DAOs, Companies & Incentives

DAOs Are a Gateway Drug

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In this Twitter thread, I broke down the winning tactics Web3 creator platforms will use to win. 

Michael Macaulay (🧱, 🚀) @Micmac132

Millions of Web3 Creator Platforms will try to win over the trad creator economy. Most will fail. But the ones that win will do 3 things. And they’ll do them better than anyone. 🧵

 

But here’s the thing. Web3 is going to radically shift incentives. Not just in the creator economy. But in the real economy too.

Here’s how it might play out and why.

Thanks Pexels!

Companies Kinda Suck

It’s really easy to criticize companies. Many of them do terrible things.

• Underpay workers while overpaying shareholders

• Use planned obsolescence to milk the market for all its worth 

• Bribe politicians to pass favorable legislation to create unfair advantages 

But these aren’t evil people. Business owners are simply playing the game to the best of their ability. The game of making money. And doing it really well. 

When you become an adult, you get hit with a bag of bricks. Everything you thought about life was wrong. Your purpose isn’t to make the world a better place or spend time with your family. Your goal is to work harder, make more money, and raise the GDP.

Our entire civilization is built around this idea.

Most of the time, we don’t explicitly say it. But it's implied through every aspect of our culture. From the media, we consume to the way we monetize our hobbies when we’re not working. It’s the invisible ideal that guides nearly all behavior today.

Company Missions & Values

In computer programming, a list of items always starts with 0. It’s always confusing at first because we naturally think of starting with 1. But 0 does come before 1.

Company values work the same way. Their number 1 value might be helping people eat healthier or creating amazing tech.

What they don’t show you is their first value. The one at 0. That value is and always will be making money. Everything comes second to this value. It’s all wind in the air. This is the only one that matters.

But it inevitably creates chaos down the road.

Class Conflict

There’s a natural division between company owners and workers/consumers.

• Owners - want to make more money, pay workers less, and provide consumers with the lowest possible quality (but viable) product

• Workers - want to work as little as possible and get paid more

• Consumers - want the best product while paying the least for it

The hardest working employees oftentimes benefit the owners more than themselves. And the most enthusiastic superfans are suckers. Imagine publicly rooting for a company you don’t own stock in (I’m looking at you Apple fanboys).

There’s a giant wall around the owner class. It keeps people out. Workers & consumers will always be outside this wall. It’s nearly impenetrable. But instead of concrete and steel, it's protected by closed-door deals, accredited investor laws, and shady stock policies.

This is simply a result of the existing incentive structures. Again, this isn’t a reflection of individual people. But a reflection of the broken game we’re all playing. One that favors the wealthy. And leaves the underclass with nothing but broken bootstraps to support themselves.

Thankfully, Web3 will provide a better game to play.

DAOs Build Bridges & Bust Down Walls

The beauty of DAOs is that anyone can start contributing. If there’s a DAO with a mission that speaks to you, there’s nothing stopping you from hopping in the Discord and helping out where you can.

DAOs bust down the wall of ownership. And they build a bridge that allows anyone to go from worker/consumer to owner.

Instead of owning equity in a company, you own a piece of the protocol.

You’re not a wage worker anymore. You’re building ownership in what you believe in. DAOs are the bridge between being a worker/consumer to owning a piece of the upside.

This is going to be big.

DAOs Will Beat Companies

You get a good sense of the problem with companies by studying the best possible scenario. 

Apple.

Apple is by any metric, one of the best companies in the world. Visionary founder story. Powerful branding. Innovative technology. And it’s worth more than $2 trillion as of this month.

They coordinate workers to create a great product. And they sell their products. Pretty straightforward. Lots of people buy these products. They make money. Consumers get good products. Seems like a win-win?

But here’s the problem. There’s that wall between workers/consumers and owners. Apple is a good enough company that even being a worker there comes with a little prestige.

But it pales in comparison to being an executive on the board. Or a majority shareholder.

You can be the most enthusiastic Apple customer in the world. But you’re just simping for shareholders. You’re not and never will be on the board at Apple. Sorry you had to find out this way. 🤷‍♂️ 

The whole purpose of the mission, branding, and great product is to get your money. None of it really mattered. And you, the customer who really believes in this shit, don’t have any meaningful way to contribute. 

But DAOs are going to fix that.

The DAO Model

The best DAOs are the ones least concerned with making money. In fact, people would run for the hills if your DAO openly announced it was only interested in making money.

The only ones that survive will be mission-driven. And not in some corporate doublespeak kind of way. But based on the actions of members. 

And the better it is the better it gets.

The DAO Positive Feedback Loop

DAOs are going to grow exponentially in the coming years. Not only because they unlock the opportunity for ownership. But because they benefit from a powerful positive feedback loop.

Here’s how it works.

Excited Outsiders

Outsiders hear about what a DAO is doing.

“We’re going to elect Andrew Yang as president of the United States.”

It sounds like a long shot. But then, something magical happens. They actually make some significant progress. The progress gets reported on by media outlets.

“Hey guys, check out this crazy Discord server that’s trying to get the UBI guy elected again.”

People who get excited about that mission. It's inevitable. Many of them will flock to the DAO in the hopes of making a difference too.

Contributions

Real people make real contributions to the movement. This can be in many forms. From coordinating partnerships, development, creating tooling, creating content, etc.

There’re many ways to contribute. Infinite ways if you’re creative.

These contributions will slowly inch the DAO’s mission closer to being a tangible reality. And again, this real progress will attract attention.

Do you see what I’m getting at here? DAOs making progress encourage new people to join. New people join and help out. Their help makes progress which makes more people want to join.

It’s a beautiful cycle. One that is going to change the world as we know it.

By The People For The People

One of the best examples was constitutionDAO. Their mission was to own an original copy of the US Constitution that was being auctioned at Sotheby's. Everyone who contributed would be a partial owner.

The Constitution would be owned by the people.

It sounded like a goofy idea at first. But then it started getting traction. $40 million dollars later, it nearly completed its mission.

Things didn’t pan out. Thankfully, a hedge-fund manager outbid the DAO.

But the simple fact that it almost happened was important. We’re not a bunch of edgy teenagers with internet coins anymore. We have the ability to raise millions of dollars. Coordinate millions of people in a completely decentralized way. We’ve got the power to change the world. If only we believe we can.

Final Thoughts

It’s really easy to dunk on companies & the people that own them. They do a lot of shady shit. But where does that really get us?

If you’re serious about making the world a better place, it’s a lot more important to create better games to play instead of taking down bad players.

Fixing incentives fixes the problem. And DAOs fix the incentives.

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