EthSign CEO: How to find new scenarios for decentralized electronic signatures

Author: ThreeDAO

In the process of communicating with 250 investors, how to develop a small tool into a comprehensive solution and agreement such as contract performance and asset management starting from a vertical scenario such as signature.

In the fourth module of the Creation Camp of Everything on July 22, Yan Xin, the founder and CEO of EthSign, used his own experience as a case to conduct a 2-hour dialogue, sharing and exchange with 66 entrepreneurs of Creation Camp S1 of Everything. In the process of communicating with 250 investors in the Web3 project invested by Capital, Circle, and Sequoia, how to develop a small tool into a comprehensive solution such as contract performance and asset management from a vertical scenario such as signature and agreement, the following is a partial transcript of the Q&A:

**Wanwudao: What kind of experience do you have at each stage of entrepreneurship? **

Today I will talk about the process and experience in the two and a half years of entrepreneurship, and I will share with you the stages of product development, the positioning of myself at each stage, and the problems encountered in the next stage. Finally, I will summarize this Two and a half years of specific thoughts.

I am the CEO of EthSign. We have been doing this for two and a half years. Before that, I was a hardware engineer and entered the blockchain industry through mining. I started working on EthSign in 19 years and started my business full-time in 21 years.

First of all, entrepreneurship is an independent homework. When I first changed from an investor to an entrepreneur, I thought I had a relatively clear understanding of how to make something valuable, and now I want to make it. But after starting a business, I found that this is a completely different matter, such as how to manage the team, how to ensure that everyone’s ideas and ideas are consistent, how to develop meaningful products and markets, how to achieve profitability, etc. It is a complex subject , rather than a linearly solvable mathematical problem.

To sum up, I think entrepreneurship can be divided into several stages. First, you have to generate an idea on the premise of having a full understanding of a certain market, and then use this idea to find many experts to realize it together. , They may be responsible for all aspects, such as product, market, front-end and back-end, etc., and then together they will show the prototype to those who may support you, such as VC. The second stage is to bring the product to the market to realize its commercial value and find someone who is willing to pay for it. Finally, give back the realized business value to those who once believed in and supported you. So this process can be replicated, and to some extent, such a methodology can be used universally, and it has nothing to do with the industry.

The second point is that I think entrepreneurship needs to be driven by enthusiasm, because we have to start a new thing and even compete with them when there is a huge difference in resources between us and other companies, and we are required to grow very fast , and everyone is under the pressure of various real life and business interests. This situation will cause your ideas to change frequently, so you will keep asking yourself what the result of entrepreneurship is, for example, what do you think? Entrepreneurship is the best way to achieve financial freedom. You may soon find out that it is not necessarily true, because maybe others are spending money and investing in the bull market, but you are spending time on product development and team management. To some extent, it is certain It is delaying your making money, but in turn entrepreneurship is actually the best way for us to see the problems in this world and come up with a solution to change it. This is the core that I think needs to really drive everyone to start a business with enthusiasm.

The third point I think is very interesting is that when I was doing the PPT yesterday, I thought that starting a business is like a smuggling, you only have a vague conceptual understanding of the destination you are about to reach, and you only know that the end point is very short. It’s beautiful, but you don’t know what the specific path is, and this place is something that no one else around you has been to. Even if you have the experience of the other party, it is impossible to completely copy it. You still have to find a few on your own. Brothers willing to charge with you to grope out. **Maybe the ship will capsize halfway, maybe you will arrive at the destination you expected at the beginning, maybe you will arrive at a place completely different from what you expected. This process is very similar to smuggling.

**All Things Island: How does EthSign discover market opportunities? And how to find out the product positioning? **

Going back to our own entrepreneurial process, the first stage is actually a pure tool. We did this project when we participated in the hackathon in 2019. At that time, everyone was still working part-time. I was also working in VC, and my partner was also studying Master, we probably found five engineers to hold a hackathon together. At that time, we wanted to verify whether decentralized storage could be used, so we thought of many ideas based on this, one of which was EthSign, which we defined as a pure I also like this kind of tool very much. The interesting point is that it is a single function to some extent. You have a clear function to solve a specific problem. You should be able to describe it clearly in one sentence, such as We are the decentralized electronic signature platform.

At the same time, I think that in the early stage of a project, find the infrastructure and community that you can rely on. For most entrepreneurs, we use new infrastructure instead of creating a new infrastructure, because it is too difficult So try to find a way to stand on the shoulders of others to take advantage of the situation. Why you have a chance to start a business is because new infrastructures are constantly emerging. To capture value, they need enough applications and a user-friendly interface. These opportunities are actually reserved for many entrepreneurs. For example, Ethereum is a very stable, fair and censorship-resistant chain. It is a very powerful infrastructure, and you can make any innovation based on it. For example, OpenAI has also become the infrastructure of AI, and many people develop and start businesses on it.

In addition, you also need to find the target community, that is, which community may have the largest audience after your product is produced, and even join this community at the beginning, to co-create with the members in it, and verify your needs. Help you save a lot of costs and detours, and avoid working behind closed doors.

From the name, EthSign knows what we do. At the beginning stage, our goal is to pursue the completion of the product. We hope that the product we make is simple, the boundaries are neat, and there is enough openness and Integratability allows everyone to access and use us, so that we can join this ecological Lego. So at that time, we made completely decentralized applications based on a lot of underlying and middleware. We didn’t have any servers, and even our code ran in decentralized storage, and our products were relatively simple. At that time, we were frantically raising funds with a valuation of 3 million in 20 years, but we kept failing. Maybe Web3 was not very popular at that time, so everyone was not willing to pay for it, but even now we have no positioning for it. Changes, I still hope it is a very clear tool to manage your agreements and assets.

At that time, investors would think that our product has a large horizontal aspect. It seems that although it is only a signature agreement, it can be used in financial lending, house leasing, personnel employment and other scenarios. From which angle to cut into the go to market needs to be considered. And whether to provide services for all scenarios on one platform, or just select a few scenarios vertically also needs to be considered, how to build a moat, how to obtain dividends through the powerful infrastructure we rely on to capture more great value.

Even many investors in the early stage said that I can find someone to make this thing in a month or two. I think it is true. After all, we are an immature start-up company, and we are definitely not as good as those with mature experience in engineering research and development capabilities. company, so I was thinking about how to capture more value in the Web3 world, or in other words how to get financing under such competitive conditions, so the thinking here changed. My idea at the time was very simple. What makes it great is its public-private key account and smart contract system. We use the account part very well and use it as a signature. Can we also use smart contracts, for example, to execute the terms of the contract? Then we think this idea is very ideal. Although it seems that the contract is something customized by thousands of people, it can still be templated behind it. After we find the scene, we will start from here to create a clearer, transparent and efficient market.

So since last year, we have turned the entire process of EthSign signing and management into a product. This year, we are thinking about the next step, how to move towards actual business and a larger market. For example, the question I have been struggling with before is that some investors asked me what your business model is and how to make a profit. This is a very difficult and difficult question for early start-up companies. There is no need for revenue because what we are doing is a protocol, and TCPIP has no business model, right, but is it really like this? The second question is whether to serve people outside the circle, or just use it for the inside. How outsiders come in has nothing to do with me. That is something that Vitalik has to consider. Another idea is that outsiders don’t come in because of The infrastructure is not mature enough and not ready for mass adoption, so we wait for the technology growth curve to arrive in two or three years, and they will use it themselves, but is this really the case?

For most of us, we are a start-up company with our own products and our own value capture channels. If there is no revenue, a billion will become a very big bottleneck for you, because we look at the valuation of more than one billion in the last round. The company has a very clear revenue, if a very complex and exquisite design without a business model, it can only be said to be a work of art rather than a product.

The second question is whether to serve outsiders. I went to Zuzalu in Montenegro to communicate with many people. I suddenly found that I have been working full-time in Web3 for so many years, and their discourse system is completely different from theirs. It is already difficult to communicate. I think meaningful things, whether it is account abstraction or zkevm, are difficult to explain to others. I don’t know if everyone feels this way. It is difficult for you to explain the value of your technology to outsiders. This is also our problem. , such as biotechnology anti-aging, AI large-scale model, its value is very clear and simple, you can explain it very clearly to anyone, but many people will think that mass adoption is not my business, I just need to put the current After things are done well, people will naturally come in. I want to say that this idea is relatively naive, because there will also be competition for talents and capital between industries. For example, AI has become popular and many people do AI and invest in AI. can create more value, and Web3 will definitely enter a bear market. This bear market is not only from the outflow of capital, but more from the outflow of talents. If people in an industry continue to do this , then this industry may die, we still have to pursue the value of technology to be simpler and more intuitive, and seek to attract people and money from outside the circle.

So this year we will also do some practical things that we didn’t want to do before. For example, we have cooperated with a world-class law firm like Cooley to launch a contract library, which covers most of the agreement templates that an entrepreneurial team needs in the early stage. We There is also a very clear product development path. The protocols everyone uses are highly customized. We first provide a paper template that everyone can accept, so that everyone can gradually get used to this fixed rule, and then we only change the parameters inside. In the future, when an agreement is used enough and the degree of template is high enough, we can turn it into a smart contract for execution. So in the long run, I think all paper agreements will disappear. We need to make this product more Be useful, actually solve everyone’s problems, not just think it’s cool.

How to go out of the circle to serve more people? We grew up from Ethereum at the beginning, but it does not mean that we only serve Ethereum. We strive to serve more ecology, such as different chains and private key formats, etc. We also submitted EIP to support everyone to use DID as identity signature, and Not only your private key, but also password storage related functions to help users better keep their account and contract data, so we will do a lot to help users, rather than let users learn by themselves.

The above are some of our changes and progress as of today, but for the future, my dream is to become a real protocol. We need to realize its network value through the protocol to cover more scenarios and users. In essence, many businesses are based on traffic. For example, our current matchmaking business is the traffic business of investors and project parties. The problem with any traffic business is that it cannot serve everyone. The Internet is uneven. It is due to different countries, Language and culture have independent circles and traffic platforms. We hope to become the public infrastructure of these traffic platforms. The advantage of becoming an agreement is that there will be strong interoperability. This is a smart contract based on the encryption field or Ethereum The highest holy grail of the platform, you only need to write a few verified smart contracts and it may be used in any related scenarios, so this smart safe can also be applied to scenarios such as family trusts, which must be protocolized The reason is that we need to open up enough capabilities so that those who need it in other scenarios can integrate our services at a low cost. We will accelerate exploration in this area in the future.

**Wanwudao: From the perspective of seniors, what suggestions does the founder have in the process of track and business verification? **

Finally, regarding my experience and feelings, first of all, don’t get too entangled in the idea stage. To be honest, there are not so many choices at the beginning of starting a business. Let’s first look at what cards we have, what we are familiar with, and what to do, and then look at the corresponding market. Find a specific problem, don’t think about finding a big problem at the beginning, as if solving this problem can capture hundreds of millions of dollars in value, this problem does exist but it may not be suitable for you, so you start with a certain problem Small problems can be solved. The second is that ideas are worthless. Investors receive a lot of ideas every day. What they want is execution, to actually bring this idea to the market, so investors invest in our execution rather than ideas.

So many people struggle too much with ideas at the beginning, like designing a logo and hoping that it can carry all our dreams, but this is impossible, just choose one at will, everyone’s goodwill for this logo actually comes from It depends on your continuous investment in the project, not whether the logo itself is good-looking or meaningful enough.

At the beginning, we frankly said that we also wanted to make a Web3 version of DocuSign, but it is not that difficult for DocuSign to add a private key signature, but he can’t do it because this thing is too new, and its core The business model and supervision may still have a great impact. As a listed company, many times the management’s decision-making deployment is for innovation, but to keep the current revenue, so this is the reason why Volkswagen and BMW cannot make Tesla. I am now Don’t encourage us to define it as something in Web2 in Web3. Although it is convenient for others to understand, you will ignore many valuable things because of this definition, which limits your field of vision. Really valuable They are all native, rather than re-doing what others have done in one field.

It is to start low move fast, or start with some small things at the bottom as I said just now, but it must be done quickly enough, instead of thinking about grand things at the beginning, finding ways to raise a large amount of money, and hiring many people. An idea that can only be realized by engineers, everyone should quickly implement its MVP from a small idea to verify the market, and then quickly iterate and update according to the feedback, so don’t think too complicated about what you want to do at the beginning , It took a lot of effort to finally finish it, only to find that the market does not need such complicated things, which leads to a huge waste of resources. Now we can complete the process from idea to MVP within one month. In addition to the engineering team, we also have There is a prototype team dedicated to MVP proof of concept.

Finally, I suggest that you take the time to go to places other than China and the United States, because our infrastructure in China and the United States is too mature, and it is difficult to understand what the market needs of those real developing countries are.

**Wanwudao: Everyone thinks your financing is very successful, what experience do you share with you? **

Investors do not invest during the rising period of the bull market, and only start investing wildly during the falling period of the bull market, because the primary and secondary markets have a lagging effect, which takes about half a year to a year. For example, when the bull market comes, LPs invest in GP Money, the GP will only invest money in the project when he has money. Our own financing process is very bumpy. It took three months to get the first financing, and then we got a total of 600,000 US dollars in financing. My own money lasted for eight months to reach the bull market, but at the peak of the bull market, I didn’t have time to speculate in coins, so I had to use my own money to last for another 5 months before I got Sequoia’s investment. This process It was very hard. I can say that I should be the institution that has seen the most investors. I have met more than 250 investors in total, at least 2 or 3 investors every day, which lasted for half a year.

This process is very painful, but also very rewarding. On the one hand, you take it as an opportunity to learn English for free. When you meet 100 investors, your English will be very fluent. Secondly, investors will give you a lot Feedback, you have to prove that your things are valuable, and investors may become bad guys who deny you and fight with you, so in the process of your justification, it is also a process of thinking deeply about how to solve the problems raised by investors. The more important thing is that you have to Keep in touch with investors. The other party may not vote for you, but you have to ask clearly why you don’t vote. Don’t stop asking because most investors say we’ll take a look. Keep asking until you get feedback. It is very important not to be afraid of losing face, and if there are any new developments in your products and business, you should always synchronize with the investors you talked to before.

Finally, don’t respect the opinions of investors too much. Many investors in traditional industries have done successful listed companies themselves. Many of his suggestions are valuable experience, but many investors in web3 have never really done it. For successful projects, their opinions are more from the perspective of investment, so don’t pay too much attention to his suggestions. It’s the best to keep doing what you really want until there are results.