Juwan Lee, Founder of NexChange, on the Blockchain Ecosystem and Adoption19 min read
by Henry Chan | Mar 19, 2019
We had the pleasure of speaking with Juwan Lee, the Founder of NexChange, a global innovation ecosystem-as-a-service platform. He comes from a financial services background and has years of experience managing portfolios for hedge funds, proprietary trading and asset management. Leveraging his knowledge gained in the financial industry he pursued his vision to help build a global community where information exchange and collaboration are accessible on a worldwide scale.
He shared with us his views on the future developments of blockchain and what NexChange is doing to grow the ecosystem.
Is there anything that caught your attention during Hong Kong Blockchain Week?
I think the most important observation is we are in a bear market, and my biggest observation is that people from all around the world came to Hong Kong and it did not feel like a bear market. It felt very positive that there were so many more interesting developments. People were looking to engage, communicate, and execute real projects using Blockchain. If you see the sentiment over the last three to six months, it’s been very negative. The prices of cryptocurrencies gone down so much. People around the world have been relatively subdued and have had a more negative tone. However, we’ve seen some very interesting pockets of positive sentiment in this environment over the past few days.
In the past year, among the countries that you visited, were there any governments or people you met that you thought were innovative?
Well, I travel all the time. An example would be my trip to Kazakhstan two weeks ago, and I met with local officials and local companies. They showed positive, reinforcing support from the government and they are looking to bring Fintech and blockchain companies to Kazakhstan and those companies have little to no global exposure. Also, I was in Thailand last week, and there was a community that was building in Chiangmai. That community was more developer-oriented and more focused on building products, and it’s reinforcing another pocket within Asia. Those are some of the small cities around the world where I’ve been to recently where I see a lot of interesting momentum.
We see that you come from a background of venture capital and investing in startups. What are the main factors that you consider when you choose to collaborate with or invest in certain projects?
I have two approaches. In both approaches, timing is absolutely the most important thing. If you want to try something when the market is negative, it’s extremely difficult. The second thing is I look for a very strong management team that is flexible, able to mold themselves as their products grow, and can change their strategy accordingly. Products have no reference point in term of success until they are released, so you have to be very flexible. I’m going to contradict myself and say this: I look for an amazing management team and I look for their ability to be flexible. But if we see very organic and quick product adoption, that trumps any management team because they’ve hit on something. Some of the most successful projects and entrepreneurs in the world actually have no history or pedigree. That why I negate what I said earlier, but in a very specific context.
There are many traditional financial institutions implementing private blockchains in their own ecosystem. How do you view this trend?
Just think about the Hong Kong government. HKMA developed a white paper on trade finance and they recently made an announcement that they will collaborate with we.trade, a consortium of banks, for a trade finance, blockchain-based solution that will increase trust and efficiency and reduce risks. This is an example of a private blockchain. Hong Kong has more than 150 banks. Most of the banks don’t trust public blockchain. Most of the projects that are going on in banks are private. Therefore, the actual execution taking place in blockchain, finance especially, is mostly in the form of private blockchains. We now have to determine which of the private blockchains have the most potential for success. Some are private blockchains and some are consortium blockchains. I think they will co-exist.
Yesterday in one of the panels there was a very interesting question regarding the tokenization of assets – with the rise of STOs and a future where all assets become tokenized, will there still be a need for the current major cryptocurrencies such as Bitcoin or Ethereum?
I have a very strong philosophy about adoption. Cryptocurrencies like Bitcoin and Ethereum have adoption. To the extent of the adoption, we can argue, but they have a community. It is extraordinarily difficult to get adoption, nearly impossible. Also, it is nearly impossible to kill adoption after it’s been grown organically. With the introduction of various other tokenization of assets, I don’t think Bitcoin and Ethereum are going away. It may not have exactly the same significance, but it is absolutely not going to go away because adoption is really hard to kill.
On the first day, you had a panel about regulation, and one of the questions was about the real, adoptable projects that you guys were going to invest in. Can you elaborate more on this?
Adoption can come two ways. One is with extraordinary amounts of money pushing aggressively. There is a separate way which is organic adoption. Ethereum had organic adoption. An example of the latter is EOS, which has been more based on marketing. When it is done organically, it is more of a natural observation that the products will be adopted. When you put a lot of marketing power into it, it involves a lot of constant marketing effort going forward. Both models have worked in the past to varying degrees. When you look at organic growth, it is extraordinarily interesting to observe. In terms of product market fit, if you are a millimeter away, you can fail. The exact market fit, when achieved organically, is very interesting.
With the evolution and various upgrades of Ethereum, will there still be organic growth and will it be a long-lasting technology? People are now able to build their own blockchains or choose to adopt other different technologies. Is there a possibility that they may not rely on Ethereum anymore?
Ethereum captivated the minds of most people for a very short period of time. There was a money-raising element to it which made the value go up and down dramatically. That use case has almost become obsolete, so if you are going to take away that blip, which was the period of the ICOs, we see what it would have naturally grown into. I would say that natural growth, adoption and next generation technology is important because Ethereum has a community already. There are so many second-generation, faster blockchains that have no community. They don’t have adoption. They have a lot of metrics, marketing and money but they don’t have adoption. That’s why you will observe from history that level of technology is less important. Technology is not the generally the reason why companies succeed, the main reason is market adoption. If you have a baseline of things like speed or ease of use, it doesn’t matter that you are the best, because that’s not the main reason you win in terms of product. That’s even the case for EOS. The few adoptions that we see in EOS are for games.
We understand that your mantra is: “Blockchain needs to solve real problems and not find problems to solve.” What problems does NexChange plan to solve in 2019?
I think the biggest problem we try to solve is that when we look at companies that are trying to accelerate growth, we want to build companies that will be viable for the future. In our venture building, we are focused on great management teams and great assets. We are trying to combine them with billions of real-world users. That’s the problem I want to solve, which by themselves is very difficult to solve and might take many years. My biggest goal is to figure out a way where I can take the product management team and assets, and somehow find user bases that can be married together with them. We are working on a number of projects. For example, one exchange has a license and team and the other exchange has users but no access to local markets. Combining the two together, they are a very interesting combination, but separately they’re equally uninteresting.
There are many different strategies to do this. Many years ago, people used to talk about this, but no one talks about this anymore: channel conflict. People don’t talk about channel conflict. You are working with your competitors and collaborating with them, but also competing with them at the same time. The market is too small. I would rather see this market grow 100 times than to see my company grow 100 times and for the market to stay the same size.
What do you think attracts everyone to Hong Kong to attend blockchain events such as this one?
Hong Kong has benefited from what had already existed before blockchain, which is a financial hub. Blockchain fundraising has gone from the wild west to a more regulated-looking STO with a strong resemblance to the securities market, which favors a market that is already well-versed in this. Hong Kong is the number one IPO market in the world, has amazing amount of assets, and numerous banks. In a way, Hong Kong didn’t have to do much because the market was attracted to it based on its advantages, with it being a financial hub, highly regulated, and having many players in the ecosystem.
What are the future goals for NexChange?
Nexchange group is an ecosystem-as-a-service. We provide a number of things and we’ve divided them into four major groups: One is media, and Hong Kong Blockchain Week is one of our iterations; there is innovation, where we build products and bring them to the market; third is ventures; and the fourth is a digital investment bank. What are we doing? We support the full life-cycle from startups to liquidity. Our goal is to bring more of those examples and create exits. We are soon going to make some announcements that allow us to show that we’ve started from the beginning and used every piece of these four groups and brought it to an end, to an exit. Our goal is to have a life-cycle approach and show exits. Nexchange builds an ecosystem with events, content, and social assets. We take this and we catch those revenues in our innovation lab, ventures, and digital investment bank. When you are perceived to be one of the major players in the middle, then people gravitate towards you. There’s a big difference between marketing and building a community. We are building a community and we’ve done this for five years.