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WEB3 startup tips: Finding your moat, what qualities should founders have?

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When you decide to start your own business, pick a track first. On this road, what existing problems can be solved and why can such problems be solved?

原文作者： @web3fox

Recently, I have read Duan Yongping's INVESTMENT q&A (business logic), and made some conclusions based on the pits I have gone through on the road of starting a business since 2021. I hope I can go better in the following road and provide some ideas for the future.

Why start a business

Motivation for starting a business

I personally understand that starting a business is about making money, and a lot of it. Through entrepreneurship, you can achieve the satisfaction, wealth, social status, class crossing and so on that you can't get from working.

However, the road of entrepreneurship is full of bones and bones, and it is a road for countless people to fight through capital, time, energy, and even life. If you want to get benefits beyond the average level of society, you have to pay far more than the cost of the public.

We are in the context of The Times

Since the 2008 global financial crisis, countries have been printing money like crazy. In an era of excessive money, the assets each of us owns, the containers that carry the money issued by other countries, have become the most direct symbol of personal wealth.

Bitcoin is undoubtedly the most eye-catching asset among many, as it was originally created as a response to the global currency overissuance.

Later, Ethereum opened up a token issuance platform independent of the traditional securities market with its smart contracts, allowing the tokens behind various applications to run on the Ethereum network. Making it the king of the Ethereum public chain and the second most valuable.

In the midst of a chaotic war of centralised trading platforms, Binance took to the seas after September 4, 2017 to pursue the global market. The landscape of centralised trading platforms changed at that moment, and embracing megatrend, adapting to globalisation, respecting its customers and other unmentioned factors led Binance to become the recognised number one trading platform in 2022.

Take the four years when Bitcoin halved as a big cycle, and every year within a big cycle is a small cycle. Countless entrepreneurs are using their wisdom, time, energy and capital to find their own money-making (business) model in the emerging industry of blockchain.

Business model

The better the business model, the more certain or less risky the investment. - duan yongping paid

Right business, right person, right price - Warren Buffett

The right business is the business model, the right person is the corporate culture, the price is not so important, the business model and the people are most important. - duan yongping paid

The above words are the top real tycoons in the investment world, and both have a profound impact on entrepreneurs in both China and the United States.

In my opinion, the best way to start a business in the blockchain industry is to find common problems in the industry and then put forward targeted solutions. Profit from incremental markets by creating value and solving problems.

For example,

Long ago, everyone didn't have to pay for water. Just dig a well or go to the river and drink.

With the development of industrialization, water sources are polluted, and ordinary people have no way to drink clean water permanently for free or at low cost. At this time, the water plant filtration, disinfection to make the water again clean. People find that the cost of filtering their water is greater than the cost of buying tap water.

In this process, waterworks reduce the purification cost per unit volume of water through large-scale industrial system. Help users to obtain clean water at a lower cost and earn more revenue from users. At this time to do incremental market, waterworks and consumers achieve a win-win situation.

With the improvement of people's living standards, the original way of drinking tap water after heating can no longer meet the needs of some consumers. At this time, keen entrepreneurs found that they could take the filter from the laboratory to transform it into a small tap water filtration system. Let the purity of tap water further improve, so as to obtain direct drinking water.

Instead of competing directly with water utilities, the new entrepreneurs found that the environment had changed and a new market was created. After meeting the new demand, profit from the new market, thus achieving business success.

Analysis of the

In the above cases, we will find helplessly. Ordinary people have done nothing wrong, but everyone is forced to bear the cost of water caused by polluted water sources. And the factories that did this didn't pay, or didn't pay enough.

Because the factory has paid taxes to the government, and then also according to the corresponding standards for sewage treatment. But pollution standards are not always correct, and it is not clear that factories are properly treating them.

Due to law enforcement costs and pressure from commercial competition, factories can only choose the most beneficial way to deal with it. In this process, everyone thinks they have done nothing wrong, but as a result, the whole society bears the consequences of environmental pollution.

Waterworks have made their commercial success by low-cost filtration of contaminated water.

Later filter element filter manufacturers are in the original track, keen to find new demand points and meet new consumers, so as to achieve new business breakthroughs.

Such incremental market entrepreneurs are worthy of our respect and learning.

In the environment of water pollution, there must be false advertised products, such businesses also gain wealth, but the loss is the general public.

Such duped consumers may cease to trust such products and stop buying truly useful items. Maybe a few years later, through whitewashing, the businessman became successful and regained the recognition of the society. But behind their success lies another group of people who will not be heard to cry and fade away.

Moat is the most important part of the business model

Let's take the water case again.

What is the moat of a waterworks?

Stable water supply, long user payment habits, administrative monopolies within the same area.

The first two come from consumer trust and need a long time to prove; The latter comes from the monopoly operation of license plates.

What is the moat of a household water purifier?

Early market blank first mover advantage, perfect pre-sale and after-sales system, humanized consideration, respect for consumer IQ and so on

Why do we choose to start a business in the blockchain industry

Differentiation is a prerequisite for a good business model

Users need something that no other competitor can satisfy -- Duan Yongping

Compared with the volume of the entity industry and the traditional Internet industry, the blockchain industry still has a lot of opportunities.

Because it's not perfect, there are so many problems that need to be solved. This provides new entrepreneurial opportunities for later generations.

Some people may say that after ten years of development, blockchain is filled with various vested interest groups, and each track is already full of entrepreneurs. How will the next generation have the opportunity?

Class solidification is a problem that every generation needs to face.

Different people stand in different positions, entrepreneurs are to solve local problems, and founders consider the whole ecological problem.

How to keep the ethereum ecosystem alive for a long time is a question that the founders should consider.

Finding web3's SoulThis paper, 37 pages long, points the way.

DeSociety, Web3, Soul, SoulboundTokens

Ethereum has big, big ambitions, not only to change the landscape of the financial market, but also to make the blockchain, centered on Ethereum, expand to every aspect of social economy, politics, culture and life.

To build a decentralized society. To achieve this goal, we need to find the soul of the web3 era.

"Soul" has many meanings, such as the person, soul, central character, etc.

In the process of searching for soul, we should first solve the problem of encoding social trust relationship. The 37-page paper, like the bitcoin white paper, points a new direction for entrepreneurs in the marketplace.

In this new track, I believe there will be many excellent entrepreneurs, according to the direction of the paper guidance, give specific solutions. And I'm one of them.

Preparation for starting a business

When you decide to start your own business, pick a track first.

It may be an underdog, it may be a hot track, it may already be full of giants, it may still be a desert.

Think about what existing problems you can solve and why you can solve them on this road.

How to find the point of differentiation to seek a breakthrough, do the giants have not noticed or temporarily unwilling to do things.

Some pitfalls of entrepreneurship

1. Don't start with infrastructure products. They cost a lot of money

2. If you can solve things with API in the early stage, don't try to interpret the original data of the block by yourself, which takes a lot of time, money and manpower

3. At the beginning of the creation of the team, please make clear the equity return structure and the scope of work to be handled by each person

4. When the amount of early capital is small, as far as possible wretched development, everyone is a jackal, the founder is a handyman, what will do or understand. It's easy to be tricked into spending more money or time. The only way to spend money on a problem is to know where it's going, what it's doing, and what problems it's solving. If you don't know, it's useless.

5. When you have a complete solution, after the MVP, feel free to go to the VC. Maybe they don't like you, it doesn't matter, there's no shortage of VCS, there's no shortage of money, there's a shortage of good projects, projects that really solve problems and create incremental value.

6. If funds allow, locate the team in a country where the policy allows. Can feel at ease a lot, bear market time is not long, but also enough to carefully polish their own products.

7. If you raise funds, I hope you can raise enough money to keep the team stable for two years. The bear market will feel at ease while the bull market will soar.

If you want to make a data analysis product, I can provide some basic reference cases.

What a founder needs to have

1. Someone who has lived through the Bull bear cycle

2. Sensitivity to data

3. Know how code works, not necessarily write it yourself

4. Know what kind of data to look for and give a plan for processing the data

5. Able to draw prototype drawings simply with FigMA to reduce communication costs as much as possible

6. Know what users want, what the market needs, and what problems need to be solved

7. Be able to seek financing from institutions independently and know whose money will be helpful to the development of future projects

8. If you can find qualified staff, it is unlikely to find a big bull in the early stage, as long as you can find qualified development team to help realize the idea

9. When the product is finished with MVP and more features, know how to put it on the market, find the right users, and make documents and video guides for introductory teaching

There may be more things that the founder is responsible for, such as payroll, office space, food, lodging, etc., all the problems that the startup team faces, the founder may be involved in solving.

Because the founder's accomplishment, pattern and thinking direction determine the upper limit of the product, while team members can only determine the lower limit of the product.

If it is a data analysis product, in addition to the above qualified person in charge, at least the following personnel are needed.

2 ~ 3 staff at the back end, responsible for the website background, database maintenance, data processing and other work, including an engineer who knows the contract.

1 ~ 2 people in the front section, responsible for building the front section of the website, according to the workload of business logic.

UI1 is responsible for the drawing of the website. Although the person in charge can overdraw, too much participation in the drawing will delay too much time, so it is enough to make the team understand.

The product is concurrently owned by the owner, because only the owner knows what the direction of the product is.

Operation 1, if the initial capital is tight, can also be responsible for the concurrent, after all, money should be spent on the edge.

To sum up, a team needs at least 7 members, and the initial start-up capital is limited to two years and at least 1 million DOLLARS is needed.

You may continue to hit a wall in the process of raising money, but don't despair. Believe that most institutions in the market will not see a rabbit, after all, people's money is also hoping to get a higher return on assets.

Don't be too humble in your quest for financing. Remember that VCS in the market invest in projects, but they want to get the highest possible potential return at the lowest possible cost.

The game is always a matter of both sides. The project side needs to get enough capital to survive, so it needs to sell equity or future tokens. The institution also hopes to get enough low chips.

More money is not always better. Valuations are too high, just as traders are too leveraged, and the focus of the product is diluted as they spend more money. Step big, capsized perhaps in a moment.

Products always have a thread, and that thread is your differentiation, your moat. All feature pages are derivative of your moat, and that's the only way to survive in the market.

At the end

Introduce myself as a person who has been in touch with bitcoin since 2012, traded bitcoin in 2013, and entered blockchain in 2017. I have experienced mining, community operation, proxy investment, and participation in the first and second level blockchain funds. I am still not free of wealth, and I am working hard to start my own business.

A little insight

Society is complex, and so are people.

In the world of blockchain, living and continuing to live is all that matters.

To live is to find new opportunities.

This is as true for investors as it is for entrepreneurs and institutions.

Blockchain is a sunrise industry, do not complain or proud because of temporary gains and losses.

Stay hungry, stay foolish

Keep a positive attitude towards new things and do not rely too much on past successful experience.

The author's contact information: Telegram @web3fox