Check This VC ‘Playbook’ for Cryptocurrency Startup Success
As so many crypto startups hit the buffers fast while others experience sky-high growth, could there be a roadmap to crypto-powered success?
One major venture capital company thinks it has come up with an answer – and has outlined some “golden rules” that cryptocurrency-themed startups should follow if they hope to make it big in the increasingly competitive world of Bitcoin, altcoins and blockchain technology.
California-based VC firm Andreessen Horowitz’s Crypto Startup School partner Jesse Walden has published a “Playbook for Building Crypto Applications,” labeling the guide a “possible path” to brighter things in crypto application.
Here are Walden’s key pointers.
Start by designing a product/market fit.
Walden says that at the very first stage decentralization is actually a bad thing.
Instead, “opinionated leadership to test hypotheses and update assumptions quickly” is what’s required. Firm decisions built on even firmer facts.
Next, community participation is key.
The goal, he says, is “fostering harmony between passive users, more-active contributors, and the core team.”
Vital takeaways here, he writes, are being brave enough to relinquish control to the community, and making sure you incentivize participation with tokens or fee streams – as users need to feel like they actually have something to gain from being part of your project.
Decentralization and community ownership should be last (but not least).
This might be the hardest of all steps for developers who have worked day and night on their projects. But it’s a necessary one for any successful crypto initiative. “Faking” decentralization – with core teams retaining control – is a fatal flaw for many ultimately unsuccessful projects.
Instead, Walden says the core team must “cede majority ownership of the application (fees and control) and mitigated platform risk by ensuring the product is community-owned and operated.” Relinquishing control is vital at this stage, and “exiting to the community” must always be the ultimate goal.
To do this, your project will need a “sustainable community-owned-and-operated network” – and presumably a lot of helpful community members!
If this all sounds a little daunting, that’s probably because it is! As logical as the “playbook” sounds, the devil often takes the best-laid plans – especially in the crypto world.
Although Walden states that “the most promising project teams I’ve spoken with have been navigating their way through this playbook,” he does concede,
“So far, we have yet to see a crypto application execute each of the objectives sequentially.”