How the f*** do you Go-to-Market in Web3 Part 1: Tokens

Every company faces the challenge of "going to market" effectively: acquiring customers, building network effects, and convincing potential users to invest their time, money, and attention in the product or service. In the traditional web2 model, organizations relied heavily on sales and marketing teams to generate leads and drive customer acquisition and retention.

However, the rise of web3 has introduced a new model of organization-building that leverages decentralized technologies, empowers users through tokens, allows for more transparency, whilst also allowing for more control over digital identity, automating mundane organizational tasks, and delegating power in a democratic way. All of these changes and approaches are creating a shift. This shift requires a reconsideration of traditional go-to-market (GTM) strategies and calls for a new mindset, tactics, and metrics to be applied.

In this 3 part blog series, we explore the new landscape of GTM in web3 and provide frameworks for thinking about how to effectively market and grow new kinds of decentralized companies and how existing ones can adapt. From the unique organizational structures of decentralized autonomous organizations (DAOs) to the role of tokens in customer acquisition, we cover the key elements that set web3 apart from its web2 predecessor.

For founders, marketers, and builders looking to create a GTM strategy in the evolving web3 space, we offer tips and tactics to help you navigate the new landscape and find success. Join us as we delve into the world of go-to-market in web3 and discover the new opportunities and challenges that await.

Part 1: Tokens as the Driving Force Behind New Go-to-Market Strategies

The customer acquisition funnel is a fundamental aspect of go-to-market strategies and is widely recognized by businesses. It starts with generating awareness and leads at the top of the funnel and culminates in converting and retaining customers at the bottom. Web2 go-to-market strategies tackle the cold-start problem by focusing on customer acquisition through pricing, marketing, partnerships, sales channel mapping, and sales force optimization.

Web3, on the other hand, takes a different approach to starting new networks, with tokens providing an alternative solution to the cold-start problem. Instead of spending funds on traditional marketing to acquire customers, core developer teams can use tokens to attract early users, who can then be incentivized for their contributions when network effects are still developing. These early users not only become evangelists who bring more people into the network, but they are also more influential than traditional sales and business development personnel in web2. The results is not a funnel but instead a very powerful advocates cycle, like an affiliate cycle on rocket fuel.

An example of this is the lending protocol Compound, which used tokens to motivate early lenders and borrowers by providing extra rewards in the form of $COMP tokens through a liquidity mining program. All users of the protocol, whether they were borrowers or lenders, received $COMP tokens. The program was launched in 2020, and as a result, the total value locked in Compound rose from around $100 million to approximately $600 million. It's worth mentioning that while tokens can attract users, they are not enough to ensure long-term user engagement. We are all too aware of just how many people in the web3 game are not here for the tech or the project, but for a quick win. Traditional companies may incentivize employees through equity, but they rarely offer financial incentives to customers and developers in a long-term way, aside from discounts or referral bonuses.

In web2, the customer is typically the primary go-to-market (GTM) stakeholder and is acquired through sales and marketing efforts. However, in web3, an organization's GTM stakeholders encompass not just customers and users, but also developers, investors, and partners. As a result, many web3 companies consider community roles to be just as important, if not more so, than sales and marketing roles.

These organizations follow a decentralized model, usually starting with a core development team or operational staff, and leverage token economics to bring in new members, incentivize contributors/ developers, and align incentives among all participants. The key difference between web3 organizations in this quadrant and those utilizing traditional go-to-market strategies lies in their approach to the product. While web2 companies primarily focus on developing a product that will attract initial customers, web3 companies approach go-to-market with a dual focus on purpose and community, e.g. quite often the people developing the product ARE the initial customers.

These organizations must have a clear purpose that defines the problem they're trying to solve, and a strong community that is not just "community-led" or "community-first," but truly community-owned. Blurring the lines between owner, shareholder, developer, and user is crucial for long-term success in web3.