The Power of Stakeholder Capitalism

In 2022 annual letter to CEOs, BlackRock's Larry Finkspoke about the power of stakeholder capitalism. He said that in today's globally interconnected world, companies must create value for their shareholders and one way of doing could be via tokenization. So let's talk about the potential here.

What potential does tokenization offer to both companies and stakeholders? Why aren't more companies trying it?

Stakeholder capitalism has been topic de jour for a while now. At the World Economic Forum last year, it was the theme of the entire conference. And I think that more and more people, especially in these times that we're living in, are talking about stakeholder capitalism because we recognize that many of the communities in which we live, the companies that we work for, aren't necessarily always aligned with ourselves as individuals, as participants stakeholders in these communities.

But until today, it's been quite hard to execute on stakeholder capitalism. When you look at a large public company today, the set of shareholders and the set of consumers are often two very different groups of people. So, no surprise there isn't always alignment between them, but with tokenization being able to open up the pool of all kinds of assets, including companies to their own stakeholders, I think finally, we can get closer to this ideal.

What do you think is needed to build confidence in the technology behind the types of tokens that can be issued (whether it is utility or security)?

Trust in technology is one thing, but probably even more important is to start building trust in the ‘’asset layer’’. People can and will look underneath the token and say, "What exactly does this represent?". And unfortunately too often in the crypto space, it is not clear what exactly you're getting, what you're owning, if you're having any legal rights at all over an underlying asset. And I think if we can start to bring online better companies, better asset quality, where you have trust in the asset, trust and technology will naturally follow because people will then view technology as they should, just as the conduit to get access to these exciting investments.

How do you create a community that can really help guarantee the success of a tokenization project and really share in that value?

By turning stakeholders into shareholders.

To me, the best way of building these communities and financially incentivizing them for being early adopters is to actually give them upside in the success of the platform itself. Taking a page from the ICO and crypto world in terms of delivering utility value to customers, but also creating security tokens that represent shares so that people get both the equity and the utility upside.

By enabling companies to launch grant pools, not just of tokens, but actually of their own equity, and using that to incentivize investors and issuers, dealing them into owning part of our platform and the network itself.