Jason Choi, a former partner at The Spartan Group, has compiled insights on cryptocurrency investing over the past four years, including the conflict between tokens and products, attracting users, and VC funding.
Here are 28 principles for Web3 founders, culled from over 100 conversations and cryptocurrency investments over the past 4 years:
1. Ask not what you can build on a blockchain, but what use case you can improve 10x by building on one.
2. Building a dapp doesn’t absolve you of the need to think like a business owner.
3. Shipping marginally improved versions of incumbents are not a product strategy.
4. Skeuomorphism is not a business strategy. <insert Web 2 idea>, but on a blockchain, is unlikely to be the basis for a scalable product.
5. Run away from trends. If you’re building for DeFi or NFTs simply because they are in vogue, you will struggle eventually.
6. Many otherwise smart founders focus too much on building products for 1,000 crypto native users.
7. Tokens as rewards are a go-to-market strategy and a customer acquisition expenditure, not a business model.
8. Businesses that require continual growth in token price to work are ponzi schemes, not businesses.
9. Credentialed founders often fall in the trap of scoffing at degens, only to wonder why no one uses their product.
10. Going multichain” is not a business strategy but lazy window dressing for retail investors.
11. Crypto obsesses too much on ideas and not enough on processes. Good builders optimize products, great builders optimize processes.
12. If you want to kill your growth, launch token governance before product maturity.
13. Build to engage users, not to impress VCs. Half the founders in crypto forget this.
14. Prefer 100 highly engaged users over 10,000 passive token holders.
15. There are two communities: one that uses your product, and one that buys your token. Founders often mistakenly assume the two overlap more than they actually do.
16. Only launch a token when you are ready to manage a public company.
17. Founders tend to focus on refining token model when growth stalls. Optimizing for token models (ve- tokens / buy and burn) before you generate meaningful fees is time wasted.
18. Token velocity seems like a myth in a bull market; it is often revealed to not be so in a bear market.
19. Bad investors can’t kill your company, but good investors can help you go a long way
20. Make +ve EV decisions. Funds raised are for growing your startup; the marginal 10-20% you make on farming with your treasury won’t affect your success, but can bankrupt your company.
21. If most of your users’ activities are on chain, leverage that data to make educated business decisions. Too many teams neglect readily available user data.
22. Because Crypto Twitter celebrates cults of personality, some founders assume they must build a prominent profile for their products to achieve success. This is false and reversed – popular products make prominent founders.
23. It’s not just about TVL.Have quantifiable metrics to aim for and constantly re-assess both the progress in reaching those metrics, and the suitability of said metrics as a proxy for growth.
24. Be careful with confusing narratives with traction. The faster unearned value is accrued, the faster it will be destroyed.
25. “Build it and they’ll come” may work in a bull market but is never a scalable distribution strategy.
26. Technical superiority alone almost NEVER wins.
27. Do not underestimate the fickleness of retail consumers driven to your product for speculative reasons.
28. Your early investors and users are the seeds of your community. Align your actions to attract the type of seeds you want.
About Jason Choi
Jason Choi was a General Partner at Spartan Capital, one of Asia’s first institutional crypto funds. As Spartan Capital’s first employee, Jason helped scale the fund from $9M in AUM to $500M within a few years and supported the launch of Spartan’s $50M DeFi-only venture fund to back world-class teams shaping the future of finance.
This is a community post written by Stephen Josh and published on https://news.kcc.io