ConsenSys is reorganizing. The sprawling company, which is working to build an internet of decentralized applications on the Ethereum blockchain, has entered a new phase called ConsenSys 2.0, which its leadership says will be marked by greater efficiency, accountability, and attention to revenue. Underperforming projects will get the axe, and the arm of ConsenSys that oversees venture investment will become more like a traditional startup accelerator.
Although these changes are already underway, most employees learned of the initiative last Friday night. At nearly 7:45 p.m., after the work week had drawn to a close in the company’s Brooklyn headquarters, they received a company-wide letter from Joseph Lubin, ConsenSys’s globe-trotting founder and CEO. In the letter, a copy of which has been reviewed by BREAKER, Lubin lays out a sweeping plan to make ConsenSys more focused and competitive in an increasingly crowded field.
"We must retain, and in some cases regain, the lean and gritty startup mindset that made us who we are."
While congratulating everyone for their work and dedication to “a technology and an ethos that many of us believe will profoundly reshape human society over time,” Lubin, who also cofounded Ethereum, said “we now find ourselves occupying a very competitive universe.” While still in a position to “succeed wildly,” he went on, “we must recognize that what got us here will probably not get us there, wherever ‘there’ is.” (Full disclosure: Lubin is one of four cofounders of BREAKER’s parent company, SingularDTV.)
What got ConsenSys here was the 2017 boom in crypto assets—driven partly by ConsenSys itself—and a willingness to let a thousand flowers bloom rather than focusing on one or two lines of business (the ConsenSys “mesh” included more than 50 projects as of October). That led to an astonishing hiring rate: Since February, the company’s workforce has doubled to more than 1,100 people, spread across 29 countries. Much of that growth was funded by Lubin himself, who is said to be the world’s single largest holder of ether. Through it all, ConsenSys has held fast to a unique business model that prizes decentralization, worker autonomy, and project variety over efficiency.
That isn’t changing. But in an interview with BREAKER on Nov. 30, Lubin admitted that while individual projects within ConsenSys remain agile, the company as a whole has grown unwieldy. Better oversight is needed, as well as stricter standards for performance. “We essentially started as an experiment—as did Ethereum, as did bitcoin,” says Lubin. Until now, “it has been enough to show up, it has been enough to do something cool, it has been enough to make a splash.”
No longer. From now on, projects will be judged on three metrics: revenue, or return on investment, which could mean projected future value rather than cash value today; benefit to the Ethereum ecosystem (as with protocol development); and social good, for which the means of assessment are still being determined.
“We’re going to get a lot more rigorous in terms of milestones and timetables,” Lubin tells BREAKER, even if that means “dissolving projects if we’ve come to the conclusion that our earlier assumptions were incorrect.” (When ConsenSys closes a project, it will try to move affected staff into other initiatives. But Lubin is not ruling out layoffs.)
The new ConsenSys will be built around five “pillars,” outlined in Lubin’s letter. Along with a general “culture of excellence and accountability,” with an emphasis on creating tangible value, they include the ongoing development of core Ethereum infrastructure; the funding of decentralized apps through the company’s venture studio; the selling of blockchain solutions, including advisory services, to enterprise clients; and the educating of both developers and the general public in blockchain technology.
"We're going to get a lot more rigorous in terms of milestones and timetables."
None of these pillars is new. “They are basically what we do right now,” says Lubin. ConsenSys 2.0 is not a pivot or a fundamental revamp. “It’s focusing, it’s adding rigor, it’s adding accountability, and it’s opening ConsenSys up more to the world.”
Opening up especially to outside funding. Over the past several months, ConsenSys has ramped up interactions with venture capitalists and will soon announce outside investment in a company project, Lubin tells me.
Yet within ConsenSys, belts seem to be tightening. A small team is working to make company travel cheaper and more efficient, including one employee who used to work in the travel division at American Express. ConsenSys has gone so far as to build its own comparative-pricing mechanisms for hotels, which Lubin says will be ready in pilot form “fairly soon.” In his letter, he told employees, “We must retain, and in some cases regain, the lean and gritty startup mindset that made us who we are.”
It is hard not to see ConsenSys 2.0 as driven in part by—or at least connected to—the crash in crypto prices that saw ether briefly trading below $100 in November, down from a high of about $1,400 in January. Other projects have been feeling the pain. The blockchain-powered social media platform Steemit laid off 70 percent of its staff in November, blaming the prolonged bear market for its drastic action. SpankChain, a crypto project which helps adult entertainers make money online, also downsized last month, to eight employees, saying its crypto-asset reserves “were punished over the last few weeks.”
“Our industry has contracted in interesting ways,” Lubin says diplomatically. “Riskier assets around the world are correcting, and price overhang in bitcoin is affecting all the different tokens. … Lots of ICOs [are] selling tokens.” And yet, even in these bleak months of crypto winter, Lubin still believes that crypto has exponential growth ahead. As blockchain expands to touch new sectors of the economy, he is adopting “an expanded purview” himself, including artificial intelligence and the internet of things. He still believes his moonshot—the decentralized web—will be a success.
“In ConsenSys 1.0, we built a laboratory instrumented to prove the moon existed, using complex engineering and math and creative philosophical arguments,” Lubin told employees in his letter. “Now we need a streamlined rocket ship to get us there, since the actual proof, ultimately, is in the landing.”
Images courtesy of Flickr.