Over the last year I became heavily invested in a lot of projects from the crypto space. It was a way for me to have an incentive in understanding exactly how crypto works. I observed that crypto and entrepreneurship have a lot of similarities. These are the business lessons I have learnt from the crypto space.
Crypto has gained a lot of attention lately, mainly because of the exponential returns it has delivered for early investors. I have invested in multiple crypto projects and observed some projects go from nothing to valuations of over R500 million in just a few weeks. I have also observed a lot of these projects fail spectacularly with investors losing a lot of money.
Some of these have just been straight up scams. However what intrigued me the most as an entrepreneur was how these projects could go from nothing to a market cap of R10 million in one day. Even projects that had very little utility and looked like obvious scams were able to secure over R1 million on the first day of going public.
This is very intriguing because you rarely ever see that in the entrepreneurial space. Having your business reach a valuation of just R1 million is something that a lot of entrepreneurs don’t achieve in South Africa despite years of working on their business. These crypto guys must obviously know something we don’t, it was really puzzling for me at first until I learned exactly how they do it and how these tactics can be applied to small and medium businesses.
1. Be very intentional about your objectives
Generally, before a crypto project goes public there is something called a roadmap and a whitepaper that gets released. The roadmap contains all the major goals and milestones of the project while the whitepaper explains what the project is about and how it works.
From the roadmap I saw that these projects had goals of having 10 000 holders in the first phase of going public. 10 000 holders are basically 10 000 long term investors of the project, these people are not expected to sell anytime soon.
The first question I asked myself is where do you get 10 000 people who believe in your project enough to invest within the first week. How do you even find such people? Some of the goals commonly listed in a roadmap include an article about the project being featured in a popular magazine like Forbes or Yahoo finance and also have the project get displayed on a big billboard in an area that gets a lot of foot traffic like the Times Square in New York. Goals also include getting very influential people to endorse the project and also get the project to trend.
For most entrepreneurs, this is what success looks like, imagine having Forbes write an article about your business, famous celebrities endorsing your business, waking up to find your business trending on social media and having over 10 000 customers.
These crypto guys apparently have a plan of achieving all that in just one week, this is something that would take a lot of entrepreneurs years to achieve. Guess what? Most often, all these objectives are fulfilled.
These guys achieve all these objectives in such a short space of time because instead of waiting, they simply pay for them. Something that is very strange to most entrepreneurs, as entrepreneurs we believe in organic growth and recognition which often takes years. In the crypto world, you buy growth.
Instead of years of hard work and hoping that at some point some journalist from Forbes magazine will discover them naturally and give them the recognition they deserve. These guys just read through the articles at Forbes, find one of the journalists/writers there then contact them on Twitter. So simple yet so effective, the writer gets paid in exchange for writing an article about the crypto project.
The same goes for celebrity endorsements, billboards, interviews, they just pay for it. This doesn’t seem to be morally correct but we can’t deny how effective it is. All the above is how they are able to pull in 10 000 holders in just one week.
If you could use this strategy and potentially have 10 000 customers, even in one month, would you do it?
2. Give people an incentive to use your product
There are a lot of giveaways in the crypto space, which reminds me of the book “The 48 laws of power”. One of the laws talks about focusing on people’s self-interest, when people have something to gain, they will undoubtedly be more invested in your product, cause or project.
Again, this is something we rarely do in the business space. Most entrepreneurs rely on the product speaking for itself. The general idea is that if you create something awesome then people will support you.
What I noticed when I joined a lot of these Telegram groups from the crypto space was how almost every member was passionate about the project and how everyone wanted the project to succeed. This is mainly because they have something to gain when the project becomes successful.
This is a very powerful tactic, because if people have an incentive to use your product then they will use it more often. There is not much incentive for you to read this article except that it might provide you with some useful information. However, If I said I would give you R100 each time you read one of my articles, you would write to me and ask me when I am posting the next article.
There are so many giveaways in the crypto space, from shill contests to staking and holding rewards. This makes you want to see the project being successful, which naturally leads you to market it from your side as well to people you know.
This tactic is also used by a certain DJ who is also a forex trader in South Africa. He gets a lot of engagement on his posts because people are incentivized to engage with them, he promises the first person to comment on his post an ewallet.
Generally, in the business world this incentive is discounts, sales, coupons and referral programs. However, nothing is as powerful as cash for an incentive. If you can figure out a way to incentivize people to use your products while maintaining profitability, you are almost guaranteed success.
A lot of these projects are established within a very short space of time. For example, Floki Inu, was established within just 3 days after Elon Musk revealed that the name of his Shiba Inu dog is Floki.
Rushing to create a project within 3 days means that it’s going to come with a lot of imperfections. However, that’s perfectly acceptable in the crypto space, the general view is that things will be improved as the project makes more money.
At first a very basic, usually ugly version of the website is launched just detailing what the project is about. It gets improved after the project has raised some money. This is something that I am a big believer in. I believe that you should start exactly where you are with exactly what you have and you will improve as you get more experience and money
However, this is something a lot of aspiring entrepreneurs don’t do. Most people believe that they should have the perfect product before launching their business. Which is what leads most ideas to never see the light. Aspiring entrepreneurs get so stuck on perfecting a product that requires a lot of skill, resources and experience. When this doesn’t happen they become frustrated and give up.
Know your target market
As it stands, crypto is not mainstream, only a handful of people have ever bought any crypto. Some less than 3% of the people on Earth have invested in altcoins. I asked myself how these projects were able to pull in such high numbers even though the average person has no clue about crypto.
Turns out, they don’t waste their time trying to convince people who don’t know about crypto to invest in their project. They simply target the same 3% of people repeatedly, all marketing efforts are geared towards people who are already interested in crypto.
Something that most entrepreneurs don’t do, most often we target everyone, that’s why a lot of marketing campaigns have a conversion rate 3% or less. When you know exactly who you are targeting; you are able to set up your campaign to have maximum effect.
Sustainability is vital
A lot of these crypto projects fail spectacularly, most often the ones that fail don’t have a lot of underlying utility. When people start believing that your business doesn’t have a future, they are likely to pull out.
At some point the hype dies down and investors ask themselves “what exactly have I invested in”. It is at this point that most projects fail, when holders realize that they invested in something that they don’t even believe will succeed, they start selling. This usually happens when people are still in profits, they secure the profits they have made then pull out. This is mainly because people perceive the project to be dead.
This happens a lot in altcoins or “shit coins” as commonly referred to. The only way most of these crypto projects stay afloat is because holders believe there is still a lot of money to be made by simply holding and supporting the project.
Similarly when seeking investors in the business world, you have to give them a reason to invest in your project and stick around for the long term. Investors should believe that their capital is safe with you, one way to do that is showing a clear path of sustainability and profitability.
Bargaining is an important skill
I am a person who always pays the asking price, I rarely negotiate for a discount. Being part of Earth 2, a metaverse project: has taught me that everyone is open to negotiation. By just negotiating, you can be able to pay 30% below the asking price, which gives you an instant profit.
You can be able to sell the same thing at its fair value and get a profit. This is a tactic commonly practised by property flippers. They buy a property for less than it’s worth, fix it up and sell it for a higher price. I personally don’t like bargaining because it makes me feel like I’m robbing people of what they deserve.
However, there are some cases when bargaining makes sense.
I could write an entire book about the business lessons I learned from playing with crypto. I cut this post short because I don’t want it to be too long. Generally, these lessons can be applied in marketing and financing your business.
The only downside to this is that you need capital to create the initial product and hype that will get investors to finance you or people to buy your product.
Do you have any thoughts or questions? Comment below.