Compilation of the original text: Hu Tao, Chain Catcher

Original title: "Common pitfalls for Web3 founders》

Compilation of the original text: Hu Tao, Chain Catcher

When founders and teams come to our offices during office hours, they often ask for our advice on topics very specific to their projects.

But just as often, their problems are common enough to be relevant to many other founders.

Let's answer these common questions. They can be roughly divided into 4 categories:

• PR/Marketing

• recruitment

• first level title

• Token Economics

1. PR/Marketing

"Which PR/marketing firm would you recommend?"

"Should I hire a marketer in-house?"

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unhealthy obsession with marketing

My knee-jerk reaction to most early founders asking PR/marketing questions is, "You're too obsessed with marketing and not enough with your product."

If an early stage startup fails after 5 years, it's not because they suck at marketing. This will be because they have not found a product that fits the market.

I'm not sure where this obsession with marketing came from. Most founders seem to think they're so good at product development that they need help with marketing. In my experience, the opposite is true. Most founders just aren't obsessed with users enough. They chat with users on an irregular basis. They are not users of their own products. How can they possibly develop unique product insights if they don't do these things?

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Strategic Advice on Web3 Marketing

Nonetheless, here are some specific recommendations for PR and marketing.

Do not use an external PR/marketing agency.so far,

so far,Content Marketing Is the Single Most Scalable Way, to get your name out there and build trust with your current and future users. Let them know about your products and industry trends.

Attending large podcasts and conferences is difficult. Podcasts and conferences only want big names. One way to become famous is to build a great product that a lot of people use, which by definition is not a viable strategy for early-stage founders. Another way is to write high-quality content again.

The main purpose of a large one-off marketing campaign is not actually to attract potential customers. This is to attract potential employees. Your hiring candidates will do their due diligence on you and will see your announcement. But your users will only come and stay if you have a great solution to their problem.

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2. Recruitment

"Where can I find a rugged/rust engineer?"

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Problems with scaling too fast or too early

Hiring is one of the biggest challenges startups face. But before I dive into how to hire the best talent, I want to point out a common mistake first-time founders make: They scale the team too quickly before any signs of product-market fit appear. As a result, they burned cash too quickly and didn't make much progress.

You feel good when your team expands. This will boost your self-esteem. But team size is a vanity metric. This is a useless optimization metric. In fact, more often than not, a smaller A-team player can achieve 3 times more than a B-team player. This is because more people lead to more human connection, more communication burden, and harder to keep the team focused.

Founders have come to me many times and said "I hired this community/marketing/product person. But I don't think they're adding much value and I'm spending too much time micromanaging them."

Rather than hiring a mediocre person to fill a position, it's better not to hire at all. They are actually a net negative to the organization due to the extra human connection. Many of your superpowers as a founder simply cannot be hired. At least not in the early stages.

If you feel overwhelmed, the best solution is not to hire more people, but to do less.Prioritize, focus, and ignore.

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how to recruit

Let's dive into the best ways to recruit talent.

When founders ask me how to find engineers (or other talent), the first question I ask them is always "Have you exhausted your personal network?"

Leveraging your network is by far the most effective way to recruit talent.Nothing comes close. Fundamentally, it's early days where you don't have a strong brand. So it's hard for people to trust you. The only people who trust you are the people in your network.

Make a list of the best people you know, zoom in and pitch your startup with them, and ask if they'd be interested in joining. It may seem awkward to have a friend work with you, but you absolutely have to step out of your comfort zone. If they're not interested, ask them to introduce you to three people they know and respect who might be interested.

Ask everyone on the team to do the same.

During my last startup, I invited one of my best friends to join me. I have known him for 10 years. It was very embarrassing and it took me a month to get convinced. He ended up joining me. He also convinced one of his former colleagues to join, among other things. The network grows exponentially.

The second best way to recruit talent is through your community, people who know you but you might not.

If you have a discord/Telegram community, ask your community if they or their friends are interested in collaborating with you. If you have a Twitter/newsletter, post your work there. Ask your allies (such as investors) to retweet. If one of your investors has a large twitter/newsletter audience, ask them if they can help post your work.

In retrospect, this should have been obvious. You want to capitalize on your loyal following, not those who don't even know you.

Only after you have completely exhausted your personal network and community should you consider using recruitment platforms such as Advices, TrimByter, StAdvOffice, etc.

first level title

3. Community Management

"How do I engage the community?"

"How do I manage FUD?"

"When should I hire a community leader?"

There are eternal memes in crypto, such as “the community is the moat”, “best community wins”, “we are a community-run project”, etc.

Let me talk about the other side of the matter. Not necessarily because I think these claims are false, but because I want you to think critically about these claims that people use blindly. I want you to start from first principles and think about whether you should have a dedicated community manager and why you even need a Discord or Telegram.

What I'm trying to say is that an engaged community is not the source of a great product. An engaged community is the result of a great product.

We've seen this over and over again. When the price goes up, the community gets excited and actively contributes. The same community that crumbles and fractures in a bear market. Price has a reasonable correlation to your product performance in the long run.

Therefore, you should not try to force participation and positivity into your community.There is a more natural way to engage your community by thinking of them as users first.

Find volunteers to test your product. Ask them for product feedback. Ask your community what pain points they are experiencing. Update your progress and roadmap. Educate them on how to use your product, as your user experience can be confusing.

In this way, you will constantly engage with the community while gaining valuable product insights. The improved product will further strengthen the community over time.

The best community person I've ever met is Kain from Synthetix (who was part of our genesis team). That's exactly what he did. He would constantly chat about the product with the Discord community. He will answer questions within minutes. Another great example is Jie Liu from Mcdex (who is also an alumnus of the Alliance). I saw him answering product questions in Telegram again and again at 11pm local time.

Note that the common theme between these two examples is that community people are their own founders.

I'm not saying every founder should live in Discord 24/7, but community management is one of those roles that founders can't easily replace. Not to mention that what founders are really doing with community management is user research. This is another responsibility of the founder that cannot and should not be replaced.

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4. Token Economics

"Is there a playbook for token design?"

"How should we incentivize users with tokens?"

“What should the vesting timetable look like?”

"How should tokens be split between the community, team, and investors?"

"Is there a standard template for token exercise?"

An unhealthy obsession with token economics

Before diving into token economics, I want to point out another common mistake Web3 founders make: they get too caught up in token economics.

I'm not saying tokens aren't important. After all, tokens, as a go-to-market strategy, are one of the key value propositions in building Web3. With token incentives, it has never been easier for the network to solve the egg problem and increase critical mass.

But "go-to-market strategy" is the key word here. Then again, most startups don't even have a great product on the market! If you're using tokens as a user acquisition strategy without a great product, you're effectively wasting your marketing budget. This is a very expensive marketing ploy because supplies are limited and mistakes are irreversible.

Also, the danger of launching token incentives too early is that you never know if you are truly a product-market fit. You don't know if the user is coming for the product or for the monetary reward. You'll have a moment of glory as all your user metrics go up, but it will be short-lived.

During the DeFi summer of 2020, many of the best products, such as Uniswap and Curve, found market fit before they even got their tokens. There are also some great products that have liquid tokens before the product launches. But they have no incentive to use tokens.

Therefore, it is better to prove product-market fit without a token.

See if you can make 100 users really happy without rewarding them with tokens.

If your product is based on network effects and has cold start issues, consider traditional Web2 growth strategies first.

If you really need tokens for network effects, don't overuse them. Don't try to design a multi-year incentive plan (as Satoshi did with Bitcoin, it's the exception, not the rule). Give up incentives sparingly and intermittently.

Trying to design a complex algorithmic multi-year incentive plan is futile because you will inevitably make mistakes. Heck, even Ethereum is still changing their token economics 8 years after their white paper. Combining theory and practice, practice can win.

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Strategy Advice for Token Economics

It can seem like a daunting task when you are finally ready to spend time on token design. You're thinking, "Is there a template?"

The short answer is no, there are no templates.

Tokens should definitely be designed from first principles, based on the unique needs of the product.Every product is different, so every token should be designed differently. Remember, tokens are an entry-to-market strategy, so whether a particular go-to-market strategy makes sense depends on the particular product.

I will introduce founders to leaders of their category. For example, I would ask DeFi founders to research Curve. I would ask game developers to learn Axie. But their model should not be copied blindly. Use them purely for inspiration, as their products are different from yours.

Speaking of industry standards, I can tell you, for example, what the average token distribution between the team, investors, and community looks like, and what the average vesting schedule looks like. But the average is not necessarily the best value. What's popular doesn't necessarily mean it's right for you. For example, I have long been critical of the ridiculously short award times (1-2 years) for many project implementations. It's a horrible misalignment of incentives.

Tactically, start conversations with top exchanges early. They all have different needs, and their needs change a lot over time. Their needs often directly affect your token design.

At this point, while you shouldn't be obsessed with the price of your token and where it's listed (as your product becomes more important again), having a listing on a top exchange is very valuable. It helps expand token distribution, increase liquidity, so basically free and ongoing marketing.

It's a very popular meme, but I don't necessarily think the community deserves much more than the investors and team. (I also disagree with the contrary.) Tokens should be allocated to each group according to their level of current and future contribution to the network. Most projects reserve between 20% and 60% of tokens for the team and investors, 40% is probably the average. But again, you should start from first principles.

Don't be too mean to your early hires.Be prepared to pay a lot of tokens for top talent. I don't think it's too crazy for an early top hire to own 1/5th of what the founders own. I've had several founders come to me agonizing over this, but you should be focusing on getting the biggest pie possible, not having a few percent variance in the number of pies you have.

If you really want to inspire confidence and show that you are in for the long haul, then your token vesting schedule should reflect that. If you shorten your investment horizon or give yourself and/or investors preferential treatment, you choose yourself to be the worst investor. Top investors rarely care that much about exercise, but the worst want to sell quickly.

If you decide to launch a token, securities laws go into effect. (AML, derivatives, and tax laws may be relevant to you even if you're not a token project.)

Typically, if you talk to 10 different lawyers about a particular topic, you'll get 15 different answers. This is because many lawyers are new to the field and don't actually know what they are doing. But also because of regulatory uncertainty, even the best lawyers may have different views, as they have different tolerances for risk and interpret the law differently.

Fortunately, we have an experienced in-house legal team who also happen to be token experts. They cannot represent you, but they can provide you with valuable business advice and connect you with the best lawyers in the field who can represent you. Your job will then be to talk to some of them and triangulate their views to make the best legal decision possible.