Crypto startup experience: Should we only focus on buzzwords, or slow down and dig deeper?

author:@mattigags

Compiled by: Xiaobai Navigation coderworld

The hidden truth

“Fast to learn, slow to remember. Fast to generate, slow to process. Fast is discontinuous, slow is continuous. Small, fast systems guide large, slow systems by accumulating innovations and occasional revolutions, while large, slow systems control small, fast systems by limiting and stabilizing. Fast captures our attention, while slow holds real power.”

Excerpted fromRhythmic Layering: How Complex Systems Learn and Keep Learning

Narratives are not designed for investors or founders, but for consumers and traders. For long-term investors, focusing on narratives is not the best strategy. Either get in at the beginning of something that has the potential to become a narrative, or wait until the situation becomes clear before acting.

along withcryptocurrencyBecause it can create huge wealth in a short period of timeXiaobai NavigationAs fame grew, many entrepreneurs flocked to the space between 2017 and 2021. Founders in this industry gradually became less focused on solving real problems and more interested in pitching to venture investors (like us) in order to capitalize on the flow of attention. And we were hooked.

cryptocurrencyThe culture of founders in a field shifts from substance to process. Everyone starts to emulate the same routines and buzzwords that once worked. However, when everyone uses the same approach, the effectiveness diminishes.

We don’t think that relying on process alone can bring good results. Imagine if everyone is doing KOL marketing, how can you stand out among so many people using the same strategy? Fierce competition will quickly consume growth opportunities.

In our conversations with founders in the crypto space, we’ve found that genuine curiosity is becoming increasingly rare. Many are trying to build products, or simply raise money around buzzwords and narratives. As a result, their presentations become their “products.”

People often mistake fashion for culture. They rely on ephemeral narratives instead of building from fundamental principles. As imitation increases, many products end up becoming the same. Founders and investors often forget how to think independently because in the cryptocurrency space, noise and trends seem to be the quickest way to riches.

In the cryptocurrency industry, no one has established a monopoly because everyone is competing in narrative. To establish a monopoly, you need to find inspiration and motivation from the grassroots.

So it’s become easier to answer the question “What are we looking for?” despite the many detours we’ve taken. We’re looking for true curiosity and unique convictions that aren’t influenced by (fast) fashion. We believe that to create something great, you must be able to deeply build and embed your ideas and products at a cultural level.

Buzzwords and narratives are like fads, easily copied and imitated. Notice how during a frenzy, everyone ends up doing the same thing because they only focus on the surface. Founders often think “I’m discovering X”, where X is the hot buzzword or concept that fits the narrative.

Most founders achieve true innovation through accidental experimentation. At its core, it almost always stems from genuine curiosity. Their approach is “I’m researching this problem, let’s see what we find.” This is a solid foundation for building meaningful results. Ideally, this also means discovering an untold truth.

You go against the market

This may just bePeter Thiel "Secrets"A reworking of the concept, but here's our perspective. If you were to listen to the various discussions and narratives that are out there, which ones would you say are really obvious truths and which ones are obvious lies? Which ones would you say are really non-obvious truths and which ones are non-obvious lies?

The difference between obvious and not obvious can be reinterpreted as popular and unpopular, or knowable and unknowable based on existing data. Take cryptocurrencies from 2021-23 as an example:

The obvious truth:

Cryptocurrency will be affected by interest rate hikes DeFi returns are unsustainable Conflict is bad for cryptocurrencies

The hidden truth:

FTX is a criminal organization L2Stablecoins are the product-market fit for cryptocurrencies, leading to liquidity splits

The distinction between the non-obvious truth that requires unique insight and the obvious truth that can be observed from a distance but still without absolute certainty, as nothing can be absolutely certain, is not necessarily binary but more likely a continuum.

Here’s an example of putting these concepts into a 2×2 framework:

So, among the false narratives and claims during that period, which ones were clearly not going to happen, and which ones were more difficult to predict?

Here is what we get:

Looking back, these concepts seem clear. Looking forward, it’s all uncertain, but by evaluating the founders’ beliefs when building the product, you can see the independence of their beliefs. Because if a founder forms an opinion based solely on obvious facts, and the product is not based on any unobvious truth or fallacy, how can it grow into a great company, project, or asset?

Some people talk about thinking in reverse, but this is not an ideal way to think. While a hypothesis may appear to go against the consensus, it is not arrived at by observing the consensus and deriving the opposite view. Hypotheses should be analyzed from first principles, uninfluenced by the consensus.

The above examples are macro-level, but let’s analyze a specific successful crypto project in recent years. If you were lucky enough to receive Solana’s pitch materials in 2019, you can analyze it through the 2×2 framework as follows.

The non-obvious truth assumption has been a positive for Solana. It has brought the discussion of modularity vs. monolithic architecture to the forefront, which was not common before. In the past, most people were used to thinking in a modular way. Solana also had the foresight to believe that sharding technology is a dead end.

Being able to identify what each quadrant contains is helpful when starting a business. If your insights only stay in the obvious areas, you may not have unique value and are just competing with many competitors.

If your belief relies entirely on something that is not obvious, you may be working in a vacuum, there may be no market demand, or you may be just guessing (if you know this, that's fine).

If you build only on truth, you may not identify problems in existing products or models. And if you build only on false assumptions, you may create problems that don’t exist, such as the belief that creators are not paid equally or that market leaders take too high a cut.

Ideas worth exploring

Those who innovate out of genuine curiosity are often the best problem solvers. Using our 2×2 framework to analyze your unique insights can help you clarify your position in the market and the value you can provide.

The way you execute on your unique beliefs is just as important as staying curious. While great ideas are rare, great execution is equally rare. The ability to launch products quickly and iterate is a rare skill. Often, you start by not relying on the standard playbook, but on those that are temporary.Unable to scaleThe personalized path is a method worth trying.

Best practices and playbooks are useful when appropriate, but they should not be relied upon in the early stages. Use them only when the time is right to allow the market to naturally form a story and buzz around your product.

Many people tend to put the cart before the horse when starting a business - focus on buzzwords first. Maybe most founders are like this. But for early-stage startups, the substance is the most important, and the process is just a tool to help expand the substance.

Rather than saying “I’m discovering X,” a better mindset is “I’m solving this problem, let’s see how it turns out.” It’s almost an aesthetic pursuit. In other words:

“Nothing to lean on, nothing to lose… In this state of mind, one does only those things that are truly reasonable: no hidden fears, no moral constraints, no rules, no potential constraints, no subtle attention to the forms of those around him, and most importantly, no attention to oneself… There are no guiding images in his actions, no hidden forces; he is just free…

…what is most important about us comes to light in those moments when we are completely defenseless…The conscious effort to achieve this state, or to be free, or to be anything, always creates a semblance of that effort that undermines it.” —From The Timeless Way of Architecture – Christopher Alexander

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