Common pitfalls for Web3 founders

Useful lessons from web3 founders building together with deFi Alliance.

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Common pitfalls for Web3 founders

Useful lessons from web3 founders building together with deFi Alliance.

cryptocurrency, crypto, finance, web3, startup

Common pitfalls for Web3 founders

When founders come to our 1:1s and group office hours at Alliance, they often seek our advice on topics that are very specific to their project.

But just as often, their questions are generic enough that they are relevant for many other founders.

Let’s address these frequently asked questions. They can be broadly grouped into 4 categories:

* PR/marketing

* Hiring

* Community management

* Token economics

PR/marketing

“What PR/marketing firm do you recommend?”

“Should I hire a marketing person in-house?”

“Any advice on our Twitter/podcast strategy?”

Unhealthy Obsession with Marketing

My knee-jerk reaction to most early-stage founders asking about PR/marketing is that “you are being too obsessed about marketing and not obsessed enough about your product.”

If an early-stage startup failed 5 years from now, it would not be because they sucked at marketing. It would be because they did not find product-market fit.

I’m not sure where this obsession with marketing comes from. Most founders seem to think that they are excellent at product building and that they need help with marketing. In my experience it’s very much the opposite. Most founders simply aren’t obsessed enough with users. They don’t talk to users on a regular basis. They aren’t users of their own product. How could they possibly develop unique product insights if they don’t do these things?

There’s a famous platitude “It is not the best product that wins. It is the best marketed product that wins.” This may be true for mature companies, but it’s extremely dangerous for startup founders to think this way. This is because most of them don’t even have a product worth marketing for!

Tactical advice on Marketing in Web3

All that being said, here are a few specific pieces of advice on PR and marketing.

* Don’t use an external PR/marketing agency. I now have a dozen data points from founders who have used one and shared their experience with me. There has not been a single success story. Do marketing in-house. Ask your investors to amplify your message and to connect you with the media.

* Content marketing is by far the single most scalable way to get your name out there and to build trust with your current and future users. Educate them on your product and industry trends you are seeing.

* Getting on major podcasts and conferences is difficult. Podcasters and conferences only want big names. One way to become a big name is by building a great product a lot of people use, which by definition is not a viable strategy for early stage founders. The other way, once again, is to write high-quality content.

* The main point of big, one-off marketing pushes such as fundraising announcements is actually not to attract potential users. It’s to attract potential hires. Your hiring candidates will do due diligence on you and will come across your announcement. But your users will only come and stay if you have a great solution to their problem.

* For Twitter, build your personal brand (not just your corporate brand). People trust personal brands more than corporate brands. Personal brands feel more approachable. Building a personal brand is not that critical to success. Lots of startups have succeeded without a celebrity CEO. But if you like being a public face, by all means do it.

* The truly Web3-native marketing strategy is tokens. And it's not just free token airdrops, but the mere fact of users owning your token. It's powerful beyond measure when used correctly. More on this later.

Hiring

“Where do I find Solidity/Rust engineers?”

“I need to hire more people. I’m overwhelmed. Do you have any advice?”

The Problem with Scaling Too Fast Too Early

Hiring is one of the biggest challenges for startups. But before diving into how to hire the best people, I want to point out a common mistake that first-time founders make: they scale the team too fast before any sign of product-market fit. As a result they burn money too fast without making much progress.

When your team expands, you feel good. It feeds your ego. But team size is a vanity metric. It’s a useless metric to optimize for. In fact, more often than not a smaller team of A players can achieve more than a team 3 times larger of B players. This is because more people leads to more interpersonal links, more communication burdens, and more difficulty to keep the team focused.

Founders have come to me multiple times and said stuff like “I hired this community/marketing/product person. But I feel like they are not creating much value, and I’m spending so much time micro-managing them.”

It’s better to not hire at all than to hire someone mediocre just for the sake of filling a role. They are actually net negatives to the organization because of the additional interpersonal links. And as a founder, many of your superpowers simply cannot be replaced by hiring someone. At least not in the early stage.

If you feel overwhelmed, the best solution is not to hire more, but to do less. Prioritize, focus, ignore.

When you start seeing signs that users love your product, then it's time to scale more aggressively.

How to Recruit

OK. Let’s dive into the top ways to recruit talents.

When founders ask me how to find engineers (or other talents), my first question back to them is always “have you exhausted your personal network?”

Tapping into your network is by far the most effective way to recruit talents. Nothing else comes even close. Fundamentally this is in the early days you don’t have a strong brand. So it’s very hard for people to trust you. The only people who trust you are those in your network.

Make a list of the best people you know, get on a Zoom with them, pitch your startup, and ask them if they are interested in joining. It may seem awkward to ask a friend to work with you, but you absolutely have to get out of your comfort zone and do this. If they are not interested, ask them to introduce you to three people they know and respect who might be interested.

Ask everyone on your team to do this too.

At my previous startup I asked one of my best friends to join me. I had known him for 10 years. It was extremely awkward, and it took me a month of convincing. He ended up joining me. He also convinced one of his former colleagues to join, and so on. The network multiplies.

The second best way to recruit talents is to go through your community, ie, people who know you but whom you may not know.

If you have a discord/Telegram community, ask your community if they or their friends are interested in working with you. If you have a Twitter/newsletter, post your jobs there. Ask your allies (eg, investors) to retweet. If one of your investors has a large Twitter/newsletter audience, ask them if they can help post your jobs.

In retrospect this should be obvious. You want to tap into your loyal followers instead of people who don��t even know you.

Only after you’ve completely exhausted your personal network and your community should you consider using recruiting platforms like Alist, Triplebyte, Stackoverflow, coding schools, etc.

One final tactical piece of advice on finding blockchain engineers: it will be far easier for you to hire experienced Web2 engineers and to train them than to find experienced Web3 engineers. Right now, in 2022, we are seeing the highest level of interest from Web2 talents looking to break into Web3. On the other hand, Web3 engineers are too rich, too comfortable, or starting their own startup.

Community management

“How do I engage the community?”

“How do I manage FUD?”

“When should I hire a community lead?”

There’s an everlasting meme in crypto that goes something like “community is the moat”, “the best community wins”, “we are a community-run project”, and so on.

I will take the other side of this for a moment. Not necessarily because I think these statements are wrong, but because I want you to think critically about these statements that people blindly throw around. I want you to reason from first principles whether or not you should have a dedicated community manager and why you even need a Discord or a Telegram in the first place.

I will argue that an engaged community is not what leads to a great product. An engaged community is the result of a great product.

We’ve seen this over and over again. A community gets excited and actively contributes when “numba go up”. The same community FUDs and fractures in a bear market. And in the long run, price is reasonably correlated with how well your product is doing.

As such, you should not try to brute-force engagement and positivity into your community. There’s a far more natural way to engage your community, which is to treat them, first and foremost, as users.

Find volunteers to beta-test your product. Ask them for product feedback. Ask your community what pain points they are experiencing. Update them on your progress and roadmap. Educate them on how to use your product because your UX may be confusing.

This way, you will constantly engage the community while gaining valuable product insights. And the improved product will further strengthen the community over time.

The best community person I’ve ever come across is Kain from Synthetix (who was part of our genesis cohort). And this is exactly what he did. He would constantly talk to his Discord community about the product. He would answer questions within minutes. Another great example of this is Liu Jie from Mcdex (who is also an Alliance alumni). I see him answer product questions on Telegram at 11PM local time again and again.

Note that the common theme between these two examples is that the community person is the founder themself.

I’m not saying every founder should live in their Discord 24/7, but community management is one of those roles where the founder cannot easily be replaced. Not to mention the fact that what the founder really is doing, via community management, is user research. Which is yet an

Common pitfalls for Web3 founders
Info
Tags Cryptocurrency, Crypto, Finance, Web3, Startup
Type Google Doc
Published 17/05/2022, 12:21:01

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