We are at the beginning of global disruption via blockchain technologies and cryptocurrencies. In fact, the sun is only just peeking over the crypto horizon as the tech world comes to grips with the implications of distributed ledgers, smart contracts, tokenization, and crowdfunding.
Andrea-Franco Stöhr and his brother Nicolo Stöhr grew up in a tiny village — of just 80 inhabitants — in the Swiss Alps around St. Moritz, famous for its winter holiday scene and a host city for the Winter Olympics in both 1928 and 1948.
After taking jobs in different locations in and around Switzerland, the brothers are once again based in the mountains, but life is very different now. In addition to running a successful waffle business, which includes supplying delicious treats at various music festivals around Switzerland and near the ski lifts in St. Moritz and Celerina, the Stöhrs have created Crypto Finance Conference AG, an events business that focuses on blockchain-technology finance.
I had the opportunity to learn more about where the industry is heading and what working with a sibling is really like when I chatted with the brothers recently.
“After the first successful conference in January and the decision to take the conference to a global audience, Andrea asked me to join him on this adventure as COO,” Nicolo told me. “First of all, the idea of building up a company together with my brother seemed appealing, as a chance like this doesn’t arise every day. Additionally, it was an opportunity for me to bring my ideas and expertise to the table and be part of something that has an actual impact in the crypto space.”
That sibling bond is, in Nicolo’s eyes, a plus.
“The biggest benefit is that there are simply no politics when working with your brother,” Nicolo said. “Whatever needs to be discussed, he and I sit down together, define solutions and implement them without having to involve too many people, which means we can avoid a lot of back and forth and save time.”
And the brothers complement each other when it comes to skillset, too.
“Nicolo is the more structured and analytical guy, whereas I am more creative and gut-driven,” Andrea-Franco said. “With Nicolo’s background as an economics major and mine with a law degree, we complete one another.”
Of course, working with a sibling has its downsides, especially in a marketplace that never sleeps.
“The biggest challenge is that we never stop talking about business, which means that our mom, dad, and little brother know quite a lot about San Francisco, Half Moon Bay, and the crypto space,” Nicolo said.
“One of the challenges is that I sometimes still see Nicolo as my little brother and not as my business partner,” Andrea-Franco added. “But I am sure as time passes, this will not be a problem anymore. We grew up together as brothers, and now we’re growing together as business partners. Working with him was one of my best business decisions so far.”
So how do you go from building a waffle business to getting involved in the crypto space?
“I studied Business Innovation at the University of St. Gallen and have always been interested in new technologies and solutions,” Nicolo said. “The crypto space got my attention in 2015 when we played poker with friends. We had one player at the table who was mining Bitcoins and talked about blockchain and crypto. It was all new and futuristic, but it sure got my attention. From that moment on, I kept an eye on the developments, but it took me another two years before I started getting involved myself.”
Andrea-Franco got started a little earlier. In an industry that is evolving from minute to minute, and that has only really been on the radar for 10 years, a year can seem like a lifetime.
“The first time I heard about Bitcoin, crypto, and blockchain was in 2014 when I started my law studies at Columbia Law School in New York,” Andrea-Franco said. “As I had to pay for my tuition in fiat currency, I needed to transfer Swiss Francs (CHF) to a U.S. account. The time that it took to transfer and the fees that were charged were just ridiculous. I then started to Google alternative payment methods, and that is when I first read about Bitcoin and blockchain technology. I was immediately hooked, seeing that the transaction times and fees were a fraction of those with traditional banks.”
So how do blockchain technology and cryptocurrencies differ from traditional currencies, especially when it comes to crowfunding models?
“To answer that question, it is important to remember that nearly every transaction we undertake is managed by a middleman,” Andrea-Franco said. “Every time we pay for something, use a credit card or a bank, there is a third party who guarantees the transaction. If you invest in the blockchain, you are investing in technology with no intermediary. Besides the expectation of revenue, investment in blockchain is, in my opinion, a political statement. This is because with blockchain everyone is in charge and no one has control.”
It also means blockchain technology gets a lot of attention from finance incumbents, and that attention is not always positive.
“The blockchain, from our point of view, is not just another technology but a new technology with high potential and probability to change the world as it is,” Nicolo said. “Through the blockchain, there is the possibility to democratize the system we are living in. Transparency and data integrity, in combination with cryptography, allow us to develop new solutions and business models in a way that was not possible before, and therefore opens new opportunities for investors.”
The returns from blockchain technology projects are not traditional either, according to the brothers.
“It is an investment in seemingly new technology, although the blockchain has existed since the 1990s, with huge upside potential,” Andrea-Franco said. “Compared to regular investments, the yield is much higher. Further, it is expected that the technology will disrupt the banking and insurance industry within the next years.”
As with all high-reward endeavors, however, there are dangers.
“Compared to regular investments, one should define what regular means,” Nicolo said. “As the blockchain market is not set yet — compared to a human being’s life, we think about it as a baby of three months old — there is a potentially higher risk to investing in such projects, as there are not yet mechanisms in place to judge and rate such projects. This has to develop and to set within the next months and years. This means that there is a potential higher risk for investors.”
Scams and non-existent projects
Of course, one of the main issues with blockchain projects is that the products and services don’t yet exist. Funding is required to build the solution, which means it can’t exist before the initial coin offering or token generation event. That means a lot of utility tokens are being used for investment only, instead of their intended purpose.
Are there any solutions to this problem?
“One of the fundamental problems is that startups with no track record and no experience were able to raise a huge amount of money just for an idea that only looked good on paper,” Andrea-Franco said. “Thus, utility tokens have to be developed by established companies with a working product or business behind [them]. Further, it is important to regulate the space to ensure that the promised product will be viable once the monies to develop it have been raised. Another way to solve this problem is to structure them properly to avoid being qualified as a security.”
With so many scams and non-existent products, it is fair to say that the fledgling blockchain industry has one other major problem to solve.
“The crypto industry has one asset to establish — trust,” Nicolo said. “That means that it is critical to separate good projects from bad projects to ensure that the possibility of scams is as low as possible and to assure investors that their investments are promising.”
One of the ways the brothers are accelerating their learning in the blockchain space is by running events where they invite leading experts — if there can be such a thing this early in the game — to speak. But competition in this area is high. I currently track over 300 events between March and December 2018, which makes it difficult for newcomers to stand out.
“When you look at the conference space … a great number of conferences are focusing on quantity and not on quality, which is understandable, since the whole space is getting bigger by the day and many conferences aim at reaching a big audience,” Andrea-Franco said. “That being said, none of them address the needs of information for investors. As investors are the ones who will be crucial for the crypto and blockchain space, there has to be an investor-focused conference. Exclusivity is important to maintain the quality of the event, as we are not going for quantity. This allows our target group to connect with peers. In addition to that, startups that pitch at our conferences have the assurance that they can present to people who are ready to invest.”
Focus is key
Every event company has to decide how much to limit their offering. Do you go broad and invite everyone or do you stay focused and target those who will really benefit from the content and networking. The latter argument is the reason VentureBeat limits its audiences for events like Transform and VB Summit, and the brothers agree on this approach.
“We do not want to be a conference for everyone,” Nicolo said. “We want to focus on people who can afford to put a considerable amount of their money in actual or future blockchain projects. That is why we focus on ultra-high and high net worth investors, family offices, and crypto funds. We want to give the participants the possibility to connect with each other, as well as to meet industry experts. So we need to keep the number of participants low, which then ensures that everyone has the chance to speak to each other, connect, and build a network.”
What’s next for crypto finance?
“As we have seen in recent months, the regulators are beginning to step in,” Andrea-Franco said. “Although regulation will help the crypto and blockchain space, regulators have to act with restraint. Otherwise, the space will be over-regulated like the bank sector. But, in general, the future looks bright. Established companies are using the space for alternative funding, and both security and equity tokens are on the rise. We further see that institutional investors are moving into the space, which will help to eliminate the scams [and] separate the wheat from the chaff.”
“Regulatory developments are key and will decide how the blockchain market will develop (or not),” Nicolo said. “There is a lot of uncertainty at the moment due to the lack of clear statements and decisions from regulators. As we are in a new market, there is also the need to find rules and procedures in this area. This uncertainty also affects the major asset — trust — as nobody can rely on the regulations 100 percent.”