Overcoming Challenges: A Fresh Perspective for Crypto Startups in Unfavorable Market Conditions
As the crypto bear market looms and the shadows of uncertainty threaten the realm of startups, the ardent pursuit of resilience and creativity becomes vital. Fear not, intrepid crypto enthusiasts, for we bring you invaluable tips and approaches to help your venture emerge from the darkness, triumphant and stronger than ever before.
Retention can be tough, despite the simplicity of acquisition.
Gaining users might seem relatively straightforward since it directly correlates with the resources invested. The more effort and funding allocated to user acquisition, the more users you'll attract. Tracking their point of origin often enables fine-tuning your strategy for maximum effectiveness. However, merely acquiring new users doesn't ensure retention, as evidenced by the spate of unsuccessful liquidity mining schemes and airdrops since DeFi Summer.
Projects expressed concerns regarding their stagnant user growth, placing the blame squarely on their marketing department. Upon asking about retention rates, net referral values, and PMF (Product Market Fit) surveys, they admitted that they hadn't considered these factors. Data collected subsequently revealed that marketing wasn't the issue; users simply weren't sticking around due to their inferior product. Alarmingly, numerous startups share the same oversight and remain unaware of their product's shortcomings, resulting in time wasted on trivial matters.
To overcome this challenge, consistently monitor your PMF using quantitative and qualitative methods. Measure the previously mentioned metrics while maintaining open communication with users and trusting your instincts. Identifying the problem serves as a solid foundation for moving forward.
If your startup falters within five years, it's likely because of low user retention rates, not inadequate user acquisition. Focus on creating something 100 people genuinely adore, rather than something that somewhat appeals to 1 million people. You don't require abundant finances or a large workforce to develop a market-fit product. In fact, excessive funding and overstaffing contribute to the collapse of many crypto startups before they achieve any semblance of product-market fit.
As the bear market rages on, the industry remains awash with venture capital, with a multitude of firms displaying complete disregard for valuations. Consequently, startups often secure seed funding figures reaching into the millions, driven not by necessity but by feasibility.
The burden of excess funding causes founders to fixate on expenditures, recruitment, and management while attempting to maintain a unified vision within an unwieldy organization, diverting attention away from the most vital aspect—product-market fit.
While team expansion may inflate one's ego, it barely scratches the surface. Addressing product-market fit typically cannot be achieved through mere manpower. Instead, it takes a small, select group genuinely propelling the organization forward by employing swift, sequential experimentation rather than simultaneous efforts. When facing a multitude of challenges within your organization, increasing the number of employees is not the optimal solution; instead, streamline tasks. Allocate priorities, concentrate on essential aspects, and disregard the rest. Consider expanding your workforce only when you observe indications of users genuinely admiring your product.
Allow sufficient time to discover a potent strategy.
Gaining substantial expertise in the crypto sector and attaining an in-depth understanding of your users necessitates patience, given the complexity of the field.
Newcomers to the cryptocurrency domain may possess preliminary knowledge, but grasping the intricate details demands immersing oneself among active users and engaging in captivating discussions. Rapid success will be elusive for those establishing DeFi protocols or NFT marketplaces without first obtaining a comprehensive knowledge of the crypto landscape. A profound understanding of crypto demands time and effort, ultimately granting you a competitive edge.
Numerous crypto founders with remarkable Web2 or TradFi backgrounds often attempt to morph their existing experiences into the crypto realm, focusing on replicating Web2 or TradFi products. However, an existing product outside the crypto sphere doesn't automatically resolve the challenges faced within crypto. Stellar crypto products, such as Metamask, Uniswap, Blur, Layer Zero are typically created by crypto natives – a noteworthy pattern highlighting the importance of first-principles thinking.
Tapping into your personal network remains the most successful recruitment strategy so far, especially during the initial stages when your brand may not be sufficiently appealing to external candidates. Make a list of the most talented individuals you know and promote your startup to them. Encourage all team members to leverage their personal networks for recruitment as well.
Channels like Discord, Telegram, Twitter, or newsletters make up the second-best means for recruitment purposes. Ask if anyone or their connections have an interest in partnering with you. Only after exhausting personal networks and community connections should you resort to crypto-specific talent agencies or recruitment platforms. Consider hiring skilled Web2 engineers and training them for Web3 roles, as finding experienced Web3 engineers can be a challenging endeavor.
Sales, Expansion, and Promotion.
Steer clear of external marketing firms; according to the experiences shared by those who have worked with them, success is a rarity. Instead, embrace in-house marketing strategies and capitalize on your investors to broaden your message and link up with the media.
For enterprise-focused or developer-oriented products in the crypto space, content marketing proves to be the most efficient method for constructing the top section of the funnel.
When it comes to consumer-directed products, tokens are the prime scalable user-acquisition approach, but they can only be used once. Crypto conferences can provide fruitful avenues to obtain users for businesses or developer products but might prove unproductive for consumer goods.
Gaining exposure on major podcasts and conferences can be an uphill battle, given the preference for well-known figures. For early-stage startups, becoming an established name can be a challenge. Instead, concentrate on generating top-notch content to gain acknowledgment.
The primary goal of sizeable marketing events, like fundraising announcements, is to draw potential staff members rather than potential users. Future employees will conduct due diligence and pay attention to these kinds of announcements. Twitter serves more as a reflection of your success rather than an indicator, so do not let it consume you.
Token incentives serve as a tactic to penetrate the market, but they can be futile without a beloved product, as users will merely abandon them. Starting token incentives too soon can impede your comprehension of the true product-market fit. You won't know if users are attracted to the product or the financial benefits.
Tokens present a delicate balance for your community and staff members, as rising prices in bull markets elevate excitement, while declining prices in bear markets dampen morale – much like publicly traded companies.
Don't attempt to anticipate market conditions; if possible, introduce your token during a bear market. Aim for your token's value to increase over time by starting from a low base. Perfection in token design won't be achieved on the first try, and adaptations will undoubtedly be made as your understanding evolves.
Avoid overcomplicating your token design. Refrain from implementing long timeframes for rewards and overly indulgent incentives. Instead, use tokens in a straightforward, periodic, and moderate manner. While it's wise to learn from leading products in particular sectors, remember to base your token design on the unique requirements of your product and build from first principles. Each product is unique, so each token should also be distinct in design. Tokens act as a market entry strategy, so their relevance depends on the individual product.
Begin discussions with exchanges at an early stage to facilitate a listing as soon as possible. Exchanges have diverse requirements that change over time, and these often impact your token design directly.
An energetic, involved community is the outcome of an exceptional product, not its origin. Telegram caters to commercial and developer audiences, while Discord is tailored to consumers.
For consumer-oriented offerings, concentrate on treating your community as users rather than strictly optimizing community involvement and excitement. Seek their opinions, run beta tests, address concerns, share progress updates and roadmaps, and teach them how to interact with your product. The core figure of the project should also take up the community manager role during the initial phase.
So, dear crypto pioneers, let us unite in our tenacious journey and transform the temporary hardships of bear markets into invaluable lessons. Rekindle the fire of innovation and hold steadfast in building a brighter future for the industry and the communities we cherish. No storm lasts forever, and together, we stand ready to embrace the sunshine of a flourishing crypto world that awaits us beyond the clouds.