4 ms·

An interesting concept, but I'm not buying the hype. At the end of the day a bunch of people bought shares in a company (or did they? Legality is weird) with

An interesting concept, but I'm not buying the hype. At the end of the day a bunch of people bought shares in a company (or did they? Legality is weird) with the special condition that in addition to owning a share of said company they also get to vote on what the company actually does, and even submit proposals for what it should do. Oh, and they also bought said shares with cryptocurrency. Magic internet money guys! Admittedly I think enabling this kind of democracy in a company is a bad idea. It might actually wind up being less nimble than an actual corporation because of the extra consensus required. Meanwhile, even though one might assume that the shareholders might be more informed than "the common mob", they might still propose and vote on more misses than, say, a corporation where new products and services are proposed through an informed internal decision making process that ultimately ends in the CEO using the information at his or her disposable to make the final decision. In a good corporation, bad decisions are self-correcting, in some cases leading to such extremes as a leadership shuffle. By contrast, who's to blame if the DAO votes on a proposal that wound up being a miss? How do they learn from their mistakes so it doesn't happen again? And I'm sure there are many other issues, but those are at the top of my list. I'd rather a company be run by those most capable, rather than the crowd.

drcode 10y ago
I'm a big ethereum fan but I agree 100% with your analysis.
hugozap 10y ago
If you vote a proposal is because you agree with it and you can't blame someone else. There's more flexibility than traditional structures with concepts like "splits" where if you don't agree with a proposal you can opt to not participate. It's new ground , has new concepts and it's still evolving. Really interesting stuff.
- deleted 10y ago
  [deleted]
kuschku 10y ago
> Admittedly I think enabling this kind of democracy in a company is a bad idea. It might actually wind up being less nimble than an actual corporation because of the extra consensus required. This stuff is also known as a cooperative, and is a very common concept for democratic companies – almost all housing in europe is owned like this.
- pnathan 10y ago
  Some actual businesses exist in the coop model. You don't see it much outside of the crunchy granola parts of the US. Kind of a shame, seems like a nice way to work.
- Freak_NL 10y ago
  > […] almost all housing in europe is owned like this. Did you mean social housing rather than housing in general? Because home ownership exceeds 50% in most European countries, just like the US. Social housing is often managed by cooperatives, but decades of neoliberalist thinking caused a lot of the larger of these cooperatives to invest in boondoggles and grandiose development projects completely unrelated to their core task rather than build more affordable housing. Coupled with the immoral self enrichment of upper management, mentioning European social housing cooperatives may not exactly support the point you are making.
  - TheOtherHobbes 10y ago
    In the UK flats - apartments - are often run by a limited liability management company which collects maintenance fees and makes sure maintenance is performed. Some or all of the flat owners are directors, and company accounts have to be filed in the usual way. They're not co-ops in the usual sense, but they're not so different in practice. Obviously these companies aren't run for profit, but it's not unusual for companies to accumulate rainy day reserves and to make a little from interest.
- Bjorkbat 10y ago
  I'm vaguely familiar with the co-op model through organic co-op grocery stores. I actually like the notion of grocery stores being run this way, but members participate in a grocery co-op primarily so they can get less expensive organic groceries and even have a say in what the co-op carries. Really it's just buying in bulk with strangers. But then I look at a corporation where members are ultimately voting on their best idea for making the corporation profitable, and presumably also mixing in ethics as well, that's where things could get hairy.
Joof 10y ago
I presume the community is to blame and they learn from the mistakes.
steego 10y ago
You shouldn't buy into the hype, especially from that hyperbolic story with silly blurbs like "The DAO is a paradigm shift in the very idea of economic organization." However, I don't think we should be flippantly dismissing the idea with phrases like "magic internet money", because if it proves itself to be minimally viable, it would really speak to a young demographic of investors who don't trust financial institutions or their products. Granted, this sort of tool is probably very ill suited for running a large corporation, but it might be ideal for Kickstarter-like organizations who want to fund a series of ideas or companies for equity. Some tasks are better suited for experienced professionals, while other tasks are better suited toward the wisdom of the crowds. (Tasks that great benefit from semi-informed polling) My best guess is this might become a useful tool for a niche investment market.
- Bjorkbat 10y ago
  Yeah, maybe I was too harsh with the magic internet money thing. I still have fresh memories of when Bitcoin went past the $1000 mark before cooling down again. Just strikes me that the people genuinely wanting to use Bitcoin as an actual form of value exchange are overshadowed by people treating it as "the new gold" The notion of having a very democratically run autonomous corporation seems a bit too far, but I'd be pretty excited to see someone using cryptocurrency to invest and buy shares in a company in a more accessible fashion than what we have now. In other words, I think cryptocurrency could potentially provide a better alternative than the way the current stock market works, but I don't know if this is necessarily a better alternative. I'm still not sure if even polling shareholders for product ideas works, unless product proposals are done effectively enough to where shareholders have a very clear vision on what the company is going to do, versus someone saying "So, we have this idea for an IoT product. There's no physical prototype you can hold yet, but here's how we think it'll work".
darawk 10y ago
The DAO will probably end up being more like a hedge fund / VC firm than a normal corporation. It will more likely invest in other companies than try to execute its own ideas. At least, that is my hope for it, and I think that is the path that makes the most sense. We will see what the crowd decides.
- dharma1 10y ago
  I think this is how it will pan out, too. However, I keep wondering what kind of company would raise funding from DAO? One that can't from anywhere else? I guess it will be companies tied into the yet to be established ETH ecosystem, that are seen too risky by trad VCs. That will help to kickstart the creation of some ETH companies, but still doesn't solve the general user adoption of ETH, beyond speculators. Will be interesting to see where the killer use cases are.
sammydavis 10y ago
There is the fascinating history of Athens and direct democratic voting that comes to mind. The citizens could all vote on anything, and that turned out to be a bad way to fight a war, especially with Sparta. Athens wasted their greater strength if I recall correctly. Could it happen with dao vs other companies? Sure, who can tell at this point. https://en.wikipedia.org/wiki/Athenian_democracy https://en.wikipedia.org/wiki/Athenian_democracy
tim333 10y ago
The DAO crowd could hire a CEO, similar to how regular shareholders can vote for board members who appoint a CEO.

drcode 10y ago

I'm a big ethereum fan but I agree 100% with your analysis.

hugozap 10y ago

If you vote a proposal is because you agree with it and you can't blame someone else. There's more flexibility than traditional structures with concepts like "splits" where if you don't agree with a proposal you can opt to not participate. It's new ground , has new concepts and it's still evolving. Really interesting stuff.

deleted 10y ago
[deleted]

kuschku 10y ago

> Admittedly I think enabling this kind of democracy in a company is a bad idea. It might actually wind up being less nimble than an actual corporation because of the extra consensus required. This stuff is also known as a cooperative, and is a very common concept for democratic companies – almost all housing in europe is owned like this.

pnathan 10y ago
Some actual businesses exist in the coop model. You don't see it much outside of the crunchy granola parts of the US. Kind of a shame, seems like a nice way to work.
Freak_NL 10y ago
> […] almost all housing in europe is owned like this. Did you mean social housing rather than housing in general? Because home ownership exceeds 50% in most European countries, just like the US. Social housing is often managed by cooperatives, but decades of neoliberalist thinking caused a lot of the larger of these cooperatives to invest in boondoggles and grandiose development projects completely unrelated to their core task rather than build more affordable housing. Coupled with the immoral self enrichment of upper management, mentioning European social housing cooperatives may not exactly support the point you are making.
- TheOtherHobbes 10y ago
  In the UK flats - apartments - are often run by a limited liability management company which collects maintenance fees and makes sure maintenance is performed. Some or all of the flat owners are directors, and company accounts have to be filed in the usual way. They're not co-ops in the usual sense, but they're not so different in practice. Obviously these companies aren't run for profit, but it's not unusual for companies to accumulate rainy day reserves and to make a little from interest.
Bjorkbat 10y ago
I'm vaguely familiar with the co-op model through organic co-op grocery stores. I actually like the notion of grocery stores being run this way, but members participate in a grocery co-op primarily so they can get less expensive organic groceries and even have a say in what the co-op carries. Really it's just buying in bulk with strangers. But then I look at a corporation where members are ultimately voting on their best idea for making the corporation profitable, and presumably also mixing in ethics as well, that's where things could get hairy.

Joof 10y ago

I presume the community is to blame and they learn from the mistakes.

steego 10y ago

You shouldn't buy into the hype, especially from that hyperbolic story with silly blurbs like "The DAO is a paradigm shift in the very idea of economic organization." However, I don't think we should be flippantly dismissing the idea with phrases like "magic internet money", because if it proves itself to be minimally viable, it would really speak to a young demographic of investors who don't trust financial institutions or their products. Granted, this sort of tool is probably very ill suited for running a large corporation, but it might be ideal for Kickstarter-like organizations who want to fund a series of ideas or companies for equity. Some tasks are better suited for experienced professionals, while other tasks are better suited toward the wisdom of the crowds. (Tasks that great benefit from semi-informed polling) My best guess is this might become a useful tool for a niche investment market.

Bjorkbat 10y ago
Yeah, maybe I was too harsh with the magic internet money thing. I still have fresh memories of when Bitcoin went past the $1000 mark before cooling down again. Just strikes me that the people genuinely wanting to use Bitcoin as an actual form of value exchange are overshadowed by people treating it as "the new gold" The notion of having a very democratically run autonomous corporation seems a bit too far, but I'd be pretty excited to see someone using cryptocurrency to invest and buy shares in a company in a more accessible fashion than what we have now. In other words, I think cryptocurrency could potentially provide a better alternative than the way the current stock market works, but I don't know if this is necessarily a better alternative. I'm still not sure if even polling shareholders for product ideas works, unless product proposals are done effectively enough to where shareholders have a very clear vision on what the company is going to do, versus someone saying "So, we have this idea for an IoT product. There's no physical prototype you can hold yet, but here's how we think it'll work".

darawk 10y ago

The DAO will probably end up being more like a hedge fund / VC firm than a normal corporation. It will more likely invest in other companies than try to execute its own ideas. At least, that is my hope for it, and I think that is the path that makes the most sense. We will see what the crowd decides.

dharma1 10y ago
I think this is how it will pan out, too. However, I keep wondering what kind of company would raise funding from DAO? One that can't from anywhere else? I guess it will be companies tied into the yet to be established ETH ecosystem, that are seen too risky by trad VCs. That will help to kickstart the creation of some ETH companies, but still doesn't solve the general user adoption of ETH, beyond speculators. Will be interesting to see where the killer use cases are.

sammydavis 10y ago

There is the fascinating history of Athens and direct democratic voting that comes to mind. The citizens could all vote on anything, and that turned out to be a bad way to fight a war, especially with Sparta. Athens wasted their greater strength if I recall correctly. Could it happen with dao vs other companies? Sure, who can tell at this point. https://en.wikipedia.org/wiki/Athenian_democracy https://en.wikipedia.org/wiki/Athenian_democracy

tim333 10y ago

The DAO crowd could hire a CEO, similar to how regular shareholders can vote for board members who appoint a CEO.