The ‘Make or Break’ for Growth in Web3 Startups
Web3 Thought leadership series #1 - Interview with Shaun Heng, ex-head at Spartan Labs & Ex-VP of Growth at CoinMarketCap
It’s 2023, and there are a bunch of Web3 Startups existing in different verticals trying to solve a bevy of different problems, while coming up with innovative ideas, and vibrant communities.
That said, there are only a few of those startups, that actually make a break onto a larger landscape of operations - getting significant user adoption, or market traction.
💡 So what exactly is the elixir of elusive success in Web3.
To answer this question and get better insights on Growth & Success in Web3, we interviewed Shaun Heng, currently an Angel Investor, formerly Head of Spartan Labs, and Ex-VP of Growth at CoinMarketCap.
Shaun brings in a stellar experience as a growth lead and as a web3 pioneer, thus making his take a valuable one for marketers and founders looking to scale, acquire users, or even raise funds 😉.
We’ve tried to create a holistic take in our conversation with Shaun, to glean as many useful insights as we could.
Read on & learn how you can shape growth strategy for your own web3 startup.
Q1: Shaun, you’ve been pioneering growth measures over the past few years now. What in your experience has been the most successful GTM strategy adopted by a team for
DeFi
Games
and NFT communities, that you’ve seen as an investor or while heading growth @ CMC?
Shaun:
Airdrops to Web 2.0 platforms seem to be the natural next step in crypto adoption across verticals. Instead of re-engineering the wheel to onboard new users, it is much better & far easier to leverage existing infrastructures and create synergies - while incentivising the web2 user to interact with the web3 ecosystem.
A keen example of this strategy is of this would be WeChat’s Red Envelope initiative - a free money promotion based on Chinese New Year gifting tradition. The initiative brought gifting into a digital realm, introduced the product and kickstarted adoption on an unprecedented scale.
On a similar note, Airdrops can power marketing promotions, while distributing free coins as a catalyst for community engagement.
Now, Airdrops have been used to a large extent by companies looking to accelerate growth for the right and wrong reasons but over time, better checks and balance will be in place to ensure fairer and more equitable airdrops.
It’s equally important to also note that tokens/airdrops should be used as a means to accelerate growth and GTM but not as a means to achieve product-market fit.
Q2. You’ve seen the journey of web3 start-ups both as an angel and during your time @ Spartan. Where does the inflection point lie for them? And how do they get there?
Shaun: Most of the startups at this point are too focused on solving certain infrastructure problems. The space might need these solutions, but it also begs the question -
Is the solution VC-backable? 🚀
Truth is that some of these problems aren’t meant to be billion dollar companies.
The problem should be big enough.
The main question a founder can ask here is what is the solution for?
Is it for a personal itch, or is it for their need of wanting to be a CEO?
If the answer to these question is absolute, then the initiative can be scaled into a company. Otherwise, it often is better to pitch the idea to a well-funded org, and be a product owner.
Add to that the fact that there have been certain industry initiatives that worked.
That too, when the fundamentals of their operations were similar.
Drawing from the success of Reddit’s collectibles avatar launch, the inflection point for Web3 projects might come when users are able to interact and experience the benefits of blockchain technology (open databases, server-less networks, smart contracts, etc) in their day to day activities.
That said, too much emphasis has been placed on the narrative of Web2 → Web3. I don’t buy into that as much. To me, blockchain/smart contract technology enable us to build on top of current businesses to built better and more sustainable business models. It’s not necessary a paradigm shift but more of a technological innovation/advancement. Projects can focus more of really finding big enough problems in the real world where blockchain/smart contract technology can help us build better businesses.
That, I believe, can create an inflection point for web3 startups. Focusing on ease of adoption, and building on top of existing needs by introducing blockchain led innovation.
Q3. You’ve been on top of the trends in the web3 realm. What is the vertical where you see prominent growth in web3 going forward? And how can startups make the most of it?
Shaun: Smart contract wallets has been a hot topic in the space at the moment with the advent of Account Abstraction that makes wallets more programmable and functional. However, the space is getting too crowded at the moment.
For builders in this space, my advice is to
Focus on figuring out your competitive edge that will help you build a moat around your competitors and
Focus on figuring out the monetization portion. Don’t leave it as an afterthought. Investors are hesitant to back wallets companies at the moment due to limited monetization opportunities.
Think outside the box and if you can solve the monetization problem and prove it, you would already have answered half of the questions investors might ask about this vertical.
Q4. CoinMarketCap saw tremendous success during your tenure there. What efforts at CMC did you take up to attribute this growth sprout to?
Shaun: It’s primarily about figuring out what your key growth drivers are and how product can play a role in enabling that growth so as to build a viral product-led growth loop.
SEO for us was the key part of our growth marketing. It allowed to us to scale our traffic in a scalable manner. Now, investing in SEO meant focusing on Product-led SEO - Focusing on customer, not keywords.
That meant, building content around what the user wants, and answering 2 very specific questions:
What the customer searching for?
How are they landing on our pages or our competitors' pages?
This strategy enabled us to 50x our traffic and I think this was a major contributor to the growth sprout.
Q5. How do you think web3 projects can solve for user acquisition, and how instrumental are community and growth analytics for it? Would love to hear an anecdote from your personal experiences.
Shaun: I really believe Airdrops can be a good way to get started for existing Web3 projects.
As far as analytics is concerned, it can play a key role when the user base is large enough and you are able to collect enough data.
Community and growth analytics are interesting especially given that blockchain is basically like an open database but the key challenge is that the data today is still very minimal and messy.
In Web3, transaction data are public on blockchains, but identity can be kept private. In Web2, it’s the opposite. Many teams are struggling to unify on-chain and off-chain data.
As an NFT collector, we often get airdrop NFT collections from other projects. While most of these airdrops are done on the premise of spray and pray, but over time, as the infrastructure gets built out, I’m certain we will be able to more accurately target the right users at the right time.
Q6. After Spartan, what is the next big move that you’re going to make? Any behind-the-scenes peek? ;)
Shaun: I have operated through almost every stage: from founding, seed, series A all the way through acquisition - from idea to tens of millions in revenue.
I particularly enjoy investing at the pre-seed/seed stage because it allows me to have the biggest impact on founders & web3 projects. Founders need help and support and I appreciate being the first call. I love jumping on a call and jamming with founders about product, go-to-market, competitive landscape, hiring, and helping them raise their next round.
I’d say rolling up my sleeves and trying to be as helpful as I can as their biggest cheerleader and most trusted partner is something that I’ll continue to cherish as far as the next move is concerned 😄