Annoying tech trends come along every few years, but most of them can be happily ignored. Nintendo had a virtual-reality helmet that flopped and Google Glass totally bombed. At first, cryptocurrency seemed like more of the same. Beyond money laundering, it was hard to understand what it was for. Just more tech bros looking to make fast money again.
But they say everything comes back around and this time, it looks like crypto's here to stay. It feels like it's closing in on you. Hollywood's Matt Damon is in TV commercials comparing trading cryptocurrency to mankind's greatest achievements. Another crappy-looking NFT made in Microsoft Paint sells for $20,000. Your mum casually drops ‘WAGMI’ – ‘We’re all gonna make it’; said to manifest your wildest crypto gains into reality – over the phone.
Created as a fundamentally anarchist project – a way to get around the state's control of money; to decentralize finance so that it didn't require placing your trust in big banks – crypto is now attracting the attention not only of private investors, but also of national governments. Despite its undoubtedly volatile nature, a growing global army of people swears by it. According to a survey by tech research company Morning Consult, 36% of millennials in the US and 20% of adults own some form of cryptocurrency.
The more desperately some people say crypto will succeed, the more others claim it will fail. We live, after all, in polarized times. The believers think it's solving the world's biggest problems, while its skeptics are convinced the whole thing is some kind of pyramid scheme. Some corners of the crypto world are still very silly while, for certain groups of tech workers and creatives, crypto is very serious indeed. To them, it suggests a more positive future of the internet. If Web2 is the internet right now, controlled by a few big platforms, they're trying to build a decentralized Web3, where everyone gets a seat at the table.
A common trait among creators, investors and promoters in the crypto world is their relentless optimism. People with competing philosophies, often living on social platforms Discord and Twitter, all in some way believe crypto will rip apart everything we believe about the relationship between value, money and the internet. Thanks to new user-friendly investment apps like Robinhood and Coinbase, small fortunes are being made – sometimes in a matter of days. In recent months, however, a new phenomenon has been growing within the crypto ecosystem. All of a sudden NFTs have been overtaken by decentralized autonomous organizations (DAOs) as the next big thing.
Crypto's biggest fans argue that DAOs are still growing up and more powerful ones will emerge over the next few years. But a handful of them have already been attracting attention – none more so than Friends With Benefits (FWB). In October 2021, the LA-based DAO raised $10 million from venture capital firm Andreessen Horowitz and other prominent investors, including the ‘It girl in venture capital’ Li Jin, resulting in a valuation of around $100 million.
If all this sounds stupid, sure, you can probably just avoid it. But when so much money and talent flows towards something new, it's generally a good idea to pay attention. No one likes to get left behind.
What's a DAO?
DAOs are a lot of things – including horribly explained. Put simply, they're a new kind of organizational structure built with blockchain technology. Maybe because there isn't any central leadership, they're often compared to crypto co-ops. They're communities that organize around shared crypto bank accounts. No official leader or CEO makes decisions on their own. Instead, someone might suggest a project for the DAO and everyone with tokens gets to vote on it. They have the potential to transform how businesses are run, with power shared more equally.
DAOs come in all shapes and sizes. Some of them operate like startups. Some support trans and non-binary artists. Some invest in founders or NFTs. Others, such as FWB, mostly exist for people to hang out.
A private social club with its own cryptocurrency, FWB launched in late 2020. Since then it's been described as many things: ‘the de facto home of Web3's growing creative class’, ‘the first decentralized Soho House’, ‘a VIP lounge for crypto's creative class’, ‘the anti-crypto crypto club’. That last one came from Raihan Anwar, who recently finished an MBA program at the University of Southern California and co-founded FWB along with Trevor McFedries, the former DJ and creator of CGI influencer Lil Miquela.
Whichever definition you go with, everyone agrees that FWB is good at creating hype. Today, the DAO has nearly 4,000 members. The biggest chunk of them reside in Los Angeles, but there are also chapters in New York and London. A new ‘Cities’ initiative was recently launched to connect the growing FWB community around the world.
To join FWB Global (the all-access tier), you need 75 $FWB tokens. For FWB Local membership (with limited access to events and Discord channels), you need just five tokens. In July 2021, global membership would have cost you $750; today, more than $1,000. In short, membership costs a lot of money. What do people get out of it?
First up, access to a private Discord server where you can hang out with other FWB superfans and VIPs, attend digital events and see all the products FWB is developing in Web3 and the metaverse. The various channels cover many things. Conversations about investing tips are as common as outfit-of-the-day photos (think Paul Krugman via Supreme). FWB is there to help figure out how it all translates to our decentralized virtual future.
Events in the real world range from big private parties to small supper clubs with acclaimed chefs. There's a new editorial platform and, earlier this year, FWB collaborated with a coffee company on the release of a sparkling yerba mate tea drink: ‘the first beverage co-created with a DAO’, according to the drink's standalone website.
The big idea
Yet FWB's potentially most revolutionary idea is that by attaching cryptocurrency to an online social club, it gives members an incentive to make it an amazing place to hang out. The more amazing it is, the thinking goes, the more newcomers will want to join and the more valuable their tokens become. While it gets increasingly expensive to join, it also gets increasingly lucrative to cash out, which members can do whenever they like.
Not everyone with the right amount of cash gets to join the cool gang. As Kaitlyn Davies, membership lead at FWB, explains: ‘Around 3,000 people have applied since the start of the year, but the acceptance rate usually sticks around 30%.’
When asked what makes a successful application, Kaitlyn replies, ‘We prioritize artists and creatives but there's no strict criteria. We love to see people doing interesting things outside of their nine to five. Maybe they have a side hustle or maybe they love to cook. Web3-adjacent backgrounds and people already looking to incorporate Web3 into their own practices, with an understanding of what we're trying to build, also helps.’ Warming to her theme, she continues: ‘Ultimately, though, I sort of just consider whether other members would like to have dinner with the person.’
The gold rush
At the beginning of 2021, $480 million had been invested in DAOs; by the end of the year, the figure was nearly $10 billion. According to estimates on the higher end of the scale, $500 billion will be invested by the end of the year.
Like the wider DAO economy, FWB is also growing fast. Not much is known about the group because it prefers to build away from the spotlight. According to Kaitlyn, ‘This has become much harder since the investment, which puts a lot more eyes and pressure on us.’
Today, there's a more diverse and bigger group of people paying close attention to FWB. ‘Pre-investment our following was quite niche,’ says Kaitlyn. ‘You had to be in the know. Someone like Raihan had to tell you about it.’
Raihan was, it turns out, how Courier found out. At a dinner in LA, shortly after FWB had launched, he quickly sketched out the philosophy behind DAOs. But it was still so new, it was hard to follow. Plus, founders from exciting startups across media, design, food and drink were also sitting around the table. The idea was to have fun rather than talk shop.
FWB started making much more sense the following year. Unlike robotic pets or Google Glass, it looked like it was here to stay. The DAO was still uniquely confusing, but it was also turning out to be insanely lucrative and quite possibly forging a new way for digital startups to build and grow. It was time to check back in.
Behind the scenes
One midweek evening in Hackney Wick, an arty formerly industrial east London neighborhood, around 40 people turn up to Studio 9294, an events space with a barge moored to the canal round the back. As always, membership is required to get in.
Singer Erykah Badu, rapper Azealia Banks and DJ and record producer Diplo have played at FWB music-related events before, so expectations are high. Tonight, a panel discussion with recording artists Murkage Dave and Elijah, hosted by Chris Reed, the DJ better-known as Plastician and head of FWB's London chapter, will consider how Web3 could provide a more positive future for independent labels, promoters and artists.
A smattering of startup geeks and hypebeasts fill the benches. Most of the crowd look like they're in their late 20s and 30s. The average person definitely skews more towards tech bro than at FWB events in the US. But it's still early days for the London chapter. On stage, dressed in jeans and a football shirt from Dutch streetwear brand Patta, Chris talks about how artists undervalue the data they give to big corporations. He also touches on the benefits of blockchain when it comes to accounting and artists receiving royalties.
His own interest in crypto and Web3 started a few years ago. ‘In 2016, I wanted to dip my toes in, so I bought some Bitcoin. Then I started following the tech side of things,’ he says. After reading up on how tokens served multiple purposes beyond simply buying and selling, ‘I started thinking about what crypto could be used to support and the kinds of more equitable businesses that could be built.’
During the Q&A, a man working in finance wearing a blazer asks the musicians on stage if ‘they want people like me investing in the interaction of music and Web3, or whether it's too much of a risk to your community?’ Murkage Dave promptly answers: ‘We take money off people we don't give a shit about all the time! So, personally I don't have a problem with it.’
There's plenty of excited talk about our decentralized future – but clearly there are limits. When one guy in the audience mentions electronic music producer Deadmau5 collaborating with fans on a track, asking: ‘Is this kind of project at the forefront of your minds?’, Elijah answers: ‘Depends on the project. But I don't always want to hear 100 slightly rubbish versions of my own songs, thanks.’
After the panel, everyone moves on to the barge outside. Chris plays some tunes. FWB members – many of them meeting out in the wild for the first time – continue making a dent in the open bar. Julian Issa is one of them. The former opera singer turned founder and CEO – his company, Fethr, is a social networking app – says he bought 40 tokens for $6 each a few months ago and they're already worth $20 each. ‘I joined FWB as a crypto newbie,’ he says. ‘But Web3 won't win if it doesn't invite new people in.’
For Julian, FWB provides ‘the perfect balance’ between giving its members fun things to do online as well as in real life. ‘Web2 put the product it was selling first, whereas Web3 prioritizes community. I guess the trade-off is that founders take less and the community earns more. At FWB, members are treated less like customers and more like co-creators,’ he says.
Marc Blinder agrees. He's the co-founder and CEO of Aikon, which helps businesses integrate blockchain technology. ‘DAOs need to become the new normal across various sectors or they'll fade from existence,’ he says. ‘It's usually only crypto people that know about DAOs but that's starting to change. Now I'm waiting for FWB to really blow up and become mainstream.’
He might be waiting a while because FWB isn't ready to take off. Not yet, at least. According to Paul Tao, events lead at FWB, ‘We're purposefully keeping [membership] growth slow and steady.’ Talking from his home in LA, where he co-owns entertainment hub IAMSOUND, he becomes more and more animated as the conversation continues. ‘We want to protect the community and the balance of people that make it what it is,’ he says. ‘I'm from a music background. When I joined, I was worried that I wouldn't be able to relate to anyone, but that proved to be the opposite.’
FWB has mostly focused on throwing parties and growing its membership, but Paul says it's beginning to widen its ambitions. He says it probably won't take long before members start releasing projects under the FWB umbrella, including magazines and clothing lines. But they won't simply be doing this for the sake of it.
‘Above all, we want to make sure creatives and culture more generally is represented in Web3. We don't want everything to be so dominated by big tech,’ he says. ‘There could be a new kind of infrastructure for Web3, with DAOs acting as the gatekeepers. One day all this might become the norm. But then again, who really knows?’
Sidebar: How to be a good host
‘Events and generally “the culture” at most companies usually exist in a choke hold. Maybe it's the creative director who singularly holds the vision and claims they know the secret sauce. Most people have worked at places with this kind of approach and you end up doing something with the lowest common denominator that doesn't speak to anyone.
‘The whole idea of decentralization – the D in DAO – is obviously really important to us at FWB, so we created standard operating procedure [SOP] documents. Anyone in FWB has access to the SOPs and anyone, really, can host an event. It could be a dinner party. It could be DJ night. It could be a festival over multiple days.
‘We have a key document called Pattern Language. In the 1970s, there was an architect called Christopher Alexander who wrote a book called The Timeless Way Of Building. Essentially, it says there are 253 patterns in architecture and, if you follow these patterns, you get to a level of quality that can't be named. Any time you walk into a house or a restaurant or a park that just draws you in – it's the quality that can't be named.
‘We believe you can create pattern language for events, too. I don't think it's ever been done before. FWB is application-based. So if you're in the membership, you have to at your core trust everyone in the community. I don't like everything that we program at FWB, but I respect the choices that people make. If you like everything, then we don't have the right mix of people. We're too homogeneous.’
Sidebar: Crypto terms to know
NGMI Meaning ‘not gonna make it’. Used to insult amateur investors and over-hyped or rip-off projects.
Diamond hands In the crypto world, if you're told you have diamond hands, it's a big compliment. It means you have the ability to hold on to tokens for the long term and are able to ride out early losses to achieve big payouts further down the line.
Paper hands This is the opposite of diamond hands: someone who gets spooked by short-term drops in value and sells too early as a result. If all your crypto pals are saying you have paper hands, you're probably being bullied.
Metaverse An alternative, virtual world where you can transact using cryptocurrencies and own digital assets like NFTs. However, it's looking likely that we'll end up with more than one metaverse, so definitions are still pretty loose at this stage.
Normie Someone who stays clear of crypto for one of two reasons: because they're completely baffled by it or because they think it's a giant scam.
Whale Either an individual or an institution that holds such vast amounts of a particular cryptocurrency that whenever they buy or sell, the whole market shifts up or down. Many whales choose to remain mysterious.