Startups Die From Starvation

A discussion about how startups and crypto companies fail, with insights from the FTX collapse. The key insight is that companies don't usually die from competition, but from fundamental issues with their business model or product.

Core Failure Principles

• Companies typically die from "starvation" not "competition"
• Death by starvation means:
  • Lack of strong product-market fit
  • Insufficient utility/use case
  • Unable to continuously draw in users over time
• Death rarely comes from being "hunted" by competitors

Applied to Crypto Industry

• FTX collapse impact:

  • Will set the industry back several years
  • Creates massive trust issues with customers
  • Affects institutional confidence
  • But likely won't kill crypto entirely

• Predicted crypto outcomes:

  • 5-10 year "winter" period ahead
  • Most altcoins will go to zero
  • Only Bitcoin and Ethereum likely to survive long-term
  • NFTs expected to collapse
  • Web3 startups from recent years likely to fail
    • Not necessarily due to bad entrepreneurs
    • But due to loss of market confidence
    • Will be "laughed out of existence"

Survivors

• Coinbase likely to survive and potentially grow
  • Seen as more trustworthy option
  • Benefits from being publicly traded
  • More regulatory oversight
• New projects may emerge after winter
  • But will need stronger fundamentals
  • Must rebuild trust with users
  • Need clear utility and use case

The key takeaway is that companies don't typically fail because competitors beat them - they fail because they can't create enough sustainable value for their market.