Saw this tweet the other day laying out how Zuck thinks about launching products at Meta. He simplifies it in a way that makes sense:
Step 1: Spark
Step 2: Retention
Step 3: Growth and Scale the Community
And then, only then, comes Step 4: Monetization
The last part hammered a feeling I’ve had about consumer crypto products for some time: by measuring an applications success by volume, fees or revenue from the get, a product is choking its ability to capture a larger customer base. Basically, crypto products have tried to approach go-to-market in the inverse of how it’s done today, without any evidence that the methodology actually works.
I understand Facebook and other Web2 platforms incentives are different– as is their current customer base. But that is the point here: the current incentives in crypto drive an assumption that it’s all about making money quickly. This drives product roadmaps, areas of focus and VC interest. But to succeed long term, that will not be the case.
I believe consumer crypto’s ultimate unlock is experiential– can I do something that previously felt impossible or prohibitive? Is the overall experience better than what currently exists? Is it expansive or additive to an existing passion? In short, it should be a way to capitalize on peoples’ time, either making it more efficient or more fun– or both.
If we’re asking for time, a great example to level set is in media. Everyone hates the paywall. But the only reason the paywall works is because there is something on the other side worth giving a shit about. If every experience on the internet had a paywall where you had to convert before knowing what was on the other side, you’d say no. Now substitute paywall with “deposit funds”. See?
This is also why I believe we see so much of the same product. If you are building in crypto, you are conditioned to follow a process where money is exchanged from the first point of contact. And where that works best today, for founders and investors, is launching a new L1, exchange, DeFi platform, lending protocol, payments tool, etc. Not to say there isn’t value in these products, in fact most are pretty revolutionary versus their incumbent competitors. But the willingness to be creative beyond them has reverse incentives, and that should change.
My partner JMo always says, “revenue quality is more important than revenue velocity” and I believe that is truer than ever. If founders, companies and investors start to see the value in building products that are sticky, critical and exciting to a user base, monetization could come later (crypto!) in a more powerful way. A lot of this is mental– as an industry we must be honest and aware of the structures of today and where we want to go tomorrow. And we probably should agree on that if we want to deliver value to customers that is more practical and durable.
