Co-authored with Eli Zeger
There are a number of probable ways you already know about Friends With Benefits, the private social media network for arts & culture in the Web3 era. On the Forefront Discord this past summer, you might’ve stopped by community hangout with FWB's lead operator and de facto mayor, Alex Zhang where he discussed the network’s evolution. If you're a culture head, maybe you heard that Yves Tumor and Diplo were partying with the FWB crew.
Friends With Benefits’ eclectic membership sees a cross between experts on DAO’s and crypto, and those who are new to both. The community boasts an array of personal and professional backgrounds—from artists and journalists to crypto enthusiasts and tech investors, to those who are just curious and want to learn more. Even to users who aren’t well versed in the intricacies of blockchain technology, the pro’s of this community token are clear and captivating.
In just its first year, FWB has already pushed the boundaries of how social tokens can create new forms of social and business organization. This case study covers the community governance structure, its strategy for working with VC’s, the standalone products leaders and members have collaboratively developed, and what the year ahead looks like for this exciting social DAO.
“FWB is a cultural crypto community. It’s a space where anyone new or experienced in crypto could come and hang out to talk about how this technology is helping to advance our society as a whole. It’s everything from talking about NFTs to getting local city guides, to learning about new food and music. It’s basically a fun place to hang out.” — Cooper Turley (source)
Friends With Benefits wants to create what they call the “ultimate cultural membership.” For that reason it’s sometimes likened to Soho House, the swanky, exclusive franchise of members-only nightclubs and hotels in several metropolitan cities. That comparison isn’t wholly apt, though, since FWB purports to value collective decision-making and interaction above cultural capital, clout-chasing, and other stereotypes of exclusivity.
When FWB launched a year ago, it was simply a token-gated group chat on a Discord server. Over the course of its first few months, founder Trevor McFedries, with the assistance of early community members, built out different features that upgraded it from a group chat into a well-rounded online space for users to socialize and invest their time—something many people were free to do since this was still during the thick of lockdown. As of writing, its private server is home to over 1,500 members.
Joining the DAO is a multi-step process. Members must hold 75 $FWB tokens—an ERC-20 standard token on the Ethereum network which can be purchased on a decentralized exchange like Uniswap—before completing a short application that’s evaluated by over 30 different community members. The second step adds friction, but the point is to make sure applicants want to be involved for the long haul rather than merely make short-term token gains.
In addition to buying $FWB, both members and non-members can earn by providing value to the network, primarily through writing, designing, and coding, as well as performing IRL tasks like helping out at events. All these different avenues for involvement have enabled FWB to ambitiously evolve its membership and model.
FWB’s leadership always knew that the quality of the network would depend on the dedication of its membership. Becoming a DAO formalized this preexisting rapport between staff and users.
Together they’ve established bylaws via Snapshot to decide how to hire and reward contributors; diversify the community treasury; manage monthly budgets, and more. The treasury and allocations can all be transparently seen on a block explorer like Etherscan. Almost all of the bylaw proposals so far have passed by landslide margins, suggesting that the interests of staff and users have been aligned for the most part.
The FWB team has deliberated over some fundamental questions about how to articulate community governance. Alex Zhang, the lead operator, mentioned a few to us: “How would a social media site function if the users had ownership in the platform and got to see collective upside through value it created? What is it like to give artists ownership in the early formation of a scene?” Though FWB isn’t a platform cooperative, these sentiments echo Nathan Schneider’s concept of exit-to-community, predicated on the simple belief that people should have a stake in the things they do online, and that Web2 isn’t sufficient enough to fully achieve this model.
“Movements are created by artists in the beginning who assign cultural value to things, but never participate in any ownership or equity because they typically get co-opted by capital,” Zhang said. “The high-level purpose is to be the social environment where creatives can ramp into Web3.”
In September this year, the question of ownership got a little more complicated. During a round led by Andreessen Horowitz alongside other firms like Pace Capital and Kindred Ventures, FWB raised a windfall of $10,000,000 in USDC. The VC’s weren’t expecting a quick boost to their stock portfolios going into this particular investment. Still, they were all eager to bet on the social DAO because of its hyper-involved user base and its output of valuable content and products.
Leaders and members flipped the script on VC dealmaking by asking the firms to pitch themselves to the community. Many were hesitant about welcoming outside investors, but they had the chance to virtual town halll over Discord. According to Zhang, was to see if the community and investors were aligned on long term goals, and to understand how investors could support the community beyond just capital, such as legal support, infastructure, etc etc."
FWB’s Snapshot proposal to accept outside funding accounted for how much power the firms should have in community governance. The DAO sold 100,000 $FWB to the VC’s altogether at $100 USDC per token, giving each of the five partners significant token-weighted voting power. To mitigate their potential for outsized control over future decision-making, the proposal required each of the VC’s to delegate half of their voting power between Team Leads and Fellows.
“The framing I always use is it would’ve been like if the first thousand users of Facebook asked Peter Thiel to sit down before he wrote that first check to Zuckerberg, and they asked Thiel, ‘What do you want from the community,’” Zhang said about the necessity of hosting the town hall. “Imagine if the values were aligned from the onset, and the community of users actually had leverage and power, and they actually owned the platform.”
Creating value has taken on different meanings in the scheme of FWB. Of course there’s the social media aspect, wherein the DAO gains worth depending on how much time its members spend on the network. Then there are the products and initiatives developed in direct collaboration between staff and user-contributors.
Some of these are meant to serve internal needs, while others can be used by anyone and could potentially exist as standalone startups.
View FWB’s most up to date organizational chart
FWB has organized its efforts into time-contained sprints, known as “seasons,” that each contain a thematic focus for its priorities, community, and product roadmap.
The Discord server is where you go if you want to become a core community member of Friends with Benefits. There are many categories and subcategories of chat channels, organized by interests, workstreams, and geographic locations.
In order to facilitate events where holding tokens could grant access, FWB created Gatekeeper, its own token-gated RSVP Portal.
FWB x Zora Hackathon
In a hackathon co-hosted with NFT protocol, Zora, FWB members came together to ideate and propose other new features, products, offerings, and community building programs. Among the ideas were:
FWB Gallery is an NFT auction platform and community space built by the FWB community as a place for FWB members to showcase, auction, and discuss non-fungible artwork from within the community.
Curated by FWB community members, city guides offer travel recommendations of activities to do in particular cities.
FWB is increasingly hosting IRL parties and events in cities across the globe.
FWB continues with its ambitions to build more in-house products and services, including a member directory (like Facebook-meets-LinkedIn) and its own governance proposal platform (called Upvote).
As FWB looks to continue growing, it will face some unique challenges along the way. How is it best to balance market price dynamics of social token demand with community accessibility? How can membership become more accessible without devaluing existing memberships? And, what is the role of venture capitalism in a social DAO? There are other challenges endemic to coordinating a large, emergent group: information asymmetry, communications, and onboarding new members.
In the social token space, FWB has been trailblazing what it means to be a social DAO, and even a new kind of social media network. The network should be recognized for demonstrating the viability of an interesting model of community-as-product. It has shown the inventive and exciting ways that crypto can bring us together, and help lift each other up. As FWB continues to grow and evolve, it will be a group worth watching (or even joining) for anyone interested in social tokens, or the future of online community building.
Special thanks to Alex Zhang for taking the time to both speak with us and provide feedback on our draft of this case study!
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