Can Activist Investors Exist On Blockchains?
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I read the following fabulous post by @steemmatt:
His reply to me in the comments was particularly insightful, and really got me thinking:
For years I've tried to address the large lack in business understanding and people-are-capital awareness. That's to be expected, but it's inexcusable to not adapt for the betterment of the entire ecosystem, economy, and user base when it's abundantly clear that it's needed.
What makes people's mindsets different here? How does one person hold a bunch of stake, and uses it at the expense of everyone else, versus someone who uses theirs to attempt to enhance the value of their existing holdings? In my mind, it is a lack of common sense with regard to business that leads someone to take the former approach. They have a scarcity mindset, which is the antithesis of the world of abundance that cryptocurrency and blockchain is creating. The closest thing I can think of in the business world, to someone who buys stake in an enterprise and uses it to influence outcomes, is the activist investor.
What is an activist investor?
According to Investopedia, activist investors are:
"known for are buying large amounts of a company's stock and then pressuring the company to make significant changes in order to increase the stock's value." src
One recent example is the attempt of Elliot Management to oust Jack Dorsey as the CEO of Twitter. Despite that attempt ultimately being unsuccessful, Elliot was still able to get four board members appointed.
One thing to keep in mind, being an activist investor doesn't automatically make you right. If you're not taking a long term view, or your ideas ultimately damage the enterprise, things can go very badly. The hostile takeover of STEEM by Justin Sun by purchasing the development fund is a very good study of what is possible if your ideas are bad. Leading to my next point...
Can there be activist investors in crypto and blockchain?
For most chains that is difficult. A whale buying a huge amount of bitcoin for example couldn't use that to directly influence the proof-of-work blockchain. He would need to use those funds to try to influence a widely dispersed set of individuals. But there is a type of blockchain where an activist investor could feel at home...
And then you have Delegated Proof of Stake (DPOS)
DPOS is paradise for an activist investor in the blockchain space. You can have activist investors large and small. The ultimate example for me on STEEM and now HIVE is @theycallmedan. He didn't build his stake by ninja mining, reward farming, or selling votes. He built it by taking his old fashioned fiat money and buying a boatload of stake. He didn't do that to farm the reward pool, and run away with a bunch of shitcoin to dump into bitcoin. From what I can tell, he genuinely wants to use his influence to grow his investment (prove me wrong). You only need to observe his actions to validate his mindset. Another one that comes to mind is @azircon. I am rather biased, but in this person I see a whale-sized stake who operates with very little regard to his own reward, only to do what he thinks is right to grow the value of his holdings. I have significantly less stake, but I still consider myself an activist investor with a similar mindset to these folks.
As I stated previously, using the example of the hostile takeover of Steem by Justin Sun, a bad actor can really do a lot of damage if his activism doesn't align with the needs of the greater community. As Uncle Ben said in Spiderman, "with great power comes great responsibility".
Why is DPOS so good for an activist investor?
First off, there are direct monetary incentives tied to votes. If a stakeholder feels like someone is abusing his investment by farming rewards, he or she can remove those rewards. If they don't like the contribution a developer or witness is making, they can simply remove their witness or proposal system vote. You have a direct line of communication to other investors, and users. You can get instant feedback on your initiatives.
How do you spot someone with an activist investor mindset?
There's opportunity cost to taking hard earned fiat or bitcoin and investing into an altcoin project. If you see someone who has bought any sized stake with their own money, and uses that stake, not to simply extract value, but to create it. That person has the mindset of an activist investor.
You don't need to invest a bunch of money to have the same mindset
What you do need to do, is take a long term view. To focus on creating value and not extracting it. It doesn't matter how many DPOS tokens you stack if they are worthless. Use what stake you have to create value for others, and that value will come back to you ten fold. Have a mindset of abundance, and don't play as if you're in a zero-sum game, because it is not. As a stakeholder, if I lose, we all lose. It is shared fate, and mutual self-interest.
Thanks for reading! As always, your engagement is appreciated.
