Top 10 Learnings from BlockPunk

BlockPunk was a startup incubated and founded at Entrepreneur First (EF) in Singapore in 2018. We raised a $1.3M Singapore dollar seed round from Silicon Valley, Asian and Japanese investors to build a new digital merchandise platform for creators by leveraging crypto and Web 3.0 technology. We launched many world firsts (world’s first anime NFTs, world’s first anime prediction market, world’s first physical-digital anime art collectible, world’s first anime movie sale on blockchain, world’s biggest anime merch search engine) but ultimately did not scale. We will continue to maintain all existing NFTs and digital certificates but from September 2020 will not be taking any new sales or business. We thank all the investors, partners and customers who went with us on this journey. We gave it our best shot and are grateful for the trust and opportunity.

Here are some of our key learnings:

1. Use your edge:
   I believe in the EF concept that you have to define and use your ‘edge’. What you know about the world may be ordinary to you, but it will for sure be extraordinary to others. If you are one of the few people in the world who understand a specific domain, you have to use that knowledge and experience to your advantage in your startup. You have to answer the ‘why you’ question to show how your background will differentiate your business. For example if you are an elite civil engineer, it doesn’t make sense to start a meat-free food business. In my case, my business domain was film/tv original production and licensing with a skew on Japan which led us down a particular road. My co-founder was a software engineer with a PhD in computer science from Yale.
2. Timing is everything
   I had dabbled in crypto prior to BlockPunk but at EF I found that many young engineers were excited at the possibilities inspired by Satoshi Nakamoto’s bitcoin white paper. When I read about the concepts behind bitcoin I also fell down the blockchain rabbit hole. It felt like the 3rd wave of the Internet and emitted many of the same vibes that I felt at the beginning of the Internet in terms of a new ecosystem of tech startups distinct from previous generations. EF was based in the office that also housed the Ethereum organisation for a time and listening to Vitalik Buterin talk in Singapore was a pivotal moment. Vitalik is undoubtedly one of the sharpest minds I have come across and a true pioneer. Listening to Vitalik and Audrey Tan talk on a panel at Devcon Osaka opened my mind to new possibilities of how to organise ourselves. I still believe in the long-term possibilities of a new decentralised financial system and world computer but we found that building a consumer-facing app that went beyond trading and gaming to be too early — widespread consumer adoption simply wasn’t there. To reuse Sam Altman’s framing, scalable consumer apps built on Ethereum were a ‘false trend’. The real trend was the rise in digital currency and decentralised finance. In retrospect we may have at least made enough money to return to investors if we had just focused on gathering Ether or Bitcoin at low prices. For example developing a native token and ICO-ing to gather Ether. With the current price of Ether we would have seen a huge increase in value, which could even continue to rise further with a long HODL.

This said, we believed we were given money by investors to build useful products, not invest. Furthermore, when we were active in 2018 and 2019, doing an ICO or IEO was very difficult because the price of Ether was not rising. In a sea of shady advisors and legal grey zones we even hired an advisory firm specialised in tokens who advised us not to issue tokens. Another consequence of a flat Ether price was a flat market for NFTs. This prompted us to diversify our model out of NFTs. As of the time of writing this, Ether is experiencing another rise in price prompting a revival of the NFT market. While we could simply have persisted with NFTs, we ultimately didn’t want to be in a business that is so sensitive to currency fluctuations

3. Start with a mission:
I believe we did not define our mission clearly enough. How were we going to change the world, what future were we creating? The more exciting the mission, the easier to enthuse customers, team and partners. Crucially the clearer the mission, the easier to define what product to build. We changed our mission from giving creators more freedom through decentralisation, making creators more money, to helping consumers finding authentic merch quicker. We tied ourselves up in knots trying to figure out if we should target creators or consumers. Or even go in a completely different direction. Ultimately the change we were bringing to the world was not ambitious enough and not clearly defined enough. Some examples of missions I really like are: “Reducing space transportation costs to enable the colonization of Mars” (Space X) “Spread ideas” (TED) “Connect the world’s professionals to make them more productive and successful” (Linkedin) Great missions have a simplicity and clarity that allows for great focus and excites people along the way. These missions are often the result of iteration (see Monzo) and don’t just appear overnight but whatever the route we didn’t get there.

4. Good Pizza: Build Something People Want.
Having a pithy mission statement is a distant second to having a product that people want. Turns out this is the most important and equally hardest thing to achieve for any startup. For me this statement falls into the category of ‘saying the bleeding obvious’ but is annoyingly true in spite of that. EF’s spiritual older sibling YC (Y Combinator) summarised this very well in their startup school lecture by Sam Altman here. Ultimately you have to “Build a product that is so good, people want to tell their friends about it”

5. Bad Pizza: Don’t burn the pizza
At BlockPunk we built many MVPs in our search for what people want. In the process we burnt cash, built technical debt, and while we definitely innovated with world firsts, ultimately didn’t make something enough people wanted at the early stage of blockchain. To borrow a phrase from a former product manager at AirBnB, we spent our time making too much “burnt pizza”: “Say you’re trying to test whether people like pizza. If you serve them burnt pizza, you’re not getting feedback on whether they like pizza. You only know that they don’t like burnt pizza.” We should have spent more time researching and planning how to build the ‘minimum lovable product’ rather than the minimum viable product. Startups only have a finite number of tries to get it right, better to save your cash until you have more confidence in the next iteration. Too often we optimised for speed rather than doing more research into what people really want. If you’re on your 3rd or 4th iteration you probably need to slow down and spend more time thinking.

6. Your co-founder matters
EF taught us that the optimal size of the founding team is 2. I buy into that. Chemistry and complementarity is key for your choice. It’s better not to launch at all than have the wrong co-founder. Having someone you want to go to battle with and face the ups and downs together. I was a non-technical founder so needed someone technical who could build. EF is great at matching and bringing talent together and advising what looks to them like a good or bad fit.

7. Know your time limit
As someone with a family I had a natural time limit. This gave me some clarity with the persist or quit decision which can perplex many entrepreneurs. Continuing the long grind of a startup that ultimately doesn’t have a big payoff had become too much of a risk. This is not an easy decision and ultimately comes down to individual choice however I was running out of time to make a success of the business. Thankfully there is a lot of literature and many shoulders to stand on to help think it through. The most helpful ones I found were from the founders of Twitch, Emmett Spear and Justin Kan. Emmett likens the startup grind to Sisyphus pushing a rock up the hill. Reaching the summit is like reaching Product-Market fit. Going uphill you are a war general, fighting for survival. Going downhill you are a resource-allocator. Emmett talks about the difference between strategic patience (your belief and conviction in a certain version of the future) and tactical impatience (your ability to influence or create that future) Ultimately the quit or stay decision is the ‘essence of a personal judgement based on belief and tolerance’ Another Twitch founder perspective I found useful was from Justin Kan who says a good way to reduce your risk of failure is to create a product or service for yourself. Then you always have a good barometer of quality and if there are other people who think like you there may be a market. “Unfortunately I am not aware of any algorithm to help you decide. I think founders generally give up when they can’t think of any more things to try to make something successful: they run out of ideas. This is why it helps a ton to build something for yourself: it is easier to come up with ideas for what will make your customers happy when you are the customer of your own product.”

8. Make a Soft Landing.
While the opportunity to build your company is exciting, and it’s certainly never been easier, there is a cost to shutting down. Not only financial but psychological. Explaining the situation to investors, customers, partners and staff. The admin associated with winding down the company. Deciding what to do with assets. The more stakeholders there are to your business, the harder it is. While we lost money for investors, one solace was that we did not leave any vendors, customers, staff or partners unpaid. By far the hardest thing I found was letting go of staff. You hired them and now feel a responsibility to help them transition. One of my team left a stable prestigious consulting firm and moved countries to join me. I managed to get him an interview at my previous employer Netflix where he was hired. I recommended one of our talented engineers for a job at a great software venture called Supabase founded by other EF engineers who had helped us build BlockPunk. I derived as much satisfaction from helping these team members land a good position as I did any other product launch or customer win with our startup. We also still have good relations with all of our investors and are still in regular contact.

9. If all else fails, make lifelong friends.
While our startup may no longer be there, the bonding experience that I lived with many other talented founders always will. Not to mention the interactions with the amazing people who founded and ran EF. I came away from Singapore with what I hope are some more lifelong friends. Some of those founders are continuing to build impressive companies. I’m cheering them on from the sidelines.

10. Singapore rocks
Looking back I marvel at how Singapore provided us with the environment to build a company. In addition to EF, we benefited from the SG Equity scheme that matched funds invested by local VCs in return for basing our company in Singapore, hiring local staff and investing in deep tech. As a hub for business operating on an English-speaking global standard it is a great place to live and startup. With the hot climate, knowing you can dive in a pool whenever you’re having mid-journey blues is also an added benefit.