An Open Letter to ZCAP Regarding the Board of the Zcash Foundation

(tldr: read bold)

Zcash Community Advisory Panel (ZCAP),

In a blog post published to their website on August 3, 2021, the Zcash Foundation wrote:

In late May, we published a blog post inviting nominations for the Zcash Foundation board. However, the only nominations submitted were those made by Jack Gavigan (the Zcash Foundation’s executive director) who nominated the three existing board members whose terms are expiring. With hindsight, it’s possible that we should have put greater effort into publicizing the fact that we were inviting nominations.

Therefore, we plan to poll the ZCAP [in late August] to ask whether they endorse reappointment of the three incumbent board members or recommend that the Foundation re-opens nominations.

I am writing this letter to urge the ZCAP to recommend the Foundation re-open nominations when polled later this month, and not authorize the reappointment of the three incumbent board members: Matthew Green, Andrew Miller, and Peter Van Valkenburgh.

There is an emerging consensus within the community that the Foundation does not operate efficiently, pays lip service to its core values and mission, and does not adequately serve Zcash users or the Zcash ecosystem. In late July, I wrote a post about this topic in the forum, but I will briefly summarize my points below and then offer a potential solution that may benefit the Foundation in the long run.

  • Transparency & Accountability: The Foundation lists “Transparency” as its #1 value under “Values and Goals” on its website, but needs to do more to “walk the talk.” For instance, it is impossible to independently assess on an annual basis (1) what the Foundation set out to do and (2) what it accomplished. I was only able to locate an engineering roadmap for 2020 and retrospectives for 2018 and 2019. There are “Quarterly Reports” for Q1 and Q2 of 2020, but they didn’t exist before 2020 and they are no longer being produced. The current Executive Director acknowledges that reporting should be more robust and that the Quarterly Reports should be reinstated, but says right now he does not have the bandwidth. With all due respect, I don’t think that is a legitimate excuse. In fact, I believe it demonstrates a poor commitment to accountability. Overall, the Foundation should do more to provide “high level” transparency reporting to community members and stakeholders.

  • Project Management: The Foundation’s mission is to “build financial privacy infrastructure…primarily serving users of the Zcash protocol.” However, its track record has been disappointing. The Zebra client is a major priority that was originally announced in October 2018 with an initial estimated release date of October 2019, around the same time as the Blossom network upgrade. Three years later, it’s still a work in progress, and when it will be fully released to production is still unknown. In addition, projects like the Zepio Wallet were publicly announced and commissioned, then quietly abandoned for unclear reasons. High level communication on the status of projects is unsatisfactory. Overall, there is not a lot of clarity and transparency into ongoing projects, and I believe this not only demonstrates poor project management, but also poor management of financial and staffing resources.

  • User Acquisition & Engagement: While the Foundation has done an excellent job organizing and producing the Zcon events, it has done little to bring new users to Zcash, educate the public on the benefits of Zcash’s privacy-preserving technology, and encourage the adoption of shielded addresses. New user acquisition should be a top priority. In addition, community engagement on social media, like Twitter, is also relatively weak, especially when compared to the Electric Coin Company and some of its key employees. Hiring a Communications Director may help with some of these issues, but only if management implements and enforces appropriate policies, procedures, and controls around communication.

First, I want to be clear that I do not blame the current Executive Director, Jack Gavigan, for the Foundation’s performance record. Jack started his position in February 2021 and deserves a chance to prove himself an effective leader. I do, however, believe his predecessor was not the right person to lead the Foundation. I also believe the board did not do a good job supervising him or holding him accountable. That said, I do not think the board was intentionally negligent or acted in bad faith.

Part of the issue is that the Foundation’s board is primarily composed of highly specialized individuals, such as academics and cryptographers, who are absolutely brilliant, but lack the experience necessary to manage people and oversee an organization. For this reason, I strongly believe it would benefit the Foundation to replace at least one of the incumbent board members with someone who possesses a strong business and organizational acumen. We need a board in place with the ability to recognize important management issues, provide guidance and solutions to the Executive Director, and act decisively when needed.

I hope what I am saying does not come across as too harsh or unfairly judgmental. My intention is to speak out on behalf of our community, offer a relatively balanced assessment of the Foundation, and advocate for a simple solution that may help it operate more efficiently going forward. Whether or not you agree with my overall assessment, I hope you will agree that it is beneficial for the board of directors to have members with diverse professional backgrounds, skills, and perspectives.

Finally, I want to commend the Foundation for choosing to poll the ZCAP rather than simply rubberstamping the reappointment of the existing board members. It demonstrates they recognize the importance of being more transparent and engaging with the community. Equally important, it offers a potential solution to some of the problems I outline above. The Foundation needs to change, and this is our chance to make it better.

Please recommend the Foundation re-open nominations for the board. This is your opportunity to help replace at least one of the incumbent directors with a new member who can help the Foundation (1) operate with increased efficiency, (2) honor its commitment to transparency and accountability, and (3) better serve Zcash users and the Zcash ecosystem.

Respectfully Yours,

Jason McGee

cc: @Dodger @amiller @secparam @amber @Matthewdgreen @valkenburgh

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ZCF Members: Please help this post get the engagement it deserves. If you have friends/acquaintances on the ZCAP, forward it to them; if you work for ZF/ECC/ZOMG, inform your colleagues; and if you agree or disagree with me, comment below. I’d like every active ZCAP member to read it before they’re polled. Let’s get a conversation going. Thank you!

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As one of the current board members not up for election and someone who’d like to see Zcash succeed: what is it you expect new board members to change?

Way I see it, you could want to change ZFND’s strategic priorities or you could want ZFND to just “due better” at execution. Either is understandable, the question is what specifically would you like to do?

For priorities, ZFND is focused on expanding what Zcash can do and who can use it
I could probably find some fluffy text we wrote somewhere, but instead I will just list (off the top of my head) some of the things inline with that:

  1. Found, recruited, and mentored a wallet dev and funded them when ECC was unable and unwilling to develop wallets . This is ZEC wallet.
  2. Are building Zebra to remove a massive amount of tech debt in the legacy C++ code.
  3. Have either built or funded necessary technical improvements for Zcash to work, including:
    a) threshold signature support in the form of FROST
    b) Funded work to make Tor actually usable on Mobile for a wallet (walking onions)
    c) hardware wallets
  4. Pushed ZSAs/ZK-assets to expand the user base for Zcash , give people private stable coins, and bring privacy to Defi

What would you add, what would you remove?

On execution:
Boards (and this is true of ZFND, ECC, and pretty much anywhere) don’t micromanage or even manage projects. The hire the Executive Directory, set strategic priorities, and approve the budget. This isn’t merely tradition, they don’t have other levers they can pull. We aren’t full time employees (in fact we aren’t even paid). We also advise the ED.

In terms of ZFND execution: Somethings have worked very quickly and very well(ZEC wallet), some have taken longer than anyone wanted (Zebra), and most are in-between.

Six months ago we brought in Jack Gavagin who has much more experience with software management than the previous Executive Director. About the only thing you can expect a board to do is, when things are going slowly, demand changes and, when that doesn’t work, manage people out. We have a new ED who’s hiring or has hired new engineers, engineering managers, and support personnel. As part of that, we also have a better structured mechanism for technical advice from those of us with substantial expertise in cryptocurrency and zk-snarks (Remember, Matt Green and I wrote the original Zcash design back when it was called Zerocash, Andrew wrote work that built on that for secret computation for blockchains).

Its natural to go “I want Zcash to be better/ more relevant/ have a higher price” and “ZFND should be doing more.” I’ve had some of those feelings, on occasion, throughout Zcash’s existence, both directed at ECC and then also ZFND. Waiting for people to realize they want privacy is frustrating. I’ve found myself asking of ECC’s board and then ZFNDs “what else would you have the board do? What else should I do as a board member.”

What would you do on execution?

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@secparam Thank you for your response. First off as a side note, I want to be clear that if ZCAP recommends to re-open nominations and no one comes forward with appropriate management experience, I will run for the board. I believe I am qualified. I am the former Head of Operations for a well-respected hedge fund in NYC. I left at the end of 2017 to focus on crypto full time. I have the time to dedicate to the role, I am passionate about Zcash, and I believe I would be a value add to the Foundation and the Zcash community.

Now, to answer your question, here are some of the things I would do to improve the Zcash Foundation:

  • Immediately re-institute “standardized” transparency reporting: I don’t care if it’s roadmaps, retrospectives, or quarterly reports, but there needs to be regular transparency reporting to community members. In his response to me, Jack mentioned the Foundation is required to file regulatory reports. Those reports give community members zero detail about (1) the Foundation’s goals, objectives, and agenda, (2) the status of ongoing projects, and (3) what goals have been completed or accomplished.

  • Improve Project Management: To be blunt, from 10,000 feet the Zebra project looks like a disaster. I get the former ED was distracted by governance issues in 2019, but to me that shouldn’t delay ongoing development projects. So, I would want to implement tighter controls around project management with regard to planning, monitoring, and progressing each project. I would also want to see clear communication of ongoing projects to community members and stakeholders. There is an Executive Director, COO, and Operations Director currently at the Foundation. In my opinion, management should be a lot more effective than it is.

  • Communication: I would work with the Communications Director to develop strong standards, procedures, and controls around communication to provide the optimal flow of information to community members and stakeholders. That means the when/where/hows to communicate.

  • User Acquisition & Education: Bringing new users to Zcash should be Priority #1. Some of this will depend on budget constraints, but I want to see the Foundation eventually hire someone to focus on new user acquisition and education. Education includes publishing education materials and position papers on relevant topics and educating the public on why they should be using Zcash and how to use Zcash. These materials can be used to ultimately create regulatory-friendly marketing campaigns that bring in new users.

  • Budget: Lastly, crypto moves in boom and bust cycles, so I hope the Foundation has a plan in place (in the event of a boom cycle where ZEC goes to something like $1,000-$6,000) to sell down ZEC holdings and diversify into USD (and maybe BTC and ETH at some point) so that it can withstand the next bust cycle where the price drops by 80%-90% without disrupting its operation. If not, I can help with this.

These are just some ideas that I thought of right off the bat; they are by no means exhaustive. I hope you’ll agree, I am not just “talking” here. I am identifying real organizational problems and offering realistic, concrete solutions that will improve things.

Lastly, I understand that board members don’t have the time to and are not charged with “micromanaging” the ED. However, if I was on the board, I would volunteer my time to help Jack run a better operation. He needs the help, and that’s not because he is not capable, but because he inherited a mess and is currently understaffed. So, I don’t care if that means I have to work 20 hours or more a week for zero compensation for a few months or longer or write the quarterly reports myself, I will help him out (assuming he wants the help). Then, once we execute on some of the things I mention above, I would back off, and be a regular ol’ board member who does things like hire/fire the ED, set strategic priorities, and approves the budget. I would not see the role as micromanaging the ED.

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Indeed, I think there’s a big gap in this field. And reviewing the hiring procedures for developers and engineers, because from an outsider point of view, looks like staff were recruited based on common interest instead of competency.

And I also maybe ask again why are they developing Zebra and why it is a priority ? As I see it, the ECC are the ones delivering based on the bitcoin code fork, not the Zebra code, so I feel like the Zebra developers will be constantly & forever lagging behing the ECC features released in the zcashd codebase.

Awesome, with the possible exception of “User Acquisition & Education”, these are in the category of help ZFND execute. They are all reasonable ideas. Some form of pretty much all of them is happening, with the priority being on project management.

Of course, I assume you don’t think they are happening fast enough. And of course we all want them instantly. The question is, what can the board do to change/improve on the existing plans? My personal answer is little until we’ve had enough time to see if Jack’s changes improve things. And even if they don’t, our options are keep applying pressure to the ED and replace the ED if we can find someone better.

This got my attention. because its true, the sooner ZFND gets more able bodies, the better. (as it is for most orgs). And hiring takes time. Two points 1) aside from you, most people who run for the board probably cannot take that time to do that nor are they qualified to do so. 2) You, me, and anyone else would be far more effective taking a paid job or volunteering for ZFND to do the work and not be on the board. Being part of the body who hires/fires the ED but also doing low level work where you need to take the ED’s direction in an organization he manages, is nearly impossible. It does not work out.

If your goal is boots on the ground involvement, being on the board makes you less effective and ties your hand behind your back in many ways. I’ve encountered this first hand even with narrow technical direction.

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@secparam My goal is not boots on the ground involvement, especially over the long term. I have a job (self-employed) managing my portfolio of investments and taking care of my two wonderful (and beautiful) children. I’m offering to be more involved in this instance because I have the time and the expertise to help Jack out, and because I care about Zcash. If you want my help, please feel free to reach out to me offline. Jack and Andrew know how to get a hold of me as I’ve spoken to both on the phone.

According to the Board of Director position specifications, the primary responsibilities of a board member are:

  • Hiring, firing and supervising the Executive Director (ED),
  • Providing guidance and advice to the ED,
  • Having bold visions about the Foundation’s mission and future, and working with the ED to execute on them.

In my opinion, if you want to do that well, you need someone on the board with business and management experience. It doesn’t have to be me, it can be someone else, but someone should be on the board to better hold the ED accountable.

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And I also maybe ask again why are they developing Zebra and why it is a priority ? As I see it, the ECC are the ones delivering based on the bitcoin code fork, not the Zebra code, so I feel like the Zebra developers will be constantly & forever lagging behing the ECC features released in the zcashd codebase.

A minor aside, but this is a question I’ve seen come up a couple of times in this thread:

Speaking as someone who’s currently working on the Bitcoin-derived zcashd codebase, I am very enthusiastic about the maturation of the Zebra client. Put bluntly, the Bitcoin-derived C++ code is quite laborious to maintain and extend, and a clean Rust implementation of the zcash protocol will be strongly beneficial to the Zcash community. All new protocol development being done at ECC is being implemented in Rust and used in the zcashd codebase via FFI, so that it may immediately be usable (with substantially lower friction than we face in zcashd) by both the Zebra client and by mobile wallets, which already rely upon our pure-Rust implementation of the Sapling protocol.

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Once zebrad is production ready, it can enable high-throughput server class and faster desktop application development. I see the work of a Rust based backbone for Zcash as a long term investment which will also help in crafting a stable Proof of Stake consensus implementation.

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Relevent
" The ETA for Zebra being an actively-participating node on the Zcash network (e.g. relaying transactions and blocks, maintaining a mempool, but no mining, no wallet or transaction creation functionality) is 18th October"
Not long at all

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I appreciate the tough questions you are asking and the enthusiasm and background you bring to this community. I also struggle with what the cost would be of losing one of these board members from the foundation because I understand the contributions they’ve made and the expertise they bring to the community. Your arguments do resonate with me though.

No matter what happens, I hope that the ZF is wise to leverage you in whatever capacity is possible and understands that you raise valid points and concerns that a lot of us in the community are not able to articulate so eloquently.

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Thank you for your kind words.

I understand your concern. Let’s say hypothetically ZCAP recommends the board re-open nominations and a number of people decide run, and in the end Andrew and Matt are removed from the board and two new members come on. What if the Foundation created a new formal group of “Advisors,” which Andrew and Matt joined so that they could continue to advise the Foundation on technology in a formal role? ECC has something similar with their “Scientific Advisory Group.”

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I don’t want to paint the running members all with the same brush, its a personal decision and I haven’t asked, but …

I would by no means assume that, after a contentious board election, a losing current board member would stay on afterwords in other capacities. Both because of possible acrimony with whoever won and simply because it would be a very strong signal by the community that their help is not appreciated.

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I have been enjoying the democratic practice of the Zcash community so far, in this hindsight of being satisfied with previous community consensus, I would support the open nominations.

@secparam you would be a great candidate yourself.
@amiller invited me to the ZCAP and trust his judgement

I am not opposed to those with the roles continuing their job either, I am fairly satisfied with ECC and ZF for the time being.

Last year was lack luster, maybe we could just extend their term 1 year and publicize it this year?

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I wouldn’t say that no one wants to join the ZCAP. I don’t think it was well known that the window to join the ZCAP was open. At least @hanh and I want to join, and if this were more broadly advertised we might bring some old community members back that you speak of that want some change?

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@amiller I’m sorry to call you out but I’d like to know, generally speaking, what do you think about the points I make in the Open Letter?

Also, are you satisfied with the Foundation’s commitment to transparency?

First of all I’m glad you’re here and asking Qs like this, because it’s much easier to practice transparency when there’s an engaged audience.

Actually, my answer here is yes! The fact that it’s woven into our founding values document like that makes it easier to remind ourselves to keep improving on it. The board made hiring for Comms one of the first priorities to set for Jack as the new ED, and it’s the only remaining hire to complete among his initial plan. You can also see it reiterated in Alex (experienced non profit management)'s welcome post.

Besides proactive reports, transparency should include encouraging and answering questions. The only concrete one I picked out from your open letter was about Zepio. I don’t off hand remember more details from this other than that that contractor relationship didn’t work out, but I’d be happy to dig for more

We’ve in fact recently formed a Technical Advisory Board. It will show up in the July minutes. Matt and Ian and I are on it, and we’re working on adding external members as well. It originated in part as a way to better compartmentalize our board meetings from our technical input discussions. Personally, even if not reelected to the board I will nonetheless remain available to give input to the TAB.

I don’t think that access to technical input is the best reason to retain someone on the board since the roles are different, on the other hand the technical knowledge does inform lots of the judgment we have to make so I’d hope the board composition never drops below at least 1 or 2 cryptography or blockchain engineering experts.

Fwiw, speaking as a CAP voter, ill be happy if you run, even if takes till next year rather than this one, and I plan to vote for reopening nominations since I don’t think very many people were paying close attention this time. Governance overload distraction is a risk but i think we could handle it. We had a pretty engaging roll of candidates last time during Zcon0. Afaict although you’ve only been posting more actively in the past month you’ve indeed been part of Zcash for many years and the hedge fund management experience is relevant. I think our board composition is already diverse by background although US heavy (jack and amber bring business and management experience). So far the board is all professionals with public reputations before and ongoing outside of zcash too. Basically I’d want to get to know you for longer before I’d vote for you.

Also fwiw i think Josh did a very good job in his time as ED. You’re welcome to incorporate that into your assessment of my judgment!

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@amiller In your opinion, should the Foundation have a duty or obligation to provide community members transparency reports on a regular basis (e.g. quarterly/semiannual/annual) that more or less provide detail about (1) the Foundation’s goals, objectives, and agenda, (2) the status of ongoing projects, and (3) what goals have been completed or accomplished or is “encouraging and answering questions” sufficient?

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I assume you have seen the previous reports:

Keep in mind that this was the normal format of the state of the Foundation reports until this year due to the transition of Josh leaving, Antonie acting as interim Director, and then Jack being hired as Director.

The amount of detail seems to cover many of your points so I assume you would just like to encourage ZF to get back into the normal process of creating these reports quarterly? Or is there something that is missing from them (besides that they haven’t been published lately) that would be good to see?

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@Shawn Yes, my issue is that the reporting has never been consistent. As I previously said, the Quarterly Reports were available for Q1 and Q2 2020, but not before or after. The Annual Reports are not available for every year.

What I’d like to hear from the Foundation is something like this: “Yes, we will reinstate providing transparency reports on a regular basis to community members immediately as a policy, with the first report for the quarter ending 09/30/21, which will be circulated by 10/31/21.”

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