Governance: The Capital Formation Engine Powering the Next Era of Crypto

A framework for product-market fit from day one

Here’s a brutal truth:

42% of startups fail because they build products nobody wants. Not because the idea was bad.

Not because the tech wasn’t sophisticated enough, but because they skipped three fundamental steps before writing a single line of code.

I’ve audited dozens of Web3 projects, DeFi protocols, and crypto startups.

The pattern is consistent: brilliant founders with great ideas who completely miss the foundation of product development.

They jump straight to building, then wonder why nobody cares.

If you’re about to build a product or you’ve built one that’s struggling to gain traction, this framework will save you months of wasted effort and thousands in burned capital.

Let’s break down the three steps most founders skip (and how to get them right).

Step 1: User Personalization (The Problem-Worth-Solving Filter)The Mistake Most Founders Make

You spot a problem in the market, and you get excited, immediately start designing solutions.

Here’s what’s missing: Not every problem people have is worth solving. And not every problem solved is worth paying for.

The Framework: Problem Validation Before Product Development

Before you write a single line of code, run your problem through this filter:

1. Does this problem actually exist?

➭ Can you find 10 people who experience this pain weekly?

➭Are they currently using makeshift solutions to deal with it?

➭ When you describe the problem, do they immediately say “YES, that’s exactly my issue”?

2. Is this problem worth solving?

➭ Are people actively looking for solutions?

➭ Have they tried other products to fix it?

➭ Would solving this meaningfully improve their workflow/life?

3. Will people pay to solve it?

➭ Are they currently paying for imperfect solutions?

➭ What’s the economic value of solving this problem?

➭ If your solution was 10x better, would they switch?

The Crypto Example

Let’s say you’re building in the Bitcoin ecosystem. You notice that Bitcoin users struggle with transaction fee estimation during network congestion.

Bad approach: Build a sophisticated fee prediction algorithm because it’s technically interesting.

Good approach:

➭ Interview 50 Bitcoin power users

➭ Discover that only 15% care about fee optimization (most just use default settings)

➭ Learn that the 15% who care are already using block explorers effectively

➭ Realize this problem isn’t painful enough to warrant a standalone product

Better opportunity discovered: Through interviews, you find that 40% struggle with UTXO management for privacy.

Now you’ve found a problem worth solving.

Why This Matters for Retention

Here’s the critical insight:

A well-engineered product solves a problem worth solving, which naturally drives retention.

If your solution genuinely makes someone’s life better, they’ll come back. Not because of gamification, not because of reward points, but because you’ve solved a real pain point.

Retention formula: Real problem + effective solution = natural retention

This is why products with genuine product-market fit don’t need to beg users to return.

Users want to return because the alternative (going back to the problem) is worse.

Step 2: Target Audience (Speak to the Believers, Not the Masses)The Mistake: Building for “Everyone”

After finding a problem, most founders make this error: Our product is for anyone who uses [broad category].

If you’re building a Bitcoin solution, you think: Our audience is anyone who uses Bitcoin.

This is wrong.

The Framework: Audience Precision Beats Audience Size

The better approach: Identify the subset of users who feel this problem most acutely, then go deeper.

Using our Bitcoin example:

Too broad: “Our product is for Bitcoin users.”

Better: “Our product is for Bitcoin power users who prioritize privacy.”

Best: “Our product is for Bitcoin OGs and privacy maximalists who actively manage their UTXOs and are frustrated by the lack of native wallet tools for this.”

Why Specificity Wins

When you target a precise audience:

1. Your messaging becomes sharper: You can speak directly to their specific pain
2. Distribution becomes easier: You know exactly where these people hang out
3. Product decisions become clearer: You’re optimizing for one persona, not everyone
4. Word-of-mouth is stronger: Enthusiastic niche users spread the word better than lukewarm broad users

Go Psychological: Speak to Beliefs, Not Just Behaviors

Don’t just understand what your audience does. Understand:

➭ What they believe (Bitcoin OGs believe in self-custody above all)

➭ What they fear (Privacy advocates fear surveillance)

➭ What they aspire to (Crypto natives want to be early to the next big thing)

➭ What frustrates them (ETH users hate high gas fees)

When your product aligns with their beliefs, you’re not just solving a problem; you’re validating their worldview.

The Targeting Question

Ask yourself: “Would a normal crypto user use our product?”

If the answer is “maybe,” you haven’t narrowed enough.

The right answer is:

No, this is specifically built for [precise audience], and that’s why they’ll love it.

Step 3: Messaging (Make Your Value Undeniable in 10 Seconds)The Mistake: Vague Positioning

Most product bios and landing pages sound like this:

“We’re building the future of DeFi.” “Next-generation blockchain solution” “Innovative platform for crypto users”

Nobody cares.

These phrases are meaningless because they don’t tell users:

➭ What you actually do

➭ Who it’s for

➭ What’s in it for them

➭ Why are you different

The Framework: The Clarity Formula

Your positioning should answer four questions in one sentence:

1. What you are (product category)
2. Who it’s for (specific audience)

3. What benefit do you deliver (specific outcome)

4. What makes you different (unique mechanism)

Good Examples vs Bad Examples

Bad: “DeFi research, risk management, and investment platform.”

➭ What does this mean in practice?

➭ Who is this for?

➭ What do I actually get?

Good: “Zero-leverage ETH vaults delivering 4.45% yield for DeFi users who want safe, predictable returns.”

➭ Product: ETH vaults

➭ Audience: DeFi users seeking safety

➭ Benefit: 4.45% yield without liquidation risk

➭ Differentiator: Zero leverage (unlike competitors)

Bad: “A wallet for crypto users.”

• Every wallet says this

Good: “The only wallet that rewards you with 2% cashback on every transaction, built for daily crypto spenders.”

• Product: Wallet with rewards
• Audience: People who spend crypto regularly
• Benefit: 2% cashback
• Differentiator: Only wallet with transaction rewards

The 10-Second Test

Can someone who’s never heard of you understand your value proposition in 10 seconds?

If not, simplify.

Formula: [Product] that [unique benefit] for [specific audience] by [differentiation]

Examples:

➭ Vaults that eliminate liquidation risk for conservative DeFi investors by using zero leverage

➭ A trading bot that executes DEX swaps 10x faster for MEV hunters by using private RPCs.

➭ Portfolio tracker that predicts tax liability in real-time for active traders by integrating with all CEXs

Why This Matters for Conversion

Here’s what happens when your messaging is clear:

Scenario A (Vague Messaging):

➭ User lands on your site

➭ Reads generic value prop

➭ Thinks “Sounds interesting, I guess.

➭ Leaves to compare alternatives

➭ Never returns (they forgot what made you special)

Scenario B (Clear Messaging):

➭ User lands on your site

➭ Immediately understands: Oh, this is exactly for me.

➭ Sees specific benefit: 4.45% yield with no liquidation risk

➭ Converts or saves for later

➭ Remembers you because the value was crystal clear

Conversion rate difference: 3–5x higher with clear positioning

Why These Three Steps Compound

Here’s the power of getting all three right:

Problem-Worth-Solving (Step 1) → Your product solves real pain, so users stick around

Precise Audience (Step 2) → Your distribution is focused, so you reach the right people efficiently

Clear Messaging (Step 3) → Your positioning is sharp, so qualified users convert fast

The Compounding Effect

➭ With Step 1 only: You build something people need, but nobody finds you

➭ With Steps 1 + 2: You build something people need, AND you know where to find them, but your message doesn’t land

➭ With Steps 1 + 2 + 3: You build something people need, you find them efficiently, and they immediately understand why you’re for them

Result: Product-market fit happens 5x faster

The Reality Check: How to Audit Your Current Product

If you’ve already launched, run this self-assessment:

Problem Validation Audit

➭ Can you name 10 specific people who had this problem before using your product?

➭ Are users returning weekly without prompting?

➭ Would users meaningfully struggle if your product disappeared tomorrow?

If you answered “no” to any: Your problem might not be painful enough

Audience Precision Audit

➭Can you describe your target user in 3 specific sentences?

➭ Do you know where 90% of your target audience hangs out online?

➭ When you post content, does it resonate specifically with your niche?

If you answered “no” to any: Your audience definition is too broad

Messaging Clarity Audit

➭ Can a stranger understand your value in 10 seconds?

➭ Does your bio include specific numbers/benefits?

➭ Is your differentiation clear (not just “better” but how you’re different)?

If you answered “no” to any: Your messaging needs sharpening

What Successful Founders Do Differently

The best founders I’ve worked with don’t just build products, they build movements.

They don’t just solve problems; they solve problems their audience believes deserve solving.

They don’t just create value, they communicate that value so clearly that conversion becomes inevitable.

The Playbook

Week 1–2: Problem validation

➭ Interview 30 potential users

➭ Identify the top 3 most painful problems

➭ Validate willingness to pay

Week 3–4: Audience definition

➭ Create detailed user personas

➭ Map their beliefs, fears, and aspirations

➭ Find where they congregate online

Week 5–6: Messaging development

➭ Write 10 variations of your value prop

➭ Test with 20 people from your target audience

➭ Refine until you have a 10-second pitch that lands

Week 7+: Build with clarity

➭ Develop a product with retention mechanisms built in

➭ Launch with precise targeting

➭ Iterate based on feedback from your specific audience

Final Thoughts: Distribution Starts on Day One

Don’t wait until your product is “perfect” to start distribution.

The founders who win start building their audience while building their product:

➭ They share their journey publicly

➭ They validate ideas in Discord/Telegram communities

➭ They create waitlists before launch

➭ They partner with Kol in their niche early

Remember: A great product with no distribution = an invisible product

The truth: An okay product with great distribution beats a great product with no distribution every time

Your Action Plan (Next 7 Days)

If you’re building a product right now:

Day 1–2: List 10 problems in your space and cross out any that people aren’t actively trying to solve.

Day 3–4: Interview 15 people from your target audience and ask: What’s your biggest frustration with [current solutions]?

Day 5–6: Write your positioning using the clarity formula and test it with 10 people.

Day 7: Commit to one of two paths:

➭ Pivot if your problem isn’t worth solving

➭ Double down if you’ve validated product-market fit

Let’s Build Better Products Together

I’m documenting my journey learning Web3 growth, one audit at a time.

If you’re a founder who wants an honest product audit, DM me.

I’ll tell you exactly where you’re losing users and how to fix it.

The best products don’t just solve problems, they solve the right problems for the right people with the right message.

Let’s make sure yours does all three.

If you found this helpful:

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The 3 Critical Steps Founders Miss When Building Products (And Why 42% Fail Because of It) was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.