Hi everyone,
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Before I get too deep into this, I want to preface it by saying a few things.
This is my CBI. This is my current best idea, and could change in five minutes but I’ve spent countless days thinking about this proposal, exploring the options, chatting with my clients and spent time on a conference call with O’Rourke and Laxman. Early in the fund raise effort, post SOTU Addison and I had strongly considered participating in the equity raise at the PNI level and thus I do have a nice view of the issues we all face as an ecosystem. Over the past few weeks, we have had in depth discussions with our Institutional Clients, some folks part of the DAO leadership team and some folks at PNI.
I would like to also add that I strongly believed we should have let the banks fail in 2009. I strongly believed that we should have let the airlines fail in the summer of 2020. If you can’t manage your own balance sheet, then you do not deserve to be rewarded for malfeasance. These are exceptions to this rule, and in 2009, those loans were all paid back and the government actually made a profit. While this doesn’t change my opinion, the structure of these bailouts were done in a fashion that I can live with.
My response here does take into account several comments and as a community participant, I appreciate them. I do not agree with them all but I am hopeful that my comments and suggestions below, redirect the initial request into a comprehensive package that not only benefits PNI but benefits the entire community as a whole.
For those that are not super clear, this project needs a bailout and without the bailout, we will undoubtedly have a financial crisis of 2009, an airline crisis of 2020, where the underlying entity will simply be finished. While this is my opinion, “I’ve seen this film before and I didn’t like the ending…” This bailout should have strict guidelines, and mandatory results. Anything short of total execution, should have consequences. In this particular case, given the structures we find ourselves in, the consequences need to be that everyone in this community, everyone in the DAO, fires PNI.
I have found the DAO to be totally dysfunctional. That being said, I have complete faith in Dermott, Ben, Nelson, Jack to steer this ship in the right direction. They are not to blame for the dysfunction, all of our DAO members are. We’ve been sloppy, we’ve allowed for total inappropriate behavior to be considered acceptable. We’ve pushed away builders and the lack of family and community support, is frankly, disappointing. Background checks on builders, disinformation campaigns, public insults, and more or only a small chapter of our history and this has to come to end. The only way this community of builders is going to get POKT to where it needs to be, is to change our methodology in how we produce work and it needs to be changed in “orders of magnitude” to be successful. I have seen a few films before, and I did like the ending. We are 100% capable of achieving the success we desire, with some sound leadership, direction and plan.
PNI - The buck stops with the CEO. Period. Michael has made some terrible decisions at the expense of this entire project. He is trusting, he is loyal and for these admirable qualities, his previous team were simply unqualified at any level to manage this balance sheet appropriately. To go into these details would be a bad use of our time but we know the PNI made an abundance of errors and many of them are stated above.
For me to support this ask which Laxman truly does need to recruit and keep top talent, I suggest the following.
- P NI needs to reduce their headcount by 50% by Feb 15th. They have already reduced staff by 15%, plans for another 15%. I suggested to Laxman that there are further cuts to be made. PNI can always hire back if they’ve trimmed too far. Rip the bandaid off and do it as soon as possible.
- This will dramatically extend their runway and with increased demand, could get them to break even sooner than later. The burn rate should be near or around 300k a month. To me, this is non-negotiable and if I was in Michael’s position, this would have been done six months ago. If any of you doubt this, I did speak to Michael last April, May and June and pleaded then for this action. I have done these layoffs (once) and they’re not fun BUT they work.
- The DAO proposal to be refined to include this key performance metrics as part of the grant.
- There is a board being built. This board at the PNI level should be commensurate with the funding of the 45m POKT. There are currently 3 board members (I think). Michael, Laxman and one Institutional investor. Add 2 more immediately. One that represents the builders and community, and one more who might represent a lead investor in their equity raise.
- PNI - issues 20% of the PNI equity to board members, employees and future employees with a profit sharing plan. The vesting option to the employees should not only be POKT tokens. This would allow for employees to recapture loss wages during this economic downturn.
- Employee reduction can come from:
i. Dev Ops
ii. Backend
iii. Frontend
iv. Quality
v. Design
vi. Product Management - A bare bones skeleton crew to maintain v0 to support 3b relays per day.
- Start over with a very lean group that is incentivized with a moonshot task. Like the rest of us, this will require 24/7 hours. Without this commitment, we’re dead.
- Laxman and O’Rourke both serve as CEO. Let me clarify.
i. O’Rourke is the founder, always the founder and has a unique skill set. That is to create demand, he is excellent at it and this turn around story will be part of his legacy.
i. Biweekly AMA with community blockchain operators
ii. Bi-weekly AMA with ecosystem CEOs, Polygon, BSC, ioTEX etc.
iii. Active twitter and spaces
iv. AMA with institutional funds (over 60 institutions have invested or own POKT tokens.). Calls with them and their respective communities.
v. Over and over and over again
ii. Laxman serves as operational CEO for the next 8 months. - This separation of title is only that and only for the interim. There is no reason why Michael should be dealing with layoffs. That has to be the most painful dagger for him to deliver. We need Michael to be our demand leader and it is almost possible to run layoffs and demand growth simultaneously.
- Once Laxman does his thing, he reverts back to the COO and Michael truly is focused on demand, which frankly is the CEO’s role. There are several companies with this setup. Salesforce is an example. Two CEOs can be an effective “tandem approach which allows for wider company scope and broader capacity for growth. Rather than one CEO feeling overwhelmed or alone, two can share workloads and ideas to speed up the process”
- A question many would ask. With all these cuts, who runs the network? We all will. In addition, the employees that are left off, this transition could provide them a soft landing where they could get paid by the DAO for participating in maintaining v0. While they are looking for new employment, they could earn a meaningful amount of POKT that one day could be much more valuable than their existing paycheck.
i. The DAO is filled with some great builders who are dedicated to the success of this project. They work 24/7, they’re motivated, they are smart and they are hungry. In less than 5 minutes, I could assign dev-ops, backend engineers, front end developers, and designers to the projects from the multitude of teams we have working in the community. This is how we do it.
i. We keep one of the POKT great Product Managers. While I do not know them all, I know of 1 and “that person” would be perfect to help manage the various teams and projects.
ii. The DAO would fund all of this development. We would be taking off 300k a month of burn from PNI for an exchange of a few million POKT a month. Let’s not get particular here, we’ll fine tune and play as we go.
iii. With teams like POKTScan, POKTFund, SendNodes, Ben Van’s group, Coder, Node Pilot, Dabble Labs and more. The talent pool is incredible but the big question that comes to mind is how do we have the time. - We need to change (for at least 8 months) the relay-mint token economics. The node runners are spending vast resources trying to squeeze out 15 more cents per day per node. That is ridiculous. My suggestion and again, all of this is one proposal and we get it done in the next fortnight. Otherwise, every self proclaimed MBA, Economist, Technologist, is going to debate this while we wither way to zero. We maintain the QoS which frankly has always been an uptime and latency issue. The original principal of 150ms. Everyone who runs a node who meets this criteria, receives a pro-rata part of the daily mint. If inflation is 15%, then every single node runner receives 6.16 POKT per day. Period (and we freeze the token inflation reduction program for 8 months). Then, the node runners are incentivized to help each other. We expand on Poktscan’s offering, we expand on Pokt.info, we build a community of node runners that costs us significantly less resources to operate and we put those resources into the above mentioned PNI gaps. We will all benefit from the economics of this effort. We can work together, share infrastructure, work on supporting the lesser chains (but still be rewarded for the effort). This socialization of the mint will bring a QoS that will fuel demand. Together we can improve the quality of service of the network, and instead of fighting over the daily mint, we can focus on growing the demand of the network hand in hand.
i. There has been talk about the need for builders to be funded. I am one of those builders so I am very careful with my words here but again, I think all of this gets wrapped into one big proposal and we’re done with it. As part of the PNI funding, have the DAO fund all open projects that have requested funding and/or projects that need it.
ii. Anyone who receives funding by the DAO should be required to be a DAO voter. Then we can really spin our spending to builders as we go through this transitional process.
iii. Back of the Napkin Math. DAO has 124m POKT. 37% to PNI, another 20% or so to fund all open projects and immediate PNI gap fill. 60 or so million POKT remains in the DAO to fund over the next 8 months as part of this recovery effort. Once all of us are stable, PNI raises money at an incredibly attractive valuation. They use part of those funds to purchase POKT on the open market and slowly over time, pay back the 45m POKT to the DAO. This 45m POKT is a loan, it is a bailout, it is not a charitable contribution. It doesn’t matter if this takes 1 year or 10 years but it gets paid back with an interest rate that is reflective of the inflation rate albeit at a discount of 50%.
The only way this project survives is not only for PNI to make some difficult choices, but we all have to make those decisions. We need to clean up the mess from the past and those are costly. I do believe that if we band together for the next 8 months, someone else one day will see this movie and they want to make a sequel. I honestly have spent weeks thinking about this and I know no proposal makes everyone happy, and this is no exception. There are unknown and unintended consequences from choices we make. This may have several but the only way I could support us providing PNI this funding is for all the above to happen. It saves PNI, it keeps the V1 team, it gives Laxman more authority, it frees up Michael, it has the node runners working together and sharing resources, it has us building additional products that the ecosystem could thrive on. It makes accountability an incredibly powerful feature.I do not claim to have all the answers, and rather than an elongated discussion on this post, a simple yes or no, is all that is needed. If we see more yeses than nos, I will set up a following call, and we can figure out the semantics along with Michael, Arthur and Laxman. We don’t need 50 cooks in the kitchen either, just a handful of us and TRUST. Trust that whoever takes the lead on this, is not a pushover but has the network’s best intention at heart. I think the reward system in this particular case will allow for the biggest contributors to be rewarded. It will allow for the small node runners to share in our resources and I know there are some small guys who run nodes that are damn good. We should be pooling this talent, not slandering it. All differences aside, POKT has the product fit, now we just need a plan that can be executed upon.
Please respond to this with a simple message of support or rejection for a comprehensive all-in-one proposal and if you are a POKT DAO Voter.
Thank you,
Sevi | Thunderhead