DenberTech's founder reveals the pitfalls of chasing cryptocurrency hype instead of addressing genuine market needs.

Description

Hi Dennis! Who are you and what are you currently working on?

Hi! I'm Dennis Ramírez Bernal, 20 years old, from Barcelona, Spain.

I work as a growth specialist and am always on the lookout for new opportunities and challenges.

Over the years, I've created, participated in, and scaled various businesses. I love building products or services that improve people's lives and add value to humanity.

‍

What’s your background and how did you come with DenberTech’s idea?

Before founding DenberTech, I had spent several years in the cryptocurrency world, learning as much as possible.

In December 2021, I was given the chance to be a product marketing specialist at Escribà, one of Spain's most relevant pastry shops. There, I helped create and launch the "Crypto Tortell" marketing campaign.

This was the first Christmas cake that could be purchased with Bitcoin, and it was a huge success. The campaign reached over 2 million people, and I was able to do interviews on television, newspapers, radio, and other media outlets.

Following this viral campaign, in January 2022, I was approached by multiple companies keen to integrate cryptocurrency payment systems into their businesses.

Only a few days later, the lightbulb moment happened: a startup that sought to revolutionize how businesses, especially physical ones, accepted cryptocurrency payments.

‍

How did you go from idea to product?

I started the startup by myself. However, when it was time to develop the software, I reached out to friends. The initial development was using very basic coding, which a few of my friends contributed when they joined the project. Fortunately, my friends worked for free, so the cost of trying to develop the MVP was very low - I can't remember the exact amount, but it was essentially free.

Our approach was to do a lot of lean thinking and bootstrapping.

The idea was to develop a simple and easy-to-use software instead of the complexity offered by the exchanges at the time.

We wanted to start with minimal resources and fail as little as possible because we couldn't waste a dollar. This was incredibly challenging for a startup searching for its product-market fit.

While developing our product, we consistently delved into market research and maintained active conversations with potential customers. We saw it as essential to have constant "real-time" communication with them.

However, the software was never finished, we only ended up attempting an MVP. We tried to follow Y Combinator's principle of doing "Things that don’t scale." The plan was to use our initial revenue and growing customer base to continually refine the product.

Which were the strategies to grow your business?

As I mentioned before, the viral campaign I worked on with Escriba generated a large number of leads, which was beneficial because we did not have to do much initial outreach. We then tested other acquisition channels, such as cold calling and SEM (Facebook and Instagram Ads and Google Ads).

Our primary focus was on the paid media. However, we encountered a challenge: the CACs for these channels were extremely high, making it difficult to maintain the campaigns over an extended period.

Another strategy we wanted to try was inbound marketing through SEO and content related to the specific problem we wanted to solve, but we closed the startup before implementing this tactic.

‍

When did things start to go in the wrong direction?

It's hard to pinpoint an exact moment, but if I had to choose, it would be when we attempted to monetize our product.

We approached everything, from development to lead generation, with the clear intention of monetizing once we had tailored our MVP to the perceived needs of potential customers. The challenge was when we began trying to charge for the service.

We quickly discovered that, while all our leads appreciated the concept, we weren't addressing an urgent or significant enough problem that made them want to use it immediately.

This delay and various other factors resulted in periods where we saw zero revenue even as our expenses continued.

‍

Which were the causes of DenberTech’s failure?

If I had to summarize the causes, they would be mainly 3:

1. Being too optimistic.

When you start to undertake your first ideas, you'll often find yourself making optimistic projections about how you imagine your project unfolding.

Naturally, you believe you'll be successful. You envision a perfect future, maybe even selling your startup. However, the reality is that even if you achieve that dream, things often don't go as planned, for better or worse.

So, this initial motivation made us underestimate many aspects of the startup.

Instead of focusing on solving current problems quickly and effectively, we wasted time thinking about what we could become.

It’s important to learn to channel that motivation, which can help you develop your idea faster and more robustly.

2. Not being prepared.

Initial enthusiasm and underestimating competition led us to believe our crypto experience was enough to succeed. However, this changed when we realized that developing our software was not as simple a task as we had initially imagined, especially since we weren't a team of engineers.

Before embarking on a startup journey, it's essential to recognize your strengths and weaknesses. While it's not necessary to be perfectly ready (because you never truly are), encountering mistakes and unforeseen challenges is all part of the process.

The startup environment is challenging. Remember that most startups (about 90%) don't succeed. But that's the nature of the beast. Ultimately, it's all about hanging in there without dying.

3. Not solving a problem.

To me, entrepreneurs' most frequent and risky mistake is trying to solve a problem that doesn't exist.

When we started, there was a very strong interest from businesses in knowing how and wanting to be able to accept cryptocurrency payments. At that time, we assumed there was a genuine demand based on this interest and other factors. We felt we had a golden opportunity to create something valuable.

However, after speaking with potential customers and deeply understanding the market, it became clear that while there was a lot of excitement around the topic, there wasn't an actual problem to solve.

We realized that businesses were coming to us mainly because of the hype. They wanted the potential publicity that would come with accepting cryptocurrency. But there was no genuine issue to tackle; we weren't offering a solution.

As I liked to say at the time, "We are trying to create a solution to a non-existent problem."

On another note, having experienced situations like this multiple times, I believe that not every problem needs a solution. There are countless problems, but not all present an actual business opportunity.

My advice is: Don't invent a solution and then look for a problem it might solve. Instead, identify a genuine problem first, then find its solution. If you approach it this way, you'll likely have more success than we did.

Which were your expenses? Did you achieve any revenue? In the end, how much capital did you lose?

Our primary expenses were on lead acquisition. Thankfully, the people involved in the project participated out of interest and passion, not for financial gain, so we didn’t have too many overheads.

For each campaign, our budget ranged between $250 and $500. We tried various approaches - some campaigns featured dynamic visuals, like videos of me speaking directly to the camera. Others were more serious and focused on text or images. We also put money into Google Ads to promote our website using informational and commercial keywords related to our project.

Initially, we didn’t set a specific budget, but with my savings and funds from another project, I had access to up to $5,000.

As I've noted earlier, we couldn’t monetize our business and, as such, didn't see any revenue.

Regarding costs, my memory is a bit hazy since it's been some time. However, I recall that approximately 90% was spent on customer acquisition, and the remaining 10% was on management software and the MVP.

‍

If you had to start over, what would you do differently?

I would have done everything differently. I wouldn't have gone with Search Engine Marketing - I would have tried for more organic media. I would have also made sure that we were the right team to develop the idea we had in mind.

I think also joining an incubator, as that would have been beneficial.

But above all, as I’ve mentioned, I would have made certain we were genuinely addressing a problem. After all, that's the essence of entrepreneurship.

‍