Quotes"The things that help a company at the very outset are things that will lead to deep discussion, that maybe are surprising, that maybe are shocking, and that not everybody agrees on.” ~@mdudas, CEO of @TheBlock__ Click To Tweet "What became clear to people pretty quickly was that we weren't playing favorites. We were going to take a skeptical but reasonable perspective and put a skeptical, reasonable eye towards anything." ~@mdudas, CEO of @TheBlock__ Click To Tweet "We literally haven't written a story about $BSV because nothing newsworthy is happening other than a price is seemingly being pumped on very limited liquidity on questionable exchanges." ~@mdudas, CEO of @TheBlock__ Click To Tweet
Welcome to this conversation with Mike Dudas, CEO of The Block, one of the top research, analysis and news brands in the digital asset space. We discuss The Block’s origins, its incredible growth, and what it’s like to lead a crypto-focused media and information organization.
This conversation is split into 3 chapters:
- Chapter 1: Mike’s career before The Block
- Chapter 2: The Block’s founding, staff, and revenue
- Chapter 3: Key moments in The Block’s history & its main sources of traffic
Topics Discussed In This Episode
- Mike’s experience working in payment processing & mobile commerce
- The challenges of building a payments network
- How Mike first discovered that crypto has an “information” problem
- Details on The Block’s staffing, funding & revenue
- How mainstream journalism became anti-tech
- The Block’s business model and plans for the future
- How The Block generates traffic
- Stories that established The Block as a serious journalistic organization
- The importance of transparency and not playing favorites
Links Relevant To This Episode
- Popular Crypto Weekly Newsletter
- Clay Collins
- Mike Dudas
- The Block
- Mike on Twitter
- The Block on Twitter
- Bitcoin (BTC)
- Ethereum (ETH)
- Ripple (XRP)
- Tether (USDT)
- Zcash (ZEC)
- Bitcoin SV (BSV)
- Bitcoin Magazine
Clay: Welcome to Flippening, the first and original podcast for full time, professional, and institutional crypto investors. I’m your host, Clay Collins. Each week, we discuss the cryptocurrency economy, new investment strategies for maximizing returns, and stories from the frontlines of financial disruption. Go to flippening.com to join our newsletter for cryptocurrency investors, and find out just why this podcast is called Flippening.
Clay Collins is the CEO of Nomics. All opinions expressed by Clay and podcast guests are solely their own opinion, [00:00:30] and do not reflect the opinion of Nomics or any other company. This podcast is for informational and entertainment purposes only and should not be relied upon as the basis for investment decisions.
Welcome to this conversation with Mike Dudas, founder and CEO of The Block, which is one of the top research analysis and news brands in the digital asset space. They’re also one of the fastest-growing brands in the space as well.
This particular episode was recorded in front of a live audience. If you’d like [00:01:00] to attend a live Flippening Podcast recording and directly submit interview questions to guests, then please go to flippening.com and subscribe. After you’ve subscribed, we’ll be sure to send you email notifications before live recording sessions so you can join us. Space is limited to 100 attendees per recording, so go to flippening.com to subscribe and join us for the next live recording of this podcast.
With that established, let’s get back to our guest. Since its launch in summer 2018, The Block has grown from zero to four million readers. There have already been [00:01:30] plenty of interviews with journalists on crypto-related topics, but there have been far fewer that focus on the journalists themselves behind these publications (or in Mike’s case, what it’s like to lead a media and information brand in the crypto space.)
Our conversation is split into 3 chapters. In Chapter 1, we discuss Mike’s career before The Block. In Chapter 2, we cover The Block’s founding, staff, and revenue. In Chapter 3, we look at key moments during The Block’s history, and then delve into some of the main sources of traffic [00:02:00] and growth. Please note that the transcript and show notes for this episode are available at flippening.com/block.
We’ll get to the interview in just a second but before we get started, I’d like to pause for a moment to tell you that this episode is brought to you by the good folks at CryptoTrader.Tax. Here are 4 things you should know about them. (1) CryptoTrader.Tax automates the entire crypto tax reporting process and has partnered with the TurboTax team to bring cryptocurrency tax reporting to the mainstream. (2) CryptoTrader.Tax [00:02:30] offers a complete Tax Loss Harvesting module, to help investors figure out their greatest tax savings opportunities, to reduce their taxable income. (3) CryptoTrader.Tax supports all fiat currencies, meaning users from all over the world can use the platform to calculate their gains and losses in their home fiat currency. And (4) CryptoTrader.Tax offers a suite for Tax Professionals to help them manage their cryptocurrency clients.
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All right. Back to our regularly scheduled program. Here’s my conversation with Mike Dudas, CEO of The Block. Enjoy.
[00:06:00] Let’s start with chapter one, the pre-history of The Block. You were Chief Revenue Officer at Button, you were Head of Mobile Business Development at Venmo, you worked at mobile commerce at Google, what was the moment that really led you to believe that this would be the next thing in a pretty fantastic career? What crystallized for you and kicked off what became the origin story of The Block?
Mike: I’ve been fortunate enough to work at [00:06:30] some incredible companies over the past decade in the fintech space and broadly in the technology space. I had spent my early career in advertising and media for the most part, and in 2010, I was at Google. At the time it was really a wonderful company in terms of allowing people to move from one project to another.
I had no experience in fintech or in mobile commerce. Google decided that it wanted to get into [00:07:00] the space in a big way and launched a product called Google Wallet. I’m not an engineer. I’m a business person, economics and political science by training 20 years ago. I didn’t quite understand the scope of technical challenges that we were trying to solve in quite a short amount of time with Google Wallet, but I jumped in and really learned an incredible amount in a couple of years.
Either it was that you’d be able to tap your phone, and with a tap on a [00:07:30] point-of-sale device, you’d be able to pay, redeem a coupon, and accrue loyalty points. The technology we were using was NFC (near-field communication). It’s a technology that Apple Pay uses today and 10 years later it’s something that’s widely adopted. I use NFC payments, Apple Pay, and others to pay really multiple times a week, but we were eight or nine years early. [00:08:00]
I spent three years on that project, and met an incredible number of folks from PayPal, who had come into Google through acquisition and/or by joining a product. One of those folks ended up moving to a company called Braintree. Braintree was a payments company, a mobile commerce company that worked to process payments, sort of a predecessor to what Stripe is today. They simplified payments and were really an API to connect [00:08:30] to Chase, Bank of America, Wells Fargo, and all these other companies that mobile and eCommerce companies had a hard time coding to accept payments.
Today that problem is largely solved. You could start up a company and sell to anyone globally fairly easily if you’re a US or an EU merchant. But 10 years ago it wasn’t easy. Braintree was a pioneer there, and then Stripe [00:09:00] took it down to 10 lines of code, basically.
It was fortunate enough to move to Braintree at a time when it was fairly mature. It was a Series C company and valued in the hundreds of millions of dollars, and had recently purchased Venmo. I got the double bonus of coming in and being able to work with Uber and Airbnb existing customers. I didn’t have to do the hard work of building and establishing the company. It was really scaling at that phase.
I got exposed [00:09:30] to incredible people—the founders of Venmo—and learned a lot about consumer and peer to peer payments, and also the real depth and complexity of merchant payments, and how expensive and ugly and gnarly our existing financial rails are. That was the first wake up call.
Google I learned a lot as well, but with Google, we had our own APIs. We were extremely assertive and said, “Hey retailer, hey credit card networks, hey banks, [00:10:00] here’s our structure. Build to us.” Moving over to Braintree, I saw it flipped and I saw how new companies that were innovative, that didn’t have that leverage or hubris were essentially connecting to the legacy financial infrastructure so that they could grow online businesses.
Anyway, Braintree was an early pioneer in helping Uber and Airbnb grow, at the same time really expensive, really one-off and custom. Every country that [00:10:30] Uber or Airbnb expanded to, there was a tremendous amount of complexity, new payments processors, new regulation. So, Braintree was kind of a patchwork. Venmo, still to this day, hasn’t expanded beyond the US because of money transmitter laws and a host of other reasons.
Anyway, to answer your question, I was at Braintree. I was fortunate enough to meet with the brilliant people who were early Coinbase employees, leaders, and investors. [00:11:00] The reason I met with them is that, it was 2013, Braintree was looking, and Coinbase was working to persuade us to accept Bitcoin payments. It’s something that both Braintree and Stripe attempted.
If you rewind 6½ years, that was one of the primary use cases. Peer-to-peer cash and the notion of low fee payments via Bitcoin was something that was really exciting. It’s something that we tried to do [00:11:30] and really didn’t find a near-term fit at that point. Merchants didn’t see enough consumers who wanted to do it. Building a payments network is really challenging. You need three sides: the merchant, retailer, and the consumer. Bitcoin still hasn’t achieved that.
That being said, the notion of censorship-resistant money, your money outside of trusted parties captured my imagination even as a non-engineer. I purchased a little bit of Bitcoin and held it, [00:12:00] I’ve basically kept an interest in it for the next 5–6 years, then took a detour into a pure tech SaaS mobile commerce company, and spent four years there working again with some of the largest commerce companies in the US and globally. Then, got married, had a child, and when we were having our second child, I was on paternity leave, and I watched Bitcoin heading North towards [00:12:30] $20,000 and I said, “Hmm, maybe now’s the time.” That’s a quick replay of my history.
Clay: I would love to hear your insight on Braintree. In my prior company, we needed to make a decision about who to use; Stripe versus Braintree. At the time, Stripe was pretty new. They really didn’t have any huge flagship customers. Braintree had Uber, Airbnb, and others, and was really the established leader. [00:13:00]
Fast forward today, Stripe is worth over $10 million. Plaid just sold for several billion dollars. Braintree sold for maybe $800 million. That’s clearly a win. It’s a huge win (personally) for a number of people involved, but they never quite really hit the scale of Stripe. Why do you think that happened? What was going on there?
Mike: First of all, the founders of Stripe from day one never compromised. [00:13:30] They are engineers and developers themselves. They set out, and now it’s common knowledge that building a developer-focused company, building it with developers, and really API-centric companies that are extremely simple for an end-user or a customer who is a developer to implement, is the way to go. Braintree wasn’t founded that way, so in 2006 or 2007 when it was founded, it was just, [00:14:00] “Hey, we’re going to solve a problem for some companies that need merchant processing.”
They were always playing catch-up (in a way) in terms of simplifying the Braintree product. Today, it is extremely easy to use, it rivals Stripe in a lot of ways, but at the time, Stripe just made it so dead simple. The other thing was Braintree was larger. It was already dealing with, “Hey, our 80% of our business is coming from the Ubers and Airbnbs. We need to [00:14:30] deploy most of our folks against that and solve that problem.” It was really just a people and timing thing, so who the founders were, who the big customers were.
Stripe built a platform, so they said, “Hey, if this is the problem we’re solving, we want to service and grow.” They’ve said at some point that the GDP of the Internet or something of that nature. They had a vision and mission in mind that was 30 years long. They would take any customer of any size, they would service those customers [00:15:00] maniacally, and that really meant the way they would service them was certainly by responding, commenting, and having great account management, but by making the product simple that it just worked. We use Stripe today at The Block to process the payments, along with Coinbase commerce to accept cryptocurrency payments.
Looking at them in 2013, we said, “Wow, they have no chance to be as big as us, and look, we’re processing higher volumes,” but they were building a really clean product, [00:15:30] a really clean stack where they were getting more economics from every payment than we were at Braintree. Sure enough, the slope that Braintree was on from a profitability perspective, even from aggregate revenue perspective, was not the same slope that Stripe was on. They’ve continued. The leaders there are still the Carlson brothers. They’re also two of [00:16:00] the best entrepreneurs of this generation.
I think if you fast-forward to 2050, they’re still going to be really, really important people in the ecosystem, whether they’re working still on Stripe or something else. There’s a chance that it really could be the most important payments and commerce company of our lifetimes.
It’s just different from building Braintree, which was a really successful payment processing company, but really thought of itself like that, versus, [00:16:30] “Hey, we’re just going to enable commerce. It’s going to be digital, and we’re going to keep doing that. We’re not going to make any trade-offs. We’re just going to get dead simple for the people who implement payment technology to use us.”
Clay: That makes a lot of sense. Let’s transition to The Block then. You’re on paternity leave, you’re going down the rabbit hole. When did you decide to pivot to creating The Block, and of all the business models in the space, what sold you on this being a news and media company?
Mike: I was basically trying to catch up [00:17:00] with this phenomenal price movement that was happening. Is this rational? The answer ultimately was no. What are all these things? I knew about Bitcoin, I knew a little bit about Ethereum, Ripple, and a few others, but what the heck is the rest of this? It was really hard to decipher.
I was fortunate. I’ve been in payments and commerce for a number of years, so I was able to get into some Telegram groups with people [00:17:30] who’ve been around the space and highly involved for 5–6 years or more at that point. And it still took me six months to make hay of anything.
I started during the summer even before paternity leave. This was the summer of 2017, when Bitcoin, Ethereum, and others started going up pretty significantly. The whys, the whats, and I could not—having worked in technology and media for a number of years, and looked at [00:18:00] a number of different business models—get my head around what was driving this price increase. And the lack of clear information really concerned me. You could just see I had random friends who were starting to create Binance accounts to buy tokens, and just had no idea what they were doing.
I created a Slack group and called it The Block. This was [00:18:30] early 2018, and it ended up turning into about a thousand people. It happened really quickly and I saw this frenzy, but the amount of information that had real signal to it was really low. The people were coming to me as an “expert” and I was somebody who didn’t pay attention to this, knew 50 times more about payment processing, about peer-to-peer payments, about mobile commerce, about shopping than I did about cryptocurrency.
That was a signal to me [00:19:00] that we had a real information problem in a space where a ton of money was moving. The aggregate market cap of all of these cryptocurrencies was moving into the high $600–$700 billions and nobody knew if it was going to stop or if it’s going to keep going. I said, “Hey, what can I add to this ecosystem? I am really interested in Bitcoin. Ethereum does seem really novel, Ripple is an established company that’s been around for a long time, and now there’s all these other interesting projects that are launching.” [00:19:30]
I look at all the projects. I didn’t feel comfortable joining any one of them. I looked at the companies I knew, some of them like Coinbase and others, but I’m based in New York, and at the time I didn’t really feel like there was anything that I wanted to join here, so I said, “Well, what am I good at?”
I historically have always been good at taking something that maybe X people are paying attention to, and helping to expand that 10X, 20X, 100X people, whether it’s through direct sales, marketing, [00:20:00] or you name it, can relate to, and not being an engineer or something that really helps me do that. I’m not the guy who’s going to sit there and write the white paper. I’m not even a theoretical economist (well obviously, if you follow my Twitter), but I am somebody who, if you can’t explain it to me. you’re probably not going to be able to explain it to enough people that it’s going to be meaningful to a large group of folks.
I’d always had friends of mine say, “Look you’re opinionated but in a thoughtful way, generally.” [00:20:30] I generally try to chase things that are interesting to me and therefore they’re interesting to a large number of folks is what I found.
Anyway, I said, “Hey, that’s my place in this ecosystem.” But I thought at the time—remember the prices were high, there was interest that was growing among somewhat mainstream folks—we were going to be. Our original thesis was, The Block was going to be crypto simplified and that we were going to go out and provide [00:21:00] signal among all of this noise, scammers, technology that’s moving fast, economics and Tokenomics, that are moving fast that people can’t get a handle on it, and provide some signal that was meaningful.
I raised money from small checks from a bunch of different people in order to expand our network, and we went from there. We were nothing. It was just me and a co-founder who’s no longer with the company, but what I immediately realized is seek out—especially as the price [00:21:30] dropped—the absolute, most dynamic, attention-grabbing, thoughtful, intelligent people in the space, and try to persuade them to work with me, because we’re quickly moving from a retail environment to an institutional environment. That’s what I did through the summer and fall of 2018.
Clay: And it seems that strategy has worked, especially given some of the numbers I’ve seen. Can you share some of the parameters around the business? What can you share about team size? Whatever you’re willing to share [00:22:00] around revenue or funding, or any other parameters or metrics around the business.
Mike: We’re 20 people. We have a few folks who are contributors, or contractors and interns, but it gets us to 21–22 folks, and we are in six time zones. Basically almost every US time zone, then Europe, and a couple in Europe and Asia, so that’s exciting. We’re always on.
[00:22:30] We’ve raised over two seed rounds, a little under $3.5 million dollars, and that’s really what allowed us to scale quickly, which was critically important, in a really noisy confidence and really fast-moving environment. It was important to raise higher and strike fast, and we did that while other companies were going away. There’ve been some that launched and went away. There were some that just died in the crash.
What we did is we launched a product [00:23:00] in a newsletter late summer of 2018, we launched our site in fall of 2018, and during 2019 we had 4 million people who visit our site at some point in the year. We booked more than $1 million in revenue, and we didn’t even start generating revenue until February of the year, so mid-February, a little over 10 months.
We hired a team that (I honestly think) [00:23:30] is unparalleled in the media and information space in digital assets. When I say digital assets, I mean not only cryptocurrency, but also blockchain technology, and we do cover fintech to the extent that it’s really on the leading and cutting edge and dealing with digital assets. And then, a lot of things around monetary policy and financial market structure, particularly with central bank digital currencies and all the different things that are happening now with financial structure [00:24:00] and markets in digital assets.
It requires a scope of talent. Out of those 20 folks, we have 6 researchers who (honestly) I would put those 6 as the six best professional researchers in the space, and anyone else would be number 7. Obviously, I’m about as biased as I come on earth, but they’re really great because: (1) they’re individually amazing, and (2) they work together. [00:24:30] They’ve been together now for almost a year as a complete group, and it’s beautiful to watch. It’s really strengthened us.
That’s why, by the way, that million dollars plus in booked revenue, a tremendous amount comes from our premium research and data product, our Genesis product. The remainder of it comes from our incredible news team.
On the research side, the first two people we recruited were Steven Zheng and Larry Cermak, just two wonderful, wonderful people who’ve been [00:25:00] brilliant, hardworking, loyal, and attract other people because of those traits. Larry’s funny and biting, Steven’s funny and sarcastic and meany.
Their personalities were just wonderful beacons to who should join. It’s important in this market where it’s dog-eat-dog and everybody’s after one another. They are the group of people that you attract—I’m sure you know this at Nomics—you’re really in a bunker together. You’re always looking [00:25:30] at what’s next, what’s going to happen. It’s nerve wracking.
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Okay, back to Mike.
Mike: On the news and journalism sides, I was able to attract Frank Chaparro from Business Insider. He’s we like to say 24 going on 60, [00:29:00] but he’s a young, wise, dynamic individual, who was able to break the stories, learn the beat incredibly quickly, gain the trust of people, cover up my mistakes or other mistakes by other folks on the team with his incredible personality.
The revenue number is the big one. The people number is the big one. We’ve raised a reasonable amount of money, and we’ve decreased our burns significantly. We are burning 50% in terms of [00:29:30] cash out the door at the end of the month, revenue minus cash-in versus cash-out. It’s half what it was four or five months ago, so revenue is really increasing and that’s what matters. This is hopefully (we believe) the tail end of crypto winter, and we believe that we’ve put ourselves in a position as survivors as a great nuclear team.
We have a lot to do, however. Our podcast is not as big as we’d like it to be. We have 25,000 newsletter subscribers. That’s people who are getting [00:30:00] six days a week our message. We want to grow that. You probably may or may not have noticed, we don’t do any paid marketing. We’re actually just beginning a process of fundraising and raising our first traditional round of venture capital equity. That’s exciting, and we view that as the evolution of the company. We’re taking the next step.
We have this incredible funnel of news, research, journalism, and this great team, [00:30:30] and now we’re diving deeper. We’re going into historical context, and we’re building out a data product, for the customers who already are reading us daily. They can use us more than just a research company, can go deeper, and pull data on people, protocols, companies, tokens, you name it.
Clay: I think any company that is growing as quickly as you guys, there’s always unfair advantages. One advantage that you had, was you had operational experience. [00:31:00] You had been involved in startups in the past and had seen them grow, but one that sticks out for me watching you guys develop is really on the HR front. You spoke to that a little bit, but it seemed like you guys struck and really understood the value of people and expertise in the space at a time when others didn’t. You snagged some pretty high profile people from a few different sources. [00:31:30] What do you think is going on there? Do you think that the interest of a crypto-journalist wasn’t really served by other publications in the space, and that gave you an opportunity that you saw value where others didn’t? What was going on there?
Mike: Absolutely. Given the nature of the people who are building in the cryptocurrency space, digital asset space, it’s a type of person and a community that, if you think of traditional media [00:32:00] and journalism, I would argue over this past decade they’ve become increasingly anti-tech. You just see that happening, and I see a lot of commentary about that from my friends and other folks in technology, both that they become anti-tech and that they don’t really understand it. There’s now so much happening, that it’s really hard for just a journalist without any technical background, product background, or having worked at a tech company, to really grok [00:32:30] the underpinnings, motivations, and the product.
If you work at a traditional publication, for the most part, you’re working with a bunch of other professional journalists, and their sources are you, me, honestly the people, The Block. If you’re one of the best journalists in the world, you saw Pete Rizzo (for example) left CoinDesk and is now at Kraken. [00:33:00] He’s one of the best in the space. He and I gave each other a hard time a year ago, but mainly because there was a lot of respect for what he was doing. He’s one of the best people that CoinDesk had and now he’s at Kraken. I think the best and most capable people want to be around authentic, really informed, deep, embedded, and high-quality minds. That’s one.
Two, if they’re really true to themselves, we’ve found that they want to be [00:33:30] an independent outpost. We’ve been really fortunate that we have a group that has bonded in excellence. A sign of that is to your question. It’s really hard (obviously) to keep a group of amazing people working together. They have to really enjoy it because I’m not giving away any competitive secrets by telling you these folks on our team (obviously) get inquiries constantly. “Hey, would you like to come work for us here?” These are great operating companies, great brands doing XYZ, [00:34:00] and one of our contributors, our […] is now a partner of Paradigm, (which I would argue is, if not the best) one of the top two or three digital asset crypto VCs in the world.
The best people have and do work here. That’s helped us keep them, and they challenge one another. It’s that authenticity and they help one another. Our journalists help our researchers write better, tell stories better, speak with sources, and get context and information. Our research team [00:34:30] helps our journalism team, our news team with depth, with accuracy. Yeah, we get a lot of […], FUD, or for “incorrect” stuff, but actually the reason we make people angry sometimes at their work, is that it’s right and so piercing that you can’t deny it. You’ll like it, so you’re going to get mad at it, versus it being incorrect. It’s a high bar and the team really pushes one another. [00:35:00]
Clay: It does strike me that the narrative around tech has become negative. The pendulum swung, you had almost the fetishizing of tech entrepreneurs in the space with Theranos founder, Elizabeth Holmes, on the cover of magazines, and lots of worship and not questioning what’s happening in tech. Then the pendulum swung the other way with folks like Kara Swisher questioning a lot of what’s happening in the Valley.
You mentioned [00:35:30] the independent aspect of things. One of the things that news publications have struggled with is revenue. That’s why we’ve got the Washington Post owned by Jeff Bezos. It seems like you guys have done some interesting things on the revenue front with your paid publications. I’m a happy subscriber to The Block Daily and I enjoy that.
Another thing that stuck out to me is just you’re speaking to the team. One thing that your organization has done well and that I applaud you for [00:36:00] is really allowing individual journalists to develop their own personal brand and to stand out. There’s lots of places where that isn’t a cool thing, but I’m constantly watching Frank, Larry, Steve, and other people on your team banter back and forth, and it just seems everyone’s having a really good time. It’s fun to watch that unfold.
Let’s transition a little bit to your sources of revenue, because it seems you have a few.
Mike: Our revenue sources are not rocket science. [00:36:30] We are a medium information business. There’s really two ways that you get paid in that business that are the primary ways. One is you get paid by marketers who want to reach your customers, advertising. The other is the folks who want to read your differentiated information, the subscriber/customer model.
What we decided to do as a company is we’re going to actually start really top of funnel, [00:37:00] and we’re going to launch the free product first. That’s how we grew to that four million total readers last year. As a result, more than 50% of our revenue last year was advertising revenue, so that was exciting. It was from a very narrow set of super premium folks, companies that we respect, that we feel comfortable with their products being marketed, and we felt good about that. [00:37:30]
The other part is memberships or subscriptions. We have two products. The daily product which you subscribe to. That one’s really targeted at the enthusiast, the person who works in the industry, the individual, and then Genesis and that price point on the retail product, $219 a year. The price on the Genesis research product is $1000 a year. That one’s more of, “Hey, I’m going to put it on the credit card, the corporate card,” [00:38:00] and that’s what we found has happened.
The real long-term model (to be completely clear) it’s similar to CB Insights, Gartner, Forrester. The real long-term in Bloomberg and FactSet is to move into really deep research and data. The folks who are paying us $1000 today, we’d love for them to be paying us $10,000 in a couple of years. We don’t have the product today that would justify that, but by earning their trust, [00:38:30] by having them interact with us, we’re moving in that direction.
The last piece—you’ll see this across a number of different media and information brands—is the conference, events, and what some people call the access business. Access can be a bad word. In our case, it’s not because we don’t have access to inside information. What we do have is access to the deep thoughts to a group of folks who are thinking about specific problems (day in and day out) in an independent way. That could be [00:39:00] Teo Liebowitz on our team who’s thinking about Ethereum and Open Finance, and all of its implications day in and day out, meeting with teams across the globe, across different protocols, so really exciting at different points in the stack.
You have folks like Ryan Todd on our team who are constantly looking at financial market structure in different ways. You have Matt Yamamoto who used to analyze public companies, now is spending a lot of his time analyzing [00:39:30] these really interesting companies that are filing, whether it be Blockstack, Props, or Overstock, who are filing information about these new token models. So, just a really exciting and interesting group of folks, who are becoming the foremost experts in an area that’s increasingly valuable.
Clay: That brings us to Chapter 3, how The Block generates traffic.
Most businesses I’ve found, there is some amount of organic, linear growth, [00:40:00] but then there’s step functions along the way. It seems your coverage of Libra was one. There was a step function there. What are some of the moments in the history of The Block that led to qualitatively more traffic where you saw, “Hey, this thing works. X, Y, and Z works.” A lot of people like to just say, “Hey, it’s all about just creating quality content,” but most people know that you can’t just write excellent content and expect people to show up. What can you share with us about [00:40:30] the mechanics of your growth and some of the things that led to outsize results?
Mike: The things that help at the very outset a company or a brand, particularly in a space like this, where there’s just much information, so much debate, so much passion, are things that will lead to deep discussion, that maybe are surprising, that maybe are shocking, and that not everybody agrees on.
The first two [00:41:00] examples were in 2018, a piece that Frank Chaparro wrote on Coinbase’s listing policies, and just raising (I think) reasonable questions about their listing rules and what tokens were listed. It was something that a lot of people, including a lot of our investors, took issue with, including Coinbase who was an investor. I do believe that the reporting was reasonable [00:41:30] and it caused a lot of discussion. That was (I think) the first time people really took us seriously as a journalistic organization, whether they dislike us or like us.
The next was the series of pieces of information that Larry Cermak released on Tether, on their banking, on the issues that people were stating that they might have as they were moving from bank to bank, which were predecessors, [00:42:00] preceded the significant gap in the what they would call temporary in terms of the backing for their Stablecoin Tether, which they had (at the time) claimed was 100% collateralized and backed.
Clay: Hey, this is Clay cutting in from the editor’s booth to speak a little bit to what Mike is referring to around Tether. In 2019, while crypto exchange Bitfinex was in court fighting accusations that it had dipped into Tether’s reserves to cover its own losses, it came to light that Tether was allegedly not [00:42:30] 100% backed by US dollars or cash equivalents. As a stablecoin, it should be backed 1:1. It was only 74% backed, allegedly. The Block’s Larry Cermak reported this finding, hitting hard at Tether and its defenders.
Okay, back to the show.
Mike: Those two stories, one more of a research story, one a news story, and then Frank did a real big deep dive on a company called Blockchain Terminal, which was just an interesting people study on what turned out to be an obvious, I don’t to use the [00:43:00] S word, S-C-A and I won’t spell it for legal reasons, but it’s something that certainly raised questions.
We were doing real reporting, and then we went deeper on profiles like that. Those were those are stories that people could debate, discuss, and really show that we had access. And that we were willing to take risks. Those ones really helped establish us.
Through Q1, we continued to write stories on [00:43:30] Tether and Bitfinex was really an ongoing narrative and story. What became clear to people pretty quickly was that we weren’t playing favorites. We were going to take a skeptical but reasonable perspective, and put a skeptical reasonable eye towards anything. Nothing was holy, nothing was sacred.
We would disclose on our website what our holdings are. I’m a 100% Bitcoin holder, but I have a lot of issues with the [00:44:00] philosophy of a certain segment of Bitcoin folks that I view as tribal, unreasonable, and almost demanding of people having the same viewpoints as them. If somebody speaks a little bit differently or out of line, then they’re cast away, they’re a horrible person, and they’re going to basically try to punish them, financially harm them, and all sorts of other things. We basically said, “We’re not going to care about [00:44:30] that because 10% of the people being really loud, angry, and noisy, if we are being true to ourselves in our collective judgment, in the long run, we’re going to be credible and believed.”
Larry had great ties to Binance. We did a lot of work there. We did a lot of work that, again on the journalism side, was more human. Isabel Woodford on our team did a series on a profile. The other thing is we constrained our work. We didn’t put out [00:45:00] 30 pieces a day. We just basically did as much as we could do with quality and it worked. By the way, there are things that we’ve done wrong that’s obvious, primarily outside of our pages. I’m really proud of almost everything, really, that’s been published on The Block.
I’m not super proud of certainly some of the things I’ve published on the Twitters and elsewhere, and certainly some of the things that other folks on our team have done, [00:45:30] but we live and learn. This is not a place for the faint of heart. It’s a place that causes errors. We’ve done our best to stay true to ourselves. That’s really all you can do, and hope your judgment is directed in a way that other people respect it.
Again, the numbers have spoken. We’re having in January the best month that we’ve had since that Libra month, which was just bonkers. I mean if you asked me. I can tell you that just looking at the numbers, that was the biggest thing that happened last year by far. [00:46:00] It was just insane. But if we wanna just skip to where we’re going and where we’re headed, December, November, October, for us, were good as a company financially, but I would say the audience and the general market was in a lull. And, boy, we’ve been shot out of the cannon in the last couple of weeks.
Over the last couple of days, we’re doing 3X for traffic. We were doing middle of the weekdays in December. The news has [00:46:30] been interesting, but I wouldn’t say we haven’t done anything significantly different that would account for that. There’s something brewing in 2020. Now obviously, I already told you we’re raising money, so I’m self-interested in saying this, but you’ll be able to see it if you look at similar web or any other analytics service. Our numbers are up. People are paying attention.
Clay: Obviously, you’re publishing stories day in and day out and you want those to be as high quality as possible. But are a lot of the big traffic bumps based on [00:47:00] very specific stories that you just happened to catch before everyone else?
Mike: Yeah, we do have spikes. That’s a good question. By the way, our traffic could be twice what it is if we wrote price pieces, which we don’t do. When I say four million would’ve been eight million if we wrote about every time Zcash went down, or XRP pumped, or BSV pumped. We literally haven’t written this story about BSV because nothing newsworthy is happening, other than a price [00:47:30] is seemingly being pumped on very limited liquidity on questionable exchanges.
What I would say is this. Yes, no question, news drives traffic. Libra month, those couple of months were massive, and I think interest is building again. There are some big launches in terms of derivatives. A big portion of our audience is the real insiders, the financial market structure folks. Frank’s been writing pieces about that as is [00:48:00] Celia and […] our journalists and traffic is up. By the way, our model is we paywall a lot of our best content, and we’ve seen a pick-up in people who are paying now, who are paying for a month of daily, so they can read a piece that we’ve written. So, there’s real interest there.
To your question, like anybody, we have spiky traffic. But again, it’s been up overall. But it’s very spikey to pieces. The other thing I’ll say is we [00:48:30] can see the sources of traffic. We have a couple of different really significant ones. One is direct traffic. Two is obviously Twitter. Three is—this isn’t in order—search traffic. But a big one for us is third parties. Those third parties include CoinMarketCap, CryptoPanic, TradingView, and Coinbase.
Coinbase is an interesting one to watch because you have to assume your traffic there corresponds with the traffic they’re seeing, and that’s up pretty [00:49:00] significantly in January. So, It’s exciting. It’s good to see. To me, that’s an implication that people are visiting, they’re interested in price, and they’re seeing the content we have and that others have. It seems the market’s healthy.
Clay: The last question I’ll ask is just incentivizing journalists. Do you have incentives in place around page views or capturing important stories? Does a journalist know their aggregate metrics across [00:49:30] all their articles? What do you have in place there?
Mike: We do not have the incentives that you described in any way, shape, or form, around traffic, around people who sign up. Do we look at that stuff, track that stuff, and work on learning for the future, such that we can determine what’s interesting to write about, what people are interested in paying for? Absolutely, but our guiding principle has always been [00:50:00] what is editorially crucial. That’s what we cover as news, breaking news, and what’s happening.
When we go into deeper, thematic, and investigative pieces, again it’s what do we think is critically important, because we believe our editorial judgment and the aggregate is good. By “we” I don’t even mean me. I mean they ignore me now. I’ve been kicked out of every editorial channel.
A testament to the editorial courage the team has is that [00:50:30] Michael McSweeney, who, along with Pete Rizzo, really built-up the editorial infrastructure at CoinDesk, which I’ll be the first to admit, has been the most influential and important publication over the past decade in aggregate, and then in cryptocurrency and Blockchain, Bitcoin Magazine obviously being up there as well. Those two were the most important folks there editorially. Rizzo, as I mentioned, is at Kraken, and Mike McSweeney joined us as our managing editor recently. He joined [00:51:00] because of the respect that he had for the team, but also because he felt we could do better.
To your question, we could do better around what we cover, with discipline in terms of how we edited, how we sourced. It’s been exciting to see improvements there over the past 3–4 weeks. You probably haven’t seen The Block major controversy in the months since McSweeney’s joined, and I’m thrilled for that. I think that’s going to be the new normal. [00:51:30] We’re growing as an organization, and we’re growing along with this incredible ecosystem that’s going from an institutional perspective, from a retail perspective with great products, the things that you’re doing to improve your price transparency, exchange transparency, project transparency. There’s just improvement across the board, and we’re really excited about that. [00:52:00]
Well, that concludes my conversation with Mike Dudas from The Block. I hope you enjoyed it. Before you go, I want to invite you to subscribe to our weekly newsletter called Popular Crypto. With the Popular Crypto newsletter, we don’t cover token hype or announcements of announcements. Instead, the Popular Crypto newsletter focuses on the mainstream products and services, taking crypto to the masses. To subscribe to the Popular Crypto Newsletter, go to popularcrypto.news, enter your email address, [00:52:30] and subscribe.
All right. That wraps up things for this week. Stay tuned for next week’s episode. Until then take care. Bye.
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