A pixie dust fad? What tech scale ups should learn from the blockchain debate

“Let’s just call it blockchain anyway; we’ll get funding” Martin Walker sparked a new debate about blockchain last May in Parliament. The think tank director likened the technology to many other “pixie dust” fads that he had seen throughout his career.
During a Treasury Committee session on cryptocurrencies Walker’s argument was that blockchain actually has very few proven benefits for the financial services sector so far.

Still worse, many companies are grasping at and even hiding behind the idea. In his words, “if you want to be seen as innovative, all you have to do is a proof of concept using blockchain.”

Likening blockchain to pixie dust certainly created headlines, but Walker’s comments aren’t quite as sensationalist as they sound.

CNBC reporter Arjun Kharpal complained that at a recent conference he overheard two entrepreneurs half-joking that calling their innovation blockchain – however inaccurately – would ensure it attracted investment.

Blockchain’s popularity might appear to be good news for companies innovating with the technology, he “pixie dust phenomenon,” however, offers critical lessons for scaling tech companies and especially those who find themselves in a hot space.

The trouble with hype
Blockchain looks to be the latest in a long line of hyped technologies, which in recent years has included the likes of artificial intelligence, virtual reality and the Internet of Things.

In fact, investors, the media and even customers are always looking for companies developing the ‘next big’ technology.
This might sound like a great opportunity for entrepreneurs. But scaling companies can be left feeling under pressure to position themselves as at the forefront of these innovations as a result of their popularity.

There’s a risk that growing companies may overuse these buzzwords, latching onto a trend in the hope that investors will simply hand money over.

The problem is that in the early days, technologies are frequently overstated in a pattern that Gartner neatly captures in its hype cycle.

New innovations pass through the ‘peak of inflated expectations,’ when commentators and stakeholders alike are over-optimistic about their potential.

However, this is then followed by the ‘trough of disillusionment’ as the reality of the technology’s limitations sets in.
Once the bubble bursts, rightly or wrongly, the same growing tech companies who initially benefitted can find themselves on the backfoot with the media, investors and shareholders.

Not falling foul of the fad
To avoid the pitfalls of the hype cycle tech, companies must be authentic and realistic about what they’re developing.
Whatever space they’re working in – be it blockchain, artificial intelligence or beyond – companies must explain to investors and shareholders exactly how their technology works and why that can deliver unique benefits.

This will create realistic expectations amongst all stakeholders, from investors to the media and even staff.

If you will be the next disruptor in the world of blockchain then brilliant, but if not, there can still be incredible value in finding a true niche in the market.

In Gartner’s 2017 Emerging Technologies Hype Cycle, blockchain was notably positioned just on the brink of the ‘trough of disillusionment’, so there could be plenty more scepticism to follow for growing companies in this space.

But by building a plan based on authenticity rather than buzzwords, entrepreneurs can secure long term success, rather than becoming a flash in the pan.

Read more about the right way to pitch your fintech business to investors here: http://www.buzzacott.co.uk/insights/authenticity-the-key-to-thriving-in-the-future-of
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