STEP 2: Continued
A good way to gauge whether your crypto project is likely to gain traction, is by checking out your envisioned competition.
You can check your competition online with a simple search on Coinmarketcap, Google or social media platforms with access to crypto communities such as Telegram, Reddit and Twitter. You will be astounded by the amount of similar ideas that are out there! But remember; just because others are offering similar products does not mean that your business model is a bad idea — in fact; that right there is a validation that there is a market for your idea.
How can you improve on the existing offerings? Is there a unique feature that will go down particularly well with potential users? Consider what makes your product special and build around that.
If you’re focusing on a niche market and only have a few competitors, scoping out 1 or 2 of them might be enough. But, if you’re focusing on a more mature market, like decentralized finance or smart contract platforms like Ethereum, for example, you should aim to search for at least 3 to 5. Ultimately, this decision comes down to you — but at this stage, learning as much as you can and questioning everything will provide you with invaluable insight further down the line.
Many of the most successful crypto projects are disrupting existing markets — look at Ripple, Bitcoin or even Dfinity. These companies have all established a presence with massive competition from existing players like Swift, FIAT money and Amazon Web Services. Looking at what your competitors are doing is sometimes the best way to reinvent your own products.
Tools To Validate Your Market
Let’s take a look at a couple of tools you might use to validate the market for your project idea.
Google trends: enables the comparison of relative search volumes for different terms, showing you how the demand has changed for each term over the last 12 months. Here you can gauge interest in search terms like crypto wallet, blockchain platform, decentralized finance, etc.
Coinmarketcap: allows you to see all current crypto projects that are currently in the market along with the most important economic metrics such as market capitalization, coin supply and performance over time.
Messari: similar to Coinmarketcap but with more advanced insights, metrics, and filters for in-depth research.
Inwara: intelligence platform that analyzes millions of data points on Initial Coin Offerings, Security Token Offerings, Blockchain startups, Initial Exchange Offerings and more.
STEP 3: Validating The Product
There’s only one way to make sure your product will solve the problem you’re focusing on and that’s to get your hands dirty and build a minimum viable product.
Building a Minimum Viable Product (MVP)
Ask yourself what minimum functionality your product needs for the potential user to be willing to use it. Don’t seek to build the perfect product before you launch, or you might end up investing a lot of money into something that doesn’t truly solve the intended problem.
Find and contact the users that you believe are willing to use and/or build on top of your product or platform.
Once you’ve built the MVP, you should begin to run tests with users to gather feedback and learn as much from them as possible. For this, you can use your current community should you have one, or leverage established online communities of crypto enthusiasts and developers. We also recommend that you continue to attend meetups, hackathons and crypto conferences where you can showcase your MVP. Consider offering an incentive to encourage people to test it out.
Before you build the ‘real’ product, you want to be extremely confident that your MVP is solving the right problem.
Ask For Feedback
Use the online and offline events mentioned above to connect with potential users and ask for their feedback. Hackathons, for example, are great to get people excited about your product and gain massive exposure and recognition from the dev community and high-quality users. Many crypto projects were built this way, the most popular crypto game, Cryptokitties, is a great example of this.
One of the most important goals in this phase is to uncover killer features for your initial user base.
Make sure you fully listen to and take on board the feedback you gain, as this could be a key turning point for your project. Nothing is more valuable than user feedback to help develop your business model or improve the product – treat this like a testing process.
You will soon understand if your product idea works or not, without having to invest huge amounts of money in doing so. By talking with potential users you can implement necessary changes according to their feedback, and revisit in the future by launching a new test, repeating this process until you determine a successful business model.
Determine Customer Acquisition Cost (CAC)
In many cases, the customer acquisition cost is the key to a new product idea.
“Whoever can spend the most to acquire a customer, wins.”
— Dan Kennedy
This, albeit sad, is increasingly true. If you can afford to spend more than your competitors to acquire a new user… guess what. You’ll gain their users! In a competitive marketplace (and providing you are spending the money wisely), that’s how you win at business.
You can no longer say that if you build a great product the users will come by themselves. If you aren’t willing to invest in marketing, your project could end up like the famous crypto phrase: REKT. In other words, your project could end up in an altcoin graveyard.
If you want to win in Crypto, mastering the art of acquiring users and developers has become an invaluable asset that will facilitate the long term success of your project.
Depending on your idea and your target users, we often find that Social Media networks and other online marketing are the best way to examine CAC. The benefit is that you can craft a very targeted campaign and start with a very low budget.
Remember this: no matter how much money you raise from token sales and venture capitalists – if your blockchain-based project doesn’t have a well-developed business model – it is very likely to join the club of those that ran out of money and were never to be seen again.
AmaZix has helped to Validate and launch over 140 projects. If you’d like to discuss your vision with us, get in touch at firstname.lastname@example.org.