Web3.0 Entrepreneurship Column | Interview with Zhang Chi, the party involved in the Yescoin case: A Web3 entrepreneur who emerged from the storm

Author: Mankiw Brand Department

Opening words

Startup Web3, chat every Wednesday!

"Startup Web3.0" is an interview program for Chinese Web3.0 entrepreneurs initiated by Mankiw LLP. Every Wednesday night, we will invite industry leaders, first-line institutions, well-known entrepreneurs, etc. to share their views. We hope to promote the compliance development of China's Web3.0 industry through positive voices, rational discussions, and experience sharing.

Web3 is surging, and entrepreneurs are overcoming obstacles and exploring the unknown in this new world. How to find direction in a track full of opportunities and challenges? How can entrepreneurs who have experienced turmoil start again? In the third issue of the "Entrepreneurial Web3.0" column, Lawyer Niu Xiaojing of Mankiw Law Firm talks with Mr. Zhang Chi, the founder of Yescoin and 3W3.

In the 37 days from the founder to the party involved in the case, Mr. Zhang Chi experienced the thrilling detention, investigation, review and arrest in the storm, and experienced every "pitfall" of the public security, procuratorial and judicial processes. After returning from the storm, how did he review the logic of Yescoin's start-up and analyze the true trend and pseudo-bubble of the TON ecosystem? More importantly, he sounded the alarm for entrepreneurs: compliance, equity, team trust - these "gray rhino" risks can overturn dreams if you are not careful! Zhang Chi shared his entrepreneurial journey from a candid perspective and revealed the true code of Web3 entrepreneurship for us!

(The audio transcription has been processed by AI and may contain omissions and errors.)

Please go to Xiaoyuzhou to listen to the full podcast

Q1: You already have extensive experience in Web2 before entering Web3, so why do you want to enter Web3?

Zhang Chi: After graduation, I have been working as a product manager in the Internet industry. Before entering Web3, I was in ByteDance, responsible for online education products. It was 2021, and the country's policy adjustments on online education had a great impact on the industry. I personally have always wanted to start a business, and I felt that there were not many entrepreneurial opportunities in online education, so I started looking for new directions. It happened that year that Web3 was in a bull market, and many friends in the industry recommended me to take a look. They think my ability and personality are suitable for this industry. After my research, I found that Web3 does have opportunities and bubbles, but it is more valuable, so I became very interested and decided to get in directly.

The specific method was to find a job, join a company in Shanghai, and follow the boss Shuaichu, who was very famous in the industry in 2017-2018. That company had many projects, and I worked on NFT tools, mining pools, new public chain projects, etc. Especially the new public chain project, which later transformed into one of the few Chinese-language projects that emerged in this bull-bear cycle, and the team was also excellent. I joined as a product manager and participated in the product team. I saw the project from 0 to 1, the problems encountered, the solution process, and the results of success or failure. This gave me a holistic understanding of Web3 entrepreneurship for the first time. I am very grateful for this experience and learned a lot.

Niu Xiaojing: From ByteDance to Web3, you have made quite a leap! It feels like a transition from "stable" to "wild".

Zhang Chi: It was indeed a bit wild. At that time, I just wanted to try something new, and the unknown of Web3 attracted me.

Q2: As a product manager, what advantages do you have that help you gain a foothold in Web3?

Zhang Chi: The basic requirement for a product manager is strong logical ability, which is my advantage. In addition, the perspective of a product manager in analyzing business, projects, and tracks is different from that of other positions. It focuses more on starting from user needs and digging deeper. This is particularly important for me to enter Web3.

The user needs of Web3 are different from those of Web2, but the underlying logic is the same - a good product must meet user needs. However, the main line of Web3 is technology and finance, and users have a strong demand for wealth. Designing products around this is more focused but also more complicated than the diverse needs of Web2. For example, Web3 projects must consider financial laws, compliance, and technical protocols, which are the parts that I must learn in addition to the user perspective brought by Web2. But in essence, the core of insight into users and meeting needs has not changed.

Niu Xiaojing: So you used the "user thinking" of Web2 to open the door to Web3. So what are the specific unique features of Web3's user needs?

Zhang Chi: Simply put, Web3 users are more concerned about asset appreciation, security, and decentralized experience, such as DeFi returns and NFT scarcity. But like Web2, they also want simple and easy-to-use products. No one likes complicated things.

Q3: What was the opportunity for the launch of Yescoin? What is the core driving force?

Zhang Chi: The success of Yescoin is not the work of one person alone. It all started with 3W3 (Web3 Asia, Africa and Latin America Research Institute). We worked on 3W3 for more than a year, focusing on Asia, Africa and Latin America - more than 6 billion relatively marginalized people in the world. The idea of Yescoin came up in February 2023, the project was established in March, and it was launched in April. Why did it succeed? I reflected on it for 37 days and summed it up in two words: redundancy - redundancy of resources.

How to explain it specifically? When Yescoin was born, it was not a key project in the 3W3 system. The core manpower and resources were invested in another large project. Yescoin was in a marginal corner, driven by a few people, and gradually attracted more people to join and make it happen. This was partly due to luck. In addition, redundancy included capital redundancy (through financing) and manpower redundancy (some people persisted even without receiving salary). These superpositions allowed Yescoin to sprout in the corner of the system.

In terms of cognition, we have been paying attention to the zero-cost track (without mentioning specific projects) since the first half of 2023. It has a large number of users and is not valued by the industry, so it is suitable for breaking the circle. In the second half of 2023, we investigated the opportunities of Telegram and TON and vigorously promoted this direction internally. Yescoin combines the accumulation of zero-cost and the potential of TON. We have tried similar projects before, but they did not succeed, but we accumulated experience. Therefore, the success of Yescoin is the result of multi-party efforts, trial and error, and timing, and cannot be attributed to one person.

Niu Xiaojing: The word “redundancy” is very interesting. Is Yescoin closely related to 3W3?

Zhang Chi: Of course. Yescoin’s narrative and user base are consistent with 3W3, targeting people in Asia, Africa and Latin America. Most of the early and late active users are also from this group of people. The team was also inspired by 3W3 to join, and the resource redundancy is the accumulation of 3W3. Without 3W3, there would be no Yescoin.

Q4: How does Yescoin attract users quickly? What are the key actions?

Zhang Chi: Yescoin is in a track that is driven by operations and brands, with several core points:

• 1. Name: Notcoin is very famous, and Yescoin benefits from it, so the name is attractive in itself.

• 2. Community promotion: Paid promotion in the Notcoin folk community and the Zero-lost community has low cost, high fission coefficient and good effect.

• 3. Brand awareness: focus on brand building and upward business cooperation to enhance the impact of the project.

• 4. Timing: The peak of user growth occurred in two stages - when Notcoin was listed and when Hamster and Kātharine were listed. The track was hot and many users flocked in.

These are the combination of the right time, right place and right people. Looking back, operations and brand are the key, but luck and track popularity are also indispensable.

Niu Xiaojing: Yescoin’s users are mainly from Asia, Africa and Latin America. Are you targeting them because of specific needs?

Zhang Chi: In the early days, I didn’t specifically target a certain group. I just took advantage of the Notcoin and Zero-lost communities to attract a large number of users. Later, I found that users from Asia, Africa, and Latin America accounted for a large proportion, which fit the 3W3 narrative, so I took advantage of the opportunity to dig deeper.

Q5: If Yescoin is redesigned, what aspects will be optimized?

Zhang Chi: A lot! There must be a lot of problems when the internal disputes have reached this point. In the end, it is a "lose-lose" situation. Everyone is responsible. From a business perspective, there were several opportunities that were missed last year:

• May-July: The company should have expanded aggressively, incubated ecological projects, commercialized, or promoted new narratives, but due to major internal disagreements on future development, it was indecisive and missed opportunities.

• August-September: The lock-up should be completed to meet user expectations and seize the second wave of heat in the track (August-September). After the lock-up, there will be funds and status to conduct innovative exploration, such as Web2 traffic products or Web3 new projects.

The rhythm was not grasped correctly, partly due to the internal route dispute - some people pushed for radical commercialization and coin issuance, while others advocated slow issuance or even no issuance. No consensus was reached and the window was missed.

Niu Xiaojing: It turns out that rhythm is so important! You mentioned the consensus issue. Does the cyclical nature of Web3 make timing more important?

Zhang Chi: Yes, Web3 has a strong cyclicality, and it is difficult to recover if you miss the window. At that time, some people saw the opportunity, but they were unable to act due to the split consensus. Yescoin has shifted from the community to the entrepreneurial team, which has also increased the difficulty of consensus.

Q6: How was your experience during the 37-day storm? What unique thoughts did you gain?

Zhang Chi: We can talk about this topic for 5 hours! I am writing a short story to commemorate this experience. I guarantee it will be wonderful. I don’t know if I can publish it on the official account yet. In short, life in the detention center is orderly, different from the chaotic scenes in movies and TV dramas, but the sense of oppression is strong - no freedom, poor food, sleeping in a large bunk bed (15-20 people squeezed together). The conditions are difficult, but everyone finds joy in hardship and is very adaptable.

The most uncomfortable thing is the uncertainty about the future. Like CZ (Changpeng Zhao) said, he is worried about being convicted and unable to get out. What is most tormenting for me is not knowing how long I will stay.

There are many interesting people in there. For example, the "boss" of our cell was detained for copyright infringement. He is the boss of a startup company. He has been defending his innocence for two years. He is determined, jogs every day, and manages the cell in an orderly manner. He was sent back for retrial after the second trial, which is rare. We talked a lot. He pointed out the problems in my entrepreneurship, and I am very grateful to him. There is also a NetEase executive who was a minor character in the corruption case that was hotly searched last year. He is very knowledgeable and can talk about history at will. Because my first job was at NetEase, he took special care of me, like an old subordinate reuniting.

Thinking about it, the environment interrupted my daily rhythm. Without a mobile phone, paper or pen, I could only think or chat. I reflected on entrepreneurship: Are my abilities, experience and artistry insufficient? Is my role rational? I learned a lot from talking to the "boss" and executives. I also thought about how to get the four arrested team members out as soon as possible, and how to protect Yescoin after they get out. The interests of 3WW3 stakeholders and even the safety of the counterparties. These thoughts made me look at human nature and social laws more comprehensively.

Others might be some insights into life and creativity. I probably read about 20 books in it. At that time, I posted on WeChat Moments that I read One Hundred Years of Solitude twice and gained a lot of insights.

Niu Xiaojing: It is amazing that you can still find interesting people and read and learn in such an environment. You said that you reflected a lot. Can you summarize what are the different perspectives?

Zhang Chi: For example, was there a lack of artistry in dealing with problems? Was the decision not decisive enough? Did I ignore human nature in the early stages of entrepreneurship? I began to pay more attention to balancing the interests of all parties, rather than just looking at right and wrong.

Q7: What are the key stages of the case from filing to acquittal? What are the key points that led to a successful resolution?

Niu Xiaojing: I just mentioned the 37-day experience, and I would like to talk more about the case itself. From the police filing the case to the final acquittal, the process must have been difficult.

Zhang Chi: To be honest, the whole process was quite ups and downs, like a roller coaster. The beginning was a "dark moment". When the case was first filed, the chain of evidence was very unfavorable to us. On the surface, it seemed that "the evidence was conclusive", but in fact it was completely untrue. On the day I was taken away, the police told me about the case. As soon as I heard it, I understood that this matter could not be convicted no matter what - not only was it legal and compliant, but it was also reasonable and morally tenable. This was my confidence. But the initial evidence was indeed not dominant, and most of the other lawyers who consulted were pessimistic and felt that it would be difficult to turn the tables. The pressure was particularly great at that time, mainly because of the uncertainty about the future, like a dark night with no end in sight.

The first thing we did was to collect evidence and piece together the truth. The legal team was very helpful, especially Attorney Chen and Attorney Huang, who were on the front line like entrepreneurs. I was isolated from all information and could only rely on lawyers to pass on information. Not only were they busy running to judicial organs and looking for evidence, they also kept encouraging me, saying, "The truth will definitely come to light." I was very touched.

In the middle of the process, an unexpected turn of events occurred - a war of public opinion. The other party released some PR on Twitter and WeChat, trying to guide public opinion, but the statements were self-contradictory and exposed their true colors. The lawyer told me that these "god assists" provided a lot of clues to prove our innocence. During that time, family, friends, and teams outside also gave us full support, and the efficiency of collaboration gradually improved. Everyone gained confidence, and things began to move in a good direction.

Around the 30th day, the lawyers were very optimistic when they met with me. They said directly: "The four of us should be able to get out without guilt in 37 days, but we must keep a calm mind and be prepared for other possibilities." I had adjusted my mindset at that time. Even in the worst case scenario, such as staying for a few more days, I decided to fight for innocence to the end. Because I have a clear conscience, I must stick to this matter to the end! The people in the same cell also gave me a lot of inspiration, such as the "boss" who fought for innocence for two years. His experience and spiritual encouragement made me more determined.

Finally, he was released as scheduled after 37 days, which put an end to this storm. Looking back, there are several key points: first, the professionalism and resilience of the lawyer team, second, the concerted efforts of the family and team outside, third, the unintentional help of the public opinion war, and fourth, my own belief - no matter how long it takes, I must restore the truth.

Niu Xiaojing: It’s not easy! You mentioned the encouragement from your legal team. How did it help you stay calm?

Zhang Chi: The biggest help lawyers gave me was to convey hope. For example, every time I met with lawyer Chen, he would say, "We've broken our legs running around outside. Don't worry, the truth will speak for itself." The last time lawyer Huang met me, he came on crutches even though his legs were broken. I was so moved! They made me feel like I wasn't fighting alone. The support of my family and friends also came in through lawyers, and I gradually became stable.

Q8: Based on this experience, what legal risk avoidance suggestions would you like to give to Web3 entrepreneurs?

Niu Xiaojing: The game between evidence and truth in the case reminds me of a concept in law: "legal facts" and "physical facts" sometimes deviate, and evidence piecing together may be distorted. From your perspective, can you share some experience with entrepreneurs, such as how to avoid legal risks, or how to deal with them?

Zhang Chi: This experience made me realize that the judicial system relies on evidence to infer the truth. There is no God's perspective, and the slightest deviation in the chain of evidence may lead to a car accident. Therefore, entrepreneurs must have a sense of "evidence preservation".

1. Keep evidence on a regular basis. You don’t need to save everything, but you need to keep the key points—contracts, emails, chat records, transaction data—in a standardized format so that they can be used in the future. This time, our initial evidence was unfavorable because some things were not saved, and we later spent a lot of effort to remedy the situation. It is best to prevent problems before they happen. Keeping evidence is like buying insurance. It is inconspicuous at ordinary times, but it can save lives at critical moments.

2. Compliance is king. The legal environment of Web3 is complex. There are policy red lines in China and different regulations overseas. If you want to stay in China for a long time, you should study the compliance path thoroughly, such as how to legalize business models and capital flows; if you want to go overseas, you can get an overseas identity and operate in compliance locally. Compliance sounds troublesome, but it can save countless worries. Find a professional lawyer like Mankiw, consult in advance, and avoid detours.

3. Be careful when taking notes. Notes are core judicial documents, and you have to take responsibility when you sign them. However, oral statements contain a lot of content, and notes are very concise, which can easily lead to distortion. My experience is to read and revise repeatedly to ensure that every sentence accurately expresses the original intention. If the notes go wrong once, you may lose everything.

4. Reserve lawyer resources. Build trust with excellent lawyers and talk about the industry like friends, so that you can mobilize quickly when something happens. This time, my family found Mankiw as soon as possible, and the efficiency was maximized. When interacting with lawyers, it is also important to show willpower, especially when fighting for innocence, which is a painful process. You have to let the lawyer see your determination, and the degree of cooperation will be higher.

Finally, I want to say that the best way is to "prevent trouble before it happens". As the old saying goes, "Those who are good at fighting do not have great achievements". Being well prepared and not taking risks at all is the best way. We resolved the crisis this time, but if we were more compliant and had more complete evidence in the early stage, we might not have had to go through this.

Niu Xiaojing: These four suggestions are full of practical information, like a "Web3 Pitfall Avoidance Guide"! You mentioned evidence storage and compliance, which seems to be a wake-up call for entrepreneurs. How do you think family members and teams can cooperate with lawyers to achieve the best results?

Zhang Chi: The family and the team must trust the lawyer and provide as much information as possible, such as project background and transaction records. Even seemingly irrelevant details may be crucial. Don't hide anything from the lawyer. Communicate honestly for the highest efficiency. Then be patient. The judicial process is slow. Don't rush the lawyer. They are also working hard.

Q9: Why did you choose TON? What unique opportunities does it have?

Zhang Chi: There are two reasons:

1. New users: 3W3 wants to break the circle for the industry. Asia, Africa and Latin America have a large number of users but little capital. The TON track (relying on Telegram) fits this direction.

2. Ecological potential: In 2023, TON and TG showed signs of development. Notcoin verified the feasibility. We followed suit and TON also provided support. TG has 400-500 million daily active users and nearly 1 billion monthly active users, many of whom are new Web3 users. Russia, India and other places use TG like WeChat, with high activity and strong social logic among acquaintances, which is suitable for fission promotion. Projects such as Yescoin have won a large number of users, but the conversion rate is low, indicating that the value of the track has not been fully explored.

In the future, there will be new ways to tap greater potential, such as Web3 projects based on TikTok and Twitter. There is a lot of room for imagination in social platform + Web3.

Niu Xiaojing: TG is a real treasure! You said the conversion rate is low, how can it be improved in the future?

Zhang Chi: We need to create new scenarios. The TG applet is an attempt, but it has not been able to retain users continuously. In the future, we may combine games, social networking or new financial products to find a more sticky way of playing.

Q10: What are Yescoin’s future plans? What other big opportunities does Web3 have?

Zhang Chi: Yescoin will continue to move forward, but there are two versions, which makes coordination difficult. Third parties and investors are facilitating negotiations to ensure normal operation. Based on our optimism about social + Web3, we will rely on Yescoin to incubate new projects and tap into the value of the track. We are also looking at other opportunities, but the current industry is sluggish and lacks innovation, which seems to be a continuation of the last bull market.

Big opportunities are hard to predict, they may be:

1. New funds: ETFs, RWAs, etc. attract traditional funds but are more suitable for large institutions.

2. New users: TG brings in new users, but new scenarios are needed to improve retention.

3. New talents: The industry needs cross-border talents, and teams that understand Web2+Web3 have more advantages.

4. New scenarios: Can non-financial application scenarios, such as games and social networking, generate new consensus? Yescoin has captured new users (60 million, with Hamster, the highest in the track, exceeding 300 million), but has not built a new scenario, which is a bit regrettable. The future depends on trial and error. Before Yescoin, we tried 10 projects, and the probability of success was low, but action is more important than fantasy.

Niu Xiaojing: That’s a great summary! Which direction will Yescoin focus on?

Zhang Chi: First stabilize existing users and try new scenarios, such as social games or cross-platform cooperation, but we have to do it step by step.

Q11: How can a small team break through in a market dominated by institutions?

Zhang Chi: With the entry of large institutions, opportunities seem to be reduced, but small teams have advantages: quick decision-making, strong execution, and high cohesion. Large companies often have a worker mentality, many brand risks, and great restrictions. Small teams are small and easy to turn around, with a wide range of choices. As long as you grasp the needs, there will always be opportunities.

The biggest fear is being constrained by resources. The core of entrepreneurship is to leverage resources, using 1 unit of resources to exchange for 10 units, and then for 100 units. More resources do not mean success, and poor creativity will still lead to failure. Entrepreneurs must focus on what they really want to do, and too much desire will only distract them. Yescoin succeeded because it focused on user growth, and in the future, small teams must also find a point to dig deeper.

Niu Xiaojing: This reminds me of the garage startups of Google and Tencent! Can the small team of Web3 also copy this logic?

Zhang Chi: There are similarities, but Web3 is more focused on financial logic, so product managers need to improve their financial knowledge. For social tracks like Yescoin, Web2 experience can be used, but it must be combined with Web3 gameplay, so teams with dual backgrounds have an advantage.

Q12: What is your message to Yescoin supporters?

Zhang Chi: First of all, I want to apologize. No matter what the reason, we have failed the expectations of users, investors, partners, and former team members. It is our responsibility. Next, we will do our best to coordinate with all parties, protect the interests of the project, and strive for the best results. I am especially grateful to my friends who have always supported me, and I will repay everyone with actions.

Niu Xiaojing: This honesty is so touching! How confident are you about the future?

Zhang Chi: After 37 days, I became more optimistic. I saw the shining points of human nature and had a clearer understanding of the laws of entrepreneurship. My peace of mind made me believe that opportunities would always come. Maybe in one month, three months, or a year, we will make a comeback and get good results.

Q13: After experiencing the turmoil, how do you view the role of the founder?

Zhang Chi: The most important thing for a founder is his or her willpower and determination. He or she must not give up in the face of difficulties and must raise a banner to inspire everyone. Cognition and resources come second. Entrepreneurship is a game where a few people make decisions, but it is necessary to take into account the interests of a wide range of people - the team, investors, and partners. This is a test of the ability to balance.

The founder needs to find direction, money, and people. Finding people is not only about recruiting people, but also about managing the team; finding money requires being able to "sell" the project; finding direction depends on vision and will. No matter how good the direction is, it is useless without persistence.

When consensus is difficult, the founder needs to be decisive, but also needs to unite people. Teams with similar backgrounds are suitable for democratic centralism; teams with large background differences are more efficient in centralization. Regardless of the situation, decision-making is the key. Yescoin’s problem lies in the split consensus. In the future, I will be more decisive, but I will not forget to win people’s hearts.

Niu Xiaojing: Mental strength comes first. This is so powerful! Will you be tougher now?

Zhang Chi: I will be more assertive, but not arbitrary. I will make everyone willing to follow, rather than force them.

Q14: What are your opinions and suggestions on Web3 legal services?

Zhang Chi: I think Web3 needs more excellent lawyers, especially in:

1. Equity structure: Design it well in the early stage to reduce conflicts. Yescoin had many problems later because of the lack of clear agreement in the early stage.

2. Compliance consulting: How to comply with regulations? How to avoid risks? Professional lawyers are crucial. The downside is that there are not enough lawyers who understand Web3, especially in the areas of equity and compliance, and there are few experienced teams.

In terms of equity, founders must balance short-term gains and long-term incentives. The option pool is used for the employee logic, and shares are given only when the partner mentality is used. Centralized decision-making is required in the early stage, but it is also necessary to prevent "founders from doing evil" and rely on compliance constraints. These will take time and legal fees, but they are worth it.

Niu Xiaojing: Equity is really a game between human nature and the law! Will you pay more attention to this now?

Zhang Chi: Absolutely! When starting a business in the future, it is important to finalize the equity agreement as soon as possible to save countless troubles.

Q15: An insight

Zhang Chi: I like the words of Dr. Qi Lu from YC China recently: " To help others and achieve oneself, to stick to the right path and be unconventional". To help others and achieve oneself is the bottom line, and to benefit others is to benefit oneself; to stick to the right path is to stick to the principles, and to be unconventional is to use cleverness to achieve results. Entrepreneurship is stressful and it is easy to go astray. The means and the purpose cannot be separated, and bad means will backfire on the goal. These eight words are not only a guide for entrepreneurship, but also the wisdom of life.

Niu Xiaojing: These eight words are so philosophical! You particularly emphasize "guarding" and "exiting". Is there any story behind this?

Zhang Chi: I used to only care about "normal" and "odd", thinking that as long as there were more tricks, it would be fine. This incident made me realize that "guarding" is the root that cannot be lost; "exiting" is the icing on the cake, and it must be used in the right place.

Niu Xiaojing: I had a great time chatting with Professor Zhang Chi tonight. He talked a lot, from the "redundant" origin of Yescoin to the deep reflection of 37 days, to the future vision of Web3. The amount of information was overwhelming! I was moved by his honesty and vision, and I gained a lot. Friends who want to continue to communicate can reply "business card" in the background of the "Mankiw Blockchain Legal Services" public account to contact Professor Zhang Chi. Yescoin and 3W3 are also recruiting people. If you are interested, please contact Professor Zhang Chi! That's all for tonight. Thank you everyone!

Zhang Chi: Thank you, Lawyer Niu! I hope my sharing can be helpful, even if it can only inspire a little bit. I look forward to chatting with you next time!

Starting a business is not easy, but your story must be cool!

Welcome to join Mankiw’s “Entrepreneurship Web3 Column” to inject real and fresh power into China’s Web3.

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