Recently Chia Network had their first real partnership disaster, where their hackathon partner Sirius Labs went off the reservation and exercised a clause in their ToS to radically reduce the promised payouts by about 92%. This kind of behaviour is really harmful to a new ecosystem community, so it is good to see that Chia Network is covering the difference. That will give the community a lot of reassurance that they won’t see their hard work devalued after the fact the next time something like this comes up. And it will come up again.
This is the problem with corporate partnerships, is that it gives another company power over yours, reciprocally. You trade power of your company for power over another. Yes yes, there is also usually a goal to accomplish, but that is secondary to the question at hand. A perfect partnership is between two exact equals, where the power traded is of equal value and the risks are equally shared between the two partners. This kind of relationship creates a symbiosis that can help both parts grow faster than they would alone.
But when there is a power imbalance, as is usually the case, what side of that do you want to be on? Most people’s instinct is to want to be bigger player, as it gives you more influence over the arrangement. And that is true, but there is another side to that. The bigger the imbalance the more the power you are trading with your partner is worth. When a large company partners with a smaller company, the large company puts a lot on the line that the smaller partner won’t make an insane decision and cause disproportionate damage to the larger company.
This is what happened here. Even if Chia skates with no PR damage from this, and that is far from certain, they are still going to be out like $100 000. And they are almost forced into this position by nature of the relationship, as their own userbase sees them as the responsible adult in the room. If, however, Chia had been partnered with a large company in a similar situation the expectations would be very different.
If the hackathon had been run by an Amazon or a Microsoft, everything still could have gone exactly the same. They easily could have been very incompetent and unprepared. They could have still decided that they didn’t like the submissions and pulled the rug out from underneath the participants just the same. The difference would have been in the expectations. No one on Earth would have expected Chia Network to “do” something in that situation. What could they do? It would be obvious that Chia was getting rolled under the bureaucracy just like the participants. There would be no bad PR, probably not even for the mega-partner.
This isn’t to say that Chia Network should ignore every company newer than them, but they should be very careful when dealing with smaller companies. They have had a lot of success this year, and its easy to start thinking of yourself as the big fish, especially with a small pond community like we have here. But the reality is that Chia Network is still a Small Medium Enterprise that is still VC funded without a lot of revenue. Most worthwhile partners will dwarf them in size, and that can be intimidating. It can also be hard to land those partners, for all the reasons outlined above. But Chia Network should be very careful about pursuing more partnerships like Sirius Labs, and instead pursue lasting relationships with the traditional technology sector even if they start small.
They should also be open to doing non-blockchain related contracts. This might feel like a distraction, but when it comes to providing Proof of Execution it doesn’t matter so much what you executed on, only that you executed the engagement successfully. Chia has a bunch of Lisp programmers, and from what I can tell a pretty deep engineering bench. I suspect that the companies in the target market for their blockchain tools have other problems they could solve with that engineering talent that would make putting the Chia blockchain into those datacenters a lot easier. It would also help them build lasting partnerships with larger enterprise companies that could open a lot of doors for them. But most importantly, no more fly-by-night hackathons.