I once listened to a podcast (https://castbox.fm/vd/441899791) where Coinbase CEO Brian Armstrong was interviewed by Guy Raz. Guy asked Brian, what do you think is the best thing Coinbase has done? Brian said, we have gone through several cycles of blockchain, and during the bull market, we did not expand recklessly, ensuring that our burn rate would not be too high when the market turns bad; during the bear market, we did not lay off a large number of employees, ensuring the product iteration so that we can meet new demands when the bull market returns.
Blockchain is closely related to money. Compared with traditional industries, it is equivalent to adding greater leverage, resulting in more frequent conversion between bull and bear markets, with larger fluctuations. It's more important to control the rhythm. Although it was recently revealed that Coinbase will also lay off employees, this should be more about optimizing the talent structure rather than saving money and reducing costs.
BTC fell sharply yesterday, with a daily closing decline of 15.38%. It might have been affected by defi liquidation, falling to a low of $20,850 before rebounding slightly. The latest episode of Bankless' podcast (https://castbox.fm/vd/503523969) also mentioned that many practitioners feel bankrupt.
As a Web2 company trying to enter Web3, we actually feel that the bear market is not a bad thing for us. During a prolonged bull market, BTC could be pledged for 70% stablecoins, and the annual interest on these stablecoins could reach 15%. Therefore, Web3 native teams with a lot of coins can earn good returns just from the interest, which they can use to expand their teams, pay tuition fees, and try out new businesses; while our Web2 team holding fiat currency would have an even bigger gap in industry knowledge compared to them. However, during the bear market, cash is king. Our balance sheet is relatively healthy, and all the funds raised after the B round have not been touched yet. Moreover, compared to most Web3 companies (excluding exchanges and wallets) that lack validated business models, at least we have positive cash flow. So we hope to accumulate well during this bear market and at least not widen the gap with Web3 native companies.
Sometimes, running fast is not as important as running long. Because a company's expected lifespan follows the Lindy effect. The Lindy effect refers to the fact that for some things that do not naturally perish, such as a technology or an idea, their expected lifespan is proportional to how long they have already existed. That is, the longer it survives, the longer its remaining expected lifespan becomes. In situations where the Lindy effect applies, mortality decreases over time.
Therefore, the longer a company stays in operation, the longer its expected lifespan becomes. Staying in the game is relatively important. After raising funds in 2018, there was consideration given to expanding, but Brother Cong stopped it. He said that in all the companies he had been through in the past, whenever they started large-scale expansion or moved to fancy offices, it was mostly the beginning of the company's decline.
Cut unnecessary expenses, deleverage, reduce debt, and ensure stable free cash flow. This applies to companies, and life as well.