There comes a time when every DAO (or project in general) must set a north star to align their path with their long term goals. While this may come naturally to some, many builders out there struggle to prioritize and scale effectively in a way that gets those boxes ticked off and builds on top of each completed task.
So, I came up with this little graph. It looks complicated at first, but I swear we’re not summoning an eldritch being here. In there you’ll find the right pointers to describe your roadmap and decisions to your community in a way that accounts for your advantages and shortcomings, as well as what to do when the elements that are out of your control take a turn for the better or worse.
To better understand it, let’s break it down into its components.
The Foundations
It all starts with the Y axis, or “Perceived Opportunity” as I’ve come to call it. This graph comes to mind first as an exploration of how leadership migrates when market conditions and personal networks evolve over time. Sometimes the world takes an upturn that makes everything flow seamlessly, there’s apparently no way for you to take a wrong step; other times, enthusiasm fades and you’re left scrounging for any leads on partnerships, capital injections, or even just a handful of people to build towards your cause.
Well, what do you do in those two scenarios? You build. When opportunity presents itself, you build in a way that will allow you to stand out and harness each and every opportunity as efficiently as possible; and when it’s drought season, you continue to build in hopes of withstanding the storm and coming out on top with some new friends to call partners once the conditions improve.
Keep in mind, every possible scenario under this umbrella is out of your control. There’s nothing you can do but adapt your leadership style to the whims of the market and people’s enthusiasm to build alongside you. This is the crux of growth-centric leadership vs its survival-centric counterpart. You roll with the punches, take whatever paths are presented, and get ready for the upturn to truly kick your master plan into motion.
What You *Can* Control
After studying how leadership styles adapt to market conditions, we’re left to wonder: “Well, what’s for us to do if the industry sinks into a multi-year market downturn?”, or even worse, “What happens to your project if some core piece of infrastructure is no longer available to the public?”
As the saying goes, the true bull market is the friends we make along the way. This is merely a fun sentiment on the surface, but it contains a valuable truth; the strength of the network you manage to build while conditions allow for it is of utmost importance. This may take many forms, and can include any investments, partnerships, or other types of valuable physical, digital, or social capital one may acquire.
As capital increases, so should your ambitions; move fast, break things. Look for the avenues that would make you a market leader, foray into new product lines or a way to address an audience other platforms have ignored, anything and everything you would’ve fantasized when you first set out to do something world-changing; so that your project is able to stand the test of time and allow further investments to come in.
Now that we’ve established how movement along the X axis represents the resources that are under your control, and the Y axis represents the delta of change in conditions that are outside of it, we can interpret the correlation of these two variables to determine the ‘north star’ your organization should pursue.
Now, What Happens When They Intersect?
It’s normal to think that building for the sake of building is the answer to every problem your community faces. But there’s many kinds of builders out there, and each of them could benefit your organization in their own unique way. But making decisions and sticking to them is one of DAOs’ biggest challenges, especially when most communities out there suffer from “too many cooks in the kitchen” syndrome.
To apply this framework, you’ll need a special kind of org. One that isn’t afraid of migrating leadership when conditions evolve. That means the run of the mill “DAO CEO” won’t do you much good here, as every individual has their own strengths and weaknesses. The leader that rallied the troops together and got you to your minimal viable community (MVC) may not be the same one that establishes a clear pipeline of outputs for your collective, or the one that helps you raise funds through industry connections for that matter.
As such, this framework is best used when combined with solid governance and community operations. You’ll need to be clear as day when shifting gears as the moment calls for it, and some of your most established contributors may even be against the new path you’re embarking on.
That is fine. Handle it with grace, and leave the door open for them to return when conditions are more suitable. Web3 is all about finding your best impact at the individual level, and stagnation of roles is definitely something we could do with a little less of.
But, that disgruntled contributor does have a point. Why not strive to become a market leader straight off the bat? Why not bet it all on burning bright and fast like Constitution DAO or the entirety of “DeFi 2.0”?
Well, Of Course Anyone Would Want a Stable Business Model!
The answer, as always, is that it’s just not sustainable. Sure, you can make an indelible mark on web3 and be remembered in perpetuity as the project that came out of nowhere to blow our minds, yet left just as quickly. But when we’re talking about helping as many people as possible year over year, you better start thinking about what you’d be sacrificing if you bet it all on that one big fireworks display.
DAOs need to find a middle ground in how they justify their operations. As agile and innovative as we are, we struggle with finding real-world impact beyond the gimmicks and pumps. That may be the result of crypto’s well known bias for the degenerate bets. But we’re exploring new methods of coordination here! We should be looking for a way to make them last, even if the main DAO could falter down the line. A lasting impact, beyond the wave we’re riding now, is all it takes for web3 to become a genuine chapter in the digital age’s storybook.
Some DAOs may launch, get funding instantly, and fumble the bag at the end zone because they didn’t take the time to properly set up a sustainable model. We saw it countless times during the Collectible PFP dark ages.
Others may launch to good market conditions with a proper safety net of utility and enthusiasm, only to be stepped on by the competition when the hype dies down and people realize no one needs yet another token swap contract (looking at the myriad DEXs launched during the early-2021 bull run).
That being the case, what’s the best course of action according to your project's current state?
It’s Different to be the Seed than the Oak
It’s very different to be a new addition to the DAO roster vs an established player. Your community’s expectations, as well as the entire space's, will vary greatly depending on how entrenched you are in people’s minds. Big players usually make the most noise when refocusing, and with good reason. Any kind of movement from a market leader usually means truck loads of cash, and possibly hundreds of people's livelihoods.
Not to say it’s a losing game for the seedlings out there. There’s still a very real chance for you to find your place among the industry titans. It’s all down to what kind of value you offer, and how it’s different (maybe even better) to what the early movers have on display.
The Launch-stage projects have a key advantage against the juggernauts: they are nimble. With the click of a button, they could be addressing a new niche that may or may not even be the result of the big player’s existence (just look at LooksRare’s launch as the anti-Opensea, or more recently Blur riding the creator royalties wave). While Category Leadership-stage orgs may have the advantage of brand recognition and capital momentum on their side, the small players can very easily come out on top if they play their cards right.
While having an established name and ample reserves to withstand any storm are strategic advantages everyone should work towards, they also e at the cost of your ability to go with the flow. It's hard to shut the lights off an exciting project when the future looks dire, especially when we're talking about your contributors’ hard work. But it's the sad truth of building sustainable value. The bigger your org becomes, the more resistance you'll be met with when attempting to pivot.
Even still, it's crucial that you do — while being mindful of the sacrifices you're making along the way, and trying to attenuate them as tactfully as possible.
Let’s Loop Back
Now it all makes a ton more sense, doesn’t it? When every variable has been accounted for, you’re essentially left with a decision matrix that shines a light on what your options are. Especially when it comes to big transitional moments like the start of a bear market or a big VC investment.
Keep in mind, there are exceptions to every norm. The goal of this graph isn’t to limit your options or say the path charted here is your *only* way forward, but rather to equip you with the tools and mindset to properly justify your decisions and shine a light on the data-backed solutions you may find with your community.
There are anecdotes of launch-phase projects getting mind-blowing amounts of venture funds and using them effectively, as well as top-of-the-food chain orgs leaving everything behind to become a behind-the-scenes player. Chances are, your average community isn’t gonna be one of them.
The key takeaway for this piece should be in its thought process. It will allow you to clearly present your ideas and focus on the potential paths that will lead to your DAO’s success over time. Next time an over-ambitious contributor wants to launch a new project, optimize processes, and kick-start a marketing campaign to blow the socks off the DAO space simultaneously; you’ll have a concise way to let them know they should take it one step at a time.