OPL Boba Time 🥤 - Innovation, Web3, and Trendsetting Insights | with Berk @OrangeDAO

We're thrilled to feature Berk Ozer, the esteemed Senior Venture Partner at OrangeDAO, in our Boba Time series.
Elva Yu

Disclaimer: This conversation is for general information only. It's not professional advice. Always do your own research or consult experts before making decisions. Enjoy reading!

Elva: Do you drink boba? If so, what's your favorite type?
Berk: Yes, I enjoy boba treats. My preference is green matcha boba with minimal sweetness, around 20 percent. It's a delightful combination that I really enjoy.
Elva: You mentioned your transition from a technical background to a management consultant before co-founding your company, SenpAI.gg. What motivated this shift in your career?
Berk: My career shift from being a programmer to a management consultant, and eventually co-founding SenpAI.gg, was driven by my desire to explore different facets of the business world. While I enjoyed the technical challenges of programming, I realized that I also had a keen interest in the strategic aspects of business management. This led me to management consulting, which eventually paved the way for entrepreneurship.
Elva: Can you elaborate on the concept behind SenpAI.gg and its journey through Y Combinator to achieving half a million active users?
Berk: SenpAI.gg is a real-time gaming assistant that provides real-time recommendations to gamers, helping them to beat opponents and learn game dynamics faster. The idea was to enhance the gaming experience by integrating AI-driven insights. Our journey through Y Combinator in summer 2021 was pivotal in scaling our business, and it's been gratifying to see our user base grow to almost half a million active users, reflecting the value we bring to the gaming community.
Elva: Now that you are a senior venture partner at OrangeDAO, how do your responsibilities differ from your previous roles, and what are your main objectives in this position?
Berk: As a senior venture partner at OrangeDAO, my role is more focused on investment and strategic decision-making. I act as the head of fund, coordinating our Decentralized Flexible Organization (DFO) team in making investment decisions for the Orange Fellowship Program. Additionally, as a group partner at Orange Fellowship, my goal is to leverage my experience to guide and support upcoming startups, accelerating their path to becoming the next crypto unicorns.
Elva: Could you share your thoughts on the increasing influence of DAOs, their potential to disrupt traditional VC structures, and how you would address skepticism and governance issues, including the potential misuse of DAOs?
Berk: Certainly. DAOs, or Decentralized Autonomous Organizations, represent a significant shift from traditional models and hold great promise for the future. However, we're still in the early stages of understanding and integrating them effectively. The adoption of DAOs is similar to the adoption of democracy in political systems – it requires a learning curve and time to adapt to new practices and governance structures.
To address potential misuse and implement good governance practices in DAOs, I believe there are two key tools. First, the staging models, where only long-term investors or stakeholders are allowed to make decisions. This approach ensures that those who have a vested, long-term interest in the DAO can contribute to decision-making.
Second, the concept of token gating or establishing certain conditions for voting rights can be effective. This involves setting specific criteria to determine who can participate in decision-making. For instance, at OrangeDao, to become a decision-maker, one needs to meet certain conditions, such as being a Y Combinator alum or a founder in whom we have invested. Establishing rules tailored to the community's needs can create a more structured and responsible decision-making process within DAOs.
Elva: Since you mentioned verification, with the hype in the web series space, how can investors distinguish between genuine innovation and projects just riding market trends? As someone experienced with different startups, could you share some insights?
Berk: Absolutely. The key is to focus on fundamental analysis rather than technical analysis, a concept borrowed from investment terminology. Investors should concentrate on the founders' backgrounds, their unique insights, and justifiable projections about the future. These elements are crucial. In terms of metrics, revenue is the most significant indicator of success. A sustainable revenue model is a strong sign of a project's potential longevity and distinguishes it from those focusing on short-term success or relying on unsustainable practices like airdrop farming. Fundamentals are essential in this evaluation process.
Elva: Can you share an exciting project or deal you worked on and what made you think it was worth investing in?
Berk: Sure, I'll discuss a recent project from our batch called Inconetwork. Remy, the founder, initially applied to Orangetel with an idea related to storing private keys with a user experience akin to web tutorials like LastPass. However, after reevaluation, we realized this might not be a long-term pursuit. Remy pivoted to create Inco Network, which offers fully homomorphic encryption. This technology is exciting as it enables fully private on-chain data and smart contracts, along with the generation of random numbers. Its potential use cases are extensive and promising.
Elva: How do you approach products that challenge or disrupt existing regulatory frameworks, and how can startups navigate these uncertainties while pursuing innovation?
Berk: Dealing with regulatory challenges, especially in the United States, is difficult for both startups and VCs due to a lack of clarity. For Web3 startups, it's even more challenging as they cannot simply "fail fast and break things" like in Web2. Once a smart contract is deployed, it's not easily modifiable. Therefore, planning ahead is crucial. Startups should seek legal advice from day zero and not adopt a 'cross the bridge when we get there' approach. This proactive strategy is essential until there is more clarity on legal issues, particularly in the U.S.
Elva: Do you think traditional startup accelerators are adapting quickly enough for new batches of startups, or is there room for improvement in their support structures?
Berk: There is definitely room for improvement. While I highly value my experience with Y Combinator, which was transformational in my entrepreneurial journey, I believe there could be an additional layer of motivation. For instance, if YC adopted a model where helping other YC companies earned tokens tied to YC's future, it would further motivate YC members to support each other, aligning with the ownership economy principle of Web3. This area is crucial for improvement in traditional accelerators.
Elva: What are the most important factors and support that accelerators or incubators can provide specifically for Web3 startups?
Berk: The key is defining the right North Star metric and maintaining a laser focus. Startups should identify one crucial metric that reflects product-market fit, often revenue, and focus on it relentlessly. Accelerators play a crucial role in helping startups distinguish real signals from noise and concentrate solely on their North Star metric. This targeted support is critical for Web3startups' success.
Elva: Looking back two years, what are some things you would definitely do or avoid?
Berk: I would focus more on angel investments in scaling or zero-knowledge solutions rather than sidechains. Reflecting on past investments, I would avoid investing in things like UST, the Terra Stablecoin, in Anchor Protocol, where I experienced significant losses.