It is often said that past is prelude. Recently, we've seen a surge in optimism in the technology space, particularly among the Web3 and AI communities. And in my view, this burgeoning momentum is a prelude to an epochal change that will fully gather speed with the coming of the new year.
December is always a time for reflecting and planning, and much action is always left for the days after the presents have been opened and the confetti has been swept from Times Square.
What does this all mean for startup founders?
I don't have a crystal ball, but some broad trends are apparent to those who have been involved in startups, and particularly blockchain and AI projects, for the past several years.
First, the regulatory winds look set to change. For the past four years, whatever the government's stated policies have been, those in the tech and startup sectors have perceived an adversarial stance on the part of regulators. These adverse actions have been spearheaded by Securities and Exchange Commission Chair Gary Gensler, who took up notable campaigns against crypto as well as popular financial instruments such as Special Purpose Acquisition Companies, and Federal Trade Commission Chair Lina Khan, who has worked to block large mergers across tech and other industries.
Whether intended or not, this animosity has led a meaningful number of tech leaders to establish relationships with key Republicans, including President-elect Donald Trump. As a result, the incoming administration has positioned itself as more overtly tech-friendly, announcing a new Department of Government Efficiency to be led by tech veterans Elon Musk and Vivek Ramaswamy, as well as a White House AI and crypto czar.
All of this would seem to portend momentum for tech, particularly fast-growing sectors in Web3, in the new year. So, regardless of your politics, it's an exciting moment for people building new companies looking to harness and scale these tools. And, as at any inflection point, there are important decisions to be made. As someone who has spent years working closely with cutting-edge businesses and founders, I've learned a few things about what gives a business the best chances of success.
Momentum Is Good but Not Enough
As a communications specialist and former journalist, I understand the importance of getting attention for young companies. In a crowded world, it's more important than ever to stand out. That's easier in a bull market because investors are looking for new projects to invest in and journalists are looking to write about growing sectors. A bull market can be the best time to seize the initiative—to make your play to gain real traction for your business.
Timing is crucial in most areas of life, but it isn't enough. To take advantage of the market tail winds, you must have already begun building before the hype picked up. Projects that are truly bound to succeed will have been conceived with a genuine conviction about a new way to solve a real problem, not in a rush to follow the hype.
Those projects that have the right stuff—of which I have the privilege to know many—still must take care not to be swept up in the euphoria, to take shortcuts in their development to capitalize on momentary waves, or to lose sight of the vision that drove them to start a company in the first place. In the end, quality and substance are still the keys to success. If you give people a good product that solves a real problem, by and large you will flourish.
Nevertheless, building the initial momentum can be the most difficult stage in a company's development. That's why bull markets often represent the best moment to announce yourself to the world and begin to build your reputation as a brand worth following. If you've conceived and built a good business, now may be the best time to begin to make your mark.
No one knows what the future holds. But it is a simple fact that markets are cyclical. I have always counseled entrepreneurs to build in bear markets. When the bull market comes—and it appears one is coming—those founders can tap into the wave of market optimism to establish growth and traction that will outlast this cycle and many still to come.
Saul Hudson is a managing partner at Angle42, a strategic communications agency for fast-growing startups in the Web3, AI and other emerging technology industries.
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