[Chainlink] Why Launch a Crypto Startup? Web3 Opportunities and GTM Strategies
Crypto represents an unparalleled opportunity space for startups. The core vision of crypto and Web3 is the development of a native digital economy open to all. Underpinned by blockchains, smart contracts, and oracles, Web3 promises a world in which processes are executed automatically based on collective processes and a shared source of cryptographic truth.
Building in Web3 means rearchitecting society’s digital infrastructure from the ground up. The current ecosystem of blockchains, L2s, and decentralized applications is the first iteration of this novel digital economy, and adoption is growing rapidly: the beginning of 2022 saw global crypto adoption rise to 300 million cumulative users and the total market grow to over $1 trillion dollars.
For many entrepreneurs, there’s an unmatched opportunity to create the first building blocks in a fast-growing space that’s disrupting and challenging legacy institutions and technologies. With an expanding user base and growing efforts from external entities to allocate funds to innovative projects, there’s never been a better time to build in Web3.
Accessible to anyone with a computer and an Internet connection, it’s clear that the promise of a more democratic and fair Internet has captured the public imagination. However, Web3 isn’t just changing the Internet itself; startups looking to build in Web3 must also think differently about how to bring their product or service to market and meet the variety of challenges unique to the blockchain ecosystem.
Traditional Go-To-Market Strategies
Traditional go-to-market (GTM) strategies rely on sales and marketing initiatives to lead customers through a marketing funnel or flywheel. The primary goal is to validate the product by identifying a pain point, finding a target audience, and building a cohesive strategy for pricing, product, distribution channels, and more.
Web2 GTM frameworks usually consist of the following components:
- Target Audience—finding the specific group of people that are most likely to need a product or service, segmented by overarching characteristics such as demographics, psychographics, behavioral tendencies, and more.
- Product-Market Fit—the specific problem a product or service attempts to solve. This is the most basic requirement of a successful GTM strategy. Product-market fit determines whether or not a product or service is actually needed by the market.
- Distribution and Sales Strategy—the actionable part of a GTM strategy. A distribution and sales strategy is a robust plan to garner awareness for a product or service in a way that’s aligned with product-market fit and target audience.
This framework is still relevant for a large subset of Web3 projects that have similar business models or organizational structures to Web2 companies. For example, while NFT marketplaces such as OpenSea and software-as-a-service firms such as Alchemy are undoubtedly Web3 projects these, their GTM strategies can follow those of existing marketplaces and software-as-a-service firms as their models are similar.
How Web3 Go-To-Market Strategies Are Different
Though Web2 GTM strategies can still be relevant, there are unique differences in the organizational structures and business models of many Web3 projects that mean a restructuring of traditional GTM models is required. Sometimes, a completely different approach is necessary.
The core difference lies in how Web3 projects are owned and governed. In Web3, the roles of owners, users, and investors are less distinct and can sometimes overlap. The contributors to many Web3 projects consist of developers, team members, and enthusiastic community members—all working together to grow the project.
Any effective Web3 GTM strategy must account for this unique organizational structure—for example, working to build an active and educated community is one of the most important aspects of driving any successful Web3 GTM strategy.
The Importance of Community
There are a few key elements to a robust community: a dedicated user base, a built-in pool of talent eager to help the project’s mission, and a group of devoted evangelists that continuously generate project awareness through their networks. Web3 startups don’t just need a Minimum Viable Product (MVP)—they also need to focus on building a Minimum Viable Community (MVC).
In Web3, control of a project is often given to the community through decentralized governance, making active and educated community participation an important pillar of a successful GTM strategy. The community effectively represents the entirety of the Web3 project, from its users and contributors to its decision-makers.
While most Web3 projects tend to have core contributors who take on leadership roles (often the founding team), they require the alignment of the larger community—who are in many cases governance stakeholders—to make impactful changes to the project and improve product-market fit.
This makes articulating a clear vision for a Web3 project from the start crucial for long-term success. By clearly communicating a strong vision, it’s possible to align stakeholders behind what the project hopes to achieve in the long run.
All of these aspects fundamentally impact how Web3 GTM strategies are structured and distinguish them from Web2 approaches. Projects without a clear vision are unlikely to garner high-quality community engagement, and those that are unsuccessful at managing their communities will struggle to align their stakeholders. Thus, a GTM strategy for Web3 projects requires a strategy for building and aligning the community with the project’s vision.
GTM Approaches for Web3 Verticals
To demonstrate more precisely how Web3 GTM strategies function, let’s consider how GTM strategies operate in the most prominent Web3 verticals, specifically decentralized finance (DeFi) protocols, blockchain gaming projects, and goal-focused DAOs.
DeFi protocols are often composable, meaning anybody can build on top of them and leverage their existing infrastructure. The more integrated into the larger ecosystem a project is, the more successful it’s likely to be.
Widespread adoption drives utility—this is the lens through which DeFi protocols should be viewed. In practice, this means that DeFi protocols must be integrated into exchanges, wallets, and related projects across the multi-chain ecosystem.
This is why DeFi GTM strategies should typically be focused on business development or supporting and attracting developers. Business development initiatives drive focused, high-value integration strategies, while developers build open-source, self-service infrastructure to jumpstart organic adoption.
For DeFi protocols, the community serves multiple functions, acting as a check and balance system that ensures core developers make changes that align with the project’s vision; a pool of talent that can accelerate growth; and an organic lead generator through evangelism regarding the project.
Like DeFi protocols, play-to-earn blockchain games require a talented group of core contributors who can conceptualize and tackle the challenges inherent to building a Web3 project at scale.
GTM strategies here should focus on directly increasing the player base. Traditionally, video games are notoriously hard to get started from the ground up, as they require large-scale marketing initiatives in a highly competitive environment to attract the number of players necessary to create a fun experience.
While their underlying game mechanisms are often similar to those of traditional video games, blockchain gaming projects involve a variety of unique GTM approaches. For example, a popular way to “cold start” a gaming project is to give the community ownership over in-game NFTs, jumpstarting a built-in gaming economy and driving organic adoption.
From there, new players can be acquired by leveraging the power of native and external communities. GTM strategies here include airdropping game NFTs to other Web3 communities, giving players control over how the game advances through decentralized governance, and introducing scholarship programs that allow users to rent NFTs to begin playing.
DAOs operate according to trust-minimized social cooperation. While DeFi and blockchain gaming projects usually transition from centralized ownership to decentralized ownership, DAOs are governance-centric.
A clear vision and robust community management is the most important aspect of successfully bringing a purpose-driven DAO to market—arguably even more important than for other Web3 projects.
A prime example of this is LexDAO, a DAO aiming to build a world-class legal engineer guild. Lawyers and legal-minded engineers across the globe can join the DAO to start working collaboratively with other members to build upon ideas that could shape the future of smart contract law.
Here, a clear vision aligns independent community members and encourages them to act like a distributed version of a legacy company by driving key initiatives and accelerating growth. The key GTM strategies for DAOs like LexDAO are building a robust governance system, incentivizing high-quality community participation, and removing frictions for wide-scale coordination among independent community members when launching DAO-native initiatives.
The New Frontier of Web3
Web3 offers founders the opportunity to build something that not only generates profit, but also democratizes existing business models.
While some Web2 GTM strategies remain relevant, Web3 founders are tasked with restructuring them to accommodate the many different stakeholders and unique growth opportunities of Web3. This is a difficult challenge to navigate, as is launching a successful Web3 project from scratch.
Startup with Chainlink is purpose-built to support Web3 founders by offering world-class resources and assisting them in their journey to launch. The program helps startups take their projects from initial ideation and validation to building a working system and fostering community.
Web3 founding teams that are building unique and interesting products, services, or offerings are invited to apply. For more Web3 startup resources delivered straight to your inbox, sign up for the Chainlink newsletter.
The post Why Launch a Crypto Startup? Web3 Opportunities and GTM Strategies appeared first on Chainlink Blog.