How blockchain startups can succeed

Blockchain is exciting. It’s a technology that can bring huge positive changes to the world we live in! 

Every day, we see blockchain startups emerging - it’s a hot topic. A lot of entrepreneurs have great blockchain ideas and with them, they want to launch their own blockchain startups.

While we see some of them succeed, there’s a big number of blockchain startups that become idle or that simply fail. In 2017, 90% of the 26,000 blockchain projects that launched the previous year became idle.

So, why is it that we see so many blockchain startups launching but just a few of them succeeding? 

While there are many reasons, like the lack of VC support or the reduced number of people that know about blockchain technology, here’s what happens: blockchain startups don’t pay attention to the business side of their projects.

Blockchain is great but launching a startup is not just about having great technology behind it, it’s about using that technology to solve a problem.

It’s not about the technology, it’s about product/market fit

The truth is, it was never about blockchain. It doesn’t matter what technology you’re working on, if you’re developing a unique algorithm, or if you developed an AI that can accurately predict the future. None of that matters if nobody is willing to buy or use your product.

This is why it’s important to validate your idea from the beginning.

A very popular way to do this is by using Lean Startup methods. Lean Startup methods are used by startups because they let you innovate faster, by using fewer resources. The idea is to develop, prototype, learn, validate, and improve business solutions as efficiently as possible.

Idea validation starts with empathy.

Why empathy? Because idea validation doesn’t mean that you’re sure your technology will work, but that it works for the people who will use it - and that it solves an important problem for them.

It’s super important to have a phase of problem validation before even starting to work on any solution.

Validating your idea completely means that you have to look for a real, poorly-met need that can be found in a reachable market and, once you’ve found it, making sure that you’ll have customers that’ll accept your solution and pay for it.

This is the so-called product/market fit: finding a good market with a product that can satisfy its needs.

An approach we love and we recommend to dive deeper into your customer needs is the Jobs-to-be-Done framework. People buy products and services to get a job done, so this framework will help you understand which job your customers want your product to fulfill.

According to this framework, customers are trying to get three different jobs done:

  • Core functional job. This is what the customer is trying to get done. This is why the market for your solution exists and the goal should be to provide a better (and cheaper, if possible) solution than the competition. 
  • Emotional jobs. This is how the customer wants to feel or be perceived when fulfilling the core functional job. 
  • Related jobs. These are additional jobs that the customer wants to get done before, during, or after executing the core functional job. By understanding these, a startup can devise solutions that help their customers get multiple jobs done.

The idea behind this stage is to really, truly understand what customers want. It starts by completely understanding their problem and knowing what job they’re hiring your product or service to do.

Competition also matters

When thinking about validating your idea, you also need to think about your competitors or potential competitors.

When breaking into a new market, you need to understand what others are doing and, essentially, where you stand next to them. Also important, you’ll further validate your problem. If your competitors aren’t at least trying to solve the problem you’re trying to solve, is there a market for your idea?

Especially in hot industries like blockchain, it’s very important to do competitor research after you’ve validated your problem. Many startup founders think they’re bringing innovative solutions to the industry and that, because of that, they don’t have any competition.

That’s not true.

Every startup has competition and, especially in the blockchain area, the competition might be not using blockchain to solve a problem, but they’re already solving it. Blockchain startups then need to ask themselves: why is blockchain a better way of solving this problem? 

Finding that sweet spot in the market where people will want to buy your product might be difficult, but you’ll also be surprised about the number of needs that are currently unmet. Sometimes you don’t need to come up with a super disruptive solution that will change the world as we know it. 

This brings us to the next point.

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Don’t reinvent the wheel

Finding a problem that’s worth solving is essential. But, afterward, you’ll need to know how you’ll solve it.

This is where a lot of blockchain startups get stuck.

You don’t want to be selling what others are already selling. Competitive intelligence can save you a lot of time in this sense, as we explained before. After doing some research, you’ll know what others are doing and how.

Learning from others will save you a lot of time! Blockchain startups need to adopt the best practices to innovate better.

Many blockchain entrepreneurs get into business thinking that they have to be disruptive and invent something that has never been seen before. In developing new features, new technologies, and trying to fix problems with very complex solutions, they might be wasting valuable resources.

Instead, blockchain startups need to realize that they don’t have to disrupt to be successful. There’s a better, more effective way to launch a business.

Focusing on solving a new problem is the first step. Then, after knowing what your competitors are doing, you can learn from their tactics and adapt their good practices to your own business. Remember, it’s not about copying their practices, it’s about adapting them to work for a blockchain startup.

A big part of having a successful business is accepting that others have launched successful businesses before and using that to your advantage.

A lot of businesses (your competitors included) already have great practices. Why not accept that you can learn from them instead of trying to reinvent the wheel?

When you accept that you can learn, adapt, and adopt good practices from other businesses, you can leave more time for innovation. You can focus on solving a new problem and pay attention to the business side of your blockchain startup.

This is something we want to solve with iSearch.ai. This tool can help you find your competitors and avoid reinventing the wheel by learning the best practices from your competitors.

By using tools like iSearch, you can better understand the problem you’re trying to solve. And, if you consider the jobs to be done approach, you can also build iteratively to extend the features of your product with related jobs to be done, as we mentioned before.

Pay attention to patents

Many competitive intelligence tools don’t include patents in their analysis. We think that if you’re not paying attention to patents, you’re missing a big part of what your competitors are doing.

Patents are important and can be enforced on a decentralized autonomous tech (like blockchain). They are important because they not only protect your ideas but your market. Every time that a big company patents an idea, they’re essentially blocking others from the market on that particular idea. 

Last year we did a study on blockchain patents and we discovered that only big companies like Alibaba, MasterCard, and IBM are filing for blockchain patents.

This is interesting because it means that these companies are already protecting their markets. Not so long ago, we learned about the MasterCard CEO crowing about their blockchain patents in a call with analysts. If you read the study, you’ll learn that only the big companies are paying attention to patents. And it’s not just “some” patents being filed. More blockchain-related patents were published in the first half of 2020 than in all of 2019, a year that had already seen three times more blockchain patents published than in 2018.

So, even if there are a lot of startups working with blockchain technology, they’re not protecting their intellectual property. If they’re not smart enough to conduct a patent search, they’ll launch an idea that already exists and that’s already protected.

What does it mean for blockchain startups?

Blockchain is one of the coolest, most innovative technologies created in the last years. But, as cool as it is, if a startup wants to use it they must be sure they’re serving their customers. Furthermore, you need to be able to answer why blockchain is the perfect technology to solve this problem.

Blockchain startups need to understand what job their product is doing for their customers. Not only in a practical way, but in an emotional way too.

If you want to succeed as a blockchain startup, start with a problem to be solved. This problem needs to be real and it needs to have real customers that want a solution for it. 

Also, you need to know where your idea stands against the competition. You don’t want to work on an idea that has been better executed or that already exists as you conceive it.

Blockchain is great, we’ll never stop saying it. But, if blockchain startups don’t find a real solution to a real problem first, they won’t be able to succeed. And, if blockchain startups fail, we’ll be missing a lot of amazing blockchain innovations that have the potential to make this world a better place.

Use iSearch.ai to save time, reduce frustration, and validate your idea - free to try!

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