I see, can someone with better understanding help me comprehend a difference between ‘runway’ and ‘incentives that pair with reduced compensation as part of cost cutting’?
Imagine you’re in a relationship with someone. In that relationship that person ruined your credit and cheated on you multiple times. And now they want a second chance. And you say “well, you know you cheated on me and used all my credit cards and ruined my credit.”
To which you respond, “Oh don’t worry, I’m only talking about future dates.”
That’s how you sound right now.
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Runway is the length of time that the entity can survive at the current burn without additional investment.
Incentives that pair with reduced compensation are a way to structure an additional upside for those who have accepted reduced compensation. It does not affect the length of time (“runway”) that the entity can operate.
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I imagine this is where the confusion is stemming from, it could have been construed that runway is mentioned with regards to this proposal.
I think 30m unvested pocket right off the bat is still a lot, as is posturing in order to hire more talent when the organization is now 65 members and PNI is literally bleeding money.
It’s all well and good to say ‘we have a plan now!’, ‘a go to marketing strategy!’ and ‘we’re confident this is the last we’ll need!’, but when it comes down to it why keep hiring when you are wounded? Is it an attempt to blitzscale and have 100 staff within the year? How will they be paid?
Easy for me to say, I’m an forum anon. I’m sure there’s lots I’m missing, but I’m sure those intelligent enough would see the faux pas immediately. It’s just how I personally see it right now.
Reasonable. The company just laid off somewhere around 10+% of the workforce, reduced average salaries 35% across the org, with leadership taking 50% cuts and higher. So, on the plus side, the cost cutting and downsizing you and others have suggested has actually already happened.
What I agree with regarding this proposal:
1 - PNI should use POKT to align the incentive of employees to drive value.
2 - PNI should not violate the rights of individuals by publicly sharing the compensation of individuals.
POKT’s DAO has not required that proposals breakdown to the individuals in a group… though some have argued for it on select proposals. DAOs like Maker DAO intentionally have group structures so that resources can be distributed in a manner that protects individual privacy. PNI should be treated with the same fashion that allows their employees to still have privacy from the anons from the internet. If certain roles are more public and should require transparency, like executives, then PNF should be the arbitrator. The POKT DAO has always promoted autonomous group proposals, and it would be unwise to change that just to address this proposal.
3 - This being PNI’s only ask proposal for this kind of grant.
My reserves about this proposal is in regards to asking for this amount upfront. I would think there could be a way to progressively top off the coffers for employees each year or so… but I do understand that you can’t sign a contract with an employee if you don’t have the POKT in the bank. I get that asking for is all upfront is needed in the traditional employee structure, but it’s still a hard pill to swallow having such a large grant being given.
Regarding other comments in this thread there a few things worth highlighting that I agree with:
1 - Lean Pocket should get a grant for their work!
The issue outlined in the past grant was that the product hadn’t been released, the PNI had not seen the code (but the wording almost suggested it was shared with them), and the value of the proposal was essentially based on that value the network would theoretically save. I think there will always be pushback to proposals if there is a lot of trust that has to be granted without seeing the product. I also don’t think that grants can be based on a percentage of the theoretical market value. I just don’t see that value model scaling. All grants thus far have been based on measurable metrics, like time and resources spent on a project with the added bonus of significant premiums. This current proposal is structured on the resources needed to accomplish a set task of providing POKT incentives to future hires. This is measurable and essentially covers 13 employees if they stay for 4 years. This proposal is not measuring its value based on the theoretical market value those employees could generate in the POKT ecosystem, it is proposing a set amount based on measurable historical data. Folks may have issues with that past data, which is good to flush out here, but the proposal is structured properly IMO.
Back to my point though, Lean Pocket was released, it’s been a huge success and they should get paid for their time invested with gracious premiums IMO. The POKTFund team has also taken their innovation and created a powerhouse of a hosting company with it, which is exactly what we hope for any team building in the POKT ecosystem. They are innovative devs and savvy business folks. Thunderhead also used their innovation to cut their costs ahead of most other providers and provide much more competitive prices than the rest of the ecosystem. Savvy innovators and a strong business sense. Both teams got a market advantage from their innovations, while also helping the sell demand on the POKT token which effected everyone, and I support the idea of having the DAO provide an added reward for releasing it publicly and continuing to contribute to its development. I’m happy to support a proposal for Lean POKT with a measurable structure.
Though, I wouldn’t spend time comparing the past Lean POKT proposal and this proposal, as they are structured very differently IMO.
2. I think POKTScan should make a proposal for Geo-mesh!
They figured out what providers were doing in a closed sourced way and opened it up to the community. The DAO should indeed reward them for all the resources they have put into geo-mesh with a gracious premium (like what should happen with POKTFund).
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Strong agree on all of the above.
I understand the past fiscal management may not have been the best or far from it. Bringing the past won’t help us move forward.
Unless I’m wrong, PNI is the sole company (private company) that is working towards building demand towards the product in addition to several other things with capital markets, awareness etc. I fully believe other companies should build and be similar to PNI to grow the network. As it stands now in this market it’s the only one. Having everyone aligned on incentives is important. When you have a vast majority of the employees working towards all elements of the business having 400k POKT over 4 years. I call that misaligned incentives.
I have brought a lot of fiscal, operational, organizational changes. Part of this is the 15% layoff thus far and 35% paycut. If we can’t incentivize employees to take this paycut and believe that their work will be paid in POKT appreciation long term then honestly can’t expect top talent to stay.
I’m focused on continuing to operate lean, and do what’s necessary to bring structure, ensure V1 gets launched, focus on getting sales, how do I do that if I don’t have a team.
Thanks
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In summary, I do not support this proposal as it does not provide a clear plan or specific goals for the requested 45M POKT imbursement. I would like to see a more detailed plan, including information on how the money will be spent, job requirements for new hires, and specific breakdowns of current burn rates and expenses. Without this information, it is difficult to justify supporting the proposal and have confidence that the money will be spent wisely.
I’ve read Jinx’s response that this is not about runway, but Michael has put in the rationale and budget saying how PNI has funded operations through token sales and goes on to say 12.5M POKT would only add a month to the runway. I’m not sure which one is correct, but I do know that this proposal does not give me any confidence that this money will be spent wisely.
If the goal is to incentivize people then I would like to see the following:
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How do we justify imbursing a company that is spending $1.2M USD a month?
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How many people is PNI planing to hire?
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Where are the job reqs for these new hires?
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How much of this POKT imbursement is committed to the people at the executive level?
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How much of the 15M POKT for existing execs?
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How much of the 30M POKT for new execs?
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How much of this POKT imbursement is committed to the people developing V1?
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How many people are currently committed to V1 development?
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How many new people are needed to complete V1 development?
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How much of this POKT imbursement is committed to people maintaining network?
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How many people are currently committed to maintaining the current network?
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How many new people are anticipated to maintain the network as it grows?
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How many people are anticipated to maintain the Pocket Network nodes?
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How much of this POKT imbursement is committed to people driving demand for the network?
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How much of this POKT imbursement do you plan to convert to USD and spend on salaries?
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How much of the current burn is going to marketing and sales?
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How much of the current burn is going to portal infrastructure?
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How much of the current burn is going to node running infrastructure?
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How much of the current burn is going to other expenses?
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How much of the current burn is going to salaries?
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How long is the actual runway at this current burn rate?
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What is the expected new burn rate after the new hires?
There is not one mention of V1 in the proposal and the future growth of the protocol. It took Ethen to point this out, and Michael only gave us a vague answer of “We’ve been focused on maintaining v0, building v1, the portal and many other products to help grow the adoption of the network.”
I’m not saying that PNI is not a good company, but I am saying that this proposal does not give me any confidence that this money will be spent wisely. The people at PNI are amazing and we are truly blessed to have them at the helm. However, I would like to see a more detailed plan of how this money will be spent before I can support a proposal of this magnitude.
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None of this POKT is going to be used for burn. Also $1.2M isn’t the burn. The burn is continuously only going down based on what I said and also efforts to get off cloud.
The breakdown of the POKT is also irrelevant. It’s going to go towards retaining all the top talent that directly influence the key elements of business including all protocol engineers.
45M POKT at todays prices isn’t much for a 4 year vesting when you look at it across the team. What does knowing what exact people earn do? It’s easy to comment outside in on should do x,y,z but it doesn’t help move forward.
Management team has changed. A lot of those changes you should already be seeing based on what’s been communicated. We are only making net new hires on engineering and sales. All low performers are phased out. Less is more is the approach. 1 top talent > 10 mediocre.
No talent related to V1 is impacted. We have 2 net incoming hires right now and both are for protocol. I have been very very very methodical in our new headcount to be as lean as possible and ensure we keep an org structure where everyone is operating to their best capacity.
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How is the breakdown of POKT irrelevant? You don’t have to give specific POKT amounts that each person is getting.
How much % of the 45M POKT is allocated to various initiatives that I outlined in my questions?
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That isn’t the way we think about allocation by initiative nor do I think that is how we should. This is over a 4 year period not a one time payout. It’s to right size and draw consistency with new hires that are top talent to those from a year ago. The newer hires received far less and thus that creates misaligned incentives. Everyone needs to have a direct focus on the influence into the token price. Future hires are in the same boat.
As I said majority of the team are engineers. Protocol has been untouched. New hires are on engineering / sales. That should provide the necessary context.
Your deflection has been noted, Lax. I won’t argue with you. I sure hope you see something I don’t.
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Loan or Mixed Loan and Grant
Isn’t this the crux? Not acceding to PNI’s request is tantamount to sawing off the branch we all sit on.
Jinx observes that PNI has taken serious steps to reduce payroll.
Trip suggests he’d support a small grant - but only if PNI cuts its workforce to the bone.
I am hesitant to second guess PNI about what employees are vital to its central goals - which mostly coincide with those of the DAO. I also strongly believe that they should be properly incentivized.
But the opposition to this PEP is understandable. 45m POKT- over a third of the DAO’s treasury - does evoke sticker shock.
To ensure DAO support for transfer of the needed funds to PNI, why not revise this PEP as follows:
- extend 45m POKT as a loan repayable over time - starting perhaps in better times. Or make the 45m part grant, part loan. (On behalf of the DAO, PNF would have to step in to draft the contract and do the legals.)
If Pocket Network becomes a success, as we all hope, PNI will have no problem repaying the loan - even with a premium.
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I hope so too. That’s why I am here is for the execution side of things and let the engineers do what they do best.
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Hey @zaatar chiming in here with my thoughts. This is an interesting idea, but I can see a few practical problems with the DAO making a loan.
In the case of PNI, this would be a significant loan to an early-stage start-up. In my experience with start-ups, debt financing tends to be a risky path to take, and I would worry it just shifts the issue to the balance sheet.
With the 45M POKT being allocated to employees in vesting packages, PNI will have to source the extra POKT to repay the loan from elsewhere, which becomes a risky proposition if you combine that with potential currency volatility. What if the price of $POKT increases dramatically over the course of the loan? Going down this path would burden PNI with a liability that would likely make it extremely difficult for them to raise financing or sustain themselves as a company.
The other open question here is does the Pocket community have the skill set to underwrite loans. The entire industry has had a lot of problems created over the past 12 months due to the difficulty in accessing creditworthiness in such a volatile space. I would lean towards keeping all DAO grants structured as simply as possible.
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Get creative. None of the issues you raise seem insurmountable.
The basic premise is that repayment can be delayed until Pocket Network becomes profitable and/or the token price goes up. In other words, repayment could be made contingent on these positive events occurring. When the time comes, PNI can repay the loan from the rewards it earns by running nodes, from fund raises or profits.
A few lawyers and finance people should be able to work something out. (This is not my area of expertise, so forgive me if my suggestion seems overly simplistic.)
A loan on these terms is much more palatable than asking the DAO for a handout. The DAO, which hopes that Pocket Network will succeed, might prefer to lend 45m now and wait till the network succeeds (if and when) to get it back. If Pocket Network - and PNI along with it - do not succeed, and the loan cannot be repaid, well that’s the same as giving the money away now. As a DAO member, I might prefer to take my chances.
Gm gm
Jumping into this conversation to bring it back to what I view as the crux of the argument: does the DAO want to give its main development agency more POKT to incentivise current and prospective talent sufficiently?
I’ve pulled out the unique arguments for/against, as well as some suggested amendments and out of scope points that I thought relevant to comment on:
Arguments for
Arguments against
To this, I agree. Although, per the arguments in the forum last September/October, it’s clear that the DAO is not comfortable bringing on full-time staff without a proper oversight function in place.
For the purposes of this debate, it is apparent that it is simply not feasible to move over key PNI staff to the DAO. However, watch this space, as the PNF is keen to work with the community to enable…
I’ve seen different variations of this pushback. To be precise, the current DAO supply is approx 121.6m (https://supply.research.pokt.network:8192/dao), so the ask is almost exactly 37%
Is there a different number that people are pushing for instead?
From my perspective, most of what you ask for was included in the SOTU slides, as well as the employee breakdowns in the original post. Not sure if there is anything else you can share on this @Lax ?
Suggested amendments / out of scope points
I have two things to say on this.
One general point is that it’s not fair on individual employees to share their grants publicly without their consent. Just like how DAO grantees don’t have to disclose their legal name and the organisation that they spend most of their time working for, neither should any PNI employee.
The specific point is that a lot of this POKT is unallocated as PNI either hasn’t hired the relevant people yet, or because there are value judgments to be made that require their discretion. Similar to the debate in the forum about the discretion to be given to PNF, once the general risks are understood and underwritten, people should be empowered to get on with using their autonomy and creativity to deliver results. Granular DAO oversight over the compensation policies of PNI is not a panacea and could lead to outcomes that are operationally unwieldy and suboptimal.
Do you have a take on objectives that would make sense here? From my perspective, the issue is that we need PNI to ship v1 and get the demand flywheel in motion. No one is doing that, and they need quality people to do that. Waiting until some unspecified time in the future would put that at risk, no?
I fully support generous grants to LeanPOKT and GeoMesh, but this is outside the scope of this debate.
Fully agree. But as I said above, that is outside the scope of this debate.
Not sure what this is getting at? Again, maybe I’m being hopelessly naive, but I see no path in which Pocket Network fails and PNI wins. Any demand that PNI services is via the protocol, which we all understand - and govern - the economic and technical rules thereof. And as per others in this thread, while it’s not where we want to be in a couple of years (even now), PNI is the only organisation building v1 and growing the demand side of the network. We all benefit from this work.
But all of this is subject to employee vesting, right? And most is unallocated, so arguably, this is less dilutive than just giving away 45m in grants with no vesting. Or am I missing something?
As the grant is for long-term employee incentives to build the next version of the protocol and grow out the demand side, I don’t think this argument holds any weight. If PNI fails, we aren’t in a pretty situation as an ecosystem. That is something we need to change in the medium-term, but it is outside the scope of this debate.
100%
This argument has been picked up elsewhere, but just from my perspective: 1) long-term employee incentives is not a bailout, and 2) PNI fired a lot of staff in the last week or so.
@o_rourke can you give any more comfort here about the fact that none of the grant will be used for anything other than to give to employees on the basis outlined in your original post?
Is there another number that the community can build consensus around? Mike made strong arguments as to why 45m was the optimal number, and we haven’t seen a well-reasoned justification for a number lower than this so far. The arguments have mostly been binary, ie yes to 45m or no to anything. Or otherwise fairly general in nature.
I don’t see a loan as feasible for two reasons:
- Putting my VC cap back on, VCs hate seeing debt in an early-stage startup’s capital structure. So I can see how this would be very unattractive to PNI as it would make them unattractive to any outside investors, including those investing directly into POKT, as they would see that the core development company has a potentially uncapped liability on its balance sheet.
- Bringing me to my second point, this is deeply commercially unattractive. For the same reason that borrow rates on almost all non-stablecoins are very low due to the inherent volatility, PNI faces a massive liability on its balance sheet that it cannot serve if POKT goes back up to the levels that we all expect it to in the coming months and years ahead. And there are no cost-effective solutions to hedge this risk as POKT is too illiquid at the moment.
TLDR
It’s good - and healthy - to have robust debates. The worst is silence. Actually, pure vitriol is the worst, but thankfully we’re better than that. Silence is a close second though.
We don’t have silence here. In fact, we have a lot of people that care. This brings me to my main ask, please be civil. It’s much more fun to spend time in Pocket when people are nice and respectful. While it’s easy for these kinds of conversations to feel like one giant group chat, and to let it devolve to the lowest common denominator, let’s hold ourselves to a higher standard.
Challenge, debate, poke fun (for sure!), but don’t be a dick. Or obstructive. All of the arguing shows that we care. Truly. We all fucking love Pocket Network. So let’s remember that and work together.
Lastly, I would recommend anyone who wants to join the debate to be as constructive as possible and suggest an alternative approach if you disagree with the proposal.
Peace
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PNI have increased staff by 50 members since March, where they had 10 staff.
‘Cutting staff to the bone’ and 'taking reasonable action to ensure survival ’ are two completely different things.
10 staff in March, 65 staff today. while a proposal comes out for 37% of the entire treasury for new hires and incentives. Can you see how this is concerning to some?
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They didn’t have 10 in March it was 30ish. Wrong statements don’t help this dialogue.
Have to stop throwing out random statements. Seriously. It throws everyone off from a fruitful dialogue.
Also going to bone is a very very personal opinion with no understanding of what’s going on. So another skewed opinion. If you want to talk on side feel free, but it’s hard to take anything you say seriously and respond because basically all of it is very false.
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