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Worth including the rest of the quote: "We’re in an interesting transitional era where San Francisco / Delaware is obviously* wrong but incorporating on-chain

Worth including the rest of the quote: "We’re in an interesting transitional era where San Francisco / Delaware is obviously* wrong but incorporating on-chain and going full remote is not yet obviously right." (i.e. he's advocating using blockchains to define your legal entity and building a distributed team worldwide for your employees.) https://twitter.com/balajis/status/1149073637325979648?lang=en https://twitter.com/balajis/status/1149073637325979648?lang=...

novok 7y ago
If you replace the SF part with the distributed team part, is there any real advantage to using 'blockchain' corps vs delaware corps?
- nostrademons 7y ago
  A lot cheaper, with less administrative hassle. DE C-Corp incorporation will run you a couple grand, with minimal annual fees in the few hundreds, and you have to do various administrative tasks like file your annual reports (on a website that looks like it was made in 1995), hold annual meetings with minutes (even if it's just yourself), re-elect yourself President every year (even if you are the only shareholder), etc. If there are any disputes or anything is done incorrectly, you're looking at tens-to-hundreds-of-thousands in legal fees. The blockchain dream (which still needs a lot of tooling and infrastructure) is that you fill out a form once, incorporation and annual maintenance is basically free, and most of the mundane legal stuff is enforced by software for very small fees. He also mentions nation-states as a configurable parameter: basically this would mean that moving your company's legal jurisdiction would be as simple as updating a form field, and nations would have to compete to retain businesses.
  - godzillabrennus 7y ago
    Formation costs aren’t that high these days unless you need a lawyer for special circumstances: https://www.delawareregisteredagent.com/incorporation-form https://www.delawareregisteredagent.com/incorporation-form
    - jjoonathan 7y ago
      Don't all of these still cost $1000/yr in California franchise fees if you so much as touch CA?
    - randyklahey 7y ago
      Please note that this is not an official site of the state of Delaware, but is a private entity completely unaffiliated with the state of Delaware. I was burned as their customer once, and investigated how they're put together when something felt off. It's a shell company of "Northwest Registered Agent", a shadowy company that has dozens of shell companies for each state and does SEO to get them to the top when you search how to register a company in these states. They're not reputable and you should absolutely stay away from them in the future. If you see onlineaccount.net in any of the source code for the page, or if it directs you there after login, it's the same shell company.
      - nostrademons 7y ago
        Folks looking to incorporate should be aware that there are a lot of scams in the space. Aside from this one, there are a zillion companies that will try to sell you labor law posters for ~$100 (which you can print out for free from the Department of Labor's website), and there are companies that scan public records filings for approved incorporations and automatically squat on the domain name and try to sell it back to you for $1000. Make sure you register your domain before incorporating and then transfer it from your personal account to the corporate one. You also actually do need a registered agent, but probably not that one. I incorporated through Clerky (which is reputable, YC uses them), but it costs much closer to $1000 than $50, and then Clerky has a partnership with CSC (Corporation Services Company) to act as the registered agent. CSC itself will try to upsell you on various services that you don't technically need.
        randyklahey 7y ago
        Honestly, find a reputable attorney in the region you want to incorporate and file through them. It may cost a few bucks more, but it's worth it.
  - novok 7y ago
    Is that machinery actually real in any way? Just because you write something on a database somewhere doesn't give it any sort of special legal status, which is why people register for corporations in specific jurisdictions, so those jurisdictions treat their organization differently than something informal.
philwelch 7y ago
That seems like such a weird combination of outwardly sensible and utterly batshit ideas to me. Remote work can be successful and SF increasingly seems like a terrible, dystopian place, but how the hell does blockchain solve the same problem as legal incorporation? Can you take a blockchain to court to stop people from seizing your personal assets to cover your business debts?
- nostrademons 7y ago
  The blockchain is the court (and bank, and law). Each investor and executive and the corporation itself has its own address, and control over only that address. As with regular corporations, investors transfer cash from their own address to the corporation's address to fund it. Unlike regular corporations, repayment can happen automatically, with no lawyers needed to enforce it - a smart contract simply deducts the requisite payment from the corporation's address to the creditor's address every month, and triggers liquidation proceedings if the required amount is not present. Since said smart contract would have access only to the corporation's bank account, there is no risk of a creditor seizing your personal assets.
  - etaioinshrdlu 7y ago
    I like to say that smart contracts are basically the opposite of legal contracts. Legal contracts are not self-executing but carry the weight of the legal system. Smart contracts are self executing but if a mistake is made or the contract is buggy it is essentially moot legally.
  - philwelch 7y ago
    When my "corporation" goes broke, my creditors can still go to an actual court of law. And if I don't have a real-world LLC or corporation to provide limited liability, the court will rule that I am liable for those debts. Even if the "contract" was only denominated in some sort of cryptocurrency, that has exactly as much legal bearing as a contract obligating me to deliver copper: if I don't deliver the copper, the court will award damages in legal tender. Frankly, this smells a lot like some straight up sovereign-citizen-tier pseudolaw. If you actually try to do business this way, you're going to be in for a rude awakening when the actual court system still ends up exercising jurisdiction over you.

novok 7y ago

If you replace the SF part with the distributed team part, is there any real advantage to using 'blockchain' corps vs delaware corps?

nostrademons 7y ago
A lot cheaper, with less administrative hassle. DE C-Corp incorporation will run you a couple grand, with minimal annual fees in the few hundreds, and you have to do various administrative tasks like file your annual reports (on a website that looks like it was made in 1995), hold annual meetings with minutes (even if it's just yourself), re-elect yourself President every year (even if you are the only shareholder), etc. If there are any disputes or anything is done incorrectly, you're looking at tens-to-hundreds-of-thousands in legal fees. The blockchain dream (which still needs a lot of tooling and infrastructure) is that you fill out a form once, incorporation and annual maintenance is basically free, and most of the mundane legal stuff is enforced by software for very small fees. He also mentions nation-states as a configurable parameter: basically this would mean that moving your company's legal jurisdiction would be as simple as updating a form field, and nations would have to compete to retain businesses.
- godzillabrennus 7y ago
  Formation costs aren’t that high these days unless you need a lawyer for special circumstances: https://www.delawareregisteredagent.com/incorporation-form https://www.delawareregisteredagent.com/incorporation-form
  - jjoonathan 7y ago
    Don't all of these still cost $1000/yr in California franchise fees if you so much as touch CA?
  - randyklahey 7y ago
    Please note that this is not an official site of the state of Delaware, but is a private entity completely unaffiliated with the state of Delaware. I was burned as their customer once, and investigated how they're put together when something felt off. It's a shell company of "Northwest Registered Agent", a shadowy company that has dozens of shell companies for each state and does SEO to get them to the top when you search how to register a company in these states. They're not reputable and you should absolutely stay away from them in the future. If you see onlineaccount.net in any of the source code for the page, or if it directs you there after login, it's the same shell company.
    - nostrademons 7y ago
      Folks looking to incorporate should be aware that there are a lot of scams in the space. Aside from this one, there are a zillion companies that will try to sell you labor law posters for ~$100 (which you can print out for free from the Department of Labor's website), and there are companies that scan public records filings for approved incorporations and automatically squat on the domain name and try to sell it back to you for $1000. Make sure you register your domain before incorporating and then transfer it from your personal account to the corporate one. You also actually do need a registered agent, but probably not that one. I incorporated through Clerky (which is reputable, YC uses them), but it costs much closer to $1000 than $50, and then Clerky has a partnership with CSC (Corporation Services Company) to act as the registered agent. CSC itself will try to upsell you on various services that you don't technically need.
      - randyklahey 7y ago
        Honestly, find a reputable attorney in the region you want to incorporate and file through them. It may cost a few bucks more, but it's worth it.
- novok 7y ago
  Is that machinery actually real in any way? Just because you write something on a database somewhere doesn't give it any sort of special legal status, which is why people register for corporations in specific jurisdictions, so those jurisdictions treat their organization differently than something informal.

philwelch 7y ago

That seems like such a weird combination of outwardly sensible and utterly batshit ideas to me. Remote work can be successful and SF increasingly seems like a terrible, dystopian place, but how the hell does blockchain solve the same problem as legal incorporation? Can you take a blockchain to court to stop people from seizing your personal assets to cover your business debts?

nostrademons 7y ago
The blockchain is the court (and bank, and law). Each investor and executive and the corporation itself has its own address, and control over only that address. As with regular corporations, investors transfer cash from their own address to the corporation's address to fund it. Unlike regular corporations, repayment can happen automatically, with no lawyers needed to enforce it - a smart contract simply deducts the requisite payment from the corporation's address to the creditor's address every month, and triggers liquidation proceedings if the required amount is not present. Since said smart contract would have access only to the corporation's bank account, there is no risk of a creditor seizing your personal assets.
- etaioinshrdlu 7y ago
  I like to say that smart contracts are basically the opposite of legal contracts. Legal contracts are not self-executing but carry the weight of the legal system. Smart contracts are self executing but if a mistake is made or the contract is buggy it is essentially moot legally.
- philwelch 7y ago
  When my "corporation" goes broke, my creditors can still go to an actual court of law. And if I don't have a real-world LLC or corporation to provide limited liability, the court will rule that I am liable for those debts. Even if the "contract" was only denominated in some sort of cryptocurrency, that has exactly as much legal bearing as a contract obligating me to deliver copper: if I don't deliver the copper, the court will award damages in legal tender. Frankly, this smells a lot like some straight up sovereign-citizen-tier pseudolaw. If you actually try to do business this way, you're going to be in for a rude awakening when the actual court system still ends up exercising jurisdiction over you.