How to do a Corporate Blockchain Project. Interview with Lachlan Feeney, Founder, Labrys, Australia’s Largest Blockchain Development Company

Transcript

Nick Abrahams:

Joining me today is Lachlan Feeney, founder of Labrys, Australia’s largest onshore blockchain consulting and development company. Lachlan, welcome to the show.

Lachlan Feeney:

Glad to be here. Thanks for having me, Nick.

Nick Abrahams:

Now, you’ve sort of created this extraordinary business in what seems like a relatively short space of time, but what was happening in Lachlan Feeney’s world, pre-Labrys? How did you end up here?

Lachlan Feeney:

Sure. I was studying an information systems degree at QUT when I started Labrys, so there’s not actually too much sort of background to go into me. Prior to Labrys, I basically started it while I was in Uni. I’m currently 23 years old. I was 19 when I started the company. I’ve always been super into crypto and blockchain. I was sort of an early Bitcoiner, even sort of back when I was in high school.

Nick Abrahams:

Oh, wow.

Lachlan Feeney:

For me, particularly by the time I got to university, I was pretty interested and set on sort of working my way into the blockchain industry and there’s sort of a long story behind it, but basically, whilst I was at Uni, I made the decision to start Labrys and I was working at the time for another blockchain company, sort of part time, and sort of doing some Bitcoin stuff and that sort of thing on the side. But yeah, I’ve Al always had a passion for blockchains, found an opportunity to sort of take a leap and start a business in the space, and five years later here we are.

Nick Abrahams:

It’s a fantastic story and it sort of feels like a very familiar tech entrepreneur story with that sort of entrepreneur dropping out of university and starting their own business. It sounds exciting. We don’t necessarily tell that story that often in Australia, but it’s great. Congratulations on that. Just maybe to drop into that, then what exactly does does Labrys do?

Lachlan Feeney:

Sure. Basically what we do is we’re a blockchain, or Web3, consulting and development company. We weren’t always that. I’m not sure whether we want to get, get into sort of the early days of Labrys or not, but for the past few years, basically what we’ve been doing is consulting and development. We’ve built up a team of some sort of very talented Web3 business analysts, engineers, smart contract developers and these sorts of things, and so we work with companies all across the world who basically want to build out blockchain systems, NFTs, metaverse products, DeFi, GameFi, as well as very enterprise blockchain solutions as well.

Lachlan Feeney:

We work with companies of all different shapes and sizes, to basically identify and help them build Web3 integrated products for their business or for their customers. So, we do everything from start to finish. We’ll work with companies to plan out, actually ideate the product and help them sort of plan out exactly how the blockchain and Web3 elements will fit in. Some clients know exactly how they want that, others don’t. Will architect solutions, design solutions, build them, and then sort of provide ongoing support and that sort of thing as well.

Lachlan Feeney:

Labrys is basically the go-to company for, if you want to build a product, or you have an existing product and not enough resources in-house, and you want to outsource a portion of that, you would go to Labrys and we have a team of people, in fact, the biggest onshore team in the country, who can work with you to basically help build out your Web3 product.

Nick Abrahams:

I mean, it’s a fantastic offering. I don’t think there’s too many other organizations in Australia that can offer that full server. I think what we seem to have seen with, particularly with the rise of Web3 over the last sort of 12 or 18 months is, digital agencies popping up who can offer bits and pieces of NFTs and so forth, but that whole approach. And so you’ll do the strategic consulting sort of as well, in terms of how to, how to fit whatever the Web3 proposition is with the rest of the organization.

Lachlan Feeney:

Yeah. Our main area of expertise is the implementation and the engineering side of things, so we’ll do a degree of sort of strategic planning, although it’s usually from the technical side.

Lachlan Feeney:

So, if you come to us and you say, “I have no idea how blockchain would fit into my business, but I want to explore it.” That might be a little bit early stage for us. Whereas if you come and you say, “Okay. I have this product. I see the blockchain value proposition here. I’m not sure exactly how it’s going to work, or what blockchain we’re going to use or, or how it’s all going to come together.” Those types of clients, we go right from the start. But we do get a wide variety of, sort of some people are already several years into product development and others of very early on, so it’s a wide variety.

Nick Abrahams:

Are there any particular industries that are sort of more open to blockchain, sort of financial services and so forth, or is it a quite of broad category?

Lachlan Feeney:

Yeah, so we are pretty broad. I’d like to say that we’ve worked with, at some point over the last five years, each sort of industry vertical, but as you and your guests sort of are probably already aware, blockchain sort of tends to have a bias towards the financial services industry. I think that primarily comes from the fact that blockchain started with Bitcoin Bitcoin was focused on money and so a lot of the early stage blockchain applications have been financially focused because we started with Bitcoin.

Lachlan Feeney:

I think the first real wave of sort of smart contract adoption was sort of DeFi and decentralized finance. We do spend a lot of time in the financial services industry, but I think this is just a case of this is kind of where the industry started and so the that’s where most thought so far has gone into developing news cases. But blockchain, this is where a lot of people get caught up, because when they think of blockchain, they just think of Bitcoin or they just think of cryptocurrency. Whereas, blockchain is a really techno a sort of industry agnostic technology.

Lachlan Feeney:

I think if you look back, you go into the future 10 years and look at industries and how blockchain is being used then, financial services sector will be just a fraction of a much, much larger industry.

Nick Abrahams:

It’s a fantastic thought as to where this all heads and we might come back to that a little bit later on, particularly around sort of NFT technology and so forth.

Nick Abrahams:

But maybe just looking at some background on your business, seems like you had a cracker last 12, 18 months. You increased head count 500%, increased revenue almost 200%. Does this sort of match the way that organizations are getting more interested in Web3? Obviously, you’ve got a successful business there, but I can’t help but feel that, three or four years ago, blockchain was a bit of a solution looking for a problem and a lot of organizations were sort of vaguely interested, but couldn’t really figure out why to use it.

Nick Abrahams:

It feels like now, we are seeing, as you mentioned, obviously across financial services and DeFi and GameFi and so forth, but even more than that in other industries. Do you think that the last 12 or 18 months has really seen a resurge or a real interest from enterprise and you see that growing?

Lachlan Feeney:

Yeah. It’s definitely come a long way over the last 12 or 18 months. If you go back five years when we first started Labrys. Labrys was founded in 2017, which as you’ll recall was sort of the ICO boom.

Nick Abrahams:

I remember. I remember that boom, very well. The phone was ringing off the hook with all manner of scarless ideas that people wanted to raise money for.

Lachlan Feeney:

Yeah. Yeah. Exactly. So, there was a lot of that sort of that. That boom for me was the first time when people started to question or think about blockchain, it had come back into frame of mind. And people had started to ask, oh, maybe this blockchain is a thing, maybe there is something here. But we had that brutal bear market through 2018, 2019, and this was a particularly tough period for businesses like Labrys, who had started in 2017. There were a lot of who didn’t make it through that to see the other side or pivoted back to Web 2.0 technologies and that sort of thing. Cause I think the sentiment back then was, okay, blockchain had a crack, but ultimately it was a fad, it all blew up, ICOs never went anywhere. That was it. And people stopped paying attention during those years.

Lachlan Feeney:

So, as a business who’s trying to sell blockchain consultancy, it’s very hard to do businesses in that time.

Nick Abrahams:

I can imagine.

Lachlan Feeney:

But as we start to get into 2020, I think the sentiment had started to shift from six or seven years ago where you said blockchain and the only possible use case anyone could conceive of was using Bitcoin on the dark web to buy, and then 2017, fad.

Lachlan Feeney:

But by 2020, when blockchain had, despite everything post-ICO, I’d continued to cut back and develop use cases, and we start to have DeFi summer and these sorts of things. People are starting to go, okay, maybe I should start to pay attention now, I don’t know how blockchain is going to fit into my business, but maybe it’s not a fad. Maybe I should start asking questions.

Lachlan Feeney:

And then that accelerated through 2021, which was, okay, now I need to do blockchain. What can my company do in blockchain and how can we get access to the technology?

Lachlan Feeney:

But I still think there is still a lot of confusion around what are the right use cases and how should companies adopt blockchain. And the fact of the matter is we are still early in this industry. So a lot of these things are still being worked out. And so we’re not at that cookie cutter approach yet where you can just go, okay, you’re this type of business, you get this solution, plug and play, there you go.

Lachlan Feeney:

I think that will become a lot more obvious over the next few years. But definitely there has been a change in attitude from laughed out of the room six or seven years ago to now, okay, let’s take blockchain seriously, we don’t quite understand how it fits into our company, but we now understand that it is going to be a crucial technology for our company over the next five years. Let’s sit down and work that out.

Nick Abrahams:

Yeah. It’s a great analysis of the last few years. As you speak, you definitely sound like a founder who’s experienced some of the peaks and also some of the troughs of founding a business. Maybe to get into that issue of, what are enterprises using blockchain for, be great to hear some of the projects. Maybe if we can kick off with, I understand you’ve been doing some work with Downer, the big engineering company.

Lachlan Feeney:

Yeah. So we’ve been working with Downer. A couple of years ago, they identified that they wanted to explore and trial blockchain technology within their maintenance services part of their business. Obviously a company the size of Downer, there’s a lot of other businesses they’re working with, there’s a ton of data that needs to be verified, moved between multiple parties and these sorts of things. And they’re looking at blockchain technology and going, hey, maybe there’s a fit here. And wanted to explore how that would work.

Lachlan Feeney:

So, we, going back to 2020 and last year, have been trialing some blockchain technology with them. I can’t say too much more than that at this stage. But yeah, there’s been a lot of work going on behind the scenes there with Downer.

Lachlan Feeney:

And from my perspective, it’s really, really good to see an organization as large as Downer being able to be at the forefront of this technology and actually not sitting around and waiting for everyone else to adopt this technology. But saying, hey, we want to be seen as innovators within the space.

Lachlan Feeney:

So we’ve been working on a really, really good blockchain solution there. And there’s a lot of challenges in terms of enterprise blockchain and building enterprise blockchains that still add value but are still compliant and deal with all of the challenges around that. So yeah, there’s been a lot of work happening behind the scenes there with Downer. I can’t go into too many of the details, but yeah, that’s been a really exciting project for us.

Nick Abrahams:

Yeah. No. And very comfortable with you not going into the detail. Completely understand that. It is just great to see an organization of that scale though, as you say, getting involved and having a go. And it feels like, and maybe that’s just because you and I are probably more believers than others, but I feel like we’ll look back in, if we go five years hence, we’ll look back on this time and go, well, of course it was going to be blockchain, of course we’re going to have digital assets and so forth. But anyway, there has to be the use cases proven along the way.

Nick Abrahams:

One of the clients that you had that really jumped out at me, and you mentioned that you’re a great Australian company that’s doing work for not only Australian customers but also offshore, but you’ve done some work for the Solomon Islands government. Are you able to tell us a little bit about that?

Lachlan Feeney:

Yeah. So, we did some work with them. Once again, unfortunately I can’t go into too many of the details.

Nick Abrahams:

Yeah, no problem.

Lachlan Feeney:

But yeah, we worked with them basically building out a blockchain system to help them. The idea here was to help them basically better track skills of basically persons across countries within the south Pacific. And this solution was integrating within their visa application and approval process. So the idea was to create a blockchain based system that could be used by multiple different departments and potentially different nations to basically share data based on seeing what skill sets are available in different labor forces across the south Pacific. And identifying and then helping basically approve skilled visas and these sorts of things based on that information getting shared between those different departments. So once again, given it’s a government level project, I can’t go into too much more detail than that.

Nick Abrahams:

Yeah, understood.

Lachlan Feeney:

But yeah, really good to see once again work being done … I could talk for hours on end about all of the different DeFi and crypto and GameFi projects that we’ve done and that sort of thing. But the ones where you get to work with massive, massive corporations or federal governments, we’ve done some work with local governments and that sort of thing as well, they’re the really interesting projects because they’re the ones that are actually the challenge. That it’s like, okay, now we need to think outside the box and come up with an industry first solution here. So yeah, the enterprise and the government projects are always really fun to work on.

Nick Abrahams:

Yeah. And is it the case, if we look at enterprise, I know you’ve done an awesome amount in GameFi and DeFi and those pure plays. Just if we look at the enterprise you’ve done, is there a thematic to that that it lends itself to a situation where it helps to have one source of truth for the data and multiple stakeholders being able to access and to update it? Is that a rough theme that runs through why enterprise would want to look at blockchain?

Lachlan Feeney:

Yeah, that’s generally the application. So you have data that’s shared between multiple different organizations. And usually what’s happening is this data is getting audited and verified and run through checking systems in these sort of black box systems that have been custom built within each organization. And so these processes are running over and over again, basically doing the same work, but in different companies. So where a lot of the enterprise blockchains come in is to basically instead of doing that or having some sort of trusted third party system where you feed all of the information to sort of distribute it across the organizations to try and decentralize that information and run the sort of checking processes only once. And then having that data sort of available there immutably. The challenges come though in that you sort of explain that to an enterprise and they go, oh, that sounds great.

Lachlan Feeney:

Give me a solution that does that. But then once you explain to them, well, to do that means you’re going to have to give up control over these systems that you currently run, and now we’re going to run on a decentralized system that you are not necessarily going to control, and you’re going to have to sort of operate that or with others and these sorts of things. That’s usually where the enterprise challenges come in. And it’s also, how do you do that without actually completely diminishing the value proposition of blockchain. You might remember a few years ago, if you wanted to do enterprise blockchain, you’d use a Hyperledger system. And you’d basically, spin up a few different nodes that each enterprise organization within the network would run, but then everyone kind of figured out that, well, yes, it’s technically a blockchain, but you’re not really adding much additional value versus the systems that you’re still trying to replace here because the companies can just get to together at the end of the day and fork the nodes to do whatever they want.

Lachlan Feeney:

So now we have much more exciting sort of enterprise blockchain solutions like Polygon Nightfall and CK roll up solutions that sort of keep enterprise information private, but roll their roll hashes and proofs back up to sort of public blockchain network. So there’s been a long way in the enterprise sort of blockchain space over the last few years, but it’s still very custom and challenging to actually work with large scale organizations to build blockchain solutions that actually make sense.

Nick Abrahams:

Yeah. Yeah. Just on in with the legal work that’s required, where we’ve worked on sort of enterprise blockchain where you’ve got sort of multiple parties and we do these consortium agreements and, oh, they’re so complicated. And in the early days, particularly some of them, we just sort of like, well, if we all don’t like it, then we can sort of scrub it and do what we want sort of thing. It’s like, okay, well sort of not really what the philosophy was, but anyway. My sense is it’s moving on from there. Maybe just talking about, I mean, are there any other projects, I know you do a wide range of things. Are there sort of other projects that you think folks might be interested in?

Lachlan Feeney:

Yeah, we’ve done a ton of stuff. We’ve been doing a lot of work over the last sort of 12 months or so sort of within the gaming industry. I do think that Game-Fi is going to be big over the next sort of 12 to, or it is probably still a few years away to be perfectly honest. But there’s a lot of work that’s being done there. We’re working with an Australian company called Pixel Quest, Australian based sort of new sort of startup gaming agency who are building their own sort of NFT based game and these sorts of things who have been fairly successful. But we’ve also we’re working, I can’t name them, but we’re working with a AAA game development studio based out of the states. And working with them has really sort of opened my eyes up to where the Game-Fi industry is sort of headed.

Lachlan Feeney:

I think there’s been a lot of disappointment and sort of backlash from the gaming community with NFTs and Web3 and these sorts of things. And if you think about why that is, a lot of it is because NFTs become popular really only the last 12 months. They’ve been around a little bit longer than that, but that’s sort of in the popularity. And so everything that’s released within the gaming industry since they’ve become popular is games and products that you can build in less than 12 months. Which in the gaming industry, you can’t build a good game in less than 12 months. And what a lot of the NFT projects have been doing is just building NFTs and promising, not even bothering with the game, and saying the game will come down the track.

Lachlan Feeney:

So what we’ve been seeing, good games like triple a video games, these things take years to build. Sometimes game development can span like a decade. So what I can say without naming any particular studios, I can say with confidence that there are triple a video games that are currently in development. Some of them of which we are personally working on, which are very good games in their own rate, despite blockchain. But once you integrate blockchain technology into an actually good game, you get tons and tons of benefits that gamers in particular, are really going to value. Things like in-game items that are restrained to only being traded to within the Steam Workshop and Steam marketplace. I’m not sure if you’re familiar with, but Steam’s sort of been banning Web3 games and these sorts of things.

Lachlan Feeney:

And a big part of that is likely because Steam has a monopoly at the moment on in-game items being traded, they take a large percentage, a large clip of every transaction that goes through their marketplace. And so when you have triple a video games, but all of the in-game items are actually yours, they can’t be confiscated by the devs or anyone else. You are not restricted to the marketplaces that you can trade these in. And you can actually own them. You can potentially take them to other games and and reuse them. And these sorts of things. I think these are things that ultimately, the gaming industry is going to do sort of very well out of blockchain. I think the gaming community is actually going to be very supportive of the technology, but it’s going to take some big games and some big game studios to really show how to do this properly.

Lachlan Feeney:

Before everyone sort of comes around and says like, oh, this is actually a pretty good idea. So as is the case with sort of most new technologies, and initially everyone hates it because it’s new and it’s changed. But once they find … Once they use a good product sort of within it, that they sort of come around. So there’s definitely of the projects that we’ve been working on over the last 12 months, I think the gaming products have definitely been some of the most exciting.

Nick Abrahams:

Fantastic. And I think, it has been interesting to note the gaming community sort of the backlash against blockchain gaming. And it seems like it’s a real schism there, but I’m sure as you’ve mentioned, once the triple a gaming studios actually bring out blockchain based games, sort of all morphed together. And the other thing that I think is really fascinating is in many respects, we talk about the metaverse and in my view is, there’s sort of a few metaverse platforms out there obviously, but if you look at the one that’s really working, and I know it’s not necessarily called metaverse, but you look at those gaming platforms, in terms of true immersive, almost three dimensional worlds. It seems like that’s where it’s really working best, right? At the moment and Game-Fi and other business models that come out of gaming will be the business models of the future in terms of metaverse and so forth. So lots of opportunities coming from that.

Lachlan Feeney:

Definitely. I was just going to say as well sorry, just touching on the gamers point and the backlash there, if you were a gamer and your only sort of experience with NFTs and blockchain is these pictures of apes. Or your gaming company has just created some 2D assets and sold them online and generated millions of dollars for completely useless, basically digital trading cards. Of course you’re going to be frustrated. Of course you’re going to hate the technology.

Lachlan Feeney:

It’s just seen as big mega gaming companies who are already taking tons of money are milking further dollars out of their fans. Of course you’re going to be frustrated with that, but I think once we move on from that first phase of NFTs with where there’s very, very little utility, to actual utility, actual use cases, real value behind these assets, then I think these are ultimately technologies that are very much aligned with that of the gaming industry and many other industries as well.

Nick Abrahams:

But I mean, you raise a great point there around NFTs. And I think obviously, the early days with the some indifferent looking apes and so forth, for most people, it just seemed a highly speculative bubble that they couldn’t understand.

Nick Abrahams:

And you mentioned the term utility. And that’s obviously the catch cry behind NFTs. At the moment we just saw Tiffany, the jewelers just do a rollout or a drop of NFTs with CryptoPunks, which you can then redeem the Tiffany NFT for an actual piece of jewelry. We’re seeing marketing folks at the particularly B2C brands, getting right on board the NFT bandwagon and trying to add utility in a loyalty-inducing way. But so I’m wondering what are your thoughts around is there more to this NFT technology than just obviously a two dimensional image or ticketing for concerts and so forth? Where could NFT technology actually take us, do you think?

Lachlan Feeney:

Yeah. Well, NFTs will definitely evolve beyond where they are today, which is digital trading cards, loyalties. It’s really like you’re buying an NFT today to become a part of a digital club or a online community, but there’s so much more you can do with them. There’s already many use cases of NFTs. People don’t actually realize there’s NFT tech behind them, that are already really, really exciting.

Lachlan Feeney:

I’m not sure how crypto savvy your audience is, but for anyone who’s used Uniswap on Uniswap V3, if you provide liquidity to Uniswap V3, your actual liquidity position within the protocol is represented as an NFT. You own an NFT which represents a liquidity position within an AMM that can generate yield. And so, your NFT is a yield generating asset that’s providing liquidity that you could then trade around, or give to anyone else, or use to redeem that liquidity back.

Lachlan Feeney:

We’re already, you can buy an ENS domain, which is the Web 3.0 version of a web domain. And that actual domain itself is an NFT. Personally, I think the whole dealing with websites with my own company and domains and these sorts of things, it’s such a hassle. It would be so much easier if you could just go and register NFTs and move them around, or put bids on different domains and those sorts of things.

Lachlan Feeney:

These are already, these are quiet crypto savvy use cases, but they are very, very impressive use cases when you think about them beyond just buying a picture of an ape. I think we’re only going to see those use cases expand. Everyone’s starting to talk about Soulbound tokens now, and digital identities being represented as NFTs.

Lachlan Feeney:

And these use cases will start to seep into beyond just the crypto world as well, given enough time. But yeah, when you think about it, an NFT really is just a standard to store a unique piece of data in a digital format. Yes, that can be a membership, but it could also be a degree, or a qualification, or a license, or identity, or something as far fetched as representing a liquidity position within a decentralized exchange protocol. Yeah, we’re going to see those use cases open up.

Nick Abrahams:

Yeah, no. And in fact, on one of the earlier episodes, we talked about an Australian company, that’s wrapping NFT tech around personal health information and dictating who can access that information via the smart contract and so forth.

Nick Abrahams:

It seems like a fantastic technology that it’s got a bit of a bad rap because of the speculative bubble nature of how it came into the public consciousness. But it seems like it will be significantly changing. Just, I guess, one final question, which is really just around Labrys. And maybe for folks who are listening, just where’s your sweet spot in terms of clients and so forth.

Nick Abrahams:

What’s the size business or the industry? Or what sort of folks would you recommend give you a call if they’re thinking about blockchain?

Lachlan Feeney:

Sure. Look, if you’re interested, if you have a business or someone who’s looking to start a business and is interested in exploring building a blockchain product or some product that utilizes blockchain technology. I’d encourage most people to reach out. We’re always happy to help. And we’re still a relatively small industry. Anything that we can do, even if we don’t provide the services ourselves, to try and help grow the industry, we’re generally more than happy to do.

Lachlan Feeney:

In terms of the types of clients that we typically work with though, we pretty much across all industry verticals. We work with small scale startups all the way up to large scale enterprise. But we’re really looking for companies who are serious about implementing blockchain technology. That’s not just a 10K profile pick NFT drop. But if you are looking to build a new DeFi protocol or you are an enterprise business who think that your existing organization can get value out of a blockchain technology integration. Or you are a gaming studio, who’s looking at how can my company integrate metaverse and Web 3.0 technologies and these sorts of things.

Lachlan Feeney:

Really any company across any vertical who’s seriously interested about actually building blockchain technology and engaging developers to build that blockchain technology. Then I definitely encourage them to reach out to Labrys and have a chat with us.

Nick Abrahams:

Terrific. Well, Lachlan, thank you very much. It does feel very much like we are on the verge of something truly significant. I always talk to people about it feels like it’s about 1997, in internet terms in terms of the take up. Labrys is a great Australian success story already. And we wish you all the success in the future and look forward to following your ride. Lachlan Feeney, founder of Labrys, thank you very much for joining us.

Lachlan Feeney:

No, thanks very much for having me. And yeah, it was, I enjoyed the conversation.