⛓ Blockchain Lessons from Pizza Hut Stalemate🍕

HashTalk with Sankalp Issue #12

Hi, I’m Sankalp Shangari. I’m exploring latest trends & my learnings and experiences in Startup & VC world and how upcoming technologies are reshaping the world as we know it, especially Blockchain & AI.

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Pizza Hut was known as the innovation powerhouse in the 90s. Just imagine, being an innovative company in a rather traditional food industry. Pizza Hut was at the forefront at filing patents for different types of crusts, grills for garlic bread and composition of sauces. But now, Pizza Hut has been edged out by its closest competitor Domino’s Pizza in market share. What went wrong and why Pizza Hut stopped innovating?

⛓ Blockchain Lessons from Pizza Hut’s Backfall 🍕

As a backdrop of facts, Pizza Hut used to hire food scientists to create the perfect crusts that didn’t went soggy when layered with different sauces and a crust that didn’t break. When Pizza Hut launched stuffed crust in 1995, it resulted in 50% jump in its parent company’s stock and a jump of 9% four years later in store sales when it launched The Big New Yorker. These two incidents are enough to prove that innovation in a traditional industry progresses the world.

But for the past few years, Pizza Hut rarely offers something new. The most it has done is changing the types of cheese it uses and rolling out failed appetizers like Stuffed CheezIt. Nokia had the same fate, so did Blackberry and Ive started to feel the same about Apple recently. I have found myself playing with an old One Plus Android phone. It is simply amazing. I hear the new Google Pixel is also inspiring. 

Back to bashing Pizza Hut. As a fact, Pizza Hut only invested only about $22 million in R&D in comparison to $33 million that was being spent in 90s (Not Adjusted for Inflation). The effects of which are quite visible in the graph below showcasing historical 5-year earnings growth rate comparison in revenue between Pizza Hut(YUM! Brands), Papa John’s & Domino’s.

So what went wrong? What was it that resulted in Pizza Hut losing the market share? In simple words, it was because they stopped innovating. Though, they later started innovating in terms of launching a pizza with a mini cheese burger on crust, it performed very poorly for the company and was deemed the poster child of global food crisis.

The same case is with the Blockchain industry as a whole. Founders and CEOs are working their a** off to make new and exciting products. Things take time and history repeatedly teaches us that. 

Fred Wilson mentions David Kelnar's Blockchain Primer in his recent post. David concluded that 

"Tim Berners-Lee developed the protocol for the web in 1989. 10 year later, in 1999, its potential was glimpsed — but technological, commercial and economic challenges brought expectations back to earth with a crash. 15 years later, Tim’s vision for globalised information, e-commerce, and communication was realised. The Bitcoin white paper was published in 2008. 10 years later its potential was glimpsed — but technological, commercial and economic limitations brought expectations down to earth with a crash".

Read more about it here: https://medium.com/@dkelnar/fa610002b999

Further, Fred Concluded that

"I take that as a suggestion that the crypto sector is following essentially the same timeline as the web sector. Facebook launched in Feb 2004, four years after the start of the internet crash. So using David’s timeline, the killer app for crypto might launch at the end of 2021 or early 2022".

We have been giving this a lot of thought. The expected revolution, the mass adoption, the new monetary system, will take some more time, if history has taught us anything. Here are some of our own thoughts (not an investment advice): 

  • Buckle up, 2020 could yet be another year of build up and consolidation, despite halving. We say this as despite all the euphoria on Libra, DeFi, soverign currencies, etc, there aren't many new users.

  • Opportunities - 2020 could be the year of new opportunities and true HODL up. Could be a steady rise in most crypto, volatile at times.

  • Decades - Look beyond decades, think in decades and build for decades. Not months and years. Crypto and blockchain looks very promising beyond 2020

  • Consolidation - is what you will hear a lot in first 6 months of 2020. Many businesses will die due to lack of users, unsustainable losses, and / or regulatory pressures.

  • Profits - Keep targets for profits and losses. Take profits and close positions accordingly. Be cautious. This is all new and a lot of bad players.


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📚 Best of the Best Articles in Tech & Startups

  • Venezuela’s paper currency is worthless, so its people seek virtual gold - The Economist

  • The AM/PM Debate - or How not to be an idiot CEO - Michael Siebel

  • Breaking Mimblewimble’s Privacy Model - Ivan Bogatyy

  • The Lightning Network: Why I Quit the Bond Market for Bitcoin - Nik Bhatia

  • If You’re Busy, You’re Doing Something Wrong: The Surprisingly Relaxed Lives of Elite Achievers - Cal Newport


🎧 Best of the Best Podcasts


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Disclaimer: None of the content in this newsletter is meant to be financial advice. Please do your own due diligence before taking any action related to content within this article.