Positive Sum +Σ is a startup support DAO whose members are on a mission to build more open and community owned & operated infrastructure to support people starting companies, so we can collectively create more impact through entrepreneurship.
Whilst we’ve not quite finished Positive Sum’s Season 1 yet, we’re a good way through, and I wanted to share a few observations of some emerging learnings on our own early DAO formation which are starting starting to surface for me.
Primarily because there’s not a lot written yet about the very earliest stages of DAO formation and because reflection is a great way to process our own learnings, so I hope this might be useful for others thinking about considering DAO as the way to start their next new thing!
I’ve distilled these reflections into 10 key takeaways, listed below and expanded on in the remainder of the article. Just my opinions and personal observations, YMMV!
1. Have An Inspirational, But Actionable Mission
Every new initiative starts with a mission and a call to action, and Positive Sum was no different.
Our founding story started with some personal exploration as a blog post, and then coalesced into a founding paper which provided a solid call to action articulating the problem we were setting out to solve.
For us this was building more open and equitable infrastructure to reward those invisible contributors and unsung heroes who help companies at their earliest stages of growth, and how the DAO structure and crypto-economic rails could enable an ownership economy which might solve that problem in ways where we could all win together.
Trying to wordsmith this vision and mission has been hard, and makes you really appreciate the branding genius that goes into producing snappy marketing taglines!
Not only do good visions and missions encapsulate exactly what you’re trying to do, they need to empower people to catalyse them into action.
Whilst we’re still refining our own vision, we’ve landed on four key components to our underlying ethos to help tell our story - our why, our mission, our vision, and our hypothesis on a theory of change. These four elements together have been key in driving new members to our cause and converting them into early contributors.
Like any new endeavour, getting friends & family to support the work is one thing, but the real test is putting the vision and mission out into the world and have it resonate enough with people you don’t know, to have them join in service of the mission alone.
2. Don’t Tokenise Too Early
Given we’re not all ‘crypto-nerds’ and smart contract developers, we necessarily had to pause on launching a token from day zero, even with the growing list of DAO platforms that promise to do every part of early management of members, tokens, and treasury, we still felt we needed to understand our needs before tokenising.
Mostly because we were still early on the Web3 journey, but also because we’d read about the impact of other crypto and DeFi projects where early participants simply bought governance rights which didn’t create an equitable environment for those who came later and we didn’t want to encode these negative behaviours up front.
This intentional delay to tokenisation has given us some really interesting benefits, and admittedly some downsides too.
Upsides
The biggest benefit is that it allowed us to really go deep on how we want our model to work before enshrining it in code.
One of the problems we’ve set out to solve in +Σ DAO is how to represent all of the intangible value flows in a startup community - i.e. how we reward people for volunteering their time to run events; making introductions to customers, investors, and co-founders; or sharing their experience through mentorship where there’s no payment expected on the other side.
This pause and intentional design phase during our season zero gave us the opportunity to understand how we want governance and value exchange to work in our community (money is just another type of capital, but not exclusively better or worse than network capital, or mentorship capital, or volunteer capital in our case for example).
It also gave us time to decide how we want to record, recognise, and reward those contributions through exploring single token models, dual token models, and ultimately through the model we seem to be settling on which involves a utility token and NFT ‘membership card’ that members can stake for better rewards/community perks as they add more (financial and non-financial) value into the community, ultimately rewarding our most active members with perks and more governance over the DAOs future.
I think if we’d run into tokenisation too fast, both the governance model, and tokenomic design would have suffered by feeling we’d locked in something too soon without actually having a solution to the problem we set out to originally solve.
Downsides
The trade-off of not tokenising early, was that it made it really hard to explain why our community was different to any other online community and how it ‘worked’.
It’s much easier to give people something (i.e. tokens) in exchange for contributing effort to build the early DAO, which in turn drives understanding of our real point of difference which is contribution and shared ownership!
So far we’ve stumbled through using a combination of spreadsheets, and a half-baked attempt to use Coordinape, but there’s no doubt that accruing tokens, especially early in a DAO really locks in the mental model of the contribute-to-earn model and if you don’t have that, you need to find ways for longer-term incentivisation or promise of future tokens.
On balance, I think the upside of deferring tokenisation outweighs this downside, especially when you’re still in exploration mode, as most people who come early don’t care about financial incentives, they’re just here to support the mission.
3. A DAO Is Not A Web3 Startup
What we’re seeing in the DAO at the moment (admittedly it’s early days) is that people are so used to seeing crypto projects or startups where there’s a core team studiously working away that they assume that’s the same case for a DAO too!
The reality is that in DAOs, there is a shared mission and with that comes a shared responsibility to contribute to making that vision a reality.
Over time, as the community grows, of course there will be many contributors, more than enough to push the mission forward, but this problem is exacerbated in early days when membership and capacity is light, especially when there’s no liquidity to remunerate people for their time.
As we’re finding, you still need to pull on goodwill and hope the mission is strong enough to allow early contributors to unlock capacity to dedicate to early-DAO-building.
Reinforcing Shared Commitment To Contribute
This means that part of early DAO onboarding needs to really hammer home just how important it is to contribute. We do this through our core values, and onboarding, reinforcing the message that in reality, DAOs require high member-participation to be successful.
But even still, this is a new operating model for most, and we’re seeing the pattern of people showing up expecting everyone else does the work or that there’s some well-funded team pumping out products, platforms, and ideas - which couldn’t be further from the truth early on!
Like any open-source initiative, this pattern is expected, so just be mindful of it and look for new ways to unlock capacity, and inspire people not just to suggest new ideas, but to own them, delivering on them themselves rather than waiting for others to turn their great ideas into reality.
This difference between core team versus core contributors is still a learning journey for us and something I think we need to make clearer both in our targeting of the right early high-potential community members, and in how we move new members from explorers in the DAO to active participants as part of their early onboarding.
4. The Energy Required To Start A DAO >= Energy Required For A Startup
I’ve been involved in the startup of many high-growth companies over my career, and all of them were hard work and took more hours than there were in the day - but a DAO is a different beast altogether!
Because there’s an expectation of a core team, or worse, that this is a volunteer project, the energy required to start a DAO and keep up the momentum for others to keep contributing early-on is just relentless.
Many early contributors might be working in their spare time, outside of a full paying job, and it takes a special type of energy and mindset to have a full day’s work, and then show up and switch on for building the DAO just like you did at 9am this morning for your real work!
Managing Capacity Attrition
The impact of this is there’s natural attrition in the early days of the DAO - I don’t mean people leave, I just mean an attrition of capacity. This can easily create a downward spiral, because you want to see progress towards the mission to inspire you to put more of your time in to make it work, but you’re already at capacity so can’t contribute enough, and so everything slows down.
Partly this can be solved by biasing for startup-experienced-folks up front who understand the effort required to start something new, but also being clear on capacity limits, and making sure that whilst people might want to be across many working groups early on to feel the excitement and energy, they can’t spread themselves that thin without losing focus and burning out the energy in the medium term.
Consistency in a Founding Team
As a founding team, this means that often you are constantly cycling people in and out, which is great for new energy, but bad for consistency, and requires you to constantly be onboarding new people.
Personally I like the challenge and rush of new contributor energy, but also, I’d love a more consistent team, who we were able to incentivise properly to focus solely on building excellence in one area rather than having to earn money elsewhere and relegating the DAO to second class citizen.
This will change with time and liquidity, but it is a cycle you need to be careful to manage of your early contributing team and your own energy to make sure you can keep bringing the energy, but also so you don’t end up taking on too much yourself to carry others.
In the end, as a startup founder, this isn’t anything new, so just a reframing, but watch out - there’s only so much capacity you have yourself!
5. Decentralised Leadership Doesn’t Work Early On
To that point, very early on in the DAO, you still need opinionated leadership early and often (and this can easily feel pretty centralised if it’s across many areas).
I don’t just mean opinionated on direction, but by leading through example, to help bring those others who might not be quite so DAO-savvy on the journey, to keep everyone else’s energy up, and to make the DAO not just feel like hard work (it is, but it’s no fun if it’s only work!)
Whilst we’ve spent the time to setup our operating models to be decentralised allowing us to scale as people turn up, the reality is that progress in the DAO happens through a small group of committed people pushing forward on many fronts, similar to how a founding team in a startup might.
Founding Team Responsibility
Many have written on this concept of progressive decentralisation and leadership, and I’m a big believer that if you are the one championing a new way of thinking or new operating models, it’s still your responsibility to help bring others on the journey and show them how.
You can’t just put a vision out to the world and expect others to go make it happen, that’s not how people work and I’ve seen this approach fail too many times - people are inspired by other people, and working together on a common mission to achieve the outcome. So rather than a more servant leadership type of model that fits in an established organisation, you instead need a clear model of leading-by-example as you blaze the trail for others to follow.
Decentralised Intent
The reality of this ‘founding ownership’ is that most early DAOs will necessarily be centralised in terms of direction, but can still allow group decision making, and then slowly introduce decentralised principles like holacratic working groups and charters to work towards decentralisation at scale.
You often still need some overarching strategy to pull things together to allow outsiders to understand how they engage with the DAO and focus the various activities across working groups, and this might require some central coordination, although you can still let this filter up to the DAO from working groups in a decentralised manner.
Finding Your Visionaries?
My experience in building startups is that even with multiple co-founder teams, there’s usually one visionary who can see the future and help show others the way whilst the rest are ‘first-followers’ and enablers on the vision.
In DAOs, there’s many ways how you could achieve the mission so the models naturally support many leaders, but these leaders often emerge over time.
Whilst you can plan for decentralised models of operation, if you expect some required centralisation of vision, energy, and ownership for lighting the way in early DAOs, it’s often what’s needed to create the momentum to succeed in the first place.
6. Build In The Open, Early
One of the positive offshoots of progressive decentralisation is that it gives you time to design scalable onboarding to help people discover your mission and contribute.
I remember seeing a twitter quote once likening DAOs to startups except onboarding 1,000 new employees a day! Whilst that’s a great problem I’d love to have at some point in our DAO, it does make you think at a different level of scale.
A benefit of DAO and its Internet scale is that anyone who aligns with your mission can turn up and contribute, no matter where they are in the world.
This means that engineering what you’re building to support onboarding at scale is key, the information can’t just exist in your head and a small group of people like it can for a startup who might be in stealth mode for example, you’ve got to be sharing what you’re building constantly, and out in the open, to reach those who care about what you’re doing and inspiring new contributors to join.
Design Onboarding for Scale
When they do show up, how can they get up to speed quickly and into contributing?
We took lessons from DAOs like Bankless (who are much further ahead than us), and spent the time between seasons to build out key assets like a website and putting all of our meeting notes, documents, designs, and resources out in the open on our Wiki.
This not only gave us a single repository of information for DAO working teams, it also allowed us to build some scalable onboarding resources, to allow anyone to discover what we’re doing and get fully up to speed on how we’re doing it and how they can contribute, which allows us a level of future scalability.
The Human Touch
Of course, it doesn’t replace a human in the loop, but we’ve now ended up with this amazing resource that we can point people to early on that is our main source of truth.
These resources have proven invaluable to give to others or link to as a sort of summary and follow up next steps for how they can get involved once they’ve heard about what we’re doing.
We appreciate this is only part of the answer, onboarding is still hard:
Building these sorts of resources early and in the open, gives you a key advantage in helping not just bring others to your mission, but starting to move members from explorers to contributors sooner.
7. Discord Is Not Slack (And Maybe That’s Okay)
Ah, Discord, love it or hate it, there’s no getting away from the fact that Discord is a mainstay of the Web3 community, being used to host much of the community discussions that keep DAOs alive.
As a techie, coming from Slack, I found Discord easy to get my head around, but in our Season 0 reflection we constantly heard about Discord being “noisy” and hard to use for those who weren’t as active as I was.
In talking with other DAO founders, they reflected the same challenge, that there’s a barrier to entry with Discord (in DAO terms), mostly because it’s new for many folks. But also, because the barrier-to-entry is so low to joining a Discord server (in that you can join for any project you’re interested in), they sometimes get a bit lost, almost like a webpage stuck in your history that you never went back to!
Joining a slack community feels a lot more intentional than the many discord communities that I’m part of that’s for sure, and maybe in part that’s just a learning curve, but also there’s a number of UX features Discord could work with as they strengthen the product use case for Web3 communities in future.
Reducing Discord “Noise”
Perhaps the biggest challenge is the way notification and @mentions work in Discord. Because there’s often so many notifications, and usually lots of channels in an active server, they’ve yet to implement many of the features that Slack has around managing the left hand menu bar, so instead you end up with every channel often looking like it’s unread and with red notification bubbles all over the place which often is just too much for some people and they give up trying to catch up with any.
Some of this can be fixed with the various bots used for restricting channels to specific roles, but this doesn’t feel right for an open-source community either - every time someone suggests we create a private channel we really have to pause and second-guess is that what we should be doing as we build out in the open?
Some of this is work on our side to make Discord easier to access and more user-friendly, but that’s some design challenge and definitely Discord could help to better support larger communities in future releases.
Discord Alternatives
The alternative is to move onto something like Slack, which is prohibitively expensive for a community-use case (compared to the DAO-friendly Discord revenue model), or to use other channels like telegram (often seen for DeFi projects), but you then risk spreading your ‘community’ across too many different channels and creating silos.
Either way, for now Discord is a “noisy” place for running a DAO, but maybe that’s just part of the learning curve of onboarding into Web3, and maybe that’s okay.
If DAOs live and die by active participation, maybe it’s up to us all to keep up with the channels that interest us to make sure we’re adding value and not extracting value by lurking and never giving back, as long as we can onboard in a right way in the first place!
Either way, YMMV, but let’s hope Discord improves it’s UX over time for DAOs to find a real long-term home there.
8. Early Activation Is A Challenge
The oft-quoted “tragedy of the commons” is that everyone consumes from open source resources and assumes everyone else is contributing, and thus the project ultimately dies as more people take rather than give back.
This is a challenge I’m already starting to see in DAOs and alluded to above. Another team member who’s active in other DAOs discussed maybe an activation rate of about 5% in the those early DAOs, which is probably what we’re seeing in ours too.
As we talk to our existing community members, what we’re realising, is that this is only in part due to that commons-consumption paradox, but also about how confident people feel both about Web3 and their perceived relative experience level compared to others already active and leading the conversations.
Web 3 Capability
For many, we’re learning that this is their first onboarding into Web3, and there’s still a long way for them to go with the jargon, the new decentralised model which many haven’t operated in before, and the lack of confidence that comes with that.
Only recently one of our members reflected that whilst she’s been tuning in to Discord and community calls, it’s only when she got setup with a wallet that she started to understand what it all meant and found herself more fully able to participate in the working groups.
Onboarding To Aid Activation
After a friend referred me onto BlockZero Labs recently, and seeing how they don’t just drop new users into their Discord server, instead walking them through a survey to help qualify why they are here, what they can offer, and using it as a way to reinforce some of their operating ethos, I’m starting to think that this curated onboarding, early-on in DAO is much more preferable to aid activation.
Whilst we do want community growth, we actually want participating community growth more so than the pure vanity metric of raw membership numbers.
This pre-onboarding ability to filter people in or out can provide some great learning to help find “hot” contributors early or identify knowledge gaps where we can immediately add some value and education to incoming members to help bring them on the journey.
Looking at contribution rates in other open-source projects, I feel activation is still going to be a problem as the DAO grows until we improve onboarding, so I’d recommend prioritising onboarding much earlier than you think is necessary!
9. Find Ways To Bring People On The Journey (Especially Web2 Folks)
One of the challenges of crypto-world in general is that it’s very crypto-centric! I know that sounds like obvious, but it plays out in many DAO and Web3 platform projects - they often only serve crypto-natives or Web3-only projects.
But what about everyone else?
One of the beauties of DAO for me is it’s not really much to do with crypto - that’s just the enabler, more interesting for DAOs are the foundations that crypto was built on top of, an open-source, permission-less, decentralised infrastructure, which is now applying to more and more traditional contexts and domains like carbon sequestration, creative production, venturing, and more.
Whilst this is great for creating more open and equitable resources in the world, the added challenge is these audiences aren’t always crypto-savvy from the outset. So thinking how you close that capability gap as you bring new people into your mission is critical.
Any good manager or leader knows that you can’t really make much progress without bringing the wider group on the journey, so finding opportunities to understand the gaps in their knowledge, and how to rapidly pivot to fill those gaps to allow you to maximise your combined resources can make you go faster.
For us, we’re realising that since we’re providing open infrastructure for all startups (Web2 and Web3), but most startups in our initial networks aren’t web3-native, we’re combining strategies of looking to attract more Web3 startups, but also finding new ways through upskilling, educating, and building programme content to bring others on the journey.
Taking a lead from other cohort-driven programmes like Kernel, this then provides us an opportunity to give back and add value to the startup community, whilst also helping people understand much of the why and inner workings of our specific mission, ideally helping us also solve our own activation challenges at the same time.
We’re still working on what our own educational programmes might look like, it’s clear that we need to bring our own community, and those not yet part of our community to see those benefits together so we can help them onboard into Web3 and share the resources they need to be successful in this world as they build their companies.
10. Focus On Propositions Sooner Than You Think
Which brings me to my final insight, which is that you’ll probably end up focussing on outward propositions, products, and programmes sooner rather than later.
We’ve tried our best to stick to the Web3 mantra of building communities first then letting products and services emerge to service that community (even though I have plenty of product and programme ideas I really want to build!).
But the biggest thing we’re learning is because our local audience isn’t yet Web3-savvy, they just can’t get their heads around this new way of thinking, and easily grasp exactly what it is we’re offering and thus how to engage.
DAO Engagement Models Still Need Work
This challenge is likely to become more overt as more and more organisations startup as DAOs. People love to put clear boundaries around things to help them build a mental model of how to engage, and if it matches something existing like an accelerator, or a fund, or a programme, the engagement model is very clear as a participant, investor, or mentor, whereas the more emergent nature of decentralised communities and working groups you see in DAOs really need a different framing and/or understanding to engage successfully.
Which leads us back to great onboarding and clearer propositions!
Truth told, we’ve ended up building platform infrastructure for our community sooner than we’d planned, pushing programme thinking earlier than expected, and now thinking how we can build more decentralised versions of traditional programmes sooner than anticipated so we can make it clearer how prospective members/partners can engage.
All good learning on our side, but it needs a lot more capacity and liquidity to really unlock to take things to the next level!
On that note, I’d best get back to building and figuring out how to get us to liquidity! 😉
Thanks for reading and I hope these insights go some way to help those looking to build a DAO at the earliest stages to surface some potential hurdles you might have to jump on the early journey. Reach out if I can be helpful!
If you’re interested to read more about what we’re doing at Positive Sum or our progress, you can look around our DAO docs, jump into our Discord (and help us with better onboarding!), or just stay connected through our monthly email update, to which you can subscribe by pressing the button below.
Image credits (all from Unsplash): Yvette de Wit; GuerrillaBuzz Crypto PR; Product School; Norman Meyer; "My Life Through A Lens"; Papaioannou Kostas; Steve Johnson; Heidi Fin; and ThisisEngineering RAEng - thanks for sharing your awesome artwork.