We have been working with a few companies on their plans for ICOs or digital token sales. We have also begun working on a book on the subject (more on this soon!). Through all of that we started to think about how a blockchain-oriented company should organize itself. We found this topic entertaining enough that we thought we would share it here.
One of the underlying promises of the cryptoasset world is that the blockchain holds the potential for a radical shift in how data, software, power, economies are organized. Setting aside all the Utopian thinking, spend enough time looking at all of this and it is clear that, at the very least, companies running on some form of blockchain should probably be organized along different lines than traditional companies.
To be clear, we are not advocating some French Revolution leveling-of-all before the power of the guillotine. (Although we suspect there are plenty in the community who are thinking along these lines.) Instead, we want to examine a much more mundane topic – the company org chart – who reports to whom.
There are many blockchain projects out there that do promise very radically altered company structures. A lot of these are explicitly aiming for having no ‘company’ at the heart of anything. Bitcoin is the obvious, easy example, and there are many more. But we are not proposing anything that radical. Instead, it strikes us that blockchain-based companies have a different set of functions and priorities than more traditionally financed companies.
Let’s look at the technical side. Here companies will really need two distinct sets of expertise. First, there is the side of that company that is offering some form of product. For a lot of blockchain companies, the blockchain and token are the only product, but for many others, there is some other form of product or application running on top of that blockchain. To further complicate matters, a lot of applications may end up running on top of someone else’s blockchain such as Ethereum or one of the other decentralized compute platforms. We have seen this a lot already as companies run their ICO on top of some form of Ethereum contract. Today, people who are capable of developing Ethereum-based applications are in hot demand. They have a very different skill set than people building traditional web or mobile applications. In many, if not most, companies a single dev team can learn the skills needed fairly quickly. That being said, the smart contract team will need to direct their focus at some very different tasks.
A second important function will be how to engage with distributed communities of token buyers and miners. This will probably be the most important function at such a company, yet it is today poorly defined. People in this role will have to have a combination of technical, marketing, evangelism, community and economic skills. So we think it is likely that we will start to see the rise of Chief Blockchain Officers (CBO). A quick Google search shows that this title is starting to become more common, thought not yet widespread.
Much of this role will be similar to Product Managers, at least at companies where that role has real heft. Their responsibility will be to take ‘ownership’ of the company’s blockchain and be responsible for all aspects of it. For starters, they will likely be the person who leads the authorship of the ICO White Paper, laying down all the basics of the blockchain including its incentive mechanisms, mining algorithms and basic operations. They will be responsible for understanding how the blockchain works with the company’s specific end-markets and ensure that the technical teams know which areas to prioritize.
Beyond that, the CBO will also have to be responsible for keeping third parties engaged with their blockchain. From this perspective, this will be a heavy marketing role. In particular, they will have to have the deepest understanding of the project’s miners. Most blockchains will die without a healthy mining pool devoting resources to it. Now the whole point of blockchain mining schemes is to provide an incentive for these miners. And much will be beyond the CBO’s control, dependent on market forces. Nonetheless, the CBO will have to monitor the pool closely. To further complicate the role, the CBO will also have to a security portfolio as every blockchain worth anything will eventually come under attack from malicious actors. For instance, we met recently with a company that had launched its blockchain network in beta. They were super excited when they signed up their first mining pool, only to realize that suddenly 70% of their mining was coming from that first customer. Under the most common blockchain schemes that level of control allows the miner to take over the entire network and essentially shift all of the wealth to themselves. This was able to build safeguards into their mining, but the point is that a new class of vulnerabilities will emerge, and it will take vigilance to anticipate and protect against them.
We will dive deeper into the topic of CBO in a future post.
Other roles will become less important. For instance, the role of Chief Financial Officer (CFO) may see a downgrade of significance. A blockchain-based company will have so much of its economics tied into the blockchain, the CFO will have far less to do. A lot will depend on the nature of the company, but some dilution seems likely. At the same time, the role of “Investor Relations” will may take on renewed focus. This role falls in between that of the CFO and CBO. Someone will have to take responsibility for keeping buyers of tokens engaged in the project and abreast of developments. Another interesting question will be the role of the Corporate Development team which typically handles M&A. As far as we know, there have been no examples of one blockchain buying another. The whole thing does not really work that way. At heart, a blockchain is a very clever way of coordinating distributed economic activity, but that leaves open the question of how blockchains can coordinate themselves and merge somehow. There are already many projects working on ways to make various cryptoassets interchangeable, but this is both very nascent and very complex. Likely the best way to have two cryptoassets coordinate in some form of partnership is on some form of blockchain, but we can see that quickly spiraling into madness.
That leaves us with the topic of Human Resources. Here, the Personnel side of the function – employment paperwork and benefits management – should remain largely unchanged. But the question of how to motivate and incent employees may end up largely devolved onto the cryptoasset itself. We have already seen a half dozen HR blockchains proposed.
In all of this, we think that the org chart of any blockchain company is going to end up looking like a mutated (evolved?) form of that of a typical company. Some roles are going to become more important, some functions are going to be divided up in new ways.