Lessons from web2 to be implemented in web3

Transcript

all right thanks everyone for being here um and thanks Paul for your presentation earlier uh I last I you know liked the last question about Investors and I think I just want to add my two cents on that I think investors are super important choosing your investors wisely uh very happy that we have Alvin as part of our investors and um the last part also when Paul was giving advice for entrepreneurs the last tiny thing that I would add to that is people is really like the people is such an important thing and when and you mentioned collaboration you mentioned like you know we're all in here together kind of fighting against something bigger it's not us competing against each other I love that and I think that's super important and finding people retaining people and giving purpose to people you

know making sure that they know why we're building what we're building and that we're going to power through whatever bear market and crisis is super important and so bhaktash here is going to talk about something that I think is really important when you think about the people aspect is um letting onboarding people into crypto and web free ecosystems and so I'll let you do your own pitch obviously but you know it's it's about helping people get into our space and not kind of being this you know exclusive web 3 whatever um thinking we can use complicated language and that nobody understands and how do we do that and how do we make the space even more inclusive so thanks a lot and I'll hand over the mic to you thank you for having us and thank you for organizing HTC for the fifth time

now um so thank you all for being here um the topic of today is like what lessons can we uh can we derive from web 2 to build better and more sustainable companies in in web3 and there are many of them as you'll see so maybe a bit of introduction first about Alvin so who we are and and what we've learned from webtoon and why sort of this topic was important for us so it's we are no surprise uh Venture firm based in London in Paris has been around for a bit over 20 years we have 22 billion um dollars on the management and our latest fund that we raised last year is 350 million so we're focused on early stage seed Series tickets from say one to ten

million euros uh we back like six unicorns including the taiku conto or or stripe ankle store five of them at the seed stage so we really are early stage investors and we support those companies on a weekly basis with basically three main things the first one is obviously your investor as as Paul was referring to as a real sparring partner on everything around product Market fit iterations uh distribution channels hiring and so on uh key strategic pivotal moment for the company the second point is around as ombo is referring to hiring and organization building this is super important because especially in with three some of the founders are really thinking that it's basically a a loose not very structured

group of people working together this is great at the beginning it's great to like spur degree Creative Energy at the very beginning but then you need to organize it and structure it as you scale so we focus on helping companies hire the head-offs VPS sea level hires and also individual contributors on the on the tech side and then we're long-term investors I think this is super important especially when you talk about like liquid Investments like tokens so our average holding period is seven years so we're not there to dump on retail at the first pump and we also so this is like the history of Alvin uh from from web 2 and we also have a pretty strong and growing crypto portfolio so crypto infrastructure is

maybe uh the first of our areas of interest kaiko is is one of the greatest examples here but also Kiln which is taking as a service company and crypto which is an accounting and reporting tool for any company that holds tokens we also ventured into into defy with angle which is a euro stablecon protocol Morpho which is um a defy optimization different lending optimization layer and then some other investments in crypto gaming and open web and so like the way we were thinking about this is just there's an evolution and actually the term with three and shows that well between a very open web in the beginning and and and then it became more centralized around big entities Facebook

Google and so on uh and then with three sort of getting back to the origins of a very transparent privacy first uh and power to to the users uh model and we just wanted to sort of uh not let be left behind and be able to adapt the way we work to this kind of entrepreneurs and so basically where what we're trying to do is like Foster Playbook sharing between different companies in the portfolio including one three obviously and implementing a same but also obviously adapted way of looking at deals in in web 3.

okay so now very important assumption that we work with is that basically launching a web 3 project before like venturing on web3 is most of all launching a project and so there are playbooks and Tech projects that have been refined for decades and years um and so it's obviously to take with a pinch of salt and and and and irony there but uh uh some of what three founders worry about well becoming a meme Lord when when will I launch a token uh having a very very high evaluation uh having a party around with like 27 crypto funds and and then strategics and and so on um and worrying about the fact that lady gen is uh is sold out again and and

stuff like this and this actually is maybe not the top priority that wealthy Founders should be thinking about when launching the project and what actually matters is things that are extremely similar to launching any products so basically do I work on a on an actual and growing pain for users or is it something like a great idea but without a specific pain to focus on do I have a strong committed and very complementary team to work on this project uh will I survive the next bear Market well I survive will I have a month to work on the projects uh before dying and will people actually use my product for what the product is designed for or will they use the product to get some

tokens to then dump them on the market um and am I getting closer to product Market fit all these kind of questions which are actually much more similar to web 2 questions than they're specific to wid3 um obviously as a caveat here there are many differences the main difference is that basically your community is everything as both your users investors stakeholders and and token holders so this obviously implies a lot of differences but still this presentation will focus mostly on the similarities with web 2 building than uh the differences so one of these differences is building a team uh in crypto it's it's uh you know you

have a bunch of pfps uh there and and many contributors and workers are full announce and and working fully remotely and stuff like this and contributing on like 50 projects uh at the same time and this is great um but at Alvin we think that there are some lessons to be derived from web 2 company building that can be applied to web3 and it's actually not either or uh it's just trying to take the best of both words uh to create companies that can scale better and that scale in a more sustainable way so some of the things that we see is uh you know people thinking that a team is is complete uh when they're just technical profiles and

maybe one Community manager or growth hacker uh and that's that might be the case in the very beginning when you're iterating towards Market fit but then very quickly you need to have other functions product management ux like how many times we've uh heard that ux is broken in web3 so that might be because we're not hiring actually people who know how to do products um Partnerships also and go to markets so obviously having a Discord Channel with people in it is is great but it's just one distribution Channel maybe you can think of other distribution channels uh Marketing sales partnership I don't know uh it's worth testing uh like album sales is is not a dirty word uh it can actually be useful and then another thing that is important

is regarding hiring uh so a lot of uh well three founders are only thinking about hiring Pure degens or pure crypto native people but the thing is if you think about it if you take like ethereum Ico as a beginning as like crypto people it's it's only been eight years so by Design if you hire crypto native people you hire people who are inexperienced or who don't have a lot of experience and so what can be interesting is thinking about people who have experience who have built companies who have scaled tech companies in centralized Tech web 2 models and upskilling them to web3 because actually then they can bring the best of both words with both experience that they gather from hyperscaling companies and also specific things to crypto to A3

community and decentralizations and on that topic so we at Alvin launch a program which is called operation three and the so the goal of this program was to basically fill a gap that we noticed in the market between on the one hand side um what three companies in our portfolio that were all in the same situation so they had cash or that was before the bird market but they had cash uh and the biggest problem that they had is they didn't they couldn't find people to hire who were both experienced and web3 fluent and on the other hand every week I had friends uh and friend of friends and other people telling me

I'm I want to leave I don't know Amazon stripe Kanto uh other companies and I want to work in web 3 but I don't really know how to upskill myself it's super opaque it's super difficult to get into this world and so on and so basically what what we are doing with operation three is just bringing those two people together so we selected 14 Partners including Glides of ledger so rare sandbox Syrian kaiko uh and and and 14 in total and on the other hand we selected 35 people for the first batch that actually graduated last week and these people went through a six-week training program in web 3 that was based on content mentors and men and and live

sessions uh kaiko was one of the participants and at the end of the sessions we're matching the candidates who want to work in web 3 with those companies and so basically we're creating a new cohort which is obviously not very big for 35 people please is is uh is not a lot um but it's just to to start and and those people will join the ranks of web 3 and will have both experience and tech companies and uh web3 fluency then the other important thing is like finding efficient go-to-market strategies and here again the question is not like Discord is not a good tool or you shouldn't spend time on Twitter or whatever it just how to get the best of

both words uh and so some go to market techniques that are used by web3 Founders are you know piling up Bots and airdrop hunters in in Discord and attending all crypto conferences around the year and having a terrible cardboard footprint as a result uh tweeting all day about you know the next um uh FTX acquisition or stuff like this and this is actually great this is Community First this is directed to the community and very very um crypto native but we think that it can be complemented with lessons to derive from web 2 go to market strategies which are Super basic actually like thinking from first person pools identifying your target audience uh and thinking about okay what's the

best way to reach this audience at the moment where they're the most likely to buy and this is very classical and in web 2 and some of the ways to do it is you know creating Partnerships creating quality content that people will actually relate to and that will disparate discussions and create links marketing yes that can be shocking like but but maybe Performance Marketing could be a good way to to grow in web 3 or at least it has to be tested outbound sales as well uh I know that I will make enemies with with that but uh but I still think it's a it's a good way to grow and then thinking about the thing that knowing your customer is not um the country of like privacy by Design

you can still preserve privacy but still gather information about your customer uh maybe not the same information but information that can be useful to your business um and so what we're doing at Alvin to sort of implement this is um creating synergetic uh relations between the portfolio companies that we had so if you take just four of them for instance like kaiko crypto angle and kill they all have similar prospects institutions getting into crypto and they all have a value proposition that is um actually similar and complementary so kaiko you all know that what they're what they're doing so um it's a it's a data market a market data provider for crypto crypto is actually a reporting

and accounting tools are also serving uh corporates and institutions willing to invest in crypto um and and Kiln is taking as a service so they're also uh they're also targeting basically the same customers which are institutions related to to crypto um and that's actually one of our biggest uh and Paul referred to it just a few minutes ago but there's a growing institutional and corporate adoption of of crypto and that's actually one of our biggest investment pieces uh and then the last thing and actually here I'll I'll uh repeat some of the things that Paul mentioned but surviving bad news or downturn or an accident or bear Market is also uh something where lessons can be derived from a two and apply two or three founders so the first

one ensuring you have a sound business model that that's obvious but basically you don't have a business if it doesn't make Revenue you have a project uh um and and and so then actually instead of you know designing super complex um economics that only work in a bull market uh then maybe just thinking about some very basic um business models from too like taking a take rate like openc is doing or having a subscription or having commission uh or pre-sale like basically a a utility token Ico is nothing more than pre-sale so you sell a product and you ship it after um and then doing a token buyback which is basically just the same

logic then share buyback in the in the web to word but this is like don't hesitate to refer to battle tested web to business models obviously adapt them to web3 because it's a bit different uh but still it's a good inspiration to have and then ensuring you have enough cash to survive obviously that's especially important in the in the bird market but be very very proactive and agile and the way you actually think about your costs your revenues your funding uh your funding can come from VCS it can come from Grants it can come from uh your users it can come from Partnerships it can come from various uh sources but this is super important and so actually hiring people in that have experience in finance for instance it

may sound completely odd for you know an early stage crypto project but actually if you don't survive the bear market then you're still better off hiring someone than not hiring someone um and to finish with the keeping the team spirit is especially important in the bear Market where you know uh it's not all green on blockfolio and and it's difficult to to keep motivated and uh and so a lot of playbooks around hiring management onboarding culture design have been implemented and great companies like you know Airbnb Google striper or or others and actually I think there's more similarities to be taken to where three than differences

obviously there are some differences but I think it's important to keep in mind those uh those similarities and then as a case study so the one thing that I wanted to to focus on here is exactly like Paul mentioned so basically VC rooted funds uh coming into into a three are statistically more like longer term uh thinkers than hedge fund guys who are going into web3 uh just because they're you know used to having timelines in years rather than in days or month uh and this can have a big impact on having someone who's actually committed uh to your success and so that's why to one of your questions I would still recommend

to have at least one or two investors who are very committed rather than like 27 funds who chipped in 200k dollars and don't really care and that's it for today [Applause] thank you very much we do have a little bit of time for questions and I just want to say something at the end of questions please don't leave the room we will not do a break after this one and we'll then have a fire set chat with Anthony from temasek and eludi from kaiko so just don't stand up and leave after the questions and that after that is lunch um so thanks a lot any questions uh it's more an open question we all

know very talented people from web 2. that I've been Post-Star syndrome in wepri and this is a great leverage because it can make great talents but it's also it might be difficult to manage for some web refunders do you have any tips on these or advices advice for the funders sure I think it depends on the stage of the company so if you're like an eight people team working towards product Market fit you might not have the time and bandwidth to like train people and like a company that has you know raised a ton of money and has a plenty of time to to do so um but I think one of the

most important things is just to bet on the learning ability of people and most of the times the most ambitious people coming from up to actually are great Learners um and so if you just put them in a context in a room with other people who are doing other stuff uh they will end up you know attracting this knowledge to them and and making them their own knowledge so I think betting on the ability to learn is maybe one of the biggest things actually one of the tough things to to do is web 2 talent in the context of 2021 and you know crazy fundings and and stock options just going up into the right and so on they have an opportunity cost to leave their company which was super high and so they

they were not willing to leave that to join something where they wouldn't be perceived as a rock star because they would still have things to learn whereas now that the equity Market went down and that some of the companies are probably overvalued and some of the stock options are probably worthless it might actually be great time to to hire those people all right thanks uh thanks for the session I appreciate you sharing uh Vasily from velvet Capital um so one of the things you mentioned is institutional adoption so that's something that we're looking at as well and the question is how do you actually build the sales process and um I think the side question to that how to make

sure your VCS and your investors can help you there like what do you look for should I look more at traditional VCS with like Connections in the in the traditional space like what's your take on that that's it so I think the first thing is just to uh to respect sales because sometimes it's not something that with three founders are respectful of they just think that if I build a great product they will just all come to me and that's it and that's usually not the way it works um and so just that's the very that's the starting point basically just be open to testing new go to market things that you haven't tested before um so that would be first and the second thing is I still think having a complimentary team within the team but also around you advisors experts investors is a great

way to actually learn from different uh from different backgrounds um and so yeah in general I would advise to to have both traditional web 2 VCS who like have been in the market for decades and who still understand the value chain of crypto and still understand what you're building and who are along with your vision and also other crypto investors who are there to bring something else liquidity network uh stuff like this I'll add on that that the uh you know up kind of up training people from web3 to Webster to from web 2 to web3 also goes for VCS I think it's interesting like initially like a few years ago you could find crypto funding with cryptographies

or VCS that were specifically looking at crypto even on the token side when people are raising with tokens uh just traditional VCS or web2 VCS didn't have any literally any vehicle in which they could hold token this has changed pretty significantly in the past few years and the process of kind of you know getting web 2 people into web 3 also applies for investors and I think there's a lot of value in that at kaiko we're a relatively traditional startup in some way we're fintech more than a crypto native startup and so we've hired a lot of people from the financial data industry and actually it's easier to up you know upskill them to web3 rather than get web3 guys and teach them about financial data and I kind of feel the same with investors like there's a lot

to be learned from traditional investors that focus on business model Financial kpis Building A Team Building Product Market fit et cetera and that are going to be super interested in kind of also upskilling on web3 so I would say it goes both ways and it's also interesting for when you're raising cool thank you so much thank you [Applause] we're gonna since we don't have a stage we have our our next uh chat here