DAOs: Why Leadership Is the Key | Steph Alinsung @ Seed Club

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GM web3 explorers! 

DAOs are revolutionizing the way we organize people in the pursuit of a common goal. 

Offices become Zoom meetings and Discord channels. Employees become contributors and owners who can actually shape the future of an organization.

But building a successful DAO (Decentralized Autonomous Organization) and realizing your vision isn’t as simple as throwing everyone into Discord and letting them run wild. 🏃‍♀️

In this week’s DOer Spotlight, we chatted with Steph Alinsung from Seed Club, a web3 community focused on educating and accelerating DAOs. 

She shared with us: 

• The common problems that DAOs (or as she likes to call them, internet-native organizations) face on their journey 😬
• How to build successful decentralized teams and the role of leadership in DAOs 📈
• And what it’s like in Seed Club’s accelerator program ⏩

Let’s dive in. 

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Common Problems Teams Face When Building a DAO

Besides the fact that DAOs are still a brand new way of organizing people in the pursuit of a goal, there are three main problems that most teams face: 

• Wanting to get too much done too quickly
• Confusion around the legal aspects of DAOs
• Creating meaningful value that aligns with the DAOs goal

Let’s break them down 👇

Focus and Speed

Yes, web3 is full of exciting emerging technology. Every week there’s a new tool, protocol, or strategy. 

However, it pays to focus on a select number of projects and complete them to the highest standard. This doesn’t mean you have to focus on a single goal at a time, though. It means that you need to pick projects that will result in the most progress for your DAO. 

On the other hand, you may look at established DAOs, such as Uniswap, Decentraland, or Polkadot, and want to reach their level in the next few months. 

There’s nothing wrong with setting lofty goals, but speed isn’t the best determinant of success.

Sure, you could grow a community very quickly, but are you prepared to manage them? And are they the right people? 🤔

A similar problem happened while building the Web3 Academy DAO. We ended up growing way too quickly, resulting in our Discord server becoming full of people who were only after whitelist opportunities. 

So we had to get back to the drawing board to figure out how we could attract the right people, which is much more important than growing quickly. ✅

Said another way, you want to focus on the 20% of tasks that reap 80% of the rewards. And you want to do it with the minimum number of people to manage. 

You wouldn’t hire 100 people let alone 10,000 when starting a normal business, why would you want to deal with that when starting a DAO? 

Start small, establish processes and culture, then scale speed and parallel projects.

Legal Ambiguity

Legislation is obviously a tricky subject since we just don’t know how different countries and states will view DAOs. 

But we’re starting to see progress with Vermont, Tennessee, and Wyoming (three US states) having already passed legislation that legally recognizes DAOs. So if you have the ability and want concrete frameworks on DAO operations, it’d be a good idea to formalize your DAO in these states.

However, if this isn’t an option, you can incorporate some of the guidelines that these states already have, and hope it aligns with your jurisdiction. 🤞

For example, some of the requirements for legally registering a DAO in those states include:

• Using upgradeable smart contracts for management
• Having at least one approved proposal in a single calendar year
• Documentation around DAO management, such as how the organization will respond to security breaches

The current legal ambiguity around DAOs is a cause for concern. However, the best we can do is follow the guidelines that we do have available to reduce any friction when local legislation eventually arrives.  

Creating Meaningful Outputs

A truly decentralized organization where everyone has the power to shape its future is a noble goal. 

But it shouldn’t be your first focus, nor should every member have a say in each little part of a DAOs operation. 

Your members should definitely have a say in the overall vision and goals of the organization. But unless they have specific expertise in, for example, marketing, public relations, development, etc. They shouldn’t be involved in day-to-day operations. ❌

So how can you actually create meaningful outputs in a DAO? 

You need to build working groups (often called guilds) which are small teams of individuals that come together to complete specific tasks or projects.

These groups can work autonomously with the help of a leader and consult the DAO if there are any changes that they should be aware of. 

For example, say DAO XYZ has a content creation team. This team shouldn’t need to create a proposal around small questions, such as when or where to post content. However, they could consult the whole DAO if they want to make a drastic change to branding and marketing. 

So to achieve meaningful outputs in a DAO, you can’t rely on members to make all the decisions. 

Instead, you need to create autonomous working groups that can efficiently manage a DAO’s day-to-day tasks. 

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Leadership: The Vital Ingredient to Building Successful Internet-native Organizations

Building a successful DAO or internet-native organization requires that you rally internet strangers around a single vision. 

And to do this, you can’t stick everyone in a Discord server and let them go wild. They need guidance. 

While DAOs always focus on decentralization and ownership for all, quality leadership is the key driver of success. You need to lead others while also showing them how to lead themselves. 

This is how we end up with successful DAOs. 📈

In my opinion, there are three main ways you can do this: 

• Ensure your contributors understand and value the DAO’s vision
• Show contributors how to efficiently communicate with each other
• Encourage shared responsibility—how you scale

Here’s how DAO leaders can do this 👇

Promote the Vision

Not everyone will share your vision. And those that do, may not have the conviction to truly believe the DAO can succeed. 

That’s why—even in decentralized organizations—it takes a leader to rally members and keep them on track. 

Having a clear vision also helps working groups function autonomously because they don’t have to constantly guess whether they’re aligned with the DAO. 

How can you promote a clear vision? 💭

Simplifying the goal and incorporating storytelling to create emotional attachments. 

Your vision itself should be simple. Do your best to condense it into a single sentence without jargon or complex words. For example, your vision shouldn’t be, “Our goal is to create frameworks and smart contracts using blockchain and NFTs to allow educators to transparently run their organizations.” 

Instead, you can say, “Our goal is to increase management transparency in educational organizations.” 

In web3, it’s easy to focus on the technology we use because it’s exciting and innovative. However, most of your contributors will not be tech-savvy nor do they need to know the technical details behind the how—unless they’re part of the dev team, of course. 

And once you have a clear vision you can begin creating stories around it. 🗣️

For example, sharing a personal story about how your vision came about or even sharing stories from your contributors. 

Another way is to promote any instance where a DAO contributor is fully-aligned with the vision. For example, if someone comes up with a great product or service idea, or through their interactions with other members. 

And finally, you need conviction. The conviction to promote your vision day in and day out, even when times are tough. 

Practice Clear Communication & Radical Candor

Whether you’re working at an adjacent desk or from different parts of the world, clear communication and radical candor are how you produce quality outputs. 

If someone in a leadership position has ever scheduled an unexpected meeting (without sharing why), you already know what unclear communication feels like. 

Did you do something wrong? Is your manager angry for some reason? 😓

It’s common to feel anxiety when we don’t know where we stand. And that anxiety can easily lead to poor performance. 

On the other hand, you may think you’re making excellent contributions to the DAO. However, a manager may believe otherwise. This surprise can again affect performance negatively. 

To avoid this happening in your DAO, ensure that you practice clear communication at all times. And the epitome of clear communication is radical candor. 

Coined by author Kim Scott, radical candor is about practicing honesty in a kind and helpful way. 

It means humbly challenging members and contributors when you believe their view is wrong. It means offering helpful critiques when someone’s contribution isn’t up to standards. 

However, it doesn’t mean that you’re always right. Instead of pushing your thoughts as the only way, it’s important to invite contributors to share their viewpoints as well. 

And finally, it means praising contributors when a job is well done. 

Encourage Shared Responsibility

The final way leaders can help build successful DAOs is by encouraging shared responsibility. 

DAOs are supposed to allow people to come together to create something greater than they could do alone—whether that’s products, services, or something else.

They’re about harnessing diverse viewpoints and experiences to ensure the best outcomes possible. 

But sometimes contributors forget that their experiences are just as important as the leader and other members of the working group. This results in contributors relying on leaders for direction unless the habit is broken. 

And the best way to do this is by always asking what your contributors and members think during conversations. 

Most people are used to how traditional organizations work. They’re used to always relying on managers for direction. That’s why you need to remind them that it’s also their responsibility to take the initiative to drive the DAO forward. 

For example, Steph’s podcast producer always had a note to discuss their podcast cadence during their weekly meetings. But the discussion was always pushed to the following week in favor of other topics. 

Instead of letting it fizzle out, Steph asked the producer if he wanted to figure the cadence out himself. 

This trust resulted in the task being completed to a high standard and a podcast producer who feels more compelled to take the initiative when his tasks aren’t moving forward. 

It’s all about putting your trust in the team. You don’t have to give them 100% straight away, though. 

Start slowly, build up over time, and before you know it, you’ll have another leader in your DAO. 💯

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What It’s Like Building a DAO in Seed Club’s Accelerator Program

While we’re on the topic of building DAOs, one of the top DAO-specific accelerator programs right now is actually the one Steph contributes to—Seed Club.

In a nutshell, Seed Club is the leading network for DAO builders & operators with the goal to make community-owned networks the most powerful organizations in the world. 

How’s that for a clear vision?

Seed Club offers a premium Discord server, events, educational content, contribution opportunities, and governance rights to anyone holding at least 10$CLUB. 🔓

However, their flagship product is their Internet-native Accelerator

The accelerator connects DAO builders with the most innovative thinkers and operators in web3 through strategic partners and successful alumni, such as JUMP and Krause House. 

Besides the networking opportunities, Steph and the team work intensively with you over the 12-week program to refine your plans and prepare you for your capital and community formation milestones. 

The program culminates with Demo Day, where you get to present your project to 1,000+ prospective contributors and community members.

But how can you get into Seed Club’s accelerator? 🤔

First, you have to be some sort of “internet-native organization”. This includes DAOs, guilds, squads, tokenized communities, etc. Basically, a digital-first company that uses tokens to organize and incentivize people to contribute to a shared mission. 

Besides that, Seed Club looks for projects that align with the idea that community ownership is the fundamental value proposition of web3.

Here are some highlights of participating in the accelerator: 

• You’ll learn the fundamentals of running digital-first organizations, such as sustainable value creation models and how to incentivize communities.
• You get to connect with a robust network of collaborators, including successful web2 and web3 builders.
• You get to showcase your project on demo day which, for some, means launching tokens, products, or something else to potential investors and contributors.
• Post demo day, you get access to Seed Club’s alumni network so you can continue learning from them.

If you want to learn more about Seed Club and its accelerator, check out their website.

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Become a Good Leader, Build a Successful DAO

In an organization that promotes shared responsibility and decision-making, it’s ironic that to become successful, leadership is key. 

But it’s not that you’ll have to constantly lead every aspect of the DAO now and in the future.

It’s about showing your contributors how they should carry themselves and, in turn, training them to become future leaders—whether to others or simply to themselves. 

However, it all starts with you. 

Promote the DAOs vision and encourage others to do the same. Practice clear communication and radical candor to ensure every contributor knows where they stand, and encourage them to do the same.

And finally, encourage shared responsibility so that contributors can take charge of their projects without relying on you.

This is the key to building decentralized autonomous organizations. 🔑

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.