10 tips from Sequoia partners to crypto founders in a bear market

22-05-17 18:49

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Original author: Michelle Bailhe

Original compilation: czgsws, 0x9F, Rhythm BlockBeats

This article is based on the opinions of Michelle Bailhe, a partner of Sequoia Capital, on her personal social media platform, which is organized and translated by BlockBeats as follows:

If you are at a loss looking at the market that is falling across the board, here are some experiences and ideas from Sequoia's 50 years, which are also applicable in the encrypted market.

First of all, we have to embrace the reality that the current encryption market is facing an unprecedented situation.Although the cryptocurrency has experienced several rounds of bear markets, but It has never experienced a global macro-financial storm. Bitcoin was born during the last global financial crisis in 2008. Cryptocurrencies have been living in an environment where U.S. interest rates are around 0%.

Over the past 14 years, encryption technology has grown tremendously. The level of sophistication or diversity of market participants (individuals and institutions) today is unmatched just a few years ago. Never before have we had so much attention from users, developers, and regulators.

So the fact is: we are facing unprecedented circumstances. This bear market will be similar to the past, but many important aspects have changed.

Maybe you are a founder and the project token has dropped 80% in the past year. Or you haven’t had time to clear your position yet, and there are still several Tokens of different track projects in your wallet. Or maybe you want to know what might be going on with your customer base. There is no point in being excessively pessimistic and complaining, but neither is self-deception. In a bear market, what should we do?

1: Don't panic, but plan. This is the moment of diamonds, not just for your personal portfolio, but for your company, agreement or team. This month you need to be thoughtful and act decisively. Stick to it, and be careful at the same time.

2: Recognize that the financing environment has changed. VC funding is no longer something you can get at your fingertips. Accordingly, you need to control project expenses.

3:Talk to those who have really crossed the bull and the bear, their experience is a valuable experience. Most VCs in the crypto space have not experienced this environment. Ignore the rambunctious rhetoric of investors who have become neurotic because of their losses.

4:Ask tough and painful questions. First of all, do our products really meet the needs of the market? Many founders are product makers, so asking this question is especially painful. Incentives and rewards of all kinds can mask product-market fit issues.

5:The second question is, do we have a sustainable business? "Token inflation" is not a business model, the native token used to secure the network is another. However, if you only considered raising money through VC and Token before, then you should consider this question.

This does not mean that your products should start charging, especially those projects that have network effects or occupy high-quality tracks, you should look at yourself track and made a plan. Crypto or Web3 can better adjust the incentive mechanism to reward users and creators, but by no means can deny the existence of objective laws.

6:Invest wisely. Almost always 10-20% of sales and marketing (S&M) and general and administrative (G&A) spend can be cut. This will make your team more efficient. Most crypto teams are lean, but there can still be redundancies, focus your precious energy on the most important things.

7: Focus on core research and development. This is one of the most important lessons Sequoia has learned from 2008, cut back on other areas but double down on product to distance yourself from your competition. When you survive a bear market, you become the strongest one.

8. Hire a good CFO. The CFO (Chief Financial Officer) is probably the most underappreciated role in the crypto space. To be honest, I don't know why. A good CFO doesn't sit by and tell you not to spend money, but helps you invest wisely. Find a good CFO ASAP.

9. Make a sustainable development route. You need to find a sustainable business model that does not require capital injection from VC or retail investors to invest in your Token. It can take 2+ years to get through a bear market, and if you can only stay afloat for 12 months, you need to cut expenses.

10. Seize the opportunity. Only in a turbulent era will there be a chance to appear, and the strong will always be strong. When the weak around them crumble, the strong poach their best talent, win their users, and their IP and licenses.

This is an opportunity to expand your advantage and solidify your position as a market leader, but you need to survive to seize this opportunity.