Being Default Alive or Default Dead - 1PAR Newsletter #1
Default alive and default dead is a cliché of trad Silicon VCs describing startup growth rates and profitability expectations. If a start-up has to raise money or it will not survive anyway, this is default dead. Being default alive is way different from being profitable, default alive startups have revenue growing but just can barely maintain their businesses and hopefully turn to profits one day.
But many startups formed during the hot market period will not face their proposition honestly, and yet the crypto start-ups. An entrepreneur running a barbershop even has a clearer face than a startup founder when it comes to these blunt realities. Founders should know what to do to survive assuming they can't raise more money.
Startup Growth Calculator, Y Combinator (2022)
Hiring to grow doesn't always work. Founders have been over-hiring but do not realize that their product model is currently not attractive enough. Imagine a crypto startup was lucky enough to create a moderately appealing product and just closed the first round, in the future, they might fall into (1) The product is only moderately appealing and cannot generate revenue, again counting on investors for another round, and (2) Hiring fast but growing slow. The problem here is over-hiring but not evolving the current product, because fundamentally hiring people is rarely the way to fix that.
The crypto environment is far more scrambling to navigate a sharp reversal. But economic downturns often turn out to be huge opportunities for founders who quickly adapt their minds: plan around spending, runways, hiring, and funding to ensure their companies survive. The team will not last long by maintaining a high burn and a long time to revenue. Think about you can often pick up significant market share in a market downturn by just staying alive.
News for Today
Reads
Brian Armstrong on the Coinbase petition
Web5, a decentralized web platform by Jack Dorsey
NFT News
OpenSea on fraud and plagiarism
Unique Network on Buying Punk and Immigrating
DeFi News
LDO + stETH dual governance proposal
Fundraising: Entropy, 25M led by a16z built on Substrate
Game News
MiHoYo Tech., the creator of Genshin Impact and Honkai 1-3, currently is valued at ~$15B (100B CNY) in private, 1PAR’s sources told
Korean game studio Nexon launching MapleStory
Fundraising: Tatsumeeko, 7.5M led by DeFiance, Delphi Digital, and BitKraft
1kx network on non-coin voting of game governance
DAOs News
Paradigm Fund on legal entities for DAOs
Furo by SushiSwap, a DAO payment streaming dApp
Fundraising: Delphia, 60M led by Multicoin
Fundraising: PartyDAO, 16.4M led by a16z
1PAR Portfolio News
Kanarias and soulbound NFTs & Burn the vouchers for the land deed
InvArch testnet workshop registration
Saito "Chess League" Announcement
Newsletter Reference Reads
Graham, P. (2015). Default Alive or Default Dead (Online). http://www.paulgraham.com/aord.html
Disclosures
Views expressed in “1PAR Newsletter” from 1PAR (1par.com) by any individuals (including any podcasts, videos, and social media) are those of the individual quoted therein and should not constitute any financial advice, please refer to https://1par.com/website-terms-of-use
