The Secrets Behind Thriving Web3 Venture Studios

Venture studios are taking the startup ecosystem by storm with good reason.?

The number of venture studios has increased by ~625% over the past 7 years, and the data supports their rise. Research shows venture studio start-ups exit 33% faster than conventional startups.

But this hype left me wondering - what's happening in the Web3 venture studio landscape? Building a startup in Web3 differs significantly from traditional sectors, so I figured Web3 studios must adapt their approaches.

To find out, I interviewed Everest Ventures Group (EVG), a leading Web3 venture studio. EVG began as a crypto venture capital fund in 2018, then transitioned into a hands-on builder model in 2021. They no longer wanted to just finance projects; they wanted to build the blockchain applications that will lead to mainstream adoption.

Since then, EVG has founded over 10 ventures, grown to a team of over 300 people, and uncovered a few key success secrets.

In this article, I dive into how startup building differs in Web3, how this impacts the venture studio model, and 3 secrets behind EVG's impressive growth.

For an introduction to venture studios, read my article here .

The differences between Web2 & Web3 startups

Fundamentally, the goal of any startup is to generate revenue to fuel its growth. But, Web3 startups take a different approach or route to achieve this goal. While traditional businesses may take a bus to get from point A to B, blockchain startups may take a train.?

There are 3 key components to how Web3 startups differ: product, operations, and growth.?

Product

The most obvious difference arises in the product layer. Web3 startups use a decentralised tech stack to build products using the blockchain, while traditional startups use a centralised tech stack.?

Web3 startups operate much like local farmer's markets, with open ecosystems where anyone can directly participate. Technology and data are decentralised across users, not controlled by a central entity. This creates more peer-to-peer collaboration and transparency.?

In contrast, traditional tech startups run much like grocery store chains. They build closed, proprietary platforms that centralise control and manage how users can access, contribute, and monetise data. Such traditional models tend to limit open innovation, prohibiting the quality of products. Think of the recent Boeing drama where the door panel came off mid flight. The airline industry has become such a monopolised and closed system that there are no incentives to improve products, leading to worse products for the end user.

In contrast, open blockchain systems have fostered a whole ecosystem of applications and protocols that startups can choose from. The variety of choice leads to better products. However, specialised expertise is required to not only build blockchain products, but also to design its architecture.?

Operations

When it comes to operations - how companies structurally run and make decisions - Web3 models again break the mould. They span a spectrum from decentralised to centralised, or blending elements of both.

On the far decentralised end are organisations such as MakerDAO. Maker is a decentralised protocol that offers financial products, with no traditional management structure. Decision making is governed by its community of core contributors. Revenue can be transparently viewed by anyone. Value is transferred in cryptocurrencies. MakerDAO is like a farmers market - stalls or products operate independently, revenues flow directly to the farmers or contributors. Traditional grocery stores choose a few vendors who get compensated.

On the centralised end are organisations such as Chainalysis. Chainalysis is a blockchain data tool and consultancy, with a more traditional management structure. Decision making is governed by C-suite and a board of directors. Real-time revenue is not publicly available. Value is transferred in both crypto or fiat with clients.?

Decentralisation in Web3 can be like a chameleon – it comes in all shapes and sizes. But all Web3 companies operate with some form of decentralisation typically not found in traditional sectors.

Growth

The outer layer of difference is growth - how companies acquire and expand their customer base.?

Traditional companies focus outward - targeting individuals through marketing campaigns designed to build an active user base. Customer acquisition follows a top-down, corporation-centric path.

Web3 companies, however, take an ecosystem approach driven by community collaboration. Rather than viewing users as transactions, they nurture engaged communities intrinsically invested in their success. Web3 startups can establish incentive systems with tokens that reward certain behaviours like referrals or platform activity. This allows growth to spring organically from within through aligned incentives.?

To scale, Web3 companies must continually provide value to their communities. Partnerships help provide this additional value. These partnerships form around delivering mutual benefits, whether through airdrops, events, content creation or financial offerings. They tap into similar communities to increase awareness and adoption.

Web3 companies focus on building a community, rather than just users, which adapts their approach to growth.

These fundamental differences of building a Web3 startup mean that venture studios have to adapt the traditional playbook to achieve success.

How these differences impact venture building

To best understand how Web3 venture studios like EVG must adapt from traditional models, let's first look at how standard venture studios typically build and launch companies.

Process

A venture studio typically follows a 5 step process:

1. Ideation - Coming up with an idea for a company.
2. Research - Evaluating an idea against a specific criteria, including outside feedback.
3. Decision - Deciding what ideas to build.
4. Build <> Recruit - Once chosen, venture studio teams begin building the product and recruiting a full time team that will continue to execute.
5. Launch - Typically at an MVP stage the recruited team takes the reins and begins the GTM. Oftentimes looking to raise a seed round.

EVG follows a similar overall process to traditional venture studios, but adapts each stage to tailor to Web3 projects' unique needs. In the ideation phase, for example, they ask questions like: “What are the drawbacks of key protocols? How could we fill these gaps? What applications will catalyse mass adoption?” These questions get explored in brainstorming sessions, tapping perspectives across departments.

Once a few ideas have been generated, it’s time to evaluate. EVG first engages employees across all internal teams - product, marketing, operations - to weigh in based on their experiences. Then EVG looks for feedback from its relevant partner network and targeted user base. This 360 approach avoids groupthink risks within the organisation. It also validates demand and user appetite. With collective insights compiled and detailed market research complete, EVG decides which ideas they should pursue.?

If EVG greenlights an idea, a project execution plan kicks off. They develop technology to an MVP stage, recruit the startup team, and assemble partnerships for the launch. Once an MVP is in place, it's time to begin the GTM execution, handing the reins to the recruited team. At this point, EVG still remains involved and continues to drive synergies among all of their projects.

Resources

As you can see, the typical venture studio process remains the same, but the resources are specifically tailored to web3. These resources encompass areas like talent (both employees and recruited teams), knowledge, network, capital, partners, and brand.

EVG believes that a successful venture requires a blend of Web3 and traditional expertise, knowledge, capital, and partners. With this mix, traditional expertise and networks can add a crucial dose of expertise, bringing Web3 ventures closer to mass adoption.?

Additionally, building a credible brand and reputation for your venture studio is critical. This strong foundation makes attracting top talent and capital significantly lower cost. But, how does EVG approach this in Web3??

Well, it's about more than just a logo and a catchy tagline. It's about building a brand that aligns with the unique values of Web3: decentralisation, transparency, community empowerment, and user ownership. Instead of wearing the investor hat, EVG wears the builder's hat. This ethos translates into their brand perception and positioning, allowing them to embody Web3 values.

EVG’s 3 success secrets

In my conversation with EVG, I was pleasantly surprised by three approaches to their business.?

ByteDance organisational structure

Ever heard of TikTok? Yes, I thought so.?

Well TikTok was built by the venture studio ByteDance. But, that’s not their only successful venture. They also built Toutiao, the most popular news app in China, which today has 320 million monthly active users, and Douyin, a short-video app that preceded TikTok.?

They are clearly doing something right… Many claim it’s their organisational structure.

EVG was inspired by their organisational structure. ByteDance relies on a shared service platform (SSP), which allows them to efficiently manage and allocate specialised resources across various products.

Picture it this way: instead of every team working in their own little world, SSP brings everyone together—HR, legal, tech, growth—working together on a range of projects when needed. By sharing projects, internal teams undergo a rapid learning curve, where both successful and unsuccessful experiences are learnt across the whole company. This eliminates the “Ooops, we did it again” moments common in new startups.

By adopting a similar approach, it has allowed EVG to efficiently scale their operations.?

Working with “allies”

When I spoke to EVG, they consistently emphasised the idea of partners as allies, which stood out to me. This focus on mutual benefit showcases their long-term thinking about building ventures. It's not about taking shortcuts, but rather about contributing to the larger Web3 ecosystem.?

Long term partnerships with other organisations have the potential to generate a massive impact. They allow access to shared resources & expertise, increased credibility & trust with a community, and network expansion.?

In an industry that can often be short-sighted, EVG's perspective is a refreshing contrast and one that deserves wider adoption.?

Open Communication

Forget siloed thinking and closed-door policies.?

At EVG, open communication is paramount. By fostering open discussions, they create an environment where challenging views are not only welcomed but encouraged. This is critical when building successful ventures, as it builds independent thinkers that challenge the status quo, just like Apple did in their early days.

One of the most successful hedge funds, Bridgewater, founded by Ray Dalio, provides another compelling example of open communication in action. They've famously built a culture based on "radical transparency," meaning everyone, regardless of rank, can openly share and challenge any idea.

Learn more about Bridgewater’s successful culture here .

This translates to practices like public disagreements, anonymous feedback mechanisms, and open access to information. Decisions are made based on "believability-weighted ideas," where the merit of an idea takes precedence over the person presenting it. Thinkers gain credibility through consistent track records and strong reasoning, not simply their position in the hierarchy. More organisations need to adopt these values.

What’s next for EVG?

With an impressive track record, EVG shows no signs of slowing down. They have several intriguing projects in development across gaming, social, art, and finance verticals.

Some of their upcoming projects include: Open Social Protocol, a Web3 social protocol; Zeek, a Web3 professional social network; Legend of Arcadia , a turn-based RPG game; and Last Odyssey , a SLG game. EVG’s previous ventures include Aspen Digital , a digital asset wealth platform; Mugen Interactive , a blockchain gaming studio; LiveArt , a Web3 marketplace for arts & collectibles; and Cassava Network , a multi-chain web3 incentives platform.

As EVG continues pushing boundaries, they have 3 key pillars in place that position them for continued success.

1. Maintaining a builder's mentality - staying actively involved in hands-on product development rather than relying solely on investment capital.?
2. Fostering open innovation within the company - encouraging transparent feedback, debate, and idea-sharing to spur creativity.?
3. Building blockchain expertise - blending specialised Web3 talent with traditional operations and growth capabilities.

These values and principles allow them to build projects that lead to the mass adoption of Web3.?

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Sources:

https://roamy.medium.com/the-2023-venture-studio-market-map-new-data-reveal-312a6f9e4467#:~:text=Today%2C%20the%20Venture%20Studio%20ecosystem,active%20across%20the%20globe%20today .?

https://hbr.org/2022/02/how-bytedance-became-the-worlds-most-valuable-startup#:~:text=Bytedance%20uses%20its%20SSP%20platform,and%20organized%20into%20corresponding%20teams .