Boring problems

Stacy posted a list a couple of weeks ago: something like 30 to 40 solid web3 projects sunset since the beginning of this year. Not random DeFi forks nobody used. Real products, real teams, the kind you look at and think "I wish we were doing as well as them."

And then they shut down.

I keep coming back to that list, partly because I'm looking for a job right now and I see the same picture from the other side: almost nobody is hiring in B2C. So what actually happened to these companies?

Here's the boring answer. Almost no company in the world shuts down while making great revenue with a healthy margin. It just doesn't happen.

So these companies weren't making enough money per user. That's the whole story. Everything else is detail.

The belief that broke everything

There was a period when companies raised a lot of money, and that money came with an assumption baked in: the market will keep growing fast, and you'll grow with it. For founders and for funds this basically meant one thing. You will grow organically, without doing much.

That belief is the mistake almost everybody bought.

We've seen this movie before. The dot com boom. The mobile app boom, where Angry Birds is still alive and you can't name ten of the thousands that died next to it. Web3 got its own version. I'd bet AI gets one in a couple of years too.

In web2 this is the first question. In web3 nobody asks it.

I've been a founder five times and I still hold shares in a couple of companies that keep raising, so I see how those conversations go. In web2 the first thing an investor asks is your LTV to CAC ratio. If it's around 5, meaning you spend $10 and get $50 back, that's fine. Not amazing. Just fine.

Now go ask the same question in crypto.

First, most teams don't know their CAC to LTV at all. Second, if they do calculate it, they usually calculate it wrong. Because the story in their head is "we don't really do paid, we're product led, we grow organically."

So they count the few thousand they spent on ads and call it a day. The community manager, the social guy, the brand designer, the four people whose entire job is acquiring attention, none of that lands in the number. That's just "the team."

But even that isn't the real problem.

The real problem is revenue per user

Look at who's actually doing well right now. Hyperliquid, Axiom, Polymarket. Whatever you think of them, they share one thing: they make serious money from a single user.

The gap between a regular wallet and something like Axiom can be a hundred times in revenue per user. A hundred times.

So if you're a marketer today, the funny truth is that your job starts with revenue.

Not with channels, not with creatives, not with your content calendar.

How does this company actually make money, and how much does it make from one acquired user. That number is what makes you a business instead of a person burning someone else's cash.

Everybody optimized the wrong goal

There's a book by Eliyahu Goldratt called The Goal. The whole idea is that a company has exactly one goal: to make money, and to make enough of it to keep growing. That's it.

I recommend it to everyone, and clearly nobody in crypto read it. Because for years we optimized for something else. Number of users. Number of wallets. Monthly actives.

You can still see these numbers on landing pages. "Millions of users." Great. My favorite version of this metric is the ten people in your Discord who say GM every morning.

Here's the thing. Everything optimizes toward whatever you actually measure. Optimize the company for a lot of users and you'll get a lot of users. Optimize it for revenue and you'll get revenue. Companies got exactly what they asked for.

And I get it. At pre-seed, seed, even Series A, user numbers matter. Investors want proof that people want this thing. Fine. But after that, at some point you have to start taking money from those users. Any money.

Do the math once. It hurts.

Say your product makes $2 per user per year. That's not a strawman, that's a real number for a lot of trackers, protocols and wallets.

So how much can you spend to acquire that user? Some fraction of $2. Maybe half, if you want to survive.

Now read the post-mortems. When companies sunset they often publish a thoughtful article about what went wrong, and the reason is almost always the same: marketing turned out too expensive and we weren't making enough from users. Yeah. You were making $2. There was never a version of this where marketing was going to be cheap enough.

"We'll just do product led growth"

This is my favorite one, and I say it with love.

The logic goes: we can't afford marketing, so we'll do product led growth. Or organic. Something free.

Let's be clear about what product led growth actually is. Telegram had it. Facebook in 2004 had it. That's the reference class, and those were new products doing something the world hadn't seen.

You're not that. You're an existing company with a product people already know. So what you actually do is ship a new feature and hope it spreads.

Not every feature works. You need something like twenty of them to get one that lands. And even that one doesn't give you product led growth, it gives you some users who are glad it exists.

Now count what those twenty cost. Product managers, developers, designers, project management, GTM, socials, partnerships, the whole operations team's time. That's not free. That's millions.

So when someone tells me marketing is too expensive, I want to ask: then why was it fine to spend a few million on two or three features that never moved growth?

Everyone studies MetaMask and Phantom. Nobody studies the 99.9% who did exactly the same thing and quietly died. That's survivorship bias, and it's expensive.

Organic isn't free either

Same story with content and community. Lunar Strategy posted recently that founders should hire a whole marketing team instead of one person, and I was surprised this is still news to people. Most companies still hire one guy and expect a channel.

What does "doing socials" even mean in practice? Either you create something people farm, quests, points, an airdrop story, which costs money. Or you make genuinely good content, which costs a lot of money. Look at Red Bull if you want to know what good content really costs.

So pick any channel you want. Paid, organic, product. Founders keep sliding down that list looking for the free one. There isn't one. You're just moving money from one budget line to another and telling yourself it disappeared.

The uncomfortable comparison

Outside crypto there's a whole category of companies that ignore this debate entirely. Mental health and wellness apps, the Zing and Flo, Headspace of the world.

They barely invest in the product. It's a solid four out of ten, just good enough that you don't ask for a refund. Everything else goes into marketing: funnels, creatives, copy, ambassadors, the whole machine.

And they grow. Every year. Because that's the mechanic they picked and they're honest with themselves about it.

I'm not saying copy them exactly. You'll still fight bad retention, and the share of users who bring you new users matters a lot. It has to be balanced. But if you believe product led growth is the only real way to grow, sit with that category for a minute.

So what do you actually do

Every company has user segments that generate wildly different revenue, and every company has levers to raise what it makes per user. That's the work.

If you're a marketer joining a company, do this before anything else:

• Ask what the revenue per paying user is. If the founder doesn't know what that means, you've already learned something important.
• If nobody has calculated it, calculate it yourself.
• If that number is under something like $10 to $25 a year, understand what you're walking into. It will be very hard to ever be profitable, whatever you do.

In a market like this one, a company with a number like that doesn't get saved by better creatives. It closes.

One last thing. If you raise this at a company that has never looked at these numbers, there are two outcomes. You either get promoted, or you get fired.

Both are fine. At least in the first case the company still has money to pay you.