William Mougayar is a Toronto-based angel investor and four-time entrepreneur who advises startups on strategy and marketing. Here, he discusses what makes a successful Decentralized Autonomous Organisation, or DAO for short.
The concept of a Decentralized Autonomous Organization/ Corporation is an idealistic outcome of the crypto-tech revolution.
Its roots originate in themes on organizational decentralization that were depicted by Ori Brafman in Starfish And The Spider (2007), and ones about 'peer production', aptly described by Yochai Benkler in The Wealth of Networks (2007).
But these two themes were recently joined by the advent of cryptocurrency-related technologies by Dan Larimer who observed that Bitcoin is the original DAC, and Vitalik Buterin who expanded on that construct by generalizing it further as a DAO, noting that the DAO has "internal capital".
The deregulation of crowdfunding and unbundling of services were two additionally paired themes that added to this combustion, and the whole thing was turbo-charged by a crypto-tech governance layer of technologies and trust-based automations to allow DAOs to run, as Stan Larimer says, "without any human involvement under the control of an incorruptible set of business rules."
A few thought leaders and visionaries explained the theory and vision of DAOs/ DACs, but missing from the literature are real experiences and a deeper dive into the realities of operating a DAO. Certainly not all DAOs will be born by following a cookbook. And there will be variations and shades of purity in DAO principles, for practical purposes.
So how do you get there, and what are the pieces of the puzzle from an operational/ practical view?
Just because we can add crypto-tech doesn’t mean that the DAO will be successful. As a play on words, a DAO is DOA (dead on arrival) until the market starts to validate its assumptions.
Evolutionary Paths to DAOs
Although it is possible to aim for a DAO from day one of planning, it is also possible to evolve towards it, and it’s equally feasible to incorporate parts of a DAO construct into a traditional organization.
If the DAO is the actual nirvana in terms of autonomous agents doing their work via artificial intelligence or smart programs, then we could imagine a path to an evolutionary sequence, where each subsequent stage builds on the functions of the previous one, as depicted in the following graph:
