Web3 companies need to both leverage traditional strategies and lean into industry strengths to survive and thrive in a down market.
No industry, and no business, is a fan of economic uncertainty, and many financial experts consider the current global market to be precarious. While every business has to look at ways to shore up operations and cut costs in a down economy, the effort can be particularly challenging for Web3 companies, which are relatively young, may have fewer ready resources than their more established Web2 counterparts, and operate within an industry many outsiders don’t understand and don’t grasp the value of.
Should the macro-economy take the turn some are predicting, only those companies — no matter their industry — that have taken steps to prepare for the storm will weather it well (or at all). Below, 14 members of Cointelegraph Innovation Circle share their advice to help Web3 companies take proactive steps to ready themselves and their communities for what could be a difficult road ahead.
Define your purpose
In an uncertain market, Web3 companies must have a defined purpose. Curious participants looking to expand their financial, social or cultural horizons through a novel service must first be convinced of its utility. Discussions of value aside, true innovation reshapes how users spend equally precious commodities: time and energy. To remain competitive, executing well is only half the battle. – Oleksandr Lutskevych, CEX.IO
Solve a real, high-value problem
Engineer value within your product, platform or protocol and solve a real, high-value problem. Customers pay for painkiller products — those that solve immediate problems — not for vitamins — “nice to have” products. Web3 companies must gravitate toward considering the magnitude of a given problem and the value they can add, not just be “me too” players living on hype. – Nitin Kumar, zblocks
Build a brand with a clear story and value proposition
What do Apple, Microsoft, Instagram and Slack have in common? All are global, household-name brands that started during times of economic recession. The lesson here is: Don’t just build a company or a product; build a brand with a clear story and value proposition that will justify your existence even when times are tough. That’s what will carry you through. – German Ramirez, THE RELEVANCE HOUSE AG
Prioritize increasing daily active users
Web3 companies should prioritize increasing their daily active users as a metric of genuine engagement. Simultaneously, they must extend their financial runway to ensure sustainability over the next six months, even in a volatile economy. Attracting a broad customer base will be key, but retaining them with trust and value will be paramount. – Erki Koldits, OÜ Popspot
Target less essential areas for cost cutting
Reduce costs without reducing your upside. When adapting to difficult market conditions, Web3 businesses should ask themselves which expenses are most vital to the company’s core value proposition. Then, target less essential areas for cost cutting while preserving the elements that are critical for your product quality and sustainable growth. – Wolfgang Rückerl, ENT Technologies AG
Find a way to add value to Web2 businesses
Target a basic customer need to de-risk your company. I don’t believe Web3 technology has to be segregated from the rest of the economy; there’s no reason to rebuild the entire market economy for Web3. Find a way to add value to Web2 businesses, and plan now to scale up when it makes sense. I think we’re through the times of easy money and flash-in-the-pan successes. Play the long game. – Stephanie So, Geeq
Focus on interoperability
Web3 companies should focus on interoperability. As the economic landscape shifts, the ability to seamlessly integrate with various blockchains and traditional financial systems could be a lifeline. It not only diversifies risk, but also opens up new avenues for user acquisition and revenue. Being too insular in your tech stack can be a hidden vulnerability when the market tightens. – Tiago Serôdio, Partisia Blockchain
Build your product and your community of core supporters
Now is a good time for a Web3 company to reevaluate and focus on building its product and its community of core supporters. As the market quiets down, a lot of the high-profile, low-substance companies will go into hibernation. Conversely, the ones in it for the long haul have an opportunity to grow their user bases and feature lists away from the cacophony that has come to characterize bull markets. – Jason Fernandes, AdLunam Inc.
Prioritize strong security and risk management
Prioritize strong security measures and hefty risk management strategies to protect digital assets and user data against potential vulnerabilities and uncertainties. In the volatile Web3 space, data leaks can be devastating. Implementing decentralized storage, advanced encryption and continuous security audits is paramount to safeguarding both user trust and your company’s reputation. – Anthony Georgiades, Pastel Network
Avoid spending on social influencers
Web3 companies should refrain from spending on social influencers. After 2022, many influencers on YouTube, TikTok, and similar platforms fell from glory due to their paid endorsements of Luna and FTX prior to their unprecedented crashes. These social influencers lost respect in the industry, and there is still mistrust among the public. It’s definitely not worth the potential reputation hit. – Ayelet Noff, SlicedBrand
Look for more efficient marketing methods, and stay in touch with regulators
There will be economic uncertainties forever. To deal with unseen and precarious financial times, Web3 companies should focus on more efficient ways of marketing, like replacing ads with SEO. Further, they should stay in constant touch with regulators to seek their support wherever possible. This also helps to address some of the misunderstandings that regulators have about crypto. – Abhishek Singh, Acknoledger
Allocate resources to in-demand innovations, and stress quality over quantity
The most important step when resources are constricted is to identify areas that are most in demand and allocate resources to those technological innovations. Second, offer quality over quantity to your community, and distinguish your brand by building with purpose — the Web3 space frequently “builds in public,” which is beneficial and can be leveraged to bolster both of these points. – Megan Nyvold, BingX
Showcase the power of Web3 governance models
Times of economic uncertainty provide an opportunity to showcase the power of Web3 governance models. It’s time for Web3 companies, particularly DAOs, to get their ships in order and mitigate their financial risks in a fast-evolving economic landscape. Accountability and transparency will allow them to prioritize resilient revenue streams and collectively ensure long-term viability. – Sheraz Ahmed, STORM Partners
Keep your developers and community excited
As low global liquidity levels lower crypto token prices, keeping both your developers and your community excited will become a challenge in this bear market. Stay ahead of the pack in terms of technology; don’t rest on previous bull market victories. If you need to airdrop some NFTs or tokens to developers and active community members, go ahead. – Zain Jaffer, Zain Ventures
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.