What Bitcoin Did: Mike Dudas from The Block on Crypto Journalism

The following is a lightly edited transcript of The Block CEO Mike Dudas' recent conversation with Peter McCormack, host of the very popular What Bitcoin Did podcast. You can find additional What Bitcoin Did interviews and subscribe to the podcast here.

What Bitcoin Did: Mike Dudas from The Block on Crypto Journalism

Peter McCormack: Welcome to the What Bitcoin Did podcast. Hi there. How are you all? Are you all having a great week? Simply the best Bitcoin podcast in Bedford. I'm your hosts, Peter McCormack. Today I have an interview with Mike Dudas from The Block.

Let's move on to my interview with Mike. Mike Dudas from The Block, who I also love because he is also a Liverpool fan. We've not only been talking about football, but we've been talking for quite a while now. Kind of got to know him. Been following what The Block do. Just a note before you listen to this. We actually recorded this before Christmas. But the way the schedule worked, this would have had to have come out on Christmas day, which I thought was a waste of time, so I've delayed it to this week. Do you know The Block? Have you checked them out? They have definitely changed the game with crypto journalism. From their hard hitting reporting to their in depth analysis. Their content has definitely been creating ripples across the whole crypto space. If you're on crypto Twitter you definitely can't miss it.

So many things stand out about them though. From the quality of the team which Mike has recruited, to the way they ensure that they have no conflicts of interest with what they do. I wanted to talk to Mike. I wanted to get him on. I wanted to discuss the background of The Block, but what their strategy is. At some point I'm going to get some of the other reporters from the team on. But right now you've got the main guy. You've got Mike. If you've got any questions about the show you know you can reach out to me. Make sure you also follow The Block. Okay, so on to the interview. As I said, if you've got any questions you can always reach out to me. My email address is [email protected] I look forward to hearing from you.

Listen, I've been following The Block for a while. Following your work. Absolutely loving it. But fully recognize that you are very different from every other crypto publication. Throwing hand grenades out there. Big stories, big coverage. Tell me about it. What's the strategy? What are you trying to do here with The Block?

Mike Dudas: With The Block, we're really trying to bring clean clear objective fact based analysis, journalism, and research to an ecosystem in which 95 percent plus of the projects are basically poof. If not in the next couple months, in the next couple years. It's pretty clear to anyone. Everyone was saying six to eight months ago when this idea for The Block first came about that, "Look. This entire quote unquote asset class is overvalued". But nobody was covering it that way, right? You had CoinDesk and others literally running BitConnect ads. It's crazy.

Mainstream media did not at the time understand the technology well enough, the governance well enough. Pretty much anything well enough to report on this accurately. They were just reporting on price. Including CNBC, including Bloomberg, and doing it in really short segments. We feel, I certainly feel having worked in FinTech at Braintree, at Google Wallet, at Venmo, for years at PayPal, that blockchain and crypto assets are a major significant evolution in how we think about money, how we think about technology and value, and digital assets. I don't think it's like traditional FinTech, that tends to get co-opted by the big banks in the existing system. I think of it as something that can exist outside of those systems. That really got me excited.

At the same time, was disappointed with the lack of professional coverage in the space, and felt like we could play a part as a media and information source of great credibility, at helping to highlight the good things and highlight the bad things. Then really separate the wheat from the chaff.

Peter McCormack: Right, okay. You spotted the opportunity. What did you go through to make it a reality?

Mike Dudas: Basically it's a people business, right? So much by the way of this entire ecosystem is a people ecosystem. We're creating software. We're creating protocols. We're not creating, in our business which is a media, information, research, and analysis business. Or in these technology businesses that are being created. It's primarily software driven. It's a lot about the people. The biggest thing at The Block was being able to recruit those people who were best in the world.

Best in the world in this ecosystem isn't somebody with 20 years of experience, because nobody has it outside of a handful of folks who were crypto anarchists in the '90s, right? What it means is bringing on people who are curious. People who have depth of knowledge, and tremendous amounts of energy, and are so passionate about this. I mean our team, we have an internal Slack group that we use for a variety of reasons. But we spend, you'll see a message, like 22 out of 24 hours of the day on there from somebody on the team. The energy is palpable. Recruiting the best people is key. The best researchers. The best analysts. The best technologists.

We're really excited about where we are. We have a really good team. The output has been tremendous since we actually launched the product in September, and the readership has followed and attention has followed.

Peter McCormack: You said you think 95 percent is going to go poof. What is it you think that?

Mike Dudas: Probably more. I mean that's if we go to like token 5,000 on CoinMarketCap. There's just, I mean there's a whole variety of reasons, right? There are people who literally scammed others. You have a variety of scams. You have a variety of people who raised money because it was easy to sell tokens to the public. Oftentimes in ways that are unregulated. Then simply don't have the capability to build what they said they would. I mean that's probably, I'm making up numbers here, but that's a big big big chunk of projects.

Then there are people who believed they could do things and haven't been able to, and have had to shut down. Then you get to the cream of the crop, right? I mean you have ... When entities like Consensus that employed 1,000 or so people at the peak are laying off hundreds and hundreds of people, with many more to come, you know that the funding got far far far ahead of what the technology is capable of. I think a lot of things that got funded will, it has so many analogies to the first internet bubble. But will be things that, in 10 years an idea might make sense, but today it doesn't.

A lot of it has to do with, "Cool. You can do this technology thing." But the trade-offs to do it on a blockchain are that it becomes absolutely unusable by consumers or businesses. Because the interface is just abysmal. That's a whole other segment of products.

Then you know, the products are actually good and interesting. Just, a lot of them aren't getting usage. You look at consumer facing dApps, which was a big use case for Ethereum outside of ICO funding and ERC20 tokens. The dApp, either business or consumer usage simply isn't there yet. EOS has been launched to try to reduce friction and enhance scalability. But again, we're talking ... The big question right now for so many of these projects is, "Is a blockchain necessary?", right? For many it's not.

Peter McCormack: Right, okay. You also, you mentioned CoinDesk. It seems like a number of the other crypto publications and websites, they are reporting in a different way. Do you think some of them, maybe this is ... Well I identify probably two reasons. One is a conflict of interest in the bigger group they may be part of. Secondly is the model they've built. In that I think many of these companies are relying on these crypto projects as a source of income. We've seen that some actually will accept payment for positive stories. Do you think that's why they've not covered it? You obviously have a different model.

Mike Dudas: Yeah. I mean this is very easy to break into groups. Let's start with the mainstream media, right? The mainstream media covers this because it gets a disproportionate amount of clicks and attention. It's interesting and it's a class of money as well as a class of technology. But they focus on a general purpose audience and typically don't give the specific thing they're looking at the depth of treatment that's necessary. The Economist is the guiltiest of this. Bloomberg is occasionally guilty when they put their general purpose reporters on it. But when they put their crypto reporters on it they actually do a pretty darn good job. Fortune has some good folks, like Jeff Roberts. There's some good mainstream media reporting. But I would say in aggregate it just doesn't go into depth.

Then you get, I think the area that you were most interested in focusing on is the Coindesks, the CCNs, and the Cointelegraphs. Let's just use those as the three largest pure play crypto media entities. CCN and Cointelegraph are the absolute early Business Insider. Just write every single thing up, aggregate. Don't worry too much about whether it's perfectly factually accurate or has depth or things are spelled right. Then let's monetize that through, like you just said earlier, ICO ads and you name any product. I mean you go onto their home pages or article pages anytime, and you're going to see some really low quality ads. That's the model. Very low cost content. Very low quality advertising. It's just volume volume volume. Then they do, as you said, accept sponsored posts. That they do denote. But in sometimes not the most transparent way.

Then you have actual high quality media, which is an interesting new category, and I'll go back to Coindesk. But you have a high quality media. Some of the new folks like Decrypt Media, who I have great respect for, and BREAKER, who I have great respect for. Now both of those are funded by, so Decrypt is directly funded by ConsenSys, and so while there's a Chinese wall there and that team has great editorial integrity, it's just hard to operate with that relationship without some doubt creeping in on the reader's mind, right? But again, what I've seen to date is high quality reporting. Who knows if stories get killed or other things happen, and who knows what their long term revenue model is. Or if it's just to be sort of patron funded by ConsenSys in a manner similar to how The Washington Post could lose money because Bezos owns it.

BREAKER is another one. I don't know what the long term revenue model is there. It's hard to really comment on what their plans are in the future. But today you would look at them and say, "It's going to be a really difficult challenge to establish businesses with either of those models". Unless they are funded by the projects. BREAKER is funded by a project, Singular DTV that ICO'd, has I'm sure a treasury, and can continue to put money into that. They have connections to New York Magazine as advisors. Those are the only two that I see doing quality work similar to us. But the funding model and business model is in question.

Lastly we'll get to Coindesk. Coindesk is a wholly owned subsidiary of Digital Currency Group. Barry Silbert, one of the most powerful most connected folks in the entire ecosystem, who has his tentacles in so many different businesses, so many different projects. His entity is a 100 percent owner. Now Coindesk has some fantastic editorial talent. Both on the pure editor side, as well as their journalists. They also, and they have great analysts and researchers. It's a mix. They put out some really good work and they put out some lower quality work. But on balance they are doing good work.

The thing is, their model isn't the journalism, the analysis, and the research. It's the conference. To your original question, they make any profit that they make on basically these series of conferences by which it's paid to speak. Gets paid to attend, and it's paid to speak. We're talking tens of millions of dollars in cumulative gross revenue annually for these sponsorships, for these speaking spots, and for participation in conferences. The journalism is meant to drum up interest.

We look at ourselves ... We looked at that landscape and then we looked at ourselves and said, "Look. There has to be someone who comes into this market". Like the information has in general technology. Like CB Insights has in terms of analysis in broader technology, and who does this independent journalism, plus independent research that people will pay for. That's what we're doing at The Block. While all of our work is shared for free today, we will be introducing a paid product in Q1.

Peter McCormack: Do you want to talk about that product? How much can you tell me?

Mike Dudas: Yeah, so I'll give you the broad outline of it. But it will be heavy on a few different things. Number one, we will go much deeper in our research. Some of the LUMAscape style charts that you've seen about enterprise blockchain or stablecoins, we'll dive deeper into research in those areas. That will be actionable for people who want to invest, who want to work in those areas, who want to understand the technology. Our analysis will go much deeper into looking at specific exchanges. Looking at trade volumes and potential irregularities. I mean just, these are a variety of topics. Again, things that will influence how perhaps people might trade.

Looking at projects much more in depth and looking at people much more in depth. Doing the things that The Information does, where they highlight deeply, "Who are all the important people at organization X, Y, or Z? Or protocol or foundation X, Y, or Z?". Things like CrunchBase. John Biggs is working with us as editor currently, and he's incredible. He's the founder of CrunchBase, and so to have John giving us that guidance as we launch this premium paid product. He's somebody who was working in crypto for over a year prior to joining us in the last few weeks. It's just such a massive shot in the arm for our efforts. We have one of the people who's sort of foremost in the world at launching one of these information, research, and people services, helping to guide our editorial teams.

Peter McCormack: Right, so it all comes down to the team, right? You've identified, you've got to get the best people.

Mike Dudas: Yeah, it's the team. You know, I left out the journalism. We will continue to break news. We view investigative journalism, such as the great piece that Frank Chaparro wrote on Blockchain Terminal last week, as really important. Because we want to share things that the general public, and even potentially investors in the project, aren't aware of. We know for a fact that we have shown light in certain cases on certain things that folks have then, authorities have then said, "This is something that we need to investigate". We think this is really important for the ecosystem, because we have resources and we believe that when we introduce our paid product, we will create such value for folks that we'll also have a business model. To support something that I said earlier will separate the wheat from the chaff in this industry.

Peter McCormack: With those quite controversial stories, the investigative journalism side, how much consideration do you have to give to the risk of publishing an article, and how it might reflect on you? Or do you just stand up and say, "Look. We're journalists. We're reporting the facts"? Freedom of the press, etc. Where are you positioned with that?

Mike Dudas: We ensure that the things that we put to print, that we publish on www.theblockcrypto.com, have been fact checked. Have been run by legal. Are exceptionally well sourced. Either on the record or with multiple sources off the record. That we have been privy to evidence that supports any factual claim that we make in those articles. What we put into those articles, we stand behind 100 percent.

The thing that is clear always in investigative journalism, and you've seen this with higher profile cases. Things like, the Wall Street Journal coverage of Theranos. It's always deny deny deny. Then the onion gets peeled back. It's always a cost benefit analysis. When you're saying, "Should we peel off all eight layers of this? Or should we just leave it with the two layers we've peeled off and get back to focusing on what the customer is looking for?". In the cases where we've done some investigative journalism, and we have some additional pieces coming over the next month, we're going to basically write the piece and share a reasonable amount of information that we believe is essential to tell the story that the public needs to know, and that we're able to prove. But that doesn't compromise our ability to do all the other things that we do, right?

We can't be pouring 100 percent of our resources into investigative journalism, even if we literally get, I'm not kidding, across our whole team we get more than a dozen tips that are worth looking into about pretty significant potential frauds and scams on a daily basis. It's really wild. I've literally never seen an ecosystem like this. Having spoken with journalists in other verticals and sort of telling them some of the tips that we're getting, not all of which are confidential. Meaning people do share them freely. They say, "Wow. That's bonkers". I mean there's a lot of crazy stuff going on in the ecosystem.

Peter McCormack: How do you think we've got to this point, then? Where there is so much.

Mike Dudas: It was just a wild wild period of excess. The tens and tens of billions of dollars of capital that poured in, and was contributed by a number of unaccredited investors globally in a relatively unregulated way. It just opened up a crazy Pandora's box. I mean, not to mention the actual companies that are still operating, and I'm not going to name any specifically. Because again, we have some investigations going on. But you look, we had a piece just yesterday. That one percent of volume, this was just a small piece that we wrote, and we were basically repeating what a more detailed study had said. But one percent of volume pairs of BTC on the top 25 pairs was legitimate volume, and more than 90 percent was wash trading or illegitimate volume. I mean it's just bonkers.

I think it's too much money. Not enough regulation. Too many jurisdictions. Whether it be state, federal, multiple countries. These types of markets attract, clearly, the worst kind of people, right? There's ability for money laundering. There's ability to exit scam. I think people still, a lot of the crooks that you'll see, and I'm not talking about anybody that we've covered or anything that we've covered. Because I'm not implying anything about anybody we've covered being crooks. But just in the ecosystem, the things that people do often that I read about and I see other folks covering, or that the SEC is actually settling with people over, I mean it's just dumb stuff. It's stuff that you're obviously going to get caught for doing. Like, "What the hell are you doing, people?".

Peter McCormack: It feels like therefore your business is going to transition quite a bit with the market. There's obviously so much to report about right now. You know, we're going to have a complete wipe out of the market. A complete shakeout of the projects that can't ship, won't ship, ship but to low quality and won't get users. All these projects will get wiped out. But at the same time, if we compare to the dot com era, there will be another round of investment of sensible ideas that follow the regulatory framework. I guess over time, you're going to, the type of things you're going to report on are gradually going to be less of the scams and the bad things happening. Then you're going to start following all the good things that are happening.

Mike Dudas: Exactly. That is literally our dream. I didn't know that the market was going to drop 85 percent from the day I made the decision and wrote my day one medium post in January when we were up 1740 Bitcoin. Now where are we? 3500? My wife definitely lets me know repeatedly that I should have sold more a the peak. But you know, you cover what there is to be covered. We don't write about price very often, but we do write about projects that are having trouble, and there's more of those than there are projects that are shining.

That being said, we're going to have a great piece come out written by Arjun Balaji, our technical advisor, this week on the Lightning Network. We are waiting for Myles Snider to write a piece, a positive one, on EOS. There are so many good developments in this ecosystem that we want to cover. I expect to see the pendulum swing back in 2019. But not entirely. In other words, there's going to be projects that run out of capital. Projects that are folded into others.

Then there's the ones that will continue. The best example of that and the one that fascinates me the most is obviously Ripple and XRP. That is, so Ripple is a company and XRP is a protocol, that are unquestionably connected. There's no question, no doubt on Earth. We've spent time. Larry Cermak, our head analyst, has written about this. I had a tweet storm over Thanksgiving about this that was backed up by public facts. That story is going to remain. We're not going to...

Our coverage, the way our coverage will change is, we're no going to keep stating the Ripple security thing over and over again. We're not out here to beat dead horses. We're not out here to chase specific people or projects, or prove points that we already feel we've proven or covered. But if there's new news, I want to see Ripple actually, I'd love to see them get product adoption. I've worked at companies similar to them. With Google Wallet, that launched from zero and now is Google Pay, and it's globally accepted.

I worked on Venmo when it had 30,000 monthly active users. I mean, it was amazing to see that product launch and scale. To help Braintree grow. To found a company in Button that went from zero revenue to more than halfway to $100 million in gross revenue. It's something, I'm an entrepreneur. I want to see these folks succeed.

The thing with Ripple, to get back to that example, is just some of the mealymouthed thing, and changed narrative about the ties to the actual cryptocurrency protocol. But if the company just existed itself without trying to force the token into the business model to prop up the treasury, which has become their actual business model, meaning selling XRP, I would be supportive. I'm supportive as Ripple, if they can improve upon Swift. But as the Transfer Wise CEO said, "I really haven't seen that to date".

Peter McCormack: Yeah, and also SWIFT aren't just going to let their business model be taken from underneath them.

Mike Dudas: Of course not. I look at them as more like FinTech than I do Bitcoin. Which could potentially be a store of value. You know, censorship resistant programmable money. But we can save that conversation for another day.

Peter McCormack: What do you make of the community around XRP? In that one of the things I've noticed is, I'm very suspicious of the bot activity. But I don't know if that's centrally controlled or if that's something that's just some very eager fans of XRP. But one thing I notice is, the volume of XRP people who have XRP in their name, XRP logos on Twitter, they hammer Coinbase every time they make an announcement, they don't discuss any crypto outside of XRP. If you actually dive into their little communities on their message boards, they're all just sharing each other's content in this kind of weird community.

Mike Dudas: Yeah, so look. It strikes me ... Again, I'm not a journalist and I am not an editorial person at The Block. I feel like I can say that it strikes me as suspicious. That being said, and I've noticed, and many folks like Jeff Goldberg, who almost obsessively talks about this publicly on Twitter, and is somebody who I've known for years pre-crypto, pre him doing any of this. But seems to, the evidence he's presented is at least eyebrow raising on the coordination of some of these things.

I personally don't have any evidence that this is connected to Ripple Corp, or that Ripple is paying any of these folks. I would never make that insinuation or accusation. But it makes you wonder if someone is, right? I don't know what's going on there, is all I have to say. But you don't see behavior like this from any other crypto quote unquote community. You see people talking about the technology. The general level of sophistication of the arguments of that particular army and community versus literally any other one is, like I can't put a number on it. It's significantly lower and less sophisticated. It's not even worth engaging at this point anymore. I've just made a policy on my personal account to just block it.

Peter McCormack: Yeah, and do you know what? How do you separate what is The Block and what is personal views? Twitter accounts tend to be personal.

Mike Dudas: It's really difficult. It's really difficult. I'm never going to get it to a point where 100 percent of people will agree with 100 percent of where I draw the line. By the way, I think that's true of The Block's coverage. We even internally debate, how much should we say on our personal accounts? How much should we say on The Block account. Then what should we cover? We have lots of internal debate on what we should cover and how we should cover it, and have different viewpoints.

But basically I think the rule, and I'm learning as I go, because I've historically been in more enterprise technology. Which by the way was why it was so fun to kind of raise $2 million for this business over the summer. A business that I'd never done before. But our investors believed in this mission, knew I'd been in crypto since 2013 and was passionate about it, and that I'm a great recruiter and could recruit this world class team to do this. But my personality and who I am and my passion is a big part of what makes this tick, and that's true of the rest of our team as well. Larry, Frank, Steven, John Biggs.

I took it, one of the highest praise or most, literally one of the kindest things anybody has said to me in a long time is, John Biggs, again, early TechCrunch, who came up with CrunchBase and worked closely with Michael Arrington, said, "Dudas, man. You remind me of Michael Arrington in the early days. Like the fire", and said a few other things. I was excited by that. I think Michael was able to, and he's still in the game in a big way in crypto. But he was able to I think move the industry in a number of ways and in a positive light. In a positive direction. Get it more visibility. Make it ready for mainstream coverage. I'd like to do that as well for crypto. But I'd like to be the mainstream publication.

TechCrunch, they've kind of ultimately purchased and didn't necessarily realize their true financial potential. I think we can learn from some of the things that happened there to do that. To do even better.

Peter McCormack: Tell me about the team then. Because that is one of the most impressive things. You've recruited this all star team. Every time someone new comes on you're like, "Yeah. I've been reading your content already." Tell me about the team. Who the key people are. What their roles are within The Block. But also, tell me about where the gaps are. Who you're looking to get in the future. What kind of people.

Mike Dudas: The key folks, my co-founder and CTO Jake McGraw, is incredible. He and I worked together 10 years ago at the first startup that both he and I worked at in '08, '09. Which was an ad tech startup. My key rule here is, the absolute best signal that somebody is going to be great to work with at an early stage company is that you know them and have worked with them before. Or you know their work.

Jake McGraw is my co-founder, and he's incredible. John Biggs coming on as our editor, we parted ways with our founding editor. John is incredible. He has a tremendous amount of experience, skill, relationships. Can keep it calm and cool when it's just, I'm a very emotional and fiery person as you know. He brings measure. But candidly, our strongest asset is the people doing the work. It's Larry Cermak, our head analyst. It's Steven Zheng, our head researcher. It's Frank Chaparro, who's our senior correspondent, and came to us from Business Insider. Then Isabel Woodford, who just joined us, who'd worked at Reuters and is based in London. Those four are doing the work that is really making this company special.

What's so fascinating is that each one of them is under the age of 25, but knows more about this space, whether it be the technology, whether it be the people, whether it be the companies, than I do. My job is to get to a slightly below topical level knowledge about a lot of things, and then help orchestrate what we cover. Go out, sales and marketing, raise money, and lead the team. But these folks are world class experts. They've been so amazing that they helped attract Arjun Balaji, who is I think one of the top five people. We've been friends. I leapt for joy when he agreed to join as technical advisor. He's giving us a decent amount of his time, and will be publishing some work.

But the whole point is, great talent attracts great talent. We're now getting more contributor pieces, ideas, tips. Then last but definitely not least, I hired a guy named Mike McCaffrey, who had spent 18 months working at Citibank as an investment banker. He was recommended to us by two investors. Bloomberg Beta, I love that Bloomberg is an investor in our business, and Blockchange's Ken Seiff, who is an incredible investor. Multiple funds, and just a wonderful man. Former CEO, and a great advisor to us. But they both recommended Mike as chief of staff, and we subsequently promoted him to director of operations and finance, as well as chief of staff. The guy is 24 going on 40. The maturity that he brings. You need these heroes.

The biggest thing I've learned, I don't recruit on LinkedIn. We don't even have to post jobs, because our network, the people we see, the talent basically comes to you if you're doing great stuff. That's what's been so so exciting. These best people just rise to the challenge in an incredible way. We're just looking for more of that. Frankly it gives us what you would call a quote unquote arbitrage opportunity versus others. We compensate every single full time person on the team in equity. As well as fair value cash. It's basically like you have upside above and beyond. That's something, that we don't have to over over over pay like I bet some of the other publications out there have to. We can pay these folks and give them upside. It's an unfair advantage.

Lastly, we have Stephen Palley, who is one of the best lawyers in the space, working on our behalf. That really, I developed a friendship with him. He's really been an incredible asset to the team, because so much of what we do does require a legal review prior to publication.

Peter McCormack: Yeah, it's a great team. I'm a fan of every single one of them, every person you just named. I think they're all amazing. One thing, it seems to me as an outsider, and I could be wrong. But it feels like you don't really have any kind of huge hierarchy of structure. It feels like you probably have quite a flat structure, and you give your team a lot of freedom.

Mike Dudas: Exactly. That, I didn't actually answer the last parting question which was, "What are the gaps?". We are launching, as I mentioned, a paid product. The biggest thing, and I just posted this actually yesterday publicly, that we will hire between now and February when we launch additional researchers and analysts. There's some really really exciting world class people who we're talking to. We're going to hire more full time folks. With love, anybody interested and listening, to apply on our site. As well as contributor pieces.

It's just the exposure that folks will get. They love it. They can get it on our site where we're seeing now hundreds of thousands of monthly visits. As well as through our newsletter, which is read by just an insane who's who of the industry. Obviously can't reveal names. But these are C level folks at Fortune 500 companies. These are leaders in protocols, household names, investors, etc.

Peter Mc