Bryce

What is a rug? From scams and 'hard rugs' to 'soft rugs' or more commonly known as 'failed business'' according to recent opinions. The word rug has taken on many identities in web3. What is a failed business? Before we slap a definition that can be regurgitated with no understanding, we need to understand a few major differences between web3 projects and timelines and web2 businesses. Web3 moves at lightning speed in comparison. With front end funding, lack of experience, poor financial decisions combined with quickness valued over execution its a tall task. Almost a third of small businesses in the U.S. close their doors within two years of opening and half in five. This should alarm you with how young the space is. The rate of failed NFT projects alone in any market is astronomically higher in a fraction of the time. There are things outside of the founders control, but the number one difference to me is money management. Why do they fail? -No market need -Not enough funding -Not the right team -Competition -Pricing If you've weathered the bear market as I have in web3, you can probably remember something I bought that failed due to the reasons above. New mints for funding, stubborn team, or to expensive. So, what is a failed business and what is a rug? In my opinion it can be boiled down to a few key points. A failed business usually runs out of money, or cannot sustain the cost of running day to day operations. In web3 it seems some of the most financially secure people were founders who profited from failed projects. With few projects delivering any tangible products its hard to believe millions can get spent in less than a year with nothing but jpegs to show for it. Small business outside of web3 has a consistent survival rate since the mid 1990's. Hovering around 78-80% lasting a year this much larger than in web3. While the data may paint a bad picture for web3, the youth of the industry makes me hopefully that the growth will continue and this type of stability could be reached. We all need to expand our time horizons, and founders need to be more cautious with the funding they receive. The number one indicator I'm interested long term in is sustainable revenue with 100% reinvestment into the growth and costs.