a16z a lesson for encryption founders: why not buy the best technology
Original title: The best technology doesn't always win
Original by:Pyrs Carvolth, Christian Crowley, a16z crypto
Original translation:Chapper, Foresight News
During the current application cycle of the block chain, the founders are learning a disturbing but far-reaching lesson:Businesses don't buy "best" technologies; they buy the least destructive path to upgrading。
For decades, new enterprise-level technologies have committed to quantitative upgrading over traditional infrastructure: faster settlement, lower cost and cleaner architecture. Landfall, however, rarely fully matched technical advantages。
This means that if your product is "better" and you can't win, the difference is not performance, but the match。
This article was written to a group of encryption founders: from the public chain scene, they are now painfully turning to business at the enterprise level. For many, this is a huge blind zone. We are now sharing a few key ideas, taking into account our own experience, the cases of founders who have successfully sold their products to businesses, and the real feedback from business buyers, to help you better market and order businesses。
What does "best" mean
Within large enterprises, "best technologies" are technologies that are perfectly compatible with existing systems, approval processes, risk models and incentive structures。
SWIFT IS SLOW AND EXPENSIVE BUT STILL STANDING. WHY? IT PROVIDES A SENSE OF SHARED GOVERNANCE AND REGULATORY SECURITY. THE COBOL LANGUAGE IS STILL IN USE BECAUSE REWRITE A STABLE SYSTEM POSES A SURVIVAL RISK. BATCH FILE TRANSFERS STILL EXIST AS THEY CREATE CLEAR CHECKPOINTS AND AUDIT TRAILS。
One potentially uncomfortable conclusion is that firms are hampered in adopting block chains, not because of lack of education and vision, but because of the faulty design of products. The founders who insist on selling the most perfect form of technology will continue to struggle. The most likely success is to see business constraints as the founders of design inputs rather than compromise solutions。
So, instead of weakening the value of the block chain, the key is to help the technical team to package a version that is acceptable to the enterprise, which requires these ideas。
Business is much more vulnerable to loss than love
When the founders sell to the enterprise, they often make the mistake of thinking that policymakers are primarily driven by earnings, better technologies, faster systems, lower costs, cleaner structures, etc。
The reality isThe core motivation of business buyers is to minimize downside risks。
Why? In large institutions, the cost of failure is asymmetric. This is in stark contrast to small start-ups, which can easily be ignored by founders who have not been present in large factories. Missing opportunities are rarely penalized, but obvious mistakes (especially those associated with new and unfamiliar technologies) can seriously affect career prospects, trigger audits and even attract regulatory scrutiny。
Decision makers will hardly benefit directly from the technologies they recommend. Even with strategic alignment and investment at the corporate level, gains are fragmented and indirect. But losses are immediate and often at the individual level。
As a result, corporate decision-making is rarely driven by what it can be done, and more by what it can be. This is why many "better" technologies are not widely available. The threshold for landing is usually not technological but:Using this technology would make the work of policy makers safer or more dangerous。
So you have to rethink who's your client. One of the most common mistakes that the founders make when they sell a business is to think that "the most skilled" is the buyer. The reality is that business landing is rarely driven by technical conviction and more by organizational dynamics。
In large institutions, decision-making looks less at benefits and more at risk management, coordination costs and accountability. At the enterprise level, most organizations outsource part of the decision-making process to consulting firms, not because they lack IQ or professional competencies, but because key decisions must be continuously validated and sustained. The introduction of well-known third parties can provide external endorsements, decentralize responsibilities and provide a credible basis when decisions are subsequently challenged. This is true for most of the world ' s top 500 countries, and therefore there is a large annual budget for consultancies。
In other words, the larger the institution, the larger the decision-making process, the more capable it is of carrying out ex post internal reviews. “No one will be expelled for hiring McKenzie.”
How does a company make decisions
Corporate decision-making is very much the way many people now use ChatGPT: instead of letting it make decisions for us, we use it to test ideas, weigh benefits, reduce uncertainty, and always take responsibility for ourselves。
Businesses behave in largely the same way, except that their decision support levels are people, not large models。
New decisions must go through legal, compliance, risk, procurement, security, supervisory and oversight levels. Each level of concern is different
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What's the problem
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Who's in charge
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How does this fit with the current system
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How do I explain this decision to the executive, the regulator or the board
So for truly meaningful innovative projectsClients are almost never a single buyerI don't know. The so-called "buyer" is actually a coalition of stakeholders, many of whom are more concerned about not making mistakes than with innovation。
Many of the better-tech products are often lost here: not inoperable, but in an organization where no suitable person can use it safely。
Take the example of the online gaming platform. As the market is projected to become popular, encrypted "water man" (e.g. a gold channel service provider) may consider online sports games as a natural business customer. But to do so, you have to understand that the regulatory framework for online sports games differs from the forecast market, including individual state plates. Knowing that state regulation has a different attitude to encryption, the providers understand that: Its clients do not want access to an encrypted mobile product, engineering or business team, but rather to a legal, compliance, financial team concerned with the risks of existing lottery licences and core French currency operations。
The simplest solution is..Early and clear identification of decision makersI don't know. Don't be afraid to ask your pros how to sell them internally. Often behind the scenes are laws, compliance, risk, finance, security... they all have an unknown veto power and have distinct concerns. The winning team will package the product into a risk-controllable decision that gives stakeholders an off-the-shelf answer, a clear benefit/risk framework. If you ask me, you will know who to pack it for and find a safe yet reassuring "consent" path。
Consultants
In many cases, new technologies go through an intermediary before reaching the buyers. Third parties, such as consulting firms, system integrators and auditors, often play a key role in the transformation and legalization of new technologies. Whether you like it or notThey've become gatekeepers for new technologiesI don't know. They have used mature, familiar frameworks and cooperative models to translate new programmes into familiar concepts and to turn uncertainty into practical recommendations。
The founders were often frustrated or skeptical, and felt that the consulting firm was slowing down, adding redundant processes and becoming an additional stakeholder in influencing final decision-making. They do. But the founders have to be realistic: in the United States alone, the market for management consulting services is expected to be over $130 billion in 2026, mostly from strategic, risk-based, transition-oriented help from large firms. Although only a small part of the chain-related business is involved, it is important not to think that the project is accompanied by a "block chain" and that this system of decision-making will emerge。
Whether you like it or not, this model has affected corporate decision-making for decades. Even if you sell block chains, that logic will not disappear. Our experience with the world ' s 500 powerful, large banks and regulatory agencies has repeatedly proved that:Neglecting this layer can create strategic errors。
Deloital Asset ' s cooperation is typical: through collaboration with large consulting firms such as Deloitte, Digital Asset ' s block chain infrastructure has been repackaged into more familiar corporate languages, such as governance, risk, compliance. For institutional buyers, the involvement of credible parties such as Deloitte validates technology and makes landing paths clearer and more viable。
Don't do the same thing
Because business decision makers are extremely sensitive to their needs (especially downside risks), you have to customize presentations:IT IS IMPORTANT NOT TO USE THE SAME SET OF BUSINESS MARKETING TECHNIQUES, THE SAME SET OF PPTS AND THE SAME FRAMEWORK FOR EVERY POTENTIAL CUSTOMER。
Details are important. The two large banks appear to be very similar, but systems, constraints and internal priorities may differ from one another. Something that moves a family may not work at all in another house。
A generic set of words equals telling each other that you did not take time to understand the specific definition of the project in this institution. If your marketing is not tailor-made, it is hard to believe, in institutional terms, that your programme fits perfectly。
There's one more serious mistake:It's a "thump back" argumentI don't know. In the area of encryption, the founders often tend to paint an entirely new future: completely replacing old systems and opening an era of innovation with newer, better decentrized technologies. However, businesses rarely do so, and traditional infrastructure is deeply embedded in workflows, compliance processes, existing vendor contracts, reporting systems and numerous contacts and interests. It is not only disrupting day-to-day operations, but also introducing risks。
The wider the impact of change, the fewer people within the organization dared to cast their hands: the larger the decision-making, the larger the decision-making alliances。
The success stories that we have seen are that the founders adapt first to the status quo of the enterprise's clients rather than to their own aspirations. Entry points are designed so that they can be integrated into existing systems and workflows, minimize interference and establish reliable entry points。
A recent example is the collaboration between Uniswap and Belet on the DFI. Uniswap does not identify DeFi as an alternative to traditional management, but rather provides secondary market liquidity without a permit for products issued under the existing regulatory and fund structure of Belet. This consolidation does not require Belet to abandon the business model, but simply extends it to the chain。
Once the programme is formally online through the procurement process, it will be possible to pursue more ambitious objectives。
The company's gonna make a run. You're gonna be the right one
This risk aversion manifests itself in a predictable behaviour: institutions are flushed and often large-scale。
Large enterprises do not simply gamble on emerging infrastructure, but conduct multiple experiments simultaneously. A small budget is allocated to a number of suppliers to test multiple programmes in innovative sectors or to pilot without touching core systems. In institutional terms, this preserves the right of option while limiting risk exposure。
But for the founders, there's a delicate trap here: chosen to be used. Many encryption companies are only one of the water test options for enterprises, and piloting is not necessary to scale up。
The real goal is not to win a pilot, but to become the most successful hedge. This requires not only technological advantages but also professionalism。
Why is it more professional than pure
In such markets, it is clear, predictable and credible, often crushing pure innovation: technology alone is difficult to win. That is why professionalism is essential and reduces uncertainty。
What we mean by professionalism is that the design and presentation of products take full account of institutional realities (e.g., legal constraints, governance processes and existing systems) and are committed to operating within these frameworks. Following customary practice is tantamount to telling each other that the product is manageable, auditable and manageable. Whether this is in line with the block chain or the encryption spirit, this is how enterprises view technology to land。
It looks like business resistance to change, not really. This is a rational response to corporate incentives。
It is difficult to convince institutions that are bound by law, regulation, and reputation to be “de-centralized” “minimum trust” or other encryption. It's too much to ask for a one-time "full vision" product。
There are, of course, examples of breakthrough technologies + purely ideological win-wins. LayerZero recently launched a new public chain, Zero, which seeks to address the challenges of expansion and interoperability in business landings, while retaining the core principles of decentrization and non-licensing innovation。
But the real difference between Zero is not just architecture, but institutional design thinking. It does not make a one-size-fits-all network and then looks to enterprises to adapt, but, together with its core partners, designs "Zones" specifically for specific scenarios such as payments, settlements, capital markets, etc。
The structure of Zero, the willingness of the team to truly cooperate around these applications, and the Layer Zero brand have minimized some of the concerns of large traditional financial institutions. These factors overlap and allow the Citadel, DTCC, ICE and others to declare themselves partners。
The founders can easily interpret corporate resistance as conservative, bureaucratic and lack of vision. Sometimes this is true, but there is usually another level of reason: most institutions are not irrational, and they are aimed at maintaining operations. They are designed to preserve capital, protect reputation and withstand censorship。
The technology to be won in such an environment is not necessarily the most elegant and ideologically pure, but rather the technology to adapt to the current state of affairs of enterprises。
These realities can help us to see the long-term potential of block chain infrastructure in the corporate sphere。
Business transformation rarely takes place overnight. Look at the "digitized transition" of the 2010s: Despite the fact that the technology has existed for many years, most large enterprises are still modernizing their core systems and often need to spend a lot of money on consulting firms. The large-scale digital transformation is a gradual process that needs to be achieved through manageable integration and expansion based on mature usage, rather than outright replacement overnight. This is the reality of corporate transformation。
The successful founders were not those who came up to demand a complete vision, but those who knew how to move。
