What’s Harming Crypto: Humility
By Dave Balter, CEO, Flipside Crypto
An industry birthed from ICO madness has generated hubris — and leadership destined to fail.
You know the old adage about blind squirrels right?
As the story goes, even as misguided as they are, they occasionally find acorns — ultimately, they’re more lucky than smart.
Robert Joseph Farkas probably felt lucky for a while.
In 2017, he leaned on Floyd Mayweather and DJ Khalid to promote his ICO for Centra Tech — and landed $25M from plucky investors seeking a short path to getting rich quick.
On June 20, 2020, Farkas — the ‘crypto entrepreneur’ — pled guilty to wire and securities fraud. I bet he isn’t feeling so smart right now.
The crypto industry is at a dangerous inflection point, but Farkas — and the rest of the criminals and thieves who showed up to take advantage of ICO madness — are just the tip of a much more menacing iceberg.
Sure they are a dark smear. A stain on many people doing many good things.
But they aren’t the real problem.
The real problem is something that will take down this industry even faster: hubris.
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“We literally just print money.”
That’s what one crypto executive exclaimed as we sat in a board room wired with wall to wall video displays. I chuckled, I think, awkwardly. He then reiterated the statement, to ensure I fully understood. “No, literally. We just print money.”
In another case, we took the elevator to the 40th floor of a high rise in a major city. As we looked out at the sun dappling the nearby mountain range, our host — a 30-something, tattooed bearded hipster in a straw hat — noted the office used to be the showcase of a massive legal firm.
He then went on to explain that in the years since their ICO — which netted somewhere around $200M — they kept lean at about 70 employees. The founders were all long gone, some spat over direction or legal woes driving a wedge between the partnership. Their product hadn’t really taken shape and they were changing direction again.
I, of course, asked a natural question about the decision-making process, “ok, so, who is the CEO now?”
“CEO,” he whispered, not to me, but to the mountains, “We haven’t had one of those in over a year.”
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This is a message to every cryptocurrency entrepreneur, employee, executive or leader: Dig a hole, throw your ego into it, and pour concrete on top. Find humility instead.
Flipside Crypto licenses its analytics technology to blockchain organizations. This provides us a front-row seat to the behaviors and attitudes of leaders and employees across hundreds of blockchain platforms, dapps, exchanges and other ecosystem participants.
The summary of years of dialogues: many leaders have formulated that just being in the blockchain space has made them untouchable. Some count an easy ICO raise as validation of success. For others they’re proud that they’re developing something so technically complex, that their team barely understands it themselves.
In one meeting, a senior executive admonished a teammate in front of us, exclaiming her work as, “useless, irrelevant and without impact.” In another, the leadership of an Asian-based exchange asked us to distribute a series of splashy press-releases, even though a working relationship was still in the formative stages.
There’s glory in being on a podcast; And fame for hosting one.
These are all danger signs. Indications that leadership is acting with unchecked confidence. With attitudes of self-worth, grandiose thinking and a terrible case of ‘we-have-it-all-figured-out’.
Blind squirrels, scratching in the dirt.
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Around the corner from our office (remember those?), was a cryptocurrency company who took part in the ICO wave.
In late 2019, the Securities and Exchange Commission (SEC) recognized their illicit fundraising efforts by publicly admonishing them for committing securities fraud. In addition, they charged them with registration violations, and required them to pay a hefty fine and refund every single investor in full.
A few weeks later, during a dinner at a local restaurant, my conversation was repeatedly interrupted by a rowdy table nearby. Whoops and cheers were met with wild fits of laughter. Drinks were being passed around. Glasses clinking.
Waiters were bringing chop after chop of cut meat.
It didn’t take long to figure out who the diners were, given most were wearing hoodies emblazoned with the logo of the recently-disgraced, SEC-fined firm.
Their CEO deceived investors and broke the law.
Was he removed. Nope. Should the team rebrand? Nope. Should they quietly melt into the woodwork? Nope.
Instead, they should party. They should let everyone know where they work. That they won.
Oh the hubris: they considered it a victory.
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Don’t get me wrong. There are some terrific leaders in the crypto industry.
Brian Armstrong is one. So is Jeremy Allaire.
Two very different leadership styles — Brian began as an engineer (at Airbnb among other places), and Jeremy as a long time entrepreneur, and a seasoned executive. Their similarity lies in a distinct truth: each approaches their businesses with maturity, clarity and delivery. All traits of leaders with the humility to build strong organizations.
Case in point: with the onset of Covid, Armstrong immediately takes action. He listens to his employees, to his customers, to the market. He makes adept shifts to their organizational infrastructure and institutes a remote first policy — and on May 20th published it publicly so it could serve as a roadmap for others.
Case in point: Allaire’s Circle has gone through a series of dramatic evolutions. Early Bitcoin ATMs made way for a truly massive OTC trading group — and as the market evolved again, he executed a nimble pirouette and developed USDC, a stable coin business.
An important note about strong leadership who recognize the art of humility. Neither Brian nor Allaire lack confidence. They have it in spades. But that confidence doesn’t root them so deeply in place that they can’t adapt. That they can’t listen to the market and their team; have the presence to focus on execution vs. promotion — and make sound, results-oriented decisions to carry their organizations forward. That’s humility at work.
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The humility imperative is simple: If you’re an ego-fueled leader, find humility today, before it’s too late. Disregard the fawning fanboys and king-like power you feel right now. Instead, choose to recognize your place in the universe is no more important than anyone else’s. Know you can learn from every single interaction — no matter the person’s credentials. Understand that your competitors are smart — perhaps (gasp!) even smarter than you. Believe that media glory is fleeting. Remember that fundraising is a tactic, not a strategy; your reputation isn’t forever golden because VC firm A16z backed you.
Here’s what matters more: You treat your employees with kindness; You are willing to be wrong; and — yes, this is hard — you share the spotlight.
Here’s the inevitable call to arms: if this isn’t fixed soon, the crypto industry will become ‘what might have been’. It will become a case study in what not to do. It will end not with a flourish or a bang, but with a whimper.
And many of the industry’s leaders — the blind squirrels — will scratch their heads (with their tiny paws) and will wonder where possibly it went wrong.
Having trouble admitting your ego is out of control? Ask your family, friends, or most trusted adviser. Find someone willing to tell you straight. Your cryptocurrency will be much better for it and you’ll truly have the opportunity to create something sustainable. Humility will prepare you for the endurance test to come. It will give you the flexibility to create an organization that can thrive in good times and survive the bad.
Have humility, or your hubris will have you.
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Dave Balter is the CEO of Flipside Crypto. His latest book, The Humility Imperative, will be released June 30th.
