As I was scrolling through Twitter I came across a tweet from Brian Flynn from Rabbit Hole asking if anyone had done any research on what an effective airdrop looks like.
While looking through the comments I came across this comment that I resonated with and thought to write a quick little write up on:
Boom. The truth expressed in such an elegant from.
Most crypto startups don’t know their unit economics which means when they’re going out to spend their equity to acquire customers they have no idea what the return of investment is going to be on each of these users. Now the reason why they don’t know it is because…
Most crypto token startups do not have product market fit and obscure the truth with incentives.
It’s a broken model when examining it from first principles. The logic flow should follow something like this:
Make something people want
Understand how much money you will make from a single customer
Know how much it costs to acquire one of these users
Ensure that your earnings exceed your costs or know by when you will recover your costs
Spend money on acquisition with a crystalised understanding of your return on improvement
It’s not rocket science.
Startups should print these 5 steps and stick them on their walls :))