Alliance DAO Employee Zero: Why is the first thing we teach founders about layoffs?

Interview: Mensh, ChainCatcher

Guest: Will, Core Contributor of Alliance DAO

Founded in 2020, Alliance DAO is the leading Web3 accelerator and founder community, helping the top 1% of Web3 founders launch and grow their companies through a 10-week program led by renowned Web3 experts. Alliance DAO’s community includes founders, lawyers, auditors, liquidity providers, market makers, etc.

So far, Alliance DAO has held 14 startup accelerator camps, and the incubated companies have a total market value of US$11 billion. In this cycle, incubation projects such as Pump.fun, Moonshot, and Glow have performed very well.

In this conversation, we invited Will Robinson, employee zero of Alliance DAO, to share his personal experience in the Web3 field, how to screen projects and the founder's experience.

personal experience

ChainCatcher: We can start with your personal experience in the crypto space.

Will Robinson : I started my career as an academic researcher. I spent eight years in graduate school studying video games, tabletop games, sports, focusing on the history and culture of gaming. I work in the Departments of English, Sociology, and Communication, studying how mechanic design and games can help game designers create more artistic games. The focus is on indie games, especially those that shock people and aren't just for entertainment. For example, I designed a game about when was the “best time” to commit suicide in high school. Studying the mechanism design and incentive structures of those who experience early suicidal thoughts. These are themes that I explore and are very challenging to design.

Later, I left game research and academia because my cousin Dan (who I consider to be one of the smartest people in crypto and the head of research at Paradigm) introduced me to Bitcoin. He told me how research in mechanism design can help people in the blockchain field. It was early 2017, I was about to complete my PhD, and I decided to change careers. I started attending meetups in Montreal to find opportunities among a group of people who were passionate about cryptocurrencies.

After four or five meetings, I found a job helping people promote their auditing practices. The pay was very low and I had no work experience, but my academic background made me good at storytelling and marketing. They wanted me to help promote their products. We help anyone who needs to prove to regulators that they actually hold cryptocurrency on their books. For example, if you are the Ethereum Foundation, you are required to report your finances in a specific way for the first few years under Swiss regulations, and then a more stringent reporting structure is required after a few years. We have cooperated with Swiss entities such as the EOS Foundation and the Lisk Foundation. Additionally, if you are a Cayman Islands fund holding cryptocurrencies on your balance sheet, you will need to report to the local regulator CIMA (Cayman Islands Monetary Authority) to ensure that your fiduciary responsibilities are met.

We audit Cayman funds, foundations and exchanges around the world. Exchanges often have regulatory bodies and we ensure they hold cryptocurrencies safely, correctly and intelligently, train employees, conduct penetration testing and risk assessments. I did this for almost four years and gradually became an expert in the field. What started as a marketer gradually transformed into an auditor or audit expert, while also continuing to learn more about cryptocurrencies in the process of promoting the product and gradually adapting to the technical field. Then I applied to join Alliance and became their first employee to build the accelerator program.

I have been working here for nearly four years now. I’ve tried my hand at just about every role including fundraising, mentoring, marketing, research and many more. Keep changing roles and find the direction you like. When working at a startup, you can decide what’s the most important thing to do next and then hand off the task at hand to someone who is better at it. I love connecting with people, so I spend a lot of time mentoring.

ChainCatcher: Which role in a startup do you enjoy most?

Will Robinson : I love helping the team prepare for Demo Day. We have 20 teams per batch, and probably 10 to 15 teams will be ready to present to VCs at the end of the batch. I spend a lot of time talking to each team and teaching them how to tell their startup story, how to tell it quickly and compellingly so that people want to invest.

By working with 100 to 150 startups, this not only gives the team a good story to attract investors, but also gives them a deeper understanding of themselves, why the company matters and what makes it special. We put a lot of effort into preparations for Demo Day. As of the last batch, this is the founder's favorite part of Alliance, and it makes me very proud.

ChainCatcher: How did your academic experience influence your subsequent work?

Will Robinson : During my PhD, I didn't learn much that was directly applicable outside of Web2 to gaming. Because Web3 games are completely different from Web2 games, at least for the foreseeable future.

However, I learned how to give presentations, how to collaborate with others, and most importantly, I learned how to face a very difficult problem alone, and to deal with a complex problem in isolation under extreme psychological torture, e.g. ) took a long time to complete. So the most important thing about my PhD is that it taught me how to deal with ambiguity. Faced with questions that have no ready-made answers, there are no formulas to refer to. Everything needs to be created by yourself.

ChainCatcher: There are a lot of trivial things to deal with when helping startups, how do you manage your time?

Will Robinson : A lot of my time is spent connecting teams with VCs, from preparing to talk to them to formal introductions. I maintain a very long list of VCs and make sure I can introduce 50 to 100 potential investors to the team. This is very time consuming.

Additionally, I spend a lot of time vetting potential applicants or future alumni as they apply to our program. We receive nearly 2,000 applications in each batch. These applications require time to read, time to interview the applicant, and sometimes a second interview.

Another major task is raising capital for our third fund. Alliance already has two funds and is currently raising a third.

Alliance DAO’s decision-making process

ChainCatcher: How do you filter projects efficiently? What does the decision-making process look like?

Will Robinson : Every application is evaluated on two aspects: whether the team is great and whether the idea is great. And I think a great team is more important than a great idea, maybe two to three times more important. Ideas are more about proving that the team can come up with a good idea than the importance of the idea itself.

Alliance is not obsessed with a specific field, we focus more on outstanding founders. Because we intervene so early, it is almost certain that they will transition at some stage. We help them adjust, work with them, and even support their transformation.

For example, the Pump.Fun team was called Caviar when they joined, and later built a 3:3 application based on Friend.tech. It would be one of the biggest mistakes of our lives if we reject Caviar because we don't like them. But we didn't do that because we knew this team was so good.

What is an excellent team? I think this is the core of the early stage venture capital world, and it needs to be seen firsthand. Being excellent does not necessarily mean that you have attended a prestigious school, that you have worked in a large company, or that your previous startup has successfully exited. As Alliance founder Qiao says, to be a good founder you need to be "traumatized and a little bit autistic." Only a truly "broken" mind can succeed in it. What we look for is extreme drive.

Most founders don’t even know why they are motivated to build their company. Therefore, an important part of my interviews is to guide them through self-reflection. I would try to get them to tell me why they wanted to do it. They'll usually start by saying, "It's to solve this problem." And then I'll ask, "But why do you want to solve this problem?" They'll say, "Because it's an important problem." And I'll follow up with, " Why do you personally want to solve this problem?" They might say, "Because I've had this problem before." And then I ask, "Why don't you let someone else solve this problem? Why does it have to be you?" And then keep digging, Until you find something, like they 6 What happened when they were young made them have to solve this problem. This in-depth discussion is critical.

ChainCatcher: How many rounds does a team need to go through to enter Alliance?

Will Robinson : Two rounds. Usually the first round is 15 to 20 minutes and the second round is 30 to 45 minutes. Like Y Combinator, which only takes 10 minutes to interview. As you practice more and more, you will find that you can quickly tell whether someone is good or not. We call it "heat." We ask each other, "Can you feel the heat during the interview?" Some people feel the heat, some don't, and the heat manifests itself in different ways. Because we are still building a community, Alliance is also a DAO, and this community cannot allow bad apples. Because we are still very small, one rat droppings can spoil the whole pot of porridge.

ChainCatcher: What percentage of projects stand out and make you feel "hot"?

Will Robinson : We will interview 20% of the applicants, then interview 20% of them, and finally admit another 20% of them.

ChainCatcher: Are there any failure cases where great founders were missed?

Will Robinson : I can give you two examples. There was a company in the last batch called Force Prime. The team consists of three older Eastern European gentlemen who have a lot of experience in Web2 games but very little knowledge of Web3 games. They applied and we rejected it. They applied again, but we still declined after the interview and explained the reasons. They applied again, I interviewed them again and declined again, continuing to explain why. It was only on the fifth application that I let them join.

Partly because I realized my biases were clouding my judgment, they were actually very good developers, smart and eager to learn. I'm also happy to let them figure it out a little longer, because their initial idea was really bad. They didn't know enough about Web3, and then they became more sophisticated and familiar with how Web3 works. I love working with them, the founders are great.

Of course, there are also cases where we don’t apply again after rejection. One case in particular stands out, that is Monad. At that time, we were not sure whether they could build a community, and their valuation was relatively high. In the early days of Alliance, we did not have strict restrictions on the valuation of entering projects and could accept teams with different valuations, sometimes even very high valuations. But at the time we lacked “buying power” and had no reputation, and people didn’t think it was worth handing us 7% of the company. Today, we no longer face this problem, and enough people think that we are doing a very good job to deserve this dilution.

Accelerator business model

ChainCatcher: Many VCs also want to do their own incubation. What do you think is your competitive advantage compared to VCs who do their own incubation?

Will Robinson : I think VCs can do a good job doing Entrepreneur-in-Residence (EIR) programs. Paradigm is a good example. They take a founder on, work with them, help them come up with an idea and launch the company. But they can only support a few people at a time.

I think running a full accelerator is beyond the scope of most VCs and financially uneconomical. The annual operating costs of an accelerator are approximately $5 million, and management fees are not even close to covering these costs. This is not a good business. You need a bigger picture or some other way to take advantage of your accelerated team. In our case, this is building a DAO focused on creating something very unique.

When VCs have other priorities, such as managing large amounts of money, they can't give all their attention to these teams. The purpose of them running accelerators is to invest more money in Series A or Series B. But when the focus is like this, it has a big impact on the teams that join the accelerator. If these teams do not receive follow-up investment, or do not receive Series A investment from these VCs, they are basically "dead." Other VCs will question, “Why didn’t your accelerator company get a follow-on investment? Didn’t they have a follow-on fund?” This could be for some perfectly legitimate reasons, like too much industry exposure, or a loss of confidence in a certain area, and It has nothing to do with the team. But such impressions are often dangerous. I don't think most VCs have a reason to run an accelerator.

Additionally, running an accelerator requires a huge amount of attention, such as 15 full-time employees, that most VCs don't have. Reviewing 2,000 applications is a lot of work, so my suggestion is that the best VCs should focus on a few founders emerging from the network and support them as an available resource, rather than trying to run an accelerator.

ChainCatcher: Besides applying online, do you have other sources for finding projects?

Will Robinson : All applicants must apply through our website, which is how we keep things organized. But how they hear about the Alliance or the website will be different. More than half of the teams are recommended by previous founders or alumni, who tell applicants, “Trust me, Alliance is worth your time.” Because most founders should be wary of accelerator programs, many accelerators don’t. Not worth your time. And the best founders in the world know this. So to gain their trust, they need to hear recommendations from within their own circles. They need their peers to tell them, “These people are reliable.” Because of that, we spent a long time building a large community of founders to spread the word and let everyone know that we are different.

ChainCatcher: Why are founders afraid of joining accelerators?

Will Robinson : Good founders don’t usually go through accelerators because they already know how to build a company. The project they're building might be valued too high, or they might choose to go to Y Combinator. Top founders know that most accelerators don’t provide the value they need compared to forgoing equity dilution. As a result, Alliance took a long time to get great founders to accept applications with the conditions we required. Because to build this kind of trust, word of mouth needs to spread through many parties. As a good founder, you need to hear from two or three people that Alliance is going to do whatever it takes to help you succeed.

Some great founders are in the early stages of their careers and accelerators can really help them learn. But now that Alliance is a well-known brand and has a large community, great founders are willing to forego dilution in order to sell their product to hundreds of alumni. Now many of our teams' first clients are Alliance alumni. This way you can jumpstart your business and get feedback.

The second is that the legitimacy and signaling that Alliance brings makes sense now. You can gain a lot of marketing and exposure because you'll be included in a list of recent success stories. I think this year we have Moonshot and Pump.Fun, and a lot of other consumer projects that are coming up. So, if you're building a consumer application, Alliance will get your product in front of more customers and people will want to do it. If you're building SaaS or some kind of infrastructure, you'll want to join an Alliance to sell your product to its community of founders. These are two different reasons you might want to join.

There are two types of accelerators. One is very boring, assembly-line guidance, such as how to register a company, implement human resources practices, establish recruitment processes, design websites and marketing, and even more professional cryptocurrency guidance, such as how to launch tokens. currency.

But Alliance does none of these things. We won’t tell you how to register a company or how to issue tokens. We'll show you how to create products that people want to use. And finding product-market fit is very difficult. A junior mentor at a regular accelerator can’t help you achieve this. But Alliance's mentors have been working in the crypto space for 8 to 15 years. These are the people who really help you find the right product for your target audience.

ChainCatcher: You mentioned that investing in subsequent rounds would be detrimental to the project. Do you sometimes invest in subsequent rounds?

Will Robinson : We never invest in subsequent rounds of teams we accelerate. That way, VCs can't tell which ones we have a preference for or not. However, we will invest in subsequent rounds for those teams that we did not accelerate. For example, Arbitrum gave us an investment opportunity. We invested in Axie Infinity. We have a lot of great strategic investments, but those are outside the scope of the accelerator.

Judgment from founders and teams

ChainCatcher: How do you see the balance between founders’ transformation capabilities and resilience?

Will Robinson : When we interview founders, we look at several things. The first is whether there is a strong cooperative relationship between the founders. If not, this means possible failure during the transformation process. So we put a lot of emphasis on finding people who have been working with us for a while.

Another thing we look at is whether they have an obsession that they have to succeed no matter what. This is also very useful. We really don’t like teams to be too big. This is a big problem for teams coming from Asia or Eastern Europe, where labor costs are lower and people tend to hire quickly. However, transformation is difficult for large teams. So we strongly prefer small teams.

Usually, the first thing you do when you join an Alliance is teach them how to lay off people. If you don’t find product-market fit, you don’t need as many employees. You need to focus on finding the right problem and the right solution. Some companies require many employees to do this, but it's very rare. And that's not the type of company we're good at helping.

Y Combinator and OpenAI are a good example. OpenAI breaks all of Y Combinator's rules. It's not like a typical YC company. It had too many employees and no clear product-market fit in 10 years. But it's one of the most valuable assets they've accelerated. So there will be exceptions and we will accept them. But generally speaking, if we want them to transform, we need them to have strong incentives, strong partnerships, and smaller staffs.

Stardew Valley quickly earned over $100 million from just one developer. I'm not here to build the next $2 billion Rockstar like GTA7. I think if we're going to develop games in the crypto space, it's best to work with small teams.

Usually those teams that come to us tend to be the largest because they come from Web 2 areas, like the traditional games industry, where you need a huge team where everyone is like a cog in a machine that can develop many different games quickly . However, the usual outcome is that they end up slowing down all processes by getting into crypto, slowly developing just one game, and overemphasis on quality over quantity. If I were to talk to a game team, I'd like to hear that they've released 20 games in a year, that they're constantly trying, and that even though the games may be rough, they're looking for market-product fit.

We now receive many AI-related project applications. I'm excited about the many project applicants related to Tokenized AI that have come up with ideas around this topic. I have always wanted to provide financial services to people who do not have access to bank services, but I did not expect that the "unbanked" would be AI. I originally thought it was people in the Global South who didn't have access to banking services, but now I see that AI is also having trouble managing money, and I would very much like to see encryption technology solve this problem for AI. A core interest for our alliance is great founders, and whatever they want to build, we're excited to build with them.

ChainCatcher: What do you think is the most interesting project currently?

Will Robinson : It was Pump.Fun because it made a lot of people change their behavior and think differently about meme coins. Another amazing project is Glow because it incentivizes solar farm production in a very interesting way and does it very well. However, there are an infinite number of interesting projects and I love being surprised.

We had no idea in the first two months that Pump.Fun would be a huge success. No one was using it at first and we had to beg people to try it. This is the kind of project that starts off very slowly and then suddenly explodes. Many people thought it would die out quickly, but that's not the case. It's unclear where Pump.Fun will end up, and I like to think about what its final game mode will be. Now we're seeing other projects starting to use it as a platform to publish content, which brings up all sorts of questions about how or if potential criminal behavior should be dealt with. And there are a lot of interesting puzzles surrounding this team that need to be solved, which took up most of my thinking space.

When they joined us, they were developing an NFT trading platform called Caviar, which used some unique financial primitives to demonstrate its uniqueness. Even though they had some user base, it wasn't enough, so they tried some new things, but the team split. One co-founder, Mohammed Bayoumi, left to found Exo, an AI company that performed well.

The other two found new co-founders and started developing in other areas. They didn't know what to build at the time, so we brainstormed with them and Imran, one of Alliance's co-founders, was the mentor who worked most closely with the Pump team. He worked with Chow on Friend.tech and thought there might be something interesting worth exploring or developing. So they started looking at the bond curve and speculation in a social media environment.

Although Friend.tech lacked traction and the interest in their project was low, they learned how to launch a token at a very low cost (just 2 cents). This ultimately becomes a clear milestone for community members, helping to drive the project forward.

I think one of the key lessons in entrepreneurship is that you need to create the conditions for yourself to be lucky. You need to push in the right direction and solve people's problems, but also hope that something unexpected will make a difference in the end. They learned a lot through deep user and consumer learning, and their continued focus on the consumer crypto space while constantly shifting directions allowed them to gain domain expertise and ultimately discover something truly useful.