Is revenue actually a thing in Web 3
Key difference between Web 2 and Web 3 Growth Metrics
I am glad that trying to bridge critical concepts between Web 2 and Web 3 is helping to make more relatable content, so this week in… Making Sense of Crypto Jargon," we're diving into the exhilarating world of metrics and KPIs! Yes, I can feel your excitement through the screen.
Let's start with the basics, shall we? Metrics and KPIs sound like identical twins who dress differently just to confuse everyone at parties. We will understand the difference between them, but more importantly the difference in onboarding growth and revenue metrics into your Web 3 startup vs Web 2 start-up.
Metric vs. KPI
Metrics are like that friend who tells you EVERYTHING about their day, quantitative measures tracking all sorts of business performance aspects. They're broad, they're plentiful, and they never shut up.
KPIs, on the other hand, are your focused friend who only calls when something important happens, strategic measurements directly tied to specific business goals. They're the VIPs of the measurement world.
Think of it this way: all KPIs are metrics, but not all metrics are KPIs, like how all squares are rectangles, but not all rectangles are squares. I know, I'm bringing geometry into crypto maybe let’s begin with Graphs and Object centric data models. What a time to be alive!
The key differences:
Scope and Focus: Metrics are the promiscuous data points sleeping around with various business processes, while KPIs are in committed relationships with specific strategic objectives.
Time Constraints: Metrics are like time-travelers, measured continuously without specific constraints. KPIs are deadline-obsessed, typically tied to defined timeframes like roadmaps and sprints.
Hierarchy: Metrics are the worker bees of daily operations, while KPIs are the queen bees reporting directly to top-level decision-makers.
Now for the sake of this substack, I am assuming part of the audience is a Web 3 founder or thinking about building something in the space. When it comes to fundraising you need two different outfits for two very different dates.
For Traditional VCs:
These folks want to see business fundamentals that would make Warren Buffett nod approvingly. They're looking for:
Monthly Revenue Growth Rate – show them the money!
User acquisition costs – how much are you spending to convince people your blockchain thing isn't just magic internet money?
User retention metrics – are people actually sticking around after the initial "ooh, shiny token" phase?
Traditional VCs want proof you're solving real problems: "Does your solution address issues that existing Web2 or centralized Web3 platforms fail to solve?" They'll want quantifiable evidence from user interviews or prototype testing.
For Crypto/Web3 VCs:
These are the people who have "WAGMI" in their Twitter bios and probably own at least one Bored Ape. They care about:
Total Value Locked (TVL): the holy grail metric showing how much money is trapped in your protocol.
Total Value Secured (TVS): especially important if you're building infrastructure like oracles.
Transaction Value Enabled (TVE): the aggregate value of transactions your protocol facilitates.
Monthly Active Developers: because in Web3, developer adoption is like having celebrities endorse your product.
Crypto VCs also obsess over decentralization thresholds: "What aspects of your project must be decentralized to align with Web3 principles versus elements that can remain centralized for efficiency?"
Onboarding Your Team
As an early-stage founder, getting your team to care about these numbers is like trying to convince teenagers that your music taste is cool. Here's how to do it without causing a revolt:
Step 1: Define Your Metrics and KPIs
Identify key areas using frameworks like POEM (Proposition, Organization, Economics, Milestones) and set initial goals like wallet activation and usage.
Step 2: Establish a Data Collection System
Implement analytics tools and train your team to use them without breaking everything.
Step 3: Integrate Metrics into Decision-Making
Align everything with strategic goals, because collecting data for data's sake is like having a swimming pool you never swim in.
Step 4: Set Up Your Feedback Loop
Create a cadence for reviewing metrics, get management and stakeholders to follow the same dashboards, and have a clear mechanism to turn user feedback into actual improvements.
And remember the cardinal rule: avoid vanity metrics like "total signups" that make you feel good but tell you nothing useful. That's like measuring your fitness by how many gym selfies you post rather than how many pushups you can do.