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7 Lessons from 2017 Blockchain Expo in Silicon Valley

After attending a good number of Blockchain conferences and events this year, I was still surprised by the size & scope of this massive event, with thousands of attendees and a vast variety of topics being covered such as AI, Internet of Things and of course my favorite Blockchain! Thus, I would like to thank Ian Johnson and Mark Boyle for inviting me to this fantastic event! And after 2 days of information overload and potentially thousands of calories burned running from panels to lectures to stands, here are my 7 main takeaways from 2017 Blockchain Expo:

 

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1.       The current state of the market:

 

Currently, we live in a market where 30% or more ICOs are a scam! Nevertheless, we see the volume of ICOs growing from $20M USD in 2016 to over $3B USD in 2017 (as of the date of the publishing of this article). Although a globally exploding industry, so far the only the only country who has legalized ICOs is the beautiful British Overseas Territory and headland, on Spain’s south coast Gibraltar, which brings us to our 2nd takeaway…

 

2.      Government Regulations:

 

A prevailing thesis to explain why governments hate Blockchain, Bitcoin and related subjects, is based on the fact that cryptocurrencies (and the most famous Bitcoin) have stolen the government’s power to be the sole issuers of currencies. Moreover, Ethereum is posed to fix the flaws in transactions by involving a machine that, unlike many humans, would never steal or cheat!  Thus, the Ethereum Virtual Machine and it’s smart contracts a major threat to many consolidated global legal entities and governmental judicial agencies. This idea of this threat is best illustrated by the Chinese government’s actions of banning Bitcoin and ICOs. However, when the Chinese government decided to ban this globally exploding Cryptocurrency market, all it really did was to create the best FREE PR possible for Cryptocurrencies and ICOs! Not only did the global volume of Bitcoin transactions had a significant decrease, but also this action created a massive amount of interest from Chinese people about this new crypto asset class that was being banned. As we know, many Chinese love to gamble, and an ICO in China is a new and exciting way to gamble in a country where gambling is officially illegal! On the other hand, we have countries like Dubai, who is integrating Blockchain into the government’s systems and operations in hopes of vastly improving efficiencies, as well as, betting on the fact that a machine is a more objective and trustworthy mediator and solution provider than the majority of humans. This seems to be part of a trend of people not trusting other people, nor it’s governments and therefore viewing a machine as a more trustworthy alternative. Aside from governmental innovation, I also noticed at this Expo a good number of innovative solutions coming from companies that are solving complex regulations.

 

3.      Innovation vs Regulation:

 

Although we continue to see companies pushing the envelope to deliver real-world transaction resolutions based on Blockchain technology, we still see a “hold-back” on the development of solutions for security ICOs trying to be properly regulated. As we know, one of the main benefits of having a security is the asset can bring liquidity to the security holder. Thus, as we know, by definition this security asset (or Crypto-asset) needs to be regulated and listed in a regulated marketplace in order to be exchanged. Therefore, companies such as Spice VC, tZero, The Gibraltar Exchange, Bancor, and Waves as well as my local StartEngine are all working hard to bring liquidity solutions to security token holders. Moreover, a solution does not seem to be very far off, as the London based, Chainstarter is working on bringing liquidity to security ICOs in the UK through a fully regulated securities exchange in 2018! I am therefore really excited about the advances I saw at the Expo who are working to bring liquidity to security ICOs. However – I keep thinking about the question “ What are the real benefits of Blockchain to the average consumer?” which leads us to my 4th point…

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4.     Massive Adoption of Blockchain:

 

It seems to me that the primary benefit Blockchain would bring for the general public, would be through its impact on financial services such as making banking services become cheaper due to the technological advances and improved operational efficiencies. When a bank’s back office becomes cheaper to run, this will make banking as a service much more competitive and hopefully, these savings will be passed along to the consumer. Currently, banking back-office costs, are estimated to be around $1B USD annually! If these costs can be greatly reduced, and hopefully passed along to end users, I believe this force massive adoption of the Blockchain technology by retail banks and related financial service providers. However, it is important to understand how massive technological changes have been adopted over the history of the Internet. I do not believe that the changes mentioned above will happen overnight,  just as we saw the 1st email being sent in 1971, it will take a few years to get everyone on the Blockchain bandwagon! So then, what does the near future look like for Fintech?

 

5.     Fintech Ahead:

 

As upper-level management in high profile financial institutions begins to understand how Blockchain technology will impact their entire industry, and how it might restructure the competitive landscape, it seems that a good solution would be for Fintech players to collaborate among themselves to overcome industry challenges. Despite JP Morgan’s CEO’s downgrading comments about Bitcoin, this financial giant is already making moves, as JP Morgan released its own Blockchain, a fork out of the Erhereum platform to develop and named it Quorum, which apparently does not require a consensus mechanism such as proof-of-work or proof-of-stake. Consequently, I strongly believe that Fintech companies, large financial institutions, and governments should not look at one problem for one firm, but instead should try to work together in order to integrate Blockchain into the global financial industry. So how do we see this interaction between Fintech, large institutions and government playing out?

 

6.     The Regulatory Environment: 

 

For many experts, 2016 was the year that Blockchain technology proved itself, 2017 was the year where business value was proven, and 2018 will be the year that regulatory solutions and compliance will be the main focus. An example of this is the continuous discussion we see surrounding the always-evolving SAFT (Simple Agreement for Future Token). A model many ICOs try to follow by issuing a SAFT coin in hopes to be considered an Utility Token. It is important to note here that for a SAFT to be done correctly and to be considered a true Utility Token, the issuing company needs to deliver a token that can be spent by the token holder on the 1st day of the launch of the related platform. Just like airline miles or bonus points at your neighborhood coffee shop, a SAFT ICO should deliver a Utility Token that can be used for consumption of products and services on DAY 1 of its related platform! As we continue to see the SAFT model evolve, we shall also see the entire industry evolve, which brings us to my final and 7th point…

7.     The Future of Crypto:\ 

What then does the future look like? In the short-term, we see many developing countries with low energy costs and weak currencies fully embracing cryptocurrencies. A good example of one of those countries is North Korea! Moreover, as we see countries like Russia issuing a CryptoRuble as a potential solution to their weak FIAT currency (RUB), it is clear to me that innovation will come out of collaboratively efforts between governmental and private sectors, along with regulatory bodies in order to establish global best practices and solutions. Unfortunately, as we know and understand from our own current American government, by default, innovation seems to not be coming out of the USA anytime soon!

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I hope you enjoyed this post and please subscribe to our channel as well as leave comments below so we can further develop this discussion!

Cheers,

Alex Nascimento

Chief Strategist at 7MarketingMedia

https://www.linkedin.com/in/nascimentoalex/

 

 

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BLOCKCHAIN: TOP 10 Lessons from #StartEngineSummit - ICO 2.0

 BLOCKCHAIN: TOP 10 Lessons from #StartEngineSummit — ICO 2.0     Dear Crypto friends…  On this past Friday, November 10th, I was happily invited to attend the Start Engine ICO 2.0 Summit, which was organized by tech mogul Howard Marks. After attending numerous conferences on Blockchain and crypto currencies this year, I realized this past event was definitely something very different.  I was surprised to see the crowd filled with attorneys, investment bankers, VCs and investors from prominent angel groups, like my friends from Tech Coast Angels, attending the event. As this industry grows, we see more & more smart money sitting on the sidelines, looking to understand regulations and best practices so they can move in as stealthy as a shark would.  Through this blog post, my intention is share with all of you what I learned, and what I believe would be of benefit to you, as this was a very educational conference.  So here are my TOP 10 most important takeaways from the Start Engine ICO 2.0 Summit:   #1.   UNCERTAINTY:   All is very unclear! There seemed to be very little certainty surrounding this very complicated issue, even among high-level researchers from academic institutions who were in attendance. However, I do not personally believe that complex issues surrounding Blockchain and crypto currencies are going to be able to be properly addressed and certainly not answered by those in academia or research. The word on the street circulating around this summit was that  “We don’t know, but we are figuring it out as we go!”    #2.   GOOD COP:   According to attorneys who drafted the JOBS ACT, the SEC (US Security Exchange Commission) is clearly engaged and fostering growth, and wanting the industry to prosper. However, as long as every ICO is treated as a Security or Commodity. So no matter what you think about your idea for an amazing token or crypto currency that is going to change the world, the reality is that most likely you will be either a Security or a Commodity — in the eye’s of the SEC.   #3.   BAD COP:   Although we do not often hear about them, outside the DAO scandal, the SEC is now actively shutting down 100’s of ICOs. So assuming you do not want all your efforts going down the drain and your genius idea being shut down, I think it is very wise to really understand how this space is being regulated and to keep up to date with the latest information.   #4.   AT HOWEY’S MERCY:   So how do I make sure that I am not going to get shut down? According to J. Clayton of the SEC, a balanced approach to evaluating an ICO can be done by looking at the ICO to define if it qualifies as a security under the “Howey Test.” The catch here is that most ICOs will be considered a security if tested under the guidelines of the “Howey Test.” If you think about it, the SEC is just making certain that it is regulating this space in its early stages before it escalates into what we saw in 2008. At the moment, the $3B USD investments in ICOs this year is still a small amount in comparison to what we saw happening in the sub-prime crisis in 2008, where the IMF estimates that global financial firms had to write-off, $1.5 TRILLION USD in sub-prime products.   #5.   SECURITY Vs. UTILITY:   In the eyes of many regulatory bodies around the world, including the Asian MAS and the British across the pond, everything is considered a crypto asset. From this understanding that everything is a crypto asset, we should then identify if we are dealing with regulated securities, or utility tokens. A security token is same as the Walt Disney Company issuing Disney Stock at the NYSE, and utility tokens being the effort of The Walt Disney Company issuing Disney Dollars for you to spend at their amusement parks on ice cream, rollercoaster rides and pictures with Goofy. Regardless of it being Disney Stock or Disney Dollars, regulators view it all as a crypto asset, and therefore the government wants their due share of both.      #6.   UNCLE SAM’S TAX BENEFIT:   Although the government is forcing a “lion’s share” of ICOs to operate under security’s law, a good thing to realize is that by raising money through a security ICO, you will have a large tax benefit!   #7.   PAY THE RIGHT TAXES:   Taxes are a topic that should be very carefully understood by all of us trying to change the world through various ICOs. The main mistake currently going on in the market, is made by entrepreneurs releasing utility tokens and not collecting sales taxes from a sale of a utility token, which puts that entrepreneur in the position of selling a security ICO in the eyes of the IRS. So make certain that whatever you do, that you have a linear and logical behavior when dealing with the government, meaning when you deal with the SEC, FINRA and the IRS.   #8.   THE END OF YOUR PRIVACY:   Aside form the government wanting a piece of every pie, I think it is wise for us all to consider that the 1st thing to “go out the door” in a regulated environment is our beloved decentralized, Blockchain oriented anonymity. The dream of living in the fantasy of a libertarian world where the government does not know who you are and where you spend your money, is no more than that — a fantasy or wishful thinking.   #9.   IS SAFT SAFE?   In this confusion of defining if your ICO is a utility or security, many are using a mechanism called SAFT, which stands for Simple Agreement for Future Token, as a way to raise money. However, in the eyes of regulators, a SAFT should only work for Disney Dollars, reward programs such as Hilton Points of American Airline Advantage Miles. Unlike its cousin, the SAFE Note which is commonly utilized by venture capitalist such as the Y-Combinator, a SAFT should been viewed form a tax perspective as a liability and therefore should be treated as such by the company raising money. By issuing a SAFT the company has an obligation, (future obligation) of delivering all those promised hotel points, ice creams and airline miles to the token holder.   #10.   BRAVE NOT NEW WORLD:   Last but not least — as I hate to shatter everyone’s dreams of having new regulations and special treatments for those in our wonderful and innovative crypto world, it is understood by many of the lawyers who are close to the SEC, and who also participated in the drafting of the JOBS Act, that the SEC has “ZERO” intention in developing a new regulation for this space. This consequently makes us all to be bound to comply with existing laws unless you want to have police officers knocking on your door.     I hope that you liked my takeaways above and that they gave you a bit more insight into the complex world of crypto currencies and ICOs. If you would like to learn more, please subscribe to our channels as I continue to attend different conferences and events, so I can share key points about this fascinating and always changing crypto environment.  Cheers,  -AN  Alex Nascimento  Chief Strategist at 7MarketingMedia   https://www.linkedin.com/in/nascimentoalex/

BLOCKCHAIN: TOP 10 Lessons from #StartEngineSummit — ICO 2.0

 

Dear Crypto friends…

On this past Friday, November 10th, I was happily invited to attend the Start Engine ICO 2.0 Summit, which was organized by tech mogul Howard Marks. After attending numerous conferences on Blockchain and crypto currencies this year, I realized this past event was definitely something very different.

I was surprised to see the crowd filled with attorneys, investment bankers, VCs and investors from prominent angel groups, like my friends from Tech Coast Angels, attending the event. As this industry grows, we see more & more smart money sitting on the sidelines, looking to understand regulations and best practices so they can move in as stealthy as a shark would.

Through this blog post, my intention is share with all of you what I learned, and what I believe would be of benefit to you, as this was a very educational conference.

So here are my TOP 10 most important takeaways from the Start Engine ICO 2.0 Summit:

#1. UNCERTAINTY:

All is very unclear! There seemed to be very little certainty surrounding this very complicated issue, even among high-level researchers from academic institutions who were in attendance. However, I do not personally believe that complex issues surrounding Blockchain and crypto currencies are going to be able to be properly addressed and certainly not answered by those in academia or research. The word on the street circulating around this summit was that “We don’t know, but we are figuring it out as we go!”

#2. GOOD COP:

According to attorneys who drafted the JOBS ACT, the SEC (US Security Exchange Commission) is clearly engaged and fostering growth, and wanting the industry to prosper. However, as long as every ICO is treated as a Security or Commodity. So no matter what you think about your idea for an amazing token or crypto currency that is going to change the world, the reality is that most likely you will be either a Security or a Commodity — in the eye’s of the SEC.

#3. BAD COP:

Although we do not often hear about them, outside the DAO scandal, the SEC is now actively shutting down 100’s of ICOs. So assuming you do not want all your efforts going down the drain and your genius idea being shut down, I think it is very wise to really understand how this space is being regulated and to keep up to date with the latest information.

#4. AT HOWEY’S MERCY:

So how do I make sure that I am not going to get shut down? According to J. Clayton of the SEC, a balanced approach to evaluating an ICO can be done by looking at the ICO to define if it qualifies as a security under the “Howey Test.” The catch here is that most ICOs will be considered a security if tested under the guidelines of the “Howey Test.” If you think about it, the SEC is just making certain that it is regulating this space in its early stages before it escalates into what we saw in 2008. At the moment, the $3B USD investments in ICOs this year is still a small amount in comparison to what we saw happening in the sub-prime crisis in 2008, where the IMF estimates that global financial firms had to write-off, $1.5 TRILLION USD in sub-prime products.

#5. SECURITY Vs. UTILITY:

In the eyes of many regulatory bodies around the world, including the Asian MAS and the British across the pond, everything is considered a crypto asset. From this understanding that everything is a crypto asset, we should then identify if we are dealing with regulated securities, or utility tokens. A security token is same as the Walt Disney Company issuing Disney Stock at the NYSE, and utility tokens being the effort of The Walt Disney Company issuing Disney Dollars for you to spend at their amusement parks on ice cream, rollercoaster rides and pictures with Goofy. Regardless of it being Disney Stock or Disney Dollars, regulators view it all as a crypto asset, and therefore the government wants their due share of both.

 

#6. UNCLE SAM’S TAX BENEFIT:

Although the government is forcing a “lion’s share” of ICOs to operate under security’s law, a good thing to realize is that by raising money through a security ICO, you will have a large tax benefit!

#7. PAY THE RIGHT TAXES:

Taxes are a topic that should be very carefully understood by all of us trying to change the world through various ICOs. The main mistake currently going on in the market, is made by entrepreneurs releasing utility tokens and not collecting sales taxes from a sale of a utility token, which puts that entrepreneur in the position of selling a security ICO in the eyes of the IRS. So make certain that whatever you do, that you have a linear and logical behavior when dealing with the government, meaning when you deal with the SEC, FINRA and the IRS.

#8. THE END OF YOUR PRIVACY:

Aside form the government wanting a piece of every pie, I think it is wise for us all to consider that the 1st thing to “go out the door” in a regulated environment is our beloved decentralized, Blockchain oriented anonymity. The dream of living in the fantasy of a libertarian world where the government does not know who you are and where you spend your money, is no more than that — a fantasy or wishful thinking.

#9. IS SAFT SAFE?

In this confusion of defining if your ICO is a utility or security, many are using a mechanism called SAFT, which stands for Simple Agreement for Future Token, as a way to raise money. However, in the eyes of regulators, a SAFT should only work for Disney Dollars, reward programs such as Hilton Points of American Airline Advantage Miles. Unlike its cousin, the SAFE Note which is commonly utilized by venture capitalist such as the Y-Combinator, a SAFT should been viewed form a tax perspective as a liability and therefore should be treated as such by the company raising money. By issuing a SAFT the company has an obligation, (future obligation) of delivering all those promised hotel points, ice creams and airline miles to the token holder.

#10. BRAVE NOT NEW WORLD:

Last but not least — as I hate to shatter everyone’s dreams of having new regulations and special treatments for those in our wonderful and innovative crypto world, it is understood by many of the lawyers who are close to the SEC, and who also participated in the drafting of the JOBS Act, that the SEC has “ZERO” intention in developing a new regulation for this space. This consequently makes us all to be bound to comply with existing laws unless you want to have police officers knocking on your door.

 

I hope that you liked my takeaways above and that they gave you a bit more insight into the complex world of crypto currencies and ICOs. If you would like to learn more, please subscribe to our channels as I continue to attend different conferences and events, so I can share key points about this fascinating and always changing crypto environment.

Cheers,

-AN

Alex Nascimento

Chief Strategist at 7MarketingMedia

https://www.linkedin.com/in/nascimentoalex/

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BLOCKCHAIN: Is My ICO a SECURITY or UTILITY Coin?

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I am frequently asked the question “If I do an ICO – Initial Coin Offering - in the United States or for U.S. Investors, will it qualify as a regulated security or an  investment contract that needs to comply with the SEC (Securities and Exchange Commission)?” The answer to this question is not simple and requires deeper explanation, as it seems there is a lot of confusion around this subject.

First and foremost, DISCLAIMER: I am NOT A LAWYER, AND DO NOT INTENT to provide legal advice to anyone. After researching and listening to various lawyers on the subject I am presenting the information below just for “entertainment purpose.” Thus, please (for your own good and safety) seek proper legal counsel before thinking of doing an ICO.  

THE 2 DIFFERENT TYPES OF ICOs:

To start, there are 2 types of ICOs. Utility and Security ICOs, and for the purpose of simplifying our discussion, let's consider the terms Tokens, ICOs, Coins, etc. all the same thing! In order to distinguish one from the other, let's think of a security token as “Disney Stock” issued by The Walt Disney Company, a tradable asset class that can be found in markets like the NYSE.  On the other hand, we shall think of a non-security or utility token as “Disney Dollars,” a currency that you can use to buy ice cream and other goods and services at the Disney Resorts and Parks.  

 

Howey Test:

In order to find out if an investment – specifically an ICO in this case - is or is not an investment contract, we can use the example of a U.S. Supreme Court case, SEC vs. Howey. This is known among legal crypto folks as the “Howey Test!” This case established the standard test for whether an arrangement qualifies as an investment contract, which is a type of security, and therefore needs to be regulated by the SEC.

The U.S. vs. Howey case established that the following three elements must be met in order for an investment to qualify as a regulated security:

1. An investment of money

2. An investment of funds in a common enterprise

3. An investment with an expectation of profits predominantly from the efforts of others

The textbook definition of a “security” is:

A security is a fungible, negotiable financial instrument that holds some type of monetary value. It represents an ownership position in a publicly-traded corporation (via stock), a creditor relationship with a governmental body or a corporation (represented by owning that entity's bond), or rights to ownership as represented by an option. – Investopedia.com

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However, in this case, the “Howey Test” specifically focuses on the term “investment contract” within the definition of security. The “Howey Test” basically considers several variations of a contract, transaction, or scheme whereby an investor gives out money with the intent to secure income or profit from the use of that cash (or cryptocurrency).

Thus, marketing a token as a speculative investment, or drawing comparisons to existing investment processes, may mislead or confuse potential buyers. It may also increase the likelihood that the token is considered a security in the eyes of the US Supreme Court, FINRA and or SEC.

Furthermore, I also believe that a Blockchain Token with one or more of the following 7 investment characteristics likely will be considered as a Security Blockchain Token (ICO):

1.     Ownership interest in a legal entity, (LLC, Corp., General Partnership you name it…)

2.     Equity interest

3.     Share of profits, losses, assets and/or liabilities

4.     Status as a creditor or lender

5.     Claim in bankruptcy as equity interest holder or creditor

6.     Holder of a repayment obligation from the system or the legal entity issuer of the Blockchain Token

7.     A feature allowing the holder to convert a Utility Blockchain Token into an instrument with investment interests

It should be noted here that an ownership interest in a fund or other legal entity vehicle that buys utility tokens would still constitute ownership of a security, even if the fund would not be deemed to own any securities.

Reves Test:

An alternative test, known as the “Reves Test,” (Reves vs. Ernst & Young) may also be used to test is an ICO is truly a security. This test considers whether an investment may be viewed as passive and relying on the efforts of others to establish whether or not ICOs qualify as securities. Specifically, this test looks at four factors:

1.     Whether funds are being raised for a business venture or enterprise

2.     Whether the transaction is offered indiscriminately to the public at large

3.     Whether the investors are substantially powerless to affect the success of the enterprise

4.     Whether the investor’s money is substantially at risk because it is inadequately secured

It is crucial to consider the manner in which the sale of a Blockchain Token occurs, particularly the promotion and marketing! For example, if the language used to promote the Blockchain Token includes words like “investment,” “returns” or “profits,” the purchasers of the Blockchain Token may be more likely to expect profits from the efforts of others than if the Blockchain Token is promoted on the basis of the usefulness of the rights attached to the token. Disney Stock (DIS – NYSE) vs. Disney Dollars!

Therefore, the essence of a non-security or utility Blockchain Token is that they are for commercial use rather than investment, and a security Blockchain Token is for any kind of investment contract and transaction.

Now if you consider that utility Blockchain Tokens will allow for the exploitation of the system by the holder, much like a licensee has rights to commercially exploit the license. One may see the non-security or utility Blockchain Token holders as active participants, like franchisees of McDonalds or licensees of software like SAP. 

On the other hand, having or not voting rights confuses many people. So, similar to the argument above, the existence of voting rights itself should not define a Blockchain Token as a security or a utility token. The focus here should be whether the holder and or purchaser of the token would or would not be viewed as one that is passively relying on the efforts of others. Given that holder of a non-security or utility Blockchain Tokens play a more active role by using, contributing to or licensing the platform, it is less likely that having the right to vote on the future of the project will constitute the token as a security. Likely, as a metaphor, Disney could start asking people to vote on how many new roller coasters the new parks and resorts should build or have.

My Opinion - SECURITY ICO vs. UTILITY ICO:

Based on the above, it is my opinion (remember I am not a lawyer nor want to provide any kind of legal advice to anyone) that an appropriately designed Blockchain Token that consists of rights, and does not include any investment interests, should not be deemed to be a security ICO, subject to the specific facts, circumstances and characteristics of the Blockchain Token itself.

On the contrary, Coins that have any aspect of an investment contract should be SEC compliant under SEC regulations such as, REGULATION D506C or REG A+  in order to be operating within the United States law and be able to sell to U.S. citizens! Remember, it only takes 1 (only one) U.S. investor in your ICO to force you to comply with U.S. securities laws.

It seems to me that the SEC will most likely see any ICOs as securities tokens unless the issuer can prove otherwise. It makes sense that the regulatory government agencies will try to protect U.S. investors from fraudulent investments by making the ICO issuer responsible for doing everything that is necessary to release a utility tokens and not security if they choose to do so.

Given the SEC’s recent actions concerning ICOs, I would strongly suggest that companies considering ICOs and promoting them to U.S. investors should be very careful and compliant with U.S. securities laws, requirements and regulations. 

Further, I would advise that it is useful to consider the extensive use of disclosures, both to inform token holders of their rights (e.g., voting rights and other systems rights) and to demonstrate the nature of the Blockchain Token, at the time of the issuance of the tokens.

I hope this post was entertaining and please feel free to comment below or PM me, as I am happy to share my opinions on the subject (for entertainment purpose of course!).

Cheers,

 

-AN

 

Alex Nascimento

Chief Strategist

7MarketingMedia

We Implement Winning Strategies

Linkedin: http://www.linkedin.com/in/nascimentoalex

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Alex Nascimento's interview at Planeta Brasil

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Alex Nascimento's interview at Planeta Brasil

 

We all at 7MarketingMedia were delighted to be invited to participate on a TV Globo International special report about 7MarketingMedia’s Founder and Chief Strategist, Alex Nascimento and his trajectory studying and developing his own Marketing Agency in US.

Planeta Brasil is a TV show broadcasted by Globo International, the international arm of TV Globo the largest television network in Brazil. The show features the best of Brazilian  business, culture, news, sports, health and entertainment in the United States. #PlanetaBrasil has been on air for 12 years and has successfully been the bridge between Brazilians living abroad and their home country.

 

Check out the full report and follow the transcription of the video in English below:

TRANSCRIPTION OF THE VIDEO

Next we will feature Alex Nascimento’s trajectory in the US, and how he opened his own Marketing Agency in California.

Alex did his undergraduate studies in Marketing in New York, where in 2001 he witnessed the horrible attacks of 9/11. He then moved back to Rio de Janeiro, but after 4 years he decided to come back to the United States. Now living in Los Angeles he teaches postgraduate Marketing courses at UCLA and manages a Digital Marketing Agency in Santa Monica, CA.

A little over 10 years ago, the “carioca" landed in Los Angeles to do his MBA at UCLA  and ended up staying in LA. Today he owns a full service Digital Marketing Agency that, even tough is located in Santa Monica, has the "look and feel" of Brazil.

  • Reporter:  So here is one of those modern companies where the employees can take a rest and work using flip flops? There is even a soccer ball here. Do you guys play soccer during lunch breaks?

  • Alex: Yes, we usually play during breaks. There is also a surfboard and and a few skates for the team to use.

  • Reporter: How is that ?

  • Alex: Well, we all have to work hard but also have fun.

  • Reporter: So, you must have a big line of people who wants to work with you, right?

  • Alex: We would like to think so, and yes we have fun here. We are all a big family!

  • Reporter: You started your journey in the United States in New York, right ? Why did you go there?

  • Alex: Yes, so I went to NYC to do my undergraduate studies. I had this opportunity and I graduated in 2002, right after the "September 11” when the city was in a very tense mood. This moment in history negatively affected all business opportunities in town, and consequently I decided to go back to Brazil.

  • Reporter: In this period that you were in Brazil, did you readapt yourself easily or were you with that thought of coming back to the US as soon as possible?

  • Alex: No, I am a big fan of Brazil! I am from Ipanema, Rio de Janeiro, so I love Brazil, I think it is a great country! However, after 4 years living and working in Brazil I thought that having an international career was what I was really looking for. Therefore, the opportunity of pursuing an MBA in the United States would give me that chance. So, I came to study for 2 years at UCLA - University of California, Los Angeles - and graduated from the UCLA Anderson Business School.

Reporter: Alex is a specialist in Marketing Strategy. Besides running his company, he also teaches at UCLA.

  • Reporter: Nowadays everything is very mixed on the Internet. There are some people that have not even thought about becoming a brand or a celebrity and suddenly, through their social media posts, they acquire millions of followers and end up getting into this kind of business because one brand wants to advertise on this person’s page.

  • Alex: The tactics, strategies and tools of Digital Marketing are the same across most channels. A very popular channel, that a lot of people like to use the social media, which best practices consists of planning an editorial calendar for those platforms including:

    • What will you be talking about?

    • What is your voice?

    • To whom are you talking to and when are you talking?

Just like on a TV program, where you plan the questions that you are going to ask. So, the idea is the same. This concept comes from Public Relations, in the same way an editor plans the editorial calendar of a magazine or newspaper. We then transfer this concept into the digital world.

  • Reporter: What tips would you give to a person that has just entered into the social media and wants to have a lot of followers ?

  • Alex: This is a very good question. The main tip would be to define your target audience, to whom are you going to communicate, who is that person that wants to buy your product or service and what is their profile.

Reporter: Alex doesn't lose his ties to our Brazilian culture and whenever possible he visits our country.

  • Alex: I always go to Brazil, about 2 to 3 times a year. A part of my family lives in Brazil, another part in Miami and my mother lives here in Los Angeles.

  • Reporter: So, you don't take your laundry to your mom's house, do you?

  • Alex: No, no.. I don’t do it, although I have already thought about it!

  • Reporter: But it must be very comfortable to have your mother close to you, right?

  • Alex: Yes, of course. It is very nice, we get along very well. We always go out for lunch or dinner and she loves living in Los Angeles.

  • Reporter: I'm going to ask you a last question, but I think I already know the answer; Do you think about living in anywhere else?

  • Alex: For the moment I think about staying here in Paradise!

  • Reporter: Well, nice to meet you! Thank you so much!

  • Alex: Thank you, it was a pleasure having you here and nice to meet you too!

  • Reporter: Wish you luck and success!

  • Alex: For you too. Thank you.

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7MarkertingMedia is now a proud sponsor of Tech Coast Angels - the largest US Angel Investor Group

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7MarkertingMedia is now a proud sponsor of Tech Coast Angels - the largest US Angel Investor Group

We at 7MarketingMedia are honored to announce that we are now a proud sponsor of Tech Coast Angels - TCA LA.

Tech Coast Angels is the largest angel investor group in the United States, possessing more than 300 members in five networks in Los Angeles, Orange County, San Diego, Central Coast, and the Inland Empire. Its members provide funding and guidance to more early-stage, high-growth companies in Southern California than any other investment group.

TCA members invest in companies in a wide range of industries, including the life sciences, biotech, IT, services, retail, Internet, financial, software, media, consumer products, and tech startups.

Our whole team at 7MarketingMedia is looking forward to developing winning strategies and helping TCA Angel Investors and their Funded Startups with digital marketing services such as   Web/App Development, Corporate Identity & UX/UI Design, Media Buying & Ad Campaign Management, SEO/SEM,  Social Media and Marketing Strategy & Implementation!

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Rafael Policiano - CEO of Chilli Beans USA gives a keynote at Alex Nascimento's UCLA Brand Strategy Course

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Rafael Policiano - CEO of Chilli Beans USA gives a keynote at Alex Nascimento's UCLA Brand Strategy Course

It was a pleasure to have Rafael Policiano - CEO Chilli Beans USA as a keynote speaker in our Brand Strategy Course at the UCLA Campus. Rafael reinforced to my students some of the key concepts of branding such as Brand Focus, Singular and Consistent Brand Identity and the importance of investing in People (staff) in order to grow a brand internationally across more than 700 stores worldwide.

 

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Alex Nascimento speaks at the first ANCINE event about The Audiovisual Industry of Brazil in LA.

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Alex Nascimento speaks at the first ANCINE event about The Audiovisual Industry of Brazil in LA.

It was a pleasure to host, for the first time in Los Angeles an event with the most recognized names of the Brazilian Audiovisual Industry who all came together for a dialogue about opportunities for co-production, partnerships and the regulatory system in Brazil. The event was held on July 23, 2015, highlighting the latest developments in filmmaking, which were presented by key players of the industry, including Manoel Rangel, the president of ANCINE, the federal regulatory agency of Brazil; Alfredo Manevy, Director President of São Paulo Cine; Ricardo Castanheira, General Manager of Motion Pictures Association in Latin America; Silvia Rabello, President of the Audiovisual Industry Interstate Union, Brazil; Steve Solot, President, Rio Film Commission and Executive Director, Brazil Film Commission Network, Fábio Cesnik and Rodrigo Salinas, Brazilian Entertainment Attorneys of Cesnik, Quintino & Salinas Law Office and more.

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How the Brazilian government and private financial sectors are preparing for the 2014 World Cup

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How the Brazilian government and private financial sectors are preparing for the 2014 World Cup

      Good news hit the Brazilian shores, as according to a spokes person from the International Finance Corporation - IFC, the World Bank affiliate is looking to invest close to $2 billion in Brazilian private sector companies.  Targeted sectors are financial, energy, low-income housing, business hotels, agriculture and water.   By doing so the IFC will improve Brazil’s competitiveness, support job creation, infrastructure development and access to financial services.

       Although foreign direct investment is growing in Brazil, the local government is also investing in growing the country’s innovation industries, which can be leveraged before, during and after the 2014 global event. A good example is the government subsidized Recife’s Porto Digital, one of the largest tech parks in the country, with technology firms focusing on areas such as urban mobility, neural networks, artificial intelligence for finance & banking, as well as security and outsourcing.  Recife’s Porto Digital has been a success, and is now home to 150 IT firms, which generated about US$488M in 2012.  

     As we approach the kickoff moment of the 2014 World Cup, another industry that is seeing significant investments is the security industry, as FIFA and foreign nations are pressuring Brazil to be prepared to counter possible terrorist threats during the 2014 event.

      As a result Brazilian security forces recently awarded a US$7.2M contract to Boston-based iRobot Corp. to have American drones and robots keep an eye on the areas around the soccer stadiums during the games and inspect suspicious packages and diffuse potential chemical and explosive devices.  

In addition, according to Brazil’s Defense Ministry, Brazil has put in place a massive military operation to secure its porous 10,440-mile frontier, to crack down on drug trafficking and smuggling of arms and illegal migrants.

     With heavy investments in infrastructure, innovation and security the nation hopes to leverage its passion for soccer, to lift the country out of its developing economic stage and into a brighter and sustainable future. 

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Alex Nascimento featured in Entrepreneur Magazine

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Alex Nascimento featured in Entrepreneur Magazine

I was honored to be featured in the December 2013 issue of Entrepreneur Magazine. It’s not accessible online, but here’s the article from the print magazine:

Global Startup Trend for 2014: Consider Brazil 
by Alexandra Schmidt

Global
 
It's time to look beyond the sunny beach-party exterior. More than just a tourism magnet that attracts 5 million-plus visitors every year, Brazil is South America's largest economy, with gears turning busily in numerous sectors.
 

Brazil's population has increased from 96 million in 1970 to about 200 million today. As a result of government investment and solid economic growth, 40 million of those people entered the middle class over the past decade. And with two major global events on the horizon--the FIFA World Cup in 2014 and the Olympics in 2016 in Rio de Janeiro--Brazil is poised as a dynamic magnet for entrepreneurial investment.
 

Alex Nascimento, founder of 7BrazilConsulting in Santa Monica, Calif., has taken dozens of individual investors on exploratory trips to his native country. "The next five years will be the hottest years for Brazil," he says. "We're going to have significant investment from the government as well as new foreign direct investment. If new tax legislation gets passed, that will give a boost to Brazil's stocks and publicly traded companies. In the coming years, I see Brazil becoming the best it can be."
Nascimento points to real estate and the aforementioned tourism as key investment sectors. An Olympic host city typically needs 50,000 to 60,000 beds; Rio reportedly has only 25,000. Cosmetics are another major opportunity. On average, Brazilian women spend 40 percent of their disposable income on cosmetic products, according to Nascimento.
 

But the hottest sector is technology. Brazilians have increasing purchasing power, but many live in underserved or rural areas where they don't have access to the goods they want. So e-commerce is booming, estimated to be worth $12 billion annually. The fastest-growing Latin American e-tailer, sporting-goods company Kanui.com.br, saw web sales increase a whopping 9,000 percent in 2012, according to Internet Retailer.
 

There is a vibrant accelerator scene funding startups within Brazil, andinvestors from outside the country are also bullish. California-based SVB Capital invested in Brazilian venture capital firms last year through a $340 million fund. "The Brazil economy in the next 10 years will be one of the third or fourth largest economies in the world," says Aaron Gershenberg, a managing partner at SVB. "If you're going to look at some diversification in your portfolio, in the innovation economy Brazil is a very natural geography to have exposure to."
 

Meanwhile, entrepreneurs from the U.S., Germany and France have already set up shop in the country, undeterred by high taxes and startup costs. New tax incentives for tech companies are on the horizon, possibly clearing the way for even more.
 

Still, there are reasons to be cautious--cultural challenges, for one. A subscription service called Shoes4you failed recently, and many observers blamed the local concept of jeitinho, which gives a wink and pat on the back to consumers who uncover ways to get things for free. When customers figured out that they could cancel their Shoes4you subscriptions indirectly through their banks, rather than through the company--eliminating the charges, but still getting their shoes at the discounted membership rate--many did. It was reportedly a key factor in the company's demise.
 

There are other reasons for measured enthusiasm.
 

Nascimento says it can take six months to get a business license. Private companies, such as bus operators, have notoriously awful customer service. The countrywide protests this summer highlighted some of the frustrations of a population putting more and more into taxes and getting seemingly little out. But the places where such services fall short represent major opportunities for entrepreneurs to do things better--even amid an atmosphere of high setup costs and thick red tape. 

Web article URL: http://www.entrepreneur.com/article/229849

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Growth in Internet usage drives e-commerce growth in Brazil

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Growth in Internet usage drives e-commerce growth in Brazil

Despite the slowdown in Brazil’s economy, many economists remain optimistic about the growth of e-commerce in the country.  A growing middle class coupled with a growing Internet penetration allows for the opportunity for e-commerce expansion. 

 As we approach the 2014 World Cup in Brazil, the local B2C e-commerce industry may see double-digit increase in 2014.  E-Marketer predicts that retail e-commerce sales would lead this double-digit growing industry throughout 2014.

Another factor that will contribute to the e-commerce expansion are the new governmental regulations focusing on online privacy, which will increase the comfort level of Brazilian Internet shoppers.

On-line tourism sales have also played an important role in the growth of Brazilian e-commerce.  According to e-Marketer, this segment represented close to 1/3 of the country’s total e-commerce sales in 2012.

Although, the expanding middle class plays a big role in the growth of the Brazilian e-commerce industry, the majority of the sales will continue to be generated by the upper class segment as they have more disposable income and are more Internet savvy.  

Nevertheless, the current market still offers several opportunities for proven foreign e-commerce models to be replicated in Brazil and leverage the love Brazilians have for shopping on-line.

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Start-Ups in Brazil Remain Optimistic

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Start-Ups in Brazil Remain Optimistic

 Numerous young companies have struggled to show sustainable profitability despite early rapid growth.  Some blame the business environment and the costs of doing business such as legal costs, taxes, employment costs and a lack of logistics infrastructure, which combined make operations more difficult.  The fact that GDP growth slowed last year to 0.9%, compared with 2.7% in 2011 has not helped entrepreneurs either.

     Initially, most investments made by foreign venture capital firms consisted of Brazilian Internet or technology companies looking to replicate existing web business models that proved to be successful in the United States or Europe.  Investors wrongly assumed that the Brazilian market was large enough to support multiple successful companies. Consequently, the market was flooded with excessive competition for limited market share.  However, other investors point to inefficiencies on the execution and operations of companies as the main reason for their poor performance.

     Despite the difficult environment, Brazilian start-ups still have foreign supporters.  Even Silicon Valley investors who have seen ideas fail are still willing to make large bets, believing that the short term will be difficult, but the long-term projections remain highly favorable, as the market grows and consumer purchasing power increases. 

     According to the Brazilian consulting firm E-bit, overall e-commerce grew by 20% in 2012 and mobile represented only 2.5% of transactions, making mobile e-commerce the next big opportunity for growth.  Other sectors in Brazil that remain overlooked and underfinanced but are starting to see more investments are health care, education and innovation. 

We also note the growing interest of Chinese Internet companies looking to duplicate in Brazil the same success that they’ve had in China.

     Overall, as move closer to the World Cup and Olympics, the country show signs of above average GDP growth and the mood for foreign investors still remains positive and more FDI is expected the next 3-5 years to further empower the growth of the Brazilian economy.

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How To SellIn LinkedIn

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How To SellIn LinkedIn

As LinkedIn’s profile states on its own company page – “LinkedIn takes your professional network online.” With 135M+ users and 11k new members every 90min, Linkedin has dominated the professional social media space as we all know it.

Aside from connecting with past lunch buddies from previous jobs, one might ask “what can a sales person do on LinkedIn?” As I always tell my students, LinkedIn allows you to do the most important business task ever - SELL!

So then, how should one sell via LinkedIn? If I may add another MBA framework, to a world that doesn’t need another self-proclaiming framework, I would like for you to consider “The 5Cs” of How to SellIn LinkedIn:

CONNECT-->CREATE-->COLD-TWEET-->COLLABORATE-->CLOSE

Let me explain…

CONNECT: Just as a sales person needs to leave the office to meet new prospects, he or she also needs to connect with new prospects on-line.

CREATE: In the era where “Content is King,” a sales professional also needs to be a source of knowledge and information. A well-crafted editorial agenda comprised of engaging & “non-salesy” content can position you and your sales team as a credible resource in your industry.

COLD-TWEET: Rule #1 is to never ever cold call on LinkedIn, aka send a request to someone you don’t know, trust me it looks horrible! However, finding a prospect’s Twitter handle, aka username, following them and eventually replying to one of their clever tweets can be a very classy way to start developing a relationship.

COLLABORATE: Get your sales team to cooperate and collaborate on LinkedIn. Develop discussion groups for teammates to exchange contacts, information and insights. Use the team’s collective LinkedIn connections to generate more leads and don’t forget to recommend one another. 

CLOSE: Considering that any given prospect has a never-ending number of options at their fingertips, focus on being an expert and educating the prospects before they have a need for a solution. If you manage the process correctly, the prospects will be closing on you instead of the other way around!
 

So my dear sales friends, I hope this helps you leverage your sales on LinkedIn, and remember, as Aristotle once said, “A friend to all is a friend to none.” With that in mind, go out there and focus on making ONLY relevant LinkedIn connection, sharing your knowledge and the sales will follow!

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Don't Stain Your Brand with Greenwash

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Don't Stain Your Brand with Greenwash

As I see brands claiming to have won the “Green” award, I would like to share with you a few principles to keep in mind in order to protect your brand from taking home the “Greenwashing” trophy. 

  • Proof = Truth – All claims should have scientific proof.
  • Don’t Hide and Emphasize – Don’t try to hide some facts and emphasize other information. Your audience will notice and the truth behind your message will come to light. Tell the whole story!
  • If you are not different, it doesn’t make a difference – If you are claiming something every other company is doing you are not special.
  • The Label Matter – Get a neutral and respectable third party organization to endorse your claim/stamp/label.
  • Educate your Audience – If you use a term, i.e. Fair Trade, provide a definition on your label for that or any other term and or claim.

As this blog post is dedicated to my UCLA Green Marketing Strategy students, I would like to share and informative video I found on YouTube made by grenkblog.com. Please watch the video and let me know how you would avoid the “Greenwash” trophy.

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Can a Chinese Brand make it in America?

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Can a Chinese Brand make it in America?

I think it can! A great example is Lenovo, who acquired the former IBM PC Company Division for approximately $1.75 billion, and is currently the largest seller of PCs in China with 28.6% market share. The Chinese PC maker was ranked sixth with a 5.6 percent market share in the U.S. market in 2010, with sales outpacing all competitors in the US.

I believe Chinese brands have to do the following to compete in the US Market:

#1- Upgrade quality standards.

#2- Communicate NEW quality standards through better advertisement and promotional efforts.

#3- Develop a customer relationship management system with “the customer is always right” mentality.

#4- Reevaluate their pricing strategy, as we all know it, in America cheap = low quality.

In addition, the Chinese American community represents the largest group of Asian Americans, accounting for 22.4% of the Asian American population in the US. Therefore, utilizing the following Chinese symbols in product development to communicate Chinese heritage can be a competitive advantage in the American market:


Red: For the Chinese, the color red symbolizes good luck and happiness.

Chinese Dragons: A symbol of authority, might and power. Chinese people consider themselves to be descendants of the dragon and proudly communicate that in several forms.

Chinese Characters: There are over 80,000 Chinese characters that illustrate the Chinese culture. 

Given that this blog post is dedicated to my dear Global Marketing Strategy students at UCLA, I am interested in knowing what you think a Chinese Brand ought to do to make it in America?

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7 MARKETING POWERS

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7 MARKETING POWERS

After reading countless BBBs – business boring books - I feel that everything has already been said by someone somewhere. However, if everyone has already heard all the pearls of success, why aren’t we all successful? 

If all those BBBs make total sense, why aren’t we implementing the strategies and tactics to make ourselves or our brand popular or should I say profitable? 

As a summary of my marketing studies, I have identified the 7 powers any wannabe marketer, brand manager, CMO, CEO or facebook junkie should develop to break through the noise of media in the 21st century and create a brand or name for themselves. 

 

I call them 7 MARKETING POWERS:

 

POWER #1 – LISTENING

– The power of listening to your clients, company and competitors.

 

POWER #2 – BRANDING

– The power of creating an iconic brand.

 

POWER #3 – PERSUASION

– The power of influencing people and storytelling.

 

POWER #4 – LEADERSHIP

– The power of motivating others.

 

POWER #5 – STRATEGY

– The power of mapping your way to success.

 

POWER #6 – EFFICIENCY

– The power of doing.

 

POWER #7 – NETWORKING

– The power of others.

 

Understanding and mastering these 7 MARKETING POWERS can be more efficient than an MBA degree, and this is coming from someone who chose that diploma on the wall over a Ferrari in the garage. Trust me, I still dream about cruising in that red convertible.

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World Cup Marketing War

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World Cup Marketing War

In a world where a sense of national pride is suppressed by globalization, the World Cup is the last frontier for a fair global battlefield! After watching every game, including the disappointing Brazil vs. Holland match, I have decided to express my digital point of view about the most simultaneously shared human experience on the planet, the South African World Cup 2010.

Estimates are that 700 Million people watched the final match between “La Furia Roja” and the not so “Clockwork Orange.” Such a massive viewing might explain why we now see national heros and football (soccer) personalities making silly fashion statements – i.e., Maradona’s 2 Hublot watches and players like Davi Villa with more hair gel than Vanila Ice - all in search of mass audience popularity and following.

Speaking of the search for popularity, two power-house brands faced off in a head to head battle, on Facebook, for the “World Followers Cup.” Adidas, the main event sponsor since 1970, set a campaign focused on fan-based match predictions, while Nike created a 10 min advertising viral video showcasing elite international players. 

After the whistle was blown in Johannesburg, the Facebook scoreboard showed Adidas 1,349,560 fans vs. Nike 1,340,220 fans. 

In the battle for fans, Adidas created so much buzz around the official ball, the Jabulani, made by Adidas, that nobody stopped to note that the only players complaining were the Nike sponsored athletes.

So in a billion dollar industry, how could a brand win at the World Cup? According to the social network numbers, Adidas not only picked the winning team, but also the ball and took the entire event.

With that in mind, should we bet your hard-earned money on the teams sponsored by the brand that spends the largest amount of money? I hope that, for the sake of Brazilians, Nike decides to spend all its American dollars in 2014…

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