[0241] Ethos: The Start of the Corporate Buyouts
Holy cow. The news dropped on me like a bombshell. I was perusing Twitter yesterday and saw two tweets from @Ethos.io, the universal wallet and @SingoLavine, the CEO.
Ethos has "done a deal" with the crypto broker, Voyager.
At first I thought, "how awesome, a new partnership". Then, as details emerged, the "deal" was not a new partnership, but a merger.
A merger? "Here we go", I thought. "The start of the corporate buyouts".
I was shocked. Out of all the startups, I thought Ethos had the most legs. Building a universal wallet that you can slot 3rd party brokers, insurers and banks into was genius. Designing a new bank for a mobile phone had to be worth a mint.
Why would you want to sell that?
Given the vision and drive of the 30 year old CEO, I thought this one was a winner. Now after the news, I can't help but think this is one of the worst trading decisions ever in the crypto space.
From what I can see, Ethos will stay in operation but will be a division of a larger company. A department. While extra resources were touted as a big win and the merger was spun as a positive, the signing over authority for a measly $4M is insanity.
Yes, Ethos sold for $4M!
ICO's raised 10x that and on a good day, you could nearly make that trading coins on the market.
Selling such a hot project for $4M reminds me of George Lucas' sale of his 40 year old Star Wars franchise for $4B. Both are monumental mistakes and bad deals.
With a pending bull run in 2020-21, $4M is milk money. So the decision leaves me flabbergasted. Why would you sell out before a bull run? You'd sell ( if you were to sell ) at the top of the market. Obviously I don't have the same info as the CEO and team, but at this stage it doesn't really matter.
The question is what do investors think? The average Joes and Janes who backed the child prodigy and believed in his vision of a fair banking system for all? Where is all that now? What will happen to the people powered platform that told us the future was for everyone?
Are these just empty slogans for use by some corporate entity?
Emotions aside, what will investors into Ethos think of the private sale and not being asked for their thoughts beforehand? The people who backed Shingo to head up the future of banking. His reputation has now taken a big hit for abdicating.
From an objective, investment point of view, Ethos just doubled in value. But retail investors won't see it that way in the short term. They will see betrayal, insanity of selling out for buttons and the wave of emotion may translate into a bearish, if not break neck, drop in price.
It will be interesting to see the markets reaction.
The sale of Ethos in my mind signals a new trend that will emerge in the next year or two. The trend of corporate buyouts. Acquisitions. Sell outs of crypto projects to the big fish. The swallowing up of crypto real estate by the big banks, Facebooks and Googles of the world.
Corporate buyouts will happen and with it will come the biggest threat to the freedom that crypto and peer to peer transactions represent. Ownership by the very monopolies they were supposed to disrupt.
We may just see a "business as usual" world when crypto is done and blockchain mass-adopted. The same world just with a new and tighter digital mesh to further institutionalise what we have now. Digital utopia is not guaranteed.
The Ethos decision is mind boggling in a number of ways and to be honest it is going to take me awhile to get my head around the motives for it. I can't see it as a good decision for a growing company that was positioned for a good percentage of market share and could have done some acquiring of its own.
In my mind it's just a matter of time before the new parent company "does a deal" themselves and is absorbed by JPMorgan of some other behemoth.
What happens then to the "fair banking for all" ethos that Ethos.io championed when that happens? Time will tell.
Whatever you think of the decision, it's a sign of things to come.
Thanks for watching,
Brendan Rohan - Indie developer of 'next gen' natural medicine from Melbourne, Australia
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