About GokuShow:
GokuShow is a program focused on talking to Web3 entrepreneurs. It was initiated by Web3 blogger Gokunocool (@Gokunocool), hoping to provide a stage for all Web3 entrepreneurs to showcase themselves, understand their stories, and make a warm program.
Host: GoKu
Guest: Chris Gu Er Master
Project owner: Yuliverse
"PokémonGo in the Web3 world", "Leading IRL virtual universe game", "Top 3 blockchain game in Japan", "Star capital-backed project supported by LIF Capital, Animoca Ventures and Hong Kong Cyberport"... Chris, CEO of Yuliverse, who has all these halos, also known as "Master Gu Er", was a guest on the third GoKuShow. From being a million-dollar investment banker who was forced to transform into a Web3 entrepreneur, to creating a star web3 game project with a very low threshold for user education, from not understanding web3 operations to a community with more people than Twitter, Master Gu Er Chris shared his observations and insights in this industry.
Highlights:
The project is cold-started, bottom-up, starting from the community
Mainstream blockchain games, including previous P2E projects, mostly use mining machines, but there is an important flaw compared to physical mining machines, such as the need for electricity and easy damage. Virtual mining machines do not have these two problems, so they have the characteristics of perpetual life.
The key to solving the death spiral is not to use the logic of nesting dolls, but "value conversion", that is, to transform the existing community, users and investors into something more valuable, making the market of this value more magnificent.
Without a framework for marketing, it is not enough to rely solely on channel promotion. The best way is still to guide users to participate gradually through airdrops, attracting and retaining them step by step. If you can make good use of this strategy, the chances of your project's success will increase by 50%. Therefore, choosing the right channel and combining it with an effective marketing strategy is the key to project success.
In order to maintain liquidity and cash out when needed, the volatility ratio must be set appropriately. This healthy adjustment framework is crucial, and although there may be changes, the basic principles remain the same.
The smartest players find it difficult to truly embrace consensus because it is difficult for them to give up their own interests in the face of money.
In Web3, you can directly take out your airdrop to attract users without the need for cash investment. This is one of the biggest advantages of Web3.
Collecting is a human desire, and the earliest Web2 applications also satisfied this desire, such as grabbing parking spaces, collecting vegetables, etc. This gamification behavior is very persistent. Contrary to the short life cycle of games, gamification is an eternal process.
I only need to say one sentence to people, "We are the web3 version of Pokemon Go," and they will immediately understand how to play this game. This is very important because if the product threshold is too high and the learning cost is too high, it will become very difficult to convert users.
The following content is from the GokuShow live broadcast:
1. Million-dollar investment banks are forced to switch to Web3 startups
Dog Brother: Can you briefly talk about your entrepreneurial experience?
Chris Gu Er: Of course, I used to work in an investment bank and my income level was okay, but the market was greatly affected after the COVID-19 pandemic. Since I used to do IPOs, I found that many domestic companies wanted to list in Hong Kong, especially pharmaceutical, technology and Internet companies. However, the epidemic caused problems with the company's financial statements and a sharp decline in business volume. The real estate company I was working for at the time also had problems, so I came up with the idea of starting a business. Since I have some research on metaphysics, I found that there will be great changes in the next year, and this change may be passive, such as being fired. So I decided to start a business and invested in a location-based social APP, switching from Web2 to Web3. This decision was very lucky, otherwise I might still be looking for a job.
Brother Gou: Why did you choose the gaming track?
Chris Gu Er: I like playing games myself, and I have played for decades, from the earliest Empire Age to CS, LOL, DOTA, Nobunaga's Ambition, etc. Later, I found that my fingers were not flexible, so I turned to playing strategy games such as Hearthstone. In 2018, I participated in both Chinese, Asian and American servers. There are also many TCG games in the web3 circle, such as Illuvium and skyweaver, which are collectible cards, and each card has trading value. I play card games not to collect cards, but just for fun, and it is best to relax. The cost of learning TCG card games is high because the entire system needs to be learned.
Dog Brother: You are a bit like Ding Lei of NetEase. You try everything you want to do when starting a business, and you focus on it. How did you create the yuliverse project?
Chris Gu Er Master: I was a small investor before, but I couldn't do it because of the epidemic, so we decided to reorganize the team and turn to web3. We are more proficient in WEB2, so the product iteration is very fast, and soon our APP was launched on Apple and Google. Although the cost of making APP is very high, we use native code to write, and Android and Apple output a set of codes respectively, so our product capabilities are quite strong. But we don't understand Web3 at all, and we started to outsource to help with smart contracts, but the quality was not good, so we spent 3 months to deeply study blockchain technology, and later we developed everything ourselves.
Brother Gou: You have received a lot of money from celebrity capital, including investment from the Hong Kong government. Before receiving the capital, were you operating with your own funds?
Chris Gu Er: Yes, if we had entered this track a year earlier, we would not have struggled so hard. But on the other hand, maybe because funds were too easy to get, we became less hardworking. When we first started preparing for financing, Luna collapsed, and then the FTX incident also occurred. We initially started looking for investors in April and May of 22, and did not complete financing until the beginning of 23. This period happened to encounter the node of token 2049, and the entire financing took nearly 10 months to complete. During this period, we have completed product development, successfully established a seed community, completed the cold start, and captured the first wave of traffic from NFT FREE MINT and seed users.
2. Project Cold Start: Discussion on Founders’ Mental Journey and Strategy
Dog Brother: What should be done when the project is cold started?
Chris Gu Er: We have no accumulation, we are all transferred from WEB2, we have no resources. If you have some resources on Web3, you can actually support it through BD and get the first wave of seed users. We are purely relying on the community to start.
There are only two directions for cold starting a project: the first is bottom-up, starting from the community, so you have more opportunities and time to try and fail, and to learn. In fact, each of your product points is different, and you need to do product market fit and combine it with the user portrait. Moreover, the biggest difference between Web3 products and Web2 products is that the user groups are different. I am not just a user, but also an investor. So you need to use the economic model as the core to develop, rather than making the product first. It is the economic model that drives the product, not the product that drives the economic model. The second is that if you are very familiar with the gameplay, and you may have done several projects before, it is best to play directly from the top up. In the web3 circle, these two methods are easier to succeed, and the others are difficult. The most feared thing is that you can't go up or down.
Dog Brother: I want to remind you of this. Many project parties have really made mistakes. Although you have accumulated experience in WEB3 and know many channels and communities, if your project is not a bottom-up project, you have not deeply connected with the community. There is no good slogan, no sentence that others will remember. Then your first impression, including brand public relations, and the quality of your product will not pass. You spend money to find channels, and you can indeed find very popular channels, but you can't retain users. You have to have a consensus, which can be an asset issued, or the founder's IP, and then invest in channels when it is appropriate. Many project parties have invested hundreds of thousands of US dollars in various KOLs and blockchain game communities around the world, but in the end, others still can't remember them.
Brother Dog: Have you ever experienced this stage of being neither up nor down?
Chris Gu Er: Yes, it should be last year, from July to October. We spent a lot of time learning during this period, but we didn’t make any money. NFTs are basically created by users, and we didn’t make any profit through NFTs. We followed the fair launch, which made it difficult to maintain price expectations. We didn’t launch the governance coin at the beginning, otherwise the whole project and investment might have gone to waste. We crossed the river by feeling the stones, and had the opportunity to try and learn. By November last year, we seized the opportunity to start the first wave of airdrops. Now our Twitter followers have increased from 180,000 to nearly 500,000. We did not use any third-party platforms, but built our own official website for airdrops, and our Discord users are close to 300,000. In fact, DC has more users than Twitter.
If a team has someone with investment banking experience, the advantage is that they know how to handle investor relationships. Every team needs such a person. But it is best if this person is still the founder, even if he is a co-founder, otherwise it will be difficult to communicate smoothly with investors. In addition, good character is also crucial. In addition to ability, collaboration with the team is also indispensable.
Brother Gou: Were there any sad experiences when the project was cold-started?
Chris Gu Er: I think everyone who has done a startup will have some sad feelings. In the project, if the cold start problem is solved, the follow-up will not be a problem, and limited resources can be used to take action. I like a blogger, "Crypto v", who is the founder of the three-disk theory and classifies the token economy into three types: Ponzi, mining machine dividend and mutual aid. You need to clarify which model the product will adopt, and everything should revolve around this, and the entire narrative serves this purpose. Mainstream chain games, including previous P2E projects, mostly use mining machine types, but there is an important defect compared to physical mining machines, such as purchasing physical mining machines requires power support and is easy to damage. Virtual mining machines do not have these two problems, so they have the characteristics of perpetual life. In July last year, stepn changed NFT to be alive to imitate this concept.
Dog Brother: Let me explain this. First of all, if a project is profitable and wants to distribute dividends to retail investors through TOKEN, this violates the SEC's positive attributes. Only gray industries are suitable for this logic. If a serious project uses this logic, basically you will be targeted by the SEC when you become big. This is a violation of securities laws, not a simple NFT.
Secondly, if there is no loss or wear and tear on mining itself, it is just unilaterally demanding from the entire economic model, which will also cause a problem. The model has no way to cover the original users, which is a great test of the incremental market capacity. The core of solving the death spiral is not to use the logic of nesting dolls, but "value conversion", that is, to transform the existing community, users and investors into something more valuable, so that the market of this value becomes more magnificent. You will find that many small and beautiful projects are passively pushed to transform and change later, and then the whole thing becomes bigger and bigger. On the contrary, if it is a very grand project at the beginning, you will find that it is getting more and more difficult. Therefore, I suggest that all projects make the plate smaller in the early stage, build up the early community first, and then extend it.
Dog Brother: Does the monthly cost of the yuliverse team is very high?
Chris Gu Er: More than 40 people, about 130,000 US dollars a month, operating in Malaysia and Hong Kong. We have a framework of marketing methods, including cross-industry cooperation, different companies and different project cooperation methods.
In project operations, planning and execution are crucial. Usually, we will arrange the work plan for the next two months or even one and a half months in advance to ensure that the entire operation process is orderly. When one stage is coming to an end, we will start to prepare for the next stage. In the early stages of the project, 80% of the technology is invested in supporting market expansion and operations, rather than focusing only on product development. Because if the product team only focuses on developing products and ignores aspects such as drainage, incentives and frameworks, it will inevitably lead to failure in the end. The entire user conversion link should be designed in the early stages, and the issuance of NFT or TOKEN should be integrated with the incentives of the product to ensure the smooth promotion of product promotion and user conversion. This comprehensive planning and execution strategy can effectively increase the probability of success of the project, ensure the smooth development of the project and achieve good results.
Dog Brother: In the Web3 world, choosing high-quality channels is crucial. Why do people prefer Twitter over YouTube? Why does TikTok, which has so many users, choose to post content on Twitter? This is because Twitter is essentially an information flow platform, while TikTok is a short video platform. From the perspective of visual transmission, there is an essential difference between the two, that is, the degree of information fragmentation. The degree of information fragmentation on Twitter is even higher than that on TikTok. If your project cannot attract users to stay, even if you invest a lot of resources, it will be in vain. Therefore, if there is a lack of framework marketing methods, it is not enough to rely solely on channel promotion. The best way is still to guide users to gradually participate through airdrops, attracting and retaining them step by step. If you can make good use of this strategy, your project's chances of success will increase by 50%. Therefore, choosing the right channel and combining it with an effective marketing strategy are the keys to project success.
3. Airdrop is crucial when designing Tokenomics
Dog Brother: Can you tell us more about tokenomics?
Chris Gu Er: First of all, there are two types. One is long-term development, and the other is short-term "rug" operation. If you choose long-term development, you need to know the source of funds, where the funds flow after entering the platform, and the proportion of users' share.
In addition, in order to maintain liquidity and cash out when needed, the volatility ratio must be set reasonably. This healthy adjustment framework is crucial, and although there may be changes, the basic principles remain the same. Otherwise, it will be difficult to control risks. Finally, avoid the situation where funds are exhausted without knowing the source of profits. In Web2, the position of actuary is very important in game companies. Their job is mainly to predict the fluctuations in asset value within a specific time period, including possible triggered behaviors.
With the rise of Web3, the demand for such positions is also increasing, and actuaries with annual salaries of over one million are no longer rare. Therefore, it is recommended that game planners with strong mathematical skills actively embrace Web3 and seize this development opportunity. A detailed understanding and correct application of Tokenomics will have a positive impact on the long-term success of the project.
Dog Brother: I remember at the end of 2022, we discussed how GameFi could get out of the death spiral. The discussion was very heated at that time, and we finally proposed some solutions, one of which was to build a points platform first, and then do airdrops. Everyone is very clear about the operation of this account, so this problem can actually be solved.
I have always believed that the dual token logic is very stressful, and a lot of mistakes will be made if you are not careful. Moreover, it is difficult for the smartest players to truly embrace consensus, because it is difficult for them to give up their own interests in front of money. However, you must show your charm, and only when you show your charm can your consensus be truly beautiful. Therefore, in Web3, many teams from Web2 encountered difficulties in adapting after entering.
The most important point is that these teams do not understand the promotion of assets. The breaking circle effect and consensus improvement brought by a star asset cannot be measured by how much advertising money is spent. If you can successfully promote your core asset, even if it is only for 20 days, the whole world will know your project. This shows that the publicity and influence of assets are crucial to the success of GameFi.
Chris Guer: From the top down, in Web3, all token economies that list coins need to reserve airdrops. This is actually like a user funnel that can circle the most users first. These users become your airdrop users, that is, stakeholders. They may be interested in your product and conduct research, otherwise, you are likely to lose this group of users. Therefore, airdrops can be understood as operations in the Web2 era where you need to spend money to attract traffic, buy users, and make conversions. In Web3, you can directly use your airdrops to attract users without cash investment. This is one of the biggest advantages of Web3.
However, before the airdrop, we must consider how each level of the user funnel is formed. Only by clarifying every link of the funnel can we better attract and convert users. Therefore, reserved airdrops are a very important part of Web3.
Dog Brother: How did you come up with the idea of doing LBS?
Chris Gu Er: Actually, there are several reasons. First, when we chose this product form, it was because we already had the relevant foundation and accumulation. The second reason is that I have played this kind of product before, and I have read an article about "collection is the original desire of human beings". You can imagine that when you play games, sometimes you will encounter a treasure chest, and you will open it involuntarily; or when you see a door, you will want to go in and take a look. In fact, this behavior is no different from squirrels collecting pine cones, and they all come from human nature. Collection is a human desire, and the earliest Web2 applications also satisfy this desire to collect, such as grabbing parking spaces, collecting vegetables, etc. This kind of gamified behavior is very persistent. Contrary to the short life cycle of games, gamification is an eternal process.
Another reason is that we chose the most easily understood game as a reference, which is Pokemon Go. It has 150 million users worldwide. If we can convert 1% of them, that would be 1.5 million users, which is a very large number in the Web3 field. I only need to say to people, "We are the WEB3 version of Pokemon Go," and they will immediately understand how to play this game. This is very important because if the product threshold is too high and the learning cost is too high, it will become very difficult to convert users. Based on these considerations, we finally determined this product form.