Proposal: Polkadot Community New York City Workspace by Transistor

A community workspace in the global finance, media, and technology hub.

Proponent: Transistor Polkadot North America, LLC

Beneficiary: Transistor Polkadot North America, LLC (14333MZvbGkcq5CZ8fYHZiFYwHNDaW3uiErDKMb7oqnupWXn)

Date of Proposal: 16 February, 2024

Requested: $2,105,000 (approximately 300K DOT using the 30-day average price of $6.77)

Description:

Transistor proposes that these funds be used to lease and run a co-working space open to Polkadot teams in or visiting New York City for at least three years; to establish a physical brand presence and effectively coordinate and drive Polkadot adoption in North America, while nurturing a more cohesive community. We believe that this workspace will be crucial in Transistor and Polkadot executing its goals of:

• Launching a regular cadence of multichain meetups in key tech hubs, starting with New York City to attract developers, entrepreneurs, and investors, ensuring Polkadot representation while providing a neutral entry point into the conversation. 

• Develop relationships in our advisor network and beyond to pitch and win enterprise and startup client business. 

• Build, launch, and promote products to advance Polkadot in a high-energy, in-person work culture.

Not having a physical workspace to host and support these business development activities would put Polkadot’s adoption prospects at risk, especially when many of Polkadot’s competitors have a substantial on-the-ground presence in New York City, San Francisco, and Miami targeting tastemakers and builders in these key global tech, finance and media hubs. 

• New York is officially the global capital of crypto, and all of Polkadot’s major competitors have representatives on the ground. Coinbase, Uniswap, dYdX, Osmosis, Solana, Coindesk, The Block, and over half the venture capital funds in crypto operate offices in NYC. This is where they forge relationships and do deals to support the business of their protocols and products. Polkadot is not a part of the mindshare in these circles because it has no serious physical presence in the city.

• This community workspace is a small, iterative step towards a substantial footprint for Polkadot in key tech hubs. After we successfully launch this space in NYC, we plan to expand this program into other key tech hubs in North America, including San Francisco, Miami, Toronto, Mexico City, and Austin. There is currently a lack of investment capital in the Polkadot ecosystem, so providing free space for teams who are exploring and building on Polkadot provides a valuable subsidy from the Polkadot treasury to attract new blood.

• Remote work fails to deliver results. While it is a nice perk in some situations, remote work does not increase productivity. More importantly, it makes building a strong culture around the Polkadot ecosystem incredibly difficult, as these are not just networks of computers. Transistor will be an in-person first company, and we encourage everyone to sweat and sneeze with us.

• We will never see commercial real estate this cheap again. The combination of COVID forcing people out of office spaces and zero interest rate policies followed by recent rate increases from the Fed have driven relative commercial real estate prices to historic lows. The U.S. economy is emerging as the strongest in the world again, meaning the rent we can lock in today is the best deal we will ever be able to get.

• We have to do this while crypto prices begin to appreciate, not after. Having worked within Parity Technologies and the Web3 Foundation during the last bull cycle, we know that if we are going to make impactful investments from the treasury during an upswing, we need to be prepared before the market moves. This is a small first step in being prepared for that impending reality.

Despite its superior tech, Polkadot has lost much ground over the past few years in the U.S. Too often, superior tech does not win the war. We at Transistor believe in Polkadot and that we will deliver on our North American business development goals. But we need this physical presence in New York City to make sure Polkadot is viewed seriously amongst this cohort once again. 

Plan:

Once the Treasury funding is approved, we plan to immediately seek a suitable space. In New York City, it typically takes 4-6 months to get moved into the right space at the right price. This timing challenge is the reason why we are proposing to the Treasury now, rather than waiting after the DF program approval, which we believe will occur in the February/March timeframe. If we do not start to execute soon, Transistor’s business development efforts risk being wasted in 2024. Also, the Federal Reserve is expected to lower rates for the first time in a few years in February, adversely affecting current cheap commercial office rent pricing. 

In New York City, building owners typically demand 5+ year leases. The current commercial rents, despite the commercial real estate headwinds, remain higher than most metropolitan areas in the world. Nonetheless, we are sensitive to and respect the OpenGov process and history. Thus, we are planning to seek a more difficult-to-source 3-year lease/sublease (on an annualized basis, the rent will be higher than that of a 5-year lease) to minimize our funding request. 

Overview:

Transistor is a U.S.-based blockchain research and business development firm. We offer expert guidance and solutions to organizations navigating the complex blockchain landscape in North America. As a U.S.-based team with deep tech and finance ties from Wall Street to Silicon Valley, we will work to positively reintroduce the Polkadot tech stack to the U.S. enterprise, startup, and investor communities, who have largely overlooked Polkadot in favor of locally accessible protocols like Solana, Avalanche, Aptos, and Polygon. 

As many of you are aware through our Polkadot community forum posting, we have applied for funding through the Decentralized Futures program (https://forum.polkadot.network/t/decentralized-futures-coalition-business-development-marketing-and-communications/4829) run by the Web3 Foundation. Aligning with the ethos of decentralization and OpenGov, our requested funding through the DF program is only budgeted to cover the payroll and employment overhead expenses of our expected team, consisting of 10-12 full-time business development, engineering, and onboarding professionals, educated and trained in the U.S., and highly focused on bringing U.S.-based enterprises and Web3-natives clients to onboard and use Polkadot.

For any additional funding for specific programs or operational items needed to advance Polkadot and Transistor’s aligned goals, we plan to submit OpenGov proposals for funding. This approach has been recommended and supported by the W3F, and we made our intention to submit this proposal for community office space clear to the Foundation in the application process. Our first proposal under that precept is the first Polkadot Community Workspace based in New York City, which will also serve as the headquarters for Transistor’s Polkadot business development work defined in our Decentralized Futures proposal (https://forum.polkadot.network/t/decentralized-futures-coalition-business-development-marketing-and-communications/4829). 

New York City is the most important global financial center and also is a major tech and investor hub. As such, many of Polkadot’s competitors have a major physical presence in New York City(https://decrypt.co/139795/solana-labs-opens-nyc-coworking-space). Their presence helps to attract the best talent in business development and engineering while facilitating closer, more effective relationships with enterprises, industries, and investors, which are necessary to compete in blockchain adoption. Avalanche has its headquarters in New York City (Brooklyn). Consensys has a major office in New York City (Brooklyn). Solana has a huge multi-floor space in downtown Manhattan they are opening to all teams building in their ecosystem, a huge benefit for start-ups with tight operating budgets. These large, flagship offices provide a competitive advantage in the dispersed crypto landscape by providing a welcoming, permanent nerve center for community building and showcasing technology and its relevance to potential clients. 

We believe our Community Workspace based in New York City will greatly enhance Transistor’s business development efforts and support high-productivity work within the Transistor team by promoting an in-office work culture. When it comes to business development with large enterprises, building relationships through regular physical meetings in a welcoming space is critical, especially when the competition has done so in some of the best office spaces in key tech corridors in New York City. Polkadot has much ground to cover in the next few years. Having to do meetings in a local coffee shop will not help us gain any ground. 

The Workspace will also encourage more effective collaboration in the Polkadot community. It will welcome any Polkadot projects visiting New York City to use as their office in the U.S. during conferences and their business development efforts. It will also help support any new projects coming out of New York City with a congenial, cooperative, and supportive workspace

Background:

Polkadot has lacked consistent and effective effort and a meaningful presence focused on adoption in the U.S. Even as we enter a new era of a multi-polar global structure and fragmentation, North America remains the largest economic region in terms of GDP. The U.S. is the largest provider of investment capital by far and remains the most productive source of tech innovations in the world by a significant margin. The North American share of the global GDP is north of 30%, nearly twice that of either the EU or China. Given the significant structural challenges facing China and the EU, this spread is more likely to widen than narrow in the future.

Beyond the size of the economy, since World War 2, nearly every global tech and consumer trend has started in the U.S. first. A successful adoption in the U.S. was a prerequisite for successful global adoption. This was especially true when it comes to digital technology, with the Internet being a prime example. Crypto adoption has shown to be no different, with the primary universe of successful protocols all tightly coupled in key tech, finance, and media hubs around the United States. Most leading Layer-1 chains based in the U.S. have pursued aggressive business development strategies despite worse regulatory positioning. 

Goals:

• Find a space that can serve as both Transistor’s headquarters and the Community Workspace for the Polkadot ecosystem,

• Approximately 6,000-8,000 square feet 

• In areas that are most popular with tech startups, VCs, and competition:

• In a utilitarian and functional Class B/C building, not in the more luxurious Class A buildings (Avalanche, Solana)

• Be ready to move in by June, hopefully earlier

Funding Requested:

We have prepared a comp analysis for the available workspaces (https://docs.google.com/spreadsheets/d/1WjuYrLRKPc-OHryS4ib-McpaTvZcxxsRxJT16cWtHPA/edit#gid=1525335915) in New York City. 

We believe 575 Broadway is the best option. It is one of the smaller spaces and with one of the lower rents. The lease is only for 3 years, not the typical 5-year lease offered for commercial rent. The location puts the workspace in the center of Soho, a Manhattan neighborhood that has become the center of crypto in New York City with Polychain, Uniswap, dYdx, Solana, and others all within a five-minute walk of each other, and a fifteen-minute walk to all the crypto investors based around Union Square. 

We are requesting $2.105 million, representing approximately 300,000 DOT at the 30-day average price of $6.77. A breakdown of estimated costs is below. It is important to note that these prices will not hold for long, as NYC commercial rent costs are near the bottom of a historic downswing following COVID and the ill-advised move to remote work (which we know from experience does not work). With interest rate cuts imminent this February, these prices will rise again so we must move quickly to secure space at these phenomenal rates. 

We are happy to answer any questions you might have. We look forward to building a strong presence for Polkadot in North America! LFG!

A couple of FAQs:

Question: You’re asking for a sum that seems very large. How can you justify it?

• Let’s first recognize the sum represents a 3-year workspace budget, including rent, required security deposit, utility, maintenance, etc.
• On a more “apples to apples” comparison basis to other treasury proposals, the one-year figure is more like $590K

Question: Then why are you asking for a 3-year budget?

• We have no other choice. In NYC, a commercial lease is typically a 5-year lease guaranteed by the lessor. We found a 3-year sublease because we were able to find a company desperate to break their 5-year lease.

Question: Why don’t you pay upfront and ask for funding later after you have proven this is worth it and you have “skin in the game?”

• We have to pay a 6-month security deposit plus the first month’s rent to do a deal like this.
• Peter and Yoon have a lot of skin in the game on this deal and in the Polkadot ecosystem. They have to personally guarantee the lease and have long-term DOT holdings to boot.

 

Question: Can you not find a smaller space than 7,000 square feet?

• 7,000 square feet, if anything is on the smallish side (the competitors in the area have significantly larger spaces)
• We want to be lean and be not wasteful but want to be able to compete. This size affords us up to 50 seats and the room to start running weekly blockchain meetups.

Question: How do we know you are not grifting the treasury?

• We won’t be making any profit on running this space, but it will greatly improve our offering to potential clients interested in the Polkadot ecosystem. We don’t need money but want our DOT stack to appreciate.
• As it is, we are taking on significant personal financial risk to launch Transistor and get this community workspace. Our credit is at risk as we are personally guaranteeing this transaction.

Question: Why now, instead of waiting for the DF approval?

• We were hoping to launch and start our BD work on Jan 1. It is now Feb 16th. If we don’t parallel process, we risk losing the 1st half of the year to not getting anything done for Polkadot while we enter a serious market upswing.

Question: Why is a physical workspace in NYC needed?

• One good BD deal can raise DOT price by 0.01%, which will pay for Transistor and the community workspace in a single transaction.
• No one can seriously build productive business relationships without a physical presence.
• All the competitors to Polkadot have a strong physical presence in NYC for a reason.Many of the major crypto companies, funds, and exchanges are headquartered or have a strong physical presence in NYC.
• NYC is Wall Street, Silicon Alley, Union Square VC corridor. Nowhere else in the world offers the same density of capital, tech talents, and business opportunities.

Question: Why the sense of urgency?

• Polkadot does not have time to f..k around. With crypto prices starting to appreciate, now is the time to start making serious investments from the treasury, as teams who receive those funds won’t be dumping them into an already depressed market.
• We are an experienced team with a long history of contributing to the Polkadot ecosystem since the original ICO. We are in this for the long run and have proven ourselves time and time again.

Management Team:

Peter Mauric was Head of Public Affairs at Parity Technologies and a Senior Advisor at the Web3 Foundation from 2018 through Polkadot’s launch. Before joining Parity Technologies, Peter was a principal at a highly-regarded public and corporate affairs consulting firm in the United States. In this role, he managed political lobbying efforts, commercial business development, and regulatory engagements in a wide range of verticals, but primarily focused on labor, energy, and tech/crypto clients. In late 2017, he was engaged to help manage the fallout from the Parity multisig/Devops199 hack and the following Ethereum governance engagement. He soon transitioned to a wider role and in addition to helping manage Gavin Wood’s public profile and several internal teams, Peter conceived, produced, and moderated Polkadot Decoded from his bedroom and living room during the virus times to tens of thousands of live viewers, more than any other virtual conference up to that time in crypto. Peter left his full-time position at Parity and transitioned to an advisory role in June 2022 after completing the third Polkadot Decoded (the first in-person). Leveraging his past government and public affairs experience, Peter served as one of the lead regulatory strategists for Polkadot’s successful engagement with the SEC (https://web3.foundation/press/dot-has-morphed-and-is-software-not-a-security), culminating in the Commission’s internal confirmation that DOT had morphed and suggested self-certification, a first for any crypto asset in the United States. 

During this time Peter also worked closely with Angela Dalton and Ursula O'Kuinghttons on engaging John Linden from Mythical Games(https://fortune.com/crypto/2023/04/26/nfl-blockchain-mobile-game-mythical-games-polkadot/) and Frank McCourt from Unfinished (https://www.protocol.com/fintech/mccourt-wood-democracy-blockchain), respectively, to bring their products (both with multi-million person userbases) to Polkadot. Additionally, Peter served as the lead negotiator for W3F with FC Barcelona on their proposed NFT/metaverse development (https://www.espn.com/soccer/story/_/id/37625915/barcelona-want-their-own-cryptocurrency-challenge-football-elite-president-joan-laporta) + club sponsorship (https://twitter.com/JoePompliano/status/1486706383298854915?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1486706383298854915%7Ctwgr%5E2467d3c99d57c95e57e085b4de78b1b5fd22d0c2%7Ctwcon%5Es1_c10&ref_url=https%3A%2F%2Fen.cryptonomist.ch%2F2022%2F02%2F01%2Fpolkadot-become-official-sponsor-barcelona-fc%2F) (400 million digitally engaged fans globally), successfully negotiating a deal agreeable to both parties, which unfortunately landed just when global crypto markets cratered.

Peter is excited about the prospect of continuing this impactful work with these advisors and a new team focused on bringing in both large-scale clients and Web3-native startups to the Polkadot ecosystem. 

Yoon Kim has over twenty years of experience in recognizing and investing early in transformative technologies and helping create long-term value in a broad range of technology companies and asset management firms. After graduating from the University of California, Berkeley with a BA, High Honors, in philosophy and economics, he began his career at Morgan Stanley. As a member of the investment bank’s vaunted M&A department, Yoon helped execute numerous M&A transactions in the data telecom, media, and transportation industries.

Recognizing the massive scale of the digital paradigm shift and the historical consumption potential of Web 2.0, Yoon received an MBA from Stanford Business School and started advising and investing in early-stage Internet and tech companies at leading Wall Street hedge funds, including Ziff Brothers Investment, Tremblant Capital, and Citadel. He joined Tremblant Capital as its first TMT (Telecom, Media, and Technology) analyst and led the fund’s investment efforts in the sector, with a strong focus on Internet companies. His successful investing process led to many outsize returns and was instrumental in the fund growing its AUM from $200 million to $5 billion in five years. 

Having built a strong track record, he launched Vestry Capital, a global TMT long and short equity fund with a $100 million seed investment from Citadel. After unwinding Vestry Capital, Yoon has served as an advisor and consultant to various funds and companies, while managing his family office to invest in both public tokens and early-stage projects/companies on the cutting edge of emerging blockchain technology. His history with Polkadot started in 2017 with an investment in Polkadot’s ICO and continues today with various investments and advisory roles in the ecosystem. Most recently, Yoon was the head of research and partner at TRGC, an early-stage crypto venture fund. 

Yoon is looking forward to bringing his deep knowledge and extensive experience to help Polkadot reach a new level of recognition and adoption in North America. Having spent most of his career in the nexus of Wall Street and Silicon Valley, Yoon natively understands what is required to produce sustainable value propositions that attract long-term investors to tech ecosystems like that of Polkadot.

Based on the very productive discussion with several stakeholders in the Polkadot ecosystem, we like to clarify and emphasize the following as a part of this proposal:

1. Even as we have long-term plans for expanding Polkadot’s footprint to other major tech and financial hubs in North America, we plan to fully focus on efforts in New York City to prove the value of this strategy. Any future expansion won’t be considered until Transistor is a great and verifiable success for Polkadot in New York City.

2. We are mission-focused on amplifying Polkadot’s engagement and adoption in North America and generating demand for Polkadot blockspace long-term.

3. Even as it is very difficult to quantify the future with certainty, our plan is to over the next 12-18 months successfully on-board 2-3 gaming companies to Polkadot and over the next 12-24 months on-board 2-3 Wall Street banks or asset managers to use Polkadot to securitize real world assets (similar to Avalanche’s Onyx deal with JP Morgan Chase).

4. The branding of the space will be tastefully Polkadot (pink) while still maintaining the professional and polished positioning expected by the kinds of clients and entrepreneurs that we aim to attract to the Polkadot ecosystem. 

5. We expect that the office space will be immediately useful to Distractive employees working in or visiting NYC, Greenpoint Labs as the also pursue a promising DF proposal, BlokHaus who will be working on Polkadot brand campaigns with Distractive, and of course the team we will be building at Transistor to focus on engaging and onboarding new clients into the Polkadot ecosystem.