"Startups are these magical things that take linear work and translate them into exponential impact," emphasizes Sreeram Kannan, the Founder of EigenLayer. But how can you, as a web3 founder, achieve this kind of hockey stick growth?
In today's Masterclass, we’ll explore the concept of a market-first approach to building companies and unpack three key lessons that can help you get inside your customers' heads. And there is no one better to learn these lessons from than Sreeram Kannan. Seen as one of the foremost innovators in web3 currently, Sreeram is the Founder of EigenLayer and the Director of the University of Washington's Blockchain Lab. Founded in 2022, EigenLayer introduces a novel validation marketplace that allows participants to freely re-stake/re-use their tokens in different networks rather than having their assets locked up in a singular location. Before founding EigenLayer, Sreeram worked on many different technological domains such as peer-to-peer wireless systems, computational genomics, and AI.
Sreeram's key advice for founders is to understand your market needs before geeking out on the tech side. The most revolutionary tech won't make a dent if nobody in the ecosystem needs it.
With a keen understanding of these lessons, you’ll be able to find that exponential growth for your startup.
1. Start With Market Before Technology
Before creating EigenLayer, Sreeram and a team of professors had actually started a different project called Trifecta, a new protocol on Bitcoin. It had extremely high-throughput, averaging about 70,000 transactions per second. This was groundbreaking technology! But when it came time to get funding, they hit a wall. While their tech was highly advanced, there were not nearly enough users (and associated transactions) to necessitate such impressive TPS. Even Ethereum wasn’t coming close to that volume of transactions.
After striking out with investors, Sreeram realized he needed to rethink his approach to building companies. Instead of going all-in on the tech first, he realized that it made more sense to consider the market demand first. That's exactly what Sreeram did with Eigenlayer.
Sreeeram realized the world of web3 was lacking a marketplace for decentralized trust. The EVM space forced new projects to bootstrap trust, instead of allowing for individuals to leverage trust (in the form of staked ETH) from other parties. This limited the ability for new EVM projects to get off of the ground, stifling innovation. Through this novel concept of restaking tokens, Sreeram realized he could build out an entirely new layer of decentralized trust across different protocols. With a unique problem to solve, he set out to build a solution that could tackle it.
For an aspiring web3 founder like yourself, the most important takeaway is to realize that, while it can be intellectually stimulating to build mind-blowing tech, it's not going to get you anywhere if no end user has an actual need for it. To ensure you’re solving a real customer need, you need to constantly talk to customers, developers, and users; conduct surveys and interviews to assess pain points; join online communities that your target audience is a part of, and study what similar solutions are doing and (importantly) lacking. You've got to figure out what people actually need first, then build a solution that fits.
2. Be a Customer of Your Own Product
Another lesson that stands out from Sreeram’s journey is the importance of being a customer of the product you are developing. In the world of web3, this isn't just a nice-to-have - it's a game-changer.
Before working on EigenLayer, Sreeram worked with Dapper Labs to build a NFT recommendation engine. This experience threw him headfirst into the ecosystem in which he was trying to innovate. He lived the user experience, felt the developer pains, and understood the ecosystem's needs at a granular level. And it was an eye-opener. He realized that in his previous venture, he'd been trying to build a blockchain without truly being an active user within the same ecosystem.
Being a web3 founder, a hands-on, immersive approach will give you invaluable insights into what your customers truly need and how your product can deliver it. If your product is a mechanism for infrastructure builders, similar to EigenLayer, then you want to have been or tried to be a protocol or bridge builder. Going a step further, if you are building a data availability layer, then you should seek to understand the pains of what it takes to be a roll-up that would actually use that data availability layer.
3. Always Keep the Endgame of Empowering Your Customers in Mind
If there's a mantra every web3 founder should hold, it's “customers and market first”. From the start, Sreeram's vision for Eigenlayer has been about making a real, tangible difference to the people in the crypto ecosystem. He sees Eigenlayer as the nucleus of an ecosystem for builders - the starting point to something that will evolve with its community over time. He even came up with the name Eigenlayer, Eigen meaning “your own” in German, before he had any clue what the technology would look like.
As a web3 founder, think of your company as part of something bigger. Get to know your customers, understand their needs, their frustrations, their aspirations. But don't just stop at talking—listen. And then use what you learn to make your product better, more user-friendly, more valuable. And remember that launching a product that truly creates value takes time and continuous effort.
The Blueprint to Success
The wisdom gained from Sreeram Kannan's journey with Eigenlayer pivots around three core principles. Firstly, place market needs before technological prowess - cool tech won't make an impact if no one needs it. Secondly, immerse yourself in your product's use cases to gain invaluable insights - being a customer of your product is game-changing. Lastly, always aim to empower your customers, making their lives and the broader ecosystem better. As a web3 founder, embracing these lessons can guide your startup on its journey. And when you put your customers and market first, you're not just building a product - you’re building a community and propelling your vision to truly achieve that exponential impact.