Starting a crypto project can present many different challenges. Founders need to navigate issues ranging from technology complexity to market volatility and talent acquisition. When getting a project off the ground, having someone like Tom Phipps guide and offer insights into the web3 ecosystem can really make a difference.
Tom was the Head of the Web3 stream for Entrepreneur First, a global talent investor. There, he worked with dozens of Web3 founders, providing guidance and support to help them navigate early-stage challenges. “You need that network behind you. You need these other people in the ecosystem to really help you move things forward because it’s very rare for this to be an endeavor that one person can take on their own. There’s just so many challenges that come down the line,” he says.
In the latest episode of The Blockchain Startup Show, I talked to Tom about these early challenges in crypto projects and the importance of customer development. You can listen to the entire conversation below:
Main Challenges for Crypto Founders
Crypto founders often discover how challenging and impactful some issues can be at the beginning of their projects.
Navigating the complex and evolving regulatory landscape for startups, for example, can be daunting. Regulations can vary significantly across different countries and jurisdictions, leading to compliance issues and potential legal risks.
The cryptocurrency market is also highly volatile, which can affect funding, user adoption, and overall business stability. Startups must be prepared to handle significant fluctuations in token values.
While there is substantial interest in crypto projects, securing funding can be competitive and challenging. Startups need to convince investors of their project’s viability and potential for return on investment. “Many people, especially first-time founders, have never been put in that situation before where they’ve got to deal with multiple stakeholders, having that accountability and being good money managers. The money you’ve got is how long your startup’s technically living for, for that foreseeable future,” says Tom.
Addressing these challenges requires careful planning, a deep understanding of the market and technology, and a strong support network. Crypto startups that can successfully navigate these obstacles are more likely to achieve long-term success.
Startup Success Lies on Customer Development
“Focus on customer development first and foremost. Make sure you’re building something that is going to be used, thar people want to use and that you’re not building for the sake of building and hoping that people are just going to turn up and use your product or service”, highlights Tom.
According to him, one of the common pitfalls for founders is thinking their idea is genius and not spending enough time developing the project to ensure it meets their target customers’ needs.
If founders do this work right, their projects will end up largely different from how they began. “Generally you will see the company, the product, the service evolve over time,” says Tom.
Zombie Crypto Companies
During my conversation with Tom, we also discussed zombie crypto companies, meaning projects that have raised significant amounts of funding but are not actively contributing to the innovation or development of the ecosystem.
These projects usually show little progress in terms of product development, user adoption, or technological advancements. They may have made grand promises during their initial coin offerings (ICOs) or fundraising rounds but failed to deliver.
Tom highlights the importance of changing according to the market to avoid becoming a zombie project: “You just can’t afford to be complacent, particularly in crypto where things move so fast. You’ve got to be open-minded and ready to pivot and adapt as the market evolves.
The Importance of Founders
In the end, summarizes Tom, it all comes down to the founder. This is why Tom’s work in guiding and supporting people starting crypto projects is so relevant in our ever-changing industry. “As a founder, 90% of your time in the early days should be purely speaking to people who you think are the target customer and just trying to get as much feedback from them as possible.”
With the right project, a target customer that is understood, and a strong community, founders are able to take their ideas to the next level.
“It’s hard to be a startup founder normally but to do it in crypto, it’s a different beast,” concludes Tom.
