What is blockchain technology? 4 small business owners explain

What is blockchain technology? 4 small business owners explain

It’s safe to say that blockchain has reached buzzword status. This term is used with abandon at tech conferences, in research reports, and by thought leaders. It’s now a word with implicit meaning – as in, you “should” know what blockchain is, but there’s a strong chance that the person discussing it is more confused than you are.

That’s largely because despite all the buzz, blockchain is still in its infancy. At last year’s Finance Disrupted conference hosted by The Economist, panelists discussed blockchain like it’s going out of style. But they also admitted that it’s not in style yet. There was uniform consensus that although blockchain might turn the finance world on its head, it’s still a good five to 10 years away from mass adoption.

This aligns with Gartner research on the subject. The IT research firm’s recent blockchain report found that while this sector is increasingly crowded, it’s still so young that whichever blockchain technology will come to dominate likely isn’t here yet.

So, what is blockchain technology? According to Harvard Business Review:

With blockchain technology, the core system that underpins bitcoin, computers of separately owned entities follow a cryptographic protocol to constantly validate updates to a commonly shared ledger. A fundamental advantage of this distributed system, where no single company has control, is that it resolves problems of disclosure and accountability between individuals and institutions whose interests aren’t necessarily aligned. Mutually important data can be updated in real time, removing the need for laborious, error-prone reconciliation with each other’s internal records. It gives each member of the network far greater and timelier visibility of the total activity.

In layman’s terms, the good news is that blockchain might be used to solve a host of future problems. The not-so-good news is that this is easier said than done. Gartner’s blockchain report confirmed that since blockchain is so new, there’s no industry consensus on product definition, feature set, or solution requirements.

To make things even tougher, blockchain’s at the peak of Gartner’s Hype Cycle curve. This means that despite a lack of clarity about blockchain, inflated expectations abound.

Even so, that doesn’t mean your small business can’t start using blockchain now. We asked four small business owners how they’re using it to get ahead. They gave us real-world examples that you can start exploring for your own small business today.

Read on to learn how small business owners are using blockchain to:

Send supply chain payments

“I have several sites, but the one I use blockchain for is 20×60.com, which sells equestrian supplies. Most of our products are imported from Europe. I have to wire money (euros) to our suppliers at least once a week. I used to use my bank’s international wire transfer, but it’s way too slow and expensive. I was charged an origination fee, a transfer fee, a receiving fee, and about three to five percent on the foreign exchange fee.

“Now, I use Veem (formerly AlignCommerce.com) instead, which uses blockchain to circumvent the normal international wire transfer rails. It’s way faster and cheaper: no fees of any kind and only one percent on the foreign exchange fee. It’s as simple to use as PayPal.

“I give them the recipient’s email and the amount of euros I want them to receive. That’s it: no banking information [is needed]. They take the money out of my checking account via ACH. On the recipient’s end, the first time they received a transfer, they had to log into Veem and create a free account [asking] them where they wanted the funds deposited. [Once the account is] set up, they don’t have to do anything: the money just shows up in their account.

“It’s the way international money transfers should be: easy, low-cost, and fast. Traditional wire transfers as we know them are going to go away in the long run.”

Mike Scanlin, CEO of Born to Sell

Facilitate smart contracts

“Slock.it is currently developing the USN, or Universal Sharing Network. It gives users an app to find, locate, rent, and control any object mediated by the USN from anywhere in the world. This will include bicycles, because access control to bicycles is easily mediated by a smart lock. We do not intend to produce the locks ourselves; instead, we are integrating with partners such as NOKE.

“The main advantage of using blockchain is a radically simplified user journey: open the app > find the bike nearby > pay for it > use it. There is only one key (your smartphone) for everything and no need to register or log in for the service. Paying for the bike and leaving a deposit is enough.

“There are other advantages, namely cost-effectiveness (we leverage a public infrastructure and therefore do not have heavy data center outlays); security (cryptographic keys [are more secure] by default); and transparency (all transactions are recorded and immutable).

“The beauty of blockchain is that…you do not need to talk to vendors before you start leveraging it. For example, if I wanted to send you money today, I do not need a circle or coinbase account: I could just open up a free and open-source bitcoin or ethereum client and send you the funds immediately. The same is true for smart contracts: if you can write them, you can deploy them. Yes, currently blockchain skills are in short supply. However, the same was true for internet developers back in 1999. Today, most companies have in-house resources that can produce websites and interact on social media.”

Stephan Tual, Founder and COO of Slock.it

Make cloud products more secure

“I am currently using blockchains to securely store electronic information in a cloud computing environment. I’m the co-inventor with my son – a Computer Science major at the University of Wisconsin-Madison – on U.S. Patent No. 9,569,771, [which] was issued on February 14th, 2017, [and uses] blockchain techniques for secure cloud storage.

“Blockchains can be used…to manage cryptocurrencies like Bitcoin or for financial tasks. Since blockchains are decentralized and do not require a ‘central authority’ or ‘middleman,’ this avoids the need to have a centralized database managed by a trusted third party which can be hacked or compromised.

“If you have a task or process that currently requires a database managed by a central authority or middleman, look into using blockchains instead. Blockchains may just be the next generation of network databases and are a great way to keep track of important electronic information, ownership titles for all kinds of real and personal property, etc.”

Stephen Lesavich, PhD, JD, Founder and CEO of Lesavich High-Tech Law Group

Boost supply chain transparency

“By design, the blockchain enforces the transparency, security, authenticity, and auditability necessary to make tracing the chain of custody and attributes of products possible. [In turn, this] allows customers to derive the high-quality information needed to make more informed choices.

“Implementing supply chain transparency on the blockchain dramatically reduces the high initial cost/benefit ratio for participants. [And] its naturally distributed design frees a central organization from costly, error-prone operational duties.

“The choices we make in the marketplace determine which business practices thrive. From a diamond in a mine to a tree in a forest, it is the deepest, darkest ends of supply chains that damage so much of the planet and its livelihood. [Blockchain] could be a unanimous source of connected, secure, and incorruptible information to allow the purchasing decisions throughout supply chains – and by end consumers – to be smarter.

“Small businesses all along the supply chain can use the blockchain to store a verified claim or certificate about a product. [Then, they can] track the chain of custody and location of that product through the supply chain using Provenance’s software service. It works for raw materials and finished products…on our self-serve platform.”

Jessi Baker, Founder and CEO of Provenance

Where to learn more

These four entrepreneurs use blockchain with success. Still, it can be tough to know where you should start. If you’re keen to learn more about blockchain, these three sources are a strong place to begin:

Your Bookkeeper

Will your accounting software support transactions with bitcoin (the cryptocurrency that blockchain supports)? Likewise, what should you do if your own country’s government allows bitcoin (like the U.S.), but other global governments don’t? If your small business has an accountant, make sure you ask these questions before blockchain gets involved.

UC Berkeley

You don’t need a degree from the University of California’s crown jewel to become a blockchain expert. That’s because real experts have done the work for you. This PDF published by UC Berkeley’s Sutardja Center for Entrepreneurship & Technology explains far more about blockchain than we have space for here. And with co-authors from companies like Google, you can rest assured that you’ll be in good hands.

GitHub

Fabric Composer is an open-source framework that lets you define a business network and script transactions in Javascript, then convert those to blockchain. As Kathryn Harrison – IBM’s Blockchain Platform Offering Leader who shepherded Fabric Composer – explains:

“What started as an idea while we struggled to translate business concepts to chaincode has now become a powerful set of tools that allows developers to model their business networks, integrate legacy systems, and create skeleton applications. We started with an enterprise white paper and have evolved into a powerful framework that makes any javascript app dev into a blockchain developer.”

Still unsure if now is the best time for your business to start using blockchain? In the meantime, cloud-based software tools for cloud storage, digital asset management, and supply chain management can help you solve problems today that blockchain might fix in the future.

Alternatively, is your small business ahead of the blockchain curve? Share how you use it in the comments!

Put your best foot forward: 4 eCommerce lessons from Peony and Moss

Put your best foot forward: 4 eCommerce lessons from Peony and Moss

Eva Spitzer is the founder and designer of Peony and Moss, the three year old fashion and apparel brand specializing in uniquely designed patterned socks. Located in Seattle, Eva’s business aim is to create beautiful socks that cater for the more modern, fashion-forward person, with an emphasis on comfort, warmth, and relaxation. From thigh highs, over-the-knees, and pretty ankle socks, Eva’s handmade designs are adored by those who enjoy the ‘cosy’ side of life.eCommerce lessonsAs a designer by trade, Eva created clothes for major national brands such as Macy’s and Bon Bébé, and was working in childrenswear development before deciding to quit and focus on turning her idea for selling patterned socks into reality.

Being a woman in business isn’t easy, but Eva has managed to expand her solo business from selling at trade shows into a successful eCommerce store. I talked with Eva about her business journey, the eCommerce lessons she’s learned, and the challenges she’s faced along the way.

The challenge: Product recognition and lack of online business experience

On taking the plunge into starting her own business, Eva said, “I had no idea how to start my own company. I just jumped in and started swimming”. With no prior experience in setting up a business, getting her brand recognised, or selling her products, she used other business models as a starting block.

Having read that another company had successfully started their business with just six necktie designs, she decided to try the same tactic. She’d also read that another pitched to 100 stores via email: she did the same, but received zero replies.

Eventually, Eva began to take things into her own hands, and called a small boutique near her home. Despite not having the capacity to meet with her, they did give her the inspiration to attend a trade show as a seller. After selling her first five orders at her first show, she knew that her designs could sell, but she left the show with a profit of just $100.

Despite making headway at trade shows, Eva knew that in terms of long-term profitability it wasn’t a sustainable business model, and not the best way to build brand recognition due to their one-off nature. Using her cornerstone – her passion for design – and her desire to learn how to sell, she began the process of building her brand through an online store.

Lesson #1: Build brand awareness early

Once Eva had set up her online store, she wanted to develop its brand awareness and online presence. In early 2015 Eva began to:

  • Send more sales pitch emails
  • Expand her line into 30 designs
  • Receive and incorporate feedback from a sales rep
  • Sell to a daily deals site (which boosted her website, her brand, and traffic)
  • Answer HARO requests to build her online presence (which gives her opportunities to be featured in other media outlets).

And her hard work paid off. Later that year, Eva sold her products to major American retailer, Nordstrom, and her online sales amounted to 10 percent of her total sales.

Eva also decided to focus more on online sales and email marketing instead of trade shows. She implemented MailChimp for her email marketing needs.

“I chose MailChimp because I’d used it previously and was so impressed by its features,” says Eva. “It’s really inexpensive for a business as small as mine. MailChimp is also great for setting up a series of automated emails when people sign-up, which eliminates a lot of time I need to spend manually emailing and getting my brand out there.”

eCommerce lesson: Recognize what works for your business, e.g. keep in mind your target audience, product, and the resources already available to you. Don’t be afraid to mix new marketing methods with more ‘traditional’ ways of generating brand awareness.

Lesson #2: Learn where and how you sell best

Having used Shopify in a previous job, Eva turned to the eCommerce app to help launch Peony and Moss. She uses Shopify add ons to integrate with Facebook and successfully sells on Wanelo – a marketplace where both large brands and independent sellers can sell their products. This has been helpful in expanding her customer base.eCommerce lessons

Despite the current craze for influencer marketing, Eva is yet to reap the rewards from sending bloggers and influencers socks to review. Nor has she seen any great return from focusing on social media platforms such as Facebook or Twitter. However, Eva found that when customers tag the shop on Instagram, and when she reposts pictures from her clients, traffic to the online store improves.

eCommerce lessons

eCommerce lesson: Don’t restrict yourself to an eCommerce store. Assuming a presence on multiple platforms can increase brand awareness and drive traffic to your store.

Lesson #3: Never stop learning

Eva’s come up against a lot of challenges while running the business on her own, and learned many eCommerce lessons along the way. Knowing that the business begins and ends with her, she’s quickly understood that she can’t be complacent about learning new trends or knowing how to efficiently market her business. Here are some key areas that Eva had to educate herself on while getting her business off the ground:

Search engine optimization (SEO)

On the process of optimizing her site for SEO, Eva says, “I definitely did not have any understanding of SEO before I set up my eCommerce store. Now, I actually use my Etsy shop to see what searches people are using to find my socks, and I then try to incorporate those terms into my listings.”

Content marketing

Eva is passionate about being able to connect with her customers. “It’s a new skill for me, learning how to connect with people on a human level,” she says. “I wrote an article about decluttering which really resonated with people, and the response gave me the confidence I needed to continue teaching myself about how best to communicate, and the importance of content marketing even as a really small business.”

Product variation

Recognising that people were often buying multiple pairs of the same socks, Eva added product bundling – the option for customers to buy multiple pairs with a discount – to her shop, which has grown sales further.eCommerce lessons

“I’m trying to continually learn and teach myself how to improve”, Eva says, and is currently taking a business class so she can:

  • Better understand customer needs
  • Learn how to get to know her customer base
  • Use email marketing to build customer relationships
  • Write blog content that resonates with people.

eCommerce lesson: Be prepared to put in the hours required to learn different skillsets and vary your offerings to ensure your business can thrive.

Lesson #4: Time really is money

Maintaining her business at its optimum level has been a big challenge for Eva. She quickly learned that, often, relying on other people can disrupt business, and that, due to the nature of her product, the sales cycle isn’t smooth all through the year.

Reliability

One lesson Eva has learned is not to rely on just one customer. “During a ‘lace trim’ sock trend, a buyer asked me to supply them in bulk for them to sell, but they didn’t actually sell them. The trend ended up dipping, and I was stuck with a huge overstock of inventory”, Eva says. “I’ve learned that getting stronger commitments from people is a must, and that there’s often a need to be firm and proactive – for example, I should have insisted they run an event, and let them know how much this setback was hurting my business.”

Sales fluctuations and cash flow

Another lesson has been in learning how to handle the nature of the sales cycle. “One of the biggest surprises for me were the sales fluctuations throughout the seasons; socks by their nature are very seasonal, but I wasn’t entirely prepared for that”, says Eva. “Now I know the sales cycle much better – stores normally buy in August in preparation for the holidays, and I know that I need to buy my fall inventory in the spring, which can present cash flow issues.”

eCommerce lesson: Secure firm commitments from potential business partners, and consider using customer management software to be fully prepared for your sales cycle.    

Peony and Moss big-wins

Despite being, for the most part, a business run by just one person, Peony and Moss has enjoyed notable achievements to date:

  • Average order size has grown from just one pair of socks to three
  • Average order value has grown threefold, from $36 to $100
  • 2016 sales grew by around 10 times compared to the previous year
  • Featured in multiple gift guides, The Seattle Times, BuzzFeed, and the Etsy newsletter.

What’s next for Peony and Moss?

Eva is more than proud of what she’s been able to accomplish so far. “I’m thrilled with how far I’ve come. The reaction I’ve had from customers to my products is great, and now I’m ready to expand the business”, says Eva.

“By continuing to teach myself, and being eager to learn the ropes with everything from email marketing, content marketing, and sales, I have been able to grow the online business at a rate that I’m really proud of”, she continues. “I think that many eCommerce stores don’t focus on their brand enough – myself included – it’s something I’m working really hard on”.

Peony and Moss is a great example of how an extensive background in sales or eCommerce isn’t necessary to succeed – a willingness to learn and a passion for what you create can foster a great basis for a growing business.

And Eva has big plans for the near future:

  • Introduction of ‘sock subscriptions’, in order to increase customer lifetime value
  • Expansion of the Peony and Moss line to include blankets, shawls, sweaters, and robes
  • Continuation of her Buy One Give One scheme, where she donates one pair of socks to someone in need with each pair sold
  • Focus on email and content marketing to increase sales and customer base.

What have been your most valuable eCommerce lessons?

Have an inspiring story to tell about your small eCommerce business success? Let us know in the comments below or email me at rhian@getapp.com.