At Covariance, we are pioneering a new way to “Go To Market” by leveraging the power of networks. Networks are everywhere around us, whether formalized or not. Advances in modernity can be credited to networks of people who collaborated to solve large-scale problems. Until now, information networks, financial networks and labor networks have been dissociated from one another. They all impact each other and course-correct, but with web3, value can now flow at the speed of information, an unlock with revolutionary implications (for more information on how people and projects unlock value in new and faster ways using web3, see our first article). 

With special thanks to Ed Medvedev, Justin Vogel, Ivan Fartunov for their contributions to this piece and their ongoing thought partnership. We are thankful for the hive of minds around us as we grow and scale the first of its kind Network-to-Market platform.

The concept of Network-to-Market is what we at Covariance call the web3 native way for projects to achieve their growth goals through activations within their networks of builders and super-connectors. Crucial to this is initial alignment around a project’s goals, and aligning external incentives to reach those goals.

Below are three fundamental tenets we believe to hold true for Network-to-Market models.

1. Network-to-Market platforms offer infinite scalability. 

Crypto networks demonstrate how open permissionless networks are able to scale much more efficiently and effectively in comparison to centralized orchestrated organization. Consensus L1 networks, core DeFi protocols such as Uniswap or AAVE, DePIN projects like Filecoin and Helium, or web3 social platforms like Farcaster or Lens all show how innovation prospers in places where information and opportunities can move flawlessly.

We’ve spent time in communities as both contributors and core team members, and this has resulted in a myriad of learnings - and also developed a conviction that a network can solve problems in a far superior way to centralized organizations - provided careful curation and nurturing (more on that below). 

Growth in web3 is impossible without leveraging relationships across networks. From protocol ecosystem teams, to grants leads, to platform teams in VC, all are constantly building and fostering relationships to further their goals. But their capacity to do this is limited in that it extends only to the 1st degree, and is also capped by the time and resources they can commit.

By decentralizing this process through a “platform as service”, Covariance unlocks the value of a collective network, a model which is infinitely scalable. 

As Ed Medvedev puts it, “this democratization of expertise breaks down traditional silos and unlocks value creation that wouldn’t exist in centralized models”. Approaching growth from a decentralized, network perspective is going to be increasingly essential to the future of work. With people contributing to multiple projects outside of their regular 9-5s and looking to find meaning in alternative endeavors, we are increasingly moving towards a system where individuals, instead of employers, will be at the center of the workforce via fractionalized work. In such a system, the value of your network is as powerful as your skillset in securing work, and decentralizing network access is therefore a huge value-add which web3 uniquely provides.

1. Successful Network-to-Market platforms appeal to long-term ownership incentives. 

In the words of Ivan Fartunov, the idea of a “curated collection of people having agency in a shared endeavor is a powerful one”. What makes it particularly powerful is the fact that the incentive is more than monetary. Networks that draw people in through token allocation or monetary promises alone often end up crumbling, attracting too much initial interest from people who are primarily interested in turning a profit, and then leave the network as soon as that is done. Networks that attract people who are interested in the value of the network for its own sake are ones that will be more likely to stand the test of time, which is why keeping the network well curated is extremely important.

Shared ownership is a powerful incentive for anyone who is used to operating in the gig economy. Justin Vogel, founder of community and marketing software Safary, had a memorable experience in an Uber ride that shaped his perspective on shared networks. After a casual chat with his driver during which he found out that the driver had been driving for Uber for 10 years, he began thinking of all the value that specific driver had accrued for Uber, and how incentivized the driver could have been to participate in an alternative network where work performed would have also accrued partial ownership of the network itself.

1. Network-to-Market platforms require curation.

Not every network is created the same. Networks that have what it takes to create sustained value are ones that are optimized to retain talent. In order for this to be a reality, several things must happen:

The network must be optimized vertically for talent. In any endeavor, the surest way to lose players is when they find reality no longer matches with their expectations in terms of areas of interest. As such, while networks can be open to all, it is recommended to tier levels of involvement to avoid this problem. At Covariance, we are experimenting with this through participation tiers. Not all contributors have the same desires, goals and capabilities - but anyone has something to contribute and together, networks become stronger. This enables everyone to join in a way that suits their needs, whether this may be access to deals, socializing, high-value BD related content, etc.

The network must also be optimized horizontally for involvement. Not everyone can be invested continuously at the same level of involvement over time. Realistically, people’s availability changes over time and the network should account for this. At Covariance, we are experimenting with this by allowing contributors to stay in the network even if they aren’t officially involved in a Season, but we differentiate between active contributors and wider contributors. We believe the strongest networks are ones that will be able to continuously operate with a high level of output - in order for this to be a reality, it is necessary to ensure an evergreen flow of contributors into the network. We have developed Hubs which are smaller, curated groups for more intimate relationships or shared goals. Hubs allow any existing network or community to offer its members opportunities to unlock value and share the potential upside. While having their own separate entity, these Hubs can nonetheless enrich the entire network with new opportunities or help other Hubs solve their problems.

Now that we have explored these three value propositions for Network-to-Market platforms, let’s explore how Covariance leverages these.

In most networks, advisors play the role of the middle-man between projects and networks. This means that value accrues to them directly, vs. getting shared collectively across the entire network. Covariance’s model leverages networks to automatically share value amongst the people who helped to create that value. This is what that looks like visualized: 

In a go-to-network model, a project running a campaign gets to have access to multiple people who potentially can help bring the value they are looking for - customers, design partners or integration partner etc..

On top, instead of a single advisor and his network, projects open up access to each member's own network and leverage their trust relationships to find and get access to new opportunities.

As new networks come and join Covariance, value will continue to spread across those networks. Each network will create their own value and also benefit from being part of the wider Covariance network, allowing for infinite scalability. The longer participants remain in networks, the more they have to gain, epitomizing the concept of long-term ownership incentives. This will look like the following:  

As new networks continue to join, they can structure themselves across different participation tiers and Hubs, allowing for a more targeted approach to value-creation, and a curated network overall. The first value-ad is unlocking the network of overall Covariance members, as opposed to the advisor getting the majority of the value. The second value-ad is through hubs tapping into other networks and their members and networks.

Join us in building the future of work!

If you are a project looking to scale your BD and growth efforts, let's talk!
If you are a builder, super connector or just find it supporting projects in their growth efforts with by leveraging your trust network - let's talk!

Ready to dive in? The following materials provide more valuable information:

Covariance network value propositions for projects

Covariance network value propositions for contributors 

Core principles