This article is a follow-up to The Creator New Economy report published by Speedinvest and Antler Capital in March of 2022. We look forward to hearing your thoughts on what you found interesting, what you think we missed, or any other viewpoints on this new Web3 consumer economy.
In Web2, the primary GTM stakeholder is the customer. But in Web3, the alignment of incentives through stakeholder primacy means that the entire community of contributors within a network are turned into stakeholders - driving the need for new distribution strategies.
The opportunity is to leverage tokens and the underlying decentralized tech to build and bootstrap these new networks.
Bradford Stephens, co-Founder & Managing Partner at Blockchain Capital, comments, "The major shift is 'Make your customers owners,' so that the early users and contributors receive part of the value they help platforms create, and eventually have governance over it and more control. We are essentially giving these companies to the users - and that's the biggest societal social shift that we're creating here."
It's just a new form of capitalism - a little more egalitarian and a little more socialist - that is allowing everyone to take part in these huge wealth creations that are happening in the world - versus limiting it to the elite investors or the founders. We talk about wealth disparity a lot in the world. But how are we going to combat that?"
What this means in practice is that, while Web2 businesses’ GTM strategies start with the product (i.e. come for the tool), Web3 companies’ bottom-up approach is as follows:
Rex Woodbury, Investor at Index Ventures, says, ‘‘Web3 is unique in that economic incentives are often built in from the beginning, which provides a compelling go-to-market. Early users become your best evangelists, benefiting from token appreciation. Think carefully about how token design will influence behavior.’’
The focus of the new Web3 creator platforms and solutions should be on:
Get the attention of early users who see the purpose and utility(ies). Then, once you have their attention, engage with them (see point 2).
Michael Sidgmore, Co-Founder of Broadhaven Ventures, comments “Community is going to end up being such an important piece on how you value these Web3 creator platforms going forward. I don’t know if you could do a traditional DCF on communities or maybe it’s an implied valuation as in ‘How much the community is willing to participate in a project / buy the tokens, that ends up being the reference point for the value of a community.”
This means designing the organizational structure and overall distribution mechanism in a way that:
Robby Yung, CEO at Animoca Brands, says, “If we think about the fact we are trying to build sustainable economies, we need to focus on community first. We need to try to figure out how to design those tokenomics to enable a circular benefit, so that everybody in the system contributes and everything circulates appropriately creating a sustainable economy - just like in the physical world. And, therefore, I think that you have to design your tokenomics to foster community. If you don't have community, then things fall apart very quickly."
Sameer Singh, Network Effects Advisor and Angel Investor, comments, “Tokens are seen as a way to circumvent the “cold start problem” by offering early users a financial upside to participate in a network to increase its utility. However, this only works if the financial incentives of early token buyers align with the utility of the network.
This is easy for networks like Helium that only require passive participation. Users earn tokens once their wireless hardware is connected to the network. But it becomes a lot harder when you need users to actively participate in the network for it to have value. Social virtual worlds like Decentraland are a good example, where token adoption has no direct link with real engagement.”
Sarah Nöckel, Creator of Femstreet and Investor at Northzone, says, “In Web3 the GTM of those creator platforms is looking a lot more like developer platform building:
consumers are the contributors / collaborators / devs and communities become the testing ground for new projects, incentivizing for high quality and consistent community contributions.”
“Now that we have seen the basics on how GTM strategies are evolving in Web3, our focus goes to what we believe is the biggest opportunity in Web3 today, to unlock the market for the mainstream user and bring the cultural masses to Web3,” says Paola Vivoli, Investor at Speedinvest
As the blockchain matures and positive market tailwinds such as the gamification of everything kick in, tokens and decentralized tech are bringing the cultural masses to Web3 by way of the consumer applications that are built on top of blockchain.
These applications are becoming mainstream and increasingly resemble consumer - and especially direct-to-consumer - businesses. We see this happening already in Gaming (e.g. Sorare), as well as in more technical applications (e.g. wallets or protocols).
The target customer is changing.
Moving forward, your customer will not be the crypto-savvy, but, instead, the mainstream consumer.
Jarrod Dicker, Partner at TCG, comments, "What this means, in practice, is that you need to understand very well the distribution mechanisms and how to reach this new (non-technical) consumer. It is not anymore just about building for the 10 million metamask users, but more about how to unlock the next 10 / 50 / 100 million users in Web3 and build something that is appealing and welcoming enough for this next generation of consumers to come in.”
Now that we know who the new consumer is, we would like to provide a ‘hands-on’ guide to help companies think about these new distribution mechanisms and help them launch or scale a Web3 company built for the mainstream consumer.
Educating non-crypto native consumers and creators on the technological merits compared to existing Web2 solutions. Think about:
Communicating the message incl. the purpose and utility in a “digestible” way. Key is here to understand:
New buzzwords such as Crypto, DeFi, NFTs, DAOs and Web3 can be confusing for non-crypto native users and we often see more technical founders struggling to clearly communicate the advantages of decentralized tech to a mainstream audience.
What your customer wants to know is (1) how they interact, (2) what they can do, (3) what they cannot do, and (4) how they can benefit from it.
These are the basics of the messaging to get the community together.
To be able to define an “authentic” GTM strategy and the ideal toolbox of Web2:Web3 strategies (e.g., a mix of push marketing versus collaborations), you need to have a sufficiently good understanding of your (future) community, as well as of where your company sits in the Web3 landscape.
Jarrod Dicker, Partner at TCG, reiterates, “Be authentic. You cannot fast track getting user interest and building your community.”
When building your Web3 toolbox, think about:
Moving forward, you need to find ways to (1) attract the mainstream consumer with the right mix of Web2 and Web3 marketing strategies, and (2) stay relevant to them like any other consumer product.
You do this by building bridges to meet people where they are, both figuratively and literally.
Build a figurative bridge to the experience, so that it feels easy and intuitive for the mainstream user.
Founders should think about how they can create an experience that feels natural for their Web2 audience by making Web3 as similar to Web2 as possible - “bridging” the experience - and able to pull users’ attention away from the Web2 solutions they are currently spending a lot of time on.
Also build a literal (virtual) bridge to a Web3 platform from a Web2 platform, because the reality is that Web2 platforms have so much (!) distribution
The way we see it, is the untapped potential for Web3 companies to become the bridge for Web2 platforms (e.g., Patreon, Twitter, Instagram) to enter Web3 by building the infrastructure layer that brings the Web2 audiences across, by hand.
Track and analyze contribution and engagement.
Have I attracted the community I designed my GTM strategy for? And if not, why?
Too often, there is generally a big discount on the market and the industry itself. Founders typically double down on the crypto side even before having really understood the market, its dynamics and its problems.
As a founder of these new solutions, it’s important to look beyond how your product’s capabilities are pushed beyond Web2 by crypto. But you should also think about and understand the market you are looking to disrupt.
Only after having done the above, then align all of that with what you are building.
“By giving people the right tools, people will realize they have the power to change things - and that’s exciting!” says Paola Vivoli, Investor at Speedinvest.
A lot more work needs to be done to make the new Web3 applications more attractive and practical for a larger pool of users to take advantage of - and that should be the focus of companies.
We are at the first mile of what these new Web3 consumer applications and tools really do and how people will use them, as well as what crypto really starts to unlock for the masses.
Once again, thank you to the experts who lent their voices and perspectives to this guide:
Sameer Singh (Angel Investor), Robby Yung (Animoca Brands), Bradford Stephens (Blockchain Capital), Jarrod Dicker (TCG), Michael Sidgmore (Broadhaven Ventures), Sarah Nöckel (Northzone, Femstreet), Rex Woodbury (Index Ventures), Danielle Lay (NEA), Sasha Kaletsky (Creator Collective Capital), Dominik Tobshall (Speedinvest), Sam Nasser Zare (SoftBank)