Flawed business plans and startup hubris
There’s the dreaded call on Saturday morning if you own a pickup truck; “Hey, I need to move this couch and coffee table, can you stop by and help me for an hour or so?” There’s the ask from your sister-in-law, “You know, Bill’s been struggling a lot lately, couldn’t you find him a position down at your office?” And then there’s the invite from your college roommate, “Hey, I just got into a great business opportunity and I’m showing it to a couple of friends…it’ll only take an hour or two of your time.”
If you’re an agile liar you can come back with, “Gee, I’d love to but I’m still treating my head lice infestation and I shouldn’t risk spreading it”. If you’re too slow, or too close to this friend, you’re going to lose at least two hours watching him draw circles on his white board, probing you for your secret materialistic fantasies, and offering you the magic lamp that can materialize them with just a rub or two.
I’m talking of Amway of course, but there are any number of other vertical marketing schemes out there lurking to ruin your Saturday. What your buddy won’t tell you, what he might not know himself, is that the only money to be made from his “business opportunity” is on the sale of the starter kit you will need to get into the business.
Amway makes some great products though, so why are new converts stuck with selling starter kits? They’re stuck because there’s a hidden but fundamental flaw in the multilevel marketer's business plan. That flaw? People like to go shopping, they like to have the choice of a couple of different laundry soaps, and when they need more detergent it’s just so convenient to stop by the supermarket and buy some.
People don’t like to put in orders and wait for a distributer to arrange pickup of their soap, particularly if they have only one brand option. They like to personally choose their bell peppers and steaks, and as long as they’re going to be at the store picking out dinner, it’s just so easy to pick up the soap as well.
I’m not actually writing about vertical marketing schemes and friends who draw circles however, this piece is a look at crypto currencies, in particular Bitcoin.
Crypto promoters show the same zeal as your friend pitching his multi-level marketing opportunity. They have a well-developed patter and a litany of criticism of the dollars you are currently using to buy your peppers and steaks… some of the spiel even seems reasonable. The problem with their pitch is a lot like the problem with your buddy’s business proposition; you already have a way to pay your bills, to buy stuff in person, to buy stuff online. Your way of paying is easy, their new way is harder to use, harder to understand, and most importantly nowhere near to being “plug and play” friendly.
The personal computer industry had to blaze a path to plug and play for their systems before they could make any serious penetration into broad markets. Young people today have no idea how difficult it used to be to get your PC to talk to your printer, they’ve never spent hours installing software and drivers, initializing (whatever that is) their operating systems or waiting on perma-hold for a dial up IT expert to explain why the damn thing won’t print in upper case fonts.
Now, of course, synching up hardware and software is nearly automatic, even hopeless old guys like me can get the technology going without bursting an aneurysm. But, when I read about setting up crypto wallets and exchange accounts (can’t use a $46 k Bitcoin to buy a pizza or a fly rod) and then maybe joining a “Lightning network” portal so I have a “peer to peer” exchange route to actually buy something with my crypto, I lose interest faster than a…well pretty damn fast.
When I want to store and spend my money, I actually have a plug and play option right down the street. I can take a wad of cash or maybe a fat check to my prospective credit union, spend five minutes with an account clerk, and walk out and a credit card that is accepted across the globe. I don’t have to set anything up. They will print a dozen checks for me if I’m the kind of Triceratops that still uses checks, and they will send me a checkbook in the mail, if I still use mail.
In another fifteen minutes I can link this account to pay all my recurring bills, I can check on my account any time I want on my laptop (Mr. Triceratops still is leery of the iPhone for personal banking) and the whole shebang is insured and guaranteed.
When my dad died it was just as easy to untangle his estate, set up accounts, pay off the brothers… the branch manager was so helpful with the intricate legalities and secure payments. Why would I ever want to take a flyer with an unsecured, unguaranteed, faceless, person less, computer algorithm instead?
Unless and until cryptos can master universality and plug and play ease of adoption they will remain the kind of speculative time waster that multi-level marketing schemes so obviously are. To add a layer of potential trouble, getting close to that level of ease and utility exposes them to still further threats.
There is unfathomable economic power, interconnected systems developed over decades, and of course international political backing for the current system that supports my credit union accounts, and if/when these vested powers see the crypto world actually gaining some similar degree of functionality they will of course intervene.
The current global banking system, which can support billions of transactions a day lefthanded, has a huge head start in technology, financial backing, and interconnection to parlay into success in the crypto sphere, should that become necessary.
I doubt that it will become necessary. Cryptos are the nine-year-old tee ball players in a world of major leaguers right now and it’s hard to see how that changes. Most likely they will remain a boutique speculation opportunity that enriches the already very wealthy, much the way that multi-level marketing schemes do.