutional focus to encompass the individuals. The company’s upcoming Permissionless event in Palm Beach in May will attract between 5,000 and 7,000 attendees.
“The idea of what an investor is is changing. That's because of how Web 2.0 is different than Web3. Web 2.0 brought information online and made it so information flowed freely. You could send a text message or video or an image, and you’d get that instantaneously. Everyone became users. Because of how crypto works – you need a token for everything – everyone is both a user and an investor. They’re the same thing. We should categorize everyone as investors because you're empowering people, especially young people, to take control of their financial decisions.”
Few people who had big events businesses spent much time before 2020 worrying about a multiyear global pandemic making in-person events, for the most part, impossible. But that’s where these companies found themselves after March 2020, forcing rapid adaptation. Blockworks relied on events for 80% of its revenue at that point, and quickly worked on retooling the business, with emphasis on podcasts, newsletters, webinars and sponsor content. Of course it helps that an estimated $33 billion in venture funding has gone into the crypto and blockchain startups in 2021 alone.
“One of the reasons that Blockworks is well positioned is we’ve known many of these companies since Day One. We were in the room when BlockFi was raising their seed round that had three employees. I remember when Fireblocks raised $2 million. (Fireblocks recently raised $550 million.) We’ve known all the founders and CMOs at these companies since they were four employees and two co-founders trying to scrape together this thing. And now these companies are unicorns and they’re raising $100 million to $500 million. What are you going to do with that? There's only two things. You take half of that and you spend it on product, and then you go acquire users and customers and that's marketing. We've worked with hundreds of companies in the industry. They're all big clients and customers of ours.”
5 things to check out
Podcast advertising clearly works for several advertisers, as shown in this New York Times report on how Squarespace has used podcasts as a key growth channel. My belief is podcast advertising often works well because podcasts are high-engagement media. This will only grow in relative effectiveness as hyper-targeting becomes far more expensive and unreliable due to privacy restrictions and regulatory crackdowns.
For better or worse, many news publishers have relied on the culture wars to drive subscriptions. The New York Times running ads featuring a loyal subscriber “imagining Harry Potter without its creator” is a sign of just how far this shtick has gone.
Condé Nast is claiming its belt-tightening efforts brought it to profitability last year on $2 billion in revenue. That’s a far cry from the $120 million in losses racked up five years ago. The choice of disclosing the numbers – and that a quarter of its revenue is direct via subs and commerce – raises the question of whether Condé is testing the waters for a sale.
Binance’s $200 million investment in Forbes raised eyebrows, not least because Binance previously sued Forbes for defamation over a 2020 story that looked into ways Binance allegedly avoided regulations. The suit, subsequently dropped, was painted as something of a learning experience by Forbes Media CEO Mike Federle. “It actually strengthened an understanding of media from Binance and from the industry,” he told Yahoo Finance. “We’re going to continue to write stories that are pro and con and based on different points of view.” The crypto crowd’s reflexive dismissal of “corporate media” and the cozy ties between some leading crypto publications and the biggest backers in the space will gain more scrutiny as crypto matures.
Nobody knows what the vibe shift is, but it’s clear a big feature of the Great Reassessment is many rethinking how they structure their lives, particularly the role of work. Too much is made of a resurgence of slacker culture of the 1990s, but underlying talk of an “anti-ambition era” is a broad dissatisfaction of the bargain offered to the middle class. The problems that tech companies face in filling roles will filter down throughout the economy.
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