Interview: Mensh, ChainCatcher

Guest: Will, Core Contributor of Alliance DAO

During the Devcon in Bangkok, the Web3 asset data platform RootData, in collaboration with ChainCatcher, officially launched the 'DeInsight 2024' annual summit, releasing the (RootData: 2024 Web3 Industry Development Research Report and Annual Rankings) (click the link to view the full report and rankings).

The report analyzes and interprets the development characteristics of the Web3 venture capital market in 2024 and prominently releases the RootData List 2024. This ranking is the second annual selection launched by RootData following its first release in 2023, and its results are gaining attention from more entrepreneurs, investors, LPs, and crypto enthusiasts.

The RootData List 2024 covers five rankings: Top 50 projects (completed TGE), Top 50 projects (not yet completed TGE), Crypto VC Top 50 investment institutions, Top 10 angel investors, Top 20 best CEOs.

ChainCatcher will publish a series of articles, conversing with projects and organizations listed in the RootData List 2024, looking for builders who can navigate bull and bear markets and tracking the latest trends in Web3.

Today's dialogue features the project Alliance DAO, which has made it to the RootData List 2024 annual ranking of 'Top 50 Investment Institutions.'

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

To date, Alliance DAO has held 14 startup accelerators, with a total market capitalization of $11 billion for the companies incubated. In this cycle, incubated projects such as Pump.fun, Moonshot, and Glow have all performed exceptionally well.

In this dialogue, we invited Will Robinson, the first employee of Alliance DAO, to share his personal experience in the Web3 field, insights on project screening, and his thoughts on founders.

Personal Experience

ChainCatcher: Let's start with your personal experience in the crypto field.

Will Robinson: My career began as an academic researcher. I studied for eight years in graduate school, researching video games, tabletop games, and sports, focusing on the history and culture of games. I worked in English, sociology, and communication departments, studying mechanism design and how games help game designers create more artistic games. The focus was on indie games, especially those that are shocking and not just for entertainment. For example, I designed a game about when it was the 'best time' to commit suicide in high school. Researching the mechanism design and incentive structures for those who had early suicidal thoughts. These are the themes I explored, and they are also very challenging content to design.

Later, I left game research and academia because my cousin Dan (whom I consider one of the smartest people in the crypto field and head of research at Paradigm) introduced me to Bitcoin. He told me how research in mechanism design could help people in the blockchain space. That was early 2017, and I was about to finish my PhD, so I decided to switch careers. I started attending meetups in Montreal, looking for opportunities among a group of people passionate about cryptocurrency.

After four or five meetups, I found a job helping people promote auditing businesses. The pay 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 promote their product. We helped anyone who needed to prove to regulators that they indeed held cryptocurrencies on their books. For example, if you are the Ethereum Foundation, you need to report your financial situation in a specific way according to Swiss regulations in the first few years, and then need a stricter reporting structure after a few years. We have worked with Swiss entities like the EOS Foundation and Lisk Foundation. Also, if you are a fund in the Cayman Islands holding cryptocurrencies on your balance sheet, you need to report to the local regulator, CIMA (Cayman Islands Monetary Authority), to ensure you fulfill your fiduciary duties.

We audit Cayman funds, foundations, and exchanges worldwide. Exchanges typically have regulatory bodies, and we ensure they hold cryptocurrencies safely, correctly, and intelligently, training employees, conducting penetration tests, and risk assessments. I have been doing this for nearly four years and have gradually become an expert in the field. From a marketer at the beginning, I transitioned into an auditor or auditing expert while continuously learning more about cryptocurrencies and adapting to the technical field during the product promotion process. Then I applied to join Alliance as their first employee, responsible for establishing the accelerator program.

As of now, I have been working here for nearly four years. I have tried almost every role, including fundraising, mentoring, marketing, and research in many aspects. Constantly switching roles to find what I enjoy. When working at a startup, you can decide what the most important thing is next, and then hand off tasks to those who are better suited to them. I love communicating with people, so I spend a lot of time mentoring.

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

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

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

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

Will Robinson: During my doctoral studies, I did not learn much that could be directly applied to the Web2 gaming field. Because Web3 games are completely different from Web2 games, at least for the foreseeable future.

However, I learned how to present, how to collaborate with others, and most importantly, I learned how to face a very difficult problem alone and spend a long time completing it under extreme mental strain (like dealing with a complex problem in solitude). Thus, the most important lesson from my doctoral studies was teaching me how to handle ambiguity. Facing questions with no ready-made answers, no formulas to refer to, everything needs to be created anew by you.

ChainCatcher: There are many trivial things to handle when helping startups; how do you manage your time?

Will Robinson: I spend a lot of my time connecting teams with venture capitalists, from preparing for discussions to formal introductions. I maintain a very long list of venture capitalists to ensure I can introduce 50 to 100 potential investors to the teams. This is very time-consuming.

Additionally, I spend a lot of time reviewing potential applicants or future alumni because they will apply for our programs. We receive nearly 2,000 applications for each batch. These applications take time to read, and time to interview 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 a third.

Decision-Making Process of Alliance DAO

ChainCatcher: How do you efficiently screen projects? What does the decision-making process look like?

Will Robinson: Each application is evaluated from two aspects: whether the team is excellent and whether the idea is outstanding. And I think an excellent team is more important than a great idea, possibly two to three times more important. The idea is more to prove that the team can come up with a good idea rather than the importance of the idea itself.

Alliance is not fixated on specific fields; we care more about outstanding founders. Because we get involved very early, we can almost be certain that they will pivot at some stage. We help them adjust, collaborate with them, and even support their pivot.

For example, the Pump.Fun team was called Caviar when they joined, and later built a 3:3 application based on Friend.tech. If we had rejected them because we disliked Caviar, that would have been one of the biggest mistakes of our lives. But we didn’t do that because we knew this team was outstanding.

What is a great team? I think this is core to early-stage venture capital, and it requires firsthand observation. Being great doesn’t necessarily mean having attended prestigious schools, doesn’t necessarily mean having worked at big companies, and doesn’t necessarily mean having previously founded a startup that successfully exited. As Alliance founder Qiao said, to be a great founder, you need to be 'a bit broken and introverted.' Only a truly 'broken' mind can succeed in this field. What we are looking for is extreme drive.

Most founders don’t even know why they are motivated to create their companies. Therefore, an important part of my interviews is guiding them into self-reflection. I try to get them to tell me why they want to do this. They usually start with, 'It's to solve this problem.' Then I ask, 'But why do you want to solve this problem?' They would say, 'Because it's an important issue.' I continue to probe, 'Why do you personally want to solve this problem?' They might say, 'Because I had this problem before.' Then I ask, 'Why don’t you let someone else solve this issue? Why does it have to be you?' And I keep digging until I uncover something, like what happened to them when they were six that compels them to solve this problem. This deep exploration is critical.

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

Will Robinson: Two rounds. Typically, the first round is 15 to 20 minutes, and the second round is 30 to 45 minutes. Y Combinator only uses 10 minutes for each interview. As you practice more, you will find you can quickly judge whether someone is excellent. We call this 'warmth.' We ask each other, 'Can you feel the warmth in the interview?' Some people have warmth, some do not, and the manifestation of warmth varies. Because we are also building a community, Alliance is also a DAO, and this community cannot have bad apples. Since we are still small, one bad apple can spoil the whole batch.

ChainCatcher: What proportion of projects stand out to make you feel 'warmth'?

Will Robinson: We interview 20% of applicants, then interview 20% of those, and finally accept 20% of that group.

ChainCatcher: Are there cases where excellent founders were missed?

Will Robinson: I can give two examples. The last batch had a company called Force Prime. The team consisted of three older gentlemen from Eastern Europe with a lot of experience in Web2 gaming but very little understanding of Web3 gaming. They applied, and we rejected them. They applied again, and we interviewed them and rejected them again, explaining the reasons. They applied a fifth time, and I finally let them in.

Part of the reason is I realized my bias affected my judgment; they are indeed very talented developers, smart and eager to learn. I was also glad to let them go out and struggle for a while longer because their initial ideas were truly poor. They did not understand Web3 well initially, but later became more seasoned and familiar with how Web3 operates. I really enjoyed collaborating with them, and the founders are exceptional.

Of course, there are also cases where we refuse applicants and they do not apply again. One case in particular stands out, which is Monad. At that time, we were uncertain whether they could build a community, and their valuation was quite high. In the early days of Alliance, we did not have strict limits on valuations for entering projects, allowing teams with various valuations, sometimes even very high ones. But at that time, we lacked 'buying power,' had no reputation, and people did not think it was worth giving us 7% of their company. Today, we no longer face this issue; enough people believe we do very well and it’s worth such dilution of shares.

Business Model of Accelerators

ChainCatcher: Many VCs also want to incubate themselves; what do you think your competitive advantage is compared to VCs that do their own incubation?

Will Robinson: I think VCs can do well with 'Entrepreneurs in Residence' (EIR) programs. For example, Paradigm is a great case. They bring in a founder to work with them, helping 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 is not financially viable. The annual operating cost of an accelerator is about $5 million, and the management fees are far from covering these costs. This is not a good business. You need to leverage your accelerated teams in a broader vision or other ways. In our case, it is in building a DAO focused on creating something very unique.

When VCs have other focuses, such as managing large amounts of capital, they cannot concentrate all their attention on these teams. They run accelerators to invest more money in Series A or B rounds. But when the focus is on this, it greatly impacts the teams joining the accelerator. If these teams do not receive follow-up investments or do not get Series A investments from these VCs, it essentially means 'death.' Other VCs will question, 'Why didn't your accelerator company receive follow-up investments? Don’t they have follow-up funds?' This could be due to entirely reasonable reasons, like excessive exposure to the industry or losing confidence in a particular area, which has nothing to do with the teams. However, such impressions are often dangerous. I think most VCs have no reason to operate an accelerator.

Moreover, running an accelerator requires immense focus; for example, it needs 15 full-time employees, and most VCs do not have such energy. Reviewing 2,000 applications requires a lot of work, so my advice is that the best VCs should focus on some founders emerging in the network and support them to become available resources rather than trying to run an accelerator.

ChainCatcher: Besides online applications, do you have other sources for finding projects?

Will Robinson: All applicants must apply through our website; this is how we maintain order. But the way they hear about Alliance or the website may vary. Over half of the teams are referred by previous founders or alumni, who tell applicants, 'Trust me, Alliance is worth your time.' Most founders should be cautious about accelerator programs because many are not worth the time. The best founders in the world know this. So, to earn their trust, they need to hear recommendations from their circle. They need peers to tell them, 'These people are reliable.' This is why we have spent a long time building a large community of founders to spread this message and let everyone know we are different.

ChainCatcher: Why are founders afraid to join accelerators?

Will Robinson: Excellent founders often do not go through accelerators because they already know how to create a company. The projects they are building may be overvalued, or they choose to go to Y Combinator. Top founders know that most accelerators cannot offer the value needed compared to the dilution of equity. Therefore, it took Alliance a long time to get excellent founders to accept the conditions we required for applications. Building that trust needed to happen through word of mouth from multiple sources. As a great founder, you need to hear from two or three people that Alliance will do everything possible to help you succeed.

Some excellent founders are at early stages of their careers, and accelerators can genuinely help them learn. But now Alliance is a well-known brand and has a large community, and outstanding founders are willing to give up dilution to sell their products to hundreds of alumni. Now, the first customers for many of our teams are alumni of Alliance. This way, you can quickly start your business and receive feedback.

Secondly, the legitimacy and signal that Alliance brings are now very meaningful. You can gain a lot of market promotion and exposure because you will be listed among a series of recent success cases. I think this year we have Moonshot and Pump.Fun, along with many other consumer projects that are emerging. So, if you are building a consumer application, Alliance will let more customers see your product, and people are willing to do this. If you are building SaaS or some kind of infrastructure, then you would want to join Alliance to sell your product to its founder community. These are two different reasons you might want to join.

Accelerators can be divided into two types: one is very boring, assembly-line-like guidance, such as how to register a company, implement HR practices, establish recruitment processes, design websites and marketing, and even more specialized cryptocurrency guidance, such as how to launch a token.

But Alliance doesn’t do these things. We don’t tell you how to register a company or how to launch a token. We tell you how to create products that people want to use. Finding product-market fit is very difficult. A typical accelerator's junior mentor cannot help you achieve this. But Alliance's mentors have been working in the crypto field for 8 to 15 years. These people are the ones who truly help you find the right product for your target users.

ChainCatcher: You mentioned that investing in follow-up rounds can be harmful to the project. Do you sometimes invest in follow-up rounds?

Will Robinson: We never invest in follow-up rounds for teams we accelerate. This way, VCs cannot discern which projects we have favoritism towards. However, we do invest in follow-up rounds for teams we haven't accelerated. For example, Arbitrum gave us an investment opportunity. We invested in Axie Infinity. We have many great strategic investments, but these do not fall within the scope of the accelerator's business.

Judging Founders and Teams

ChainCatcher: How do you balance the founders' ability to pivot and resilience?

Will Robinson: When we interview founders, we check several aspects. First is whether there is a strong collaborative relationship between the founders. If not, it means they may fail during the pivot process. So, we pay great attention to finding people who have already collaborated for some time.

Another point we focus on is whether they have an obsession to succeed at all costs. This is also very useful. We really don't like teams that are too large. This is a big issue for teams from Asia or Eastern Europe, where labor costs are lower and people tend to hire quickly. However, large teams find it difficult to pivot. Therefore, we strongly prefer small teams.

Typically, the first thing we teach when joining Alliance is how to lay off employees. If you haven't found product-market fit, then you don't need that many employees. You need to focus on finding the right problem and the right solution. Some companies need a lot of employees to achieve this, but it's very rare. And this is not the type of company we excel at helping.

Y Combinator and OpenAI are a great example. OpenAI broke all the rules of Y Combinator. It doesn’t operate like a typical YC company. It has too many employees and had no clear product-market fit for ten years. Yet it is one of their most valuable assets that they accelerated. So there will be exceptions, and we will accept them. But generally, if we want them to pivot, we need them to have strong motivation, solid collaboration, and fewer employees.

(Stardew Valley) quickly earned over $100 million with just one developer. I am not here to build the next (Rockstar) worth $2 billion like (GTA7). I think if we are to develop games in the crypto space, it is best to primarily focus on small teams.

Typically, the teams that come to us tend to be the largest because they come from Web 2 fields, such as the traditional gaming industry, where a large team is required, and everyone functions like a gear in a machine, capable of rapidly developing many different games. However, the usual outcome is that they end up slowing down all processes due to entering the crypto space, developing only one game slowly, and overemphasizing quality at the expense of quantity. If I were to communicate with a game team, I would hope to hear that they released 20 games in a year, continuously trying, even if the games might be rough, as they search for product-market fit.

We are currently receiving many applications for AI-related projects. Many applicants related to tokenizing AI have proposed ideas around this theme, which excites me. I have always wanted to provide financial services to those who cannot access banking services, but I did not expect that 'those who cannot access banking services' would be AI. I originally thought it was people in the global south who could not access banking, but now I find that AI also struggles with managing funds. I very much hope to see crypto technology solve this issue for AI. For our Alliance, the core interest is great founders; no matter what they want to build, we are happy to build alongside them.

ChainCatcher: What do you think are the most interesting projects at the moment?

Will Robinson: It's Pump.Fun because it changed the way many people behave and changed the thinking around meme coins. Another amazing project is Glow because it incentivizes solar farms' production in a very interesting way and performs exceptionally well. However, there are infinitely many interesting projects, and I also like to be surprised.

In the first two months, we did not know that Pump.Fun would become a great success. Initially, no one was using it, and we had to beg people to try it. It was that kind of project that started very slowly but then suddenly exploded. Many people thought it would quickly vanish, but that was not the case. It’s still unclear where Pump.Fun's endpoint will be, and I like to think about what its ultimate game model will be. Now we see other projects starting to use it as a platform to publish content, which also brings various issues, such as how to handle or whether to handle potential criminal activities. And there are many interesting puzzles surrounding this team that occupy much of my thought space.

When they joined us, they were developing an NFT trading platform called Caviar, which used some unique financial vernacular to showcase its uniqueness. Although they had a user base, it was still insufficient, so they tried new things, but the team also split. One co-founder, Mohammed Bayoumi, left to establish Exo, a high-performing AI company.

And the other two found new co-founders and began developing in other areas. At that time, they did not know what to develop, and we brainstormed with them. Imran is one of the co-founders of Alliance and a mentor who closely worked with the Pump team. He researched Friend.tech with Chow and thought there might be some interesting things worth exploring or developing. Therefore, they began exploring bond curves and speculation within the social media environment.

Despite Friend.tech's lack of appeal and insufficient project interest, they learned how to launch tokens at a very low cost (only 2 cents). This ultimately became a clear milestone for community members and helped push the project forward.

I think a key lesson in entrepreneurship is that you need to create lucky conditions for yourself. You need to work in the right direction, solving people's problems, but also hope that certain unexpected things will end up playing a significant role. They have learned many lessons through deep engagement with users and consumers, continuously focusing on the consumer crypto space while constantly pivoting, which has allowed them to gain domain expertise and ultimately discover something truly useful.