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By: Paweł Łaskarzewski CEO & Co-Founder of Synapse Network
VC companies invested in crypto startups more than in any other industry in 2021, according to a recent report by Galaxy Digital. Yet 2,411 coins failed that same year, and funding for crypto startups fell 26 percent in Q2 of 2022. It’s true that most startups fail in any industry, but it’s also true that the crypto industry is a different beast. So what’s the secret ingredient for success? Jack Dorsey answered this question when he stated at “The B Word” conference last year that “the network and the community” are key.
But why is community so important and vital to success, especially in crypto?
The importance of community
Unlike, for example, the smartphone industry, the crypto industry was born from the bottom up. There weren’t energized communities of young people crowding in basement bars and fiercely typing on subreddits about how the iPhone was going to tip the balance of power toward average folk. Compare that to the launch of Bitcoin, the world’s first cryptocurrency. It almost immediately spurred a reaction from young techies excited about blockchain’s promise to empower retail investors.
One of those young people was Vitalik Buterin, who was so excited about Bitcoin’s potential that he founded the Ethereum network just a few years later. Again note the contrast here between Ethereum, for example, and the smartphones other brands launched to compete with the iPhone after its launch. Vitalik’s idea wasn’t a reactionary attempt to compete with Bitcoin. Sure, the financial incentive was there. But Ethereum was born out of an ideological commitment to the idea of decentralization and the desire to take the blockchain concept introduced by Bitcoin to the next level and to empower developers to build on it.
This, along with the financial incentives luring young (mostly) men and early crypto marketing bans on major platforms like Facebook, led to a strong community tradition in the crypto industry.
Even now that crypto traditional advertising is much more common, swanky marketing strategies without an emphasis on community building will only go so far for crypto startups, albeit these aspects are important as well. Seventy percent of marketers think branding the audience is more impactful than sales, and the crypto world can benefit much by focusing more on branding crypto to the community than spending money on advertisements.
Being part of a community that not only shares the same values but actively pursues them, creates an even stronger bond among community members. But building a crypto community is easier said than done. It’s critical to devote time and resources to figuring out what the need in the market is and how to cater to and create that community.
Catering to a crypto community
Understanding where information comes from in your industry is a key factor in determining how to disseminate information. And for the crypto community, there’s no place more prevalent than social media for information. Yes, Coinbase and others bought air time during the Super Bowl, but most information about new crypto projects and whitelists comes from the community channels, such as Telegram, Twitter, and Discord.
Focusing on growing communities on social media and messaging apps is one of the key ways to ensure the success of your crypto startup. As part of building a community, crypto companies need ambassadors and influencers to help rile up people and get them enthusiastic about the project. Having people in the community who are excited about the project and share that excitement with the rest is a good predictor of a successful project. A strong community with great leadership and a team dedicated to the idea they want to bring to life is a recipe for success.
Since community building is so critical to the success of crypto projects, those funding the projects, such as VCs or launchpads should offer more than money to help the project get off the ground. Sure, money is critical for funding projects, but offering services that actually build a community are somewhat as critical to ensuring a thriving project. Hiring a community manager or two can make all the difference between a successful project and one that fails in infancy. And perhaps most critical is for founders to be flexible enough to do a partial or full pivot of their business. With strong community backing, pivoting to a new idea will be easier when the support is already there.
Crypto communities are the heart and soul of the crypto world and it’s critical to strengthen them as much as possible to ensure the success of the crypto industry. Especially during a time of market turmoil, it’s more important than ever for crypto communities to rally together and ensure their members understand the industry’s value to save it from an impending winter.
About the author:
Paweł Łaskarzewski is the CEO & Co-Founder of Synapse Network, a self-driven serial entrepreneur, and an early investor with over 20 years of experience in tech. He was pointed out as a Blockchain Expert of The Year in 2022.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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