EP15: Building crypto native products, with Qiao Wang, co-founder of Alliance DAO, the leading Web3 accelerator and builder community

Qiao Wang is the co-founder of Alliance DAO, which is the leading web3 accelerator and builder community. In terms of impact, Alliance has helped accelerate 10% of the top crypto projects by market cap. Their most cohort had 30 companies building web3 products across DeFi, Social, NFTs and Gaming. Before Alliance, Qiao was the Head of Product at Messari which is a market intelligence product that provides advanced analytics for crypto.

Special thanks to Roberto Riccio and Brian Ma for providing questions for this conversation.

In today’s episode we discuss

1. Crypto Landscape 
   1. What led to a perfect storm for decentralized technologies?
   2. How has pace of innovation progressed vs expectations?
   3. What could web3 native social networks/products look like?
2. Opportunity Areas across DeFi, SocialNets, Gaming 
   1. What are opportunity areas where Qiao is seeing startups get traction?
   2. What are some examples of interesting projects in different verticals?
   3. What are the main motivations for people playing games like Axie?
   4. What are some opportunities for financial products to build social experiences?
3. Getting Messari off the ground to provide advanced analytics for crypto 
   1. What was the unique insight when founding/building Messari?
   2. What were the first products / features that got PMF?
   3. How much to rely on intuition vs user feedback/research for crypto products?
   4. How did they approach pricing for their paid plans?
   5. How did they approach governance and tokens?
4. Accelerating web3 with Alliance accelerator and community 
   1. What is Alliance today and how did it start?
   2. How big is each cohort and what categories are most projects/companies in?
   3. How does the accelerator work and how does Alliance accelerate teams?
   4. What makes for a great Alliance founder?
5. How to build Crypto Native products and companies 
   1. When and how to launch a token?
   2. What are regulatory implications?
   3. How to fundraise for web3? How to vest?
   4. How to manage trade-offs between PMF and Tokens?
   5. How do SAFEs and SAFTs work?
   6. When and how to decentralize without losing vision and execution leadership?
   7. How to leverage DAOs in an effective way?
6. Future of DAOs as Digital Nations 
   1. How might DAOs re-shape society?
   2. What is the core value proposition of a DAO?
   3. How to build the right incentives with tokens and DAOs?
   4. How might DAOs enable digital nations with property rights and laws?
7. Crypto and web3 trajectory 
   1. What has to go right for crypto products to continue to go mainstream?
   2. Has crypto and web3 reached escape velocity? What are the biggest risks?
8. Closing thoughts 
   1. What are your superpowers that you like to lean on day to day?
   2. Who are some people that have given you a meaningful break?
   3. What books (or articles or podcasts) have had an outsized impact on your life?

Links

• Apply to the next cohort of AllianceDAO
• Follow Qiao and AllianceDAO on Twitter

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Transcript

0:04  
Hello, you're listening to paradigm shift, a podcast about people building the future and pivotal moments in their journey. I'm Ashish, and I'm joined by my co host, Zane. And today we're super excited to speak with Chao Wang, who's the co founder of Alliance Dow, which is a leading web three accelerator and founder community. Alliance recently announced that over 300 contributors have joined the Dow, and its initial round contributing over $50 million. In terms of impact to date, Alliance has helped accelerate 10% of the top web three projects by market cap. before founding Alliance, Chow was head of product at masari, which is a market intelligence product for crypto, almost like a Bloomberg for crypto traders. And before we get in, I want to say a big thanks to Roberto Riccio for suggesting some really great questions to ask. Ciao. Thanks so much for being here today. Thanks for inviting me. So we've got a lot to cover. But I want to start with one of your recent tweets. In a nutshell, you wrote that we've never seen a more perfect storm for decentralized technologies. So maybe we can start there. Why do you think the crypto landscape is currently in the middle of a perfect storm? Yeah, I think I wrote that tweet maybe about a year ago, but there was a confluence of events that that occurred around that time. One is obviously COVID. One of the main consequences of COVID was the massive amount of money printing by central banks all around the world. And that was extremely bullish for Bitcoin and other non sovereign monies. So that's one thing. Another thing that happened was sort of related, which is how the Wall Street investment banks and commercial banks basically banded together during COVID. But also, even during the last financial crisis in 2008, they were too big to fail. And people saw that and people thought that this was an opportunity for a non government controlled. I mean, essentially, Wall Street is very close, it works very closely with the government, especially Central Banks, right? People saw the opportunity before the rise of non government controlled financial services. And that led to defy the rise of defy right, that's defy is one of the main sectors of thought through. And thirdly, what happened was, interestingly, that was shortly after the presidential elections, there was obviously the D platforming of, then a President of the United States, Donald Trump by Twitter, and there was deep platforming as many others over the years in recent times, by major, big tech, right. So that created the perfect opportunity for the rise of web three native tech platforms, social media platforms. So these three things happened around that time. And I thought that was that created the perfect confluence of events that gave rise to web three, which included no summary monies, defy and social media. And have you been surprised by how things have unfolded since then, like how has the pace compared to your expectations, I would say defi was a little bit slower than I expected. But decentralized social nodes are going a lot faster, despite the fact that the vast majority of products with product market fit are still defi. Whereas in in terms of social ads, you can't think of any right like unless you're like super dipping in web during crypto, you could consider mirror dot XYZ as a social net. I mean, it's like a blogging platform, but I would consider as a social network as well. But other than that, there's not much use, there aren't that many social net products that have found product market fit. But what I'm trying to say is there's a lot more people who are really for getting excited about about Sonos, and really building social nets, both from investor's point of view, as well as builders point of view. And why do you think that's been slower to unfold because I agree with you like you would expect that to be like an obvious use case, you know, with the deep platforming going on, and that privacy invasions that the large social networks tend to take part in,

4:01  
I think the main reason is that web to social nets are just too good. Their products are just too good. And the switching cost is too high for the vast majority of users. And as a social net, decentralized social net, even if you're able to move, let's say, I don't know hundreds 1000s of users from a web to social entity into your web through social net, you still don't have the network effect yet. We still haven't bootstrap the critical mass of users right into move a large, much larger number of them. So I have a thesis that is quite likely that went through negative social net is actually not going to be an A social net, per se, but it will be a game or D fi product that eventually transitions into a social net. Because, again, is compelling enough to bring users onto your platform. Once you have the critical mass of users, you can build social nets on top of it and same thing with defy and in fact, we saw recently that the other the decentralized lending platform, the top two decentralized ledger platform launch their their own social net. Right, that was announced like yesterday. So that's a pretty likely scenario in my in my opinion. Yeah, that's really interesting. I totally agree that taking on current social networks head on is not going to work because they've been optimizing for years. They have like billions of users there. They're too good. It has to be something new and something almost like crypto native, I think. So what are some other projects, you've seen Chow, where you've seen traction is really interesting space. And I think it'd be great to hear from you on a couple of like examples that you've seen work that might inspire new projects. There's interesting projects in almost every vertical defy, there's a ton of them, basically, since defy Sumer. However, arguably, when you think about finance, there's different layers, right? At the most basic layer, you have exchanges, lending platform stable points. And then on top of that, you have derivatives, and that on top of that, you have like structure products, more advanced, more exotic stuff, but arguably, the base layer, which is exchanges, lending platforms, in stable times, there's already a pretty dominant player on Aetherium, and arguably, on Salado, so opportunity might be less on the base layer, just because you're going to be fighting an uphill battle against incumbents, but layers above right, like the more exotic stuff, I think the game hasn't played out yet. There's opportunities for founders to build derivative platforms, and even more advanced derivatives, like structure, product and stuff like that. So like, for instance, there's a few products that went through our accelerator that are currently sitting at that layer. There's like ribbon, which is a structure product. There's for instance, notional and swivel, that are like interest rate products, interest, interest, its derivatives, or fixed rate lending kind of products. So that's defi, I think there's opportunities higher in the stack. In social as I mentioned, mirror, the interesting about mirror is that, again, like I consider as a pure, you know, social net. But when asked people why they use mirror instead of like, let's say medium, which is the what to counterpart, people are like, I use mirror, because that makes me feel that makes me look like a web expert. Right? Like, if I work and live in web three, I'm not going to use medium because it's just not perceived as being, you know, digit. So that is actually one major benefit, or one of the main core value propositions of launching web three social net, right? Like, it gives people the feeling of belonging, and the feeling of being perceived as being legitimate. So that's very interesting. So that's socialized, and then there is gaming, which is xe, which was backed up in early days. xe, so obviously, like everyone might have heard of played earn, which is the fact that when you play the game, you actually earn some money, or some valuable assets, right? A lot of people view xe as a purely monetary gain and financial game, but if you actually play the game, you realize that actually is pretty fun to play with. It's a pretty fun game, obviously, it's not a triple A, like, you know, kind of game like your, your, I don't know, Starcraft, or kind of game, but it resembles more to do like Pokemon. So it's not AAA, but it's still fun to play with. And if you add the financial and monitor component to it, it really works is magical, right? If you get the token economics, right, it's really magical, like xe at its peak had a market cap of like, I want to say like $30 billion, which will be ranked as a top five by traditional gaming standard, a top flight company in the world. She's absolutely amazing, right. Anyway, so I think these are some of the games that a new founders would be quite intrigued by and should be looking at with, with Axi I tried to play but I couldn't get into it, it was too much friction to like, so many things you have to do to like, you know, get into like the game mechanic. And I just never got got through it. So I think just like taking some of these things that are working and making them more accessible, should bring in more people,

8:55  
as they found product market fit, not in developed countries, because to your point, people find the game to have too much friction, onboarding, friction, and then they have a lot better alternatives, right, in terms of gameplay actually found product market fit in developing countries, especially in early days in the Philippines, where people find it worth it's worth it for people to do all that onboarding stuff to install all that all the wallets, like all the old onboarding stuff, in order to make money that is higher than their base salary in their local country. Right. That's why the monitor component of xe really worked. Yeah, it almost seems like xe was like, almost like a part time job for people or even a full time job for people. I don't know. Was it truly like fun? Like or was it just like super high value for someone in the Philippines to play all day because they could make a living. One of the founders backseat Jeffrey, known as G hose. He gave a presentation to our founders in the last cohort. And he mentioned a survey that he did with his users and basically what people said He, the question he asked was like, What is your main motivation for playing this game? Is it money? Is it play slash social? And I think the result was that over 50% I think it was almost 60% of players play the game for the social slash gameplay component. And only 40% played it for the financial on the monitor and pony. Got it? Yeah. You know, like, there's all these games we grew up playing, right? Like I grew up playing like Street Fighter and like Super Mario, and they all had like, like a points component and a score component, right? I always wondered if you could take like crypto game mechanics and create like a, like a multiplayer game like that, where you're actually like winning real money or tokens? Have you seen projects like that, that have started come online and have any of them like achieve some meaningful traction or success. There's plenty of games that are doing exactly what you're just were just described, which is sort of a reskin of a traditional game, a very, very popular traditional game, and add some monitoring and crypto component on top of it. I haven't seen any game that like that that works yet, or large scale product just because there are too early. But the thesis makes sense. If you add the monitor component to a game that's already fun to play, I would imagine that there's even more incentives for people to play. Right? Before we move on, I'd love to go back to the the social network ideas you shared and like, drill into that a little bit more. Do you think mirror has product market fit from what you've seen, from an outsider's point of view, it's very hard to say, only the PM, or like the team knows. I haven't seen any metrics. So I can't really comment. But I do see almost on a weekly basis, someone writes a really good article on there. So that's the data points that I have. And then the other thing we talked about was how you know, like the social networks that come out of web three, could be built around financial data in a sense. I think that's a really interesting thesis too. And a few examples that come to mind are Venmo. Right? Venmo is, in a sense, a social network built around like a financial feed. I think rainbow does this a little bit because he looked at people's wallets and sort of like, you know, what tokens they have. And there's a little bit of a social component with your with your ens, I would love to hear your thoughts on like, what are some of your thesis or ideas on what a social network might look like that comes out of, you know, this, like, social media, crypto financial stuff.

12:26  
So I want to say there might be two angles. One is the mirror angle because mirror as as a blogging platform, they actually have some crypto native, like financial component where like, on the platform itself, you can fund existing products with your native cryptocurrencies, right. But at the end of the day mirror is still I want to say blogging first, financial second, however, there's a second type of products that are finance first, is slowly turning into social. And I think we're seeing that with ether skin. And I suspect we're we might see similar things with the likes of zappers theory on, right. These are financial products that are sort of like, like a financial aggregator. What What's that product that people use a lot in just the consumer space? I forgot the name, but like an app where you look at all your finances, right? Oh, co pilot or mint Nantais? That's right. Yep. So I want to say that prayers in Xero are almost like a meant before crypto. And I think these projects are in a perfect position to go social, because they already have a large number of users. Ether scan actually launched a feature recently where from one address, you can directly talk to the owner of another address by sending a message on chain. And this didn't exist before. But it's so obvious that you want to do this, like this is basically the web three native of email, like in web one is your de facto identity. In Web three, your address is your de facto identity. And the ability to communicate between addresses is a no brainer. There's projects like NTP, epns, that are trying to tackle this from a protocol point of view. So they're, they're building a protocol first, and then apps on top of it. However, ether scan takes a different approach. They are an app first, because they have like all these analytics like blockchain analytics, right. And then they're going down the stack by building a communication protocol. Right? I'm a huge fan of the second because again, you're to have a large number of users. Yeah, I think the wallet messaging and dancin that's going to be like a huge unlock potentially. The other limiting factor I think, but the social network sort of set of projects is this very few people that are crypto native today there's about like 2 million people that use like crypto wallets and, and, you know, transact with their wallets today. So it's, it's a very small audience and maybe like, it hasn't yet reached the critical mass to allow for like, you know, abroad. So, so that, that could be another reason why maybe it hasn't happened yet. Moving on, shall we just talk a little bit about masari and then get into ions, which of course is like the main topic we want to spend time discussing, we'd love to hear from you on, you know, what was the insight and the core problem that led to masari. And what was like your experience getting that off the ground, I think that's really relevant because, you know, getting a crypto project off the ground doesn't look like I think what, you know, traditional web to product might look like in terms of getting to a product market fit. The main thing that led to masari, there was a confluence of two things. One is that up until 2017, there was basically only one, crypto, which was which was Bitcoin, but 2017 Etheria really took off. And then with all those ICOs, there was a proliferation explosion of tokens. So you need a sort of analytics platform data platform for a large number of assets. That's one side, the other side is in 2017. By the way, this was always going to happen. But it was very clear that there were an inflow of more and more sophisticated users and players in the space. So it's no longer just a retail game. Right? institutions were coming in more sophisticated individuals were playing the game as well. So you need a platform for the professionals for the sophisticated players. So the combination of these two factors lead to masari. Because before masari, there was basically only kind of coin market cap in block folio. Both are great products, but both are extremely retail oriented. So you need someone like Massara to provide advanced guidance for those players. What was the first thing you guys built? And what was like maybe a key feature that helped you guys get to product market fit with the salary and the salary is kind of like a Bloomberg terminal, right? For crypto traders? I don't know if that's a fair way to say it. Okay. The first product that film from our COVID, if you want to use traditional finance language is called a screener. It's basically a list of all the assets. And you can filter you can search, you can sort by a variety of, of traits, like such as the basic one would be like market cap price, more advanced features would be like TVL, daily active users, that kind of stuff. Were you a crypto trader before jumping into masari? Are there folks in the team that had that, you know, trading background that helped you sort of build for yourselves? Or how did you talk to users? What was your approach to that? Because so much of crypto is anonymous as well. Right? So how did you start to get user feedback? And some of that?

17:16  
Yeah, basically, initially, it was all personal insights, intuition, there was very little user research. Initially, I think, perhaps for consumer products. As a very early stage, your own intuition might be more important than user feedback, especially if you're the user of your own product. If you're solving a problem for yourself, I think your intuition matters a lot. So that was the main thing we relied on initially. But over time, obviously, we did more and more user research, especially eventually, when we moved in 2019, we moved a little bit more towards a enterprise SAS kind of model with a different data set with those players. I think you should be more user driven. And wish we did. Got it. Yeah. And how did you guys think about pricing? I'm asking because I know doing analytics recently raised? I think the unicorn valuation, and they charge four or 500 bucks a month. And, you know, they've got like, something like 10,000 paying users, so they have really nice business. How did you guys approach that? Sorry, it's very difficult. At the beginning, it's entirely intuition and guesstimates. But we try to hide prices very aggressively until users are our artists. But there's, there's a famous saying by I think Marc Andreessen, you want to you want to raise prices aggressively. So we did that. But there there was basically two tiers of pricing, one for sophisticated retail, and the other one for institutions. And the second tier is one or two orders of magnitude more expensive than the former. Yeah. And you kind of have to believe that there's 10,000 20,000 people willing to pay that to know that there's a big business to be built here. Right. One last question on the Saturday before we move on to alliances? How did you guys think about potentially thinking through token economics and benefits for a product like masari? Does it even make sense? And how did you think about like governance mechanics? I'm asking because, you know, you're kind of like you've seen so much in terms of like those tokens. And so how did you think about that in the context of this particular product that you built, and then we would love to talk about that around the lines as well. I think tokers might be fine for someone like oh, sorry, Mr is not the best use case or for tacos. I think tokens work best when you have something that has some some kind of network effect. Whether it's a decentralized Exchange, or a game or social net, like all these have some sort of network effect. Right. Massara is more of a data and analytics ally. Yeah. But that's that I think was RMIT might consider building network based products in the future. I think it's possible. So I would love to switch gears and talk about alliances. What is Alliance today, and what drew you to starting it? Alliance first started, we were called Chicago defilements. And we're just a meetup group among like, some of the OG defi products like synthetics, Khyber set protocol, Xerox, and some of the Chicago based trading firms. That was late 2019. We just wanted to get all these people together to support each other to debate on things. Because back then defi, it was still a very controversial topic in all of crypto in 2019, there was nothing in crypto, I really had thought of market data, Bitcoin and stable coin. So people didn't really see defy as something that was going to be alizee was not consensus that if I was going to be big, and especially the Chicago based trading firms, despite the fact that they were involved in crypto since as early as like 2015, they were very skeptical about Defy. So we got these people together to debate on things like that, like is different, even a thing? And if so how can the two groups of people support each other, right? And eventually, the trading firms wrap their head around, and they said, Okay, this might have some some real substance, and it started providing some liquidity to defy, and arguably, that was one of the key ingredients that led to the famous defy summer of 2020. Right, which was the first rise of first wave of different products that found product market fit, and also rose in market cap. Sorry to interrupt you, what do you mean by they were providing liquidity. So in rd days, you have products like synthetics, Ave compound, uniswap, and others, right, so these trading firms who provide liquidity as a lender, as a borrower, as a trader on this on the exchanges, as a market maker for the derivatives, right, I like to keep the prices in line with underlying providing liquidity for stable clients, all sorts of stuff. Because if you just want to rely on retail, retail, obviously, you know, doesn't have all the volume that they need. That's one and two, they may not have the expertise to do arbitrage, which is very important to keep prices in line with the across different markets. Right. So the involvement of market makers by providing liquidity led to a more efficient market at a much bigger volume.

22:08  
So it started as like a meetup group in Chicago, and you were kind of bridging these two communities together. And fast forward to today. And it's much more developed. It's much more developed. org, can you talk about where it is today and what your vision is for moving forward? Yeah, the easiest way to picture how we evolved is that when we first started were called to Chicago defiance. Later on, we removed the word Chicago because it became a lot more global, and then a lot overridden the word define. And now we're just called alliances because we expanded way beyond Defy. In fact, in the current cohort, I want to say there's only only 15% of our products, founders are sure defy the rest are games, social nets, NF T's as heroes era, right. So that's where alliances today we the current cohort has like 30 teams, really some of the best founders like this one. For the current cohort, I had to reject a ton of really top notch founders, our initial raise has always been kept at well below 5%. And, as I said, more verticals, more mentors from the entire industry. When we first started, the mentors, the clinical mentors were basically just the trading firms. But now we have mentors from a bunch of VC funds, research firms, legal firms, past entrepreneurs that we had accelerated in the past, coming back as mentors, and also a lot of web two founders for looking to web three, sharing their experience as a web two founder to our web three alumni. So how does the the Alliance accelerator work? Like what is like, you know, how long is it? What does it look like for a typical company? And what what are some key areas where you guys add value or some key problems you solve for web three founders? Yeah, it's a it's a 10 week program, the structure of the program, I've never gone through yc. But apparently, it's very similar to yc. And partly is because of Roberto who joined us. As a former YC founder, he joined us as a head of product, and he really helped improve the program itself for us, but 10, we program every week, there's almost daily presentation by one of the mentors in our network. And then there's group office hours where we get five to 10 founders together to talk about their latest challenge, and milestones and get them to support each other, ask questions to each other. There's also a forum which might remind you of book face by see where are the founders what is like a q&a between the founders, and it's working really well currently. And then probably the most important piece of it is the one on ones with myself. My partner's other partners have lines to give really custom, specific advice to each founder and the kind of advice we provide. I think the most useful type of device that we provide is what for specific advice because like the general entrepreneurship stuff you can get in A lot of other places, including on to sell on the internet. But the stuff that that almost everyone finds useful is what through specific, how do you launch a token? What are the regulatory implications? What are some of the risks involved? How do you fundraise in this environment? How do you do your token investing? All this stuff is completely different from web to, to the point where I'd like some what to native founders coming to web went through, get completely surprised by how, you know, this industry does things? Awesome. Let's talk about that. So like, you know, for the Pope's and founders listening, of course, you can't do custom advice, you can't go very deep. So they need to apply and go through the program to get the full 100% experience. But, you know, what advice would you give to someone who's trying to think through whether to do a token or whether to do a Dao, how to think about liquidity, those seem like three big things right in in the web three world, my general advice, which may or may not apply to everybody, but generally, you want to focus on product market fit first, before even thinking about the token, because the token is only a temporary way for you to gather users if you want to use token incentives. However, if you don't have product market fit, then using tokens to acquire users is a complete waste of your go to market strategy, a complete waste of marketing budget, you want to have a product that at least 100 users really love and use recurrently first, before spending any kind of token budget to acquire further users. So that's my general advice. But there's a few exceptions here. For instance, if the token is the intrinsic part of the product itself, such as in the case of xe, token is, is core to the product, because like, the token might be an in game asset. Or it might be an in game currency, in which case, your product won't move succeed without the tokens in which is you want to really design the token first. And what's their regulatory or compliance framework that you guys generally share as like, initial we one way to think about it? Yeah.

27:05  
So for that would provide very specific advice, non legal, legal advice to our founders, but you really depends on product. There's no one size fit all but like, in the fundraise environment, we tend to see a lot of safe plus token warrant for safe plus, you know, some kind of slightly later. This part really evolved over the last couple of years. In 2018, Saft was the dominant way to raise money. Over time people realize that staff has, you know, more and more regulatory risks, because straight up in a contract to make your product looks like a security. So the industry overtime, converge to safe plus token worn or safe plus some kind of seller in charge. Do you mind expanding on what Assaf is and then how it's different from a safe plus side letter? Yeah. So Saft, my understanding is that when you invest as a Saft, essentially, initially, you're going to invest as a, you're going to be an equity owner. But at some point, the equity ownership will be converted into token, and you're just going to become a token holder, and the equity essentially becomes irrelevant, or dissolves. I don't know that the exact details, but that's how I think about the draft safe plus token, Warren, at some point, you're going to be as an investor, you're going to be an Oklahoma folder, but you also get the option to purchase tokens proportional to the founding team. So you're going to be an equity holder and the token holder, one of the benefits is that is the perceived lower regulatory risk. And the other side of that is, you have both ownership of equity and the token, if you don't, you run the risk as an investor, you run the risk of founders, potentially trying to accrue value more to one or the other. Right? No, both you're protected from that firm. So why this might be a dumb question. But why is there like a legal entity at all? You know what I mean, the promise of web threes, like all everything's on the chain, you know, equity ownership is represented by tokens, governance tokens, people are getting paid through whatever other means. So why are we in this world where there's like a version in Delaware? And then there's like a mirrored version on chain? Yeah. Because it initially you're not going to have a token? That's the most obvious answer, okay, you're gonna raise money, you're gonna build a team, you're going to try to build a product, you're going to try to find product market fit, then you launch a token, right? So there's a short period of time where you just don't have a token. And if you want to raise money at that point, you need equity. That's the most obvious answer. But also, I want to say less importantly, less of a an obvious answer is that you do want to centralize things initially and progressively decentralize over time. Because if you start as decentralized, there's no way in the world To build a good product, right like Joseph DeLong, foo, foo, as a former CTO of sushi sushi swap, which is governed in a completely decentralized way, one of the most decentralized product tweeted that Dallas are probably one of the worst ways to build products, something along those lines, right? That's interesting. It's obvious. If you don't have leadership, there's no way you can build a good. That's a good segue into like, what's your advice on Dows? Right? How should founders think about Dows? And how to harness this potential energy around ours effectively? What are your thoughts on that? Basically, my response to sort of this view that, number one, I agree with the fact that you can build a good product by being super decentralized. My way to reconcile the decentralized indels versus don't go to product is that the word decentralized in Dallas does not mean decision by committee, which it will never lead to a good product that decentralized indels means checks and balances, it means that if you make a wrong decision, as a dowel contributor, as a leader, or as a member of the dowel, you're going to be punished by someone else within the dowel, or be punished by the market. Right. A good example of that is if you look has a traditional corporate structure, a entry level employee can be punished by their manager, if they make a wrong decision, and their manager can be punished by a higher level manager could be a CEO, a seat C level executives, a C level executive can be punished by the board and the board can be punished by shareholders, and the shareholders ultimately will be punished by the market if they make a wrong decision. Right. So decentralize. indels for me, means checks and balances, it does not mean decision by committee. So the corollary of that is, if you want to build a good product, if you want to be successful as a bell, you need leadership, you need clear vision, you need some level of centralization, initially,

31:58  
and maybe forever, too, right? Like, I mean, entropy is real, right? Like, if you like just open something up to like decentralization, I think like, it's just so much harder to run like a, like a tight organization and execute well. So that being the case, even if it's just in the early days, like you know, you need centralized and like strong leadership to like, you know, get get to product market fit, build a great product and scale. So in that context, what is the value of a doubt? So, once again, I think that the word decentralized and the word autonomous are complete misnomers, like the word decentralized, Dow is a complete misnomer. Because the kind of doubts that will work, at least at the beginning of they're not decentralized, and they're not autonomous, like, What the hell does this autonomous human mean? So I think it's a misnomer. But to answer a question, the way that like, Why do Dells matter, I think it really boils down to the fact that if the organization is completely on chain, potentially with a token, you're able to transcend traditional legal framework. If you use this as the starting point as your first principle, you can derive two core value propositions of Adele. One is the fact that for the first time in history, you're able to form an organization with people around the world in a very easy and frictionless way. Imagine doing that in the traditional framework, every country has their own jurisdiction, their own traditional have their own way to set up a LLC. How do you get people from different countries together to form one entity? That's a lot harder to do. Right? Forming transnational entity, with thous is one of the two core value propositions. The other one is you can more easily use tokens to do micro incentives. So think about Uber in the early days, right? Even if Uber wanted to incentivize their drivers with their equity in the early days, it was impossible. Because imagine the amount of paperwork you have to do with like 1000s of drivers. It's just way too much legal friction. But with tokens, it's a lot easier. Just give me 1000 Aetherium addresses, I'll drop you tokens, right, based on the kind of work that you've done, then you remove this friction of four in terms of incentivizing bidders. So these are the two core propositions valid propositions of deli moment. So Roberto had a great question he wanted us to ask you, and that was like, so how do you think Dallas can reshape society? Very ambitious. I mean, if you if you buy into Dallas, right, it's like okay, yes, Dallas can allow for like borderless low friction, organization and new incentive mechanics. Like what sort of things do we think we'll see in the future? Maybe you have some thoughts maybe it is, it is a very broad set of like far reaching question.

34:42  
I have a couple of pragmatic answers and I have one very ideal is idealistic answer. The pragmatic lens is, it's now a lot easier to bootstrap to solve the chicken egg problem with phallus. Wishing web two you have to do a bunch of like things that don't scale. Well, you know, brute force user acquisition, like, maybe we can go back to the example of Uber, it would have been a lot easier for Uber to bootstrap their initial critical mass of users with tokens, because if you give people tokens, they will join your network hoping that their tokens will increase in value over time. Right. So Dells was tokens, make tech products a lot easier, especially those tech projects that have some kind of network effect. So it's great for founders. And if we think about so this actually touches one of the the second of the two core value propositions that emotion five minutes ago, if you want to think about the first core value proposition, right, like, once again, you can form transnational organizations and build stuff together for the first time in history. So we might see more cross border corporations, or cross border products with Dallas, basically, before Dallas, the products were essentially confined within country, right, like the big tech in that started in the early or in the late 19 9090s, and early 2000s, basically all came out of Silicon Valley, or Seattle, right. But when I see more global kind of products, by the way, so these are like super pragmatic things that might happen that idealistically one that I wanted to mention was, I think of Dallas, ultimate addressable market as being digital nations. So this might sound extremely far into the future, but it actually is very far into the future. But with Dallas for the first time, you're able to do property rights, with encryption. And this is one of the key differences between 1000 LLCs, as an LLC, or as a corporation, the assets that you own, you're not guaranteeing the assets that you don't have your guarantee of the ownership is done by the state, right. It's the state that that gives you the property rights. But as a Dell, you truly own the assets that on chain, right? The Dell is self guarantees the property rights. So this property is one of the necessary, but not sufficient conditions for starting a digital nation is the property rights don't own chain. And you can also do laws with smart contracts instead of laws as some kind of social contract. Right? So you can code laws that govern the rules of the cell, using smart contracts, rather than something that's guaranteed by by laws, which is a social construct. And thirdly, you're able to do ancient international trade with defy, you're able to do taxation, the token insurance, essentially, when you inflate the token, you're basically it's basically attacks on existing token holders, right. So you can issue some token, and they use that additional insurance as some kind of budget for future work, right. So if you combine all these things together, you have the basic building blocks for building a digital nation. And I think a lot of crypto projects are essentially doing that without either without realizing it or without being public about it. But actually, for instance, is actually public about it. They say that they're building a digital nation for gamers, which in my mind makes perfect sense. Alliance down is building a digital nation for builders and founders. That's our ultimate vision. So I think to answer a question, the way Dells may reshape society is to give rise to a plethora of digital native nations in the coming decades. So Chad, that's actually a perfect segue, because I would love to ask you about the business model of Alliance accelerator itself, right? In a traditional world. I mean, yc is probably the best proxy for this and web to their venture fund, effectively, very early stage, they run a program, they get equity, in these really early stage companies, they have their LPs that they then distribute gains to, you know, when the companies eventually go public or get acquired, what are the similarities and differences between that model and what you all are doing with alliances?

39:01  
Yep, I think we might be the, in terms of the terms that we give to founders might be the most single most favorable accelerator in history. Because we don't have any requirements in terms of investment. We don't take 7% for 125k, we basically find really good founders with good products, we let them in, we work with them closely for 10 weeks, it's a way for both the founder and us to get to know each other. And towards the end of the 10 weeks, both have a pretty good understanding of each other's and, you know, basically, we would invest on the terms that the founder has. So basically, we will invest alongside everyone else, whenever the founder is ready to raise. So it's not a fixed term. We do offer like an optional standard terms, but so like the standard terms that we offer is like 20k for a $5 million valuation, but it's entirely optional. If they need the money right now. We will give that if they don't, we will invest later down the road when they're ready to raise at the same terms as everybody That's amazing. And so you're really playing the long game, right with building the relationship with the founders and exhibiting your value. And how does it work from a fun perspective? Like, are you structured like a traditional LP fund? And then also from operations perspective? Like, how centralized or decentralized? Is this model? Yeah, so the exact structure, I can't really disclose it yet, just because we're still working on it. The funds are definitely ready for for investment. But there's a lot of, you know, back office infrastructure, legal infrastructure work to be done. And I'm not I'm not actually super familiar with that part. But it's going to be different from a traditional GP LP model, we will have LPs, one of the benefits of that is, our customers are not LPs, our customers are really the founders. So that gives us the flexibility and really the bandwidth to focus on founders rather than on LPs. That's great. And what about the operating model? How centralized is like the the model when you're actually accelerating the companies? And is that something you foresee being, you know, more decentralized, more open and more flexible? Yeah. So we definitely started as being pretty centralized, in a sense that myself and a couple others, that worked full time for our lives, as core contributors, with select would do admission, just probably to two or three of us. The mentorship is a lot more decentralized in the sense that we bring all these great mentors from our network to give presentations to do q&a is with the founders, the one on ones are slightly more on decentralized side, because you will be myself and you know, probably four or five others, like the YC, equivalent of full time partners, and we're trying to bring on partner partners as well. So this part will decentralize over time, right. So the mentorship is going to get more and more decentralized a larger number of part time partners. I think the mission will also get more decentralized over time, just because we're every cohort, we're seeing more more applicants, and I just can't do everything by myself. So we naturally tend to decentralization, I think that brings us to what you look for like alliances like without doubt, the the top accelerator in terms of impact and also like value it provides to founders. And I know you've seen like an incredible amount of interest from folks wanting to join the program. And I think you had the most competitive cohort recently. So what makes for a great alliance founder, what do you what do you guys look for? So in terms of immersion, I want to say over 70 to 80% of my criteria is the caliber of the founder itself. And the remaining is the product, know that the product, how novel is the product, right? Are they doing something new, rather than copying an existing product and trying to compete with incumbent, what makes a good founder, there are certain things that are like, but these are not like hard requirements. I like fresh grads from top schools, top engineering schools in you know, across the world have maybe a list of 1020 30 of them. I like non first time founders, people who have experienced building startups in the past, even if they failed, especially if they failed, they probably learned a lot of lessons there. I like seeing founders coming from big tech as well, because that at least tells me they have the basic engineering skills. So these are the things that I like to see in the application. But there's a lot of things that there's far other more things that I see during the interview itself. And those things are very hard to quantify. It's entirely based on gut feeling. But typically, there's two types of founders that are more likely to succeed. One is those that are extremely confident, aggressive, formidable. Another type of founders are those who are extremely humble. They want to learn, they want to get advice from people. We've seen both types of founders succeed and do really well in crypto. So but it's very hard to hard to quantify. It's really based on the gut feeling of talking to data person on a zoom call. What do they bring to the program? Like? Is it often just an idea? Or do you have a product? They have prototype signs Mark market fit? Like, what does that look like?

43:56  
Really the entire range, we've had folks that are solo founders with just an idea, not even a white paper ain't nothing written down, except for the application itself, all the way to billion dollar networks, and companies. So we've done the entire spectrum. But our current sweet spot is early, because that's where we can make the most impact. We want to make the most impact. I prefer to spend time on those who don't have any crypto native, legit backers, because that's where we can help them the most. So I want to just touch on one topic, and then she has a few questions he likes to do at the end. So maybe we'll do six minutes on this one other area and then we'll wrap up. So just in terms of like, what's going on in crypto right now, like we're seeing like this massive influx of capital, and it just seems to accelerate every day almost. It seems like I mean, Sequoia just put 400 million into polygon alchemy raised $200 million salon, Firebase, there's just like multiple $10 billion companies now it seems and crypto over the next few years, what do you think has to go right for us to look back at this moment and be like, Wow, those were like brilliant investments? I mean, that the obvious answers is more talent coming in more products, finding product market fit. I think that entire industry is on a really good trajectory, I can't really see any obvious challenges or risks other than the regulatory side of things, which is, you know, again, that is malleable. It's not like, it's not like if the government does something, we're dead, it's something we can really fight against. Right? That is a major regulatory risk. But I think we can solve that. There's obviously some very low probability a longtail major risk of something like ECDSA, like breaking like the entire, basically, the entire encryption thing, like just just completely gone, like I don't know, quantum computing of that kind of stuff, which basically will bring the inherent internet down or encrypted going to zero, like that kind of risks exist, but it's extremely low probability. Right? That can bring the entire industry down. But other than that, I think we're we're on a really good path, like more towns coming in more money, capital coming in more products, finding a product market fit. So in your mind, web three, and crypto has reached escape velocity like this, there's no slowing down at this point, like prices might go up my toe down. But this thing's like the future. Dope. I want to say the entire crypto web three space was completely de risked in the last cycle. Because the last cycle we had some the most, the smartest people and investors and founders joining this space, I think it was the wrist in the last cycle. This cycle, we've reached escape velocity with the likes of defy gaming socialites all finding product market fits at the same time. That's great. So Chow, we'd like to ask three questions to every guest on the show. And the first one is around superpowers. Everyone has a set of skills that they're really good at. It feels like play to them, but work for others. Are there any superpowers that you've identified in yourself that you'd like to lean on day to day? I think my superpower is the fact that I speak multiple languages. I know multiple different cultures, I've grown up in multiple different countries, I have a much more global view, then I want to say 99% of people I've ever met. And I'm ever to that own databases. I'm more open minded to different cultures, different founders from different countries, different ideas, however crazy they might be. That is my superpower. That's amazing. Curiosity. Tell us more about that. Where'd you grew up? Or where have you lived less than a third of my time, the first third of my life in China, second third of my life in Canada. And the third third in the US. And in Canada was in the French speaking region of Canada, which is very different from the rest of Canada, and the rest of Canada is very different from the US. And obviously China is a completely different country. That makes sense. That's awesome. So the second question is around people that have given you a break. When you look back over the arc of your career, are there certain moments where you feel like someone went to bat for you and give you an opportunity that really was a big unlock for your journey? That's, that's a very hard question. I feel like my career has been pretty smooth up until this point, and I've been just extremely lucky. I feel like there has been a ton of people breathin helpful for me. And it's hard for me to identify a single person, other than, you know, obviously, my parents, right, like parents are probably play like, the single most important of all, like results for like 9% of failure today, in my opinion. But other than that, I can't really identify any one single person, nothing. Makes sense. And that's fair. Last question is around books. Are there any books that have had an outsized impact on your personal or professional life?

48:54  
No, I've read a ton of books, but I feel like reading blog posts are far more effective than reading books. Yeah. Tell us about that. Any blog posts that have been super impactful? I mean, just just generally, like, these days, I spent a lot of time learning about health, longevity. I read like David Sinclair's blog posts and podcasts and Peter, Tia, very good stuff. The thing was books is even some of the most well known and popular writers, I feel like they can write their book in five pages instead of like 200. And really condense the knowledge and make my time a lot more efficient. That's why I like ball posts. It's a much better use of time and podcasts are good second, like I liked listening to podcast when I went to work, workout and right before sleeping. So that's great. Well, on that note, I think this was a really fascinating discussion, and we really appreciate you coming on and hope to have you on again sometime in the future. Thanks so much. Thanks, Joe.