[Music]
hello uh all right so this is going to
be a uh a quick one um uh so I I'll try
to go fast but hopefully keep it
comprehensible so yeah my name is Mike
Sadam founder and CE of ethery uh and my
lens on the uh the crypto space is that
I come from a web to uh back ground and
so one of the things that I want to talk
about is what are some of the lessons
that web 3 Founders can learn from uh
the web 2
Universe uh so just to give you a little
bit about uh my background uh I got into
crypto super early bought some Bitcoin
back in uh 2011 that's like the actual
confirmation email uh it was about a
dollar per Bitcoin at that time there
weren't even exchanges I had to just
PayPal some money to a random guy on an
internet Forum uh which was fun uh then
around the same time I started a company
called Top Hat uh which was a web 2 uh
company in B2B SAS so specifically we
were doing um uh education software for
universities so which is a very
challenging Market to be in uh spent
about 10 years uh growing that company
uh it ended up being pretty successful
we got it up to around 450 employees
with 65 million Revenue uh and then sold
it in
2021 uh it was a great great outcome uh
and so then I decided to do pretty much
the exact opposite as far as you can get
from education software which was my
first Passion crypto and started ethery
around
2022 uh and that's gone uh remarkably
well we've been humbled at at all our
success we the number four def5 protocol
uh by by tvl at least about 8 billion in
tvl given current eth price um um and
yeah run 30 million revenue and growing
super fast you know couldn't be more
excited about it uh one of the reasons I
would say that ethery has been
successful is because uh we've taken
sort of the discipline and mechanics of
operation of the business and brought it
to the uh uh the defi world and so what
I want to do is just talk about you know
what what are some of those lessons so
you know the curse of crypto is that
there's way too much money uh in the
space uh you know there's just a ton of
gambling money coming from the great uh
you know casinos in the sky uh and that
actually the effect that ends up having
is crowding out uh real product
development because it basically
eliminates the need in many cases for
getting product Market fit if you're
doing you know a web 2 more traditional
SAS type of business the the cycle of
that business looks roughly like this
you acquire a customer you get the
customer to give you dollars uh you then
keep that customer by you're providing a
good service then you reinvest that back
into R&D and then the customer is happy
and there's a nice positive feedback
loop uh in web 3 it looks a little bit
different uh usually you uh you know you
find a project that's really cool cool
maybe a nice Dex uh you launch a token
uh you vest your tokens you cash out and
then you're done uh it's a great
business model super easy to uh make
really you know shocking amounts of
money uh doing it that way but when the
main business model is basically
printing casino chips uh and then taking
a rake uh you know this is why we can't
have nice things so uh so what I'd like
to do is talk about like what are some
of the principles that you can use uh to
uh to construct uh projects that
actually have some
sustainability and the reason they're
important is because there's actually I
guess what I would say is almost a
science around this stuff uh um uh that
that goes into putting together these
businesses that are sustainable so that
you can answer this question you know is
your project a viable project does it
have some sustainability or is check
check or
Ponzi uh okay so here's some quick
definitions so we're going to run
through this really fast CAC is is cost
of customer acquisition or customer
acquisition cost arpu is average revenue
per user churn is basically how much you
retain uh you know one cohort of
customers to the next time period net
dollar retention is how many dollars
you're retaining from one time period to
another LTV is lifetime value so these
are kind of like the key I mean there's
probably dozens of other metrics but
these are the key ones that you need to
remember and the main question is are
you even measuring these because if
you're not even measuring measuring
these things uh you're you're probably
more in the or you're you're lending
yourself more to being in the Ponzi Camp
uh okay so what ises that what does this
look like well this is the the
fundamental kind of mechanic of customer
acquisition you spend a bunch of money
let's say you spend $5,000 to acquire a
customer and then every month you get a
little bit of money from that customer
maybe it's a DEX you spend some money to
acquire them Sal was a marketing BD
whatever and then the user trades and
that generates revenue for the project
over some period of time until the
customer turns at some point and so at
some point you know you go from negative
let's say you spend $5,000 to acquire
the customer and then the customer pays
pays themselves back over time you go to
you know cash flow positive and then
ideally if you at some point pay back
the cost of acquisition the project
actually makes sense so the the rough
Benchmark is that your LTV divided by
your CAC needs to be greater than three
why there's lots of reasons for that but
to be you know a top quartile kind of
company you want to make sure that your
lifetime value of your customer is worth
more than 3x the cost to acquire that
customer and you want to make sure that
the payback period is less than 12
months that matters because it has a
dramatic impact on the growth of your
business if your payback period is like
24 months you're basically never going
to get out of the trough you're
basically the business isn't going to
isn't going to work uh whereas otherwise
you you get a really nice growth craft
okay I'm over time um uh so the other
thing that matters is churn uh you want
to make sure that you're growing uh your
customer base the the cohort of
customers that you have is growing in
terms of their usage of the product
faster than the customers that you're
losing to the customers that are
churning out uh if you have high churn
you basically Plateau because the
cohorts all kind of compressed and go to
zero if uh you have a negative churn
then uh you know it grows really nicely
okay so the first step I would say is in
summary uh you got to measure these
things if you don't know these numbers
then you're you're going to have a bad
time uh and there's a real science to
this so I encourage you to go out there
and uh uh research about how this
science is put together so that you can
build more sustainable project that uh
have utility thank
you thank you Mike so we have time for a
few
questions it's a
bit can I over there behind you
thank you what's your most valuable
customer acquisition
channel uh I think for most projects uh
I mean it's it's X or Twitter um uh that
just you know that that tends to drive
uh most uh most customer acquisition uh
and then Word of Mouth uh you know
there's in in the SAS world uh there's a
parameter called the K Factor how many
customers does each customer refer so I
think in crypto it's pretty much uh
Twitter and and Word of Mouth
hey uh love the presentation thank you
for the pricing strategy 101 reminder
that was great as a double founder in
web 2 and web 3 what's your take on the
fact that the majority of the people in
crypto come from like successful company
successful business school we majority
all know this but collectively we are
not able to do the basics to deliver
insightful projects I'd love to hear
your take on that yeah I mean I guess I
just to uh so first of all I would say
the operating chops in crypto are pretty
low I mean the just being honest the
average founder that you meet in crypto
tends to uh not have very strong
operating chops huge amount of money
wasted um Without Really any
consideration for for Roi uh you know
companies just they're they're not run
super efficiently and so you see
projects that are even some of the
largest projects in crypto that should
be just absolutely printing money uh
that are instead just hemorrhaging money
incomprehensibly a complete lack of
financial literacy people that think you
know token emissions are revenue and
other Insanity um so uh so I don't know
I mean maybe maybe it's because it's
just so easy to make money by doing the
the Ponzi stuff versus doing the the
hard work um you know we're okay I can
talk more about that but I'll stop
there thank you very much um so please
sorry we would have more time for
questions um so thank you very much for
your time and for this