Discover more from Femstreet
A Guide On Web3 Go-To-Market Tactics And Strategies
GTM and distribution strategies in Web3: The opportunity
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 we're creating here.
It's just a new form of capitalism - a little more egalitarian and a little more socialist - that allows everyone to participate in these huge wealth creations 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:
Define a clear purpose to attract and;
Build an engaged community of early contributors who see and use the utility(ies) in ‘the right way’ (more on that later)
Match contributors with the right organizational structure and overall tokenomics that allows them to benefit from the value creation power of the network - turning them into evangelists
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.’’
What does this mean for these new Web3 creator platforms?
The focus of the new Web3 creator platforms and solutions should be on:
1. Finding your evangelists → community
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.”
2. Engaging with them, constantly
This means designing the organizational structure and distribution mechanism in a way that:
incentivizes these early users not only to contribute, but also to contribute for the ‘right’ reasons - meaning you want users to use the utility (tokens) in the right way (i.e., with the intended purpose) versus speculating on them, in order to create a sustainable ecosystem. 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 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 you have to design your tokenomics to foster community. If you don't have community, then things fall apart quickly."
keeps them engaged and wanting to contribute more in the long term by distributing tokens to the most active contributors so that they keep a really engaged and thriving community
rewards these early users proportionally for their contribution. Remember you need to reward your early users for taking a risk and believing in the project so early on
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 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 network's utility.
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 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 looks like developer platform building:
Consumers are the contributors / collaborators / devs and communities become the testing ground for new projects, incentivising for high quality and consistent community contributions.”
The opportunity to unlock the next 100 million users in Web3
“Now that we have seen the basics on how GTM strategies are evolving in Web3, our focus is on 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, 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 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 the mainstream consumer.
Jarrod Dicker, Partner at TCG, comments, "What this means is that you need to understand the distribution mechanisms and how to reach this new (non-technical) consumer. It is not anymore 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 appealing and welcoming enough for this next generation of consumers to come in.”
The ABCs to launching or scaling a Web3 company
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.
1. Education & Communication
Educating non-crypto native consumers and creators on the technological merits compared to existing Web2 solutions. Think about:
Why is this better vs. Web2 equivalent?
Why should you care?
How will they benefit?
Communicating the message incl. the purpose and utility in a “digestible” way. Key is here to understand:
What is the message I want to convey?
Who am I attracting with my messaging?
Why are they receptive?
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.
2. Understand your community & define an “authentic” GTM
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 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:
What should my tokenomics look like?
Does issuance of a token provide merely a “loyalty” tool / benefit versus being a native part of the platform?
How do I encourage early users to interact with the product / community and provide valuable contributions?
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.
3. Create an intuitive experience for mainstream, non-crypto users
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.
4. Reassess your approach as your community grows and matures
Track and analyse contribution and engagement.
How are the tokens used? What is true usage versus speculation?
How to track these things, and what are adequate metrics (and target values)?
Have I attracted the community I designed my GTM strategy for? And if not, why?
5. Don’t discount the market
Too often, there is generally a big discount on the market and industry itself. Founders typically double down on the crypto side even before understanding 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.
How big is the market?
How are people currently engaging within the market?
What are people’s interests? What problems do they have, which are not satisfied by the solutions currently out there?
Only after doing the above, align all that with what you are building.
The first mile of the new Web3 consumer applications
“By giving people the 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 starts to unlock for the masses.