The Rise of the Decentralized Startup
elizabethyin.com
elizabethyin.com
Where things break down if one party expects to receive a "no strings attached gift" and one is expecting to participate in a complex system of social and economic credit balance.
I'm not sure how to make the above sound less snarky - I'm genuinely interested in how this stuff compares to more formalized systems of debt in modern societies.
If it's an obligation, then I suppose the retributive action (if any) from not meeting this obligation probably depends on the society and the event. Different societies have different responses to individual who don't play by the rules.
In general even non-literate human societies are pretty good in carrying a common ledger of who-owes-what-to-whom.
I suggest the book "Debt the first 5000 years" by David Graeber on the details.
But overall, when traveling, check the local customs around gifts from a cultural guide :)
Small groups of people (tribes, essentially) can and do use peer pressure (ostracisation) to enforce the agreed upon social contracts.
IOW, if you get a reputation as a non-giver amongst your group of friends and family who are all givers, they'll soon stop associating with you.
You become a bad neighbor and everybody stops helping you. Things may get as bad as nobody trusting you at all, and you becoming the escape goat for some problem.
People organize this way up to today, even in mature economies. There's mystery to solve.
That said, I think a lot of economy is rooted in emotional bonding. I'm helping a lot of neighbors (people that saw me growing up). Offer my time for free since most of their issues are trivial computer stuff. They want to pay me even when it's a 3 minute check and there was nothing to do. Many times they say they don't want to feel indebted. Even though I clearly state that I'm really happy to spend time doing this for free, and will really have no future request to them because I moved a usb cable or something like that. Money is a kind of shared agreement on help here. If you don't use an intermediate medium, you get deeper but also messier relationship because no one is sure how the other party feels and if they'll think they will want more retribution later. With good and intimate relationships it's rarely an issue because you know they'll provide, there's no risk no fear.. but with many people you run into it's creating a lot of unknowns.
[1] eg Large-scale application of fusion power. According to mass–energy equivalence, Type I implies the conversion of about 2 kg of matter to energy per second https://en.wikipedia.org/wiki/Kardashev_scale#Type_I_civiliz...
I’m glad there is a Wikipedia page that discusses the reciprocity of non-cash relationships. It’s an enormously important element of social societies (of humans and other species) and is probably 60% of the content of advice columnists (my child isn’t calling me / I have a clingy friend / I didn’t get invited to a party though the hosts were at my house for dinner …)
"What follows is from a description of a dzamalag held in the 1940s, as observed by an anthropologist named Ronald Berndt.
Once again, it begins as strangers, after some initial negotiations, are invited into the hosts’ main camp. The visitors in this particular example were famous for their “much-prized serrated spears”—their hosts had access to good European cloth. The trading begins when the visiting party, which consisted of both men and women, enters the camp’s dancing ground of “ring place,” and three of them began to entertain their hosts with music. Two men start singing, a third accompanies them on the didjeridu. Before long, women from the hosts’ side come and attack the musicians:
Men and women rise and begin to dance. The dzamalag opens when two Gunwinggu women of the opposite moiety to the singing men “give dzamalag” to the latter. They present each man with a piece of cloth, and hit or touch him, pulling him down on the ground, calling him a dzamalag husband, and joking with him in an erotic vein. Then another woman of the opposite moiety to the pipe player gives him cloth, hits and jokes with him.
This sets in motion the dzamalag exchange. Men from the visiting group sit quietly while women of the opposite moiety come over and give them cloth, hit them, and invite them to copulate; they take any liberty they choose with the men, amid amusement and applause, while the singing and dancing continue. Women try to undo the men’s loin coverings or touch their penises, and to drag them from the “ring place” for coitus. The men go with their dzamalag partners, with a show of reluctance, to copulate in the bushes away from the fires which light up the dancers. They may give the women tobacco or beads. When the women return, they give part of this tobacco to their own husbands, who have encouraged them to go dzamalag. The husbands, in turn, use the tobacco to pay their own female dzamalag partners…
New singers and musicians appear, are again assaulted and dragged off to the bushes; men encourage their wives “not to be shy,” so as to maintain the Gunwinggu reputation for hospitality; eventually those men also take the initiative with the visitors’ wives, offering cloth, hitting them, and leading them off into the bushes. Beads and tobacco circulate. Finally, once participants have all paired off at least once, and the guests are satisfied with the cloth they have acquired, the women stop dancing and stand in two rows and the visitors line up to repay them.
Then visiting men of one moiety dance towards the women of the opposite moiety, in order to “give them dzamalag.” They hold shovel-nosed spears poised, pretending to spear the women, but instead hit them with the flat of the blade. “We will not spear you, for we have already speared you with our penises.” They present the spears to the women. Then visiting men of the other moiety go through the same actions with the women of their opposite moiety, giving them spears with serrated points. This terminates the ceremony, which is followed by a large distribution of food."
"The traditional economic theory of the time suggested that, because the market is "efficient" (that is, those who are best at providing each good or service most cheaply are already doing so), it should always be cheaper to contract out than to hire.
Coase noted, however, that there are a number of transaction costs to using the market; the cost of obtaining a good or service via the market is actually more than just the price of the good. Other costs, including search and information costs, bargaining costs, keeping trade secrets, and policing and enforcement costs, can all potentially add to the cost of procuring something via the market. This suggests that firms will arise when they can arrange to produce what they need internally, and somehow avoid these costs."
https://arxiv.org/abs/cs/0109077 : Coase's Penguin, or Linux and the Nature of the Firm, Benkler (2001)
"Specifically, I suggest that nonproprietary peer-production of information and cultural materials will likely be a ubiquitous phenomenon in a pervasively networked society. I describe a number of such enterprises, at various stages of the information production value chain."
(OK, so that's just a couple of quotes and I haven't advanced a thesis, but the thesis is "yes, possibly, provided the market costs can be addressed", and it looks like the article highlights that the search costs for developers are incredibly high. Defi or not.)
1. I would wager a good amount of people working on DAOs would never have gotten a job at Google. This isn't poaching the top tier talent from FAANGS but rather unlocking an ignored pool of talent because they lack traditional credentialism. To wit one of our investors is a co-founder of Sushiswap. Knowing them I don't think its possible they would have ever been considered for a FAANG position.
2. People mostly just want to work when and where they want with clear objectives and a chance to earn a good chunk of what their labor produces. I would argue for many that having a decent equity stake in a startup that is worldwide remote solves for this.
I keep hearing about this war for talent over and over and even though we're functionally a nobody seed stage startup I've never felt it because from day 1 we've been worldwide remote and asycnh. People say they can't find developers but the last time we posted a job we got 300+ applications in less than 24 hours and probably 1/3rd were reasonably qualified. DAOs are fine. I think they'll exist to some degree moving forward, but it isn't the end all be all I think some folks make it out to be.
So true. And the challenge to this, at least in Europe, has nothing to do with technology - it's a legal challenge. The process of issuing and trading shares of a company is super simple in itself, it's the regulation that makes it hard.
And since securities regulations apply to things like profit-sharing tokens... then, good job, you just solved nothing and made the tech 10x harder.
Do you run into a lot of overhead managing all the different laws in each country for full-time employment and equity compensation?
"For centuries, work has been incredibly inefficient. In the “barter era”, one person would do work in exchange for someone else’s work. E.g. I’ll make you a silver fork in exchange for salt and spices. There were many things challenging about this type of economy. 1) There was no common currency to transact and understand value, and 2) on a macro level, it was hard to know whether your good or service was really needed and whether it was going up or down in value. E.g. Is there a surplus of spices? Should I be spending time in spices or something else this year?"
I have a dozen criticisms of this essay, but maybe the most obvious is that I still ask myself these questions several times a year, and I'm definitely not living in a barter economy. Indeed, these questions seem more likely to be asked in a monetary economy that's already seen considerable specialization of labor -- one person is making a silver fork, and another person is harvesting spices. This is the world of, say for instance, Britain in 1800 AD, not 1800 BC.
Basically people in small societies would be in debt to each other and they would use that as a way to conduct “trade”.
But, I think generally it's wrong too. Neither does it mean that when you're a prolific dev, you're crypto rich. Or that you have to display your richness to everyone.
The main reason I think people have opted to be anonymous is to avoid regulation.
I've written a dedicated blog post about this topic: https://timdaub.github.io/2021/10/08/detokenization-or-anony...
The latter situation is rampant in the so-called helping professions.
A hard fork was the only rational thing he could have done and how any other centralized actor would have responded. But by doing so all the previous talk about decentralization and "code-is-law" mumbo-jumbo was exposed for what it is.
So whoever did this should be celebrated from saving the world from a much bigger shock that would have eventually happened once it would have been actually adopted by real market players. If you hack a system like IOTA, OneCoin, Ethereum and show the world that it's just a bunch of scammers who talk about things they wish the system to be, as opposed to what it realistically can be (or presently is), they are doing the world a favor by educating the rest of us.
We do not talk enough about what a grift the whole Ethereum platform is. I guess it is because people are just tired of it because we've already had at least 6+ years of pointing it out. Not just Ethereum's Wood/Buterin but many others (the guys behind the IOTA foundation making claims about contracts with Microsoft, Volkswagen and Cisco that never existed). They all suffer from the same issue which is very prevalent in Tech. They have been trying to "fake it before they make it" for too long and can no longer walk it back. When people do this the whole thing becomes bigger than them, it goes from an idea to a prank to a worldwide scam[1] from which you have no choice other than doubling down on your lies.
[1] see the story of Dr Ruja Ignatova - "The Missing Crypto Queen" https://www.bbc.co.uk/programmes/p07nkd84/episodes/downloads <- the major difference between Ruja and Buterin is that Ruja was a McKinsey consultant who didn't understand technology. This makes Buterin a far more successful (and more dangerous) player. Buterin is what Ruja could have been if she wouldn't have had to trust others in defining the technological aspect/parts of OneCoin.
1. Ethereum had just launched. There was a sense of everything being in beta.
2. The Ethereum stakeholder set was very small, so obtaining consensus for such a controversial hard fork was much easier to accomplish than it would be today.
3. The economy on Ethereum was very small, so
a) a hard fork was far less disruptive than it would be today.
b) an undermining of Ethereum's commitment to neutrality/immutability jeapardized far fewer decentralized application projects than it would today.
4. Smart contracts were completely new, so there was a sense that people could be forgiven for their mistakes.
5. The Ethereum Foundation had promoted the idea of a DAO on their website, and several Ethereum founders had promoted the specific DAO that ended up being hacked. These facts made the DAO appear to be more than a completely third party app.
Ethereum is very different today than it was in 2016, and a DAO-scale mishap would never lead to a hard fork again.
In general, I think given how ambitious the DAO was, the rollback can be excused.
It's hard to stress how new a universal smart contract execution environment were at the time. Until outside of a few extremely niche communities, the idea had never been discussed, let alone experimented on, before Ethereum was introduced.
And the DAO was a very complex smart contract, that every one jumped in with intuition about the vulnerabilities of smart contracts.
It's a programmatic contract. But 'smart contract' is easier to write/say, and otherwise catchier, so I suspect it'll stick.
For a particular example, open source projects typically have funding issues and users typically want new features. This is a great way to get funding while also giving users the ability to vote on new features priorities, etc.
I'm more interested in the rise of one person startups enabled by first class of the shelf open source and SaaS tooling.
However, try doing the same for technical people who will almost always require onboarding for a significant period of time before they can be super-productive (at least on existing work) and there is a lot of risk here.
It also doesn't talk about those who claim "we really believe in your mission" and in reality are a PITA and you lose a couple of months, after which you need to let them go and find someone else.
Lastly, this seems a luxury for those who are wealthy enough that they can enjoy the idea of mission-first and profits second. Most businesses cannot afford to do this in the same way, they need the money to pay the bills.
Those complaints aside, I like it as an ideal and it is probably a good practice for most businesses to know what their mission is.
Next, the war for talent can be easily solved if you pay more. Same as the market for tomatoes.
You are trying to convince the farmer that there is a mission (special kind of salad) for the tomatoes , hence he should sell you the tomatos for 50% off.
I think these ideas are interesting, but I am not sure I agree with the main hypothesis: does providing shared values solve the talent problem? Good values are definitely a part of choosing to work at a certain company, but that is not all. Monetary compensation, culture, career possibilities and experiences are part of it.
The developer guild: A group of peoples (devs, ux, business dev) meet online and form a temporary DAO and start taking contracts. The DAO would give the participants 1) a programmatic way to divide the money they make 2) vote on directions to take (hire/fire decision, take/fire clients, pay of each participant given the contribution..)
The startup: Two co-founders decide to build a b2b saas in some vertical. They build a DAO. Start taking investor money which comes with voting rights about certain issues (hire/fire CEOs, hire/fire C- level execs, equity). Similarly, they start hiring founding engineers which a certain voting power in the DAO around certain issues (should we optimize for growth or get dividends, should we fire the C-levels..), which also get to choose whether to trade equity for salary. The level of democracy in each startup would be different. Some would give employees some voting rights about big decision, some only about wealth distribution..
The DAO in the second example would allow 1) new ways of governance inside the organization (compared to the board->CEO->organization) 2) new ways of wealth and risk sharing inside the organization (probably benefiting employees) 3) a friction-less lawyer-less way of doing both of these.
I don't know if all of this makes sense, I am thinking out loud here, and I honestly doesn't know much about DAOs.
That is, Who pays the taxes on the people that get hired? How is non-blockchain income distributed? Who do you sue if a vote violates a labor law? How does the DAO purchase or pay for services from non-blockchain entities?
If a DAO token is "equity" then it will fall under security regulations of various nations. In addition, it cannot be equity unless the DAO is also a registered company in some jurisdiction.
In fact replace the string "DAO" with "corporation" and everything still makes perfect sense - because what you are describing is a common-or-garden corporation.
Nothing in DAOs is new. Look at 30 year-old open-source projects, or books like "Reinventing organizations" from Laloux. And as such, it's fair to believe that DAOs will work to the extent that all other previous attempts at distributed organizations have.
In short: it works for some people, in some cases.
It gives stakeholders (dao participants, aka users that are more involved), a say in the direction of the project.
A basic unincorporated association would be enough. Perhaps a (limited liability) company if you wanted the entity to have legal personality.
I'm sorry but the HN crowd is seeing a huge shift right on from of them and completely blind to it. It's the same mindset as people dismissing the internet saying you can just send messages to people through the mail, or you can get information from the library, and taking about how unusable the internet is even though it's been in development for 20 years, etc.
I don't know about you, but I'd hardly call updating a membership list held by the organisation itself "a bunch of paperwork". It's about as simple as record keeping gets.
I'd argue that maintaining all of the crypto mechanics of a DAO is a lot more work than updating a single database table!
Decentralized digital tokens fit the ethos of open source communities better than any previous form of money. You can issue them to party living anywhere in the world, with no trusted third party intermediary, and without asking for any identifying information from the pseudonymous recipient.
Curious to understand the value people are getting from being part of that network which at the time of writing costs a sizable ~ $7800 to join for full membership.