Does Crypto Have a Product-Market Fit?   

Crypto and its many innovations are often criticized for creating solutions to non-existent problems


mapush/Shutterstock modified by Blockworks


It’s one of the first questions any investor will ask an entrepreneur as they propose their newfangled idea: “What’s your product-market fit?”

They’d better have a good answer, or the discussion will come to a sudden close — Shark Tank style — with a prompt “I’m out.”

Product-market fit (PMF), in a nutshell, is the notion of a product uniquely providing for a particular demand in the market. Any product that demonstrates good PMF entices consumers away from incumbent offerings, like Airbnb luring customers away from booking hotels, for example, with its unique take on the accommodations industry.

Crypto and its many innovations are often criticized for creating solutions to non-existent problems. But on a recent Empire Podcast, seed investor Santiago Santos insists crypto does indeed provide an important and unique PMF. 

It’s like investing in a team in the early stages of a project, Santos says, noting, “you’ve gotta believe in the technology and the impact that it can have. Ultimately, there’s really smart people here.”

Santos argues that crypto does indeed exhibit strong product-market fit, but it is often obscured by elements of the market that are poorly understood or disliked for a variety of reasons. It seems that crypto critics can’t see the forest for the trees.

“If you don’t like NFTs or meme coins or DeFi because you think that the art sucks or that DeFi doesn’t work or it’s too complicated or whatever…”

“How is that any different,” Santos asks, from “e-commerce, for instance, especially in the early days?”

People might hate some of the low-quality products sold on Amazon or other online services, he says as an example. “Does that make Amazon, PayPal, or Stripe bad companies without product-market fit? Because maybe you don’t like anything that’s sold there?” he asks.

“Absolutely not.” 

The creation of digital property

Whereas online services have allowed users to buy anywhere, any time, all the time, crypto has transcended a key friction point of the internet, Santos explains, allowing money to move the same way that information is processed.

“You have created digital property, and you’ve allowed creators that really appreciate it, especially in the NFT realm, to sell their art and prove the scarcity of that to the end customer.”

“Ultimately, if you don’t find anything you like today, I guarantee you, there’s gonna be something you like in five, ten years.”

Santos points again to Amazon as an example of what would have been a phenomenal investment in its early days. “Amazon started with books. There’s people that don’t like books, but at some point they have now bought something from Amazon.”

Santos admits the current crypto experience is inefficient, but he argues that current struggles are, ironically, indicators of long-term appeal. 

“If people are willing to go through hoops and barbed wire to enter this space because they wanna buy an NFT, how is that not product-market fit?”

Pay attention to hobbyists

Citing a16z crypto founder Chris Dixon, Santos advises, “Pay attention to hobbyists.”

“Those are the guys that are early. The hobbyists are tinkering with technology and it’s never easy, but they’re so passionate about it and obsessed with it.”

“We’re all hobbyists in crypto right now and that,” he says, “is a hallmark of strong product-market fit.”

Santos admits, “It will never be perfect. So we should always be skeptical.”

“But the more you try this stuff,” he says, “the more excited you get about how crypto fits into so many different huge, slow transformational trends that have been happening over the last 20 years — and are going to continue to reshape this world in a very meaningful way.”

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