On Building Robust Ecosystems In Switzerland and Beyond
Competition is for losers. These days it’s all about building robust business ecosystems, powered by technology with no competitors in sight.
When it comes to ecosystems, my experience has predominately been with the Blockchain Nation Switzerland, aka the Crypto Valley. During my travels I have been fortunate enough to observe other blockchain ecosystems at work. I will gladly share my experiences with you.
I’d like to start off with Pearl Zhu’s quote. Pearl is a renowned digital expert out of Silicon Valley. Here is her take:
“A business ecosystem is just like the natural ecosystem; first, needs to be understood, then, needs to be well planned, and also needs to be thoughtfully renewed as well.”
I want you to think about this quote for a second. It’s important for businesses to be part of a business ecosystems if they want to be innovative and continue to grow. But what if a group of companies continuously builds new companies, solutions, products and offers services; it becomes an ecosystem in its own right.
One of my favorite venture capitalists, Peter Thiel terms such groups of companies as monopolies. He believes that monopolies are the way to go in modern capitalism. He explains why:
“If you get a creative monopoly for inventing something new, I think it’s symptomatic of having created something really valuable.”
And:
“If you’re the founder…entrepreneur starting a company, you always want to aim for monopoly and you always want to avoid competition.”
Peter believes there is a scale which defines all companies. You have perfect competition on the one hand and monopolies on the other. Perfect competition is where a multitude of companies compete for the same clients, the margins are so slim, there are virtually none existent. On the other side of the spectrum sits monopoly or a business ecosystem. This means: what the company (or a group) is building something so unique, there is simply no one out there to compete with.
Another way of seeing it is through the red ocean, blue ocean lens and expanding it a little bit to the black ocean. Those of you who know about red ocean, blue ocean strategy, skip to the next paragraph. For those of you you not in the know, the Blue Ocean Strategy was proposed by W. Chan Kim and Renée Mauborgne, two professors at INSEAD back in 2004. They went on to publish several books on this topic. Kim and Mauborgne’s main premise is: companies should compete in the blue ocean, where there is little to none competition, as opposed to the red ocean, because cutthroat competition turns the ocean bloody red. Instead, companies should pivot and iterate till they are successful in their new ventures.
Michael Lewrick, former Chief Innovation Officer at Swisscom and current Head of Innovation at Deloitte Switzerland, who is also extremely proficient in design thinking (wrote several books on this topic and also on the topic of blockchain, do check him out), talks about the next step after the Blue Ocean, which is the Black Ocean Strategy:
“The goal of a “black ocean” strategy, however, is to make market entry impossible for competitors. The existing rules are changed, new framework conditions created, and an “unfair advantage” built up and used accordingly.”
And:
“A haven for business ecosystem design are projects where blockchain is used as enabler technology.”
What are then the examples of successful business ecosystems or monopolies, which in the words of Peter Thiel are really good at pretending they are not a monopoly and are locked in a fierce competition with other companies? Some of the companies all of us know are: Apple, Google, IBM, Microsoft, AT&T, Uber etc etc. With regards to the blockchain industry — ConsenSys comes to mind.
I would like to move on to the important components for building successful ecosystems. Michael Lewrick believes the following steps should be completed:
A mature ecosystem should be:
- Focused on the user
- Loosely coupled and designed for co-creation
- Consisting of networked and decentralized system elements
- Coordinated and accepted value systems of the actors
- Cross-industry offers
- Designed for maximum benefit for all participants
- Step-by-step development of a MVE (Minimal Viable Ecosystem)”
Let’s look at this through the Crypto Valley lens. The Blockchain Nation Switzerland and within it, CV VC /CV labs is focused on the user. For us the user is a blockchain company. On co-creation — that’s pretty much what we do through the means of our blockchain incubator. Networked and decentralized system elements are the Crypto Valley Association and the Swiss Blockchain Federation. Value systems — we are all focused on the #BUIDL (play on words, similar to HODL, which means to hold crypto currencies, BUIDL is associated with building products, solutions and decentralized applications or dApps). Cross-industry offers: large corporates are getting into blockchain, several innovation spaces have opened up at Swiss Post, Siemens, Generali and others. Maximum benefit — with more than 800 blockchain companies in Switzerland, I am sure there’s benefit for all participants of the ecosystem. On the MVE, we are currently at a stage, where we need to renew our ecosystem, just like Pearl Zhu have stated. Switzerland was first, 3–4 years ago, yet other ecosystems have caught up.
Now let’s look at the history of the Crypto Valley. First, the Bitcoin Suisse, opened its doors in 2013. Then protocols, such as Ethereum, Tezos, Cardano and others settled in Switzerland. When we first started in 2016, we could not possibly imagine that more than 800 blockchain companies would choose Crypto Valley ecosystem as their home. Back then, we wanted to create a community of like-minded entrepreneurs — a space where revolutionary ideas would flourish. We started with events, then moved onto to hosting several pitch battles, showcasing blockchain tech to the large corporates. As the blockchain startups kept showing up at our doorstep, searching for then already famous Crypto Valley, one thing was certain — all of them needed a place to work, network, co-create or just to hang out. Enter CV Labs — our very own blockchain co-working space. Recent crypto winter was tough on everyone. We weathered it because we believe in BUIDL’ing awesome things for our community. What we created is a whole ecosystem, a base layer for blockchain startups, where founders are supported through funding, advise and connections.
How do we, as a group of companies see primary components (or stakeholders) for the ecosystem to develop:
- Regulation and (somewhat sane) government, its agencies
- Universities and researchers
- Industry players and corporates
- Service providers
- Entrepreneurs and intraprenuers with ideas and the will to execute
- Investors
Secondary components are:
Governmental support, stable political system, favorable tax regime and democracy / rule of law.
Now, if we talk about value creation, we strive to create value to all relevant ecosystem stakeholders: startups can become part of the truly unique blockchain ecosystem. Investors have access to the unique deal flow. Corporates may join us on our deep dive into the blockchain technology. Service providers become exposed to the unique opportunities the blockchain ecosystem has to offer. Researchers can collaborate with other researchers right in the heart of the Crypto Valley. Governments and associations can exchange ideas on best practices and thought-leadership.
If we go back to what Michel Lewrick was saying about building up unfair competitive advantage, there is no other group of companies, or business ecosystems like us in Switzerland. As such, there are plenty of venture capital companies, plenty of co-working spaces and event organizing agencies in Switzerland and beyond, but very few do all of this at the same time. This then makes us a monopoly; our group of companies is a business ecosystem within a greater ecosystem — the Blockchain Nation Switzerland.
If I may compare us to another monopoly, I would say we are competing with ConsenSys. We don’t have our own protocol (yet), neither we are flush with cash as they are, but we are getting there.
One last thing, we are going global this year! We believe that the Swiss blockchain ecosystem — Crypto Valley has matured over the years and it’s time for to venture out to other blockchain ecosystems.
CV Labs second location opened its doors on October 1, 2019. It is located in Vaduz, Lichtenstein; other locations in Asia, Middle East, US and EU will come online soon enough.
Some after thoughts: Building up successful ecosystems takes time. It took us six years to get to where we are today and now we are faced with a whole host of new challenges. What I am most excited about is seeing new ecosystems emerge. It always warms my heart to see great companies build awesome things across Europe. I believe, we can be much stronger together as a European ecosystem. Our competing ecosystems are located in the East and in the West — China, Singapore, Japan, US, Canada and LATAM. They are faster than us, have more resources and their early-adopter mindset allows for higher risk tolerance. The only way for European blockchain ecosystem to move forward is by collaborating, co-creating and BUIDL’ing!
My name is Pavel Jakovlev and I am the Head of the Ecosystem Growth at CV VC, which stands for Crypto Valley Venture Capital. I am also managing CV VC’s daughter company, CV Labs.
Today, CV Labs is the blockchain-dedicated co-working space, with more than 130 startups registered in its premises. The co-working hub offers variety of services, such as incubation for early-stage startups, excubation services for corporate clients, blockchain and enterprenuership education modules, events and content marketing, aimed at positioning blockchain companies within the ecosystem and advisory services, with an aim to help blockchain companies set up shop in the heart of the Crypto Valley, Zug.
