# Matthew Howells-Barby # Matthew Howells-Barby: Growth for the frontier of finance Growth for the frontier of finance, where there's no playbook to copy. I founded and sold a company, then spent years running growth at scale in crypto's most volatile, heavily regulated markets. Now I'm building an agent-driven growth org from the ground up. I'm back in the trenches with the team, doing what I do best. Chief Growth Officer, Breakout [My operating record](https://mhb.xyz/operating-record/) ![](https://mhb.xyz/assets/portrait-crumbs.ff1df3561860.webp) ![Matthew Howells-Barby](https://mhb.xyz/assets/portrait-photo.f7e79cccd247.jpg) ![](https://mhb.xyz/assets/portrait-clay.607b82c0d10f.webp) ## Essays [![A dockside crane lifting a small sailing dinghy up toward the deck of a freighter.](https://mhb.xyz/_astro/src.zQvAF_yW_1xp67.webp)](https://mhb.xyz/essays/bootstrap-to-buyout/) Growth / 24 Oct 2023 ### [From Bootstrap to Buyout: How We Sold Our Side Hustle to a Public Company](https://mhb.xyz/essays/bootstrap-to-buyout/) The Traffic Think Tank sale, told from the founder side of the table. [![A horseshoe magnet lifting a dense cluster of iron filings while loose filings fall away beneath.](https://mhb.xyz/_astro/src.DbvgPjZ1_1r05Om.webp)](https://mhb.xyz/essays/incentive-systems/) Growth / 6 Feb 2024 ### [You Can't Buy Product-Market Fit](https://mhb.xyz/essays/incentive-systems/) [![A lone diver mid-air between a high platform and the open water below.](https://mhb.xyz/_astro/src.fdZ5l_LV_Z2wBqFf.webp)](https://mhb.xyz/essays/going-all-in/) Career / 27 Apr 2022 ### [Going All-In](https://mhb.xyz/essays/going-all-in/) [![Successive tide lines marked on a sloping shore, the newest wave reaching past every earlier mark.](https://mhb.xyz/_astro/src.DzGs7wXG_181OU0.webp)](https://mhb.xyz/essays/this-time-its-different/) Economics / 16 Feb 2024 ### [This Time It's Different](https://mhb.xyz/essays/this-time-its-different/) [![Small figures hauling on ropes to raise the frame of a timber barn together.](https://mhb.xyz/_astro/src.364KYSBh_Zs24jA.webp)](https://mhb.xyz/essays/1mm-arr-community-business/) Growth / 29 Aug 2019 ### [Growing a $1mm+ ARR community business: The story of Traffic Think Tank](https://mhb.xyz/essays/1mm-arr-community-business/) [![A towering hollow effigy held up from behind by wooden scaffolding, small figures kneeling at its base.](https://mhb.xyz/_astro/src.Boz16RB4_1vRhnW.webp)](https://mhb.xyz/essays/cult-problem-in-crypto/) Crypto / 16 Nov 2022 ### [Our Fearless Leader: the Cult Problem in Crypto](https://mhb.xyz/essays/cult-problem-in-crypto/) [Read the essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/](https://mhb.xyz/) # Advisory and angel investing # I take on one to two companies a year, the ones where I can be genuinely useful. This isn't a consulting practice, and I'm selective about what I take on. If there's a real fit, the door is open. If there isn't, I'll say so quickly. ## Where I'm useful Growth problems with no playbook. Crypto and fintech companies building where the mechanics are unproven, the market moves under you, or the org has to be built rather than inherited. My [operating record](https://mhb.xyz/operating-record/) shows what that looks like. ## What makes it a yes The companies I say yes to have two things in common: I believe in what they're building, and I can see exactly where I'd add value. When that's true, I'm in. When it isn't, I'll tell you quickly. ## Angel investing I write four to six small checks a year, usually $20k to $50k, backing ambitious founders and companies building at the frontier of tech and finance. I'm not a KOL or an influencer, and I won't be shilling your product. I'm here as an investor you can lean on, to talk through a problem or share what I've learned when you want or need it. ### Some of the companies I've invested in: * [![Lumanu](https://mhb.xyz/assets/lumanu.e11d30e06f3f.svg) Lumanu](https://www.lumanu.com/) * [![ether.fi](https://mhb.xyz/assets/etherfi.11dbc22b7b30.svg) ether.fi](https://ether.fi/) * [![Fhenix](https://mhb.xyz/assets/fhenix.be990154e845.svg) Fhenix](https://www.fhenix.io/) * [![OneBalance](https://mhb.xyz/assets/onebalance.5f03902ba656.svg) OneBalance](https://www.onebalance.io/) * [![Botanix](https://mhb.xyz/assets/botanix.c752d4018772.svg) Botanix](https://botanixlabs.com/) * [![](https://mhb.xyz/assets/defiapp.d137f301d1cc.svg) Defi App Defi App](https://defi.app/) * [![Roosty's](https://mhb.xyz/assets/roostys.fe502a2277e1.svg) Roosty's](https://roostys.co/) * [![Citrea](https://mhb.xyz/assets/citrea.bba259dfc22d.svg) Citrea](https://citrea.xyz/) * [![Shardeum](https://mhb.xyz/assets/shardeum.badf41c75e76.svg) Shardeum](https://shardeum.org/) For advisory or investment conversations, [get in touch](https://mhb.xyz/contact/). Source: [https://mhb.xyz/advisory/](https://mhb.xyz/advisory/) # Contact # The fastest way to reach me is this form. If there's a real fit, I'll come back quickly. Source: [https://mhb.xyz/contact/](https://mhb.xyz/contact/) # Writing # Writing I write when I've worked something out, not on a schedule. Mostly growth, crypto, and the economics underneath both. [![Successive tide lines marked on a sloping shore, the newest wave reaching past every earlier mark.](https://mhb.xyz/_astro/src.DzGs7wXG_181OU0.webp)](https://mhb.xyz/essays/this-time-its-different/) Economics 16 Feb 2024 7 min ## [This Time It's Different](https://mhb.xyz/essays/this-time-its-different/) [![A horseshoe magnet lifting a dense cluster of iron filings while loose filings fall away beneath.](https://mhb.xyz/_astro/src.DbvgPjZ1_1r05Om.webp)](https://mhb.xyz/essays/incentive-systems/) Growth 6 Feb 2024 12 min ## [You Can't Buy Product-Market Fit](https://mhb.xyz/essays/incentive-systems/) Why incentives can rent behavior but never buy the product truth underneath it. [![A wolf draped in a sheep's fleece, the fleece slipping off one shoulder.](https://mhb.xyz/_astro/src.CBLZTItl_Z2uhvzq.webp)](https://mhb.xyz/essays/central-bank-digital-currencies/) Economics 17 Nov 2023 8 min ## [CBDCs: A Wolf in Sheep's Clothing](https://mhb.xyz/essays/central-bank-digital-currencies/) [![A dockside crane lifting a small sailing dinghy up toward the deck of a freighter.](https://mhb.xyz/_astro/src.zQvAF_yW_1xp67.webp)](https://mhb.xyz/essays/bootstrap-to-buyout/) Growth 24 Oct 2023 13 min ## [From Bootstrap to Buyout: How We Sold Our Side Hustle to a Public Company](https://mhb.xyz/essays/bootstrap-to-buyout/) The Traffic Think Tank sale, told from the founder side of the table. [![A riveted pressure vessel venting one plume of steam through a small safety valve.](https://mhb.xyz/_astro/src.IAQ00vM4_Z2jLr2a.webp)](https://mhb.xyz/essays/understanding-inflation/) Economics 14 Dec 2022 9 min ## [Understanding Inflation](https://mhb.xyz/essays/understanding-inflation/) [![A towering hollow effigy held up from behind by wooden scaffolding, small figures kneeling at its base.](https://mhb.xyz/_astro/src.Boz16RB4_1vRhnW.webp)](https://mhb.xyz/essays/cult-problem-in-crypto/) Crypto 16 Nov 2022 6 min ## [Our Fearless Leader: the Cult Problem in Crypto](https://mhb.xyz/essays/cult-problem-in-crypto/) ## From the Archives * [ ### Going All-In Career 27 Apr 2022 10 min ](https://mhb.xyz/essays/going-all-in/) * [ ### The Remote Leader's Guide to Managing a Team Leadership 28 Jan 2020 13 min ](https://mhb.xyz/essays/remote-leadership/) * [ ### Growing a $1mm+ ARR community business: The story of Traffic Think Tank Growth 29 Aug 2019 18 min ](https://mhb.xyz/essays/1mm-arr-community-business/) * [ ### How to Grow a Successful Career in Marketing Career 15 Aug 2017 8 min ](https://mhb.xyz/essays/careers-in-marketing/) * [ ### A Look to the Future: Speed, Convenience and the Rise of AI Growth 26 Jul 2017 15 min ](https://mhb.xyz/essays/future-of-marketing/) * [ ### Life Beyond Email: Chatbot Marketing Growth 14 Feb 2017 12 min ](https://mhb.xyz/essays/chatbot-marketing/) I've kept the essays I wrote a decade or more ago in [the vault](https://mhb.xyz/vault/). Source: [https://mhb.xyz/essays/](https://mhb.xyz/essays/) # Operating record I build growth engines for companies operating where there's no playbook to copy. Here's my track record so far. Feb 2026–present ## Getting back in the trenches In February 2026 I left a large org at Kraken to build growth from scratch at Breakout, a crypto prop-trading company in the same group. I wanted my hands back on the build, and a system I could own end to end, using everything I'd learned running growth at scale. At Breakout I'm building a fully agent-driven growth org in crypto prop trading, where agents do the work a growth org used to throw people at. I'll show the numbers when they're real. For now, the architecture is the proof. Role: Chief Growth Officer / Company: Breakout (a Payward Company) ![Breakout](https://mhb.xyz/assets/breakout.273be9524cb6.webp)part of![Payward](https://mhb.xyz/assets/payward.7ef61892b5a3.svg) ![A chain of Jacquard loom punched cards draped in a curve](https://mhb.xyz/assets/tile-breakout.c3b53e22e321.png) 2023–2026 ## Crypto at scale, and current Then I went where the playbooks run out. I took over growth at Kraken, running a sixty-plus person org and a budget north of $250 million in the most volatile, heavily regulated market there is. Running growth in crypto is not running growth in SaaS with a different logo. The ground moves under you: regulation, market cycles, trust, all of it shifting faster than any plan survives. I've operated through that, at scale, and I'm still in it while a lot of people who were in crypto have quietly left. Role: VP, Growth / Company: Kraken (a Payward Company) ![Kraken](https://mhb.xyz/assets/kraken.27c810011d28.svg)part of![Payward](https://mhb.xyz/assets/payward.7ef61892b5a3.svg) ![A rai stone, the carved stone money of Yap, standing upright](https://mhb.xyz/assets/tile-kraken.cf0f6bb0b886.png) 2017–2023 ## Founder mode The interesting part started when I stopped only running other people's growth and built something of my own. I co-founded Traffic Think Tank in 2017, a paid community for marketers, before the subscription-community model was something you could point at and copy. We grew it to around a million in recurring revenue inside a couple of years and sold it to Semrush in 2023. I've owned the outcome, not just the function, and that changes how you operate inside someone else's company. You stop thinking like a hire. Role: Founder / Company: Traffic Think Tank (acquired by Semrush) ![Traffic Think Tank, a Semrush company](https://mhb.xyz/assets/ttt.ff53eaddbd22.svg) ![A telephone switchboard with patch cords plugged between its jacks](https://mhb.xyz/assets/tile-ttt.5d95fb4070fd.png) 2015–2022 ## The playbook others copied Before crypto, I spent seven years at HubSpot as VP Marketing. I joined in 2015 to build SEO and freemium acquisition, and by the end I was running a ninety-person global org across acquisition, customer education and community, while the company grew from around $1 billion to $40 billion in market cap. Monthly signups went from near zero to hundreds of thousands. The organic growth engine that team built has become the playbook for growth at scale, and plenty of companies well outside SaaS have copied it since. I was the one driving that team. Role: VP, Marketing / Company: HubSpot ![HubSpot](https://mhb.xyz/assets/hubspot.883ba903494b.svg) ![A mill waterwheel turned by a running current](https://mhb.xyz/assets/tile-hubspot.40bea1412537.png) Source: [https://mhb.xyz/operating-record/](https://mhb.xyz/operating-record/) # Privacy # Privacy This site uses a contact form and offers optional website analytics. Analytics is disabled until its configuration has been reviewed and you allow it. ## Contact messages The contact form asks for your name, email address, topic and message so your enquiry can be answered. Cloudflare checks submissions for abuse. When email delivery is configured, the selected email provider processes the message for delivery. Contact details and message text are not sent to analytics. ## Cookies Your analytics preference is stored in your browser. You can reject analytics or withdraw permission through Cookie preferences in the footer. The contact form uses a security challenge to limit automated submissions. ## Questions Use the [contact page](https://mhb.xyz/contact/) for questions about information you have submitted. Source: [https://mhb.xyz/privacy/](https://mhb.xyz/privacy/) # Growing a $1mm+ ARR community business: The story of Traffic Think Tank # Growing a $1mm+ ARR community business: The story of Traffic Think Tank The build behind the exit: how a paid community reached seven figures. Growth29 Aug 201918 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![Small figures hauling on ropes to raise the frame of a timber barn together.](https://mhb.xyz/_astro/src.364KYSBh_Zs24jA.webp) Just under two years ago I launched an online community business called [Traffic Think Tank](https://trafficthinktank.com/) with two other co-founders, Nick Eubanks and Ian Howells. As a Traffic Think Tank customer, you (currently) pay $119 a month to get access to our online community, which is run through Slack. The community is focused on helping you learn various aspects of marketing, with a particular focus on search engine optimization (SEO). Alongside access to the Slack community, we publish new educational video content from outside experts every week that all customers have access to. At the time of writing, Traffic Think Tank has around 650 members spanning across 17 of the 24 different global time zones. I was on a business trip over in Sydney recently, and during my time there I met up with some of our Australia-based community members. During dinner, I was asked by several of them how the idea for Traffic Think Tank came about and what steps we took to validate that the idea was worth pursuing. This is what I told them… ## How it all began It all started with a personal need. Nick, an already successful entrepreneur and owner of a marketing agency, had tested out an early version Traffic Think Tank in early 2017. He offered real-time consulting for around ten customers that he ran from Slack. He would publish some educational videos and offer his advice on projects that the members were running. The initial test went well, but it was tough to maintain on his own and he had to charge a fairly high price to make it worth his time. That’s when he spoke to me and Ian about turning this idea into something much bigger. Both Ian and I offered something slightly different to Nick. We’ve both spent time in senior positions at marketing agencies, but currently hold senior director positions in 2,000+ public employee companies (HubSpot and LendingTree). Alongside this, as a trio we could really ramp up the quality and quantity of content within the community, spread out the administrative workload and just generally have more resources to throw at getting this thing off the ground. Admittedly, Nick was much more optimistic about the potential of Traffic Think Tank – something I’m very thankful for now – whereas Ian and I were in the camp of “you’re out of your mind if you think hundreds of people are going to pay us to be a part of a Slack channel”. To validate the idea at scale, we decided that we’d get an initial MVP of the community up and running with a goal of reaching 100 paying customers in the first six months. If we achieved that, we’d validate that it was a viable business and we would continue to pursue it. If not, we’d kill it. We spent the next month building out the initial tech stack that enabled us to accept payments, do basic user management to the Slack channel, and get a one-page website up and running with information on what Traffic Think Tank was all about. After this was ready, we doubled down on getting some initial content created for members – I mean, we couldn’t have people just land in an empty Slack channel, could we? We created around ten initial videos, 20 or so articles, and then some long threads full of useful information within the Slack channel so that members would have some content to pour into right from the beginning. Then, it was time to go live. ## The first 100 customers Fortunately, both Nick and I had built a somewhat substantial following in the SEO space over the previous 5-10 years, so we at least had a large email list to tap into (a total of around 40,000 people). We queued up some launch emails, set an initial price of $99 per month and pressed send. ![Traffic Think Tank Opening Email](https://mhb.xyz/_astro/Traffic-Think-Tank-Opening-Email.D-bTeMjJ_Qi9lJ.webp) _The launch email I sent to my subscribers announcing Traffic Think Tank_ What we didn’t expect was to sell all of the initial 100 membership spots in the first 72 hours. “Shit. What do we do now? Are we ready for this many people? Are we providing them with enough value? What if something breaks in our tech stack? What if they don’t like the content? What if everyone hates Slack?” All of these were thoughts running through my head. This brings me to the first great decision we made: we closed down new membership intake for 3 months so that we could focus completely on adding value to the first cohort of users. ## The right thing at the right time SEO is somewhat of a dark art to many people that are trying to learn about it for the first time. There are hundreds of thousands (possibly millions) of articles and videos online that talk about how to do SEO. Some of it’s good advice; a lot of it is very bad advice. Add to this that the barrier to entry of claiming to be an “expert” in SEO is practically non-existent and you have a recipe for disaster. This is why, for a long time, individuals involved in SEO have flocked in their masses to online communities for information and to bounce ideas off of others in the space. Forums like SEObook, Black Hat World, WickedFire, Inbound.org, /r/BigSEO, and many more have, at one time, been called home by many SEOs. In recent times, these communities have either been closed down or just simply haven’t adapted to the changing needs of the community – one of those needs being real-time feedback on real-world problems. The other big need that we all spotted and personally had was the ability to openly share the things that are working – and the things that aren’t – in SEO within a private forum. Not everyone wanted to share their _secret sauce_ with the world. One of the main reasons we chose Slack as the platform to run our community on was the fact that it solved these two core needs. It gave the ability to communicate in real-time across multiple devices, and all of the information shared within it was outside of the public domain. The other problem that plagued a lot of these early communities was spam. Most of them were web-based forums that were free to access. That meant they became a breeding ground for people trying to either sell their services or promote their own content – neither of which is conducive to building a thriving community. This was our main motivation for charging a monthly fee to access Traffic Think Tank. We spent a lot of time thinking through pricing. It needed to be enough money that people would be motivated to really make use of their membership and act in a way that’s beneficial to the community, but not too much money that it became cost prohibitive to the people that would benefit from it the most. Considering that most of our members would typically spend between $200-800 per month on SEO software, $99 initially felt like the perfect balance. ## Growing pains The first three months of running the community went by without any major hiccups. Members were incredibly patient with us, gave us great feedback and were incredibly helpful and accommodating to other members. Messages were being posted every day, with Nick, Ian and myself seeding most of the engagement at this stage. With everything going smoothly, we decided that it was time to open the doors to another intake of new members. At this point we’d accumulated a backlog of people on our waiting list, so we knew that simply opening our doors would result in another large intake. Adding more members to a community has a direct impact on the value that each member receives. For Traffic Think Tank in particular, the value for members comes from three areas: 1. The ability to have your questions answered by me, Nick and Ian, as well as other members of the community. 2. The access to a large library of exclusive content. 3. The ability to build connections with the wider community. In the early stages of membership growth, there was a big emphasis on the first of those three points. We didn’t have an enormous content library, nor did we have a particularly large community of members, so a lot of the value came from getting a lot of one-to-one time with the community founders. ![Community Engagement inside Traffic Think Tank](https://mhb.xyz/_astro/Community-Engagement-in-Traffic-Think-Tank.eBlQM6VE_mtHyU.webp) _Engagement within the Traffic Think Tank Slack community_ The good thing about having 100 members was that it was just about feasible to give each and every member some one-to-one time within the month, which really helped us to deliver those moments of delight that the community needed early on. Two-and-a-half months after we launched Traffic Think Tank, we opened the doors to another 250 people, taking our total number of members to 350. This is where we experienced our first growing pains. Our original members had become used to being able to drop us direct messages and expect an almost instant response, but this wasn’t feasible anymore. There were too many people, and we needed to create a shift in behavior. We needed more value to come from the community engaging with one another or we’d never be able to scale beyond this level. We started to really pay attention to engagement metrics; how many people were logging in every day, and of those, how many were actually posting messages within public channels. We asked members that were logging in a lot but weren’t posting (the “lurkers”) why that was the case. We also asked the members that engaged in the community the most what motivated them to post regularly. We learned a lot from doing this. We found that the large majority of highly-engaged members had much more experience in SEO, whereas most of the “lurkers” were beginners. This meant that most of the information being shared in the community was very advanced, with a lot of feedback from the beginners in the group being that they “didn’t want to ask a stupid question”. As managers of the community, we needed to facilitate conversations that catered to all of our members, not just those at a certain level of skill. To tackle this problem, we created a number of new channels that had a much deeper focus on beginner topics so novice members had a safe place to ask questions without judgment. We also started running live video Q&As each month where we’d answer questions submitted by the community. This gave our members one-on-one time with me, Nick and Ian, but spread the value of these conversations across the whole community rather than them being hidden within private messages. As a result of these changes, we found that the more experienced members in the community were really enjoying sharing their knowledge with those with less experience. The number of replies within each question thread was really starting to increase, and the community started to shift away from just being a bunch of threads created by me, Nick and Ian to a thriving forum of diverse topics compiled by a diverse set of individuals. This is what we’d always wanted. A true community. It was starting to happen. ![Community Engagement Balance Graph](https://mhb.xyz/_astro/Community-Engagement-Balance-Graph.BAjgFm6y_1s80TW.webp) At the same time, we started to realize that we’ll eventually reach a tipping point where there’ll be too much content for us to manage and our members to engage with. When we reach this point, the community will be tough to follow and the quality of any given post will go down. Not only that, but the community will become increasingly difficult to moderate. We’re not there yet, but we recognize that this will come, and we’ll have to adjust our model again. ## Advocating advocacy As we started to feel more comfortable about the value that members were receiving, we made the decision to indefinitely open for new members. At the same time, we increased the price of membership (from $99 a month to $119) in a bid to strike the right balance between profitability as a business and to slow down the rate at which we were reaching the tipping point of community size. We also made the decision to repay all of our early adopters by grandfathering them in to the original pricing – and committing to always do this in the future. Despite the price increase, we saw a continued flow of new members come into the community. The craziest part about this was that we were doing practically no marketing activities to encourage new members– this was all coming from word of mouth. Our members were getting enough value from the community that they were recommending it to their friends, colleagues and business partners. The scale at which this was happening really took us by surprise and it told us one thing very clearly: delivering more value to members resulted in more value being delivered to the business. This is a wonderful dynamic to have because it perfectly aligns the incentives on both sides. We’d said from the start that we wouldn’t sacrifice value to members for more revenue – this is something that all three of us felt very strongly about. First and foremost, we wanted to create a community that delivered value to its members and was run in a way that aligned with our values as people. If we could find a way to stimulate brand advocacy, while also tightening the bonds between all of our individual community members, we’d be boosting both customer retention and customer acquisition in the same motion. This became our next big focus. [Original social post](https://twitter.com/AdamGSteele/status/1130892481099382784?ref_src=twsrc%5Etfw) _Adam, one of our members wore his Traffic Think Tank t-shirt in the Sahara desert_ We started with some simple things: * We shipped out Traffic Think Tank branded T-shirts to all new members. * We’d call out each of the individuals that would submit questions to our live Q&A sessions and thank them live on air. * We set up a new channel that was dedicated to sharing a quick introduction to who you are, what you do and where you’re based for all new members. * We’d created a jobs channel and a marketplace for selling, buying and trading services with other members. * Our monthly “blind dates” calls were started where you’d be randomly grouped with 3-4 other community members so that you could hop on a call to get to know each other better. * The _Traffic Think Tank In Real Life (IRL)_ channel was born, which enabled members to facilitate in-person meetups with each other. In particular, we saw that as members started to meet in person or via calls the community itself was feeling more and more like a family. It became much closer knit and some members started to build up a really positive reputation for being particularly helpful to other members, or for having really strong knowledge in a specific area. [Original social post](https://twitter.com/matthewbarby/status/1117175584080134149?ref_src=twsrc%5Etfw) Nick, Ian and I would go out of our way to try and meet with members in real life wherever we could. I was taken aback by how appreciative people were for us doing this, and it also served as an invaluable way to gain honest feedback from members. There was another trend that we’d observed that we didn’t really expect to happen. More and more members were doing business with each another. We’ve had people find new jobs through the community, sell businesses to other members, launch joint ventures together and bring members in as consultants to their business. This has probably been the most rewarding thing to watch, and it was clear that the deeper relationships that our members were forming were resulting in an increased level of trust to work with each other. We wanted to harness this and take it to a new level. This brought us to arguably the best decision we’ve made so far running Traffic Think Tank… we were going to run a big live event for our members. ## I have no idea what I’m doing It’s the first week of January 2019 and we’re less than three weeks away from Traffic Think Tank LIVE, our first ever in-person event hosting 150 people, most of which are Traffic Think Tank members. > It’s like an ongoing nightmare I can’t wake up from. That was Nick’s response in our private admin channel to myself and Ian when I asked if they were finding the run-up to the event as stressful as I was. I think that all three of us were riding on such a high from how the community was growing that we felt like we could do anything. Running an event? How hard can it be? Well, turns out it’s really hard. We had seven different speakers flying over from around the world to speak at the event, there was a pre- and after event party, and we’d planned a charity dinner where we would take ten attendees (picked at random via a raffle) out for a fancy meal. Oh, and Nick, Ian and I were hosting a live Q&A session on stage. It wasn’t until precisely 48 hours before the event that we’d realized we didn’t have any microphones, nor had a large amount of the swag we’d ordered arrived. Plus, a giant storm had hit Philly causing a TON of flight cancellations. Perfect. Just perfect. This was honestly the tip of the iceberg. We hadn’t thought about who was going to run the registration desk, who would be taking photos during the event and who would actually field questions from the audience while all three of us sat on stage for our live Q&A panel. Turns out that the answer to all of those questions were my wife, Laura, and Nick’s wife, Kelley. Thankfully, they were on hand to save our asses. The weeks running up to the event were honestly some of the most stressful of my life. We sold around 50% of our ticket allocation within the final two weeks before the event. All of the event organizers told us this would happen, but did we believe them? Hell no! Imagine having two weeks until the big day and as it stood half of the room would be completely empty. I was ready to fly most of my extended family over just to make it look remotely busy. ![Traffic Think Tank LIVE - Ryan Presenting](https://mhb.xyz/_astro/Traffic-Think-Tank-LIVE-Ryan-Presenting.CZXpLHyD_9Neeg.webp) _One of our speakers, Ryan Stewart, presenting at [Traffic Think Tank LIVE](https://trafficthinktank.com/live/)_ Thankfully, if all came together. We managed to acquire some microphones, the swag arrived on the morning of the event, all of our speakers were able to make it on time and the weather just about held up so that our entire allocation of ticket holders was able to make it to the event. We pooled together and I’m proud to say that the event was a huge success. While we made a substantial financial loss on the event itself, January saw a huge spike in new members, which more than recouped our losses. Not only that, but we got to hang out with a load of our members all day while they said really nice things about the thing we’d built. It was both exhausting and incredibly rewarding. Bring on Traffic Think Tank LIVE 2020! (This time we’re hiring an event manager…) ## The road ahead Fast forward to today (August 2019) and Traffic Think Tank has over 650 members. The biggest challenges that we’re tackling right now include making sure the most interesting conversations and best content surfaces to the top of the community, making Slack more searchable (this is ultimately one of its flaws as a platform) and giving members a quicker way to find the exclusive content that we create. You’ll notice there’s a pretty clear theme here. In the past 30 days, 4,566 messages were posted in public channels inside Traffic Think Tank. If you add on any messages posted inside private direct messages, this number rises to 21,612. That’s a lot of messages. To solve these challenges and enable further scale in the future, we’ve invested a bunch of cash and our time into building out a full learning management system (LMS) that all members will get access to alongside the Slack community. The LMS will be a web-based portal that houses all of the video content we produce. It will also provide an account admin section where users can update or change their billing information (they have to email us to do this right now, which isn’t ideal), a list of membership perks and discounts with our partners, and a list of links to some of the best threads within Slack – when clicked, these will drop you directly into Slack. ![Traffic Think Tank LMS](https://mhb.xyz/_astro/Traffic-Think-Tank-LMS.CrTLb8HT_1zi3QV.webp) _Designs for the new learning management system (LMS)_ It’s not been easy, but we’re 95% of the way through this and I’m certain that it will have a hugely positive impact on the experience for our members. Alongside this we hired a community manager, Liz, who supports with any questions that our members have, coordinates with external experts to arrange webinars for the community, helps with new member onboarding, and has tightened up some of our processes around billing and general accounts admin. This was a great decision. Finally, we’ve started planning next year’s live event, which we plan to more than double in size to 350 attendees, and we decided to pick a slightly warmer location in Miami this time out. Stay tuned for me to have a complete meltdown 3 weeks from the event. ## Final thoughts When I look back on the journey we’ve had so far building Traffic Think Tank, there’s one very important piece to this puzzle that’s made all of this work that I’ve failed to mention so far: co-founder alignment. Building a community is a balancing act that relies heavily on those in charge being completely aligned. Nick, Ian, and I completely trust each other and more importantly, are philosophically aligned on how we want to run and grow the community. If we didn’t have this, the friction between us could tear apart the entire community. Picking the right people to work with is important in any company, but when your business is literally about bringing people together, there’s no margin for error here. While I’m sure there will be many more challenges ahead, knowing that we all trust each other to make decisions that fall in line with each of our core values makes these challenges dramatically easier to overcome. Finally, I’d like to thank all of our members for making the community what it is today – it’d be nothing without you and I promise that we’ll never take that for granted. ![A community member wearing a purple Traffic Think Tank shirt at a live event.](https://mhb.xyz/_astro/Traffic-Think-Tank-LIVE-Matt.BLR3It4t_Z1KPyrd.webp) [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/1mm-arr-community-business/](https://mhb.xyz/essays/1mm-arr-community-business/) # Ordinals and the Rise of Bitcoin NFTs # Ordinals and the Rise of Bitcoin NFTs Crypto9 Feb 20238 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A pale spiral ammonite fossil set into layered rock, thin gold lines running through the strata.](https://mhb.xyz/_astro/src.Jknn_VDU_2p1ETN.webp) Ordinals, an innovative and divisive new project has brought NFTs to Bitcoin. Coined as “Digital Artifacts” by Ordinals founder, Casey Rodarmor, the NFTs have been the topic of much debate. On one side, there’s the argument that Bitcoin should be exclusively used for financial transactions, with anything outside of this being a deviation from its mission. On the other side, Ordinals is paving the way for new use cases on Bitcoin that can both drive additional revenue for miners and increased interest from end users. Whatever your stance, it’s clear that Ordinals has brought renewed interest in the Bitcoin blockchain. And with some of these early NFTs being sold for over 1 bitcoin (~$23,000) it’s been capturing the imagination of speculators. [Original social post](https://twitter.com/matthewbarby/status/1621238377294041088?ref_src=twsrc%5Etfw) ## What is Ordinals? Launched only a few weeks ago, Ordinals has pioneered a way for NFTs, referred to as “[Digital Artifacts](https://docs.ordinals.com/digital-artifacts.html)”, to be created on Bitcoin. This has been made possible since Bitcoin’s [Taproot upgrade](https://www.kraken.com/en-gb/learn/what-is-taproot) (November 2021), as well as the [Segwit upgrade](https://cointelegraph.com/explained/segwit-explained) from back in 2017. The Ordinals protocol allows for content to be added to a Bitcoin transaction that is then assigned to an individual satoshi (smaller denominations of bitcoins), each with its own unique serial number. The process of assigning content on Bitcoin to a satoshi is known as an “[inscription](https://docs.ordinals.com/inscriptions.html)”. These satoshis that contain inscriptions can then be transferred to other wallets, in a similar fashion to NFTs on Ethereum. Unlike Ethereum, where the content linked to from an NFT (e.g. digital artwork) is hosted off-chain within platforms like IPFS or Arweave, Ordinals hosts this content directly on the Bitcoin blockchain. In fact, the entire process is managed end-to-end within the Bitcoin blockchain without the need for new tokens or sidechains. Since its launch, several thousand inscriptions have been created. Each one has its own serial number, starting at 0 and increasing by 1 chronologically based on the time it was mined on the Bitcoin blockchain. Here’s [inscription #1,326](https://ordinals.com/inscription/36f5ecde809734483ae07104751600e78f42251591baf29238ca8828bfac1f16i0) that I created (with the generous help of [Niski](https://twitter.com/wagmiwiz)): ![Ordinals inscription 1326, showing the M monogram and transaction details.](https://mhb.xyz/_astro/Ordinals-Inscription-1326.DRxD6FZp_6ATG6.webp) Projects have been racing to create early numbered inscriptions as it seems that these could be valued with greater provenance. Time will tell if that’s the case, though. Some of the earlier “collections” to be launched include [Bitcoin Rocks](https://twitter.com/ordrocks), a derivative of the popular Ether Rocks project, and [Ordinal Punks](https://ordinalpunks.com/), paying homage to CryptoPunks. What’s somewhat crazy right now is that there’s currently no marketplace to buy, sell, and swap Bitcoin NFTs. It’s all being done via over-the-counter (OTC) trades within Discord groups. This is going to change very soon, but if you’re planning on trading, please be vigilant because it’s an environment ripe for scams. ## Ethereum NFTs vs Bitcoin NFTs Bitcoin NFTs are technically very different to those created on Ethereum (and other smart contract-enabled blockchains). ### On-Chain Content The first and most obvious distinction is that Bitcoin NFTs have their content (images, videos, audio, etc.) hosted directly on the Bitcoin blockchain, whereas Ethereum NFTs are hosted off-chain. As Bitcoin blocks have a maximum storage size of 4MB, this is the maximum file size that can be stored. Due to the content being added directly to Bitcoin, it’s immutable by default, meaning it can never be modified. This isn’t the case on Ethereum as smart contracts can be programmed to modify content in the future, for example, they can be upgraded or burned. Equally, if IPFS or any other platform where the Ethereum NFT’s content is hosted is taken down, the content can be lost. There have already been some interesting content formats added to Bitcoin in the past few days, [including this](https://ordinals.com/inscription/521f8eccffa4c41a3a7728dd012ea5a4a02feed81f41159231251ecf1e5c79dai0) playable version of the classic video game, Doom. ### No New Tokens Required On Ethereum, there are a number of unique token standards, like [ERC-721](https://ethereum.org/en/developers/docs/standards/tokens/erc-721/) or [ERC-1155](https://ethereum.org/en/developers/docs/standards/tokens/erc-1155/), that are designed specifically to support NFTs (and a range of other use cases). Ordinals simply leverage existing tokens, Satoshis, adding inscriptions to them that reference the associated content on Bitcoin. On Ethereum, the parameters and attributes of an NFT are coded into a smart contract. This contains information like the size of the NFT collection, the mint price, plus much more. With Bitcoin NFTs it’s much simpler. There are no smart contracts. Instead, all of the necessary information is added to the satoshi via an inscription. ### Blockchain-Level Serial Numbers and Rarity NFTs on Ethereum are typically grouped into collections, each with its own unique token ID that corresponds to its place in the total collection size. For example, BAYC #3258 is token [3258/10000](https://etherscan.io/nft/0xc874dadccbab2d63fb48488f572243cbe96e6dbd/3258) as Bored Ape Yacht Club has a total collection size of 10,000. Similarly, the rarity of an NFT is determined by its provenance within the collection that it belongs. This is usually calculated through the uniqueness of its traits. For example, the artwork on BAYC 3258 contains a black hat with the words “BAYC”. This trait is only present in 2% of Bored Apes, which gives it a certain level of rarity within the collection. Ordinals work differently. There isn’t really a concept of “collections”. Instead, as a new inscription is added to a satoshi, it receives a serial number. These are ordered chronologically based on the moment in time that they were mined. For example, the very first inscription has the serial number 0, the next is 1, then 2, etc. This all happens at the blockchain level instead of being siloed within a collection. Similarly, rarity is prescribed at the blockchain level, but this is where it gets even more interesting. Rarity is attributed to satoshis regardless of whether they have an inscription or not. There are [a few different variables](https://docs.ordinals.com/overview.html#rarity) that impact the rarity of the satoshi but they all relate to the time at which they are first mined. Here are the different rarity types: * **common**: Any sat that is not the first sat of its block * **uncommon**: The first sat of each block * **rare**: The first sat of each difficulty adjustment period * **epic**: The first sat of each halving epoch * **legendary**: The first sat of each cycle * mythic: The first sat of the genesis block The first satoshi that was mined after the last halving epoch would give it an “epic” rarity. If someone were to obtain this satoshi (who knows, this could be sitting in your Bitcoin wallet right now!) and then inscribed sought-after artwork within it, it would no doubt be seen as a particularly valuable sat. It’s well worth reading more about _[Ordinals Theory](https://docs.ordinals.com/)_ to better understand this. I imagine there will be plenty of tools built out to identify these rarer satoshis so that they can be inscribed. ### Accessibility Creating a Bitcoin NFT via Ordinals requires significant technical knowledge right now. You need to run a Bitcoin node and know how to utilize the [ord](https://github.com/casey/ord/) Github repository as a starting point. Not only that, but a regular Bitcoin wallet doesn’t support the storing and sending of satoshis with inscriptions. You’ll need to use the Ordinals wallet to do this. There isn’t even a marketplace for the trustless buying and selling of inscriptions yet. This will change very soon. Ordinals’ answer to OpenSea will no doubt appear, along with a flurry of competitors, while several projects are building more user-friendly wallet solutions. Until then, the technical barriers to entry for the average user are very high. ## Why are Bitcoin NFTs so Controversial? A large and loud percentage of the Bitcoin community has been very against Ordinals and Bitcoin NFTs as a whole. The primary argument is that it’s counterproductive to Bitcoin’s core mission, which is to be a better form of money. This has been a long-debated topic, often backed up [by the comments made by Satoshi](https://bitcointalk.org/index.php?topic=1790.msg28917#msg28917), the creator of Bitcoin, back in 2010 where they said that Bitcoin shouldn’t be used for non-financial use cases. Many from the early Bitcoin community have labeled Ordinals as an “attack” on the network. This is because the large transaction sizes – as a result of the content being inscribed within them – result in much larger block sizes and transaction fees for other users. ![Bitcoin transaction fees as a share of the block reward over time, with occasional sharp spikes.](https://mhb.xyz/_astro/Bitcoin-Transaction-Fees-as-of-Block-Reward-Hashrate-Index-1024x559.Dz6hyYl4_ZXcRDd.webp) Chart: Hashrate Index In fact, the average block size on Bitcoin [hit an all-time high](https://ycharts.com/indicators/bitcoin_average_block_size) (1.75MB) on February 4th due to Ordinals. The counter-argument here is that this has [dramatically grown](https://data.hashrateindex.com/chart/bitcoin-transaction-fees) revenue for miners, who are essential for securing the network. As rewards on Bitcoin reduce (halving every four years), fees become a much more important contributor to total revenue. Another argument being put forward in favor of Ordinals is that it could serve as a valuable tool for onboarding new users and growing interest in Bitcoin. At the same time, there’s something to be said for having a narrow financial use case for an asset that’s being used as a store of value. Gold is a great example of this where only a very small percentage of what gold is utilized for involves physical production. Ultimately, the decentralized nature of Bitcoin allows anyone to use the network in a way that fits within the parameters of its design. The only thing that can hinder the growth in projects like Ordinals is a lack of end-user demand. Will Bitcoin NFTs become a core part of the blockchain’s long-term utility? I’m unsure. Is there a lot of excitement and innovation happening in this space right now? Absolutely. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/bitcoin-nfts-ordinals/](https://mhb.xyz/essays/bitcoin-nfts-ordinals/) # From Bootstrap to Buyout: How We Sold Our Side Hustle to a Public Company # From Bootstrap to Buyout: How We Sold Our Side Hustle to a Public Company The Traffic Think Tank sale, told from the founder side of the table. Growth24 Oct 202313 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A dockside crane lifting a small sailing dinghy up toward the deck of a freighter.](https://mhb.xyz/_astro/src.zQvAF_yW_1xp67.webp) A little over five years ago, I founded a company with two other cofounders called Traffic Think Tank. We bootstrapped the business and grew annual revenue to seven figures within the first three years. Running the business was never a full-time thing for us – we juggled it alongside our full-time gigs. Despite this, things went from strength to strength. Earlier this year, Traffic Think Tank was acquired by Semrush, a multi-billion dollar software company. This is the brief story of how we turned a side project with no funding into a business that was acquired by a public tech company. ![The three Traffic Think Tank cofounders on stage in front of the live audience.](https://mhb.xyz/_astro/tttlive2019-matt-nick-ian-1024x558.CJp6HKw0_ZRN3be.webp) Matt, Nick, and Ian, the founders of Traffic Think Tank during the first live community event ## The Idea The story begins back in 2014 when I was invited into a private Facebook group by my now cofounder, Nick Eubanks. The group had around 15 people in it and you could only join through an invitation/recommendation from another member. The purpose of the group was simple: to privately share highly effective strategies for ranking websites in Google search. The one rule was that nothing was to be shared outside of the group. The reason for this is that once a tactic becomes public knowledge, it’s done to death and becomes less effective. This group was all about collectively gaining an edge. I learned a LOT from this group and consider many of the people I met inside it as close friends. It was pretty much the sole reason I didn’t delete my Facebook account. What’s even crazier is that the group never grew larger than 30 people. important This was the first time I realized how powerful online communities can be. From starting Traffic Think Tank to my pivot into the web3 space, this realization has been a formative moment in my career. It was in mid-2017 that Nick reached out to me and Ian Howells, another member of the Facebook group, about a little experiment he was working on. He’d invited 10 people who had asked him about doing some consulting into a Slack group that he created where they’d spent a few months paying to get access to Nick. He felt that there was room to expand this but needed help to do it. He’d tentatively called the project, “Traffic Think Tank”. ![An email headed Traffic Think Tank Re-Launch, outlining the proposed membership offer.](https://mhb.xyz/_astro/TTT-idea-email-from-Nick.5D59X1iu_Z23YeKC.webp) After a little back/forth over email, we decided that we’d aim to launch an MVP later in the year. The MVP would be structured as follows: * $99 per month subscription for access to the private Slack community. * We’d publish a new piece of educational content every week. * Members could ask us questions directly or to the wider community. * We’d respond to messages within 24 hours (maximum). * We’d host a monthly live Q&A over Zoom covering a topic the community chose. We wanted to keep things as simple as possible so we decided to set a hard cap of 100 customers to begin with. If we filled this allocation within 3 months, we’d validate that enough people were willing to pay for what we were offering and we’d pursue it further. If not, we’d cut our losses. The decision not to initially offer this for free was where we had the most discussion. On one hand, free access would get lots more people in much faster. On the other hand, we’d have no idea about the commercial viability of the offering. Spam was also a big concern for us – in particular, how we’d avoid it – so putting in some good friction by requiring paid access helped to solve this problem. I’ll be the first to admit that I was extremely skeptical of the idea that people would pay $99 per month to be part of a Slack community. It’s important to note that this was well before paid communities were commonplace. Well, we launched the beta in November 2017 by sharing it with our personal email lists and across our social media networks, held our breath and hoped we’d see a few customers trickle in. Less than a week later, we maxed out our allocation of 100 customers. Things all of a sudden became very real. ## Growing Pains Our early traction told us we were offering something people wanted. In the decade before launching our community, the SEO space had a plethora of active forums that the industry’s best minds would engage in daily. Those involved in the space will remember the glory days of WickedFire, SEObook, Warrior Forum, and BlackHatWorld. As forum activity dwindled and the crowds moved toward social bookmarking sites like Inbound.org and /r/BigSEO, there was no longer a single place to go and chat with others operating in the space. While we were very focused on education, it was clear that it wasn’t the primary problem we were addressing. Traffic Think Tank was, and still is, in the business of personal connections. The more of these connections that we facilitated and the stronger each of them was, the more value the community received. We did everything we could to lean into this and spent the lion’s share of our time obsessing over building a brand in the space people would trust and feel an affinity to. One of the things that’s always surprised me is how much the community has played a role in driving the growth of new members. It’s no exaggeration to say that ~95% of all new customers have come from word of mouth. Seriously, we’ve done little to no direct user acquisition work outside of simply delivering a product that people loved. With the flywheel starting to spin, it took less than a year for us to hit 350 customers. It was also at this point that we started to feel our first growing pains. I wrote a little about these growing pains in [an essay back in 2019](https://mhb.xyz/essays/1mm-arr-community-business/), but the short story here is that when you’re building a community there is a fine balance between having enough people inside it to create value and engagement and having so many that people get overwhelmed. It’s a little like joining a startup that goes through a rapid growth phase. When you join, everything is scrappy and you’re a part of everything. You never have enough resources but you feel real ownership of your work so you don’t mind as much. Then you grow fast and all of a sudden you have a ton of resources, a big team, and you need sign-off from three different people to get something done. Each situation has its pros and cons, and while one isn’t necessarily better than the other, if you ask for the startup life and get given the big company life, you’re not going to be happy. Similar to a fast-growing startup, our community had to evolve and shed its skin a little. This is painful but necessary. As a community grows, evolution is inevitable, but the core values that underpin it should remain intact. Behind the scenes we were going through some changes, too. We needed to transition from this being a little side project to a _real company_. Each of us was stretched thin and it was starting to show in our ability to manage the community effectively, especially through periods of change. We made a couple of key hires in Liz, our community manager, and David, our content marketing manager. With the new team on board, we leveled up our operations and delivered more value to the community, and it freed me, Nick, and Ian, to take a step back and think about how we reach our next growth milestone. The hard work paid off. We finished 2019 with our first in-person live event, where we sold out all 150 tickets and received incredibly positive feedback. Our community NPS was at an all-time high, and we were just shy of $1mn in ARR. ## Stick or Twist? 2020 was a year nobody will forget (for obvious reasons). For Traffic Think Tank, the pandemic-fueled shift to remote work meant that there was a renewed demand for online communities. This brought an explosion of competitors to the space, but our first-mover advantage paid dividends here, confirming our position of having a strong moat around our business. It was at this point that we started to have several approaches from larger businesses interested in acquiring Traffic Think Tank. In nearly all of these cases, we quickly declined to progress the conversation as we saw a path for continued growth, and frankly, we struggled to see a situation where we’d feel confident enough in the buyer for us to hand over the keys to the kingdom. The community was more than a _company_ to us, it was part of our identities. We were founding members, after all. What these initial conversations _did_ tell us though, was that the company was in no state to even be packaged up for a sale in the future. If we ever wanted or needed to exit the business, we had some work to do. If you own a content or community-focused business that you intend to sell one day, I can’t stress enough the importance of preparing for a sale ahead of time. For us, this involved: * Ensuring we had contracts in place for any content produced for the community (paid for or free). * Revamping our terms of use and user agreements, including making sure we were GDPR compliant. * Getting all of the assets relating to the business to have paper trails of company ownership, as opposed to.. uh.. residing in Ian’s personal GoDaddy account. * Streamlining our company expenses and getting better financial hygiene in place to track expenditures more formally. * Revisiting our founder equity agreements and making sure we were watertight on the ownership structure of the business. In hindsight, this was probably one of the most important moments in the company’s existence. Without doing this work, we’d never have been able to sell. If you’ve never been through a diligence exercise before, let me tell you something, it’s painful, long, and will make you question why you hadn’t sorted things out well ahead of time. Even if we never sold the business, this was helping us mature the organization as a whole, and that’s never a bad thing. In the background of all of this, the community was continuing to expand. Each of us in the founding team was taking on more outside of Traffic Think Tank, too – including the arrival of my daughter – and we were back to being stretched thin. Another critical juncture was being reached as we ended 2021 and we realized we needed to decide on whether we _stick or twist_. We either needed to double down on growth, expand the team and potentially even acquire another community to accelerate our expansion further, or we had to explore a possible sale. Anything in between meant stagnation or decline. After some exploratory conversations to acquire some additional content assets and communities, we quickly started to realize that we might be biting off more than we can chew. It was at this point that we had our first conversation with Semrush. ## Closing the Deal Semrush is a marketing software company based out of Boston. They’d recently gone through an IPO and had established themselves as both a market leader in the SEO software space and a much-loved brand. I’d been an advisor to the company over the past couple of years prior so had a good relationship with the senior leadership team. When the idea was floated that Semrush could be interested in an acquisition of Traffic Think Tank, it was the first time that we’d all universally agreed that this could be a buyer that would be truly additive to the community as a whole. From our first conversation to reaching an informal agreement on a sale, it was only around four weeks. It was scary and exciting all at the same time. We flew out to Boston to meet the exec team and spend a day walking through what a transition plan would look like. This was as much about Semrush proving they could be trustworthy custodians of the community as us showcasing the value of Traffic Think Tank. After a long day of working sessions and an evening of socializing, we signed an LOI and flew back home. Everything became _very_ real and as strange as it may sound, this was probably the first time I’d considered the fact that we’d built _a real business_. Our little side project was about to be acquired by a public company. That’s something I’m proud of. It was August 2022 and two months had passed since our first chat about the sale to the point of signing the LOI. It wasn’t until February 21, 2023, that we finally closed the deal. Turns out that when you’re selling an asset to a public company, there’s quite a lot of due diligence involved and even more lawyers. If you haven’t got your company in order at this point, you’re in for a world of pain. It’s worth calling out that the Semrush team were fantastic through this whole process. They were flexible where they could be and very patient with us (I’m sure we tested that patience a fair bit through the process!). ![Signing a document at a table during the Traffic Think Tank sale process.](https://mhb.xyz/_astro/signing-the-LOI-768x1024.B3utgNHk_mNveo.webp) ![Traffic Think Tank and Semrush team members sharing a restaurant meal.](https://mhb.xyz/_astro/meeting-the-Semrush-team-1024x584.BsZLIfhK_Z1aTAE.webp) _Ian signing the LOI (left), Meeting the Semrush team in Boston (right)_ ## Lessons Learned It’s been roughly nine months since we handed over the reins of the community to the Semrush team. During that time I’ve had time to reflect on what we did well and a few small pieces of advice I’d give to anyone looking to explore a similar path. ### Lesson 1: Pick Your Cofounders Carefully I can’t overstate how important this is. If there’s friction or incompatibility between the founding team while you’re running the business, these small cracks will turn into giant crevasses when you enter an acquisition process. Thankfully, Nick, Ian and I have a great relationship. This is probably the number one reason why we were successful in building the Traffic Think Tank community. I mean, how could we possibly build a business focused on fostering relationships with others if we didn’t have those very relationships ourselves? ### Lesson 2: Do the Admin Early The less organized a business is, the more difficult it is to sell. In an online community business where the majority of the intellectual property owned by the business was created by its customers, it’s even more challenging to sell. Work with lawyers early on to ensure you have the right user agreements, terms, and contracts in place to ensure that your business does _own_ all of that IP. The same goes for all of the founder and employee equity agreements. The last thing you want to be doing during a sale process is fixing a mess within your ownership structure. ### Lesson 3: Optimize for Customer Experience vs Revenue Expansion When you’re building a community business, your customers are also the product. The less satisfied those customers are, the less valuable the community is as a whole. There were plenty of situations that arose for us where we could have generated more revenue but it was often at the expense of the overall community experience. One example of this was the opportunity we had to earn a significant amount of affiliate revenue by promoting software and services to our customers. The trade-off would be that it brought our impartiality into question, so we decided that we’d never explore that route. Similarly, we had tons of companies reach out about paying to have promotional content added to our Academy (the members-only content library). Again, we felt this diminished the value of community membership so we opted to only allow companies to list (for free) exclusive discounted offers to our members within our _community perks_ section. These decisions paid off as we’d regularly get feedback from within our NPS surveys that customers felt we always did a great job of avoiding sales pitches or unnecessary promotions, which benefited the customer experience. I believe this was a key reason why we’d managed to build such trust with the community ## Final Thoughts Having the opportunity to build a community and brand that reached the heights that Traffic Think Tank did was a real privilege. It’s an experience that I’ll hold onto and taught me a _lot_ about how to take something from _zero to one_. More than anything, I’m relieved to know that we found trustworthy new stewards for the community that can take it to levels that the founding team ultimately couldn’t. Nick, Ian, and I have stayed on in a reduced operational capacity and remain active members of the community (and always will!). For any aspiring community builders out there, make sure you’re living the values you’ve set and make decisions that put your community members first, not your revenue. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/bootstrap-to-buyout/](https://mhb.xyz/essays/bootstrap-to-buyout/) # How to Grow a Successful Career in Marketing # How to Grow a Successful Career in Marketing Career15 Aug 20178 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A young fruit tree trained flat against a wall frame, each branch tied off at a rung.](https://mhb.xyz/_astro/src.uaBmqdDq_ZdM4T6.webp) How do I land a senior position at an awesome company? How do I learn tactics that nobody else is using? How do I create a personal brand that will have companies approaching _me_ to come work for them? These are all questions that I get asked on a regular basis. In the grand scheme of things, I’m in the relatively early years of my career, but during this time I’ve benefitted from an accelerated career trajectory. I’ve been very fortunate with the opportunities that have come my way and feel particularly optimistic about those that will arrive in the future. With all that said, I don’t believe that I just got lucky. There are a number of decisions that I’ve made over the past few years that have contributed to the early success that I’ve had. I’d like to share these with you in the hope that they may benefit you in the same way. ![MozCon 2017 Matthew Barby](https://mhb.xyz/_astro/MozCon-2017-Matthew-Barby.DU69mNqj_1CYlEO.webp) ## Don’t Chase a Salary. Chase Problems. Let me tell you a secret. For at least 40% of my working life so far, I may as well have been working for free. As I came out of university and a lot of my friends took nice graduate roles at companies with well-known names, I stayed at a tiny marketing agency that I’d been working in part time during my final year of studies. I earned £16,000 per year. There were no stock options, bonuses, free lunches, ping-pong tables or meditation rooms. There were four of us working out of an oversized shed using our personal laptops to do the work. I worked from 7am to 11pm some nights and nearly every single one of my friends earned around three times my salary. I did this for nearly 3 years and saw my salary reach the dizzying heights of £18,000. Despite all of this, I was relatively happy. I was happy because while I certainly wasn’t “where the money was”, I was absolutely where the problems were. > Every failure was a new lesson learned, and with that came more knowledge. At one time I believe I was responsible for working on the marketing strategies, in particular, the SEO strategies of 30 different clients. It’s fair to say that I wore a lot of hats, and every new client presented a whole different challenge. They presented challenges that I’d never faced before and I failed a lot – and I mean a LOT. But every failure was a new lesson learned, and with that came more knowledge. The key here is to never have to learn the same lesson twice. My thought process at the time was that I’d try to face as many unique problems as humanly possible so that I would always have a way to find a solution in the future. Even now when I come up against a tough challenge, I think back to some of the ways that I solved problems during this time, and it helps me think differently about the situation and attack it from a new angle. When you’re evaluating a new position at a time where you feel you need to learn more, you should ask yourself this question: “How many problems will I be exposed to and be held accountable for solving?” ## Learn Through Others There’s a limit to how much you can teach yourself. Not only this, but there are also some problems that you’ll likely never face yourself. This is where learning through others is imperative. Pretty much once a week for the past couple of years, I’ve met with one person that I didn’t previously know that works in a similar role to me at a different company. This could be a 15-to-20-minute call, grabbing a coffee in person or with me taking a trip over to their office. During these meetings, I ask one question: “What are the toughest problems you’ve faced and how did you solve them?” I’d attribute around 90% of the new things that I learn to these meetings alone. It’s the single most valuable exercise in my working life. This is something that anyone in any position can do. Ok, you may struggle to get time in with Elon Musk, but this is why it’s important to book time with people at a similar level to you – so that you can add equivalent value. I’ve found that almost every conversation I have with someone ends up in them suggesting that I speak to someone else they know, creating a domino effect of new conversations that I have lined up. If you’re reading this now and think this sounds like a good idea, open up your LinkedIn account and search for any of your connections with similar titles. There’s your starting point. \[cta id=”4512″\] ## Don’t Obsess Over Specialization I hear a lot of advice given out to marketers in the early stages of their career to “find one thing that you’re good at and specialize in it.” This isn’t always the best advice, primarily because it takes a long time to truly figure out what you’re good at. Alongside this, placing yourself in a silo can inhibit you from learning skills in other channels and cross-pollinating ideas. Creating walls in front of new paths of learning means that you’ll limit your exposure to problems. Aside from learning limitations, this can end up placing you in a bucket that you may not want to be in 2-3 years from now, but you’ll find it difficult to get out of. Instead of trying to be the best in the world at Twitter advertising, begin by gaining a surface-level understanding of a variety of different channels. Instead of being one piece of the puzzle, try to be the one that assembles it. ## Work on Your Personal Brand It’s no secret that most people don’t stay in the same job at the same company for their entire lives. The reality is that every few years, people move on from their current role to the next, especially in the formative years of their career. This was something that worried me greatly within my first couple of jobs. I’d invested a lot of time and energy into building a reputation for myself within the company I was working with, but if I left it would all disappear and I’d have to start again. I don’t like the idea that my reputation is out of my hands, and this was what first brought me down the path of building my personal brand. Your personal brand sits agnostic to that of your employer, so if you leave a company that you’re working for, you’ll maintain your reputation and find that your employability/investability continues on its upward trajectory. The thing with building a personal brand is that it takes time. A lot of time. If you’re working full time then this means carving out some extra hours to work on it. For just over a year I decided to work all the way through the night every Tuesday to build out content on my blog, as well as working on side hustles. I went for a swim first thing on Wednesday morning and it was straight into the office from there for a very tiring day. > Be patient and stick to your plan. This took its toll on me, but I look back on it now as a worthy sacrifice. I decided that instead of taking up a few hours every night of the week – and leaving no time for actually enjoying life – it was more efficient to push through an entire night/morning once a week. That said, I’m certainly not advocating this approach. Instead, I want to highlight the fact that you’ll have to be prepared to sacrifice a significant portion of your time to work on this. Another important aspect of building your personal brand is being realistic. It’s highly unlikely that you’re going to land a major keynote speaking gig when you’re in your first 2 months of gaining experience. Work on achieving what is realistic, and what delivers value to you **right now**. Once the value delivered from one thing has diminished in comparison to the resources required to achieve it, move up to the next thing. ![Pyramid of Influence - Matthew Barby](https://mhb.xyz/_astro/Influence-Pyramid.CJeVNzxf_8O5pj.webp) I like to think about all of this in a triangle of hierarchy, as shown above. This is almost the exact playbook that I’ve taken while building my own personal brand. Instead of jumping in and creating a blog sharing my 2-3 months’ worth of knowledge (which added little value to anyone), I scoured through online forums and communities to find questions that I _could_ answer, and when I did answer them, I’d go into great detail. Once this approach diminished in returns for me, I moved on to writing a guest post or two for smaller blogs, slowly working my way up the ladder of influence. Eventually, when I felt I had enough value to deliver, I started my own blog, I spoke at events, became a columnist for various trade publications and was invited onto podcasts as a guest. Each one of these expanded my reach and opened up more opportunities. Slowly but surely, a 10-minute speaking slot at a 50-person meetup turned into a 40-minute keynote at an event with many thousands of people in the audience. The gap between these two events was around 3 years. Be patient, and stick to your plan. ## Be Patient. Work Hard. If there’s one skill that I’m doing my utmost to work on improving the most, it’s patience. Everything around us amplifies the fallacy that we need everything now, and that for every day we wait another opportunity is lost. This is both not the case and an incredibly unhealthy mental state to live in. Don’t fall into it. Be patient, work hard and have a long-term plan with short-term milestones to hit along the way. Do this and you’re putting yourself in the best possible position to succeed. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/careers-in-marketing/](https://mhb.xyz/essays/careers-in-marketing/) # CBDCs: A Wolf in Sheep's Clothing # CBDCs: A Wolf in Sheep's Clothing Economics17 Nov 20238 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A wolf draped in a sheep's fleece, the fleece slipping off one shoulder.](https://mhb.xyz/_astro/src.CBLZTItl_Z2uhvzq.webp) In the next decade, physical cash will no longer exist in most major economies. While most of us have grown accustomed to tapping our phones to make payments instead of handing over coins and notes, what’s coming in place of cash is something very different, and it’s something we should scrutinize. Central Bank Digital Currencies (CBDCs) will be the replacement for cash, and while at first glance they may seem like just an extension of your existing online banking, the reality is that they’re a wolf in sheep’s clothing. Now, before I get into the explanation of this statement, I just want to clarify that I’m by no means a staunch libertarian. I’m an advocate for the disintermediation of finance as well as the proliferation of decentralized digital assets, but I’ll do my best to avoid some of the wilder rhetoric that I’ve seen positioned as arguments against CBDCs. That’s right, I don’t believe CBDCs are part of an “ESG agenda” as Ron DeSantis would have you believe[\[1\]](https://www.ft.com/content/ab8fbe73-34bf-4624-b394-97f995551f7a), nor that this is all part of a plot to put microchips under our skin to track us, as Marc Friedrich suggests[\[2\]](https://www.politico.eu/article/digital-euro-currency-conspiracy-theory-marc-friedrich-jorg-meuthen-european-central-bank-surveillance/). ## What is a CBDC? A CBDC is a virtual currency issued directly from the central bank. It’s most often a digital version of a country’s fiat currency (e.g. pound sterling, euro, dollar). It replaces cash. Instead of printing physical money, the central bank issues digital currency to individuals that’s also a claim on the central bank. I know what you’re thinking, “Matt, we already have digital versions of our cash – that’s what sits in our bank accounts, right?” Wrong. The cash sitting in your bank account is held and owned by your bank. CBDCs, on the other hand, represent physical cash (you know, the notes and coins you rarely use) and would be held in a digital wallet outside of your bank account. Unlike the money in your bank, they’re issued directly by your central bank (e.g. the Bank of England, Federal Reserve, etc.). I appreciate that it’s a little hard to see the difference between the cash held in your bank and a CBDC stored in a digital wallet, but alongside some important nuances that I’ll come to, you can simply view this as a complete replacement for physical cash. It’s reasonable to believe that in the next decade, most major economies in the world will have a CBDC and will be transitioning physical cash out of circulation. In fact, 130 countries, representing 98% of global GDP, are exploring a CBDC. 11 countries have launched one, while 19 of the G20 countries are in the advanced stages of deployment[\[3\]](https://www.atlanticcouncil.org/cbdctracker/). ## I don’t use cash. Why should I care? The COVID-induced global pandemic was a huge accelerant in moving towards a cashless society. Norway has become somewhat of a poster-child for this with only 4% of transactions using physical cash[\[4\]](https://www.norges-bank.no/en/news-events/news-publications/Speeches/2020/2020-11-05-bache/). This is the lowest volume recorded globally. That said, cash is still frequently used in most major economies. The UK is a good example of this where 14% of all transactions were made with cash[\[5\]](https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/watching-our-pennies-how-consumers-feel-about-cash), and 40% of UK residents surveyed said that they use cash at least once per week[\[6\]](https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/watching-our-pennies-how-consumers-feel-about-cash). Putting usage to one side, an important thing to understand is that cash is the only form of money issued within your country that you truly own. Money in your bank is owned by the bank. Yes, that’s right, you _don’t_ own the money in your bank account. This is why there’s so many horror stories from banking collapses where people have lost their life savings. This is one of the catalysts behind Bitcoin’s early traction. It’s a completely decentralized digital currency that you have complete ownership of. You custody your own bitcoins and have full control of them. CBDCs, on the other hand, are centralized. The systems powering them – in many cases, blockchains – are wholly run and owned by the central bank. The only similarity that CBDCs and bitcoins share is that they use a blockchain. Cash, while it gets a bad rep for being a tool that can be used to facilitate tax evasion or to pay for illegal goods, is ultimately relied upon for those most in need. Low-income and underprivileged individuals like the homeless, refugees, and many more who don’t have access to bank accounts or sufficient IDs to obtain them, rely completely on cash. Removing this can be catastrophic for them. CBDCs may seem like a natural progression toward a cashless society, but the reality is that they offer very little in terms of real benefits while significantly decreasing the financial freedom of individuals and leaving those most in need of financial support in an even more perilous situation. ## The case against CBDCs The demise of physical cash is one reason to be concerned, but there’s also a wide range of other tradeoffs that come with CBDCs, most notably in their potential to facilitate state overreach. ### Overreach CBDCs bring with them new possibilities from a technological standpoint that simply aren’t possible with either physical cash or the money sitting in your bank account. This includes the ability to set rules or logic to the way in which the currency functions. For example, payments to individuals on sanctions lists could be blocked automatically. Similarly, payments to certain products or services could be programmatically blocked. All of this would be controlled by the central bank. It’s not hard to imagine how this could enable overreach. ### Privacy This also brings additional levels of surveillance into play. Governments would have visibility into every transaction being made using a CBDC, which has some positive use cases, but for those concerned with the already low level of individual privacy that exists today, this is a further step back. ### Not Your Money Now, when you look at some of the reasons being given for why CBDCs could provide value, one of those is that it will give Central Banks a more direct route to influence monetary policy. In particular, this paves the way for driving down inflation through negative rates. What this means is that instead of simply increasing interest rates to squeeze the economy and [drive down inflation](https://mhb.xyz/essays/understanding-inflation/), they’d simply shrink the balance of CBDC-holding wallets. Yes, you read that correctly… they could reduce the money supply simply by removing funds from your account. This is, of course, still theoretical at this stage, but Central Banks will have the ability to do this (and a whole lot more). ### Security Monetary policy isn’t the only way you could have cash removed from your account. One of the greater concerns with building private, permissioned blockchains is that they are nowhere near as secure as decentralized ones. In fact, this just creates yet another giant honeypot waiting to be breached. The traditional banking sector sees large data breaches occur on a weekly basis, and governments aren’t much better. The UK government recently shared that over 40 million UK residents’ personal data was breached in a hack on the electoral register[\[7\]](https://www.electoralcommission.org.uk/privacy-policy/public-notification-cyber-attack-electoral-commission-systems). I don’t hold much hope for CBDCs to be much different. ### Retail Bank Flight Finally, an area that’s been much spoken of when it comes to CBDCs is the potential for this to drain liquidity from the retail banking sector. We’ve seen what happens when retail banks face liquidity issues, most notably during the start of this year when several large US banks collapsed[\[8\]](https://en.wikipedia.org/wiki/2023_United_States_banking_crisis). Why would this happen? Well, in times of crisis, most capital moves to the safest areas. In the US, this is often treasuries because it’s a claim on the US government. CBDCs would be a claim on the central bank, making it substantially safer than cash sitting in a retail bank that could feasibly collapse during a crisis. This could become a self-fulfilling prophecy in that as retail banks struggle, they see greater outflows to CBDCs which worsen their situation and lead to their eventual demise. This would, in the best case, put a squeeze on retail banks’ ability to lend. It’s worth calling out that some central banks have been looking at ways to mitigate this issue. The Bank of England has suggested[\[9\]](https://www.bankofengland.co.uk/speech/2023/february/jon-cunliffe-speech-at-uk-finance-update-on-central-bank-digital-currency) that they’d implement a limit on the amount of currency that anyone could hold at one time of either £10,000 or £20,000. Any additional deposits to your wallet would be swept into your retail bank. While this solves some of the problems, it begs the question of whether this would even be useful in practicality with spending caps in place. ## What is it good for? Absolutely nothing. It’s hard to make a compelling case for why a CBDC would be beneficial to individuals. As an episode of _Money Talks_ from the Financial Times[\[10\]](https://www.ft.com/content/c39b0da8-568a-4a0a-a41e-2ae26ff58eda) early this year proposes, it seems as though CBDCs are a solution looking for a problem. Nobody can deny that physical cash is on the decline. Consumers prefer to make payments digitally, the data tells us this[\[11\]](https://www.statista.com/topics/4586/cashless-payments-in-the-united-states/#topicOverview). That said, we have ample avenues through which we can make digital payments. Physical cash still has a valuable place in society, especially for those in the most underprivileged circumstances. Even if the argument isn’t in favor of keeping cash, the tradeoffs – most of which the majority of the population will not realize until it’s too late – don’t even remotely outweigh the upside. Time and time again over the past two decades we’ve traded our personal privacy and security for a minor additional convenience. Hopefully, we learn from our past mistakes this time. * * * 1. [https://www.ft.com/content/ab8fbe73-34bf-4624-b394-97f995551f7a](https://www.ft.com/content/ab8fbe73-34bf-4624-b394-97f995551f7a) 2. [https://www.politico.eu/article/digital-euro-currency-conspiracy-theory-marc-friedrich-jorg-meuthen-european-central-bank-surveillance/](https://www.politico.eu/article/digital-euro-currency-conspiracy-theory-marc-friedrich-jorg-meuthen-european-central-bank-surveillance/) 3. [https://www.atlanticcouncil.org/cbdctracker/](https://www.atlanticcouncil.org/cbdctracker/) 4. [https://www.norges-bank.no/en/news-events/news-publications/Speeches/2020/2020-11-05-bache/](https://www.norges-bank.no/en/news-events/news-publications/Speeches/2020/2020-11-05-bache/) 5. [https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/watching-our-pennies-how-consumers-feel-about-cash](https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/watching-our-pennies-how-consumers-feel-about-cash) 6. [https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/watching-our-pennies-how-consumers-feel-about-cash](https://www.ukfinance.org.uk/policy-and-guidance/reports-and-publications/watching-our-pennies-how-consumers-feel-about-cash) 7. [https://www.electoralcommission.org.uk/privacy-policy/public-notification-cyber-attack-electoral-commission-systems](https://www.electoralcommission.org.uk/privacy-policy/public-notification-cyber-attack-electoral-commission-systems) 8. [https://en.wikipedia.org/wiki/2023\\\_United\\\_States\\\_banking\\\_crisis](https://en.wikipedia.org/wiki/2023%5C_United%5C_States%5C_banking%5C_crisis) 9. [https://www.bankofengland.co.uk/speech/2023/february/jon-cunliffe-speech-at-uk-finance-update-on-central-bank-digital-currency](https://www.bankofengland.co.uk/speech/2023/february/jon-cunliffe-speech-at-uk-finance-update-on-central-bank-digital-currency) [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/central-bank-digital-currencies/](https://mhb.xyz/essays/central-bank-digital-currencies/) # Life Beyond Email: Chatbot Marketing # Life Beyond Email: Chatbot Marketing Growth14 Feb 201712 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A hand-cranked sluice gate turning a stream out of a silted channel into a clear one.](https://mhb.xyz/_astro/src.BzTGmSev_nH0pM.webp) Every marketing channel suffers from fatigue at one stage. Whether this is due to an increase of competition, rising costs of competing or hitting a ceiling of volume, every business will face the challenge of seeing diminishing returns on a once high-performing channel for them. I’ve come across this challenge many times, which has made me very focused on adopting new channels that have potential at an early stage to reap the rewards. Just take video ads within Facebook as an example. We’re currently at a point where video ads are reaching their peak. Cost is still relatively low and engagement is high, but, like with most ad platforms, increased competition will drive up those prices and make it less and less viable for smaller companies (and larger ones) to invest in it. ![Marketing Channel Effectiveness vs Time](https://mhb.xyz/_astro/Channel-Effectiveness-vs-Time.BRtHkC4S_Z2gExIR.webp) Being an early adopter of a new channel can provide enormous benefits, but that comes with equally high risks. This is amplified within marketplaces like Amazon. Early adopters within Amazon’s marketplace were able to focus on building a solid base of reviews for their products – a primary ranking signal – which meant that they’d create huge barriers to entry for competitors (namely because they were always showing up in the search results before them). > Every marketing channel suffers from fatigue at one stage. While the payout wasn’t huge within the early days of Amazon, those who got in early are now seeing huge rewards, with 38% of shoppers starting their buying journey within Amazon ([source](http://www.powerreviews.com/blog/new-study-finds-that-retailers-and-brands-can-leverage-reviews-to-compete-with-amazon-and-search/)), making it the number one retail search engine. Some studies are suggesting that Amazon is responsible for 80% of e-commerce growth for publicly traded web retailers ([source](https://www.internetretailer.com/2016/10/05/amazon-drives-80-web-growth-publicly-traded-retailers)). On the other hand, early adoption can be somewhat of a curse. In 2011, many companies and individuals, myself included, invested a lot of time and money into Google+, dubbed to be bigger than Facebook at the time. They acquired over 10 million new users within the first two weeks of launch and things were looking positive. Many companies doubled-down on growing a community within the platform, hopeful of using it as a new and growing acquisition channel, but [things didn’t exactly pan out that way](http://mashable.com/2015/08/02/google-plus-history/#56hVcxUwnsq7). Google all but killed the social network in mid-2015 leaving a lot of early adopters licking their wounds. ## Life Beyond Email For as long as I can remember, email has been a fundamentally important channel for a large majority of businesses. The ability to market products directly through a channel that scales up to an incredibly high ceiling is very attractive. The only problem is that it’s costing more and more money to acquire email addresses from potential customers, and the engagement from email is getting worse and worse. ![Email Click Rate Decline](https://mhb.xyz/_astro/Epsilon-email-open-and-click-rates-Q32010-Q32016-Jan2017.CzZbhOom_1DxGqV.webp) As the above chart ([source](http://www.marketingcharts.com/online/email-click-rates-continue-to-decline-is-an-increase-in-marketings-share-of-emails-to-blame-73758/attachment/epsilon-email-open-and-click-rates-q32010-q32016-jan2017/)) illustrates, email click-rate has been steadily declining. While open rates seem to be increasing – largely driven by mobile – the actual engagement from email is nosediving. Not only that, but it’s becoming more and more difficult to even reach someone’s email inbox; [Google’s move](https://litmus.com/blog/gmail-does-it-again-the-new-visual-promotions-tab) to separate out promotional emails into their ‘promotions’ tab and increasing [problems of email deliverability](https://www.clickz.com/email-deliverability-is-on-the-decline-report/104466/) have been top reasons behind this. All that said, email is still an incredibly important channel for a lot of businesses and it undoubtedly still gets results. I don’t think many people will argue that, while this is the case now, things are only going to get worse. As with many ‘organic’ channels, the relative reach of your audience tends to decline over time due to a variety of factors. In email’s case, it can be the over-exposure to marketing emails and moves from email providers to filter out promotional content; with other channels it can be the platform itself. Back in 2014, I wrote about how “Facebook’s Likes Don’t Matter Anymore” in relation to the declining organic reach of Facebook pages. Last year alone the organic reach of publishers on Facebook [fell by a further 52%](http://marketingland.com/facebook-organic-reach-drop-steepens-52-publishers-pages-187253). ## The Birth of Chatbots It’s fair to say that I’m pretty obsessed with chatbots right now. There are some great applications popping up from brands that genuinely add value to the end consumer, and early signs are showing that consumers are actually responding really well to them. For those of you who aren’t quite sure what I’m talking about, here’s a quick overview of what a chatbot is: \[information icon=”true”\]**A chatbot is a service powered by rules, and sometimes artificial intelligence, that you interact with via a chat interface.** The service could be any number of things, ranging from functional to fun, and it could live in any major chat product (Facebook Messenger, Slack, Telegram, Text Messages, etc.). ([source](https://chatbotsmagazine.com/the-complete-beginner-s-guide-to-chatbots-8280b7b906ca#.fr1ldb1z8))\[/information\] ![Chatbot Search Demand in Google](https://mhb.xyz/_astro/Chatbot-Search-Demand-in-Google.DBjFybLo_Z1fAFMe.webp) Awareness around chatbots is starting to grow, especially after [Facebook came out mid-last year](https://techcrunch.com/2016/04/12/agents-on-messenger/) with their new Messenger platform that supported chatbots. On top of that, and like with a lot of things online, the adult industry has stimulated a lot of demand around chatbots. Just take a look at some of the most searched-for keywords in the search engines related to chatbots (data from [Storybase](https://www.storybase.com/)): ![chatbot keyword data](https://mhb.xyz/_astro/chatbot-keyword-data-1024x569.BxQZXypp_eISk9.webp) This is why we can’t have nice things. That aside, there are some really great chatbots that have been built that add a bunch of value while also benefitting the brand commercially. One that I really like is [the Politico chatbot](https://www.messenger.com/t/politico/) that gives you regular digests of news while also serving you up relevant information that you ask for. This is great for the consumer because they don’t need to leave the environment of Facebook to get access to the content they want, and it’s hugely beneficial to Politico, as they’re able to push on-demand content through to an increasingly engaged audience – oh, and they can also learn a bunch of interesting things about their audience in the process (I’ll get to this shortly). ![Politico Bot](https://mhb.xyz/_astro/Politico-Bot-870x1024.B5qtXtXR_Z2hhSoh.webp) There are a bunch of e-commerce stores taking advantage of chatbots as well. One example that I was playing with was from [Fynd](https://www.messenger.com/t/gofynd) that enables you to ask for specific products and they’ll display them to you directly within Messenger. What’s more, Facebook even allows you to [make payments via Messenger](https://techcrunch.com/2016/10/24/facebook-messenger-now-supports-paypal-payments-in-bots-will-track-your-paypal-receipts/) [bots](https://techcrunch.com/2016/10/24/facebook-messenger-now-supports-paypal-payments-in-bots-will-track-your-paypal-receipts/), opening up a whole world of possibility to e-commerce stores. > Bot experiences with more engaged audiences are getting 80-90% response rates. I spoke with [Dmitriy Kachin](https://www.linkedin.com/in/dmitriy-kachin-b452b32/) from Chatfuel, a chatbot creation platform, to see how some of their customers’ chatbots were performing in terms of read/response rates. Here’s what he had to say: > Obviously, numbers vary across the board – and better bot experiences with more engaged audiences are getting 80-90% response rates. While even the least favorable experiences are in the 35-40% range. ## Why Should You Care? Ok, so you’re probably thinking, “This all sounds great, Matt, but how can _I_ do something with chatbots?” Well, I’ve got you covered. Don’t for a minute think that chatbots are some gimmick that is going to be available only to bring brands with huge audiences. While there are a number of new chatbots appearing each week, the space is still in its infancy. **This is the time** to become an early adopter. Why? Here are five reasons to start with (and this is just with Messenger): 1. As soon as someone engages with your chatbot, you have the ability to push messages to them within Facebook Messenger with very few limitations. 2. You can use input from users to dynamically segment them into groups and serve different content to them. 3. You can set up automation workflows in the same way that you would via email marketing automation. 4. Click-through rates and general engagement is very high at this stage. You’re more likely to get engagement within Messenger than from within your Facebook page because the communication is 1:1 and you’re not competing with others in the newsfeed. 5. Facebook has opened up the ability to [run ads directly to Messenger](https://developers.facebook.com/blog/post/2016/09/12/new-messenger-features-payments-ads-enhanced-mobile-websites/). This means that anyone that engages with your ad can now be followed up with directly within Messenger (this is incredibly exciting). ![ads to messenger](https://mhb.xyz/_astro/ads-to-messenger.D5HEKPR1_Z1IORBO.webp) The fact that you can now run ads directly to Messenger is an enormous opportunity for any business. This skips the convoluted and leaky process of trying to acquire someone’s email address to nurture them outside of Facebook’s platform. Instead, you can retain the connection with someone inside Facebook and improve the overall conversion rates to receiving an engagement. Don’t forget that you can also tap into platforms outside of Messenger as well, for example, Slack, Telegram and even SMS. If you’re interested in bringing a chatbot to a whole bunch of these different platforms then I’d recommend checking out [Flow XO](https://flowxo.com/). ## How Do I Create a Chatbot? One of the biggest hurdles to overcome with being an early adopter of a platform is that it often costs a lot of money and requires highly specialized skills. That’s not the case with chatbots. You can actually go from an idea to a fully functioning chatbot within a matter of minutes, and it won’t cost you anything. How is this possible? [Chatfuel](https://chatfuel.com/). ![TechCrunch Chatbot Made in Chatfuel](https://mhb.xyz/_astro/Techcrunch-Chatbot-Made-in-Chatfuel.Bgu0Tmuf_Z1SIsvl.webp) \[information icon=”true”\]Chatfuel is a platform that lets you build your own Chatbot for Messenger (and Telegram) for free. The only limit is if you pass more than 100,000 conversations per month, but for most businesses that won’t be an issue. No understanding of code is required and it has a simple drag-and-drop interface. Think Wix/Squarespace for bots (**side note**: I have zero affiliation with Chatfuel).\[/information\] There are other platforms similar to Chatfuel at the moment, but not many. [Botsify](https://botsify.com/) is one, but I haven’t actually used them yet. The first thing to do when mapping out your own chatbot is to figure out what unique value it could add to the user. One example of a chatbot that I’m testing out at the minute is a recipe recommendation bot that lives directly within Messenger. The basic way that it works will be that the user will say what ingredient (or list of a few ingredients) that they want to cook with and the chatbot will serve up relevant recipe recommendations. It’s a simple idea but adds a ton of ongoing value to the user, and, more importantly, gives them a reason to _regularly_ engage with the bot. This creates a bunch of opportunities to take the user down extra conversion paths – for example, purchasing ingredients, product recommendations and ongoing content subscriptions (to name a few). When you’re thinking about designing your chatbot you should have a very clear answer to “Why would someone continue to get value from this?” ### Chatfuel Basics: Blocks and Rules The basic way that Chatfuel works is by linking “blocks” to “AI Rules”. The best way to explain this is in the same context of email automation. Think of the “blocks” as individual emails, and the “AI Rules” as your automation rules (i.e., if a user does _x_, send them _y_). Each interaction that you plan to make with the user should be built out in an individual block. Based on the user’s input, they will receive different blocks afterwards. Here’s a simple schematic of how a user would interact with individual “blocks” within my recipe recommendation example: ![Recipe ChatBot Schematic](https://mhb.xyz/_astro/Recipe-Bot-Flow-Schematic.kncAUUHt_20f2YQ.webp) This is an extremely simplified version of the interaction flow, but it should hopefully illustrate the basic premise behind “blocks”. The rules can be set up so that if a user responds in a certain way, they’ll be served a specific block. For example, in the flow I’ve outlined above, if a user says, “No” when asked if they want to see another recipe for the ingredient they specified, they’ll be directed back to the “Select Ingredient” block. You can also create some rules based on keywords. For example, if a user types the words “manage subscription”, you could send them to a block that asks them if they’d like to reduce the amount of messages they receive. This is one of many examples. ![AI Rules](https://mhb.xyz/_astro/AI-Rules-1024x654.BDy3-h85_1FgDcl.webp) In my recipe recommendation example, if a user types “salmon recipes” they’ll be served up a selection of recipes that include salmon. This can be pulled in dynamically via the RSS plugin within Chatfuel. The plugin aspect to Chatfuel is one of the real bonuses. You can link up to all sorts of different services to add richer content to the conversations that you’re having. This includes linking up to Twitter, Instagram and YouTube, as well as being able to request that the user share their location, serve video and audio content, and build out custom attributes that can be used to segment users based on their inputs. This last part is a killer feature. My advice here is to go in and create a free account with Chatfuel and just start playing around. They have a really useful “Test This Chatbot” feature that pings you a message in Messenger to start engaging with your bot in development mode so that you can test it out and improve it before going live. ## Using Chatbots to Grow Your Funnel Once you’ve started to get some engagement with your chatbot, you can start experimenting with a bunch of different ways to use it as an acquisition channel. During my conversation with Dmitriy Kachin from Chatfuel, I asked him for some tips on getting the best possible results from broadcast messages. From analyzing Chatfuel’s customer data, Dmitriy came back with the following: > The overall quality of the content and its relevance to the audience the bot owner is reaching out to. > > Giving people a clear and precise expectation of what you will be sending, how often, and offering them the opportunity to choose whether they want to receive this type of content and how frequently. Give the users as much control as possible. > > Personalizing the content as much as possible – making use of FB’s default user attributes (addressing users by name), using the segmentation features of the platform to learn as much as possible about the audience and offering specific groups of people only the type of content that is relevant to their needs, interests and choices. > > Being mindful not to abuse the power of broadcasting (no more than 2 broadcast messages per day typically); otherwise, people start getting annoyed with the volume of messages and tend to unsubscribe, or mute the bot. ## Final Thoughts If you’re a subscriber to my email list or a regular follower of my blog then you’ll likely hear me talking a lot about chatbots over the coming months. I’ve personally been testing them out a lot and plan to do a whole lot more – some of you will have received used my chatbot as part of my ‘free SEO consultation’ campaign. Ultimately, only time will tell how effective the likes of Facebook Messenger will become in the long term. As more and more companies look to use chatbots within the platform, the greater the frequency of messages that individual users will receive. This could result in Facebook (and other messaging platforms) placing stricter restrictions on usage, but until then I’d recommend testing as much as possible. If you’re running a chatbot that’s seen some success, I’d love to hear from you in the comments below. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/chatbot-marketing/](https://mhb.xyz/essays/chatbot-marketing/) # Our Fearless Leader: the Cult Problem in Crypto # Our Fearless Leader: the Cult Problem in Crypto Crypto16 Nov 20226 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A towering hollow effigy held up from behind by wooden scaffolding, small figures kneeling at its base.](https://mhb.xyz/_astro/src.Boz16RB4_1vRhnW.webp) 2022 will go down as one of the most tumultuous and ultimately, damaging years in the brief history of the crypto space. From its inception, the space has been plagued with controversy. This ranged from the early criticism that “_Bitcoin is only used by criminals_”, to the environmental impact of proof-of-work consensus, and more recently, retail investors being scammed out of their life savings. The [capitulation of FTX](https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankman-fried-crypto-bankruptcy.html) has been the final straw for many institutional investors, retail participants, and no doubt, regulators. This has been nothing short of crypto’s Lehman Brothers moment. Comparisons have been drawn against the Enron scandal, with Sam Bankman-Fried being center-stage as the villain. This latest scandal follows a slew of meltdowns from earlier in the year, including Terra/Luna, Three Arrows Capital, Celsius, and more recently, BlockFi. More will follow in the coming weeks as contagion takes hold. What’s undeniable is that there are some systemic issues that need to be addressed. Even the most staunch advocates of the space, myself included, are struggling to rationalize the aforementioned events. While the emphasis is often on a lack of regulation and gross mismanagement, I believe there’s an even bigger problem. Crypto has a cult problem. > As flies to wanton boys are we to the gods; They kill us for their sport. > > – _William Shakespeare (King Lear)_ As populism has historically plagued the political sphere, the past few years have seen a similar cult of personality flood the crypto industry. The story is similar for many of them: they rapidly rise in popularity riding a wave of innovation, achieving god-like status to the point where it seems like they can do nothing wrong – until they ultimately do. These personalities grow tremendous followings, only dwarfed in size by the net worth they personally accumulate. While many of their actions are dubious, they’re given the benefit of the doubt time and time again. Any criticism of them is met with aggression and ridicule from their following. Do Kwon, the founder of Terra, has to be the embodiment of this persona. His “LUNAtics” would support his every move, while he would openly mock anyone that questioned his brilliance. [Original social post](https://twitter.com/stablekwon/status/1410491186196795398?s=20&t=XtJYLz1CET_P_vdeZMkKjw) After the historic crash of Luna, fueled by a combination of poor economic design and gross mismanagement, Do Kwon watched as over [$40bn of value disappeared](https://www.coindesk.com/markets/2022/05/15/the-collapse-of-terra-was-devastating-but-there-is-still-hope-for-crypto/#:~:text=The%20short%20of%20it%20is,billion%20of%20value%20was%20lost.) from the hands of his supporters in little over 24 hours. This isn’t the first time we’ve seen this kind of story play out. Daniele Sestagalli, the one-time leader of his so-called “Frog Nation” (his equivalent of the “LUNAtics”) was found to have knowingly allowed Michael Patryn AKA 0xSifu, [a convicted criminal and co-founder](https://coinculture.com/au/people/the-downfall-of-daniele-sesta-and-time-202202/) of the infamous QuadrigaCX scam exchange, to manage the near billion dollar treasury of his DeFi protocol, Wonderland. [Original social post](https://twitter.com/danielesesta/status/1486591436233404421) One of Daniele’s close friends, Andre Cronje – often referred to as the “Godfather of DeFi” for his creation, Yearn Finance, which many credit with sparking the DeFi Summer of 2020 – is yet another figurehead to cause maximum pain to retail investors. After a multi-month marketing campaign to encourage as many DeFi protocols and investors as possible to move their funds into the Fantom blockchain, subsequently skyrocketing the blockchain’s total value locked (TVL) to [over $8bn from under $1bn](https://defillama.com/chain/Fantom) only a few months prior. This was all on the promise of lucrative rewards that would be delivered to those that participated in his new DeFi protocol, Solidly, which on its own saw a little [over $2.6bn in locked value](https://beincrypto.com/defi-cronjes-ve33-tech-2-69b-tvl-launch/). Within just a few days of this launch, Andre decided to “quit crypto” and go completely underground. The average drawdown of tokens associated with his projects was ~20% immediately after the news, and things only got worse from there. What I find incredible is that the recent news that [Andre Cronje is coming back](https://cryptoslate.com/rumors-of-andre-cronjes-return-cause-fantom-to-spike-24/) to the DeFi space has been largely well-received. We’ve truly entered Stockholm syndrome territory at this point. The actions of the aforementioned somewhat pale into insignificance when you consider what the likes of Su Zhu and Kyle Davies of disgraced hedge fund, Three Arrows Capital, [were up to](https://nymag.com/intelligencer/article/three-arrows-capital-kyle-davies-su-zhu-crash.html). The gambling of investor funds, gross mismanagement, and almost certain financial fraud left the already shaken crypto industry in a state of paralysis. And just when you thought we’d seen it all, Sam Bankman-Fried has shown us all of the above at a scale nobody had imagined. The collapse of FTX and Alameda Research, two of Bankman-Fried’s companies, has seen billions of dollars in assets disappear with FTX alone estimated to have [over 1mn creditors](https://www.ft.com/content/6a0ea717-b57e-44de-abf3-054523855172) in its bankruptcy proceedings. The shockwaves caused by this implosion are claiming more new victims every day. Outside of the financial losses, this latest scandal has done even more damage when you consider Bankman-Fried’s self-elected position as the face of crypto in congress. He’s been a key contributor to regulatory bills for crypto assets while also earning the title of the [second-largest individual donor](https://thehill.com/business-a-lobbying/3720141-here-are-the-biggest-donors-in-the-midterm-elections/) to the Democrats in the recent mid-term elections. It’s fair to say that politicians don’t love it when they end up with _egg on their face_, while regulators eye [a knee-jerk reaction](https://www.theblock.co/post/185473/urgent-need-for-legislation-after-ftx-collapse-says-maxine-waters) in regulatory legislation. ## Where do we go from here? Some of the damage done to the crypto space this year is measurable; the more than [$44bn in lost funds in 2022](https://defiyield.app/rekt-database) is an example of that, yet much of the reputational damage can’t be quantified so easily. Looking to the future, it’s clear to me that, as an industry, we _must do better_. The recent situation with FTX has at least shone a light on the black box that is CeFi. We need more centralized exchanges sharing _[proof of reserves](https://www.kraken.com/en-gb/proof-of-reserves)_ and greater transparency into how funds are being secured and managed. Despite popular opinion on crypto Twitter, we do need more regulation. Regulation is there to protect people from the very kind of behavior we’re seeing time and time again from bad actors. Yes, the balance needs to be struck with not stifling innovation, but the current regulatory vacuum is doing more harm than good. We should limit the reach and influence of cult-like figureheads that manage to deceive the very people that enabled their position in the first place. The now cliché phrase, “don’t trust, verify” has never been more aptly relevant here. Now more than ever, we need adults in the room. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/cult-problem-in-crypto/](https://mhb.xyz/essays/cult-problem-in-crypto/) # A Look to the Future: Speed, Convenience and the Rise of AI # A Look to the Future: Speed, Convenience and the Rise of AI Growth26 Jul 201715 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A single river fanning out into a broad delta of many small pools.](https://mhb.xyz/_astro/src.dl5V8k0r_1q8Aia.webp) I’d like to take you on a quick journey back to the year 1998. A number of important things happened during 1998. Will Smith released, “Gettin Jiggy Wit It”, Jackie Chan and Chris Tucker starred in the first Rush Hour movie, and a little-known startup called Google was officially incorporated as a company. Back then, Google neither looked nor operated as sophisticatedly as it does now. Every results page looked similar, there were no images or videos being displayed and you’d probably have to search a few different queries to truly find what you were looking for. Alta Vista was ruling the roost at the time, with [over 80 million hits per day](http://www.thehistoryofseo.com/The-Industry/Short_History_of_Early_Search_Engines.aspx) and by far the largest index of webpages of any other search engine. On top of all this, the natural habit of performing a transaction online hadn’t quite taken off with consumers at scale yet. There were only 147 million people online at this point – compared to around 3.7 billion in March 2017 ([source](http://www.internetworldstats.com/emarketing.htm)) – and even Amazon only generated a total of $610 million in annual sales ([source](https://revenuesandprofits.com/amazon-vs-walmart-revenues-profits-1995-2015/)) vs over $135 billion in 2016 ([source](http://www.marketwatch.com/investing/stock/amzn/financials)). I mean, this was a time when Blockbuster video stores reigned supreme. That says it all. The fact that Amazon was even making a fraction of what they were at this time is a true testament to their early innovation online. Bear in mind that the average internet speed was 56kps, so you really had to have a lot of patience to put up with the painfully slow web experience. Just to put that speed into perspective, if you were to download Will Smith’s “Getting Jiggy Wit It” MP3 back then, it would take around 15 minutes to complete. Now, try downloading the Rush Hour movie and it’d be closer to 45 days… not exactly ready for 4K streaming from Netflix. This brings me to the first important point that I want to make: > **Technology is only as effective as its lowest performing dependency.** You’ve probably thought to yourself at one time or another, “If I could go back in time 20 years, I’d just invent Snapchat (or some other popular app) and become a billionaire.” Here’s the thing… attempting to launch something like Snapchat 20 years ago would’ve got you nowhere. So many great ideas have come along and died a quick death because of the fact that the underlying tech infrastructure wasn’t at a stage that could benefit the end consumer. Here are a few examples: **Smartphones:** without advances in wireless and cellular broadband speeds, smartphones would be useless. None of your apps could connect to the internet, so you’d basically just have a much more expensive Game Boy. Nokia already showed us what happens with ideas like that when [they launched their N-Gage product](http://www.phonecruncher.com/features/00944/the-nokia-n-gage-what-happened-to-the-handheld-console/). **Alexa/Google Home/Siri:** the huge strides forward in the development of [natural language processing](http://www.dataversity.net/big-data-and-artificial-intelligence-advances-in-natural-language-processing/) have enabled Amazon, Google, Apple and many more to provide voice assistant products that genuinely deliver a good experience to consumers (most of the time). There’s still a long way to go, but without upgrades in NLP, you’d have a whole lot more of the, “Sorry, I didn’t understand the question.” **Snapchat:** a lot of people are divided over the long-term viability of Snapchat’s business model, but one thing that everyone can agree on is that without [innovation in mobile camera technology](https://www.digitaltrends.com/mobile/camera-phone-history/), Snapchat wouldn’t be able to exist. **eBay:** PayPal’s work in disrupting the online payment processing space has been [widely cited](https://www.linkedin.com/pulse/20140123213553-187399433-paypal-ebay-best-together) as one of the most important factors contributing to eBay’s early success. Sellers and buyers need a safe and simple way to manage payments within eBay’s platform – without it, there would have been too much friction for them to scale. There are hundreds of more examples that could be cited here. One huge example of a product too ahead of its time was Microsoft’s Tablet PC that [they launched](http://www.computerworld.com/article/2471642/mobile-apps/microsoft-released-its-first-tablet-10-years-ago--so-why-did-apple-win-with-the-ipad-.html) back in 2001. The surrounding dependencies of tech weren’t at the level that Microsoft needed, amongst a number of other reasons, which meant the product ultimately failed. Fast-forward to 2010 and Apple launch the iPad. The rest is history. ## The Era of Instantaneous Access In [October of 2016](http://gs.statcounter.com/press/mobile-and-tablet-internet-usage-exceeds-desktop-for-first-time-worldwide), global internet usage via mobile devices surpassed that of desktop for the first time in history. ![Device Internet Usage - Matthew Barby](https://mhb.xyz/_astro/Device-Internet-Usage-Matthew-Barby.DKv0sM0I_eYGUf.webp) This was a major milestone in a landscape that had been shifting dramatically since 2013. Increased mobile device usage paved the way for an influx in services that focused heavily on reducing the time to value for consumers. Netflix turned the DVD industry on its head by giving customers instant access to a plethora of new films and TV shows that could be streamed directly from their app – all for a monthly cost cheaper than your average cinema ticket. By the end of 2016, they had just under 100 million paying customers. ![Customer Growth Netflix - Matthew Barby](https://mhb.xyz/_astro/Customer-Growth-Netflix-Matthew-Barby.Bg004ZLi_1ClF09.webp) Following in Netflix’s footsteps, Spotify gave everyone a reason to ditch their audio CDs and even say goodbye to bulky MP3 files. Using a similar subscription model, [their 50 million (at the time of writing) customers](https://techcrunch.com/2017/03/02/spotify-50-million/) now benefit from instant playback of over 30 million different songs without the need for any extra storage space on your mobile device. Oh, and just to put this in perspective, that’d be around 105 terabytes of storage, costing just under $1,050 in Apple iCloud storage per month. Demand for immediate access to extensive libraries of video and audio has been around for some time. This is perfectly illustrated by the infamous launch of Napster, [which accrued over 80 million registered users](https://www.pcworld.idg.com.au/article/22380/requiem_napster/) by 2001. The key thing to understand about the early success of Napster is that while everything being ‘free’ was a huge bonus, it was really the ability to download music there and then, with an almost limitless selection, that was its main benefit to consumers. Not only could you get the latest album you wanted from your favorite band without having to take a walk down to the record store, but you could also download bootleg MP3 and limited release albums that weren’t even available to purchase. But it’s not just our entertainment needs that need to deliver instantaneously… Amazon has revolutionized the shipping industry, offering customers next-day delivery on huge portions of their product range via their Prime service. They’ve even taken this a step further with their Prime Air service, which promises 1-hour delivery performed by [their delivery drones](https://www.theverge.com/2017/3/24/15047424/amazon-prime-air-drone-delivery-public-us-test-mars). Yet that’s not the only incredible thing about Amazon right now. Did you know that 70% of all sales made through Amazon are [completed via their mobile app](http://phoenix.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=2125057)? On top of that, [90% of consumers](http://www.retaildive.com/news/survey-55-of-shoppers-turn-to-amazon-to-begin-product-search/427118/) in the US say that even when they’ve found a product on a retailer’s website, they still check Amazon. That’s the perfect example of the moat that Amazon has built through offering customers instant access. Instacart, which has just [secured $400 million](https://techcrunch.com/2017/03/07/instacart-raises-400-million-at-a-3-4-billion-valuation-to-deliver-groceries-on-demand/) in its latest round of funding, is disrupting the on-demand grocery delivery market. They offer 2-hour delivery on groceries from your local grocery stores, meaning you can avoid having to face the queues in-store and avoid the journey altogether for a small delivery fee. They’re going [head-to-head with Amazon’s ‘Fresh’ delivery service](https://www.businessinsider.com.au/instacart-vs-google-express-vs-amazon-prime-fresh-2016-3?r=US&IR=T), and in the light of Amazon’s $13.7 billion [acquisition of Whole Foods](https://www.bloomberg.com/news/articles/2017-06-16/amazon-to-acquire-whole-foods-in-13-7-billion-bet-on-groceries), this space is about to get a lot more interesting. Google has picked up on the consumer need for instant access and has responded by making a number of major changes to their search results. One of those is [Featured Snippets](https://blog.hubspot.com/marketing/how-to-featured-snippet-box), the sections within the search results page that show instant answers to a range of different queries. ![featured snippet example](https://mhb.xyz/_astro/featured-snippets-1024x469.DjpiUhkv_ZaW1EP.webp) The Featured Snippet results remove the need to even click through to a webpage, delivering the answer to a searcher instantly. This is particularly useful within mobile search and they appear in over 15% of all results pages ([source](http://mozcast.com/features)). Google has also recently [launched their job search](https://techcrunch.com/2017/05/17/google-to-launch-a-jobs-search-engine-in-the-u-s/) section that removes the need to browse multiple job board sites when looking for a new position. Instead, users can search within Google for jobs and see lists of all those available across multiple job boards directly within Google. ## Convenience Instant access isn’t all we demand. Convenience plays an equally important role in the decision-making process. The past 4-5 years have created an abundance of convenience-driven services that have become staples in our lives. Let’s take Lyft as an example. Gone are the days of having to hail a cab, explain where you need to go (even if you’ve never been there before) and have no idea how much you’re going to end up paying for your journey. Now, you can open the Lyft app, type in your destination and have a driver come and pick you up from your exact location. You don’t even need cash because it’ll be charged directly from your credit card. Very convenient. The next couple of years are going to see us completely remove the driver from this equation. Uber has [already tested autonomous cars](https://www.wired.com/2016/09/self-driving-autonomous-uber-pittsburgh/) within a number of cities in the US, and the competition is following suit. Apps like Uber and Lyft have now become an indispensable part of our lives. I took a regular cab a few weeks ago for the first time in months and it was like I traveled back in time. It’s not just our travel that’s become a lot more convenient. With the introduction of Apple Pay and Google Wallet, we’ve moved our wallets into our smartphones now as well. Making payment can be done by simply hovering your smartphone over a POS device – incredibly convenient. Not only has this taken off for ‘brick-and-mortar’ stores, but [huge volumes of websites and apps](http://appleinsider.com/articles/16/02/09/apple-pay-in-app-transactions-rapidly-expanding-beyond-nfc-payment-terminals) have integrated Apple Pay into their checkout systems. No more scrambling to find your debit card to purchase something; you can now just use your fingerprint. ![Apple Pay Stats - Matthew Barby](https://mhb.xyz/_astro/Apple-Pay-Stats-Matthew-Barby.BZAN5sBP_Zhw6gw.webp) This provides a simple and effortless experience for the consumer, while the companies selling products online using Apple Pay are seeing massive gains in conversion rates. In fact, Jack Threadz, a US online fashion retailer, recently found that customers using Apple Pay to checkout via their website were [92% more likely to complete their transaction](https://qz.com/612309/for-apple-pay-the-future-is-apps/). One of the other industries that have been most affected by the rising demand for convenience is the food industry. Companies like [Instacart](https://www.instacart.com/) have been disrupting the on-demand food delivery space, offering grocery deliveries from your local stores within 2 hours. That’s pretty incredible, though not nearly as incredible as its latest [$400 million funding round](https://techcrunch.com/2017/03/07/instacart-raises-400-million-at-a-3-4-billion-valuation-to-deliver-groceries-on-demand/) that puts the company at a $3.4 billion valuation. [Natural Machines](https://www.naturalmachines.com/), a startup based out of Barcelona, is looking to take this a step further with their food 3D printing product, Foodini. Yes, you read that correctly, they’re 3D printing edible food. If that’s not the pinnacle of convenience right now, then I don’t know what is. Oh, and if all this wasn’t enough for us, we now don’t even want the hassle of having to type the demands we have into a device. We have products like Amazon’s Alexa, Google Home or Siri so that we can just shout our needs from across the room and not have to experience the hardship of moving our thumbs across our smartphone screen. And if you thought this was just a fad, think again. Recent studies show that in Q4 of 2016, [12% of US broadband households adopted a voice assistant](http://www.marketwired.com/press-release/parks-associates-adoption-voice-assistants-such-as-amazon-echo-google-home-more-than-2204333.htm). ## Data The trade-off for instant access and unrivaled convenience is the sharing of your data. When I talk about data, I’m not just referring to your name, phone number and email address, I’m talking about all aspects of your life. Let me just break down some of the data that each of us is handing over when we use each of these popular services: * **Instacart:** what you eat, the brands you tend to buy, where you shop and how frequently you do it. * **MyFitnessPal:** your health levels, general diet, the brands of food that you eat, plus the times of the day that you tend to eat. * **Fitbit:** everywhere that you travel on foot, including any regular journeys that you make and at what times you make them. * **Uber:** your daily commute, frequent locations that you visit and when you leave to go on holiday. * **Apple Pay:** which items your regularly purchase, where you make those purchases and how much you typically spend each day/week/month. * **Amazon Alexa:** the way that you speak and how/when you typically ask for things. * **Netflix:** what you like to watch, when you typically watch it and which types of visuals tend to trigger you to take an action. * **Nest:** when you’re at home, when you tend to leave each day and how much energy you use. * **Facebook:** what you’re interested in, who you’re friends with, what you read… pretty much everything about you as a person! Now, it’s certainly not uncommon for one person to use all of the above services. When you then think about the ‘joining’ of these various data points together, it paints a very clear picture of all aspects of the consumer’s life right now, and more importantly, helps predict what they’ll do/need next. Ultimately, the goal is **to know what you want, when you want it and how you want it, before you do.** Simple examples of this are entering into our lives already. Take Google Inbox, the latest iteration of the Gmail product, as an example. Google has been using neural networks to power their Smart Replies feature that gives you automated suggestions on responses to your emails. Evidently, their users find this feature very useful because over 10% of all emails sent from the Google Inbox app are powered by Smart Replies. Grammarly, a popular spell-checking app, just raised $110 million in their latest round of funding. If you think it’s so that they can simply make a better spell-checker, you’re sorely mistaken. Grammarly, like many others in this space, is investing in improving their natural language processing capabilities by getting access to enormous volumes of data from their users. Every email, document and blog post that they help spell-check for you is used to help them understand the way that people write so that they can feed this data into their machine learning algorithms and improve their NLP technology. It’s no wonder that Google has blocked Grammarly’s Chrome extension from spell-checking in Google Docs. I haven’t even started to discuss the recent rise in [popularity of chatbots](https://mhb.xyz/essays/chatbot-marketing/) that are doing a similar thing. For any of you that regularly read the articles that I publish on my blog or that have seen me speak at an event, you’ll likely know that I have my own chatbot that I use to engage with my subscribers. One of the benefits that this gives me is that I can automate the process of getting feedback on what my followers want to hear more about, or how they’ve rated the things that I’ve produced – I think of it as another source of keyword research. ## How to Adapt Failing to adapt to the changing demands of consumers can have devastating consequences for your business. Your goal should be to solve the consumer’s problem instantly, within the environment **that they choose**. The days of simply funneling everyone back to your website is over. This whole approach was born out of a lack of sophistication from other channels, and a single-device experience for the user. With more and more experiences happening across a range of devices (mobile, desktop, tablet, etc.), and dramatic improvements to cross-channel reporting, consumers want to engage with brands in the setting that they choose. There’s a significant push from platforms like Facebook and Google to keep users within the walls of their product. Facebook has invested in their Instant Articles experience that loads content from external sites directly within the app, and Google has done the same with Accelerated Mobile Pages (AMP). Forcing someone out of these platforms to consume information makes it more likely that they will be lost altogether; this is why more and more larger brands are investing a lot of cash into creating native content. ## Landing in Pools Something that I’ve been talking about a lot recently is the idea that every marketing channel eventually suffers fatigue. This could be through rising costs from increasing competition in AdWords, hitting a ceiling of demand in organic search or even the platforms themselves squeezing the amount of value you’re able to get – it’s no secret that the average organic reach of a Facebook page has decreased from somewhere in the region of 16% in 2013 to less than 2% in 2017. ![Channel Fatigue - Matthew Barby](https://mhb.xyz/_astro/Channel-Fatigue-Matthew-Barby.CPTUOQpY_1S8BaF.webp) As someone focused on acquiring new customers, your goal should be to find existing pools of potential customers and then figure how you can effectively land within them. “Landing effectively” within these pools would consist of figuring out how you can deliver a positive experience for the user without requiring them to leave. A great example of a company that’s doing this right now is [Fomo](https://www.usefomo.com/), a social-proof tool aimed primarily at e-commerce companies. Fomo noticed that a lot of their customers used Shopify to host their e-commerce websites, so they built a Shopify app that could be listed within their marketplace. With a native Shopify app, Fomo could be found and purchased by new customers that already had Shopify stores without ever having to leave the platform. As a result, Fomo now receives over 1,000 new paying customers each month from Shopify’s app store alone. Being an early adopter of new pools can pay off with even greater rewards. Just look at the growth of the Amazon Alexa ‘skill’ marketplace. In Q1 of 2016, there were just 135 third-party skills available. Fast forward to Q1 of 2017 and there are over 10,000. That said, some of the most popular skills have as little as 20 reviews, an important ranking factor within the marketplace. Not only that, but Amazon only allow free skills at this stage, so there’s a whole lot more room for growth. This is a pool with huge potential right now. For every high potential opportunity of early adoption, there are equally high risks. There are countless examples of new channels arriving and then quickly disappearing, leaving early adopters licking their wounds. Remember Meerkat? Google Plus? Messaging is one hot new channel right now that has a range of pools within it. Companies are rushing to build their own chatbots and messaging applications, while many others have at least adopted live chat. The beauty of messaging is that it perfectly plays into the need for instant gratification and it doesn’t require you to leave the environment that you’re in. Ask a question within Facebook Messenger? You’ll get the answer within Facebook Messenger. Request a meeting with a sales rep within Slack? You’ll have the meeting booked within Slack. I’m firmly of the belief that messaging is going to dominate the marketing strategies of companies for at least the next 2-3 years. My overarching advice for anyone reading this is to treat every channel that you rely on for growth as if it could cease to exist tomorrow. Search out new opportunities to diversify your acquisition strategy and make sure that above all else, you’re able to keep up with the demand for instant and convenient solutions to the problems of your customers. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/future-of-marketing/](https://mhb.xyz/essays/future-of-marketing/) # Going All-In # Going All-In On leaving the safe version of a career to own the outcome. Career27 Apr 202210 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A lone diver mid-air between a high platform and the open water below.](https://mhb.xyz/_astro/src.fdZ5l_LV_Z2wBqFf.webp) It’s February 19, 2015, and I’ve just landed in Boston to be greeted by one of the biggest snowstorms ever recorded in the city. I’m there to meet with the leadership team at HubSpot before taking a role leading their new SEO team. I was running strategy at a marketing agency back in the UK at the time and had started working with a growing number of SaaS businesses that piqued my interest in what was becoming an increasingly fast-growing space. While I’d been working _with_ a lot of tech companies, I hadn’t worked _at_ one before. This fact became glaringly obvious as I arrived at HubSpot HQ in a full suit. To say I felt overdressed would be an understatement. During my entire time at the company, I could probably count on one hand how many times I’ve seen anyone in a suit. As I walked through the beautifully designed office, laden with free snacks, beer taps, ping pong tables, games consoles, and of course, a nap room, I began wondering if this was a workplace at all. It was _very_ new to me and was a million miles away from what I was used to. After a full day of interviews with the team, it became clear to me that behind all of the office gimmicks there was an incredibly talented and driven team of leaders that I would be _very_ lucky to get the opportunity to learn from. At this point in my career, I wanted to level up my leadership skills and get the opportunity to build a substantial team that could eventually lead to me becoming an exec. This was clearly going to take time, but I knew that I could absorb a ton of knowledge from the existing team at HubSpot and if a few other things fell in place I’d get the chance to take an accelerated path to my goal. I flew back to the UK, spoke with my wife, and signed the contract with HubSpot the following week. It’s hands-down the greatest career decision I’ve made to date and has changed my life both personally and professionally. ## From 600 to 6,000 I joined only a few months after we’d gone through our IPO, and with a little over 650 employees, the company was valued at ~$900 million. Fast forward to today and HubSpot has over 6,000 employees and a market cap of over $20 billion. Going through this level of growth has been a wild ride, and I’d love to say that when I joined I envisioned this all playing out, but the reality is that I was just excited to join a high-performing team that was willing to invest in me. Anything beyond that was a bonus. Needless to say, it was quite the bonus. When you go through this kind of growth, a company needs to shed its skin several times. Processes, structure, culture – they all need to evolve. One thing that has surprised me the most over the years is that while we’ve had many people come and go, reorganizations of the team structure, a meteoric global office expansion, and then an equally meteoric shift to remote work, the core values set out by the founding team have persisted. I’ve no doubt that this is one of the primary reasons why the company has consistently been voted as one of the best places to work year after year. This relentless focus on being a value-driven company is something I’ll take with me for the rest of my career. It’s worth calling out that I’d never planned to stay at HubSpot for 7 years. If you’d have told me that I’d be there this long when I first joined I would have laughed at you. In fairness, I was in my mid-20s so I wasn’t looking further ahead than a year at a time. There are many reasons behind my decision to stay this long, but one of these was by far and away the largest contributor: the company has consistently invested in my personal growth. Having a company invest in you in the way that HubSpot has invested in me is incredibly rare. I’ll be eternally grateful for this. It gave me the privilege of living in three different countries (going above and beyond to help with my relocations), promoting me all the way from being an individual contributor up to eventually becoming a VP, and trusting me to run a team of ~80 people. I’ve worked alongside some of the greatest minds in the world, some of whom have opened doors to me that I’d never thought would be possible, and many of whom have become life-long friends. For all of this and so much more, I’m incredibly thankful. But now, it’s time for something new. ## The Future of the Web Anyone that’s had an extended conversation with me over the past half-decade has likely heard me talking about blockchain technology. The boom of 2017 brought a lot of attention to the wider crypto space, and while a lot of it wasn’t good attention, it validated for me that crypto was here to stay. More importantly, we were at the precipice of the next phase of the web. There was a lot of work to do. I began immersing myself in the crypto community, reading countless books, attending every event I could, speaking to founders, investing in projects, and offering free marketing support to a few different foundations. By mid-2017 I was hooked. I started the [Decrypting Crypto podcast](https://decryptingcrypto.xyz/) with a colleague at HubSpot at the time, Austin Knight, and we’d spend the majority of our free time talking about all things blockchain. We got the chance to connect with some seriously talented individuals and this helped me get a better understanding of some of the big problems that these projects were going to face in the future. After the ICO bubble burst and we moved into yet another multi-year _[crypto winter](https://www.aljazeera.com/economy/2022/1/25/winters-past-bitcoin-plunge-brings-back-memories-of-2018)_, it highlighted to me the fragility of the whole space, but I still felt very strongly that some of these early projects would pave the way to web3. At the same time, I didn’t love the idea of moving on from what is an incredible company in HubSpot into a company that could no longer exist in 3 month’s time. Plus, I wasn’t exactly in love with the mission of many of the crypto projects at the time, which was just “make the token price go up”. I was also suffering from imposter syndrome as all of my professional experience was outside of the crypto space. I figured I’d wait it out. I’ll see how the space evolves and, in the meantime, keep levelling up my skills at HubSpot. Enter, 2020. ## 2020 Vision 2020 was the most volatile year of most of our lifetimes. Mine was compounded by the fact that 2 weeks prior to the majority of the world going into a full state of lockdown, my wife gave birth to our first child. Like most new parents, I was sleep-deprived, stressed, and overwhelmed. The global pandemic removed any external support we were hoping to have from parents and friends – we couldn’t even get postnatal midwife visits. Combine all of this with the fact that financial markets were in turmoil, companies around the world were having to lay off staff, and we had the looming threat of a virus that we knew very little about that was killing hundreds of thousands of people every day… well, it’s fair to say that my introduction to parenthood wasn’t _exactly_ how I had imagined it. It was a tough year, but in spite of the chaos, it was full of wonderful moments. Not only that but as the year progressed, the markets were rallying. In fact, they were booming. In the background of all this, the crypto space was making a sudden and dramatic revival through what we now refer to as the _[DeFi summer](https://www.gsr.io/insights/chart-of-the-week-defi-summer-2-0-dont-call-it-a-comeback/)_. Decentralized financial protocols such as Uniswap, Yearn, and Compound had arrived and they sparked a frenzy of new investment. This, combined with the breakout NFT craze that was unfolding, had put crypto, and most notable, _web3_, back into the mainstream. A few dots were starting to connect for me. I was fascinated by the composability of different DeFi applications and how NFTs could be used to create whole new online experiences and communities. It was the perfect blend of community building, economics, and emerging technology that led me to go all the way down the rabbit hole once again. In October of 2021, taking advantage of the generous policy that HubSpot offers to all employees once they reach 5 years of tenure at the company, I took a fully paid sabbatical for a month. Alongside having some much-needed downtime (and playtime with my daughter), I set aside time to figure out what I wanted from the next couple of years. Being in a leadership position during the pandemic was a lot more mentally challenging than I’d anticipated. Everyone was struggling, and conversations with my team could feel like therapy sessions at times. I didn’t have a great outlet myself and felt horribly burnt out. This was really impacting how happy I was overall and it became obvious to me that I needed to make some changes. ## Having Conviction While I was incredibly thankful for the position I was in at HubSpot, loved my team, and always felt like my contributions were appreciated, I started to realize that my heart wasn’t quite in it anymore. More to the point, all of my spare time was spent thinking about web3. It was new and exciting, and I was loving learning new things again. At the same time, I still had this feeling of imposter syndrome, and while it may not always seem like it from the outside looking in, I’m generally a more risk averse person. I realized that if I remained risk-off I’d never pursue something I was clearly very passionate about, so I decided to enter 2022 with a greater level of conviction. I started by giving myself more skin in the game. This meant moving a much larger percentage of my cash into crypto, and then actively looking for some advisory positions to get a better sense of how this new wave of decentralized organizations actually operate. After a couple of months of working on some interesting projects in the GameFi space, I knew this was where I wanted to be. More importantly, I knew I could add value. Midway through March, I spoke to the HubSpot leadership team to let them know that I’d be leaving. I didn’t have anything lined up at that point but decided I needed to make the change to figure out what was next. They were incredibly understanding and supportive; yet another sign of what a great group of people they are. During my notice period, I started getting more and more involved with GameFi company, [Decentral Games](https://decentral.games/). They boast the most trafficked venues across all of [Decentraland](https://decentraland.org/), one of the largest metaverse projects, and have grown a treasury of over $50mm in just 6 months. The team is full of ambitious, hyper-intelligent people who are obsessed with building immersive, enjoyable gaming experiences in the metaverse. Not only that but the whole project is governed by a DAO, meaning that the community has real ownership over the direction it takes. It’s with great excitement that I can announce that I’m joining the Decentral Games team as Chief Marketing Officer. As well as being a radically different working environment to what I’m used to, I’ll also be paid exclusively in cryptocurrency. If I was lacking conviction before, the same can’t be said for now. It’s a space I’m passionate about, a project I’m excited to work on, and the shift in my lifestyle that I’ve been searching for. I’m going all in. See you in the metaverse 👋 [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/going-all-in/](https://mhb.xyz/essays/going-all-in/) # You Can't Buy Product-Market Fit # You Can't Buy Product-Market Fit Why incentives can rent behavior but never buy the product truth underneath it. Growth6 Feb 202412 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A horseshoe magnet lifting a dense cluster of iron filings while loose filings fall away beneath.](https://mhb.xyz/_astro/src.DbvgPjZ1_1r05Om.webp) Loyalty programs have been around as early as the 19th century([1](https://www.co-operativeheritage.coop/blog/the-co-op-dividend-what-is-it#:~:text=Co%2Dop%20Dividend%20tokens%20were,to%20be%20redeemed%20for%20cash.)), evolving from simple token redemptions in stores to the more complex, multi-tiered point systems we use today with credit cards and airlines. Traditionally used as a tool to drive loyalty and repeat purchases from customers, they’ve taken on a new use case over the past couple of years in the crypto space: bootstrapping user growth. The recent explosion of points programs in crypto has reached a fever pitch. Mercenary capital travels from one protocol to another in search of yet another token airdrop, with countless individuals sharing their “free money” daily success stories online – further fueling the feeding frenzy. But is this delivering long-term value for the majority of the protocols running these programs? **My take**: absolutely not. In fact, I’d go as far as to say that this is actively damaging their growth prospects. As tempting as it sounds, you’ll never buy your way to product-market fit. At some point, the bubble will burst, and _the higher you climb, the harder you’ll fall_. I’ve spent several years focused on growth in the crypto space, both on the protocol side and now at a centralized exchange. Solving the cold start problem of user growth is very challenging, and driving long-term customer loyalty is even more difficult. Despite my opinion that the majority of the current wave of points programs are detrimental to growth, I do see an important role for them in crypto which I’ll explore in this short essay. ## The Blur Effect Blur, the leading NFT marketplace([2](https://dune.com/hildobby/NFTs)), arrived out of nowhere in what seemed like an industry that had already chosen its winner: OpenSea. Within just a few months they went from being unheard of to being the market leader by pretty much every measure. In the past 3 months, they’ve accounted for >75% of total NFT trading volume and that number only seems to be growing. ![Daily NFT marketplace trading-volume shares, with Blur accounting for most of the displayed volume.](https://mhb.xyz/_astro/Blur-Trading-Volume-Nov23-Jan24-1-1024x453.DmBz0RaU_Z2nx0cD.webp) The catalyst for their meteoric rise wasn’t related to the superiority of their product. In fact, at a certain level, NFT marketplaces have become somewhat undifferentiated and arguably commoditized. There’s no real reason why you wouldn’t jump from one platform to another outside of the fees being charged, which is inevitably a race to the bottom. Blur does have lower fees than OpenSea, but so do many other competitors yet they’ve struggled to gain traction regardless. The reason for Blur’s success is its points program. Users on Blur accrue points in a few different ways, including listing NFTs close to the floor price, making trades, only listing via Blur and no other marketplaces, and more recently, lending. The more points you accrue, the higher you climb on the [public leaderboard](https://blur.io/airdrop). At the end of each points season, which usually lasts several months, users are airdropped $BLUR tokens in amounts proportional to their standing in the leaderboard. Season one ended in February 2023 and resulted in one of the single largest airdrop in crypto history, with the average airdrop being worth just under $3,000. It doesn’t take a genius to understand that people love free money, and it’s hard to think that Blur can sustain these airdrops indefinitely, but in a space where the products aren’t overly differentiated and many users simply retain in a platform due to the ongoing familiarity to it, this has proven over an extended period to be a successful strategy. What’s important to note is that the Blur product clearly has achieved product-market fit, which means they’re in a much better position to drive long-term revenue regardless of the existence of a points program. Interestingly, Blur has nearly 10 times _fewer_ users than OpenSea despite doing around 6 times their volume. While the initial outcome of their points program was that it drove in a ton of new users, since then it’s shifted more to driving up the lifetime value of their existing customer base. ## Missing the Point Off the back of Blur’s rise, we’ve seen an explosion of protocols across several verticals trying to replicate their success. Many of these have failed and paid the ultimate price. Even before points were the industry meta, protocols have been using incentives to try and rapidly grow their user base. The Defi Summer of 2020 was a perfect example of this where we were introduced to the concept of yield farming. This largely proliferated in decentralized exchanges where they needed to source liquidity for their different token markets. To solve this problem they offered incentives to liquidity providers, usually by printing more of their native token. The result was that they had huge inflows of liquidity as people rushed to farm the token incentives. When the incentives dried up or more attractive ones were offered elsewhere, the liquidity providers simply removed their capital and deposited it on another protocol. This was very problematic because not only did the protocol lose the majority of its liquidity needed to function, but it also massively devalued its native token (through intense sell pressure as farmers sold them), leaving them stuck with fewer routes to raising capital. The worst part about this situation is that it rarely actually resulted in more users coming to the protocol. Sure, they brought in a ton of liquidity but did they generate even remotely enough in fees to balance the cost of incentives paid out? Of course not. This is a classic example of trying to introduce incentives at the wrong time: that time being pre-product market fit. In an attempt to combat the issues outlined above, the next wave of protocols looking to become a category leader tried a variation of the yield farming approach. They offered incentives to liquidity providers while offering the potential of an airdrop to users who used their protocol. This, in theory, would balance both supply and demand, creating revenue in the process. Yet again, the problem arose that once these incentives dried up, their users realized that they didn’t want to use the product because they had no clear need for it. And so, history repeated itself. One of the few protocols of this era in DeFi that managed to successfully execute an incentive program that drove both new users and retention was Uniswap. Their infamous $UNI token airdrop totalled $3.4bn in value and was distributed across more than 250,000 wallets([3](https://earni.fi/airdrops/uniswap)). Fast-forward nearly four years to today and Uniswap is by far and away the market leader in DEX volume, rivaling many major centralized exchanges([4](https://defillama.com/dexs)). Why did they succeed while others perished? Uniswap was a first-mover and category creator. They built a truly innovative product that solved an enormous need, quickly establishing product-market fit. Even when rivals like SushiSwap attempted to absorb Uniswap users through even larger incentives([5](https://medium.com/coinmonks/sushiswap-and-the-vampire-attack-8a9826475b8e)), Uniswap’s dominance remained. ## These Aren’t Your Customers For any new business, overcoming the _cold start problem_ is no mean feat. Getting early data on your customers helps to inform your future product roadmap and, when done correctly, should drive ongoing user growth and retention. > user behavior, under a points program, morphs to respond to incentives. > > Li Jin, cofounder of Variant Fund If you’re using incentives to bring these early users in, you’re unlikely to gather accurate insights about their behavior. As Li Jin, cofounder of Variant Fund, puts it([6](https://twitter.com/ljin18/status/1736796817831211212)), “user behavior, under a points program, morphs to respond to incentives.” I experienced this first-hand during my time at Decentral Games, a web3 game studio. We benefited from the capital explosion that game with the play-to-earn craze and we brought in a ton of early users from our early NFT sales. While the numbers looked great on paper, we quickly realized that the users we’d acquired into our ecosystem were not the target audience for our product. A large majority of them were simply speculating on the value of our in-game assets vs being gamers looking to consistently play our games. We’d bootstrapped user growth but it came at a cost. Most of the 2020/21 cohort of web3 games faced the same problem. Axie Infinity was the poster child of web3 gaming and their incentive program was heralded as a form of universal basic income at one point([7](https://www.asianpioneers.com/interviews/qa-with-jeff-zirlin/)). They reached unprecedented levels of user growth for a web3 game, generating over 5 million MAUs at their peak. What quickly became apparent was that many of these “users” were bots([8](https://www.youtube.com/watch?v=1FGF3ig0fNA)) or click farm operations interacting in a completely inorganic way to maximize their incentive accrual. ## Doing it Right We’ve reached the stage where whole secondary markets have opened up to trade points from various protocols on the promise of unquantified future token airdrops. As an example, points from the much-hyped EigenLayer protocol are currently trading for around $0.11 per point, while the once-flavor-of-the-month, FriendTech has in some cases traded for upwards of $44 per point. ![An offer to trade EigenLayer points through an over-the-counter contract interface.](https://mhb.xyz/_astro/EigenLayer-OTC-Points-Offer.4UiLgpfG_Z1rLfMK.webp) What’s the math on calculating these points’ value? Who knows, but it both validates that there’s a huge appetite for point systems and illustrates that the obfuscation of their true economic value only adds to the allure. In fact, this obfuscation may be particularly important when it comes to staying on the right side of the regulators([9](https://www.ft.com/content/cb5aa81b-2fe3-3cee-ae40-d19b0788f09f)). Cutting through the hype, how can protocols looking to support their growth tap into a points program in a way that delivers positive long-term outcomes? Well, the first and most obvious requirement from what I’ve mentioned so far is that you shouldn’t be introducing an incentive system like this until you’ve achieved product-market fit – or if you’re a first mover – this shouldn’t be the vehicle through which you _determine_ product-market fit. The focus should be on lifetime-value expansion, likely driven by i) improved retention, and ii) product cross-selling. This involves doubling down on your existing customer base, and with that, your incentives mustn’t cannibalize your existing revenue. By this, I mean that you should avoid offering monetary incentives for actions that a user would have taken anyway. Fee discounting is a prime example of this. For example, let’s say you offer a fee-free trade after a customer has placed ten trades. The discount probably isn’t that meaningful enough to your customers to incentivize them to place ten trades when they otherwise wouldn’t have, so you’re effectively offering a discount to users who would’ve already taken this action without an incentive in place. A better way to approach this would be to offer a fee-free trade on a product they haven’t used before – for example, a futures perp trade. This might be enough to encourage them to use a new feature, which could lead to them using it again, creating new revenue and expanding their LTV. Increasing the cost of moving from your protocol to a competitor is another great way to drive retention. The airline industry has been doing this for decades with air miles loyalty programs. The more you fly with your chosen airline, the higher up the reward tiers you go and the more benefits you unlock. Even when there are cheaper flights elsewhere, many consumers will stick with their airline of choice because the perceived opportunity cost of not accruing air miles is higher than the increased cost of airfare. ![The Blur Season 3 points dashboard, showing bidding, lending and listing points and 100% loyalty.](https://mhb.xyz/_astro/Blur-Loyalty-Points-1024x345.CyuuaV0K_1htWOg.webp) As I mentioned previously, Blur implemented their “Listing Loyalty” feature within their points program that incentivized their users to exclusively list NFTs on their platform vs their competitors. If they did this, they got an additional multiplier on their overall points. If they didn’t, they were penalized. What’s brilliant about this is that it promotes user retention while avoiding incentivizing inorganic behavior. I have plenty of examples that I can point to where I’ve observed protocols trying to achieve a similar outcome but going about it completely the wrong way. One example from the past few months is Orbiter Finance. Orbiter is a cross-chain bridge and a major part of their points program focuses on users accruing points by bridging from as many different chains as many times as possible. ![The Orbiter bridge interface with a points summary and reward missions.](https://mhb.xyz/_astro/Orbiter-Bridge-Points-1024x535.DuuGkou6_Z2bboTo.webp) In theory, this sounds good, but in practicality, you’re just incentivizing users to carry out mindless, inorganic behavior for the sole purpose of farming potential rewards. I’m not convinced that bridging minuscule amounts of ETH back and forth between the Manta L2 and Ethereum L1 is going to build long-term habits and loyalty. As soon as the points dry up, all of this activity will stop. I don’t mean that they won’t retain any users but they’re certainly not going to be acting in the same way. Cross-chain bridges are an example of an application that has become somewhat commodified in crypto. Past a certain level of speed and security, they’ve become undifferentiated. This is the same in many ways for wallets, and to a certain degree, DEXs. For those building products in these spaces, this is actually where a points program can be deployed to good effect. Rainbow Wallet’s current loyalty program has already done a great job of pulling users away from MetaMask, the industry-leading wallet. There was a lot I liked about how they structured their points program but two things stood out to me: 1. They gave out points to anyone who had used MetaMask’s (their competitor) native swap feature. 2. They offer ongoing points for the usage of different features within Rainbow Wallet. ![Rainbow wallet daily swap activity, showing a sharp rise in mid-December followed by lower activity.](https://mhb.xyz/_astro/Rainbow-Wallet-User-Growth.D3JcECW9_K5Kou.webp) On the first point, this is a classic vampire attack with a twist. They’re ultimately rewarding users who are the best possible fit for being high LTV users of their product. The Rainbow team created a whole onboarding flow to simply import your MetaMask accounts into Rainbow to minimize friction. Then, the second part of the program comes into play: they incentivize these high-value users to try out all of the features of their wallet to illustrate that the experience is either on par or better than that of their competitor. ![Rainbow wallet rewards eligibility and a breakdown of points.](https://mhb.xyz/_astro/Rainbow-Wallet-1024x406.DjunT7cd_1vy1AN.webp) What’s key is that Rainbow has _the right to win_ in the crypto wallet market but their biggest barrier was a user’s willingness to migrate. This solves that problem. ## Peak Points Will points be another fad in crypto? Probably. Is there a place long-term for them? Most likely. Will a small few make a ton of money through them regardless? Absolutely. If you’re a team building what you believe can be major playing within your niche in crypto, I’d encourage you to avoid the distraction of the current feeding frenzy. Instead, focus on building products that solve a real problem in a delightful way. Once you’ve done this and possess the right to win, by all means, explore how an incentive program could drive greater ARPU and stickier retention – your future self (and users) will thank you. Just remember, share the wrong carrot with your customers and it’s your growth that will receive the stick. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/incentive-systems/](https://mhb.xyz/essays/incentive-systems/) # The Remote Leader's Guide to Managing a Team # The Remote Leader's Guide to Managing a Team Leadership28 Jan 202013 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![Two distant signal towers exchanging a single beam of light across a wide valley at dusk.](https://mhb.xyz/_astro/src.0G7EXj5X_Z7DyPy.webp) In the past four years, I’ve lived in three different countries. During that time, I’ve also managed a remote team spread out across three continents. Some of my team worked from an office, while others were completely remote. The same goes for me. I’ve worked full time from an office in Dublin and also Boston, and I’m now fully remote working from London. Add to this that I co-founded [a company](https://trafficthinktank.com/) with two people, neither of which live in the same country as me. I’d never actually met one of my co-founders in person until we’d owned a business together for six months, so it’s fair to say that I’m well acquainted with a remote working environment. In this article, I’m going to share some of the things I’ve learned from my time as a remote leader over the past few years. You’ll be able to apply some of this directly to your own situation, while other parts of my experience might be less relevant to your situation. This is all part of the nuance of both leadership and remote working. ## The different approaches to remote work Every company takes a slightly different approach to remote work. While the prospect of allowing your employees to work from anywhere can terrify some companies, others have fully embraced it and have completely ditched the need for any office locations altogether. The likes of [InVision](https://www.crunchbase.com/organization/invisionapp), [Zapier](https://www.crunchbase.com/organization/zapier), and [Automattic](https://www.crunchbase.com/organization/automattic) are just a few examples of the growing number of companies that operate completely remotely. It’s not all or nothing, though. [Trello](https://www.crunchbase.com/organization/trello), [Basecamp](https://www.crunchbase.com/organization/basecamp), and [HubSpot](https://www.crunchbase.com/organization/hubspot) (where I work) all have a hybrid remote setup where some of their employees work remotely, while others work from one of their offices. Each of the various remote work setups comes with its own advantages and disadvantages, and they also require a fair amount of adaptability when it comes to how you’ll manage your team. For example, having a completely distributed team means that everyone is bought into the remote working culture, which means they’ll naturally have empathy for one another and understand the challenges that come with remote working. It’s also much more likely that your company is set up to facilitate remote working more effectively. That said, having a completely distributed team can make it very difficult for team members to get to know each other on a personal level. There are often much more scheduling issues when there are multiple time zones to account for, and organizing in-person meet-ups can be particularly tricky if your team is spread out across the globe. Organizing in-person meetups is typically a little easier if you have at least one office, because you can pick one central location – often where most of your in-office team are based – and coordinate travel there. Having an office means that you can have new remote employees come in and meet everyone during their onboarding, giving them a way to form bonds with the team early on. The downside of this model is that remote workers can feel like they’re missing out on exposure to management that in-office employees get, which could lead to them missing out on potential opportunities to grow within the company. In-office workers can also feel like they’re given less flexibility than their remote co-workers. These are all challenges that a remote leader has to address. ## Encouraging empathy within your team important One of the best ways to develop empathy for your team – and help them develop empathy for each other, too – is to expose yourself to a new working environment. I’m not talking about taking on a new job – I’m talking about putting yourself in the shoes of your remote workers. If you haven’t worked remotely before, it’s tough to truly understand the challenges that come with working remotely and the things they need from you as a manager. One interesting experiment that I ran with my team, which is roughly a 50/50 split of fully remote and office-based individuals, was to stage a “remote week”. This involved everyone going completely remote for the week to experience the issues remote employees face each day. This not only helps your whole team develop more empathy for each other, but it really pushes the boundaries of your technology stack, surfacing issues that you might not have noticed until you reach a certain scale (video conferencing software is one that comes to mind). If you plan on doing a remote week with your team, I’d recommend putting the following guardrails in place: 1. None of the team are allowed to come into the office for the week. 2. Each team member will be given a small budget that can be used to cover expenses for things like WiFi, co-working spaces, travel to a new location, etc. 3. Everyone on the team needs to be available for meetings within a 3-hour time-window (if everyone is in the same time zone you could increase this to 5 hours). 4. All existing meetings need to be kept in the calendar, and it’s encouraged that team members try to maintain the exact meeting schedule they would if they were in the office. 5. Each team member fills out a small journal entry at the end of the day to document how the day went, any challenges they faced, any deviations from their regular schedule that they implemented, and any ideas for how things could be improved. Remember that working from home isn’t always possible for everyone, so you need to ensure you give people the ability to find other options during this week that won’t leave them out of pocket. ## Communicate clear working guardrails for your team to follow If you haven’t worked remotely before, I wouldn’t hold it against you if you have an image of someone sitting on a beach, sipping cocktails while they complete their two hours of daily work before heading onto a flight to another exotic location. Well, the reality is often _very_ different. WiFi challenges, scrambling to find a quiet place to work from, late-night meetings or painfully early starts, your dog thinking it’s a never-ending playtime when you’re trying to get things done – these are just a few of the daily realities. Few things demonstrate this perception better than a search through stock images of remote work, as was highlighted in [this tweet](https://twitter.com/searchbrat/status/1155138855496011778?s=20) from my colleague and friend, Kieran Flanagan. [Original social post](https://twitter.com/searchbrat/status/1155139327145533442?ref_src=twsrc%5Etfw) Remote workers can often feel a lack of trust from their manager or company simply because they’re not in the office (those stereotypes of remote working don’t help here). Working guardrails are not there to police whether your team is _actually_ working; they’re there to create a predictable and stable working environment where both parties are able to operate with flexibility without compromising performance. Many remote workers like to work remotely because it gives them flexibility to fit their job work around their life (instead of the other way around). Flexible working hours are great for this, but they can also have a negative impact if managers expect flexible working to mean that their team members should be available 24/7. Guardrails are for you _and_ your team. Some guardrails that I find useful to put in place include: 1. **Ensure that there’s an overlap of at** **_least_** **2 hours where your whole team is working and available for meetings.** The more timezones you operate across, the tougher this is, but knowing that there is a common time for quick chats and meetings gives everyone comfort that they’ll be able to reach you and one-another if they need to. 2. **Communicate expected response times by communication channel.** For example, you could let your team know that if they email you, they’ll get a response within 24 hours. If they Slack you, they will have a 4 hour response time. If they book a Zoom meeting in your calendar within the office hours times, you’ll be there within 10 minutes of notice. 3. **Set recurring meetings with each of your direct reports and overall team.** Recurring meetings ensure that your team always has a space to discuss issues with you. Without these in place, you’ll find that issues are more likely not to be addressed until they become a _serious_ problem. I set weekly one-to-ones with my direct reports, a weekly team meeting, a monthly career catchup with direct reports, and a monthly check-in with indirect reports. Do what works best for you and your team. 4. **Any major changes in location should be communicated and agreed upon beforehand**. Just because you work remote, it doesn’t necessarily mean you can just fly off to any country and work from there. Timezones and lack of good WiFi can put a strain on your work. Also, if others know where you are, they can better tailor meeting times to suit you. 5. **Any holidays should be added to a shared calendar**. This is a simple one but it lets everyone know where you’ll be and when. I’m also a fan of utilizing the Slack status feature to let people know if I’m out of office or tied up in a personal appointment. 6. **Over-communicate and be responsive**. This can feel counterintuitive but over-communication is particularly important in the earlier days of you operating as a remote leader. Even if you don’t have the solution to a problem, a quick response to let the team know you’re looking into it and they can expect a response by X date and time will dramatically improve communication and ensure that everyone feels listened to. ## Practice what you preach and take employee wellbeing seriously If you’re a remote manager that works flexible hours, your team can sometimes feel like you’re _always_ working. This is because they get emails and Slack messages from you at all hours of the day, while some days you’re taking meetings at 7am and others you’re taking them at 9pm. The reality might be that some days you work a 7am-5pm because you’ve carved out family time in the evenings, whereas on others you work 12pm-9pm because you like to do an early gym session and walk the dog on those days. That’s not what your team sees though… they just see you being online and taking meetings **all the time**. That’s not bad though, right? They take comfort in the fact you’re always around, surely? Not in my experience. Instead, this makes them feel like they _also_ need to be working long, unrealistic hours and respond to emails and messages at all hours. This is both unsustainable and unfair. One way you can mitigate this is by sharing your working hours with your team ahead of time, and then keeping your calendar up-to-date with slots allocated for your personal time. Personally, I add all of my personal appointments to my calendar for my team to see that I am in fact _not working_ during the times I’ve said to help normalize taking personal time. For example, I’ll include “Walking the dog” or “Family time” in my calendar. Here’s a snapshot of a random week in my calendar (which is visible to anyone in my company): ![A weekly calendar filled with colour-coded meetings and personal appointments.](https://mhb.xyz/_astro/matthew-howells-barby-calendar-1024x913.DMm94_bD_mMge1.webp) _(_[_Porridge_](https://twitter.com/matthewbarby/status/1140314084627423232?s=20) _is my dog, in case you were wondering what that meant!)_ A lot of people get hung up on this, stating that they don’t want their team to know everything that they do outside of work. That’s absolutely fine. You could just simply block out time labeled as “Personal Time” or “Not Working” to achieve the same outcome. [Original social post](https://twitter.com/matthewbarby/status/1217830338560516098?ref_src=twsrc%5Etfw) Another thing that you’ll see from my calendar is that I add a block in my calendar every day between 6pm-12am that simply says, “**Ask before booking – I’m based in the UK**”. This is one of the most effective things I’ve done to ensure people wouldn’t book me at crazy times without asking me first, and I’d highly recommend this if you work with people in very different time zones to you. Alongside your availability and working hours, you also need to consider response times… There are few things more anxiety-inducing for your team members than waking up to 20 Slack messages and ten emails from you. I was guilty of this for a long time because one thing I found useful was to go through some final emails and Slack messages before I went to sleep. It was part of my routine and it worked for me. The outcome for my team was that they felt like I was sending loads of urgent requests that people would wake up to every day. To fix this, I didn’t change my routine, I simply scheduled all of the emails I was about to send to go out during my team’s working hours. I also saved Slack messages and sent them in the morning. This small change made a huge difference. ## There’s no substitute for meeting in person Bonding is a key part of building a strong team and comes a lot more naturally when you can meet in person. Whether this is in the form of a company-wide offsite or a team offsite, it’s important to try to enable these kinds of meetings. I run an offsite with my team once or twice a year, and we also have a wider company onsite where everyone travels to HQ. The team-level offsites are incredibly valuable, as they’re the perfect opportunity to run longer, deeper strategy sessions (this can be tricky to do when everyone is remote). It’s also a great opportunity to plan activities you can bond over as a team. Last year my team and I did a VR escape room, which was both hilarious and awesome. ![HubSpot colleagues sharing a meal around a long table at a team offsite.](https://mhb.xyz/_astro/team-offsite-hubspot.D4qikgDu_lGAfS.webp) _Me and some of the team hanging out after an offsite._ That being said, sometimes it isn’t viable for some of your team to attend an offsite. So try and be respectful and inclusive when you plan your meet-ups. Travel isn’t always feasible for some people – if they have young children, disabilities, get anxiety from flying, or a whole host of other reasons. With this in mind, make sure that there’s always a way for remote individuals to participate in an in-person meetup. You can even FaceTime them in for some of the social activities. There are plenty of opportunities for you and your team to bond remotely, too. Last year my team and I did a remote gift unwrapping and a team quiz right before the holidays last year and it was great. It’s also important to be aware that remote workers don’t get the usual opportunities to meet other people within the company – especially if you’re a large organization. This can leave them feeling isolated, so it’s crucial that you give them the opportunity to build connections with the wider team so they feel part of things. One great way to do this is through an app like [Donut](https://www.donut.com/), which pairs random people within your company up with each other for a video chat so they can get to know each other. We use this at both HubSpot and Traffic Think Tank. ## Final thoughts. Remote work isn’t for everyone, but it’s only growing in popularity. The search term “remote jobs” is searched for over 100,000 times every month in the US alone, and [Google Trends shows](https://trends.google.com/trends/explore?date=2016-01-01%202020-01-11&geo=US&q=remote%20jobs) the dramatic spike in interest that there’s been in the past 12 months. ![Google Trends interest in remote jobs rising from 2016 to 2019.](https://mhb.xyz/_astro/remote-jobs-trend-interest-1024x367.BoYjEJT-_1HBbiV.webp) As a people manager, your role in creating a positive environment for your fellow remote team members is particularly important. Balancing the adoption of remote work within your organization while avoiding neglecting or isolating those working from an office is one of the biggest challenges you’ll have to overcome. My overarching advice is to focus on building a working environment that is flexible and can accommodate a range of different preferences. This starts with building trust. Trust works both ways, too… [Original social post](https://twitter.com/jessjoyce/status/1217866900140462080?ref_src=twsrc%5Etfw) Speak to other remote leaders at different companies, find what’s worked well for them and adapt it for your own team. At the same time, learn from their mistakes before you make them yourself. It takes time and flexibility on your part, but it’s all worth it in the end. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/remote-leadership/](https://mhb.xyz/essays/remote-leadership/) # This Time It's Different # This Time It's Different Economics16 Feb 20247 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![Successive tide lines marked on a sloping shore, the newest wave reaching past every earlier mark.](https://mhb.xyz/_astro/src.DzGs7wXG_181OU0.webp) At the start of every bull run, we hear the same one-liner repeated: > “This time it’s different.” Nothing is a sure thing in financial markets, and crypto brings an additional element of surprise, but I can’t help thinking that something fundamental has changed. Do I think this will bring us into an extended, so-called, “supercycle”? No. I believe, like most asset classes, crypto will maintain its cyclical patterns. I also believe that this cycle is going to be dramatically different to the last few. Maybe it’s more, “Same same, but different.” ![Bitcoin performance over time](https://mhb.xyz/_astro/The_Crypto_Market_Cycle_-_Bitcoin-s_Performance_Over_Time-1024x650.CSDssYQ6_ZCuEsq.webp) Image source: [Caleb & Brown](https://calebandbrown.com/blog/bitcoins-market-cycle/) Investing in Bitcoin isn’t for the faint-hearted. I know this from experience. In each major cycle, Bitcoin’s price has both appreciated by at least 260% and depreciated by at least 77%. That’s quite the ride. Bitcoin often leads the rally as well as the decline, with the rest of the market largely following suit. If you look at Bitcoin’s price chart, you’ll notice that each cycle tends to occur in four-year increments. This maps to the Bitcoin halving events where the new supply of Bitcoins entering circulation is halved. ![Bitcoin's halving timeline](https://mhb.xyz/_astro/bitcoin-halving-coin-desk.Dm3yLbf-_Cy9fe.webp) Image source: [Coin Desk](https://www.coindesk.com/learn/bitcoin-halving-explained/) It’s quite remarkable to look at Bitcoin’s price one year before and after each of the previous halving events. These have shown to be the periods where the greatest price appreciation takes place. While history doesn’t often repeat itself, it often rhymes. I don’t know of a better chart to illustrate this in action. This is one of the reasons why there’s such excitement in the crypto space right now – we’re only a couple of months away from the next halving and history is certainly rhyming again. It’s not just Bitcoin that follows these patterns. Bitcoin has historically created a rising tide that’s lifted the wider ecosystem of digital assets, catalyzing capital inflows that then flood across the rest of the space. 2017 was the first time this happened at scale, giving birth to the “altcoin” market, led by Ethereum and fueled by Initial Coin Offerings. The 2020 cycle saw Ethereum take center stage, with the layer-2 scaling solutions creating an explosion of innovation while yield farming and the NFT boom supercharged speculation. Alongside all of the catalysts for the crypto market’s cyclical ascent, there were plenty that triggered its decline. In 2014, it was the Mt.Gox bankruptcy([1](https://www.reuters.com/article/idUSBREA1R0FX/)). In 2018, there was a regulatory backlash on ICOs([2](https://www.cnbc.com/2018/11/16/in-crackdown-of-crypto-sec-goes-after-unregistered-coin-offerings.html)) and the China crypto ban([3](https://www.coindesk.com/learn/china-crypto-bans-a-complete-history/)). Then, more recently, in 2022 we had the Luna crash([4](https://www.coindesk.com/learn/the-fall-of-terra-a-timeline-of-the-meteoric-rise-and-crash-of-ust-and-luna/)) and the FTX implosion([5](https://www.bbc.co.uk/news/technology-63612489)). ## Why It’s Different One often-neglected fact from the past three crypto cycles is that while Bitcoin’s price has followed a similar trend of huge price appreciation followed by an equally huge depreciation, the relative growth and decline have lessened. While it might not feel like it when you view price in absolute terms, the swings during each cycle are getting less extreme. I believe this cycle will be a continuation of that trend. This would be very positive for digital assets as a whole and will build greater investor confidence in the asset class. Speaking of investor confidence, one event that’s taken place already this year has brought structural changes to the flow of capital in crypto and further legitimized Bitcoin as a store of wealth asset: the Bitcoin spot ETF. [Original social post](https://twitter.com/BitMEXResearch/status/1758396135822016850?ref_src=twsrc%5Etfw) In the first 26 days of trading, there have been over $4.5 billion of net inflows across the ten Bitcoin spot ETFs. By any measure, the Bitcoin spot ETFs have been a blockbuster success. Blackrock’s $IBIT ETF alone has breached the top five ETFs by inflows for the past week([6](https://www.etf.com/etfanalytics/etf-fund-flows-tool?startDate=2024-01-01&endDate=2024-02-16)). The “money sitting on the sidelines” has been talked about for years in crypto, and now we’re seeing the impact of when institutional investors have easy access to Bitcoin exposure, and this is just the beginning. Access to the ETFs still isn’t widespread, with some high-profile brokers not listing it([7](https://investor.vanguard.com/investor-resources-education/news/no-bitcoin-etfs-at-vanguard-heres-why)), and many banks beginning to petition the SEC for changes to the costs of holding digital assets as they chase a slice of the pie([8](https://www.fxstreet.com/cryptocurrencies/news/us-banks-appeal-to-the-sec-for-a-piece-of-the-bitcoin-etf-cake-202402152359)). Then there’s the appetizing prospect of trading options on the spot ETFs. All of the above comes in the background of a significantly rosier macroeconomic outlook. We’ve just come through a historic period of high inflation, which most market analysts agree has reached its peak([9](https://www.reuters.com/markets/us/us-consumer-prices-unchanged-october-2023-11-14/)). Attention now shifts to when the Federal Reserve and other major central banks will begin lowering interest rates, with many investors betting on this happening around May 2024. ![A global liquidity index and a longer-term cycle plotted from 2000 to 2026.](https://mhb.xyz/_astro/Global-liquidity-cycles.Dah27aiu_Z1kVWLb.webp) Image source: [Financial Times](https://www.ft.com/content/4d3790e0-cf12-47f9-a129-b44f4ed70e67) Once this happens, liquidity will enter the broader market and this will spill over into crypto markets. The cost of capital is set to come down dramatically over the next 24 months, which will likely fuel a new wave of institutional capital investments. The 2024 US elections will only amplify this as the impetus shifts from stemming inflation to driving economic growth. All this to say: there have been significant structural shifts in crypto markets and the macroeconomic outlook ahead is extremely positive. ## This Cycle’s Catalysts Zooming further into the innovation happening in the crypto space, there’s a lot to be excited about. The wider economic environment has given breathing space for the latest cohort of projects to thrive and we’re beginning to see the early signs of what’s to come. Like in 2020, there’s plenty of attention being placed on blockchain scalability. The imminent rollout of Ethereum’s Dencun upgrade will see the introduction of proto-danksharding([10](https://www.eip4844.com/)), which will dramatically reduce the cost incurred by L2 rollups posting transactions to Ethereum. This will spur a renewed wave of interest (and speculation) into the L2 ecosystem. At the same time, protocols focused on parallelization and modularization have been garnering a lot of attention and are likely to be some of the big winners in this cycle. ![A Kraken Sei price chart rising through late 2023 and early 2024.](https://mhb.xyz/_astro/SEI-price-chart-Kraken.Bj_1zO91_ZyfpwX.webp) Image source: [Kraken](https://www.kraken.com/en-gb/prices/sei) Sei and Celestia are protocols focused on this area and they’ve already seen their native tokens rise by more than 600% and 185% respectively. On top of this, the much-anticipated decision on the Ethereum spot ETF approval comes in mid-May. If we get the green light here, you can expect green candles to follow. Another exciting development is restaking. The upcoming launch of EigenLayer is set to be one of the largest airdrops in crypto history, and the underlying technology that it brings with it will usher in vast improvements to scalability. EigenLayer’s [points program](https://mhb.xyz/essays/incentive-systems/) alone has helped it capture over $6bn of TVL in just a few months. If that wasn’t enough, Bitcoin DeFi is also starting to take shape. The meteoric rise of [Ordinals](https://mhb.xyz/essays/bitcoin-nfts-ordinals/) last year has paved the way for an expansion of Bitcoin’s use cases, with several Bitcoin layer 2 networks gearing up for launch. This, combined with the halving in April is paving the way for more capital to flow into Bitcoin and its surrounding ecosystem. And finally, at a more foundational level, blockchain technology has matured to a level where it’s far more resilient than in previous cycles. Those that lived through the previous bear markets and weathered the storms they brought have only got stronger. Lessons have been learned, and while there will still be huge hurdles to overcome when it comes to adoption, there’s momentum that’s building. Several sovereign states have adopted Bitcoin, and there’s been a sustained level of growth in payments via digital assets. In the background to all of this, and despite the current environment in the US, many regulators around the world are providing clarity on their stance surrounding digital assets. While not perfect, MiCA([11](https://www.twobirds.com/en/insights/2024/global/markets-in-crypto-assets-new-eu-law-on-crypto-assets)) is set to arrive in the EU in late 2024 and many other equivalent frameworks will appear around the world in the coming 18 months. This at least creates more certainty for companies operating in the space. The combination of greater liquidity, more regulatory certainty, stronger foundations, and a positive macroeconomic setting means that crypto has all the ingredients needed to have its best cycle yet.Maybe, just maybe, this time _could_ be different. [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/this-time-its-different/](https://mhb.xyz/essays/this-time-its-different/) # Understanding Inflation # Understanding Inflation Economics14 Dec 20229 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![A riveted pressure vessel venting one plume of steam through a small safety valve.](https://mhb.xyz/_astro/src.IAQ00vM4_Z2jLr2a.webp) Despite its significant role in economics and society as a whole, inflation remains a largely mysterious and confusing concept. definition Inflation is the rate at which goods and services prices go up. Another way to look at this is the rate at which a currency depreciates in value. This means that your one dollar today will afford you fewer goods and services in the future. Defining inflation is one thing; controlling it is another. History has shown us how devastating the impact of high inflation can be. The Weimar Republic’s period of hyperinflation between 1921-1923 saw millions of people watch their life savings become worthless in a matter of months, leaving them without the means to afford even the most basic of food supplies.[\[1\]](https://mhb.xyz/essays/understanding-inflation/#ref-1) In more recent times, Zimbabwe experienced runaway inflation that led to the prices of goods doubling _every single day_.[\[2\]](https://mhb.xyz/essays/understanding-inflation/#ref-2) ![Piles of German money in a Berlin bank during the post-World War I hyperinflation.](https://mhb.xyz/_astro/weimar-hyper-inflation-1024x535.DwEuKM-W_1GrsGg.webp) _Piles of German money in a Berlin bank during the post-World War I hyperinflation._ These are extreme examples, and while today’s conditions don’t come close to this, we are, statistically speaking, currently living through one of the highest rates of inflation in modern times. But what does this mean? important During periods of high inflation, the purchasing power of consumers decreases. That is, the income you generate can afford you fewer things. It also reduces the value of your cash savings. This impacts lower-income households disproportionately more because as their disposable income is decreased, they often have fewer options to reduce their outgoings. Essential goods and services, like electricity and food, are often the first to rise in price, while the interest payments on existing debt – like mortgages – will often rise dramatically as a result of central banks trying to tame inflation. The increase in the cost of debt isn’t a direct consequence of inflation, but a natural result of the fight to bring down inflation. This comes as central banks, like the Federal Reserve or the Bank of England, increase interest rates. We’re seeing this play out right now with central banks worldwide increasing rates at an accelerated pace to fight inflation.[\[3\]](https://mhb.xyz/essays/understanding-inflation/#ref-3) Central banks raise interest rates in order to slow economic growth (yes, you read that correctly). The interest rate issued by central banks, often referred to as the _bank rate_,[\[4\]](https://mhb.xyz/essays/understanding-inflation/#ref-4) is the rate at which they lend money to domestic banks. This rate influences the interest rate that those domestic banks will charge to lend money to consumers and businesses. As the bank rate increases, so will mortgage rates. As the cost of capital increases for businesses, their existing profit margins will be squeezed and they’ll have fewer options for investing in future business growth. As the cost of mortgages increases, consumers will have less disposable income so will reduce their spending. This slows down economic growth. As spending decreases, businesses lack the ability to increase the prices of their goods and services. As the profits of companies decrease, so does the wage growth of employees, leading to an increase in unemployment. What all of this results in is the rate of inflation slowing. The challenge that central banks face is to slow economic growth enough to tame inflation without slowing it so much that it has damaging long-term effects on the economy. When you consider that one of the main measures of inflation, the consumer price index (CPI), is a lagging indicator,[\[5\]](https://mhb.xyz/essays/understanding-inflation/#ref-5) you’ll realize that striking the aforementioned balance becomes even more difficult. Central banks only know that they’ve gone too far (or not far enough) with their rate increases when it’s too late. This is why the target for inflation is 2% and not zero. It gives a healthy buffer within. Much of the discussion today centers around whether we will have a _hard or soft landing_ from the current period of high inflation. In the UK’s case, this is largely a question of _how long_ the recession will last as opposed to whether we’ll have a recession at all. danger Going too far with interest rate hikes can lead to deflation, which is arguably much worse than high inflation. This is when the value of your money increases in comparison to goods and services. At first glance, this sounds pretty good, but when you realize that this means all of the assets you hold, like your home, are actually decreasing in value while any debt on them remains unchanged, it doesn’t sound so good. It also gives rise to a reduction in consumer spending. If you know that the value of something you’re looking to purchase will reduce in cost in a month’s time, you’re much more likely to save your money than spend it. This lack of spending cripples businesses, leading to lower wages and huge increases in unemployment. As unemployment takes hold, consumer spending reduces further. In fact, within the first year of unemployment, consumption expenditures drop on average by 26.3%.[\[6\]](https://mhb.xyz/essays/understanding-inflation/#ref-6) This _doom spiral_ only perpetuates the problem further. At this point, central banks will begin to reduce interest rates in order to stimulate economic growth. As interest rates lower, the cost of capital decreases and debt becomes cheaper. This positively impacts businesses because they can receive much-needed funding to survive and eventually grow. It helps consumers because their debt repayments reduce, unemployment reduces (as businesses begin hiring again) and disposable income grows, leading to increased consumer spending. In March 2020, when the full gravity of the COVID-19 pandemic took hold, the Federal Reserve reduced its bank rate to close to 0% from 1.5%‑1.75%.[\[7\]](https://mhb.xyz/essays/understanding-inflation/#ref-7) The Bank of England acted similarly, reducing rates to 0.1%,[\[8\]](https://mhb.xyz/essays/understanding-inflation/#ref-8) the lowest rate in history. **Chart source data\[11\]** Fast forward to December 2022 and things couldn’t be more different. Today, the Federal Reserve announced another increase in their bank rate, this time by a rate of 0.50%, following four successive increases of 0.75%. This brings the rate up to a range of 4.25% and 4.5%,[\[9\]](https://mhb.xyz/essays/understanding-inflation/#ref-9) which is likely to peak next year just above 5%.[\[10\]](https://mhb.xyz/essays/understanding-inflation/#ref-10) The Bank of England’s bank rate currently sits at 3%,[\[11\]](https://mhb.xyz/essays/understanding-inflation/#ref-11) with more increases to come. ## Printing Money There’s another role that central banks play in the creation of inflation: quantitative easing. This is where they issue new currency (also known as “printing money”), expanding the supply of money in the process, to purchase government bonds and other financial assets.[\[12\]](https://mhb.xyz/essays/understanding-inflation/#ref-12) The idea behind this is that this injection of capital into the economy will stimulate growth. Governments have more capital to invest in infrastructure, while companies and other financial institutions have more capital to invest. Central Banks have grown rather fond of quantitative easing, and even during high inflation periods, they’ve continued to increase the supply of money. The side effect of continuously increasing the supply of money is that it depreciates its value if demand doesn’t increase in line with it. The more British pounds that are created out of thin air, the less each of those pounds is worth. _Chart source data\[12\]_ Between November 2009 and 2020, the Bank of England _printed_ £895 billion through their quantitative easing program.[\[12\]](https://mhb.xyz/essays/understanding-inflation/#ref-12) While the extent to which quantitative easing contributes to inflation is a constant source of debate,[\[13\]](https://mhb.xyz/essays/understanding-inflation/#ref-13) history has shown us that growing the money supply of an economy at an ever-increasing rate has an undeniable link to inflation. Alongside monetary policy, there’s fiscal policy. Fiscal policy is how the government play a role in influencing the economy, primarily through spending and taxation. Changes to the rates of taxation on businesses and individuals has an impact on economic growth, which in turn has an effect on inflation. The complete meltdown of the British government during Liz Truss’s now infamous and record-setting brief tenure as Prime Minister is a perfect illustration of this. While most were calling for fiscal tightening, Truss and Kwarteng, the Chancellor of the Exchequer at the time, delivered a “mini budget” that sent shockwaves through the global economy.[\[17\]](https://mhb.xyz/essays/understanding-inflation/#ref-17) Widespread taxation cuts and huge increases in borrowing sparked major concerns on the negative impact this would have on tackling inflation and contributing to future economic pain. The fact that the UK government were taking the complete opposite stance to the Bank of England highlights is a perfect illustration of how fiscal and monetary policy can butt heads and cause volatility in the markets. ## Taking Our Medicine The reality is that the causes of inflation are nuanced, dynamic and complex. Simply stating that the expansion of the money supply is the cause of inflation would be inaccurate. What got us to where we are today is a whole host of overlapping circumstances; some were preventable, and others weren’t. The unprecedented situation of facing a global pandemic and the impact this had on consumer spending, supply chain dynamics, and the need for copious amounts of stimulus spending is something that’s very difficult to prepare for. The energy crisis in Europe that’s come as a result of Russia’s war on Ukraine has impacted inflation – in particular on fuel costs – is disproportionately growing inflation at a rate much faster than in the US.[\[13\]](https://mhb.xyz/essays/understanding-inflation/#ref-13) **Chart source data[\[16\]](https://mhb.xyz/essays/understanding-inflation/#ref-16)** While headline inflation is starting to slow in both Europe and the US,[\[15\]](https://mhb.xyz/essays/understanding-inflation/#ref-15) further interest rate increases are coming next year, and even then, getting inflation under control is just one part of the battle. After this, attention will shift to the slowdown in economic growth. important This is one of the reasons why tackling inflation is so painful: it means things need to get much worse for people before they can get better. References 1. [1](https://mhb.xyz/essays/understanding-inflation/#refmark-1) Fergusson, A. (1975) _When money dies: The nightmare of the weimar collapse_. London: Kimber. 2. [2](https://mhb.xyz/essays/understanding-inflation/#refmark-2) Uchoa, P. (2018) _[How do you solve catastrophic hyperinflation?](https://www.bbc.co.uk/news/business-45523636)_, _BBC News_. BBC. (Accessed: December 14, 2022). 3. [3](https://mhb.xyz/essays/understanding-inflation/#refmark-3) Coulton, B. (2022) _[Global Interest Rates Rising Faster than Expected, Pivot Unlikely in 2023](https://www.fitchratings.com/research/sovereigns/global-interest-rates-rising-faster-than-expected-pivot-unlikely-in-2023-10-11-2022)_, _Fitch Ratings: Credit Ratings & Analysis for Financial Markets_. Fitch Ratings. (Accessed: December 14, 2022). 4. [4](https://mhb.xyz/essays/understanding-inflation/#refmark-4) Kenton, W. (2022) _[Bank rate: Definition, how it works, types, and example](https://www.investopedia.com/terms/b/bankrate.asp)_, _Investopedia_. Investopedia. (Accessed: December 14, 2022). 5. [5](https://mhb.xyz/essays/understanding-inflation/#refmark-5) Britzman, M. (2022) _[Lagging vs. leading indicators – what’s the difference and what investors need to know](https://www.hl.co.uk/news/articles/lagging-vs.-leading-indicators-whats-the-difference-and-what-investors-need-to-know)_, _Hargreaves Lansdown_. Hargreaves Lansdown. (Accessed: December 14, 2022). 6. [6](https://mhb.xyz/essays/understanding-inflation/#refmark-6) Kolsrud, J. _et al._ (2018) “[The optimal timing of unemployment benefits: Theory and evidence from Sweden](https://doi.org/10.1257/aer.20160816),” _American Economic Review_, 108(4-5), pp. 985–1033. 7. [7](https://mhb.xyz/essays/understanding-inflation/#refmark-7) [_Federal Reserve issues FOMC statement_ (2020) _Board of Governors of the Federal Reserve System_](https://www.federalreserve.gov/newsevents/pressreleases/monetary20200315a.htm). Federal Reserve Board. (Accessed: December 14, 2022). 8. [8](https://mhb.xyz/essays/understanding-inflation/#refmark-8) _[Bank rate reduced to 0.1% and asset purchases increased by £200bn – march 2020](https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2020/monetary-policy-summary-for-the-special-monetary-policy-committee-meeting-on-19-march-2020)_ (2020) _Bank of England_. Bank of England. (Accessed: December 14, 2022). 9. [9](https://mhb.xyz/essays/understanding-inflation/#refmark-9) Person and Howard Schneider, A.S. (2022) _[Fed’s Powell says inflation battle not won, more rate hikes coming](https://www.reuters.com/markets/us/fed-set-slow-pace-rate-hikes-inflation-grinch-loses-steam-2022-12-14/)_, _Reuters_. Thomson Reuters. (Accessed: December 15, 2022). 10. [10](https://mhb.xyz/essays/understanding-inflation/#refmark-10) Smith, C. (2022) _[Fed set to slow rate rises but signal tightening not over yet](https://www.ft.com/content/97b30115-f0e5-40ab-ae71-4536086c3553)_, _The Financial Times_. Financial Times. (Accessed: December 14, 2022). 11. [11](https://mhb.xyz/essays/understanding-inflation/#refmark-11) _[Official Bank Rate History](https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp)_ (no date) _Bank of England_. (Accessed: December 14, 2022). 12. [12](https://mhb.xyz/essays/understanding-inflation/#refmark-12) _[Quantitative easing](https://www.bankofengland.co.uk/monetary-policy/quantitative-easing)_ (2022) _Bank of England_. (Accessed: December 14, 2022). 13. [13](https://mhb.xyz/essays/understanding-inflation/#refmark-13) Greenlaw, S.A. and Taylor, T. (2015) “[11.4 The Phillips Curve](https://openstax.org/books/principles-macroeconomics-ap-courses/pages/11-4-the-phillips-curve),” in _Principles of Macroeconomics for AP courses_. Houston, Texas: OpenStax. 14. 14 Elliott, L. (2022) _[Russian war slowing growth and hiking inflation, European Commission warns](https://www.theguardian.com/business/2022/jul/14/russian-war-slowing-growth-and-hiking-inflation-european-commission-warns)_, _The Guardian_. Guardian News and Media. (Accessed: December 14, 2022). 15. [15](https://mhb.xyz/essays/understanding-inflation/#refmark-15) Irwin, N. and Brown, C. (2022) _[Inflation cools in November for the second-straight month](https://www.axios.com/2022/12/13/inflation-consumer-prices-november)_, _Axios_. (Accessed: December 14, 2022). 16. [16](https://mhb.xyz/essays/understanding-inflation/#refmark-16) _[Inflation rate: World](https://tradingeconomics.com/country-list/inflation-rate?continent=world)_ (no date) _Inflation Rate – Countries – List | World_. Trading Economics. (Accessed: December 14, 2022). 17. [17](https://mhb.xyz/essays/understanding-inflation/#refmark-17) Heale, J. and Cole, H. (2022) _[How Liz Truss and Kwasi Kwarteng’s mini-budget turned into a major disaster](https://www.thetimes.co.uk/article/how-liz-truss-and-kwasi-kwartengs-mini-budget-turned-into-a-major-disaster-t88xzvkx9)_, _News | The Times_. The Times. (Accessed: December 14, 2022). [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/understanding-inflation/](https://mhb.xyz/essays/understanding-inflation/) # Composability, Community, and Ownership: Web3 Gaming's Future # Composability, Community, and Ownership: Web3 Gaming's Future Crypto10 Jan 202311 min[Matthew Howells-Barby](https://mhb.xyz/operating-record/) ![Railway tracks from three separate networks converging through a junction into one continuous line.](https://mhb.xyz/_astro/src.B-zLlcTv_1AdM72.webp) Web3 gaming has been on a rollercoaster ride over the past 18 months. 2021 ended with an explosion in adoption, with games like Axie Infinity boasting over 2mn daily active users.[\[1\]](https://mhb.xyz/essays/web3-gaming-future/#ref-1) All this followed a record-setting year of venture investments in the space, a trend that carried on well into last year.[\[2\]](https://mhb.xyz/essays/web3-gaming-future/#ref-2) But, like most emerging areas of crypto, web3 gaming faced some significant headwinds, most notably from the early iterations of rewards systems that led to the capitulation of the game economy in many leading games. _Chart source data[\[18\]](https://mhb.xyz/essays/web3-gaming-future/#ref-18)_ While the attractive incentives offered by the first cohort of play-to-earn games were an undeniably powerful tool for bootstrapping player liquidity, it proved to be an unsustainable model for growth.[\[3\]](https://mhb.xyz/essays/web3-gaming-future/#ref-3) Games that failed to adapt early enough have faced the consequences. The reality is that web3 gaming sits at a crossroads right now. The volatility in the broader crypto markets, along with the numerous scandals – most recently with FTX,[\[4\]](https://mhb.xyz/essays/web3-gaming-future/#ref-4) has led to a slowdown in adoption from crypto natives. At the same time, bringing “traditional” gamers to web3 has proved particularly challenging due to a combination of substantial onboarding friction and their negative perception of the space. A recent study by Coda Labs showed that most _regular_ gamers surveyed hated NFTs.[\[5\]](https://mhb.xyz/essays/web3-gaming-future/#ref-5) The reaction to Ubisoft’s video introducing NFTs to their audience further validated this.[\[6\]](https://mhb.xyz/essays/web3-gaming-future/#ref-6) While web3 gaming is still in its infancy, it’s fair to say that it’s not quite found a narrative that resonates with all factions of gamers, nor have we seen a web3 game truly scale into the mainstream gaming community. I believe this will happen in the coming years. Moreover, I see web3 gaming becoming a huge contributor to market share in the gaming industry over the next decade. To understand why it’s worth revisiting the evolution that gaming technology has experienced over the past thirty years. ## A look to the past to see the future Over the past three decades, the gaming industry has been through several waves of very significant disruption. Each time, the existing player base in gaming has had a largely negative response to new, disruptive technologies. A great example of this was seen with mobile gaming. The introduction of the iPhone in 2007, and more importantly, the subsequent launch of Apple’s App Store the following year,[\[7\]](https://mhb.xyz/essays/web3-gaming-future/#ref-7) paved the way for a new era of mobile gaming. At the time, Microsoft had recently launched their iconic Xbox 360 console, and Sony had followed suit with the PlayStation 3. This was during the peak of the _Console Wars_, where high-performance hardware capable of producing stunning graphics was at the forefront of consumer demand. These two combined sold an eye-watering 171 million consoles.[\[8\]](https://mhb.xyz/essays/web3-gaming-future/#ref-8) After the best part of a decade spent releasing sub-par consoles, Nintendo then re-entered the market with their Wii console, which went on to sell an incredible 101 units.[\[9\]](https://mhb.xyz/essays/web3-gaming-future/#ref-9) Console Name Release Year Units Sold PlayStation 2 2000 \>155 million Nintendo DS 2004 154.02 million GameBoy & GameBoy Color 1989, 1998 118.69 million PlayStation 4 2013 117.2 million Nintendo Switch 2017 114.33 million PlayStation 1994 102.49 million Wii 2006 101.63 million Best-selling games consoles (all-time)[\[19\]](https://mhb.xyz/essays/web3-gaming-future/#ref-19) All of the top-grossing game studios were doubling down their efforts on producing titles for one of the _big three_ consoles. For consumers, this meant spending between $50-60 for each of the games they wished to own.[\[10\]](https://mhb.xyz/essays/web3-gaming-future/#ref-10) Apple’s release of the App Store, combined with its rapidly growing distribution, tore down the huge barriers to entry in the video games market and unleashed a resurgence of indie game developers that were able to generate meaningful income through the development of mobile apps. For the consumer, they went from paying $60 for a game to paying $1.99, and eventually, as free-to-play emerged, nothing at all. In the past five years, revenue from mobile games alone has more than doubled, and it’s by far and away the largest segment in gaming by revenue. This number is expected to grow from $152bn in 2022 to $221bn in 2027.[\[11\]](https://mhb.xyz/essays/web3-gaming-future/#ref-11) It’s worth noting that up until the iPhone, mobile gaming was only possible with a dedicated mobile gaming console (outside of playing _snake_ on your Nokia 3210).[\[12\]](https://mhb.xyz/essays/web3-gaming-future/#ref-12) Those that tried to successfully combine the mobile phone with a gaming console ended with a particularly painful end. Remember Nokia’s N-Gage?[\[13\]](https://mhb.xyz/essays/web3-gaming-future/#ref-13) No? Me neither. While many of these products paved the way for what mobile gaming has become today, they lacked the distribution engine that Apple created. Web3 gaming seems to be in a similar state right now. Most gaming hardware doesn’t natively support the basic infrastructure needed for web3 gaming, in particular, the ability to use crypto wallets. Apple’s recent attack on apps implementing NFTs has further raised the barriers to entry.[\[14\]](https://mhb.xyz/essays/web3-gaming-future/#ref-14) While it’s unclear whether we need the web3 equivalent of the App Store, what _is_ clear is that the current distribution channels aren’t set up to support widespread web3 gaming adoption. ## Why web3? The question that many critics of web3 gaming pose is, “_wouldn’t this game work just as well, if not better if it wasn’t powered by a blockchain?”_ It’s a reasonable question to ask because many of the hundreds, potentially thousands, of web3 games that have appeared since 2021 have clearly lacked product-market fit and the addition of blockchain technology was generally an afterthought. That said, web3 possesses some powerful features and new economic models that simply aren’t possible for traditional games to produce. One of which is the ability for gamers to own assets within the game. Asset ownership is a much-touted benefit, but the reality is that it’s a little-understood concept. The majority of the discussion on this front has centered on the ability to sell these assets for a profit, but many traditional gamers have been turned off at the idea of the financialization of their gaming experience. The thing is, ownership is about so much more than this. The hours, days, and weeks of gameplay that gamers invest into the ecosystem of traditional games, and all of the associated reputation and in-game assets they accrue, remain confined to the boundaries of that game. Web3 changes this. What if the skin you own within Fortnite could be used across a plethora of other games, giving you unique abilities and, more importantly, allowing you to retain the sense of community you’ve built inside Fortnite and transfer that into other game ecosystems? Also, imagine that owning this skin could get you access to special in-person events or online communities. This level of portability is at the heart of web3 gaming. This seemingly simple innovation is leading to novel new approaches to building games. Composable game assets are becoming the building blocks from which new games are developed (as opposed to the other way around). ![Three illustrated Loot cards labelled Synthetic Loot, More Loot and Genesis Loot.](https://mhb.xyz/_astro/Loot-For-Adventurers-1024x614.CQ4FdgXt_Z2fGSAq.webp) Image Source [\[15\]](https://mhb.xyz/essays/web3-gaming-future/#ref-15) Take Loot, a pioneering web3 project, as an example. Instead of building a game through which players could then earn assets and follow a predesigned story, Loot simply created a collection of assets that they then encouraged creators to build games, stories, and other digital experiences around.[\[15\]](https://mhb.xyz/essays/web3-gaming-future/#ref-15) This inside-out approach to game design is what gets me personally so excited, and it’s something the industry has barely scratched the surface of. Alongside the composability of game assets, on-chain reputation is another valuable building block for both gamers and developers. Whereas today, your achievements and reputation within a game are isolated within the walled garden of either the game (e.g. World of Warcraft) or the platform (e.g. Steam). Taking these achievements and reputation on-chain means this information can be seamlessly read and integrated into other ecosystems without any permission needed from the developers of the other game. This removes a lot of friction from the process of creating larger open-world experiences that can stitch together to create something far greater than the sum of its parts. ## How long will it take? For all the promise of web3 gaming, there’s still a long way to go until it’s fully realized. There are a number of reasons why this is the case, but two of the biggest contributors are the lack of infrastructure for web3 in the current gaming ecosystem and the friction that exists in onboarding new players. For a start, Apple has made it painfully difficult for any web3 game to operate within its App Store. This immediately lowers the total addressable market open to web3 right now. The ongoing situation with Coinbase Wallet, where Apple are demanding 30% of gas fees from transactions within the app, is a perfect example of the barriers to entry that are in place.[\[16\]](https://mhb.xyz/essays/web3-gaming-future/#ref-16) [Original social post](https://twitter.com/baseapp/status/1598354821983125506?ref_src=twsrc%5Etfw) As many have pointed out, even if Coinbase wanted to comply they couldn’t because there’s no infrastructure to pull these fees out of on-chain transactions and into Apple’s in-app purchase system. Existing App Stores need better tooling before these kinds of restrictions can be put in place. These obstacles will be removed over time, and if not, disruption will come in its place. The stickier problem right is getting non-crypto natives comfortable with self-custody. Creating a wallet is confusing, and for many, a scary proposition. There’s a reason why the lion’s share of the global population stores their money in bank accounts: it’s both impractical and for many, terrifying, to be the sole point of failure in the security of your wealth. Most web3 wallets that exist today have been built for crypto-natives. They provide a poor user experience, limited mobile app support, and a steep learning curve on their use. For web3 to reach the masses, this must change. Infrastructure like web3auth that enables wallet creation via Twitter or Google OAuth, combined with technology like Paper.xyz that provides payment services to users via credit cards (removing the need to buy crypto assets), are all great starting points. The experience in web3 gaming should feel like that of traditional gaming, all while the blockchain elements are running in the background – not put to the front and center of the experience. These are some things that help in the short term. Over the long term, the promise of unlimited composability needs to come to fruition. Ironically, many web3 games that are being built today are creating their own walled gardens. Competing _open metaverse_ projects like Decentraland and The Sandbox aren’t interoperable, while many games are simply building their own purpose-built chains to support their individual needs. There are some examples that exist today, like Ready Player Me, that are building with interoperability first, and many of the leading open metaverse projects have plans to support this,[\[17\]](https://mhb.xyz/essays/web3-gaming-future/#ref-17) but we’re still years away from this being a smooth experience. As interoperability becomes standard, the wallet experience – or lack thereof – is improved, and web3 infrastructure is built into the primary distribution hubs of gaming today, we’re going to see an explosion of creativity that I believe will captivate gamers in whole new ways. Web3 has its growing pains right now, but as history has shown us, gaming is a sector that leads the way with emerging technologies. It’s a matter of time before web3 is synonymous with gaming. References 1. [1](https://mhb.xyz/essays/web3-gaming-future/#refmark-1) Wang, T. (2022) _[Axie Infinity nears 2M daily active users as creator raises $152M series B](https://www.coindesk.com/business/2021/10/05/axie-infinity-nears-2m-daily-active-users-as-creator-raises-1)_, _CoinDesk_. CoinDesk. (Accessed: December 21, 2022). 2. [2](https://mhb.xyz/essays/web3-gaming-future/#refmark-2) Bourgi, S. (2022) _[Blockchain games and metaverse projects raised $1.3B in Q3: Dappradar](https://cointelegraph.com/news/blockchain-games-and-metaverse-projects-raised-1-3b-in-q3-dappradar)_, _Cointelegraph_. Cointelegraph. (Accessed: December 21, 2022). 3. [3](https://mhb.xyz/essays/web3-gaming-future/#refmark-3) Howells-Barby, M. (2022) _Building Sustainable Play & Earn Ecosystems_, _Matthew Howells-Barby_. 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[8](https://mhb.xyz/essays/web3-gaming-future/#refmark-8) Constantine, R. (2019) _[Who finally won: PS3 or xbox 360?](https://www.escapistmagazine.com/who-finally-won-ps3-or-xbox-360/)_, _The Escapist_. The Escapist. (Accessed: December 21, 2022). 9. [9](https://mhb.xyz/essays/web3-gaming-future/#refmark-9) _[IR information : Historical data](https://www.nintendo.co.jp/ir/en/finance/historical_data/index.html)_ (no date) _Nintendo Co., Ltd._ (Accessed: December 21, 2022). 10. [10](https://mhb.xyz/essays/web3-gaming-future/#refmark-10) Rgrosso (2020) _[The cost of gaming since the 1970s](https://techraptor.net/gaming/features/cost-of-gaming-since-1970s)_, _TechRaptor_. (Accessed: December 21, 2022). 11. [11](https://mhb.xyz/essays/web3-gaming-future/#refmark-11) _[Video games – worldwide: Statista market forecast](https://www.statista.com/outlook/dmo/digital-media/video-games/worldwide#revenue)_ (no date) _Statista_. (Accessed: December 21, 2022). 12. 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Wikimedia Foundation. (Accessed: January 10, 2023). [All essays](https://mhb.xyz/essays/) Source: [https://mhb.xyz/essays/web3-gaming-future/](https://mhb.xyz/essays/web3-gaming-future/)