Balancing cost-cutting efforts with smart efficiency strategies can help crypto companies weather current macroeconomic conditions.
Crypto winter has been challenging enough for the industry; it doesn’t help that the broader macroeconomic environment is uncertain as well. With ongoing talk of a potential recession, tightening access to investor capital and rising interest rates, some crypto and blockchain companies are joining their peers in other industries in exploring cost-cutting measures.
While trimming the budget may be a necessary effort, it’s important to do so judiciously. Further, leveraging smart strategies can help companies avoid deep cuts and boost productivity and efficiency. Here, 15 members of Cointelegraph Innovation Circle share tips to help companies in the crypto and blockchain space wisely adjust to survive the current macroeconomic environment.
Listen to your users
Given today’s larger macroeconomic environment, it’s more important than ever for crypto leaders to listen to their users. During the previous bull run, too many companies rushed to buy sponsorships or roll out NFT marketplaces when they should have focused on the needs of their core user base. Product, user experience and community engagement will always be good areas to invest in. – Molly Glennon, Ditto
Build an attribution model
Consider hidden costs, and most of all, build an attribution model. Many developers jump the gun and get rid of product people only to be told by investors that they haven’t reached product-market fit. Know where your strengths are, and be laser-focused; don’t try to be everything all at once. Forget the DAO, the clout and the event sponsorships. Keep your head down and your people close. – Audrey Raby, Audrey Raby
Pare down your conference schedule
Many crypto companies spend too much on conferences. A lot of them do not yield a good ROI. Inventory all the conferences you plan to attend, and cut the less relevant ones. Doing so will bring down costs, including travel, opportunity, sponsorship and so on. – Nitin Kumar, zblocks
Focus on your product rather than branding
Focus more on building your product and less on building your branding. Spend less (or nothing) on sponsorships for splashy events so you can save to spend more on your team. In times like these, I always like to say that “mammoths are born in winter.” Make sure you spend on what’s important — your team members, who create your products — so you will be armed and ready for the next crypto summer. – Tomer Warschauer Nuni, Kryptomon
Ensure you know what it should cost to build a project
This is a technology business, and now there are regulatory concerns. Nothing kills your cash flow and runway faster than not understanding what you’re building and the cost to build it. I see founders spending 20 times what something should actually cost because they don’t know what it takes to build software or meet regulatory standards. Make sure you know or hire people with proven records whom you can trust. – John Wingate, BankSocial
Cut costs — but know when to stop
A lot of first-time startup owners make the mistake of only focusing on cutting costs. It puts them in a scarcity mindset. I’ve seen companies cost-cut themselves out of business by taking steps the economic situation didn’t warrant. My tip for CEOs trying to navigate the times is to make their cuts, but have the discipline to know when to stop. There is such a thing as too much cost-cutting. – Brian D. Evans, BDE Ventures Ventures
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Offer your token as compensation to retain developers
Retain your developers during bear periods so they can keep building your product. You can offer higher amounts of your token as a form of compensation to developers and early supporters instead of cash. However, it becomes difficult when the bear market stretches for long periods and crypto values become very low. – Zain Jaffer, Zain Ventures
Outsource non-core functions
Crypto and blockchain companies can cut costs and adapt to the larger macroeconomic environment by outsourcing non-core business functions. For example, they can outsource functions such as customer support, accounting and legal services to specialized service providers. This can help reduce staffing, training and overhead expenses, while still allowing you to maintain a high-quality output. – Vinita Rathi, Systango
Prioritize core features and products
In order to be resilient and keep moving forward during a bear market, blockchain companies should focus on key areas that drive revenue and grow their communities. Don’t get distracted by nonessential initiatives; it’s better to pursue these opportunities once more favorable conditions return. – Wolfgang Rückerl, ENT Technologies AG
Forge strategic partnerships
A key tip for crypto and blockchain companies looking to reduce costs is to forge strategic partnerships with industry peers. By sharing resources and collaborating on joint R&D projects, shared infrastructure, and collective blockchain network development/maintenance, companies can eliminate duplicate efforts, lower costs, and tap into a collective pool of resources to drive innovation and growth. – Akash Takyar, LeewayHertz
Don’t pay for social influencers
Save your money by not paying so-called “social influencers.” It is a well-known fact that many influencers on YouTube, TikTok and other platforms take payment for shilling projects, and industry insiders don’t see them as credible sources. After 2022 — when so many of these influencers spoke highly of Luna and FTX before their falls — it became apparent that we should all think twice before listening to social influencers. – Ayelet Noff, SlicedBrand
Don’t rely on hype; market the value you provide
In the current market conditions, projects need proper marketing. In most cases, founders think that this means better hype marketing, but that’s a mistake; the current bear market has given us ample proof of that. If crypto companies want to cut costs and adapt, they should start with a concept built around solving a real problem — an irresistible offer — and showcase the value they’re providing in their marketing. – Bogomil Stoev, Seasonal Tokens
Investigate open-source solutions
Consider scalability. Due to the inherent complexity and expense of blockchain technology, businesses must guarantee that their procedures are efficient. Additionally, businesses should investigate decentralization, as it can give numerous cost-saving benefits. Open-source solutions can be less expensive alternatives to costly proprietary solutions. – Theo Sastre-Garau, NFTevening
Be transparent if you decide to cut employee perks
It’s essential to make difficult decisions to ensure long-term success. While it’s important to invest in things that promote employee satisfaction, such as free weekly lunches or nice office spaces, leaders may need to cut these costs. Be transparent with your employees about where you’re cutting costs and why. – Anthony Georgiades, Pastel Network
Leverage the help of freelance workers
Create an efficient process to delegate essential tasks to remote freelance workers within the decentralized workforce. This will save the precious time of your current full-time employees and help avoid the trap of “growing too quickly,” which many companies in tech have fallen victim to. – Sheraz Ahmed, STORM Partners
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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