a16z: How do crypto startups "recommend themselves"?

Author: Pyrs Carvolth, Maggie Hsu, both partners at a16z crypto

Compiled by: Luffy, Foresight News

For founders, clearly communicating the company's vision is crucial, which includes articulating the company's stance, future direction, and differentiation from competitors. Early-stage companies, especially those that have not yet launched a usable product, may feel that it is too early to articulate the company's mission. However, a well-considered core message can unite the team, help founders establish credibility and clear goals, and more effectively bring products to market.

There are many resources available on building a brand and crafting a mission statement that reflects the team's values. However, integrating these elements can be quite challenging. Therefore, in this article, we will focus on how to adjust and differentiate the mission statement from the value proposition, as well as how to refine the elevator pitch—used for partnerships, sales enablement, fundraising, and more. We will also share the essential materials founders need before bringing their products to market.

A Brief Overview of Ideal Customer Profiles and How to Use Them in the Crypto Space

In this article, we will use the concept of Ideal Customer Profiles (ICP). This is a well-known business development tool used to define potential customers who are most likely to purchase the products you are selling, based on dimensions such as behavior, environment, and demographics.

Why is this important? Ideal customer profiles help you understand your target audience, i.e., who you are "selling" to, and adjust your messaging accordingly based on the feedback received. For example, a technical audience may require more technical details, while business professionals may need less detail but focus more on the benefits and outcomes of the product.

It sounds good, but in the crypto space, especially for pre-seed companies, defining ideal customer profiles can be tricky, as it requires considering business outcomes and goals immediately while the product is still evolving. It is difficult to define ideal customer profiles when the product is not yet refined. Therefore, we encourage companies to think about their desired end users, partners, and customers, and then craft messaging for their go-to-market materials that can easily adapt to different customers, dialogues, and contexts.

In short, it is all about explaining clearly and concisely to anyone why you are developing your product.

At the same time, it is important to note that regardless of the audience, one piece of messaging should remain consistent: the mission statement.

It All Starts with the Mission Statement

There has been much discussion on how to write a good mission statement. However, the core of a mission statement is the "why," which succinctly describes the reason for the company's existence, its goals, and values, as well as what makes it unique. This is crucial for positioning in various aspects such as pitch decks, website copy, follow-up emails, and sales conversations.

Importantly, a mission statement related to go-to-market strategy is not about "how" or even "what." It does not need to delve into the specifics of the company's operations or detail the concrete plans for achieving its goals. Instead, the mission statement outlines the company's objectives and helps define its position in the industry. The mission statement also serves the following purposes:

1. Establish a Core Purpose for the Company and Unite the Team

An effective mission statement provides much-needed direction in situations where innovation and rapid growth may divert important goals, helping founders focus on those idealistic long-term goals set at the company's inception.

This core purpose is especially important when the market is hot and the team needs to expand. They can integrate the mission statement into the interview, onboarding, and performance evaluation processes, as well as in strategic planning, product roadmap prioritization, and marketing activities.

For example, Coinbase's mission has long been "to promote economic freedom."

Over the years, Coinbase has gradually launched centralized exchanges, wallets, NFT marketplaces, layer-two networks, etc. If the focus were to be placed on any single project, the overarching principle of this mission statement might be overlooked in the communication process. However, it is broad enough to allow the team to concentrate on this principle and then incorporate it into decisions about cultural values and product investments, even though the Base project seems to extend beyond its core centralized exchange business.

On the other hand, many startups wish to focus on refining specific products or continuously pay attention to certain technologies or ecosystems. For example, Blackbird's mission is "to be a loyalty company that rewards people who love restaurants."

With this mission statement, target audiences such as partners, customers, or investors can perceive that as the product evolves, Blackbird will prioritize and meet the experiential needs of diners and restaurant operators, building loyalty and trust within a specific customer group.

2. Differentiate the Company from Competitors

The crypto industry is still in its early stages but is rapidly evolving in areas such as scaling solutions and staking. Coupled with the open-source nature of the crypto industry, many products offered by different vendors may appear very similar on the surface.

Companies in these hot sectors need to dig deeper into their differentiation advantages in both product and narrative. First, ensure that these differentiation advantages are integrated into the mission statement. Even if a startup is still exploring its differentiation advantages, identifying the impact of these advantages early on may be as important as providing a feature comparison chart with competitors.

Consider these as early branding opportunities. Focus on what makes you unique as a founder, what makes the team you are building unique, what makes the company you are creating unique, and what makes your product vision unique. Even companies offering very similar products may have vastly different styles, and partners and customers will ultimately consider these factors when comparing competitors. Why not help them draw these conclusions and enable them to share these insights internally in your words and advocate for your product?

For example, Towns has quickly established a different mindset for social networking, one that no longer emphasizes large global groups but instead leans towards creating intimate, curated, and more localized gathering spaces.

3. Refocus When Market Dynamics Change

Mission statements are not set in stone. Consumer attitudes change, products pivot, and companies launch new initiatives. Founders will inevitably encounter situations where the company's development exceeds the scope of the mission statement.

While it is important for the team to adapt to changes and communicate the company's direction to the market, the mission statement should maintain enough flexibility to accommodate necessary strategic shifts while still reflecting a unique vision.

Mission statements that embody what keeps founders awake at night and the problems they are solving for users can stand out in a noisy market and withstand the test of time. This is preferable to overly focusing on transient market fads, as the latter will ultimately confuse internal teams as well.

In Summary

When planning the messaging roadmap, start by drafting the mission statement and then build more specific value propositions on that foundation (which we will discuss below). Every company is different, but here are some general guidelines:

What to Do:

• Focus on long-term vision
• Differentiate from competitors
• Approach from a macro perspective, focusing on core principles and benefits rather than products or features
• Seek input from co-founders or employees from different functions
• Practice messaging as an early branding exercise by considering the following questions: What changes will my company bring? What do we value as a company, and why?

What to Avoid:

• Getting bogged down in the minutiae of product and feature specifications
• Communicating different mission statements to different audiences
• Writing a "generic" statement that applies to any company in your industry

Similarly, every company has different needs and should assess its approach. But once the mission statement is established, you can start developing the value proposition.

Best Practices for Value Propositions

At some point, startups need to shift their focus from describing the core mission to helping customers understand why they should care about the company's products. If the mission statement articulates the "why," then the value proposition articulates the "what" and "how," based on the mission, using concise, customer-centric language to outline the main benefits of the product or service.

Value propositions are crucial when pitching your product and will appear in your marketing and sales materials, serving the following purposes:

1. Provide Context Using Meaningful, Tailored Language

Crypto products often require defining new terminology during promotion; it is essential to articulate new terms using language and concepts that customers are already familiar with.

Using common industry terms is necessary, with the goal always being to avoid alienating the target audience. For instance, an audience familiar with the crypto space will recognize acronyms like DAO (Decentralized Autonomous Organization). If the value proposition spells it out or explains its meaning in detail, they may find it tedious. Conversely, if the value proposition does not explain the overall concept, a broader audience that still needs introductory guidance may lose interest.

Determining which terms are appropriate and which are not can be quite challenging. Many founders think, "My audience is smart; they will understand." But the reality is that people have different ways of using and understanding jargon. If you are unsure which terms are viable, do not make subjective assumptions. You can always survey your audience or simply take some time to explain and reach a consensus.

For example, Alchemy states that their Node API allows customers to "connect to top-tier L1 or L2, with RPC infrastructure handling over 30 billion requests weekly and uptime at 99.9%." Here, there is no need to explain what L1 or L2 is, nor to fully spell out RPC. Their customers, likely developers and engineers in the crypto space, probably use these terms frequently and do not require further explanation. Moreover, while these value propositions involve some details, they still align with the company's mission statement (a complete Web3 developer platform).

2. Get Straight to the Point, Focusing on How the Product Makes Customers' Lives Easier

When writing value propositions for potential customers and partners, be sure to describe the actual effects of the collaboration, not just the technical specifications. For example…

• Alchemy: Launch reliable enterprise-grade scaling solutions and immediately reach millions of developers
• Base: A secure, low-cost, developer-friendly Ethereum layer-two network
• Solana: Leverage Solana's high throughput, low fees, and minimal environmental impact to meet your business's specific needs

All these value propositions position the product from the perspective of enhancing user efficiency, i.e., how they help customers achieve their goals faster or better than before.

For products seeking entirely new audiences, describing how to do better can be more challenging when something has never truly been done before. In such cases, founders may want to compare the product's benefits with adjacent existing areas or even abstract some technologies to make them easier for the audience to understand.

For consumers, Blackbird removed specific crypto terminology and firmly positioned itself in the restaurant loyalty space. For instance, they described their points as "universal reward currency," which people can spend at participating restaurants. For diners who have not been exposed to the crypto space, this is much clearer than terms like "token with transfer restrictions." Importantly, it captures the needs of food enthusiasts who love dining out, leveraging their existing behaviors rather than asking them to adopt new ones.

3. Help Founders Be More Efficient

Especially in the early stages of the product lifecycle, having a clear list of value propositions can help founders quickly understand the dialogue with customers, investors, suppliers, potential talent, and other stakeholders. Additionally, the team can adjust this list for use in sales enablement and marketing, including company websites, social media, GitHub repositories, sales presentations, and more.

Good value propositions will adhere to the core principles outlined above. They can clarify products and services, enhance customer understanding of the company and its developed products, and make early conversations more efficient.

Here are some suggestions for writing value propositions:

What to Do:

• Choose language that customers use to resonate with them
• Gather feedback on the value proposition from customers, employees, and other stakeholders, but ensure the messaging is relevant to your product
• Reuse the value proposition in sales enablement and marketing materials
• Connect benefits to the mission statement, which also helps internal product teams, designers, sales teams, etc.

What to Avoid:

• Writing overly broad or lengthy value propositions
• Overusing jargon, especially with audiences that do not understand it
• Trying to cover multiple different audiences with a single value proposition

Once the value proposition is established, you can consider combining it with the mission statement to form an elevator pitch.

Refining the Elevator Pitch

You may have heard of the "elevator pitch," which is the kind of speech you can use to pitch your product or company during a brief elevator ride. The elevator pitch succinctly articulates the company's "what," "why," and "how." Most founders have practiced this extensively when pitching to investors and can even recite it, but it is still worth delving into because this speech is very important. It will also be prevalent in your go-to-market materials.

First, the sooner you start thinking about the elevator pitch, the better. Founders must continually assess their ability to bring products to market and clearly articulate the company's core points. Their pitch should not only establish the brand for the company but also for the founders, showcasing who they are, what they are developing, and why they are the right people to develop that product.

The elevator pitch can also save time. Founders can complete their pitch in under a minute, and if done well, they can gauge whether they are talking to the right person. This is helpful for building partnerships, sales, and fundraising, and it also aids in obtaining useful feedback immediately. For example, founders can quickly assess whether their pitch is effective and decide if they need to adjust their messaging.

Like the mission statement and value proposition, the elevator pitch also reflects the company's values and culture and will evolve over time. Therefore, it is a good practice to regularly review and update it to ensure alignment among co-founders, employees, and external company supporters.

Finally, here are some suggestions for refining the elevator pitch:

What to Do:

• Practice your pitch at events and conferences both within and outside the crypto space
• Gather feedback from both advocates and critics in the crypto space, as the latter are harder to persuade
• Conduct A/B testing to refine your expression based on different objectives

What to Avoid:

• Undermining your pitch at the last minute due to lack of preparation
• Using the exact same pitch for different audiences: adjust the pitch based on whom you are speaking to, such as technical decision-makers or business decision-makers

Integrating the Above: Four Essential Elements of Messaging

All this information should be integrated into several different documents. Here are some essential materials that every team should have before launching their go-to-market activities:

• Standard Introductory Paragraph: This introductory paragraph can borrow heavily from the elevator pitch, and founders should be prepared to present it both orally and in writing, including it on the company's "About Us" page and in introductory emails.
• One-Page Overview: A one-page overview of the company, including some potential use cases. Incorporate information from the elevator pitch, mission statement, and value proposition, as well as any relevant data or proof points, such as customer growth, uptime, or key partnerships. The team can send this one-page overview as pre-reading material before meetings and can also send it in follow-up emails if stakeholders request more information.
• Business Presentation: This is slightly different from an investment or pitch presentation and may actually consist of two to three presentations tailored to different ideal customer profiles. Each version of the presentation should appropriately adjust the messaging based on the situation and include a slide discussing next steps. Note: We typically recommend that founders present this presentation with stakeholders rather than sending it in advance, as the conversation will guide the best order of slides and the key points for each slide.
• Company Website: Early-stage companies sometimes use a GitHub repository instead of a website for marketing. The website should combine the company's information with key assets, such as developer documentation and case studies, which can be very helpful in various conversations. While these information points and case studies can be shared temporarily, consolidating everything helps facilitate better partnerships and customer dialogues.

When various ideas are flowing and founders remain focused on iterating the product, determining the direction of messaging can be challenging. Nevertheless, it is important to start thinking about messaging as soon as possible. Founders who do so will have more valuable materials for dialogues with investors, customers, and potential partners. Companies with effective messaging will also have a key advantage in this noisy industry: they can provide actionable statements about work culture and values, from product roadmaps to hiring. Do not skip this step.