Alliance DAO Employee Zero: Why the first thing we teach founders is to lay off employees?

Interview: Mensh, ChainCatcher

Guest: Will, Core Contributor of Alliance DAO

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

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

In this conversation, we invited Will Robinson, the zeroth employee of Alliance DAO, to share his personal experience in the Web3 field, how to screen projects and founders’ insights.

Personal experience

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

Will Robinson : I started my career as an academic researcher. I spent eight years in graduate school studying video games, board games, sports, and focusing on the history and culture of games. I worked in the English, Sociology, and Communication departments, studying how mechanics design and games can help game designers create more artistic games. The focus was on independent games, especially those that were shocking and not just for entertainment. For example, I designed a game about when is the "best time" to commit suicide in high school. Studying the mechanics design and incentive structures of those who have early suicidal thoughts. These are the topics I explore and are very challenging to design.

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

After four or five meetups, I got a job helping people market their audit business. The salary was very low and I had no work experience, but my academic background made me good at storytelling and marketing. They wanted me to help them market their product. We help anyone who needs to prove to regulators that they actually hold cryptocurrency on their books. For example, if you are the Ethereum Foundation, you need to report your financials in a specific way in the first few years according to Swiss regulations, and then a stricter reporting structure after a few years. We have worked with Swiss entities such as the EOS Foundation and the Lisk Foundation. In addition, if you are a Cayman Islands fund and hold cryptocurrency on your balance sheet, you need to report to the local regulator CIMA (Cayman Islands Monetary Authority) to ensure that you fulfill your fiduciary responsibilities.

We audit Cayman funds, foundations, and exchanges around the world. Exchanges usually have regulators, and we make sure they hold cryptocurrencies safely, correctly, and intelligently, train employees, conduct penetration tests and risk assessments. I did this for nearly four years and gradually became an expert in the field. I gradually transformed from a marketer at the beginning to an auditor or audit expert, while also constantly learning more about cryptocurrencies and gradually adapting to the technology field while promoting products. Then I applied to join Alliance and became their first employee to set up the accelerator program.

I have been working here for almost four years now. I have tried almost every role, including fundraising, mentoring, marketing, research, and many other aspects. Keep changing roles to find the direction you like. When working in a startup, you can decide what is the most important thing to do next and then hand off the tasks at hand to people who are better at it. I like to communicate with people, so I spend a lot of time mentoring.

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

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

By working with 100-150 startups, it not only gives the teams a great story to attract investors, but it also gives them a deeper understanding of themselves and why their company is important and unique. We put a lot of effort into preparing for Demo Day. As of the last batch, this is the founders’ favorite part of Alliance, which makes me very proud.

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

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

However, I learned how to make presentations, how to work with others, and most importantly, how to face a very difficult problem alone and spend a long time to complete it under extreme psychological torture (such as dealing with a complex problem alone). Therefore, the most important point of doctoral study is that it taught me how to deal with ambiguity. When faced with a problem that has no ready-made answers, there is no formula to refer to, and everything needs to be created by yourself.

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

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

In addition, I spend a lot of time reviewing potential applicants or future alumni as they apply to our program. We receive nearly 2,000 applications per batch. These applications require time to read, and time to interview the applicants, sometimes requiring a second interview.

Another major task is to raise funds for our third fund. Alliance already has two funds and is currently raising the third fund.

Alliance DAO’s decision-making process

ChainCatcher: How do you screen projects efficiently? What is the decision-making process?

Will Robinson : Every application is evaluated on two things: whether the team is good and whether the idea is good. And I think the team is good is more important than the idea, probably two or three times more important. The idea is more about proving that the team can come up with a good idea, rather than the idea itself.

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

For example, the Pump.Fun team joined as Caviar and later built a 3:3 app based on Friend.tech. If we had rejected Caviar because we didn’t like them, it would have been one of the biggest mistakes of our lives. But we didn’t do that because we knew the team was amazing.

What is a great team? I think this is the core of the early stage venture capital field, and it needs to be observed firsthand. Greatness does not necessarily mean going to a prestigious school, working at a large company, or having successfully exited a previous startup. As Qiao, the founder of Alliance, said, to be a great founder, you need to be "traumatized and a little autistic." Only a truly "broken" mind can succeed in it. What we look for is extreme drive.

Most founders don’t even know why they’re motivated to start their company. So a big part of my interview is to lead them into self-reflection. I’ll try to get them to tell me why they want to do this. They’ll usually start by saying, “It’s about solving this problem.” Then I’ll ask, “But why do you want to solve this problem?” They’ll say, “Because it’s an important problem.” I’ll follow up with, “Why do you personally want to solve this problem?” They might say, “Because I’ve had this problem before.” Then I’ll ask, “Why don’t you let someone else solve this problem? Why you?” And keep going deeper until you find something, like something that happened when they were 6 years old, that made them have to solve this problem. This deep exploration is critical.

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

Will Robinson : Two rounds. Usually the first round is 15 to 20 minutes, and the second round is 30 to 45 minutes. For example, Y Combinator only takes 10 minutes to interview each time. As you practice more and more, you will find that you can quickly judge whether someone is good or not. We call it "heat". We will ask each other: "Can you feel the heat during the interview?" Some people have heat, some don't, and the heat manifests in different forms. Because we are still building a community, Alliance is also a DAO, and this community cannot have bad apples. Because we are still small at present, one bad apple can spoil the whole barrel.

ChainCatcher: What percentage of projects will stand out and make you feel the "heat"?

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

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

Will Robinson : I can give you two examples. There was a company in the last batch called Force Prime. The team was made up of three older Eastern European gentlemen who had a lot of experience in Web2 games but very little knowledge of Web3 games. They applied, and we rejected them. They applied again, and we interviewed them and rejected them again, explaining why. They applied again, and I interviewed them again and rejected them again, continuing to explain why. I only let them join on the fifth application.

Part of it was that I realized my own biases were affecting my judgment, and they were actually very good developers, smart and eager to learn. I was also happy to let them get out there for a while because their initial ideas were really bad. They didn't know enough about Web3, but later they became more sophisticated and more familiar with how Web3 works. I enjoyed working with them, and the founders were great.

Of course, there were also cases where we rejected them and never reapplied. One case that stood out was Monad. At that time, we were unsure whether they could build a community, and their valuation was relatively high. In the early days of Alliance, we did not have strict restrictions on the valuation of entering projects, and we could accept teams with different valuations, sometimes even very high valuations. But at that time, we lacked "buying power" and reputation, and people did not think it was worth giving us 7% of the company's shares. Today, we no longer face this problem. Enough people think that we are doing very well and deserve such a dilution.

The Accelerator’s Business Model

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

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

I think running a full accelerator is beyond the scope of most VCs and doesn't make sense financially. An accelerator costs about $5 million per year to run, and the overhead doesn't even come close to covering those costs. It's not a good business. You need to leverage the teams you accelerate in a bigger picture or in some other way. In our case, we're building a DAO focused on creating something very unique.

When VCs have other priorities, like managing a lot of money, they can’t give all their attention to these teams. They run accelerators with the goal of investing more money in Series A or B. But when the focus is like this, it has a big impact on the teams that join the accelerator. If these teams don’t get follow-on investment, or don’t get Series A investment from these VCs, they’re basically “dead.” Other VCs will question: “Why didn’t your accelerator companies get follow-on investment? Don’t they have follow-on funds?” This may be for some completely reasonable reasons, such as too much industry exposure, or loss of confidence in a certain field, and has nothing to do with the team. But this impression is usually dangerous. I think most VCs have no reason to run accelerators.

Additionally, running an accelerator requires a huge focus, like 15 full-time employees, which most VCs don’t have. Reviewing 2,000 applications is a lot of work, so my advice is that the best VCs should focus on a few founders that emerge from their network and support them as available resources, rather than trying to run an accelerator.

ChainCatcher: In addition to online applications, do you have other sources for finding projects?

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

ChainCatcher: Why are founders afraid to join accelerators?

Will Robinson : Great founders often don’t go through an accelerator because they already know how to build a company. The valuation of what they’re building might be too high, or they’ll go to Y Combinator. Top founders know that most accelerators can’t provide the value they need compared to giving up the dilution. So it took a long time for Alliance to get great founders to accept the conditions we require. Because it takes word of mouth from many parties to build that trust. As a great founder, you need to hear from two or three people that Alliance will do everything in its power to help you succeed.

Some great founders are at the early stages of their careers, and accelerators can really help them learn. But now that Alliance is a well-known brand and has a large community, great founders are willing to forgo dilution in order to sell their products to hundreds of alumni. Now many of our teams’ first customers are Alliance alumni. This way you can quickly launch a business and get feedback.

The second is that the legitimacy and signaling that Alliance brings is really meaningful right now. You get a lot of marketing and exposure because you're listed in a list of recent success stories. I think this year we had Moonshot and Pump.Fun, and there are a lot of other consumer projects that are coming to the fore. So if you're building a consumer application, Alliance will get your product in front of more customers and people are willing to do that. If you're building SaaS or some kind of infrastructure, then you'll want to join Alliance to sell your product to its community of founders. Those are two different reasons you might want to join.

Accelerators fall into two categories: very boring, assembly-line guidance on how to register a company, implement HR practices, set up a hiring process, design a website and marketing, or even more specialized cryptocurrency guidance on how to launch a token.

Alliance doesn’t do these things. We don’t tell you how to register a company or how to issue a token. We tell you how to create a product that people want to use. And finding product-market fit is very difficult. A junior mentor at a regular accelerator can’t help you achieve that. But Alliance’s mentors have been working in the crypto space for 8 to 15 years. These are the people who really help you find the right product for your target users.

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

Will Robinson : We never invest in follow-up rounds of teams that we accelerate. That way, VCs can't tell which ones we have a preference for or not. However, we invest in follow-up rounds of teams that we don't accelerate. For example, Arbitrum gave us an investment opportunity. We invested in Axie Infinity. We have a lot of great strategic investments, but they are not part of the accelerator's business scope.

Founder and team evaluation

ChainCatcher: How do you view the balance between a founder’s transformational capabilities and resilience?

Will Robinson : When we interview founders, we check several aspects. The first is whether there is a strong partnership between the founders. If not, it means that there may be failure in the transformation process. So we pay great attention to finding people who have been working together for a while.

Another point we look at is whether they have an obsession that they must succeed no matter what. This is also very useful. We really don't like teams to be too big. This is a big problem for teams from Asia or Eastern Europe, because labor costs are lower there and people usually hire quickly. However, it is difficult to transform large teams. So we strongly prefer small teams.

Typically, the first thing that comes to Alliance is teaching them how to lay off people. If you don’t find product-market fit, then you don’t need that many people. You need to focus on finding the right problem and the right solution. Some companies need a lot of people to do that, but they’re very rare. And that’s not the type of company we’re good at helping.

Y Combinator and OpenAI are a great example. OpenAI broke all the rules of Y Combinator. It wasn't like a typical YC company. It had too many employees and no clear product-market fit for 10 years. But it was one of the most valuable assets they were accelerating. So there will be exceptions, and we'll take them. But in general, if we want them to pivot, we need them to have strong motivations, strong partnerships, and a small number of employees.

Stardew Valley quickly made over $100 million with just one developer. I’m not here to build the next Rockstar that’s worth $2 billion like GTA7. I think if we’re going to develop games in the crypto space, it’s better to do it with a small team.

Usually the teams that come to us tend to be the largest because they come from Web 2, like the traditional gaming industry, where you need a large team, everyone is like a cog in a machine, and you can develop many different games quickly. However, what usually happens is that they end up slowing down everything by entering the crypto space, just slowly developing a game, and over-emphasizing quality over quantity. If I'm talking to a game team, I want to hear that they released 20 games in a year, and they keep trying, even though the games may be rough, but they are looking for the market and product fit.

We are getting a lot of AI-related project applications right now. I am excited that many of the project applicants related to tokenized AI have proposed ideas around this theme. I have always wanted to provide financial services to the unbanked, but I didn't expect that the "unbanked" would be AI. I thought it was people in the global south who had no access to banking services, but now I find that AI also has difficulties managing money, and I really hope to see crypto technology solve this problem for AI. The core interest point for our alliance is great founders, and we will be happy to build with them no matter what they want to build.

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

Will Robinson : Pump.Fun, because it got a lot of people to change their behavior and think differently about memecoins. Another amazing project is Glow, because it incentivizes production on solar farms in a very interesting way, and it does a great job. However, there are an infinite number of interesting projects, and I love being surprised.

We had no idea in the first two months that Pump.Fun would be a huge success. No one was using it at first, and we had to beg people to try it. It was one of those projects that started out really slow, but then suddenly exploded. A lot of people thought it would die quickly, but that wasn't the case. It's unclear where Pump.Fun's end point is, and I like thinking about what its end game mode will be. Now we're seeing other projects starting to use it as a platform to publish content, which brings up all kinds of questions, like how or if potential criminal behavior should be handled. There are a lot of interesting puzzles to solve around this team, which occupy most of my thinking space.

When they joined us, they were developing an NFT trading platform called Caviar that used some unique financial primitives to make it unique. Although they had some user base, it was not enough, so they tried some new things, but the team also split. One co-founder, Mohammed Bayoumi, left and founded Exo, an AI company that has performed well.

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

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

I think one of the key lessons of entrepreneurship is that you need to create the conditions for yourself to be lucky. You need to be working in the right direction, solving people's problems, but also hoping that something unexpected will end up being important. They learned a lot of lessons through deep user and consumer learning, and continued to focus on the consumer crypto space while constantly shifting directions, which allowed them to gain domain expertise and eventually find something really useful.