Innovation creates opportunity. For entrepreneurs, it can be the spark that empowers you to get started — the fuel you need to challenge industry titans.
It should be no surprise, then, that the most radical innovation of our time — blockchain — has inspired scores of entrepreneurs around the world to start their own companies. My team at Bee Token capitalized on opportunities allowed by Ethereum to build a decentralized home sharing network. Now, we are on our way to compete with Airbnb.
But despite the vast numbers of people now starting blockchain-powered businesses, there remain misconceptions around what the process is actually like — what is unique about it, what sorts of mindsets are required.
It’s important to understand because misguided expectations can doom your company before it even gets started. If you’re considering building a new business on the blockchain, here’s what you need to know.
1. The health of the cryptomarket is going to impact your fundraising efforts.
More so than any other market, the health of the cryptomarket determines how easy or difficult it’s going to be raising funds for your company or project. When the market is hot, investors clamor. But when it’s cold, they hesitate.
When we were raising our first round of funding at Bee Token, we had to entice investors with bonus compensation. We had a great product, a working prototype, and a talented team, but the market was down. A month later, when the market was hot, the process was much easier — and we didn’t need extra compensation to entice anyone.
As you’re embarking on your first rounds of funding, this is important to keep in mind. The volatility of the market should play a part in shaping your fundraising strategy.
2. Starting a business on the blockchain is similar to starting businesses powered by other technologies — just faster.
Some entrepreneurs assume that starting a business powered by the blockchain is fundamentally different than starting a business powered by some other innovative technology, like the cloud.
But the truth is, it’s not. The only real difference is the speed at which things move.
The same fundamentals apply: you still need to focus your efforts on building a valuable product, assembling a talented team, and designing attractive content. You just need to do it all at a faster clip, as the world around you is spinning and moving at a much faster rate.
What this means is you can’t afford to cut corners.
Your passion needs to be genuine, and the problem you’re attempting to solve needs to be real.
The underlying “why” motivating you to embark on your entrepreneurial journey still needs to be captivating and true. If your aim is to capitalize on market-hype or short-term speculation, you won’t last long.
3. You’ll need to make sure your founding team collaborates well and has technical prowess.
One aspect of the entrepreneurial process that you’ll need to pay more serious attention to is the synchronicity of the founding team. If one of you is more attuned to the customer-facing side of the business, the other has to possess technical skill.
In addition, every member of your founding team will need to wear a number of hats. You’ll need to collaborate across specialties, and you’ll need to be able to do it quickly.
It’s important that you understand this going into the experience because if you’re not prepared to wear a variety of hats, your company will move slower than it should. No one on your founding team will only ever do one job. You’re all responsible for steering the ship.
4. It’s critical to utilize advisors and community insiders as resources.
Because the blockchain community is so spirited and dynamic, advisors and industry insiders can prove to be invaluable resources. Going to even one monthly blockchain meetup can result in dozens of connections and potentially important relationships.
At Bee Token, the advisors we partnered with in the beginning proved immensely helpful. Their experience building businesses powered by the blockchain helped hone our strategy.
Their expertise also varied — some were more technical, and others possessed insight unique to marketing or PR. In the blockchain space, that sort of hard-earned wisdom is hard to come by because so many of the players are new.
Having advisors who know what they’re doing is priceless.
But this is not too different from building startups off the blockchain: the process is still demanding and difficult, and the need for advisors you can trust is still paramount. No one on your team will be wearing just one hat, and the ability to operate quickly is still a requirement.
That said, the blockchain is a uniquely exciting innovation. If you calibrate your expectations the right way, your company might just become part of actualizing a new and better decentralized economy.