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[on-hold music] So do you have a flywheel or a funnel? Do you know what I mean by that? I do know what you mean by that. We have both. Here, let me kind of explain that. Yeah.

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So we have a funnel in that, like up here, social media drives into our website. Well, what's the top? Forget about the social media 'cause that's like- Sure, sure.

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All of our competitors were shooting themselves in the foot, and we're- That's what I mean. That's why it was very surprising to, like, greet it. Yeah, everyone was shooting themselves in the foot, and I don't know.

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But, like, I don't think we're, we're that smart, but we hadn't shot ourselves in the foot. [laughs] That helps. Step one, don't shoot yourself in the foot. Don't self-sabotage, um.

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[on-hold music] This episode of the Rebooting show is brought to you by House of Kaizen.

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In the spring, I participated in a workshop House of Kaizen hosted for a group of publishers looking to expand their subscription programs.

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What emerged was that connecting subscriber journey stages with specific aspects of the audience experience is a powerful toolkit for subscription teams to focus on what is the biggest impact long term.

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As Eric Helwig of Missoula's Pocket said, "House of Kaizen's framework was an incredibly helpful tool to align the entire organization on where we were hitting our marks and what areas needed attention."

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This workshop is now available on demand as a self-guided course or supplemented with one-to-one consultation as you see fit. To learn more, go to houseofkaizen.com, that is houseofkaizen.com/rebooting.

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That is Kaizen, K-A-I-Z-E-N. Thanks, House of Kaizen. [on-hold music] Welcome to the Rebooting show. Jason Yanowitz, second time on the program, I believe.

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It was right at the beginning of the crypto winter that we talked. Jason is the CEO of Blockworks, which is a, a survivor and a thriver from the crypto winter.

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So I wanted to have you on to talk about that, and because we had dinner together twice in the last week. Sorry, are you telling me that crypto winter is officially over? Is that what you're saying? I think it is, yeah.

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Is it behind us? [laughs] I mean, maybe it's 'cause I'm in Miami right now. The sun is shining. I'm up on- You're a crypto convert, Brian. I, I love this dude [laughs] I'm up on Bitcoin.

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I've, like, resurfaced a couple of Web3 newsletters [laughs] that I wrote- Yeah... in twenty-twenty-one, like why Web3 matters and when I was in my DAO curious phase. I'm, I'm still not buying the, what was it?

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Like, off-chain summer, on-chain summer. On-chain summer, Coinbase? Yeah. Yeah. That's crazy. That's- It's funny. No one wants to talk to me when the prices are down.

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Now Bitcoin best performing asset class of- Yeah, that's why you're back on... the entire market. Every-everyone wants to, to talk crypto again, so it's funny.

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[laughs] But, like, let's talk about what happened between then and now because Blockworks is a crypto media company, right? So you have media and research. Started in twenty-eighteen, correct? Yeah.

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We founded it unofficially in twenty-seventeen, but officially, you know, meaning I left my job- Yeah... and my co-founder left our jobs May of twenty-eighteen.

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So coming up on five and a half, six years now, however you measure it. Yeah. And so you were... That was well into the cycle. If you're talking crypto, we're gonna be talking about cycles and stuff like this.

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And explain where the cycle was then. I don't even remember. It was starting to run up. Yeah. So when we...

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So, okay, so the backstory of Blockworks, and I'll spare you the details 'cause I don't wanna bore your audience too much here, but crypto back in twenty-seventeen was a very retail-driven asset class. Yeah.

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So when you think about investors, there's kind of a spectrum, retail all the way to institutional, institutional being the asset allocators into the asset managers, then there's financial advisors, then there's, like, the prosumer investors, then there's retail.

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It was very retail back then, meaning... And what that, what that meant was a bunch of, like- Meaning people like me. Yeah, people like you. Well before I got, got, like- People, no, people like you.

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People like me as well... No, I got suckered in twenty-twenty-one. You know, I was, like, recently out of college. But that also meant all the information was very retail as well.

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So I was working at a venture firm trying to talk to the, you know, the GPs and the LPs about crypto, but we realized that all the information was basically on Reddit and Twitter coming from folks like Crypto Panda and Crypto Whale.

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We kind of had this thesis. We've got a lot wrong over the years, but one thing we got right was the thesis, which was that crypto would become this huge institutional asset class.

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As that happened, the number of investors who came into the industry would grow by orders of magnitude, and those investors were gonna demand a much, much more sophisticated level of information about the industry and the asset class.

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Some looked and felt a little more similar to a Bloomberg or Wall Street Journal instead of the anonymous blog that gets posted on Reddit. And so that's what we've built over the last six years.

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And where it was in the cycle then was we... If you look at the initial docs to form what was an LLC then, now a C corp, but the initial LLC, we top ticked the market.

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The Bitcoin topped out, I think, the third week of December. We formed the company the second week of December. So we basically rode Blockworks into this deep bear market in twenty-eighteen- Yeah... twenty-nineteen.

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Then COVID hits, money pumps into the market. Paul Tudor Jones calls Bitcoin the fastest horse in the race. We rode it through that, that up market, and then we've been riding it- Yeah...

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into this down market again for twenty-twenty-two. What, what is the... You want to... The old spiel is you wanna start in a down market and, and build during that, and then ride the up.

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I mean, many people, front of the parade's usually pretty crowded. People like me come and wanna do podcasts when the price of Bitcoin's, like, over, what is it, thirty-two, thirty-four thousand. Yeah.

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Volatility is really good to grow an asset class.

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You don't want a ton of volatility in an asset class when it's more mature, but for a new industry, and last time I was on the pod, I-- we talked about the railroad industry.

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But, yeah, in any industry when it gets started, you want volatility because dramatic price increases pull both human capital and financial capital into industries. Then the fluff gets wiped out. You rebuild bigger.

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You find higher lows. That happens again. Yeah. You find higher lows, and that's what's happening in crypto right now. Okay.

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So when you started the company, you were starting it as a media company, or were you just, like, always- Hmm...

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Because you didn't come from, you know, quote unquote, "media," and I don't think your co-founder did either, right? So I always think, like, when you come into...

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First of all, it's great when people who are not steeped in media come into media because they don't have all the hang-ups.Of people [chuckles] that have been in this messed up industry for so long. Yeah.

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So they're just like, "What are you talking about?" [laughs] Like, this is a growing area. People need information. Whereas someone in the media industry was like, "No, it's never gonna work."

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It's so funny being at these media dinners with you, it's like, e-everyone's like, "Oh, media's not growing." Yeah, you're right.

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I mean, we- You're like with a bunch of the, the Waldorf and Statlers, like, in the, in- Yes... the Muppets and the- Exactly. I mean, yeah, we...

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I'll tell you the real story instead of the, the kinda like narrative story. The real story is we walked ass backwards into media. We had no idea- [laughs]... what we were doing.

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I didn't even know how media companies worked. I was like, yeah, when I was prepping for internships, I, I read The Wall Street Journal, you know. That was kinda all I knew about media.

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And I listened to a lot of podcasts, actually.

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And so we built this media company ass backwards, and what I mean by that is when you look at a lot of media companies today, usually how they, they launch and grow, they start with a Substack or a, you know, Beehiiv or something.

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They start with a newsletter or podcast. That goes on for, like, a year. Then they say, "Oh, crap, we gotta monetize." They try to sell some ads.

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Maybe that doesn't work, so then they go do a conference, and that makes some money. That's, like, the, kind of the playbook in media today. We started with- Sounds familiar. [chuckles] Sounds familiar.

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We start- I, first of all, I sold ads, but go on. Well, you're... I mean, you know, you know, you know the game. You know how to do it. But we... So we started with events.

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We started with 6:00 to 10:00 PM happy hours after work. We didn't even underst- Yeah...

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we didn't know what sponsorships were, so we would just wake up at, like, 4:00 AM every day, rip out a couple hundred LinkedIn messages, try to sling tickets for, like, 20 bucks a pop.

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Once we got enough people there, then we started selling sponsorships. After we got into the conference game, we then launched our podcast network. Podcast car- started growing.

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We laun- we partnered with some big, like, kinda crypto, big names in the crypto space. Then we had conferences and podcasts. Then we launched a newsletter, and then we launched webinars.

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And then COVID hit, and we basically looked at the business and said, "What are we? What are we doing here?"

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And we realized that after talking to about 100 people in our audience, in our community, we realized that we're a media company.

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We realized that we're a media company, and not only are we a media company, we realized that there was a huge opportunity for, like, more institutional grade information about the industry.

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There were other media companies, CoinDesk, Cointelegraph, people like that, but nobody was covering the asset class as if you were someone from traditional capital markets looking at the asset class.

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They were kinda covering it for the almost crypto bro. So that's what, in January 2021, we relaunched as Blockworks. We used to be called Blockworks Group. We launched the editorial site.

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We hired reporters and journalists, and built an editorial team, and that was kind of like phase two of Blockworks. And then we did that for another year and a half, and then May 2022, we launched the research arm.

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Great. So, uh, it's interesting you started with events. The place I was last started as an events.

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I think there's a lot of advantages starting in events because you are, are kind of forced, but by nature, you're gonna be community driven, right?

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'Cause a lot of people like to throw around the word community these days because audiences are shrinking, and so it's like, better call this a community 'cause that'll, you know, make it seem okay that the numbers are small.

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And- Well-... it's harder to, it's harder to retrofit, I think, community on an audience than it is to grow from a community and expand audience. 'Cause e- not everyone is gonna be engaged on the community level.

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I have maybe a slightly different take than most people on conferences, which is... So I think community is a, a nice thing, and it's great if you can build a community.

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I don't think it's this end all be all that- Yeah... that will build a business. I think what conferences help you do as a media company is they let you monetize. That's the main job. Yeah.

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I- that, that actually is the main job. I think of... The main goal of a conference is not to build a community. [chuckles] That's this nice byproduct.

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The main goal of a conference is you're generating a ton of free cash flow. The problem with conferences is it's really low multiple business.

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So our job at Blockworks and our, you know, a lot of other media companies who have conferences, you have to learn how to take that very high cash flowing business that spits off a lot of cash that can then be used to reinvest in the business, you have to take low multiple high cash flow product, AKA conferences, and turn that into higher multiple streams of revenue, such as data, research, podcasts, whatever it may be.

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And for us, we made a very conscious decision not to raise venture capital money at the beginning, and this was- Yeah...

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coming off the wave of BuzzFeed, Vice, Vox, Complex, all these folks, and that model really just didn't make sense to us.

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I don't think you can raise venture money as a media company, at least in the first couple of years, or you're just almost doomed to fail. So conferences for us, that was our venture model.

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Like- Well, that's, conferences are VC to some degree. For media, you can use conferences almost as...

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Look, you need capital to start any business, and like you were saying, like, conferences can generate a bunch of cash at once. You're not gonna have that much cash selling newsletter sponsorships.

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[chuckles] It's, it's- Yeah. I mean, you could back in the day, but yeah, conferences, I think, are still the best way for a media company to bootstrap in the early days. Um- Yeah. So in '20...

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In, when we talked last, you guys had gotten, this is before the research, I'm gonna get into that, had, had gotten, I think you s- you said it was at $20 million in revenue back in '22. Yeah. Our goal for '20...

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When, when did we talk, 2021 or 2022? 2022. Early 2022. Okay. So our goal for that year was 20 million, and we pretty significantly exceeded that.

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Well, that's good because, well, the 2022 was kind of a bubbly year, wasn't it? Is it still... When did the bubble fully- I think 2021 was the real bubble year- Yeah... in crypto, but media lags prices.

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So if you look at, yeah, if you look at, like, media tends to lag by about six months in terms of prices, uh, specifically in like B2B and smaller industries. So, so 2022 was a really good year.

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It was probably a bit of an inflated year because the market was doing so well, but yeah, we, we're pretty proud of it. Yeah.

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So 2023 was disastrous for crypto overall, pretty much up until the last few months, and a lot of crypto media companies really suffered. Now, I'm on the periphery of this world, but, like, they have specific issues.

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Like, if we're going to, like, CoinDesk, they're owned by DCG. I mean, the, the entire crypto media space can, some of it can be a little strange 'cause there's a lot of, like, incestuous relationships going on.

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And then there was The Block, which is not Blockworks.Which I had known before. I'd known one of the guys who started the block, but the guy who was running it was secretly taking money from Sam Bankman-Fried.

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Like, there's all kinds of weird things. So I'm guessing, like, what I'm trying to get at is beyond the, like, you know, scandal aspect of it, how much of it was just the crypto space deflating?

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Because I would just imagine, look, I'm in Miami and, like, you know, the stadium was named after a crypto company. Everything was crypto. Now it's, it's, it's all gone.

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It's starting to creep back, but most of it is gone. And I would imagine- Yeah... as these companies, as their valuation went down, obviously their marketing expenditures all dried up. Yes and no, I would say. Okay. So,

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well, first off, there was a reckoning in digital- Like, that's what I'm... Like, did you fare better than these companies, or, or- Did. We did. So yeah, if you...

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I mean, if you look at the [laughs] digital media landscape in general, I think there was a reckoning. Yeah. Not even crypto. Then you took, look at crypto digital media companies, there was a real reckoning. Yeah.

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And some of that was, like, own goals, I would say. Some of that was, you know, just not having -- maybe being owned by a billionaire, so they had never actually had to figure out- Yeah...

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how to build a profitable media business. Others were, yeah, they took money under the table from SBF. Like, that's about as own goal of a, as you can get. For us, we have two types of advertisers.

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We have what I'd call the... L- I'm trying to think of the right way to put it for your, for, like, a non-crypto audience.

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But, like, the Coinbases and kinda Geminis and the BitGoes and Anchorage and kind of the, like, more centralized crypto companies that are trying to reach institutional investors and investors in general who are coming into the industry.

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Mm-hmm. Those folks pulled back their budget pretty significantly. And the reason is when Bitcoin's going up, more people come into the industry. You wanna be that onboarding place for those investors.

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When Bitcoin is going down and the industry's prices are going down, no new people are coming into the industry, therefore you don't have to market as much.

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However, we have a whole 'nother bucket of advertisers that we've continued to do really well with, and those are the DeFi and what I call, like, crypto native companies, the protocols. So Ethereum scaling solutions.

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You know, one of our clients spent three million dollars in the heart of a bear market on a conference called ECC in Paris. They are trying to reach developers to build on them.

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There's basically this war, this battle happening in crypto right now between infrastructure providers.

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It's kind of like maybe the cloud wars of the last several years, where you've got Google, Microsoft, Amazon battling it out for people to build on their clouds.

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And that exact same dynamic is shaping up in crypto right now, where you have Solana versus Avalanche versus Ethereum scaling solutions like Arbitrum and Optimism and zkSync and Scroll.

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And these companies have treasuries of billions of dollars, and they need to allocate it to get companies and founders and developers to build on them.

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So to summarize that, the advertisers we have who are trying to reach investors pulled back.

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The advertisers who are trying to reach the founders and the builders doubled down because a lot of people still stayed in the industry.

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[gentle music] My first job, uh, in journalism was writing about dot-com businesses.

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And don't tell me you were in grade school, even if you were. Okay.

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Because at the time, what happened is there was all these tourists who entered the dot-com space, and the Nasdaq crashed in April, and they all went away, basically. Mm-hmm.

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The, the, the entire market collapsed, then 9/11 just completely ended it. And the thing is, everyone was looking at the Nasdaq number, and all the tourists left, but they weren't looking at the broadband number.

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And, like, the broadband penetration continued and continued and continued and continued, and guess what came back? Like, the internet that everyone said, "Oh, phew, it, it's gone," and everything.

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Now, I don't know enough about crypto to say that it's like that, but the building kept happening, right? And you see the iconic companies that came out of that period really were getting going.

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You know, Google was getting going after that. And that is the nature, I think, of these cycles, I guess, right? Exactly. I mean, we are very much a B2B media company.

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For- Do you consider yourself B2B, not, like, prosumer? I consider us B2B. I mean- Yeah... when I think about our audience, they're professionals in crypto. They are, like, real professionals in crypto.

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And you might listen to a pod- Like, Brian Morrissey might listen to, uh, one of our podcasts or get sent one of our news articles, but, like, you're not our core audience.

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You're not who, like, Arbitrum is trying to reach when they spend a million dollars with us on advertising. Yeah. Yeah. Looks to reach me maybe. Maybe.

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But again, like, probably not, because they wanna reach the hedge fund manager who religiously reads our newsletter and listens to every single one of our podcasts, who already owns Bitcoin, who's, uh, thinking about- Okay...

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not only allocating to Ethereum, but thinking about staking their Ethereum. To you, you're like- I'll tell you now. No, you're right. No... staking my Ethereum? Like, what are you talking about?

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No, I know what staking is. [laughs] Come on. That's insulting, Jason. Offensive. It... No. You lived in Miami for two years. What, do you think I don't know what staking is? Oh, yeah. After Miami, crypto guy now.

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But yeah, I mean, the industry, like, we... I, at my core, believe that crypto will eventually become one of the largest industries in the entire world, and that's the... our audience also believes that. Yeah.

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And we build for that small audience know- hoping and knowing that, like, that pie will grow. Instead of any media company today who tries to chase these large numbers, like the 100 million pages a month, like- Yeah...

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you're just gonna get run over by social media. You j- Yeah... you just can't compete. I mean, look at the buzz- Yeah.

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I mean, I was just talking with someone who's been in the center ship for a long time, and, you know, he was making the point that, like, acquiring customers is just mechanized at this point.

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Like, I mean, Google and Facebook have won that, and then with the retail media, like, it's not a fight that publishers can win. Like, and- Yeah...

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that is an essential function, has been an f- essential function of many parts of the media industry, and everyone's gonna have to differentiate in their models, for sure. Let me ask you this. Did you have any doubts?

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'Cause, like, I was always, you know, following your tweets and stuff like this, and, like everyone in crypto, let's face it, like, everyone has to be enthusiastic all the time, even in the face of, like, downturns.

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But we're-- at some point, we are likeThis might be, [laughs] maybe this is... It got kind of bad. I had doubts in 2018 and 2019. I- Oh, you had doubts in this like, in, in this one?

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There was not one se- no, because I see what's happening on the ground. Okay, okay.

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So like, right now there are 175 apps with over 20 million in deposits, 60 apps with 100 million in deposits, 15 apps with over a billion in deposits. There was 700 billion of dex volumes in the last year, 700 million.

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These protocols that, like, everyone outside of crypto thinks are these, like, weird esoteric protocols, they actually did collectively $700 million of revenue in the last 12 months.

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There's been $6 trillion of stable coin volumes. There's been $3 billion of outstanding loans across the two largest lending protocols in the last 12 months. So, and if you look at, like, scaling, right?

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And you talk about broadband, like Ethereum has scaled by 500% by it via L2's, these things like arbitrary and optimism- Yeah... in the past 12 months. So that's what I'm looking at.

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So like, there was never a doubt in my mind that, like, crypto would come back, and that it is coming back in this cycle. 2018 to 2019 is different.

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2018 to 2019, I remember having talks with my co-founder being like, "Man, if this doesn't work out, I might go get a job at Netflix or something." But in this market, no. Was this the ICO time? Was that the ICO one?

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This was after ICOs. Yeah. That was after. This was after... This was, I mean, there was nothing. Like, there were no NFTs. There was no DeFi. Like, there were no use cases.

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Now, there are real use cases of crypto, and it's very different, so.

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Okay, so for a crypto doubter, and then we'll get into the research, give me the use case, 'cause I was just talking with my brother who can talk L2s and stuff like that, and 'cause he's an engineer and, and he's totally into the technical aspects, and he definitely recommended a few crypto investments that I- Uh-oh.

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That's always dangerous... I'm holding, I'm holding against him. [laughs] 'Cause I was like, "He's an engineer." He's like, "And I've listened to two podcasts on it, and so I'm in." And that was probably a mistake.

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Mm-hmm. But leave that aside. But give me the use cases that have developed since, let's face it, a lot of people stopped paying attention, like, a year or so ago with the Bored Ape stuff.

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Like, they were just like, "Oh yeah, NFTs." Yeah, I wasn't, I wasn't. "That tells me that this is all bullshit."

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And if the NFTs, by the way, if they come back, they're gonna have to rebrand them, call them anything, call them tokenize this, tokenize that, but the NFT thing, you're just gonna have to like, I think, give up on that as a term.

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But give me the use cases that are actually compelling that, like, someone who stopped paying attention, let's say, a year ago, should pay attention to. D- depends who you are. I mean, let me...

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I'll, I guess I'd run through a couple of them. The first one are stable coins. So there's been over... So stable coins are basically putting, taking a dollar out of the traditional financial system- Mm-hmm...

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and putting it on chain. Uh, you know, moving it on something like Ethereum.

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So if you look at the dollar, the dollar is one of the hottest commodities and the most sought-after product in the world, but a lot of people can't actually access the dollar.

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So when I look at something like stable coin volume, there's been $6 trillion in stable coin volume around the world, and for me, like, there's actually this guy from Venezuela, Wences Casares, he started one of the first custodians and then sold it to Coinbase.

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He had this great quote back in 2016 on Laura Shin's podcast that I loved, which was, "Explaining Bitcoin to Americans is the hardest group of people to explain it to." Yeah.

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And the reason for that is your money works and your government works. In a lot of other places that- Broadly speaking. Broadly speaking. Not always, yeah, broad- I mean, we'll see right now. Yeah.

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But, uh, it's not- Well, we're starting to understand where, like, before, like, that, that argument was made, and it was like, you don't understand.

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Other countries have, like, you know, crazy inflation and stuff, [laughs] right? It's like, well- Yeah...

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we don't have the crazy inflation of like an, o- obviously of a Venezuela or even Argentina, but w- we now have- Yeah. When I think about something like stable coins, like, stable coins are an amazing product.

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They're probably crypto's best use case up until this point. Yeah. Which they give anyone in the world access to the US dollar. So that's the first one.

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The second one is basically giving, again, folks around the world access to more efficient capital markets.

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So if you think about how capital markets and the states work today, even for me, an American, it is very cumbersome to access capital markets products unless you're very wealthy.

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So even I got my first mortgage, that w- like that process was an, a pretty ridiculous process to get the mortgage- Yeah... through Wells Fargo.

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And you just like- If you got it in New York, you'll start to be back in a different century, and, and not even the 20th century. No, truly. It's like the 19th.

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[laughs] And I think when you look at, yeah, when you look at DeFi, again, they feel like these kind of, for those who have never used them, like they feel like these weird esoteric products, but the demand is there, right?

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Seven hundred billion of volume through decentralized exchanges, three billion of outstanding loans across the two largest lending protocols, and there's this very booming DeFi ecosystem that's giving anyone in the world access to capital markets when historically, really efficient capital markets have only existed for first world countries, and you could argue those aren't even efficient.

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Yeah. And then there's this other bucket that's like, that's a little more like third world country where 54% of the world's population around- Yeah...

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over four billion people are living under some form of a- authoritarian regime, right? And what that means is that half of the planet can't trust their government to manage a sound economy, a stable currency, or- Yeah...

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provide national security and infrastructure. And the reality is that, like, at any given point in time, that might start to include their assets, their livelihood, their physical health.

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All that could be upended within a moment's notice, and I think when you look at something like Bitcoin specifically, like a lot of people who are like hardcore Bitcoiners, that is a vote for freedom almost.

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That is a way, like, of opting out of that regime and giving people a potential path to prosperity for the billions that aren't blessed with the dollar, the euro, the yen- Yeah... or the yuan.

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For all of the problems we have in this country, and they're real, like we have every advantage possible, like, as Americans, like with the dollar- I've j- I've just always thought it was funny-...

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with a government that works. Yeah, I've just- It does compared to other places. [laughs] Yeah, I don't know. I've just always thought it was very funny the people who...

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I actually s- really see why people don't like crypto, the Bored Apes, and the crazy NFT boom- Yeah...

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and the booms and busts, and when prices go up, it's exciting, but when they go down, looks like a lot of people get hurt.

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But I've never fully understand the people who are anti-innovation and anti-crypto, because if I asked you, "Do you think the financial system works perfectly?" Of course not.

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I can mail a letter to London faster than I can send a dollar- Yeah... to London, right? So why wouldn't you want to improve the financial system?

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Uh, it's just, it's never really made sense to me, but- It's a brand problem, I think. But that's a totally- It's a brand problem. I agree with that. I agree... logical story.

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Because like what you said, like there's a lot of fraud that has grown up around this ecosystem, and like, look, eBay had a ton of fraud, you know, early on and stuff that, thatThe internet is filled with fraudsters, and I think that there was probably a brand problem in a lot of these booms in that a fair number of people were...

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And there was enough use cases, and you see, like SBF is on trial right now.

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And I, I know the argument he's just like a regular con man and stuff like this, but the reality is there's tons of crypto scams still, so many of them that it leads to a brand problem. Y- yeah.

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I also do think that, like, there are a lot of scams in the US in general, and it's like the best part about someone is oftentimes the worst part about them. Yeah. And that's with America, too.

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America's the most optimistic country in the world, and that leads to frauds, and you can't have one without the other. [laughs] That's an interesting way of looking at it. Um- It's just the pri-price of doing business.

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It's kind of like a- It's the price of having a very optimistic capitalistic society. Yeah.

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There is an argument that diverse societies are generally unequal societies, and that if you wanna optimize to an equal society, you're probably gonna have a, a less diversity as they're like the trade-off.

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I mean, I just have read that before. Obviously, events revenue is discounted when you talk about the enterprise value of a company, and media revenue is not the same as recurring revenue.

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Now, in a B2B business, everyone wants to be the Bloomberg of X, right? Like, it's a very compelling thing.

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There's worse models to have out there than, you know, if you just say you're gonna be the BuzzFeed of, of crypto, maybe not so much. But Bloomberg of crypto sounds a lot better.

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Tell me about getting into the data side and then how you were thinking about recurring revenue. First off, I [laughs] am just thinking about your Bloomberg comment.

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I actually think someone used that in a headline for us, by the way. Like, "Oh, they're building the Bloomberg of crypto." I- Well, it's like a, it's like a cliche. It's a sexy headline. Yeah, yeah, I get it.

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I do think Bloomberg's one of those, like, white whale companies. It's like I... Bloomberg's one of the most successful companies in the history of the world. It's like saying you wanna go build another Apple- Yeah...

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or another Google, like they do- Well, you know, Re- Rafat was at that dinner the other day. He, when he started Skipt, it was gonna be the Bloomberg of Trump.

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It's, it's a nice message, but it's not actually how things work. Right. And also, they started the terminal before they started media. Yeah. Well, so anyways, um, I think it's an overused thing.

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However- But I'm still gonna use it for the, the title of this podcast. But go on. That's great. That's good. Better for me.

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[laughs] Okay, so going back to the original, the thesis of the business, industry would grow, investors would come in, they'd want better information. First five years of the business, we focused on media.

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At a certain point in time, really in 2021, we started to realize that the industry had matured more than when we, you know, when we actually got into the industry, and there were now a whole class of professional investors and financial institutions who demanded even more sophisticated data and information than anyone was offering in the industry.

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So we decided to build what we call Blockworks Research, which is really three pillars. It's research, it's data and analytics, and it's protocol governance information.

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So actually, the better comparison would not be, well, it's more like a CapIQ or FactSet. If anyone... Probably CapIQ- Yeah... is more, is the best comparison there. So when you are- I know FactSet.

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My niece works for FactSet, so I know. Oh, there you go. Is she looking for a job? We're hiring. So we, like, our thesis is that, like, we have the media business, it does two things for us.

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It, it spits off cash flow and it, we own the relationship with all these different users, with millions of people in our audience who listen to our podcasts and newsletters and come to our conferences. We...

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Some small percentage of those people, maybe it's 1%, maybe it's 0.1%, get driven down the funnel all the way into our conferences.

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They buy tickets to come to the conferences, and then they actually go one step further, and they subscribe to our research platform. So our research...

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And all the way through that media funnel, they're monetized with ads and sponsorships. At the very bottom, they might buy... That's a subscription platform. So they're paying an annual... It's like, it's a SaaS product.

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So we have anyone from, like, crypto funds all the way up to large enterprises who are buying a lot of seats. Okay, so it's a seat license model. [clears throat] This isn't, like, a $200 subscription basically? No.

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Indi-individual... I mean, right now it's $2,500 a year per seat. So let's say you're buying 10 seats, that's 25K a year. We plan on in-increasing tho-that pricing pretty signific-significantly, though.

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So, mm, I'd, I'd give it two years, I doubt any individual is subscribing to this. Okay, so how is this different than, like, a Messari?

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Very similar to Messari, except, uh, we've taken a different strategy in terms of what we cover.

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So when Messari and some of the other research providers in the space launched, they said, "Hey, look, we wanna cover the entire industry." And back then, that was actually possible 'cause the industry was really small.

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It was just, like, Bitcoin, Ethereum, and some recently launched scammy ICOs. So it was actually really possible to cover the entire industry.

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The problem with that strategy, though, is that they've, as the industry has grown exponentially, their value prop is we cover the whole industry. So what happened is they are now a mile wide and an inch deep.

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They don't... If you're a professional investor, you don't actually really get value out of a lot of their services simply because they've tried to go super wide. We- Okay, so you're saying they're too...

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They're, they're just broader. Not too broad, but they're broader. Ex-exactly. So there are all these, like- 'Cause when you're talking crypto, you could be talking about, like- You could be talking about NFTs. Yeah.

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You could be talking about Bitcoin and Bitcoin mining. You could be talking about macro and how Bitcoin fits into the macro landscape.

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You could be talking about, you know, Web2 brands like Budweiser or Nike getting into the industry. Yeah. You could be talking about DeFi. You could be talking about scaling. You could be talking about MEV.

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You could be talking about trading in the markets. Yeah. It's too broad to cover everything. No, I know. I once...

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I unfortunately had this experience with a fintech publication that, that was sort of dumped on me, and, like, I tried to get my head around that. I, I remember that. I, I remember that. [laughs] It was very bad.

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So- It was very bad because of, like, what I quickly got in, I was like, "This industry is too big." Like, you can't cover fintech with, like, three people.

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Like, RegTech, InsurTech, it's, like, 20% of the global economy. Like, what, how- Yeah... are we possibly gonna cover all this? So actually, this is where I do like what Bloomberg did.

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Bloomberg just launched with bond pricing, and if Bloomberg tried to launch with, like, all of capital markets, there's no way they would've been able to- Yeah...

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build a moat or really build a, a business and a product that their customers couldn't not use. And the way they were able to do that is by just focusing on bonds. And, uh, that's what we're doing at Blockworks.

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So instead of trying to cover all of that, our platform is just DeFi. So we are... We don't go a mile wide and an inch deep, we are a mile deep, and I guess an inch wide, which is just DeFi. Yeah.

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So if you are an investor or a financial institution, whether you're Morgan Stanley, Visa, Stripe-Or a crypto fund, or a traditional capital market, a traditional fund investing in DeFi, or even just looking into, like, what's happening with Ethereum scaling, things like that, you have to subscribe to Blockworks Research.

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As we start to expand the customer base, eventually we'll probably cover the whole industry. Yeah. But we don't think that the best strategy is to try to do that from day one. Well, this is proven time and again.

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It's like I always go back to Uber, right? I mean, Uber didn't start with, like, Uber Eats, Uber Transport, Uber this. They started with black cars, and they started in black cars in San Francisco.

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Like, they didn't be like, "We're gonna be a global logistics network for everything." Yeah. Fa- fake college students, right? Yeah.

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Craigslist meetups in San Francisco, eBay collectibles, Blockworks Research, DeFi, then we expand. There you go. [chuckles] So- It's like right in there. Just put yourself on the Rushmore. It's perfect. Exactly.

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You gotta do that.

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[upbeat music] So tell me about...

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Do, so do you have a flywheel or a funnel? Do you know what I mean by that? I do know what you mean by that. We have both. Here, let me, let me explain that. Yeah.

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So we have a funnel in that, like, up here, social media drives into our website, page views, articles, drives into podcasts- Yeah... and newsletters, drives into webinars. So like how many... What, what's the top?

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Forget about the social media, 'cause that's like- Sure, sure. Top, top are, are news articles. Like, we, our editorial team is one of our largest teams at Blockworks. We cover the industry with news- Sure...

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and op-eds and things like that better than I think anybody else. So we'll get millions of people reading our articles. Yeah. Some- People like me end up on there even. Even you, Brian. Even you.

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[chuckles] So some percentage of those people end up saying, "Hey, I actually really like how they covered this Coinbase launching perps internationally news. I see they have podcasts and newsletters." Yeah.

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"Let me go one step deeper down the funnel. Let me subscribe to their newsletter. Let me s- uh, subscribe to one of their podcasts." We have eight different podcasts.

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Let's say you listen to it, then you start listening to our, you know, weekly podcast, reading a daily newsletter. You say, "Hey, these guys really get it. I want to dive even deeper into the industry.

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Maybe I just got my first-time job, job in crypto." You attend one of our conferences. We have two different conference brands. That's Permissionless, which is massive. We have Permissionless- Right?...

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which is a, yeah, multi-thousand person, one of the biggest events in the industry. We host that. It's a partnership with the folks at Bankless, another media brand.

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And then we also have Digital Asset Summit, which is our more buttoned-up institutional conference. And then, let's say, so Digital Asset Summit, we'll have about twelve hundred people in London this year.

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Probably ten percent of those folks are a really good potential customer for our research platform. So we'll have a research booth on site, we'll do one-to-one meetings, and we'll sign up folks on site there.

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So that's the funnel. The flywheel is kind of the traditional flywheel of any media company, which is sponsorships drives more money. We can hire more people on content.

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More content equals bigger audience, equals more sponsorships and ad dollars, and it continues and continues. Yeah. So is your goal... Like Craig Fuller, he's talked about, he has FreightWaves.

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He does flying too, like, but, like, with FreightWaves, you know, he talks about negative CAC a lot, right? Mm-hmm.

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And I think there's a seductiveness, and that's why going back to my job at Silicon Alley Reporter, like twenty-three years ago, people were talking content and commerce and stuff like this, 'cause everyone wanted to figure out a way to meld the two, and- Twenty-five years later, here we are.

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Yeah, here we go. Everything's... [chuckles] I keep getting older, they keep staying the same age. [chuckles] But everything's always better on paper than in reality. But do, do you see that?

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Like, 'cause obviously, you want the... You said the editorial group is the largest group in the company, right?

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But, like, the most valuable part of the company when you think about it from an enterprise value, is how many people you end up converting to the recurring, the, the high value recurring. Yeah.

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You should be on our board, Brian. This is the same thing our board was saying.

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So this is gonna sound stupid as I say this out loud, but our marketing team for our enterprise research platform- Oh, don't tell the journalists this. Don't do this, Jason...

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and our sales team, zero-person marketing team, and this is where we're really stupid, zero-person sales team. Wait, what? We have grown to the size that we've grown to all through our brand and our media funnel.

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So- Wait, excuse me. You don't have a sales team? We have z- I mean, we have an ad sales team. Okay. We have zero-person subscription sales team. Um, and- Oh, okay. So for the sa- the sales team for the research project.

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The B2B product. Yeah. Okay. Feet on the street. Yeah. They gotta, like, deploy a bunch of really expensive- Yeah, compare that to one of our competitors. Enterprise sales.

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They have a thirty-person subscription sales team. Now, we're under... We should actually have a, a B2B sales team, and we'll end up building that relatively soon.

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But yeah, I mean, the reason we've been, like, hesitant is we're just, we've been growing really quickly just through our funnel. So, and that won't always last like that. It's almost like, uh, shooting fish in a barrel.

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Like, it's very low-hanging fruit right now. But eventually- But it's a competitive advantage, right? Like, I mean, someone could have started this research product. Huge competitive advantage.

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Let's say you, you didn't have Blockworks. You could start this research product and go out there and try to compete.

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You wouldn't have the brand halo that's being created every day by the editorial team, and then by the events, and by the podcasts, and stuff like this. But you wouldn't have- Yeah...

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the fact that you're always engaging with people, and that's just the magic of media to me. I think about it as a rate of growth, like the slope of a line chart almost. Mm-hmm.

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And we actually started the research and data platform years after a lot of our competitors did.

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But there if you, I know this isn't a video podcast, but if you're, you know, the, let's say their slo- they have a slope of one, but they start a couple years before us.

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Our slope, our rate of growth is gonna be two or three, and so even though we're starting later, eventually we'll catch up and pass them pretty soon.

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Let's take worst case scenario, like even if our CAC is only twenty percent better than someone else, or thirty percent better than one of our competitors, eventually as you scale and get to, like, pretty substantial size as an industry and as an asset class and really as companies and as competitors, twenty to thirty percent lower CAC is this, like, very substantial competitive advantage we think.

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Yeah. So what's the revenue breakdown now between, like, I don't know how you bucket-Like media events, like subscription, how do you bucket it?

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Where, so where we wanna be next year is roughly, like, probably 40/40/20 next year, like conferences. We bucket it as just, like, digital, we call it internally. Okay.

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So podcast ads, newsletter ads, branded content we bucket in there. So that's just, like, a big bucket of digital, 40% conferences, that's sponsorships and tickets, and then research, which is the subscriptions. Yeah.

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So you closed a round, which I was, like, shocked, [chuckles] 'cause it was during, it was in May, at least when it was an- announced. You were raising it in the teeth of... You like to make things hard, I think.

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But maybe not, I don't know. Maybe there were a lot of people looking to invest in crypto research. I mean, we, yes, we raised 12 million at a 135 valuation- Yeah... in, uh, May of 2023 of th- of this year. Yeah.

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And we, it k- kind of goes back to, like, what... It's, the reason we did that is two reasons.

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One is that if you looked at crypto media back then, ev- everything was falling apart across, like, all of our competitors were shooting themselves in the foot, and we're- That's what I mean.

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That's why [chuckles] I was very surprised, and to, like, greet it.

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Yeah, everyone was shooting themselves in the foot, and I don't know, but, like, I don't think we're, we're that smart, but we hadn't shot ourselves in the foot. [laughs] That helps.

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Step one, don't shoot yourself in the foot. Don't self-sabotage, um, but no. But really what happened is we left growth on the table in a bull market- Yeah... so that we could remain solid in the bear market.

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And so yeah, we had this crazy opportunity to kinda leapfrog some of our competitors, and so we raised on, for that reason.

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The other reason we raised is building data is a very capital-intensive business, and we'd been profitable since day one, but the rate at which we wanted to grow, like, we wanted to put some fuel on the fire.

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And so yeah, we had, you know, raised some money to hire engineers and product folks, and build the analyst team to be larger, and hire data folks- Mm... and things like that.

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So what gave you confidence that you would be able to pull that off? I mean, you just have to, like, have confidence, right, that you can do it. But you know, the, I don't know, like, I was...

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Again, I keep going back to this dinner, but I was, I was s- sitting next to, uh, Anon, a former guest on this podcast from CB Insights, and it was about something totally unrelated to Blockworks, and he was like, "Oh, media companies can never build data products, like, it never works."

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And I've heard that before, but what gave you confidence that you, you can make that? Like, okay, you're good at events, you're good at media. Okay, so that's funny that, that's...

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Anon built, he doesn't call it a media company, because he doesn't monetize with sponsorships and ads. Sends a lot of email. How do I know CB Insights? Yeah, I know.

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I used to get his email every day in my inbox, and I remember he used to sign it off saying, "I love you, Anon." I know. I know. That's a media company that just doesn't monetize with ads and sponsorships.

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So you call it content marketing, right? But it's, they built a, a media-first and a content-first business. But he's right, it is really tough. They're different skillsets. It's a very different skillset, yeah.

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We had to hire a GM of the research business. She spent a lot of time at crypto hedge funds, Bloomberg for, I don't know, three or four or five years, as well as different crypto companies.

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Then we had to hire, like, a world-class CTO, and that is a new skillset. And it's really hard. But the reason we had confidence is there was no other option, I think. We had to do it.

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So if we, this is where it gets a little wonky, but, like, if our vision of the future with how big we think that crypto will become, like- Mm-hmm...

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we believe we can go head-to-head with some of the biggest media companies in the world, but the only way we can do that is if we have, let's say, an ad business that's doing, you know, 100 million in, in revenue a year, but also the subscription platform that's also doing, you know, 100 million in revenue a year.

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That makes us competitive on the, like, global financial media, uh- Yeah.

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Well, 'cause I would guess, like, with your thesis, like, let's just say, like, yes, y- the way this market is going to develop is the way you're anticipating it, and it's in an aggressive development curve.

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The existing financial data and information companies which are already entrenched in the old world are clearly going to add this as part of their stack, right? Slowly. So we used to give talks at Bloomberg. Yeah.

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My co-founder and I used to get called in to, like, go talk to the Bloomberg team about crypto, and I remember [laughs] this really telling thing that they said, which was, uh, their, I think it was their head of product, he's like, "Yeah, you know, Bitcoin's been the most searched product on the entire terminal for two years in a row.

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We're thinking we might wanna add Bitcoin support inside the terminal." That is two years- Yeah... that it was the most searched asset in the entire terminal, and they, they didn't build it, right? They had to wait.

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So w- I, like, I don't know, this is just a time and time again, I think you see large enterprises come into industries a little too slow- Yeah... and they have a- But that doesn't last forever.

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I guess my point is, like, you sort of, you have to adapt, otherwise, like, eventually Bloomberg is going to add that to the terminal, like, eventually. Yeah, which is why speed is, like, one of the most important- Yeah.

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Okay... things for us. We, we have to move in every day, like, incredibly quickly. And we, I mean, we partner with Bloomberg.

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Like, a lot of our stuff gets actually distributed out inside of the terminal, so I s- I kind of think of the terminal as less of a competitor. But yeah, CapIQ or FactSet- Yeah...

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I think we can eat away at their business.

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So final thing is, like, when you talked at the beginning about, like, you know, the trajectory, getting that right, and you mentioned, like, as a little aside, like, got a few things wrong.

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I was like, "What did, what'd you get wrong?" Um- You guys pick two. It's, p- pick the most flattering two. Oh, no, so, so many, [chuckles] Brian. So we didn't raise money in the beginning.

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Not one like, "Oh, I didn't think it was gonna be as hard as it is." Roll with it. Oh, I d- I didn't think it would be as hard as it is, but- [laughs] But not as, as hard...

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we, we, we basically had to chase revenue because we weren't... Oh man, I don't even know if I wanna share these stories, but, like, they're, 'cause they're just too embarrassing.

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But- There's no shame in chasing revenue... we did things like we b- So we had to survive in 2018 and 2019, in, like, the real heart of the bear market of crypto. Like, people think this bear market was bad.

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Like, 2018 and 2019 was horrible. Yeah. Ethereum went from 2,000 bucks to, like, well I don't know, like, $20. Like, it w- it was over. It was all over. So or no, I think down to $80.

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So we did things like we white labeled our conference event services. So we would, like, we had a venture firm who needed to host a venture summit, and they paid us 15K to host a venture summit. [laughs] Oh.

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That is such a little amount of money- That's scrappy. I love it... to go host an entire event for someone, but we did it.

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We were actually talking to one of our main competitors about hosting their event for them because-We needed revenue. We launched, this is the embarrassing one. We launched an influencer marketing. Really?

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Crypto influencer services business connecting brands with influencers on Twitter, and we would take a cut of that. Now, we shut that down. We shut that down when- And we won't talk about it...

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we realized how crappy it was to work with influencers. Leave that off the company timeline. That's gonna- Yeah, yeah. We leave that one off the, like, company timeline.

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But yeah, we, we just chased revenue a lot, and when I look back, I'm like, "Oh, man, what a mistake." So much wasted time and energy, but also we had to do it to survive, so it also did...

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Like, that is when I think about the DNA of Blockworks, it's like it's always been just scrappy to drive revenue. Yeah. And I think it's like that is the advantage of taking a, a mostly bootstrapped approach, right?

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It builds it into the DNA that even when you do, I'm guessing, but I haven't been part of, like, a, a funded company, but my having experiences, like, inevitably you can't get things out of your DNA.

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That's why it's DNA, right? I don't think at this point you can. Yeah. Oh, to a fault as well.

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Like, we raised twelve million in May, and we'll, we still have, you know, we'll have someone who's like, "Hey, I wanna get like a fancy microphone for, like, 'cause I'm now hosting a podcast."

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And we're like, "Ooh, I don't know about that. That's two hundred dollars."

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No, yeah, you'll never shake that, and that's probably, that's, you know, look, we've seen if there's any lessons we've learned yet again, it's that that's a probably a pretty good trade, and particularly going into let's just assume crypto is gonna, you know, continue its trajectory because despite its little blips down, if you look at it over time, like the trajectory is fairly clear.

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It's, it's fast-growing space. It's still the media industry, and it's still hard, and running businesses with discipline never goes out of style. Yeah. Yeah, it's funny you talk about crypto.

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It's like the gap, I think, between perception and reality has never been larger in crypto, and I do think almost we have a...

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This isn't really our job, but I do feel like almost a sense of mission to drive the industry forward but in a responsible way, you know. So I think, I don't know. We'll, we'll see what happens. Well, we'll see.

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Bitcoin ETF at some point. I'm hoping that'll cause my ample Bitcoin holdings to explode in value. Yeah. Not funny. All right. Well, you gotta come back and explain layer two to, in a few months. Whenever you want.

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Yeah, appreciate it, Brian. This was fun. Thank you, Jason. Appreciate it. [upbeat music] Thanks for listening. Thank you to Jay Sparks for producing the Rebooting show.

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If you have a podcast that you're considering making, you should check out Podhelp Us and what Jay can do for you. Go to podhelp.us.

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[upbeat music]