Five lessons we’ve learned from bringing DAO tooling to market

Special thanks to Rafa the Builder, Abbey and Vishesh for their feedback on this post.

Much has been written about DAOs as a new form of organization, and how they can be built and maintained sustainably. We are very much still in the iteration and discovery phase as we learn how DAOs can best structure, govern, attract and retain members and produce value. However, it is not too early to start thinking about the implication of DAOs as a new organizational structure.

As DAOs adopt new forms of operation, this will affect how they collaborate with, sell and service each other and other organizations. This blog post tells the story of what we have learned about DAO go-to-market (GTM) as a young, small organization building primitives for DAOs.

Starting with the wrong heuristics

In his post on the DAO landscape, Coopahtroopa defined DAOs and segmented them by industry. This is an obvious starting point in trying to make sense of DAOs and forming a high-level view of the space. However, stopping the segmentation at this level misses an important point: there are many other properties that make DAOs different from one another. As a DAO tooling builder, we learned that these other properties were more relevant in defining which DAOs we worked with.

DAOs are fundamentally different from traditional organizations, both in their mode of operation and culture. Their fluid nature, positive-sum culture, and distributed decision-making set them apart, but also introduce attributes that make DAOs very different from one another. Simply starting from the comparison point between DAOs and ‘organizations’ may lead us down the wrong path. We might instead start from a framework that compares DAOs to ecologies or sense-making organisms – networks of interdependent actors.

This connects with a broader theme we are noticing in web3 – the use of assumptions and heuristics from the past often leads us to miss the point. In order to effectively build for, collaborate with and sell to DAOs, we need to shed our assumptions and go back to the basic questions. In the case of GTM, this means building segmentation from the ground up, understanding organizational decision-making, and embracing DAOs for what they are.

Why it’s hard

Before we dive in, it’s worth mentioning what we have found makes DAO GTM hard:

  1. Using the wrong heuristics for what DAOs actually are. Using the wrong heuristics misses the point of embracing DAOs for what they are and introduces analogies from the traditional world, which oftentimes don’t work. First-principles thinking is required in coming up with an effective strategy.
  2. DAOs are in a constant state of flux. DAOs are nascent and crypto is moving fast. Since many DAOs are still figuring out their ideal operating method, they are evolving at a fast pace, which often means that pressing problems from last month may not be the top priority this month.
  3. DAOs are not entities with single points of contact, but rather sense-making organisms that coordinate as a network of people. The lack of defined hierarchy, decision-making, and responsibility means that there are many different voices, opinions, and agendas. While we find this a compelling feature of DAOs, it also makes GTM hard to navigate if you’re approaching it like traditional sales.
  4. Nobody, including DAOs, fully knows what they need. Since we are all still figuring this out together, there is no one clear menu of what DAOs need. It is harder to build and sell products when there is so much uncertainty about the needs and priorities.
  5. DAOs are early. The fact that DAOs are early and many are still experiments (totally worth making), means that most DAOs that exist today probably won’t be around for the long haul. The DAOs that stick around will be overwhelmed with requests for new DAO tooling, as all DAO tooling builders are focused on the same high-profile DAOs.

Tactics that worked for Otterspace

With the challenges laid out above, finding an effective way to navigate the beautiful messiness in the space can present itself as an opportunity to differentiate and find success. Below are some strategies that have helped us – maybe they will also help you.

1. Forego inaccurate heuristics by segmenting effectively

Effectively segmenting DAOs for your specific case is essential both for product development and GTM. Understanding who you are building for will help you stay focused and hone in on depth over breadth. We have found that starting with the problem is the most effective way to build good segmentation. Ask yourself what types of DAOs are likely to feel the problem most painfully and why?

Some of the properties we have considered and found helpful in segmentation are:

  • Lifecycle stage (newly forming vs. mature DAOs)
  • Treasury size
  • Member size
  • Contributor size
  • On-chain maximalists or not
  • Number of contributors
  • DAO mission & purpose (product, service, community)

In addition to considering what properties are relevant to your problem, it also helps to consider the properties that will make your DAOs a good customer. How are they funded? Are they likely to become long-term users? Will they refer other DAOs? Asking this question led us to a cluster-based segmentation of DAOs, mapping out loosely affiliated groups of DAOs with strong ties amongst contributor networks. These are entirely subjective clusters, but they may help you too:

  • Public goods cluster (Gitcoin, ENS, Proof of Humanity, Toucan Protocol, Gnosis, etc.)
  • DeFi Maxis (Compound, Curve, Uniswap, Aave, etc.)
  • Social Finance (Index Coop, Bankless, etc.)
  • On-chain Maxis (DxDAO, etc.)
  • Moloch (DAO Haus, MetaCartel, etc.)
  • “Community is the product” DAOs (Forefront, FWB, SeedClub, etc.)
  • Juicebox cluster (SharkDAO, ConstitutionDAO, MoonDAO, etc.)
  • NFT Cluster (NOUNS DAO, PartyDAO, FlamingDAO, ApeDAO, etc.)

2. Accept the fast-paced evolution of DAOs and build an adaptable product

DAOs are constantly learning, evolving, and updating their methods of operation. If you need to spend 6 months to put something in the hands of your customer, you might miss the boat as the DAO evolves beyond last year’s issues. GTM always starts with having the right product, but in this case, it couldn’t be more important.

The evolving nature of DAOs favors straightforward products that solve specific and highly painful problems. By overengineering or overdesigning a solution, you risk building in assumptions or needs that quickly become irrelevant or take too long to build.

As we have iterated on the Otterspace product from MVP onwards, we learned that stripping away functionality would allow us to start with a simpler product and evolve with the DAOs using our solution. Keeping products focused and simple is not a new concept, but we have found it especially important in the DAO space which is evolving so quickly.

3. Leverage the networked nature of DAOs by building a self-serve product with built-in growth loops

Lean into the permissionless nature of DAOs by building self-serve and single-player use cases that foster bottom-up adoption within the DAO, instead of trying to sell to the DAO as a whole. If you are building a product that is valuable in multiplayer mode, focus on DAO sub-units such as guilds or pods instead of going for DAO-wide adoption.

By considering the DAO as an organism or network, you can seed small projects within a DAO and let them percolate upwards through built-in growth loops, thereby spreading adoption. This takes advantage of the bottom-up and permissionless nature of DAOs and reduces the amount of direct sales work needed.

At Otterspace, we started by serving only onboarding member journeys with the intention of expanding to other journeys later. However, we quickly realized that the onboarding journey relies on many more stakeholders and is more time-consuming to implement. By allowing any DAO member to create any journey, we make product adoption easier by individuals and guilds. The natural growth loops built into our badges product allow easy adoption – once someone earns a badge they can go and create a badge for someone else.

4. Collaborate with other projects to collectively figure out what DAOs need

We are all early and nobody is quite sure what DAOs need or how they will continue to evolve. In order to have the highest chance of success, we all need to put our heads together, learn from each other and build flexible, interoperable tools.

The beauty of web3 is the ability to build modular and easily composable components that form part of a greater whole. By collaborating with adjacent projects, you can together build an even greater solution and benefit from increased distribution. Similar to how we framed DAOs as ecologies, we can also consider DAO tools to be an ecosystem of components that can symbiotically work together to enable DAOs to compose their ideal whole.

It also goes without saying that the values of positive-sum, open-source, and minimal extraction are deeply rooted in the DAO culture and you will most likely fail if you try to sell DAOs something that is centralized, siloed in a walled garden, and extractive.

At Otterspace, we’ve been bringing together a group of leading DAO tooling projects to collaborate in a symbiotic way. We believe that together, we’re more likely to be able to learn and build a better tool stack for DAOs. Stay tuned for the DAO-in-a-box piece, which is coming out soon!

5. Amplify and differentiate your message to DAOs by building out your community

Try to build a community as early as possible. Your community will help you prequalify potential DAOs who want to try your product and act as the top of funnel that drives awareness about your product and the problem that you’re addressing. It will also support the middle of funnel in teaching users how to use the product during the consideration stage. Most importantly, your community also acts as the unified megaphone that will amplify your differentiated message. This is important in becoming the signal in all the noise.

At Otterspace, we realized early on that quality over quantity is what makes an engaging community. We, therefore, decided to curate our community based on the Otter NFT campaign which launched in February. We wanted to make sure that everyone who joins our community resonates with our mission and vision, and is incentivized to spread our message.

Since we will plan on launching our product publicly, we will open up our community with that as well. Stay tuned for our public launch soon!

What’s next

While we certainly don’t have a silver bullet for every problem, we hope our approach to solving some of the GTM challenges will also help other DAOs and DAO tooling providers. By publishing this piece, we hope to engage in public discourse on what works and what doesn’t. Please reach out on Twitter to contribute to the public discussion on this!

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