A VC Asks The Uncomfortable Blockchain Questions That Break Through The Hype

There are startups marketing themselves as blockchain innovators, and there are established enterprises trying to innovate with blockchain. Vic Pascucci has a stock response to most of them: “Just use an f***n VPN.”

The managing director of venture capital firm Lightbank was positioned as the resident contrarian at the recent Voice of Blockchain conference in Chicago late last week, where he balanced his optimism about the technology’s potential with sharp criticism about how quickly it was being used as a marketing tactic.

“I’ve seen a couple of these types of shifts,” he said. “I take a couple thousand of pitches a month. I just keep going back to, ‘Why blockchain for this? I challenge everyone that comes in: ‘Tell me why it’s better than the existing technologies. Most of them don’t have a reason.”

It’s not that blockchain — a distributed ledger technology that provides an immutable record for transactions involving items of value — can’t be applied in useful ways across a variety of business scenarios. It’s just that, even more than the move to cloud computing, mobile computing and more recently artificial intelligence, Pascucci has come to realize how onerous the transitions can be.

“You have to ask yourself: what is it about your application, your solution that is going to cause the customer to change everything they do in their daily life to use yours?” he said. “Most of these enterprises are still on mainframes with COBOL. That’s what they still run their systems. It’s not just about the technology. You need to offer a lot more value to change the way they run their business.”

Of course, some blockchain startups are already finding success — Pascucci pointed to CoinBase as an example — and large vendors like IBM and Microsoft have already built out enterprise-grade blockchain products and services. Beyond just marketing efforts that tout blockchain capabilities, however, Pascucci said firms of every kind will need to have the right talent on hand to really convince customers.

“You’re not just trying to tell them the latest CRM platform,” he said, suggesting that in some cases blockchain may lead to entire “cubicle farms” of workers being displaced because they act as intermediaries that aren’t necessary in a world of decentralized apps. “You have to have a deep-assed sales team that makes the Oracle sales team look timid and weak. You’re not just telling technology, but a new way for businesses to work.”