When founders and teams come to our offices during office hours, they often seek our advice on topics that are very specific to their projects.
But just as often, their problems are common enough to be relevant to many other founders.
Let’s answer these frequently asked questions. They can be roughly divided into 4 categories:
3. Community management
4. Token Economics
“Which PR/marketing firm would you recommend?”
“Should I hire a marketer in-house?”
“Any suggestions for our Twitter/podcast strategy?”
Unhealthy obsession with marketing
My knee-jerk reaction to most of the PR/marketing questions that early founders ask is, “You’re too obsessed with marketing, not enough of your product.”
If an early stage startup fails after 5 years, it’s not because they suck at marketing. This will be because they have not found a product that fits the market.
I’m not sure where this obsession with marketing came from. Most founders seem to think they are so good at product development that they need help with marketing. In my experience, the opposite is true. Most founders are just not obsessed enough with their users. They do not regularly talk to users. They are not users of their own product. If they don’t do these things, how can they possibly develop unique product insights?
There’s a famous cliché: “It’s not the best product that wins, it’s the product that sells the best.” This may be true for established companies, but it’s very dangerous for entrepreneurs to think this way of. This is because most of them don’t even have a product worth marketing!
Strategies for Web3 Marketing
Nonetheless, here are some concrete tips for PR and marketing.
Don’t use an outside PR/marketing agency. I now have a dozen data points using founders who used external PR agencies and shared their experiences with me. There isn’t a single success story. Do internal marketing. Ask your investors to amplify your message and connect you to the media.
Content marketing is by far the single most scalable way to get your name out there and build trust with your current and future users. Let them know about your products and industry trends.
Participating in big podcasts and conferences is difficult. Podcasts and conferences only want big shots. One way to become famous is to build a great product that a lot of people use, which is by definition not a viable strategy for early stage entrepreneurs. Another way is to write high-quality content again.
The main purpose of a large one-off marketing campaign is not really to attract potential users. This is to attract potential employees. Your recruiting candidates will perform due diligence on you and will see 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 branding feels more approachable. Building a personal brand is not the key to success. Many startups have succeeded without celebrity CEOs. But if you like being a public figure, by all means do it.
“Where can I find a solid/rust engineer?”
“I need to hire more people. I’m overwhelmed. Do you have any advice?”
Problems with scaling too fast or too early
Recruiting is one of the biggest challenges a startup faces. But before diving into how to hire the best talent, I want to point out a common mistake first-time entrepreneurs make: They scale their teams too quickly before any sign of product-market fit. As a result, they burn through money too quickly and don’t make much progress.
You feel good when your team expands. This will boost your self-esteem. But team size is a vanity measure. This is a useless optimization metric. In fact, typically, a smaller A-team player can achieve 3 times as much as a B-team player. This is because more people leads to more human connections, more communication burden, and harder to keep the team focused.
The founders came to me multiple times and said, “I hired this community/marketing/product people. But I don’t think they’re creating much value, and I spend too much time micromanaging them.”
Instead of hiring a mediocre person just to fill a position, it’s better not to hire at all. They are actually a net negative to the organization due to the extra human connection. As a founder, many of your superpowers simply cannot be hired to replace. At least not in the early stages.
If you feel overwhelmed, the best solution is not to hire more people, but to do less. Prioritize, focus, ignore.
When you start seeing signs that users like your product, it’s time to expand more aggressively.
How to recruit
Let’s dive into the best ways to recruit talent.
When founders ask me how to find engineers (or other talent), the first question I ask them is always “Have you exhausted your personal network?”
Leveraging your network is by far the most effective way to recruit talent. Nothing comes close. Fundamentally, it’s early days and you don’t have a strong brand. So people have a hard time believing you. The only people who trust you are the people in your network.
List the best people you know, zoom in with them and introduce your startup, and ask them if they’d be interested in joining. It may seem awkward to have a friend work with you, but you absolutely have to get out of your comfort zone. If they are not interested, ask them to introduce you to three people they know and respect who may be interested.
Ask everyone on the team to do the same.
When I last started a business, I invited a best friend to join me. I have known him for 10 years. It was very embarrassing and it took me a month to convince it. He eventually joined me. He also persuaded a former colleague of his to join, etc. The network has grown exponentially.
The second best way to recruit talent is through your community, people who know you but you may not.
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 work there. Ask your allies (like investors) to retweet. If one of your investors has a large Twitter/newsletter audience, ask if they can help publish your work.
In retrospect, this should have been obvious. You want to take advantage of your loyal followers, not those who don’t even know you.
Only after you have completely exhausted your personal network and community should you consider using recruitment platforms such as Advices, TrimByter, StAdvOffice, etc.
One final piece of tactical advice on finding a blockchain engineer: it’s much easier for you to hire and train experienced Web2 engineers than to find experienced Web3 engineers. Now, in 2022, we’re seeing the highest level of interest in Web2 talent moving into Web3. On the other hand, Web3 engineers are too rich, too comfortable, or start their own business.
3. Community management
“How do I engage the community?”
“How do I manage FUD?”
“When should I hire community leaders?”
There is a timeless meme in crypto, like “Community is the moat”, “Best community wins”, “We are a community-run project”, etc.
Let me turn to the other side of the matter. Not necessarily because I think these claims are false, but because I want you to think critically about the claims people use blindly. I want you to think from first principles whether you should have a dedicated community manager and why you even need a Discord or Telegram.
I would say that an engaged community is not the source of a great product. An engaged community is the result of a great product.
We’ve seen this over and over again. When the price goes up, the community gets excited and actively contributes. The same community crumbles and ruptures in a bear market. Price has a reasonable correlation with your product performance in the long run.
Therefore, you should not try to force participation and positivity into your community. A more natural way to get your community involved is to think of them as users in the first place.
Find volunteers to test your product. Ask them for product feedback. Ask your community what pain points they are experiencing. Update your progress and roadmap. Educate them on how to use your product because your user experience can be confusing.
In this way, you’ll continuously engage with the community while gaining valuable product insights. Over time, the improved product will further strengthen the community.
The best community person I’ve ever met is Kain from Synthetix (who is part of our genesis team). That’s exactly what he did. He is constantly talking about the product with the Discord community. He will answer questions within minutes. Another good example is Jie Liu from Mcdex (who is also an alumnus of the league). I saw him answering product questions on the telegram again and again at 11pm local time.
Note that the common theme between these two examples is that the people in the community are their own founders.
I’m not saying every founder should live in Discord 24/7, but community management is one of those roles that a founder can’t easily replace. Not to mention that what founders are really doing with community curation is user research. This is another responsibility of the founder that cannot and should not be replaced.
In the early days, it’s better for the founder to be the de facto community manager.
4. Token Economics
“Is there a script designed by Token?”
“How should we use Token to motivate users?”
“What should the exercise schedule look like?”
“How should Tokens be divided among the community, team and investors?”
“Is there a standard template for token exercise?”
An unhealthy obsession with token economics
Before diving into token economics, I would like to point out another common mistake that Web3 founders make: they are too obsessed with token economics.
I’m not saying that Tokens are not important. After all, tokens, as a go-to-market strategy, are one of the key value propositions for building Web3. With token incentives, it has never been easier for the network to solve the egg problem and improve critical mass.
But “go-to-market strategy” is the key word here. Then again, most startups don’t even have a great product on the market! If you use tokens as a user acquisition strategy without a good product, you are actually wasting your marketing budget. This is a very expensive marketing strategy because the supply is limited and mistakes are irreversible.
Also, the danger of launching token incentives too early is that you never know if you’re truly a product-market fit. You don’t know if the user is coming for the product or for the monetary reward. You will have a moment of glory as all your user metrics will go up, but it will be short lived.
During the summer of 2020 DeFi, many of the best products, such as Uniswap and Curve, found market-friendly products before they even got tokens. There are also some great products that have liquid tokens before the product goes on sale. But they have no incentives to use tokens.
Therefore, it is best to prove that the product is suitable for the market without the token.
See if you can make 100 users really happy without rewarding them with tokens.
If your product is based on network effects and has cold start issues, consider traditional Web2 growth strategies first.
If you really need tokens to improve network performance, don’t overuse them. Don’t try to design a multi-year incentive plan (as Satoshi did with Bitcoin, which is the exception, not the rule). Give up incentives sparingly and intermittently.
Trying to design a complex algorithmic multi-year incentive plan is futile because you will inevitably make mistakes. Heck, even Ethereum is still changing their token economics 8 years after the whitepaper. The combination of theory and practice, practice can win.
In short, prioritize your product over your token. (One notable exception to this rule is if the token is the product itself, or an integral part of the product, such as Maker) Have a rough plan for how the token will be distributed among the team, investors, community, and the Treasury. Have some rough idea of what utilities you want your token to have. But until you have a product that 100 users love, don’t over-engineer it.
Strategies for Token Economics
When you’re finally ready to spend time on token design, it can seem like a daunting task. You think, “Is there a template?”
The simple answer is no, there are no templates.
The design of Token should absolutely follow the first principles, according to the unique needs of the product. Every product is different, so the design of every token should be different. Remember, a token is a go-to-market strategy, so whether a particular go-to-market strategy makes sense depends on a particular product.
I will introduce founders to leaders in their category. For example, I would ask DeFi founders to study Curve. I would ask game developers to learn Axie. But their patterns should not be copied blindly. Use them purely for inspiration as their products are different from yours.
Speaking of industry standards, I can tell you, for example, what the average token distribution between teams, investors, and the community looks like, and what the average vesting schedule looks like. But the average is not necessarily the best value. What’s popular isn’t necessarily right for you. For example, I have long criticized many project implementations for ridiculously short grant times (1-2 years). This is a terrible incentive dislocation.
Tactically, start conversations with top trading platforms early. They all have different needs, and their needs change a lot over time. Their needs often directly affect your token design.
At this point, while you shouldn’t be obsessed with the price of your token and where it’s listed (because your product is more important again), being listed on a top exchange is extremely valuable. It helps to expand token distribution and improve liquidity, so it’s basically free and ongoing marketing.
It’s a hugely popular meme, but I don’t necessarily think the community deserves much more than investors and teams. (I also disagree with the opposite.) Tokens should be allocated to each group based on their current and future level of contribution to the network. Most projects reserve 20% to 60% of their tokens for teams and investors, with 40% probably being the average. But again, you should start with first principles.
Don’t be too mean to your early hires. Get ready to pay a lot of tokens for top talent. I don’t think it’s too crazy that an early top employee owns 1/5 of what the founders own. I’ve had several founders come to me and fret about it, but you should focus on the biggest pie possible, not a few percent variance in the amount of pie you have.
If you really want to inspire confidence and show that you are in it for the long haul, your token vesting schedule should reflect that. If you shorten the investment horizon or give yourself and/or investors preferential treatment, you will choose yourself to be the worst investor. Top investors care less about exercising options, but the worst investors want to sell quickly.
If you decide to launch a token, the securities laws will come into effect. (Even if you are not a token project, AML, derivatives and tax laws may be relevant to you.)
Typically, if you talk to 10 different lawyers about a particular topic, you get 15 different answers. This is because many lawyers are new to the field and don’t actually know what they are doing. But also because of regulatory uncertainty, even the best lawyers may have different views because they have different tolerances for risk and interpret the law differently.
Fortunately, we have an experienced in-house legal team who also happen to be Token experts. They can’t represent you, but they can provide you with valuable business advice and connect you with the best lawyers in the field who can represent you. Your job will then be to talk to some of them and triangulate their perspectives to make the best legal decision.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/defi-alliance-four-traps-web3-founders-must-avoid/
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