Why create a crypto startup? Talking about the opportunities and market entry strategies in the Web3 era

For start-up companies, the opportunities in the crypto industry are unmatched by other industries. The core vision of crypto and Web3 is to create a native digital economy that is open to everyone. Web3 is supported by blockchain, smart contracts and oracle machines at the bottom layer, and will have the potential to create a new pattern. In it, processes are automated based on unified standards and agreed-upon encrypted sources of truth.

To develop Web3, we need to rebuild the digital infrastructure in today's society. Today, the ecology built by blockchain, layer 2 and decentralized applications is the first step in the transformation of this emerging digital economy, and it is accelerating the realization of applications. At the beginning of 2022, the cumulative global crypto users will rise to 300 million, and the total market size will grow to more than 1 trillion US dollars.

Entrepreneurs should seize this once-in-a-lifetime opportunity to gain a first-mover advantage in the fast-growing Web3 industry, lay a foundation for the future, and subvert and challenge existing mechanisms and technologies. The user base of Web3 continues to expand, and traditional enterprises are also increasing their investment in innovative projects, so now is the best time to participate in Web3 development.

Anyone who has a computer and access to the Internet can enter the world of Web3. Obviously, the value proposition of Web3 is to create a fairer Internet, and this has also aroused the unlimited imagination of the public. However, Web3 will not only change the Internet itself, but startups that want to participate in the development of Web3 must also rethink how to market their products and services to the Web3 market, and deal with various unique challenges in the blockchain ecosystem.

Traditional go-to-market strategies typically employ a sales and marketing strategy, using a marketing funnel or flywheel to filter consumers. The main purpose of this is to identify pain points and target customer groups, and formulate consistent pricing, product and channel distribution strategies to verify whether the product can be recognized by the market.

A go-to-market strategy for Web2 typically includes the following elements:

• Target customer group— identify the specific customer group that is most likely to need a certain product or service, and conduct market segmentation based on main characteristics such as demographic characteristics, psychological characteristics, and behavioral tendencies.

• Product-market fit— the specific problem a product or service hopes to solve. This is an essential condition for a successful go-to-market strategy. Product-market fit determines whether a product or service can really meet market demand.

• Distribution and Sales Strategy - This is the concrete and executable part of the go-to-market strategy. The distribution and sales strategy is robust, with the purpose of raising product or service awareness, and at the same time harmonizing with the two dimensions of "product-market fit" and "target customer group".

This framework is still of reference value for most Web3 projects that have the same business model or organizational structure as Web2 enterprises. For example, although NFT trading markets such as OpenSea and SaaS companies such as Alchemy are undoubtedly Web3 projects, their market entry strategies can still refer to traditional trading markets and SaaS companies because their business models are similar.

Although the entry-to-market strategy of Web2 still has some reference value, many Web3 projects have unique organizational structures and business models, so the entry-to-market strategy needs to be redesigned. Sometimes, even a completely different design philosophy is required.

The biggest difference between Web2 and Web3 lies in the ownership and governance model. In a Web3 enterprise, the lines between owners, users and investors are relatively blurred and sometimes even overlap. Contributors to many Web3 projects include developers, team members, and active community members who share a common goal of moving the project forward.

To develop a successful Web3 go-to-market strategy, this particular organizational structure must be taken into account. Among them, building an active high-quality community is one of the core elements to ensure the success of the Web3 market entry strategy.

Building a strong community involves several key factors, namely: a loyal user base, an internal talent pool that is passionate about promoting the project, and community members who are constantly promoting and promoting the project. Web3 startups not only need to have a "minimum viable product" (MVP), but also need to commit to building a "minimum viable community" (MVC).

In the Web3 industry, the control of the project is usually handed over to the community through a decentralized governance model. Therefore, an active, high-quality community is an important factor for a successful go-to-market strategy. The community is not only a user, but also a contributor and a decision maker, and can fully represent the entire Web3 project.

While most Web3 projects will have some core contributors in leadership positions (note: core contributors are usually from the founding team), there is still a need to coordinate with the entire community to make adjustments to the project and improve product and market fit. In addition, community members usually also hold the governance token of the project.

Therefore, Web3 projects must have a clear vision from the beginning to be successful in the long term. Once a clear vision has been developed, various stakeholders can be coordinated and unified so that everyone can jointly promote the development of the project towards this vision.

All of the above elements have fundamentally influenced the design of the Web3 go-to-market strategy and differentiated it from the Web2 go-to-market strategy. If the project does not have a clear vision, it cannot effectively gather high-quality communities. Projects that fail to manage communities effectively will have difficulty coordinating various stakeholders. Therefore, the go-to-market strategy of a Web3 project should focus on building community and aligning various stakeholders.

To discuss Web3 go-to-market strategies in more detail, we can look at how the largest verticals in Web3 are executing go-to-market strategies, especially decentralized finance (DeFi) protocols, blockchain game projects, and for a specific Decentralized Autonomous Organization (DAO) established for the purpose.

DeFi protocols can often be combined in any combination. That is to say, anyone can use its infrastructure to develop new content on it. The larger the ecological scale of a project integration, the more likely it will be successful.

Large-scale applications will in turn promote functional iterations, and we should look at DeFi protocols from this perspective. In fact, this also means that the DeFi protocol must be integrated into various trading platforms, wallets and related projects in the multi-chain ecosystem.

Therefore, DeFi go-to-market strategies focus on business development and attracting developers. Business development can enable high-value integrated strategies and make them more focused. At the same time, developers can also develop an open source self-service infrastructure for organic growth and adoption.

For DeFi protocols, the community has many functions. The community can supervise the core developers to ensure that the changes made by the developers are in line with the vision of the project; the talent pool in the community helps to accelerate the development of the project; members in the community continue to promote and publicize the project, which will naturally improve Project popularity and reputation.

Like DeFi protocols, P2E blockchain games also need a group of high-quality core contributors to jointly deal with various problems and challenges that arise in the development of Web3 projects.

Here, the go-to-market strategy focuses on directly expanding the player base. As we all know, traditional games are difficult to start from scratch, because the game needs to attract enough players to ensure a high-quality game experience, and doing so often requires a lot of marketing resources and faces fierce competition.

The underlying game mechanics of blockchain game projects are usually not much different from traditional games, but they adopt various market entry strategies that are different from traditional games. For example, a common way to cold start a game project is to hand over the ownership of the in-game NFT to the community, which can activate the in-game economy and drive endogenous growth.

Then, you can use your internal and external communities to acquire new players. Here, the market entry strategy includes airdropping game NFTs to other Web3 communities, allowing players to control how the game develops through a decentralized governance model, and launching a scholar program that allows users to rent NFTs at the entry stage.

DAO operates based on a trust-minimized social cooperation mechanism. DeFi and blockchain game projects usually transition from a centralized governance model to a decentralized governance model, while DAO is completely governance-centric.

The most important part of bringing a DAO with a clear purpose to the market is to formulate a clear vision and establish a robust community management mechanism.

One of the typical cases is LexDAO, whose purpose is to create a world-class guild of legal engineers. Lawyers and legal engineers from all over the world can join this DAO and cooperate with other members to formulate future smart contract laws.

In this case, a clear vision connects individual community members and encourages them to work in a distributed organizational structure to execute key initiatives and accelerate growth. For a DAO like LexDAO, the most critical entry-to-market strategy is to establish a robust governance mechanism, encourage high-quality community participation, and eliminate friction in the collaboration process of community members when releasing DAO internal initiatives.

Web3 not only enables entrepreneurs to achieve profitability, but also improves the fairness of existing business models.

While Web3 can refer to some of the go-to-market strategies of Web2, Web3 entrepreneurs need to readjust them to meet the needs of different stakeholders and seize the unique growth opportunities of Web3. This is not a small challenge, because the Web3 project needs to be built from scratch.

The Startup with Chainlink program is dedicated to providing Web3 entrepreneurs with world-class resources and support on their entrepreneurial journey. The program aims to provide one-stop assistance for start-up companies from initial project conception, proof of concept, system development to community incubation.

All Web3 teams currently developing unique products and services are welcome to apply. Please subscribe to the Chainlink newsletter for more information on resources for Web3 startups.

Original link: https://blog.chain.link/why-launch-a-crypto-startup/