Treasury, Runway, and Operational Throughput

[coinop-logan]

Let’s talk about finances (frynances? Oh god, I’ve been spending too much time around Schalk…)

I threw together a spreadsheet with a chart to get a good visual idea of where we’re at with raising and spending.

Here, the filled in area is the treasury balance of DAI at any given point, starting from the sale launch and ending today. The dotted line is the total DAI raised, ignoring costs.

A few things to note:

• We used to be much leaner. Around Sep/Oct, we started to scale up operations, so our cost footprint increased.
• Our funding tends to come in huge chunks: the bump in mid-July felt big at the time, and in late August we had another much bigger bump.
• We’ve spent nearly half of what we’ve raised in total.
• We’re still raising DAI, but not as fast as we’re spending it. If nothing changes in our spending or earning, my estimate is that we have 3-6 months of runway at the moment.

So, this is a problem we need to solve semi-urgently. Fortunately there are a lot of opportunities right now.

• Later today, the video we’ve been talking about will finally be delivered in a final or near-final form. It’s an inspiring piece that turned out pretty well and should stand out against the other crap that is crypto marketing. This combined with a retweet-giveaway campaign could be the spark to a big new bump.
• Several really great ideas for marketing SmokeSignal have popped up in the community. SmokeSignal can be thought of as a funnel that leads back to Foundry and gives it a much firmer proposition, especially once it gets more traction. @sjalq is currently trying out one of these ideas, giving away $FRY in exchange for people writing about censorship on SmokeSignal.
• This bull run is looking very juicy, and our sale can be amazing at capturing this energy and storing it in DAI. We just need to adjust our sails to catch the wind.

This week or early next week, I’ll look into how our costs break down exactly, to give more details on where the money has been going. But I wanted to get this out there quickly for transparency and discussion with High Fryers.

[Captain_Stake]

@coinop-logan

early next week, I’ll look into how our costs break down exactly, to give more deta

This level of transparency is awe inspiring, well done team tosst!

[coinop-logan]

Alright, here’s a breakdown of where we’ve been spending money so far.

So, there are quite a few things to note and think about here.

• The yield farming took by far the biggest chunk. I’m not really happy about that, because I’m wondering if it really did much for the project. I expected more press as a result - I thought people would care about permalocked liquidity.

  • Then again, some of that money should have found its way back into the sale… @sjalq, any thoughts on how we can estimate whether and to what extent that money came back to us?

• Next big costs are my salary, our website admin contractor, and the Elm developer. Info not captured here is, the Elm developer is actually the most expensive week by week - we hired him recently, so with time he’ll eat more of the pie. In any case, we can say that roughly half of our spending has gone into these wages/salary.

  • The website admin contractor is what allows us to iteratively improve foundrydao.com, without me or Schalk having to manually intervene.
  • I generally spend my time in four main ways: oversight and long-term strategizing; doing the jobs that doesn’t fit onto anyone else’s plate; technical admin; and Elm development (before we hired the Elm dev).
  • The Elm dev can still be thought of as going through an onboarding process, and should become more cost-efficient as we move forward - this will manifest in more rapid iteration with Foundry apps, most immediately SmokeSignal.

• Producing this video took a small but significant bite out of the Treasury, and we are currently trying it out on some YouTube ads. I’d be very curious to hear if you guys think this was worth the money. For the record it also ate up some of my and Schalk’s time.

[coinop-logan]

In the interest of estimating runway, I dug a bit further into the running salary/wage costs: the combined monthly frootprint of me, the website contractor, and the Elm dev. This amounted to $6.5k/month.

Here are some scenarios to get an idea of where that leaves us, given a current Treasury balance of $48k. It’s actually quite a bit more optimistic than my original post suggested!

• If we stopped all other major expenditures - no marketing, no more paid content production - and if we also stopped receiving DAI in the bucket sale, we’d have about 7 months of runway.
• However, if we factor back in what seems to be a reliable inflow of almost 8k DAI into the Treasury each month (see dotted line in the first graph of this thread), we’re back into the black and then some, giving us an infinite runway!

This gives us a lot of wiggle room to spend Treasury funds on various marketing efforts - all while the Elm Dev continues to improve SmokeSignal and other apps, the website admin helps us continue to build out an online presence, and I steer this ship in the long term to deliver on the ultimate dream and promise of Foundry.

Marketing is like trying to light a forest on a fire, using flint. We keep throwing sparks out into the underbrush, and occasionally we catch a twig or leaf on fire. But sometimes a bush catches on fire, a success in itself - and sometimes that bush causes a chain reaction of viral hype, and the whole forest is burning. That’s what we’re focused on now: wandering through this forest of marketing, trying to light shit on fire. I’m confident that it’s just a matter of time until this project lights up in a very big way, and while our Treasury isn’t huge it’s enough to try many different approaches to the problem.

Once the forest catches on fire - or even a few trees - we can relax a bit about the marketing. We’ll reallocate @sjalq to building out Governance, with our Elm dev helping this effort on the front-end, while I refocus my efforts on cultivating an intelligent High Fryer network.

[sjalq]

@coinop-logan

The yield farming took by far the biggest chunk. I’m not really happy about that, because I’m wondering if it really did much for the project. I expected more press as a result - I thought people would care about permalocked liquidity.

• Then again, some of that money should have found its way back into the sale… @sjalq, any thoughts on how we can estimate whether and to what extent that money came back to us?

Re: Yield farming; I don’t think we marketed this sufficiently, but it did almost double the liquidity on the market. There has definitely been arbitrage between the market and the sale during this period and the price has declined slower than without the yield farming. We spend $10k to buy up $FRY so as not to dilute the supply. We won’t do that if we make this a permanent $FRY distribution mechanism.

Re: Permafrost; We diluted $FRY with this experiment by 900k $FRY. It only ran for 1 week but netted 6k of liquidity and around 10k of total liquidity. The permafrost has actually generated around $600 in fees for itself since inception. If that slow week were repeated another 56 times until the end of the sale we would have $336k in permanently locked liquidity.

I do think both experiments worked but neither on their own blew the lights out. I would say that if both were to become permanent fixture around how we distribute $FRY, they would yield compounding and complementary results. From what we can see my guestimate is that we can raise the liquidity to around $500k before the end of the sale and that a very significant amount of that will be arbitraged into the treasury. That’s assuming we don’t make any other significant progress wrt marketing.

[coinop-logan]

As discussed elsewhere, focusing on marketing and iterating SmokeSignal will be our immediate focus in the short- to medium-term. Getting usage on SmokeSignal will be a huge achievement and help us move toward Foundry goals in a number of ways. To name a few:

• Activity on SmokeSignal makes Foundry’s proposition a lot stronger, because it will be immediately evident that Foundry actually builds useful things.
• Activity on SmokeSignal will generate income for the Foundry Treasury. Even in small amounts, this is a crucial proof-of-concept for Foundry’s claim of being profit-focused.
• Users on SmokeSignal have a good chance of converting into FRY holders. They’ll value radical freedom, and will become aware that SmokeSignal’s success can be reflected in a token they can invest in.
• For similar reasons, these users will have a high chance of converting into High Fryers: pseudonymous individuals who provide Foundry with decentralized, resilient, bold intelligence.
• Individual SmokeSignal posts can be made to have their own SEO, and a successful post that ranks high on Google will essentially serve as the beginning of a marketing funnel that will direct further users to SmokeSignal itself as well as Foundry and its sale.

Given all the above, we’re considering hiring out more Elm development (Elm being the language we write all our front-ends with, including SmokeSignal), as this is the bottleneck for how quickly we can iterate SmokeSignal.

The cost, of course, is that doing so would transform our “infinite runway” given our current costs to a limited one. But in general we have to make a decision like this, because scaling up our operational throughput is a crucial step to achieving Foundry autonomy by Feb 2022. Anyway, let’s look at some numbers.

Running Some Numbers

Assuming a rate of $40/hr, hiring a full time Elm developer would cost an additional $6.4k/month, doubling our current monthly cost footprint. Running similar math and assumptions as my previous post here, (including assuming that the DAI income via the sale doesn’t increase or decrease), that leaves us with about 10 months of runway. That’s not really too scary.

And what would we get in exchange? It should about double the speed at which we can iterate SmokeSignal (and other front-ends for Foundry stuff), because of the two existing devs, one (me) is usually doing other thigns, and the other (@hcryptoz) is only working part-time and is still getting up-to-speed with Elm.

If instead we hire two additional Elm developers, then we get 4.2 months of runway, and should roughly triple our speed of iterating front-ends (SmokeSignal and otherwise). Hiring three would bring these values to 2.7 months of runway and four times our front-end iteration speed.

More Thoughts

When thinking about the above, there are a few things to keep in mind.

First, a short runway shouldn’t freak us out too much, because anyone we hire we can fire as the Treasury gets closer to zero. For example, if we hire three additional Elm developers, and 1.5 months later none of their work has translated into increased DAI entering the sale, we’d have about $22k left in the Treasury from our current $50k. That’s not a happy scenario, but we can decide to let them go and stop hemorrhaging money while we try other things and determine the next action.

On the other hand, we should also keep in mind that the Elm developers won’t immediately be at 100% capacity on day one. We’ll hire for proficiency in Elm, but they’ll have to spend some amount of time (a day or two? A week or two?) simply getting familiar with the codebase. On top of that, this process of onboarding will take up my own time, which is a more invisible cost, slowing down my work with leadership, writing (like this post), marketing, and general admin tasks.

Alternatives

While discussing this, there were other ideas for how to turn Treasury money into increased operational throughput. Here are some.

• Hire a technical admin, freeing up a significant portion of my own time). However, a difficulty here is that we’d need someone with extremely high trust. Hiring an Internet stranger for this feels extremely dangerous.
• Find and hire a growth coach, who specializes in the strategy of transforming from a small team into a larger, faster-moving beast. This could be a crypto guy or someone more about general business.
• Hire a marketing lead.

For the record, we also intend to spend some of the Treasury money on marketing too.

Any other ideas, for how to turn Treasury funds into increased operational throughput?