Avoiding the sophomore slump: How to empower your business in the Web3 world
What the history of the internet can teach us about the future of blockchain
Ioan Ifrim is an associate program director at Long Dash. He has led partnerships with multi-national firms as well as the federal government.
By now, you’ve heard that blockchain technology is a fad and that the FTX collapse proves it. But writing off blockchain—a rapid and secure method of sharing information at scale—could be a mistake. The technology, while not inherently a silver bullet, will have significant implications for many industries over time and bears a similar origin story to another defining technology in recent history: the internet.
There are parallels to the dot-com crash
There are similarities between the ongoing “crypto-crash” and the dot-com bubble bursting in the early 2000s. These similarities suggest that the underlying technology behind blockchain, like the internet, is poised to continue growing and play a key role in our future despite the early failings of first-adopters. To understand that connection, let’s go back to the late 90s, when internet-based companies like Amazon and Pets.com saw their valuations soar.
Pets.com, founded in 1998, was so flush with cash from its February 2000 IPO, it bought ads for the 2000 Super Bowl to have its sock-puppet mascot guilt you into staying home with your pet and buying all your pet supplies in one place: its online store. By November of that same year, it had laid off most of its staff and stopped doing business, becoming known as one of the “greatest dot-com disasters.” By the end of the dot-com crash, many internet companies had gone bankrupt, and those that survived lost significant valuation, seemingly confirming the views of the internet naysayers.
Clearly, the internet and Amazon are doing fine and have evolved far beyond the Web 1.0, as we now know it, of the late 90s. So what lessons are there for brand leaders thinking about blockchain?
1. Focus on improving the customer experience and building trust
Buying something online in 1999 meant using dial-up internet to look at low-resolution images of products and trusting an opaque site with your financial information with little to no guarantee of safety. While online shopping was more efficient than shopping in a brick-and-mortar store, the lack of a supporting infrastructure and refined user experience eventually eroded consumer trust entirely. The lesson here is: Putting all your eggs in the basket of finding efficiencies in existing processes can only take you so far before the oversized promise catches up with the underwhelming performance. This is the sophomore slump.
Putting all your eggs in the basket of finding efficiencies in existing processes can only take you so far before the oversized promise catches up with the underwhelming performance.
Startups that survived or avoided the sophomore slump did so by focusing on improving the experience for customers and building trust. Some companies, like Amazon, moved beyond the sophomore slump by creating entirely new markets based on internet infrastructure and adapting that technology to meet consumer needs. While Amazon refined its patented “one-click” shopping experience, it concurrently worked on advancing the “back-end” architecture of the internet, launching “Amazon.com Web Services” in 2002. This focus on customer trust is still central to Amazon’s success: A study conducted by The Verge and Reticle Research found that Amazon is the most trusted and well-liked tech brand, with some customers reporting that they trust the company almost as much as they do their bank.
2. Adopt new technology to serve your customer base
Despite being founded in 1997, at the height of the internet revolution, Netflix didn’t launch a streaming service until 2007. It started with a simpler idea: DVD by mail. The idea was a hit due to the increasing popularity and decreasing cost of DVD players, but Netflix never rested on its laurels. It constantly sought to innovate and anticipate the needs of its evolving customer base by leveraging evolving technologies as a tool to serve that customer base.
Netflix closely followed the increase of internet users, which had grown to 74% of US adults in 2007, the same year Netflix introduced a streaming service. It took risks by investing in this new technology, but also managed those risks by ensuring once-popular offerings remained accessible to niche audiences. Hence why you can still buy books on Amazon and rent Netflix DVDs by mail. The purpose of technology adoption was not for technology’s sake, but for the customer’s sake. So what does that mean for blockchain technology?
Sign up for OnBrand
Our weekly digest featuring ideas on the future of brand.
3. Start with the basics: audience intelligence
Brands should think about blockchain adoption similarly to how Amazon and Netflix approached being online—by focusing on both efficiency and the creation of a customer experience built on trust. Many consumers today aren’t blockchain-native yet, but they are interested in the principles driving it: influence, membership, and consensus commerce. These insights should drive how brands think about their audience intelligence strategies. In other words, instead of anticipating the technology itself, brands should be anticipating how and why their customers will want to use blockchain. This requires developing close 1:1 relationships with audiences to stay in tune with their needs and desires. The use case for the tech will follow—and likely be a more natural but elevated extension of a brand’s current product.
Blockchain has the potential to transform our economy, and brand leaders should continue to pay attention. However, brands should be cautious that their motivation to adopt the new technology doesn’t stem from FOMO. Rather, brands should be interested in understanding how they can improve the customer experience and build consumer trust by letting their audiences guide them. This will be the determining factor in whether brands drop out from the sophomore slump or graduate with honors.