I have been exploring with my longtime friend and fellow ex-Facebook vet, Aran Donohue. When we started this exploration, we had one rule: no matter what we do, we would never, ever do anything in crypto. Like ever.
There’s a reason most of the population hates crypto even while 16% of Americans own it. Crypto combines the worst of tech bro, finance bro and obnoxious libertarian culture. Not for us, thanks.
We spent three fruitless months focused on tools for improving the efficiency of small businesses. That was followed by three more fruitless months looking for ways that AI could help individual entrepreneurs. We knew that something big was going to change the way that we worked. We could feel that COVID had accelerated a shift from old types of companies to new. But we just weren’t seeing the new problems to be solved.
“Okay,” I said, “So for what’s next, I think we should look at crypto. We’re not going to do anything in the space, but there’s so much hype. We should take a look to make sure we’re not betting against the internet in ’97.“
Aran shrugged between sips of coffee, “Sure. Take a week. Look into it. When we meet next Thursday, we can cross it off.”
The next week, I came to our meeting with a notebook full of half-baked ideas and sloppily jotted insights. “Aran,” I said, “I think we should get serious about crypto.”
You’re right to be skeptical, dear reader. A lot of what is happening in crypto right now is bullshit. Most of the things that aren’t bullshit still will not actually work. Your climate concerns (while undergoing mitigation) are still valid. But if you can see through that haze, you will catch a glimpse of a revolution that has happened only twice before. We’re about to change the way that we organize companies to achieve our goals and support our livelihoods.
But, first, some history.
In 1604, the Age of Exploration was dawning. The promise of new lands and new treasures intoxicated European governments. But the risk of exploration was high. Pirates raided ships. Storms destroyed them. The governments needed a new way to fund these ventures. So they gave Nobles permission to form Joint Stock Companies. These companies let wealthy citizens invest and profit from colonial expeditions.
By the 1840s, the joint-stock corporation was in decline. The industrial age had introduced new challenges, and the world needed a new type of company. So the UK Parliament passed laws that created the modern corporation. They got rid of Royal Charters and allowed anyone to create a company for any purpose. They introduced limited liability rules to protect investors from lawsuits. As a result, new companies formed to build railroads and start factories.
Now, there’s only two data points here, but you can start to see a pattern. Exploration and industrialization were such large global shifts that they necessitated new institutions. We’re now thirty years into the Age of the Internet, but our organizations remain the same. The “startup,” after all, is just a fast growing limited liability corporation.
This is where Aran and I first started to see the potential of crypto to transform businesses. The idea of what a business should be is changing. Platforms like AWS, Shopify and Upwork have unbundled core primitives of the firm. This lowers the costs of starting up, scaling up and building a company. The same work that used to take twenty people now takes one or two.
In turn, the challenges facing teams and entrepreneurs have changed. Today we need to worry about surfacing and acting on information and opportunities. We need to attract talent – if only for a single project – and ensure that they execute well. We need to focus on attracting and retaining customer attention. We need to act quickly to engage those customers and turn them into a community of supporters. These challenges demand organizations that are small, nimble and smart enough to adapt.
But the modern corporation is not designed for flexible teams or investors. It exists to permanently support a consistent team with a consistent mission. The internet age opens up the possibility of organizations where those assumptions need not hold.
It’s time for us to rethink our organizations. It is time to imagine what internet native companies should look like. These companies will need to form instantly, spread virally and be owned by members. But the governments and banks are not capable of supporting these changes. Their incentives are to force new organizations into classic corporate structures.
Still we will need a way to trust each other. So to create new institutions we will need a new system of trust that does not rely on regulators. And that’s where the blockchain comes in handy.
The blockchain is not a typical technology. It is slower, more costly and more energy intensive than running a database was in the late-90s. As a technical innovation, it is underwhelming. But that’s actually OK. The blockchain is not a pure technology. It is a social technology like a corporation or a government. It creates a shared and verifiable record of transactions without a need for a regulator.
If you don’t need to work with a bank or government then you don’t need their permission for your organization. You don't need their permission to issue equity. You don't need their permission to pool resources. You don't need their permission to make purchases or provide services. This is going to open up a flood of new types of organizations and new types of companies. Some (even most) will fail.
But, new organizations have already emerged that would not have existed before blockchain.
- Helium enables anyone to buy a radio antenna and earn money from anyone who accesses the mesh wireless data network.
- Mirror is a writer-owned coop that rewards authors for the business they generate.
- LinksDAO is crowdfunding the purchasing and management of a golf course.
These organizations would have been possible before blockchain. But they would have required costly legal agreements and sophisticated banking partners. We have now removed that friction. In doing so, we're unleashing the largest experiment in institution design ever attempted.
That couldn't come a moment too soon. The world has big problems, and we’re going to need new ways to collaborate to solve those challenges. I don’t know where the best opportunity lies – if I did, I would be working on that right now. But I know that this moment is going to be big. And I want to lay out why it’s so exciting in a way that doesn’t sound like I’m shilling tokens to my friends from prior tech jobs.
So I’m starting a new project to explore and chronicle the most interesting of these DAOs (or Decentralized Autonomous Organizations, as their known). I promise to do my best to avoid the jargon that makes crypto so exhausting to newcomers. I’m calling this project Charterless in a nod to the history of the corporation. Where we're going, we don't need Royal Charters. I hope you’ll follow along by subscribing below.
I’ll keep publishing my personal musings on Chaos Graph and use Charterless for all my thoughts on DAOs and other things crypto.
I hope you'll choose to subscribe to it here.
See ya down the rabbithole.