Surviving the Dip
How to keep your business afloat during an economic downturn
The global economy is in a fragile place right now and people everywhere are feeling the squeeze. How directly this global economic uncertainty is impacting cryptocurrencies is hard to say for sure, but there’s no denying it’s having its effect.
Whether we’ve already borne the worst or if it’s still to come is the billion-dollar question, but in any case, there are steps businesses can take to make the most of a bad time. As builders in crypto, we have an obligation to ourselves, to our teams, to the people who’ve believed in us, and to the people whose lives we set out to improve, to keep forging ahead through adversity.
In this article, we share some actionable steps to help you stay on the right path and capitalize on this unique, albeit scary, moment in the market.
We’re in some tough times, there’s no doubting that. You may be looking to the past for clues on how crypto got where it is right now, but we’ve never experienced anything quite like this before. We’ve never had such a variety of market participants, never had such an astonishing market value, and never had so much interest from users, developers, banks, corporations, investors and regulators.
On the flip side, we’ve never seen so much value wiped off the market like that of Terra’s UST, never seen $40-billion ecosystems evaporate overnight, and never been through the global macro storm we’re experiencing today.
In this cycle, accept that things are different — as they always are. Be smart about what you think you can assume and what you can recognize as different.
If you’ve already launched your solution, you may be watching in horror as your token’s price freefalls. If you’re fundraising, you may be looking around to find no VCs extending a hand.
Bear markets are actually one of the best times to build a start-up. There is a lot more space in the market, and the crunch drives fresh innovation and change. This is the time to cut out what’s extraneous
- Focus on core Research & Development
- Double down on your product development and look for new opportunities.
If you manage this, when the sun returns, you’ll be streets ahead of your competitors and may even look around to find that many of them either gave up or ran out of fuel.
Ask yourself the hard questions
Do we have a product-market fit? Do we have a sustainable business model? When your VC funds and your tokens run dry, will you still be here? In bull markets, these questions don’t need answers. In bear markets, they get answered whether you ask them or not.
To determine whether you have product-market fit, Dan Olsen offers one high-level method in his book, The Lean Product Playbook:
1. Determine your target customer
2. Identify underserved needs of that customer
3. Define your value proposition
4. Specify your minimum viable product (MVP) feature set
5. Develop your MVP
6. Test your MVP with customers
Poor market fit can be hidden behind grant or VC funding, or the userbase you’ve accumulated during incentivized usership stages. Ask yourself, when this runs dry, is your business model still sustainable? This is a great time to be brutally honest because if the answer’s no, you hopefully still have time to adapt accordingly.
Chart your business a path towards sustainability: a business that covers its expenses and can generate revenue. This may mean introducing fees or simply being smarter with the capital you already have. This also may involve hiring a CFO, which can be one of the best investments an early-stage startup can make.
You should Under-promise and overdeliver
This may be a moment in which the only VCs who’ll commit to giving you money will ask for more than you want to give them. Be patient. VCs are currently coming to terms with the fact that they’re in a new era of crypto, one in which they can’t just throw money into every idea that comes past their desk. If you’re confident you have a strong product with a product-market fit, VCs will be lining up around the corner to get a piece of the pie. Don’t compromise your project’s long-term sustainability with VC-favoured tokenomics.
Another angle to this is being realistic with investors and stakeholders. If you know you need a year to push out a great MVP, tell them that — telling investors it’ll be ready next month just to appease them or secure funding hurts everybody. If you think it might be ready in a month, but it’s possible it’ll take three, say it’ll take three. If it gets pushed out in a month everyone’s happy and it reflects well on your ability to organize and collaborate.
Under-promising and overdelivering also apply to your community. Here taking a note out of the Cardano playbook might be something to investigate. Rather than organizing their roadmap into months or quarters, Cardano opted for ‘eras’ — buckets of deliverables considered complete once everything inside is finished. These eras can be separate from date-based internal roadmaps, giving you more flexibility in your developmental timelines and affording you leniency from your community and investors.
Ask for advice: Adaverse has you covered
This isn’t the first market downturn, and it won’t be the last. 2008, 2012, 2017 and 2020 were all times of extreme fear — and there were of course periods in between which markets were shaky, to say the least.
Founders have survived and thrived through bear markets, and their advice can be invaluable. At Adaverse, we specialize in connecting start-ups with the advice they need to grow and succeed: advice that is more useful than ever when things start getting tough.
Another great support during uncertain times is a network of peers. You can join the Adaverse Founders Group to be among a community of CEOs and Startup founders across the globe.
If you’re interested in connecting with experienced mentors who can help you not just survive, but thrive, get in touch with us today.