What I’d do differently building a Crypto Foundation

Five mistakes to avoid when starting a new foundation.

After 4 years leading the Stacks Foundation, I've been reflecting on what I'd do differently if I were to start over. It's not easy to admit, but I've made my share of mistakes. Most could be resolved but spent valuable time or resources that I wish we could get back. Thoughts ranged from personal "how did I not understand this from day one" to communal "how did my lawyers/advisors miss it too?"

But here's the thing: my story isn't unique. I've heard countless similar experiences behind closed doors. Sharing these stories in private helps people feel less isolated, but it doesn't stop the next foundation from stumbling into the same pitfalls.

For those of you leading or considering launching a web3 foundation, here are some key insights that could save you significant time and resources.

Improving the future of Web3 by sharing past mistakes.

The Challenge: Optimizing Foundation Structure for Long-term Success

We all know that building in this space isn't just about innovative tech or a strong whitepaper. It's about creating an organizational structure that can navigate the unique challenges of the crypto landscape while driving meaningful progress. Even for seasoned professionals, getting this right from the start can be tricky.

Why It Matters

The choices we make in the early stages of our foundations have far-reaching implications. They affect everything from regulatory compliance and community engagement to operational efficiency and crisis management. Getting these elements right allows us to focus on our core mission instead of constantly putting out fires.

Common Pitfalls

In my observations and conversations with peers, there are the most common recurring issues:

• Defaulting to offshore incorporation without fully considering the implications

• Underestimating the importance of structured community involvement

• Lack of transparency in goal-setting and progress reporting

• Inadequate preparation for the inevitable disruptions in our space

• Failure to create long term and diversified treasury plans

These aren't just beginner's mistakes - they're traps that even experienced teams can fall into when scaling quickly or navigating new regulatory landscapes.

Key Strategies for Improvement

Based on my experience, here are five strategies I'd implement from day one if I were to restart:

1. Incorporate as a 501c3 in the US, or offshore if all of the team is offshore
   For foundations with a significant US presence, this structure offers distinct advantages. It provides a solid legal framework and can simplify operations, especially when interfacing with traditional institutions. Make sure to apply early to ensure alignment between your status and activities. We learned the hard way that waiting to incorporate the status could take years to hear back.

2. Implement structured community working groups
   We introduced Working Groups late into our journey, but the impact was immediate and substantial. The structure allows organized community initiatives with clear goals and outcomes in a transparent way. These groups provide a framework for channeling community expertise and enthusiasm into tangible outcomes. We've seen our community drive initiatives in areas like protocol development, ecosystem growth, and governance refinement. You learn more about the Stacks process here.

3. Adopt public tertile reporting
   Transitioning from quarterly to public tertile OKR reports (3x/year) has been transformative. It aligns our goals more closely with the community, enhances transparency, and provides planning cycles more aligned with our team. This approach has significantly improved our ability to deliver on complex, long-term objectives and remain our goal of transparency and community input.

4. Integrate disruption planning into OKRs
   In our space, black swan events are almost the norm. We've learned to build disruption planning directly into our objectives. This includes maintaining a dedicated "go-squad" for urgent issues, from market volatility to critical security patches. This proactive stance has dramatically improved our resilience and response times.

5. Build a strong financial position early

   Foundations are built to serve their mission, not gamble the future. The majority of our assets were held in the native token even though business operations and liabilties were denominated in USD. When black swan events like FTX hit token/USD prices, we had to dramatically change our plans. We now keep 12 months of operating expenses in cash to keep stability with a clear liquidation plan. We aren’t paid to time the market, nor do we have the capability to do so.

Implementing these strategies requires effort, but the long-term benefits in terms of operational efficiency, community engagement, and organizational resilience are substantial.

I'm curious to hear your thoughts. Have you implemented similar strategies? What other approaches have you found effective in structuring and scaling your foundations?

Want to learn more? Reply here, say hello on X @br_ttany and subscribe on Substack. Don’t forget to look out for my Chainmakers podcast launching this month. We’ll take a look at world class web3 operators in the fastest growing companies.