The Magic Behind AllianceDAO: Mutual Honesty Between Founders and the Organization
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The Magic Behind AllianceDAO: Mutual Honesty Between Founders and the Organization
Our honesty with founders, and founders' honesty with us.
Navigating Web3 tides with focused insightsWritten by: Qiao Wang
Compiled by: TechFlow
A few months ago at the ALL11 founders' dinner, it hit me. I finally understood why so many of our alumni hold us in such high regard. So I delivered this speech at that dinner.
The magic behind AllianceDAO is "mutual honesty"—meaning: our honesty toward founders, and founders’ honesty toward us. Let me explain.
After three years of supporting early-stage crypto startups, I’ve noticed that 99% of investors just want to be friends with founders. They’d rather be politely insincere than truly honest, because honesty can indeed backfire.
But for a startup with only two founders, encouragement isn’t always what they need. Sometimes what they really need is honest, independent feedback. Employees won’t give honest feedback because they fear getting fired. Potential users won’t give honest feedback because there’s no benefit in saying, “Sorry, I won’t use your product.” Few investors offer honest feedback because they want to be liked. Co-founders often hesitate to give each other honest feedback to protect the fragility of their relationship. And even if they want to, they might not be able to—because amid daily merge conflicts and cold-outreaching users on Twitter, it’s easy to lose sight of the bigger picture.
But the other mentors in AllianceDAO and I don’t sugarcoat anything. Polishing the truth only leads founders to waste more time and money down the wrong path. If we think your product needs improvement, we’ll tell you. If you’re spending too much time schmoozing VCs instead of coding and talking to users, we’ll tell you. If you’re overextending before any sign of product-market fit, we’ll tell you. And if we genuinely think you’ve failed, we’ll tell you.
Now, most of the time, we actually don’t have strong opinions. The world is increasingly complex, and we know our own limitations. We also recognize that founders understand their ventures better than we do, so we expect them to make the right decisions most of the time. But when we occasionally feel strongly about something, we aren’t afraid to speak up—even if the short-term consequence is making them uncomfortable. In the long run, our alumni always appreciate our honesty, and sometimes tell us, “You were right—I wish I had listened.”
But absolute honesty doesn’t mean being cold or rude. On the contrary, we strive to empathize deeply with the pain founders are going through, so they feel safe being fully transparent with us about their challenges. This is the other direction of the "mutual honesty" mentioned above.
Founders are always selling. They sell to users. They sell to partners. They sell to employees. They sell to investors. The result of “always being in sales mode” is that they can’t be fully honest with users, partners, employees, or investors. They fear losing a user. They fear disappointing a partner. They fear demotivating employees. They fear telling investors the truth because they worry it makes them look weak or jeopardizes future funding rounds.
But with us, you can be completely transparent. Founders often come to their investors to complain about hiring difficulties or introduce a customer. Yes, we can help solve these issues—but we know they almost always have deeper problems, pains, and fears that they keep to themselves, that keep them up at night. For example, their co-founder relationship has turned toxic and they can’t break out of the vicious cycle alone. Or they’ve spent months iterating on a product that has some traction but not enough, and they’re unsure whether to persevere or pivot.
So a typical office hour with me usually goes like this: A founder comes in and asks a series of questions. Sometimes these questions are deep and critical. Sometimes I sense they’re superficial. In the latter case, I turn the table and start asking probing questions instead of just answering. I keep doing this until we peel away all the layers and reach the core—the fundamental issue the founder either hasn’t realized or hasn’t told anyone. Some alumni have told me they sometimes feel like I’m still conducting due diligence on them. But I tell them I’m more like ChatGPT: the more context you give me, the more likely I am to give you a helpful answer.
Again, sometimes we have good ideas for solving the root problem, sometimes we don’t. But even when we don’t, just having someone to talk to about your deepest struggles is always motivating, because building a company as a one- or two-person team is incredibly lonely, and having no one to talk to can genuinely lead to mental breakdowns. I often half-jokingly tell our alumni that my main job is to be a good therapist. I can sense when they talk to me—they’re not really seeking advice; they just want someone to talk to.
And this mutual honesty between mentors and founders—that’s the magic behind AllianceDAO. It’s something I’ve never seen anywhere else.
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