As technology is evolving and buzzwords like the metaverse and Web3 startups start becoming reality so is the need for new entrepreneurs and creators within the Web3 space. If you want to become a Web3 entrepreneur you’re going to need some advice on your way. This article is dedicated to inspiring you with different tips on what Web3 really is, and how to plan and build successful Web3 startups.
Web2 and Web3: what’s the difference?
You may have heard the term Web3 already. Web3 is a new understanding of the internet, where users become more empowered and data can be owned and verified. Web3 also differs in technology and aims for a semantically richer web of information. Here is a table to better understand the most important differences between Web2 and Web3.
|Definition||The second generation of the internet focuses on social interactions||The third generation of the internet focuses on decentralization and semantic learning|
|Focus||Social interaction and data generation||User empowerment, verification, decentralization|
|Types of applications||Web apps||Decentralized apps (dApps)|
|State of data||The network owns the data||Entities own the data|
|Features||Improved interactions Web applications||Mix of web technology and knowledge representationdApps|
Web3 is associated with semantic markup and web services. Semantic markup helps in describing an element, in addition to defining its appearance. This helps in finding other matching elements based on similar attributes. The use of semantics is geared towards easier searching than in Web2. Now you can type a keyword into Google search and it will expertly suggest related words.
Web2 is managed by a small group of technology giants like Amazon Web Services (AWS). Their data centers run the websites and applications we use every day: Facebook, Twitter, Airbnb, Uber, Reddit, Netflix, and so on. Web3 is decentralized thanks to the applied blockchain architecture. Each company can be a network of interested parties. Each of them participates in the process under certain conditions. Web3 reaches individuals by understanding their needs and preferences to deliver tailored experiences and support the content creator economy.
Web3 is a mix of 2D and 3D worlds. It uses immersive realities to create an enhanced user experience. In addition, Web3 can be accessed from a variety of devices, not just phones and computers. Web3 goes further and is expected to be the executable phase of the web with AI and ML that enables machine-to-machine interactions to find resources according to user needs. Web3 relies on decentralized applications (dApps) and web deployment 3.0, built on blockchain platforms such as Ethereum so that no single entity is in control.
Web3 is 100% open source. This allows for transparency, accountability, and more responsible development. Any user can view the code of a dApp to check for misuse and anomalies.
The 3 most important technical implications of Web3
The development of artificial intelligence got boosted by methods like natural language processing and neural links. This enables more efficient and complex communication between humans and machines. It supports the user experience within the web and makes interaction with higher engagement possible.
Edge computing drives decentralization and gives back power to the users, while at the same time being more efficient and less prone to downtime. A shift towards edges can support both, autonomy and computing power. In addition, it also serves as an opportunity for passive income.
Distributed ledger technology and blockchain
The features of DLT are increased trust and transparency within the web, as they serve as publicly distributed data storage. As data stored on a blockchain is immutable, it can be used as proof if something went wrong at any point in time. It also supports data integrity, as the technology is transaction-based and must not sell your personal data to gain profits.
Mentioned features can support entirely new and innovative business models with applied blockchain. The technology used comes with complex features that shape the business models in a very specific way. One has to understand that the underlying architecture of Web3 businesses is very different from the fundamentals of a Web2 company. Features like participation, decentralization, and ownership can not be supported by Web2 as they can with Web3. In case you want to learn more specifics about Web3, we would suggest a further read on Web3 here.
Translating the features of Web3 to actual business ideas might not be an easy task, as entrepreneurs have to understand the Web3 space first in order to grasp the opportunities evolving. In this chapter of our guide, we will introduce the real-world implications of Web3 technology and what it could mean for specific parts of our global economy. Read more here.
Retaining rights of content
Let us take any author in Web2, whether it is a tweet or an online book. It is now possible to trade your assets on a decentralized internet without intermediaries (who usually dictate their own rules and charge fees for transactions). This means authors retain the rights to their content. On the Web2 internet, you can create something of your own, i.e. publications on Twitter, but everything that a user does on the site belongs to the platform itself.
Economy without middlemen
Decentralized finance, or DeFi, allows you to change and invest in currencies, borrow and lend, and secure loans. Bankers are no longer needed to make transactions, so costs are lower, and there is no bias.
“Decentralized finance, or DeFi, is the cryptocurrency Wall Street,”
Gilles DC, marketing and sales specialist
Any company can be a network of interested parties and each participates in the process based on certain conditions:
- If an employee did the work, they receive a salary
- If a client receives a service, the company receives payment
- If a borrower meets the bank’s requirements, they receive a loan
- If an investor sponsors a company, they receive the benefits of it
All these conditions can be written into smart contracts via the blockchain, excluding intermediary managers. And by organizing a decentralized autonomous organization (DAO), you can also distribute management rights among the participants in the form of native tokens. Their number will determine which decisions a person can affect and which they cannot.
Empowering the creator economy
Web3 expands the capacity for global mass collaboration and contributes to more direct democracy. This creates a favorable environment for the content creator economy looking to sell and share their works without fear of having them stolen or forged. For example, DEIP provides a special creator economy protocol that enables the discovery, evaluation, licensing and exchange of tokenized intangible assets. Moreover, it provides creators with secure and quick transactions within the growing creator economy size.
We discussed 4 features that connect the idea of Web 3 to the real world. It shows one encompassing trend: the support of decentralization, democracy, and empowerment of the creators. An understanding of those underlying concepts is important to see the value created by the Web3 vision.
Now that we know more about Web3, its features, and possibilities, we need to deep-dive into how we can actually start off with a Web3 startup. We are narrowing down the path towards actually launching. Here are four tips on what to keep in mind from the very beginning:
Decide on technology
One of the most important things to consider when starting a Web3 startup is deciding which aspects of the technology you want to focus on. This includes deciding whether you want to build infrastructure or focus on actual use cases. Additionally, it’s essential to think about how your company will position itself in a multi-chain world and the creator economy market map.
Fortunately, you don’t need to reinvent the wheel when it comes to building your Web3 business. You can take advantage of open-source code that has already been built by others in the blockchain community. Blockchain technology is very transparent, and all the code is open-source, so entrepreneurs can consider reusing parts already built before them. Taking advantage of the existing codebase is a smart move for any budding Web3 entrepreneur.
When starting a Web3 startup, entrepreneurs need to be mindful of their limits but also understand where they excel and be aware of creator economy trends. Recognizing your strengths and weaknesses will help you achieve success in any aspect of life, not least the business world.
Finally, entrepreneurs should know their way around applied blockchain technology to best develop their product with all the benefits that it offers. If you don’t have expertise in these areas, look at hiring people who do!
If not already considered you might ask yourself if you want to go through this alone or if a co-founder would support you and your goals in the long run, Web3 is all about collaboration and democratic value creation, so why not find someone to share the business and co-found with. The next section delivers important tips on how to find your Web3 co-founder best.
Finding good people can be quite challenging. The Web3 space is currently at a fast-growing pace. This also means that Web3 talents and people that are within the space for years are very rare to find. Here are three tips that help you find the right co-founder:
Start with people you know. Friends, people you went to school with, colleagues, and former colleagues. Friends of friends, ideally those already active in the creator economy companies and Web3 communities. Trust is essential, so if you can start searching in places where trust is already established then it makes the search for a co-founder easier.
However, if you don’t know someone that well, then don’t pick the first potential co-founder based on a tenuous link. “Well, he/she went to the same school, we’re friends on Facebook, connected on LinkedIn, and they worked at X with my friend Y”, isn’t the sort of reasoning you want to found a company on. Given how important this choice is, you need other reasons to work with someone as a co-founder.
Expand your search. Play an active role in Web3 communities across numerous channels. Start telling people about your idea, and what you are working on. Building in public is the best way to find Web3 co-founders, partners, investors, and even customers.
Web3 startups need the support of a community. Make sure to engage early on with communities on Twitter, Telegram, Discord, and start your marketing on Medium, even LinkedIn, and other channels. This could be crucial in the search for a Web3 co-founder.
Accelerators & networking groups
Beyond web-based communities, there’s a good chance you could meet a potential Web3 co-founder through accelerators, blockchain consulting companies, and business networking groups, for example, on LinkedIn.
Now that you are all set, we can actually think about the first tasks to start building the Web3 startup from scratch. The approach to building a Web3 startup is completely different from Web2. You will experience this not just for technology but also for community building, marketing, funding, and more.
How to build a successful Web3 startup?
In this section we discuss things to consider when launching a Web3 startup:
Building a community
Web3 puts users in control. Hence the decentralized applied blockchain model. This means you need to grow a community around the solution, even when a product is B2B. Starting with community building means investing in marketing early on.
Thought leadership, content marketing, social networks
Investing in marketing means being committed to long-term marketing-based growth. That’s the only way founders can establish credibility, grow the startup’s brand, and achieve product-market fit. It’s user-focused research, in real-time, in an open environment.
Web3 startups can’t do stealth mode. Instead, they need to be engaging with potential users/customers through content marketing, AMA’s, thought leadership, videos, PR, and across dozens of social channels, such as Twitter, Telegram, Discord, and others.
Rely on trusted partners
Remember, with this space expanding, there are now numerous media brands and FinTech companies getting into the same niche. You need to select the right partners and blockchain backer to support your growth. Helping you raise investment, grow a community, and build your creator economy companies and brands.
Web3 startups rely on a thriving community that is well informed and highly engaged. Your community is your backer, not just financially but also by supporting your vision, vibe, and culture. It is necessary to understand that community building and care is one of the most important steps for your Web3 startup to become a success. This also comes with the need for transparency and communication about your solution, the thought processes, and the progress along the way.
How to scale a Web3 startup?
One of the biggest challenges of Web3 startups is scaling the organization, not just from a business but also from a technical perspective. DLT and blockchain-based solutions are not yet the technology that is very mature. This means they can come with a lot of downsides as well. Web3 startup entrepreneurs have to make sure to choose the right blockchain infrastructure for their purpose and business model. The following 5 tips will give you an idea of what to consider when scaling a Web3 startup.
Prioritize customer retention
Depending on your skills, customer service, and product uniqueness, you may find it easy to acquire customers soon after launching your Web3 startup.
However, they may lose interest or outgrow your services down the line, especially after you start scaling. This is common when you have many new clients to balance alongside your previous and current ones.
Client retention minimizes the acquisition costs incurred when you seek to expand your customer base. It also increases customer loyalty, helping to keep ongoing revenue predictable.
As you prepare to scale your Web3 startup, don’t forget to maintain your brand name and reputation by retaining your customers, listening to feedback, and handling their requests in the shortest possible time.
Hire the necessary manpower
Some tech startups hold the myth that you must be slow to hire a workforce but quick to fire as your business scales. This may sound like a sensible idea on paper but in reality, it’s a risky game. You might need manpower more when scaling, especially if you had a small team while launching your Web3 startup.
They know the ins and outs of your venture and lived the changes of your brand during the growth period. Instead of hiring to fire, invest in nurturing your team’s talents in order to help maximize their output.
Startup scaling may also push you to hire more specialized help to expand into different areas and further increase your revenue.
Automate, outsource, and streamline your activities
Starting a new venture can be confusing, therefore it’s not uncommon to pick up a lot of unnecessary baggage early on. This can leave you with costs you don’t need during the scaling process.
You may also have started with minimal resources, forcing you to perform most activities manually. This causes overload and inefficiency, especially when you have a small team or working alone.
Automating activities during your Web3 scale-up improves business operations while minimizing disruptions. Invest in effective tools to facilitate communication, streamlining, and smooth growth for your startup.
DEIP offers a Web3 constructor so that you can make Web3 applications without any knowledge of the intricacies of applied blockchain. The constructor is like WordPress for Web3, offering no-code Web3 construction, in addition to low-code Web3 construction for more advanced users.
Increase your funding
As with other tech business ventures, Web3 startups require substantial money to launch and grow. While scaling may not need as much money as you needed while starting, you’ll still need to raise capital to keep your Web3 startup competitive.
Funding your growth is necessary to support product diversification, acquire new software, expand existing software, and market your business. You can acquire scaling funds from loans, contributions from friends and family, investors, and your savings.
Before taking this step, you should research the market and understand the expected returns for your capital in order to avoid losses that may interfere with your scaling process.
Consult with Web3 experts
DEIP is well placed to assist you in scaling your startup, with a depth of expertise that can help you uncover previously unseen changes and opportunities within the tech industry. By consulting with DEIP and using Casimir — DEIP Web3 constructor, you can focus on your company’s day-to-day operations and check on progress at your convenience. The constructor will help you focus on the benefits for the user to scale your Web3 startup and bring blockchain business ideas to life, without having to hire specialists to create complex inner workings on the back end.
We have discussed many important points for the success of your Web3 startup. It will allow you to look at your business model from different angles and improve the bottom line. Web3 technology can either improve your model in some way or even serve as a completely new blueprint for your new business.
In either case, you need to know the underlying vision of the Web3 community and how to engage the community in your development process. If you’ve decided that Web3 technology could be a solution, you’ll find lots of guidance on how to gather ideas, empower your staff, build a thriving community, hire the right people, and set up the necessary governance structures.
DEIP can help you with all the essential steps in terms of tools, infrastructure, consulting, and partnerships. It is a very exciting time to be developing Web3 solutions, to be part of the immense growth in the creative industries, and to be driving a global shift in consciousness towards democratic value creation.