MIP40c3-SP9: Modify Core Unit Budget, CPM-001

Preamble

MIP40c2-SP9
Author(s): Kathleen Chu
Status: Rejected
Date Applied: 2021-03-25
Date Ratified: <yyyy-mm-dd>

Sentence Summary

MIP40c3-SP9 adds the budget for Core Unit CPM-001: Strategic Marcomms

Specification

Motivation

The Strategic Marcomms unit, formed by a team of experienced professionals, plays a vital role in representing the MakerDAO brand in the eyes of potential users and partners.

The complexity of the products and undefined regulatory frameworks in major jurisdictions in the cryptocurrency sector means the team has to be diligent communicators capable of executing marketing plans while being mindful of the potential concerns of users and regulators.

I am proposing this budget to take the groundwork built by the foundation and drive it forward. My unit ensures MakerDAO reaches its full potential by tapping into new markets and boosting visibility in existing ones. We will be the face of MakerDAO for new users and partners.

My team consists of diverse individuals who are multilingual. Their international background and level of experience inject strength and brings value to the team. That diversity is essential as we present Dai as an unbiased currency, and position MakerDAO as a way to unlock financial freedom for anyone, anywhere.

The stablecoin market with a $60 billion market cap has surged exponentially in the past year, where Dai accounts for 5 percent of the market share. The team will focus on this fast-growing market and new target growth areas while collaborating with other units in reaching the common goal of bringing Dai to the level of mass adoption.

Core Unit Name

Strategic Marcomms

Budget Composition

On average, marketing budgets account for about 10 percent of a company’s revenue. Together with the PR communications, they function as revenue drivers.

The proposed budget is based on industry data and estimates made after consulting with experts and service providers in finance, accounting, legal, marketing, and PR. The budget encompasses key areas of coverage, and some initiatives such as outreach programs are scheduled to be activated in the second and third quarters.

The budget is about 8.2 percent of the Maker protocol’s revenue (based on estimates from the first two months of the year), below the 10 percent average. The below-average estimate is made regardless of additional costs unique to MakerDAO units, such as legal consultation and the team’s operation cost. A lower than average budget shows that the unit is ambitious, ready to execute its plan, and simultaneously realistic of what can be achieved in one year.

Budget Breakdown

People:
This budget ensures that MakerDAO attracts and retains creative and diligent professionals to reach new markets and users. The estimates are within the compensation range in reports published by major HR consulting agencies based on job levels and experience.

The table below gives an overview of the number of people that plan to join the unit, and the number of people we need to hire.

  • Marketing includes consultants focusing on marketing, events, and community building.
  • PR & Communications include specialists on social media, content, and media outreach.
  • The unit plans to add nine more people to fill out marketing-related roles such as SEO, email and social media marketing channels, and outreach. The budget also includes a couple of freelancers to ensure the team is agile in achieving our goals. We aim to fill these roles by the first quarter with help from recruiters.
People Current To hire
Facilitator 1
PR & Communications 2 4
Marketing 3 3
Freelancers 2

Marketing & PR:
This budget covers upcoming marketing campaigns, advertising, and cost for hiring PR agencies in locations we identify as top markets that can provide relatively high ROI. It also includes joint campaigns with potential partners in major markets such as the U.S, Japan, EU regions. The budget also ensures we sponsor the most significant events and host educational and exciting events for potential users.

The budget also includes content that is educational, relatable, easy for potential users to read while further strengthening our already-established position in the DeFi and Web 3 space. The content will be in the form of blog posts and audios.

Outreach Programs:
This budget includes the initiatives listed below that are aimed at reaching out to new audiences.

  • Ambassador program
  • Translation
  • Market research
  • Community management

Administration:
This budget is for daily operation, recruitment fees, accounting, IT subscriptions, and recruitment so the unit can focus on fulfilling their mandate. It also includes traveling for the team on speaking engagement post COVID.

Legal & Consultation:
This budget ensures the unit has a global legal counsel on retainer, in addition to hiring counsels for crucial jurisdictions such as the U.S., Japan, and the EU.

Incentives:
A 20 percent is added to the category of People to provide an incentive for the team members to achieve their deliverables. The unit is interested in MKR vesting being discussed by the community. We support such a framework and await the outcome of MKR-related discussions for MakerDAO units. We plan to change our incentive structure accordingly after the governance community reaches its conclusion.

Categories Annual Budget (DAI) % to Total
People 1,656,480 34.77%
Marketing & PR 1,974,000 41.43%
Outreach Programs 382,000 8.02%
Administration 380,284 7.98%
Legal & Consultation 372,000 7.81%
Quarterly 1,191,191
Total 4,764,764
(8.2% of estimated revenue)

Moonshot Fund:
Opportunities for ad placement may arise with high ROI, in which case we will need to act fast on confidential information and have the funding ready to deploy. We ask for five million DAI of additional budget to be put aside for the Moonshot fund. We will only access this budget after the unit carefully conducts due diligence, evaluates the ROI, and decides whether it is worth pursuing.

Budget Implementation

An annual budget brings monthly cost to 397,064 DAI.

Budget implementation: Simple

First month: 5,397,064 DAI (5 million DAI of Moonshot fund included)

Second month on: 397,064 DAI each

Asset type: DAI

Payment Date & Frequency: The first ten days of each month

Strategic Marcomms Multisig Wallet: 0x21401cca9b3e237e6c5de9cd227cec690d566a60

Strategic Marcomms Core Unit
Facilitator Onboarding

10 Likes

Could you provide more details on how the 1,436,400 will be paid out across the 13 employees?

What subscriptions and accounting software are you running that requires a 272k budget?

6 Likes

@Kathleen

Just following up on my inquiry.

1 Like

Hi Zarevok. There are some changes as we build the team, and the budget will need to be modified.

On People, the team members are hired as contractors, given that we are just starting. Contractors usually cost 20% more than the estimated range of salary. That comes down to 1.19 million DAI. Then, I included 20% as incentives if we reach our key results, bringing the total to 1.4 million.

The 272k budget on admin-related cost includes the cost of setting up a company, accounting reporting, gas fee, wire transfer, auditor, travel expense, and recruiting fee.

Half of the group were confirmed at the time of the estimate, and half weren’t. Therefore, I included 30% on the estimated salary for the cost of hiring a recruiter for the rest of the team because I would like to get everything started as soon as we launch.

1 Like

All, I have modified the budget to reflect the latest update in our strategy. I have also included a moonshot fund that we only access when a significant opportunity arises. We welcome any feedback or questions.

5 Likes

Good News Kathleen!

1 Like

I am formally submitting this MIP for the May Governance Cycle.

3 Likes

It’s a little late for feedback, for which I apologize. Could you confirm how this moonshot fund should be handled in the same way as the budget implementation? Additions strictly for clarity are acceptable subsequent to the frozen period starting.

What is the starting date? This is unclear from the proposal. (It will obviously be dependent on this proposal passing.)

From an operational standpoint I need to know when and where you are expecting each transfer of funds. This means:

  • Multi-sig / Wallet address.
  • Date
  • Amount

For at least the first payment, and ideally for all payments.

2 Likes

Hi, @LongForWisdom

The moonshot fund should only be handled when such an opportunity arises. I included in the budget proposal to ensure that we can act on an offer swiftly when an opportunity comes. Such an offer is usually confidential, and, likely, we wouldn’t be able to share details with the community.

I understand the community values transparency. The thinking behind this is our ability to grab an opportunity when presented to us instead of writing out a budget-modifying proposal that requires details that we want to, but can’t share.

Do you have any suggestions on how we can approach this issue? Would you say utilizing Manual Budget Implementations suitable in this case?

Separately, as for the starting date, we want to officially start on June 1st.
Budget Implementation: Simple
Wallet address: 0x21401CCa9b3E237E6c5De9cD227CEC690d566A60
Date: The first day of every month from June
Amount: 397,064 DAI

Couple of things here:

The only way you’re going to have instant access to those funds is if they are in a multi-sig that you guys control. Any other mechanism is going to have a delay and need to pass one or more governance votes. I’m not sure how easy it will be to sell that to the community though.

Personally I’d recommend putting any such request up to an on-chain poll in the weekly governance cycle.

Because funds are currently distributed via executive vote, we can’t guarantee timing to this extent. The current setup is for monthly budget payouts to be included in the first weekly executive vote of the month. In practice this means the payment could arrive any-time in the first two weeks of the month (depending on how the executive lines up on the calendar, how quickly it is passed by governance and what the GSM pause delay is set to.

As an example for June. The executive would go up on June 4th and would presumably pass and be executed sometime before June 11th.

2 Likes

Transparency and MKR making the calls are indeed core values of MakerDAO in my view. You are asking to be able to spend more than 10% of the annual expenses of MakerDAO (15% of the Surplus Buffer) without wanting to discuss with governance because it’s “confidential”?

11 Likes

Is there an example of how this 5,000,000 DAI moonshot fund would ideally be deployed?

Perhaps provide a hypothetical example on what it would be used for, why, how you would after the fact measure the success of it, and what kind of reporting would occur to the DAO (even if the DAO was not privy to the specifics of the deal prior to deployment of funds)

Edited to add:
Could you walk us through what a typical work week looks like in this CU? I’m still trying to understand exactly what services are being provided and how they improve profits or expand the reach of DAI.

I know there’s been a lot of questions, but your proposal is asking for millions more DAI than absolutely critical, notoriously expensive units to operate like Protocol Engineering.

2 Likes

Few questions on this budget:

  1. I’m struggling to understand why such a high % of our revenue should be spent on marketing activities at this stage of MakerDAO’s growth. The % may be reasonable for a traditional company, but MakerDAO does not fit in that peer group. I suspect marketing budgets for most crypto platforms are much lower than what’s stated here. How are we evaluating the impact of our direct marketing spend and identifying what works and what doesn’t work?

  2. Why are our Admin and Legal expenses so high? Either other Core Units are underestimating these costs or your proposal has too large of a budget. The admin and legal expenses are more than every other Core Unit combined. Would appreciate more detail here.

  3. As requested by others, could you please provide an example of a moonshot opportunity that we took advantage of in the past or what one would look like? I don’t think it’s in Governance’s best interest to have no transparency for such a large amount of DAI. Any single marketing campaign that costs greater than 1M DAI should be approved by Governance, IMO.

8 Likes

As a bit of comparison, this proposal is for 3.5 million DAI more than Protocol Engineering. Just to lay out for everyone why some of us are asking so many questions. It is by >50% the largest budget proposal for a CU’s first year

3 Likes

I would like to see the voting of this CU as a standalone proposal and not bundled with other things

5 Likes

“A product at rest will remain at rest until acted upon by a marketing force.” —Ben Butler

In all fairness 10% of a company’s annual revenues should go to marketing. Anything below 10% is shooting yourself in the foot. If you want growth, you have to prioritize your marketing communications efforts into the budget, I think we can All agree.

However, we do need a success measuring technique. And @Kathleen I will be the first community member to defend your Team and that 10% of revenues is needed for your Core Unit budget—but the lack of clarification of how the 5M DAI for Moonshot is not being disclosed properly to the community and that unfortunately has some folks here concerned.

Let’s not forget @PaperImperium that this core unit expands beyond the US of A. It’s global(pretty sure you know that).

One thing I do remember is the appearance by Rune on Bloomberg Asia. I highly doubt any of us community members would have made that happen. So, let’s not forget the accomplishments this Core Unit has made.

5 Likes

I don’t know what those are. Please humor those of us who are newer. A portfolio of clippings and other earned media would be wonderful.

I would also like further clarification if this is marketing towards new vault users, partners to integrate us, or merchants and institutions to accept DAI? If any of those, how is this different from what the Growth CU is doing? If it’s something else, what is the marketing’s goal?

4 Likes

It will have it’s own Inclusion poll as part of the monthly governance cycle. The poll will go up on Monday, and last until Thursday.

To be clear, this proposal probably will be bundled with the other CPM Core Unit proposals, but it will be separate from everything else at the Inclusion Poll stage.

3 Likes

I meant for both instances

2 Likes

Sorry, both instances of what? We don’t really have the luxury of having separate executives for each proposal, there just isn’t enough time for voters to coordinate reliably if we try to do more than 1 in a week.

MIP51 addresses this in a way by no longer requiring executives to pass MIPs, however it has no passed yet, it is also been submitted for the May governance cycle.