Protocol Guide to Enterprise Growth
Protocol Guide to Enterprise Growth
Not all protocols will survive
Whenever there's a new technology, a Cambrian explosion of different vendors emerges. But eventually that number whittles down to just a handful.
Cars. Airplanes. Computer operating systems. Chip manufacturers.
In each case, the early days had lots of innovation. But as the market matured (which it often did quickly), few were left standing.
Protocols will face a similar fate.
With the rapid explosion fueled by cheap capital and the current market contraction, it's likely that 2023 will be the Year of the Whittling.
What will determine which are the last protocols standing?
Every failed protocol fails in its own way
I don't know for certain if the Anna Karenina principle applies, but I think every happy long standing protocol will have one thing shared amongst the others.
This one thing is not being done well by most protocols.
In fact, the industry as a whole is lacking this one thing.
Protocols in the blockchain have been pouring energy towards attracting lots of developers who will build on their platform. They have been mostly using a tried and true Developer Relations Playbook, which includes hackathons, documentation, tutorials, and Twitter/Youtube content.
At first, this seems like a reasonable strategy. And for the protocols that quickly reached critical mass, it has paid off in the short-run.
New startups are being built on these protocols. Some of these could become big, which will help the protocols grow.
These early winners have an advantage in greater developer mindshare over laggards or late-comers.
However, initial developer awareness is not sufficient for long-term growth and sustainability.
Especially among the decentralized and permissionless blockchains, this one thing seems to be missing.
Enterprise demand pull.
I anticipate two main counter arguments to this statement, both of which I believe are mistaken perspectives.
Mistaken perspectives on enterprise demand pull
Even if you are already building enterprise content and have hired a BD team, understanding the dynamics of missing demand pull will only help you.
It's worth asking whether the assumptions you have about the role of enterprise demand pull deserve deeper consideration.
Myth 1: Enterprises already know about blockchain
This is an easy one to believe. Blockchain is already more than ten years old.
There have been many enterprise focused organizations like IBM that have been pushing the blockchain story to support their own services and cloud divisions.
But education of the enterprise takes time. And IBM's involvement isn't the harbinger of industry success or customer adoption.
For perspective, the Internet ushered in the "digital transformation" mantra. And IBM arguably led the way with "e-services" as an offering, complete with massive billboards in airports.
But it still took years before the majority of businesses instinctively had a digital-native approach.
This massive C-level education, which took time and money throughout the prior decade, laid the ground for our current environment of developer-first Go To Market (GTM).
In other words, we’re just getting started with enterprises embracing the blockchain.
Myth 2: Developer-first will already generate enterprise demand
For the last decade or so, developer-led growth has been wildly successful for the reasons in #1 -- huge investments in educating business leaders around "digital transformation."
All the leg work done by consulting firms and large software companies to educate the CxO on "digital transformation" has created the enterprise demand.
This enterprise demand is what makes developer-first GTM now work.
Not the other way around.
Developers are fulfilling existing demand.
The demand has been wide and deep across a spectrum of technical areas, from DevOps (dev tooling through testing and deployment), infrastructure such as cloud-native versions of the tech stack (compute, storage, databases), and developer-centric security.
This demand for technical infrastructure and tooling, however, was driven by business initiatives.
As a simple example, a business may say that they want a personalized, on-demand e-commerce store for medical blood tests. That’s the business initiative based on a business model enabled by the Internet, cloud and mobile and other market dynamics.
The developer now needs to figure out how to comply with HIPAA, PII, SOC2, mobile, while lowering costs and only having two developers on the team.
The initiative and the expectation of the application to deliver results is what fuels developer demand for the best cloud-native, DevSecOps tooling, mobile QA suites and end-to-end automations.
Without that demand, developers can attend all the hackathons they want on new technologies; those technologies will not get purchased by their companies.
These demand-pulling initiatives emerged from the CxO “digital transformation” education.
A reasonable counter-argument would be the following:
If developer-first works, why doesn’t this existing “digital transformation” demand pull in blockchain protocols?
This is the critical disconnect.
Blockchain doesn’t fulfill the needs of existing demand better than existing non-blockchain technologies.
Why?
To answer that, we need to understand where does demand pull come from. Why do certain business decisions create demand for technology?
Demand pull for enterprises - where does it come from?
Demand from enterprises comes from, at first, "business model innovation," followed by operational efficiencies to support those new business models.
The existence of the Internet, for example, did not create demand on its own.
The resulting new business models, however, did.
Business model innovations born from the Internet are concepts we take for granted today.
But these concepts weren't always obvious or seen as necessary before all the “digital transformation” education. Back then, many enterprise decision-makers didn’t make these business models a priority.
Whether it is 24/7 shopping, deep personalization, infinite inventory, user-generated content, ad-driven businesses at scale, granular CRM -- all of these weren't part of most company's business models prior to the Internet.
But they all shared advantages made newly possible by the Internet, which includes: near-zero cost distribution, unlimited global presence, intimacy with users, and streamlining existing workflows.
Once the new models were in place, the investment then shifted to reducing operating costs of those new ways of running the business.
This business mandated ushered in cloud computing (only pay for resources you actually use), streamlined business processes through specialized SaaS (lower headcount), and higher productivity (fewer devs, security analysts, and dev ops to ship more impactful code faster).
Because nearly every company across every industry became a software company a) first to innovate on their business model; b) to then reduce operating costs; c) rinse and repeat at the appropriate pace and cycle for their industry or competitive set, developer-first tapped into massive demand.
Every developer was touching meaningful innovation or efficiency initiatives, whether for a small start-up or for a large enterprise. And so there were a ton of developers all open to new tools and infrastructure.
Blockchain’s value proposition differs from existing technologies
However, much of the value propositions that created the enterprise initiatives differ from blockchain’s promise.
Blockchain advocates make one of two mistakes: 1) they assume it does, it’s just a “better” version of what we have; 2) the value-proposition have already been accepted fully by the CxO suite.
Blockchain's value proposition and business model innovations are far enough out of the mainstream of the values generated by past technologies like the Internet, mobile, and cloud.
Therefore, blockchain cannot ride the existing enterprise demand pull.
Why are blockchain protocols different?
Because the value-creation primitives upon which business business and business decisions have been made are not achieved through blockchain any better than existing technologies.
Existing demand value propositions
In contract, let's first look at the primary value-creation areas for the Internet and software.
The Internet gives free, unlimited distribution. The blockchain doesn't add to this. So it's not a technology being pulled by innovation that is based on this value-creation primitive.
Mobile ubiquity gives deep intimacy with global customers. The blockchain also does not add to this in a better way than mobile does. So it's not really being pulled by this value-creation primitive.
Software reduces costs. Software automates redundancies, increasing record accuracy, and reduces the needs for humans to streamline existing workflows and processes. So the blockchain also doesn't really get pulled in by this value creation primitive.
Unless new value-creation concepts and primitives are accepted by the mainstream enterprises as true "unlocks" for their business, the blockchain will just be compared to existing "web2" technology.
Blockchain is not just a bigger and cheaper database. If it gets compared as such, it will lose.
Blockchain isn’t just another client for end-users to store and retrieve information. If it gets compared as such, it will lose.
Blockchain protocols enable different business models.
And until executives embrace and gain conviction around those new business models, blockchains are competing with existing technologies and will largely lose.
What is needed is blockchain-centric business model innovation.
What is the risk for remaining engineering-centric?
Let's recap the main ideas so far:
Many protocols have deployed a developer-first GTM model
This is a reasonable initial strategy because it works for existing technology that share the same value-creation primitives
Demand pull comes when business decision makers embrace new business models, followed by operating efficiencies of those models
Because of the long and arduous education and evangelism of CxO's around "digital transformation," every business became a software business.
This created a huge demand pull for a wide range of modern technologies, where developers could make meaningful decisions to support an executive-level business model initiative
This demand pull does not exist for blockchain because blockchain creates new value creation primitives and new business models
Without acceptance of new business models, the demand for blockchain will lag behind existing technologies.
Unless protocols can accelerate the new business model thinking, protocols will not have sufficient demand to survive
Will this happen organically?
It could.
We’ve seen how the blockchain has captured the imaginations of typically slower-moving brands. NFTs, because of their simplicity and cultural-impact, made a huge leap.
In a similar way, ChatGPT has made consumers so aware of AI that we will likely see rapid adoption in the enterprise. This adoption has already started, but will accelerate.
Right now, if protocols bet on this cultural shift, they are taking a big risk.
What can protocols do to survive, thrive, and perhaps overtake protocols with a large developer ecosystem?
The short answer is to augment their wide BD efforts with deep business model innovation engagement with those lower in the funnel.
Protocols need to own the wide BD efforts because those are directly linked to developer relations run by their own teams.
However, most protocols are too lean to then go deep and spend the time on business model innovation in a way that’s sticky and creates value quickly for the customer.
Large corporations, like Microsoft, when facing a dire situation of creating enterprise demand, especially in the face of more successful developer-first competitors, invested in their enterprise customers with free consulting engagements to educate these users.
Protocols cannot make this investment.
If they let up the gas on their wide BD touch-points, they will surely waste their investment in developer-first.
But they cannot spend on going deep on those potential customers.
This is where Blockstitch works to help both protocols and enterprises.
Helping protocols to leverage their developer relations and BD to then enable enterprises to uncover true business model innovations and a working MVP on the protocol is a win-win.
Protocols scale with sustainable customers. The right enterprise customer could potentially bring in more users than a year full of hackathons and grants.
Enterprises gain by having the attention and business-model guidance to unlock true value for their business, especially during challenging market conditions when investing in new growth or retention matters.
How can Protocols start?
If this sounds interesting, go to this link here to set up a call where we work through your current BD and Dev Rel programs and discuss a way to succeed.