Unchained - SyndicateDAO Is Launching Web3 Investment Clubs. Could They Disrupt VCs? - Ep.312

Episode Date: January 25, 2022

Will Papper and Ian Lee, the two co-founders of Syndicate, join Unchained to announce the release of Syndicate’s new product: Web3 Investment Clubs, an innovation they believe could end up disrupting the web2 investment world, along with the entire venture capital industry. For example, with Web3 Investment Clubs, users will be able to turn an Ethereum wallet address into an investing DAO with just a few clicks, transfer funds without going through banks, and manage a cap-table directly on-chain. Show topics: what differentiates a Web3 Investment Club club from a normal investment club what on-chain tools Syndicate has built for Web3 Investment Clubs how Web3 Investment Clubs work within existing regulations how Ian and Will met and what inspired them to create Syndicate whether Syndicate plans to decentralize why Will and Ian believe investment DAOs will disrupt the venture capital industry why venture capital firms invested in Syndicate, a company built to disrupt them what Will learned from building Adventure Gold (AGLD), the governance token for Loot what plans Syndicate has for 2022 Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unconfirmedcardearnfeb2021          Beefy Finance: https://beefy.finance Alchemy Pay:  https://alchemypay.org   Episode Links   Will Papper Twitter: https://twitter.com/WillPapper  LinkedIn: https://www.linkedin.com/in/wpapper   Ian Lee Twitter: https://twitter.com/iandaos  LinkedIn: https://www.linkedin.com/in/mrianlee/    Syndicate: Twitter: ​https://twitter.com/SyndicateDAO  Website: https://twitter.com/SyndicateDAO   Miscellaneous History of AGLD https://twitter.com/WillPapper/status/1484215805478797312 Will Papper’s previous Unchained appearance https://unchainedpodcast.com/constitutiondao-did-not-win-the-auction-but-it-demonstrated-the-power-of-daos/ Will DAOs disrupt crypto venture capital? ​https://www.coindesk.com/business/2022/01/06/will-daos-replace-crypto-venture-capital/  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, all. I just wanted to share with you a blurb that Willie Wu, on-chain Bitcoin Analyst and author of The Bitcoin Forecast Newsletter, wrote about my book. Willie said, deeply researched, this book is an important body of work and must read for the inside story of Ethereum, complete with all of its grit and drama. If you have not yet pre-ordered your copy of the Cryptopians, then head to Bitley slash Cryptopians. That's B-I-T-L-Y-S-C-R-Y-P-T-O-P-I-N-S to pre-order your copy today. Again, the link to pre-order is Bitley slash Cryptopians. Additionally, I'll be doing a Facebook live slash AMA tomorrow Wednesday, January 26th, the eighth anniversary of Vitalik Boutarin presenting Ethereum for the first time at the North American Bitcoin Conference in Miami.

The AMA will be about my book, which is about Ethereum in the 2017 ICAase, but you can also ask questions about recent crypto news. Head to Facebook.com slash Unchained with Laura Shin to RSVP and ask questions. Again, the link for the AMA is the pinned post at Facebook.com slash unchained with Laura Shin. Finally, I wanted to mention that in this episode, Ian and Will mentioned an interesting fact about their new product, which is that 50% of the groups they're launching with are female led. I decided to write up an article featuring some of these groups, so please check it out

on my Bulletin newsletter, which you can access at laura shin.bulleton.com if you're not already subscribed. Again, the link is laura shin.bulletin.com. Now, on to the show. Hi, everyone. Welcome to Unchained. You're a no-hype resource for all things crypto. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. This is the January 25th, 2022 episode of Unchained. Alchemy Pay is the pioneer of the world's first truly hybrid crypto and fiat payment network that makes real-world crypto payments easy, secure, and instant for both.

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Today's guests are Ian Lee and Will Papper, co-founders of Syndicate Dow. Welcome, Ian and Will. Good to be here. Yeah, great to be here, Laura. You two have an announcement that is dropping the day this podcast comes out. Tell us what your news is. Yep. So today we announced that we launched our first mainstream product on top of syndicate protocol in public beta.

And that product is what we call Web3 investment clubs. And what it does is it allows any group of people, typically their friends, groups of angel investors or Web3 communities, to come to our protocol and easily launch a investing Dow as a Web3 investment club on syndicate in a single Ethereum transaction for just the cost of gas. It effectively transforms any Ethereum wallet, whether it's a multi-sig or a metamask or a ledger into a powerful investing Dow and imbues that wallet with all of these really powerful capabilities. to invest together as an investment club completely on chain with no back end.

And what that means is it allows these clubs and groups of people, like basically to turn a lot of these group chats that people are in already today where they're groups of friends and they're buying NFTs or maybe they're investing in, you know, different projects in the Web3 space or even investing in startups off-chain into equities and things like that, and turn that thing into an on-chain club as easily as a group chat. And so we'll get into a lot of the details around the protocol and the application and, you know, program that we've been developing with a bunch of partners over the last number of months. But what we're really excited about is how this tool really begins to democratize investing to

people that and groups of people who may not have been able to access these tools or afford these tools traditionally because these tools have been very difficult, very expensive and very slow to kind of like be able to use. And we make that, you know, 10 to 100x easier and also embed into the tool and snap into the tool various partners and various even tools that we built on the legal side that enable these investment clubs to maintain their investment club status legally and compliantly so that they have the peace of mind to ensure that they're using these investing DAWs in the right way for themselves or DAWs and their members. I love this. I find this such a fascinating new product. So for listeners who are listening on the

podcast that was Ian talking, just to help differentiate the voices. And I did want to ask, though, you know, just stepping back, like, investment club isn't a common term, at least it's not one that I've really used much. So, you know, regardless of kind of like the Web 3 component in your product, just what is an investment club generally? So it's really interesting because investment clubs as a concept had been around for thousands of years. The earliest example of of an investment club in recorded history was in 1898 in Texas during the Wild West, probably in some saloon or something like that. But the reality is these investment clubs have existed ever since then in the real world,

actually, before Web 3, even before Web 2. In the real world, typically what these things look like are groups of people in oftentimes local towns. They get together at a community center or a restaurant. They meet up. They're oftentimes friends and community members. They'll talk about traditionally oftentimes, like different stocks that they'll look into invest in together. They'll make kind of purchases together, club their and pool their capital together to

reduce transaction costs, you know, spread out risks, learn together, you know, win together, basically. And what's fascinating is that has existed in the meat space in a non-digital way and a non-internet native way for hundreds of the years. But it hasn't been modernized for the internet, and it certainly hasn't been modernized for Web3, especially as, you know, obviously Web 3 has created all these new assets that are native to the Internet and live on the internet. And so what we've done here with our first product on top of our protocol is modern investment clubs for Web3, where they natively can live, well, be created, be run, and natively live on the Internet where these assets are being created and live as well.

Now, what's interesting in addition to this, though, obviously, is we've built these kind of like Web3 native tools, which is specifically like a Dow technology to invest natively, you know, together as a group of friends on the Internet, you know, in Web3. today on Ethereum and other chains in the future. But in addition to that, we've taken the time to snap in, for example, like we teamed up with Latham Walkins to generate open source legal agreements

for Web3 Investment Clubs on Syndicate where people can generate these legal documents automatically using our tool, sign them with their web wallet, to provide them with those additional kind of guarantees in the real world legally. And then the second thing we've also partnered with this fintech from the Web 2 world called Dula, where they're

teaming up with us so that any investing down in syndicate or any investment club on syndicate can get legal entities in Delaware and Wyoming. They can make state filings. They can get EINs. They can get Fiat bank accounts and they can also file taxes and issue K-1s. And so they can do everything basically in the real world that a traditional investment club would be able to do, but they're now natively run in Web 3 using our infrastructure. Wow. It's so fascinating. So let's walk through a hypothetical process of people forming one of the Web 3 investment clubs. Will, do you want to take this one? Yeah, happy to. So typically these investment clubs will start with either a thesis or a community. So existing

Dow communities will want to spin up club so that they can invest together, or someone might have a certain thesis like on-chain NFTs are the feature, and it will spin up a club related to that. And then from that point, they can go to Syndicate and set up their investment club in literally 45 seconds. And with that one on-chain transaction, they have their club ready to go, and they can send the link to anyone in their community when they want to be able to deposit.

They just send it via private messages and group chats, and they're up and running. So we took a Web 2 process where these investment clubs in the Web 2 world were very time-consuming to set up and run, and we made it in the Web 3 world take under a minute to set up and run, which is just a huge, huge leap forward

in the accessibility of these investment clubs. And when you were talking about setting this up, so how is it all structured? Is it like there's, I'm assuming, so this web address, is it a multi-sig? And then, you know, when you were talking about the chat and everything, is that built in? Do you have like a chat platform? So all the Investment Club communications are on one platform or like how is all that structured? So we allow you to turn any wallet into an investment.

investment club, and depending on the size of the investment club and the scooter requirements of the Dow, we'll use different options. If they're looking to join really fast-moving NFTments, they probably want to use a hardware wallet, for example. If they're looking to make private investment into a token, we'll probably want to use a multi-sag if they're dealing with larger amounts. So clubs can choose the wallet that's the right fit for them, and we can convert that wallet into an investing club. Right now, the tools that they use are the tools they're already using to organize their communities. So we're compatible with any tooling that they may be using, whether that's token gated discords for chat or a snapshot for governance. In the long term, we are definitely thinking

about how to build stronger communities. And we do have a community product for membership NFTs that allows people to form a community and easily administer it. But a lot of that is coming after the Core Investment Club launch. And so who can participate? Obviously, in the U.S., we have accredited investor roles, but from your documentation, it looks like non-accredited investors can participate, but then probably, I guess, they're limited in what they can invest in. Can you just talk a little bit about that?

Yeah, so we've been doing a lot of work on this over the last number of of months because what we think is really important is that tools like what syndicate is building and others, for DAOs to really move forward as a technology, in particular in the case of like the application that we're launching with investment clubs, they need to guide users and provide users with the right tools to protect themselves, their members and their DAWS, right? And so we've invested a ton of time internally as well as working with a bunch of of external partners, as we mentioned, to get this really, really right. And so with investment clubs, it's really interesting because, you know, there's a webpage on the SEC's website where you

can read up about how they look at investment clubs. Investment clubs generally are not regulated by the SEC provided that they meet certain guidelines. For example, fewer than 100 members, no public solicitation. There is no No investment advisor, no performance fees or carried interest. And also, everyone must participate as members of the investment club in decisions. And so those sorts of things have been actually designed into the tool that we've built. And also the kind of adjacent tools like the legal document tools and other things that we've snapped into it to allow people to run their investment clubs and and help them run their investment clubs as compliant as possible.

Now, with respect to what these investment clubs can invest in, that's a really interesting thing, because that is actually determined by whether or not accredited or unaccredited people can invest in that asset that they're purchasing or investing in. So, for example, like, an investment club is investing in a startup and, like, it's equity, like in an early stage kind of venture round or something, right? Startups, you know, often for those capital raises will require that the investors are accredited. And if that thing that is investing into it is a vehicle, like let's say an investment club,

then that startup will often require that that investment club is an accredited vehicle, which means that that investment club and all of its members need to be accredited investors. Okay. And so for certain types of things like that, right, there are those accreditation requirements, and that is something that the creators and members of investment clubs need to, you know, decide and follow for themselves when using, you know, these tools and also creating investment clubs of their own, whether in the, you know, traditional world or, you know, on web three using Synicate. That said, however, there are a number of assets where people can buy that without being accredited. You know, a good example of this would be like Bitcoin and Ethereum, right? I mean, people can go to Coinbase and buy that very easily. And so investment clubs that are formed to invest in assets where you don't have to be accredited, right? Like maybe they're buying an NFT that they really love, like from an artist or something.

or they're a community of people that are trying to support certain creators or certain projects in Web3 where they allow people to invest in those assets. Or even like an investment club, we see some of these on the platform today where they're actually not investing for profit, but they're actually almost using it like a grant vehicle of some kind to support the development of a certain community. you know, those types of investment clubs can have unaccredited people as part of those. And so obviously it's like, you know, we provide in our tool a number of protections and also related tools and services or partner services from, you know, teams that we partner with to help them with that. But provided that, you know, they've done their diligence and figured out,

you know, what they're able to do and what they're not able to do, yeah, this. this tool is available to people who, you know, are not necessarily accredited if the club can invest in those assets. And that's incredibly democratizing and empowering for communities that need the most, we believe. So we're really excited about that. And I did happen to notice in a wiki that you wrote up about your investment clubs that, you know, you refer to these clubs where they'll need to have all accredited members if they want to invest, for instance, in the startup equity. And then you wrote, we are working hard to change this so that more people can have the same access and opportunity. So please stay tuned for updates. Can you give a hint as to what

that's about? Sure. Yeah. So we, you know, are on this long-term mission to try to democratize the tools to invest to as many, you know, people as carefully, thoughtfully and legally and compliant as possible because, you know, this gets to, you know, to the mission a bit of syndicate, but, you know, when you look at Web 3 and the power of Web 3, right, it has this, the technologies in these networks are really incredible in terms of the ability to decentralize and democratize, you know, access, you know, these powerful kind of systems to more people around the world. And that's fundamentally a good thing, right? But the capabilities, to invest, and the capital that invests in Web3 today is still, you know, kind of skeomorphic

with the, you know, traditional world, right? And so the tools and the infrastructure to invest in Web3 natively, in the network native way, in a community-driven way, has not yet, in our opinion, gotten to the point where it's truly network-native with Web3. And that's what we're trying to do because we want, you know, more people to participate in the development of Web3, the investing in Web 3, the wealth building that results from investing in Web 3. And frankly, if Web 3 is the new internet and it's rebuilding our world, we need more people to participate in the building of this world because what gets invested in shapes how that world gets built, by whom, for whom, etc.

Right. But so how are you going to, I mean, are you like doing lobbying with the SEC or like, you know what I'm saying? Like, no, no. So we are working. you know, with existing regulation, right? I mean, good example is the Investment Club product, right? We are following by the book, like what's within sort of the regulation to be able to introduce a tool that is Web3 native, but also helps, you know, users of that tool maintain compliance.

And maybe to get specifically to your question, right, you know, the law is very complicated when it comes to investing. There's lots of different structures beyond investment clubs, obviously, which are not even, you know, technically regulated by SECC. There's things like 3C1 funds. There's 506B funds. There's 506 funds, et cetera. And even, you know, other things, variations within that. And what we are working through, you know, very diligently is identifying, you know,

existing legal frameworks where they, similarly to investment clubs can be modernized for Web3. And what we're finding is that we believe it is possible to create these tools that enable these investing Dow's on syndicate to follow existing regulations and compliance, but introduce Web3 native capabilities to them that thoughtfully enable more people to be a part of these systems. And, you know, how exactly that works is really, really nuanced. that's what we're trying to figure out bit by debt. Right, right. It reminds me of how, for instance, Stax didn't ICO, but it was within the Regulation A crowdfunding role. So it's like, you know, kind of fitting it into existing laws.

So you kind of touched briefly on some of these other things, but I just wanted to dive into them a little further. You know, you talked about how these investing DAOs or investment clubs can obtain legal entities. And I just wondered, you know, if you could talk a little bit about why it is that some of them might want to do that. And then also, you know, you talked about how it'll enable them to handle their taxes, which is pretty interesting. So you could talk about those two things. Yeah.

I mean, what we're finding is, you know, again, this, this user behavior around people pulling capital together with friends, you know, often people that have known each other for a while and live in these, like group chats or Discord channels, that's been happening, you know, especially with the rise of, you know, these NFTs and things like crowd buying in Web3 has become kind of a more common user, you know, behavior and pattern. Well, we're also finding, though, is two things. Like, what they're doing right now is they're kind of, you know, just throwing into a multi-sig or a wallet that someone's running. there's no kind of like tooling on top of that that makes that, you know, easier, more powerful.

Like, for example, with, you know, investing in Dells on Syndicate, they have this, you know, really robust dashboard that shows and visualizes assets in real time like NFTs, tokens, and even startups that they invest in. So it becomes this like portfolio management system on top of a wallet. So they're oftentimes just doing this kind of manually. And they're also tracking all of this stuff on a, spreadsheet, like a Google sheet, right? And it's very manual, you know, it's very kind of like labor intensive. Lots of times there's like errors or just inconsistencies because data isn't updated,

right? And so basically syndicate in a certain way, like offloads like all of that onto the smart contract in our application. And on top of that, right, like, which is not what a lot of Dow's, these group chats are thinking about. But, you know, the ones they get more serious and they, you know, they want to follow things by the book and not worry about, you know, certain things like, do I need to pay taxes and how do I do that like easily and compliantly, right? That's where these, this fintech partnership with Dula comes in where, you know, they can help DOWs and syndicate do all of that really, you know, easily and affordably annually. So they just kind of get those services, you know, don't have, they just provide the information,

file taxes, get the K-1s, which, you know, all members need of an investment club. to be able to file that with their taxes every year. And it gives them that peace of mind, which we're finding a lot of these investment clubs actually do want. And we think might be one of the key limiters for adoption of investing DAOs or investment clubs in Web3 because people are just kind of worried and don't want to deal with all this stuff that they don't know. Yeah, I feel like at the end of every year or at the beginning of every year,

there are jokes in crypto about all the crazy. things people did with their money the previous year and how their accountants are going to have a headache. So the Investment Club members will get a token. What is that going to be used for? Yeah. So the token itself, broadly speaking, represents the cap table of the investment club. So it represents the ownership share is similar to apologies, mirror table slash mirror shares that he described in a recent post, that on-chain cap table we've had has existed since the beginning of syndicate. And we've been working on their product for the past year. Yeah, and just define the mirror tables and mirror shares for people who didn't read his post.

Yes, happy to. So cap tables are traditionally managed via centralized services. And you're dependent entirely on that centralized service to define who owns what. And that's a single source of failure. So if there's any inconsistency in the data, any difference in what was promised versus what was given, And it's, you're dependent entirely on that centralized service to make it right or not. And there's many cases where things go wrong, for example, for startup employees. There's so many cases of people being promised, for example, one equity price, and then you're not paying a much higher price just due to some nuances of how the stock grants worked. and being out like many, many thousands of dollars of differences.

And that's because it's a centralized service. That's not available to all members and not transparent to all members. But by moving the cap table, essentially the ownership stakes on chain, that is now, not only can all members verify their stakes, it can also be guaranteed in the smart contract that, for example, distributions of profits will be given out according to the ownership shares on chain. not only is this more trustworthy, this is also far easier to manage. We talk with groups where they sometimes spend multiple days just sending wire transfers

because every single wire transfer they send, they have to go through the bank's verification process. So we'll have to do that 80 or 90 times. Separate phone calls with the bank, oftentimes like 10 to 15 minutes per phone call. With syndicate, because we've already moved the ownership stakes on chain, when it comes time to give up profits, you just say the profits are being given out according to the ownership stakes, never can claim it in the smart contract.

So we take a process that can literally take days to coordinate for tracking deposits in and distributions out and make it fully automated and fully removing that centralized party that you had to trust. Saving managers a ton of time and giving members,

a lot of confidence in the in the fact that they will receive what they've been promised. And then before you go on back to the tokens, I did want to ask, so you're calling them mirror tables and mirror shares,

but is that because you still are managing them originally in some kind of off-chain service that, you know, is run by a centralized company? Or is it all just being run in the smart contract? And you're just using word mirror table and mirror shares,

even though it's not actually mirroring something that's off-chain. Yeah, we're, fully living in the feature. So it's fully on chain. We don't need to mirror it. A lot of people have been asking us about mirror tables and mirror shares and we're able to show them, oh, you actually don't even need to mirror it. You can go directly on chain and directly live in the future. You don't need that bridge anymore. You can several ties the antiquated past if you want to. And one thing we're so excited about is this relates to a question of the token.

So underneath the hood syndicates are ERC20s to represent the ownership shares, which means now they're composable with every other tool in the ecosystem that you might want to use. So, for example, the ownership shares can be plugged into snapshot for governance. So now communities can make determinations based on their holdings. You could even provide another startup that's getting launched, could provide exclusive access or air drops to investors in a highly related syndicate. Imagine, for example, a new fintech startup saying, I want to offer my investment to all the early investors in Stripe.

They could do that with syndicate automatically. So under the hood, by moving your cap table on chain, your ownership shares on chain, what you get is the ability to compose this with the entire rest of the ecosystem. So we unlock the full power of composability because these shares are E or C20s. That being said, it's, of course, up for the managers to remain compliant.

So we keep transferability disabled by default as one example to ensure that the investment clubs are compliant. But the composability to unlock is really, really phenomenal. And essentially, it gives these ownership stakes superpowers to access the rest of the ecosystem. Okay. reason the tokens are non-transferable is to prevent issues around, I don't know, just anything involving probably illicit activity of some sort or like anti-money laundering

or stuff like that. Is that the reason for that? It's related to the investment club regulations. So the investment clubs can't have more than 99 members, and they also can't have passive holders. Everyone must actively participate. So if you transfer these to, say, a smart contract that's fully autonomous, it's not clear how that smart contract can actively participate. We make it easy for users to remain compliant, so we keep that disabled by default. If they work with their own lawyers and their lawyers determine what they can and can't do, then of course, they're welcome to use the protocol in the way that they've been advised. But we make it easier to remain compliant, so we provide a happy path to ensure that the

investment clubs are set up correctly. Yeah, investment club regulation, like membership interests can't be, you know, traded and stuff, like on secondary markets. And so that's a big part of, you know, ensuring that, you know, this tool is, you know, helping people maintain that status. Okay. But since there's like a limit of 99 members, let's say that at, so let's say you, the three of us are in some investment club that already has 99 members and somebody leaves, a new person could join the investment club. Right. And they would just get a new a new ERC 20 token. Yeah, typically what happens, what we're seeing is a lot of these investment clubs, they organize

themselves as different seasons. So they'll have like season one, season two, season three. And the membership in each season will change actually every season. Some people will kind of continue. But then they'll introduce some new members and some old members will kind of, you know, like not be a part of it. And we're, We're finding that that's actually like the very common pattern with investment clubs with

syndicate. But, you know, yes, could someone, you know, join, leave an investment club for whatever reason or whatnot? Yeah. And then at that point, you know, someone else could be admitted. All right. So in a moment, we're going to talk more about the backstory behind this. But first, a quick word from the sponsors who make this show possible.

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while you sleep. Simply deposit your crypto into Beefy's secure industry-leading auto-companting vaults to put your funds to work. Each one of Beefy's 740 volts automatically reinvests the interest gained on your crypto deposits, earning you more while saving you time and fees. B-Fee's strategies create bank-busting APYs with 0% deposit fees at the click of a button. Join $1.4 billion of investments and understand why so many users trust B-FeeFee with their financial independence. Visit B-Fee.Fi. Finance and take control of your financial future. Back to my conversation with Ian and Will. How did you come up with the idea for these investment clubs, the Web 3 version?

Ian, you want to go, go for it? We've been talking about this for the last four years. So there's, yeah, it's, we've been thinking about it for a long time. Well, actually, maybe, why don't we do this? Because I was going to ask you next how you two met and started working together, but maybe that's a better way to start off. Yeah.

Yeah, so Will and I met when we were both at IDEO's crypto team in 2018. This was the beginning of 2018. And back then, right, it was a world of difference in the crypto. space. It was just on the back of kind of the ICO boom and then crash, right? And, you know, it was kind of actually like the beginning of the crypto bear market. What was interesting in particular with respect to investing at that time in crypto was, you know, the ICO wave, in my mind, at least, really introduced this fully democratized, decentralized, and permissionless model for investing. Now, obviously, there were a lot of things about it that were not good,

and specifically from like a regulation perspective. But what happened interestingly enough, right, like in 2018, was that the pendulum swung really hard the opposite direction. And it kind of like re-centralized around like the SAFT model, which, you know, persisted for over a year after that. And what I thought was kind of always weird about that was, well, wait a minute, Like these technologies that are being developed are intended to be owned in a network native way by the community of users. Why is it that the capital that invests in these network technologies are not also network native, right?

And so that kind of question was something that Will and I started researching at the time when we met, we also did a deep dive into decentralized social networks back in 2018 and what the future applications of those might be. be. And the conclusion of that, which we ended up designing this pseudonymous decentralized social network in early 2018, was that the primary application of, there were two major insights. The primary application of a decentralized social network was actually for the purpose of decentralized testing and democratizing investing. And we looked at that and we were like, that's kind of interesting. Why is that the case? The second conclusion, the second insight, though, from that work was that the infrastructure was not ready and the market wasn't ready for that idea.

Defi wasn't really like a thing. There were a number of primitives that didn't exist that syndicate or an idea like it needed before that would be possible. And so for, you know, once we came to that kind of assessment, Will and I said, well, let's go, you know, work on some other stuff. Will went to another startup to focus on a number of things, including decentralized identity. continued in the DFI space and, you know, with IDO, continued to invest and incubate startups. And in 2020, you know, we started seeing these primitives get landed in DFI. That really started to harden, right?

And Will and I took a look at them and sort of said, wait a minute, if you take some of these primitives and you kind of mash them together and then you mash them with the decentralized social network that we had conceived four years ago, we now think syndicate is possible. And that's when we started working on the architecture for it in late 2020. We arrived upon something that we thought would work. And then we formally set up the company and went full time into it in early 2021. So it's been about a year since we started working on it.

And so what you mean working on the investment club? What for your investment club idea? No, on syndicate as in general as a company. I mean, you know, we have a much broader kind of. of ambition and roadmap from a protocol and product perspective than investment clubs. But investment clubs are the first, you know, tool on top of the protocol that we're opening in public beta that we've been incubating in private beta with over a dozen communities over the last six months.

And in the coming months, we'll be, you know, releasing more and more infrastructure and tools for Web3 native investing in Dow's. So is that kind of what the main mission is of syndicate Dow? Yeah, we're definitely laser-focused on investing DAOs as a company. We believe that investing DAOs are the future, and we think that it's really, really important to get it right. So that's where all of our effort is around. That being said, every DAO that manages assets in some capacity is an investing DAO.

So DAOs that are holding their native token or DAWs that are holding a stable coin reserves are implicitly investing DAO's. So we have a very specific focus, but a very broad market available to us. And so the name is syndicate DAO, but you called yourselves a company. So it's a centralized company that is called a DAO? So we essentially have in the long-term plans to become a DAO. Right now, we help people set up DAOs. We do, we do want to be a to do ourselves and that's certainly something that we spend a lot of time thinking about. Syndicate doesn't tend to launch a DAO at some point. And we intend to grow into that.

The thing that we saw starting and running DAO is that getting the initial state of the DAO right is incredibly important. Because once you launch a DAW, it's very, very difficult to change. We are going to be very deliberate and very careful and very intentional about how we set up our DAO. because we want to make sure that we be right by the whole community of syndicate users. Now, Syndicate is the development company that is building this infrastructure, as Will mentioned. You know, we intend for our technologies to be decentralized and community owned, hope to one day, you know, launch our own Dow. Also, some people refer to Dow's on Syndicate as Syndicate Dow's.

So there's kind of, it's a little confusing, but it also sometimes works really well. So, yeah, it's, yeah, I guess. Are those like synocates on Angel List? And is that kind of basically just like a proto version of the Web3 investment clubs? I think that some people do sometimes look at us and think of us as maybe like a Web3 native version of, you know, different tools that AngelList also provides. Will should definitely go into this. But I mean, I think that's kind of maybe a more near-term analogy. and skeomorphic analogy, but it's, but the, but, you know, we're, we're trying to really build

like Web 3 native infrastructure for both investing in, and Dow's generally. And so I think, kind of the way we think about syndicate is a lot different. Well, you should share your, you know, vision on this. Yeah, yeah, definitely. So by making Web3 native investment clubs, we think that the investments that these clubs make and how they operate will look dramatically different. than what came before. One analogy we use a lot internally is that the disruption of investment clubs to venture capital will be similar

to the disruption of YouTube to the film and media industry where YouTube and syndicate both are cases where you dramatically lower the cost of setting these things up, lower the difficulty, so it's much, much faster to do so. And increase the distribution Instead of in the Web2 world, these investment clubs were often in-person meetings and town halls.

Now it's taking place in Discord and Telegram in the Web Theory world. Likewise with YouTube, instead of reaching audiences via cable, via television and networks and film distributors, you're now able to go directly to your audience as well on a global scale. It's hard to say how the world will be different, given how no one can anticipate what changes will come about from this kind of product. But we do think that the investing Dows and syndicate will look very different than the traditional investing Dows. They will be much more community driven. They'll be much more open.

They'll be much more accessible. And the types of investments they make will look very different. So it's something that we're excited about. It's one of those like known unknowns. We have no idea what the freezer will look like, but we do know that it will be very different. A good example is that, you know, of the dozen or so groups that we've announced, you know, launching and that have been helping us build this investment club product, you know, over 50% of them are investing Dow and investment clubs on syndicate that are women led or all women, DAWS. And, you know, these DAOs are bringing more women and other populate, you know, communities that traditionally haven't participated at the same scale in Web3, into Web3 and into Investors. investing in Web 3. And that's like really amazing. And we love that, you know, we can support

missions like that because that really aligns with kind of like what we're hoping syndicate will do long term at a global scale. Another example is like, you know, we have two Dow's, one called Mori Music Dow, and then another is Dow Jones. And both of those are actually led by communities of creators in the NFT and in Mori's case, specifically the music NFT space. And so it's a bunch of like music, NFT collectors, creators, you know,

technologists that are coming together very passionately as a club to invest in more NFT creators, right? And investing in their own community. And we think that that's like one of the most amazing things is that this tool is for, is a community driven tool for communities to invest oftentimes in their

community to develop and to help grow it and, you know, bring it more and more. into Web 3. So we're really, really excited about, you know, seeing that already on Syndicate. And I wanted to ask about, you know, that fact you mentioned about how about 50% of the groups that are already working with you in their investment clubs or investing downs about how they're led by women. Why do you think that is? That's a good question. I mean, part of it is like We are sharing and communicating a mission of democratization and empowerment for communities.

And we're showing it, right, at all levels of our company and the product. You know, we have a lot of really incredible women leaders at syndicate. And we're, you know, hiring more by the day. But also, like, in terms of the partners that we, we, we, we, we, we, we, we, we, we, we, work with and look for, we're really looking for, especially during, you know, the private beta phase where we've been incubating this for, you know, six plus months. We've been looking for really values aligned, mission aligned, long-term partners to work with, right, who are going on this journey together with us to make a difference using these technologies in the world

for people and society. And so I think that that's, you know, that has attracted certain types of communities and people to come to us organically. And, you know, we're meeting more every day, actually, as we share more about what we're doing. And honestly, it wasn't like intentional. We just kept working, finding new partners to work with. And as we got ready for launch, we got everyone together. And it was like, oh, my God, you know, 50% of these groups that we were working with are either all women or women led. And it's really cool to see that. And we hope to work with as many communities as possible who honestly deserve access to these kinds of tools and opportunities. So, you know, that's a big part of why we're doing what we're doing. I love it. I love it. I find that

so fascinating. And yeah, I will, I'll try to reach out to some of them to ask them some questions. I actually wanted to go back to what we were discussing about how you guys think that Dow's will be as disruptive to VC as YouTube was to film and television. So hilariously, while I was doing the research for this, I saw this Coin Desk article with the headline, will Dow's replace crypto venture capital? And I couldn't help but notice, you know, syndicate has received $20 million in Series A funding from Andreson Horowitz,

IDOCELAB ventures, coin-based ventures, variant, coin funds, scalar capital. I mean, these are all VCs. So, you know, why do you think that they're interested in investing in you if this is going to be disruptive to them? Okay. So I'll maybe take that one as a former, you know, and still I, you know, disclosure, I'm still a venture partner at IDO, but I was one of the co-managing partners of that crypto fund for four years, right? And I've, you know, come from that space. I think a few things about this. So I guess, you know, to address one of, Just kind of those things specifically. What we are doing here is actually trying to attempt to solve a really massive, difficult, complex, you know, seemingly intractable problem in society around inequality of access to investing

opportunities at scale globally that, in our opinion, is driving unequal opportunities and inequality in many different ways, right? And so to do that, like it's not sufficient, in our opinion, to create a smart contract, deploy it, and kind of hope that it goes well. We are in this for the long term. And we're going to do this the right way as long as it takes to do it well and do it right. So to do that, we need a lot of patient capital. We need values-aligned partners who can help us and actually bring

not only capital, but actually like really important capabilities and and expertise and networks to this project to make it as successful as possible. So, you know, partnering, for example, with IDO, which is actually where Will and I met and we incubated this thing, but also partnering with like teams like Andresen who have been incredible in terms of helping us think through all the legal, you know, regulatory considerations when designing this protocol and product and stuff to get it right. But, you know, we've also brought probably more than any other crypto project at this point in time, more than 300 founders, builders, creatives, you know, people in our community, other investors into this project. Like we have the, you know, head of the financial inclusion at the Gates Foundation, who is also, you know, a part of this and many others like them that are contributing to this. This is going to be a long-term effort to do this.

And the conversation was very interesting, right? When we were talking to a lot of these VCs, like, you know, are they aligned with us or, you know, do they not see what we see? And I think that, honestly, if you've been in this space long enough, you know that the writing's on the wall. Like, you know that like the traditional models for investing today in Web3 are skeomorphic to Web3. And that the native model for investing in Web3 in our opinion, and I think, you know, know, our investors who decided to come on this journey with us also realized that the native model is very likely a Dow model. And so what does that mean? It means that it's inevitable. And rather than kind of, you know, hide from that, let's just go for it together, right? And do it,

do it right and do it together. And so, you know, is it going to completely disrupt venture capital? Will should definitely comment on this because maybe he'll have a, a, uh, a, uh, different and spicier take. But maybe I'm a little, you know, traditional in the sense that I think that it will disrupt and transform venture capital, but that doesn't mean that certain players or, you know, especially forward-thinking ones, won't be able to successfully transform and transition to this new model. And I think that, you know, a lot of the groups that have come on this journey so far and many more that will come along the way, like, they're going to actively kind of like work on that. And, you know, there are a number that we're already working with that, you know,

are planning to do that. Like in the same way that, you know, Web 2 VCs are now transitioning to become like crypto or Web 3 VCs, I think the next logical step is that Web 3 VCs will actually become investing DAWs in some way, shape, or form in the next five to 10 years. Yeah. And before Will gives his two cents on this, I just because we keep using this word and I'm not sure everybody will know what it is schemorphic. And feel free to correct my definition here. But I guess it's like applying kind of like the way things were done before just to this new technology. Whereas like something that's like more native to it would not be schemorphic.

It's not like you're imitating. You know, it's like something schemorphic is when, you know, the internet was first created. And I used to do this because I used to work at public. publications like Newsweek.com and the Wall Street Journal.com and New Yorkstimes.com, you would just put the publication on the web. And so that's kind of like an example of something that's schumorphic. But I don't know if you have a better definition before. No, that's right. I mean, yeah, skeuomorphic would be like, yeah, let's put a venture fund on the blockchain, right? And these things. And to be honest, like, that is like going to happen.

So, you know, skemorphism, it has a purpose, like, you know, as far as transatlorefism, as far as transitioning to the more Web3 native world. But even when you take, like, for example, an investment club and then put it on, you know, put it as a Dow on chain on Ethereum, right, even though that is in some ways skeomorphic, right, what Will was mentioning about how the infrastructure underneath that that powers it on syndicate and how it's composable with Web3, that starts to unlock these Web3 native capabilities like out of the bottom. that you wouldn't have if you just left that thing on Web 2. And that's a big part of how these skeuomorphic models

are actually going to likely seamlessly transition or more seamlessly transition to Web3 native models in the future. Okay, so yeah, well, do you want to give your take on way out? Some of our investors when investing in us literally said to us, I know I'm putting myself out of business, but having a stake in the future is so important that I am going to fund this anyway. But that being said, I mean, people still go to movie theaters. It's just that movie theaters are a ton less important than that were before.

What we've already been seen in the venture capital space is the commodification of capital. So if all money is the same and you're given the choice between a fund that's offering you a million dollars or 99 values aligned, crypto users, operators, angels, I think that that choice becomes very obvious. The way venture capital firms have been competing has been to develop more and more services around recruiting, legal compliance, things along those lines. And that has value.

I think that will always have value. I think that if syndicate is successful, like the VC funds that add value will still survive, just like really nice movie theater, still survive. But it won't be the only channel for getting money. And it will be a most capital, we believe, will be raised via investing downs. And then you'll fill out your round with a few traditional VC funds or the services they provide. So instead of a case where the majority is from VC funds and a small amount is from angels and users and operators, where you believe that

model will flip, where the majority of it is from the users, and partners let you work with, and then a small amount is from traditional funds. I wonder if the reason that Andreessen is raising this $4.5 billion fund now is to just sort of get in while it's good, and then, you know, if they see the writing on the wall, they may know in the future. They may not be able to have such big funds. But anyway, I don't have any information to their future plans, but I do have to say that Andreessen is an extremely long-term aligned partner. that's one thing that I think traditional funds will use to compete is that if the funds are long-term

partners and they stick with you for a long time, that is also a value add in a space where so many people are thinking short-term. And Andreessen is one of those people, for sure, as is all the investors undercap people. We chose them for that reason. Right. Yeah. I mean, clearly, you know, the list is definitely all people who are all in on this space. So, Will, I, I did want to ask you also about this kind of like other thing you've got going. You've had quite the ride as the creator of Adventure Gold, which is part of the Lute System. And I was wondering if you had any takeaways from that experience. You might want to kind of give the audience a little bit of background because it's really interesting

and explain how you think it might be relevant to DAUZ and Investment Clubs as well. Absolutely. Yeah. The Lute ecosystem and Adventure Gold is definitely an example of the future that we're already living in. The feature is already here, just not evenly distributed. And Lute is one of those features. I recently wrote a history of Adventure Gold

that people can find on my Twitter at Will Papper. Yeah, but can you just kind of recap it a little? And yeah, absolutely. So to give some background, Adventure Gold is an in-game currency of the Lute ecosystem. So Lute is an on-chain, essentially RPG game,

where at a time when so many NFD projects We're promising these super unrealistic roadmaps. We're going to have a full game built in three months, et cetera, et cetera. Lute was, here's a bunch of items you could use in a future game. That's it. And it was the role of the community to add those primitives. Some people added in characters. Some people added in land.

I added in an in-game currency. And Adventure Gold definitely exceeded my, my wildest expectations. I wrote it in four hours at an airport and did not, did not, did not, I'm just so grateful for the community adoption that it's received. I think that one of the most important takeaways

from Adventure Gold is the importance of, so one of the really best aspects of it is the importance of widespread distribution. Because it was a fair launch, I gave every single token away to the loot community. I didn't reserve any for myself. I had loot, sure, but I didn't reserve any special portion.

And I had an infinitesimal portion of the supply. Because it was so widely community owned, there are so many people helping out with adventure gold or integrating it into what they've built. And that is really incredible that by giving it away, people find it useful and people start to contribute back to the ecosystem. So that's one really, really. important takeaway.

The second one, and yeah, I've talked about this in the past, but it's definitely worth emphasizing for anyone thinking about launching a Dow is once your tokenomics are set, they're really difficult to change. So make sure that you get the tokenomics right up front.

With Adventure Gold, I gave it all away where every loot holder could claim. I had no idea how big it would get. So I didn't have any, like, long-term vesting built-in, for example. If I'd known how big it would get, I would have added that in, and now we are adding that in later on. The community members are building out code for that right now.

But if it had done from the beginning, I think that would have been significantly more helpful. So the biggest thing that we helped out with at syndicate, one is defining their community and their purpose, and they should have an extremely specific and clear purpose. So in this case, the purpose for adventure gold is an in-game currency, and the community is the loot ecosystem. That's very, very clearly defined. The second thing we do is we help them define the initial tokenomics. And that varies a tonne based on the goals of every community.

But the initial tokenomics, once launched, are really, really, really hard to change. So we helped us a lot with getting it right and giving them flexibility to adapt down the road. And we have upcoming community products, not part of the Investment Club launch, but already available in private beta that work to create a set of best practices around community building and tokenomics for DAWS. So we definitely see our role in the space at Syndicate as setting the standard. Adventure Gold does a personal project. It wasn't really to Syndicate, but many of what I saw from it and many of the lessons I learned apply really well to it. And I've written quite a bit on the history of venture gold and the composability. So anyone who wants to dive in, I work to make those lessons as accessible as possible to anyone considering starting a Dow.

All right. So you kind of hinted at some of the other stuff you're working on. I don't know if you want to give even more of a preview. But just in general, where do you think Dow's will go in 2022? Yeah. So there are two sides of the syndicate. The investment process and the community. The investment process is what we've been laser focused on for the past year, creating just a fantastic end-to-end experience for setting up and managing investment clubs.

And we're really happy with the results of that. 2022 is when we're thinking a lot about community. How do we help these Dow communities build really, really strong ecosystems? How do we help them grow? How do we help them adapt over time? We already have a membership NFT product launched that can upgrade over time as community members. make more contributions that can then give them

all sorts of really interesting perks and bonuses to recognize them for their contributions. And we're also thinking a lot about how to build a community around syndicate as well, a community of developers and an ecosystem of people who can take part in

building on top of syndicates protocol as infrastructure. So that's a lot of what we're thinking about for 2022. And all of that is already in testing. It's already built. It's just not row that publicly quite yet. Ian, did you want to add anything? Yeah, I mean, I think a couple things from like a market perspective. So I'll kind of mention two trends that that we think are really interesting now with with infrastructure like

syndicate that's rolling out, right? One is like what happens in a world where there are hundreds of thousands or millions or tens of millions of investing DAOs. You know, the investing world has been, as we'll mention, like in this multi-decade transformation towards more and more commoditization, but also decentralization, even before Web 3, like with angelist syndicates and rolling funds and all these things, right? I mean, that's a part of like this kind of broader historical arc. And DAOs, we think, are just going to take that to the logical extreme.

And so in this world where there's millions of these things out there, But not only millions of investing DAOs, but the fact that they're programmable and they're composable with one another, like syndicate DAOs on syndicate protocol are composable with each other, that's going to enable really incredible things, possibilities that you just do not see in Web 2, where DAOs can actually start to coordinate with each other programmatically on Web 3 networks. So that's kind of like one area of research that we think. is really, really promising.

The other area that I think is just as interesting is Will was kind of alluding to us, you know, what is an investing Dow really? And what is even investing, really? Like, is investing specifically meaning like the investment of money and financial capital? Or can investing actually be broadened to mean investing time, talent, energy, resources, attention, those kinds of things. And in that context, right, you can actually open up the design possibilities and design space for what investing means and therefore what an investing DAO is and can become.

So a good example is like we've been working with this Dow called Vector Dow that, you know, is launched on Seneca. Vector Dow is a group of designers in the Web3 space that work with different Web3 projects. and it's a club of people, kind of, but they're not investing capital. They're invest in time and talent. And that is really exciting to us because you were asking earlier, like how are we going to increase access and participation given in existing structures?

We think that there's something really big there, where people who, there are people who can invest capital, but there are also people who can contribute time and talent. And there will be models, down native and Web3 models where those two things, capital and labor can come together. And, you know, lots more to come on that front. But that should, you know, give you a sense for how big potential, I think, syndicate could tap into in the ears head. Wow. I love it. That is, I, that's very fascinating. I cannot wait to hear more about that.

All right, you guys, this has been such a great conversation. I've just really enjoyed it. But where can people learn more about each of you and your work? Absolutely. So you can go to syndicate.io to get all the information on our investment clubs and set one up. It has everything you need to get started and it only takes around 45 seconds to spend up a club. So very, very easy to do. Definitely check it out. I'm on Twitter at Will Papper.

Ian is on Twitter at Ian Dow's. And of course, Syndicate is on Twitter as at Syndicate Dow. So definitely check us out. Twitter is where we tend to post updates, and the website is where you go to set up a club. Perfect. All right. Well, thank you both so much for coming on Unchained.

Thanks, Laura. Thanks so much. Thanks so much for joining us today. To learn more about Ian, Will, Syndicate Dow, and the Web 3 investment clubs, check out of the show-dust for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Daniel Nuss, Mark Murdoch,

Shashonk, and CLK transcription. Thanks for listening. Thank you.