Everyone wants a scalable startup.

Innovation helps launch a startup. The secret to a scalable business is growth trials (from 1 to 100).

Growth marketing combines marketing and product development for long-term growth.

Today, I'll explain growth hacking strategies popular startups used to scale.

1/ A Facebook user's social value is proportional to their friends.

Facebook built its user base using content marketing and paid ads. Mark and his investors feared in 2007 when Facebook's growth stalled at 90 million users.

Chamath Palihapitiya was brought in by Mark.

The team tested SEO keywords and MAU chasing. The growth team introduced “people you may know”

This feature reunited long-lost friends and family. Casual users became power users as the retention curve flattened.

Growth Hack Insights: With social network effect the value of your product or platform increases exponentially if you have users you know or can relate with.

2/ Airbnb - Focus on your value propositions

Airbnb nearly failed in 2009. The company's weekly revenue was $200 and they had less than 2 months of runway.

Enter Paul Graham. The team noticed a pattern in 40 listings. Their website's property photos sucked.

Why?

Because these photos were taken with regular smartphones. Users didn't like the first impression.

Graham suggested traveling to New York to rent a camera, meet with property owners, and replace amateur photos with high-resolution ones.

A week later, the team's weekly revenue doubled to $400, indicating they were on track.

Growth Hack Insights: When selling an “online experience” ensure that your value proposition is aesthetic enough for users to enjoy being associated with them.

3/ Zomato - A company's smartphone push ensured growth.

Zomato delivers food. User retention was a challenge for the founders. Indian food customers are notorious for switching brands at the drop of a hat.

Zomato wanted users to order food online and repeat orders throughout the week.

Zomato created an attractive website with “near me” keywords for SEO indexing.

Zomato gambled to increase repeat orders. They only allowed mobile app food orders.

Zomato thought mobile apps were stickier. Product innovations in search/discovery/ordering or marketing campaigns like discounts/in-app notifications/nudges can improve user experience.

Zomato went public in 2021 after users kept ordering food online.

Growth Hack Insights: To improve user retention try to build platforms that build user stickiness. Your product and marketing team will do the rest for them.

4/ Hotmail - Signaling helps build premium users.

Ever sent or received an email or tweet with a sign — sent from iPhone?

Hotmail did it first! One investor suggested Hotmail add a signature to every email.

Overnight, thousands joined the company. Six months later, the company had 1 million users.

When serving an existing customer, improve their social standing. Signaling keeps the top 1%.

5/ Dropbox - Respect loyal customers

Dropbox is a company that puts people over profits. The company prioritized existing users.

Dropbox rewarded loyal users by offering 250 MB of free storage to anyone who referred a friend. The referral hack helped Dropbox get millions of downloads in its first few months.

Growth Hack Insights: Think of ways to improve the social positioning of your end-user when you are serving an existing customer. Signaling goes a long way in attracting the top 1% to stay.

These experiments weren’t hacks. Hundreds of failed experiments and user research drove these experiments. Scaling up experiments is difficult.

Contact me if you want to grow your startup's user base.

How did his money blind me?

Like most fledgling entrepreneurs, I wanted a mentor. I met as many nearby folks with "entrepreneur" in their LinkedIn biographies for coffee.

These meetings taught me a lot, and I'd suggest them to any new creator. Attention! Meeting with many experienced entrepreneurs means getting contradictory advice. One entrepreneur will tell you to do X, then the next one you talk to may tell you to do Y, which are sometimes opposites. You'll have to chose which suggestion to take after the chats.

I experienced this. Same afternoon, I had two coffee meetings with experienced entrepreneurs. The first meeting was with a billionaire entrepreneur who took his company public.

I met him in a swanky hotel lobby and ordered a drink I didn't pay for. As a fledgling entrepreneur, money was scarce.

During the meeting, I demoed the software I'd built, he liked it, and we spent the hour discussing what features would make it a success. By the end of the meeting, he requested I include a killer feature we both agreed would attract buyers. The feature was complex and would require some time. The billionaire I was sipping coffee with in a beautiful hotel lobby insisted people would love it, and that got me enthusiastic.

The second meeting was with a young entrepreneur who had recently raised a small amount of investment and looked as eager to pitch me as I was to pitch him. I forgot his name. I mostly recall meeting him in a filthy coffee shop in a bad section of town and buying his pricey cappuccino. Water for me.

After his pitch, I demoed my app. When I was done, he barely noticed. He questioned my customer acquisition plan. Who was my client? What did they offer? What was my plan? Etc. No decent answers.

After our meeting, he insisted I spend more time learning my market and selling. He ignored my questions about features. Don't worry about features, he said. Customers will request features. First, find them.

Putting your faith in results over relevance

Problems plagued my afternoon. I met with two entrepreneurs who gave me differing advice about how to proceed, and I had to decide which to pursue. I couldn't decide.

Ultimately, I followed the advice of the billionaire.

Obviously.

Who wouldn’t? That was the guy who clearly knew more.

A few months later, I constructed the feature the billionaire said people would line up for.

The new feature was unpopular. I couldn't even get the billionaire to answer an email showing him what I'd done. He disappeared.

Within a few months, I shut down the company, wasting all the time and effort I'd invested into constructing the killer feature the billionaire said I required.

Would follow the struggling entrepreneur's advice have saved my company? It would have saved me time in retrospect. Potential consumers would have told me they didn't want what I was producing, and I could have shut down the company sooner or built something they did want. Both outcomes would have been better.

Now I know, but not then. I favored achievement above relevance.

Success vs. relevance

The millionaire gave me advice on building a large, successful public firm. A successful public firm is different from a startup. Priorities change in the last phase of business building, which few entrepreneurs reach. He gave wonderful advice to founders trying to double their stock values in two years, but it wasn't beneficial for me.

The other failing entrepreneur had relevant, recent experience. He'd recently been in my shoes. We still had lots of problems. He may not have achieved huge success, but he had valuable advice on how to pass the closest hurdle.

The money blinded me at the moment. Not alone So much of company success is defined by money valuations, fundraising, exits, etc., so entrepreneurs easily fall into this trap. Money chatter obscures the value of knowledge.

Don't base startup advice on a person's income. Focus on what and when the person has learned. Relevance to you and your goals is more important than a person's accomplishments when considering advice.

I've written a lot about Y Combinator's success, but as any startup founder or investor knows, many startups fail.

Rebel Fund invests in the top 5-10% of new Y Combinator startups each year, so we focus on identifying and supporting the most promising technology startups in our ecosystem. Given the power law dynamic and asymmetric risk/return profile of venture capital, we worry more about our successes than our failures. Since the latter still counts, this essay will focus on the proportion of YC startups that fail.

Since YC's launch in 2005, the figure below shows the percentage of active, inactive, and public/acquired YC startups by batch.

As more startups finish, the blue bars (active) decrease significantly. By 12 years, 88% of startups have closed or exited. Only 7% of startups reach resolution each year.

YC startups by status after 12 years:

Half the startups have failed, over one-third have exited, and the rest are still operating.

In venture investing, it's said that failed investments show up before successful ones. This is true for YC startups, but only in their early years.

Below, we only present resolved companies from the first chart. Some companies fail soon after establishment, but after a few years, the inactive vs. public/acquired ratio stabilizes around 55:45. After a few years, a YC firm is roughly as likely to quit as fail, which is better than I imagined.

I prepared this post because Rebel investors regularly question me about YC startup failure rates and how long it takes for them to exit or shut down.

Early-stage venture investors can overlook it because 100x investments matter more than 0x investments.

YC founders can ignore it because it shouldn't matter if many of their peers succeed or fail ;)

The Merge cut Ethereum's energy use by 99.5%.

The Crypto community celebrated on September 15, 2022. This day, Ethereum Merged. The entire blockchain successfully merged with the Beacon chain, and it was so smooth you barely noticed.

Many have waited, dreaded, and longed for this day.

Some investors feared the network would break down, while others envisioned a seamless merging.

Speculators predict a successful Merge will lead investors to Ethereum. This could boost Ethereum's popularity.

What Has Changed Since The Merge

The merging transitions Ethereum mainnet from PoW to PoS.

PoW sends a mathematical riddle to computers worldwide (miners). First miner to solve puzzle updates blockchain and is rewarded.

The puzzles sent are power-intensive to solve, so mining requires a lot of electricity. It's sent to every miner competing to solve it, requiring duplicate computation.

PoS allows investors to stake their coins to validate a new transaction. Instead of validating a whole block, you validate a transaction and get the fees.

You can validate instead of mine. A validator stakes 32 Ethereum. After staking, the validator can validate future blocks.

Once a validator validates a block, it's sent to a randomly selected group of other validators. This group verifies that a validator is not malicious and doesn't validate fake blocks.

This way, only one computer needs to solve or validate the transaction, instead of all miners. The validated block must be approved by a small group of validators, causing duplicate computation.

PoS is more secure because validating fake blocks results in slashing. You lose your bet tokens. If a validator signs a bad block or double-signs conflicting blocks, their ETH is burned.

Theoretically, Ethereum has one block every 12 seconds, so a validator forging a block risks burning 1 Ethereum for 12 seconds of transactions. This makes mistakes expensive and risky.

What Impact Does This Have On Energy Use?

Cryptocurrency is a natural calamity, sucking electricity and eating away at the earth one transaction at a time.

Many don't know the environmental impact of cryptocurrencies, yet it's tremendous.

A single Ethereum transaction used to use 200 kWh and leave a large carbon imprint. This update reduces global energy use by 0.2%.

Ethereum will submit a challenge to one validator, and that validator will forward it to randomly selected other validators who accept it.

This reduces the needed computing power.

They expect a 99.5% reduction, therefore a single transaction should cost 1 kWh.

Carbon footprint is 0.58 kgCO2, or 1,235 VISA transactions.

This is a big Ethereum blockchain update.

I love cryptocurrency and Mother Earth.

Disclaimer : This is not financial advice for any investment.

TL;DR

• You might not have realized it, but as we move toward net zero carbon emissions, the globe is already at war.

• According to the Paris Agreement of COP26, 64% of nations have already declared net zero, and the issue of carbon reduction has already become so important for businesses that it affects their ability to survive. Furthermore, the time when carbon emission standards will be defined and controlled on an individual basis is becoming closer.

• Since 2017, the market for carbon credits has experienced extraordinary expansion as a result of widespread talks about carbon credits. The carbon credit market is predicted to expand much more once net zero is implemented and carbon emission rules inevitably tighten.

Hello! Ben here from Nonce Classic. Nonce Classic has recently confirmed the tremendous growth potential of the carbon credit market in the midst of a major trend towards the global goal of net zero (carbon emissions caused by humans — carbon reduction by humans = 0 ). Moreover, we too believed that the questions and issues the carbon credit market suffered from the last 30–40yrs could be perfectly answered through crypto technology and that is why we have added a carbon credit crypto project to the Nonce Classic portfolio. There have been many teams out there that have tried to solve environmental problems through crypto but very few that have measurable experience working in the carbon credit scene. Thus we have put in our efforts to find projects that are not crypto projects created for the sake of issuing tokens but projects that pragmatically use crypto technology to combat climate change by solving problems of the current carbon credit market. In that process, we came to hear of Climate Coin, a veritable carbon credit crypto project, and us Nonce Classic as an accelerator, have begun contributing to its growth and invested in its tokens. Starting with this article, we plan to publish a series of articles explaining why the carbon credit market is bullish, why we invested in Climate Coin, and what kind of project Climate Coin is specifically. In this first article let us understand the carbon credit market and look into its growth potential! Let’s begin :)

The Unavoidable Entry of the Net Zero Era

Net zero means... Human carbon emissions are balanced by carbon reduction efforts. A non-environmentalist may find it hard to accept that net zero is attainable by 2050. Global cooperation to save the earth is happening faster than we imagine.

In the Paris Agreement of COP26, concluded in Glasgow, UK on Oct. 31, 2021, nations pledged to reduce worldwide yearly greenhouse gas emissions by more than 50% by 2030 and attain net zero by 2050. Governments throughout the world have pledged net zero at the national level and are holding each other accountable by submitting Nationally Determined Contributions (NDC) every five years to assess implementation. 127 of 198 nations have declared net zero.

Each country's 1.5-degree reduction plans have led to carbon reduction obligations for companies. In places with the strictest environmental regulations, like the EU, companies often face bankruptcy because the cost of buying carbon credits to meet their carbon allowances exceeds their operating profits. In this day and age, minimizing carbon emissions and securing carbon credits are crucial.

Recent SEC actions on climate change may increase companies' concerns about reducing emissions. The SEC required all U.S. stock market companies to disclose their annual greenhouse gas emissions and climate change impact on March 21, 2022. The SEC prepared the proposed regulation through in-depth analysis and stakeholder input since last year. Three out of four SEC members agreed that it should pass without major changes. If the regulation passes, it will affect not only US companies, but also countless companies around the world, directly or indirectly.

Even companies not listed on the U.S. stock market will be affected and, in most cases, required to disclose emissions. Companies listed on the U.S. stock market with significant greenhouse gas emissions or specific targets are subject to stricter emission standards (Scope 3) and disclosure obligations, which will magnify investigations into all related companies. Greenhouse gas emissions can be calculated three ways. Scope 1 measures carbon emissions from a company's facilities and transportation. Scope 2 measures carbon emissions from energy purchases. Scope 3 covers all indirect emissions from a company's value chains.

The SEC's proposed carbon emission disclosure mandate and regulations are one example of how carbon credit policies can cross borders and affect all parties. As such incidents will continue throughout the implementation of net zero, even companies that are not immediately obligated to disclose their carbon emissions must be prepared to respond to changes in carbon emission laws and policies.

Carbon reduction obligations will soon become individual. Individual consumption has increased dramatically with improved quality of life and convenience, despite national and corporate efforts to reduce carbon emissions. Since consumption is directly related to carbon emissions, increasing consumption increases carbon emissions. Countries around the world have agreed that to achieve net zero, carbon emissions must be reduced on an individual level. Solutions to individual carbon reduction are being actively discussed and studied under the term Personal Carbon Trading (PCT).

PCT is a system that allows individuals to trade carbon emission quotas in the form of carbon credits. Individuals who emit more carbon than their allotment can buy carbon credits from those who emit less. European cities with well-established carbon credit markets are preparing for net zero by conducting early carbon reduction prototype projects. The era of checking product labels for carbon footprints, choosing low-emissions transportation, and worrying about hot shower emissions is closer than we think.

The Market for Carbon Credits Is Expanding Fearfully

Compliance and voluntary carbon markets make up the carbon credit market.

A Compliance Market enforces carbon emission allowances for actors. Companies in industries that previously emitted a lot of carbon are included in the mandatory carbon market, and each government receives carbon credits each year. If a company's emissions are less than the assigned cap and it has extra carbon credits, it can sell them to other companies that have larger emissions and require them (Cap and Trade). The annual number of free emission permits provided to companies is designed to decline, therefore companies' desire for carbon credits will increase. The compliance market's yearly trading volume will exceed $261B in 2020, five times its 2017 level.

In the Voluntary Market, carbon reduction is voluntary and carbon credits are sold for personal reasons or to build market participants' eco-friendly reputations. Even if not in the compliance market, it is typical for a corporation to be obliged to offset its carbon emissions by acquiring voluntary carbon credits. When a company seeks government or company investment, it may be denied because it is not net zero. If a significant shareholder declares net zero, the companies below it must execute it. As the world moves toward ESG management, becoming an eco-friendly company is no longer a strategic choice to gain a competitive edge, but an important precaution to not fall behind. Due to this eco-friendly trend, the annual market volume of voluntary emission credits will approach $1B by November 2021. The voluntary credit market is anticipated to reach $5B to $50B by 2030. (TSCVM 2021 Report)

In conclusion

This article analyzed how net zero, a target promised by countries around the world to combat climate change, has brought governmental, corporate, and human changes. We discussed how these shifts will become more obvious as we approach net zero, and how the carbon credit market would increase exponentially in response. In the following piece, let's analyze the hurdles impeding the carbon credit market's growth, how the project we invested in tries to tackle these issues, and why we chose Climate Coin. Wait! Jim Skea, co-chair of the IPCC working group, said,

“It’s now or never, if we want to limit global warming to 1.5°C” — Jim Skea

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Mail us : general@nonceclassic.org

Don't sleep with your own sister.

70% of lottery winners go broke within five years. You've heard the last one. People who got rich quickly without setbacks and hard work often lose it all. My father said, "Easy money is easily lost," and a wealthy friend who owns a family office said, "The first generation makes it, the second generation spends it, and the third generation blows it."

This is evident. Corrupt politicians in developing countries live lavishly, buying their third wives' fifth Hermès bag and celebrating New Year's at The Brando Resort. A successful businessperson from humble beginnings is more conservative with money. More so if they're atom-based, not bit-based. They value money.

Crypto can "feel" easy. I have nothing against capital market investing. The global financial system is shady, but that's another topic. The problem started when those who took advantage of easy money started affecting other businesses. VCs did minimal due diligence on FTX because they needed deal flow and returns for their LPs. Lenders did minimum diligence and underwrote ludicrous loans to 3AC because they needed revenue.

Alameda (hence FTX) and 3AC made "easy money" Genesis and DCG aren't. Their businesses are more conventional, but they underestimated how "easy money" can hurt them.

Genesis has been the victim of easy money hubris and insolvency, losing $1 billion+ to 3AC and $200M to FTX. We discuss the implications for the broader crypto market.

Here are the quick takeaways:

• Genesis is one of the largest and most notable crypto lenders and prime brokerage firms.

• DCG and Genesis have done related party transactions, which can be done right but is a bad practice.

• Genesis owes DCG $1.5 billion+.

• If DCG unwinds Grayscale's GBTC, $9-10 billion in BTC will hit the market.

• DCG will survive Genesis.

What happened?

Let's recap the FTX shenanigan from two weeks ago. Shenanigans! Delphi's tweet sums up the craziness. Genesis has $175M in FTX.

Cred's timeline: I hate bad crisis management. Yes, admitting their balance sheet hole right away might've sparked more panic, and there's no easy way to convey your trouble, but no one ever learns.

By November 23, rumors circulated online that the problem could affect Genesis' parent company, DCG. To address this, Barry Silbert, Founder, and CEO of DCG released a statement to shareholders.

• A few things are confirmed thanks to this statement.

• DCG owes $1.5 billion+ to Genesis.

• $500M is due in 6 months, and the rest is due in 2032 (yes, that’s not a typo).

• Unless Barry raises new cash, his last-ditch efforts to repay the money will likely push the crypto market lower.

• Half a year of GBTC fees is approximately $100M.

• They can pay $500M with GBTC.

• With profits, sell another port.

Genesis has hired a restructuring adviser, indicating it is in trouble.

Rehypothecation

Every crypto problem in the past year seems to be rehypothecation between related parties, excessive leverage, hubris, and the removal of the money printer. The Bankless guys provided a chart showing 2021 crypto yield.

In June 2022, @DataFinnovation published a great investigation about 3AC and DCG. Here's a summary.

• 3AC borrowed BTC from Genesis and pledged it to create Grayscale's GBTC shares.

• 3AC uses GBTC to borrow more money from Genesis.

• This lets 3AC leverage their capital.

• 3AC's strategy made sense because GBTC had a premium, creating "free money."

• GBTC's discount and LUNA's implosion caused problems.

• 3AC lost its loan money in LUNA.

• Margin called on 3ACs' GBTC collateral.

• DCG bought GBTC to avoid a systemic collapse and a larger discount.

• Genesis lost too much money because 3AC can't pay back its loan. DCG "saved" Genesis, but the FTX collapse hurt Genesis further, forcing DCG and Genesis to seek external funding.

bruh…

Learning Experience

Co-borrowing. Unnecessary rehypothecation. Extra space. Governance disaster. Greed, hubris. Crypto has repeatedly shown it can recreate traditional financial system disasters quickly. Working in crypto is one of the best ways to learn crazy financial tricks people will do for a quick buck much faster than if you dabble in traditional finance.

Moving Forward

I think the crypto industry needs to consider its future. This is especially true for professionals. I'm not trying to scare you. In 2018 and 2020, I had doubts. No doubts now. Detailing the crypto industry's potential outcomes helped me gain certainty and confidence in its future. This includes VCs' benefits and talking points during the bull market, as well as what would happen if government regulations became hostile, etc. Even if that happens, I'm certain. This is permanent. I may write a post about that soon.

Sincerely,

M.