From Institutional to Crypto Native: How Blockworks Pivoted to Thrive in a Bear Market

Building a media business is challenging. Doing it in the volatile crypto industry is insane. One year, a publication can be thriving, generating high revenue with great margins, and the next, it can be burning millions and laying off staff. For Blockworks, stability and profitability have been the name of the game since its founding in 2018.

“We’ve been profitable since day one,” Jason Yanowitz, a co-founder of Blockworks, told A Media Operator. “If you annualize profitability, 2023 was the first year that we were not profitable, and then we’ll be profitable again this year.”

It missed the mark last year for two reasons. First, the crypto markets were in a bear market with the price of bitcoin dropping 70% from its 2021 high to its low in late 2022. Since crypto media tends to lag behind assets by 6-9 months, ad spend was slow to follow even as prices started to climb in 2023.

The second reason it missed profitability is due to heavy investment in its new research business. Last year, “we ramped up the engineering team for the first time. Engineers are expensive as hell, more expensive than we realized they would be,” Yanowitz explained. “And then we have 15 analysts, so they’re expensive, too.”

Considering Blockworks’ revenue growth since its launch, missing a year of profitability due to investment can be forgiven, especially if it returns this year.

Yanowitz did not share 2023 revenue, only stating, “last year was our first down year,” so AMO estimated the $24 million number. He forecasted that this year would return to 2022’s figures and said, “next year, we’ll do somewhere between like $35 and $40 million.”

Blockworks’ stability is partly due to its diverse revenue sources. About half of this year’s revenue will come from events, with Permissionless being the biggest product, held in Salt Lake City. Sponsorship packages range anywhere from $20,000 to $1 million—realistic prices. During my time at CoinDesk, Deloitte would spend hundreds of thousands to be the top sponsor at Consensus.

The other event is the Digital Asset Summit, an annual event in London for institutional investors. “The margin on something like DAS is crazy. It’s like 70%. And it just runs,” Yanowitz said.

The other half of the business is 30% digital media—newsletters and podcasts—and its growing research business.

Overall, you have a business that generates a blend of sponsorship and reader revenue through subscriptions and ticket sales to events.

Yanowitz says there are multiple paths for growth, including a second DAS event next year, a third events brand that it has not yet announced—not to mention, growth in its media and research arms.

Niching down to overcome volatility

But the question I needed answered more than anything else was how it has weathered the crypto markets so efficiently beyond just revenue diversification. As Yanowitz explained, it was a significant decision to pivot away from its core business.

We made this decision when the market was going down. If you look at what CoinDesk and Cointelegraph did, they said, ‘oh crap, we’re losing pageviews, we’re losing podcast downloads… Let’s go top of funnel. Let’s do 101 level content to try to pull the Google searcher in. What is Ethereum? What is Bitcoin? They doubled down on all of that.

The problem is that you’re competing with the exchanges. So, they’re competing with finance brands, Coinbase, etc. on that content. We said, ‘screw that content. Crypto is now big enough where we need to go even more niche and even more b2b.’ So, we just doubled down on the extremely crypto native audience. It was a huge bet for us because we used to be this very institutional brand and we completely got away from that, pivoted to deeply crypto native. Pretty technical, and it’s worked out.”

While it will still run and expand its Digital Asset Summit, that product is from its era as an institutional-first company. The festival for the crypto native, Permissionless, looks more like the future.

Just pivoting to crypto natives wasn’t enough. As Yanowitz explained, running a crypto site used to be niche, but as the industry has grown, niches within the niche have appeared, making it harder to serve the entire audience. Crypto is tribal. If you’re a bitcoin believer, you might be vehemently against other tokens. The same goes for various protocols out there.

“My fear has always been that crypto grows enough that it becomes more mainstream,” Yanowitz explained. “And then we’re just in the messy middle of media. We’re not niche enough and we’re not like The New York Times.”

To combat this, Blockworks is introducing subcommunities within its ecosystem. For example, Solana, a blockchain protocol launched in 2020, will have a podcast, newsletter, and in-person events—either on its own or as a stage at Permissionless. “Each one of these communities will have a P&L owner,” Yanowitz said, and he believes each has the potential to become a $10 million business.

In many respects, it’s the same model Industry Dive has with its portfolio of verticals or what we were doing when I was at Morning Brew. Blockworks operationalizes podcasts, newsletters, and events and then introduces them across the various crypto subcommunities. Adding more verticals increases efficiencies and improves margins.

You can create more content that appeals to a very targeted audience. And behind the scenes, the rate that you can charge to advertisers is just much higher because they’re more niche audiences.

Blockworks’ approach to 1st-party data differs from traditional b2b media companies that focus on standard declarative data points. Its strategy centers on crypto assets. Sean Griffey, the co-founder and CEO, sits on Blockworks’ board of advisors. According to Yanowitz, “He’s been smacking us over the head [about 1st-party data] and I’m like, ‘yeah, we’ll get to it.’ This allows us to actually put in place a really solid first-party data strategy.”

By focusing on crypto assets, it can build segments based on what individuals care about. And because Blockworks is going newsletter first, it can closely link the individual to their behavior.

Unique sales strategy

Niching down is only part of the solution, though. How Blockworks sells ads is also unique. Selling ads is straightforward for a typical media company. You contact a brand, speak with the marketing team, sign an insertion order, and then you’re off to the races. The same was true for crypto up until recently.

Two and a half years ago, we started to see a sea change in where the money is. So, when you [I was at CoinDesk from 2016-2020] were in crypto, the money was in the big companies. Anchorage, BitGo, Fireblocks… those were the big capital allocators. On the advertising side, that’s not the case anymore.

As Yanowitz explained, the money is now with the protocols. He used Arbitrum, a protocol on top of Ethereum, as an example. This decentralized protocol has $1 billion in its treasury. But allocating that money is not done by any one person. “There’s no CMO of Arbitrum,” Yanowitz explained. “There’s a Labs Group, which is Offchain Labs, a Foundation, and a DAO (Decentralized Autonomous Organization). You’re now selling into three different organizations.”

Then, he walked me through an example, which can be found here. This was a $960,000 ad deal that Blockworks and its partner, Delphi Research, submitted. Yanowitz said this forum post is the equivalent of the media kit and proposal.

But it’s unbelievably complicated because decentralized autonomous organizations are effectively the collective holders of the Arbitrum (ARB) token and those that have been delegated.

Then we had to do a bunch of lobbying inside of the DAO because there are delegates in the DAO who have votes. And then once we felt we had enough delegates, we posted it on chain [blockchain], and then the votes came in. Like most media deals, we competed with The Block. These [voters] are just the biggest delegates in Arbitrum.

So, this Olympio guy has 27 million ARB that’s been delegated to him by different funds. This anonymous person has 21 million. So we had to go to all these people and lobby them to vote for us. 17,000 people voted on this deal.

Ultimately, Blockworks and Delphi won the deal, but it was a chaotic process. Or, as Yanowitz said, “it’s a nightmare. I’d rather be on a call with Fidelity and their 17-person digital marketing ad buying team than this.” Sensing this shift in how ads were bought, Blockworks started training the sales team on how to sell like this two and a half years ago. Despite resistance at the start—folks not wanting to post on forums—the results speak for themselves.

“Now we’ve closed seven-figure deals with Solana, Polygon, Arbitrum, and Celestia.”

This ad sales strategy would not have worked without niching down and pivoting to crypto natives. Yanowitz explained that the crypto media industry was focused on acquiring more investors. The problem is that when the markets go cold, there are no new ones to acquire, and the ad dollars disappear.

What we’re doing is going after the one group that never dries up: developers, researchers, and builders. They don’t dry up in terms of attention, but most importantly, they don’t dry up in terms of ad dollars. They’re really hard users to acquire, but once you have them… Crypto marketers will pay 12x to reach a good developer as they will pay to reach a good investor.

But why?

The protocols generate value and tokens appreciate in price when more people use them. If a developer builds an app on top of one of these and it becomes a massive success, the protocol does too. Yanowitz explained, “A good developer can literally bring billions of dollars into your chain.”

By niching down and focusing its ad sales efforts on the influential players in crypto—the protocols—it has been able to handle the industry’s volatility.

Expansion into research

Blockworks is now building the third leg of its stool with its research business, which consists of reports, analytics, and GovHub. When combined, these make for a robust offering.

The research reports are both long-form technical reports and short flash notes. “If you are in crypto, but not only in crypto, but like allocating hundreds of millions of dollars to these protocols, this is a must-read piece.”

Analytics is a strategic initiative to introduce fundamentals to crypto investing. As Yanowitz explained:

I believe that one day, crypto will trade on fundamentals, which is a laughable statement today. We have to figure out what those fundamentals are and then surface them. So, if you look at something like MakerDAO, which a lot of people feel is a wonky protocol, we can actually export things off of Etherscan (a tool to track blockchain activity) and then build a P&L statement for MakerDAO. I can actually show you the price to sales and the price to earnings for MakerDAO.

However, it’s not just about introducing any sort of fundamentals. Blockworks wants to create its own. “If we can start to define the fundamentals that these things should trade off of, we win. So, like, Total Economic Value is a Blockworks coined term. It’s totally made up, but it’s starting to permeate into the ecosystem.”

Then there’s GovHub. Above, I said that individuals can vote on budget allocation in crypto. But finding these proposals can be a full-time job. “There are all of these things in governance proposal forums that can actually move a liquid token a lot. The problem is that it lives in a random forum that nobody looks at,” Yanowitz explained.

And so, they scraped it all and put it into one place. Blockworks offers its take on the proposal, giving investors better insights. The goal is to use a machine learning algorithm trained on its thousands of takes to assign a rating one day. But for now, it’s manual.

From a business perspective, it’s very straightforward. A seat costs $4,500 and provides full access plus a private Telegram chat with the analysts. “Most of the big funds… Pantera, Polychain, Franklin Templeton, VanEck, Citadel… they all have people in there.” Overall, a little over 100 customers have purchased multiple seats.

And because Blockworks Research has access to the broader Blockworks media ecosystem, the subscription business benefits from negative CACs. This means Blockworks doesn’t need to spend much on user acquisition since the audience comes from its own editorial—usually with ads running against it. “Every day, we probably get 15 inbound leads for the research platform,” Yanowitz said.

Crypto is different

Crypto is a fundamentally different industry from many others. The markets are immensely cyclical, advertising demand fluctuates, and none of that addresses the regulatory uncertainty in various countries.

And yet, Blockworks has figured out how to not only deal with all of this uncertainty, but thrive in it, seeing fast revenue growth while remaining profitable. The business may not expand as rapidly as before—3.5x from 2020-2021 and double from 2021-2022—but there’s more upside for the brand. As crypto grows, so does Blockworks.