Web3 & Crypto Community Growth in a Bear Market

On August 26, Hazel Chen, Chief of Staff at Shima Capital, hosted a Twitter Space, inviting Jarred Winn from Winn Solutions, Preston Tesvich from Mainline, and Kyle Klemmer & David from Mech.com, to discuss on Web3 & Crypto Community Growth in a Bear Market. We had more than 95K listeners tuned in. Below is a recap of the Space.

TL;DR

• As a project team, no matter it’s a bull or bear market, no matter what product you are building, the first and foremost thing when it comes to marketing and community building, is identifying your audience.
• After clarifying who you are targeting, you need quality content, steady cadence, and the right platform.
• There’s no shortcut and it takes sincerity and effort to keep your community active and engage.
• From a user perspective, other than understanding the project and the team behind, another way to identify whether a project has strong potential or not, is to spend 10 minutes going through their community.
• When evaluating a project community, you should focus on a couple key indicators:
  ​ ​ ​​​ ​ ​​​ ​ ​​​For Twitter: Who are their top followers/engagers? What kind of activity level does this account have? Does it have a good balance of original posts, of replies, of retweets? Is it active and continuing to be active? Is it growing in the engagement from week over week?
  ​ ​ ​​​ ​ ​​​ For Discord: Join the Discord, talk to people and see where they started, where they are now, what different channels they have, how organized is the team, how passionate are the people managing it, whether their core team care about the community, how often they do announcements, whether they have kept their words.

Marketing is a Funnel Game

Jarred Winn: Identify your audience

• From a business model perspective, a project team should be able to have a clear understanding of their target audience. But in reality, how can they find this group of people? One of the ways that we use is to go through the active members within their competitors’ communities and start from there.
• What we have realized is that, there’s very few Web3 projects out there that actually attract a lot of Web2 users. Usually Web3 communities are derived from other Web3 communities. So for a new project, they should start with identifying other Web3 communities that may have overlap with their target audience. This is even more important during the market downturn as there would be less noise when trying to identify this group of target audience.

Preston: Targeting your audience

• To do this, it’s simply three things — quality content, steady cadence, and the right approach to target.
• I think the right approach to target is where it comes to more data analytics. To us (Mainline), we kind of look at it either from a strategic level, where it’s all about finding the right influencers to work with and understanding whose networks are going to bring the most value to your project. Or, on the other side, it’s the technical level, which is to find new users and bring them into the community. And one easy way to start is from the users that are engaging with competitor projects or engaging in conversations that are relevant to your project.

Kyle/David: Convert your audience to your advocators

• After attracting all these potential users, you need to interact with them. At the end of the day, these are all people, and you need someone who can relate to the people on that on a personal level. Being a Community Manager, I was the main person in that discord, getting everybody comfortable and learning the crypto space. That’s how a project could convert those new users into active users.
• During the market downturn, it might take more touch points and communications to convert, but once convert, the users would be more sticky and loyal.

Hazel: Keep the funnel actively running

• So to summarize, the top of the funnel is actually starting from using efficient approaches to get the new eyeballs in from all the potential users — which is necessary, but not sufficient, actually.
• After finding users on Twitter, we get the opportunities of brand exposure. Then there’s the content — what is the content that we want to show? does it have something compelling? is it making the audience want to act or do something? And then beyond that, the next part is getting them to the more interactive communities (i.e. Telegram, Discord, Newsletters). This is where the community managers would play a critical role. Their job now is to engage with the users, make them feel welcome and make them feel like they’re in the right spot and they want to continue going forward with various actions. Throughout this funnel, there should be constant targeting, attracting, converting/dripping that need a project team to invest in sincerity and efforts to keep it actively running.

After funneling, the community engagement is key

Kyle/David: Building a community needs content and planning

• Being able to stay in the Discord server, talk to everybody, foster whatever interest, set up different community events, and monitor that engagement, is one of the most important component in community building. This requires not only high-quality content, constant communication (esp. from the core team), but also planning of different events. Different contests and giveaways are ways to reengage the audience.
• If you see the vibe and the attitude is starting to die down in there, you need to get together with all of your staff. The whole marketing team should come up with a solid plan to reengage everybody. There are still large amounts of active users out there even in the bear market. The key point is to put effort in keeping them active and interested in the project that you are building.

Hazel: How do you filter out scams and engage with the right audience?

• But when it comes to contests, we’ve seen that, especially on the data side, where you can run certain airdrops and giveaways but it’s overall kind of crap, right? Like the followers you get from it are really great, but at the end of the day, you don’t get the audience that you’re looking for.

Kyle/David: Allow the members to contribute and recognize them

• Yes that’s true. A way to mitigate is that you don’t just do those typical ones where it’s click, follow, retweet sort of thing. You want ones that can really engage the audience. And remember what we’ve been doing, what we’ve found success doing in Mech.com is having these sorts of videos, letting the members make art, make memes, do things that can foster their creativity and their passion for our project. And then you just build on that. When the audience has a platform to contribute to the community and you are recognizing their efforts, that kind of engagement is pretty strong and solid.

From an individual perspective, how do you identify a good project?

Jarred: Starting with the project and the team

• Of course you should start with a bit of a diligence on the team. What is this project trying to do ultimately? What are my risks? Is this too good to be true? Who are the founders and investors? etc.

Preston: And then check on their community

• From a community perspective, I want to know things like who are their top followers, who are their top engagers? What kind of activity level does this account have? Does it have a good cadence of original posts, of replies, of retweets? Is it active and continuing to be active? Is it growing in the engagement week over week?

Jarred: Network quality is important, not just the # of followers

• I would like to add a bit on this. Different ways of engagement would result in different levels of network quality. For example, when you put a contest in a tweet, there’s at least 10, 20, 30, maybe even hundreds of other companies out there that have click bots that automatically generate these fake accounts that are going to spam everything out from your contest in order to try to get that $500. Because if it only cost them $10 in AWS credits to actually do this, why not, right?
• For many of the accounts that you see, the followers are simply a vanity metric. And really, what’s important is the quality of followers. On Twitter, this isn’t something that is very publicized, but there are social authority scores based on the types of followers you have, ie: how many of them have less than 10 followers. People will argue that this is fine, as a lot of people use Twitter as a source of information and aren’t constantly tweeting and putting out content and so forth. But the likelihood of those users being faked is much greater than those with a decent amount of followers. So if we take how active the followers are into consideration, then we can have a rough understanding on the quality of a twitter account network.
• From an algorithm perspective, what matters is your impact rate. And that means not only how many people that follow you, but also how many of those actually trust you and actually engage with you.

Preston: Mainline is creating a score to measure the network quality

• As an expert in Twitter data analytics, I would say that the rabbit hole goes pretty deep and it kind of depends on what angle you want to look at it from. Because on one hand, some accounts might have 50% suspicious looking followers. Maybe lots of them made their account on the same day or whatever, but the other 50% might be a ton of blue checkmark, high prominence individuals that you would want to know if someone’s following. That’s been our focus, is looking at those different angles. So when someone’s follower quality on our platform is low, for example, it means that maybe they have a very high percentage of zero followers or under ten followers, or if their score is high, they might have a higher percentage of verified users.

Kyle/David: Community engagement can tell a lot about the team

• When engaging with a project, I would suggest after joining the discord, you should talk to people and see where they started, where they are now, what different channels they have, how organized is the team, how passionate are the people managing it, whether their core team care about the community, how often they do announcements, whether they have kept their words. These are all indicators on whether this team is putting their efforts into the project.

The opinions and ideas expressed in this article are solely those of the author and do not represent the official stance or views of any employer, past or present.

About Shima Capital: We are a leading early stage VC firm investing in disruptive blockchain companies. Shima is backed by Dragonfly Capital, Digital Currency Group, Tiger Global, Bill Ackman and other strategics (e.g. Huobi, ByBit, OKex, Animoca, Republic). The fund is deeply focused on taking a hands-on approach and working closely with its portfolio companies to provide the most sweat equity per dollar invested. As teams in Web3 push the frontier of innovation, Shima helps hire talent, build community, amplify narratives, and foster the acceleration of technical research and development. Shima is composed of seasoned investors, accomplished operators, and former founders who align on a mission to support all-star teams with building and scaling generational companies.