It took him more than 100 investor pitches before he was able to raise funds for his web3 startup.
In this episode, we talk to Matt Kim. He is the co-founder of Smoothie, a discover-to-earn rewards platform for web3 projects. Smoothie is also known as the Product Hunt for web3.
Matt shares his experience building his web3 startup including unique opportunities that the web3 space presented at the beginning of his project. He also shares his thoughts on on-chain activities, his number one tip for pitching to investors, and his predictions on the future of crypto.
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Justin Kan’s famous quote
[00:00:00] Matt: Justin Kan famously said that first time founders focus on product and second time founders focus on distribution. One thing that I realized though is a variation of this for the web3 space where first time founders still focus on product, but then second time founders focus on community.
[00:00:16] Kaz: Welcome to 023 podcast, where we interviewed emerging founders in the web three ecosystems. We'll talk about how they got started, what they learned along the way, and will transform their stories into actionable insights. We're a co-host. I'm Kaz. I'm Kevin.
[00:00:30] Kevin: Today we are joined by Matt Kim co-founder of Smoothie, a discovered-to-earn awards platform for web3 projects. You can upvote the best new crypto projects and get rewarded for it. Think of it as the Product Hunt for web3. In today's show, Matt breaks down the story of how Smoothie came to be the challenges and lessons he learned as a first time founder and his experience raising 1.2 million for his company.
[00:00:53] Stick around to learn his tips for raising funds for your own web3 startup.
[00:00:57] To kick off here's Matt, he starts talking about his transition from web2 to web3 and how he got Smoothie off the ground.
[00:01:04] Matt: My name is Matt. I'm one of the co-founders and CEO of Smoothie, and Smoothie is a discover-to-earn awards platform for web3 projects. Now, in terms of my background, I used to work in the mobile app industry, so I used to work at a mobile app, analytics startup called Sensor Tower.
[00:01:19] And then I worked as a vertical strategy lead at Facebook for their mobile gaming team. And after when I quit Facebook, I started building another startup actually called, Bonfire, which was a virtual event marketplace. And you know, we realized that it wasn't gonna get to the scale that we had hoped for and we actually had to pivot away.
[00:01:39] But we learned a pretty valuable lesson of, first time founders, tend to focus on product. And then second time founders, focus on distribution. And we really learned that the hard way. You know, we built something and people just weren't that excited about it. So taking that learning, we actually started Smoothie.
[00:01:55] And when we first started smoothie, we actually started off as a newsletter. You know, taking our learning, focusing on distribution first, we actually didn't know what we want to build yet, so we start off with a newsletter to teach crypto. With visual storytelling. And then as you built that newsletter, built up the content, built up the audience.
[00:02:11] We had a lot of projects come to us and say, “hey, can I share my project on your newsletter?” And then we also had our subscribers and reader. Saying, Hey, what is the next NFT or DAO tool that I should know? So taking some of these insights, we said, “why don't we actually build something for this?” It seems like discovery is a missing piece in the space right now.
[00:02:30] So that's how we went about and said, let's build the product hunt for web3, this discovery awards platform. And then fast forward, we raised our pre-seed round, earlier last year in March of 1.2 million. And, since then, we've launched a product. We're live, we've had some amazing projects participate already, including Cyber Connect, DSol, Rabbit Hole, Invisible College.
[00:02:53] Kevin: It took Matt a few pivots, but finally, he was able to create a product that people were excited to use. while there are many unique web3 opportunities one thing that stood out for matt is user ownership.
[00:03:04] Matt: The thing that really stood out for us was that. Things are now user owned. Before it was really centralized. One company owned everything and then, you know, everyone else is just a user. But I think the big shift that's happening, you know, beyond the technology side is that the users are actually becoming the owners of, of the product that they're using.
[00:03:26] So because of that, even as we were thinking of the idea for Smoothie, we said, hey, instead of this just being the product that people use. Is there a way that this can be actually governed and owned by the users in the long term? So that is something that we keep in mind as we continue to build for Smoothie as well.
[00:03:39] Kevin: An engaged community helps improve your products with their feedback. Add more features based on their needs and onboard more people onto web3. Learn how Matt overcame a few challenges when it came to building his community for Smoothie.
[00:03:53] Matt: So I briefly hinted at this, but Justin Kan famously said that first time founders focus on product and second time founders focus on distribution. And I think most people that go through some level of failure understand this. One thing that I realized though is a variation of this for the web3 space where first time founders still focus on product, but then second time founders focus on community.
[00:04:14] And you can kind of see that in how we've built Smoothie as well, where once we had the newsletter, it's not just about, you know, writing to an audience, we actually interacted with them as much as possible. So I responded to every single person that reached out. We held Twitter spaces, you know, tried to understand them a lot more.
[00:04:30] And as we built more of this sense of community, that's even how we got the idea of, you know, building the discovery platform for Smoothie to what it is today. And even now as we're continuing to grow a lot of the help that we get, whether it's, you know, getting feedback on what we're building or introductions to new people, it's all thanks to this community that we're building.
[00:04:51] And I don't think this would've been possible without that. So it's a variation of that famous quote, for web3.
[00:04:56] Kevin: We can all agree that user feedback is really important.
[00:05:00] How about knowing how to properly raise funds for your own startup? Pitching to a handful of investors is one way to go about it.
[00:05:06] Matt: This was my first time successfully fundraising. I tried before in the past, and, at that time failed. And having gone through this time around, well actually having gone through both times, each time was a lot of learning. And basically what happens is, you know, once you start pitching an idea to.
[00:05:23] Investors, aka people that, you know, spend their entire days looking at a bunch of companies. They have a lot of great thoughts. You know, their job is to poke holes in, you know, the idea that you think is perfect to, you know, share ideas of opportunities that you may not have actually thought of. So actually going through that fundraising process and actually pitching to, you know, for us, we pitch to like over a hundred investors.
[00:05:45] We learn so much from. And it actually shaped a little bit more of Smoothie, of, you know, the direction that we wanted to go, the details of what we want to build, what we should focus on. And a lot of that, a lot of those narratives got changed, you know, from those conversations. So, you know, I think whether you actually succeed or fail in fundraising, it's a really, really great process to go through because they're just gonna learn so much coming out.
[00:06:06] Kevin: As the most famous saying goes, if at first you don't succeed. Try, try again. That's what Matt did. And as we heard earlier, he successfully raised funds for Smoothie. Next up matt gives us tip when it comes to pitching and raising funds.
[00:06:20] Matt: First of all, I wrote a really great thread on this, on Twitter, so, I'm sure you guys will share it in whatever links you guys are sharing. So, but out of that, I'll, I'll give one, tip, so that it's kind of easier for listeners to follow. But this is one thing that I wish I did in my process, but we should have started with angels.
[00:06:38] And really anyone that's fundraising should start with angels as well. And the reason for that is, angel investors have a much faster process. It's really just one person usually, so they can make the decision sometimes on that call, or, you know, the week after. They usually don't have to do a follow-up call.
[00:06:53] They don't have to, you know, introduce other people on their team. The due diligence is a lot faster as well. So it's easier to get, a lot more commitments, for that round. So let's say you're raising one mill. The goal is to get maybe 20 to 30% of that, in angel commitments as fast as possible.
[00:07:10] And then you go to the big funds and by that point you say, hey, Andreessen Horowitz, we've already got 300K in commitments and now we're looking for, you know, a couple big funds to just, to just close up the round to finish the round. What that does is, you know, a couple things. One, it creates some level of FOMO, for the other angels, but as well as the funds that you're pitching to, but also at the same time when you're pitching to people, you're gonna mess up.
[00:07:36] Like, there, there are gonna be so many times where you say something wrong or, you know, you didn't answer a question properly. So you should do that much sooner with, you know, the angels that you're pitching to instead of like the big name funds, who can, you know, bring in, you know, a million plus dollars to whatever around here, you know, hoping to raise.
[00:07:52] So, you know, get those mess up out of the way early. You're gonna have those, And then, yeah, get start with angels because that'll just make the entire process easier.
[00:07:59] Kevin: The more experienced you get the more knowledge you can bring to the table when it comes to pitching to bigger investors. At the time of this recording, we're in a bear market. So there's a lot of building involved. As a first time founder or someone who's just getting started in the web3 space.
[00:08:13] Consider asking yourself, does it need to be on-chain? Matt dives deep into this further.
[00:08:18] Matt: I think everyone right now is still very eager. Like we're in a bear market, but we're still very clearly in a builder's market. So there's a lot of people that are tinkering with stuff, trying to build. I think, one thing that I still see is everyone is very eager to say that something has to be on-chain.
[00:08:37] And sometimes I would just challenge that and ask, does it really need to be, like, you know, we. Are doing, I don't know, blending fruits on-chain. We are, you know, listening to podcasts on-chain, I'm, I'm like, okay, does this really have to be on-chain? And how big is the market for that? So yeah, I think these days, I, I, I've, I've definitely seen a lot of people and doing that, so I'll try to question them and like push them a little bit more with that.
[00:09:01] And I think the, the thing to keep in mind with that is, you know, you have your set market, whatever it is. Let's say you're gonna go for, people that wanna do fitness, but then let's say your app is specifically fitness people that wanna record themselves in like a short-form video format, and then they also want an NFT.
[00:09:15] Now what you've done is you've cut down your segment in like threefold, right? It's like the people that work out, the people that wanna film a video and the people that also want an NFT. So it's like, did you shrink that too much? And is that NFT on-chain part really necessary? So I would challenge people to kind of rethink about that.
[00:09:29] Kevin: As mentioned by builders and founders in the space, web three is still in its early stages. There are a lot of improvements that need to be made as well as better onboarding. Matt mentioned that eventually crypto will be pushed to the background and it will become more easily accessible to everyone else.
[00:09:44] Matt: If I were to look at the future of web3 right now, I would say that we still embody that theme of being user owned, user governed. And that goes, that goes for many things, right? It's not. It's not just, you know, actions that a company does, but also things like security, data, even like storage.
[00:10:03] Like everything can really be like user owned. So I think that's one trend. But then the other trend that I think is gonna happen in the more near future is that crypto is gonna be pushed to the background. And I think it should be, because when I look at the users right now, it still feels like you know, the nerds of the space, right?
[00:10:21] It's like if you think about the internet back in the day, it's like the nerds, you know, we're the first ones to jump on it and then it made it much more easily accessible to everyone else. And I think right now, cryptos, crypto and rep, there are both still like that, where it's the nerds of the space that are really using it, and it's really tough for regular, everyday people to do it.
[00:10:34] Like, there's no way my mom is gonna understand how seed raise is and all that stuff works. So I think I know a lot of companies that are, you know, working to push some of these, you know, wallet creations and logins and you know, all that sort of stuff into the background. And I think that needs to happen.
[00:10:47] Kevin: I also believe web3 is just going through the same thing as when the internet first came out. Most people don't quite understand web three. And it's not just the fact that there are a lot of terms like DeFi, mainnet, proof of stake and so on. But there are a lot of startups out there that are trying to change this
[00:11:03] The last thing I asked Matt is what's next for Smoothie?
[00:11:07] Matt: One big cultural theme for us at Smoothie is to supercharge web3 startups, and that's something that we continue to keep in mind as we build features or, you know, build our community and obviously, one way to do that is through discoverability. And right now the big focus is making it easier to discover startups.
[00:11:29] But how can we make it more meaningful? You know, like who are these users that are actually discovering these sorts of startups? What, in what ways can we make it more meaningful to them as well? So I don't, I don't wanna give away too much because, we have a lot of cool things, coming up. But, to give you a little hint, we are doing more things around discoverability, meaningful information and also, bringing that value to the actual users on the platform via status.
[00:11:58] Kevin: There are amazing web3 startups on Smoothie so I definitely recommend you check it out. Especially if you're always on the lookout for the next DAO, dApp, or web3 startup. If you like this 023 episode, please leave us a review. We're just starting out. So every review really helps. Follow us on Twitter at zypsycom, if you don't want to miss an episode. That way you'll be able to see every time a new show goes live.
[00:12:22] That's all for me today.
[00:12:23] Thank you so much for listening to this episode of Zero to Three.