Shortly after SourceCred’s founding, @Protocol Labs (PL) decided to officially support the project. As part of that, I joined PL, which became the de-facto home of the SourceCred project. Since then, PL has helped the project in many ways, most notably paying me (and, for several months, @wchargin) to focus on the project full-time, providing logistical support, and acting as the initial Grain purchaser.
Now that SourceCred is starting to get up and running, I think it’s time for SourceCred to spin out from Protocol Labs, and set up its own independent entity. As part of this, I imagine the entity hiring a few people to commit full-time on growing SourceCred. This has a few advantages:
- Protocol Labs has many larger projects, which it understandably prioritizes. Having a smaller team (but which is fully focused on SourceCred) will allow us to move faster and more decisively.
- It will enable SourceCred to raise capital and budget independently, giving us more financial flexibility and robustness.
- Since SourceCred is a distinct community from Protocol Labs, having our own independent entity which is governed by our own values and processes (e.g. cred-weighted voting) will give us more sense of empowerment and ownership over our shared creation.
I’m happy to report that the PL leadership is supportive of this plan, and we’re going to work together to have a smooth transition. In particular, they’re going to help us with setting up the new entity, raising capital, and will still be providing support. In return, I want us to do a good job of giving PL cred for all of the important support that they’ve offered, and that they will offer in the future.
Metaphorically, it’s like SourceCred has been a kid living in PL’s house. Now, SourceCred is growing up, and it’s time for us to move out, on good terms. Our new apartment may be less fancy, but it will be ours.
This transition will occur in 2020. Around the same time, we will find a few value-aligned VCs who want to commit to purchasing large amounts of Grain. This will increase the financial flows going through SourceCred–so that we can start paying multiple full-time salaries to contributors. This will enable us to build a stronger and more committed team to keep growing and developing SourceCred.
As I alluded to above, having our own legal entity will also allow us to have our own balance sheet. (I imagine the balance sheet will be initially funded by creating a lump sum of Grain.) Having a legal entity with a bank account would let us do several interesting things:
- Organize “CredConf”, bringing together key SourceCred contributors and partners in meat-space, including getting a venue and paying for folks’ flights
- Pay some contributors upfront salaries
- Potentially arrange health insurance / other benefits for high cred community members. (Maybe set a price in Grain?)
As we plan for this entity, we should be cognizant of the risks of creating a centralized entity within a decentralized and open-source project. It presents the risk of creating an “insiders/outsiders” dynamic, where people who are explicitly part of the entity have privileged access to information and ability to coordinate. It would be especially pernicious if people inside the entity get paid preferentially to open-source contributors, since that would tend to entrench unhealthy power dynamics.
However, being able to hire some key folks (e.g. an operations lead, a core developer, maybe a design lead) would greatly improve the project’s ability to execute with a consistent tempo. Without promising economic consistency in the form of a salary, it may be hard to get people to give us the kind of upfront “championship” style commitment that can anchor the project’s future.
Here’s one proposal for working within these constraints:
- We establish a SourceCred Foundation (SCF) as a centralized entity within the SourceCred project. We give it a one-off endowment of Grain that it can sell for $ as its initial source of funding.
- SCF’s governance will be based on voting from Cred-earners and Grain-holders
- SCF can hire full time employees to work on SourceCred. From SCF, they will receive only salary (SCF has no equity). The salary will be considered an advance on future Grain, so that as the employee earns Grain, 50% of it goes directly to SCF until they have “repaid” the advance (with some risk compensation to SCF, e.g. they need to pay back 125% of the advance)
This means that SCF will be using its financial clout to de-risk SourceCred contributors’ financial future: SCF takes on some of the risk that a contributor won’t earn a lot of Grain, so that contributor can commit to the project with confidence. However, it ensures that the big rewards for everyone (whether inside or outside SCF) will come from our public SourceCred instance, rather than from SCF internal politics. If SCF becomes nepotistic and starts hiring people who aren’t actually earning Cred/Grain, then it will start to lose money, and will be forced to course-correct. Also, anyone could form a competing org which offers a better deal to contributors.
Please let me know what you think of this plan! It’s in early stages, and I have a few other versions I’m simultaneously considering.
For example, instead of having the “SourceCred Foundation” as an opinionated entity that is pushing forwards SC development, we could make SCF a very unopinionated neutral-grounds type org that just holds the IP and trademarks and such. Then, we could make another entity (“CredCorp” or “CredCooperative”) which is an opinionated and cash-rich entity that is driving forward SC development. This could have the benefit that it’s clearer that anyone else can make competing centralized entities that advocate distinct visions for the ecosystem. However, it’s higher complexity since now we’re setting up more entities.