A Dive into Cosmos
Arianne Flemming is the Chief Operating Officer at Informal Systems, a Cosmos-based developer of systems, protocols, and research. Cosmos Network is a decentralized network of independent, scalable, and interoperable blockchains, creating the foundation for a new token economy.
Before joining Informal Systems, Arianne was a managing director at the Interchain Foundation, a Swiss non-profit organization focused on advancing open and decentralized networks, particularly within the Cosmos Network. She also led the Finance team at Tendermint, a company developing high-value public blockchains, and worked at WatrHub Inc., a North American firm specializing in predictive water infrastructure investment data
#FridayFutures Highlight 27: Arianne Flemming, COO - Informal Systems
What is the mission and vision of Cosmos that sets it apart from other protocols?
Cosmos is an Internet of blockchains. Instead of having a "one blockchain to rule them all" approach, it prioritizes sovereignty and individual decision-making while maintaining connectivity. Similar to how the Internet evolved from intranets within companies to interconnecting globally, Cosmos follows a philosophy that allows people to exercise autonomy and sovereignty while being part of a larger network. This uniqueness lies in its focus on empowering individual projects with the ownership and sovereignty they seek, rather than attempting to encompass everything.
How did you get into the blockchain space?
I've had a very nonlinear path in my life, and I believe it has been quite valuable. I've had the opportunity to explore and see things from various perspectives. My entry into the industry was quite accidental. I worked at the University of Toronto's Creative Destruction Lab, specifically in their early days of establishing a machine learning and AI commercialization arm. While it was an early phase for AI, the research had been ongoing for decades. This was one of the first instances of commercialization in this field.
During my time there, I crossed paths with Ethan Buchman, one of the co-founders of Cosmos. We stayed in touch as I explored different roles in various industries. In 2017, Ethan reached out to me, mentioning they needed some assistance with finance. At that point, I knew very little about their world and what they were doing. I traveled to San Francisco to meet the team, which was relatively small back then.
I fell into it, but I quickly developed a strong affinity for the work. It was the early days, with just a handful people. I was drawn to the people, their passion, idealism, and dedication to translating their ideals into reality. The vision was constantly evolving, but what hooked me was the opportunity to work with individuals who were deeply committed and had a grand vision for what they were trying to achieve.
My journey into this field happened somewhat accidentally, but I've been fortunate to accumulate diverse experiences along the way. Many of these experiences have proven valuable in my current role.
How did you confidently navigate a technical environment despite lacking a technical background?
Navigating the ecosystem can be challenging for non-technical individuals, but it also presents numerous opportunities to contribute meaningfully. You don't necessarily need technical expertise because there's a substantial gap between the act of development or building and the broader responsibilities involved in running a company. Developers typically won't handle these aspects themselves, nor do they necessarily want to.
During my time at Tendermint, the two co-founders were technical experts. They didn't want to deal with treasury management, contracts, payments, and the myriad complexities that come with running a company. This presented an opening for me to step in, and I believe I was one of the first to formally take on an Ops role. There were many gaps to fill, and I never found it challenging to find my place in this environment.
What's particularly interesting about working in an Ops and finance role within a technical industry is that you're continually faced with unique challenges. There isn't a predefined playbook for running the operations of a blockchain company. You often find yourself trying to fit a square peg into a round hole. You rely on best practices and creative problem-solving to address issues such as dealing with taxes without formal guidance or rules, managing a globally distributed and remote team, and more. It's a constant learning process, and I consider myself fortunate to help others in similar roles by sharing my experiences.
When you're starting in this field, you have to figure out a lot of things as you go along. I believe there's substantial potential for individuals coming from non-technical backgrounds to contribute value and support, complementing the development perspective rather than solely relying on it.
What’s the most exciting thing you’ve learned that you would want others to know?
Learning is a constant, and there's always something new to discover. Two significant lessons stand out for me.
Firstly, it's crucial to be thoughtful when choosing your battles. In the software world, especially when considering the mission and vision of a project, the possibilities are vast. We often aspire to reinvent various aspects simultaneously. However, it's essential to exercise caution and not attempt to change everything all at once. I've observed many companies experimenting with different structures, such as flat hierarchies, unique compensation models, etc. While we at Informal engage in forward-looking experimentation, I believe it's essential to do so gradually and meticulously. Attempting to change too much simultaneously can result in chaos. It's vital to focus on the changes that truly make an impact and matter the most.
The second lesson, which I believe is more critical than ever, is that cash is king. It's easy to get caught up in the fluctuations of cryptocurrencies and assume that everything will experience drastic declines, possibly up to 90% at any given time. We've seen these market swings happen repeatedly. Therefore, it's crucial to maintain a pragmatic approach. At Informal, we prioritize stringent treasury management processes.Cash is king... Long-term, life-changing missions and visions require sustainability. If you can't sustain your operations and compensate your team in the long run, it becomes challenging to achieve your objectives. We've been fortunate not to have faced issues related to this, but I'm aware that many companies have. Thus, maintaining a rigorous and sustainable treasury management process is of utmost importance.
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What are the most important things you prioritize in Treasury management??
I think it's crucial to capitalize on the upside to protect against potential downsides. In bullish markets when prices are on the rise, we need to set specific limits that trigger sales. For instance, if certain assets exceed a predetermined threshold, we should convert them into cash.
Moreover, we place great emphasis on assessing the liquidity of our various holdings. This involves considering the impact of selling low-liquidity assets all at once. Would there be enough buyers, or would it disrupt the market? These considerations shape our approach.
In summary, our strategy revolves around establishing clear cash requirements and implementing limits that trigger sales when necessary. This approach helps us maintain a structured set of rules, ensuring we always have a sufficient cash reserve to sustain our operations for a defined period. In the worst-case scenario, where everything drops to zero, we have the confidence that we can weather the storm
Do you have a strategic planning process that includes forecasting both cost and revenue-related cash flow requirements for your business lines or projects?
It depends on the business lines, each of which has its unique revenue model. We evaluate the revenue models on a per-business basis. For instance, some are in the pre-revenue stage, like CoFi. In such cases, we don't anticipate significant cash flow. On the other hand, our security auditing business follows a more straightforward model where we can precisely track cash inflow and margins.
For each business, we try to project the expected service revenue for the year. This is generally quite predictable, especially when dealing with pure service revenue, such as forecasting service revenue for a validator business. However, predicting revenue for a validator business can be challenging because it's tied to crypto market conditions. How I approach this, I usually develop low, medium, and high estimates to create a range for the year. This approach helps us avoid relying solely on crypto market speculation.
When it comes to crypto or crypto-related operations, I tend to adopt a highly conservative approach. I prefer to assume minimal reliance on them from a cash perspective to ensure our financial stability and sustainability.
What’s your hot take or unpopular opinion about the future?
A common observation is that during bull markets, everyone believes cryptocurrencies are the future, while in bear markets, there's skepticism about their accomplishments. This narrative is likely to persist.
I genuinely believe that inspiration often arises from resilience. Those who continue building during periods when their efforts may not be in the spotlight are the truly inspiring individuals. As for my hot take, on the market in general, I think the world has become increasingly challenging for millennials and younger generations. Our parents' generation may have been fortunate to accumulate wealth through investments like real estate. In contrast, our generation faces unattainable home prices, high inflation, and other economic challenges.
I don't view the market purely from a speculative standpoint; rather, I see its potential to fundamentally reshape various aspects of the world. This transformation could potentially be one of the few significant wealth-generation opportunities for our generation, given the limited number of asset classes available for wealth accumulation.
Is there any person or company that’s inspiring you right now?
There are many interesting companies we're working with so it’s hard to name just one or two. At the end of the day, resilience is what inspires me. People who've been working on these things for a long time, despite it not being initially glamorous or getting immediate attention, they continue to believe in their work.
The people we work with at Informal, for instance, have dedicated a significant amount of time to these systems. They just haven't gained mainstream recognition yet. Demonstrating that kind of resilience to push these ideals into the mainstream, whether through blockchain technology or other means, is truly inspiring.
How can we stay in touch?
You can follow us on Twitter. We're pretty active; it's @informalinc. I'm not a big Twitter user personally, but I'm always around and I do stay up to date on LinkedIn.
Have thoughts on this week’s topic or question for me or Arianne? Post your thoughts in the comment section. Until next week.??
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