Startup Community Next
0xE2E3
January 21st, 2022

BUIDLing the startup support systems and communities of the future

The world is changing.

Have you felt it yet?

It’s moving from an age of industry with companies at its core.

To collectives of self-governing networks at its heart instead.

These collectives are internet-native, global communities of people who are strongly aligned on values, who share resources, and work together as a self-governing unit to create and capture value for the benefit of their community.

If you’re like many in my orbit, who view crypto with old-school retweeted FUD, proof-of-work killing the environment, and dangerous dark-web use-cases, you might think there’s nothing to see here.

But things are changing quicker than you might realise…

Accelerated by the pandemic with globally remote workforces reinventing the future-of-work, these last few years have seen the pioneers of the next Internet age firmly building a new world on top of the old one, moving rapidly:

  • From a world of competition to collaboration;

  • From a world of protection to permission;

  • From a world of scarcity to abundance;

  • And from a world of centralised control to the emergence of perhaps the biggest global shift in digital culture we’ll see in our lifetime (since the birth of the Internet).

For those of you, like me, who are building startup communities, this is a massive revolution happening under our very feet, that’s timely, important, and which I believe, is the future of how startups will be grown and supported in future.

Web3 x Community x High-Growth Entrepreneurship

For those who don’t know me, I build startup and innovation communities and stand up the infrastructure and programmes to support them.

I started this journey when I helped build the largest pre-facebook online community platform in Europe, and then helped activate and build the startup community in New Zealand after moving here many years ago.

Since then, with others, I’ve experimented with new models of community-ownership and programme-delivery, and pioneered more aligned models of venture-capital suited to smaller emerging markets like ours.

For the last few years, I’ve been trying to figure out what comes next, and how to evolve startup community models to make them more sustainable for those enablers who are passionate about helping them grow, but are forced to do things they don’t necessarily love to earn money.

Whilst I’ve been at the cutting edge of the web for much of my career, I’ll admit, I’ve been a slow mover in Web3 after a short dabble with crypto in 2018, so am playing catch up, fast!

Background: From Hierarchies To Networks

This last decade has seen startups and leaders play with many new models of decentralised management, from self-organising co-ops, to new management models, to decentralised decision making models like holocracy.

These approaches were all reaching for new ways to collaborate in a world that no longer fit the command-and-control values of early production line industries.

They were searching for new models better suited to the way we now access talent, capital, and ideas in a more network-centric world.

Whilst there have been many critics and public failures (read: learnings) of these models, those trying anything new in the name of innovation are often classified by others as the crazy ones.

But there’s a fine line between crazy and genius.

And on that line is where the heart of innovation lies.

Changing How We Create And Capture Value

This reinvention is exactly what’s happening in Decentralised Autonomous Organisations (DAOs) around the world today - it’s a transformational shift in the way people organise, get work done, and create value, with network mindsets and collaboration at their heart.

“[In DAOs] Members work together to create, distribute and capture value relative to a shared mission. Ownership shares economic, social and political components, creating best practices for digital coordination.” - @Coopahtroopa

DAOs are ‘organisations-as-code’ - a set of smart contracts that run entirely autonomously on public ledgers (blockchains) where all resources, decisions, and ownership can be seen in real-time by anyone.

This radical transparency levels the playing field in terms of commercial advantage and trade secrets, meaning organisations are forced to compete directly on culture and the shared value they create for their users.

Audacity.fund, building the next 100 years of new markets powered by culture and community
Audacity.fund, building the next 100 years of new markets powered by culture and community

Audacity fund puts it well in that culture and community are becoming the new asset classes, and in this world, everything is decentralised, with this new economy rewarding contributors, collaborators, and creators.

If companies organised the industrial age, then DAOs are organising the Internet age.

And DAOs are effectively online communities, powered up by bank accounts and governance.

It’s this intertwining of financial assets with social capital that is the real magic of DAOs, because perhaps the biggest limiting factor in most self-organising communities up to now has been their lack of ability to monetise and reward the people who work in them.

Cryptocurrencies change that for the better, allowing communities to create and hold their own treasury, mint their own tokens, and use these tokens to reward participation and contribution towards the community’s shared values.

As we’ve started to see over the last year with the explosion of DeFi (decentralised finance), finally the financial frameworks and tools (whilst mostly unregulated for now), are allowing communities to start capturing value through buying and selling these community tokens to early adopters and users of their communities, taking early crowdfunding models like Kickstarter to entirely new levels.

And this isn’t just a geeky fringe edging its way in slowly - peel back the onion, and you’ll see there’s a Cambrian explosion happening right under our very feet with DAOs, and the necessary infrastructure required to bring these communities to life.

DAO Landscape 2021 (partial) - coopahtroopa.mirror.xyz
DAO Landscape 2021 (partial) - coopahtroopa.mirror.xyz

If you work in tech and Web3, Blockchain, DAOs, DeFi, and NFTs aren’t in your lexicon yet, you better upskill soon, as I predict that’s all anyone will be talking about in this space within the next year or so…

Friends With Benefits (FWB)

Perhaps the most prominent example of this cultural revolution is an experiment in community building from Trevor McFedries, founder of the Friends With Benefits DAO.

Is FWB the future of communities of shared values and interests?
Is FWB the future of communities of shared values and interests?

Founded last year, FWB describes itself as the ultimate cultural membership powered by a community of our favourite Web3 artists, operators, and thinkers bound together by shared values, shared incentives ($FWB), and shared IRL + URL experiences.

But they didn’t start as a DAO.

Initially FWB was a token-gated discord server attracting like minds to share their expertise, values, and thoughts in one place. But this quickly evolved over a series of rapidly successful seasons (or experiments) to where it is today.

To join FWB, you must be referred in by an existing member, and also hold 75 $FWB tokens in your Web3 wallet (purchasable on a decentralised exchange). These tokens, which once traded around $10 each, have risen to $50+ per token as the community creates more and more collective value.

By holding $FWB tokens, members not only get access to major benefits from exclusive events, content, and community, but are also literally invested in the community’s success, participating in the upside of the value they create together.

The beauty of this model allows community members to earn $FWB tokens from it’s own treasury for providing value in a number of ways, including being active in Discord, attending community calls, hosting recurring events and overseeing collaborative programs, and all of this is decided and rewarded by the community.

The FWB model continues to evolve as the community scales to more roles and better decentralised operational structure is put in place to manage that growth. Last year they took in more traditional venture funding, but in a new model of governance and venture-funding, increasing the value of the $FWB token and the entire community’s wealth in the process.

What’s This Got To Do With Startup Community?

Everything.

Because this evolution of community, to centre around collective ownership of ideas, products, values, and people is exactly what function a startup community serves to its founders, and to its member enablers.

But, with one big caveat:

Until now, value in startup communities has mostly been captured by founders and financiers, and not the whole village of people that helped create that value in the first place (including mentors, advisors, programmes, and ecosystem connectors).

I’ve watched for decades in our startup community as community leaders come with energy, passion, and dedication to help a new raft of startups grow. They tirelessly put on events, they help teach founders the benefits of their experience through mentorship, they run focussed- ideation and growth programmes, and help give founders unfair advantage through their networks, but are rarely compensated for their efforts.

And when those companies and founders ultimately become successful, the rewards go not to those who helped them on their journey, it mostly goes to those who invested financially in the company, rewarding only one type of capital (financial) and leaving social, network, and knowledge capital as ultimately second-class citizens.

I can’t count the number of times I’ve seen these high-impact and high-energy leaders come into our community, be a bright spark, and then fizzle out soon after because there was no way for the community to reward their contribution other than with gratitude.

The community enablers that make up the fabric of the startup community rarely make the cap-tables of the companies they help grow, but are highly value-accretive to the ‘cap-table of the community’ as a whole.

Community tokens with actual financial value seem an excellent solution to incentivising and rewarding this type of positive community behaviour, especially when it’s governed by the community itself.

Tokenising Startup Programmes?

But this burnout problem doesn’t just stop at people.

I’ve seen the same problem in our startup programmes, our incubators, our accelerators, and other startup support systems too.

It happened to a virtual community-led incubator experiment we piloted a few years ago.

Each year these programmes and organisations have a fight to survive and beg for operating fund handouts from governments or over-committed sponsors.

Why?

Because whilst value in startups is accreted during the formative stages of getting to product-market fit, that value is only realised (and thus becomes liquid) at a stage where most startup support programmes, people, and networks are no longer connected to those companies, even though they’re often a part of what got them there in the first place!

Some programmes might take equity out of these companies early or charge hefty programme fees up-front, but in many ecosystems, the mean-time-to-payback and venture maths of such small equity holdings doesn’t really scale to make this a useful stream of operating revenue to sustain such programmes.

Whilst value creation is distributed across all startup ecosystem participants, it’s only really able to be captured by a few siloed, later-stage parts of that system. Whilst this capital is often recycled into the next startups, rarely does it touch the community coffers to help support and grow the next generation.

In smaller communities like ours, such programmes aren’t connected to huge venture capital funds that can cover the operating costs out of fund management fees, and arguably, the venture capital business model is already so risky in the first place, that supporting this type of initiative is rarely a sensible move when return on investment drives most VC LP agendas.

But these people and programmes who are huge connectors of mentors, financial, social, and network- capital, and provides the energy and momentum to help founders push hard to breakthrough in their respective domains are so vitally important in helping build a vibrant startup community.

Startup Community x Web3

What if that community did capture that value throughout the chain?

What if the community itself was incentivised and rewarded to perform these functions themselves - finding great companies, referring them into the network, sharing their own knowledge as education and mentorship; connecting them to capital, customers, other mentors; and helping design and build the engine to keep the operating fabric of that required culture, processes, and incentives alive in the first place?

What if early community members or supporters were given NFTs to reward early participation or investment, allowing new models of supporting community such as certain NFT holders getting exclusive access to new initiatives like first right of refusals on certain investment deals, beta or premium access to new initiatives, events, or access additional distributions or earn passive income on their community tokens - the possibilities are endless....

This is Startup Community x Web3.

For those already operating in the Web3 world, we’re starting to see the rise of a new model to fill this gap: Investment DAOs, like MetaCartel, Angel DAO, Stacker Ventures, Komorebi, and Seed Club are a few examples.

These investment DAOs are community governed groups who seek to invest the combined capital of the community, but some are also starting to leverage the resources of the community to support those (mostly crypto-native) investments too with startup labs, accelerator programmes, and more.

Startup Culture x Community Values

The highly-aligned shared-value cultures we see in investment DAOs and social DAOs (like FWB), are really what set these communities apart.

Startup communities are great exemplars of supportive, highly-aligned groups of people who love to help other founders get a leg up and be successful.

Like the founders themselves, these communities have an altruistic spirit-of-service, who give before they get, and play a zero-sum game to make the community as a whole better.

Programmes like YC and OnDeck have taken this culture to another level by effectively creating exclusive social memberships to do exactly that based on very clear cultural sets of aligned values (e.g. growth for YC, and spirit-of-service for OD).

But many of these startup support organisations still operate on centralised models who are governed by old-school models of control, which in these circles are still (VC) money (which as an aside, is still the biggest risk for true decentralisation in Web3 communities whereby governance tokens can be simply bought with the biggest wallet, rather than earned through biggest commitment to community service).

The real promise of Web3 is to take the power out of platforms and return it to the people where it belongs, and this is what excites me most about levelling up our startup communities and merging them with DAOs.

Scaling Culture in Startup Communities

Whilst I’ve seen individual startup support programmes create amazing cultures, it often exists inside their own four walls rather than being shared across the community at large.

Indeed our small, but highly-connected community last year was rocked by a high-profile suicide from a far too-young founder, with many commentators pointing the finger back to bullying by media and angry investors on social media.

Whilst you’re going to get bad actors in any community, preventing this sort of outcome, is the sort of thing you hope that communities with shared-values and clear operating systems can put safeguards and support systems around.

But our current concept of startup community isn’t gated or policed by a set of commonly agreed-on principles or behaviours, so it’s prone to those bad actors who refuse to see the human underneath the entrepreneurial cloak of bravado that they are so often forced to wear to be ‘successful’ in this world.

Tragedies such as Jake’s make me think how can we create the conditions for a more supportive community that young founders can grow up in, with psychological and emotional safety guard-rails, understood by others because they know what the journey is really like, and where we’re all vested in the individuals’ success because it leads to the collective’s success.

The Future Of Startup Communities

In my mind Web3 and DAOs wrap up these startup community cultural aspects nicely.

  • DAOs are membership communities with a set of shared values and people who are closely aligned in group behaviour.

  • Entry and value is created and can be rewarded by those who contribute to it in positive rather than negative ways, and those behaviours are defined by the community.

  • DAOs are powered by cryptocurrencies which incentivise the collective to work together and increase the value of what they own, and builds wealth for everyone.

  • By default, DAOs are equitable, inclusive, and fair with transparent compensation - web3 members are simply identified by a unique Web3 address and the value they deliver to the collective - not by gender, not by race, and not by their location.

  • And DAOs build everything in public, laying bare culture, community, and forcing us to rethink delivering true value as our real competitive advantage.

Make no mistake, even if you haven’t seen it yet - this is the new frontier of online communities and the future of work, and it’s heading at us with thunderous velocity.

BUIDLing The New Village

The future is distributed in those who care to be curious, to explore the unknown, and think about better ways to support and grow the next generation of our future companies and leaders.

Bringing all of those thoughts to a head...

I strongly believe that crypto and DAOs will be the future of not only our global economies, but our digital and cultural interactions too.

I believe that DAOs will underpin every values-aligned startup community around the world tomorrow.

I thought I’d lost my community-building mojo over the last few years as I struggled to grasp what comes next.

But I’m boots into this new way of thinking about and building community.

When I started building online communities 20 or so years ago, I helped onboard the first 2 million people onto the internet.

I want to bring the next 2 million companies into this new Internet age and see them share the value with all of the people who helped them get there.

We all know it takes a village to raise a startup.

I believe it takes a DAO to raise the next startup community.

And I want to help build that village.

A web3 village of values-aligned startup founders, operators, and community enablers who exist to to help people start companies, find talent, and create shared value through our collective networks and expertise.

A village operating as a DAO on the blockchain, and is owned and governed collectively by its members, who are rewarded for positive value-adding behaviours to help the community grow.

I don’t know exactly how this new village could look and work, but I’d love for you to join me as I find out!

I’m all in - if you’re in too, reach out, HODL on, and LFG!

--

Update: 11th Feb 2022, founding discussion document for the DAO now online - check it out and get involved.

Update: 29th Apr 2022, our Season 0 goals, all about understanding value flows in startup communities is now online - check it out and get involved.

Update*: 30th Jun 2022, our Season 0 officially wrapped up, see what we managed to achieve, and our reflections to take into Season 1!*

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