Service DAOs will change how venture capital in web3 works.
Summarizing insights from @0xtaetaehoho & @Mikey0x_ to help you understand problems & solutions of Service DAOs
Summarizing insights from @0xtaetaehoho & @Mikey0x_ to help you understand problems & solutions of Service DAOs
@0xtaetaehoho @Mikey0x_ First some context
These past 2 years interest in crypto has grown, leading to an influx of capital for crypto-related projects & orgs.
But while capital is abundant, high-quality talent is scarce.
And this is where service DAOs come in.
These past 2 years interest in crypto has grown, leading to an influx of capital for crypto-related projects & orgs.
But while capital is abundant, high-quality talent is scarce.
And this is where service DAOs come in.
@0xtaetaehoho @Mikey0x_ Service DAOs are a type of DAO that acts as a talent aggregator for other DAOs.
Think of them as the crypto equivalent of consultancy firms (Design, Development, Legal, Marketing, etc)
In exchange for their services, service DAOs accrue a project's ownership (token/equity)
Think of them as the crypto equivalent of consultancy firms (Design, Development, Legal, Marketing, etc)
In exchange for their services, service DAOs accrue a project's ownership (token/equity)
@0xtaetaehoho @Mikey0x_ And because service DAOs provide services to directly address a project's needs,
A project's ownership dilution can be far less than with traditional funds.
This disrupts the unit economics of venture capital.
A project's ownership dilution can be far less than with traditional funds.
This disrupts the unit economics of venture capital.
@0xtaetaehoho @Mikey0x_ But what are the strengths of service DAOs over traditional consulting firms:
- Contributors get direct ownership
- Open contribution culture
- Better understanding of crypto-specific issues
- Reduced earning volatility
- Contributors get direct ownership
- Open contribution culture
- Better understanding of crypto-specific issues
- Reduced earning volatility
@0xtaetaehoho @Mikey0x_ Ownership is a powerful incentive.
It allows people to find meaning and autonomy in what they do.
This is what Service DAOs provide - direct ownership.
Contributors get a share of the value they create client-side as well as from the service DAO.
It allows people to find meaning and autonomy in what they do.
This is what Service DAOs provide - direct ownership.
Contributors get a share of the value they create client-side as well as from the service DAO.
@0xtaetaehoho @Mikey0x_ With ownership, contributors are better aligned.
A more collaborative culture is formed.
As long as you have the skillset, anyone can start contributing towards a service DAO.
Even anonymous contributors.
A more collaborative culture is formed.
As long as you have the skillset, anyone can start contributing towards a service DAO.
Even anonymous contributors.
@0xtaetaehoho @Mikey0x_ Most projects that service DAOs will take on are from other DAOS / crypto protocols.
Compared to a standard consultancy, service DAOs, whose contributors are crypto native, are more familiar with crypto-specific challenges.
Compared to a standard consultancy, service DAOs, whose contributors are crypto native, are more familiar with crypto-specific challenges.
@0xtaetaehoho @Mikey0x_ Contributing to service DAOs is less volatile.
Token rewards to contributors are diversified.
Contributors get both stable service DAO governance tokens + client's project tokens.
Token rewards to contributors are diversified.
Contributors get both stable service DAO governance tokens + client's project tokens.
@0xtaetaehoho @Mikey0x_ Service DAOs do however face challenges.
Sourcing & retaining talent is hard, there's more demand than supply as of now.
Latent talent in the community also can't be surfaced easily.
Newcomers to service DAOs were either shy or confused in the contribution process.
Sourcing & retaining talent is hard, there's more demand than supply as of now.
Latent talent in the community also can't be surfaced easily.
Newcomers to service DAOs were either shy or confused in the contribution process.
@0xtaetaehoho @Mikey0x_ Aligning culture & values is another challenge.
An organization's culture means shared values and processes.
It helps retain talent, better quality of work, smoother operations.
But DAOs are hierarchy-less, asynchronous & remote, which makes it difficult to propagate.
An organization's culture means shared values and processes.
It helps retain talent, better quality of work, smoother operations.
But DAOs are hierarchy-less, asynchronous & remote, which makes it difficult to propagate.
@0xtaetaehoho @Mikey0x_ Service DAOs also face operational challenges.
Because of the hierarchy-less, asynchronous & remote nature of DAOs, it's hard to standardize processes / maintain documentation
Too much control slows down the process.
Too little oversight, the work quality becomes too varied.
Because of the hierarchy-less, asynchronous & remote nature of DAOs, it's hard to standardize processes / maintain documentation
Too much control slows down the process.
Too little oversight, the work quality becomes too varied.
@0xtaetaehoho @Mikey0x_ Legal uncertainties are also prevalent.
- How do we incorporate?
- How do we issue tokens?
- How do we help with contributors paying taxes?
- How do we pay vendors or non-crypto entities?
- How do we incorporate?
- How do we issue tokens?
- How do we help with contributors paying taxes?
- How do we pay vendors or non-crypto entities?
@0xtaetaehoho @Mikey0x_ These people + operations challenges have downstream effects on external parties involved.
Due to the lack of standardized processes or QA, project delivery suffers in terms of quality or delivery time.
Due to the lack of standardized processes or QA, project delivery suffers in terms of quality or delivery time.
@0xtaetaehoho @Mikey0x_ And because DAOs operate based on decentralized governance, friction happens.
In order for funds to be released, voting needs to conclude and a multisig needs to happen.
This causes delays in closing for service DAOs
In order for funds to be released, voting needs to conclude and a multisig needs to happen.
This causes delays in closing for service DAOs
@0xtaetaehoho @Mikey0x_ So how are service DAOs tackling these challenges?
Here are the 4 categories of solutions reported to have worked for at least 1 DAO:
1. Legal
2. People + Operations
3. Techstack
4. External
Here are the 4 categories of solutions reported to have worked for at least 1 DAO:
1. Legal
2. People + Operations
3. Techstack
4. External
@0xtaetaehoho @Mikey0x_ 1. Legal structure solutions:
• Worker Co-ops - lawyers that know cooperatives are rare
• LCA - allows for investor class with a 2-class system
• LLC - fits small dev shops, hard to be anonymous
• Series LLC - easy to maintain, centralized
• Talk to lawyers early.
• Worker Co-ops - lawyers that know cooperatives are rare
• LCA - allows for investor class with a 2-class system
• LLC - fits small dev shops, hard to be anonymous
• Series LLC - easy to maintain, centralized
• Talk to lawyers early.
@0xtaetaehoho @Mikey0x_ 2-1. People + Operations solutions:
• Compensation structuring
Coordinape + Sourcered combo for compensation splits - slower but decentralized.
PMs decide the split.
Sales get 5-10% of commission if deal goes through, the rest is divided among contributors.
• Compensation structuring
Coordinape + Sourcered combo for compensation splits - slower but decentralized.
PMs decide the split.
Sales get 5-10% of commission if deal goes through, the rest is divided among contributors.
@0xtaetaehoho @Mikey0x_ 2-2.
• Compensation structuring (cont'd)
To encourage participation and remove confusion, communicate early on to the contributors their portion.
Establish a culture of "pay a lot" early
• Compensation structuring (cont'd)
To encourage participation and remove confusion, communicate early on to the contributors their portion.
Establish a culture of "pay a lot" early
@0xtaetaehoho @Mikey0x_ 2-3.
• Recruit and retain talent
Recruit from those that are already active in other DAOs.
You can train new recruits by creating a mentor system.
Have everyone in the community be required to mentor someone.
Allow for new participants to just shadow
• Recruit and retain talent
Recruit from those that are already active in other DAOs.
You can train new recruits by creating a mentor system.
Have everyone in the community be required to mentor someone.
Allow for new participants to just shadow
@0xtaetaehoho @Mikey0x_ 2-4.
• Building Culture
1-on-1 interactions should be encouraged, which helps build personal relationships.
Repeat mission, narratives often
Limit rate of growth so that culture can spread to newcomers.
Create memes / art / shared documents.
• Building Culture
1-on-1 interactions should be encouraged, which helps build personal relationships.
Repeat mission, narratives often
Limit rate of growth so that culture can spread to newcomers.
Create memes / art / shared documents.
@0xtaetaehoho @Mikey0x_ 2-5.
• Streamline operations
DAOs need project managers, so hire some.
Also allocate talent/capital on the operations side of things as well. (comms, coordination improvements, etc)
Adopt proven processes such as design sprints to maintain structure & work quality.
• Streamline operations
DAOs need project managers, so hire some.
Also allocate talent/capital on the operations side of things as well. (comms, coordination improvements, etc)
Adopt proven processes such as design sprints to maintain structure & work quality.
@0xtaetaehoho @Mikey0x_ 3. Tech Stack solutions:
Use custom CRMs
@RaidGuild's smartinvoice - invoice
@utopialabs_ / @GildedFinance - finance
@discord - comms
@GnosisDAO - DAO treasury
@lettucemeetapp - scheduling
@airtable - database
@NotionHQ - documentation
@SnapshotLabs - voting
Use custom CRMs
@RaidGuild's smartinvoice - invoice
@utopialabs_ / @GildedFinance - finance
@discord - comms
@GnosisDAO - DAO treasury
@lettucemeetapp - scheduling
@airtable - database
@NotionHQ - documentation
@SnapshotLabs - voting
@0xtaetaehoho @Mikey0x_ @RaidGuild @utopialabs_ @GildedFinance @discord @GnosisDAO @lettucemeetapp @airtable @NotionHQ @SnapshotLabs 4. External facing solutions
Have some people manage communication between working groups, people, and the public.
Adjust accordingly the level of transparency, depending on what the project is about.
Once again, craft memes, they also help with awareness and retention.
Have some people manage communication between working groups, people, and the public.
Adjust accordingly the level of transparency, depending on what the project is about.
Once again, craft memes, they also help with awareness and retention.
@0xtaetaehoho @Mikey0x_ @RaidGuild @utopialabs_ @GildedFinance @discord @GnosisDAO @lettucemeetapp @airtable @NotionHQ @SnapshotLabs If you would like to learn more, please check out the original article from @0xtaetaehoho, @Mikey0x_ & @1kxNetwork:
medium.com
medium.com
@0xtaetaehoho @Mikey0x_ @RaidGuild @utopialabs_ @GildedFinance @discord @GnosisDAO @lettucemeetapp @airtable @NotionHQ @SnapshotLabs @1kxnetwork If you enjoyed this thread:
1. Follow me @kazsatamai & @withmattkim for more web3 insights & design startups principles.
2. RT the first tweet below to help others learn about Service DAOs
1. Follow me @kazsatamai & @withmattkim for more web3 insights & design startups principles.
2. RT the first tweet below to help others learn about Service DAOs
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