In July 2022, FTX Chief Executive, Sam Bankman-Fried, and Anatoly Yakovenko, Co-Founder of Solana, were on a fireside chat at Wing Web3 Summit where they revealed some mistakes they made when building their respective companies, and there lie several lessons for web3 founders.
The virtual summit was focused on building, scaling, and founder lessons – things that the early Web3 community can absorb and which will hopefully make the whole ecosystem stronger.
BitKE found 5 areas where the founders made mistakes and singled out these key business aspects as important:
- Uptime
- Security
- Product
- Partners
- Hiring
(1) Uptime Needs to be Perfect
Uptime is the duration of time that a system has been working and available in a reliable operating manner. It is an indication of the stability and reliability of the operating system and compute infrastructure.
FTX CEO revealed that when they launched, he thought that 99% of uptime would be a great achievement, but he got to learn that ‘it’s incredibly important for customers to trade whenever they want to trade.’
“I thought this would be damn good, even though 100% would have been better. But this didn’t turn out to be correct, as it turns out that it’s incredibly important for customers to trade whenever they want to trade.
It would be horrific if we are down for even 10 minutes every month, so we had to go back and rework some of our systems.”
– CEO, FTX
(2) Security Can’t Be Optional
Bankman-Fried also revealed that FTX customers were phished during the exchange’s early days.
This occurred when the startup had security features that could have prevented this, yet these were optional.
“Many of these features are now mandatory because we realized this was really important for our users. Security can’t be optional.”
– CEO, FTX
(3) You Needn’t Be in a Hurry to Launch Products
The FTX CEO also mentioned that at the beginning, they tried to launch many products, which did not get much traction. He thinks they should have done better to serve customers more effectively.
“When you look at institutional traders, order throughput means a lot. We should have prioritized that earlier.”
– CEO, FTX
(4) Pick Partners Intelligently
For Solana Founder, Anatoly Yakovenko, founders launching Web3 products should pick their partners intelligently. The relationship between the two began early, and this can be seen based on the close association between the companies they have built.
Yakovenko explained that he connected with Bankman-Fried early in his career, noting that the FTX CEO told him there was a need to make blockchains faster.
Based on that, FTX’s engineers then slammed the Solana network, which led the company to develop Project Serum, a decentralized derivatives exchange for Solana.
“Early-stage founders need partners who are aligned on their visions and can help execute immediately.”
– Founder, Solana
(5) Don’t Over-Hire
According to Bankman-Fried, many companies tend to over-hire rather than under hire. However, he pointed out that this often leads to less productivity in the long run.
“When running a business it’s easy to fall into a trap where you hire a lot of good people and then end up with a total diffusion of responsibility. You then have too many cooks in the kitchen and no one is sure what anyone should be doing.”
– CEO, FTX
A piece of advice Bankman-Fried gave is that companies shouldn’t hire new employees unless the new employees will be entering a team that is already run well but has too many responsibilities allocated.
“The current team needs to have been at the company long enough that they know how to do their jobs. They also need to have the management capacity to teach someone new.”
– CEO, FTX
Finally, one parting shot from the summit was:
“The best time to invest is in bear markets historically. Prices are down and tourists are scared off.”
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RECOMMENDED READING: 3 Crypto Startup Lessons for Entrepreneurs from CZ, CEO, Binance
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