My first startup in Web3: from building a DEX team to breaking the capital chain

Foreword

In the previous article "I decided to upgrade from "writing tutorials" to "doing projects", I reviewed the technical content output in the past few years and clarified the next direction:No longer focusing only on "explaining the technology clearly", but hoping to review the projects I have done in the past from the perspective of Builder, and on the other hand, record the process of the new project I will try next - not only talking about "how to write technology", but also "how things are done, or not done".

This time, I want to start with the earliest Web3 startup in 2018. That was the first time I devoted myself to a chain project full-time as a Builder.

It was an experience full of hope, but ultimately disappointing. From the peak of the bull market to the advent of the bear market, from the high morale of the team to the broken capital chain and the dissolution of the project. Although it did not succeed in the end, it allowed me to truly stand in the core area of ​​Web3 for the first time.

This article is a review of that entrepreneurial experience. It is not only the starting point of my "project-driven content output", but also hopes to provide a real reference perspective for you who are on the road of Web3 Builder.

Starting point

The starting point of this experience was a recommendation from a friend.

In the first half of 2018, a friend who had been in "Dark Horse" - whom I met when I was invited to do an offline technical sharing - contacted me. At that time, I was still in Guangzhou and he was in Shenzhen. He said he was participating in a decentralized exchange (DEX) project to develop a DApp based on the Loopring protocol, and wanted to recommend me to have a chat to see if there was any possibility of cooperation. What attracted me to this project was not just the label of "blockchain". What really attracted me was that it highly overlapped with the three directions I was focusing on at the time:

• First, the direction was DEX, which was one of the core tracks of blockchain;

• Second, the underlying layer used was the Loopring protocol, which was considered to be an advanced DEX technical solution at the time;

• Third, they hoped to find a technical director who understood mobile development, was familiar with product implementation logic, and had full-stack App capabilities - this was exactly my ability profile at the time.

At that time, I had already made up my mind to invest in Web3, and I was just looking for a suitable entry point. This project came at a very timely moment, which gave me a feeling that "the time has come".

So I took advantage of the weekend to go from Guangzhou to Shenzhen and met the initiator of this project.

The founder was a post-90s generation who had previously worked as an Android developer. Because he made a lot of money from speculating in cryptocurrencies, he began to plan his own blockchain project. He was very optimistic about Loopring, participated in the token issuance in the early stage, held a lot of tokens, and was an absolute fan. Therefore, he wanted to make a DApp based on the Loopring protocol, and even the product name was very similar, called  Loois.

Overall, I had a good impression of him: he was a down-to-earth person, had a strong desire to get things done, and had some courage. Although he lacked management experience and product background, these were exactly the parts I could make up for.

In addition, it was still a bull market at the time, and the company had a profitable business line, so it did not need financing for the time being, and there was no financial pressure.

At that moment, I felt: the direction was right, the people were reliable, and the gap was exactly what I could make up for. I was willing to give it a try to see if this idea could really be made.

We talked for a whole day, and finally I decided to join the project as CTO and become a partner in the form of technical shares.

Team Building

After I officially joined, I didn’t give myself too much transition period, but quickly stepped into the role of CTO and started to build product and technical teams.

Before this project, I led several small R&D teams and participated in the whole process of building a system from scratch. The challenge this time is: we not only have to start from 0, but also explore product landing in a brand new track - Web3. Time is tight, the task is heavy, and there is almost no room for trial and error.

It took me a week to build the basic technical direction and architecture plan, and at the same time I started to recruit people to build a team. At that time, remote work was not popular yet, and offline office was absolutely mainstream. In order to save commuting time as much as possible, I rented a house in the community opposite the company and brought my family and children from Guangzhou. Almost "zero commuting" between life and work also allowed me to devote myself to the project.

When forming a team, I knew that time was tight and I had to quickly build an efficient and well-coordinated technical team. The core members mainly come from three aspects:

• Most of them are excellent subordinates I have led before. They are familiar with my management and working methods and can quickly get into the state;

• Some are excellent colleagues who have worked with me before and have rich experience and ability;

• In addition, I also selected some outstanding talents from my public account fans, hoping to bring fresh perspectives and vitality through them.

With these channels, I can quickly lock in trustworthy team backbones with matching capabilities to ensure team quality and execution.

My formation strategy includes three key points:

• First, quickly lock in the core backbone to ensure the solid foundation of the team;

• Second, accurate role matching and division of labor , according to project requirements, clarify key positions such as product manager, mobile terminal, front-end, back-end, smart contract development, testing, etc., and reasonably allocate responsibilities;

• Third, create an efficient collaboration process

• leaf="">, promote flat communication and agile development, use project management tools to track tasks, ensure information transparency and fast feedback.

Through these methods, we built a team of more than 20 people in a very short time, covering key positions such as product manager, UI design, mobile terminal, front-end, back-end, smart contract development, testing, operation and maintenance. This speed is still very fast in today's entrepreneurial environment.

The team is very capable and full of energy. From the first day, a clear rhythm of collaboration was established: the product direction was disassembled by me, the R&D process was divided into modules, project management was followed up by tower.im, synchronized once a week, and communicated in a flat manner at other times.

What satisfies me most is that although the team was just established not long ago, it has strong execution and low running-in costs.

Under such circumstances,it took us only one and a half months to complete the development and launch of the first version of Loois.

Looking back, this was the stage with the fastest pace and the best atmosphere of the entire project.

Highlight

When Loois was officially launched, we also held a small press conference and invited some friends and media in the circle. Although the scale was not large, more than 200 people came to the scene, and it was almost full.

As CTO, I gave a complete introduction from technical solutions, product positioning, protocol selection to future roadmap. That was my first official appearance in the Web3 project as a Builder.

In order to explain our vision and mechanism more systematically, I also personally wrote the project's white paper, covering Loois' business architecture, business model, economic model and future development plan. At that time, we did draw a big pie: not only to connect to Loopring, but also to connect to multiple protocols such as 0x and R1, and to realize cross-chain transactions. The goal was to be a decentralized transaction aggregator - in fact, it is very close to the aggregated transaction experience provided by the OKX Web3 wallet today.

But the pie is the pie,our product iteration speed and quality are really online. The team adopts a two-week iteration rhythm and releases progress updates every two weeks to ensure that the community can continue to see the evolution of the project. Loois's user interface and interactive experience were very outstanding among similar products at the time, and many early users gave it high praise.

After seeing our product, the official team of Loopring also expressed their recognition and invited us as an ecological partner to participate in the 2018 Digital Economy Summit Forum hosted by them, which brought us more industry exposure. Later, they also made a small investment in us through project tokens. Although the amount is not large, for us, this is not only a supplement to funds, but also a kind of "official endorsement" from the upstream protocol.

Since then, I have been invited to participate in several industry salons and private board meetings, and began to contact more chain circle venture capitalists, and also expanded some early connections in the Web3 circle.

Among them, the one that impressed me the most was the investor Jiang Haibing, who was known as the "Old Naughty Boy" in the industry. He was the second employee of Alipay and later founded Duoniu Capital in 2014, focusing on early-stage investments in the blockchain field. We met with him several times and he expressed a strong interest in Loois. Although we failed to reach an investment in the end, we benefited a lot from those exchanges and gained a deeper understanding of "how to talk about projects in financing."

This stage is when the project is most promising and the team is most confident. Although the shadow of the bear market has already emerged, we still believe that as long as we make products, financing and growth are only a matter of time.

But soon, we had to face the backlash of reality.

The backlash of reality

For a period of time after the press conference, the team morale was high, the product progress was smooth, the user feedback was also good, and the ecological cooperation and media attention were gradually increasing. From the outside, everything was "upward".

But what we didn't realize was thatit was actually at the critical point of a downward cycle.

Although Loois's products have been launched and the experience is better than many similar products, the entire market is gradually cooling down. The bear market of 2018 is quietly approaching - the heat on the chain is receding, and the enthusiasm of investors is also cooling down rapidly.

We were not anxious at first. After all, the company has other business lines that are making money, there is still money in the account, the product is online, and the feedback is not bad. Everyone generally believes: "As long as we continue to make the product, financing and growth are only a matter of time."

But soon, reality began to tear our confidence bit by bit.

The business line that originally made money suddenly "lost blood"

The business line that supported the entire company's cash flow quickly fell out of favor in the early stages of the bear market, and customers were lost one after another, and business income fell sharply. The salary of our Loois team is attached to the entire company system, that is to say,our salary is not borne by the Loois project itself, but by "blood transfusions" from other businesses.

Once the blood transfusion capacity weakens, the pressure is immediately transmitted to our side.

Financing obstacles: ideals are full, but the market is getting colder

At that time, we officially started the financing process and began to pitch. But reality soon gave us a blow.

Many investors still lack confidence in the DEX track and have limited knowledge of the Loopring protocol; and although our product is online, the number of users is still small, and the data is not convincing; the background of team members is not like that of "serial entrepreneurs" or "star technical teams".

To make matters worse, the entire industry is entering a "capital winter",Investors are beginning to become extremely cautious, and projects must be extremely certain and anti-cyclical in order to be favored.

After several rounds of roadshows, we received highly similar reasons for rejection: "The project is good, but we dare not invest now."

Internal concerns: invisible money, visible anxiety

Funds are getting tighter and everyone is starting to get anxious. Some members were brought over from Guangzhou by me, and they were originally treating this as a long-term battle. At the beginning, we could still comfort ourselves that "the money is about to be raised", but gradually, even I began to doubt this statement.

The founder also seemed overwhelmed. The wealth accumulated by speculating in coins in the early days was greatly reduced due to the sharp drop in coin prices. Under pressure, he began to become impatient and internal communication became increasingly chaotic.

The most typical symptoms are:

It feels like you are driving a car with good performance, the accelerator is pressed firmly, and the direction is correct - but you don't know if there is a gas station ahead.

Things did not suddenly collapse at a certain moment, but quietly slid out of control step by step.

First, funds were tight and salaries were delayed; then team members quietly updated their resumes and looked for opportunities; later, communication became difficult, decision-making was delayed, and team morale visibly declined.

We tried to "grit our teeth and persevere", continue to polish the product and find funds, but at a certain point, we all knew in our hearts:This car is really out of gas.

From the surface highlights, to the backlash of reality, to the real realization that we are in a quagmire -This is the power of the bear market. It will not destroy you overnight, but like a tide, it swallows up confidence, resources and endurance bit by bit.

This is the cruel reality that many Web3 entrepreneurs will experience:Not dying from technical difficulties, but losing to cycles and confidence.

Finally, we announced that the Loois project would stop moving forward and the team would disband.

Fortunately, at the time, a partner was preparing a centralized exchange (CEX), and they highly recognized our team's execution and collaboration, and took the initiative to invite us to participate in the construction of its core system.

Although there was some idealistic gap in the transition from DEX to CEX, we all knew that at that stage,

staying in the industry and doing something practical was more important than anything else.

I accepted the job and started a new journey as a Builder.

Harvest and reflection

This failure experience brought me not only lessons, but also many irreplaceableaccumulations and precipitation.

First, mynetworkof people

in the Web3 circle began to be established. In an emerging industry, this is very important. I began to integrate into the friend circles of some core builders, and these connections played a role repeatedly in different subsequent occasions:

• Information exchange and sharing helped me quickly expand my industry horizons;

• When I needed to recruit talents, I could find trustworthy recommendations from the circle;

• When I wanted to find a new job or cooperation opportunity, I could also directly find internal referral channels.

Secondly, it was a leap in professional ability.

During that time, I not only improved my technical skills in Golang and Solidity, but also began to understand how to write white papers and the design thinking of economic models. More importantly, for the first time, I really participated in the connection between "on-chain products" and "business logic". For the first time, I had the opportunity to participate in some industry activities as a Builder, communicate with senior entrepreneurs and investors, and learn how they understand trends, assess risks, and judge opportunities. These processes have rapidly broadened my business vision. Finally, it is my true understanding of this industry ecosystem. I began to gradually see the "outside" and "inside" of the Web3 circle: chain circle, currency circle, hype, speculation, ICO, air coins, pyramid schemes - especially in Shenzhen, the entire industry ecosystem is far more chaotic than I imagined. Web3 has strong financial attributes. In the cycle of skyrocketing and plummeting, it will attract real builders and a large number of people who are making money.  This is the current state of the industry that must be faced.