Reflections on Backed
June 20th, 2023We recently made the difficult decision to wind down Backed, the startup I've been working on for the past year and a half. At Backed, our goal was to make NFT-backed lending as easy as possible. In our short 1.5 years, we launched two protocols, each with their own slick web based interfaces, both of which struggled to gain traction. I've learned a lot, and thought I would summarize those learnings in this post.
For some context, Backed was started by four former Coinbase employees (one of whom was me). I'd been an engineer at Coinbase for two years prior, working on how Coinbase processes payments. In the summer of 2022, Wilson Cusack, the CEO and brain father (is this a word?) of Backed, proposed a protocol for NFT-backed loans to the Coinbase product and engineering leads. Coinbase was excited about it, told him he should continue to explore the idea, and even gave him permission to recruit a few resources from within the company to help him. In November 2022, when Wilson mentioned he was looking for other engineers, I immediately reached out. I had followed Wilson for a while on twitter, and had enjoyed his thoughts on crypto as a whole. Additionally, I was growing tired of working on a larger team where I didn't have much autonomy, and thought this would be a good opportunity to get my hands dirty on a small scrappy team. And small and scrappy was exactly what we were. After a couple of months, Coinbase urged us to spin out into our own entity, funded by Coinbase Ventures, and we immediately got to work. I won't get into detail about everything that came between the wind up and wind down, but I will reflect on the experience of failure, the benefits of optimizing who you work with, and the value of knowing when to give up. I'll also preface by saying that this reflection is more through the eyes of a founding engineer, rather than a true founder.
Reflection #1: who you work with > what you work on
I learned more in my year at Backed than I did during two years at Coinbase. I think this is largely in part due to who I worked with, and not what I worked on. Being on a small team allowed us to move quickly, and make decisions amongst ourselves. This is the key to me, less time around the process to make decisions means more time executing the decisions. Also, being a technical team with no managers results in one aligned goal: make the product great. When there is no product there is only you to build it. When the product breaks there is only you to fix it. If a user tells you the product is not good, there is only you to make it better. No managers means the product comes before any one and any thing. I hadn't really known what my grandest ambition in work was (and still don't know), but I knew I was obsessed with good products and experiences so this was a good fit. I am lucky to have worked with three other people who were earnest, and always put the craft before ego. We did not care about spending a ton of money on flashy web content or promotions. Nor did we feel the need pay for user acquisition before trying to find product market fit. We were all aligned on iterating on the product as many times as possible, even if it meant failing faster.
Reflection #2: build something you yourself want
I've seen this simple advice given so many times, yet I now know first hand it is hard to follow. There is difficulty in discerning between whether you are wanting to want what you are building and if you genuinely want it. I think this is one of the dangerous fogs of ambition: you sometimes conflate your desire to succeed with whatever the task at hand actually is. It is important to periodically zoom out and re-evaluate: if I wasn't building this myself, would I use it? This is easier said than done of course. I used some of the products we built at Backed, but that was more to marvel at what we'd built rather than derive genuine value from it. The other nuance though, is that a loans product isn't one that people come back to every day, or every month even. This made assessing organic demand even trickier. The tech bubble knows the “build something you want” mantra well, but I've been surprised to see how common it is stated agnostic of industry. I came across an interview with JJJJound founder Justin Saunders recently, and he mentions:
“We selfishly choose to launch/produce items we want in our lives: We need a simple pour over coffee drip for the office, awesome let's make one. Montreal is getting cold again, awesome let's make beanies for ourselves.”
I hope the discernment and zooming out I mentioned earlier comes easier with practice, and I also think framing it as selfish pursuit like Justin mentions certainly helps.
Reflection #3: thinking about how you feel when things get tough
Building something from scratch takes a lot of discipline. You do not have a strong company culture, or a chain of management to keep you focused. During the last two months of Backed, we built out an alternative interface for our protocol called papr adventure. We launched it, and saw no new users come to use the interface to take out a loan. This was defeating. Shortly after, feeling the stings of low-usage (on both the new and old interfaces), we began having discussions of shutting down. While forming my thoughts on what I thought we should do, I came across this quote from Phil Knight that I resonated with a lot:
"Making work be fun is not what you think it is. People who consider their work to be fun are still describing it just as (or more) painful, stressful, annoying and horrible than everyone else. The difference seems to be not in enjoying the work when it's good per se, but not wanting to quit it when it's at its worst. When your job is at its worst do you feel:
A. I can't do this anymore, all I want to do is quit → your work is work
B. I could never quit, this only is driving me harder → your work is play"
I felt more aligned with option A. This is not to say everyone's end goal should be to have work that feels like play. I do personally think, however, that if you're sacrificing the stability of a “normal” job to start a company, it should be energizing, even when things are not going well. Notice how you feel the going gets tough, with anything that you're embarking on, because it seems anything worth doing has the lowest lows and the highest highs. And if you want to quit when things are low, maybe you are not enjoying it overall as much as you think.
I finally want to thank Wilson, Joe, and Chris, for the past year and a half. Going on the Backed journey is one that I'll never regret because of who I got to work with. Outcomes don't matter as much if you enjoy the company of those around you, and I couldn't have asked for a better bunch to build alongside. And a special shoutout to Wilson for taking a chance on me. I got this opportunity by cold DMing Wilson, so I'll end by being the millionth person to say: shoot your shot.
For some context, Backed was started by four former Coinbase employees (one of whom was me). I'd been an engineer at Coinbase for two years prior, working on how Coinbase processes payments. In the summer of 2022, Wilson Cusack, the CEO and brain father (is this a word?) of Backed, proposed a protocol for NFT-backed loans to the Coinbase product and engineering leads. Coinbase was excited about it, told him he should continue to explore the idea, and even gave him permission to recruit a few resources from within the company to help him. In November 2022, when Wilson mentioned he was looking for other engineers, I immediately reached out. I had followed Wilson for a while on twitter, and had enjoyed his thoughts on crypto as a whole. Additionally, I was growing tired of working on a larger team where I didn't have much autonomy, and thought this would be a good opportunity to get my hands dirty on a small scrappy team. And small and scrappy was exactly what we were. After a couple of months, Coinbase urged us to spin out into our own entity, funded by Coinbase Ventures, and we immediately got to work. I won't get into detail about everything that came between the wind up and wind down, but I will reflect on the experience of failure, the benefits of optimizing who you work with, and the value of knowing when to give up. I'll also preface by saying that this reflection is more through the eyes of a founding engineer, rather than a true founder.
Reflection #1: who you work with > what you work on
I learned more in my year at Backed than I did during two years at Coinbase. I think this is largely in part due to who I worked with, and not what I worked on. Being on a small team allowed us to move quickly, and make decisions amongst ourselves. This is the key to me, less time around the process to make decisions means more time executing the decisions. Also, being a technical team with no managers results in one aligned goal: make the product great. When there is no product there is only you to build it. When the product breaks there is only you to fix it. If a user tells you the product is not good, there is only you to make it better. No managers means the product comes before any one and any thing. I hadn't really known what my grandest ambition in work was (and still don't know), but I knew I was obsessed with good products and experiences so this was a good fit. I am lucky to have worked with three other people who were earnest, and always put the craft before ego. We did not care about spending a ton of money on flashy web content or promotions. Nor did we feel the need pay for user acquisition before trying to find product market fit. We were all aligned on iterating on the product as many times as possible, even if it meant failing faster.
Reflection #2: build something you yourself want
I've seen this simple advice given so many times, yet I now know first hand it is hard to follow. There is difficulty in discerning between whether you are wanting to want what you are building and if you genuinely want it. I think this is one of the dangerous fogs of ambition: you sometimes conflate your desire to succeed with whatever the task at hand actually is. It is important to periodically zoom out and re-evaluate: if I wasn't building this myself, would I use it? This is easier said than done of course. I used some of the products we built at Backed, but that was more to marvel at what we'd built rather than derive genuine value from it. The other nuance though, is that a loans product isn't one that people come back to every day, or every month even. This made assessing organic demand even trickier. The tech bubble knows the “build something you want” mantra well, but I've been surprised to see how common it is stated agnostic of industry. I came across an interview with JJJJound founder Justin Saunders recently, and he mentions:
“We selfishly choose to launch/produce items we want in our lives: We need a simple pour over coffee drip for the office, awesome let's make one. Montreal is getting cold again, awesome let's make beanies for ourselves.”
I hope the discernment and zooming out I mentioned earlier comes easier with practice, and I also think framing it as selfish pursuit like Justin mentions certainly helps.
Reflection #3: thinking about how you feel when things get tough
Building something from scratch takes a lot of discipline. You do not have a strong company culture, or a chain of management to keep you focused. During the last two months of Backed, we built out an alternative interface for our protocol called papr adventure. We launched it, and saw no new users come to use the interface to take out a loan. This was defeating. Shortly after, feeling the stings of low-usage (on both the new and old interfaces), we began having discussions of shutting down. While forming my thoughts on what I thought we should do, I came across this quote from Phil Knight that I resonated with a lot:
"Making work be fun is not what you think it is. People who consider their work to be fun are still describing it just as (or more) painful, stressful, annoying and horrible than everyone else. The difference seems to be not in enjoying the work when it's good per se, but not wanting to quit it when it's at its worst. When your job is at its worst do you feel:
A. I can't do this anymore, all I want to do is quit → your work is work
B. I could never quit, this only is driving me harder → your work is play"
I felt more aligned with option A. This is not to say everyone's end goal should be to have work that feels like play. I do personally think, however, that if you're sacrificing the stability of a “normal” job to start a company, it should be energizing, even when things are not going well. Notice how you feel the going gets tough, with anything that you're embarking on, because it seems anything worth doing has the lowest lows and the highest highs. And if you want to quit when things are low, maybe you are not enjoying it overall as much as you think.
I finally want to thank Wilson, Joe, and Chris, for the past year and a half. Going on the Backed journey is one that I'll never regret because of who I got to work with. Outcomes don't matter as much if you enjoy the company of those around you, and I couldn't have asked for a better bunch to build alongside. And a special shoutout to Wilson for taking a chance on me. I got this opportunity by cold DMing Wilson, so I'll end by being the millionth person to say: shoot your shot.