Mike Dudas from The Block on Crypto Journalism
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Interview location: Skype
Interview date: Tuesday 18th Dec, 2018
Company: The Block
Role: Founder & CEO
Crypto journalism has a questionable past, from mainstream media misreporting on Bitcoin with sensationalist headlines to crypto specific publications exposed as accepting payment for positive stories.
With so many people losing money to scams and poor projects, it is often difficult to find the truth behind some crypto projects. The Block has changed the game with their no-nonsense, hard-hitting reporting and in-depth analysis.
In this interview, I talk with their founder and CEO, Mike Dudas. We discuss how The Block came to be, their strategy for growth, future monetisation, conflict of interests in crypto media and we also talk about personal mental health issues.
00.03.14: Intro and welcome
00.10.15: Conflicts of interest in crypto media
00.18.41: Editorial policy
00.23.57: How The Block’s reporting will change with the market
00.28.18: Thoughts on Ripplecoin
00.34.24: Recruiting a first class team
00.40.54: The design of The Block
00.47.07: Dealing with growth
00.50.50: Stress of managing a startup and mental health
00.54.41: Mike’s predictions for 2019
01.00.10: Considerations for a Bitcoin ETF
01.05.17: Keeping in touch with The Block and Mike
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Peter McCormack: Listen, I’ve been following The Block for a while. Following your work, absolutely loving it, but fully recognize that you are very different from every other crypto publication throwing hand grenades out there, but stories, big coverage. Tell me about it, what’s the strategy, what are you trying to do her with The Block?
Mike Dudas: With The Block, we’re really trying to bring clean, clear, objective, fact-based analysis, journalism and research to an ecosystem in which 95%+ of the projects are basically poof. If not, in the next couple of months, in the next couple of years. It’s pretty clear to anyone, everyone was saying, six to eight months ago when this idea for The Block first came about, that look, this entire “asset class” is overvalued. Nobody was covering it that way.
You had Coin Desk and others literally running Bit Connect ads. It’s crazy. Mainstream media did not at the time understand the technology well enough. The governance well-enough. Pretty much anything well enough to report on this accurately. They were just reporting on price. Including CNBC, including Bloomberg, and doing it in really short segments.
We feel that I certainly feel having worked in FinTech at Braintree, at Google Wallet, at Venmo for years, at PayPal, that blockchain and crypto assets are a major significant evolution, in how we think about money, how we think about technology and value, and digital assets.
I don’t think it’s like traditional FinTech, that tends to get co-opted by the big banks and the existing system. I think of it as something that can exist outside of both systems. That really got me excited. At the same time, was disappointed with the lack of professional coverage in the space, and felt like we could play a part as a media and information source, of great credibility, at helping to highlight the good things and highlight the bad things, and then really separate the wheat from the chaff.
Peter McCormack: Right. Okay. You spotted the opportunity. What did you go through to make it a reality?
Mike Dudas: Basically, it’s a people business. So much, by the way, of this entire ecosystem is a people ecosystem. We’re creating software, we’re creating protocols. We’re not creating, in our business, which was a media information research and analysis business, or in these technology businesses that are being created, it’s primarily software driven. It’s a lot about people. The biggest thing at The Block was being able to recruit those people who were best in the world, and best in the world in this ecosystem isn’t somebody with 20 years of experience, because nobody has it outside of a handful of folks who were crypto-anarchists in the ‘90s.
What it means is, bringing on people who are curious, people who have the depth of knowledge, and tremendous amounts of energy, and are so passionate about this. Our team, we have an internal Slack group that we use for a variety of reasons, but we spend, you’ll see a message, 22 out of 24 hours of the day on there, from somebody on the team. The energy is palpable.
Recruiting the best people is key, the best researchers, the best analysts, and the best technologists. We’re really excited about where we are. We have a really good team. The output has been tremendous since we actually launched the product in September, and the readership has followed, and the attention has followed.
Peter McCormack: You said you think 95% is going to go buff. Why is it you think that?
Mike Dudas: Probably more. That’s if we go to token 5000 on Coin Market Cap. There’s just, there’s a whole variety of reasons. There’re people who literally scammed others, you have a variety of scams. You have a variety of people who raise money because it was easy to sell tokens to the public. Oftentimes, in ways that are unregulated. Then, simply don’t have the capability to build what they said they would. That’s probably, let’s just, I’m making up numbers here, but that’s a big, big, big chunk of projects.
Then there’re people who believed they could do things, and haven’t been able to and have had to shut down. Then you get to the cream of the crop. You have, when entities like Consensys that employed 1000 or so people at the peak, are laying off hundreds and hundreds of people with many more to come, you know that the funding got far, far, far ahead of what the technology is capable of. I think a lot of things that got funded will, it has so many analogies to the first internet bubble but will be things that in 10 years, an idea might make sense.
Today, it doesn’t. A lot of it has to do with cool, you can do this technology thing, but the trade-offs to do it on a blockchain are that it becomes absolutely unusable, by consumers or businesses, because the interface is just abysmal. That’s a whole ‘nother segment of products. Then, the products are actually good and interesting, just a lot of them aren’t getting used. You look at consumer-facing DAPs, which was a big use case for Ethereum outside of ICO funding and ERC 20 tokens. The DAP, either business or consumer usage, simply isn’t there yet. Eos has been launched to try to reduce friction and enhance scalability, but again, we’re talking …
The big question right now for some of these projects is a blockchain necessary. For many, it’s not.
Peter McCormack: Right. Okay. You also, you mentioned Coindesk. It seems like a number of the other crypto publications and websites, they are reporting in a different way. Do you think some of them, maybe this is … I identify probably two reasons. One, there’s a conflict of interest in the bigger group they may be part of. Secondly, is the model they’ve built, in that I think many of these companies are relying on these crypto projects as a source of income. We’ve seen that some actually will accept payment for positive stories. Do you think that’s why they've not covered it and you obviously have a different model?
Mike Dudas: Yeah. This is very easy to break into groups. Let’s start with the mainstream media. The mainstream media covers this because it gets a disproportionate amount of clicks and attention, and it’s interesting, and it’s a class of money, as well as a class of technology. They focus on a general purpose audience and typically don’t give the specific thing they’re looking at, the depth of treatment that’s necessary. The Economist is the guiltiest of this. Bloomberg is occasionally guilty when they put their general purpose reporters on it.
When they put their crypto reporters on it, they actually do a pretty darn good job. Fortune has some good folks like Jeff Roberts. There are some good mainstream media reporting. I would say in aggregate, it just doesn’t go to depth.
Then you get, I think the area that you were most interested in and focusing on is the Coin Desks, the CCNs and the Coin Telegraphs. Let’s just use those as the three largest pure-play crypto media entities. CNN and Coin Telegraph are the absolute early business insider, just write every single thing up, aggregate, don’t worry too much about whether it’s perfectly factually accurate, or has depth, or things are spelt right. Then let’s monetize that through, like you just said earlier, ICO ads, and you name any product. You go onto their homepages or article pages any time, and you’re going to see some really low-quality ads.
That’s the model. Very low-cost content, very low-quality advertising, and it’s just volume, volume, volume, and then they do as you said, accept sponsored posts, that they do denote, in sometimes not the most transparent way.
Then, you have actual high-quality media, which is an interesting new category, and I’ll go back to Coin Desk, but you have a high-quality media that some of the new folks like Decrypt Media, who I have great respect for, and Breaker, who I have great respect for. Both of those are funded by, Decrypt is directly funded by Consensys. While there’s a Chinese wall there and that team has great editorial integrity, it’s just hard to operate with that relationship, without some doubt creeping in on the reader’s mind. Again, what I’ve seen to date is high-quality reporting. Who knows if stories get killed or other things happen, and who knows what their long-term revenue model is, or if it’s just to be patron funded by Consensys, in a manner similar to how the Washington Post could lose money for Bezos.
Breaker is another one. I don’t know what the long-term revenue model is there. It’s hard to really comment on what their plans are in the future, but today, you would look at them and say hey, it’s going to be a really difficult challenge, to establish businesses with either of those models, unless they are funded by the projects. Breaker is funded by a project, Singular DTV, that ICO has I’m sure a treasury, and can continue to put money into that. They have connections to New York Magazine, as advisors.
Those are the only two that I see doing quality work similar to us, but the funding model and business model is in question. Lastly, we’ll get to Coin Desk. Coin Desk is a wholly owned subsidiary of Digital Currency Group. Barry Silbert, one of the most powerful, most connected folks in the entire ecosystem, who has his tentacles in so many different businesses, so many different projects, his entity is a 100% owner.
Now, Coin Desk has some fantastic editorial talent, both on the pure editor side, as well as their journalists. They also, and they have great analysts and researchers. It’s a mix. They put out some really good work, and they put out some lower quality work, but on balance, they are doing good work. The thing is, their model isn’t the journalism, the analysis and the research, it’s the conference. To your original question, they make, any profit that they make on basically these series of conferences by which it’s pay to speak.
It’s pay to attend, and it’s pay to speak. We’re talking tens of millions of dollars in cumulative gross revenue annually, for these sponsorships, for these speaking spots, and for participation in the conferences. The journalism is meant to drum up interest.
We looked at that landscape, and then we looked at ourselves and we say look, there has to be someone who comes into this market, like the information has in general technology, like CB Insights has in terms of analysis and broader technology, and who does this independent journalism, plus independent research that people will pay for. That’s what we’re doing at The Block. While all of our work is shared for free today, we will be introducing a paid product in Q1.
Peter McCormack: Do you want to talk about that product, how much can you tell me?
Mike Dudas: Yeah. I’ll give you the broad outline of it. It will be heavy on a few different things. Number one, we will go much deeper in our research. If some of the Lumascape-style charts that you’ve seen about enterprise blockchain or stable coins, we’ll dive deeper into research in those areas. That will be actionable for people who want to invest, who want to work in those areas, who want to understand the technology. Our analysis will go much deeper into looking at specific exchanges, looking at trade volumes and potential irregularities. These are a variety of topics.
Again, things that will influence how perhaps people might trade. Looking at products much more in depth and looking at people much more in-depth. Doing the things that the information does, where they highlight deeply, who are all the important people at organization X Y or Z or protocol or foundation X Y or Z. Things like Crunchbase. John Biggs is working with us as editor currently, and he’s incredible. He’s the founder of Crunchbase. To have John giving us that guidance as we launch this premium paid product, and he’s somebody who is working in crypto for over a year, prior to joining us in the last few weeks, is just such a massive shot in the arm, for our efforts.
We have one of the people who serve foremost in the world, that launching one of this information, research and people services, helping to guide our editorial team to do that.
Peter McCormack: Right. It all comes down to the team. You’ve identified, you’ve got to get the best people.
Mike Dudas: Yeah. It’s the team. I left out the journalism. We will continue to break news and we view investigative journalism such as the great piece that Frank Chaparro did, wrote on blockchain terminal last week, as really important, because we want to share things that the general public, and even potential investors in the project are aware of. We know for a fact, that we have shown light in certain cases on certain things, that folks have then, authorities have then said hey, this is something that we need to investigate, and we think this is really important for the ecosystem, because we have resources and we believe that when we introduce our paid product, we will create such value for folks that we’ll also have a business model.
Support, something that I said earlier, will separate the wheat from the chaff in this industry.
Peter McCormack: With those quite controversial stories, the investigative journalism side, how much consideration do you have to give to the risk of publishing an article and then, how it might reflect when you, or do you just stand up and say look, we’re journalists, we’re reporting the facts, freedom of the press, et cetera. Where are you positioned with that?
Mike Dudas: We ensure that the things that we put to print, that we publish on theblockcrypto.com, have been fact-checked, have been run by legal, are exceptionally well-sourced, either on the record or with multiple sources off the record, that we have been privy to evidence, that supports any factual claim that we make in those articles.
What we put into those articles, we stand behind 100%. The thing that is clear, always, in investigative journalism, and you’ve seen this with higher, higher profile cases, things like The Wall Street Journal covered, is it's always deny, deny, deny. Then, the onion gets peeled back. It’s always a cost-benefit analysis.
When you’re saying hey, should we peel off all eight layers of this, or should we just leave it with the two layers we’ve peeled off, and get back to focusing on what the customer is looking for? In the cases where we’ve done some investigative journalism and we have some additional pieces coming, over the next month, we’re going to basically write the piece and share the reasonable amount of information that we believe is essential to tell the story that the public needs to know and that we’re able to prove. That doesn’t compromise our ability to do all the other things that we do.
We can’t be pouring 100% of our resources into investigative journalism, even if we literally get, I’m not kidding, across our whole team, we get more than a dozen tips that are worth looking into about pretty significant potential frauds and scams on a daily basis. It’s really wild, I’ve literally never seen an ecosystem like this, and having spoken with journalists in other verticals, and telling them some of the tips that we’re getting, not all of which are confidential, meaning people do share them freely, they say, wow, that’s bonkers. There’s a lot of crazy stuff going on in the ecosystem.
Peter McCormack: How do you think we’ve got to this point then? Where there is so much.
Mike Dudas: Yeah. It was just a wild, wild period of excess. The tens and tens of billions of dollars of capital that poured in, and was contributed by a number of unaccredited investors globally, in a relatively unregulated way. It just, it opened up a crazy Pandora’s box. Not to mention, the actual companies that are still operating, and I’m not going to name any specifically because again, we have some investigations going on.
You look, we had a piece just yesterday, that 1% of volume, this was just a small piece that we wrote, and we were basically repeating what a more detailed study had said, but 1% of volume payers of BPC on the top 25 payers was legitimate volume, and more than 90% was wash trading or illegitimate volume. It’s just bonkers.
I think it’s too much money, not enough regulation, too many jurisdictions, whether it be state, federal, multiple countries. These types of markets attract, clearly, the worst kind of people. There’s the ability for money laundering, there’s the ability to exit scam. I think people still, a lot of the crooks that you’ll see, and I’m not talking about anybody that we’ve covered or anything that we’ve covered, because I’m not implying anything about anybody we’ve covered being crooks.
Just in the ecosystem, the things that people do often that I read about and I see other folks covering, or that the SEC is actually settling with people over, it’s just dumb stuff. It’s stuff that you’re obviously going to get caught for doing it. What the hell are you doing, people?
Peter McCormack: It feels like therefore; your business is going to transition quite a bit with the market. There’s obviously so much to report about right now. We’re going to have a complete wide part of the market, a complete shakeout of the projects that can’t ship, won’t ship, ship but too low quality among users. All these projects will get wiped out, but at the same time, if we compare to the dot com era, there will be another round of investment of sensible ideas that follow the regulatory framework.
I guess over time, you’re going to, the type of things you’re going to report on are gradually going to be less of the scams and the bad things happening, and then you’re going to start following all the good things that are happening?
Mike Dudas: Exactly. That is literally our dream. I didn’t know that the market was going to drop 85% from the day I made the decision and wrote my day one Medium post in January when we were up 17,400 Bitcoin, and now where are we, 3500? My wife definitely lets me know repeatedly that I should’ve sold more at the peak. You cover what there is to be covered. We don’t write about price very often, but we do write about projects that are having trouble, and there’s more of those than there are projects that are shining. That being said, we’re going to have a great piece come out written by Arjun Balaji, our technical advisor this week on the Lightning Network.
We are waiting for Miles Snider to write a piece, a positive one on Eos. There are so many good developments in this ecosystem, that we want to cover. I expect to see the pendulum swing back in 2019, but not entirely. In other words, there’s going to be projects that run out of capital, projects that are folded into others.
Then there are the ones that will continue. The best example of that and the one that fascinates me the most is obviously Ripple and XRP. That is, Ripple the company and XRP is a protocol, that is unquestionably connected. There’s no question, no doubt on earth. We’ve spent time, Larry Cermak, our head analyst, has written about this. I had a tweet storm over Thanksgiving about this that was backed up by public facts. That story is going to remain. We’re not going to …
Our coverage, the way our coverage will change is, we’re not going to keep stating the Ripple security thing over and over again. We’re not out here to beat dead horses. We’re not out here to chase specific people or projects or prove points that we already feel we’ve proven are covered. If there’s new news, I want to see Ripple actually … I’d love to see them get product adoption. I’ve worked at companies similar to them with Google Wallet, that launched from zero and now is Google Pay and is globally accepted.
I’ve worked on Venmo when it had 30,000 monthly active users. It was amazing to see that product launch and scale, to help Braintree grow, to found a company in Button that went from zero revenue to more than halfway to 100 million gross revenue.
It’s something, I’m an entrepreneur, I want to see these folks succeed. The thing with Ripple, to get back to that example, is just some of the mealy-mouthing and change narrative about the ties to the actual cryptocurrency protocol. If the company just existed itself without trying to force the token into the business model, to prop up the treasury, which has become their actual business model, meaning selling XRP, I would be supportive. I’m supportive as Ripple if they can improve upon Swift.
As the transfer-wide CEO said, I really haven’t seen that to date, he said.
Peter McCormack: Yeah. Also, Swift isn’t just going to let their business model be taken from underneath them.
Mike Dudas: Of course not. I look at them as more like FinTech than I do Bitcoin, which could potentially be a store of value, censorship-resistant, programmable money. We can save that conversation for another day.
Peter McCormack: What do you make of the community around XRP? In that, one of the things I’ve noticed is, I’m very suspicious of the bot activity. I don’t know if that’s centrally controlled or if that’s something that’s just some very eager fans of XRP. One thing I notice is, the volume of XRP people who have XRP in their name, XRP logos on Twitter, they hammer Coin Base every time they make an announcement, they don’t discuss any crypto outside of XRP, and if you actually dive into their little communities on their message boards, they’re all just sharing each other’s content in this weird community.
Mike Dudas: Yeah. Look, it strikes me again, I’m not a journalist, and I am not an editorial person at The Block. I feel like I can say that, it strikes me as suspicious. That being said, and I’ve noticed, and many folks like Jeff Goldberg, who almost obsessively talks about this publicly on Twitter, and as somebody who I have known for years, pre-crypto, pre-him doing any of this, but seems to … The evidence he’s presented is at least eyebrow-raising on the coordination of some of these things.
I personally don’t have any evidence that this is connected to Ripple or Ripple Core, or that Ripple is paying any of these folks, and I would never make that insinuation, or accusation. But, it makes you wonder if someone is. I don’t know what’s going on there is all I have to say. You don’t see behaviour like this from any other crypto “community.” You see people talking about technology.
The general level of sophistication of the arguments of that particular army and community versus literally any other one is, I can’t put a number on it. It’s significantly lower and less sophisticated. It’s not even worth engaging at this point anymore. I just made a policy on my personal account, to just block them.
Peter McCormack: Yeah, and do you know what, do you separate what is The Block and what is personal views, Twitter accounts tend to be personal?
Mike Dudas: It’s really difficult. I’m never going to get it to a point where 100% of people will agree with 100% of where I draw the line. By the way, I think that’s true of The Block’s coverage. We even internally debate how much should we say on our personal accounts, how much should we say on the Block account. Then, what should we cover? We have lots of internal debate on what we should cover and how we should cover it, and have different viewpoints.
Basically, I think the rule, and I’m learning as I go, because I’ve historically been in more enterprise technology, which by the way is why it was so fun to raise $2 million for this business over the summer, business that I’d never done before, but our investors believed in this mission, knew I’d been in crypto since 2013 and was passionate about it, and that I’m a great recruiter and could recruit this world-class team to do this. My personality and who I am and my passion is a big part of what makes this tick. That’s true of the rest of our team as well. Larry, Frank, Steven, John Biggs.
I took at one of the highest praise or most, literally one of the kindest things anybody has said to me in a long time, is John Biggs again, early tech crunch, who came up with Crunchbase, and worked closely with Michael Errington, said hey, Dudas, man, you remind me of Michael Errington in the early days. The fire. And said a few other things. I was excited by that. I think Michael was able to, and he’s still in the game in a big way, in crypto, but he was able to I think, move the industry in a number of ways, and in a positive light, in a positive direction, give it more visibility, make it ready for mainstream coverage. I’d like to do that as well for crypto.
I’d like to be the mainstream publication. I think Tech Crunch, they ultimately were purchased and didn’t necessarily realize their true financial potential. I think we can learn from some of the things that happened there, to do even better.
Peter McCormack: Tell me about the team then. That is one of the most impressive things. You’ve recruited this all-star team. Every time someone new comes on, you’re like, yeah, I’ve been reading your content already. Tell me about the team, who the key people are, what their roles are within The Block, but also, tell me about where the gaps are, who you’re looking to get in the future, what kind of people.
Mike Dudas: The key folks, my co-founder and CTO, Jake McGraw, is incredible. He and I worked together 10 years ago at the first start-up that both he and I worked at in ’08, ’09, which was an ad tech start-up.
My key rule here is, the absolute best signal that somebody is going to be great to work with is that you know them and have worked with them before. Or, you know their work. Jake McGraw is my co-founder and he’s incredible. John Biggs, coming on as our editor, we parted ways with our founding editor, and John is incredible. He has a tremendous amount of experience, skill, relationships, can keep it calm and cool when it’s just, I’m a very emotional and fiery person as you know. He brings measure.
Candidly, our strongest asset is the people doing the work. It’s Larry Cermak, our head analyst. It’s Steven Jiang, our head researcher. It’s Frank Chaparro, who’s our senior correspondent and came to us from Business Insider. I had seen, and then Isabel Woodford, who just joined us, who’d worked at Reuters and is based in London.
Those four are doing the work that is really making this company special. What’s so fascinating is that each one of them is under the age of 25, but knows more about this space, whether it be the technology, whether it be the people, whether it be the companies that I … My job is to get to a slightly below topical level knowledge about a lot of things, and then help orchestrate what we cover, go out, sales and marketing, raise money, and lead the team. These folks are world class experts. They’ve been so amazing, that they helped attract Arjun Balaji, who is I think one of the top five people. We’ve been friends. I was, leapt for joy when he agreed to join as a technical advisor. He’s giving us a decent amount of his time and will be publishing some work.
The whole point is, great talent attracts great talent. We’re now getting more contributor pieces, ideas, tips. Then, last but definitely not least, I hired a guy named Mike McCaffrey, who had spent 18 months working at Citibank as an investment banker, he was recommended to us by two investors, Bloomberg Beta. I love that Bloomberg’s an investor in our business. And, Blockchange Ventures, Ken Seiff, who’s an incredible investor. Multiple funds, and just a wonderful man, former CEO, and a great advisor to us.
They both recommended Mike as chief of staff, and we subsequently promoted him to director of operations and finance, as well as chief of staff. The guy’s 24 going on 40. The maturity that he brings.
You need these heroes. The biggest thing I’ve learned, I don’t recruit on Twitter. I’m sorry, I don’t recruit on LinkedIn, we don’t even have to post jobs because our network, the people we see, the talent, basically, comes to you if you’re doing great stuff. That’s what’s been so, so exciting. These best people just rise to the challenge, in an incredible way.
We’re just looking for more of that. Frankly, it gives us what you would call a “arbitrage opportunity” versus others. We compensate every single full-time person on the time, in equity, as well as fair value cash. It’s basically like, you have upside above and beyond. That’s something that, we don’t have to over, over, overpay like I bet some of the other publications out there have to. We can pay these folks and give them upsides. It’s an unfair advantage.
Lastly, we have Stephen Palley, who’s one of the best lawyers in the space, working on our behalf. That really, I developed a friendship with him, and he’s really been an incredible asset to the team, because so much of what we know, do, does require a legal review prior to publication.
Peter McCormack: Yeah. It’s a great team. I’m a fan of every single one of them, every person you just named. I think they’re all amazing. One thing it seems to me, as an outsider, and I could be wrong, but it feels like you don’t really have any kind of huge hierarchy of structure. If it was, you probably have quite a flat structure, and you give your team a lot of freedom.
Mike Dudas: Exactly. That, I didn’t actually answer the last part of your question, which is, what are the gaps. We are launching as I mentioned a paid product. The biggest thing, and I just posted this actually yesterday, publicly, that we will hire between now and February, when we launch, is additional researchers and analysts. There are some really, really exciting world-class people who we’re talking to. We’re going to hire more full-time folks, and would love anybody interested in listening to apply on our site, as well as contributor pieces.
It’s just the exposure that folks will get, they love it, they can get it on our site where we’re seeing now hundreds of thousands of monthly visits, as well as through our newsletter, which is read by just an insane who’s who of them individually. Obviously, can’t reveal names. These are CEOs of Fortune five … C level folks of Fortune 500 companies, these are leaders of protocols, household names, investors, et cetera.
Peter McCormack: Another thing I’ve noticed, and I really am a big fan of, is the design of the website. It’s very simple, it’s very clean, it’s very easy to use. It’s a real job, actually. Somebody who’s coming from a web design background, I don’t like publisher websites normally. Usually, they’re either ugly or something like Mashable, which try to do something different, which I don’t get along with.
Your site is just really easy to use. It’s a really nice chronological, hierarchy of stories, which you can filter by Bitcoin, Ethereum. It’s very, very simple. I’m guessing that was a key decision, right?
Mike Dudas: Absolutely. The original idea was crypto simplified. Crypto simplified, that’s the tagline, that applies whether you’re presenting exceptionally complex ideas, or whether you’re doing blockchain 101. We were really lucky, so much, and this comes down to relationships. You put yourself in a position to get lucky, but my cofounder, Chris Mattern, of my former company Button, who I also worked with at Venmo, recommended an incredible firm called Charming Robot, who are world, world-class designers. They’ve worked with the Skim, they helped launch Skift, which is Rafat Ali’s travel publication. They’ve worked with a number of other great folks who all endorse them to us.
I knew Dan Macaron, the CEO, and Eric Bowie, the COO for a while, and they did just a bang up job. This is pre-Jake coming on as our CTO. We wanted to build up the site, get it launched on WordPress. You’re going to see a lot of updates, but in terms of that clean crypto simplified design, they did such a great job. We wanted to be distinct and look different, in that snippet based, or block-based design. They helped with the name as well. It was certainly something that I thought about in the shower and kept thinking about at 3:00 AM.
Now we have to figure out how to get the domain name.
Peter McCormack: Somebody else has got it?
Mike Dudas: Block.co. Block.com is Chevy, I think. I don’t think they’ll be selling.
Peter McCormack: Right. Okay. Look, it’s all going well. Readership’s up. I saw you put the stats out. They’re pretty impressive. You’ve got a great team. Your product’s coming. Everything seems to be going well. What are your main challenges, Mike? What’s the stuff that’s keeping you up at night?
Mike Dudas: Yeah. As a CEO, you always have to mix a healthy dose of optimism and paranoia. I’m most optimistic about the team as we’ve talked about, and about the reception to what we’re doing. At the same time, there are risks. We’re largely pre-revenue. We do have revenue coming in. We will start, by the way, running sponsorships. From key partners, and those’ll be sponsored posts, clearly delineated, from brands that we have great respect. High-quality brands, not like ICOs that we wouldn’t believe in or things like that, in January.
Hew, how is our audience going to respond to that? Would be a concern. Hopefully well. We think well. Then, are we going to get that right mix? We have some more hiring to do over the next couple of months, as I mentioned, on the research analysis side. We believe we have the product, people are going to like when we launch the paid product. The last thing I forgot is, we’re going to have a Matt Levine from Bloomberg-style, or a Ryan Selkis-style column on daily, or every couple day basis. That’ll be behind the paywall.
Will that product resonate? We think it will. My basic thing is, I’m not going to name the price point now, but basically, at the price point, we’re going at, if we help you make one good decision per year, you’ve more than paid for your subscription. That’s the bar that we want to hit. We want everybody to make 10x from what they read from us.
Then, the next thing is, does the market recover. The market doesn’t have to recover per se, but you need some volatility for folks to remain interested. I don’t fear that because I’m a true crypto believer. I think there’s a reasonable, logical question. I think we’re past that point, just based on the developer activity I’m seeing through the downturn. The market changing next year. We will go to the market to raise one more round of capital, and I’d like to turn profitable on that rate. I plan to raise a series A, I plan to do that in the late Q1 or Q2 timeframe. Based on, a really strong management team and a really strong editorial team and a product that will be starting to generate some really good revenue. Led by me, by Jake, our CTO, and by John Biggs, our editor and chief.
I think that’s going to be a really compelling vertical, median information, the value proposition for investors. But, always a risk, as to whether you can raise. I’ve done it before. I think we’ll do it.
Then, the last thing is just, can we maintain, can we keep our people. Can we keep them engaged, as their star grows? I think it will be advantageous to everybody, that we stick together. This is a people business. I think we all make each other better, and as a leader, it’s my job to put them all in a position to keep doing that.
Scaling’s hard, man. You know, you’ve seen it. I’ve sure been through it. I did at Button, at my last company, over 100 people now, and it’s like every, when you go from where we are, 10 to 25 is a huge jump. 25 to 40, and after that, once you’re above 40, it’s just constant evolution, people are coming and going.
I think we’re a different kind of business, where we don’t necessarily need to get that large. Keeping the core intact is really critical, and always the biggest risk.
Peter McCormack: Yeah. The most I ever got to was a full-time team of 35, and a transient team of five. Say, 40. What I noticed is, and I’ve had this twice actually, about 15 people, above that, it starts to change, because you can’t be there holding hands and everyone making decisions together, that united front changes. The biggest change I had was when we went over 30, it was always like, I had to let go. My job became to manage the people, who manage the company. Also, you have cliques form and groups form within the company. Politics has become something that’s very hard to fight. It just naturally happens though.
I’m sure you’re prepared for it, Mike?
Mike Dudas: Yeah. We are. That will be a challenge. We’re already in five time zones with 10 people. It’ll be interesting as we hire in Asia, for example, we have a reporter role that we have open there, and we have contributors from there, Joseph Young right now, who’s a phenomenal contributor, who’s written a couple pieces for us. We’ll have to grow and grow prudently.
The distributed mobile company, it’s a new thing. We’re looking at the folks who perhaps haven’t done it as well, or have grown too fast. You see Consensys cutting back. Consensys has done, I don’t mean to pick on them, they’ve done some incredible things for the Ethereum ecosystem, and for the crypto ecosystem at large. But, grew too fast and then had to pull back, which can hurt folks. By the way, that’s I think positive for the rest of the ecosystem. We’re talking to Consensys folks ourselves. I think there’s going to be landing places for that talent.
Peter McCormack: Yeah. I think, I can imagine in a couple of years, we’re going to look back at 2018 and hopefully say, I’m glad that happened. It was needed, it was required. We needed that to shake everything out, so people will focus on fundamentals again.
Mike Dudas: That’s what we say about, we make mistakes as a company, in different areas. Whether it’s resource planning, hiring, you name it. As long as you can do a retro, take those lessons, and grow from them, I have this experience from previous businesses, and not dwell. Just hey, if I was dwelling on the fact that I lost 80% of the notional Bitcoin that I had at the beginning of the year, I’d drive myself nuts. I don’t. I thought about it as play money, and I hedged by actually building a business, that I think is going to be tremendously valuable in the long run.
Peter McCormack: Look, you saw my tweet, right?
Mike Dudas: Yeah.
Peter McCormack: Yeah. No, it’s fine.
Mike Dudas: You’ve got a lot of stuff going on. You’re going to look at this in five years and say, hell, I really think, because I see you, the energy that you bring … Now, it’s my turn to say nice things about you. That I see the energy that you bring in all of your endeavours. By the way, just like I know you don’t agree with 100% of what I say publicly, I don’t always agree with you, but I have such respect for your energy, your conviction, and your honesty and openness, because again, I’m the same way, very honest and open. It’s risky and it exposes you, vulnerability to other people, that they can then point to later.
The bottom line is, you’re a doer. You’re doing three, four, five things now, and you’re going to be successful because I think you have good judgment. People are interested in what you do. You have good ideas. You’re thoughtful. You’re in, as far as I believe, the right market at the right time.
Peter McCormack: Yeah. There’s a lot of luck there. It was just on your point, you said you hedged, you wish … I wish I’d sold. I got a phone call from The Guardian newspaper today because they wanted to talk about what happened. They thought I was all depressed and miserable, and I said, you know what, I’m not. They asked if there were regrets, and I said, regrets are stupid, because every decision I’ve made at the time, I thought it was the right one. There is no point in having regrets, but like you, I hedged. I was like, this isn’t going to go on forever. I’m going to build a podcast, I’ve got a sustainable income, I’m not broke. I haven’t lost my house or anything.
Actually, I think we’ll look back and, if someone turned around to me and said, you can have all the money, but you wouldn’t have the podcast, I wouldn’t take it, because what would I be doing?
Mike Dudas: You have this platform now, it’s growing, this is how I feel about The Block as well. Yeah, bottom line, if you can take that positive approach, stay out of depression, which I’m somebody, and I’ve said this publicly, who over periods of my life, I fight on a daily basis, to clinically … I forget the exact description, but social anxiety disorder. It’s a challenge, and it impacts how I engage with people. I’ve basically, I work day in and day out so that I can overcome it, and be that outgoing person, which is so key to my business.
If you’re resilient, even despite it being hard and challenging, day to day, in taking those setbacks, which, of course, as a startup CEO, you can imagine, we’ve had setbacks. You revealed the setbacks you’ve seen over the past year, and come out of it with that spirit. Then look at the things you’re lucky about. Yeah, I tweeted this recently, but I’ve got a beautiful family, son and a daughter, four and a half-year-old daughter, one-year-old son. Amazing wife. My parents are incredible. Brother, my wife’s family. It’s awesome.
Feel very fortunate about all that. That’s the stuff that’s important when I’m not tweeting.
Peter McCormack: Anxiety though, it’s pretty rough, right?
Mike Dudas: It is. Yeah. I developed, in my early 20s, and didn’t know what it was until my mid-20s. It was most crippling when I didn’t know what it was. I would literally if I got up in front of an audience, I would literally break into a cold sweat, and then the anticipatory anxiety would become very nerve-racking. Then you start to avoid. I’ve always been a social, outgoing person, and you’re like, what the heck is this? Often, it happens to that type of a personality.
I’ve, over the years, managed it. It’s been literally, I’m almost 40. I’ve been managing it since I was, managing it well since I was 26, it’s been 14 years. No fun. Daily battle. Many other people have, that’s what you would call a mental, let’s say mental illness, much in other aspects of my health. I’m very fortunate.
Peter McCormack: Yeah. I’ve had bouts of anxiety for five years, panic attacks, SVTs.
Mike Dudas: Yeah. I read about it. That’s why I felt comfortable chatting with you about it. Mine hasn’t gotten to that point, but there was a period actually when I literally would, it was painful to fly, because I associated it with, and then physical things, again, would manifest. It wouldn’t be a heart rate, but sweating and I’d get these weird things like leg cramps, and all kinds of odd stuff.
The brain is a powerful thing in positive ways and can be a powerful thing in negative ways. I find when I talk to other people doing really exciting, interesting, on the edge things, many of them share these unique things that they manage, and that drives them to be better, and let them exist on the extremes and the edges.
I feel that is comforting, and that I know there are many other people out there. Again, I’ve been … The most successful parts of my career have been while I’ve been managing that, drives me to prove, hell, I’m going to win and win again.
Peter McCormack: Man, I get it. I’ve been there. Been through the roughest times and the good times, I know what it’s like.
Listen, look, this is really good stuff. Let’s talk about next year. 2019. Give me your predictions, Mike. What do you think is going to happen?
Mike Dudas: I think that this industry is going to return to a really positive builder mentality industry, across all key segments. We’ve seen the infrastructure being built on the institutional side, in terms of Fidelity and others, building out institutional products. I think we’re going to start to see some really, really early, new consumer-facing adoption. Endorsement from big companies like Starbucks, like Fidelity. I come from a world where I believe that’s important, even though I know many of the early folks and libertarians would say, maximalists might say, of certain types, would say, or crypto-anarchists, not maximalists, but say hey, this is bad, they’re co-opting our technology and our money.
I think it’s necessary for mass adoption. You’re going to see broader adoption and usage of these technologies. You’re going to see more building without the hashtag. You’re not going to see people bragging about building. You’re going to see some cool product announcements. I think people are going to follow the lightning labs of the world, and realize that actually, delivering product and then showing how the nodes are growing, week over week, and having people talk about it, folks like Casa who are delivering products, folks like Ledger, folks like Nomics, who just announced a raise today, those are the people to follow. Folks like Rick Burton at Balance who keep trucking along, and just mentioned yesterday that he was able to find a lead for his next round.
I’m excited to watch those builders. Julian from AMOC Protocol. The protocols themselves. Even the projects that are delayed, I’m somebody who’s interested in projects far beyond just Bitcoin, Ethereum. I was excited to hear Definity say hey, this is coming next. Even Hashgraph today talking about things in the future.
I think we’re going to see a lot more things come into reality. Then we’re going to see some things come to a head, things that don’t work. We’re going to see much more regulatory enforcement, and some projects are going to settle and go away, and I think that’s a healthy thing. You’re going to see projects make prudent decisions like Basis did, to shut down when they realize what they proposed isn’t feasible.
I thought that team wound down in an exceptionally professional way and should be proud of themselves. Then, we’re going to start to see, I think … I think there will be a high profile just disintegration. I don’t know what project it is, but I think … Bitcoin Cash is doing it to themselves. Just a big massive highly valued project that doesn’t deliver. I’m not going to name names, I have some in mind, that the value craters, even more than it already has.
That, I’ll end with the notion of, I think you’re going to see separation in 2019. Maybe I’m hoping and projecting here. Between high-quality project price, you’re going to see some drop, a lot of tokens drop to -99% of all time high. Yes, I do, and it’s hard to speak in these short-term periods, and I’m not going to make any investment advice or price predictions, but wherever Bitcoin ends the year, I think 12 months later, it’s not going to go much lower than that. Or, I’ll say this.
Two to three years out, I see it being higher than what it is now.
Peter McCormack: Yeah. I’m with you.
Mike Dudas: In every metric, cash rate, activity, on the network, transactions, consumer usage, and price.
Peter McCormack: I don’t know about you, I’m actually in some ways, I’m excited more than ever.
Mike Dudas: Oh my God, yeah. That’s what I should’ve said. I don’t think you’re going to see a stop to the flow of people. I do think you’re going to see more people entering into this ecosystem. One of the reasons, by the way, is because I actually think, it’s important to consider crypto, and I just use that word as slang, but crypto in the context of the larger global economy. I think we’re going to start to see some real trouble in the larger global economy, and that’s going to lead to layoffs, you’re going to see more people, people in technology looking for things to do. Google and Amazon continue to expand, they’ll hoover up tons of talent. They’re building campuses here in New York.
There’s a lot of other companies that are going to bleed people. I wouldn’t be surprised if you see some of those folks coming into this ecosystem, and this asset class. You’ll start to see I think more …
The one thing that I’m unsure of, the one thing I want to see, just so people stop talking about it, is this goddamn ETF just getting approved or not. I’m sure Gabor has talked about this. Was he on your show, talking about it?
Peter McCormack: Yeah. He was on a few weeks ago. You know what, he put out one tweet that’s really interesting. I can’t remember the exact wording, but I’ll find it and put it in the show notes. He said something along the lines of, that Coin Base is able to issue shit coin after shit coin, to retail investors, whilst they are building a regulated product for institutional investors, and they can’t get approval.
Mike Dudas: It’s great, I’m glad you brought that up. Please do interview my colleague Larry on an upcoming show, because he and I actually just agree fundamentally on this. I think of Bitcoin ETF, it should be approved. If you look at other assets that have been approved, when you look at market manipulation and those markets, I would argue, and Gabor would as well, that there’s no more than there is, at least to be alleged, in the Bitcoin market. There’s a whole host of other factors they consider.
Then the next question is hey, was that tweet responsible. I’m of the opinion, I really like him, and I’m the type of guy who tweets some things that people don’t always necessarily think are proper. I thought it was fun. I think he just called out the wrong company. Now, full disclosure, Coin Base is an investor in The Block, very small, less than 0.3% of the company. I have a place here in my heart for them, they got me into crypto. My first meeting in crypto was when I was at Braintree and met Coin Base.
I view them as a very credible, very secure exchange. They’ve still only listed, what, 10, 12 coins at most. Silly one to pick on is what I would say. I think listing a token for trading is very, very different than having it be an ETF, available to unaccredited investors and available through traditional channels.
Once you get that Bitcoin ETF approved, it then can start showing up, not for people who seek it out on Coin Base, but for people who might see that in their traditional accounts. It is a big difference. It was just a weird analogy.
Peter McCormack: Okay. What are your predictions for The Block for next year?
Mike Dudas: My prediction for The Block is that when you look at us five years from now, we are going to be the absolute standard in the crypto ecosystem, in terms of the brand that people think of when they think of media, information, you name it. Like Bloomberg is to traditional financial markets, people will think of The Block as that to crypto. I don’t think we’ll talk about it as crypto then, I believe it will be digital assets. It will include things like tokenized securities, it will include some of the things that people today classify as FinTech. I think FinTech as a word starts to go away, and we’ll start to talk more about digital assets and things of that nature.
I have every intention to make us the preeminent media and information brand. Multimedia by the way, so we’ll expand into other media in this world. Then lastly, I think media and information companies have not done a good job of creating communities. I think within the crypto ecosystem in particular, just like Twitch has done in video gaming, I think people love Telegram, they love Slack in the crypto ecosystem to communicate with one another, and they learn in that way.
We are going to over the next few years build in an element of communication and community. LinkedIn will not exist in this ecosystem. We can act as a replacement for them. It’s easy to say that, we have a pretty interesting plan on how we will get there.
Peter McCormack: Oh. Amazing. Who’s going to win the Premier League?
Mike Dudas: Liverpool. I would say by three points at the end.
Peter McCormack: I think it’s going to be close. That’s all I can say. I think it’s going to be tight, it’s going to be close.
Mike Dudas: Yeah. I’m not a lifelong fan like you are. I’m a six-year fan.
Peter McCormack: Yeah. That’s enough. If you ever get over here Mike, I’m going to get us tickets and I’ll take us to a game.
Mike Dudas: Yeah. We tried the last time, I ended up going to see Liverpool versus Palace, and it was an absolute blast.
Peter McCormack: Was that at Palace?
Mike Dudas: What’s that?
Peter McCormack: Was that at Palace?
Mike Dudas: Yeah. I didn’t wear any gear.
Peter McCormack: That’s a great ground. That ground is great. It’s a noisy ground.
Mike Dudas: Oh my goodness. I did cheer at the whistle, 2–0, and the folks around me, season ticket holders, not pleased, told me to keep it down. I was an American fan. You’re not allowed to clap for a team when they win unless you’re in the visitor’s, supporter’s area, I guess.
Peter McCormack: Yeah. I know the chairman because he used to be a client of mine. We used to do the web work and digital work for Crystal Palace. I got to know Parrish, and he invited me to the game where we were all three all, at, you know when we missed out on winning the league, what a game.
All right. Listen, look, Mike, this has been great. I knew it would be. Tell me, tell everyone how they can follow The Block and how they can follow you, and who you want to hear from.
Mike Dudas: Of course. You can find us at www.theblockcrypto.com. We’re @theblock__ on Twitter, we got to fix that. I’m @dudas on Twitter. Love to engage, I have open DMs, we have open DMs for The Block. Please communicate with us. We’re looking for world-class researchers to work with us. World class analysts and world-class journalists, who have a deep, deep interest in the crypto ecosystem.
We’re always, always, always looking for tips. If you have an interesting story that you’d either like to write as a contributor yourself, or a tip that you want to share with us either anonymously or under your identity, please don’t hesitate to reach out to us.
Peter McCormack: All right, man. That was cool. Thanks a lot, Mike.
Mike Dudas: All right. Thank you, brother.