@dwr

"Why didn't you spend more of the money you raised?" Spending money can help with sign ups, i.e. you can pay to get the users to download and go through onboarding. What it doesn't solve is the most important thing -- retention. If 3 out of every 10 users that signed up continued to use Farcaster after 30 days, we would have been thrilled to spend the money acquiring more users. We had some brief periods where 30d retention was >20%, but those didn't stick. But the harsh reality is we never found an iteration of the product that could reliably retain users. Everyone will have opinions on what form of the product *might* have led to better retention -- reply bumping! channels!, something else! -- but the data never supported any of it. "So then why did you raise so much money?" An older Silicon Valley operator / investor once shared a good quip here: "When they are passing hors d'oeuvres, take two." Raising a lot of money is only a burden for a company if you spend it. So Varun and I always had the point of view to raise when timing was good for us (timing is 80% of fundraising) and then be disciplined on how we spend it. Our mentality was never to spend every penny because we had it. Rather, preserve as much as possible until a clear sign of product-market fit and then be able to rapidly deploy capital into something that was working (both in user acquisition and scaling the team). The amusing thing about being told "you should have spent more" is the divide: those who've never raised significant capital wanted me to spend it, while those who actually have raised large sums thought I was being prudent.

33 replies

25 recasts

266 reactions