Here are my tips for founders and startups building over Summer 2022.
No matter what happens next, it’s clear that we’re entering a new phase of the crypto market, one which has significant business ramifications for anyone who got started building during the last bull run. Market dynamics are set to change right at a time that new startups need to put their heads down and get serious about building. Many startups will be faced with the unappealing prospect of an existing customer base clamoring for results at a time of restricted cashflow, and many a roadmap will need a realistic reassessment in light these changes, something we’re already seeing with many existing NFT 10k projects.
Companies unlucky enough with their timing to have an unreleased product in the pipeline that’s not yet ready for prime time will likely be faced with a more difficult time finding customers in the coming months, as existing crypto users cast a more wary eye to new startups and potential new entrants to the crypto space are put off by the radioactive meltdown of Terra’s collapse. Of course, this market pattern will ease with time, but founders who only have experience building in most recent crypto bull run can take immediate steps to batten down the hatches and make their runway survive as long as possible. By playing it safe and maybe a bit more slow than planned, you can survive and even thrive during a bear market.
Here’s how I would play it going into Summer 2022:
- Scale back where possible
- Keep customers in the loop
- Build in public
- Focus on slow, concentrated growth
Let’s break it down.
Scale back where possible
There are a few different areas you can scale back in, depending on your company’s size and position in the market.
Founders are going to hate me for saying this, but scaling back on parties and other major events is one of the better ways to cut costs. Yes, they serve as advertising and community building events, but if you truly want your startup to survive a bear market you can’t be blowing money on something that isn’t directly focused on product development or sales — so be selective in how you approach them. Rather than throwing a party by yourself, see if you could help sponsor one instead. Oftentimes larger brands will offer different sponsorship tiers with varying benefits, so be on the lookout for ones that provide product or brand placement opportunities. Send two or three of your people with the strongest grasp on the product and business plan to major events (and accompanying parties) with networking specifically in mind. It might not be as much of an ego boost as throwing a party by yourself, but rest assured that those will come along with company success. Don’t burn through your capital living it up too soon.
Unless you have a pre-existing community, scrap those plans for a discord server for now, stick with Twitter. It will be less overhead on support staff, and creating a public space invites both moderation headaches in the form of spam and hacking attempts as well as online abuse and people FUDing your project. If you’re not at the point where you need a public discord server yet, it will be more of a drag on your company than anything else in the early days. One way to stay in touch would be via Twitter Communities, which is a good alternative for startups that need to communicate more often than a newsletter and less often than on discord or telegram.
When it comes to employees, there will be somewhat of a natural self-selection process at work as people who were really only building with you in the hopes of a quick moon ditch the project, with those who really want to see it succeed (and willing to put in the work to do so) sticking around. That being said, you may still need to assess your staff composition unless you’ve got a lean, well-oiled machine of a team that’s already working well together as it is. In that case, don’t change a thing.
Think a few months down the line. You’re not going to launch as soon as you think you are, despite your best efforts. That’s just the way these things go, and that goes doubly in a bear market. So what changes would you make to your staff under a longer, slower timeline to launch than planned? This doesn’t necessarily mean you need to let people go, it could be the case that you can find some other aspect of the business for them to focus on in the mean time. In the event that you do have to let people go, keep in mind that unexpected layoffs can have a depressing effect on staff morale, so try to do what you can to make the process as transparent as possible. Layoffs should occur simultaneously so it doesn’t feel like hunger games for your remaining employees.
If you haven’t done so already, sit down with your dev team and ask them their honest opinion on which planned features are realistic within the current product development timeframe, and which ones are slipping further behind and would be best put off until a future version. Be realistic, and decisive, then go with the streamlined feature set and cut the rest. You dev team will be grateful and the remaining features are more likely to work well and be polished as a result of refined focus. (This is actually something that is good to do frequently throughout the product development lifecycle, not just in bear markets. Trimming excess growth is what keeps your product streamlined and moving towards market.)
Keep customers in the loop
Protecting an existing customer base during a bear market is one of the most difficult things for a small startup to get right. Lost customers are hard to win back, and more likely to spread FUD about your project. Oftentimes customers are much more forgiving and lenient when it comes to unexpected delays and changes in plans than you’d expect — as long as you’re open in your communication with them.
Existing customers who were promised plans that now seem sky high will be upset when you can’t follow through on your promises. The best way through is to approach it head on. You might be tempted to put your head down and just keep building, trying to avoid rocking the boat one way or the other, but this usually leads to an undercurrent of dissatisfaction that can be hard to shake once picked up by the community at large. It’s better, then, to be as clear with customers as you can when it comes to changes to the product, timeline, or both. Be sure to think things through as much as possible before involving your larger customer community — nothing is worse than a poorly planned Twitter Space.
Depending on the size of your customer base, this might present an opportunity to gather feedback in relation to roadmap changes, but it’s very easy for a divided Twitter Space to morph into a mob scene. Be smart in how you approach things, and read the room. Be able to clearly lay out the problem, the steps you’re taking in the short term, the steps you’re taking in the long term, and how you’ll be keeping your customer base in the loop going forward. By providing information on the problem, your plan of attack, and how you’re planning on staying accountable, you provide reassurance that you’re going to keep building, and that it’s safe for your customers to keep trusting you.
I caution new founders to take the above point very seriously. Your business reputation is everything, and you absolutely cannot approach changes in business direction without thinking things through ahead of time. Customers (former or not) FUDing your project hurts not only your company image, it also hurts your development team’s morale. People often forget that there are humans behind these projects. Nobody wants to feel like the project they’re working on isn’t worth it, so make sure to insulate your team where you can.
Build in public
One of the easiest ways to remain accountable to your customer base is to simply build in public, as much as possible. Be transparent in your setbacks as well as your successes, share screenshots of what you’re working on, and start fostering community growth. There’s a fine line between keeping people in the loop and spamming them, however — if you don’t have anything new to report, don’t lean too heavily into engagement farming. Remember, this is the time you’re supposed to start proving to your customers that they were right to put their faith in you. Your earliest supporters can turn into lifelong fans when you treat them like people and not product.
Keep in mind that you don’t have to be posting new screenshots every day to provide value to your customers, there are other things you could do as well.
Contribute back to the larger crypto community where possible — not everything has to be product. It could be contributing to how-to guides, highlighting the latest developments in your neck of the crypto woods, or otherwise fostering a shared community mentality through something unique such as weekly Twitter Spaces with a common theme (I’ve enjoyed a couple of very nice meditation ones that have been offered by various projects over the past few months).
Focus on slow, concentrated growth
Whatever projections you made for user growth during the bull market need to be updated. New founders are going to experience a period of whiplash as they transition from a wild west gold rush mentality with customers flocking to literally any random new project they could to one where it’s much harder to win customers over. Your marketing strategy might need an overhaul. Now is not the time for billboards and other extraneous adspends. Instead, this approach requires more time spent doing market research to identify potential customers.
There is a ton of data sitting on chain right now that could be used to help streamline this approach, and I expect an increased focus on community building and community outreach over the next few months as projects learn that there can be strength in interoperability without leverage (see the entire Loot Project ecosystem, mathcastles/hypercastle explorer, nouns, and blitmaps projects for example). Cooperative, sustained growth will still play an important role going forward, but it’s going to look different than what happened in DeFi during the run-up to the Terra crash.
Looking toward the future
No matter the state of the market overall, I continue to remain bullish on many of the projects coming out of the web3 space, especially the ones that have been quietly building this whole time. I’m excited for new hardware advancements that are coming to the AR/VR side of things, which is an area of interoperability with NFTs that has been sorely undervalued by investors and builders alike, but which should be on everyone’s radar as new hardware starts to hit the market. Some things need to be built that don’t necessarily provide direct value to a company but are rather public goods for all that help improve the space. There is a continuing need to implement guardrails for those new to the crypto space in the form of better tools, better protocols, and better documentation. As always, user education remains in dire need of assistance in this space.
Each cycle in the crypto market follows a familiar pattern, starting with an initial gold rush period where any and everything looks good, followed by a downtempo period of building wherein the true value is actually created. This will be the time when we see startups survive and thrive or wither and fail. If you’ve made it this far, congratulations. You’ve survived the initial trials in becoming a startup. Now it’s time to see how well you do at becoming a successful startup.
I can’t wait to see what you build.