Creating a lasting Growth strategy for Web3

This is the second piece in a series of three articles where we are unpacking current Web2 growth models and how they can be applied by Web3 companies.

  1. Growth models for Web3
  2. Creating a lasting Growth strategy for Web3
  3. Building your Web3 Growth team

As we discussed in a previous article Growth models for Web3, the VC funding in the Crypto and Web3 space is accelerating at a record pace and investors will be demanding not just growth, but exponential growth.

In his famous essay, Paul Graham makes the following statement:

A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.

As relevant as it was back in 2012, on the cusp of the Web2 revolution, this statement has the same weight today for Web3 founders and builders.

So what are valuable growth frameworks that will help you put in place the fundamental principles of a long-lasting growth strategy?

The Four Fits Model

In his article “The Four Growth Frameworks You Need to Build a $100M Product”, Brian Balfour explains growth dynamics and four essential fits that help shape the business strategy for different types of companies.

Market Product Fit, Product Channel Fit, Channel Model Fit, Model Market Fit.
Market Product Fit, Product Channel Fit, Channel Model Fit, Model Market Fit.

This model serves as a tool to define the most important questions and hypotheses you have to answer when thinking from first principles about your growth strategy.

  • Market-Product Fit: What problem are you solving? Whom does it solve for? And what are potential solutions?
  • Product-Channel Fit: What are one or two distribution and acquisition channels that your product fits?
  • Channel-Model Fit: Do these channels fit your business model?
  • Model-Market Fit: How big and profitable is the market for your business model?

In the context of Web3, I would add one more “fit” to this framework that is becoming a pillar for some of the most successful companies in the space — Community Market Fit.

  • Community-Market Fit: Who are the top 1% of the community contributors on your market?

Web2 = Market → Product → Channel → Model

Web3 = Community → Market → Product → Channel → Model

It is still early to understand the whole picture of how communities will play a foundational role in the long-term impact of Web3 companies' growth trajectories. But we know from the Web2 experience that these can be a critical driver of sustainable and scalable growth via organic growth loops or ‘flywheels’.

Making the “Five Fits” model work for Web3 organizations

Jack Butcher | @visualizevalue
Jack Butcher | @visualizevalue

Community → Market

For this exercise, let’s use JUMP, a fast-growing DAO for marketing professionals and brand marketers who already work in a Web3 company or are starting to learn about the space.

They currently have thousands of marketers in their Discord, a community that has organically grown to a point where they have started to uncover users’ personas and a potential addressable market for a still to be defined product.

Here is an interesting take on this; the ambiguity in this growth process was done by design. The Community needed to come before the Market, as it is the community of the underlying structure that has enabled them to organically define and narrow down their potential target market.


JUMP’s Mission
We imagine a world where the best creatives, strategists, project managers, brand managers, technologists, analysts, media planners, content creators, PR managers, and many more within the marketing and advertising industry have shared value creation through the $JUMP token.

Community-Market Fit will be what set apart successful Web3 companies from the rest.

There are four elements we can use to define JUMP’s Community-Market Fit are:

  • Category: Community for marketing and advertising professionals.
  • Who: Agency professionals and brand marketers.
  • Problems: 1. It’s really hard to find one place to find just marketing-related Web3 updates and news 2. Hard to connect with people already working in the industry 3. It’s overwhelming and confusing to get started in Web3 for marketing and brand professionals.
  • Motivations: 1. Looking to transition from a Web2 marketing role to Web3 2. Keep up with the latest Web3 marketing, brand, and product updates 3. Network with other Web3 marketers

Web3 companies, especially decentralized organizations, have the unique opportunity to align and shape their company ethos and culture based on the 1% of early-adopter to build the foundation of their growth engine. A win-win relationship between the organization and its community or market.

Market → Product

A big top-of-funnel doesn’t mean you have product-market fit and people love your online community. — Andy Johns

Building a community is not the answer to all your product and growth challenges.

In the last few months, Web3 organizations have been rushing to hire community managers as communities are becoming the “holy grail” of Web3 land, and airdrops or give-aways are becoming some of the biggest growth levers.

A similar thing happened the last decade in Web2 with the rise and “fall” of the Growth Hacking role.

Even though these tactics are a well-intentioned way to ignite the community flywheel effect, they are shorted lived and might do more harm than good when trying to narrow down what product you are building for your market or community.

Before tactics you need a growth process. But before a growth process you need a strategy. — Brian Balfour

The search for Market-Product fit is driven by the alignment between your core community, their problems and motivations and the basic elements of the potential product to be built.

Following with JUMP as an example we can define the relationship between the community-market and initial product as:

  • Core Value Proposition: Where marketers, creative and brand professionals gather to learn, research and explore the Web3 world.
  • Hook: Access to a thriving community shaping the future of Web3 brands.
  • Time To Value: Quick — Apply to JUMP → Discord Access → Weekly roundup newsletter (high-value content)
  • Stickiness: High — $JUMP token as a retention tool for top 1% contributors.

As your community-market moves, your product offering will need to adjust, making product/market fit a thing that doesn’t happen at a single point in time but a metric that will be constantly changing and evolving as your growth efforts expand your baseline community.

Product → Channel & Channel → Model

Most Web3 companies are still very early and in the process to find Community-Market Fit or Market-Product Fit, but is important to keep in mind how does your potential product fits within different acquisition channels and how these channels fit your business model.

Peter Thiel (co-founder of Paypal) famously said:

Most companies get zero distribution channels to work. If you get just one channel to work you have a great business. If you try for several but don’t nail one, you’re finished — source: “Zero to One”

Simply defined, Product-Channel fit means finding one or two scalable acquisition channels that drive the type of users who will find the most value at that specific point in time with the current state of your community or product. This is equally true for Web2 as Web3 organizations.

Products are built to fit with channels. Channels do not mold to products — Brian Balfour

Channel-Model fit is defined by how your customer acquisition channels drive sustainable business value.

As it was discussed in my previous article *“Growth Frameworks from Web2 to Web3” companies need to be able to answer the question How do we scale? as a first step to be able to build a sound growth strategy.

For Web3 organizations or DAOs like JUMP, traditional customer acquisition channels and growth frameworks like Organic Growth Loops or Product-Led growth are still relevant for the industry. But the exciting part is the whole new set of channels and strategies to explore within the Web3 ecosystem, like token incentives, community ownership, and product partnerships as growth levers driven by creating more business value through expanding the acquisition and distribution loops.

Your Lasting Growth Strategy

Web3 companies can follow similar paths to Web2 companies to uncover their growth model and levers. In both cases, the organization's vision and mission, early-adopters or community, business model, acquisition, and distribution channels will shape your growth model.

Is important to note that a strategy is not about the specific goals, metrics, and roadmaps. These are often confused as a strategy, but they are rather the elements that can help you answer the questions and hypotheses that will help inform your strategy,

Distribution = Defensibility = More Distribution — Reforge

In summary, whether you are a centralized or decentralized Web3 company, there are four core concepts that your overall Growth Strategy should be addressing:

  1. Build trust
  2. Remove friction
  3. Accelerate the time-to-value
  4. Product-led distribution

As Reforge put it’s better “A Growth Strategy is about getting the most out of our existing product and existing target market, by removing barriers to access and increasing product distribution”

Growth is about building a compounding, deterministic, repeatable, and sustainable system that can help you answer what’s the company growth model, this is true for both Web2 and Web3 companies.

Web3 brings a whole new world of possibilities and challenges for founders and growth teams. These are exciting times! I would imagine this was a similar feeling to the early days of companies like Facebook, Uber or Airbnb, trying to figure out what would become the foundation levers for growth across all the tech industry.

Thanks to Jkey and Andrea Perez for their contributions to this article.

Launching or building a Web3 / Crypto company? Would love to connect — Feel free to reach out to me over Twitter @mati_honorato.

Any grammar, spelling, or punctuation mistakes, please let me know. So I can keep improving my English…Thanks!

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