- The thesis is the North Star: Founders need to communicate their vision and mission with a strong story.
- Every leader’s style is different: There isn’t a one-size-fits-all approach to leadership. Companies need a combination of leadership styles at different stages, which is why having co-founders is important
- Be open to coaching: Great founders understand that they don’t know everything and can’t be everything for their companies. They need to be willing to take advice without being overly reactive, whilst also staying true to their vision.
- The additional challenge of being a Web3 founder: The industry lacks clear regulations and go-to business models. It’s both exciting and challenging, which is why Outlier Ventures’ Base Camp can be a huge advantage for first-time founders in Web3
When a founder witnesses or experiences a problem, it becomes their burning mission to solve it. As it begins to occupy their minds day and night, they need to share it with the people around them.
Eventually a few brave souls join the founder on their mission, and before they know it, the founder has created a startup, which can in some ways be analogous with a cult.
It may be an uncouth analogy, but there can be common traits between cult leaders and founders. Most notably, they both believe in a future that doesn’t exist yet, and that they will play an important role in creating that future through storytelling. However, in contrast to cult leaders, great startup founders are often driven first and foremost by purpose.
Web3 founders in particular may also be motivated by the foundational principles of the industry, like sovereignty, the fluid collectivism of DAOs, and digital property rights. They may not understand or subscribe to all those principles themselves, but they intuitively understand that Web3 is different from the current web paradigm, and there are problems specific to the ecosystem.
No matter what a founder is building, it can be an overwhelming experience with all the risk they take on and things they have to learn. And as a Web3 founder, it’s at an even greater order of magnitude.
At Outlier Ventures, we passionately believe in the power of founders to impact positive change on society. They actively participate in building the solution they want to see in the world, and they want to work with people who share this mission, too.
The Thesis Is the North Star
Most people join a company or become an early customer because they first connect with the company’s story. If they can make themselves part of the narrative, it builds an even stronger relationship.
Like any story, it won’t strike a chord with everyone—and it doesn’t need to. A founder’s story needs to resonate with three types of people:
- Employees: people who want to write part of the story themselves
- Investors: people who want to see the story come true
- Customers: the audience the story is meant for
Great stories illustrate a personal connection not only to the problem, but to the customer as well. It’s especially critical in the earliest stages of a company because there may not be a minimum viable product (MVP) yet.
Founders need to paint a tangible, exciting vision of the future that lights a fire under employees, investors and users alike. Furthermore, being a great storyteller isn’t only in written form: it also needs to be a great story the founders tell in interviews, pitch competitions and meetings.
As startups scale and iterate, the product will inevitably change directions to meet the needs of the target market properly. It’s rare that a startup is exactly the same at inception as it is at exit, but that evolution doesn’t have to replace the entire story. Rather, a strong mission acts as a constant north star that allows the founder and team to pivot because the product is based around the vision, not the solution itself.
Ryan Gill, a Base Camp alum, has a passion for designing human-centric protocols, which led to the founding of Crucible with Toby Tremayne. They had both witnessed a fair share of ‘bullshit and lack of integrity’ during the 2017 ICO boom, which only further solidified their thesis of not sacrificing people’s well-being for efficiency. It’s a mission and story that sparked our interest and convinced us to accept Ryan’s Open Meta into Base Camp—on their second application (more on this later).
In Base Camp, we help founders become comfortable communicating that vision, usually through repetition. We tweak the story here and there, and adjust it according to the potential audience.
Certain aspects of a story will speak to different audiences. For example an investor may want to hear more about the founder’s industry experience and the plan for the future. In contrast, a customer may be more interested in how the founder encountered and overcame the same problem they’re facing.
When it comes to potential employees, they need to be convinced that the story needs them. The story should have room for them to insert themselves and envision how they will contribute to the next chapter so they can become its heroes and part of a story that transcends them.
Every Leader’s Style Is Different
There isn’t a one-size-fits-all approach to leadership, which is why many startups have co-founders: because companies need a combination of leadership styles at different stages.
My role as founder (especially in the early years) is very different to my role as CEO.
As a founder in the early stages, I worked with a small team that was almost like a family, because we all had such an early, unconventional passion for crypto at a time when the community was much smaller. This bound us very closely together as a tribe; us versus the world.
Whilst we successfully grew and realised our vision, it meant we had to expand our family and turn into more of an elite team, which we built around individual and collective excellence and performance. We focused on the system as a whole and introduced more operational structure and intentional culture.
Taking a startup from 0 to 1 as a founder is very different from being a CEO, and scaling a company beyond 100 full-time staff is a totally different challenge. That’s why being open to coaching is an important trait for a founder, and ultimately hiring people smarter and better. Founders need team members who complement their weaknesses so they can focus on where they can be most impactful based on their unique skill set (Nathalie explains this further in the section Who Should Be on the Build Team).
Be Open to Coaching
No one—not even investors—expects a first-time, early stage founder to be great at navigating a market, building a product, scaling a business, hiring and managing people or structuring and fundraising. That’s why founders often seek support from advisors or board members.
However, founders can only get the most out of them if they’re open to coaching: they have to be open to advice without being overly reactive. Yet they still need to be confident in filtering for their truth.
At the beginning of my own founder journey, I had no interest in joining an accelerator or finding a coach. Whilst I successfully built several companies, the learning and building process was longer and more challenging than it needed to be, and I learnt through often expensive lessons. In hindsight, I’m certain that I could’ve fast-tracked my career if I just had the humility to accept coaching.
In contrast, Ryan is a shining example of that humility and openness. After being denied the first time, he realised he needed to make the product more specific. He continued to have a relationship with us at Outlier and joined us at the Berlin Diffusion conference to learn more about the problems Crucible could solve. He was clearly serious about taking feedback to heart in order to build a must-have solution for portable digital identities in gaming, and so we were thrilled when he applied a second time to Base Camp with this refined idea.
This is why ‘coachability’ is one of the most important filters for our Base Camp Accelerator program. It’s one of the most important indicators of success, and founders either have it because they have a fundamental sense of humility, or they have learnt the hard way that they can’t know everything.
Founders will face a number of unique challenges along their journeys. If our team can help them avoid simple mistakes from having worked with thousands of founders and build more efficiently, they can focus on the real and immediate problems at hand.
The Additional Challenge of Being a Web3 Founder
On top of all the obstacles that first-time founders face, being a Web3 startup comes with additional complexities.
Even now with every new startup we work with, we learn a new insight that can be applied to our portfolio. They have to figure out all the challenges of being a first-time founder, but they have to do it in a new paradigm; there is additional technical, regulatory, market and business model risk.
Whilst a Web2 marketplace startup can look to established goliaths like eBay or Amazon, a Web3 marketplace faces a number of different obstacles that no company has resolved yet. OpenSea, for example, revealed that more than 80% of NFTs created with the free minting tool were fraudulent or scams. Fraud and scams in digital marketplaces are not new, but the elements of decentralisation, content creation and lack of regulation present new challenges that no other platform has successfully addressed.
Founders have to explore new business models and engage with principles that might be new to them, like game theory and token design.
It also means that recruiting talent and raising from investors can be extra challenging as well. A run-of-the-mill B2B SaaS startup has their pick of talent and investors, but almost everyone is still new to Web3. As of December 2021, it is estimated that an average of 18,000 developers actively contribute to open source Web3 projects, and over 34,000 developers committed code related to crypto and Web3. To put that in perspective, there were over 73 million developers on GitHub in 2021—less than 0.01% of the entire developer talent pool worked on Web3 related code.
Not only is Web3 a technological movement but a cultural one as well. If they haven’t already experienced it themselves, founders also have to learn how to become Web3 native through things like building community momentum. And they also need to engage with an entirely new investor base, whether it’s their retail community of end-users or investors who are knowledgeable about the space.
It’s not just that a Web3 founder wants to build something new. They want to make something that doesn’t exist yet, and the tools to build it are still a work in progress. It’s equally exciting and daunting as a new frontier.
The Cult of You
Great founders—especially Web3 founders—have an insatiable itch to solve a problem. However, they need to translate that passion into a great story that convinces investors, customers and talent alike to support the company’s mission.
With the right people, founders can take their companies to the moon and beyond.
Further Reading
Jim Collins’ Good to Great: https://www.jimcollins.com/article_topics/articles/good-to-great.html#articletop
Developer Report by Electric Capital: https://raw.githubusercontent.com/electric-capital/developer-reports/master/dev_report_2021.pdf
