Downtown Stimulus Program Review
How mainstream adoption of crypto primitives helped us distribute $30K to businesses in need
A Boulder Idea for Quadratic Funding
It was early April, 2020, and the world was simultaneously feeling very large and very small here in Boulder. Though we were “flattening the curve” and learning to live with the myriad changes associated with a global pandemic, it was quickly becoming clear that small businesses — the businesses that make home feel like home — were just at the beginning of what will be a very long road to recovery.
Here in Boulder, Colorado, where many of our downtown businesses depend on a healthy tourist season coupled with onslaught of college kids (and their parents) in the spring and fall seasons, it became clear rather quickly that the impact COVID-19 would have would be felt for many months to come. It seemed almost a foregone conclusion that our vibrant, local downtown Boulder would evolve into a dystopian, shuttered walking mall with only the occasional chain restaurant that could afford the steep downtown rent.
Prior to the pandemic, I shared an office downtown with my business partner, Zach Herring, and our colleague Kevin Owocki, and we collaborated together on different initiatives to bring cryptocurrency and web3 primitives mainstream. Kevin had spent the prior year working to democratically redistribute wealth to startups through his Gitcoin Grants program and in early April, as we were bemoaning the pandemic and our collective love for our local businesses, he recommended repurposing the Grants platform to help provide funding to businesses who needed it.
What began as a harebrained idea over Slack quickly captured our hearts and minds: why couldn’t we use the power of quadratic funding (the algorithm behind Gitcoin Grants) to help sustain businesses? Yes, it had only been tested with diehard web3 enthusiasts, but why couldn’t we experiment with bringing it mainstream?
Zach and I eagerly jumped at the chance to help Kevin experiment with the business model, but we had one stipulation: we had to leverage lean start-up and design thinking methodologies to ensure the product we built was usable for and useful to the people we were trying to help, the business owners and the end users. For two people who’ve spent the better part of their careers advocating on behalf of user-first principles for product design and development, this was a unique opportunity to put our money where our mouths were.
Kevin agreed to our terms and (I assume) sat on his hands for a week while Zach and I went to work conducting formative research on business owners in Boulder. Over the course of 5 days, we spoke to 8 business owners and 2 members of the Downtown Boulder Partnership. It was worse than we’d thought: 7 businesses had been forced to shut their doors for the first time ever, 7 of them had experimented with pivoting the business model to account for remote or contactless business, 6 of them ranked the past month as “catastrophic” to their business, and only 2 of the owners had been able to receive Paycheck Protection Program funding. One of the recipients of PPP funding only received it because he provided his bank with a blank page with just his signature on it, giving permission to the banker to use it as he saw fit.
After listening to the business owners tell us how devastating COVID had been for them, we shared a little description with each owner about what we were thinking of creating. We were surprised to hear business owners enthusiastically respond to our idea; in fact, most of the owners we spoke to told us that they would sign up immediately if it were available to them. We assumed that they would be skeptical about the back end algorithm. Instead, they were excited about the potential of a donation match being made based on the number of donors and the amount they each donated.
Zach and I came away from the interviews feeling incredibly inspired, and in the course of 5 short days, we developed prototype wireframes and a pitch deck to raise a fund for our program. Our pitch deck focused on the proven capabilities of quadratic funding and brought to light the true pain the business owners were feeling; not surprisingly, we were able to raise $25K for a pilot in a matter of a few days from philanthropists in Boulder as well as crypto enthusiasts who were interested in seeing if we could bring quadratic funding mainstream.
Shockingly, though, when we came back to the businesses we had interviewed to ask them if they would participate in our pilot, we discovered that the businesses were hesitant at best and unwilling at worst to even consider participating in our experiment. To say that we were disheartened is putting it mildly: this was the first time in either of our careers that something like this had happened. Both Zach and I have worked in this industry for over a decade, and we regularly instruct businesses to follow this proven methodology of research and design thinking practices to build products and services people truly want and need. Why, then, were we being rebuffed by the same business owners who just 7 days earlier had embraced and celebrated our ideas?
Follow-up research led us to the underlying truth: business owners in downtown Boulder were flat-out uncomfortable with asking for donations from their clientele. They wanted their patrons to receive something in exchange for their money and fundamentally felt uncomfortable, overly vulnerable, or disingenuous in asking for financial support at this time. While owners continued to stress with us how dire the situation was for their personal livelihoods as well as that of their staff members, they insisted that they could not participate in our pilot.
Close to giving up, we decided to expand our reach a little bit and began recruiting pilot participants outside of downtown. Where we had found only one willing participant in downtown, we quickly found 3 in the greater Boulder area. After securing four willing businesses, we were able to recruit a fifth owner in downtown with whom we had not spoken before. Finally, a month later, we were ready to move forward with our pilot.
Bringing the Product to Life
Now that we had committed businesses, philanthropic funds, and a generous partner in the Downtown Boulder Partnership to help us administer the money, all that remained was to build our product. Zach had developed incredible designs in Figma, but we needed assistance getting it all coded up.
We posted a bounty to Gitcoin to incentivize a developer to build our product, and after a brief search, we ended up selecting Ethify Labs to be our development partner. Over the course a few weeks, we worked with the team to turn Zach’s Figma work into a web application that could accept credit card contributions. By early June, we deployed it to the Downtown Stimulus URL.
Over the few weeks we spent developing the website, we collaborated closely with the businesses to explain functionality, develop text and visuals for easy distribution to patrons via email and social media, and iterated on page designs and content. The goal was to minimize burden on the business owners: aside from evangelizing what we were doing, we didn’t want to add to the myriad tasks they were managing as the pandemic rolled on.
We made the decision early on to strip out all web3 and blockchain parlance from the site and the promotional material to minimize confusion on part of the owners and their patrons. Instead, we spoke about an algorithm (Quadratic Funding) that would be operating in the background to determine the match, and explained that it was loosely based on a combination of size of individual donations and number of unique donors. The magic, we explained, was that even a single donation of $1 from a new, unique donor could result in a significant match. Because we were not entirely sure how donation dynamics would play out over the course of the two weeks, we agreed to set some ground rules and communicated this early to the business owners:
- No one business could raise more than $8K in matched funds
- Once the round was saturated (all the money was spoken for), the funds would move between businesses based on a combination of percent of total funds raised and percent of total unique donors.
On July 1, 2020, we launched the website publicly and began working with the businesses to promote the project for inbound donations.
A Community that Loves the Local
To say we were blown away by the results of our work is an understatement. Within 24 hours of launch, we had a business hit the predetermined “max” of $8K. Within 3 days, we had saturated the round: all $25K was spoken for.
Over the next week and a half, though, the businesses continued to impress, leading to a total of 325 unique donors who collectively donated 408 times. The average donation, which we had estimated would be approximately $10, was $40. All told, we raised $16.5K from the Boulder community. When matched with the $25K of philanthropic funds, we were able to contribute $41.5K to 5 local Boulder businesses.
We used a tracking tool to show progress throughout the project; as you can see below, though we definitely experienced a surge of donations up front, the donations and matching continued throughout the entire campaign thanks in large part to the tireless work of the business owners and the communities they’ve built around them.
The business owners worked to give us feedback throughout the program and afterward to help us improve the experience and understanding of the back end. Many of the suggestions were implemented immediately; others will be taken into consideration for next time. We’re proud to report at the conclusion of the program, we had a 60 NPS, and some incredible testimonials from our business owners:
“I really loved the mission share of the program- you guys are developing something in real time to solve a huge problem. It was an incredible program to be a part of.”
“I got “free” money from my supporters and from this grant! I loved the idea that all the businesses were supporting one another, tagging each other, etc.”
“I loved the template and how it explained the why and how we needed these funds and that Boulder as a community would benefit. The video and matching amounts kept simple was a plus too.”
Based on this incredible feedback and the results presented above, we truly believe that this campaign has proven that Quadratic Funding can work in the mainstream, particularly for providing economic stimulus to local communities in a democratic way.
What’s Next?
We are exploring a few opportunities to do more pilot programs, for more money, in new locations. If you would like to collaborate with us on doing so, please get in touch.
We are actively exploring enabling others to build Quadratic Funding applications. The codebase for Downtown Stimulus is open source so if you are interested in pursuing a quadratic funding campaign, please feel free to leverage that asset.
Thank You
This entire project would not have happened without the incredible support from the people and organizations shown below. Thank you for your tireless work, your trust in us, and your belief in community and saving local businesses.
Our five businesses: Kondition Fitness, JLounge, Time Warp Comics, Piece Love and Chocolate, and Amana Yoga
@eeks — the gitcoin community member who donated $10k to the pilot
The anonymous donor who donated $10k to the pilot
Brad Feld, who donated $5k to the pilot
Zach Herring for spearheading this effort with me and trusting the process
Kevin Owocki for dreaming big about bringing QF mainstream and the support to make this happen
Ethify Labs for making everything work
Glen Weyl and Vitalik Buterin, for authoring the QF paper.
The 325 donors to the campaign
