We have been thinking a lot lately about how to sustain crypto projects. In our recent post we discussed the role of “Investor Relations” in crypto, which we felt really just scratched the surface of the challenge. As we wrote a few months back, companies backing digital tokens (or backed by them) need to rethink how they organize themselves. We speculated that we will likely see the role of the Chief Blockchain Officer (CBO) emerge in such companies. In this post we will link those two ideas together and walk through the job description of a CBO. To be clear, there are many versions of blockchain organizations, and governance is an important topic in the crypto community, but in this post we will focus solely on companies that are running operations on top of a blockchain.
Part of the challenge in operating a blockchain is that it is by nature distributed, with many of the key constituents largely anonymous to the organizers of the project. This is a key feature of the whole idea, but it poses some interesting managerial challenges. Traditional organizations are designed along a hierarchical basis. Someone at the top (aka the CEO) issues instructions and those are transmitted down the line via that hierarchy. This is largely how companies have been organized for 5,000 years. We could (and probably will someday) write a whole other post on the benefits and problems of such a system, and its evolution under modern capitalism. The point here is that companies are largely organized around bi-directional communications – up and down.
With a blockchain, the communication is multi-directional. There are several constituencies involved – miners, users of the tokens, financial holders and then the company trying to “organize” all this. These groups all need to communicate with each other in some fashion. The chain itself provides an important degree of coordination, but there is always going to be some friction in getting all these constituencies aligned. Our key theory behind this is that communications under these conditions is a marketing problem – reaching out to large, disparate audiences.
Having worked on a few chains recently, we increasingly believe that hierarchical companies in this position need to designate this Chief Blockchain Officer. This person will be responsible for the health of the company’s chain. There will be a heavy temptation to staff this role with someone with a technical background. We think this is a mistake. Admittedly, the design of the chain and its implementation are heavily technical roles. However, once the chain is rolled out it becomes much more of a marketing role, so the preference should be someone with that sort of background.
The CBO should become the face of the company for anyone touching the coin. They should be responsible for promoting the use of the coin – working closely with or actually managing the sales and business development team. The CBO will also need to communicate with miners and other parts of the crypto economy – including exchanges and the (now nascent) analyst and ratings shops. In addition, the CBO is also a good person to run the Investor Relations functions we discussed in the last post. They should probably also run the company’s marketing function, because they will be the biggest consumer of that function.
This model poses a few challenges. First, over time companies will almost certainly have to adopt and improve their underlying chain. In some cases, this responsibility rests outside the company either with the developers or the miners. However, for projects where the company holds this responsibility, there is a pressing need to stay on top of the rapidly evolving state-of-the-art in crypto. This includes both the technical side (i.e. security, especially security) and the economic (i.e. growing pressure to decentralize all the things). The model we envisage needs to have a engineering functional team under the CBO to work on these issues. Again, we do not see the CBO as a technical role, but the officeholder needs to be deeply comfortable with technology.
Other functions which might fall under the CBO include Operations – getting all the company’s functions running smoothly. So some might argue the CBO is a sort of glorified COO. However, we think the operations side is a much smaller challenge than the communications piece. (If this is not the case, then the company probably needs a dedicated COO to fix that.)
A successful CBO will likely spend most of their time outside the company – meeting with users, developers, miners and investors; speaking at conferences; meeting with academics and cutting edge service providers. Time in the office should be spent working on improving the company’s messaging and matching that to the operations running on the chain.
In short, the CBO combines many of the functions of a CMO and COO, but operating in a wholly different environment.