Tim Delhaes is joined by Novell Loh and Amy Soon, the Co-founders of Blu3 DAO. Earlier this year, the sisters formed the DAO in order to empower women to achieve financial freedom through learning, exploring and building their careers in the Web3 space.
However, recently, the organization has come under scrutiny regarding allegations of financial mismanagement. In recent articles, including one published by Forbes, reporters didn’t speak directly to Blu3 DAO members. So, we’ve decided to hear their side of the story.
In the episode, Tim, Novell and Amy cover the backstory and inception of Blu3 DAO, Amy’s contentious book deal, how the DAO secured funding from Harmony, the details of Blu3 DAO’s finances, and what, if anything, could have been done differently to avoid the controversy. To find out how Grindery is building a Swiss army knife for existing DAO frameworks, head to grindery.io.
Tim Delhaes: Hi, my name is Tim and you're listening to DAO Talks. In every episode, you sit down with my Web3 leading guests and demystify decentralized autonomous organizations, DAOs, and share the builder's stories and discover how we can better use DAOs and hopefully improve the world we live in.
Today, I'll be talking to Amy and Novell from Blu3 DAO. Blu3 DAO has been going through somewhat of controversy leading up to a Forbes article that came out a few days ago before the show. Amy and Novell had reached out to me in order to get a space to tell their side of the story. This is an opportunity for you guys to listen to the story, compared it to what you've read in Forbes or the other articles as well as on Twitter, and make up your own mind.
Full disclosure, Blu3 DAO has been working with Harmony, and they had a brand design from Harmony. Grindery, my own project, is also receiving grants from Harmony. In the past, we also went through similar trouble. Just wanted to disclose this here, so in all fairness to all participants, enjoy your show.
Amy, Novell, welcome to the show. Thanks for joining. How are you and where are you?
Novell Loh: We're alive. We're still alive, so that's great. [chuckles] We're in New York City, both Amy and I.
Tim: Amy, Novell, let's jump in. This entire story with Blu3 DAO actually made it into Forbes. It's surprising, not good, not bad, but that's actually covered in that much detail, and that you today go, "Hey, how many people actually know what a DAO is?" Just go look at it and go like, "This is total Chinese to me."
Obviously, it's a very controversial situation and story. What went wrong? How did you end up there? What was your thought from like, you see this article up, and you go like, "Okay, what happened?"
Novell: Yes. I thought things wouldn't go any worse until I saw that story on Forbes and I was like, "Wow," but I would say these are allegations. There were multiple allegations on the original story. One of it was that Blu3 received $1 million in grant, and we continue to ask for more. The second one is that the funding benefited the founders and not the community. The third is that DAO is comingling personal finances with DAO money, and fourth is that we continue to get grants despite the grant programs are paused indefinitely.
All of these are allegations and they're unfortunately one-sided. What went wrong is that I think, some of these things were questions posted within the community forum itself. We have tried explaining ourselves in multiple occasions and then, at this point, somebody just posted this and published it on Twitter, and then a few others retweeted it, and then it got caught on fire.
Unfortunately, like I said, these allegations are false and they are one-sided. We didn't actually get a chance to share our side of the story.
Tim: How does that happen? How do you get from where you think everything is going normal, as normal as things can be in Web3, but what do you think-- In essence, what happened there that it ended up being this controversy, big story on Forbes, what went wrong?
Novell: We had a very difficult situation at DEFCON, a completely unrelated matter. Actually, Amy and I weren't even in DEFCON, but we had a great and amazing team over there. Unfortunately, during this time when we were trying to resolve the situation, we were hit by a series of false, damaging, and very personal allegations on Twitter. I honestly do not know if it was malicious or whatever the reason was, I just found it pretty interesting that it came at that particular time when we, as a leadership team, for a women organization was trying to resolve a separate unrelated issue on the ground.
Tim: Do you think that the underlying cause of this is that somebody wanted to do harm or is it a big misunderstanding, or is it a series of unfortunate events? What do you believe is the underlying dynamic here?
Novell: To be very honest, I will say that these are really truly valid concerns. What I would have done if I had concern is to go directly to the person and have a very frank conversation. That's what I would have done. I can't speak for others. I can't say if there are other malicious intent. All I would just say is that that's not how I would have done things, that's first.
The second thing is that I do believe that DAOs are very new and very experimental. Grant programs are very new and experimental, and I think in the industry, it has proven itself that it's probably not a sustainable way of doing things. Blu3 DAO being one of the DAOs that have received funding, I think there were a lot of misunderstanding around that. I think it's just all brewing in together and, yes, that's my take on things.
Tim: Amy, do you share that? Is there another aspect to it that didn't take into consideration? Is anything else that happened there in the background that cause the story to evolve to the point where it is right now?
Amy Soon: If I were to take a step back because I have connected with other industry leaders in the space, I think people don't understand how Blu3 DAO came about. Especially with my sister and I being new in the space, how did we manage to start a DAO and then receive a $1 million commitment from a major protocol? A lot of people don't understand how we got here, and I think a part of that is the pain points of being a DAO. Being a DAO is being decentralized and a lot of times we don't want to put ourselves front and center.
One thing that I've learned from this is people don't understand how we started as founders and how we have evolved as a DAO. When people don't understand things, they like to plug their own narrative on a picture. A lot of the allegations that came from a community forum, we had tried to deal with a lot of, what I would say critics, and more like naysayers. We try our best to justify the work that we do, and after a while it gets exhausting. Because our work is in real life. Our work is to bring women and non-binaries to our three hackathons. After a while, we stop responding to these people online and focus on the real work that we do. My lesson from this is that we need to figure out how to better control that type of noise because now, that have blown out of proportion.
In going back to my sister's point, I do agree if some people have questions about how we run our DAO, it is much more healthy to actually have a direct communication with us, especially when we already had an ongoing communication about our partnership.
Tim: They're going to take you by the word that you just said, which is the history of how Blu3 DAO came about, and what's the backstory? What personal experience let you to actually start it?
Amy: We both lost our mother almost seven years ago on my birthday, and she passed away still worried about money until the day she died. It really, really pains us because she died alone in a house when we were all here in the US. We came abroad to America for the American Dream, and she was back in Malaysia. That really pains us, and because of that, my sister picked a path, which I'm going to let her tell her story.
For me, it really broke my heart that my mom was still worried about money so it has become my mission to liberate other women from the grip of money, and so with that, I learned a lot. I had a decade of experience as an actuary working in Fortune 500 companies as a pension actuary, and then HR merges and acquisition covering over 150 deals. I have a lot of experience on the finance side, but I really gained a lot of passion during COVID with personal finance because I realized at that time 75% of Americans were living paycheck to paycheck, and most women don't even invest.
I actually spent every waking hour, nights and weekend during COVID, while everyone else was figuring out how to cook, I was figuring out how to invest. I then realized how much I love investing so I started volunteering in a Black Woman's Personal Finance group. This was during the heat of Black Lives Matter. That was how I was contributing back. My sister and I, we co-founded and started MoneyBoss, which is a personal finance education platform, because a lot of my sister's friends-- She's in the dancing world, a lot of them also wasn't making money during COVID because everything was shut down.
We were giving back to the community by giving free personal finance classes. That was when we realize that it was actually a huge need in the space that women just don't know how to invest and they're afraid to. We started giving classes month to month and we ran that for about a year.
Novell: A little bit of background about me because all these ties into how Blu3 came together. I started my career in audit and financial controls, and then I went into becoming a management consultant, specializing in strategy and operations in financial transformation. I was there for, I think, about 9 to 10 years, and then I got hired to a client, they are one of the top three private equity firms in New York, as a director. I was there for about three years, and then six years ago I quit my job to pursue my dreams. That's before quitting your job is cool.
A big thing came out of it was because our dear mom, like Amy mentioned earlier on, passed away all of a sudden, and six months into it I had my own health scare. That's when I realized that time is the most important thing, and I pursue my dreams of becoming a professional dancer. That happened for about five, six years, and Amy mentioned earlier on, at the height of the pandemic, we started MoneyBoss, which is our personal finance platform to teach women how to invest. That was the birth, going then into Web3.
Tim: How was your contact with Web3? Had you been involved in some form earlier? You already held tokens, been doing investing actively, did you have a lot of exposure? How was your path, individually or together, into that world?
Amy: I shared how I started learning everything I could about investing, which includes investing in crypto. I bought my first Bitcoin-- Well, not the whole Bitcoin, a little bit of it, [chuckles] during COVID, and taking crypto trading lessons every week, three times a week. I was with a group of ladies learning everything I could about crypto for over a year. That was when I started learning about the Web3 space, but more so on the investing front and the trading front.
I have two mentors in the space who's also in the Web3 space, and how my sister and I at that time was running MoneyBoss, how we stumbled into Web3 was during Messari Mainnet, New York City. This was September of 2021. I had a friend in town and I got invited to crash a happy hour. At this point, TARA was going to the moon. [chuckles] It was a TARA happy hour. They were like, "Hey, Amy, would you like to come for this happy hour?" I was like, "Of course," I would love to meet the brilliant minds behind all these tokens that was trading.
I showed up, and I remember I was fangirling, secretly texting my classmates in my crypto-creating class. I was like, "Oh my God, I just met Do Kwon. I just met the cofounder of Harmony. I just met the cofounder of Chainlink and Cosmos" and all these amazing protocols.
I think the thing for me in that moment was realizing just how passionate these individuals are. They're so brilliant, they're so humble, inclusive. I felt like it was a new space that it was new to me. I came from a Wall Street and M&A background. My clients were bankers, and we do mergers and acquisitions, but in this space it was different. There's this vibrancy and inclusion. I don't know how to describe it, but there was so much magic in the air that I just fell in love with it.
I remember going back to my sister and went, "Oh my God, we have to do something in this Web3 space." That was the start of how we started getting in.
Tim: When was that? Do you remember the date?
Amy: At that point it was September, and I had met a lot of these industry leaders in all of these parties. [chucklies] If you've been to a conference you know that every night they have some sort of party or happy hour or networking event. I remember going out at least three times or four times that week, and then the following week, I caught COVID. It was actually when I caught COVID which was my turning point.
When I caught COVID, I had a friend of mine, she is an industry leader-- I'm not going to disclose her name, but she was on a panel with Gary Vee, so at that level. She called me and she was like, "Amy, oh my God, I just lost two friends to COVID last month. Are you okay?" In that moment I had brain fog, I couldn't taste anything, I couldn't smell anything. I felt like I was going through this realization with death, kind of what my sister had when my mom passed with her own death scare. I had my own death scare.
In that moment, I was like, "Oh my God, if I die this week what else is there left for me to do in this world?" I knew in that moment I had to write a book. I had to write a book about our family, because our family, it was traumatic, but our parents used to argue a lot about money. I knew that that was my purpose and I had to share our story.
Two months later, it was NFT.NYC. I met up again with a lot of these industry leaders that were in New York City, including Harmony core team. Harmony had lost a $300 million ecosystem grant at that point, and I told them about how we have the same mission. They launched a create wealth and harmony campaign in Time Square, and I shared how we have the same mission at MoneyBoss. We want to create wealth and harmony, too. I pitched my book, actually, at that time, and they loved the idea, and that's how we started our partnership between Harmony and MoneyBoss.
Tim: Who were you involved with Harmony? Who did you meet back then?
Amy: We met the whole team, actually. We met Li Jiang, Stephen, Adrian, Rongjian, RJ. Yes, the whole team was in town, and then they were back again for NFT.NYC and they made a huge splash. They had several parties. We helped them plan a supper one night in K-town. I think that's how we started integrating and meeting a lot of the people in the Harmony ecosystem.
Novell: I will also add that it wasn't just Harmony. Harmony was just one of the many teams that we met in that event at NFT New York City. This is very common, as we all conference-goers know. We know that there are many protocols and many projects that we meet.
Tim: Got it. When you started pitching Blu3 DAO was it already called Blu3, or what was it called? What did you actually pitch? What was the core idea back then?
Amy: The core idea was a book about our family. It was about personal finance. We had been working on MoneyBoss almost a year at that point, delivering classes every week, including online courses that were supported.
Tim: Got you. How does the story continue from there? They said, yes, and that was the first project or?
Amy: Yes, it was the book, the book was our first project together. I wrote the book in three weeks because we only had one month to write the whole book. My sister, at that time was helping me review the book.
Then following the book, I think they were planning to have a big presence in ETHDenver, so they provided 250 scholarship spots. They sponsored 250 people to go ETHDenver, and as part of the book partnership, we had 50 spots that we gave out to our community at MoneyBoss.
Novell: Yes, and it wasn't just MoneyBoss, I would say. The 50 spots, I think we gave 10 to MoneyBoss, and then a few others to other organizations, and then also a lot from just random people that have applied to these scholarships. I think I would like to emphasize that the key to the book, like Amy mentioned earlier on, her background is in actuarial science. My background is also in accounting and finance, and we work in the traditional finance world.
The whole thing about that is really providing the knowledge and telling that story to people, so that people can come out of COVID, to become more knowledgeable about how to manage their finances. At that time, in January before ETHDenver, Blu3 DOA was not even in existance, though we were preparing to launch a DAO.
Tim: That DAO initially was more evolving around the book or that was already a separate idea back then?
Novell: We were very new, at that time, to the idea of a DAO but the idea of a DAO was really interesting to us. We talk about community, we talk about inclusion, so we thought that was a very brilliant idea, and that idea came to life at ETHDenver.
Tim: Just to go back to the book a little bit, there were some stuff posted about the book, as well. There was already some controversy. From this book project, what was the good and the bad that you take away, looking in hindsight? What controversy is today connected to the book?
Amy: I think the book was intended to be an open-source and collaborative book. We tried creating an open channel for that. I think the good thing that came out of it is the urgency and the creation of this book, creating a space for other people to now have permission and feel compelled to also share their side of the story.
I remember when I talked about the book on stage in Denver, there were people that came up to me after, giving me big hugs and that they also feel the same way, so I think that was the beautiful part about it. The part that didn't go so well, in my opinion, is I think maybe I could have done a better job with being more proactive with getting feedback and then rewriting the book.
Unfortunately, we got so busy with Blu3 DAO right after Denver, hence I haven't really given the book more room for people to share their thoughts since then.
Tim: All right. What came next with Blu3 DAO? How did that come about?
Amy: When we were in Denver, we met the 50 scholars, and the energy was just incredible. Everyone was really engaged and I think maybe it also came from the space of authenticity and awareness of what is important in life that brought out people-- We attracted other women and non-binaries that also felt that sense of being empowered into the space. I think that's part of the magic that came about.
We were given a month to plan an entire conference for 50 people. Harmony had given a list of 15 items to complete. Initially, we were like, "We're only going to get three things done." The next thing you know, we're almost halfway done and we have two weeks left and we said, "We're not going to make it. This is impossible."
I think in that moment we're like, "Hey, we have 50 people that are coming with us--" In that moment, we didn't know it was a DAO, but essentially we started operating like a DAO. People started stepping up as leaders, like, "Oh, I'll help you with this part. I'll help you with that part." Then we started dividing and conquering. Then we showed up in ETHDenver. By now we had already two to three weeks of planning a conference together before we even met in person.
That's why when we showed up in Denver the engagement was really high, and we talked about launching Blu3 DAO. That was how we applied for the grant.
Tim: Just to clarify that, so this initial group of people, this 50 people, where did they come from? What profile did they have? What brought them together?
Novell: Our mission was to bring more women into the space. We want to create more opportunities. Out of the 50, I think initially we said, "We're going to give 10 to our existing MoneyBoss community." We have a community that follows us. We said, "We give 10 over there."
Then we gave another five or 10 spots to some of the other women organizations we talk about earlier that Amy was involved with learning about crypto and about investments. Then the other 30, we were just advertising under MoneyBoss platform for anybody who would like to get a scholarship-- At the time we called it scholarship, to ETHDenver. We had more than 200 people applying for that, and I was doing the screening.
Very quickly I realized that oh, there are some people who would just put their wallet address in and may not even be there. Then what I ended up doing is I would interview them and as time comes by, I would actually schedule video and phone interviews with them. These are just people who we don't know, but we ask very thoughtful questions about, "Who are you? Why do you want to be in Web3? What are some of your dreams?"
We find that their answers are very compelling, that they really put in a lot of thought into it, and that they may use this opportunity. Then we interview them and then we approve them.
Amy: I know that when we got there, the Harmony core team they had mentioned-- And I think that was when we met Stephen, Lee, and actually all of the core team, because all of them was on the ground, including Maddie and Sam. They were like, "Oh, when we gave you the list of 15 items, those were just options," but we completed all 15 items. [chuckles]
They were really impressed with the performance of-- At that point, we weren't called Blu3 DAO yet, but essentially the performance of our group. When we applied for the proposal, they were like, "We'll commit $1 million to working together." We haven't quite ironed out the details at that point, but it was supposed to be over one or two-year period with exclusivity rights to our project.
Tim: How did the name Blu3 DAO come about?
Amy: Blue is the color of empathy. I was going through a really hard time at work with my relationship and even personally on my health level. When I was depressed during COVID, sometimes life happens to you and it's very painful. It was then that my best friend told me the story about how you go through your own metamorphosis because it's meant to make you stronger and you're going through your own transformation.
Tim: I hear you. You discussed the Blu3 DAO idea as a team with the people that you gave scholarships to and so on. I assume, if I got it right, the Harmony team gave you a thumbs up and said, "Okay, if you guys present a formal proposal then this is what can be done. Now please start the submission." What were the next steps like? How did that evolve from there?
Amy: My understanding is at ETHDenver they had a-- I think it's called Project X. Don't quote me on it, because they had the $300 million ecosystem grant fund. I believe they announced it very publicly about ho if you tell me your dreams this week, if you find any of the Harmony core team members at ETHDenver, flag them and tell them your dreams. If they like and they support your dream, they'll give you money to essentially build within Harmony.
We got our chance to share our dreams, [chuckles] and our dream was to onboard more women and non-binaries into the space by sponsoring them to other Web3 conferences and hackathons around the world. That was part of our dream but it also included many other things. We were going to launch a Big Sister Little Sister program, we were going to launch our NFT, our social tokens. At that point, I remember Harmony having the DAO strategy, and so we wanted to be good partners and allies to them. We were like, "We'll help you launch 1,000 DAOs. [chuckles]
Novell: I think it's important to note that I think this is where actually what really got us into trouble. When Harmony publicly said that they were giving Blu3 DAO $1 million, I think that's where people thought that we got $1 million. That's not true at all. Harmony has their own process about their grants, which is, I think, gated by Milestones and et cetera, et cetera.
We, I think for many months, didn't receive the funding yet because they still were ironing out the DAO operations and we were so busy with the scholarship program. I think that's what got us into a lot of trouble because a lot of people thought that we had this $1 million. We have only received $75,000 out of that $1 million grant that was committed. I believe that there are a lot of other projects out there who got actually a lot more money than us, but for some reason, [chuckles] people just remember that we got the $1 million, which we did not. [chuckles]
Tim: Let's run through the dates again somewhat. It was the ETHDenver, when was this? It was beginning of the year, what was it, March or something?
Tim: February. Then you got a thumbs up and then you wrote a proposal and put it up, and that was when-- I just want to go through the timeline. Do you remember that?
Novell: I don't exactly remember when, but it was towards the end of ETHDenver.
Tim: You've wrote the proposal for Blu3 DAO while you were in Denver and then got it approved while you were there or that happened later?
Novell: Yes. I think this is more of a question for Harmony, how they approved the grant process, but from our end, those are the work that we did. Then when we heard about the DAO, I believe-- And don't quote me on that. Harmony was giving out grants by their core team and it ranges from 10,000 to-- I guess the highest is 1 million. I don't know what the number is, but the proposal, we were working on it in ETHDenver. Then we have other core members who are still members of the DAO leadership today, all pitching in, finalizing the proposal.
Tim: Then at some point, they announced it and whatever Harmony's approval process for grants is, which is another topic. They approved it, they announced it, and as you put it, one of the problems likely is that they announce it, but you're not getting the money up-front, you're getting the money over a certain period. Then before you get any money, time passes.
Just for bringing the story together between ETHDenver and everybody going like, "Yes, $1 million to do an amazing project." Until you actually got any money, how much time passed then? What happened from that moment until actually, some tokens got into your multi stick, which I assumed it's how it worked.
Novell: To clarify, and I think this is also another point where maybe folks are confused. One is the $1 million grant. I think the $1 million grant was "committed subjected to Milestone approvals from Harmony." The first $75,000 I believe, was given in April and it is $45,000 in ONEs and the other $30,000 in USDC.
Coming out of Denver, Harmony was really impressed with the level of engagement, the planning, and the success that we did through our scholarship program that they decided that Blu3 DAO will manage their scholarship programs going forward. Going into Denver, like I mentioned earlier on, there were other organizations that actually had much bigger portions than us.
Now in Rio-- So separate from the $1 million grant, which $75,000 was paid, we have these other scholarship programs that was meant to bring people, women, and non-binary into the ecosystem. There were funds that were given to the Blu3 Multisig and then it's mostly a pass-through of stipends given to the scholars as well as expenses reimbursements. That happened for the Rio trip and then the subsequent scholarship trips. Our last was ETHNew York.
Tim: In the period from ETHDenver until April, what funds were you able to use to do activities? How did you finance the activities?
Novell: Good question, Tim. All of Blu3 DAO-- And I'm very, very proud to say this, that we have been actually working voluntarily and for sweat equity. Amy and I have been working on this 80 hours since the beginning of the year and depending on the time of the year. Then we have recruited a lot of core team and all of them have been doing this for sweat equity or voluntary work.
The money that comes in is directly going out to the scholars, who are the hackers or the co-leads, and the expenses. We actually don't pay ourselves and haven't been paying ourselves until very recently because we know this model was not sustainable. The point being, separate from the grant, which most of it we actually haven't even touched yet-- We have some money. Most of it is depreciated due to the ONEs we all know. The Ones know that. The rest of the USDC, some of it has been year mark for operational-related expenses like gas fees or the ETHMexico event that we have to pay for some of our co-leads.
Tim: That is still these 75,000 that we're talking about here, right?
Novell: Yes. That's the 75,000, majority of it has depreciated because we got 45,000 in ONEs, so 41,000 just evaporated from market. Then we get separate funding for any of the scholarship programs that we do because we are key strategic partner to Harmony. Most of those funds-- I have the numbers but I want to say 92% of them goes directly out to the scholars or expenses. Expenses are mainly for accommodations, events, and they are substantiated with receipts.
Tim: Now, I got a question for you. I've worked in organizing entrepreneurial events and stuff. I did that for four or five years on nonprofits. I'm involved working with government grants as well. I'm trying to put myself into your minds. What I would love to hear this is when you do something very grassroots and everything is very small, you obviously do it with a lot of passion because you have an interest in the topic. The hours that you put in are likely not worth the money that you're making with it, it's out of balance.
Now, thinking about this idea that you work really hard, put a lot of time in it, what is important you suffer because clearly you go "Well, we're not going to make it. We're not going to be able to do that conference. We're not making the checklist." You go on a [unintelligible 00:32:50] and then you somewhat have what is equivalent to a funding event in a startup. Suddenly there's this promise of a big pile of cash. This is the question for both of you individually, how did you imagine your future?
Amy: The future was going to be a collective-- It's almost like a Web3 startup where now, it's a group of us passionate about a shared mission. We have $1 million dollar as capital and we were going to figure out how to grow that money. [chuckles] That's why we didn't pay ourselves and we were going to have it almost run-- Be a self-sustaining DAO, to continue pursuing and fulfilling our mission, and that it will live beyond the two of us.
Novell: Yes, I think I echo Amy's element in that. First, let me clarify a few things. When we started MoneyBoss, that is what we pay ourselves but we actually stopped MoneyBoss in April because we were getting so busy with Blu3 Dow.
To your point early on, Tim, when we receive or when Harmony committed that $1 million to us, and this is just Amy and I, we were brought up in a very Asian culture where you need to be saving X percentage of your money, you should be investing your money and growing them instead of spending them. If you're familiar with the Harmony ecosystem, Tim, you know that one of the things that Harmony suggested very early on in the DAO program is that you can pay your governors $75 an hour.
Blu3 DAO consciously chose to not pay any of our governors. We did that because we wanted to grow our treasury so that it can be self-sustainable instead of paying ourselves. That's why these allegations hurt that much more because we made these conscious decisions.
Tim: Did you project yourselves into the future as "employees" of a organization, DAO or non-DAO, or did you see an equity play in this? Because you used the term earlier where you said, sweat equity and in a startup it would be great. I'm paying myself shit salary or none but I own 10% of the pie. How did you see your personal return of investment? By return, I'm not only saying necessarily money but in this aspect, what was the model that you had in mind where you would say, "All of the sweat and time and energy and pain that I'm putting in here, is going to pay off because we're building something meaningful." I assume that's what you thought but you must have also thought, there must be a financial return at least. In terms of providing yourself financial sustainability, what was your ambition and plan around that for yourselves at that time?
Amy: I think one of the beautiful things about DAO is that in the Web 2.0 space, the stake owners are the stakeholders. Between employees, owners and customers are three different sets of people. In a DAO setting, they're the same, the employee is the owner and also is the customer.
We build Blu3 DAO with a vision to serve ourselves, not just the two of us but our community. We're all working for sweat equity. Our contributors are paid with blue tokens and essentially, we've learned a lot about the DAO space, but one of the success story that we are all familiar with is Friends With Benefits. When they got to 1,000 active contributors they were worth $140 million in valuation.
We believe that we were on that trajectory that if we create enough value for our community, that now, we can capture that value through our tokens. We are essentially becoming a tokenized community.
Tim: When did that dream crash and what moment did you realize "Okay, that's not going to happen," and not because Blu3 DAO is collapsing in completely, that's just not the point. When did you realize the seed funding, so to speak, which was $1 million is not going to end up coming in?
Novell: I think it's important to note that while the million dollars would have been great, the actual fact is that we never got the million dollars but we still were able to achieve a lot of what we set out to do. Would it have been great with the million dollars? Sure. Right now we have been eight months into this, we never receive the million dollars. Blu3 DAO actually became even stronger.
We lost Harmony as a key sponsor in June. Actually, when they told us about it, we told them that while this is a step back for Blu3, we understand it's the right thing to do for Harmony, given the market crash, given the hack. We parted ways but then we worked very, very hard for our ETHMexico trip.
It was a financial loss for the treasury for what [chuckles] little money left we have, but we worked damn hard. All of that just talks to the testament about the strength of truly what a DAO is when you can put a bunch of people who are very passionate for the mission and what are they willing and able to do even without the funding.
Amy: I have to correct you there, Tim, I think we still believe in the vision of Blu3 because honestly there were multiple moments of "We're not going to make it," moments including when we lost the million dollar grant. Remember we had that conversation like "Oh, some people are going to quit cause now we don't have money anymore," and nobody quit.
In fact, we gained momentum. In fact, what happened in that moment was our core team all stepped up and they're like, "You know what? Let's pivot." I think that's part of our DNA is that we're a group of multifaceted, intelligent, and talented, resourceful individuals that, despite whatever we face, it never stopped us. Even now, even at this point after going through this crisis, nobody quit.
Tim: How have you been sustaining yourself financially if you're not paying from the DAO, and how are you planning to do that forward? Let me put it like this. When I did my first startup when I was 18, 19, 20, I think we pretty much lived out of rice and ketchup and beer for a year. `That wasn't the problem.
A DAO can be a startup in terms of as a commercial enterprise. When I look at the commercial enterprises startup after building a few companies, it's almost for me, ineffective if founders don't pay themselves and they don't pay themselves well, because it creates an artificial environment that's a bubble outside reality because you create a risk for the organization to collapse if people that are at the steering wheel are not getting paid, sooner or later they're gonna jump off. How well did you do it? What was your plan and what's your plan now?
Novell: Tim, you're like the perfect interviewee because you understand actually, the pain and the process of a founder. First of all, this is why we started MoneyBoss. Amy and I have two different journeys to get to where we are financially, and when I quit my job, six years ago-- I quit my job without income even before Blu3 DAO. I am lucky enough to be able to do that because of some decisions that I made in my life including having good expense management, like being able to get a good-paying job at the very early onset of my career, started to invest in my first home when I was 20 or 21 years old, made some good investments and then once I quit my job, it is all about cost management.
On top of that, I also have some investments that pay for my monthly expenses. That being said, you're absolutely right. The model that we have currently for Blu3 is not sustainable. It's not sustainable to not be paying anybody and expect them to be working full-time. That is why we just instituted the model to pay some of our contributors based on whatever sponsorships that we get. That again is also very well deliberated and controlled and discussed within the DAO governance as to how do we want to do that, because it's a matter of balancing between paying people and not bankrupting the DAO, especially we're in crypto winter right now. That's my point.
Amy: I agree with my sister, but going forward, Tim, we have a business model in mind. We have a great strategy that will be coming up in the pipeline, and we do plan to fundraise because we want to grow this bigger and make it more than what it is today.
Tim: Very good. Again, in hindsight, looking back, how do you think this situation that you have now with the controversy going on, including in Forbes, what was the one thing you think you could've done different that would have avoided that?
Novell: Yes, I wish I knew what the answer was. Some of these questions were asked in the Harmony Forum, some of them are good questions. I think if you go back you can see that we tried answering some of the questions. The answers were just again, torn apart. I don't know what else we could have done there. Maybe we could have spent more time in answering them, but we were advised by other industry leaders to just leave it as it is and continue building.
I really wish that if anybody had any questions, they can come directly to Amy and I. If they truly believe that "This doesn't smell right, can we have a conversation?" I would be very, very happy for that and we have asked Harmony many times to come out and say, "Look, we did not give Blu3 DAO $1 million." [chuckles] I know they have done that a couple of times, but people just overlook that.
I don't know what we could have done. I would actually love to ask you, now that you have a lot of our backstory, what could we have done different to avoid this?
Tim: The few things I know is things change when money is on the table. Everyone is friends and shares ideas and passions about something. I have 5 people or 4 people or 10 people at the table and they have this discussion for month and month and month, and the moment you put money in the middle of the table, and it's about splitting it up in some form or controlling it. It's totally unpredictable how people behave. I think that's one.
I think that these discussions about DAOs, in general, is that what is very common in any organization is basic accounting and transparency that is somewhat built into DAOs. When I look at grant programs, every time we do a payout from a Gnosis Safe, the only thing that's there is a wallet address, amount, and the transaction ID but there's nothing for anyone to connect that to anything meaningful. It's so complicated that even on the payout, the people that have to do it have to take a spreadsheet and compare things.
Traditional companies would not be able to work like that either. If you would run any business like that, yes, we just don't have any accounting records. We have somebody that puts it down on a napkin because-- And working in Web3, all of this as we know how powerful money is and that is the engine behind Web3. It's an incentive system. If that is not used carefully, ends up on unpredictable places. I think that is a core problem of DAOs, of grant programs of the entire Web3 space.
I think if I would recommend anything to anyone who is building a DAO is as soon as you get any money and make sure everything that moves is transparently published ideally on Chain. I think it's crazy that when you do a DAO payout that you pay out and then your reporting is a screenshot from an Excel sheet that gets uploaded into a forum. It wouldn't pass any accounting standards anywhere. If my company, by our CFO was run like that, he would get fired. However, in the DAOs, that's the most common best practice.
I think that is one Achilles' heel of the organization no matter how you structure it. It is in the end the point of failure for a lot of startups. Founders in-fighting about who has how many shares, how many tokens, who gets paid more salary and that's where things fall apart. DAOs is not different, it's just even more informal.
To close, what would you tell somebody that is now going like, "Hey I have this idea and it has to transform society and I want to run a DAO." What would you recommend? What are the one, two, three things that you would say, "Great idea, love it, just make sure you do these three things?"
Novell: I would say that first of all the question is, "Does it need to be a DAO?" I think a lot of people like 10 months ago DAOs a very hot topic. The idea of DAO, I think, it's brilliant and it's amazing. The reality is that we are not quite there yet in terms of the infrastructure to support the actual build-out of a DAO.
Then the question is, "Do you really need a DAO? If so, why is that? Why do you need a DAO versus a traditional structure?" Then if you do decide that you do need a DAO, focus on building the infrastructure and the community. The infrastructure meaning your governance process. Like I said, having those really good controls around the DAO and then how are you going to have the tokenomics and the legal entity structure? Now all of these are risks relating to DAOs right now.
Then third, focusing on your community because your community is basically your DAO. Without the community, you don't really have a DAO.
Amy: I do think that DAO is still very new. We're walking on a bridge while building it. There is a lot of things that don't work yet. With running a DAO, it is painful but I do think that DAOs are beautiful. I do think that DAOs are the next frontier of social networks. I do think that if you understand people, desires and you're able to bring a community together for a shared vision, and you're able to lead and find other leaders, be clear on their responsibilities, then your DAO will thrive.
The thing that DAOs can do that, in my opinion, traditional organizations cannot do as well, is that now you're harnessing the power of the people as a collective. I think that is very powerful.
Tim: Amy, thank you for those words. Novell, thank you so much. This was a very interesting conversation.
Novell: Thank you, Tim.
Amy: Thank you, Tim. This is an honor.
Tim: DAO is brought to you by Grindery. If you enjoyed this podcast, consider subscribing to DAO Talks on Apple podcast, Spotify, Google, or any other platform you fancy. To find out more about Grindery, visit grindery.io. Thanks for joining me. Tim.