In 2005, founder and “hacker philosopher” Paul Graham stood before the Harvard undergraduate computer club and outlined the playbook that was to define the trajectory of the tech boom. “You need three things to create a successful startup,” he told them, “to start with good people, to make something customers actually want, and to spend as little money as possible.” The TLDR version of this presentation later became the motto of Y Combinator, the seed accelerator Graham would go on to cofound later that year: “Make something people want.”
To help founders to make good on this motto, Y Combinator put in place a model it’s hard to overstate the influence of. In a process memorably described by Malcolm Harris as “angel investing as a for-profit university,” a cohort of early-stage startups are brought together for a short period of time and provided with funding, resources, and mentorship in exchange for equity. The only way to avoid the prolific output of this model is to log off, touch grass, and try very hard not to think about the internet, with notable companies launched by the accelerator including Reddit, Airbnb, Twitch, and Coinbase.
“The Y Combinator of Web3” is the fastest way to pitch Seed Club, a Telegram group that grew into a seed accelerator DAO in 2021. Born from the frothy excess of the dotcom bubble (Graham made his fortune when his company Viaweb was acquired by Yahoo), Y Combinator set the stage for the next epoch of the online world. Now, Seed Club is seeking to catalyze a similar revolution. But the DAO adapts as much as it adopts from the Y Combinator model, and to characterize it as a straight crypto port of a familiar framework would be a serious disservice. The clue is in how Seed Club’s tagline expands Y Combinator’s: “Make something people want to be a part of.” If the elementary unit of Y Combinator was products, for Seed Club, it’s participation.
This sensibility is evident not only in the organizations and collectives that Seed Club has supported—alumni include Refraction, Boys Club, Metalabel, Poolsuite, and Pussy Riot, to name a few—but in the fundamentals of their approach. Selected teams offer up 3% of their token supply to the DAO. In exchange, the teams in turn receive a grant of tokens from Seed Club’s own treasury upon launching, granting them membership in the DAO and the governance rights needed to shape its future trajectory. Entrants don’t just receive a one-time transfer of contacts and capital; they become another node in an ever-growing network of collective knowledge.
As the DAO gears up to open applications for its seventh cohort, ZINE’s Yana Sosnovskaya spoke to Seed Club instigator Jess Sloss about consumer crypto, creating forever media, and collective belief as a future-making technology.
Yana Sosnovskaya: Tell me about the moment that inspired you to create Seed Club.
Jess Sloss: I’ve been a builder and just generally fascinated by the way our world is becoming more networked since the earliest days. I remember the first dot com boom. I was part of a team that was early on YouTube—I saw the value of social media and was very active in consulting and working on that front end. Then I really saw both the power and the downsides of aggregators in Web2. I saw the development of Twitter and the developer ecosystem and then how Twitter co-opted that and removed that developer ecosystem, same with Facebook. So the idea of living in a world of digital feudalism where we all have to pay homage to our overlords of Facebook and Twitter and YouTube and Google just seemed very depressing to me for a long time.
When I heard of the idea of DAOs in 2016 on YouTube, it captivated me immediately and I bought my first Ethereum. This idea that we could have ownership in networks or a voice in the networks was exciting. And if our world truly is going to be networked, what private property rights and benefits come from that? How might I actually participate in creating those? That’s an absolutely essential part of growing a sustainable, effective middle class and thus having a good society. So that was the core insight I had back in 2016. In 2017 I really saw those ideas explode onto the scene through the ICO craze.
I remember being introduced to the idea of tokens and being fascinated. I was part of an early team that did one of the first security tokens in the space. I continued to work in the space and thought, where are the interesting experiments happening that are not driven by just the hype, speculation, and excitement? I just happened to have a number of friends that were experimenting with social tokens at the time—Brian Flynn, Alex Masmej, Reuben Bramanathan, and Peter Pan—who were all taking advantage of these new tools that had emerged from that bear market of 2018 to do new things.
I thought, what if we just brought people together into a Telegram chat? That’s really the insight for Seed Club—11 people in a Telegram chat at the end of 2020. We quickly realized that there was definitely something here within these new tools and this idea of social and cultural capital. We thought, how do we help people start to build so that more people can touch this stuff? We called the first thing the Social Token Incubator, and that ultimately turned into Seed Club Accelerator, which we’ve done five batches of so far.
YS: You’ve said previously that crypto is a social phenomenon, not a technological one. Can you expand a bit more on that? With a hyperfinancialized community like crypto, what do you find challenging?
JS: Bitcoin’s value and the idea behind crypto being a social and not solely technological thing is best expressed by Toby Shorin’s “Life After Lifestyle.” The early days of Ethereum were very much willed into existence based on the shared belief of a group of people; having a digital asset could represent and will value out of ultimately nothing. Without the belief in a future of decentralized finance, I don’t think we would be where we are today.
I think the explosion of NFTs showcases this. Failing to recognize the social aspect of this is actually missing a big point. One of the core threads that we’re pulling on at Seed Club is asking the question, “What is the meme, what is the narrative, what is the mission here that we’re trying to push forward, and how might we best represent that mission as a digital asset in some way?”
How does hyperfinancialization play into it? I think the answer is yes, it’s very challenging, but it comes with the territory. Building in crypto is about needing to respect the pump but not be fully taken over by it. There is a very clear narrative wave, meme wave, and attention cycle that plays off in the space. We’re still searching for the fundamentals that will bring the broader market on board and showcase the business models that drive these decentralized organizations, collectives, or token networks. We’re going to be in this more volatile space for a while until many more of those pieces are solved. Will they ever be solved? I think the answer is yes. We’re just early. We’re still very early in the development of both the social and technological pieces that will lead to these decentralized organizations or crypto businesses being long-term valuable, and sustainable.
YS: Seed Club is making a shift right now to support not only DAOs but other crypto projects as well. Is that correct?
JS: Yeah. Since our earliest days, we have been focused on representing our ownership in community-owned networks through governance tokens, so NFTs or ERC-20 tokens. We’re big fans of the tagline: build something people want to be a part of. That’s at the core of Seed Club.
But when we looked at our network and at many of the lessons that we’ve learned over the last two years, we realized that building something people want to be a part of is actually the biggest challenge. For most teams that are trying to go do a specific thing, doing that as either a company or a non-crypto structure to start probably makes the most sense. Really great products are most often built by small teams that are able to make fast and hard decisions, and doing that in a broad participatory way from day one is most often not the easiest path, at least today.
That’s not to say we don't see huge opportunities in DAOs and in community-owned networks from day one. We definitely do and we continue to build with them. Long-term, the more crypto-native projects will probably be the most interesting.
YS: Fundraising is easier when going through traditional VC rather than creating a new blueprint for DAO funding, right?
JS: I’m not sure that’s ultimately true. What we’re seeing very clearly is an immense amount of venture capital in the space over the last couple years, and a much more clear path to fundraising for teams to raise capital into it.
Obviously, there’s still a ton of money in venture capital funds and we still think there’s a ripe market for teams that are fundraising in a more traditional way. But if we look at Nouns Builder, we look at the Nounish DAOs, we look at some of the open editions, there are some really interesting crypto-native ways for generating revenue and capital into projects. The hard part, really, is trying to do a specific thing that requires a bunch of curation, taste, and building, and getting things wrong for a reasonable period of time.
YS: Seed Club is in a very unique position with all the experience in DAOs that you’ve amassed. What patterns do you see that help DAOs to be successful and what guarantees failure?
JS: Like any new organization, the default failure is probably going to be case by case. Signals of potential future success fall into a few big buckets: great founder, right timing, right narrative. First, it’s the initial founding team or community. What we need to do is create structures for more leaders to emerge. Whether you’re looking at the open networks of Ethereum, or Nouns, or some of the more earlier stage projects that are just set up as companies, the core of success is exceptional leaders, and founders, and builders willing to dedicate their heartbeats to making the project is absolutely crucial.
What we’re going to see in this bear market phase is who are the teams and great leaders who will outperform. The other thing that’s essential for the longevity of these projects is timing. I think Yuga [Labs] is probably the best example of that in the crypto space. 10K PFPs [were] normalized or popularized by CryptoPunks and Yuga just stepping in and executing very effectively in that world. If we look at Art Blocks we can see that Snowfro was just so enamored with the idea of generative art and it being a part of that community—that served their success. There’s a large constituency in Web3 who care deeply about not just reinventing the same broken systems and trying to build a new type of structure. Gitcoin is doing really excellent work in that regard.
Build something that people want to be a part of. Once people experience it and recognize it, there’s a pull, a desire to be a part of it.
YS: All the flowers to Gitcoin. I just spoke this morning with Scott [Moore] and got a deeper insight into his thinking—absolutely amazing project and team. There’s two sides of the coin in the current Web3 community. It feels like I’m in a certain bubble of people with whom are very much aligned in values, not shying away from the financial aspect, but don’t prioritize it. Then there is another type of bubble where the financial aspect is the only thing cared about. No judgment, no shade. I respect that. How do you feel these two are going to continue to exist, to coexist, and what’s your forecast for the future?
JS: I totally agree. There is this opposition over the financialization of things in such cultural movements. I think being able to define both what we’re in favor of and what we’re against is such a helpful [quality].
[This duality] is inherent to human existence. A naive belief that I hold onto still is that we can leverage some of that for good. This idea of respecting the pump without being fully taken over by it, maybe it’s still an open question of whether or not that can be true. There are still people participating in projects and narratives that stay true to building something that has long-lasting value.
You can’t fully ignore the people who do not care about anything other than price. I just don’t think that there’s a long-term cultural movement to be built out of that. The idea of building new institutions is what really drives me. Can we go build something? I want Seed Club to be a thing that is going to live far beyond my existence. To me, that’s what success is. We are creating forever media. We are creating forever assets, these things that are going to live as long as Ethereum or whatever your blockchain of choice is. For us to just hyperfocus on whatever’s happening over the next three months is disruptive.
YS: In a prior conversation you called the next Seed Club cohort consumer crypto. That makes me think about the consumer product and the new generation outside of Web3. What, in your opinion, will help onboard the next massive chunk of users into Web3?
JS: What’s happened over the last few months as the markets have been more challenging and investors are looking for safer play is we’re seeing a lot of VCs go back to investing in infrastructure. I was on the floor of the conference at ETH Denver and there were dozens of decks. There are more L1s, there’s more block space, more tools, and what we’re not seeing is more uses of these things. For us as an organization, I really want to push forward this technology and this meme, this new opportunity, this idea that we can build new institutions—the idea of building something people want to be a part of is actually key.
It reminds me just of what I would imagine the early days of the railroad networks in the United States looked like, where everybody was building these train tracks to different places, but there wasn’t an industry, there weren’t destinations, there weren’t people using them. That’s what we see today; an opportunity to bring together an incredible group of people to help support the builders of these consumer products, the builders of the new DAOs, platforms, networks, that will create a sense of meaning and desire for people to participate in, and to own and to collect.
What we’re seeing is the collective belief in a network or in an idea of thousands of people—not hundreds of thousands of people, not millions of people—that can create significant value. Now, clearly we want to grow that pie, but I think the pathway to do that is to start building things for people to actually touch, feel, and participate in. It feels more like trading cards—a whole lot of new people who are interested in one thing.
Our dream is to be a part of the next wave of teams that are actually building these experiences. We are creating new opportunities, new access.
YS: You mentioned a consistent capital flow and how we’re yet to discover a blueprint model for monetization through crowdfunding. My hot take is that maybe there are other models that are not necessarily venture capital that we just haven’t discovered yet.
JS: I want to show up to be an eager explorer alongside other eager explorers. I would agree with you that the ultimate structure has not been discovered
We’re seeing this desire to collect especially in the music NFT space or the podcast NFT space. These are very small micro examples of things that are delivering on Kevin Kelly’s adage of 1,000 True Fans in a way that Web2 was just never able to. Can that scale? I don’t know. I think there’s reason to believe it can. We’re seeing transaction fees, so there’s clearly money flowing to sustain these organizations. We have no idea what we’re doing and I think that’s an important stance to take—a beginner’s mindset.
YS: Do you have any tips that you like giving to first-time crypto founders?
JS: Being a founder or a leader of anything can feel very lonely. This idea of the entrepreneur’s roller coaster is very real. You feel the binary outcomes of the top of the world or the bottom of the pit of despair. There doesn’t seem to be a lot in between. Recognizing that this too shall pass to both the top and bottom levels of excitement is important.
Always be in and around other founders. When I think about the group of human beings who I can turn to today for support, it is the most empowering thing ever. When I think about the founders that we get to work with through Seed Club, whether that’s through Seed Club’s accelerator programs, through our community, or through the venture DAO that we have, it’s incredible. A huge network of builders, folks who have had successful large-scale NFT drops, folks that have been building in FAANG companies before, lawyers—such a wealth of people.
Even though we’re building community projects, it can feel like we’re going it alone. Really the best advice is to resist the desire to be a lone wolf as a founder and instead turn to others who are truly eager to support your development.
YS: That’s very beautifully said. We’re constantly battling with our own ego, feeling vulnerable or afraid to fail. So I think it’s a brilliant tip and piece of advice. Are there any specific projects from the next Seed Club cohort that excite you personally?
JS: We haven’t announced or formalized any projects for this next batch, so I’m very excited to dive in. We’ll be opening up applications at the beginning of April. What I’m most looking for are founders that are coming in with a big vision that have been told, “You’re insane. That makes no sense. Give me a break. You’re not going to be able to achieve that.” And I want Seed Club to be the place for those types of founders to succeed. Crazy is exactly what we’re all about.
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