MIP40c3-SP19: Growth Core Unit Budget, GRO-001

MIP40c3-SP19: Growth Core Unit Budget, GRO-001

Preamble

MIP40c3-SP#: 19
Author(s): @Nadia
Contributors:
tags: core-unit, gro-001
Status: Formal Submission
Date Applied: 2021-06-08
Date Ratified: N/A

Sentence Summary

MIP40c3-SP19 adds the budget for Core Unit GRO-001: Growth.

Paragraph Summary

This budget proposal covers a total of 3 months (August, September, and October of 2021). During these three months, our focus will be on:

  • We have 93 opportunities at the last stages of the Growth Process cycle. We will drive these opportunities to the next step by launching adoption campaigns with our partners.
  • Institutional vaults: we will find the proper implementation with the Maker community and larger vault users.
  • Dai in other Networks: Increase Dai usage in other networks like Polygon and Solana.

Growth CU is asking for a total of 937,950 DAI over three months. 437,950 DAI will cover operations, and 500,000 DAI will cover the work we’ll do with our partners in the latest stages of the Growth Cycle (adoption campaigns, educational content, etc.).

Motivation

We are proposing this Core Unit Budget modification because GrowthCU requires an operating budget to fulfill its mandate.

Core Unit Name

Growth (GRO-001)

Quarterly Focus - August, September, October

  • Progressing our pipeline. The general outline of our traditional cycle consists of the following phases: Outreach → Initial conversations → Project formalization and commitment → Integrations support → Pre-launch growth → The partner Launch → Maintenance and growth. We want to focus on the 93 opportunities in the latest stages of the Growth Process cycle during this quarter (pre-launch, partner launch, and maintenance) which requires the “integrations and marketing” budget to execute the growth plans we created with our partners.

  • Developing an Institutional Vaults strategy. With the feedback from Maker’s largest vault users, we want to coordinate the efforts of the DAO to find the right solution for this need and pitch to all crypto-native companies this solution.

  • Dai in other networks. We are having conversations with Polygon, Solana, XDai, and Ronin about the strategy to increase Dai usage. We plan to continue doing this with other networks that are relevant to the protocol.

Team Membership

The Growth team will consist of at least the following members during this quarter:

– Facilitator –
@Nadia -Full Time-

– Contributors –
@Jenn , for North America and strategic partnerships -Full Time-
@Matthew_Cooper , for North America -Full Time-
@Lozadaluis12 , for LatAm -Full Time-
@joce_chang , for Asia -Full Time-
@Doo_Nam for Asia -Part Time-
@Gustav_Arentoft , for Europe -Part Time-
@MarianoDP , Growth strategy -Full Time-
@nanexcool , DeFi advisor
TBD, for Europe -Full Time-

TBD, integrations -Full Time- (as the Foundation’s integrations team decided to be part of the SES CU and change their role, we need to find one resource who could help us with any technical question/advice our partners could have regarding the protocol. This person will also create technical documentation oriented to our prospect partners to interact with the protocol or Dai in other networks)

Quarterly Budget - August, September, October

Budget Breakdown

Remarks

Team remuneration

The Business Development contributors should feel persuaded toward behaviors that will support the Maker Protocol strategy. That’s why besides a base pay, each one of our BD persons will be under a compensation structure, a proactive process that forms goals around the account planning process and accounts for past performance/growth.

The compensation structure follows these rules:

  1. Two-quarters of goal achievement constitutes a 10% rise in base pay.
  2. Not meeting goals results in base pay stagnation.
  3. Less than 50% of goal number achieved results in 0 bonus for the quarter.
  4. Bonus pay is determined as a percentage of base pay and it’s relative to the goal number’s achievement.
  5. Bonus is capped at 100% of base pay.

Operations.

To cover associated costs to legal advice and the enablement of all support applications.

Travel and partner relationships.

we need to have a presence in major events to develop our network, speak in conferences, maintain the ecosystem updated on what’s happening in the DAO, and attract more companies and projects to the protocol.

Opportunities.

To support any contingency or opportunity that could appear, like a tier-one partner looking to execute a strategic action.

Integrations and Marketing.

When we are working with future partners, part of our job is to create a way to help that partner give more visibility to the new solution supported by the Maker Protocol. Sometimes the execution of that idea requires a budget for different purposes:

  • Educational purposes: When a partner wants to explain to their user/customer base about the new product, usually this is for creating content in a particular language oriented to a defined audience.
  • Marketing purposes: Budget for executing a marketing campaign to help our partner expose the usage of the new solution.
  • Technical purposes: Some partners that are not part of the crypto ecosystem need specialized help to integrate the Maker protocol with their systems.

After presenting the quarterly PnL, unspent funds will be returned, (including also the funds for the current quarter, May-June-July).

Budget Implementation

Growth CU has a multi-signature wallet to administer the funds allocated to fulfilling the mandate. The details of this multi-sig wallet are as follows:

Multi-sig Address: 0x7800C137A645c07132886539217ce192b9F0528e
Budget implementation: Manual
Payment Frequency: Transfers should be included in the first executive of the month. In the event of the first executive of the month failing to pass successfully, transfers should be included in the next available executive vote.
Payout Dates:
August - 637,900 DAI
September - 137,900 DAI
October - 162,150 DAI

11 Likes

I like the idea of a raise in base pay for goal achievement. Maybe more core units should emulate this.

3 Likes

I think that the incentives also go hand in hand, the next UCs should also take this into account.

Yes, we want a mechanism to reward excellence.

1 Like

Please a request on these budget changes.

Tell us what the budget was along with what the request is. I am having to search elsewhere to figure out what the changes are and would like to see this data incorporated into CU budget change requests.

I also would like to at least have a clue as to what the expense breakdown was in terms of DAI/HR or work unit (say Full Time units) for workers and DAI/month of expenses(which you do have at least part of). In the loosest sense from a budget sense I want to know in these CRs basically what avg manpower cost was and how that is changing and then what the outlay budget was and how it is changing as well. Run the FT rates to yearly, as well as Expenses as well as I am used to thinking of things in terms of 1 year run rates vs. month to month changes.

3 Likes

Completely agree with your request.

Let me know if this works. If not, I can think of another format to present it or any other information you think it’s necessary.

We decided to ask for a quarterly budget for the firsts quarters until we have a more accurate forecast. We can’t use our past experience within the Foundation because, during the last year, we weren’t actively executing campaigns with our partners due to the Foundation’s restrictions. We are also re-creating the Growth team because when we were part of the Foundation, we counted with the support of complementary business units like legal, design, marketing, and integrations. As a CU, we have to decide if we hire someone or wait until a CU is created.

As for the differences between quarters:

  1. Base salary: We are hiring two FT contributors, one to cover Europe and another one to help us with the technical aspect of any integration. We are also hiring one PT contributor as a community manager.
  2. Integrations and Marketing: the first-quarter budget was to support campaigns for up to two tier-2 partners and up to seven tier-3 partners. Analyzing our pipeline, we know we have 93 opportunities in the last stages of our process, and we decided to support campaigns for up to two tier-1, seven tier-2, and ten tier-3.

We also added a budget for travel because the events are back. And we kept the same funding for operations because we will need it for legal expenses around future contracts with partners.

7 Likes

Ok. The above is definitely better.

Let me try this based on what you have above.

Colors arbitrary, also probably could just go with full conversion to FTE based on 2080hrs/work year.

My point with this is to illustrate what I would want to see from quarterly reports (encourage people to actually look at some company quarterlies btw to see what reporting regulations expect from public companies mostly to get a handle on what is reported how).

Things I want to see are basically break downs of costs and Q over Q increases. In the end I want to see how these changes are affecting not just the quarterly numbers but what they are doing to yearly numbers.

I understand things are still being hammered out in terms of transition but understanding what is going on with the overall numbers from all CU’s I am going to be asking same questions:

  1. What is the average cost per FT position and if this can be broken down into PT and FT fine. I also like to see it as a hourly as this gives me some perspective. Please include any MKR compensation as a line item in compensation (as well as any other things - medical, retirement, bonuses, whatever)

  2. The other specific expenses - break them down into line items and if they have numbers give a number. In the above case I have no clue what a T1 integration/marketing campaign costs. At least break these out so we can see what T1, T2, T3 integrations are costing and how this is changing. I can only guess why I&M went from 75-500K/Q but this is a large jump I want to understand and get a handle on what T1 integrations cost and get a run on these.

Beyond this I just want to see the Quarterly full totals also extended to the year, and then the % increase Q/Q on each.

Beyond that I am good. I don’t like seeing these numbers growing at 100% Q/Q so would like to have some comments regarding whether these numbers are expected to keep climbing as dramatically next Q or whether they are anticipated to settle.

Thank you for endeavoring to satisfy my inquiry. I look forward to seeing all these CU financial and activity/sales/expense reports come together into a quarterly that reads like a company quarterly report.

3 Likes

So while I agree that it’s good to have a transparent budget, unless there are single line items that are really, really big and need lots of explanation, I’m not super inclined to micromanage a core unit that’s executing well. Growth is pretty good about giving us an update each week on newly completed milestones. My philosophy is that if the overall unit is performing, then only the total expenditure number really matters to the DAO.

This unit in particular seems like a bargain for what we pay. If they stop delivering, we can take a closer look at the specific line items. But a $4 million annual burn rate seems in line with what they’re bringing home to Maker.

A standardized, DAO-wide template for reporting and requesting budgets is sorely, sorely needed, though. I think I was told by GovAlpha that it was on the radar, though I’m not sure where it is in the queue.

2 Likes

Well 75-500K is kind of a big jump. I don’t want to micromanage anything. I just want a reasonable breakdown when a budget for a line item jumps 10x and this jump in fact now accounts for 25% of the total budget being asked for.

Being able to track costs on deliverables over time is also useful. Honestly not that hard to at least estimate the numbers as I can’t make heads or tails of what the T1, T2, T3 marketing looks like. Salaries as a yearly and a hourly are also just interesting because these are the types of numbers a prospective is going to want to know anyway as well as how these are changing over time. (I would)

I believe a lot of DAOs would benefit from forming a PracticalDAO group and funding it so that things like this stuff could be standardized, or at least addressed by multiple DAOs at once in a coherent fashion.

As to growth. I honestly have no clue what is actually driving growth since we don’t have any vault owner metrics other than how much DAI is minted by what vault. Honestly everyone looks at DAI - how about TVL locked from a Token or market perspective. ETH locked I don’t believe has grown very much in the past year, while the value of that ETH has. These kinds of metrics are sorely lacking.

I have no clue whether we are actually capturing greater or less of available marketshare (say wBTC for example) since we don’t collect snapshot metrics of total wBTC available and how much of it is in our vaults.

6 Likes

I’ve loudly wished for an Analytics or Data CU to appear. Let me know if you find a magic lamp and get three wishes you’ll share with the DAO.

I think one is on the way, but won’t be here for quite a while. I would think Growth, Risk, and any future marketing-oriented CU could benefit from having someone capturing and analyzing behavior and usage of our products.

But hey, just think of the budget we’re saving by not having a Data CU, an Accounting CU, or a Legal CU! Of course, you can also think about how much quicker we’d be able to target profitable customers, useful partners, and maximize profits if we had those vital support units… :frowning:

2 Likes

thanks for all the inputs, it helps us to define what are the important things for the community

Yeah a long time ago I was willing to put up the DAI Maker paid me (piddly 4K DAI at the time) for the Black Thursday report to get some matching funds for some solid analytics on auction performance, vault liquidation stats, keeper/bid data (stuff like in my BT report) as well as some user analytics.

Makerburn doing a great job but there is still a lot of stuff missing.

I was and am also for targeting vault users with surveys if they completed could get DAI back (in terms of removing fees - though this was a technical detail). This way we could target specific vaults types, sizes of borrowers, usage whatever. Try to get some basic feed back information from our vault users.

Yeah. Right! I mean we could just run without any changes to anything and save all this DAI… /s> I mean just set the surplus to like 25% with a 25-50% burn along the way, change and everything will be fine in a few years.

Given growth I think Maker is working too hard on stuff honestly. I would have preferred some sort of MCD vN whatever specs document done, then bring the system up to that spec and freeze the implementation and go work on a Maker vN+1 so we can take what we learned and Make the next Maker version better vs. trying to change everything on the fly as we go along.

Makes me think about a guy trying to work on his engine while in the Indy 500.

Interesting that you bring up “marketing” because I been trying to figure out if the Growth CU is also a Marcoms CU. Are Business Developments teams traditionally also involved in Marketing? I was trying to research it and it seems that both work together. Or, are BD teams expected to run marketing campaigns?

1 Like

In my experience BD does marketing mostly because they are most familiar. In effect either Marketing has a BD subgroup or BD has a Marketing group. How that works or is structured depends on the company and history. Usually a business starts with BD and then hires Marketing manager that reports to the BD head.

1 Like

This seems like a necessity not a nice to have. Otherwise we’re just flying blind.

Should Growth CU hire a marketing department?

1 Like

Yep, we’re pretty blind right now. Is anyone even saving snapshots of the data right now? Guess I’ll start pulling a daily CSV of our vault data until we get some professionals

1 Like

I am not sure, on chain is data and the only one that matter. All data you can find about the vault are on chain, they are audited, valid, unique and the full history is available.

The only thing you need is the interpretation of it, I don’t think we need a CSV file.

@Nadia What does the Tier1-3 mean in the figure?

Since the proposal specifies payout, but does not precisely state the number of persons this covers (as they have yet to sign on), I think the proposal need to state that “unspent funds will be returned”. Same with the 500k for Integrations and marketing. And the 50k travel budget.

Also - the proposal operates with incentives for performance - but Maker as an organization is not bottlenecked by the lack of business opportunities, it is bottlenecked by a lack of developers and even more by the need to audit every piece of code. So I assume the Incentives post is an internal thing?

My apologies if my remarks are duplicates of what other people have been stating already.

4 Likes

I guess Nadia can cover other points you raised but do want to say there’s a active business war going on and a lot of efforts and resources are dedicated even if the public might not see them directly. Here are some examples. Starting with Korea as I am most familiar is Dai is literally the only Stablecoin that users can deposit and withdraw in major Korean exchanges. Not even Terra’s KRT and UST or major stablecoin like USDC and USDT have that privilege and you can be sure that’s thanks to years long relationship and effort we put into. That’s the same case for many dApps and applications. Often times, we need to teach them about Dai and negotiate with them to bring Dai there. That’s the same case for large “institutional vaults”.

8 Likes

Also adding that some deals took 1-2 years. Would been almost impossible in the vacuum.