The Magic behind AllianceDAO

Qiao Wang
Alliance
Published in
4 min readOct 19, 2023

A few months ago at one of the dinners with ALL11 founders I had an epiphany. I realized why so many of our alumni raved about us. So I gave this talk during that dinner.

The magic behind AllianceDAO is “mutual honesty”. This means: our honesty towards the founders, as well as the founders’ honesty towards us. Let me explain.

After 3 years of supporting early stage crypto startups I noticed that 99% of investors just want to be friends with founders. They would rather be hypocritically polite than brutally honest. Because honesty can indeed backfire.

But a pat on the back is not always what an early stage startup with just two founders needs. What they need sometimes is honest independent feedback. The employees won’t give honest feedback because they are scared of getting fired. Prospective users won’t give honest feedback because there’s zero upside in saying “sorry I won’t use your product”. Virtually no investors will give honest feedback because they want to be likable. The co-founders often hesitate to give each other honest feedback in order to protect the delicacy of the relationship. And even if they wanted to, they may simply not be able to because it’s so easy to miss the big picture while getting bogged down in the day to day of fixing merge conflicts and cold-outreaching users on Twitter.

But I and other mentors at AllianceDAO don’t sugarcoat anything. Sugarcoating only leads to founders wasting more time and money on the wrong path. If we think the product needs improvement, we’ll tell you. If you are spending too much time courting VCs instead of coding and talking to users, we’ll tell you. If you are over-scaling before any sign of product-market-fit, we’ll tell you. If we genuinely feel you are failing, we’ll tell you.

Now, most of the time we don’t actually have strong opinions. The world is increasingly more complex and we are aware of our own limitations. We are also conscious that founders have far more context about their own startups than we do, so we expect them to make good decisions most of the time. But when we do occasionally have conviction in something, we’re not afraid to tell them even if the short-term consequence is leaving a bad taste in their mouth. In the long term, our alumni always appreciate our honesty, and occasionally tell us “you were right and I wish I listened to your advice.”

But being brutally honest doesn’t mean being cold and rude. Quite to the contrary, we try as hard as we can to empathize with the pain that founders go through, so much so that they are willing to be completely open with us about the problems they are facing. And this is the other direction of the aforementioned “mutual honesty”.

Founders are always selling. They are selling to their users. They are selling to their co-founders. They are selling to their employees. They are selling to their investors. The result of “always be selling” is they can’t be completely honest with their users, their co-founders, their employees, and their investors. They are afraid of losing a user. They are afraid of letting their cofounders down. They are afraid of demotivating their employees. They are afraid of telling their investors the truth for fear of appearing weak or jeopardizing follow-on rounds.

But with us, you can be completely transparent. Founders often go to their investors and tell them about the challenges they are experiencing with hiring or ask them for intros to customers. Yes we can help with all these things, but we know for a fact that there are almost always deeper problems, pains, and fears that they lose sleep over and are keeping to themselves. For example, the cofounder relationship has become toxic and they can’t get out of the vicious cycle on their own. Or, they spent months iterating on a product that has some but not a lot of traction and they aren’t sure if they should hold on to it or pivot.

So a typical office hour with myself looks like this. The founder comes in and asks a series of questions. Sometimes these questions are deep and critical. Sometimes I feel that they are superficial. In the latter case, I will turn the table and start asking probing questions instead of just answering questions. I continue to do this until we’ve peeled away all the layers of the onion and arrived at the core, which is usually a root problem that the founder either hasn’t realized or hasn’t told anyone. Some of our alumni have given me the feedback that sometimes they feel like I’m still doing due diligence on them. But I tell them I’m more like ChatGPT: the more context you give me, the more likely I’m able to provide a helpful answer back to you.

Now, once again, sometimes we have good ideas to on to solve the root problem and sometimes we don’t. But even when we don’t, having someone to talk to about your deepest problems is always helpful from a motivation standpoint, because It’s incredibly lonesome to build a startup with a team of one or two people and having no one to talk to could literally lead to clinical insanity. I often semi-jokingly tell our alumni that my primary job is to be a good therapist. I can sense that often when they talk to me they aren’t really seeking advice but just want to have someone to talk to.

And this mutual honesty that the mentors and the founders have towards each other is the magic behind AllianceDAO. Something I haven’t seen replicated anywhere else.

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